Orders of the Day — European Communities (Finance) Bill

– in the House of Commons at 4:34 pm on 11 July 1988.

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Order for Second Reading read.

[Relevant document: Fifth Report from the Treasury and Civil Service Committee (House of Commons Paper No. 358 of Session 1987–88) on European Community Finance.]

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey 4:36, 11 July 1988

I beg to move, That the Bill be now read a Second time.

As the House will appreciate, as well as the report from the Treasury and Civil Service Committee, the debate also provides scope for consideration of the Community documents specified at column 122 of the Official Report for 7 July.

United Kingdom policy in the Community, throughout the past five years, has had three dominant aims. We have sought to put the Community's finances on a sound basis of good management; we have sought to bring discipline to CAP spending; and we have sought to make a reality of the Community's commitment to a genuine internal market, 320 million strong.

That agenda, originally set by Britain, has become the European agenda as well, and it is being carried into practice. The House heard from my right hon. Friend the Prime Minister only ten days ago about the progress made at Hanover towards the single market, the third of the objectives that I have described.

The Bill is concerned to implement the first two of those objectives—sound finance and control over agricultural spending—on the basis of the agreement that we achieved at the Brussels European Council last February. I believe that those achievements have been welcomed by the great majority on both sides of the House.

Attitudes towards the Community in the country at large, as well as in this House, have indeed moved a long way in recent years. The decade of debate about the merits of our membership is well behind us. The common objective now is to see how we can make the Community work as effectively as possible. Certainly that is where the interests of the United Kingdom lie, and the interests of Europe as well.

Of course, I do not by that imply that our perception of our interests will always be in line with the views of our partners. That is the nature of any genuine partnership. On such occasions—there have been many on the road to the Brussels and Hanover European Councils, and there will be many more—we press our country's case with vigour. So, quite rightly, do others. The challenge of Europe is to find what is best in each nation's position, and to offer that to the whole, making the most of our common strength. Real progress is being made when all can see their interests being advanced.

Photo of Eric Forth Eric Forth , Mid Worcestershire

I am grateful to my right hon. and learned Friend for giving way at this early stage. Will he assure the House that the combination of the effects of the Single European Act and the proposals in this measure will give ample opportunity for any member state, particularly our own, still to defend what it sees as its essential national interest, whether in financial or politico-economic matters? Is he satisfied of that, and can he reassure the House?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

Yes. I am grateful to my hon. Friend for giving me the opportunity to take one intervention at this stage. A large number of hon. Members wish to speak in the debate which, as so often, has started an hour late. I make no complaint about that, but I hope that the House will forgive me if I do not give way to a range of interventions, because I wish to set out the argument in support of the Bill as a whole.

I begin by acknowledging the point made by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth). Incidentally, I reject the argument that it is wrong for us ever to shift our views for the sake of a common position. If 12 nations are to make the most of their separate resources and talents, each must be ready to join in the search for agreement. But equally, I reject the argument that it is somehow bad form within the Community to fight for what we think right. The suggestion is occasionally made—it was made by some in this House during our struggle for better Community budget discipline—that the right course must always be to go along with the consensus. But that obviously depends whether the consensus is right—right for us and right for the Community. For us to fall in with the majority, where we think it charts the wrong path for the Community, would be to fail the Community, as well as Britain.

I make no apology—and the House would not expect anyone to make an apology—for the fact that the recent far-reaching review of the Community's finances and policies took place at the insistence of this country. The other member states now acknowledge, publicly and privately, just how necessary that review was. The new own resources decision and intergovernmental agreement now before the House are among its results: today's debate gives us an opportunity to review them all.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Will my right hon. and learned Friend give way?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

I am normally fascinated by the points that are made by my hon. Friend. I hope that he will forgive me on this occasion, but I wish to stay within the pattern of the argument.

The principal result is a series of deep-seated changes in the way the Community budget will in future be run. The Community now has the solid foundation which it needs in the run-up to 1992. That demonstrates the wisdom of this Government's determination to make a success of the Community through concrete internal reform, consistently and tenaciously pursued, even when many in Brussels urged us to settle for less. Our tenacity in pursuit of those objectives is in sharp contrast to the ineffectual, toothless, gnawing attitude one sometimes detects from the Benches opposite, where vacillation has become accepted as a substitute for leadership and consistency, and resolution and patriotism are conspicuous by their absence.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

Will my right hon. and learned Friend give way?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

No, but I am sure that I carry my hon. Friend with me in what I have just said about the Opposition.

The same contrast is evident in the attitudes of the two sides of the House to the completion of the single market. That is the next key task for the Community. It is another where the United Kingdom has set the pace, and the tone has been set by my right lion. and hon. Friends.

Good progress is being made. In the six months of the German presidency, agreement was reached at Council level on a record number of 56 individual single market measures. That brings the total since the Milan European Council in 1985 to nearly 200. Those key measures included a number of considerable importance to the United Kingdom, such as the removal of controls on capital movements by all member states. That is a prerequisite of a genuine free market in financial services. It will be a major boon to the City of London.

The measures included the full liberalisation of road haulage by the end of 1992. That means the end of continental lorry quotas. British firms will be able freely to compete for business, and costs to consumers will be cut. I mention as well the liberalisation of non-life insurance services—another change of major benefit to the British insurance industry.

Why has there been the acceleration of progress on the single market?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

I am almost delighted that the hon. Gentleman is paying tribute to a British member of the European Commission. Certainly he deserves tribute.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

I have taken the hon. Gentleman's point.

We have made such rapid progress because, throughout the Community, there has been a growing recognition of the significance of 1992, and the benefits that it will bring, and because the completion of the future financing review, the principal reason for this Bill, has provided the foundation for single market success.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

No dialogue—just reading out the Foreign Office brief.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

I am delighted that my hon. Friend is taking such a close interest in what I have to say. He will find it even more fascinating, as I go on.

The accession of Spain and Portugal on 1 January 1986 brought the Community two new members with incomes significantly below the Community average. Their entry coincided with a strong and increasing awareness of the link between the single market programme and the Community's spending plans. In particular, it was clear that the full development of the single market would best be accompanied by further expansion of the structural funds, to improve the economic infrastructure of the poorer Community regions.

Thus, it became clear too that the ceiling on the Community's own resources agreed at Fontainebleau in 1984 would be insufficient to provide for the needs of a Community of 12 in the run-up to 1992. In consequence, the Commission brought forward, in February 1987, proposals for the comprehensive restructuring of the Community's finances and an increase in the level of the Community's own resources.

From the beginning, the future financing review provided both threats and opportunities. On the positive side, the Commission's proposals called for a comprehensive reform of the common agricultural policy. That included, for the first time, the introduction of automatic stabilisers in all the main agricultural sectors, with increased supervisory power for the Commission to prevent possible overshoots. The Commission also proposed improved budget management procedures. The aim here was to improve forward financial planning. To all that, the United Kingdom gave strong support.

But the Commission's proposals also contained dangers. Chief among them was a proposal for a new method of calculating the British abatement which, on our calculations, would have left the United Kingdom hundreds of millions of pounds worse off in each year up to 1992—and by about £700 million in 1992 alone.

The Commission also proposed an increase in the own resources of the Community to 1·4 per cent. of Community GNP. The United Kingdom argued that an increase of that scale—equivalent to a rise of nearly 50 per cent.—was not required, and would impose an unnecessary burden on taxpayers.

Another unwelcome Commission proposal was for a new tax on the consumption of oils and fats. That was designed to lay upon consumers the burden of the Community's oils and fats support regime—by increasing the costs of margarine and vegetable oils by up to 31 per cent. We strongly opposed that tax: it would have been degressive, and it would have done little to address the basic problem of over-production.

In the negotiations which followed, we made four points clear: first, any further increase in Community resources must be accompanied by effective and legally binding controls on expenditure; secondly, there would have to be effective measures to reduce agricultural surpluses; thirdly, there should be no oils and fats tax; and fourthly, we were determined to preserve in full the Fontainebleau abatement mechanism.

We also made it absolutely clear that we were not prepared to agree to any element of the future financing package until we were satisfied with every individual element in the package as a whole. We succeeded on all counts.

We succeeded in getting in place agricultural stabilisers for cereals, oil seeds and the other principal agricultural commodities. Those stabilisers have subsequently been implemented by a series of detailed agricultural regulations covering each of the crops involved. By the standards of Community agriculture in the previous two decades, that stabiliser regime is revolutionary and long overdue. For the first time, we have an automatic mechanism, with teeth, which will control the growth of financial support.

To improve overall control of the common agricultural policy, the Brussels European Council also agreed, again for the first time, to make the financial guideline for agricultural spending legally binding. In future, the Commission's price proposals must always be consistent with the agricultural guideline.

Photo of Mr Jonathan Aitken Mr Jonathan Aitken , South Thanet

In the catalogue of success that my right hon. and learned Friend is relaying about how well we are now controlling expenditure, why has he omitted the lack of legally binding controls on the non-obligatory sector? How are the intergovernmental discussions supposed to equate with the legally binding controls that we were promised by my right hon. Friend the Prime Minister at the Dispatch Box?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

As my hon. Friend has acknowledged, the arrangements now coming into force provide legally binding controls for obligatory expenditure under the agricultural guideline. They also provide for legally binding limits year on year on the aggregate Community budget. The combination of those two effects provides a legally binding control on the non-obligatory expenditure. In addition, the matter is fortified by the inter-institutional agreement that was also arrived at as part of the arrangements. The point made by my hon. Friend—[Interruption.] This is the point. Even the hon. Member for Vauxhall (Mr. Holland) finds it difficult to follow the complexity of these matters. For that reason, the intervention made by my hon. Friend the Member for Thanet, South (Mr. Aitken), confirms the wisdom of my original decision to allow a relatively small number of interventions. These are technical points, and we must look at the matter as a whole.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

Why is the package so complex?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

With his characteristic wisdom, even from a sedentary position my hon. Friend the Member for Northampton, North (Mr. Marlow) has asked, "Why such a complex package?" It is complex to satisfy the legitimate anxieties of my hon Friends to gain effective control in the circumstances.

In future, as I have said, spending on the CAP will be able to grow at a maximum of just three quarters of the rate of growth of Community GNP—that is, about 2 per cent. per annum in real terms. That compares with an average growth rate of 5 per cent. per annum over the years 1980–87. Crucially, it will ensure that the CAP has access to a steadily shrinking percentage of the Community's GNP.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Southend East

Will my right hon. and learned Friend give way?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

No. I hope that my hon. Friend will forgive me. No doubt the House is looking forward with great interest to what my hon Friend has to say.

The Brussels agreement also eliminated the general provision for additional expenditure in so-called "exceptional circumstances." Instead, the new budget discipline arrangements make specific and tightly controlled provision for a reserve of 1 billion ecu which will become available only in response to substantial in-year changes in the dollar-ecu exchange rate.

World agricultural prices are in dollar terms, so when the dollar falls against the ecu, CAP budget costs rise. When in future such extra costs exceed 400 million ecu, the new reserve will be triggered, and may be drawn down, but only up to the limit of 1 billion ecu. The arrangement is symmetrical: when the dollar rises, the reserve will fall, automatically reducing the amount available for CAP support.

In line with the provision in the Brussels conclusions that all these controls should be in legally binding form, detailed texts governing agricultural budget discipline, the financing of the CAP and of stock depreciation, and the financing of FEOGA intervention, have been drawn up since February. They were formally adopted by the Council on 24 June and copies have been placed in the Library of the House.

The conclusions of the February European Council also provided for a useful tightening of arrangements for budgetary mamagement. Those provisions too are embodied in a Council regulation adopted on 24 June and deposited in the Library of the House.

As I explained earlier in reply to my hon. Friend the Member for Thanet, South, a helpful additional control on spending arises from the agreement between the Council, the European Parliament and the Commission on an inter-institutional agreement covering Community expenditure between 1988 and 1992. Under the agreement, all three institutions commit themselves to respect a reference framework, or financial perspective, for spending over the five-year period which is consistent with the conclusions of the Brussels European Council.

So much for the framework. How are the new arrangements working in practice? The Commission's 1988 price-fixing proposals for support prices for agricultural products were within the agricultural guideline for 1988, as was the compromise package agreed by the Council on 23 and 24 June. The Commission's proposed provision for agriculture in the draft 1989 budget is within the guideline for 1989.

The signal to farmers and the markets is clear. The scandal of soaring CAP costs, at the expense of taxpayers, consumers and developing countries, is at last being brought under control.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Southend East

To preserve his superb reputation for fairness and honesty, will my right hon. and learned Friend the Secretary of State accept that on the basis of the information provided by my right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food, the 2 per cent. increase referred to in 1989 actually compares with a year of 14 months and that that 14-month year was created by the £5 billion overspend under the previous strict budgetary controls?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

It is important that my hon. Friend should give me the opportunity to deal with that matter. I heard him muttering about it, so I thought that I would give the House the opportunity to hear about it.

A change was made last year to alter the arrangements so that the financial control of agricultural expenditure shifted from the system of advances to reimbursements. Whereas previously money used to be advanced by the Community to member states for them to pay, it is now paid by way of reimbursing expenditure actually incurred. We regarded that change as desirable because it gives tighter control. Member states are given money when they have paid it out.

As a matter of practice in making the change, it involved reimbursing after a two-and-a-half-month delay. There was a change in the pattern of timing. If we compare the two years, we see that the figure for 1988 covers the period from 1 November 1987 to 15 October 1988. The second period for the 1989 figure covers 16 October 1988 to 15 October 1989. The two periods are comparable, and the 2 per cent. increase to which I have referred results from comparing like with like.

I am anxious to make that point. It answers the point raised by my hon. Friend the Member for Southend, East (Mr. Taylor) and no doubt he will have an opportunity to investigate it further. The House will understand that it is possible to make these points only with a high degree of comprehension, as characterised by the intervention made by my hon. Friend the Member for Southend, East.

The change to which I have referred is already having a powerful effect in practice. In the dairy sector, as many hon. Members will be aware from their experience, where milk quotas were first introduced in 1984 and strengthened under our presidency in 1986, the reduction of intervention stocks has already been impressive. Between the end of April 1987 and the end of April this year, butter stocks in the Community have been reduced from some 1·1 million tonnes to about 570,000 tonnes. That is a reduction of almost 50 per cent. in 12 months. Similarly, stocks of skimmed milk powder were reduced from 766,000 tonnes at the end of April last year to just 101,000 tonnes at the end of April this year. That is an 87 per cent. reduction.

All those important agricultural reforms have been achieved without the introduction of the oils and fats tax, despite strong support for such a tax from a number of member states.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West

Is the right hon. and learned Gentleman implying that this is the first time that there has been a sharp reduction in the level of butter and skimmed milk stocks, or does he recall that a similar reduction took place in 1982 without such a scheme?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

This is the first time that one has been deliberately sought in the face of market conditions that might have produced the opposite result. It has been achieved as a result of the determination with which the Government have sought this precise reform in agricultural policy. One of the most notable contributions was made by my right hon. Friend the then Minister of Agriculture, Fisheries and Food, when presiding over the December 1986 Farm Council. who brought to bear on the working of the Community all the authority that came from his experience as a Government Chief Whip and achieved a good result.

I see this willingness to accept the reform of the common agricultural policy agreed at Brussels as an impressive demonstration of the new seriousness of purpose in the Community. However, it will have 10 be sustained and intensified for years to come. More, much more, must still be done to make the agricultural sector worldwide more responsive to market signals. The opportunity arises in the current GATT negotiations.

Almost every one of the industrial economies needs to discover ways of promoting the health of their rural communities that do not depend upon the artificially protected production of food surpluses. That need was recognised at the Toronto economic summit. The message that the Toronto summit gave the GATT negotiators in Geneva was clear and can be put simply and graphically: that, if the countryside is to find a different way of maintaining its economic health, we should "start beating ploughshares into golf clubs". [Interruption.] Well, it is a striking phrase which should appeal to the hon. Member for Hamilton (Mr. Robertson), as it has a great appeal in Scotland.

It is a serious point, because for too long we have been devoting resources, not just in Britain or in the Community but throughout the world, to supporting, sustaining and protecting agriculture to enable it to produce food surpluses that cannot be consumed, at prices that are artificially sustained. The task of reform is the message that we have been driving home at the Tokyo, Venice and Toronto summits. That task must be dramatised and we must look for other ways of sustaining our rural communities. I make no apology for the phrase. Yes, let us start beating ploughshares into golf clubs. Planning permission is part of the argument.

We want action soon, and, over and above that, we want an agreed framework for major cuts in protection and support in the longer term as well in the short run. Through the Community, Britain will be working—

Photo of Mr Philip Oppenheim Mr Philip Oppenheim , Amber Valley

Will my hon. and learned Friend give way?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

If my hon. Friends will forgive me, I shall not give way; I have given way sufficiently already.

Through the Community, we shall be working to ensure that the GATT negotiations reach a successful conclusion.

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

I shall give way for the last time.

Photo of Mr Philip Oppenheim Mr Philip Oppenheim , Amber Valley

I thank my right hon. and learned Friend for giving way. I know that he is greatly concerned to free the agricultural market, and as moves seem to be in hand to do just that, is it not also true that the Commission is taking an increasingly protectionist stand on the import of non-EEC industrial goods? At the moment, the EEC has a series of quotas, voluntary restraint agreements and spurious anti-dumping duties against a range of goods from steel to typewriters, and from photocopiers to canned mushrooms in brine. How can that help the industries which use those products, and how does it square with the Government's policy of deregulation and freeing the markets?

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

That intervention may have to substitute for my hon. Friend's speech, although I hope not. It raises a range of question. As my hon. Friend knows, the fact is that on almost every commodity for which there is an argument for anti-dumping regulations and protectionism, more often than not a United Kingdom constituency is arguing for such protection. It is important that the right balance is struck. On the whole, and certainly as far as the United Kingdom is concerned, our pressure is constantly for more liberalisation. I take as an example the removal of quotas in the steel industry, an arrangement which was operated to the advantage of the Community steel industry as a whole for some years, but which we wanted to get rid of, and we have got rid of it, pressing the Community in a more liberal direction.

The conclusions of the Hanover Council clearly record that we want to be sure that the achievement of the single market does not amount to the erection of a new protective hedge around the Community. It is important that we should continue to work as we are doing to achieve more liberalisation of the countries of the European Free Trade Association. However, it is equally important that we should not give away a protection if we could use it to win a corresponding deal from another trading bloc. The matter should be handled intelligently. My hon. Friend's point was worth making, and will be taken on board.

As I mentioned earlier, a further important element of the review of future financing was the adoption by the Council again on 24 June, of a new regulation on the structural funds, putting into effect the decision of the Brussels Council to increase structural funds commitments by some £1 billion a year over the period 1989–92.

The increase will go primarily to the poorest, to Greece, Portugal, Spain, Italy and Ireland, but Britain will remain a major beneficiary from the funds. We shall continue to receive more than £750 million a year——

Photo of Mr Geoffrey Howe Mr Geoffrey Howe , East Surrey

No, if my hon. Friend will forgive me, I will not give way.

The particular problems of Northern Ireland will continue to receive special attention. Areas affected by industrial decline will still benefit from the regional and the social funds. Social fund resources will still be available to tackle unemployment, especially youth and long-term unemployment. The Highlands and Islands, mid-Wales and Devon and Cornwall will continue to qualify for support from all three structural funds.

The final element in the Brussels Council package was the agreement to increase the level of own resouces available to the Community, and to change the way in which member states' contributions were calculated.

The new own resources decision, the implementation of which is provided for by clause 1, gives effect to the February decision to increase the overall limit on the amount of resources available to the Community.

As I have explained, some increase was inevitable, and always foreseen as likely, given the terms of the Fontainebleau agreement, the accession of Spain and Portugal and the increase in the structural funds required in the context of 1992. The new limit has been set this year at 1·15 per cent. of Community GNP. It will rise through a series of annual sub-ceilings to 1·2 per cent. in 1992. The original Commission proposal, strongly supported by a number of member states, was, of course, for 1·4 per cent.

The new own resources decision also embodies a change in the structure of the Community's own resources. Under the new arrangements, the VAT rate will continue to be limited to 1·4 per cent., but the VAT base in each member state will be capped at 55 per cent. of its GNP. The remaining portion of resources due from each member state will be calculated according to its share in Community GNP. The Council has agreed a directive—a copy of which has been placed in the Library of the House —to ensure that member states' GNP statistics are comparable and uniform. Calculating an element of member states' contributions on the basis of GNP will bring the own resources structure more in line with the relative prosperity of member states—another change which the United Kingdom has consistently supported.

Most important of all, the new own resources decision preserves the Fontainebleau abatement mechanism intact. Some member states initially argued that it should be abolished outright. Others wanted to see it greatly reduced, or made degressive so as to disappear by 1992. However, in the end all accepted that it should continue. The Fontainebleau arrangement has been worth some £3,000 million to Britain over the past three years. It will be worth some £1,600 million this year. It ensures that, even if Community spending were to reach the new ceiling, the United Kingdom net contribution could amount to no more than about 0·25 per cent. of GNP.

The abatement mechanism will last as long as the new own resources decision itself, and even thereafter can be changed only by the unanimous agreement of all member states. The Commission's document setting out how the abatement will be calculated in future has been deposited in the Library.

The Bill also seeks the approval of the House for payments to be made under the 1988 intergovernmental agreement. This is needed to ensure that the Community can meet its commitments during the rest of this year, pending the entry into force of the new own resources decision The procedure of using a single Bill for the new own resources decision and the intergovernmental agreement was expressly commended by the Treasury and Civil Service Select Committee in its report of 18 May, and follows the precedent of the 1985 European Communities (Finance) Act. The present Bill supersedes and repeals that Act.

Throughout this spring, we made it clear that we would not be prepared to recommend to this House an increase in Community own resources until all the decisions reached at the Brussels European Council had been embodied in firm and legally binding texts. With the adoption of the package of texts by the Council on 24 June, that stage has been reached.

Effective CAP reform is at last in train. The Community's finances are at last firmly based. On this foundation the single market can be, and is being, successfully built. Three key United Kingdom aims are thus achieved or under way. The Community's interests are also being enhanced. To set our sights high was right —for Britain and for the Community. We have hit the target, and I commend the Bill to the House.

Photo of Mr George Robertson Mr George Robertson , Hamilton 5:10, 11 July 1988

I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof, this House declines to give a Second Reading to a Bill which fails to provide a genuine and expeditious programme for a substantial reduction in common agricultural spending or a corresponding increase in budget allocations for the social and regional funds, for the environment or for assistance to developing countries. One is tempted to start this debate by saying that it is the same old debate with the same old characters at the same old time, only the figures are bigger.

Photo of Eric Forth Eric Forth , Mid Worcestershire

And the hon. Gentleman will make the same old speech.

Photo of Mr George Robertson Mr George Robertson , Hamilton

The hon. Gentleman says that I shall make the same old speech. I hope that he has taken the precaution of looking at my 1985 speech and comparing it with what the Foreign Secretary said then.

There is a major difference today. It is not just that the figures are much larger than they have ever been, but there is the presence of the Foreign Secretary to open the debate. That is surprising because this is not his Bill, but a Bill presented by Mr. Chancellor of the Exchequer. Where is he? Nowhere to be seen. He is not present to defend or even to describe the Bill. That has been left to the man whose job the Chancellor is said to covet even more than a level of interest rates which may stay steady for more than 10 days at a time.

That is all the more surprising since the Treasury has its own European Minister who could have launched the Government's flag ship today. The Paymaster General is present, giving a serious imitation of being awake, which is more than several of his hon. Friends have managed during the Foreign Secretary's speech. The Paymaster General is usually cast adrift on the parliamentary ocean at the mercy of all the sharks on both sides of the House. But he is no mean figure to sail this particular dead fish, if one is to continue with these nautical analogies. He is not a minor Treasury Minister; in his spare, unpaid, time he is the chairman of the Conservative and Unionist party. Who better to tell us of the iniquities of today's creative accountancy which will allow the Common Market once again to escape bankruptcy?

After all, the right hon. Gentleman was appointed to eliminate the charismatic mark of the right hon. Member for Chingford (Mr. Tebbit), who won the election but lost the Prime Minister's ear for being too explicit in saying aloud what she allows only to be unattributably leaked. Even in her most demented moments she could not have appointed the Paymaster General to do for the Conservative party what he managed to do for the European Community. For all that, the Paymaster General has the clout and the prestige to launch the Bill, but he is not doing it.

Photo of Mr George Robertson Mr George Robertson , Hamilton


Instead, it is the Foreign Secretary, who on 30 June opened a full day's foreign affairs debate. Today he is here to open the debate on this important Bill which has been stolen from the Treasury, and on Friday he is back at the Dispatch Box opening a full day's debate on Hong Kong.I put it to you, Madam Deputy Speaker, that three opening speeches in two weeks would make even the most sleepy Lobby journalist stop suspiciously for a moment. After weeks of speculation——

Photo of Mr George Robertson Mr George Robertson , Hamilton

I shall consider giving way to hon. Gentlemen who are jumping up and down when I come to an appropriate point in my speech.

We have seen weeks of speculation. On 28 June The Sun,among the usual abuse of the Labour party which we have come to expect, had an editorial headlined, "Bye, Geoffrey", which stated: In a speech Sir Geoffrey Howe claimed credit for Britain's economic success.But what he was really doing was fighting for his political life.Too late, Geoffrey. You would have done better if, instead of siding with Nigel Lawson in the row over the pound, you had supported your Prime Minister.Now all you can do is wait until October 17 when you're due for the chop. Clearly, The Sunknows more than even the right hon. and learned Gentleman about how he will go and the precise date on which it will happen.

Perhaps the Foreign Secretary has spotted a chink in the door at No. 11 Downing street, with the fourth interest hike in two weeks allowing a previous Chancellor a brief moment at the Dispatch Box to show up in public the present incumbent——

Photo of Mr Ian Gow Mr Ian Gow , Eastbourne

On a point of order, Madam Deputy Speaker. When the Opposition Front Bench spokesman makes an opening speech on the Second Reading of a Bill should not the spokesman direct his mind and words to the Bill rather than to outrageous attacks upon my right hon. and learned Friend?

Photo of Miss Betty Boothroyd Miss Betty Boothroyd Deputy Speaker (Second Deputy Chairman of Ways and Means)

The hon. Gentleman will realise that a Second Reading debate is wide-ranging and hon. Members should be allowed to develop their comments as they see fit.

Photo of Mr George Robertson Mr George Robertson , Hamilton

It is indicative of the embarrassment of right hon. and hon. Gentlemen that they have to stoop to such a weak debating point to interrupt a speech. The House is now graced with a predecessor of the Paymaster General, who is sitting on the Back Benches, having fallen out with the Prime Minister, as have so many sitting around him. He was in the position of making up all the fanciful tales about European Community budgets which were told to the House.

My point is that this is a Treasury Bill and the Secretary of State for Foreign and Commonwealth Affairs is moving it. It is legitimate for the House to ask why that is and where on earth the Chancellor of the Exchequer is during this debate on his Bill.

It is difficult to explain the Foreign Secretary's completely irrational desire to open the debate on this of all Bills, which provides so little evidence of judgment, efficiency and political or financial prudence. Is the truth that he was left with the short straw yet again because even the Chancellor, who has peddled a few secondhand policies in his time, could not face selling this particular old banger? One can see why anybody, boasting, however fraudulently, of national financial success, would want to keep far from this Bill.

The Foreign Secretary has tried his best to confuse because, obviously, he cannot convince the House that when the bluster, jargon and funny money is set aside, the news in the Bill is not bad for Parliament and for British taxpayers.

Photo of Mr George Robertson Mr George Robertson , Hamilton

When we strip away the interinstitutional agreements, the intergovernmental agreements, the non-refundable advances, the fourth resources, the stabilisers, the green pound, the social spaces, the financial engineering and all the Euro mumbo-jumbo, the Bill permits a dramatic increase in the Common Market's budget of 25 per cent. on what it spends now. That is one extra pound for every four that the Community is spending.

Last year, after getting everything back that we were due and after receiving the much-vaunted rebate that the Government are so proud of, Britain paid a total of £1,347 million to the Community—that was our total net contribution. For those who struggle to understand these concepts, that is the equivalent of the total amount that the Government spent on the National Health Service's capital investment programme last year.

Photo of Mr Teddy Taylor Mr Teddy Taylor , Southend East

Is the hon. Gentleman aware that the figure has since been revised yet again, for the fifth time? The net contribution last year was £1,649 million. There has been a further revision—the revisions occur regularly. That, of course, is an enormous figure.

Photo of Mr George Robertson Mr George Robertson , Hamilton

I am grateful to the hon. Gentleman. At least one expatriate Scot who got away from the fragile and dangerous areas for Tories north of the border makes a constructive contribution. We are now talking about considerably more than what the Government spent on the NHS's capital investment programme last year. As a consequence of the Prime Minister's negotiations and generosity at the Brussels summit, the figure is expected to go up by between £200 million and £300 million, which is the equivalent of the total arts budget of this country. That will be the extra amount paid to the European Community this year.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Will the hon. Gentleman comment on the increase in the structural funds? We have been helped very much by a document from Conservative Central Office, which tells us some of the things that the Foreign Office is not prepared to draw attention to. It points out that the structural funds will go up by 80 per cent. in real terms. I dare say that the hon. Gentleman, who I expect believes in plenty of industrial and social engineering, will applaud that, and he might even provide us with Tory arguments for the increases. My right hon. and learned Friend the Foreign Secretary did not have anything to say about the 80 per cent. increase in real terms.

Photo of Mr George Robertson Mr George Robertson , Hamilton

I know that the right hon. and learned Gentleman did not. That is why I shall come to that. The hon. Gentleman makes a good point. I presume that the briefing that he mentions is issued under the name of the Paymaster General. I am sure that when he winds up the debate the right hon. Gentleman will be pleased to give careful attention to the material that is coming from his own researchers, buried deep in the bowels of Conservative Central Office.

I am giving equivalents of the large sums because such large amounts are almost meaningless. They seem meaningless to the Prime Minister because she agrees to them with such aclarity—[HON. MEMBERS: "Alacrity."] I am sorry. The Euro-jargon is even getting to me.

In the context of those remarkable increases, I should like to draw attention to an exchange in the Select Committee on Treasury and Civil Service, to which I pay fulsome tribute for producing, yet again, an excellent report on the subject. The exchange was between the hon. Member for Bridlington (Mr. Townend) and Mr. A. J. C. Edwards, under-secretary to the European Community Group in the Treasury.

The hon. Member for Bridlington asked: I just wonder what would be the attitude of the Treasury if one of the spending departments came up with a request to increase spending by 25 per cent. Mr. Edwards replied—these are precious words— Well, it is no secret that we would not be well pleased. The language of Sir Humphrey permeates all this. I recently heard a Minister say at a public gathering that if people thought that "Yes, Minister" was a comedy, he was able to vouch for the fact that it was a documentary. There is ultimate proof in that quotation.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

My hon. Friend quoted from the explanatory and financial memorandum to the Bill, which says that the net increase in expenditure will be between £200 million and £300 million a year. Does he not agree that that is an estimate, which takes account of what the Government hope will be spent in Britain at Brussels' behest? Would it not he more accurate to say what the extra liability would be? Should not the Paymaster General tell us that? Despite that being the former job of the Foreign Secretary, he did not have the grace to tell us what the liability is.

Photo of Mr George Robertson Mr George Robertson , Hamilton

My hon. Friend makes an excellent point. To spare the House the complete tangle of statistics, I left out that substantial point for the moment. As the hon. Member for Wolverhampton, South-West (Mr. Budgen) said, the structural funds will play a large part in the net calculation that will apply to this country next year. I intend to deal with that and to show that the optimistic assumptions of the Prime Minister and the Foreign Secretary have little or no chance of coming to fruition. Therefore, the £200 million to £300 million extra that we shall pay to the Community will be substantially below the amount that we shall get. Indeed, we shall pay far more than that.

The recalculation of the budget financing on a GNP basis is welcome, being fair and much more straightforward than the previous convoluted system, but it is being used simply as a cover for the 20 to 25 per cent. increase in the Community budget that is now proposed. We remain rightly sceptical of the calculation of GNP that will apply in many Community countries, not least our own, but those figures are not the only bad news with which the Chancellor of the Exchequer does not want to be associated.

The second and entirely separate part of the Bill puts the Chancellor's signature on a splendidly generous cheque from the Treasury to the European Community, even more generous than the cheque that the Minister for Social Security and the Disabled handed over to ITV's Telethon at prime time only a few weeks ago. That cheque to the Common Market will be for no less than £765 million. It is the intergovernmental agreement sum that we shall pay as an extra amount to the European Community this year.

It is difficult to find equivalents to show how generous the Government are and how much they have given away, but if I say that the combination of that payment plus the extra payment that we shall give the Community will probably be close to the total spent on the roads programme in the whole of the United Kingdom, perhaps some people will get the gist of what has been conceded.

Photo of Ian Taylor Ian Taylor , Esher

Will the hon. Gentleman give way?

Photo of Mr George Robertson Mr George Robertson , Hamilton


It should he noted that this year we intend to give close to £2 billion as our contribution to the European Community. That extra-generous cheque, which will go under the title of an intergovernmental agreement yet again, a non-refundable advance on our contribution, will add up to 57 per cent. of our net contribution. That special, one-off payment will add up to 57 per cent. on top of our present bill for membership of the Common Market. It is small wonder that the Chancellor of the Exchequer stayed away today. Even he does not have the brass neck or the cheek to tell us how prudent or sensible that amount is.

The expensive saga is still not over because what follows is even more reason for the Chancellor to keep out of the firing line and let the Foreign Secretary take the shellfire, perhaps all the better to benefit the Chancellor in his desire to take over his predecessor's job.

What do those gigantic sums mean for Britain? What does the deal that was wearily accepted by the Prime Minister in the wee small hours in Brussels in February do for our country or even for the European Community? I come back to the point made by the hon. Member for Wolverhampton, South-West. For one thing, it will double the structural funds of the European Community—the European social and regional funds. Before she went to Brussels, the Prime Minister said that such an increase would be lacking in any "rational justification"

In the House of Lords, Lord Brabazon of Tara said: The proposal by the Commission for a doubling of the structural funds is in our opinion quite unrealistic".—[Official Report, House of Lords, 9 November 1987; Vol. 489, c. 1243.] Of course, he simply reads a script written by the Treasury, because in May the Paymaster General told the House that such a figure was "wholly unrealistic." The structural funds will not go up by 50 per cent., but by 1992, they will go up by 80 per cent., with good reason, of course.

The House of Lords Select Committee on the European Community recently published a report "Reform of the Structural Funds" which says: Differences in unemployment rates have intensified throughout the Community. Comparing the Community with the USA, it"— the Commission— estimates that regional disparities in the Community are twice as high as regards incomes, and three times a high as regards unemployment rates.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

What proportion of the structural funds are obligatory and what non-obligatory? I believe that almost all of them are non-obligatory and if so, they are not subject to any legally binding constraints.

Photo of Mr George Robertson Mr George Robertson , Hamilton

The bulk f the structural funds are non-obligatory, but in order to reduce the amount of money in the compulsory and agricultural sector next year, the Community has transferred some of that money to the non-obligatory sector and is now claiming a triumph in reducing the agricultural component of the 1989 budget. The accountants employed by the European Community beat anyone employed by any local government organisation in Britain

When the Prime Minister returned from Brussels she had no regrets about her volte-face on the structural funds but said: We receive about £750 million from the structural funds. The Foreign Secretary repeated that this afternoon. However, she went on to say: Indeed we do fairly well out of the funds. We hope"— note the word "hope"— that this figure will increase to about £1,000 million in 1992." —[Official Report,15 February 1988; Vol. 127, c. 10] The division of the structural funds is being negotiated presently and one thing is clear—Britain will not do well, whatever the Prime Minister and the Foreign Secretary may say.

In the 1989 draft budget, 80 per cent. of the social and regional funds will be devoted to what is entitled "Objective I areas". Most of those areas are in Spain and Portugal and only one United Kingdom area, Northern Ireland, is featured. That area alone will benefit from the lion's share of the new cash that will be poured into the structural funds. Therefore, many suffering British regions and many of our acutely disadvantaged communities will be off the European assistance map for years. The Prime Minister may "hope", but our regions will suffer from her unwillingness to bargain. Her redrawing of the British regional assistance map has kept us out of the reckoning. When the intergovernmental agreement contained in the Bill is endorsed, our only real bargaining lever for a fairer deal on the structural funds will go for many years to come.

Photo of Mr George Robertson Mr George Robertson , Hamilton

I have given way enough and I would like to leave time for others to speak in this important debate.

We are told that the next benefit in Santa Howe's package is the cut in the near-obscene expenditure on agriculture. Anyone who thinks that this much vaunted package will stop the unique protection from market pressures and currency fluctuations that is given to farmers and farming—a protection that is not given to any other industry or work force— will, predictably, be sadly disappointed.

We are assured that there are to be new legally binding controls on agricultural spending. The fatal flaws in 1984 Fontainebleau package about which we and other Members of the House repeatedly warned the Government, have been supposedly spotted and eliminated. This time we are told that it is all watertight.

Certain hon. Members have asked, "What about 1984?" Let me take the Foreign Secretary back to 25 June 1985 when we considered the European Communities (Finance) Bill of that year. In reply to an intervention by the hon. Member for Wolverhampton, South-West and describing the great momentous controls that had been negotiated, the Foreign Secretary said: If that does not amount to the effective imposition of budget discipline, I do not know what does …We have achieved the fundamental change in the operation of the Community"—[Official Report,25 June 1985; Vol. 81, c. 798–800.] The then Economic Secretary to the Treasury went beyond that and he wrote an article in The Times that appeared on that very day. Of course, the Economic Secretary is now dealing with defence and great issues of the nation's security. I met him today on his way to Washington and he expressed a great desire to be in Washington and not in the House this evening. In that article, he said: we achieved a system of budgetary discipline designed to bring the growth of Community expenditure under much tighter control … we see that the new budgetary disciplines are now beginning to bite ….Fontainebleau has changed the rules for good. That is not what the Foreign Secretary said today, rather that Fontainebleau was rubbish. It is like Gorbachev at the all-party union conference a couple of weeks ago when he said that everything in the past was wrong, but that everything that he says now is 100 per cent. correct. Out of modesty I will not read out large chunks of my speech on 25 June when I predicted precisely the fatal flaws that the Foreign Secretary is now willing to admit in his confession today.

We have been told that all the loopholes have been closed—we hope so. I do not believe that anyone in this House does not hope that the controls will work and that the Community will get on with tackling the necessary and urgent problems that face all European countries. However, the House should be as sceptical about those controls as the fifth report of the Select Committee on the Treasury.

The excellent House of Commons Library reference sheet, which has been produced on this Bill, states: A more likely scenario is that violation of guidelines by the Commission might be renewed pressure from some member states, already unenthusiastic about budgetary discipline, to change the rules themselves. This would require unanimous agreement; but so of course have the successively more expensive budgetary packages agreed up until now. That says it all.

In his evidence to the Select Committee, the Paymaster General underlined the concept of legal enforceability by reminding the Committee that, on behalf of the British Government, he took the European Parliament to the European Court of Justice when that Parliament broke the treaty provisions on legal spending limits. He told the Committee that we won the judgment, but he conveniently forgot to remind the Committee that we had to pay the substantial cost involved in fighting that action and that the eventually agreed budget was larger than the one which he had taken the European Parliament to court to stop. If those are the guarantees on the legal enforceability of this budget, we and the Committee are right to be sceptical and suspicious about the controls—all the more so when they apply to the common agricultural policy.

Photo of Mr George Robertson Mr George Robertson , Hamilton

Time does not allow me to give way.

The Foreign Secretary is aware that, on the crucial cereals threshold, the Prime Minister was forced to accept what she knew to be a ludicrously generous stabiliser of 160 million tonnes. Before she attended that summit, she had said that that level would be an attack on the taxpayer and the housewife The Foreign Secretary is aware that the accumulating price cuts with which the Prime Minister dazzled the House in February do not start until the year after the stabiliser limits have been exceeded. At the same time, the right hon. Lady's Government, without using the negotiating power that they had over the IGA to get a fair deal for these extra structural funds, have thrown a bonus of £750 million into the expenditure hole of the 1988 budget, the budget which the Prime Minister has despised.

If the Foreign Secretary was trying today to get back into the limelight, to get back into the reckoning for succession to the Prime Minister, or even to survive the knives of the autumn, he chose a bad cause to plead and a bad case to present to the House. Four years and two weeks have passed since we debated the Bill which followed the Fontainebleau summit, yet we are still offered only hopes and promises on the financing of the Community.

The Government and the Prime Minister see no vision of a Europe that works for all its citizens, including the young, the unemployed and those whose jobs are threatened by Japanese or United States competition, who could all benefit from genuine pan-European programmes. Instead, the Prime Minister sees a deregulated, free-for-all Europe that is made easy for big business. This sad financial Bill says it all about Thatcherism at home and abroad—prudence for those who need help and profligacy for those who already have the cash.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing 5:42, 11 July 1988

The extremely long preamble and peroration of the hon. Member for Hamilton (Mr. Robertson), in which he complained that it was my right hon. and learned Friend the Foreign Secretary who proposed the Bill's Second Reading and not my right hon. Friend the Chancellor of the Exchequer, might have been more convincing had the hon. Gentleman been the shadow Chancellor.

It is rather difficult to regard the increase in own resources that we are debating as more than a further step on the rake's progress which the EEC has developed over the years. We must recognise, however, that the Government have been making strenuous efforts to bring matters under control. The progress that they have made with the United Kingdom abatement is to be welcomed.

It is fundamental to the Government's policy that own resources should not be increased unless there is effective budgetary discipline. Developments on that front have been chronicled over a period by the Select Committee on the Treasury and Civil Service. On budgetary discipline, I fear that it is no consolation to any member of that Committee to say, "I told you so." The matter was made clear to the Government by that Committee at the time of the Fontainebleau agreement. That is something which none of us can rejoice about.

We must recognise that it is extremely difficult for a Head of Government, as a lone voice, to continue saying no time and time again. It is important to view the developments that we are debating today against that extremely difficult background.

I wish, first, to comment on a major change in the basis of our contribution to own resources from VAT to gross national product. The Select Committee on the Treasury and the Civil Service, in the final paragraph of its report, draws attention to the real dangers that accompany that, especially the GNP statistics. The Committee observes that the United Kingdom's GNP statistics are deficient. I am glad that the Treasury has agreed about that and has introduced a review that will, I hope, result in more accurate statistics. These statistics are used in governing the country and in organising the economy, and when it comes to our contribution to the EEC they mean hard cash.

I was disappointed by the way in which my right hon. Friend the Prime Minister answered a question which I put to her following her statement on returning from the Hanover summit. I asked my right hon. Friend to check that our own GNP statistics were all right and similarly to check those for the rest of the Community. My right hon. Friend said: I agree with my right hon. Friend that a change from a percentage of VAT to a percentage of GNP is significant …Obviously, I cannot force the rest of the European Community to do that"— that is, to initiate an inquiry— but we are making strenuous efforts to see that our statistics are as accurate as we can make them."—[Official Report,30 June 1988; Vol. 136, c. 528.] It is crucial that the review should encompass our own statistics and those of the other member states. If it does not, we may find ourselves paying more to the EEC than we should. I hope that the Treasury will take this matter on board and that we shall have more forthcoming answers in future than the one which I received to my question.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

Will the right hon. Gentleman give way?

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I shall give way only once. Complaints have been made that Privy Councillors speak for too long, and I am anxious not to do that.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

Perhaps the right hon. Gentleman's remarks are illustrative of a scrutiny problem. Is he aware that the Government have produced an explanatory memorandum and that the EEC has produced a Commission working paper on GNP? If we read the titles of the documents that are italicised in the Official Report for Thursday 7 July, which the Leader of the House did not repeat, we find that they are notionally for debate today. I do not blame the right hon. Gentleman. because there is a great scrutiny problem.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I agree that scrutiny is tremendously important, and I pay tribute to the work of the Select Committee on European Legislation, which the hon. Gentleman heads, in that area. So many directives are being rushed through in anticipation of 1992, and this happens during any presidency of the Council. It is increasingly difficult for the House to ascertain what the directives really mean. It is a problem to which the House should give careful attention. I much agree with what the hon. Member for Newham, South (Mr. Spearing) has said.

Should budgetary discipline be legally binding? We know that the Prime Minister was disappointed, rightly, that what she believed would be effective budgetary discipline at the time of the Fontainebleau agreement was not. She then said that it must be legally binding. I do not think that the House and the Government are making sufficient use of the legal restraints available to them in controlling those matters, while complying, rightly, with the legal restraints that are imposed on us.

A few days ago, we had to go along with the European Court's decision on imposing value added tax on certain items. It is difficult to understand why we do not insist on imposing legal restraints on matters such as expenditure in the EEC. We have had successive debates on the reports of the Court of Auditors in the EEC, which have said that various devices used to expand the expenditure in the EEC, beyond the limits that were thought right, were illegal. However, the Council of Ministers, the Commission and the EEC as a whole have not pointed out that, if this is illegal, it should not happen. I do not like the asymmetrical way in which, on the one hand. we are complying with our legal obligations but, on the other, we are not using the legal mechanisms to ensure that the EEC stays within the legal limits that have been imposed on it.

Will the agreement embodied in the Bill result in effective budgetary discipline? In that respect it is important to distinguish between non-obligatory and obligatory expenditure and to ascertain whether the present arrangements provide an effective means of legal control. When giving evidence to the Select Committee,my right hon. Friend the Paymaster General said: There will be a legal instrument. To take you back to the debate we have had in this committee room on previous occasions, we have previously not had legally enforceable instruments. Member States or the Council have recourse to the European Court if a legally enforceable instrument is in fact being infringed. When the Prime Minister originally said that we would agree to an increase in own resources only if there was a legally enforceable instrument, I do not recall that a distinction was made between obligatory and non-obligatory expenditure. The impression created was that it would apply to both.

I shall deal with obligatory expenditure first. The agreement that we have reached imposes an arrangement whereby limits will be set on obligatory expenditure. But if the limits are exceeded in any given year, there will be a clawback over the next two years—most of it, we hope, in the following year. I understand that, but it is not a very prompt means of securing budgetary discipline.

What is more worrying is that paragraph 8 of the guidelines submitted for a decision of the European Council that dealt with this legally binding arrangement says: The budgetary effect of such exceptional circumstances shall be cancelled out within a three year period. If any overruns have not been offset by the end of the period, the Commission and the Council shall assess the situation and decide how to deal with the overrun. That does not seem to be an effective way of imposing a legally binding agreement. I hope that when the Paymaster General replies, he will make it absolutely clear how this mechanism will work, so that if there is an excess, it will be possible for any Government to take the EEC and the relevant authorities to the Court.

I move from the obligatory expenditure side, which appears to be a little loosely worded, to non-obligatory expenditure. The Select Committee was told that it was not possible to make a legally binding agreement because it would fetter the powers which the institutions enjoy under the terms of the budgetary articles of the Treaty. If I understand it correctly, this is effectively an amendment to the treaty. I am not the least bit clear why we could not amend the treaty in such a way as not to affect those bodies said to have powers that would be fettered if we were to have a legally binding agreement on non-obligatory expenditure.

My right hon. and learned Friend the Foreign Secretary said that we need not worry about the lack of a legally binding agreement on non-obligatory expenditure, because there is a limit on obligatory expenditure and a limit on the total. Therefore, effectively there is a legal limit on the lot. Will the Paymaster General concentrate on that point in his reply?

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

I know that he is giving careful attention to it. I do not understand how the mechanism described by the Foreign Secretary will work in practice. One problem is that there are considerable doubts about the way in which it will work and how it will be made legally binding.

The increase in own resources is substantial. The limit on agricultural expenditure will only keep it in line with the increase in GNP—in contrast with earlier attempts to reduce the percentage spent on agriculture. That is worrying. However, some progress has been made in this direction and I hope that the Paymaster General will deal with those points in his reply.

It is worrying that the periods specified for the restraints on expenditure are too long. There is a limit for a particular year and any excess is clawed back in the next year or the year after that. We should try to monitor it quarter by quarter. I hope that, in reply to this debate or in Committee, the Paymaster General will assure us that the figures will be produced each quarter, so that the Select Committee can ensure that the restraints are working within a year and, if necessary, report back to the House. Corrective action can then be taken before the annual limit is exceeded.

The Bill contains some improvements. It is certainly an improvement on the Fontainebleau agreement, but, as the hon. Member for Newham, South (Mr. Spearing) said, we should continue to impose as tight a scrutiny as we can on the way in which the somewhat complex and nebulous proposals are put before us.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber 5:58, 11 July 1988

In fending off questions at the beginning of his speech, the Foreign Secretary said that we had only a half-day debate, because the statement had reduced the time available. He added: I make no complaint about that. I suggest that he should have complained to his business managers who had allocated only a half day when, as can be seen from the number of hon. Members in the Chamber ——

Photo of Mr George Robertson Mr George Robertson , Hamilton

It is not a half day, it is a whole day.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

Then I can be somewhat more relaxed. I had it firmly in my mind that it was only a half-day debate, so I withdraw unhesitatingly my first remarks.

I welcome the Bill. It represents an important step forward in the slow but steady integration of the European Community and the development of stable financial arrangements within it. It is very much in line with the views that I and other of my right hon. and hon. Friends have expressed from this Bench over many years. In his opening speech, the Foreign Secretary referred to the virtues of consistency and their alleged absence from the Opposition Front Bench. Be that as it may, I can claim with justice and no exaggeration that Liberals have been consistent and clear on these matters since the war.

Looking back to the successful Brussels summit in February, the fact is that, when faced with the choice of either jeopardising the achievement of the common internal market or agreeing to a modest and sensible increase in the Community's own resources, the Prime Minister chose the latter. That is fair enough, but I wonder why she was not prepared to endorse what was substantially the same agreement when it was first discussed in Copenhagen at the end of last year. The reality is that the Prime Minister's tactics held back the development of the Community by two to three months, for no reason and to nobody's benefit.

I must mention two related points. First, there is the continuing mystery of why Her Majesty's Government will not join the exchange rate mechanism of the European monetary system when it is known that the Chancellor of the Exchequer, the Treasury. the Foreign Secretary and most business men —most of whom support the Government—are in favour of it. Yet we continue to say that now is not the appropriate time.

Secondly, there is the mystery of the Prime Minister's attitude to the central European bank proposition. It seems to me that that is a very natural proposition on the road to European integration, that it will certainly come to pass in time and that it will he of great benefit to all the members of the Community. Nobody was asking the Prime Minister to commit herself in advance to any specific plan. All that she was required to do was to keep an open mind and to consider the potential benefits to Britain and to the Community as a whole. This, regrettably, she did not do. She made a sweeping attack on the whole idea, saying that it was absurd and ridiculous and that it should not be entertained because it would mean casting away sovereignty.

Perhaps the right hon. Lady had not read the July issue of Expression, which is published by American Express. It contains an article by the Minister of State, Foreign and Commonwealth Office, the right hon. Member for Wallasey (Mrs. Chalker), in which she said: A truly liberal banking system throughout Europe would help—as would greater private use of the ecu. I am sure that the hon. Member for Northampton, North (Mr. Marlow) would welcome greater private use of the ecu. The Minister continued: These are both things that we"— that is, the Government—

are encouraging in the move towards a single market. There is a conflict between that clear position and the Prime Minister's equally clear position. The members of the Community have committed themselves to the free flow of capital within the European Community by 1990 and this is likely to be of major benefit to the United Kingdom, but the absence of a common bank and a common currency could produce large swings in interest rates as Governments tried to avoid harmful fluctuations in the value of their currencies.

Furthermore, from the point of view of the ordinary individual, the sheer cost and bother of changing money will cause more and more irritation as the single market develops. When my middle son, David, went on a school trip to Italy at the beginning of this year, I thought that he ought to have a few lire with him in case he had trouble changing money. I trotted off with my £10 note to the National Westminster Bank's bureau de change, where I was told, "We do not have any lire." Then I went to Barclay's bank where I was told, "We will change it, of course, but it will cost 70p. Are you a member of our bank?" When I said that I was not, I was told that it would cost me another £1. It cost me £1·70, not to buy anything but to change £10. That was immensely annoying. The Prime Minister's original dismissal of even discussions about a central bank was nothing short of ridiculous, and it bolstered Frankfurt's claim to house such an institution when it is established.

An unspoken side of the consequences of the Bill concerns democracy. I do not think that the Foreign Secretary was at the Hague conference earlier this year. He was represented by his right hon. Friend the Member for Wallasey. Perhaps she told him of the remarkable speech by the President of the Federal Republic of Germany, Richard von Weizsdcker, who said: Europe needs democracy. The democratic process exists on a national level and direct elections to the European Parliament represent a significant step towards a European supra-national democracy, but we must go further in this direction. A European Union which aims to protect democratic values in the world can no longer be satisfied with a parliament whose powers are inadequate. As long as the road to Europe is bound up with a loss of parliamentary power there will be no progress, because our European aim is democracy and that means it is bound up with parliamentary legitimacy. Such remarks would predictably raise the ire of a number of hon. Members who object to that kind of approach. but to me the logic is inescapable.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

The hon. Gentleman said that to him the logic is inescapable. Does his party espouse Mr. von Weizsdcker's remarks, and are they similar to the remarks of Mr. Kohl and Mr. Delors?

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

The short answer is yes. I shall refer in a moment to Mr. Delors

Before making these points about European development, the hon. Member for Hamilton (Mr. Robertson) made the kind of speech that one would not hear from the President of the Federal Republic of Germany or even from an ordinary member of the Bundestag, despite the fact that Germany's net payments to the Community far exceed ours. Germany's attitude is still very different from ours. I shall not weary the House with an extended rebuttal of the hon. Gentleman's tatty argument, in which he compared individual Government expenditures with our total net Community contribution. The last time that I remember that argument being trotted out ad nauseum was when Concorde was built. People said that if Concorde was not built we should be able to do this, that or the other. It was a poor argument.

I must comment, however, on the hon. Gentleman's strange remarks about the structural funds, which I did not understand. I presume that he agrees that the limited amount of money that is available for the structural funds, in particular for the regional fund, should go to the most needy countries in the Community, which are Portugal and Greece. Thereafter, one should look at the most needy areas and regions. Scotland has missed out considerably by not adopting earlier a more positive attitude to certain schemes that she could have implemented. However, because of enlargement, the position has changed.

Equally, when making such remarks, the hon. Gentleman ought to recognise that one of the failures of the United Kingdom's regional fund is that we have failed to operate the addionality rule and to a large extent have ourselves undermined the regional policy's effectiveness.

Photo of Mr George Robertson Mr George Robertson , Hamilton

It is not a mean debating trick to point out the equivalent value of the payments to the European Community. I made those comparisons, but I make them more forcibly about the additional payments. The intergovernmental agreement will cover a one-off payment covering a hole in the budget about which there is severe disagreement. I know that it will appeal to the hon. Gentleman when I say that that figure is more than that for Scotland's housing programme in the current financial year. I refer to the additional payment and not to our net Community contribution, which can vary from year to year.

I will clarify my comment about the structural funds. Of course we are in favour of more money being paid, and we believe that it should go to the neediest countries and to the neediest areas within individual countries, such as our own. That can only sensibly be done if there is some curtailment of the money wasted on agriculture, which is a perfectly good area where savings could be made, so that the budget does not have to grow.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

I do not want to engage in an extended argument, particularly because of pressures of time. The hon. Member for Hamilton must surely recognise, as do other opponents and, in some cases, justified critics of the Community's excessive agricultural expenditure, that one cannot turn that situation around suddenly and quickly. The degree of agreement now achieved gives promise that it will happen, but in a steady and organised way. If one tries to make that change suddenly, and in a draconian fashion, which certain hon. Members sometimes suggest, it would cause great social upheaval.

I return to the democratic component. First, it remains utterly disgraceful that the United Kingdom continues distorting the whole political composition of the European Parliament by refusing to allow election to that Parliament in proportion to voting support, as do all other member countries. I see no justification for that injustice, and I regret the absence of any reference to it in the amendment in the name of the Leader of the Opposition.

Secondly—I address these remarks to the hon. Member for Newham, South (Mr. Spearing)—Jacques Delors is right when he says that we need to look now, as we reassess the basis of our financial contributions, towards what he called "an embryonic European government". That means looking actively for means whereby the European Parliament can play a steadily more significant part in overseeing Community policy and legislation; otherwise, there will be no directly elected democratic control. I say again that Jacques Delors is right and that the Prime Minister should congratulate him on his directness and foresight. What he suggests will not happen overnight, but that prospect must be faced.

Thirdly, it will also be necessary in the long term to examine direct finance-raising powers for the European Parliament.

I conclude by expressing disappointment at the thrust and style of the Foreign Secretary's speech.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

That is a fair point—perhaps "thrust" is the wrong word, and I do not argue with that.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

The hon. Gentleman's speech could do with some thrust and style.

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

I am grateful to you, Madam Deputy Speaker; I believe that there was some form of abusive remark, which I shall ignore.

The greater part of the Foreign Secretary's speech was given over to trying to prove that the United Kingdom has single-handedly reformed the whole European Community, and has done so in the face of opposition, hesitation, obstruction and goodness knows what else. Apparently, we had no allies in that struggle, because none was mentioned. It seems that we thought of it all ourselves and won the day by logic, remarkable innovative ability, and will power. Not only is that an even greater caricature of reality than is our representation in the European Parliament a mockery of the way in which people voted, but it gives no encouragement that the Government yet understand the need to begin concentrating on political solutions and arguments and to cast aside the old nationalist prejudices and out-dated nationalist attitudes that still colour our debates far too much.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North 6:14, 11 July 1988

First, I congratulate the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) on the thrust and style of his speech. I know that the Labour party, such of it as is here at the moment, believes in open government, so I hope that it will not mind if I tell a little secret. Conservative Members have received a piece of paper from our Whips' Office, and under Monday night there are three black lines. Like most secrets, it is not what it seems. It is not a three-line Whip from the Government but a three-line Whip from Mr. Delors, that we should vote for this package tonight.

Let me explain what I am saying. My right hon. Friend the Prime Minister has throughout these negotiations done more than any human being could do, from the point of our national interests and from the point of view of the Community. Time after time she has to meet the same group of people. She has to sit down with them. She has to debate with them. She has to discuss with them. She has to take account of what is happening in Europe as a whole and what is happening in NATO as a whole. She does what is best for our country in those circumstances. But we are not the Prime Minister. We are the House of Commons —part of the Parliament of the United Kingdom. It is up to us also to do what we deem to be best for the interests of the United Kingdom and for Europe.

I should also like to congratulate my right hon. and learned Friend the Foreign Secretary—I am sorry that he is not here at the moment—on the tremendous efforts that he has made on behalf of Britain and on behalf of the European Community. It is a question of damage limitation. He comes back here when the damage has been done. Perhaps we have been defeated, but not annihilated, and that is some progress. He comes back and says, as he is bound to do, that although it did not work last time —as he said last time—it will work this time. This time, he said that it did not work last time—it is going to work next time.

There is one point of criticism of my right hon. and learned Friend. The tax we are talking about and this financial package are complex. My right hon. and learned Friend said that of course it must be complex in order to be fair. He was for a time a very distinguished Chancellor of the Exchequer. When we have a system of taxation, to be fair it must be simple. People must be able to understand it. My constituents and the people out there do not have a clue what is being done on their behalf. One of the great criticisms of European Community finance is its complexity. People feel that they are being taken for a ride.

I shall he voting against the Bill for two reasons. The first reason is the less important. The two reasons are money and sovereignty. A haemorrhage of cash—that is important. But more important than that is the loss of sovereignty that is taking place, drip by drip, bit by bit, day by day—loss of sovereignty, the atrophy of a nation's soul. Take a commercial company. It can lose money. It can have a couple of years' losses, but it can still survive. But if it goes into liquidation, that is the end of it. That is what I am concerned about—the way in which we are moving in the European Community at the moment, our country is slowly, bit by bit, ceasing to exist as an independent national state.

We all of us in the House want control of expenditure. Community expenditure was up to a level of 1 per cent. VAT, then it went up to a level of 1·4 per cent. VAT. Now we are increasing the amount of money available to the Community by another one quarter—by another £1 in £4, I believe the Minister said; £5 where it was £4 before. But that is basically for the same group of policies. This time, we are increasing regional policies. We have been doing our best to cut down regional policies in the United Kingdom, but basically this additional money is buying us the same package as it did before.

There are two ways of looking at Community expenditure. First, there is the gross contribution—the amount of money that we spend on this fixed clutch of policies. We make a gross contribution to the Health Service and to the Ministry of Defence. Little by little, by 1, 2 or 3 per cent. a year, it goes up. But the Community gross expenditure for this area of policy controlled by the Community goes up by leaps and bounds, year after year. Surely what is good for financial control in Britain ought also to be good for financial control in the Community. If we can make it work here, why cannot they make it work there?

Secondly, there is the net contribution. The Community budget is a zero sum. Some people put money in, and some take it out. Why do we, even now, have to pay a vast sum into the Community budget, net, for nothing—our membership fee—when richer countries such as Holland, or those with overburdened levels of public expenditure but still richer than ourselves—such as Denmark—take money out? Countries such as Greece that do not even abide by the legislation and regulations that come out of the Community put their hands in the Community bowl and take out a lot of money. Why should we have that? There is no justice in it and no good reason for it. It is just history. Why should our people have to pay net vast sums into the Community budget?

We can control this expenditure. In an important speech, my right hon. and learned Friend talked about obligatory and non-obligatory expenditure. We can control all the expenditure in the Community. It is a simple matter. We do not have to have it on trust; we do not have to say whether the devices that my right hon. and learned Friend talked about today would work. All that we have to do is throw out the Bill today: no Bill, no money. The amount that the Community is allowed now is the amount that it would be allowed in the future. It would then have to cut its coat according to its cloth. When it has done that and we are getting value for money, we can come back to it again and see whether we want to vote it more money later.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Why should we? There will be no need for it then.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

As my hon. Friend says so succinctly, if they have taken the medicine—taken the bait —got the message, they will not need the money. Let us do them a service. Let us vote against the Bill.

There is also the important question of sovereignty. The name of Mr. Delors has been mentioned. Mr. Delors, as we know—it must be so, as I saw it in an issue of European Parliament-EP News—said that before long 80 per cent. of legislation in the economic, financial and social spheres would be of a European nature and thus beyond the control of domestic legislatures. I think that we are a domestic legislature. I believe that we used to control 100 per cent. of the laws that affected the people of this country. In future, for every five issues that we control now —if I may return to the mathematics of the hon. Member for Hamilton (Mr. Robertson)—if Mr. Delors is right, we shall only have any control of, say in or influence over one. One fifth—that is how low we shall sink if Mr. Delors has his way.

Mr. Delors, of course, wants a united states of Europe. Do we want a united states of Europe? The hon. Member for Inverness, Nairn and Lochaber, who has just left the Chamber, wants a united states of Europe. But does the House want it? Is that what we negotiated? Is that what my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) negotiated with the Community? If it was, why did he not tell the British people? Why should the British people be dragged kicking and screaming and by default into something that they have not been told about, when they were promised something else?

I do not believe that we want a united states of Europe. What we want—or what most of us want; some of my colleagues may not want it, but I am happy to have it—is a single European market. I am very much in favour of 1992, and of European co-operation in foreign and defence policy. We ought, with those with whom we have interests in common, to co-operate where we have those common interests. But to bring that about certain actions are necessary. Certain other actions are unnecessary, however, and those actions—those regulations, those directives—are being showered upon us day after day, week after week. Those unnecessary actions have nothing do do with a single European market or with co-operation between nation states, but they are very much to do with enmeshing us in a unified united states of Europe, which we have never requested or wanted.

Photo of Mr John Biggs-Davison Mr John Biggs-Davison , Epping Forest

Does my hon. Friend think that the country to which M. Jacques Delors belongs wants a united states of Europe either?

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

My hon. Friend may have a point. The country to which he belongs may or may not want a united states of Europe. But given the way in which the institutions and powers are cast in the European Community at present, that is what it will get unless it does something about it. I hope that my hon. Friend will help me in taking the first slow step towards stopping it.

We in the House have slumbered to a certain extent while the legislation has been introduced. Because of that, we have been lumbered with various edicts with which we do not agree. Let me give a couple of examples of some of the things that have gone wrong. Recently, we were required by the European Court of Justice ——

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

These foreigners have no sense of fair play.

Photo of Mr Tony Marlow Mr Tony Marlow , Northampton North

I am sure that my hon. Friend will make a very fluent and compelling speech later. In the meantime, if he will forgive me, I shall continue with mine.

Recently, we were required to put VAT on commercial construction. That is not necessary to a single unified European market. It is not necessary to free trade between free member countries of a European community. It is Europeanisation. How did it come about? On 29 November 1976, there was a debate in the House on a directive about VAT. Let me tell the story of that directive. That directive was scrutinised by the European legislation Select Committee and was referred to the Chamber for debate. It was debated late at night, and the vote finished after midnight. About 123 hon. Members voted—less than one fifth of the number in the House. The directive that was voted on then was not the complete directive; it then went back to Brussels and was changed significantly.

The vote that night was a vote to take note, not a vote to approve. If it had been a vote to approve, it would have been approval of something that was subsequently changed. The European Court of Justice interpreted that directive, which forced us to impose VAT on items on which the Government of this country did not wish to impose it. We were told that Parliament had had its chance, that Parliament had scrutinised it and that there had been parliamentary control over it. Nothing could be further than the truth. Parliament had no power and no control, and was not even involved in the final directive through which that VAT was raised.

There is a second way in which important things can go wrong. Part of the package of measures will be a directive that will measure the gross national product of each Community country, so that we can assess the amount that must go into the European kitty. That directive was to be assessed by the European legislation Select Committee. There is something called a scrutiny reserve. The Government should not reach an agreement on the directive until it has been debated in the House, if that is what the Select Committee wishes the House to do.

The Select Committee did not have an earthly. The Government overruled it. The directive has been agreed. This is an important directive: it decides how we are to assess exactly how much each Community country will have to pay into the Community kitty. There are good things in it. It is not bureaucratic. Each country will decide what is its own gross national product. Or is that such a good thing? What is Italy going to decide about its gross national product? How will we in the House be able to influence it? When will we be able to debate it? What Italy does not pay, we shall have to pay. That is it: that is the end of sovereignty. That is the end of our control over the issue.

Mr. Delors is right when he says that there is something called the democratic deficit. There is no democratic control over these matters at all. Vitally important issues that would in the past have taken weeks of legislative time are going through on the nod because of the lack of proper democratic control. What can we do about it? We are the only people who have a chance of doing anything about it. If someone feels hard done by, he can have recourse to the law. We can take the matter to the European Court of Justice. But can we? Is it a court of justice or is it a court of Europeanisation? It is not the former; it is the latter. The European Court of Justice is there to impose a centrally controlled European state on the member nations of the European Community.

What else can we do? We can give more power, influence and discretion to the European Parliament, but will it be objective? Is not the common characteristic of almost everyone who sits in the European Parliament that, individually and collectively, they all want a united states of Europe?

If we cannot rely on the Court or on the European Parliament, there is only one institution that we can rely on —the House of Commons. Slowly, the lifeblood of nation states ebbs away; the powers of the House are shorn just as surely as Samson had his locks cut. There is a solution, a cure to this near terminal disease. It is painful, risky and controversial. It is to throw out the Bill.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South 6:30, 11 July 1988

I can answer one of the questions posed by the hon. Member for Northampton, North (Mr. Marlow). He, like the Chairman of the Select Committee on the Treasury and Civil Service, the right hon. Member for Worthing (Mr. Higgins), referred to the gross national product directive: it is COM(88)176. It has been referred for debate by the Select Committee on European Legislation, of which I have the honour to be Chairman.

That document is notionally being included in today's debate, but the fact that such a sharp-eyed Member as the hon. Member for Northampton, North and such a well-informed person as the right hon. Member for Worthing were not aware that the document was being debated—I must admit that until just before the debate it had escaped my memory, too—shows the extent to which the House is already not even scrutinising the matters that its own Select Committee suggests that it should. I do not blame anyone in particular. It is the mass of paper that descends on us from Brussels that has put us in this parlous state. It is a little parable of the difficulties that face us.

The Paymaster General courteously wrote to me some time ago saying that it would be for the convenience of all to discuss this document in this debate, and my Committee acquiesced in that. Nevertheless, given the numbers of documents that we have it is easy for some of them to be overlooked, and it is hardly possible to discuss the document this afternoon——

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

It would seem from the answer that we received after the Hanover summit about GNP statistics that the Prime Minister had also failed to realise that.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

That may well be so.

The Prime Minister and hon. Members have forgotten several things. As recently as Thursday last the Prime Minister said: "the principal achievements of our forebears in 1688 remain and ensure that the will of the people be exercised through Parliament rather than by intimidation or pressure practised by any one group or faction— [Official Report, 7 July 1988; Vol. 136, c. 1231.] Alas, I do not believe that is so. It is clear that Parliament, perhaps through its own choice in 1972, does not enjoy that power now. Sixteen eighty-eight is a reminder to us that, in respect of the intergovernmental undertaking of which this Bills seeks to approve, we are supplying the deficit in 1988.

Supplying the deficit is a fundamental piece of parliamentary language: we vote supply. Originally, that was to supply the deficit incurred by the Crown, I suspect that we are back in the waters of 1688, because we are being invited by the Bill to supply the deficit in the funding of the EEC which, under article 199 of the treaty of Rome, is illegal, because it states that the budget must be in balance, which it clearly is not. If it were, the second part of the Bill would not exist.

Photo of Bill Cash Bill Cash , Stafford

Does the hon. Gentleman agree that, contrary to what he has just said about the Prime Minister's remarks about the glorious revolution, we retain the power in this House by virtue of the fact that we passed the European Communities Act 1972? That is a crucial point, and it remains. Furthermore, if we used the procedures of the House, as I have consistently argued that we should, to enable us to scrutinise what is happening more effectively, we would be able retain the degree of real control represented by what is called sovereignty.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

The hon. Gentleman is confusing approval of a particular tax —VAT, for example—with our power of removing section 2(1) of the 1972 Act. But the real day-by-day control by voting money and creating laws has, to some extent, departed.

Photo of Mr Hugh Dykes Mr Hugh Dykes , Harrow East

Will the hon. Gentleman agree with two quick points? First, remarkably, in February last year the Chairman of the Public Accounts Committee agreed that £150 billion of United Kingdom Government spending went through this place on the nod and unnoticed, much of it late at night, with most hon. Members paying not the slightest attention to it. On the other hand, a single pound increase in Community expenditure attracts monumental hysteria on the part of certain anti-EEC hon. Members. Is not that a reflection of double standards and hypocrisy?

As Chairman of the Scrutiny Committee, would the hon. Gentleman agree that if there were a national Committee scrutinising every item of domestic legislation, it, too, would be swamped by the weight of legislation? So that is not a material point. Are not the hon. Gentleman's remarks tantamount to saying that he and his Committee are not doing their job properly?

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

I shall not give way again; time presses. The House has the opportunity, through its own procedures, to call a halt to expenditure or legislation at any time. Whether hon. Members choose to use that potential adequately is a matter that we can debate. I shall return to the hon. Gentleman's remarks at the end of my speech, when I deal with the prospective value added tax. Unless the House takes further steps it does not have the same degree of potential control over European matters as it has over the things that the hon. Gentleman mentioned. However, I agree that it is desirable that the Scrutiny Committee, of which he and I are members, should be able to scrutinise more deeply and that there should be more glasnost about European matters in the House, because as has been shown, we do not have the proper means to ensure transparency in what is afoot.

I shall illustrate the degree to which we have already lost control by referring to the passing of the Single European Act, which the hon. Member for Harrow, East (Mr. Dykes) gaily voted for, whereas others, notably the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) were aghast when they discovered what they had agreed to.

Article 100A of the treaty of Rome stipulates that any legislation relating to the achievement of the single European market can be passed in the Council of Ministers by a qualified majority. It is possible for a law passed by the Council of Ministers which is a directly acting regulation to be imposed on the House even if the ministerial representative of the British Government in Brussels votes against it.

The hon. Member for Harrow, East has said that that is democracy, but I question that. The Council of Ministers does not meet in public; it is rather like Parliament was before 1688—or even further back. It does not yet have our democratic controls, and the debate in the House that precedes a Council of Ministers' decision has no control, as yet, over what the Minister does there. All that we can do is to have a debate brought about by the Scrutiny Committee and perhaps by the resolution, but we cannot control the Minister. The Minister goes away and decides whether the Government will vote yes or no. The Prime Minister decides whether under article 99 the new VAT excise proposed by Lord Cockfield will be imposed on the House.

Photo of Mr Nigel Spearing Mr Nigel Spearing , Newham South

I will not give way to the hon. Gentleman because he will have a better opportunity to speak about the matter in Committee.

I hope that I have illustrated to the House how we have lost detailed control of legislation from Brussels which even the Government opposed and of prospective VAT on such things as books, newspapers, water, public transport, drugs and charities. The imposition of that tax will depend on how the Prime Minister or the Chancellor of the Exchequer, whoever that may be, behaves in the Council of Ministers. The House will be able to debate only the general principle, and the Prime Minister or the Chancellor will negotiate.

During the election campaign the Prime Minister did not say, as she could have said, that the Government would object and use their so-called veto on unanimity voting—if that operates—to prevent any increase in value added tax. If she had said that, most people would have agreed that it was right, but she did not. She said that she would veto VAT on children's clothing and on fuel and power but she did not say that she would veto the items in the list that I have read out. When the Prime Minister or the Chancellor of the Exchequer or perhaps, appropriately enough, the Paymaster General, who is competent in these matters, goes to the Finance Council, he or she will have to take the Cabinet's decision on the matter and not the decision of the House.

There is a way out in respect of VAT and it is not by refusing to pass the Bill. I commend the method to the hon. Member for Northampton, North, who asked what we could do. It would be possible and appropriate this year when we are celebrating 300 years of the House's superiority over the Crown to tell the Ministers of the Crown that they can go to the European Councils only if they do or do not do certain things. It is quite within the power of the House to pass such a resolution and it is not outwith the treaty of Rome. That is what the Folketing in Denmark has done ever since Denmark has been a member of the Community. It is a matter of the internal constitution of our land. One of the steps that we could take to ensure that the House has control in future is to pass such a resolution.

I shall now pursue the Prime Ministerial cries. The Prime Minister is adept at persuading the British public that she somehow does not like the European Community. She reminds me of a person who loves to go racing and who perhaps spends too freely on the horses. Such a person says that he does not want to be dragged to race meetings but when he gets there he is in his element. Why is the Prime Minister in her element when she gets to the EEC? It is because she is a worshipper, as are Conservative Members, of the free market. If we are to have a single European market that is free of frontiers, as the treaty dictates, somebody must decide the rules on either side of what was a frontier. That presupposes a supranational authority and if one is not there one must be established. That is as plain as a pikestaff.

Conservative Members talk a great deal about education and one of the matters they talk about is the need for Latin. I do not think that Latin grammar is very good but Latin vocabulary is very important. There is all the difference in the world between inter and super and extra and ultra. If we are to be international there must be something to be international about. I think that there is some agreement about that in all parts of the House. But the treaty of Rome is not international. By intent, purpose, operation and structure it is supranational. I see that the hon. Member for Harrow, East agrees. The institutions are there. Mr. Delors and Herr Kohl are quite right. Those institutions were there from the origin of the Community. There is the Council, the Commission, the Parliament and the Court, and those four institutions are growing in power day by day.

My final point is that the House has added to the power of those institutions against its will. The Government have also done that and I shall prove it. When the Prime Minister was invited in Milan to agree to an international conference to revise the Treaty of Rome, she said that a new treaty was not needed and suggested progress by pragmatism. She was probably right, but what happened? There was an international conference and we had a new Single European Act, very detailed and full, which provides for the majority voting of which I spoke. That is in one of the important articles, article 100A. The Government did not want that Act and to some extent they managed to dilute it—or so they thought. I suppose that some people thought that it was not strong enough —people such as Mr. Tindemans and others.

The Act was brought to the House in 1986 and put through on the guillotine, even though we have proof positive that the Government did not want it at all. Since when have the Government brought to the House a Bill with which they disagreed, and put it through on a guillotine? That is the extent to which the Prime Minister is dragged hapless into supporting an increasing tendency for power in the EEC.

That brings me to my concluding thought, which is about 1688. In that year the monarchy was sent packing by the House because the House said that it would decide the finance and the law. Today we have a new protomonarchy and a new proto-imperium which is growing daily in Brussels. It is time that the House cut off the air supply to Brussels.

Photo of Sir Anthony Meyer Sir Anthony Meyer , Clwyd North West 6:47, 11 July 1988

The hon. Members who have expressed concern about the Bill, none with more passion than my hon. Friend the Member for Northampton, North (Mr. Marlow) or with more remorseless logic than the hon. Member for Newham, South (Mr. Spearing), were right to express fears. The agreement on finance in the Community to which the Bill gives the force of law is a major step towards giving the European Community an independent existence and a means to sustain it. I quite understand why that process is deeply upsetting to hon. Members in all parts of the House.

Faced with these fears and concerns, some Ministers, although not on this occasion my right hon. and learned Friend the Foreign Secretary, have sought to dismiss them as groundless or, at worst, as greatly exaggerated. People who adopt that attitude will lay up trouble for themselves in the House and in the country if they seek merely to quell those doubts by bland assurances. That will be all the more likely if those bland assurances are the reverse side of a coin, the front of which is a policy towards the Community that aims to secure all our national interests without being prepared in return to make any concessions to the national interests of others except as part of a very crude horse trade that refuses to accept that closer co-operation between member states is a good thing in itself and will bring benefits to all members of the Community.

To be communautaire is to be an effective champion of national interests. The kind of minimalist, apologetic approach to the Community that I have been decrying is not, in the fairly short run, the best way for Ministers to avoid trouble, although no doubt it will avert any possibility of their seeing their majority shrink too much at the end of the debate. Far less is it the way to derive maximum benefit for the United Kingdom and its people from membership of the Community.

Ministers would be far better advised to go over to the attack, as my right hon. and learned Friend the Foreign Secretary did so conspicuously in the debate. They should demonstrate the gains that can come not only to the Community as a whole but to each of its members and to the United Kingdom by a maximalist and enthusiastic policy of co-operation.

It is true that national Parliaments are losing influence and power to the institutions of the European Community, although perhaps not to the European Parliament, which is not yet a proper Parliament in the sense that we understand it here, with the power to overthrow or effectively criticise Governments. However, even the European Parliament may have to become a proper Parliament if national Parliaments continue to behave like the Parliament of Lilliput and continue to fail so lamentably in their job of effective democratic control of the Council of Ministers, which is, of course, where power resides in the European Community, as the hon. Member for Newham, South pointed out.

This Parliament, by treating the European Parliament and its Members as some kind of lepers who have to ring bells before they can gain entry, has contrived to achieve the worst of all possible worlds. National Parliaments are losing influence because they cling so pathetically to the illusions of national sovereignty after the reality has gone. Those illusions make no sense at all in these days of nuclear defence, worldwide pollution of the environment, the overweening powers of multinational corporations and the problems of footloose hot money and Third-world debts.

An example only the other day brought that home vividly. Our overcrowded air space is putting air travellers in danger because national air traffic control systems will not accept the overriding authority of Eurocontrol, so, as an aircraft passes from one airspace to another, it has to switch from one system of control to another.

Co-operation is very much in our interests in respect of the European monetary system—we should have joined the exchange rate mechanism long ago—and, above all, in the calls for a European central bank, which were so summarily dismissed by my right hon. Friend the Prime Minister. Of course we can dismiss those ideas as Utopian, but they do not appear Utopian to our partners. We once dismissed the idea of a Single European Act as totally unnecessary, but we now bless it as one of the few ways in which any decisions can he taken within the Community of 12. If we continue to block agreement on such matters as the European central bank, we shall find that we are losing one of our principal assets within the European Community—the vital role played by the City of London as the principal financial centre of the European Community.

I say to hon. Members who have expressed their doubts about or hostility towards the Bill that they were quite right. The measure is a step towards an independent, self-sustaining Community, although not, alas, towards federalism. If they can defeat it—my hon. Friend the Member for Northampton, North made no secret of his desire to do so—we could then preserve the tattered shreds of sovereignty and we could become a sort of proud, independent western European Albania. Is that really the way in which a great nation such as ours can play the part that it is called to play in one of the world's three superpowers? Is that the way to ensure the prosperity, safety and hopes of our people?.

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney 6:52, 11 July 1988

I am sorry that the Foreign Secretary is not with us, because he would have heard some interesting speeches—the great candour of the hon. Member for Clwyd, North-West (Sir A. Meyer) about the reality of the loss of parliamentary sovereignty; the pure joy expressed by the hon. Member for Harrow, East (Mr. Dykes) whenever he hears that this nation has been stripped of, and that this Parliament has lost, more and more powers; and some good suggestions from my hon. Friend the Member for Newham, South (Mr. Spearing) about how, if we have the will to do so, we can gain greater control over Ministers before they give their consent to propositions, resolutions, decisions and directives in the Council of Ministers.

I understand—I can hardly believe it—that the Foreign Secretary is appearing on the Terry Wogan show. I find it a strange discourtesy to the House and a strange choice of priorities that the Foreign Secretary, introducing a Bill seeking to tax the British people and hand over the proceeds to the European Commission, should leave this Chamber and prefer to be summoned into the presence of Mr. Terry Wogan in some studio, wherever it may be, in London. It is as though he himself believed the prophecies of those who say that, in a few years' time, we shall be reduced to nothing more than a provincial assembly. The Foreign Secretary owes the House an apology and I hope very much that we shall hear from his right hon. Friend the Paymaster General, who will wind up the debate, that there is a reason other than a television interview to explain the Foreign Secretary's absence.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

Does not the right hon. Gentleman think that, even in a borough council, if an important speaker in a debate went off to appear on the local town chat show, even the borough council might take it amiss?

Photo of Mr Peter Shore Mr Peter Shore , Bethnal Green and Stepney

I have made my point, and the hon. Gentleman makes his point, which reinforces it.

That apart, I was going to say that I thought it extremely fitting that the Foreign Secretary should introduce this Bill and debate because, after all, it is a finance Bill. The Foreign Secretary is an ex-Chancellor of the Exchequer, but this is a finance Bill of a special kind because it is a European finance Bill and the Foreign Secretary has quite a track record in that area. I t was he who last introduced such a measure European—Communities (Finance) Act—in June 1985. We are now seeking to withdraw that Bill and to substitute the measure before us today. No one more than the Foreign Secretary can claim to be, if not the author, the co-author, of the original European Communities Act 1972, which first imposed the European Community's tax regime on the British people.

We knew then, at the end of those protracted negotiations with the EEC, that the terms of entry were heavily disadvantageous. That was shown nowhere more clearly than in the arrangements made for the British contribution to the EEC budget. Why was it so disadvantageous? The House probably knows why, but there are two clear reasons. First, EEC budget expenditure was, and still is, overwhelmingly in support of agriculture and was bound to be much less in Britain, with its comparatively small agricultural sector, than in other continental European nations.

Secondly, although our receipts from the EEC budget would be smaller, our tax burdens would be heavier. Levies on imported foodstuffs and customs duties on third country imports were bound to fall with exceptional severity on the United Kingdom, whose pattern of food and non-food trade was much more heavily geared to the Commonwealth and other non-European countries than was the case with out continental neighbours.

The problem that originated with the treaty of accession and the European Communities Act 1972 remain with us today. It is fitting, therefore, that the Foreign Secretary, like Sisyphus in Hades, is condemned and doomed to push up the hill the boulder of reform of the CAP and changes in the European tax system and to see it fall down again to the bottom of the hill, where he has once again to resume his labours.

To be fair, the Prime Minister has fought hard to reduce those original burdens. She negotiated a temporary refund on a year-by-year basis for the first three years of her premiership. Then, at the Fontainebleau summit in 1984, she secured what was described as a durable system for the abatement of our contribution. That was an abatement of two thirds of the United Kingdom deficit of budget payments to, over receipts from, the EEC, to be deducted from the United Kingdom VAT payment.

But to obtain that abatement, a price had to be paid. The previous ceiling on VAT contributions of 1 per cent. was raised to 1·4 per cent. To those who questioned that virtual 40 per cent. increase in the EEC's own resources only four years ago, the Prime Minister and the Foreign Secretary gave specific assurances that CAP spending would be curbed by budgetary disciplines year by year.

Now, in the Bill before us today, we have a re-run of 1985. Once again, the EEC has been authorised to increase its tax take. But instead of increasing the 1·4 per cent. VAT contribution to a new ceiling of 1·6 per cent.—as had been envisaged in the 1985 Finance Act—a new formula has been evolved, to cap the VAT base at 55 per cent. of GNP in each member state, while maintaining the maximum rate at 1·4 per cent. In addition, a fourth own resources tax has been added. That is to take the form of a percentage of GNP at whatever rate is needed to make up the budget over and above the yield of the other three own resource taxes. In all this, the United Kingdom abatement is to be retained. It will still consist of 66 per cent. of the difference between our payments and our receipts.

Again, let us consider the price that has had to be paid. The Community, whose tax yield under own resources was increased by 40 per cent. only three years ago, is now to have a further increase of 25 per cent., with a new ceiling of 1·2 per cent. of Community GNP—equivalent to 1·9 per cent. VAT. Once again, we are assured that agricultural spending will be controlled by budgetary discipline, by the so-called legally binding mechanisms for each of the agricultural stabilisers.

Judging by the Bill and its predecessor in 1985, the British bargaining has amounted to this: the United Kingdom receives some abatement of its original intolerable and unsustainable net financial burden, and in return, abandons its veto, its one power to reshape the EEC budget, and is obliged to permit an increase in EEC expenditure and taxation. Each time, of course, the United Kingdom pays more.

What it has meant for Britain in terms of its net contribution since the Fontainebleau summit is a net contribution of £759 million in 1985, £943 million in 1986 and £1,125 million in 1987. The estimate for 1988 is £1,250 million and for 1989, £1,500 million. That is roughly a 100 per cent. increase in the United Kingdom's net contribution in four years. In the same period, the total spend of the European Community will have risen from 28 billion ecu in 1985 to an estimated 46 billion ecu in 1989 —a vast increase of some 64 per cent., but still significantly less than the increase in the United Kingdom's net contribution.

At the same time, we note that the draft general budget of the European Community for this year, 1988, within a total of 43·4 billion ecu, will spend no less than 30·7 billion ecu on all forms of agricultural expenditure. This is made up of the guarantee expenditure, the guidance section and, in addition, the new provisions to underpin the ecu-dollar exchange rate and the amount set aside for the depreciation and disposal of existing surplus agriculture stocks. The total commitment to agricultural expenditure is 30·7 billion ecu, or more than 70 per cent. of the total budget.

I have been listening to Ministers making speeches about reforming the CAP and reducing its share of the total EEC budget since 1964. When the first Macmillan negotiation took place, Mr. Marjolin and Mr. Mansholt produced great plans for reforming a then intolerably expensive and inefficient CAP. But in those days, it did not take more than 70 per cent. of the total. Throughout the 1980s, there has been only one year in which it has exceeded the 70 per cent. that we are committed to paying during 1988. If that is an example of how budgetary disciplines work, I am not at all impressed with them, and nor should any other right hon. or hon. Member be. So much for cost control of the EEC budget.

The House can easily anticipate within the next three years, if not before, another European Community finance bill raising still further the EEC tax ceiling and budget expenditures, and the British Government once again conceding it, and withholding their veto because of the fear of losing their abatement, in part or altogether. When the House makes its decision tonight, hon. Members should reflect on the fact that the Bill, to increase further the taxation of the British people and to transfer that tax yeild to the Commissioners in Brussels, is only a part of a continuing process of steady erosion of the rights of the House and of the British people, with a corresponding growth and extension of Community competence throughout taxation, legislation and policy decisions.

The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) cannot have enough of it, and mentions with regret the facts that we are not members of European monetary system, that we have not abolished altogether our separate financial institutions and that we do not have a common currency or a central European bank to look after our financial and monetary affairs. But that is not the view of most hon. Members. In the past 12 months, zero-rating provisions of our own VAT legislation have been swept aside unceremoniously by decisions of the European Court. We know, too, that the Single European Act, with its commitment to a Europe without frontiers by 1992, threatens an unprecedented harmonisation of virtually all United Kingdom indirect taxation, and a widespread extention of majority voting throughout the EEC.

We have seen the Government's plans for the disposal of Austin Rover to British Aerospace delayed and jeopardised by the intervention of the Commission. Only last Wednesday, Mr. Jacques Delors, the President of the European Commission, before the European Assembly, told us that this House and the existing system of national Parliaments in Europe would have to give way to the embryo of a European Government within the next seven years.

I warn the House now—I address my warning to my right hon. and hon. Friends on the Labour Front Bench as well as to the Paymaster General—that the issue of Britain's membership of the EEC, now dormant, will remain so only so long as it remains basically a customs union, with sensible co-ordination of economic, environmental and other policies—in other words, a Europe des patries. But if the trend continues towards a European union, a federal Europe, a European Government, and if our democracy and our Parliament are to be stripped progressively of the powers that make us a sovereign state, of that sovereignty that belongs inalienably to our own people, to future generations as much as to those who have the rights of citizenship today, there will be a tidal wave of protest and opposition. The whole bizarre, unnatural and flimsy structure of European Commission, European Court, European Assembly and the thousand and one treaties that have burgeoned forth will be swept away.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West 7:08, 11 July 1988

I wish that I had made as fine a speech as that of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). For many years he has spoken for so many of us who feel the pull and the inspiration of British nationalism. His was a fine statement of that nationalism which is felt in every class and every section of the British community, and which, to a very large extent, is now denied even by the Labour party.

The main purpose of my speech is to give a sincere and unqualified apology to the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). Four years ago, when we were debating the proposed increase in VAT from 1 per cent. to 1·4 per cent., the hon. Member for Inverness, Nairn and Lochaber got up and said that his party, the Liberal party, was in favour of a very substantial increase in the take from VAT, up to 2 per cent. I remember rudely deriding all that.

On that happy note, the whole of the Tory party present at the time agreed with me. It was ridiculous to suppose that any party should be so ridiculously and fanatically in favour of the EEC as to want to increase the rate of VAT to 2 per cent. Not only that, but the hon. Member for Inverness, Nairn and Lochaber explained that the Liberal party, and especially Lord Jenkins, who was then the right hon. Member for Glasgow, Hillhead, who was not often the flavour of the week with the Tory party, were in favour of a massive increase in the structural and regional funds.

On that note of abuse and rhetoric, I was able to find whole-hearted support from the whole of the Tory party, as I abused the hon. Member for Inverness, Nairn and Lochaber. Now, of course, we find that these proposals are not quite the increase to 2 per cent. as the hon. Gentlemen wanted. Sadly, the increase is only up to 1·9 per cent.

Everyone who votes in favour of the Bill tonight should be aware that the Liberal party and Lord Jenkins have entirely converted all the Tory party, and they have subverted the Prime Minister, to their views. They are owed the deepest apology. They have won in every respect. The Government have become as ridiculously Euro-fanatic as we believed the Liberal party was four years ago.

Sadly, I am not authorised to apologise on behalf of the Government. However, I repeat my deep apology. My hon. Friend the Member for Northampton, North (Mr. Marlow) was particularly vocal about the measure some four years ago and I am certain that he will also want to apologise. We who derided the Liberal party and who continue to deride it are now a small and disgusting minority in the Tory party. Tonight, when the hon. Member for Inverness, Nairn and Lochaber enters the Lobby with the bulk of the Government, I hope that he is greeted as the friend that he should be recognised for. Most of all, he should he applauded because he has won on the structural funds.

My right hon. Friend the chairman of the Tory party has been very helpful. He has given all of us who wished to apply at the Whips Office a most excellent Conservative research department brief, which is much more informative than any document that the Foreign Office gave my right hon. and learned Friend the Foreign Secretary. That brief emphasises in very clear terms that, as a result of the massive increase in the funds for the Community, the structural fund will be increased in real terms by 80 per cent.

That is a very useful figure. By increasing that part of the budget which is not spent on the CAP, it enables the Government to say that they have kept the CAP down as a proportion of overall expenditure to the derisory amount of only 70 per cent. or whatever it is. That is plainly a sign of the fundamental reforms that were promised four years ago, which are promised now again today and which will be promised again in three years' time. As my right hon. and learned Friend the Foreign Secretary said on Wednesday, we are taking concrete steps towards reforming the CAP and we will continue to take concrete, but not dramatic, steps towards reforming it.

While a massive extension of the structural funds may pose little philosophical doubt in the minds of Labour Members, with the exception of those splendid British nationalists who want to rely on the membership of the House of Commons and the concept of sovereignty even before they are Socialists, I would have thought that for a Tory Government who are alleged to be totally dominated by Thatcherism—whatever that may be there must be—at least some explanation for he 80 per cent. increase in real terms in the structural funds before we vote.

The structural fund is designed so that the EEC may progress towards economic and social convergence. In short, it is a practical expression of EEC Socialism. 'The concept of the structural fund means that, if we go to the toe of Italy and happen to notice that people there seem less economically active than people in Stuttgart, or if they have less money than people in Stuttgart, we may say to them, "My friends, we are going to shake you into economic and social convergence. We shall either do it by directive or by showering money on you. But in some way or another, you've got to become the same as the people in Stuttgart."

Photo of Mr Russell Johnston Mr Russell Johnston , Inverness, Nairn and Lochaber

The hon. Gentleman's speech is going off course. I thought that he was redeemed.

Photo of Mr Nicholas Budgen Mr Nicholas Budgen , Wolverhampton South West

I do not think so.

When the great and the good go to the toe of Italy and try to shake the Sicilians into becoming like those people who manage the Scottish Widows' Fund in Edinburgh, they may find that the good people of Sicily simply take the money, but do not want to converge. They may want to use the money for greater leisure.

It is extraordinary that the Prime Minister can say that she welcomes the extension of this vast social fund because she believes that we will get some kickbacks from the money that we put in. Perhaps we shall, but what has the Prime Minister to say about the handling costs? What about all those gentlemen in Brussels who will be signing the cheques, receiving the money and deciding whether Tom, Dick or Harry should receive this largesse? She does not seem to recognise that the costs will be great.

Before the House votes for this vast increase in the structural funds, I hope that hon. Members will understand that there is a fundamental ambiguity about the way in which the EEC handles its funds. That ambiguity is raised constantly whenever we debate the reports from the European Court of Auditors.

I remember some years ago accompanying my hon. Friend the Member for Horsham (Sir P. Hordern) to talk to the splendid gentlemen who run the European Court of Auditors. We sat for half a morning listening to them. I was feeling rather tired, so I was able to contain myself for nearly an hour. I listened to a story about the number of olive trees in southern Italy. I was told that if there were that number of olive trees, there would not be one house, one field or one runway in the south of Italy. I heard all about cows in Bavaria.

Eventually, I decided that it sounded as if there was gross fraud in the way in which money was distributed in the EEC. I asked the gentleman a few unkind questions. After that, my hon. Friend the Member for Horsham straightened his Rifle Brigade tie and asked me to go outside. He gave me the worst rocket that I had received since I was late as a national service subaltern. I stood to attention and mumbled that I was very sorry. It made me reflect even more on the ambiguity that we shall never have an EEC system for policing expenditure in the EEC.

If, for the sake of argument, we arranged for the Metropolitan police fraud squad to go to Sicily, there would be a major uprising there against the assertion that there was some form of central control in the EEC. In the same way, I have no doubt that if a gentleman from Italy came to inquire about the amount of quota that was or was not being used on a dairy farm in Britain, there would be a strong resurgence of English nationalism and the Italian would be invited to leave the farm.

Therefore, there will be no accountability for the bulk of expenditure on the structural fund. The House will not have proper control and there will he no philosophical agreement, because the proposal is based on a belief in equality and in social, industrial and pan-European convergence. That is completely antipathetic to everything that Conservative Members have been taught to believe in during the past 15 years or so. The Prime Minister used to oppose the extension of the structural fund, yet she comes back to the House and mouths words which imply that she approves of it.

We should remember that, if the EEC institutions had been reformed, the Bill would be unnecessary. If we want to extend the policy of regional development, we can do so through our own national policies in the House. The Bill is unnecessary; it is, most of all, an affront to anybody who has any sense of the history of this House.

Photo of Ms Joyce Quin Ms Joyce Quin , Gateshead East 7:22, 11 July 1988

When we debate the Bill we are examining the priorities within the EEC and, in particular, the British Government's priorities in the European negotiations in which they take part. Having listened to the Foreign Secretary, it seems that the Government's European priorities do not appeal greatly to the Opposition and I had the strong impression that few Tory Members were convinced by his remarks. The reaction was—to put it mildly—somewhat mixed.

It is clear that the much-trumpeted budget agreement on spending and on the way ahead leaves much to be desired, especially for the citizens of the United Kingdom and it does not give a particularly good deal to most of the other citizens of the EEC. The priorities of agricultural reform and control of agricultural spending are priorities which we all share, but progress seems to have been almost non-existent. We seem to have been marching in the wrong direction in the past year, as there has been an increase in agricultural spending.

The system of export refunds and the huge gap between world and EEC prices persist, and little seems to be being done about that. We are still far from a fundamental reform of the agricultural policy or agricultural spending. We are told that the great priority for the Government is the creation of the large single market in 1992. Every time we switch on our televisions sets we are assailed by glossy advertisements telling us of the benefits that will accrue. That naive trust in the automatic benefits of a large, free market is unjustified.

I should like to suggest four priority areas for the Government to consider in their EEC spending and policies. They are regional, industrial, social and environmental priorities and I should like to deal with each briefly.

I do not believe that the budget settlement gives a good deal to most of Britain's regions, despite the increase in the structural funds. We have learnt that the regions will be divided into two categories. Category 1, which is basically for agricultural, underdeveloped countries of southern Europe, plus Ireland and Northern Ireland, will get by far the lion's share. While I accept that those areas have real needs and I would not like to deny them any funds, I am worried that the second priority, which is the money given to declining industrial regions, will be severely downgraded as a result of the agreement. I do not want to see that happen.

Coming from the northern region of England, I fear that that region, which has the highest level of unemployment of any region in the United Kingdom, apart from Northern Ireland, may receive much less from the European Community budget in the future. I should like the Government to give us a commitment tonight that that will not happen and that in their continuing negotiations in the coming months they will do their utmost to promote the profile of the northern region and the other industrial regions of Britain.

It does not help regional policy when the Prime Minister keeps telling other European countries how well we are doing. That masks the reality of Britain as we know it and the dramatic regional divisions which persist. Regional policy means more than just funds. I am concerned that unless some compensatory measures are taken, the creation of the internal market will be bad news for the regions and will simply increase the prosperity of the already prosperous areas to the detriment of the needy parts of the country.

I should like the Government to give us a commitment that there will be a proper detailed study of the likely effects of the internal market on our least prosperous regions. The Government should not move towards the internal market unless they can come up with some detailed figures to show the benefits to the regions. No such detailed regional study has been undertaken.

The Government's lack of commitment to regional spending and regional policy could not have been made clearer to me today with the announcement that the Marconi radar factory in Gateshead will close. The other Marconi factory, in Chelmsford, is situated in an area where there are job vacancies for that type of employment. That shows on both a British and an EEC level the Government's total failure to stand by those regions that most need help and positive policies.

On industrial policy, the United Kingdom Government have failed to provide any EEC funds to help older industries such as steel, shipbuilding and textiles to renew themselves and have woefully neglected to provide research and development money on an EEC level. In fact, the United Kingdom Government are well-known for blocking money for EEC research and development. They took a great deal of time to agree the research framework programme, and in 1986 the amount of EEC budget that was spent on energy research was only 2·1 per cent. That was lower than the amount given to support tobacco growers, who managed to get 2·3 per cent. of the budget.

The third area of priority for the Government should be social measures. Again, they need to be considered in conjunction with the whole debate about the internal market. In the Government's desire to see common standards and freedom from barriers on trade—I concede that they sometimes have beneficial effects—there has been virtually no discussion of other matters such as the common social benefits of policies that could improve people's quality of life. That has been conspicuously absent. European Report states: The Prime Minister argues in favour of deregulation on all fronts even in the social sphere. She apparently expressed her desire for no new rules in the realm of company law relating to worker participation in company structures. This dampening down of any commitment to regulate economic and social equilibrium in the Community was greeted with disappointment, notably by President Mitterand who said 'It is shocking that progress has been made to free the movement of capital but workers have been left by the wayside."' The Government have taken a cheeseparing, penny-pinching attitude to environmental issues and have been unwilling to campaign for or agree to an increase in moneys to fight environmental pollution which threatens us all and seems to be one of the most important issues on which EEC countries can co-operate. I am thinking of money to fight the threat of acid rain and to prevent more of it from being produced, to combat the depletion of the ozone layer, to clean up our beaches—our performance has been disgraceful—and to improve the quality of our drinking water, which still fails to meet EEC standards in many areas. The Government should have given a much higher priority to those issues.

What are the Government trying to create? Is it a European Community which will help people or simply a Europe for big business and capital? Surely the pursuit of profit should not be an end in itself but a means to an improved quality of life for all. In terms of improving the quality of life for the general population of the EEC and particularly for those in the least prosperous regions, the Government's EEC policies and their spending priorities have been an abject failure.

Photo of Mr Peter Hordern Mr Peter Hordern , Horsham 7:31, 11 July 1988

The hon. Member for Gateshead, East (Ms. Quin) seemed to favour an increase in the European Community budget. If that is the case, she is the only hon. Member, except for one or two of my hon. Friends, who has so far done so in this debate.

I thought twice about putting my name down for this debate and if I had known that my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) would refer to me in the terms that he did, I would have thought three times. My recollection of the incident differs markedly from his and the only resemblance is that I have my regimental tie on today, just as then, in order to give him a similar rebuke.

I have not spoken in a European debate for some time because I have felt that the arguments were much the same. I approach this subject as an EC supporter, but one who is entirely cynical about the assurances given on every occasion when budget measures are introduced.

First, as the House will know, we are invited to vote for a Bill which increases our net contribution to the Community budget by £200 million to £300 million a year. Our share under the intergovernmental agreement is some £765 million at a particular rate of exchange with the ecu. How does that square with the estimate in the public expenditure White Paper on total expenditure for 1988–89 of £1,780 million? If there is a difference, it will undoubtedly come from the contingency reserve, but I should like my hon. Friend the Minister to define what he thinks the net difference will be.

The increase has arisen because of the increasing expense of the common agricultural policy. I was delighted to hear my right hon and learned Friend the Foreign Secretary say that he wanted to convert ploughshares into golf clubs. As the parliamentary golf champion I welcome that suggestion, but it shows the extent to which our policy has changed so that we are talking about supporting, not farmers and their production, but an agricultural community. That is important not only for internal budgetary reasons or European budgetary reasons, but for the real danger that exists of forming a tariff wall against imports of agricultural products from other countries, particularly the United States of America.

The House will know that the United States Congress has passed a trade Act. If conditions become more difficult for the United States as they find further difficulty in reducing their budget deficit, they will certainly take countervailing measures against the EC. The best way we can help the United States and, indeed, other countries is to reform the common agricultural policy and allow more imports of agricultural products. That would do a great deal to help our cost of living and it would improve and increase efficiency, of which we stand in need.

It is absurd that so much money has been spent on agriculture for so many years, and further work needs to be done. That not only has a serious impact on the United States and other countries, but has its worst impact on developing countries which are unable to export their agricultural surpluses to us.

I am not an opponent of the European Community. I have watched developments with interest for some time and we must admit that we do not possess the clout within the EC that we should. We are in danger of becoming too much of an observer. Never an enthusiastic member of the EC, always thinking about the snags and difficulties, there is a risk of finding ourselves in a halfway house, neither a full member of it nor prepared to accept the progress that is going on, and at the same time jibbing at and finding fault with almost every aspect of it.

I used to be agnostic about the European monetary system, but recently I have come to believe that it would be to our national advantage to join it. It is time that we examined our attitude and policy. It is not a question of whether one is sufficiently communautaire to join the EMS. When one talks about being communautaire I always feel that that is best left to the prandialists. It is vital to our internal economic policy that we should now become a member of the EMS. I say that not from any particular enthusiasm for Europe, but because in recent times we have shed our ability to control our monetary aggregates internally and we now rely almost entirely on the interest rate to control inflation We are placing too much weight on a rather slender instrument and we need the additional strength and resources which membership of the EMS could bring.

That important point is nowhere more important than in the current debate which appears to be taking place openly—I should like to say, behind the scenes—between the Prime Minister and other members of her Cabinet. We are not a member of the EMS—or, more accurately, we have no formal link with the deutschmark—because my right hon. Friend the Prime Minister is against it. The reason is that her advisers feel that the turnover in the foreign exchange markets is far too high for our slender reserves. If we were members of the European monetary system, most of the speculation—most of the dealings are speculative—would disappear so long as there was credibility that we had a firm policy of alignment with the deutschmark. So that is not a good argument, although it is a natural apprehension to have.

There is also the argument that an interest rate differential would occur between the deutschmark and sterling, which the Germans would take advantage of. The only way in which they could do that would be to buy sterling in sufficient quantities. That would put up the price of sterling and then it would not be necessary to have such a high level of interest rates. So that argument is answered as well. There is also the possibility of a run on sterling that would leave us with no power to devalue.

I do not decry any of those reasons as being entirely wrong or illogical in themselves. They all contain much force, but they fall down in that they are essentially short-term negative lawyer-type considerations—it is the views of lawyers mixed with those of academic economists of the sort who write in that admirable journal produced by the Institute of Economic Affairs. The time to read that journal is on a very long, wet railway journey when one has run out of one's other newspapers.

It appears to me that those academic economists have more power than they are expected to have and than they properly should have. I am sorry that that should be so. It must come as a great surprise to them that anybody reads, let alone acts upon, their work. They appear to have extraordinary power to influence the course of events.

I regret that the good, common sense approach appears to be lacking. That is the approach adopted by business men. A business man would ask what the alternative would mean, if we remained outside the European monetary system. The European countries would get closer together in some form or other of European monetary union. That is inevitable. The question is whether we should do better to remain outside or within the European monetary system. In essence, that is the argument for membership of the European Community itself.

I any business man were asked what would happen in the European Community—the idea of a single European market commends itself—he would guess that in the long run there would be closer monetary union. If that is so, surely it is much better for us to be a part of it, a full member of it, rather than standing on the sidelines, criticising the operation of the European monetary system and insisting on having what we strongly call our independent sovereignty.

But in this issue, independent sovereignty means that we would be an offshore island of which little notice was taken by the European Community or still less by our old partners, the United States. What business would the United States have with a special relationship with an offshore island when there was a real community of nations to deal with in the European Community? So the present attitude, apparently held at the highest level, is mistaken and in the long run damaging to our interests. Therefore, I sincerely hope that it will change.

I do not believe that we shall have the luxury of selecting which bus we shall catch in future. It would be of great importance to us, for our own internal monetary discipline reasons, to align sterling with the deutschmark as soon as possible. For the wider reasons that I have given, we should catch that bus now and help to drive it.

Photo of John Reid John Reid , Motherwell North 7:44, 11 July 1988

I entirely agree with my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) that it is a matter of some regret that the Foreign Secretary, having opening the debate, could not stay and hear some of the contributions on the Floor of the House. I understand how pressing the desire can be to share the evening with Mr. Wogan. If the Foreign Secretary's contribution on "Wogan" is as unconsciously amazing, amusing and entertaining as his contribution in the House, we shall see "Wogan" rocketing in the viewing ratings.

The only word to describe the speech by the Foreign Secretary is "incredible". He presented us with a veritable catalogue of victories that we had won in Europe on EEC funding over the past few years. I think that some of us can be forgiven for asking how it is that on EEC funding we seem to go from victory to victory to final defeat each and every year.

The Bill would be the latest of those defeats, the latest in a long line of mechanisms for attempting to finance the European Community. It addresses problems raised at Fontainebleau in 1984 and at various other summits over the past few years. The fundamental problems when we entered the Community many years ago are patently getting worse. It is obvious to most people and to most hon. Members that the minutiae of the Bill do little to conceal what is happening to the EEC budget. The Opposition have tabled a significant amendment to show that little has changed since Fontainebleau in 1984 and even since 1979. The fundamental imbalances, excesses and, some would say, almost iniquities of the EEC budget have worsened and there is little hope that anything that the Government have done or are likely to do will be of significance in changing that.

The problems addressed in 1984 at Fontainebleau and again today are nothing new and should elicit at least some frustration, if not embarrassment, from the Government Front Bench because the continuing excessive common agricultural policy spending, which seems to be on an almost inexorable rise under this Government, shows nothing less than incompetence. No one would pretend that the scandalous rise in agricultural spending and the under-allocation of the social and regional funds—all we have is promises—is anything new or unique to the Government. The problem goes to the heart of our membership of the EEC.

What is galling is the image presented by the Foreign Secretary, and by the Prime Minister on other occasions on her skirmishes in Brussels and elsewhere. We need little reminding of how many years the Prime Minister has had to fight Britain's case. We need little reminding of how many volumes of Churchillian rhetoric have been expended in attacking the EEC before she goes off to the various summits, which she presents as victories when she returns.

Of all the quotations from the Churchillian volumes, perhaps the one that describes best the Prime Minister's attitude to the EEC in practice is that she has been "resolute in her equivocation" over the EEC budget. If I were to paraphrase an ex-leader of the Labour party, it seems that the Prime Minister is prepared to "lose, lose and lose again" to preserve her antipathy towards the Common Market budget.

We need little reminding that as 1992 and the open market come upon us, we have hardly been able to shift the debate towards common sense in the Common Market. The Government have failed consistently to fight our case and win real concessions. How many years will it take for the Government to make real progress? Where do we stand today? We have a CAP budget which is out of control and a social and regional fund which is merely papering over the cracks of industrial decline and inner city decay in Britain.

The Government have constantly stood by and watched the worsening imbalance between revenue and expenditure which lies at the heart of the Community's financial mess. There are two causes of that imbalance—first, a failure of budget discipline controls to check excessive expenditure, especially on agriculture, and secondly, revenue ceilings, which the Court of Auditors believed were artificial and took insufficient account of the Community's financing needs.

The collapse of internal EEC financial control is scandalous. It is also scandalous that agricultural spending has increased two and a half times since Fontainebleau —not since the initial agreement when Britain joined the EEC, but since 1984. Many right hon. and hon. Members have already said that the waste must stop somewhere. When the treaty of Rome was signed in 1957, one in four of the working population of the then EEC was employed in agriculture. That is clearly not so now. Today the total working population involved in agriculture in the original six nations is down to about 5 per cent.; for the Community of Ten—before the accession of the Mediterranean countries—it is roughly 10 per cent.

My hon. Friend the Member for Hamilton (Mr. Robertson) made a comparison of the amount spent by Britain on the EEC agricultural budget and the amount spent in Britain on the National Health Service. It is worth enlarging on that comparison, and to put the runaway agricultural spending in its grim perspective, we need look no further than the NHS. When the Government refuse to find £1 billion needed to get the NHS out of the current decline from which it is suffering so badly, they should remember the sickening immorality of the £11 billion a year that is spent solely on dumping, destroying and storing food surpluses within the EEC. Such spending must appear increasingly beyond the control of any democratic body. What have the Government done about that imbalance?

I notice that the Foreign Secretary has returned from addressing the masses through the medium of light entertainment. May I remind him of the fifth report of the Treasury and Civil Service Select Committee on EEC finance, which was especially instructive on the imbalance? It shows that the gap between the regional and agricultural budgets is widening. The agricultural budget for 1986 amounted to two thirds of Community spending, while the regional fund amounted to 7·6 per cent. of total spending.

In a previous debate on this matter the Paymaster General pointed out something that he thought had gone unnoticed by me—the fact that the expansion of the social fund was agreed in Brussels by the European Council. But it was agreed as a prediction and promise, and those of us who are interested in the Common Market know that past promises and predictions from Ministers rarely bear much relationship to the reality of EEC funding.

During a sitting of the Treasury and Civil Service Select Committee, my hon. Friend the Member for Gateshead, East (Ms. Quin), who spoke so eloquently tonight on the need for the extension of programmes on industrial, social and environmental matters, pressed the Paymaster General to come clean on the imbalance. She managed to extract from him the information that 72 per cent. of this year's budget will be for agricultural guaranteed expenditure, which represents an overall increase. The tone of that question and answer session must have been embarrassing for the Government. They seem to be taking steps in the wrong direction.

No matter how much the Government try to belittle the annual increase in agricultural spending, it is clear that each little step forward in agricultural spending is one huge leap backwards for Britain and the British economy's contribution to overall EEC spending. We cannot rely on the Government to reduce the CAP budget and it is also depressingly clear that that budget is on the increase and out of control.

The Chairman of the Select Committee put the matter succinctly to the Paymaster General and said that the House was told some time ago … that the proportion on agriculture was going to go down, and that was the part of the original budgetary discipline package. On that occasion, the Paymaster General had to admit —as the Government should admit to us today—that it is common knowledge and an embarrassment for Britain that the arrangements that were secured in 1984 to restrain agricultural spending were completely ineffective. That appears to be the real story behind the sabre rattling that accompanied the return of the Prime Minister from the Brussels meeting.

The Government are all talk and no action, just like the £7·9 million advertising circus surrounding 1992 and the open market. There is a worrying aspect to that advertising, because, although it is beneficial to alert the British public to the 1992 open market, the nature of the advertising is in grave danger of becoming the tip of a corrupt iceberg. The advertising for the open market and the advertising for the Department of Trade and Industry and the Scottish Office smooth over distinctions between the state, the Conservative party and the largest benefactors of the Conservative party, who are now appearing nightly on our television sets glorifying the free market. Ministers may smile, but those smiles may disappear when they realise that the smoothing over of the distinctions between the state and the Tory party appears to be worrying one or two other people.

Tonight I learnt that Mr. Alex Pagett, who left his job at the Scottish Office only three months ago to become the director of publicity for the Conservative party, has resigned his post. He has informed us that he is now going to work for the Reo Stakis organisation. I also understand that he informed the press that his decision is the result of his taking advantage of the enterprise culture". Some of us suspect that he has found the blurring of distinction between the state and the Tory party too strong to take.

The Paymaster General told the Treasury and Civil Service Select Committee that, this year, much effort has gone into reinforcing the 1984 arrangements. Why should we believe the Government when the financial forecast for CAP spending is that it will continue to increase in real terms by 2 per cent. per annum? We have been let down by the Government, not least because the corresponding loss to this country's declining regions and inner cities will be keenly felt while the farmers of France, Germany and Benelux will receive their usual annual boost.

How can anyone deny the stark contrast between the House of Commons agreeing to increase, once again, the massive subsidies to inefficient French farmers and the fact that I have to go back to my constituency and to the county of Lanarkshire, where the steel men and the steel mills, particularly Ravenscraig, are breaking record after record, heightening efficiency, increasing output and delivering quality goods on time, and tell them that, although there is a threat over their heads, the Government cannot and will not find the money even to convince the British Steel Corporation that it has a right to survive on its record.

That same Government, however, can find money by the barrelload to plough into Europe's inefficient agricultural sector. That contrast is so stark as almost to boggle the imagination. The Government cannot expect anyone to swallow that. They must break out of the dogmatic straitjacket that has suppressed and guided their previous actions on Europe.

We need a certain pessimism of the intellect when we study the Government's past actions. We need also some optimism of will, which the Government seem incapable of achieving. It is possible to make a leap of the imagination and to define measures that could be taken within the EEC that would assist Britain and the rest of Europe to overcome some of our greatest industrial and financial problems.

Some comments and criticisms have been levelled at Mr. Delors, and we need not accept everything that Mr. Delors says. For example, he said recently that he looked forward to a European Government in 10 years' time. However, there are many developments for which he has been fighting which we could usefully take on board as being beneficial to Britain. He has called for a social market, including the opening of the books by, and industrial democracy within, European big business. He has proposed new rights for European trade unionists, an increased budget share for social spending and a European recovery programme, all of which would be suitably enhanced if the Government were to direct their attention to them.

These proposals are opposed by the British Government, but not by the other member state Governments. The British Government are committed to deregulation in Europe on a scale that has not been supported even by Chancellor Kohl.

The message to the Government should be that co-operation does not necessarily imply integration. A co-ordination of effort by sovereign states on a European scale does not necessarily imply the undermining of national sovereignty. Indeed, if it is to be a co-operative approach rather than an integrated one, the national sovereignty of the states involved could be reinforced.

The Labour party has made it clear that it would take such initiatives and stop the trend of budget allocation being decided at the centre. A Labour Government would be involved in co-operative and co-ordinated efforts.

Once more, we have been asked to acquiesce in a failure by the Government to secure reasonable terms for Britain. They have failed to show sufficient imagination in approaching the problem. This is a failure for Britain's industrial and social base and for the future of the EEC.

Photo of Mr Jonathan Aitken Mr Jonathan Aitken , South Thanet 8:03, 11 July 1988

The hon. Member for Motherwell, North (Dr. Reid) began his speech with a few good-natured digs at my right hon. and learned Friend the Foreign Secretary for leaving the Chamber to appear on the Terry Wogan show this evening. I am sure that my right hon. and learned Friend delighted his viewing audience of millions. I am only sorry that some of us were unable to see him and enjoy an interesting experience.

Those of us who have sat through four and a half hours of this debate have had a remarkably interesting time, too. From whatever viewpoint a speech has been made, there has been a sense that this debate takes place at a time that amounts to something of a watershed in the affairs of Europe. It is no ordinary Bill that we are debating. It is no run-of-the-mill piece of EEC legisation, even though my right hon. and learned Friend sought to present it as a routine measure, suggesting that everything in the garden was rosy and successful.

The Bill is a significant revision of the EEC fundamental treaty rules. It gives the House an important opportunity to take a real decision on the hitherto highly unsatisfactory spending arrangements of the Community. It should be said at the outset by way of warning that our scope as a Parliament for taking such decisions in future may be extremely limited if some Euro-enthusiasts get their way.

As several hon. Members have warned, the debate is taking place against a background of much arrogant muscle-flexing by the EEC, especially by the Commission's President, Mr. Delors, who has emerged as the villain of the piece, according to many of those who have contributed to the debate. I see Mr. Delors in that role. He appears to be assuming the mantle of a latter-day Louis XIV, complete with a spending record that displays a consistently extravagant folie de grandeur. Some of his speeches embody the Sun King's notorious dictum, "L'etat c'est moi." We have heard repeatedly——

Photo of Bill Cash Bill Cash , Stafford

Does my hon. Friend agree that he might add to these famous epigrams, "Apres moi, Delors."?

Photo of Mr Jonathan Aitken Mr Jonathan Aitken , South Thanet

I hesitate to contribute further to this game of French quotations. There has been a deluge of criticism this evening and it is apres that that I am speaking.

Criticism has been rightly directed to the remarks of Mr. Delors. Many hon. Friends, including the right hon. Member for Bethnal Green and Stepney (Mr. Shore), have referred to Mr. Delors' speech in which he said that within 10 years 80 per cent. of legislation in economic and social areas will be taken from the House of Commons and put under the control of European institutions. That gauntlet having been thrown down, many parliamentarians, quite rightly, would wish to take it up.

Whether we share Mr. Delors's vision or whether we do not, it is certain that the EEC juggernaut is rolling in the direction that he is suggesting. If he and his fellow visionaries have their way, in 10 years this House will be no more than a glorified county council. It is certain that there would be a massive erosion of sovereignty. It would mean the loss to our Parliament of even the minimal controls on EEC expenditure that we are debating this evening. We must see the EEC treaty revision that is enshrined in the Bill not as a small rule change, as my right hon. and learned Friend the Foreign Secretary tried to present it, but as representing an important preliminary battle in the coming political war of survival, in which the issue will be whether to surrender to Euro-federalism or to retain the independence of member nation states and their national legislatures.

From the big picture, I turn to some of the details of the Bill. One of the most worrying aspects of the Bill is the contrast between the tight way in which we control the spending of taxpayers' money at home and the loose rein that we are giving to the EEC to spend the same taxpayers' money on our behalf in Europe.

Almost every nook and cranny of public spending in Britain has felt the threat, and sometimes the lash, of Thatcherite discipline, and rightly, too. District council treasurers, hospital administrators, DHSS managers—almost everyone in a public responsible position—have learnt to live with cash limits, budgetary restraints, ceilings, cappings and all the other instruments of Treasury torture that are handed down from the modern Court of the Star Chamber.

This smack of firm Government has not been felt on the bottoms of the EEC bureaucrats. The big spenders of Brussels must feel that they are living in the court of King Midas. Whenever they have touched a budget limit in the past, even a so-called legally binding one, it has exploded into an El Dorado of overspending.

Let us consider the figures that lie behind the Bill. Under the IGA, the United Kingdom taxpayer has to start by coughing up £765 million to pay for past EEC overspending. Perhaps what is past is past; there is no point in crying over spilt wine lakes today. But will overspending stop with this legislation? I think that the case for pessimism is much more convincing than that for optimism. For a start, they have mighty generous budgets over there in the EEC. At home, Ministers go before the Court of the Star Chamber——

Photo of Mr Win Griffiths Mr Win Griffiths , Bridgend

The hon. Gentleman has been stressing the amount of money that we pay into the EEC budget. What percentage of our gross national product do we pay into that budget?

Photo of Mr Jonathan Aitken Mr Jonathan Aitken , South Thanet

I am coming to that. It is a somewhat misleading figure. In measurable terms, we were paying 1·4 per cent. of VAT, and we are now paying 1·9 per cent. That is a more measurable statistic than the GNP statistic, which I shall come to later.

There is a great contrast here at home with our Ministers appearing before our domestic Court of the Star Chamber, cap in hand, to try to get an extra 4 per cent., 5 per cent., or, if they are really lucky, 5·5 per cent. increase for their domestic budgets. But the European Parliament has recently approved an increase in the EEC budget of 20 per cent. The Bill envisages an increase in EEC resources of 25 per cent.

The only good thing to be said about that is that it is only half as much as Mr. Delors wanted for the own resources ceiling. He wanted an increase in own resources of 50 per cent., which is equivalent to 2·3 per cent. of VAT. The awful thing is that I expect that he will get it by one method or another in the foreseeable future. After all, we were told that the 1·4 per cent. limit would be unbreakable. There is spirit over there in the EEC—in the words of the late Mr. Wilfred Pickles—of, "Give him the money, Mabel."

Every Commission seems to be able to get cut of national Governments more and more money by all sorts of methods, some of which have been no more than conjuring tricks in creative accountancy. Those tricks and devices have many labels—the negative reserve, the reimbursable advance and the carryover. Tonight we heard about the 10-month metric year that has been invented to give a favourable statistical comparison with the previous 14-month year.

The new conjuring trick is that, instead of an own resources limit of 1·4 per cent. of VAT, which is upgraded to at least a measurable 1·9 per cent., we have something called the fourth resource, which is a levy of 1·2 per cent. on the gross national product of member states. As my right hon. Friend the Member for Worthing (Mr. Higgins) said, the trouble with the fourth resource is that the GNP calculations are notoriously difficult to measure. Even in the United Kingdom there are different ways of calculating it—the income method and the expenditure method—and after reading the EEC draft directive, I have grave doubts whether the statistical basis of the Greek or Italian GNP take into account the black economy and whether we are using the same methods of comparison.

The fourth resource is a recipe for obscurity, and obscurity in financial figures is usually the mother of indiscipline. That is a worrying aspect of the calculations on which we are asked to base our approval of this measure.

The message from the Foreign Secretary was, "Do not worry, this time we really have the big spenders under control, because their spending limits are legally enforceable." We have had legally enforceable limits before. They were enforceable by the Council of Ministers, which did not take a blind bit of notice, so the limits were never enforced, and spending soared. On this occasion, we have heard the Foreign Secretary say that the spending conrols will be written into the regulations, thus making the budgetary limits strictly legally enforceable. That phrase is somewhat contradictory, because the European Court has no penal sanctions with which to enforce them.

However, it sounds good—at least until we look at the small print. As I said in my intervention to my right hon. and learned Friend, the categories of EEC expenditure, broken down between obligatory and non-obligatory expenditure, are not on the same basis when it comes to those legally enforceable limits. Whereas obligatory expenditure is covered by the regulations, which are pretty generous, allowing agriculture to grow by 74 per cent. of Community GNP—which seems extremely generous to those who believe that agriculture has grown quite enough —the non-obligatory expenditure category is not covered by legally binding regulations.

The budgetary discipline for the non-obligatory expenditure category depends not on law, but on what are called "inter-institutional discussions" among the European Council, the Commission and Parliament. Those inter-institutional discussions sound like one of the softest touches known to political life. Imagine Zorba, Jacques and Franz all going off to have lunch together and having an instant inter-institutional discussion on whether to have potato soup or caviare. I bet that they will end up buying the caviare.

On the basis of the track record, who really believes that those inter-institutional discussions will mean more firm and effective spending limits for our taxpayers? The whole culture and thinking of the European Community these days is focused not on budgetary discipline, but on dreams of glory, of federalism, of 1992 and all that. The much more prosaic but essential requirements, such as spending controls, are being brushed aside as the grand designs for the future political state of Europe take priority.

I make no apology for returning to the need to envisage the Bill in the context of the coming struggle between national sovereignty and Euro federalism. Apart from the futuristic pronouncements of Mr. Delors in favour of a European Government, we already have contemporary and concrete proposals on the table for a European central bank, a European common currency and a European economic and monetary union. There are even discussion papers circulating in the Commission with ideas on how to introduce a common system of direct European taxation. If those plans are anything like the experience of direct European expenditure, they are not likely to be beneficial to the British taxpayer and the British public, and they will put our Chancellor of the Exchequer out of a job.

Before we vote on the legislation, which substantially amends the EEC treaty rules on expenditure, we must pause and reflect for a moment on the direction in which we are being led. In the history of the American wild west, there used to be a legendary bar known as the Last Chance saloon. I believe that that establishment was traditionally located on the edge of the frontier where the good and bad guys mingled together before going out to fight over how the west was going to be won and by whom. We are now in or close to the Last Chance saloon of the European future.

As a sovereign Parliament, very soon we must decide whether we will slither into President Delors' vision of a federal Europe, with all the financial and legislative laxity that that implies, or whether we will take a stand and fight for our national sovereignty, for the rights of our national Parliament and, on the positive side, for a different vision of Europe. The one that I prefer is General De Gaulle's "Europe des Patries".

That Gaullist vision of a Europe of independent nation states is enshrined in the person of my right hon. Friend the Prime Minister. I have the greatest confidence in my right hon. Friend's ability to resist the worst of the current EEC proposals leading us down the primrose path of Euro-federalism. Despite some signs to the contrary, my right hon. Friend has not yet been conclusively proved to be either invincible or immortal, so her fine words and instincts need to be backed up by parliamentary action and support.

Small in number though we may be in the Division Lobby, some of my hon. Friends are determined to sound the tocsin of alarm about the rising tide of federalism in Europe. A vital factor in reasserting some national parliamentary resistance to the federal big thinkers and big spenders is the retention of effective levers of control on EEC spending. Those effective levers of control are lamentably absent from the legislation, and that is why I shall vote against a Second Reading for the Bill.

Photo of Mr Win Griffiths Mr Win Griffiths , Bridgend 8:17, 11 July 1988

I shall preface my remarks by mentioning some of the constitutional issues that seem to have played a great part in the debate— the lament about the loss of sovereignty through our membership of the European Community.

The problem is far wider than the effect on our constitutional processes since we became a member of the European Community. It is the far more fundamental one of the roles of the Executive and the legislature. Conservative Members who complain about the European Community must examine the roles of the legislature and the Executive as they have developed especially in the past decade, when measure after measure has been steamrollered through without much opportunity being given for the real will of the House to be heard.

I dare say that not a single word of any of these agreements will be changed as a result of this debate or any of the debates that we shall have when we go into a Committee of the whole House. Conservative Members should think about that. We have become puppets of the Executive, who pull the strings as they desire and bring us agreements that have been made in secret, which they have no intention of changing, and which they want us to rubber-stamp. I look forward to the opportunity in Committee to try to make some major changes.

There is a reference in paragraph 3(iii) of the explanatory and financial memorandum of the Bill to a new fourth resource. Do the Government accept that, if the House agrees, it should be deleted from the Council's decision of 24 June? Why do the Government feel that a fourth resource is needed? Do they believe that the budgetary agreements on discipline will not hold and that this safety net will enable them to provide more finance for the Community without having to return to the House and suffer embarrassment here? How large a part of the budget will the new fourth resource be? Will it be 1 per cent., 2 per cent., or 10 per cent.? Or might it be 20 per cent. of revenue? The Government do not have much idea, but they probably inserted the proviso to overcome any future problems over budgetary indiscipline.

We are told that the intergovernmental agreement provides for contributions to a monetary reserve, but that such contributions would be triggered only if the dollar depreciated against the ecu. Only last week we were told by the venerable scribes who write in The Economistthat that is likely to happen. They forecast that, because interest rates in America are coming into line with world interest rates and because of the uncertainty caused by the presidential elections, the dollar's rally is likely to be short-lived. They predict that over the next 12 months the dollar will touch new lows against the yen and sterling. It will not necessarily depreciate against the deutschmark, but it might still depreciate against the ecu. Any substantial downward movement in the dollar will affect the amount of money that we spend on the common agricultural policy.

The Foreign Secretary nailed the Government's flag to the mast of the Single European Act and to the budgetary agreement. According to the Commission's preliminary draft general budget, which has the title "General picture", the Single European Act will strengthen the Community's decision-making capacity and will set several fundamental goals. The first is the completion of a large internal market by 1992. The Government are well and truly committed to that goal. It has been rammed down our throats in glossy television advertising every night of the week. However, whenever we ask the Government what they think the impact of the internal market will be on employment in the regions, the Government say that they are encouraging business men everywhere to grasp this opportunity, that they expect extra jobs to be created in the United Kingdom but that there is no way of telling what will happen in the regions and that they do not intend even to attempt to find out.

In the light of the way in which the Common Market has developed, the regions are likely to suffer from the creation of the internal market. A minority of high-tech companies are located in the regions. The Japanese factories in south Wales will no doubt prosper, but the distribution of high-tech companies cannot be better illustrated than by a Hewlett Packard advertisement that appeared in several newspapers during the past fortnight. Hewlett Packard claims that it covers the nation with its high-tech services. It has 19 centres in the south-east. In Wales it has one, and in the north it has two. That is the kind of involvement that the regions have in high-tech industries. The Government are committed to the internal market, but they are not committed to employment in the regions.

The second goal provided for in the Single European Act is greater economic and social cohesion between the Member States. However, the United Kingdom Government have been doing exactly the opposite. There is no greater economic and social cohesion between the constituent parts of the United Kingdom. There are great disparities. The wealth gap and the employment gap are growing all the time, to the detriment of the regions.

The third goal is speeding up the development of a common policy on research. The Government have had to be dragged, kicking and screaming, into supporting European Community re-search programmes, which in financial terms are chickenfeed.

The fourth goal is the development of social policy, monetary integration and environment policy. However, the Government have been hopelessly dragging their feet over all those aims. Because of their failure properly to apply the equal opportunities directives, they have been taken to the European Court on several occasions. They have blocked the parental leave directive. They helped to torpedo the famous Vredeling directive that would have allowed for greater consultation with workers if there were major changes in the company's activities, or if it was proposed to close it.

Whatever we may think of monetary integration, we know that the Government want no part of it. They have declared their opposition to joining the European monetary system and the creation of a European central bank. The Prime Minister continues to refuse to countenance the United Kingdom joining the EMS. The Government have reluctantly agreed to implement the directives on bath water and tap water quality, on sulphur emissions from large industrial plants, on lead in petrol and on the ozone layer only after immense pressure from other member states.

The Government do not support the proposal to alter the basis of the European Community's revenue. It was amazing to hear the Foreign Secretary speak about the Government's consistent approach to the structural funds. When the Prime Minister reported to the House on 8 December 1987 after the European Council meeting in Copenhagen, she said: On the second aspect, structural funds, the Commission had proposed a doubling of the resources devoted to those funds by 1992 … I made it clear that this was out of the question."—[Official Report,8 December 1987; Vol. 124, c. 167] A few months later, an agreement was signed that will lead to an 80 per cent. increase in real terms by 1992. By 1993 there will be a doubling of the structural funds.

I welcome the Prime Minister's conversion to a regional policy for the European Community. What worries me is how Britain will benefit from a doubling of the structural funds. We know that in all likelihood 80 per cent. of the regional fund will go to the southern states and only 20 per cent. to the north. On the basis of the projected figures for 1992, that will mean about £2·6 billion at the very most being available to help in priority two assistance for helping traditional industrial regions suffering from major job losses. Even if we receive one third of that money, we will be lucky to get the £1 billion that the Prime Minister said at one time she hoped we would get.

The Government themselves have already halved the amount of money available for regional policies in the United Kingdom and there is a real possibility that the Government will reduce that figure even further. The regional fund contributions are on a shared basis, and there must be a commitment by the Government as well as from the Community. Even if that money were available to us, I foresee that our own spending on regional policy may be insufficient to enable us to take up all the available money. I shall be interested to know whether the Government have considered the possibility of that imbalance occurring in the future.

I fully endorse the Opposition's amendment, and I hope that it will receive the support of Conservative dissidents who are unhappy about the way in which their Government are moving. However, from the tenor of their remarks, I gather that they would prefer to put up some kind of iron curtain around the United Kingdom anyway.

We need to underline the fact that the Bill will lead to a major increase in Community spending that is likely to find its way, without much diminution, into the agricultural sector, leaving the very real needs of Britain's industrial areas not being met. If the Government want to see Community spending increase, they must ensure that the balance is more towards that part of the budget that is described as non-compulsory expenditure.

Photo of David Curry David Curry , Skipton and Ripon 8:32, 11 July 1988

It was inevitable that this debate would take on the tones of a constitutional argument, yet that is to disfigure it. We are not facing a choice between nationalism and federalism in the European Community. We signed a treaty, the first indent of which stated that its signatories are Determined to lay the foundations of an ever-closer union among the people of Europe. Both the Conservative and Labour Governments spent many years travelling around Europe getting the right to sign that treaty. What is now happening flows from it. It is true that in Britain we have often made the mistake of pretending that there is a distinction to be made between economic and political development; as if one could have greater economic integration without concomitant political moves as well. Perhaps that is catching up with us.

Tonight, we should be debating the Community's practicalities, recognising that in heading for the 1992 target, we are saying that we shall let the market be the motor. Well, the market may well lead us into directions that entail political decision-making. It may be that we shall move more in the direction of pooling our political activity, but to argue that it is a question of sovereignty against federalism is to be a generation behind the debate.

I pay tribute to those hon. Members who have tonight made emotional speeches, many of which have been tours de force. However, they have said nothing to me intellectually, because they have not offered any vision of where we will take this island—I yield to nobody in being proud of being born a Briton in these islands—when we have a few miles away a continent that is undergoing the process of political and economic unification. That is the strategic context in which tonight's debate must be placed.

I wonder whether the Opposition will divide the House, because I noted that the Leader of the Opposition wrote recently to the European Parliament's Socialist groups subscribing to the notion of a common manifesto for the next European elections a year from now. It has also been observed that almost all the European Parliament's Socialist groups have endorsed the deal from Brussels. I fail to see how the Labour party can square its adherance to the notion of a common manifesto with its opposition to the measures that underpin it.

Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall

I do not know whether the hon. Gentleman would like my reply to that point now or later.

Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall

Then I can tell the House that my intervention will take some time.

Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall

That is why, Madam Deputy Speaker, I suggest that the hon. Member for Skipton and Ripon (Mr. Curry) stays for the end of the debate.

Photo of David Curry David Curry , Skipton and Ripon

I look forward with keen anticipation to the hon. Gentleman's reply, and I am happy that he has given himself time to work it out.

In judging the measures that are before the House, we should not look for an absolute and perfect solution, because all of us know that such is not likely to present itself. We are all rather tired of talking about the Community in terms of absolutes. It is not that kind of organisation. Instead, we need to know whether the Brussels deal is materially better than that which went before it. First, will there be a discipline in farm spending? Secondly, will it offer the Community a period of stability and an end to what seem to be interminable demands for yet more emergency funding? Thirdly, is it a good deal for the United Kingdom? Finally, is it a good deal for the whole of the Community, in the sense that it will open the way to those developments that have been endorsed, promoted and demanded by the United Kingdom? I believe that we can make a positive response on all those counts.

The Brussels deal plugs the deficiencies of Fontainebleau, and we must be honest and admit that it did have deficiencies. Also, it introduces medium-term planned expenditure, and the inter-institutional agreement deserves rather more credit than it has been given tonight. It also reinforces the rebate mechanism and improves upon it in certain respects. It also opens the way to 1992, by establishing the political balance—which is where the increase in the structural funds comes—that will clear the way for decision-making towards that goal.

What were the faults of the Fontainebleau agreement? It was not legally binding on the European Council or on the Commission. There was nothing to prevent the Commission from making proposals that contravened Fontainebleau's guidelines. Finally, it was not translated into specific and binding controls on the individual agricultural support programmes.

The Brussels deal provides legally and formally binding control over agricultural expenditure, because the Brussels commitments had to be passed into legislative texts, which went their course through the European Parliament and Council and were then legislated into existence during the course of last month. They both fix an overall limit on farm spending and define it as a percentage of the growth in Community resources. Those provisions are in texts that can only be overcome by a unanimous vote of the Council, and there is no organisation in the world that will bind itself in all circumstances whatsoever and not leave the possibility of unanimity changing the situation.

Whereas Fontainebleau was riddled with special circumstances, the Brussels deal permits the single special circumstances of the dollar-ecu relationship. It does so both ways. If the dollar starts to rise—the recent pressure on the dollar has been upwards—those economies are realised, just as, if the dollar declines, the funding will be made available, I recommend that the hon. Member for Vauxhall (Mr. Holland) reads the text, where he will find that provision. Secondly, the Commission must never make proposals exceeding the guideline. Thirdly, we have in the agricultural regimes about 20 specific measures for legally bound stabilisers.

It is easy enough to say that this is nothing but yet another rerun of Fontainebleau. The fact is that it is a radically different animal. Let us not denigrate Fontainebleau: it laid the basis for our rebate arrangements, and they came under intense pressure. It is difficult to exaggerate the unpopularity of the rebate provision at the time, but they have now been reinforced and enhanced by the Brussels agreement. Fontainebleau was a milestone along the road, although it did not provide the certainties for which many hoped at the time.

Will the arrangement work? That is a perfectly legitimate question. I have been examining some of the agricultural sums for this year. In this year's farm price review, we have had a Council compromise, which is still hanging on the Greek distinction between points and percentages in monetary compensatory amounts, and which added 289 million ecu to the cost. That has been entirely compensated for by reduced aid for incorporation of skimmed milk powder, for milk to be fed as a liquid to calves and for liquid to be used for casein manufacture, and by savings in export subsidy. The total savings are 285 million ecu.

The Ministers went into the negotiations saying that they would chop the green rate and play on the level playing field. What happened? They were told, "No." As a result the changes in the green rate are deferred until next year. They could not drive a coach and horses through the settlement as they had done in the past.

Let me make a forecast for next year: I think that it will be impossible to spend the money in the agricultural guideline. I think that we will end up 1 billion ecu in the black in both 1989 and 1990. We have a 350 million ecu margin in the preliminary draft budget before we reach the guideline; the slight increase in inflation in the Community gives us another 50 million ecu to play with; the savings in the dairy sector are substantial; and the drought in the United States will have a dramatic impact on the amount that we need to subsidise production of oilseed rape and soya, and on the lower restitutions on the cereal harvest.

That extra 1 billion ecu will permit the full depreciation of stocks and, if it is what Ministers want, the dismantling of MCAs. The importance of such an automatic depreciation is difficult to exaggerate. It introduces a step of budgetary integrity that did not exist in the past. The overvalued stock represents a disfigurement of the budget, and that is now being tackled.

We can argue that the CAP is now palpably coming into balance, albeit slowly. There is no skim milk powder to be had. My right hon. and learned Friend the Foreign Secretary gave figures for stocks at 1 April. A telephone call to Brussels would have obtained the figures for 30 June, which show that there is no skim milk powder to be had, and that the butter stocks, which peaked at 1·4 million tonnes in 1986 and were 1·18 million tonnes a year ago, stood on 30 June at 378,339 tonnes. That is a very significant decline. What is important is that that is not reaccumulating: it is not going into stock now. It is a net decrease in the level of stocks.

There is a good argument for saying that, although some sectors remain difficult, the general shape of the CAP is very different from that of five years ago. I invite those who regard quotas as merely a tinkering with the system to visit my constituency—a dairy-producing area with many small farmers—and to propose their thesis in front of the Craven tenant farmers association. I should like them to see what response they would receive.

The second important gain has been what can only be described as the medium-term expenditure plan incorporated in the inter-institutional agreement, which limits expenditure on a scale to 1992. Many hon. Members have said that that means that there is no budgetary discipline in the non-obligatory sector. Having lived through the negotiations with the committees of the European Parliament that wish to spend the money and having told them that the limits that were now to be enforced, I believe that there is an effective discipline, although it is different from that in the obligatory sector. It is worth noting that the only part of the non-obligatory sector in which there is any prospect of significant expansion is research. That line in the budget is the most favourable to the United Kingdom.

The third gain is the rebate, which has been safeguarded. That was by no means an obvious achievement. It has been taken outside the framework of the budget, which gets us away from the difficult problem of the "dead money" that the rebate imposes on the budget. The gross national product scheme will benefit the United Kingdom, possibly to the tune of 500 million ecu a year.

In a sense the most important criterion is whether the deal relaunches the Community as a growing and dynamic concern. There is striking evidence from the past six months that it does. We have had the agreements on capital movements, road haulage, the mutual recognition of diplomas and the controls on large combustion plants. The Community will always go in fits and starts; we shall never achieve a great consistent movement. The history of presidencies shows that each tends to start as a period of stagnation, with a great rush towards the end. I do not think that there is anything wrong with that. I feel that we have political lift-off, and commercial lift-off as well.

I invite hon. Members to read the Financial Times day by day and to note the extent to which industry is positioning itself ahead of its 1992 market. The 1992 objective is a British objective. We claim that we invented it. But the Community is enlarging the horizon as it emerges as a world power. It has always been a world power waiting to be invented: now it is taking material shape. We see that in the reactions to the Reagan-Gorbachev detente on security measures, which imposes on the Community the heavy political burden of demonstrating its capacity for unity.

The states of eastern Europe are now queuing up for Community recognition. How long will it be before Mr. Gorbachev pays a visit to the Commission headquarters in Brussels, and until the President of the Council goes to Moscow? We have already seen the first agreement signed with Hungary. The frontiers of the Community are, in a sense, extending towards the East. The Community is aleready an economic magnet to those countries. Already we begin to see the new candidate states lining up. In Norway, Austria and even Switzerland, politicians are asking, "What is the relationship with that greater Community? Can we not be a member of it?"

A politically strong Community, competent to handle its worldwide relations as an ally of the United States, is a major British objective. What would happen if we said no—for the House could vote against the measure? First, we would continue the long period of disunity and internal warfare that has so characterised the Community, just when we most need to present a united visage to the world. I apologise for the French: the word means "face".

Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall

I om abliged to the hon. Gentleman for giving way to me, but, first, I do not need lessons in French, and secondly, several hon. Members still wish to intervene, although we have postponed the wind-up.

Photo of David Curry David Curry , Skipton and Ripon

I am drawing to a conclusion. The hon. Gentleman will know that I have sat through every second of the debate.

Secondly, we would throw away our gains in budget discipline—the rebate and expenditure control. Thirdly, we would dislocate the whole movement towards 1992. The rest of Europe will not say, "What are we going to do to accommodate the British? How can we get round the problem?" They will not come galloping to us when they have just agreed one of the most difficult political compromises in the history of the European Community. The damage would be done to British objectives.

We are no longer behind the rest of the train. We have caught up through our efforts and our negotiating skills in Brussels. This marks a new stage in Britain's full, sensible and pragmatic participation in the development of the Community, and I commend it to the House. It is part of my vision of the future.

Photo of Mr Tam Dalyell Mr Tam Dalyell , Linlithgow 8:50, 11 July 1988

I hope to catch Mr. Speaker's eye on Wednesday in the debate on short speeches, so I shall just ask six questions, five of which are friendly and may be answered by letter.

First, the Foreign Secretary spoke with approval about the reduction of stocks—beating ploughshares into golf clubs, as he put it. That has something to be said for it, except that we have all seen the dramatic pictures from Iowa and Nebraska. What is the Government's estimate of the effect of the American bread-basket weather conditions on policy towards European stocks?

The second question concerns European action on the environment, about which my hon. Friend the Member for Gateshead, East (Ms. Quin) quite properly asked. When reducing stocks, is there any policy of increasing habitats that might well be put to other uses? I think in particular of the wetlands and of the dramatic figures published only last week by the Royal Society for the Protection of Birds showing the likely decline and possible elimination of many European species. Has that been taken into account in policy-making?

I am glad to see the Parliamentary Under-Secretary of State for Education and Science here. Last Thursday week we had an interesting debate in Committee during which the Under-Secretary of State for Foreign and Commonwealth Affairs spelt out policy on the ozone layer and on chlorofluorocarbons. I pay tribute to the work that has been done by British civil servants in the Foreign Office, who are internationally distinguished and who have a great reputation in Europe and around the world for their expertise on the Antarctic. In answer to a specific question the Prime Minister replied that the Secretary of State for the Environment was the lead Minister in all matters relating to the ozone layer. The problem of the Arctic and the Antarctic should be handled on a European basis. Are the Government coming around to that view?

A third matter that should be handled on a European basis—if it is not, we shall not have much effect—has to do with the rain forests. It is no good turning around to the Brazilians, the Indonesians and Laotians—my hon. Friend the Member for Vauxhall (Mr. Holland) knows a great deal about this—and telling them that the responsibility is entirely theirs. It is an international responsibility and a matter of self-interest. Is it Government policy that this should be dealt with on a European rather than a British basis?

My third question is much shorter. The Under-Secretary will remember this from a previous incarnation when he was responsible for these matters as a Minister of the Department of Education and Science, and I believe he has a continuing interest in the issue. Clause 8 of the Bill contains a great deal of money. What is the policy towards Ispra and Karlsruhe and the other European institutions that we have debated but about which no final decision has been reached? There are certain tasks that are probably better performed on a European basis if the institutions function properly. One such task is waste management and the storage of toxic waste. For example, all the toxic waste arriving at the mouth of the Mersey creates enormous problems. Surely it would be rational to deal with that on a European basis?

Fourthly, what is the policy towards setting aside money for a disaster fund? When I was a Member of the European Parliament I was also a member of the budget sub-committee which was responsible for going to Friuli after the earthquake. I was impressed by what the Commission did. The Parliamentary Under-Secretary of State for Education and Science will recall the disaster from his days as assistant to Sir Christopher Soames. At any rate in the early stages, the Commission did an extremely good job, whatever happened later on.

Should not disaster operations come more and more to be done on a European basis? I am consumed by constituency problems arising from the Piper Alpha disaster, which was extremely harrowing for all concerned. Should not oil slicks, for instance, be a matter for European action rather than action by those whose rivers are most affected?

Fifthly, as an NUR-sponsored hon. Member I ask again about policies on customs. We have trains travelling at 47 miles an hour; the French trains travel at 165 in the Pas de Calais. An all-party Channel tunnel visit takes place tomorrow and as a member of it I shall know a little more in 24 hours' time, but the briefing that NUR sponsors had from Sir Robert Reid fills us with alarm. Someone must tell the Home Office to get its act together. I believe that the Department of Transport is doing its best, but Scotland and the north of England must not be disadvantaged by inflexibility of the customs.

My final question will be received less well. At the Hanover and Toronto summits we saw pictures of the Prime Minister. In Hanover, we saw her going up the Herrenhausen steps—that beautiful palace of Hanover—flanked as usual by Mr. Charles Powell. If Mr. Powell was so inefficient at the crucial time in January 1986 that he failed to tell his Prime Minister anything about what she should know about the role of the then Secretary of State for Trade and Industry, how is it that he remains such a crucial and powerful foreign policy adviser in the tradition of Sir Horace Wilson? I surmise from the chuckles of Ministers that they know exactly what I am on about, thereby giving the game away. Enough said.

Photo of Ian Taylor Ian Taylor , Esher 8:57, 11 July 1988

Of the many speeches by Conservative Members I noted two in particular with some sadness. My hon. Friend the Member for Thanet, South (Mr. Aitken) got stuck on his worries about sovereignty—rather painfully stuck in the swing doors of the Last Chance saloon to which he referred.

I also noted the speech of my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), which I felt was notable for its wit, style and complete lack of facts. He addressed the central problem of whether we Conservatives want the Community and are prepared to take the consequential decisions arising from our membership of it. Those of us who believe that what the Government have achieved with the Community partners is to be lauded are not uninterested in the control of expenditure. I wish that debates on other areas of Government expenditure were treated with the same enthusiasm, pound for pound, when we scrutinise parts of our domestic budget.

It is not surprising that the European Community budget has grown. After all, we are now in a Community of 12 member states and 320 million people. The budget, even this year after the increases, is approximately £29 billion. In relative terms, that is nearly one fifth of the United Kingdom budget. If we look at it another way, we see that our contribution to the EC budget is running at about 1 per cent. of the total United Kingdom budget.

These are vital sums and it is important that we control them. I ask hon. Members to review them in the context of the Community that we are trying to build and the benefits that we have derived from it. The Community is leading us towards a single market, which is very much Government policy, and I suspect that it will have to be part of the policy of the Opposition if they go as far as signing the common manifesto about which my hon. Friend the Member for Shipton and Ripon (Mr. Curry) spoke. Therefore, it is not so much the magnitude of the budget that we should be discussing as the discipline required to control it and the direction that the expenditure has now taken.

The Brussels summit in February was a notable success and showed the strength of the negotiations led by the Prime Minister and the Foreign Secretary. What did it achieve, and what are we considering? It achieved a degree of budget discipline which has not before been practised within the Community and led to a control of the common agricultural policy which has not previously been seen in the Community. It led to a shift in balance in the budget progressively away from agriculture, and that also has not previously been seen in the Community. It retained the Fontainebleau agreement and our abatement system which is of such great importance to us.

The concept of legally binding expenditure is written into the agreement. I endorse what was said earlier. This is a new departure. There was nothing comparable in the Fontainebleau agreement. That is why we are effectively amending the treaty of Rome, an order of magnitude which gives strength to the nature of the agreements and their legally binding character.

Perhaps the Paymaster General will go a little further into the ways in which Britain will ensure that those legally binding measures are enacted. How will the legal options be used and what recourse will he consider having to the Court of Justice if there is a variation? Greater understanding here of the procedures would lead to a great deal more confidence about the nature of the agreements that have been reached.

Budget discipline will also be helped by other factors in the Community, not least that France has become a net contributor to total funds. For example, if we look at the intergovernmental agreement that we are being asked to approve and at the order of magnitude of this year's contributions, we find that West Germany will contribute £1·16 billion, France £967 million and the United Kingdom £741 million. However, the United Kingdom position is even more favourable than that.

The hon. Member for Hamilton (Mr. Robertson) did not give way to me earlier. If he had, I would have advised him that the IGA figure that we are discussing is an advance on own resources. We shall receive additional receipts as a consequence and,, of course, the differential amount will be treated under the abatement procedure. The arrangement is of great benefit to Britain.

As I have said, under own resources the United Kingdom's gross contribution to the Community is little more than 1 per cent. of GNP after abatement, and that is well below the contribution of the other member states. Having secured our relatively favourable position, we find that the toal agreement derived from the Brussels summit has established the revised basis of own resources in the Community. It enshrines the reform of accounting practice, such as the ending of the old hoary accounting measures that are used to distort figures, such as the carry forward of unused budget appropriations and negative reserves. It has enforced budgetary discipline, especially in agriculture, by way of the guideline limits and the removal of exceptional circumstances through which under previous agreements the Commission regularly drove a coach and horses. It has established price proposals in the guidelines and automatic stabilisers and new rules for depreciation and treatment of agricultural stock.

The results are a signal success for the Government. They show that when the Government give leadership in the Community they win support and are able to make significant progress and major changes. We are now talking about major changes in the budget and the common agricultural policy.

Through our leadership we have encouraged the other countries in the Community to abolish capital controls on a phased basis. That is a remarkable event, which has not received sufficient appreciation in the House. The French Minister, in particular, has already acknowledged that the cost to France in 1990 of removing capital controls and liberalising exchange controls could be a net outflow of 200 billion francs, but he is still prepared to take the measure in the interests of moving the Community forward. We cannot have a single market with the capital controls that currently exist in member states other than Britain.

I agree with my hon. Friend the Member for Horsham (Sir P. Hordern) that the problem is that this country so often treats the European Community in a half-hearted way. We are in, but we are not terribly enthusiastic. However, I urge the Government to build on their successes at Brussels and Hanover, to take advantage of the agreements that are now to be ratified throughout the Community and to get stuck in and assume a proper leading role within the community.

That will entail our deciding how the EMS is developed by becoming a member of the exchange rate mechanism. It is an incredible oversight for the Government, having succeeded in encouraging other member countries to give up capital controls, not, at the same time, to take the consequences, go into the exchange rate mechanism and take up leadership there and in the inevitable discussions about monetary policy. Moves forward are not just driven by the Commission, as if we have to fear members of the Commission as ogres. Some of us talk to businesses around the country. When they start to appreciate the benefits of the European Community, they say, "Why is it that, with those benefits, we do not take the consequences further, join the exchange rate mechanism and take the lead rather than having those questions decided by the Germans and the French?"

If we do so, we can ensure that the Community develops on a basis of deregulation rather than on one of more and more regulation. I fear that we shall have to address that matter carefully in the next few months, during the Greek presidency, when we will hear old favourites under the new heading of social dimensions, which should be resisted.

Finally—it is appropriate that my right hon. and learned Friend the Foreign Secretary is in his place—if we take the initiative in the economic area of the European Community, we can also continue and strengthen our role as the leader in foreign policy. This is a particularly vital period when we are beginning to open up towards the Eastern bloc and when there are many signs that that will perhaps be the key area of policy development in the next few years.

It is not a question of giving up sovereignty; it is a question of redefining it. It is a question whether we are to be a mere outpost of a Community of 320 million people or take the leadership of that Community and ensure that the sort of policies that we as a Government would endorse will be accepted by our 11 partners.

Photo of Mrs Alice Mahon Mrs Alice Mahon , Halifax 9:08, 11 July 1988

Whenever I see the Government twisting and contorting over the insatiable alien that is the EEC budget, I cannot help wanting to say, "I told you so." It could not happen to a more deserving Government. The tragedy is, of course, that the Governent and the people whom they represent are not paying the full price. The full price is being paid by the skilled workers languishing on the dole. We have lost over 1 million jobs in manufacturing since we joined this expensive club. The low-paid workers in my constituency are paying a high price for food.

I do not want to waste too much time talking about the ills of joining the Common Market because I am aware that time is short and that, whatever speeches may be made by Conservative Members, the rebellion will fizzle out when we go into the Lobbies. I want to concentrate on who will get what from the new structure and, to that end, I shall address my remarks mainly to the proposal to enlarge the structural funds.

Those funds are important to areas of unemployment, particularly those areas of high unemployment and deprivation, because they are still contributing to that increase in tax. My constituency lost assisted area status in 1981. Because we do not have assisted area status, certain EEC grants are not available. Halifax is in a textile closure area. Until the end of March, local firms can benefit to some extent from the regional fund, but the local authorities do not present such a cosy picture. What is the good of grants being available from Europe when, because of their spiteful attitude to local government, the Government have prevented councils from taking advantage of such grants? The councils have also lost out heavily on regional grants because of Government policy towards local government.

In Haifax, there is to be a major factory closure, KP Foods. Conservative Members who talk about the benefits of 1992 should listen carefully. When the KP Foods factory closes in 12 months' time, it will cost nearly 1,000 jobs. In answer to a question from a colleague about the internal market in 1992, one of the directors of KP Foods said: Internal market 1992.You are right to wonder if this had been considered in our appraisal of the future biscuit-making capacity and efficiency because it certainly has. There is no doubt that there will be increasing competition from many sources in the EEC for a share in the United Kingdom Market. This is happening now and imports from the continent are already rising". That is clear confirmation.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

Does my hon. Friend agree that that internal market will lose us jobs in 1992? My hon. Friend will be interested to learn that I sent a copy of that letter to Lord Young, and asked him to use it in his advertising campaign—on which he is spending £3·5 million—extolling all the alleged virtues of the internal market in 1992, to explain to people that the internal market will lose jobs in Bradford, South and in Halifax.

Photo of Mrs Alice Mahon Mrs Alice Mahon , Halifax

My hon. Friend is absolutely right and I welcome his intervention. Halifax has also been subjected to the Nestle takeover of Rowntree. I attended both meetings in the House and questioned the directors of both companies in detail about the effects of the takeover. I have also received replies to letters which have confirmed that part of the reason for the takeover and the subsequent rationalisation is 1992. It will be quite devastating for towns that have already lost out because of Europe.

Under the European regional development grant, Halifax has been caught in a Catch 22 situation. We do not have assisted area status, but in March, we shall also lose out under the European social fund. The KP Foods factory would have gained grant under the European social fund, but will now lose assisted area status in Europe also.

It is particularly hard for the employees of that factory in Halifax because it employs mainly women and we shall now lose retraining grants which would have been available for those women, because of the changes in grant allocation. The work force is 70 per cent. women, and 80 per cent. are part-time. Approximately 550 women will lose their jobs but will not appear on the unemployment figures because of the way in which the Government calculate figures. The Government are presenting unemployment statistics that will be detrimental to our own people, because they will lose grant. That is disgraceful. The Government are denying our own people the right to funds which are, after all, all that we are getting back for a very huge payment.

I have listened to most of the debate and what I have heard does not convince me that things will get any better. I believe that things will get much worse. There is a crisis in the regions and what I will call "invisible" unemployment. The "disappeared" exist. They know that they exist and hon. Members who represent towns like Halifax know that they exist. I challenge whoever replies to this debate to come to my constituency and see the real problems caused by our being in Europe. In particular, he should come and see the "invisible" women at KP Foods who will not show up in the Government's statistics. I assure hon. Members that those women exist.

Photo of Bill Cash Bill Cash , Stafford 9:11, 11 July 1988

I welcome the Bill primarily because it is an opportunity for us, within the procedures of the House, to control legislation. Unlike so much other legislation which passes through the Select Committee on European Legislation, of which I am a member, this Bill gives us an opportunity to comment upon and consider the implications. That point has been made when we consider the wide variety of views that have been expressed on the Bill's merits today.

When we talk about the percentage of money involved in relation to the overall United Kingdom budget, we see that, although the Bill would increase the resources available to the Community by 25 per cent., in terms of the overall volume of money passing through our economy, that is still a relatively small sum. I am far less concerned about that than I am about the other aspects of the Community and what I refer to as "creeping federalism", expressed best in the views of Mr. Jacques Delors, the President of the European Commission, only some 10 days ago.

I wrote an article in The Times shortly before that in which I warned about creeping federalism. It is naive and absurd for us to ignore the fact that there are people in the European Community and elsewhere who would like to see a federal Europe.

The other day I was on a television programme with a Conservative Member of the European Parliament. Quite expressly, he said that he was a federalist and that my right hon. Friend the Prime Minister had got it all wrong. He said that the Conservative party would have to come round to his point of view.

Recently we dealt with the liberalisation of telecommunications. Despite our Government's protests and those of most member states, the European Commission is determined to ignore those protests and introduce that measure on the basis of what it wants rather than to consider the views of the Council of Ministers, the European Parliament, the Economic and Social Committee—ECOSOC—and the national Parliaments. We should take very seriously what Mr. Delors is saying.

There are other signs of creeping federalism. I am in favour of a European Community which can provide opportunities that are exemplified by the Single European Act. It is possible to ensure that we gain the benefits and create a mutual and reciprocal Europe and at the same time retain greater effective control over what is happening in the House.

We had a debate on the glorious revolution the other day. We would not want to throw away the advantages that we have accumulated over the past three centuries in return for inverted control over our affairs. We must accept the opportunity to maintain the rights of the people who elected us and speak for them in this House on matters that increasingly affect them.

Mr. Delors is right: about 80 per cent. of the industrial, commercial and social legislation affecting the electorate is increasingly being moved into the European domain. It is up to us—as I tried to point out in my article in The Times—to ensure that we are truly involved. It is through that involvement and representation that we shall be able to demonstrate our commitment to the greater purpose and to represent the electorate more effectively.

Photo of Mr Rhodri Morgan Mr Rhodri Morgan , Cardiff West 9:20, 11 July 1988

I am pleased to have the opportunity to make one or two remarks that follow from the Foreign Secretary's introduction to the debate. He said that one purpose of the change in the budget system was in the increase in the structural fund required in the context of 1992. I hope that I have quoted him correctly. He implied that the gap in the standard of living between the south and east and the north and west of this country is likely to remain a serious problem for public policy. I assume that he did not mean the alternative interpretation, which is that the regional differences within the Community, between the Mediterranean regions, which have never been industrialised, and the industrial regions, will remain wide.

If the Government had represented the whole country, rather than being dominated by the south and the east, they would have effected a different compromise between their desire to see discipline brought into agricultural expenditure and the need to explain the structural funds to solve the north-south, east-west gap in this country, as well as the problems of the Mediterranean regions.

This is a compromise; it is not a victory. The Government love referring to victories, and Back Benchers have been falling into that trap tonight. Every time Ministers return from a Council of Ministers meeting, they are like slightly cultured football hooligans, always talking about victory, success, and leadership, but never about compromise, which is what they have just made. Obviously, the legislation is a compromise, and it is a Tory compromise. It does not take sufficient account of the needs of the regions.

However, the Foreign Secretary said that, in the context of 1992, the north and west of this country—Wales, Scotland and the northern region, not just Northern Ireland, which he emphasised—will have serious problems. Therefore, we need a greater emphasis on the regional and structural funds. We need them to be oriented to solving the problems in the industrial regions and to addressing the question of how those regions will catch up with the south and east, which have all the geographical advantages of being next to the Channel tunnel and the centre of the Community as an economic market.

I hope that the Paymaster General will give us an explanation of what he will do to bend the Community and its policies towards a solution of the problems of Wales and the other disadvantaged regions of the Community.

Photo of Mr Stuart Holland Mr Stuart Holland , Vauxhall 9:22, 11 July 1988

We have had a wide-ranging debate, which is appropriate because the Bill is concerned with the Community budget until the early 1990s and the allegedly magic date of 1992. We have covered major issues, including sovereignty and whether the Community brings about a loss of sovereignty rather than its extension. We have discussed internationalism, federalism, confederalism and regional interests, and it is clear that there is division on many of those issues. Government and Opposition Members have different views on those matters and that is understandable.

The Community itself is not an unchanging institution and has changed dramatically over the years. When the Coal and Steel Community was founded in the early 1950s, it was described by Maurice Schumann, the then French Secretary of State for Foreign Affairs in glowing terms. He said that the Coal and Steel Community would mean that war between France and Germany would be not only morally unthinkable, but materially impossible. Sadly, that forward-looking initiative was nonetheless retrospective. The main issue facing Europe was not a possible war between France and Germany, but future relations between east and west Europe, to which some hon. Members, notably the hon. Member for Skipton and Ripon (Mr. Curry) referred. They asked how the Community should now respond to the recent overtures of Comecon, the Eastern European countries and the Soviet Union.

My hon. Friend the Member for Bridgend (Mr. Griffiths) made a telling point. When we talk about sovereignty and effective parliamentary democracy, just how effect is the democracy in this Chamber on this Bill? I am advised by those with experience of this matter that it is virtually impossible to amend the Bill. In one sense this reflects the Government's majority, in that, despite the dissenting voices of some Conservative Members, they can use it to get the Bill through. But in any effective democracy it should be possible to amend a Bill both in Committee and on the Floor of the House. It should be possible to use the scalpel rather than the steamroller. Otherwise, we are applying double standards in saying that the European Assembly is an ineffective talking shop which cannot restrain the increase in agricultural spending when it is not clear whether we can do so.

My hon. Friend the Member for Newham, South (Mr. Spearing) also made some telling points, such as we have become accustomed to from him. He spoke about the considerable significance of the Bill, especially as it reflects the Single European Act which, in terms of public perception, has quietly transformed the long-standing Gaullist veto agreed at the Luxembourg compromise in January 1966 into the reintroduction of majority voting. It is argued that increased payments will be made which have not yet been approved by our Parliament and which may have been opposed by British Ministers in the Council of Ministers. We shall have a 25 per cent. increase in real terms in EC expenditure.

Hon. Friends, especially my hon. Friend the Member for Hamilton (Mr. Robertson), have already pointed out that commitments at Fontainebleau have not been realised and we have not managed to restrain spending on the common agricultural policy. One of the most effective ways of reducing spending under the CAP would be to do something not yet mentioned in the debate, which is to achieve a reduction in prices inside the Community. That should include threshold prices, and commodities which are produced by other countries, particularly the least developed countries, which can achieve no comparative advantage in the modern and advanced technology industries open to the Community. They are highly, if not completely, dependent on such access for an increase in their income and standard of living. The European Community has not addressed that sufficiently, just as its aid disbursement has been notoriously slow and ineffective.

The Community has further problems with the regional fund. It may be said that the structural funds, including the regional fund, will increase by x, y or z per cent., and some of those percentages look dramatic. But we should bear in mind how ineffective the Community regional fund has been to date. In recent years it has varied between one twentieth and less than one fifteenth of the total EC budget. Since total EEC spending itself for most of that period has been less than 1 per cent. of GDP, this amounts to a very minor fraction of the Community's GDP as a whole. Granted that only one tenth of the regional budget changes hands between member countries, one then has about one two hundredth of 1 per cent. of the Community's GDP changing hands, so one is talking about one which comes within the accounting errors of virtually any well-managed international agency.

So I am not terrified, and I think that other Opposition Members are certainly not terrified, by an increase in the spending under the regional fund. What we want to see is effective spending under that regional fund and we should get some social indicators for that spending. The issue of juste retour should be addressed in a new sense. Jacques Delors has argued for a social market and social criteria inside the Community and if we are talking about that we should make certain that there is a net shift of resources towards the less privileged people in the lesser and least developed regions of the Community. However, it does not make any sense to have such a spending programme if, as has traditionally been the case in the Community, it is only to be on infrastructure rather than on enterprise.

It is absolutely classic to say, when in doubt, build a road. When doubly in doubt, build oneself a free enterprise zone, which is an elaborate form of the advance factory building programme that we have in the United Kingdom. We have learnt through our experience in this country and as introduced by the Labour Government in the 1970s, that one needs a much more public entrepreneurial approach. That is what we argued for in the case of the Scottish and Welsh Development Agencies. The Government have not scrapped those agencies—they have not dared to do so.

Yet when the Community comes forward with a reasonable proposal for local and regional government sponsorship of entrepreneurial ventures to strengthen the regional fabric of the Community, as we learnt in the most recent debate touching on those issues in May, the Government will not support that. If I may say it to the hon. Member for Skipton and Ripon, that is one difference between our position and that of the Government.

The other aspects of such difference are certainly easy to elaborate. I can illustrate them by what the Foreign Secretary said in the opening debate. I was entertained when he said that the Government would seek finance on a sound basis, that some progress had been made at Hanover, and that we would find the best way of doing this. He then claimed that the agenda had been set by the British.

I say to him and again to the hon. Member for Skipton and Ripon that that agenda was not in fact set by the British. It was set by Andreas Papandreou at the December 1984 summit in Athens and echoed by Francois Mitterrand in June 1985. It was there, when the Community was stuck in the mud of the common agricultural policy and could not set a serious agenda on any major issue affecting either the recovery of the European economy, the restructuring of European industry or our relations with the Third world, that it was put by a Socialist Prime Minister and a Socialist President that we needed fundamentally to rethink the institutions of the Community. They proposed a new Messina conference. That conference has the same relation to the Rome treaty as, for example, Bretton Woods has to international monetary affairs. It was from their arguments and their pressure that much of the recent change that we have seen has been realised.

Jacques Delors has been mentioned more than once during the debate. The hon. Member for Skipton and Ripon argues that the proposals coming from the Government or the Community are not accepted by us and asks how our position is different. It is very different, as is Jacques Delors' position. He has argued that the liberalised internal market must be complemented by a social market, that there must be a raising of practices at work to the best standards available in the Community, that we have to achieve an opening of the books, with accountability and industrial democracy in leading enterprises in the Community, and that we have to take measures to promote small and medium firms and enable them to network and gain the advantages from mutual size through joint ventures in Community. For many years Jacques Delors has notably argued that we need a recovery programme in the European Community.

Our Government are identified with none of those proposals. Yet such proposals could make 1992 of real interest to working people throughout Europe. At the moment all we have is the proposal for the harmonisation of passport covers, but not the abolition of tariff barriers. A harmonisation mania has taken over without the willingness for joint international action to co-operate on some of the urgent issues that face Europe, especially joint action for jobs and joint accountability of the new multinational companies that are dominating the Community.

When I first raised the matter of multinationals with the Government I stressed the major increase in the market share held by the top 100 companies in the Community from the early 1960s to the 1980s. They have doubled their share of the market. That increase is coming home to the public, through the press, because of bids made by multinational companies for British companies. I would not say that all of my hon. Friends are against such bids, but they want a means of accountability for such bids and a public policy framework that countervails the power of multinational capital in Europe. My hon. Friends want work practices safeguarded and workers rights extended. Within that framework our position differs from the Government about what 1992 is or should be about.

We believe that the GDP base is a better foundation for budget assessment. It is interesting to see from the proposals before us that there will be a working party of the Commission, which will constantly evaluate what GDP is about. I was quite amused when one hon. Member said, almost spitting the words, "the Italians". By implication he was talking about the Italian black market and meant that the Italians' GDP would be understated and therefore their contribution would be less than it should be.

As it happens, one reason for the increase in the growth registered in the Italian economy is precisely because the Italians have made estimates of their black economy and their shadow economy and included them within their assessment. By and large such things can be sorted out provided that we can break into the private language game between the professional economists and get some sense into the argument.

If we are to have a new committee for accounting within the Community, we should implement articles 85 and 86 of the treaty of Rome. We should gain transparency on the activities of the octoploid multinational enterprises, which are presently not accountable to any Community procedure—they are accountable to virtually nobody but themselves. If we were to do that we would discover a lot more public interest in what is happening in the Community.

The position that we argue is not federalist, it is internationalist. We argue for joint international action within the Community, but, in contrast with some hon. Members on both sides of the House, I would not argue that this denies one's sovereignty. Effective joint international action can extend one's sovereignty and it is a collective expression of it. The contrast therefore is not between nationalism and supranationalism. The case must be made for changing the political agenda of the Community and for putting on its agenda and of our Parliament the issues that concern not only our people, but the peoples of Italy, Spain, West Germany and elsewhere. The tragedy is that our Government will simply not join or extend that debate.

The Prime Minister has dismayed her counterparts abroad—and I am not just talking about Socialist Prime Ministers or Heads of State. When the Prime Minister kept on about the rebate and only the rebate, Mr. Chirac made a remark that was something like "I've had enough of this cracking of nuts." It is quite clear that the Prime Minister could not co-operate with the then Prime Minister of France. She cannot even co-operate with the present Chancellor of West Germany.

In coming to a conclusion in supporting the reasoned amendment that the Opposition have put forward, I draw attention to a report by Patricia Clough in The Independent on 8 July. I have never met Patricia Clough and I do not know her views on Community matters, but she wrote: Highly influential German politicians, who wish Britain well, are intensely irritated by the way Mrs. Thatcher has been built up in Britain as the senior and most prestigious European statesperson who can speak for Europe on a world platform. They are staggered that this can be claimed of a person who has been, and is still, obstructing progress to European unity. 'She does not speak for Europeans. She does not think like a European and she does not even try to understand them' said one. 'She only speaks for Britain's narrow provincial interests.' That is the bottom line of the weakness and limitation of the Government's position. It is one reason why we have argued for an extension of the structural funds—for spending on the social fund, the environment, regional development and the developing countries. It is one of the reasons why I am sure that my right hon. and hon. Friends will join me in supporting the reasoned amendment in the Lobby this evening.

Photo of Mr Peter Brooke Mr Peter Brooke Paymaster General (HM Treasury), Party Chair, Conservative Party 9:40, 11 July 1988

This has been a colourful debate. My hon. Friend the Member for Thanet, South (Mr. Aitken) talked about Louis XIV and the Last Chance saloon. My hon. Friend the Member for Horsham (Sir P. Hordern) played a role as the parliamentary golf champion. The hon. Member for Linlithgow (Mr. Dalyell), not disagreeably, but irrelevantly, introduced Mr. Charles Powell into the debate.

The hon. Member for Hamilton (Mr. Robertson), in opening the debate on behalf of the Opposition, spent an enormous amount of time on the presence of my right hon. and learned Friend the Foreign Secretary, a presence which all of my right hon. and hon. Friends welcomed. I can assume only that the time that the hon. Gentleman devoted to that was designed to conceal the absence from the Opposition Front Bench of the Leader of the Opposition, the right hon. Member for Manchester, Gorton (Mr. Kaufman) and the right hon. and learned Member for Monklands, East (Mr. Smith).

I shall comment on several of the subjects that have been raised and I shall take them in the order in which they were raised. The structural funds were spoken of initially by the hon. Member for Hamilton, the hon. Members for Gateshead, East (Ms. Quin), for Motherwell, North (Dr. Reid), for Bridgend (Mr. Griffiths), for Halifax (Mrs. Mahon) and for Cardiff, West (Mr. Morgan), and by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).

I would never describe my hon. Friend as a member of a small and disgusting minority, as he did. I thought that he was a little less than generous in his remarks about the Whips' Office and the documentation that is available there. I sensed that he might not be supporting the Government. I am sorry that he is not subject to the same military discipline as that which he described when referring to my hon. Friend the Member for Horsham at an earlier stage.

The hon. Member for Gateshead, East raised a number of subjects when talking about the structural funds and I shall respond to the general topics. In that process, I hope that I shall deal with the contributions of other hon. Members. The United Kingdom can be expected to benefit from all of the five priority objectives which were agreed at Brussels and enshrined in the framework regulations.

As the hon. Member for Gateshead, East said, Northern Ireland has been included in the agreed list of less-developed regions, in recognition of its special political and economic difficulties, although it does not meet the standards or criteria for inclusion under the objective. Most of the United Kingdom assisted areas should continue to be eligible for support under the second objective, which is to help with the problems of industrial decline. That includes the major areas of decline. Help for the peripheral areas, such as the Highlands and Islands, rural Wales, and many parts of south-west England, will be available under the fifth objective. The third objective is to combat long-term unemployment and the fourth is to improve training, especially for young people.

The social fund will continue to be focused on activities that are priorities for the United Kingdom, such as youth training and assistance for the long-term unemployed. In 1988, social fund commitments for the United Kingdom totalled over £400 million, and the funds as a whole total £750 million.

As I have said, the fifth objective is to promote rural development. It is important that a link has been made between the operation of the funds and the reform of the CAP. There will also be commercial opportunities for British companies and employers in other parts of the Community in terms of the application of funds there.

The hon. Member for Halifax invited me to her constituency. I may have to go in my capacity as chairman of the Conservative party rather than as Paymaster General, but I gladly accept her invitation. The hon. Member for Gateshead, East and other hon. Members referred to research. I stress that it is necessary to ensure that we get value for money in research and development expenditure and that we do not fund bad research.

My right hon. Friend the Member for Worthing (Mr. Higgins) was the first to mention GNP statistics, and he was followed by the hon. Member for Newham, South (Mr. Spearing) and my hon. Friend the Member for Thanet, South. It is precisely because our statistics and those of others are not good enough that the European Council decided in February that a directive was needed on the harmonisation of GNP statistics.

The directive's aim, which has been agreed by the Council, is to guarantee the comparability and uniformity of national GNP statistics and to provide for them to be verified and revised as necessary. The directive explicitly provides for the scrutiny of member states' GNP estimates by a management committee containing national experts of all member states. In reply to my hon. Friend the Member for Thanet, South, I should say that hon. Members must be aware that many of the weaknesses that apply to GNP statistics apply to VAT statistics, too.

The hon. Member for Hamilton mentioned the IGA and implied that it is on top of the increase in own resources provided for in the Bill. Total payments to the budget for 1988, including the IGA and own resources payments, will be within the new ceiling of 1·15 per cent. of GNP. He seemed to forget that the IGA is a gross contribution that will give rise both to extra receipts by the United Kingdom and to extra abatement next year. Expressing the IGA contribution as a percentage of our net contribution is not comparing like with like.

My right hon. Friend the Member for Worthing joined the hon. Member for Hamilton, and was joined by my hon. Friend the Member for Esher (Mr. Taylor), on the subject of legal enforceability. The Council can limit the exercise of its powers over obligatory expenditure, on which it has the last word, but it cannot limit the powers of the European Parliament over non-obligatory expenditure, on which the Parliament has the last word. We could not have obtained the agreement of other member states to amend the treaty to limit significantly the budgetary powers of the Parliament—nor was such a treaty amendment necessary. But by imposing own resources sub-ceilings, we can limit the amount of resources available for total spending. Given the limits on agricultural spending, that limits the resources for non-obligatory expenditure, too.

The hon. Members for Hamilton and for Newham, South mentioned the effect on our gross contribution of the increase in the own resources ceiling. On the basis of the 1988 figures, the increase in the own resources ceiling 1·2 per cent. of GNP will increase our gross contribution, before abatement, by up to a maximum of a little under £1 billion. However, that will be greatly offset by additional receipts and some extra abatement.

The right hon. Member for Bethnal Green and Stepney (Mr. Shore) may have misunderstood the effect of moving from 1 per cent. VAT to 1·4 per cent., and described it as a 40 per cent. increase in own resources. Other aspects of own resources need to be taken into account, so the overall effect was less—some 15 or 20 per cent.

My hon. Friend the Member for Horsham mentioned the public expenditure White Paper projection of net payments to the Community institutions in 1988–89. That projection was £800 million, not £1,470 million. The £1,470 million related to 1989–90. The Brussels package will increase our net payments by £200 million to £300 million a year, but I fear that my hon. Friend will have to wait until the Autumn Statement for a more detailed projection, giving revised figures year by year.

The hon. Member for Bridgend referred to the fourth resource. On the basis of the 1988 figures, GNP contributions could amount to up to 25 per cent. of the budget, if expenditure were at the 1·2 per cent. of GNP ceiling. The Government could not accept amendment of the Bill to exclude GNP contributions from own resources: that would be tantamount to rejecting the new own resources decision. The Government support the introduction of GNP contributions, as they bring own resources more into line with relative prosperity.

The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) apologised to me for having to leave the debate early to go north. He referred first to what had been said by Mr. Delors. My hon. Friend the Member for Northampton, North (Mr. Marlow), who also apologised for having to leave early, the right hon. Member for Bethnal Green and Stepney and my hon. Friend the Member for Thanet, South also referred to Mr. Delors.

I am aware of the statement by the President of the Commission to the European Parliament in Strasbourg on 6 July. It reflected Mr. Delors' personal view.[Interruption.] If the hon. Member for Walsall, North (Mr. Winnick), who has been here for only part of the debate, will excuse me, I have read the speech in French. Mr. Delors explained that he was speaking personally. It is important to remember the audience that he was addressing.

Mr. Delors' views do not reflect those of Her Majesty's Government. We do not believe that in 10 years' time 80 per cent. of economic, social and fiscal legislation will originate in the Community. Mr. Delors' statement was more indicative of the audience that he was addressing than of the true facts. I suspect that his intervention was intended to stress the need for national Parliaments not to accept uncritically what is happening in Brussels. He did not include this House in his remarks.

My right hon. Friend the Member for Worthing referred to the monitoring of agricultural expenditure and sought an assurance that agricultural expenditure would be properly monitored. I am happy to give him that assurance. Under article 6 of the budget discipline decision, the Commission will submit monthly reports on the development of agricultural expenditure, sector by sector, both to the Council of Ministers and to the European Parliament.

Photo of Mr Terence Higgins Mr Terence Higgins , Worthing

Many hon. Members are puzzled by what my right hon. and learned Friend the Foreign Secretary said, and my right hon. Friend has just repeated that obligatory expenditure will be subject to binding legal restraints, or budgetary discipline, but that that will not apply to non-obligatory expenditure. My right hon. and learned Friend also said that none the less there is an overall legally binding budgetary discipline and that therefore we need not worry about the fact that it does not apply to non-obligatory expenditure. We are puzzled by that. Perhaps my right hon. Friend will spell it out. if it means merely the GNP ceiling, that is not an effective measure.

Photo of Mr Peter Brooke Mr Peter Brooke Paymaster General (HM Treasury), Party Chair, Conservative Party

The inter-institutional agreement that was approved by the Ecofin Council on 13 June, and by the European Parliament on 15 June, is a political agreement on the procedural and financial framework for implementing the conclusions of the Brussels European Council on budgetary discipline and the level of expenditure. The reference framework for the agreement is the financial perspective for 1988 to 1992, drawn up in accordance with the Brussels conclusions. The perspective will be subject to technical adjustments—for example, to update it to current prices. Other revisions to individual elements can be made only by agreement between Council and Parliament and then only within the overall expenditure ceiling, plus a safety margin for unforeseen expenditure of 0·03 per cent. of GNP. The payment ceilings in the inter-institutional agreement, together with the safety margin, constitute the annual own resources sub-ceilings, set out in the own resources decision. The ORD also includes for the first time a ceiling on commitments.

It would not be possible to have such a legally binding instrument on budgetary discipline for non-obligatory expenditure, because it would fetter the powers of the Parliament that I have described. The inter-institutional agreement is a political agreement between the institutions, and the sub-ceilings in the ORD are a legally binding constraint on both revenue and overall expenditure. Given the legally binding limit on agricultural and on other obligatory spending, the sub-ceilings necessarily limit the amount available for non-obligatory expenditure.

My hon. Friends the Members for Clwyd, North-West (Sir A. Meyer), for Horsham, for Skipton and Ripon (Mr. Curry), for Esher (Mr. Taylor) and for Stafford (Mr. Cash) all made speeches that varied between the eloquent and the pithy in supporting the Community.

The hon. Member for Linlithgow asked me six questions, the first five of which were rather more relevant. and serious than the last. Nevertheless, he indicated by the tone of his questions his basic support for the Community. As for his question about the American drought, it is too early to assess its precise impact on the Community budget. If the recent increase in world prices for many commodities is sustained, expenditure on Community subsidies should fall. I do not accept that occasional adverse weather justifies a policy of maintaining large food stocks in the Community. I have seen a recent report that the United States has in store six months' supply of food, and there is therefore no reason to expect any serious disruption in food supplies.

Photo of John Reid John Reid , Motherwell North

Can the Minister explain to the House what he meant by the Government continuing to monitor agricultural expenditure? Once, there was a Scottish goalkeeper named Frank Haffey who, in retrospect, could be said to have monitored the ball going into the net behind him at Wembley. Is that the kind of monitoring that the Minister has in mind?

Photo of Mr Peter Brooke Mr Peter Brooke Paymaster General (HM Treasury), Party Chair, Conservative Party

I congratulate the hon. Member for Motherwell, North on his analogy. The monitoring takes the form of reporting by the Commission to the Council. As the hon. Gentleman knows, that reporting process places an obligation on the Commission and on the Council to respond to the situation in which they find themselves.

The hon. Member for Vauxhall (Mr. Holland) referred to the amendment which the hon. Member for Hamilton moved on behalf of the Opposition. Going back into history, there was a speech made by the now noble Lord Callaghan, in the heartlands of the Labour party, in Islington, on 26 April 1975, when he said: In the matter of the Budget, we made a flat request that Britain's share should be reduced in certain circumstances … Long and arduous negotiations produced a satisfactory result. Britain will now pay less. The effect of those renegotiations in 1974–75 was that they did not save us a single ecu.

By comparison, my right hon. Friend the Prime Minister said at Luxembourg on 18 October 1979: Britain cannot accept the present situation. It is demonstrably unjust. It is politically indefensible … the balance is not compatible with the spirit of the Community. Its continuation would undermine the sense of solidarity and common obligation which lies at the base of Community endeavour. As a consequence of the Government's actions, we achieved negotiated refunds of more than £2·5 billion between 1980 and 1984, and the Fontainebleau abatement has been worth £3 billion since then.

The hon. Member for Newham, South quoted Latin. I have long been conscious that the Latin word for left is "sinister". I say to my hon. Friend the Member for Thanet, South, who placed Mr. Delors in the Last Chance saloon, that Conservative Members will recall that Mr. Delors is a Socialist.

Question put, That the amendment be made:—

The House divided: Ayes 184, Noes 330.

Division No. 403][9.59 pm
Abbott, Ms DianeBody, Sir Richard
Adams, Allen (Paisley N)Boyes, Roland
Allen, GrahamBradley, Keith
Anderson, DonaldBray, Dr Jeremy
Archer, Rt Hon PeterBrown, Gordon (D'mline E)
Armstrong, HilaryBrown, Nicholas (Newcastle E)
Ashley, Rt Hon JackBrown, Ron (Edinburgh Leith)
Barnes, Harry (Derbyshire NE)Buchan, Norman
Barron, KevinBuckley, George J.
Beckett, MargaretCampbell, Ron (Blyth Valley)
Bell, StuartCampbell-Savours, D. N.
Bennett, A. F. (D'nt'n & R'dish)Canavan, Dennis
Bermingham, GeraldClark, Dr David (S Shields)
Blunkett, DavidClarke, Tom (Monklands W)
Boateng, PaulClay, Bob
Clelland, DavidLoyden, Eddie
Clwyd, Mrs AnnMcAllion, John
Cohen, HarryMcAvoy, Thomas
Coleman, DonaldMcCartney, Ian
Cook, Frank (Stockton N)Macdonald, Calum A.
Cook, Robin (Livingston)McFall, John
Corbett, RobinMcKelvey, William
Corbyn, JeremyMcLeish, Henry
Cousins, JimMcNamara, Kevin
Cryer, BobMcTaggart, Bob
Cummings, JohnMcWilliam, John
Cunliffe, LawrenceMadden, Max
Dalyell, TamMahon, Mrs Alice
Davies, Rt Hon Denzil (Llanelli)Marek, Dr John
Davies, Ron (Caerphilly)Marshall, Jim (Leicester S)
Dewar, DonaldMartin, Michael J. (Springburn)
Dixon, DonMartlew, Eric
Dobson, FrankMaxton, John
Doran, FrankMeacher, Michael
Duffy, A. E. P.Meale, Alan
Dunnachie, JimmyMichael, Alun
Eadie, AlexanderMillan, Rt Hon Bruce
Eastham, KenMoonie, Dr Lewis
Evans, John (St Helens N)Morgan, Rhodri
Ewing, Harry (Falkirk E)Morley, Elliott
Fatchett, DerekMorris, Rt Hon A. (W'shawe)
Faulds, AndrewMorris, Rt Hon J. (Aberavon)
Field, Frank (Birkenhead)Mowlam, Marjorie
Fields, Terry (L'pool B G'n)Mullin, Chris
Flannery, MartinMurphy, Paul
Flynn, PaulOakes, Rt Hon Gordon
Foot, Rt Hon MichaelO'Neill, Martin
Foster, DerekOrme, Rt Hon Stanley-
Fraser, JohnParry, Robert
Fyfe, MariaPike, Peter L.
Galbraith, SamPowell, Ray (Ogmore)
Galloway, GeorgePrimarolo, Dawn
Garrett, John (Norwich South)Quin, Ms Joyce
Garrett, Ted (Wallsend)Radice, Giles
George, BruceRedmond, Martin
Godman, Dr Norman A.Rees, Rt Hon Merlyn
Gordon, MildredReid, Dr John
Gould, BryanRichardson, Jo
Graham, ThomasRobertson, George
Grant, Bernie (Tottenham)Robinson, Geoffrey
Griffiths, Nigel (Edinburgh S)Rogers, Allan
Griffiths, Win (Bridgend)Rooker, Jeff
Grocott, BruceRoss, Ernie (Dundee W)
Harman, Ms HarrietRowlands, Ted
Hattersley, Rt Hon RoySedgemore, Brian
Haynes, FrankSheerman, Barry
Healey, Rt Hon DenisSheldon, Rt Hon Robert
Heffer, Eric S.Shore, Rt Hon Peter
Hinchliffe, DavidShort, Clare
Hogg, N. (C'nauld & Kilsyth)Skinner, Dennis
Holland, StuartSmith, Andrew (Oxford E)
Home Robertson, JohnSmith, C. (Isl'ton & F'bury)
Hood, JimmySnape, Peter
Howarth, George (Knowsley N)Spearing, Nigel
Howell, Rt Hon D. (S'heath)Steinberg, Gerry
Hughes, John (Coventry NE)Stott, Roger
Hughes, Robert (Aberdeen N)Thompson, Jack (Wansbeck)
Hughes, Roy (Newport E)Turner, Dennis
Hughes, Sean (Knowsley S)Vaz, Keith
Illsley, EricWall, Pat
Ingram, AdamWardell, Gareth (Gower)
Janner, GrevilleWareing, Robert N.
John, BrynmorWelsh, Michael (Doncaster N)
Jones, Martyn (Clwyd S W)Williams, Rt Hon Alan
Kaufman, Rt Hon GeraldWilliams, Alan W. (Carm'then)
Lambie, DavidWilson, Brian
Lamond, JamesWinnick, David
Leadbitter, TedWise, Mrs Audrey
Leighton, RonWorthington, Tony
Lestor, Joan (Eccles)Wray, Jimmy
Lewis, Terry
Litherland, RobertTellers for the Ayes:
Lloyd, Tony (Stretford)Mr. Allen McKay and
Lofthouse, GeoffreyMrs. Llin Golding.
Alexander, RichardDykes, Hugh
Alison, Rt Hon MichaelEggar, Tim
Allason, RupertEmery, Sir Peter
Amess, DavidEvans, David (Welwyn Hatf'd)
Amos, AlanEvennett, David
Arbuthnot, JamesFallon, Michael
Arnold, Jacques (Gravesham)Favell, Tony
Ashby, DavidFearn, Ronald
Atkins, RobertFenner, Dame Peggy
Atkinson, DavidField, Barry (Isle of Wight)
Baker, Rt Hon K. (Mole Valley)Finsberg, Sir Geoffrey
Baker, Nicholas (Dorset N)Fookes, Miss Janet
Baldry, TonyForman, Nigel
Banks, Robert (Harrogate)Forsyth, Michael (Stirling)
Batiste, SpencerForth, Eric
Beaumont-Dark, AnthonyFowler, Rt Hon Norman
Bellingham, HenryFox, Sir Marcus
Bendall, VivianFranks, Cecil
Bennett, Nicholas (Pembroke)Freeman, Roger
Benyon, W.French, Douglas
Bevan, David GilroyGale, Roger
Biggs-Davison, Sir JohnGardiner, George
Blackburn, Dr John G.Gill, Christopher
Blaker, Rt Hon Sir PeterGilmour, Rt Hon Sir Ian
Bonsor, Sir NicholasGlyn, Dr Alan
Boswell, TimGoodlad, Alastair
Bottomley, PeterGoodson-Wickes, Dr Charles
Bottomley, Mrs VirginiaGorman, Mrs Teresa
Bowden, A (Brighton K'pto'n)Gorst, John
Bowden, Gerald (Dulwich)Gow, Ian
Bowis, JohnGrant, Sir Anthony (CambsSW)
Boyson, Rt Hon Dr Sir RhodesGreenway, Harry (Eating N)
Braine, Rt Hon Sir BernardGreenway, John (Ryedale)
Brandon-Bravo, MartinGregory, Conal
Brazier, JulianGriffiths, Sir Eldon (Bury St E')
Bright, GrahamGriffiths, Peter (Portsmouth N)
Brittan, Rt Hon LeonGrist, Ian
Brooke, Rt Hon PeterGround, Patrick
Brown, Michael (Brigg & Cl't's)Grylls, Michael
Browne, John (Winchester)Gummer, Rt Hon John Selwyn
Bruce, Ian (Dorset South)Hamilton, Hon Archie (Epsom)
Buck, Sir AntonyHamilton, Neil (Tatton)
Burns, SimonHanley, Jeremy
Burt, AlistairHannam,John
Butcher, JohnHargreaves, A. (B'ham H'll Gr')
Butler, ChrisHargreaves, Ken (Hyndburn)
Butterfill, JohnHarris, David
Campbell, Menzies (Fife NE)Haselhurst, Alan
Carlile, Alex (Mont'g)Hawkins, Christopher
Carlisle, John, (Luton N)Hayes, Jerry
Carlisle, Kenneth (Lincoln)Hayhoe, Rt Hon Sir Barney
Carrington, MatthewHayward, Robert
Cash, WilliamHeathcoat-Amory, David
Channon, Rt Hon PaulHeddle, John
Chapman, SydneyHeseltine, Rt Hon Michael
Chope, ChristopherHicks, Robert (Cornwall SE)
Churchill, MrHiggins, Rt Hon Terence L.
Clark, Hon Alan (Plym'th S'n)Hill, James
Clark, Dr Michael (Rochford)Hind, Kenneth
Clark, Sir W. (Croydon S)Hogg, Hon Douglas (Gr'th'm)
Clarke, Rt Hon K. (Rushcliffe)Holt, Richard
Colvin, MichaelHordern, Sir Peter
Coombs, Anthony (Wyre F'rest)Howard, Michael
Coombs, Simon (Swindon)Howarth, Alan (Strat'd-on-A)
Cope, Rt Hon JohnHowarth, G. (Cannock & B'wd)
Cormack, PatrickHowe, Rt Hon Sir Geoffrey
Couchman, JamesHowell, Rt Hon David (G'dford)
Cran, JamesHughes, Robert G. (Harrow W)
Critchley, JulianHunt, David (Wirral W)
Currie, Mrs EdwinaHunt, John (Ravensbourne)
Curry, DavidHunter, Andrew
Davies, Q. (Stamf'd & Spald'g)Hurd, Rt Hon Douglas
Davis, David (Boothferry)Irvine, Michael
Day, StephenIrving, Charles
Devlin, TimJack, Michael
Dickens, GeoffreyJackson, Robert
Douglas-Hamilton, Lord JamesJanman, Tim
Dunn, BobJessel, Toby
Durant, TonyJohnson Smith, Sir Geoffrey
Jones, Gwilym (Cardiff N)Portillo, Michael
Jones, Robert B (Herts W)Powell, William (Corby)
Kellett-Bowman, Dame ElainePrice, Sir David
Key, RobertRaffan, Keith
King, Roger (B'ham N'thfield)Raison, Rt Hon Timothy
Kirkhope, TimothyRathbone, Tim
Knapman, RogerRedwood, John
Knight, Greg (Derby North)Renton, Tim
Knight, Dame Jill (Edgbaston)Rhodes James, Robert
Knowles, MichaelRiddick, Graham
Knox, DavidRidley, Rt Hon Nicholas
Lamont, Rt Hon NormanRidsdale, Sir Julian
Lang, IanRifkind, Rt Hon Malcolm
Latham, MichaelRoberts, Wyn (Conwy)
Lawrence, IvanRoe, Mrs Marion
Lawson, Rt Hon NigelRossi, Sir Hugh
Leigh, Edward (Gainsbor'gh)Rost, Peter
Lennox-Boyd, Hon MarkRowe, Andrew
Lester, Jim (Broxtowe)Rumbold, Mrs Angela
Lightbown, DavidRyder, Richard
Livsey, RichardSackville, Hon Tom
Lloyd, Sir Ian (Havant)Sainsbury, Hon Tim
Lloyd, Peter (Fareham)Sayeed, Jonathan
Lord, MichaelScott, Nicholas
Luce, Rt Hon RichardShaw, David (Dover)
Lyell, Sir NicholasShaw, Sir Giles (Pudsey)
McCrindle, RobertShaw, Sir Michael (Scarb')
Macfarlane, Sir NeilShelton, William (Streatham)
MacGregor, Rt Hon JohnShephard, Mrs G. (Norfolk SW)
MacKay, Andrew (E Berkshire)Shepherd, Colin (Hereford)
Maclean, DavidShersby, Michael
McLoughlin, PatrickSims, Roger
McNair-Wilson, Sir MichaelSkeet, Sir Trevor
McNair-Wilson, P. (New Forest)Smith, Sir Dudley (Warwick)
Madel, DavidSmith, Tim (Beaconsfield)
Major, Rt Hon JohnSoames, Hon Nicholas
Malins, HumfreySpeed, Keith
Mans, KeithSpeller, Tony
Maples, JohnSpicer, Sir Jim (Dorset W)
Marland, PaulSpicer, Michael (S Worcs)
Marlow, TonySquire, Robin
Marshall, John (Hendon S)Stanbrook, Ivor
Martin, David (Portsmouth S)Stanley, Rt Hon John
Mates, MichaelSteen, Anthony
Maude, Hon FrancisStern, Michael
Maxwell-Hyslop, RobinStevens, Lewis
Mayhew, Rt Hon Sir PatrickStewart, Allan (Eastwood)
Mellor, DavidStewart, Andy (Sherwood)
Meyer, Sir AnthonyStradling Thomas, Sir John
Miller, Sir HalSumberg, David
Mills, IainSummerson, Hugo
Miscampbell, NormanTapsell, Sir Peter
Mitchell, Andrew (Gedling)Taylor, Ian (Esher)
Mitchell, David (Hants NW)Taylor, John M (Solihull)
Montgomery, Sir FergusTebbit, Rt Hon Norman
Moore, Rt Hon JohnTemple-Morris, Peter
Morrison, Sir CharlesThatcher, Rt Hon Margaret
Morrison, Rt Hon P (Chester)Thompson, D. (Calder Valley)
Moss, MalcolmThompson, Patrick (Norwich N)
Moynihan, Hon ColinThorne, Neil
Mudd, DavidThornton, Malcolm
Neale, GerrardThurnham, Peter
Needham, RichardTownend, John (Bridlington)
Nelson, AnthonyTownsend, Cyril D. (B'heath)
Neubert, MichaelTracey, Richard
Newton, Rt Hon TonyTredinnick, David
Nicholls, PatrickTrippier, David
Nicholson, David (Taunton)Trotter, Neville
Nicholson, Emma (Devon West)Twinn, Dr Ian
Onslow, Rt Hon CranleyViggers, Peter
Oppenheim, PhillipWaddington, Rt Hon David
Page, RichardWakeham, Rt Hon John
Paice, JamesWaldegrave, Hon William
Patnick, IrvineWalden, George
Patten, Chris (Bath)Walker, Bill (T'side North)
Patten, John (Oxford W)Waller, Gary
Pattie, Rt Hon Sir GeoffreyWalters, Sir Dennis
Pawsey, JamesWard, John
Peacock, Mrs ElizabethWardle, Charles (Bexhill)
Porter, David (Waveney)Watts, John
Wells, BowenWood, Timothy
Wheeler, JohnWoodcock, Mike
Whitney, RayYeo, Tim
Widdecombe, AnnYoung, Sir George (Acton)
Wiggin, Jerry
Wilkinson, JohnTellers for the Noes:
Wilshire, DavidMr. Robert Boscawen and Mr. Tristan Garel-Jones.
Wolfson, Mark

Question accordingly negatived.

Main Question put:—

The House divided: Ayes 323, Noes 195.

Division No. 404][10.16 pm
Alexander, RichardCran, James
Alison, Rt Hon MichaelCritchley, Julian
Allason, RupertCurrie, Mrs Edwina
Amess, DavidCurry, David
Amos, AlanDavies, Q. (Stamf'd & Spald'g)
Arbuthnot, JamesDavis, David (Boothferry)
Arnold, Jacques (Gravesham)Day, Stephen
Ashby, DavidDevlin, Tim
Atkins, RobertDickens, Geoffrey
Atkinson, DavidDouglas-Hamilton, Lord James
Baker, Rt Hon K. (Mole Valley)Dunn, Bob
Baker, Nicholas (Dorset N)Durant, Tony
Baldry, TonyDykes, Hugh
Banks, Robert (Harrogate)Eggar, Tim
Batiste, SpencerEmery, Sir Peter
Bellingham, HenryEvans, David (Welwyn Hatf'd)
Bendall, VivianEvennett, David
Bennett, Nicholas (Pembroke)Ewing, Mrs Margaret (Moray)
Benyon, W.Fallon, Michael
Bevan, David GilroyFavell, Tony
Biggs-Davison, Sir JohnFearn, Ronald
Blackburn, Dr John G.Fenner, Dame Peggy
Blaker, Rt Hon Sir PeterField, Barry (Isle of Wight)
Bonsor, Sir NicholasFinsberg, Sir Geoffrey
Boswell, TimFookes, Miss Janet
Bottomley, PeterForman, Nigel
Bottomley, Mrs VirginiaForsyth, Michael (Stirling)
Bowden, A (Brighton K'pto'n)Forth, Eric
Bowden, Gerald (Dulwich)Fowler, Rt Hon Norman
Bowis, JohnFox, Sir Marcus
Boyson, Rt Hon Dr Sir RhodesFranks, Cecil
Braine, Rt Hon Sir BernardFreeman, Roger
Brandon-Bravo, MartinFrench, Douglas
Brazier, JulianGale, Roger
Bright, GrahamGardiner, George
Brittan, Rt Hon LeonGill, Christopher
Brooke, Rt Hon PeterGilmour, Rt Hon Sir Ian
Brown, Michael (Brigg & Cl't's)Glyn, Dr Alan
Browne, John (Winchester)Goodlad, Alastair
Bruce, Ian (Dorset South)Goodson-Wickes, Dr Charles
Buck, Sir AntonyGorst, John
Burns, SimonGow, Ian
Burt, AlistairGrant, Sir Anthony (CambsSW)
Butcher, JohnGreenway, Harry (Ealing N)
Butler, ChrisGreenway, John (Ryedale)
Butterfill, JohnGregory, Conal
Campbell, Menzies (Fife NE)Griffiths, Sir Eldon (Bury St E')
Carlile, Alex (Mont'g)Grist, Ian
Carlisle, Kenneth (Lincoln)Ground, Patrick
Carrington, MatthewGrylls, Michael
Cash, WilliamGummer, Rt Hon John Selwyn
Channon, Rt Hon PaulHamilton, Hon Archie (Epsom)
Chapman, SydneyHamilton, Neil (Tatton)
Chope, ChristopherHanley, Jeremy
Churchill, MrHannam, John
Clark, Hon Alan (Plym'th S'n)Hargreaves, A. (B'ham H'll Gr')
Clark, Dr Michael (Rochford)Harg reaves, Ken (Hyndburn)
Clark, Sir W. (Croydon S)Harris, David
Clarke, Rt Hon K. (Rushcliffe)Haselhurst, Alan
Colvin, MichaelHawkins, Christopher
Coombs, Anthony (Wyre F'rest)Hayes, Jerry
Coombs, Simon (Swindon)Hayhoe, Rt Hon Sir Barney
Cope, Rt Hon JohnHayward, Robert
Couchman, JamesHeathcoat-Amory, David
Heddle, JohnMorrison, Sir Charles
Heseltine, Rt Hon MichaelMorrison, Rt Hon P (Chester)
Hicks, Robert (Cornwall SE)Moss, Malcolm
Higgins, Rt Hon Terence L.Moynihan, Hon Colin
Hill, JamesMudd, David
Hind, KennethNeale, Gerrard
Hogg, Hon Douglas (Gr'th'm)Needham, Richard
Holt, RichardNelson, Anthony
Hordern, Sir PeterNeubert, Michael
Howard, MichaelNewton, Rt Hon Tony
Howarth, Alan (Strafd-on-A)Nicholls, Patrick
Howarth, G. (Cannock & B'wd)Nicholson, David (Taunton)
Howe, Rt Hon Sir GeoffreyNicholson, Emma (Devon West)
Howell, Rt Hon David (G'dtord)Onslow, Rt Hon Cranley
Hughes, Robert G. (Harrow W)Oppenheim, Phillip
Hunt, David (Wirral W)Page, Richard
Hunt, John (Ravensbourne)Paice, James
Hunter, AndrewPatnick, Irvine
Hurd, Rt Hon DouglasPatten, Chris (Bath)
Irvine, MichaelPatten, John (Oxford W)
Irving, CharlesPattie, Rt Hon Sir Geoffrey
Jack, MichaelPawsey, James
Jackson, RobertPeacock, Mrs Elizabeth
Jessel, TobyPorter, David (Waveney)
Johnson Smith, Sir GeoffreyPortillo, Michael
Jones, Gwilym (Cardiff N)Powell, William (Corby)
Jones, Robert B (Herts W)Price, Sir David
Kellett-Bowman, Dame ElaineRaffan, Keith
Key, RobertRaison, Rt Hon Timothy
King, Roger (B'ham N'thfield)Rathbone, Tim
Kirkhope, TimothyRenton, Tim
Knapman, RogerRhodes James, Robert
Knight, Greg (Derby North)Riddick, Graham
Knight, Dame Jill (Edgbaston)Ridley, Rt Hon Nicholas
Knowles, MichaelRidsdale, Sir Julian
Knox, DavidRifkind, Rt Hon Malcolm
Lamont, Rt Hon NormanRoberts, Wyn (Conwy)
Lang, IanRoe, Mrs Marion
Latham, MichaelRossi, Sir Hugh
Lawrence, IvanRost, Peter
Lawson, Rt Hon NigelRowe, Andrew
Leigh, Edward (Gainsbor'gh)Rumbold, Mrs Angela
Lennox-Boyd, Hon MarkRyder, Richard
Lester, Jim (Broxtowe)Sackville, Hon Tom
Lightbown, DavidSainsbury, Hon Tim
Livsey, RichardSalmond, Alex
Lloyd, Sir Ian (Havant)Sayeed, Jonathan
Lloyd, Peter (Fareham)Scott, Nicholas
Lord, MichaelShaw, David (Dover)
Luce, Rt Hon RichardShaw, Sir Giles (Pudsey)
Lyell, Sir NicholasShaw, Sir Michael (Scarb')
McCrindle, RobertShelton, William (Streatham)
Macfarlane, Sir NeilShephard, Mrs G. (Norfolk SW)
MacGregor, Rt Hon JohnShepherd, Colin (Hereford)
MacKay, Andrew (E Berkshire)Shersby, Michael
Maclean, DavidSims, Roger
McLoughlin, PatrickSkeet, Sir Trevor
McNair-Wilson, Sir MichaelSmith, Sir Dudley (Warwick)
McNair-Wilson, P. (New Forest)Smith, Tim (Beaconsfield)
Madel, DavidSoames, Hon Nicholas
Major, Rt Hon JohnSpeed, Keith
Malins, HumfreySpeller, Tony
Mans, KeithSpicer, Sir Jim (Dorset W)
Maples, JohnSpicer, Michael (S Worcs)
Marland, PaulSquire, Robin
Marshall, John (Hendon S)Stanbrook, Ivor
Martin, David (Portsmouth S)Stanley, Rt Hon John
Mates, MichaelSteen, Anthony
Maude, Hon FrancisStern, Michael
Maxwell-Hyslop, RobinStevens, Lewis
Mayhew, Rt Hon Sir PatrickStewart, Allan (Eastwood)
Mellor, DavidStewart, Andy (Sherwood)
Meyer, Sir AnthonyStradling Thomas, Sir John
Miller, Sir HalSumberg, David
Mills, IainSummerson, Hugo
Miscampbell, NormanTapsell, Sir Peter
Mitchell, Andrew (Gedling)Taylor, Ian (Esher)
Mitchell, David (Hants NW)Taylor, John M (Solihull)
Montgomery, Sir FergusTebbit, Rt Hon Norman
Moore, Rt Hon JohnTemple-Morris, Peter
Thatcher, Rt Hon MargaretWardle, Charles (Bexhlll)
Thompson, D (Calder Valley)Wells, Bowen
Thompson, Patrick (Norwich N)Welsh, Andrew (Angus E)
Thorne, NeilWheeler, John
Thornton, MalcolmWhitney, Ray
Thurnham, PeterWiddecombe, Ann
Townsend, Cyril D (B heath)Wiggin, Jerry
Tracey, RichardWigley, Dafydd
Tredinmck, DavidWilkinson, John
Trippier, DavidWilshire, David
Trotter, NevilleWolfson, Mark
Twinn, Dr IanWood, Timothy
Viggers, PeterWoodcock, Mike
Waddington, Rt Hon DavidYeo, Tim
Wakeham, Rt Hon JohnYoung, Sir George (Acton)
Waldegrave, Hon William
Walden, GeorgeTellers for the Ayes
Waller, GaryMr Robert Boscawen and Mr. Tristan Garel-Jones.
Walters, Sir Dennis
Ward. John
Abbott, Ms DianeEvans, John (St Helens N)
Adams, Allen (Paisley N)Ewing, Harry (Falkirk E)
Aitken, JonathanFatchett, Derek
Allen, GrahamFaulds, Andrew
Anderson, DonaldField, Frank (Blrkenhead)
Archer, Rt Hon PeterFields, Terry (L'pool B G'n)
Armstrong, HilaryFlannery, Martin
Ashley, Rt Hon JackFlynn, Paul
Barnes, Harry (Derbyshire NE)Foot, Rt Hon Michael
Barron, KevinFoster, Derek
Beckett, MargaretFraser, John
Bell, StuartFyfe, Maria
Bennett, A. F. (D'nt'n & R'dish)Galbraith, Sam
Bermingham, GeraldGalloway, George
Biffen, Rt Hon JohnGarrett, John (Norwich South)
Blunkett, DavidGarrett, Ted (Wallsend)
Boateng, PaulGeorge, Bruce
Body, Sir RichardGodman, Dr Norman A.
Boyes, RolandGordon, Mildred
Bradley, KeithGorman, Mrs Teresa
Bray, Dr JeremyGould, Bryan
Brown, Gordon (D'mline E)Graham, Thomas
Brown, Nicholas (Newcastle E)Grant, Bernie (Tottenham)
Brown, Ron (Edinburgh Leith)Griffiths, Nigel (Edinburgh S)
Buchan, NormanGriffiths, Win (Bridgend)
Buckley, George J.Grocott, Bruce
Budgen, NicholasHarman, Ms Harriet
Campbell, Ron (Blyth Valley)Hattersley, Rt Hon Roy
Campbell-Savours, D. N.Haynes, Frank
Canavan, DennisHealey, Rt Hon Denis
Carlisle, John, (Luton N)Heffer, Eric S.
Clark, Dr David (S Shields)Hinchliffe, David
Clarke, Tom (Monklands W)Hogg, N. (C'nauld & Kilsyth)
Clay, BobHolland, Stuart
Clelland, DavidHome Robertson, John
Clwyd, Mrs AnnHood, Jimmy
Cohen, HarryHowarth, George (Knowsley N)
Coleman, DonaldHowell, Rt Hon D. (S'heath)
Cook, Frank (Stockton N)Hughes, John (Coventry NE)
Cook, Robin (Livingston)Hughes, Robert (Aberdeen N)
Corbett, RobinHughes, Roy (Newport E)
Corbyn, JeremyHughes, Sean (Knowsley S)
Cousins, JimIllsley, Eric
Cryer, BobIngram, Adam
Cummings, JohnJanman, Tim
Cunliffe, LawrenceJanner, Greville
Dalyell, TamJohn, Brynmor
Davies, Rt Hon Denzil (Llanelli)Jones, Martyn (Clwyd S W)
Davies, Ron (Caerphilly)Kaufman, Rt Hon Gerald
Dewar, DonaldLambie, David
Dixon, DonLamond, James
Dobson, FrankLeadbitter, Ted
Doran, FrankLeighton, Ron
Duffy, A. E. P.Lestor, Joan (Eccles)
Dunnachie, JimmyLewis, Terry
Eadie, AlexanderLitherland, Robert
Eastham, KenLloyd, Tony (Stretford)
Lofthouse, GeoffreyRees, Rt Hon Merlyn
Loyden, EddieReid, Dr John
McAllion, JohnRichardson, Jo
McAvoy, ThomasRobertson, George
McCartney, IanRobinson, Geoffrey
Macdonald, Calum A.Rogers, Allan
McFall, JohnRooker, Jeff
McKelvey, WilliamRoss, Ernie (Dundee W)
McLeish, HenryRowlands, Ted
McNamara, KevinSedgemore, Brian
McTaggart, BobSheerman, Barry
McWilliam, JohnSheldon, Rt Hon Robert
Madden, MaxShepherd, Richard (Aldridge)
Mahon, Mrs AliceShore, Rt Hon Peter
Marek, Dr JohnShort, Clare
Marlow, TonySkinner, Dennis
Marshall, Jim (Leicester S)Smith, Andrew (Oxford E)
Martin, Michael J. (Springburn)Smith, C. (Isl'ton & F'bury)
Martlew, EricSnape, Peter
Maxton, JohnSpearing, Nigel
Meacher, MichaelSteinberg, Gerry
Meale, AlanStott, Roger
Michael, AlunTaylor, Teddy (S'end E)
Millan, Rt Hon BruceThompson, Jack (Wansbeck)
Moate, RogerTownend, John (Bridlington)
Moonie, Dr LewisTurner, Dennis
Morgan, RhodriVaz, Keith
Morley, ElliottWall, Pat
Morris, Rt Hon A. (W'shawe)Wardell, Gareth (Gower)
Morris, Rt Hon J. (Aberavon)Wareing, Robert N.
Mowlam, MarjorieWelsh, Michael (Doncaster N)
Mullin, ChrisWilliams, Rt Hon Alan
Murphy, PaulWilliams, Alan W. (Carm'then)
Oakes, Rt Hon GordonWilson, Brian
O'Neill, MartinWinnick, David
Orme, Rt Hon StanleyWise, Mrs Audrey
Parry, RobertWorthington, Tony
Pike, Peter L.Wray, Jimmy
Powell, Ray (Ogmore)
Primarolo, DawnTellers for the Noes:
Quin, Ms JoyceMrs. Llin Golding and
Radice, GilesMr. Allen McKay.
Redmond, Martin

Question accordingly agreed to.

Bill accordingly read a Second time.

Photo of Mr Bob Cryer Mr Bob Cryer , Bradford South

On a point of order, Mr. Speaker. When I came out of the No Lobby, two Tory Whips, led by the hon. Member for Staffordshire, South-East (Mr. Lightbown) whose rather menacing bulk can now been seen at the Bar of the House, were taking down the names of those Tory Members who voted No. That could be regarded as besetting and intimidation and, as you know, Mr. Speaker, by law that cannot be carried out by trade unionists. If the law is good enough for trade unionists, it should be good enough for Tory Members and should stop them intimidating their hon. Friends. If there is any intimidation, I ask you, Mr. Speaker, to carry out an investigation to see if there is a serious breach of privilege by those Tory thugs.

Photo of Mr Bernard Weatherill Mr Bernard Weatherill , Croydon North East

I have no knowledge of any intimidation. The Whips might have been inviting those hon. Members to dinner.

Bill committed to a Committee of the whole House.—[Mr. Ryder.]

Committee tomorrow.