European Communities (Finance) Bill

HC Deb 28 November 1994 vol 250 cc932-1034

Order for Second Reading read.

Madam Speaker

I have selected the amendment standing in the name of the Leader of the Opposition. Because of the interest in this debate, I have had to limit speeches to 10 minutes between the hours of 6 pm and 8 pm. I ask other hon. Members who speak outside that time to be courteous to their colleagues by restricting the length of their speeches.

3.39 pm

The Chancellor of the Exchequer (Mr. Kenneth Clarke)

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

The Bill will ratify the highly successful deal negotiated by my right hon. Friend the Prime Minister and my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), the then Chancellor of the Exchequer, at Edinburgh in 1992. The new financial decision that emerged from Edinburgh will add about £75 million a year to our net contributions to the European Union in the next financial year, and that sum will increase to about £250 million a year by 1999.

That increase in the contribution is an increase in the price that we pay for the undoubted benefits of membership of the European Union. Our economic well-being is dependent in huge part on our membership of the single market. We pay for a seat at the table to enable us to influence the political and commercial character of that market. We use our membership of the European Union to increase our influence in the world and to give added clout to our worldwide foreign policy.

The Edinburgh deal paid a fair price for those benefits and it also achieved other things in the financial area. It took the United Kingdom down the league table of contributors to the European budget. As a result of the Edinburgh deal, not only Germany, which has always paid more than us, but the Netherlands, France, Sweden, Austria and—if it joins—Norway, will all in the future make a bigger net contribution per head to the Community than do we in the United Kingdom. The deal will also continue to reduce the proportion of the total budget devoted to the common agricultural policy as a result of the mechanism of so-called agricultural guidelines.

Mr. Tony Marlow (Northampton, North)

Will my right hon. and learned Friend give way?

Mr. Clarke

I shall in a second.

The Edinburgh deal also preserved the British rebate. So far, that has been worth £16 billion to us, and that rebate has been preserved until the end of the century.

Mr. Marlow

When the right hon. Lady, the then Prime Minister, came back with the rebate on 27 June 1984, she said: this system can be changed only by a unanimous decision by all member Governments and ratified by their Parliaments. The benefits for the United Kingdom will continue unless and until we ourselves agree to change it."—[0fficial Report, 27 June 1984; Vol. 62, c. 993.] Was she right or was she talking nonsense?

Mr. Clarke

She was perfectly right. If my hon. Friend will restrain himself at this stage, the rebate was negotiated at Fontainebleau in 1984 and unanimity is required to change it but, as I shall explain in a moment, usually a large number of issues are on the table at Councils to revisit those financial deals; countries pursue a variety of objectives; and each country puts into issues the subjects that it wishes to reopen.

I can assure my hon. Friend that the subject of the British rebate is reopened by our partners at every possible opportunity and it was on the table at Edinburgh, but my right hon. Friend the Prime Minister stuck to his guns and insisted that the British rebate should remain part of the financial arrangements. As a result of the Edinburgh deal, it is now preserved at least until the end of the present century.

Before I discuss the Edinburgh deal in detail, we must first be sure about the present level of our contributions to the European Union. Last week, it was plain that there is still, in spite of the copious document that I produced, a certain lack of clarity. The contributions that we are paying this year are based on the framework that was agreed by the then Prime Minister, Margaret Thatcher, in 1988 at the Brussels summit, the last time that a financial framework was negotiated before 1992.

Margaret Thatcher had a tough time at Brussels in 1988, and it is worth remembering what the financial picture then was. The Commission and most of the other member states wanted the ceiling to go up to 1.4 per cent. of Community gross national product. Eventually, they revised their proposals downwards and she was asked to accept 1.3 per cent. of GNP as the ceiling. She still said, on behalf of the British Government, that that was too high. Jacques Delors then proposed 1.2 per cent. Chancellor Helmut Kohl was alarmed by the effect that that might have on German farmers. Chancellor Kohl wanted to go to 1.3 per cent., but Margaret Thatcher stuck to her guns and she settled at the Jacques Delors compromise of 1.2 per cent.

Five years later, at Edinburgh, when the matter had to be reopened, my right hon. Friend the Prime Minister was still, in the end, not taken anywhere near the figures that Chancellor Kohl and others had been demanding five years earlier. Not by the end of the century will we reach the figures that others were demanding of the British Government in 1988. The Edinburgh settlement will move our contribution to 1.21 per cent. in 1995–96, and to 1.27 per cent. by 1998–99.

What of today's figures, which result from the Margaret Thatcher settlement and the 1.2 per cent. of gross national product to which the Edinburgh deal will be added? What about the billions of pounds whose payment, and forecasts of which, now appear to cause some of my right hon. and hon. Friends such concern? Since 1988, there has been a history of very erratic figures. The highest net public sector contribution that we have made so far is the £2.4 billion paid in 1989–90; the lowest is the £943 million paid in 1991–92. There is a genuine reason for that: technical factors make the figures veer about unpredictably from year to year. The timing of our receipts and payments is unpredictable, and difficulties are involved in calculating the rebate.

The legal basis of the payments is certain, settled by the financial framework, but the timing in any British financial year from April to April is notoriously difficult, given that the rest of Europe and the Union work on a calendar year. There has always been uncertainty: if right hon. and hon. Members look back, they will see that forecasting has been difficult under every Government of every complexion in every year of our membership of the Community and, subsequently, the Union. One thing we do know is that the figures tend to rise in cash terms over the years; that is the inevitable effect of inflation and the overall growth of our GNP, and that is why we have reached the £3 billion figure that has been debated in the past week.

As people continue to be alarmed by such figures, let me make it clear that there is nothing new about them. We have always known that our net contribution would eventually exceed £3 billion: we have always said that it would do so in the end as a result of the Margaret Thatcher Brussels summit deal, if it had never been altered.

Let us take the current year—the year over which there was so much fuss last week when I produced the figures a week earlier than I would normally produce the latest forecast so that we should be better informed today and, I hoped, engage in an intelligent discussion about the cost to the country of the European Union. The first forecast for 1994–95 was made in the Treasury's 1991 autumn statement, and amounted to £3.3 billion. I do not recall the slightest fuss being made at the time. In the 1992 autumn statement, the forecast amounted to £3.1 billion; again, no one raised a murmur. Last year, the autumn statement forecast had come down, because—trying to predict our payments and receipts—we expected this to be a particularly low year: we made a forecast of £1.7 billion. Last week, I announced our latest forecast of £2.4 billion.

Those forecasts show the difficulty of forecasting, which no one has ever claimed to be an exact science. They show either a rise of £700 million or a fall of £900 million over the past few years, according to taste. What matters about the figures—

Mr. William Cash (Stafford)

Will my right hon. and learned Friend give way?

Mr. Clarke

I can think of no other hon. Member to whom I should make this point more clearly than my hon. Friend the Member for Stafford (Mr. Cash)—the man who has chosen not only to show the uncertainty of the figures, but to suggest that there is some untruthfulness or deceit behind them. He has rejected my allegations that he was talking alarmist nonsense, as indeed he was, a fortnight ago. Those figures have nothing whatever to do with the Edinburgh deal, or with the Bill.

Mr. Cash

Does my right hon. and learned Friend accept that, when he came to the House last week and produced the revised figures, he was obliged to do so? What I said was not rubbish, as he said on a radio programme the other day. I said that there had been a serious omission of enormous proportions from the letter that he sent round, and that that was unacceptable.

Mr. Clarke

I most definitely was not obliged to produce those figures last week. My hon. Friend was utterly amazed that I did so last week. He would have produced his figures and carried on making mischief with them if I had not produced my figures last week. Those figures would normally have been produced at the time of the Budget tomorrow. Had I produced them tomorrow, I predict that we should have had the same nonsense surrounding them as last week. As my hon. Friend knows, my letter set out accurately and clearly the financial consequences of the Edinburgh summit and the financial consequences of the Bill. That has been incontrovertible throughout. The forecast that I gave last week of this year's contribution, which has nothing to do with Edinburgh, is lower than some forecasts that we have given and higher than other forecasts that we have given. I think that the outturn will show this year to be a fairly normal year.

Mr. Gordon Brown (Dunfermline, East)

Will the Chancellor of the Exchequer clear up this matter once and for all? Given what we know of the European Community—that it thought that the figure was higher than £1.7 billion since January—when did the Treasury first calculate that the figure would be higher than £1.7 billion? Was it last week or was it a few months ago?

Mr. Clarke

As far as I am aware, the European Union does not calculate in advance the net contribution from particular countries. It knows what the legal obligation is. For our public spending purposes, we produce forecasts of receipts and expenditure. We produce net contribution figures and we produce them annually. We are for ever altering the forecast. We produce the figures at the time of the Budget. As far as I am aware, no Chancellor of the Exchequer has produced the latest forecasts a week ahead of the Budget. I did so in order that the debate should be better informed. I thought that it was a useful exercise in open government, but not everyone is ready for open government in this country yet.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Does my right hon. and learned Friend agree that the issue is not really whether there are different assumptions and different ways of calculating, although there certainly are and all hon. Members can honourably and in a friendly way disagree about them? The difficulty is this. When the measure was first proposed, it was presented as being for £75 million. At a later stage, it appeared that the first year's contribution might be a lot larger. Some of my right hon. and hon. Friends say that, of course, it was first of all presented as being a little measure. Then, when it became necessary to bash it through with a quite unnecessary element of confidence added to it, and the country began to ask, "Why are you blackmailing your Back Benchers over £75 million?" it became necessary to say that the measure was for a larger sum.

Mr. Clarke

My hon. Friend and I have conducted this debate, or variants of it, with respect and in a friendly spirit for many years. He appreciates what the issue is, although I was not sure about that from his intervention. The reason why I produced the figures last week, ahead of when I had to, was to demonstrate the latest forecasts of the underlying pre-Edinburgh contribution. As he knows, there is a legitimate issue of what the consequences are of moving from a ceiling based on 1.20 per cent. of our GNP, in steady steps to 1.27 per cent. of our GNP by 1999. The figure that I first put forward—the figure in the letter that I sent to every Member of Parliament in an attempt to make the debate better informed than I feared it might otherwise be—remains accurate. The consequences of going from 1.20 per cent. to 1.21 per cent. are about £75 million next year—a sum on which Parliament must obviously vote and approve or not approve. Similarly, going to 1.27 per cent. by 1999 will have a £250 million consequence. That is the issue before us. To be fair to my hon. Friend, he has never traduced my efforts to make that clear.

I should not seek to blackmail my hon. Friend, but I wish to persuade him of the merits of the deal—to which I shall return when I resume my speech—and that his conscience, lifelong commitment to the Conservative party, sense of proportion and of his country's duty of keeping its word when it enters into commitments with our partners in the European Union, should lead him to support the Bill tonight, with no question of having his arm twisted.

Mr. Gordon Brown

Will the Chancellor answer my question? Did he know of the Treasury forecast revising the contribution upwards from £1.7 billion when he wrote his letter to Members of Parliament?

Mr. Clarke

I honestly cannot remember. [Laughter.] My letter to Members of Parliament was based on the consequences of the Edinburgh summit. When one prepares a Budget, forecasts and tables flow through the Treasury, normally to be produced on the day of the Budget in the Red Book. I do not normally trail in advance tables that are to appear in the Red Book or any part of them. I prepared a letter about the Bill containing the figures that I gave a moment ago. Only when confusion arose about the figures and a date was set for this debate did I decide that one line of those figures—the forecast of our EU contributions—should be abstracted and given to the House.

The hon. Member for Dunfermline, East (Mr. Brown) supports the Edinburgh deal, so he must find it difficult to know which issues to raise in this debate. He can only trawl about, joining some of my hon. Friends in trying to obscure the real issue behind the Bill. I fear that he is somewhat scraping the barrel.

Mr. John Wilkinson (Ruislip-Northwood)

Is my right hon. and learned Friend telling the House that he cannot remember the advice of his Treasury officials when he took the most unusual step of writing a round-robin to 651 Members of Parliament in advance of this debate? That letter conveniently referred to the extra amount that would be paid over and above the sum predicted, rather than to the net contributions that our people will have to pay.

Mr. Clarke

I wrote about the Bill's financial consequences and the amount of money riding on this evening's vote. I did not write about the forecast contribution that would arise this year from the 1988 settlement long ago ratified by the House and now utterly beyond its control. I wrote about the issue before us tonight. The attempt to make a great issue about the forecast of this year's contribution, which is £900 million lower than that which we made two years ago but admittedly £700 million higher than the one that we made 12 months ago, is an attempt—with the greatest respect to my hon. Friend—to introduce a complete irrelevance.

Mrs. Teresa Gorman (Billericay)

rose—

Sir Teddy Taylor (Southend, East)

rose—

Mr. Clarke

I shall give way to both my hon. Friends, but as I am sure that they both want to speak, perhaps they will allow me to make a little progress first.

Around £75 million is therefore the correct figure for the effect of the Bill next year. The issue that we should address is why it was necessary, given that large underlying net contribution to which we were already committed, to agree to give anything more at the Edinburgh summit. That is a serious question.

Mr. Barry Porter (Wirral, South)

Will my right hon. and learned Friend give way?

Mr. Clarke

No, because that would be unfair to my other hon. Friends.

Why was it necessary to add anything to the £2 billion to £3 billion, which I have just been talking about, and which flowed from the Brussels summit in 1988? The first thing to understand—it is rarely understood by anybody discussing European Councils of any kind—is that we were pursuing a package of aims at the extremely important Edinburgh Council. We had to help the Danes to obtain Maastricht opt-outs similar to our own to keep them in the Union as our decentralising and anti-federalist allies. We had to secure the completion of the single market as we wanted it to be. We had to turn subsidiarity into a more concrete form to get something to flow from it, and we had to secure agreement to enlargement so that Austria and the Scandinavians might join.

It was a very tough agenda, and it explains the context in which the decision was reached, which the House is being asked to endorse two years later. We had all those highly important political aims. The danger for my right hon. Friend the Prime Minister, as anyone who has been to any Council of Ministers will readily understand, was that he had to pursue those four political objectives. The danger was that the high spenders in the Union would demand in return too high a price in the new financial arrangements in exchange for our British objectives. The danger of not agreeing any of those things and not having a settlement at the Edinburgh Council would have been that it would all have passed on to the next presidency—it was out of our hands in the British presidency—which might have been less sympathetic.

At Edinburgh, my right hon. Friend succeeded in every one of the political objectives that I have set out: he secured the Danish opt-outs and the completion of the single market, subsidiarity was turned to concrete form, and there was the agreement to enlargement, which is now taking effect—and still at a modest cost, which kept the British abatement intact.

Why, after all that had been secured, was there an unavoidable need for any increase in the new financial arrangements? That is the only key question. Why, even when he pursued and got those four key British objectives, did my right hon. Friend the Prime Minister have to concede any more money? That, in my opinion, is about the only sensible question to have been raised in the debate in the past week.

More money had to go into the structural and cohesion funds to provide the less-developed regions of the Union with the infrastructure and other investment that they required to accept the single market, and certainly to accept enlargement. There are hon. Members who welcome the objective 1 status that the highlands and islands, Liverpool and Merseyside, as well as Northern Ireland, now have. Principally, the money was needed by Spain, Greece and Portugal to accept what we wanted: that they would compete with German, British and French industry in open trading conditions.

In 1992 we also needed money to give European aid to countries in central and eastern Europe, for example, Poland, Hungary, Czechoslovakia and Russia. I still debate, in the Council of Finance Ministers, the aid that we give to those countries—countries in which we need to see liberal, democratic government and free market economies and whose stability is vital to European security. More money was inevitable because those were new developments. The question was how much. When one looks at that alongside the political achievements, it is my opinion that the Prime Minister returned to the House with a considerable triumph.

Mrs. Gorman

I thank my right hon. and learned Friend for giving way. Does not he agree that most people in this country are concerned about the money that we are already giving, which, as he just pointed out, amounts to 31/2p in the pound on the basic rate of income tax? The constituents whom I represent do not worry too much about putting money into roads in Portugal or into massive irrigation schemes in Spain. They are at a loss to understand why our Government should give priority to the needs of our European partners while neglecting the increase that the taxpayer in this country will have to contribute, which is not a small sum, but which almost amounts to the equivalent that we are trying to raise on VAT?

Mr. Clarke

The case that I have tried to make so far is that we have, under the existing arrangements, been paying between £2 billion and £3 billion a year to bring the undoubted benefits of the single market and of the European Union to this country. Whatever views people have on Europe, very few have demanded that we leave the Union. That level of net contribution has prevailed for years and years, and has not been debated in the House because it has not been a serious issue since the 1988 settlement arose.

Another £75 million will be added to that amount next year and I have given two of the reasons why it needs to be added. That £75 million, for the reasons that I have just given, was a virtually unavoidable increase because there were commitments that had not been there before. That was a very, very good settlement given that the main things that people were concerned about at that Council were the opt-out for Denmark, the enlargement to Sweden, Finland, Austria and Norway, turning subsidiarity into something other than a phrase in the Maastricht treaty and the other benefits that I have just described my right hon. Friend the Prime Minister coming back with from the British summit.

Mr. Barry Porter

I largely accept my right hon. and learned Friend's argument. I represent myself, totally unelected, as somebody from the centrist tendency. We are not much bothered about the odd percentage here and there of gross national product. What we are bothered about, I think—and I am sure that my right hon. and learned Friend will come to this point—is that he should satisfy us that the Government have some policy under which something will be done about the fraud and corruption that have been brought to our attention, not for the first time this year, but in years before. Thereafter, let us get the woods from the trees. We can go forward with this matter perfectly happily, as other hon. Members on both sides of the House can.

Mr. Clarke

My hon. Friend the Member for Wirral, South (Mr. Porter), not for the first time, speaks for the voice of common sense. I certainly intend in due course to deal with the extremely important question of how we stop fraud and how we stop the misuse of this money. If I have time, I should like to go on to the far more important question of how we get better value for the money that we spend, which is an important issue highlighted by the Bill. I shall deal with those questions and try to explain why I believe that the present situation is not the same as the past. Very much more is being done, although I believe that we must ensure that more is achieved to get a grip on the issue.

Dr. Robert Spink (Castle Point)

rose—

Mr. Clarke

I will not give way yet, if my hon. Friend will forgive me.

As the Bill is concerned with these figures and as we are voting on our increased contribution, I shall conclude my arguments about why I think that the Bill, in terms of the figures, represents a good bargain that the House should approve. I shall then turn to how we can be sure in future that we get much better value out of what we are already paying, as well as the addition that we are talking about this evening.

Sir Teddy Taylor

Before the end of this debate, shall we have an idea of when the Chancellor of the Exchequer first became aware that the estimate of £1,714 million was an underestimate of about £730 million? More importantly, on the accuracy of the £75 million, as the Chancellor has said, that depends on all the guidelines being met. Does not it worry him that, as my photocopy shows, the 1995 budget of the EC states clearly and precisely that in agricultural spending, the budget will be exceeded by £1 billion? That will be done by accountancy devices in exactly the same way as happened when, unfortunately, Lady Thatcher got agricultural guidelines and they were broken through by having a metric year. How can we stop such a thing, when the figures are written clearly and precisely?

Mr. Clarke

Throughout the public spending round, various estimates of expenditure are produced; quite a lot are negotiated. I assure my hon. Friend the Member for Southend, East (Sir T. Taylor) that European contributions remain a pretty uncertain feature throughout most of a public spending round until, eventually, the Treasury experts go nap on the best figure they can do for the coming year on the forecast then coming in. Those forecasts emerge in the Red Book at the time of the Budget, so at the time of writing the Budget, one becomes aware of them. I should not normally look at them in close detail until we were finalising the arithmetic in the last week or two.

Those figures were not in my mind at the time of the letter; they had nothing to do with the letter. A complete red herring has been raised in seizing on the changed estimate—changed from when I produced it last year. Hon. Members know that the figures that I gave in my letter were precise, accurate and unchallengeable, yet some of them have chosen to go off on to another field.

Mr. Peter Shore (Bethnal Green and Stepney)

Will the Chancellor of the Exchequer give way?

Mr. Clarke

I shall conclude my point and then I shall give way to the right hon. Gentleman.

I shall conclude the judgment of the deal at the Edinburgh summit. I have described the political background. This judgment is what, two years later, has given rise to this so-called "crisis debate". [Interruption.] Good heavens. Sudden noise reminds me that some members of the Labour party are here. I do not know why they have come to this debate as their participation in supporting the Edinburgh deal is somewhat difficult to understand. Let me—[Interruption.] Let me just give some objective judgments of the deal at the Edinburgh summit. It was described in the following terms by my right hon. Friend the Member for Kingston upon Thames, the then Chancellor: I think it has been an outstandingly successful sutnmit, I can't remember one that has been so successful for many years. I think this is very much due to the negotiating style, the quiet determined diplomacy of John Major, he absolutely excels in this sort of forum and he has delivered a very good deal for Britain on almost every issue. [HON. MEMBERS: "Hear, hear."] I do not say this to embarrass my right hon. Friend the Member for Kingston upon Thames. He has supported the deal throughout, but he keeps being prayed in aid by those who do not.

My right hon. Friend went on to say: The overall financing agreement is one that is affordable and is much more modest than the highly ambitious plans the Commission put forward which have been scaled back. He even said: Everybody had to make some compromises, but at the end of the day, by making switches from one item of the Budget here to another item there we achieved a result which actually goes ahead for seven years on the future finances, it takes us right up to 1999. That's why it was very good news that we succeeded in preserving our rebate, because that is now guaranteed into the next century. Now that is excellent news. That is what my right hon. Friend said and I agree with it—[Interruption.]—and there were others.

My hon. Friend the Member for Stafford rose to ask a question during the statement after my right hon. Friend the Prime Minister had returned from the Edinburgh summit. At column 29 of Hansard on 14 December 1992, he asked about the Danish opt-out. At that time, my hon. Friend did not utter one word of complaint about the own resources deal. My hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) rose to his feet immediately after the Prime Minister had said that the Edinburgh summit had decided that it was not appropriate to increase expenditure by a substantial amount, even over the coming years. My right hon. Friend the Prime Minister had just reminded the House that At present, the United Kingdom's net contribution is about £2 billion a year. It would be £4 billion but for the rebate, which remains and—lest there be any doubt—is extended to cover the fresh areas of expenditure that were agreed at Maastricht. In the case of the cohesion fund, for example, that means that we would pay only 5 per cent. of the total cost. My hon. Friend the Member for Wolverhampton South-West rose shortly after that. At column 32 of Hansard he did not demur from a word of that. He asked a question about the need for any future ratification of the treaty.

My hon. Friend the Member for Holland with Boston (Sir R. Body) intervened, as did my hon. Friend the Member for Reigate (Sir G. Gardiner). Neither raised the slightest murmur about the financial deal. My hon. Friend the Member for Tayside, North (Mr. Walker) intervened at column 39.

Mr. Bill Walker (Tayside, North)

rose—

Hon. Members

Hooray!

Mr. Clarke

I shall give way to my hon. Friend, who had the courtesy to rise and to congratulate my right hon. Friend the Prime Minister on his negotiating skill.

Mr. Walker

I meant what I said, as my right hon. and learned Friend believes, and I said what I meant at the time. [Interruption.] Yes, I still mean it and my right hon. Friend the Prime Minister knows that. May I draw the attention of my right hon. and learned Friend the Chancellor to paragraph 5 of the explanatory and financial memorandum? It says: The new Decision has to be approved by all member states in accordance with their national procedures before it can enter into force. It will take effect as from 1st January 1995. What we are doing in the House is pursuing our normal procedures. Since 1992, there have been changes as a result of our economic difficulties, 17.5 per cent. VAT on fuel and many other aspects. Exposed Community fraud, as a result of what my right hon. Friend the Prime Minister achieved, has been demonstrated. People such as my constituents and I are concerned about what we shall do about the fraud. That is why they are taking a stand. We are following our normal procedures.

Mr. Clarke

With respect to my hon. Friend, that really will not do. When the Government of this country enter into political commitments with their allies in such Councils, it is known that the Government will come back and follow our normal parliamentary procedures and seek approval from the House. That is how our parliamentary democracy works. The normal procedure for an hon. Member who supports the Government is to support a settlement upon which he congratulated the Prime Minister at the time he brought it back.

Mr. Andrew Rowe (Mid-Kent)

Will my right hon. and learned Friend give way?

Mr. Clarke

I shall give way in a moment after I have referred to one more of my colleagues.

One Euro-sceptic Member of Parliament queried the cost. Only one Member of Parliament in the entire House cast any question on the financial deal at the time. That person was my hon. Friend the Member for Billericay (Mrs. Gorman). She was the only person to complain about what she called the massive increase in taxation … which will be necessary to pay for that money".—[Official Report, 14 December 1992; Vol. 216, c. 31–35.] She complained at the time, so it is to her, the only person to see anything wrong at the time, to whom I turn to continue to explain what I hope are her last doubts about the £75 million next year that she objects to paying.

Mr. Shore

rose—

Mr. Budgen

Will my right hon. and learned Friend give way?

Mr. Clarke

I shall give way to my hon. Friend in a second. I give way to the right hon. Member for Bethnal Green and Stepney (Mr. Shore) first.

Mr. Shore

The right hon. and learned Gentleman will realise that the arithmetic in this matter is pretty important and his credentials in this matter are not exactly improved by the correction of £732 million that he had to make to.this year's estimate. However, whatever the right hon. and learned Gentleman may argue and reason in claiming that this year's additional expenditure is likely to be only £75 million, what assumptions has he made that lead him to the derisory figure of £250 million in six years' time? What assumptions has he made, crucially, about United Kingdom and Community growth rates during that period? The whole own resource ceiling is based entirely on the percentage of achieved gross domestic product.

Mr. Clarke

The right hon. Gentleman was in government long enough to know that when we look back at the history of predictions of net contributions to the European Community, it is clear that they veer about, year in and year out in the Red Book, as I have described. That is not usually put down to the individual Chancellor of the Exchequer having changed the figures. In fact, the estimates that I produced last week are lower than the estimates that we gave in 1991 and in 1992, as I have already described.

I agree with the right hon. Member for Bethnal Green and Stepney that the arithmetic matters. The certainty is that the ceiling will move in steady stages from its present 1.20 per cent. of gross national product to 1.27 per cent. of GNP by 1999. The assumptions that we have made in trying to put a cash figure on that, to make it cornparable with other public spending figures, are 21/2 per cent. inflation and 21/2 per cent. growth in GNP. At the moment, we are becoming more prosperous more rapidly than any of our partners in the European Union. As our GNP goes up, that has the effect of putting up our contributions.

Mr. Budgen

Does my right hon. and learned Friend appreciate how much we enjoyed his knock-about performance on the announcement at the Edinburgh summit? Does he appreciate that he has already demonstrated that the figures are very complex and that there are a number of different assumptions about them? It was silly for some people to greet them with sycophantic approval. It would also have been silly to greet them with open disapproval without knowing what they were. Surely, on reflection, my right hon. and learned Friend will agree that it was better simply to wait until the full figures emerged and to hope at least that the rights of Members of Parliament would be respected when Members of Parliament were trying carefully and sensibly to analyse what was done and what was asked for.

Mr. Clarke

I really must put it to my hon. Friend that we have got into the debate now, and so far, it seems to me, no one has challenged my figure of around £75 million for next year. It remains absolutely incontrovertible. My hon. Friend at least, I certainly agree, understands the Red Book when the Chancellor produces it, so he would understand the figures when they are produced. He really is being disingenuous in saying that we would have avoided this confusion if I had saved them until tomorrow as opposed to producing them last week. My hon. Friend knows perfectly well that, had I produced them tomorrow, he and his hon. Friends would have gone straight to them and again done what they did last week—tried to pretend that a totally different figure about a totally different estimate casts doubt upon my wholly accurate figure of £75 million for next year.

Mr. Geoffrey Hoon (Ashfield)

Should we add the name of the right hon. Member for Thanet, South (Mr. Aitken) to the list of Conservative dissidents? In 1988, when a very similar Bill was before the House, the right hon. Gentleman tabled a series of wrecking amendments. The right hon. Gentleman is now a member of the Cabinet. Is he a member of the Cabinet because his views on European finance have changed, or is he a member of the Cabinet because his views on European finance have not changed?

Mr. Clarke

In 1988, we had a different Bill and a much more expensive deal; a much more significant increase in the British contribution than the one in 1992 that we are now facing. I say to the hon. Member for Ashfield (Mr. Hoon), as I say to most members of the Labour party, that I continue to wonder what irrelevances they are going to introduce to intervene in the debate. The truth is that they are cynically listening to a debate on a Bill which they support, and whose objectives they have never demurred from, but which they intend to vote against, presumably because they have tabled a wholly wrecking amendment at the request of whichever of my hon. Friends they can get to vote against it.

Mr. Rowe

Will my right hon. and learned Friend give way?

Mr. Clarke

Let me proceed a little.

Let me refer to the doubts that have been raised by some of my hon. Friends about, perhaps, agriculture and, perhaps, fraud and poor value for money, which, certainly, it is sensible for the House to address at a time when we have the chance of considering the overall cost by way of net contribution of our membership of the Union. Agricultural spending is referred to in the Opposition's amendment, although, as far as I can see, with no proposals for reform put forward by them.

Agricultural spending still covers about 50 per cent. of all European spending, but, since 1988, it has been declining. We have a so-called agricultural guideline, which certainly should not be broken. I agree with my hon. Friends who say, "Well, we wait to see what happens." [Interruption,] Spending is.in the control of Finance Ministers. I assure my hon. Friend the Member for Southend, East that Finance Ministers are keen on the Edinburgh ceilings and keen on the agricultural guideline. That guideline has already ensured that agriculture is taking a steadily declining share of the total. It took 70 per cent. of the total in 1988, it takes 50 per cent. now, and that proportion will fall, making room for the structural funds and the third-country payments to which I have already referred.

The proposition on the table about agriculture at the 1992 Edinburgh summit, and again under discussion during 1993, was that the agricultural guideline should actually be increased by 1.5 billion ecu. That proposition was rejected by my right hon. Friend the Prime Minister and was successfully fought off by him. Because of GATT and the reforms of the common agricultural policy in 1992, agricultural policy will be less dependent on export subsidies and storage costs. Those are the sectors that have been notoriously vulnerable to fraud, and the future shape of agricultural policy should lessen itself to fraud. However, fraud is an extremely important and serious matter.

Mr. George Stevenson (Stoke-on-Trent, South)

Will the right hon. and learned Gentleman give way?

Mr. Clarke

I give way to the hon. Member for Stoke-on-Trent, South (Mr. Stevenson), because he is usually critical of the common agricultural policy and its expenditure. So am I and so are the Government. We had an important reform in 1992. We are now seeing a decline in the agricultural budget, and we are shall tighten up on fraud in that budget, as I shall explain in a moment.

Mr. Stevenson

I am grateful to the Chancellor for giving way. In that context, will he confirm that between 1992 and 1995 common agricultural policy expenditure under his Government has increased from £21 billion to almost £27 billion—an increase of 25 per cent?

Mr. Clarke

That is part of the 1992 reforms, which reduced the surpluses and the costs to consumers and, I agree, certainly gave rise to some compensatory costs for farmers. I must confess that I have no idea what the Labour party's policy on common agricultural policy reform is, but I assume that Labour's spokesperson in 1992, whoever it was, accepted that the very substantial reforms which my right hon. Friend, now the Secretary of State for the Environment, took through during our presidency were a considerable net economic benefit to this country. We must continue to go down that road, and the present guidelines reduce the proportion of the total that is likely to go on agriculture.

Mr. Rowe

Will my right hon. and learned Friend confirm that in the last year for which we were solely responsible for agricultural support, the cost was about 1.2 per cent. of our gross national product, and it is now well under 0.5 per cent.? Is not it also true that we are having so much difficulty with the figures now because the enormous potential increase in our contribution stems exactly from the very success of the club for which this is the subscription?

Mr. Clarke

I agree with my hon. Friend on his second point and I am grateful to him for the figures that he gave, which I shall check. He is certainly correct.

Some of the recent publicity about the so-called cost of the European Union has included calculations that assume that we should not have any system of agricultural support if we were not a member of the European Union. My hon. Friend and I are just about old enough to remember that we had a very bad and expensive form of agricultural support before we joined the European Union. He and I both represent farmers in our constituencies and we are committed to a continuing element of agricultural support in the future. I have described how that support has been reformed and improved and how it is now reducing as a proportion of total expenditure.

I shall move on to the subject of fraud after one more intervention.

Mr. Alex Salmond (Banff and Buchan): If the Chancellor is so confident about the case that he is putting about the Edinburgh summit, why did the Government feel obliged to make this an issue of confidence? It was the Chancellor who raised the stakes in the debate in a quite spectacular manner—of course, no doubt in a totally loyal fashion. If there is a separate vote next week about VAT on fuel, will that also be an issue of confidence and if not, why not?

Mr. Clarke

I shall come to the question of confidence and the stakes of this bet, which it is a certainty we shall win, in a few moments. If I have to address the hon. Gentleman about the British constitution and our perfectly commonsense interpretation of it, I shall do so in due course.

I shall deal first with the question of fraud that my right hon. and hon. Friends have raised. We have been giving the highest priority to tackling fraud and getting better value for money—an even bigger problem— over the past year or two, and we have made substantial progress.

Mr. Gordon Brown

Will the right hon. and learned Gentleman give way?

Mr. Clarke

I shall give way when I have explained our current position. The House must understand that we are not the only member state concerned about fraud. The fact is that our Danish, Dutch and German colleagues, to name but a few, are equally aroused about it. It is as important to their political debate as it is to ours, as I know from the frequent discussions that we have on the subject when I attend the Council of Finance Ministers.

But it is the British Government who have made most.of the running in recent years and it is the British Government who have contributed the most tangible changes that will produce an improvement inside the Union. A great deal has been done, but there is a great deal more to do.

Any fraud is unacceptable when public or any other money is involved. The present level of fraud is excessive, but I say again to the House that it does not improve public debate or the appreciation of what can be done to whip up the debate on the subject by way of the grotesque exaggeration that we have heard in the past week. The ridiculous figure of £6 billion worth of fraud is bandied about in the BBC and sections of the press, and by some of my hon. Friends. As far as I am aware, it has not the slightest factual basis.

There was once a German academic who tried to produce the figure as a result of a study that he had done of the beef regime. It does not stand up to the slightest examination. I trust that when we debate the matter today, people will not exaggerate the extent of fraud by at least 10 times.

As I said, no fraud is acceptable. All fraud is serious. So let me refer to what has been done in the past two years or so since the ratification of the Maastricht treaty. The Maastricht treaty has so far made the biggest changes.

Mr. Wilkinson

Will my right hon. and learned Friend give way?

Mr. Clarke

My hon. Friend was not the most famous supporter of that treaty, but I shall give way to him.

Mr. Wilkinson

Will my right hon. and learned Friend tell the House why he allowed the Italians to get away with the milk quota scam, which cost £500 million? They grossly exceeded their milk quotas deliberately and then blackmailed the Community, saying that they would not implement the Edinburgh summit proposals unless we gave in. Why, if my right hon. and learned Friend and Her Majesty's Government are so keen on eliminating fraud within the Community, did they give in in that way?

Mr. Clarke

It is untrue that I gave in. I shall deal with Italian milk quotas, in which suddenly everyone has taken a great interest in the past fortnight. Most of the people who talk about milk quotas have not the first idea what they are talking about. I shall deal with the Italian milk quota settlement before I sit down because I have had enough of the allegations made about it both by my hon. Friends and by the press. The allegation that I backed down on that matter is as untrue as the ridiculous £6 billion figure for fraud that I have just described.

I shall first deal with the Maastricht treaty changes and what is happening now. The treaty gives the Court of Auditors greatly increased status and powers compared with those that the body previously had. The irony is that the new, stronger Court of Auditors, which produced last week's report on the 1993 budget, gave the opportunity to every enemy of the European Union suddenly to claim that it was corrupt to the core because at last they had the material, which they then grossly exaggerated. That gave rise to the allegations.

The Court of Auditors now has the power to take the Commission or other institutions of the Union to the.European Court of Justice if it needs to do so to get action taken on its reports. The Council of Ministers and the European Parliament have also been given extra powers to hold the Commission to account for the defects disclosed by the Court of Auditors reports. The Council of Ministers and the European Parliament are now doing that for the 1992 budget.

The British took the lead at a Council of Finance Ministers, which demanded that, in the light of the 1992 report, in future we should have prior approval of projects, target setting for results in terms of value for money, monitoring and evaluation of spending. That put in place the type of procedures that accompany good government in this country. The European Parliament is demanding action on milk quotas, tobacco and the use of anti-fraud staff. It is also getting a response.

Since 1992 there has been a Commissioner personally responsible for action against fraud. It is at present a German Commissioner and is soon to be a Swedish Commissioner. Both come from countries as keen to cut fraud in parts of the Union as we are in the British Parliament. There is now a unit that deals with fraud— the so-called flying squad—currently headed by a Dane. That so far is good enough, but the British Government wish and intend to go further.

Both the British Government and the Commission have made further proposals for Community-wide action and stronger criminal penalties for those who are guilty of fraud involving Community funds. My right hon. and learned Friend the Home Secretary has put forward the British proposal that member states should tighten penalties for Community fraud and that it should be a criminal, imprisonable and extraditable offence. The Commission has responded with, if anything, even stronger suggestions of its own. I know that my right hon. and learned Friend or another Home Office Minister will discuss the matter at the Council of Interior Ministers later this week and that proposals will soon be put in place.

Fraud is a serious matter. That is not anything that divides any Members in the House one from another. At last—especially since 1992, Maastricht and Edinburgh—we have in place the necessary structures to tackle fraud. The British Government will remain among the most determined to ensure that the structures are acted on and produce results.

More proposals will be put forward at the next European summit in Essen. For example, we might propose independent inspection of the vetting of claims by some national agencies because some member states are not good at vetting the claims that they put forward.

I hope that when we make those proposals and when we strengthen what we have done in the past two years, no Members of the House will say that we are allowing European interference in this country, appointing Euro-snoopers and making Euro-laws. We are strengthening the action that can been taken against fraud because it is absolutely essential that we get value for money out of the budget.

Mr. Cash

I must ask my right hon. and learned Friend, in a friendly spirit, whether he intends to make a statement on the proposal in my amendment, which has not been selected, that the Public Accounts Committee could take a greater interest in the issue, given the fact that, under the Maastricht arrangements and previously, it was stated that Conservative Members wanted greater enhancement of the powers of national Parliaments.

Mr. Clarke

I am not sure whether the Public Accounts Committee and the Comptroller and Auditor General have access to information that the Court of Auditors, the Commission and member states receive. The PAC does a very good job, but I am dubious about how much information it would have about the Yugoslav maize scam, which was detected in Greece some time ago. A serious point lies behind my hon. Friend's amendment—how we tackle fraud.

I was describing the way in which we are putting into place in.Europe—largely at Britain's behest, as was the case when we negotiated Maastricht—the sort of arrangements that British politicians would recognise as likely to detect fraud at member state level, or when there is carelessness at Commission level.

Several hon. Members

rose—

Mr. Clarke

May I keep my promise to return to the subject of the Italian milk quotas? The basis on which the own resources decisions proceeded was finally unlocked at the Council of Finance Ministers, when I settled a series of actions that turned around the Italian and Spanish milk quotas from 1988 onwards. The British Government had participated in those court actions precisely to ensure that people were not allowed to escape with the underpayment of penalties, which might otherwise have occurred.

The Italians and Spanish had exceeded their milk quotas for a number of years and had not collected the penalties from their farmers, as other members, such as the Germans, Belgians and British, had done. When the matter finally came to a head, the Commission purported to backdate the quotas to those member states, because many Agriculture Ministers agreed that mistakes had been made in calculating the exact milk production of those countries. The Commission calculated how much Italy and Spain should pay to the Union and tried to backdate the increased quotas. I have put those facts on the record because some factual description of the saga is required.

What did the various court actions lead to? The Commission proposed to sort out the problem by making the Italians and Spanish repay 2.1 becu—£1.6 billion—as a penalty. They said no, went to court and said that they should not have to pay anything as it had all been a mistake and they were not liable for £1.6 billion. The British went to court to argue that the Commission should not backdate the quota and that the two countries should pay more penalties.

When we discussed the matter, the first question was who would win in court. I have been involved in enough court actions to know that no one can be certain of that, least of all in the European Court of Justice. Had we gone to court and won the point of principle, we should still have left the Commission to calculate the penalties. There was no reason at all to believe that had we won the action, the Commission would have assessed the penalties at anything more than the 2.1 becu, or £1.6 billion, which it was already happy to take. The settlement that we got obliged the payment of penalties of 3.2 becu, an increase above the Commission's statement of 1.1 becu. The British action in court and our position at the Council of Finance Ministers increased the penalties by £860 million, over and above anything that would otherwise have been achieved.

We took that action because we insisted that the penalties should not be waived by the Commission in those circumstances. My Italian and Spanish colleagues had to go back to their Parliaments and explain why, between the two of them, £860 million had been added to the penalties imposed upon them for failing to enforce milk quotas. That £860 million was a cost imposed by the British Government for their seeking to evade the operation of milk quotas that other people had.

That action, which gave rise to the biggest penalties in the history of agriculture in the European Union, is typical of the action that the Government will take on fraud in the future. That is why I suggest to the House that the addition to our net contributions is a triumph of negotiation. It is a contribution that we should pay on top of our existing contributions to continue to get benefits from the Union.

I have been asked why that is a matter of confidence in Her Majesty's Government.

Sir Teddy Taylor

Will my right hon. and learned Friend give way?

Mr. Clarke

No, with the greatest respect to my hon. Friend. I am now about to conclude. It is time for us to find out what the Labour party is here for.

On the question of confidence, I repeat to the House what I said when I was giving a press conference about the figures that I produced last week. It seems to me to be plain and obvious that any Government who give a solemn undertaking in international negotiations, enter into political commitments and require money to support those commitments, must come back and ask the House to endorse that. If the House will not vote in favour of that money, the Government will have lost the confidence of Parliament. [Interruption.] It is not a ploy, nor a policy decision. It is plain and obvious common sense.

The role of this Parliament will be diminished if a new rule is invented for the short-term and expedient reasons given by some Opposition Members that the Government can be defeated on a major international obligation and then carry on with a reshuffle as if nothing had happened. It is precisely the power of Parliament that if Parliament will not vote in favour of the money and will not enable the Government to honour their solemn international commitments, the Government will have lost the confidence of the House and they must fall. That seems to be obvious, and to take any other course would undermine parliamentary democracy and not improve it.

That is the only issue which has moved the Labour party and the Liberal Democrat party to want to vote against the own resources decision.

Several hon. Members

rose—

Mr. Clarke

Hon. Members must now wait for their speeches to make their points.

The deal was not only not criticised by anybody at the time—apart from my hon. Friend the Member for Billericay—fbut it has been supported in full by the Labour party and by the Liberal Democrat party ever since it was entered into. If we are talking about parliamentary procedure, and if hon. Members are to raise points of order about respect for Parliament as a result of newspaper reports that they have read at the weekend, what respect for Parliament is created by the official Opposition and the third-biggest party standing on their heads and voting against every principle and statement that they have ever propounded on Edinburgh at the request of some of my right hon and hon. Friends?

I ask the Opposition to go away. They have no part to play in the debate. We know their views. My hon. Friend the Member for Stafford will tell them when to come back and which way to vote. He will tell them whether they are needed or not.

The Opposition are following a totally dishonourable course in seeking to wreck a deal that was a superb negotiating triumph at the time. When the House returns to common sense, it will ratify that deal when it gives the Bill a Second Reading tonight.

4.44 pm

Mr. Gordon Brown (Dunfermline, East)

I beg to move, to leave out from "That" to the end of the Question and to add instead thereof: this House believes that the European Communities (Finance) Bill is not an acceptable measure as it increases United Kingdom contributions to the European Union without action by Her Majesty's Government to cut fraud and waste in Europe or to reduce expenditure on the Common Agricultural Policy. The case for the amendment has been enhanced by the muddle created by the Chancellor this afternoon over the figures which he has produced, and by his failure to convince and explain them adequately to the House. We know that the Chancellor did not read the Maastricht treaty. Now we know that he cannot remember when he read what were perhaps the most controversial estimates of his public expenditure statement. It does the Chancellor no credit to respond to his own failure by spending a good deal of his speech attacking many Conservative Back Benchers.

In the recent history of the House, there have been many votes of confidence called by Prime Ministers to determine the fate of their Government. In every one of them, the Prime Minister of the day has come to the House, stood at the Dispatch Box and spoken in defence of his Ministers, Cabinet and Government. That is until today.

The Prime Minister tells us that he attaches vital importance to the debate. He has told the House that, for him, it is a matter of confidence and that every clause is a vote of confidence. He has told the country that it is a matter on which not just he, but the whole Government would resign. No compromise, no last-minute shuffling of leaders—it is all or nothing. But the man who has asked for that vote of confidence from the House has not the confidence to stand up in the House to ask for that vote.

The House has seen many historic votes of confidence. But when the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) faced a vote of confidence over Europe, he did not delegate that matter to Anthony Barber. When Macmillan faced a vote of confidence after sacking half his Cabinet—some said the wrong half—he did not sit it out and simply call on Selwyn-Lloyd to stand at the Dispatch Box. I ask the House; would Lady Thatcher, in similar circumstances to today's, have sent along Sir Geoffrey Howe to defend her?

The Prime Minister has chosen to exercise his right to silence in the debate, and we all know the inference from insisting on one's right to silence which the Home Secretary would encourage us to draw. It is rather as if the grand old Duke of York had marched his men up to the top of hill, made his excuses and left. If I may recall a previous European encounter in which a leader sought to summon up the spirits of his country, it is as if the Prime Minister had said, "Once more into the breach, dear friends. But I am sorry, I will not be leading you myself."

We have an unprecedented vote of confidence called the day before the Budget on every clause and every detail of the Bill. There has been panic, and the ultimatum of the confidence vote. The scale of the threat and this bizarre sequence of events can be explained by one thing and one thing only; not by any reference to the national interest and not by looking at the needs of the British economy and the British people, but by the fact that it is in accordance with the imperatives exercised by the bitter feuding inside the Conservative party. The divisions, as we see this afternoon, are rapidly becoming irreconcilable and are now fracturing a once-great party.

Just as the imperatives arising from that disunity have forced the Prime Minister to adopt an absurd stand over the confidence vote, the Prime Minister has allowed himself to be forced into making every clause in the Bill a matter of confidence. This must be a no-change Bill; a Bill that the Prime Minister tells us is somehow beyond improvement. What a ridiculous position the Prime Minister has put himself in. He asks us to adopt a test which, if applied to the European Communities (Amendment) Bill—which the House chose to amend eight times during 12 months—would have, under the new Prime Ministerial diktat, occasioned general election after general election during the past year. If such a test were to be applied—as the Prime Minister says—to every Finance Bill, it would have meant last year alone, with three amendments to the Finance Bill accepted, three dissolutions of Parliament.

The Prime Minister should reconsider his absurd view that strength and authority would come from an unchanged Bill. The best evidence of strength and authority would be a better Bill, because I believe that a majority in the House want new measures to be included in the Bill to tackle waste, fraud and the cost of the CAP. Not only is a majority in the House in favour of that, but, as the custodian of public finance, the House has a duty to demand action as a result of the report by the president of the Court of Auditors, which was published since the Edinburgh summit.

On Thursday, the Chancellor gave the House revised figures relating to our contributions to the European Community. Last week, an extra £700 million was added to our budget contributions—not to the contributions made in 1988 or 1989, nor to contributions forecast long into the future, but to our contributions this year. Surely we deserve a better explanation than we have had from the Chancellor this afternoon, especially when we were told 18 months ago that our contributions were to be £2.6 billion, but then that they were to be halved to £1.3 billion. That reduction represented savings as vast as one third of the public spending cuts that the Chancellor announced in the Budget. Why were we not told earlier that the contribution had been revised from £1.7 billion to £2.4 billion?

I must tell the Chancellor that this is not a technical matter. It goes right to the heart of the debate about our contributions to the European Community. We are talking about the bottom line in terms of Britain's payments to the Community. It is not a technical matter, because the failure to answer our questions and the fact that £700 million more is to be paid raises questions about what the Government are doing about waste, fraud, the expenditure on the CAP and costs that continue to rise.

Mr. James Clappison (Hertsmere)

Talking about the bottom line, can the hon. Gentleman confirm that if he had his way, the one thing that we could be sure of is that our contributions would be far higher because of the massive spending demands of the Labour party? Whatever the contributions made by a Labour Government, they would be infinitely higher than the figure given by the Chancellor.

Mr. Brown

We have never supported the increasing costs of the CAP, which have risen under the Government. The hon. Gentleman will have a difficult job explaining to his constituents that he opposed an amendment that called for further action on waste, fraud and the costs of the CAP. He has told his constituents that combating such fraud and waste is exactly what he would do in the House, but tonight he will vote against a proposal designed to do just that.

Mr. Ray Whitney (Wycombe)

If the hon. Gentleman is right when he says that the Labour party has always supported improvements to the CAP, can he explain why his party either abstained on or opposed such important reforms, and did not support them, when they were introduced in December 1991?

Mr. Brown

The hon. Gentleman does not seem to know whether we abstained or opposed, but the fact is that we have been consistent opponents of the CAP.

When the former Minister of Agriculture, Fisheries and Food returned to the House after the debates on the MacSharry proposals, he commended them to the House as the proposals of the British Government. Even then, however, we were calling for continual major reform of the CAP. If Conservative Members think that the CAP, which is costing ordinary people £20 more in their food bills—it is a tax on food, unfair to the development of eastern Europe and unfair to the third world—is in any way still defensible, they should listen to their constituents, who would tell them the exact opposite.

It is important to consider the waste and fraud in the Community budget and the recent report of the president of the Court of Auditors. That report is a sorry catalogue of abuse and lack of accountability which cries out for action. However, today, yet again, the Prime Minister has set himself against any amendment that would give the House greater powers of accountability to consider such waste.

Mr. John Butterfill (Bournemouth, West)

Does the hon. Gentleman agree that there is a lack of manpower resources in the Commission to investigate such fraud? Does he agree that the effect of his amendment, if passed, would be to wreck the Bill and deny those resources to tackle fraud?

Mr. Brown

I agree with the hon. Gentleman that not enough work is done in the Community to combat fraud, which undoubtedly exists. Let me remind him that on 1 September 1993 a Treasury Minister said: It is correct that the UK does not take up all the money that the Commission allocates us for anti-fraud work. The hon. Gentleman may wish to allocate responsibility to the European Commission, but mistakes made by the Treasury have prevented us from taking up the money available to deal with fraud.

The intervention from the hon. Member for Bournemouth, West (Mr. Butterfill) is extremely helpful, because, yesterday, I was given figures about the take-up of money by Britain for anti-fraud work relating to the CAP. In 1991, the European Community made available to Britain 1.5 million ecu for anti-fraud work, but the British Government took up not a penny; in 1992, 1.4 million ecu were available, but 80 per cent. of that sum was not taken up; in 1993, 92 per cent. of the available money was not taken up. In total, just 11 per cent. of the amount available to deal with anti-fraud was—

Mr. David Shaw (Dover)

We are more honest than others in the Community.

Mr. Brown

The hon. Gentleman has raised another issue, but I have already pointed out that we do not take up the money available for anti-fraud work. The hon. Gentleman should criticise the Chancellor for that. I accept that Britain is not the worst when it comes to fraud, but perhaps the hon. Gentleman has not read the Court of Auditors report, because the president was not entirely pleased with what was happening here. He noted that mechanisms were not in place for dealing with both the audit and the monitoring of customs fraud. The hon. Gentleman may wish to direct some of his questions to the Chancellor concerning the failures of the Government, as reported by the president of the Court of Auditors.

Let us be clear about the waste and the fraud and why the Government should be criticised for failing to act. We know about the celebrated incident of the £1 billion wasted on digging up vineyards, only to find that, at the end of it, the output of wine in the Community had increased by 20 per cent. The Court of Auditors also reported that one department had been giving grants to dig up the vineyards while another had given grants to replant them. We also know that grants were made to start projects that had already been completed; that grants intended for redundant workers went to people whose jobs were not at risk; and companies which were given other grants for a particular job were then given a grant for auditing their own accounts. I believe that the majority of hon. Members would want more done to combat such fraud.

When the Foreign Secretary praised the Court of Auditors for the report, perhaps he already knew about the high standards of hospitality offered by its president at its launch. Journalists and officials discussed the waste and corruption in the Euro gravy train while they were served caviar, smoked salmon, canapes and pâté de foie gras washed down with champagne. No doubt each and every guest was determined to do as much as possible in the time available to diminish the salmon mountain and the champagne lake.

Is not it absurd that a reasonable amendment, which gives the House more power to monitor such abuses—something that Conservative Members believe is necessary in principle—will not be accepted by the Prime Minister because he has made a test of strength not out of getting the best Bill, not out of answering the real needs in relation to the European Community, but out of getting the Bill through unchanged, no matter the opinion of the House?

Mr. Kenneth Clarke

The hon. Gentleman is giving the impression that his amendment is merely designed to cut down on the quantity of canapes consumed and to cut agricultural spending a bit. I trust that he will accept that his amendment would wreck the Second Reading of the Bill; stop it from proceeding and prevent us from being able to endorse the Edinburgh deal. That would put us in breach of our treaty obligations to other members of the European Union. Why is he putting forward an amendment that does that when he supports the deal that we have done?

Mr. Brown

Of course the Government could bring the Bill back with the amendment that we put forward, but it is the Prime Minister who has made this evening's vote a vote of confidence. It is the Prime Minister who is trying to dragoon his troops into the Lobby. It is the Prime Minister who is responsible for the issue becoming more controversial than it need be. However, if he is seeking to pass an unchanged Bill through the House, he does not understand the feelings of the country about waste and fraud, and about what is happening to the common agricultural policy.

Mr. Nigel Spearing (Newham, South)

Has my hon. Friend noted that the Chancellor has just claimed that failure to pass the Second Reading tonight would be a breach of treaty commitment? Does he share with me the impression that the Chancellor admitted that he has not read it, because is it not a fact that article 201 of the union treaty gives this Parliament an explicit right to agree or disagree with the provisional agreement made in Edinburgh two years ago?

Mr. Brown

I am grateful to my hon. Friend, whose erudition in those matters is well known. I heard the Chief Secretary to the Treasury yesterday repeating the words that the Chancellor said today: that we had to honour obligations that were made internationally and we could not be put off by a minority of dissidents in the House. The very Chief Secretary who says that this year was the person who voted against an analogous Bill as recently as a few years ago. [Interruption.] He does not seem to understand that that was also a negotiated treaty that he was asking the House to vote against.

What about the role of the House?

Mr. Quentin Davies (Stamford and Spalding)

rose—

Mr. Brown

Mr. Deputy Speaker, I do not know on which side of the debate the hon. Gentleman is, but I will give way to him because of his well-known interest in agriculture.

Mr. Davies

Is it not a fact that neither the hon. Gentleman nor his party said a word against the Edinburgh agreement when it was concluded? Is it not amazingly cynical to come to the House with an amendment designed to prevent the Government front implementing an international obligation to which the hon. Gentleman never objected at the time? Will not that be regarded as utterly cynical throughout Europe?

Mr. Brown

But if I may say so in language that 1 think that the hon. Gentleman would understand, we have always called for a fundamental reform of the common agricultural policy. I think that the hon. Gentleman, with his specialist knowledge, understands that. [Interruption.]

Mr. Davies

Will the hon. Gentleman give way? [Interruption.]

Mr. Brown

Mr. Deputy Speaker, I have made it clear from the opposition Benches that amendments that deal with the problems of waste and fraud in the European Community can,I believe, command a majority throughout the House and that it is ridiculous for the Prime Minister to demand an unchanged Bill when,by debate and discussion and by the House performing its proper duties supervising the finances of the Government, we can obtain a better Bill. We not only—

Sir Terence Higgins (Worthing)

Will the hon. Gentleman give way?

Mr. Brown

I will give way because of seniority.

Sir Terence Higgins

I am grateful to the hon. Gentleman. Will he make it absolutely clear to the House that, if his amendment is carried, he believes that the Bill will have obtained a Second Reading? Secondly, since he argues for amendments, can we understand that he proposes to table amendments in Committee, both on agriculture and on fraud, which would have any effect in reality on those two problems?

Mr. Brown

The Government could accept our amendment now and let us deal with the questions of waste, fraud and the common agricultural policy. [Interruption.] Mr. Deputy Speaker, the Government can accept our amendment. They could bring back the Bill after they had debated it this evening. It is not I but the Prime Minister who has made it an issue of confidence to be dealt with at 10 o'clock this evening.

Mr. Kenneth Clarke

It is important that the hon. Gentleman knows what he is voting about. His amendment would delete everything after the word "That" and would deny the Bill a Second Reading. It would substitute for it his form of words about fraud and agriculture, but the Bill would be defeated. It would not be possible for the Government to bring back the Bill in the same Session of Parliament. The hon. Gentleman is voting to defeat a Bill whose objectives he supports, and he does not even seem to realise that that is what he is doing.

Mr. Brown

I repeat, it is the Prime Minister who has made that an issue of confidence this evening. The Government could bring back the Bill, with the changes that we are recommending in it, if they chose to do so, but it is the Prime Minister who has chosen to make it an issue of confidence, and it is the Prime Minister who would pay the price as a result.

I shall now discuss the common agricultural policy. When even the National Farmers Union now calls for fundamental reform, when the Country Landowners Association has recently submitted a document calling for reform, when the wasteful CAP is a tax on food and a barrier to fair trade—since 1979, the cost of the CAP has increased dramatically—I ask Members on the Conservative Benches how they can vote tonight for no further action against a system of open-ended state intervention, the export subsidies that go with it and its inviolability.

The Prime Minister is elevating into a vote of confidence the lack of amendment to the Bill. Since the Edinburgh summit, what has happened to the Community agricultural policy and why is action now needed? Expenditure on the common agricultural policy continues to increase—despite the impression that the Chancellor gave—and in order to meet the guidelines, we are witnessing what the Senior Controller of European Spending, in talks that he has had, has called, "creative accounting". The only way that he could meet the ceiling, as he said himself, was by what he called "certain budgetary devices"—counting the 1994 payments against the 1993 budget, closing the budget a year early or further delaying payments of credits to member states in one year. Having failed to condone the profligacy, we are being asked to condone the rigging of the balance sheets of the common agricultural policy, yet the Prime Minister would countenance no amendment related to that in the Bill.

What of this year's budget for the common agricultural policy? Of course there are now budget corrective measures if there is an overspend; of course the Commission cannot switch resources between sectors; but was not "Anglo Europe" right to report, on the use of budgetary devices for this year's budget: The figures in the official draft budget are merely juggled under the new rectifying letter"? Surely it is right that the House should insist, when agricultural spending continues to increase—it will increase by £3 billion in coming years, a 10 per cent. increase despite all the reforms that have been made—that the House should be in a greater position to scrutinise the Executive with regard to that matter.

Mr. David Howell (Guildford)

rose—

Mr. Brown

I am not giving way again.

Let us consider the tobacco regime, costing more than £1 billion a year, while we spend little on health education. In a previous debate, the then Minister of Agriculture, Fisheries and Food said: It is not feasible to end tobacco production and support for it". We are entitled to say, about something from which we obtain no benefit, when are talking about the uneconomical production of the most unsmokable and the most unhealthy cigarettes, that the Prime Minister is wrong to elevate the sanctity of the Bill, without amendment to tackle those abuses, into a vote of confidence.

Despite everything that the Chancellor said this afternoon, this is the Government whose proposals on waste, on fraud and on the common agricultural policy cannot command the weight that they need and the influence that they should have in the European Community, because all political credit is being used up by the Government in fighting the social chapter, fighting for opt-outs, fighting European integration and losing influence in Europe as a result, simply because of the divisions in the Tory party.

The Government are fighting battles in Europe that they cannot win. Following battle after battle over the social chapter, they have persuaded no other country, no other entrant country, no other right-wing leader in Europe except Monsieur le Pen and not even many Conservative Members of the European Parliament. They now find that more than 50 of the top 100 British companies are implementing the social chapter anyway.

A no-change Bill, this vote a day before the Budget, the nature of the vote itself—a confidence vote without the Prime Minister being willing to appear in the House—and the edifice of absurdity that the handling of the Bill now represents, is predicated on the utter precariousness of the Conservative party's leadership and its control of the party.

What is the Prime Minister asking us to have confidence in? What is the Government's European policy now? What is their ability to handle the issue of Europe on its merits? What is that European policy? The Conservative party has a vice-chairman who has to resign for attacking our European neighbours in the most infantile of terms, who says he wants Britain out of Europe. It has a deputy chairman who states explicitly that every European decision must involve not examining the national interest, but appeasing party dissidents: the party must therefore remain more Euro-sceptic than Labour—as the deputy chairman has said—simply to achieve unity.

We are asked to have confidence in the Government's European policy as a result of all that. Their Chief Secretary, a signatory to the Bill, spent most of the 1980s opposing the very measures for which he now asks us to vote. Divisions on European policy are at the very heart of the Cabinet. The moment the Chancellor calls for convergence in Europe, the Secretary of State for Employment says that important national differences must be recognised; when the Chancellor says that he favours co-operation on exchange rates, the Employment Secretary wants to call for free floating; when the Chancellor says that he favours monetary union in principle, the Employment Secretary and a substantial section of the Cabinet say that it will mean "giving up the government" of the United Kingdom, and that that is the impossible.

Mr. Patrick Cormack (Staffordshire, South)

Will the hon. Gentleman give way?

Mr. Brown

I will give way once more.

Mr. Cormack

Can the hon. Gentleman tell us, very simply, whether he agrees with what was agreed at Edinburgh in 1992?

Mr. Brown

We made our position absolutely clear at the time. We made it clear that we supported the Edinburgh agreement. What we will not support is a failure on the part of the House, and an unwillingness on the part of the Prime Minister, to consider any amendments to the Bill that deal with fraud, waste and the common agricultural policy. I think that, when he returns to his constituency, the hon. Gentleman will hear very clearly from his constituents that they, too, want action against waste, fraud and the CAP.

Where is the Prime Minister in all this? Sadly for the Prime Minister—sadly for the Prime Minister—[Interruption.] The hon. Member for Harrow, East (Mr. Dykes) thinks that I have nothing to say about the Prime Minister; he is mistaken.

Mr. Hugh Dykes (Harrow, East)

rose—

Mr. Brown

I will not give way—although I am interested to note that the Maples memorandum, which was supposed to menace and threaten the Labour party, and suggest ways of shouting us down and silencing us, is now being used to get Conservative Back Benchers into line.

Where is the Prime Minister at the end of all this? The authority of the Chancellor has been strengthened for a minute, while the authority of the Prime Minister has diminished. The dissidents in the Conservative party began by planning to challenge the Bill; they have ended up planning to challenge the Prime Minister, this year or next year. (Interruption.] The hon. Member for Southend, East (Sir T. Taylor) says that he is not leading the challenge, but I note a great deal of silence on the Bench beside him.

The Prime Minister has come to the House today in his customary capacity as head of the Government. True to form, he has turned up in person but he is no longer in charge. Once more, he is an onlooker of the great debates that are taking place. When Lady Thatcher resigned, the Conservatives believed that they had ordered the "New Statesman"; instead, they have got the "Spectator".

In similar circumstances, after meeting his Back Benchers in 1922, Bonar Law said of them: I am their leader; I must follow them. The Prime Minister has added another pathetic dimension to his leadership: "I am their leader; I cannot make up my mind which faction to follow." In the Conservative party, all options to negotiate in Europe, to influence events, to co-operate for the benefit of Britain and to be genuinely at the heart of Europe have been sacrificed to the overriding pressures of party strife. We have a Chancellor who cannot give us the exact figures in relation to the budget, a Prime Minister who now tells us that we cannot vote for amendments to deal with waste, fraud and the CAP and Conservative Back Benchers who spend all their time talking about the problems of waste and fraud but who will join the Government in the Lobby to vote against an amendment that raises those very issues.

Such is the tyranny of the factions within the Conservative party, and such is the impotence of the leadership, that the only European policy on which the Conservatives can now agree is to stand apart from Europe. Such is the weakness at the top that the only posture left to the Government in European negotiations is hovering between semi-detachment and complete isolationism. Such is the depth of disunity that they cannot understand that true patriotism—standing up for Britain's interests—means not opting out but co-operating, winning influence and leading to secure the best deals for Britain.

The Government can no longer speak with a united voice; they can no longer speak for Britain. Their divisions are irreconcilable. They are intellectually bankrupt and politically exhausted. They should go, and go now.

5.15 pm

Mr. Norman Lamont (Kingston upon Thames)

I am told by those who know more about it than I do that the issuing of suicide threats is a classic cry for help. It is in that spirit that I wish to help the Government tonight. In such cases, the key is to keep the potential victim talking, to prevent his mind from turning to any untoward action. Well, there has been a good deal of talking—rather too much, some might say. I am told that the Prime Minister is thinking of reintroducing Budget purdah.

I am grateful for the effusive thanks delivered by the Chancellor of the Exchequer for the role that I took in the Edinburgh negotiations. After the summit, I was happy to commend the deal to colleagues: it was a good deal, and I commend it again.

The Bill is, essentially, the price that we agreed to pay the Spanish for agreeing to enlargement. The danegeld— if that phrase can be applied to the Spanish—was kept to relatively modest proportions. I believe that it would have been difficult to secure a better deal. In the months coming up to the Edinburgh summit, we kept being told that if we did not achieve a new financial perspective, the Community would come to a halt—that it would be unable to function and would run out of money. I must say that I did not find that an altogether convincing threat, and I am sure that the same thought occasionally crossed the mind of the Chancellor when he was dealing with the question of Italian fines on milk quotas.

The issue that I want to discuss is not the extra cost that the Bill imposes. I want to deal with the question to which my hon. Friend the Member for Billericay (Mrs. Gorman) referred: what is the true, underlying financial and public expenditure cost of our membership of Europe? What real figure represents the cost of our membership of the Union?

I want to discuss that matter because I believe that, even after 20 years, our membership of the European Union ought still to be able to be subject to rational analysis and ought still to be discussed in the light of the costs and benefits that result from it.

Conditions are now very different from those that obtained 20 years ago, when we joined the European Community. We live in a world of very low tariffs. The external tariff of the European Union is less; I believe that the arguments about access to the market, and about inward investment, therefore have much less impact and are less persuasive than was the case 20 years ago. All the time, however, the cost of our membership has been rising.

People could be forgiven for being confused when they are given so many different figures about both the Bill and the cost of our membership. My good friend Sir Leon Brittan tells us that the cost of the Bill is only the price of a newspaper a day. I do not know whether my right hon. Friend the Chief Secretary to the Treasury would regard £75 million as something that should be described in quite those terms.

My right hon. and learned Friend the Chancellor of the Exchequer has referred to the cost of our membership as being £75 million—he reconfirmed that figure today—rising to £250 million. He also referred to the real cost as being our current net contribution—just over £2 billion in 1993–94, rising to £3.5 billion in 1996–97.

Mr. Cormack

Would my right hon. Friend agree with our friend Sir Leon Brittan if he were still Chancellor of the Exchequer?

Mr. Lamont

I am coming on to what I think the costs are. I have no quarrel with what the present Chancellor of the Exchequer has said about the arithmetic of the Bill and I have not implied that I have. I wish to differ with the Chancellor in that I do not believe that the net figures are a measure of the true cost of our membership of the European Union.

It is an extraordinarily curious argument for Conservatives to say that the cost is what we pay in taxes, minus what we get back in public expenditure. After all, that is like saying that the education service, the national health service or lunch are free. It is like saying that the rate of income tax, which the Chancellor will announce for the year ahead in his Budget and which I suspect will remain unchanged at 25p in the pound—although some of my hon. Friends may hope for something else—is not really 25p but 2p in the pound because we receive a lot back in terms of schools, roads, hospitals and the NHS. As I said the other day, the argument about us getting the money back reminds me of the campaign slogan of the mayor of Sao Paulo in Brazil, who said: I steal but I give some back. It cannot be disputed that the real cost of European-directed and sponsored programmes is, of course, our gross contribution to the European Community, minus our rebate. That cost could amount to about £6 billion this year, rising to £8 billion at the end of 1996–97. Our net contribution would represent the cost of our membership of the Community if it spent money only on things that our own Government wanted to spend money on. Of course, we know that that is very far from being the case.

The real public expenditure cost of the European Union, therefore, is somewhere between our net contribution in 1993–94 of £2.1 billion and £6 billion gross, and in 1996 it will be somewhere between the net cost of £3.5 billion and the gross cost minus the rebate of £8 billion. Throughout that period, the real cost of our membership of Europe will be much nearer the higher figure because the vast majority of European Union expenditure goes on things which we do not really want and which the Government would not have chosen to spend money on. Indeed, we know that, as a matter of principle and doctrine, the European Commission will approve expenditure in this country only on things that are additional to what the Government want to spend money on.

Mr. Dykes

I am grateful to my right hon. Friend for giving way at that point in his interesting analysis, but even his own more pessimistic figures amount to a maximum of about 1 per cent. of gross national product at the end of the period to which he referred. That is the cost of the strength that we gain from being in the European Union, with all the other sovereign countries working together on common issues.

Mr. Lamont

One per cent. of GNP is a significant sum of money which represents in excess in £6 billion. It is a much larger figure than that quoted in the debate as the cost of our net contribution to and membership of Europe.

We are told all the time that we get money back, but is that money spent on things that we want it to be spent on? The answer is, broadly, no. I am sure that I am not alone in feeling considerable irritation when I go around the country and see signs with the blue sticker and 12 yellow stars saying, "Funded by the European Union." May I make a suggestion to my right hon. and learned Friend? The Government should put a sticker underneath saying, "The European Union has decided to give you three quarters of your money back." It is absurd that we should be made to feel grateful for getting our money back through things that we would not have wanted to spend the money on in the first place.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Will the right hon. Gentleman give way?

Mr. Lamont

I want to make a little more progress.

On the subject of fraud, my right hon. and learned Friend the Chancellor of the Exchequer referred to some of the new proposals in the Maastricht treaty and to the new unit against fraud which has a Dane in charge. The Dane will have to be good because, in my experience, the European Commission is not interested in fraud and has a considerable antipathy to the Court of Auditors.

I tried to make the subject of combating fraud one of the themes of the United Kingdom's presidency of the EC. I tried to get the Court of Auditors more involved in the work of European Finance Ministers. On one occasion, I convened a special meeting to discuss the matter. We had before us a Court of Auditors report detailing various frauds, particularly in the common agricultural policy. There was a report about grain being moved from one ship to another in Hamburg harbour and about people pretending that transactions had taken place and receiving money for those bogus transactions. Quite a number of the Ministers did not turn up. I opened the discussion. A large number of Ministers just read their newspapers. No one contributed a word to the discussion and then Mr. Delors attacked me for being political by introducing the subject of the Court of Auditors.

I remember, as will the Prime Minister, who I know has been rightly concerned about the matter, as was Lady Thatcher, how decisions on aid were made in the Community. My right hon. and learned Friend the Chancellor referred to aid to Russia and to other countries. The big decisions on aid and debt write-off are normally taken after the ECOFIN meeting in the morning, over cigars and port. Those decisions involve billions of ecus. No papers are prepared. I tried hard to take a radical and provocative initiative—to have bits of paper before we made those decisions. Again, that was turned down.

When European Finance Ministers discussed aid for Russia, to which my right hon. and learned Friend referred, I remember that the attitude was that the Community had to give aid because it had to play a role in that development. Of course, aid to Russia is important, but, as time went by, there was reason to think that food aid was not necessary because no evidence existed of food shortages in Russia and there had been a good harvest. Even when statistics on the good harvest came in, could we get the European Union to reconsider the aid which had been allocated nine months previously, most of which had been lost in the distribution system or gone to the mafia and which was now unnecessary? No, we could not because Europe had to be seen to be acting and to be political.

Mr. Kenneth Clarke

Given that there is not much difference between my right hon. Friend and me on the things that he has discussed, I assure him that matters have moved on rather a lot since he was attending the meetings that he described. The Court of Auditors now attends the Council of Finance Ministers with the Commissioner responsible for dealing with fraud, and the Council has asked for individual complaints to be acted on and to be reported. Fraud was twice on the agenda of the Council of Finance Ministers during the German presidency. It will be on the agenda twice during the French presidency.

Only a month ago, with the assistance of my French colleague, I dropped a proposal for aid to the Ukraine, at a lunch of the kind about which my right hon. Friend rightly complains. The only difference between us is that my right hon. Friend described a situation that has improved. He played a large part in the Maastricht treaty that gave the Court of Auditors its additional powers.

Mr. Lamont

I was not seeking to argue that there was a difference between my right hon. and learned Friend and me on this matter. I wish him all the best in this new climate and new world of interest in fraud and giving value for money. All I can say is that I do not recognise it.

Value for money will always be difficult to achieve in Europe because money is politics and money is power. As my right hon. and learned Friend said, our money is used to bribe the Greeks, Spaniards, Portuguese and Irish to believe in ever-closer European union.

Our money is equally used to bribe the regions of individual countries, including the United Kingdom, to believe in Brussels as the giver of aid and succour rather than the central Governments of those countries. In that way, the central Governments of those individual nation states can be made less relevant.

Europe is an issue that risks splitting the Conservative party, because the party as a whole has not yet accepted that our partners' ambitions are not compatible with Britain's continued ability to govern ourselves as an independent sovereign state. A minority would welcome that development, but for the majority of Conservatives in the House and in the country that outcome would be anathema. If Labour ever formed a Government, it would face precisely the same dilemma.

The Maastricht compromise reflected in the Bill was accepted by the Conservative party and Parliament for two reasons: it succeeded in delaying some of the most important aspects of European integration and was underpinned by the belief that Maastricht marked the high tide of Euro-federalism. That hope has proved unfounded. Only last week, Mr. van den Broek argued that the next intergovernmental conference should abolish our national veto on future treaty changes. If that were implemented, this country's sovereignty would be gone.

It is important to recognise that divisive arguments on Europe—of which the costs of membership is an important example, because money is at the heart of the development of Europe—arise from the incompatibility between what is acceptable to Britain and what is acceptable to our partners. That is why this country needs to redefine its relations with Europe on a permanent basis.

For that reason, I am persuaded that we in this country must consider all options if we cannot negotiate a special economic relationship between Britain and our partners, including even withdrawal. We should not shrink from that logic but ask ourselves what is the best way to preserve our interests and to remove the source of tension with our European partners. The risk that stems from the Government's decision to make the issue one of confidence is that it may give the impression that the Government's overriding priority will be that the House will simply rubber-stamp whatever is agreed in some European town in 1996. I hope and believe that impression is unfounded—but the Government cannot proceed on the basis that we do not know what 1996 will be about and therefore do not need to think about it.

A conscripted army never fights as well as an army of volunteers, and the Conservative party is an army of volunteers. We should have the confidence to set out the issues and to debate them before our future is thrown in the melting pot in 1996. The Bill is a good deal, but it obviously does not address the issues that in time will confront us all.

5.34 pm

Mr. Peter Shore (Bethnal Green and Stepney)

The right hon. Member for Kingston upon Thames (Mr. Lamont) has enlarged the debate by leaning forward in time to the crucial intergovernmental conference in 1996, which will tilt the balance and either move us decisively in the direction of an unwanted federal state, of which we shall be a province, or bring a halt to the process of integration that has proceeded for the past 30 years.

The right hon. Gentleman spoke well about costs, which go far beyond the minor sums that the Chancellor mentioned in respect of the increase in own resources which is at the heart of the Edinburgh agreement. It is misleading to think that the cost to us is measured by even the so-called net cost of the budget. The net cost is bad enough, having increased from £1,500 million in 1988 to £2,400 million this year. According to the Treasury's own figures, it is due to rise to £3,500 million in 1999, which is a doubling within a decade. That is a huge and unnecessary increase in the net cost—net of all repayments and abatement.

We should be debating not a Bill to increase Britain's net and gross contributions to the European Union, but how to reduce the increasingly unbearable burden of costs that our membership imposes. The right hon. Member for Kingston upon Thames was right to draw attention not just to net but to gross costs, which are increasing alarmingly. Again using the Treasury's own figures, the gross cost to Britain in 1990 was £6.4 billion. This year, it will be £8.3 billion, and for 1997–98 it will be £10.5 billion. That is a measure of the weight of the burden, which increases with every year that passes.

I will direct my remarks not to the arithmetic, which has been the subject of considerable exchanges, but to the significance of the Court of Auditors report. It is a long time since December 1992, when the Edinburgh agreement was reached. Not least among events which have occurred since then was the publication only a fortnight ago—unfortunate timing for the Government—of the court's report. The Chancellor claimed that it is slightly more authoritative and penetrating than any report received so far. It is directly relevant to the Bill because it occurs to everyone to question why we should pay the European Union more money before it has put right its own waste, incompetence and fraud.

The figure of £6 billion does not relate just to fraud—that is only a component—but also to waste. My hon. Friend the Member for Dunfermline, East (Mr. Brown) gave many examples of the magnitude of the waste involved, such as vineyards being planted and then uprooted, and all kinds of false payments being made under the common agricultural policy.

It would be a disgrace if we did not insist on remedial action before additional tax revenues for the EU are approved. It is the oldest maxim of parliamentary government that grievances should be redressed before supply is granted. The need for redress is clear, and the House should face the fact that there will be no redress unless supply is withheld.

Mr. Dykes

Obviously, fraud must be tackled everywhere, both in the Union and in the member states, but is not the right hon. Gentleman being unusually illogical? In this country we accept that there is a considerable amount of social security fraud; it is estimated at more than £4 billion annually, I believe. Is the right hon. Gentleman suggesting that social security payments should be suspended to all other recipients pending the resolution of that problem? That is exactly the same ridiculous argument.

Mr. Shore

No. I said that there are very great differences.

Let us return to the relevance of the Bill. The Chancellor, of course, challenges the figure of £6 billion which, if it is anything like the truth, is twice the total amount that the Community will raise—not just in Britain, but throughout the Community—from the addition to own resources. It will be an addition of some £3,000 million in increased expenditure. Many people would say that gross incompetence, waste and fraud amount to twice that figure. It would indeed be a disgrace if we did not try to put that matter right first.

Mr. Dykes

Will the right hon. Gentleman give way?

Mr. Shore

No.

I now add a point about which the House has not been aware so far: the Community's reaction to the Court of Auditors' report. The Commission's reaction has been almost as remarkable as the contents of the report itself. I read now from the European Community's "Week in Europe" dated 24 November 1994: Commission Secretary General David Williamson has rejected media allegations that fraud was widespread in European Budgetary spending. Commenting on the recent Court of Auditor's report he said the document was not about fraud but about financial management. It mentioned fraud only once in its 484 pages referring to just one transaction in Denmark. That was the Secretary-General of the European Commission responding to a tremendous indictment of the Community's lack of effective control over budgetary spending, waste and fraud.

What did the Auditors' report say? I quote from its introduction: despite repeated assurances of remedial action, the Commission has not managed to achieve the results desired by the Budgetary authorities in the field of financial control. It goes on to say: member state authorities continue to issue incorrect certificates for structural funds expenditure, in some cases covering expenditure which has not really been incurred or is eligible for aid — to use another word, fraud. Again, the report notes structural shortcomings in the internal control systems resulting in lack of proper protection of the financial interests of the Community against fraud and other irregularities. What makes the situation totally unacceptable is that nearly all of those criticisms were made not just in 1994, but time and again over the past 10 years and longer. Indeed, the report itself says: the audit of matters which are the exclusive concern of the Commission also reveals some of the same problems in 1993 as the Court has raised since 1983. If any hon. Member thinks that there is something eccentric—or, dare I say, Euro-sceptic—about the Court of Auditors' report, I invite him or her to look at the 12th report of the Select Committee of the House of Lords, published on 19 July 1994. I quote from its opening paragraph: this is the Select Committee's fourth report since 1989 on fraud and financial irregularity in Community spending. Our 1989 report found that huge sums of Community money were lost each year because of fraud; that financial management was weak; that the failure both to detect fraud and take action when it was detected allowed the fraudsters to continue in business; and that for years there has been no political will to tackle the problem. That point was made by the previous Chancellor. So much for Mr. David Williamson's assertion that the document was not about fraud but about financial management. The sheer effrontery and negativism of the Commission when faced with such a damning report is truly breathtaking. There is not the slightest sign of repentance, nor of any will whatever to deal with the problems so well described and adequately documented in the Court of Auditors' report.

Still more revealing of the Commission's attitude was the announcement on 3 November of the distribution of portfolios among the new Commissioners, due to take office on 1 January 1995. Given the significance of the issues of fraud, waste and common agricultural policy expenditure, one might have expected that the allocation of responsibility for dealing with financial control and fraud would have been placed on the shoulders of one of the senior Commissioners. Did it go to Sir Leon Brittan, Mr. Bangemann, Karel van Miert, Mr. van den Brock or any of the men of some weight in Brussels? Not a bit of it. The responsibilities were given to number 19 in the new pecking order of 21 Commissioners—Mrs. Anita Gradin, the new Swedish Commissioner, whose portfolio includes immigration, home and judicial affairs, relations with the ombudsman and, last of all, financial control and anti-fraud measures. I have no doubt that she is an excellent lady, but inevitably she has no experience whatever of dealing with the long-term budgetary controls and fraud problems of the Community.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

I hesitate to argue with my right hon. Friend, but the only decent sign among those Commissioners is Anita Gradin, who is not only a very brilliant lady but one who has undertaken a great deal of careful study of the way in which the Commission works, as she did all the negotiating for Sweden. That is the only good thing to be said of the present incoming Commission. I hope that my right hon. Friend will accept that the Commission has inadvertently appointed the one person who can actually do something useful.

Mr. Shore

That would be a very welcome event. It would be a bit like the good fortune that overtook the Government when the pound was forced out of the exchange rate mechanism in the summer of 1992.

Mr. Toby Jessel (Twickenham)

Is the right hon. Gentleman aware that I happen to know Mrs. Anita Gradin quite well, as she was chairman of the Council of Europe committee on migration and refugees, of which I was vice-chairman about 10 years ago? She had a very compassionate attitude towards refugees and migration problems, but I would not see her as having tremendous rigour in the capacity to root out fraud.

Mr. Shore

We shall see. I do not wish to say anything other than good words about Mrs. Gradin, but she faces a formidable task. There is indeed an Augean stable to be cleaned out in Brussels in this respect.

I come back to the point that I made at the start. Given the arrogance and insolence of the Commission, there is no way in which we shall achieve redress for our grievances about fraud and waste unless we have the resolution to deny supply. There should be no increase in own resources unless and until those reforms are carried out. That is why the Bill should be voted down today.

I now turn to what is being claimed by the proponents of the Bill.

Mr. Quentin Davies

Will the right hon. Gentleman give way?

Mr. Shore

In a moment.

We are debating, as we should, the motion that was tabled by my right hon. Friends for the House to consider and vote on tonight. It is a very modest amendment indeed. It simply says that the Bill is not an acceptable measure as it increases the United Kingdom's contributions to the European Union without first dealing with fraud, waste and the common agricultural policy.

On the merits of the issue, I believe that not one hon. Member in any part of the House would disagree with those sentiments. As we all know, however, Conservative Members are to be ferociously whipped into the No Lobby, with threats of expulsion and deselection directed at dissenters. I deeply regret the fact that the Government have chosen that course and that they have sought to turn the whole issue into a vote of confidence in the Prime Minister.

It is a vast oversimplification to claim, as the Chancellor did today, that the proposals are an international treaty that we are honour bound to approve. In fact, it is not a treaty at all. It is a decision made in the Council of Ministers and it is given treaty form only by the peculiar definitions of the European Communities Act 1972. It would be entirely proper for the House to amend the Bill so that its implementation could be delayed and made dependent on effective reforms to deal with waste and fraud. Under the threat of dissolution, our debates on the Bill will be reduced to what is virtually a farce. That is a misuse of the House of Commons on what is essentially a piece of domestic and financial legislation.

As the scope of the European treaties continually widens, we find that an ever-growing area of our national affairs is being subjected to ministerial decision making without prior approval by the House of Commons. That is a threat to our democracy and it is one that all democrats in the House, regardless of party, should resolve to defeat tonight.

5.50 pm

Mr. Peter Brooke (City of London and Westminster, South)

Last time I spoke in the House, I was followed by the right hon. Member for Bethnal Green and Stepney (Mr. Shore). I do not know how long we can sustain this mutual succession of speeches. The right hon. Gentleman confers distinction on every debate in which he takes part, without my necessarily agreeing with much of what he says.

One can have a claim on the attention of the House tonight only if one is brief, for the issues are of straightforward simplicity and the number of one's colleagues who wish to speak is voluminous. The laws of arithmetic, therefore, reinforce the argument for brevity.

I want to make just three points this evening, even if that is three times as many as Lloyd George urged on a new Member. Before doing so, I need to say a brief word about the speech of the shadow Chancellor, the hon. Member for Dunfermline, East (Mr. Brown). The hon. Gentleman is a historian and he gave us a history lesson on confidence votes. Into that history lesson he introduced the bizarre scenario of Harold Macmillan delegating the defence of the Government, on a confidence vote on the night of the long knives, to Selwyn Lloyd who had been the principal victim of that event. I realise that the Labour party orders these matters differently, but I believe that the only virtue of the bizarre scenario that the hon. Gentleman painted was that it was a harbinger for the bizarre scenario of his whole speech, in which he argued that a wrecking amendment was not at variance with the Labour party's support for the agreement reached at Edinburgh.

I said that I had three points. The first is that the principle of an international deal entered into by this country should be adhered to. Second Reading is at the level of principle. All of us know that, if the Whips Office did not exist for any length of time, the House would suffer a collective nervous breakdown. One has only to spend an evening here on a series of amendments on a free vote to recognise the force of that. There is a corollary, which is that international statesmanship, or even national statesmanship, is not possible unless it is reinforced by the disciplines of the Whip in this House. Moreover, for all the cries of "perfidious Albion", our allies have long found our word to be reliable. One might, to coin a phrase, say that it is part of the national heritage.

My second point relates to fraud. Of course we all detest fraud. For all of us, our annual reading of the report by the Court of Auditors is always among the gloomiest reading of our year. However, we have long winced at the most obvious solution, which is to give the Commission greater powers to monitor and investigate the actions of member states in the area. We in this country have confidence in our institutions and we do not see why they should be second-guessed by foreigners. I share the misgivings of some of my hon. Friends about ceding that authority, although it may be the price that we have to pay to secure supervision of the affairs of other member states, whose institutions we trust less, and thus to diminish fraud in the Union.

All of us bring our own impedimenta to the House. Before I joined the Government, I chaired a business for five years. That business operated in 12 countries, five of them within the European Union. Having lived twice on the continent, I possessed a certain scepticism about mutual accounting standards and business ethics. In the end, one had to rest, in the private sector, on employing a single firm of international auditors which applied the local standards in each country. The universality of that firm was an improvement on doing as we do now and relying on the member states' own standards.

If we wish to sleep at night on the reliability of what is done in our name, further authority may need to be ceded. Opposition Members who ask for that may approach the matter with an underlying sympathy different from that of many of my hon. Friends. I hope that I can appeal successfully to many of my hon. Friends to visit the Court of Auditors, as I have done in the past and as I hope to do again, to get at what would be the most efficacious moves against fraud.

That brings me to my third point. Conservative Members who ally themselves with the Labour party on this issue run the risk of ending up with something far worse than they currently oppose. Lady Thatcher's first Administration lost only one vote in this House. I have some reason to recall it as I was the pairing Whip. A number of my hon. Friends decided to oppose an immigration order because they felt it to be insufficiently strong. The Opposition opposed it on the opposite ground—that it was too strong. There was a non-contest on the principle of the order. I remember that event vividly because I brought my right hon. Friend the Member for Witney (Mr. Hurd), now the Foreign Secretary, back from a visit to Nepal for a vote that we won by 270 to nil. The event so struck my right hon. Friend that he put it into his next novel—although, since truth is always stranger than fiction, he made the majority only 17.

The eventual Division was won by the Opposition and some of my hon. Friends. This had the consequence that the Government, as they could not strengthen the proposition without risking losing the support of others of their hon. Friends, had no choice on the arithmetic but to bring in a proposal that was even less satisfactory to their hon. Friends, but which was acceptable to the Opposition. Thus do we sometimes, in the name of principle, give ourselves an outcome that we do not remotely desire.

I support the Bill and I support the negotiating skills in Edinburgh of my right hon. Friends, including my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), which afforded the Bill to us.

Mr. Deputy Speaker (Mr. Michael Morris)

I remind the House that Madam Speaker has said that from 6 o'clock speeches shall be no longer than 10 minutes.

5.57 pm

Mr. Charles Kennedy (Ross, Cromarty and Skye)

The right hon. Member for City of London and Westminster, South (Mr. Brooke) has a near-impeccable reputation in the House for fair-mindedness, which was on display in his contribution. Being fair-minded, however, he would have to acknowledge that it is not a quality overwhelmingly in evidence in the Cabinet and, in particular, in the Chancellor of the Exchequer. There will be a Division at the end of the debate tonight, although there is broadly based, all-party support for the principles of the Bill, because of the thoroughly cynical decision by the Government to turn the debate away from a motion on Europe and on the Bill, into a vote of confidence in themselves.

The more significant contribution, in terms of Conservative party politics, came from the right hon. Member for Kingston upon Thames (Mr. Lamont), the former Chancellor of the Exchequer. He spoke about the way in which we now have Government by threat of collective suicide. He seemed to present himself, in that sense, as some kind of Samaritan who was there to counsel and to help. I am not sure whether the Prime Minister thinks of his former friend and Chancellor as the good Samaritan in all this. It certainly seemed to me that, although the right hon. Gentleman may not yet be a stalking horse, he made more than a little of a stalking speech. The Prime Minister will have to worry about the position in which the former Chancellor is attempting to put himself perhaps not later this week, but in one year's time.

The fact that we are at an impasse on the Bill is entirely a reflection of the "Perils of Pauline" style of premiership of the present incumbent. It has to be said, however, that to start with a Bill that, if there were a free vote on its merits in the Lobbies tonight, would command a majority of five to one, with hon. Members from all parties supporting it, and then to manage to turn that into a confidence issue on which the Government's majority will be much smaller speaks volumes for the Government's party management and parliamentary management.

The Chancellor tried to argue on European grounds and it was notable that he turned his attention to the issue of confidence only at the very end of his speech. Indeed, he was not very anxious to take too many interventions on that. That simply reveals or confirms that he knows that this is just a piece of chicanery from the Government. It is a constitutional absurdity to suppose that any Opposition party would express confidence in a Government who are regarded with utter derision and contempt by the voters of this country—as was further revealed by the leaked memorandum from their own deputy chairman only one week ago—particularly when that confidence is vested in Europe, and when the Chancellor of the Exchequer has spent an hour and 10 minutes at the Dispatch Box arguing non-stop and to a standstill with his own Back Benchers, by trooping through the Lobby in support of them. The Government do not have confidence in themselves on this issue and therefore they should not look to the Opposition parties to express any confidence in them either.

The problem throughout, of course, has been one of leadership. When the Prime Minister became leader of his party, he largely got that job because of who he was not. If he hangs on to it, he will hang on to it because of who he is not. That is the fundamental weakness of the Prime Minister's political position—not least where Europe is concerned. Indeed, his first two sound bites laid the seeds of what may well be his future destruction and perhaps even the destruction of his party. He began by saying that he wanted Britain to be at the heart of Europe. There was much talk of Helmut. We do not hear so much about Helmut these days, but it was Helmut this and Helmut that and how we were all together at the heart of Europe. The first major summit was when Helmut came to Chequers and the whole tone had changed from the days of the previous Prime Minister.

Then, of course, the Prime Minister negotiated his opt-outs and his anti-social chapter position at the time of the Maastricht treaty, and he came out with the other very revealing sound bite: "game, set and match". Those two sound bites set beside each other reveal the dilemma of the man himself. He cannot have it both ways. He cannot be at the heart of Europe and then talk of scoring tricks and deals over Europe and our supposed partners. There is no consistent leadership from the Prime Minister on the fundamental issue that is dividing his party and enfeebling his Administration—Europe.

Since the last general election, we have had the initial hesitation over Maastricht and then the trumpeting of the fact that Maastricht should be approved for what it was not going to do, what it did not apply to, and what we had managed to extricate ourselves from. The Prime Minister has sought to play the European card in a negative way and he has left all the positive initiative to his malcontents on the Back Benches who are sceptical, or opposed, or Euro-phobic, or whatever the appropriate expression may be.

Mr. John Biffen (Shropshire, North)

Conservatives,.

Mr. Kennedy

Conservatives. I am happy to have that all-encompassing term of abuse applied if that is what the right hon. Gentleman wishes.

In the House, and as a feature of the Government, we now have a party within a party. In the 1980s, Militant Tendency may have been a problem for the Labour party, but it was as nothing compared with the Euro-sceptics on the Conservative Benches. They run their own Whip, they organise their own votes, they have significant editorial endorsement from powerful people in powerful places, they even—essentially—run their own party headquarters. There is a party within a party and that party cannot expect the confidence of the Members of this House when it is internally split from top to bottom on the issue of Europe.

We may, therefore, be about to see a historic split affecting the Conservatives. The Labour party falls out—internally—from time to time, and we have been known to have our own domestic grief from time to time as well. The thing about the Conservatives though, is that when they split, they do it in style. They usually do it for at least a generation. It does not happen very often, but it is fun to be here when it may be happening and to watch it taking place. They are really the Fortnum and Mason of party splits and I pay tribute to that.

Mr. Bernard Jenkin (Colchester, North)

Will the hon. Gentleman give way?

Mr. Kennedy

I shall give way to one of the English federalists as opposed to one of the Christian Democrats.

Mr. Jenkin

I take note and I take heart from the face that the hon. Gentleman is not taking great pleasure in telling his voters why he would vote for more money for the European Community.

Mr. Kennedy

I shall happily go on to express that in a moment, but I felt that it was perhaps of more immediate interest to remind the voters of the internal agonies among Conservative Members, because, after all, they form the Government.

There will be a further implication of the way in which the issue has been turned into a vote of confidence. It will have a damaging internal effect in the Conservative party. I am not particularly bothered about that, but I am more concerned about the damage that it will do to the position of the country in the run-up to the next intergovernmental conference. The Prime Minister, having paid such a heavy price in whipping his malcontents into the Lobby tonight, is bound, in terms of his party management, to respond in a more nationalistic and Euro-sceptical way in the run-up to that IGC. That will not be in the best interests of the country because we need to be at the heart of Europe.

We already began to see that—although the Chancellor, unfortunately, did not give way to an intervention on this matter and therefore managed to avoid clarifying his own position—at the end of last week from the Foreign Secretary, who, ever so significantly and subtly, edged the formal position of the triumvirate at the top of the Cabinet away from its downright stated opposition to an eventual referendum. I do not have difficulty with a referendum, but the Prime Minister and the Chancellor and the Foreign Secretary will have to make a bonfire of their vocabulary over the past few years if that is the way in which they are to sue for peace at the IGC and on the European issue generally in their party in the context of the next general election. Perhaps whoever makes the winding-up speech tonight could take the opportunity to clarify the current stated position of the Cabinet on an eventual referendum.

Frankly, at the end of the day, the wording of the Labour party's amendment is neither here nor there. It is a vote about confidence in the Government—the context of it so decided, so put down and so phrased by the Chancellor especially, but by the Prime Minister as well. On the basis of European policy, there is no doubt that one cannot have confidence in the Government. Therefore, the argument about what will happen if the amendment is passed is largely sterile. If the amendment is passed, we know what will happen. The Prime Minister will be into his limousine and off up Pall Mall to seek a dissolution from the Queen. There will then be a general election and, undoubtedly, a change of Government.

Whatever the complexion of the Government who come in, it is difficult to envisage a future Government being more divided or more tortured internally on matters European than this one. Therefore, this measure would be reintroduced. Even if we reach the stage that we did over Maastricht, when Denmark said no on the first referendum, the European powers that be will still be able to find a formula, a means and a mechanism to sort it out eventually. So, let us not have any of this utter nonsense from the Chancellor that failure to pass the Bill tonight will mean a general election and a change of Government, which would destroy it all.

The issue is not really the Bill and its merits. Its merits are clearly shown, and it enjoys all-party support. What is at stake here is the future of the Government. It really puts it all in context when one thinks of the history of Europe and some of the famous places from Berlin to Brussels and even to Bruges. It seems now that the only person whom the Chancellor is willing to acknowledge has any consistency in his party is the hon. Member for Billericay (Mrs. Gorman).

If those who want to speak for little England are to be consistent, they should vote for little England at the end of the debate. The fact that they will not do so shows that they know that electoral extinction would follow. Therefore, knowing that, my unfortunate conclusion is that the Conservative Members will not be going back to their constituencies to prepare for opposition, but, by God, they should.

6.8 pm

Mr. John Biffen (Shropshire, North)

May I first declare an interest? I am a non-executive director of J. Bibby plc, a South African company which has a substantial subsidiary in Spain related to the construction industry, and one may assume that it will benefit from the Edinburgh arrangements. I wish to speak briefly about public spending in the European Union, the question of having this debate on an issue of confidence and the general election.

The House has been so conditioned by battles over public spending—involving not many of those in the Chamber now, but certainly their forebears—going back centuries, that the issue of public spending and how it is financed is at the very heart of politics. On that test, it seems to me that European public spending is flawed in its conception and execution. Everyone who is concerned about public spending as an instrument of social policy should be deeply anxious about that factor.

I will quote Nye Bevan for the Leader of the Opposition because I gather that to mention socialism in his presence will make me, as near as I can be, a yobbo. At the party conference of 1959, Bevan said: The language of priorities is the religion of socialism. There seems to be a dangerous lack of focus about Community spending because, in a sense, it is a product of so many layers of authority. One is almost diffident about praying in aid the virtues of the Treasury, but wherever public spending is concerned, there is much merit in having a disciplined hand.

The Minister of State, Treasury (Mr. Anthony Nelson)

indicated assent.

Mr. Biffen

I notice that the Euro-enthusiast and Treasury Minister is nodding in agreement.

I shall refer to my constituency, out of deference to my electors. The 5b area status has been conferred on Shropshire by the European Union. That is modest spending, but it has already raised an absolute hornet's nest of competing claims, local authority prejudices, delays and general condemnation of the Treasury, which has been contrasted with the more open-handedness of Brussels. It all adds up to a less effective application of public spending.

In deference to Scots Members present, I noticed an even better example of that in The Times under the heading: Hebrideans look to Brussels for £6 million bridge. I am not saying that looking is receiving, but the article states: The bridge between Scalpay and Harris in the Outer Hebrides would only span 180 yards of water, a crossing that takes 10 minutes by ferry. Islanders are optimistic that funding will come from the European Union. Last year the Highlands and Islands were granted Objective One status". No doubt the bridge will be called "Son of Humber". I do not for a moment say that the project will be landed, but it gives one an insight into the focus of spending in the European Union.

Mr. Salmond

Will the right hon. Gentleman give way?

Mr. Biffen

If the hon. Gentleman will excuse me, I must try to keep within my time limit.

Mention has already been made of fraud. I will not add to that except to say that no one knows the extent of the fraud. It is all very well to stand up and to bluster and assert that it is nothing like the figure that has been created in such and such a paper. It is generally acknowledged that fraud is substantial. I rest my case with the 12th report of the House of Lords Select Committee on European Communities.

My next point is the most unnerving point of all. There is an erosion of standards of fiscal responsibility which seems to be pervasive. The House of Lords Select Committee states: as in previous inquiries we detected a worrying absence of indignation at the amounts of fraud and mismanagement in the Community's finances. All the cures and improvements, and the Court of Auditors, will falter against the difficulty of devising a system of application which does not merely take account of national culture, but which does so in a form that relates to all other national cultures, which are almost certain to be different. I am not saying that the Nordic experience is different from that of the Latin, but if one could examine the figures, I would not be surprised if there were a difference.

The Liberal party is right to argue for the repatriation of the common agricultural policy. That is a difficult objective, but ultimately the situation can be dealt with only by diminishing the basis of public spending in the Community and not by alteration of the controls. All that becomes even more imperative as we move towards the expansion of the Community to include the central European countries.

I want now to refer to the confidence motion. The Prime Minister has every authority to call a confidence motion. Such motions have often been called in the past. I particularly have in mind Winston Churchill demanding confidence after losing a vote on the Education Bill in 1944. I do not believe that that was his finest hour. Looking back, it is clear that that debate, which was about equal pay in the teaching profession, was a sign of the desire for major social change which was enthroned in the 1945 general election. Perhaps the easy recourse to a confidence motion means that one might be a little blind elsewhere in one's political judgment.

Although I will gladly conform with the confidence vote, as I have always told my constituents I would, I am anxious about it. In that regard, I want to quote Lord Howe, partly because the Chancellor of the Exchequer was his Parliamentary Private Secretary at one time. I hope that his comments will be a beneficial influence. Lord Howe said of modern authority that it was "government by explanation". That is what we grievously need over the next year and a half.

The next general election will not be fought with a parade ground as the battlefield; it will be fought over much more difficult terrain and that leads me to the attitude which must be struck if the Conservative party is to have a credible position.

The absence of confidence in the issue exists because there is ambivalence in Conservative party policy. That ambivalence exists because we cannot resolve whether we are going to move from our present position on the opt-out on the single currency. That opt-out is merely a policy of postponing what one wants to say until later in the day. It has very little by way of quality of leadership about it.

If, as I do, one takes as one's text the Prime Minister's article in The Economist of a while ago, one has a most comprehensive and authoritative exposition of a Tory attitude which looks to the nation state as the centrepiece of European policy. In that context, the natural corollary is a monetary policy which provides for co-operation on the basis that individual states may vary their own national exchange rates. That is the framework for monetary co-operation. It is European in character, but it preserves to the nation its own final judgment.

I notice that my hon. Friend the Member for Portsmouth, South (Mr. Martin) is in the Chamber. I read with much interest his letter in The Times today. He got it exactly right. We need a set of principles which will complete our general attitude to the Community and to its evolution and our commitment to the widening of the Community and which will enshrine our belief that the national state is the natural fulcrum for the pursuit of that policy. In doing that, one cannot leave out, ignore or postpone the final crucial question about economic and monetary union. A party that believes in national institutions, its national heritage and its national destiny must have a national context in monetary union.

6.17 pm

Mr. Denzil Davies (Llanelli)

As the Chancellor of the Exchequer pointed out, the Bill will increase the ceiling on our contributions from the original figure of 1.2 per cent. to 1.27 per cent. Whatever one says on either side of the argument, the increase in the ceiling represents a victory—perhaps a small victory, thanks to the Government's negotiating prowess—for the centralised institutions of the European state against the nation states in the continuing struggle between the centralised state in Brussels and the powers of the old nation states of Europe. This debate is about that struggle and no doubt future debates will follow that course.

The Chancellor had to concede that our contributions are going to rise. He said that that was a price that we have to pay for a seat at the table. Years ago, apparently, our contributions were a price to be paid for membership of the club.

In 1972, there was much talk about subscriptions to clubs. We now have a seat at the table. That is all very well. However, I have always asked—I never receive an answer—why most members of the club and most of the people who have seats at that table do not have to pay anything. Indeed, until very recently—perhaps it is still the position this year—only Germany, as it is now called, and the United Kingdom have to pay for a seat at the table or a subscription to the club. Hon. Members shake their heads, but there might gradually be one or two other countries. France, perhaps, is coming in, but, in general, the largest subscriptions are being paid by two countries. The argument does not hold water.

The Chancellor took us back to 1984 and the Fontainebleau agreement. I shall refer back a little further in the short time at my disposal. In about 1976, the then Chancellor of the Exchequer, now Lord Healey, asked me as a Treasury Minister to try to do something about the escalating costs of the EEC budget. I do not know what crime I had committed for him to ask me to do that, but it was a frustrating exercise. As a result of the brilliant negotiations that were carried out by the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) and Lord Rippon, as 1979—the end of the transitional period—was coming upon us, subscriptions and net contributions to the club were increasing rapidly. By 1979, they reached £1 billion or even £1.5 billion.

Of course, I like to look back and think that I laid the groundwork—all the hard work—for the Fontainebleau agreement. Margaret Thatcher, as she was referred to by the Chancellor, managed to negotiate that agreement. It was fortuitous that Spain, Greece and Portugal wanted to come in at the same time, and there was an opportunity to open matters. For a few years, there was a holding back of our net contributions, but they have gone up again—almost £2.5 billion this year and probably £3.5 billion in three or four years. The ceiling has gone up; contributions will again be increased.

The amendment, which I wholeheartedly support, in the name of my right hon. and hon. Friends, calls for a cut in common agricultural policy expenditure. I wish that we could cut expenditure on the common agricultural policy. Indeed, I was a member of a Government who tried very hard to cut that expenditure. The present Government have probably done their best, but it is not in the power of Her Majesty's Government of whatever party to cut that expenditure—we need 12 countries to agree. The extraordinary written constitution that we have foisted upon ourselves means that even our legislature cannot change the constitution; we need the agreement of 12 other countries.

By all means let us cut common agricultural expenditure, but that would be extremely difficult without the consent of the others. I am told that the Poles are going to do that for us. Around the year 2000, the Polish cavalry will come in and lay about the common agricultural policy, and that will be the end of it—perhaps. Perhaps by the time we negotiate with eastern Europe, it will be possible to destroy that monstrosity. It will certainly take a long time.

My constituency is in west Wales—one could say west Britain. Some of my constituents are a little concerned when they look across the Irish sea and they discover, apparently, that the moneys that come back to the south of Ireland now represent about 6 per cent. of the gross national product of southern Ireland. They ask, "Why should we in Wales contribute that £2.5 billion or £3 billion a year when, across the water in Ireland, in many areas incomes per head are higher than in some parts of south Wales?" Let us consider an even smaller country, Luxembourg. It has the highest income per capita in the European Union and it is the second largest net receiver of money from the European Union. Again, my constituents ask, "Why should that be so? Why do we have to pay the price for the seat at the top table and the subscription to the club?"

There is a contradiction. Tomorrow, the Chancellor will announce, so we are told, £4 billion or £5 billion cuts in public expenditure. Of course, those reductions in public expenditure will not fall upon our contributions to the EEC. Those contributions are outside the PESC—the Public Expenditure Survey Committee—as it used to be called. It does not matter whether the Chancellor knew what the forecasts were, because, in respect of the expenditure round, the contribution had to be made. But the £2.5 billion to be paid this year will have to come out of the rest of public expenditure.

There is no free lunch. In modern jargon, it is known as disinvestment. We invest in one sector and we have to disinvest in another. We invest £2.5 billion in the public expenditure of the European state and we disinvest £2.5 billion in the public expenditure of the United Kingdom. My right hon. Friends, when they form a Government, will face that problem. The cuts that will have to happen will, as usual in terms of public expenditure, fall on the needy, the old and the unemployed.

There is a contradiction on Maastricht, too. I hate to bring up Maastricht again, but I know that the Chancellor has now read the treaty. Maastricht imposes clamps. It imposes restrictions on public expenditure and the public borrowing of nation states. We are not supposed to spend too much, we are supposed to spend less, yet, of course, we can spend money to hand it over to Brussels, because Brussels can spend more. That is part of the struggle—it is part of what is actually happening. The Chancellor talked about subsidiarity. Apparently, the money also was to enable one word in the treaty to be turned into a brilliantly illuminating paragraph describing subsidiarity. The very payment of £2.5 billion—the very raising of the ceiling—is contrary to the concept of subsidiarity.

The Government are concerned about subsidiarity. They wish to reduce rather than increase the ceiling, just as we wish to do away with the common agricultural policy and return to a system of national aims for agriculture. That would be subsidiarity.

The Chancellor wrote me a letter. I gather that all hon. Members received a letter from the Chancellor. It started, "Dear colleague". I really thought that that letter should have gone to the Minister of State, Foreign and Commonwealth Office, whose last name is Davis and who has one of my first names. I sometimes receive his correspondence and I always scrupulously turn my head the other way and put it back. When I saw the Chancellor's "Dear colleague" I almost did that, but then I thought, "No, perhaps it has a wider circulation." Lord Healey, when he was Chancellor of the Exchequer, had his problems between 1966 and 1968—we all did—but I do not remember our problems being so great then that he had to write letters to the then Opposition, asking for support to spend more public money. That shows the measure of the panic which appears to be at the heart of the Government when it comes to Europe.

Mr. Deputy Speaker , (Mr. Geoffrey Lofthouse)

Order. The Chair has a problem now; I must stop the right hon. Gentleman.

6.27 pm

Sir Peter Hordern (Horsham)

I can remember Lord Healey, when he was Chancellor of the Exchequer, having problems of his own in turning back from the airport. Other hon. Members will remember that, too.

One of the interesting points of the debate is the lavish attention that is being paid to the Public Accounts Committee and the effort to control fraud and waste. I do not think that I have ever heard so much attention being paid to it. I was a member of the PAC for 20 years. At that time, our debates took place on one day late in the Session. There was never a Whip, of course. Our debates were badly attended and only members of the PAC were present. I suppose it is an advance to have so much attention paid to the PAC, particularly by Opposition Members.

The amendment, in drawing attention to public waste in the European Union, is very important and it needs to be debated. I am grateful for that. However, it seems that the issue of public waste was raised in the amendment merely as a peg on which to hang a reason to vote against the Government in a most important vote of confidence.

I think that the European Communities (Finance) Bill appears to be quite reasonable. Two years ago the Prime Minister came to the House to make a statement about the legislation. As my right hon. and learned Friend the Chancellor of the Exchequer said earlier today, at that time there was only one voice against it on the Government side; nobody else objected to the increase in expenditure because it was very modest.

Much more attention has been paid to the fact that the arrangements for financing the Community, which were made under the 1988 agreement, have been very erratic. It is true that the expenditure of extra money—some £750 million—comes at a time when it is convenient for the critics of the Bill to lump it together and say that the situation is out of control. It is uncertain because it involves forecasts which are based on future estimates of gross domestic product. The reason why it appears that we are having to pay more this year is that our GDP has risen at a faster rate than that of other members of the European Union. So I do not think we can use that argument in objecting to the increase in payments. In any case, the amount of subscription to the European Union was set in stone many years ago and was passed by the House.

The increase in expenditure which was decided upon in the Edinburgh agreement is only £75 million in 1995 and £250 million in 1999. I think that the Edinburgh agreement has other advantages, too: notably, we shall no longer be the second-largest contributor of funds to the Union. France, the Netherlands and, per capita, Austria and Sweden will contribute more. It is also a real advance that future contributions will be related to proportion of GDP rather than VAT contributions. That is the right way to go.

All in all, I do not believe that the Bill places a substantially greater burden on this country than that which we carried before. However, there are other burdens in all the nooks and crannies through which the European Union and the Commission, in particular, can get involved in our national life. The burden comes in the European Commission's essentially corporatist approach, its social chapter and the existence of the cohesion and the structural funds.

Yet I cannot help but wonder how many Members of the House would wish us to leave the European Union, for all its faults, after 20 years of membership. Our whole trade and investment system is deeply embedded in the European Union. At a purely practical level, if we were outside the European Union, how could we influence it about landing rights at Charles de Gaulle airport, for example, which Air France is trying to prevent British Airways from using?

There are other reasons for our remaining in the Union which have been gone over many times. This country has acted as a magnet for overseas investment and it is plainly in our commercial interests to remain a member of the Union and to have an influence over the future pattern of Europe.

Meanwhile, we have to deal with the current imperfections of the European Union. I am privileged to have been the chairman of the Public Accounts Commission for the past five years. In that capacity, I have seen a good deal of the Comptroller and Auditor General and we have had a number of discussions about fraud and waste within the European Union and how we might be able to combat it effectively. I have corresponded with both my right hon. Friend the Prime Minister and the Chancellor of the Exchequer about the matter.

I think that right hon. and hon. Members are perfectly correct to point to the scandalous imperfections and examples of fraud and waste within the European Union and its total failure of will to deal with these problems. However, if we are to deal with fraud and waste effectively we will have to give the European Commission and the European Parliament more power than they have at present. There is no way that we, as a nation, can affect European Union spending; that is an inescapable dilemma.

The European Parliament has useful powers in relation to the European Commission. But hon. Members who have served on the Public Accounts Committee will know that it all depends on how these powers are used. They will recall that if a permanent secretary was due to appear before the Committee, he would take a week off work to prepare. I would like to think that some Commissioners at the Berlaymont building would miss even a lunch in order to prepare before appearing before the budget committee. It would do them no harm to miss a few lunches.

The European Parliament is not sufficiently addressing the powers that it has to tackle the European Commission about waste and fraud. However, not even those extra powers will be sufficient in themselves to address the problem. Ultimately, the European Union should not allow funds to go to a member state for any purpose—cohesion, structural or agricultural—until the frauds and waste which have been discovered have been properly reimbursed and penalties have been imposed.

My right hon. and learned Friend the Home Secretary wants member states to pass the appropriate laws. That is a matter for them to decide. They may agree to do so, but I wonder whether the pace of legislation to deal with fraud and crime in Greece or Italy, for example, will be as rapid as it is in this country. I rather doubt that it will. Therefore, the only satisfactory way in which to deal with these problems is for the European Commission to withhold its funds.

Sir Teddy Taylor

It cannot be done.

Sir Peter Hordern

My hon. Friend may say that, but it can be done, and I have it in writing from the Chancellor to say that that is the case.

It might help if the United Kingdom PAC were to meet the PACs from other member countries. I think that the incidence of fraud and waste brings the European Union into contempt, and the European Parliament and the Commission must come to grips with the problem. It is far and away the most important duty of the European Parliament.

Whenever I mention the matter to my friends in the European Parliament—as, I dare say, my hon. Friends have done—I see their eyes glaze over. They like to debate these matters, but they do not like to do the invigilation and investigation.

Dame Elaine Kellett-Bowman (Lancaster)

Will my right hon. Friend give way?

Sir Peter Hordern

No. I am sorry, but I am very short of time. Many improvements need to be made.

Unfortunately, fraud and waste have an effect upon the regard in which the European Parliament is held. The voter turnout at the European elections demonstrated a lack of confidence in Europe. It is always very dangerous to depart too far from our democratic roots and support. Whatever Europe thinks of us, national Parliaments are democratic institutions which enjoy the largest measure of popular support. That is certainly true in this country.

Mr. Deputy Speaker

Order. The right hon. Member's time has expired.

6.38 pm

Mr. Ted Rowlands (Merthyr Tydfil and Rhymney)

It is a pleasure to follow the right hon. Member for Horsham (Sir P. Hordern), who spent his 10 minutes reminding the House, rightly, of the important and different traditions by which parliamentary sovereignty and accountability have developed. I remind the right hon. Gentleman that it is a rich irony that in this parliamentary Session we celebrate the tercentenary of the parliamentary Session of 1690 to 1695 which basically invented democratic accountability as we have come to know it.

Accountability was invented using financial control of the Administration of the day, through the first Public Accounts Committee, which was directly elected by the House in the 1690 Parliament. The parliamentary Session of 1690 to 1694 saw the first annual estimates presented to the House. Those changes to procedure ensured the continued stability of parliamentary institutions. Exactly 300 years ago this Session we established the principle of annual Sessions of Parliament. Before that, even in the British tradition, the House of Commons was more a matter of occasion than an institution. It could go for years without even sitting.

That position is fundamentally different from what happened on the continent and that is why our definition of sovereignty is different from that of any other country in Europe. We define loss of sovereignty as loss of parliamentary control over our financial affairs—rightly so, because that is the basis on which we have conceived the idea of sovereignty. That interpretation cannot be found anywhere on the continent. The Spanish Cortes, the Bundestag, and the Greek, French or Italian Parliaments do not have that sense of continuity. Nor have they defined sovereignty in institutional terms, as we have. It is richly ironic that we are debating a Bill which will again transfer significant sums of money outside the control of the Public Accounts Committee and outside any form of scrutiny.

I listened with interest to the speech of the shadow Chancellor, my hon. Friend the Member for Dunfermline, East (Mr. Brown). He has to admit, as we all do, that we no longer have control over the money that we agree to pass to Europe. It will not be subject to Public Accounts Committee scrutiny. It cannot be subject to a minute from some permanent secretary such as Sir Tim Lankester which said of the Pergau dam affair, "I do not believe in and do not underwrite this type of expenditure." There is no such equivalent procedure in Europe. Therefore, we are abrogating a measure of parliamentary sovereignty if we support the Bill.

I should like to demonstrate the point. Where will the money go that we are supposed to vote to transfer? It will go to one form of expenditure that I should instinctively support. The financial perspective for 1993 to 1999 shows an increase of more than 42 per cent. in EC overseas aid programmes. I have examined the management and financial accountability of such programmes. I am talking not about fraud but about the processes of ensuring financial accountability. One reads report after report. The House of Lords has submitted reports and the Court of Auditors has reported on EC overseas aid expenditure.

I find it impossible to accept the line, which I think the right hon. Member for Horsham tried to persuade us to accept, that we should continue giving the money in the hope that it will some day be made more accountable. I cannot see how a 42 per cent. increase in a budget which already cannot easily be accounted for and which is riddled with waste and duplication of administration will improve the programme. Every investigation has emphasised the waste in European overseas aid programmes. I do not understand the logic of increasing the budget. I do not understand how, if the budget is increased to that extent, we will manage to make it more financially accountable and less wasteful and gain control over the fraud and mismanagement. It is a large aid udget and it is not working effectively, as anyone who has examined it agrees.

If one wanted an example of how parliamentary sovereignty has been eroded, overseas aid expenditure is as good as any. As a result of the increase in overseas aid expenditure in Europe and elsewhere, next year more than half the budget of the Overseas Development Administration, a major part of a Government Department of the British state, will be outside the scrutiny, power and responsibility of the House of Commons and its Committees. More than 50 per cent. of the budget of one major agency will be spent by agencies outside this country which are not subject to the Public Accounts Committee, to estimates or to control by the House.

I came into the House more than 25 years ago believing in the concept of parliamentary sovereignty. It may sound old-fashioned, whiggish or whatever one may like to call it. I still believe in it. I have watched the erosion of parliamentary sovereignty. I have to confess to the House that I have condoned it. I did not do very much on the Single European Act. I looked up the debates on the European Communities (Finance) Bill in 1988 and I took no part. I scarcely voted, but nor did the House. The Committee stage was cleared in one evening. The Third Reading was nodded through without a debate.

Half the Chancellor's case was that we did not oppose the Edinburgh summit agreement in 1992. All right. We are waking up fast. The likes of me are waking up and are no longer willing to support and condone the loss of parliamentary sovereignty represented by the Bill. Therefore, I shall not only vote for our Front-Bench amendment but vote against the Second Reading of the Bill.

6.44 pm

Sir Teddy Taylor (Southend, East)

Over the years, I have had a few rows with my Front Bench about the European Community. I remember resigning from a Conservative Government—probably before you were born, Mr. Deputy Speaker—because they decided to join the EC. I remember exchanging rather tough words with a lady for the first time when the previous Prime Minister was in office. It is unfortunate that in the debate tonight an enormous number of people will vote for what they consider a load of rubbish. We have enthusiastic Euro-supporters who will vote against the Bill tonight. That seems silly. I know that a substantial number of my hon. Friends who are opposed to what is happening feel obliged to vote for the Second Reading of the Bill.

I shall be in trouble because I am afraid that I cannot support the Government in the Lobby tonight. All that I want to do is say a few things to my colleagues which I hope that they will remember. Unfortunately, I shall be in great trouble. Happily, I have a splendid constituents association which supports me. However, no one is safe, because we have a regional chair of the Conservative party who has all the management skills of the late Robert Maxwell and all the charm and good humour of the hon. Member for Staffordshire, South-East (Mr. Lightbown). In that situation, we have to worry.

However, I am not worried. We have to ask ourselves what people should think about this evening. First, I plead with colleagues to consider honestly whether they are not losing every battle on the EC. If they do so, they will see that that is what is happening. Let us take the repeated statements year after year that agricultural reform is coming, something is around the corner and spending is falling. Please look at the financial papers and see what has been happening. My colleagues will see that expenditure is increasing.

The Government say—the Chancellor said it today—that our proportion of the total budget is going down. My hon. Friends should ask him what is happening to domestic spending on agriculture. There has been a shift of expenditure from the EC to member states. Sadly, it breaks every record. The Government say, "Please vote for us because now we have control. We have budgetary limits." My colleagues should look at the budget for 1995. They will see precisely and clearly on page 13 that spending will bust through the legal limits by more than £1,000 million and that it will be done by means of accountancy devices. That is exactly what happened the last time that we had limits.

I ask my colleagues please to stop thinking of controlling European legislation. I had the pleasure only this week of meeting representatives of Thamesway, my local bus company, a super bus company which runs buses all over the place. Colleagues should ask local bus companies what will happen with the EC construction directive on buses and coaches. It will make massive changes. It will make the use of double deckers impossible. It will insist on all sorts of extra exits. It will involve massive spending. It is a load of nonsense. When we ask the Government what they can do, they say that, sadly, it is a majority vote issue.

I appeal to my hon. Friend the Paymaster General, who is one of the most honest and accurate Ministers, to remember the issue of freedom of trade. Does he remember PMS, one of my local firms? It is a super firm employing 200 people. It made £2 million profit last year. I received a letter from it only today, which says: It would appear that the EC is determined to destroy our business. It had been told that it had to reduce its business by more than 50 per cent. It imports stuff and re-exports it. What can the Government do? Basically nothing, because although they voted against the relevant measure, it went through by majority vote. I plead with my colleagues to stop thinking that they are winning the battle and stop pretending. Sadly, expenditure and interference are increasing and the economic situation in the EC is getting worse. If hon. Members doubt that, they should ask what the European Community's trade is with the rest of the world.

Secondly, we must ask ourselves how on earth we can support extra funding for the EC when spending is so dreadfully tight at home. On Friday, I went to Lancaster school in Southend—I am sure that no one has heard of it—which is a school for severely disabled children. They are in wheelchairs and have appalling disabilities. A report issued in 1992 states: The accommodation … is unsuitable for the needs of children with severe learning difficulties. The majority of classes can only be reached by external sloping pathways, 2 bases are in relocatable classrooms, toileting and changing facilities are poor, and there is little specialist therapy accommodation. In 1994, the inspectors' report stated: Problems with the school building had a detrimental effect on the pupils' education. The Health and Safety Executive said that the paths and slopes were unsuitable for wheelchairs. Why can something not be done? For the simple reason that there is no money.

Yesterday, a lady from Cluny square visited me. Her son-in-law told me that she is desperate to get into a retirement home, but cannot do so because, sadly, Essex county council says that there is no money. With a situation like that, how on earth can any Member of Parliament in all conscience vote for extra cash to go to an organisation that wastes money as though it were water? It is not right.

In fairness, the Government fight very hard to sort things out and we know that a Labour Government would do exactly the same, but what should we be doing today? I hoped that the Government would start to tell the truth to troublesome Back-Bench Members. That is a shocking thing to have to say to any Government or Opposition, but I mean it sincerely. Unfortunately, Ministers who are Euro-enthusiasts put things one way—Opposition spokesmen who are Euro-enthusiasts do the same. For example, let us try to get across what the balance of our trade is with the European Community. What is the expenditure and how does it compare?

Unfortunately, we heard only last week that there had been some error of calculation and we had to spend an extra £731 million on the EC this year—almost as much as the £900 million that we have paid in value added tax on fuel during the year. We want to know when the Government found out about the error. The Chancellor told us, first, that he could not remember and, then, that it was not on his mind when he wrote to Members of Parliament. We simply have to tell people the facts and, once we have done so, we must ask about the options.

All this talk of how we will stop fraud is so silly. No matter how many Euro-policemen one employs, one cannot stop fraud when one has a policy that invites it and it is absolute nonsense to say that one can. All those Members who say that we should have more Euro-policemen and open up more offices must know that that is madness and cannot work. We must decide that the common agricultural policy should be scrapped and how we should go about it.

I hope that the Government will appreciate that people's views are changing. Anyone who doubts that fact should remember what happened at the Conservative party conference in Bournemouth. It was tragic that no one wanted to talk about the European Community at the conference, but every meeting organised by the Euro-sceptics or the anti-market groups was packed out. We had to turn people away, and it was not because speakers like me were brilliant but because the average Conservative knew that something was going very wrong.

Young people are getting worried. They are worried about the threat to our democracy and they are wondering what is the point of voting for all those clever politicians at the next election when all their powers are being given away. I hope that we will think of a way of asking the people of Britain whether we should have a separate relationship with the European Community and how they would like to express a view on the subject.

I am very distressed because I am in no sense a conspirator against the Prime Minister, who is a decent and honourable man. If I have the opportunity to vote in a leadership election, I shall do so. I am not trying to rock the Government in any way, but I hope that they will accept that some hon. Members think it outrageous, impossible and wrong to vote for extra cash for the EC when it wastes so much money.

I well remember walking down Southend high street with my lovely wife on Saturday. I could not walk down that street again next week and be straight and open with people if we decided to pour even more cash into that wasteful, fraudulent and non-democratic organisation. I very much regret that I cannot vote for the Government tonight, but obviously I wish them well.

6.54 pm

Mr. Mike Gapes (Ilford, South)

It is a pleasure to follow the hon. Member for Southend, East (Sir T. Taylor). His remarks were obviously very sincere. He and I come to this debate from very different positions, yet we will, I hope, be in the same Lobby tonight—if the hon. Gentleman is not there, he will in sentiment be in the same Lobby as Opposition Members.

Clearly, this debate is not about European Union expenditure. It is a dry run for the intergovernmental conference debate that is yet to come and reflects the internal schism in the Conservative party. The real issues in the debate are obscured by the way in which it has been conducted.

At the risk of being unpopular with the majority of hon. Members in the Chamber, I shall say why it is essential for people to put matters into perspective. Our total domestic product is about £400 billion. We are discussing total expenditure on the European Union of about £2.5 billion. The United Kingdom has the eighth-largest gross domestic product per capita in the Union, yet we are the second-largest contributor to the budget. Clearly, that is unacceptable and it must be changed.

The real reason for the size of that contribution is not the increases that were agreed at Edinburgh but the fact that agricultural spending still takes a disproportionate amount of the European Union budget. It is not surprising that the Government are not doing anything substantial to remedy that problem because, after all, the Conservative party represents very large agricultural interests that do not want fundamentally to change the common agricultural policy, the set-aside arrangements and all the other scams and scandals that apply not only where there has been fraud but to the way in which urban working people and consumers are punished because of the interests of the agricultural lobby.

Speaking as a Member of Parliament for an urban constituency with no agriculture, I believe that it is about time that the majority of people got a better deal through lower food prices and more efficiency, which is in their interests, rather than having to pay others not to produce, or to produce alcohol that is converted to vehicle fuel and tobacco that is unsmokeable and stockpiled. That nonsense cannot go on. That is why it is essential that we reform the common agricultural policy.

On fraud and the role of the auditors within the European Union, some people in the European Parliament in Brussels are fighting very hard to get a grip on the work, led by members of the socialist group such as Terry Wynn and John Tomlinson. It is not for the European Parliament to decide what resources are required to carry out the inspections and how many people should carry out the work; that is a decision for the Council of Ministers.

My hon. Friend the shadow Chancellor said that the British Government failed to take up funding that was available for anti-fraud measures. Worse than that, the British Government have resisted efforts to increase the budget heads so that people can carry out that work. If our Government were serious about action against fraud, they would be doing all that they could, not merely on a national basis but on an international, European Union, basis.

We also have the opportunity to do something fundamental about the common agriculture policy, and all the problems associated with it, in the next few years during the debates about enlargement. I was alarmed to read in a newspaper today that one of the Commissioners is suggesting that the CAP be extended to Poland. In their discussions over enlargement with the central and eastern European Visegrad countries, the Government must be clear that we are not just going to transpose the existing CAP into 17, 20 or more countries. We must use the opportunity of enlargement to break and erode the CAP and to reduce expenditure on agriculture. We must not build in even worse problems for the future by trying to finance surpluses, overproduction and set-asides in Poland, Slovakia, the Czech republic and Hungary. I say that as somebody who is firmly committed to enlargement and who wishes all the democratic countries of Europe ultimately to be part of the same political and economic system within the European Union. Of course, we are not trying today to resolve those matters.

As long as this lame-duck Government persist in hanging on to office by threat, bluster and blackmail, they will be clearly incapable—because of their internal divisions—of doing anything constructive or on a collective basis with other Governments or with the European Parliament to assist in making changes in the process. We must wait for a change of Government, and for a Government who are committed to reforming the common agriculture policy, to rooting out fraud and corruption and to co-operating and building up structural funds. We must shift the balance in the EU budget towards areas of need, combating unemployment and implementing proposals—such as the Delors package—which will deal with the problems that Europe is facing. I regret that the debate is not focusing on the issues. I hope that we will soon have a Government who are able to set us on that path.

7.1 pm

Sir John Cope (Northavon)

I shall refer to the first terms of the Bill, because it is on Second Reading that we shall be primarily and most importantly voting at the end of the debate.

I was closely involved with the issue as a Minister when I was at the Treasury, from the election until July this year. Given the freedom of the Back Benches and some time for reflection and hindsight, I remain a supporter of the actions that were taken by my senior colleagues at the Edinburgh summit and brought into effect by the Bill. I believe that it was an extremely good deal. My opinion was enforced by the fact that—as far as I can gather from his response to an intervention—even the shadow Chancellor thought it was a good deal. He did not criticise the deal during the whole of his speech, and that seems to be the position also of the Liberal Democrat party.

Of course, we can all imagine a more desirable deal for the United Kingdom being achieved if we did not have to reach agreement with others. That is also true of each of the other 11 countries that were represented around the table, each of which could have prevented an agreement. But we in the House must live in the real world, and the Edinburgh deal was a good deal for the United Kingdom.

As a result of Edinburgh, the total increase in European Community expenditure has been slowed down, and the proportion of Community expenditure that falls on the UK has also been reduced. As for total expenditure, there is always plenty of debate in this Parliament and elsewhere about individual programmes within the Community. But the key overall figure is the own resources ceiling which restricts the total amount that the Community can spend under every head by reference to a percentage of GNP. As we know, that proportion was 1.2 per cent. by the time of the Edinburgh summit. I say to my hon. Friend the Member for Southend, East (Sir T. Taylor) that, whatever creative accounting may be attempted on individual bits of expenditure—as he suggested in one instance—the own resources limit applies in total to all the expenditure. That was the key figure at Edinburgh.

Just before Edinburgh, the Commission proposed a series of increases, starting with 1.22 per cent. in 1993 and rising to 1.37 per cent. in 1999. The Commission thought that those rises were a compromise between member states such as ourselves that were very restrictive on the amount of spending and those that wanted to spend more. If that compromise had been in place this year, the Community would have been able to spend 1.27 per cent. of GNP. In fact, we will not reach 1.27 per cent. until 1999. Of course, this year's increase is nil.

The final agreement was to reach less than half the compromise increase two years later than was proposed, but there was also hard negotiation on the various member states' shares of total expenditure, and once again I believe it to be a good deal. There was shifting of some of the weight of expenditure from the VAT resource to the GNP resource, which helps our cash flow and means that—over the term of the agreement—the proportion of Community expenditure funded by the UK will go down.

In turn, the deal means that the number of states that are serious net contributors to the Community will increase and, as we have heard, enlargement will take that process further. That will make our position in the Economic and Finance Council and in the Budget Council much easier. It is also potentially very important for the changing culture of the Community, and the Council of Ministers in particular, with regard to value for money and fraud. I observed part of that process myself before I left the Treasury. I am sure that my right hon. and learned Friend the Chancellor and my hon. Friend the Paymaster General will do all they can to build on that advantage.

I believe that, for those two primary reasons, it is a good deal for the UK. But, of course, it was a deal, and I and others believe that it depends on the belief that it is in the UK's interests to continue to belong to the European Community. I believe that because of the inward investment that has come to my constituency and to others all over country. I believe that it is also in our interests to be part of a large and prosperous home market—not to protect that market but to act as a base from which to trade around the world, particularly against other great trading blocks. It is better to work with our nearest neighbours and rivals to ensure the free movement of goods and services and proper uniform standards. Our membership of the EU also increases our leverage in world negotiations.

Above all, it is wise to have "jaw-jaw" rather than "war-war", and I am talking about trade wars as well as the shooting wars from which the European Community originated. "Jaw-jaw" can sometimes be extremely hard work in the European Community. I have represented this country from three different Departments on the Council of Ministers and a number of other Councils. I was much involved during the UK's presidency, when I was president of the Budget Council.

I know exactly to my cost—I lost sleep because of it—how difficult negotiating within the Community sometimes is. However, if we belong to the Community, it is necessary for us to take part in all its work. We must negotiate the best deals we can, as was done successfully by the Prime Minister, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) and the Foreign Secretary at Edinburgh.

It has always been obvious to me that the Bill would be of the first importance. The supporters of the Government are expected, of course, to support all the major Bills introduced. There is nothing new in that and I was not in the least surprised when my right hon. Friend the Prime Minister spelt that out in the debate on the Queen's Speech. An idea has grown up, too, that because opposition to a Bill is regarded as incompatible with full membership of the Government's parliamentary party, the Opposition parties are therefore obliged to vote against it as well, regardless of whether they support its aims. In fact, the Labour and Liberal Democrat parties seem to support the purpose of the Bill.

That decision to oppose is a distortion of our constitution and promotes to absurd lengths the idea that the duty of the Opposition is to oppose. Of course I realise the temptation to the Opposition parties. I am cynical enough to realise that they cannot resist it. Their excuse is concern about fraud and the mismanagement in the Community, but we are all concerned about that, too. The Opposition also know perfectly well that the United Kingdom Government, of all Governments, have been the strongest in the Community in combating fraud and mismanagement. The Opposition know that that will continue to be the case.

If our Parliament can find better ways in which to scrutinise such expenditure, we should, by all means, consider them. We could, for example, consider the suggestions put forward in the amendment tabled by my hon. Friend the Member for Stafford (Mr. Cash) and others, which has not been selected. A change of that kind, however, should not be seen as a reason to decline to give the Bill its Second Reading. It deserves support from both sides of the House.

7.11 pm

Mr. John D. Taylor (Strangford)

In common with the right hon. Member for Shropshire, North (Mr. Biffen), I must declare an interest, because I have been associated with companies that have benefited from funding through the International Fund for Ireland, which is partly financed by the European Community.

As is well know, the Ulster Unionist party has consistently opposed the integration of Europe. We are strong Europeans and believe in co-operation in Europe, but we do not believe in subjecting the United Kingdom to control from Brussels. That has been our line consistently.

What concerns us as a parliamentary party is the attitude of the Government to the Edinburgh agreement. They are treating it as though it were a foreign treaty. They argue that it represents a political commitment and has placed on Parliament an international obligation to rubber-stamp what was agreed in Edinburgh. I believe, however, that the Prime Minister went to the conference in Edinburgh and made a decision that requires the approval of the elected Members of Parliament of the United Kingdom. They are neither delegates nor rubber stamps but representatives, who have the right to express their views, yea or nay, on the Edinburgh agreement.

The agreement has two adverse effects. First, it is yet a further move in the direction of an integrated Europe. It increases the United Kingdom's contributions from own resources to the European Commission's budget. Secondly, it brings into being the cohesion fund, which benefits European regions, as well as four European nations. Some of the regions within those four nations, however, are much richer than many of the regions in the eight other countries that have been excluded from the benefits of that fund. I think immediately of some regions in Scotland, which have been denied any benefit from it. Among the favourable aspects of the Edinburgh agreement is the British Government's success in drawing attention to fraud and waste and the successful decision at least to curtail agricultural expenditure.

In the few minutes allowed to me I should like to discuss the implications of the agreement for Northern Ireland. Northern Ireland receives a considerable amount of money from the European Union, but it must be said that were we not a member of that Union, the national expenditure on Northern Ireland would be even greater than the money that we receive from Europe. That must always be borne in mind. Of greater concern to us, since we are in Europe and receive European funding, is that the funding from the Commission is politically motivated. The spending priorities are not those that we in the United Kingdom would have chosen and are certainly not those that we in Northern Ireland would prefer.

The International Fund for Ireland, for example, concentrates mainly on cross-border projects. It also spends money on some other projects that we consider wasteful, such as butterfly parks, a golfing video, as well as £40,000 on Lord O'Neill's steam engine, which closed down a few months later. The money wasted through that fund is also politically oriented expenditure. For example, 20 villages were selected to receive money from that fund, but even though the majority of villages in Northern Ireland are unionist, those selected were nationalist majority villages. That kind of policy, funded by the European Community, is creating unease and irritation among the unionist majority community in Northern Ireland. It represents an abuse of power by the European Community, through the International Fund for Ireland, and, as a result, the majority community in Northern Ireland is now losing out.

Another example of such political motivation will be announced next week, with the allocation of a further £300 million for Northern Ireland. We welcome that money, but, once again, the European Union is about to say that that money can be spent only on cross-border roads. Not a penny of that money can be spent on priority roads for Northern Ireland—for example, the Supermac junction on Saintfield road, the busiest junction in Northern Ireland, which has to deal with 50,000 vehicles a day. Instead it must be wasted on small roads across the border.

An important internal road in the west of Ulster runs from Omagh to Enniskillen. That road is especially important now that Omagh has lost its maternity hospital, which means that women must travel to Enniskillen. No money can be spent on that road from the new funding. That is the type of thing that is upsetting people in Northern Ireland.

We look forward to the intergovernmental conference in 1996. I hope that the United Kingdom Government will bring to an end the movement towards a federal Europe. That would ensure that we end up not with a Europe of regions, but a Europe of co-operating sovereign states. The Government should also, finally, commit themselves to opposing a single currency, otherwise its introduction would mean the final destruction of the United Kingdom as an independent nation. I hope that we will have some offer from the Government to the effect that, after 1996, it will be the people, through a referendum, who will have the right to decide what happens in our future relations with Europe.

We have been asked how we intend to vote tonight. It has been alleged that there is a deal between the Ulster Unionist party and the Government. Let me make it clear that there is no deal, nor is there need for one, because in the context of the developing situation within Northern Ireland, Her Majesty's Opposition support the Downing street declaration, just as Her Majesty's Government do. Therefore, any change in Government would have no effect on the present process in Northern Ireland, so there is no need for any deal. The Ulster Unionist party is not afraid of a general election either; my party would welcome it, because, in the present circumstances, we would do well in Northern Ireland.

Our decision on the Bill will be based not on Northern Ireland politics, but on today's debate—Europe and where we are going in it. The Government may have done some bad things, but when we look at the alternatives we see a Labour Opposition, and, even worse, a Liberal Democrat Opposition, who give the impression that they would accept every demand and every expenditure call from Brussels. They would query nothing. They accept everything coming from Brussels. Until Her Majesty's Opposition take a firm line and stand up for the interests of the United Kingdom in Europe, I am afraid that the Ulster Unionist parliamentary party could not identify itself with the policies of the Opposition tonight.

7.19 pm

Mr. William Cash (Stafford)

The proposition that "I know I am right" has now been elevated into a new constitutional doctrine. It whips a coach and horses through our history and traditions. It sweeps away the struggles of Pym and Hampden to establish our parliamentary rights against the absolutism of the Crown and asserts a new and dangerous concept—the divine right of Government. Then we had regicide; now we have suicide. Now the Prime Minister in effect declares that the Government can do no wrong—but he is not here today.

We have been told that the Bill is introduced and must pass as a matter of honour. We have been told that the presidency conclusions at Edinburgh amount to an international commitment, an international obligation. It has been described as a treaty obligation. That is not so; and no one seriously believes that we would have lost the rebate successfully secured at Fontainebleau.

The own resources decision became legally binding as recently as 31 October this year, but that was dependent on it being enacted in the House according to our constitutional requirements. That includes the rights of Members of Parliament.

Much has happened since the Edinburgh Council and—as my right hon. Friend the Prime Minister said when we were chucked out of the exchange rate mechanism—circumstances have changed. Not least, we have the compelling evidence that fraud in the European Community has not been contained. Far from it; as the current Court of Auditors report clearly shows, it has got worse in spite of the Maastricht treaty.

There has been more than enough reason not to implement the presidency conclusions since December 1992. They were concluded immediately after our ejection from the ERM, since when our gross domestic product has grown, and will grow as non-EU exports improve, as the revised figures that the Chancellor of the Exchequer has belatedly presented to the House demonstrate. He of course had to do that after having said on a radio programme that my figures were rubbish. Nothing said today alters that.

There is also the repudiation by the Court of Auditors of the accuracy of the GNP figures. Then there is the Conservative European manifesto of May and June 1994, which clearly states: We will resist all pressure to increase the ceiling on spending in the Community. Why, then, did we break that commitment to our own people, our own voters—as we did over the tax promises in our general election manifesto of 1992 as a result of the disastrous experiment in the exchange rate mechanism? A mere four months later, on 31 October 1994, we broke that commitment. That itself was a mere 10 days after the Chancellor had gone to Brussels and had given in significantly to the Italian blackmail on Italy's milk quota fraud. The Bill is tainted with fraud.

The Prime Minister could, and should, have said no on 31 October, and gained the approval of the electorate. As when he refused to veto economic and monetary union, and as when the Danes first rejected Maastricht and he let them down, as when he stubbornly stayed in the exchange rate mechanism—which nearly destroyed our economy—and as when he failed to say no to qualified majority voting, the chasm between promise and performance grows wider and wider as the tectonic plates of the European issue move beneath us.

As Francis Bacon said: Nothing destroys authority so much as the unequal and untimely interchange of power pressed too far and relaxed too much. My amendment would draw powers back to the House—to the democratic, independent, all-party scrutiny of the Public Accounts Committee, in co-operation, as I have always argued, with the European Parliament and in contact with the Court of Auditors, but in line with the promises of Maastricht: the Government's commitment to enhance the powers of national Parliaments, as yet ignored.

Edinburgh was a failure, as I said at the time. We gave in to Kohl's intimidation and Gonzalez's avarice, largely because of threats that we would be drawn away from enlargement. We should have stood up to them and used Edinburgh to renegotiate Maastricht. We would not be in this dangerous position, in the run-up to 1996, if we had.

So what is to be done? I will not support the Labour party, which would simply enact the Bill. Our argument is won, but the taxpayer will pay, either under the present Government or a under Labour successor. It would be worse than a pyrrhic victory to defeat the Government tonight. In "Murder in the Cathedral" we are told: it is the greatest treason to do the right thing for the wrong reason. Tonight, some will do the wrong thing for the right reason.

In my constituency annual general meeting last year, I was advised to recall the words of Winston Churchill: Your first duty is to your country; your second duty is to your constituents; only in the third instance is your duty to your party's policy and programme. Those people have been magnificent.

We are being whipped to do the wrong thing for the wrong reason. That is a disgrace to our parliamentary democracy, and makes more and more valid the claim of Chancellor Kohl's foreign policy spokesman, who said: Those who cling to national sovereignty are seeking solace in an empty shell. We have been warned.

Let us assert our confidence in the House by refusing a single currency now, by tackling fraud as my amendment proposes and by holding a referendum on this issue as a last resort—before the intergovernmental conference, and the prospect of a sell-out worse even than that at Maastricht. We could, and I would still urge that the Government do so, withdraw the Bill.

7.25 pm

Mr. George Stevenson (Stoke-on-Trent, South)

There can be little doubt that fraud is a justifiable cause for concern, and that it is growing. One of the main reasons why fraud is growing is the complete failure, especially by the Government, to control, let alone eliminate, it.

The Court of Auditors reports in the past 10 years or so have shown that it believes that at least 10 per cent. of the European Community budget is subject to fraud. I believe, and I think that most right hon. and hon. Members believe, that that is the tip of a very large iceberg.

I was staggered by the Chancellor's statement earlier, when he criticised the theory that fraud could amount to about £6 billion. He pooh-poohed that. He said that that was pure speculation, and completely irresponsible. The 10 per cent. figure that the Court of Auditors has identified—I repeat that it is the tip of a large iceberg—will account for fraud of £4.5 billion per year. The figure that the Chancellor so arrogantly dismissed is not too far away from the facts with which we are now presented.

The Government claim that they have targeted fraud. I want to show that their aim is severely defective. The fundamental reason for that is that the common agricultural policy system is inherently fraudulent.

In 1992, the then Minister of Agriculture, Fisheries and Food, the right hon. Member for Suffolk, Coastal (Mr. Gummer) came back to the House and claimed that the changes to the CAP were not only Tory-inspired but a victory for Europe, for Britain, for the farmers, for the taxpayers and for the consumers. I believe that claim to be as bogus as the claim by the Government that they are winning the battle against fraud.

We should separate the facts from Government propaganda—propaganda which, I believe, is designed to hoodwink the public further. A report published by the Court of Auditors this year highlighted a crucial element in the system of fraud—the export refund system. The export refund system is fertile ground for the fraudsters. A crucial element in control of the export refund system is accurate recording of production. The Court of Auditors report showed that two states in the European Union had a satisfactory system of production records. The Court of Auditors report also said that the records of the Netherlands, Italy and the United Kingdom were never examined. Therefore, the system of production records for export refunds in the United Kingdom—not according to the Labour party or the Euro-sceptics, but according to the Court of Auditors—was "not adequately covered".

Another aspect of the control of fraud in export refunds is the reliability of information provided by member states. Under the relevant regulations and articles, each member state is required to produce, every three months, a report notifying the European Commission of fraud cases. In three member states, such reports were not respected: those states were Greece, Italy and the United Kingdom. How can the United Kingdom Government claim to be winning the battle against fraud when, in the crucial matter of export refunds, the Court of Auditors has criticised their record so severely?

That is what the Court of Auditors said; but what is the United Kingdom's record over the past decade or so? I was interested by the suggestion of the right hon. Member for Horsham (Sir P. Hordern) that the Commission ought to stop the flow of funds to member states that are not dealing adequately with cases of fraud. That is indeed an interesting concept, but let us examine the United Kingdom's record.

Over the past 20 years or so—the Government have been in office for most of that time—5,775 fraud cases have been reported. The Chancellor said today that the Government were giving the highest possible priority to the defeat of fraud, and that they had made most of the running in the progress made towards that end; but the UK record tells a different story. The Court of Auditors report suggests that only 27 per cent. of the amounts involved in the fraud cases identified in the United Kingdom has been recovered: in other words, nearly three quarters of those amounts went straight into the fraudsters' pockets, and remains there. The Government's complacency strikes me as staggering, and the Court of Auditors has pointed out that the result is far short of what is required.

The common agricultural policy is responsible for the basic problem: until it is fundamentally reformed, fraud will flourish. It is a gluttonous creature, demanding to be fed, and the Government are instrumental in providing it with a financial feast. It was argued in 1992 that the reforms made in that year would put the CAP on a strict diet, but that cannot happen. We should not be fooled by the Chancellor's statement about what will happen by the end of the decade. In 1992, the CAP budget was £21.2 billion; in 1995—four years after we were promised that the reforms would deliver the goods—that budget will increase to £27.1 billion. That is a 25 per cent. increase since 1992, and it is not—as the Chancellor has claimed—a trifle; it is a scandal.

The Chancellor said that he must amend the United Kingdom's contributions by some £720 million. Let me give some further examples of fraud. We can remain within the CAP guideline only by ignoring the annual cost of devaluation—about £ 1 billion a year—by deferring olive oil payments for future years—about £900,000 a year—and by using reserve money—about £350,000 a year. That is not contained in any document, but it is outside the guideline; it is another example of the fraudulent way in which we are trying to con the public. The CAP is loaded with fraud, and another fraud is the one being perpetrated on the British people.

The Bill is not acceptable in the terms in which it is drafted, and I hope that hon. Members will support the amendment. The Government have failed to combat fraud; they have no effective policy to reform the CAP; and there is every sign that they will continue to pour more resources down the plughole that is the common agricultural policy.

7.34 pm

Mr. Ray Whitney (Wycombe)

Time and again, the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) called for the reform of the common agricultural policy and I do not believe that a single Conservative Member would disagree with him; my point to him is that, in 1992, when a reform of the CAP last took place—again, I know of no hon. Member who would deny that that was a step in the right direction—his party gave the reform no support. That puts its record into context.

We have heard a good deal today—and, indeed, from the media in the weeks running up to the debate—about the iniquity and wickedness of this cruel Government, who have demanded that Conservative Members vote for the Bill's Second Reading and turned the vote into a vote of confidence. Words such as "blackmail" and "bullying" have been used. A number of my hon. Friends—a small number, usually known as the Europhobes; that is one thing that the Leader of the Opposition got right—have been going from media studio to media studio complaining about the denial of freedom that has been imposed on them. My hon. Friend the Member for Stafford (Mr. Cash), who is not present now, even prayed in aid the glorious names of Pym and Hampden in connection with the dreadful things that are being done.

If that were the whole truth, it would indeed present a dreadful picture. The picture is giving serious concern to many people throughout the country and many members of party associations, but the reality is entirely different. As so often happens, that reality is being regularly and deliberately obscured by the very agency that is meant to bring enlightenment: the media have worked themselves into an ecstasy—a frenzy—about the whole episode, joining our party's Europhobes in whipping up a lather of indignation.

In fact, there would be no need for any of this if there were any question that the Opposition operated with the slightest degree of honesty and responsibility. As has been made clear, they entirely support the objectives of own resources enlargement; we can debate the details of that issue, but the effective debate is not on that territory.

This appears to be a debate about fraud. It is a relatively new tactic. I have good reason to believe that the Labour party, certainly, had no intention of missing what it saw as an opportunity to attack and embarrass the Government, knowing the parliamentary arithmetic which, sadly, clearly applies in the Conservative party. Labour's original tactic, or pretext, was to use the social chapter and the differences of view across the House on that subject: that was to be the casus belli of this evening's challenge. Then, riding to Labour's rescue came the report of the Court of Auditors, which was taken up on all sides—and an admirable cause it is.

One of the many ironies in the present circumstances is that the power and impact of the Court of Auditors is now greater, thanks to what was achieved by my right hon. Friend the Prime Minister's initiative as a result of the Maastricht negotiations. The Court is now a Community institution and the impact of its report is therefore that much greater—although it is important to retain in context what my right hon. and learned Friend the Chancellor said about the scale of fraud. Of course, any amount of fraud is too much, but the scale of this fraud has been grossly exaggerated—although we must go on working to get it right.

That is really just a question of parliamentary tactics, particularly on the part of the Labour party. It is, I think, a measure of the frenzy created by the present political climate that the spotlight is not on the total inconsistency of the Opposition's position: we are seeking to obfuscate their support for the European Community and own resources enlargement, and the pretext that they are using. The Opposition use that pretext, not least because their record in combating fraud and in seeking reform of the common agricultural policy is so dreadful. Another irony is that one or two of my hon. Friends might abstain or join the two major Opposition parties in the Division Lobby when their objectives are totally opposed.

My final point is, sadly, addressed largely to Conservative Members. Seven words in the English language are damaging at the moment to the Conservative party, to the Government and to British special interests. They are, "I am in favour of Europe, but." That attitude is sapping and damaging Britain's position in developing a Europe with which we can live and in which we can prosper.

One or two of my hon. Friends have taken a consistent and honest position on Europe—they have said from the beginning that they oppose our membership. Of course, they are wrong and deeply misguided, but I respect their opinions and the consistency of their position. My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) joined that band some weeks ago at our party conference in Bournemouth. In his speech in a fringe meeting there, he seemed to accept that Britain would consistently be outvoted by 11 to one on virtually any issue. He is deeply wrong and misinformed, but at least he is now clear that he has joined the ranks of the totally negative.

We can deal with that tiny minority in the Conservative party. It is much smaller than the minority of Labour Members against Europe. The position of Front-Bench Labour party spokesmen flops and flips and it has done so eight times in the past 10 years. At the moment, the pro-Europeans are in the ascendancy, but a large minority of Labour Members are permanently hostile to Europe and we have heard one or two of them in the debate. The minority of Conservative Members who hold such a view is small. I ask them to clarify their position and genuinely to consider it.

Those Conservative Members go around constantly attacking Europe, ignoring its achievements and the vision and potential that Europe offers us, when three or four countries, if Norway gets it right, are knocking on the door to enter Europe, understanding that it is not just a free-trading area. Those three or four countries will become members when my hon. Friends are making it difficult for us to stay in Europe and, by implication, want us to get out. They do great harm not only to our party, but to our country.

The sort of Europe that most hon. Members believe in has huge potential. It is a Europe of nation states, where we collaborate, where our interests are served and where we work out our own salvation where it is most sensible—at the national level. That is the principle of subsidiarity. We have a great opportunity now and we shall have a wonderful opportunity in 1996. That opportunity, however, will be destroyed unless my hon. Friends stop saying, "I am in favour of Europe, but." They should st art saying, "The sort of Europe that we believe in is …" Millions and millions of our fellow Europeans would share that sort of Europe with us.

7.43 pm

Mr. Ieuan Wyn Jones (Ynys Môn)

With the greatest respect to the hon. Member for Wycombe (Mr. Whitney), I think that he was not totally open when he attacked the Opposition parties for seeking to defeat the Government tonight. He knows well why the Opposition parties are lined up against the Government. It is not because we are debating extra money from the United Kingdom budget for the European Union—the opposition has nothing to do with that. It has nothing to do with fraud or reform of the common agricultural policy. The opposition is all to do with confidence in the Government.

I cannot understand why, when a natural majority exists in the House for accepting the principles of the Edinburgh summit agreement, the Government have contrived to defeat themselves. I find it amazing that they have decided to make this an issue of confidence. Euro-sceptics on both sides of the House have decided to man the barricades on the issue, which, on the scale of things European, is small beer.

When one considers the decisions that were taken from 1971 to the time of the Maastricht debates, and when one considers what choices face the United Kingdom up to 1996, the possibility of having the Whip withdrawn over a measure such as this beggars belief. I do not understand why Conservative Members have decided to man the barricades.

Let us be clear about the decision that was taken at Edinburgh in 1992 and let us accept the reason why we should support the principle behind that decision. We should support it because the Maastricht treaty contains commitments on social and economic cohesion. There was an acceptance by countries of the European Union that, if they were to achieve economic and monetary union and if they were to improve their economic performance, they needed an increase in structural operations, including structural funds and cohesion funds.

Plaid Cymru agrees that the own resources ceiling should be raised from 1.2 per cent. to 1.27 per cent. in 1999 to enable peripheral and poorer regions of the European Union to benefit from Union membership. We accept that that must happen. The problem we have with the Edinburgh decision is that it does not accept Wales' particular position in the new European Union.

Hon. Members must accept that the Welsh economy, particularly the west Wales economy, has a fragile base. Many parts of rural Wales are still highly dependent on, for example, agriculture and tourism. The economy must diversify. Parts of industrial Wales have suffered from the recession and from structural changes. If all pockets of unemployment are to be reduced, the economy must diversify.

The problem is that although, under the Edinburgh agreement, resources for structural operations will increase by 43 per cent. between 1993 and 1999, Wales will not receive the real benefit of that increase. Because we have no voice where it matters in Brussels, we are denied access to funds that will improve Wales' economic performance in the run-up to eventual economic and monetary union.

Let us remember that countries that have objective 1 status and that can attract cohesion funds will be the real beneficiaries of the Edinburgh agreement. Let us remember that 62 per cent. of all structural funds will go to regions and nations that benefit from objective 1 status.

Some regions in the UK will benefit. The highlands and islands of Scotland will benefit for the first time under objective 1. Merseyside will benefit. Northern Ireland has benefited for at least two periods, but areas in Wales could benefit. They qualify under any objective criteria.

Mr. Rowlands

Mid-Glamorgan is one of them.

Mr. Jones

Yes. Gwent, Dyfed and Gwynedd are others.

Because Wales lacks the political clout to secure objective 1 status from Brussels, the Welsh economy will suffer a net loss of at least £800 million between 1995 and 1999. If we had secured the sort of funding that the Edinburgh agreement was supposed to give peripheral and marginal areas, our economic base would have substantially improved.

Wales would qualify also for cohesion funds, because the criterion under the Maastricht treaty is any country having a gross domestic product of less than 90 per cent. of the European Union average. Only four countries meet that criterion—Spain, Portugal, Greece and Ireland. Wales would qualify. The cost to the Welsh economy of failing to attract cohesion funds will be at least £417 million between 1995 and 1999.

The failure of Wales to qualify for objective 1 and cohesion funds will cause the loss of £1.2 billion between 1995 and 1999. If Wales had a proper voice in the European Union, it could have attracted those moneys. They are not extra funds. We ask only for qualification under the existing own resources decision that increased the ceiling at Edinburgh.

We must examine the role of the Secretary of State for Wales in the damage that has been done to the Welsh economy as a result of our failing to have a proper voice in Europe. His predecessor eulogised at a Conservative party conference about what he described as a Europe of the regions. He said that Wales should play its part as a region—we would say, as a nation—in the European Union. He pioneered agreements with other European regions—Baden-Wurttemburg, Rhone-Alpes, Lombardy and Catalonia—and said that Wales should move in the same direction by having an independent, distinctive voice in the Union.

Today, we have a Euro-sceptic as Secretary of State for Wales, who gets Euro-sceptic Back Benchers to ask him questions, so that he can say why Wales should look to Westminster rather than to Europe for its salvation. 'This afternoon, the hon. Member for Colchester, North (Mr. Jenkin) asked if it was true that Wales receives £6 billion a year from Westminster to pay its way. Does not the hon. Gentleman realise that that £6 billion comes from the pockets of Welsh taxpayers? Wales does not receive from Westminster funds to which it has not contributed.

The Secretary of State for Wales underestimates the contribution that Europe can make to the future of the Welsh economy. He denies us access to funds to improve our transport and technology infrastructure, so that Wales could play a full role on the European stage. Wales can flourish within the Union only if it continues to enjoy its own identity and breaks free of the shackles of the centralised British state.

7.53 pm

Mr. John Wilkinson (Ruislip-Northwood)

My right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke) said that we all brought our own impedimenta to this debate. I confess to bringing my own intellectual bags and baggage. It may be that right hon. and hon. Members say that I habitually travel light. So be it. I admit, however, to a fundamental and deep preconception against the Bill

In many studios and numerous forums over the past few days, I have been asked how I will vote. I answered that I am against the principle of the Bill but would listen to the debate and make up my mind according to the arguments. Having done so, I hold to my original belief that the proposed legislation is neither in the interests of my country nor to the benefit of my constituents.

Last Wednesday, my Conservative association's executive committee wrote asking me to give an undertaking that I would support the Government in all votes which they deemed to be issues of confidence. I replied that I could only give my constituents my integrity and judgment—that I would, in the last resort, do that which I believed to be right.

The matter has been extraordinarily escalated by the Government. When I watched television on Saturday night, 1 saw my right hon. Friend the Member for Richmond and Barnes (Mr. Hanley). I canvassed for him at a Lambeth by-election, and at Richmond in 1983 when he just squeezed home. He is a constituent of mine and has been a friend for many years. I heard him suggest that Conservative Members who vote against the Government, abstain or even seek to amend legislation were in danger of disciplinary action, losing the Whip and, by implication, being deselected.

Being deselected is an occupational hazard—much less hazardous than some I have known in my past. In any case, it is no bad thing for Members of Parliament to be answerable to their electorate at all times, and I wholeheartedly welcome that. However, the extraordinary congruence of events over the past weeks and days has compelled me even more urgently and insistently to obey my conscience.

The Government, blithely and apparently happily, forwent the Conservative commitment to privatise the Post Office, did not press ahead with privatising national air traffic control services, and did not seem to mind that their long-stated commitment to making it easier to mobilise our reserve forces was not to feature in a Bill. Yet they chose to press ahead with this legislation which in my judgment, as I said in the letter to my constituency executive, is not recognisably Conservative.

It is with a heavy heart and some sadness that I say that my original view has not been shaken. Let us consider the financial perspective. How can it be right for a Conservative party that believes—if it believes in anything these days—in controlling public spending to allow an extra 3.3 per cent. in real terms to be assigned per annum to Brussels until the end of this decade? It goes against everything that my right hon. and learned Friend the Chancellor has suggested. As others have remarked, my right hon. and learned Friend will be seeking in his Budget tomorrow to impose cuts in future spending plans.

My right hon. and learned Friend then said, and I refer directly to his speech, that only one of his hon. Friends—my hon. Friend the Member for Billericay (Mrs. Gorman), whose perspicacity in the matter as well as her tenacity and courage I admire—had complained about the cost of the Edinburgh deal when the statement was made to the House after the Edinburgh summit. This was hardly surprising, since at that time all our attention was focused on the fact that our Danish friends had voted no in their referendum and we were wondering what arrangement would be cobbled together to secure a different outcome for them in their next referendum.

On amendments, is it really so awful for Conservatives—honest Conservatives, loyal Conservatives, trustworthy Conservatives—to say that it is inappropriate for us to pass such an amendment as that tabled in the name of the Leader of the Opposition? It reads: That this House believes that the European Communities (Finance) Bill is not an acceptable measure as it increases United Kingdom contributions to the European Union without action by Her Majesty's Government to cut fraud and waste in Europe or to reduce expenditure on the Common Agricultural Poiicy. I do not want to personalise the matter or to refer to my right hon. and learned Friend the Chancellor, but I see no way in which one could soft-shoe shuffle around this. It was put to me in a television studio this morning, "Your party, Mr. Wilkinson, are in danger of being labelled as sleaze bags." The proposed legislation does to some degree by statute institutionalise fraud. This will be the case unless efficient and effective methods to curb fraud are put in place before the Bill's enactment. So I do take the amendment seriously.

My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) referred to the true cost of membership of the EEC. In his speech there was no sleight of hand about what additional money over and above that previously anticipated we would have to finance. He referred to the true cost up to the end of the decade. The opportunity cost, too—inasmuch as the gross contribution—is just as important as the net cost. It is a fact, is it not, that every penny devoted to Brussels is fuel to the motor of European integration. The motor of European integration is fired and fuelled by our taxpayers' money at a time when—perhaps tomorrow it will be confirmed—our taxpayers will see VAT on domestic fuel doubled and other imposts will be applied from the next financial year. Many taxpayers have suffered deeply in the recession, which was intensified by our membership of the exchange rate mechanism.

We heard speeches from the right hon. Members for Llanelli (Mr. Davies) and for Bethnal Green and Stepney (Mr. Shore) and from the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands)—all of them honest gentlemen and all of whom were respected Ministers in Labour Administrations. They have seen over the years how the institutions of the Community work.

My hon. Friend the Member for Wycombe (Mr. Whitney) referred to the Johnny-come-latelys—those were not his words, but we can refer to ourselves as such—who have only recently understood how much the EEC would cost, unlike my hon. Friend the Member for Southend, East (Sir T. Taylor), who has always comprehended what the EEC was about and how much it would cost. For me, the Damascus road conversion came when, following the first Danish referendum result, I read the Maastricht treaty. It is plain to see—for all who would read it—that it is a blueprint for a united states of Europe. The more money we provide—the Bill is an example—the nearer the day will come when we are part of a super-state without our fellow countrymen ever having had a chance to express their opinion.

I rest my case on this final point. One of the most treasured, most valued, most prized and most important responsibilities of the House is the voting of supply, which we do by tradition annually. The Bill seeks not quite to grant a blank cheque to Europe, but if the rate of growth continues to be as high as it is now—way above that predicated in December 1992, when the original decision was taken—it will mean a substantial transfer of resources from our fellow countrymen, to their detriment, not only to the wasteful and in some instances corruptly managed central institutions of the embryo European super-state but, through cohesion and structural funds, to Portugal, Spain, Greece, southern Italy, and so on, for industries to be developed there which will grow and compete and put our own people in this country out of work. In those circumstances, how can one say that we are acting as loyal Conservatives and responsible Members of Parliament if we renege on our traditional duties to our constituents and allow ourselves, as this Bill proposes, to bind future Parliaments which will succeed us?

I know that my right hon. Friend the Prime Minister is a very nice man. I have never had cause to exchange a single cross word with him. He has always been a good listener, but that reputation accords ill with his behaviour over the proposed legislation before us. I believe that he has said that one of his great political heroes, apart from lain Macleod, for whom I share his admiration—his rhetoric was formidable and was certainly an inspiration to many, including myself—was Neville Chamberlain. To me, and for the Conservative party, today was as climactic a moment as when the anti-appeasers stood their ground over Munich in 1938. It was my hon. Friend the Member for Stafford (Mr. Cash) who, at a private meeting—I beg his indulgence if I quote him in his absence—said that we should remember that Winston had to face a vote of confidence in his own constituency when he voted against the Government over Munich.

We must not take analogies too far, but it seems to me that Her Majesty's Government bow down and appease Brussels all the way along the line and the danger is that my right hon. Friend the Prime Minister, like Neville Chamberlain, will be swept away from office, perhaps as a consequence of his weakness, some two years hence. My only hope is that our party will not be swept to destruction in that same tidal wave. I believe that, if we stand our ground and hold fast to what we believe to be right today, we are much less likely to be so.

8.8 pm

Mr. Nigel Spearing (Newham, South)

The hon. Member for Ruislip-Northwood (Mr. Wilkinson) mentioned Neville Chamberlain. I happen to remember the said gentleman as Prime Minister. People said that he was very good for Birmingham but he could not deal with foreign affairs. Perhaps that might be the same with the present Prime Minister, the nice gentleman to whom the hon. Gentleman referred just now.

The hon. Gentleman refocused our attention on supply. The European Community constantly reiterates its basic democracy. I would challenge whether, in fact, our form of democracy is at all compatible with the treaty's. I believe that Government after Government will be entangled in treaties that are incapable of providing the fruit that they promise, because of their constitutional structure, which prevents some hon. Members from doing what they want in this country and which I believe does not allow the Labour party to do what it would wish to if such treaties did not exist. The difference between Neville Chamberlain's situation and the present is that whereas Chamberlain was up against armed force, all Prime Ministers and all Governments of this country for the foreseeable future, unless the position changes, will be fighting the treaties, which are difficult to alter. That is the problem that will face any Government.

The right hon. Member for Northavon (Sir J. Cope), a former Treasury Minister, reminded us that this was economic warfare. Indeed it is, because the treaties set up economic warfare and economic competition. The Conservative party believes in economic competition in this country and pretty well everywhere else. If there is to be economic competition, one has to have a legislative framework. Once the legislative framework has been set, by democratic means one hopes, one knows where one is. The trouble with the treaties is that they get negotiation and legislation hopelessly tangled together. The framework of the economy, in terms of legislation, gets tangled up with finance and we find ourselves in constant difficulty.

Truth is supposed to be one of the first casualties of war. Unfortunately, truth has become the casualty of the treaties and of the economic warfare within the Community. That has been vividly illustrated today. A former Chancellor, the right hon. Member for Kingston upon Thames (Mr. Lamont), has confessed to us that the granting of substantial sums to eastern Europe for reconstruction was done over a dinner table. Is that the way in which to vote money? Of course not. Did we know about that? No, but we know the truth now because more and more hon. Members with experience are spilling the beans.

What about Edinburgh? We are told tonight, "Oh, under the Edinburgh arrangement, we had to pay up because we had to ensure that the Spaniards would move forward with Europe." Why should there always be a succession of changes in the European Community? Why does it have to introduce yet another move towards centralisation before the previous move has been assessed and before its results have been analysed? There is an answer to that question, which I shall not venture tonight, although we must bear that point in mind.

As the hon. Member for Ruislip-Northwood said, when the Edinburgh summit was announced, we were told that the discussions would concern the Danes, enlargement and this, that and the other. We now hear that the agreement was made to keep the Spaniards on side and to reconstruct eastern Europe. That is why the Government then agreed not just to retention of the rebate—that is fine for the moment—but to an expansion of the expenditure envelope. That is what we now discover two years on.

The truth is a casualty even inside the Cabinet. I heard the Secretary of State for Defence say on television last week that the Bill was a treaty commitment. I intervened during the speech by my hon. Friend the Member for Dunfermline, East (Mr. Brown) to remind him and, indeed, the Chancellor—who has reminded us that he does not know what the treaty is about—about the nature of that commitment. The Chancellor said that the Bill was a treaty commitment and I pointed out that article 201 of the Maastricht treaty makes it exclusively the responsibility of each country's legislature, in our case this House.

Article 201 says that after consulting the European Parliament on the proposals, the Council, acting unanimously, shall lay down provisions … which it shall recommend to the Member States for adoption in accordance with their respective constitutional requirements. That was to happen after the proposal had been put to the Council and to the Edinburgh summit. In other words, far from saying that it is a constitutional duty of the House to pass the Bill, the treaty gives the House the option to say no. It also gives the House the option to say no to supply or, as the Labour amendment says, the option to say no unless and until action is taken on fraud, waste and the common agricultural policy. The amendment does not wipe out the possibility of enactment altogether. Unless a legislative assembly or a democratic body representing taxpayers has the ability to control expenditure, both in taxation and the distribution of expenditure, it cannot control the Government.

The Government, by coming along tonight on the basis of confidence, are confessing that in earlier negotiations, behind closed doors and in secret, they committed the House and the country to expenditure. The Government say that the Bill is so important for future negotiations that they will have to face that for the good of the country, they must get it through, whatever its merits, and eschew the opportunity of saying, "unless and until there is better control of misappropriation and fraud, and better this and better that."

If the House agrees to a Second Reading tonight, it will break one of the historic and fundamental defences of the citizens of this country because it will be agreeing supply reluctantly. In some ways, that is redolent of the supply that used to have to be granted to the monarch. Parliament used to have to supply the deficit in the monarch's own accounts from the revenues that it collected. It supplied the difference between the monarch's accounts and his expenditure. That is the basis of what we are now doing.

I want to be a little more popular in my remaining points. What I have said will be clear to those in the House today, but I am sure that the public are completely foxed by what has been going on in the past few weeks. Unless I was a Member of this House, I think that I would be foxed. Even now, I am not altogether sure of certain things because the arithmetic is so complex, and so on. We do not know what the extra payment will be. As the Chancellor himself told us, the figure is calculated retrospectively and it depends on so many economic factors that we do not know what it will be.

I used to have a constituent whom I will call Bob who is, unfortunately, no longer with us. He was a gatekeeper at Tate and Lyle and he had been in the forces. He used to question me closely on these matters. When the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) was negotiating all this, he came to a halt and Lord Rippon came to a stop. The right hon. Member for Old Bexley and Sidcup and President Pompidou had a chat and after that chat, negotiations went ahead. Bob said to me, "That Pompidou, he saw Mr. Heath coming." Bob would say to me now, "Why is the House having to do this?" I would say, "Because it is like a cheque that has to have two signatures. Mr. Major signed two years ago in Edinburgh and he is now asking us, as the second signatory, to sign. The problem is that we did not understand at the time—and it was not made clear—why our country was signing it. We have the right not to sign it."

Bob would say, "But look, we are going to get more back, aren't we? All this money is coming back to us." I would say, "Not exactly because at the moment, we are paying much more in than we get back." The 1992 figures tell their own story. Gross contribution is £6.7 billion, receipts are £2.8 billion and net receipts are £3.9 billion. The rebate is £1.8 billion and the final net contribution is £2.1 billion. That rebate is all important, as has been admitted. Bob would say, "That's all right. It is in the treaty, isn't it?" I would say, "Sorry, Bob, but the answer is no. It runs out in 1999."

Bob would ask, "What happens then?" I would say, "I happen to know that the Germans are very keen on doing something about the situation, not just with us, but with France, because they are the major contributors and Germany is a bigger country than the United Kingdom. The Germans have said that they do not want the situation to continue into the next century." Bob would say, "Surely people understand that. It is only a leasehold." I would say, "Ah, Bob, but the EC works like this. It works by the current politicians getting off the hook by providing future politicians with insoluble problems. When we get to a problem, the reason why a decision was taken will have been forgotten and the people responsible will have retired and be out of the way." It happens like that time and again.

I believe that Bob has a point. One of the problems is that everywhere in the country—we know this from our constituencies—we are offered funds. Funds are not just being misapplied, as we know, but are questionable. The other day, the Select Committee on European Legislation discussed a proposal relating to education. The proposal said that 1996, the year of the great treaty, will be the year of lifelong education and the European Community will spend the equivalent of £6 million telling us, all over the Community, that education in life is so important. There is hardly a person in this country who would not agree with that. Of course it is important. Is that money going towards further or adult education? No, yet the EC is telling us through agencies, through advertising, through projects and distribution and conferences just how important education is. That is the sort of thing for which we may have to pay.

Bob would say, "Well Nigel, that is not very good, but, of course, we still have our foreign policy, haven't we?" I would say, "Well no, not exactly, Bob. We now have a common foreign policy." Bob would say "Well, what about the United Nations and the Security Council?" I would say, "Well, I am afraid that that is common as well because we have a common foreign policy. We sort of co-ordinate life and we have an obligation to that".

Bob was an ex-service man and he would say to me, "What about our Army? We have the Army and the Queen is the head of the Army. Surely we can send our soldiers where we like." I would say, "Well, I would like to think that. But in any peace operation, for anything such as the tragedy that we are now seeing in the former Yugoslavia, there is a common policy." He would say, "Who would make the decision? Would ii be our Parliament, or the Queen?" I would say, "No, I am sorry, Bob. It would be the Union president." He would ask, "Who is the Union president?" I would say, "Well, we do not know." Bob would say, "What do you mean, you don't know? Surely you, Nigel, know all about the EC. Who is the Union president?" I would say, "It changes every six months." "Oh," he would say, "so in 1996 or 1997, when we have to send some troops somewhere and it is under the European Union, not the United Nations or NATO, and we do not know how it will work out, to whom will they be accountable?" I would say, "Under the treaty terms that we have now signed, they will be accountable to the president of the Union for that six months." Bob would say to me, "Nigel, are you mad or are you telling me the truth?" I would say, "Unfortunately, Bob, I am telling you the truth." I do not think that any hon. Member in the House would challenge anything that I have said in respect of fact in my speech. We have a Black Rod of Brussels who knocks on the door of this Chamber. The Black Rod of Brussels is summoning us not to a legislative assembly, one which we in the end control, but to decisions which have been made behind closed doors by the princes of Europe—those now and in the future.

8.21 pm

Mr. Richard Shepherd (Aldridge-Brownhills)

The hon. Member for Newham, South (Mr. Spearing) is right. The country is confused. Two weeks ago, the Government began with a putative majority of 500— 500— on this issue. By the end of last week, we were into a suicide pact. Yet the atmosphere in the House is hardly the thought that the Government will—remotely—lose tonight. There is no sense of urgency about it; it is a nonsense found out. I cannot explain to anyone why hon. Members may have the Whip withdrawn, or why the Government perceive a crisis on this issue, above all other issues, in their legislative programme. I merely reflect on the curiosity of it. I shall return to that point a little later.

I shall look at two statements made by the Chancellor of the Exchequer. We have not discussed European finance in the terms that we have a control over it, or that we may stop the sending of money, taxes, tariffs, or levies to Brussels, since 1988. The Chancellor of the Exchequer said of the taxation of the United Kingdom by Brussels, "It is utterly beyond the control of this House." That was his statement during his powerful speech this afternoon. He has actually sounded the death knell of the House, has he not? We were founded on the control of supply, so that our citizens would bear the charges and impulse of Government for the purposes of this country and that we had the final word on it. "No, no," says the Chancellor, "it is now utterly beyond the control of this House."

I have no vanity about that in a personal sense. The Chancellor means that taxation is now utterly beyond the control of the electorate, the people, the citizens of this country who make our industry and our wealth. They are now taxed by treaty and sent to a foreign capital, Brussels, as I see it, without any intervention from the House and with no annual review, which the Government currently have to face in seeking the funds to maintain our own institutions and our own patterns of expenditure. No, no, this is more sacred than that, because we may not interfere.

All I conclude from those words of the Chancellor of the Exchequer is: give Brussels a penny more, and the day after tomorrow, when the Bill has been passed, no matter the fraud, waste or deception, he will again announce that those moneys, cast aside in one evening, are now also utterly beyond the control of this House, and therefore the people. Perhaps the Cabinet will reflect that that may be the source of discontent which ignites this nation on the European issue. Once a passage has been made, that is irrevocable and irreversible if the bureaucrats and the unelected people who now govern us in fundamental law have their way. That was what the noble Lady Thatcher meant when she said that it was a ratchet and that once it gained one inch, it was for ever given. That is what we have seen in Europe.

When I first came to the House, this Europe did not have the presumption or the pretension that it could tax us directly without us having a word, without us being able to say that the exigencies of Britain, our care, or our interests in our own people, must come first. The Chancellor of the Exchequer made light of the costs of the membership of a club and, of course, concentrated, as all Governments have, on merely the net contribution. I was thrilled when my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont), the former Chancellor—it always takes the leaving of office to discover truths; it is one of the most remarkable things in this House—discovered the quantum. If I were to demur from anything that he said, I would say that he took Lady Thatcher's abatement out of the quantum. In point of fact, under the Community taxation rules, we have to pay the full quantum, so that by 1996–97, it will be £10.3 billion. Then, one year later, the rebate will be paid back. Therefore, the burden of taxation in the current year falls on us all as the total quantum. As my right hon. Friend rightly pointed out, are those objectives and matters on which we should necessarily spend our own money? That is a question that is properly for the House of Commons.

Forgive me for particularising, but I thought that wonderful speeches were made by two Opposition Members. One was made by the right hon. Member for Llanelli (Mr. Davies), to which we have become used, and the other was made by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands). They reminded us of what the essential heart of our institution is about. If we cannot control money, we cannot control our own Government. Yet, our own Government turn round to us and blithely say that those controls are now utterly beyond the control of this House and therefore of the people. That is why this is a fierce debate in one sense. We believe in the rights of our electorate and, as many hon. Members have said, we believe that we are here only because people have put trust in us to express honourably and truthfully what we feel on the great public policy issues of our day.

Why, of all the measures, has it been decided that this is a confidence measure? I am rather old-fashioned. My view is that if a Government propose a measure, it is defeated and they believe that the loss of that measure is so profound to their existence, they should stand by a separate confidence motion. That used to be the tradition of the House. The danger to the House is that if the Government start particularising every piece of legislation as a confidence motion, in the short term, they can bring about the ruin of their country and, in the long term, they can bring about their own ruin.

Every Conservative treats this issue solemnly because of the fear that, in the balance of judgment in the cabal of Cabinet members, who sat together and weighed up the issues, they came to the conclusion—whether due to spite, not fact—that the destruction of my party and of the constituency associations across the country would be the consequences of the Government not getting their way on what Americans would call merely a line amendment to the budget. We are considering a small matter, almost immaterial in public expenditure. So we all ask ourselves why the Government draw the line on this one issue—note that it is not the debate next week about VAT on domestic fuel. If the Government lose that measure, that is just a small part of an overall Budget. The House has not denied the Government the funds to maintain the government of this country and its institutions. One ponders why, and we must listen very carefully to what the Government have to say in that regard.

My second bite at the speech made by my right hon. and learned Friend the Chancellor of the Exchequer is that he said that we are talking about a major international agreement. Other hon. Members have referred to the nature of this major international agreement. Let us be quite clear: this is not the end of the cold war as in Paris; this is not a meeting between Mrs. Thatcher and Mr. Reagan agreeing on solemn undertakings in the advancement of our international benefit.

This is now meant to be a Community in which, I regret, my own Front Bench insisted on us all becoming citizens together. When the Council issued its direction four weeks ago that the process should come forward, that Council comprised common citizens of a Union to which I am not attracted.

How can one argue that one's common citizen—one's neighbour—has formed a solemn international agreement? One cannot do that. That is part of the deception with such arguments. One can use the argument one way or the other. I am now very used to that from Front-Bench spokesmen. They say one thing today and another tomorrow, and they hope that we do not notice the difference. They have a pretty good stab at reconciling matters.

What we now have is jovial bluff. We are told that this is a solemn international agreement with citizens sitting around the table prepared to divvy up, in an unchallengeable fashion for a period of time, indefinite in the memories of this House, and forward for years, a certain source of finance. That is the solemn international agreement, but it is not borne out by the treaty. That is a proper mechanism which supports, according to the treaty and our own domestic law, the supremacy of the House in these matters.

The Government must follow the traditional methods and constitutional arrangements of this country, as must each other respective member of the Union. There -is nothing odd about that. As I said, we shall have a vote on VAT next week. The Government do not threaten resignation if they lose the increase in VAT. In fact, I rather suspect that there would be a cheer from Conservative Benches if that occurred.

One should reflect on why, in all the legislative programme, this one tiny issue is set out. I am going to suggest something that I find very uncomfortable. We are governed by a cabal that is federalist in its intentions. It has told us, "Softly, softly, catchee monkey." It has told us over the years, "We resist." However, I listened to a Labour Government and read a Labour White Paper which said that if we were to vote for common arrangements for free trade, we should not believe that we would lose control over anything as we had an absolute veto on everything.

The Foreign Secretary does not have a view on anything in these matters. He is an agnostic on the single currency. On the other hand, a powerful, young and thrusting hopeful in Cabinet tells me that he thinks that this is dreadful and that it will have consequences. With the brio from the Chancellor of the Exchequer, he understands why we should join. What guidance. On the one hand, yes; on the other hand, no and, from the Foreign Secretary, "I'm an agnostic." No wonder there is concern and disbelief about the Government's position.

It is a matter of, "Not by my words do you judge me, but by my deeds." Since I have been a Member of this place, we started from a position of very little government from Europe. We are ending up with a formidable body of law in respect of which the Chancellor says that it is utterly beyond the reach of this House. The constitutional position is wrong if he is right. However, I know that he is wrong: it is within the reach of this House.

What do we do about this? We are confronted with the fact that we no longer have a free choice in the matter. I can speak only for myself. However, I was first chosen by good and honourable people. I was elected by an electorate whom I hold to be good and honourable. Like every other hon. Member, I have tried to honour those relationships. If the Government think that by stuffing my mouth with gold or offers of reward, or by withdrawing the Whip, they can alter the first trust in a democracy—that of a Member and his constituency—they misjudge their party and the Members of this House.

We must be true to ourselves, or the electorate will have no confidence in the most important institution in our democracy—a free Parliament. In the end, that is what I stand by. I do not wish to see a Government go down. We know that that is a fatuous proposition: they will not go down. How have we got into this state? I ask the House to reflect on the men who comprise the Cabinet and to think: is their judgment sound in these matters that they can create turmoil of this nature?

I do not want the Government to go because I believe that the programmes that we have set out and that we have struggled to accomplish are worth while and appropriate. However, I say this in a personal vein so that they may understand the agony that they have placed on their own hon. Members: how could I face my electorate, when clearly I have stood before them and said, "I stand not for giving money to something that is corrupt."? From the time I was born until today, I have been told that if people spend money foolishly, withhold the source of the funds. That was a principle of this House. Where do we stand without it?

The Government have misjudged the temper of their own nation and they have misjudged the truthful intent of their own party. They will see people go through the Lobby, but in their hearts they are damned.

8.36 pm

Mr. Stuart Randall (Kingston upon Hull, West)

I had not planned to speak in this debate, but so many of the speeches have been so utterly depressing that I felt that I needed to say something that sounded pro-European Union and not like a lot of anti-European rhetoric. However, I must confess that some of the views are sincerely held. In particular in that regard, I am thinking of the comments of the hon. Member for Aldridge-Brownhills (Mr. Shepherd) to whom I always listen with great interest.

We are in an absurd position today. We have business before the House that one would normally expect to go through almost on the nod. It comprises several European Union documents which people generally have great difficulty reading because they are so thick and because they are usually out of date. One usually takes very little notice of them.

This sort of legislation should go through almost on the nod. However, the Government have tabled their motion and, because of the controversy to which the hon. Member for Aldridge-Brownhills referred, the Labour party could not resist challenging the vote of confidence—terruption.] Labour will not win the confidence vote. I am not sure what the business managers are saying, but I am sure that many Labour Members will abstain on the main Question. The Government will get their business.

I am sure that all right hon. and hon. Members accept that fraud and waste must be tackled. No one would disagree with that. I would expect tough initiatives on this matter. The Chancellor seemed rather sanguine about the way things were happening. I should be grateful if the Paymaster General would describe the Government's position on this point and tell us whether they are satisfied with the current policies and whether they will work and be effective.

By the time of the intergovernmental conference in 1996, I hope that we will not have to include things in a Maastricht mark 2 treaty document on this point. By then, I hope that the policies will be in place and that we will have an effective system of monitoring and surveillance.

The key—the heart—of this matter is the future development of the European Union. Like the majority of hon. Members and, I believe, the majority of people in Britain, I want the European Union to develop, not to hesitate, not to be held back and not to unravel in any way. The stakes are far too high.

The future of the European Union for us is very important, socially and economically and from the point of view of peace, foreign affairs, matters of the interior, co-operation, and so on. That is absolutely vital, and the money must be forthcoming, particularly since, as I notice in the motion, that part of the money will be for expansion of the European Union. I find the notion of expansion exciting. All countries in the European Union will work for the benefit not only of European Union countries but of other parts of the world, particularly poorer countries.

Much has been made of Edinburgh, but the Edinburgh summit took place. The aim was to have a financial structure. One has to have that because it is impossible to plan something the size of the European Union without having some stability in one's finances. One has to be able to plan. I therefore believe that it is necessary to ensure that the Government succeed tonight and that the European Communities (Finance) Bill is passed.

I now refer to democracy. People talk about giving up our sovereignty. I prefer to use the "pooling". [Laughter.] There is giving and taking. Some hon. Members do not accept that. They do not believe in the European Union—I do. We all differ on that point. Just as the hon. Member for Bridlington (Mr. Townend) will argue his case in his own way, I shall argue in my way. The future of my children and their children is in the European Union, which I want to work economically, but I also want it to create the basis of peace. In the first and second world wars, 30 million people died. The creators of the European Union—the people in the early days—said, "We must stop German nationalism. We must nail the feet of the Germans to the ground so that they cannot embark on any more wars." That was the basis.

When one pools sovereignty, one must have a development of democracy. There is a democratic deficit in the European Union. It still has structures that are synonymous with an early institution, and quite centralised powers. Those powers must be spread. I hope that there will be much on that point in the treaty document that comes out of the 1996 IGC.

There has been talk about referendums. We had our referendum in 1975, and the majority was massive. The people of Britain decided then that our future was in the European Union—the European Common Market, as it was then called. Since the treaty of Rome, we have had further treaties. We have had the treaty on the single market and the Maastricht treaty. There will be another treaty in 1996. All those treaties are mechanisms for the development of the European Union. I look forward to the 1996 IGC and to debating beforehand what will be the key issues in it.

Many hon. Members who attended the Maastricht debate resented—perhaps "resented" is too strong, but you, Mr. Deputy Speaker, handled the duties of the Chair brilliantly during those difficult times—being presented with that thick blue document. Whether hon. Members are Euro-sceptics or pro-European Union, many felt that to be presented with such a document as a fait accompli was just not good enough. It is important that there is an opportunity for all Parliaments of the European Union in some way to be able to take part in such debates rather than be presented with a fait accompli.

Mr. John Townend (Bridlington)

Does the hon. Gentleman agree that the purpose of the previous referendum was to stop the Labour party tearing itself apart? Therefore, would it not be equally fair now to have a referendum to stop the Conservative party tearing itself apart? Does the hon. Gentleman agree also that people voted to stay in—not to go into—an economic community? If they thought that they were voting to stay in what was going to become a federal state run from Brussels, with Westminster becoming a county council, many would not have voted yes in that referendum.

Mr. Randall

I accept what the hon. Gentleman says. One can always have new terms of reference for a referendum—one can have a new set every week and still not be satisfied—but that is what happened. It worries me that the leadership on both sides are talking now about the possibility—the glint—of a referendum. Personally, I am against that. It would cause turmoil and it would stop development of the European Union, and that is not desirable. I would not want Labour or the Conservatives even to put a reference to a referendum in their manifestos for the next election. That would be completely wrong.

When it comes to debating the issues rather than being presented with the blue document—this is entirely my own view, based on informal discussions with other European Union politicians—as soon as the French presidential elections are over, and we can speculate on who can win, the Germans and the French will be setting the pace and we will be confronted with some important decisions. France and Germany could race ahead and challenge Britain on what it will do, and the question of a two-track Europe could come up. I should be very disillusioned if, in any way, the future of Britain were risked by Britain being put into the second track of a European Union.

On the balance of power, the doctrine of subsidiarity, which was debated with the Maastricht treaty, has not been taken far enough. It is a crucial element. The two new pillars or new powers that we have are very important. I refer to defence and foreign policy and home affairs.

On monetary and economic union, from the point of view of business, we must have a stable currency. My own view is that monetary and economic union will come as surely as night follows day. I want far greater co-operation, and I want a central bank to have the discipline that we want. I want to see great co-operation at European level, particularly in respect of high-technology products such as in the aerospace and information industries.

We on the left of British politics used to argue—I regret that we do not do so as much as we used to—about internationalism. The Common Market and the European Union have in some way eliminated that. I regard the European Union as crucial in developing poorer countries, not only in the European Union but outside it. Countries have benefited greatly. I appreciate that, and I welcome in particular the development in the size of the European Union. I regard the matter as a great opportunity. The 1996 IGC is crucial. I want to see those arguments put on the table. It is important that we have a stable financial structure which will allow planning to take place. That is what the motions before us tonight seek to ensure. We do not want there to be any hiccups in the future development of the European Union.

8.50 pm

Mrs. Teresa Gorman (Billericay)

When my right hon. and learned Friend the Chancellor of the Exchequer opened the debate on the European Communities (Finance) Bill, he paid me the small but singular compliment of saying that I had been consistently opposed to giving more money to Europe; so my colleagues will not be surprised to learn that I do not intend to break my record in that respect this evening.

Tonight we are asked to vote for more money for Europe; we are not asked to stop it receiving the vast sum that it has been allocated already. When I listen to the debates in the House, and particularly those speakers on the Front Bench who talk of what percentages they did or did not manage to achieve, my mind drifts away from that technical stuff to my constituents who come to my surgery to relate their financial problems. An extra fiver or a tenner in their pay packets would make a good deal of difference to their standard of living and would reduce their worries.

I think also about the business men in my constituency. They tell me that the backs of their businesses have been broken either by regulations or by the gratuitous expenses imposed on them by the European Union. They do not come to me whining and moaning and asking for Government help; they come to me bewildered that Parliament allows the accretion of expensive bureaucratic items which are paid for with taxpayers' money. The bureaucrats who make the decisions that affect people so dramatically are paid handsomely from the money that we ask the British people to contribute towards the European budget.

I sometimes listen to my colleagues who tell me that the money that we give to Europe is only a small fraction of our budget—they say that Europe is not an expensive club at all. They ask: why grumble about it? Why not talk about the European Union's achievements? But I ask myself: what achievements? What are these achievements and why does the British population not appreciate them?

When I walk the streets of Billericay or other parts of my constituency or when I take a train from London to Cambridge, as I did on the weekend, why do people not boo at me for resisting the idea of this European organisation? Why do complete strangers compliment me on my resistance to giving any money to it? Why do the British people, foolish creatures that they are—almost 52 million of them, if I am to believe some of the speeches that have been made in the House—think that there is something wrong with our giving more money to this institution?

The people of Britain did not fully understand the deep and profound issues of Maastricht, but they understand this issue. They understand that their hard-earned money is being taken from them and given to an institution which we are told is riddled with fraud. But fraud or no fraud, I would not support giving more money to Europe because I do not think that we have a mandate to do so—especially when we are presented with a fait accompli on the issue and we Conservatives are told that we face an enormous sacrifice almost for even querying whether we should give Europe more money.

It has been said several times before, but I want to say it again, that the House is founded on the belief that the people shall not be taxed without their consent; yet we are told by our own Prime Minister that that idea was lost when we made a deal with Europe and the Prime Minister decided, on the British people's behalf, that they would be taxed to enable the Government to give more money to the European Union. I think that that is profoundly wrong and it is not the sort of policy that people in my constituency send me here to support.

Many things have been said about those of us who resist the legislation. It is said that we are petulant or difficult, or perhaps slightly crazy. Those sorts of things were said about others in the past. The barons who resisted King John over the Magna Carta were criticised. King Charles came to the House, criticising those Members of Parliament who wished to prevent him from taxing the British people without their consent and demanding that they be brought before him.

Although those of us who resist the legislation may not survive as Members of Parliament, I think that we will have made our mark in putting up a strong case for refusing to give money to a European organisation that is clearly not loved by the British people. We are told that, whatever we say, it does not matter because the deal has been done already.

Mr. Rupert Allason (Torbay)

Does my hon. Friend agree that a solution to the problem would be to hold a referendum? Even now, it might not be too late for the Government to make a commitment to hold a referendum after the intergovernmental conference in 1996 so that we go no further, particularly in relation to a single currency.

Mrs. Gorman

I agree in principle with my hon. Friend: the people should be consulted about the issue. There has never been any consultation. We joined the European Union believing that we were entering a common market. Even in that, we have been disappointed because the European Community is not an open and free market; it is a cartel. Brussels dictates all aspects of our business life. The level playing field concept is nonsense, because competition is about comparative advantage.

When we joined Europe, we believed that we would be sharing in the economic miracle of the post-war European scene, but policies in Europe today are hell-bent on destroying even those conditions that made Europe appear attractive to Britain.

The European Community costs the British people £7 billion a year. None of us can grasp fully what that means. It means that 3.5p in every pound from taxation goes to the European Community. If we did not pay that money to Europe, we could halve VAT and do away completely with VAT on fuel. If we were so minded, we could increase old-age pensions by £7. Those would be enormous advantages for the British people, but we will not see them because the money is going elsewhere.

The British people will not thank us for giving money to pay for the extravagances of our European partners—whether they are roadways through Portugal or irrigation schemes in Spain. How does that advantage the British people to whom we are responsible? It does not advantage them in the slightest, and the British people understand that. They support those of us who resist the move to give more money to Europe.

I urge the House, although I realise that I am speaking to closed minds, to decide that we will not give the European Union a penny more, even if it puts its house in order. Until the British people exercise their enthusiasm through the vote, and by turning out to vote in European elections—we all know that fewer than 30 per cent. of our citizens do so—and until they are given a say in whether they wish to hand over authority to the Government of the day, we shall never be able to say that we are doing these things in the name of the British people. Therefore, I shall not support the measure tonight.

8.58 pm

Mr. Andrew Mackinlay (Thurrock)

Tonight's debate is about much more than the Conservatives' difficulty being the Opposition's opportunity. The fact that we are debating a matter of confidence tonight was demonstrated by the speech of the hon. Member for Aldridge-Brownhills (Mr. Shepherd). If one listened closely to what he said, it was clear that his speech was a devastating indictment of the stewardship of the right hon. Member for Huntingdon (Mr. Major). Among other phrases that he used, the hon. Gentleman referred to those on the Treasury Bench as a cabal. Those are the people who are running our country and who have control of policy on Europe. Therefore, we are discussing the competence of the Government. Demonstrably, we and the people whom we represent have no confidence whatever in the Government.

When one listens to the tortured, agonising speeches of people such as the hon. Members for Aldridge-Brownhills and for Ruislip-Northwood (Mr. Wilkinson), one realises what a state the Government are in. It is our duty to say that they have had their chance. They have been running the country's European policy for 15 years. There are others who could do better. We would not start from here. [Interruption.] I shall be coming to the hon. Member for Wycombe (Mr. Whitney) in a moment. All the matters that hon. Members have complained about were to a large extent shaped by Lady Thatcher, the present Prime Minister and the Foreign Secretary. They are to blame. If there was a change of Government, in future my right hon. Friends would harmonise the interests of Europe with those of the United Kingdom. We could take a lesson from President Mitterrand, who combined and promoted the best interests of France and the international perspective. That is what is lacking in the United Kingdom's policy.

The hon. Member for Wycombe referred to the sapping and damaging references of his hon. Friends and said that they diminished our influence in Europe. Exactly so. That further underlines the fact that many Conservative Members are inadequate to promote the best interests of the United Kingdom and Europe.

Mr. Whitney

Will the hon. Gentleman admit that what most damages Britain's standing in Europe is the fact that members of his party and the Liberal Democrat party, who profess to be in favour of Britain's membership of the European Union and of the enlargement of own resources, will go through the Lobby tonight to vote against what they profess to believe in? What could be more damaging to British political integrity than that?

Mr. Mackinlay

I do not know where the hon. Member for Wycombe has been. The Prime Minister has made this a matter of confidence. Opposition Members believe that if we were given the opportunity of being on the Treasury Bench, we could do a lot better in promoting the best interests of the United Kingdom in Europe in future negotiations as one moves towards 1996.

Mr. Thomas Graham (Renfrew, West and Inverclyde)

Will my hon. Friend give way?

Mr. Mackinlay

I have limited time, but as it is my hon. Friend, I feel obliged to give way.

Mr. Graham

Does my hon. Friend agree that if there was a general election in three weeks' time, we would be elected and we would sign the social chapter, which would put millions of people in Britain in a better position to support the aims of the Common Market?

Mr. Mackinlay

Precisely. Conservative Members do not understand that we want a slice of the action in the interests of working people. That is what they are being denied at present. We are paying the bill but not getting the benefits. That is largely because of the rather selfish interests of many Conservative Members and because our foreign policy is run by a nice man, but someone who is out of touch with the best interests of ordinary working people in Britain.

The hon. Member for Ruislip-Northwood referred to the Prime Minister as a nice man, but went on to criticise him. The best that can be said about the Prime Minister is that he is a nice man over-promoted. One of the leading members of Thurrock Conservative Association said on television last week that the Prime Minister was the Captain Mainwaring of British politics. He went on to use a term that I will not repeat in the House because it would be unparliamentary. Nevertheless, it reflected the yobbo tendency of the Conservative party.

The behaviour of the Conservatives, their approach to Europe and the comments of a former vice-chairman of the Conservative party about European colleagues are all on the charge sheet against the Government.

Opposition Members are obliged to vote against the Bill tonight to demonstrate a lack of confidence in the Government and to give those Conservative Members—many of whom I disagree with, but whose courage I respect—the opportunity to demonstrate that this is an important matter of principle.

Hon. Members suggest that it is cynical of Labour and the other Opposition parties to vote in such a way tonight, but our politics are adversarial and we have an obligation to frustrate and bring down the Government. That is the nature of things. I wish that it were not so— [HON. MEMBERS: "Oh?"] Yes, I happen to think that our adversarial system is barmy and that many reforms need to be instituted. As there has not been a referendum on the issue, the House must decide. We also have a duty to frustrate the Government.

In other parts of the world, treaties are signed subject to ratification by the legislature and there is a presumption that it will examine fully the implications of the treaty. That is what happens in the United States. We do not have a system or a tradition whereby it is understood that the Executive might sign or endorse a treaty, but it is subject to endorsement by Parliament or the people. That is what we lack and it is another reason why those hon. Members who broadly support the concept of Europe should join those hon. Members who oppose the Bill.

The Government have no mandate for this legislation. That legitimately unites all Opposition Members with some Conservative Members, with whom we might disagree on some important details, but with whom we agree that a democratic mandate is necessary.

The Bill will increase EU resources, but the Government's stewardship of existing resources has been sloppy. Forgive me for raising a constituency matter, but my area of Essex was entitled to objective 2 money, as were the constituencies of the hon. Members for Billericay (Mrs. Gorman) and for Southend, East (Sir T. Taylor). We were denied that money. The Government argued that that was due to the bureaucrats in Brussels, but this wrong also bears the fingerprints of clumsy handling by the right hon. Member for Hove (Mr. Sainsbury) who, as the Minister responsible for trade and industry, did not understand that Thurrock was in the Southend travel-to-work area. We were therefore denied the resources to which the social and unemployment problems on the north bank of the River Thames entitled us.

Ministers on the Treasury Bench have grossly mishandled the distribution of funds, to the great disadvantage of my constituents and those of many other hon. Members. Time and again, we come back to the fact that Members who occupy the Treasury Bench are arrogant and maladroit and should go. We are presented with that opportunity tonight, if we can encourage enough Conservative Members to join us in the Lobby.

I regret the fact that the Ulster Unionists feel unable to join us in the Lobby. They should bear in mind the fact that the Government's lack of negotiating skills has resulted in the absurd situation in which cohesion fund money is available for 26 counties in Ireland, but there is no comparable money for the Six Counties. That is profoundly foolish.

If my right hon. and hon. Friends had been in office they would have banged on the table in Brussels and argued that there was a special case for parity of treatment for all the 32 counties of Ireland, both north and south, and that cohesion fund money should be made available for the whole of Ireland. That is one more reason why I hope that members of the Ulster Unionist party will pause and reflect on the fact that they are sustaining a Government who are not promoting the best interests of the working people of Warrenpoint, Derry or Belfast.

Rev. Martin Smyth (Belfast, South)

Will the hon. Gentleman also bear in mind the fact that there is an industrial policy in the United Kingdom which does not help us in the agricultural sector of Northern Ireland?

Mr. Mackinlay

I take on board the hon. Gentleman's point and I hope that cognisance will be taken of that by my right hon. and hon. Friends who, sooner or later, will occupy the Treasury Bench.

I hope that the debate and the vote tonight will demonstrate beyond all doubt that the Government have lost the confidence of the vast majority of the people of this country, as will be demonstrated by the votes of all the Opposition parties apart from the Ulster Unionists. The Government are under notice that, sooner or later, there will be a collapse in their ranks which will precipitate a general election and the election of a Labour Government.

9.10 pm

Mr. Andrew Smith (Oxford, East)

There have been some fierce debates this evening and the Opposition parties have taken part as well.

Let me make clear the principal differences between the amendment tabled by my right hon. and hon. Friends on the one hand and the position of the Chancellor, the Prime Minister and most Government Members who agree with them on the other. First, we say that this House has the right and duty to scrutinise and, as appropriate, to amend what is a substantial financial measure. The Prirne Minister is effectively seeking to deny the House that opportunity. The Bill, he says, is perfect and the House of Commons—even hon. Members informed by our constituents—cannot improve on the flawless legislation that he has set before us.

Secondly, Labour says that the Government have not done nearly enough to combat waste and fraud in the European Union budget. The Prime Minister and the Chancellor say that they have done all that they can and they are happy to see the Bill pass into law without incorporating further action.

Thirdly, we say that the common agriculture policy is a wasteful and economically and environmentally damaging monstrosity which must be changed, root and branch. The Prime Minister seems to think that reform is coming along nicely.

Fourthly, we say that there have been developments since Edinburgh which warrant the House of Commons and the Government seeking further action to get European Union expenditure under proper control.

On each of those points—scrutiny, waste, agricultural reform and developments since Edinburgh—the people of Britain and the true majority in the House agree with us, not with the Prime Minister. We speak for the British people, and he does not—it is as simple as that. That is why the House should pass the amendment tonight.

Earlier, we had a truly extraordinary admission from the Chancellor under some considerable pressure from my hon. Friend the Member for Dunfermline, East (Mr. Brown). The Chancellor admitted to the House that he could not remember when he first knew about the £0700 million increased estimates on this year's contributions to the European Union. Given that that money must be paid from the contingency reserve, and given that it represents fully one fifth of the contingency reserve—the new control total states that the contingency reserve is just £3.5 billion, and here we are talking about an extra £700 million—is not it staggering that the Chancellor of the Exchequer, who is supposed to be in charge of the nation's finances, cannot remember when he first knew that one fifth of his reserves had gone? No wonder so much money is wasted in Europe, when the Government are not controlling it properly in this country. [HON. MEMBERS: "Where is he?"] Perhaps I shall say that again when the Chancellor comes in, as he ought to hear it.

My hon. Friend the Member for Dunfermline, East also set out how unprecedented it is for the Prime Minister to insist that every essential element of the Bill is so perfect that the House cannot improve upon it. Such an attitude, as hon. Members have pointed out during the debate, cannot be consistent with the right and duty of hon. Members to their constituencies, nor with the proper exercise of democracy.

The Prime Minister's treatment of his own hon. Friends offers us another sign of how woefully out of touch the Government are. Cannot the Prime Minister see how the people will judge his threats to his hon. Friends? They will ask what they are to make of a Prime Minister and a Cabinet who cannot carry their colleagues with them by persuasion; cannot convince by reasoned argument; cannot appeal to the usual party loyalty; and instead try with threats simply to bludgeon their way through. So divided are the Conservative party that the only weapon that the Prime Minister can use to create a semblance of unity is the threat of defeat at an immediate general election. The Prime Minister is not deploying persuasion or debating skills against his own Back Benchers, but the traditional Conservative weapon of coercion of the past 15 years, the threat of unemployment.

Will people say that such policy demonstrates that the Prime Minister is acting with success, based on authority and strength? No. They will say that this Prime Minister is a failure, who is acting on division and weakness. They will be right. Every time the Prime Minister deploys the political suicide dissolution threat—there may be more instances of that to come on the Bill and on votes on VAT which we hope to instigate—he should remember that by issuing that threat he does not make his position stronger, but weaker, because he reminds the country of the authority that he lacks. He should remember the more he twirls the chamber of the Russian roulette revolver, the more he risks finding the bullet. Perhaps the immortal words of the right hon. Member for Kingston upon Thames (Mr. Lamont) were right, when he said that we all know that a suicide threat is a cry for help—that from the Prime Minister's former Chancellor.

The Prime Minister would do well to remember that threaten though he might his hon. Friends, intimidate as he has tried to do their constituency associations, at the next general election it is the people of Billericay who will decide on their Member of Parliament. Perhaps I should repeat that for the benefit of the hon. Member for Billericay (Mrs. Gorman), who is not listening, but perhaps the electorate will not choose her. The electorate will also decide whether they want to return a Conservative Government. The behaviour of the Prime Minister now will not help him when they come to make that decision.

The value of the House should be based on the fact that hon. Members have the opportunity to bring our constituents' concerns to bear on the great issues of the day. We can seek to persuade one another, set out our case to the wider audience in the country and scrutinise and amend legislation. The Prime Minister, however, is now trying to curtail that right. My hon. Friends and I have many differences with the arguments put forward by the so-called Euro-sceptics. I part company with those of them who believe that isolation within the European Union is a viable option for Britain. I disagree still more with those who believe that it would be a good thing for Britain to attempt to shape its destiny outside the European Union. That those hon. Members are voicing important concerns, held by many people in this country, which those of us who want close and constructive involvement in Europe should at least address, is undeniable.

One reason why the Maastricht treaty ran into trouble not just here but in Denmark, France, Germany and elsewhere is that the thinking, assumptions and constitutional ambition of the European political elite ran way ahead of the concerns and understanding of citizens throughout the European Community. The lesson for those of us who believe in the benefits of European co-operation should not be to attempt to dismiss out of hand, or crush with confidence motions, concerns about waste, over-centralisation, lack of democracy and the other imperfections of the European Union. Our task should be to show how those concerns can be answered and remedial action taken. That is precisely why our deliberations on the Bill should be informed by the amendment that my right hon. and hon. Friends have tabled this evening, and it is precisely the reason why the Government's version of the Bill needs to be amended in the way that we have suggested.

The Chief Secretary to the Treasury (Mr. Jonathan Aitken)

Before the hon. Gentleman gets away with the conjuring trick of trying to present his amendment as a constructive measure to reduce fraud, will he answer the question that the shadow Chancellor failed to answer— will he admit that that is not a constructive amendment but a wrecking amendment, which would deny the progress of the Bill?

Mr. Smith

It is a very constructive amendment, framed in circumstances in which the Prime Minister has made tonight's vote a vote of confidence.

As I understand it, the Chancellor of the Exchequer argued earlier that this was a wrecking amendment because, if carried, the Bill would be lost and could not be introduced until another Session. I think that when the Chancellor said that, he had forgotten that the Prime Minister had made the vote a vote of confidence.

If the Opposition win the vote, there will be a general election; and at that general election, the Labour party will win; and after that victory, there will be a new Session of Parliament and a Bill will be placed before the House, not simply signing up to the Edinburgh agreement, but taking the measures to tackle waste and fraud and to reform the common agricultural policy—the things that are absent from the current Government's Bill.

Sir Donald Thompson (Calder Valley)

Will the hon. Gentleman give way?

Mr. Smith

In a moment. Let me make a little more progress.

As my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) said, waste and fraud in the European Union are not confined to agriculture, as much of the debate has been. They happen in many other sectors. My hon. Friend cited the unacceptable waste that too often happens in the European Union overseas aid budget—it is especially tragic when part of that goes astray. Many other hon. Members have drawn our attention to the unacceptable and alarming fact that, when it comes to waste and fraud, things seem to continue to get worse rather than better.

The Chancellor attempted to rubbish claims that the recent Court of Auditors' report showed fraud running at anything like £6 billion a year. He can do so only because the Court of Auditors did not tot up all the things that they had identified throughout their report, but those things do add up, and they amount to billions of pounds.

Wine production has increased by 20 per cent. since 1989, despite European Union expenditure of £1 billion to take vineyards out of production. German apple growers were paid more than £180,000 to dig up their trees, which had mysteriously grown back in place when the inspectors went to find out what had happened. There were no competitive tenders on the new European Parliament building in Brussels and the costs increased from £781 million to £1.42 billion.

Sir Donald Thompson

rose—

Mr. Whitney

rose—

Mr. Smith

I give way to the hon. Member for Wycombe (Mr. Whitney).

Mr. Whitney

The hon. Gentleman said that 'wine production had increased. Is he aware that it has decreased by 34 per cent. since 1987–88?

Mr. Smith

That is not the figure in the Court of Auditors' report and I stand by the figure that I have given of a 20 per cent. increase since 1989.

Sir Donald Thompson

Will the hon. Gentleman give way?

Mr. Smith

No.

In reacting to the Court of Auditors' report, the Chancellor of the Exchequer, in radio interviews, and the European Commission's Secretary-General, have drawn a distinction between fraud and financial mismanagement. Opposition Members would not go along with the Secretary-General in rejecting, as he did last week, what he called "media allegations" that fraud was widespread in European budgetary spending. He should take more notice of what the Court of Auditors say. The Chancellor, like him, should be—as Opposition Members are—as worried about financial mismanagement as fraud.

As my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said, it is not so much the distinction between one and the other that matters, important though it is legally; the important fact is the sheer amount of money that is being wasted. We need to mobilise every pressure to get something done about A powerful signal should be sent to the Commission and our partners in Europe that people in this country, for years high net contributors to the European budget, are sick and tired of waste and corruption.

Sir Donald Thompson

For the past 20 years, every Labour Minister has said that Labour will win the next general election; none has kept that promise. Let me ask another question, however. The Opposition Chief Whip went to the Government Chief Whip and said, "We think that the Edinburgh deal was a good one, although we would have done better, but we will support it only if you introduce a simultaneous Bill to fight fraud." Why did not the Opposition introduce such a Bill? They acted as they did only because they wanted to defraud the electorate.

Mr. Smith

Much has happened since the Edinburgh summit, including a succession of Court of Auditors' reports revealing a consistently serious position.

In tabling tonight's amendment, my right hon. and hon. Friends and I were not expressing a new-found or sudden concern. Time and again, on the Floor of the House and in Committee, we have expressed our alarm at the lack of effective control on the Community budget and the need for decisive action not only to root out fraud and waste, but to gain recompense in instances where lax controls on the part of national authorities are to blame.

We advanced that view, for instance, in our submission to the Delors consultation on growth, competitiveness and employment in Europe. What, in their submission about competitiveness in Europe, did the Chancellor of the Exchequer and his right hon. Friends have to say about waste, fraud and corruption in the European Union? Absolutely nothing; so obsessed were they with their dogma and their opposition to the social chapter that they completely omitted in that important submission even to hint at the idea that waste, corruption or fraud—on which, according to the Chancellor, so much progress is being made—might somehow have an impact on competitiveness.

We challenge the Government's position on the binding European convention that is being advanced for the protection of the Community's financial interests, to make such matters an offence against Community law. I ask the Paymaster General to tell us whether the Government will support that measure or oppose it. Will they simply rely on the joint action initiative, which I understand would not be binding?

Sir Teddy Taylor

Lest there be any misunderstanding about the wine situation, will the hon. Gentleman strongly advise hon. Members to read the Court of Auditors' report—they may not have read it yet; it became available only today—which shows that expenditure on wine products increased by 45 per cent. between 1992 and 1993?

Mr. Smith

The hon. Gentleman makes a telling point. [Interruption.]

Earlier, someone asked what the Opposition parties were doing in the Chamber. The answer was "morbid curiosity", and I think that what the hon. Member for Southend, East (Sir T. Taylor) has just done to the hon. Member for Wycombe with the Court of Auditors' report provides a very good illustration of what I am talking about.

Few would disagree with my hon. Friend the Member for Ilford, South (Mr. Gapes) and others that the CAP cannot be allowed to continue as it is. When the Chancellor was asked about it on a recent edition of the "Today" programme, he said: The Agriculture Ministers"— that presumably includes his own Agriculture Minister— do make it too complicated. That is one of the things that the Finance Ministers have pointed out.

We argue that the problem is not just that our Agriculture Minister, along with all the others, has made it too complicated; those Ministers have made it too expensive, too wasteful, and too open to fraud and abuse. That waste adds enormously to the industrial cost of the European Union, as well as to the agricultural cost: we urgently need reform.

I referred earlier to developments since Edinburgh. They form an important part of our arguments and of our reason for introducing the amendment. I have already referred to the Government's, at best, prevarication over the anti-fraud convention and the missed opportunities on the Delors submission. Something else, however, has changed since Edinburgh: the Government have introduced VAT on domestic fuel.

Some hon. Members may be unaware that the imposition of VAT on domestic fuel hits Britain twice—it adds not only to fuel costs of British families, but to our net contributions to the European Union, something that the Chancellor of the Exchequer seems to have missed out from his copious briefings and corrections to hon. Members for the debate.

Mr. Kenneth Clarke

indicated dissent.

Mr. Smith

The right hon. and learned Gentleman shakes his head, but extra charges and extra payments to Europe arise from the imposition of VAT on fuel. Those costs do not arise from the calculation of VAT under the agreement that the Bill will incorporate because the VAT base is already harmonised. They arise because VAT on fuel adds to the calculation of member states' gross national product at market prices. It thereby increases both the fourth resource of funding and the cap on the GNP-related third resource. It is estimated that that will add about £8 million a year to Britain's European contributions, a fair proportion of the extra £75 million that the Chancellor talked about. The Government should now provide what they have so far failed to provide: an exact estimate, which hon. Members might like to take into account when they vote this evening and when they vote on VAT on fuel, which we hope they shall have the opportunity to do soon.

In reply, the Minister may say that the figure amounts to only a few million pounds. We say that it is a few million pounds that British users of fuels, especially pensioners and disabled people, should not have to pay. They will be furious that they are forced to pay not only VAT on fuel, but, as a consequence, more money to Brussels. It adds insult to injury and people will not forget.

The Opposition's argument is that the Prime Minister's approach to the Bill is deeply flawed. We say that, if Britain's contributions are to increase, the House has a right to decide on the action that the Government should take to cut out fraud, waste and the excesses of the CAP. We say that, far from being anti-European, action on these matters is essential to build confidence in Europe. Nothing more corrodes public support for the European Union than fraud, waste and excess perpetrated at their expense. Nothing more entrenches narrow, crabbed nationalism, which falsely imagines that isolation from Europe is the best way of winning friends and markets.

A Europe of budgetary waste and fraud, agricultural excess, political centralisation and itinerant Parliaments will never win public support. A Europe that acts for peace, prosperity, jobs, trade, infrastructure, the environment and human rights, a Europe of person-to-person contact through travel, twinning, sporting and cultural exchanges, a Europe with real political subsidiarity, can win confidence. That is what we must seek—a people's Europe, not a Europe of vested interests.

The Opposition say, too, that a proud country is able to take a lead and to say yes and no, but it is scornful of the Prime Minister's maybes. There is, however, something even more important than the Prime Minister's reputation, the Government's standing or party advantage in the House this evening. It is the Chamber's responsibility for overseeing, scrutinising and, where necessary, amending legislation. The Prime Minister has called into question the integrity of the House of Commons. Hon. Members will vote on the words of the amendment. They are: this House believes that the European Communities (Finance) Bill is not an acceptable measure as it increases United Kingdom contributions to the European Union without action by Her Majesty's Government to cut fraud and waste in Europe or to reduce expenditure on the Common Agricultural Policy. A true majority of right hon. and hon. Members agree with those words and I have no doubt that a true majority of people in this country support them. The people are watching and counting and they are paying the price for the fraud, excess and waste that we want stopped.

I call on right hon. and hon. Members in all parts of the House to carry the will of the people into the Bill tonight. The amendment is right. The British people will be our judge.

9.34 pm

The Paymaster General (Mr. David Heathcoat-Amory)

The House is used to lack of consistency from the Labour party but we just heard from the hon. Member for Oxford, East (Mr. Smith) a particularly choice example of trying to oppose something without actually being against it. We all know that Labour wants higher contributions made to the European Union. It has argued for them, requested them, stands for them and would implement them. Nevertheless, Labour has found a way of tabling an amendment that would wreck a Bill to give effect to higher contributions.

The hon. Member for Dunfermline, East (Mr. Brown), answering an intervention from my hon. Friend the Member for Staffordshire, South (Mr. Cormack) said that he supported the Edinburgh agreement, yet the hon. Gentleman tabled and argued an amendment that would have the effect of blocking a Bill that takes that same agreement into law and would release those contributions.

To put the matter beyond doubt, the House authorities have confirmed that Labour's amendment is a wrecking amendment. If passed, it would block the Bill. Any thought that Labour can be in favour of the Edinburgh own resources decision yet vote against it is shown to be a sham.

Mr. Bill Walker

Can my hon. Friend confirm that the Government's view is that the House should properly monitor legislation, particularly that affecting finance, and that the Government are not adverse to amendments that allow the House to scrutinise matters more carefully? Could not amendments be tabled and accepted at a later stage?

Mr. Heathcoat-Amory

No amendment to the Bill has that effect. The House must either approve or not approve the own resources decision taken at Edinburgh. Any conditional or half-acceptance would not have the effect of giving approval, and of giving effect, to the decision negotiated by my right hon. Friend the Prime Minister.

My right hon. Friend the Member for Northavon (Sir J. Cope) said that Labour's stance takes to almost absurd lengths the duty to oppose. We have established as point one that Labour will vote against a measure in which it believes and that it wants.

Mr. Cash

Will my hon. Friend the Minister say whether or not the Government agree with the substance of the amendment that I tabled, which invites the Public Accounts Committee to take a substantial interest in fraud? The answer that he gave my hon. Friend the Member for Tayside, North (Mr. Walker) suggested that was not the case. Perhaps I misunderstood my hon. Friend the Minister. Will he get that straight?

Mr. Heathcoat-Amory

I strongly believe in this House taking a close interest in mismanagement and fraud in the European Community. Indeed, I have just sent an explanatory memorandum to the Scrutiny Committee about the European Court of Auditors report for 1993. The point that I was making, in response to an intervention by my hon. Friend the Member for Tayside, North (Mr. Walker), is that an amendment to the Bill not only would not have such an effect, but would block the Bill's Second Reading and prevent the entering into force of the own resources decision in any form.

Mr. Andrew Smith

I am grateful to the Paymaster General for giving way. Let us get this absolutely clear. Is he saying that the Bill must go through unchanged?

Mr. Heathcoat-Amory

The hon. Gentleman is welcome to table amendments in Committee. I am saying that the amendment tabled by the official Opposition, if passed this evening, would not have the effect of amending in any way the Bill or the decision. It would block the Bill, which could not then be reintroduced in this Session. That was not understood by the hon. Member for Oxford, East or by the hon. Member for Dunfermline, East in his earlier speech.

Mr. Smith

rose—

Mr. Heathcoat-Amory

I have answered the point that the hon. Gentleman made. He made his own speech earlier in the proceedings, which I shall now endeavour to answer.

I want to take the House back to some of the comments made in the debate, particularly those by my right hon. Friend the Member for City of London and Westminster, South (Mr. Brooke). He made the point that an international agreement entered into by my right hon. Friend the Prime Minister is something that the Prime Minister is entitled to see passed into law by the House even though it is two years after the Edinburgh Council. The task faced by my right hon. Friend at that Council was, indeed, daunting. The Community was in the depths of a world recession. The single market was not then in place. The Uruguay round of GATT was in the greatest difficulty. Denmark's future in the Community was in doubt, and the prospect of further enlargement to include the Nordic countries and Austria was completely over the horizon. Those and other issues were tackled with great determination by my right hon. Friend the Prime Minister and other Ministers.

Co-ordinated efforts were made to stimulate growth in the Community. My right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) played a leading part in the growth initiative at that time. I wish to pick up on one point that he made: that the external tariff of the Community was of decreasing importance. I put it to my right hon. Friend that the landing rights at French airports were denied to British Airways not by tariff barriers but by non-tariff barriers. I think that he will agree that: the Spanish market, to which he referred, is by tradition a protectionist market. It takes the force of Community law and the single market to break down those barriers for British exports.

None of this would have been possible without the settlement of the financial questions faced at Edinburgh. The political way was cleared for a solution to the Danish question. Negotiations were started with the EFTA countries and Austria, and a new commitment was made to free trade and deregulation. What was essential at that negotiation was to clear away the difficult issue of own resources. That had been under discussion in the Community for more than 10 months, and the previous Lisbon Council had failed to resolve it. The Commission wanted a higher figure. It wanted the own resources of the Community to increase to 1.37 per cent., not by 1999 but by 1997. The abatement was also under fire. The abatement negotiated in 1984 at Fontainebleau has netted back to this country some £16 billion. Other member states, naturally, wished to remove it.

The abatement is under threat not from other member states but from the words and actions of the hon. Member for Dunfermline, East. Just before the Edinburgh Council, referring to our abatement, he said: There has got to be renegotiation over that. The Opposition would have given in on just about everything. Here I agree with the point—[Interruption.]

Madam Speaker

Order. I am sorry to interrupt the Minister. Conversations should be a little less noisy. It is extremely difficult for both sides of the House. I can hear many conversations which should be less noisy.

Mr. Heathcoat-Amory

I agreed with the intervention and with the speech made by the right hon. Member for Strangford (Mr. Taylor) who said clearly that the Opposition parties—the Liberal Democrats and the Labour party—could not be trusted on European matters because they would give in to just about everything. The itch to tax and to spend runs very deep through Opposition Members.

As we know, in the event, the own resources ceiling was to rise to 1.27 per cent. by 1999. That is less than half the increase proposed by the Commission and supported by the Labour party in the European Parliament. The British abatement is secure. In answer to the point raised by the hon. Member for Newham, South (Mr. Spearing), it can be changed only by unanimity in 1999. That will require primary legislation in this House which means that a vote here is required before the abatement is changed, even at that late date.

The effect of that decision, negotiated by my right hon. Friend the Prime Minister, is to increase our net contribution by £75 million next year and by about £250 million in the last year of the century. Of course, the existing decision means that there is growth anyway in the size of the European budget due to growth in the size of the Community's gross national product and the effect of inflation. It is that increase which many people have muddled up with the increase attributable to the Bill. In fact, the yearly increase flowing from the Bill will be considerably less than that under the previous review in 1988.

By 1999, the adjustment to the contribution ceiling contained in the Bill will cost each person in this country about 7p a week at today's prices. All Conservative Members agree that all public expenditure needs to be looked after. I ask the House to keep a sense of proportion and to compare that '7p a week at today's prices with, for example, the £28 a week which is everyone's share of the social security budget today.

A comment has been made by several hon. Members about the abrupt increases in the United Kingdom's contribution that can be seen from one year to the next. By cunning choice of baseline, a steep increase can be seen between specific years. I think that the House now understands that there are technical reasons for that. This country has a financial year that runs from April to March. The Community accounts on a calendar year so it can be easily seen by any hon. Member that a shift in expenditure or contributions within a calendar year can take that expenditure out of one financial year and into another. If one combines that with the effect of the abatement, whereby we get reimbursed a year in arrears, it is plain to see that our contributions fluctuate from year to year. There is, therefore, nothing sinister in the figures put forward by my right hon. and learned Friend the Chancellor of the Exchequer early last week.

I regret the scepticism expressed by my hon. Friend the Member for Southend, East (Sir T. Taylor) who said that he wanted the true figures. He has the true figures. My right hon. and learned Friend the Chancellor is not keeping some secret update from the House—far from it. He actually brought forward by a week, for the convenience of the House, the figures that would normally be published on Budget day.

Fraud and mismanagement have been mentioned by many hon. Members in this debate. My right hon. Friend the Member for Shropshire, North (Mr. Biffen), in his elegant way, referred to the problem of financial management and what he termed the "lack of focus" in some European Community spending. As usual, his comments need to be taken seriously by Ministers. I agree with many of the sentiments expressed by Conservative and Opposition Members about the lack of adequate financial management in the European Community.

There is also the linked, but actually separate, issue of fraud. That was raised by, among others, the hon. Member for Kingston upon Hull, West (Mr. Randall) and I can assure him that the Government take extremely seriously the criticisms and recommendations laid out in the European Court of Auditors report. It is, by definition, extremely difficult to quantify fraud. Some of the wilder estimates given by hon. Members during the debate were, frankly, just guesses. I can assure the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) that, contrary to what he said, the European Court of Auditors has not put a figure on prevalence of fraud.

Having said that, I agree that financial management in the Community is not good enough and fraud is far too prevalent.

Mr. D. N. Campbell-Savours (Workington)

On the whole question of fraud, what happens if the measures introduced to deal with fraud after Maastricht do not work? Supposing that, next year and again the year after, the Court of Auditors produces another report of a similar nature. What will the Government then do? Will they take the Community to the wire? Will they pursue a policy of brinkmanship, or will we hear the same old drivel well into the future?

Mr. Heathcoat-Amory

Fraud, like sin, can never be totally eliminated but I can give the House the absolute assurance that we will pursue this issue with renewed vigour. That includes, which I think will be of assistance to the hon. Gentleman, the wider use of administrative penalties. So, where serious shortcomings are identified, we recommend the cutting off of further funds to the areas or projects identified. That was a point raised and a request made by my right hon. Friend the Member for Horsham (Sir P. Hordern) among others.

Combating fraud is not simply a question of spending more money. It is typically Labour thinking to suppose that the quality of any organisation or initiative is judged simply by the amount of public money spent on it. Yes, we need greater policing of EC expenditure. We also want to see more preventive measures to take away the opportunities for fraud at source.

Mr. Andrew Smith

On preventive measures, will the Paymaster General answer the question to which no answer was given to my hon. Friend the Member for Dunfermline, East (Mr. Brown) earlier? Will the Government, in seeking to prevent a defeat on VAT on fuel, be making that issue a vote of confidence?

Mr. Heathcoat-Amory

That is not a subject for today's debate, Madam Speaker, as I am sure that you agree.

The question of fraud, which is of interest to the House this evening, is a matter that we shall be pursuing partly by the better policing of expenditure and partly, as I also mentioned, by better preventive measures.

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

Could the Paymaster General simplify this a little for the sake of people at home? Is it not right that we have a very good deal, through the Prime Minister at Edinburgh, and that we are paying very much less than we would have been paying into Europe, which is very important? In fact, it is petty cash in Treasury terms. For it, we are getting inward investment in the United Kingdom, we are getting millions of pounds back out of Europe for environmental reasons and I think that the rebels in this House have not even understood the whole question.

Mr. Heathcoat-Amory

We all welcome my hon. Friend back and the whole House will agree with his intervention.

My final point about fraud is that we must remove the distortions which give an incentive to fraud. There is a connection in that regard with CAP reform. Many of the frauds in the Community arise because of a disparity between EC prices and world prices. That is why the Government have pressed so hard for CAP reform. The MacSharry reforms, which were agreed in 1992, are a very big step in that direction.

When Labour was last in office, agriculture consumed more than two thirds of the EC budget. The figure is now about half and it will continue to fall, not because of Opposition criticism but through the determination and practical steps taken by Conservative Governments.

In response to points raised by my hon. Friend the Member for Southend, East and others, let me say that the agricultural guideline which sets a limit on agricultural expenditure will be rigidly observed. As it can be increased only by unanimity, I can repeat the assurance to my right hon. and hon. Friends that we will police that guideline absolutely.

The amendment, with its weasel-worded rejection of the Bill, would achieve none of those things to improve the war on fraud or to reform the CAP.

Mr. Cormack

Will my hon. Friend tell the House that we are determined to be tough on fraud and tough on the causes of fraud?

Mr. Heathcoat-Amory

I can give that assurance to my hon. Friend.

The amendment would not assist in the smallest degree. The House is aware that the Labour party is the party of public expenditure at home and, since its last U-turn in its attitude to the European Union, it is the party of public expenditure in Europe: public expenditure good; European public expenditure even better.

The Official Report is littered with requests from Opposition Members asking for, urging and demanding more expenditure. In his previous post as shadow Foreign Secretary, the right hon. Member for Copeland (Dr. Cunningham) said on 24 November 1992: We firmly believe that there should be Europe-wide measures on employment, job creation, investment in transport infrastructure, measures for industrial regeneration and investment. The hon. Member for Oxford, East, who replied to the debate on behalf of the Labour party, called for more money before Edinburgh and for even more expenditure afterwards.

The Liberal Democrats are just the same. As usual, it depends on which audience they are addressing. The hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) said that he wanted a bold, and…generous settlement at Edinburgh".—[Official Report, 24 November 1992; Vol. 214, c. 773–85.] However, he and his party are apparently supporting an amendment which would wreck the only settlement that is on offer. I hope that the Liberal Democrats have explained to their rural constituents their new-found interest in CAP reform and reduction in agricultural expenditure.

Contrary to what the hon. Member for Oxford, East said, there has been nothing in the speeches of Opposition Members, before or after Edinburgh, about the need for budgetary discipline and cracking down on fraud. They have never mentioned the European Court of Auditors. We can look in vain for any reference to the problem of fraud or waste in their speeches in 1982 and since, yet now they produce that as a fig leaf to cover their amendment.

This is a sham amendment put forward by a party with a sham policy on Europe. It is opportunistic, it is inconsistent, and it is wrong. Opposition Members hope that, by betraying their principles, they will bring down the Government and then betray ours. I say to my right hon. and hon. Friends: do not fall into a trap so crude. The Bill is about an extra 700ths of 1 per cent. of gross national product at the end of seven years. It is worth more than that to stand firm and fight for the European Community we want and not to sell out to the Opposition parties. I urge the House to reject the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 303, Noes 330.

Division No. 5]	[22.00 pm
AYES
Abbott, Ms Diane	Cousins, Jim
Adams, Mrs Irene	Cox, Tom
Aingor, Nfck	Cummings, John
Ainsworth, Robert (Cov'try NE)	Cunliffe, Lawrence
Allen, Graham	Cunningham, Jim (Covy SE)
Alton, David	Cunningham, Rt Hon Dr John
Anderson, Donald (Swansea E)	Dafis, Cynog
Anderson, Ms Janet (Ros'dale)	Dalyell.Tam
Armstrong, Hilary	Darling, Alistair
Ashdown, Rt Hon Paddy	Davidson, Ian
Ashton,Joe	Davies, Bryan (Oldham C'tral)
Austin-WaJker, John	Davies, Ron (Caerpilly)
Banks, Tony (Newham NW)	Davies, Rt Hon Denzil (Llanelli)
Barnes, Harry	Davis, Terry (B'ham, H'dge H'I)
Barron, Kevin	Denham, John
Battle, John	Dewar, Donald
Bayley.Hugh	Dixon, Don
Beckett, Rt Hon Margaret	Dobson, Frank
Beith, Rt Hon AJ	Donohoe, Brian H
Bell, Stuart	Dowd, Jim
Benn, Rt Hon Tony	Dunnachie, Jimmy
Bennett, Andrew F	Dunwoody, Mrs Gwyneth
Benton, Joe	Eagle, Ms Angela
Bermingham, Gerald	Eastham, Ken
Berry, Roger	Enright, Derek
Betts,Clive	Etherington, Bill
Blair, Rt Hon Tony	Evans, John (St Helens N)
Blunkett, David	Ewing, Mrs Margaret
Boateng, Paul	Fatchett, Derek
Boyes, Roland	Faulds, Andrew
Bradley, Keith	Field, Frank (Biikenhead)
Bray, Dr Jeremy	Fisher, Mark
Brown, Gordon (Dunfermline E)	Flynn, Paul
Brown, N (N'c'tle upon Tyne E)	Foster, Don (Bath)
Bruce, Malcolm (Gordon)	Foster, Rt Hon Derek
Burden, Richard	Foulkes, George
Byers, Stephen	Fraser, John
Caborn, Richard	Fyfe, Maria
Callaghan.Jim	Galbraith, Sam
Campbell, Menzies (Fife NE)	Galloway, George
Campbell, Mrs Anne (C'bridge)	Gapes, Mike
Campbell, Ronnie (Blyth V)	Garrett, John
Campbell-Savours, D N	George, Bruce
Canavan, Dennis	Gerrard, Neil
Cann, Jamie	Gilbert, Rt Hon Dr John
Carlile, Alexander (Montgomry)	Godman, Dr Norman A
Chidgey, David	Godsrff, Roger
Chisholm, Malcolm	GolWing, Mrs Llin
Church, Judith	Gordon, Mildred
Clapham, Michael	Graham, Thomas
Clark, Dr David (South Shields)	Grant, Bemie (Tottenham)
Clarke, Eric (Midlothian)	Griffiths, Nigel (Edinburgh S)
Clarke, Tom (Monkands W)	Griffiths. Win (Bridgend)
Clelland, David	Grocott, Bruce
Clwyd,MrsAnn	Gunnell, John
Coffey, Ann	Hain, Peter
Cohen, Harry	Hall, Mike
Connarty, Michael	Hanson, David
Cook, Frank (Stockton N)	Hardy, Peter
Cook, Robin (Livingston)	Harman, Ms Harriet
Corbett, Robin	Harvey, Nick
Corbyn, Jeremy	Hattersley, Rt Hon Roy
Corston, Jean	Henderson, Doug

Hendron,Dr Joe	Meale, Alan
Heppell,John	Milchael,Alun
Hill, Keith (Stratham)	Michie, Bill (Sheffield Heeley)
Hinchliffe, David	Michie, Mrs Ray (Argyll &Bute)
Hodge, Margaret	Milburn, Alan
Hoey.Kate	Miller, Andrew
Hogg, Norman (Curnbemauld)	Mitcnell, Austin (Gt Grinsby)
Home Robertson, John	Moonie, Dr Lewte
Hood, Jimmy	Morgan, Rhodri
Hoon, Geoffrey	Morley, Elliot
Howarth, George (Knowsley N)	Morris, Estalle (B'ham Yandley)
Howells, Dr. Kim (Pontypridd)	Monis, Rt Hon Alfred (Wynshawe)
Hoyle, Doug	Morris, Rt Hon John (Aberavon)
Hughes, Kevin (Doncaster N)	Mowlam, Marjorie
Hughes, Robert (Aberdeen N)	Mudie, George
Hughes, Roy (Newport E)	Mullin, Chris
Hughes, Simon (Southwark)	Murphy, Paul
Hume, John	O'Brien, Bill (Normanton)
Hutton, John	OBrien,Mike(NW'kshire)
Illsley.Eric	O'Hara, Edward
Ingram, Adam	O'Neill, Martin
Jackson, Glenda (H'stead)	Oakes, Rt Hon Gordon
Jackson, Helen (Shef'ld, H)	Olner.Bill
Jamieson, David	Orme, Rt Hon Stanley
Janner, Greville	Paisley, The Reverend Ian
Johnston, Sir Russell	Parry, Robert
Jones, Barry (Alyn and D'side)	Patchett, Terry
Jones, Ieuan Wyn (Ynys Mon)	Pendry, Tom
Jones, Jon Owen (Cardiff C)	Plckthal, Colin
Jones, Lynne (B'ham S O)	Pike, Peter L
Jones, Martyn (Clwyd, SW)	Pope, Greg
Jones, Nigel (Cheltenham)	Prentice, Bridget (Lew'm E)
Jewell, Tessa	Prentice, Gordon (Pendle)
Kaufman, Rt Hon Gerald	Prescott, Rt Hon John
Keen, Alan	Primarolo, Dawn
Kennedy, Charles (Ross,C&S)	Purchase, Ken
Kennedy, Jane (Lpool Brdgn)	Quin, Ms Joyce
Khabra,Piara S	Radice, Giles
Kilfoyle, Peter	Randall, Stuart
Kinnock, Rt Hon Neil (Islwyn)	Raynsford, Nick
Kirkwood, Archy	Redmond, Martin
Lestor, Joan (Eccles)	Reid, Dr John
Lewis, Terry	Rendel, David
Liddell, Mrs Helen	Robertson, George (Hamilton)
Litherland, Robert	Robinson, Geoffrey (Co'try NW)
Livingstone, Ken	Roche, Mrs Barbara
Lloyd, Tony (Stretfoud)	Rogers, Allan
Llwyd,Elfyn	Rooker, Jeff
Loyden, Eddie	Rooney, Terry
Lynne, Ms Liz	Ross, Ernie (Dundee W)
Macdonald, Calum	Rowlands, Ted
Mackinlay, Andrew	Ruddock, Joan
Maclennan, Robert	Salmond, Alex
MacShane, Denis	Sedgemore, Brian
Madden, Max	Sheerman, Barry
Maddock, Diana	Sheldon, Rt Hon Robert
Mahon.Alice	Shore, Rt Hon Peter
Mallon, Seamus	Short, Clare
Mandelson, Peter	Simpson, Alan
Marek,Dr John	Skinner, Dennis
Marshall, David (Shettleston)	Smith, Andrew (Oxford E)
Marshall, Jim (Leicester, S)	Smith, Chris (lel'ton S & F'sbury)
Martin, Michael J (Springburn)	Smith, Llew (Blaenau Gwent)
Martlew, Eric	Snape, Peter
Maxtor, John	Soley.Clive
McAllion, John	Spearing, Nigel
McAvoy, Thomas	Spellar, John
McCartney, Ian	Squire, Rachel (Dunfermline W)
McCrea, Rev William	Steel, Rt Hon Sir David
McFall, John	Steinberg, Gerry
McGrady, Eddie	Stevenson, George
McKelvey, William	Stott, Roger
McLeish, Henry	Strang, Dr. Gavin
McNamara, Kevin	Straw, Jack
McWilliam, John	Sufcliffe, Gerry
Meacher, Michael	Taylor, Matthew (Truro)

Taylor, Mrs Ann (Dewsbury)	Wicks, Malcolm
Thompson, Jack (Wansbeck)	Wigley, Dafydd
Timms, Stephen	Williams, Alan W (Carmarthen)
Tipping, Paddy	Williams, Rt Hon Alan (SW'n W)
Turner, Dennis	Wilson, Brian
Tyler, Paul	Winnick, David
Vaz, Keith	Wise, Audrey
Walker, Rt Hon Sir Harold	Wray, Jimmy
	Worthington, Tony
Wallace, James	Wright, Dr Tony
Walley, Joan	Young, David (Bolton SE)
Wardell, Gareth (Gower)
Wareing, Robert N	Tellers for the Ayes:
Watson, Mike	Mr. Ray Powell and
Welsh, Andrew	Mr. Gordon McMaster.
NOES
Ainsworth, Peter (East Surrey)	Coe, Sebastian
Aitken, Rt Hon Jonathan	Colvin, Michael
Alexander, Richard	Congdon, David
Alison, Rt Hon Michael (Selby)	Conway, Derek
Allason, Rupert (Torbay)	Coombs, Anthony (Wyre For'st)
Amess, David	Coombs, Simon (Swindon)
Ancram, Michael	Cope, Rt Hon Sir John
Arbuthnot, James	Cormack, Patrick
Arnold, Jacques (Gravesham)	Couchman, James
Arnold, Sir Thomas (Hazel Grv)	Cran, James
Ashby, David	Critchley, Julian
Aspinwall, Jack	Currie, Mrs Edwina (S D'by'ire)
Atkins, Robert	Curry, David (Skipton & Ripon)
Atkinson, David (Bour'mouth E)	Davies, Quentin (Stamford)
Atkinson, Peter (Hexham)	Davis, David (Boothferry)
Baker, Nicholas (Dorset North)	Day, Stephen
Baker, Rt Hon K (Mole Valley)	Deva, Nirj Joseph
Baldry, Tony	Devlin, Tim
Banks, Matthew (Southport)	Dickens, Geoffrey
Banks, Robert (Harrogate)	Dicks, Terry
Bates, Michael	Dorrell, Rt Hon Stephen
Batiste, Spencer	Douglas-Hamilton, Lord James
Beggs, Roy	Dover, Den
Bellingham, Henry	Duncan Smith, Iain
Bendall, Vivian	Duncan, Alan
Beresford, Sir Paul	Dunn, Bob
Biffen, Rt Hon John	Durant, Sir Anthony
Body, Sir Richard	Dykes, Hugh
Bonsor, Sir Nicholas	Eggar, Tim
Booth, Hartley	Elletson, Harold
Boswell, Tim	Emery, Rt Hon Sir Peter
Bottomley, Peter (Eltham)	Evans, David (Welwyn Hatfield)
Bottomley, Rt Hon Virginia	Evans, Jonathan (Brecon)
Bowden, Sir Andrew	Evans, Nigel (Ribble Valley)
Bowis, John	Evans, Roger (Monmouth)
Boyson, Rt Hon Sir Rhodes	Evennett, David
Brandreth, Gyles	Faber, David
Brazier, Julian	Fabricant, Michael
Bright Sir Graham	Fenner, Dame Peggy
Brooke, Rt Hon Peter	Field, Barry (Isle of Wight)
Brown, M (Brigg & Cl'thorpes)	Fishburn, Dudley
Browning, Mrs. Angela	Forman, Nigel
Bruce, Ian (Dorset)	Forsyth, Michael (Stirling)
Burns, Simon	Forsythe, Clifford (Antrim S)
Burt, Alistair	Forth, Eric
Butcher, John	Fowler, Rt Hon Sir Norman
Butler, Peter	Fox, Dr Liam (Woodspring)
Butterfill, John	Fox, Sir Marcus (Shipley)
Carlisle, John (Luton North)	Freeman, Rt Hon Roger
Carlisle, Sir Kenneth (Lincoln)	French, Douglas
Carrington, Matthew	Fry, Sir Peter
Carttiss, Michael	Gale, Roger
Cash, William	Gallie, Phil
Channon, Rt Hon Paul	Gardiner, Sir George
Churchill, Mr	Garel-Jones, Rt Hon Tristan
Clappison, James	Garnier, Edward
Clark, Dr Michael (Rochford)	Gillan, Cheryl
Clarke, Rt Hon Kenneth (Ru'clif)	Goodlad, Rt Hon Alastair
Clifton-Brown, Geoffrey	Goodson-Wickes, Dr Charles

Gorst, Sir John	Maginnis, Ken
Grant, Sir A (Cambs SW)	Maitland, Lady Olga
Greenway, Harry (Ealing N)	Major, Rt Hon John
Greenway, John (Ryedale)	Malone, Gerald
Griffiths, Peter (Portsmouth, N)	Mans, Keith
Grylls, Sir Michael	Marland, Paul
Gummer, Rt Hon John Selwyn	Marshall, John (Hendon S)
Hague, William	Marshall, Sir Michael (Arundel)
Hamilton, Neil (Tatton)	Martin, David (Portsmouth S)
Hamilton, Rt Hon Sir Archibald	Mates, Michael
Hampson, Dr Keith	Mawhinney, Rt Hon Dr Brian
Hanley, Rt Hon Jeremy	Mayhew, Rt Hon Sir Patrick
Hannam, Sir John	McLoughlin, Patrick
Hargreaves, Andrew	McNair-Wilson, Sir Patrick
Harris, David	Mellor, Rt Hon David
Haselhurst, Alan	Merchant Piers
Hawkins, Nick	Mills, Iain
Hawksley, Warren	Mitchell, Andrew (Gedling)
Hayes, Jerry	Mitchell, Sir David (Hants NW)
Heald, Oliver	Moate, Sir Roger
Heath, Rt Hon Sir Edward	Molyneaux, Rt Hon James
Heathcoat-Amory, David	Monro, Sir Hector
Hendry, Charles	Montgomery, Sir Fergus
Heseltine, Rt Hon Michael	Moss, Malcolm
Hicks, Robert	Needham, Rt Hon Richard
Higgins, Rt Hon Sir Terence	Nelson, Anthony
Hill. James (Southampton Test)	Neubert, Sir Michael
Hogg, Rt Hon Douglas (G'tham)	Newton, Rt Hon Tony
Horam, John	Nicholls, Patrick
Hordem, Rt Hon Sir Peter	Nicholson, David (Taunton)
Howard, Rt Hon Michael	Nicholson, Emma (Devon West)
Howarth, Alan (Strat'rd-on-A)	Norris, Steve
Howell, Rt Hon David (G'dford)	Onslow, Rt Hon Sir Cranley
Howell, Sir Ralph (N Norfolk)	Oppenheim, Phillip
Hughes, Robert (Harrow West)	Ottaway, Richard
Hunt, Rt Hon David (Wirral W)	Page, Richard
Hunt, Sir John (Ravensbourne)	Paice, James
Hunter, Andrew	Patnick, Sir Irvine
Hurd, Rt Hon Douglas	Patten, Rt Hon John
Jack, Michael	Pattie, Rt Hon Sir Geoffrey
Jackson, Robert (Wantage)	Pawsey, James
Jenkin, Bernard	Peacock, Mrs Elizabeth
Jessel,Toby	Pickles, Eric
Johnson Smith, Sir Geoffrey	Porter, Barry (Wirral S)
Jones, Gwilym (Cardiff N)	Porter, David (Waveney)
Jones, Robert B (W Hertfdshr)	Portillo, Rt Hon Michael
Jopling, Rt Hon Michael	Powell, William (Corby)
Kellett-Bowman, Dame Elaine	Rathbone, Tim
Key, Robert	Redwood, Rt Hon John
Kilfedder, Sir James	Renton, Rt Hon Tim
King, Rt Hon Tom	Richards, Rod
Kirkhope, Timothy	Riddick, Graham
Knapman, Roger	Rifkind, Rt Hon Malcolm
Knight, Dame Jill (Bir'm E'st'n)	Robathan, Andrew
Knight, Greg (Derby N)	Roberts, Rt Hon Sir Wyn
Knight Mrs Angela (Erewash)	Robinson, Mark (Somerton)
Knox, Sir David	Roe, Mrs Marion (Broxbourne)
Kynoch, George (Kincardine)	Ross, William (E Londonderry)
Lait, Mrs Jacqui	Rowe, Andrew (Mid Kent)
Lamont Rt Hon Norman	Rumbold, Rt Hon Dame Angela
Lang, Rt Hon Ian	Ryder, Rt Hon Richard
Lawrence, Sir Ivan	Sackville, Tom
Legg, Barry	Sainsbury, Rt Hon Tim
Leigh, Edward	Scott, Rt Hon Nicholas
Lennox-Boyd, Sir Mark	Shaw, David (Dover)
Lester, Jim (Broxtowe)	Shaw, Sir Giles (Pudsey)
Lidington, David	Shephard, Rt Hon Gillian
Lilley, Rt Hon Peter	Shepherd, Colin (Hereford)
Lloyd, Rt Hon Peter (Fareham)	Shersby, Michael
Lord, Michael	Sims, Roger
Luff, Peter	Skeet Sir Trevor
Lyell, Rt Hon Sir Nicholas	Smith, Sir Dudley (Warwick)
MacGregor, Rt Hon John	Smith, Tim (Beaconsfield)
MacKay, Andrew	Smyth, Rev Martin (Belfast S)
Maclean, David	Soames, Nicholas
Madel, Sir David	Speed, Sir Keith

Spencer, Sir Derek	Trimble, David
Spicer, Michael (S Worcs)	Trotter, Neville
Spicer, Sir James (W Dorset)	Twinn, Dr lan
Spink, Dr Robert	Vaughan, Sir Gerard
Spring, Richard	Viggers, Peter
Sproat lain	Waldegrave, Rt Hon William
Squire, Robin (Hornchurch)	Walden, George
Stanley, Rt Hon Sir John	Walker, A Cecil (Belfast N)
Steen, Anthony	Walker, Bill (N Tayside)
Stephen, Michael	Waller, Gary
Stern, Michael	Ward, John
Stewart, Allan	Wardle, Charles (Bexhill)
Streeter, Gary	Waterson, Nigel
Sumberg, David	Watts, John
Sweeney, Walter	Wells, Bowen
Sykes, John	Wheeler, Rt Hon Sir John
Tapsell, Sir Peter	Whittingdale, John
Taylor, Ian (Esher)	Widdecombe, Ann
Taylor, John M(Solihull)	Wiggin, Sir Jerry
Taylor, Rt Hon John D (Strgfd)	Willetts, David
Temple-Morris, Peter	Wilshire, David
Thomason, Roy	Winterton, Mrs Ann (Congleton)
Thompson, Patrick (Norwich N)	Winterton, Nicholas (Macc'f'ld)
Thompson, Sir Donald (C'er V)	Wolfson,Mark
Thornton, Sir Malcolm	Wood, Timothy
Thumham, Peter	Yeo, Tim
Townend, John (Bridlington)	Young, Rt Hon Sir George
Townsend, Cyril D (Bexl'yh'th)
Tracey, Richard	Tellers for the Noes:
Tredinnick, David	Mr. David Lightbown and
Trend, Michael	Mr. Sydney Chapman

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 60 (Amendment on Second or Third Reading):—

The House divided: Ayes 329, Noes 44

Division No.6]	[22.17 pm
AYES
Ainsworth, Peter (East Surrey)	Bottomley, Rt Hon Virginia
Aitken, Rt Hon Jonathan	Bowden, Sir Andrew
Alexander, Richard	Bowis, John
Alison, Rt Hon Michael (Selby)	Boyson, Rt Hon Sir Rhodes
Allason, Rupert (Torbay)	Brandreth, Gyles
Amess, David	Brazier, Julian
Ancram, Michael	Bright, Sir Graham
Arbuthnot, James	Brooke, Rt Hon Peter
Arnold, Jacques (Gravesham)	Brown, M (Brigg & Ct'thorpes)
Arnold, Sir Thomas (Hazel Grv)	Browning, Mrs. Angela
Ashby, David	Bruce, Ian
Aspinwall, Jack	Burns, Simon
Atkins, Robert	Burt, Alistair
Atkinson, David (Bour'mouth E)	Butcher, John
Atkinson, Peter (Hexham)	Butler, Peter
Baker, Nicholas (Dorset North)	Butterfill, John
Baker, Rt Hon K (Mole Valley)	Carlisle, John (Luton North)
Baldry, Tony	Carlisle, Sir Kenneth (Lincoln)
Banks, Matthew (Southport)	Carrington, Matthew
Banks, Robert (Harrogate)	Cash, William
Bates, Michael	Channon, Rt Hon Paul
Batiste, Spencer	Churchill, Mr
Beggs, Roy	Clappison, James
Bellingham, Henry	Clark, Dr Michael (Rochford)
Bendall, Vivian	Clarke, Rt Hon Kenneth (Ru'clif)
Beresford, Sir Paul	Clifton-Brown, Geoffrey
Biffen, Rt Hon John	Coe, Sebastian
Body, Sir Richard	Colvin, Michael
Bonsor, Sir Nicholas	Congdon, David
Booth, Hartley	Conway, Derek
Boswell, Tim	Coombs, Anthony (Wyre For'st)
Bottomley, Peter (Eltham)	Coombs, Simon (Swindon)

Cope, Rt Hon Sir John	Heseltine, Rt Hon Michael
Cormack, Patrick	Hicks, Robert
Couchman, James	Higgins, Rt Hon Sir Terence
Cran, James	Hill, James (Southampton Test)
Critchley, Julian	Hogg, Rt Hon Douglas (G'them)
Currie, Mrs Edwina (S D'by'lre)	Horam, John
Curry, David (Skipton & Ripon)	Hordem, Rt Hon Sir Peter
Davies, Quentin (Stamford)	Howard, Rt Hon Michael
Davis, David (Boothferry)	Howarth, Alan (Strat'rd-on-A)
Day, Stephen	Howell, Rt Hon David (G'dford)
Deva, Nirj Joseph	Howell, Sir Ralph (N Norfolk)
Devlin, Tim	Hughes, Robert G (Harrow W)
Dickens, Geoffrey	Hunt, Rt Hon David (Wirral W)
Dicks, Terry	Hunt, Sir John (Ravensboume)
Dorrell, Rt Hon Stephen	Hunter, Andrew
Douglas-Hamilton, Lord James	Hurd, Rt Hon Douglas
Dover, Den	Jack, Michael
Duncan Smith, Iain	Jackson, Robert (Wantage)
Duncan, Alan	Jenkin, Bernard
Dunn, Bob	Jessel, Toby
Durant, Sir Anthony	Johnson Smith, Sir Geoffrey
Dykes, Hugh	Jones, Gwilym (Cardiff N)
Eggar, Tim	Jones, Robert B (W Hertfdshr)
Elletson, Harold	Jopling, Rt Hon Michael
Emery, Rt Hon Sir Peter	Kellett-Bowman, Dame Elaine
Evans, David (Welwyn Hatfield)	Key, Robert
Evans, Jonathan (Brecon)	Kilfedder, Sir James
Evans, Nigel (Ribble Valley)	King, Rt Hon Tom
Evans, Roger (Monmouth)	Kirkhope, Timothy
Evernnett, David	Knapman, Roger
Faber, David	Knight Dame Jill (Bir'm E'st'n)
Fabricant, Michael	Knight, Greg (Derby N)
Fenner, Dame Peggy	Knight, Mrs Angela (Erewash)
Field, Barry (Isle of Wight)	Knox, Sir David
Fishbum, Dudley	Kynoch, George (Kincardine)
Forman, Nigel	Lait, Mrs Jacqui
Forsyth, Michael (Stirling)	Lamont, Rt Hon Norman
Forsythe, Clifford (Antrim S)	Lang, Rt Hon Ian
Forth, Eric	Lawrence, Sir Ivan
Fowler, Rt Hon Sir Norman	Legg, Barry
Fox, Dr Liam (Woodspring)	Leigh, Edward
Fox, Sir Marcus (Shipley)	Lennox-Boyd, Sir Mark
Freeman, Rt Hon Roger	Lester, Jim (Broxtowe)
French, Douglas	Lidington, David
Fry, Sir Peter	Lilley, Rt Hon Peter
Gate, Roger	Lloyd, Rt Hon Peter (Fareham)
Gallie, Phil	Lord, Michael
Gardiner, Sir George	Luff, Peter
Garel-Jones, Rt Hon Tristan	Lyell, Rt Hon Sir Nicholas
Garnier, Edward	MacGregor, Rt Hon John
Gillan, Cheryl	MacKay, Andrew
Goodlad, Rt Hon Alastair	Maclean, David
Goodson-Wickes, Dr Charles	Madel, Sir David
Gorst, Sir John	Maginnis, Ken
Grant, Sir A (Cambs SM)	Maitland, Lady Olga
Greenway, Harry (Ealing N)	Major, Rt Hon John
Greenway, John (Ryedale)	Malone, Gerald
Griffiths, Peter (Portsmouth, N)	Mans, Keith
Grylls, Sir Michael	Marland, Paul
Gummer, Rt Hon John Selwyn	Marshall, John (Hendon S)
Hague, William	Marshall, Sir Michael (Arundel)
Hamilton, Neil (Tatton)	Martin, David (Portsmouth S)
Hamilton, Rt Hon Sir Archibald	Mates, Michael
Hampson, Dr Keith	Mawhinney, Rt Hon Dr Brian
Hanley, Rt Hon Jeremy	Mayhew, Rt Hon Sir Patrick
Hannam, Sir John	McLoughlin, Patrick
Hargreaves, Andrew	McNair-Wilson, Sir Patrick
Harris, David	Mellor, Rt Hon David
Haselhurst, Alan	Merchant, Piers
Hawkins, Nick	Mills, Iain
Hawksley, Warren	Mitchell, Andrew (Gedling)
Hayes, Jerry	Mitchell, Sir David (Harts NW)
Heald, Oliver	Moate, Sir Roger
Heath, Rt Hon Sir Edward	Molyneaux, Rt Hon James
Heathcoat-Amory, David	Mono, Sir Hector
Hendry, Charles	Montgomery, Sir Fergus

Moss, Malcolm	Spring, Richard
Needham, Rt Hon Richard	Sproat, Iain
Nelson, Anthony	Squire, Robin (Hornchurch)
Neubert, Sir Michael	Stanley, Rt Hon Sir John
Newton, Rt Hon Tony	Steen, Anthony
Nicholls, Patrick	Stephen, Michael
Nicholson, David (Taunton)	Stem, Michael
Nicholson, Emma (Devon West)	Stewart, Allan
Norris, Steve	Streeter, Gary
Onslow, Rt Hon Sir Cranley	Sumberg, David
Oppenheim, Phillip	Sweeney, Walter
Ottaway, Richard	Sykes, John
Page, Richard	Tapsell, Sir Peter
Paice, James	Taylor, Ian (Esher)
Patnick, Sir Irvine	Taylor, John M (Solihull)
Patten, Rt Hon John	Taylor, Rt Hon John D (Strgfd)
Pattie, Rt Hon Sir Geoffrey	Temple-Morris, Peter
Pawsey, James	Thomason, Roy
Peacock, Mrs Elizabeth	Thompson, Patrick (Norwich N)
Pickles, Eric	Thompson, Sir Donald (C'er V)
Porter, Barry (Wirral S)	Thomton, Sir Malcolm
Porter, David (Waveney)	Thumham, Peter
Portillo, Rt Hon Michael	Townend, John (Bridlington)
Powell, William (Corby)	Townsend, Cyril D (Bexl'yh'th)
Rathbone, Tim	Tracey, Richard
Redwood, Rt Hon John	Tredinnick, David
Renton, Rt Hon Tim	Trend, Michael
Richards, Rod	Trimble, David
Riddick, Graham	Trotter, Neville
Rifkind, Rt Hon Malcolm	Twinn, Dr Ian
Robathan, Andrew	Vaughan, Sir Gerard
Roberts, Rt Hon Sir Wyn	viggers, Peter
Robertson, Raymond (Ab'd'n S)	Wakdegrave, Rt Hon William
Robinson, Mark (Somerton)	Waldern, George
Roe, Mrs Marion (Broxbourne)	walker, A Cecil (Belfast N)
Ross, William (E Londonderry)	Walker, Bill (N Tayside)
Rowe, Andrew (Mid Kent)	Waller, Gary
Rumbold, Rt Hon Dame Angela	Ward John
Ryder, Rt Hon Richard	Wardle, Charles (Bexhill)
Sackville, Tom	Waterson, Nigel
Sainsbury, Rt Hon Tim	Watts, John
Scott, Rt Hon Nicholas	Wells, Bowen
Shaw David (Dover)	Wheeler, Rt Hon Sir John
Shaw, Sir Giles (Pudsey)	Whitney, Ray
Shephard, Rt Hon Gillian	Whittingdale, John
Shepherd, Colin (Hereford)	Widdecombe, Ann
Shersby, Michael	Wiggin, Sir Jerry
Sims, Roger	Willetts, David
Skeet, Sir Trevor	Wilshire, David
	Winterton, Mrs Ann (Congleton)
Smith, Sir Dudley (Warwick)	Winterton, Nicholas (Macc'f'ld)
Smith, Tim (Beaconsfield)	Wolfson, Mark
Smyth, Rev Martin (Belfast S)	Wood, Timothy
Soames, Nicholas	Yeo, Tim
Speed, Sir Keith	Young, Rt Hon Sir George
Spencer, Sir Derek
Spicer, Mchael (S Worcs)	Tellers for the Ayes:
Spicer, Sir James (W Dorset)	Mr. David Lightbown and
Spink, Dr Robert	Mr. Sydney Chapman.
NOES
Abbott, Ms Diane	Gerrard, Neil
Austin-Walker, John	Gordon, Mildred
Barnes, Harry	Hall, Mike
Benn, Rt Hon Tony	Hood, Jimmy
Bennett, Andrew F	Jones, Lynne (B'ham S O)
Callaghan, Jim	Lewis, Terry
Campbell, Ronnie (Blyth V)	Livingstone, Ken
Canavan, Dennis	Loyden, Eddie
Cann, Jamie	Madden, Max
Clelland, David	Mahon, Alice
Cohen, Harry	Marshall, Jim (Leicester, S)
Corbyn, Jeremy	McCrea, Rev William
Davies, Rt Hon Denzil (Llanelli)	McWillam, John
Davis, Terry (B'ham, H'dge H'I)	Michie, Bill (Sheffield Heeley)
Evans, John (St Helens N)	Olner, Bill

Paisley, The Reverend Ian	Spearing, Nigel
Parry, Robert	Steinberg, Gerry
Pickthall, Colin	Welsh, Andrew
Rowlands, Ted	Winnick, David
Salmond, Alex	Wise, Audrey
Shore, Rt Hon Peter
Simpson, Alan	Tellers for the Noes:
Skinner, Dennis	Mrs. Gwyneth Dunwoody
Smith, Llew	and Mr. Austin Mitchell.

Question accordingly agreed to.

Bill accordingly read a Second time, and committed to a Committee of the whole House pursuant to Standing Order No. 61 (Committal of Bills).

Committee tomorrow.