EUROPEAN ECONOMIC COMMUNITY (BRUSSELS NEGOTIATIONS)

HC Deb 11 February 1963 vol 671 cc943-1072

3.35 p.m.

The Prime Minister (Mr. Harold Macmillan)

I beg to move, That this House expresses its full confidence in the determination and ability of Her Majesty's Government to deal with the political and economic situation arising from the breakdown of the Brussels negotiations. During the next two days the House will be discussing the broad political and economic consequences of the breakdown of the Brussels negotiations. Later in the debate my right hon. Friend the Lord Privy Seal will give a fuller account than he was able to do on 30th January of the last scenes of a very dramatic week, and, no doubt, will be able to add his reflections on the European situation immediately resulting. His intimate knowledge of the issues involved, combined with the very close friendships that he has made with all his colleagues in Europe—in the E.F.T.A. countries as well as in the Six—together with the close association which he has kept throughout, with the help of my right hon. Friend the Secretary of State for Commonwealth Relations, with the Commonwealth countries, makes it right that he should place on record a full account of the final stages and his thoughts about the future.

Whatever may be the divergent emphasis which hon. Members have put upon this or that aspect of this great issue, I think that there can be no division of opinion as to the skill and diligence which my right hon. Friend has shown throughout, aided by a devoted team of officials.

I will not disguise from the House, as I have not attempted to disguise from the country, the deep disappointment of the Government and, I think, of the whole nation, at the turn of events. As I have already made clear, I do not believe that there is a simple alternative, in the sense of a sort of ready-made plan, which is better than the one we have been pursuing. There are, indeed, measures which we can and will adopt, and action which we can and will take. Meanwhile, it would be right for me, first, to give some account of the effects of the breakdown in the negotiations upon the Commonwealth economy, on that of our E.F.T.A. partners, and on our own. There were clearly some very substantial gains for some of the Commonwealth countries in the terms negotiated by the Lord Privy Seal.

First, to take an important example in Asia, both India and Ceylon depend for their earnings of foreign exchange very largely upon the export of tea. The sale of tea represents £91 million, or 47 per cent., of the total of Indian exports to Britain. In Ceylon, the figures are £84 million and 90 per cent. of total exports to Britain. It had been agreed that instead of the tariffs now operating in the Common Market countries, which will shortly be at a uniform 10.8 per cent., there would be free entry to all Europe—that is, the Six—from the date of Britain's acceptance.

This would not only have safeguarded exports of tea to the British market, but would have opened up the markets of the Community as a whole, and when we realise what a high proportion tea represents of these countries' exports and, consequently, of their earnings of foreign exchange, we realise the full measure of these lost opportunities.

In the case of those manufactured goods which are of special importance to India, Pakistan and Hong Kong, we had hoped, by the negotiation of comprehensive trade agreements, to inaugurate in Europe as a whole a move towards those advantages which we in Britain have given to these Commonwealth countries, often at very great sacrifice to ourselves.

Let us turn to Africa and the Caribbean. The Lord Privy Seal negotiated an agreement for association should they wish to take it, under which almost all of their raw materials and tropical foodstuffs would have entered freely to this great European market. Most of the new African countries were unwilling, for political reasons, to accept association. But I feel sure that as the years had gone on this process would have developed. Already, some of the West Indian countries have seen the advantages of association and some, undoubtedly, would have accepted it from the beginning.

As regards the old Commonwealth countries, perhaps the most important question facing Canada, Australia and New Zealand in the field of temperate foodstuffs is the hope of being able to negotiate world commodity agreements. It is clear that our absence from the Community will weaken the forces working for reasonable prices and limiting artificial stimulation of production, and this will make commodity agreements correspondingly more difficult. On other items, too, while there was to have been, of course, a gradual disappearance of the preferences and some products which now enter this country free of duty would gradually have become dutiable, it should not be thought that all free entry would have been eliminated.

Many of the most important commodities of Commonwealth producers, such as wool and jute, would still have been duty free. Where items become subject to duty, the loss of the duty-free entry into Britain would have been compensated—perhaps more than compensated—by the reduction of duty in the whole European market. These were the direct benefits. Moreover, all the Commonwealth countries recognised, and made clear at our conference that they recognized, the necessarily limited character of the British market. They accepted the advantage of strengthening the wealth and resilience of that market over the years as well as seeking new outlets elsewhere.

Considerable difficulties must follow for some of the E.F.T.A. countries. The case of Denmark is a particular one because of the character of her food exports, divided between Britain and Germany. The case of Austria also presents a special problem. Yet, broadly speaking, in spite of the difficulty of taking care of every single individual interest, the E.F.T.A. countries were looking forward to entering into the Community with us. I think it right to underline these advantages, not merely for Britain but for the Commonwealth and the E.F.T.A. countries, which would have followed a successful negotiation.

Having said that, let us now turn to the future. First the Commonwealth. In our discussions over the last eighteen months I think that we have all studied with greater precision than ever before the character of Commonwealth trade. It is sometimes argued that some form of free trade or common market could be developed among the Commonwealth countries. Even sixty years ago, when these ideas were first put forward, when the independent Commonwealth countries were confined to very few, and Britain was solely responsible for all the Colonial Empire, such a plan was found to be impracticable and unacceptable. Far more so today.

The Commonwealth cannot be a single economic unit in the sense of any other trading community like, let us say, the United States or the Common Market. It is not only the mere separation by distance; this could be overcome. It is quite a different sort of obstacle. The different stages of industrial development, and the different sorts of trade which meet the needs of individual Commonwealth countries, make it impossible for them all to be unified with us in a free trade area.

Some have very high tariffs, some very low. Some are at the beginning of their industrialisation, some are far advanced. Some are determined to protect—as they have the perfect right to do—their nascent industries with high protective tariffs, and would not for a moment accept what they would call being flooded by cheaper products from Britain. This is true of Australia, Canada and, to some extent of New Zealand.

That is not to say that trade between Britain and the Commonwealth countries cannot be extended. It must be. It is only to say that a uniform system cannot be applied between the Commonwealth countries because of those variations which, on the political and moral side, represent the strength of the Commonwealth. This is an attitude which is shared by all the Commonwealth countries. It means, therefore, that neither an immediate Commonwealth Prime Ministers' conference, nor any other conference, could devise, either in their interests or in ours, a substitute for what we had hoped to obtain, for us and for them, from Europe. It is for this reason that it does not seem right at this stage to suggest a Commonwealth Prime Ministers' conference.

This view is shared by Mr. Menzies and Mr. Holyoake, and I think that it would be accepted by most of the Commonwealth Prime Ministers. What we must do in the Commonwealth falls into two categories: first, individual consultation where special arrangements are under review, or there are trade agreements to be made or renewed; secondly, general consultation for any problem in which we can play a joint part. With regard to the first, I shall have an opportunity to see the Prime Minister of Canada at the end of this month and I hope that Mr. Menzies, and Mr. Holyoake will be able to come over soon.

As regards the second, that is where we could have a co-operative approach, there is a special field in which we could work together and that is the approach to some of the problems presented by the various world agreements. The main hope which we now have in this field is in making effective the so-called Kennedy Round. We hope that this can soon begin. We have, therefore, proposed a meeting of Commonwealth Trade Ministers shortly before the time of the coming ministerial session of G.A.T.T. It is hoped that the G.A.T.T. session will take place in the early summer.

We have suggested that this Commonwealth meeting should be held in London and it will provide an opportunity not only for discussing questions in relation to the Kennedy Round, where we can all, I hope, get together, but other economic matters of common interest. I have sent those messages and so far as I have seen the replies there seems to be general hope that such a conference may meet. In addition, this conference will enable us to carry on discussions and negotiations on an individual or bilateral basis. I hope that we shall be able to arrange this conference. It is, of course, in line with the recent statement of Mr. Diefenbaker in the Canadian Parliament and, I think, with the thinking of all the Commonwealth Prime Ministers.

We in Britain are prepared to play our part fully in reducing our own tariffs if we can get comparable benefits for our export markets. As exporters our main interests are in the field of industrial products. The Kennedy Round will be concerned not only with the duties of industrial products, but also, we hope, with trade and agricultural products of no less interest to the Commonwealth.

International trade in temperate agricultural products is at present affected not only by tariffs, but also by a variety of protective devices which are themselves the reflection of various policies of protecting or subsidising domestic producers in both exporting and importing coun- tries. These policies, combined with technical advances in all the producing countries, have aggravated the problems of the trade in temperate agricultural foodstuffs.

In our new situation we have, of course, to be particularly careful from the balance of payments point of view and conscious of the economic disadvantages of uncompensated price increases. This turns upon the degree of compensation in the negotiations. Also important are the obstacles to trade of less-developed countries, and, here again, it is not merely a question of tariffs but also a question of quantitative restrictions and revenue duties which inhibit the growth of trade not only in primary tropical products, but also in manufactured goods.

Commodity agreements to avoid excessive price fluctuations are, as we all know, a great hope which we had, and still have, for benefiting the economies of these countries. Since the war we have worked for international agreements on particular commodities—wheat, sugar, coffee, tin and now, we hope, the cocoa agreement will be completed. The Kennedy Round will be of crucial importance. We must work with enthusiasm to make it succeed. This means good will, as well as skilful negotiation. The United States, the Community and, indeed, all countries will have to accept, in spite of all internal pressures, the reduction of tariffs on a wide basis, if we are to succeed.

Turning to E.F.T.A., there is to be a Council meeting on 18th February, and the House will not expect me to go into detail. As the House knows, E.F.T.A. has two broad purposes. It already offers a wide area of reduced tariffs among an important grouping of trading nations. Beyond this, we have always seen it as a step towards a fully integrated European market. These objects are not inconsistent. In practice, the E.F.T.A. countries have pursued them simultaneously.

Let us look first at the broader objective. A fully integrated European market could be attained in one of two ways, either by the establishment of a free trade area embracing the countries of E.E.C. and E.F.T.A., or by the negotiation by the individual member countries of E.F.T.A. of arrangements for membership of the Community or association with it.

So far, these efforts have proved abortive, in 1957 and 1958, as the House knows, because of the exclusion of agriculture, and now because of the breakdown of the Brussels conference. Nevertheless, the E.F.T.A. countries will seek to extend their trade and develop their association together on the lines provided in the Stockholm Convention. At the same time, they will no doubt seek to increase their exports to the countries of the Community as well as to other countries. We must, by all practical means within our power, preserve and strengthen the fabric of European trade until such a time as the obstacles preventing the establishment of a market, fully integrated, are removed and in this task the support of our E.F.T.A. partners will be of the greatest value.

I should like to say something, if the House will bear with me, about another of the problems which we have been discussing so much in recent months—that of home agriculture. Everyone will realise that this part of the Treaty of Rome presented great difficulties, both as regards our problems here at home and, of course, those of the old Commonwealth countries. It is no good discussing now the details of various approaches which either had been agreed or might have been agreed to resolve them. Nevertheless, the problem remains as regards our own country.

I think that the whole agricultural community recognises that whatever may be the different views about the so-called managed market, towards which we could have worked had we joined the Six, the present system of open-ended subsidy on a number of items, combined with free entry often at far lower prices, has serious drawbacks.

We must try to cure these defects without losing sight of our main purpose—a fair standard of living for the agricultural community, a strong and prosperous agricultural industry, and also, may I add, one which is ail the time improving its methods both as to production and as to distribution. The record of the industry since the war is, indeed, remarkable. Improved agricultural techniques and the considerable inflow of capital into agriculture have, of course, benefited the industry and they have also been the foundation of one of the best of all our exports—the agricultural machinery industry.

However, it is the object that matters, and the methods must be looked at, of course, from time to time. The mere fact that the Common Market negotiations have failed does not relieve us of this responsibility or the need to fit our agricultural policy into overseas trading arrangements. We have been saying for some time now—my right hon. Friend the Minister of Agriculture has said it on many occasions—that, whether we join the Common Market or not, some changes in our support system are inevitable. The amount of agricultural support, particularly the Exchequer's open-ended commitment, must be brought under greater control.

My right hon. Friend the Minister will be ready, beginning at this year's Price Review and continuing thereafter, to discuss with agricultural representatives what can be done, in the full spirit of our pledges, to work out new and constructive ideas. Many of these steps will, of course, involve special consultation and special agreements with our overseas suppliers, including the Commonwealth countries.

Turning to the effect of the breakdown of Brussels upon the general British economy—

Mr. John Morris (Aberavon) rose—

The Prime Minister

I have a great deal to say and would prefer not to give way at this point.

Turning to the general effect of the Brussels breakdown upon our British economy, I know that some economists have differed as to the value which we should obtain or would have obtained by entering the Common Market. Nevertheless, I think that most economists, and certainly the mass of business opinion in this country, had no doubt about the balance of advantage. Some feared certain pressures upon the balance of payments which might develop from an increase in the cost of food imports. Others feared a corresponding increase in the cost of British industrial products. But, broadly speaking, the great majority were looking forward eagerly and enthusiastically to this new adventure.

We shall not now obtain automatically the larger market for which we had hoped. At least, we shall not obtain it on the favourable terms for which we had hoped. But that certainly does not mean that we cannot win it by our own efforts. Our sales to Europe have shown very remarkable increases, and that in spite of the tariff. We have already leapt over the wall and if, as we hope, the collective decision of the Six keeps the tariff reasonably low, then it should not be more insurmountable than in the past. But it will be there, and we must, therefore, face that fact and try to reduce our internal costs by all possible means.

We must enlarge our own home market by all the measures of expansion which can increase consumer demand without undue pressure upon imports. I will not embark today on the great economic problem of how to expand without inflation—[HON. MEMBERS: "Oh"]—but, whatever may be the views of hon. Members, there is, undoubtedly accepted by all serious students, one vital condition for a lasting solution. That is to adopt in principle and make effective in practice a reasonable incomes policy. At any rate, we must now try to increase consumer demand as the basis for the export demand.

We shall have to do it in conditions where we shall not have the competitive stimulus of European exports into this country which the open, free competition would have provided, and we must, therefore, provide the stimulus ourselves. This can be done partly by modernising the structure of industry and partly by encouraging a general climate of competition at home. In addition, it is becoming more and more recognised that the old concept of every man starting in one industry and spending his whole life in the same industry may have to be changed as industries and techniques change—

Mr. E. Shinwell (Easington)

It is changing.

The Prime Minister

It has changed and is changing and this brings the need for plans based on a wide scale to deal with the need for workers to move from one industry to another. My right hon. Friend the Minister of Labour has already made certain proposals for industrial retraining. This is only a start and I believe that we shall be able to develop wider schemes especially in those areas where some radical changes must be faced in the character of industry.

But success or failure will depend more than ever on the future of British exports. On the whole, at present British prices compare not unfavourably with the general European level. If we can expand at home without destroying this equilibrium, our exports should have a fine chance of going across the tariff barriers, wherever they may be, in the Six, or the United States, or in the Commonwealth, or indeed, in any other country in the world. Since we now have to carry rather more burdens than we expected, at least in Europe more than we had hoped for, we must not handicap ourselves unduly in the future.

It is natural that in the present situation we should look again at the whole question of export incentives. I must warn the House that this is a very difficult and complicated matter. So far as direct subsidies are concerned, we have spent a long time trying to get agreements between the main trading nations against export subsidies in any form and in this we have been remarkably successful. Since we depend so much more heavily on exports than do others, it is clearly in our interests to maintain and strengthen this policy.

The same is broadly true of tax relief. Nevertheless, it may be possible to find methods of helping exporters which do not conflict with the undertakings into which we have entered and done so much to persuade other countries to accept. Meanwhile, we have made a tremendous improvement, even during the last eighteen months or so, in the flexibility of our export credits system. What has been done is shown by the volume of orders obtained by British firms with the support of the export credits system. By 1959, they were running at over £600 million. By 1962, they had risen to nearly £900 million.

Of course, our export drive must be made from a sound internal base. Tremendous changes have been brought about by technical development. This has involved a shrinking of some industries and an overall expansion of new industry. Nevertheless, it would be a mistake to suppose that the older industries have no prospects before them. Apart from other measures which may be taken, great improvements have been made by the best-organised shipbuilding firms and there are signs of much better co-operation between employers and trade unions and, what is equally important, between the trade unions themselves.

There are also quite new techniques just ahead of us. The House has taken much interest in the prospect of a nuclear merchant ship. We have always been anxious, not merely to build a nuclear engine which could propel a ship—that, of course, can easily be done —but the Atomic Energy Authority and its experts have been concentrating on how to get a nuclear reactor which is economically attractive. We are now getting 'very near to this point. My right hon. Friend the Minister of Transport will very soon be discussing with all those concerned the arrangements for the construction, ownership and operation of such a vessel.

To sum up on the economic side. First, we have proposed a conference of Commonwealth Trade Ministers. Secondly, we shall work for close co-operation with the Commonwealth, the United States, E.F.T.A. and we hope the Six, for the Kennedy Round. Next we shall maintain our E.F.T.A. association. We shall work for world commodity agreements. At home we shall work for an expanding economy, without inflation, based upon an incomes policy.

Finally, we will accept and encourage changes in the technique and structure of industry while paying particular attention to areas of temporary unemployment. If the breakdown of this long negotiation is a serious set-hack, it is one which, as so often before in our history, we are confident we shall be able to overcome.

Mr. Harold Davies (Leek)

I am grateful to the Prime Minister for giving way. From this plan for the expansion of trade, on which hon. Members on both side of the House will agree, I have noticed one omission. That is a reference to the economies of Africa, Asia, China, Eastern Europe and the rest of the Communist world, which are expanding whether we like it or not. What plans have the Government for a new and dynamic approach to these new countries, which have awakening expectations? We have heard not a word about that.

The Prime Minister

The discussions which I have called the Kennedy Round are among the members of the G.A.T.T. We have tried to do, and have also done, a great deal to expand our trade with various Communist countries which do not trade in our way but trade by barter agreement—Poland, Russia and, to some extent, China—and that, where possible, we shall continue.

I now turn to a consideration of some of the political conclusions which one might draw from what has happened. We do not need, in my view, at any rate, to reproach ourselves about the manner in which the present phase closed. It is the end of a chapter, though not, in my view, necessarily the end of the whole volume. The negotiations did not break down, as they might have done, on a long-drawn-out series of detailed bargains.

If the European vision has been obscured, it has not been by a minor obstruction on one side or the other. It was brought to an end by a dramatic, if somewhat brutal, stroke of policy. As I said in my broadcast the next day, the end did not come because the discussions were menaced with failure. On the contrary, it was because they threatened to succeed. That the French Government, in their hearts, had long feared success I do not now doubt, but I had always hoped that they might be animated by two considerations: first, by the underlying good will that undoubtedly links France and Britain. This friendship is very deep between our peoples, and the links have been forced in the purging fire of war, twice in my lifetime, during terrible years when Britain and France suffered side by side.

Secondly, I had hoped that the French Government would be unwilling to place themselves in the public position of opposing the will of all their colleagues in the Community and, indeed, of disappointing the hopes of every country in the free world. Of course, they may have hoped that the responsibility for this decision would not have to be placed upon their shoulders. They may have felt that the British Government would not be able to carry their policy forward, either through their party or through the assent of the Commonwealth, or through the House of Commons. But when these expectations began to fail the head of the French Government decided to act.

Even so, there was some confusion in the method. So many different reasons were given for Britain's exclusion—that she is an island; that our people were not sufficiently European-minded; that we do not accept the Treaty of Rome—a statement wholly incorrect; that the Nassau Agreement on Polaris was a sudden and unexpected blow—equally incorrect. It was clear that none of these reasons was the real one.

It was common knowledge that the whole French Government had every expectation that the negotiations would be carried through successfully. M. Pompidou, the French Prime Minister, was reported in the French Press as having told a group of journalists as late as 11 th January—that is, three days before the matter was brought to a sudden close—that France desired to see Great Britain join the Six and accede to the Common Market. Other French Ministers had given us similiar assurances in private discussions at much the same time.

The French Government have taken their decision and it would be wrong to ignore the division of purpose which has grown up between us—for a time, at any rate. Of course we wish to continue close relations with France, but it is right that it should be clearly understood that we will do all we can to secure that the Community develops liberal and outward-looking policies and that we shall sustain the efforts and determination of our friends in the Community to work to this end. We have, therefore, to bear in mind the loyalty that we owe to the other nations of Europe which have stood so firmly by us and on whose continued strength of purpose the hope of Europe must now largely depend.

I ought perhaps to refer to the decision to advise Her Royal Highness Princess Margaret to cancel her forthcoming visit to Paris. We here at home are so used to our Head of State and the Royal Family standing scrupulously aloof from day-to-day political affairs that we tend to forget that abroad other considerations obtain. There is no doubt that foreign countries regard royal visits as having a political significance, and, indeed, it is natural that they should. Although this particular visit was, in the main, of an unofficial nature, it was bound, in the circumstances, to assume a semi-official character. [HON. MEMBERS: "Oh"] So soon after recent events a Royal visit and entertainment at the Elysee seemed hardly timely just at this moment. Apart from any question of possible embarrassment—

Mr. Frank Bowles (Nuneaton)

On a point of order. Is it in order for the Prime Minister or any other hon. Member to bring the Royal family in to support an argument?

Mr. Speaker

It is quite in order to discuss the reasons for the decision, for which apparently the Government are accepting responsibility, in that it was taken on their advice. I do not think that the Prime Minister has done anything more than was necessary for that purpose, as far as I have heard at present.

The Prime Minister

Apart from any question of possible embarrassment, such an occasion must have been given a significance which would have been misunderstood, both in France and in the countries of Europe. Now that the entry of Britain into Europe has been barred by a decision of principle, a decision which, I think, in all common fairness, might have been taken long ago, not after fourteen months of negotiation—

Mr. Harold Wilson (Huyton)

We shall deal later with the petty and peevish decision to cancel the Royal visit. Will the Prime Minister, now that he has said that the reason was the political effects of such a visit, kindly tell the House why the Government put out the statement last week that it had nothing to do with that and was a question of maintaining an adequate number of Counsellors of State in this country?

The Prime Minister

I think that it was in full accordance with diplomatic courtesies and usages to use that form of words.

We have now been barred by a decision which I think in fairness might have been taken fourteen months ago. We cannot hide from ourselves, therefore, that a situation has arisen more serious and with deeper implications than the mere breakdown of an economic plan. It would be wrong not to express frankly to the House and to the country some of the apprehensions which we feel. There have always been two ways of looking at European unity.

There are those who felt that the continental countries, which were so battered by the war, should get together primarily with a view to their reconstruction, and that was natural. It is true that, had it not been for the generous American aid under the Marshall Plan, all these ambitions would have come to nothing or been much delayed; but by the help of the allies in their policies towards the defeated countries—for instance, in the constitution of Federal Germany and, as I have said, by generous outside aid—the first emphasis was, naturally, upon internal reconstruction.

On the Continent, the founders of the European movement were, among many other distinguished men, Dr. Adenauer, Signor de Gasperi, M. Schuman, M. Spaak, M. Monnet, and many others. Nor did Britain stand apart. The British Foreign Secretary of the day, Mr. Bevin, gave every help, including the signature of the Brussels Treaty. My right hon. Friend the Member for Woodford (Sir W. Churchill) took himself a leading rôle in the movement and played a dramatic part.

At the beginning, Europeans were, naturally, in a sense obsessed by their own problems. For many years France depended upon outside aid and her adverse balance of payments had to be supported by monetary arrangements with her partners in the European Payments Union. Her technical and industrial recovery and reconstruction were largely due to the work of M. Monnet and his team.

As Europe's revival began to succeed, the European outlook began to widen. There were some—there are some—who have kept the narrow view, who still seem to regard a united Europe as a restricted or autarchic community on a protectionist basis; in other words, they would like a community which would retain all the errors of high protectionism which had often been the policy of some of the constituent nations. That is not the vision of the European movement as a whole. It is not, happily, the view of the five countries which have stood so loyally by our side. It is certainly not our view. It is not the view of our E.F.T.A. partners. It is not the view of the older Commonwealth countries. And it is certainly wholly contrary to the interests of the younger Commonwealth countries. In spite of the long tradition of protectionism in the United States, it is not the view of the American Administration and the forward-looking people of the United States. This narrower concept is, therefore, in a true sense a reactionary view.

One of the main reasons why there was such universal support for our entry was the belief of our friends, as well as many of our critics, that Britain, added to this company, would give as well as take, that she would contribute to the tradition of outward-looking development. If the French Government object to us as an island, it is also as an island that we bring this rich heritage to the world.

So much for what I would call the economic philosophy. I am convinced that in spite of the disappointments, which none of us can conceal, what we have done in the last years is not and will not be in vain. There is, as a result of these negotiations, a far greater understanding between European countries, certainly between the Five and ourselves. There is, as a result of the day-to-day contact with the Commonwealth countries, a more accurate and a more balanced view of the economic possibilities, both the difficulties and the prospects. The same is true of the E.F.T.A. countries. All this is good and, at least, some compensation.

Here, I think, it would be right to pay a tribute to the German, Italian, Dutch, Belgian and Luxembourg Ministers, who worked so hard and so persistently and were frustrated by the veto and by nothing else. As a result of this experience, there is, I believe, a greater degree of understanding and sympathy than ever before. I found it so in Rome when I was there the other day. I believe that German opinion has never been so universally on our side in this matter as it is today, and here, perhaps, I may be allowed to make a plea for the future.

It is natural that there should be lingering in our country a certain reserve—the memories of two wars are not lightly wiped out—but the German people are also sensitive over this, and in my view great harm can be done by ungenerous attitudes, whether in the Press or among any of us. Curiously enough, I have observed that this feeling is often strongest amongst people who have taken the least active part in these great struggles.

I remember very well the doubt expressed when a German regiment was coming over for training in Wales. In fact, it was received, as might have been forseen, by ordinary people with good will and friendship. The truth is that just as good Anglo-French relations and a close co-operation between us and the people of France are fervently desired here, we also recognise that the fruitful development of Anglo-German relations should be one of the props on which the unity of Europe must depend.

With the peoples of the Benelux countries we have long and historic links, and the memory of troubles shared is poignant and strong. They were particularly anxious for Britain to join, and to join in time. This was not merely because of our mutual friendship, but because it corresponds to what throughout history has been their deepest interest.

Why have the Five Powers shown such anxiety and such emotion? Partly, perhaps, because of their genuine sympathy and wish to work in with Britain; partly because they share our economic and political point of view about the future of Europe, and, therefore, thought that the Community would be strengthened by our adhesion. But there are other anxieties, and deeper anxieties, in the political field that also trouble them. First, there is the suspicion that one of their partners wants to unite Europe on a sham basis. They and we have had enough of this idea that Europe could be united by a single nation or a single man, not on a basis of agreement, partnership or co-operation, but on a basis of power.

At present, European institutions—and, indeed, all the institutions we have created—depend in their early stages on unanimity, although later on, in many respects, a different system of voting is developed. At present, the strength of the French Government's position depends on the veto—the principle that one black ball excludes. So, in negotiations undertaken by the Community, whether at G.A.T.T. or elsewhere, there is a dan- ger that the position of stalemate may be repeated.

Another aspect of French policy has equally alarmed the old world and the new—the tendency to treat the N.A.T.O. Alliance with a certain selectiveness, to say the least. Of course, during the great difficulties of France and Algeria, which are happily dealt with, everyone understood that, but now there have been very many other cases. France's refusal to let her navy play any part in N.A.T.O. plans and, still more important, in a way, her refusal to join in N.A.T.O.'s air defence arrangements, has left a serious gap in that system.

As I say, some of these aspects of French policy we can understand, but they are continuing, and they may develop. It is, therefore, inevitable that people are beginning to wonder whether these are not indications of a policy which, if it were pursued, would bring the whole Western Alliance into great jeopardy, if not collapse.

In the great balance of actual power today we all know that the nuclear strength of America is and must remain essential, but a common alliance must be based on mutual respect. Naturally, 'the great countries of the old world which, at different periods of their history, have held unique or commanding positions, sometimes suffer from a certain nostalgia. As regards our own country, it is a sentiment certainly inapplicable today as, indeed, it was in most of the most inspiring periods of our history. But this feeling represents what is really a weakness and not a strength of human nature. It is curiously similar, this jealousy—for it is only that—to that emotion which makes many people more able to forget an injury than to forgive a benefit.

I do not want to exaggerate these tendencies, but it is because of them that we in this country must do all we can to range ourselves and the influence we have on the right side. We have, partly as the result of the outcome of Brussels, partly because of the growing anxiety in Europe, the great majority of the countries of Europe in one way or another ranged on our side in this matter. These anxieties do not merely affect this island, or Europe, or even the whole of the N.A.T.O. Alliance.

For the European nations, whether in or out of N.A.T.O., and those on the periphery—above all, the Scandinavians —anything that threatens the Western Alliance, and particularly its organisation in N.A.T.O., must be a source of deep alarm. No countries have more reason to fear than these should there be an agonising reappraisal of the American position. No countries have more to lose should America, under any Administration, be almost forced into isolation by the slighting attitude of Europe and European statesmen.

With regard to the old Commonwealth countries, Canada has a leading and powerful rôle in N.A.T.O. Australia and New Zealand, however great the contribution they are able to make to their defence, must, in fact, depend for their safety on the co-operation between Britain and America—and indeed, these two countries have entered into their own alliance with the United States.

These assets are fundamental and we shall try by all means to keep them alive and thus to rally European opinion for the future. I do not mean that we look forward to an early resumption of these particular negotiations for Britain's entry into the Community. That is impossible. This is not a kind of business deal that, if it fails one week, can be taken up the next. It is, for good or ill, a great historic event. It cannot be disregarded, but its importance and, perhaps, its permanence, must not be exaggerated. While it would be absurd not to recognise with our heads that Britain's entry is not now capable of early realisation, we should surely strive to keep the vision in our hearts.

These, then, are the major lessons to be learned from what has happened in the political field, but until the day comes—and we pray that it may come some day —when the great gulf between East and West can be bridged, the fundamental principle of our policy must be summed up in a single phrase, "On the strength and unity of the Western Alliance depends the peace of the world".

4.30 p.m.

Mr. Harold Wilson (Huyton)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: has no confidence in the ability of Her Majesty's Government to formulate or to carry through a programme which would bring about the necessary changes in our policies for international trade and for economic and political co-operation; and does not believe that it has the capacity to arouse in Great Britain the sense of urgency and national purpose so necessary to meet the situation created by the breakdown in the negotiations in Brussels". No words of mine could be more eloquent in support of that Amendment than the speech which we have just heard.

I do not intend to spend a lot of time on it, but what does the Prime Minister think that he has achieved by that speech? He got a lot off his chest about President de Gaulle. We understand that, but the speech did not provide a breath of justification for his policies over the past eighteen months and gave no indication of a Government with either the ideas or the capacity to chart a course out of this Sargasso sea in which they have found themselves becalmed. Looking for any positive policies and for any inspiration, the nation, when it comes to study his speech, will find nothing but defeatism, a certain amount of peevishness, and a complete policy vacuum.

There were one or two parts of the right hon. Gentleman's speech which I think the House will have found interesting. There was his appeal on behalf of an understanding for Dr. Adenauer. I find it hard to give the right hon. Gentleman the support for which he asks in that direction. We have read Dr. Adenauer's speech this weekend. He does not want us in because he calculates, rightly, that at the next General Election this country will go Socialist. Hon. Gentlemen opposite, with no confidence in their own ability to stop it, now look to Europe to stop it. Dr. Adenauer went on to say, and on this occasion he was wrong, that at the next election this country will go neutralist. We shall not.

I was moved also by the right hon. Gentleman's reference to Commonwealth trade. Quite early in his speech he said that during the last eighteen months the Government have studied with greater care than ever before these problems of Commonwealth trade. What were they doing for the ten years before that? No doubt during those eighteen months they were studying Commonwealth trade with great care, but for what purpose? For the purpose of entering into agreements that would have destroyed a great part of it. There was plenty of care. Oh, yes! It was the same care with which an intending burglar studies a house. I think that it is called "casing the joint".

At any rate, I will say for the right hon. Gentleman that this afternoon he did not try, as in his broadcast, to evoke a Dunkirk spirit. I am glad that he did not, because it does not lie in his mouth, the man who fought the last General Election on a materialist Never had it so good" philosophy, the man who has preached the doctrine and whose Government have encouraged other people to follow the precepts of an "I'm all right, Jack "philosophy. In any case, I should remind the right hon. Gentleman, although I am sure that he does not need reminding, that the success of the Dunkirk appeal from the right hon. Gentleman the Member for Woodford (Sir W. Churchill) was due to the fact that that right hon. Gentleman had no responsibility for the state of affairs that had led up to Dunkirk.

There is, at any rate, one central theme which was clear again this afternoon and which is already passing into the corpus of Conservative mythology. This is the idea that the Government were within an ace of achieving a satisfactory agreement only to find the prize snatched from their grasp by an intransigent Frenchman. Let this myth be nailed once and for all. Even ignoring the long list of unsolved problems—from the Commonwealth Sugar Agreement to New Zealand butter, the association of Commonwealth African countries, the price level for food and agricultural prices, transitional provisions for British agriculture and, still more important, a permanent settlement for British agriculture; quite apart from all these unsolved issues, the fact is that the terms which have been negotiated, the accumulated totality of vital national and Commonwealth interests already surrendered by the Government, already constituted a national humiliation.

We on this side of the House had laid down a series of broad conditions and detailed requirements which we felt must be met if this country could reasonably be asked to enter into the Community. We were agreed on them and we believe that the country supported them. Again, I ask the House now: where was the greater realism to be found and the greater sense of national interest shown— in Brighton, or in Llandudno? When we debated the state of the negotiations and the outcome of the Commonwealth Prime Ministers' Conference in the two-day debate on 7th and 8th November, we moved an Amendment saying flatly that the terms obtained up to that time were not acceptable. Since that time, there have been unacceptable concessions on agriculture, on net tariffs, and a total collapse of what should have been our position on voting rights and on the extent of the veto. We therefore utterly reject this account of a satisfactory agreement sabotaged by President de Gaulle.

The right hon. Gentleman spent a lot of time on President de Gaulle. What we should have liked from him would have been more information on his meetings with the French President. It would have been interesting if the veil could have been lifted on the tête-à-tête at the Chateau de Champs and at Rambouillet. Last May we warned the right hon. Gentleman against throwing a cloak of respectability over President de Gaulle's nuclear ambitions in return for help in b gettina into the Market. No one—not even the Prime Minister—can now be in any doubt about what the French nuclear go-it-alone, do-it-yourself policy means either for the unity of the Western Alliance or for worldwide hopes of preventing the spread of nuclear weapons. But it is now becoming very clear from President de Gaulle's disclosures last week that the Prime Minister last year not only condoned French nuclear plans, but encouraged them.

When the right hon. Gentleman, to the defence debate a fortnight ago, spoke of fighting a General Election on the line that Labour's policy would mean that France would be the only nuclear Power in Europe, and when the Leader of the House dutifully took up the call in a speech in East Anglia, and when, no doubt, the printing presses at the Tory Central Office are already grinding out propaganda material on this theme—we can trust the Leader of the House to see to that—do not hon. Members apposite ask themselves who, above all others in the alliance, were responsible for encouraging France in becoming an independent nuclear Power? They have only to look at President de Gaulle's comment on that to find the answer.

What is much more important now than who was responsible for the breakdown is the total failure of the Government to produce any plans for the future. All we have been able to deduce from the Prime Minister's speeches and actions since Brussels is that the only concrete reaction, the one dramatic piece of policy following the new situation, is the petulant cancellation of a Royal visit to Paris. When I interrupted the Prime Minister to ask him about the misleading statements which have been put out, he said that it was in accordance with the usual diplomatic courtesies to tell lies.

If that is his idea of diplomatic courtesies, it is about time that someone else was in charge of diplomatic courtesies. At any rate, I will say this for the right hon. Gentleman. We are quite used to getting two accounts put out by the Government. We usually get the true one given to the Press and a false one given in the House. What we have had this time is a false one given to the Press and the true one given in the House.

This highlights how serious the situation is, for we have had from the Prime Minister no plan and no proposal either in the world economic field or in any measures at home to reassure our sense of national purpose in domestic economic policy. Why? Why is it that no preparations were made long in advance of the possibility of the Brussels negotiations breaking down? It was certainly not for want of advice. In every debate on the Common Market that we have had my hon. Friends and I have stressed the need to prepare alternative policies: first, to strengthen the Government's hand in the talks—because negotiations without a credible alternative are liable to lead to unconditional surrender—and, secondly, simply as a measure of prudence, to prepare for the situation which would arise if the negotiations broke down—the situation with which we are now faced.

I will not worry the House by repeating the warnings, proposals and alternative policies we put forward in debate after debate. If any hon. Member doubts that we did so, I can give him a full list of references—from HANSARD, articles and speeches in the country—which will indicate exactly what the Government were told. But the Government—the Prime Minister and his right hon. Friends —were so convinced that we had no alternative but to go into Europe that our warnings went unheeded.

We remember the Foreign Secretary asking in another place, on 22nd June, whether we could afford to stay out, with only one answer in mind. We can remember speech after speech which the Prime Minister made and that broadcast of his last September in which he wondered what would happen if we did not go in but stood outside. We should not be able to develop our true strength, he said, or be able to compete in a world of giants.

Does the right hon. Gentleman accept that as a true description of the position in which we find ourselves now? In that broadcast the right hon. Gentleman went on to discuss the economic reasons for our going in and he described the products which British industry was capable of producing. Would we be able to sell those goods either to the Europeans in the Common Market area or outside in other markets in the world against competition? How would we sell them in the home market which is only a quarter the size of theirs? That was his argument in September. Really, have we now no hope of selling them? The right hon. Gentleman, in that broadcast speech, said: I know that there are some people, however, who talk as if there was an alternative system to the Common Market. and, in the rest of his broadcast, he went on to prove how foolish and shortsighted they were.

Then we had the pamphlet issued to the nation, or Conservative conference, a week before Llandudno, a somewhat undignified proceeding, one would have thought, for the Prime Minister. It contained one idea: that if we did not go in, we were finished. No wonder the Prime Minister was so defeatist this afternoon if that is what he really thinks. What has collapsed is not only the Common Market talks, but the whole system of Government policies based on them. From July, 1961, onwards the whole complex of economic, trade, defence and international policies revolved around entry into Europe. It was meant not only as an electoral ploy—and the Prime Minister made no secret of that—but an economic solvent as well, to call Europe into existence to redress the balance in British industry, to enforce the pay pause, to solve the industrial problems which the Government had failed to solve—and so, with the breakdown, the whole edifice of Government policy collapsed.

I do not intend to say much more about the Government's record over the last eighteen months. It would be easy for me to go on, and, I must confess, it would be tempting to go on, but where the Government have so manifestly failed leads my right hon. and hon. Friends and I to accept that we not only have a right but a duty to say what we believe should now be done. What we are putting forward we are not going to call an "alternative". Much of it—such as the need for more dynamic policies at home—has been, and would have been, equally necessary whether or not we entered Europe. Again, the same applies to world commodity agreements. These would have been necessary irrespective of whether or not we joined the Common Market.

What we are really discussing today is not a packaged alternative to the Common Market, but a plan for the future of Britain in world trade and economic affairs. To approach this we must get the facts clear. First, the Prime Minister was a little nostalgic as to whether or not the talks were on or off. They are off. We had better understand that. While we are not slamming the door to proposals to advance European unity—indeed, we do not rule out the possibility of further proposals on this—we must understand, agree and resolve that we cannot hang around in European antechambers for a further period of months or years in the hope that the Brussels temperature will become warmer.

We certainly do not rule out the possibility of further negotiations in Europe at the right time and under the right auspices. [HoN. MEMBERS:"Oh?"] Hon. Members opposite should be a little more patient. I intend to say what they are. In any further negotiations in Europe we cannot again allow ourselves to get into the posture of suppliants. It was in that posture that the Six regarded us, even if we did not so regard ourselves. If at any future time we enter negotiations in Europe we must not start from the catalogue of concessions granted by the Lord Privy Seal which, we felt, went far beyond any authority granted by the House of Commons, and which, in our view, would have been rejected by the country.

Secondly, we must get clear which markets are and which are not affected by the breakdown in Brussels. The markets of the Six? Yes, undoubtedly these are affected, though we are selling there today and we are selling in the United States, despite a considerable domestic tariff. The Commonwealth? Our trade with the Commonwealth has received a merciful reprieve. Harm has been done—great harm, in our view—not only by the clear willingness of Ministers to sacrifice their interests to the scramble to get into Europe but, no less, by the whole manipulation of the Commonwealth Prime Ministers' conference, the calculated leaks by Brutish Ministers to the Press—and the guiltiest of the lot, the Secretary of State for Commonwealth Relations, whom, I see, making notes—designed to isolate and, even on occasions, to discredit individual Commonwealth leaders. The whole sorry history of this was given in the debate on 7th November last by Hugh Gaitskell and has never been answered or denied by the Government.

Because of this we certainly need a new Commonwealth Prime Ministers' conference to restore confidence, but we must ask whether the Government have not gone too far now to have any hope of success. Nevertheless, there is good will in the Commonwealth countries despite all this. Despite the efforts of our export, and apart from the fact that some Commonwealth countries have already redeployed their trading arrangements because of what they thought we were going to do in Europe, the markets are there.

The dollar areas? Our trade with them is unaffected completely by the breakdown. E.F.T.A? Our links there remain and, as I think the Prime Minister tried to indicate, these links can and should be strengthened—certainly until something better comes along. The third countries? From Latin America to the Far East these markets are unaffected for our exports. Eastern Europe—EastWest trade—remains open to us.

Indeed, we have escaped a twofold danger which was presented in the talks, as we warned: first, adoption of a common European trade policy, which would have limited our freedom to complete trade agreements with Eastern Europe; and, secondly, the effect of the Market's agricultural policy of placing penal import levies on agricultural imports from Eastern Europe, which would have prevented those countries from buying engineer mg and chemical plant from us.

There is scope for East-West trade, and we are now free to develop it. While not exaggerating the prospects—the House will recognise both the possibilities and the limitations—we can now achieve a substantial increase above all in those products of heavy industries where orders are so urgently needed to get back to full employment in our northern industrial areas. Nothing would be further from the truth than for the idea to get about that our export trade is finished or that we face an inevitable decline. We do not. The upward trend of our exports is, as it always was, a matter uniquely depend-dent on our own endeavours.

One thing further is that we no longer face, as some of us felt we faced with the concessions which the Government had made, a choice between the Commonwealth and Europe. Nor are we faced with a choice between Western Europe and some of our partners in E.F.T.A. There is no ground for defeatism provided that we seize the opportunities presented to us.

What about the political position in Europe? The position here is undoubtedly more sombre. Our task, avoiding all bitterness and recrimination, is to ensure that existing political relations, and, in particular, the Western Alliance, are not further endangered.

What, then, are we to do? I begin with Europe. Our European initiative should be on the basis of an area of Europe wider than the Community, wider than the Six. The Six, E.F.T.A. and we in any such initiative should leave the door open for other countries, such as Yugoslavia. We shall make more progress, whether in economic or political co-operation, the less we aim at federal or supranational solutions, the more we work within an inter-governmental framework.

In our view, O.E.C.D. provides an adequate forum for this. We should take the initiative in O.E.C.D., making clear our willingness to discuss any proposition which covers the whole European area of O.E.C.D. The position is obviously too fluid to have any hard and fast plans about what is to be done, but we ought not to rule out an idea which was put forward from this Box four years ago —the idea one day of a free trade area in which the Six would join as one integrated country.

The main reason for the failure of the Maudling Committee was the feeling of the Six that we were working in the hope of destroying the unity and integrity of the Six. Readiness to accept the Six as an integrated unit might create a new and more favourable climate—I do not know, but it is worth trying and it is better than sitting down and criticising what President de Gaulle has done.

We should be quite ready, too, to examine any French proposal, if such there be, for an industrial free trade area. I do not know what gold backing there is to this proposal and there would certainly be difficulties about an industrial free trade area—Denmark is one. However, I thought that the Lord Privy Seal rejected the idea rather too hastily. It was a fortnight ago and we could understand his feelings at the time —heaven knows that we could understand them—and I certainly would not have excessive hopes that this would be a satisfactory solution.

But at any rate let us keep an open mind and, if they are willing to talk about an industrial free trade area, let us have a look at it, provided only that we are not to be kept hanging around again and provided only that such discussions do not exclude action on all the other fronts, including the Commonwealth and including the Atlantic area, with which I shall be dealing.

On the political side in Europe, so far as the alliance is concerned, we must base our stand fairly and squarely on N.A.T.O. Cynicism and bitterness about the recent French action must not be allowed to endanger N.A.T.O. still further. As we urged in the defence debate, a great initiative is open to us by taking the lead and improving the effectiveness of our conventional contribution to N.A.T.O. There is equal urgency about proposals which have been made from this side of the House for strengthening the political arrangements and the political control of N.A.T.O.

However, that is not the whole answer, of course. Some of our friends are not in N.A.T.O., including Sweden and Austria. They are not in W.E.U. That is why I am rather doubtful about the Prime Minister's first thoughts of working through W.E.U., which, I gather, he indicated last week. We must realise that we are considering a number of possible courses of action in Europe. It is not yet clear which of them, or which combination of them, will be the right ones, but at any rate we should consider these.

We could show our determination not to turn our backs on Europe and we could show our desire for greater European unity of an acceptable pragmatic kind if we made a formal proposal for regular meetings of heads of Government of all the countries of Western and Northern Europe, not with the idea of imposing a federal constitution or common foreign and defence policies on the basis of majority decisions, but to get the widest measure of agreement possible on international questions.

This is not a dramatic proposal, but some of the most significant advances in international co-operation began far less dramatically. In the present condition of Europe, we might have to be content with a step at a time. But in our negotiations and groupings and in all we try to do in Europe we must be constantly looking outward to wider horizons; and this brings me now to a subject touched on by the Prime Minister—the trade and tariff negotiations on an Atlantic scale—indeed, wider than Atlantic; on a two-oceans scale.

For many of us, one important test of the Brussels negotiations was whether the resulting Community at the end of the day would be restrictive and protectionist and inward-looking, or whether it would pave the way for a wider zone of freer trade—the Prime Minister expressed the same thought this afternoon. President Kennedy's Trade Expansion Act was directed to this very end. As the House knows, President Kennedy was given power in the negotiations with the enlarged Community, including Britain, to reduce any tariff by 50 per cent. and, in the case of commodities where the en- larged Community plus the United States accounted for 80 per cent. or more of world trade, to negotiate with full powers to reduce the tariff to nil, a provision which realistically took account of the fact that under G.A.T.T. any tariff concessions mutually agreed in bilateral negotiations had to be extended on a mostfavoured-nation basis to all other signatories of G.A.T.T.

We have been pressing for some time —we said this in the debate in November and again in December—that we should not regard any breakdown in Brussels as a disaster, but that we should go forward with the Kennedy Round. We know that the United States legislation specifically refers to a state of affairs in which Britain is in the Common Market. The Douglas amendment was accepted by the Senate and, in the conference which followed between the two Houses, it was clearly said by the Chairman of the Ways and Means Committee, Mr. Mills, that if Britain did not get in the matter could be put right quite simply by an amendment.

What is now required, as we argued in December, is the same negotiations as were already planned, the Kennedy Round, but with a different table plan. Instead of a confrontation with the United States on one side and the enlarged Community, including Britain, Norway and Denmark on the other, we should have the Six on one side—as soon as we can get them to sit down together again—and the United States, Britain, our E.F.T.A. partners and the Commonwealth on the other. It may be that the United States will insist on Latin America; so be it.

Talks on these lines should be pressed urgently. I was glad that the Prime Minister appeared to feel that this was the right course and I hope that when Mr. Herter was over here last week, talking to the Government, the Government gave him the green light for these talks to go ahead. There are some who may say that these talks, too, will founder on the rocks of French obstructionism, but if we are to initiate nothing because of those fears the outcome is certainly predictable—we shall achieve nothing.

Now, the problem of Commonwealth trade. The Prime Minister said very little about this. He told us that the Trade Ministers were to meet together before the G.A.T.T. Ministerial meeting. But is not this common practice? Has it not been the position all along, wherever there is a Ministerial meeting in the G.A.T.T., in the International Monetary Fund, or whatever it may be, that the Commonwealth Ministers get together first? It always used to be so under the Labour Government. Has it changed, or is the Prime Minister just taking what is normally common form and scratching it together to make something to put into his speech? I say frankly that, after the handling of the Commonwealth Prime Ministers' conference, we shah need something more than a routine meeting to restore confidence.

I come now to specific measures to develop Commonwealth trade. We have been urging these measures for ten years, because we simply do not accept the relative decline of Commonwealth trade as a historically necessary secular trend. Commonwealth imports have not been falling; they have been rising sharply during the past few years. I gave the figures in our debates last year and I shall not repeat them now. What has fallen has been not Commonwealth imports, but Britain's share of the trade going into these markets. We have lost ground year after year to Germany, the United States and Japan, despite our preferential advantage, simply because we failed to demonstrate a willingness and ability to seize the trading opportunities which are open to us.

We have lost ground, also, because of Government policy, the systematic dissolving of the links of sterling area interdependence, destroying, in the interests of speculative commodity markets, the system of long-term contracts and bulk purchase which, in my submission, did more for Commonwealth trade than the preferential system ever did. Government policy bears a heavy responsibility for the relative decline in our trade with the Commonwealth. During recent years, the heat of Government policy and exhortation which has been turned on to British exporters to trade with Commonwealth countries has not been a tithe of 1 per cent. of the heat directed to trade with the dollar area or trade directed towards Europe.

What we now suggest for Commonwealth trade is not an alternative to O.E.D.C. or to the Kennedy Round, It can go on simultaneously; there is nothing incompatible. I suggest that we begin by sitting down with Commonwealth Governments and their public purchasing agencies and discussing their development plans in detail. I do not mean only with the under-developed countries. In 1949 Board of Trade officials, special missions appointed from industry and the Government spent months sitting down with the authorities responsible for, for instance, the Ontario hydro-electric scheme and the Toronto subway, seeing where we could help and considering what could be done to channel major equipment orders to this country.

There was the Snowy River scheme in Australia. There were vast development programmes in New Zealand. More recently, under this Government, we abdicated from the Canadian coast-tocoast pipeline project without a struggle. There is the Volta River scheme and a score of lesser projects in Asia and Africa. These projects are going on all the time in both advanced and under-developed countries.

Despite the grave harm done during the past eighteen months, there is still enough good will so that these countries would welcome our representatives sitting down with them and getting down to cases to see where we can help. These things could lead to quite spectacular orders, but, or course, they involve obligations upon us as well. We must, in return for a greater willingness to take our products, be completely forthcoming in our willingness to buy, on a long-term basis from them, guaranteed quantities of Commonwealth primary products.

This will mean—we must face it—interference with speculative markets. It will mean bulk purchase or equally effective alternatives. We cannot afford to let ideology stand in the way. [HON. MEMBERS: "Oh."] If hon. Members opposite are not interested in getting these orders from Commonwealth countries, I pity them. I am telling them how to do it. What I am saying may or may not be ideological, but it will get the export orders. It did last time, and it will next time. The method of right hon. and hon. Gentlemen opposite has failed.

I remind the House that, in the days of the Anglo-Canadian bulk purchase wheat agreement, which many hon. Gentlemen opposite viciously criticised but which was one of the finest bargains ever recommended to the House, the Saskatchewan Wheat Board was the best ambassador for British exports to Canada that we ever had. These things could happen again. Commonwealth planning of this kind would have another implication for this country, too. We must ensure, by purposive economic planning at home, that we expand those sectors of our industrial system which are needed to supply the particular types of development capital needed.

We shall not do this on the basis of a laissez-faire, soft-centred, speculative, hire-purchase, advertiser-controlled, stop-go, three-year freeze and a false thaw every election year, sort of economy. We have had a lot of experience of this now. We must have the changes in our industry which are needed to meet these markets. Hon. Members opposite know perfectly well that these markets are there, and the reason why we are not getting them is that we have not created the industry capable of meeting their requirements. If that is not true, why have we not been as succesful as other countries, when we have had the preferential advantage, in getting into these markets?

Sir Cyril Osborne (Louth) rose—

Mr. H. Wilson

No, I shall not trouble with the hon. Gentleman. He should not think that I am afraid to give way to him. I have done it too often in the past, and it has inevitably meant wasting the time of the House.

What this all means is not only a national plan for Britain—hon. Members opposite are supposed to believe in this now—a target of 4 per cent. or whatever it is every year, but the means of enforcing that plan, not just a global financial plan but detailed industrial expansion plans for the sectors which have to expand to meet Commonwealth requirements and the requirements of world trade generally, for transport, for earth-moving equipment, for irrigation equipment and the rest. This will require a whole range of action on the part of the Government. My hon. Friend the Member for Cardiff, South-East (Mr. Callaghan), if he catches your eye tomorrow, Mr. Speaker, will deal with that.

It will require tax incentives. It will require State-guaranteed orders. Hon. Members opposite should not scoff at this. I can tell them of cases under the Labour Government when business firms or consortia came to us with world-beating inventions, but were afraid to go into production because they thought that the markets might not be there. They asked us to provide a guaranteed order, that the Labour Government would buy any which they failed to sell. We gave that guarantee, and what they then produced has been one of the finest of our lines in the export market ever since. Sometimes, the Government must give guaranteed orders to private enterprise so as to get the production forthcoming.

It will mean more than this. It will mean State initiative in building, equipping and running factories to fill the hard-centre gaps in our economy. We must have State factories, too, to provide some of the goods which the Commonwealth will want.

Finally, I turn to the measures—[HON. MEMBERS "Hear, hear."] I think that I may claim to have said, in half the time, a little more than the Prime Minister said. I can well understand the nervousness and giggling of hon. Members opposite. After all, this is the third debate in three weeks in which they have had to listen to a tale of humiliation from their own Front Bench.

I turn now to the measures on a world scale which will be needed. Again, most of these are not alternatives. They are certainly not panic measures thought of after Brussels. First, measures with regard to world liquidity. We all agree now on the urgency of means to ensure that world trade does not seize up through a shortage of the necessary monetary lubrication.

World commodity agreements. I am glad that the right hon. Gentleman gave his blessing to this. It is a new thing for the Government. One would have thought, when the Six proposed this as a means to enable the Government to escape some of their Commonwealth commitments, that no one had thought of it before. But, of course, the Havana Charter negotiations, largely on the initiative of the British Government, prepared a complete chapter of agreed enabling provisions. Year after year we have pressed for them both as a Government and an Opposition. The Prime Minister is now converted to this idea, yet only last year, in G.A.T.T., his Government voted against commodity agreements when the proposal was made on Commonwealth initiative in Geneva.

One of the difficulties has been that there has been United States opposition to the idea of commodity agreements. Now, for the first time, we have an American Government in active sympathy. They see, if others do not, the futility of beggaring the primary producing countries of Africa and Latin America and then having to spend millions of dollars on military means to fight the Communist threat there. This question of stability and security in primary cereal crops is absolutely vital to these areas. All the advanced countries today, all of us, have painfully raised our total contribution of economic aid to the underdeveloped areas to a total now of almost 3½ billion dollars. The whole of this and more was wiped out by the fall in the purchasing power of the recipient countries through the fall in commodity prices over the past two years.

Thirdly, and linked with this, is the problem of surpluses. It seems to be a political law of advanced countries that our concern for our own agricultural producers is such that, taking advance countries as a whole, there is a permanent endemic surplus of agricultural goods and, of course, the Brussels agricultural programme will swell this surplus still further. In food production we are no longer affluent societies; we are surplus societies. Commodity agreements for temperate foodstuffs must provide machinery for channelling the overspill of our advanced countries into the hungry countries on the lines of the World Food Board proposed years ago by Lord Boyd-Orr. I led a delegation to a four months' conference to examine that. That scheme did not go through because of a peculiar post-war condition, but times have changed, and it should be revived as an essential proposal in the world after Brussels.

But why food only? There is a surplus of steel in many advanced countries, and in this country the steel mills are working at 60 per cent. capacity. We all want to help India and a score of other developing countries. Apart from money, why not send them a million tons of ingot steel? We might go further. Our railway workshops stand idle through a combination of Government ideology and the end of steam as a means of locomotion. But those of us who have had to deal with the problems of developing countries know that the biggest bottleneck in many of them is rail transport, and for them steam is not obsolete. Why, then, should there not be international plans for mobilising some of these workshops in Britain and elsewhere to produce the locomotives and the rolling stock? Why not mobilise the steel mills to produce tracks?

Next year the United Nations is holding a conference on world trade and development. I should like to see the Government propose that that conference be advanced a year—held this year—and that at that conference proposals for the mobilisation of surpluses of food, steel and rolling stock, and the rest, be considered and put into action. Of course, the other priority on a world scale is that of providing markets in advanced countries for Asian, and later African, manufactured goods. This was one of the issues on which the right hon. Gentleman had a lot of difficulty in Brussels.

Britain, as Lancashire and Cheshire hon. Members know, takes more than her fair share of Asian textiles and other manufactured goods. To talk of world development and then to refuse on an international scale a planned access to our markets is hypocrisy. That is why not only the Six, whose record in the matter is abysmal, but all advanced countries should agree on quotas to allow a reasonable flow of these goods into their markets. The George Ball proposal is one that we should support.

I have not dealt in detail with the implication for British economic and industrial policy of the post-Brussels challenge because, as I said, my hon. Friend will deal with that matter tomorrow. But I must emphasise the need to maintain intact our foreign exchange controls, and, if need be, to strengthen them. We know that this would have been impossible under the Treaty of Rome, and we have frequently expressed our anxieties about this. Doubts and uncertainty at any time may lead to sudden and perilous flights of capital, including British capital, from the City of London.

The breakdown of the Brussels talks, with the certainty now of a discriminatory tariff against our exports to Europe, may well increase the number of firms seeking to establish plants in Europe. In such cases this will be of value to our balance of payments, but it is essential that full control be maintained case by case. It is appropriate in every case to use exchange control.

Nearly two years ago, when we produced our statement "Signposts for the Sixties", we said that whether we went into Europe or not the case for a purposive plan for economic expansion was equally strong. If we did not achieve such an expansion the only choice was between being a backwater inside Europe or a backwater outside Europe.

I think that the events of the past few weeks have underscored that warning. The veils have been torn away. One thing is clear. Our future lies now clearly in our own hands, on our sense of purpose, of dynamism, of self-discipline, of sacrifices, if sacrifices there must be, fairly shared. If this failure of the Brussels negotiations has brought this home to us as never before, I thank God for it, because this is the first condition for reasserting our national strength and our national independence.

What has been brought home in these past few weeks with almost sickening clarity is the total incapacity of the Government to produce the policies capable of mobilising the energies of Britain in the 1960s. The right hon. Gentleman's speech today was one of abdication on behalf of a whole Government. The recovery of Britain's lost dynamic is a task that must and will now pass into other hands.

5.19 p.m.

Sir Derek Walker-Smith (Hertfordshire, East)

I once told the House that listening to the right hon. Member for Huyton (Mr. H. Wilson) was one of my favourite and least expensive pleasures. I am particularly glad today that no gate money is charged, because I should certainly be minded to ask for it back, though, I suppose that in all fairness my claim might be met with the defence that though the right hon. Gentleman had not spoken very well he had at least spoken very long. In particular, I missed the usual galaxy of brilliant extemporary jokes with which the right hon. Gentleman regales us, can quite understand that recently he has probably not had much time to make them up.

I regret that this has been made the occasion for censure, even though I think that the right hon. Gentleman has not censured the Government very successfully. This is an occasion which, as was suggested by an admirable leader in The Times this morning, calls for constructive thought and a forward view. It is an occasion when, in the classic formula, the House should have constituted itself into a Council of State to devise—[HON. MEMBERS: "Oh."] If this high consideration does not appeal to right hon. and hon. Members opposite, there is a more mundane consideration which may find more ready access to their minds and hearts. Their attitude may prove to be bad tactics, because they have lived in glasshouses in this matter. I do not refer to the fact that they had divided views. We on this side of the House had divided views and there is nothing wrong about them if they are sincerely held.

What I do criticise is the fact that for so long so many hon. Members opposite appeared to have no views at all on this great and vital matter. For many months, their thinking seemed to be conditioned more by electoral preoccupation than by the well-being of the country. The right hon. Gentleman says, "Look at the Brighton conference, in October, 1962."But I say, "Look back to 1961." There was no clear and clarion call from the Opposition then. There were only muted and equivocal pronouncements spoken with that minimal dignity and conviction which come from a seat on the fence.

I do not regard the breakdown of these negotiations as a disaster. What would have been a disaster would have been entry into the Common Market on the wrong terms. It would also have been gravely detrimental to continue protracted negotiations which would have led to frustration in the end. Better the surgical operation now than a long and wasting disease.

Nor do I regard this as a defeat or even as a setback. I regard it as a turning point which can, and should, lead us to greater heights and to broader endeavours. I am concerned, therefore, with future action and not with the past, and, with the House's indulgence, I propose to address myself shortly to the three main questions which demand answer at this time: first, what, in present circumstances, should be our attitude to Europe; secondly, what action should we take to make a firm base at home for an initiative overseas; and, thirdly, what form should that initiative take what action can we take to promote the economic well-being of Britain and to enlarge and improve the contribution which collectively the Commonwealth can make to the well-being of the world?

First, our attitude to Europe. I am glad that we have not gone into the Common Market, not because of any hostility to the Community, as I have tried to make clear all along, but simply because, as things are and as they are likely to be, the Common Market is no place for us. This is true whatever the result of the present struggle for power. Kennedy does not want a Europe dominated by de Gaulle and de Gaulle does not want a Europe dominated by Kennedy, and I must say that I agree with both of them. [HON. MEMBERS: "Oh."] I know that it is unfashionable to say anything good about both of these eminent but controversial gentlemen in a single sentence.

Now that our application to join on the terms on which we were willing to join has not been approved, the question arises: what should our attitude be towards further negotiations in the hope of better terms? My answer to that is clear: we should be receptive of suggestions but not active in promoting them. For eighteen months our thinking has been dominated by Europe, and we must not allow any continued or nostalgic preoccupation with Europe to obscure the vision of wider endeavours which are open to us.

Our application having been rejected, the right and dignified course is to let the initiative pass to the Six. The time may come when they are willing to modify their structure so as to meet our conditions. In that case, let them say so. We have heard much about the good will of the Five, and we are grateful to them for their kind words and benevolent intent. If it be the fact, as we are told, that they think that the Common Market would be the better for our presence, we are flattered and obliged. But none of this is in the realm of action. If the time comes when they speak with deeds as well as words, then they will make an initiative to us which takes account of our special position, of our sovereignty and of the Commonwealth.

It is human to hope for that, but it would be foolish to count on it. Meanwhile, action in regard to the Six would be impracticable, and solicitation would be humiliating. To ask once and be refused may he painful, but it is not humiliating. To persist in the absence of a change of circumstances would be importunate and unworthy of our position, and it would damage those wider endeavours on which we must embark. We should now be paying our addresses in another quarter, and one cannot qualify a proposal couched in the language of love and affection by saying, "Of course, all this is conditional on the first addressee not changing her mind. "That is the language neither of true love nor of good sense. No girl of high spirit would entertain so hesitant or half-hearted a suitor.

This is not a principle which holds good Only for courtship. It holds good also in international co-operation. If we are to succeed in our wider endeavours, we cannot afford a long, lingering look behind. I found my case on very high authority indeed, on the third chapter of the Epistle to the Philippians, the 13th and 14th verses: … forgetting those things which are behind and reaching forth unto those things which are before. I press toward the mark …". I would summarise what should be our attitude to Europe in these four short propositions. First, we should seek association but not integration at the price of sovereignty or the Commonwealth. Secondly, such association must be weighed in the balance of our wider endeavours in the world as a whole. Thirdly, the initiative for the time being must pass to the Six. Fourthly, we should preserve the utmost friendliness and good will towards Europe but should make clear that Britain is a friend and a well-wisher, not a suitor or a suppliant. In the popular phrase, we should not turn our back on Europe. We should look her in the face with friendly mien, but with posture erect and head held high.

I come to the second main question, our action here at home. Time obviously forbids any detailed reference to this, but it would be wrong to ignore it, because without timely and appropriate action at home to assist and invigorate the economy we cannot hope to initiate successful action overseas. The truth is that international arrangements, whatever their nature, will not solve our domestic problems for us. If anything, the converse is nearer the truth. The worst reason for our going into the Common Market was that it would impose from without measures to force us to be competitive, just as the worst reason for staying out would have been the hope that thereby we could avoid such measures.

I touched on these arguments in my speech to the House in August, 1961. I said then that competition is not for us a matter of choice, but something imposed by history, geography and inescapable circumstance. The necessity of competition is reinforced in the conditions of a fast-changing world by new techniques and new competitors. It applies especially in this country, because one thing which remains unchanged in a changing world is our position as a small and crowded island, dependent upon imports from overseas for half our foodstuffs, most of our metals and many of the raw materials which we need to keep the wheels of industry turning at home.

That position conditions our choice of remedies as well. It is, in fact, one of the prime arguments against Socialism. It is possible to operate a siege economy based upon a Socialist policy in a great land mass like the Soviet Union, insulated by a gigantic home market from the shifts and shocks of changing world conditions, but that cannot be done where one is absolutely dependent upon world markets. You can bring controls and compulsion to bear upon the home market, but you would not bring them to bear upon the markets of the world.

To reject Socialist controls, however, is not to say that there is not scope for Government initiative and action. I will mention by way of illustration just three examples with which I am particularly concerned. The first is restrictive practices. Seven years ago, I spent long and laborious days in helping to put the Restrictive Trade Practices Act upon the Statute Book. I believe that it was a good Act and that, within limits, it has done what I then claimed for it. It has helped to make the economy freer and more flexible, more vigorous and more vital. I saw it, however, only as a first instalment. There is the whole field of monopolies. There is the companion problem of restrictive labour practices with virtually nothing done, a monument to the traditionalism of trade unions and the timidity of politicians.

My second example is taxation. We need a review and revision of the whole tax structure with the dual object of reducing to a minimum the burden on productive industry and avoiding so far as possible disincentive to individual endeavour.

The third need is a keen and objective look at Government expenditure, including defence and social services—the lot. Indeed, if a Royal Commission to examine the haphazard structure of our social service finance had been set up two years ago this month, when I originally asked for it, it would be well on the way to reporting now.

I cite these three examples not as comprehensive or exclusive, but as illustrative. These are matters amongst others in which inquiry and action should be initiated now. We cannot hope, in this modern world, to earn our living, much less to give the leadership that we can and should, if we do not have our house fully in order here.

I come, then, to the third main question, our action overseas. I start from the position that there has been no major Commonwealth initiative in economic affairs since 1932. We must not miss the opportunity now. We must start with a Commonwealth initiative, but in no narrow or exclusive spirit. I want to associate E.F.T.A. as soon as possible and to bring E.F.T.A. into the Commonwealth trading arrangements wherever practicable. After that, from the basis of increased strength, we can open our negotiations with the United States, the Community and the rest of the world.

Here again, time forbids detail, but I am fortified by these two considerations: first, that my hon. Friend the Member for Worcester (Mr. Walker) and I, as long ago as last June, published our pamphlet "A Call to the Commonwealth", including a good deal of detailed thinking and practical proposals; and, secondly, that a group of my hon. Friends under the chairmanship of my right hon. Friend the Member for Thirsk and Mahon (Mr. Turton) have more recently given detailed study to these problems, the heads of proposals having been promulgated last week.

Let me, however, make this clear. We do not expect a Commonwealth common market or Customs union on the tightly institutionalised pattern of the European Common Market. There are two considerations which prevent it, one political and one economic. The political consideration is that such a common market involves substantial surrenders of sovereignty, and the Commonwealth is an association of sovereign States. The economic reason is that the great diversity of the Commonwealth—in my view, one of its sources of political strength and influence—prevents a full Customs union or total internal free trade, at least for the time being.

The fact that we cannot have those should not, however, be any reason why we cannot have the looser but still beneficent association which we ought to have. Circumstances and the operation of the G.A.T.T. are leading to a loss of that. The G.A.T.T. imposes a common obligation on its signatories to accept the same treatment save only in cases of Customs unions and free trade areas. As the Commonwealth is neither of those, it does not share in those benefits.

It is true that at the time of the signing of the G.A.T.T., a reservation was made in favour of the continuance of existing preferences so long as they are not increased; but one may neither increase preferences nor introduce new ones. It is easy to see the effect of that in a world characterised, on the one hand, by new products and new techniques and, on the other, by a good deal of inflation. The effect has been to erode the value of preferences and, at the same time, the value of the preferential system.

We are told that the preferential system is not the whole of the Commonwealth; and that is true. But it is certainly an important part of the economic cement which binds the whole structure together. If that system is to be made effective in the conditions of the modern world, two things are necessary: first, an amendment of the G.A.T.T.; and, secondly, a revision of the Ottawa trading agreements in the light of it. I know that there are those who regard any suggestion to amend the G.A.T.T. as the laying of sacrilegious hands upon the ark of the covenant, but to them I would respectfully make two submissions.

First, G.A.T.T. is not the ark of the covenant. It is, in fact, in part at any rate, rigidly drafted and lacking in pragmatism; and it reflects the economic conditions of the immediate post-war years, the dominance of the United States and the relative weakness of the United Kingdom. Secondly, it is not a question of denouncing the G.A.T.T. altogether. It involves, I think, an amendment of probably only two Articles out of many.

Therefore, I say that the amendment of the G.A.T.T. and the revision of the Ottawa agreements must be put into the very forefront of the agenda of the Commonwealth economic conference. With respect, I would agree with my right hon. Friend and Mr. Menzies that we do not want a Prime Ministers' conference. With no disrespect to the high office of Prime Minister, what we need is a working conference or a series of conferences, because there is so much to do and so much to discuss. I want to see the Commonwealth Economic Consultative Council made an effective body in continuous operation. It has led only a shadowy existence since its inception in 1958, and the time has come to give it substance.

Other matters which I would like to see high on the agenda are a Commonwealth Marketing Board; a Commonwealth Populations Board; a Commonwealth Technical Training Scheme; a survey of Commonwealth resources on the lines of the Paley Report in the United States. There are these and many other measures, including, certainly not least, measures to safeguard and promote capital investment in the Commonwealth, so important in the context of the underdeveloped territories, providing, I would hope, for some sort of Commonwealth capital guarantee department to insure the risks of capital investment on the sort of lines on which export risks are now insured by the Export Credits Guarantee Department. Of all these matters my hon. Friends and I have made some study, and we shall continue to do so, so far as private citizens can. But, basically, they are matters for the Government, and to Government I commend them.

I conclude, therefore, with two very brief observations. First, it may be said that these things are difficult, agree. Most worth-while things are difficult. But if it is said they are impossible, then I join issue absolutely. We must not in this country get into the way of classing as impossible things which are in the British tradition of achievement and which can redound to the strength and well-being of Britain and the Commonwealth.

I think that in this one respect we can take example from President de Gaulle. I do not like his methods; I deplore the subordination of Parliamentary government in France. In this country we like our great men to be of the stamp of Chatham and of my right hon. Friend the Member for Woodford (Sir. W. Churchill), men whose results are obtained and whose miracles are wrought within the framework of Parliamentary democracy.

But though de Gaulle's methods do not appeal, he has shown greatness in his resolution and determination in his refusal to regard as impossible the things which he believes will serve the interests and greatness of France, So let my right hon. Friends also reject the affirmation of impossibility, glorying in difficulty as demonstrating the value of the task.

My second observation is this. It may be said that these suggestions are mainly economic. This, of course, is true. But the Commonwealth is far more than economic. This, of course, is true. But the formal links of the Commonwealth are necessarily economic. Strengthen those, and we strengthen the whole. Strengthen those, and we strengthen the great purposes which the Commonwealth can serve. Because there still are great purposes today. The mission of the British people is not ended in the second half of the twentieth century. Britain still stands at the heart and centre of the Commonwealth, with all its healthy diversity and unconscripted unity.

There is a mission still, to give leadership without dictation and guidance without coercion. The task and the challenge lie before us. Let my right hon. Friends assume the burden and respond to the challenge.

5.45 p.m.

Mr. John Dugdale (West Bromwich)

With much of the last part of the speech of the right hon. and learned Gentleman the Member for Hertfordshire, East (Sir D. Walker-Smith) I would agree, though certainly not with his last words, but I would take issue with him very strongly over the first part. Would he have said what he said if the situation had been the other way round—if the Labour Government had failed to get into Europe? Of course he would not. I do not think many of his hon. Friends would. We shall see about that when that happens if it ever happens, but I hope it never does.

The right hon. and learned Gentleman said that the Opposition had no views of what we should do now. In fact the Opposition have perfectly clear views and have stated them over and over again. We have said that we would go into Europe only if the terms were right. From what we knew of the terms we thought them not right. We said so constantly. That is our view and we think that we should not have gone in on terms which appeared to us at that time to be those which the Government were likely to accept.

The right hon. and learned Gentleman did say one thing with which I agree most heartily. He said it was no disaster that we did not get in. I certainly agree with him, and I think everyone on this side will agree with him wholeheartedly about that.

I want to turn now to the Prime Minister's speech. The Prime Minister's speech was—let us face it—a funeral oration. It was not only the funeral oration of the Common Market but its was his own funeral oration. I have never heard a man sound so depressed as he was. And small wonder, because when Prime Ministers take office they have certain ambitions. They do not just want to become Prime Ministers; they have certain plans they want to carry out. The one thing which the Prime Minister wanted to do was to go down in history as the man who took Britain into the Common Market.

I am not at the moment saying whether that is right or wrong in itself. Some may have thought it a noble ambition. But it was the right hon. Gentleman's ambition, and he has failed in it, and it is too late now for him to have another ambition, now that that has gone. He has failed miserably, and so I say that, undoubtedly, his speech today was his funeral oration.

However, I do not think that this is en occasion for a funeral oration. I think that what we have got to do now is to do what the right hon. and learned Gentleman the Member for Hertfordshire, East was doing—and I will follow him in some of the things he said—and that is to see where we go from here and how we can best develop the Commonwealth now after having failed to enter the Common Market. It is on those lines that I want to speak this afternoon.

The Commonwealth today is like a garden: it has to be cultivated, and if we do not cultivate it, it will wither away. The Prime Minister has failed to cultivate it during these years. He has paid too much attention to other people's gardens in Europe and too little attention to his own in the Commonwealth. I think that we have got to turn our attention from Europe now and towards the Commonwealth.

I would ask first of all, as my right hon. Friend the Member for Huyton (Mr. H. Wilson) asked, what preparations have been made for just this situation? Was the Prime Minister so certain that we were going to get into the Common Market, so certain that there would not be a failure that he thought that it was not worth while to make preparations in case there was a failure? He made none at all, and today, when he was asked what was going to be done, he gave no answer. Perhaps the Chancellor of the Exchequer will tell us when he winds up the debate, but so far we have heard nothing at all about the alternatives in the situation which the Prime Minister must have envisaged as being at least possible.

What are the advantages possessed by the Commonwealth? I think it is just as well that we should remember them. First of all—let us face it—it is larger than Europe; it is larger than the United States; it is larger than the Union of Soviet Socialist Republic. It has size. It has enormous populations. I know they are spread very far apart, and I know that the distances are great, but, after all, distances today are not what they used to be, because people can move about very quickly. We have only to see how fast Her Majesty has moved from one part of the Commonwealth to another now to perceive how close the parts are to one another, and how perfectly possible it is to develop the Commonwealth, widespread though it be.

Above all, we have also a most tremendous amount of good will in the Commonwealth. That may sound stupid or sentimental, but I believe that good will exists not only in the countries of English extraction—Australia, Canada and New Zealand—but in other countries. I was impressed recently when I attended a debate in a university about our going into the Common Market. A Pakistani stood up and said, referring to Britain, "We remember our parents with gratitude and do not want to be separated from them." There is that attitude among people in Asia and among some people in Africa, though admittedly not all of them, and we have that in our favour.

We also have the absolutely priceless gift of having the same language, a tremendously big thing and something which does not exist in Europe. If we had entered the Common Market we should constantly have been in the difficulty of our all speaking different languages. But in the Commonwealth the basic language is English. Indeed, many people of different tribes who cannot speak to each other in their tribal languages can speak to each other in English. That is a very great help.

We have a great similarity in law. Even today there are countries in the Commonwealth which still appeal in the last resort to the Privy Council. This basic system of law is of immense benefit.

We also have, by and large, a general liking for democracy. I know that there are some countries in Africa and Asia which are not as democratic as others in the Commonwealth, but, by and large, we stand for democracy.

Lastly, as was vividly proved at the time of the discussions before South Africa left the Commonwealth, we all stand for racial tolerance.

Those are some of the very big things which we can say we have as links and which are useful in starting any kind of organisation.

To turn for a moment to the future, we have heard from the Prime Minister that there will not, apparently, be a Prime Ministers' conference. As I understand it, all that will happen is that one outgoing Prime Minister will meet another one. That may be an advantage to both of them—I do not know—but it will not be of very great advantage to the Commonwealth. I hope that there will be conferences, not necessarily of Prime Ministers, but at a lower level—conferences of Ministers of Trade, Ministers of Education and Ministers of Health. It is most important that such conferences should take place.

We should try also to develop some kind of Commonwealth civil service. Of great advantage is the fact that the civil services of many parts of the Commonwealth have been trained by methods produced in this country. They have the same ideas, and they could meet and usefully discuss many important problems. We should ascertain whether it is possible to have a civil service working for the Commonwealth which will operate in between the times when the conferences I have suggested are going on. A start has been made in that direction, but it is a very small one. I hope that very much more will be done to develop that idea.

I hope, too, that we might be able to develop inside the Commonwealth many Commonwealth services. We already have the Commonwealth Telecommunications Board, which is an example of what can be done. In this connection, I only wish that the Commonwealth Telecommunications Board had a scheme like the United States Telstar scheme. I hope that it can develop something very much like it later on.

I should like to know whether it would be possible to have a Commonwealth health service and a Commonwealth education service. I appreciate that the people of India have a much lower level of health service than we have and that the people of New Zealand have a very high one. For all that, I believe there must be a possibility of something in that direction being developed.

In Africa there is the Flying Doctor Service, which has been very useful. Doctors have been going from one country to another regardless of frontiers, so that one country might help another in certain circumstances. There could be a joint Commonwealth health service that might begin to bring some help to the countries which most need it. There are today services such as the Royal Commonwealth Society for the Blind and the Commonwealth Society for the Deaf, both of which do that sort of work in the Commonwealth, but they are voluntary organisations. Much more could be done if there were a definite Government organisation responsible.

The Commonwealth Scholarships Scheme is a very great step in the right direction. I certainly would not underestimate the work that our Government have done to get it established, but I believe that much more could be done along those lines towards the development eventually of a Commonwealth education service, and I hope that will happen.

I turn to finance. What can we do about that? Today more than 50 per cent. of the world's trade is conducted in sterling, and that means mainly Commonwealth trade. We should consider the possibility of the formation of a Commonwealth Bank. There is already the World Bank. Why should not a Commonwealth Bank be established? I believe it is possible for this to happen. In the sterling group we might even be able to include Canada, for, after all, Canada very nearly came into the sterling area when Sir Stafford Cripps was Chancellor. It could happen even yet, though I think it is less likely now than it was previously.

What about trade? I do not want to weary the House with a great many figures, but it is fair to say that a very large amount of our export trade is done with the Commonwealth, and a very large amount of our imports come from the Commonwealth—I am sure that this could be greatly extended—and two-thirds of our imports come in British ships. That is very important for us, and I hope it will continue. But we could do very much more to develop Commonwealth trade if the Prime Minister and the Government—or some other Government—would give half as much time to it as they have done to trying to develop trade with Europe. I hope that they will do this.

I hope that there can be a Commonwealth free trade area. If I am told that it will be against G.A.T.T., I would ask whether it would not have been against G.A.T.T. if we had gone into Europe. I think we should have found ourselves in grave difficulty in that respect if we had joined the Common Market. If we were going to face that in order to join the Common Market, why should we not face it today in order to produce Commonwealth free trade? I hope that we can have a system of Commonwealth free trade, perhaps starting with a lowering of tariffs even from 20 per cent. to 10 per cent. That would be a beginning, and I believe we could do it.

Above all, I join my right hon. Friend the Member for Huyton in hoping that we can very greatly develop bulk purchase with guaranteed prices in the Commonwealth. That was one of the finest things done during the war and continued during the period of the Labour Government. It made prosperous countries which otherwise would have been bankrupt. It saved the West Indies. It did an enormous amount for West Africa. It would do even more if we could initiate it again today.

I quote the words of the Assistant Director-General of the International Labour Office in this respect: The whole economic development in some areas of the world depends on the stability of commodity prices … In countries where plantation production constitutes a high proportion of the exports, instability of commodity prices leads to general social instability and, in particular, to unemployment, loss of earnings, privation and misery for a large proportion of the population … He said that that happens when one has a free market without any bulk purchase and when commodity markets are dominated by people whose only interest is to make a profit out of them rather than ensure full development of the economic structure of their countries. I hope that we can do a great deal to extend the system of bulk purchase with guaranteed prices.

But it is all very well to talk about what we must do for the Commonwealth. The rest of the Commonwealth must do something for us; if we are to buy a large quantity of wheat or cocoa, or other commodities, there must be a system by which those countries of the Commonwealth from whom we are buying agree to buy from us.

Mr. Austen Albu (Edmonton)

Oh.

Mr. Dugdale

My hon. Friend may laugh, but it is very important that this should be done. I know that it is difficult, and the Government alone cannot do it, but they can work towards it, and it appears more likely to succeed than has the Government's effort to join the Common Market.

All these things require a totally new approach. According to the right hon. and learned Member for Hertfordshire, East, a new approach to the Commonwealth has not been made since 1932, and do not let us forget that the majority of the time since then has been under a Conservative Government. I believe that that new approach will not come from this tired and decrepit Government who are disillusioned with their attempts to get into the Common Market. But within eighteen months, and I hope sooner, there will come a new Government, and that Government will take up the challenge and will succeed.

6.2 p.m.

Sir Cyril Osborne (Louth)

Many appeals have been made in the House for ten-minute speeches so that more hon. Members can take part in the debate. I will try to make a ten-minute speech, provided that I am not interrupted. I shall make a few very brief comments almost in shorthand style.

First of all, since General de Gaulle says that Britain must choose between being either a satellite of France or a junior partner of America, I support the Government in choosing America. I would rather be a poor relation of America than live on sufferance at the pleasure of General de Gaulle, for I believe there can be neither prosperity nor peace for the free world if the English-speaking peoples are permanently divided.

Secondly, I believe that we deceive ourselves and mislead people outside if we pretend that the Five outside the Six, or America, or E.F.T.A., will do anything to help us to their own detriment. They will not. If we are to be saved economically, we have to save ourselves.

Thirdly, I say to my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith), for whom I have a high regard and whose speaking ability I envy so greatly, that the Commonwealth group, headed by Lord Beaverbrook, hypnotise themselves if they believe that the Commonwealth is anxiously waiting to buy more British goods, or that closer Commonwealth trading relation will of themselves solve our economic problems. They will not.

Over the last twelve years, Canada has every year sold to this country over £100 million of goods more than she has bought from us—and there is a 40 per cent. tariff in Canada against our goods. Over the last twelve years, since this party has been in power, the adverse trade balance in Canada's favour against us has totalled £1,700 million. Why? This was the question which I wanted to put to the right hon. Member for Huyton (Mr. H. Wilson), but he was frightened to give way. The answer is that the Canadian people prefer American goods to British goods, because in their opinion American goods are either cheaper or better than British goods. I think that Lord Beaverbrook—if I may say so to my right hon. and learned Friend—should first of all convert the Canadian people before preaching at us.

The Russian people have a point of view. They rightly regard the Common Market as the economic arm of N.A.T.O. They fear that the leader ultimately will not be France but will be Western Germany, and they fear the re-emergence of German militarism which would demand, to begin with, unification with Eastern Germany and ultimately a return of the lost provinces from Poland. Let us make no mistake, in Russian eyes that would mean war.

Mr. Khrushchev has made it clear recently by publicly quarrelling with the Chinese that he wants, if possible, peaceful coexistence with this country. Anglo-Soviet trade is only £70 million a year each way. I think that it could be ten times greater, and I ask the Government whether we could not do more to increase East-West trade instead of leaving it as something rather distasteful, with right-wing Members of both parties turning up their noses at it. I should like to see our Ministers go to Moscow and Warsaw as often as they go to Paris and Bonn.

Fifthly—and I hope that I shall keep to my ten minutes—our economic problems can be put into simple terms. This is what the country and the House will not face. Britain has to import 50 per cent. of its foodstuffs and nearly 100 per cent, of its raw materials. In order to pay for them, we must sell abroad roughly 30 per cent. of all we manufacture. In the manufacture of these goods, roughly 60 per cent. represents direct or indirect labour costs. Nobody can make the foreigner buy British—and this is something which the right hon. Member for Huyton will not face. If our goods are too dear or not of good enough quality, we cannot plan our exports—and 5 million jobs depend on exports. This is the challenge which both sides of the House ought to face; how do we get our costs down and how do we get the quality of our goods up? We shall not do that by playing party politics in the House.

Sixthly, I regard Brussels as a great defeat—as great a defeat for us as was Dunkirk. The question is, shall we get the same sort of response now as we managed to get after Dunkirk? Will our people face the harsh, bitter and cruel economic dangers which I believe beset us, and have we the will to work in national unity to overcome them? It is not politics or long speeches which will save us; it is sheer hard work. That is the story which we ought to put out to the people outside the House.

No one put it better than did a right hon. and learned Gentleman for whom I had deep respect, although I opposed him politically—Sir Stafford Cripps. In 1949 he said: Any worker by hand or brain who goes slow, or is an absentee, or demands more money for no more output, is in fact doing his best to put up his own household bills and to put somebody—quite possibly himself—out of a job. That is what Cripps said in 1949. If organised labour would not believe Cripps then, will they believe a Wilson or a Brown today? I think not.

The Opposition claim that they will overcome our difficulties by planning. Let me ask them to face this honestly: how can they plan without direction of labour, and are they prepared to enforce that? How can they guarantee full employment when 5 million jobs depend on exports and they cannot force the foreigner to buy the goods which these 5 million men make? How can they get down our prices and increase the quality of our goods? These are the questions which face us.

I believe that they are incapable of doing these things, and because of that I shall vote against them. I shall vote against the motion of censure, moreover, for a personal reason: ultimately this is a motion of censure on my right hon. Friend the Lord Privy Seal and on the work which he has tried to do in the last eighteen months. I believe that he rightly commands greater trust and respect than any other hon. Member, no matter whom hon. Gentlemen elect next Thursday.

6.10 p.m.

Mr. F. Blackburn (Stalybridge and Hyde)

If I answered in detail the policy of despair of the hon. Member for Louth (Sir C. Osborne), I am afraid my speech would be longer than would be approved by him.

The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) complained about the lengthy speech of my right hon. Friend the Member for Huyton (Mr. H. Wilson). Actually it was much shorter than that of the Prime Minister. When the Prime Minister rose to speak I had a clean sheet of paper on which to make notes which might be of some value when I made my speech. At the end of his speech my sheet was still virgin white. I do not think that I need make any further comment on that.

The hon. Member for Louth said that he was not going to vote with us tonight. I do not think that anybody on this side ever expected that he would, but I wonder whether he has read the Motion for which he is going to vote. In fact, I wonder whether any hon. Gentleman opposite has read it. They are asked to express full confidence in the determination and ability of Her Majesty's Government …"; they are asked to give a vote of confidence to this Government at the moment when everything is collapsing about their ears. Their economic policy has collapsed, and we have an unemployment figure of well over 800,000. Their defence policy has collapsed, now their Common Market policy has collapsed, and we are asked to give them a vote of confidence.

I have never been either violently anti-or violently pro-Common Market because I could not work up the same enthusiasm for or against the idea as some of my hon. Friends and some hon. Gentlemen opposite have done. I felt instinctively against the Common Market, but I would have been prepared to go in on my own terms, which are quite different from the terms which have been negotiated by the Lord Privy Seal. My chief concern was for the Commonwealth, not that I thought for a moment that we could work out an economic unit of the Commonwealth, but because I believe that this association of free peoples, unique in the history of the world, is one of the greatest forces for peace in the world, and I should hate anything to happen which would reduce the effectiveness of the Commonwealth.

I do not make a habit of trying to prophesy, but when the Government came before the House and said that the House should approve their negotiating to enter the Common Market and laid down their three conditions, I said at that time that if the Government were sincere in the conditions which they had laid down the question of our entry into the Common Market would never arise because they would not accept us on those conditions. But the Government have hedged on their terms. It is very significant that a few weeks ago in one of these debates, when the Lord Privy Seal was challenged about the conditions for entry into the Common Market, he said: Of course we stick to our three conditions"— but he added these significant words"— consistent with the Treaty of Rome. That, of course, put an entirely different reading on the promises they had given.

The Prime Minister was wrong in his broadcast, and he was wrong again today when he said that we were nearly reaching agreement. We were far from reaching terms which were acceptable to this House. We were certainly far from reaching terms acceptable to this party. If we had gone in, the Government would have broken faith with the Commonwealth. They would have broken faith with E.F.T.A. They would have broken faith with British agriculture. They would have broken faith with this House, and they would have broken faith with the people of this country. I believe that if there had been a free vote in this House on the terms which had been so far negotiated the House would have rejected them.

I do not for a moment underestimate the skill, the hard work, and the patience of the Lord Privy Seal, but to me it has been humiliating that this country should have been going with a begging bowl to countries which we either liberated or defeated in the last war. I regret that we did not take the initiative instead of waiting to be kicked out, because it was quite clear that if the Government really meant what they said in the first place it was impossible to negotiate entry. We have been turned out through the inordinate conceit of General de Gaulle who at this moment thinks La France c'est moi, and no doubt hopes some day to be able to say L'Europe c'est moi.

I am astonished that anyone is surprised at what has happened, because we had already been warned. In November, 1961, M. Couve de Murville said: Britain is a European power but at the same time a World Power. When she presents herself to the Common Market, she presents herself in both these roles. If she enters the Common Market without the Commonwealth, then the Commonwealth would be finished, and no one wants that—least of all France. But if she enters it with the Commonwealth, the Common Market would be meaningless. I cannot understand why anyone should be surprised at what has happened. The warning was fully given.

I think that the Government ought to be very grateful to General de Gaulle, for he has saved them from being accused of bad faith, and I hope that if ever the question arises again of our joining the Common Market we shall not go cap in hand. I agree with the right hon. and learned Member for Hertfordshire, East—let the initiative come from the Six and not from ourselves.

One can feel sorry for the Government in the predicament in which they find themselves. They are now back in square one. They are back where they were before ever the negotiations started. Let me quote what the Prime Minister said when he was Chancellor of the Exchequer: I do not believe that this House would ever agree to our entering arrangements which … would prevent us treating a great range of imports from the Commonwealth at least as favourably as those from the European countries."—[OFFICIAL REPORT, 26th November, 1956; Vol. 561, c. 37–8.] He went on to say that we must continue free to maintain the volume of preferential imports from the Commonwealth. What has been negotiated is not in accordance with that.

The present Chancellor of the Exchequer said on 12th February, 1959, when he was Paymaster-General: … I cannot conceive that any Government of this country would put forward a proposition which would involve the abandonment of Commonwealth free entry. It would be wrong for us and for the whole free world to adopt a policy of new duties on foodstuffs and raw materials, many of which come from underdeveloped countries, at present entering a major market duty-free. … Finally, we must recognise that the aim of the main proponents of the Community is political integration. We can see that in Article 138 of the Treaty, which looks towards a common Assembly, directly elected. The whole idea of the Six, the Iron and Steel Community and Euratom is a movement towards political integration. That is a fine aspiration, but we must recognise that for us to sign the Treaty of Rome would be to accept as the ultimate goal, political federation in Europe, including ourselves. That, as I have said, does not seem to me to be a proposition which, at the moment, commands majority support in this country. …"—[OFFICIAL REPORT, 12th February, 1959 Vol. 599, c. 1381–2.] Why did Government policy change? Was it because of pressure from America? If so, I find the position humiliating. Or was it because of the economic crisis of 1961? I am sure that everybody agrees that we cannot export our economic problems to any organisation. Whether we are inside or outside the Common Market, our salvation depends upon ourselves.

It has been said that we should go into the Common Market because the great competition there would bring a breath of change in our own industry, and would stimulate it. If the adherents of the Common Market are correct in saying that the competition we would find would give an impetus to our industries, surely the fact that we are staying outside and losing the great advantages which we would otherwise have had will provide an even greater stimulus.

Even among the greatest adherents to the Common Market idea there is no despondency. I have found disappointment but not despondency. This is a challenge which we must meet together. We cannot afford inefficient management, or unofficial wildcat strikes, or a Government which believe in expansion only during an election year. Much of last Monday's economic debate is relevant today. What we need is dynamic leadership, which we are not being given. Our unemployment figure of 815,000 shows that we are not in a healthy state to meet that challenge. The Government must drop some of their inhibitions and complacency. There must be leadership to which the whole nation will respond, and a really dynamic export drive.

I give credit to the hon. Member for Louth for having preached the question of exports for a long time. Our manufacturers must scour the world for markets. When I was in the Far East, on more than one occasion I was asked, "Why do not your industrialists send out more of their top people in order to find out exactly what we want, instead of sending us what they think we want?" We have to set about the job of increasing exports in a dynamic way.

The Government can help with extended credits. I am sure that some way can be found, within the framework of international agreements, to provide export incentives. There is no need for any of us to be despondent. We have plenty of friends, and I am sure that we are not turning our back on any of them. It is not our intention to turn our back on the continent of Europe; we are not turning our back on the Six or on France. The fact we are not a member of the Community does not prevent our trading with it. Our trade with the Six has been increasing, and I see no reason why it should not continue to increase. Our trade with E.F.T.A. has been increasing, and I am confident that there can be a greater upsurge of our Commonwealth trade.

The Prime Minister has said that we will not have a Prime Ministers' conference. Like my right hon. Friend the Member for West Bromwich (Mr. Dugdale), I take the view that we should have a number of Commonwealth conferences, eventually with one at Prime Ministers' level but perhaps preceded by conferences of the various economic, finance and trade Ministers. I would like to see a conference of the leaders of the Commonwealth and America—a country which still might have been in the Commonwealth, but for the ham-fistedness of some of our predecessors—and of E.F.T.A. If they all worked together, something might be evolved.

We have friends all over the world, in the Commonwealth, in E.F.T.A. and in America—and America is likely to look upon us with a much more kindly eye, now that we have been kicked out of the Six, than she would otherwise have done. I deprecate the amount of anti-American-ism that exists in this country—an anti-Americanism chiefly due to the fact that the Government have given the impression that we just do what we are told by the Americans. We cannot afford that. Some of the most violent anti-Americans are also the most violent anti-Common Marketeers. We cannot exist by being anti-everything. There are opportunities in other parts of the world, such as in South America, and opportunities for East-West trade, if only we are given the leadership to set about these things. The world is our oyster. What has happened is not a setback but a challenge, but we shall not solve that challenge merely by a vote of confidence.

6.26 p.m.

Sir Hamilton Kerr (Cambridge)

Having promised, like my hon. Friend the Member for Louth (Sir C. Osborne), to speak for only ten minutes, I must link my few remarks to one theme. I have the honour to be the chairman of the all-party Angio-French Committee, and no one regrets the quarrel with France more than I. Hon. Members on both sides of the House love France, and we have often followed with admiration the career of the President of the French Republic. When we think of him, we remember his brave and lonely stand in 1940; we remember that he was the only man who was able to solve the Algerian problem; we remember his superb speech in Westminster Hall, three years ago. We also remember that he has performed the greatest of services to France not only by restoring her greatness but by giving her back her self-respect.

Our difference with him amounts to this one point. We think that his idea for Europe is too small. Some years ago, my right hon. Friend the Member for Woodford (Sir W. Churchill) made a speech defining British foreign policy as three intersecting circles, none of whose interests conflicted—first, the Empire and Commonwealth; secondly, the United States, and, thirdly, Europe. I deliberately give them in that order. It was in this spirit that we began negotiations to enter the Common Market.

We believe that the French President's idea for Europe is too small, for three reasons. I do not think that it is oversimplification to say that in the modern world power derives from three sources. First, there is military power, expressed in terms of divisions, ships, aircraft and, above all, atomic power. Second is economic power, expressed in terms of output of coal and steel, and the possession of a large labour force, but, thirdly, there is moral power, expressed in terms of the loyalties and beliefs of the peoples concerned.

In these last two—economic and moral power—the Six are strong. Their production is great and growing. They are likewise the seat of the ancient Christian civilisation, which has had such a tremendous impact on the world. But in terms of atomic power they are virtually non-existent. Walter Lippmann tells us that our contribution in atomic power is about 2 per cent. of that of the United States. If that is so, the French contribution must be very small; indeed it is only a tiny fraction of ours.

The simple truth—and the fallacy of General de Gaulle's argument—is that at the moment Europe cannot be defended without aid from the United States. Secondly, it is surely not offensive to say that the General cannot live for many more years, and when he passes it seems certain that power will pass to the Western German Federal Republic. It says a great deal for the people of Western Germany that they asked us into the Common Market. They doubtless realise that Europe no longer wants to be dominated by one Power, but by a concert of great peoples.

Lastly, the choice the President placed before us of the Commonwealth or Europe was surely a very false one. We can never forgo our loyalties to the men who fought for us on every battlefield in two world wars and who fought for France. At the same time, we need the Commonwealth in the general framework of the cold war today. Can we imagine India left to China, or the rich resources of Africa and South-East Asia passing from us? For all these reasons, the General's idea of Europe is too small. But I think we delude ourselves if we believe that opinion will change in France or that the President will change. I believe that the best information shows that about 80 per cent. of the French people support him at the moment. So what can we friends of France do in this House? We can carry on as best we may; maintain all the personal contacts we can between our two Governments and collaborate in such ventures as the Concorde or, if necessary, the Channel Tunnel.

The President seems to think of the United States and the Commonwealth as Anglo-Saxon partners. It is true that the Americans speak English but they derive their system of Government from the French political philosophers of the eighteenth century. Also, since the nineteenth century there has been a huge population in the United States which is not Anglo-Saxon. America has derived her civilisation from Europe. For this reason I feel myself today a citizen of the Atlantic Community.

How can we play our part inside that Community? I was rather amazed last year by the reaction of this country to the speech of Mr. Dean Acheson when he said that this country was no longer a great Power and did not now know where it was going. I believe that had that speech been made a hundred years ago, in 1862, it would not have been greeted with rage but with roars of laughter. We knew that we were a great people and we knew where we were going. I believe, therefore, that The Times was so right this morning when it said that the crisis of the moment is not pre-eminently economic or military, it is a moral crisis.

During the 27 years in which I have had the privilege of being a Member of this House I have been lucky enough to see many parts of the world. Instead of growing more cynical I have returned from other parts of the world with a greater belief in this little country of ours. I believe that we are one country which has always believed that character is the foundation of national greatness. It possesses great moral resource. At the moment the national character is not as great as it might be. I believe that we lack faith in ourselves and in our mission. I am as shy, as most other Englishmen, when speaking of great issues. But I think the time is right to say that what we need today in this hour is a moral and religious revival.

We have all been to blame in the past, labour and management and every class. We have shut our eyes to the realities of the present day world. I was fascinated by a story which I heard about Lenin when in exile in Switzerland. Some well-wishers came to visit him before the revolution in 1917 and said to him, "We agree with you; we are working for the same thing in our own ways." In reply he said, "Gentleman, I do not ask you for your weekends. I ask you for your lives". We must all try to carry this idea out in our own lives. That is why I welcome every move in the country and abroad which restates the great moral truths of the past and rebuilds our national character. I welcome the meeting of the churches in Rome, and movements like moral rearmament, whose healing work I have seen in many parts of the world.

How can we help in the world today? We can do it by seeing clearly the present defects in our country, but, at the same time, seeing her as she could be. I remember the words used by Lord Rosebery in his great "Life of Lord Chatham". He wrote of him: He loved England with an intense and personal love. He believed in her power and her glory and her public virtue till England came to believe in herself. Perhaps each one of us, in our small and humble way, can follow the example of that great man.

6.35 p.m.

Mr. Desmond Donnelly (Pembroke)

I hope that the hon. Member for Cambridge (Sir H. Kerr) will not think me discourteous if I go straight to the speech of the Prime Minister.

During the last Presidential elections in the United States I had the good fortune to visit the State of Texas. When I was attending a political function there I was assured that all speeches in Texas were known to be rather like the head of a steer, with a point here and a point there and a terrible lot of "bull" in between. This afternoon the right hon. Gentleman gave us the finest definition of a Texan speech I have heard for a very long time, The speech of the Prime Minister amounted to a declamation of a Government who had found that their policy had failed and had no real idea of what alternative policy they should adopt and were meanwhile marking time.

The conditions which led us to apply for membership of the European Economic Community still exist, and the problems which we would have faced had we joined the Community are still the problems to which we must address ourselves. These are the two sides of the same coin, and perhaps I may say a word or two about each side. First the external side—if hon. Members like so to term it.

There have been a number of cataclysmic changes in the world's history in the last eighteen years. There has been the liquidation of the British Empire and the reversion of this country from being a great imperial centre to a small, crowded island of 50 million people, but which is still nevertheless, temporarily at any rate, a potential nugget of political power. There has been the emergence of the United States and Russia as the super-Powers. The development of modern technology has made a nonsense of all of our defence concepts. There has been a change in the whole scale of things which has meant that small nations can no longer develop industrially or militarily or politically in the same way as once they were able to do.

This is not a new development. Small nations have had to drop out of the industrial race before. It is a question of the size of the base. The extreme illustration and the reason why there is no aircraft industry in Andorra, or no Lord Nuffield in the Falkland Islands, has nothing to do with the indigenous capacity of the people it is due to the size of the base. Belgium and Holland have had to drop out of this kind of race, and now it has reached the point where the 50-million nation is not a wide enough base.

These are the sort of changes which have taken place in eighteen brief years and within the recollection of nearly one-third of the hon. Members of this House. They are changes more drastic than any since the fall of the Roman Empire, and the major debates in this House of the past few months, such as the defence debate the other day, the debate today have been, and all major debates which may take place in the future will be, about the specific issue of these great changes and how this country must adapt itself to them.

Perhaps I may now say a word about how we should face this situation. In my judgment, we stand today in a more perilous position than at any time in peace-time in the history of this country, in respect of our foreign relations for the last three years, because of our isolation and impotence. This again is a specific problem. It falls into two sections. There is the economic side and the political side. I wish first to say a word about the economic side.

We have been the custodians of the sterling area for a long time. This comes to us by history, by tradition, and now by sentiment, because we are still nominally the centre of the Commonwealth and, broadly, the Commonwealth constitutes the sterling area. I wish to pose the problem to the House—because it is a very specific problem about which we shall have to make a judgment, not necessarily in the next few months, but certainly in the next year or two—what are we to do about the sterling area.

In the N.A.T.O. Journal of December, 1962, the American economist Mr. James Burtle expressed some pertinent opinions. He pointed out that between 1954 and 1961 the imports of the sterling area, excluding the United Kingdom, increased substantially from 11.4 billion dollars to 16.6 billion dollars, while exports increased from eleven billion dollars to 14.2 billion dollars. In other words, exports have not offset imports. At the same time, he pointed out that the general reserves of the area declined, while the reserves of the United Kingdom slightly increased.

It would have been possible to have faced this situation without economic difficulties if the imports of the area had come largely from the United Kingdom. But there has been a revolutionary switch in the way in which the sterling area has been importing its engineering and manufactured goods. This poses a very real problem. Mr. Burtle quoted the British National Institute of Economic and Social Research to show that between 1954–55 and 1959–60 imports of manufactures in the overseas sterling area increased by 28.2 per cent. while imports from the United Kingdom increased by only 5.2 per cent. Imports from the Common Market countries increased by 61.1 per cent., from Japan by 74.5 per cent., from the United States by 52.5 per cent. and—to name one specific country in the Common Market—from Germany by 90.7 per cent.

This poses a very real problem, because it means that the burden of sustaining the sterling area here in London, acting as the bankers of the sterling area, is a severe inhibition upon our economic growth. From it, of course, stems a great deal of political influence in the world. The question I pose—and I do not pretend to answer it, for it is a very great issue about which there has to be a very broad, balanced judgment and a great deal of consideration—is: what do we do about the sterling area?

Having said that about the economic side, because it is very, very important, I come now to the political side. We have had a good deal of recrimination heaped upon President de Gaulle's head today. The political problem is specifically that we now have to seek to exercise the kind of influence on Europe and on the world that we would have been able to do from inside Europe. It will be infinitely more difficult but this must be the target of our policy. How do we set about it?

I do not propose to indulge in any kind of recrimination about President de Gaulle. I say only that anybody who has read his memoires will be impressed by the concept he advances. I hesitate to use the analogy, but it is the second time this century that someone has set down, in temporary retirement, the kind of political policy he would follow if he had the power. President de Gaulle has consistently followed this policy since 1958, when he came back to power. The substance, as hon. Members know, is the Europe of Napoleon followed by a rapprochement with Russia, with the concept of Europe advanced to the Urals, Anglo-Saxons, of course, being excluded.

There are several fallacies in this. There are obvious ones, but I will quote two specific ones. First, the idea of Europe from the Channel to the Urals has never been and never will be a geopolitical unit. Secondly, his assumption is based upon a misconception, of the doctrinal nature of the cold war. Mr. Khrushchev pointed this out clearly the other day. It amounts to the fact that the cold war began in 1917, actually reached a point of world challenge when the Russians had an industrial and military base strong enough to pose a challenge on a world scale, and it will continue until there are gentlemen in Moscow and then Peking who have given up the concept of world domination. In the present concept, the only kind of rapprochement is that of surrender.

Mr. K. Zilliacus (Manchester, Gorton)

No.

Mr. Donnelly

I wish it were otherwise. When they talk of making peace they mean our giving in.

Mr. Zilliacus

They do not.

Mr. Donnelly

Of course they do. I have argued with my hon. Friend many times, and I hope that he will not take it amiss if I say that he has not the slightest limited concept of what the cold war is really about.

Mr. Zilliacus

Unlike my hon. Friend, I have spent half my life officially in keeping in touch with Soviet affairs as a League of Nations official. I think I have forgotten more than he has ever learned. I know perfectly well that the Soviet challenge is ideological and economic and not a military threat.

Mr. Donnelly

I did not say that it was a purely military threat. I was saying it was an ideological challenge. I thought that was the whole basis of my remarks. If I did not make it clear to the House, I apologise. This is a religious crusade, but it is backed by every appropriate means available.

Mr. Michael Foot (Ebbw Vale)

The Protestants and the Catholics came to agreement.

Mr. Donnelly

They did. But the Crusades went on for quite a long time with the infidels, did they not?

The assumption of President de Gaulle's attitude is based essentially on a misconception of the possibility of a rapprochement. Of course, if hon. Members think otherwise they can join the Gaullists. But my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) would have some difficulty in getting back into France.

What are we to do about this isolation from Europe? First, we must address ourselves to the existing institutions of which we are members and from which the French cannot exclude us. First, there is N.A.T.O. Secondly, there is O.E.C.D., which arose out of the Marshall Plan. In both of these bodies the overwhelming voice is that of the United States. Thirdly, there is Western European Union, which is really the Six plus Britain. Finally, there is the Council of Europe, which we have tended to underrate and which has now become a very important political sounding board in Europe. All these bodies involve two things. First we have to get rid of our anti-Frenchism. Secondly, we cannot afford the luxury of our anti-Americanism.

The hon. Member for Cambridge referred to the speech by Mr. Dean Acheson. I thought that was an extraordinary affair. Particularly did I think that the letter to the Institute of Directors, even if one had had a good dinner in advance, was a most extraordinary statement of drivel from a Prime Minister. We cannot afford that kind of nonsense.

Nor can we afford our anti-Germanism either. West Germany is one of the keys to this situation. The Prime Minister referred today to Germans training in my constituency. Perhaps I may be permitted a personal word on this. I did not make the decision, and I was astonished when the German troops arrived. But not only is it silly of people to go prancing down there demonstrating against these troops—against the wishes of the local people—but it is something which is no longer in our national interest. I hope that we shall not hear any more of it in the future. It is absurd from now on.

In all these paths we must seek to exert an influence which has to be more sensitive, more appreciative of the requirements of both sides of the Atlantic, and recognise that this island, for good or ill, is anchored off the shores of Europe. We cannot take it to the Indian Ocean or put it in a sleeping car and take it to Sweden to be part of a Scandinavian bloc. We are twenty miles from the shores of Europe and the wild billows of the Atlantic beat on our western coast. We have to live and die in this island trying to act as a bridge between the two. It is going to be a very difficult task indeed. The extent to which we are able to do it will depend very largely on how we order our affairs here. Something has been said about the weakness of Britain. As my right hon. Friend the Member for Belper (Mr. G. Brown) said during a television broadcast the other day, one does not like to talk about this, but we have to face the facts.

The Prime Minister appeared today as presiding over this assembly of the sick men of Europe—almost as if he were a representative of the Ottoman Empire and not a descendant of some Scottish clan. That is not the Prime Minister's fault. It is not the fault of the right hon. Gentlemen who temporarily occupy the Treasury Bench—that is over-rating their efficacy. It goes back much further. Broadly, the British economy has been stagnant for more than forty years—ever since 1918—and, except for a brief period during the war and the post-war reconstruction, that stagnation has been a deep malaise.

This is something far bigger than can be dealt with just by the adjustment of Government policies on a short-time basis. There must be very radical changes. The hon. Member for Cambridge spoke of a moral purpose, but there must be a sense of national purpose in these changes, which must take account of the whole nation and not of any one limited section of it. We have to determine our priorities first of all, and they must be nationally acceptable.

Obviously, the first priority for any Government in any country—and I cannot Burke this, because it would be intellectual dishonesty to do so—must be defence. By definition, it is the sustaining of the apparatus of the State. It need not be the over-riding priority but it must be the first one—indeed, it should not be the over-riding priority.

Then comes social investment or industrial investment. Here we have to give a virtually over-riding priority to industrial investment, and included in that investment in machines I would put investment in people. Here we need a refurnishing of our basic industries on a major scale that has never before been undertaken by a Parliamentary democracy. It has been done in the Soviet Union. In forty years they have pulled themselves up to their present position. We have to do it by consent.

This is our major challenge, and it will call for great maturity, and great leadership from the Government of the day, too, because it means recognising that the consumer goods and social services will have to take second place to industrial investment. I bitterly regret that, because I am a supporter of the Welfare State, but we have to recognise that before we can get the hospitals we must have the factories—because that is the way in which to get better hospitals in the end.

In the same way, we must have the factories before we can have the consumer goods and the "never-had-it-so-good" policy. We must never again have from a Government that kind of cynical approach to electioneering. The ballot box is not a slot meter, not something stuck on a railway platform into which people put their votes in order to get some kind of candy floss—although I appreciate that to be the constitutional concept of some right hon. Gentlemen who shall be nameless. We must never go back to that situation.

Next comes education. There has been a great deal of speculation in the weekend Press about the 45 universities recommended by the committee set up by the Labour Party under Lord Taylor. This is the sort of bold approach I support. We shall soon have the report of the Robbins Committee. But there must be much more to it than that. We need more education and we need a big improvement in the education we now have. We need more teachers, but we also need better teachers.

I believe that it must work in two parallel sections. First of all, we have the expansion, which obviously must take place as the major drive. There will be mistakes and there will be considerable problems, but it is better to get the drive started than never to move at all. Secondly, we must try to improve the standards of what we now have. We are not doing nearly enough about the techniques, including television techniques, that might be deployed—I will not go into that now, but I hope to talk about it on some later and more suitable occasion—to raise the standard of education as well as to expand its extent. But the watershed must be the raising of the school-leaving age to 16. It is ridiculous that a great industrial nation like this does not already have a school-leaving age of 16.

This will call for very great sacrifices by the British people, and let us make no mistake about it, we must go to the country and pose what is a virtual attempt at creating the mass Athenian democracy; an attempt to govern by consent and to get support for restraint. There must be national incomes and wages policies that may appear to bear harshly but which must be carried to the people by the leadership of the Government of the day. This is a democracy—it is our proud claim. It must be done by consent, again, by the Government of the day, which is an even bigger test of leadership.

All these things involve the greatest challenge in our history, far more difficult even than resistance when attacked, but the hope of the future is this. We have a chance, it is a slender chance, I would not put it higher than that—I am not being defeatist but I am aware of the practicalities and magnitude of the problem—and this House of Commons has been faced with this challenge. We can succeed, provided we have the courage to dare the new, the compassion to help the wretched of other countries, and the vision to see what men can really be in the society of our dreams.

6.56 p.m.

Lieut.-Colonel Sir Walter Bromley-Davenport (Knutsford)

Had we been successful in entering the European Economic Community we should have had a home market with a firm base of some 240 million people as opposed to the 50 million people in this country, a market bigger than the United States, hitherto unchallenged as the greatest single market and the richest nation in the world.

An example of what this would have meant was sent to several hon. Members some time ago. The firm concerned produced certain technical equipment, the total development charges of which amounted to some £145,000. Total sales in the United Kingdom amounted to about £100,000, but export sales, particularly to Europe, amounted to £860,000. As soon as the Common Market reduced its tariffs within the Community and raised them against this country, quite obviously those other countries would be able to undersell us throughout Europe. The only thing that the firm could do in order to remain competitive was to transfer its main production plant to Europe. As we know, several firms have done that already. The only alternative for us is to cut costs, increase production and find markets elsewhere, but how are we to increase production with so many people asking for more pay for less work? An example of the result of this was given by my hon. Friend the Member for Louth (Sir C. Osborne) in an excellent letter to the Daily Telegraph only the other day.

In the last seven years, our exports have increased by only 28 per cent., but Germany's increased by 156 per cent., Italy's by 180 per cent., the Netherland's by 92 per cent. and Switzerland's by 67 per cent. World exports show an average total rise of 50 per cent. We failed because our export prices increased by 10 per cent., Germany's by only 2 per cent., while those of the Netherlands fell by 1 per cent, and those of Switzerland by 4 per cent. Therefore, we are faced today with a gigantic task and we cannot survive as a nation if we insist on more pay and less work.

We can no longer afford the luxury of unofficial strikes, wildcat strikes, working to rule, go-slow, and sending people to Coventry because they work too hard, and all that sort of nonsense. All sections of the community are fed up with them, including the unions themselves. All sections of the community feel that the system must be wrong somewhere whereby a handful of men, in defiance of their unions, can inflict so much damage to their country and distress and hardship on all sections of the community.

Behind all this, sabotaging the country is the Communist Party. Haw often have we read of its responsibility for fomenting industrial unrest. Its leaders proudly proclaim: In Great Britain during the first nine months of 1962, 4 million workers, as against 639,900 for the corresponding period of 1961, went on strike for a total of 4 million working days. Unless something is done, there will be more and more sabotage as surely as the Red Flag flies over Moscow. And the hon. Member opposite who smiles had better go and join his fellow-travellers. Lord Citrine blames the Communists for an atmosphere of apathy, suspicion and hostility. Mr. Carron said, Subversive elements played their part in the Pressed Steel strike and he added that They are doing all they can to wreck Britain's economy. My right hon. Friend the Prime Minister once said that the real threat to the life of this country was not military but economic. I also remember him saying in the House that next to being defeated by the enemy and living under the heel of a conqueror, the worst catastrophe was uncontrolled inflation. Chancellor after Chancellor and Government after Government have fought against this evil, but the trouble is that the road to national bankruptcy is quite pleasant. Controlled inflation is enjoyable to a great many people as long as it is controlled.

The Government are sometimes criticised for not placing the facts before the people. What nonsense this is. All Governments have warned the people of the dangers of inflation. Not least of those who warned them was the late Leader of the Opposition, but not all his charm, nor all his eloquence, nor all his tears had any effect on the miners. His warnings bounced off their heads like tennis balls off a concrete wicket. Sir Stafford Cripps did his best to warn the nation time after time. As my hon. Friend the Member for Louth said, he did so in the House in 1949.

Speech after speech is made on this subject, but nobody listens. Reports of warnings by all Governments are not published in the national newspapers. If they are published they are put on a back page. We cannot blame the newspapers, because to remain in business they have to print what the people want to read, and nobody wants to read bad news. As the situation gets worse and inflation gets really serious, no Chancellor can say so, because that might involve a run on the £. And all the time the deadly canker of the Communists is at work, occupying more and more key positions. There are fellow- travellers everywhere with the sworn objective to destroy our economy.

What can be done? There is an increasing feeling among all sections of the community that it is wrong that a free people should have to suffer periodical tyranny from an irresponsible minority. This has been described as not democracy but anarchy, and it is our duty to stop it. A people who have not the determination to protect themselves from the abuse of their own liberties are going down the hill and deserve all they get. This country may not survive if something is not done about this.

There is a Motion on the Order Paper which recommends that a Royal Commission should be set up to inquire into the causes of disputes and into the part played by both sides of industry in producing the conditions out of which disputes arise. We are all glad that the Motion mentions both sides, because it is the bad employers who create the conditions in which Communist agitators can do their deadly work. I hope that if such a Royal Commission is set up it will report as soon as possible. There is not much time left.

In the meantime cannot we anticipate the findings of the Royal Commission and start thinking of what action might be taken? The situation in the country is that the Communists can do exactly what they like, provided that they keep within the law. Everything is made easy for them. Instead of making conditions as easy as possible for them to operate, cannot we make things as difficult as possible? We do not tolerate traitors in time of war when we are fighting for our lives. Why should we tolerate them in time of peace when we are working for our very existence?

Mr. Drew Middleton, that great friend of this country who was here throughout the war writing for the New York Times, made a farewell broadcast on leaving these shores. I was fortunate enough to hear it. He said how happy he has been here, what a wonderful country it was and what a wonderful people we were. But he felt that one of the great virtues of the English people had now become one of their greatest weaknesses. This was tolerance. It was tolerance carried to such an extent that we allowed the Communists to get hold of the trade unions and other key positions and sabotage the country. What amazed him even more was the complete indifference with which people in all sections in this country recognised this fact. Nobody seems to care any more—if anyone ever did. He described our attitude as madness when we adopted a play fair attitude towards Communist politics and the trade unions.

Have we not learned that these traitors will stop at nothing and that to retain power they rely on bullets instead of ballots once they are elected? Why do we not consider some of the American methods of dealing with them, without adopting the methods of McCarthy? Surely the Americans who have contributed towards outlawing the Communist Party in the United States cannot be described as McCarthyites when the list includes Franklin Roosevelt, Harry S. Truman, Dwight Eisenhower, John F. Kennedy, Adlai Stevenson, Chester Bowles and Ralph Bunche. Prominent members of the trade unions in the United States have co-operated 100 per cent., and behind it all, giving further support, have been learned justices of the Supreme Court such as Frankfurter, Black, Douglas, Jackson, and Hand.

What steps might we consider? I say only "consider". At governmental and legislative level the Communist movement might be declared illegal. The Government might declare that no Communist should be employed by the Government or in local government. No defence contracts should be given to any firms which employ Communists. Perhaps our unions would co-operate, just as the unions have co-operated in the United States. In America some unions prevent Communists from holding any position of responsibility in the unions and, indeed, some unions ban Communists altogether.

I have one other important suggestion—and this is often said to hon. Members by their constituents. It is that strikes should be decided by ballot. Something must be done, and the only thing that is always wrong is to do nothing. If the Government take bold and decisive action they will get the overwhelming support of the vast majority of people in this country. But if nothing is done, if these traitors continue to sabotage our industries and if the nation goes on permanently demanding more and more pay for less work, and getting it, here lies the road to ruin.

7.11 p.m.

Mr. Michael Foot (Ebbw Vale)

The hon. Member for Louth (Sir C. Osborne) told us that he intended to speak for only ten minutes, and he gratified us greatly by keeping to his promise. We have just had the explanation as to why it was possible for him to keep his promise; he obviously handed part of his notes to his hon. and gallant Friend the Member for Knutsford (Sir W. Bromley-Davenport), who was seated behind him, so that he could read out that part of his speech. Anyway, we prefer to have such a speech in two instalments, and I must say that the latter part of it which we have just received from the hon. and gallant Member for Knutsford was not directly relevant to today's debate. The hon. Member proposed large-scale measures of suppression to deal with the Communist menace. I have always thought it rather strange that the same people who propose to deal with Communism start by behaving like Communists.

I will deal with the question before us, however, and refer to the speech of the Prime Minister. We were told a few days ago in another place by the Foreign Secretary that this was not an occasion, at the end of the Brussels talks, for new decisions and that there must be time for a pause. One verdict which can be passed on the Prime Minister's speech is that the pause continues. No one would take seriously that part of his speech in which he outlined the measures the Government would take to deal with this critical situation.

The Prime Minister was obviously more interested in turning to the other part of his speech, the political side. He purported to give some account of what had led to the crisis in Brussels and he reflected on the future of Europe when commenting about General de Gaulle. It seems to me that the Prime Minister, however he might disown attempting to do this, in every statement he has made since the conclusion of the Brussels talks—and this goes for many of the statements made by other Ministers, including the Secretary of State for Commonwealth Relations—has striven hard to make President de Gaulle the scapegoat for everything that has happened.

We have had the development about Princess Margaret, which was the first sign of the Government's reaction. The second line of Government policy in their second reaction was to say that we must consolidate still further the American alliance and prove that we can be even better allies of the Americans than we were before. These are the two deductions the Government have drawn, and one can say, therefore, that their reaction to the Brussels situation is a combination of pique and pusillanimity—the two worst foundations for any foreign policy.

Why did President de Gaulle take the action he did? It is worth remembering that, however we may dislike many aspects of his policies—and he has introduced an authoritarian constitution which may mean that when he dies the situation in France may be serious indeed—it would be foolish to dismiss General de Gaulle as a megalomaniac, an awkward anachronism or a Napoleon the Little. Even while we may dislike some of the things he is attempting to do, there is usually a reason or a purpose—or even a vision—in what he does, even while a part of that vision may seem distorted.

Thus it would be foolish for us to think that General de Gaulle has acted merely out of pique. As he has shown throughout his life, he thinks in terms of distant goals and there have been at least two occasions in his life when he has succeeded in reaching those goals, although many people at the time of his proposing them had thought them unattainable. For these reasons we should examine very carefully—certainly far more carefully than has so far been done—why General de Gaulle took the action he did and what was his motive.

We may be able to do this by looking carefully at his speeches, for I do not think that the Prime Minister has made General de Gaulle's reasons clear. The General declared at a Press conference in Paris that one of the reasons for his action—although it has all been smoothed over—had something to do with Cuba and the deductions which he drew from Cuba. We should not dimiss everything he says. He is a man of substance and we should be ready to consider what are his deductions about Cuba from the point of view of France and Europe.

He says, in effect, "In my opinion what happened in Cuba is this"—note, he was not protesting against the action of the American Government—"The action taken by the American Government in Cuba and in the Cuban dispute shows that they will act by themselves and not necessarily in accord with the interests of the whole alliance." We must bear that part of General de Gaulle's conclusion very much in mind.

If General de Gaulle had any doubts about that, there were many statements issued afterwards by President Kennedy regarding the Cuban affair. Some of them have appeared in the British Press, particularly those made at the beginning of this year when President Kennedy stayed at Palm Beach and thought about what had happened in Cuba. So when people talk about one man ruling Europe, President Kennedy's pronouncements would indicate to some people that one man might wish to rule the whole of the Western world. The Times Washington correspondent—in my view, the best informed correspondent in that part of the world—wrote that America's performance in Cuba could be … now seen as a text book example on how to deal with enemies and allies alike". That was the Administration's conclusion. There was also the report from Mr. Worsthome in the Sunday Telegraph who, having seen President Kennedy and others in Washington, wrote: President Kennedy is determined to make all the vital thermo-nuclear decisions. At moments of thermo-nuclear drama, the only meaningful division will not be between Americans and British, or Americans and the French, but between those in the White House and those outside. President de Gaulle can read these things as well. He takes the view that if America is determined to insist on being the complete arbiter of everything that happens in the Western Alliance, he is not prepared to agree.

It may also be that he was influenced by the speech of Mr. Dean Acheson. That speech was not properly read in this country. President de Gaulle had no reason for thinking that Dean Acheson's speech was not the view of the American Government, because a few weeks before the speech Dean Acheson had been sent to France during the Cuban crisis as the spokesman of the American Government. The most important part of that speech had nothing to do with Britain's rôle in the world. The most important part occurred when Dean Acheson said that in his view Germany was the steadiest ally of the United States. He went on to outline a programme for dealing with the Berlin and German situation, giving what amounted to proposals for creating a Cuban crisis in Germany and rolling back the Russians in East Germany. This was all in Dean Acheson's speech, but it went unnoticed in the reports in this country—it was not put in exactly those words, but the meaning was there and I do not think that anybody would dispute it.

However, surely President de Gaulle read that, too. He would have said, "The Americans say that they are to make Germany their steadiest ally; it so happens that West Germany is my steadiest ally and I will not have any interference with that." He could also remember for himself where the instigation for Britain's entry into the Common Market came from.

Many of us made the accusation during the period of the Common Market negotiations that the chief pressure for getting Britain into the Community came from the United States. That was pooh-poohed in many quarters at the time. We were told that we were exaggerating and that these were old fears which we had always had and which could not be true. But when the Common Market negotiations collapsed, in a matter of hours we were told that this was the destruction of a primary purpose of American policy. The explosion of American wrath within a few hours of the collapse of the Brussels negotiations was in a sense a vindication of the charge which President de Gaulle had made beforehand.

Has anyone tried to discover objectively the reasons why President de Gaulle has reached this conclusion? We have not been provided with reasons by the Government. We have been told that President de Gaulle has been guilty of a grave breach of faith, that he is just a twister or one man who wants to dominate Europe. Those are not satisfactory explanations, particularly when they come from those who were lauding President de Gaulle only a short time ago when he was committing much more serious offences, such as the partial suppression of French democracy. At any rate, they do not explain the facts.

Anyone who has studied the situation must conclude—and this is important for the future—that President de Gaulle is a rebel against American leadership. Some of us who are also rebels have some sympathy with him on that account. However, he is an old-fashioned nationalist and an old-fashioned European and he has expressed his rebellion against American policy in these terms. When he goes on to express it in terms of saying that he intends to have his independent nuclear deterrent, I think that he is pursuing a dangerous absurdity, just as hon. Members opposite are when they pursue the same will-o'-the-wisp.

However, the conclusions which the Prime Minister draws from this situation are quite inapposite. De Gaulle is seeking to wrest some of the power out of the American hands in Europe—surely that is not overstating it—and will continue to do so. He has been alone many times before and he will not be diverted from his course because the British Government does not like it, or even because the American Government does not like it. The more the American Government denounces him, the more will he be strengthened in his point of view, and he may think that the more he will get others to agree with him.

There are many reasons why people in Europe will agree with him, particularly if it is the case, as has been suggested, that one of his long-term aims is to secure a settlement between East and West in Europe. He shows more knowledge of history, certainly of geography, than some hon. Members opposite who have spoken today, because he understands that the frontiers of Europe do not end at and are not confined to the frontiers of the Common Market. One of his wise actions was the recognition of the Oder-Neisse line some years ago. He may be saying, "Eventually we must make an agreement with the Russians and it is better that it should be made by Europeans than by Americans." He may have some grounds for that, because the agreements or disagreements made by the Americans have not been so wise.

For all those reasons, in my opinion we are witnessing something much bigger than the collapse of the Common Market negotiations. The whole world picture is being changed. It is not easy to arrive at certain conclusions from it, but one can be absolutely certain that the conclusions drawn by the Government, especially by the Prime Minister today, are wrong. The Prime Minister draws the conclusion from the whole affair that the only course of British policy is to dedicate ourselves even more rigidly, with even fewer qualifications, to the American alliance.

General de Gaulle can see that the American alliance as operated by the Americans today is something that Europe will not swallow. It is the old story from "Alice in Wonderland"—if one goes on drinking from the bottle marked "Poison", it is bound to disagree with one in the end. There are some policies which the United States has been pursuing in Europe and Asia over the last ten years which neither Europe or Asia will swallow. The major policy of the United States in Asia has been the ostracism of China. Does anybody think that that is a wise policy? It is a major policy, nevertheless. I am not saying that de Gaulle is all-wise, but no one can say that the ostracism of China for the past ten years has been wise. However, it is to be the leading policy to which the alliance is committed in Asia.

The major policy of the United States in Europe since 1951 or 1952 has been to build up West Germany as the most powerful State in Western Europe, standing athwart any idea of disengagement and détente in Europe. That cannot be denied. It has all been written out and the Dean Acheson speech has underlined it. Having made Germany such a powerful State, the American view, according to Dean Acheson, is that West Germany is now America's steadiest ally.

The Americans' policy in the Caribbean, their Cuba obsession, and their apparent determination to overthrow the Castro régime, either by force or by starvation, irrespective of the consequences that may follow for the United Nations, which I believe to be the hope of the whole world, is another example. It is another major policy of the alliance to which we are committed.

I take my final example from this debate. How was it that the United States Government exerted such influence to press this country to join the Common Market, using all their diplomacy in so many capitals to try to achieve this result, without finding out what was the effect on their most faithful ally? Apparently, the United States Government, like our own, could not discover what President de Gaulle's intentions were. What has our ambassador in Paris been doing all this time? We are told in the newspapers today that he was the person who advised that Princess Margaret should not go to Paris. I should not have thought that anyone would take the advice of our ambassador in Paris, because he might have told us, long before, what was President de Gaulle's view about the Common Market. Surely, also, the Americans might have found out. Instead, during the past eighteen months, the whole power of American diplomacy has been used to try to force, persuade or get this country into the Common Market.

Yet, when we examined the possibility, as we did in the House last year, what did we see? The late Leader of the Opposition objectively and faithfully examined it, as, I am sure, everyone agrees, and he saw that the only terms on which we could join would be deeply damaging to the Commonwealth, probably deeply damaging to British agriculture, and even more damaging to any possibility of planning in this country.

My hon. Friend the Member for Pembroke (Mr. Donnelly) outlined, at the end of his speech, some measures for arranging our priorities in this country in order to escape from our economic difficulties. With many of his proposals I agree. But we could not carry out those proposals in the Common Market. How does my hon. Friend think that he could have pursued all his proposals for ordering our priorities as he wishes in a Community where the economic policies would not be determined in this House and in this country? I do not think that even my hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), who is such a passionate supporter of the Common Market, would ever have dreamed of saying that the proposals of his hon. Friend the Member for Pembroke could have been carried out within the Common Market.

That was the situation. The consequences of joining the Common Market were found to be greatly injurious to the Commonwealth, greatly injurious to the planning of British agriculture, and, even more certainly, they would forbid all the economic planning measures which are so desperately required to enable this country to escape from its present position. Over and above that, they would have destroyed the independence in this country in its foreign affairs, and done so at this critical time. I have tried to describe the picture I see of the world. The whole situation is altering between East and West. The planet is trembling with alterations and differences in alliances and arrangements. I do not believe in the old configuration of the cold war which my hon. Friend the Member for Pembroke described. It is out of date. It is five years, even ten years, out of date. The world is changing much faster than my hon. Friend understands.

I believe—this is certainly my hope—that the most powerful new influence in the world, alongside the power of the great nuclear giants, will be the great and growing power of uncommitted nations represented in the United Nations. This is the new power, the only hopeful power in the world, perhaps, although hon. Gentlemen opposite so often jeer at it and denounce it. It played a critical part in the days of Cuba. It played a critical part in the Congo. It can play a critical part in many other areas of the world.

Yet, if we had gone forward in the Common Market, our influence would have been injured at the very moment when we could help to shape affairs in this changing world, perhaps, more beneficially than for many years past. One of the reasons why I am passionately eager to see in this country a new Government who have no responsibility for the tragedies and errors of the past ten years is that I want us to have a Government who are prepared to look afresh at this changing world. This is what we must hope for. In the words of Abraham Lincoln, we must seek anew and act anew. We must disenthrall ourselves. Therefore, so far from bewailing what has happened, as the Prime Minister did in his lugubrious speech, we may, whatever may have been his motives and reasons, thank President de Gaulle for doing for us what the British Government had not the courage and energy to do for themselves.

7.35 p.m.

Mr. R. P. Hornby (Tonbridge)

I find this a depressing day, depressing because of the situation which we are discussing and depressing because of some of the things which have been said during the debate.

We start with the fact that France, as she was legally entitled to do, has exercised her veto and, as a consequence, Britain cannot go ahead with her negotiations, at least for the time being. We are excluded, here and now, from what has always seemed to me to be, in political terms, far and away the most promising development in the post-war history of Europe. There are, of course, other organisations to which we can refer, but this one, the E.E.C., had gone farther in the direction of enabling nation States to solve their differences and difficulties in an adult way to the benefit of them all than had any other single organisation developed in recent years.

As a result of what has happened, we face a problem not only of British political influence but of opportunities for the development of overseas trade affecting Britain herself and her dependencies and fellow-members of the Commonwealth in many parts of the world. Third, there are the effects on our own opportunities for the growth of wealth and the maintenance of our standard of living in this country. In all these respects, it seems to me, we have great cause to regret the consequences of the French veto.

We are not the only people with cause to regret what has happened. The other five members of the Six are today wondering whether they and France are thinking in precisely the same terms about the future of Europe. Hitherto, there has been a great spirit of compromise within the Six which has made it possible—I hope that it will continue to do so—to overcome the difficulties as and when they arose. But recent events have brought the spirit of compromise and co-operation within Europe very near to breaking point, and this we, as Europeans, must regret no less than the other members of the Six regret it.

America also, I believe, has had cause for considerable concern. America has spent a great deal of money, diplomacy and effort in the last 20 years or more, first, in coming to the rescue of Europe, second, in trying to set Europe on her feet again, and third, in trying to help Europe so to organise her affairs that dissensions within Europe would not break out again and ruin her. With all that this must involve for the defence of the West, America must be not a little disillusioned by the signs of a split in Europe, the split which the negotiations in Brussels were to heal but which might, conceivably, become permanent unless we can solve our problems in the next few years. Last, there is the, as it were, relatively parochial matter of the danger of a bitter chapter in Anglo-French relations opening. All these things seem to me to give great cause for anxiety today.

That being so, how should be attempt to face these facts? Hon. Members on both sides have referred to the economic challenge which we have to face. I agree that it is there, and the sooner we face it the better. It seems to me that the essential points are these. First, our own efficiency—or the lack of it—which, I think, may have had some effect on the negotiations. Every time we have to make some special plea or ask for a longer period for playing in or for helping a particular industry, that makes the business of collaboration with and entry into Europe more difficult. If we can improve our efficiency not only do we help to overcome our immediate difficulties but we also make it easier at some future date, which I hope will come, to get very much closer to the Six.

One of my hon. Friends referred to our high costs, our export problems, and so on. We cannot be tolerant about our efficiency when we read in a recent F.B.I. report that only one-sixth of British industry is working on a shift system of any kind—not working right through the night, but working even a two-shift system. Is it likely that enough expensive machinery will be installed if that is all the use we make of it? Is it likely that we shall be competitive in Europe and in the world unless we gear our technical education to a much higher level? Is it likely that our exports will flourish unless we become less inept in speaking the more frequently used languages of the world? We are very adept at the many abstruse languages of Africa and Asia but much less so in the more widely spoken languages of Europe.

Reference has been made to labour relations and to many other things, but I believe that efficiency in the conduct of our business is something from which we can not longer escape, and it must be the keynote, for all its inconveniences, of our domestic policy.

Secondly, in our international trading policy, I believe that our objective must be to keep our trade as international as possible and to keep our tariffs as low as we can without setting ourselves at a disadvantage with people who refuse to do likewise. Thirdly, I believe that in our economic thinking in the coming months we should beware of doing things which will make the unification of Europe more difficult. I agree that for tactical reasons we must face the fact that for the time being negotiations are dead, but I hope that they are not buried. I trust that the time will come when this matter can be taken up again and that we shall have better success.

I wish to say a few words about Commonwealth trade. Nothing could be less true than the statement of the right hon. Member for Huyton (Mr. H. Wilson) that Commonwealth trade has had a merciful reprieve. Precisely the reverse is the case. What the right hon. Gentleman totally fails to realise is that Commonwealth trade is not solely a matter of the policy of this country in conjunction with the members of the Commonwealth. It is something much bigger and wider than that. It was precisely because we were enlisting the interests, support, investment and markets of a far wider area that the negotiations in Europe were of paramount importance to the Commonwealth, and I believe that that is being increasingly recognised, despite some of the initial protests, not unnaturally and very emotionally, made at the time.

I turn from the economic to the political problems. I am sure that the main point that we must emphasise again and again, and more specially now than at any time during the negotiations, is this. If, as we have said time and again, we value the unification of Europe and the prevention of old discords recurring, we must play our part to the full in the European councils open to us. In the military sphere, we must play our full part in N.A.T.O. Whenever we seem to be falling short in our commitments there, we are handing to our opponents in Europe and elsewhere weapons with which they can beat us.

Secondly, the suggestion was made in an article in the Observer yesterday, and it has been made by hon. Members in the debate, that O.E.C.D. is an organisation in which we must continue to play our full part. Particularly must we interest it to the very full in the development prospects of the less fortunate parts of the world.

Thirdly, many sharp things have been said from time to time about how much is said and how little is done at the Council of Europe in Strasbourg. I believe that now more than at any other time great importance should be attached to the rôle played by Members of this House in the deliberations of the Parliament in Strasbourg. Presumably it is the intention of the French Government, having vetoed our entry into Europe, to justify their view that we are not mature Europeans at this stage. There is nothing to be said for providing President de Gaulle with ammunition to prove his point.

Lastly, on our links with Europe, a word or two about Western European Union. It has been suggested by some that this is a most suitable forum for close contacts with Europe. I cannot pretend to be an expert on the multifarious European bodies, but my reaction to this suggestion is that it is not, perhaps, the most suitable place at which to make our views best known. It seems to me that if we try to refurbish W.E.U. and make it something much more than it has been there is a danger that it will be said that we are trying to divide the institutions of Europe and trying to set up a rival organisation whose main effect would be to weaken the Six.

Nothing that we do in our relations with Europe should give strength to the argument that we are trying to weaken the Six. We are disappointed at our exclusion from the Common Market. We regret that France appears to see its development differently from ourselves and, apparently, the Five; but we certainly do not wish there to be any decline in the strength of what I earlier referred to as probably the most outstanding development in post-war diplomatic history.

Next, a word about our relations with America. The hon. Member for Ebbw Vale (Mr. M. Foot) referred to the reason why General de Gaulle wanted to exclude Britain, as the spokesman for American views, from the Common Market. In passing, I have heard of many strange bedfellows, but none stranger than the hon. Member for Ebbw Vale and General de Gaulle. Amidst a good deal of violent anti-Americanism from the hon. Member for Ebbw Vale, there was, however, one point which seemed to me to have substance. The hon. Member pointed out that Europe—and France in particular—was touchy of the seeming disregard which American policy had for the views of her allies. In particular, he was referring to Cuba.

I entirely defend the attitude of the American Government over Cuba, although not for the reasons that the hon. Member gave. Short of an evolved and agreed machinery for consultation within the Western Alliance, America, as the leading member of it, sometimes has to act alone lest nothing should happen in defence of her interests. The right conclusion to draw is not General de Gaulle's conclusion or that of the hon. Member for Ebbw Vale—namely, that what America has done once, every individual nation should start to do for itself—but that we should do far more to evolve the machinery of political consultation within the Western Alliance.

Finally, I refer to what I can best describe as our general attitude to what has happened. In the past, there have been dangers, to which we have sometimes succumbed, of seeing ourselves as insular, proudly nationalist and rather isolationist and taking a good deal of pride in such an attitude. We do ourselves great damage if we succumb to those temptations.

The danger in the world is that the individual nation States, with the weapons with which they can now arm themselves, will cling on too tightly to their sovereignty and be too little willing to pool their resources, their manpower and their willingness to debate with one another; and in the process they will go down, either as a result of action from their enemies or though sheer mutual self-destruction. That is what it should be our cause to prevent.

In doing that, we shall be helping ourselves, we shall be helping all Europe and we shall be helping our allies and Commonwealth friends overseas. I therefore hope that no action of impatience or spite will prevent us, here and now, from preserving those objectives and ultimately becoming a part of Europe.

7.52 p.m.

Mr. Jeremy Thorpe (Devon, North)

I congratulate the hon. Member for Ton-bridge (Mr. Hornby) on his speech, which was reasonable, constructive, unembittered and contained definite proposals for the future. One could only wish that the Prime Minister's speech had had the same qualities.

For those of us, in all parts of the House, who have been passionately keen on the idea of European co-operation, today is a sad and distressing event. I remember the days when for a Liberal to get up from this bench and advocate that we should apply to join the Common Market was to invite howls of derision from both the major parties in the House of Commons. I remember when to call a Division on the issue of whether it was more important to go into the Six than to try to create E.F.T.A., or whether it was the moment, in consultation with the Commonwealth and E.F.T.A., to apply for membership and to negotiate terms, was again an occasion for howls of derision. To challenge the issue in the Lobby would go the mass hordes of the Tory Party on the one hand, and the Labour Party would sit sullen and abstaining on the other hand, with a handful of Liberals going into the other Lobby to face derision from both the other parties. At least, in those days, there was hope of conversion, and the Government were converted. Unfortunately, their conversion has come too late. As the hon. Member for Tonbridge has said, the negotiations are over and dead, and they must be buried.

The full significance of what has happened was outlined in the opening speech by the Lord Privy Seal on 10th October, 1961, when he made Britain's initial application to join. He said: There can be no doubt that the success or failure of these negotiations will determine the future shape of Europe. They will affect profoundly the way of life, the political thought and even the character of each one of our peoples. Inevitably, there has been concentration upon the economic effects of exclusion. Many of the measures which must now be taken would have had to be taken whether we were inside or outside the Common Market, such as stimulating trade with the Commonwealth, E.F.T.A. and the United States, the possibility of bringing about substantial tariff reduc- tions through G.A.T.T., world commodity agreements as envisaged by the Six and certainly a new agricultural policy. Having heard the Prime Minister's remarks and remembering what he said to the National Farmers' Union in 1956, it is interesting to know when he suddenly found that the 1957 Act had the defects of which he spoke today.

It is, however, the political significance of our exclusion which is much more important. I agree with those who are opposed to the Common Market that it is primarily a political grouping. This is, indeed, why many people, ranging from the hon. Member for Ebbw Vale, on the extreme Left, to the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith), on the extreme Right, have been opposed to the concept of the Community, because it is primarily a political grouping. It is on this issue that we are entitled to ask the Government what are their intentions, because it is on this issue of the political implications that the Government have been very shifty ever since the application for membership was made.

Britain has spoken with two voices. Abroad, there has been the voice of the Lord Privy Seal, starting with his speech of 10th October, 1961, when he accepted all the implications of the Bonn Declaration. One remembers the embarrassment of the Government when that speech leaked to the Canadians and they insisted upon full publication. We then had the speech to the Council of the Western European Union by the Lord Privy Seal in April last year. That was the acceptance abroad of the political implications of joining the Community.

At home, however, the Tory leaders have been saying very different things. At their last assembly at Llandudno, when they managed to generate the same excitement for the Common Market in 1962 as they had contrived to procure hostility against it in 1960, the First Secretary of State was heard to say: The present negotiations do not take into account questions of political union and the Prime Minister was saying: Close co-operation may be involved, but there is no question of a federal character of any sort involving sovereignty of the Crown. Government or people. It is true that the First Secretary has advanced—

Mr. Edward Gardner (Billericay)

Does the hon. Member not agree that we were negotiating upon the terms of the Treaty of Rome? There is nothing in the Treaty of Rome that deals with political association. That would need to have been the subject of another treaty.

Mr. Thorpe

The hon. and learned Member cannot have read the Treaty of Rome in its entirety. If Tory Members are still not aware of what the European Community is and is intended to do, it is high time that even back benchers in the Tory Party made the necessary researches. The Treaty of Rome intended to create a community which would achieve political ends through economic means. To quote Professor Hallstein's words, "We are not in business, we are in politics." The whole trend of Europe has been towards political integration—for example, the High Authority; Euratom, which we have applied to join; and the Iron and Steel Community, which we have not yet joined but are thinking about. The whole contest has been between those who hold the view of the Fouchet Committee, of a Europe des patries, and the Five, who wanted Europe with a supranational authority. Of course, the Treaty of Rome and the Community meant a political involvement.

Mr. Gardner

Not a political treaty.

Mr. Thorpe

If hon. Members take the view that the Treaty of Rome and the European Community and the acceptance of the Bonn Declaration of 18th July, 1961, did not involve political union, then perhaps the speeches which Ministers have been making in this country have been accepted, as it was intended they should be accepted, by the rank and file of the Tory Party; but in Brussels we had the complete acceptance of October, 1961, by the Lord Privy Seal of all the implications of the Bonn Declaration: we had the statement that we were perfectly prepared for all the political measures of Western European Union of April last year, the statement of the hon. Member for Halifax (Mr. Maurice Macmillan) that they would not conflict with British views. Clearly that is a political movement, and to suggest otherwise is flying in the face of the facts.

Mr. Peter Kirk (Gravesend)

The point is that the negotiations going on at Brussels were not political negotiations. All the Government accepted was the Bonn Declaration which called for some form of political co-operation and led to the proceedings of the Fouchet Committee, but it was not in the Brussels negotiations.

Mr. Thorpe

The Fouchet Committee was an attempt by de Gaulle to water down the political implications of the Community. This is the whole point. The Five were not prepared for it.

Mr. Kirk

Unless we were in.

Mr. Thorpe

That would have been a matter for discussion.

But if the party opposite believes it was merely negotiating for economic purposes it is no wonder the negotiations broke down. What I am asking the Government is, what are their clear political intentions in regard to Europe? There is no doubt in the latest memorandum of the Commission for its next four-year programme from 1962 to 1965, the second four-year plan, that the existing Communities comprise economically and socially a political union. I ask the Government, first, do they accept the significance of the political co-operation which has occurred in Europe? Are they prepared to support and further the aim of political integration? Are they prepared to consolidate the political gains, which, quite clearly, we have made in the eighteen months of our negotiations? Are they prepared to heal the political divisions which have now arisen?

I found particularly nauseating as an apologia for what has happened the article written yesterday in the Sunday Times by the head of the Conservative Political Centre, Mr. Goldman. He said that Mr. Anthony Nutting, a former Member of this House, had said that everybody had indicated that if the British had been in at the initial stages in 1950 when the Coal and Steel Community was first mooted we should have been able to get in on our own terms and we would have been leaders of that community. How right he was; and how equally this might be said of these negotiations.

But I hope we are not going to have the suggestion from the Tory Party that the failure of Britain to get into the Economic Community was exclusively due to General de Gaulle or that it stemmed from the Labour Party's isolationalism in 1950. It stems from the hostility to the Community shown right up until the moment that the Prime Minister got up at that Box and announced that we were to apply for membership. It stems from the bitter hostility of the Tory Party to the idea of going into Europe. There was the contempt which caused us to walk out of Messina where the initial talks were held in 1955. There was the hostility which caused us to create the free trade area and E.F.T.A. in an attempt to wreck the Community, and there were the feelers put out in the autumn of 1960 without consultation of the Commonwealth followed by the biggest drawing ever on the International Monetary Fund, a credit squeeze and pay pause, after which we reluctantly applied to join.

That is the party which has been shifting ground, and we are entitled to ask, what is its intentions? It is true that we have moved a long way since the present Chancellor of the Exchequer was saying in October, 1959, that "we never dreamed of joining the Common Market." We have come a long way from what the First Secretary said in October, 1960, that "the Economic Community would not be suitable for us." We have moved a long way from the election addresses of 1959 when the Prime Minister and the Lord Privy Seal and the First Secretary did not even mention Europe, still less the Common Market. I am prepared to accept that the leaders of the Tory Party are now coming round genuinely to the view of European integration.

Then I want to put one or two points to them. I believe first that the effect of exclusion upon Britain will be politically very serious. I believe that there is a grave risk now of Franco-German domination in Europe. I believe that there is even the possibility ultimately of a Franco-German deterrent, because the folie de grandeur, that one must possess one's own deterrent, is not exclusively the preserve of this Government. I believe it will make it far more difficult for us to achieve tariff reductions now. I believe there may be a run on sterling as foreign capital goes to Europe, and many firms in this country expand in Europe. I hope it will not be so but I believe this is a very real possibility.

I believe that in Europe itself there is an acute dissension. The Dutch Foreign Minister has already gone on record as attacking the authoritarian character of the French view and saying that this could lead politically and economically to a split in Europe. I believe that there is a very real risk, unless we take the initiative, that the European view will be the French view.

That, of course, would be the view which would be independent of the United States. That is clearly the French case. Here I agree with the hon. Member for Ebbw Vale (Mr. M. Foot). It would be independent of N.A.T.O. That is clearly de Gaulle's ultimate intention. It would therefore clearly be independent of O.E.C.D., which, of course, has America and Canada as full members, and independent of Western European Union, which, of course, hypothecates Western security, embracing countries outside Europe. In fact it would be a third force, and, more than that, that third force, of course, was the very idea behind the Community itself. That is the French view, and I believe that the pressures on the Four at the moment are very great indeed.

Are they going to be able to maintain an outward-looking community with a Commission which is really building up as a supranational force of international civil servants? Will they be able to create that sort of Europe? Or are they going to have to turn their backs on those who are in favour of an outward-looking Europe and in the process find themselves dominated by the Franco-German view?

This is a great risk, and I believe that, in this, this country has a tremendous part to play in deciding which way Europe has to go. I believe the Lord Privy Seal was entirely right and indeed to be congratulated in his first reaction, at the end of what must have been a gruelling session, when he said that we must not turn our backs and we would continue to be good Europeans. I must confess that I do not believe that cancelling luncheon engagements is a good way of making friends and influencing people or is indeed a substitute for a European policy. One can only wish that the Prime Minister had acted with more dignity and restraint. It is a very odd thesis in the Prime Minister's dictionary that it is diplomatically courteous to tell a lie on Friday provided a public confession is made in the House of Commons on Monday.

What, then, should be the political initiative of this country? I believe it is, first, vital to make clear that we do not intend to undermine the Community. Our efforts in the free trade area and E.F.T.A. must have been a lesson as to that. I believe it should be to try to put new life into the European idea, which should not be susceptible to the French veto. We should take careful diplomatic soundings and, ideally, it may very well be that a new political community should be created with a Council of Ministers and an independent secretariat—because there is the great weakness of W.E.U.—with no central executive, because that would get over the fears of a supranational body; a political community which can discuss matters of foreign interest, whether they be of foreign policy, or whether they be the balance of N.A.T.O., or whether they be the purely political effects of the defence of the West.

It may well be that all of this could be achieved through existing agencies. The N.A.T.O. Council could, perhaps, be expanded; Article 2 provides for economic collaboration and. Article 4 for political consultation. The speech of Professor Hallstein last November about the need to create an Atlantic "partnership" as opposed to "community" is something that we should look at afresh. I doubt whether it would be possible for the O.E.C.D. to be developed in this way because it is too much concerned with economic matters. The same applies to W.E.U., which is concerned primarily with defence matters and has no international secretariat.

But I am certain that what Great Britain must do is to show that we are prepared to co-operate politically with our new friends in Europe and to associate with those friends our old friends in E.F.T.A., the Commonwealth and North America. This would be a means of giving strength and encouragement to the Four, who are under very great pressure indeed.

Finally, I will say a word about the economic side. When we go to G.A.T.T., as we shall do shortly, we should be in a mood to make very generous tariff reductions. If the Prime Minister could have seen the effect that some of his free trade remarks had upon some of his protectionist supporters, he would have been very grateful that he was looking at this side of the House and had not to turn round. I believe that one thing we can do is to reduce our external tariff to the level of the external tariff of the Community, and we should do so. It would be ludicrous if we maintained tariffs higher than the external tariff of the Community.

I will give the Chancellor one or two ideas: photographic equipment, 40 per cent. United Kingdom tariff, 18 per cent. Community external tariff; motor tyres, 24 per cent. U.K. tariff, 15 per cent. Community external tariff; ammonium nitrate fertiliser, 16 per cent. U.K. tariff, 10 per cent. Community external tariff. This is something we ought to do as a matter of course. Thereafter we should make it plain that we are prepared to negotiate cuts of up to 50 per cent. in all our tariffs.

Let us go into G.A.T.T. with that initiative, and let us see whether we can get a really generous cutting of tariffs. After all, the Conservative Party is now a party of free traders, and this is a very great opportunity. I believe that we have to make a very great attempt through O.E.C.D., or a different alignment, to bring about agreement on world commodity prices, though I am bound to say that the Labour Party, particularly the hon. Member for Wednesbury (Mr. Stonehouse), who has been very adroit in putting Questions on the Order Paper, that this may well mean an increase in the cost of food in this country because it may well be that we shall pay a higher price for many of the tropical and, indeed, temperate foodstuffs which we import. Therefore, this is part of our responsibility to the under-developed nations. Let us be frank; an agreement on world commodity prices may well mean an increase in the cost of certain foodstuffs.

We have also to have a new agricultural policy. I have always believed that the 1957 Act was bust. The Government are, we know, tied to this until the next General Election, but we all hope that that will not be very soon. [Laughter.] I mean, we hope it will be very soon. Indeed, the sooner the better.

I believe that it was a great thing that the Government were, at the eleventh hour, converted to the idea of going into Europe. If only they had done so before, they could have been members of the Community before General de Gaulle came to power or was heard of politically. But they preferred to procrastinate and experiment with the Outer Seven and the European Free Trade Association, with all the arguments which we have heard put from the other side of the House.

What we have to do now is to take the political initiative in Europe. We must take the economic initiative in G.A.T.T. I believe that we can now influence the future of Europe. If Great Britain is prepared to pool her sovereignty and if she is prepared to co-operate with her European neighbours, I think this is the only hope we shall have of an outward-looking Europe and not one dominated by General de Gaulle, which in itself would be the very antithesis of the spirit and philosophy of the Community.

8.15 p.m.

Mr. Denys Bullard (King's Lynn)

I must confess that when I learned that the Common Market negotiations had come to an end I was somewhat relieved. I am not disposed to put all the blame on General de Gaulle. My reason for saying that is that some time before the end I felt that there was a fundamental difference of view and that even if the negotiations had gone on further we should have come to a point at which we should have found it impossible to go further. On the other hand, I always approved very strongly of the Government's having undertaken the negotiations. I have never been an out-and-out condemner of the Common Market arrangement. I thought there was a great deal in it politically. I believe now that the dissensions which may arise in Europe can be very serious indeed, and I should be very sorry to see the European nations drift apart, and for that reason I hope that my right hon. Friends in the Government will maintain their point of view of not turning their backs upon Europe.

I wish this evening to refer to one or two economic matters, and particularly to some on the agricultural side. Now that the negotiations have failed, I hope there will be no tendency to "take it out", so to speak, to some extent on the farming community. I notice a slight tendency for that to occur. I hope that the references to this matter by my right hon. Friend the Prime Minister do not indicate that this line is to be taken. The community as a whole has derived very great benefits from the expansion of our home agriculture, and when we are looking to increased trade and production I hope that we shall not ignore the tremendous contribution which the agricultural industry has made, particularly in the way in which it has provided markets for manufactures such as tractors, fertilisers and many other supplies which are immensely valuable to us. When I hear that we are to be forced to abandon our agricultural policy—as the hon. Member for Devon, North (Mr. Thorpe) said just now—I think that is probably a great mistake.

Mr. Thorpe

I did not say that we should abandon the agricultural policy. I said that we must re-examine the 1957 Act. This is what the Prime Minister was suggesting in his speech. Whether the hon. Gentleman agrees with the Prime Minister on this or not, I do not know.

Mr. Bullard

When the hon. Member says that we must abandon the 1957 Act, I take it that he means the abandonment of the limitation, to 2½ per cent. overall, or 4 per cent. on any single commodity, of the reduction that can be made in the guarantees in any one year. What part of the Agriculture Act is he advocating abandoning?

Mr. Thorpe

The Prime Minister referred to the dangers of an open-ended subsidy. I suggest that in the case of the dumping of goods which would clearly come into this country freely under present arrangements as surpluses from Denmark and other countries which are exporters of agricultural commodities and are excluded from the Common Market, the subsidy bill could go to £600 million. I do not think that a bill of that size is one that a primarily industrial economy will be prepared to meet. Other arrangements will have to be made.

Mr. Bullard

I do not think that that is involved in the 1957 Act, but it arises out of the general principle of providing a guarantee. That principle emerged from earlier legislation.

Mr. Eric Lubbock (Orpington)

Perhaps the hon. Gentleman will explain why the Prime Minister said that we must get away from open-ended guarantees.

Mr. Bullard

I am not here to explain what my right hon. Friend said. Indeed, I am slightly taking issue with him for making a major point of the idea that we have to depart from our agriculture policy. I do so because I believe that that policy has grown up from necessity and that we shall be obliged, by dint of circumstances, to stick to the main substance of it.

I think that our policy has many great advantages, in not interfering with international trade by not putting undue restriction on it, which are of great benefit to this country. We should not abandon this policy until we have found something which gives a reasonable guarantee to home agriculture. It will be hard to find a suitable alternative. I believe that we shall get on much better if we try to modify our agriculture policy rather than continually suggest that we have to find an absolutely new one. It would be very difficult to find an absolutely new policy which has not some very great drawbacks.

The reason that I did not think we should be able to go into the Common Market in the end was my belief that the Common Market food price policy is fundamentally wrong. There are some aspects of it which worry me greatly, including the prospect of having to switch from wheat from the wide open spaces of the prairies and of Australia to European wheat at a greatly enhanced price. This seems fundamentally wrong. Nor could I understand why it would be a good thing to put an external tariff against the Argentine under the ægis of the Common Market when, apparently, it is such a bad thing to do under other circumstances. I have all along felt that the food price policy of the Six is fundamentally unsound. I believe that it will not work and that they will be forced to abandon it because it contains such a strong element of protectionism and artificiality. It is not a good economic arrangement.

I admit that the subsidy bill for our home agriculture is very large. I think that many people have concluded that it is too large. But I am not sure that it does not bring such considerable advantages to the community as a whole that a fair sized bill for farm guarantees cannot be stood by the community at large. When the economic advantages of going into the Common Market were so strongly urged, I always felt that those who were so anxious to get in were overlooking the advantages brought by our existing system in food prices.

I should like to get the amount reduced, and I think that the farming community is quite ready to make sacrifices if they are shown to be in the national interest. The trouble is that so many of the changes advocated in order to reduce the Bill would not, in the long run, be in the national interest. I think it is a good thing to look at some of the possibilities of reducing the bill. I do not want to deal with internal matters of policy today because this debate is about the breakdown of the Brussels negotiations. But I want to look at one or two matters of international trade in agricultural produce.

I think that the possibility of a world agreement is one which should be very seriously looked into. I do not know whose job it is to study these matters under our present arrangement. I suppose it is the job of the Foreign Office and the Board of Trade. I wonder whether there is not a task here calling for specialised treatment, possibly by a special Minister. I cannot think that the President of the Board of Trade, who is involved in so many matters at the head of such a huge department, can devote the major part of his time which the subject deserves to the question of international agreements on primary commodities. I should like this matter much more carefully looked into than at present.

I hear arguments that we should get rid of surpluses by giving them to underdeveloped countries, but nobody seems to answer the question, "Who is going to pay for this?" I am sure that there is something in the idea. I am sure that it is perfectly sound as a broad idea, but I think that the right way to help the under-developed countries is to get them growing their own food and producing their own goods. I do not think we would do very much for them merely by getting rid to them of surpluses from our own circle.

All the same, this is a matter which should be looked at, because the fall in the world prices of primary commodities is at the basis of a lot of our troubles and also the primary reason why the farm subsidy bill is as large as it is. I therefore urge a more specialised study of the situation. It should be undertaken by a member of the Government. It may be, of course, that the matter is adequately covered by present arrangements.

The other matter I want to refer to is the question of the policy which we ought to follow now with regard to dumped foodstuffs. I am acutely aware that one cannot come out of these negotiations and go in for a policy of wholesale restriction of imports as an alternative. I believe that the fact that we are not in the Common Market means, as many hon. Members have said, that we must expand our international trade and attempt to remove some of the barriers to trade. I cannot think that it would be proper, as an alternative, to put a hedge of protective duties around ourselves as a means of achieving our aims. Indeed, I think that it would have the reverse effect.

On the other hand, I do not think that we can allow our agriculture system to be completely upset by the dumping of foodstuffs. As a livestock farmer myself, partially, I have a slight inclination to say that we should use cheap cereals if anyone is inclined to sell them to us at below world prices, but I believe that the disadvantages would be so considerable that we must tighten up our regulations about the dumping of foodstuffs. If other nations decide to run their high internal prices and allow their surpluses to spill over into our markets regardless of price, I do not believe that it will be possible to run an agricultural policy here, and I think we must do something about that.

I think that it is essential to attempt to expand East-West trade. On the other hand, it should not always be a foregone conclusion that we are going to sell industrial goods to countries behind the Iron Curtain and receive foodstuffs in return. There has to be a little variety in this trade, and I think that those who advocate it must be prepared for that. It must not be assumed that it will always be a case of agricultural goods coming in and industrial goods going out, because it will not work out that way. Such a policy can be very dangerous from the point of view of upsetting our agricultural policy.

Finally, as my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) said, I believe that the time has now come for a great impetus to Commonwealth trade. I am aware that the Commonwealth and the Common Market were not the same sort of trading communities. I never thought that they were, but I think that the time has now come for an initiative, and I wonder whether it would be possible to say to some of the Commonwealth countries who want to supply us with food that we shall allow them to do so on very favourable terms, but they must in return take a greater proportion than hitherto of our manufactured goods.

The snag about Canadian trade—and I have made a study of the position during several visits to that country—is that they supply us with so much and take so little. This ought to be made much more of a two-sided bargain, but all the same I hope that Her Majesty's Government, having been forced to come away from the Common Market negotiations, will take the opportunity of making this an occasion for a great drive to increase trade with the Commonwealth.

8.32 p.m.

Mr. John Mackie (Enfield, East)

I hope the House will not think that this debate has taken on too much of an agricultural flavour. I agree with much of what the hon. Member for King's Lynn (Mr. Bullard) said, but I should like later to deal with agriculture.

I thought that the hon. Gentleman was going to give us a policy which would help the next Government. This Government are pledged to the end of this Parliament to maintain the 1947 and 1957 Acts, and as we are confident that we shall be the next Government, I thought that the hon. Gentleman was going to help us, but he did not go very far with the new agricultural policy which obviously the Prime Minister, the Chancellor of the Exchequer and the Minister of Agriculture, Fisheries and Food think is necessary.

I hesitate to say anything about the political situation after the extraordinarily good speech of my hon. Friend the Member for Ebbw Vale (Mr. M. Foot) in which he pointed out why de Gaulle took this action. I think it was pretty obvious that the reason for his not wanting us in was political, because we would have helped him tremendously economically, as I am certain that he had his eyes on our food market. My reason for saying this is that not long before the negotiations came to an end he had brought to his notice the potential of French agriculture if it was developed in the way his advisers thought it should be, and there is no doubt that if that potential was achieved he would have to find another market, and ours was attractive to him.

The Prime Minister suggested that de Gaulle made his decision because the negotiations threatened to succeed. I do not think that that was his reason. He felt all along that the conditions which this Government promised to achieve, and which we insisted should be achieved, made it obvious that the Six would not accept us, and de Gaulle was not worried. But it was obvious that the Government were giving in all along the line and were not getting hard and fast promises about anything, and this is why de Gaulle decided to keep us out. I am certain that Adenauer agreed with him, but knew how instransigent de Gaulle would be, and therefore was not unduly worried about saying so, although he had said so on previous occasions. I think that if we had gone in we would have spent the next decade bickering with de Gaulle and Adenauer. It would have been a mad house, and we would have got nowhere.

Look at it from an economic angle. This is the first time that I have taken part in what may be termed a major debate on a subject outside my province. I know that a layman is not supposed to enter the field of economics, but although we have a few economists on this side of the House I sometimes wonder how much attention we should pay to them. When one starts to examine something, one may often come to the same conclusion as an economist, but in a totally different way, and certainly in a more simple way.

When the Common Market was first mooted I was in favour of it. I felt that this was an enormous decision which the House would have to take some day. I therefore made it my duty to find out as much as I could about it, and particularly about the effects it would have on the wide range of industries in the Lea Valley area of Enfield. I therefore invited parties of twelve industrialists at a time to dinner at my house. I have a good cook as a wife. I treated them well to loosen their tongues—this is not a bad way of doing things—and had an interesting series of discussions with them. I was amazed to find that opinions varied considerably among them. After listening to the late Leader of this party, I came to the conclusion, as he did, that there was only a 50–50 chance of success on the economic side and none on the political side, and I therefore decided that we were better off out of it.

That decision has been taken out of my hands now and I am forced to take a further look at what we should do in this country to improve our position—and, my goodness, it needs improving. The right hon. Member for Woodford (Sir W. Churchill) has said several times that we never got off what he called a trap-door economy.

Let us take a look at this country and see what it consists of. There are 60 million acres—10 million of them being covered with bricks, cement and tarmac, leaving 50 million acres from which to feed ourselves. Eighteen million acres are rough grazing, and 32 million acres consist of arable land, with a good bit of that permanent pasture. We have a population of about 52 million. We have a healthy agriculture industry, and we have good supplies of coal and iron, and fair supplies of fish and minerals, but we depend chiefly upon our skills.

What, then, is our greatest need. First, we can feed only just over half our population. If we had super-efficient farmers we might be able to raise the proportion to 60 per cent., but we cannot expect our agricultural community to be better than the rest of the country. Our farmers produce more than half of what we eat by weight but less than half in value. We have to import more than half of our raw materials.

I have searched through the Board of Trade returns, and I find that we need to import almost two-thirds of our raw materials. Having discovered these facts I asked myself, as an ordinary person studying the matter, "Where can we get this stuff, and where can we get it cheapest?" That is not the angle from which economists look at the problem, but that is the way in which a normal person would react.

First, I considered that we could not afford to go anywhere but to the cheapest source for the food to feed the 25 million people that we cannot feed ourselves. Everybody wanted us to go to the Continent, but if we are going to buy half our food we must buy it where it is available. What is the position about food on the Continent? The figures that I have in this respect must be fairly reliable; they are taken from the Three Banks Review. Hon. Members opposite have great faith in what the banks produce. That Review got the figures from the 1960 Economic Survey of the E.E.C. in Geneva.

They show that we need to import 65 per cent. of our wheat. The E.E.C. needs 8 per cent., so they cannot supply any. We need to import 26 per cent, of our barley, and the E.E.C. needs to import 20 per cent. They cannot supply any barley. Here we have a fantastic situation. It is difficult to believe that we trade in barley with the Continent, but in 1960 we had ships from the Continent delivering barley to Bristol, Liverpool and Glasgow, while lorries loaded with barley were going across the centre of the country to supply distilleries, and loading up with barley and going to the East Coast ports—Leith, Newcastle and London, from where the barley was shipped to the Continent.

Sir C. Osborne

Not the same quality barley.

Mr. Mackie

Yes, it was the same quality. The same barley was going both ways. A lorry driver from Glasgow had to take a load of barley to Stirling, and then he had to wait there to pick up another load of barley which he delivered at Leith. He really wondered what he was doing. So far as he was concerned it would have been much better to take the barley from Glasgow straight to Leith. When it was pointed out to him that it would be better still to send the ships direct to the Continent, he really thought that the country was going mad. That is the sort of thing that is going on, and is being used as an argument for joining the Common Market.

To return to the figures—we need to import 75 per cent. of our sugar, whereas the Continent needs to import 6 per cent. They cannot give us sugar. We are almost self-supporting in eggs; we need to import 3 per cent. The Continent produces only 89 per cent. of its needs, so it cannot give us any eggs. We produce 10 per cent. of our butter requirements, and the Continent has a surplus of 1 per cent. which would not go very far. We need to import 55 per cent. of our cheese requirements, and the Continent just has sufficient, so we would not get any of that. The Continent needs to import 9 per cent. of its beef and veal requirements, and we need 43 per cent. The Continent produces slightly under what it needs in pork, and we need 40 per cent., so we would not get any of that. I conclude that the Continent is not a very good place from which to get our food. If anybody can refute my argument I shall be happy to allow him to do so.

Mr. W. A. Wilkins (Bristol, South)

Why, then, are our farmers so much opposed to entering the Common Market?

Mr. Martin Maddan (Hitchin)

Would not the hon. Member's figures bear out the fact that our present tremendous food imports from the Commonwealth could continue even if we were in the Common Market?

Mr. Mackie

Yes—over a tariff wall. It would mean putting up the price of food in a manufacturing country, with no guarantee—as I said earlier, if the hon. Member had been listening—that France's potential would not grow and that she could upset all our considerations.

I consulted the Board of Trade figures again, and discovered that we import £4,500 million worth of stuff every year, divided fairly equally as between about £1,500 million each on food, raw materials and manufactured goods. That is a rough break-down, but it is not too rough. The figures for raw materials are important. They include hides, skins, oil seeds, rubber, wood, and cork, pulp and wastepaper and silk, although I suppose silk fits in with the Continent. But one finds that very few of these things are surplus on the Continent. I commend these figures to hon. Members because they are very interesting. One thing I cannot understand why we need to buy £10½ million worth of live animals of a kind not normally used for food—but that is beside the point.

Having gained some knowledge of what we need, I went on to the question of "where"? Last year I spent five weeks as the guest of the Commonwealth Association in Canada, and I was struck by two things, the first being the extraordinary loyalty of the Canadians to this country. I was quite touched by their loyalty and their anxiety to stay in the Commonwealth. I might describe it as almost bone-headed loyalty. They said, "If you people want to go into the Common Market and it is to your benefit, we do not see why we should stop you." There does not seem to be sufficient propaganda designed to counter that argument.

Sir C. Osborne

Did the hon. Member ask his Canadian friends why they had a 40 per cent. tariff against our goods?

Mr. Mackie

I was coming to that. It is amazing how hon. Members, if they wait, will get their answer.

Having gained this knowledge from Canada, I started to look at the resources of the country. The Canadians have produced an excellent book which contains an excellent account of statistics about production. We find that they have all the things which were mentioned in the previous list—wood, pulp, oil, grain—and not only that, but the country is developing. The population figure is low—although it is increasing—and I think that a link-up between this small country with its high population and Canada could be most profitable. A lot of our prosperity could result from a closer link-up with Canada.

Coming to the question of the hon. Member for Louth (Sir C. Osborne), in the past Canada knew that we needed wheat, feed grains and everything else and she did not need to worry about a protective tariff because we had to buy in the cheapest market which was to be found in the Western Hemisphere and particularly with Canada. But times are changing. There is a potential threat from France. We get a lot of our meat from Yugoslavia and Canada is adopting a different outlook altogether. There is no question about that. Australia is coming into the market—

Sir C. Osborne indicated dissent.

Mr. Mackie

The hon. Member for Louth must not shake his head at that because it is a fact.

I had a game of golf with a motor agent from Vancouver who told me that he was an agent for Vauxhall cars. He said that in 1961 there was a promotion programme with a lot of high power advertising and they sold 82 Vauxhall cars. After the tariff had been imposed to protect the Canadian economy—that is the capitalist way of doing it—they had another promotion programme and sold two cars. This motor agent was pressing for a better deal for the loyal Canadians who are particularly keen to buy British. The Canadians are worried about their balance of payments. They buy from America. In 1960—the last figure which I have, an enormous figure in dollars which I am sorry that I have not had time to convert into sterling—there was roughly 3,000 million dollars worth of goods exported to the United States and 3,693 million dollars of goods imported from the United States. There was an adverse balance of 693 million dollars.

They are in credit balance with this country. I was amazed by the things which they buy from America—things which we produce well, such as washing machines, clothes and refrigerators. They showed me the things which they had bought, and I know that they could buy them more cheaply—and as good—from this country. There is, therefore, a tremendous potential to redress that balance, which would help us and help them.

They are trying to change their attitude, but they will not change it if we continue to flirt with Europe. I read an article in the Toronto Telegram the day I left which predicted that there would be union with the United States within 10 years. It pointed out that one of the reasons was that Britain was flirting with the Common Market. We shall lose Canada if we continue to pursue this vision, as the Prime Minister described it, of getting into the E.E.C.

That is not to say that we should not deal with Europe. As the Prime Minister said, we are climbing over the tariff wall already. In any case, where else will France sell the millions of gallons of wine which we buy in this country.

Like my right hon. Friend the Member for Huyton (Mr. H. Wilson) I know that the problem is not easy, and perhaps it is not as simple as I have suggested. I know and have studied the complications of international trade. I know that invisible trading figures must be taken into consideration. But it will not help us if we make a four-seater car like the Morris 1100 in Coventry, transport it to Bonn and set up sales and service arrangements there, and then bring back to this country a Volkswagen, which may be a little different—perhaps the doors shut a little better—but which can take only the same four people, in my opinion rather uncomfortably, from A to B. I do not believe that we should become wealthy by taking in each other's washing. We must link with those countries which have the goods that we need. Trading for the sake of trading is useless.

Mr. Arthur Holt (Bolton, West)

On this basis, would the hon. Member agree that there is no point in growing wheat in this country when we can buy it far more cheaply from Canada?

Mr. Mackie

I will not go that far.

I promised not to be too long, but I have been interrupted. Nevertheless, the interruptions show that there is a certain interest in what I have said.

Much of what I have suggested will have to be done with Socialist economics and not capitalist economics. That also applies to East-West trade. There are 160 million people in the part of Europe with which the Lord Privy Seal was dealing, but in the rest of Europe there are 260 million people. Could we not give a lead to the whole of that area? If de Gaulle does not want us in his part of Europe, let us take the 260 million people of the rest of Europe and lead them. Economists have suggested that the E.E.C. countries have tremendous reserves which they can use against us. Economics of that kind will get us nowhere. Hitler did not worry about reserves when he rebuilt Germany. I am not suggesting that we should follow his example, but I am suggesting that we need not be frightened about the reserves of E.E.C.

There are three reasons why we must not forsake British agriculture. The first is that it produces £1,500 million worth of food, which helps our economy. Secondly, I am certain that the British people do not want again to have an agricultural situation such as existed in 1930—a countryside that they could enjoy, not one with bad and dilapidated houses and buildings and thousands and thousands of acres uncultivated. I am perfectly certain that the people are willing to pay to avoid that. The third reason was given by the Prime Minister, though it is not enough in itself. Our agricultural machine industry has exports amounting to £150 million a year, and before it can export on that scale it requires a developing agriculture behind it.

I agree with the hon. Member for King's Lynn that we want a new structure for the support of British agriculture. It should not be beyond the wit of a British Government to do that without over-subsidising the big farmer like myself and under-subsidising the small men in the west. I am glad that President de Gaulle has solved our difficulties for us and put us on our mettle, but the mettle will have to be shown on this side of the House, not that.

8.56 p.m.

Mr. John Harvey (Walthamstow, East)

I should like to try to follow the argument advanced by the hon. Member for Enfield, East (Mr. Mackie), but signals are being made to me about the amount of time I should take. I am therefore sure that he will forgive me.

In many ways, this has been a fascinating debate and, when allowances are made for all the understandable party political interchanges that have occurred, there has been an extraordinarily broad sense of agreement across the Chamber about where we need to go from here. In one sense, what has happened in the last week or two has been immensely unfortunate in that, for the time being at least, we see the entente cordiale put into cold storage, and the traditional friendship that has carried Britain and France through so many years of successful collaboration rather sadly and unnecessarily endangered.

Nevertheless, one cannot help feeling that all this was clear when General de Gaulle wrote his memoirs, and I should like to quote briefly from Volume III, 1954, in which he said: I intended to guarantee France primacy in Western Europe by preventing the rise of a new Reich that might again threaten its safety; to co-operate with East and West and if need contract the necessary alliances on one side or the other without ever accepting any kind of dependency; to transform the French Union into a free association in order to avoid the as yet unspecified dangers of upheaval; to persuade the states along the Rhine, the Alps and the Pyrennes to form a political, economic and strategic bloc; to establish this organisation as one of the three world Powers and, should it become necessary, as the arbiter between the Soviet and Anglo-American camps. Since 1940 my every word and act has been dedicated to establishing these possibilities; now that France was on her feet again, I tried to realise them. We knew that those words had been written when we tried to negotiate, but, although I think that we were right to try, those words help us to understand how deeply the French President holds that view. It follows—and had I the time I should elaborate on this—that one of our principal efforts in the months ahead must be to play a very prominent part in ensuring that Europe shall be outward-looking, and not as inward-looking as the words I have quoted suggest.

If Europe continues along that path we shall have learned nothing from the lessons of history and we shall go back into all the old dangers which Europe has had to face so many times. It must be by looking outwards that Europe can play its full part in the new world, which all those inside and outside the House so much want to see it play. Whatever else they do, it must be by giving a lead in ensuring that Europe looks outward that the Government must play their part in the months ahead.

9.1 p.m.

Mr. Gordon Walker (Smethwick)

I am very grateful to the hon. Member for Walthamstow, East (Mr. J. Harvey) and I am sorry for him that he had to contract his remarks. I congratulate him on packing into five minutes a great deal of very good sense with which I agree, and in the course of my remarks I hope to go back to some of the matters which he covered.

The Prime Minister's speech today was eagerly awaited by hon. Members and by the country—a country that was anxiously looking for a lead. I do not think that even the Prime Minister's best friends can deny that he fell very far below the needs of the time. It was a defeatist speech. The basic reason why it was a defeatist speech was that the Government have for so long felt themselves committed to the view that there was no future for Britain outside the Common Market. They have lost faith in the future of Britain outside the Market. There is plenty of evidence—and my right hon. Friend the Member for Huyton (Mr. H. Wilson) quoted some of it—to show that it was the Government's convinced view that Britain had no future outside the Common Market. This ran through the Prime Minister's remarks today.

This is why the Prime Minister presents us with a second-best policy. He admits that it is second-best and says that there is no alternative as good as going into Europe would have been. This is why he indulges in these petulant and childish acts against France. This is the reason for the advice which he thought fit to give to Princess Margaret. He has lost touch with reality. I have not read or heard anywhere any defence of this act as being rational. The right hon. Gentleman said that political significance would have been attached to the visit. Nothing could have given it more political significance than the way the Prime Minister has handled it. This sort of pettiness and childishness against France makes Britain and all of us look silly and this attempt by the Prime Minister to isolate France diplomatically inside Europe is a very mistaken policy.

I was sorry that the Prime Minister was so anti-French in his speech. He devoted a great deal of the speech to an attack on the French Government because of his feelings of annoyance and anger, which I understand. But we have to consider what our main aim must be in this grave situation which the country is facing. This aim is sometimes described as not turning our back on Europe. I find that this is too negative a description of our aim. I would put it positively that we must pursue the aim of finding the closest possible relationships with Europe.

I have always thought this, and I have long doubted whether going into the Common Market was the best way of achieving it. It seemed to me that the attempt would frustrate its own purpose. But we must achieve the most intimate possible relationship with Europe. This must be the central guiding aim to which we must subordinate our feelings of childish petulance. I am talking about the whole of Europe. I am not talking only about the Six, and certainly not of the Five. It is important that we should foster our friendship with the friends we have in the Five, but we must not attempt, as the Prime Minister did, to lead the Five against France, and we must not make the error of identifying the Five with Europe. Even the Six is not Europe. The Five is certainly not, and to base a policy on the assumption that the Five is Europe is stupid and would be resented inside the Economic Community when it has settled down and has lost its present tension.

We should aim at the closest possible relationship with all of Europe inside the broader framework of an Atlantic community. This should be our guiding aim—an Atlantic community which itself must be outward-looking, seeking to expand its trade, and so on. To carry out such a policy we need to be clear-sighted and not misled by illusions regarding our own internal situation and our relations with various parts of the outside world. With the European Economic Community above all we must avoid wishful thinking. This has been the bane of Government policy in the past 18 months, for they have been super-optimists against mounting contrary evidence. They are still suffering from this wishful thinking; this new myth that the negotiations were on the point of success when this ogre came along and spoilt everything. This simply is not true.

As the Lord Privy Seal knows better than anyone, the negotiations were in a critical state before General de Gaulle held his Press conference. There had been a number of bombshells dropped in the course of the negotiations and there were still a large number of vital oustanding issues to be settled before General de Gaulle held his Press conference. I refer to such issues as the adjustment of British agriculture, horticulture—a vast subject of great importance—and nearly-nil tariffs. There had been no settlement about New Zealand's position, and the same applies to E.F.T.A. and the E.F.T.A. neutrals.

If the Government intend to persist in the view that the negotiations were on the point of success—and the Prime Minister repeated it today—they must equally admit that the logic of it is that the Government were on the point of surrender on these outstanding issues. They cannot have it both ways. Either the real issues would have to be discussed, and a long time taken over the discussion, or the negotiations were virtually settled, in which case the Government were going to surrender. That would have produced bitter controversy in this country.

The Labour Party, before General de Gaulle's Press conference, had declared that the terms were unacceptable and I know that many hon. Members opposite had said the same. I believe that a great deal of evidence exists to show that the majority of people in this country had already come to that conclusion. Thus had the Government surrendered in that way—and this is the only justification for the Prime Minister's view that General de Gaulle broke things up because they were on the point of success—then the agreement which they would have reached would, I believe, have been rejected in Britain and, probably, in the House of Commons.

Regarding the future of the European Economic Community and our relations with it, it is only right that we should wish the Community to continue and that we should wish it prosperity and success. After all, it is an important development in Europe and we must envisage negotiating with it in due course. But we must be absolutely clear that there can be no question of simply taking up the negotiations where they left off. That is impossible and it would divide the nation. There has not been a true meeting of minds even between us and the Five, and there is no indication that the Five were moving towards us on the important outstanding issues about which I have spoken. These issues were of great importance and needed to be negotiated.

Perhaps we shall be told that evidence can be produced to show that we were coming together on the question of the E.F.T.A. neutrals and on New Zealand; but there is no evidence of that. Many important things, like horticulture, have not yet been discussed, so I do not know how they could have been approaching us on these issues.

The Lord Privy Seal (Mr. Edward Heath)

will deal in considerable detail with this tomorrow, but I must say at this stage that I could not possibly accept what the right hon. Gentleman has said. For example, he has just said that horticulture had never been discussed. Horticulture was discussed in these negotiations by two working parties, by three meetings of deputies and two meetings of Ministers. We were, therefore, ready to reach a compromise agreement on horticulture.

Mr. Gordon Walker

I beg the right hon. Gentleman's pardon. I should not have said, "not discussed". There was no approach to agreement. There had been some official discussions, but the right hon. Gentleman had not given the House any indication of an approach to an agreement. There were many other outstanding issues.

In all this we must start afresh. We cannot just take up things where they were left. This will take time. We first have to help to create an Atlantic community within which we can get an asociation with Europe, and then we have to find the closest possible relationships with the Community and the rest of Europe. We must not do this in a hurried way and we must not do it in a doctrinaire way.

I would not reject the idea of association. I do not mean technical association in the technical sense of the Treaty of Rome, for that would not be right. "Association" can cover many different kinds of relationship and I would not be against finding a satisfactory association between us and the E.E.C., inside the Atlantic Community, which was something less than membership. One can think of various ways. I am not very hopeful about an industrial free trade area, because the right hon. Gentleman the Chancellor of the Exchequer tried that and there were very good and logical reasons why France rejected it at the time. However, there are other kinds of association and we should certainly not shut our minds to them.

The aim of getting the closest possible relationship with Europe inside the Atlantic Community implies a second related aim. It is that Britain must have the self-confidence that it can play a vital rôle in creating the conditions which are necessary to the achievement of this aim. First—and I found this lacking in the Prime Minister's speech—we must have the self-confidence that we can stand on our own feet.

The hon. Member for Louth (Sir C. Osborne) was rather depressing about our prospects of exports now that this situation has arisen. However, we have a certain advantage which we should exploit to the full and which is almost unique. It is the degree of the cheapness of our food and raw material imports, which gives us relatively low costs of production and a great advantage in exporting to third countries, particularly in competition with what now appears to be becoming a very high cost economic community. The Chancellor of the Exchequer was saying something along these lines the other day.

Of course, we must have economic growth, as my right hon. Friend the Member for Huyton said, and as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) will develop at greater length tomorrow night. But, however important economic considerations might be, and they are important, fundamentally, as the leading article in The Times of today says, this is a moral question. There has to be a radical shake-up of many established ways of doing things in this country and we must put behind us all this "never had it so good" kind of philosophy.

It is not possible to see how the Prime Minister can do this, for he is the embodiment of that kind of philosophy. He won an election on that slogan. We have to concert our efforts with E.F.T.A. and the Commonwealth, and I still think that it is important and urgent to call a conference, if possible, a joint conference of the two. If we are to concert our efforts with E.F.T.A. and the Commonwealth, we have to have a new Government to do it properly. The present Government have alienated and affronted all the friends upon whom we must now most rely.

It was very widely believed, and said, that Britain was prepared to abandon its pledge to E.F.T.A. [Interruption.] I heard it at the Council of Europe being widely said by responsible people. It was so widespread that it reached the headlines of responsible newspapers like the Guardian of 6th December, 1962— Britain may have to break E.F.T.A. pledge. Six rule out agreement with neutrals before 1964 Certainly, if the Prime Minister is now saying that the negotiations were on the point of success, he must have been ready to abandon that pledge because very little progress—[Interruption.] We were told that the neutrals would not be allowed in until 1964. This was said. If that was so, we could not have had a quick solution, so quick that President de Gaulle was frightened that we might settle everything before he could have his Press conference.

Mr. Heath

The statements which the right hon. Gentleman is making are such monstrous distortions that they must be denied at once. The plain fact was that we could have reached our agreement because the undertaking we had given to the E.F.T.A. countries was that it would come into operation at the same time as their agreements. Therefore, there was nothing whatever to stop us reaching an agreement and for them to come later. Secondly, the Community has not said that the neutrals could not conclude their agreement by 1964 and would not be allowed in until then. What the Community said was that it could not, at that moment, see that the negotiations would be concluded by the end of the year; and we agreed to leave that until the negotiations took place.

Mr. Gordon Walker

The Lord Privy Seal is saying that we would have come to our agreement, that is, we could have said that we were going in, before we could possibly have known what the results of the E.F.T.A. negotiations were.

Mr. Heath

rose—

Mr. Gordon Walker

The right hon. Gentleman will make his speech tomorrow. That is what he said. The other alternative is that we were not going in until 1964—no doubt, after a General Election. Very improbable. [HON. MEMBERS: "Nonsense."] It is not monstrous. The right hon. Gentleman said that we would come to our own agreement, that is, an agreement to go in. [HON. MEMBERS: "No."] Then we would have come to an agreement in 1964, in which case President de Gaulle could not have held his Press conference because he was frightened that there would be success in the negotiations. Hon. and right hon. Members opposite cannot have it both ways.

The Secretary of State for Commonwealth Relations is to speak later this evening. I hope that he will not give us a lot of platitudes about the wonderful hope of the Commonwealth, and so on. That really would be adding insult to insult. Last September, he behaved in a way clean contrary to the duties of his office. He cold-bloodedly decided that we must abandon our pledges to the Commonwealth. He briefed the Press—I have quotations here—to say that Britain had made up its mind and that the other Commonwealth countries must lump it. He tried to play off one Prime Minister against another, and, at the end of the day, he could not get one Prime Minister, except the Prime Minister of Trinidad, to say that, in his view, our pledge to safeguard Commonwealth interests had, in fact, been kept.

I do not want to take time about the economic aspects of our future relation, ships with the Commonwealth because they have been dealt with very fully today. The economic value is not the only value of the Commonwealth. One thing which I deplore—it is one of the reasons why we are pressing our Motion of censure—is that the Government have given the impression that they do not regard as of any great importance the political value of the Commonwealth to us and to the world. In his speech today, the Prime Minister went to great length to explain that the Commonwealth did not really offer much hope, reinforcing the impression that he has already given, that he has lost interest in the Commonwealth since—[HON. MEMBERS: "No."] —it became a multiracial association.

The Prime Minister wrote a pamphlet from which I propose to quote. On page 4 of it he produced one strong argument why we should go into the Common Market, and it was this: … the political character of the Commonwealth has been profoundly changed by the attainment of independence by our former colonies In other words, he was saying as clearly as he could that the Commonwealth was not worth very much any more and that it had changed its nature. Why did the right hon. Gentleman put forward this argument for our going into the Common Market? Why use these words in our name? These words were carefully chosen and written, not said.

I think that we must sometimes raise our eyes from Europe and look at some of the great problems facing us in the world today. With or without the Common Market, there is no danger today of a war between Germany and France. History has transformed the scene and shifted the danger points and points of challenge. These are not the things against which we have to guard today. The real problems of the world are the cold war and different sorts of challenge—world hunger, race and colour tensions.

Nothing could make a greater contribution to the solution of these real new problems facing us than a Commonwealth which has in it developed and underdeveloped countries, committed and uncommitted countries, and people of practically every race in the world bound together in a peculiar kind of intimate relationship. The political value of the Commonwealth is of immense importance and should not simply be set in the balance against a relationship with Europe. In an age in which Continental blocs may turn out to be more dangerous than sovereign nations have been, a Commonwealth which contains within it unique bridges between the continents can be of really great value in the world.

There is one respect in which I think we can most quickly and most effectively help to create the sort of Atlantic framework within which we can get the sort of unity with Europe that we want, and that is in defence. N.A.T.O. is, after all, the best expression of a very large measure of such a unity of Europe inside an Atlantic community and to reinvigorate, refurbish and reform N.A.T.O. is one of the best means we can quickly use for the achievement of our aim.

In order to achieve this, we must treat N.A.T.O. as a single whole. I was sorry that the Prime Minister seemed today to be trying to rally the Western Alliance against France. It seemed to me that this was the meaning of a large part of his speech, although I must read it with care tomorrow. We must drop the idea, which the Government may have been toying with, of Europe and the United States as equal separate entities inside N.A.T.O. That doctrine would lead to the split of N.A.T.O. This idea, in its extreme form, of the European Economic Community as a sort of separate military alliance and the belief that one cannot have neutrals in it because it has all sorts of political obligations is the essential Gaullist heresy and error. This is what we must resist in all its forms. We cannot have a N.A.T.O. which is made up of two different separate things. This has in it the very dangerous implication of a European independent nuclear weapon. I shall not go over that again; we discussed it in the debate on the Nassau Agreement. This we very much oppose.

We must work for a single, indivisible N.A.T.O. within which the allies have the fullest possible share of control of policy and strategy. In my view, we will achieve that end better if we pay our subscription to the club in first-class conventional weapons and forces. That would give us influence in the Alliance and would enable us to have a real share in the control of policy and strategy, and would be a contribution which would be indispensable to the Alliance.

The problem of France has to be faced. Much graver than the French attitude to our entry into the Common Market is the French attitude to N.A.T.O. and its refusal to play its part or, indeed, accept the nature of N.A.T.O. We must set about reconstructing N.A.T.O. in any event and in a way that would enable France later to fit in as a proud and realistic nation. This policy is different from the policy, which I was attacking a little while ago, of trying to isolate France and trying to lead the Western Alliance against France. First, N.A.T.O. is vital to our own defence and, secondly, it is a step to creating the Atlantic framework within which we can get European unity and in which alone we can get the sort of unity with Europe that we want. Unless there is a vigorous N.A.T.O. there is, first, no defence of the West, and, secondly, the framework within which we can get unity with an outward-looking Europe would not exist.

The first aim is the need for self-confidence in the country, a new lead which will re-awaken the nation. We should stop whining about the blows of fate that have fallen upon us, we should stop trying to isolate France and we should stop wistfully looking over our shoulder all the time for things which might have been or which may be in the future but for which we will have to wait long and patiently.

The Government cannot pursue that sort of policy, because it has alienated our partners in E.F.T.A. They have annoyed our partners in the Commonwealth—[HON. MEMBERS: "Nonsense."] Certainly. We, too, talk to Commonwealth Prime Ministers. The Government cannot awaken in the country the sense of national purpose to which we refer in our Amendment, because the fundamental trouble is that we have a Government who have lost faith in Britain and we have a Government in which Britain has lost faith.

9.28 p.m.

The Secretary of State for Commonwealth Relations and Secretary of State for the Colonies (Mr. Duncan Sandys)

I hope the House will allow me to start on a personal note. My hon. Friend the Member for Tonbridge (Mr. Hornby), in a speech which was rightly praised on both sides of the House, said that the negotiations in Brussels were dead but that he hoped they were not buried. I share that hope. As one who took a part in the early days after the war in launching the European movement here and on the Continent, naturally I am deeply disappointed about the outcome of the negotiations in Brussels. The decision taken in Brussels does not, I feel, accord with the interests and sentiments of the people of Western Europe and runs counter to the whole trend of history. I therefore cannot accept that this decision is final or that it will long endure.

The right hon. Member for Smethwick (Mr. Gordon Walker) complained that my hon. Friend the Prime Minister had given an impression that we are pursuing a course that is second-best. That is one of the most accurate things that the right hon. Gentleman said in his speech tonight. Of course, it is second-best. How could it be anything but second best? If we had not believed that entry into the European Common Market was the best course for Britain, why would we have been negotiating for eighteen months in Brussels?

The right hon. Gentleman said a number of things which certainly were very much lacking in accuracy. I am sure he did not wish to mislead the House, but he said among other things that we had failed at the Commonwealth Prime Ministers' Conference last September to persuade them to say that they were satisfied that their vital interests had been safeguarded. Of course they did not say that.

Mr. Gordon Walker

The Government tried very hard to get them to say it.

Mr. Sandys

Of course we did not try to get them to say it. How could we try to persuade them to say that their interests had been safeguarded when the negotiations were only halfway through? It would have been absurd to ask them to do that, and we certainly did not ask them.

The House will expect me to concentrate to a large extent on the Commonwealth aspects of this wide-ranging debate today. Throughout the controversy which has raged around this issue we have always refused to accept the suggestion that we had to make a choice between the Commonwealth and Europe. From the start we have been convinced that our entry into the European Community would not only be good for Britain and for Europe but also would be in the best interests of the Commonwealth, both economically and politically.

Mr. G. R. Mitchison (Kettering)

On any terms?

Mr. Sandys

On the terms which we explained we were trying to negotiate. We made it perfectly clear all the way through that unless we got terms which were satisfactory and which safeguarded the vital interests of the Commonwealth we would not go into Europe.

This view was strongly challenged by a number of Commonwealth countries. On the economic side this was the expression of genuine and natural anxiety about the uncertain consequences of disturbing long-established trading arrangements. On the political side some of our oldest Commonwealth partners were worried lest Britain's closer association with Europe might result in loosening her links with the countries of the Commonwealth. However, I think it fair to say that as the months went by these differences in approach were progressively lessened.

The right hon. Gentleman the Member for Huyton (Mr. H. Wilson) said that the breakdown of these negotiations had been a merciful release. All I can say is that that has not been the reaction in the Commonwealth. I should like to quote two typical examples of newspaper reactions in the Commonwealth. New Zealand's Wellington Evening Post describes the breakdown as "a tragedy and a challenge". Similarly, the Sydney Daily Herald wrote that it had in the last twelve months become apparent that Australia's long-term interests might be better served if Britain were inside the European Community. This increased understanding was, I think, largely due to the intensive consultation which took place throughout this period.

The right hon. Gentleman the Member for Huyton expressed surprise that we had not been studying Commonwealth trade more intensively than before during these last eighteen months. Considering the importance and urgency of the issues at stake, is that really very surprising?

I wish to express our thanks to the Commonwealth Governments for the time, effort and expense which they have devoted to helping us to understand their point of view and to work out methods to protect their interests in the Brussels negotiations. As a result of this continuous exchange of thoughts and ideas, which reached its peak at the Prime Ministers' Conference last September, there developed a growing realisation among Commonwealth countries of the important contribution which a politically stable and outwardly-looking Europe could make to the peace and prosperity of the whole world, and it became increasingly recognised that it was in the interests of the whole Commonwealth that Britain should have the opportunity to play her part and exercise her influence in the councils of this new and important European Community.

The right hon. Member for Huyton said that the terms which had so far been negotiated were a national humiliation and totally unacceptable. The fact is that there emerged from the Brussels negotiations a whole series of specific arrangements which offered great benefits to Commonwealth countries. My right hon. Friend the Prime Minister referred to some of these benefits in his speech; for example, the duty-free entry into Europe for Ceylon and Indian tea, the offer of trade agreements designed to increase the export earnings of India and Pakistan, new outlets for their produce which association offered for African and West Indian countries and for most of our colonies; and the undertaking by the Community to negotiate world-wide commodity agreements, of particular importance to the primary producers in Australia, New Zealand and Canada.

There has been no rejoicing in the Commonwealth over what has happened in Brussels. Among other things, the Commonwealth Governments recognise that the hard economic facts which led Britain to seek to join the Common Market are still with us; they cannot be ignored simply because the negotiations have collapsed. The searching discussions which took place in the preparation for the Brussels negotiations have given us all a much clearer understanding of one another's problems and needs. They have brought home to our overseas partners, above all, the limitations and realities of Britain's economic position. In the first place, they have emphasised the close connection between trade and aid. It is now better understood that Britain cannot increase her overseas financial assistance and investment unless she can at the same time increase her earnings from overseas trade.

In particular, the talks between us have underlined the hard fact that the British market, whether for Commonwealth foodstuffs or manufactures, is not inexhaustible. I was interested to read in the Auckland Star a frank warning that the Brussels failure must not be regarded as a sign that New Zealand could hope to continue to sell ever-increasing quantities of her products to Britain. The rapid growth of British agriculture since the war, coupled with the continuing industrialisation of other Commonwealth countries, has profoundly altered the pattern of trade between us and obliged us all to develop new markets.

It is worth remembering the facts—the dramatic leap of Japan to first place among the purchasers of Australian wool; the great expansion of British exports to the United States and Western Europe; the vast wheat sales to China by Canada and Australia; and the growing exports of Australian and New Zealand beef to the United States. This process of diversifying the markets for Commonwealth trade started long before the Brussels negotiations, and it was quite clear that it would continue irrespective of whether or not Britain joined the Common Market.

We agree, therefore, with Mr. Menzies, who said the other day that the search for new markets must go on. Mr. Holyoake has stressed the same point. He warned his countrymen not to imagine that the breakdown had solved the problems of New Zealand's dairy producers. He said that in this new situation the countries of the Commonwealth had a particular responsibility, but the problems could not be solved by the Commonwealth alone.

I would like to say a few words about the plan or proposals put forward by the right hon. Member for Huyton. His main theme was that the Government have no plan. He said that he would take it upon himself to tell us what should be done. We had expectations of receiving something precise, something dynamic, something which would justify the Amendment. The right hon. Gentleman announced what he was good enough to call "Labour's plan for the future of Britain". What did this plan amount to? He divided it into various parts. First, he said that he would define what should be our attitude to Europe. But I must say that I did not feel that he had very much to contribute. He said that we must regard the Brussels talks as off.

Mr. George Brown (Belper)

Oh, good Lord!

Mr. Sandys

The right hon Member for Belper (Mr. G. Brown) says, "Good Lord". But I am stating what his right hon. Friend said. The right hon. Member for Huyton went on to say that we must not slam the door. But that is almost exactly the same as what my right hon. Friend the Lord Privy Seal said when he returned from Brussels. My right hon. Friend said that we must not turn our backs on Europe. Thus, the right hon. Member's policy towards Europe is no different in any way from what the Government have already said and announced.

The right hon. Member went on to say that our European initiative should be on a wider basis than the Community and should be based upon the Six and E.F.T.A. He added, as an after-thought, Yugoslavia—and I give the party opposite full credit for having thought that one out. But, apart from Yugoslavia, that is precisely what we have been doing over the last eighteen months. Our negotiations with the Six have been conditional upon parallel negotiations being brought to a successful conclusion to allow the other countries of E.F.T.A. to join the Community. I can see nothing new, therefore, in what the right hon. Gentleman said on that issue.

The right hon. Gentleman then said that we should examine the French proposals for an industrial free trade area. I was not aware of any proposal, and I have now verified with the Foreign Office that there is no such thing.

Mr. James Callaghan (Cardiff, South-East)

That is not what he said.

Mr. Sandys

What did he say?

Mr. Callaghan

This is as much in my recollection as in that of the right hon. Gentleman. My right hon. Friend said that we should be willing to accept any proposals if they were forthcoming. It is no use the hon. and gallant Member for Knutsford (Sir W. Bromley-Davenport) uttering his usual ridiculous animal noises.

Mr. Sandys

I should probably be out of order if I offered the hon. Gentleman a bet that what he said is incorrect, as he will see when he reads HANSARD tomorrow; but I am prepared to do so outside the House.

If the right hon. Gentleman merely said "examine anything that may come along", that is not a great policy. I understood that this was a proposal; this was a plan for the future of Britain put forward by the Labour Party, even though it was pretty thin. The right hon. Gentleman said that we should examine the French proposals for an industrial free trade area. All I can say is that no such proposals have been received. I accept the hon. Gentleman's interpretation; any serious proposals put forward from any quarter will of course be considered.

Mr. Callaghan

Does that mean that the Government would be willing to consider the idea of an association with the Common Market?

Mr. Sandys

I am talking about these proposals for an industrial free trade area. The hon. Gentleman knows the objections to association, which has been ruled out by the Community itself. I am not going to deal with a lot of hypothetical cases. We shall receive politely, and consider carefully, any proposals from any quarter. Considering them does not involve accepting them. The hon. Gentleman cannot expect us to say in advance that we are prepared to accept proposals which we have not seen. The right hon. Gentleman summed up his plan for the future of Britain with these impressive and inspiring words, "We must keep an open mind".

The right hon. Gentleman went on to say that we must base our policy on N.A.T.O., but who is he, and who is the party opposite, to tell us to show more devotion, more concern, and pay more attention to the importance of N.A.T.O.? N.A.T.O. has always been the cornerstone of our European policy. The only new idea put forward by the right hon. Gentleman under this head was that we should convene a conference of the heads of Governments of the countries of N.A.T.O.—when in doubt, call a conference.

But while advocating a conference of his own, the right hon. Gentleman pooh-poohed a meeting of Commonwealth Trade Ministers which we are convening. He said that a meeting of Commonwealth Ministers before the G.A.T.T. session was no more than routine. He seems to think that Commonwealth consultation is best done in a series of dramatic, much-publicised and spasmodic conferences. Are we wrong to use the existing machinery of the Commonwealth? The meeting may be a normal one, but the issues to be discussed will be of exceptional importance.

The hon. Member for Devon, North (Mr. Thorpe) urged that we should do all we can to further the reduction of tariffs. The right hon. Member for Huyton urged that we should make the most of the Kennedy round of tariff negotiations. That is already the declared policy of the Government. It is a little difficult to understand how the right hon. Gentleman reconciles that argument with his emphasis on bulk purchase. He seemed to be advocating a series of bilateral deals, under which we would buy Commonwealth primary products and the Commonwealth countries would, in turn, buy our manufactured goods. But that is not what the Commonwealth countries want. What they want is wider multilateral trade.

Before we pursue the right hon. Gentleman's ideas we must be quite sure that they would not result in reducing our total volume of world exports. To increase Commonwealth trade at the expense of reducing total trade would be a loss and not a gain. That is why all the Commonwealth Governments at the Montreal Conference defined their objectives in these words: To continue to work in no exclusive spirit towards a multilateral trade and payments system over the widest possible area. In the same spirit the Commonwealth Prime Ministers, at their meeting here last September, expressed their readiness to join in comprehensive international efforts by all available means to expand world trade. All this surely leads to the conclusion that our immediate aim must be to do our utmost to ensure that the next vitally important round of tariff negotiations results in a major loosening up of trade restrictions throughout the world.

It has been said many times that the Commonwealth is not an alternative to the Common Market. By that we mean that it cannot offer us what we had hoped to obtain by joining the European Community, namely, a large area of completely free trade. Developing Commonwealth countries would not feel able to expose their young industries to unrestricted competition from Britain. Equally, the British farmer could not, without support, hold his own against the low-cost producer in Australia and New Zealand. But while accepting the necessity to expand trade outside the Com- monwealth, we must not assume that there are not still great opportunities for expanding trade within the Commonwealth also. These opportunities must be exploited to the full.

From the beginning, all Commonwealth Governments have made it clear that the responsibility for the decision whether or not we should enter the Common Market must rest with Britain, and with Britain alone. The protracted nature of the negotiations was largely due to the number and complexity of Commonwealth problems for which solutions had to be found. The whole Commonwealth will acknowledge the ability and determination with which my right hon. Friend the Lord Privy Seal fought for their interests.

There were many who feared that Britain's application to join the European Community would vitally undermine the unity of the Commonwealth. But that has not happened. In fact, I believe that these eighteen months of intensive discussion have given us a better understanding of each other's problems and needs than ever before. These earnest consultations on matters of vital concern to the lives of our people have imparted an increased sense of reality and purpose to our Commonwealth relationships. I firmly believe that to be so.

In the course of these negotiations, we have learned to understand each other's point of view and have come a great deal nearer on these difficult economic problems. The links between us have been tested and have stood the strain. The Commonwealth has emerged, I believe, strengthened in its unity and in its purpose.

The right hon. Member for Huyton said that we needed a purposeful plan for economic expansion. I believe that when the right hon. Gentleman's plan for the future of Europe is studied it will be found that it contains nothing new and nothing very purposeful—not even his final statement that our future lies in our own hands. His proposals were either mere repetition—

Mr. G. Brown

So is this speech.

Mr. Sandys

—of declared Government policy or else a revival of old and dusty quack remedies out of the Socialist medicine cupboard. I do not believe that anyone who heard the right hon. Gentleman today thought that he or his plan, in the words of his Amendment, had the capacity to arouse in Great Britain the sense of urgency and national purpose …". Debate adjourned.—[Mr. Hughes-Young.]

Debate to be resumed Tomorrow.