HC Deb 25 February 1970 vol 796 cc1213-338

Order read for resuming adjourned debate on Question [24th February]: That this House takes note of the White Paper on Britain and the European Communities (Command Paper No. 4289)—[Mr. M. Stewart].

Question again proposed.

Mr. Speaker

Before the debate begins, may I inform the House that, when the general debate begins, no fewer than 40 right hon. and hon. Gentlemen, including nine Privy Councillors—[HON. MEMBERS: "Oh."] Order—have indicated their desire to speak. Yesterday, I was able to call 22 right hon. and hon. Gentlemen, because speeches were reasonably brief.

4.3 p.m.

Mr. James Scott-Hopkins (Derbyshire, West)

I fully support what you have said, Mr. Speaker, my speech today will be the briefest that I have ever made in the House. All hon. Members are waiting to hear from my right hon. Friend the Leader of the Opposition and everyone else who wants to speak, but it is also the tradition of the House that a back bencher who has the Floor when the debate is adjourned the previous day should be able to continue for a very short time when the debate is resumed. I hope to exercise this right, but definitely only for a short while.

Just before we adjourned last night I wanted to talk about the effects of the agricultural side of this issue on our application to join the Common Market. After the speech of the Foreign Secretary yesterday, I became more confused than I had been as to whether or not it was advantageous and whether or not the Government wanted to negotiate. I think that three points are important here.

First, before the negotiations are entered into, or during them, I hope that some of the surpluses existing in the Market will be eliminated. For us to join even after negotiations with these still in being will make things very difficult. There are two ways of doing this. One is by adopting the Mansholt plan and by bringing about a reduction of the level of intervention prices. These are excessively high and have encouraged over-production. I would have thought that they could reasonably be reduced. By bringing down the price levels of the Six this will also reduce the level of agricultural activity. These lower prices would still mean that a great response was possible by our own agriculture.—[Interruption.] That is the most important point [Interruption.]

Sir Harmar Nicholls (Peterborough)

On a point of order. Is the rumble of conversation an attempt to deprive a back bencher of his right to continue in the debate, Mr. Speaker?

Mr. Speaker

I am grateful to the hon. Baronet. He is quite right: there should be no rumble of conversation.

Mr. Scott-Hopkins

My second point concerns the ability of our agriculture to take up the slack of our home production and thereby to lessen imports into this country. This is an important point which must be borne in mind. At present, we are importing about £950 million-worth of food which can be produced on our own farms. I see no reason why we should not raise the level of our meat production to about 95 per cent. of home consumption and that of our dairy produce to about 60 per cent.

But this cannot be done quickly. It needs time and money. If these negotiations are to start in the summer of this year, it is important that the Government should implement as quickly as possible their intention to expand agriculture, so that, when the negotiations are complete, the industry will be able to take up this slack and to save us a large proportion of our imports. I believe that this can be done and that our farmers would welcome this and would be able to meet the challenge. No one is more efficient than they are.

Right hon. and hon. Gentlemen on both sides have doubted whether there is room for expansion at home if we joined the Common Market, because the E.E.C. levels of production are up to about 90 per cent. But it is only in four products that they are over 100 per cent.—wheat, pigmeat and butter and cheese. Otherwise, they are not up to anything like self-sufficiency. We have a long way to go to satisfy ourselves and get to the highest level of production in this country, but this can and should be done.

My third point is the cost to the housewife. If my two other points are taken into account, namely, if the amount of our imports is reduced by a considerable expansion of home agriculture, and at the same time the price levels in the E.E.C. are reduced, to eliminate the circumstances which I mentioned—these are two vital factors which must be borne in mind at the negotiations—it is possible that the housewife's bill, although large, will be greatly reduced. It might even be below the 18 per cent. bottom figure given in the White Paper.

At the same time, it is possible that the amount which the average family spends on its food, 26 per cent., as given in the Family Expenditure Survey, could be increased by about 1 or 2 per cent. If that happened, as well as a slight switch of consumption habits to alternative and cheaper foods, such as from butter to margarine, and cheaper cuts of meat, I believe that the actual amount spread over three years which the housewife would have to bear would not be intolerable.

We must calculate how much the cost of these factors will be. The agricultural response will be at the higher level, as shown in Table 8 of the White Paper. I believe that the consumption will be marginally changed. If this is done, and accepting that there will be a rise in the cost to the housewife, we must calculate how high this should go before wage demands become excessive and price our industry out of the Market. That is the negotiating level to which the Government, whoever they are at the time, should go.

This affects the contributions to the agricultural fund. The right hon. Member for Battersea, North (Mr. Jay) was not correct yesterday, as his right hon. Friend the Chancellor of the Duchy of Lancaster explained by referring to Table 9 and the subsequent paragraphs, that after 1971 the actual percentage increase or decrease of the contribution to the fund is fixed to a limited amount of 1, 1½ or 2 per cent. over a period up to 1975. This is an important point when trying to assess the figure and it was wrong to alarm the public, which the right hon. Gentleman and some of his hon. Friends did.

I believe that in the medium and long term it will be advantageous to our agricultural industry to join the Common Market. I do not believe that it will be too bad for the housewife over a period of years. I believe that, ignoring entirely the beneficial dynamic effects which may happen from the Market's impact on British industry, it is worth while entering into the negotiations with a will. If the price and the conditions that I have outlined are accepted, it will be worth while this country's joining the Common Market.

4.11 p.m.

Mr. Edward Heath (Bexley)

It has already clearly emerged from the debate that although the Motion is to take note of the White Paper it is impossible to debate European policy except as a whole. I hope that that is a view which the Foreign Secretary and the Government will share.

I fear that the members of the public who have been looking for enlightenment on European policy may be more confused after the debate than they were before. Perhaps the responsibility which has rested on all of us has not been entirely satisfactorily discharged over the past few years, because we have overlooked the fact that the great debates which took place in 1960 and 1963, while negotiations were going on, and, to a lesser degree, in 1967, have passed by a whole generation of people who have never heard the issues argued out in the same way as they were argued at the beginning of the last decade.

I cannot help feeling that underlying our discussion of the economic aspects are deeper matters of international politics and, indeed, of international sovereignty, and that these have coloured many of the attitudes expressed about the economic factors which we have been discussing.

I should like to make my position quite clear. I think that both the House and the country know where I stand. My position has been known since I made my maiden speech in the House in June, 1950, through the negotiations of 1960 to 1963, and it is where I still stand today.

I want to bring about a wider European unity. For this, I have consistently worked. I believe in it. I believe in closer international co-operation, because I am an internationalist. I want to see more of this co-operation brought about. Moreover, I do not believe that we can have a prosperous and peaceful world unless there is closer co-operation between countries in both the political and the economic fields. It is already happening with success in many parts of the world. It is already happening in Europe in both the Common Market and E.F.T.A. Where it is not yet happening—for example, in the Indian sub-continent—it is obviously disadvantageous and, indeed, damaging to the countries in that part of the world.

Today, there is a young generation, not only in this country but right across Europe and, indeed, across North America and many other countries, which looks to those in a position of responsibility to break down the barriers which their forefathers created. Man created the barriers. They look to men today to break them down, so they look to us to make a start in our own continent. It was the Europeans, the products of our own continent, who created the barriers in the other continents of the world—in Africa, in Asia. In Europe today there is the opportunity of breaking down those barriers in the relations not only between Europeans, but between Europe and the countries of Africa, Asia and the West Indies. This is why, as an internationalist, I feel so deeply about working for a wider Europe and European Community.

I believe in this policy, perhaps even more so because I am a patriot. I know that Britain can contribute to this movement for a wider unity in our own continent because of our history, our parliamentary institutions, our traditions and our skills, and because other people recognise that we have this contribution to make.

I want future generations in Britain to have these opportunities open to them. I want future generations in Europe to have these opportunities for prosperity and influence in the world outside. But this can only be brought about—we have certainly recognised it since the first Resolution of this House in 1961 authorising us to negotiate in Europe—by arrangements which are beneficial both to the old and to the new members of the Economic Community. Britain would not be justified, nor would any other applicant, in accepting arrangements—and the Conservative Party would not accept arrangements—which mean, overall, that we cannot benefit together with the other members of an enlarged Community. That, surely, must be absolutely fundamental.

But neither do I believe that the Six members should or would agree to any penal arrangements. Although the Six might for a time benefit because of inequitable payments across the exchanges, it would mean the movement of real resources from this country to the member countries of the Six and, although it might benefit them in the short term, they would be landed with a permanent dependent on their hands. This cannot be to their benefit ultimately. They would not want it. Nor would they accept it. That, therefore, seems to be the basic fact of the situation in this negotiation.

The extreme position set out in the White Paper is presumably completely unacceptable to Her Majesty's Government, and certainly to us. But the White Paper says that it cannot happen. We may indeed wonder at those who go to such lengths to produce an unacceptable position and then to prove that it is quite impossible. That has been the outcome of the White Paper.

The arrangements for the enlarged Community must be such as to benefit all its members. To achieve this, as I am sure the Chancellor of the Duchy of Lancaster will agree, is not a one-way movement. It is a process to which both present and possible future members have a contribution to make, and without a contribution from both sides it will not be possible.

So far, the emphasis has been perhaps too much on what will happen if we cannot create this unity and be part of it. The Foreign Secretary was absolutely right, and it was quite proper of him, to draw attention to this yesterday. It would be foolish for all of us to ignore the lessons of history. The impact of one great Power, as the Community will become, alone on the mainland of Europe alongside us, not today perhaps, as we have thought of it in the past in a military sense, as a direct threat to our security, but its importance to us in relation to other groupings—for example, the Eastern bloc—must be of vital importance, and we would wish to be in it. There is also its importance to our security, now that the position of the United States is changing, and its dispositions will change with it.

On my last visit to Washington, nearly a year ago, I felt for the first time that there was in the United States a weariness of the spirit, of which we in Europe would be wise to take account, based on a feeling that for 25 years they have borne a great part of the burden of the defence of Western Europe, that we shelter under their nuclear umbrella, that they have been involved in a major war in the Pacific which has torn their country apart, that they have immense problems in their cities and in their race relations.

It is perhaps natural that they should say, "Can we not devote more of our resources to our own problems for our own country and let others perhaps take a larger share for themselves?" It behoves us to work out together a rational reapportionment of resources and the relationship in this way. I believe that it can be done without in any way weakening the position of the West as a whole.

The Community's power in economic negotiations has already been demonstrated in the Kennedy Round. These are all negative aspects. We live with them today. We can go on living with them in the future, if we have to, as they develop. But it is to the opportunities that we should look when thinking of the European policy as a whole, opportunities which are political, social and economic, opportunities in working out the future of this major grouping in Europe, its future relationship with the third world and with the developing world.

The failure of U.N.C.T.A.D. in Delhi pointed sufficiently clearly to a need for Europe as a whole to be able to take a leading position in the relations with the third world, in helping to work out a new relationship of this grouping across the Atlantic in the Atlantic partnership, in helping to guide the relationship of this new grouping with the Eastern bloc which will be of such immense importance for the whole future of world peace. These are political aspects to which we gave priority in 1961. They appeared first in Mr. Macmillan's speech and in my own statement in Paris.

There are those, including right hon. and hon. Members in the House, who disagree with that concept of a new rôle for Britain, and I respect their views. Some hon. Members opposite, including the right hon. Member for Battersea, North (Mr. Jay), believe that it is better that we as a country should go it alone and that we can exercise equal influence. Surely the last few years have shown that this is no longer the case? [Interruption.] There are some who take this view, including some of my right hon. and hon. Friends. They would argue that the lack of influence over the past few years has been due to particular Government policies. That may be a contributory factor, but does not comprise the whole of the factors about the influence of a single country in the modern world today. I respect their disagreement, but I believe that we have to play a part with others if it is possible to do so.

There are some of my right hon. and hon. Friends who say that this would only be effective politically if it is in a federal or confederal system. There are others who are opposed to any such development and who say that nothing can be done. I say that this is both too tidy and too logical, both for the Europeans and for ourselves. Great influence can be achieved by countries working together. The more closely they work the more they will create institutions which suit them so as to enable them to have co-ordinated policies both in political affairs and in defence and to exercise an influence on the way in which matters are decided.

There are others, as we heard yesterday, who want to go on working through the Western European Union. This is undoubtedly a bridging operation, to which I have always attached great importance. That is why I disagreed with the Foreign Secretary on the policy which he followed last year. But there is no doubt that when the Community starts working seriously together in political and military matters, then the W.E.U. will lose its usefulness as a forum in which we can take part. This is for the simple reason that, having thrashed out political and defence problems among themselves, the Six will not then want to go to the W.E.U. and thrash the matter out all over again with us as an outside member. I have already experienced this in Paris in W.E.U. during the period 1961 to 1963. Therefore, this is not the sort of effective influence and close co-operation that one could have inside the Community.

At The Hague the Six have now decided that they will work together in political consultation. This is how progress will be made. There will not be a blueprint for a federal Europe, however much some individuals may want to have it. I remember Von Brentano, when he was German Foreign Minister, saying to me, "When I started in Europe I thought that we could create a blueprint for political activities in the same way as we have created blueprints in the Community." He went on to say, "Now I realise how wrong I was. With old nation States this is not the way to go about it. We shall start working more closely together and achieve our aims and then perhaps within 10 years we shall call in a constitutional lawyer from a university and ask him to define where we have got to." This is the pragmatic approach which is the British approach, and that is how I am quite convinced it will work out.

Whatever the working arrangement, our views would be taken account of, and, indeed, we should give leadership there. The Hague communiqué specifically provided for the future and for the present development of the Community. What is more, those members of the Community who want a federal system, but who know the views of Her Majesty's Government and the Opposition parties here are prepared to forgo their federal desires so that Britain should be a member and take part in political consultation and co-ordination with them. I believe this to be of great importance. They also quite rightly believe that the Community would be much better balanced, both politically and economically, if Britain were a member. That is why they support so strongly our application for membership.

I would pose the real question that faces the Government, whichever Government negotiate. It is whether those of us who want this new rôle for Britain in a wider European Community can bring it about and, if so, how it can be done and on what basis. This is where the White Paper is of importance although we know the criticisms which can be made of it. On what basis can all this be done? I am sure that it can be done only on the basis of an enlarged European Economic Community.

Here again, I recognise the differences of opinion held by some of my right hon. and hon. Friends and by some hon. Gentlemen opposite. The Community, of late, has been much criticised and this has been put forward as a reason for our no longer having anything to do with it. But our application was held up by President de Gaulle's policies, by his veto and by the question of British membership. Now the question of our membership, in my view, will have to be settled one way or the other during the next two or three years.

I believe that the Six will want to settle it reasonably quickly in two or three years. Whichever way it is settled, they will then go ahead with or without us. It is quite clear that the Community is gaining in momentum. Since The Hague conference it has moved into a final form. It has settled its agricultural financial regulations and it is now working for a close economic union and co-ordinated currencies. That means coordinated economic policies.

We must be under no illusion about the momentum that the Community has gained and the way in which this will continue. It is on the basis of the Treaty of Rome. I recognise the objections to the treaty put forward on both sides of the House. Because of the derogation of sovereignty specifically defined in the treaty over economic matters, they reject this concept of a new rôle for Britain in Europe. Such evidence as is available shows that this is not the view of our people as a whole. It is not the issue of sovereignty today on which the great majority of them differ. They are prepared to co-operate under common rules if the people of Britain feel the purpose is a worthy one. Of this, I am quite convinced. They are prepared to accept a pooling of sovereignty under the Treaty of Rome in the specific terms laid down in the treaty because they know that it is impossible to have successful economic operations together, except within a common framework.

Sovereignty is for us, as a generation, to make the best use of if we can. If we can make better use of this element by operating together under the Treaty of Rome with our partners in Europe, then I believe that it is our responsibility to do so. We should recognise that no policy in the Community has been pursued against what any member country believes to be a major interest of its own—not what other countries decide was a major interest but what the country itself decided was a major interest of its own.

Again, the reason is a pragmatic one. Whatever the position might be in international law, were the other members to try to overrule what a country believes to be its major interest the strain would be too great and the community would disintegrate. Of that there can be no doubt whatever.

The Treaty of Rome, again we hear, is the basis for an inward-looking bloc. I think this was rather the view of the right hon. Member for Battersea, North. Perhaps we could now accept that the common tariff round the Community is lower than the British tariff. Perhaps we can accept that those countries certainly equal what we do for the developing world and in some cases exceed what we are able to do for the developing world. Perhaps we can also accept that their contribution to world stabilisation of currency from which this country and Her Majesty's Government have benefited in the last five years has been very remarkable. That is not the mark of an inward-looking community. Let us also recognise that they carry out other obligations of a defence kind across the world and that they will continue to do so. On the other hand, they do not expect us to give up our commitments which we have elsewhere.

I cannot accept the view which is sometimes put forward by those most strongly in favour of a European policy that for Britain it means what it has not meant for other members—severing all our links with the outside world. They are not asking us to do this and there is no reason why we should. Indeed, it is contradictory to the whole philosophy underlying this policy, because the purpose of a wider European community is to use our influence for good in the outside world, and that can be done only by maintaining our links.

There are others who say, because of the economic problems why can we not adopt other alternatives? I have said publicly—and I said it in my Guildhall speech—that it is right that we should look at the alternative.

There is the alternative, as it is usually put, of building up the Commonwealth. But we know that, through neither our fault nor that of the Commonwealth but because of the movement of international trade and international negotiations on trade, the preferences of the Commonwealth have been steadily eroded. The Commonwealth will not reverse that trend, because it suits it.

The right hon. Member for Battersea, North said yesterday that we would be moving in Europe, if we went in, into a much narrower market of a preferential kind. But surely that is difficult to sustain. The right hon. Gentleman himself said that it did not matter if the new Commonwealth countries made their own negotiations with the Community and put reverse preferences against us, as the countries of East Africa and West Africa have done. This is a trend which is likely to continue. The countries of the Indian sub-continent made their arrangements after 1963 to take advantage of the tariff changes which we had negotiated. But the old Commonwealth Market with its preferences is a market of about 35 million people with a higher standard of living than our own though it is doubtful whether it is higher than in E.F.T.A. or some Common Market countries, and if there is a change of preferences we would be moving into a preferential market of 200 million people. It is difficult to sustain the argument especially with the E.F.T.A. countries added, that this is a narrower preferential market than that which we enjoy at the moment.

Let us look as an alternative to E.F.T.A. The right hon. Gentleman said yesterday that we should strengthen E.F.T.A. That was received with murmurs of applause, but what does strengthening E.F.T.A. mean? It is up to businessmen now, with our existing tariffs, to develop those markets to the utmost. That they can do, if E.F.T.A. joins the Community, whether we are in the Community together with all of them or not.

How else can the Government strengthen E.F.T.A.? We successfully advanced the abolition of tariffs at the first meeting in Lisbon after 1963. But is E.F.T.A. to have a common agricultural policy? Is that how we strengthen it? How can the alpine agriculture of Switzerland, the fjord agriculture of Norway, the highly productive agriculture of Denmark, and our own support price system in this country—which the right hon. Gentleman wishes to retain—be brought together in a common agricultural policy?

What other sphere is there for strengthening E.F.T.A.? To create institutions for common economic policies means the creation of a central commission such as in the Community, to which the right hon. Gentleman most strongly objects. How, then, is there a policy for strengthening E.F.T.A. as an alternative to possible membership of the E.E.C.?

Mr. Douglas Jay (Battersea, North)

Would the right hon. Gentleman at least agree that we ought not to accept any arrangements which would mean going back on the free trade arrangements which we now have with the other E.F.T.A. countries?

Mr. Heath

Some E.F.T.A. countries want full membership, in which case there would be no tariff arrangements between them but they would have to change their external tariffs Some E.F.T.A. countries want associate membership—in the case of Portugal leading to full membership—and others, because of neutrality, want associate membership. That would deal with the tariff question which the right hon. Gentleman asks.

Then there is the question of increasing trade with the Soviet bloc. That is about 2½ per cent. of our total trade. Of course we should increase it, and again that depends on Government arrangements as well as business men. But this cannot match the opportunities which exist in Europe if we are able to take them.

Finally, there is the alternative of a North Atlantic Free Trade Area. Of course it was right for that to be explored, but it is well known that no American Administration has been prepared to support a policy of this kind. The Canadians turned it down in 1958–59, and have now developed their own tariff policy across the border with the United States. The Australians and New Zealanders may want free entry for their agricultural products, but they are not prepared to remove protection from their industries. Therefore, from all those points of view, the possibility of bringing about a free trade area of that kind does not offer a realistic policy on which we can put our own reliance.

Finally, it is said, "Let us have bilateral arrangements with the Six, or some other form of loose co-operation particularly in technological products." I should like to make one brief reference to what the Foreign Secretary said yesterday because he said, or implied, that our policy was to get a bilateral arrangement with France. That has never been our policy. What I was constantly urging was what the Five were always urging upon me—that as it was a French Administration which had put the obstacles in the way of British membership everything should be done by the British, working with the French, to try to remove those obstacles. It was a sensible and realistic approach, urged by the Five and the right thing to do.

What about projects? As far as bilateral trade arrangements are concerned, they can no longer be with individual countries but only with the Six as a whole. It is true that we have developed some projects, but when we are outside the Community it will be more and more difficult for us to be involved with large-scale projects which they are prepared to do themselves. This will be the case because the outcome of economic union in the Community will be great Euro-companies under European company law.

That is the purpose of the development today, and the difficulty which will face those who want to carry on great projects will be very considerable. But inside the Community there would be tremendous opportunities in Euro-companies, in which we could contribute our technology—it is mainly through companies that technology would be imparted—and in projects which would have a single chain of command.

I do not imagine that anyone who has been concerned with any of these great projects today would say that the double chain of command is satisfactory. It means divided responsibility. It means escalating costs. It means delay in production. The only real answer is the Euro-company with a single chain of command in which we ourselves are a part.

So the question remains: can the Six and ourselves, with the other applicant countries, make the arrangements by enlarging the present Community which will enable us to take advantage of these opportunities, both political and economic, and make what I think is an all-important contribution to the future of our own country in Europe?

In that context, let us consider the White Paper. The Prime Minister was right to issue it. The Prime Minister was right to point out that in my Guildhall speech I asked for the greatest possible information to be given to the people, though I do not flatter myself that that was the reason he produced the White Paper. Yesterday, my right hon. Friend the Member for Barnet (Mr. Maudling) dealt with many of its aspects. It is, I think, the first White Paper I can recall which the commentators have condemned not because of the policy set out in it, but because they believed that it was statistically inadequate—to put it at its mildest—or intellectually rather disreputable, to quote the words of those who condemned it most. I shall add three comments of my own upon the White Paper.

First, there is a failure to provide any clear and detailed explanations of the assumptions on which so many of the calculations are based. It is this omission, if I may say so to the Chancellor of the Exchequer, which makes it almost impossible for other commentators or those who try to work out the figures to make any comparison with the Government's own figures. It becomes more and more confusing just to set one lot of figures against another lot.

Second, there is a failure to provide any suggestions for Community solutions to the problems which obviously arise from the White Paper. The Chancellor may say that that was not its purpose, but, if one is to have a constructive approach to this matter one of the most helpful things which the Government could do during this interim period would be to put forward reasonable rational solutions which are acceptable to us and which fit in with the Community's method of tackling these problems. This is not to weaken the negotiating position. Indeed, in my view, it carries conviction for the negotiating position, because it shows, first, that the Government have studied the problems and, second, how they themselves believe that the problems can be handled in a Community context. I urge the Government to do that.

In 1967, Her Majesty's Government put forward only one specific proposal, and that was to deal with the problem of sterling at the time. But it was not a Community solution. The proposal was to isolate one aspect of this country's sterling problem, and, therefore, it was not acceptable. It is Community solutions that are required.

Third, there is a failure to provide a clear view of the criteria by which any overall arrangement which is negotiated can be judged as to whether it is in Britain's interests and the interests of the Six. This seems to me the most glaring omission.

I believe that members of the public want to look at this question from the individual's and from a national point of view, and I shall consider that aspect of it for a moment. From the individual's point of view, what is, obviously, occupying everyone's mind is the cost-of-living increase involved in acceptance of the common agricultural policy. It was stated in the White Paper as 4 to 5 per cent. Looking at this, however, as an economic factor, it is a once-for-all jacking up on to the existing European price level. It is a once-for-all operation. Is this manageable? Is it manageable from the individual's point of view?

We come now to a consideration of the transitional period. Over the past five years, there has been an increase in the cost of living of 25 per cent. That has been much criticised, quite rightly, but, on the other hand, as the Chancellor knows, the standard of living has not decreased. We can say that the standard of living has not greatly improved—[Laughter.] It has not greatly improved—that is true—not in comparison with what was going on during the period before that.

From the point of view of a jacking-up operation, is that something which can be managed, as a result of a transitional period in which it is spread over, perhaps, five years, as a result of changes in the social service benefits which would be required, and as a result of changes in Government policies? I should have thought that, if it is forced to that level—which would not necessarily be true after negotiations—this is a matter which can be considered as a once-for-all jacking up process for which special arrangements and policies would have to be made.

I come now to the question from the national point of view, that is, the payments across the exchanges, to which much attention was devoted yesterday. They are payments for Community funds. Can our industry, the expansion of our agriculture and the expansion of our services for the Community and the rest of the world cope with whatever is required after negotiations? It is on this matter that the Government will have to judge in negotiations if they carry them through, and on which the House of Commons itself and the people will have to judge when the arrangements are negotiated.

Mr. John Lee (Reading)

Yesterday, the right hon. Gentleman the Member for Barnet (Mr. Maudling) made clear that the top price—if I may call it that—in the White Paper of £1,100 million would be totally unacceptable to the Opposition. Presumably, the bottom price would be. Will the right hon. Gentleman say at what point in between the thing becomes unacceptable?

Mr. Heath

The hon. Gentleman knows that those who are responsible for negotiations ought to give the House the calculations and show what the situation is when they negotiate.

Mr. John Lee

What is the right hon. Gentleman's view?

Mr. Heath

With respect, I am not negotiating.

The real question is: will industry, agriculture and services be able to cope with the problem? It is here that the Government ought to have been able to give rather better indications than they have so far given. One can talk only in general terms. I believe that the possibility of agricultural expansion is under-estimated. In my experience, it always has been under-estimated by the Minister of Agriculture. Perhaps, as the right hon. Gentleman is on the Front Bench, I may say that I find it extraordinary that this is the first major debate on Europe I recall in which the Minister of Agriculture has not taken part.

I believe that agricultural expansion could be much greater than is projected in the White Paper. This would save more on the balance of payments, and it would also reduce the levies which have to be paid across the exchanges, There is also the factor of the purchase of surpluses from the Community, which will reduce the amount which has to be paid out of the central pool and, therefore, further reduce the national contribution.

This brings us to the heart of the Commonwealth problem, and it is about this that so little has so far been said. It takes us to the heart of it because of the purchases of surpluses and raises the question of soft wheat and also milk products from, in particular, Australia and New Zealand.

As regards industry, we should look at the opportunities as well as the disadvantages. Has British industry the potential to achieve what is required of it? Again, if there is a reasonable negotiation, I believe that it has. It has the reservoir of those who still remain to be employed. It has over-manning in a considerable part of industry. It has declining uneconomic industries which can be transformed into new and sophisticated industries. It has plenty of scope for the removal of restrictive practices, for improved management and for fresh investment.

Therefore, the problem is not, is the potential there, but, how can it be used, how can it be brought together to cope with the problems across the exchanges? What is required are the right policies to do it and the time in the transitional period which the Government must themselves negotiate. I repeat that these negotiated arrangements must give industry and agriculture the proper opportunities to develop and to cope with the burdens which are required under the system. Unless they can do so, there is no point in our becoming a member.

There are some who say, "Despite all this, let us wait still further for a later opportunity". I can only draw their attention to what I regard as the sad story that in 1945 Britain could have had the leadership of Europe on a plate—indeed, Europe came to us and asked for it. In 1950, during the Coal and Steel Community proposals, we could have been in at the initial discussions, and we rejected that; and in 1956, when we ourselves were in power, we could have taken part in the shaping of the Economic Community and Euratom, and we rejected it.

In 1961, the problems had become very great, but they were within reasonable reach of solution when the veto was imposed. Indeed, that is why it was imposed. In 1967, the veto was still there, and the negotiations did not even start. In 1970, the problems have become still greater, because the Community has reached its final stage, and because we have had to suffer a devaluation which has altered, indeed increased, the gap between the price level of the common agricultural and our agricultural policy. To those who urge, "Why do we not sit still and wait for a later opportunity?" I say that this must now be examined realistically, and that the Community will settle it with us one way or the other, and that if we decide against it, or, if the Community decides against it, then we must go on living with the situation as we find it.

I now want to make one or two points about the negotiations themselves. I said that the Community had regained momentum. What impresses me most today is the calm confidence of the Commission and of the Community as a whole. When I was negotiating it was still in a frenzied state. This was shown throughout the negotiations, because the members felt that the Community was fragile. It had been in existence for less than three years, and this lack of confidence made them extraordinarily rigid in the proposals put forward for making changes which would allow us time and the means by which to adjust. Today, they have the strength which comes from confidence in the knowledge that they have reached the final stage. The Community can be much more flexible, and I think that the onus is on the Government to put forward Community solutions which will receive much more favourable consideration than we have ever had before.

That is a helpful factor, but there is still plenty to negotiate. I do not think that the right hon. Gentleman was right in saying yesterday that there was little to negotiate. There is the whole question of the timetable, the changeover, the phasing of the C.A.P., and contributions across the exchanges, apart from the problems of the sugar agreement, New Zealand, and raw materials with zero tariffs. There is plenty to negotiate about. The Government must distinguish between the transitional period, how the changeover is made, and the permanent position once we move into the final stage. I believe that the objective is desirable and worthy, and that the responsibility rests both on the Community and ourselves to find solutions to these problems of a Community kind which will enable us to obtain benefit in the long term, looking at it overall, just as much as the Community wants to do by itself.

I come now to the Prime Minister's characteristic electioneering frolic last Saturday morning, followed by his so-called non-electioneering broadcast last Sunday. This is a matter which, in the interests of everybody, we ought to get straight. The Prime Minister said: The Conservative position, calculated, considered, carefully thought-out, is to pay the entrance fee in any case. without any sort of qualification whatever.

I think that it is clear from our previous position that this is not so. Indeed, one might ask why we negotiated for such a long time, and with such determination, in 1961 to 1963 to get arrangements which were suitable for us.

The right hon. Gentleman went on to say: You've got to say this about the Tory negotiating postures. It's a funny way to run a negotiation to start paying the price before you begin. It's a fairly sure way of getting less satisfactory terms. It's not of itself a recipe for failing to get in, it's a recipe for paying more as the price for getting in. That is throwing the whole matter straight into the electoral arena. It has thrown the whole question of the conduct of negotiations into the arena.

Mrs. Anne Kerr (Rochester and Chatham)

It should be.

Mr. Heath

The hon. Lady may be right. Perhaps it ought to be thrown into the electoral arena, in which case let us be quite clear where we stand, because on Sunday the Prime Minister said the reverse. He was asked whether he had really intended to throw the question of Britain's entry into Europe right into the middle of the pre-election battle ring, and he said: No. I wasn't dealing with the question of the terms in which we're going into Europe. Having said that he had to say something about the Tory posture, he then said that he was not dealing with the terms for going into Europe.

Perhaps the right hon. Gentleman would prefer me to quote what he said two minutes later in his Sunday broadcast: What I am concerned with … is the strange behaviour of those who want to pay the price when they're not certain of getting in. Having first contradicted himself at two days' notice, the right hon. Gentleman contradicted himself at two minutes' notice.

Let us look at the whole question of what is really involved in this negotiating posture. We have advocated that we should move over to the levy system for British agriculture. That is what the right hon. Gentleman criticises as the negotiating posture, but the Prime Minister and the Government have accepted the whole of the C.A.P., and all the directives issued under it. They had to do that, otherwise the negotiations would not begin. How can the Prime Minister say that our negotiating posture is weaker than his, when he has accepted the whole of the policy?

Let us come to the question of paying the price. The White Paper says that under the Community food prices will rise by between 18 and 26 per cent., and the cost of living by 4 to 5 per cent. Under our policy for Britain outside the Community, the Minister of Agriculture himself has said, in answer to Questions, that food prices will rise by between 5 to 7 per cent., or just over 1 per cent. on the cost of living. That is one-quarter of what the Prime Minister and his colleagues have committed themselves to, and this is, therefore, a bogus point about a negotiating posture.

Is the Prime Minister—or the Chancellor of the Duchy of Lancaster—going to negotiate about the price level? The right hon. Gentleman has never said so. If he is, jolly good luck to him. He will find that it is far from easy in the negotiations to change the price level in the Community, but good luck to him. If he is to negotiate on the price level, does the Prime Minister think that he will bring it down to one-quarter of the difference between the Community and this country at the moment? Does he really think that he will get it down to what is our support price level? This is absolutely and totally unrealistic, and the right hon. Gentleman knows it.

I turn to the next point, about paying the price. Under our proposal, the subsidies which are saved accrue to the Treasury, and the levies accrue to the Treasury as well. The Chancellor can use them either for social purposes, or for the reduction of taxation. That is our proposal. But what happens under the Community's proposal? The Chancellor gets none of it. It all goes to the central pool, both the saving on the subsidies which is only one-quarter of the weight of the price level, and the levies, and the Chancellor has to contribute from indirect taxation, from Customs dues, and, if necessary, a national contribution. This is the difference between our proposal which is self-contained for Britain outside the Community and the Prime Minister's commitments as a negotiating position and in practice as regards the C.A.P.

At odd moments the right hon. Gentleman has dropped a hint that the Community will change the system. However much we would like it, there is no evidence that the Community will change the C.A.P. as such. What is will do is deal with the structure of agriculture in Europe, and with the price level, and in that we can support them if we become members. It is not a question of the system. Once we have jacked up to the existing price level, it is a question of the prices which are involved in the C.A.P. which matter. If, under our support price system, we want the same levels as they have in Europe, we shall have the same sort of problems in our country as they have in Europe; and the Leader of the House knows that better than anybody, because he studied it when he was Minister of Agriculture. The Prime Minister's excursion into this last Saturday was an argument which was deliberately falsified to mislead the electorate.

There is a final point I wish to put to the Prime Minister about the negotiations.

Mr. E. Shinwell (Easington)

Having listened to the right hon. Gentleman with the utmost attention, may I ask him, in view of his observations, why he does not produce his own White Paper?

Mr. Heath

It will be only a short time before my right hon. and hon. Friends and I will have all the resources of a Government, and then that will be possible.

On the question of Commonwealth trade, both for temperate products and industrial goods, of the association of the developing world, which is a major part of the Commonwealth position, and of the Price Review for agriculture—all were accepted by the Prime Minister in his speech to the House in 1967. We negotiated them from 1961 to 1963 and they have all been accepted by the present Administration.

If my hon. Friends and I are as incapable as the Prime Minister suggests in negotiations of this type of defending the interests of this country, why has he accepted what we negotiated for the Commonwealth, developed and underdeveloped, and for agriculture? It is obvious that it was just an example of the Prime Minister trying to show that he is a bold and resolute negotiator who has the admiration of the world. But what was the purpose? Was it to succeed or fail in the negotiations? Nobody can tell.

It is interesting to note that after the White Paper, and after the right hon. Gentleman's speech on Saturday and his broadcast on Sunday, the country and the world—not just "The World at One", or "The World this Weekend", but everybody—has only one question to ask him: is he or is he not going to rat?

The whole world knows what happens to the right hon. Gentleman's boldness and resolution when he negotiates. This is the man who declared that a Bill was "essential to our economic recovery", "essential to our balance of payments", "essential to full employment" and "essential to the Government's continuance in office". He negotiated that, and what did he do? He negotiated it away. That happened to the trade union reform which he abdicated and over which he was toppled by a couple of trade union leaders—[Interruption.]

If the Prime Minister wants to fight the coming election on who should negotiate for Britain, let him come out now and fight it. Let Europe see which Government have the support of the people of Britain. And if the negotiations are successful, then let there be in power a Government who will pursue policies which are essential, and which will be essential, in Europe for this country to take its rightful place in the wider Europe which many people have worked so long to create.

5.3 p.m.

The Chancellor of the Exchequer (Mr. Roy Jenkins)

The right hon. Gentleman the Leader of the Opposition made what I thought was an extremely thoughtful and constructive speech for the first 45 minutes. He did not continue in that vein for the last seven minutes. Indeed, he ended extremely weakly and ineffectively. [Interruption.] If, in the Opposition's view, what he did had to be done, then the right hon. Member for Barnet (Mr. Maudling) did it a good deal more effectively yesterday.

The Leader of the Opposition seems to fail to understand the central point—if it needs to be dealt with further, my right hon. Friend the Prime Minister will deal with it later—which is that we are willing to pay certain prices to get into the Community but that we are not willing to pay them if we do not get in. I prefer to concentrate on, and give a response if not reply to, the first 45 minutes of the right hon. Gentleman's speech. I can, without covering it in the same way, pursue much of the ground he covered.

This is the first time that I have had the opportunity of taking part in a debate on this subject since my days on the Opposition back benches, when I missed participating in very few of them. I wish, therefore, to begin by attempting to summarise the major changes which have occurred since the issue was last before the House in 1967. There have been three major changes, two of them good and one bad.

First, there is the change within the Community itself; there are new Governments in France and Germany and the devaluation of the franc and the revaluation of the mark have removed the monetary strain coming from within the Six. At the December Summit at The Hague confidence, which was hitherto damaged by our exclusion, was restored between the existing members on the basis both of the strengthening and enlargement of the Community. For the first time there is an approach to unanimity among them on the issue of the desirability of our entry.

Secondly, there has been a striking improvement in our economic strength. In 1967 our balance of payments position was weak and there were doubts about the parity of our currency. We now have the strongest balance of payments, current and long-term capital combined, of any European country inside or outside the Community. These are the two favourable changes, and they are substantial ones.

The unfavourable change is the increase in the likely agricultural cost of entry. This stems from two factors, the higher level of expenditure by the Community's Agricultural Fund and the rise in the sterling level of E.E.C. prices as a result of devaluation. This is, therefore, a substantial factor also.

It is against this background that I come to the central question, on which the House will expect me to comment. It is that raised by the general economic assessment in Chapter V of the White Paper. When we set the possible costs against the possible benefits, with all the margins of uncertainty that are necessarily involved, can we afford the price? And even if we have the money to pay, is it worth doing so?

I will, first, try to put the time scale into perspective. The argument against our going in is sometimes put in terms which suggest that the costs would hit us in a single, almost annihilating, blow and might do so in the course of the next few months. This is nonsense. The negotiations would inevitably take quite a long time. There would then he a further delay for parliamentary ratification in the various countries. Then we would begin the transitional period, during which the effect would be gradual and not concentrated. Altogether, we should be likely to be in the second half of the 'seventies before we had to bear the major brunt.

However, this does not begin to answer the question: would it be worth while? Nevertheless, it has a considerable bearing on the question: can we afford it? It has a bearing in at least two ways, the first being the fact that our national income would be larger by then. Even at the past rate of progress—taking the average for the last 10 years, which I frankly regard as having been disappointing—our national income should increase, in real terms, by about £6,000 million between now and 1975.

Secondly, there should be no question of any balance of payments cost being laid on top of the burden of short and medium-term debt repayment obligations. Even on much more pessimistic assumptions than the past year would justify, these should be well out of the way before then.

There is a third point which is necessarily more speculative and on which I can express only my personal view. The White Paper calculations are done, as they should have been, on the basis of existing disparities between the cost of food in the Community and the cost here, which is largely based on world prices. The level of prices in the Community results in large surpluses, and there are many in the Community who would like to see prices fall to a level at which these surpluses would no longer be produced. There may well be a movement in this direction, associated with a rise in the agricultural efficiency of the Community, which is already to some extent taking place, but for which there is still a great deal of room.

I also believe, contrary to the view of my right hon. Friend the Member for Battersea, North (Mr. Jay)—it is not unknown for him and me to disagree upon this matter—that there may be a rise in relative food prices outside, associated with rising living standards in the rest of the world. I would judge it likely that the gap in food prices between the E.E.C. and the rest of the world will have diminished by 1975. The cost to us will be correspondingly reduced.

Mr. Jay

Since my right hon. Friend mentioned me, would he agree that we indeed had this disagreement in 1967 and that, since then, I have been proved right and he has been proved wrong?

Mr. Jenkins

I do not think that my right hon. Friend and I had a disagreement in 1967, because other Departmental responsibilities inhibited me from speaking on this subject in 1967. He and I had many disagreements in 1962 and 1963 and I would say that, on a number of issues there raised, I proved right and he proved wrong—

Mr. Jay

Which?

Mr. Jenkins

It would be wearisome to the House to go over them, but my recollection is that my right hon. Friend was very sceptical about continued rates of growth in the Community which have proved very strong since then—quite contrary to his view at that time. That is merely one example.

I now turn to the question of whether any likely price which we would have to pay is worth while. The economic answer, primarily—the political answer as well, to which I shall turn at the end—is the effect upon the terms of entry on our rate of growth. We must first try to get the quantities right. The British G.N.P. is now almost £40,000 million a year. An additional growth rate of a half per cent. per annum would therefore give us an extra £1,100 million per annum after five years and an extra £2,700 million per annum at the end of the tenth year. The effect, of course, is cumulative and this helps us to put possible costs somewhat in perspective. It does not, of course, mean that we could tolerate the maximum cost, and I regard it as almost inconceivable that all the factors should flow with full force in an adverse direction, but if they did, the result, we would all agree, would be unacceptable.

There is a further point. The cost would rise to this maximum by the end of the transitional period, whatever level that may be, but this would not apply to the benefits. They would continue to accrue, wholly unmortgaged so far as the E.E.C. was concerned, after the end of the transitional period. They would be with us into the future. The costs would have been disposed of.

So far, of course, all this obviously begs the question of whether the growth benefit would be there. But I have no desire to leave this crucial and difficult point undiscussed. It is not a matter—nearly the whole House recognises this—which can be subject one way or the other to absolute proof. Only events can prove what will happen. I can only lay certain considerations before the House.

It is undoubtedly true—before anyone interrupts me, I should point out that I do not lay great stress on this point—that, over the past decade and more, the E.E.C. has shown a substantially faster growth rate than we have. I do not lay great stress on that, except to note that the E.E.C. countries have maintained their growth with more consistency than was expected on several occasions in the past and that their growth of trade, particularly with each other, has made a significant contribution to this growth.

I am aware, of course, of the argument to which my right hon. Friend the Chancellor of the Duchy referred last night, that, if we abstract the United Kingdom, E.F.T.A. can be shown to have achieved approximately the same rate of growth as the E.E.C. [An HON. MEMBER: "More"] No, not more, the same. But it is also the case that, if it is right to abstract the United Kingdom, it would also be right to abstract Portugal, which is the odd man out in both groups. It is a developing country, very different from any of the others. If this is done, we return to a position in which the E.E.C. rate of growth is significantly different from that of E.F.T.A.—

Mr. Frank Hooley (Sheffield, Heeley) rose—

Mr. Jenkins

I said, before anyone interrupted me, that I was not laying great stress on this point.

What is perhaps more directly relevant also is the experience of one country within the E.E.C.—Belgium, which had a disappointing growth rate based on an old industrial structure, not unlike ours in some ways, and which moved up from an average of 2.6 per cent. in 1953–58 to an average of 4.4 per cent. overall or 3.8 per cent. per head for the period 1958–67. If we are to look for parallels, that seems to me to be as good a comparative experience as anyone can find.

The main growth case in my view does not rest upon an argument by analogy. If we are to grow faster, this must mean that our more technologically advanced industries will lead the way and play an increasingly dominant rôle in the economy. They are the ones with the greatest capacity to expand their markets and get above average increases in productivity. These are two clearly necessary ingredients for faster growth. We will not get faster growth led by industries which produce goods for markets which are no longer expanding, either at home or abroad, and we will not get it from industries which, by their very nature, have little scope for further drastic improvements in the methods of production.

Yet if we look at these growth industries, these advanced industries on which our growth hopes must depend, two things stand out. First, they are the industries which most need to have a large and unified market available. They need it because of their dependence on a large research and development effort and because, whether they are producing on a large scale or turning out more specialised products, the economies of scale are of great importance to them.

Second, it is precisely in these advanced industries that the management leaders, with very few exceptions, are most enthusiastic for British entry. Of course, management opinion, like any other opinion, can get things wrong, but I doubt whether they could achieve such a near-unanimity of wrongness on an issue in which their own interests were so directly involved.

Some hon. Members take a more pessimistic view and see British industry as necessarily being damaged by our opening our frontiers to the industries of the Six. The hon. Member for Peterborough (Sir Harmar Nicholls) I think said this yester- day. Whatever else may be said about this, I do not think that it is a good argument for those who want us to stay out. If one believes that it is better for us to stay out, one must believe that our industry has a special resilience which will enable it to compete successfully for investment markets all over the world, when we, alone amongst major exporting countries, are operating from a narrow home base, one of only 50 million to 60 million here at home and of 100 million if one includes E.F.T.A. But if we stayed out by our own desire, if we failed to negotiate, I wonder how much of E.F.T.A. would remain constant to our own position rather than seek to be included within the Common Market.

Sir Hamar Nicholls

The point which some of us tried to make yesterday was that, while our industry is alert and vigorous and perhaps among the leading ones, by joining the Community, we should be on the perimeter of the new market, whereas, if we remained as a maritime Power, we would be at the centre of the world market.

Mr. Jenkins

No. I think that the hon. Gentleman is trying to give an economic cloak to his natural insularity. I do not believe that we have any advantage as a maritime Power over, shall we say, the complex which exists at Rotterdam. I do not think that there is any inherent difficulty about having a prosperous region which is not what is sometimes called the golden triangle. I do not think that Milan or Turin or that area has failed to do well out of being in the Six. The hon. Gentleman is seeing things, possibly out of his own desire, in an unnecessarily pessimistic way.

So if we stay out, with 50–60 million on our own, and perhaps 100 million if E.F.T.A. remains with us, with a query over that, we are asking British industry to accept a long-term competitive disadvantage which will not be true of any major competitor throughout the world not true of America; not true of Western Europe; not true of the Soviet Union and its satellites; and not true of Japan, which is already 100 million and growing very fast indeed.

Let us note that there is, in my view, now no alternative grouping which is now seriously proposed for us. In the controversies of the early 1960s there were those who saw the Commonwealth as providing such an economic grouping, I think that there are very few who today see it in that rôle.

More recently the idea of N.A.F.T.A. —the North Atlantic Free Trade Area—was fairly widely canvassed. We do not hear much of that concept today, for in my view the good and sufficient reason that there is not and never has been a sufficient body of sustained American opinion, which would necessarily be overwhelmingly dominant in N.A.F.T.A., which would be interested in the idea. By staying out, we should therefore be accepting for an indefinite future a position more cut off than that of all our major competitors.

I am not saying that we could not survive and even prosper in such circumstances. What I am saying is that to believe that we could do so is totally incompatible with the view that our industry dare not open its doors to European competition. Outside we would still have to compete—compete with our European neighbours, but compete with them in less favourable circumstances.

I come now to a point which I believe, from one or two questions which have been asked of me recently, may be in the minds of some of my hon. Friends. "All right", they may say, "from a gross national product point of view perhaps we could afford it. Perhaps we would even gain. But what about the balance of payments? To go in we would have to maintain a strong surplus for some time to come. Would not this exercise a constant restraint on our growth rate and consequently limit our ability to get the G.N.P. benefits which might otherwise be available?".

I believe that this view is based on a misunderstanding of the relationship between growth rates and the balance of payments. When a country has a weak balance of payments and is trying to cure it, this is often an impediment to the rate of growth. But this is quite different from saying that a strong balance of payments goes with a slow rate of growth. Indeed, the reverse is very much nearer to the truth.

In recent years two countries have probably stood out as the countries with the strongest balance of payments in the world—Germany and Japan. These have also been the two countries which most of us would probably pick out, and rightly pick out, as those with the fastest growth rates. A distinction must be drawn between the transition to balance of payments strength and the position when that strength has been achieved, particularly if, like firm, hard packed snow, it becomes, as I believe a steady balance of payments surplus can, difficult to melt.

Our immediate need for a large balance of payments surplus has stemmed, in my view, from our need to start repaying our debts—a direction in which we may have made some very good progress recently. But there has been a continuing need, and there is a continuing need, to keep the balance of payments strong in order to get a more sustained growth rate than we have hitherto been able to achieve.

In my view, a strong balance of payments is not something to be dissipated, something to be spent once and for all. It is, rather, a platform on which to get a generally better economic performance than we have been able to achieve in the past.

There is no inherent reason why we should think of ourselves as a natural deficit countfy, as we have been for too long and too often in the past—obsessed and stultified by balance of payments weakness. We have shown that we can get our visible trade into balance—indeed, into surplus. On top of that, we have the strongest position on invisible account of almost any country in the world. That invisible strength would undoubtedly be further increased by our accession to the E.E.C.

I believe that no one could be less anxious to dissipate a balance of payments surplus than I am. I have had to propound too many hard measures in order to achieve it. If we are to use that surplus as a foundation for greater wealth in the future, I believe that, provided that acceptable terms can be negotiated, we can advantageously invest part of it in the cost of admission to the Community. I believe, for the reasons I have endeavoured to give, that that is more likely—I agree that there cannot be absolute certainty—to increase our growth rate in the future than any other course which we could take.

We have twice had the negotiations broken off by others and the door slammed in our faces. On these occasions, too, there was perhaps ground for a certain lack of self-confidence in our approach to entry because of our economic weakness. Now that weakness has been removed and the door is at last opening. I believe that it would be an ironic tragedy if at this of all moments we were to lose our resolution and not go forward to the negotiations.

Mr. J. Enoch Powell (Wolverhampton, South-West)

Can the Chancellor of the Exchequer clear up what appears to be a contradiction? Earlier in his speech he pointed out that an increase in our growth rate of only ½ per cent. per annum cumulatively would pay, as it were, for the upper limit of the cost of entry to the Common Market, but at the same time he declared that that upper limit was manifestly unacceptable. Does it follow from that that he regards even so small an increase in annual growth rate as not I likely?

Mr. Jenkins

I think that there were about four different conclusions and five premises in the right hon. Gentleman's intervention. I do not regard any of the conclusions as following from the premises. As my right hon. Friend the Secretary of State for Foreign Affairs said yesterday, I think that the right hon. Gentleman tries to pursue these matters a little too close to the frontiers of reason. [HON. MEMBERS: "Answer."] I did not say that I regarded it as reasonable to pay for the upper limit. I said that I thought that the upper limit was too much. I did not say that the 1 per cent. increase—[HON. MEMBERS:"½ per cent."]—in the growth rate was a maximum. I did not strike any balance between the two. Having dealt with three of the premises, I must confess to the House that I forget the remaining two.

I turn now, briefly, to the political case for entry. Not having the detailed responsibilities of being a Foreign Office Minister, I should like to approach this standing back a little and in the broadest possible way.

In the post-war world—the right hon. Member for Bexley (Mr. Heath) said something along these lines, though he and I would part company a little further along the argument—it took all political parties some time—in my view, too long—to accept a European orientation. This was not altogether surprising, for our post-1945 position appeared to be different from that of the other European countries.

We emerged from the war with an inheritance which was proud, glorious, yet unsatisfactory. It was unsatisfactory because, of all the major countries in the world, our future was less clearly charted. America and Russia emerged with their rôles as super-Powers firmly secured. Germany, Italy and Japan had all suffered the harsh experience of defeat.

Mrs. Anne Kerr

Can I ask my right hon. Friend a question?

Hon. Members

No.

Mr. Jenkins

I will not give way.

Mrs. Anne Kerr

This is crucial.

Mr. Deputy Speaker (Mr. Harry Gourlay)

Order. If the right hon. Gentleman has not given way, the hon. Lady must resume her seat.

Mr. Jenkins

Their regimes had to be constructed almost afresh. France came to victory after the humiliation of occupation. We in this country were not subject to any such brutal adjustment. But our power, so far from being built up by the war like that of America and Russia, had been undermined.

In one sense, we reacted quickly to the new situation. We made little attempt, less than some of our neighbours, to maintain our direct colonial power. We forced the pace of a substantial and successful transfer of power in Asia. During the fifties and the early sixties, similar transfers took place in Africa. We withdrew, inevitably but on the whole with good grace, from what might be described as the more selfish part of our world rôle. But from the more unselfish part we made no such withdrawal. We continued to believe that it was our duty to police large parts of the world, to defend our former dependencies, and to maintain a network of military commitments barely approached by the super-Powers, let alone by our power equals. In this way, not for unworthy motives, we tried to cling on to our precarious position as the third of the great Powers. Economically, we were not in their league. Militarily, we tried to pretend that we were. I do not believe that the attempt worked. It produced 20 years of severe overstrain with grave effects upon our economic performance.

We have also had to rethink our association with the Commonwealth and to recognise that, although it undoubtedly has a valuable rôle as a means of bringing together in intimate association countries of different races and at different stages of development, the Commonwealth can no longer give us a special rôle in the world. Neither in its old nor in its new form does the Commonwealth offer us the prospect of either economic or political cohesion. None of its members, white or coloured, see it as doing that.

Then there is our relationship with America. I believe in close North Atlantic ties. I also believe that Britain's entry into the E.E.C. should and will help and not hinder such ties. But they should be on the basis of an approach to equality. Between Western Europe as a whole and the United States this can exist. But between any individual country, Britain or any other, and the United States it is simply not possible for reasons of power parity alone.

There is another issue to be considered. I believe that the two vetoes which were applied to Britain's application to join have inevitably devalued the ideological force in Europe of the European idea. The plans which emanated from men like Robert Schumann and Jean Monnet and the inspirations which seized those who met at The Hague just over 21 years ago were not related solely to the arrangements between an exclusive group of Powers. They offered a new way of learning from the bitterness and destruction of the war years, transcending the restrictions of national sovereignty.

But once these objectives had been given, they could not be limited just to six countries without undermining their own basis. It is not possible convincingly to say that national sovereignty is out-dated, but to refuse to let more than a limited number of countries escape from its confines. It cannot be claimed that Europe can solve its problems only on a European basis and yet insist that European countries—we are certainly a European country—anxious to join should not be allowed to make a full contribution.

I believe that that has been the weakness of the Community since 1963. It explains a large part of its loss of momentum. No one in this country should rejoice at this loss of momentum. We have suffered too heavily from European divisions in the past 60 years for any sensible person to enjoy standing on the sidelines and jeering.

In the recent past, the responsibility for our exclusion has not rested with us. In my view, it must not do so in the future, either. But now the responsibility is on both sides—on us, to keep our resolution; on the Community, to make tolerable the terms of our entry. If either fails, the loss will be great, and it will be a loss not only for us but for Europe as a whole and for the rest of the world as well.

5.35 p.m.

Mr. R. H. Turton (Thirsk and Malton)

It is very pleasant to welcome back the Chancellor of the Exchequer to these European debates after his years of purdah in the Home Office and the Treasury. He has always been a convinced marketeer, and the remarkable fact is that at present the leaders of all three political parties in this House are determined marketeers, believing that Britains' place should be in the European community.

All the party propaganda is devoted to this end. The leading newspapers, with one exception, are all pressurising Britain to get into the Common Market. The broadcasting media do the same. Yet, notwithstanding that fact, 72 per cent. of the British people are opposed to Britain going into the Common Market.

Why is that? I think there is a certain significance in the fact that in its supplement last Thursday the Daily Telegraph printed an article by an ex-political leader on this very matter. He said: Are we going into Europe now to make a proper job of it, or will Britain shrink back in timid isolation? He went on: Europe will not work without a large measure of common government. That was written by Sir Oswald Mosley, the ex-leader of the British Union of Fascists, and that is really the clue to the repugnance of many British people about Britain's inclusion in the Community. They do not want to be subject to an authoritarian bureaucracy, and they believe that that would be the answer if we went into the Community.

The British people also feel unhappy about the political stability of the members of the Six, and they do not want to be in a United States of Europe with them. At the last election in Italy, 35.9 per cent. of the votes went to the Communists, the "Fellow Travellers" and the Fascists. At the last election in France, 36 per cent. of the votes went to the Communists and the "Fellow Travellers". At the last election in Germany, it is true that the N.P.D. did not get 5 per cent. of the votes. But there is a great anxiety that, in a few years' time, there may be in the Bundestag members of that party, which is so very like the Nazi Party before the war. I think that the majority of the British people feel that they would not wish to betray the Australians, New Zealanders and Canadians or abandon their partners in E.F.T.A. in exchange for some federal solution with a United States of Europe.

My right hon. Friend the Leader of the Opposition was at pains today to point out that the solution he saw was not a federal solution in Europe, but is that the general view of the leaders of the Six? Last night, the hon. Member for Watford (Mr. Raphael Tuck) quoted Dr. Luns, the Dutch Foreign Minister, who said, when he came over here, that Britain would be accepted only if she agreed to have a federal solution with the Six. I hope that the Prime Minister will explain exactly what we would be entering if these negotiations succeeded.

Yesterday, the Foreign Secretary manufactured a wonderful bromide when he said: … Western Europe would proceed, economically, legally, commercially and politically to make itself a more compact unit …"—[OFFICIAL REPORT, 24th February, 1970; Vol. 796, c. 1010.] What did he mean by that? My interpretation is that those words mean that Western Europe would become a Federal State. [HON. MEMBERS: "No."] I hope the Prime Minister will make the position abundantly clear when he replies. What is meant by a more compact unit, economically, politically and so forth?

On 22nd July, the Prime Minister told us: I have said repeatedly that there is no immediate proposal by us or by other Governments for any federal get-together or structure in Europe.… It does not fit in with the general opinion of this House or the country as an immediate proposition."—[OFFICIAL REPORT, 22nd July, 1969; Vol. 787, c. 1498.] I hope that the right hon. Gentleman will make it clear tonight that, in the negotiations, he will not agree with any form of federal solution for Europe, that he will not take Britain into a United States of Europe.

I turn now from the political aspects, which I think exercise the majority of people most in this country, to the economic side. I congratulate the Government on the White Paper. On 23rd June, when the Foreign Secretary was asked if he would produce a White Paper, he replied: … it would simply be doing a disservice to the House to try to give a detailed calculation of the effects of all the factors that would be operating on the balance of payments in the first few years after our entry."—[OFFICIAL REPORT, 23rd June, 1969; Vol. 785, c. 979.] It is a remarkable conversion from that statement to his speech yesterday, when he had produced this White Paper, which, for all its faults, is a remarkable document.

When the White Paper deals with the price of food, there is very little margin. The paper issued by the C.B.I. put the figure as a rise of 17 to 18 per cent. The Government White Paper puts the rise as being from 18 to 26 per cent. That means a range of increase of 4s. to 5s. in the £. Taking the present expenditure on food by the average household in this country, it would mean, for a man, wife and two children, a rise of 32s. to £2 a week in the price of their food. It is no good the Chancellor of the Exchequer saying that it will not happen for a year or two. This is what the British people face if they go into the E.E.C. It will jack up their costs to that extent and as a result our costs of production would be jacked up.

I ask the Prime Minister to tell us whether there is any possibility in the negotiations of reducing that rise in the cost of food by any percentage? It seems to be fixed. It may well be that, for a transitional period, the Prime Minister may be able to delay the full extent of the rise, but the British people know that, if they go into the Common Market, that will be the extra cost to every household. Those at work may and will ask for higher wages and salaries, but those living on fixed incomes will not be able to get any recompense.

I turn now to the question of the balance of payments. I found it hard to follow the Chancellor on this. He obviously has not got himself clear, because he could not reply to a point put by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). The White Paper gives a figure of about £1,100 million, roughly speaking, as the cost to the balance of payments. Most of that, as Mr. Pisani has said, would come from the extra cost that Britain would have to pay to the Agricultural Fund, which has been fixed. As I understand it, what was fixed in December at The Hague on the financial structure of the Agricultural Fund is not negotiable on our entry. I hope that the Prime Minister will make this clear. At the moment, it has not been made clear by any Government spokesman, and although my right hon. Friend the Leader of the Opposition hinted at it he did not make it as clear as it should be made.

Mr. John Mendelson (Penistone)

The right hon. Gentleman made it plain.

Mr. Turton

My right hon. Friend is a much more convincing speaker than the others I have mentioned. From 1975, all the agricultural levies, customs duties and a surcharge on the value added tax have to be paid into the Fund. I ask the Prime Minister whether he is going to negotiate to alter that for our benefit after 1975 when we are in, if we go in. Is that negotiable? If it is not negotiable, I find it difficult to understand what the Prime Minister can negotiate about that will bring down the total cost to the balance of payments to a figure that we can pay.

Are we, therefore, limiting our negotiating position to the transitional period, saying that, for a certain time, we need not betray New Zealand. I do not believe that would be any satisfaction to our Commonwealth partners or to our own people. I am not asking for transitional provisions. I ask the Government to negotiate, certainly, but to have a different form of negotiations from that which the Foreign Secretary has put forward.

It is vital that Britain and the E.F.T.A. countries should negotiate as soon as possible with the countries of the Community to secure a free trade arrangement in Europe as a whole. This is long overdue. It was offered by General de Gaulle to Christopher Soames, but, unfortunately, the Prime Minister leaked and laughed that out of court. That is what we should be negotiating about. Britain requires a larger market in Europe and it can get it by a wide free trade area open to all, not merely to the countries of Europe but to the developed Commonwealth countries and the United States of America.

The Chancellor of the Exchequer said that the idea of an Atlantic free trade area was a non-starter. Of course it is. If the leaders of all three political parties are convinced marketeers whose only desire is to get into Europe, how can the American Government or any Government say that they would be happy to join an open free trade association to which we would belong? If the country and the Government realise that the price we are being asked to pay is too great, then we have this solution, which will not betray our friendship with Australia, New Zealand and Canada, a solution that will not abandon our E.F.T.A. alliance and which will not involve a steep rise in our cost of living and I believe that that is Britain's destiny.

5.52 p.m.

Mr. George Brown (Belper)

It is hard to know how to begin my contribution to this great debate, because we are dealing with Neanderthal man on the other side of the House, whom I recognise over there but do not recognise on this side—

Mr. Shinwell

You had better not.

Mr. Brown

He has his counterpart over here.

I start by confessing an interest. I belong to the generation and the wing of the Labour Party that thought that Socialism was international, and that our fellow workers, whether in the Continent of Europe or elsewhere, were equal with us. What I find most distasteful is the willingness of some of my hon. and right hon. Friends to pick up the argument from the other side and talk about our continental colleagues as if they are inferior to us.

The second thing I dislike is the ability of some of my hon. and right hon. Friends and some of the Neandertal men to reduce the argument to a rather miserable economic level. I once had this argument with the then Leader of the Labour Party, to whom I was the deputy, who made a great speech at a seaside conference of ours about the thousand years of history behind us. I had the job of picking up the pieces and trying to make sure that the jigsaw was not destroyed.

I think not so much about the thousand years of history behind us, but about the thousand years, or, maybe, the hundred years, in front of us. We are not deciding today how much my wife will pay for bacon tomorrow or next year. We are talking about my children, my children's children and my children's children's children, what Britain will be 50 or 100 years from now. What road do we see for Britain? We have for a thousand years played a significant rôle in the world. What we are now discussing is how we go on playing that rôle in the world, and where.

May I make a declaration? I will try to meet the economic argument, but to me this issue is far more political than economic. For me, it is a question of how, in a changing world, Britain can still retain a capacity and a power to influence events. I make no apology to anybody. I will pay a very high economic price for that political power to influence our future and the way in which the world develops I would probably pay a higher economic price than other people might want to pay; that is a reasonable difference of view. At the end of the day, it is our ability a hundred years from now, as it has been our ability for a thousand years, to influence events that is really important.

I enjoyed the speech of the right hon. Gentleman the Leader of the Opposition, although I thought that during the last seven minutes he was making a political electoral issue of this question. I hope that we shall get off, and keep off, that level. As I say, much of the speech I enjoyed, but what stuck with me was his reference to the Europeans and ourselves. What are we? Asiatics? Africans? We are Europe. We have always been involved in everything that has happened in Europe. The only time that Europe has ever gone wrong and cost us millions of casualties was when we tried to withdraw. Then Europe went wrong.

We have always had to come in to redress the balance. The men who are counting the pennies should count the lives that it has cost us to hold the ring until the Americans came in, and the pounds we have poured out until we got back again. Europe is where we are, where we have always been and, in this new world in which a country of 50 million people cannot expect economically or in any other way to live by itself, Europe is where we have to be.

I have in my constituency one of the greatest aero-engine firms in the world. It makes a wonderful engine. How many can Britain order? Perhaps 10. The company cannot even carry its research and development expenditure in its domestic market. How can it compete with Lockheed, which may get an initial order of 250 in the United States? By the time that it is selling, it will have written off its research and development costs. It does not have to carry a single dollar of research and development on its export engines because its domestic market takes care of the problem. We cannot do that. We need a market of 300 million people so that we can start exporting on equivalent terms and so that we may have an initial order not of 10 but from the whole of Europe, write off the research and development costs, and then start competing.

It puzzles me that the little Englanders who are frightened of giving up any sovereignty should force our people into what is without question an inferior economic position for emotional reasons. I regard the White Paper as a monstrosity. In all my life I have never seen anything like it. I cannot think who wrote it. Had I been responsible for it, it would not have come out in this form. I quote one sentence of page 18 which puts the matter in perspective: With a smaller price gap, the overall level of production might be marginally higher or lower than it would be outside the Community depending upon whether the production response was greater or less". Choosing my words very carefully, I say that I do not know who was conning who. But I make it plain that M. Jean Louis Rey will not be conned as easily as that. It is a silly White Paper; it helps us not one whit.

I represent a vast agricultural constituency. Food prices in the shops are not related to what my farmers are paid. Sir Jack Cohen, my friend, with his vast supermarket in the Edgware Road where my wife goes, often twice a week, just to show that we are still friends, is not charging my wife what my Derbyshire farmers are being paid. He is charging her what she is willing to pay. In Britain industrialists can barely make a return on capital employed sufficient to cover the cost of borrowing the money. But I am told that distributors are making 22 or 25 per cent. on capital employed because they have vast margins.

If the price which my Derbyshire farmers get goes up, it does not follow that the prices in the shops go up. The distributors may well be squeezed. It is ridiculous to say that when producers are paid more prices in the shops go up. I challenge any Member representing an agricultural constituency to deny that for long we have been saying that our producers, especially our vegetable producers, were getting much less for what they were producing than what the distributors were charging in the shops. This is the price that we pay for not having an efficient and controlled marketing system. It is a silly argument to say that if the price to the producer goes up inevitably the price to the consumer goes up. The consumer already pays more than she should for much that is produced at a reasonable price.

My farmer friends in Derbyshire want nothing more than to be encouraged to produce corn, which they are not encouraged to produce under our system. When I was at the Ministry of Agriculture, in 1947, with Tom Williams, I helped to put through the Act which made our present system permanent. As a result, my farmers are discouraged, because Derbyshire is geographically a badly sited county. It gets a great deal of rain at the wrong time of the year. We have less soil than we would like to have. Under the present system we are discouraged from producing corn.

Given the agricultural system of the Community, my farmers would gain from joining it and the income of the producers would rise. If the income of the producers rises, our contribution across the board falls. We could sell quite a lot of things at very advantageous prices across the board. Much of the argument is so tenuous as to be not valid.

Mr. Bert HazeII (Norfolk, North)

I should like my right hon. Friend to tell us how his farmer producers would gain by this country entering the Common Market in view of the higher feed costs involved and the fact that in the E.E.C. milk products are already greatly in surplus.

Mr. Brown

I shall leave it to my right hon. Friend to follow up that point. I will simply say this: we would be selling animal food which we are not encouraged to produce and sell at the moment. We would, therefore, benefit to that extent. As my hon. Friend knows quite well, some will gain and some will lose. But my farmers, and certainly his men in East Anglia, will make an absolute picking, and he knows that very well.

When I began my speech, I said that to me the argument was mostly political. I return to the political argument because we can go on and on with the other arguments, like a game of pat-ball. When I presented the application on behalf of Her Majesty's Government, I said, quite fairly and this is in a Command Paper—that the economic argument was finely balanced, although I thought that it came down in our favour. It has always been my view that it is the political arguments which tell.

I said earlier that we are part of Europe. Joining the Community would give us the chance to become a powerful, influential member of an integrated Europe. I would not want it to end with joining the Economic Community. If that is all that is involved, I have not that much interest. Some of our great industrial companies, motor car, chemical and textile companies, will gain and other people will lose, but I would not be all that interested if that is all it involved.

What I am interested in is if this means that we will begin to be again a leader—I do not arrogantly say, "the" leader—of Europe. I want to be able to influence European defence policy. I do not want to be wholly dependent upon whether Mr. Melvyn Laird, President Nixon, or anyone else decided to withdraw 100,000 American Servicemen from Europe. I do not want to be under what someone at Question Time today called the "nuclear umbrella" of America.

I want to be able to have a say when the use of that umbrella should be invoked. I do not want it to be on the basis of whether we should put New York, Boston, or San Francisco at risk. That is not my business. I do not want them to do what they did a year or so ago, when the then United States Defence Secretary, Mr. McNamara, nine days before the Defence Ministers were to meet, made a unilateral announcement about the anti-ballistic missile, which changed the whole dimension of defence in Britain.

The right hon. Member for Thirsk and Malton (Mr. Turton) may not like it, but we, Britain alone, cannot affect these things. We, Europe, we, Western Europe —I look forward to it some day being we, the whole of Europe—could affect this. This is what I want those who oppose this policy on political grounds to understand, that they have got the wrong end of the stick. Our sovereignty is being eroded every day, whether we like it or not. More and more, as the Chancellor so rightly said, the big and grave issues are becoming the prerogatives of the so-called "super-Powers". I do not like polarisation. I believe that this is very dangerous for all of us—and most of us are small nations.

We must resist by joining the Common Market as a step to joining the integrated Europe. We will not be eroding our sovereignty, but bringing it back. We will be giving ourselves again the power which we used to exercise, only this time we will get it as a leader of a community of nations here in Europe. So, without any question, this is how it is in Britain's interests to create a strong European Community.

"But", people said yesterday and again today, "it is a bit inward looking, isn't it? If it were outward looking, would not that be better?" How much better it would be to make it outward looking when we and Eire and Denmark and Norway join it. That is the best way to make it outward looking—[AN HON. MEMBER: "Simultaneously?"] Yes, simultaneously. There will be no problem about that. We all say that we back our comrade Willi Brandt's efforts to get a genuine östpolitik in any improvements of the reactionary influences in Western Germany. How much more could we help him to do that if we were part of a Europe of which he was part.

I go even further. The right hon. Gentleman said that he did not like, or would not have, this business of a United States of Europe. I do not know how long it will take us to get them. It took centuries to get a United Kingdom—

Mrs. Winifred Ewing (Hamilton) rose—

Mr. Brown

—and the hon. Lady wants to break it up again. There are not only Neanderthal men, but Neanderthal women.

It took us centuries to get a United Kingdom and it may take us a long time to get a united States of Europe. I would say to my right hon. Friend, whom I like, and with whom I enjoy very much this kind of argument, that I would go for that. How long it will take us to get there, I do not know, but I should like to think that, in my lifetime, in this House, we started off on the road which will give us a political community—

Mrs. Ewing rose—

Mr. Speaker

Order. If the right hon. Gentleman does not give way, the hon. Lady must sit down.

Mr. Brown

—which will give us a political community and a central body for making political divisions which matter to all of us.

I think that foreign policy should no longer be balkanised. Being balkanised destroyed the Balkans. Being balkanised brought Russia into that part of Europe. We should be very silly to walk the same way. I therefore honestly want a political community. However many steps it takes, however many years it takes, I want a political Community so that Western Germany, or the whole of Germany, does not make decisions which affect us without our being able to affect those decisions.

This is the real point. I have never forgotten that notorious dinner in the Harcourt Room, when Mr. Khrushchev said, "If you do not agree with me, I will make my own arrangement." The word "Rapallo" is stuck in my mind. Whatever Mr. Khrushchev said, another Russian leader can say and another German leader can say. Those who are in power at the moment are my friends—I trust them and like them—but I would not like to guarantee that there would never be someone else. I want to be there when the decision is made.

I can only be there if I am part of a political Community, because whatever decision is made inevitably involves me, my children, my children's children and any children that they may have. We are being very silly—I would say with respect to my right hon. Friend—if we behave as though our little England is any longer permissible or valid and can any longer hold a position of strength.

Mr. Michael Foot (Ebbw Vale)

My right hon. Friend will be aware that an agreement of that nature in Western Europe was made by the Western Powers at Munich. It is because they thought of half Europe, instead of the whole of Europe, that some of us so much oppose this policy.

Mr. Brown

My hon. Friend will remember that I said that I would like it to be the whole of Europe.

But I must start with what is available. I would like the Eastern European States in as well—[An HON. MEMBER: "In the Common Market?"] With great respect to my colleagues, who are very willing to make growling noises, I have spoken, both in and out of office, with most of the leaders of the Eastern European States who are not wholly Soviet-controlled. They would like this, too. The best way to start is to get Western Europe organised and then we can add our weight to the Eastern European States who are not willing or who cannot be crowded down by Russian tanks and guns. We all know what happened to Czechoslovakia, but there are other Eastern European States which are able to stand up and resist. I know what they would like to do, and I believe that this is the beginning.

There are some people who argue the case on the basis of electoral opinion in the country. I would not know what the majority would be for me in my constituency, or what it might be against me at the next election. What I do know is that when I put my case it will not be a matter of 10 or 50 votes either way. Our constituents expect us to take our view, to make our case, and if we do so honestly we need not enter into electoral calculations. It does not matter a single damn. If they like me, because of what I am, they will vote for me.

Please do not let us enter into this matter as an exercise in electoral advantage. I personally believe that the future of Britain requires that we join the Common Market as a step to creating an integrated political Europe. For that, I am quite willing to declare myself, and I will face my 80,000 electorate without any trouble at all.

6.22 p.m.

Mr. J. Enoch Powell (Wolverhampton, South-West)

On one thing at least the whole House will, I believe, be in agreement with the right hon. Gentleman the Member for Belper (Mr. George Brown). It is not a question of minutiae, economic or otherwise, which we are discussing in this debate. We are discussing perhaps the most solemn issues to which this House could apply itself, issues where our decision and our actions will have their effect for generations to come.

Having listened to the debate so far, I feel that on the whole the House has been rather harsh to the White Paper. Those who compiled the White Paper were asked to do a combination of the impossible and the irrelevant. It is rather churlish of the House then to complain at the result of that attempt. An attempt to quantify the cost of entering the Common Market was bound to be self-defeating. In one sense, we can describe the cost as the amount of resources which, under the working of the Common Market, would have to be transferred from this country to the rest of the Community; but that quantity depends on the current policies of the Community which, if we entered, presumably we should influence and which we certainly cannot foresee. Therefore, the quantification of the cost in that sense falls down before it starts.

In the narrower sense, the cost to the balance of payments must depend on the exchange rates which are in force between the different members of the Community and between them and the outside world. Those rates have altered several times in the last two or three years and it is a reasonable assumption that they will alter unforeseeably many times yet.

Then there is the balance between the cost, however assessed, and the prospect of economic gain. I had a brief passage of arms on that subject earlier this afternoon with the right hon. Gentleman the Chancellor of the Exchequer. But at any rate he and I agree that the assumptions one makes as to the long run economic consequences of our being in or out of the Community render the figures in the White Paper, or can render them, relatively insignificant.

The real service performed by the White Paper is a service that was badly needed. It refers us back to our own reason and judgment on the long-term, inherent consequences of joining the European Economic Community, a process from which we shall not be saved and from which we shall not be excused by any figures produced by civil servants, however ingenious or industrious. That judgment and that reasoning has to be applied over the whole area; but the whole area divides itself naturally enough, although there is some overlap, into three fields—economic, political and military.

The economic aspect is dominated in most of the discussions by the concept of growth. In its simplest form the argument is that since the European Common Market has experienced, relative to this country, a high rate of growth since it came into existence, therefore the chances are that if we were part of the Community in future we, too, would grow faster than we have done. This is the sort of process that is described by anthropologists as sympathetic magic—the idea that if one puts two things together, the one will assimilate itself to the other.

There is no reason behind the assumption that, if this country were a member of the E.E.C., or had been in the past, or were to be in the future, the growth rate experience by us would resemble that of one extreme rather than the other extreme of the spectrum which the Com- mon Market itself displays; for in talking about the growth rate of the Common Market we have averaged out, in that figure of 4 per cent., or whatever it may be, the very disparate experiences of the various countries.

Incidentally, the figures in Table 14 of the White Paper are figures for the whole nine years of the Community's existence. But there has been quite a story during those nine years. This comes out if we compare the nine-year figures in the White Paper with the experience of the last three years set out in a Written Answer on the 23rd of this month col. 247. We find that in those three years, the average annual rate growth of gross national product per head in the German Federal Republic was 1.7 per cent., contrasting with 4.2 per cent. in Italy, and producing an overall average of 2.9 per cent.

What reason have we for supposing, since it is purely a matter of assumption, that if we were members of the Common Market our growth rate would be assimilated rather to that of Italy than to that of Federal Germany? Indeed, what reason have we for assuming that the growth experience of the Common Market countries in the coming years will not be much more like their experience in the last three years than like their experience over the whole nine years? For the earlier part of that period was strongly influenced by post-war and other factors which have disappeared.

This is a relatively crude argument, as its very proponents recognise and as the Chancellor of the Exchequer candidly admitted. There is a growing fashion, a kind of game played by those who engage in discussions on this subject, which one might call "growth-picking". It consists in looking through the voluminous statistics, all too voluminous, of the growth rates in various countries and assembling groups of them together to suit the purpose of the particular player at the time.

I am afraid that the Chancellor was guilty of a little "growth-picking" himself when he took Portugal out of the E.F.T.A. average. I admit that the E.F.T.A. average itself is a nonsense, like all these averages. However, to dress up his argument, he just flicked Portugal out, saying, "After all, Portugal is a developing country; so we will not count it".

However, if there is a "growth-picker" who would like a tip, I would say that he should put his money on Turkey. In the figures for the last three years, way out beyond anywhere but Japan, there is Turkey with a 6.9 per cent. growth of g.n.p. per annum per head. Now, there is a wagon to hitch one's star to, if one is really after growth. It is a good N.A.T.O. country, too. So what is wrong with having an economic Community with Turkey, and growing at 6.9 per cent. per annum?

Mr. Stephen Hastings (Mid-Bedfordshire)

Would my right hon. Friend consider picking Rhodesia?

Mr. Powell

My hon. Friend is trying to take me into other and perhaps more distant fields by his intervention.

The fact is—and the Chancellor of the Exchequer settled for this in his argument—that our prospects of growth depend not upon association with one country or the other, but upon our own internal and external environment. Incidentally, I noticed that it was my right hon. Friend the Leader of the Opposition who, almost alone in this debate, made the point that, after all, something does depend upon us and on the way in which we manage our affairs in this country.

The wider argument which is put forward is that of the large market. A very simple piece of sleight-of-hand is performed by those who operate with this argument. They start by saying, "Nowadays, in the important and progressive branches of production, it is necessary to have a large market." In the next sentence, they slip in the word "domestic". They go on to say, "Having agreed, then, that it is necessary to have a large domestic market, it follows that this, that, or the other." There is a gap in the argument, across which there is no real bridge.

Of course, a large market is needed for certain lines of production; but that market does not need to be a domestic market wholly under the control of the producers. The world is littered with examples of firms in some of the countries with the very smallest domestic markets which dominate the world and have got the world market. Firms of this sort in such countries as Switzer- land, Sweden, and Denmark are household names. There is literally no co-relation between the size of the domestic market of an economy and its rate of progress. The whole idea of a specific relationship between the two is mythical. Perhaps the only case in point that one can find is that of the United States, which is at the top of both leagues.

Of course, if we were just talking about free access to that European market to which 20 per cent. of our trade goes already, it would not be necessary to have this debate. But the large market which Britain needs and will need for her most intensive forms of production is not one which we ought to circumscribe even to the market of Western Europe. What this country needs is the utmost freedom to choose and to find, for each commodity and line of production, the market which offers the best opportunities. So I reject the argument from the assumed necessity of a large domestic market, which is really a false deduction from the necessity of a large market for many, though not for all, lines of production.

I come last in this economic section to the blood-curdling argument with which the Foreign Secretary ended his speech. He said, "Ah, yes, but what will it be like for us at the end of the century —for little us, with the giant United States across the Atlantic and the giant unit in Western Europe?" He asked how we shall fare under the shadow of these two great political—and I will come to "political" in a moment—and economic units. I refuse to be frightened by this prospect. In any case, I regard it as an unreal bogey. But, supposing it to be real, and accepting the hypothesis for a moment I refuse to be frightened by it.

Are we at any great disadvantage in our international trade because of the immense size and power and economic strength of the United States? It is one of the very best markets of the United Kingdom, and surely it will continue to be. Is the argument that our trade today would be healthier and more lucrative if the Confederates had won the Civil War, or the plantations had never been united? The existence of that tremendous economic unit in the Western Hemisphere does not damage this country. If I were put to it, I would rather argue the thesis that it assists than that it damages this country.

Similarly, I see no reason why we should be damaged by trading with a large, efficient and economically prosperous unit, if there is to be such, in Western Europe or in Europe. But that brings us from the economic to the political. Let us look at the sort of unit that it would be on the Foreign Secretary's hypothesis. It would be a unit compact "economically, legally, commercially and politically". The right hon. Member for Belper brought the House to the real issue before us when he said that we have to envisage on behalf of our fellow countrymen all that would be implied in the United Kingdom being embodied in a Western European unit, compact "economically, legally, commercially and politically".

Most hon. Members are agreed that the movement of public opinion in the recent past has been unfavourable to entry to the Common Market. Time and again in this debate, hon. Members have asked what has been the reason for this sudden, sharp and indubitably hostile crystallisation. I believe that the reason is that the deeper implications, especially the political implications, have at last been candidly disclosed both from the side of the Common Market and from the side of its advocates in this country. There is no disposition in the White Paper to mince matters. Paragraph 9 refers to the prospect before the Community as being progress towards "economic and monetary unification", towards "a common social policy", and towards "political unification".

We are now told that, whatever be the form—federal, confederal, or whatever—that is what the Common Market is about. Whether or not we are to be compacted with it, it is to be a unit which increasingly has common monetary, economic and social policies. Only today, in a report from Paris, I was reading how the political leaders in the European Economic Community accepted "that there must be meaningful harmonisation of policies". The report goes on: This means that such things as growth targets, rates of inflation, unemployment, budgets and taxation must eventually all conform to a community standard. Are not social policies, growth targets, unemployment, development and taxation the very stuff of politics, about which we in this House argue day and night? Are they not the subjects about which we compare our differing opinions and objects before the electors, seeking to bring them to our point of view? This is what politics is about, what this House is about, what the electoral system of the country is about—how our social services shall be organised, how we shall be taxed, how the development of different parts of the Kingdom shall be managed or not managed, [Interruption.] Yes, and ways and means. I do not go into legal matters: I will rest with these economic and social questions.

The President of the Community has told us that, in his view, there will be a common currency by the end of the 1970s; and think what we have all gone through together in the last few years for the value of the £ sterling. If the Community is to be a community in which these matters increasingly are decided in common, then his other prediction must come true, too, that there will also be a European Parliament elected on universal suffrage by the end of the 1970s. It is the view of Her Majesty's Government that a true Parliament—one like this, one which sustains and criticises a government dealing with the heart and soul of political matters that affect ordinary people—is implicit in the European Common Market. The right hon. Gentleman the Chancellor of the Duchy said in a Written Answer on 2nd February: I would remind the hon. Member "— my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne)— of the Government's view, set out in the Anglo/Italian Declaration … that 'Europe must be firmly based on democratic institutions and the European Communities should he sustained by an elected Parliament …[OFFICIAL REPORT, 2nd February, 1970; Vol. 795, c. 3.] All pretence is now aside. All the words with which we amused ourselves two or three years ago, eight or 10 years ago—I confess that I also amused myself, along with the rest—that this was really an economic matter, a matter of trade, and that the rest was pure theorising: "a few European theorists, perhaps, but we pragmatic British take no notice of that"—that is all stripped aside. The question we are deciding is whether we can and will enter into a political unit that deals with all the major matters of political life affecting the daily lives of all the people in this country, under a Government sustained by a European elected Parliament. Elected it must be; nothing else would be imaginable or acceptable.

We have to say whether that makes sense or nonsense to us. The British people have to say—I think that they are saying already—whether it is sense or nonsense to them, whether they can imagine it and whether, if they can imagine it, they want it. Now, an electorate which sustains a true Parliament has to be an homogeneous electorate. By that I mean that every part of the electorate has consciously to say, "We are part of the whole; we accept the verdict of the majority as expressed at the polls and then, somewhat curiously, reflected in the composition of this House".

That is why this Parliament works. That is why this Parliament is our pride and our guardian, because it rests on an electorate which, with vanishing exceptions, is in that sense homogeneous in that it is prepared to accept the verdict of the majority, because it feels that it is the majority of themselves.

The question posed to us is: can we now, or in the next 10 years, or in the foreseeable or imaginable future, believe that the people of this country would regard themselves as so much part of an electorate comprising 200 to 250 million other electors—

Mr. George Brown

Three hundred million white people.

Mr. Powell

—that they would accept the majority view on taxation, on social policy, on development, on all the matters which are crucial to our political life? I have to confess that I do not believe such an attitude of mind is foreseeable.

I do not believe that is the outlook of our people. I do not believe that in that sense, which is the necessary sense, they identify themselves, as part of a whole, with the electorate of Western Europe. It may be that they should; but that is not the question. It may be that we should be a different people from what we are; but that is not the question. The question is whether this is sense or nonsense, practicable or impracticable.

Mr. George Brown

If it is a question whether they should or should not, may I ask the right hon. Gentleman what advice we should give them? I repeat the interjection that I rudely made while sitting down, against the rules of the House, that they are all white. Why should not we say to 300 million white people that we should all agree and work it out and accept the majority decision? I ask the right hon. Gentleman: what is so wrong about that?

Mr. Powell

There is nothing right or wrong with it. The question is: what is the present or the foreseeable outlook, feeling and belief of the people of this country? We cannot alter that by saying "Oh, would that it were different! Would that they did regard the people of Western Germany and the people of Sicily as so much a part of the same electorate that they would bow to the general majority decision, as the people of Cornwall and Devon, however reluctantly, today accept the decisions of the United Kingdom Parliament!"

Moving into the third and last of the areas—the military area—I want to put this to the most acid test. We are told that the European Common Market is necessary to us, with all its political implications, for defence. My right hon. Friend the Member for Streatham (Mr. Sandys) said yesterday: European unity is equally essential from the standpoint of military security".—[OFFICIAL REPORT, 24th February, 1970, Vol. 796, c. 1053.] I accept that, as has been pointed out many times, the United States is contributing more to the defence of Western Europe than all the Western European countries together. I accept that the probability is that the American contribution will diminish over the years to come. But I, then ask: what is the relevance of that to the question of political unity for military purposes?

We have an alliance in N.A.T.O. with all these countries that links us with them and with Canada and the United States. Is the contention, since our contribution to European defence is deficient and since the continental countries are paying a lesser proportion of their national income for defence than we are, that, if we were amalgamated, if there were a central political authority, a central political will, we would all pay more? Is it the proposition that what the individual countries are not willing to contribute they would be made to contribute by a unitary Government? Is that the argument?

An Hon. Member

Yes.

Mr. Powell

If that is the argument, I am not sure that I like the idea of a unitary Government with power to impose upon these populations a military effort which apparently they do not at present voluntarily accept.

Of course, there can be a genuine military argument here. If the military capabilities of all the countries concerned were put under one command and one political leadership, in the sense that the American forces are under the President or the British forces are under Her Majesty's Government, then the same forces, I agree, would be more effective; but let us follow this through. Let us imagine that the alliance has been replaced by political unity, and that one of the essential functions of that political unity is military organisation, military preparation and military decision.

Mr. George Brown

And foreign affairs.

Mr. Powell

Yes, and foreign affairs.

I want to put this most solemn question to the House, a question which we have a duty to face; for we are asked to say yea or nay, and the country is asked to say yea or nay, on this issue above all others. The question is this: in 1940 we were members of an alliance. Let us suppose that instead of being members of an alliance, we had been members of a political unit with a military function.

An Hon. Member

There would not have been a war with Germany.

Mr. Powell

Someone says, "there would not have been a war". I proceed, ignoring the foolish optimism of those who think that because there are military preparations there will be no war. [Interruption.] The use of military force to balance other military force is what we are talking about—I go back to 1940; for this is how the people of this country instinctively see it and put it to themselves.

Suppose, I say, there had not been an alliance, but suppose, instead, that we and our forces—I mean the forces raised from this kingdom—had been part of a political and military unit with a single political Government and a single command, a unit much larger in relation to the United Kingdom than the alliance of France and Britain was. I ask: does anyone suppose that the force which saved this country and saved liberty would not have been thrown into the lost battle by that political unit and swallowed up in defeat?

That is what is meant by political unity. [HON. MEMBERS: "No."] Hon. Members will not face it. [HON. MEMBERS: "It is not true."] Hon. Members have to come to face the difference between political unity, which means what is says, and alliance. This is the acid test of whether we identify ourselves with the electorate of the rest of Western Europe, so that we regard ourselves as part of that whole just as surely as Coventry and Bristol regarded themselves as part of the United Kingdom in 1940.

Captain Walter Elliot (Carshalton) rose—

Mr. Powell

I have almost finished. This is my last word.

I do not believe that that is the outlook of the people of the country. I do not believe that they so regard themselves now or will so regard themselves in the foreseeable future. That is why I believe that, whatever we say in this House, whatever White Papers we publish, whatever negotiations we enter into, when the reality is comprehended it will be rejected by the people of Britain.

6.52 p.m.

Mr. E. Shinwell (Easington)

If I may indulge in the well-known cliché, adversity makes strange bedfellows, I never expected to find myself in this peculiar situation. I am unable to describe the right hon. Gentleman the Member for Wolverhampton, South-West (Mr. Powell) as a comrade. That would be going too far. Perhaps I had better put him in his proper place by describing him as a camp follower.

I say that because the right hon. Gentleman for many years believed that we ought to go into the Common Market helter skelter, lock stock and barrel. But he is a master of surprise; indeed, he is now what I would call an ex officio member of the anti-Common Market league. We are grateful for any kind of contribution, so we must accept the right hon. Gentleman.

The right hon. Gentleman was right about one matter. He said that we ought not, on this issue, to indulge in minutiae and trivial matters—and, I would add, the domestic question of prices, high or low. He is right about that. This debate has nothing to do with it.

If I may indulge in a digression, I must say that, convinced as I am that we ought not to go into the Common Market, my right hon. Friend the Member for Belper (Mr. George Brown) convinced me beyond any possibility of change. In fact, he frightened me. I understand what he is driving at. He has been driving at this all the time, ever since he was Foreign Secretary.

Mr. George Brown

And before that.

Mr. Shinwell

—And even before he was Foreign Secretary. I include him in my category of those who would go into the Common Market irrespective of conditions and that has been my view ever since this argument began.

It has nothing to do with prices. Take, for example, the White Paper. There is no clarity in it. It is a series of assumptions, speculation, conjecture and the like. It is not worth the paper it is written on. This argument is about something very much more important.

There is a very wide issue involved—not merely the question of going into the Common Market for economic reasons, but entering the Common Market and being captured, not for a year or a few years but may be for all time. The argument is not only on the economic issues but the political issues and, I add, military issues.

Over and over again I have ventured in these debates, inside and outside the House, to direct attention to what appears to me to be one inescapable fact, namely, that Germany, a powerful industrial nation, does not want us in for economic purposes. She has no need of us for that. I see that my right hon. Friend agrees. She wants us for military purposes. She wants this country of ours, even with its limited military resources, to bolster her up against the possibility of soviet sggression That is the purpose of it all.

I am bound to say that my right hon. Friend, in extravagant language, presented a picture which, as I said, frightened me as it must have frightened many right hon. and hon. Members. He envisaged a situation in which we enter on certain conditions or without conditions—I shall go into the question of acceptable or unacceptable conditions a little later—but,once we enter there is a phasing. We come to some agreement. Then we build up a political situation. My right hon. Friend was not very anxious to tell us what kind of political organisation was likely to exist, whether it would be bureaucratic in nature or democratic in nature. That is all left for the future. There is no certainty about that. But it would be the building up of an organisation which, in the long run, meant that there was an effective, efficient, powerful military alliance in order to face up to Soviet aggression. That is the purpose of it all.

It may be said that we have N.A.T.0., but nobody regards that as a strong and powerful organisation, capable at any time of standing up to Soviet aggression. This is something quite different and the right hon. Gentleman the Member for Wolverhampton, South-West has put us in the picture and I am glad that he has done so. Now we have clarity. We know where we are.

My right hon. Friend spoke about his electors and said that he was not frightened about the response from them. I should like him to tell his electors exactly what he is driving at. If he wishes to interrupt me, perhaps he will do so now.

Mr. George Brown

I have been reminded by some of my hon. Friends that they also wish to speak, so I shall put this point as briefly as I can. The outfit which I was envisaging would be a democratic European Parliament controlling all the nation States in Europe. What does my right hon. Friend find so wrong about that?

Mr. Shinwell

I am obliged to my right hon. Friend. Now we have it—a democratic Parliament, presumably elected—

Mr. Brown

Yes.

Mr. Shinwell

—not nominated, but elected. Elected where? Let us start here. It would be elected no longer for this Parliament—I suppose that we shall be a sort of parish council—but for a European Parliament. For a long time, I have suspected that my right hon. Friend, because of his obsession about entering the Common Market, has hopes that some day he may be elected to a European Parliament, and there is always the possibility, at the very least, of his being a member of the cabinet. I cannot imagine a greater calamity than that for Europe.

Mr. George Brown

What about being my P.P.S?

Mr. Shinwell

No, I shall not be my right hon. Friend's P.P.S. I had better make my position clear before I proceed further.

I respect the integrity and sincerity of all those, including my right hon. Friend, who take a view different from mine, even though I do not agree with them. My right hon. Friend believes in what he is saying. It is unfortunate, but there it is. For what it may be worth, I am an unrepentant, determined, resolute, obstinate, stubborn and—if people care to say it—perverse opponent of entering the Common Market. I suppose that I am the only Member who occupies that exalted position. All around me there are reservations of one kind or another, "We shall go in if the conditions are acceptable; we shall go in if we can have assurances of one sort or another; we shall go in because, if we do not, this country is doomed to defeat, able to survive but no more than that."

For me, there are no reservations at all. When the next election comes, unlike my right hon. Friend the Member for Belper I shall not be facing a body of electors. I shall be on the sidelines, a ringside spectator, but if I have the opportunity—I should not be surprised; I may be asked to speak—I shall tell the electors exactly what I have just said. But I shall go further and tell them that, because of my conviction that entering the Common Market represents for Britain a disaster in the long run, I would not vote for any candidate of any party if he was in favour of entering the Market. That is as straight as I can make it. [Interruption.] I shall go to my right hon. Friend's constituency with delight, provided that he pays my expenses. I have never changed my mind on this question right from the outset.

I come now to what I regard as, perhaps, the most important issue of all. It is a domestic issue, but it has nothing to do with prices. I disregard those minor considerations. I refer to the electoral issue. First, I must say, in passing, that I have derived some pleasure from the debate. Guess what it is. It is that the coalition between the two Front Benches has come to an end. That was well worth while. There is no longer the loving embrace, no longer the enchantment one with another.

I recall what happened in the last big debate we had two or three years ago when there was a division of opinion in the House and 62 hon. Members from both sides voted against the Government. But on that occasion there was a coalition between the two Front Benches, which percolated down—or up—to the back benches. On a three-line Whip—or, perhaps, a six-line Whip—the Government derived great pleasure from the fact that the Opposition supported them in defeating those who were opposed to entering the Common Market. In other words, the Government used the Opposition. They can use them no longer.

By the way, the Government then had the benefit of what has been described as the payroll vote. I did not devise that expression—I had nothing to do with it, though I heard about it—but I refer to the Members of the Government, many of whom—I challenge contradiction on this—were against the Government's policy, but were forced to vote as the Government directed. What would have been the position without that so-called payroll vote? If the Opposition had not voted with the Government, the Government might have got through because of the payroll vote, but the back benches on that occasion were almost equally divided. I venture the opinion that there is a more acute division now than there was then. I say that because of the electoral consequences.

Time and again, in private and in public, I have ventured to advise the Prime Minister, politely, of course, and with characteristic courtesy, not to make the question of the Common Market an issue at the election. I regard that as dangerous. Now, however, I think that it is unavoidable. The speech of my right hon. Friend the Prime Minister the other day, the submission of the White Paper, this debate, the attitude of the Leader of the Opposition today in his criticism of the Prime Minister—all this means that, when the election comes, almost every candidate will be asked whether he is in favour of going into the Common Market, whether he is in favour of higher prices, whether he is concerned about exchange rates, about changes in currency—

Mr. Arthur Lewis

About foreign labour.

Mr. Shinwell

Yes, there are all these questions. It may well be that on this issue the political future of this country will be determined. There is no escape from that.

I return now to the question of conditions. Some of my right hon. and hon. Friends are prepared to go into the Common Market without any conditions. Yesterday, I asked the Prime Minister: what are the specific proposals he will make when negotiations take place with the European Economic Community which safeguard British interests? It was a fair Question. This was the Answer: I would refer my right hon. Friend to my reply to a Question by the hon. Member for Banbury (Mr. Marten) on 19th February." —[OFFICIAL REPORT. 24th February, 1970: Vol. 796, c. 983.] I looked it up. In the Answer which he gave to the hon. Member for Banbury, my right hon. Friend the Prime Minister referred to a statement made by the then Secretary of State for Foreign Affairs £ which £ remains"—s I emphasise that word— our position"—rOFFiciAL REPORT, 19th February, 1970; Vol. 796, c. 187.] Thus, the position stated then is the position now.

But my right hon. Friend said on 4th December that the negotiations could be related to a relatively small number of strategic issues"— that is what the negotiations were about— A great deal of ground was covered in the early negotiations, and, if that is still agreeable to our colleagues in the Six, nothing agreed then need be the subject of prolonged negotiation again."—[OFFiciAL REPORT, 4th December, 1969; Vol. 792, c. 1702.] I wanted to know how that came about. There was in HANSARD a reference to a Command Paper. I shall tell hon. Members what the number is so that they can obtain copies for the purpose of greater accuracy. It is Command 3345—the best piece of anti-Common Market propaganda yet devised.

Who was the Foreign Secretary then? It was my right hon. Friend the Member for Belper. When we hear this double-talk, "We will go in if the terms are acceptable and we will not go in if they are not", I would ask right hon. and hon. Members to read the White Paper. I cannot read the whole of it, for obvious reasons, but apart from some euphoria, some expressions of glory about the system that will operate in future—a long way off—apart from that, the document throughout indicated that only a few minor issues were at stake, such as the question of milk and what it would cost, and New Zealand butter. That was not regarded as a formidable problem.

The word "formidable" appears several times in the document. The issues are always regarded as limited in character, hardly worth discussing. These were regarded as negotiations. The right hon. Gentleman the Leader of the Opposition said today that there were no negotiations, but this is what we had. This White Paper was the communiqué issued by my right hon. Friend the Member for Belper at the time, with the full consent of the Government. It indicates beyond any question that the Government at that time, certainly my right hon. Friend, and presumably the Prime Minister, were in favour of entering with conditions that were hardly worth talking about. Indeed, the suggestion is contained here, quite contrary to what my right hon. Friend said this afternoon about phasing and the time that it would take—the standstill operation and the rest—that we would go in without any difficulty.

Mr. George Brown

This is an attack on my integrity. That document says what I said this afternoon. My integrity is as important to me as my right hon. Friend's is to him. That document says the same thing, that we would phase it over a sufficient period to enable us to do it properly. Nothing that I said this afternoon is different from what I said in the document.

Mr. Shinwell

I am not questioning my right hon. Friend's integrity. I will read part of the communiqué. It says: I have set out"— this is my right hon. Friend speaking— fully and frankly the issues which we believe will require attention in negotiations to provide for our entry into the European Communities. Our list is not a formidable one. More than ever we hold to our view that it presents no questions to which an answer cannot reasonably be found in our common interest. Practically nothing at all. This has been my suspicion—that there are members of the Government who would enter the Common Market with any conditions. All these statements about terms being acceptable are just double-talk. [Interruption.] I understand the opinions of my right hon. Friend. But I have mine and I am entitled to express them.

Mrs. Anne Kerr

My right hon. Friend is right.

Mr. Shinwell

All this double-talk, all these suggestions that we will go in if conditions are acceptable but will not if they are unacceptable, is plain, unvarnished humbug.

Mrs. Anne Kerr

Exactly!

Mr. Shinwell

That is what I say and that is what I mean.

The Foreign Secretary made a speech yesterday of no consequence whatever. This afternoon we had a speech from the Chancellor of the Exchequer, a wonderful, powerful speech. What did it show? Did it show that he would not go in if the conditions were unacceptable? That speech showed that he held the strongest opinions about entering the Common Market, without any question. My right hon. Friend the Member for Belper and the Chancellor—I do not include the Prime Minister because, frankly, I do not know where he stands—

Mr. Arthur Lewis

Neither does he.

Mr. Shinwell

He blows hot and cold, but there it is.

Hon. Members

Here is the Prime Minister.

Mr. Shinwell

I am not likely to be deterred by fear of not being promoted to office.

My right hon. Friend the Member for Belper I understand, but I do not agree with him. I think that he is wrong. This afternoon his language and the desires he expressed were grotesque, fantastic and frightening. As for the Chancellor, his was a wonderful speech, clearly indicating that he was not concerned with conditions. He would go in if there was any opportunity because he strongly believes that we ought to go in. As for my right hon. Friend the Prime Minister, he baffles me. I am not sure where he stands in this matter, or whether he believes literally in the contents of the White Paper. Indeed, I wonder why the White Paper was ever produced it contains so many reservations and qualifications. I would like to know where my right hon. Friend really stands. Does he want to go in? Will he go in only on conditions related to decisions that we made at Labour Party conferences and which he has accepted unreservedly? We are entitled to know.

We are told that if we do not go in this country cannot survive. I refuse to accept this defeatist attitude. I do not believe it. This country, provided there is vigour, provided we put our backs into it, provided we use our resources wisely, trading with every other country in the world, if there is an opportunity to do so, can survive. Even the countries of the Common Market, if we fail to join them, are bound to trade with us. The French and Italian wine producers, the Dutch farmers and all the rest, cannot do without our market. I want to see this country trading with every country in the world.

When the Leader of the Opposition talks about international co-operation I remember how my old friend the late George Lansbury spoke from that Bench many years ago, nearly 40 years, demanding international co-operation. That is what we want, co-operation with every country in the world, trading with them technologically, culturally and occasionally militarily. I believe in Britain, strange as it may seem. I am of foreign extraction. My family came here in the 1850s, but I have a great affection for this country and, what is more, I have pride in it, as I believe we all have. Let us show it. There is no need for us to enter the Common Market. Trade with it, cooperate with it as far as we can, but stand by Britain and make the best of it.

7.18 p.m.

Mr. Julian Amery (Brighton, Pavilion)

The right hon. Member for Easington (Mr. Shinwell) left us in no doubt where he stands on this issue. There was only one point on which he was uncertain and that was the position of the Prime Minister.

I am sorry that the right hon. Member did not give us the benefit of his best guess on what is a fairly central and important subject. I think that he will agree that the basic issue underlying this debate is what is the framework in which this country is most likely to find security and prosperity. This is no new issue. It is a question which has occupied all the right hon. Gentleman's political life, and even before that. When the right hon. Gentleman was born, Britain still believed that she could go it alone. We followed a policy of "Free Trade and Splendid Isolation."; and it was not until the beginning of the century that Joseph Chamberlain came forward and said that we would lose our economic and financial leadership unless we made an economic union of the Empire, as it was then called. He put forward the case and argued it cogently, largely on the argument of the big domestic market, but he was defeated on the cry of "dear food".

A generation went by, and it was not until we had 3 million unemployed, and our currency was devalued, that his policies were put into practice, and proved right by the event. Many of us looking back must feel that if only that Empire economic union had been launched in 1903 when it was first proposed there might have been no First World War, no great depression, and no Second World War.

The Second World War: my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) referred to 1940, to what would have happened, or what might have happened, if we and France had been part of a single nation. But this is precisely what Sir Winston Churchill offered the French. The object of the offer was that instead of capitulating in France the French Government should come to England and fight on.

Mr. Powell

What happened?

Mr. Amery

They refused the offer. They were not part of a union. They were members of an alliance. If they had been members of a union I have little doubt that they would have come to London to fight on.

After the Second World War, as the hon. Member for Ashton-under-Lyne (Mr. Sheldon) pointed out in a powerful speech yesterday, it was clear that the Commonwealth itself as an economic union was no longer on a sufficient scale to meet the challenges of a post-war world where the standards of power were set by the Soviet Union and the United States. There was a need for a broader industrial base if we were to buy all the raw materials and other goods which the Commonwealth had to sell and if we were to provide them with the investment capital which they needed to develop themselves.

That is why, in the search for a broader industrial base to enable us to generate the money to defend ourselves, and to invest in the under-developed countries, Sir Winston Churchill took the lead in launching the European movement. That he and my father—and they were not men who were backward in their support for the Commonwealth—should have taken this lead shows the new scale on which we had to think.

I have been associated with the European movement from its beginnings; and looking back the political arguments in favour of a junction between this country and the Continent seem stronger today than they have ever been. The Soviet threat, the threat from the East, has not diminished. It is not yet 18 months since the House was recalled to debate Czechoslovakia, to record its disapproval, and to register our impotence to do anything about it.

We have seen a great statesman, whatever his failings, and whatever criticisms we may have of him, General de Gaulle, try to pursue an independent policy on a national basis, and fail. We and the French are, to a limited extent, independent nuclear Powers. There are strategic armament limitation talks going on between the Russians and the Americans. We are not invited to them. I doubt very much whether we even get closely informed about what is happening. There is a serious crisis in the Middle East. There are supposed to be four-Power talks to deal with it, but everyone knows that the reality is that the talks are between the Russians and the Americans.

Mr. J. T. Price (Westhoughton)

If the right hon. Gentleman is talking in military and strategic terms about the integration of Europe, or the defence of Europe against a threat from the East, surely he appreciates that the only defence of Europe which matters in the context of contemporary world politics is the shield provided by American power still in Europe, and where we hope it will be for a long time, so long as the threat remains. It cannot be replaced by any European union.

Mr. Amery

The hon. Gentleman need not have bothered to intervene, because I was coming to that.

No one in his heart feels confident that the American nuclear shield will long be there to protect us against a minor, or indeed a major, attack from the East. There is an urgent need to pool our resources to provide a more adequate nuclear and conventional defence than we have today. It may sound reassuring to us that the President of the United States should have said that he would no more think of withdrawing from Europe than from Alaska, but I am not sure how much his phrase has reassured people in Ottawa.

In the same way, I think that my right hon. Friend the Member for Barnet (Mr. Maudling) was very wise when he said that we must not take Western European unity for granted. As the right hon. Member for Belper (Mr. George Brown) said, there are dangerous currents in Germany. There are neo-Nazi currents. There are neo-Rapallo currents. We want to provide a framework in which Germany can find security and prosperity.

The constitutional objections to a junction between this country and the Continent have greatly diminished since the matter was first raised at the end of the 'forties and the beginning of the 'fifties. So long as the great triumvirate of Christian Democrats, de Gasperi, Adenauer, and Schumann were in power, the accent was on a federal Europe; but I do not find a federalist tone in Paris or Bonn today. If there is to be a European union, it will begin on the basis of co-operation between Goverments. How the European family of nations will grow is something which we can judge only in the light of experience.

Many people believed before the First World War that the British Empire would develop on federal lines. It did not. Nevertheless, it achieved very effective unity in the First World War, during the great depression, and in the Second World War. We do not know how Europe will develop, but there is one matter on which I agree with Lord Gladwyn. I am sure that it will not develop into a federation on American lines. Meanwhile, in the words of the hymn: I do not seek to see the distant scene, One step enough for me To those who are particularly concerned about sovereignty I would say, "What has happened to our sovereignty?". We have our economic policies run in partnership, in harness, between the Chancellor of the Exchequer and Mr. Pierre-Paul Schweitzer, but I am not sure, in the harness team, who is the horse and who is the jockey.

There are those who are frightened of involvement. After all, we became involved in two world wars, once for Serbia, and once for Danzig. The fact that we were not members of a union did not protect us from getting involved.

The right hon. Member for Devon, North (Mr. Thorpe) raised the technological case for a junction with Europe. Speaking from my experience, I can strongly underline his case. Hon. Members may or may not support the Concorde project in which I played some part, but one thing which is quite clear is that the cost of projects of this kind is so great that we in this country could not possibly contemplate doing them on our own. We can do these things only in conjunction with others.

We are all much more conscious than we were when these matters were debated in 1962, or even in 1967, of the "American Challenge" To their credit the Government have tried hard to do something for the computer industry, yet I see that the software side of the computer industry comes more and more under American control. We are within a few months of the first landing on the moon, and yet there is no European space programme, and the very limited one that is on the drawing board is one from which we have contracted out.

I know that many of my right hon. and hon. Friends—and I think that my right hon. Friend the Member for Thirsk and Malton (Mr. Turton), the Father of the House, is one—have often said that they see the need for an alliance, and for technological co-operation, but why must we join the Common Market? I think that the real answer is that foreign policy and defence policy are not things in isolation. They are really the policies by which a country or a group of countries defend and promote their material interests. Unless we put our material interests, our trade and payments, together, we will never in the long run develop defence and foreign policies that march together.

We face the problem—it is the occasion of this debate and the cause of the White Paper—of whether the terms of entry that we are likely to get at the negotiating table will be acceptable. I will not go over the advantages again since they have been well discussed, except to say that the economies of large-scale production are undeniable.

My right hon. Friend the Member for Wolverhampton. South-West sought at one time to argue the opposite, but later in his speech he seem to contradict himself when he told us that America had achieved some of its prosperity by the victory of the Federalists over the Confederates and that that was not a movement which we needed to regret.

From experience I feel certain that the economies of large-scale production are of immense value. I learned long ago, when I represented an industrial constituency in the North-West—I learnt this from every industrialist I met—that the chances of selling exports successfully depend on being able to sell over the top of a large and prosperous home market. If one has a home market of 300 million people one will sell better to third countries than if one has a home market of only 50 million people.

We should never forget the immense bargaining power of a big market. Already Britain is such an important market that it gives us great bargaining power in purchasing from overseas. Think of what the bargaining power of a European market of 300 million people would be.

Naturally, the opponents of the Market lay great emphasis on the increased cost of food which would come about from our joining the E.E.C. This may be good stuff for the hustings, but there is a certain irony, which the hon. Member for Ebbw Vale (Mr.Michael Foot) will appreciate, that the Daily Express, that great organ which in the past has supported the protectionist cause, should now be raking up all the Radical and Liberal arguments of the beginning of the century about dear food, to shoot at supporters of the Market.

I find the arguments about dear food the least serious of them all. The fluctuations in retail food costs over the last few years have been extraordinary. Food costs rose between 1958, when we stopped food subsidies, and 1964 by about 2½,per cent. each year. Between 1964 and today they have risen by about 5 per cent. This is already a great fluctuation.

There are vast fluctuations between food prices in supermarkets and retail stores in the centres of towns, which pay heavy S.E.T., and stores on the outskirts of towns, the rents and rates of which are lower. The White Paper would have us believe that we would pay between 15 per cent. and 26 per cent. more for our food, over and above whatever other natural increases there might be during the transitional period of five to eight years. The Economist says this is "untrue"; indeed, I thought that the Foreign Secretary seemed to agree with the Economist.

I have the gravest doubts whether any of the statistics mean a great deal. Some increase there will be in the cost of food, but we have been through all this before. In 1952 Lord Butler took off half the food subsidies and compensated for that by increasing family allowances, insurance and supplementary benefits, old-age pensions and by reducing direct taxation. That was not inflationary because the increase in food prices syphoned off the extra consuming power which he injected into the economy. Food is an emotional issue. Let us tell the people the facts. But let us scorn to exploit their fears.

The balance of payments question is obviously a more critical issue and one which we trust that the Government of the day will battle hard over at the negotiating table. There is, first, the question of the rate of levy that we will have to pay. The White Paper would have us believe that we might face a loss in exports on the balance of payments of between £125 million and £250 million a year. The right hon. Member for Battersea, North (Mr. Jay) bumped this up to £500 million. The Economist called the White Paper figure "unadulterated rubbish". I would not go as far as that, but I think that the right hon. Member for Battersea, North is exaggerating.

It seems clear that we will increase our exports to the Common Market, as all the other Market countries have done to each other. It seems to me that, with the economies of large-scale production, we will sell more to third countries over the top of a flourishing home market despite some loss of preferences, and I am sure that our agricultural production will increase, probably dramatically.

One reason why the Six are swimming in butter is because agricultural prices were fixed so high that market forces have produced quite unexpected increases in production on the Continent. The same could happen here, to the assistance of our balance of payments position.

Nor do I greatly fear a big outflow of capital. There will, of course, be some outflow, but we offer a so much better capital market here than is offered by any other country, with the exception of perhaps. America, that I think that most of the Continental and third countries— Euro-dollar holders and big depositors like Kuwait—will keep their money here and will probably bring fresh money to Britain at the same time.

With respect to the right hon. Member for Battersea, North, I suggest that our industrialists will be less tempted, once we are in, to set up factories on the Continent than they are today. Many hon. Members will have had experience of businesses which have deliberately set up subsidiaries on the Continent to get on the other side of the Common Market tariff barrier. Once we join that temptation will no longer exist.

Much has been said about Commonwealth preferences and I think that the Foreign Secretary was a little too pessimistic about this issue. They have been seriously eroded by what I believe to have been the mistaken policy of both parties when in office of accepting the "no new preference" clauses of G.A.T.T. We have a duty as well as an interest to maintain the preferences as far as we can, and it is clear that something must be done for New Zealand and the sugar producers.

We should not stop there, however. The former members of the French Union have almost all concluded satisfactory association agreements with the Common Market. Israel, Nigeria and East Africa—the former British colonies of East Africa—have done, or are doing, the same. I do not see why we should not have an extension of preferential arrangements between those countries with which we have had reciprocal preferential arrangements and the Common Market as a whole.

In other words, we could convert our preferences into agreements of association between them, the Six and ourselves. Indeed, a distinguished American, Mr. Schaetzel, made a powerful speech on the Continent some time ago forecasting that we would do just this and deprecating it as representing the establishment of a new European overseas sphere. Nevertheless, I believe that it will happen.

The colonial movement was not an aberration. Europe has never had the markets or raw materials it needs within its own borders. We can never have a Fortress Europe like the Americans could have a Fortress America. The colonial days have gone and will not return, but I believe that special agreements of association will take place between ourselves, in Europe, and the countries of Africa and of the Middle East with which we have been traditionally associated.

The next great issue is that of the length of the transitional phase. Britain's entry into the E.E.C. will mean important changes in the pattern of industry, not only for us but for the Continental countries as well. This is a matter on which the Six will have strong views, just as we have. The principle I urge on our negotiators is that we should be prepared to scratch each other's interests but not to skin or break them. The transitional period should be long enough—I hope that it will be more than five years; for the most difficult categories six or eight years would be better—to enable adjustment to take place without breaking bones.

The negotiations, then, will be about the level of the levy, about preferences, and about the period of transition. There will be plenty of room for bargaining. As the Chancellor of the Exchequer said, the outcome does not depend on us alone. The crux of the matter is the intention of all concerned. We have twice faced a French veto. If the French want to keep us out again, they can. Will they want to?

None of us here can speak for certain. My belief is that changes in France's own position, her own economic and social difficulties, the change of Government in Germany, and changes in American policy, have brought about a change of heart on the other side of the Channel. If the change is real, they will not ask us to accept unacceptable terms, and we should not seek impossible concessions from them.

In any case, we are not dealing here with "the laws of the Medes and the Persians that can never be changed" If in the light of experience, even in the period of transition, some of the conditions are found to be too onerous for us, we would expect our partners to make changes to suit us, just as we would be and should be prepared to make changes to suit them rather than insist on concessions which they could not afford.

I end by making only one reference to the Prime Minister's weekend speech. It has had one unfortunate effect so far—to call forth a rather ominous and hard comment on the question of British entry from M. Pompidou in New York. This issue is too serious for cheap electioneering cracks. In a democracy everything has to be in the political arena and talked about, but this issue is too serious for cheap cracks.

The right attitude should be for us on this side to say to the Prime Minister that he can count on our support when he goes to the negotiating table and that we expect to be able to count on his loyal support if and when the wheel of political fortune leaves it to us to pick up the hand and finish the game.

7.42 p.m.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

The right hon. Member for Brighton, Pavilion (Mr. Amery) will excuse me if I do not follow him; because I agree with much of what he said.

I have listened to the debate with great interest. There have been some very fine speeches. My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs gave a wonderful exposition of the case for the Market. The Devil's advocate, as my right hon. Friend the Member for Battersea, North (Mr. Jay) might be considered from the Common Market point of view, made a splendid assessment of the opposition case.

The right hon. Member for Wolverhampton, South-West (Mr. Powell) started his speech with a very close analytical examination of figures. Figures have played a great part in the debate. My impression is that everybody has been concentrating on the thin edge of wedges which, according to history, are seldom driven home. We have been given an entertainment of economic and political horror comics and told of the dreadful disaster which will befall Britain if we join the Common Market.

All that has happened is that Parliament has decided that the Government should apply for membership of the Common Market. When we enter, we will become members of the European Community. From that time onwards, every decision will be our decision as well as that of the rest of the members of the Common Market. The idea that we are going in to Europe to sit at the door and be dictated to is a caricature of what will happen. At the moment we are outside the door of Europe shouting in, giving it advice and trying to influence it from the outside. We shall not help to guide European destiny if we talk through the door. We must be sitting with our colleagues at the table, helping to decide European destiny.

I was glad that the right hon. Member for Brighton, Pavilion dealt a little with the history. This European development has arisen because when Europe was balkanised, as somebody has described it, we suffered two world wars. Such wars could have arisen again. After the last war, Ernest Bevin tried to bring France and Germany together to get them to sit at a table and find some way of solving the problems that had divided them for so long and which had led to war over economic problems in Europe. He succeeded. The whole of this European development has arisen from these steps to bring the three Powers, Luxembourg, Holland and Belgium—Benelux —together and then gradually extend it to bring in the Six.

When Winston Churchill went to the conference at The Hague, he gave a great inspiration to Europe—not because he would cheapen the price of butter or anything like that, but because he gave them a hope for the future to lift them out 'of the depths of despair. Every European country had been occupied by foreign troops. Every European country had been under the heel of a dictator. Those peoples were looking for salvation from any further wars and any further dictatorships. Winston Churchill went to The Hague conference and gave them inspiration and enabled them to raise their eyes to the vision of a united Europe.

I had the privilege of attending some very big conferences in Europe. I attended the conference of the Communes of Europe representing 30,000 local authorities with 5,000 delegates. They did not discuss the economic implication of unity. They wanted Britain in, not because they expected her to contribute to their agricultural fund, but because they thought that she would be the champion of democracy, a bulwark against dictatorship, and would help to unify Europe and prevent war.

It was an inspiration to hear those people from towns and villages throughout Europe, who came to the conference with a great idealism. I am glad that some speakers have introduced some of that idealism into this debate. The question of a united Europe is not a question of a nation of shopkeepers wanting to make some money out of Europe. It depressed the people of Europe that Britain was always discussing how much it could make. Today we are discussing how much we shall lose.

This is bringing a great historical issue down to a very mean and petty level. It is not the Government that have done this. This has been done by people who have asked the Government to produce statistics. Figures can be produced to mean anything.

I believe that history demands that the peoples of the world should become united. We cannot get a world government yet—that is a bit too ambitious. This is a unity on our own doorstep, yet people who formerly wanted to unite the whole world in a glorious brotherhood are now niggling about all the petty details and pouring cold water upon the great ideal of the people of Europe coming together.

I believe that there is no danger in our going into Europe. The idea that all the horrible things that have been suggested will happen the day after we join the Common Market is belied by history. I am a member of a small country which has been a member of the greatest common market in the world for 250 years. It has not lost its identity. The Scots are still Scots. The Irish are still Irish. The Welsh are still Welsh. The English, though they do not pay so much attention to it, are still English; they see no reason why everybody should not be English. They do not understand nationality.

We understand nationality. We have not lost our nationality. Nor have we lost the right to make our national contribution to the world's culture and wellbeing. The idea that what has not happened in this country after 250 years of a homogeneous common market will happen in Europe in about three weeks is a lot of nonsense.

Mr. Arthur Lewis

We are not controlled by the Treaty of Rome.

Mr. Woodburn

The Treaty of Rome says that the whole of Europe should sit around the same table and discuss Europe's affairs. Viewing the matter logically, we are in Europe, our firms are in Europe, much of our trade is in Europe, and many of our people travel to Europe. When one can go from here to Paris in half an hour, artificial barriers are an anachronism. It takes about three or four days for a lorry to go from London to Italy, because of passing through the various customs. It could go the same distance in America in half the time or less.

I remember when one could not go outside Paris without passing through Customs at the gates of Paris and paying duties—octrois. They used to examine old wives' baskets and make then pay octrois between Paris and the outside. Those who want to perpetuate that system are blinded by prejudice and the fear of the foreigner. I have talked to Dutchmen, Frenchmen, Germans, Norwegians, Swedes and Danes and I know that the colonel's lady and Judy O'Grady are sisters under the skin. These people are as decent as I and I am prepared to trust them in negotiations.

My right hon. Friend painted a terrible picture of this £1,000 million which we should have to pay the Common Market. We have had the greatest difficulty transferring £80 million across the frontier to pay German defence costs. No one has ever explained how this £1,000 million will get to Europe. Do we send them a cheque, print notes or send a couple of Concordes each year? After the First World War, I heard Bernard Shaw say in a speech,"Make Germany pay". The Germans offered mark notes, but we wanted coal instead, until one of the civil servants said that that would upset the miners. Aeroplanes were similarly out of the question, so it was decided that we would take potash. As if one could have £1,000 million-worth of potash landed in this country.

The ridiculous idea that one can mix up trade with all these artificial subsidies and indemnities was wiped off the economic board about 100 years ago, when Germany found that it could not accept the indemnity from France. It was found that it could not be collected without dislocating its own economy. All we would do is to make an economic muddle. No one will convince me that the Commission and the Community are such fools as to make an agreement like that: they will want a practical agreement.

Scottish farmers do not fear the Common Market: they will do very well out of it. One says that he will sell vegetables to Holland in the spring, because he can produce them earlier. The highly specialised meat of the Highlands would find a ready market. We are already sending lamb to Paris from my constituency as a delicacy for the French table. There may be differences, but our farmers are not afraid. I am sure that the same is true in England. It may threaten the small farmer, but he is being threatened anyway as agriculture becomes rationalised.

I agree with what the right hon. Member for Brighton, Pavilion said about the industrial and technical side. A leading industrialist, one of our most up-to-date technicians, recently showed that with every 100 million of population by which his market increases, his costs will fall by 5, 10 or 15 per cent. One thing on which I agree with the hon. Member for Wolverhampton, South-West is that many of our problems will have to be solved whether we enter the Common Market of not by, for example, getting better industrial production and industrial relations.

I am satisfied, from my 25 years in industry, that, if we could get the cooperation of workers and employers to make productive processes efficient, we could reduce our costs and put this country on top of the world even without the Common Market. But even in the Common Market we will have a great advantage. It is no use our scorning the fact that we cannot sell goods to people in other parts of the world who cannot pay for them.

Mr. Arthur Lewis

Has my right hon. Friend not seen the official report from the Common Market that last year they had a £74 million deficit, as against a £300 million credit, on their balance of payments and that they are now going to introduce a squeeze and deflationary measures? Will that help us?

Mr. Woodburn

That will happen in any case. One thing which one cannot get people to realise is that no one can put more cabbages on the table than he grows in his garden. Every housewife knows this, but many expert economists do not seem to. The Chancellor has great difficulty in convincing our people that they cannot consume more than they produce. So that problem will have to be solved anyway. What we are dealing with is political unity. If we were to start from scratch, we should organise Europe by having a Government which dealt with things European. No one expects the European Government to decide where all the "Clochemerles" will be built in the local villages. Even in our own country the Government get into trouble for trying to tell people what to do in their own localities. We are trying to reorganise our local government so that democracy will be as near people as possible for the small things, but for great regions there will be regional authorities. We might also have national authorities for England, Scotland, Wales and Ireland, with a British Government dealing with things British. In this context, it seems sensible to have a European Government to deal with things European.

No national authority, for example, can make laws to control fishing in the North Sea. It must be done by many roundabout methods. There are big companies which are spreading over frontiers. Who controls them? No single Government can. We must have horses for courses in administration as in other walks of life. We want a political Government of Europe to deal with things European. It is the business of our Government to see that that Government does not take on too much or interfere in national affairs any more than is necessary.

All the horrors which have been mentioned are so much propaganda because people in this Parliament, like people in the country, tend to believe what they want to believe and then look for arguments to back it up. A great deal of our debate has been finding arguments to back up previous convictions. The idea that we can be independent in a world which is really one economic unit is ridiculous. Our balance of payments position is tied up with the position of other countries and we cannot possibly cut ourselves off from them.

The same applies to our defence sovereignty. Professor Jacks defined a nation as people who were under the same military command. We are under the command of N.A.T.O. In a war, every man in this country would be under one commander of N.A.T.O. We are already to some extent in line with the United States, but, for convenience, Britain and the Common Market countries should be joined together and there should be political control over the military and economic life of Europe.

The E.E.C. Commission is a wonderful institution in its way. It provides a European brain consisting of people already thinking in terms of Europe. Nevertheless, people in Europe are alarmed because the European Parliament has very little control over the Commission and are wondering how it can become democratic and control the Commission. This is where the question arises of elections and suffrage. No one has solved the problem yet and I see great difficulties in such elections. But —and it is perhaps flattering to us—this is one of the things which Europeans are anxious for us to come in for. With our experience of democracy, they look to us in the hope that we might perhaps solve the problem, which will have to be solved sooner or later, otherwise we shall have an unknown body controlling the affairs of Europe and of this country, with the people having practically no say. Anyone objecting to a Parliament of Europe is arguing for a dictatorship in Europe without public control. We must have public control. If we have parliamentary control, we will have control of Government in Europe.

This has been a great debate. I hope that the public will be able to gather some of the pros and cons from it, but it would be misleading to give the public to understand that this is a matter of pure economics or of bargaining and shopkeeping between ourselves and Europe. It is a great ideal, this brotherhood of man in the world. It is the ideal of organising the unity of Europe with a view to preventing further wars and dictatorships, a view not only of a Europe contributing to the well-being of the backward countries but of organising Europe economically and militarily.

I hope that all this will lead to the wonderful and colourful variety of the constituent parts of Europe contributing to the future culture of the world. We all—Frenchmen, Germans, Irish, Welsh, Scots and English and the rest—have a wonderful colourful variety of experience and gifts and it is that variety that makes Europe the wonder and marvel of the world.

8.4 p.m.

Mr. Edward du Cann (Taunton)

The right hon. Member for East Stirling-shire (Mr. A. Woodburn) always speaks with sincerity and I respect his ideals, but idealism alone is not enough. Like many others who have spoken in the debate, he has referred, quite properly and with pride, to his consistency. I cannot claim the same virtue. My position has changed. After the war, as a young man in uniform, I prayed, almost, for the unity of Europe, but as my right hon. Friend the Leader of the Opposition said in his excellent speech today the scene, too, has changed. It has become increasingly complex.

I am less certain than I ever was that British entry into the E.E.C. would be right. If I and other hon. Members say that after a conscientious and honourable attempt to make up their minds, they have honest doubts, I hope that no one will carelessly categorise us as anti-European, or as bad Europeans. That is not and cannot be so.

Of course, our nation must work in partnership with France, Italy, Benelux and other countries on the Continent, and with Germany above all, but how? There are many and various ways. The question is whether it must be within the Community, or whether it can only be inside it.

Nor let it be suggested that there is anything disloyal to one's friends or party in honest doubt plainly expressed. It can be no bad thing if hon. Members occasionally mirror public opinion.

We do not make any decision today, yet, as the right hon. Gentleman has said, the debate is important, for it is a great step in the process of decision. We start with the negotiation. It will not be complete before the next General Election. Indeed, it will not be complete for one or two years after that, but at any rate it begins. Time, even if one regrets the missed opportunities, as my right hon. Friend expressed them, in 1945 and again in 1950 and subsequently, has at least one benefit. When the negotiation is complete, when the schemes have been properly costed and we know what the terms are, when all that is done, after that, and only after that, is one entitled to make a final judgment, to evaluate the risks and perhaps to take them.

The speech of the right hon. Member for Be1per (Mr. George Brown) was remarkable for its concentration on the political aspects; and it is true that by comparison the economic items are minor. It is the political issue that is main. But it is even less exact in calculation than the economic situation at present.

At first sight, there are attractive arguments for being part of a wider union, thus giving one a political influence, enabling competition with Russia and the United States, or with China looming around the corner. But a number of points bother me.

Is not the attitude we are adopting somewhat conceited and arrogant? Will it not be construed in the countries of Europe as a suggestion that, as has been plainly stated in this debate, we shall go in as it were to run Europe? I do not think that that will be allowed for one moment. Again, what is Europe? How do we define it? Shall we always exclude countries like Finland and the satellites? That is what is likely to occur if we join the E.E.C. in its present form. We do not yet know how exclusive the club is to be, but if it is exclusive in any sense we shall find it harder to develop relations with the rest of the world.

As my right hon. Friend the Leader of the Opposition said, he is an internationalist. So are we all. If there is one process we wish to see expedited it is that of détente between the free and and the Communist nations. I fancy—if I believe wrongly I hope that someone will tell me—that entry into the Community might make the process of détente all the more difficult to pursue.

Furthermore, it is not and it has never been only the members of a club or a debating chamber who can exercise influence upon it. To say that individual Powers can have no voice in this age of super Powers is as misleading as to say that individuals in history have never had and can never have, now or in the future, influence upon a nation.

I am anxious too about old friendships. Much as I enjoyed and respected the Chancellor's speech, I thought that both he and the Foreign Secretary, who spoke yesterday, skipped over the question of this modern Commonwealth of ours. Dr. Johnson said that a man should keep his friendships in proper repair. We have never given a lead of any kind since the war to the Commonwealth, so it is not surprising that some countries in it have looked elsewhere for succour.

My business, as is well known in the House, is banking and investment. I would sooner invest for the future in Australia, Canada or Singapore than in some of the alternative situations, with all that that implies. In talking of friendships I have no wish to leave out other nations. It is only a question of not being able to catalogue them all in the time available.

Let us not forget E.F.T.A., to which we have not given much of a lead either in recent years. I hope that the Prime Minister will say at least that we shall do our utmost, whatever the success of our own negotiations may be, to look after our friends in E.F.T.A. who have stood by us these years.

I am anxious about the position as it may eventually arise in respect of the supranational political institutions. We have had a surfeit of vagueness from the Government on this subject. It would be a good thing, as my right hon Friend the Member for Flint, West (Mr. Birch) suggested in a letter to The Times, if some time—not now perhaps—when they are ready to "come clean", the Government produced a White Paper on the political aspects also, and especially the subject of those institutions.

I turn now to economic matters. There are those who say that we should not concern ourselves with the minutiae. I am often sympathetic to this argument, particularly in terms of the political debate between opposing sides of the House. But every beach is made of many grains of sand.

There have been many criticisms of the White Paper, most of them deserved, but it has had value, as my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) suggested. I put forward other reasons, the chief being that it has provoked a new discussion. That is all to the good, for the public believes itself to be very much uninformed, and it is certainly much confused by these questions. What is more, it is equally uncertain of the attitude of the political parties. It does not care for what it has assumed to be a dogmatism on the part of the Opposition, nor for what one can perhaps describe politely as the flexibility of the Prime Minister.

Whatever right hon. and hon. Members may say about their intention to disclose their views in their election addresses, the electorate feels that it has a lack of voting choice in the matter, and will have. It should not be assumed that if there is any public or parliamentary tolerance of a start to negotiations that is an undertaking to pay the bill in the end, whatever it may be.

Let us, as we embark on it, by all means have a successful negotiation. Let the £.s.d. of the matter be well calculated. There are those who have said that a £1,000 million a year on the balance of payments would be too much. I would go a great deal further. While we do not yet know the detail of the timing, the phasing and many other matters, I would go so far as to say that an additional annual bill of £200 million to £300 million on our balance of payments would be too much.

But there are some things which are clear already. The first, coming out of the debate, has been that if the cost is too high, entry into the E.E.C. will be impossible to achieve for any other reason. Another matter which has become clear is that the House will not tolerate a heavy subsidisation of the inefficient agricultures of France and Germany.

Other truths have emerged. I regretted to see in the White Paper the extensive use of the word "dynamic". I thought it as foolish as those overworked words "gritty"or"purposive". Certainly, it is true that if we join the E.E.C.—I think that the Chancellor of the Exchequer acknowledged this—we shall not automatically and necessarily enjoy a faster rate of growth than we have had. The reason for the United Kingdom's lack of growth is not that we have been outside the Common Market, but simply our balance of payments difficulties, excessive Government interference with industry and the community and, last but by no means least, a poor but, happily, changing management performance. I mean "management" in the widest sense, to include trade union practices.

Another truth is that there is no guarantee that more competition will mean more trade. Perhaps the reverse can be the case.

Also, the elimination of tariffs is no longer of such importance as once it was, since we have had the progressive reductions, the two latest being the Dillon and Kennedy Round. I would go much more strongly for standardisation.

But, all that having been said, the E.E.C. is certainly a vast market with a huge propensity to import. It is vital for us. What is said about the need for scale in manufacture, and so on, said, first, I think, in a wise speech by my right hon. Friend the Member for Barnet (Mr. Maudling), is absolutely true. It is the progressive industries, chemicals, computers, modern technology that need scale. Yet it is a curiosity that although we are a little country, this United Kingdom has great international companies like Shell, Philips and Unilever and others which manage to surmount the frontiers and to do well at home and abroad.

I will not weary the House with details of the tariff reductions we can expect, nor seek to measure the E.E.C. against anywhere else. We shall have to make a judgment on that in due course. This leads me, however, to another question.

Is our trading policy right? Is membership of the E.E.C. being given the right priority for this country? We depend on success in world trade probably more than any other country, with the possible exception of Japan. Surely, then, it should be the duty of the Government—and I have not seen this clearly defined at any time since the war—to set out objectives which can be readily understood and plainly worked for by Ministers. The first should be the opening of world markets in general. Rather than spending time on negotiating with the E.E.C., I would sooner we put more steam behind G.A.T.T. It is clear that we are moving fast into a protective world.

I do not understand why certain ideas which have been canvassed, such as A.F.T.A., have been neglected by both the Government and Opposition. Both have done their best to crab them publicly and privately. Why should it be wrong to examine all the possible alternatives in depth? That has not been done. It is insufficient and inadequate to say that these additional ideas, which could have been pursued all the time our application was lying on the table, are simply inappropriate and then to do nothing about them. So I would put the opening of world markets in general first.

Second, I put the assessment of the potential growth markets of the future, a diagnosis of them and an assault on them by business led, prodded and encouraged by Government.

Third I put the provision of adequate payments facilities of one sort or another. It has taken us seven years from the initiative taken, as I remember very well, having been there myself, at the I.M.F. meeting of 1962 to get the S.D.R. scheme off the ground. I include under this head freerer exchanges, credits and the like. They are just as important as opening markets.

I do not believe that Governments have been anything like sufficiently clear-minded about these matters, and I deplore the way in which, in the past and today, our commercial ventures on the part of the Government stand still while successive negotiations take place. We shall be the stronger for pursuing alternatives at the present time.

This is not only a selfish proposal. We have a duty to open our markets here to the less complex manufactures of the developing countries, while ourselves concentrating on the more sophisticated manufactures. We have set the world an example in the case of Lancashire. I wish this were more clearly seen as a development of Government policy.

It is not our destiny to be locked in any exclusive club. The greatest political issue is not whether or not we join the E.E.C. It is the growing disparity between the living standards of the developed and developing countries. It would be wrong if that were excluded from consideration of the implications of entering the Common Market.

I do not believe that the case for entry is proven, as they say in Scotland. The economic balance sheet cannot yet be struck. The political cost can and should be counted. The Minister without Portfolio said last night that it will not be a disaster if we do not enter the Common Market. I am coming to believe that we do best as a nation when we are alone, and so it may be again.

8.20 p.m.

Mr. Patrick Gordon Walker (Leyton)

As usual, the right hon. Member for Taunton (Mr. du Cann) made a thoughtful and carefully argued speech. I will come later to some of his points, because I believe that at this late stage of the debate one should concentrate one's remarks on a few basic points.

I start with what I regard as the only really important economic question, namely, the effect on our balance of payments of opening negotiations and joining the Common Market. We know about the impact burdens which will arise during the transition period, but little attention has been paid in the debate to the fact that, during the same transition period, some of the benefits will begin to accrue which arise from joining a larger market and an area of greater growth.

The right hon. Member for Taunton seemed to deny that there was a relationship between size of market and growth. There are exceptions to everything in this world. Switzerland is an exception to everything. But there has been an extraordinarily clear co-relation between size of markets and growth. It is difficult to explain why the Industrial Revolution started in this country. The reason it started here instead of somewhere else was that the United Kingdom was the biggest and most complete common market in the world.

The main purpose of our negotiations should be twofold. First, we should try to secure such a balance that the benefits and detriments of joining cancel out during the transition period. Both the White Paper and the C.B.I. say that this should be possible. They both show that a balance would be struck if during the transition period our own gross national product increased in a few years by considerably less than 1 per cent. faster than it would otherwise increase. We can reasonably expect this because of the association with the greater growth market.

However, I must admit that any calculation about cancelling out benefits and detriments must depend on guesses, estimates and extrapolations which may turn out to be wrong. Therefore, a second major aim in the negotiations must be to try to get an agreement that if the assumptions which we and the Six and the other candidate members make turn out to be seriously wrong the whole matter would be looked at again towards the end of the transition period. We should be able to secure agreement on this.

We should not assume that the E.E.C. is hostile to Britain, that it is bent on driving the hardest possible bargain with us and trying to impose intolerable burdens on us and determined to take the last pound of flesh from us. This is the argument which underlies the speeches made against our negotiating. It would be entirely against both the interests and the nature of the Common Market to behave in a hostile way and to try to hurt us to the greatest possible extent. The E.E.C. has an interest in having a viable Britain as a member which would make the maximum contribution and not an unviable Britain which would not make a contribution but would be a drain on them.

Secondly—as regards its nature—the Community has an unwritten rule which they all observe—that they do not allow their strict and written rules to drive any member into economic difficulty. A recent example of that is that both Germany and France were granted for two years an abatement of the sacrosanct common agricultural policy, which everybody says cannot be changed at all. If our negotiations succeeded, as a member of the Common Market we would have to do our utmost to carry out any fair, negotiated settlement which we made at the beginning. But if the calculations on which the settlement was based proved wrong, we should be able to invoke and expect the same treatment which Germany and France recently received, and we would have to be ready to extend the same treatment to any other member which got into grave difficulties because of the strict interpretation of the rules.

I agree with my right hon. Friend the Member for Be1per (Mr. George Brown) and others that the political factors are the decisive ones. It is one's feel for the politics of the matter which determines the economic arguments that one uses. There is one fact from which we cannot escape: by withdrawing from east of Suez we became a European Power, and we must act as such. From that moment—and it is irreversible—it became a major British national interest to associate ourselves with a new centre of power so that we could again have influence and a rôle to play in the world. I have no doubt that an enlarged E.E.C. is the only centre of power in which Britain can play an important part which is in accord with its new status as a European Power. Withdrawing from east of Suez was a turning point. It changed 400 years of our history. It was a very important decision for us.

It is necessary to join the Common Market in order to maintain the balance of world power. The decisive factor is that the United States has started to cut its commitments. President Nixon says that there will be no disengagement from Europe. But Presidents come and go. The policy of countries is determined by the trend of their interests. It would be very prudent now to reckon on a steady withdrawal of America from Europe over a period—a much longer transition period than that in respect of the Common Market negotiations.

During this longer transition, if we are to maintain a balance in the world and keep ourselves safe we must achieve some co-ordination of European defence and foreign policy. We can do that only if we are in the Common Market. If Britain remained out, the whole of Europe, including Britain, would be exposed increasingly to grave danger.

Federation has been mentioned, but this is not a real problem at the moment. No Common Market Government has taken any step or made any proposition about federation, but I have no doubt that it will come in the end, whether we are in or out. I want to see it come in the end, step by step, in a suitable way and I would far sooner it came in a Community of which Britain was a member, so that she could help to shape it, than in a Community with Britain outside, and this being done in a way which was harmful to us.

The political and economic factors are inseparable, although we talk about them separately; and the fact that we could bring great political benefit to Europe by membership must help our economic negotiations.

The conclusion I come to, on balance, after a great deal of thought, is that we can approach the negotiations prepared to secure our proper national interest and confident that a bargain can be struck from which both sides will derive ever increasing benefits and advantages, both political and economic.

8.30 p.m.

Mr. Stephen Hastings (Mid-Bedfordshire)

The House always listens with great care to what the right hon. Mem- ber for Leyton (Mr. Gordon Walker), whose record we all know well, has to say on these matters. If he will forgive me, I will follow his example and this is a late stage in the debate and there may be one or two more hon. Members to speak. He said that by withdrawing from east of Suez this country has become a European Power. I would prefer to look at that the other way round. We always were a European Power, but with far extended responsibilities. One of our difficulties is to persuade the Europeans to look at the world in the same way as we did formerly.

I am glad to see the Chancellor of the Duchy of Lancaster on the Front Bench, because I want to speak about the negotiations which many of us hope that he will undertake. The Foreign Secretary said yesterday: …if one wants to enter the Community the right way to do it is through the front door, through an agreement negotiated under the relevant Article of the Treaty of Rome."—[OFFICIAL REPORT, 24th February 1970; Vol. 796, c. 998.] Nobody could quarrel with that as it stands, but it is an over-simplification of the problems that the right hon. Gentleman will face, and I will try to explain why.

I was formerly a very strong supporter of Europe, in so far as I was able, even before I came to this House. It was one of the main motive forces for my going into politics. There was a great deal of talk yesterday, as my right hon. Friend the Member for Taunton (Mr. du Cann) said, by both protagonists about the merit of consistency. I fear, like him, that I may appear to some extent inconsistent but, as he said, I also am unrepentant about this. We are not talking about the story of a week or a month, but about 10 years, and, if one counts the negotiations which led up to Messina, a good deal longer than that.

So far, the argument in the debate has been largely about the effects upon us: should we venture bravely across the Channel into this den of foreigners and thieves for the sake of our souls—certainly not for the sake of our pockets, that is clear from the White Paper—or should we stay in our island fastness? There is something archetypal about the argument and to me it is only half the argument.

What I want to ask is what has happened within the Common Market in this time? What were the objectives to begin with, are they still the same? What progress has been made towards reaching them and, in the light of that, what should our objectives now be in these negotiations? It is my contention that from the White Paper and from what the Government have said we do not really know. The vagueness of the White Paper and the Government statements leads me to think that the criticisms of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) yesterday when he talked about "a supranational Eldorado" are justified. After years of stoic self-sacrifice we shall get all sorts of mystical and material benefits which cannot now be quantified.

What then were the objectives? First and foremost, so far as I was concerned, we needed to avoid the outbreak of a Third World War started fratricidally between nations with basically the same civilisation. I do not think that this is any longer a valid objective; nobody realistically can believe that such a thing will happen again, so that is out. The second one, as is clear from the Treaty, was about unity. The first proposition in the Preamble says that all those concerned are: Determined to establish the foundations of an ever closer union among the European peoples. What progress has there been towards elimination of national boundaries, towards federalism, and so forth? I would submit that in reality there has been very little. Even after 10 years and three rounds of negotiations about agricultural policy, which everybody is agreed is the key to the whole affair, there has been no real agreement and such agreement as there was has been heavily qualified by France and Germany since their last round of talks in Brussels. I believe that The Guardian was justified in saying—and that newspaper is nothing if not a supporter of going into Europe—on the 11th February: It is not Europe. It is six nation States behaving like 19th-century monarchies. There is a good deal of truth in that.

The third objective concerns defence and I will quote briefly from the last proposition of the Preamble: Resolved by the establishment of this combination of resources to strengthen the safe- guards of peace and liberty and calling upon the other peoples of Europe who share their ideal to join in their efforts. That, in my terms, means defence. But what has happened within that 10-year period? Italy has teetered on the edge of Communist-dominated government. France has nearly succumbed to an anarchist revolution and, in addition, has left N.A.T.O. It is not directly related, but it cannot be said to have advanced the cause of integrated European defence very much. And if Italy or France, or both, had succumbed to these political events, does anybody believe that the Common Market would have done anything about it? I believe it would have recoiled in horror from any such suggestion. To my mind this is not in modern terms safeguarding peace and liberty. There has been very little progress on this matter over 10 years.

The fourth objective is an integrated monetary system, about which we have heard much during this debate. I put this high on the list because what we are talking about is the creation of European power. If defence forces represent power, then so also does money. What has happened in this respect? Against the provisions of the Treaty two of its most powerful member States, France and Germany, have revalued without any warning whatever—Germany up and France down. Since then there have been certain proposals for the mutual support of currencies mentioned by the Chancellor of the Exchequer today and by one or two hon. Gentlemen yesterday. But after a period of 10 years they are still just proposals.

It could be said that the Bank for International Settlements has made more progress than this. It could certainly be said that the International Monetary Fund has made more progress than this. The United States and South Africa have carried out some hard bargaining about these matters, but the Common Market has achieved practically nothing at all. Indeed I question whether they have done as well as the Lombards did in the fourteenth and fifteenth centuries when they more or less ran the monetary system of Europe. Therefore, in many respects the Common Market has signally failed, and in these circumstances we should not regard the rules and regulations as sacrosanct in these negotiations. If the achievements could be proved and shown, then the answer would be "Yes", but if the true picture is as I put it, and I hope I am not exaggerating, then the answer would be "No".

Now, what are our objectives in the negotiations? To join, it is said, "if the conditions are right". This is not good enough. Of course, the Government cannot give any break figure in this great bracket between £100 million and £1,100 million in the White Paper because it is not yet defined what it is they are after. It is not simply a question of sacrificing sovereignty without being able to quantify the long-term dividend. It is a question of sacrificing sovereignty without knowing what we want in exchange for it. This principally is what worries me.

What is the fresh approach to be, if it is legitimate to suggest a fresh approach at this stage? I put my proposal forward as suggestive. I cannot be precise since I have not the information. First, we should redefine the dangers to Europe, and unquestionably they are there. They are, first, external and internal defence against the Soviet Union both from the point of view of the spread of Soviet power over the world and subversion within Europe. Secondly, there is the assault of American managerial and business control of industry—though not of capital, for most of the capital used within the Common Market has been generated there or is in the form of Euro-dollars. This is the subject of that famous book which should be required reading for anyone interested in these matters, Le Défi Americain, or The American Challenge, by M. ServanSchreiber.

To take the first danger: if the Common Market wants to safeguard "peace and liberty", it must recognise that the danger to the West is worldwide and does not rest simply on the Eastern front of Europe. Secondly, it must recognise that the end of the Pax Americana is the beginning of reality. Thirdly, we must all recognise that the danger of a Communist take-over within a member State is a possibility in the light of the experience of 10 years, and I for one would like to know during these negotiations what would be done about it.

Suppose that, after preliminary consultations, perhaps before the main negotia- tions started, we got to a stage where we stopped arguing about the levies, the agricultural contributions or the weighted voting or whatever and said to them, "With the full agreement of all of those concerned, gentlemen, we are empowered to invite you to assist us to maintain a European base in the Far East, the Middle East or wherever". Suppose that we were in a position to say,"Hands up for a brigade or regiment from France or Germany to help us in the Far East, or even a Luxembourg anti-aircraft battery". What would be the answer to that? Almost certainly it would be "No". If they said "No", we should have to look more carefully at what they ask us to pay. Let us accept that we have a big argument to conduct on our side.

To pass to Le Déli American, here it seems that the Common Market has had relatively little effect so far. When in trouble, European firms run, not to each other, but to American firms. On occasions European Governments do the same. If we are to devise practical objectives about this during the negotiations, we have to realise certain facts and try and persuade our European partners to do the same. The first of them is that any real advance towards supra-nationalism has so far not been because of the ideas of politicians, bureaucrats or dreamers, but more than any other single development, because of that which was mentioned by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) and subsequently by my right hon. Friend the Member for Taunton—the international companies. There are already an impressive number of them, and there are several in this country. They all operate within the Common Market, but I question whether any single one arose as a result of the Common Market. There is only one new European giant, and that is Agfa-Gernert, which, in any case, is half Swiss.

I come now to the technological argument, and the right hon. Member for Devon, North (Mr. Thorpe) laid great stress upon this yesterday. Talking about aircraft, the nuclear energy programme and, subsequently, computers, he said: If there had been common purchasing and development of computers we could save £170 million by 1975."—[OFFICIAL REPORT, 24th February, 1970; Vol. 796, c. 1040.] That may be so, but I do not think that he took account of the scale of the problem.

Taking computers, for instance, an O.E.C.D. report of a few years ago made it clear that for a firm to afford to amortise the research and development necessary to build integrated circuits today it would have to be able to sell a million a year. But the whole Common Market could not provide an annual order for more than half a million, if that. It gives some idea of the scale of these things. I do not think that in the time scale that the right hon. Gentleman was thinking about, or indeed has been hinted at in the White Paper, such an advance is possible.

Let me try to make clear what I mean. Paragraph 73 of the White Paper states that a beginning has been made on studies of possible future technological co-operation in Europe, through the Working Group of the Community's Medium-Term Economic Policy Committee, under the chairmanship of Professor Aigrain. Proposals have been made by this Group for new co-operative European studies and research in the fields of computers… It does not really make sense. But nevertheless, I.B.M., Honeywell, Univac and I.C.L. are in there. I.C.L. has made a very promising beginning in Europe. There are moves afoot now to set up a similar kind of organisation in software.

But none of this has much to do with our joining the Common Market. The Economic Policy Committee is pleased to talk to us about these matters—that is made clear in the White Paper—not because of our application, but because, of our know-how. The growth of the international company may in the end do naturally what Communism seeks to do by force and tyranny—to soften and merge the barriers of nations. It is to be encouraged, but it has little to do with our negotiations.

Of course, there could be advantages in this sphere from our joining. They seem to me to lie in the same range used by the United States Government to stimulate research and development and innovation on so vast a scale. They lie beyond the scope of commerce and they should be part of the price of our entry, so I believe; not something that it is hoped comes afterwards, maybe by chance.

The kind of questions—I am not attempting to be precise about my choice of them, but I believe that I shall be able to convey what I am thinking—which I hope that the right hon. Gentleman will be putting to the members of the Common Market when he sits down to negotiate are as follows. First, are you prepared to integrate your defensive effort and develop a common procurement policy Europe-wide here and now, or are you not?

Secondly, are you prepared to vote funds for the Economic Policy Committee to place orders now for the development of software and computers to run the administration of, for instance, the Commission and the member Governments? Thirdly, are you prepared to set up a space communications programme and subscribe the necessary funds now? In both those latter cases control would have to be vested in a single project director who would call for tenders and get on with the job without interference from member Governments.

If Europe wants to be in business with the United States and resist the American challenge, this is what the Common Market will have to do without further delay. It is no good our agreeing to subsidise its butter mountain in the hope that it may all happen in the future. It will he too late. It would be better for us to save our money and give it to the banks to help them facilitate the acquisition of companies and facilities for British international companies than to throw it away without any precision in these areas.

The ideal of Europe was and is a great ideal. It has moved me and many others in this debate. Over the years it has conjured for me a vision of the defence of civilization—of the Knights of St. John on the walls of St. Elmo, of the song of Roland. But, with all that behind me, I find it very difficult to decide what this country should do about it at the moment. The White Paper helps not at all. They cannot work out the sums, but if they knew what their objectives were and had been able to make them precise and understandable in the White Paper then the sums might take care of themselves. There was a great deal in what my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) said yesterday in the passage in which, I know lightheartedly, he referred to the difference in weight between the paper given to the Roskill Commission about the third London Airport and this White Paper.

A great deal of what I am talking about ought to have been worked out and we ought to know the answers, but we do not. To join an expensive, quarrelsome and, to a large degree, apparently unsuccessful club is not sufficient in itself. We are asked in this debate to take note of the White Paper. Let us by all means take note and let us suggest to the Government that they take it away, clear their ideas and come back and explain to us what they really believe they are at.

8.51 p.m.

Mr. John Mendelson (Penistone)

The hon. Gentleman the Member for Mid-Bedfordshire (Mr. Hastings) had one great merit in his speech and that was that he actually talked about negotiations. I think that as my right hon. Friend the Chancellor of the Duchy of Lancaster has been sitting dutifully on the Front Bench, as he has been for the most part of the two days, there ought to be at any rate in most speeches some reference to the negotiations for entry into the Common Market.

I begin by referring to a strange hostility which has been shown to the White Paper in so many different circles. It is interesting to note the very hostile reaction to the Government's decision after so many demands have been made upon them inside and outside the House, to publish a document to give more information to Parliament and to the country I very much welcome both the decision to publish the White Paper and the actual implementation of that decision.

What comment did we have from the Opposition? The right hon. Member for Barnet (Mr. Maudling) committed himself to the far-reaching statement that all he wanted to see in the White Paper, once it was to be published, was a short paragraph saying, "We do not know of anything useful to tell you"—and that would be the end of the White Paper. That is what he suggested yesterday. His right hon. Friend the Leader of the Opposition was a little more subtle today. But in a moment of aberration the right hon. Member for Barnet, who is usually quite cool, committed himself to this absurd and bizarre statement.

We had hon. Members on both sides of the House—including some of my best-liked hon. Friends—equally denouncing the White Paper as useless, misleading and as alarming the country. Then we had the right hon. Gentleman the Member for Devon, North (Mr. Thorpe), the Leader of the Liberal Party—and I regret that he is not in his place—who was beside himself with contempt and denunciation of the White Paper.

Why is there this conspiracy of denunciation among so many different people? What are they so anxious and so angry about? Whilst I was puzzling this problem, I read a report in "Peterborough's Diary", in the Daily Telegraph, which was later confirmed in a number of continental newspapers—and "Peterborough" is very often first with the news. The report pointed out that in the entourage of no less a person than M. Jean Rey there was a feeling of being greatly upset by the publication of this White Paper. The report from Brussels said that it was regarded there as anti-European.

The first serious point which I want to put on record is that if there are people in the entourage of Mr. Jean Rey who so regard a first effort of telling the truth to the people of this country, we had better look again at the definition of anti-European. This has added to the disturbance which so many hon. Members have shown. What are they so angry about?

I come now to the more intellectual kind of denunciation which we have heard. My right hon. Friend the Member for Belper (Mr. George Brown) told us that he would have done it all differently. We are becoming accustomed to that. Whether it be the Middle East, Europe, or even the innocent act of publishing a White Paper, my right hon. Friend, since he left office, would have it all done differently, the silent but implied assumption being, of course, that he would do it so much better—which is not so difficult.

The problem facing the Government in deciding to publish the White Paper was that, unless they wanted merely to engage in an act against their own negotiating position, which is that there are things which they do not now understand or know for certain, and which depend on the outcome of the negotiations, they could not publish any more than they have, in fact, published. I regard it as some element of progress that they have published the White Paper and given the people some basis to make estimates and to look into the problem.

When my right hon. Friend the Prime Minister first announced the White Paper in a statement from the Dispatch Box, the right hon. Gentleman the Leader of the Opposition was immediately angry, saying that steps must now be taken in the country to make clear what all this means and that the process of education must start. In this connection, perhaps I should deal with the assumption expressed by so many hon. Members that there has been a shift of opinion against our entering the Common Market in the last few years because there has been no propaganda in favour of the Market. Nothing could be further from the truth. The pro-Market forces have disposed of much more money, they have had more organisation, they have organised many more trips to Brussels, with both Government money and money from other sources, including the Continent, than have the critics of our application. It is, therefore, quite incorrect to say that that was the reason there has been the shift of opinion.

The Government are entitled to have their position regarding negotiations taken seriously, more seriously than some hon. Members have taken it so far. Politically, now—I think that my right hon. Friend the Chancellor of the Duchy knows that this is my view—whatever some of us thought in 1967, once the Government have committed themselves to opening negotiations they cannot now suddenly drop the whole enterprise and change their mind. That is academic advice to give to any Government in office. It would be impossible.

The real argument—This point was made by the right hon. Gentleman the Member for Brighton, Pavilion (Mr. Amery)—is about what will be in the negotiations. That is what matters now. In passing, I should like to deal quickly, before the Prime Minister returns, with the completely unwarranted attack on a small point, which the right hon. Gentleman made against my right hon. Friend the Prime Minister. He said that my right hon. Friend's statement on Saturday has led to a very sour comment by the President of France, M. Pompidou. This is wholly incorrect, and the evidence is readily available.

I regret that the right hon. Gentleman is not here at the moment, because I am sure that, being a fair-minded man, he would have accepted my correction. The guidelines of the attitude of the President of France on his Washington visit were laid down within the last fortnight, and he has taken great care to give two major interviews to leading American newspapers. These were put into print in the middle of last week, on the Monday, Tuesday, Wednesday, long before anyone knew what the Prime Minister would say in his speech on Saturday, or on Sunday. They had nothing to do with it.

The President of France decided to harden the French line before his trip to Washington. On patriotic grounds, at least; I am sure that the Leader of the Opposition would expect every responsible member of the Opposition, in what is a difficult situation, whichever way one looks at it, to withdraw such an attack and to say plainly that the atttitude of the President of France had nothing to do with my right hon. Friend's speech, of which he had no foreknowledge when making up his mind about the line which he would take.

What is this French position? It does not look much different from that adopted under President de Gaulle. It is very relevant to this debate, before the Front Benches take over, that some of us on the back benches should be able to give our analysis of the situation. The French position, according to the President, has always been that Britain must accept what the Common Market countries have done so far as a test of our real sincerity in wanting to join the Economic Community. There was no mention of that in the speech of my right hon. Friend the Member for Belper and certainly very little mention of it in the speech by the Foreign Secretary yesterday.

The Foreign Secretary was also exaggerating a position held by a number of people in 1967. I see that my right hon. Friend has just entered the Chamber, so I had better repeat that yesterday he reiterated the assumption made by a number of people in 1967 when he implied that if we do not go in—and to be fair to him he saw certain conditions which he would regard as unacceptable, like the rest of the Government—then we would become very isolated.

My right hon. Friend did not use those words, but the cliché of a small offshore island of Europe made its reappearance. This is an exaggeration. We ought not to be frightened by it. It is not a very good strengthening of our negotiating position, before the start of negotiations, when our chief spokesman on foreign policy makes that sort of point.

On economic affairs there can be no doubt, in spite of what the right hon. Member for Barnet said yesterday, about the usefulness of the White Paper. Its usefulness is that it allows some informed discussion to take place upon the possibilities which we can see when we look at the negotiating position of the French and other members of the Community. It is not good enough for the right hon. Gentleman to denounce the attempts to provide such a basis for discussion, because it is essential that before negotiations start the people should be fully informed about the details of what is being done in their name.

The position has changed very little. The Leader of the Opposition said today that in his opinion the agricultural arrangements were not negotiable. This must be tested against the opinion of the Prime Minister when he replies tonight to the debate. I do not accept that we must go into these negotiations talking only about transitional arrangements. Many of us who voted against the application in 1967 were afraid that negotiations would be meaningless because they could only be about transitional terms.

I urge the Government, in the negotiations, to regard themselves as being free to reopen the discussion on all the circumstances, permanent arrangements as well as transitional. It would be wrong to abandon at the beginning, as the Leader of the Opposition implied, any attempt to start negotiating everything that is implied by British membership. I can see a good reason for that. The Common Market countries spent 4½ years before concluding their original treaty, carefully arranging each other's interests. It would be wrong, however greatly any hon. Member may be convinced about the importance of the political arguments, to underestimate the importance of the economic arguments

On the political side, what disturbed me most was the view expressed by the right hon. Member for Streatham (Mr. Sandys), my right hon. Friend the Member for Belper, and others, that they are looking forward to a close military alliance based upon the Common Market. This is in complete contradiction of what the Prime Minister has said time and again, because the implication of what was said by these two right hon. Members is that there is to be a new military alliance, which is bound to include a new nuclear command.

This is in complete contradiction of Government policy. The Government have no mandate whatsoever to deal with this issue at any stage of the negotiations. The Government's position is clear. This country is part of N.A.T.O. The only nuclear command which the Prime Minister finds acceptable and useful is the nuclear command under N.A.T.O.

We have been told this afternoon that the economic arrangements are not very important, and that what matters is the rôle which this country can play in a new foreign policy and military alliance. This has been mentioned freely for the first time in this debate, and I regard it as far more important than discussions about federalism and all the rest of it. I agree with the Prime Minister that this is a matter with which future generations may have to deal. What is much more important, and what is here and now, is these plans for a new military alliance.

My right hon. Friend the Member for Belper said that in this Community, in such a new alliance, we would be in a position to create a bridge between East and West. My right hon. Friend is ill-informed since he left office if that is his true opinion, because if there is one thing which the Eastern countries fear more than anything else—and this is a geniune fear—is a new nuclear pact, of which Germany is a full member. However insincere Soviet negotiators and diplomats may be in some matters which they put forward, there is no doubt that they are sincere when they say that what they fear most is a new nuclear alliance, with Germany as a full member. [Interruption.]

If that policy were carried out it would present the greatest possible threat to the attempts being made by Chancellor Brandt and others to create a better détente between East and West. There is a fallacy in the argument that we can play a much more effective rôle, politically and internationally, only if we are members of the Common Market. The fact is that the present position of the United Kingdom and American Governments in wishing for better relations between East and West has played an important part in opening the way for the new West German Government to start these negotiations.

This is not unrelated to the general feeling in the United States and the Soviet Union that some attempt should be made to create better relations between East and West. But, on the other hand, nothing would create more suspicion in the minds of all the Eastern European countries than the setting up of a new nuclear command within the Common Market countries. They would regard this as a direct threat to the hopes of a détente which have been expressed by so many statesmen in Western countries.

It is unrealistic to advise the Government to drop the negotiations—they are committed to them, and they must go into them—but the House and the country are entitled to a clear understanding that the Government have no mandate to accept all the permanent arrangements to which the Six have come If there is a hardening of the French position—and as I read the Press conference replies given by President Pompidou in Washington there is—the Government have a bounden duty to take the House into their confidence and to keep the country informed. They must insist on conditions which are acceptable to the people of this country, both in the long-term, and in the short-term. Only in that way can it be meaningful to accept the Prime Minister's repeated statement that if conditions are unacceptable he will not advise the House to accept the proposal to go into the Common Market.

9.10 p.m.

Mr. Richard Wood (Bridlington)

During the last two days, with the single exception of the hon. Member for Penistone (Mr. John Mendelson), the White Paper does not seem to have made one friend. Even the right hon. Gentleman the Foreign Secretary seemed a little lukewarm, suggesting that its truthfulness was bound to be in inverse ratio to its precision.

Perhaps the document will become known as the "Sorry White Paper", because in its 46 pages there are 47 apologies. I had not realised that there were so many ways of regretfully expressing uncertainty. They rise to a crescendo in the final pages, until we read, in the penultimate paragraph of a paper styled "An Economic Assessment": The major uncertain factor still is the balance of economic advantage… So uncertain does this remain, for all the White Paper's 46 pages and two days of debate, that there must be broad agreement with the assertion in the final paragraph that This White Paper demonstrates the need for negotiations… to determine more accurately the elements of the great equation which can be accurately calculated before Britain takes the decision to enter or to refuse to enter the Community.

As the Foreign Secretary said yesterday: …we shall be substantially nearer to the answers…at the end of negotiations than at the beginning."—[OFFICIAL REPORT, 24th February, 1970; Vol. 796, c. 1000.] Indeed, when we come to know the exact contribution to the agricultural fund that will be required of Britain, our present uncertainty will be greatly diminished.

We would be greatly helped by more information about the accuracy of the White Paper estimates of increases in the cost of food. These estimates, of which we have had some discussion, are considerably higher than any of their predecessors and they are offered, as some of my hon. Friends have pointed out, without any observable mathematical argument to sustain them.

They are much higher than the estimate of the E.E.C. Commission. It is remarkable that the most pessimistic assumptions in the C.B.I. document, which presumably reflected some discussion with the National Farmers' Union, should correspond with the most optimistic expectations in the Government's White Paper.

It is common ground that an entrance fee would have to be paid, that certain prices would rise and that only the process of negotiation could improve the accuracy of some of the estimates that we can now make. Parliament and the nation therefore await the further information which negotiations alone can make available.

Meanwhile, we had a brilliant and statemanlike analysis from the Chancellor of the Exchequer. From my point of view, that analysis of our situation stirred the hearts and illuminated the minds of those who want to understand this problem better. It certainly raised our eyes above the gloomy horizons of the Prime Minister who has, I am sorry to say, been operating several leagues below the sublime heights of the Chancellor of the Exchequer.

The Prime Minister was not present to hear some of the robust common sense of his right hon. Friend the Member for Be1per (Mr. George Brown) but I wondered, as the right hon. Gentleman listened to his right hon. Friend the Chancellor, whether he was reconsidering the doubts that his remarks last Saturday are bound to cast on the sincerity of the Government's intentions on both sides of the Channel, to say nothing of the doubts which they seem to have implanted in the mind of the right hon. Member for Easington (Mr. Shinwell). I think that the Prime Minister was absent from the Chamber when his right hon. Friend said that he would not comment on the attitude of the Prime Minister because he had no idea where the Prime Minister stood.

The Prime Minister (Mr. Harold Wilson)

I came in.

Mr. Wood

This is the difficulty that we and the country share with the right hon. Gentleman the Member for Easington, because if the Prime Minister suggests that there are electoral advantages in posing as a relatively tough negotiator, might he not shortly find it irresistible to reap the more tempting electoral harvest of masquerading as the saviour of Britain from the undesirable short-term effects of entry?

After the speech of the Chancellor of the Exchequer, I hope that we can dismiss from our minds suspicions of this kind. Certainly, our application might still fail, the terms may be plainly unacceptable, and we shall not go into Europe. But I doubt whether our children or our grandchidren will lightly forgive us if they have the slightest suspicion that this great decision was subordinated to the lesser considerations of how the election, this year or next year, could be won.

So grave would be the judgment, both of our successors in this country and of our contemporaries in Europe, that, despite the doubts sown by the Prime Minister's weekend speech, I cannot believe that such a cynical subordination could ever be contemplated by the Government of a great people.

I have little doubt that, whatever the political complexion of the Government of Britain, we shall pursue negotiations determined to succeed and to win entry for Britain on such terms as would allow us to make the most fruitful and constructive contribution to the future of Europe.

Whatever the course of negotiations, when they are completed, perhaps by the end of 1971, as my right hon. Friend the Member for Streatham (Mr. Sandys) made clear, the area of precision in the far larger field of uncertainty will still be relatively small. Certainly, the course of negotiations may help us to assess the principal price of entry—the cost, across the exchanges, of the British contribution to Community finance; for not only is the amount of our contribution negotiable, but the pattern of Community expenditure may change.

As to this pattern, there seem to me to be two important possible developments which are by no means inconceivable. Both would considerably lighten our burden. The first is that agriculture in the Community could undergo considerable reform and the present cost of supporting this could be substantially lowered.

The second, and perhaps the more likely, is that activity within the Community might well expand to include fields in which Britain would draw back a more significant return. My hon. Friend the Member for Westmorland (Mr. Jopling) suggested yesterday that a larger proportion of the Community's budget might be devoted to things like technological development or regional policy, from which Britain could expect to benefit. If this took place, the burden of the present predominantly agriculture support, from which we benefit little, would be lightened.

There are other factors which the White Paper attempts to measure, but which are certain to remain indefinite even when negotiations are complete. We shall be able to guess more accurately, but we shall not know, the likely extent of the increase or decrease in the cost of imported food; and we shall not be able to assess the exact size of what are known as the "impact effects", in spite of the assertion of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) that these are the "only measurable effects".

In fact, the White Paper seems to have been dangerously and uncharacteristically bold in even attempting an estimate, let alone giving it a "phoney" air of exactitude. The right hon. Member for Battersea, North (Mr. Jay), who is even bolder than the White Paper, promptly doubled the estimate.

I find these things far more difficult for forecast than either of the right hon. Gentlemen,because the initial effects upon our invisible trade are bound to depend upon a whole series of variable assumptions—the rise in the cost of living itself; the effect of the cost of living on wage increases; the effect of wage increases on export prices; and the effect on potential exports of higher prices.

In the fairly recent past, from 1963 to 1967, earnings increased by 6 per cent. a year, but our export prices went up annually by only 2 per cent. This suggests that the effect on export prices of a small increase in earnings might be encouragingly small.

Little light will be shed by the negotiations on the effect of entry on capital movements and the effect on invisible earnings, although the hon. Member for Heywood and Royton (Mr. Barnett) thought them likely to be considerable. In the very nature of things, there is no hope of knowing, until long after the negotiations have ended, the most important of all the factors, which the White Paper treats with some enthusiasm in general terms but makes no attempt to estimate. In the opinion of most of us, it is the dynamic effects of membership that will, one way or the other, determine the economic advantage or disadvantage of entry.

But if we think it probable, as do the hon. and learned Member for Dulwich (Mr. S. C. Silkin), the hon. Member for Ashton-under-Lyne (Mr. Sheldon) and my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), that our economy will grow quicker inside than outside the Six; if we believe, with my hon. Friend the Member for Cheltenham (Mr. Dodds-Parker), that an enlarged Community including Britain would make possible a larger and more fruitful expenditure on research and development; if we believe that long-term investments in economies of scale would become consistently easier to make; if we believe that our share of exports to the E.E.C. is likely to rise more rapidly than our imports from the Six; if we believe, with the Chancellor of the Duchy of Lancaster, that in principle the junction of a smaller market with a big one normally brings greater proportionate benefits to the smaller than the larger; if we believe that all these things will be among the results of British membership, the economic case for entry, uncertain as it must remain, begins to appear a great deal stronger than the White Paper would suggest.

But these expectations, clearly, cannot be translated into reality until well after negotiations end, and until after a decision has been taken to enter the Community. Therefore, those who argue that this must be and must remain a gamble are quite right. Of course it is a gamble; but even those who never bet on the horses take gambles every day of their lives. I think that "risk" is a more respectable word. We cannot avoid risk, and would not get very far if we did.

Even if we make the judgment that the price of entry is too high and refuse to go in, we shall still be taking the risk of having made the wrong decision and subsequently finding life unexpectedly bleak outside the Community, with decisions taken by the Six and we ourselves left out. In this matter, as one paragraph of the White Paper specifically stated, the stakes are very high; but if it is complete certainty we are after we shall seek it in vain, not only now but after the negotiations are over.

Meanwhile, our search for the right decision and our approach to probably the most important judgment most of us will make in this place is set against a movement of public opinion which has grown, and is probably still growing, more hostile to the prospect of British membership. Whether or not this hostility is more closely related to the likely increase in the cost of living or other potential effects, we cannot tell, but we all know that deep anxieties exist.

Those of us who believe that on acceptable terms membership of the Common Market would be greatly to Britain's advantage share an obligation to explain much more clearly than has been possible in recent years why a very large number of hon. Members, not usually wholly insensitive to public opinion, are still convinced that this, on the right terms, is the right course to take. For the decision is one that must be taken by this Parliament, or the next, not because hon. Members or Members of another place have a monopoly or even a superior gift of wisdom—such propositions might be easily and perhaps embarrassingly disproved—but because our system of representative government makes it impossible for us to abdicate from our responsibilities.

Whatever our decision, it will be a long time after we take it before we have sufficient information to prove ourselves right or wrong. Even if we could miraculously judge now the future balance of economic advantage, the equation would be dangerously incomplete without the addition of completely different but powerful considerations with which the White Paper, being an economic assessment, makes no attempt to deal.

My right hon. Friend the Member for Taunton (Mr. du Cann) and others asked for another White Paper outlining the political implications, but those implications have been strongly argued by my right hon. Friend the Leader of the Opposition and others. They have shown that it is difficult enough to produce a coherent balance sheet of economic gains and losses, but that it becomes impossible to weigh a political advantage against an economic price. Whatever the economic balance, there does seem the possibility of a greater harvest of political gain through membership than in any alternative international framework.

Failure of our application to join would no doubt spur this country with a challenge which, I hope, we should courageously accept and successfully meet, but I believe that the judgment of the White Paper is correct—that in that case, the whole world would have lost a contribution to its peace and prosperity that neither Britain nor the countries of the European Communities can make separately". The unity of Europe is an objective, as my hon. Friend the Member for Portsmouth, Langstone (Mr. Ian Lloyd) said yesterday, that men have tried to achieve in one way or another for more than 1,000 years. Even if the present Community expanded to include all the nations of Western Europe, we should have fulfilled, as the right hon. Member for Belper said, only half the task of building a united Europe.

None of us can foresee the possible regroupings of world power between now and the end of the century. In the lifetime of most of us here, nations have moved almost unbelievably from hostility to friendship. Some, sadly, have drifted in the opposite direction. But a recurrence of the European disaster which twice in a single generation tore the Continent and much of the world apart has already become unthinkable. One reason it has become unthinkable, however splendid the logic of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), is the new political structure of Europe over the last two decades.

It may be, by building soundly on foundations already laid, as the Foreign Secretary suggested yesterday, that Britain and her neighbours might begin to be able to dismantle some of the barriers which still divide Europe into two suspicious halves, making equally unthinkable a conflict between East and West and equally fruitful the collaboration between them.

Finally, in the framework of a united Europe, I believe that the present efforts which we and other nations make to raise the standards of living and the standards of life in nations poorer than ourselves can pale into insignificance besides the massive contribution that, together, we could make to bring help and hope to millions in other parts of the world.

9.27 p.m.

The Prime Minister (Mr. Harold Wilson)

Everyone who has spoken in the debate has recognised that, for the past two days, we have been discussing one of the most momentous issues facing Britain. Whatever the different viewpoints expressed—and there have been very wide-ranging speeches—they have reflected this realisation. I am sorry that, because of the commitments to our Yugoslav visitors, I missed some of the speeches yesterday, but I have had the opportunity of catching up with them since.

The right hon. Gentleman the Leader of the Opposition made a speech today with which I and I think many other hon. Members found ourselves in very considerable agreement—at any rate, for the first 45 minutes of it. He was right, I think, as were my right hon. Friends the Foreign Secretary, the Chancellor of the Duchy of Lancaster and the Chancellor of the Exchequer, to deal with some of the wider aspects of the case for and against entry, going far beyond those on which the economic assessment has been dealt with in the White Paper, particularly the political issues—the question of the greater political unity of Europe and the question of Europe's influence in the world.

I agreed with a great deal of the vision which the right hon. Gentleman expressed. Many of us have tried to express, in different words and in different formulations, what he was saying today. I agreed particularly with his rejection of the charge that the Common Market, particularly with Britain in it, is likely to develop on an inward-looking basis. I think that he was right to talk about the remarkable record of the Common Market over the past 10 years, in its fostering of overseas aid to a very large part of the developing world. We believe, and this was the basis of his own negotiations a few years ago, that what the Six have agreed for themselves in respect of developing countries with which they have been historically associated, is likely to be also the pattern of an enlarged Community in respect of those areas of the developing world where, for example, we have had special responsibilities.

I believe, as the right hon. Gentleman said, that the Kennedy Round has shown the willingness of the Six to embark on fundamental liberalisation of trade, in this case exclusively between advanced countries. British entry, with the distinctive window on the world which we have, because of our Commonwealth and other connections, would enrich the Communities, not endanger them. That is where some within Europe in the past few years have been so wrong. I agree with his statement about political aspirations and equally his realistic reply—and many of us have tried to say this in different words—to those who hope, and I know that there are others who fear, that joining the Communities means the adoption now or in the foreseeable future of some, I think he called it, "blueprint for political federation". Most of us would agree with what he said about that.

Then there was his exposition of the argument about sovereignty, his views that we should be prepared—I am not sure whether I got the phrase down right —to give "a limited element of sovereignty" to negotiate something greater and finer for ourselves, for Europe and the world. I tried to express the same thought in one of our earliest debates on the Common Market on 3rd August, 1961, when I said that the whole history of political progress is a history of gradual abandonment of national sovereignty. I said then that we abrogated national sovereignty to a degree when we joined the United Nations.

I said then that some people would talk about world government in one breath and then start drooling about the need to preserve national sovereignty in the next. I went on to say: The question is not whether sovereignty remains absolute or not, but in what way one is prepared to sacrifice sovereignty, to whom and for what purpose…whether any proposed surrender of sovereignty will advance our progress to the kind of world that we want to see."—[OFFICIAL REPORT, 3rd August, 1961; Vol. 645, c. 1667.] It is that thought, and our several positions and viewpoints on whether a limited transfer of sovereignty is for the good of Britain, Europe and mankind, or is harmful to it, that will largely determine the position of each hon. Member on this question.

I would finally refer to what the right hon. Gentleman said about timing when he rejected the views of those who say that this is not the time. I feel, and many hon. Members have expressed their agreement with this, that it is the time, more than ever before. Because, whatever may have been the position in 1967 or five years earlier, there are none in Europe or elsewhere who any longer doubt our economic strength, our vigour and our industrial competitiveness. At the very moment when, after years of dispute, the Six are ready to sit down with us, to spurn them now would be to add a very large and significant chapter to the historical record of missed opportunities.

The Motion before us is about the White Paper and there have been a number of questions asked and points raised about it. I want to pick up the main questions in the debate and seek to answer them. The first question is: was it right, was it necessary, to embark on the preparation of this White Paper? I do not think there has been much suggestion that we were wrong to embark on this exercise. As the right hon. Gentleman reminded us this afternoon, when he and the right hon. Gentleman the Leader of the Liberal Party and I, and others, spoke at Guildhall last July he stressed this point when he said: Every citizen is entitled to have the fullest information available on these and other implications of membership of the Community. His words received very wide national publicity. He made the same point in answer to a question last September in Sheffield when he said: The British people ought to be given every scrap of information available. It would be the greatest possible mistake if the British people went into this without having the fullest possible information. On the same day, the right hon. Member for Enfield, West (Mr. Iain Macleod) was reported as pressing again for this kind of information.

I was a little surprised yesterday at the terms in which the right hon. Member for Barnet (Mr. Maudling) spoke. He seemed to suggest that we should not have embarked on this exercise. I interrupted him and pointed out that his right hon. Friend had demanded it in very strong terms. So he then corrected himself and said that the Government were right to try to work out the figures, but when they found that it could not be done they should have said so. It is a fair point of view. But I am sure that once we had announced, as we had announced in October, that the calculations were be-hon. Gentleman wanted and said, "We ing made, if we had done what the right have carried the calculations so far but cannot get any meaningful answers. The figures could not be as precise and accurate as you want and therefore we are going to break off the exercise", I can imagine the reaction of the House, including that of right hon. Members opposite.

After all, there were suggestions at various times that even the delay in bringing out the White Paper represented political interference with the statistical exercise. The House now knows that there was no political interference with the statistical exercise, and no one will say that it was slanted in any direction, certainly not in the direction of entry to the Common Market, as some apparently feared. But if we had called off the exercise there would have been the darkest and deepest suspicions, and I am sure that they would have been voiced by the right hon. Member for Barnet. I therefore conclude that the House generally agrees that it was right to produce the White Paper while reserving its traditional right to comment on it with a certain degree of brutality when it saw it.

The next question which has been much discussed in the past two days, certainly by the right hon. Member for Barnet, is this: does the fact that there is so wide a range of costs of the adverse effects of entry mean that the final figures—indeed the whole exercise, having been done—are meaningless? There has been little criticism in these two days of the calculations set out in each of the chapters of the White Paper. The principal element in the total costing is that which relates to agricultural policy and agricultural financing. But the House knows that it is impossible to assess with any accuracy the precise form of the Community agricultural policy at the point of British entry. Even if one were bold enough to forecast what that would be, any calculation based on the levies, for example, would mean making assumptions not only about levels of target prices in the Community but about the level of world prices and the level of the price which we should be paying to our existing traditional suppliers if we were not to enter.

I do not think that anyone would be so foolhardy as to claim that he could forecast with any degree of accuracy what the Community's prices will be. The prices have not even been settled for 1970–71. The discussion is now taking place against the background of very considerable argument within the Community and within the existing countries in the Community about the level of surpluses of particular products. As I have just pointed out and as the Leader of the Opposition pointed out today, any calculation about the cost must involve assumptions about the level of world prices.

I am not sure that there has been a wide enough realisation, at any rate by some hon. Members, of the extent to which assumptions in one part of the calculation can affect the position in other parts of the calculation. Take Table 8, for example, which shows the possible cost of United Kingdom food imports on different assumptions about the size of the price gap which must be closed between United Kingdom prices, on the one hand, and E.E.C. prices, on the other hand, over a transitional period and on different assumptions about the response of British farmers to higher prices.

Many hon. Members have said that perhaps the calculations about the British farmers' response to E.E.C. prices were too pessimistic. That may be so. There must be different assumptions about the response of British consumers to the higher prices. According to the assumptions which were made, the annual cost of food imports, excluding levies, could be £85 million less or £255 million more if we were a member of the Community than if we were not.

This is one reason why those who have made much play with the extreme width of the estimates, on the one hand £100 million and on the other £1,100 million, are perhaps somewhat wide of the mark. The right hon. Member for Barnet made it clear that he will be opposed to accepting any deal involving a cost at the extreme £1,100 million end of the range, and clearly no one else would accept it either. There is no single estimate of £100 million or £1,100 million in the White Paper, as is made clear in paragraph 101, which says that this range is no more than the sum of the extreme points of all the calculations of each individual item. It goes on to say that to add them all together is "positively misleading" because: It is inconceivable that all the elements in the calculation will work in the same direction… that is to say, in the most pessimistic or, for that matter, in the most optimistic way. Again, as I have argued, an adverse movement in one sector of the calculations would produce upsetting consequences in another sector of the calculations. The White Paper also stresses in the same paragraph that the top figure of £670 million for our contribution to the Community budget is only a "theoretical maximum", because it cannot take into account the bearing on the United Kingdom of the arrangements agreed by the Six in December, 1969, for regulating their own contributions.

The right hon. Gentleman was right to draw attention to the importance of the limit set to national contributions by what the Community call the key, although I think my right hon. Friend the Chancellor of the Duchy of Lancaster corrected the impression that this had not been said in the White Paper. It is, in fact, set out fully in paragraph 42 and Table 9. I do not think it is fair to convict the figures or the White Paper about the extreme range of the estimates. The White Paper concludes that the total adverse effect is likely to lie well within the extremes of this range of £100 million to £1,100 million.

The White Paper makes it clear that the calculations of the adverse effects have been produced not only on the basis of present assumptions, including present decisions by the Community—and the House must remember that we had most of these basic decisions as recently as December and some not until this month, which is why the White Paper was delayed—but also without taking into account any possible results achieved by the negotiations. Of course it would have been possible to make still further assumptions on what might come out of the negotiations, for example, on agricultural financing and on the period or periods of transition, whether for agriculture or for industry. I cannot think of a more reckless or unproductive form of proceeding than for a Government White Paper to have appeared to have anticipated the negotiations in this way.

I was a little surprised this afternoon when the right hon. Gentleman the Leader of the Opposition appeared to suggest that we should spell out our assumptions more than we have done. I may have misunderstood him and, if so, I regret it. In saying this, I thought he was perhaps saying that we should have spelt out the assumptions more in terms of what the negotiations might bring, but I may not be right here. For example, does anyone suggest that we should have spelt out in greater detail, and then quantified, the assumptions about the length of the transitional period or the transitional periods? It would be unwise, before the negotiations, to spell out this assumption further, but it is our intention to keep the House informed of the progress of negotiations as far as this can be done.

Here we propose to follow the procedure adopted by the right hon. Gentleman in 1961–63, so far as possible. This would enable Parliament and the public to narrow some of the wide assumptions that had to be made in the White Paper. As the negotiations go on, some assumptions will be knocked on the head and many of the range of assumptions will be narrowed.

I turn to the next question that goes to the heart of the great debate in this House in the last two days, and indeed the debate more widely in the fortnight since the White Paper was published. It has been said that the White Paper provides an argument against entering the Community. Many hon. Members have argued that it does. In my opinion, as I forecast would happen, the White Paper has confirmed what in their own minds they had worked out for themselves long before the White Paper was embarked upon. That is a natural reaction. Those who take the other side of the dispute also think that the White Paper confirms what they have thought, partly because of the margin of assumptions.

In my own view, not only because the difficulty of making assumptions and calculations, but still more because we cannot forecast the progress of negotiations, I believe that the White Paper has neither added anything to nor subtracted anything from the arguments of those who already felt strongly either that we should enter or should not enter. [Interruption.] The House asked for the best figures to be made available, and we have given them. It is a basis for public discussion of the facts and the considerations so far as they are now known. That is before negotiations have started and before the community has taken some policy decisions—decisions which it is taking all the time since it is a continuing process—which may affect the terms of entry.

The White Paper was not intended to provide a demonstration that we should enter or that we should not enter, because whether we enter depends, and must depend, on the terms of entry, and these we can know only when we finish the negotiations. The Government's position, which I have made clear many times, was stated in the White Paper and confirmed in the concluding words of my statement to the House on the day the White Paper was published. I then said The Government would enter into negotiations resolutely, in good faith mindful both of British interests and of the advantages of success in the negotiations for all the members of an enlarged Community. We have made clear that if the negotiations produced acceptable conditions for British entry we believe that this will be advantageous for Britain, for Europe, and for Europe's voice in the world. Equally, we have made clear that if the conditions which emerge from the negotiations are in the Government's view not acceptable, we can rely on our own strength outside the Communities. But I repeat what I have said on a number of occasions in the House and outside that this outcome—a failure of the negotiations—would involve a cost for Britain. a cost for Europe, and a diminution of Europe's influence in world affairs."—[OFFICIAL REPORT, 10th February, 1970; Vol. 795, c. 1083–84.] That is our position. I feel that no hon. Member will be able to form a final view before the results of the negotiations are a great deal clearer.

These considerations provide a clear answer to the next question I want to put: has the publication of the White Paper produced any argument for withdrawing the application? If what I have said is true, clearly there is no case whatever for withdrawing the application, because we can only form a realistic estimate of the cost to Britain and a much clearer evaluation of the advantages to Britain as a result of the negotiations.

Not more than one or two hon. Members at most have suggested that the application should be withdrawn now. This has been true of the speeches of a large number of hon. Members who are opposed to final entry and whose opposition to our entry has not been in the slightest degree reduced by anything in recent months, but they are not suggesting that we should withdraw the application.

Mr. Maurice Edelman (Coventry, North)

Would my right hon. Friend say whether the negotiators will be plenipotentiaries or whether, having agreed the terms, the terms would have to be ratified by Parliament?

The Prime Minister

It is impossible for any Government to take a decision as vital as entry without the support of Parliament. Of course we would submit it to Parliament, but the Government will take a view about it in the light of the results of the negotiations.

Reference has been made in the debate to public opinion polls on the Common Market. Some hon. Members have suggested that popular support has been affected by the considerable degree of frustration, indeed even boredom or by two successive and prolonged vetoes. But as the Foreign Secretary said yesterday, a public opinion poll was taken on the day of the publication of the White Paper, which while it showed a strong majority against entry, nevertheless showed a clear and substantial majority in favour of going on with the negotiations. I also know that there has not been any support for a proposal that we put forward a little while ago that, while the application should remain in, we should postpone the beginning of the negotiations until some future date. In my opinion, this would be the worst of all worlds.

We have made it clear repeatedly that we are ready to enter negotiations at the earliest moment that our negotiating partners are prepared to start them. Nothing could be worse now that they have taken a clear decision to enter into early negotiations than for them to assemble in a conference and find that we were not there—[Interruption.] I am glad that I get general agreement for that proposition, But I am dealing with the same suggestion that the right hon. Gentleman dealt with this afternoon. He dealt equally with the question of timing and, I am happy to say, reached the same conclusion. I repeat that the Government's position on entry into the Common Market is clear. Our application is in. This is not in question, and it is not in question after this debate. We have made it clear that we are ready immediately to start negotiations. The Six have agreed to start negotiations this summer. We shall enter them in full determination to achieve success, for we believe it to be in the interests not only of Britain but of Europe and of Europe's place in world affairs. We aim to achieve terms which are acceptable to Britain and acceptable to Europe. Given acceptable terms for membership, we shall be willing to enter fully into all the responsibilities of membership, with a suitable and carefully adjusted period for transition. Those words are those which I used in a speech that I happen to have made last Saturday, to which attention has been drawn. I repeat that we have made clear that we are prepared to pay whatever price may be necessary to secure entry in terms of the agricultural programme and agricultural financing regulations if, but only if, the advantages accruing to Britain economically and politically as a result of entry on those terms in our judgment outweight the disadvantages and costs.

In assessing the economic part of the balance of advantage and disadvantage, this would mean that we should have to accept increases in the cost of living over a reasonable transitional period. Equally, in this part of the transition, we should have to balance against the increases in the cost of living our hopes and assurances from the negotiations of rises in the standard of living which could be got by going in as opposed to remaining outside. Those will be the sort of tests when the time comes.

My argument on Saturday, from which selective quotations were read this afternoon—[HON. MEMBERS: "0h"] I know, because I made the speech and, unlike most hon. Members who seem so sure about it, I have read it, too. My argument was that, while we are prepared to accept these policies in return for the greater advantages of joining the Market —and so, I think, are right hon. and hon. Gentlemen opposite—the Conservative policy would be to accept a partially self-imposed increase in food prices not in return for a European advantage but as part of the wider policy which emerged from Selsdon Park.

The speech, which I gather some right hon. and hon. Members do not altogether like—they seem less than enthusiastic about it, anyway—highlighted the four central features of the Conservative policy which emerged from Selsdon Park. The first is to force up food prices. The second is to force up prices of other essentials. On that second point, I noticed that the Leader of the Opposition did not respond this afternoon to that part of my speech about V.A.T. The third is to cut down the welfare services to means test levels—[Interruption.] Yes, Selsdon Park was a classic blunder on their part—[Interruplion.]—

Mr. Speaker

Order. We have had a placid debate so far. Something has disturbed it.

The Prime Minister

Mr. Speaker, they are loving it. The fourth is to force up rents in a free-for-all in housing.

Concerning food prices, to which attention was drawn this afternoon—

Mr. Kenneth Lewis (Rutland and Stamford)

On a point of order. I am not infrequently called to order because of something that I have said which does not relate to the debate. May I ask how this relates either to the White Paper or to the Common Market? This is just political clap-trap.

Mr. Speaker

Order. I thought that the bit about housing had nothing to do with the Common Market.

The Prime Minister

I was saying, when I was interrupted by the point of order, that the question of food prices, which has been in order throughout the debate, is the Opposition's policy, irrespective of Common Market negotiations. It would be their policy, as they have made clear, if there were no Common Market negotiations, or if, as the right hon. Member for Bridlington (Mr. Wood) said, the negotiations were to fail. They would do it without the higher living standards that the Market would mean and without the wider advantages of Common Market entry.

Mr. Jeremy Thorpe (Devon, North) rose—

The Prime Minister

The right hon. Gentleman was not at Selsdon. He would like to hear about it. I should love to have been there.

When I have attacked the dearer food policy in the House in the past the right hon. Gentleman has asked me, perfectly fairly, whether we should not be committed to dearer food if we entered the Market. Each time I have replied that the difference between us is that we would do it in return for advantages in the European negotiations, but that they would do it anyhow without any corressponding advantage.

What I said last Saturday I have frequently said in the House. I know how the right hon. Gentleman feels about it, but he and his right hon. and hon. Friends have got themselves into this difficulty by rushing out statements on Sunday clearly not knowing with any accuracy what I had said. Their own Conservative newspapers on Monday morning admitted that when they read the full text of the speech the charge did not stick—even the Telegraph and The Times—[HoN. MEMBERS: "Oh."]

I believe that this petulant reaction that we have had from the right hon. Gentleman today was based on an angry and peevish realisation that the full implications of their policy are now becoming more clear to the public, whether it is dearer food, higher rents, or the rest. The more their policies are probed, the more reckless and regressive they seem to be. So, just to cheer up the right hon. Gentleman, there are many more questions that we shall have to put to him about his dearer food policy and we shall expect those questions to be answered.

Having dealt with that irrelevant intervention, I conclude by saying that today is not the time to attempt to draw conclusions in terms of policy from the White Paper. Britain's application for membership has been made, and that is not in question. I repeat, the facts discussed in the debate create a situation in which I believe that the Government can go forward to the negotiations with determination, supported by many right hon. and hon. Members. When those negotiations are complete, we can put our decision to the House. I believe that the debate of the last two days will help to clarify for the House, and will also help the Government in the negotiations, what the real issues are.

Mr. Speaker

The Question is, That this House takes note of the White Paper on Britain and the European Communities (Command Paper No. 4289). As many as are of that opinion say "Aye" To the contrary, "No."

Mrs. Ewing

No.

Mr. Speaker

I think the "Ayes" have it. The "Ayes" have it.

Resolved, That this House takes note of the White Paper on Britain and the European Communities (Command Paper No. 4289).

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