EUROPEAN ECONOMIC COMMUNITY

HC Deb 21 January 1971 vol 809 cc1304-412

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Goodhew.]

4.45 p.m.

Mr. Roy Jenkins (Birmingham, Stechford)

A few moments ago my hon. Friend the Member for Erith and Crayford (Mr. Wellbeloved) was kind enough to apologise to me for holding up this debate. I say to him that there was no need for him to apologise to me. The Government have shown an unfailing lack of parliamentary instinct in providing the worst possible preface to what I imagine they would like to be a debate of calm reflection on the issue to be discussed.

I am bound to begin by drawing attention to another matter on which it seems to me the Government are not showing the respect to the House which they should show. I am sorry that the Chancellor of the Exchequer is not taking part in this debate. The right hon. Member for Stafford and Stone (Mr. Hugh Fraser) made this point yesterday, and I agree with him. I think that the Chancellor of the Exchequer should have taken part. Yesterday, my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) dealt a great deal with monetary questions and I propose to do the same today. These matters are of great impact, and are recognised as being of great impact, upon the central issue we are discussing. We should have had the Chancellor of the Exchequer's views upon them. We should have had his views upon the economic gains on the one hand and the disadvantages, on the other, which seem to him as likely to follow from our membership of the European Economic Community.

Mr. Arthur Lewis (West Ham, North)

At least he should have been here.

Mr. Jenkins

I do not always agree with my hon. Friend the Member for West Ham, North (Mr. Arthur Lewis) but I do so on this occasion. I think that the least the Chancellor of the Exchequer might have done was to be present. We have not heard from him on this subject since he took his present office. It will be within the recollection of many right hon. and hon. Members that, 11 months ago, when we had a rather similar two-day debate, although we were then nearer to the period of Budget purdah, I, as Chancellor of the Exchequer, intervened on the second day and gave the House the views of the then Government on the economic aspects largely as we then saw them. The Chancellor of the Exchequer has been extremely sparing in his appearances in the House. He has not made a speech in the House since 4th November, and I do not think that he should rest too long upon his laurels on that occasion.

Yesterday, the Chancellor of the Duchy of Lancaster gave us some account of the negotiations so far and the prospect as he sees it. I make it clear from the beginning that I do not propose to follow him in much detail on this point. I do not, indeed, think it right for an Opposition spokesman to take up a particular position in regard to the negotiations while they are in mid-stream. The Government, inevitably and rightly, have the responsibiity for conducting the negotiations. They must bring them, if they can bring them to fruition, in their complete form to the House and then we must all make our judgment about what they have achieved as a whole. To attempt partial judgment of the negotiations in the meantime would mean, first, that we were in danger of not seeing the matter in the round, and, secondly, in danger of jogging the negotiator's arm, which I do not wish to do. There are, however, two points which I think the right hon. and learned Gentleman should bear constantly in mind.

First, the right hon. and learned Gentleman has the advantage of being able to negotiate from a very strong balance of payments position. The outturn for 1970 as a whole, and in particular the last quarter, leaves no room for doubt about that. The June remarks of the Prime Minister about a deteriorating trend have been shown to be utterly without foundation, and he is a very lucky man to have his forecast falsified on such a remarkably convenient time scale. To be able to preach weakness before the election and then to inherit strength after it is a position of singular good fortune. But such is undoubtedly the case.

The year as a whole from the balance of payments point of view was our best ever, and the second half was better than the first. This means that we are able to negotiate from a much stronger position than was the case in 1961–63 or would have been the case had we got to negotiations in 1967. It means that, provided the Government do not dissipate the surplus they have inherited, we can hope to enter the Community in a position of much greater economic strength than would have been previously the case and thus be able to take a fuller and more consistent advantage of the stimulus to growth which I firmly believe this can bring—although I acknowledge, as I always have, that this is not a matter subject to absolute proof. It is not by its very nature, but nor are many of the other most important matters on which in human affairs we have to make judgments. They are not subject to absolute truth; they are subject to judgment, as is the case here.

The primary object of the right hon. and learned Gentleman in the negotiations should be to preserve that strength and to avoid terms which would bring us back to a position of weakness and so prevent our getting the extra growth, quite limited amounts of which will enable us to pay reasonable contributions without feeling the burden severely.

Secondly, he should constantly bear in mind that, although we can gain a great deal from entry and shall miss many opportunities if we fail to secure it on good terms, the Six will also lose a great deal if they fail again to ease our entry. The two vetoes which have so far been applied have caused a continuing and debilitating split within the Europe of the Community. The ideals and plans for the future which came from the prophets of the European idea were not related to arrangements between a particular exclusive group of Powers. They offered a new way in which to learn from the bitterness and the frustration of the war years, one way of transcending the restrictions of national sovereignty.

But once these new methods had been opened up, these new prospects had been given, they could not be limited only to six countries without undermining their basis. One cannot convincingly say that full national sovereignty is outdated and yet refuse to allow more than a limited number of countries to escape from its confines. One cannot claim that Europe can solve its problems only on a European basis and yet insist that European countries, and we are undoubtedly a European country, anxious to join should not be allowed to make a full contribution.

This has been a major weakness of the Community since 1963, and it will remain so until the question of the candidate members, ourselves and the other three, is settled. It is not a problem which will just go away from the door of the Six. Only our entry can settle this divisive issue which in the past seven years has done a great deal to tarnish the image and weaken the momentum of the Community.

If we were to be kept out again, it could endanger the whole future of the Community. Some hon. Members may say, "And a good thing too", but I think that that would be a very shortsighted view. We in this country, and indeed the whole world, have suffered far too much in the past from the divisions of Europe, and in particular the division between France and Germany, for any sensible person to want to see them recreated.

Our entry is therefore likely to assist the development of a better balance in the Atlantic community as a whole than has hitherto been possible. Reasons both of history and geography unite in ensuring that Britain would always want to see a Europe of which it was a member joined by close and friendly links with the United States. There are very few in Britain who would want to abolish the Channel at the price of making the Atlantic into an unbridgeable chasm.

But our rôle here requires careful definition. If we see it as that of standing outside Europe and trying from a mid-Atlantic position, as a sort of enlarged Iceland, to act as an intermediary between Europe and the United States, we are likely to end in rather foolish failure. But if we see our rôle as being fully part of Europe, but a part which, because of our tradition and outlook, is likely always to want to keep European unity fully compatible with links across the Atlantic, we will better serve both our own needs and the North Atlantic community as a whole.

Furthermore, the best basis, I am convinced, for a close continuing North Atlantic relationship is the nearest approach to equality which is possible between the European partners on the one hand and the American on the other, a closer approach to equality than has been possible so far in the Europe of the Alliance. This is far more likely to be achieved by a Europe of which Britain is a part than one from which Britain is excluded. The right hon. and learned Gentleman, therefore, has a strong hand to play, but I hope that he will play it in the negotiations with firmness, but without bombast.

I turn next to the monetary questions about which my right hon. Friend the Member for Cheetham said some words yesterday when he threatened the House that I would say even more today. I am not sure whether that will be so, but I should like to fill in one or two aspects of the matter around his words of yesterday.

During the past few months, the Werner Report and associated developments have focussed attention on the likely monetary future of the Community. There has been a considerable tendency to exaggerate the significance of what has taken place so far and even to speak as though the formation of a full monetary Community with a common currency was just around the corner. I believe that there are many difficulties to be overcome before there can be any real question of achieving this, and, indeed, the degree of enthusiasm of the Governments of the Six for rapid moves in this direction can easily be exaggerated.

There are two practical questions for the foreseeable future. The first, although that of lesser importance, is the plan for narrower exchange rate margins between the countries of the Community. I see no great difficulty about this. The present position is somewhat anomalous. Under the rules of the International Monetary Fund, drawn up, of course, well before the Community existed, the currency of any member of the Community may fluctuate against that of another member by twice as much as either may fluctuate against the dollar. This greater degree of flexibility against a partner's currency than against one outside the Community, even if in both cases it is very limited, is difficult to defend.

At the I.M.F. meeting before last, 16 months ago, I suggested, although I did not regard the matter as of primary importance, a widening of the margins from the present 1 per cent. to perhaps 2 per cent. This would not necessarily be incompatible with a move towards narrower margins within the Community itself. For most countries, certainly for this country, it is the rate against the dollar as the anchor currency which is important for exchange market management, not the cross rates against another European currency. On this issue, therefore, while the importance can be exaggerated, certainly the difficulties can be, too.

The second and more important practical question is whether from here forward substantial changes of parity between the currencies of the members of the Community should be ruled out. I am not now talking about fluctuations within the margins, devaluations and revaluations, substantial changes of parity. At the present stage of integration, or at any stage which is likely to be reached in the early future, such a point would be highly theoretical. No doubt it is important to avoid frequent or numerous parity changes within the Community. No doubt they make the working of certain aspects of the Community more difficult. Indeed, before the French devaluation and the German revaluation of 1969 we were told with considerable authority that the financial provisions of the common agricultural policy were an unsurmountable obstacle to such changes within the Community. In practice, the unsurmountable obstacle proved little more than a molehill.

When the parity changes became highly necessary in the national interests of the countries concerned, this argument, like others, was not allowed to stand in the way. It is often a mistake in evolving human affairs to attempt too rigid a division between the past and the future, between what has in fact occurred and what we will allow to occur in the future. But the fact that the main parity changes in the whole developed world of the past 18 months have been a movement in opposite directions of the two major currencies of the Community itself should make both those within the Community and those interested in joining very cautious about attempting to lay down a too rigid position for the future. What happened on a dramatic scale in 1969 would be inconceivable and inadmissible in the 1970's. When parity changes become necessary, they will eventually take place whatever the theoretical position may be, and therefore the Community would be very unwise to try to create a theoretical position which could not be sustained, and I believe that that is indeed what will happen.

Having said that, however, I should like to stress the undesirability from the point of view of Britain and Europe and, indeed, of the whole world, of trying to exclude monetary questions from the development of the Community, or trying to believe that all we have to do is to maintain the monetary status quo. There is a long-term deep-seated monetary imbalance in the world. Since September, 1969, it has not given much trouble, because we have all been temporarily in calm waters. But it created a great deal of trouble in the two years before that and it could in the future present us with still more severe difficulties than anything we have yet known.

This imbalance, in my view, stems from the fact that the rôles of the two—I stress the "two"—traditional reserve currencies of the world are now out of joint with the balance of world economic power which has developed over the past 20 years. After the war, there were two major trading and reserve currencies: the dollar, clearly in practice, and, indeed, in theory, as the result of Bretton Woods, the primary one, but sterling a very important secondary one.

Throughout the whole of the post-war period, the rôle of sterling has been excessive in relation to the size of the United Kingdom economy. It has been balanced, not unlike an inverted pyramid, upon the narrow base of an economy with only 50 million inhabitants. This has meant that sterling has been in the firing line without much protection in every world monetary crisis. It has meant that the United Kingdom, under successive Governments, has been somewhat top-heavy in monetary matters. It made it far more difficult for us to carry out our devaluation with the same sudden, silent decisiveness which the French achieved in August, 1969. There were too many people who had to be told beforehand.

To some extent, the position has gradually but belatedly been eased for us by a substantial relative decline in both the reserve and trading positions of sterling. But it has still not been adequately eased for us, and moreover the method by which easement has been brought about has created more problems for the world monetary system as a whole, for the easement has been achieved, in so far as it has been achieved, by the dollar, as the pivot of the whole system, taking on still greater burdens.

In the early post-war days of clear United States economic and competitive preponderance, with the massive U.S. trade surpluses which went with that, the dollar might have carried this additional burden. But those circumstances no longer apply. The position, therefore, is that sterling, although carrying a progressively smaller burden, is still overstrained, and the dollar, carrying a progressively larger burden, is now overstrained too. The missing piece of the jigsaw is that the prosperous, rapidly-growing and reserve-rich economies of Western Europe carry very little reserve currency responsibility. I do not reproach them for that. The present position is largely an accident of history, but it is one which I believe to be bad for the world monetary system and one which should be corrected as soon as is practicable.

This should be and could be, done either by moving towards a European-based second world reserve currency or by endeavouring to persuade the I.M.F. to take on the burden of providing reserve assets which could maintain and extend world liquidity, in due course perhaps replacing the dollar as the pivot of the whole system. But in either event, the countries of the Community must be prepared, whether directly or indirectly, to take on more responsibility. Only thus can the excessive and potentially dangerous strain upon the dollar be removed. Only thus can the world monetary system be given more stability.

As my right hon. Friend the Member for Cheetham said yesterday, there can be no question of repudiating our liabilities, but we ought certainly to be willing, and in my view anxious, to abandon the special position of sterling and see it merged in the new reserve asset or currency, whichever it may be. The result could be a much more balanced and sensible system for the world as a whole.

The developments here will not be directly involved in the negotiations in which the Chancellor of the Duchy of Lancaster is engaged, but they will provide an important chorus of noises offstage. But the Government, and that goes for the other Chancellor as well, ought to have a clear idea of the direction in which they wish to move on this important issue.

I am bound to conclude that section of my speech by expressing again my great regret—indeed, my great surprise—that the Chancellor of the Exchequer has not thought it fit to turn up at the House even to listen to the discussion this afternoon.

Mr. J. Bruce-Gardyne (South Angus)

The House has listened with great interest to what the right hon. Gentleman has said, but before he leaves the question of the position of sterling could he elaborate what seems to be the great difficulty in dealing with the problem, that what were described as the privileges of sterling in fact involved liabilities, which the Community might be very reluctant to take on?

Mr. Jenkins

I have dealt with this matter as far as it would be reasonable to do so in a speech of this sort. I did not directly suggest that the only solution was the Community taking them on. I have said that we do not want to get out of our liabilities, but we want a more sensible situation for the future. There are two possibilities: one is through the Community, and one is through the I.M.F. The I.M.F. only has strength through its members, and the prominent member, the United States, is already taking as much strain as it can. Therefore one comes back to the ability of the Community, whether directly or indirectly to take on more responsibility.

I think it would be the view of the House that I have probably gone into that subject with as much detail as hon. Members would wish, and rather than proceed further I shall leave the matter there.

I turn now to a quite separate issue, the argument about sovereignty. In recent months there has been a certain shift here in the lines of argument. Previously those opposed to our entry laid by far the greater stress on the economic points, and it was those in favour of entry mostly, and I think generally—

Mr. Neil Marten (Banbury)

No.

Mr. Jenkins

The hon. Gentleman may be an exception. He is a distinguished exponent of the view that we should not go into Europe. He can refute it later if he wishes. I think that it is the view of the House that what I have said on that particular issue is broadly correct—[Interruption.]—of course, it is not the view of everybody. I recollect that in most recent debates going back over the past three or four years, those who have been very sceptical about entry laid their previous stress mainly upon the economic argument. However, let me hasten to assure the House that this is a comment I make by way of passing, and I propose to raise no great argument upon it. If I had thought that it would provoke dissent, I probably would not have bothered to make it.

Mr. Alfred Morris (Manchester, Wythenshawe)

Would my right hon. Friend agree that there have been occasions when he has made some severe comments on the economic argument? Does he recall that he has used some very harsh words about the common agricultural policy of the E.E.C. and does he still hold to that viewpoint? Does he recall also his speech at Aberystwyth on the value-added tax, and does he still feel as he did then about it?

Mr. Jenkins

It is impossible to feel in this House as one feels in Aberystwyth. Leaving that point aside, certainly I have no wish to alter anything that I said there or anything that I have said elsewhere on these matters. It is the case that the common agricultural policy is the least attractive face of the Community. I believe that to be so.

On the whole, I have believed that the political arguments were even more in favour of entry than the economic arguments. Though, on balance, I have believed that there is a strong economic case, I have endeavoured to see the balance of the arguments one way and another, and I have perhaps been more willing to admit some of the points against entry than my hon. Friend has some of the points in favour.

Mr. Peter Mills (Torrington)

Will the right hon. Gentleman give way?

Mr. Jenkins

No. At the moment, I am being interrupted in my argument, which shows the danger of putting in points by way of transition to a new point. I am being interrupted on a point which is in no way central to my argument. I want now to proceed to points which are central to my argument and on which, within reason, I will be prepared to give way again.

What is clearly the case is that, whatever is true or untrue about the past, those who are now against entry are increasingly taking the political point and saying that entry will involve the loss of our national identity, which is what the right hon. Member for Wolverhampton, South-West (Mr. Powell) argues, a loss of our ability to control our own destiny, and will necessarily mean a short, sharp ride to a federal Europe.

This argument is severely distorted at both ends. First, I believe it to be based on a misunderstanding of the problem of the exercise of sovereignty in the modern world. It greatly overestimates our ability to control our own destiny in or out of the Community, and it endeavours to make a false equation between detachment and independence. To pretend to a sovereignty which has ceased to be effective is to restrict and not to preserve national freedom.

I take first the example of defence. For almost any country, certainly for any power of the second or third rank to attempt today to provide exclusively for its own defence needs would mean either that it was wholly dependent on the whims of its neighbours to attack or defend it as they wished, or that it accepted a crippling and still probably ineffective burden which in turn greatly reduced its freedom to do other things such as improving the standard of living of its people and providing a good level of community services. Participation in a mutual defence arrangement, even with tight guarantees and a high degree of military integration, is thus likely to increase rather than diminish the country's ability to develop as it wishes.

Equally, in terms of the economy, to be shut out of the main groups which determine the world's economic climate does not mean exemption from the effects of that climate, but merely a loss of influence in determining the climate and less strength with which to withstand its rigours.

Economic influence in turn greatly affects political influence, and this can only be exerted effectively when a nation has found a satisfactory political orientation and is not forced by the search for one to attempt military tasks beyond its real economic capacity with the almost inevitable consequences of reducing that capacity still further and thus producing a minimum amount of influence for a maximum amount of effort. For any medium-rank Power today a willingness to pool sovereignty is thus an essential prerequisite for both influence and, in a paradoxical but real sense, national freedom.

I turn now to the federalist point. Some argue as though an anti-federalist Britain would be sucked into a federalist whirlpool immediately that we set foot in the Community. Almost exactly the reverse is the case. It may be a good thing or a bad thing, but I do not believe that, even if in this country we were unanimously for federalism, which we most certainly are not, we could get the rest of Europe with us in the lifetime of most Members of this House. The forces of inertia are always much stronger than the forces of action. In any event, it is towards confederation and not federation that even the limited forces of action are now working. I believe that that is the almost unanimous view of those who look at the Six through the spectacles of realism and not through those of either utopianism or scaremongering.

Opponents of entry then say, "If Europe has not enough faith in its own purposes to become quickly federalist, what is the point in the venture at all?" That is to see the evolving institution in far too rigid, black and white terms. It is a false antithesis to argue that, because it is unlikely and even undesirable for complete integration to be achieved in the foreseeable future, it therefore follows that nothing is worth going for.

Europe has travelled a substantial distance in the past 12 years. It would be much easier for us today and much better for the Six, too, if we had been with them from the beginning. That aside, the hard fact is that in none of the six countries, throughout the spectrum of democratic political opinion, is there any substantial organised body of people who wish that they were out rather than in, who wish that the Treaty of Rome had never been signed, who believe that they have not achieved any real benefits from it.

I put this point particularly to some of my hon. Friends: recently a Norwegian trade union and Labour Party delegation under the leader of the party went round the Six. Like ourselves, the Norwegians are candidate members. Still more than ourselves, they are peripheral to the core of Europe. They are perhaps not notable for their integrationist ideas. Yet they were deeply impressed by the very facts that I have just mentioned, especially as they apply to the Socialist and trade union movements in the Six. They met no one who wished to come out. They met no one who did not believe that substantial benefits had been achieved from being in. They found, too, that everyone with whom they talked was more worried about progress in the future being too slow than too fast.

Some may be inclined to answer, "That is all very well for the Six. No doubt it benefits them, but it would not benefit us. We are not as other Europeans are." With respect, that I believe to be one of the worst, most dangerous and most unacceptable of all the arguments against entry. It has lain behind far too much of our thinking in this country since the war.

We have believed, against the increasing evidence of the facts, that we were different, better, more independent and more able to manage on our own than were our neighbours. Of course, in some senses we are different, as every European country is different from every other, and none has found any difficulty in preserving its identity. But, if we believe that we are different in a qualitative sense, that we have a different and separate rôle in the world, that we can remain as semi-detached from Europe as can the Americans, then I fear that at the end of the day the real difference will turn out to be that the countries of the Community have gone way ahead, have adjusted themselves both more realistically and more imaginatively to both the harshness and the opportunity of the modern world and that they have achieved more than we have done in influence, standard of living, social services and in help for developing areas too, and that we have increasingly been left behind.

I do not believe that this need happen, but it certainly could. To help avoid this we must hope for a successful outcome of this third and crucial attempt at negotiation. That places a responsibility upon both sides, both upon us in this country to look beyond narrow horizons and upon the Six to show that they have the cohesion and self-confidence necessary to allow enlargement to take place on tolerable terms, without which the Community can neither achieve its full strength nor remain faithful to its original European idealism.

5.22 p.m.

The Minister of Agriculture, Fisheries and Food (Mr. James Prior)

The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) has over the last 10 years made a number of speeches in this House on the Common Market. Those of us who have been privileged to listen to them know that he has never made a bad speech on this subject, and even from those who have perhaps not found themselves in agreement with him he has gained a great deal of respect in all that he has said. Certainly today his remarks on monetary policy and sovereignty have been extremely helpful to my right hon. Friend who has to carry out the negotiations.

Yesterday's debate lived up to the high standard of Common Market debates over the years. The speeches of the hon. Member for Berwick and East Lothian (Mr. Mackintosh) and my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) were up to their usual high standard. Perhaps some of the fire of the debates of previous times has gone, but it would not do to draw too many conclusions from the lack of emotion that the debates now arouse.

I agree with the right hon. Gentleman that the pattern has changed. Some hon. Members may not agree with this, but the debates of 1961 to 1963 were much more concerned with economics, agriculture and Commonwealth than with sovereignty and food prices, which now dominate one's thinking. I say this only because events here and in the Common Market have not stood still. The prob- lems have changed, and will go on changing, for the Six, for the Four and for the Ten. A mistake we sometimes make is to look at a possible situation in 1978 through the static position of 1971. When I come to be as specific and detailed as I can about my responsibilities I hope that this factor will be remembered.

A great deal has been said about sovereignty. One either agrees that France and the other countries, including West Germany, with the Ostpolitik, have found the Common Market no bar to their aims of following national policy, or one argues that, as the years have rolled on, we have had or will have less control over our own destinies, and that this is true of the Community. Whichever way one argues, and perhaps both arguments are true in part, it cannot be said on the evidence available that the anxiety of certain hon. Gentlemen has been borne out. I agree with the right hon. Gentleman that progress towards complete integration is bound to be extremely slow. On economic sovereignty, which was mentioned yesterday by the right hon. Member for Manchester, Cheetham (Mr. H. Lever), it is very much a question of what we hope to achieve. If one were to ask the average British person whether he would rather have 2s. in his pocket with our present economic sovereignty or 4s. without it, I have no doubt what answer he would give.

The common agricultural policy has been the centrepiece for community institutions. This is certainly where one would expect to see the greatest pooling of sovereignty, and it is by far the most advanced project in the Community. Even here, there are still, and will remain for many years, great national divergences. The right hon. Gentleman mentioned this in talking about parity and the effect that changes in currency rates would have on common agricultural policy, but it has not happened. The arguments on sovereignty are by no means made out to our disadvantage.

I wish to present to the House this afternoon as much information as I can about the state of the negotiations and their effect upon us. There are limitations on what one can say, as the policies of the Community are not standing still—nor are our own. Detailed paints have to be left undecided but general positions have to be established. I apologise in advance for some of the detail contained in my speech, but I believe that it is the wish of the House that the country should be fully informed. It is also essential to build up the confidence of farmers, horticulturists, fishermen, food processers and, perhaps most important of all, housewives, in what we are trying to do.

I will start, therefore, with food prices. It is important here to put the facts clearly and simply but without exaggeration. Our entry into the E.E.C. would, of course, entail some increase in food prices. That is inevitable, given that we should be changing to a different system, and has been accepted by successive Governments on both sides of the House. It is important to get this in perspective.

First, as to the likely amount of the rise, an estimate was made in the White Paper published last February which suggested that overall the retail food price index might, as a result of our accession, be 18 to 26 per cent. higher than it otherwise would have been. It is this that frightens people, but this increase would not take place immediately on our accession. We have proposed in Brussels that our agricultural prices should be raised to Community levels by six steps spread over a full five-year period. This would mean that the retail food prices would on average go up by about 3 to 4 per cent. a year. This would represent an increase in the general index of retail prices of no more than about 1 per cent. a year, since food is about 25 per cent. of the total weighting. No one should seek to under-estimate what this means—nor to exaggerate it. Any estimate of this sort has to be based on certain assumptions, and these were also set out in the White Paper. Since the figures which I have quoted were published, there have been two developments which are tending to reduce the size of the increase which we would face on entry.

The first is that over the past year world prices for food have risen significantly for certain important basic commodities—by about 7 per cent. This has in turn raised our consumer prices, and this means that the gap to be bridged between our prices and E.E.C. prices has to this extent diminished. World prices have risen, but E.E.C. food prices have been largely stable.

Secondly, there are two further elements of which we have to take account. Food prices in the E.E.C. are higher, partly because the E.E.C. pays the farmer higher prices for most commodities and partly because of the different method of support for agriculture. So we have to take account of the effect of the Government's policy of changing our system of agricultural support from one relying predominantly on deficiency payments to one in which the farmer gets his return from the market. If the negotiations succeed, on any reasonable assumption we can expect to have gone a good way by the time we actually join in moving the main means of our support from deficiency payment to the market. To the extent that we have done this, we shall further reduce the increase in prices arising from our accession.

So far I have spoken only in general terms. Not all prices will be going up. Fruit and vegetables, which account for about 20 per cent. of the housewife's expenditure on food, will in some cases be cheaper and in other cases remain the same. Even where prices rise, it is nonsense to suggest as I have seen suggested recently, that the people of the E.E.C. are an undernourished community, and that if we join there will be a massive switch in our diet towards bread and potatoes. It is important to remember—

Mr. Marten

Who said it?

Mr. Prior

It was said by Professor Zinkin and reported fully last week in the Daily Express.

Mr. Marten

Is my right hon. Friend aware that Professor Zinkin is a great pro-Common Marketeer?

Mr. Prior

I have been asked who said it, and I have told my hon. Friend. It is important to remember that the speed at which price rises occur is as important as the size of the increase in determining the effect on the market and the consumer. The intention will be to phase in the rise in food prices in an orderly way in the transitional period while we are experiencing the steadily increasing wider benefits of membership.

Retail prices and patterns of consumption vary within the Community, but it is surely significant in this context that, for example, the French and the Germans consume per head marginally larger amounts of meat and cheese than we do in this country, in spite of the higher prices which obtain there. The prices in the Common Market vary enormously from one country to the next, and it is quite impossible to talk of an overall average on this basis.

Mr. Arthur Lewis

During the last election, the Conservative Party promised, amongst other things, to reduce food prices—[HON. MEMBERS: "No."]

Assuming that was their intention, even if they wanted to reduce prices, under the Rome Treaty they would not be able to do so once these conditions are agreed.

Mr. Prior

The hon. Gentleman starts from a wrong assumption from which he tries to prove something else. At the last election we made it perfectly plain that it was our intention to negotiate to join the Common Market and that we would change the agricultural system of support to the levy system. There was no indication that we would reduce food prices. If we go into the Common Market we shall have to accept the rules, and this is the argument which has been going on for the last day and a half.

Mr. John Farr (Harborough)

My right hon. Friend said just now that those in the E.E.C. at the moment marginally consume more meat and cheese than we do. Would he not be fair and say that a good proportion of that meat is horsemeat and bears no comparison to what we eat in this country?

Mr. Prior

Perhaps I do not go round the Continent as often as my hon. Friend, but when there I do not see large numbers of horses being reared to be consumed as horsemeat. The fact is that their standard of living and their eating habits are not all that different from our own. It is also significant that, as a nation grows richer, so the percentage that it spends on food tends to fall.

To turn to the food industries and get away from food prices for a moment, the effect of higher prices for basic agricultural commodities is a matter of concern not only to the housewife but also to the food manufacturers. I know that worries have been expressed by some of our food manufacturers and trades about the possible effects on consumption in the home market of higher prices for their products. This matter again needs to be kept in perspective, bearing in mind that these higher prices would be phased in slowly and that as time goes on we should increasingly be experiencing the benefits of accession.

It is not just a question of the effects on the United Kingdom market. The progressive removal of barriers within the Community will offer considerable new opportunities to British food manufacturers and the trade. To exploit these will call for energy and enterprise, and perhaps some adjustments, but I am confident that British food industries, which are among the leaders in their field in efficiency and innovation, will respond.

As the debate is getting very much behind time, I will leave out of my speech the sections aimed at dealing with the regulations concerning the food industry. The point I would like to make on them is that these regulations are for the main part in draft and seek to cover the Common Market countries as they are now, their eating habits, their different requirements for hygiene. But they will have to take into consideration the changes which the accession of Britain and other countries would bring.

It is worth remembering that when one is eating in Rome one does not necessarily eat the same food as one would eat in Paris, Brussels or London—even in the case of horsemeat. There is plenty of scope for a wide range of regulations which will still allow our industry to compete.

To turn to the agricultural problems—

Mr. John Mendelson (Penistone)

Before the right hon. Gentleman leaves the important subject of food prices, in which of course the public are interested, he said that the jump will not be so great when the transitional period is over because he will have introduced successive increases in food prices by changing the methods and by making the market compete more. Is he not hiding the fact that the earlier he changes the methods, the less the jump will be? The full impact and brunt will still have to be borne by the British housewife.

Mr. Prior

I did not say that at the end of the period of transition there would be a jump, but in so far as changes are made before the transition period begins, the hon. Gentleman is correct in his assumption. But at the moment our plans are to do no more than stabilise prices at or about their present level.

I have never felt that agriculture represented a major problem. I did not think that it did in 1961, and my opinion is now more strongly held than it was even at that time. The reason that it has always been cited as a major problem is much more because of the financial and balance of payments implications attendent upon the acceptance of the common agricultural policy and its guarantee and guidance fund. The whole structure of the industry, the scale of our enterprise, the scale of our farmers and their grasp of the modern technologies, leave me in no doubt that the industry has nothing to fear and much to gain. But, of course, our entry will cause changes and require adjustments.

We have said that we are prepared to adopt the common agricultural policy, subject to a number of points mentioned at the beginning of negotiations. A number of those points have now been dealt with and, since I have been asked a number of questions by right hon. and hon. Gentlemen opposite, I will try to answer as completely and as shortly as I can.

On liquid milk, our discussions with the Community have established first that it is an objective of the common policy to use as much milk as possible for liquid consumption throughout the Community and that the policy should not be applied so as to impede this aim. This is a change from what we had before.

Secondly, we have established that member States are free to fix retail prices for milk but are not obliged to do so, so that there need be no fixed differential between the prices paid for liquid milk and for milk sent for processing. Thirdly, a non-Governmental producer organisation, provided that it acts within the provisions of the Treaty and secondary legislation deriving from it, may engage in the direction of supplies, the pooling of returns and seasonal pricing. Thus our understanding is that the milk marketing board as a non-Governmental producer organisation will be able to continue the essential features of our present milk marketing arrangements. Likewise, we believe that the other marketing boards will continue to play an important rôle in efficient production and marketing.

On the Annual Review, we have secured confirmation that we shall be free to conduct at national level our own review of the economic condition and prospects of the United Kingdom industry. In addition, it has been agreed that there will be an annual review of the economic conditions and prospects in the enlarged Community before price decisions are taken by the Council of Ministers. This review will be conducted by the Commission in consultation with member States. It will include effective and meaningful consultations with producer organisations.

We have secured an adequate agreement with the Community on this subject and we shall ensure that within the enlarged Community it is properly carried out. I regard it as a valuable agreement which should help to give United Kingdom producers confidence that their voice will be properly heard in the new and somewhat unfamiliar situation into which they will be moving after United Kingdom accession.

Mr. Eric Deakins (Walthamstow, West)

In view of what the Minister has just said, would he confirm an answer which he gave me in this House some time ago that the Annual Review in the United Kingdom would not be given statutory force, as would the present price review arrangements?

Mr. Prior

We must not get mixed up between the Annual Review and the price review that follows it, because they are different arrangements altogether. But so far as the Annual Review is concerned, as things stand we shall conduct such a review, but most people, and a good many farmers, feel that we want to move away from the Annual Review, in any event, in the form in which we have had it in the last few years.

Mr. Cledwyn Hughes (Anglesey)

Would it be correct to say that it would be an annual review but not an annual price review?

Mr. Prior

Broadly speaking, that would be correct because the prices have to be fixed by the Council of Ministers after submissions put to them by the Commission.

Mr. Arthur Lewis

Will Parliament have a right to hear it?

Mr. Prior

The answer is, "No". There is no burking the point. I will come to that point a little later. Obviously, the Community review of agriculture will not be exactly the same as the national review which we now hold.

As regards pigmeat and eggs, the application of the common agricultural policy would mean moving to a system where our producers get their returns from the Market rather than from subsidies. That is the direction in which we ourselves are already moving in regard to eggs, and I am sure that the efficiency of our producers is such that they will acquit themselves well in the new circumstances. But it will be important to achieve the transition smoothly and we thought it important to discuss with the Community the likely market conditions in an enlarged Community.

As a result of our discussions, the Community has recognised the value of continued stability for these commodities, the importance of and special characteristics of the United Kingdom bacon market in particular as an outlet for pigmeat in an enlarged Community and the need to keep this situation under careful review during the transitional period and afterwards. We shall be looking carefully at the future of the market sharing arrangement and the various other measures when we come to discuss the transitional arrangements after accession takes place.

The right hon. Member for Anglesey (Mr. Cledwyn Hughes) referred to the question of butter and cheese imports. This is, as he said, a very complex matter where precise forecasts are impossible. The enlarged Community would include our Irish and Danish suppliers. There must also be provision for New Zealand's exports to us. But so far as our market is concerned, the Community's support arrangements will ensure that British producers receive a fair, and increasing, level of returns for their milk products.

In negotiating the transitional arrangements, we shall see to it that they are not at a disadvantage as compared with competitors elsewhere in the Community. Broadly, therefore, we have accepted the common agricultural policy. We have not done this because we think everything in it is perfect and cannot be improved.

Mr. Russell Kerr (Feltham)

You can say that again!

Mr. John Mendelson

The understatement of the year!

Mr. Prior

Perhaps hon. Members opposite would allow me to continue. Much needs to be done, as the Six know, to rectify these shortcomings.

Hon. Members criticise certain aspects of the common agriculture policy, often with justice. They question whether the level and pattern of agricultural prices is sensible. They point to the difficulties which the Community has faced over surpluses in the past. They ask why we have not tried to set these matters to rights in the negotiations for entry and fear that our only chance of doing so is being lost.

I do not agree. As members of the Community we shall have a full say in the development of the agricultural policy. We shall participate as full voting members in the year-to-year decisions on prices. We shall be able to influence the Community's policies on structural reforms in agriculture. We should, however, pay tribute to the efforts being made to reduce surpluses in the Common Market, to get production in balance and to improve structure. For example,. the mountains of dairy produce of which we have heard so much for years are fast disappearing.

Mr. John Mendelson

They are destroying them.

Mrs. Renée Short (Wolverhampton, North-East)

They are feeding them to the cows.

Mr. Prior

Hon. Members opposite do not know their facts or they would not make these ridiculous statements. The hon. Member for Penistone will use any stick to beat the Common Market policy. And he is not too careful about which stick he uses and how he uses it.

The problem for British agriculture is one of making the transition rather than of accepting the principles of the common agricultural policy.

The important thing, which we have emphasised to the Six, is that the transition should be conducted in such a way as to allow United Kingdom producers to make the considerable adjustments which they will face as smoothly as possible so that we avoid unnecessary disruption to all concerned. This is important not only for us and for our consumers but also for the Six, who would not gain from disruption of the Common Market.

Mr. John Mendelson

rose—

Mr. Prior

The hon. Gentleman is always having his say.

Mr. Mendelson

rose—

Mr. Deputy Speaker (Sir Robert Grant-Ferris)

Order. The hon. Member must resume his seat if the right hon. Gentleman is not giving way.

Mr. Mendelson

rose—

Mr. Deputy Speaker

Order. Let us be quite clear about this. When a right hon. or hon. Gentleman does not give way, no hon. Member is entitled to persist. If the right hon. Gentleman does not give way, the hon. Member must resume his seat. If the right hon. Gentleman wishes to give way, he will do so and I shall call the hon. Gentleman.

Mr. Mendelson

Will the right hon. Gentleman give way?

Mr. Prior

I have given way once to the hon. Gentleman. I have just attacked him, but, as I shall be attacking him once more before I finish my speech, perhaps he will wait and deal with both points together.

As I was saying, the important thing for British and Common Market producers is to make this transition smoothly. Regarding the length of the transition period, we have said that we are willing to adopt a single period of five years for both agriculture and industry. We believe that this would be an adequate length of time for agriculture, provided that there is provision for an adequate degree of flexibility. It would not be in the interests of any of the parties concerned to tie ourselves down to an exact programme for five years without providing any means to deal with unforeseen developments in our markets. Having agreed the general principles of the transition, we shall expect to have reasonable room for manoeuvre to deal with any unforeseen difficulties or developments.

I should now like to turn to horticulture.

Mr. Mendelson

rose—

Mr. Prior

I shall be criticising the hon. Gentleman when I come to fishing, so he may rest assured.

On horticulture, which I have so far not mentioned, there are particular and special problems. The gradual reduction of our barriers to trade with members of the Community will expose some of our growers to much-increased competition. Prices for some fruit and vegetables in the E.E.C. have been considerably lower than here. This is well known, but the horticultural problem has to be seen in perspective.

Not by any means all of our industry will be at risk from the opening up of trade. Many growers will be able to stand the greater competition. Some will undoubtedly find new markets and new opportunities.

There has been considerable progress in our industry in the last few years. Under the series of the Horticultural Improvement Schemes and by the improvement of our wholesale horticultural markets, a great deal has been done to enable the industry to be more competitive.

Even in Cornwall last week—I will refer to the speech yesterday of my hon. Friend the Member for Bodmin (Mr. Hicks)—it was interesting to see the developments in flower bulb production compared with four or five years ago. One producer of flowers was exporting on quite a considerable scale to Germany. In view of this, I believe that a transitional period of five years will be long enough for those growers who are going to adapt and compete in the enlarged Community. To have sought a longer period would not have been realistic and could have damaged our chances of securing adequate provision for those who may be adversely affected.

The sectors of British horticulture which will face difficulties are chiefly those which suffer from climatic disadvantages—in particular, the growers of apples and pears, where the Community has built up serious structural surpluses. But, here again, it cannot be in the interests of French and Italian producers to go on over-producing as they are now.

We have said to the Community that flexibility will be essential when we come to make the transition. The problem will be complicated, because, while most horticultural products are protected by tariffs, there are quotas for apples and pears. It is crucial to the well being of our industry that the existing forms of protection should be phased out smoothly and that market disruption should be avoided.

We have proposed to the Community that for products subject to tariffs, protection against the Community should be phased out in the following way. The first adjustment should not take place until after the first year of transition, which would be only 15 per cent., followed by annual moves of 15, 20, 25 and 25 per cent. For quotas we have proposed a gradual liberalisation during the transitional period. Above all, we have emphasised the need for flexibility and for avoiding disruption of markets. It simply would not be in the interests of those countries to flood our market and to undermine the good prices which they get here.

Ways must also be found of helping growers to adjust or, if necessary, to abandon their enterprises. I have already given the industry an assurance that this point will be sympathetically considered.

Mr. John Mendelson

rose—

Mr. Arthur Lewis

rose—

Mr. Prior

I will give way to the hon. Member for Penistone later.

Mr. Arthur Lewis

I am obliged to the right hon. Gentleman for giving way. The Minister talks about abandoning the industry. Do I understand that the Government will assist in the abandonment of the industry? Is the right hon. Gentleman referring to the statement made by his Ministry that there must be a digging up and abolition of a number of acres of fruit? Is the right hon. Gentleman suggesting that we should destroy our fruit?

Mr. Prior

What I have said so far on the grubbing up of apple orchards, in which I understand the hon. Gentleman is interested, is that, whether we go into the Common Market or not, there is a great deal of very bad produce in this country which undermines the market for good produce. It would be better to have those apple orchards out, and the Government would assist in a major scheme to get them out.

Mr. Mendelson

rose—

Mr. Prior

I ask the hon. Gentleman to wait.

On the other point raised by the hon. Member for West Ham, North, we shall consider what is necessary to help those producers who, through no fault of their own—horticulture is a long-term business—suffer as a result of accession. The Government are prepared to consider what should be done about that.

Mr. Mendelson

Concerning the destruction of butter, the right hon. Gentleman alleged that I did not know my facts. Is the Minister denying, as I told the House yesterday, that in November, 1970, the Commission in Brussels published an official communique announcing that it had spent 300 million dollars in the 12 months preceding November, 1970, destroying perfectly good butter and that it was proposing to spend another 300 million dollars from November, 1970, to November, 1971, for the same purpose, therefore showing no sign of abandoning its policy?

Mr. Prior

I understand that they do not destroy butter. They may have to underwrite cheap exports of butter to other countries.—[An HON. MEMBER:"That is dumping."]—Of course it is dumping. But the amount of surplus butter in the Common Market has already fallen from about 300,000 tons at its peak to about 100,000 tons now, and it is continuing to fall very considerably.

Mr. Mendelson

Then withdraw the charge of inaccuracy.

Mr. Prior

I will withdraw the charge of inaccuracy and say that I think that the hon. Gentleman's forecast about what is happening to dairy produce within the Common Market is totally inaccurate and leave it at that.

Mr. Marten

Will my right hon. Friend give way on this point?

Mr. Prior

No. I have given way many times. Other hon. Members badly want to get into the debate, so I am afraid that I shall not give way.

There are other matters still remaining for negotiation. There is the question of the aid which, in common with other members of the Community, we give to our hill farmers. Some people have been worried that the provisions of the Treaty of Rome would require us to discontinue our special aid for the hills and to destroy the economy of the hill areas.

Mr. John Wells (Maidstone)

Assuming that my right hon. Friend has finished with horticulture, may I ask, first, whether he will give a categoric assurance that Cox's apples will be graded in the highest possible grade, therefore achieving a serious export potential? Secondly, will the Hops Marketing Board be able to continue in a similar style? Finally, will my right hon. Friend give an assurance that we shall not squander money on too many new wholesale markets, which should be suitably done at a reasonable price per sq. ft.?

Mr. Prior

On the question of Hops Marketing Board, I have said that producer marketing boards should have no trouble in doing their present jobs. On the matter of the grade of Cox's apples, I know that there is an important point here because of differences of colour and size, and we shall do all that we can in this regard. On the third point, that of wholesale arrangements, the amount of money available for the modernisation of wholesale markets is strictly limited in any case, but I am watching this very carefully.

Mr. Marten

What is happening about Australian apples? At the moment 47 per cent. of their production comes to the British housewife. Secondly, on the question of dumping, is my right hon. Friend aware that the Common Market surpluses of butter are being dumped in places like Hong Kong at very much below the production price, thus driving out the traditional supplier there, which is Australia? Does my right hon. Friend approve of that?

Mr. Prior

No. We have known that the Common Market countries have been dumping, but they are now beginning to get their surpluses well under control, and when that is done there will be no need to dump. There is no doubt that they are getting their surpluses under control, and I must tell hon. Members that that is a fact.

On the matter of Australian apples, what will happen over a period of years is that these apples will bear the common external tariff which all goods coming into the United Kingdom or to the Common Market area will have to carry. What the Australians are concerned with is not so much what tariff their apples will have to bear but whether they will be able to market them here. If my geography is correct, I think that these are southern hemisphere apples which come here at a time of the year when the Common Market is not producing apples of its own, so I imagine that apple-growers in Australia will still find a ready market in this country.

I now turn to the problems of the hill-farmers, which to some hon. Members is an important matter. The right hon. Gentleman asked me to give a specific assurance about the future of the individual hill subsidies. I cannot guarantee anything specific about the future of the hill subsidies as such, any more than he would be able to commit irrevocably a future Labour Government to a guarantee of anything specific, and we all know why not. However, I appreciate the anxiety which prompts the right hon. Gentleman's questions and those of many other hon. Members.

The legal position under the Treaty of Rome is, of course, complex, and I shall not recite the details now. Briefly, the position is that there are no E.E.C. provisions which would specifically prohibit our grants to hill farmers or any other of our production grants, either. The Treaty contains a general prohibition on aids which distort competition and affect trade between member countries, but no agreed criteria have so far been laid down for applying this principle. However, the Treaty specifically provides for dealing with special problems of this sort and, indeed, member countries give aid in various forms to similar groups of producers with special problems.

As I have said, we shall be having discussions with the Community about the problems of the hill areas, but I assure hon. Members that the Government appreciate the importance to hill producers of the income support which they are now receiving, and I do not believe that the Community would seek to press us to take a course which would seriously undermine the economy of the hill areas. There are also important points arising from the Community's directives on plant and animal health to be discussed with them in future negotiations.

I come now to fisheries, which I think is another important matter for many of my hon. Friends, including my hon. Friend the Member for Bodmin, who made an excellent maiden speech yesterday. I can understand the anxieties which have been expressed about our inshore fisheries, and I assure the House that the Government have no intention of allowing our inshore waters to be raped. I must first emphasise that while it is regrettable that the Community should have chosen this moment to press on with the establishment of the common fisheries policy, in fact only its broad outlines have so far been settled. There are many points still to be clarified, and many details have still to be finalised, even in regard to the application of the policy to the Six themselves.

The Government have recently despatched a team of officials to Brussels with the specific purpose of seeking such clarification. Only when this has been received shall we be in a position to decide whether the existing regulations provide sufficiently for the protection of our inshore waters. In the meantime, our position is fully safeguarded, and we have brought firmly to the attention of the Community the importance of this matter for us both as a social and as an economic question. I think that until further clarification has been obtained it would be wise to wait and suspend judgment, but there is one general point which I think can fairly be made at this stage.

It is not in the interests of member countries that any of the waters to which they have access should be over-fished, as is clearly recognised by the provisions which the Six have made in their common fisheries policy for safeguards against the risk of over-exploitation. The Community as a whole can take measures to avoid such risks, quite apart from any measures which individual countries may take in the exercise of the extensive powers with which the common policy allows them to regulate their own waters. There is not, therefore, on this point any clash of principle between ourselves and the Six. Our concern is simply to ensure proper protection in the particular circumstances of our own inshore waters. As I have already told the House, my right hon. and learned Friend and I have made abundantly plain to the Community the extreme importance which the Government and the House attach to satisfaction on this vital issue, and I believe that the Community is in no doubt about the strength of feeling here on this subject.

I have tried to deal as dispassionately as I can with the progress of the negotiations. I apologise to the House for the time that this has taken, and for the detail with which I have become involved, but these are largely technical points, and I think that the House, and certainly the country, will want to know what they are. So many people ask me why we want to join the Common Market.

Mr. Marten

Hear, hear.

Mr. Prior

I shall try to give my hon. Friend my answer to that question. It is surely and quite rightly because, I believe, as do many hon. Members, that there are great advantages for us in joining on the right terms. There are advantages to us in political terms, and therefore peace. There are advantages to us in economic terms, and therefore prosperity. Coupled with those would come the greater opportunities for the British to exercise their wisdom and experience in a wider community, and through a wider community outward to the rest of the world.

We have contributed much, and have much more to add. These are generous sentiments to which, as a Member of Parliament, I am proud to subscribe. For me the Common Market is the inexorable logic of history. I am no less English for being European, and no less European for being an internationalist.

6.9 p.m.

Mr. Douglas Jay (Battersea, North)

I should like to return to the major realities of this controversy rather than the pious hopes and illusions of which we have heard a good deal.

We are holding this debate at a time when the House and the country are supposed to be awaiting the result of the Government's negotiations with the E.E.C. All that the electorate were invited to do last June and, indeed, all that the party conferences were asked to do in October, was to wait and see what terms emerged from these negotiations. Neither the electorate nor the party conferences were asked to approve a decision to join the E.E.C., and certainly neither of them did so. Therefore I think that what we should do today is to look frankly at what has emerged and is emerging from the right hon. Gentleman's negotiations. When we do that, the plain fact which stands out is that, although no doubt the right hon. Gentleman has personally done his best, he has been forced to give way already so much of what is vital to British interests that one wonders whether there is very much left to wait for.

Let me enumerate briefly and factually what the right hon. Gentleman has given away to date. First, he has accepted en bloc the whole of the Rome Treaty, all the decisions and laws following from it and all future decisions which may be taken, whether by a majority or otherwise. Second, he has accepted, as we were told again today, the whole main substance of the common agricultural policy, from which almost the entire economic damage to this country is likely to follow.

Third, the right hon. Gentleman has accepted that the level of food prices in the E.E.C., which we would have to have imposed upon us if we joined, are not to be discussed in these negotiations at all. Does the right hon. Gentleman deny—I do not think that he will, but I do not want to tempt him to interrupt me—that the actual level of individual food prices in future is outside the scope of these negotiations? This is at a time, incidentally, when the recent O.E.C.D. Report on the British Economy has given this advice to the British Government: The admission of low cost food imports could make an important contribution to relieving inflationary pressure. Fourth, most of the substance of the assurances given about safeguarding Commonwealth interests have now been abandoned. Apart from special arrangements for the sugar-producing countries, New Zealand, some African countries, perhaps, and a so-called "transition" period, there are to be virtually no safeguards whatever for British trade in the whole of the rest of the Commonwealth preference area, including the vital markets of Australia, Canada, India, Pakistan and many others.

That does not fairly carry out the assurances which were given by British Ministers in both the last Governments, that Commonwealth interests would be safeguarded. That is, incidentally, the opinion of many in the Commonwealth, including Australia, which is a large and vital market for us. Indeed, even for New Zealand and the sugar-producing countries, there is not even yet any assurance that the proposed arrangements would be more than temporary palliatives.

Fifth, the arrangements which the Government are trying to make to limit this country's budget contribution will, as I understand it, be purely temporary. The Chancellor of the Duchy virtually admitted this yesterday—unless he cares to deny it now. At least, from 1980 onwards, the full financial regulations of the E.E.C. will come into effect unqualified, and from that time on, we are bound to hand over 90 per cent. of the new food tax revenue, 90 per cent. of all customs revenue and an additional amount equal to a rate of 1 per cent. of v.a.t. or purchase tax.

In last Sunday's Sunday Times Business News, Mr. Malcom Crawford wrote: E.E.C. officials have calculated that, whatever the result of the present negotiations, Britain will be obliged from 1980 onwards to pay about 22 per cent. to 23 per cent. of the total Common Market budget. That article goes on: This fact, which has not yet been admitted by Ministers, is based on the Community financial regulations, which the existing members have already agreed, and which Britain has now accepted in principle. Indeed, M. Deniau of the Commission, when over here recently, also made it clear, I understand, that the supposed review procedure, which was supposed to be invoked if this caused intolerable strain to the British economy, was no more than the normal E.E.C. assumption that some sort of talks would take place if any member had a special grievance. It therefore would be of little practical value, particularly when one remembers that a decision of this kind would go to the Council of Ministers and require unanimous approval.

Do Ministers deny that the British budget contribution would necessarily be determined in that way, after the temporary period is over? If that is true, the contribution is bound to total by that time, on the assumptions of last February's White Paper, something like £600 million a year gross at 1971 prices, to be paid across the exchanges.

So much for what the right hon. Gentleman has given away already. This means that vastly the greater part of the economic damage to our balance of payments and standard of living would now be inevitable, whatever details the right hon. Gentleman negotiates on particular areas or so-called transition years. For the country must realise clearly that the budgetary contribution would be only one part of the total balance of payments cost.

This was stated very lucidly by Sir Con O'Neill in Brussels on 12th January, as follows Britain not only has to consider its budgetary contribution but also the increased cost of agricultural imports from the Six, the loss of certain preferences for its industrial goods and the effect of the increased cost of living on the general level of industrial costs. I hope that the House will now realise, in the light of Sir Con O'Neill's analysis and the negotiations to date, the magnitude of the balance of payments burden which would be inevitable if we joined on these terms. I think that there is a lot of illusion about this. This can now, within a reasonable margin of error, be recalculated in terms of 1971 trade values and volumes, and assuming that the permanent and not just the temporary arrangements were to be enforced.

The first burden would be the direct budgetary contribution itself. When the full system, as described, comes into effect, it follows from last February's White Paper—this is confirmed by the E.E.C. estimate of a 22 to 23 per cent. share of the Common Market cost—that the full long period cost on the United Kingdom would be about £600 million gross a year, if not more.

The present Government themselves, in their estimate which they still have not published, but which everyone knows in Brussels and Paris and which was submitted to the E.E.C. in July, put the net figure at £470 million a year after generous allowances of, I understand, £180 million for the supposed back payments to us. That leaves one with the conclusion that the lowest possible figure at which one can put the net contribution is about £400 million a year—and that is pretty optimistic.

The next item, as Sir Con O'Neill points out, is the higher cost of food and feeding stuffs imports. This consists, of course, both of the dear food which we should have to buy from the Community instead of cheaper food from efficient producers in the outside world, and also—this is sometimes forgotten—of the much higher price which we would have to pay for food imports which we already get from the Community now at a low price, and which we would have the privilege of taking at the extortionate price which they charge their internal consumers, if we were to join.

Those two items, since the total United Kingdom food and feeding stuff imports are now over £2,000 million a year, must, I should have thought, at the very least—this is higher food import prices—amount to at least £200 million a year. Therefore, the direct agricultural costs in the long term—the higher contribution and higher food prices—cannot now honestly be put at a lower figure than about £600 million a year.

That is the loss on the import side of the balance of payments. On the export side, we have to face a net loss of exports, due to what Sir Con O'Neill rightly calls both the loss of certain preferences and the effect of higher living costs on our industrial costs.

Since the Government are now proposing virtually no safeguards for the main preference area countries, we are bound to lose free entry rights as well as preferences throughout the preference area and the E.F.T.A. countries which do not join. To this group of countries, to both the preference area and the non-applicant E.F.T.A. countries, we are now exporting nearly £3,000 million worth of goods a year, far more than we export to the E.E.C. Indeed, our exports to the preference area alone have risen by about £600 million a year since 1966 and now amount to about £2,300 million.

Mr. Arthur Blenkinsop (South Shields)

In referring to the E.F.T.A. countries which do not join, is my right hon. Friend deleting from his overall calculations the figures relating to those countries?

Mr. Jay

I am making what I regard as the reasonable assumption that non-applicant E.F.T.A. countries will not join.

As we are now enjoying about 60 per cent. free entry into this whole group of countries, it seems undeniable that the erection of their full normal m.f.n. tariffs against all our industrial exports—which must follow our joining the E.E.C. on these terms—would face us with a loss of exports due to tariff changes of at least £250 million a year. This is confirmed by the C.B.I. in its valuable estimate that we would lose about the same total of exports in the preference area alone as we would gain in the Community.

On top of that—and I am still following Sir Con O'Neill—there would be a further loss of exports in the world outside the E.E.C. due to our higher industrial costs. Higher food prices in this country, the value-added tax and higher insurance contributions, would raise the level of our living costs by 6 per cent. or more. A rise of labour costs by this amount over the total of our exports in the world outside the E.E.C., which are now more than £6,500 million a year, must mean a further loss in exports of at least £300 million a year.

In trade with the E.E.C. itself, the increase in our imports from the Community would certainly exceed the increase in our exports to it, leaving us with a further net worsening of the balance, because our costs would rise substantially and our tariff cuts would be larger than theirs. In particular, I believe that our motor industry would suffer severely.

Thus, without going into more details—I would like to, but there is not time—if we face the facts in the light of the negotiations to date, we must reckon on a total agricultural cost to the balance of payments of at least £600 million a year and, in addition, a net loss in our trade balance in industrial goods, after allowing for higher exports to the Community, of between £500 million and £600 million a year. Even beyond this, if we face the whole prospect fairly, we must realise that there would be a rise in manufactured imports here from the rest of the world because of our higher costs; and the removal of exchange control would add a further unquantifiable liability for capital exports.

However one allows for margins of error—we all agree that there are bound to be such errors when looking ahead, but it is not therefore unwise to look ahead—it is plain beyond reasonable doubt that we would be faced, on the prospects now emerging from these negotiations, with an extra balance of payments burden of well over £1,000 million a year by the time this new system was fully operating. On each item these are moderate estimates, and the House would be deceiving itself if it imagined that the prospective burden would be likely to be less than something of this order.

It is also clearly implied in the questionnaire which was submitted to the Government by the Commission only last week—if the Government deny this, they should publish the questionnaire—that the payment of the full contribution at the end of the transition period, on top of all the other damage that we would suffer, would be more than the United Kingdom could stand economically and would imperil our balance of payments and sterling.

Confronted with a growing balance of payments deficit of this order, this country would be forced to lower its food consumption and standard of living proportionately to overcome the deficit. If we were free to devalue, we could not escape the lower living standards and still higher prices, but at least economic growth from a lower level would still be possible.

But even this line of escape seems to be cut off by the extraordinary monetary and exchange policies to which the E.E.C. has now committed itself in pledging the member countries to ever-more rigidly fixed exchange rates and monetary union which is now accepted in principle for 1980.

Not able to devalue, in those circumstances the United Kingdom would be forced into chronic deflation which, in all reasonable probability, would reduce our economic growth even further than what we have known in recent years. Indeed, the whole lesson of recent economic history is that exchange rates should be more, and not less, flexible; and this is the one way the United Kingdom can achieve growth without persistent deficit at the same time.

Yet the E.E.C. is moving in precisely the opposite direction. And our Chancellor of the Exchequer has blithely accepted the whole of these exchange and monetary policies, apparently in advance and without argument. Yet the combination of a heavy balance of payments deficit and an imposed fixed exchange rate is a recipe not just for economic decline but, I believe, for economic disaster. It is flying in the face of all the economic experience of recent years.

There are some who try to evade this conclusion, and who say that by joining the E.E.C. we would automatically take on board some mysterious secret of economic growth. This argument is hardly worth answering because few people now believe it. The truth is that our future growth now depends on our own economic policies and cannot be contracted like some sort of disease merely by joining this or any other customs union. If it could be, there are a great many industrial countries, from Japan to the other members of E.F.T.A., which we would be better advised to join.

Mr. Robert Sheldon (Ashton-under Lyne)

My right hon. Friend says that there is little evidence to show that there would be economic growth for us in joining the Community. Although he paid tribute to the C.B.I. document, he could not have read it because it expresses the view that our entry would provide that growth.

Mr. Jay

If my hon. Friend had read that document as carefully as I have, he would have noticed that while its figures are valuable, its verbal conclusions appear to contradict those figures. If my hon. Friend is interested in the historical facts of this matter—

Mr. Sheldon

I urge my right hon. Friend to read what the document says.

Mr. Jay

—the truth is that growth in the Six has been slower since the Treaty of Rome was signed than it was before. At the same time, in the O.E.C.D. countries other than the Six, growth has more than doubled in the years since the Treaty was signed. Indeed, in the E.F.T.A. countries other than the United Kingdom, growth has been faster since the Treaty of Rome was signed. Our future growth will depend on our balance of payments and our freedom to alter our exchange rates when we wish to do so, and both of these would be jeopardised by our joining the E.E.C.

Captain Walter Elliot (Carshalton)

Does the right hon. Gentleman think that growth has been encouraged in this country by the formation of the E.F.T.A.?

Mr. Jay

I would say that growth has not been affected very much one way or the other by the formation of the E.F.T.A. It is our persistent balance of payments deficits which have forced Governments to deflate, and that is what has held back our growth.

There are still some left who say that, although that is the truth about the immediate balance of payments and growth prospects, there would nevertheless be some mysterious "dynamic" economic benefits which we should achieve in the rather remote future by joining the E.E.C. That illusion ignores the simple fact that the balance of payments burden would not be temporary. It would last as long as the common agricultural policy, which is really the kernel of the E.E.C. system.

In addition to that argument, the National Institute, which deals in facts and figures, not illusions, has now done a most valuable service by searchingly inquiring into the alleged dynamic benefits. It concludes thus: It is hard to think that if the dynamic properties of a widening market were really as great as is sometimes suggested, the statistical evidence of their influence would be so completely and consistently lacking.… To accept a heavy burden of impact effects as the price of entry, in the belief that the dynamic effects are likely to be even bigger, would under these circumstances represent a triumph of hope over experience. That conclusion is made even more incontestable for this reason. Some of those who have still not thought the problem out have deluded themselves with the idea that joining the E.E.C. would somehow mean a wider total market for British industry. But it would not. It would demonstrably mean a narrower, not a wider, market in the world as a whole. We should certainly lose more exports than we should gain, and competitive imports would increase; which must involve a permanent narrowing of the total market for British industry. That conclusion, incidentally, follows directly—my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) will be interested here—from the C.B.I. calculation that the loss of exports in the preference area alone would equal the gain in the E.E.C. It follows also from last year's White Paper.

Yet there are still some who erect elaborate arguments on the basis of this mythical larger market, although the facts and figures show beyond doubt that the total market would be narrower.

Mr. Sheldon

rose—

Mr. Jay

I do not think that I should give way to my hon. Friend again.

Mr. Sheldon

My right hon. Friend mentioned me just now. His second misconception about what the C.B.I. said must be corrected. It was perfectly clear: Free access to a large and faster growing market should provide the necessary conditions for the achievement by the United Kingdom of a significantly faster rate of growth than has been realised in the past 15 years.

Mr. Jay

I am surprised that someone so gifted as my hon. Friend should ignore the figures and be deluded by the verbiage.

Mr. Sheldon

My right hon. Friend has misquoted and misconstrued.

Mr. Jay

Even when all that is fully understood, we are told that the immense economic burdens and dangers have to be borne for the sake of the political advantages. What are these immense political benefits? I have found that too many people, when they say that the argument is political, really mean that the argument is irrational, or that they are—sincerely—unable to explain what it is. But, to give full credit to those who use this argument, what I think they are saying—the right hon. Member for Streatham (Mr. Sandys) said it candidly yesterday—is that, if this country joins a federal super-State in Western Europe, we shall then be able to exert greater influence in the world. That is what the argument comes to. Yet at the same time we are being told, very often by the same enthusiasts for entry, that entry does not involve joining any sort of federal super-State.

That is, surely, a dishonest attitude. Either signing the Treaty of Rome will not involve us at any time in joining such a State; in which case the whole political argument falls to the ground. Or else it will; which means, in effect, abandoning in time not just sovereignty but the political independence of this country. And the great majority of the British people are certainly opposed to that. Before this debate is over, the Government should really tell us whether they favour joining a federal State in Europe or not.

The evidence is now overwhelming that the E.E.C. is moving in that direction. It has accepted the objective of a directly elected Parliament, and monetary union by 1980. Neither of those, unless they are to be shams, is possible without the creation of a federal central Government with overriding powers. That means not just a limited sacrifice of sovereignty which one could take back as one can under normal treaties, but an irrevocable and irreversible process by which the power of decision is transferred elsewhere and cannot be taken back. I felt that my right hon. Friend the Member for Birmingham, Stechford, speaking from our Front Bench today, totally ignored that vital distinction in his remarks about sovereignty.

Yet it is clear beyond dispute that neither this Government nor this Parliament has any mandate to take such an unparalleled constitutional decision without consulting the electorate. The general election manifesto of the Conservative Party which, I suppose, is now the ruling document, said last June—it was remarkably clear— Our sole commitment is to negotiate: no more, no less. Plainly, therefore, the Government have no moral or constitutional right to go beyond that without consulting the electorate again. Indeed, if Parliament were to claim that right, it would be deeply damaging to Parliament itself.

Yet the Government seem bent—I hope they are not, but they appear from their actions to be—on asking Parliament, without a mandate, to accept a settlement which would do great economic harm to this country, which would before very long sacrifice our essential political freedom in the world, which would, incidentally, alienate many of our best friends overseas, and which would be likely to set back the whole cause of greater free trade which might have been built on E.F.T.A. and the Kennedy Round.

How infinitely better it would be to shake off now, this narrow obsession with one trading group, and work steadily, with whatever patience and wisdom would be needed, for a wider and looser form of association which would include all of us—the E.E.C., E.F.T.A., the Commonwealth, the United States and the rest—preserving each our own independence and our democratically adopted internal policies.

On all the evidence, the British public are so overwhelmingly opposed to the sort of settlement which the Government now propose that I believe we shall before long return to sanity once again.

6.39 p.m.

Sir Derek Walker-Smith (Hertfordshire, East)

On a previous occasion in the last Parliament when I had the privilege of following the right hon. Member for Battersea, North (Mr. Jay), I observed that it was difficult not to feel a sense of intellectual inferiority in following someone who had the triple qualification of being a former President of the Board of Trade, a Fellow of All Souls and the father of the Editor of Business Section of The Times. I cannot pay the right hon. Gentleman a more fitting or more deserved compliment than to say that the clarity and cogency of his argument today and his devastating presentation of the economic facts of the case in particular are fully worthy of anybody enjoying that unique qualification.

As this is the first time we have debated the matter in the present Parliament, perhaps I might briefly identify my position. [Laughter.] It is a great mistake for right hon. Members to assume that their words are as well known as they would like them to be, so I am taking the precaution of making it clear that I am opposed to entry into the Common Market on the terms of an unrevised Treaty of Rome. It follows that I am not likely to find wholly meaningful or satisfactory any negotiations which do not go to the heart of the matter in the sense that they provide for at least the possibility of amending the Treaty and improving the working of the Community. I am not, and never have been, anti-Common Market in the sense of having any hostility to the Community. Far from it. I made that clear in 1961 and again in 1967, when I said I opposed our entry to the Community because, though no doubt the Common Market is suited to the needs of the countries in it, it is not suited to Britain's special and different position.

The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins), who, having made his speech, seems to have deserted the Chamber quickly and continuously ever since, observed that critics of entry rested their case on the fact that Britain had a different and better position. I have never used the word "better" in this context. I have never made that sort of qualitative comparison and I have never heard it made in the House, so it is difficult to think on what that observation was based.

I believe that the position is even clearer today than it was in those earlier days, as one would expect at the end of the transitional period under the Treaty and with the consequential tightening up of the structure of the Community. It is perhaps for this reason and perhaps also because time has given more opportunity for study and comprehension of the implications that more people are against entry today than there were then, certainly in the country and probably in the House as a whole.

Those who are not opposed to entry are comprised in three main groups, to each of which I shall say a short word this evening. The first group is normally known as "Europeans", though again, as with the expression "anti-Marketeers", it is an over-simplification. Their view substantially is that Britain has a significant future only as part of the Community and perhaps in the further future as part of a political federation. For them, therefore, as the goal is clear it does not really matter if the negotiations touch only on fringe matters, because on that view the negotiations in any event should not lead to a withdrawal of the application. For them the right terms mean, in effect, the best terms that will be available at the end of the day, be they what they are. Of course, they would say that it is better to pay a low price than a high price in that as in any other transaction, but in any event they say that the price will be worth paying. They echo the words of King Henry IV of France, who said, "Paris vain bien une messe."

I do not have very much to say to them today, save this. I respect the sincerity and good faith of their position and the skill of the presentation of their argument. But the logic of their conclusion depends on the validity of the premise from which it derives, the premise that in a changing world Britain has no distinctive individual contribution to make, that her unique institutions are better absorbed into an extraneous and prefabricated system, that her global position is no longer a reality, and that her overseas and Commonwealth connections have become so tenuous and expendable that their sacrifice is immaterial. I do not accept the premise, and therefore I cannot accept the conclusion.

An. Hon. Member

What conclusion?

Sir D. Walker-Smith

The conclusion that Britain's future lies only in being absorbed into the Community and cannot successfully be pursued on more traditional lines. That is the conclusion to which I am referring, and which I cannot share. I believe that Britain, though diminished indeed in military might and material resources, still has a distinctive contribution to make, that her institutions are still worth preserving, and that her extra-European connections are still worth maintaining. I therefore take the view that we should pursue a policy not of integration but of close and cordial co-operation with the Six against that background and within the requirements of our special position.

The second group are those who take an optimistic view, who see potential benefits in our joining the Community but hope that somehow it would not involve the consequential penalties which students of the Community and the Treaty identify as a necessary corollary to them. This was really the official position in 1961. I did not accept it then, and I cannot accept it now. Indeed, I believe that circumstances make it less tenable today than it was then on two grounds, first, because the expectation of economic benefit is shown to be weaker and, second, because the constitutional implications are clearer.

As to economic benefits, two aspects are suggested—tariff reduction and economies of scale. But we now have to see tariff reduction in the context of the Kennedy Round, which has made tariffs a relatively small barrier to trade in the world. It has become gratifyingly clear that nations can and will move to greater liberalisation of trade without having to become part of a customs union designed to give internal free trade, but only at the expense of a common external tariff.

The argument of economies of scale is of course right in principle, but it is a very different thing to assume that we would obtain them by entry to the Community, at any rate in sufficient measure to offset the economic detriment—the loss of preferences, the higher food prices, and the payments across the exchanges. The White Paper of last February admitted that it is impossible to quantify the so-called dynamic effects. But the matter goes even further. Even their existence cannot be proved. The right hon. Gentleman referred to the study by the National Institute Economic Reiew, referred to at Question time today as a scholarly work—

An Hon. Member

By whom?

Sir D. Walker-Smith

By my right hon. Friend the Deputy Prime Minister.

This scholarly work concludes that there is no substantial evidence that the countries of the Community have become more competitive, more specialised or faster growing by reason of their membership, and that, if anything, the evidence points in the other direction. Therefore it is clear that we must revise the optimism in regard to economic benefit; and the same applies to the constitutional penalties.

The right hon. Member for Birmingham, Stechford said that sovereignty was a relatively new point and that the position has changed. But that is not so. The point was clearly taken in all the earlier debates on the matter. The only thing that has changed is the argument for entry. Whereas in those days we were told that the economic benefit was such that we must put up with the political detriment, we are now told that the political benefit is such that we must put up with the economic detriment.

It cannot be maintained that British sovereignty, particularly the sovereignty of Parliament, would not be seriously eroded by entry. Of course it would. That is what the Community is for—to substitute Community law and government for national law and government over a wide range of economic and social life. That is what Lord Denning, with the great authority of the Master of the Rolls, has said. He stated that entry would mean that our constitutional law must be re-written so as to show that the sovereignty of these Islands is not ours alone but shared with others. That has become clearer over the years with the steady flow of regulations, nearly 10,000 to date, which, in the words of Article 189 of the Treaty, are binding in every respect and directly applicable in each member State. It has become clearer too with the final evolution of a rigid supra-national common agricultural policy. For the future it will be the same. There is no requirement of unanimity under Article 189 and consequently no possibility of veto. Under that Article, regulations made in Brussels would be enforceable in this country even if every Member of Parliament would wish to vote against them if he had the opportunity.

Nor is it sensible to pretend that the Treaty does not mean what it says, or that its obligations could in some way be evaded or shrugged off. In any event, it would be contrary to British practice to give our hand to an agreement which we did not intend to honour to the full. It would be contrary to our interests to enter any society where that was thought to be appropriate. Therefore, optimism must be tempered with realism, and the prospects objectively assessed in the light of the facts.

The third group is the wait-and-see group, those who qualify their desire for entry with reference to the outcome of the negotiations and the proviso that the terms must be right. For that view to be practical we must know what terms are considered to be satisfactory and what is the scope of the negotiations. Here the position is obstinately obscure and the Government are curiously coy. The speeches of my right hon. and learned Friend the Chancellor of the Duchy of Lancaster and the right hon. Member for Manchester, Cheetham (Mr. Harold Lever) yesterday were peppered with references to the right and reasonable terms, but they did not condescend to precise definition of what was meant by that phrase.

After all, we have been invited to regard the negotiations as of crucial importance. The Conservative Manifesto made that clear, saying that there was no commitment save to negotiate. If negotiations are so important as to constitute the Government's sole commitment, the reasonable inference must be that they will be concerned with the basic considerations. But in fact they are not. They are concerned with some very important matters identified by my right hon. and learned Friend yesterday. New Zealand dairy products and sugar are very important matters, but viewed in terms of membership in perpetuity the negotiations are in a sense on fringe matters, because they leave intact the main unacceptable features of the Market—the loss of sovereignty, the high cost of the common agricultural policy, the damage to our trade and our trading partners, the bureaucratic rigidities and the undemocratic form of administration.

We are told that the negotiations will avoid the pitfalls of the kangaroo meat type of discussion, and avoid getting down into too much detail. But there is no point in avoiding detail at the price of not getting to grips with essentials—and the essential thing now is that we are faced with the irreversible decision, as it is called, for a federal style budget in 1977. In 1961, and even in 1967, people might take comfort from the thought that things were in an evolutionary state and that we might hope then to influence their final form. Now, all that is the dust of yesterday. The common agricultural policy and the financial regulations are final and irreversible and we must take them or leave them.

By 1977, our commitment would be absolute—forced payments on receipts from compulsory levies on our overseas farm imports, on customs receipts, and on a percentage of a value-added tax—all this, not for the benefit of British agriculture but at any rate at present to prop up the Community's agricultural structure, the vast majority of which is a structure which is acknowledged, not only by opponents of entry but generally, to be ossified, uneconomic, anachronistic and wholly inappropriate to the needs of the twentieth century.

We should be making the worst bargain since Esau sold his birthright for a mess of potage. Indeed, we would be making an even worse bargain. He at least received a mess of potage; but we shall be paying for them to take our birthright and our sovereignty. What matters is the position after 1977, at the end of the financial transitional period. We are told on high authority that a week is a long time in politics. But seven years is a short time in the life of a nation, and the long-term position is what negotiations should be about, and if these things are not open to negotiation I doubt whether there is any point in negotiating at all.

If the negotiations are not getting to the heart of the matter, if they are to be concerned exclusively with the short-term, with efforts to temper the transitional wind to the shorn British lamb, then I say that I do not think that they are meaningful. It is as if someone faced with the possibility of a life sentence, instead of devoting his energies to trying to avoid it, concentrated all his effort on trying to improve his conditions while on remand.

I end with two pleas—one to those who have reserved their position to date and the other to the Government. To those who have reserved their position, I make this plea—that they define the terms which they think requisite at the end of the negotiations and ask themselves now whether the negotiations have in fact any material chance of achieving them. If the answer be, "No", then I ask them to accept the position, to eschew the political fence—always an inelegant and precarious position—and take their stand with diginity and firmness on the broad ground of British interest, not in a narrow or insular spirit but with confidence alike in the contribution that Britain can make and in the good will that she will show.

To the Government, my plea is this—that they remember the limitations of the mandate that the nation has been asked to give. I say to them, "Do not be tempted to revise it to an assumed mandate for entry at any price or for entry at a price which Britain should not be asked to pay". If the scope of the negotiations is as narrow as it appears to be, then it is better to be frank and to be frank now, and tell the Six that there are features of the Community which, because of our differing needs, are not for us; and to tell them, in all friendship and harmony, that we must therefore seek other paths of contact and co-operation, since we can no longer fruitfully pursue the negotiations or continue laboriously and painfully to tread the stony path to entry.

7.0 p.m.

Mr. David Ginsburg (Dewsbury)

The right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) has always been lucid and consistent on this subject but he made one point—his major point—which I fail to understand. He said that he was not anti-Common Market. He said, as he has said before, that his objection was to the Rome Treaty and that he wanted it amended. Strictly, of course—and I am recalling the words of Mr. Harold Macmillan when this issue was before us in 1961—the British application is to sign the Rome Treaty, subject, I understand, to the amendments necessary on the accession of a new member.

But I will not lay too much point on that minor aspect. I want to put the broader point that the Rome Treaty is a fact and that it is also a dynamic fact. It will adapt best with Britain, and the right hon. and learned Gentleman might agree that all the member countries, and, for that matter, their Parliaments, will have to be consulted on the major constitutional changes that he has referred to. If he really is not so anti-Common Market as he gives the impression sometimes of being, if he really wants to get into Europe, I remind him that entry into Europe was easier in 1949–50, in the time of Lord Attlee and Ernest Bevin, than it was in 1955–56, when the Rome Treaty was drawn up; it was easier for Britain in 1955–56 than in 1961, when we put our first application in; it was easier for Mr. Macmillan's Government than it was for the Government of my right hon. Friend the Member for Huyton (Mr. Harold Wilson) in 1967—and it was easier for my right hon. Friend than it is now. If one says that one is not anti-Common Market but that some time one must go in, then surely it is logical that, if that is the consideration, we have seriously to consider that there is little to be gained by delaying on this aspect of the problem.

Sir D. Walker-Smith

I do not want there to be misunderstanding. I was not on a point of time. I was saying that I was not anti-Common Market in the sense of having hostility to the Six. I said that no doubt it was a Community suited to their needs but that we could not have an association on the terms of the Rome Treaty. It would require very substantial amendment.

Mr. Ginsburg

I shall not pursue this point further. I thought the right hon. and learned Gentleman referred to the question of amendment of the Rome Treaty, an attitude which suggests that one is not totally opposed to something if one is seeking its amendment. That is an important point, but I will leave it now because I want to turn to the Government and to the Chancellor of the Duchy of Lancaster and plead with them that they should keep up the momentum. It is the time this problem has been around which has led to a lot of public apathy, cynicism and disillusionment. It is right to consider not only the details of the negotiations, on which I will not comment much, but also the issues which face the House and the nation, and which will face us particularly when we come to the point of decision.

It has been suggested in some quarters that we should proceed by way of referendum when the time comes. There are arguments for and against referenda, and I do not want to digress into a long discussion about them. My posture is simple. I think the problem has to be decided through British institutions of representative democracy but I think that we should pause to consider the responsibilities which we all carry as hon. Members and which the Government in particular carry on this supremely important issue.

It seems to me that on this unique issue we as Members of the House are trustees for those who think our way among our constituents and are trustees for those who may disagree with us. But we are also trustees for the future. To me, the issue of joining the Common Market and entering Europe is one of the supreme issues of our time. But strong though my feelings and convictions are, I accept that one cannot accomplish this against what, for want of a better word, I would call the "consensus" of the British people.

Equally, I say to hon. Members on both sides of the House who oppose going into the Common Market, that we must accept that they, too, have a responsibility in this matter—a responsibility to the future as well as to the present—and that they would be wrong without the deepest thought to let go by an opportunity for Britain to enter the Common Market which, I venture to suggest, may never return again.

Ascertaining the opinions and the real interest of Britain is not an easy process. One cannot do it by simple opinion polls—and here I suppose I should declare my interest as director of a market research company. I know from my professional experience that government by poll is the negation of government. If Governments spend their time reading public opinion polls, this becomes a prescription for doing nothing. The process of assessment has to be continuous and weighty and in the final analysis it devolves on hon. Members of this House and nowhere else.

Just as hon. Members have their responsibilities, so have the Government. It has been suggested from time to time that on an issue involving bipartisanship there would be advantage if the Opposition were in on the negotiations. I do not accept that. The responsibility is quite properly that of the Government. However, the Government have the responsibility of acting for the country and the responsibility of carrying the country with them. It is not a platitude to say that they need a united community at home.

We are all party men here and, of course, the present Government, according to their lights, are no more partisan than the last Government. But Ministers and especially the Prime Minister must ask themselves whether what, for want of better words, I described as "tough, controversial domestic policies" are the best thing at a time when all efforts should be concentrated on trying to get the British public to accept the logic and the need of the European case.

There is an additional point that should be made here. Although politics should be a rational exercise, it is true that there is an act of faith involved here. I believe that the logic of history, especially since the Second World War, is for a united Europe and I hope that it would eventually evolve with an elected European Parliament. I believe that an enlarged Community, with British membership, is a start along that road. I fully concede that such a view is an act of faith in the future. It cannot be quantified or proven. But equally, of course, I remind the opponents of British entry that to proclaim the need for continued, unmodified British sovereignty in this modern world also involves an act of faith. No one can prove whether the supporters or the critics are right; only the future will tell.

I believe that one's faith in the future is reinforced by the lessons of history. The unity of Western Europe, especially of France and Germany, is a great development, and it would be a terrible tragedy if at this moment in world history Britain stood back from this evolution.

This brings me to the subject of the terms. It was very lucidly argued by the right hon. Member for Wolverhampton, South-West (Mr. Powell) that the quantification exercise on which the last Government embarked was a vain exercise. As so often, the right hon. Gentleman was both right and wrong at the same time. The big issue is whether Britain should go into a wider Community and it is much more vital than—I was about to say—the price of potatoes, but one is now tempted to say than the price of Cox's applies; however, at the risk of being quoted, I am prepared to stand by that. Equally, I accept that the surrender of British sovereignty, or a substantial modification of British sovereignty, is a much bigger issue than any possible minor improvements in living standards which may result from joining the Community.

To that extent, the quantification exercise undertaken in the last White Paper masks the big issues which are before the House now and which will be before the House in due course, issues which I can only describe as being of political faith and imagination. They relate, and cannot help being related, to our concept of the kind of Europe we wish to see and Britain's rôle in it, and they vastly transcend the White Paper published by the Government of my right hon. Friends.

Yes, whether or not the British entry into the E.E.C. is right for our destiny, the quantification exercise is, in a limited sense, essential, because the British public is bound to view the matter in concrete, day-to-day and bread-and-butter terms. It is inevitable that the elector will want to weigh the short-term costs of joining the Market against the short-term benefits of joining the Market.

It follows that those who support Britain's entry have to recognise a transitional problem. It is partly financial, but there is another aspect. There are important administrative features in the transitional problem, because the institutions of Government will have to be streamlined if we are to go into the Market, and many other institutions will have to face the transition. I mention one small exercise which will be taking place in a few weeks' time to suggest that Ministers have not given much thought to this aspect of the subject. It is the decimalisation exercise on which we are about to embark. If we go into the Market with a transitional period, it will make decimalisation child's play.

The Common Market problem is twofold. First, will France let us in? If the French veto of British entry is removed, how will the British public take it? This aspect breaks down into two parts. In the final analysis, it is a consumer problem. There is also the problem of public attitudes to be overcome. Although this is an age of greater travel, as well as trade with Europe, there is a language barrier. Although that may seem strange, Governments have not measured the effect of that barrier, or the need for seeking various means of reducing it in the long run.

When this subject was debated in 1961, three major problem areas were outlined—British agriculture, E.F.T.A., and the Commonwealth. Basically, only the third, aspects of the Commonwealth relating to British food consumption remains, and that, too, is subsumed in what I would call the consumer issue. The problem of E.F.T.A. has been resolved, because, basically, the E.F.T.A. countries want to go into the Common Market, and there has been substantial progress with British agriculture.

Therefore, the question is whether we can enter the Market without excessive financial burdens and a serious worsening of the consumer food position. If the answer to both questions is "Yes", we should most certainly go in. To do so would bring an atmosphere of buoyancy and hope to British industry which most of our constituents want. Not to go in would be a tragedy, an economic tragedy, of course, but also we should be turning our back on Europe and, if that were the case, Europe would turn its back on us.

7.16 p.m.

Colonel Sir Tufton Beamish (Lewes)

The hon. Member for Dewsbury (Mr. Ginsburg) made a very thoughtful speech and, not for the first time, I found myself in agreement with much of what he said. My remarks will dovetail neatly into what he told us.

May I briefly comment on the speech of my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith)? He enjoyed himself hugely putting up Aunt Sallys and knocking them down and, even more, making false premises about the arguments of those with whom he did not agree about the Common Market and drawing wrong conclusions from them. With great respect to an old friend, I did not find that impressive.

One of his remarks was most unfortunate and surprising in an eminent lawyer. It was also made by the right hon. Member for Battersea, North (Mr. Jay). My right hon. and learned Friend said that in the last Conservative manifesto there was no commitment except to negotiate. I have been reading it, and I found these words: If we can negotiate the right terms, we believe that it would be in the long-term interest of the British people for Britain to join the European Economic Community, and that it would make a major contribution to both the prosperity and the security of our country. The opportunities are immense. Economic growth and a higher standard of living would result from having a larger market. My right hon. and learned Friend cannot have read the manifesto. What he said has been repeated by many others who share his views.

Sir D. Walker-Smith

I have read the manifesto. Would my hon and gallant Friend be good enough to read on? The words are that the commitment is to negotiate, no more and no less. My hon. and gallant Friend referred to my being a lawyer: lawyers draw a distinction between statements of intention and commitments. My hon. and gallant Friend has just read the commitment, which was the word I used, and I was correct in saying that it was the sole commitment.

Sir T. Beamish

As I read it, and as most other people read it, the commitment is to negotiate in order to find what terms we can get and, if we can get terms which are satisfactory, these are the advantages which would flow. That seems perfectly obvious to me but, then, I am not a lawyer.

The right hon. Member for Battersea, North and my right hon. and learned Friend made similar remarks about the lack of economic advantage likely to flow from joining the Community. I wonder what comment those with that view would make on the fact that before they produced their second report the C.B.I. consulted 1,200 member firms about whether they thought that advantage would flow from joining the Community. Most of them were deeply involved in exports and 75 per cent. were strongly in favour of joining the E.E.C., while 10 per cent. were against. Was this because they wanted to export less or because they wanted to export more? The answer is fairly obvious, and if this is not a good piece of evidence for my right hon. Friend it certainly is for me. I should like the anti-marketeers, if I might call them that, to take as a slogan something once said by Groucho Marx: I wouldn't dream of joining any club that would have me as a member. I should like to concentrate on the attempts, as I see them, to cloud the real issues behind a smokescreen of exaggeration and emotionalism, and the attempts to exploit fear of all change. Whether we are in principle in favour of joining the Community, or we do not know, or are inflexibly opposed to joining it on any terms, we all know that one thing bands us together; that the decision to go in or stay out is one of historic importance which will affect the lives of everyone in the country now and future generations, perhaps for all time. That we can agree about.

There was a time in our history when even such crucial decisions as this could be taken by those in power, and imposed, by force if necessary, on a reluctant or even on a rebellious people. Since Cromwell's time, however, Britain's rulers have needed the blessing of a Parliamentary majority. Now, such far-reaching decisions touching on the lives of everyone in the country must also have the backing of public opinion. I agree with what the hon. Member for Dewsbury said about that. The Prime Minister has made it absolutely clear on numerous occasions that that is his view.

Looking back, it was inconceivable that Britain could take part in two world wars unless the British people had the will to fight for their survival. A referendum in 1936 or 1937 would without doubt have shown a massive vote of confidence in the then current policy of appeasement, wishful thinking, isolationism and disarmament, reflecting the escapist mood of the country, still suffering, as we were, from a terrible war. A General Election held on that one issue—which would have been impossible, just as it would be impossible on the issue of the Common Market—would have had the same result, and the disarmers and isolationists would have won quite easily. Fortunately, the truth dawned in time on Parliament that, ill-prepared as we were and costly as it would be, there was no alternative to war.

It is just as inconceivable today that Parliament should ride roughshod over the wishes of the people and accept the provisions of the Treaty of Rome unless public opinion comes out in favour of doing so. The danger is not only a failure in two-way communications between Parliament and the people—although they are not working very well at present—but it is also that the techniques of salesmanship brought to a fine point can be used not only to promote shoddy goods but shoddy ideas—"good wine needs no bush".

I welcome the fact that the nation-wide debate on the Common Market is gaining impetus in the Press, on television and radio, and at meetings all over the country, at rotary clubs, women's institutes, chambers of commerce, Lions clubs and so on. This is splendid. I am sure that the debate will hot up, and I welcome that. The more debate there is the more people will understand the facts and will not be swept off their feet by emotional arguments. Much of the discussion taking place in the country is constructive and useful. But at most of the meetings which I have attended up and down the country I found that for some people the real issues are disguised and distorted by fears deliberately and sometimes mischievously aroused to sway public opinion against the Common Market.

I am not referring to the scurrilous and even libellous propaganda put out by disreputable individuals and organisations which come in all our mail. There is much too much of that. I received some only yesterday from the National Front, and pretty nasty stuff it was. These squalid broad-sheets preach extreme doctrines which very few Members of Parliament indeed have any sympathy with at all, whether they have serious doubts about the Common Market or are in principle in favour of joining it. But a lot of people are climbing on the anti-Market bandwagon for their own motives.

Of course, it is not the fault of those who oppose our entry at any price if they find that they have such disreputable passengers travelling the same way. We can only dismiss the arguments of the Communist Party, which is utterly opposed to our joining, which for obvious reasons employs its special brand of special pleading, in the way they ought to be dismissed. But here again it is reasonable to say to many hon. Members on both sides of the House who are against joining the Common Market that they ought to have a pretty good think about the fact that they are saying exactly the same thing about not joining it as the Communist Party is saying. [HON. MEMBERS: "Shame."] It is perfectly true. There is only one party which put up a substantial number of candidates at the last General Election which is absolutely opposed to joining, and that is the Communist Party. I am not for a wild moment suggesting that any of my hon. Friends are Communists.

Mr. Richard Body (Holland with Boston)

Is the hon. and gallant Gentleman inviting us to retaliate with references to the consistent view of Sir Oswald Moseley ever since the end of the war?

Sir T. Beamish

The answer to that is no. I regard that as a remarkably silly intervention. It just happens to be true that the Communist Party is utterly opposed to Britain joining the Common Market. They have their reasons for that.

Mrs. Renée Short

rose—

Sir T. Beamish

It is worth finding out what those reasons are. That is what I was trying to suggest. The Communists apart, I recognise that a minority of hon. Members of the House have entirely sincere reasons, representing a much larger proportion of opinion in the country which is opposed to joining the Common Market no matter what terms are offered.

It is hard to understand at present why such a very large proportion of public opinion is opposed to joining the Common Market. It was only in July of 1966 that National Opinion Polls took a poll. Their question was: "Do you think Britain should try to enter the Common Market or not?" That was not loaded in any way. It was as straightforward and clear as a question can be. Only 18 per cent. of those consulted said, "No, we should not try to enter"; 62 per cent. said "Yes"; and 18 per cent. did not know. According to the most recent poll I have seen the figures are roughly reversed.

I am not trying to adduce a mass of arguments to add weight to what I want to see happen. It is a fact we have to face. Part of the explanation is that there has been rather a lot of brain-washing called in aid to bolster what I regard as the pretty barren arguments of those who are opposed to joining the Community whatever the price may be. I shall give some typical examples later. I am not suggesting that we should enter the Community on any terms.

My right hon. Friend suggested in his category I, or whatever it was, that a substantial number of hon. Members and a large number of people in the country are in favour of going in no matter what the price, but I have to tell him that I do not know of one single hon. or right hon. Gentleman on this side of the House who falls into that category.—[Interruption.] There may be one, or two or three, but it is a category which is extremely small. Playing a leading part in the campaign to get the Common Market understood, I am not in favour of joining no matter what the price may be. There may be some hon. Members who are, and that is a perfectly respectable position, but it is a very small number.

Obviously many genuine problems will face this country, whether or not we join the Common Market. That is one of the arguments which those who oppose our joining overlook. They say that such and such will happen if we join. However, such and such is almost certain to happen in any event, and it may present an even tougher problem if we do not join. Those who oppose our going in should think about that as well.

There are too many phoney arguments used by those who are against our joining. We are always told about the cost of living. They never talk about the standard of living, I find a perfect example of the distortion of this kind of argument in the article to which my right hon. Friend the Minister of Agriculture referred in his opening speech, though I think that he unconsciously put words in the mouth of Dr. Zinkin which were the words of the commentary alongside what he said.

On 14th January, 1971, the Daily Express quoted Dr. Zinkin, a food expert, as saying that entry to the Common Market would mean a fall in the consumption of butter of about 20 per cent. and a fall in the consumption of cheese of about 15 per cent. He also talked about other foodstuffs. The following day in a leading article, Dr. Zinkin's words became: … a prophesy that butter and cheese would vanish from the British menu … Those are the tactics employed by many people who are opposed to our joining the Common Market, and they are having a profound effect on public opinion.

Mr. Patrick Cormack (Cannock)

That is the view of one newspaper.

Sir T. Beamish

Yes, but it is a very influential and widely read newspaper. It is a very often quoted one.

Mr. Marten

That is not "many people."

Sir T. Beamish

What is not?

Mr. Marten

One newspaper, one writer, one article.

Sir T. Beamish

I think that my point is valid. I could give dozens of quotations from the Beaverbrook Press similar in character where facts have been deliberately distorted, and these distortions are used by people making speeches against the Common Market up and down the country. People have no means of knowing whether what they have read is true. I think that my example is perfectly fair.

Surely it is obvious that it is the standard of living that matters. It is real wages and salaries that matter. It is paid holidays, it is the amount of tax that one pays, it is the amount of social service benefits that one gets which matter. All these add up to the standard of living. I hope that those who are against our entry will understand this elementary argument and talk more about the standard of living in the Community.

Ten years ago, average weekly wages in the Community were £2 below the average weekly wage in the United Kingdom. Today, the average weekly wage in the Community is £5 above ours.

Sir D. Walker-Smith

Well?

Sir T. Beamish

It is a very good state of affairs for the countries in the Community. An extra £7 buys an awful lot of butter.

Several Hon. Members

rose—

Sir T. Beamish

No, I am not giving way any more—

Hon. Members

Give way.

Sir T. Beamish

No.

Mr. Deputy Speaker (Miss Harvie Anderson)

Order. The hon. and gallant Member for Lewes (Sir T. Beamish) has made it plain that he does not intend to give way. Other hon. Members know that, in that case, they must resume their seats.

Sir T. Beamish

Another bogey which is often put up by those opposed to British entry concerns what they call our loss of sovereignty. That has been so well answered in the debate already by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) and others that I need not comment further on it. I will say only that great exaggerations are entering into these arguments, and I hope that opponents of our entering the Common Market will look more carefully at the facts.

They would find it an interesting exercise to compare two other former colonial powers with each other. I refer to Portugal and the Netherlands. Portugal has a very sluggish growth, it has serious inflation and industrial unrest. Com- paratively, its wages are very low, and it is extremely short of foreign investment. Some may think that I am describing the United Kingdom. All these points apply to us as well. In general, Portugal is poor and has a low standard of living.

The Netherlands is another former colonial Power and, like Portugal, it is a small country. Industrial production in 1969–70 was up by 9.5 per cent. Incidentally, ours was up by nothing. The Netherlands has a sharply rising standard of living. Wages are going up at a steady pace. Unemployment is very low. It has had a much greater say in world affairs since becoming a members of the powerful Community—[AN HON. MEMBER: "Denmark is also doing well."]—Denmark is also doing well, I agree, and it has applied for membership because it wants to do better.

Then there is a great deal of scare talk about the monarchy. That is quite ridiculous. It so happens that of the 10 countries, taking the four and the Six together, six of them would have monarchies. It could be argued that republicans had better be warned because there will be six monarchies out of the 10, and they may all finish up with kings and queens. That would be just as good an argument, but it would be a very silly one. I hope that we shall not hear any more about the threat to the British monarchy.

We hear a lot of talk about the faceless bureaucrats in Brussels who run the Community. That is a travesty of the truth, and I waste no further time on it.

Then we are told that members of the Community have lost their diversity, their national characteristics and their cultures and customs. The Germans, one might think, are being forced to eat frogs' legs and the French sauerkraut—

Mr. Marten

That is my hon. and gallant Friend, not us.

Sir T. Beamish

These are ridiculous arguments, but they are arguments which are being used time and time again by those who are opposed to British entry. I wish that they would have a little more sense.

Mr. Marten

Who are they? Name them.

Sir T. Beamish

There is no need to name them. They are using them all the time.

Mr. Marten

Who?

Sir T. Beamish

All of them. By all means let us have vigorous nation-wide debate explaining the genuine arguments for and against joining the Community, but for heaven's sake let it be more constructive.

Mrs. Renée Short

The hon. and gallant Gentleman should tell us.

Sir T. Beamish

As well as being constructive, I hope that we shall be told what is the real alternative. During the first round of negotiations, hon. Members opposed to British entry were all talking about a Commonwealth free trade area. Yet there was not one country in the Commonwealth which was willing to enter a free trade agreement with us. That argument has practically been given up, but we still hear echoes of it.

In the second round of negotiations, there was talk about a North Atlantic free trade association. Yet there was not one country named as a possible member of N.A.F.T.A. which wished to enter such an agreement. That argument has virtually been dropped as well.

Now we have to fall back on E.F.T.A., which increases our home market only to about 95 million people. All hon. Members who are opposed to British entry know that E.F.T.A. was created as a fall-back position so that we could succeed in the next round of negotiations in getting into the Community. They also know that belonging to E.F.T.A. is not a constructive alternative to joining the Community, any more than N.A.F.T.A. and a Commonwealth free trade area were.

It would be disastrous for this country if the terms we are offered are rejected through fear of change, nostalgia for the past, narrow prejudices and a "little England" mentality. I appeal to the anti-marketeers to keep the debate on a serious and rational level and to stop trying to exploit groundless fears.

I conclude on a personal note. I was 28 when first elected to the House of Commons in 1945. It seemed to me then that there were three things of fundamental importance for Britain for which I and other Members of Parliament should constantly strive. First, that this country should make the greatest possible contribution within its resources to the defence of the free world and thus to the defence of democracy. Secondly, that we should do everything in our power to help to maintain peace through close co-operation with other countries that shared our ideals and aims. Thirdly, that we should work for Britain's prosperity, because only a prosperous country can afford a decent standard of living for the elderly, the sick, the needy and all those who are unable to provide for themselves.

I do not think that I have necessarily done particularly well in any of those three aims, but those aims are no less important now than they were then, and it is because of my conviction that joining the Community would help us to achieve all three of these aims that I am enthusiastically in favour of British entry if the price is fair and within our means.

7.41 p.m.

Mr. Alfred Morris (Manchester, Wythenshawe)

It is not my intention to follow in detail the remarkable speech we have just heard. I heard it described by an hon. Member whose views are anything but strong on this issue as a shameful and shameless speech. I shall only say that it was picturesque, perhaps overlong and not a particularly helpful speech from the standpoint from which the hon. and gallant Member was speaking.

The right hon. and learned Member for Hexham (Mr. Rippon) opened the debate with an intriguing speech. I remember him in the last Parliament as a bustling and abrasive representative of the Monday Club. It used to be his habit to throw things across the Table of the House and he was nothing if not a forceful member of the Opposition team. But yesterday he was all reasonableness. He was the soul of discretion and politesse. His tactic is extremely interesting. I take it that his purpose is to try to take the heat out of this great debate, but he is being less than fair to the House in this tactic.

The right hon. and learned Gentleman yesterday referred to protecting the sugar producers in the developing Commonwealth countries. There is a dark rumour that he has tabled a proposal in Brussels to phase out Australia from the Commonwealth Sugar Agreement in the event of our entry to the E.E.C. I am certain that there is no majority in this House for excluding Australia from the Commonwealth Sugar Agreement and even more emphatically certain that there is no majority in this country for doing so. Any such dismantling of the Commonwealth Sugar Agreement would have a disastrous effect on the International Sugar Agreement, which is a short-term agreement but one which all of us must hope will be continued far into the future. For reasons which the right hon. and learned Gentleman should know, if Australia is taken out of the Commonwealth Sugar Agreement, then the International Sugar Agreement will be wrecked and that would do great hurt to some forty developing countries.

I take it that hon. Members on both sides of the House are extremely anxious to help the developing countries. Some people say that New Zealand would be very seriously affected but that Australia would not be nearly so badly affected by our entry to the Common Market. But there are circumstances in which the effect on Queensland could be almost as perilous as on New Zealand. The Commonwealth Sugar Agreement is an instrument which is admired throughout the world. It is a basic necessity for the continuance of the International Sugar Agreement. If that Agreement collapses, it means economic disaster for some of the poorest peoples in the world.

The poorer people of this world are interested in trade as much as they are interested in aid. They want trade on fair terms with the developed countries. The main political challenge of the future is how the rich and developed and the poor and developing countries can live in fruitful partnership. That is why the Commonwealth Sugar Agreement must, if necessary, be a breaking point in these negotiations and why there can be no question of allowing any present member of that Agreement to be phased out. Australia has been a very good friend to this country and has many good friends in this country.

The House will recall that I have also been concerned about the proposal for Anglo-French nuclear sharing. I had a summer Adjournment debate on this sub- ject in July, 1969. My right hon. Friend in a recent speech outside the House criticised very eloquently the whole proposition of an Anglo-French nuclear deterrent, but the right hon. Member for Bexley (Mr. Heath) has said in his Godkin Lectures at Harvard that he would favour an Anglo-French nuclear deterrent. M. Pompidou has said much the same thing: I believe that the future of a common European nuclear defence policy lies in an agreement between France and Britain. I am quite ready to discuss such a programme with the United Kingdom which would also be a European agreement. Any suggestion of an Anglo-French nuclear deterrent would have scant support on this side of the House, and the French had better understand that as well as the right hon. and learned Gentleman and the Prime Minister. This whole matter of British entry to the E.E.C. must be decided by the people of this country who have so far been inadequately consulted. It is our duty to see that they know all the facts so that they can judge all the opinions.

While I appreciate the purpose of the right hon. Gentleman's tactic in trying to make this a quiet debate, just as I admire his politesse, he is being too clever by three-quarters. As a concession to him, I should perhaps say by .75 per cent. But he must not be surprised if it becomes a somewhat angry debate. It will be long, detailed and historic, and it behoves us all to make certain that, whatever else happens, at the outcome of this debate and of these negotiations we do not disown the traditional friends of this country.

7.50 p.m.

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

Technically the question which the House is debating is whether we should now adjourn, and I hope we are rightly informed that it is not the intention of any hon. Member at 10 o'clock to seek to divide the House. There will be a time for voting upon this great matter, but that time has not yet come. The time now is for debate, and the debate of today and yesterday has greatly advanced our consideration of the question. Certainly it has destroyed what has hitherto been a curious and rather alarming paradox about the debate on the Common Market, namely, that everything seemed to turn upon transition and nothing upon transition to what.

The reports, the discussions in the newspapers and much of what was said in this House were about the details of how to get from 1973 to 1977; but where we were going to, to what we were making the transition, had not hitherto been in the centre of debate in this House or outside. It is rather as if there were a proposal for a completely new system of social security, a grand new pension scheme, and all the debate and discussion about it were to turn upon the transition from the present scheme to the new scheme. In fact, if there were such a proposal for a new scheme of social security, we should examine first whether it was in itself good and desirable, our decision would be taken upon that basis, and only then should we devote our attention to the manner in which we were to effect the transition to it.

This paradox has been resolved and disposed of by this two-day debate; and for that we are most of all indebted to two speeches: one was the speech of my right hon. Friend the Chancellor of the Duchy of Lancaster, which some of those who have spoken have treated unfairly; the other was the speech of my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas), which is one of the best I have ever heard him make in the House, and that, referring to my hon. Friend the Member for Chelmsford, is high praise indeed.

My right hon. Friend the Chancellor of the Duchy made quite clear what was the destination. He did not confine himself to the journey, he was perfectly can did about the destination. He said … the Community is now beginning to work gradually towards an economic and monetary union."—[OFFICIAL REPORT, 20th January, 1971; Vol. 809, c. 1091.] So my right hon. Friend has made no secret of the fact that "economic and monetary union" is the destination of the E.E.C. and of those who join it; but he has also made it plain that the union is not purely economic and monetary, that the economic and the political cannot be separated. He quoted with approval the words of the French President when the French President indicated that the object was to move towards a union which, when it has sufficiently become so, both in fact and in the minds of the peoples, will be able to have its own policy, its own independence, its own rôle in the world."—[OFFICIAL REPORT, 20th January, 1971; Vol. 809, c. 1091.] The creation therefore of a political unit—economic, monetary and political unification—is the goal which my right hon. Friend and Her Majesty's Government accept as that of the Community, and participation in it as the object of joining.

My hon. Friend the Member for Chelmsford put this drastically, when he said: We are discussing no less than the union of Europe …"—[OFFICIAL REPORT, 20th January, 1971; Vol. 809, c. 1161.] So, as a result of this debate, we are now in the clear as to the essential matter: economic and political union, however long it may take, whatever may be the course towards it, is the objective.

This makes a contrast with the atmosphere and background against which the former debate on this subject took place in the early years of the last decade. In those years it was possible for many people to say that it was essentially a discussion about wider trade areas, about lowering barriers to trade, about the extension of free trade, while the implications of union, above all of political union, were so remote and theoretical that for practical purposes they could be dismissed. That we cannot now do. We are now in the clear as to what the great debate is about.

Mr. Selwyn Gummer (Lewisham, West)

Although my right hon. Friend said that it was possible for many people to think that, it was not possible for him to think that and he went round the countryside fighting for the cause of closer union in Europe. It is only recently that he has come to his present conclusion. Surely he himself was in the clear those many years ago.

Mr. Powell

I was making an observation that I would be prepared to apply to myself. I remember in those years I invited those to whom I spoke to concentrate on the effects on trade and the increase in the size of a common trading area. Not only in the case of some individuals but in the case of all of us—in the Community, as well as here—the perspective has shifted and sharpened in the intervening years. But I make no argument of this. Whatever a man's past opinions, we are still under an obligation, if we are to be fair to ourselves, to address ourselves to what it is he is arguing in the present, in order to see whether it is sound or not and whehter or not we agree with it.

At least we now know, and there has been substantial agreement on it throughout this debate, as throughout the country, that if we desire to will the means, we must will the end. We now know what the end is that we have to will, in order to justify the means.

We now know the price that must be paid for any economic advantages of membership of the European Economic Community. I myself am far from sure that the balance of advantage of being participants in the European trading area outweighs in total the disadvantages of greater severance in trade from the rest of the world. I am also far from sure that there is any sound instinct behind the argument from dynamism. For I suspect the reasons which cause this contrast in growth and economic experience between our country and those with which the international statisticians so constantly compare us are so profound—that they are so deep in the nature of our society as well as our economy—that I am doubtful whether they would respond, as if by sympathetic magic, to association with the higher growth rate of the countries of the E.E.C. But whichever way the balance be, we now know the price. The price of any economic advantage is economic and political union. That is what we must will in order to secure those economic advantages, such as they be, and if there be such.

The same is true of the political advantages. One understands very well, above all perhaps in the British people, the aspiration to feel members of a great unit which exercises power and influence throughout the world. This is what many promise themselves. I think that is part of the emotional attraction for many of membership of the E.E.C. But we now know what its price is. We cannot have it, we cannot enjoy it, except at the price of economic and political unification. So we now know the price ticket on the articles which are offered to us as the gain from entry into the Community.

This insight, the establishment of this point, has resolved two conundrums with which this debate had far too long been bedevilled: the conundrum of federalism and the conundrum of sovereignty. The argument about federalism is really an irrelevance. If it be the case—and it is asserted and I believe substantially agreed by most hon. Members—that the goal and end is economic and political union, then it is pointless to argue now about whether the particular form of those institutions, whether the particular mode of that union, will be federal or confederal or whatever shape it may take. Certainly, I dismiss, as much as any marketeer, the talk about federation and federalism as a side issue, something barely relevant.

Then on the matter of sovereignty. There is here a confusion of language and of thought. Of course all sovereignty, like all freedom, is limited. Every nation is limited in what it can do—even the greatest—both by circumstance and by what it is, just as every individual is limited both by circumstance and by his own character in what he can achieve. We do not therefore deny that a nation is sovereign or that an individual is free. At several points in this debate it has been pointed out that Britain and other nations require alliances, that alliances are extremely desirable to them if they are to have any hope of maintaining their security, of enjoying peace, of surviving. That is true; but there is nothing new about this. We never doubted, when in past centuries this country contracted alliances for exactly that reason, that Great Britain in those days was sovereign. It is a fallacious use of language to deny that a person is free just because there are certain limits imposed by the nature of things upon the directions in which he can exercise his freedom. A nation may enter into contracts or associations or agreements and thereby voluntarily limit its freedom, as does an individual who signs a contract. But this is totally different from deliberately giving up for all time the freedom in future to take a decision. It is essentially different from the merging of sovereignty or "pooling" of sovereignty—the term which has frequently been used. In a political and economic union of Europe it would be contradictory to speak or think of national sovereignty in the sense in which that exists at present.

One could usefully envisage the change which would be involved by considering what happened with the Scottish nation, when they were a nation in the political sense. They contracted a permanent union with England. From that time onwards Scottish sovereignty was merged indissolubly with the sovereignty of the new political unit which was thereby created. It is in those terms, if we are to be fair to ourselves, that we must envisage the loss of sovereignty as it is called—the effacement of British national sovereignty—as a consequence inherent in the achievement by the E.E.C. of its goal.

Mr. Robert Adley (Bristol, North-East)

I am not a Scot nor is my right hon. Friend, but does he suggest that Scotland has lost irreversibly by the decision it took?

Mr. Powell

I am not considering whether the Scottish people are better off or worse off as a result of the decision taken in 1707. I am pointing out that the Scottish nation as it was before 1707 lost, and was bound to lose its sovereignty by reason of forming a union with England and creating a new political entity.

Mr. Nicholas Scott (Paddington, South)

rose—

Mr. Peter Trew (Dartford)

rose—

Mr. Powell

I am not sure to whom to give way.

Mr. Trew

I am grateful to my right hon. Friend for giving way. Would he not agree that the break-up of the Central African Federation illustrated that political union is not irrevocable and indissoluble if the strains within it become intolerable?

Mr. Powell

Yes, I was coming to that matter, though I cannot imagine that the creation of a political entity which was found to be so intolerable that the member states broke it up is a commendation for what is before the House or is wisely brought into the present debate by those who favour entry into the Community. But my hon. Friend brings me directly to the next point I was going to make.

Mr. George Lawson (Motherwell)

As a Scotsman, may I ask whether it is not true that the coming together of England and Scotland at that time was very much to the advantage of both England and Scotland?

Mr. Powell

That may well be, but it does not follow that because one union was advantageous and practicable, therefore some other union is. I am merely pointing out to the House that the consequence of the development of the E.E.C., the consequence of what it is intended and necessary for us to do if we join it, is the loss of our national sovereignty, and that that is implicit.

The right hon. Member for Manchester, Cheetham (Mr. Harold Lever) said yesterday … it is a fundamental proposition of our constitution that no House of Commons can bind its successors."—[OFFICIAL REPORT, 20th January 1971; Vol. 809, c. 1108.] That is so; but it is an aspect of the continuing national sovereignty of the United Kingdom of which this is the Parliament. My right hon. Friend the Chancellor of the Duchy of Lancaster does not go to Brussels and say, "Gentlemen, I must make it clear to you that it is a fundamental proposition of our constitution, which we do not intend to change, that no House of Commons can bind its successors". He does not think it incumbent upon himself, quite rightly, to say to them, "Because of this fundamental proposition of our constitution, anything in which we agree to participate when we join the E.E.C. can be freely overturned in each subsequent Parliament after each subsequent General Election". Of course not. He recognises—we ought all to recognise—that the nature of the act is intended to lead to an irreversible alienation of our separate sovereignty and the merging of our decisions in the decisions of a greater political whole. Many hon. Members have said, "Yes, but in that greater whole we shall enjoy influence, control"—that is a word which has been used more than once by my right hon. and learned Friend the Chancellor of the Duchy of Lancaster—"and even leadership"—though I find it always grits one's teeth a little when one hears the British, with their rather characteristic insensitivity to other nationalities, talking about becoming the leaders in a new European Economic Community. [Interruption.] I should not have thought there would be any objection to my drawing attention to the fact that all the other peoples of the European Economic Community are as proud in their own way as we are and that there is a deep unrealism in our talking about "leading" the Community, because we, the British, deign to join it. There is no disrespect to our nationhood in that; there is only a recognition of other people's pride and characteristics.

Of what would this control, leadership, influence consist? It would, in terms of the present United Kingdom, be the influence which a minority of constituencies have upon the decisions of the Government and upon the decisions of this House. We, as approximately one-fifth of the enlarged Community, would enjoy—someone mentioned Scotland and I will mention it now—only such leadership, influence, control, as those who come from the 70-odd constituencies of Scotland exercise over the Government and policy of the United Kingdom. Our voice in the common policies, in the common government, in the common institutions, would be that of a section of an electorate.

The fundamental question which we have to put to ourselves is: can we conceive the people of this country, and, if we can, do we wish to do so, forming an element—a small minority element—in the electorate which would sustain the government and the institutions of this new political entity? My right hon. Friends full recognised, in their adoption of the Anglo-Italian Declaration of, I think, two years ago, that the sovereignty of the new political entity—the unitary sovereignty of the economic and political union which is the goal—implies democratic institutions, democratic control, and ultimate responsibility to the majority of the electorate of that unit. It is the will of the majority of that entire population upon which the policy of the economic and political unit would depend.

We have to decide—this is a profound question, which goes to the root of what we, the people of the United Kingdom, are—whether it is possible, and, if it is possible, whether it is desirable, that the United Kingdom should become part of the territory of a new political entity predominantly comprising the western continent of Europe; and whether it is conceivable, and, if conceivable, whether it is desirable, that the people of the United Kingdom should become part of an electorate predominantly comprising the people of the countries of Western Europe. That is the basic question, and it cannot be answered by sarcastic references to "Little England". It cannot be answered by transposing, as my hon. Friend the Member for Chelmsford did, the phrase "Little England" into "tight isolationist island". In order to answer it, we have to envisage profoundly what we as a nation are.

Of course we are a European nation in the sense that we share the common heritage of Europe. We share it in culture, in religion, and in what distinguishes European man from the other branches of the human race. In that we are European. We are as European in that sense as any other of the nations of Europe.

But it is not in that sense that we are posing this question. For we are talking about economic and political union. We are posing a question about political entity, about nationhood—the thing for which men, if necessary, fight and, if necessary, die, and to preserve which men think no sacrifice too great. In respect of our nationhood, then, I say that we are not a part of the continent of Europe. The whole development and nature of our national identity and consciousness has been not merely separate from that of the countries of the Continent of Europe but actually antithetical; and, with the centuries, so far from growing together, our institutions and outlook have rather grown apart from those of our neighbours on the continent. In our history, both recent and earlier, the principal events which have placed their stamp upon our consciousness of who we are, were the very moments in which we have been alone, confronting a Europe which was lost or hostile. That is the picture, that is the folk memory, by which our nation has been formed.

Over whole periods of our history, periods crucial to our development, it would be true to say that Britain has stood with her back towards Europe and her face towards the oceans and the continents of the world. Nor was this just in that brief period which we call the British Empire; for it was, historically speaking, a brief period. In the very nature of our situation—a situation which has formed us through a thousand years into what we are—we are a people rather oceanic than continental, a people profoundly separated from the continent of Europe in what we are nationally and politically.

Almost everyone who has referred to this point in the debate has acknowledged, whatever explanation he has given for it, that people generally in this country are not merely, in the majority, hostile but increasingly hostile to the prospect of Britain joining the European Economic Community.

Sir T. Beamish

Not increasingly.

Mr. Powell

I thought that my hon. and gallant Friend pointed to the fact that the trend had increased. However, the matter is not of great importance for my present purpose. I think no one disputes that at present the preponderant feeling in this country is contrary to the proposition of entering the E.E.C. I believe—every hon. Member must form his own view on this—that the reason is a deep and wise instinct; that the people of this country, knowing—feeling, rather—who and what they are, cannot believe, cannot envisage, cannot bring themselves to wish, that they could be a part—a minority part—of the electorate of a political entity embracing virtually the whole of the continent of Western Europe.

I believe that that is their instinct. For myself, I believe that it is a right instinct. I believe that instinct speaks truth. That is why we in this House, the vocal organ of the British nation, ought to speak in this matter for that instinct. We ought to say to the Continent of Europe and to the E.E.C., "You want us to trade with you, to broaden and widen our intercourse with you? Gladly we do it; we will seize any opportunity to do it. You want us to join with you in alliance, to stand shoulder to shoulder with you against the dangers which threaten us both? We will do it; we do it already, and we will continue to do it. You ask us to merge the destiny of our own country with the destiny if it is to be, of a new political entity of Western Europe? We cannot. We will not." That is what we have to say in the name of the people of Britain.

8.21 p.m.

Mr. Arthur Blenkinsop (South Shields)

Not surprisingly, we have listened to a speech from the right hon. Member for Wolverhampton, South-West (Mr. Powell) which runs coherently with the general argument that he has been preaching inside this House and outside it for a kind of economic society of the past rather than of the present or the future. To my mind his picture toward the end of his speech was of a Boadicean character appealing to the dark emotions of our land, just as I feel that he appeals to it on many occasions. His tough and century-old view about the organisation of economic society is also something of the past and not of today or the future.

I shall leave it to those who are to wind up the debate to deal with more detailed matters because I must be very brief, indeed. I want to deal with only three or four matters, and with some of the anxieties which all of us, whether supporting our entry into the Common Market or rejecting it, must have. Certainly anyone who has experience of our regions, and particularly of our development areas, must have in mind the problem of what kind of effect entry into the Common Market might have, good and bad, upon the problems that we face in areas with great difficulties, which have been with us for some considerable time. I have in mind areas like my own which face the problems of declining industries.

The second issue is that, as a democratic Socialist, I am concerned to see that we should not endanger the opportunities for radical advance here in Britain in particular and more generally in Europe, and I shall come back to this.

The third matter about which I want to be sure is that we are not endangering the contribution that we wish to make towards the wider developing world, the needs of which are infinitely greater than our own and which make such a strong moral, as well as practical call, upon us.

Like many other hon. Members, I have during the last five years had an opportunity of seeing more of how Europe has been developing than I ever had before. I think that all who have had the opportunity of close contact with Western Europe during this recent period have been astonished at the amount of development that has taken place and how misconceived some of our earlier views were. This is certainly true of myself, and I believe it is of many others. Therefore, for myself, in spite of the anxieties which I share with many people, I regard the opportunity of joining the Community as an exciting one, and one which I hope we shall be able to accept.

What are the choices open to us? I find that even in this debate there are many of my hon. Friends, and some hon. Gentlemen on the other side of the Chamber, who still seem to think that one choice available to us is our ability to continue in this country more or less as we are. If there is one thing that is certain it is that that is not open to us. Our own conditions, whether we join or not, are changing, and are changing rapidly. The world is changing around us, and nowhere is this more clear than in our relationship with E.F.T.A.

I found it to some extent rather sad to note something of a campaign which appeared to be running at Question Time the other day showing a new-found interest in E.F.T.A., something which only a few people had shown before. Apparently an attempt was being made to suggest that the development of E.F.T.A. offered a real alternative to joining the Common Market; but, as has been made clear, many of the E.F.T.A. countries are themselves expecting to join the Common Market and, indeed, some of them notably Denmark, are very much more eager to do so than we are. It is extremely likely that, whatever success or failure we may have, Denmark will certainly want to join the E.E.C. Certainly it is true that E.F.T.A. could not be recreated after the negotiations in the form that it is today, and offers none of the possibilities which some hon. Members appear to think it might.

I agree that at one time many of us looked upon the Commonwealth as a practical alternative. This was in the minds of many hon. Members who were in the House shortly after the end of the war. There was great idealism about the possibilities. A great deal of that has gone in recent years, not because of actions in this House, but because of the inevitable actions of the Commonwealth countries themselves.

The older Commonwealth countries in particular have moved away in their trade and their connections. They were bound to do so. They have rightly and inevitably made their new relationships clear with countries near to them. They have made their relationships clear with the economic and political Powers near to them, and it would be absurd to imagine that we could retain the kind of economic links which we might have thought possible immediately after the war. We were misled in that. We have only to look at Canada or Australia to find the changes to which I refer. Many other Commonwealth countries, in Africa, for example, are making their own arrangements with the Common Market, and good luck to them.

Some hon. Members have proposed a closer link with the United States, although that proposal has not been made during this debate as vigorously as it has on earlier occasions. For most of us, the greatest anxiety is lest, short of joining the Common Market, we might become a servile addition to the United States. The pressures from the United States are such that, if we were to attempt some kind of continued independent rôle, this is the greater danger. Many of us sincerely fear the danger which this might bring to industry and to our way of life, which are all too obvious to anyone, industrially or socially. We want a good relationship with the United States, but on something nearer equal terms than if we tried to maintain some pseudo-independent position.

I come back to the real anxieties and problems which I, like everyone else, must try to resolve. On the practical question of what effect joining would have upon regional development, some interesting suggestions have been made that, in the present negotiations, it might be possible to establish at least the framework of a much more effective and powerful regional fund in the Common Market which could be of value to us as to other developing areas within the Common Market.

From what I have seen—I have seen a good deal—of developments in the Common Market, I have been struck with the fact that, although many of them face comparable problems to ourselves of declining older industries and the movement of people into their countries, they have overcome those problems much more successfully than we have, even with the limited support of the Central Fund.

Although Southern Italy has particular problems, which are separate and distinct, but with regard to the industrial parts of the Common Market countries, it has made more progress than we have, in large measure because of the practical steps which they have taken within their own countries. It would add greatly to our success if we could knit ourselves together more closely and make fuller use of the experience of the Common Market in this respect.

I therefore hope that the Minister will say something about the kind of contribution he believes it may be possible to negotiate from within the Common Market for regional support. This will be a crucial matter for many people in this country.

The other question is that of radical measures and whether entry will inhibit or encourage the development of radical thought and opinion such as I, for one, wish to see. The fact that all our social democratic parties and trade unions in the Common Market countries are eager to stay in it and want us to join them affects me considerably. It is right and proper that, as a democratic movement, we should wish to join forces with them to help them to strengthen some of the democratic institutions which, they would agree, are still far from strong enough.

I am therefore eager to join forces with our colleagues in Western Europe, because they have been able to advance a great deal, as experience has shown. I want our movements also to make social change and experiment in management of industry which we discussed a little time ago in this House, and in which some of the most interesting developments have taken place in Common Market countries. I wish to ensure for ourselves an opportunity of sharing in those developments.

Joining the E.E.C. will not inhibit our making a contribution to the developing world. Indeed, our contribution in this sphere has not been what I would have liked it to have been in recent years and the contribution which has been made by the Community countries has, on balance, been greater and not less than ours. This is not a sign of a narrow, inward-looking Community, as I feared it might be. It is obvious that the opportunities from within the Common Market of expanding our contribution to the developing world will be greater than had we remained outside.

These are a few of the reasons why, on balance, we should join the Community and why I am depressed by some of what I would describe as the wholly negative and fearful arguments which have been adduced by some of my hon. Friends. I am an internationalist but not an impossibilist. I believe that the opportunities for advancement lie in our entering the E.E.C. I eagerly want to co-operate as quickly as possible with our colleagues in Europe because we have much to achieve by joining the E.E.C.

I hope that in the long run, and I appreciate that it may be a very long run indeed, there will emerge, and the Community will develop into, a new kind of Europe. That lies a long way ahead. I am not afraid of that development, as some people seem to be. We should work towards it.

8.37 p.m.

Mr. Ralph Howell (Norfolk, North)

I am grateful for this opportunity to make my maiden speech in this important debate.

My constituency of North Norfolk has been represented in this House for the past six years by Mr. Bert Hazell, whose example as an excellent constituency hon. Member I shall do my best to follow. Mr. Hazell, who is President of the National Union of Agricultural Workers, has worked all his life to improve the lot of agricultural workers, and it is my intention to work for a better recognition of the essential work that they do.

North Norfolk is an area of great natural beauty. With its 60 miles of coastline and many more miles of Broads and waterways, we have a great heritage, which we intend to conserve. Many people throughout the country enjoy their holidays with us in our small seaside and Broads resorts and a great many people eventually decide to retire to North Norfolk.

The make-up of my constituency is almost entirely agricultural. Agriculture is the main source of our income. The holiday industry is also important and, as I say, we are an area with a great number of retired people.

The wage level in my constituency is the lowest of practically any area in England. This is because we are agricultural. I support our entry into the E.E.C. because for far too long the rural areas of this country have been starved of money through the cheap food policy which we have been pursuing for more than 100 years. I look forward to a change in that state of affairs.

Let us be clear about what cheap food means. It means that farming people and everyone in the rural areas have wages far lower than they should have in comparison with the rest of the community. In my constituency, the average wage is about £8 a week less than the national average. We should welcome a change so that there can be more equity between town and country.

The argument used by so many people who are opposed to our entry into the Common Market has been based on the expected increase in food prices. I should have thought it obvious that we shall have increasing food prices in this country regardless of whether we enter the Common Market. The days of cheap food production here are fast receding, and we have only recently had reports on what we have done to the soil through starving our land of capital. Moreover, the farm workers themselves will settle the question of cheap food, for they are leaving the land at a frightening rate. To bring workers back to the land so as to maintain a high agricultural output, we shall have to pay proper wages. So there will be a lifting of food prices regardless of whether we enter the Common Market.

We ought to look over the fence to see what is going on in the Common Market instead of burying our heads, as so many hon. Members seem to do, not wanting to know how people are progressing in Europe. The French and the Germans have been paying realistic prices for food, and at the same time they are able to improve their growth factor much better than we can in this country, while producing cheaper articles as well. One has only to set out to buy a deep-freezer or a washing machine, for example, to find that they are beating us right across the board.

If it is right to go into the Common Market, it must be right for the whole community. I am convinced that, if we join the E.E.C., we, too, shall have better growth through better methods and through a more modern approach in industry. The whole community can share in those advantages.

In this situation, one of the most important functions which the Government must take on, alongside their attempt to negotiate entry, is to explain fully to the British people what it is all about. I feel that we have failed miserably over the last seven or eight years since we began talking about it to put over to the country what the advantages of joining are. We have concealed quite a lot or just failed to bother to find out the facts. Only last week, I went to the Library to ask for comparative figures of pensions in this country and in all the Common Market countries, but the Library was unable to provide me with those figures. The latest available figures, I believe, were for August, 1969, and they were not in a suitable form to give any reasonable comparison.

We must be able to tell all sections of the community, and pensioners in particular, that they will not suffer at all by our entry, and that, indeed, by the increased wealth which we shall attain by joining, they will be better off. Before it can be sensible to expect them to support entry, we must be able to tell them that.

We should concentrate on the broader issues rather than talk only of economic advancement. The greatest single thing that has happened in the world since the war has been the fact that France and Germany are now working together instead of snarling at each other and fighting each other as they have done over the past hundred years. Is not that what it is all about? Will not the security of Britain be greatly enhanced if we join? There can be no defence of this country which is not achieved in co-operation with the rest of Europe. That is why I am so sure that it is essential that we should work closely with our neighbours. Joining the Common Market is nothing more than working and co-operating with our neighbours.

I ask the Government to do more to put over the advantages and the real issues. That is important, for much as I support entry I cannot participate in dragging this counry reluctantly and blinkered into taking this tremendous step. I look forward to the time when the Government have explained the advantages to the people clearly and in detail. Then I hope that we shall be able to go forward into Europe, to accept the challenge, and to benefit by it generally.

8.45 p.m.

Dr. John Gilbert (Dudley)

It is my very pleasant duty to congratulate the hon. Member for Norfolk, North (Mr. Ralph Howell) on his maiden speech. Though I do not agree with every point he made, his obvious concern for the less-well-off members of his constituency and his knowledge of the circumstances that affect their daily life will make him a very worthy successor to Mr. Bert Hazell, and we look forward to hearing from him frequently in the future.

The economic arguments for or against our entry into the E.E.C. have been rehearsed enough. For the purpose of tonight's debate I am prepared to accept the economic case, to accept the arguments and the guesswork, the known costs and the charming optimism we often hear about the benefits that are supposed to follow. Let us accept all that. Let us concentrate on the real nature of the Community which we are being asked to join.

It is undeniably not just an economic arrangement. Thousands of directives, by all of which we should be bound, will affect a whole range of facets of our lives. Those we must accept. Others are being discussed which may be in force before we arrive in the Community. Those we shall have to accept as well. They cover everything from the size of lorries, the harmonisation of education, and company law to the way that beer is to be brewed. It is high time the Government came clean with the country and made it quite clear that this is not just an economic question. All sorts of such considerations affecting our daily lives will be burdened upon us as soon as we enter the Community. It is no good the Minister for Trade and Industry making regulations to have smaller lorries on the roads. When we get into the Community we shall have to have bigger lorries whether we like it or not.

There are long-term political considerations to be borne in mind. We have been fairly asked by those in favour of entry to consider the long-term economic aspects. It is therefore only right that we should consider the long-term political considerations. The first thing we notice about the Community is how undemocratic its present institutions are. The proponents of adherance say that that will change, that we shall have a European Parliament and it will be all right. Let us accept that. But if we have a European Parliament there are certain matters to which every hon. Member should pay very serious attention. If there is an effective European Parliament with an effective European Government and a European Cabinet, various things would inexorably flow from those developments. We shall have to have European political parties and European election campaigns. We shall have to have political propaganda organised on a European basis in between General Elections.

Where does this country fit into the European scheme of politics? The first words I have to say on the subject may give some comfort to hon. Members opposite, but I warn them not to crow too soon. The first thing that is quite clear is that the prospects of ever getting a social democratic majority in a European Parliament are virtually nil. We have only to look at the statistics at election after election since the war. At the last set of elections, for both the Six and the Ten, the figures were as follows. The total number that voted in the last elections in the Six was 98,913,000. Those voting for Social Democratic parties amounted to just over 25 million, less than 26 per cent. of the combined electorates. If we include the Ten the figures go up to a total of those exercising a franchise of 133,000,000. Those voting for parties affiliating to the Socialist International numbered 39 million, even allowing for padding the figures in the case of Italy, where there is one Socialist Party of doubtful allegiance to the Socialist International. About 29 per cent. of the votes cast at the last elections throughout the Six and the Ten were for Social Democratic parties as we understand them.

For the Liberal Party—and heaven only knows why the Liberals want to go into Europe—the figures are even more pathetic. They may not have much chance of forming a majority in this country, but their chance of forming one in Europe is negligible.

Let us now turn to the position of the British Conservative Party. One looks at the spectrum of European political parties to try to find its equivalent. It is difficult to find one. Indeed, looking around the world it is difficult to find an equivalent of the British Conservative Party. The world may be all the better for that, but I do not want to dwell on the point.

The fact is that the British Conservative Party will have to make its alliances with the Christian Democratic parties of Europe. As soon as one mentions that fact one is brought head on against one of the most serious differences between political life on the Continent and political life in this country. It underlines immediately the fact that political parties in Europe are organised predominantly, though not exclusively, along lines of religious division. This, mercifully, is not the case here. One does not know what is the religion of most of one's fellow Members of this House, because it is unimportant and irrelevant. Yet one can see in the politics of Europe the violence and the degree of civil strife that is directly traceable to this fundamental difference in the way their political parties are organised.

Let us not assume that parties or people in Europe have a monopoly of religious intolerance or political violence. One has only to look across to Northern Ireland to see that these things can affect us in this country as well. But the fact is that it is only in Ulster that we have in this country political parties organised on a religious basis, and any development that would lead to a change in the fundamental alignment of political parties in this country on the basis of religious divisions could only be deplored by anyone with the health of the social fabric of our country at heart.

We are constantly being asked what are the alternatives to going into Europe. It is put to us that either we go into Europe or we are dominated by the Americans. It sounds terrible. It sounds as though one were sitting in a cell with the option of poisoning or shooting oneself. There might be a third course—that of walking out of an open door. It does not sound dramatic but the results would be much more beneficial. There are many things in terms of increasing functional co-operation with the E.E.C., the extension of negotiations in the Kennedy Round, co-operation through U.N.C.T.A.D., reducing non-tariff barriers to trade, political support for the decisions of the United Nations—all sorts of developments of this sort which are not dramatic but which in the long run provide a real prospect for peace and economic advancement for Britain.

Those of us who oppose this political suggestion of a merger with Europe are not Little Englanders. We resent suggestions that we need lectures in internationalism. We seek closer relations equally with the Communist countries and with the other capitalist countries. Above all we seek closer relations with the developing world whose people do not share the economic bounty that we enjoy.

8.56 p.m.

Mr. Spencer Le Marchant (The High Peak)

I am grateful to you, Mr. Speaker, for having called me. I will be brief. It is impossible not to be controversial in this debate. Anyone who has sat throughout these two days of debate would not be able to make a remark that would not be controversial to someone, and I bear in mind that in the next few days I must perforce away to Banbury and that on the way back to High Peak I have to pass very close to Wolverhampton.

The High Peak—like the constituencies of the other maiden speakers in this debate—is beautiful and entirely different. I was somewhat upset last night when the right hon. Member for Anglesey (Mr. Cledwyn Hughes) discriminated against my sheep. He spoke about Welsh, Scottish and North Pennine sheep. I draw his attention to the fact that in the High Peak the Pennines start and that my sheep are every bit as fine.

The High Peak, lying as it does in a National Park, has had two hon. Members recently who have served it well. Lord Molson was, indeed, in advance of the times in his efforts for preservation, and Mr. Peter Jackson also loved the country and did very well for his constituency and was a good Member.

I shall not speak about the economic side of the issue. I have long believed that the larger market that our entry would bring would be to our benefit. I want to speak rather of the Community —a Community that is well worth while to join, a Community that is working well and a Community that we can improve by our contribution. Having been to Brussels, I saw and heard a different story from the one we usually read and hear so much. We read and hear only of disagreements, not of a Community that is really working effectively. I believe that it is working effectively.

The Six have had the essential objective of the constant improvement of the living and working conditions of their people. The common financing which is levied upon the members has worked well. The European Coal and Steel Community Fund and the European Social Fund have done a great deal for the benefit of their people in rehabilitating workers who have had to change their jobs. Currently, this Fund is running at £25 million a year but the Commission has asked to put it up to £100 million a year. This money is spent not by those who put the money into the kitty but by those who really need it.

The Community has helped the backward regions of the Six. It has dropped its normal rules, in certain measure, in agriculture, transport and the general field of competition in favour of regional development. It has set up an investment bank and now has proposals for a Community regional development fund with loan guarantees and interest rebates. The Community has given an impressive amount of money to areas outside its own regions, and there is now the new idea of the generalised tariff preference for every developing country, something in which we should be proud to participate.

I turn to the mutual help which is part of the Treaty of Rome. The Community has extended this mutual help fund for those in balance of payments difficulties and 2,000 million dollars is proposed for loans of up to one year and 2,000 million dollars for loans of up to five years.

It is not a rigid Community which sticks always to the letter of the law. There is the example of the value-added tax. This was due to come in through out the Community in 1970, but that was not possible because two countries could not introduce it by that time, and so Belgium was given an extra year and Italy an extra two years.

Another example of the way in which the Community helps various members when they need it is that of 1969 when there was devaluation in France and revaluation in Germany. Under the agricultural laws, those countries would have been forced to change their prices immediately, and that would have meant much higher food prices in France and lower prices in Germany, which would have cut the farmers' wages. The Community did not enforce those laws and gave those countries two years in which to make the changes.

This is a Community which is working, a Community which we should be proud to join. I wish my right hon. and learned Friend every success in the necessarily difficult negotiations which must lie ahead.

9.2 p.m.

Mr. Dennis Walters (Westbury)

I have only a few minutes. I should like first to congratulate my hon. Friend the Member for The High Peak (Mr. Le Marchant) on his maiden speech. I am sure that we shall hear many more speeches of similar high quality from him.

My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) made a brilliant and lucid speech. He is a brilliant and lucid debater. But that does not mean that he always reaches the right conclusions. He did not reach the right conclusion this afternoon. When he said that if the Community were to be anything, it must inevitably be a federal union, and so we had to decide whether that was what we wanted to join, he was not right. What we have to decide is whether the Community is worth joining as it stands and whether the Treaty of Rome is worth signing as it stands. It may be that this will lead to the Federal union of Europe. Such an end might be desirable and some hon. Members on both sides may wish to see it happen, but that is not necessarily what will follow and that is not the choice which we are facing at this moment.

Speaking outside the House, the right hon. Member for Bristol, South-East (Mr. Benn) referred to our possible entry as a unique decision calling for a unique mechanism, a referendum. There can always be arguments about how far any political decision is unique. Britain's decision to declare war on Germany in 1939 was very important and had important consequences as my hon. and gallant Friend the Member for Lewis (Sir T. Beamish) rightly said. The momentous decision to give independence to India, which finally ended the era of Empire, was a great decision. Both were taken without a referendum.

A referendum would be most unlikely to produce a true reflection of public opinion on the Common Market, because, having obtained agreement in Brussels, the Government would be almost certainly bound to put their weight behind the "Yes" vote. In that case, the matter would almost certainly be decided by popular attitudes to Government policy as a whole and not to the specific issue of the Common Market. If a vocal and powerful section of the Labour Party were to oppose it, the character of a vote of confidence would be even more pronounced.

The negative reason for joining Europe, and it is no less valid for being negative, is simple—there is no sensible long-term political and economic alternative for Britain. The Commonwealth alternative has always been substantially bogus and it is rather ironic that some of its most ardent proponents are to be found among those who, except in the context of an anti-European alternative, have nothing but adverse things to say about the Commonwealth. N.A.F.T.A. is a non-starter for one very good reason, that not a single serious American politician wants it, and should this not be so—which it is—then it would be undesirable because it would lead to a total economic dependence on the United States, which I believe no Member of the House would wish to see and which nobody in this country would wish to see.

The positive reasons why Britain should join are, as they always have been, overwhelmingly political. First, Europe needs Britain. That has always been the case, though it may have been a little obscured of late. The recent major initiative of the West German Government toward Russia and Eastern Europe, the Ostpolitik, has usefully emphasised this need. It is both wise and understandable that the Government of Herr Brandt should wish to improve relations with the Soviet Union. But inevitably there are inherent risks in such a policy, and British membership of the European Community would minimise such risks and would provide a crucial guarantee of stability. Britain needs Europe. I cannot go into the economic reasons now. But British participation is necessary politically so that this country can make its most effective contribution at this moment in our history.

Inevitably at present, the United States and the Soviet Union dominate world affairs. My right hon. Friend the Member for Streatham (Mr. Sandys) referred to this yesterday. Eventually they will be joined by China. Alone, Britain can do little to influence and moderate world events. Other countries in Europe can do even less.

The right hon. Member for Stepney (Mr. Shore) was less than fair about the proposals for co-ordinating foreign policies of member countries. An enlarged Community would transform the situation. I only wish that there were a European policy in the Middle East at present. A coherent European foreign policy could arise and, eventually, a common defence policy. At that stage, Western Europe would be able to influence world events again, independently of the super-Powers, and Britain would be able to contribute its unique experience and influence. Only through a united Europe can we perform this vital task.

I hope that the European negotiations which are being conducted so skilfully by my right hon. Friend the Chancellor of the Duchy of Lancaster will succeed, that we shall have the chance to join the Community and that we shall grasp it.

9.8 p.m.

Mr. Denis Healey (Leeds, East)

This has been an interesting and often exciting, debate which has certainly not been characterised by a rigid adherence to party solidarity. Most of the views held at present by different groups of British people have been well expressed by speakers from both sides of the House in the last two days, not only by their most prominent representatives in the House but also by some very able and eloquent maiden speakers. I congratulate, particularly, the hon. Member for Norfolk, North (Mr. Ralph Howell) and the hon. Member for The High Peak (Mr. Le Marchant) on their contributions to the debate.

There has been only one necessary voice missing, that of the Chancellor. I must add my protest to the many others that, on an issue in which the cost of entry in terms of budgetary resources, foreign exchange, the rôle of sterling as a reserve currency and the possibility of a currency union are among the central problems at stake, the Minister responsible for those problems has chosen neither to speak nor to listen to our debate. I hope that the Chancellor of the Duchy will comment on some of the points which have been made, especially those by my right hon. Friends about the relevance of sterling's rôle as a reserve currency, to the negotiations in which he is engaged.

It has been pointed out by several hon. Members in the past two days that the views of many hon. Members of Parliament have changed, in both directions, in the 12 years since we first began debating Britain's relationship to the Common Market. It is odd to reflect that the present Deputy Prime Minister, when Paymaster-General, expressed the view in 1958 that neither Britain nor any other European country outside the Treaty of Rome could for political or economic reasons accept the concept of a Customs Union. It is interesting to note that in the last two days no hon. Member has raised objections to the concept of a Customs Union. It is a bogey which has no terrors for us now, and even those who oppose the idea of joining the Common Market have not raised the difficulties attendant on the creation of a Customs Union as a major problem which is facing the country.

For many years both the major parties and the Liberal Party have supported in principle entry into the Common Market. They have supported the negotiations for entry, and they have hoped that those negotiations would succeed. But all the parties also have believed that a final decision must await the terms which are reached in the negotiations. All the parties have accepted that the terms might be unacceptable, that the cost of entry might prove to be too high. This is a reasonable attitude because, if the costs were too high, they could inflict economic damage on Britain which would ruin all hope of long-term economic benefits either for Britain or for the Common Market as a result of our adherence. Similarly, if the terms were unacceptable and the cost too high, undoubtedly there would be a revulsion among the British people against the idea of entry which would rob both Britain and the Community as a whole of the political benefits that we now hope to obtain.

We now know the major issues in the negotiations on which the acceptability or not of the final agreement will hang. First there are the agreements which are reached on Commonwealth sugar and on the treatment of New Zealand's exports. Above all, there is the nature of the agreement on the size and phasing of the net cost falling on the United Kingdom as a result mainly of the common agricultural policy and the budgetary provisions on which the Six have recently agreed.

Those who favour entry, as I do, are often asked to say what price would be acceptable. We have been asked it in this debate. We are unable to answer, for two obvious reasons. In the first place, many variables will be involved in the final package and, until we see how they relate one to another, we shall not be able to form a fair estimate of the real cost falling on Britain as a result of the agreement as a whole. We might gain in some areas what we lose in others.

There is another reason which is too rarely recognised. It is that the cost which Britain will be able to afford when the negotiations are reaching their completion will depend critically on Britain's economic strength and prospects at that time. If we are weak, we shall require a lower cost and shall find it more difficult to persuade the Six to give it to us. If we are strong, we shall be able to accept a higher cost for entry.

The Common Market is often described as a cold shower which will bring our industries into a more healthy state of mind. But a cold shower which is bracing to a healthy man can be fatal to a man suffering from diabetes or tuberculosis. For that reason the development of the British economy in the next 12 months is likely to be critically important, not only to the acceptability of the terms but to the question whether agreement is reached at all during this year on the terms of entry.

I believe that the proposals made by the Chancellor of the Duchy as to the phasing, the size and the net cost falling on to Britain as a result of the common budget make sense for Britain now and, as Sir Con O'Neill explained clearly in his presentation of these proposals to the Community, the Community should find them wholly reasonable. But if the economy deteriorated and if its prospects looked much worse, then the question whether we should accept these terms would be in doubt.

None of us who favour entry believes that all our troubles will be over once we join the Common Market. None of us believes that the Common Market in its present form is perfect. There are many aspects of the Common Market which all of us would wish to improve, not least the common agricultural policy. I add my voice to those who suggested that it is surprising and in the long run unacceptable that the proceeds in the common budget should be devoted exclusively to the agricultural development of other peoples. There is a strong case for extending the scope of the common budget to cover, for example, the development of regionally depressed areas throughout the Community. Again, if the Community were prepared to accept such an extension of the budget, the net cost falling on Britain might well be less and the form of the contribution which we should accept might well be different. Many leading members of the Governments and Oppositions among the Six would agree with us about those issues.

Much, and I think probably most, of the last two days' debate has not been concerned with the terms of entry but, as the right hon. Member for Wolverhampton, South-West (Mr. Powell) pointed out, with the principle whether we should want to join this type of Community on any terms at all. The main problem which has worried the opponents of entry on both sides of the House has been its effect on the identity of Britain, however this is expressed—in terms of worry about our freedom of action, worry about our sovereignty, worry about the Community developing supranational powers or moving into a federation or into a political, economic and financial union.

This worry was most eloquently expressed by the right hon. Member for Wolverhampton, South West. Once again, he erected a glittering edifice of argument by systematic logical extrapolation from a phrase in a speech. Having dazzled us with this display of pure reason, he then appealed to the dark instincts of primeval blood and earth. This is a style of his—beating the ideological tom-tom—with which we are all familiar, and it never fails to assemble the tribes.

May I put to the right hon. Gentleman that the whole style of his argument—the way he presented it and the instincts to which he appealed—was peculiarly Continental rather than British in tone. He would find them in the works of Nietzsche or Charles Maurras. He will not find many precedents in Britain, except perhaps in Mr. Houston Stewart Chamberlain, who is not very much read these days. I cannot help feeling that in the perspective of history his approach will seem no more relevant to the politics of his age, and no less relevant, than theirs.

My real complaint about the right hon. Gentleman—and about many other speakers on both sides who reflected the same worries about the Common Market—is that he is hypnotised by words and ignores the facts. There was a strong case for raising these worries about sovereignty when the Treaty of Rome was first drafted, because then all we had to go on were the words of the Treaty, which included all these terrible commitments to create a union of one sort and another. But now we have 12 years of experience of the Common Market to go on. We know how it works. We know how it develops and how it takes decisions, and the reality is very different from the words which frighten so many hon. Members.

The European Economic Community at present is a customs union for industrial goods and a managed market for agricultural products. It has very little supranational about it, and what it has about it that is supranational in form is always ignored by its members with impunity when their major national interests are at stake. As my right hon. Friend pointed out earlier today, neither Germany nor France had the right to change their parities two years ago without first negotiating with their fellow signatories of the common agricultural policy about the impact of their changes in parity on that, but they did not do so, and they did not do so with impunity.

What matters in the Common Market at present are the views of national Governments. It is true that there is a valuable dialogue between national Governments and an international or supranational Commission. Whereas each national Government has a veto in this dialogue, the Commission has none, and the Governments always have the last word.

What do the Governments of the most important countries in the Common Market say about the bogeys of federation and supranationalism? The German Chancellor, Chancellor Brandt, told us in London last year that supranationalism is something for the next generation to decide, or the generation after that. That is the view of the German Government. M. Pompidou, M. Schumann and M. Debré have made the same points for the French Government in many speeches on many occasions.

Personally, I do not think supra-nationalism is a bad thing. I would like to see the Community developing towards a different type of relationship from that which exists at present. But the one thing that is certain is that there will be no supra-nationalism, no federation, no loss of identity, unless all the member Governments agree. This problem has yet to be decided, and we shall play our part in deciding it when we are in. When I say "we", I mean not just the British Government but the British House of Commons. It is inconceivable that the British Government, or any Government which is now a member of the Community, would seek to reach a decision with the other members of the Community on the surrender of national rights without first consulting its Parliament and making certain its Parliament agreed.

The right hon. Member for Wolverhampton, South-East made one point with which I very much agreed. It was that over the centuries Britain as an island and the countries of Continental Europe have drifted apart from one another in many respects—in respect of interests, culture and temperament. One of the differences is in respect of our legal traditions. I believe that most of the things which worry Members of this House arise from a historic difference in our approach to juridical commitment arising out of the different ways in which our legal traditions have developed over the centuries. We regard a juridical commitment as a minimum that we guarantee to achieve; many of the other countries regard it as a maximum at which they aim. They regard it as a guiding star rather than as a route-map.

The truth of what I have said can be seen if one compares the behaviour of the member Governments of the Community since 1958, and one another's reaction to that behaviour, with the actual words of the Treaty. The European Economic Community is not now a federation or a supra-national organisation. It will move only slowly in that direction, if at all, and will move only with the consent of its member Governments and Parliaments.

There is another misunderstanding which has dogged many of the speeches in this debate. It relates to the degree of national sovereignty we have now. Britain is not a suburb of Wolverhampton spinning through outer space and separated by a million light years from all other human kind. Britain is part of an international community which has shrunk enormously in our lifetime, and will shrink even further in the next 10, 20 or 30 years. We have contacts with others, commitments to others, for the sake of our diplomacy, our economic prosperity and our defence. All those commitments limit our freedom to that extent.

For two generations at least it has been true to say, and has often been said in this House, that when America sneezes economically we catch cold. Yet we have no control over America's state of health. We depend on the Arab world, on Libya, and on Nigeria for our oil. As a result it is possible that within the next few weeks thousands of Englishmen, Welshmen, Irishmen and Scotsmen will be out of work because 2s. a gallon is added to the price of oil.

But nearly half of our trade is now with Europe. The percentage of our trade with Europe is certain to grow steadily as the years pass. We have a chance to influence the climate that determines that part of our trade if we join the Community.

Britain has not suffered much by exclusion from the Community in its first 12 years of existence, for three reasons. First, because the Community has been concerned mainly with the reduction of tariffs and has had a very low external tariff against the outside world. Secondly, because during that 12 years world trade has been expanding fairly regularly. Thirdly, and very important, because for almost the whole of that period we have said we wanted to join the Common Market and therefore the Six have taken special care for our own interests. But the next 12 years could be very different.

In the first place the Six want to deepen their community and tackle other barriers to trade than tariffs. They want to move towards closer unity in economic and financial matters. In the second place—a fact that has not been mentioned once in the House in the last few days—there is a real risk that world trade will shrink in the next ten years because the enormous surplus that is being built up by Japan is not now being adequately accommodated in imports by the developed world. Last year we saw the attempts in the United States to produce a barrier between United States and trade with the outside world because of Japan. I hope that it will be defeated this year. But there is no doubt that the pressure of Japanese exports on the developed world creates a real risk of the barriers going up round all the major trading communities.

If in such a situation we are in none of the major world trading communities, the prospects for us could be very serious indeed. In this situation we shall lose all influence with the Common Market as it faces these new problems if we once say that we do not want to join—as indeed the United States has practically lost all its influence. This is why American ambassadors complain every week in Brussels about various aspects of the Common Market on agriculture, on association with the applicant territories, and so on.

There is one further new possible factor in the political sphere. I do not say that any of these things are certain; it is possible that none may happen, but I think that they are probable. There is another possible and, indeed, probable factor in the political sphere. The United States may reduce its commitments in Europe during the coming years and may simultaneously seek bilateral agreements with the Soviet Union A Europe of which we are not a member could move in very dangerous directions if we are not involved in the way in which it responds to these new political factors.

This in my opinion, is where the question raised by my hon. Friend the Member for Penistone (Mr. John Mendelson) and by another of my hon. Friends this afternoon about the nuclear future of Europe is so important. I have not time to go into that question more deeply, but one of the many illusions of this Government—which was exploded within a few months of their taking office—was that they could buy their way into the Common Market by offering a nuclear alliance with France. Despite M. Pompidou's words, it is crystal-clear that France has no intention of pooling or integrating its nuclear forces with anyone. The last thing that France will ever integrate is its nuclear forces—not with America not with Britain, not with anybody in the world so long as her leaders are men such as they are today.

I believe that after Suez in 1956, the biggest mistake that Britain made in her foreign policy since the Second World War, and in which both parties share complicity, was not going to the Messina Conference out of which the Common Market grew. If we had gone there, I think that we could have helped to avoid some of the difficulties which we now face.

As I said, we have not so far suffered very much from exclusion, and we had no real chance to negotiate entry so long as General de Gaulle was alive. I thought that it was a great mistake to apply for entry as long as General de Gaulle was alive, because it was certain that he would veto our application. But we now have a second chance, and we must take it. I believe that all the members of the Common Market want us to take this chance, and I hope that this includes the French Government as well.

As has been pointed out, this debate has created some very unusual alliances. This is inevitable, because almost every possible view about the Common Market is held in the two main parties on both sides of the House. I share Dr. Johnson's reluctance to dispute the precedence between one Conservative Member and another. But, if I had to choose, on the whole I should much prefer to be aligned with the right hon. and learned member for Hexham (Mr. Rippon) than with the right hon. Member for Wolverhampton, South-West.

But what is far more important than alliances in this House is the attitude of our friends outside this country Every party—Conservative, Liberal, Socialist—inside the Common Market, after 12 years' experience, thinks that it was right to join and that it is right to go on. Some parties believe that it is too good to let us in. But all the Socialist parties and trade unions inside the Common Market want faster, not slower, progress towards unity, and they al want Britain and the other applicants in the Common Market. Above all, this is true of the German Government under Chancellor Brandt, because, ever since he got into power, he has made it clear that his Ostpolitik would work only if the Common Market were enlarged.

I ask my right hon. and hon. Friends, who have made eloquent and impressive speeches against entry, to consider the impact of our exclusion on our best friends in Europe as well as on our future in the world.

9.34 p.m.

The Chancellor of the Duchy of Lancaster (Mr. Geoffrey Rippon)

We have had a wide-ranging debate with many effective and occasionally, and I think rightly so, passionate speeches but, if I may say so, perhaps no speech has done more to draw all the threads together than that of the right hon. Member for Leeds, East (Mr. Healey). I was surprised at only one item in his speech. We do not think that he should admit any more mistakes that he made while in office.

We have had five maiden speeches of a high quality from my hon. Friends the Members for Bodmin (Mr. Hicks), Clapham (Mr. William Shelton), Luton (Mr. Simeons), Norfolk, North (Mr. Ralph Howell) and The High Peak (Mr. Le Marchant). They can all look back on their first speeches—I hope that they will be the first of many—with legitimate pride not only in the fact that they have made helpful and constructive contributions, but that they have spoken on a matter of historic importance to us all. I hope that I may have some opportunity as we go along to refer to some of the points they made.

As the right hon. Gentleman said, and as many speakers in this debate have acknowledged, successive Governments have deployed this case for full British participation in the drive for European unity, and that means accession to the European Community, provided we can find fair terms. There are, of course, many right hon. and hon. Members who have shown that their fears outweigh their hopes, but no change, not even change for the better, can be accomplished without difficulty. That is why we attach so much importance to the transitional arrangements, and why they loom so large in the negotiations, but it is right in a debate of this kind that we should look at the wider horizon.

Looking further ahead we must recognise, as my hon. Friend the Member for Galloway (Mr. Brewis) said, that the world is not going to stay the same, whether we are in the Community or outside it. It really is no good living, as I think some right hon. and hon. Members would like to do, in blinkers in a world of change. If, as a nation, we are not to drop out of the main stream of the world's life, we must be prepared to change and adapt our methods. All through history—and my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) is a great historian—this has been one of the main sources of our strength. I think this debate has shown that the House as a whole recognises that in the medium term and in the long term the economic and political case for full British participation in the Community of Europe is very strong, provided we can get terms which allow us to take full advantage of the opportunities offered.

My right hon. Friend the Member for Streatham (Mr. Sandys), in his characteristically powerful speech, showed that these opportunities are both economic and political. They are both, after all, sides of the same coin. If the economic arguments are balanced in some Members' view in the short term, and I do not believe they are in the long term, the political advantages are overwhelming, and I do not use the word "political" in just the sense of prestige. I mean the ability to protect British defence and trade interests, and to maintain peace and stability in a world of change.

On defence, we are already deeply committed with the Six in the framework of the Alliance. We are already involved in major collaborative efforts such as the M.R.C.A., with which the right hon. Member for Leeds, East was so much concerned, and we all have much to gain by intensifying this process. There is nothing in the Treaty about defence, and it is not a subject of negotiation, but, as my right hon. Friend the Chancellor of the Exchequer said in his opening speech at Luxembourg on 30th June, it is right that Europe should assume a greater share of responsibility for its own defence. My hon. Friends the Members for Clapham (Mr. Shelton), and Westbury (Mr. Walters) developed this point, and I think that they are right.

It is against that background, and against the prospect of a greater degree of unity in Europe and a greater degree of influence for Europe in the world, that we must look at possible ways in which the Alliance can be strengthened. I do not go all the way with what the right hon. Member for Leeds, East said about nuclear weapons. This matter was referred to also by the hon. Members for Penistone (Mr. John Mendelson) and Manchester, Wythenshawe (Mr. Alfred Morris). We did not, as a Government, seek to try to buy our way into the Community by offering the French an Anglo-French nuclear alliance. There is no truth in that. Britain possesses nuclear weapons, and so does France. We hope that both will soon be members of the same community, and it would be senseless to rule out the posibility of further collaboration in the future in these spheres, but it is not a subject of the negotiations.

As I tried to say in opening, it is the Government's view, and I think that it was the view of the majority of hon. Members who spoke, that we should grow towards political and economic union. I was grateful for the speech of the right hon. Member for Wolverhampton, South-West. At least he is satisfied now that we are in the clear about the great debate—but we should have been in the clear from the outset, because large numbers of us, including the right hon. Gentleman, voted in support of the statement which the Leader of the Opposition made on 2nd May, 1967; he also voted against the Amendment which suggested that there might be, among other things, loss of sovereignty.

Of course, consistency is not a virtue, but at least my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) and my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker Smith) have been consistent throughout, while the right hon. Gentleman the Member for Wolverhampton, South-West has changed his mind. He may be right. Personally, I think that the right hon. Gentleman was correct in the article on the defence of Europe which he contributed to the R.U.S.I. Journal of February, 1968.

Talking of the need to bring together Europe's defence policy, he said: It would be idle to pretend that this presence"— That is, Britain's military presence on the Continent, which he supported— is not closely relevant to Britain's aspiration to join in the economic co-operation of Western Europe, which has found expression in our recent application to join the European Economic Community. The will to permanent economic co-operation between the Western nations and their impulse to combine in the fields of space, atomic energy and heavy industry, not to mention arms production, have inevitable overtones of defence. Political unity is inseparable from defence unity, and to move towards the one is to move towards the other. And that is what I believe.

I cannot, perhaps, describe my right hon. Friend's speech with so much eloquence as did the right hon. Member for Leeds, East, but I think that his whole philosophy is summed up in one phrase that he used: "I believe instinct speaks truth." That is a rather primitive instinct. I believe that it was a wise Frenchman who said that men of reason have endured and men of passion have lived. I think that the British people want to do both.

At any rate, let there be no doubt about what is at stake. Western Europe will not regain her influence or even retain her industrial independence unless we work together. That applies not only to foreign and defence policy but also to economic, monetary and financial questions. The right hon. Members for Manchester, Cheetham (Mr. Harold Lever), Birmingham, Stechford (Mr. Roy Jenkins) and Stepney (Mr. Shore) have all spoken about these issues, although their previous Cabinet solidarity has frayed a little, at least at the Stepney edges. That right hon. Gentleman has not admitted his mistake in voting for the statement of 2nd May, 1967.

As the right hon. Members for Cheetham and Stechford acknowledged, monetary questions and the rôle of sterling are not part of the negotiations. They are what the right hon. Gentleman called the X factor, and they are certainly a matter of concern to us and to the Members of the Community.

Some right hon. Gentlemen have been less than fair to my colleague the Chancellor of the Exchequer. It was envisaged that I should wind up this debate, and no one, so far as I know, raised any objection to that. When the Chancellor of the Exchequer had my job, he spoke on these matters, in so far as they bore upon the negotiations, and I am now doing the same. We are, of course, in close consultation, and what I have to say, I think that he will agree.

At the outset of the negotiations of June last year, the Belgian Foreign Minister, M. Harmel, said that the Community would wish to have discussions with us in due course on the economic, monetary and financial problems related to accession to the Community. It was made plain that these matters were not to be the subject of negotiation but only of discussion, and we have expressed the view, with which the Six have been in agreement, that the value of such discussions will be greatly enhanced if they can be conducted in an atmosphere of mutual candour, and this means that they should be confidential.

In broad terms, it is already well-known that we shall be exchanging views upon the future of sterling in this context, but, as my hon. Friend the Member for Cheltenham (Mr. Dodds-Parker) said last night—he speaks with some authority on these matters—there are difficulties, which I am sure the House will understand, in open negotiations, in which every thought of the parties is immediately publicised.

The right hon. Member for Manchester, Cheetham, the right hon. Member for Stechford and others dwelt on the so-called problem of sterling. Apart from whether or not it is directly involved in the negotiations, I do not believe that there is the sort of problem of which they have spoken, though there is certainly some danger of sterling being seen out of its true perspective.

Sterling's international rôle has been declining significantly over the past decade or more in the way that has been described by the right hon. Member for Stechford. To give one example between 1955 and 1970 the proportion of sterling in world official reserves declined by one half, from 14 per cent. to 7 per cent. The trading use of sterling has been declining for some time and is still declining. In spite of this, because of the adaptability of the City of London our invisible earnings have nevertheless risen rapidly.

It is clear to most observers that the reserve rôle of sterling is no longer of advantage to Britain. Indeed, the reverse is more easily argued, and these trends in the trading and reserve uses of sterling will probably continue. In the long term, the Government do not propose to stand in the way of these developments.

I remind those who speak about the need to shed the reserve rôle of sterling that this would require more than a unilateral decision on the part of this country. I cannot emphasise too strongly, as the House will appreciate, that other interests, notably those of sterling holders, as well as the need for adequate international liquidity, are involved and would have to be taken fully into account. The right hon. Gentleman made this perfectly clear when he pointed out that there can be no question of our repudiating our responsibilities.

Mr. Arthur Latham (Paddington, North)

rose—

Mr. Rippon

I have a lot still to say.

Mr. Latham

I have been listening with some interest for some elaboration of a much earlier remark which the right hon. and learned Gentleman made. As this elaboration has not yet come, and considering the time, I thought that I would ask him this question. [HON. MEMBERS: "Sit down."] The right hon. and learned Gentleman earlier spoke of economic arguments and then of overwhelming political considerations. He went on to define what he meant by "political". He has defined certain matters. As I am extremely worried because what he said and what my right hon. Friend said seemed to paint such a gloomy picture if we were to stay out of the Common Market, I should like him to define what he meant by "overwhelming" because—[Interruption.]—we fear that we may go in regardless of the terms.

Mr. Rippon

I am sorry that I allowed the hon. Gentleman to make that intervention, for the reason which the House will readily appreciate. If he had wanted to make a speech he should have been in his place during the debate.

I come to some of the other points that have been raised by hon. Members. There was the specific question about the future of the sterling agreements and the related £2,000 million Basle facility of September, 1968. These are also matters which must be settled between Britain and the other countries which are parties to the arrangements. We are faced in the coming months with a series of related negotiations and discussions on these matters, which have, of course, received thorough and careful preparation. The House will not expect me to develop this matter further at this point.

I come to the points that were made by a number of hon. Members about the Werner Report on European Monetary Union. This development has been generally recognised as a movement which recognises the reality of our contemporary world. Today the economies of our countries, of our national States, are increasingly and inevitably interdependent, and changes in one country—whether in the level of employment, the rate of economic growth or the external account—have a direct impact on the situation in other countries.

I have no reason to dissent from the general observations that were made by the right hon. Member for Stechford or from the comments he made on the two practical points of narrower exchange rate margins between members of the Community, as contrasted with the use of wider margins in the general international system. There is no necessary incompatibility in that argument. I suggest that hon. Members read the European Review, winter edition, 1970–71, where the right hon. Gentleman's views are fully set out. Careful study will be repaid.

As regards the Werner Report, no rigid position has been adopted, as the hon. Member for Edmonton (Mr. Albu) pointed out. If we become members of the Community, we can influence the decisions. As for the first stage, no problem whatever arises. The second stage will not arise until after the negotiations are concluded. The third stage is pretty far in the future. I think that the anxieties of the right hon. Member for Stepney and other hon. Members are ill founded, and much of the talk of parities, as his right hon. Friend said, is thoroughly theoretical. Moreover, as his right hon. Friend pointed out, at a time when the right hon. Gentleman was in the Government, things were happening in Europe which showed that the existence of the common agricultural policy did not prevent quite considerable changes in the monetary field.

Mr. Shore

The right hon. and learned Gentleman is underplaying this point. I can well understand his motives for underplaying the significance of the Werner Report. It is not enough to talk about the first phase, which, I understand, is a two-year phase, in that way. What matters is that the total strategy for the decade is rather like the earlier transitional stage of the Treaty of Rome itself. We saw what happened in the period 1958–70, and we shall have the period 1970–80 with a full currency and non-convertibility.

Mr. Rippon

It is not like that. At a later stage, it would require amendments to the Treaty of Rome itself. What the Werner Report suggested was a progressive co-ordination of policies and the emergence of regional policies at the Community level of the sort to which the hon. Member for South Shields (Mr. Blenkinsop) referred earlier. That would gradually diminish the need for changes in exchange rates within the Community, but such changes will be ruled out only at the final stage of monetary union. Certainly, the right hon. Gentlemen the Members for Cheetham and for Stechford did not fear the changes which might take place in many years to come, and nor do Her Majesty's Government.

Looking to the future, we may agree with the right hon. Member for Cardiff, South-East (Mr. Callaghan), who, when he was Chancellor of the Exchequer, was reported in The Times as saying on 26th September, 1967: Such policies would eventually allow the creation of a common European currency in which all our currencies, including sterling, would be subsumed. All the speeches which successive Chancellors of the Exchequer and people in Europe have been making on this subject have been based on moving towards that final objective by realistic stages.

I turn briefly to one or two of the specific questions arising out of the negotiations. Most anxieties, perhaps, have been expressed about our contribution to the Community budget, and many doubts have been raised on that score by a number of hon. Members, including my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell). The right hon. Member for Battersea, North (Mr. Jay), referred to the figure in the White Paper for February 1970 of £670 million a year as the eventual cost. But, as he knows, the White Paper pointed out that that was the theoretical upper limit. Moreover, it was a gross figure, not net. The figures I used in the House on 16th December expressed the net contribution.

I think that the right hon. Member for Leeds, North-East is right when he says that we cannot go into great detail on these figures. Everything depends on the outcome of the negotiations. There will certainly come a point when the Government will have to come back and report to the House, as a result of the discussions about the key, about the size and shape of the budget and other factors, exactly what is involved.

All I say is that, as regards the Community budget, there are two objectives which we must achieve in the negotiations. First, we must ensure that there is adequate time for the dynamic effects to develop before the undeniable impact effects build up. In other words, we must ensure that we secure satisfactory arrangements for the transitional period in which the timing of our gradual integration into the Community will offer the prospect of a balance of mutual advantages to us and the Six.

Second, on the question of our contributions to the budget, we must continue to insist that the arrangements we make for the transitional period do not place intolerable burdens on our economy and that we should be given adequate time in which to achieve the dynamic effects of membership before we become fully liable to the Six's existing financial system. I think that those are the sort of safeguards many hon. Members are looking for when they express anxieties about our contribution to the budget.

Many right hon. and hon. Members have expressed doubts about the dynamic effects and asked how we can quantify them. Of course, these things cannot be quantified with any degree of precision, but those of us who voted for the statement of 2nd May, 1967 accepted the arguments set out in that document as the reason why the then Government decided to make the application. We can also assess the cost of staying out, as my hon. Friend the Member for Luton suggested. I believe that Europe can secure its economic stability and progress only if we can command a market the size of the United States and supply funds for research and development on the scale necessary to produce marketable technology. What has been happening in the Community is that Western Europe has been the world's main importer of discoveries and the main exporter of brains. If it goes on like that there will be a cumulative underdevelopment of Western Europe from which we will suffer.

Equally, it is agreed that we in Britain cannot frequently make full use of our own research and development. What has been the result? A divided Western Europe has failed to provide an adequate aviation or space programme of its own. That is a tragic waste of resources which it should be one of our main purposes to end.

I turn briefly to the questions raised about the Commonwealth. Inevitably the main issues in the negotiations have been New Zealand dairy products and sugar from the developing countries. That has not meant that we have not been aware that there are special problems in relation to particular commodities and particular countries. As I have indicated in the various statements I have made to the House, we are negotiating with the concern of each particular member of the Commonwealth in mind. I consult them, and we shall make the best progress we can.

Many right hon. and hon. Members do not understand how the patterns of trade are changing. The hon. Member for Wythenshawe spoke of developing countries that need trade. Of course, that is true. But he should look at what Lee Kwan Yu, Prime Minister of Singapore, said last week. He said: We were unfortunate that Britain was not a signatory of the Treaty of Rome on 25th March, 1957. Had she been, many of us might have been able to enjoy the benefits of a wider market for our produce and simple manufactures. I agree with the right hon. Member for Leeds, North-East that it is a pity that we did not go in at the beginning. I and many people advocated that we should. It is still not too late for us to seize these opportunities.

We must go ahead bearing in mind, as the hon. Member for Inverness (Mr. Russell Johnston) said, that much of the opposition to the Community is negative, dwelling on objections rather than alternatives. We hear very little about alternatives. My hon. and learned Friend the Member for Buckinghamshire, South says that we need no alternatives, but he is wrong. The negotiations may fail. We should survive, and the Six would survive. It would be in every way a second best for all of us if the negotiations failed. There would be bitterness and trouble for us all, far greater than the transient problem and challenges which success would bring. We should all be losers.

But I do not believe that the negotiations will fail, because it is not in the interests of any one of us that they should. I believe that a resurgent Europe, centred on the enlarged Community, is Britain's rightful place and the world's greatest hope today.

It is in that spirit that we shall continue to pursue the negotiations with the same humour, tenacity and realism as have always characterised the representatives of the Community, if I may borrow a phrase that President Pompidou used at his Press conference this afternoon.

Question, That this House do now adjourn, put and negatived.