HC Deb 26 July 1971 vol 822 cc31-167

Order read for resuming Adjourned debate on Question [21st July]: That this House takes note of the White Paper entitled The United Kingdom and the European Communities (Command Paper No. 4715).—[The Prime Minister.]

Question again proposed.

3.31 p.m.

The Chancellor of the Exchequer (Mr. Anthony Barber)

It is just about a year ago, within a few days, that I ceased to be Chancellor of the Duchy of Lancaster and handed over to my right hon. and learned Friend the Member for Hexham (Mr. Rippon). I well remember at the time when I left the Foreign Office pondering on the likely success of the negotiations. I think that if anybody had asked me then I should have said that the chances of a successful conclusion of the negotiations were about 50–50. I was by then quite convinced that each of the six members of the Community genuinely wanted us to join, and I believe that I had convinced them that the British Government were sincere and were in earnest. But to one question I could not then give an answer—should we be able to negotiate terms satisfactory to the United Kingdom?

I think that I am perhaps in the best position of anyone to say that, whatever views right hon. and hon. Members on either side of the House may hold about the merits of the case for entry, we owe a real debt of gratitude to my right hon. and learned Friend the Chancellor of the Duchy of Lancaster for the tenacity and skill with which he has conducted these negotiations, and I think that I would go further and say that in certain respects—New Zealand, for instance—he has succeeded beyond my expectations.

There is one thing that I want to say, which is, perhaps, a somewhat surprising admission to come from one who started the negotiations, but I think that it should be said. I was never one of those who would not take "No" for an answer. Indeed, I said in my first speech at the opening of the negotiations that unless a satisfactory financial solution could be found no British Government could contemplate joining". I well remember at the time that both in the European Press and in the British Press I was criticised for putting that point so bluntly. I must tell the House that, with my particular responsibility as Chancellor of the Exchequer, I have no doubt whatever that the terms which have been negotiated are not only fair but that to join on these terms will be to the great benefit of the British people.

It is right that today, on the last day of this debate, I should concentrate on the economic and financial aspects of entry, and I hope that in due course the House will bear with me if I deal with certain rather technical matters.

The basis of the Government's case is that we believe that on the terms which have been negotiated membership of the enlarged Community will bring substantial economic benefits to the United Kingdom. The success of a nation, as of an individual, depends upon the exertions and the skills of its people. But any country operates within a given economic framework, and this can have a deep and a lasting effect upon its success.

For an industrial nation like ours, the best framework for efficiency and growth is one where the opportunities for competitive trading, free of tariffs and other barriers, are wide and are securely based. Companies are better able to specialise and to derive advantage from the economies of large-scale working. They have greater encouragement to market new products, and they have an increased incentive to invest in the latest equipment. Resources can be used more efficiently, which in turn leads to a higher national income.

We have seen the emergence of just such conditions in the Common Market itself. The experience of the Six over the past 14 years since the signing of the Treaty of Rome shows just how important the economic framework is to the prosperity of the economies which work within it. By contrast, for the United Kingdom the past decade—indeed, I think, one could probably say most of the period since 1945—has been, by and large, a disappointing one. Our poor record of growth, our disappointing level of investment, our struggles with the balance of payments, the lack of sustained business confidence and the frequent imposition of economic restrictions, are all too familiar to hon. Members on both sides of the House.

The higher rates of growth of the Six are equally well known. In the 'sixties their average rate of growth was nearly twice that of the United Kingdom. To put it another way, at the rate of growth which we have achieved in the last decade it would take us 35 years to double our standard of living. The Community is doubling its standard of living every 17 years.

As the House knows, I have always recognised that there are certain special circumstances which account in part for that record of the Six in the 'fifties and in the 'sixties. Some of them, as we know only too well, started from a comparatively low base as a result of the war. Others benefited from the recruitment into industry of labour released from agriculture and initially their tariffs were high, and so their mutual trade expanded rapidly when the barriers came down.

But I for one do not believe that factors such as those, however important during the 'fifties, could account wholly for the general improvement in the performance of the Six through the 'sixties; for the fact that their productivity per man employed in manufacturing industry has been rising in a most striking manner; and for the benefits which they have derived, and will continue to enjoy, through better allocation of resources within the Community following the final achievement of the Customs Union. It is very significant that they had already achieved a high rate of growth in the output of manufacturing industry per employee in the early 'sixties, and that most of them had shown a further marked increase in this rate in the second half of the last decade.

I accept, as I always have done, that this success cannot be ascribed specifically, or statistically to the creation of the Community. Too many factors are involved, and the process of growth is very complex. But if one talks to the Ministers of the Six one finds that they have no doubt whatsoever that the abolition of tariffs and the formation of a single large market has helped very substantially, and it would be strange indeed if they, who are directly involved in this major change, should be wrong in their assessment of its effects. For my part, I am convinced that the enlargement of the Community will provide conditions within which the ten countries, including our own, can thrive in competition, and grow in national wealth.

The abolition of tariffs is the "trigger" to trade expansion and industrial change. But entry to the Communities cannot be regarded simply as a tariff exercise, as a sort of "European" Kennedy Round. Mere tariffs are in essence provisional. There is always a danger that in changed circumstances the parties may be driven back again to protectionism.

The Community is different. Free trade between its members is an assured and guaranteed change in the whole trading situation, and from the moment of our entry our industrialists can count upon a single market for their products. The change is not simply a technical matter of price relationships but a new climate for planning investment, production and sales in a great new single market approaching some 300 million people.

Not only are all the existing members of the Six convinced that they have benefited; this is also the view of the great majority of British industry. At its council meeting about ten days ago, the C.B.I, reaffirmed its support for British entry. It considered that the terms were "far better than expected" and emphasised the poor prospects for British industry and for the country's economy if the United Kingdom were at this stage to choose to remain outside the E.E.C.

The motor industry, in particular, sees great opportunities. The House will remember no doubt the recent advertisement of British Leyland. It is worth quoting what Lord Stokes said: As Britain's biggest single exporting company, British Leyland welcomes the prospect of entry into the Common Market. He went on: We feel sure that it will be good for Britain, good for Europe and particularly good for British industry and ourselves. He then said: We forecast that, if things go well, we should double our sales in Europe by 1975. But, of course, British Leyland is not alone. This applies to most of the major companies—Shell, Dunlop, Courtaulds, Fisons, Tube Investments, I.C.I., Hawker-Siddeley, De La Rue, and so one could go on. They and others all wholeheartedly support our entry and they all believe that failure to seize this opportunity will gravely damage the prospects for British industry.

Mrs. Renée Short (Wolverhampton, North-East)

Before the right hon. Gentleman leaves the car industry, would he accept from me that car workers in the West Midlands are very concerned about the inroads made by car companies in the Six into the British home market—[HON. MEMBERS: "Whose fault is that?"]—when hon. Members have finished—now reaching about 22 per cent. of the British home market, and that is with an adverse tariff? Are we likely to see the development of this situation when the tariff barriers are removed?

Mr. Barber

I am sure that, with improved industrial relations and better productivity, we shall do better in that respect. But even so, this is not a oneway traffic. As Lord Stokes himself has pointed out—these are very significant facts—nearly twice as many Minis produced in this country are sold in Italy as all the Italian cars sold in this country. So one has to take into account not just British Leyland but the Chrysler Company, for example, and many others which consider that they will benefit.

I think that it will be generally accepted that we also have in London the most versatile, flexible and experienced capital market in the world. It is well known that the City is already a major contributor to our national welfare through the sale of services abroad. We think mostly in net terms, but it is interesting to recall that our invisible earnings as a whole have not only been rising steeply but that last year, in gross terms, they amounted to over £5,000 million. Certainly, those who work in the City have no doubt that the country stands to gain from our entry of the Community.

I have never been one who has scoffed at those who genuinely doubted the wisdom of our joining. It should not be forgotten that, before the existing members of the Community themselves signed the Treaty, in every one of those countries, there were genuine doubts and vocal opposition. One senior Minister in the Six, well known to right hon. and hon. Members opposite and to those on this Front Bench, told me that in those days he was resolutely opposed to the whole concept. Now, he has no doubts whatever. The truth is that over the years the Opposition has been silenced by the reality of events.

Talk to those in the Six, and what does one find? In Germany, for example, it was said that the common agricultural policy would create an impossible balance of payments situation. Instead, their balance of payments has moved from strength to strength. In Italy, it was said that their industries would be crippled by German competition—the sort of fears that one hears sometimes from hon. Members opposite. Instead, Italian industry has thrived.

In France, it was said that their plans for economic expansion would have to be held back. Instead, their rate of economic growth has been much faster than ours in the United Kingdom. Before entry, Belgium was in many ways in much the same position as Britain is now—a slow rate of economic growth and an economy for which, it was said, the common agricultural policy would present an impossible burden. But the Belgians themselves believe that they have achieved a faster rate of growth and greater prosperity within the Community than they would have achieved if Belgium had remained outside.

But each of us must form his own judgment. For my part, I am convinced that an enlarged Community will provide the framework within which our pros perity can grow faster than if we remain outside—;

Mr. Neil Marten (Banbury)

Will my right hon. Friend give way?

Mr. John Mendelson (Penistone)

Will the right hon. Gentleman allow me?

Mr. Speaker

To whom is the right hon. Gentleman giving way?

Mr. Barber

To my hon. Friend.

Mr. Marten

I am most grateful to my right hon. Friend and I apologise to the hon. Member for Penistone (Mr. John Mendelson).

My right hon. Friend keeps coming back to this growth rate argument, which is very interesting. Has he seen the advertisement in The Times today—not the one signed by Henry Cooper and Mary Quant, but the one which claims that all those businessmen, headed by Campbell Adamson of the C.B.I., believe that the European market is growing at twice our rate? I thought that last week my right hon. Friend said that our growth rate for next year—after all, they too are talking about the future, not the past—was to be between 4 and 4½ per cent., and the E.E.C. growth rate for this current year, 1971–72, is 4½ per cent. How can these businessmen say that it will be twice the rate?

Mr. Barber

I thought that my hon. Friend was intervening to ask me a question about something that I had said in my speech. I am not responsible for any advertisements which appear in any newspapers, so my hon. Friend must ask himself.

Mr. John Mendelson rose—;

Mr. Barber

I have a good deal to deal with. I have promised to deal with capital movements, the position of sterling and the effect on the balance of payments. I do not want to take up more time than necessary, so I hope that I shall be allowed to get on with my speech.

Mr. Mendelson

On the point which the right hon. Gentleman made about the expectations of the Six, would he not accept that the Six countries spent four and a half years carefully adjusting many of their economic interests to each other, and that it is the burden of the complaint of some of us that they have refused to do the same for Britain's economic interests? There were discussions only about transitional periods, but it was not possible to reopen any of the arrangements which had already been made.

Mr. Barber

I do not understand the hon. Member's point. Assuming that we join, we join in 18 months, oh 1st January, 1973, and we then have a transitional period of five years—six and a half years altogether. I believe that, on the terms which have been negotiated, this is ade- quate. The hon. Member must form his own judgment, but that is certainly my judgment.

I want to turn now to our contribution to the Community budget. The other day, in an intervention, the Leader of the Opposition asked to be reminded of what I said at the opening of the negotiations in Luxembourg about the impossibility of accepting certain terms. The words which I used were these: We have to work together to find a solution to this basic problem which will be fair and sound for the enlarged Community and for all its members. If I appear to labour this point, it is only because, unless such a solution is found, the burden on the United Kingdom could not be sustained and no British Government could contemplate joining. I went on: Moreover, without a such a solution, the whole basis of stability and confidence, essential to the further development of the Communities, would be lacking". We proceeded, as did the previous Administration, recognising, realistically that the common agricultural policy was an integral part of the Community, and that this recognition must form part of our position.

Mr. John Mendelson

That is the basis of our argument.

Mr. Barber

That was the position of the Labour Government, and it is not unreasonable that I should point out calmly where there is common ground between us, whatever other differences we may have. As our predecessors recognised, the C.A.P. was not negotiable, but we had the undoubted right to adequate transitional arrangements to enable us to adapt gradually to the new system.

My right hon. and learned Friend the Chancellor of the Duchy of Lancaster has already dealt with the agreement reached on our contribution to the Community budget during the transitional years. For the years from 1980 onwards, when a ceiling will no longer apply to our contribution, our net payments to the budget will depend on two factors—first, the actual size of the total Community budget, and second, the yield in the 'eighties of United Kingdom levies and duties charged on our imports from non-Community countries.

It is, frankly, impossible at this stage to make useful forecasts of either of these factors. The size of the budget will depend, in part, on the nature of Community expenditure, and our yield of duties and levies will depend on the size of our trade and its pattern and on the sources of our imports.

As the House knows—and this is the complaint of some hon. Members on both sides—at present Community expenditure is devoted as to well over 80 per cent. to agricultural support, from which the United Kingdom will obtain only a modest return. But the future calls of agriculture will almost certainly decrease.

Several Hon. Members rose—;

Mr. Barber

I have a lot to say. I hope that I will be allowed to go on.

Every year, one-third of a million workers leave agriculture in the Six. The pressure of farm surpluses has, it is accepted, eased. The gap between world and Community prices for foodstuffs has narrowed. These are all relevant considerations.

Over the next five to 10 years, the Community is likely to be spending proportionately much less on agricultural support and more on regional policy, industrial development and so on, from which we should benefit on an equal footing with other members. As my right hon. Friend the Prime Minister has pointed out, as a member of the Community we shall be sharing in the control and direction of these funds. [Interruption.]

The other main consequence of the C.A.P. is the effect on our domestic prices, which was dealt with by my right hon. Friend the Minister of Agriculture, Fisheries and Food on Friday. As the House knows, we estimate that the effect will be a rise in retail food prices of about 2½ per cent. annually over a period of six years. That is equivalent to a yearly rise in the cost of living of about one-half of one new penny in the £.

But it is quite wrong to consider the price of food in isolation and to think that, as far as the cost of living is concerned, the only consequence of joining the Community will be to put up the cost of food. That is not the case, because the effect of the reduction in tariffs will be to exert a downward pressure on the prices of manufactured consumer goods, which will be lower than they would otherwise have been. Thus, the rise in the cost of living due to our joining the E.E.C. will be less than one-half of one new penny in the £.

I think it is accepted on both sides of the House that one of the fundamental causes of the apparently inexorable rise in the cost of living in Britain has been our slow rate of economic growth. Certainly every trade union leader knows of our poor record of economic growth, just as he knows that what counts is not money earnings but real earnings.

Those who oppose our joining the E.E.C. may challenge the action, but they cannot deny the facts—for example, first, considerably faster economic growth over the past decade, and secondly, that between 1958 and 1969 real earnings in the Community increased by over 75 per cent. compared with less than 40 per cent. in the United Kingdom.

If we succeed in achieving a faster rate of growth, as I am sure we shall, there will follow a faster rise in real wages and salaries and in terms of the standard of living of the British people, which is what really matters.

We have made it clear in the White Paper that we will take steps to protect retirement pensioners and those who are dependent on other social benefits from the effects of the increases in food prices.

There is another point about which I was asked which I wish to make clear, because it is relevant to the impact of our joining. Those who depend on retirement pensions and other social benefits will be protected from increases in the cost of living as a result of our entering the E.E.C, small though those increases are likely to be. But these effects will not begin to be felt until the spring and summer of 1973 at the earliest, and this will be exactly the time when we will be reviewing once again the purchasing power of National Insurance benefits, pensions and other benefits.

My hon. Friend the Member for Banbury was mistaken the other day on an important point. As the House knows, apart from our application, a value-added tax will become operative in this country as from April 1973. I did not hear my right hon. Friend's speech the other day in which he said that by 1973 the V.A.T. must be harmonised at the European level, whatever it is. He will be pleased to know that there is no such requirement, though as far as the future harmonisation of rates or coverage is concerned, we will be a party to any such agreements.

Mr. Marten

I apologise for interrupting my right hon. Friend yet again, but would he say at what date harmonisation is due? I understood that it was originally 1973. [HON. MEMBERS: "No."] What is it now?

Mr. Barber

There has never been a time, and there is no such date now.

I come to the important question of capital movements.

Mr. Dick Douglas (East Stirlingshire)

Before the right hon. Gentleman leaves this subject and in view of his remarks about ameliorating the hardship that will be faced by pensioners and those in receipt of social security benefits, may I ask him for an undertaking to have a zero rate on food as an effective safeguard for old-age pensioners and other?

Mr. Barber

We have already made it clear that when we introduce the V.A.T. in 1973 there will be relief in respect of food. We have spelled this out and made it clear, and under the present arrangements in the E.E.C. we are under no obligation to harmonise either our rates or coverage with the rates or coverage of individual members of the Community.

I hope the House will bear with me while I answer some questions relating to capital movements. In the White Paper we outlined in the United Kingdom proposals for the progressive liberalisation of certain of our exchange control restrictions in relation to Community countries over a transitional period of five years. The purpose, as the House knows, is to give capital movements between the United Kingdom and other members of the Community a degree of freedom which is called for under arrangements which the Community has already adopted. At the time when the White Paper was published, these proposals were still under consideration by the Community. As hon. Members know, the Community has now accepted the proposals in full.

Freedom of capital movements between member States is, of course, one of the principal economic freedoms envisaged in the Treaty of Rome and is rightly regarded as fundamental to any successful Common Market. The United Kingdom Government have no hesitation in accepting this principle. Both the present and the previous Administration have throughout made it plain that our approach on this matter should be one of full acceptance of the Community's present arrangements, subject only to negotiation of a sufficient transitional period. We set our sights on a period of five years, and this has now been agreed.

In accepting this principle and concentrating our negotiations on the arrangements for transition, we have relied upon certain safeguards in the Treaty of Rome itself, and I think that I ought again to remind the House of these, because they are important.

First, the Treaty of Rome itself provides for certain situations in which a member country may need to take special measures of protection, including restrictions of capital movement. Some existing members have taken advantage of this position and, I think I am right in saying, are still doing so. These provisions will be equally available to the United Kingdom.

Second, the Treaty of Rome provides a framework within which it is allowable, and I can assure the House that it will be technically practicable, to protect ourselves, where we consider it necessary, against leakage of capital via other members of the Community to third countries.

The Community's present arrangements do not themselves call for total freedom of capital movement of all kinds. The transactions covered were indicated by my right hon. Friend the Chancellor of the Duchy of Lancaster in a Written Answer on 16th July. They include a number of relatively minor items, on many of which we do not at present impose restrictions, but there are three groups of transactions of greater importance to us: direct investment, personal capital movements and portfolio investment.

Direct investment will be dealt with during the first two years. This could probably occur in two stages, with some relaxation at the outset and the remainder before the end of the second year. Direct investment is not at present prevented by exchange control, but important limiting conditions are placed on its financing. It is these conditions which have to be progressively removed.

At the end of the two years it will be open to United Kingdom companies to carry out direct investment in other Community countries with official exchange, and companies in other Community countries wishing to invest in the United Kingdom will be allowed access to the United Kingdom capital market for their finance. I shall return later to the possible effect on levels of investment.

The main impact on our foreign exchange position will depend on the extent to which companies at present obliged to make use of foreign finance find it more convenient to use sterling. Some personal capital movements of relatively small financial significance will be liberalised from the outset—for instance, those associated with movement of persons to take up employment. The main bulk, however, will be liberalised by the middle of the transitional period. They include a variety of minor items, such as gifts, payments in connection with inheritances, purchase of private property and funds of emigrants.

Finally, there is portfolio investment. At present, residents in this country are entirely free to acquire securities in Community countries on the condition that they do so through the investment currency market. Our intention is to remove these restrictions in relation to Community securities by the end of the transitional period. It is not expected that the impact of this particular part of the programme of liberalisation will be very large, taking one year with another.

I turn now to a matter of considerable importance which has been raised by a number of hon. Members and some right hon. Members opposite, and that is the likely effect of our entry on the levels and direction of movement of the major types of capital investment.

First, it is worth considering the level of our own British direct investment in the countries of the Six. There was, as the House knows, a considerable upsurge early in the 'sixties, and it gathered pace in the years that followed. This was the very natural result of decisions of many major British companies to make substantial investments in the countries of the Six, and what influenced many of them, without doubt, was the sustained rate of growth of prosperity in the Community.

Often, their decisions were based on the desire to be sure that they would get a foothold on the other side of the tariff barrier in case we did not get in. Once we enter, of course, this motive will cease to have force. I have little doubt that the level of our investments in Europe will continue to grow, but I see no clear reason for assuming that the measures we shall take to conform with freedom of capital movements within Europe will result in any substantial new wave of British investment on the Continent.

The second factor is investment in the United Kingdom by companies of other Community countries. In the past, with the exception of two or three multinational companies, we have enjoyed very little such investment from other Community countries, and there is scope for considerable growth in future. Improved access to United Kingdom capital to finance investment will no doubt offer an incentive, and the United Kingdom as a full member of the E.E.C. is likely to be more attractive to companies which base their operations within the Six, especially by comparison with the situation in the past, in which the United Kingdom appeared as a relatively slow-growing economy.

Thirdly, and also important, there are the possible effects on American investment. We have traditionally attracted a good deal of American investment, no doubt influenced by common language, comparable capital markets and a sense of longstanding familiarity. But the significant thing is that over the last decade American investors have found the wider E.E.C. market more attractive. After United Kingdom entry, the American investor will be able to obtain both kinds of benefit in the United Kingdom. I believe that this could well stop, and very likely reverse, the tendency of American investors to look increasingly towards the present six members of the E.E.C.

On the subject of sterling, I should like to refer to the remarks made by the right hon. Gentleman the Member for Birmingham, Stechford (Mr. Roy Jenkins) on Thursday. Because he was not so long ago Chancellor of the Exchequer, I was not surprised to have his understanding of our objectives with regard to sterling. He made a number of points, and I think that I should remind the House of what I said to the right hon. Gentleman on 27th April. I was talking about the replacement of sterling balances by some alternative assets, and I said: … the Government would be ready to consider such a move provided that means could be found which avoided an unacceptable burden on the United Kingdom, promoted the healthy development of the international monetary system, and protected the interests of the sterling holders."—[OFFICIAL REPORT, 27th April, 1971; Vol. 816, c. 219.] I will not go over the whole of the ground which is covered by the statement of my right hon. Friend the Prime Minister and which, as the House knows, is set out in paragraph 127 of the White Paper, but I should like to emphasise one point, and that is to give the right hon. Gentleman an absolute assurance that there is no question whatever of taking on a repayment programme which would impose an undue burden on our balance of payments.

Sometimes the maintenance of sterling as a reserve currency is thought of as a matter of national prestige, but everyone whose business is concerned with these matters knows that, in fact, sterling's relative importance as a reserve currency has declined, and has declined markedly, since the end of the war. In 1950 official sterling balances were 16 per cent. of world reserves: by 1970 they were 7 per cent. As a proportion of world trade, total sterling liabilities were 17 per cent. in 1949 and 4 per cent. in 1969.

Surely, what is important is that there is no reason to believe that a reduction in the rôle of sterling as a reserve currency would have any significant effect on the invisible earnings of the City. Those earnings arise partly from the use of sterling as a trading currency, which will not be directly affected by a reduction in the reserve balances, and partly from financial services, such as banking and insurance, in which, if anything, the City has strengthened its rôle in recent years. Those services are as capable of being transacted in, say, United States dollars as in sterling. Indeed, a large part of the increase in earnings in recent years is due to London having established itself as the principal market in Eurodollars.

I come now to the effects of joining on our balance of payments, starting with the broad effect on our economy. For the reasons which I have already explained, I have no doubt that membership will provide us with the opportunity for faster growth. There are costs, but I believe that those costs can be met out of the improved competitive power and the increased resources which membership will offer us. I have already referred to the costs of the contribution to the Community budget. There is also the higher price of food imports from other countries of the enlarged Community. Both these effects can be quantified. Then there is the effect on the balance of trade in goods other than food.

The previous Administration published an assessment of the possible effects in their White Paper of February, 1970. They gave an estimate of what they called the "impact" effects of the whole pattern of tariff changes. They went on to make the following qualifications about the figures which they gave, which were described as "very rough quantitative estimates". They frankly said that the figures involved a "whole series" of assumptions about the development of world trade over the next five years; they were based on what were described as "highly oversimplified assumptions" about the effect and timing of a complex series of tariff changes on a wide range of goods. They went on: Each of these assumptions can be little more than an informed guess which may be very wide of the mark. They pointed out that they related to a total flow of United Kingdom trade which might be of the order of £18,000 million.

But, most important, for sound reasons which the previous Administration explained, they made no corresponding estimate of the "dynamic" effects of membership.

Speaking in the debate on that White Paper, my right hon. Friend the Home Secretary had this to say about the figures for the "impact" effects. This was when we were in Opposition. The arguments put forward are complicated, but they are not sustained by any reasoned argument. It is nonsense to pretend that one can achieve accuracy of this kind in these sorts of forward estimates. … How can one calculate within a range of £100 million or £150 million five years ahead on a total of £18 billion? The White Paper concludes by saying that the calculations may be positively misleading. I prefer the phrase used by the Economist, "unadulterated rubbish".—[OFFICIAL REPORT, 24th February, 1970; Vol. 796, c. 1016–17.] The distinction between so-called "impact" effects and "dynamic" effects is itself arbitrary and artificial, because the one shades into the other. The first can be measured after a fashion, given fairly sweeping assumptions, but the result is of little more value than an outright guess. The latter, the dynamic effects, as was recognised by the previous Administration, cannot be measured at all. To measure one without the other is to produce a wholly misleading result.

Our judgment is that the overall effects of the tariff changes on the balance of trade will prove to be both beneficial and substantial.

The House will appreciate that there will be two simultaneous processes: on the one hand, the cost of food imports, some loss of preferences, and an increase in imports; on the other hand, there will be much greater market opportunities, our improved competitive position, and the expansion of exports. Of course, it is extremely difficult to predict the time path of the outcome of these processes over the transitional period, but, to the extent that the effects are adverse, they will be within our capacity to meet, and the benefits will be substantial, cumulative and continuing.

Mr. Denis Healey (Leeds, East)

Could the Chancellor clear up a difficulty? First, he said that the impact would be simultaneous. Is it not the case that the Secretary of State for Trade and Industry admitted that the immediate effect, and for several years, of the removal and changes in preferences would be highly disadvantageous to the United Kingdom? Secondly, did not his right hon. Friend the Chancellor of the Duchy, who is responsible for negotiations, tell the House in December that the effect of the changes in industrial tariffs would be disdvantageous to the extent of £200 to £300 million a year, and did he not confirm this figure, according to the Economist newspaper which the right Gentleman has just quoted, as recently as 24th June? Why have the Government not given these figures honestly in the White Paper, especially as the Treasury did a similar calculation of the effects of devaluation and got it absolutely right?

Mr. Barber

What I said was that the one shades into the other, and I should have thought that no one would disagree with that. I understand, and I respect those such as the right hon. Gentleman who believe that we should have given figures, despite the fact that in the White Paper of spring of last year they were qualified in the way that the right hon. Gentleman knows. After all, he was a member of the Government, and I respect the view he is putting forward. But he was a member of the Government who said in that White Paper: Each of these assumptions can be little more than an informed guess which may be very wide of the mark. All I am saying to the right hon. Gentleman is that, for my part, to try and produce a figure for the so-called impact consequences which is … little more than an informed guess which may be very wide of the mark and to produce no figures—which one cannot do, I agree—for the dynamic consequences, would give a wholly misleading idea to the British nation and to Parliament of the consequences.

Mr. E. Fernyhough (Jarrow) rose—;

Mr. Barber

It is extremely difficult to predict the time path of the outcome of these processes over the transitional period, but the benefits will be substantial, cumulative and continuing.

Mr. John Mendelson

The right hon. Gentleman has just said that he did not know.

Mr. Barber

I turn to the costs which can be identified. Taken together, the budget contribution and the cost of food imports might amount to about £250 million by 1977. It is important to keep this in perspective. In the first place, the additional burden on the balance of payments which we shall have to absorb will begin at a level of about £100 million a year in 1973. It will build up only gradually to the figure of about £250 million by 1977.

To talk as if there will be a sudden terrible shock to the balance of payments is absurd. The sums we are talking about are well within the range of normal swings in the balance of payments; well within the range of accidental developments, good and bad, which affect the balance of payments one way or another in most years. Since the beginning of this year, for example, there has been the increased cost of our oil imports; on the other hand, we have derived advantages from the exchange rate changes in Germany and other countries.

Our aid to developing countries is now running at about £240 million a year. The annual increase—increase alone—in export credit outstanding has recently been about £250 million, and private capital investment overseas this year may total over £700 million. I make this comparison not to suggest that the identifiable cost of joining the Community can, in effect, be discounted or disregarded; nor that it is similar in kind to outlays on investment or export credit. But it is right, in considering the identifiable cost of joining, to bear in mind the magnitudes involved in our total external account with the rest of the world and the size of the flows of short-term funds. By 1978 the value of visible trade alone, at 1970 prices, is likely to be of the order of £24,000 million.

Our present and prospective surplus on current account is substantial. Indeed, as I said last week, it has been running at an annual rate of £600 million a year compared with a deficit of £300 million in 1967 when the previous Administration applied for entry. We have profited from a favourable flow of funds. Sterling is strong. We have been able to make very large repayments of short-term indebtedness. The prospect for economic growth is good. Whatever views hon. Members may have about the merits of entry, I think the whole House will agree that, looking ahead, we can expect to enter the Community in a much stronger economic and financial position than many thought possible in recent years.

Mr. Healey

The right hon. Gentleman is discussing the situation before his so-called mini-Budget last week. What estimate has the Treasury given of the cost to the balance of payments of a consumerled reflation such as he introduced last week? Is the right hon. Gentleman aware that the Economist, which favours entry, believes that the cost of the measures the Chancellor took last week will be £500 million on the balance of payments?

Mr. Barber

I have not read that in the Economist, but I hope that I may be able to comment without having read it and say that it is absolute rubbish.

Mr. Healey

Will the right hon. Gentleman give an estimate?

Mr. Barber

We now have 18 months for industry to prepare itself for entry and to bring the economy to a position where we can take advantage of the opportunities of membership.

I reject entirely the argument that the costs of membership will oblige us to hold back the growth of the economy. The costs will accrue gradually from the date of entry onwards. They will not fall to be met suddenly, in large amount. The whole purpose of the transitional arrangements negotiated by my right hon. and learned Friend is to enable us to adjust by stages both to the liabilities which we shall be called upon to meet, and also to the changes that will be brought about in our economy. If, as we believe, British manufacturers take account now of the changes that will be taking place from 1973 onwards as our economy is progressively brought within the framework of the new enlarged Community, they will be ready from the outset to exploit the new opportunities.

I have already referred to the improvements in efficiency and competitive power of the Six. British industry believes, and I believe, that it will fare likewise, with new opportunities, not merely in the enlarged Community—this is important—but also in world markets generally. So we shall be able to meet the costs of entry. I have already explained why I believe that joining the Community will lead to an increased growth rate. It is this which will make it possible not only to pay for the costs of entry but also to provide for a more rapid improvement in our standard of living.

As we have stated in the White Paper, if the rate of growth were to rise by only half a percentage point—[Interruption.]—this was a point made by members of the previous Administration—by the end of a period of five years our national income would be some £1,100 million higher in the fifth year. At a time when we are suffering from heavy unemployment, it should not be forgotten that in their own national policies the Six have been extremely successful in maintaining full employment. With the exception of Italy, where there have been special regional problems, they have all managed their economies at a very high level of employment. This indicates the high priority which they attach to this objective of economic policy.

In October Parliament will decide whether we go in or whether we stay out. I have never sought to exaggerate the difficulties of staying out. There would be no sudden cataclysmic disaster if we do not join. [HON. MEMBERS: "Hear, hear."] Life would no doubt continue for quite a time, much as at present, with fewer changes than if we join. We would no doubt get along with a comfortable but slow rate of economic growth, proud of our history and boasting of our tradition of civilised living. But let us not burke the reality of the situation as it would develop. We would inevitably be overcome and overshadowed by a larger, stronger and richer Europe. Our political influence would dwindle, and history would pass us by.

I have today concentrated on the economic consequences of joining. I believe, for the reasons I have given, that the benefit to our standard of living will be substantial. I do not doubt that, after due consideration, the House of Commons will approve our entry into the Community, and when it does so the House will have taken a decision wise and courageous and in the interests of the British people.

4.26 p.m.

Mr. Michael Foot (Ebbw Vale)

Before I start my comments on the speech of the Chancellor of the Exchequer, perhaps the House will permit me to make two brief comments on two speeches which have been delivered from this side of the House during the course of this debate.

Everyone who heard the speech of my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) will agree that it was a most formidable speech. It was formidable, because he combined in the speech qualities of character, intellect and eloquence. I honour him for those qualities, however much I may disagree with the course that he is recommending for the country.

I believe also that my right hon. Friend the Member for Battersea, North (Mr. Jay) mounted a most formidable case, one that certainly has not been answered in the Chancellor's speech today. As we have now reached almost the end of this debate on this great subject, some of us are wondering how that part of the case is to be answered. I think that the best course would be for the Government to agree to the proposal which was made by my right hon. Friend the Leader of the Opposition for a Select Committee to examine these details of fact.

There is, for example, the question of the missing £500 million, which the Chancellor says was absolute nonsense, but which the Economist and most other newspapers have quoted and which can be worked out, as it was worked out by my right hon. Friend the Member for Battersea, North. Indeed, my right hon. Friend puts the figure considerably higher. [Laughter.] Those figures should be examined by a Select Committee.

The same applies to the case made by my right hon. Friend the Member for Stechford, and this part of his speech was reinforced by the speech of the Chancellor of the Exchequer, if that is the right term to use. The right hon. Gentleman referred to the figures of expansion of the export trade and the intra-trade of the Community as one of his main arguments for the deductions to be drawn about the way the Community has worked. Those figures, according to a statement by Mr. Anthony Harris in The Guardian today, have been produced in a Cabinet study paper. Perhaps they were available to the previous Cabinet. No doubt they are available to this Cabinet. I do not see why they should not be made available to the House of Commons so that we can all discuss them. I believe, therefore, that the more that hon. Members have listened to this debate the stronger has become the case for a Select Committee to try to examine some of these matters.

The Chancellor of the Exchequer showed one sign of penitence, if I can put it that way. He said that he was not one to scoff at those who took different views from his own on the subject of the Common Market. A week or two ago in the Daily Telegraph there was a headline: Barber scoffs at Six Doubts". He is reported as saying: … if Christopher Columbus had waited for proof before setting sail, we might still think today that the earth was flat. I am sure it will be recollected that Christopher Columbus set out to discover China, thought that he had discovered India and, in fact, had discovered America—which is just about the degree of accuracy attempted in the White Paper. On the basis of this White Paper, Christopher Columbus would never have got the money to start the expedition at all.

Let me give some illustrations of that charge. We are asked to "take note" of the White Paper. That is what the Government have invited us to do. I should like first to take note of some of the parts of the White Paper which we regard as extremely unsatisfactory, quite apart even from the major question of the missing £500 million. Let us take the question of the European Coal and Steel Community, which some hon. Members opposite suggest we should not discuss. They say that these are matters which the Mother of Parliaments should not worry her pretty little head about, because they have decided this matter. I should like to dispose of those claims or defences against the proper examination of the subject.

The Government say that we do not need to discuss this subject because there is no difference in the application as it affects coal and steel from the application that was made in 1967. It is very flattering for members of the previous Cabinet to be told by the present Government, "Anything you can do we cannot do better." That seems to be their claim. But it does not seem to be a perfect defence. Moreover, it is not the case that the situation is the same. In the case of the steel industry, the situation has greatly changed since 1967 in the sense that there is in readiness to be put into operation a major development plan which will cost £4,000 million over a period of years. What we have asked is that the right hon. Gentleman should tell us whether, in the negotiations, the question whether this programme could be carried through under the provisions of the Treaty was raised. I will say in a moment what was the kind of answer we got. Certainly they cannot argue that the situation is the same as it was in 1967.

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


Mr. Foot

The right hon. and learned Gentleman should have been here when the Secretary of State was arguing on Thursday. He was arguing that the claim put in now is on the same basis as that made in 1967.

Mr. Rippon

It is the claim put forward on the basis of the 1970 statement by the then Prime Minister that the 1967 White Paper remained the basis of the Government's attitude.

Mr. Foot

I understand that. I am comparing that matter with what was said in the debate, that it was the same as 1967. I am discussing the excuses made by the Government as to why we should not examine this matter in more detail.

The second defence that is made is that we do not need to examine it in detail because the heads of the nationalised coal industry and the nationalised steel industry are in favour of the agreement that has been made by the Government and that, therefore, it is not necessary for us to examine it in detail. I say that those two defences are not satisfactory for the House of Commons. We must discuss these matters in greater detail. I say this partly because the Government, for some extraordinary reason, have sought to prevent the House of Commons from having the information that was made available to them. Thanks to the reports in The Guardian by Mr. Mark Arnold-Foster, but with no thanks at all to the Government, there is in the Library of the House of Commons at the moment some account of those negotiations. I must say that if ever slipshod, slatternly negotiations were carried out on behalf of this country, they were these. I can prove it. Any hon. Gentleman who doubts what I say can consult those parts of the documents which are in the Library of the House of Commons.

What those documents say, amongst other things, is this. Originally the Chancellor of the Exchequer, when he was in charge of the negotiations, asked for a joint working party with representatives of the Community to decide the matter. That was turned down by the Community. They said instead that they wished to draw up a list of the operations of the European Coal and Steel Community which were incompatible with the operations of our nationalised industries. They drew up this list, and it is formidable. The list deals with a large number of matters which are of current importance to this country. The Prime Minister boasts about how he stopped the steel price increase. That action would not have been possible under the arrangements which are now being agreed. It may be even that the so-called guidance which the Government are giving to the nationalised industries as it affects coal and steel would not be compatible with the undertakings which they are asking the House to make on these subjects.

The High Authority of the Community insists that it has the right to decide questions arising from dispute between the private and public sectors of the steel industry. That is of some importance. Then the High Authority insists that there shall be, as the right hon. Gentleman admitted on Thursday, no forms of subsidised investment in these industries, but they also say in effect that the steel industry of the country has been sustained by a form of subsidised investment. That is what they say in the report.

I suggest plainly to hon. Members opposite, as indeed the Government admit in their own White Paper, that the status, the position, of the Coal Board and the Steel Corporation in their relation to this House and the Government would have to be altered by major legislation if we went into the Common Market. These are facts. The House of Commons should examine these matters in detail. I cannot understand why the Government who gave us details of other matters in the negotiations have refused to give us details on this. The steel industry is as of much interest to Britain as dairy produce is to New Zealand. Why should we not have the details presented to us? I invite the Government to publish in full the negotiations which they have had on this subject, which are available in part in the Library of the House of Commons, and hon. Members can confirm by con- sulting the documents the truth of what I have said.

Meantime the Government ought to withdraw the so-called popular version of the White Paper that they have issued on this subject, apart from all the other subjects. They say The Coal and Steel Community. If we join, there will be no interference with the size or status of the British Steel Corporation or the National Coal Board. That is, on the basis even of the Government's own White Paper, either a direct lie or a colossal display of ignorance. Perhaps the Home Secretary will explain which it is.

It is nice to see the right hon. Gentleman the Home Secretary taking part in these Common Market debates, if I may give him the welcome of the red carpet. There has been a lot of talk about politicians coming off the fence in this issue. In the case of the Home Secretary maybe the fence just collapsed. At any rate, it is nice to see him. We shall welcome him later in the debate as another herald of the new dynamism with which we are going to be led into Europe. But there are those of us who will always retain an affection for the right hon. Gentleman in his earlier incarnation. As I see him. I always think of the limerick: There was an old bear at the Zoo, Who could always find something to do. When it bored him, you know, To walk to and fro, He reversed it and walked fro and to. We are very happy to see the right hon. Gentleman, and, since consistency is now elevated to the very highest place in politics, we are eager to see him defend his position on the Common Market tonight. Perhaps he will explain some of the serious matters which were dealt with not at all or, in my judgement, not dealt with properly by the Chancellor of the Exchequer in his speech today.

The question of regional policy touches all the rest of the policies which the right hon. Gentleman tried to describe to us. Capital movements, the lowering of tariffs, all the other measures which are taken to deal with the situation—all these affect what will happen in the shaping of regional policy, and this is why some of us are so suspicious or so anxious about the situation.

When he spoke about those matters on Thursday, the right hon. Gentleman the Secretary of State for Trade and Industry said that we really need not worry very much about regional policy. It was a subject very near to his heart, we understood. Judging from the way he talked, one might have thought that he had dedicated the whole of his commercial and political life to helping lame ducks over stiles. But we cannot be reassured on that basis. We must discover what are the real possibilities and the probabilities for the regions of this country.

The whole case of the Government and of those of my right hon. and hon. Friends who state their argument so strongly for entering the Common Market rests on one major base, the base which the Chancellor of the Exchequer elaborated upon in his speech today. It is the claim that there will be a much better chance of growth in the economy, a much better chance of expansion in the economy, a much better chance of investment, and investment at a fairly early stage, if we join the E.E.C. But all these claims are based on the further assumption that we shall be able to sell many more exports in the highly competitive market of Western Europe. That is the basis on which all the other advantages rest. If that were to collapse, all the other advantages would collapse as well.

In that situation, there would fall upon us all the costs which we have to bear in the abolition of our tariff advantages in some parts of the world, with the E.F.T.A. and with our own Commonwealth, all the burdens which we have to carry even though they are not properly specified, under the Community budget, and all the other disadvantages, many of them not spelled out at all.

I interpolate here a comment on what the right hon. Gentleman said about the great advantages for American investment in this country if we go into the European Economic Community. Very well; he is entitled to put his argument, but he ought to deal, for example, with the case which has been put to me very strongly by workers in Dagenham and elsewhere. One of the reasons why the Americans in Detroit decide to invest in Dagenham rather than in Cologne is that they can sell a lot of Ford cars in the Commonwealth and in the E.F.T.A. with the advantages of the existing trade agreements there. I believe that Ford Motor Company sells about 80 per cent. of its exports to markets outside the E.E.C. If those advantages go, it may well be that Detroit, in considering where to make future investments, will decide to expand the Ford factory in Cologne rather than in Dagenham. No doubt, if that happens the Government will put all the blame on Jack Jones and ignore what they themselves have contributed. That is an example of the problems which must be faced.

Most of the costs and burdens of entry into the Common Market have not been spelled out properly in the White Paper, and this is one reason why we urge that there should be a Select Committee to go into the matter. But, coming back to the question of regional policy, I repeat that all the advantages will be lost if we do not get the extra exports to Western Europe, and all the costs and burdens will then fall upon us, without the benefits.

This is where regional policy comes in. What will happen if, in the next two or three years, industrialists go to the Department of Trade and Industry and say, "We are potential exporters, we are potential investors in exports. So that the enterprise may succeed, we must have export assistance in order to get into Western Europe, and we want to put our new factories in the South or in the Midlands, far away from Scotland, Wales and the other difficult regions"?

This is always an awkward choice. It is a difficult choice in any event when a Government have to decide where they will back investment. But, by the very fact of entry into the E.E.C, the Government in that situation will be heavily weighting the advantages against the regions.

We who come from these areas know very well how difficult things are even when a Government have good will towards them in wishing to pursue a policy for their benefit. My hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), who spoke most impressively on this subject the other day, said quite correctly that what one needs in the regions are policies of discrimination and advantage to assist us at a time of expansion. Without the expansion, the discriminations cannot greatly assist us. I entirely agree. But what we fear—what I fear—will happen in the next two or three years if the whole direction of Government policy is to assist exports into the Common Market is that the regions will be starved of the essential assistance which they need.

The argument about the regions is not solely directed to whether particular instruments will be available to the Government. What matters is the economic climate in which the Government have to make decisions. This is what so largely determines whether the regions will be assisted at all. If by any chance the Government's calculations are wrong on the question of the regions if we enter the Community, what will be the position then?

Many of us have had great experience in these matters—for example, my right hon. Friend the Member for Kilmarnock (Mr. Ross) and others of my right hon. and hon. Friends who come from the regions. Most of the regions are represented by Members on this side. If our fears rather than the Government's vague expectations are proved correct, there could be political as well as economic consequences, and the political consequences could be serious indeed for Wales, for Scotland, for the North-East and for Northern Ireland.

It would be a strange irony, but not an impossible outcome, if the measure which is designed to solder us more closely within the European Community had the effect of splintering the United Kingdom. But I believe that that could happen. [Interruption.] I say it could happen. Hon. Members may say that it is supposition, but it is not suppositions that we have suffered in the regions and the development areas from the consequences of market forces being let loose. Millions of our people have been driven out of their homes and out of their communities by the forces. This is what we fear, and this is why we say that there must be assurances on regional policy very different from the derisory few paragraphs which are all the Government have offered us in the White Paper on this subject.

That brings me to another aspect of the matter on which the Chancellor of the Exchequer dwelt today. He spoke of the "larger market" almost as though those magic words could be used and immediately greater trade would follow. But to secure access to larger markets it is not necessary to have overlapping political authority. If it were, this country would not have learned to trade with all the world. Countries like Switzerland, Sweden and Japan would never have secured access to larger markets if to do that it were necessary to extend political authority as well.

Important as they are, economic tests are not the only tests to be applied. We must judge these matters also by what we believe will be the consequences for the political and democratic life of the people of Britain. Judging by their recent performance, I have no great respect for the way in which the great blocs and the super-States have conducted their affairs. They may be exploring the universe, but they do not seem to be very good at protecting the elementary liberties of their people. In one sense it is almost safer to walk on the moon than through the streets of Washington and New York. So much is it the case that the larger political authority in the United States has removed democratic control from the people, that the Executive of the United States has gathered to itself such power and authority, that it has landed the United States in the most disastrous and ruinous war in its history.

This happens east and west. What is happening in the world, though hon. Members on both sides do not always seem to recognise it, is that, east and west, many proud peoples, many nations, are seeking to escape from the blocs rather than to enter them.

The problem for this country is not only the economic problem of how best we can gain access to larger markets or retain the larger markets that we have. It is also the question of how we are to enhance and strengthen our democratic institutions. That is the primary lesson of the 1960s when we see the violence that has occurred in so many parts of the world, in Prague, Paris, or wherever we may care to look. This is a paramount question for the British people.

The sharpest barb that the anti-Marketeer in my party can direct against me is to say that I am an anti-internationalist. I repudiate the charge, but I should like to spend a few minutes in doing so. I said in the House some 25 years ago—and it was not very popular to say it—that we should give up some of our own food to give to the Germans; so I have some right to speak on that case.

It is essential for us to have good relations with France. I hope that my right hon. Friend the Leader of the Opposition will not hold it against me, particularly at such a promising moment in my political career—I hope that he will have enough sympathy for a rising young politician to understand—when I say that I have a soft spot even for the inefficient French farmers of Provence and the Dordogne. I like their coqs au vin for one thing. Long may they live in sustained subsidised splendour, but I hope that it is not xenophobic to say that I do not understand why the people of Ebbw Vale should have to pay for them.

As for Italy, so far from my being anti-Italian, I feel that anyone who does not share my love for the Italy of Rossini, of Stendhal, of Casanova and the rest, of Garibaldi and Matteoti can go and jump in the foaming Tiber.

So it is not necessary for us to argue on that basis. But neither is it necessary for us, in order to live peaceably and prosperously with our European neighbours, to adopt from them institutions which may be well suited to them, and which they may justifiably think may suit us, but which have not been designed to suit us. Certainly one of the institutions that we shall have to alter fundamentally is this House and this Parliament. If the Government claim that the advantages of entry into the E.E.C. are such that we should diminish the sovereignty of Parliament, they should say so openly, but it is not proper for them to suggest to the people that there will be no erosion of sovereignty. Of course there will.

This is a subject on which the Home Secretary can reply to us. Next year, if the House votes for the proposition, next year a huge mountain of legislation will have to be passed, dealing with some of the nationalised industries, as I have already hinted; questions of regional policy; questions of competition between different forms of traders; all the matters already dealt with under the Treaty of Rome. A mammoth amount of legislation will have to pass through the House, almost all of it unamendable, I understand—the Home Secretary will correct me if I am wrong. If that legislation has to be passed through almost in its entirety, almost without qualification, because the Government have in effect bound us in advance to accept it, who could say that the sovereignty and authority of this House had not been diminished? Of course they would have been.

Mr. Ian Lloyd (Portsmouth, Langstone)

Does not it follow logically and ideally from what the hon. Gentleman is saying that a legitimate aim for the British people should be to alter equally fundamentally the European Parliament which we are joining?

Mr. Foot

I should be very glad if the Home Secretary, as the Government's authority on these matters, would spell them out, too, and tell the British people how far and how fast the Government will support the proposition that we advance to a single currency; how fast they will support the proposition that we advance towards a federal Government in Europe; how fast we shall advance to all the other different propositions. The people of this country have a right to know. Many of us believe, not because we are chauvinists or anti-internationalists, that in this country on the whole—I do not want to say this in a boastful manner, but I say it none the less—the liberties of ordinary people have been better protected under this Parliament than in most other countries. We do not want to see those liberties taken away from us, particularly by a Government who are not even explaining the matter to us. It was a great Frenchman, greater even perhaps than M. Pompidou, Jean-Jacques Rousseau, who said: Liberty diminishes where the State enlarges. That may very well be the case. [Interruption.] Yes, indeed, and that is why some of us on this side have argued for the strengthening of industrial democracy and the rights of ordinary people in their factories and local government and elsewhere to exercise their democratic rights. That is why we say above all else, and will continue to say—[Interruption.]—despite all the jeers of hon. Members opposite, that some people in this country will defend the rights and traditions of this Parliament and its chance to defend those liberties in years to come.

In my judgment the country is facing a very serious question in that respect. The supporters of entry surely want to take us in with the support of the people of this country. The Prime Minister has said that on occasion. I think that he was very wise when he said it, but I wonder how he will translate it into practice. Nothing would be worse for the great adventure, this most historic decision that we have been told of, and for the years to come, when many resentments and difficulties will have to be dealt with, than that we should enter with a majority, or even a substantial minority, of the British people feeling that they were cheated in the operation. There are ways of settling this question. It is not a new matter; it arose in the Labour Party in 1962 over exactly the same question of entry into the Common Market.

Many of my hon. Friends on this side will recall as well as I do the speech in which the then Leader of the Labour Party, Mr. Hugh Gaitskell, described what he thought was the constitutional position facing not merely the Labour Party but the country as a whole in such a position. I beg leave of the House to quote what he said. Every word of it is apposite now. Why then is the British Government in such a hurry? I think I know the answer. They had a timetable. They wanted to get this thing agreed, to sign the Treaty of Rome, to force the legislation through Parliament, to get the whole thing finished and complete before the British people could have an opportunity to comment upon it. I repeat again my demand: If when the final terms are known, this party—the major Opposition party, the alternative government of the country—comes to the conclusion that these terms are not good enough, if it is our conviction' that we should not enter the Common Market on these terms, so that there is a clear clash of opinion between the two major political groupings in the country, then the only right and proper and democratic thing is to let the people decide the issue. … Of course, Mr. Macmillan has given a pledge in his broadcast. He said: ' When we know the final position, then it will be for us here in Britain to decide what to do.' For us here in Britain? Who does he mean? Does he mean the Government? Or the Tory Party? Or the British people? We are now being told that the British people are not capable of judging this issue—the Government knows best; the top people are the only people who can understand it; it is difficult for the rest. This is the classic argument of every tryranny in history…We did not win the political battles of the nineteenth and twentieth centuries to have this reactionary nonsense thrust upon us again. I say in conclusion, primarily to my right hon. and hon. Friends—more perhaps than to some hon. Members opposite, although I believe that the debate will continue throughout the country—and in particular to those of my hon. Friends whose opinion I respect but which differs from mine, that one cannot help to build democracy for Europe by undermining it in Britain. But I am so little of a "Little Englander" that I still believe that if we can rebuild it here and enhance it here and transform it into what we on this side of the House call Socialism, then we can save it everywhere, and that is the proper summons for this country.

5.3 p.m.

Mr. Duncan Sandys (Streatham)

As I think the House knows, my views on this question are somewhat different from those of the hon. Member for Ebbw Vale (Mr. Michael Foot). I have been campaigning for some 25 years for European unity. I am, therefore, naturally delighted at the imminent prospect of Britain's entry into the European Community.

The economic case can be stated quite simply. We are offered the opportunity to secure an internal market, with a common tariff and common economic policies, embracing some 300 million consumers, with all that that implies. It may be said that bigger is not necessarily better. Size by itself will not guarantee success. But there is no doubt that a large home market is an enormous asset for a country like Britain, which exports technologically advanced products requiring vast expenditure on research and development.

The case for joining, as my right hon. Friend the Chancellor of the Exchequer has said, is greatly reinforced by the solid evidence of the progress achieved in recent years in the Community. Since the Common Market was formed, there has been a remarkable acceleration in economic growth and a significant rise in living standards in all the six countries. While there may have been some other contributory factors, there is very little doubt that this spectacular improvement is in the main due to the benefits of economic union.

There has been much argument about the precise terms which have been negotiated. The right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) said that they were not ideal but were acceptable. In international negotiations the result is never ideal. One cannot expect to get everything one asks for. But, having taken part in the first round of the negotiations with my right hon. Friend the Prime Minister, I am sure that these terms are as good as any Government could have obtained; and I congratulate my right hon. and learned Friend the Chancellor of the Duchy of Lancaster on an outstanding diplomatic achievement. In any case, it is no good at this stage discussing how the terms might have been improved. These are the terms and we have either to accept them or reject them.

As has been said—and the hon. Member for Ebbw Vale said it again today—this is a momentous and historic decision. But there are some who do not seem to appreciate that a decision to say "No" would be just as momentous and just as historic as a decision to say "Yes". This offer is not going to remain open. The opportunity once missed would be unlikely to recur for a decade, or perhaps a generation. In the interval, Britain and the Community would have developed along entirely different lines which would make economic union incomparably more difficult, if not impossible. Therefore, those who warn us that a decision to go in would be irrevocable should realise that a decision to stay out would, for all practical purposes, be irrevocable also.

A variety of opinions have been expressed about the effect on our balance of payments of joining the Common Market. The completion of the negotiations has removed a few of the uncertainties. But, as my right hon. Friend explained today, there is really no way of estimating with any precision—and this came out clearly in the last Government's White Paper—the dynamic effect of the enlargement of the Market upon our exporting industries; and that, of course, is one of the basic factors in any balance of payments calculation. I am sure—and I think that anyone who thinks about it seriously will come to the same conclusion—that a Select Committee would be faced with exactly the same difficulty.

I fully share the confidence expressed by my right hon. Friend, which incidentally echoes the earlier assessment of the Leader of the Opposition, who said in the House in 1967: … I believe that within a very short period the balance of payment effects … could be not negative but excitingly positive for Britain."—[OFFICIAL REPORT, 8th May, 1967; Vol. 746, c. 1084.] I do not believe that anything has happened in the interval to invalidate that opinion. In the end it comes down to a question of national confidence. Are we afraid that in a free market Britain would not be able to hold her own? If we have faith in ourselves, surely we should welcome the challenge and grasp the opportunity which Europe offers.

Many hon. Members have spoken about New Zealand. Since my mother was a New Zealander, I naturally feel a special affection for that wonderful country. I remember as Commonwealth Secretary going to Wellington in 1961, before the start of our first Common Market negotiations. I expected the New Zealand Government to demand every kind of assurance and safeguard. In fact they asked for nothing. They merely said: "We trust Britain. We know you will not let us down."

Committed as I am to the European idea, I could never have brought myself to support terms which betrayed New Zealand's trust. I was therefore greatly relieved when my right hon. and learned Friend managed to secure such a favourable arrangement. The terms have been rightly welcomed, not only by the New Zealand Government but also by the New Zealand dairy industry

The hon. Member for Ebbw Vale referred in the closing part of his speech to public opinion. The opinion polls, as we all know, have for some time shown a large majority against joining the Common Market. But that is not surprising. Having had the door shut twice in our faces, one would hardly expect great popular enthusiasm for a third application. But now that the negotiations have been successfully completed, there are already signs that public opinion is shifting quite rapidly. By the autumn there may well be—and personally I believe that there will be—a majority in favour of joining the Common Market. But either way—;

Mr. Arthur Lewis (West Ham, North)

In view of the racket being made by those in favour, it is not surprising.

Mr. Sandys

The hon. Member will have the opportunity to express himself later on.

Mr. Lewis

No, he will not.

Mr. Deputy Speaker (Sir R. Grant-Ferris)

Order. We cannot have sedentary interjections. If the hon. Gentleman wishes to intervene, I am sure the right hon. Gentleman will be generous.

Mr. Lewis

The right hon. Gentleman made an incorrect statement.

Mr. Deputy Speaker

The right hon. Gentleman has not yet given way, but if he does I am sure—;

Mr. Sandys

He is not likely to give way.

Mr. Lewis

On a point of order, Mr. Deputy Speaker. I want to raise this matter with you. It was a matter I raised during the first two days of the debate. I have taken careful note of all the speakers called in this debate and all the regulars known to be pro are being called. It is now two to one in favour of the Government, excluding the two Front Benches. There is a deliberate attempt to show favouritism on the part of the Chair.

Mr. Deputy Speaker

In that case the hon. Gentleman knows his remedy. This is not something we can discuss now.

Mr. Lewis

I am going to put down a Motion.

Mr. Sandys

I was saying that by the autumn—;

Mr. Lewis

Have a look at HANSARD.

Mr. Jeremy Thorpe (Devon, North)

Shut up.

Mr. Lewis

I am not going to shut up. The facts are that favouritism has been shown.

Mr. Deputy Speaker

The hon. Gentleman knows parliamentary business very well and he knows he must not make those remarks.

Mr. Lewis

Yes, Mr. Deputy Speaker, and I know that people have been promised, they have gone to the Chair, they have been told when they are to be called, they make their speech, go out and never put in an appearance again. Hon. Members who are regularly here are not being called, and there is a two-to-one bias on the part of the Chair in favour of those for the Common Market. I shall put down a Motion quoting the facts and figures.

Mr. Deputy Speaker

I now have to ask the hon. Gentleman to withdraw that remark about bias from the Chair. If he wishes to do anything about this, he must put down a Motion. He must not make offensive remarks to the Chair, and I ask him to withdraw.

Mr. Lewis

It is in HANSARD. The record is there.

Hon. Members


Mr. Lewis

I am not going to withdraw. It is on the record in HANSARD, two to one being called in favour of this Motion. Hon. Members who want to take part in the debate cannot get called.

Mr. Deputy Speaker

Unless the hon. Gentleman seeks to withdraw that remark now, I am afraid I shall have to take serious action against him, and I should dislike having to do that very much indeed. I ask him to withdraw the remark since he must know that the House never allows offensive remarks to be made against the Chair. The hon. Member may find himself alone in this assembly unless he does as I suggest.

Mr. Lewis

I have found myself alone throughout the whole of the debate. The figures are in HANSARD. I will put down a Motion. In view of the fact that I will put down a Motion quoting the numbers and names, I will withdraw.

Mr. Deputy Speaker

I think the hon. Gentleman would be wiser, if he is to put a Motion, to withdraw his offensive remark now. Will he withdraw it now?

Mr. A. E. P. Duffy (Sheffield, Attercliffe)

He has said he will withdraw.

Mr. Barber

The hon. Gentleman said that he will withdraw the remark he made and that he intends to put down a Motion.

Mr. Deputy Speaker

I accept that. Mr. Sandys.

Mr. Lewis

Perhaps you will look at HANSARD yourself, Mr. Deputy Speaker.

Mr. Sandys

Before this interruption, I was saying that by the autumn the opinion polls may well show a majority in favour of joining the Common Market. But, either way, we should not allow this to dictate our decision here in Parliament. I cannot believe that the British people really want Parliament to be reduced to a glorified computer, which churns out decisions in accordance with the data fed into it by Gallup polls. That is not the rôle of Parliament.

Those of us who were in this House in the 1930's and were then pressing in vain for rapid rearmament to meet the Nazi threat will never forget how both the Government and the Opposition shamefully shirked this vital issue, in deference to public opinion which had not yet awoken to the danger of war. Whatever the opinion polls may say, Parliament cannot shuffle off its inalienable responsibility to do what it considers to be in the best interests of the nation.

A number of hon. Members have spoken about the political aspects of this question. The European Economic Community, as its name implies, is concerned with economic matters. Any decision to create political institutions to deal with foreign affairs or defence would require the positive approval of all the members. It could not therefore happen without our consent. But that does not mean to say that political union is not desirable. For my part, I sincerely hope that economic integration will lead progressively to political integration. The time has long gone by when small or even medium-size States like Britain can successfully pursue independent foreign and defence policies. To exercise effective influence and to provide effective security, larger groupings and joint action are essential.

Nor should this necessarily stop at regional associations. It may well be that a United Europe will ultimately constitute one of the major components of a real world authority which, sooner or later, will have to be created, if a succession of ever bigger and ever more calamitous wars is to be prevented.

The right hon. Member for Stechford was right to stress the importance of strengthening the ties between the Federal Republic of Germany and the free world. It would be unwise to assume that West Germany could never, in any circumstances, be detached from her European and Atlantic partners. It is conceivable that, at some favourable moment, Russia might offer her the tempting prize of German reunification, in return for neutralisation and withdrawal from the European Community. I do not say that the Germans would accept such a deal. But, if they did, it would undermine completely the whole structure of Western defence. Any such danger would of course, disappear with the creation of a politically united democratic Europe, in which the Federal Republic would play an important part and which East Germany might one day be free to join.

Our aim should be to build a unified Europe which, in the name of all our peoples, could claim a seat at the top table and share in the great international decisions. That does not mean that Europe can act in isolation, since her safety depends as much as ever upon the continued cohesion of the Western world, whose defence is indivisible. Without American support, the free nations of Europe would be completely at the mercy of Russia's incomparably superior military power. It is, therefore, an illusion to think that Europe could, if she wished, play the rôle of an independent "Third Force", performing a kind of balancing act between the United States and the Communist bloc.

President Kennedy spoke of a partnership resting on two pillars—the United States and United Europe. There can be no real partnership between a super-Power and a collection of smaller nations, each pursuing separate policies and speaking with conflicting voices. The concept of two pillars likewise makes no sense unless it supports an arch. The arch is the Atlantic Alliance.

After the war, Britain laid down the responsibilities and power of a world empire and brought to an end a great and honourable chapter in her history. Since then, we have been unconsciously looking for a new rôle to replace the old, a new and inspiring objective, a new sense of purpose. A nation's rôle cannot be chosen from a catalogue. It is determined largely by factors outside its control—geography, economics and security. In all these respects, Britain is an integral part of Europe and, whether or not she joins the Common Market, her future destiny is linked inextricably with that of her European neighbours.

We can, if we like, turn our back on Europe and work out our own salvation by ourselves. If we do, as my right hon. Friend the Chancellor of the Exchequer said, Britain will not collapse. But she must be prepared to accept retarded economic growth and dwindling influence. Alternatively, we can help to build a United Europe, which will possess material resources and political power of the first order. As a leading member of that great association, we can share in its expanding prosperity and once again play our part in shaping the course of history.

5.25 p.m.

Mr. Peter Shore (Stepney)

It is always stimulating to be called immediately after a speech from the right hon. Member for Streatham (Mr. Sandys). That is not to say that I find myself in agreement with what he says very often. Rather, it is the case that, more than most right hon. and hon. Members, he seems to articulate more clearly the aspirations and the underlying emotions which lie behind the more sensitive and careful formulations of the propositions that we are debating.

The right hon. Gentleman brought into question such matters as whether we have sufficient faith in ourselves—which was one of his earlier phrases—whether the small and medium-size States of today are viable in the world of today and tomorrow, whether the future lies with large regional blocs which, in the case of Europe at any rate, the right hon. Gentleman admits will not really be a regional bloc of the same calibre and power of the Soviet Union and the United States, or whether the future is to lie with inter- national organisations built not necessarily out of a small number of regional blocs but upon the much more natural module of the nation State. That is one of the great arguments about the future in which all of us who are interested in this matter should concern ourselves.

At a later stage in my remarks I shall pick up again one or two of the points made by the right hon. Gentleman. Meanwhile, almost with reluctance, I leave his speech to address one or two remarks to the almost empty Treasury Bench where the Chancellor of the Exchequer and the Chancellor of the Duchy of Lancaster normally are to be found. Both right hon. Gentlemen have played a very important part in the negotiations. Apart from the Prime Minister, they more than anyone else have some very important questions to answer.

I begin by addressing myself to the absent Chancellor of the Exchequer. It is no good his simply assuring this Parliament and this nation that we can expect the same consequences to flow from membership as have followed from the membership of the original six member States. The reason why it is extremely unwise for us to expect the same consequences from our membership are these. Not one of the original Six was a member already of two preferential trading systems. When Italy, France and Germany came together with the Benelux countries, they did not, as they joined and formed that club, withdraw from other trading clubs in which they were preferentially situated already.

These trading clubs, in the case of Britain in relation to the Commonwealth and E.F.T.A., account for one and a half to two times the trade which we now carry on with the Common Market. This, as everyone knows, is a major factor in the equation. It is a little difficult to quantify, although efforts have been made to quantify it. The only problem is the reasonable ranges. It is not a question that in principle it is impossible. Otherwise, how do the Government think that negotiations in the past have been carried out with the Kennedy Round, and so on? Were we all in a complete fog? Had we no idea where our national interests lay? Had we no idea at all what the consequences of the lowering of one set of tariffs and the raising of another would be? Of course we had. The right hon. Member for Barnet (Mr. Maudling), who, I understand, is to wind up the debate tonight, knows it better than most.

So I come to the second point of great difference. When the Six joined together a most important thing happened. They got rid of their tariffs. When they joined in 1958, the tariffs were extremely high. The tariffs of France and Italy over the whole range of manufactured goods were 35 to 40 per cent., and those of Germany, while not so high, were still substantial. As those tariffs came down, those countries enjoyed the benefits of greater competition, greater specialisation, and so on. But those circumstances will not apply to us. The reasons are well known.

As a result of our successful negotiations to get rid of tariffs, because we are now at the end of the Kennedy Round, the tariffs which we had to get rid of are very much lower. It is not a question of British tariffs being 30 per cent. or even 20 per cent. The average British tariff at the end of this year will be about 10 per cent. Incidentally, the average tariff over which we have to climb in the Common Market countries is 7½ per cent. Therefore, we must be honest. In so far as the dynamic effect depended upon the winning of an open market and on the removal of quotas, tariffs, and so on, we already enjoy from the outside 50 per cent., if not two-thirds of all the benefits which we could reasonably hope to get from entry.

When the Secretary of State for Trade and Industry, who is not present, in a speech earlier this year, which he had obviously forgotten because he indicated dissent this afternoon, said that he expected that we would do less well in the transitional period because the straight trade effect on the balance of our exports and imports would be adverse, he was speaking of the effect of pulling out of one trading system in which we are preferential members and going into another where the benefits are not so great. The Government know that the calculations show that the balance will not be so good. If that were the only problem we would probably try to live with it, but it is not.

This brings me to the more important and onerous obligation which the Government have negotiated, which was touched on in the Chancellor of the Exchequer's speech this afternoon. I refer to the commitment from the end of the transitional period to accept the permanent system of financing which the Six worked out and only agreed among themselves in February, 1970, and afterwards. It did not exist in 1961–63 when the Government last negotiated or in 1967 when the application went in from the then Labour Government.

At the beginning of 1970 the Six worked out this system among themselves, and the Chancellor of the Exchequer, when he was playing the rôle of the Chancellor of the Duchy of Lancaster and went to Luxembourg on 30th June, 1970, to open negotiations, commenting upon that system, said that if he appeared "to labour the point" it was only because unless such a solution is found, a fair solution, a sound solution, 'the burden on the United Kingdom could not be sustained and no British Government could contemplate joining.

Mr. Rippon

I am sorry to have missed the earlier part of the right hon. Gentleman's speech. From the outset it has been understood that all that we could seek is what we have obtained—namely, transitional arrangements. If the right hon. Gentleman will look, as he has so far refused to do, at HANSARD of 19th February, 1970, column 187, he will see that the Government of which he was a member—indeed, a member of the Cabinet—expressely stated that their position was as set out on 4th July, 1967, and that they had no further observations to make.

Mr. Shore

I have indeed looked at all that. I am prepared to run over the ground with the Chancellor. However, if that is his understanding, it is very odd that the Chancellor of the Duchy, from whose speech on 30th June, 1970, I have just quoted, should have gone out of his way to make such a fuss about something which, if he believed it to be the case, had already been conceded and was in his view non-negotiable; namely, that only transitional terms could apply.

I think that I can speak with some authority on this subject. The permanent financing system of the Six was not accepted by the Labour Government. The paragraph 43 half sentence of the February, 1970, White Paper which the right hon. and learned Gentleman tried to quote to me is refuted in the next paragraph, it is refuted again in the introductory part of the White Paper, and it was specifically refuted by my right hon. Friend the Member for Dundee, East (Mr. George Thomson) in his speech in the debate in February, 1970, and by the then Foreign Secretary.

I do not wish to labour the point. I understand why the right hon. and learned Gentleman now wishes to try to suggest to me, though apparently not to the Six some months ago, that we had accepted in advance what he has conceded. His right hon. Friend did not concede it. He said, if words have any meaning, that he wanted something special, something different, something which was not just a transitional arrangement.

Why should the right hon. Gentleman go to such lengths? For the simple reason—the Chancellor of the Duchy knows it very well—that the permanent system which the Six agreed among themselves would result, on the best estimates that we could make, in Britain imposing on herself a three-tax system and handing over the yield of those three taxes across the balance of payments to the Community, to Brussels. It means, to quote our White Paper, the whole of our Customs duties, the whole of our food levies, and a 1 per cent., value-added tax. We found it difficult to put a figure on it, but the best estimate with which we came up was up to £670 million. That was our top figure. That was the prize about which the negotiations were taking place and which the Chancellor's right hon. Friend very properly reserved in full to the Government on day one.

The tragedy of these negotiations is that the right hon. and learned Gentleman, for reasons which I do not fully understand, obviously thought that he had to accept this system, despite all that it will impose on Britain, and that all he could do was to argue about the length of the transitional period.

The right hon. and learned Gentleman has been congratulated by his right hon. Friend—I find it difficult to understand why—on his conduct of the negotiations. He came back with a formula which began with a 3 per cent. contribution which at the end of five years was supposed to be between 13 and 15 per cent. Then he wanted three years in which there would be a small increase, and at the end of that, as the third part of his own special package, he was to get a special review. That is what he asked for on 16th December.

I have costed that package. It is very simple. It came out at about £1,000 million. That was what the right hon. and learned Gentleman proposed we should pay in the adjustment period, the transitional period, across our balance of payments to the Continent. He was proposing that we should pay just £1,000 million, knowing full well that the sum would increase very much after that. The system which he has adopted, even the transitional arrangement which he has accepted, has knocked up the sum—and if I am wrong I ask the right hon. and learned Gentleman to say where—to more than £1,700 million. That is how much we shall pay across the balance of payments between 1973 and 1980 simply as part of our membership fee, as our contribution, on a rising scale, in the knowledge that from 1980 onwards the best guess available is that we cannot be asked to pay less than £400 million a year in perpetuity.

That is the heart of the matter. That is what the negotiation has been about. The right hon. and learned Gentleman shakes his head. It has never been difficult for this country to join the E.E.C. We could have done it in 1956. If this nation had been prepared to do what even the French could not conceive we would do, and that was totally to accept every possible condition which the French demanded, we could have entered the Community at an even earlier stage.

It has always been a matter of how to reconcile very different sets of interest which arise out of our histories. There is nothing necessarily wrong or mean about the approach of each side. France has always pursued a policy of self-sufficiency, or near self-sufficiency, in food supply. We, on the other hand, have been an open market for the world's food. We have been part of a great Commonwealth preference system, while the French have been part of a French union. These things are there. They are part of our history, and the problem has always been to bring about a fair solution.

We have conceded, and the French have got in these negotiations all that they could possibly have asked for, and more. Indeed, one gets the impression that they were so surprised at what they got that they could hardly believe it, and it was not until President Pompidou had spent 11 hours alone with the Prime Minister that he was satisfied. During the meeting he asked the Prime Minister a number of questions designed to find out whether the right hon. Gentleman was really a European—whether he believed in a European Europe and was prepared, in all matters, to give preference to the Continent of Europe over all other claims and interests; whether he saw the future of Europe through the eyes of France; whether, if Britain went in, she would cease to be in any sense a serious challenge to France; whether Britain would be ready to be shackled with enormous burdens at the point of entry, and so on. The right hon. and learned Gentleman smiles in his bland way, but I did not make that speech. That is what President Pompidou said just before he met the Prime Minister for the meeting at which he asked all those questions of him. Those are the questions which he said he would put to the Prime Minister at his meeting.

What it comes to—and this is why it is so important—is that the C.A.P. and the method of financing it involves this immense payment by us. The system is called the "own resources" system of the Community. It involves the alienation of revenues—a major constitutional matter. These taxes and their yield cease to go to the Treasury. They go across the exchanges to the Community of Europe. British people are taxed by a body over which they have very little, if any, control. This agricultural and financial system involves the cutting back of all the food supplies that we have enjoyed from other countries. It is this, more than anything else, which has made it so difficult to get anything like convincing terms for New Zealand and the Commonwealth sugar islands.

It is impossible to get those terms securely agreed because they are in conflict with the system of giving preference to Continental supplies, and by the time we come to renegotiate these agreements Britain will not be able to negotiate as Britain. Our negotiating power will have become merged with the power of the enlarged Community. Is not that the essence of the problem? Is not that really why the simple guarantees which could otherwise be required are not given?

As I said earlier, this is a system which cannot be changed. One thing which the French insisted on before they began negotiations was that the whole of the Six agree with them, and that they agree with them to the point of signing a separate treaty under which their agriculture is to be supported and cannot be changed except by the unanimous agreement of all the member States, which means that there is a veto by France over any such change.

This is an important development, and the Chancellor of the Duchy of Lancaster and the Chancellor of the Exchequer have both referred to this system. They said at the beginning, and they have maintained it today, that all the arrangements to be worked out would be fair to this country. I say that they cannot be fair to Britain because the very nature of the system which they have introduced—a system which finances agriculture from food levies and from Customs duties—must bear more heavily on this country, which imports half of its food, and which does 70 per cent. of its trade outside the enlarged Community, than on any other member country.

Does the right hon. and learned Gentleman dispute the figures put forward by his own officials in the summer of last year? They reckoned then that Britain would be paying 46 per cent. of the total food levies, and one-third of the total customs duties, that in all these payments in and out at the end of the transitional period we would be paying £400 million a year net to the Community, that France would be gaining £300 million net, and that all the others would be paying plus or minus, but to a very smaller extent.

People ask one to explain the fact that France wants Britain in the Community. I have not detected any great change in French policy, but I have detected some big changes in British policy. I should be amazed at any French Government who refused to take in a Britain that has solved the problem of her farm surplus, that has provided a guaranteed market almost to the end of time for French agriculture, that is paying this fantastic annual ransom across the exchanges, and that has accepted, without the possibility of change, an arrangement which I very much doubt has been accepted by any nation in human history, other than a nation at the end of a war. I am amazed that this should have been agreed to by us, but I am in no sense surprised to see it warmly welcomed by France, and that brings me to my last point in this economic argument.

This is a much more important point, because it spreads over from the economic to the political. I have always accepted that nations with different interests should stick up for their interests, as we must do for ours, but have a reconciliation where this is possible. But given the known effects on us of this system, and given the great losses that we shall sustain by going into the Common Market on the terms that have been indicated, I find it a very worrying and unconvincing demonstration of the meaning of community that the first expression of membership to us should be to negotiate terms which smack more of the Treaty of Versailles than of membership of the Treaty of Rome, membership of a community of friends and allies.

If I am wrong about what I have said, I invite those on the Treasury Front Bench to prove it. Let them open the books. Let them have whatever form of inquiry they think is right, so that we can put our heads together. If the right hon. and learned Gentleman can convince me that I am wrong I shall be happy to be so convinced, but let us have the facts.

It is because these terms are so bad that one has to ask why the Government have been so determined to press ahead, why they are in a sense ignoring what I believe to be the facts and evidence of which they are aware? The answers lie very much in the remarks of the right hon. Member for Streatham.

This whole argument and the attraction that so many people feel for going into Europe is based on uncertainty about the power of this country in the world of today and, as they see it, the world of tomorrow. They are worried about it. They feel that we have less power than we should like to have as a nation and they are trying, perhaps partly because of this, to persuade the British people that we have very little power at all.

A lot of this worry about power is a misreading of our situation. It takes two forms. First, there are those who worry about the economic power of this nation. My right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) had a great deal to say about sitting as one of a group of ten and feeling uncomfortable because he had to wait while the Five sorted things out for themselves. But in many ways the logic of his line of thought is that he should not be there at all. If the Community goes ahead and forms a monetary and economic union, as it intends to do, over the next 10 years, there will not be a British Chancellor of the Exchequer in a group of ten at all. The group of ten will simply become a group of five. What I find extraordinary is that among the nine are countries like Sweden and Switzerland, which will be only too pleased to continue there.

It is one of the paradoxes of the postwar period that, while a great deal of the physical power that this nation used to possess in the world, based upon our great position in different parts of the world, has declined, the ability of the people and Governments in this country to shape, control and civilise the economic forces which until very recently totally dominated them has grown enormously.

When we are faced with unemployment today, such as we have had this last year, we can say, and know it to be true, that it is up to the Chancellor to decide whether or not that level of unemployment will continue. Twenty, thirty or forty years ago—certainly in the pre-war period—that power did not seem to lie with economic Ministers at all. Nations were in those days much more the victims or the servants of an economic system than they are today.

Therefore, I do not believe that our ability to exercise economic power effectively on behalf of our people has diminished. On the contrary, it has greatly increased. I certainly have in mind the kind of worries which still beset so many of my friends when they consider very large international companies.

Second, political power has been reduced for this country. But where one is concerned with the problems of security and defence, the position is remarkable. One would think that we were an island totally alone, unallied with others. But for twenty years, we have been linked—some of us think over-linked—in vast military alliances. This country is not alone or isolated.

I have very little belief in the new doctrine, which has been insinuated rather than asserted, that today one needs units of 200 to 300 million people in order to have either prosperity or security. I do not think that this is so. I am convinced that we can have much more effective organisations to deal with genuinely international problems and that there is still plenty of scope for the individual nation States to deal with their own problems.

I do not fear to be excluded from the Common Market. This fear of exclusion is one of the driving and dangerous forces which is at work throughout the whole of this debate.

5.55 p.m.

Mr. Michael Grylls (Chertsey)

When the right hon. Member for Stepney (Mr. Shore) talks about dynamic effects, many people will remember his time at the Department of Economic Affairs, and wonder whether he is very well qualified to talk about dynamism.

Even if some doubts remain in the minds of our constituents today, I believe that a majority of people think that, by 1973, Britain will be a member of the Community. It may not yet be universally welcomed, but I believe that it is universally accepted.

The certainty of the United Kingdom's entry was evident when a number of us went to the European Parliament the other day. We were not yet European parliamentarians, but we were treated as such, and the warmth of our welcome was very great. It was moving and encouraging for all of us, whatever our politics, to meet these European parliamentarians for a few days. The hon. Member for Gower (Mr. Ifor Davies) rather surprised everyone in one of our discussions by starting to speak in Welsh. I believe that it was welcomed, although it caused some embarrassement to the translators.

No one can fail to respond to the excitement of that assembly—the ideal behind the Parliament of six independent nations working for a European solution to all their problems, a multi-nation Parliament sitting in party groups and not as national delegations. Britain must be there to play a leading rôle in building that Parliament into an influential and virile assembly.

Our adhesion to the E.E.C. will do more than just increase the size of the Market—important though that may be. We shall bring with us our unique Commonwealth connections, which will be better for Britain, better for the Commonwealth and better for Europe. These mutual advantages of British entry are clearly recognised by all European parliamentarians, with perhaps the sole exception of the Communists in that Parliament, who alone in Western Europe today have nothing to gain from a strong and unified Western Europe.

Europe and Britain have suffered cruelly through division and wars, particularly in this century. Most of us can remember the horror of those occasions. But today, the world is dominated by the super-Powers. A united Europe of 10 leading countries will have a real influence in the world. Alone, none of us can be influential. None of us today is powerful enough to wield real influence, but together we can really influence world events, and decisively, for the good.

Surely it must be accepted—I believe that it is being increasingly accepted throughout Britain—that Britain will wield more influence inside than outside. A Europe without Britain would be unreal. A Europe with Britain will speak with a voice of experience and political stability. Who can fail to applaud such an opportunity and such an exciting prospect?

But a word of warning. Great opportunities only come once. If, through doubts or lack of confidence, as my right hon. Friend the Member for Streatham (Mr. Sandys) said so well, we fail to grasp that challenge, history will judge us very harshly. Future generations will justifiably say, "They had little faith in 1971".

As the debate rolls on and people understand more what this issue is all about, let us move forward and have confidence which this great nation has traditionally had in great matters. Let us take our place in Europe. That place is available to us now. Let us play a real rôle in Europe and the world that our civilisation, greatness and experience have undeniably fitted us to play.

6.0 p.m.

Mr. Tam Dalyell (West Lothian)

My right hon. Friend the Member for Stepney (Mr. Shore) asked why the French wanted us in the E.E.C. I recollect putting the same question to a super-technocrat at E.S.R.O. at its space research organisation.

Piere Blasel, of the Ecole Poly-technique, replied, "It's like this. Some of us scientists in Europe"—and he was speaking for a wider community than scientists—"are unhappy about the way in which a number of European Governments and institutions are developing. We feel that you British have a great deal to contribute to the whole range of problems, and the style of Government we have in Europe". Such is the relationship between the State and the individual.

I hope that my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) will not take it amiss if I say that one of the major contributions that we can make to Europe is to bring to European debate and politics people like my hon. Friend the Member for Ebbw Vale, with his sparkling wit and sense of irreverence. That would certainly be extremely welcome in the European councils.

Indeed, I would welcome the presence of a cat from Ebbw Vale among the European pigeons. The solemnity of debate is one of the disadvantages for a pro-European, like myself, in envisaging European politics, so that the presence of my hon. Friend on the European scene would be most welcome, and good for Europe.

If I speak about West Lothian, I do so not out of a sense of narrow parochialism but because I suspect 30 or 40 constituencies are in exactly the same position as we ore. For example, we were an area of coal and shale mining. My hon. Friend the Member for Lanarkshire, North (Mr. John Smith) will agree that his constituency is like mine in many respects. These mines closed down and, in the 'sixties, we saw a remarkable transformation, with many new jobs coming in. A sizeable number of these were brought in by international com- panies.Indeed, what we would have done had it not been for the activities of Hewlett, Packard, Cameron Iron Works, Signetics International, and a number of others I do not know. One can point to British international companies like British Leyland, I.C.I., B.P., B.H.C., and others which are in the same investment bout.

There is a tremendous problem of conflicting loyalties. One of my strongest loyalties is to the young people of the constituency which has sent me to Parliament for nearly ten years. I dread to think what will happen to these young people and their careers, for fewer of their jobs will be in West Lothian if we reject entering the E.E.C.

I went along to talk to these international companies, American or British based. They say "We are, if the United Kingdom does not enter E.E.C, not going to withdraw. We do not want to exaggerate the case. Nor do we intend to close down overnight. Perhaps the next time round we will go ahead with our expansion plans, but you must understand that the time after that we will probably want to go to the larger markets, perhaps at Liege or Dortmund". I wonder what development areas like West Lothian will do if possible investment decisions are not implemented as a result of our not going into Europe? The jobs situation would be worse, much worse.

This may all seem negative, but I have more positive reasons for taking a pro-Market view. As one who has taken an interest in the affairs of international companies, I have seen only too clearly what happened during the six years of Labour Government, and I have no reason to doubt that they will be any different under the Conservatives.

For example, time and again some companies have threatened that if certain of their conditions were not met, they would go elsewhere, where those conditions would be met. There are some international companies which do not pay as much attention to pollution and the needs of the environment as they might. Other companies are very good. The not-so-good ones tend to say, "If you cause difficulty and lay down stringent conditions about pollution and the amount of waste that may come from our factories, you can say good bye to the jobs that we would have provided, and we will go elsewhere". Currently, such companies are going to Belgium.

By those sort of arguments they are able to wield a powerful stick. To combat this stick and indeed to overcome postures which trade unions might dislike, we must have a large properly organised and coherent Community, because if we are alone we will be in great difficulties in our relations with the international company. If Socialism in one country has considerable difficulty, so does advanced technology in one country because advanced technology knows no frontier. It is for this and many other reasons that I support our entry into the E.E.C.

Several Hon. Members rose—;

Mr. Speaker

Order. I understand that there has been an undercurrent of criticism of the Chair in regard to the calling of hon. Members to speak. I am not sure of its extent or whether it goes beyond one particular hon. Member.

Part of my duty is to secure the equitable distribution of time. In the first two days of this debate, those from the back benches who were for entry into the E.E.C. had 198 minutes, while those against had 204 minutes. Those who were doubtful had 51 minutes. I am keeping a careful eye on the equitable distribution of time. Sir D. Walker-Smith.

6.6 p.m.

Sir Derek Walker-Smith (Hertfordshire, East)

The White Paper is a short document, but this is a wide debate. It seeks to answer the question whether, in the context of the full facts and best estimates, the conclusion arrived at in the White Paper is correct. It is, therefore, a wide issue embracing every aspect, and it is by no means restricted to those matters which the Government saw fit to reserve for negotiation.

For myself, I have always been convinced that this great issue must be resolved not in the narrow ravines of particular interests, still less in the tortuous crevices of political calculation, but on the great broad plateau of the public interest, not only of this generation but of those to come.

If that be so, then we observe at once a strange paradox in the White Paper. It is concerned basically with two matters. One is the great abiding question of what is called the case for entry, while the other is secondary and mainly transitional; namely, the outcome of the negotiations. However, the content of the White Paper is in inverse ratio to the importance of the subject matter, with 103 paragraphs on the smaller matter and only 33 on the greater.

Brevity, it may be said, is not necessarily a defect; and that is so, provided always that it stems from precision and not from omission. Here that is not so. The White Paper, or the part dealing with the case for entry, combines both faults. It is neither ample nor precise.

Too many glosses and generalisations are contained within it. It has too few firm facts and figures and too many hopes and aspirations, eloquently expressed but imperfectly justified. It makes too many claims, based not on evidence and evaluation but on surmise and speculation.

It was because I feared—rightly, as it turned out—that there might be a temptation to issue a White Paper more propagandist than informative, more hortatory than analytical, that I felt it right to table 18 Parliamentary Questions asking for the inclusion of certain specific and factual matters. They covered, in addition to horticulture, in which I have a constituency interest, and medical and nursing matters, in which I have a post-Ministerial interest, a number of matters on which the decision should hinge and on which hon. Members have not only a right but a duty to be precisely informed. The answers, I regret to say, were disappointing, negative, unhelpful. I asked for bread, and they gave me a stone. I asked for precision, and they said, "Wait and see"—but wait until it may be too late. In the result, the White Paper is defective and the position is unsatisfactory.

Time allows only a few brief examples. On cost, the White Paper has been widely and effectively criticised for lack of any proper cost benefit analysis. There is no, or no sufficient, assessment of the balance of payments position; no, or no sufficient, assessment of the gain and loss on the tariff position—the effect of the remission of the common external tariff for a quarter of our exports set against the loss of protection in the home market and the loss of preferences in the Commonwealth and in E.F.T.A.—because how can we expect our friends to treat us better than we treat them?

These vital matters are, incredibly, relegated to a footnote at the bottom of page 13 of the White Paper. The total effect of increased food prices and of this new pay-more-eat-less principle are not quantified. The inevitable effect on industrial costs and exports is shrugged off. As for the contribution to the Community budget—after all, even an estimated £200 million per year represents a third of the biggest surplus we have ever achieved on current account in the balance of payments. But would it be only £200 million? That is at best the estimate for 1977, but what about the period thereafter?

What about the optimistic view taken in the White Paper of receipts? Again, I sought to clarify the matter by way of Parliamentary Questions, asking for a statement of any expected receipts from the Community budget, specifying the basis of calculation and the degree of certainty or otherwise. "Wait for the White Paper", I was told. But all the White Paper says, in paragraph 42, is … after allowing for our estimated receipts from the budget … But what receipts, and based on what estimate?

At present, nearly all that budget goes to propping up the common agricultural policy, an out-of-date, inefficient, costly and socially divisive system. Britain can only hope to be at the receiving end if there is a substantial restructuring of agriculture in the Community. So, once again, I deemed it my duty to ask for a statement on the position and prospects of restructuring and the estimated effect on receipts. But we have not got it. M. Pompidou, however, has obliglingly filled the gap which British Ministers delicately left open. He told his constituents, in effect, that matters had gone far enough.

We should have known the answer without M. Pompidou's help. Why should Western European farmers change their familiar ways, why should they risk the hazards and assume the burdens of innovation, when the British taxpayer will pay them to stay as they are? Of course, they will not, and their votes will ensure that they cannot be compelled to do so. We shall go on paying, not a subscription, as it is sometimes called—because the principle of a subscription is equal contribution for equal benefits—but a penalty; and if it be right, as we are so often told, that British entry will be good for the Community, why should we pay a penalty to do them good?

Then there is this wishful thinking on the long-term effects—unproven, speculative, contingent as they are, part of a miscellany of assorted Market myths—that they will put everything right. They will compensate, we are told, for dear food, high costs, lost preferences, budget penalties, and the rest. On this aspect of the White Paper, let us call Mr. Anthony Bambridge, pro-Market economist, writing in the pro-Market Observer. This is what he says: It is in its attempts to assess this dynamic effect that the White Paper falls down. It simply does not bother. He goes on: I want to believe it, I really do, but without a shred of evidence how can I? How, indeed, though this is a disability from which some of my right hon. Friends and some right hon. Gentlemen opposite seem to have managed to extricate themselves.

Mr. Bambridge refers to the … 300 card carrying economists of Whitehall… as he puts it. He says that they should have quantified the dynamic effects. Does anyone think that they would not have done so if there had been any such effects to be quantified? Does anyone think that they would not have been eager to earn their keep, with Ministers breathing down their necks—Ministers who have scratched and scraped so sedulously for every scintilla of evidence that could support their case? Of course they would, but they have not. And they have not because it cannot be done.

The puzzle is this: how comes such a document from responsible economists at all? This puzzled me until last Thursday, I thought that I perhaps had the answer, when The Times published this list of distinguished names, this advocacy of entry which came by courtesy of the affluent European Movement, this galaxy of the stars of sport and stage. And then I thought, "Yes, elementary, my dear Watson. These are"—and I think I get the idiom right—"the credits for the White Paper. These gentlemen are the authors of the White Paper, what time the Government's 300 economists have gone to try their hand in Show-Biz."

To say that the case is non-proven is a classic understatement. One appreciates that future prospects may not be susceptible of precise proof, but there must be a reasonable balance of probability. I do not ask, and I have not in the last 10 years asked, for that standard of proof to which I have been accustomed in the courts. But surely we are entitled to the same standard of care and prudence as people exhibit in their own affairs; and who would make a decision, with so much at stake, knowing that even those most ardently wishing to believe confess themselves unable to do so on the evidence?

Again, time allows only the briefest reference to the constitutional aspect. On this, the White Paper contribution is a travesty. Its authors have taken all the old red herrings out of the larder again and have scarcely bothered to dust them over before serving; really, they should be put in the deep freeze, because they are getting a bit high.

We shall still have our criminal law and our family law, we are told—as if anyone had ever said anything to the contrary. What we say is that there is a serious and unacceptable sacrifice of sovereignty over a wide range of our economic and social life.

Nor is the reference to the basic question of commitment in perpetuity any better. The treaty, we are told, contains "… no provision expressly permitting or prohibiting withdrawal". But what the British people want to know is whether, if things turned out badly, as many fear they will, could we then legally and honourably withdraw without the consent of the other members? The answer is that we could only legally withdraw if the other members were to recognise such a fundamental change in circumstances as would vitiate our original consent—and what prospects is there of that when, by that time, the Community budget would be based on a substantial British contribution?

Much better, surely, if the White Paper had been frank. Much better, surely, if it had said, "We hope that this will not happen: but, if it does, we are faced with the unwelcome alternative of soldiering on or of dishonouring our bond by unilateral repudiation".

Finally, on the erosion of sovereignty, the White Paper says that there will be no erosion of essential sovereignty. Obviously that begs the question. It depends on what is meant by "essential". The White Paper should have set out the facts instead of taking refuge in that bland and unproven assertion.

The treaty is quite clear, and the in-stitutions and rules of the Community are geared to give effect to it. Over a vast range of our economic and social life, tariffs and trade, taxation and social services, agriculture and transport, and much else, we would have, in the language of the treaty, to approximate our municipal law to the law of the Community, or, in plain words, where they are in conflict, to subordinate our national law to the law of the Community.

We should also have to submit to regulations of the Community. Article 189 is quite clear, and there is no unanimity rule, no right of veto, to protect us there. We should have to incorporate those regulations in our law with no power of material amendment. No erosion of essential sovereignty forsooth! There has been no bigger erosion of the power and function of Parliament since Cromwell contemptuously sent the House packing 300 years ago and more.

The verdict is inescapable. The White Paper has failed, and the failure of its presentation reflects the weakness of the case. Its message is clear, though it is not the message that the Government hoped it would give. The message is one of urgent warning. I ask the Government to pay heed to it while yet they may. Let them now say to the Six, in all dignity and friendliness, "We want close cooperation with you, but not at the price of losing so much we cherish and hold in trust. And so we must seek that cooperation along other, and less stony, paths".

6.22 p.m.

Sir Geoffrey de Freitas (Kettering)

I do not agree with most of what the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) said, but I agree that the White Paper is a most disappointing document. In particular, it does not in any way meet the points raised by the right hon. and learned Gentleman, not for the first time today, about sovereignty.

Having heard all but a few minutes of all the Ministers speeches and having studied the White Paper, I am also disappointed that there is so little evidence of preparation being made for entry into the Community. I illustrate that in this way. I have asked this Government, as I asked the previous Government, what they were doing about new roads linking the industrial East Midlands with the east coast ports in view of the expanding trade. Sure enough, this Government, like the previous Government, have plans for such roads. That is good enough; but it is nothing like going to the heart of the matter and making political preparation.

Paragraph 76 of the White Paper states that we shall … play a full part in the management and future development of the Community. Neither in the White Paper nor in Ministers' speeches has there been any indication that the Government have thought about the problems posed for us by the European Parliament, to which the hon. Member for Chertsey (Mr. Grylls) referred. I am worried about this. In 18 months time, according to the schedule, the first British delegation of Members of Parliament will arrive in Strasbourg for a meeting of the European Parliament. What has been done to study the way in which this institution works?

Many of us who have taken part in joint meetings of the European Parliament and the Assembly of the Council of Europe have learned a great deal. I have certainly learned that the conditions of European national Parliaments are very different from ours. No Continental Parliament is anything like as demanding on its members as we are on our Members. With this background, we must realise that our Members of Parliament in the European Parliament would have to be at Strasbourg for at least 50 days a year for sessions. I have said Strasbourg, but the committees meet also in Brussels and Luxembourg. They prefer Strasbourg because of the French cuisine in German-sized portions. But they have to go to other towns for political reasons inside the Community. Not only are there the 50 meeting days of the sessions but, for committees, up to another 50; that means 100 days of meetings in Strasbourg, Brussels or Luxembourg. It was rather a left-handed compliment by my hon. Friend the Member for West Lothian (Mr. Dalyell) when he said to my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) that he thought he should go to the European Parliament. After all, we sit for only 166 days a year, so we should not have much of my hon. Friend the Member for Ebbw Vale if he were playing a full part in the European Parliament.

Understandably, the Whips are much concerned because of these absences. What are we to do about it? We cannot possibly work such a system or spare this number of Members of Parliament, 36, for these long periods. Even with the far less exacting Assembly of the Council of Europe there are problems, especially at a time such as 1964 to 1966, when there was a tiny Government majority.

Two years ago the European Parliament threatened legal action in the European Court of Justice against the Council of Ministers for not having introduced legislation ensuring the setting up of a system by which people were elected directly to the European Parliament. I am told that the Committee of Representatives is studying these problems. But what discussions have the Government had with it? In 18 months' time, according to the present schedule, there will be a British delegation there. The object of any discussions that the Government must have must be to strengthen the European Parliament not only in its legal competence but also in its composition. It must be strengthened if we are to do more than pay lip service to democratic control over the executive organ. We must not forget that in May 1969 the British and Italian Governments made this statement: The European Communities must be sustained by an elected Parliament. I do not know how this direct election would be achieved. I complain of lack of attention to the problem.

Many suggestions have been made and I have read of them in learned journals and in debates of the European Parliament. One of the most widely canvassed is that, to begin with, half the members would be from national Parliaments and the other half would be directly elected from the countries concerned. That would mean 36 people elected from Britain. It would mean constituencies with a population of about 1½ million. We have no experience of that. This is a most serious point. The Americans are the only people I know of who have long experience of this. What have they had there? A situation has been reached in which a millionaire has a very long start in the race for the Senate because the expenses are so enormous. How would we get across even the names of the candidates in a constituency of 1½ million? We are not accustomed to that in our system.

I hope that one of the points that we would start with in any discussions would be to look at the German system, by which Government funds go to the parties to finance elections. Right from the beginning, we would ensure that no problems were being created which might turn out like the American problem, and none of our people elected to the Parliament would be subsidised by private interests.

My right hon. and hon. Friends may be interested to know that the Socialist Group at the European Parliament is now the second largest group there. If the Four were to join and there were to be Ten, the Socialist Group would most certainly become the largest group. This is important if there is to be more Left-wing opinion. There are the Liberals, the Christian Democrats and an independent group. It would be very important to have the Socialists as the largest group, and we ought not to overlook this fact.

Now that my hon. Friend the Member for West Lothian has returned, I shall follow up one of the points that he made. He referred to the difficulty of controlling international companies when it came to their interests conflicting with social amenity, especially in the matter of pollution. A very strong Socialist Group in the European Parliament would be able to play a great part in bringing about governmental control.

Many hon. Members, especially my hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), have spoken about the Community's attitude to aid to developing countries. This subject is important, because there is a great deal of misunderstanding here. There are frequently references to an inward-looking Six.

Ten years ago I left the House and went to Africa to become a High Commissioner. One reason for that was that I was very concerned with the development of developing countries, especially in agriculture. I had been a delegate at the United Nations in 1949 when it was first established as a point of principle that the rich had a duty to the poor in international affairs.

I was disappointed that in Africa the Conservative Government, which I served, did not do more. Since I returned to the House, I have been disappointed that the Labour Government, which I supported, did not do more.

The important fact is that the debates on aid which have taken place in the Assembly of the Council of Europe and in the European Parliament have shown that there is no danger whatsoever of the Six being inward-looking. Its record of aid to developing countries is very good. It has been the pressure that these parliamentarians have brought to bear on their Governments which has made aid part of their political life today.

U Thant five years ago in the Assembly of the Council of Europe, speaking as an Asian on behalf of a world organisation, warned the European members against the dangers of sinking back into, as he put it, "prosperous European provincialism" when the rest of the world needed Europe's help and experience. We in Europe who have so much have much to give. We must not forget that the world is a living community of our fellow men.

In my constituency I often speak on the subject of aid. I put the case in two ways. First, it is our duty as a rich country to help the poorer countries. Second, our enlightened self-interest is in raising the standard of living of the poorer countries. We make steel and footwear. I emphasise to my constituents that they cannot sell steel products and shoes to people who live in mud huts and go around barefoot. This important point is fundamental to the arguments which are now going on in the Community itself. There is no sign of any turning in. The Community is looking out.

Incidentally, in the direct prospect of employment my hon. Friend the Member for West Lothian referred to his constituency by way of illustration and I will do so, too. For steel, I am content to accept from the Chairman of the British Steel Corporation that there is a great advantage to the steel industry in entry to the Common Market. For footwear, I am content to accept the view of the Director of the Federation of British Footwear Manufacturers who has seen the British industry which was first 10 years ago, overtaken by the Italians and by the French, and now says: The question is, not ' Shall we survive in the Common Market?' It is, rather, 'Shall we survive if we do not enter the Common Market?' [Interruption.] I am talking about the footwear industry in my constituency and about the man who is nationally concerned with this.

One general point: the anti-Market climate is changing as people realise that so good has the European Community been for the workers on the Continent that all the non-Communist trade unions, and many Communist workers, not only welcome the Community but welcome British workers to share the benefits.

To sum up, I much regret that the Government have given so little thought to the enormous implications of the European Parliament. I just do not know how we shall work it. I refer not only to the great difficulty of providing representation from the House but to the opportunity of ensuring an elected European Parliament free from private financial subsidy.

I believe that if we enter the Community there will be advantages to Britain in general and to my constituents in particular, whether as workers in particular industries or as consumers.

Apart from the advantages to us, there are also the advantages to the Community in democratic development and in what we can do to preserve peace. First, we would bring what is so much needed in Europe—a long experience of peaceful democratic development. We have achieved the rare distinction of a highly-developed society in which most of our restraint is self-imposed restraint. Second, we would bring tolerance. We have always had dissenters, and we have always respected them. Third, British political and economic power strengthens the post-war settlement in Europe, because in that post-war settlement the greater part of Germany was brought into the democratic West and within a few years was allied with us, the leading democratic European country.

When my hon. Friend the Member for Ebbw Vale, in a brilliant passage, said how much he liked France and drew the consequences from that and how much he liked Italy and drew the consequences from that, I wondered whether somebody would interrupt and point out that somebody—I do not know who it was—said that he liked Germany very much, so much so that he liked to see two Germanies. However, this is a serious point. We are embracing Germany and leading her towards us. We have done so since the war. It has been said today that there is no sign at the moment that Western Germany will break from the West. There is not. However, we must remember that the Germans are by far the largest and most powerful people in Central Europe, and, indeed, in the whole of Europe. Now that we have this chance, I believe that it is very important for us to throw our whole weight into Western Europe.

My last words are to remind my hon. Friends that it is no accident that our entry into the Community is welcomed by all the Socialist Parties of the Community—that is, by the Socialist Parties of those countries which suffered most under Hitler's Germany.

6.37 p.m.

Mr. W. R. Rees-Davies (Isle of Thanet)

We have just listened to a very thoughtful speech by right hon. Member for Kettering (Sir G. de Freitas). That is the type of speech one expects to hear from the right hon. Gentleman, but I think that he was premature in inviting the Government in a White Paper or in the general line of debate to explain at this stage how we are to meet the problems of the development of a future Parliament of Europe.

I accept that they are real problems. They must be met. Having been one of those Members with interests outside the House, I am certainly girding up my loins to forget them entirely if we join the Community, and I think that many other hon. Members, some of whom I see present, may well have to do the same.

The day of the professional politician in Britain is clearly upon us, by which I mean the person who will have little or no time for outside interests, particularly if he intends to participate in European parliamentary affairs.

I do not intend to deal with the White Paper, nor the negotiations, nor the other matters which have been so fully and admirably debated over the last three days and which will be debated in the country.

I intend to state why from the very outset I am so heartily committed to our entry into Europe. I begin with the words which are often quoted which were spoken by Winston Churchill and which certainly set my imagination alight when he said them: If Europe were once united in the sharing of its common inheritance, there would be no limit to the happiness, to the prosperity and glory which those three or four hundred million people would enjoy. The White Paper says this: In a single generation we should have renounced an imperial past and rejected a European future. … Our power to influence the Communities would steadily diminish, while the Communities' powers to affect our future would as steadily increase. I am convinced beyond the shadow of a doubt that both quotations are entirely true. After the war, when I first entered and took some interest in politics, I remember going to Nottingham and saying that in the diminishing ties of an old empire, we should try to create a new, third empire—a sterling empire lying between the dollar empire on the right and the rouble empire on the left—and prepare for the day when there would be a yen empire of the future. Although those days have changed in that sterling will no longer be the common currency, as it would have been 20 years ago had we then seized the opportunity, I believe nevertheless that the rôle of Britain in the future is historic. I believe, too, that as a back bencher I can say, as many members and former members of the Cabinet on either side of the House cannot say, that our rôle will in due course be that of the predominant partner in Europe, to give it the lead that it needs, first of all, in the development of its political institutions. How true it is that we in this country, because of our long civilisation, have recognised and understood, and have always borne the brunt of, the development of democratic government. I believe that the message from those young men on the television last night was the demand that young people the world over, with Britain, should enter into Europe.

We give the leadership with a true sense of partnership. This applies, for example, in the legal field. The development of company law which must be similar for all the major countries in Europe, as it will be with us, will demand all the abilities of our lawyers to create a form of corporate law which will have a real influence on the development of the judicial system. We shall play a great part at the Court of The Hague. I believe that in the development of institutions which will create the new Parliament which must come, we shall be able, with our neighbours and partners, to arrive at the right form of partnership in deciding which part of essential sovereignty shall be retained by Britain, by Italy and Germany and which part we as partners feel can properly be surrendered for the common purpose. I believe that we shall be the people who will decide the question which the right hon. Member for Kettering asked—how we can fit into a Parliament in Europe with power, and at the same time continue to maintain our own individuality and sovereign powers in certain fields.

There is not only the criminal law. In fiscal matters we shall develop corporate taxation. There will be one corporation tax. This will be necessary for the development of the movement of goods and the development of companies—the development of the megalithic company and of multi-national companies which will have to cross all boundaries. It is in the development of that company structure that Britain will undoubtedly give a lead.

All the leaders of finance in the City of London favour our entry into the Common Market. Why is that? It is because they believe that they will lead Europe, that the City of London will be the leading financial centre, and that all those who serve in the City, whether stockbrokers or in insurance or in merchant banking, will have opportunities to join with their co-partners in friendly rivalry in giving the lead that is needed in the creation and furtherance of these institutions.

I turn to two particular aspects which I do not think have been mentioned. One of our greatest industries within two years will be not the motor car industry but the tourist industry. This is the greatest growth industry in the country, and within two years it will be our leading industry because we lead in hotel and property development. With the opportunities of co-partnership, all those associated with our major companies will be able to develop in France, Germany and Italy, thus bringing to us a vastly expanded tourist industry. We have the skill and know-how to enable us to be of the greatest value in the development of tourism.

What about regional policy? It may be that the White Paper did not dot the i's and cross the t's here. In fact, it certainly did not. But under the Treaty of Rome the countries pledged themselves to strengthen the unity of their economies and to ensure their harmonious development by reducing the disparities between the various regions and mitigating the backwardness of the less-favoured ones, to promote better living and working conditions for workers so as to lead to the harmonisation of such conditions in an upward direction. They have undertaken to co-operate closely in social matters, especially employment, labour law, working conditions, occupational training, social security, protection against occupational accidents and diseases, industrial hygiene, the law on trade unions and collective bargaining between employers and workers.

The Commission has already done a great deal in this field. Those countries have their own regional development programmes, but as the Community develop its economic union there is an increasing need for a joint approach to the problems of regional planning. This is particularly acute at the edge of the Community—likewise in our country—in Southern Italy, South-West France, the areas in Germany along the east zonal border and where the frontiers meet. In those areas they have the same arrangement for industrial development certificates; they have the same machinery as we have. Just as those outlying, underdeveloped backward areas in Italy and Germany are now being satisfactorily developed, there is no reason to suppose that we cannot have regional development existing side by side and effective in the United Kingdom.

It is true that in the Isle of Thanet, which faces French shores, and which has higher unemployment than almost any other part of the country, we shall get a great constituency benefit in the development of this regional area. I have no doubt that we shall be able to have an exchange of firms and goods across the Channel and the development of a regional development policy which we saw in the late 1950s and early 1960s but which we are now denied. The mere fact of that development along similar lines in Europe means that these developments could take place throughout the whole of the United Kingdom.

In October, 1969, the Commission proposed that annual reviews of regional needs should be undertaken, and efforts should be made to fit regional development schemes in with other Community policies, that a permanent committee of Government experts should be set up to consider mutual regional problems, and that a joint Community fund and financial incentive scheme should be started to encourage investment in deprived regions. By the end of 1969 it had made loans in the Community totalling 1,245 million dollars.

With regional development on that scale we need have no fear, whether it be the Isle of Thanet or Ebbw Vale, about getting the development of regional policies along similar lines in this country. But those on the right wing of the Tory Party, those who believe in and are not ashamed of the word "empire", should recognise that we have one last opportunity—not as my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) would think, but the other way; we have the opportunity to regain and lead a new world empire, one of four, which will maintain the peace and will develop the progress of the world.

6.49 p.m.

Mr. Roland Moyle (Lewisham, North)

We are debating a White Paper that has been tabled by the Government, and, therefore, I do not regard this as an appropriate moment for unburdening myself of any fundamental articles of faith, and I hope that the hon. Member for the Isle of Thanet (Mr. Rees-Davies) will forgive me for not following his argument even to oppose. It was said earlier this year that there was some danger that the Government would bounce us into Europe on a hot afternoon in August when the nation was paddling at the sea. That danger was averted, but we are facing an equally serious one, in that the Government are trying to seduce us into Europe on the basis of providing information that is totally inadequate upon which to form a judgment and arrive at a decision.

We are being asked to take note of the White Paper. It is such a paltry document that we can do little else. We can see that it is based on two separate arguments. The first is that going into Europe is necessary in order to protect our prosperity. That argument has been put forward with a great deal of force and detail during the four days' debate. The other argument is that we must go into Europe to maintain our security. Yet, in spite of the fact that that is one of the two major arguments for joining the Common Market and is set out in the very first sentence of the White Paper, I can find just one other sentence on the subject of security, plus one paragraph—paragraph 35. That is not an adequate basis upon which to persuade the nation to accept one of the two major arguments for going into the Community.

I want to put a few simple questions to the Government. First, if we are talking about our security, we may be asked to accept the view that Russia has ceased to be a military threat to the West, and that negotiations for our security should be developed on the basis of reducing the number of forces in Central Europe, together with the number of weapons. That may be true. It is a judgment of Russia that I would accept at the moment, although I am not dogmatic about it.

If we accept that point of view we should also accept that there must be an organisation, based on the Western alliance, which can group Western interests together in one coherent pattern and put forward one set of negotiating propositions to Eastern Europe, on the basis of which we can secure such a reduction of forces and weapons in Central Europe.

I maintain that we have exactly such an organisation in existence at the moment, in the form of the North Atlantic Treaty Organisation. We see from some of the documents now coming from Brussels that that is one rôle that N.A.T.O. sees for itself—acting as the machinery for negotiations between the Western and Eastern alliances. We are entitled to ask the Government, in relation to defence matters, exactly what they feel we can do as members of the European Economic Community that we cannot do as members of N.A.T.O.? That question has been skated over; it is not even alluded to in the White Paper.

That is not the present Government's attitude towards the process of security in Europe; their attitude is fairly clearly revealed, in outline at any rate, in paragraph 35 of the White Paper, which talks about the defence of Western Europe being based upon the contribution which the United States of America is making—a contribution which it calls generous. It says that the United States is becoming bored or fed up with the burden and is anxious to reduce its contribution to the defence of Europe, and that membership of the E.E.C. is essential to British security.

If that is so it clearly means that the Government intend that as we enter the E.E.C. this country will have to make a greater contribution in men, money or materials—or all three—to N.A.T.O. That is crystal clear. If a gap is left by the Americans and we are supposed to fill it by joining the E.E.C, we must make a greater contribution. That would be in accordance with the cold war ambience of the Government's White Paper on defence, issued last autumn. We are therefore entitled to ask how much this increased contribution to the defence of Western Europe will cost in money terms.

The other question is: will there be an increased contribution to the defence of Western Europe in terms of men? All those who have taken part in defence debates in this House in the past few years will agree that at the moment in terms of men, we are making the greatest possible contribution to the defence of Western Europe, consonant with a voluntary system of recruitment to our forces.

There are only two solutions to this situation. One is a substantial increase in the salaries of our Service men and women in Europe in order to attract them into our Army, Navy and Air Force. If that is envisaged, we are entitled to ask how much the Government think it will cost—because it will represent a burden on our industry. If they are not prepared to tell us that, they must tell us whether they intend to raise the extra men by conscription. That is not such a farfetched scheme as it may seem. Many of my constituents have noted the fact that we shall be joining a group of six nations each of which maintains its military forces by the process of conscription. The Goverment are to make an extra contribution. From where will the men come?

The Government must know the answer. Bearing in mind the credibility of this Government at the moment it is no use their saying "No, we are not going to introduce conscription if we join the Community." There will have to be an argued case, showing how we are to provide an extra contribution without any of the consequences that I have mentioned.

The Prime Minister has always said that he has looked forward to a nuclear deterrent based upon an Anglo-French merging of both countries' existing national deterrents. I have always taken the view that he probably wants this to threaten the U.S.S.R. with a nuclear deterrent which will be European controlled. I shall not pursue that argument. I merely say that the Prime Minister may want it in order that the Western Europeans may have a seat at the S.A.L.T. talks which are now going on.

There is one basis upon which that may take place. We do not know very much about that basis, but it may be that the Prime Minister has agreed with M. Pompidou that if Britain ties herself to Europe's leg in N.A.T.O.—and therefore comes away from the American leg—and is prepared to make over her resources, in terms of technology, to the French—and most observers would admit that our resources are substantially greater than the French resources—the French will come back into N.A.T.O. In so momentous a matter the Government should tell us whether that was one of the agreements reached between the Prime Minister and M. Pompidou in Paris

They should also tell us whether the problem of France's absence from N.A.T.O. has been solved. I hope that many years before this Anglo-French merging is brought to fruition the S.A.L.T. talks will have reached a successful conclusion. I say that not because I do not want us to be there but because I hope that if Russia and America have embarked on these fundamental talks they will reach a conclusion within the not too distant future I remain optimistic, although the signs are not good.

Of all the people who have criticised and commented favourably on the terms reached in the negotiations, none has commented on the defence aspect. When we remember that 5 per cent. and more of the gross national product is committed by this country, the Government need to bring forward much more information before the British people can be expected to reach a decision on the matter. It is all very well saying, "The more we are together the merrier we shall be". That may be one of the merry songs of peace the Prime Minister is always singing, but by itself it does not seem to be a credible defence policy.

There are many gaps in the White Paper, and that is one of the more important gaps which the Government must fill. They must fill it by producing a defence White Paper so that the great debate may be a whole and meaningful one, not just about the chances of greater prosperity but about the question of greater security, so that we may see where we stand on this matter and understand what the bill will be.

In the past few months we have had a consensus on defence in this country. Basically, the Government have committed themselves to providing defence arrangements at a figure not substantially greater—this is the formal position—than that left by my right hon. Friend the Member for Leeds, East (Mr. Healey) when he ceased to be Secretary of State for defence. By what amount do the Government envisage that this particular bill will be increased as a result of our membership of the E.E.C.?

One can go through all the terms on a similar basis. It is said, for example, that the agreement on sugar should not be criticised because the parties to the Commonwealth Sugar Agreement have accepted it. This is expecting us to be very naive. The Commonwealth sugar countries asked for bankable assurances, There must have come a time when assurances were reached and the Chancellor of the Duchy said to the Commonwealth sugar countries, "I can do no more for you". Whether that agreement was acceptable to the Commonwealth sugar countries or not, at that juncture they plainly had to say that they accepted it because the next time they went to their bankers and asked for credit to cover the next crop, they would be told that they had not got bankable assurances. If they themselves had said it, what would their position be?

In the case of New Zealand, can anyone expect that little Mr. Marshall would have gone back to New Zealand and told the voracious Mr. Kirk that he had failed to get a suitable agreement? It is just not credible, tI would be like taking a five-year-old paddling in the shark-infested Timor Sea without an escort. Mr. Kirk is already in process of gobbling Mr. Marshall up and spitting out the bones like pips. Mr. Marshall had to come back with this agreement reached between the Chancellor of the Duchy and the E.E.C. countries and say that he had a suitable agreement.

Is it really a triumph that we can go on purchasing only 71 per cent. of the food which we have hitherto purchased from New Zealand, food of as good a quality as any in the world and at as good or better prices. Yet this is the ultimate position at the end of the transition period. It is not good enough.

I think that M. Pompidou saw us coming. Our criticism on this side, I believe, is that the Government played a weak hand weakly. It was a weak hand at the beginning because, at the outset, we were trying to get in, and because this Government are led by a Prime Minister who is determined to take this country into Europe, no matter what the price may be. [An HON. MEMBER: "Rubbish."] Rubbish it may be called, but I believe it to be true.

The argument which has been put by my right hon. Friends the Members for Stepney (Mr. Shore) and Battersea, North (Mr. Jay) has not been answered. My right hon. Friend the Member for Battersea, North has put his argument forward consistently for several years. As I say, a weak hand was played weakly. We have not got the appropriate terms.

There were a number of levers which the Government could have used with the French Government. We could have pointed to the fact that the French are locked up inside Europe with the Germans, and they want our support. We never exploited that. They want our money to subsidise the departure of many of their farmers and the maintenance of the remainder on the land. They want Britain as the cause for further growth in Europe. We exploited none of those considerations.

The whole position was largely given away. I regard the terms as totally inadequate. I read a great deal of British history, and I cannot help recalling that William the Conqueror once saw that he had just such an Englishman as the Prime Minister in Edward the Confessor, whom he could play for all he was worth. At the end of the day, the conclusion of history will be that M. Pompidou found that he could add another to the many attributes which the present Prime Minister already shared with Edward the Confessor.

7.5 p.m.

Mr. Russell Johnston (Inverness)

I hope that the hon. Member for Lewis-ham, North (Mr. Moyle) will forgive me if I do not take up the defence questions which he raised. We have but limited time, and I do not wish to detain the House for long.

I have attended the debate for the past three days and more, and it has been for me at least a unique occasion. I have been in the House for about 6½ years now, and this is the first time when I have felt, in the Chamber as opposed to Committee, that one is engaging in a really meaningful debate in which, as the hon. Member for Fife, West (Mr. William Hamilton), I think, put it on Friday, there is a real attempt being made to listen and to influence one another. This is a very good thing for politics, though, unfortunately, rather rare.

I do not believe that this issue is above politics, above party, or anything of that sort. That is nonsense. But, in a real way, it is apolitical and across party, which is very different. A political party has taken a basic political decision. Although I am in opposition—it will be remembered that the Liberals are, perhaps, more experienced in opposition than anyone else—I regard myself as perfectly entitled, although disagreeing with the Government's attitude and policy on many matters, to agree with them on this issue. After all, an Opposition exist not simply to criticise but constructively to offer views.

How does one reach a decision in a matter of this sort? In his superb speech today, the hon. Member for Ebbw Vale (Mr. Michael Foot) quoted words of the late Hugh Gaitskell in 1962 when he criticised the then Conservative Government for being unwilling to engage in a General Election when the terms of negotiation were achieved. That may well have been a valid criticism at the time, as the Conservatives won the 1959 election committed against entry into the Common Market. But this is 1971, nine years later, and, like it or not, the British public have elected the Conservative Party to Government knowing that, over that period, it has become committed and been determined to secure entry if it could

I do not regard that as unreasonable or undemocratic; nor, for that matter, do I go along with the remarks made by the right hon. Member for Bistol, South-East (Mr. Benn) on Thursday night when he argued for a referendum. I should have thought more of the right hon. Gentleman if, during the past few years, he had made more relevant observations about reforming the way in which we elect our Members of Parliament in this country. I hope that the right hon. Gentleman the Member for Kettering (Sir G. de Freitas), who spoke about representation in the European Parliament, will remember that we are to enter a Community in which, just as in the E.F.T.A., all the member countries have forms of election to their Parliaments more democratic than we have.

We have six Liberal Members in the House. If we had a system comparable with anything in those parts of Europe, we should have 70. Hon. Members need not smile at that. There has been a great concentration on proper democratic representation in the countries of Europe, the like of which we do not have here.

The basic question is whether we want to join with other European countries in trying to work out common policies which we can all accept and which may one day lead—the hon. Member for Banbury (Mr. Marten) put it quite well at the beginning of the debate—to some form of common government. Like Willy Brandt, whose views the hon. Gentleman queetioned, if asked that question I should reply that that is something which I should want to do, and I should want to do it because I believe that in that way we could ensure a far better living standard and a far greater degree of influence for my constituents and for the people of this country than could ever be achieved in a perpetuation of inter-State rivalries, a situation in which we shall inevitably be more and more dictated to by the super-Powers or by the international companies which have been referred to by more than one speaker in the debate, among them the hon. Member for Ebbw Vale himself.

We have not seen amongst the anti-Marketeers a campaign against Ford (Britain), which does not have a single British shareholder, and whose essential long-term investment decisions are made not in Britain but in Detroit. That is the sort of thing we should be able better to regulate and control within the European Community.

If it ultimately leads, a long time distant, to a super-State, let it be so. I would expect that, because I do not agree with the conclusion of the hon. Member for Holland with Boston (Mr. Body) who made a very good speech on Friday. He said: I am opposed to the entry of this country into the Common Market because I have no wish to live, or for my children to live, in what must evolve into a super-State. I do not believe that super-States were made by God for the benefit of ordinary people."— I hear the hon. Member for Ebbw Vale applauding that— They are the device of politicians who want to walk the world stage and talk of power."—[OFFICIAL REPORT, 23rd July, 1971; Vol. 821, c. 1888.] What sort of country have the hon. Gentleman and his family been living in for the past 200 years, but a super-Power, the greatest super-Power we have yet had in the world, which has moulded the shape of the people we are? That is not a sensible way of looking at the question.

Like the hon. Member for Cambridge (Mr. Lane) and the Chancellor of the Exchequer today, I accept that it is not a great cataclysm if we do not get in; it is not a question of join or disaster but of join or decline.

Last week in my constituency, within the space of a mere hour, I saw a couple of motor cars with a little notice at the back saying, Say ' No ' to the Common Market". One was a Peugeot and one was a Volkswagen. Why were the owners who were saying "No" to the Common Market in such vehicles? It was because their cars were cheaper, more reliable and better serviced because of the great development within the Common Market. Their sort of opposition is rather like that of those who sign the petition sent round by small traders opposing the entry of a supermarket into their town but who, as soon as the supermarket comes, buy all their goods there. That is not logical.

Many hon. Members have said how difficult it is to forecast economic trends, although usually their saying that has been the prelude for asking for a forecast of making one themselves. All I know is that the trend of expansion in Europe is clear and has been for the past 10 years, and that the record of stagnation in this country is equally clear over the same period. I and my constituents want to share in the expansion and the work which goes with it. On Friday the Scottish Nationalist Member for Western Isles (Mr. Donald Stewart) attacked the Common Market. There is 27 per cent. unemployment in his constituency. Will it get worse if we join? I find that hardly credible.

As a Liberal, I believe that it is necessary to develop devolution, but I do not accept that there will be any worsening of regional policies. I am encouraged by what the Community has done in regional development. It has not gone very far in this regard with the proposals made in 1969, because of the great difficulty of resolving the various economic development programmes, but the intention is clear. Belgium was quoted the other day as an example where regional policy has been prevented. That was a notably bad example to quote, because Belgium succeeded in reducing her coalmining industry by about 50 per cent. with the assistance of the Social Fund.

There are many other things I should like to say, but I have spoken for longer than I had intended. Just one thing more: at the end of last year I read in the newspapers a statement by Dan McGarvey, of the boilermakers' union.

Mr. Fernyhough

A good friend of mine.

Mr. Johnston

He said that in any question as between British boilermakers and French peasants he knew what side he was on. To me, as a Liberal, that is precisely what is wrong with so much of the opposition to the Community. What we want to devise is a system fair alike to the boilermaker and the peasant, and that is what I believe we have begun to work towards.

7.16 p.m.

Mr. Michael Clark Hutchison (Edinburgh, South)

Like my friend the hon. Member for Inverness (Mr. Russell Johnston), I shall try to be brief.

I have for long opposed our joining the E.E.C. Indeed, I should never have made an application.

As my right hon. Friend the Prime Minister has said in this debate, and has said throughout, if we enter the E.E.C. it means accepting the Treaty of Rome in its entirety. It is on that basic point that my case mainly rests. The treaty was designed for six continental countries. They did not have us in mind when it was made. The entire set-up under the treaty appears to me to be very authoritarian. I particularly dislike the immense powers given to the Commission. The whole organisation in the Common Market is foreign to my political beliefs, and I believe that it is contrary to British traditions.

Why has there not been more concentration on the Treaty of Rome. Why is there no explanation of it? Why is it not in the post offices? We are told that it is fundamental, so it is only right that this background should be made freely available to the British people. If they read it, there would be no further debate. It would end at a stroke.

Three areas merit attention. Under Article 228 we should not be able to make any trade agreement or other agreements with foreign countries or Commonwealth countries. Such agreements would be made by the Commission. I do not know whether all hon. Members realise that. I am certain that the public do not. I do not like that restriction, and I do not see why we should have it. I should never stomach it at any price.

Then there is the Community Court. It has wide powers which are likely to grow. Its opinion can be sought on numerous cases, and its rulings can and do affect not only companies but individuals. Disputes involving individuals or organisations in the United Kingdom should be settled in London or Edinburgh and not in Luxembourg. I have a strong notion that that is the view of the vast majority of the British people. That is one of the things that sovereignty is about.

There is also the common agricultural policy. I have always believed in a policy of cheap food. It is immensely beneficial to our nation, which cannot grow sufficient to feed itself. The idea of placing a levy on good Commonwealth or other imported food, paying customs duties on imported manufactured goods and paying part of that V.A.T. into a fund to bolster continental farmers is so crack-brained, so ludicrous, that it amazes me that it has received any attention. The White Paper gives no indication of the effect that the dearer food will have on wage demands and in turn on the cost of our goods.

Nor does the White Paper give any figures about what effect entry would have on pensioners and those on fixed incomes. My right hon. Friend the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) did not get a very satisfactory reply when he raised this point last week. It is all very well to say that pensions can be increased. Of course they can. But what is the cost? What would be the effect on people like railway pensioners and others above the band receiving State benefits? The White Paper is entirely silent about this matter.

I have tried to make it clear that my opposition to going into the Community is total and basic. But let us look at the terms. On fishing, there is nothing—except that we seem to have abandoned the 12-mile limit. Queensland sugar would be phased out. Why? I have always been told by the Conservative Party, and in all sorts of briefs I have received over the years, that the Commonwealth and Commonwealth produce would be protected. Commonwealth sugar would not be protected. I hope that the Government take note of that. After all, we were not just told that the developing Commonwealth would be looked after. We were told that the Commonwealth as such would be looked after. There are some terms for New Zealand, but Mr. Marshall himself told me in this building that he wanted to see the arrangements for New Zealand continuous and as far ahead as man could see. He was not particularly interested in alterations after two or three years.

I feel that our people should think very carefully about this question of entering the E.E.C. I have heard hon. Members and people outside say that they are thinking of their children and their grandchildren. I have both, and I am quite certain that they would want their father and grandfather to vote for Britain's independence and the maintenance and strengthening of her connections with the great English-speaking nations beyond the seas and not go into a small, restricted part of Europe—because it is, after all, only six nations out of 19 in that continent.

7.22 p.m.

Mr. Alan Fitch (Wigan)

Whether one is in favour of going into the E.E.C. or against, I think that we are all agreed on one thing—that we are living in a world of larger and larger units and bigger regions. This country is the only major industrial Power with a home-based market of less than 100 million consumers Japan, Russia, the United States and the E.E.C. all have those larger markets. I suggest that at least in the future, if we remain outside, our economic difficulties will not be overcome but will be made more acute by the very smallness of our market.

Recently, the members of the Community themselves admitted that their region as it is—the region of the Six—is too small for first-rate scientific and technological developments in comparison with the Soviet Union and the United States. One of the reasons they want us in, and one of the reasons why we should go in, is that, from the scientific and technical points of view, we should be able to compete more effectively with both the Soviet Union and the United States.

I have not quite been able to understand the arguments advanced sometimes by people who, like myself, believe in world unity. As a Socialist, I must believe in that. But I cannot see how we are going to get a system of world unity, or a system of world government, without going through the stage of regional unity and regional government first. Surely this is man's evolutionary development—cave-dweller, village dweller, town dweller, national dweller, regional dweller and, finally, citizen of the world. I cannot understand the argument of those who wish to leave out what I would regard as an essential part of the process towards world government.

I am a former mine worker and I am speaking in my personal capacity. I want to say something about the coal industry. I believe that the structure and size of the British coal industry if we enter the Coal and Steel Community will not be fundamentally changed. I accept that both from the White Paper, although I may be critical of other things in it, and from those in the coal industry whose judgment I respect in this matter. The National Coal Board already conforms to the Coal and Steel Community's requirements on the pricing and marketing of industrial coal. I do not want to exaggerate it, but I see a future at least—I believe, a brighter future—for an industry which at the moment is exporting to the Community 2½ million tons of coal at a time when the Community is importing from other countries 22 million tons.

Mr. Fernyhough

But my hon. Friend will remember that last year there was a great cry because we were exporting duff to France—that is, duff from the hard South Wales coal—and reimporting it after it had been manufactured into bricks. So there is trade both ways.

Mr. Fitch

I am talking about if we are inside. The illustration given by my right hon. Friend the Member for Jarrow (Mr. Fernyhough) is from the present position when we are not inside the E.E.C. This is the crux of my argument. The fact that we shall have opportunity to export more coal will bring new life to our coal industry.

Then there is the question of hiving off, which I hope the Government will clear up. I have a feeling that hiving off may be contrary to the Community's rules. I believe that inside the Community the Government would have no power to hive off from our coal and steel industries their most profitable parts.

I see an enlarged European coal industry producing about 300 million tons a year and depending on Great Britain for at least half of that tonnage. It would strengthen our industry and its potential very much and we should become a vital force in meeting Europe's expanding energy requirements.

My criteria as a Socialist, in thinking of the coal industry in relation to Europe, are these. First, will it remain under public ownership? My answer is, "Yes". Secondly, will it be given a new incentive to expand? Again, my answer is, "Yes".

I turn from the coal industry to public ownership in general. If I thought that public ownership in any shape or form or State planning were in any way contrary to the Treaty of Rome, I should oppose our entry. But that is not the case. In 1963 the Italian Government as a member of the Community nationalised the electricity industry. This was challenged by a firm named Costa, and the matter then went to the Italian courts who referred to the Community's court of justice. The court ruled that this was not contrary to the Treaty of Rome, and this form of nationalisation went forward.

Four of the seven large banks in France are nationalised. The fourth largest bank in Germany is owned by the trade unions. The Port of Antwerp is municipally owned and controlled. One could give many more examples of the operation of public ownership in the Community.

I turn to development areas. I was recently in Belgium in the province of Liege where there had been great contraction, particularly of the mining industry. The province had introduced, with the aid of the Belgian Government, 24 new trading estates. There is no question about the effectiveness of Belgium's regional policy.

I do not intend to dwell long upon the question of Commonwealth preference, but I think that it is long overdue for overhaul. We are basing many of our ideas on the old Ottawa Agreement. In the early 'thirties this was an agreement to help the then under-developed countries such as Canada, New Zealand, Australia and others. As far as the present under-developed countries are concerned we must give them all possible aid.

As for the developed countries, I can think of an example in my own constituency where the management of an engineering firm asked me to visit it. The management complained that engineering valves from Canada were coming into this country duty free. The identical valve was being manufactured by the British company and when exported to Canada was subject to a duty of 20 per cent. This resulted in short-time working for some of my constituents.

The time has come to take a fresh look at the whole question of Commonwealth preference, particularly in relation to the developed countries.

Finally, there has been a fear among the people of this country about Europe. I can understand this. Most people are afraid of the unknown, afraid of taking the step which they know little about. This is understandable because twice we have been rejected and rejected people naturally become cynical about things. I do not think that entry into Europe will bring an immediate earthly paradise. But I do believe that it is a challenge which we and Europe must accept.

7.35 p.m.

Mr. Derek Coombs (Birmingham, Yardley)

I have given a great deal of thought to my opposition to the Common Market, which has been related not to the precise terms or the specifically economic aspects but rather to the wider political implications of Britain joining the E.E.C. and its inevitable move towards some kind of federalism in the future. The idea of a free trade community in itself must obviously be welcomed, and I sincerely believe that the terms which my right hon. and learned Friend the Chancellor of the Duchy of Lancaster has obtained are the best that could possibly be achieved.

It is fair to say that nobody should refer to one side of the coin without mentioning the other. So that although there will be some short-term economic disadvantages, the long-term advantages economically speaking can be enormous. Quite frankly, one does not really know. One thing is probably true—that the price we shall have to pay because of C.A.P. will be much higher than if we had been a founder member. But all that is history.

The big question now is: how will our major industries react to the new wind of competition? Will the loss of Commonwealth preference and the contributions that we shall soon have to make cripple us, or will free access to the hugh industrial market provide the platform for which we have so long been searching and enable our economy to grow at a fast and consistent rate? These are questions which it is impossible for any one to answer with any certainty; but, taking the economic arguments in isolation from the political arguments, I believe on balance that we should acknowledge the risks and accept the challenge.

My main reservation has consistently been the impact on our political institutions. At the time of the first negotiations from 1961 to 1963 I thought it possible that this problem could be overcome. It was abundantly clear that any form of supra-nationality did not appeal to de Gaulle. It seemed to me at least conceivable that with Britain's entry at that time the Treaty of Rome could have been revised to contain a positive clause which, while enabling member States to merge their economies and foreign policy to a desirable degree, would rule out any possibility of a loss of national sovereignty. But it has long ceased to be possible to entertain any such hopes.

I believe major political developments are bound to take place in a large Community. My concern has always been that the Eurocrats, the civil servants, the technocrats will progressively take over and that in, say 20 or 30 years' time a one-nation State covering the whole of Western Europe will materialise. It would be both idle and dishonest for me to pretend that anything has yet happened to change that concern. What has changed, however, is what I regard as one crucial factor in the balance of my personal judgment. It is simply that, whereas until recently I believed that Britain's refusal to join would, in effect, block the political development of the Community, I am now convinced that, whether we are inside or outside, we shall ultimately see the gradual unfolding of what will amount to a new super-Power. In those circumstances, Britain herself could well become an offshore island, and this would plainly be unacceptable.

If this is so, it alters, and alters drastically, the risks and consequences of staying out. On grounds of comparative size alone, real British influence—our ability to exert our national identity—could be much less outside than inside. The dangers of allowing this to happen are obvious at a time when the whole international pattern seems on the verge of major change. For me, and, I imagine, for many others, the recent announcement of President Nixon's historic China initiative brought home forcibly the opportunities that may be opening up, and the urgent need to secure for Britain the most effective influence she can have.

It is inevitable that Western Europe will respond to these changes. Against that background, it now seems to me that the paramount political consideration for us must be to influence the development of Europe, both to the advantage of this country and in the interests of world peace. We must ensure that our own political ideas help to shape its institutions and its attitudes. We must try to see that the freedoms and values that we sustain in this country are sustained in Western Europe as well.

I have, therefore, come to the conclusion that the balance of political argument now matches what I have always believed to be the balance of economic argument, and that it is now right for this country to join the Community on the present terms.

My judgment is influenced also by the very fact that the negotiations have succeeded which in itself now create a situation whereby a mass force of new aspirations, trade patterns and thinking has been set in motion not only in this country but throughout the Commonwealth. This cannot easily be reversed, and the consequences of a straightforward rejection by this country could not be the same as if agreement had never been reached.

Whether Britain gains or suffers will depend not only on the response of industry, trade unions and the public at large but also on the quality of our statesmanship in the decades ahead. To take an extreme view, I think that we have to guard against the possibility that a weak Government led by a weak Prime Minister in 10 or 20 years' time could condemn the country to a satellite position in a Western Europe whose policies could conceivably be undesirable. On the other hand, it is reasonable and right to have confidence in our abilities to persuade and encourage this great union in the direction which is advantageous not only to ourselves but to the world as a whole.

For me many doubts and reservations remain. But it is now obvious that the ancient States of Europe will have some kind of common political purpose with or without us. It must, therefore, be right for the people of this country to lend their wholehearted suport. It is a decision on which we shall not be able to turn our backs. I hope and believe that this House of Commons will demonstrate in succeeding years its right to say, "We joined to lead and not to follow".

7.44 p.m.

Mr. Denzil Davies (Llannelly)

I hope that the hon. Member for Birmingham, Yardley (Mr. Coombs) will not think me disrespectful if I do not pursue his argument, other than to say that I disagree with the conclusion that he seems to have reached. I intend to speak on the effects of entry into the E.E.C. upon regional policies and the development of the regions. As a number of hon. Members have pointed out already, this subject has been treated with scant respect if not contempt, with the White Paper devoting fewer than 200 words to it out of a total of some 20,000, notwithstanding the fact that almost half the United Kingdom is classified as a development area.

It is in the regions that not only the economic but the political consequences of entry probably are most profound. Unlike some of my hon. Friends, whose views I respect, I am convinced that entry will damage the regions seriously and will represent a major blow and setback to all that has been achieved towards the creation of a viable and healthy economy in our regions.

There are those, like the hon. Member for Inverness (Mr. Russell Johnston), who say that it could not be worse in the regions. The hon. Gentleman mentioned the Western Isles, with an unemployment rate of 25 per cent. But it could be, and will be, worse in the regions as a consequence of entry. It is precisely because of the short-term disadvantages that the position in the regions could be worse. Even the most fervent advocate of entry will not suggest that, in the short term, matters will get better in the country. It is because the regions are weak at the moment that the short-term policies will be imposed upon them and will hit them harder than other areas. For example, if the prices of essential foods such as bread, cheese, meat and butter go up by between 20 and 30 per cent., if deflationary policies have to be pursued to protect the balance of payments, and if a harmonised value-added tax at a possible rate of 20 per cent. has to be introduced, the regions will suffer much more than the more prosperous South-East and Midlands.

The so-called long-term benefits, if they should come, in justice should be correspondingly greater in the development areas to make up for the greater short-term burdens. But we all know that that will not be the case. The benefits, if they come, will come primarily to the already prosperous areas and, as usual, the development areas will be at the end of a long queue.

One of the myths put about by the present Government, not just about the Common Market but also about the internal economy of the United Kingdom, is that the problems of the developed areas can be solved best by boosting investment generally, especially investment in the non-development areas. Apparently, in some magical way, general investment will spill over into the regions and benefit them as a result. It is argued that, if we enter the Community, the extra fillip to investment will act in this way and, correspondingly, be of benefit to the development areas.

Like all myths, this one does not stand up to analysis and is not supported by our empirical experience. The major effect of a boost to investment generally in the United Kingdom has been a rapid exodus from the development areas into the more prosperous South-East and Midlands. Past experience proves that, without strong regional policies, capital does not follow labour. As a result, labour has to trek after capital investment. The same would happen if we entered the Community, the only difference being that it would happen on a greater scale.

It is possible to make that assertion with complete confidence. Again, we can draw on our experience to prove it. There is a common market already in existence between the regions and the nations of the United Kingdom. We know what has been the effect on the freedom of movement of capital between Wales, Scotland and England. We know what has been the effect of complete mobility of labour between the regions and the nations of the United Kingdom. We know that, without a strong central Government directing strong regional policies, the depopulation of the regions in the last few years would have been worse.

That the depopulation and regional imbalance will increase is confirmed by the experience of the existing countries in the Community. If one reads the latest reports of the Commission on Regional Policies, one sees that regional imbalance is increasing in all the countries of the Six, especially in Italy, Belgium and France.

A recent study of the problems of the regions of Western France showed that one of the main difficulties of those regions was that they were a long way from the axis of the Common Market. If Western France is a long way from it, how much further are West Wales and Western Scotland?

My hon. Friend the Member for Wigan (Mr. Fitch) referred to Belgium. This same report shows that there has been considerable depopulation and a net emigration of 5,000 people a year from the southern part of Belgium as a result of the troubles of the coal mining industry. The enormous problems and serious depopulation of Southern Italy are well known.

What has happened in the Community confirms our own experience, which is that labour will always be forced to follow capital into the more prosperous areas. Without a strong regional policy covering the whole area in which capital and labour are free to move the trend which we have seen in this country will continue.

The Treaty of Rome does not anywhere expressly provide for a common regional policy. It contains some pious words in the preamble, but not one Article expressly or clearly provides for a common regional policy. Indeed, the Commission recognises this. Since 1958 it has made efforts to try to get some kind of common regional policy. It has turned out memorandum after memorandum, but, as usual with a set-up governed by civil servants with no political control, nothing has been done about it.

It is not surprising that the Treaty of Rome contains no clear commitment for a common regional policy. It is based on the principle, if it can be called such, of competition—the law of the market place. The whose essence of a regional policy is that it intends and aims to distort market forces. We find provisions in the Treaty for the free movement of capital and labour, a common transport policy which emerges against the regions, and a common agricultural policy, which is the only common policy it has. There is nothing in the Treaty to provide for a common regional policy. Indeed, so weak are the provisions of the Treaty that whenever the European Commission seeks to make an advance towards a common regional policy it can never make up its mind under what section of what Article of the Treaty it should proceed. It is strongly arguable that it has no power within the Articles of the Treaty to do so.

Mr. Alexander W. Lyon (York)

My hon. Friend is right that there is no provision in the Treaty for a common policy, but there is nothing to prevent individual nations taking their own policy. One of the exceptions from the Article dealing with competition is that individual States can take such action, if they deem it necessary, in the interests of the region.

Mr. Davies

I agree absolutely. The point which I was making was that if we increase our home market area, if we allow capital to move within this much larger area and encourage the mobility of labour within it, we can never solve that problem by individual countries doing their best to try to change the balance. We need a strong centralised regional policy to counteract the market forces which we set in motion as a result of the Treaty of Rome.

I agree that there is provision for member countries to provide their own aids, and I will come to them now. I believe that my hon. Friend the Member for York (Mr. Alexander W. Lyon) was referring to Article 92 which starts by expressly prohibiting any aids which distort competition. I suggest that it is possible to argue that almost any aid to a company which encourages it to set up its factory not in an area which its commercial and economic judgment indicates, but in an area where aids would be given, distorts competition. The Article provides for this, but it then provides a certain exception. I do not want to go into the exceptions, but they are narrowly drawn. I believe that they were drawn mainly to assist the parts of Southern Italy and the various peasant communities of France which would suffer if the full force of competition were to be allowed to apply to them.

What is important is that the Commission is enjoined—indeed, empowered—to prevent a member State pursuing regional aids which are contrary to Article 92. Hon. Members on both sides of the House, sometimes in favour of the Market, tend to think that it does not matter than the Commission can prevent a member State acting contrary to the Treaty. But the Commission takes member States before the European Court of Justice, and on this regional issue it has done so. It has successfully pursued the Belgian Government because of some aspects of its regional policy and it has successfully pursued the Italian Government for providing subsidies for transport to and from Southern Italy. The French and German Governments have had to change their regional policies rather than face the disgrace of defeat at the hands of the Commission before the European Court of Justice.

Mr. John Smith (Lanarkshire, North)

My hon. Friend mentions the Belgian example. Is it not a fact that the objection which the Commission raised with the Belgian Government was that the aid proposed was to industry all over Belgium and that, therefore, distorted the price of competition between the member States? The Commission would not have objected if it had related simply to under-developed parts of Belgium.

Mr. Davies

That may be true. My point is that here is a body, the European Commission, which tells the Belgian Government what they can and cannot do and the Belgian Government have to submit. It is at this point that I believe the issue ceases to be economic and becomes a matter of sovereignty.

The important question is not whether our existing aids are or are not contrary to the principles of the Treaty of Rome—I believe that some of them are—but whether a future British Parliament and Government will be able to introduce aids, for better or for worse, which they consider to be for the benefit of the British people. They will be prevented from so doing by a non-elected, non-representative body sitting in Brussels backed by the Treaty of Rome. Again, our famous veto, about which we hear so much, will not assist us in this respect, because the Commission is empowered and enjoined and is under an obligation to enforce the Articles of the Treaty. What is not realised is that the Commission can pursue not only member States, but—it has not done so yet—the Council of Ministers before the European Court of Justice.

I have no doubt that eventually a strong centralised regional policy may come from Brussels. But when it does, I suggest that we shall have travelled a long way down a road, the ultimate destination of which is the creation of a new Western European state. That is a road which I believe the British people would not knowingly wish to travel. In the meantime, the regions will suffer from the harsh winds of competition which are enshrined and codified in the Treaty of Rome and the British people, not only in relation to regional policies but generally, will be governed in ever more increasing areas of their lives by a non-elected, non-representative body sitting in Brussels.

Those who wrote the White Paper said that accession to the Treaty of Rome does not involve the erosion of essential sovereignty. With respect, both in relation to regional policy and generally, I submit that that statement is untrue.

7.58 p.m.

Mr. Dennis Walters (Westbury)

I hope that the hon. Member for Llanelli (Mr. Denzil Davies) will forgive me if I do not follow him on the points which he raised in order that I may keep my speech as brief as possible.

In a previous debate on Europe I was able to argue why I supported the principle of British entry and to express my fervent wish that acceptable terms could be obtained. I believe such terms have been negotiated inevitably at this stage of the debate the central theme of the argument has been covered extensively.

Perhaps the most positive aspect to emerge over the past four days is that this debate on the historic issue of Britain's accession to the European Communities has not degenerated into a party political wrangle. It would have been tragic if it had done so, because it would have presented an untrue picture of public opinion in Britain and would have been a stinging blow to those many loyal, patient European supporters of British entry who are to be found in every political party in Europe and who remained constant, throughout—first, when we hesitated and then when we were rebuffed.

Tribute should be paid to the right hon. Members for Birmingham, Stechford (Mr. Roy Jenkins), Dundee, East (Mr. George Thomson), Manchester, Cheetham (Mr. Harold Lever) and many other right hon. and hon. Gentlemen opposite who have kept bipartisanship alive on the issue of Europe. No doubt they will have noted, among the many comments which have been made, the remarks of that veteran social democratic leader President Saragat of Italy, an old friend of this country.

Many hon. Members have referred to the origin of their European convictions and to their work for this cause. My hon. Friend the Member for Chelmsford (Mr. St. John-Stevas), in an eloquent speech, did so in a telling way. Perhaps I could refer briefly to my own experience in this connection. For reasons with which I shall not weary the House, at the age of 15, after being interned for three years, I worked for a few months with the Italian Resistance movement behind the Germany lines. In due course, after the liberation of Rome, I returned home, but it was an enlightening experience which left its mark.

The Resistance was made up of very diverse elements—Communists, Monarchists, Socialists and Christian Democrats. Perhaps the most intellectually attractive, and one of the most active groups, was the Action Party whose political philosophy was Liberal-Socialist, and whose anti-Fascist record was the most impeccable of all.

I made friends in all these groups. They had a genuine veneration for Britain, for its parliamentary institutions, for its way of upholding the rule of law, and for its enlightened and civilised attitude to politics. There was among them a yearning for British involvement and for British leadership. I refer to that because it made a lasting impression on me, and because I believe that their feeling, not unique to Italy, but shared throughout Europe by Socialists, Liberals and Conservatives, helps to explain the consistency of support for British entry among so many Europeans over such a long period of time.

It would take too long to recall the history of European unification after the war and the catalogue of missed opportunities for Britain. When at last we took the plunge, leadership was no longer there for the asking, even membership was rejected. But our friends in Europe did not waver in their support and encouragement. They refused to accept any rebuff as final. They worked to keep the door open and to make it possible for negotiations eventually to succeed.

I, personally, have supported and worked for British entry for many years but, like many other right hon. and hon. Members, I should not have been prepared to enter at any price. The terms had to be acceptable. I am satisfied that they are. I support the unanimous view of the Cabinet in recommending them. I believe the right hon. Members for Stechford, Dundee, East, Cheetham and Fulham (Mr. Michael Stewart) when they say that such terms would have been acceptable to a Labour Cabinet.

I am convinced that at this moment in history Britain's rôle lies in Europe and it is from there that we should continue to influence affairs in Europe and in the world. I believe that that is what our children would expect us to do. I believe that it is what the majority of young people in this country would wish us to do and that it is the right decision.

To turn back now would signify a gloomy acceptance of mediocrity. It would also—and this is the point that I should like to leave with the House tonight—be a shabby betrayal of our friends in Europe who have maintained their faith in us over such a long period of time and through so many vicissitudes.

8.4 p.m.

Mr. John Smith (Lanarkshire, North)

I do not wish to follow the line taken by the hon. Member for Westbury (Mr. Walters). I hope that he will forgive me if I refer briefly to the powerful speech of my hon. Friend the Member for Llanelly (Mr. Denzil Davies), who argued against entry from the regional development point of view. Like my hon. Friend, I represent a constituency in a development area. If I thought that my hon. Friend's gloomy prediction for the future of the development areas would result from entry into the Community I should be a devoted opponent of entry, because any hon. Member whose constituency was to be affected in the vital way suggested by my hon. Friend would have to argue against going in.

Having gone into the matter as carefully as I can, because of the special responsibility which I, as a Member representing a development area, have, I am convinced that my hon. Friend's prediction is not likely to be correct, and I think that that was foreshadowed by the inexact example which he took from the action of the Commission, when he found that the Commission was acting against indiscriminate aid to a country, rather than to a region.

The answer to the problem about regional development is to be found in the activities that have taken place within the Six, some of them using techniques which I wish this Government or then-predecessors had used. They demonstrate that it is possible to have a vigorous development policy within the E.E.C. We have been given examples of what has happened in Italy, in Belgium and in France. They do not exactly parallel what is going on in this country, but they indicate that the attitude of the Commission is one of permissiveness towards regional development policies carried out by individual countries, and that was the conclusion at which the previous Government arrived. It was the conclusion given expression to by the Leader of the Opposition in the debate on entry in May, 1967, and I do not think that very much has changed since then in the Commission's attitude to regional development.

The other argument that is used—and it was deployed by my hon. Friend the Member for Llanelly—is that of the fear about the free flow of capital. There is a feeling among many people that if there is free flow of capital the regional development areas will inevitably suffer. I do not take such a pessimistic view of the future. One reason which prompts me to take a more optimistic view is that it has been clear, particularly in relation to Scotland, that a good deal of the investment that has come in has come from outside the United Kingdom. If the development areas in Scotland had been dependent simply on United Kingdom investment, we should have had very little in the way of investment. We have attracted investment from outside, from Europe and from America. It is that sort of investment that has kept us going, and I think that in future we shall be able to attract investment on that scale.

One thing that I know for certain is that unless the United Kingdom's general economy prospers there is no hope for the development areas. I say that because of the difficulties that we are facing in Scotland. They result not from the fact that we do not have a set of tools for a regional policy to bite into the problem, but because there is not a generally strong economy to back it up and provide the mobile industry that is missing. I think that in this sense the development areas are even more dependent than other areas upon the general economic health of the community.

Mr. Denzil Davies

I do not know the experience of Scotland, but our experience in Wales is that when investment is high in the Midlands we suffer a considerable depopulation, especially of our young people, from Mid-Wales. Unemployment in Mid-Wales falls, but not because the problem has been cured; it falls because of an exodus of young people to the Midlands.

Mr. Smith

I cannot argue about that, but let us consider the general proposition. It seems to me that my hon. Friend is taking an unduly pessimistic view, because I cannot see how it is possible for industry to go to Scotland or to Wales unless there is industrial expansion in the whole country. Industry does not grow out of the ground of its own accord. It comes because of a willingness to invest somewhere in the United Kingdom. It is only if there is a substantial rate of growth in the general United Kingdom economy that one gets growth in the development areas, and that is one of the main reasons why we need to go into the E.E.C.

The question of economic growth is one which can be argued from both sides. At bottom this is a question of sovereignty, and many hon. Members are reluctant to give up some of the sovereignty which is held dear in this country. I do not take that view, and if there is a diminution of sovereignty, as I think there is, in going into the Community, I am willing to face that. A sovereignty which is not real is not worth having.

There was an interesting interlude at the end of the speech of my right hon. Friend the Member for Stepney (Mr. Shore) when he referred to the speech of my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), who had talked about sitting outside meetings of international monetary bodies in Europe waiting until the Six made up their minds. My right hon. Friend the Member for Stepney asked whether he should have been there at all. I am sure that my right hon. Friend the Member for Stechford would have been happy not to be there, but he had to be there, waiting in an ante room even when we were outside Europe, because decisions of great consequence to us were being taken. A country is not in a position to display effective national sovereignty in a situation like that. Ministers are in a better position to secure national interests and bolster up the country's sovereignty when they are inside the conference room, not waiting outside.

Mr. Elystan Morgan (Cardigan)

Whilst my hon. Friend is willing to surrender some part of Britain's sovereignty, is he willing to surrender the sovereignty of democratic institutions? Is he willing to see the essential planning of British industry, for example, vested in the nine Commissioners, who are not answerable to the Council of Ministers or the European Parliament? The issue is not one of the surrender of State sovereignty but the surrender of democratic institutions.

Mr. Deputy Speaker (Miss Harvie Anderson)

Order. Before the hon. Gentleman who has the Floor resumes, may I remind hon. Members that many hon. Members have sat through four days of debate.

Mr. Smith

I am grateful for my hon. Friend's intervention, but I must try to deal with that point generally, rather than particularly, because of the time. I am about to come to it.

The key question which we as a nation and Europe will have to face is how best to use the advantages of technology. I am convinced that we shall never be able to get investment on the scale required to build up the necessary technologies on a nation-state basis, or at least on a nation-state of the size of this country. It will have to be done on a European basis. That is something hon. Members on both sides can agree, whether Conservatives arguing for entry for Conservative aims, Liberals arguing for entry for Liberal aims, or Socialists arguing for entry for Socialist aims. All will agree on the necessity to obtain the advantages of technology, and, in my view, they will not be achieved unless we have the enlarged Common Market. It would, of course, be possible if we were not in the E.E.C. for Governments to make ad hoc agreements about various technical developments, like military aircraft, but they are only likely to be in the areas where the Governments are purchasers and consumers, rather than more general areas where we shall have to find our own customers throughout Europe and the rest of the world. We shall need to do it on a European scale.

Having created that technology on a European scale, we shall need to devise institutions to deal with it. Here, I come to the point raised by my hon. Friend the Member for Cardigan (Mr. Elystan Morgan). I cannot see how it will be possible for us to control the international companies that will increasingly dominate the economic scene if we are all working within a nation-state framework. Some international companies already have assets larger than those of many of the nation-states of the world. They can take their decisions on an international basis and steer their industry away from one area to another because they dislike the policy of a particular Government. A theoretical national sovereignty which can be flouted by the economic power of international companies is a national sovereignty which is not apt to meet the real problems a nation faces.

I am willing to give us some national sovereignty to gain a sovereignty which will be able to do something about controlling the international companies of the future. If we create a technology but cannot control it we shall not have achieved very much in the way of political and economic development. The institutions that can control it are in the E.E.C. The Commission, derided so much, can be the instrument to stand up to and control the international companies. That is the difference between a free trade area and the E.E.C. The E.E.C. is not just a free trade area but has Community institutions, two of which could do the job—the Commission, and the European Parliament at a later stage.

This is a fundamental argument about entering Europe. It is one which I sincerely put, not only because I am concerned about the problems of industry in relation to politics but, more important, because as a democratic Socialist I believe that the fundamental of democratic Socialism is that economic forces must somehow be brought under popular control and be fashioned towards social and political ends which the people determine. If we do not enter Europe we shall not be in a position to control them and achieve those economic, social and political ends which we on this side hold among our main political objectives.

I have strayed a little far beyond the terms of entry but some of the long-term principles are perhaps the most important aspects of the debate. Younger Members in particular should stress those long-term objectives when we are discussing this vital issue. I hope that when we look back in 10, 20, 30 or 40 years' time—and some of us may be lucky enough still to be in the House then—we shall recall some of the fears expressed and wonder how they could have existed when we see the real achievements of the Europe we shall have helped to build.

8.16 p.m.

Mr. Carol Mather (Esher)

I have sat through four days of the debate and have heard many powerful speeches. I hope that the hon. Member for Lanarkshire, North (Mr. John Smith) will forgive me if I do not take up any of his points, but time presses. I should like to single out in particular the speech of my right hon. Friend and neighbour the Member for Kingston-upon-Thames (Mr. Boyd-Carpenter), which reflected the deep divisions on the subject in the country and in the House.

I have reservations about entry on political grounds, but it is not right to make a final decision until one has spent some time in one's constituency during the summer months. The White Paper gives the impression that it is over-egging the bun, which rather spoils the case.

I want to speak about several broad issues to do with our entry which it is our duty to probe. Whatever our views on the issue, it is the duty of Members to investigate the full implications.

It is generally recognised that entry will be no panacea to cure Britain's economic problems. One wonders whether those problems have to some extent been brought about by the very fact that over a number of years Britain has been trying to enter the Common Market and has been told by successive political parties that our future lies in Europe and there is no future for this country on its own. This must have had an effect on the industrial psychology of the country.

It seems odd that in these days when the trend is away from the centralisation of government—at a time when we are talking more about regional government, when there is an upsurge of local nationalism and when we are talking about the participation of the people in government—we should be going in the opposite direction and heading for more centralisation. Even in the debates on local government reform the arguments have been about the need to bring the power and functions of government closer to the people.

My next point concerns super-powers, which it is obvious have difficulty in governing themselves these days. One has the difficulties experienced in the governing of, on the one hand, a country like the United States, and the force involved in governing a country like the Soviet Union.

A super-Power comprised of six countries is one thing. A political union of six countries is also one thing. An enlarged Community of 10 nations, stretching from the Mediterranean to the Baltic, is something quite different. How one governs an enormous group of nations of this kind I do not know, and I do not believe that anyone has addressed his mind to this sufficiently.

One also wonders whether superpowers are the right types of organisation for the world as it seems to be developing. We are entering an era which will be entirely different from the one through which we have passed. It will be a question of survival, and I fear that we shall be in danger of breakdown through various causes. There could be a technological breakdown, looking at the United States, or even a biological or psychological one. This will be an extremely difficult era through which to live. We shall need the right kind of political unit in the coming years, and it will need to be homogeneous and cohesive.

One also wonders whether a huge strategic decision of this kind—a decision affecting the destiny of the nation—can be taken by a single Government in one fell swoop. Looking at history, one is bound to question whether decisions of this kind work out in the long run. Looking back, one has had, on the economic side, five-year plans and the like. On the political side there has been the creation of federations, the majority of which have failed to succeed. We can also look at the results of other mainly political decisions, such as partitions, which we are seeing occurring in the world.

Perhaps decisions of this magnitude are better solved by evolutionary rather than revolutionary means. I believe that there is an alternative to this step and that this can be brought about by a more gradual process—in other words, by means of a step-by-step policy.

Looking at the broad issues involved, one must consider the question of loyalty. The people of Britain are loyal to this nation, and this is an important consideration. Are we going to give it up for a wider European loyalty which is as yet unknown and untried, When doing something like this one is on dangerous ground. One is playing with political chemistry the formula of which is extremely elusive, and this loyalty factor is the last resort of statesmen in an emergency.

The question of sovereignty is not adequately covered in the White Paper. It is difficult to see exactly what the position will be, but in a judgment by the European Court of Justice in 1962 it was stated: By creating a Community of unlimited duration, with its own institutions, its own personality and its own capacity in law, Member States have restricted their sovereign rights. An earlier White Paper on the legal and constitutional implications of Britain joining the Treaty of Rome said that we would be restricted in future in our international dealings. It also said that it would have an effect on our treaty-making ability and the freedom to negotiate in more direct ways. The whole aspect of the effect of joining the E.E.C. on our Parliament here has not been considered in the White Paper. Regulations, directives and decisions will emanate from the Council of Ministers. There will be instruments which will "apply generally" and "be binding in their entirety." They will "take direct effect on each member State." This means that Parliament here will not have any power of veto over such regulations.

I have been into the experience of Community Parliaments in this respect. An extremely good publication entitled "E.E.C.—National Parliaments in Community Decision-making" studies the whole relationship between national Parliaments and the Council of Ministers and covers the whole period during which the Treaty of Rome has been in force.

The experience of national Parliaments has been that there has been a greater by-passing of individual Parliaments. Experience has also shown that national Parliaments have been inhibited and hindered in certain respects because of the secrecy of the Council of Ministers. For example, one cannot have the full information that one requires. There is also the time factor; one cannot get the information one requires in time for it to be useful. There is also difficulty in obtaining information of the quality one requires. It is extremely difficult to obtain information about what is going on in the Commission and Council. Indeed, even if one gets this information, it is difficult to sort out what is and what is not important.

On this aspect, therefore, there is great danger that one of the main democratic links in our activities will be broken. Already there have been major clashes over issues of this kind; for example, between the Italian and German Parliaments and the Council of Ministers. I can foresee great clashes ahead.

In a way, this is an unnatural process for us. We are tearing ourselves apart from the Commonwealth and from our traditional friends. As such, this seems to be going against the grain. It is vital that before any final decision is taken we realise the full implications of what we will have to face if we join the E.E.C.

8.27 p.m.

Mr. Edward Milne (Blyth)

I trust that the hon. Member for Esher (Mr. Mather) will forgive me if I do not comment on the various points he made, though [shall be touching on some of his arguments because he voiced some of the uncertainty that has spread through this four-day debate.

The Government have a responsibility, between now and October, to fill in the gaps in this inadequate White Paper. A common thread running through this debate on whether Britain should join the Common Market—it has run through the last 10 years during which this subject has been discussed—has been the fact that many hon. Members would be prepared for Britain to join as long as we got adequate safeguards, conditions and guarantees. It is clear from the major speeches that have been made on this subject that the Government have hardly started to consider the basis of the safeguards, conditions and guarantees that are necessary.

We have yet to negotiate on fisheries, and we have to keep in mind New Zealand and sugar. We must also remember those E.F.T.A. partners which have not applied for entry, and there is a chance that Norway may not enter the Community. That being so, the White Paper is an inadequate document on which to base discussion and decisions between now and October.

Throughout the debate we have had analyses of the progress made by the countries of (he Six during the Community's 10 years of life. It is well known that the rate of economic development and growth in those countries prior to the formation of the Community was greater than it has been since. In using the formation of the Community as an argument for Britain's entering in order to further her economic and industrial interests we are apt to forget the vital fact that we alone in the post-war period would be entering the Community while leaving behind us partnerships at present providing us with about 80 per cent. of our trade.

That state of affairs did not face or affect the countries of the Six at all when they entered. Leaving aside the Benelux set-up between Luxembourg, Holland and Belgium, the Community was formed by six separate countries. We, on the other hand, will leave behind us a Commonwealth partnership, as well as membership of the highly successful European Free Trade Association, which was set up at the same time as the Common Market.

Those who are disturbed about sovereignty must also be disturbed at the comparison between the progress made by the European Free Trade Association and the Six. As partners in E.F.T.A. we had a trading association with Europe, and were in Europe, as well as maintaining our links with other countries and with other groups with which we were associated. To join the Six is to turn our backs on these associations and partnerships and to place our future destiny in the hands of organisations other than our own. If the evidence is right, and it is for the Government to provide more evidence if what we have so far had is not correct, this Parliament and the country's democratic foundations would be greatly undermined by our entry and decisions would be taken that would considerably affect not only the country's future but the future of those areas which require most assistance industrially and economically.

We have to think of the effect that our entry would have on our areas of high unemployment, and in this connection development policy in Southern Italy has been quoted almost as a showpiece of how the countries of the Six are able to assist areas of high unemployment and those requiring industrial assistance. When one learns that 1 million Italian industrial and construction workers are working in Switzerland one begins to doubt this vaunted prosperity of the Community and to question how its development policy will be able to look after the poorer sections of the countries in membership.

One wonders whether the Community's development area policy would be of value to areas such as my own in the North-East, and in Scotland and Wales. The Southern Italian showpiece gives us some clue. All the evidence from the 10 years of the Community's life suggests that our own development area policies, critical though many of us have been of them under successive Governments in the last 10 years, have tremendous advantages over anything that the Community has to offer. When Ministers are replying on behalf of the Government, not only in this debate but in the months ahead before the British people and Parliament make a decision, we shall have to have a greater amount of evidence on the advantages of development area policy for the people that we represent.

The coal industry has also been cited as an example of one of Britain's industries that will most immediately benefit upon our entry into the E.E.C. One of my hon. Friends has mentioned the question of an annual tonnage of about 150 million tons of coal being maintained in Britain if we enter the Community when for the last 10 years the contraction policy in the mining areas of the Community has been fiercer and harsher than it has been in our coalfields. There are much wider things to be discussed, and one does not have the time to develop these at the tail end of a debate such as this, when time is so drastically restricted.

On the immediate advantages we have to look at this debate merely as a jumping-off ground, not necessarily so much to attempt to satisfy those of us who have always been against entering the E.E.C, against the background of its institutions, rules and principles, as to convince those who feel that there is merit and advantage in entry and that Britain could not survive unless she entered.

The main purpose and value of the debate will have been served if it can take the Government out of the cloak of secrecy which seems to surround them when it comes to telling us what is needed for entry and make them give us precisely the terms, conditions and safeguards that they are prepared to underline.

We have not been given a single agreement either on the balance of payments or on the other issues that have been mentioned, ranging from fisheries to coal and other matters. Neither the British people nor the House have been told anything which goes beyond the transitional period. We have to take far too much on chance for the period which lies beyond the transition if the Government are determined to take what they wrongly claim to be this historic step.

8.39 p.m.

Mr. John Peel (Leicester, South-East)

The hon. Member for Ebbw Vale (Mr. Michael Foot) insisted that unless we can achieve an increase of trade within the Community, the whole point of our joining would be nullified. First, I would not agree with that. He seemed to overlook the fact that between 1958 and 1968 our trade with the Community increased by about 150 per cent.—alas, a great deal faster than our trade with the Commonwealth—and trade within the Community increased by no less than 300 per cent. It is a reasonable assumption that if we join the Community our trade will stand to benefit even more. The hon. Gentleman omitted to tell us any of those figures.

I want to examine two of the fears which are rightly and understandably held by many British people, fears which have tended to be overstressed and blown up by those who are against our joining the Community. One is the irrevocability and immutability of the Treaty of Rome. I do not believe that any association of sovereign States has in practice been prepared so to subordinate their vital national interests as to regard a treaty as irrevocable or immutable. Any country that signs a treaty accepts obligations as well as rights. There is no provision in the Treaty of Rome for a termination date.

However, it has been clearly demonstrated by the Community that, where the vital national interests of any member State are at stake, the veto will most certainly be used. France demonstrated this in 1965 over the question of weighted majority voting which was provided for in the Treaty. France made it clear that, where it thought that its vital national interests were being overridden at any point, it would refuse to abide by the wishes of the other members. That is why today in all cases of real importance where member countries consider that there vital national interests are at stake there must be unanimity within the Council of Ministers.

The other fear which one often encounters, and which is often stressed by my hon. Friend the Member for Banbury (Mr. Marten), is the question of federalism and the danger of Britain being dragged into a federal Europe before she knows where she is, the danger that we shall lose our sovereignty.

I ask the House to consider some of the institutions in the Common Market. The European Parliament is composed of members of the sovereign Parliaments of the constituent members of the Community in proportion to their populations. The powers of the European Parliament are purely advisory. It has two executive powers. First, it can throw out the Commission, which it has not attempted to do. Second, it can throw out the budget, but it has not attempted to do that, either.

The main decisions on Community matters are taken by the Council of Ministers, which is composed of the Ministers of the individual countries responsible to their own sovereign Parliaments, where their own Members can tell them exactly what they think about what is proposed. The proposals which are put before the Council are drafted by the Commission administrators in close collaboration with the national administrations of the individual countries concerned. Those proposals are then considered by the European Parliament, where members of the national Parliaments express their opinions upon them. There is not much federalism there.

Ultimately, it is possible that the Community will be sustained by an elected Parliament, though the whole question of separate constituencies for an elected Parliament is a big question and I do not see it happening in the foreseeable future. There will be no great increase in the powers of the European Parliament unless there is a real European executive power. I do not see much sign of that. It is not likely to come for a long time.

The time may come when the harmonisation of our foreign and defence policies, our political ideas, and our economies, has reached such a stage that our successors and our descendants will want to create an executive and a Parliament, but it will be up to them. I see no reason why we should be afraid to take bold steps at this stage.

Meantime, the present European Parliament will have increasingly important work to do. The recognition for a closer co-operation in foreign policy has been accepted. Here again, questions of foreign policy will be discussed between the Members of the European Parliament and the Council of Ministers. We shall, if we join the Community, be entitled to 36 seats in the European Parliament, and certainly we should take them up. The whole problem of servicing these places in the European Parliament was raised by the right hon. Member for Kettering (Sir G. de Freitas) and this is certainly something to which we shall have to pay a great deal of attention. For instance, it is very important that members of the European Parliament in the foreseeable future should continue to be members of their own sovereign Parliaments, and some way must be found to ensure that they can serve in both places. There is no reason why some members should not come from the other place. They are Members of Parliament and they have every right to sit in the European Parliament. We may have to consider electing some more Members of Parliament in order to service this duty.

However, I hope that nobody thinks that these problems are insoluble. They are not. The important thing is for Britain to seize this historic opportunity to help build not only a greater, more prosperous and safer Europe but a greater and more prosperous Britain and, with Britain, a greater and more prosperous Commonwealth which will be outward-looking and a strongly beneficent power in the world.

8.47 p.m.

Mr. Dick Taverne (Lincoln)

In the last minutes of the back-bench debate I want to say something about the longer term. It is often pointed out by critics of the decision to enter that we must have regard to the longer term and in particular to the far-reaching plans for a common currency and a monetary union, which I prefer to refer to as a monetary and economic union.

The argument is that quite apart from the derogation of sovereignty which this implies, this would force us, with our lower rate of growth of productive potential to an economic state of deflation and would condemn us to the kind of situation in which Northern Ireland finds itself within the monetary union of the United Kingdom. The most common defence against this argument is that we need not worry very much, that monetary union is not something which will happen in any event, that one only has to look at what has happened recently in the Common Market, and that even if it did show signs of developing we could, as members, block it.

I intend to take a somewhat different line in my approach to this problem. I agree that the time scale for this eventual development has been foreshortened in the eyes of those who put it forward. It has been suggested that we should have this monetary union by 1980. It seems to me that that aim is unrealistic. It would mean that as we approached monetary union the exchange rate alterations would become progressively more difficult and would be barred by 1980. Certainly in the light of past experience this is somewhat unlikely. There have been more devaluations and revalutions within the Common Market, despite the existence of the common agricultural policy, than anywhere else in Europe.

Secondly, monetary union, as first the Werner Committee and more strongly the Commission and certainly the Dutch and Germans have pointed out, implies economic union. It is impracticable without economic union. It cannot work unless there is first a harmonisation of growth rates and a much closer approximation of the rate of inflation in the different countries. Of course, these different rates of growth, or certainly of inflation, were the reasons behind the devaluations and revaluations which took place within the Common Market. So it seems likely that the process towards this union, if it takes place, will take very much longer than the time scale envisaged by the Werner Committee.

On the other hand, it seems a fundamental mistake to dismiss it in the way in which some proponents of Common Market entry do. In many respects, it is a reasonable extension of the customs union. It has been part of the history of Europe in the past that progress is made, after which there is a temporary halt before further progress is made. We should consider this matter on its merits, and I propose to do so briefly.

It seems to me that the aim of monetary and economic union is an attractive one if certain points are met. First, it enhances the benefit of membership, in that it eases the flow of trade. One has only to see how much easier it is to sell in the monetary union of the United Kingdom than it is to sell abroad, apart altogether from tariff barriers.

The second principal advantage of monetary union is a much greater harmonisation of economic growth rates and inflation rates. That is something which cannot but benefit this country. If this harmonisation does not take place there will be no such monetary union. If it does take place, this country stands to benefit particularly.

Thirdly, it forces a solution of the sterling problem. It has been said that we would run down the sterling balances, but it does not necessarily follow that we would. In the progress towards monetary union there has to be a pooling of currencies. If Europe rejects—as I think it will—the idea of a European reserve currency, or linked currencies becoming an international reserve currency, the Europeans are in a position to assist, and must assist, this country in the kind of I.M.F. solution towards the internationalism of sterling balances that I would strongly welcome. Progress towards monetary union would be of great assistance in solving the sterling problem, which has considerably hampered us in the past.

Fourthly, one reason for promoting monetary union is a desire for independence from the dollar. It is difficult to envisage the problem of the domination of Europe by the dollar being solved without a much greater degree of monetary union than exists at present.

Lastly, I must consider the major objection—that we should be depriving ourselves of the right to devalue and therefore of one of the most important weapons of preventing this becoming an area of economic depression, because deflation may seem to be the only alternative to devaluation. That objection seems to me to be invalid. If we begin to approach monetary union, and exchange rate alterations therefore become more difficult, we shall be depriving ourselves only of a weapon that will become increasingly obsolete.

Monetary union becomes feasible only if there is a much greater degree of harmonisation. This is the purpose of the escape clause—or the prudence clause—inserted at the Council of Ministers' meeting in February. If there is this greater degree of harmonisation there is no doubt that there will be a far greater internationalisation of union contacts. Many people on this side of the House, even including those who oppose entry, would see that as one of the advantages.

If there is a much greater internationalisation of union contacts wage standards are likely to be set much more on an international scale. In terms of fixing basic wage rates, just as within the monetary union of the United Kingdom we cannot isolate what is happening in one part of the United Kingdom from what is happening in another part, it seems to me inevitable that as the degree of economic harmonisation becomes closer the effects of any devaluation would be much more rapidly undone. We should have to look to substitutes for devaluation—substitutes that would be longer lasting. They would be regional policies of a kind referred to frequently in our debates. We have only to see that the policy of regional employment premiums is equivalent to a 2 per cent. devaluation in the areas to which it applies to see that regional policies, of whatever form, can do the same work as devaluation, except that by reason of the fact that economic harmonisation taking place, they would become much more effective.

All that development of regional policy is a process which we ourselves can influence. We have the right to see, and we shall have the opportunity to see if we are members of the E.E.C., that progress towards monetary union will not take place unless proper regional policies, including—I say this to my hon. Friend the Member for Llanelly (Mr. Denzil Davies)—Common Market central regional policies, have first been properly developed. It seems to me that, if they have been developed, the attractions of a monetary and economic union are not something on which we should turn our backs.

8.55 p.m.

Mr. John Stokes (Oldbury and Halesowen)

I hope that right hon. and hon. Members who spoke before me will forgive me if, in the few remaining minutes of the debate I do not refer to their speeches. I wish to appeal to those of my colleagues in the House and to those outside who take a traditional patriotic view, and who, perhaps, in the main, are older people.

For years since the war in this country, we have seen patriotism belittled and our nation lose faith in itself and be a target of abuse from all and sundry. It has been a long retreat since Dean Acheson said that we had lost an empire and not found a rôle. Some people now think that entry into the European Economic Community will be the final nail in our coffin and that henceforward England will not be the England which we know and love.

That is an emotional fear, and emotional fears are difficult to allay. I hope to persuade those who have such doubts and fears that at least some of them are not well founded. I hope to show that far from entry into Europe being the last gasp of a dying nation, it will be the first steps to future greatness in a new rôle, a rôle which, I believe, we are particularly suited to play.

I believe that in the new and larger Europe of 10 nations we can take a leading part. The European nations need us and want us. The part which we played in the war is sometimes better remembered there than it is here. Our vast knowledge of world affairs, our parliamentary processes and our stability in political and social life will all, I believe, be great assets which we shall bring to the Community. In the new Europe, I believe, we shall find ourselves again, and it will be an exhilarating tonic which we badly need. Older people sometimes do not realise that the empire has gone. The Commonwealth is something quite different. Our navy is small. Nor do we have the pre-eminence in trade and finance which once was ours.

I confess that I do not understand the somewhat niggling criticisms of those who do not like the terms. I fully understand, however, those of my hon. Friends and hon. Members opposite who will have no part of it at all. That, I realise, goes to the heart of the matter. I say to them that I believe they are mistaken. Our basic institutions will remain and will in no way be threatened. The Queen, the Church and the Law will still remain much as they are now, and the sovereignty of Parliament will not be diminished to anything like the extent that some people suggest. We shall still love and take pride in our country, but with an additional new loyalty to Europe—just as now, for instance, in cricketing terms, we can equally back Worcestershire and support England in a Test.

Our social life will not be threatened. We shall retain, as I see it, all our national characteristics, and if, perhaps, we become slightly more Europeanised than Americanised, I do not see the harm in that.

From the way some people talk one would think that the local pub and the shop round the corner will suddenly disappear. We shall travel more, and, that, surely, will be good. Our young people will speak more foreign languages, and that, surely, will be good. Since we lost our empire we have become too inward-looking, and Britain was always at her greatest when looking outward.

People sometimes fear that if we enter the Community masses of foreign workers will come here. I regard that as most unlikely. Much more likely is it that many British workers will find good jobs in Europe, as thousands of them have already done in Germany.

In a remarkable article recently in the Daily Telegraph, Dr. Luns, the former Foreign Minister of Holland, wrote about what the E.E.C. was like seen from the inside. He has been a very good friend to this country for over 20 years. The Dutch originally expressed many of the fears which opponents of entry do here today. He said that the E.E.C. was rather a decent club, and that the British are a most clubable people.

Our opponents try to make our flesh creep because they dislike change. I believe that this change will give this country, which has been faltering for over 20 years, just the opportunity it needs and wants.

9.2 p.m.

Mr. Denis Healey (Leeds, East)

The main purpose of this debate has been to discuss those terms of entry to the Common Market which are known at this stage in the negotiations and to consider the Government's case for entry as deployed in the White Paper. Everyone who has sat through these four days of debate will agree that it has been an extremely valuable exchange.

I congratulate my hon. Friend the Member for Hayes and Harlington (Mr. Sandelson) on an impressive maiden speech. However, the contributions from the Government Front Bench have been most disappointing to both sides of the House in the main. Ministers have confined themselves very largely to reciting speeches they have already made elsewhere and, with the one exception, I think, of the Minister of Agriculture, Fisheries and Food, have notably failed to answer any of the questions put to them. Therefore, we are all anxiously awaiting the Home Secretary in the hope that he at least will add something to the store of our knowledge.

Although this is only a "take note" debate, most of those who have spoken have sought to define their personal position on entry. Two things stand out. The first is that there is a wide variety of opinion in all three parties, a fact which leads many Members to be rather embarrassed by the allies they find elsewhere. The second thing that has struck me very much is that many speakers have admitted changing their mind on the subject at least once, and sometimes more often.

It seems to me that only a minority in any party has consistently held very strong views either for or against entry in principle since the issue first arose over the Schuman Plan, and those who have consistently held strong views either for or against entry have changed their attitude very little in the past 20 years despite enormous changes in the world, in the Common Market and in the United Kingdom itself. They also have something which marks them off from the rest of us who have not held the same view so consistently. Those in favour are very eloquent on the benefits as they see them, but they have been silent or evasive on the costs. Those against have tended to be rather cursory on the benefits of entry or the disadvantages of staying out, and have concentrated their attention on the price.

In my opinion, in many cases both sides have grossly exaggerated their case and, therefore, weakened its credibility. Many of those who spoke very strongly in favour tended to argue, as the Chancellor of the Exchequer did, that a large market in itself will give us growth. I am surprised that he of all Ministers should take this view, given the advice he must be receiving from the Treasury, because, as has been pointed out many times in the debate, the Common Market countries were growing as fast, many of them faster, before they formed the Community and the other members of E.F.T.A. have been growing as fast as the Common Market countries. Indeed, E.F.T.A. itself provides its members with a market as large as that of Japan, which at the moment is one of the three most powerful trading entities in the modern world. The one country which has consistently failed to share in this growth—a growth common to all other Western European countries inside or outside the Common Market—is the United Kingdom.

I cannot help feeling that we must face the fact that we in Britain face a particularly intractable economic problem which is unique in Europe. No one who has studied the problem over the last two decades can deny that. There is some evidence that the only other country which faces an economic problem similar to ours is the United States, and the United States of course already enjoys a very large market indeed.

I believe that my right hon. Friends the Member for Battersea, North (Mr. Jay) and Stepney (Mr. Shore) were right to point out that analogies from the experiences of the Six in the Common Market are not necessarily relevant to us in Britain, because if we join we shall have disadvantages which none of them incurred. We shall have to give up a cheap food policy, which none of them had. We shall have to give up tariff preferences in the Commonwealth and share the preferences we have in E.F.T.A. We shall have to give up an external tariff which is higher than the external tariffs given up by the Common Market countries, and, because of the way in which the budget is framed, we shall get less back from our contribution to that budget in terms of percentages than any other member.

It was significant that none of the Ministers, who had these points put to them repeatedly in the debate, attempted to deal with them, although they do, in my view, wreck a very large part of the case for entry as represented by the most enthusiastic supporters. This does not, of course, wreck the whole of the real case by any means.

I think that those fundamentally opposed to entry equally exaggerated their position. They, I think, in the main were particularly worried about what they think is a loss of sovereignty, a risk that we shall be forced if we join to do things which are against our national interest. This was a tenable fear 10 years ago, but it really is not tenable today and has not been tenable since, in 1966, by threatening to paralyse the Community unless majority voting was given up, France persuaded her partners to accept that each of the countries should be able to prevent action which is regarded as contrary to its fundamental national interests.

Of course, we have had many examples of this in the last few months. There has been the inability of France and Germany to agree on how they handle their currencies. There is the fact that Italy has defaulted this week, I think for the third time, by failing to introduce a value-added tax by the terminal date fixed by the Commission.

There is one other general point I would make about the case put by what I might call the extremists. I regret—and I think many people on both sides of the argument as well as both sides of the House will regret—the tendency of both extremes to seek support for their positions by denigrating countries which are outside the particular groups to which they think we should belong.

Those in favour have tended in this debate to attack the United States or the Commonwealth. Any British Minister and any British Government will often have a troublesome time from a foreign Government when it is defending its interests, but I doubt whether there is any time when the Commonwealth or the United States has mounted a sustained attack on the British currency in the way that M. Pompidou did some years ago. With great respect to my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins), I doubt whether he found Mr. McMahon quite as difficult a customer on the occasion to which he referred as he found Dr. Schiller on another occasion.

It is equally wrong for some opponents of entry to attempt to generate support for their case by attacks on France and on Germany, particularly at a time when the French and German Governments are pursuing a policy more helpful to the United Kingdom than at any period since the Second World War. We must all recognise that, whether or not we joint the Common Market, we shall have to work in politics as well as in trade matters with European Governments, with American Governments and with Commonwealth Governments. There is no argument for making that work more difficult.

I think it has been clear in this debate that the great majority of hon. Members belong to neither of the extremes to which I have referred. The great majority regard entry as a problem of judgment not of principle—and certainly not of party principle, otherwise the House would not be as widely divided as it is.

What do we have to judge? We have to measure the cost of entry against the benefits we can expect and then we have to judge our national ability to pay that cost. Even if we decide that the benefit of entry is worth the cost, we may have to decide we are unable to pay. It is as if a commercial traveller wanted to buy a new car in the hope of increasing his earnings. He has to decide whether it is worth the money, whether the terms of purchase are fair, and then whether he can afford it.

With great respect to those who take a different view, the strength of our economy during the critical years of entry is one fundamental element in the final judgment. I should like to spend a little time dealing with those three areas on which we have to make up our minds: the benefits, the cost, and, finally, our ability to pay the cost. Whatever happens to the European Community in the longer term, it is at present, as its name implies, purely an economic Community. France plays no part whatever in N.A.T.O., though she is a member of the Alliance. She has significant disagreements with all other members of the Common Market on attitudes towards the United States, the Soviet Union and the Middle East—by far the most important three areas of foreign policy. In fact, the United Kingdom Government under different party leadership have proved that Britain can co-operate closely in defence and foreign policy with the other members of the Common Market without being a member of the Community. Indeed, if I may adopt the very telling image used by my right hon. Friend the Member for Stechford, in all discussions in N.A.T.O. on European defence France has been eating her meals alone outside the room, and the sooner she decides to enter the better.

We must judge the benefits of entry into the Community in economic terms. At the moment—this could and, in my view, will change—the Community is economically a Customs union for industrial goods, with a low external tariff. Therefore, so far Britain has lost very little trade from being excluded. Indeed, our exports to the Six have gone up almost as fast as our exports to one another.

Colonel Sir Tufton Beamish (Lewes)

Nothing like as much.

Mr. Healey

Yes, and we have had the benefit of preferences in E.F.T.A. and the Commonwealth at the same time.

SirBeamish T.

About half.

Mr. Healey

The figures to which the hon. and gallant Member for Lewes (Sir T. Beamish) is referring depend on counting in Dutch entrepôt trade to Germany, which, in realistic terms, is not trade at all.

On the agricultural side, the Common Market is a managed market for agricultural goods at a very high price. It was essentially devised to help the French Government to buy their farmers' votes during a very difficult period of transition in French agricultural policy. From the point of view of the common agricultural policy, no one disputes that we should lose from joining the Common Market.

The one likely advantage of membership, and it is an important one, will not follow automatically from belonging to a larger market, according to the theories of eighteenth century economists. It is the fact, as Lord Stokes has said, that stop-go policies in Britain under successive Governments in the last quarter of a century have been a serious disincentive to industrial investment. Industrialists believe, though this, too, can be disputed, that in the larger market they can invest today with less risk but that in two years' time the market will have disappeared as a result of the policy of their own Government.

To my mind, by far the most important argument for entry is a new one. It is what we could lose from exclusion in the future. The Common Market Governments are now attempting to go beyond a common market to a common economic policy on both internal and external matters. Here the benefits of our membership would be substantial, especially if the three applicant countries joined at the same time.

It is notable that both Sweden and Switzerland, which believe that it is inconsistent with their foreign policy to join as full members, are, if we are to believe the Press, deeply concerned that they, too, should be able to play a part in the decision-making process of the Common Market as it develops over the next 10 years. I believe that by far the most important area in which the Common Market is likely to develop policies, for good or ill, is in world trade and the general context in which at the moment there is a real threat of war between the major trading blocs. I think that this is an important case for entry.

Let us look now at the cost. The ostensible purpose of the White Paper was to give some details of what it would cost if we joined. Not one speaker in this debate has had a good word for the White Paper in this regard. It has added nothing to earlier statements in the House. It has taken a good deal away. Ministers now deny things that they told the House a few months ago.

I agree with what the Chancellor of the Exchequer said earlier, that in many of these areas, including those already in the While Paper, one need a range of estimates because many of the factors are highly speculative. The last Government in fact produced a range of estimates, and it is very much easier to do it now than it was then because a lot of the uncertainties in 1970 have been cleared up in the course of the negotiations, above all the uncertainties about the phasing of food costs and the uncertainties about our contribution to the Community budget.

The fact is that we are getting less information now than we were given a year ago. In a most impressive speech, the right hon. and learned Member for Hertfordshire, East (Sir D. Walker-Smith) was right to say that all this work has been done by the Government. It had to be done by the Government if the Government were to make up their own minds on whether the price of entry was worth while. But information which was considered vital by the Government in making up their own minds is now denied the House because it is considered either too complicated or too embarrassing to reveal to the public of Britain.

No Government in recent times have undertaken an enterprise of so much moment for their people with so shameless a lack of candour since the United States first got involved in Vietnam. My right hon. Friend the Leader of the Opposition and my hon. Friend the Member for Ebbw Vale (Mr. Michael Foot) have asked the Government to set up a Select Committee to consider the facts here. That demand has been supported by many right hon. and hon. Gentlemen opposite. I hope that we shall have a reply to that demand from the Home Secretary when he winds up tonight.

There are three vital areas which the House must consider: the cost in foreign exchange, the cost in resources, and the impact on the cost of living.

For the sake of argument, one can afford temporarily to accept the Government's estimate of the budget cost in 1973 and 1977 while pointing out that, as the Minister told the House not long ago, it is likely to rise to £300 million net by 1980, and may continue to rise. This is one of the many facts given to the House by Ministers and suppressed in the White Paper.

For the sake of argument, one can also accept the estimate of £50 million as the extra cost of food on the balance of payments. But the key figure is the impact of entry on our trade and industrial goods. Here, as the Government admit, we shall suffer losses which no other member of the Common Market has suffered or will suffer because of the loss of preferences. The Labour Government gave a figure for this—it was a very wide one—of £125 million to £275 million. The Chancellor of the Duchy gave the House an estimate of £200 million to £300 million not long ago. If we are to believe the Economist last weekend, the right hon. and learned Gentleman confirmed it in discussing it privately with the Press last month. But nobody who has studied the argument in the last White Paper—the Government have rightly based themselves to a large extent on the White Paper produced by the Labour Government—can deny that there will be a substantial cost, and the figure of £200 million to £300 million, falling, as it does, roughly in the middle of the estimate made by the last Government, is the probable one. If we add to that the likely loss on capital exports, it is difficult to see the total coming out at less than £500 million by 1977. This is not the entrance fee; this is an annual subscription which continues to be paid so long as we are a member, although I agree that it might be offset—this is the Government's case—by what used to be called the dynamic effects of entry in the later years.

It is no good the Government claiming that a figure like £500 million cost to the balance of payments is nugatory, because, as my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) pointed out in an important speech last Wednesday, we have wrecked our domestic economy repeatedly since the war for the sake of deficits far smaller than £500 million. Nobody on the Government Front Bench has given us any clue so far in the debate as to what steps he would take to prevent a similar deficit from wrecking our economy in future. I hope that the Home Secretary, who was Chancellor of the Exchequer at one time, will answer this point.

The resource cost is not even mentioned in the White Paper. In my view, the effect on the cost of living is underestimated, because it is unrealistic to believe that common agricultural policy prices will not rise faster in the next few years than world prices. Indeed, it is likely that world prices may fall. [HON. MEMBERS: "Why?"] For reasons which we explained in detail in the debate on Friday which very few hon. Members shouting "Why?" bothered to attend.

The cost on the balance of payments, by the Government's admission, is substantial. It is no use the Secretary of State for Trade and Industry wagging his head, because he is the Minister who told businessmen in the Midlands not long ago that there would be a substantial cost falling on us in our balance of payments before we could expect to get advantages from the dynamic results. The question is whether we can pay this cost, and here my right hon. Friends the Members for Stechford and Cheetham were quite right when they said last week that we could not afford to pay such a cost without a fundamental change in our economic policy such as to guarantee this country sustained growth, something which we have had at no time since the war so far.

A week ago we were told that the stagnation from which we were suffering was an ideal basis on which to enter the Common Market because it gave us a big balance of payments surplus and a large amount of unused resources. When some of us took the opposite view, we were accused in the Press of trivialising the issue.

Now the argument is the opposite. Now the Government are arguing that because they have completely reversed the policy we had a week ago we can afford to carry the cost of entry. I do not know what particular term from the menagerie of Establishment polemics I should use to describe this total reversal of the Government's position, but perhaps I could quote the view of the City editor of the Sunday Telegraph yesterday, when he said: … I am delighted that what is, in the best sense, the opportunism of the Conservative Party has shown itself again". That was in an article entitled: … Three Cheers for the Chancellor. The fact is that we have now seen a total reversal of all the dogma to which the Conservative Party has been attached since the General Election, even to the extent of paying nationalised industries a subsidy of £200 million to £300 million to help private industry to get its power and steel at under the cost price; but the question is whether this will work.

This is a consumer-led boom. It is certain to suck in imports very much faster than it generates exports. It is certain to force prices up. I must remind the right hon. Member for Barnet (Mr. Maudling) that when he was Chancellor he gave away £270 million and that that led us into a balance of payments deficit within a year of nearly £800 million. The Government are now giving away £400 million, and I believe that the estimate of the Economist is near the mark when it says that this could lead us into deficit within a year running at the rate of £500 million a year, and this is just at the point when we are supposed to be going into the Common Market and accepting the additional costs in foreign exchange to which I have just referred.

That is not just my view. It is the view of the economic editor of the Financial Times, of the Sunday Times, of Mr. Nigel Lawson in The Times, and it was expressed by the hon. Members for South Angus (Mr. Bruce-Gardyne) and Oswestry (Mr. Biffen) earlier in the debate.

What do we do when this happens? We have a choice between going into debt, defaulting, deflation and devaluation and there is no doubt that the course which the Government will take will be either deflation or devaluation. Devaluation is regarded by many economists as certain, even without the Chancellor's new policy. We all know that the Government indulge in the dream that they can have a General Election next October and devalue in December, but there is no chance whatever of them having time to do that, and the cost to the British people and the increase in the cost of entry if the present policies lead us into devaluation, which the overwhelming majority of informed comment on the budget has suggested is likely, will be absolutely enormous.

The fact is that the only basis on which the Government's policy could hope to succeed—and this point has been made by all commentators—is support from the trade unions in wage restraint. But, although the Government have changed their economic policy, they have not changed their social policy, which is calculated to deny them that support from the unions on which the success of their policy must depend. We face the Industrial Relations Bill, increases in food prices, rents going up by 50p a week, school meals going up again, increases in medical charges, increases in National Insurance contributions, and the introduction of a value added tax.

There is no chance of entry to the Common Market bringing this country the expected benefits without a change in Government policy far more radical than the Conservative Party can hope or would wish to achieve. That, above all, is why I believe that it could be a disaster for Parliament to accept the terms negotiated by the Government without giving the British people a chance to change their Government in a General Election.

9.31 p.m.

The Secretary of State for the Home Department (Mr. Reginald Maudling)

As the right hon. Member for Leeds, East (Mr. Healey) said, this has been a debate in which many important speeches have been made and points of view on both sides have been expressed with clarity. It fell to the right hon. Gentleman to express the middle point of view, which must have been uncomfortable for him. The hon. Member for Ebbw Vale (Mr. Michael Foot) said that the fence had collapsed under me. It has not collapsed under the right hon. Gentleman yet, so far as I can see.

When the right hon. Gentleman quoted the Economist's saying that the measures of my right hon. Friend the Chancellor of the Exchequer would lead to a balance of payments deficit of so many hundreds of millions of pounds, I seemed to remember the Economist's comment on the late Government's White Paper and their figures. We quite rightly have not tried to estimate the impact on our trade. The Economist described the Labour Government's figures as unadulterated rubbish, and I expressed my agreement at the time, because it is not possible to give accurate figures on £18 billion worth of trade.

The hon. Member for Ebbw Vale proposed a charming limerick about me. I have been trying to think of an answer, but I cannot think of any limerick about him which Mr. Speaker would allow me to use. However, I have thought of something which refers to the attitude of his right hon. Friend the Leader of the Opposition to the E.E.C. He reminds me of the: … young man of Brent, Whose foot was unhappily bent. To save himself trouble, He bent it back double, And instead of coming he went. I must apologise for this frivolity. That is a chestnut which has been adapted.

I now come to the basic issues of the debate. [HON. MEMBERS: "Hear, hear."] That will be a change after the previous speech.

I have been involved in European problems for over 20 years, since I first went to the O.E.E.C. with Lord Butler when he was Chancellor of the Exchequer. It always seemed to me that there were three essential requirements of United Kingdom policy which are relevant in this context. First, we need the widest possible freedom of trade and payments. This suits us because of the nature of our economy and industry, because by and large what we import is necessary—food and raw materials—whereas what we export can often be postponed or is not essential to our customers.

The second requirement is the end of strife between France and Germany. The concept of balance of power in Europe is out of date. We have suffered enough from wars and strife in Europe, and therefore it is a fundamental interest of this country to eliminate any cause of tension which might in the future, as in the past, give rise to the sort of difficulty and struggle from which we have repeatedly suffered.

A third requirement is that any European trading system which we join should be an outward-looking body, not merely because of our maritime tradition or the old Imperial or Commonwealth trading connection that we have, but because it is in the nature of this country to be a world trading and world investing body.

We can welcome a policy of freedom of trade in Europe, therefore, only if it is not at the cost of restricting trade in the world generally and not at the cost of international interference with traditional patterns of British trade. I agree with the right hon. Gentleman in his remarks about not distorting the broad pattern of world trade. This is one of the important reasons why our voice in the Community would be of great benefit to us and other countries. And as for traditional patterns of trade, particularly in terms of the Commonwealth, I will have something to say about that later.

Looking back at the historical development of the present situation, which it is important to do, in the post-war years the O.E.E.C. fulfilled all these requirements. We had the removal of quotas, and the European Payments Union brought about a truly remarkable expansion in the prosperity of Western Europe after the recovery from the war.

We had freedom of trade, freedom from quotas among the European countries, co-operation between France and Germany and, with the involvement of America and Canada, an outward-looking body and trading organisation. But somehow impetus in the O.E.E.C. ran out. With the elimination of quotas, there was not much more for it to do. Tariffs were the business of G.A.T.T. Thus, at that time, the six countries of the Community felt that they should make a further move forward in economic cooperation and integration.

We at first were sceptical about it—[Interruption.]—and I admit that, along with many others, I underestimated at the time what the developments would be following the Messina Conference.

However, there is one other reason for our policy. It should not be forgotten that before the Treaty of Rome was signed we had a clear agreement with the other European countries, our partners in O.E.E.C, to negotiate a free trade area embracing the countries of the Six as well as the other European countries. So we set about those negotiations. I remember them well. Unfortunately, they came up against a road block in 1958.

It was said that a great deal could have been achieved for Europe and the world by the creation of a free trade area at that time. However, looking back, it was probably inevitable that the idea should fail. I believe that the founder members of the Six, including the Germans, were worried that their Community would somehow be swamped in a wider free trade area. As I say, the negotiations for a free trade area at that time collapsed and they were not—and, I believe, could not be—revived.

We turned, with Norway and Sweden, to the foundation of E.F.T.A., and I recall that there were three reasons why we set about founding it. The first was to extend the freedom of trade, wherever that was possible, in Europe, and to create a market of 90 million if we could not have a market of 290 million.

The second was to prevent a further fragmentation of the European economic pattern, with individual bilateral deals between non-E.E.C. countries and the E.E.C. The third was because the members of E.F.T.A., when it was formed, envisaged it as part of a future movement of coming together with the Community and forming one single European economic system. Those were the reasons for founding E.F.T.A.

There have been some big changes in the world since then, and certainly the sort of changes to which the right hon. Gentleman referred. They had led me to believe—as I believe now—that it would be right for us to choose entry into the E.E.C.

I will list some of these changes. There has been the comparative decline in the economic position of the United Kingdom. I am sure that hon. Members will accept this, whatever the reasons may have been. Then there has been the relative decline in our growth of output, of exports and of investment, along with our relative failure to increase our living standards as fast as many other countries. The reasons for these developments can be argued on another occasion.

There is, then, the sterling area burden and the difficulty of knowing what to do with it. I agree with the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) that sterling as a reserve currency is, in many ways, a great burden. I also agree that it is not easy to know how to overcome the difficulty of this burden, particularly when it consists of debts owed to friends and trading partners. This is another reason why I believe our comparative trading position has not advanced in the way the position has in other trading countries.

On the other hand, we have seen the growing power of the Community, first in its own economic growth and what it has displayed, and, secondly, as a competitor with us throughout the entire world. I believe that this aspect has been under-estimated in this debate. We must think not only of the advantages and disadvantages of going in but also of the consequences of staying out, and one of the consequences of staying out will be facing this very severe competition from an economy across the Channel the size of that of the United States but with wage levels akin not to those of America but to ours. This is a formidable competitive situation.

One must also bear in mind, in looking at that, the enormous power of the Community in international trade negotiations. When these trade negotiations take place—we saw this in the Kennedy Round—the big boys are the big importing economies and the Community, I think that I am right in saying, is the world's biggest single importer. That is why the voice of the Community is enormously powerful in these negotiations. If we are members of the Community, we shall have our part in influencing that voice and our interests will be taken care of by our partners but, remaining outside, we shall have to paddle our own canoe, and our chances then, realistically viewed, will be far less than if we were members.

The policy of the Community has developed on a far less restrictive basis than I expected. Its tariffs have been lowered. It has taken a full part in the Kennedy Round and is moving towards policies of lower tariffs. In its attitude to other countries it has been, I think, a genuine example, to use a somewhat ugly phrase, of an outward-looking organisation. In its relations with very many countries and in its generous policies of aid for developing countries it has performed very well indeed—much better, frankly, than I expected 10 years ago.

Then, the drive to early federation or to a federalist system has very much diminished. I do not know to what extent in the initial stages the founders were convinced of the need for federalism—M. Monnet was, I know—or how much Governments were, but the drive to federalism has diminished. Since the 1966 agreement it is recognised that no country's vital interests can be over-ridden by the other countries and there can be no extension of the functions of the Community beyond the Treaty of Rome without unanimous agreement. So the pace of any advance to federalism, in the political sense, or to a common currency, in the economic sense, will be determined by what the member countries believe to be their national interests.

Next, there has been a change in the trading pattern. The Commonwealth countries have pursued trade with the Community actively in the last 10 years. Many of them are attached by association with the Community, and some have already given preference to the Community over us. The pattern of trade has changed because of a change of pattern in industrial production, and also because, in the case of Australia, for example, of the tremendous pull of Japan and the enormous growth of trade between Japan and Australia. There is also the decisive change in the attitude of the French Government which has taken place in the last year or so.

For all these reasons I am convinced by experience and reasoning, not by sentiment, that it is better for us and the rest of the world if we enter the Community. I must say that I have never been a "whole hogger". I have never accepted for a moment that it is disaster to stay outside of the Community and automatic prosperity to be inside. Anyone who argues that is quite wrong. The argument, as it seems to me, is that for this country there will be better opportunities, both economic and political, inside, and greater danger outside the Community.

This is the great decision we have to make—and let us remember that a decision to stay out is just as big a decision as a decision to go in. So often in politics and in economic management a decision to do nothing may be the most reckless decision of all. There is a wide spectrum of views. There are those who say let us go in unconditionally, like the Liberal Party—;

Mr. Thorpe


Mr. Maudling

I thought that the Liberals had sophisticated arguments about going in and changing things from the inside. In any case, that argument has disappeared, because the terms available are known.

The various attitude to this decision can perhaps be analysed in this way. There are the opponents who, for a variety of reasons, are against entry in principle—and we have heard a number of hon. and right hon. Gentlemen on both sides who are opposed in principle. Then there are those who say that there can be no entry on these terms. Some, like the right hon. Gentleman the Leader of the Opposition, say just "No" to these terms. Some, like the right hon. Member for Cardiff, South-East (Mr. Callaghan), say, "Let us try to get better terms". Finally, there are those—I think probably very few—like the right hon. Member for Leeds, East, who say, "Yes, let us go in but only when there is a different Government and a different economic policy". Those are the various arguments.

Summarising the basic arguments for entry, they are the economic arguments, which my right hon. Friend the Chancellor of the Exchequer dwelt on at some length this afternoon—the economy of scale within a larger market; the possibility of building up European enterprises on a scale and power adequate to compete throughout the world with American enterprises; the means for modern research and development; the means for investment on the modern scale required by the high technology industries, in a very large market; the possibility of more competition within our own market, which is good for us and from which we should not shrink; and the opportunities available to our investors. After all, the City of London remains dominant throughout the Western world. The ability of the City to raise even further its very high invisible earnings will be great within the Community.

Then there is the evidence of the Community itself, its advanced living standards, internal trade and investment. I say again to those who question these figures: listen, surely, to the evidence of the people themselves in the Six because they, Governments, business men and unions alike, are convinced that much of the growth that they have achieved and the success that has come to them has come because of the formation of the Community. I think that it was the right hon. Member for Leeds, East who said the other day, in an article in the Mirror, that he knew of no Socialist Party and no trade union throughout the whole Community that did not consider that the Community was a good thing and did not welcome British entry. So much for Socialist solidarity.

The negative arguments I have tried to express must also be considered. It is very important to bear in mind the competition world-wide from a market this size, and the effect on investment in this country, investment both by British enterprises and by American enterprises. People sometimes argue—I think that they are quite wrong—that if we join the Community British investment will flow out into Europe. It is just the opposite. At the moment, firms wanting to make their investment in the Six to improve their market are not, by and large, better off. They have to go there to avoid jumping over a tariff barrier. But once we are inside the Community there will not be the pressure on British business men to expand outside our own shores, as American investment and experience shows quite clearly that the Americans have influences which attract them to investment here—common language and engineering standards. They would be much more likely to invest here rather than on the Continent if there is no longer this tariff barrier which at present is causing them to move away from Britain towards continental Europe.

My right hon. Friend the Foreign Secretary, with clarity and force, has stated the advantages as have many others who have spoken, and they come down broadly to the argument we know so well, that in a world of very large Powers indeed the question is simply whether we can make our influence felt better by having a wholly separate voice outside the Community or by taking a leading part in the framing of European policies. Of course, the development of a single European foreign policy lies a very long way ahead but surely, despite that fact, the more we can do to concert the policies of Europe, the more we can defend and advance in common a common political purpose for Western Europe, and the better it must be for us and for men of good will throughout the world.

There is no real alternative. The Commonwealth is no longer credible as an economic or a political system. One must accept that, as I believe the whole House accepts it. Changes in the economic pattern of the Commonwealth have been very great—the growth of competing secondary industries in so many overseas countries, the spread of export in their materials to many new countries, such as Japan—and in political matters there has never been, for many years, any opportunity of forming a common, single political aim among the members of the Commonwealth.

The alternative does not rest there, nor do I believe that the North Atlantic Free Trade Area which has been suggested is an alternative. The Americans have never shown any interest in this. I do not see why they should; because the offer to them of a market on our scale is nothing compared to the offer they have to make us of a market on their scale.

As for E.F.T.A., although I agree—this is natural, because of my connection with it—about the value of E.F.T.A. in the economic field, it cannot make any basis for combined or concerted political action. These are the arguments for.

As for the objections in principle, the first is the question of sovereignty. An international agreement tends to involve some abrogation of sovereignty. Sovereignty is freedom of action. Anyone who joins an alliance accepts some limitation on his freedom of action, as his partners accept limitation on their freedom of action. This is a reciprocal acceptance which has not been adequately realised.

As regards sovereignty, our activities will be bound by our obligations under the Treaty, and by no more than our obligations under the Treaty, which are basically of an economic and a commercial character.

Mr. Michael Foot

Will the Secretary of State answer the question I put to him earlier? Will he tell us, first, when an outline will be given of the legislation which would be involved if the Government accepted entry and, second, which of those proposals would be amendable when they are presented to the House? If they are not amendable, would that not be an interference with the sovereignty of Parliament?

Mr. Maudling

No, because that is a common occurrence when we enter into a treaty. We often enter into treaties which call for legislation. We are obliged by the terms of treaties to legislate; and we are obliged to accept our obligations under the treaty.

Mr. Foot

Does the Secretary of State say that we have entered into any treaties which would involve such an extensive amount of legislation as will be brought before the House covering taxation, trading relations, and all the other matters?

Mr. Maudling

I am not sure that taxation is covered by it. In any case, we have already entered into treaties which determine the course of the country in a wider field than the obligations under the Treaty of Rome. Nothing could be greater than the obligation to make war in defence of an ally, should that be necessary.

As to the balance of payments, the elements in the balance of payments are, on the debit side, the cost of the contribution to the Community fund, the cost of the increase in the price of food imports, and the cost—unquantifiable—between the loss of some preferences and the gain in the so-called dynamic effect and the access to much wider markets. This last is not quantifiable. It is not possible to quantify the effect of a reduction in preferences over a period which is not known. One cannot be set against the other, therefore. The attempt by the Labour Government in their White Paper in 1970 to do that was a dismal failure.

Suffice it to say two things. First, it is the almost unanimous view of British industrialists that, from their experience as industrialists, this will be excellent for trade and commerce in Britain. I find the confidence of those actively engaged in trade particularly convincing.

As regards the previous Government, the conditions which govern trade and commerce which we propose should be accepted are precisely those which they proposed should be accepted. There has been no change in this respect. I do not quite understand why such a condition as was acceptable in the conditions of the balance of payments problem of 1967 should not be acceptable against the background of the strong balance of payments of 1970. These are the arguments of principle.

As to the argument on the terms, there is, first, the budget contribution. I do not believe that anyone would imagine that we could have got a better deal on the budget contribution than that which has been obtained by my right hon. and learned Friend the Chancellor of the Duchy. No one in Europe will believe that for one moment.

Mr. Shore rose—;

Mr. Maudling

No; I am sorry. It is getting towards the end.

Mr. Shore rose—;

Hon. Members

Sit down!

Mr. Speaker

Order. If the right hon. Member who has the Floor does not give way, the right hon. Member for Stepney (Mr. Shore) must resume his seat.

Mr. Maudling rose—;

Mr. Shore rose—;

Hon. Members

Sit down!

Mr. Maudling

I am winding up a four-day debate and trying to cover as many points as I can. The objections which are made to the terms which have been obtained are, first, the budget contribution; second, as to sugar, where the terms have been accepted by those most directly affected—namely, the sugar producers; third, New Zealand, where the terms have been accepted by the New Zealand Government; and, fourth, raised by the Leader of the Opposition, as to capital movement, where all that was asked for was the transitional movement, which is precisely what we got. Therefore, the argument on the terms is totally bogus. It is not believed in this country or throughout Europe. Everyone knows perfectly well, as is evidenced by Ministers of the previous Government who know most about these things, that these are the best terms that any Government could have expected to get. If they are now saying that the terms are not acceptable, the enterprise of trying to enter themselves was bogus from the start.

Mr. Shore

Will the right hon. Gentleman give way?

Mr. Maudling

Other points that have been raised, and particularly by the hon. Member for Ebbw Vale, related to iron and steel and regional policies. On the subject of iron and steel I would merely say that the hon. Gentleman's Government decided to accept the Treaty of Paris in its entirety, requiring only a transitional period, and what we have got is a transitional period—once again precisely what his Government thought would be suitable. If that be so, and it is true that the leaders of the coal and steel industries emphatically say that in their belief entry into Europe on these terms will be in the interests of their industries—[Interruption.] I do not know whether hon. Members opposite are saying that the chairmen of the iron and steel industries are not fit exponents of the interests of their industries.

Some of the matters which were raised by the hon. Member for Ebbw Vale about cutting back on expansion programmes and the House of Commons losing control of the nationalised industries are bogus. If they are true, why were they neglected by the previous Government when they entered into this negotiation? It is argued that in the Community we would have to cut back our assistance to the regions. I believe this to be the opopsite of the truth. I am convinced that under membership of the E.E.C. we shall be able to do more to help the regions than we are doing at the moment. Look at the experience of the Community and at the fact that the Community states in the beginning of the Treaty of Rome that one of its main purposes is to establish a balance between the various economic regions, and look at what they have done in Southern Italy, parts of France and Germany, and see the practical results of a regional policy. One will see that the party opposite were quite right in assuming as they did that joining the Community, so far from damaging regional policy, will facilitate it.

There is no argument on the terms. There remains the argument: let us go back and ask for better terms. This is the most unrealistic argument of all. After all these years of struggle and negotiation under succeeding Governments, after all the efforts of our friends in the Community who have worked hard to get us in, who have believed in our entry, for us to turn our backs and say, "We shall go back in a few years' time when you have learned how much you miss us"—I do not believe that Europe can be run on that basis. The shock to Europe and the Western world would be profound.

These are the arguments—the arguments of those who say "I agree on going in but the terms are wrong", who say, "Let us try again", which is ridiculous, and who say, "Let us have a political argument about a General Election."

Mr. Wilfred Proudfoot (Brighouse and Spendborough)

On a point of order, Mr. Speaker—;

Mr. Speaker

Later, I think. I must first put the Question.

Question put and agreed to.

Resolved, That this House takes note of the White Paper entitled The United Kingdom and the European Communities (Command Paper No. 4715).