EUROPEAN COMMUNITIES ACT 1972

HC Deb 28 July 1972 vol 841 cc2291-326

'For the avoidance of doubt, it is hereby declared that the provisions of this Act are not affected in any way by the provisions of the European Communities Act 1972'.—[Mr. Millan.]

Brought up, and read the First time.

Mr. Millan

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

Mr. Deputy Speaker

I suggest that it will be convenient to discuss at the same time new Clause 3 (European Economic Commission) and Amendment No. 42, in Clause 16, page 17, line 5, at end insert: '(2) Any report prepared under the last foregoing subsection shall contain details of the way in which any of the provisions of this Act have been affected by the provisions of any treaty or international agreement entered into either before or after the passing of this Act'.

Mr. Millan

We should in any event have wished to pursue this matter at some stage in the Bill, but it became the more important to pursue after reports in the newspapers on 18th July that the German Government had raised with the Commission the British Government's proposals in relation both to free depreciation, which applies not just to the assisted areas but over the whole of the United Kingdom, and to the capital grants system provided for in the Bill, and had told the Commission that they had doubts whether these arrangements met the obligations which Her Majesy's Government were accepting in acceding to the Treaty of Rome. Immediately the question is raised of how far we are able even now to determine our own regional policy and how far we shall be able to do that if and when we join the Common Market. The debate gives the Government an opportunity to clear up that matter.

Having read what most of what Ministers have said about regional policy since the question of accession to the Community first arose, it seems that there are two conflicting arguments. The first is that we shall have a common regional policy—we do not have one yet—and that it will be very much to Britain's advantage to have such a policy. The second argument is that we need not worry, that the provisions of the regional policy which we are operating now will operate under the Bill and that we cannot therefore be in any kind of danger from our entry into the Common Market.

Those two arguments cannot both be right. If we are to be in favour of a common regional policy and if we are to have such a policy, it follows, whether it is to our advantage or not, that we cannot say that the package of proposals which we are producing in the Bill is bound to survive exactly as it is at present and that no proposal to which hon. Members attach importance can possibly be in danger once we are a member of the European Community.

I am never sure about the logic of the common policy argument. The argument that a common policy can only be of advantage to the United Kingdom must presumably depend on what the common policy actually is. There is no logical connection between the proposition that we should have a common policy and the proposition that a common policy is bound to be a good thing for the United Kingdom. Whether it is a good thing will depend on the terms of the common policy. The Government hope that we shall get a common polcy which will be rather expensive and will involve spending large sums of money in the United Kingdom disproportionate to our contribution to the Common Market budget, and that we shall get back thereby through our common regional policy rather more than we put in. The Government hope that that will compensate for the considerable burdens being placed on the British taxpayer and consumer in financing what is the regional policy of the French, the common agricultural policy.

If that all happens, I dare say those of us who are most critical about accession to the Common Market will be happy with it. However, it is by no means clear that it will happen. It is clear that the French Government will do their damnedest to see that it does not happen. There will be a tremendous amount of opposition. Yet we have Ministers continually producing anodyne replies that we need not worry about a regional policy, that it will be all right in Common Market and that we shall benefit from it. I do not believe that is true, and that is one of the reasons why we have put down new Cluse 3.

Some aspects of our regional policy will be in danger when we join the Community. There are persistent reports from Brussels that the regionl employment premium will be looked upon with considerable disfavour by the Commission and other members of the Community. It is significant that the regional employment premium is being phased out, according to the new terminology, from 1974. The Government have not committed themselves to its replacement by another form of labour subsidy. A good deal of this matter is concerned with whether we shall be able to continue with REP when we are a member of the Community.

2.15 p.m.

There is also the question of free depreciation, not just general aid to industry but specific regional aid following this year's Budget. The mere fact that Germany has already queried our free depreciation demonstrates that there is danger that this aspect of our policy will not be allowed in the Community and will not survive the adoption of a common policy.

It was reported in Monday's newspapers that the Commission has ordered the French Government to postpone their new regional aid measures. One of the reasons for that is that some of the measures which are now being proposed by France might operate in areas or France where the Commission feels that there should be no regional assistance at all.

The relevance of that to the United Kingdom is that, because of the deteriorating unemployment situation, the Government have extended the boundaries and categories of assisted areas to an extent where we now have approximately 48 per cent. of the population of Great Britain covered in development, special development, intermediate and derelict land clearance areas. It must be open to considerable doubt whether, in any common regional policy in the Common Market, we shall be able to assist our industry to anything like the extent of 48 per cent. of the population of Great Britain.

We have a vital interest in the House in ensuring that we have a significant and effective regional policy. I have a particular interest in this matter as I represent a Scottish constituency. Apart from all the arguments about the efficiency and efficacy of particular types of regional aid and other matters, the fact remains that Scotland, if and when we join the Common Market, will be geographically off centre to a considerably greater extent than it now is. That will be a major disadvantage for Scotland. It is therefore vital for Scotland to know—this applies to other assisted areas as well, but Scotland will be further removed from the industrial centre of things—that the Government will maintain control over regional policy and will be able to apply effective regional aids.

New Clauses 2 and 3 are designed to assert what the Government themselves assert by implication or hint:the proposition that we shall be able to continue to have a regional policy appropriate to British regional circumstances. In case new Clause 2 is not accepted, new Clause 3 makes the point that there shall be no change in our regional policy without full discussion in Parliament. It is one of the unsatisfactory aspects of the situation that we can go through the laborious procedure of passing the Industry Bill, with Amendments, speeches and Government replies, satisfactory or unsatisfactory, but at the end of the day what we have provided may be changed by a decision of the Commission. We should be able to do nothing about it and we would not be able to have parliamentary discussion about it.

The reason for new Clause 3—incidentally, new Clauses 2 and 3 are not alternatives; both are needed—is the necessity to make clear that there will be no change in this policy without adequate parliamentary discussion. Had time permitted I could have made many more points. I want, however, to impress upon the Minister that we take these new Clauses seriously and we expect a far clearer and more honest statement from him today than we have hitherto had from the Government.

Mr. Biffen

The hon. Member for Glasgow, Craigton (Mr. Millan) should be congratulated on the Clause because it gives the House an opportunity to examine an aspect of the Bill which received scant scrutiny in Standing Committee. I say that in no sense of disrespect for or criticism of those of my colleagues who served with me on the Committee. We were all under pressures of time and a general anxiety was felt, perhaps more by some than by others, that the Bill should reach the Statute Book. But as so often happens, and it is one of the delights of the procedures of this parliamentary institution, the situation which attends a Bill on Second Reading and even in Committee is transformed by parallel developments outside the House. Therefore we are wise, even on a Friday afternoon and to the inconvenience of the Executive, once again to turn to the problem.

First we have to consider the precise constitutional implications of what has been happening. I do not believe there is very much here of substance to concern the House but at least it would be agreeable to resolve some of the residual ambiguities. I am still puzzled about the nature of the consultation which took place between the Treasury Bench and the Commission in Brussels. When did it take place and what was the actual form of the consultation? On Second Reading the right hon. Member for Bristol, South-East (Mr. Benn) was very quick to alight upon this point and he intervened about it in the speech of my right hon. Friend the Secretary of State. Needless to say, my hon. Friend the Member for Banbury (Mr. Marten) was also involved in the subsequent exchanges. My right hon. Friend said: the White Paper on which the Bill is largely based has been subject of consultation with the Commission in Brussels."—[Official Report, 22nd May, 1972; Vol. 837, c. 1011.] So we were left in absolutely no doubt that there had been consultation in Brussels.

In Committee, in the brief period during which we touched upon the subject in the context of whether labour subsidies might be written into the Bill, I wondered whether the fact that the Government had resisted an Amendment to include such subsidies could be related to the fact that after discussing the White Paper and after views had been made known about it the Government had decided against the writing in of such provisions. What intrigues me is that when the issue blew up again on 18th July my right hon. Friend the Minister for Industrial Development said that the Bill was shown to the Commission as soon as it was available. At no time hitherto had it been suggested that both the White Paper and the Bill had been shown to the Commission as soon as they were available.

There was a significance for the House in the difference between a White Paper and a published Bill. Therefore this is not a piece of nit-picking, but is a point of substance. If the Bill was shown to the Commission as soon as it was available, as was asserted by my right hon. Friend, I think it may be no more than an oversight that that information had not been disclosed on Second Reading, but at least it is something about which we could be given more information now.

Mr. Anthony Wedgwood Benn (Bristol, South-East)

Is the hon. Member aware that the German Ambassador in London has issued a Press release stating: Within the framework of consultations agreed upon with Great Britain, British parliamentary Bills are provisionally examined by the Commission… So that parallel and superior discussions are going on about Bills before the House is permitted to discuss them and in anticipation of that.

Mr. Biffen

That is an interesting and revealing intervention, and I hope that my hon. Friend the Minister will have a chance to elaborate on this when he replies. I do not have any more than a suspicion about this but if we are to formulate happy relationships between our law-making institution and the law-making institution within the Community, it will be for the benefit of all if we understand the position from the outset. The debate may therefore be valuable even within this very narrow—or perhaps it is not so narrow—constitutional point. If the point made by the right hon. Member for Bristol, South-East had been elaborated on Second Reading, the proceedings would have gone somewhat differently

The Bill is not only concerned with regional development. It is also about generalised assistance to industry. A great deal of the discussions about Clause 8 related particularly to that. It is here that we have an interesting prospect of the degree of manoeuvrability, of sovereignty and of freedom of action invested in the Government. To what extent is that a freedom in industrial affairs which is conditional only on our proceeding through the transitional period of Community membership? To what extent is it a freedom to be traded in or shared—I shall not use emotive language such as "surrendered"—from 1st January onwards? I speak about this in terms of Clause 8 and as one who does not admire it.

Mr. Dan Jones

We have noticed that.

Mr. Biffen

Such powers of advocacy as I have at least are recognised by one hon. Member opposite, and I am grateful.

I shall not be assuaged by being told that everything is all right because the Commission will do my job for me. I did not come to the House to give up my critical rôle to the Commission. If I make a case against Clause 8, this is the place where I shall make it. This is where I wish either to be overwhelmed or, perhaps on occasions, to triumph. I am prepared to take my fortunes here. I am not convinced by my hon. Friends who ask why I complain if the Commission take a more critical view of the powers which can be exercised under Clause 8. Critical powers properly belong to this assembly.

I also have information which supplements to some extent that given by the hon. Member for Craigton when he referred to Monday's newspapers in deal- ing with the relationship which seemed to be emerging between the Commission and the French Government. We have been without national newspapers for the last few days. I have been in Italy with the Select Committee on Nationalised Industries seeing, perhaps appropriately, how the Italians operate regional policy and how they have interesting organisations like IRI and ENI and a number of others—one could run through the whole gamut of initials once one starts and it is difficult to know where to stop. One of the by-products of that visit was that I was able to become a little more informed about what was going on in relations between the Commission and Italy than I would be with the help of the information provided by such newspapers as the Financial Times.

Perhaps the House will bear with me if I quote from the Daily American of 26th July.

Mr. Bruce-Gardyne

Not a reliable source.

2.30 p.m.

Mr. Biffen

My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) speaking from a sedentary position, says that it is not a reliable source. If he wants me to quote the Italian original from the Italian source, he knows perfectly well that to do so would not get past the Chair. I hope he will not disparage this as a source of information because what is about to be read into the record will be there for others to investigate and authenticate, and if I prove to be wrong I will naturally withdraw. The dateline is Brussels, 25th July, and it states: The European Economic Community Commission has moved to prohibit Italy from continuing to accord financial aid to its entire textile industry, an EEC spokesman said today. The Italian aid consists of a 5 per cent. reduction in the amount of social benefits that textile companies pay the state to cover their workers.

Mr. Deputy Speaker

The hon. Gentleman must try to relate his remarks on the EEC to the Industry Bill.

Mr. Biffen

I shall be most grateful, Mr. Deputy Speaker, if I am able to direct your attention to Clause 8. It provides for general assistance to whole industries, whether they are within or without assisted areas. Therefore, the parallel of an entire industry which I am quoting—the Italian textile industry—could reasonably fall within the provisions of the Bill.

I hope you will understand, Mr. Deputy Speaker, that what I am seeking to demonstrate is that Clause 8 could provide for generalised industrial assistance and could, for example, enable the Government to offer a general system of help to the paper industry in its current difficulties, or to help the textile industry in its current difficulties, and that might be inadmissible. That is my interpretation. If that is not in the Government's mind and they can demonstrate that the Bill is worded as to make that wholly impossible, plainly they will seek the earliest opportunity to make that clear.

However, I do not want to prolong the proceedings and I will therefore conclude the quotation, because it is important. Most of the arguments being deployed about the Bill are understandably being deployed about regional policy. What I am saying is that the Bill goes beyond mere regional policy. Therefore, the generalised assistance which may be offered to industry also falls under the authority of the Commission.

Mr. Adam Butler (Bosworth)

Would it not expedite matters if my hon. Friend confirmed his impression, which is my impression, that the form of aid which the Italian Government have been giving to the Italian textile industry—namely, reduction in contributions for insurance purposes—would not fall within the scope of the financial assistance to be given under Clause 7 or Clause 8? In that case, is not his example irrelevant to the argument?

Mr. Biffen

My hon. Friend will prolong my speech.

Mr. Butler

I was trying to shorten it.

Mr. Biffen

Perhaps, but that intervention does not shorten it. What we are discussing is not the form of aid, but in principle whether any of the forms of aid which might be provided under Clause 8 would be deemed by the Commission to infringe the principles of fair competition. I am therefore unimpressed by the fact that the labour subsidy which the Italian Government have been practising and to which the Commission has taken exception is not referred to in the Bill. There are many other ways in which generalised assistance could be offered under the Bill which I am certain would cause eyebrows to be raised in Brussels if the Commission were determined to apply the principles of transparency of competition.

I complete the quotation: The EEC move is in the form of a procedure it has opened under article 93 of the Treaty of Rome. The procedure provides that aid be suspended until comments from interested parties are compiled.… However, the commission didn't believe aid should be given to the entire Italian textile industry, and therefore decided to open the procedure. In Biella, Italy, Giancarlo Forconi, director of the Industrial Union of Biella, bitterly attacked the decision of the European Community… In a telephone interview, Forconi said:'The EEC inquiry will take a long time, and by the time it is over, the textile industry here will be dead.' All of us with experience of the concern and anxiety expressed from time to time by the textile industry—and I say this under the expert eye of my hon. Friend the Member for Cheadle (Mr. Normanton)—will recognise the feelings contained in those remarks. All I am saying, although it has been somewhat difficult to say it, is that we need clarification whether, under Clause 8, there is any likelihood that what is envisaged are forms of assistance which cannot be set aside by the intervention of the Commission.

One could continue this argument a good deal longer because I could move on to the considerations of regional policy itself and the philosophic dilemma mentioned by the hon. Member for Craigton. However, in the interest of brevity I shall not do so.

But I shall not be bounced into brevity because the Government are trying to scramble the Bill through on a Friday afternoon and I shall not be bounced into brevity because this subject happens to touch on the relationships of the Community affecting this sensitive issue. It does not involve whether one is in favour of Community membership or against it. But unless the House at a reasonable stage is persuaded and is confident about the relationships that will be evolved between itself as a law-making body and other law-making bodies, I promise my right hon. Friends that the whole Community experiment will prove immensely sour.

Mr. Edmund Dell (Birkenhead)

The hon. Member for Oswestry (Mr. Biffen) is right to say that issues are raised here whatever one's attitude to entry into the European Community. However, some of those who have listened in the past few months to debates about entry into the European Community may have been surprised to hear that the European Commission was capable of bringing pressure to bear on the French Government, and that may even prove to be a reassurance to some hon. Members.

The reassurance that I should like is the reassurance about the future of the Bill in the context of membership of the European Communities for which my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) asked.

Both main parties in this country for a considerable time have thought it right that the United Kingdom should be a member of one European trading group or another. If it was not the European Economic Community it was the European Free Trade Area. My party was not opposed to membership of EFTA. We did not propose on coming into office in 1964 to renegotiate the Treaty of Stockholm. We thought that membership of EFTA was beneficial to this country.

However, European groupings of this kind take certain steps to achieve their objects. One common object of the two groupings was the promotion of competition. For that purpose there were provisions within the Treaty of Rome and the Treaty of Stockholm directed to harmonisation. I have no objection to harmonisation in principle, but an essential proviso, one to which the Government must have regard and to which all members of the European Community will have to have regard, is that harmonisation is not inconsistent with national full employment policies. There is a difference in this respect between EFTA and the EEC, because EFTA spoke only of competition. There was no element of social policy written into the Treaty of Stockholm, whereas an element of social policy is written into the Rome Treaty.

Regional concerns are matters of legitimate action by member Governments of the EEC. This is perhaps something on which this country can build when we become members of the EEC. There is nothing inconsistent in there being both a common regional policy within the EEC and national regional policies within it as a supplement to them. That is true in agriculture, where there are both a common agricultural policy and national agricultural policies operating alongside. Even if there is an effective common regional policy, we shall need national regional policies as a supplement to it—indeed, perhaps as the continuing major part of the regional effort of the member countries. On that we must build, and on that perhaps the Bill is an attempt to build.

When the Bill was introduced apparently there were discussions with the Commission, and the German Government have made certain inquiries about it. But I can state with certainty that if the Bill had been introduced while this country was a member of EFTA there would have been an uproar, as compared with the murmurs from EEC countries. Every member of EFTA would have demanded that the Bill be withdrawn. They would have asserted that it was in every respect inconsistent with the Treaty of Stockholm. Whether we should have stood up to that uproar, is a different question.

Mr. Ridley

Does the right hon. Gentleman agree that standing up to the uproar means welshing on our international treaty obligations?

2.45 p.m.

Mr. Dell

Not necessarily. It depends on those obligations. One of the points I am making is that within such international agreements it is sometimes necessary to stand up to the uproar. For example, there was the uproar about investment grants, which the Bill re-introduces. If the Government were reintroducing investment grants within the EFTA context, there would be complaints, just as there were about the investment grant system introduced by the last Government. The last Government stood up to the clamour and maintained the investment grant system.

We did not stand up equally strongly in the matter of the aluminium smelters. We agreed to cut their initial capacity by a total of 40,000 tons, and agreed that any expansion of that industry would be subject to a review within EFTA. We were prepared to make concessions for the purpose of maintaining relationships within EFTA. Under the Industrial Development (Ships) Act, 1969, EFTA shipyards were regarded as British shipyards for the purposes of the Act and for the balance of payments test which it made a condition of the investment grant for ships. There were complaints within EFTA about the activities of the Industrial Reorganisation Corporation.

The point I am making is that membership of international communities of the kind we are discussing involves a process of harmonisation, and issues may well be raised about the activities of national Governments in the pursuance of their regional and industrial policies. Those national Governments may decide in certain circumstances that it is right, for the purpose of the continuance of the Treaty and of obtaining the benefits under that Treaty, to agree to make certain concessions. By and large, I think the Labour Government were right. We stood by what we thought to be our rights under the Treaty of Stockholm, but we made concessions while standing up for the main principles with which we were concerned. I wish to have assurances from the Government that they will stand up for British interests within the EEC at least as strongly as the Labour Government did within EFTA when our actions were called in question by other member countries.

One specific point that has been raised several times during the course of these debates is the definition of the central area, the area within which there may be some control of the extent of investment incentives. We have been told, particularly by the Secretary of State for Trade and Industry, that that definition would be regarded as a matter of national interest. I have taken great comfort from that statement, because it means for my constituency and the development area in which it is situated that if there were any de-scheduling it would be a consequence of a decision of the British Government and not of any intervention by European institutions.

The main point is that within the process of harmonisation every national Government, and particularly the British Gov- ernment, in which we are mainly interested, must take the position that full employment and national policies for promotion of full employment come before harmonisation. What is being asked for in the new Clauses is a statement by the British Government that that is their attitude, that they will put national policies for the promotion of full employment before harmonisation, if at any point the two prove to be in conflict. That is the sort of reassurance I, too, look for from the Government, and I hope that they will be able to give it today.

Mr. Ridley

The right hon. Member for Birkenhead (Mr. Dell) got the right distinction, up to a point, between EFTA and the EEC, but then seemed to get lost, because he assumed that it was fair to break the rules of the EFTA Treaty. Although that Treaty frankly says that free and fair competition shall be the rule between all members, it had no machinery for enforcing that provision despite the fact that it said that it was binding. The rule in the Treaty of Rome is the same, that there shall be fair competition, without differential subsidy, between countries, but the Commission has taken powers to enforce it.

That is why I have always believed that to join EFTA with a lighthearted assumption that we do not have to stick to the rules if we get into trouble was a slightly dishonourable way to look at that association, and that is why I have welcomed joining the EEC because it seems there are occasions when we might even need saving from ourselves.

I also believe that there is little point in paying lip service to competition and not being prepared to accept the disciplines which it will exercise if we may be tempted to err from the straight and narrow. That is why I think it is right that we should accept the implications of the EEC and be perfectly frank about them.

My hon. Friend the Member for Oswestry (Mr. Biffen), who always delights the House, certainly he delights me with his eloquence and brilliance, was in something of a dilemma, a dilemma out of which he got admirably but one could feel the two forces within his breast struggling. We know on the one hand of his dislike of Clause 8, and on the other of his dislike of the EEC. He got out out of this dilemma with great skill and it was extremely brave of him to venture upon the topic at all. I congratulate him on what he said. He knows that on this side of the House there are doubts about how far along the road of Clause 8 we would like to go. It is difficult for him to attack the fact that the Commission will have powers to stop us going too far along that road when this is one of the few powers which the Commission will have which my hon. Friend would tend to welcome if it were in a different context.

I should have thought it was perfectly clear that the situation will be that any part of the regional or industrial policy of the Government will be subject to the approval of the Commission in so far as it does not contravene the rules of competition and subsidy which are laid down for the Common Market. I cannot see that this is an objectionable principle. If we are to have bidding-up all over Europe, if we pay X per cent. and the Belgians pay X plus 1 per cent., and the Italians X plus 3 per cent., then we have to come in again and pay X plus 4 per cent. That does not achieve anything in the regional policy context, it simply sets up a major distortion in the price at which the products in those industries are sold without giving anyone a competitive advantage. What is more, it escalates.

I should have thought that there was everything to be said for the Commission having power to stop this sort of thing, and I would unreservedly accept that this Measure could be over-ruled by the Commission if we go anywhere near to infringing the broad principles of competition laid down—with the savers for regional and social policy—which, as far as I can see, are being administered humanely and sensibly by the Commission in Brussels. I see no difficulty there.

Where I do see some difficulty is in this extraordinary distinction between capital subsidies and income subsidies. As has been said, the Italians have been prevented from paying an incomes subsidy by reducing the insurance contributions to be paid by workers in the textile industry. That is apparently taboo. If the Italians did the other thing and allowed their textile industry to run into heavy losses and if after a period of years the Government were to make a capital contribution to remove those losses, that apparently would be totally acceptable.

It does not make very much sense to say that income or wage subsidies are not allowed but capital subsidies are. We saw this with the British Steel Corporation when it was apparently permissible for us to write off the accumulated debt of the Corporation although not permissible for us to subsidise it as it went along. In truth there is no real distinction between these two at the end of the day. I hope that the Commission will address itself to these problems.

What is slightly unfortunate is that the Bill should be rushed through before 1st January to make certain that it is on the Statute Book before the disciplines of the Common Market apply. It would be wiser to view this Bill as though we were already members of the EEC otherwise it creates a suspicion that there is something illegal—that is a word I would rather not use—something inconsistent with the Treaty of Rome about the Bill. I have no doubt that there is not. In my opinion it should come within the scope of the Commission because I do not see what the difference is between an incomes subsidy and a capital subsidy. It would be better not to hasten too fast with this Bill but to allow these points to be discussed carefully and objectively and to obtain a full view from the Commission about the acceptability of what is being done.

Even then I do not think it matters, because this Bill is permissive. It gives power to the Secretary of State to do certain things and if at a later stage it appears that these things cannot be done, all that we have to do is to refrain from doing them. That does not seem to throw up any real difficulties or inconsistencies. I do not think that these Clauses are sensible. The House has given a Third Reading to the EEC Bill, and it is made clear in that Bill that the powers of the Commission to override our own domestic ideas in an area such as this are clearly within the competence of the Treaty of Rome. I welcome that. It is right and proper that it should be so, but we should see an advantage in this and not say that just because we have been told not to do something, or we could be told not to do something, this is automatically wrong.

There could be the possibility, and I ask hon. Gentlemen who are opposed to joining the EEC to recognise this, that there are advantages in harmonisation of regional policies and subsidies and the promotion of fair and equal terms of competition. The proposal seems to be immensely worth while considering on its merits. If, for instance we could extend the principle to the world as a whole—we cannot I know, but if we could bring in the Japanese, the Koreans, the Americans and everyone else so that we all stuck to the same rules—think how much easier our problems would be over a whole range of products, imports and exports, where international competition has been thwarted by one country or another. Even to extend this to an area the size of Western Europe is a major gain which the House should delight in and welcome rather than treat with the suspicion evident in this debate.

Mr. Dan Jones

I do not intend to go over the arguments relating to our entry to the EEC because we do not have time for that this afternoon. I am sure the Government are perfectly correct in wanting the Bill passed as quickly as possible. I do not agree with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) and I consider that he has been less than fair to his own Government by inferring that the haste to get the Bill is somehow or other because they want it on the Statute Book before we enter Europe. I do not accept that at all. I followed the progress of the Bill in Committee and I am in a position to judge very accurately the approach of the Minister and the Under-Secretary of State. I am sure that both of them and the rest of the Government are sincere in wishing to get the Bill on the Statute Book for the simple and sound reason that the regions desperately need the help inherent in it.

3.0 p.m.

New Clause 2 is very simple and straightforward and the Minister could have short-circuited the debate by saying "I accept it." [Laughter.] Hon. Members on the Government side laugh, but I shall prove my point in a moment. The new Clause simply says: For the avoidance of doubt, it is hereby declared that the provisions of this Act are not affected in any way by the provisions of the European Communities Act 1972. In Committee it was the Opposition who saw Clause 8 through its various stages. Hon. Members opposite were opposed to it. I am sure that before this debate ends we shall hear more of that opposition. The hon. Member for Oswestry (Mr. Biffen) has been refreshingly candid in his opposition to certain provisions in Clause 8. I cannot understand why the Minister should wish to defeat his hon. Friends on an issue of this kind and not ensure that the EEC does not frustrate the objects of Clause 8.

There is absolute and incontestable proof that since the formation of the EEC the regions have fared rather badly. There is also proof that the Commission in Brussels has interfered with the development of the regions in the EEC. If the Government are not aware of that, they are behaving not only naïvely but dangerously. The regions in this country expect reasonably substantial assistance from the Bill. If the regions, which have fastened their hopes to the Bill, are cheated in 1973 as a result of any form of interference by or check procedures from the EEC, the disappointment, chagrin and genuine indignation of the regions will be great and their reactions will be perfectly justified.

I have expressed the point briefly and bluntly, which is the only way I know how to speak. People may disagree with me but they know where I stand. I ask the Minister to intercede in this debate and to tell us, if the Government are sincere in what they say about giving advantage to the regions, that he will accept this very simple new Clause so that we may have faith that they mean what they have said.

Mr. Warren

There has been a remarkable escape from reality about the way in which the EEC functions. There seems to be an ability to avoid the reality of what goes on and to concentrate on theory. My hon. Friend the Member for Oswestry (Mr. Biffen) has been inclined to fall into this trench.

I agree that the Bill goes beyond the question of regional policy; there is no doubt about that. I have to take my agreement with my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) a bit further and say that I do not think it was ever out of the mind of any hon. Member in Committee that we were dealing with a Bill which had to be considered in the context of what the EEC said and did. I agree with the hon. Member for Burnley (Mr. Dan Jones) that this matter is urgent. We cannot wait until 1st January because something needs to be done now. That supersedes many political dogmas which some hon. Members, particularly on this side of the House, have been nurturing for many years. The reality of what goes on in the Common Market has not been accurately postulated today.

The types of aid given by countries in the Common Market were considered by the Select Committee on Science and Technology when it was discussing the problems of the British computer industry. The Committee said in paragraph 245 of its Fourth Report: Despite the provisions of the Treaty of Rome, the French and German Governments have in recent years been supporting their domestically owned industry…". It was estimated that in 1971 the assistance for the French industry was over £16 million and for the German industry over £34 million. This aid is being given at a time when it is believed that there is harmonisation to the disadvantage of particular industries and areas. There have not been complaints by any countries in the Common Market to the Commission or by the Commission to any Common Market country, notably West Germany and France, about this kind of aid.

If I may voice one criticism to my right hon. Friend the Secretary of State for Trade and Industry, it is nine months since that report was made. That is a suitably human period of gestation, and I hope that my right hon. Friend will make a statement similar to that which he promised to my hon. Friend the Member for Tynemouth (Dame Irene Ward) about the shipbuilding industry before the Summer Recess.

The Common Market Commission must live with the reality of regional development. Nobody can look at the common agricultural policy without realising it is a form of regional aid. That reality has been expressed today by the hon. Member for Glasgow, Craigton (Mr. Millan). I hope that the Government will not fail to reject the West German complaint to the Commission. The type of complaint made is spurious, but I draw attention to the Osbert Lancaster cartoon in this morning's Daily Express which shows that the types of complaint we should make are not exactly those which were earlier put forward by the right hon. Member for Bristol, South-East (Mr. Benn). The cartoon says: Don't forget, dear, the situation is never so bad that a few well-chosen words from Mr. Anthony Concorde-Benn can't make it ten times worse". Throughout our consideration of the European Communities Bill in the House, nothing inhibited us from making protests or saying that we would wish to change Common Market policy either before we went into the Common Market or after we joined.

Mr. McElhone

It is only fair that the hon. Gentleman should repeat what he said a moment or two ago now that my right hon. Friend the Member for Bristol, South-East (Mr. Benn) has come into the Chamber.

Mr. Warren

I am not sure whether Mr. Speaker will allow me to read it again, but if it is the wish of hon. Members opposite perhaps I can do so. I quoted the Osbert Lancaster cartoon in today's Daily Express which, in commenting about the right hon. Member for Bristol, South-East, said: Don't forget, dear, the situation is never so bad that a few well-chosen words from Mr. Anthony Concorde-Benn can't make it ten times worse. Does that satisfy the hon. Member? I am grateful to you, Mr. Speaker, for allowing me to repeat that. Any other encores will be gladly supplied, but I think I must press on.

Article 93 of the Treaty of Rome has been referred to, but there is also Article 92 which makes it quite clear that the Commission shall, in co-operation with member States, keep under constant review all systems of aid existing in those States. Furthermore, it says that it shall be compatible with the Common Market to give aid to promote economic development areas where the standard of living is abnormally low or where there is serious under-employment.

In conclusion I would like to pass one comment on our relationship with the Community. I hope that my right hon. Friend the Secretary of State and his fellow members of the Government will make sure that all Ministers and officials who go to Brussels will actively battle on behalf of this country. I hope that, even if they come out with compromises, those compromises will adequately reflect the needs of Britain. There is nothing in the treaty to prohibit that. If we fail to have that assurance in our minds when we go away from this place today we shall have missed a very important element laid down in the Bill.

Mr. John Mendelson (Penistone)

What the hon. Member for Hastings (Mr. Warren) ought to have confessed when he referred to the Daily Expressis that a great many of us share a secret desire to be the subject of a cartoon by Mr. Osbert Lancaster. Very few have achieved it, but the Secretary of State has achieved it, and so has my right hon. Friend. The hon. Member for Hastings will never achieve such fame. The contribution we have heard from him today, that small lecturette, will make quite sure that he will never share the fame of his right hon. Friend and my right hon. Friend.

I am not so sure about the hon. Gentleman and the Member for Cirencester and Tewkesbury (Mr. Ridley). I think he is of a different frame and might well achieve this kind of fame.

Mr. Speaker

Order. This really is not the topic of this debate.

Mr. Benn

Could the cartoon be circulated in the Official Report?

Mr. Mendelson

You will know, Mr. Speaker, that I hardly ever ask your permission to indulge in any such references at all, but just a minute or two ago we had imposed on us about four minutes of this tripe and I thought that I might take 90 seconds to make a reference to it in passing, and that was all I was doing.

From the drastic logic of the hon. Member for Cirencester and Tewkesbury. probably the most drastic since Thomas Hobbes, I can see how he frightened his colleagues from time to time in the last few years, and how they must have been frightened when listening to him about his determination that the people of this country, in areas where unemployment is high, must be disregarded or put on the altar of competition, as he has explained again to the House this after- noon. It is indeed true that there were some from whom we had to be saved, and I am very glad that we have been saved from them. There are some others who are the same kind, but we thought that the Secretary of State had learned some of the lessons of the régime of the hon. Gentleman the Member for Cirencester and Tewkesbury and of his right hon. Friend who is now the Minister of Posts and Telecomunications, and that, abhorrent as we found it, and frightened of it as we were, we did not want the reintroduction of this same rigid policy in relation to the European Economic Community. Because this is what is at stake in this debate. It is indeed a serious subject, not to be treated with witticism or frivolity.

I would point out to my right hon. Friend the Member for Birkenhead (Mr. Dell), to whose speech I listened with the profoundest of interest, that although his case was quite consistent there was one difference he perhaps ought to have pointed out to us between EFTA and the European Economic Community, and that is that nobody can deny that the United Kingdom had in EFTA a position different in size and in importance compared with that of most of the other members and a position different from what we shall have in this Economic Community of the Six plus four. It is that distinction of size and influence and power that is the reality.

3.15 p.m.

Mr. Dell

My hon. Friend may find when he studies, as I am sure he will, the history of EFTA that the advantage or disadvantage was shown by the concessions we have had from time to time to make.

Mr. Mendelson

We made those concessions because we valued the association and because of the purposes of the association, but we are not in a position to coerce the Community to make them. That is the reality of the situation, and anybody who has listened to the arguments of the Conservative Government until 1964 and of the two Governments since then up to 1970 will know that that is correct, will know that is true.

There is a big difference in belonging to a community where one can say sometimes, "We do want to amend certain policies, there are certain policies we wish to pursue, because we think the general purposes are in the interests of us all, and we, as the biggest Power in the association, make a deliberate concession". There is a big difference between that and entering a Community where the lines are so drawn that it will be to our essential disadvantage if this policy is continued a ľ outrance, which is suggested to be right.

Mr. Bruce-Gardyne

If the hon. Member says we are in a position to coerce the EFTA arrangements I suggest to him that he should have in mind that his hon. and learned Friend the Member for Lincoln (Mr. Taverne) had to get up in this House and explain that a specific undertaking given to ICI publicly that purchase tax would be eliminated on a particular product of ICI, a product produced in the Scottish development area, could not be honoured because of our EFTA partners, and we were forced to accept that.

Mr. Mendelson

I am saying that, given the power and size of all the partners in EFTA, it would not be true to say that there was that kind of coercion to which we are going to be subject in EEC, and it cannot at all be compared with our situation in EEC. The argument when a Government decide not to do something, or to amend something it was proposed to do, must be as my hon. and learned Friend the Member for Lincoln (Mr. Taverne) put it. That argument is a genuine one, but nobody could deny the proposition which I am advancing, that we are entering a community wholly different from the association, with larger purposes and different aims, not at all to be compared with EFTA.

As the hon. Member for Cirencester and Tewkesbury said, the association we are now about to enter has got powers which it has taken unto itself, powers of enforcement, and I completely agree with the hon. Gentleman that that makes a real difference. That was the point I was advancing against the argument put forward by my right hon. Friend.

Mr. Ridley

I want only to remind the hon. Gentleman that the EFTA Treaty was quite specific and binding and that the only deviation or coercion could be by breaking our word. Is he really saying that it is better to join a community in which we can break our word and welch on our undertakings? Is that why he favours the EFTA Treaty?

Mr. Mendelson

Not at all. I am saying the opposite. I do not know whether the hon. Member often attended the long Committee consideration of the European Communities Bill, but if he did he will have heard his right hon. and learned Friend the Chancellor of the Duchy of Lancaster always saying, what the Government have often said, "Once we are inside the Community we will deal with that". He was joined by my right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever). My right hon. Friend the Member for Cheetham said exactly the same thing. He said. "There is nothing to worry about; once we are inside we shall see that things which are not possible we shall not have to do". My argument is the exact opposite. I support the new Clause because I want the Government to be clear open and frank about their attitude.

Here I come to the new Minister for Industry, who made such light work the other day of the Private Notice Question he had on the intervention by the German Government. During that very short period of question and answer he spoke of the position of the steel industry, which is why I am now intervening. The steel industry is a very decisive case in point for our future. The hon. Member for Cirencester and Tewkesbury said that there is no real distinction between writing off capital losses and making immediate current direct subsidies and in logic there may not be, but our debate is directly relevant to the steel industry under the British Steel Corporation.

We know that at the suggestion of the Secretary of State for Trade and Industry the board of BSC is at the moment preparing its development programme. We know that there will be arguments and discussions between Lord Melchett and his board and the Government. But far more important than any instances so far quoted is the future policy of the Government for the expansion of the steel industry. There may well have to be very considerable Government assistance for that industry in future. I do not know whether everyone on that side of the House supports that view, but we on this side are certainly in favour of seeing to it that there is no danger whatsoever of such assistance not being given.

I come from an area where the distinction between giving support to a particularly handicapped region and giving more general assistance is of the greatest possible importance. I do not regard this debate as dealing merely with high unemployment regions. There are those of us who come from constituencies where until a few years ago the level of unemployment was comparatively low. Unfortunately that is no longer true of South Yorkshire. We have with the utmost consistency pressed for special assistance for the regions, and have thought it our duty so to do. But one result has been a certain distortion of economic development. A result of giving special aid to the regions was that a number of firms which might have come to Yorkshire have bypassed us and have gone to development areas. We thought that we were right to press for special assistance for the regions, but there comes a point when as a result there is a lack of new investment in areas where unemployment until a few years ago has not been so high.

Therefore, if the Government have recently extended a certain amount of special aid to South Yorkshire, to the whole Yorkshire coalfield, we welcome it, but what is important is to recognise that further aid right across the country will be needed, and will have to pick out certain industries. We want to be sure that when such assistance is given under the Bill neither the German Government nor the Commission nor any other EEC Government will have the right to interfere with such policies if the British Government wish to pursue them.

Some hon. Members opposite have always been hostile to the kind of policies of economic assistance and of a certain amount of economic direction pursued by the previous Government, so why are they not honest about it? We know that many Government back benchers are deeply critical of the policies now being pursued by the Secretary of State for Trade and Industry. We know that there has been a great deal of criticism behind the scenes because he is now pursuing interventionalist policies, so their views are not relevant to this part of the argument. They are opposed to this kind of interventionalist economic policy in any case on doctrinaire and other grounds, and they are none the worse forthat—they are entitled to their views. We on this side have always regarded theirs as a mistaken, misguided and highly danger-our policy.

After two critical years in which we have seen the results of this disastrous policy of allowing the lame ducks to look after themselves and making competition king, after two years of bitter experience, we have seen a change. The change has been brought about not so much by what has happened in Parliament but by the people. It has been brought about by what Ministers have heard when travelling throughout the United Kingdom from local authorities, local industrialists and local trade unionists, who have drawn attention to the results of their policies. After two years we have just managed to persuade the Government to introduce certain changes in their policies, but now we hear that people outside, in the countries which make up the EEC, are beginning to criticise the legislation necessitated by the change. This is the real position, and it is no laughing matter.

We want to hear from the Minister for Industry a little more than we heard the other day when he replied to the Private Notice Question. We want to know whether the criticism was as limited as he then suggested. He made one believe that all that had happened was that someone had mentioned that there might be something wrong with the Finance Bill or with certain provisions of this Bill; that this suggestion had been answered; that there was nothing really to worry about, and that we were not really involved. We want today a much more detailed and careful account of this business.

Even more important, we want to hear about the Government's future attitude. This is not a matter of not looking after the Community. The Government are not selling their particular policy on entering the Community on the basis of the airy-fairy contribution of the hon. Member for Hastings. Senior Ministers have said that they want us to be in the Community because it will be in the direct economic interest of our people. That is their argument; not just a question of joining because it would be nice to join—

Mr. Warren

If the hon. Gentleman thinks that mine was an airy-fairy contribution, will he not recall that I quoted Articles 92 and 93 of the Treaty of Rome as being the reality of how negotiations take place?

Mr. Mendelson

The hon. Member gave us the old story about not looking at the theory but at the practice of what happens in the Community. That is precisely why his contribution was airy-fairy. He argues, as the Chancellor of the Duchy of Lancaster has argued for months, that all these provisions we are worried about just do not exist, but the fact is that this country, joining the Community at this stage, with our own distribution between agriculture and industry and with our own contributions to the Budget of the Community, will be put at a disastrous disadvantage. We cannot discuss the Community in theory. We cannot say that competition is king. We have to look at the kind of provisions that are being made.

The hon. Member mentioned the common agricultural policy. That policy is designed to do certain things for French agriculture and for a small section of the farmers in Bavaria. It is nonsense to say that the Community as set up on general legal grounds; that what was wanted was a good legal framework. It was not done in that way at all. Anyone who followed the legal negotiations, which took four and a half years before the EEC was ever set up, knows that the original six Member States took great care two adjust each other's economic interests; and that some States, like France, being more powerful than others, got into a position of certain advantage.

Therefore, we are only exercising the normal right that any of those countries, the original partners, would have claimed, to say that we must look after our special interests as they are now. The Government should hold up the negotiations and see whether, at the summit conference in October, these interests cannot be better safeguarded. They should at least give the House and the country an assurance that they will see to it that nothing that might be done in the Community will interfere with the provisions proposed in this legislation. I cannot see how any hon. Member—such as the hon. Member for Hastings—who wants these interests safeguarded can do anything but go into the Lobby in support of the new Clause.

We want answers to the questions asked in the debate. We want to know the reason why the Government will not accept the new Clause. I see no reason for that. The Government ought to accept it and thereby give some confidence to the House and to the country.

3.30 p.m.

Mr. Bruce-Gardyne

No one can match members of the international Socialist brotherhood in producing a good burst of xenophobia from time to time. To listen to one like the right hon. Member for Bristol, South-East (Mr. Benn) on the subject of the inquiry from the German Government to the Commission the other day about some of the provisions of the Measure we are discussing, one would imagine that we were fully entitled and able to conduct our domestic affairs as if the world outside our borders simply did not exist.

I happen to agree entirely with the right hon. Member for Birkenhead (Mr. Dell) about the restrictions that were inevitably imposed upon us by our membership of the European Free Trade Area. But when my hon. Friend the Member for Oswestry (Mr. Biffen) referred to the possibility of the European Commission raising an eyebrow about some of the proposed arrangements in the Bill, I recalled our experience not in EFTA or the European Community but when we used to have those regular quarterly meetings and visitations from Mr. Richard Good of the International Monetary Fund. He used to raise an eyebrow quite frequently. We used to see the Labour Party slip out of one commitment after another as the eyebrow went up and down. It is totally unrealistic to imagine that we in this House can conduct our affairs as if our international relationships did not exist. That is why I agree with my hon. Friend the Member for Hastings (Mr. Warren) that so much of what we have heard this afternoon from some of the opponents of the European Community is somewhat lacking in realism.

My hon. Friend the Member for Oswestry said that he did not like Clause 8. I confess that I am not overwhelmingly enamoured of it myself. However, my hon. Friend, in his crucial point, said "I believe that criticisms which one may have of this Measure should be argued out in the House and I do not wish to have the restrictions imposed by the Commission in Brussels".

I have a good deal of sympathy with the attitude of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley). Sometimes it is perhaps no bad thing that we are saved from ourselves by a certain amount of outside influence. But my hon. Friend the Member for Oswestry is a very powerful advocate of the causes he sustains, and we all admire his advocacy. However, the truth is that successive British Governments of different complexions have, under the aegis and pressure of Whitehall civil servants, pursued policies in this respect, such as those we are discussing, that neither he nor I find particularly compatible. I have not noticed that my hon. Friend's advocacy, powerful as it is, has prevented this from happening. I do not find it particularly easy to share my hon. Friend's convolutions about his attitude towards Clause 8 and the possible intervention of the Commission upon it.

I should like briefly to emphasise where it seems only logical that regional policies should be desirably considered in a wider context than the purely national context. Not long ago I was approached by the controlling firm of a factory in my constituency. The firm was deeply worried about the proposals for the provision of a large new IRC-type fund in Northern Ireland because it was afraid that assistance might be given by this fund to a manufacturer in Northern Ireland who was in competition with a subsidiary of the firm in my constituency.

This particular manufacturing firm in Northern Ireland had almost bankrupted itself—it had been trading at a loss for some time—by under-cutting the market for a particular product which was also produced in my constituency. The parent firm of the firm in my constituency said "If this body in Northern Ireland is to inject cash into the business in Northern Ireland so as to enable it to continue under-pricing the market at the expense of its liquidity, the likelihood is that the factory in your constituency will be forced to close". That is a small example of how we cannot consider regional development policies in a narrow national context.

Equally, I recall in the days of the Labour Government one of their very grandiloquent projects and the remarkable objective of a splendid petrochemical plant in the north of the Highlands of Scotland. When discussing this with the would-be management of this particular concern, I was told that if any difficulties were placed in the way of its obtaining Government assistance in this country it would go to Sardinia, where it could get an 80 per cent. cash grant. That seems to be regional development policy gone mad. It is highly desirable that we should have some co-ordination in a European context to prevent a sort of Dutch auction in regional development incentives taking off into the wild blue yonder. I do not share the anxieties of my hon. Friend the Member for Oswestry on this point.

Mr. Biffen

I shall use this intervention not to engage in a more philosophic consideration but only to touch upon the last point of the story, about which I am sure we would all like to know more. My hon. Friend said that as an alternative the firm could go to Sardinia. I have news for my hon. Friend. There is no likelihood, it seems, of the Commission being the great motive force for economic liberalism in this instance, because the Italian Government took the very good precaution of writing into the Treaty of Rome a protocol covering the Mezzogiorno, which includes Sardinia. So the reality of the situation is not that within the Community there will be a progressive dismantling of intervention. If anything, there will probably be an intensification of it.

Mr. Bruce-Gardyne

That leads me to the point I was about to make when my hon. Friend intervened. I was about to utter a word of warning. I am a little worried about the way the regional policies of an enlarged Community might loom under a certain amount of impulsion from my right hon. Friend.

Mr. Biffen

Not me.

Mr. Bruce-Gardyne

I said "my right hon. Friend". My hon. Friend has not yet reached that eminence.

At the beginning of the debate the hon. Member for Glasgow, Craigton (Mr. Millan) outlined what he foresaw to be some of my right hon. Friend's ambitions in terms of the evolution of the Community's spending. In that part of his speech the hon. Gentleman was not entirely wide of the mark. I can see superficial advantages from our point of view in ensuring that, whereas the first decade of the Community's operation was the decade of the peasants, the second decade shall be that of the lame ducks. There could be the expectation that this would enable us to recover not only our contribution to the agricultural fund but also perhaps a little extra.

I hold the rather heterodox view that the French have not been the prinicipal beneficiaries of the first 10 years of the Community's operation through the common agricultural policy but, on the contrary, have been the principal victims. The result of the enormous transfer payments, largely to France, on the agricultural side in the first years of the Community's operation has been that the transformation and modernisation of the French economy have been delayed, that France has suffered from a considerably accentuated degree of domestic inflation and that the French industrial market has been colonised by German industry.

If my right hon. Friend succeeds in transforming the next decade of the Community's development from the decade of the peasants to the decade of the lame ducks, our economy might suffer similar consequences in that decade to those which the French economy has suffered in the first decade of the Community's existence.

The whole structure of trade within the Community and the development of the Community shows that it is not only more godly to give than to receive, but that it is also more profitable. I should not be happy that any efforts we might be making in the direction of transformation of Community spending would lead to the adoption by the Community of a massive gravy-train operation. This would not be in the overall interests of any part of our economy. If the French are to resist this, as I have no doubt they will, I should not be altogether sorry to see them achieve their objective.

3.45 p.m.

Mr. Douglas

I shall address my remarks in particular to Amendment No. 42. My hon. Friend the Member for Glasgow, Craigton (Mr. Millan) was not entirely correct in the points he made in his powerful submission. The important point about regional policy in any community is the amount that is devoted to the region and the differentiation which exists between areas which are to be assisted, be it in the United Kingdom or in the European Economic Community, and areas which are not to be assisted. The Government are in the dilemma that the totality of regional policy is related to proposals contained in this Bill and in the Finance Bill.

The Community is endeavouring to secure a comprehensive regional policy. I support that. It is a matter for debate whether our regional policy would be better inside or outside the Community. It is important that we exert pressure on the Community to secure the greatest amount of assistance possible for areas requiring assistance.

My hon. Friend the Member for Craigton was right in saying that the agricultural policy was a form of regional assistance for French agriculture. I see nothing particularly wrong about that. If agriculture needs assistance to transform itself, it must get it. It would be wrong for anyone to level complaints at us for trying to devote assistance to industries which require restructuring, be it shipbuilding, steel or coal mining.

To operate in parallel our domestic regional policy and a regional policy within the Community, we must seek to get the amount devoted by the Community to this purpose increased and seek to increase the amount that the United Kingdom devotes to regional assistance and also to raise the differential.

The differential is a matter of concern. Are any questions which are being raised at Community level about regional policy related to the 20 per cent. differential between assisted areas and non-assisted areas? Is the 20 per cent. the top figure? It may be the top figure in the mind of the Commission, but it may not necessarily be the top figure that should be in the minds of the Government of the United Kingdom.

I want the Government to be clear about the way in which their policy might develop after our entry into the Community, whether or not they are willing and capable of discussing with the Commission the question of raising the level of assistance above 20 per cent.

No criticism can be levelled at the German Government or at any other Government who want to question our regional policy. I, as a Scot, am perfectly entitled to question the level of regional assistance given to Wales, Northern Ireland or any other part of the United Kingdom. That is the penalty which is paid for being a member of an economic union. The obverse is true:I have every right as a Scot to seek to ensure that the level of regional assistance for Scotland meets the needs of my area.

It strikes me as passing strange that on this very day more than 400 of my constituents will be made redundant in a paper mill. However, some of them will be saved the ignominy of the employment exchange, not by a United Kingdom firm, but by a German firm. If it is true that our regional assistance has proved attractive in this one case to the German firm, I am grateful on behalf of my constituents for the regional policy which this Government have belatedly had to adopt. It cannot be argued, particularly from this side, that British regional policy because it is British is best.

We shall have the opportunity within an expanding Community—the Labour Party has embarked on a substantial study of this—to look at the experiments in regional policy in other parts of the Community, experiments like the IRI and the ENI. I hope that we shall make a contribution to the development of regional policy so that the Community may derive benefit from our long experience, going back to the 1920s and 1930s, in trying to ensure that, when economic changes take place, their ill effects are mitigated and that, when old industries decline, new ones come in.

Having said that, I add my support to Amendment No. 42. I regard it as in line with the principle of parliamentary accountability. If it seems possible that the provisions of the Bill may be affected in any way by any treaty or international agreement, it is right that the Govern- ment should report to the House and give assurances that our regional policies are not undermined. We ought to be willing to work in harmony with other nations, but we ought not to have our posture in relation to full employment undermined by treaty obligations.

Mr. McElhone

I realise that the hour is getting late and there is still much to do, but I think it right that we should spend a good deal of time on this group of proposals. My constituency is in a special development area, so that what has been said by my hon. Friend the Member for Glasgow, Craigton (Mr. Millan) and others touches matters of deep concern to my constituents.

We welcome the Bill, but my main reservation stems from paragraph 60 of the White Paper, Cmnd. 4942: In order to give industry the confidence it requires to invest, the Government intend to maintain the new system of incentives at least"— this is the important point— at least until…1st January 1978. That is the bit that worries me in relation to the Bill. It worried me in Committee, too. No one can say that we held up progress of the Bill in any way, although we did get a bit annoyed at the many CBI speeches we had to listen to, especially on the last day.

The hon. Member for Hastings (Mr. Warren) did not give the full position regarding Article 92, and this is the matter which inevitably worries us—the same goes for similar areas in Wales—because the Treaty makes clear that, where an arrangement conflicts with the interests of the Community, it will be regarded as incompatible with the Community. The Article goes on to cover the various situations which will be allowed, but it is important to note that paragraph (3) lays down that serious unemployment "may be considered".

The difference between "may" and "shall" has been the subject of many debates in the House. I am deeply concerned about it in this context. In paragraph (2) of Article 92, there are three references using the word "shall", but on the question of serious unemployment the word is "may". There is no guarantee.

My hon. Friend the Member for East Stirlingshire (Mr. Douglas)—he has to leave to catch a plane to his constituency soon—talked about having the best. I am not so worried about having the best; let us have a policy which is adequate to the needs of Scotland, where there are 138,000 unemployed, about whom we had such an unsatisfactory reply from the Minister last night. We are in no way mollified by the answers we have had hitherto. If anything is to come out of our debate on regional policy, let it be a guarantee that, when 1st January, 1978 comes, the situation in Scotland will not be at risk. The figures given yesterday by hon. Members stressing the seriousness of unemployment in their constituencies make the need for such an assurance only too clear.

In his comments on various aspects of Common Market regional policy which may have a serious effect on our policy, perhaps the right hon. Gentleman will reflect also on the removal of tariff and quota barriers, and say a little about the removal of restrictions on capital movements, since this also must affect our approach to regional policy. The same goes for proposals for monetary union, about which a great deal has been said.

I should like to hear, also, about the pricing policy of the European Coal and Steel Community. Common Market policy on this point insists that one must quote base points to which transport costs are added. The present practice of the British Steel Corporation is to quote a standard price for the whole country, a policy which makes it reasonably easy for Scotland to compete. If the Common Market practice is adopted, the Scottish steel industry, already suffering the dire consequences of 7,000 lost jobs, will be at severe risk in January, 1978.

We have heard a great deal about harmonisation in social policy. Misguidedly, perhaps, I have a strong conviction that all the talk about harmonisation is tending towards a negation of democracy as we understand it as a nation. It should be our purpose to have a regional policy which best suits the situation at any given time. On 11th July last year, the CBI was reported in the Sunday Timesas having admitted that the Common Market's approach would have very serious implications for Britain's regional policy. I had intended to say a great deal more, but I am conscious of the time and of the number of matters still to be considered. The Government must give some firm assurances about regional employment. Too many Scots from my part of the country have been sacrificed on the altar of sheer competition, about which we have heard a great deal from the hon. Member for South Angus (Mr. Bruce-Gardyne). Any Government—any Commission—must have some regard to social consequences.

However late in the day, the Government can take a little credit for what they did about Rolls-Royce and UCS. After visits by the Minister and others to places such as Clydebank, they began to appreciate the serious social consequences.

If areas such as Glasgow and other parts of Scotland, and Wales, are to be prevented from having the good things in the Bill through regional policy, building up resources and encouraging by public investment some sizeable private investment, those who invest privately must know that public investment under the Bill will last a lot later than January, 1978.

The Minister for Industrial Development (Mr. Christopher Chataway)

We have had an extremely wide debate on the Common Market and the possible implications for regional and industrial policies of our membership. I cannot recommend the acceptance of new Clauses 2 and 3 and Amendment No. 42. I understand that those who are opposed to entry into the Common Market, and still hope that we shall not enter want to see the new Clauses written into the Bill. However, they are clearly inconsistent with the European Communities Bill.

It being Four o'clock, the debate stood adjourned.