HC Deb 24 October 1973 vol 861 cc1265-76
The Chancellor of the Duchy of Lancaster (Mr. John Davies)

With your permission, Mr. Speaker, and that of the House, I wish to make a statement about the main matters considered in the Council of the European Communities since I last reported to the House on 25th July. There have been six meetings—the Foreign Ministers twice, the Agriculture Ministers twice, the Economic Ministers and Finance Ministers once each.

The Economic Ministers met in Tokyo on 11th and 12th September in prepara- tion for the GATT Ministerial meeting which successfully launched the multilaterial trade negotiations.

The Foreign Ministers met on 20th September and 15th October. They considered the question of the Community's participation in negotiations for a new International Sugar Agreement; relations between the Community and the Council for Mutual Economic Assistance; the Commission's proposals for an industrial and technological policy programme; measures to improve working relations between the Council of Ministers and the European Parliament; the mandate for a new association agreement between the Community and certain developing countries in Africa, the Caribbean and the Pacific; and a report on progress with the proposals for a Regional Development Fund.

The Finance Ministers met on 21st September to discuss the Communities' Budget for 1974, which is now being considered by the European Parliament. It amounts to 5,026 million units of account, slightly lower than the revised budget for 1973.

The United Kingdom contribution will be about £206 million gross; and approximately £90 million net which is of the same order as the forecast in last year's Public Expenditure White Paper (Cmnd. 5178).

The Finance Ministers agreed that as soon as the amount of money to be allocated to the Regional Development Fund had been decided, funds would be made immediately available.

At the meeting of the Agriculture Ministers on 24th-25th September, my right hon. Friend raised the subject of animal welfare and the Commission undertook to carry out an urgent study of these problems. They also had a preliminary discussion on the Commission's proposals for the future Community sugar régime.

At their meeting on 22nd-23rd October, the Agriculture Ministers held a detailed discussion on the Commission's draft directive on aids for mountainous and less-favoured agricultural areas, including the criteria for assistance, the measures to be applied and the level of FEOGA contribution. They also considered the possibility of extending some form of assistance for dairy cows in these areas; and invited the Commission to put forward proposals for further consideration.

The Council will seek to reach firm conclusions on these matters at its next meeting in November.

Mr. Shore

When the right hon. Gentleman last reported to the House it was to announce acceptance by the Government of an additional £30 million contribution to the Budget of the EEC for this year. Will he confirm now that there is no proposal or intention to put the additional sum of money to the House in the form of a motion or resolution? Is it simply that this additional sum is to flow under Article 2(3) from the British people straight to the Commission without further opportunity for parliamentary intercession?

Turning to the matters covered by the six separate Council meetings, I note that the Minister of Agriculture, Fisheries and Food was quoted as saying yesterday that he had had a dull and frustrating day. The Chancellor of the Duchy must have had a dull and frustrating two months.

Is it not the case that no agreement has been reached, and is not the real message to come out of this report on many of the most important matters which should have been agreed in the past two months that there has been no agreement on the International Sugar Agreement and the EEC taking part in it, with the result that the Geneva talks have collapsed and that there will be no International Sugar Agreement at the end of the day?

Am I right in suspecting that no agreement has been reached, because of substantial opposition from a familiar quarter, on hill farming subsidies in the EEC? Is it not the case that no agreement has been reached on the negotiating mandate between the Community and the associables and associates, again because of the reluctance to waive the requirement for reciprocal preferences to the EEC by the developing countries which have a chance of being associated with it?

The right hon. Gentleman made reference to the Regional Development Fund. Is it the case that this Fund is no longer linked to the starting of the second stage of economic and monetary union? If it is linked to the second stage, does the right hon. Gentleman agree with the view of Chancellor Brandt that there is no chance of that second stage now starting on 1st January 1974 and is not that, amongst others, one of the main reasons for the proposed visit of President Pompidou to Britain?

Finally, will the right hon. Gentleman accept that we are disappointed that no serious discussion has taken place with the EEC and elsewhere of oil supplies and the effect of the Middle East war? Can the right hon. Gentleman say what action the Government propose or are taking in the EEC in view of the embargo being applied to Holland by Iraq and Algeria on oil supplies?

Mr. Davies

On the first question affecting the Budget, I was not entirely sure what the right hon. Gentleman meant. I think that he wished me to tell him that no Supplementary Estimate would be laid before the House in order to cater for the £30 million, and that is the case. His remark might have inferred that there was an increase in the present Budget. That is not the case.

On the question of lack of agreement, he was entirely wrong in what he said about the International Sugar Agreement. The failure of those meeting in Geneva in October had nothing to do with the presence or the absence of the Community. The collapse was a matter for regret. However, it is still the Community's firm intention to abide clearly by the undertaking that it gave in Santiago last year when it said that it was its firm purpose to seek means of becoming a member of that agreement. It will live up to that.

I do not think that the right hon. Gentleman's references were either accurate or apposite. On the question of hill farming, I regret as much as he that this matter has not been finalised. It is not due to start anyway until next year, but it is important to get the terms right, because the terms critically affect British farmers. My right hon. Friend has been working hard in the last day or two to ensure that their interests are protected.

The right hon. Gentleman referred in his rather disparaging remarks about the lack of agreement to the associates' and associates' meetings. Again he is off beam. The truth is that one of the remarkable things about the two meetings which took place at ministerial level with these countries has been that understanding between the Community and them has been good. The 40 or more countries concerned have been able to come forward on two occasions with a united point of view, talking clearly to the Community and being responded to by the Community. It is right for the work to be carried out by the Community in an exploratory sense.

The right lion. Gentleman gives the impression that if he had his way what he would like to happen would be the Community laying down the law. That is not the purpose of the Community. Its purpose is to try to find out what these countries wish and to try to meet it.

In all three references on the lack of agreement, the right hon. Gentleman seems not to have taken the point.

On the Regional Development Fund, the position is slightly different from that which he gave us to understand. First, the RDF is to be set up on 1st January. The provision of its resources from the Communty's own resources is linked to the institution of the second phase of EMU. The constitution of the fund was set out by the Summit, to take place on 1st January 1974. It is to that objective that the Community is working. The right hon. Gentleman should make some distinction between these two figures which are distinguished in the Summit provisions.

I agree with him that the provision of adequate resources for the Regional Development Fund by the time it is set up is critical. For this reason, as the right hon. Gentleman will have observed, great care was taken to ensure that in the budgetary discussion provision was made so that as soon as the Fund was agreed it would be possible for it to start to be operative, otherwise there might have been a hiatus, which no parties would wish to see happen. The provisions in the Budget have successfully overcome that risk.

The right hon. Gentleman is aware that there has been a material degree of discussion among the nine members of the Community on the subject of the Middle East war and oil supplies and that they produced a joint statement from their meetings in Copenhagen. It is the Community's intention at an early stage to seek to have a meeting of Ministers concerned with energy matters, particularly to look at these and other issues of oil supplies.

Mr. Farr

Would my right hon. Friend say something about the CAP? In his statement, he did not mention this subject, on which anxiety has been expressed on both sides of the House many times this year, particularly about the workings of the CAP and the desirability of having if not major at least minor alterations made to it.

Mr. Davies

The present situation is that the Commission is to produce very shortly indeed—and I mean very shortly—its report on the amendments which it considers appropriate to the common agricultural policy. As soon as we have those, clearly we shall be working on them with great urgency. They are not yet in hand, but they are expected to be very shortly.

Mr. David Steel

Are we to understand that there has been absolutely no discussion during the summer on the development of the political and democratic structures of the EEC? When will the British Government take an initiative in this matter?

Mr. Davies

I am of course reporting on the meetings of the Council of the Communities. These are not concerned with political co-operation—[An HON. MEMBER: "Yes."] No. Political cooperation takes place outside the Council meetings of the Communities. It is a separate form of meeting which is not part of the Community activity and is not within the framework of the Treaty of Rome. It is a separate but related part of the actions of the nine member countries and takes place on a separate basis. So, in reporting on the Council meetings, I should not properly report on that. However, I will answer the hon. Member's question.

There have been active discussions throughout the summer on political cooperation. As for taking an initiative, the present state of discussion between the Nine and the United States, in view of an eventual visit by President Nixon, owes a great deal to the initiatives taken by the British participants, as would be generally recognised throughout the Communities. The present state of play in these discussions is rather satisfactory and is moving ahead, I think, much more effectively than any of us could have imagined before the Summer Recess.

Mr. Biffen

In view of the spasmodic and recurring problems of butter surpluses in the Community, is it not nonsensical that there should be any suggestions that the farming aids for mountainous areas should be extended to include dairy cattle? Can my right hon. Friend confirm that his right hon. Friend the Minister of Agriculture originally suggested that such aids should not include dairy cattle? If the Commission suggests that they should, this will be to the detriment of British agriculture and to the corresponding advantage of the farmers of the Republic of Ireland and of France.

Mr. Davies

As I am sure my hon. Friend knows, the Minister of Agriculture has been diligently seeking means of avoiding the CAP giving rise to continuing butter surpluses. However, in so far as dairy farming takes place in these hill and mountainous areas, it is much more concerned with cheese production than it is with butter. Therefore, the inconveniences in terms of surpluses are not of the kind that perhaps my hon. Friend fears.

Mr. Jay

Can the right hon. Gentleman tell us of any benefits that this country has secured from all these discussions?

Mr. Davies

Yes. I would not wish to go on at too great length, but one perhaps which would particularly concern the right hon. Gentleman with his past great experience in Government, is that we are launched on an effective international negotiation to regulate world trading conditions. I say to the right hon. Gentleman that, but for our membership and but for our presence, that negotiation would by no means be launched in the way it is.

Mr. Hicks

On the question of the mountain and bill farming draft directive, can my right hon. Friend confirm that there was agreement on all the original facets and content of the directive and that the disagreement was in reference to additional factors which were raised at the meeting yesterday?

Mr. Davies

No, I am afraid that that is not correct. The hill farming provisional directive is a very complex one which provides not only for the setting of criteria but for the delimitation of areas and for the finalisation of the level of grant to be accorded. None of these things has yet been finalised, so my hon. Friend is wrong to believe that the dairy cattle issue was the only one outstanding.

Mr. McBride

Would the right hon. Gentleman clarify his remarks about the cow subsidies? Will this policy of the Community bear any relation to the policy of the then six members of the Community which resulted in £100 subsidy being given for every cow slaughtered and which was a direct result of the raids on our cattle markets, particularly at Banbury, which raised the price of beef to the prohibitively high levels below which the Minister of Agriculture, who is sitting beside him, has said that prices will not fall? How can he say that this will benefit the pensioners and other low wage-earners in this country?

Mr. Davies

I do not know that, at least this afternoon, I have said anything about a cow subsidy benefiting the pensioners. However, leaving that aside, the matters to which the hon. Gentleman refers are absolutely undecided and are far from being conclusive. I therefore doubt whether the points raised by him are apposite.

Dame Irene Ward

With regard to regional development policy, when the decision has been taken about how much money will be available and it has been paid over to the regions, will the regions be able to spend it entirely as they like without any decisions by the Council? Will there be a variety of decisions according to what the regions themselves want? May I add that I am jolly glad that my right hon. Friend is gay and confident? Let him go on being so.

Mr. Davies

On the question of the allocation of regional development funds, it is probably true to say that this Government, more than any other, have ensured that the decisions taken at regional level about regional support have been accentuated and made much more real. I am sure that everybody in the regions regards that as being the case. This will continue. To some extent work, both in developing projects and putting them forward for consideration for national aid, and eventually for Community aid, too, will still be at regional level. The criteria which govern the allocation of funds from the Regional Development Fund will of course be agreed at the level of the Council of Ministers.

Mr. Heffer

That is a very gay answer.

Mr. Deakins

Since the amount of regional aid in the Community next year has yet to be decided, presumably it is not included in the 1974 Budget of 5,000 million units of account. If it is not so included, how is it to be paid for and what is likely to be this country's share?

Mr. Davies

Until the further discussions have taken place this year I cannot answer the latter part of the question. It would be simply guesswork. On the former part of the question, this issue was very much in the minds of those attending the Council of Ministers dealing with the Budget. Accordingly, the reference in the Budget to the Regional Development Fund is with a view to ensuring that, just as soon as funds are agreed for it, it can automatically operate. Hon. Members will be aware of the problems which otherwise might arise in terms of the time-lag in any reference to the Parliament Economic and Social Committee. It was in order to overcome that time-lag that the provisions were made in the Budget in the form I have stated.

Mr. Hugh Fraser

I am sure that my right hon. Friend will be aware that there is total dissatisfaction throughout the House that we cannot have a proper debate about the £30 million which seems to have been wasted by the Community on subsidising butter to Russia. That could have been a chance for a debate on agricultural and financial policy generally in the Community, and I am sorry that it has been lost.

On the great triumph that my right hon. Friend reports of advantages in the GATT negotiations, perhaps he could make it clearer what the strength of the British representation will be during these negotiations, especially since our policy seems to diverge completely from that of France and most of the other Europeans as regards trade with the third world. I hope that he can confirm that there will be proper British representation in these all-important negotiations in Geneva.

Mr. Davies

My right hon. Friend will be aware of the fact that a very small proportion of third world countries is involved in the GATT multilateral discussions. My right hon. Friend's last point is not one which is concerned with the points that I made in my statement. On the question of the extent of the British representation, this will evidently not be very great, because representation will take place at the level of the Council of Ministers and it will give rise to a Community policy which will be defended effectively by the Community.

Mr. Marks

How much notice do Ministers receive of the agenda of these ministerial meetings? Is the Minister aware that in some countries Ministers consult their Parliaments before the meetings take place? Could not we do that in Britain?

Mr. Davies

The opportunity for matters to be raised here well before meetings take place is very much available. There are placed in the Vote Office documents arising from the Commission which foreshadow the discussions in the Council. Indeed, many of the questions are raised in the House long before the relevant debates take place in the Council. Hon. Members should not be concerned on that score. There is every opportunity to probe into these matters before the Council deals with them.

Mr. Marten

On the question of the International Sugar Agreement breakdown, will my right hon. Friend place in the Library a transcript of what was said by the British delegates at the meetings, because historically we played a great part in the negotiations? On the question of the relationship between the Council of Ministers and the European Assembly, will my right hon. Friend be very cautious in expressing a view in the Council of Ministers until this House has debated the report of Sir John Foster's Committee, which we hope to receive soon?

Lastly, did my right hon. Friend take up with the Council of Ministers the question of Britain's counter-inflation policy and the intention of the Government to place an 8 per cent, tax on imported lamb on 1st January, which is very counter to the counter-inflation policy?

Mr. Davies

On the first question, my right hon. Friend the Minister of Agriculture is present and heard my hon. Friend's question. My right hon. Friend would be more able to respond to it than I am. But the International Sugar Agreement is not a matter which is, so to speak, within the Community's activities as yet. However, my right hon. Friend heard what my hon. Friend said.

The relationships between the Council of Ministers and the European Parliament are quite separate from the whole relationship which the Select Committee has been studying in this House. There is a Parliament and a Council of Ministers. In relation to their present work there is a need for a better and an easier relationship, and that has been a matter of study. The question of the Select Committee brings new factors to bear upon the relationship with this House, which will be most diligently considered.

I was asked about lamb. As I am sure my hon. Friend knows, there is no lamb régime within the common agricultural policy.

Mr. Elystan Morgan

Does the Chancellor of the Duohy recollect that on 8th July 1971 the then Minister of Agriculture gave a written undertaking to the President of the National Farmers Union that the current level of assistance to hill farmers would be maintained? Will the right hon. Gentleman now give the House an undertaking that, irrespective of any inhibitions and despite any frustrations placed in our path by our distinguished partners in the EEC, that undertaking will not to the slightest degree be dishonoured?

Mr. Davies

I have absolutely no reason to suppose that the undertakings which were given at that time will not be respected fully.

Several Hon. Members rose—

Mi. Speaker

Order. Nearly 40 right hon. and hon. Members wish to speak in the next debate, so I think we must move on.

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