EUROPEAN COMMUNITIES

HC Deb 19 December 1974 vol 883 cc1897-2000

7.22 p.m.

Mr. Nigel Spearing (Newham, South)

On a point of order, Mr. Speaker. In the Second Special Report from the Scrutiny Committee, dated 20th August 1974, No. 258-II, paragraph 28 states: that the House of Commons should have the right to give its opinion both on the principles and details of particular Community documents, by debating and voting on motions and on amendments thereto. Last night we had a debate on the Adjournment motion, and the subject for discussion concerned Community documents. The same thing has happened tonight in spite of representations that it would be better, in accordance with the Committee's recommendation, and more convenient for the House to separate matters concerning renegotiation with the EEC, and no doubt the summit renegotiations which have been continuing this week, from discussion on other documents and the draft general budget.

I understand that document R/2829/ 74, which is included in the proposed debate, concerns the renegotiations since it concerns adjustment of contribution of moneys from Britain. The rest of the documents and the draft general budget, which I understand consists of several volumes which are in the Library, do not come directly under the heading of renegotiation or coincide with the subject of Cmnd. Paper 5790 which is also down for debate.

I hope that my right hon. Friend the Lord President will consider this arrangement of business, otherwise in spite of his plea for stronger democracy, it might be difficult for the House to deal with both matters simultaneously.

Mr. Bob Cryer (Keighley)

Further to that point of order, Mr. Speaker. To decline to allow amendments to be tabled and, therefore, debated is an important erosion of democrary and represents the sort of spirit which pervades in Brussels. I look to you, Mr. Speaker, for protection which will give back benchers the right to express the opinion which is shared by the majority of people in the country concerning some of these documents, some of them of great complexity, which are pouring out from Brussels and which come to this House after the Scrutiny Committee has reported. I ask you, therefore, to give us protection by ensuring that in future the opportunity for tabling amendments and debating them will be provided.

The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short)

Further to that point of order, Mr. Speaker. We are feeling our way in this matter and we are trying various methods of approach. We have tried "take-note" debates and "approval" debates and we thought that this week we would try debates on the Adjournment motion. However, we are quite willing to discuss this question with anybody. The basic difficulty is that Parliament has lost its sovereignty over this whole area of legislation which applies to the people of this country and the most we can do is discuss these points.

My hon. Friend the Member for Keighley (Mr. Cryer) raised the question of amending the orders. That would be a new departure for this House. We have never allowed orders to be amended, and that is a very difficult path on which to start. However, we could look at the point.

We made inquiries on the whole question and we felt that it was the general wish of the House that these orders and the six-monthly report should be discussed in a general debate which, I hope, will go on tonight until midnight. However, we shall see how we get on, and if it is felt at the end of the time that there should be another occasion for debating budgetary matters I shall see what I can do to arrange that.

Mr. Speaker

This is not a question for the Chair. As for protecting the rights of back benchers, the motion for the Adjournment offers the widest possible protection in that it enables anybody to say practically anything. That represents the greatest protection for back benchers. If it is desired that these matters should be debated other than on the motion for the Adjournment, the responsibility for change lies not with the Chair but elsewhere.

Mr. Spearing

I appreciate that this is not a matter for the Chair, Mr. Speaker. My right hon. Friend the Lord President mentioned that the Scrutiny Committee had sent the orders to the House for discussion and for information. I should be grateful if my right hon. Friend would give us an assurance now, not at some time in the future, that he will provide time for the House to consider these orders and the draft general budget. Possibly that could take place after the recess and on a motion which would allow of amendment.

Unless my right hon. Friend can give that assurance, I feel sure that the debate which is to follow, which is on the motion for the Adjournment and which will range very wide, will not follow the sort of course we all want it to follow whereby it was confined to matters of renegotiation. Therefore, I hope that in protecting the interests of the House and of democracy as a whole my right hon. Friend will give an assurance that he accepts that merely the appearance of these documents on the Order Paper, albeit in italics, does not constitute consideration by this House as recommended by the Scrutiny Committee, and that he will find time for a debate on the orders and the draft general budget in the near future.

Mr. Peter Kirk (Saffron Walden)

The Leader of the House mentioned budgetary matters specifically as something that might be held over for later discussion. There are two aspects to this. One is document R/2829/74 and the other is the draft general budget—I think that I am the only person who has a copy—which runs to seven volumes. Both of these are down for discussion. When the right hon. Gentleman referred to "later discussion", which of these did he have it in mind to discuss? The two are quite separate.

Mrs. Audrey Wise (Coventry, South-West)

Will my right hon. Friend the Leader of the House take into account that there is a vast difference between procedures which allow individual expressions of view and procedures which give the House the opportunity of expressing a collective view through motions which can be amended? That is precisely why a debate on the Adjournment motion, however wide it may go, cannot meet the point we are seeking to make.

Mr. Short

We are in a difficulty here and we are feeling our way. We have tried various methods of discussing these subjects. I have said that if at the end of the debate the view is expressed that we should debate the whole thing again, I shall be happy to arrange that. We cannot withdraw the motion now since it is down for debate, but if it is generally felt that we should have another occasion we shall be very happy to provide it.

Mr. John Davies (Knutsford)

When the Leader of the House referred to debating the whole thing again, I take it he was not inferring that we would be going over the debate again on six months' experience?

The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)

No, certainly not.

Mr. Spearing

Is it not a fact that if we debate this matter on the Adjournment motion, the only report that will appear in the Journals of the House is that the Adjournment was moved and there was a discussion? In that case, surely there will be no record of such a discussion appearing in the Journals of the House?

Mr. Speaker

That may indeed be so.

Mr. David Stoddart (Swindon)

I should like to raise a further point of order, Mr. Speaker, although it is related to what has been said. I refer to the "take-note" discussion which we had on 3rd December relating to EEC documents R/1472/74 and R/127/74 concerning energy policy.

Mr. Mellish

We talked it out.

Mr. Stoddart

I know. There was an amendment to the motion which you accepted, Mr. Speaker. It was moved and supported. After one and a half hours the debate was adjourned while the Secretary of State for Energy was on his feet. In those circumstances you, Mr. Speaker, said that the debate must be adjourned. No Opposition speaker was called in the debate. Neither was the Chairman of the committee which is examining European secondary legislation called.

On the following day, 4th December, the motion and the amendment were placed on the remaining Orders of the Day—item 28, page 1656—presumably by the Government business managers. However, the motion and the amendment did not appear on 5th December, nor have they appeared subsequently. However, an article in The Guardian on 5th December seemed to indicate that the Government had decided that the matter was finished and that the motion to take note had been carried.

Surely that cannot be so. You, Mr. Speaker, announced that the debate had been adjourned, and neither Question had been put. The House did not take a decision to take note. In my view, the matter is still before the House because the motion and the amendment were moved and, therefore, they became the property of the House. In my view, it is not within the jurisdiction of the business managers to take away from the House business which is the property of the House. I should like your guidance, Mr. Speaker, on how we can get the motion back on the Order Paper.

Mr. Speaker

That is not a matter for me. It is certain that no decision was taken. The motion was talked out and the debate on it will be resumed on another day. I am not sure whether the conduct of the Chair has been criticised, but I do not think it has. However, no decision was reached. When the matter is to be put back on the Order Paper is certainly not a matter for the Chair.

7.33 p.m.

Mr. Geoffrey Rippon (Hexham)

We all agree that it is useful to have a general opportunity to debate developments in the European Communities both in the context of the progress reported in the White Paper, Cmnd. 5790, which we welcome, and in the context of the communiqué issued after the Paris summit meeting last week.

There is sometimes an air of unreality about our debates on the so-called renegotiation because there is nothing before the Community which was not in contemplation when the Treaty of Accession was signed. Thus we are all grateful that there is no question of amending the treaties containing the basic terms of membership. I was glad that the Prime Minister went out of his way, before going to Paris, to say: We do not seek to change the basis on which the European Community is founded. In consequence of the attitude which the Government are now adopting, there is much which is encouraging in recent developments on the economic and political fronts. The White Paper "Developments in the European Communities March—October 1974", gives in paragraph 8 an impressive list of policies carried forward. They include the conclusion of negotiations under the GATT between the EEC and the United States; Community participation in the special United Nations emergency programme to help the developing countries hardest hit by the increase in the price of oil; agreement to raise a Community loan to help member countries in balance of payments difficulties as a result of the increase in the price of oil—a subject which we debated only recently; agreement on the extension of a common Community policy towards State trading countries; progress towards determining a long-term energy strategy for the Community; and the further extension and development of political co-operation between the Foreign Ministers of the member countries of the Community.

All those matters we welcome and many of them were carried forward at the recent Paris summit meeting. All Heads of Government, including our own, in effect reaffirmed in Paris that a strong European Community was essential for our prosperity and political influence just as a strong Atlantic Alliance is essential for our security. We have common interests, as the summit has shown, which we share with the Community; and, as the Duke of Wellington once said. "Interests never lie".

I therefore particularly welcome those parts of the summit communiqué which emphasise the need for political co-operation at every level. I welcome the proposals which have been agreed by all Heads of Government for more regular meetings which result, in the words of the communiqué, from a unanimous recognition of: the need for an overall approach to the internal problems in achieving European unity and to the external problems facing Europe That applies to the need to adopt common positions and common policies in all areas of international affairs which affect the interests of the European Communities.

There is also the welcome reaffirmation of the objective of progress towards economic and monetary union as stated at the Paris conference of 1972 as well as a very welcome determination to implement a common energy policy in the shortest possible time.

All that is in addition to setting up working parties to study the possibility of establishing a passport union, a stage-by-stage harmonisation of legislation affecting aliens and the conferring of special rights on citizens of the nine member States as members of the Community. That is a very good example of European co-operation wholly in accordance with the provisions and aims and objects of the Treaty of Accession.

There is only one caveat in the document, namely, the Prime Minister's explanation that the Government reserved their position upon direct elections to the European Parliament until after the completion of the process of so-called renegotiation. For many of us it is a matter of deep regret, both here and in Europe, that the Labour Party is not represented at the Parliament in Strasbourg. However, it should be recalled that the British position on the issue of direct elections, which was reaffirmed by the Conservative Government, was set out by the Labour Government, of which the Foreign Secretary was a distinguished member, in April 1969 in the Saragat Declaration. It was a declaration on Europe by the Governments of the United Kingdom of Great Britain and Northern Ireland and of the Republic of Italy. It stated: In the firm belief that their future and the future of Europe are indissolubly linked; that only a united Europe can make its due contribution to peace, prosperity and international co-operation and can, at the same time, provide the necessary framework for the fulfilment of their common destiny; and that therefore no effort must be spared to give a new impetus to achieve European unity, Britain and Italy have agreed their European policy as follows: The economic and political integration of Europe are both essential. As experience has shown, neither can go forward without the other. The European Communities remain the basis for European unity. The Treaties establishing these Communities provide for the accession of other European countries… . The political development of Europe requires that all member countries of an enlarged community shall be able to play a full part. Europe must be firmly based on democratic institutions, and the European Communities should be sustained by an elected Parliament, as provided for in the Treaty of Rome. The role of the present European assemblies must be enhanced. That was the statement made by the Labour Government in 1969 and reaffirmed by the Conservative Government, and I hope that it still remains the policy of Her Majesty's Government, although there can be discussion about the modalities by which that objective is achieved. It is clear that, as far as one can judge, all that is at issue between us is a number of so-called terms. Let us look at the progress which has been made this year.

The Opposition have consistently urged the need to make changes in the common agricultural policy. As the Prime Minister said from the day he launched our application to join the Community, the agriculture policy, like the other policies, can be changed, but it can be changed only from within.

Equally, there is no need for us to differ over the attempt to find a new and fairer method of financing the Community budget. From the outset we contemplated changes in both the size and the shape of the budget and also—by the establishment, for example, of effective regional policies—changes in its structure. As we said in our 1971 White Paper, Neither our contribution to, nor our receipts from, the Community budget in the 1980s are susceptible of valid estimation at this stage. That appeared to be what the Lord President agreed to the other day. Although no one else in the Community has raised this issue, and although every other member of the Community faces the same problems of inflation and rising oil and world commodity prices, we are nevertheless entitled at any stage to raise the issue, even though only the British Government at the moment foresee a steady real decline in our relative prosperity vis-á-vis our partners.

If that be the case—and the Commission says on present evidence that there is some ground for that argument—we were certainly entitled to invoke the Community's 1971 undertaking that if unacceptable situation should arise the very life of the Community would make it imperative that the institutions find equitable solutions ". Interestingly enough, the precise phrase which we negotiated is referred to in the summit communiqué. That is the concession which the Goverment have apparently achieved, namely, a repetition of the very undertaking that was negotiated at the outset.

In those circumstances, the "corrective mechanism" called for by the summit conference must be supported by us, particularly as the Government have made quite clear that they are seeking a formula which would not apply to Britain alone but would be applicable to all members of the Community, so that our and their contribution might well change as national circumstances altered.

Nor do I think that there can be any quarrel with the Government's concern to ensure that the terms of entry are fully implemented in accordance with the wishes and needs of the various Commonwealth countries. I am sure the Foreign Secretary will be able to assure the House that no Commonwealth country would wish us to leave the Community. This was referred to yesterday, but I think that the Foreign Secretary did not wholly appreciate the full force of what the Australian Prime Minister had been saying. His words were, I think, that there was no advantage to Australia if we left. New Zealand would say the same. The Foreign Secretary will confirm that the New Zealand Government were recently much more pleased with the Commission's proposals on price than with the United Kingdom's proposals. That is often the case.

Although changes are being made, they are by no means being made solely on the initiative of Her Majesty's Government. Progress made in improved trade and aid to the developing countries of the world was promoted forcefully not only by Her Majesty's Government but also by the Commissioner who is primarily charged with this responsibility and who has done a splendid job.

The same considerations apply in relation to the sugar-producing, developing countries of the Commonwealth, for which we sought assurances during the negotiations from partners in whose word we had confidence. Those specific and moral commitments have been fulfilled. The problem now is one not of access but of price. Here again we shall find that the British housewife, as well as the Commonwealth producing countries, will benefit considerably from our membership of the Community. We are in a much more favourable position than we should have been were we trying to renegotiate the old Commonwealth Sugar Agreement. That would not have been as good for us, the housewife or the producing countries.

Mr. Spearing

The right hon. and learned Gentleman used the words "have been fulfilled". The whole House hopes that that is so. Is the right hon. and learned Gentleman aware, however, that when representatives of the Commonwealth countries were in Brussels last week, instead of being offered the highest price even within the mandate which the Council of Agricultural Ministers had given to the Commission, they were offered the lowest price? We hope that the conditions will be fulfilled, but I do not think that the right hon. and learned Gentleman is right in saying we have made sure of it.

Mr. Rippon

The specific and moral commitment referred to in the debates on the European Communities Bill was the access for the 1.4 million tons. The basic problem is price, but now that the negotiations are developing the position is much better than it would have been if we had been negotiating the Commonwealth Sugar Agreement on the old lines, and that applies to all the parties concerned. Perhaps the Foreign Secretary will confirm that some progress has been made today and that the first £20 million worth of subsidies for us has been agreed. As for the other matters—value added tax and the maintenance of our own regional policies—provided, as the Prime Minister says, they do not infringe the rules of fair competition, they are all common ground. There is, therefore, very little in dispute between us on basic principles.

The Foreign Secretary went a long way yesterday to dispel some of the illusions about Britain's position in the Community. I was glad that he blew sky high all the nonsense that has been talked about trade figures and the so-called deficit in our trade with the Community. He said, fairly enough, that very little could be deduced one way or another from the various sets of statistics which are thrown up. In so far as our deficit with the Community countries has increased, I am sure that the hon. Member for Oxford (Mr. Luard) was right in saying yesterday that one reason is that food and many other raw materials and commodities are now cheaper in the Community than they are outside.

Equally, I hope that the Foreign Secretary may be able to confirm that the tariff changes which come about on 1st January will once again be beneficial to this country. Perhaps he will say which tariffs will be cut and which will rise or, at any rate, whether on average they will be going up or down in terms of the value of imports. The price of a number of items will be going up—for example, tinned peaches from South Africa—but there is little doubt that the balance of advantage lies with us as a result of the changes that will lake place on 1st January.

As one argument after another advanced by those who wish that we were not a member of the Community is swept into limbo, it is not surprising that the old vague assertions about loss of sovereignty are being dusted off. In referring to the International Energy Agency, which in many respects is far more supranational than the Community, I was glad to hear the Foreign Secretary say yesterday that no one minds abandoning sovereignty if the benefits are worth it".— [OFFICIAL REPORT. 18th December 1974 ; Vol. 883, c. 1563.] He said that in regard to the International Energy Agency the benefits would be worth while. In that case, however, there is no veto and a majority vote can bring into force an emergency from which all sorts of consequences can flow and over which we would have no direct control.

The truth of the matter, and we in this House must face it, is that sovereignty can no longer be exercised on a purely national scale. The whole history of political progress is the history of a gradual abandonment of national sovereignty. I welcome what the communiqué said on the subject of the Luxembourg compromise. It made it clear that in regard to that compromise there would no longer be the maintenance of the practice of making an agreement on all questions conditional on the unanimous consent of the member States. That is a sensible provision, but refers only to abandoning or renouncing the practice in regard to all agreements, and there are minor matters in which it is manifestly sensible to proceed by a majority vote.

I am sure the Foreign Secretary will confirm that there is no question of our having to acquiesce in any policy which we consider to be against a vital national interest. We have pooled sovereignty in a number of organisations—for example, the United Nations, NATO and WEU— and we do not complain if on the advice of the Government we support in the United Nations a mandatory resolution and subsequently feel ourselves bound to follow it. We have to realise that the Government pursue policies which they know will subsequently command the support of this House.

Having joined the European Community and acceded to the Treaty of Rome, we are committed to certain agreed aims defined in the Community treaties. But in terms of Parliamentary sovereignty it is fair to say that the legal and constitutional implications of Britain's accession to the European Communities were clearly stated by the Prime Minister when he made the initial application, and the House subsequently voted by an enormous majority in support of the Government's proposal to apply for entry.

In that speech on 8th May 1967 the Prime Minister—who was reinforced by the then Lord Chancellor, Lord Gardiner, in the House of Lords on the same day —left no room for doubt at all about the nature of the commitment to the directly applicable principle of community law that is the basis of membership on any terms. In the Prime Minister's own words: membership of the Communities involves a vesting of legislative and judicial powers, in certain fields, in the Community institutions, and acceptance of a corresponding limitation of the ordinary exercise of national powers in those fields. The extent of the powers of the Community institutions in this respect is, of course, limited to the purposes set out in the Treaties, and those purposes cannot be altered except by unanimous agreement of the member States."—[OFFICIAL REPORT, 8th May 1967; Vol. 746, c. 1088.] That was further spelt out in the White Paper issued by the Labour Government in May 1967. Although certain changes have occurred in the Community since then, all the succeeding Conservative Government had to do was to reissue that White Paper in 1971. Nothing has occurred since to invalidate the broad conclusion described in the 1967 White Paper. The Government could not have negotiated in good faith unless they accepted those basic minimum requirements.

Mr. Neil Marten (Banbury)

My right hon. and learned Friend raises the interesting historical dispute about what the present Prime Minister said in 1967. However, when it came to the test on the European Communities Bill the right hon. Gentleman voted against the Question. "That Clause 2 stand part of the Bill".

Mr. Rippon

The Prime Minister has been careful to say that the only reason why he opposed it was that he did not agree with the terms. In other words, if only the terms had been right on agricultural policy and on the budget and so on, he would have seen no difficulty whatever in supporting our application to join and the signing of the treaties.

Many matters are now coming before the House which have caused a good deal of trouble, but they are matters which the House would not think of discussing at all if they involved domestic legislation. [Interruption.] That is true. If legislation had not come from Brussels, no one would make any fuss. If it had been known, for example, that the legislation on King Edward potatoes had come from the Ministry of Agriculture without reference to Brussels, nobody would have raised a squeak of protest.

We now have an opportunity of discussing what is in these draft regulations. What normally happens is that the Government of the day lay a Bill before the House, it has its Second Reading and the House can accept it or reject it. More frequently a stream of statutory rules and orders come out of Whitehall and there are opportunities to pray against them but with no opportunity to amend. We know that when the draft regulations on lorry weights came before the Conservative Government, because of the wholehearted disapproval that was expressed by the House we accepted that situation.

We would then have been entitled to say—because nothing is more vital to a Government's interests than their survival —"As the House of Commons has so clearly demonstrated its opposition to the draft regulations, we shall use our veto because it relates to a vital matter of national interest—an interest so vital that Parliament has taken the trouble to express its deep concern about it." I see no difficulty in that respect.

Mr. Douglas Jay (Battersea, North)

The right hon. and learned Gentleman's speech would be better if occasionally his sentences ended. Does he suggest that if a normal order had come forward in the House to transfer the control of our future North Sea oil supplies to an executive agency outside the House, the House would consider it not worth giving it lime for debate?

Mr. Rippon

The House has a choice in these matters and can debate matters which are of great interest. If I do not complete my sentences in order to prevent the right hon. Gentleman intervening, it may save the time of the House.

Mr. J. Enoch Powell (Down, South)

The right hon. and learned Gentleman made what appeared to be an important statement on behalf of the official Opposition, and I wonder whether he will make it clear. He said that a vital national interest invoking the Luxembourg Agreement could include a case where the Government were either defeated or in danger of being overruled or were mandated by the House of Commons, apart from whether that would be regarded as a large matter or a small matter. Was that a correct understanding of the point?

Mr. Rippon

I was trying to suggest that if in practice an issue was raised in draft in Brussels as a proposal about which the House of Commons felt so strongly that it indicated that it would not support the Government and their policies, the Government would be justified in saying that that was a major issue. I would not put it any higher than that. [Interruption.] I said that Governments might regard their survival as vital to the national interest. However, the House of Commons might not take that view. That is the ultimate safeguard of the House of Commons in all these matters involving the exercise by the executive of the prerogative power of making treaties and agreements of all kinds. If the Government enter into a treaty or agreement which the House repudiates, the consequences have to be accepted. That has always been the case in regard to treaties.

The assumption is that when a Government reach agreement they bind themselves. I hope the Government will make it clear that when they reach agreement in due course about this so-called package of negotiations they will bind themselves to see the matter through. Their own credit will then be at stake. It is all right for a Minister when abroad to say "I agree ad referendum "—that is to say, ad referendum to the Cabinet. It does not apply ad referendum indefinitely to Parliament and people.

Far more significant in terms of parliamentary sovereignty is the question of a possible referendum.

Whatever the possibilities may be—we accept that it is only a reference to a "ballot", but this matter is exercising public interest and concern—I submit that, in the interests of parliamentary sovereignty and good government, there ought at any early stage to be a Green Paper on the place of a referendum in the British constitution with reference to the practice in other countries.

While the House is taking up a great deal of time considering these draft directives and regulations from Brussels, some of which are of relatively minor importance with which the House will readily concur, it should be possible to find time to discuss a fundamental constitutional issue within the framework of our own domestic system. It is necessary to make clear that if the Government reach agreement on the package of renegotiation, they will recommend that package to the House and to the country and take full responsibility for doing so.

I submit that all these discussions about sovereignty, draft directives, our procedures and this so-called package of renegotiation, which is a continuing process which will go on for many years, are manifestly now at the margin of world events. We should recognise that, within the framework of the Community, it is essential to concentrate on the major problems of recession, energy shortage, trade, employment and inflation which threaten to engulf us all. Indeed, we should welcome that the meeting of Heads of Government in Paris gave high priority to those issues. Faced with the threat of a world economic recession, the European Economic Community has the capacity, which we do not have alone, to give essential mutual assistance to deal with inflation and a distorted balance of payments.

In the 1930s we sought to shelter behind the protection of high tariff walls with disastrous results. This time there is more hope to be found in the existence of the European Economic Community, which now has both the institutions and the means to pool our resources. Indeed, on Monday we witnessed the warm welcome that the Prime Minister rightly gave to the Federal German Government's measures involving a substantial measure of reflation for a country with a surplus.

The Labour Party has always prided itself upon its internationalism, just as we on this side of the House would wish to do. Surely we ought now as a House of Commons to recognise that the European Economic Community is likely to remain the best available effective framework within which we can co-operate with other countries for our common good.

So far from threatening our own withdrawal, which is unnecessary to pursue the Government's objectives, we ought to be looking to its enlargement and considering whether in the new circumstances Greece or a new democratic Government in Portugal could be part of that wider family. Certainly we should be thinking of what we can achieve not only within the framework of the EEC but within the framework of the Council of Europe, which ought not to be forgotten in the context of a debate on Europe. We ought to be working together to try to create a truly united Europe from the Iberian Peninsula to Finland.

Mr. John Lee (Birmingham, Handsworth)

Before the right hon. and learned Gentleman completes his panegyric on a united Europe, may I ask whether he would include Iron Curtain countries? After all, this is a much wider area.

Mr. Rippon

I am saying that we should not confine our debates solely to what we are trying to achieve in the European Economic Community, which is an important part of our rôle in Europe, because what the Government are trying to achieve can be brought about without any threat of withdrawal. Indeed, so far from threatening to withdraw, we should be thinking whether other countries could join the European Economic Community. There are some countries which, for various reasons, cannot become full members—for example Austria, which is bound by its treaty obligations, or Switzerland with its traditional neutrality. However, we should be thinking in terms of how to use our membership of the Council of Europe more effectively. If we could effectively bring about a greater degree of unity in Europe from the Iberian Peninsula to Finland, we would create a strong foundation from which to proceed towards detente between Eastern and Western Europe. I believe that that is the ultimate safeguard not only for peace and security but for the very survival of our civilisation.

I hope that in the course of the debate we shall lift our sights away from this detailed renegotiation, which is to some extent bogus, as I think we all know, deal with those issues on their merits as they arise and consider the wider grave national issues which should concern us at this time. We must co-operate together within the whole framework of Europe if we are to have any hope of solving the dangers before us.

8.07 p.m.

The Secretary of State for Foreign and Commonwealth Affairs (Mr. James Callaghan)

I certainly think that this is a useful occasion on which to have a broad-ranging debate on developments in Europe. I draw to the attention of the House that, apart from the documents which were the subject of certain points of order by some of my hon. Friends, we are basically discussing a review of developments in the European Economic Community between March and October 1974 which was published as a White Paper, intended to be as objective and factual as possible, but, of course, with special reference to the renegotiations that we have been conducting. I hope that there is no complaint about the manner of its presentation.

My right hon. Friend the Lord President of the Council said that we were feeling our way in all these matters. I do not think that anybody should be too proud to learn. If any right hon. or hon. Members have proposals or suggestions to make on the manner of presentation of this White Paper, I should be glad to hear them with a view to improving it so that the House of Commons can play its full part in these matters and know as much as possible.

I agree with the right hon. and learned Member for Hexham (Mr. Rippon) that it is an interesting phenomenon that the number of regulations and directives that issue from the Commission, and, therefore, fall under the scrutiny of the House of Commons, is in some ways greater than would be the administrative decisions that would have been taken by Ministers in this country which would not have been challenged except by way of Questions in the House or in correspondence. I think that note should be taken of that.

I had not fully realised that in some ways we are encompassing the Government with a greater degree of control by Parliament as a result of the transference of these powers than would otherwise be the case. I am sure that I would not have been required to come here and answer a number of these questions if these matters had remained under the administrative control of Ministers in the United Kingdom. That is a simple fact. I am trying to state the facts. Others may draw deductions.

On the large issues, as the Lord President said, a number of matters which have been delegated—no, not delegated— which have gone to the Commission by the decision of the House at the time must be looked at to see whether there is any derogation of sovereignty which is unacceptable to the House. That is part of the scrutiny that the Lord President is undertaking at the moment.

Perhaps I could return to this matter later, because I want to try to explain the Government's understanding of the question of sovereignty.

I want to begin with the common agricultural policy, which is included in the White Paper. The circumstances under which it operates have changed in the last year, because CAP prices are on average lower than world prices. Indeed, CAP prices of cereals and sugar are substantially lower than world prices. The question that we have to ask is: how long is this situation likely to run? Is it permanent or not? I am sceptical about those who say that for ever the situation will remain as it is today. I remember learned books being written in the late 1940s telling me that there would be a permanent dollar shortage and nations of the West would spend their time scrambling for the odd dollar. My right hon. Friend the Member for Battersea, North (Mr. Jay) was one of those who always disputed that view, and I should not disagree with him now if he disputes the view that there will not be a permanent food shortage.

If one has to take a balanced view on this, it would be fair to say that prices in the world for food are likely to remain higher and to be consistently higher in relation to manufactured goods than they have been in the past. It is fair to say that the days of Britain exchanging her manufactures for food from abroad, which characterised our trade in the nineteenth and twentieth centuries, certainly the first half of the latter, are gone, because the food-producing countries have more muscle now.

The raw material-producing countries and those that produce commodities have bound themselves together with a kind of regionalism which in some ways I dislike because it stands in the way of a multilateral world. Nevertheless, coming to terms with the situation as it exists, these countries, in a number of fields, have banded themselves together, and their bargaining position as against the industrial West will probably continue to be stronger because they have discovered how they can use their position in a way that was not done in earlier days.

Those are the facts that we have to weigh and consider when we are looking at how the CAP will develop. If I had to make a guess—and my guess is no better than anybody else's—it would be that there will be a decline in prices of world food. There is a large amount of tillage still to be employed, but I doubt —and I think we must take a judgment on this—whether prices will decline to the level that they were before the recent rises.

What has happened has in one sense been of benefit to the British consumer— that is, in the sense of being a member of the EEC—because, for the time being, and taking food supplies across the board, the housewife is getting food at a less high price—I shall not say cheaper—than she would have done if we had been outside the Community.

There have been the three developments since the White Paper was published. On sugar, we have the agreement to import 14 million tons for an indefinite period from the developing Commonwealth. That is an important gain. The right hon. and learned Gentleman may think that he tied it up, but I promise him that people in the Community did not think it had been tied up. I shall be kind because the Christmas spirit is here. We had a lot of difficulty in ensuring that the figure of 1.4 million tons was accepted by the Council and the Commission.

Secondly, measures have been taken to help the serious position of British livestock farmers, and the next step will be to negotiate an adequate and new permanent Community beef régime that will ensure a proper return to producers and will take account of the needs of the consumer. My right hon. Friend the Minister of Agriculture, Fisheries and Food has proposals for that which he will put before the Community when it meets early in January, and now we have the Commission's proposals for the Annual Price Review.

In this review and in the CAP stocktaking that will follow we shall follow up some of our renegotiation objectives. As the right hon. and learned Gentleman thinks they are either non-existent or, if they exist, he got them anyway, let me say that we want to see established firm criteria for prices which are set in relation to the needs of the British farmer. We need to improve Community intervention arrangements. Intervention in itself is not a sin; it depends whether it leads to "mountains". If it does, the system is clearly wrong, but we have been intervening in certain markets for a long time past.

We must also, as part of our renegotiation objectives, seek to ensure that producers outside Europe can continue to have access to the EEC market when that is of advantage to them and to us.

Mr. Peter Blaker (Blackpool, South)

The right hon. Gentleman regards "mountains" as a sin in the European context, whereas in the context of the World Food Conference people have been calling for buffer stocks, which are regarded as a good thing. Does the right hon. Gentleman distinguish between the two?

Mr. Callaghan

I do distinguish between the two. It depends whether it is a system of agriculture which is designed to produce a mountain that cannot be disposed of except at unremunerative prices, or to produce food to aid millions of people throughout Africa and elsewhere who are unable otherwise to secure proper standards of nutrition and how that is to be financed. I distinguish between the two.

Mr. John Davies

In view of what the right hon. Gentleman said about the Minister of Agriculture, Fisheries and Food having defined the proposals that he plans to put to Brussels, may I ask whether he would be inclined to allow the House to have access to these proposals, to look at them alongside the proposals now put forward by the Commission, so that we can try to reach some assessment of the comparative advantages of the two?

Mr. Callaghan

I am sure my right hon. Friend will be willing to give the House all the information that he can. If the right hon. Gentleman is saying to me—I hope he is not—that, in all circumstances, a negotiating mandate should be made available to the House, my reply is that I am sure the House in its wisdom will see what a stupid and foolish thing that would be. It would mean giving away a negotiating position before it was developed. I know of nobody, be he a trade union negotiator—and I should not have done it when I was negotiating on behalf of a trade union—or a business man, who will tell the world his negotiating position, his fall-back position and what he is willing to take before he starts. The House has to accept this and assume that, on the whole, British Ministers will be on the side of the British people. It is not an unfair assumption that when they go to Brussels they try to negotiate to secure the best result for our own people.

As I was saying, I draw a distinction between the two.

On the matter of the Community Budget, since the White Paper was published, as the Prime Minister said recently, we have started a process which I hope will lead to a corrective mechanism to deal with the unfairness of the present EEC budget problem. I presented our case on 1st April and 4th June, and emphasised that as we adopted the full loans resources system we should find ourselves paying a significantly higher proportion to the Community budget than was fair in relation to our share of the total Community GDP.

The Commission, as a result, was requested to draw up a stocktaking report on the economic and financial developments in the Community since enlargement—that is one of the documents listed on the Order Paper today—and I think it adopted a different analytical approach from our studies, but the Commission's report broadly substantiated our case.

The recent Heads of Government meeting in Paris marked a major step forward on the budget issue. At that meeting Heads of Government recognised that the impact of the budget arrangements will lead to problems and invited the institutions to devise a corrective mechanism as soon as possible to prevent such problems arising.

The decision of principle which they took is one of general application, and it deliberately avoids detail, but it makes clear that the correcting mechanism should be based on objective criteria, which would include a test of ability to pay. I cannot yet say, obviously, how much the United Kingdom might save once such a mechanism came into effect, although it could be a substantial saving towards the end of the transitional period.

The objective now is to secure early agreement in the institutions on the details of this corrective mechanism. It is my hope—and I have every reason to believe it will be substantiated—that the Commission will start work immediately and that the discussions on this correcting mechanism can be held in the Council early next year. I have no doubt that there will be tough negotiations over the details, but the Heads of Government have established the principle and we are now asking the institutions to take action to give effect to it within the time scale that we set ourselves for completing these renegotiations.

The safeguarding of the interests of the Commonwealth and developing countries takes up quite a portion of Cmnd. 5790. The Community has made considerable progress over the last months in safeguarding the interests of Commonwealth and developing countries. A total of 22 countries from the Commonwealth and 23 from the non-Commonwealth are participating in the association negotiations.

There has been rather more delay than I should have liked, but this is one of the inevitable consequences when nine nations are trying to move together, each with its own separate interests. This is one of the disadvantages of having a group of nine, but the question, which the country will decide later, is whether the advantages do not outweigh the disadvantages. I have never assumed that everything was on one side in this matter. However, I am confident, now that the negotiations have got so far, that the arrangements negotiated will meet the aid and trade interests of the developing countries.

I was asked to make a comment about sugar. The price is proving a difficult issue to settle, as the House might assume. The producers will get a long-term guaranteed price related to the Community price of the day. That may not seem very much to them at the moment, but the world price is being extremely volatile. It has fallen from over £600 to £460 or £470 in a short period. When one thinks back to 1968, when it was £30 a ton or thereabouts, one can see what a tremendous margin there is. I have no doubt that it is in the interests of the developing countries as a whole to take a price which is broadly based on the Community's internal price, but, of course, they must, and it is reasonable that they should, expect a good premium when the world price is much above. But that is the position at the moment.

How large an additional sum will be needed is of particular interest to the United Kingdom and the British housewife. In accordance with the agreement, the main bulk of sugar will come to this country, but producers understandably wish to secure as high a price as they can, while the consumers, especially ourselves, although they are anxious to give the producers a fair deal, naturally want to keep prices down.

In view of some reports, I should say that the Minister of Food tells me that the negotiations have not broken down. It is the usual bargaining process which is going on and negotiations are to be resumed early in the new year. He hopes that they will be brought to a successful conclusion by mid-January.

The producers understand that the long-term agreement has to be seen as a whole and that the quantities which they will be entitled to supply in future years will be related to the quantities that they in fact supply in 1975. For countries outside the circle of association—that is, the 45 countries; in particular the Commonwealth countries in Asia—there have been substantial benefits, which have been secured by my right hon. Friend the Minister of Overseas Development under the Community's generalised scheme of preferences.

The right hon. and learned Member for Hexham might acknowledge the work that my right hon. Friend has done in this field. It is true that she has had a receptive ally in M. Cheysson, who is the commissioner responsible. This is one case which I have certainly observed— I have played little part in it, so I can state the position as an observer—in which British influence, British history and British relationships with the developing countries have given added muscle to those in the Community who have not had that kind of experience and relationship, and have enabled a much better scheme to be evolved for the developing countries than would have been possible otherwise. We can be pleased that Britain has been able to play this r61e with M. Cheysson. I know that he would certainly associate himself with the work that my right hon. Friend has done.

We intend to press for further improvements. Next year, additionally, apart from the EEC trade agreement with India which came into force on 1st April last, negotiations are well under way with Pakistan, Bangladesh and Sri Lanka for the conclusion of commercial and co-operation agreements. It may be because the Commonwealth countries, as I said to a meeting of the Labour Party in July and as I have said in the House, see that a wider market is being opened up to them that their initial doubts about the prospects of our membership in relation to their prosperity are beginning to dwindle.

On the aid side, there have been a number of helpful developments which bring the Community nearer our objective, which is that of having a worldwide development policy. A first slice of the Community's contribution towards the United Nations emergency measures in favour of developing countries most seriously affected by oil price increases is being disbursed at the moment, and India and Bangladesh—again, I emphasise, through Britain's influence—will be the major beneficiaries. They are already receiving some benefits through the Community's food aid programme. The Community has already agreed in principle to a continuing programme of financial aid for non-associated developing countries which are in need.

A helpful study has been produced— again, through M. Cheysson, but with considerable impetus because of our background and because we know the plight of these countries—and it is now for us to see that these good intentions are put into practice as soon as possible.

Let me come home again now, to regional and industrial policy. We are committed to retaining for Parliament the powers over the British economy which we need to pursue effective regional, industrial and fiscal policies. At the same time, we are parties to treaties which give the Community powers to co-ordinate regional and industrial policies as implemented by member States. Here again, a balance must be struck. Agreed rules can be helpful to the United Kingdom in so far as they would give our aid rules and our industries protection from unfair competition by other member States.

But there is obviously room for conflict. We are continuing discussions on specific problems with the Commission, so that we can be reassured, if it is possible—I am still not certain: I want to see how it goes—that our plans for British industry will not be hampered unduly by restrictive interpretations of the treaty.

In the case of the specific step of co-ordinating regional aids so that each country is moving broadly along the same lines, we are taking part in discussions in the working party which has been established to consider possible new ways of co-ordinating the systems of member countries. It is a major renegotiation objective for us to ensure that the new rules do not prevent us from doing the things which need to be done—for example, in relation to movements of boundaries. I would not want to see us lose that power. We intend as far as we can to ensure that this is retained. I think that we can do it, but if it cannot be achieved, I will report to the House where we have failed.

On the regional development fund, there has been a great deal of discussion over a long period, but at the recent Heads of Government meeting it was agreed to set up the fund. Italy and Ireland were particularly concerned about it. It is slightly smaller than the Commission's last proposal. We get 28 per cent. of the fund, but we shall be contributing a substantial sum towards it. It is no use saying that that is our net return ; it is a gross return. If we continued to get 28 per cent. and the budgetary contribution remained unaltered, we could find ourselves paying 22 per cent. to get 28 per cent., which is not much of a net gain when we finally adjust it to the new system.

That is another reason for the importance of the budget renegotiations. If this fund becomes a sizeable one in due course and if we have our contribution to the budget related to our gross domestic product, or in some similar relationship, we ought to get a much bigger slice of the regional fund even while we maintain our receipts at 28 per cent.—that is, if our contribution to the budget goes down.

Mr. Russell Johnston (Inverness)

Does the right hon. Gentleman not agree that 28 per cent. is not a fixed percentage but really a ceiling which we might reach according to the objective criteria which the Commission, with our agreement, has established?

Mr. Callaghan

No. If the hon. Gentleman looks at the communiqué, page 7, he will see that the resources of the fund will be divided along the lines envisaged by the Commission. Percentages are set out, and it says "United Kingdom—28 per cent." Therefore, till that is altered by agreement among the Heads of Government or by the Council of Foreign Ministers, that 28 per cent. stands.

The fund totals 13 million units of account—that is roughly £540 million—to be allocated over three years over the whole Community. We must not get this matter out of proportion. I think that the advocates of the EEC always overstated the benefits. That seems a foolish thing to do. Let us get the matter right. What the Community is proposing to disburse through this fund is £540 million over three years. This compares with our own national regional expenditure of £500 million a year.

That, therefore, is the size of the fund. It is welcome to us. In our circumstances we do not want to turn away any millions of pounds. But it is not a tremendously large sum. Perhaps it will be built up in time, but the Community contribution at present will be modest in comparison with what we are now doing. Let me reassure the House that by subscribing to it we shall not weaken our ability to implement our own regional policy which is suitable to Britain's needs.

Mr. Jay

Will my right hon. Friend just clear the figures? He spoke about £500 million over three years. That is for the whole Community, is it not? Therefore, what the United Kingdom would get—I am not sure whether net or gross—would be about £25 million a year.

Mr. Callaghan

No, rather more than that, I think. We shall get roughly 28 per cent. of £540 million.

Mr. Jay

Over three years.

Mr. Callaghan

That is right. That is gross, and I think that it would be about £70 million or £80 million net over the three years.

Mr. Jay

About £25 million.

Mr. Callaghan

Well, £20 million or £30 million. I do not think that it is possible to give the figure exactly. I hope that my right hon. Friend does not think that I was trying to mislead him. I was trying to give the exact figure as a useful comparison.

However, one of the useful things about this is that it means that whereas in the past it was agricultural affairs on which thinking about Community regional development was centred, this has now to some extent given way to the fact that there are industrial problems which the United Kingdom faces and which should be met, too.

I come to institutions. The regular meetings of Heads of Government will be called, to prevent the notion of "summit", a European Council in the fullness of time. They do provide a useful forum in which to discuss both Community problems and broad international questions. They should give an impetus to practical decision making, and especially to co-operation on economic and common policy questions. It is proposed that they should meet three times a year. As there are two presidencies a year, this would mean one meeting in each presidency and probably a third meeting in Brussels. The work of the Foreign Ministers will thus, I hope, be more effectively combined in the future.

I come now to the matter of the European Assembly, to which the right hon. and learned Member for Hexham referred. The communiqué reserves our position on this, because in the light of what we had said and the decisions taken by the Labour Party and accepted by the Government, the Prime Minister and I made it clear that we could not take on any commitment to make progress towards the direct election of members of the Assembly till renegotiation has been completed and the results submitted to the British people. If we decide that we should stay in on the terms we are able to negotiate we shall consider whether we should make a move towards direct elections at that time.

I know that there has been considerable disquiet about the so-called Luxembourg compromise and majority voting. I should like to tell the House how I see it. I believe that I shall be giving an interpretation which is accepted by all the other members. First, the Luxembourg compromise itself was not so much an agreement as an agreement to disagree.

Some member States, as was made clear at the recent Heads of Government meeting, have never dropped their support for the introduction of majority voting in the Council. They adhered to it then and they adhere to it now. That in some ways represents the reason for the somewhat clumsy wording of that particular paragraph. Others, notably France, took a different view in 1966. The summit communiqué makes it clear that member States are free to maintain their respective positions, whatever they may be or whatever they were. That is what it is intended to say. In other words, those who argue that there never was a compromise are free to go on arguing that there never was a compromise. Those who argue that they reserve the right are free to go on doing so. In that sense there has been no change.

Since 1966 the practice of the Council has been to seek unanimity on virtually all subjects. The summit communiqué means that in future member States will not insist on unanimity on every subject, however unimportant it may be to them. Let us be absolutely clear what that means. Every nation agrees that the ability of any member State, including, obviously, the United Kingdom, to block any matter which it considers contrary to its important interests is not weakened, and, indeed, is not even challenged. Nobody has questioned that unanimity should remain the rule for all important questions.

Some interesting exchanges occurred just now as to what constitutes a matter of vital national interest. If I thought the Government were likely to be defeated on the question of—

Mr. Marten

Aerosols.

Mr. Gallaghan

I choose my own example—

Mrs. Winifred Ewing (Moray and Nairn)

Scottish oil.

Mr. Callaghan

The example I chose is the standardisation of rear-view mirrors on agricultural tractors. If I thought the Government would be defeated on that issue, I would regard that as a matter of vital national importance, because it is a matter of vital national importance that the Government should not be defeated. That stands to reason. If the House feels so passionately about the standardisation of rear-view mirrors on agricultural tractors that it intends to defeat the Government, that is a subject to which I shall not give my agreement at the Council of Ministers.

Mr. Powell

Would that be the case if the debate on rear-view mirrors for agricultural tractors had been conducted on the motion for the Adjournment of the House, to avoid any risk of the Government being defeated?

Mr. Callaghan

The right hon. Gentleman the Member for Down, South (Mr. Powell) must assume that some hon. Members know a little about what the House is likely to do with regard to special subjects. We do not have to enter the Lobbies on every occasion to discover that. There are ways and means of that being made known through what are called the usual channels, even if there is no debate. Perhaps some right hon. Gentlemen do not have usual channels. Joy shall be in Heaven over one sinner that repenteth —when the right hon. Member for Down, South returns to lead the Conservative Party in due course.

I want to make it clear that nobody questions the right of any single member State, including the United Kingdom, to say what is important, for example, to the United Kingdom.

It is not necessary for agreement on all questions to be conditional on unanimous consent. It is the word "all" which matters here. This amounts to a resolve by all the member States to be flexible on matters of less importance. It is a simple matter of common sense. That is what happens now. When I participate at meetings of the Council of Foreign Ministers and a subject is being considered which is not of vital national importance to the United Kingdom and on which we do not have any strict view, I do not feel that it is my job to hold up progress within the Community on that issue.

It is when we formalise what has taken place, and especially during the nine months I have been there, that we get into the problems that exist because of the theology of the Luxembourg compromise. This in no way erodes our ability to block any developments or proposals to which we object.

On the question of European union, over the last nine months I have repeatedly asked my Community colleagues what is meant by a commitment to European union, according to the Paris summit communiqué of October 1972. There has never been an agreed reply. Against that background we agreed to the statement in the recent summit communiqué that the time had come for the nine member States to agree, if they could, on an overall concept of European union. This confirms my view that the words represent a slogan more than a precise aim.

The decision to appoint Mr. Tindemans, the Prime Minister of Belgium, to sound out opinion at all levels in the Community, and to produce a report for the Heads of Government to consider, is sensible and excellent. I suggested to Mr. Tindemans, when I spoke to him about this matter, that he should visit this country and consult parliamentarians of all shades of opinion, the trade unions, the CBI and the institutions, so that he could find out how opinion moves on this question. When he has produced his report, he will consider what the European Assembly and other institutions have to say. Then he can come back to the Heads of Government and we shall all be free to say whether any of his proposals meet our needs, whether they go too far, or whether we want to accept them.

If the United Kingdom decides to remain a member—if the people of this country should decide so to do—and he produces his report in 12 months, that will be the way this issue will go. These important decisions will not be rushed. We have taken on no commitment, but I regard the Community's approach to this question as showing a welcome new realism which was absent from some of the approaches made when it announced large aspirations with no foundations to support them.

Mr. Marten

After 17 years of life of the Community where European union has been the target or aim, the right hon. Gentleman can hardly exactly say that matters have been rushed, but, after 17 years, I urge that the Community should now come to a conclusion about this rather more quickly. When the Minister of State made his statement yesterday, I was cut short by Mr. Speaker when I tried to ask about it. Now I ask the right hon. Gentleman. As we are likely to have this issue put to the test by the ballot box by 10th October, and as the expression "European union" is such a vital one—in the minds of most people it means federalism or supranationalism —could not we get a decision from these now matured Europeans after 17 years before the referendum or the ballot box?

Mr. Callaghan

I dare say we could get a decision, but I do not think that it would be worth very much if we did. It would be one more of these large aspirations which mean very little. If there is to be European union—and it may be that it will come about in 50 years—it will be as a result of a gradual process of growing together. Certainly it will not come by a document rushed out in the next three months so that the British people may take a vote. It will be for Parliament and the people to decide continually how far they want this to go and whether it is in their interests—

Mr. Marten

We have heard that expression before. Where did that get us?

Mr. Callaghan

Yes, but the hon. Gentleman has not heard it from a Labour Minister. If we have a perpetual series of Labour Governments he can sleep safely in his bed. I cannot vouch for the right hon. and learned Member for Hex-ham.

What I can say is that there will be—[Interruption.] I hope that hon. Members will not tempt me to speculate. I should have thought that, with growing regionalism in the world, over 20 or 30 years there would be a growing convergence of economies throughout the world. I am sure that no one in this country will stand out against that if he believes that it is in the best interests of the British people. There is a growing co-ordination now. Now that there seems to be a better prospect in the Community itself I see coming a convergence between the economy of the United States and those of the members of the Community. It is vital that there should be such a convergence. As a confirmed Atlanticist I have no doubt that it will come, although it will not come while I am in this House. If the hon. Member for Banbury (Mr. Marten) were to get a text today it would not be of much help to him or to future Members who will sit for Banbury and who will have to take this decision.

Mr. Spearing

Although most of us agree that a growing convergence is an almost inevitable consequence of the advance in production, marketing and transport techniques, there is a distinction between, on the one hand, a convergence of individual sovereign States over a wide area, perhaps wider than that of the Nine, and which maintain their fundamental sovereignty but co-operate freely and with good heart in specific areas and, on the other hand, the type of convergence where a new executive power is erected which is superior to the individual Governments— rather than a full and free association of countries whose sovereignty is still maintained.

Mr. Callaghan

That is, I imagine, precisely the kind of question that Mr. Tinde-mans will want to examine, and I hope all opinions will be consulted about this particular matter. Then a report will be produced upon it. Of course, there is a great difference between the two concepts which my hon. Friend adduces. What we are seeing at the moment is the Community moving away from its original belief that it was going to have one sovereign central body which was to administer the affairs of Europe.

If there is a classic example it is in Economic and Monetary Union where, after the great statements of the previous summit meeting, there is really a welcome new realism in the Community's attitude. Nobody now sees EMU as a goal in whose name one should accept commitments to fix parities or to adjust one's economy to produce more unemployment. The final objective remains on a distant horizon. But what is important is that the detailed plans in which they endeavoured to contort the European economy in 1971/72 have been set aside. This is realism. This is the practical consequence.

I was interested to hear a distinguished representative at the Heads of Government meeting who shall be nameless describe what happened last week as an illustration of EMU. I took down his words: Created by idealists who simply did not understand the subject. That is the reality of the position, and it is a matter for Governments and Parliaments to decide how far, when and in whose interests it will be to move towards an Economic and Monetary Union. That is the important issue.

On capital movements, the Labour Party manifesto calls for an agreement on capital movements protecting our balance of payments and for full employment policies. We invoked the balance of payments safeguard provisions in the Treaty of Rome last March to enable us to apply this. We have informed the Commission and other member States of our intention to retain the existing rules beyond 1st January 1975 under the same provision.

I will say a word on the harmonisation of VAT because there is not much in the document before the House. The position here is that the Community discussion is concentrated on the Six directive on VAT dealing with the convergence of VAT in member countries and not towards any move on harmonisation of rates. In the context of these discussions we have made clear that we shall not levy VAT on essentials such as foodstuffs, and the directive, in draft so far, would not require us to change our position. We believe that it will be possible to establish an equitable harmonised VAT basis which would not exclude the zero rating of necessities. But, in my view, full harmonisation will be postponed until the Greek Kalends.

Going back to sovereignty, like other hon. Members of this House—and my attitude is pretty well known—I am concerned about the implications of membership of the Community for our national sovereignty, a proper concern for Ministers and hon. Members. Of course, all international agreement involves to some degree loss of sovereignty for the signatory States, and especially for citizens of the EEC, because it makes provision for a body of law to have direct internal effect in member States, although the final decisions are taken outside. There is no escape from that point, and the Government are well aware of the importance of this fundamental fact, which is why, as I hasten to point out, we published a White Paper some years ago, in the lifetime of the last Labour Government, setting out in detail the legal and constitutional implications of membership. That is why our whole approach to renegotiation and the ultimate decision of membership of the Community, which will be put to the people, has been based on Parliament's will to ensure that no involuntary loss of sovereignty can occur.

We have tackled this question from both ends—here at Westminster and in Brussels. At Westminster, the first task is to make sure that Parliament is fully informed, and although the Select Committee under the chairmanship of the right hon. Member for Knutsford (Mr. Davies), has made some complaints about this, I hope that it will also agree that the Government do their best to try to meet those complaints. It is inevitable, in a new situation, as we develop procedures, that they will be less than perfect to start with. But constant improvements are being made. Parliament is provided with a copy of all the draft legislation put forward for consideration by the Council of Ministers at the stage at which the Commission makes the original proposal.

Since Community legislation, like any other legislation, is often difficult to understand, we have undertaken to provide explanatory memoranda. I know that it is complained that some of them do not really lead hon. Members to the core of the problem. This is because of a desire to be as objective and as neutral as possible. During the period of renegotiation, I have tried to ensure that this has been so, and I am sorry if it has become a source of complaint. We could go a long way further, however, and we will endeavour to meet the views of the Select Committee and be more positive in some of the things we put forward if that is what it wishes us to do.

The Scrutiny Committees of both Houses of Parliament have a vital rôle to play in sifting these proposals and making sure that Parliament is alerted to and considers proposals of importance. We shall continue to do our utmost to help both Committees fulfil this task.

We have also given an assurance that if the Scrutiny Committee recommends a proposal for debate, we will not, except in the most exceptional circumstances—I emphasise that there might be exceptional circumstances—let that proposal be agreed in the Community until debate has taken place. When a document is of sufficient importance for Parliament to wish to debate it, the Government should be able to have Parliament's views before the final decision is taken.

I emphasise that this would be done except in the most exceptional cases. I am doing no more than pointing out that there might be certain cases where the Government feel that it might be urgent in the interests of Britain to conclude some business in Brussels before Parliament has had an opportunity to debate it. I assure the House that this discretion will be used most sparingly, and I have no doubt that, should it ever be used, the Government will be able to give a good account of their reasons.

I am, of course, fully aware of the difficulties of arranging debates in the House because of the limits of the parliamentary timetable. I hope that the Select Committee on Procedure, which is to consider whether any alterations should be made in the procedures of the House, will be able to come forward with something that will help us.

Having looked at some of the things recommended for debate and some of the things which might be picked out, my feeling is that the House naturally, at the beginning of a process like this, selects more things for debate than, if we are to remain members of the EEC, it will be selecting in five years' time. That is a hunch of mine. I think it is inevitable that at the beginning the Scrutiny Committee will want to examine more things, but when it realises the stages through which these proposals go there will be a falling off in number.

I said that in Brussels we are tackling the problem of sovereignty. We have made it clear there that Her Majesty's Government must retain the ability to say "No" to any proposal we consider runs counter to our interests. Should the Scrutiny Committee have recommended a proposal for debate, or should the Houses have expressed views on a certain proposal, these are the factors that the Government would take into account in determining their policy and considering whether important interests are involved.

I do not accept the view put forward by the hon. and learned Member for Beaconsfield (Mr. Bell) that what was agreed in Paris calls into question the value of the Government's assurances to Parliament on draft legislation. As I said earlier about the summit meeting, nothing that was agreed in Paris has eroded that position in the slightest degree.

There is one other category of Community legislation about which I know the House is sensitive—the instruments issued on the responsibility of the Commission, as distinct from the responsibility of the Council of Ministers, where the Council and the Commission act separately. I want to make the position clear. This process occurs in specific sectors in which powers have been delegated to the Commission, either by the treaties themselves or by deliberate legislative act of the Council of Ministers. I want to express my view that in the vast majority of cases where instruments are put forward by the Commission this House would not consider at all such instruments if they were being made by the Government and if they ranked here as statutory instruments. Some of the measures are so trivial that in the United Kingdom they would be dealt with administratively. Most are transitory in effect and limited in importance. The Community needs to have an instrument of this nature but the Government will be vigilant to see that it is not abused.

I note what the right hon and learned Gentleman said about the possible referendum, and what should be done regarding this. But I have nothing to add tonight to what has already been said.

I conclude by referring to the discussions by Heads of Government. It was at the British request that the items of inflation and unemployment were added to the agenda. The French wished the subject of energy to be discussed and some of the best discussions that took place among the Heads of Government were on these three subjects. I came away from the Heads of Government meeting feeling that there was, if not a convergence of our economies, at least a growth of understanding of the reasons why there was not that convergence. I do not believe—here I am repeating a point —that there can possibly be economic or monetary union as long as there is growing divergence between our economies. It is only possible when they converge and come together. This will make it difficult for some new members to join in with the Community. There must be a certain level in the economies of the members if there is to be any sort of parity and equality between them. I would like to see the questions we discussed debated on a broader basis.

I am not a lover of a regional world, but it is here. Whether we like it or not —I do not care for it—it exists throughout the world in many areas, as hon. Members will recognise. We must accommodate ourselves to a regional world, whether in or out of the Community.

It is borne in on us that the United States is the motor of the economies of the Western world. If the United States does not reflate and reflate quickly, we shall be—whatever system we may have in the Community—in for the worst recession we have seen for many years. It is that message that we as a Community asked President Giscard d'Estaing to convey at Martinique to President Ford. It was an advantage that he was able to go there and speak on behalf of the whole Community. President Giscard was able to go there for the Nine countries and put this point to President Ford, and there were some reflections in the communiqué of what President Giscard said.

Whatever the nature of the regional world we shall live in, I hope we shall never lose sight of the fact that it is in a multilateral world which is growing smaller every day that our problems will have to be solved. Nevertheless, there are considerable advantages about meeting as Nine, and associating as Nine. There are also disadvantages to this country, but it is this balance which in the end the British people will have to decide, and at the end of the period of renegotiation it will be for us to say what our view is on the end result.

Mr. Deputy Speaker (Sir Myer Galpern)

I offer no criticism of the length of the opening speeches, but I appeal to hon. Members, in view of the fact that the debate must finish at midnight and a substantial number of Members are anxious to take part, to be as brief as possible.

8.59 p.m.

Mr. Jim Spicer (Dorset, West)

I shall heed your words, Mr. Deputy Speaker.

We had a long, detailed disquisition of the Government's present position by the Foreign and Commonwealth Secretary, given with his usual reassuring manner. He outlined a wide range of activity being undertaken in Brussels in particular. I should like to bring us closer to home. I hope that over the next six months the Government will direct more attention to the problems they face in this country, with which they do not seem to be dealing as they might.

It has always been my contention that the right way to approach New Year resolutions is to learn from the year that has just passed. The Government need to make certain resolutions to carry them forward into the difficult year of 1975. Mr. Whitlam made it clear in Brussels yesterday that from his point of view, and the point of view of many other people in the Commonwealth and the Community, the time for shilly-shallying, as he put it, has passed and the time for action has arrived.

The first resolution I suggest to the Government, and to the right hon. Gentleman in particular, is that the Government should now admit that the whole idea of a referendum is nonsense. It was dreamt up, with many people in the Labour Party disagreeing with it, to cover fundamental disagreement in the party. It follows from the acceptance of a referendum that we are opening up a basket from which we can see all sorts of ideas developing, many of which would be abhorrent to the House though others might be acceptable.

I read in a newspaper recently the following item about a referendum in Switzerland: In a nationwide referendum the Swiss people today rejected Government proposals for increased taxes and in addition voted for restrictions on federal spending. The majorities were 55.7 per cent. and 69.9 per cent. respectively. On average, about 40 per cent. of the electorate voted. They also said No to plans for a state health service. It may be a long time before we arrive at that point, but I am sure that many hon. Members are fearful of the consequences if we should move into a situation in which referenda became the established order of the day.

My second suggestion for a New Year resolution by the Government is that they should try to act much more as a team in what they are doing over our membership of the Community. It is sad and distressing for many hon. Members to find that team work is not something that many people in the Government understand. I should like to quote from the speech to the Labour Committee for Safeguards on the Common Market by the Secretary of State for Trade on 26th November, when he said: First, there are, as there always have been, serious and genuine differences of interest between Britain and its European neighbours. Second, because this is so, there has to be a strong will for success, not just on this side but on the other side of the Channel too. The Foreign and Commonwealth Secretary would not dispute that that will is being proved time and time again on the other side of the Channel. The need is that the Government as a team should reciprocate and make clear that as a team they believe that the will exists on this side of the Channel.

Going further into that speech, one can find other instances where the Secretary of State for Trade was deliberately undermining the work that the Foreign and Commonwealth Secretary and his team have been doing in a continuing negotion of the terms of our membership of the Community. The Secretary of State turned to what he called "the argument of defeatism", saying that with a £2,000 million trade deficit, a serious sugar shortage, a beef crisis and other difficulties it was impossible for people to point to the benefits of membership any longer. Nobody in his right mind can possibly equate the sugar shortage with the Community. The exact opposite is the case. The sugar shortage stemmed from the failure in February of the cane sugar producers to produce their quotas to this country. We have received nothing but help from other members of the Community in that respect.

Mrs. Winifred Ewing

Would it not have been a help if the sugar beet industry in Scotland had not been closed by the Conservative Government?

Mr. Spicer

The hon. Lady is correct on that point. We must reserve our position in this respect in the future. If we cannot get the right amount of sugar into the Community at the right price, we must seriously consider increasing sugar beet production in Britain and the Community generally.

That sort of statement by the Secretary of State for Trade does no good to the work that the Foreign Secretary is trying to carry out. As was said in the House on Monday, our agricultural imports from the European Community have gone up by 57 per cent., and thank God they have. Imports of maize have risen by 90 per cent., and speaking on behalf of a farming constituency where there is a desperate shortage of animal feeding stuffs we thank God for that increase. Without it feeding stuffs this winter would have been at double and treble the price with none available from other parts of the world. The Community deserves the gratitude of the farming community for all it has done to help us in a very difficult situation.

It is certain that we have reached the end of our traditional relationship with the Commonwealth. One has only to listen to and read what Mr. Whitlam said in Brussels yesterday. He made it clear that Australia believes that we should stay in the EEC and that it would be of no advantage to Britain, Europe or the world if we withdrew from the Common Market. That must surely underline statements which are made continually by some of my hon. Friends and by some Labour Members that the Commonwealth believes we should stay in. Our relationship with the Commonwealth has changed. The Commonwealth has grown up, and while it wants a close relationship it is not prepared to continue under the terms as they once existed.

Mr. Marten

Will my hon. Friend name the last Conservative Member who made such a statement?

Mr. Spicer

My hon. Friend has the advantage of me there, but that is being said all the time. References to the Commonwealth repeatedly crop up in the House. My hon. Friend the Member for Faversham (Mr. Moate) made such a statement in a speech early in the last Parliament. There is frequently this reference to the Commonwealth and our traditional friends and markets.

Mr. Whitlam has made his position clear. For the first time he went to Brussels instead of coming direct to London. That would have been unthinkable a few years ago, but he went there for the symbolic purpose of showing that the whole balance and weight had moved towards Brussels. He believed that this was inevitable. The sooner we accept the realities of that sort of situation, the better it will be for everyone.

I accept that the Foreign Secretary has made the case that the supply of cheap food might not have gone for ever, but certainly we shall never see food coming from other world markets at the prices of a few years ago. That should be made clear in the way that the Minister of State and the Secretary of State for Prices and Consumer Protection have sought to do. They have both made it clear that there is a margin in favour of the Community, and I believe we should be honest and accept that that is so.

There can be no doubt that 1975 will be a very difficult and dangerous year for Western Europe. There can be no safe harbour for any country, least of all the United Kingdom, and we face particular dangers. The first of these is inflation. The second is that we are on a sliding scale with our gross national product. Our GNP in relation to the rest of the Community has fallen from 26 per cent. in 1962 to 16 per cent. The estimate is that by 1980, if the trend continues, we shall be down to 14 per cent. In a situation like that, with the possibility of another flare-up in the Middle East and an interruption of our oil supplies, it is vital that we have friends, that we count them as friends and that we stand up and be counted alongside them in the Community.

Nothing could have more clearly borne out the reality of the situation than the speech which Chancellor Schmidt addressed to the Labour Party conference only two weeks ago. It was a moving speech. Every person in this country who watched him on television realised the strength and depth of feeling coming from our erstwhile enemies when they speak of the need to have Britain in the Community. They know that without this country there is a serious danger of Europe falling apart and reducing itself to the conditions which we had to accept in the 1930s. That was borne out in the speeches which many of my hon. Friends made in the 1960s and early 1970s.

Chancellor Schmidt said: in pursuing the interests of my own people let me say very frankly: if we fail to establish close co-operation in order to cope with the risks of the present economic problems in the Western democratic societies, we do, I am afraid, put political stability at risk also, and might endanger our privilege to enjoy living in a democratic system.". What worries me is that we are losing sight of that one aim—that we must keep close to each other, if not for the sake of present generations in this country, for the sake of generations to come.

9.12 p.m.

Mr. Douglas Jay (Battersea, North)

Although we are all glad to see my right hon. Friend the Foreign Secretary in a state of what Nye Bevan used to call rude health, those who heard his speech tonight and the Prime Minister's statement on Monday must have been struck by the remarkable difference between the summit communiqué issued earlier this week and the interpretations which both my right hon. Friends have put on it.

The communiqué, if one accepts the ordinary meaning of words, records a series of steps towards turning the Common Market into something much more like a federal State. More powers are to be "conferred" on the Commission— that is paragraph 8. There is to be stage-by-stage harmonisation of legislation affecting aliens ". That is paragraph 11. Election of the European Assembly by universal suffrage should be achieved as soon as possible"— and could take place in or after 1978. Then there is the remarkable paragraph about "renouncing" the Luxembourg Agreement.

Now we have the interpretations. The communiqué itself records a firm British reservation, which I welcome, on direct elections, although that is to operate apparently only until the referendum. That should be noted.

Most readers will have taken paragraph 6 on the veto in the Luxembourg Agreement about which my right hon. Friend spoke today to mean—and I noted that the Leader of the Opposition took it to mean this as well as I did—that all EEC members had renounced even the extra-legal right under that agreement to veto any decision affecting essential national policy. The exact words, as I am sure my right hon. Friend will agree, are that member countries consider it necessary to renounce the practice which consists of making agreements on all questions conditional on the unanimous consent of the Member States, whatever their positions may be regarding the Luxembourg Agreement ". I welcome the assurances given by the Prime Minister and by my right hon. Friend the Foreign Secretary today that this does not weaken the Luxembourg compromise which, we were told throughout the 1972 debates, particularly by the right hon. and learned Member for Hexham (Mr. Rippon) and by the then Solicitor-General, was the great safeguard for British independence.

We are now told that all that the communiqué means is that on some minor issues unanimity will not be required. I hope, therefore, that I understand my right hon. Friend correctly today to say clearly that this country retains the right to veto any decision which we consider to be contrary to our major national interest, and that, if we do, that decision will not be valid and will not have the force of law as EEC legislation.

Mr. James Callaghan

I was very careful in what I said, and I do not want to add to it. I accept every word of what my right hon. Friend has just said and his description of what it means.

Mr. Jay

I am glad to hear that, because this is not exactly a minor issue. To give away the last resort veto would be to sacrifice the right of the British people to decide their own future.

Mr. Rippon

Would the right hon. Gentleman say exactly the same about the International Energy Agency?

Mr. Jay

The International Energy Agency is a temporary arrangement from which we can withdraw at any time we wish, and it does not involve internal United Kingdom legislation. The right hon. and learned Gentleman must be able to see the difference.

To give away the last resort power to veto legislative proposals of this kind is something that a great many countries in this century have fought to avoid. There may be a few who would be willing to sacrifice this country's independence as a democratic State and to enter a federal State, but, those who want to do that should advocate it openly and not by stealth, deception and concealment of what is going on. As Hugh Gaitskell said on this issue in 1962, federalism means the end of Britain as an independent European State It means the end of a thousand years of history. You may say ' Let it end', but, my goodness, it is a decision that needs a little care and thought. I echo those sentiments.

The Government have now accepted another concession—or perhaps it should be called a surrender—which does not seem to be wholly consistent with the Labour Party's last two election manifestos. There has so far been no fundamental renegotiation of the common agricultural policy. And the Government are proposing on 1st January to raise still further a whole series of import taxes on food, although the Labour Party voted against corresponding increases a year ago, and the election manifesto, which my right hon. Friend did not quote today, said: While the negotiations proceed, we shall stop further processes of integration, particularly as they affect food taxes. Yet we are being asked to raise these taxes on 1st January without, incidentally, the Government finding time for the House to discuss them first. It is true that at the same time on some intra-EEC trade taxes go down, but in view of that pledge and the paramount need of the moment to keep food prices down to reinforce the social contract it is in my view indefensible to raise any taxes on food at present. Yet the order, which we have not even discussed, will make steep increases on duty on 1st January.

Mr. James Callaghan

No.

Mr. Jay

The import duty on beef is doubled and there are increases in the taxes on fish and other foods. I am omitting levies which are not strictly taxes and which, for technical reasons, are not included in the order.

Mr. James Callaghan

Does my right hon. Friend dispute the figures I gave yesterday, namely, that the food index will rise by 0.1 per cent. but that the overall effect of the tariff changes, including food, will be to reduce the retail price index, again by an infinitesimal amount?

Mr. Jay

What I said was that there would be steep increases in duties.

Mr. James Callaghan

They are not necessarily passed on to the consumer.

Mr. Jay

If my right hon. Friend does not think they will be passed on at all, he is exceedingly hopeful. I said that there will be steep increases in the duties, and those are not justified at present.

I return to the major issue which is being argued by pro-Market propagandists—though not by my right hon. Friend the Foreign Secretary today—that all these food taxes and restrictions do not raise the cost of food. I still ask "What then is the point of all these food taxes and intervention measures if they do not make food more expensive than it otherwise would be?" Why should we not remove them altogether?

Let us take the example of beef, about which my right hon. Friend the Foreign Secretary knows a great deal. Not merely are we doubling the rate of im- port duty on 1st January, but prices are so much lower in the world outside the EEC that the Community has imposed a total import ban on all imports of beef from anywhere in the world. That was originally supposed to be a temporary arrangement, but it has now been continued indefinitely and is legally enforceable in this country, although we have had no opportunity to discuss this mattter at any time at all. Countries as different as Australia, New Zealand, the Argentine, Brazil and Yugoslavia are all able to send beef to the Community countries more cheaply than they are allowed to by the import ban.

Mr. Evan Luard (Oxford)

Is not my right hon. Friend leaving out of account an important factor about the Community and its agricultural policy? It is in many ways employing a protective policy which sometimes keeps out imports from outside the Community but it is based on a managed market and its own prices, which at present in many cases are below world prices. The fact that one keeps out foreign imports does not necessarily raise prices.

Mr. Jay

I was saying that the price of beef in the outside world is lower than the price within the Community, and that is why the Community has imposed an import ban. It is no use hon. Members arguing that this is justified because at the lower prices our home farmers would be injured. They would have not been injured if we had not abandoned guaranteed prices and deficiency payments. If we had continued these well-tried policies and had not imposed the present import ban our farmers would be enjoying greater security; consumers would be paying less for their meat; and consumption would be higher.

The present crisis in British agriculture is directly caused by the abandonment by the Conservative Government of guaranteed prices and deficiency payments, just as the sugar crisis has largely been caused in this country by the abandonment of the Commonwealth Sugar Agreement. Both were abandoned as a direct result of our entry into the Community. If the Commonwealth Sugar Agreement had run on, we would have had to pay more but would have had greater assurance of supplies—for example from Australia—than we have at present.

What is true of beef is equally true of butter, cheese, mutton and lamb, on all of which we are now imposing heavy import levies or duties, and all of which could be bought more cheaply from outside the EEC if we were allowed to do so.

Mr. Hamish Watt (Banff)

Will the right hon. Gentleman also give the House some details of the fiasco that is now taking place over milk powder where the EEC deliberately keeps the price of milk powder at £350 a ton, instead of selling it to consumers at a reasonable price? Does he appreciate that thousands of tons of milk powder are being sold to Eastern European countries at £200 a ton and does he realise that the EEC by these regulations will not—

Mr. Deputy Speaker

Order. The hon. Gentleman cannot use his intervention for the purpose of making a speech.

Mr. Jay

What the hon. Member said is broadly true, but, for the sake of brevity, I am trying to stick to the main foodstuffs.

The fact is that even with the present exceptionally high world prices, which, on the evidence of history, will not continue indefinitely, we are now paying more than we need to pay for a number—not all, I agree—of our main food imports.

The real folly—I think that here my right hon. Friend agreed, according to what he said today—is that, whatever the cost of a given commodity at a given moment, it must be in our national interest to retain the power to import as cheaply as possible any commodity at any time in the unpredictable future. That is just plain common sense.

Dear food is not the only burden cast upon us economically by EEC membership. Another burden is our staggering trade deficit with the old EEC Six—the great home market that the then Prime Minister's White Paper told us was to rescue us from all these other burdens. The figures for 1974 are remarkable. The 1971 White Paper promised a positive and substantial trade balance with the great home market of the Six. In 1970 we had a fairly negligible trade deficit about £70 million with the Six. In the first 11 months of this year the visible trade deficit with the Six was £1,925 million compared with a total non-oil trade deficit with the whole world in the same period of about £1,559 million. That means that, apart from the Six, we had a visible non-oil trade surplus, so far in 1974, of nearly £400 million. Since our current non-oil balance of payments deficit this year has been only £230 million—a remarkable figure—it follows that, but for the deficit with the Six, we should have had a non-oil payments surplus this year of £1,700 million—[HON. MEMBERS: "Rubbish."]—these are the figures—which is more than half the cost of our trade deficit on oil imports.

It may be argued that the whole of our deficit with the EEC is not due to our joining, and that may be so, but it is a different argument. I repeat that we were told by the Tory Government's White Paper that a substantial trade surplus would be gained by joining the EEC. It is well that the House should understand the facts now.

Let us contrast our deficit with the EEC with those of the other EFTA countries which had the sense not to join the Common Market. Norway at this time is thriving. All these countries have now signed an industrial free trade area agreement with the EEC and it is now in force. That agreement provides for a further 20 per cent. tariff cut on 1st January next year and full free trade between all those countries and the EEC by 1977. That is a fundamental fact in the situation that has not yet been generally enough realised.

If we were to withdraw from the EEC next year—some people should give thought to the question of what would happen if we did—we would already de facto be enjoying industrial free trade with the present EEC and EFTA countries and be relieved of the crippling burden of the common agricultural policy and of all this undemocratic legislation from Brussels.

So far from being excluded, as we are sometimes told, from Western European trade, any country that wished to erect new barriers against British exports would have to take the initiative in proposing to do this discriminatingly against the United Kingdom alone of the 16 countries involved. The reality is that this would be such an absurd proposal that nobody, I expect not even the French, would be the least likely to propose it, let alone support it. Certainly no single member of the EFTA group would do so.

The truth is that this country, if we have sufficient courage and resolution, still has the power, like Norway, to join the industrial free trade area with the greater part of Western Europe, including the EEC, and free ourselves of the damaging burdens that are now thrust upon us. That is what we should do, and there is really no other way in which to rescue ourselves from our present self-inflicted difficulties.

9.31 p.m.

Mr. John Davies (Knutsford)

One must greatly admire the consistency of the right hon. Member for Battersea, North (Mr. Jay). He produces over the years precisely the same arguments with precisely the same background, with no regard to the changes that take place either in the statistics or in the underlying factors. He is a model of consistency and one can only admire it, disagree with him though one does.

The Secretary of State for Foreign and Commonwealth Affairs is not consistent to the same degree. It is interesting to me to contrast the roaring lion voice of the right hon. Gentleman in April this year with the cooing dove voice that we heard this evening. The contrast is astonishing, and I can only offer him my compliments. I believe that it represents a wonderful conversion which we greatly admire.

In addition it bears out what I genuinely believe to be the case, that people who are exposed to the actuality of the Community which is so much a matter of discussion find themselves more and more drawn into the interest and potential that it represents. In the right hon. Gentleman's change of tone I detect that to a considerable degree. He has great adaptability. We know that, he has shown it, and we compliment him upon it and hope it continues.

I hope in this evening's debate not to indulge in what seems to me to be a semantic argument. The question of renegotiation or negotiation seems to me a matter that is past being very interesting. I have never had any doubt that at some appropriate time it would be necessary to try to ensure that this country's contribution to the Community's budget was not irrational in relation to the state of this country in the context of the Community. If, as a result of the negotiations of the right hon. Gentleman and his colleagues, the mechanism to which he referred can give some greater degree of assurance about that possibility, who am I to complain? I can only compliment them upon it.

Equally, I think that if one looks at many of the other fields in which the on-going negotiation is showing itself to be relevant, one sees the same thing. I have never doubted that it was desirable that there should be much freer access to Community markets from Commonwealth and overseas countries. Indeed, in all the negotiations that took place, particularly with the developing countries, it was always the leitmotiv of British Ministers attending Council meetings to try to increase the openness of Community markets to external markets. I shall compliment the right hon. Gentleman if he manages to get some positive assurances on that matter.

The right hon. Gentleman did not mention tighter financial control. One of the obvious deficiencies of the common agricultural policy is the slackness of the financial control which has for so long accompanied it. If he can find means of tightening that up, we can only compliment him and wish him good luck.

Even on aid, I think that the right hon. Gentleman would admit, in fairness, that my party when in government and in the councils in Brussels always took the view that the Community's stance should be much more broadly based and that the generalised trade preferences should be more liberal. If the right hon. Gentleman can now carry that to fruition, we can only compliment him. So if, in this renegotiation, he can improve mechanisms, I can only be content. This process is fully in conformity with my idea of an on-going Community seeking to improve its procedure, its mechanism and its attitude to the outside world.

Mr. James Callaghan

I am grateful, although I am a little worried about all these compliments. If this is so, and I am doing this in conformity with the Labour Party manifesto, why did the right hon. Gentleman's colleagues, if not he himself, tell us we would never get beyond first base and would not be able to do these things?

Mr. Davies

I do not doubt that the right hon. Gentleman thought there was something novel in what that manifesto involved in terms of a continuing negotiation. There was not novelty but continuity, upon which I am very content. Let him go ahead : I am happy for him to do so.

The Community's performance over 1974—perhaps we will be allowed, on a motion for the Adjournment, to deal fairly widely and not stop at October 1974— shows that in a number of ways the doors are being opened and that perhaps some have already given way to great progress through them of manifest improvement. I am content to see that happen.

Many of us were disturbed when, at the end of last year, the Community faced an entirely new situation. Instead of simply trying to increase the prosperity of its member States, which were already prospering and looking forward to greater prosperity, it suddenly faced the hard fact that hardship and difficulty might lie ahead. The member States needed to find a new attitude to handle a change from continuing and assured prosperity to a situation of perhaps great adversity. It was a difficult and traumatic time in the Community's history, not aided by what seemed then to be the much harder line of the present Government.

But the Community has come through much of that situation. It has been able to move on. The communiqué from the summit meeting gives encouraging evidence of preparedness to move further forward and to do so effectively. There are real opportunities. We now see the way open to reopening and continuing discussions on worldwide trade agreements within the framework of GATT. This has come about because of a new United States Trade Bill which allows the safety catch to be taken off. We all know that the Community, speaking for nine countries at a time within the framework of these trade negotiations, is undoubtedly far better armed to deal with them effectively than we would be alone. So the Community has a new lease of life in this respect, and a powerful and valuable one.

The movement into regional funds is a small beginning. But if one looks at the history of the Community one sees that most of these things had small beginnings. Where the Community has gone forward, it has done so because there was support for them and because there was a feeling that there was something worth doing. What is little mentioned but is nevertheless remarkable is that within about 28 years of the end of the last war one should have old enemies actually prepared to fund assistance to one another to overcome social and industrial deficiencies. That is an attainment of no mean order and one which we should certainly not forget.

We have also seen something of an improvement and an advance on energy. A new impetus has been given by the Heads of Government. I welcome that. There is a danger that we have come to be obsessed with oil alone as the issue in relation to energy. The truth is that it is unlikely that the enormous changes to which we look forward in the supply of nuclear power would be attained by any European country acting alone. We have already seen very valid developments, for instance, in uranium enrichment, and we must see more in nuclear development itself.

It may be that the energy strategy outlined by the Community for 40 per cent, or more of its total energy demand being furnished in 1985 from nuclear sources is over-ambitious. But it is going the right way. If it is to be attained, it will not be attained by nine independent countries following independent lines of research and development. It will be attained by a common operation. That, unfortunately, will not be achieved if we in particular were to stand outside it, because we have a massive part to play.

Nor do I believe that the exceedingly important part that coal has to play in the future of energy resources on this continent is likely to be adequately assured without the common support of a force as massive as the European Community. I see already the movements towards such considerations implicit in the communiqué from the Heads of Government.

In the interesting change in relation to the provision for the social fund which has taken place we see something of importance in itself but something which is also very indicative of another element. For the first time we have seen the European Parliament actually enforcing— albeit its members are not directly elected ; nevertheless they are representative members—an added dimension to the social provisions of the Community. It is an important issue in itself that there should be at this point an evidence of the new power which the European Parliament exercises actually to move the whole thing forward—perhaps even despite the Council of Ministers, as has been the case.

On the matter of Community loans, which we were most recently debating here, it is a very important step for the Community to have decided by common effort to seek to secure the funds which may be so essential to us in Britain for the support of our currency and for mutual support among the member States in time of adversity.

Looking at the whole strand of 1974, with its extraordinary uncertainties and hazards, one sees that the year started very badly but that the Community has once again summoned its strength and has moved forward and is now looking in much better posture. But we must support it. If we were to fail it at this stage, I fear that once again the vacillations and uncertainties would dominate the scene, to the great damage not only of ourselves but of Europe as a whole.

I want to make a further reference to the intention expressed at the Heads of Government meeting in Paris to ensure that there would be something called the European Council which had a kind of overriding rôle in the Community. That seems to be of great importance.

A great deficiency of the Community mechanism and systems is that all the meetings of the Council of Ministers are given over almost entirely to national bargaining. There is little other than nationalistic impulse in the bargaining operations within those Council meetings. To my mind, that is an immense shortcoming. There is, and has been hitherto, no regular means of ensuring that people in high positions of authority in the Community get together from time to time to ensure that the Community objects are identified, that the Community purpose is given full discussion and that there is a Community strategy, of which national strategy forms a part but which in the end must be contributed and not contested.

I regard the developments which we have seen, albeit with some anxiety, during the course of the year as now being encouraging, and I compliment the Government on the part they play in ensuring that encouragement.

9.46 p.m.

Mrs. Winifred Ewing (Moray and Nairn)

With regard to the terms which are used, whether we are European or anti-European, the members of my party think that Scotland has always been part of Europe. If it is not too rude to drag up old history, Scotland looked to Europe for allies against a fairly aggressive southern enemy centuries go. Through that connection, we developed a European system of law. When I visited Luxembourg recently I was glad to find Lord Mackenzie Stuart there to speak up for Scotland's juristic views. There are a number of qualified Scottish persons in Luxembourg as a kind of recognition that, whoever is in any doubt about it, Scotland has always been part of Europe.

The Scottish National Party is opposed to the EEC as presently structured on a number of grounds. The first and most obvious of these will not come as any surprise to hon. Members. We feel that we occupy a constitutionally absurd position already, even before we came to this House. Scotland is a nation. No one seriously refutes that. Yesterday I heard a noble Lord in the other place refute that fact. No hon. Member of this House seems to refute it. While we are a nation, with many of the trappings and institutions of nationhood, we do not have the normal trappings which cover the central institution of decision making where it counts, particularly as regards finance and industry. That is the position taken by my party, which is a democratic one, as regards Scotland, although we regret the fact that we were the first to enter a common market. We were the bold, international experimenters in 1707 when we entered a common market which had much greater power.

The right hon. Member for Down, South (Mr. Powell) said in previous debate that England should beware the case of Scotland, which entered a common market in 1707. "Look what happened to her ", he said. We have a point of view. Many promises were made that entering the Common Market would bring prosperity. We were told that the removal of decision making to a faraway place—in those days it was a far-off place because of the lack of communications—would not affect us too vitally.

Although we were the first in the Industrial Revolution, for many reasons which I will not go into now, to reap the normal benefits of good housing and living wages, during the past 50 years Scotland has lost 1 million talented people who mostly did not want to leave. It is a country which is left with some of the worst housing in Europe, and some of the longest job queues. One of the reasons why my colleagues and I are in Parliament is that there is a generation abroad in Scotland today saying "Enough is enough, and we want to solve the problem in our generation".

I make those points because, when we consider the EEC as it stands, the people of Scotland are wondering whether they will experience third-hand the red tape which we experience at the moment second-hand. Will it be better for us? Will the centralisation from which we now suffer be carried one degree further?

Recently in Luxembourg the argument was put to me in all seriousness, "Could anything be worse than your plight as helpless pawn in the United Kingdom setup?" That argument does not appeal to me. Although we are not completely satisfied, at least in this House we can make contributions, put our case, get a hearing and have some accountability.

Mr. J. Enoch Powell (Down South)

Power sharing.

Mrs. Ewing

We can question Ministers. The Ministers may not give us the answers for which we ask, but we can go through the motions, and often we get answers. We have a degree of accountability. But, as presently constituted, given the good will behind much of what is going on in the European attempt to come together, we fear that in terms of our lack of influence and accountability the situation will become very serious.

As I say, recently I visited the European Parliament. On a previous occasion I visited the Commission. I was impressed with many features of the European Parliament. The seating in the European Parliament is arranged not according to member States but according to parties. Its members strive to bring pressure to bear on the Commission and the Council of Ministers, just as we strive in this House to bring to bear on the Treasury Bench. The European Parliament appears to be doing a very good job. It is attempting to do it by reaching concord together. As a child of the war, I was impressed to see the representatives of all those countries sitting together. If the motivation of the set-up is to ensure that Germany and France never go to war against each other again, perhaps it is worth while.

In this House it is not always easy to catch Mr. Speaker's eye. Sometimes when I come back to this House from the European Parliament I recall with pleasure an assembly where speeches are limited to five minutes and where everyone can catch the eye of the Chair and have his say. I hasten to assure hon. Members that I shall not stick to a five-minute limit tonight. I am not in the European Parliament at the moment.

The European Parliament is trying to seek concord, whereas this House tries to do its business by starting off in discord, however small the majority of the party in power. The European Parliament is trying to democratise itself. It wants direct elections. It has already had some success with regard to the Community budget. But I sometimes wonder whether it will achieve anything quickly enough for my country.

That is my position. The problems of Scotland are severe, and they need quick solutions if we are not to lose another half million people, especially from our northern lands. When we lose people from such areas, whole communities die, and they can never be brought back to what they were. That is the concern of my party, and, with the best will towards the European Parliament, I wonder whether it will ever get into a situation where it can hold its institutions sufficiently accountable and produce decisions to solve our problems.

We have suffered from misfit policies. I am sure that misfit policies do not come out of this House because of any animosity towards Scotland. However, so long as we are in the Common Market with the United Kingdom, the United Kingdom has to legislate for the majority. In the same way, the Community will have to legislate for the majority. The result will be that we who are already a minority in a majority will become a peripheral minority in a bigger majority. My logical mind asks how that will benefit Scotland.

Let us consider the example of regional aid. I was delighted to hear the assurances about this that we had from the Foreign Minister. This is a crucial matter. The right hon. Gentleman said that regional policies within a member State would not be imperilled if the State felt them to be necessary. Let us compare the amount that Britain spends with the amount which is to be spent over the cake as a whole. Although it will be very nice to get a few million pounds here and there for Scotland to deal with small difficulties, no real impact will be made on our major problems. It is more likely that the United Kingdom, with a better attitude to regional aid, will solve these problems than anything that can be done by means of the slow and cumbrous arrangements of the EEC.

The centralism worries me particularly. I wonder in whose interests these rules about imports and exports are framed. My country, Scotland, is nearly self-sufficient in most basic foods. We are a country which could sensibly look to the Government to say that food imports should be cut down considerably. But we are now unable to look to the United Kingdom to do so because the United Kingdom is giving away the right to do so to a larger framework, perhaps for the greater good of a great many people. But in the meantime we have absurdities forced upon us.

Mr. Mike Thomas(Newcastle-upon-Tyne, East)

I thank the hon. Lady for giving way. I do not quite follow her argument. Is she saying that, while she would like to see the European Parliament strong and given more powers, at the same time she sees that if it were there would be no rôle within it for a Scottish National Party?

Mrs. Ewing

I would welcome the European Parliament having more power because I like to see a non-democratic body become more democratic. I welcome any Parliament becoming more democratic. I would welcome this Parliament becoming more democratic than it is. When I visited the Commission for the first time some years ago, in 1969, I was told by a very senior civil servant that the policy of the European Community was that hill farmers would have to go to the wall. I did not like the expression. I have been told they have changed their view. But hill farmers in Scotland, among them many in my constituency, have gone to the wall. No doubt hon. Members will say that that is not the fault of the European Community, but I believe that it is. I believe that the agricultural policy into which we have been slotted has not suited Scotland or Wales or even parts of England.

Certainly, there has been no attempt to discuss the EEC fishing policy, which does not suit the inshore fishermen of Scotland, including many in my constituency, who are in a state of uncertainty. Young men are not going into the industry. For the first time links over centuries in many coastal towns in Scotland are being broken. This is a very bad situation, because if that link is broken, communities die. I have one such port that has died and is now only a tourist place. Lossiemouth is a tourist and a fishing place. No one wants to have just a tourist place but that could happen if the uncertainty that is hanging over inshore fishermen continued and that is what we face.

I see the problems staring me in the face. That is hard for me, because I admire much about the Community. I was told at the end of the discussion, when I visited the Commission in 1969, "You must have faith ". I ask: how can I have faith in a set of institutions whose representatives are basically ignorant about the nature of my country and its problems? I found they were not as well-briefed as British civil servants. How can I have faith when I do not know who is to give us priority to help get our problems solved?

Let us take steel. Is there, somewhere, a steel map showing where people say it is reasonable and others say it is not reasonable to have a steel industry in Scotland? Certainly, the British Government seem to say that it is not reasonable to have a steel industry in Scotland, because successive British Governments have eroded the steel industry there. If this is what we have from a Government over which we have some accountability, what shall we have if we go in? Take the case of subsidised local industry. Are we to be able to do that or not? Will someone spell that out?

I have great sympathy with those in the House who raised the question of the scrutiny of secondary legislation, and I agree with what has been said. I offer myself to this Committee, and will the Minister take note that I do so? I have offered myself before. I will try once again.

There is one question of great muddle. From the answer given to the hon. Member for South Ayrshire (Mr. Sillars) it seems that the Secretary of State is not sure how many regulations affect him but he thinks there are about 10. The Secretary of State for the Environment thinks about 20 regulations affect his sphere of negotiations, and the Secretary of State for Trade thinks the number affecting him is about 400; but no one seems very sure.

It is a muddle. When I seek information about how to get a grant for a fishing boat, I get one answer from the Scottish Office and another from the Community. I assume that the Community is wrong. I take it up with the Scottish office—amicably, because we are all anxious to get a solution.

It being Ten o'clock, the motion for the Adjournment of the House lapsed without Question put.

Ordered, That at this day's Sitting the Business of Supply may be proceeded with, though opposed, until Twelve o'clock.—[Mr. Michael Cocks.]

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

Mrs. Ewing

I come back to another point of opposition by the Scottish National Party. I question the motivation of some of those who supported the European Communities Act. I recall that in the debates in 1968 and 1969 there was the argument that our growth rate would be greatly assisted by our membership. It has not happened. But that is a materialistic argument. I am more impressed by those who leave that argument alone.

The other argument that I remember that both the Prime Minister and the Leader of the Opposition made—they were in the same rôles then—narrowed down to the point that Britain must be great again. That argument does not have much appeal to Scotland.

Mr. James Sillars (South Ayrshire)

Why?

Mrs. Ewing

We are not particularly worried that we lost the Empire. We are much happier with the Commonwealth. I suggest that Britain never got used to it. If we want to play at influencing events, we are told, it has to be from within a super-Power. We hear the phrases "super-Power" and "centralised bloc". The idea is that we could create entente between the two other blocs. But we do not want blocs. We want to be on good terms with all the blocs if possible. So we are not over-impressed that the motivation in that sense was the highest and noblest on the part of those who supported the legislation in this House, although I agree that it was so on the part of many. I can certainly see the noble aspects of a situation in which countries sit down together, but I have to come back to my responsibilities and I do not see the problems of Scotland being solved in that way.

In The Economist recently there was reference to the phrase "stealthily a super-power". I am not particularly impressed by that aspect of the Community. All we can see is that the Community is in trouble. M. Monnet says that it is in a mess. He asks "What can we do to revive the sick man of Europe?" My hon. Friend the Member for the Western Isle (Mr. Stewart) once described the members of the Community as taking in each other's washing machines. He might have been a little facetious, but is there not truth in it? Is it not meant to keep the machines grinding and the markets going? Is that not the objective, rather than noble motives?

I am pleased to see that a Minister from the Scottish Office is present. We have managed to devolve parts of the Scottish Office through many years of struggle in this House democratically. Now the Secretary of State for Scotland has seven hats at least, with great responsibilities within which he can make decisions. But suddenly we find other Ministers from Britain going to Brussels without a Minister from the Scottish Office, taking one of the Secretary of State's hats and discussing things like Scottish teachers' salaries and agriculture without a Scottish Minister being present.

That is a serious breach of our constitutional rights in this House, and no one seems to take the matter seriously, except the members of the Scottish National Party. The alarming thing is that the Scottish Office seems to be cooperating in its own demise. It does not seem to have been upset by this process. It has handed over a large degree of responsibility, which again strengthens my argument about accountability.

The Scottish National Party supports the proposal for a referendum. We are not afraid of a new device. We see nothing alarming about putting a straightforward point to the people. We ask that the decision be made constituency by constituency so that we can ascertain our own constituents' views and those of each and every part of the British Isles. Whatever is decided by the Scottish people, we will accept the verdict.

If the verdict of the people of Scotland is different from that of the people of England, that would be a very strong argument for independence for Scotland. If it is different from that of England, we suggest that we should put moral pressure on behalf of all the people of Scotland on the Community to change itself in some way which would make it acceptable to Scotland.

Mr. Sillars

If Scotland voted "No" and the rest of the United Kingdom voted "Yes", should we opt out of the Community?

Mrs. Ewing

I argue at the moment that we should opt out of the Community. I am explaining that I do not approve of it. We would urge the people of Scotland to opt out. But if Scotland voted for the Community we would be bound to do our best to make it work better.

I have tried to make my position clear. Scotland's options are open because we have a unique position, being self-sufficient in most basic foods and in energy and having a high export rate and no balance of payments problems. We have an almost unique trading position, being the second highest exporters after West Germany. We have our options open. Some of those options have been mentioned by the right hon. Member for Battersea, North (Mr. Jay), but there are other options and some are very attractive.

At the end of the day the criterion which will settle the question for the people of Scotland is whether they think that this set of institutions can offer them the solution to their urgent problems, and at the moment I do not see a prospect that it can do so.

Mr. Speaker

I draw the attention of the House to the fact that a great number of hon. Members still want to catch my eye in this debate.

10.6 p.m.

Mr. John Roper (Farnworth)

The hon. Lady's remarks encourage me to extend my speech more than you would wish, Mr. Speaker, and therefore I shall ask her merely whether she is intending to take up a seat at Luxembourg, next to the hon. Member for Inverness (Mr. Johnson), in order to play her part in strengthening the institutions of the Community and see developed as quickly as possible the policies she has outlined this evening.

Mrs. Ewing

I shall if my party so decides. We are a democratic party and all decisions are made by our assembly. It is to be put to the assembly by me on 18th January whether I take my seat and state my point of view for Scotland.

Mr. Roper

I am interested to hear what the hon. Lady says on that point.

I welcome the six months' report we are considering tonight. This is a most useful innovation by the present Government and I congratulate my right hon. Friend the Foreign Secretary for having laid this before the House in such a useful and helpful way. I also congratulate him and my colleagues in the Government, including my right hon. Friends the Minister of Agriculture, the Minister of Overseas Development, the Chancellor of the Exchequer and the Secretary of State for Trade, for the part they have played in the Community councils in the first six months. I also congratulate them on their achievements, which have taken us a substantial way on the road to renegotiation as laid down in the Labour Party manifesto in February.

However, all the congratulations should not go to them alone. They have had the co-operation of our Community partners, who have shown understanding about the needs of this country and have put forward constructive proposals for the solution of the problems which we have outlined.

I think particularly of the part played in recent weeks by Chancellor Schmidt and by the Belgian Prime Minister Mr. Tindemans, and, indeed, the French President, who may have been somewhat harsh at one stage but has shown himself prepared to support and accept constructive compromises to deal with the difficult problems facing the various countries of the Community. There has also been helpfulness on the part of other Community partners during the past seven months, and the Commission itself has considerably assisted the process of renegotiation.

The Commission paper we are considering—R/2829/74—on the contribution of the United Kingdom to the Community budget is a full and interesting analysis. Unlike the Treasury document which, as far as I know, has never been laid before the House, it gives us some of the figures we need to make an assessment of the possible cost to the United Kingdom at the end of the decade.

Other Commissioners have also shown their understanding. Mr. Lardinois, the Agriculture Commissioner, has shown considerable helpfulness in working out solutions which take account of the particular nature of our agriculture. M. Cheysson, the Commissioner for Overseas Development, has worked closely with my right hon. Friend the Minister of Overseas Development and Mr. Pronk, the Dutch Minister of Development, to work out new policies, particularly on the Convention with the 46 ACP countries and the move towards a globalisation of aid policies.

The Regional Fund has already been referred to. It is a modest beginning, but it is important that at last, after years of argument, a fund will be inscribed into the budget. If the hon. Lady takes her seat in Strasbourg she will be able to argue for its increase.

We have at least made a start, and this, too, should count as one of the successes of the past nine months of our membership of the Community. There have been substantial achievements. My right hon. Friend the Prime Minister was right when he suggested that there are also substantial problems ahead of us. My right hon. Friend the Member for Battersea, North (Mr. Jay) has referred to the problems of the common agricultural policy as they affect the United Kingdom. There is clearly a need here for co-operation and understanding. We cannot expect the Community to reverse the common agricultural policy overnight, but I hope that there will be considerable modification of that policy after the stocktaking the German Government have called for in the spring of next year.

One of the important areas that remain a subject of controversy and misunderstanding is the nature of the Community we have entered and the degree to which powers should be exercised in common rather than on an individual national basis. I have recently been reading, for a different purpose, the debates in the House in November 1956 and February 1959 on the free trade area proposals associated with the then Paymaster-General —the right hon. Member for Chipping Barnet (Mr. Maudling). In view of what my right hon. Friend the Member for Battersea, North has said tonight about the possibility of our entering a free trade area, those debates are perhaps particularly relevant and interesting now, although I cannot share the optimism of my right hon. Friend about the enthusiasm of the other members of the Community to agree to our having a free trade association agreement on the same basis as Norway has had. We are a much more substantial trading partner. I do not think that the automobile industry or the chemical industry of the Community, for example, would be particularly anxious to see us having a free trade agreement.

Mr. Luard

Is it not the case that France has consistently expressed her opposition to the idea of a free trade area including Britain? That has been a consistent policy over 15 years. It would have been advantageous to this country to have such a trading area, but France has never allowed it, and there is no sign that she would allow it now.

Mr. Roper

That is my understanding of the situation, but I believe that, in addition, industries in the Community countries, such as the automobile industry in Germany and Italy and the chemical industry in Belgium and elsewhere, would be resistant to our having free trade access if we were not members of the Community.

In both the debates in 1956 and the debate in 1959 one of the Labour Front Bench spokesmen was my right hon. Friend the present Prime Minister, who made it clear on 12th February 1959, as reported in columns 1475 and 1476 of HANSARD, that there were disadvantages to a limited, negative, tariff-free European economy. He made it clear that there were dangers in a free trade area without common policies.

The closing Labour speaker in the debate on 26th November 1956 insisted that competition and the single system of natural liberty were not enough—that, indeed, success would depend on how far we were able to continue from ordinary free trade principles. It was made clear then that we wanted free trade but with such a difference that a new name would be needed for it.

In 1959, the opening speaker from the Labour benches made it clear that To base the new unity of a wider, bigger Europe merely on the removal of restraints to trade would be simply to have an economy erected on the principle of ' To him that hath shall be given'. We have to try to take a different approach and to start from a different point of view."—[OFFICIAL REPORT, 12th February 1959; Vol. 599, c. 1400.] As was said then, a good unifying principle is to say to Europe not, "Let us get rid of restraints to trade" but, "Let us see how we can make this area dynamic in economic and social terms". As the debate made clear then, and as is still the case, such an approach must mean that certain decisions are taken in common and collectively if we are to ensure a measure of social control over the economic environment. This is sometimes referred to as a loss of powers by this country to the Community. There may well be instances in the economic world in which a national Government no longer has effective control over multinational companies or over world monetary and commercial developments, but as part of a community it can have a greater degree of control over the country's economic environment.

Although that may be accepted for certain areas where the case for common policies is clear-cut, there are other areas of policy making, such as agriculture, in which the case for common policies is more difficult to establish. There are differences between the agricultural policies of the original six members of the Community and Ireland and Denmark, as large exporting countries of agricultural products, have different policies in certain elements from those required by the United Kingdom, although, as my right hon. Friend pointed out, this is less self-evident in the present state of high world prices. However, it will be necessary, in the stocktaking which is carried out in the next few months, for a policy to be developed which takes into account the interests of all nine members of the Community, or this will be a substantial problem in the renegotiations.

In becoming members of a Community we must accept that although, overall, it is intended to be to the advantage of its members, there are inevitably some elements of particular policies which will be unpopular in individual member countries or among certain groups in individual member countries. That is true with national policies and it would be impossible for it not also to be true at a Community level. But what must be established, as Chancellor Schmidt made clear recently in London, is not that there are no disadvantages in Community membership but that, on balance, the advantages of common policies, taken as a whole, outweigh the disadvantages.

I have spoken about the loss of powers from this country to the Community and the advantages and disadvantages involved. There is, however, another problem of the shift of power which is consequential on our membership of the Community, namely, the possible shift of power from Parliament to the British Government—the executive—who can use their powers as members of the Council of Ministers to take decisions without our sanction. This problem is perhaps more potential than real, but we should consider it.

I am therefore glad that paragraphs 56 and 57 of the White Paper consider briefly the problems of Parliament and the European Community. If the Minister tonight cannot say anything on this subject, I hope that someone else on a future occasion will tell us what more can be done about this matter in the near future.

In spite of the difficulties experienced —not despite what the Foreign Secretary said, because of the novelty of Community membership but largely because of the backlog which the Scrutiny Committee has inherited—I believe that that Committee can develop into one useful instrument to serve as a watchdog for the House. Not surprisingly, we have found it difficult to achieve a satisfactory method by which the House can express its views to Ministers before they go to Brussels, but I believe that we must be flexible on this score and I hope that continued experiment will lead us to find a mechanism by which this can be achieved.

But there is another stage in the process of Community law making where I believe Parliament has not yet established effective control or an effective system of analysis. I believe that we should be more involved in scrutinising and debating legislation in the United Kingdom which arises or purports to arise from obligations to introduce Community directives into the United Kingdom. What we in the Scrutiny Committee do not have at the moment, unlike the Irish Scrutiny Committee, is a particular responsibility in that direction. This is a matter which needs far more consideration by the Government and the House.

It seems that we should have greater powers to ensure that the provisions of Section 2(2) and (4) of the European Communities Act are not abused. In particular, it would be important to reconsider carefully amendments to Schedule 2 of the Act to increase the number of matters arising from directives which would require legislation rather than statutory instruments. I hope that my right hon. Friends, in examining this matter of parliamentary control, will take another look at the amendment which was moved on 20th June 1972 to Schedule 2 by my right hon. and learned Friend, now the Attorney-General, supported by my right hon. Friend, now the Paymaster-General, and by my hon. and learned Friend, now the Solicitor-General. If this were incorporated as an amendment to the Act it would represent an important extension of parliamentary control.

Perhaps this evening there is an element of "end of term". The Government certainly deserve an excellent report on their first nine months in the Community. I hope that the report they will produce of their second six months will enable us to say that their efforts in the team have been rewarded and that the success that my right hon. Friend the Foreign Secretary deserves has been earned in Brussels.

10.23 p.m.

Mr. Russell Johnston (Inverness)

I regret that I cannot share the gust of euphoria with which the hon. Member for Farnworth (Mr. Roper) ended his speech. This debate has been too quiet, and yet it is the first round in the referendum debate. In some ways it is surprising that few of the speeches have dwelt at any length on the terms which are being negotiated. Perhaps this reflects the paradoxical and possibly artificial fact that the terms, whenever they are negotiated, are likely to have only a very limited if not peripheral effect both on the referendum campaign and its result. We are to have a referendum because of the sustained and successful activities of those who are not interested in terms but reject the whole concept of the Community, root and branch. In particular, these people have been successful in their advocacy within the Labour Party when it was in opposition.

The Foreign Secretary, who is a very practical man—as I am sure the Minister of State would agree—knows full well that no terms he can possibly achieve will ever satisfy the Secretary of State for Industry, the right hon. Member for Battersea, North (Mr. Jay), the Labour Left, the hon. Member for Banbury (Mr. Marten) or the right hon. Member for Down, South (Mr. Powell). They are not interested in terms, because the terms would be negotiated on the basis of staying within a supranational institution of which they want no part.

In exactly the same way, the Scottish National Party is not interested in devolution or in federal institutions within the United Kingdom, because these would inevitably assume the continuance of— as they would describe it—a supranational United Kingdom. It has always seemed odd to me that the Labour Left and the Conservative Right should attack the nationalist—Welsh or Scottish— posture, because they are themselves making precisely the same argument vis-à-vis Europe, perhaps sometimes with less cultural justification. Every time a Labour or Conservative Member extols the Luxembourg Agreement, the necessity for a British veto and for it to be preserved for ever and ever, amen, he should ask himself why he opposes the idea of a Scottish or Welsh veto within the United Kingdom. It is exactly the same argument, with exactly the same weaknesses built into it.

The Luxembourg compromise is probably an inevitability in the short term within the Community, but it is depressing that the Government should spend so much time laying emphasis on it when we should be seeking to move away from that situation. It is extraordinary that the Foreign Secretary should take the example of reflecting rear mirrors on tractors as a subject on which the House might declare its democratic rights, which could be carried on to a veto in Luxembourg. That is a glorious example of the fact that there is no such thing as a national interest. There is the Government's interest—and the Government like to equate the two. While the national interest may, exceptionally, be described in terms of unemployment, it certainly cannot be described in terms of rear mirrors on tractors, whatever the House might decide.

Liberals have never opposed the negotiating objectives set out by the Government. After all, the Community has no meaning unless it has the capacity to adjust and readjust to changing circumstances. It is by definition a non-stop negotiation. We have opposed strongly, first, the exclusive concentration on our own short-term economic problems, to the total exclusion of long-term thinking. That has given the serious impression that Britain wants only to receive and never to give, and that has inhibited our chances of a fully sympathetic hearing for valid claims.

Secondly, there is the gunboat diplomacy of threatening to leave if we do not get just what we want. Aggressive and introvert nationalism breeds only retaliation and a vicious circle of protectionism. In the last two years Britain has missed an immense opportunity to take a lead in generally improving the whole Community, and in that way her own situation, and has dissipated a deep well of good will going back to the last war. So we have cynicism on the Continent and doubt at home.

When the Foreign Secretary made his initial statement on negotiations early in the year, I said that the one thing that was absent was any vision of the future, and of the part and the place of the British peoples in the future. Whether we can create this now at a time of crushing and divisive inflation, is the challenge of the referendum and of this debate. There is nothing more important next year. We are approaching a deep and grave decision, with implications that stretch on remorselessly into the future.

I should like to stress three critical aspects of the future, none of which renegotiation has done anything to help but all of which reach to the heart of the utter necessity of saying "Yes" to Europe in the referendum.

There is the question of economic and monetary union and the general strategy of the Community. The hon. Member for Saffron Walden (Mr. Peter Kirk), who sits on the Front Bench of the Opposition, remarked in our debate on the Community budget in Strasbourg recently that it was not a budget in the real sense of the word but an aggregation of departmental demands lacking any directional strategy, and he was absolutely right. It is the fact that we do not have any element of strategy within the Community which we should be working to change.

Few people now believe that the monetary proposals of the Werner Report are viable, or possibly even desirable. Nevertheless, the arguments which led to the desire for economic co-operation are stronger than they ever were. It is disastrous that the Community has not an alternative strategy. The rôle of the British in the last 12 months, despite what the hon. Member for Farnworth (Mr. Roper) said, has been to resist rather than to encourage the finding of a solution.

As a balance to the freedom of trade within the Community, it is essential that arrangements should be made to protect States which, for reasons which are not always under their own control, can and do get into special balance of payments or monetary difficulties. Britain needs the advantages of a wider market, but, at the same time, needs protection in the short term from monetary and economic forces which she is not equipped to face alone. A pledge by the British Government to lead the long-term unity of Europe could result in action for economic help and co-operation from the Community which is essential to us.

Inflation is a problem which affects all States, and support for a concerted attack upon it would be forthcoming if this country had taken an initiative, but if we wait much longer Britain will suffer, and Britain would be the last country to gain from the development of nationalistic protectionist economic policies within Europe.

Secondly there is regional policy and the need to redistribute income within the Community. Reference has already been made to the establishment of a regional fund at the summit a week or so ago. One thing we have to recognise, I am sure, is that that decision was made because of the pressure of Italy and Ireland, on the one hand, and because of the generous far-sightedness of Germany and the Netherlands on the other, and not because of the United Kingdom's activities.

If one looks beyond the regional policy to the existing instruments for redistribution, some Ministers in the Government have actually sought to prevent money coming to the United Kingdom, as in the case of the social fund and of surveys which were to have taken place in South Wales. There was a further case in East Anglia, and there could be a case in Scotland. It seems incredible.

If one looks at the European Investment Bank, funds are available at about 10½ per cent., while necessary public works in the United Kingdom are being cut back. It may be the fault of individual Members. They can all think of necessary and desirable objects in their constituencies which are being cut back and for which it would be worth remembering the European Investment Bank exists.

Without or with British membership of the Community, there is a great danger of wealth being concentrated wholly in the centre of Western Europe, and the fundamental purpose of our membership should be actively to work to forestall that danger by backing proposals for positive integration, so that the Community budget, as the hon. Member for Saffron Walden rightly said, is concerned not just with agriculture, but with industry, social services, the regional fund and a concerted economic policy to control the inflation which harms backward regions and groups. Our failure to work towards this goal has been very serious.

If policies to counter unemployment are conducted on a purely national basis, full employment, with or without British membership, will be possible in only a few countries in the centre and north of Europe.

The Labour Left should seriously ponder the fact that its policy of getting out at any price would simply make us dependent on the Americans. In fact, when we look at the anti-Europe forces, which stretch from the right hon. Member for Down, South to the IRA, and from the hon. Member for Harlow (Mr. Newens), on the Labour Left, to the hon. Member for Banbury, we see that the only common denominator is opposition. There is no common positive alternative.

Thirdly and lastly, a bureaucratic Europe will wither and a democratic Europe will flower. I think that only the Liberals in this Parliament and country have consistently pressed for direct elections to the European Parliament. It seems ludicrous that at a time when political opinion is shifting within this country and when even the French Government, who opposed us year after year, are now in favour, the Gaullist mantle should fall over the shoulders of the Foreign Secretary. It also seems incredible.

Certainly the British Parliament has taken some steps towards controlling the activities of Ministers in the Council. That has been commented upon by a number of hon. Members, including the hon. Member for Farnworth. They are inadequate, but in the end—we must face this situation in this House—they can never be more than a minor contribution, given that decisions are made collectively within the Community and given the need for more, not less, collective decisions.

Lord Diamond's Committee in another place, in its special report, said that the scrutiny committees—I am a member of the scrutiny committee of this House— can be no more than a stopgap in the end. The only way to give the British people direct representation in Community decision making is directly to elect the European Parliament and to give it real powers.

I do not understand why this Government and the previous Conservative Government denied this right to the British people and misled them by suggesting that national Parliaments can effectively control supranational institutions—because they cannot. We must face the fact that they cannot.

I think that these are specific and positive points regarding the Community which, pursued by a Government who believe in the future of the Community, could still bring real benefits to Britain.

The history of two world wars has shown that the safety and prosperity of the British people are intimately bound up with those of the other peoples of Western Europe and that failure to realise that in the past has always led to disaster.

I believe that British Governments— this Government in particular, because they have the control of the situation in their hands—must adopt a more constructive, even if, in diplomatic terms, aggressive attitude in search of a collective European response to problems which, like the imbalance of economic power among European States, the maldistribution of wealth among regions and groups and the remoteness of decisions made by leaders, we ignore at our peril.

10.39 p.m.

Mr. Russell Fairgrieve (Aberdeenshire, West)

It gives me much pleasure to follow the speech of the hon. Member for Inverness (Mr. Johnston) because I agree with so much of what he said, but in my short contribution I shall stick mainly to some issues that affect Scotland.

When Britain entered the Community it brought to it something that was not to be found within the existing members. We were already an integrated community of nations, as opposed to regions in European countries. In Britain there were Scotland, England, Ireland and Wales— nations within their own right. That is why in the debate over Europe and in recent years we in Scotland have been much more worried that the Westminster preoccupation with renegotiations would interfere with, delay or lessen the vital regional policies that were necessary for our countries.

That is why, Britain's having become a member of the Community, I feel that the Labour Party should take its seats in the European Parliament, because it is adopting a petulant attitude in electing not to be there. I have always understood that Socialism and the Labour Party were about the brotherhood of man, about international Socialism, and I am certain where that great fellow Scot, the late Keir Hardie, would have stood in this debate.

There is another problem among Labour Party Members that comes out time and again in our debates. Fellow Socialists in Europe appeal to them to come in and form a great European Socialist Party, but the trouble in some sectors of the Labour Party is that it is not democratic Socialism that is wanted but Marxist Socialism.

The same thing happens internally. Where is the opposition to the EEC to be found? It comes from what is termed, loosely or otherwise, the Left in the Labour Party and the nationalist parties here. The same thing is to be found externally. America, our friends in Europe, and even Australia, want us to stay in, but who wants us not to remain a member? The answer is Russia, Communist Powers and certain nationalist régimes of the extreme Right.

After a brief visit and reading the papers, something has happened among our Nationalists. I am sorry that the hon. Lady the Member for Moray and Nairn (Mrs. Ewing) has had to go home. It may not have been as impressive or as historic as the conversion on the road to Damascus, even if on the Metro in Brussels something has made the hon. Lady say that she is prepared to take her seat in Strasbourg, there is a ray of hope, and I welcome it.

Those who have worked in the Scottish Council and in Scottish industry know that it is vital for our country that we remain a member of the EEC and—I echo the words of the hon. Member for Inverness that we must, and 14 years have gone by—implement Article 138(3) of the Treaty of Rome, which states quite clearly that The Assembly shall draw up proposals for elections by direct universal sufferage. Why do we in Scotland want that to be implemented? It is because we want our members who are at Strasbourg not to be selected by Westminster but to be elected in Scotland. That is the vital democratic difference.

Time and again we hear the argument about loss of sovereignty. Apart from the fact that there is no real national sovereignty left in a world that is overhung with the threat of nuclear destruction, what about OECD, GATT and NATO, each of which in its own way represents the giving away of far more sovereignty than is required as a member of the EEC? Yet it is the Community that has to be the permanent whipping boy in the argument about loss of sovereignty.

For Scotland—this is so misunderstood—this is a return to history, to the old alliance, a return to Bonnie Prince Charlie. We are now in Europe, we can work in Europe, and Scotland can be one of the main countries in making sure that Britain plays her part in the Europe of the future.

10.45 p.m.

Mr. J. Enoch Powell (Down, South)

It was recently reported in the Press— such reports are frequently inaccurate— that something called a "manifesto group" had been formed in the bosom of the Labour Party. This is something which should be welcomed, if the name is any clue to the nature, for, indeed, the relationship between the manifesto of the Labour Party at the last two elections and the actions of the Labour Government is of importance for more even than the future of that party and that Government themselves.

I am no lover of the doctrine of the mandate. I have never supported the view or believed that Governments and Parliaments are precluded from acting in a manner which has not been precisely or even generally indicated beforehand to the electorate. But to say that is not to deny that, when an election has been fought on certain specific, clear undertakings prominently displayed, there is not a duty upon those who won that election to endeavour to carry them out in the plain and natural sense of their terms.

I believe that what the Labour Party said on fundamental renegotiation in February and reaffirmed in October was sincerely meant in the natural sense in which it was stated. I deprecate the habit, which is very prevalent, of assuming that there will be insincerity of intention or of outcome. It is no way to secure fair dealing to begin by assuming that one is face to face with those who will play foul.

Indeed, as I say, there are more than the Labour Party who have a deep interest in the correspondence of performance with manifesto, for he would be a brave psephologist who would argue that the Labour Party do not owe their majority—tenuous in this Parliament, non-existent in the last—to the many thousands, perhaps hundreds of thousands, of electors who, when they would not have done so on other grounds, voted for that party on the faith of what they said on this subject of the European Economic Community which to many of our citizens is of overriding importance.

It will be an ill day when large sections of the electorate, if ever they do, come to the conclusion that there is no necessary correspondence between what one party or another says at an election and the way in which it acts in office. In this situation, we are all upon trial, and it behoves all of us jealously to consider what was said and what comes of it —and perhaps not least myself and my fellow Members from Ulster, who prominently in our own manifesto declared our opposition to British membership of the European Economic Community upon anything resembling the present terms.

Perhaps I may be allowed an extra sentence just to rebut the assumption made by two previous speakers that the United Ulster Unionist Party is a nationalist party. We are the reverse of a nationalist party. We do not claim that the part of the United Kingdom which we represent is a nation: we claim that it is an integral part of the nation which is the United Kingdom.

I do not believe that anyone could read the lengthy passage, so frequently and fairly reiterated by the Prime Minister and other Ministers, without concluding that such a renegotiation as was there outlined is indeed fundamental. I mean in a moment briefly to run through the elements there set out and to show how fundamental they are, but because they are fundamental and because it was that fundamental character which constituted the essence of the contract between the electorate and those who won the election, it is important that we should understand that the outcome of this fundamental renegotiation, if it is successful. must take the same form as that which is being renegotiated.

This is a fundamental renegotiation of the terms. Therefore, if it succeeds, its form must be something which is no less permanent and no less final than the terms which the Labour Party and many of the rest of us denounced when they were offered to the 1970 Parliament.

A fundamental renegotiation cannot be sealed either by an undertaking that the veto will always be available or by the outcome of some negotiation, however successful, about the handling of the common agricultural policy, or by any agreements or negotiations which are essentially of a temporary character. Nor can a fundamental renegotiation be accomplished simply by observing that circumstances have changed, or that the Community is no longer interested in certain things which seemed previously important, or that certain eventualities appear more remote than they once did.

The necessity that, if it is accomplished, this fundamental renegotiation be cast in a form which, so far as such things can be, is final, follows from the very act which is to be consequent upon the completion of the renegotiation—namely, a submission of the outcome, yea or nay, to the electorate for a decision binding upon the Government. There would be no point in asking the British people whether or not they wanted membership upon terms which were not as permanent and as fundamental as the rest of the structure of the EEC itself.

Having said that, I wish briefly to run once again through the elements, so often stated, of that fundamental renegotiation. First, as regards the common agricultural policy, "major changes" in it so that it ceases to be a threat to world trade in food products, and so that low-cost producers outside Europe can continue to have access to the British food market. In the natural and plain meaning of that sentence, it is the antithesis of the CAP itself. This is not concerned with arrangements for a little more sugar to be imported than otherwise would be. It is not even concerned with arrangements —which I applaud—for improved access for the developing countries. It is concerned with the right of this country to import food from the rest of the world because that food is able to be imported more cheaply than it can be obtained inside the Community. It is a point not met by observing that at one time or another one foodstuff or another may be cheaper inside the Community than outside. It implies what it says "major changes in the CAP". It may be truer still to say that it requires a fundamental change in the CAP; for the very object of the CAP is to deny the free "access to the British food market" of food from "low-cost producers" in the rest of the world.

Then the Community budget. I take this sentence: Neither the taxes that form the so-called 'own resources' of the Communities, nor the purposes, mainly agricultural support, on which the funds are mainly to be spent, are acceptable to us. So the Labour Party has said that the taxes which form the "own resources" of the Communities are not acceptable to it. We know what those taxes are. They are the levies and, to a certain extent and in certain conditions, part of the yield of VAT. Thus, the Labour Party has told the electorate that it does not accept the levies and does not accept VAT as sources of the "own resources" of the Community. Therefore that article cannot be fulfilled unless those taxes are replaced by other taxes which are acceptable. That is not a question of shares in the budget. It is something quite different.

Then the purposes … mainly agricultural support". It is not acceptable to the Labour Party that the "own resources" of the Communities should mainly be spent upon agricultural support; nor is that the only purpose which is not acceptable. Therefore, unless the purposes are, if not entirely, yet mainly altered, unless the whole outlook and purpose of the Communities' "own resources"—the origins of the finance and the purposes of the finance—are radically changed, it will not be possible to fulfil this condition of the fundamental renegotiation.

As regards economic and monetary union, I shall concentrate only upon the repudiation of: any kind of international agreement which compelled us to accept increased unemployment for the sake of maintaining a fixed parity, as is required by current proposals for a European Economic and Monetary Union. A monetary union, in any possible sense of the term, means that there is a common currency. That is more than a fixed parity; but let it be that it is only a fixed parity. Nothing can be a monetary union where there is anything less than fixed parity between the local currencies of the partners. It is exactly that which the Labour Party in principle rejects. Of course it is right in saying that if one unit within an economic union has a fixed monetary parity with the rest, it must face, from time to time, in order to maintain that parity, the consequences of deflation which the Labour Party, rightly, in that context, rejects. So monetary union is not something which can just be left over for a time. It must be renounced by this country—on behalf of this country—as part of the renegotiation if that condition is to be fulfilled.

Fourthly, I come to the retention by Parliament of those powers over the British economy needed to pursue effective regional, —comma!— industrial and fiscal policies". We have heard a lot about the regional policies ; but this also speaks of the retention by Parliament of the powers needed to pursue effective fiscal policies. In other words, this Parliament must retain its fiscal independence, its power to frame its own budget and its own taxation— what many of us, weary hour after weary hour, said to the Government, as we marched through the Lobbies more than 100 times along with right hon. and hon. Gentlemen in opposition.

Yet such independence is inconsistent with the very spirit, principle and aspiration of the Community. It is impossible to study the Treaty of Rome and imagine that the individual countries can permanently retain—that is what we are talking about—powers to pursue their own effective fiscal policies. I shall not weary the House by repeating the argument—for it is exactly the same—in regard to industrial policies. An independent national industrial policy, such as the Labour Party very largely came to power to pursue, is inconsistent with the whole intention of the Treaty of Rome and the development of the Community. So that is something which must be reserved, and reserved permanently, if this condition is to be fulfilled.

The fifth and last specific point which the Labour Party put forward is No harmonization of value added tax which would require us to tax necessities. presumably meaning what we choose to regard as necessities. That is of course another way of asserting fiscal independence exemplified, it so happens, by a tax of which the harmonisation is implicit in the intended development of the "own resources" and the financing and budgeting of the Community.

All these conditions do indeed constitute a fundamental renegotiation. It is because they were fundamental that those of us who wish to see this House retain, for as far ahead as can be seen, its real sovereignty and its real responsibility for the policies and laws under which the country is to live, felt able to recommend the support of that manifesto and the support of that party to such of the electorate as we could persuade.

A Government supporter who spoke earlier touched upon a matter which will be of increasing importance and will come nearer to the centre of these discussions in the coming weeks. He was talking about Schedule 2 to the 1972 Act. He said that he did not believe we would be able to avoid an amendment to or an alteration of the 1972 Act. Nor do 1. I think it is a matter of technicality whether, if this fundamental renegotiation succeeds, its results are embodied by a change in the treaties—I can understand how awkward that is—or by a separate document reserving or restating the British position. But what is certain is that the 1972 Act, which corresponded to a different view of the Community from that which this policy implies, will require to be amended and to be remade.

If that is possible—if that work can be set in hand—then, as it proceeds, I believe it may be possible for those who have been opponents on this subject and for those who have fiercely and bitterly parted from lifelong political association to draw together again. I believe that if the renegotiation leads to a point at which this House is able again to examine what it did in 1972 and to remake it in the light of the outcome of the renegotiation, and in the light of the revision of point of view which I think everyone has undergone, perhaps once again we shall see how the historic procedures of this House can produce a consensus and agreed basis for the future where before it seemed that there was only division.

However, that may be too hopeful. I conclude by saying that the Government have—and I know that they know they have—a responsibility not only to themselves and to their own ranks but to the country and to the future of Parliament for the solemnity and the honour with which they carry out the plain and natural meaning of what they promised before they were elected.

11.3 p.m.

Mr. Bryan Gould (Southampton, Test)

I wish to take up briefly the theme pursued by the right hon. Member for Down, South (Mr. Powell).

Throughout the so-called "great debate" in 1972, we were told that the issue of sovereignty was of minor importance. Sometimes we were told that there was no loss of sovereignty, because this Parliament could at any point repeal the European Communities Act. That argument is accurate for the time being, but it is disingenuous because it obscures the fact that the purpose and object of the 1972 Act and of those who promoted it was the present Leader of the Opposition, superior legal system which in the end would not allow the repeal of the Act.

Sometimes we were told that there was no greater loss of sovereignty involved in joining the Common Market than in undertaking any other treaty obligation. One of the major culprits in this regard was the present leader of the Opposition. I recall hearing him on one occasion equating this to our obligations under the United Nations Charter. That statement was repeated tonight by the right hon. and learned Member for Hexham (Mr. Rippon).

Mr. Rippon

On all matters relating to sovereignty I have never gone beyond the quotation from the Prime Minister on 8th May 1967.

Mr. Gould

I remind the right hon. and learned Gentleman that he repeated this evening that there were no greater losses of sovereignty involved in Common Market membership than were involved in membership of the United Nations. The fallacy of that argument is apparent to anyone who has thought about this issue. There is no vesting of legislative power under the United Nations Charter in the United Nations. The United Nations has no power to make laws which are directly binding on this country.

We must acquit the right hon. and learned Gentleman and the right hon. Gentleman of duplicity, but their ignorance is astounding. They must bear the prime responsibility for the loss of sovereignty which is implicit in the European Communities Act. At least we can say of them, charitably enough, that they knew not what they did. But we know differently now.

We have, for example, the words of the Leader of the House this evening. He said clearly that Parliament had lost its sovereignty. We have the word of Lord Denning, Master of the Rolls, in the Court of Appeal earlier this year, that The Treaty is like an incoming tide. It flows into the estuaries and up the rivers. It cannot be held back. We need not rely on those statements. Our own experience tells us that it is so. Over the past few months we have stood as bewildered and bemused bystanders as the flood of directives and regulations has issued from Brussels. Sometimes we have been able to scrutinise them and bring them to the House, but not always. Sometimes we have been able to express an opinion on them, but not always. The difficulties are enormous. There are difficulties not only of volume but of parliamentary time. For example, we had only one and a half hours in which to discuss the EEC document on energy. There are difficulties of synchronising our timetable with that of the EEC.

The basic difficulty is that the House has no fundamental rôle in these matters. We simply are not a necessary part of the process of legislation. It does not matter a damn whether we discuss these things or whether we do not. It matters not a damn to the legislative process and the law-making effect of the regulations produced in Brussels.

The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hatters-ley)

Does my hon. Friend agree that the crucial decision-making process in Brussels is taken when the Foreign Secretary and eight other Foreign Secretaries give their eventual unanimous consent to a proposition put to the Council of Ministers? If that is the crucial moment, does not my hon. Friend think that what is said and done in this House affects the decision that my right hon. Friend takes, and the way in which he votes?

Mr. Gould

One would hope so, but I hope to demonstrate to my hon. Friend that one has no confidence that that will always be so, in the inevitability of that process.

It is true that hon. Members on both sides of the House have been trying to reassert some form of parliamentary control over these matters. For example, we have been trying to develop procedures, precedents and conventions that will enable us to mandate Ministers in the way in which my hon. Friend suggests is done. I understand that the Danes, in their Parliament, do that to some extent. Even if we could get the machinery right, even if we could get the documents to us in the right form at the right time, even if we could tell Ministers what we feel, there remain two major difficulties of principle.

The first is that what is, in effect, being done by Ministers is an act of the executive. When they go to Brussels they are subject to pressures exerted on them by their negotiating partners on a whole range of issues. The time may not be far away when Ministers will say to the House, in good faith, "We understand you, and we will act on what you say." But when they get to Brussels other pressures are exerted on them and they have to give way on that issue to get their way on another. They will come back to the House, shame-faced and crestfallen no doubt, and say that it was impossible to avoid that outcome, not perhaps on a major issue but on one of middling importance but one on which the House has taken a view and expects the Minister to carry through that view.

The second major difficulty in principle is that the whole structure which we are trying to build to assert parliamentary control rests on the flimsy foundations of the Luxembourg Agreement. That agreement, as we have seen in the last week or so, may easily be diluted at the fringes and eventually disappear altogether. There is no guarantee that the agreement, which is not part of the treaty, will remain in force for ever. As far as Commission regulations are concerned, there is no power and no possibility for Ministers to carry out any decisions.

It is argued that these defects in parliamentary control can be made good by the European Assembly—and assembly it is. Whatever defect the treaty may have, it is accurate in that respect. The assembly may have some influence on the legislative process, but so much might be claimed for the personal idiosyncracies of individual Commissioners. We are not talking about influence, but about power —legislative power, sovereign power, power to make legislation for the peace and good order of this country. That is what we were sent here to do and not to be a blurred, random and largely unnecessary rubber stamp for decisions taken elsewhere.

Even if there were to be direct elections to the European Parliament, assuming that the time-table were at least acceptable, that would open the perspective of a Europe totally different from any Europe which has been described in the process of getting us to join the Common Market.

It seems to me, therefore, that if this Parliament wants to deal with these problems, it cannot deal with them as long as we are gagged and shackled, particularly when the gag and the shackle are imposed on us by our own hand in the form of the European Communities Act, particularly Section 2.

If we are to avoid the difficulties we have all experienced over the last few months, and which can only get worse, the only solution is to amend the Act. It is not for me to suggest the form of that amendment. There may well be many possibilities. But perhaps we should at least say that no Community regulation can be law in this country unless it has first been scrutinised, debated, or even approved by this House or by a Committee of this House. That may mean that we should develop our Committee procedures, that we may have to sit for longer hours perhaps in the mornings. But the job must be done. We must devise procedures for controlling this legislative process.

It may be argued that if we were to amend the Act in that way we should be less than fulfilling our obligations under the treaty. I believe that to be true. But let us be clear. Under our constitutional doctrine a treaty obligation is taken according to the prerogative power. It is always for this Parliament to decide how far, in what form and to what extent treaty obligations should be made binding in our own municipal law.

Derogation from the treaty would be no new thing in Common Market affairs. We have a good deal to learn from some of our partners, particularly the French, in this respect. We might find that if we amended the Act in such a way it would not only be tolerated but even emulated by our European partners.

It is argued that we need not worry because that will be the position in practice—that political realities will mean that we can always protect our national interest. There is a good deal to be said, however, for making the law accord with the practice. There is always grave danger if there is too great a divergence between law and practice, particularly in important matters of this sort.

I had hoped to be able to deal with one of the documents which have cropped up in the interstices of the debate—Document R/2829/74. To some extent, it has already been dealt with. Nevertheless, it is worth while to point out that in the prognostications it makes for the form of budgetary contribution that this country will be expected to make once the budget is financed from own resources exclusively, it makes a very important statement. Every hon. Member should read it with care.

I shall not now go into the details of the calculation. I shall simply say that it suggests that unless some fundamental reform or change in the whole structure of financing the Community budget from own resources is made we shall not achieve the fundamental renegotiation that the Government say is their objective. If the argument is that the renegotiation can be carried through without any change to the treaties whatever, Article 127 of the treaty stands in the way. That article reads: The Decision of 21 April 1970 …"— on the provisions setting out the own-resources financing method— shall be applied ". That is mandatory language. I agree with the right hon. Member for Down, South that unless that provision is changed there can be no possibility of an effective and permanent renegotiation on that point.

I return to the point on which I began. I see that you are getting agitated, Mr. Speaker.

Mr. Speaker

I am not getting agitated. I simply want to bring one or two other hon. Members into the debate.

Mr. Gould

I shall conclude in three sentences.

The fundamental issue which must be put to the British people is that of the control over the law-making process within the Community. We have a choice between reasserting our own parliamentary control and acknowledging that that law-making process is beyond democratic control in this country and not subject to democratic control at all. The British people will require satisfaction on that point before they decide on the issue of Common Market membership.

11.16 p.m.

Mr. Neil Marten (Banbury)

The whole House will wish me to congratulate the hon Member for Southampton, Test (Mr. Gould) on an excellent speech. I only wish that he had been with us in 1972, when we were on the Government benches and were having great discussions, very much of that nature, on the European Communities Bill.

In the four minutes remaining before the concluding speeches start, I should like to return to the point of my intervention to the Foreign and Commonwealth Secretary earlier—the question of deciding what is meant by political union. I realise the difficulties of a quick decision on that, which is one of the most fundamental points the country must decide when it faces a referendum. Whatever the question of economic benefits, the common agricultural policy or anything else, the referendum will in the end come down to a decision by the people whether they want to stay in a grouping of countries which, in the end, can only become a federal Euro-State.

Therefore, before we have the referendum, if the Belgian Prime Minister and the other countries cannot decide I do not see why the Government should not declare where they stand on the issue. My right hon. Friends on the Opposition Front Bench should also declare where they stand on it. I do not say that to the Liberal Party, because Liberal Mem- bers have always declared that they are basically a federal party. But that matter lies at the heart of what the referendum will be about.

We saw in the communiqué approval of direct elections to the European Parliament. The Foreign and Commonwealth Secretary reserved our position until after the referendum. But if we are to have a directly-elected European Parliament, what is it to do? It is supposed to be democratic. Therefore, the directly-elected European Parliament will be set up to control the Council of Ministers. In that way we should be moving towards parliamentary control of the Euro-Cabinet, which is what I call the Council of Ministers. Once one goes on to that, one has the beginning of the march down the road towards a federal State.

That is precisely why I have always objected, and shall continue to object, to our membership of the Common Market. As a nation, we must think ahead. It is no good being fobbed off with some of the things we were told in 1972—that it will not happen in our time. I do not know how long I shall live. It may well happen in my time. Therefore—to borrow an expression much used by that worn-out organisation subsidised by the Government, the European Movement— we must think not only of our children's future but of our children's children's future, and so it goes on.

That is why I ask the Government and my right hon. Friends to come clean before the referendum and say where they stand on this fundamental issue. I hope that both concluding speeches will contain the undertaking that that is what they will do, out of fairness to our nation.

Mr. Speaker

Order. I have been unable to call seven or eight hon. Members who wished to speak. I think that the House must consider, in view of the pressure of time in dealing with these matters, a voluntary time limit to speeches. We really should think about whether we cannot make it possible for more hon. Members to be called in debates like this. The speeches tonight have been quite long.

11.20 p.m.

Mr. Peter Kirk (Saffron Walden)

I fully concur with what you have said, Mr. Speaker, although I cannot commit my hon. and right hon. Friends to that. I merely mention, as did the hon. Member for Moray and Nairn (Mrs. Ewing), that that much-abused body, the European Parliament or Assembly, has a compulsory time limit on speeches, and that does not seem to stop anybody talking. I have always believed that it would be possible to have something of the same kind here. I remember when the hon. Member for Huddersfield, West (Mr. Lomas) and myself tabled a motion saying that no speech from the Front Benches should last for more than half an hour and no speech from the back benches more than 15 minutes. The Minister of State and I between us will not take more than 40 minutes. I shall be as brief as I can.

A number of points have arisen as a result of today's interesting debate, and I have a number of points to put to the hon. Gentleman concerning the communiqué and the White Paper—and, if I have time, one or two others which raise questions of principle.

In the last half hour the right hon. Member for Down, South (Mr. Powell) and the hon. Member for Southampton, Test (Mr. Gould) have between them come to the heart of the argument. We are not discussing fundamental renegotiation in the sense of the details of the common agricultural policy, or even of the beef régime—though I shall undoubtedly have questions on these matters to put to the Government and to the Commission in another place.

The House is discussing now—and it has been discussing for as long as I have been a Member, which is nearly 20 years—the abstract question of sovereignty. I say "abstract" deliberately, because I do not believe that there are two Members of this House who could between them produce a definition of "sovereignty" on which they would agree. This is basically the problem that we are up against.

I would say—and I approved of it when it was done—that probably the greatest abandonment of sovereignty by any Government was by the Labour Government when they were last in office, in recognising the right of individual application to the Court of Human Rights in Strasbourg, thereby completely overruling every court in the country on matters of individual applica- tion. That is my personal judgment. Quite clearly, the hon. Member for Southampton, Test would not agree that that was an abandonment of sovereignty, but it is certainly regarded as such by a large number of judges in this country, because they have said so.

I merely cite that as an instance of the difficulty of talking about sovereignty. I was not ministerially responsible— happily—for any part either of the negotiations or the passage of the European Communities Act in 1972, although I was a member of the Government at the time and therefore I have a collective responsibility which I do not shirk. But in the course of that year I had the opportunity to address 70 or 80 meetings throughout the country on this point, and I certainly never would have concealed the fact that by signing the Treaty of Accession, and by passing the European Communities Act, we gave up a substantial element of British sovereignty, of sovereignty of this House, of the British Government and of the British people.

Whether we gave up a greater degree of sovereignty then than we gave up in the past by doing things that other Governments have done is not something I wish to quarrel about.

Mr. Spearing

I appreciate the hon. Gentleman's difficulty. Does he not agree that there is often a de facto giving up of sovereignty in entering into the sort of arrangements of which we often hear examples, where there is a balance between whether one should withdraw or go in, whereas a de jure giving up of sovereignty not only means another legislature and another executive, but the fact that the final power has left this House has repercussions throughout the administration of a country, and the attitude of Members of this House to what it can do changes almost overnight?

Mr. Kirk

I am in no difficulty. I have always been a federalist. This is no problem for me. My personal problem —I am not committing anybody else; if anybody in this House did not always know my aim, he cannot have listened to the speeches that I made on this subject 10 or 15 years ago when the matter was first raised—

Mr. Cryer

I accept that the hon. Gentleman has individual attitudes, but does he not regard it as a matter of regret that the British people were never given the opportunity of making a decision about an attitude which he may hold dear to his heart but which the British people do not?

Mr. Kirk

My constituents have been given the opportunity on many occasions and they continue to re-elect me, knowing what my view is. The party which supported entry into the European Economic Community and the parties which supported the European Communities Bill in 1972 have, in the two General Elections since then, consistently scored very much better between them than the parties which did not.

As I say, there is a problem here, and it is not a problem which can really be resolved because it is one on which there is a fundamental difference of view both on what we mean by what we are doing and, indeed, on what many of us want to do. I accept that the Foreign Secretary does not share my enthusiasm for the type of European solution which I want to see. Therefore, we are bound to be talking short-term. Long-term we do not even agree on what we are talking about. This is the great difficulty which we have had in these debates, not only during the passage of the 1972 Act but even in the late night debates which we have been having, most of which I have tried to attend—and, indeed, at Question Time on these matters.

Therefore, when we discuss, as we should, the details of the documents with which the Government have provided us, we have to take a decision whether we should discuss that fundamental principle once again or should try to discuss some of the details which, even in the present transitional situation, are of very considerable importance. It is that which I wish the House to allow me to do tonight.

I have raised the question of sovereignty because I do not wish to burke it; it is absolutely vital. It is a question on which we can argue for a million years without agreeing. However, there are some things on which we can try to question the Government.

I take first the communiqué, and I ask the Minister of State whether he would elaborate a little on the arrangements now being made for the meetings of what is now to be called the Council of the Communities—meeting, I assume at Heads of Government level, accompanied by Ministers of foreign Powers. It says: The administrative secretariat will be provided for in an appropriate manner with due regard for existing practices and procedures"— which is about the vaguest statement I have ever read. If it is provided for from Community funds, I have a direct interest in this, as all administrative expenses provided out of those funds are provided from Parliament. The Commissioners cannot vote them. The Secretary of State will no doubt be communicating to me what his wishes are with regard to the British delegation in this respect. At the same time, it is important that we should know whether this is the secretariat originally envisaged under the Fouchet proposals, and precisely to whom it will be responsible.

Further on, the communiqué states that These arrangements do not in any way affect the rules and procedures laid down in the Treaties or the provisions on political co-operation in the Luxembourg and Copenhagen reports. Does that mean that the quarterly Davignon meetings are also going on? If so, presumably we shall have seven meetings a year, which seem to be rather excessive. I am all in favour of the Foreign Ministers' getting together as often as possible, but we shall not see very much of the Secretary of State if he spends all his time accompanying the Prime Minister or going in his own behalf to these various meetings. A certain amount of clarification is needed there.

The Council of Ministers would disappear. It would be turned into a mere senate of the Community. It is a legislative body now. It would become a purely legislative body at the end of the day.

Secondly, I should like to say what the precise position is regarding the financing of the Regional Fund. At the top of page 7 of the communiqué it is agreed that the principal regional imbalances in the Community resulting notably from agricultural predominance, industrial change and structural under-employment will be helped by a fund which will be put into operation by the institutions of the Community with effect from 1 January, 1975. That must mean that it will have retrospective effect, because the Council of Ministers rejected the European Parliament's attempt to write a figure into the 1975 budget. Therefore, any such move must be the subject of a supplementary budget and, presumably, will be something we shall do in January or February.

Quite apart from the unfortunate order in which these subjects are linked, there is also, two paragraphs later, the statement that This total sum of 1,300 mua will be financed up to a level of 150 mua by credits not presently utilised from the European Agricultural Guidance and Guarantee Fund (Guidance Section)". Which credits are these? We tried to strike out 100 million units of account for the denaturing of wheat and 20 million units of account for the denaturing of sugar. The Council objected. Those funds were required by virement in order to enable the sugar deal to be concluded with Australia. I am sorry that we have not had time to discuss the order, because there were some interesting things that we should like to have discussed.

I find totally deplorable the policy that the Council had of writing in funds for one purpose and spending them on another. Such a procedure would not be acceptable in the House. I hope that it will not be acceptable when the Public Accounts Committee of the European Parliament gets functioning towards the end of next year under a very distinguished former Member of the House—Mr. Rafton Pounder, who. I hope, will be in charge of the operation. This procedure is something that the Council of Ministers should look at again.

When we went through the budget with the Council of Ministers we were told again and again that they must have this amount, even though they had already cut out 1,000 million units of account and we had cut out more because they were needed for something else. As the European Parliament develops its statutory powers, it is important that the British Government should realise—I hope that they will realise—that efforts must be made in the Council of Minister to see that things are properly dealt with.

Finally, on the communiqué, there are two points that I wish to make. First, it confirms that all the arrangements for renegotiating budgetary powers were already laid down by my right hon. and learned Friend the Member for Hexham (Mr. Rippon) at the time of our accession to the Community. The third paragraph from the end of the communiqué states that The Heads of Government recall the statement made during the accession negotiations by the Community to the effect that 'If unacceptable situations were to arise, the very life of the Community would make it imperative for the institutions to find equitable solutions'. The Minister will be aware that I asked the Acting Chairman of the Council, Dr. Fitzgerald, precisely where that quotation came from. I refer to page 159 of the proceedings of the European Parliament of Thursday of last week. Dr. Fitzgerald said: I am asked … on the question of British renegotiation, whether the reference to that in the second paragraph is a quotation from the Treaties of Accession, and of course it is such a quotation. That quotation sets out the principles to guide the Community if unacceptable situations arise. What is proposed now is that the question will be studied to see what mechanism might best be adopted should such situations arise, and this is being done in what one might describe as very good time, before they do arise. I have no complaint about that. It should be placed on record, however, as far as the Community is concerned that this was agreed upon as long ago as 1971 and it does not cause the Community any major surprise. [Interruption.] If the Foreign Secretary denies it, perhaps he will get up and say so, because there it is on the record.

Mr. James Callaghan

Certainly I will. The acting Chairman of the Council of Ministers was not there in 1971, anyway, so he does not know any more than I do what happened then. What he knows, as I know, is the difficulties we have had to try to get that general statement of principle translated into something that will be effective.

Mr. Kirk

Of course Dr. Fitzgerald himself was not there, but the officials who were with him on the occasion when he made that statement, and who undoubtedly helped him to draft it, were there, and some of them are known to the Secretary of State and to me. They would not have let him make a statement like that unless they believed it to be true.

In the brief few moments remaining—I want to give the Minister of State plenty of time to reply—I want to mention two other points. One of them, which comes from the communiqué, is the question of own resources, which was raised by the right hon. Member for Down, South and others. There seems to be doubt in the statement made by the Prime Minister last Monday whether we do or do not accept the question of own resources.

In the section of the communiqué headed "Britain's membership of the Community"—and, therefore, presumably being one to which the British Government paid considerable attention—we read that the Heads of Government confirm that the system of 'own resources' represents one of the fundamental elements of the economic integration of the Community. Of course it is. As we all know, the own resources are the products of the levies, which at present are fairly low because world food prices are pretty high, and the products of the customs duties, which will fade away between now and 1978—

Mr. Roper

Surely the customs duties will not fade away before 1978. There will always be customs duties on the goods coming across the common external tariff.

Mr. Kirk

That is true, but they will be considerably lower. I meant that the main substance of that section at the moment is the intra-customs duties, which also figure in this, but the major section was always intended to be the product of value added tax, which is up at the moment to 1 per cent. of the total.

The Secretary of State said in his opening speech that the harmonisation of VAT would, he felt, surely be put off until the Greek kalends. That will be a great relief to my hon. Friend the Member for Scarborough (Mr. Shaw) and me as we are wrestling with the document, "Harmonisation of VAT Structures", sent to us by the Council of Ministers and on which the Council requires an early decision. Therefore, it will be useful if the Minister of State can tell us briefly what is the position on this because it is a matter of importance.

If we are not to have our resources harmonised on that level they must presumably be harmonised on something else, because the right to levy direct taxes will exist from within the Community as from 1st January next year and we should know what form the taxes will take.

On direct elections, I am sorry that the Government are taking so reticent an attitude. I can inform my hon. Friend, as he asked me, that the Opposition intend, with the consent of the Shadow Cabinet, to vote for the draft convention on direct elections within the European Parliament at its next meeting in the third week of January.

11.39 p.m.

The Minister of State for Foreign and Commonwealth Affairs (Mr. Roy Hattersley)

The hon. Member for Saffron Walden (Mr. Kirk) asked a number of questions. Some were important, but some were also detailed. I hope between now and midnight to answer at least a majority of them, but the hon. Gentleman will understand if either time or ignorance prevents my doing so. I shall write to him with the answers to the specific points which necessarily were made at a rather late stage in the debate.

First, I should like to say one or two general things about the debate. I remind the House that the debate we have just held actually began in the parliamentary mind as a discussion of the White Paper published by my right hon. Friend which described the whole work and life of the Community over the last six months.

As the right hon. Member for Knuts-ford (Mr. Davies) and the right hon. and learned Member for Hexham (Mr. Rippon) pointed out, the Government's determination to improve the terms of British membership of the EEC has been only one of the Community's preoccupations over the last six months. We do ourselves no credit if we discuss these matters as if they were the only things which had concerned the Community and Western Europe in the six months we have spent on our renegotiation.

Notwithstanding that, in this House— inevitably and properly—until the British people make their decision one way or another our debates will concentrate on the merits of United Kingdom membership of the Community and the prospects of its becoming permanent. In the light of that, my right hon. Friend the Member for Battersea, South (Mr. Jay) did the House a service by drawing our attention, not for the first time, to the fact that if we consider the merits and the demerits —as he would describe them—of permanent membership, we have a duty not simply to examine the prospects for Britain if we remain in, but the prospects if we were to withdraw.

Not for the first time, my right hon. Friend told us to do that and, not for the first time, he told us that our pattern of life and behaviour, if we withdraw, should be modelled on that of Norway. He went so far as to attribute Norway's increasing prosperity to the fact that she had remained outside, but some of us would ascribe part of it to the fact that she had brought oil ashore rather early.

Putting that aside, let us examine the prospect offered by my right hon. Friend of achieving Norway's relationship with the EEC. She chose not to enter and, having so chosen, partly with the help of the new members who were her old partners in EFTA, she obtained highly desirable trading arrangements with the Community. We should be extremely rash to assume that Britain could do the same in 1975.

We entered the Community and signed the Treaty. If we did what my right hon. Friend the Member for Battersea, South has urged upon us, it would be to say, "We have examined and experienced the Community and we have now decided that we want to leave. We do so in order to avoid the inevitable costs of Community membership—the costs to Great Britain of the benefits to other members", and as we left he would have us say, "By the way, we would like to retain the benefits of free trade arrangements".

That might be his view of the response we should get from our partners in the Community, but it is a deeply optimistic judgment, I fear, of how they would react. If renegotiation failed and the Government felt it right to recommend withdrawal to the British people and the British people endorsed that withdrawal, we should struggle and strive to obtain that free trade arrangement.

Clearly that is the alternative for which we must press, but to talk now, in the middle of renegotiation, as if such a prospect were certain, particularly weighing against the facts I have tried to describe, the evidence offered by my hon. Friends the Members for Oxford (Mr. Luard) and Farnworth (Mr. Roper) would be operating on something very near to a false prospectus.

Mr. Jay

Does my hon Friend deny that next year this country will already be on near-100 per cent. industrial free trade terms with all the EFTA and EEC countries, and so will all the other EFTA countries? If, therefore, some new obstacle were to be placed in the way of British exports it would be necessary for a country to propose discrimination against this country, as against all the other countries. Does my hon. Friend think it probable that any country in EFTA or the EEC will do that?

Mr. Hattersley

With respect, my right hon. Friend misunderstands what withdrawal involves. It does not mean that having obtained free trade benefits we can leave the Community and automatically retain them. If we leave, we must start afresh. The countries of the Community will not say, "We will allow the British free trade concession to continue." They must decide whether to pass new legislation giving or denying us that benefit. In those circumstances, my right hon. Friend may feel certain about the outcome. However, I at least say that to work on the prospect that his analysis is correct would be a rash thing for us to do at this time. It may be that at some future date we shall have to attempt to obtain that arrangement, but to talk as though it is there automatically is not to conduct the renegotiation or our analysis of the alternatives in a rational or sensible way.

Having referred to the prospect of being allowed to enjoy the benefits without paying the costs, I have conceded that substantial financial costs are involved in our membership. I echo the views of my right hon. Friend the Foreign Secretary that in previous economic debates there has been reluctance on the part of those who wished for British membership to admit and describe what the costs were. Like him, I believe that is so. Unlike him, I have been guilty of it in the past.

The time has now come to talk about not only the financial costs of British membership but the costs which we may have to pay, in terms of our relationship with the world, if we remain in the Community on the terms negotiated three years ago. The object of the renegotiations is so to reduce those costs that the balance of the benefit remains fairly and squarely on the side of Britain's continued membership. That is what is meant by renegotiation in good faith. It is to that task that the Government have attached themselves.

I hope that the House will concede what many of my hon. Friends have said—that the progress that we have made in various areas of renegotiation has been substantial, if not spectacular. I take only two examples. I believe that the attitude of the Community towards the Third World has been radically and perhaps fundamentally altered by decisions taken by the British Government and carried out in Brussels during the last eight months. I also believe that the Community's view on the budget has been radically changed. What my right hon. Friend said about the need for the budget contribution to reflect in some ways the needs and the ability to pay off individual countries and therefore to act as a stimulus towards the convergence of the economies has brought about a radical shift in thinking within the Community.

It is important to place on record how successful our attempts to renegotiate the budget have been. My hon. Friend the Member for Southampton, Test (Mr. Gould), in an excellent speech, referred to the second document that we are discussing and suggested that it was evidence of the appalling problems that might face us if we remained in the Community and paid our budget contribution in the traditional way. I remind him that it is also evidence that the case that we made to the Community eight months ago, about needing to change the method of paying our budget contribution, was justified, and that the document produced by the Commission supports the contention that there had to be changes in our budget contribution.

It is also possible to make those changes within the terms of the Treaty of Rome. That document commits the mem- bers to economic convergence. Article 235 provides that special measures may and must be taken if other articles of the treaty, on which the principles of Community membership are founded, are not being carried out.

I believe that putting the preamble and Article 235 together helps us to make progress towards making the budget contribution which we believe to be necessary. The treaty helps us, but I point out to the hon. Member for Saffron Walden (Mr. Kirk) that it is impossible to argue that anything done by the previous Government helped us at all. However, it is fair to say that a rather vacuous sentence was inserted into a single document saying that if any trouble arose in future there would be a certain obligation on all of us to put it right. Getting a statement of intention in that rather general form is one thing, but getting it carried out is another.

When we came to office in March of this year there was no evidence that our predecessors had tried to carry out the principle which they had described in this general fashion.

Mr. Kirk

I advise the hon. Gentleman to read the debates in the European Parliament in the summer and autumn of last year, when the case for not proceeding on these lines was deployed by the Conservative group and by our Liberal colleagues.

Mr. Hattersley

I had given way to the hon. Member for Mid-Oxon (Mr. Hurd).

Mr. Douglas Hurd(Mid-Oxon)

As the Minister has thrown such a douche of cold water on what he described as a rogue phrase, will he explain why that phrase was made the starting point in the summit communiqué to which his right hon. Friend the Prime Minister agreed for the whole discussion and agreement on this subject? That is the pedigree, the starting point, of the arrangement which he is negotiating.

Mr. Hattersley

I think it was an admirable declaration of intent, but declarations of intent do not often work in practice. What my right hon. Friend and the new Government had to do was to give reality to that description, and I say again that there was no evidence that our predecessors had even begun to do that. Indeed, the basis on which we are attempting to renegotiate our budget contribution was bitterly attacked in this House before it became clear that it would succeed.

I was told by the Opposition Front Bench that to divulge the figures of British growth rates and comparative British domestic projects for 1980, and later, was undermining the British position. If we had not done that, we should not have been able to change the budget régime. We were accused of selling Britain short by beginning that process eight months ago.

Mr. Blaker

Surely the date on which our percentage contribution to the budget exceeds our percentage of the Community GNP does not arise for a couple of years.

Mr. Hattersley

That may be the hon. Gentleman's interpretation of prudence, but, as it arises in a couple of years from now, if we are to commit the British people to permanent membership, or urge it on them, or give them a chance of deciding for themselves, we have an obligation to tell them that we shall do our best to defend their budgetary contribution and their financial rights two years from now. I find it difficult to understand why the hon. Gentleman is arguing against this in the first place, unless he is substantiating my point that there has been criticism of the concept of a budget contribution.

I move to the second area, of sovereignty—the area on which, I suppose, the debate is increasingly likely to focus during the next few months. In those areas of the renegotiation in which our progress can be measured, we can claim to have made progress. I do not believe we can claim to know the outcome, but we can claim that we are on course and on time, but that is essentially a feature of the measurable elements in our renegotiation package. As the hon. Gentleman said, the attitude to sovereignty and the success in preserving the sovereignty of this kingdom and this House are not susceptible to that sort of precise investigation, because we all have different views as to what sovereignty means.

This evening, sovereignty has largely been discussed in parliamentary and legislative terms. I do not believe that the sacrifice of sovereignty that we have made, and need to make, is anything like as great as the judgment made by the hon. Member for Saffron Walden. He makes that judgment because he hopes that one day it will come about. I offer that not as a criticism but as a judgment based on his description of his position.

The hon. Gentleman is a federalist, and when he admitted it he immediately raised the worst fears of the hon. Member for Banbury (Mr. Marten). There are only two sets of people—and they are small sets—in Europe who talk about federalism. They are the extreme anti-Europeans, who hate and fear it, and the extreme pro-Europeans, who love and hope for it. Between those two extremes there is much pro-European opinion that does not believe in either the desirability or the prospect of federalism in our lifetime. I do not believe that it is sensible to discuss the prospects in Europe as we realistically see them now as an argument for or against federalism, but it is absolutely sensible, and I believe necessary, increasingly to concentrate our debate on this issue of legislative sovereignty.

I wish that in all these matters we could keep the Commission's rôle in perspective. The Commission is always brought in as one of the great ogres undermining the power of the Mother of Parliaments. In fact, in legislative terms, it is not the Commission which is important but the Council of Ministers. Let me say again—for I do not believe that it can be said too often—that the essential power of this House, in respect of control of what goes on in the Community, is exercised by its power and influence over the individual Ministers whom it may and does send to Brussels. If the House can influence the Foreign Secretary it can influence what goes on in Brussels. [An HON. MEMBER: "How can it do that?"] It can vote the Government out of office. It has the final sanction against them. Hon. Members can and do argue that the powers of the House of Commons over the executive are not as great as they should be, but that is a different argument. In terms of power over Europe, if the House of Commons can control its Ministers, it can to a large extent control what they do in Europe.

It is worth remembering—the right hon. Member for Knutsford sits there to prove it—that the Government have gone to a great deal of trouble to do their best to make it easier for the House of Commons to exercise its influence and control over Ministers. I do not argue for a moment that the present procedures of the Scrutiny Committee approach perfection. The Committee itself, I am sure, is perfect, but the procedures are a long way from that. That is why the Select Committee is examining what alterations should be made. That is why the Leader of the House said, during a series of points of order earlier today, that we are trying a number of techniques to make sure that the will of the House is adequately demonstrated over a whole variety of areas. Clearly, we are doing our best, and will continue to do so, to ensure that the essential ability of the House of Commons to influence Ministers, and therefore the decisions in Brussels, is carried out, preserved and extended.

Having said all that, I admit that there will be some erosion of sovereignty —not half as great as the hon. Member for Banbury suggests, but some erosion. What we have to decide is, first, whether we have minimised that erosion as much as possible and then, when we are down to the irreducible minimum, whether the losing of that sovereignty is worth it in the end. We have talked about convergence of economies, which I regard as highly desirable in Europe. We have to decide whether, to get more economic convergence, we have to lose more sovereignty as a balancing weight. I do not want us to preserve British sovereignty only to ensure that by 1980 we have half the gross domestic product or wealth of the Federal Republic of Germany and are a rather poorer country than Italy. We have obligations in terms of real sovereignty, and that is not some eighteenth century concept of the House of Commons being able to do anything but change a man into a woman; it is a twentieth century concept of having the economic muscle and the political influence to do the things which are necessary on behalf of the British people and our constituents. If we can obtain the improved terms, the EEC offers us that prospect. I hold the view that those terms are possible.

I end—and every debate of this sort must end in this way—by affirming that the Government's position is as it was on the day we were elected, when the Foreign Secretary made his first speech in Luxembourg on 1st April. It is a serious, genuine and fundamental renegotiation of the terms of entry, followed by the equally serious determination to ensure that, for the first time, the British people can make the final judgment on continued membership.

I say that for two reasons. First, it was a solemn promise of our election manifesto. Over the last few years we have gone through a period when election promises have been too lightly made and too easily forgotten, and we have an obligation to fulfil that one. Secondly, if we arc to succeed in Europe as a proper member of the Community, it can happen only when the full-hearted consent of the British people, which they were always promised would be sought, is actually made a reality. A British people in Europe reluctantly are not a British people who will support their Government in building the sort of Europe which is in their interests. I therefore believe that that, even in European terms, is an essential part of our manifesto.

I end tonight as I began eight months ago, by saying that this is our policy and will continue—

It being Twelve o'clock, the motion for the Adjournment of the House lapsed, without Question put.