EUROPEAN COMMUNITY MEMBERSHIP)

HC Deb 08 April 1975 vol 889 cc1020-150

Order read for resuming adjourned debate on Question [7th April]

That this House approves the recommendation of Her Majesty's Government to continue Britain's Membership of the Community as set out in the White Paper on the Membership of the European Community (Command No. 5999)—[The Prime Minister]

Question again proposed

3.36 p.m.

Mr. Nigel Spearing (Newham, South)

On a point or order, Mr. Speaker. On 19th December last, in a debate on the six-monthly White Paper report on EEC negotiations, the Government put down on the Order Paper certain regulations from the EEC concerning the budget which were to be debated along with it. As a result of representations, those documents were not debated.

Yesterday, the Government put down on the Order Paper two other Commission documents, Nos. R /650/75 and R /1372 / 73, concerning regional aid. As a result of an objection which I made yesterday, those two documents were not moved to be taken note of yesterday, although the debate concerning approval of the recommendation in the White Paper was taken.

Today, the Government have for the second time put these Commission documents on the Order Paper. I submit that, although it is strictly in order in terms of procedure, it is not in the best interests of proper debate or within the democratic traditions of this House.

Therefore, I protest once again. I hope that the Government will not move these documents, so that they may be taken separately, though together, and properly debated on their own merits on another occasion.

Mr. Speaker

The moving of motions dealing with the documents is not a matter for me. As for debating them, they cannot be debated together without the approval of the whole House.

Before I call the right hon. Member for Finchley (Mrs. Thatcher), may I say a word about the state of my list of speakers. Although the debate yesterday began on time, only 17 back benchers spoke, and some speeches could have been equally effective if they had been shorter. I have more than 50 right hon. and hon. Members who wish to take part in this debate. I hope that right hon. and hon. Members will make their speeches shorter.

3.38 p.m.

Mrs. Margaret Thatcher (Finchley)

Yesterday the Prime Minister opened the fourth major debate in 14 years on Britain's membership of the EEC. On each of the first three occasions the Prime Minister began the day as an enthusiastic advocate of the cause that his Government were proposing. This time the Prime Minister chose to open with a very low-key speech leaving out most of the broader issues or dwelling on them only briefly.

We are aware of the right hon. Gentleman's problems. If we were not aware of them yesterday, we have been made aware of them in Question Time today. At present he has to rely more on his political opponents than on his alleged political friends to secure the decision which he considers right for Britain.

It has been suggested in some quarters that my party might find it tempting to withdraw support in order to embarrass the Prime Minister. But we have voted consistently for Britain in Europe by a large majority and would not think of performing W-turns on this issue.

In 1961, when the right hon. Harold Macmillan first came to the House with the idea that we should make an application to the Common Market for membership, the Labour Party was lukewarm in the debate. Indeed, it did not vote upon the main question. On that occasion the Conservative and Liberal Parties voted 313 for the application. There were only five votes against, of which one was Conservative.

In 1967, when the Prime Minister made his application, 488 hon. Members voted for the application, and only 62 against, including 26 Conservatives.

In 1971, on the result of the application, 356 hon. Members voted for it and 244 against, which included some of ours.

Throughout, our record has been consistently that the vast majority of the Conservative Party have voted for the European idea in support of making applications, even when some of the right hon. Gentleman's party did not vote in support of the first application, and again we have supported the idea of Britain in the European Community.

The Prime Minister dealt mainly with the renegotiations and the Labour Party manifesto of 1974. I do not believe that this issue will be decided on those matters. The results set out in the White Paper are difficult to assess and very complicated. I believe that the matter will be decided on the broader issues associated with membership, and it is this argument which I propose to deploy today. I will deal, first, with the case for being in the Common Market, then the case for staying in, and finally the alternatives.

First, the case for being in the Common Market. I believe, with a number of hon. Members who spoke yesterday, that the paramount case for being in is the political case for peace and security. It is taken for granted now that Western Europe, which has been the centre of troubles within our lifetime, will not embark again upon its own destruction. I think that we should not too readily take that for granted but for the tremendous efforts and constructive purpose which have led to those nations working together in the Common Market.

One of the measures of the success of the Community that we now take for granted is essentially security. I think that security is a matter not only of defence but of working together in peacetime on economic issues which concern us and of working closely together on trade, work and other social matters which affect all our peoples. The more closely we work together in that way, the better our security will be from the viewpoint of the future of our children.

I believe that people today recognise two quite different needs. First, there is the need to be part of some smaller group to which we can belong and feel and know we belong. We see that daily in a certain amount of revulsion against size. [Interruption] I hear sounds coming from a certain direction. The country with perhaps the greatest devolution of power—Germany—is one of the most active members of the Common Market. So there is this need which we must all recognise and take into account in our policies and in the institutions which we fashion.

The second need is the knowledge that it is only when we get and work together that we can achieve the larger objectives which we arc seeking to achieve. It seems to me that the prospect of the Common Market fulfils both those needs —the need to identify with one's own nation and country and the need to work together as a community and an alliance of nations for the well-being and betterment of mankind.

Mrs. Winifred Ewing (Moray and Nairn)

May I take it from the right hon. Lady's remarks that she supports the view that powers should be devolved to Scotland equivalent to the powers of the Bavarian Parliament?

Mrs. Thatcher

The hon. Lady would be unwise to conclude anything of that kind. The Conservative Party has always stood for genuine devolution of decision making. I am sure that the hon. Lady will be interested to know that the letters which I get from some people in her country say that Edinburgh is just as remote as London. The hon. Lady has not been here as long as I have. That sounds rather like the Prime Minister. I must not fall into his ways too soon, but I admire his instinct for self-preservation.

I believe that these two needs are met by countries being in the Common Market and working together for the larger purpose. Therefore, my first reason for believing that we should be in the Common Market is peace and security.

The second reason concerns what I believe to be most important—access to secure sources of food supplies. We had quite a lot of argument and debate yesterday about food in the Common Market. I think that we have to view that against the background of the world's food reserves and the amount of food that this country needs to import. We need to import at least half our food to survive. Taking into account the import of fertilisers and foodstuffs, it comes slightly above the 50 per cent. mark. The figures were given in the Lubbock Memorial Lecture at Oxford recently.

Against the background of that need we must remember that the world's food reserves are now smaller in proportion to its consumption than they have ever been. We now have to live from the products of one harvest to the products of the next. The reserves are not sufficient, or the same, as they used to be in the past. In these circumstances, it is only prudent and sensible for the Government to obtain steady access to the Community, which could be self-sufficient in many agricultural products, and which, because of its combined bargaining power, is in a far better position than any single country to negotiate with the rest of the world.

We are the most vulnerable country with our need for food imports. Therefore, it is vital that we secure access to continuous and good sources of food supply. In some years supplies from the Continent will be more expensive; in other years they will be cheaper. But the great benefit is access and greater stability of supplies.

Obviously we had some debate about prices. I notice that the White Paper is very modest in its claim. But undoubtedly the common agricultural policy has not had the effect upon food prices which many opponents of the Market thought it would have. One has only to look at the latest official Government reply inHansard of 17th March to see that the Secretary of State for Prices and Consumer Protection said: the overall level of food prices in the United Kingdom is not at present significantly affected one way or the other by our membership of the European Community."—[Official Report, 17th March 1975; Vol. 888, c. 1125.] The right hon. Lady took the general overall picture. Of course, some commodities are up and others are down in price.

Mr. Norman Buchan (Renfrewshire, West)

Does the right hon. Lady recognise that there are two points here? First, it is irrelevant to the comparison whether the CAP has put up prices or not, but it has. [Interruption] The right hon. Lady was making the point that the CAP had not put up food prices and she used this answer to prove it. It does not prove it. The CAP did put up our food prices.

Secondly, on the comparison that the right hon. Lady was making, all the major commodities—beef, lamb, butter and cheese and all the grains, including wheat and maize—are dearer than outside the Common Market. The answer and the White Paper are wrong and totally out of date.

Mrs. Thatcher

As far as 1 can see, what the hon. Gentleman is saying is that the EEC prices did not put up food prices in this country but the CAP did. I should not like to argue that from a public platform. I prefer to take the official Government reply, which I believe is correct—that the overall level of food prices in the United Kingdom is not at present significantly affected one way or the other by our membership of the Community.

The third main reason why we should belong to the Community is that it is the largest trading and aiding unit in the world. It is larger than the United States; larger in the amount of goods which it imports than the United States; larger than the United States in aid. It is a very great advantage for this country to be a part of that very much larger tradingbloc. This has become very obvious to other countries. We can appreciate that by looking at the number of them which wish to negotiate direct with the Community, no longer so much with the separate countries. Country after country wishes to obtain access to the Community itself, to the most powerful market in the world. They are far more interested in the Community than they ever would be in supplying us alone.

Furthermore, as time goes on we are more likely to get access to the raw materials we need to fabricate our exports through bargaining as part of a community than we are ever to achieve by bargaining on our own. It is part of the same economic argument. One needs access to secure supplies of food; one needs access to secure supplies of raw materials—particularly if one has to import them to survive.

At present, on the trading point, half of our trade is with Western Europe as a whole. Through our membership of the Common Market we have preferential access to all those countries, which we should not otherwise have. Those countries comprise our eight EEC partners, the seven remaining EFTA countries, with which we have free trade agreements by virtue of belonging to the Community, and Greece, Turkey and Spain, which have Community preferential agreements. Therefore,. on the broad strategic trade and aid argument we have preferential access to Western Europe, with which we conduct 50 per cent. of our trade. I doubt very much whether we should be able to get that on our own.

Yesterday we had a good deal of argument about the trade deficit. Indeed, the hon. Member for Renfrewshire, West (Mr. Buchan) had a good deal to say about that, as indeed had the right hon. Member for Battersea, North (Mr. Jay). The Minister of State for Foreign and Commonwealth Affairs, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), substantially answered the question last night, but unfortunately —[Interruption] I said earlier that the Government had more friends on the Opposition side of the House than on their side. I am being proved right with almost every interjection.

On the trade deficit we were challenged. What right hon. and hon. Gentlemen did not say was that about four-fifths of the trade deficit came from the supply of about five different commodities to this country. Had we not bought them from Europe we would have had to buy them at the same or increased prices elsewhere.

First, on food, including dairy products, which we bought from Europe because many of the products were lower in price than they were in our traditional markets, to substitute our traditional markets for Europe would have meant that the adverse balance would have been worse than it was. Secondly, fuel accounted for part of the deficit. Because of the increased oil prices, we bought fuel products from the EEC—we had to buy some of them because of lack of refining capacity—and they went up in price, so that was a neutral factor in relation to the deficit. On plastics and steel we had an adverse balance. Again, we had to have some of these commodities because we could not supply them. We could not supply the plastics partly because of the Flixborough disaster, and we could not supply the steel because the British Steel Corporation was not able to supply enough last year. If we had not got those supplies from Europe we should have had to buy them elsewhere.

On all of these things, membership of the Community did not have an adverse effect on our balance of trade; in fact, it helped us, in so far as some of these things cost us less in Europe than they would have cost elsewhere. [An HON. MEMBER: "What about the balance of payments?"] The balance of payments is worse under the present Government than it has ever been under any other. Furthermore, we are borrowing more under the present Government than we have ever borrowed under any other.

The fourth main strategic reason for us being in the Common Market is to provide a world role for Britain. We on the Opposition side of the House have always attached great importance to a world role. On our own, as a nation of 55 million, we would have some voice, but not enough. Traditionally, Britain has always been part of a larger grouping, and was listened to partly because of that grouping as well as because of our own particular attributes. It used to be the Commonwealth, but since then most of the Commonwealth countries have become independent and have set up their own trading preferences and arrangements. That did not happen only after our accession to the Common Market. For years and years the Commonwealth preferences were being eroded, as those of us who tried to sell to many of the Commonwealth countries knew. Naturally, they set up their own industries, and naturally they protected them in the early stages. That meant that steadily our markets were closing down. I watched that process year after year. It became vital that as those markets closed down, so we should be able to open up markets of equivalent or greater capacity elsewhere.

The Community opens windows on the world for us which since the war have been closing. It is already strong and already a major influence in the world.

Those are the four big strategic points for being a member of the Community. They are as strong now as they ever have been.

There are also additional points now for staying in the Community which perhaps did not exist at the beginning. First, the Commonwealth itself now wants us to stay in. I know of no adverse comment on this matter. All the comments that have been made, whether by the Prime Minister of Australia, the Prime Minister of New Zealand, the Prime Minister of Canada, the Indian Minister of Commerce, or the Jamaican Ambassador to the United Nations in New York, have been to the effect that they wish us to stay in. This is indeed a further powerful reason for staying in.

The second reason is that we can begin to quantify some of the benefits. The document produced by the Britain in Europe Group, which sets out 176 examples of grants and loans made in the last two years by the Community institutions to this country, is most effective. It sets out specific examples of grants and loans totalling some £290 million, which have gone all over the country.

Mr. E. Fernyhough (Jarrow)

How much is loan and how much grant?

Mrs. Thatcher

The grant is £89 million and the loans are £200 million. That leaves out of account £176 million paid from the guarantee section of the Community's Agricultural Fund.

One can point to a large number of tangible benefits in the form of grants coming to this country. The right hon. Gentleman the Leader of the Liberal Party enumerated a number of separate items yesterday. They vary from very large grants of some £34 million or £35 million to small grants such as grants to the families affected by the Flixborough chemical plant explosion. The EEC gave grants to the planners and grants to agriculture. It gave one grant after another to which one can point; and, of whichever area one is speaking, all this came from the EEC.

Another reason for staying in is that our partners have done everything possible to be both co-operative and constructive. It has been noticeable how they have helped this Government through all their renegotiation difficulties. I believe that on the whole the Prime Minister and the Foreign Secretary did a good job in the negotiations, and so far as they have obtained improved terms we are delighted and hope that those, too, will help to keep Britain a member of the Common Market. My right hon. Friend the Member for Penrith and the Border (Mr. Whitelaw) said yesterday that he believed that renegotiation is a continuous process. It was my right hon. Friend the Member for Knutsford (Mr. Davies), I believe, who described the Common Market as almost a non-stop negotiating machine. Of course, that is likely to be so in any community which is an organic, living community. It is constantly developing the whole time, constantly responding to the interests of its members.

The right hon. Member for Jarrow (Mr. Fernyhough) indicated a moment ago a certain amount of scepticism about the total amount of grants and loans, but it is quite clear from the White Paper that our calculations, made two or three years ago, about the effects of the Common Market on our Budget were wrong. It is equally difficult to try to make precise forecasts of the sums involved here when we are looking to the future. All we know is that the figures given in the White Paper show that this year, when we were expecting to pay a net contribution of some £165 million, our net contribution turned out to be only £31 million; so our calculations were wrong. The result has been that we have contributed far less to the Community budget than we had expected to contribute. That is another plus for Britain.

On the common agricultural policy, despite what the hon. Gentleman has said, that has not had as adverse an effect on world food prices as he and some of his hon. Friends, and a number of other people, feared at the time it was negotiated. But, in fact, there are very good reasons for believing that the agricultural policy will gradually become more consumer-oriented than it has been in the past. It is natural that as a country has fewer people working in agriculture and more working in the manufacturing industries, its policies will become more directed towards the consumer than towards the agricultural producer; but I and a number of my hon. Friends would hold very strongly that those who work in agricultural production should get just as good a living as those who work in producing manufactured goods.

Another good reason for staying in is the effect that there would be on investment and jobs if we were to pull out. Again, this is very difficult to quantify. Obviously, quite a number of multinational companies will prefer to invest in Europe rather than here if we are not a member of the Common Market. A number of companies here have already indicated that they feel that if we were to withdraw there would be a loss of jobs. Firms like GKN, Lucas and Vauxhall, and a number of people in the chemical industry, have indicated that if we were to withdraw investment would not be forthcoming here; and in their view it would have an adverse effect on jobs.—[Interruption] I assume that the hon. Member for Bolsover (Mr. Skinner) is interested in getting investment, even overseas, if it helps us to provide jobs in areas where jobs are needed.

Mr. Frank Hooley (Sheffield, Heeley)

Is not the right hon. Lady aware that in 1973 the outward flow of industrial capital, or capital for investment, from this country to the Common Market countries was £400 million while the flow the other way was only £50 million?

Mrs. Thatcher

I think the hon. Gentleman is trying to accelerate new investment towards the Common Market and away from this country. The position is already difficult. We should not try to make it more difficult still. We want more investment here and are quite happy for multinational companies to come and invest, particularly in areas where we need jobs.

The last reason for staying in is that it would be traumatic—to use the Foreign Secretary's own expression—to come out. When we went in we knew exactly what we were going into. We had had very powerful negotiations, under my right hon. Friend the Member for Sidcup (Mr. Heath), over a period of two or more years and knew exactly the conditions we were to face when we went in.

If we were now to withdraw, it would be a leap in the dark. We should not have any idea of the trading conditions into which we were coming out, or of the effect on sterling. It is not a genuine alternative. A genuine alternative would be to have two sets of negotiations and choose between them; but that would not be possible. We knew what we were going into because of the careful negotiations. If we withdraw we have no idea of what alternative trading arrangements we shall be able to secure. Quite a number of people have made a different suggestion, that perhaps we could return to EFTA. We are already a member of the free trade area by virtue of being a member of the Common Market; and if we were out every EFTA country would have to secure EEC permission because of the free trade agreements. Secondly, we would be a market of only 40 million, which is hardly comparable to a market of 200 million in the EEC. Thirdly, agreements on EFTA are particularly tough on rules of origin, and those in themselves, in the way they operate, could have an adverse effect on some of our trade, particularly in motorcar components.

Having been through some 60 pages of the rules of origin one understands the difficulties associated with them. As hon. Members will know, there are provisions covering certain sensitive products in EFTA agreements under which tariff barriers have gone down, particularly in textiles, with the EEC. Those barriers would be erected again. So even if we could get into EFTA, that would be no answer to our problems. A second alternative would be to have a free trade agreement with the Community. The first thing that occurs to one on this is that a time when one has just broken a treaty is not, frankly, the best time to ask for another, particularly when one is a country of a similar size to other countries in the Common Market and one's products are such that one competes with many of the others.

Many people may say that Norway did so, but she got agreement before she went in; and Norway is a market of only 4 million people with an economy quite different from ours. Any such arrangement would require protracted negotiations which would probably follow the general lines of those agreed with other EFTA countries, and again there would be sensitive products. Secondly, the clauses and articles dealing with State aid to nationalised industries are, if anything, slightly tougher in the free trade area agreements with the EEC than they are in the initial EEC agreement. That EEC agreement specified certain grants that were compatible with the treaty. The free trade area agreement does not repeat those particular grants; and, as I have said, it is slightly tougher on State aid to nationalised industries than the EEC treaty ever was.

Mr. Douglas Jay (Battersea, North)

Does not the right hon. Lady realise that if we withdrew in that situation over the broad area of industrial goods this country would really be in a free trade relation with both groups and, therefore, all we would be abrogating—[Interruption] Well, if hon. Members do not understand that they do not understand the basic facts. In that situation the onus would be on any other country to alter the status quoand take the initiative in raising tariffs against us. Does she really think that that is likely to happen?

Mrs. Thatcher

The right hon. Gentleman is taking a virtually unique view in thinking that he can select certain parts and not others, that he can just opt out of the agricultural part and keep the free trade area part. But if we abrogate a treaty we abrogate all the treaty and then have to start negotiating again. I see absolutely no grounds for believing that one can get exactly those bits one wants while taking none of the others which do not happen to suit one.

Mr. Jay

Does the right hon. Lady not realise that the EFTA countries are now in exactly that position of industrial free trade without the Common Market obligations?

Mrs. Thatcher

The EFTA countries negotiated their own particular treaties with the EEC. We have no such treaties. We should have to start the negotiations all over again. We do not have such a treaty and we do not know whether we would get it. The time to ask for a new treaty would not be when we had just broken the old one. As the right hon. Gentleman knows, those EFTA countries which are steel producers had to promise to align their steel prices with those of the Community without consultation. There are also certain other restrictions on fishing which were applied to Norway, although I agree that fishing has not yet been fully resolved in the treaty.

The choice is whether to be outside the Community and yet have to accept everything which it decides on trading provisions, including standards and safety provisions and prices of steel, or whether to stay in the Community and have an influence over all those decisions which will seriously and closely affect the whole of our industrial life.

Mr. Ron Thomas (Bristol, North-West)

Is the Leader of the Opposition suggesting that the EEC will prejudice its £2,000 million balance of trade surplus with us simply out of pique and erect trade barriers and become the inward-looking club that many of us feel it is?

Mrs. Thatcher

What I am suggesting is that the hon. Member has absolutely no grounds for assuming that we should get a free trade area agreement with the EEC when it has made strenuous efforts to meet all our requests and demands to keep us in the Community. I believe that the hon. Gentleman wants to accept those parts of the treaty which suit him and forget about the rest.

I hope that our economy will soon be in better shape and overcome the adverse balance of trade, and I am sure that the Prime Minister shares that view. We cannot assume that we would have an alternative area to go to, and the result may be that we should have to go it alone. There being no certain alternatives, it would seem that we have very carefully to consider keeping the arrangements and agreements we already possess before going completely into the unknown. Being in the EEC will not, of course, solve all our economic problems, or anything like it. Some of them are home grown and have to be dealt with by us. There are the problems of inflation in particular which we have to cope with ourselves, whether we are in or out of the Community.

For Britain to abrogate a treaty is bad for Britain, bad for our relations with the rest of the world and bad for our future trading relationships. I believe that Britain has always played a major role in the world and still has a major role to play. I do not believe it can play that role to best advantage on its own, and if we wish to give our children maximum peace and security in a very uncertain world, our best course of action is to stay in the Common Market.

4.14 p.m.

Mr. Brian Walden (Birmingham, Ladywood)

The Leader of the Opposi- tion began, very properly I am sure, with a tourd'horizonof what we had or had not done in the past and of who had voted for what and who had not. I would be the first to accept that if she is trying to contend that the very heart and core of the anti-Market case lies within the Labour Party, she is right. I am sure, however, that she will not misunderstand me when I say on this issue that we all have to accept some strange bedfellows. I hope she will not feel too disappointed in having to agree with my right hon. Friend the Prime Minister on this issue, whether he is low key at present, as she alleges, or whether he is enthusiastic, as she claims he was in the past.

The side I support happens to comprise the majority of the Conservative and Liberal Parties in the House of Commons, plus the CBI, the NFU and Sir Oswald Mosley. But, then, my hon. Friends who disagree with me are in no better position. They are supported by the nationalist parties, the right hon. Member for Down, South (Mr. Powell), the Communist Party and the National Front. Which of us is the more motley crew is a moot point, so moot that I think it much better not pursued. It would be wiser of us all on the Labour benches to assume that, for what seem to us as individuals good and sufficient reasons, we have arrived at our views without fear of guilt by association.

On the issue itself, I have never pretended in the past, and I do not pretend now, that I regard this as the most important issue facing the country. I do not. Among a number to which I could give a higher priority I cite just one. Should we or should we not preserve a mixed economy? To my mind that is an unresolved philosophic and practical dilemma for my party and one which will have the most profound significance upon British society. However, even there there is some chance of compromise. After all, one may support a mixed economy but dislike the present mix. On the EEC, as we now stand, all hope of compromise has gone. Time has run out. There are no more expedients left for deferring a decision. This week the House of Commons must say "Yes" or "No", and later the electorate will have to say "Yes" or "No".

Although I am enough of a politician to dislike seeing bridges burning behind me, temperamentally I would far sooner make a decision than postpone one and I am glad that we have reached the point at which we have to decide. I believe that our present uncertainty on EEC membership weakens us in several crucial spheres, particularly financial and economic. We need to decide our future and to get on with it. This country cannot go on being a coy and cool friend of our European partners. We either dissolve the partnership or we make a wholehearted attempt to have a success with it.

Naturally I draw a very clear distinction between entering the EEC in the first place and deciding to leave it now. It means not only that the United Kingdom would unilaterally renounce a treaty that it has so recently signed—and make no mistake about it, our credit in the world stands not upon such a pinnacle that we can lightly do that without regard to the consequences. It also implies that few of us can see no logical distinction between being opposed to entry and wishing to leave after having joined. I would be sorry to believe that that were so. However, listening to yesterday's debate. I noticed that the Leader of the Scottish National Party, the hon. Member for the Western Isles (Mr. Stewart), several times referred to joining the EEC as though we had not already joined. The profound wish in many hearts that we had never joined cannot undo the fact that we have.

That is the reality of the situation. A die has been cast. A destiny has been determined. We can certainly try to undo it, but let nobody suppose that that is much the same thing as never having joined in the first place. It is supremely different—indeed, so different that a unique constitutional device has had to be contrived to try to circumvent the wishes of Parliament, a Parliament which not only voted to join in the first place, but which everybody knows will vote on Wednesday night even more decisively to stay in the Market.

A constitutional dodge, associated previously only with Professor Dicey, a stone-blind reactionary who wanted to use it against home rule, has had to be devised in order to get us out of a situation that the House wishes us to be in. In that respect, if in no other, coming out is profoundly different from joining in the first place.

I hear it argued that our experiences within the Common Market have been so appalling that any expedient would be justified to get us out. What are these appalling experiences? They are usually related to our trade deficit with Europe. The logic of that case escapes me entirely. Is it suggested that we leave the EEC and then cease to trade with the EEC countries? I assume that the proposition is that we should set up a free trade area, in which case we shall go on trading with EEC countries, and the deficit will stay exactly where it is until we do what we ought to have done long ago, and will in the end have to do, namely, submit ourselves to the disciplines and sacrifices that will put our own house in order.

The problem on the trade deficit side is that we are responsible for the way in which we regulate our economy and produce those situations. I agree completely with the analysis by my right hon. Friend the Prime Minister of this matter. I only wish that I could see more will to resist the current madness which at the fiat of over-mighty subjects robs us of any option except inflationary money-printing on the one hand and deflation and unemployment on the other, as the only things that we are allowed to do because of the prison that this movement has allowed itself to be shoved into. When we do something about that, we shall see some impact on our trading deficit with Europe. That is where the shoe pinches. There will be no escape from the hard choices involved. Economic management is a uniquely high priority. I fear that it will become a crisis and that there will be no escape.

I do not deceive myself that the argument in the country will be conducted mainly on economic policy—not a bit of it. There were kind but naive friends of mine who assumed that when we drummed up the seven points for renegotiation, none of which directly mentioned sovereignty, that would mean that everybody would play fair and that the antiMarketeers would not bring up the sovereignty issue, because it was not in the manifesto.

Mr. Spearing

It was.

Mr. Walden

If my hon. Friend looks at the seven points for renegotiation he will see that sovereignty, if mentioned at all is mentioned in the most marginal sense. It will be the keyboard upon which all the high notes in the country are played.

We are told that our sovereignty has been undermined. Let us examine that proposition, because that is the core of the case against my right hon. Friend the Prime Minister's proposition. As I believe that the onus lies on those who wish to make the change, let us look at the core of their case, especially in relation to my own party. It surely cannot be national sovereignty that is worrying my hon. Friends. It is perfectly proper that the right hon. Member for Down, South should portray himself as a thoroughgoing nationalist, because that is what he is. I have no doubt that he will stir many hearts with reminiscences of vice-regal splendour, and that he will chill a good deal of blood with talk of the aliens without and the aliens within our society. It is entirely open to him. He has always, or at least in recent years, expressed those views.

Is this supposed to be the traditional posture of the Labour Party? I had assumed that we were an internationalist party. Although it is an important function of internationalists to extend the hand of friendship to those who despise and detest our system of government, there must be just a little tiny corner in our hearts for those who actually approve of it.

Therefore, I take it that the Labour Party is not particularly worried about national sovereignty. So the problem must be, as we have been told, parliamentary sovereignty. I must say that I am much encouraged. Events of recent years had tended to conceal from me the depth of affection in which parliamentary sovereignty was held by the strong antiMarketeers in the Labour Party. I knew that some of them felt it, but I had been misled into believing that that feeling was not entirely universal. I now see my mistake. Parliamentary sovereignty is what they really care for.

Unfortunately, for my sins, I am of a somewhat sceptical turn of mind. Therefore, I ask myself certain questions. First, I wonder whether the reality of the threat to parliamentary democracy does not lie within our bounds rather than in Brussels. If parliamentary sovereignty is a priceless jewel to be preserved unflawed, why are we having a referendum at all? The referendum is the most brazen affront to parliamentary sovereignty in my lifetime.

I will say something else which will not be the least popular but which needs to be said. If we are to be told about the value of parliamentary sovereignty, let me ask some of my hon. Friends this: if the will of Parliament is now so vital to them, if parliamentary sovereignty matters so much to them that they cannot bear to see it abridged by any regulation, why was it that instead of campaigning to change the law, which is proper, so many of our party when in Opposition wished to, and did, defy the law, which was the will of Parliament and therefore the very embodiment of parliamentary sover eignty? Where were the doctrines of parliamentary sovereignty then, and who was having recourse to them then?

Some of us who really believe in parliamentary sovereignty, against all its challenges, have felt lonely people in the Labour Party in recent years. [AN HON. MEMBER: "My hon. Friend is not so lonely now."]—I welcome the change, although I do not need to be told that no man should come here as a delegate from the massed party of the country, that no man should suffer himself to be mandated by the general management committee of his party, that no man should place any outside responsibilities against his parliamentary judgment. I accept all of that. But it seems to me that the right place to exalt parliamentary sovereignty is not in Brussels but in Blackpool during the month of October.

I could be asked "That is all very well but, flagrant though the offences against parliamentary sovereignty have been from within our society, does that change the fact that membership of the EEC has further abridged it?" No, it does not, and there is no point in pretending otherwise. But surely the Foreign Secretary must be right when he points out that the reality of the EEC is that what a member country finds insupportable it is not required to support. Does anyone suppose that the late President de Gaulle—or, for that matter, even the present President, M. Giscard d'Estaing, who is somewhat different both temperamentally and in his opinions—lay awake at night wondering about the portentous threat to French sovereignty posed by membership of the EEC? Of course they did not. I am very fond of the French, and I am especially fond of Paris, in more than one way, and I am not being rude to them when I say that they are stubborn realists. It is a bit more realism that we need on this matter. Realists know that the EEC can, does and must take account of national political situations. If the French and the Germans, or for that matter the British, find some formulation of the Brussels Commission politically unacceptable—

Mrs. Millie Miller (Ilford, North)rose—

Mr. Walden

The trouble is that if I give way I shall prolong my remarks, but for the hon. Lady I will give way.

Mrs. Miller

I should like to refer the hon. Gentleman to one of the problem countries of the EEC, Italy, which at this very moment is living in fear and trembling of new regulations being introduced not by the Council of Ministers but by the Commission on Agriculture, against which there is no veto. I wonder how that affects his argument.

Mr. Walden

I take my hon. Friend's point although I am not at all sure that the regulations will have the impact she supposes. I am bound to say that if I were an Italian it would not be fear and trembling of Brussels from which I should be suffering but fear and trembling of the incompetence of my own Government.

I find it crass to suppose that these regulations are simply imposed without further ado against enormous national protest, that treaties are brandished and people are told to go away, keep quite and simply obey them. The EEC countries are democracies, and democracies are led by democratic politicians who have to placate annual conferences and win elections. It is a very strange idea that these chaps do not understand the problems of other politicians. Of course they do.

The whole history of the EEC is of compromise and accommodation. Where a particular problem is found to require different solutions in different countries, a formulation is always devised which enables that to take place. Of course a text-book formulation of the EEC may well frighten the apprehensive, but a textbook formulation of our system bears very little relation to what is happening at present, to say the least. It does not even wholly identify the true centres of power. We need some new text books, but in the meantime we might make up the deficiency by being a bit more realistic and a bit less apprehensive.

I do not find the case for leaving the EEC to have been made, and I think that the onus lies on those who now wish to take us out to show quite conclusively the benefits that this will confer on the British people. For my part I cannot see those benefits and, although I hope it will not, I think that the anti-Market campaign will in the end, when it gets out into the sticks, degenerate into narrow nationalism, the plea for a siege economy, for Socialism in one country. I was never very enchanted by the rhapsodies of the Eurofanatics but I certainly prefer their version of the future to that grim and barren alternative which it seems to me the anti-Marketeers will end up with.

The rational answer, and certainly the one that would suit me best, is to say that one might as well stay with an established and, when all is said and done, none-too-onerous arrangement, the leaving of which at best would be disruptive and at worst might give our fragile economy that final push over the precipice; and, if it goes, then there goes with it the worthwhile society that it supports.

4.36 p.m.

Mr. John Davies (Knutsford)

The trouble about this debate is that as it proceeds one is confronted with the fact that very much of what one has prepared to say has already been said much better by somebody else. I find this is particularly so in the debate on the European Economic Community which, since I have been in this House, has seen a good deal of discussion over the years. One is in some difficulty in trying to reconcile one's own prepared oration with the exigencies expressed from the Chair to observe brevity which I will seek to do, and at the same time not to fall into the hazard of producing a totally dislocated statement. I will try to bridge these various gaps, no doubt with some deficiencies.

I should like to follow the hon. Member for Birmingham, Ladywood (Mr. Walden), in his scintillating speech, and in the first place on the subject with which he dealt in terms of the various sovereignties which have been under consideration in the country and within this House. I agree with him that a good deal of nonsense is talked about sovereignty, but there is no doubt—and I can have no doubt of it myself, after even so brief a period as I have spent in this House—that the issue of parliamentary sovereignty, the ability that this House commands to have under review all the major issues that affect the future of the country, to express its opinion, to give its guidance and where necessary to impose its discipline, is of fundamental importance in the way this country is run. I accept that I understand it to be the case. In the time I have been in the House, I have always heard it so expressed by my right hon. Friend the Member for Down, South (Mr. Powell), and I have respected his statements on it.

But I am bound to say that, in the same way, my own brief experience of this House has not led me to suppose that the House itself exercises a remarkable degree of pressure or effect upon the passage of legislation as it emerges through the House of Commons.

I wonder how many hon. Members had the opportunity of reading an article by the hon. Member for Basildon (Mr. Moonman) inThe Times some time ago on the question "A time to talk and a time to act". He said something which has been my personal experience of the way in which this House is operated in terms of its legislative process. He said, …the fact is that, by the time a Bill comes before the House, no matter how unclear its intentions or how badly drafted, any amount of discussion will rarely shift emphasis or intention, for it already embodies hours of consultation with outside interests and Civil Service preparations which no government will willingly see repeated. I must say that both as a Minister and as a back bencher in this House it has been my experience that the degree to which this House can shape and frame legislation upon which the Government have already spent an immense amount of time is small. Therefore, whether the legislation be of a domestic or Community nature, the House must find a means of scrutinsing it within its own capacity, subject to the sort of restrictions which the hon. Member's article clearly implies.

The means adopted in the House of scrutinising European legislative proposals have proved to be not ineffective. It is interesting to recall the occasions in recent years when the expression of opinion of this House on Community legislation seemed to have a positve effect on the conduct of Ministers. It is curious that that has happened particularly with regard to Community proposals.

We can recall our discussions about juggernauts and the effect which the pressure that the House put on the then Minister of Transport had in the conduct of his affairs in Brussels. We can think of the question—my right hon. Friend the Member for Down, South will recall it very well—of the powers of summary arrest in the event of non-compliance with certain vehicle insurance requirements. The pressure exercised through this House undoubtedly had a powerful effect on the Minister concerned. My hon. Friend the Member for Banbury (Mr. Marten) will recall his contribution to a discussion on the system of vehicle driving licences, the way in which they were provided and the age at which they could be granted. He cannot doubt that that discussion had a profound effect on the Ministers dealing with that matter.

The methods which have been used have had precisely the effect which I believe the House most usefully can exercise, namely, of impressing on Ministers before they take action the feelings of the House about the measures contemplated. The methods which we have adopted to deal with European matters have not been ineffective. Indeed, I wonder whether they might be more widely applied to domestic legislation.

A Green Paper embodies a large degree of resolution which is, to all intents and purposes, immutable. Would it not be of interest if a Select Committee or Select Committees were to consider Green Papers and gave the House their opinion on the suitability of the measures proposed or contemplated? Green Papers are the subject of discussion with outside bodies, and if the House and individual Members wish to contribute to those discussions they do so. But normally they are not subject to the sort of scrutiny which is devoted to Community legislation. It would be interesting if that were done.

Therefore, on the issue of sovereignty, there is little that can be said to show that the legislative capacity of the House has been or is being severely undermined by the Community institutions.

Mr. Spearing

Does the right hon. Gentleman agree that, despite the truth of what he has said, when the Government are considering future legislation and advisers are advising Ministers about certain courses of action, it is almost certain that they will not advise courses of action which will conflict with Community policy? Therefore, not only would the direction of the legislature be governed by the direction in which the Community was going, but the House would not be given the option of discussing the merits of the wider options.

Mr. Davies

I very much doubt whether that is so. The Community proceeds, not solely by a series of proposals, but, as the hon. Gentleman knows very well, by a wide range of consultative documents which, broadly, precede the development of proposals in instrument form. Therefore, the House has the opportunity—and it should exercise it—to discuss these matters when they are in a much more formative stage than is normally the case.

I turn to the question of food and the common agricultural policy. I do not wish to repeat what has been said by my right hon. Friend the Leader of the Opposition today. However, in the adverse remarks made about the common agricultural policy—and, regretfully, I think there will be a period of dearth rather than of plenty in world supply—little has been said about the real interests of the farming industry. I regret that deeply. The common agricultural policy is not least an instrument whereby the preservation and health of the agriculture industry should be maintained.

This country decided years ago, perhaps without sufficient consideration, that it was wise to make a judgment about the number of people employed in the farming industry solely in relation to the economic criteria of the alternative employment in industry or elsewhere. But the agriculture industry is a vital part of the social structure of this country and of Europe. I am convinced that if we do not take determined steps—we are not taking them now—to protect and preserve our agriculture industry, we shall suffer greatly in terms, not simply of food production or of the means of feeding ourselves, but of the texture of our country, of our society, and, not least, of our environment. Therefore, I see in the CAP a means of ensuring that there is preserved in this Continent something which I believe is of the greatest value to it and the disappearance of which will be a matter for the greatest concern.

I turn to the other principal area of discussion, namely, the economic consequences. The anti-Marketeers apparently blame Community membership for a degree of the deficit in trade which they believe is overwhelming any potential economic advantages which we may draw from the Community. That argument has been repeatedly exposed in the past two days.

Mr. Fernyhough

Does the right hon. Gentleman agree that every ministerial statement leading up to our taking the decision to join the Common Market pointed out that capital would flow to this country like water flowing down the mountainside and that our trade would increase tremendously? Does the right hon. Gentleman also agree that none of the rosy pictures which he and his colleagues painted has turned out to be true?

Mr. Davies

I was always of the opinion, and said so, that the purely technical effects of tariff abatement were bound to operate more favourably in relation to the then Community countries than to us at the outset. No one could have presumed that this country would be in its present parlous economic condition at the time that forecasts of these matters were made. For 18 months at least this country has been grossly over-consuming and grossly under-producing. The effect of those contrasts is to induce an overwhelming propensity to import. Whether those imports come from Community countries or elsewhere, the cause is here and nowhere else and the remedy is here.

I agree entirely with what the hon. Member for Ladywood said. It is absolutely futile to try to pin on to other people the causes of our own weakness, which we must remedy. Therefore, contrary to what the right hon. Member for Battersea, North (Mr. Jay) would have us believe, we shall not correct an intrinsic internal productive weakness by adopting a siege economy, with drastic import controls. We have to correct this ourselves. I apologise for responding at some length to the intervention of the right hon. Member for Jarrow (Mr. Fernyhough).

What I have said so far represents, to a large degree, the defensive side of the argument that must be deployed. There is a major positive side which we must not fail to state. The whole renegotiation procedure is a fantasy which has the one advantage that it gives us cause and time to rethink our convictions. In facing the need to convince people of the dramatic and even tragic effects that might be brought about by withdrawal from the Community at this stage, we are forced to review our thinking and convictions on this matter, which have been generated over many years.

As I look towards the next quarter of this century I realise that all the large issues we have to face cannot be faced alone. For instance, we are facing the end of a century in which the whole problem of access to primary resources, whether they be energy, food or other essential materials, is conditioned not just by a rate of exhaustion higher than the rate of discovery but also by political overtones which have a fundamental importance for our future.

Whether we are thinking in terms of food, energy or essential metals, we cannot for one moment believe that we can necessarily guarantee ourselves either the safeguards or the deals necessary to preserve our position, with Europe, as one of the great transformation areas of the world. The Continent of Europe is not a continent of primary resources. Valuable though finds of oil and gas in the North Sea may be, they do not con- stitute a vital reversal of the resource patern of this Continent. Europe is a Continent of transformation and will remain so. To be such a continent Europe must be able to count with certainty, and on reasonable terms, on continuing access to supplies of a wide variety of materials. Otherwise we could easily find ourselves and for almost negligible values at times held totally to ransom in terms of our performance. Britain, as one country alone, is not equal to dealing with that problem.

A second and no less major issue over the remainder of the century is the management of our technology, not just the ability to stay in the hunt in all the advanced fields of technology in which we have hitherto been high-level performers. From now on we may easily regress in this sphere unless we proceed in concert with others.

There are other things to be borne in mind, for example, the handling of our waste and pollution. I wish to preserve a decent way of life and at the same time to create a more elaborate technology. I see problems ahead in trying to reconcile the preservation of human decency and dignity at work with the electronic control of so much of our activities. If we act alone without the degree of comprehension that goes with the Community, we shall not succeed. There are many other such spheres.

The Lomé Convention is a great step forward. To use such an agreement not just as a means of transferring help to people but as a means of actively ensuring that there is growing capacity for developing countries to look after themselves and to support and aid that operation is a unique break through in terms of relationships between developed and developing countries. However, it is only a beginning. There is an immense amount to do, especially in relation to the problems of the continent of South-East Asia as they are accumulating today. Alone Britain cannot figure in dealing with that problem.

During the next 25 years or so—and it may be longer—the question of the generation of an adequate monetary system will arise. Who can imagine that this almost anarchic floating arrangement between countries is a basis for sound industrial development? It simply is not and will have to be remedied. Who can imagine that the existing arrangements with regard to the law of the sea can be altered to suit our point of view if we are alone as an individual representative? We shall simply be a cipher and an insignificant voice if we so remain.

For all those reasons and for all that lies ahead, I cannot believe that our vote tomorrow night will be anything but a strong affirmative, and I pray that it will be so in the country.

4.56 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I am an internationalist and for 30 years I have tried, in a modest way, to promote in this country the principles and ideals of the United Nations and an understanding of the great development of the international bodies which have grown up on the framework of the United Nations Charter.

It is primarily because I am an internationalist that I am an anti-Marketeer. I reject completely the narrow concept put forward by my hon. Friend the Member for Birmingham, Ladywood (Mr. Walden), that those of us who are opposed to the Treaty of Rome and who are opposed to the arrangements in Western Europe at present have no interest in international co-operation. It is the Europeans who are developing the narrow isolationist attitude, the narrow ethos of protectionism against world food trade, of special arrangements to a privileged small group of countries. That is the ethos of Europe.

Those of us who reject that ethos do so because we want to see this country play a role in the genuine international organisations, the UN, the International Monetary Fund, the World Bank, the General Agreement on Tariffs and Trade, UNCTAD, the World Food Council and other bodies. These bodies are of importance to this country and we should be seeking to develop, enhance and strengthen them. It is the European Community concept which is hostile to these bodies and which, over the past few years, has developed an inward-looking approach to the great international problems that face us. The classic example of this is the common agricultural policy, which is the cornerstone of the EEC's economic arrangement.

Let nobody suppose that the French Government would for one moment remain within the Common Market if anyone threatened the CAP. This is why the renegotiation on that point has been no renegotiation at all. The fundamental elements of the CAP are still there. It is a deliberate policy of discrimination against world food suppliers —it is a twentieth-century version of the Corn Laws—and a deliberate policy of dear food, which is contrary to the interests of our own people and to the interests of many consumers on the Continent.

The system works this way. If prices in the world commodities fall as they are now falling—and falling significantly—the system of levies is designed to maintain dear food within the Common Market. If prices within the Common Market show any inclination to decline, the system of intervention buying is deliberately designed to maintain them.

These two principles are totally unchanged by renegotiation. The White Paper does not seriously claim that they have been changed. The consequences for this country have been that whereas in the world market we could have bought beef, lamb, mutton, veal, cheese, butter and today wheat and maize, at a lower cost, we have been compelled by the system to buy dear. A more wicked and reprehensible aspect of the policy has been the deliberate creation of great mounds of stored-away food, deliberately taken from the consumer by the intervention policy. We have had the beef mountain and the butter mountain. We now have a vast surplus of wine and of dried milk. We have had the deliberate denaturing of wheat to make it inedible.

The curious consequences of this policy is that the British taxpayer, about whom Conservative Members are so sensitive and concerned, is paying more under this system to keep food dear than he paid under our own system of deficiency payments to keep it cheap. If there was any condemnation of the policy, that should be it. Those, like me, who wish to see a genuine international trading arrangement, want to see an approach to worldwide food and commodity agreements which will in some respects resemble the Commonwealth Sugar Agreement.

There are those who sneer at us and say, "Oh well, all you want to do is exploit the poor peasant in the West Indies, Fiji and Mauritius". Nothing of the kind. The essence of the Commonwealth Sugar Agreement was that it was a fair deal between the consumer and the producer. To the producer was given a stable market and reasonably stable prices. The consumer was given a fair price in the shops. It was a system that worked extremely well for 20 years and was welcomed by both sides. It was a system that was destroyed by our entry to the Common Market.

Mr. Peter Temple-Morris (Leominster)

Has the hon. Gentleman heard of the Lome Convention? Is not the purport and effect of that aimed at the far-reaching goals at which the hon. Member worthily aims?

Mr. Hooley

Not at all. I propose to deal a little later with the Lomé Convention and to draw attention to the considered judgment of the Overseas Development Institute in London about the exact force and achievement of that convention.

I want to avoid the narrow protectionist outlook represented by the common agricultural policy and move towards genuine international co-operation in the wider framework of such bodies as the United Nations and all the great organisations and agreements such as GATT which try to provide sensible co-operation throughout the whole world. I do not want a narrow, exclusive club for Western Europe. I want to see genuine co-operation between the countries of Africa, Asia, the Caribbean and Latin America so that there is a give and take, a genuine exchange and fair dealings between the two sides.

My right hon. Friend the Foreign Secretary said at the outset of the negotiations that the Government believe that the monetary problems of the European countries could be resolved only in a worldwide framework. I believe that he was absolutely right. If this is so, why bother with Brussels? Why waste our time dealing with the apparatus of the Commission and the Council of Ministers when it is the worldwide framework, as my right hon. Friend has said, which matters?

Many hon. Members try to say that here we are creating a splendid economic super-State which can stand up to America and Russia and which can play a powerful, independent economic role in the world and get its own way. Therefore, they say, we must join in this super-State. What happened when the oil crisis arose and there was the problem of recycling oil revenues? The Common Market was absolutely helpless. It did not even devise a common policy. France, Germany and Italy ran like scared rabbits in all directions to make private deals with countries such as Iran, Saudi Arabia and Libya.

There was no common policy, no agreement, no effective organisation. This great super-economic State, when faced with the most serious and difficult financial crisis in the post-war period, was totally helpless to deal with it. What happened was that the Chancellor of the Exchequer took an important initiative. He began negotiations. He went to the IMF and through that managed to achieve a working arrangement, or the beginnings of one, for the recycling of the petro-dollars.

Through the OECD, and subsequently by bringing in the United States, Japan, Canada and other countries, we have been able to devise arrangements which, for the moment at least, have begun to bring under control this great international problem of recycling the surplus revenues of the oil States. But the European Commission, the Common Market apparatus, this so-called European super-State, this economic giant, has been totally irrelevant to the problem. I fail to see how British interests have been in any way advanced in this crisis by membership of that body.

Our membership of the IMF and of OCED has been of far greater importance than our membership of the EEC.

The energy crisis was likewise beyond the capacity of the Common Market to cope with because it required cooperation between all the major consumer countries in the world and not simply between the nine industrial countries of Western Europe, although these are important consumers of oil and have an important interest. It is the International Energy Authority not the Brussels Commission which is now important in dealing with problems of oil. It is negotiations between Europeans and Americans, the Japanese, Canadians, Swedes and other industrial countries, together with the OPEC countries, which will eventually resolve the problem of how to get a flow of an essential raw material from the producers to the countries which need it, on a reasonable financial basis. But the European Commission is totally irrelevant to the problem.

Mr. Russell Johnston (Inverness)

The past five minutes or so of the hon. Gentleman's speech have been concerned to criticise the Community for lacking a foreign policy. We know this perfectly well. The corollary of his criticism must be that if the Community did have a foreign policy it would be able to exert the kind of pressure which he correctly pointed out it was unable to exert during the oil crisis.

Mr. Hooley

It is not primarily a question of foreign policy. It is a question of monetary and economic policy. There are other major countries, such as America, Japan and Canada, whose interests are so intricately bound up with these problems that it is nonsense to suppose that the Commission or the Western European conglomeration can have a policy and go its own way without the co-operation of and without close consultation with these other major industrial countries. I hold that the Commission and the apparatus of the EEC is basically irrelevent to dealing with these problems. The bodies which matter arc the IMF, the International Energy Authority and the OECD, where all the industrial countries and the oil producers can meet together to solve the problems.

The White Paper dismisses the idea of a European monetary union as something which has been tacitly abandoned. There are differences of opinion whether that is the European view, but if it is true, why stay in? If a European monetary system is not contemplated—and the White Paper says that for practical purposes it is finished—why bother? Surely it would be more sensible to build up the system of special drawing rights through the International Monetary Fund and strengthen the genuine international monetary unions which are of importance to the whole world. I cannot see the point of going forward within this complex of arrangements in Western Europe when we believe that Western Europe is not serious in going ahead with a matter of vital importance if we are to have a genuinely integrated system of economies among the nine countries. If the White Paper is right in saying that this idea has been abandoned--and I am prepared to accept that from my right hon. Friends—I suggest that we should look elsewhere for our international monetary arrangements through the IMF.

Mr. Neil Marten ( (Banbury)

If one is to believe what is said in the Community, it has not been abandoned. 'The Heads of Government communiqué of 10th December 1974 affirms that the will of the Nine has not weakened and that their objective has not changed since the Paris Conference. European monetary union is still there. It is only a question of time.

Mr. Hooley

I agree that there is a difference of opinion on this matter. I am debating what the Government claim to have achieved in the renegotiation. The claim which the Government are putting to the British people and which I shall argue with my constituents is that European monetary union is effectively a non-starter and that it is something way out in the future which will not affect us. On that basis, and indeed on the other basis, I am prepared to argue that the International Monetary Fund is a far more important body to this country than is the EMU.

We have already been told by my right hon. Friend the Member for Battersea, North (Mr. Jay) and others of the disastrous effects on our balance of payments of membership of the Common Market, and I shall not dwell on that. The figures are established and are irrefutable. As theFinancial Timespointed out, possibly in the next decade the important new markets for British industry may not lie only in Europe, although European markets will be important, and I do not deny that. The important new markets will be in countries which have the great oil revenues, such as Iran, Nigeria, Indonesia, Venezuela and possibly, after a lapse of time, Angola, Zaire and Algeria. Those countries need the industrial equipment and products which we can supply and they will be abundantly able to pay for them. The oil crisis has to some extent widened the scope of international trade and the possibilities for British industry, so long as we take our eyes off this magic Paris-Bonn axis and look around us at the real opportunities in the world.

Beyond that, there is the question of the supply of industrial raw materials which will become more significant in the next 10 years as the Third World demands better prices and a more reasonable deal for its products. The Brussels Commission is helpless in this matter. It has no access to control over bauxite, copper, tin, nickel, manganese and uranium, not to mention oil. Certainly we can have negotiations with European countries and with the producers of these materials, but those negotiations will have to include the United States, Japan and the other great industrial countries. It is nonsense to suppose that we can formulate our own little European policy and go it alone on that basis, because we shall have to come to terms both with the Third World producers and with our world competitors who also need these materials.

I want to say a few words about relations with the Third World. One of the key questions in this debate has been whether the Common Market is outward-looking and generous towards the Third World and believes in a genuine relationship of co-operation with the countries of Asia and Africa. The record of sugar is not encouraging. We had to fight like fury to get the 1.4 million tons of sugar into our own market. We were not asking France, Germany, Italy or Holland to accept sugar from the Caribbean, Fiji or Mauritius. We were simply saying that we wanted to retain an arrangement which had been valuable to our traditional suppliers and to British consumers. After endless debate, obstruction and argument we at last received permission to continue an arrangement which was valuable to us and to our traditional suppliers.

The hon. Member for Leominster (Mr. Temple-Morris) referred to the Lomé Convention. I draw to his attention a seven-page study of the convention made by the Overseas Development Institute in London. One cannot seriously call in question the expertise of the ODI in matters concerning the Third World and help to the Third World. I do not intend to weary the House by going over the whole document, which is lengthy, but I will quote from it two sections, one on trade and one on aid. Referring to the Lomé Convention, the document states: The convention does not, therefore, substantially improve the terms of access for ACP countries over what would have been the case if the Yaoundé Convention had simply been reviewed …. the goal identified by the Select Committee". —that is a Select Committee of the House— as" the most important for associates, associables and the rest of the Third World '—free access to the EEC market—is not brought very much nearer by the terms of the convention. On aid, the document has this to say: the aid provisions of the Lomé Convention represent a worsening en the position under the Second Yaounde agreement…. in purchasing power there will be a decline, given the rapid inflation of recent years: the Lomé per caput level is, in real terms, more than 40 per cent. below the Yaounde II figure. Those who preach to us about the tremendous historic success of the negotiations which have taken place should ponder on the considered judgment of the ODI.

Mr. Richard Wood (Bridlington)

Is not the hon. Gentleman trying to elevate the judgment of the Overseas Development Institute and his own judgment above that of the 46 ACP countries, which are well satisfied by the arrangement and presumably would be much less satisfied if Britain were to withdraw from the EEC?

Mr. Hooley

I accept that the ACP countries were willing to ratify and accede to the convention as the best arrangement they could get in the circumstances, but they were dissatisfied with certain aspects of the agreement and said so at the time.

More serious in regard to the convention is that left out of the privileged circle of associates are the Commonwealth countries of Asia, including India, Bangladesh and Sri Lanka, the largest and poorest countries in the world. They receive little food aid and no financial aid, but they are major recipients of British aid. The United Kingdom must help the poorest countries and channel its aid through the international agencies of the United Nations over and above its bilateral efforts. I am in no way disparaging or denigrating the generosity of France, Germany and Holland as individual countries which in aid terms has exceeded our own. I am saying that the EEC as an organisation has not shown any particular generosity. Nor has it matched up to the demands of the Third World in terms of this convention.

There is another point that I must cover as it directly affects my constituency although it is not so much related to the overall problem of world relationships between the Common Market and ourselves. The Labour Party fought for 20 years to make the steel industry accountable to Parliament not only through the creation of the British Steel Corporation but by Section 15 of the Iron and Steel Act 1967, which gave the Government control over major investment decisions in the private sector. That was swept away by the European Communities Act 1972. Our own Parliament now has no effective control over steel in the public or private sectors. Prices, mergers and acquisitions are now subject to control by European bodies. To obtain a stake in the special steel industry in Sheffield, following the collapse of the Jessel empire, the British Steel Corporation had to go cap in hand to the European Commission under Article 66 of the Treaty of Paris. The commission gave permission for that acquisition but it laid down conditions which were completely unacceptable and which would have involved unemployment in other cities in the United Kingdom.

If Britain withdraws from the EEC we shall still remain a member of 94 major international organisations. We shall still have a full voice, full rights and full opportunities of discussion, consultation and influence within those organisations. Some of those who oppose our withdrawing talk as though we are about to depart to some other planet, that we are about to be cast into outer darkness and that we shall cease to belong to Europe or the world. That is a totally false picture. I am completely persuaded in my own mind that co-operation with the world at large and co-operation with Europe will be feasible and advantageous to us outside the EEC.

Our future depends on our own hard work, inventiveness and industrial enter- prise, and on the successful development of the genuine international bodies such as the UN, the IMF, GATT, UNCTAD and the rest. It also depends on the vigorous exploitation of our natural wealth, such as coal, oil, gas, farmland, fisheries and the rest. That is where our future lies and not in Brussels or Bonn.

Mr. Deputy Speaker (Mr. George Thomas)

There are 32 right hon. and hon. Members who are eager to take part in today's debate. If all hon. Members take 26 minutes very few are going to get in.

5.24 p.m.

Mr. Neil Marten (Banbury)

Every time that I am called in a Common Market debate the previous speaker rather exceeds his time and the occupant of the Chair, Mr. Deputy Speaker, always makes that remark. I always take it to heart.

I much enjoyed the speech of the hon. Member for Sheffield, Heeley (Mr. Hooley). I hope that he did not misinterpret my remarks about economic and monetary union. I was only saying that it is quite clear that it is still an objective of that curious thing called the Common Market. It has not been dropped, although the White Paper gives the impression that it has been pushed back for our children and our children's children to consider.

I agree very much with what the hon. Member for Sheffield, Heeley said about the wider international organisations through which we should work. We should work through the OECD and the IMF, for example. It is a parochial approach to international problems, such as finance and economics, not to work straight through those organisations.

I also agree with the hon. Gentleman about the European market. I am not sure whether he used the word "decline", but it is not as important as it has been in the past. That is proved by the figures. Before we joined the Market our trade with the European Community was increasing by roughly 2 per cent. a year. In the last year, 1974, it went up by only 1 per cent. Therefore I think it is true to say that, while it is early days for us to draw a firm conclusion, it seems as though our trade with the Community is increasing at a less rapid rate than it was. However, our trade with the Middle East, the petro-dollar States, and the developing countries, which are getting quite a lot of the petrodollars, is increasing and has a great capacity for increasing.

At this stage I shall take up the speech of the hon. Member for Birmingham, Ladywood (Mr. Walden). Obviously, the hon. Gentleman has had to leave the Chamber. I shall want to do the same thing myself before too long. The hon. Gentleman opened up the very subjects about which I wish to speak. I agree very much with his opening remark that we should not smear people by association. I was appalled when I read a letter in The Times from Lord Gladwyn. Well, I was not appalled because he has done so before. And one of my hon. Friends wrote a similarly orchestrated letter—perhaps orchestrated by the European Movement—to theDaily Telegraph. Happily, both papers published my replies.

Mr. Russell Fairgrieve (Aberdeenshire, West)

May I point out to my hon. Friend the Member for Banbury (Mr. Marten) that no one orchestrates my letters. I wrote them myself.

Mr. Marten

I was not saying that my hon. Friend did not write his letters himself. It was the placing of the letters in the two papers which was obviously orchestrated. I have seen that happen before. I cannot prove it, but the implication is always there. However, I hope that we can drop that kind of silly time wasting and that sort of silly, childish argument.

The hon. Member for Birmingham, Ladywood raised the question of the breaking of the Treaty. It is a matter that keeps on coming up in the Common Market argument.

Mr. Percy Grieve (Solihull)

You don't say.

Mr. Marten

I do say, and I am just about to say it. My right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) who, at the time represented, Reigate, is present and on the Opposition Front Bench. Throughout the whole of the debates on the European Communities Bill we were assured repeatedly that we could always come out of the Common Market. That has never been disputed. If the assurance, before going in, was that we could always come out, who can complain, if we vote to come out in the referendum, that we are breaking the Treaty? That seems to me to be a highly technical point.

Further, we must remember that when the Government were in Opposition during the European Community debates they said, and particularly during Third Reading of the Bill their official Front Bench spokesman said—I do not have a copy of the speech in front of me; it is normally in my little file that I usually carry around, but I did not bring it with me for this debate—quite clearly that they did not accept the terms of the Treaty of Accession because we were not allowed to debate that Treaty in the House. They made that absolutely clear. The then Opposition also said that if they were returned to power and that has now come about—they would pledge themselves to renegotiate. They have now gone through the motions of renegotiation. They also said that having renegotiated the terms they would put the matter to the people. They said, finally, that the Common Market had better take note of those remarks before we joined, and before the Common Market countries ratified our accession. They made it clear that the Labour Party, if returned to Government, would not feel bound by the Treaty.

I hope that we can now drop that argument about the breaking of the Treaty. It seems that the Labour Party is honouring the things that it pledged itself to do. I do not think that we can complain about that.

The third point that the hon. Member for Birmingham, Ladywood made was that of sovereignty. That matter will come out on top in the debate on the referendum. Sovereignty "is a loose word often used by some people as implying the power to throw one's weight about in the world. We are not talking about that kind of sovereignty—not the power to throw our weight about as some great imperialists in the House want us to do.

We can divide the question of sovereignty in two. First, if we lose our so-called sovereignty, what will it involve? The right hon. Gentleman the Leader of the House has already clearly admitted that this House has lost its sovereignty over a wide area, and that is not in doubt. My right hon. Friend the Member for Knutsford (Mr. Davies) made a good point about pre-discussion. That is a matter which this House, on its own, after we have come out of the Common Market, can examine and consider in regard to legislation before it reaches the stage of Second Reading.

We have got ourselves into a position where, despite pre-discussion, laws are finalised by wheeling and dealing in secret in Brussels. We go through the motions in this House of scrutinising material and of having stupid debates at 11.30 at night. However that does not stop Ministers going back to Brussels on behalf of the British people, wheeling and dealing behind the scenes, and coming up with something entirely different from what was presented to this House. In that way this House has lost its sovereignty.

I am glad to see my right hon. Friend the Leader of the Opposition present. The official Opposition has lost its power to amend draft European legislation, and so has every back bencher in the Chamber. Not one back bencher in the Chamber can amend legislation that is laid before the House in respect of the European Community. If my right hon. Friend the Leader of the Opposition likes to try to take action on that score one night, I should probably support her.

The present situation means that once legislation in draft form has been finalised, after secret wheeling and dealing in the Community, it is directly applicable and this House cannot change that law without the consent of the other eight members of the Community. To that extent we have certainly lost our so-called sovereignty. Personally, I prefer to call it the power of self-rule.

However, the question of today's sovereignty is only one aspect of this matter. My real anxiety is aimed at the way in which the future will develop. That will be the fundamental issue in the referendum. We must look at what we are really talking about—namely, the setting up of a directly elected European Parliament with legislative powers, a Parliament which will legislate and whose laws will apply to this country. If at a subsequent General Election the British elector by his vote wishes to change the policy of this country, the Government he elects for the United Kingdom will be incapable of altering laws passed by the European so-called Parliament. It is not European: it is only a Common Market Parliament.

I am glad that my right hon. Friend the Leader of the Opposition did not confuse Common Market with Europe. She used the word "Community" throughout her speech, whereas yesterday my right hon. Friend the Member for Penrith and The Border (Mr. Whitelaw), as Deputy Leader of the Opposition, used the word "Europe" many times when he meant Common Market. I agree that it is a good propaganda point for pro-Marketeers, but I believe that we should distinguish one from the other.

The point about the European Parliament and the inability of the British elector, once that Parliament is set up, to change the laws which it makes, is being hidden by the pro-Market case. The pro-Marketeers know that if the British fully understood that, they would he sure to vote to come out of the EEC. My hon. Friends and I, who find ourselves on this side of the argument, will ensure that throughout the referendum campaign the British public will be made aware of that fact. I hope that on that basis they will vote for self-rule and self-government. I hope that finally they will say "Let us in this country rule ourselves and let us not be ruled by Brussels."

Some people say that this will not happen. Let us trace the reasons why it will happen, judging by what one understands to be the decisions of the Community. The Summit communiqué issued in Paris clearly refers to the question of the directly elected European Assembly. It says: The Heads of Government note that the election of the European Assembly by universal suffrage, one of the objectives laid down in the Treaty, should be achieved as soon as possible. In this connection, they await with interest the proposals of the European Assembly, on which they wish the Council to act in 1976. On this assumption, elections by direct universal suffrage could take place at any time in or after 1978. Let us turn to what happened at the European Assembly in Strasbourg when on 16th January a resolution was passed by the European parliament. It said,inter alia The European Parliament therefore considers a European Parliament elected by direct universal suffrage as an indispensable element in achieving further progress towards integration…". Article 3 of that resolution refers to the directly-elected European parliament having a five-year legislative period to begin at the opening of the first session following each election. It is clear it will be a legislative assembly for it will have a five-year life and, if it is legislative, it will, of course, make laws.

The Conservative spokesman on Europe, my hon. Friend the Member for Saffron Walden (Mr. Kirk), in the House on 29th January, asked the Minister of State for Foreign and Commonwealth Affairs about a directly-elected European parliament. My hon. Friend said: Does not the right hon. Gentleman agree that the terms of the Treaty are mandatory? As the Government are accepting the treaty and are renegotiating within it, they must have accepted the principle of direct elections and are arguing only about detail? In the Summit communiqué we were told that there would be postponement of that decision till after the referendum. The Minister of State replied: While the principle is there established, the timing of its implementation is a matter for the individual States."—[Official Report, 29th January 1975; Vol. 885, c. 389.] Both sides of the House now clearly accept a directly-elected European parliament. If we accept that, we surely accept that such a body will do something. It will not sit there and do nothing. It will legislate.

Let us assume that there is an anti-Socialist majority in that Parliament. The people of this country may want to elect a Socialist Government here because that is their choice. However, there is nothing a newly-elected Socialist Government in this country could do in face of an anti-Socialist majority in Europe. I find it curious that the Conservative Party is prepared to let a Socialist majority in Europe legislate if we are unable to reverse the laws made by the European Parliament.

Mr. Russell Johnston

It equally follows that the hon. Gentleman would prefer to have a Socialist Government in this country and a Conservative Government in Europe.

Mr. Marten

I want people in this country to use their vote to elect the Government which they want and not to be ruled by legislation passed by a majority of people in Europe—in other words by continental Members of Parliament in a majority. I do not use that term in any bad sense, but I am referring to people who do not belong to this country. They will be able to make laws which will affect this country. That is my objection, and it should be the objection voiced by many more people in this Parliament.

I am worried since it seems to me that the judgment of the pro-Marketeers is faulty. The first case occurs on page 42 of the White Paper where there is a proud quotation of what the Prime Minister said in the House of Commons on 2nd May 1967. He was then in his pro-European mood. He said: Together, we can ensure that Europe plays in world affairs the part which the Europe of today is not at present playing."—[Ofcial Report, 2nd May 1967; Vol. 746, c. 314.] That was his judgment. His judgment was that we should enter the Common Market and play this marvellous role together.

How has it turned out? In January 1975 Mr. Ortoli, the President of the Commission, reporting on the year's work of the Community, used these words: Europe's attempt to speak with one voice on critical issues has sadly misfired, and Europe's lack of co-ordination, lack of initiative, to be frank, lack of courage, means that Europe has lost its minor part to become a mere spectator. Europe's role, Europe's influence, is insignificant, ineffective and nonexistence in the forums where major decisions on peace, security and economic and financial affairs are taken. Those are not my words. Those are the words of the President of the Commission reporting on his own Common Market.

Looking at what the Prime Minister said in 1967, his judgment was that once Britain had entered the Community all would be lovely. His judgment was wrong then, just as it is wrong now.

We were told in paragraph 57 of the 1971 White Paper that there would be a more rapid improvement in our standard of living. In fact our standard of living seriously declined in 1974. Exactly that was forecast by the anti-Marketeers who then opposed entry. Paragraph 45 of the 1971 White Paper said that the effect on the balance of payments would be positive and substantial. We know that the opposite has happened, which was forecast by the anti-Marketeers then campaigning to keep Britain out.

Paragraph 56 of that White Paper said that membership of the Community would lead to much improved productivity. According to Government statistical digests, productivity declined by 3.3 per cent. in 1974. Again, paragraph 56 of the 1971 White Paper said that membership of the Community would lead to a higher rate of investment. That rate is now down by 6.7 per cent. It was also said that membership of the Community would offer the chance of new jobs. Unemployment is rising. Paragraph 57 said that entry would result in a higher rate of growth of the economy. There is no growth in the economy, which is exactly what the anti-Marketeers said.

It was said that entry would not lead to a deficit in our balance of payments. It was said that the opportunities for growth would lead to more jobs and greater prosperity for all in Britain if we entered the Common Market. That statement was contained in an advertisement inThe Times on 26th July 1971. It was signed by 71 leaders of British industry and commerce.

Mr. William Molloy (Ealing, North)

Some leaders.

Mr. Marten

That is my point.

Membership of the EEC is a serious question, which the country must judge. This must come after the catalogue of misjudgment I have mentioned. I am not saying that there was anything other than misjudgment. There was no attempt to mislead the country. It was just that the judgment was wrong. Judgments are again being made in the present White Paper, including what would happen if the United Kingdom left the EEC. The country must recognise that the judgment on this occasion is likely to be just as wrong as the judgment of 1971.

Last time the anti-Marketeers were right. This time the anti-Marketeers are again right.

5.45 p.m.

Mr. David Marquand (Ashfield)

I shall deal later with what the hon. Member for Banbury (Mr. Marten) said about sovereignty, which was the central point of his speech. However, I should like to take up what he said about the renegotiations—which, after all, we are supposed to be debating—at the outset of my speech. The hon. Gentleman said that the Government had gone through the motions of renegotiation. The right hon. Member for Knutsford (Mr. Davies) described the renegotiations as a fantasy. I sat through most of the debate yesterday, for my sins, and I heard other speakers describe the renegotiations as a charade and as a farce. That theme has run through this debate. Therefore, I should like to try to put the record straight about the renegotiations.

It is a slightly odd rôle for me to play since I should not have chosen these objectives. If I had drawn up the Labour Party manifesto, the renegotiation objectives would have been different.

I had no great enthusiasm for the seven points put forward in the Labour Party manifesto. I should have liked to see a Labour Government trying to renegotiate in a different way and for different purposes. I should have liked to see them trying to change the Community in a more Socialist, a more internationalist and, in some respects, a more supranational direction.

I was sad that the emphasis and the thrust of the Labour Government's renegotiations exercise should have been concerned primarily with the defence of British interests rather than with changing the nature of the Community to benefit all its members. However, that is not the point.

The point about the renegotiation exercise is this. A British Government came to power a year ago with a manifesto saying that they wanted to achieve certain objectives in the Community. After 12 months of bargaining and give and take, that Government have come back with at least 80 per cent. of what they requested. In doing so, they have demonstrated that the argument of those who said, when we entered the Community in 1973, that the Community was an inflexible monolith which could not be changed was totally without foundation. They have demonstrated that the Community is a genuine community and that its members are prepared to take account of each other's vital interests as each sees its vital interests. In that sense the renegotiations have achieved an important purpose.

Mr. Molloy

Will my hon. Friend say whether, in view of the fact that they achieved certain of their objectives, the Government were helped in the achievement of those objectives by the fact that there was a possibility of a referendum being held in Britain on whether we should stay in or leave the Common Market?

Mr. Marquand

I do not believe so. If we look at the history of the Community of the Six before we entered, we shall find that whenever there were differences between five nations and a sixth, the five have always taken account of the interests of the sixth, whichever the sixth nation happened to be. That is the way in which the Community works. It is a partnership of States which take account of each other's vital interests. It has not become a supranational monolith. Indeed, it has not become as supranational as I hope it will become in due course.

The question which we are debating today, and on which the British people will vote on referendum day, is not whether we should have joined the Community in 1973 but whether we should leave the Common Market in 1975. We must take some account of the costs of withdrawal if we are to arrive at a balanced judgment on that question. I do not wish to commit the sin of exaggerating the likely costs of withdrawal.

My own personal opinion is that if we withdraw from the Common Market. the horrific picture conjured up by my hon. Friend the Member for Birmingham, Ladywood (Mr. Walden) is very likely to come true. It is very likely that there will be a catastrophic sterling crisis. But I do not wish to place much emphasis on that argument, because even if that were not so I do not think that there can be any serious doubt that over the long term we should be economically isolated—and isolated in a very much colder world than the one we knew before we went into Common Market in 1973.

It is a total fantasy to believe that somehow or other, because we have now changed our minds yet again, we can summon up the lost legions of the Commonwealth and EFTA and expect them to return to the relationship that we had with them before we went into the Common Market. It is an even bigger fantasy to think that in 1975 we can somehow persuade the EEC to make with us the sort of free trade area agreement which the right hon. Member for Chipping Barnet (Mr. Maudling) failed to get 20 years ago, when the institution was much less developed than it is today.

What shall we be doing if we withdraw from the Common Market? The hon. Member for Banbury has a valid point when he says that it was stated by the Labour Opposition at the time that there would be a referendum and that there could be a withdrawal. But if we want to estimate the likely reaction of the Common Market to our withdrawal, we must try to look at our behaviour through the eyes of its members and not through our own. How would they judge us if we were now to withdraw?

We spent several years trying to get in. Having got in, we have spent 12 months trying to negotiate different terms from those we agreed upon when we joined. If the British people now vote for withdrawal, a long process not of renegotiation but of re-renegotiation would have to take place to get some new arrangement with the Common Market.

It is inconceivable that if we kick our partners in the teeth in this way they will give us the generous treatment which they would not give us 20 years ago. If we get out of the Common Market, we get out to be on our own, and on our own in a very cold and hostile world.

Mr. Hooley

I remind my hon. Friend that trade not only between Europe and ourselves but throughout the world is now governed by important international agreements under the GATT which are binding on the Common Market countries, on us and on other nations. These will not be abrogated if we withdraw from the Common Market.

Mr. Marquand

But if we withdraw we shall cease to get the benefits of industrial free trade with the Common Market. It is a total fantasy to imagine that we can get an industrial free trade agreement with the Common Market if we withdraw. I agree that we shall still be members of GATT and the IMF, but that advantage we shall not have.

I believe that the political costs of withdrawal are likely to be far more serious than the economic costs. It is the political argument that matters most to me.

The unity of the Western world at the moment is far more fragile than many in this House appreciate and far more fragile than it has been at any time since the early 1950s. We have had a generation of peace and stability such as the human race has never known before, to a considerable extent because of the creation by Ernest Bevin, Acheson, Truman and others in the late 1940s, of the present structure of the Western world.

We have come to take it for granted. But at present there are very strong currents of neo-isolationism in the United States. Not far beneath the surface, similar currents can be detected on the mainland of Europe. Certainly they can be detected in the Common Market debate in this country. If we pull out of the Common Market, we shall strike a terrible blow at an increasingly fragile structure. I do not say that we shall necessarily destroy it—

Mr. Molloy

Like France did in withdrawing from NATO.

Mr. Marquand

Exactly.

Mr. Molloy

And France is in the Common Market.

Mr. Marquand

That was stupid of the French.

Mr. Molloy

The French are stupid.

Mr. Marquand

But two wrongs do not make a right. For us to do as President de Gaulle did a few years ago in what is today an even more dangerous situation would do far greater damage than he did. Isolationism is catching. If this country lurches into isolationism as a result of the referendum, the effects on the Western world could be very serious.

I want now to refer briefly to the argument advanced so persuasively by the hon. Member for Banbury about sovereignty. I agree with him that it is humbug to pretend that there is no loss of sovereignty in membership of the Common Market. I also agree that sovereignty and power are different and should not be confused. There is a loss of sovereignty through membership of the Common Market. But, though I find it consistent and reasonable for the lion. Member for Banbury to use the sovereignty argument, I find it strange that some of my hon. Friends should applaud him when he does so.

For me, one of the fundamental aspects of Socialism is internationalism. We cannot have internationalism unless we are prepared to give up sovereignty to someone. It may be that the Common Market is not the right body to which it should be given, but to say that in no circumstances should we ever give up any sovereignty to anyone is inconsistent with all that I thought that the Labour Party stood for.

The nation State was the creation of nineteenth-century capitalism. I believe that it has had its day. The Common Market came into existence because the nation States of Western Europe found that they could not achieve their purposes—the welfare, happiness and prosperity of their peoples—within the structure of the nineteenth-century nation States. Today, the same applies to us as applied to them.

Let me take some specific, practical examples. Take the problem of regional policy which has concerned a great number of my right hon. and hon. Friends, and which concerns me as well, since I represent an intermediate area. No one who looks at this problem in a European context can doubt that the forces which create regional inequality in this country are part of an international complex of forces. The forces which create disparities between the North and South of England are not confined to this country. They operate all over Western Europe.

I do not believe that it is possible to counteract those forces effectively within the structure of the nineteenth-century nation State. It is not possible to deal with the problem of pollution effectively within the structure of the nineteenth- century nation State. This is a crowded continent with all kinds of interlocking, overlapping problems which cannot be dealt with effectively within the obsolete structure of the nineteenth-century nation State. That is why I believe it is necessary to work in partnership with other countries in Western Europe.

We are part of the continent of Europe whether we like it or not. The hon. Member for Banbury attacked proMarketeers for equating the Common Market with Europe. Of course, he is right The two things should not be equated together. But the fact remains that we are part of the continent of Europe.

Whatever happens on the continent of Europe is bound to affect this country most profoundly. Throughout our history—even in the greatest days of the Empire on which the sun never set—we were always profoundly affected by developments on the continent of Europe. British Governments in the 1920s and 1930s thought that they could stand aside from developments on the continent of Europe. They and the British people learned their lesson in 1940.

British Governments before the First World War thought that they could maintain a policy of glorious isolation and remain unaffected by developments on the continent of Europe. The British people learned their lesson between 1914 and 1918.

Whether we like it or not, we are affected by what happens across the Channel. We are more affected now than ever before in our history because this is a smaller world and because we are a weaker Power.

The question that we must ask ourselves in the referendum campaign and in this debate is this: do we want to remain part of an institution which gives us the capacity to influence the developments which take place on the mainland of Europe, or do we not? We shall be profoundly affected by those developments whether we are in or out of the Common Market. The difference between being in and being out is the difference between being able to influence those developments and being unable to do so. I believe that it would be an act of national folly to give up the opportunity to influence those developments from within.

6.3 p.m.

Mr. Hugh Fraser (Stafford and Stone)

Three years, three summers with the length of three long winters, have passed since I spoke either to the House or to my constituents on the problem of the EEC. Looking back on the speeches that I made against joining the EEC in 1970 and 1971, I believe that they represented fair and proper arguments. But the question now before the House is of a quite different nature. It is not whether we should go in but whether we should come out and break a whole series of agreements and arrangements which have been made. The whole question now is not of going in but whether we should come out. The considerations now are of a different nature from the considerations which applied on going in or not going in to the Common Market.

In the last three years, as the hon. Member for Ashfield (Mr. Marquand) said, there has been a complete change in the world outside this country and outside Europe itself. We are seeing the West today in a period of grave disorder, if not decline. We face a situation which is as brittle, inflammatory and dangerous to the interests of the West as we have ever seen.

Over the last few months a large number of people in this country and many Labour Party Members have seemed almost to think that we are not in the Common Market at all because of the nature of Labour Party propaganda which has undoubtedly confused the issue. But is is a fact that under two Governments we have been and are members of the European Economic Community.

The issue of economics and various other issues which have been raised can be and have been argued back and forth across the House, but at the end, when the people come to weigh up these matters, they will be no more certain of their balancing of these arguments than they were at the beginning.

I should like to turn to a few of the much wider considerations. First there is the fact that we are in the EEC. It is a sea of troubles and to be glorious in the act, but to stand out against a tide of events and to try to reverse the tide of history leads, as I know, coming from a Jacobite family, to the block or to a position as absurd as that of Canute. Frankly, I think that to try to turn against what has happened would be an error.

My hon. Friend the Member for Banbury (Mr. Marten) spoke feelingly about the letter by Lord Gladwyn which appeared inThe Timesa few days ago. But I must say that a far larger number of Jacobins than Jacobites seem his allies in the political spectrum. I hope that this may give him some pause. His friends seem widely spread with a Left-wing bias. Who rules whom? But this is a Leninist relationship which he must work out for himself.

I come to my conclusions with regret. I am not and never will be a passionate Marketeer. However, looking back, the last 30 years have been a history of regret and retreat from glory. Looking at both Front Benches and at the shadows or ghosts of those who sat on those Front Benches before, nothing emerges more clearly than the lack of national objective since the end of the 1939–45 war. Our leaders glibly talked about the unity of Europe in the 1940s and 1950s. What did they do? They did nothing. They talked about a great and special relationship with the United States of America. When the right hon. Member for Battersea, North (Mr. Jay) and I and other Members of this House and Senator Javits, and other Americans tried to float a North Atlantic free trade area, what happened? There was not even a pennyworth of Government assistance.

When General de Gaulle came forward in the late 1960s and suggested, through our ambassador, that there should be a free trade area with political direction by the major Powers, which in every way made sense, what did we do? We rejected it.

For more than 15 years British Governments have blown hot and cold on the idea of this country having a purpose and mission in the world at all. Unlike the French, who after all bound their ex-colonial territories with hoops of gold, and with bands of proffered administration and the strength of a mother tongue, we sent missions round the world in the 1960s to our friends, our late dependencies, designating the sterling area and telling them "We can no longer look after you. You must be prepared to paddle your own ships and reach some port or anchorage". As a result, of course, they did. As a result, a treaty like the Lomé Convention is more valuable to them than any connection with Whitehall.

This is a story not of a great people but of a people great but perhaps too much misled by their own politicians. Now, in all these years, whether or not one likes it—I do not like it—there has been one positive, firm act of statesmanship, whether or not it be popular, and that was the action of my right hon. Friend the Member for Sidcup (Mr. Heath) of getting this country joined to the EEC.

I have not been in favour of it. But there it is. It is a fact. Perhaps I may draw a more homely analogy. If one has been against a marriage and it is consummated, does one try to destroy it? If one has been against an operation for some relative, and if one has the power, does one drag the body of the patient out of the operating theatre? Really, withdrawal from the EEC would be to indulge a personal ideological whim against the national interest.

Of course there will be difficulties in this arrangement with Europe. Of course there is the problem of sovereignty, which hon. Members have so rightly and widely spoken about and of which they have made such a proper issue. I have always been one who has been what is called staunch on the question of British national and parliamentary sovereignty. I defied even Sir Winston in his day in voting against the first American loan. I have defied my Whips. Of course, that means nothing today in the House of Commons. It is a badge of honour, like one of those hats which are worn in Africa to show that people are properly independent and have been in prison. I have defied my Whips endlessly on these issues

I have supported my right hon. Friend the Member for Down, South (Mr. Powell) in his brilliant attacks on this issue of sovereignty. Even with my right hon. Friend the Member for Sidcup, I went so far as to insist, when I was a member of the Cabinet for a short while on the defence side, that at Nassau we retained the full independence, if needs be, of our nuclear deterrent. Therefore, sovereignty is a matter of considerable importance to me, as it is to every hon. Member.

The hon. Member for Birmingham, Ladywood (Mr. Walden) said that the danger to sovereignty is not in these EEC arrangements, imperfect though they may be, but that the danger to sovereignty could well be inside this country if things go wrong. And wrong they are going. My greatest fear is of this growing present derogation to parliamentary sovereignty. Even the absurd idea—with respect to hon. Members on the Government benches—of a referendum is a derogation of parliamentary sovereignty. The giving away of powers to the trade unions is a derogation of parliamentary sovereignty. Day by day we see derogations of parliamentary sovereignty.

With respect to my hon. Friends and various sides of the House and various people in this country, I must say that there is only one party which is absolutely solid in favour of our coming out of Europe. I know that the party of the hon. Member for Moray and Nairn (Mrs. Ewing) is totally divided, according to today's edition of theGlasgow HeraldEven the Scottish National Party is no longer solid on the issue. One party is absolutely solid, and that party wishes to do what? It wishes to destroy democracy. It is the Communist Party in Britain. [An hon. Member: "Reds under the bed."] It is not "Reds under the bed" at all. It is a fact of life, and the more that right hon. Members of the Government realise that the better their constituents will be served.

Of course there are difficulties ahead. But I believe that to pull out of Europe now would be a disaster at home for confidence within this country and a disaster for our relationships abroad. Britain could now waste far too much time on the referendum, which could become for far too many people an escapist exercise, away from the realities. The realities for Britain are grim. We are living on borrowed time and borrowed money. The sooner this House and this Government get down to the solutions to these problems, the better it will be.

6.15 p.m.

Mr. E. Fernyhough (Jarrow)

I share at least one thing with the right hon. Member for Stafford and Stone (Mr. Fraser). Like him, in the past I have not always been the best-loved of Members by the Whips. Looking back on those occasions when I was rebellious, I find, like the right hon. Gentleman, that history has proved that I was right.

The House will appreciate that it was not an easy speech which the right hon. Gentleman had to make. It is never easy for anyone who has trodden a certain road for a number of years and advanced a persuasive argument to have to end up by saying "This is the end of the road and as far as I am concerned the chapter is now closed. I accept afait accompli"

I am sorry that I cannot do that, because I am satisfied that if the House, looking at the Common Market as it exists today, were facing the question that it faced three years ago, it certainly would not decide in favour of going in. If I had the powers to compel people to do a penance, I would make those proMarketeers whose speeches were so influential in the days when they were saying that it was desirable for us to go in re-read their speeches. What did those speeches really say? They said that if we went into the Common Market it would act as a blood transfusion. They said that it would revitalise this nation.

We have been in the Common Market. We have had the advice of the Common Market doctor. The truth is that the British patient is weaker and more ill today than when we first went to the doctor. There are other patients of this doctor who have been in the Common Market from the beginning, but they do not hold any hope for us. Italy's years of membership of the Common Market have not solved the great economic and social problems from which she is suffering. One would have thought that after the years that Italy has been a member she would have been in a much stronger economic position today than she is.

Mr. Grieve

The right hon. Gentleman surely recognises that the ills of this country have nothing to do with our membership of the Community but are due to what my right hon. Friend the Member for Knutsford (Mr. Davies) said a little while ago—to our producing too little, paying ourselves too much and living beyond our means. That we can remedy ourselves.

Mr. Fernyhough

If I could persuade the hon. and learned Gentleman to do me the courtesy of reading the speech I made in the three-day debate on entry, he would find that that was precisely the content of my peroration. I said that our ills, aches, pains and economic and social problems could not be solved by looking into the crystal ball of the Common Market. They could not be solved by endless journeyings between here and Brussels. They would be solved by the skill, determination and cooperation of the British people. Our salvation lies here. It does not lie outside. Nobody will save us if we are not prepared to save ourselves.

I am greatly disturbed when I look at the world. On our television screens, week after week in the past few months, we have had pictures of starving people in Ethiopia, Bangladesh, Vietnam and other countries; and here we are saying that it is very desirable for us to tie ourselves, hook, line and sinker as it were, to a system which believes in building up big stocks of meat, butter, cheese and milk and destroying and denaturing wheat. How can we as a so-called civilised, Christian people ever defend the regulations and rules of a system which on the one hand puts into storage millions of tons of food and on the other does nothing at a time when stomachs are empty to marry that food to those empty stomachs?

Mr. John Roper (Farnworth)

My hon. Friend will be aware of the food aid programme of the Community which has been specifically directed to the countries to which he is referring, which has been reported on to this House by the Select Committee on European Secondary Legislation.

Mr. Fernyhough

I am very well aware of that, and I hope my hon. Friend has read the letter which my right hon. Friend the Minister of Overseas Development has sent out this week in which she makes very clear that the Market will discriminate against the hungry millions in India and Sri Lanka. I had intended to bring that document with me because on its second page there are two paragraphs which are very informative and telling; but obviously it would have meant that my speech would have been a little longer, Mr. Deputy Speaker, than you or the rest of the House would have appreciated, so I did not do so. I recommend my hon. Friend to read that letter and I would then ask him whether he thinks that our proposed entry is as glorious as he tries to make it out to be, because anything which discriminates against hungry men, women and children anywhere cannot be defended at a time when there are the resources to feed them if the will existed.

Mr. Roper

It is true, of course, that the Lomé Convention applies only to 46 countries, but my right hon. Friend will know that the Community has already agreed a commercial agreement with India and is signing another with Sri Lanka, and that its food aid goes to countries of Asia as well as to the ACP countries.

Mr. Fernyhough

All I am saying is that in a situation of this kind I prefer the word of the Minister who has responsibility in this field to the word of my hon. Friend. I do not say that in any discourteous way, but it is the Minister who has responsibility in this field and it is she who has passed on this information. I presume she knew that it would be quoted and might be challenged. Therefore, I accept it because it comes from a source which is open to much more challenge than any ordinary Member would be.

Everybody says that we have to be in the Community because of the influence we shall wield. That is an argument that I have never accepted at all. I do not know why some Opposition Members who are so very concerned about what they call the Left wing in this party do not join us to try to influence the party. I do not know why some of my hon. Friends who are so concerned about some of the Right-wing Tory policies do not join the Tory Party so that they can influence it from inside. The truth is, of course, that one has as much influence outside the Tory Party, if one disagrees with it, as one would have within it if one disagreed with it.

We have all seen what happens to members of the Labour or Tory Parties if they fundamentally disagree. They become very isolated, very uninfluential. In this respect one has only to think of the right hon. Member for Down, South (Mr. Powell). Nobody could pretend that he has not the ability to influence, but I believe most people would accept that today he carries less influence over those who sit on either side of him and in front of him than he did, say, five or six years ago, quite apart from the time when he was a Minister.

Speaking of sovereignty, the right hon. Member for Stafford and Stone gave one or two illustrations. He asked whether if one had had a row with a relative one needed to carry on with it. That would depend upon whether the relative or the right hon. Gentleman was in the wrong. It is not normal for people who feel that they are right to make an abject apology to someone who has done them a wrong.

There are countless thousands of newly-married couples in this country who, if only they would be content to live with their in-laws, could have a higher standard of housing, more money to spend, and live, by and large, a fuller life materially. But many of them choose to live in a squalid slum because it gives them power to make their own decisions and to run their own lives rather than live under the roof of their parents who may be fairly affluent. It is the ability to govern their own lives, to make their own decisions and determine their own way which they cherish and love over and above the affluence that they would enjoy if they would only give up their right not to determine their own destiny. Likewise with countries. There are some things for which too high a price can be paid.

I am not one of those people who wants Britain to be in the position it was years ago. I am not with the former Prime Minister who wants to make Great Britain great again if he is thinking in terms of its greatness at the turn of the century, because I believe that we have qualities far and away above those to offer to the rest of mankind in these very troubled times.

Mr. Andrew Welsh (South Angus)

. From all the argument of the hon. Gentleman, the logical conclusion is that he favours self-government for Scotland.

Mr. Fernyhough

I shall be quite honest with the hon. Member. I have put down a note here on Scotland and Wales and I am prepared to say that at a time when more of our people are asking for more self-determination, the right to make their own laws and to govern themselves, it seems very improper, when we are saying to part of our people that there is nothing wrong in their aspiring to do these things, that we should at the same time be giving away, as far as the whole nation is concerned, our right to do what we say Scotland and Wales have a right to do.

I think that our difficulties are probably due to the simple fact that over the last 20 years both major political parties have promised too much. They have raised the sights and increased the appetites of the people far beyond their capacity to honour their promises. We now realise that there is no Santa Claus who will deliver the goods for the British people. There is no panacea, no simple means by which the hopes, aspirations and appetites of the British people may be satisfied. The British people by their own efforts and determination and by the sweat of their brows will lift themselves out of this economic situation. They will co-operate with the Government in combating, or we shall fail in the fight. There is no one in Europe or anywhere else in the world to come to our rescue in these circumstances. Our rescue will depend completely upon our own efforts.

I said that if I had the power I would make those who before entry made such beautiful and prophetic speeches about the effect of entry into the Common Market re-read their speeches. However, I am able to quote briefly from an advertisement which appeared in a newspaper in my constituency which was inserted by Common Market supporters. It is called "Common Market Comment". It dealt with depressed areas. God in Heaven knows that if anyone has represented a depressed area through 28 years in Parliament, I have. Jarrow has always had twice the unemployment of any other part of the country.

The advertisement reads: However, turning a depressed area into a prosperous one is not just a question of aids and inducements. Fundamentally it's a question of national economic strength and confidence in the future. Our entry into the Common Market will create this strength and this confidence. Stagnation will give way to growth. Investment money will flow into the areas that now have a surplus of labour, creating many more jobs in many industries. It was wicked for intelligent men to have put that sort of advertisement in the newspaper in Jarrow in 1971 to try to convince the people that their unemployment would disappear and that there would be economic growth if we joined the EEC.

The people of Jarrow know that the Common Market is not the answer to their problems. They know, too, that the EEC Regional Fund will not be an answer to their problems. The figures explain what I mean. We in Britain will spend £470 million this year in the development areas. Anybody who thinks that the EEC Regional Fund will make a great and fundamental contribution should compare its proposed £150 million spread over three years with the amount we are proposing to spend in Britain. It can then be seen how insignificant that amount is by comparison.

Mr. Hugh Fraser

We are borrowing.

Mr. Fernyhough

The right hon. Gentleman says that we are borrowing, but we have borrowed many times before and I am confident that if the Labour Government remain in office we shall not only repay that debt but we shall do something which we have achieved twice before —we shall get the country out of the muck and mess it was left in by the Conservatives.

The tragedy of the present Government, like the tragedy of the 1964 Government, was that it had to take over a bankrupt country which had been led into that situation by the Conservatives. We had to give the country new life. On both occasions we left a succeeding Conservative Government with a handsome balance of payments situation and on both occasions the Conservatives squandered it. Once more it is our turn to clear up the mess.

I can never believe that it is desirable that a country which is faced with economic and financial problems such as those we face should ever have to subscribe to the free movement of capital. This is one of the key issues in the development of any country. If a Government cannot control the movement of capital, they cannot determine the extent of growth. If we are to rescue ourselves, we must not only expect our people to make the necessary effort: we must expect from the capitalists a social conscience which far too few of them have exhibited. They must be taught that it is their moral obligation where their country is struggling for its very existence to invest their money in their country where they made it rather than transfer it to other countries as many of them have done.

The British people have yet to speak. I am glad that we are to have a referendum, and I hope that when the count is taken the people will make a decision which I believe they would have made in 1972 had they been given the chance. I believe that they will say that Britain will remain an independent country and that, because of its values, it could be a beacon to the rest of the world.

6.38 p.m.

Mr. Russell Fairgrieve (Aberdeenshire, West)

I did not have the privilege of being a Member of this House when the historic debate took place in 1971 with the great majority of 112 Members wishing this country to join the EEC. For that reason alone I am grateful to have the opportunity to speak tonight. I cannot be the only person who arrived into a political career for some reason other than mere party ideologies. I had sufficient experience of the waste of war to become interested in politics. I am sure that many hon. Members on both sides of the House found themselves, by their natures and beliefs, able to settle for one or other of the party ideologies in order to serve higher causes.

I am grateful for having been called this evening, but it is a greaty pity that we are once more going through this debate. We have just had the renegotiations, whatever they were, and we are now about to have the referendum, whatever it is. How did it all happen? I regret that we have to lay some blame for this situation upon the Prime Minister, one of the three patrons of the European movement. It was he who in the late 1960s would not take "No" for an answer, and he who went with the then Foreign Secretary round the capitals of Europe starting the negotiations which were to be continued in the early 1970s with the objective of entering the EEC. Now, because of the difficulty of half of the Labour Party producing a manifesto that talks about agreement in principle, but wanting better terms, we have this wretched, dubious device of a referendum which is going to consume and waste the next few months of valuable British time.

My hon. Friend the Member for Banbury (Mr. Marten) did me the honour of referring to a letter which I wrote to theDaily Telegraph I believe it is fair, because it must have caught him a little bit in the raw, to refer to the facts which I mentioned in that very short letter. What is the line up as we enter the referendum phase? Those who want Britain to stay in Europe include the great majority of the Conservative Party, the great majority of the Liberal Party and approximately half—I do not want to use emotive words—of the Labour Members, those who are sometimes known as the moderate half. There are also British industry, the National Farmers' Union and our partners in Europe and America. Those are the people who want us to stay in Europe. Who wants us to come out? In this House. one half of the Labour Party—

Mr. Richard Body (Holland with Boston)

Has my hon. Friend not left out an important wing of the Communist Party?

Mr. Fairgrieve

I am now dealing with those who wish us to come out. They include, as I have said, the other half of the Labour Party, namely, the Tribune half, the Communist Party, the militant and Marxist leaders of certain trade unions, and Russia. I do not wish to say anything more. It is for the people of this country to make their judgment.

There are two views. Those who wish us to stay in want to see a strong Britain in a united Europe, and those who want us out wish to have a weak Britain in a disunited Europe. When I think of a countryman of mine many years ago, Keir Hardie, and what he meant when he talked about international socialism and the brotherhood of man, I wonder what has happened to the thinking and philosophy of some Members opposite.

Mr. John Ovenden (Gravesend)

He was not talking about the Treaty of Rome.

Mr. Fairgrieve

It is with sad, natural Scottish regret that I have to include the Scottish National Party with those who are lined up against the EEC. I did not include it in the previous list, because I believe that its reasons are completely different and to some extent tactical. It is an anti-Westminster establishment decision. I am certain that in the three unlikely events of, first, our coming out of Europe, secondly, the United Kingdom's being split up, and, thirdly, the SNP's being the Government of Scotland, the first thing it would do would be to slap in an application to join the Community, to spite the English.

Mr. Welsh

Where does Scotland stand in the hon. Gentleman's United Europe? Shall we have independent representation? Denmark, with a similar population, has about 22 permanent representatives of various stature, whereas the Scottish Office has one relatively minor official.

Will the Scottish Conservative Party stand up for independent Scottish representation in Europe or for thestatus quo?

Mr. Fairgrieve

If the hon. Gentleman had heard some of the things which I have been saying for years he would know that I have advocated immediate application by all member States of Article 138 of the Treaty of Rome, which calls for direct elections by universal suffrage. That means Scotsmen electing people direct to Strasbourg, and not having them chosen for them by a Westminster Government.

Mrs. Ewing

What about the Council of Ministers?

Mr. Fairgrieve

Scotland is the one part of the United Kingdom that has always been international. This has been manifested in history by the Old Alliance, Bonnie Prince Charlie, and the Prince across the water. We have sent soldiers to India and statesmen to New Zealand and Canada. We were the one international part of the United Kingdom. It is ridiculous that Scotland should ever consider coming out of the part of the world that she has been in for all her history.

I turn to a few other points. The first is the question of the grants. We are receiving huge grants from Europe. There is the question of regional policy. The fact that we should receive from the £500 million Community regional fund, £150 million over the next three years, was scorned. That is only the start. I want to remind people who denigrate the Community on this subject of what the facts are. There are nine members of the Community, of which we are one, subscribing to regional funds. Of those nine members, three are creditor nations, receiving more than they are putting in. Those nations are Italy, Ireland and the United Kingdom. Much maligned France, is getting less out than she is putting in, though I grant that it is not by much. Out of common decency we should remember these facts.

We know that the grants will mean a lot to industry and employment in this country, particularly Scotland, which will receive a large proportion of the United Kingdom funds. This is vital to my constituency of Aberdeenshire, West, one of the most important beef-producing areas of the United Kingdom. We are glad that the National Farmers' Union has been followed by its counterpart in Scotland in advocating that we should stay in Europe. It amazed me to hear the SNP spokesman for agriculture only yesterday going against his own NFU. He is meant to be a practical farmer.

Already money is coming in the form of grants to the fishing industry for building fishing boats in Scotland. At a time when we are receiving grants to help the fishing industry in Scotland a non-EEC country, Norway, is dumping subsidised cod in Scottish ports.

In my constituency there are four major paper mills. Their main export market is now the European Community. They know what it means to them if we come out of Europe. There are two textile mills, which form parts of large British organisations. The textile industry has stated quite clearly the catastrophic effect our coming out of Europe would have on it.

On the question of national sovereignty I make one brief point because it will come up in the next three months. About the faceless bureaucrats, there are fewer bureaucrats in Brussels to look after 250 million people than there are in Scotland to look after 5 million Scotsmen. That shows the level of the exaggeration on this point.

Mr. Ovenden

They are extra.

Mr. Fairgrieve

The national sovereignty and the strength of Germany and France have increased by their being members of the EEC, whereas our sovereignty has decreased by not being a member. Anyway, what real sovereignty is left in a world that can destroy itself overnight by nuclear holocaust?

We must look to future generations, to the future of mankind. The development of the EEC is a step along the way. If we in Europe are ever to repay the debt we owe to the 25 million people who were killed, maimed and wounded in two world wars, then Europe must unite.

6.50 p.m.

Mr. D. E. Thomas (Merioneth)

It will not surprise hon. Members that I have a rather different perspective of the European Community from that so far shown in the debate. I am concerned not so much with the impact of the Community on Britain as a whole as with the impact of continued membership on the Welsh economy, on Welsh industry and agriculture, and particularly on the political developments now taking place within the United Kingdom concerning devolution and the type of institutions we are creating in Wales.

It is clear to me, from what I hope was an objective reading of the renegotion White Paper, that the so-called terms cannot be described as a major issue in the debate. The contributions from both sides of the argument have not centred on the terms. That confirms me in the view that the renegotiation exercise has brought no fundamental change in the structure of the treaties or the way in which the Commission and the Council of Ministers are interpreting them. The very fact that the renegotiation exercise took place as part of the normal working programme of the Community indicates that for the Community it was a nuisance to get out of the way rather than a fundamental exercise.

That means that the fundamental objections that we in Plaid Cymru had hack in 1967, when my hon. Friend the Member for Carmarthen (Mr. Evans) was first in the House and spoke in the European debates then, and in 1971, when the Conservative Party took the British and Welsh people into Europe without consultation, still stand. Those objections were to the type of supranational institution that the EEC is. We have had bitter experience of being part of a political and economic union throughout our modern history. We have been subject to policies of economic, industrial and political centralisation, and we know what the effect of those policies on peripheral areas and regions can be.

Our major fear, which is the basis of our objection to Welsh and British membership of the EEC, is that Wales will become the periphery of a periphery, with no representation in the institutions of the European Community. But even if we were to have representation in the type of institutions that exist in the Community, even if we were to have the type of directly-elected European Parliament that is canvassed by some hon. Members, the result would be to create a supranational European structure in which the smaller regions and constituent nations would be even less likely to have a clearly-heard voice.

The European Community faces a fundamental contradiction in its structure. If it is to democratise itself, all that it will do is to create massive so-called democratic institutions, so out of touch with the people they represent that it will be impossible for them effectively to scrutinise policy decisions or to produce legislation which can be relevant to all the people they are supposed to govern. It is impossible to develop democratic institutions along the lines now envisaged by those who have advocated a directly-elected European Parliament.

The results of centralisation, which we have experienced in Wales, will be exacerbated for Wales, Scotland and the North of England within the EEC. The current net flow of direct investment capital will make it more difficult to diversify and strengthen the Welsh economy. The tendency to concentrate economic development in areas already most favoured by industrialists will continue. We believe that the central areas will become relatively more prosperous and the peripheral areas relatively poor. It is clear to us from any objective study of the economic structure of the EEC regions that the Community has not benefited Brittany or the other peripheral regions.

It will be argued that the regional fund is only in its infancy and that regional policy is only now getting off the ground. That only strengthens my argument. Any European structure which gives such a low priority to regional policy and a social fund cannot call itself a community. It cannot care for the peripheral areas or, for that matter, the 25 million people in Europe living below the poverty line, living in relative social deprivation. The over-centralised economic and political structure of the Community can mean only that there will be further disbenefits to the periphery—to Wales, Scotland and the regions.

One section of the White Paper caused me much concern. We have advocated that there should be a special development agency for rural Wales and that there should be special policies to induce manufacturing industry to come to Mid-Wales. Yet we see in the White Paper that a request has been made for a special derogation from the treaties and the policies of the Community in respect of the Highlands and Islands Development Board. That confirms my view that the board is contrary to the treaties and the policies of the Commission and the Council of Ministers. That is why a special derogation must be sought. Therefore, I am concerned about the flexibility of a Welsh Government, when the Assembly is set up, to pursue their regional policies and to have the type of incentive or infrastructure policy that they would want. That will be severely limited by being within the EEC competition policy structure.

We have seen no fundamental change in the structure of the common agricultural policy as a result of the renegotiations. Yet that policy has increased the income disparity between various parts of agriculture. Farmers at the higher end of the income bracket received more, whereas those in the hill and less-favoured areas, although we now have a concession in those areas under the operation of the CAP, receive relatively less in terms of the total spending under the CAP than they would receive under a deficiency payments system. The burden on the lower income taxpayer and the pensioner is relatively far higher under the CAP system than under the deficiency payments system.

The National Farmers' Union and the Farmers' Union of Wales talk about the need for a five-year development programme for agriculture. The British Government's ability to invest more in agriculture will be restricted by the common agricultural policy if we remain in the Community. Last year's beef crisis reflected the British Minister of Agriculture's lack of flexibility within the CAP system. I do not see why the farming unions in particular retain their commitment to continued membership.

Our view, particularly at this time in the political development of Wales, is that we will not have ourselves put into the straitjacket of the European Community. We will not prejudice the potential sovereignty of the Welsh people, when we have our Assembly and a Government in Wales, by committing ourselves to an institution in which we have no representation and over which we have no control. I am certain that that is the view of the majority of the Welsh people.

Mr. Speaker

Order. I am grateful to the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) and the hon. Member for Merioneth (Mr. Thomas) for making speeches much shorter than most of those made by their predecessors. I hope that this will continue.

6.59 p.m.

Mr. Alan Lee Williams (Hornchurch)

The hon. Member for Merioneth (Mr. Thomas) made an interesting speech. I always enjoy listening to him. He is my favourite nationalist in the House, because he does not lecture or hector the House. But the hon. Gentleman makes a mistake in thinking that the European Community is as static as he imagines.

My right hon. Friend the Foreign Secretary has shown in his renegotiations that quite a lot can be achieved within the Community, particularly in respect of the common agricultural policy. Of course it is not perfect—we know that—and it still has not been fundamentally changed. It still very much benefits the French farmers. The House knows that, and I do not think that the Government have made any attempt to conceal it from the House. But we still find our- selves in the position currently of renegotiating this aspect. It is an on-going process. Therefore, there is a prospect within the European Community of meeting some of the difficulties which the hon. Member for Merioneth has mentioned.

I would say to my right hon. Friend the Member for Jarrow (Mr. Fernyhough), who spoke with great passion—I only wish that I could match his eloquence—that the only chance of meeting his major point about helping the needy and the poor is by concerted action with our European partners. It is beyond the capability of the United Kingdom to do it alone. I therefore think that we should try as my right hon. Friend the Foreign Secretary has done in the period of renegotiation, to get major concessions. I think we have obtained some concessions. Again, however, they are only part of the story. But it is an on-going business, and in this direction we must do more.

During the course of the past two days we have had a series of what I consider to be misleading descriptions of the European Community. The hon. Member for Newham, South (Mr. Spearing) said that it was "pale blue". He implied that the European Community was for the benefit of what he called capitalists. I would say to him that if he likes to make a detailed examination—and I have asked my right hon. Friend the Member for Jarrow to do this, too—of the areas of public ownership that are to be found within the European Community, he will find that Britain is not at the top of the league but that it is behind France and Germany. He will find that there is no restriction within the workings of the Treaty of Rome which will prevent the Secretary of State for Trade or the Secretary of State for Industry from coming to the House with proposals for radically reorganising the British economy. There are no restrictions that one can see in the practice of the European Community.

It is very important to say that because I think it will be one of the arguments used by the opponents of staying in the Community that somehow or other a British Chancellor of the Exchequer will have to clear his Budget statement with our partners before he presents it to the House. I do not believe that to be the truth of the matter at all.

The right hon. Member for Stafford and Stone (Mr. Fraser) made what was I thought a most interesting speech because he put the matter in historical perspective, and one must see this debate, which has, after all, been going on for 15 years, in historical perspective. But he also touched on the real nub of the problem as far as we on this side of the House are concerned when he mentioned the right hon Member for Sidcup (Mr. Heath), because it was he who negotiated British entry into the European Community. I said outside at the time, because I had lost my seat and was no longer in the House, that I thought that it was a commendable achievement, but the main missing ingredient in the presentation of the case by the right hon. Member for Sidcup was the common touch. The general population, particularly the people who support the party on this side of the House particularly trade's unionists, thought that the European Community was quite alien from what we were trying to achieve.

I think the arguments were pitched in the wrong way. I am not trying to escape my own share of responsibility, because I had a hand in that campaign, since I have been a pro-Marketeer for a number of years, but I thought at the time and, looking back, feel retrospectively very strongly, that the emphasis always on the benefits purely in material terms—although I think they are there—were wrong and that some of the essential idealism had gone out of the debate.

I must say that I am less of a sceptic than my hon. Friend the Member for Birmingham, Ladywood (Mr. Walden) basically is about the European Community, although I fully understand his position. I was attracted to the European Community idea for its idealism, because I believed that it would be possible, with all the imperfections of the Treaty of Rome, to reorganise Europe in such a way that not only would we rid ourselves of the horrors of the two world wars but we would be able to play a major part in world politics; that we would be able to evolve into an interdependent relationship with the United States rather than a one-sided relationship in which the United States had all the power and most of all the influence. This was part of the basic idealism which motivated the European movement, and I do not think that need necessarily and wrongly be interpreted as anti-American, because I happen not to be anti-American.

At the same time, there must be an awareness by all of us, now that we go towards what I hope is the final hurdle in respect of British membership, that what we are trying to create here is an outward-looking Community. a Community which is concerned about the Third World. But we must also be aware that because of the difficulties which we have at the present moment, the industrial problems and some of the other problems which my hon. Friend the Member for Ladywood mentioned, there is a mood in this country—to be found not only in the United States, but in this country—of apprehension. People are uncertain. They hear many making speeches which give the impression that we are now facing—as indeed I think we are in many respects—the gravest crisis this country has faced since the inter-war period. People are therefore apprehensive.

In these circumstances, those of us who wish to see Britain firmly in Europe must argue the positive case that the only way we can overcome some of our problems is by working with like-sized and like-minded Powers in Europe; and we must admit at the same time that gradually there has to be a loss of sovereignty. I see no reason why we should run away from this because, if I have to generalise, I think that most British people would be confederalist rather than federalist. I think that most people who think the problem through in respect of the European Community realise that we are entering into a relationship with supranational implications, and it is only fair that those who argue the case should make that absolutely clear.

Although my right hon. Friend the Foreign Secretary has indicated that in the period of renegotiation the move towards monetary union has been temporarily put aside, it would be misleading the House to give the impression that this has been totally abandoned, because in fact it is part of the European idea. The timing is vitally important, and I agree with my right hon. Friend that to talk about monetary union by 1980 against the backcloth of a declining economic situation was dangerous nonsense.

Nevertheless, I firmly believe that the European Community will give us a chance, not to resurrect the glories of the past—because that is impossible—but, with France, Germany and the Benelux countries, to build a Europe which is sufficiently powerful in the areas of technology and science to compete on equal terms with the Soviet Union and the United States. That is no bad thing.

7.10 p.m.

Sir George Sinclair (Dorking)

The Government have announced to the House that they have made considerable improvements in the terms of our membership of the EEC. I wish to add my congratulations to those expressed by other hon. Members on their achievement. But that was always possible once we were members and started negotiating with friends who were fellow members and who were dedicated to the proposition that an unfair arrangement for any member would weaken and damage the whole Community.

I welcome the Government's achievement, but I am sad that there has been not one word of acknowledgement from the Government benches of all the work done by those representing Britain in the European Parliament—all drawn, regrettably, from the Opposition benches in this House and in the other place. They have faced all sorts of difficulties, without much help and they have worked extremely hard. Everyone in the European Parliament will, I think, allow that they have done much to gain acceptance and understanding of the British case and have played a major background role in the Government's renegotiation. It is very poor-spirited of the Government not to have acknowledged this achievement.

Today we are debating, not the small print of what has been gained in Europe, but the main issue. What is the great value of our remaining in Europe? The basis of it is identity of interest—a point well brought out yesterday by the hon. Member for Berwick and East Lothian (Mr. Mackintosh) and today by my right hon. Friend the Leader of the Opposition. There is a real identity of interest between this country and our fellow members of the EEC. It has been built out of our common experience of a war-torn Europe.

The main identity of interest is political. It is in security and defence for the people of the West working in unity. If that is not achieved, we shall face two threats: first, that Europe will again be divided and will tear itself apart, and, secondly, that we shall not be strong enough to stand against the military strength of the USSR, which is increasing year by year in spite of all the talk of détente. Our basic duty to our people is to ensure that they live without fear and in a world in which there is stability.

We have an identity of interest in the sort of open society we are trying to create in Europe where individuals can fulfil themselves and where we can, by hard work and hard thinking, achieve a standard of prosperity for our people.

We share a common interest in our need for raw materials and food from outside the EEC—a point emphasised by my right hon. Friend the Leader of the Opposition.

A major role for Europe is to provide a large, civilised and understandingbiocwhich will recognise its interdependence with the rest of the world—a bloc which will realise how important it is for peace that the Third World shall share some of the prosperity of the industrialised world. There is every sign that, in the EEC, this interdependence is recognised. It has now been given institutional form and action has led to agreements, such as the Lomé Convention, to help the poorer countries.

Another interest which has always been in the minds of our people is our relationship with the Commonwealth. I speak as someone with deep family connections in Canada, Africa, India and Australia. For me, one of the great strengths of our membership of the EEC is that it is supported by all the people with whom we have been associated most closely in defence and trade matters and in bringing communities to independence. As independent Commonwealth countries, they are fully in support of our remaining members of the EEC and in helping them to establish better and more profitable relations with Europe. As members we can help to put their case to our fellow members in the EEC, many of whom have much experience of dealing with the Third World.

There is also our relationship with America. For that we are grateful, remembering two of the greatest trials of freedom in the Western world—the First and Second World Wars—and the Marshal Plan. The Americans have always been major supporters of a strong and united Europe which could share with them the burden of defence of the free world and the maintenance of free societies throughout the world. Therefore, all our friends outside the EEC support our remaining in Europe.

People say that membership of the EEC is a good thing for Britain. It could be a good thing for Britain. It is what we make it. Membership is no solution to our internal problems— a point which has been made by many speakers. Europe provides us with opportunities to recreate our industrial vitality and to regain our self-respect by learning once more to pay our way in the world. So far we have not taken advantage of the opportunities offered. We are skulking about with self-inflicted industrial wounds and dislocations when we should be thrusting our way into the trading opportunities provided by Europe. Europe will not solve any problems for us. How-ever, if we take advantage of the opportunities that Europe is opening up to us, we shall serve our people well: we shall be able to restore our self-respect, take part in the greater community of the EEC and help Europe to rebuild its strength; we shall contribute to stability and peace in the world. Now, it is our duty to give an unmistakable lead to the country. That is what we are sent here to do. We should give it in this debate and in the two Divisions that follow in this week. We should make it clear that our judgment is backed by many groups in this country—the Confederation of British Industry and the National Farmers' Union, as well as by the leaderships of the great political parties. We should make it abundantly clear that our opportunities, responsibilities and duties lie in a united Europe. I hope that the votes at the end of this debate will reflect our determination and the leadership of this House.

7.21 p.m.

Mr. John Ovendon (Gravesend)

It comes as no surprise to me to find that pro-Marketeers in this debate are concentrating upon the political advantages rather than the economic advantages of membership. Strangely enough, two years ago the position was precisely the reverse. We were then being told of the enormous economic opportunities which awaited us in Europe. I am not surprised that that is not being said today because we no longer need to look into the crystal ball. We have the facts. We can look at the books, and we know what the effect of membership of the Common Market has been on this country's economy and balance of payments.

I would not attempt to blame all our economic ills upon our membership of the Common Market. I remind the proMarketeers that our membership was supposed to make it easier for us to solve these problems and that we were supposed to have before us wide opportunities which would increase the prosperity of this country. That has not happened. No longer, therefore, do we hear the economic argument about Europe. We hear some strange argument about Britain's withdrawal from Europe being a threat to world peace—and a stranger argument I have rarely heard. Even if one is an advocate of the cold war politics, which we have heard advocated so splendidly by Conservative Members today, surely a better vehicle for pursuing those policies is the North Atlantic Treaty Organisation, which is quite irrelevant to the EEC.

We are supposed to be debating the White Paper presented to us by the Government as a result of their renegotiation of the terms of membership. The Labour Party's election manifesto, on which all Labour Members were elected, specifically rejected the terms which were negotiated by the Conservative Government for British membership of the Common Market. The present Government came to office pledged to conduct a fundamental renegotiation of those terms and to reconsider membership in the light of that renegotiation so that they could make a recommendation to the British people. The logical assumption is that success in that renegotiation would lead to a recommendation to stay in and an unsuccessful outcome would lead to a recommendation to leave the Market.

The question before us seems to be whether that renegotiation has been successful to the extent that membership, which was unacceptable a year ago, is now desirable. If we are to claim that fundamental renegotiations have been successful, we must be able to demonstrate that there have been fundamental changes as a result of those renegotiations. I am in no doubt that we fail upon that test.

First, the Labour Party manifesto rejected the imposition of a common agricultural policy which prevented access for low-cost producers to the British food market. After a year's renegotiation the principles of the CAP remain entirely intact. We have not altered one fundamental point of a policy specifically designed to protect inefficient European farmers by maintaining EEC prices above world levels. It has been argued, strangely enough, that the CAP can be used to provide cheaper and assured supplies of food. That is a gross distortion of the whole purpose of the CAP and totally inconsistent with the machinery of import levies and denaturing which form the framework of the CAP.

Throughout this debate there has been a determined attempt to pretend that import levies are not affecting food prices in Britain, yet we know for a fact that over a whole range of basic foods levies have forced up prices. I find it quite inexplicable that certain hon. Members should admit that levies are being imposed on imported food and in the same breath claim that this has no effect upon prices. Sugar has been quoted time and again by pro-Marketeers as an example of how we benefit from the CAP. That is not in any way surprising because it is virtually the only food which can be obtained inside the Common Market more cheaply than outside, and that will be for only a limited period. In contrast the CAP prevents us, by its ban on beef imports, from obtaining beef which is now cheaper in the world markets than it is in the EEC.

The facts of life show us that world prices for food are now falling and that the CAP will come back into its own, that it will play the very rôle it was designed to play and keep the price of food in this country above world levels.

Our objective as regards the Community budget was clearly defined in our manifesto. It was defined as securing New and fairer methods of financing the Community budget. The manifesto commitment continued: Neither the taxes that form the so-called own resources' of the Communities, nor the purposes … on which those funds are mainly to be spent, are acceptable to us. We would be ready to contribute to Community finances only such sums as were fair in relation to what is paid and what is received by other Member countries. That achievement of renegotiation should hardly be mentioned in the same breath as the statement from our election manifesto.

There has been no change in the system of raising finance for the Community budget. There has been precious little alteration to the distribution of the budget proceeds. We have been offered purely a compensatory mechanism to refund part—I stress, only part—of our excess contribution to that budget and then only in carefully defined circumstances.

Two basic problems arise as a result of this mechanism. What happens if we fail to satisfy the conditions laid down? If, for example, ourper capitaincome rises above 85 per cent. of the Community average, we would qualify for no compensatory payment. As I understand it, there would be no limit to the unfairness of the contribution we would be asked to shoulder as a result of membership of the Community.

The other problem is that this mechanism is for a limited period of seven years. There is no guarantee that it will be renewed. As we have not changed the basic nature of the financing of the Community in the renegotiation, we would return to that should this mechanism not be renewed. I ask my right hon. Friends to explain what guarantees they have for any continuation of a compensatory mechanism. In short, we cannot fairly claim to have achieved the objectives of renegotiation. The real question before us is whether membership is desirable without the changes which the Labour Party demands.

The answer to that question must be a firm and clear "No". There are not sufficient economic advantages in membership, as we have seen over the past few years, to outweigh the burden placed on us by the budget contribution and by the CAP. Excessive contribution to the budget represents not merely an injustice which will lead to growing resentment in this country against the Community but a surcharge on the living standards of working people in Britain.

An unfair and excessive burden on our balance of payments can only lead to a corresponding diversion of resources into exports to compensate for that situation. That must mean a reduction of home consumption and a reduction of living standards for the British people. We have already suffered enough in this country for the massive and unavoidable increases in oil costs without consciously and deliberately adding to the burden, as we shall do if we remain members of the Community.

Equally, I believe that continued acceptance of the common agricultural policy would prove to be a self-inflicted wound. That would largely undermine either our living standards or our ability to compete in EEC or world markets. There is little advantage in the reduction of tariffs for our exports if we are to take on board the problem of higher food prices which will lead to higher wages, which will lead to our pricing ourselves out of the very markets in which we are claiming now to have advantages.

What do we do if we leave the Common Market? I have sensed a feeling of despair in speeches as though there was no future outside the EEC. It is as though this country did not exist before it joined the EEC, as though the rest of the world had somehow slipped into the sea since this country joined the Common Market. This is the insular approach of the Eurofanatics to which we have become perhaps immune over the past few years.

It may well be that the EEC countries would choose in their own interest to continue trading with us. I find it a strange argument which says that the EEC, which has gained so much from free trade with us, would cut off its nose to spite its face by re-erecting tariff barriers against us. The loss would he on the part of the EEC countries if they did so. It is inconceivable that, when countries are running such a massive surplus with another country, as the EEC countries are running with Great Britain. there should be any serious consideration of tariff barriers being erected.

I remind my hon. Friends, particularly my right hon. Friends, that the Labour Party exists to protect and promote the living standards of working people in this country. We must ask whether Common Market membership under the terms open to us is consistent with that commitment. In my view it is totally inconsistent. Big business in this country is unanimous in its support of British membership. It is obviously attracted by support for the principle of free competition which is enshrined within the Treaty of Rome.

I remind my right hon. Friends that this party exists to distort free competition. This party came into existence to prevent the free working of the market. We have seen some strange arguments in the White Paper. These have been repeated in the debate. It is suggested that we should forget the Treaty of Rome and should look only at present practice. It is said that we should ignore the prospect of economic and monetary union because it has not been talked about and that we should ignore references to the harmonisation of tax policies because that is not happening at the moment.

It is an appalling principle that we should consider joining a Community the rules and objectives of which we intend completely to disregard. That would be bad for Britain and it would be bad for Europe. Either we go into the Community with full knowledge of the obligations placed on us and prepared to work for the objectives of the Community, or we get out of the Community. It has been said that there is no future for us outside the Community. That ignores the economic facts of life. Above and beyond that it is the politics of defeatism and of despair and it is the advocacy of tired men who lack political imagination.

7.35 p.m.

Sir John Eden (Bournemouth, West)

Unlike the hon. Member for Gravesend (Mr. Ovenden), I welcome the White Paper. I am glad that the improvements achieved are sufficient to enable the Government, or at any rate a large part of it, officially to support our continued membership of the EEC. The White Paper made two things clear. The first is that the Community is flexible and the second is that it is easier to exert influence on its institutions and policies from within than from outside.

The word "renegotiation" is misleading. The original terms established the basis for entry and were negotiated from outside. They have now been improved and modified after entry from within. That process of adaptation and change will Continue because the Community is not static. It is living, organic and developing. None the less, the progress made, as set out in the White Paper, is a tribute to our negotiators. It is also a testimony to the understanding, tolerance and good will of our Common Market partners— attitudes that would be forfeited if we now decide to withdraw.

Opponents of our membership rest their case, as we have heard today, largely on the issue of sovereignty, by which they seem to mean the ability to take on our own decisions affecting our own interests. How real can that be today? Given the gravity of recent international events, given the persistence of Communist penetration in many parts of the world, who can doubt that today's urgent need is for free nations to identify their common interests and combine their resources in resisting further encroachment?

There are two matters in which we, a small and heavily populated island, have a major interest. They concern food and exports. We have to import almost half our food requirements. We must therefore be able to sell the products of our factories to pay for it. So the price of food to us is important and it is not without significance that food accounts for more than half our total trade deficit with the EEC.

That underlines the fact that since 1972 our membership of the Community has brought us a considerable price advantage in certain important items of food. But our interest in food is not limited to its price. To an even greater extent we have an interest in the continuing supply of food. Our membership of the Community will help to secure that for us, just as that same membership, by offering to us the best prospect for long-term economic growth, will enable us to expand our industrial base to pay for it. That will ensure for us a much better independence, a much more worthwhile sovereignty, than any realistic alternative international relationship could produce.

Sovereignty is not, after all, a document, a piece of paper, or even a treaty. In reality, sovereignty is our economic strength, our self-sufficiency and our political stability. Sovereignty is also and pre-eminently the maintenance of parliamentary government.

I agree with the Prime Minister that these aims are more likely to be won by our remaining members of the EEC. There can be no doubt, as the White Paper makes clear, that their atttainment would be infinitely more difficult if we were to withdraw. That being so, I hope that before referendum day the Prime Minister will drop his low-key approach and, in the words used last night by his right hon. Friend, the Minister of State for Foreign and Commonwealth Affairs, he will triumphantly describe to the British people the advantages of keeping Britain in the enlarged European Community.

7.39 p.m.

Mr. Maurice Edelman (Coventry, North-West)

The right hon. Member for Bournemouth, West (Sir J. Eden) has properly set out the advantages of remaining members of the European Community, to which I fully subscribe. Much of the discussion about the question of renegotiation or negotiation is a matter of semantics. What is clear is that the negotiations on the limited objectives set before himself by the Prime Minister, set out in the manifesto, have been fully realised. To that extent I commend the achievements of the Prime Minister and the Foreign Secretary.

The debate so far has been conducted in a reasonable and constructive way and I have no doubt that that atmosphere will largely be echoed in the country although a number of bogy words such as "Brussels" and the "Commission" will be used to frighten people. No doubt words such as "Eurofanatic", which was used by my hon. Friend the Member for Gravesend (Mr. Ovenden), will be used to intimidate the public. But I believe that the majority of the British electorate will give full weight to the real issues and to what it means to Britain in the future for us to remain a member of the Community.

The idea of the European Community was born out of the disaster of war. I was a member of the very first British delegation to the Council of Europe in 1949, where some of the ideas which eventually became the basis of the Treaty of Rome were first formulated. Although my hon. Friend the Member for Gravesend was rather derisive about the political content of the Treaty of Rome and the purpose of the European Community, the political idea that was then put forward and which remains the basis of the European Community today was that there should be a community system of political and economic co-operation straddling frontiers and enmeshing friends as well as former enemies in a united purpose.

That project was heightened later by the admission of the Germans to the Council of Europe and so, for the first time, we saw the creation of a community instrument, the Coal and Steel Community, which gave an assurance that the French and Germans would never again go to war for the coal and steel of Alsace-Lorraine. The object of the community system was to tear down Customs barriers and to enable the peasants— who, I remind my hon. Friend, are the working class of Europe— to have guaranteed prices for their products to protect their livelihood.

When talking about the common agricultural policy it is a mistake to think of the farmers of Europe in terms of millionaires driving around in Cadillacs. They are ordinary working people, with sometimes very modest and inefficient farms, who have led depressed lives and are seeking to elevate their lives and to obtain a fair return for their labours.

What we wanted to do at this first great meeting of the Council of Europe, which was attended by Hugh Dalton, Herbert Morrison and Winston Churchill, was to seek the economic and political integration of Europe and to put an end to the Balkanisation of Europe, which was the origin of the fratricidal wars which had continued for over a century. Our purpose was to try to avoid the tribal nationalisms which in the past have bedevilled, and even today still bedevil, the condition of Europe.

Those who say that the purpose of achieving peace which the founders of the Community of Europe put before themselves is now anachronistic should think again. These tribal nationalisms are alive in the world today and are responsible for some of the greatest miseries which confront Europe and the world in 1975. How much better would it be if in the Middle East there were some kind of economic and political community linking together those countries which are liable to go to war.

It has been suggested by some of my hon. Friends that the Treaty of Rome is a capitalist racket. That was not a description given to it by our Socialist comrades who were the founders of the concept of the Council of Europe and the European Communities. They were people who believed in the ideal of the European Community. They believed on that basis in a fraternal concept which was put forward by such excellent Socialists as Andre Philippe of France, Henri Rollin of Belgium and Schumacher— men of the Resistance and of the concentration camps. To suggest that those people would promote a capitalist racket is an insult to their memory. My hon. Friend may smile but we should be careful of the way in which we speak about them. They were men who had seen the evils of perverted nationalism. They were men who during the war suffered in camps and in the Resistance. They came out determined, as they put it, to create a better Europe, and they wanted to try to establish a mechanism for so doing.

Mr. Ovenden

I do not want to give my hon. Friend the wrong impression. I was not smiling about that. I intended to point out to him the supporters of Socialism on the Opposition benches who were expressing their support.

Mr. Edelman

Not only my hon. Friends but many of our friends and comrades in constituencies should know that the European Community is a concept in which Democratic Socialists played a full part, and the principles they then enunciated are equally valid today. They did not want a diktat from the centre. They wanted to achieve planning by consent, and that was the democratic principle which they put forward. It was they who put forward the idea of a tripartite organisation in the Economic and Social Council. It was they who put forward the idea of co-operation between Government, employers and trade unions

When my right hon. Friend the Secretary of State for Industry talks about planning agreements and tripartite planning, he should not imagine that he invented the idea. That idea has been in existence in Europe for many years. It was at the basis of the Monet plan for the modernisation and re-equipment of French industry. That most successful plan and enterprise was carried out years before my right hon. Friend ever thought of tripartite planning or planning agreements. I am happy to see that he has now caught up with those desirable concepts.

I will touch briefly on the question of sovereignty, which is essential to our debate. It is true that in the early days before the European Communities were formed, in the Conference of Messina and similar organisations, there were those who looked forward to a federal Europe. In those days, I recall. the division was between the federalists and the functionalists— those who believed that by functional co-operation it was possible to knit Europe together and to create a Europe which would be different from the institutionalised Europe we arc talking about today.

One of the products of that functional concept was Concorde. I have always been a supporter of Concorde. Although initially I supported functional co-operation, looking at the example of Concorde — where there is a treaty without joint accountability, a treaty without proper responsibility, a treaty in which there has been a surrender of power without a compensatory control— I must come to the conclusion that such an institutional arrangement is necessary to knit Europe together.

Every international treaty means a surrender of a certain amount of sovereignty. It means an agreement either to do or not to do something. In surrendering that element of sovereignty for a specific purpose, in any international treaty we are carrying out what we have done under the Treaty of Rome. We have abandoned a measure of sovereignty for a specific purpose, but we have not abandoned our sovereignty. I believe that that willing surrender of sovereignty for a specific end, with delegation of power for a particular purpose, is wholly desirable. Those of us who support the idea of the European Economic Community should not feel any sense of shame or diffidence about affirming that we are in favour of this limited cession of sovereignty for a specific purpose. That, indeed, is how it has turned out to be.

It is true that there are weaknesses in the structure of the Community and perhaps in the application of the Treaty of Rome. If there are weaknesses, let us correct them. We shall not correct them by skulking or abstaining. We shall correct them only by sending a delegation to the European Parliament and by seeking to influence the evolution of the Community. I believe that that is the way to participate and the way in which to amend the admitted imperfections inside the Community.

I accept fully that not all the institutions of Europe are perfect, but equally imperfect are our own institutions. I entirely agree that the European executive must be checked. Equally, I believe that our own executive must be checked. I think that the improvement of the Commission and of the Eurocrats lies within our own power. They must be called to account. As I have said, the first way in which we can do so is for the Government, when this matter is decided, to send a delegation to the European Parliament so as to strengthen its control of the Commission. The power to control the Commission already lies in the European Parliament. It is up to us to take the necessary action to make it effective.

I have touched on sovereignty, and I add to what I have already said by pointing out that sovereignty is never absolute. Sovereignty lies in the power to exercise. influence and to affect decisions. To that extent I feel that within the greater authority of the European Communities our sovereignty, far from being weakened, will he extended. My right hon. Friend the Minister of State for Foreign and Commonwealth Affairs, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), has very properly said that President de Gaulle. in whom there was no greater nationalist. found himself perfectly at home within the European Economic Community after his first hesitations. There has never been any question of France losing its glory, prestige or self-dedication because it has become a member of the Common Market. What is true of France is true of Germany, Italy, Belgium and Holland. All of those countries have maintained their national personality.

I say to my hon. Friends who are nationalists that their fear of losing their national personality and of being smothered by this greater entity is false. On the contrary, I believe that they will have a greater opportunity than they have anticipated of defining and expressing their national personality, even as nation States, within the wider framework of the Community. I believe that they will have greater opportunities than they have had in captive isolation, as it were, within a smaller organisation. That is not to say that I support in any way the Balkanisation of Europe. That could lead to the greatest evils. On the other hand, I believe that sovereignty and national identity can and will be preserved within the Community and that ultimately we shall see not only the strengthening of Europe as an entity but the flowering of the individuality of regions, nations and smaller groups.

Before I conclude I must refer briefly to the common agricultural policy and the question of cheap food. Everyone in this House who seeks to obtain cheap food for the British people is not only justified but obliged to do so. I am certainly strongly in favour of any policy which leads to the cheapening of the cost of living and the cheapening of food. At the same time, we must recognise that within the structure of the Community one of the aims is to give some sort of security and a fair return to the producer, to the farmer, to the peasants about whom I was talking a short time ago.

Within the framework of the Common Market the CAP, for all its imperfections, has the validity that it is the quid pro quo which the peasant workers of Europe seek in exchange for the right of the British industrial worker to send his industrial exports into a greater market without any barriers.

It would be entirely wrong to think of the CAP as a protective mechanism designed to preserve the self-interest of a handful of people. On the contrary, I believe that the CAP, despite some of its shortcomings, offers the opportunity of providing a continual supply of food in an age in which not only world supplies of food are becoming scarcer but food outside the Market is likely to be very much dearer.

Let us remember that, happily, the days of colonial cheap food are over. That source of cheap food was based on the exploitation of native peoples. We sent our industrial products to their countries and they sent us their "cheap" food. I put the word "cheap" in inverted commas because they sold their food to us at prices which meant sweated labour in the colonies from which they derived. I hope that that kind of cheap food policy has gone for ever.

Mr. Leslie Spriggs (St. Helens)

My hon. Friend has said that the day of cheap food has gone for ever. I hope that he will accept that most of his hon. Friends agree with him. I hope that he will remember that it was the exploitation of the Commonwealth countries and their cheap food which helped to destroy the Commonwealth as we knew it.

Mr. Edelman

If my hon. Friend is talking about the colonies, I agree with him entirely. That leads me to a further point. Now that those countries have achieved their independence and become more sophisticated, and now that the patterns of world trade are changing, the food that is available from them is being directed into different markets. There is no going back on that. Therefore, it is hopeless to think that somehow we can reconstitute the omelette which was made from the shattered eggs of the Commonwealth as we knew it.

I must add an addendum to that proposition. What use would it be to have relatively cheap food in a slump situation such as the 1930s when the unemployed could not afford to pay for it? That is why I say that the main economic purpose of the Community must be to create the kind of industrial prosperity for which Britain is eminently qualified.

The decision to be taken by the electorate in the referendum will be conditioned by many factors. Many people will vote on impulse, prejudice, sentiment and xenophobia. Many considerations will apply other than purely rational considerations. There will be gut reactions and there will be the opportunity for demagogues to incite people to vote. There will be demagogues who will try to incite the people to vote in both directions. I am not claiming that the fault will be on only one side. It is up to us to give the country a lead in considering these matters objectively and clinically.

Even those who are opposed to the Market must recognise the deadly upheaval that would take place if the treaties were denounced. I use the word "denounced" deliberately. There is no question of the Community breaking up because we decide that we do not want to be members. However, we would have to denounce the Treaty of Rome, to which we are signatories. In that event Britain's honour would be damaged. We would appear as treaty-breakers. Britain's credit would be damaged and confidence in Britain's stability would also be damaged. Then would come the grave day of reckoning.

I do not believe for a moment that we could have any kind of industrial free trade area. I do not think that that would work because our former partners would not hear of it. Why should they allow us to have a policy which some of my hon. Friends and some Conservative Members claim would be based on a cheap food policy? Why should they allow us to undercut them in an industrial free trade market? The whole proposal is contradictory.

There would come the day of reckoning. The Foreign Secretary and the Secretary of State for Trade would have to go hawking round the world capitals begging for somebody to take on Britain as a partner. I wonder how many doors would be slammed in their faces and how much British trade would be lost in such an event. I wonder how high the cost of food would be if Britain, lacking the bulk purchasing power of the USA or the Soviet Union, had to go out into the open market to buy food. We should have turned our faces on the broad vista of co-operation and would be faced with isolation in an overcrowded island, in circumstances which would spell only disadvantage to everybody in our nation.

I hope that when these arguments are deployed in the referendum campaign the British people will learn the real truth about Europe. I also hope that the very word "Europe" will not be used as a bogy to stampede opinion. We have a choice before us. The choice lies between peace and unity in Europe and a return to the fragmentation of that continent which has resulted in so many tragic wars. Because of my belief that Britain's future must lie with Europe, I support my right hon. Friends in their presentation of the White Paper. I hope that presentation will have the overwhelming support of the whole House.

8.2 p.m.

Mrs. Winifred Ewing (Moray and Nairn)

I am happy to assure the hon. Member for Coventry, North-West (Mr. Edelman) that although Scotland has been in the "common market" with England for over 260 years, we have not been smothered— and I do not think that is likely to happen, whatever the outcome of the debate and whatever may be the decision of the people.

If we stay in the Common Market after the referendum, my party will wish to emphasise the point that for Scotland there must be no taxation without representation. The Community comprises a body of institutions which reaches its view by compromise in a wheeling-dealing kind of situation. Some rights are sacrificed to others. If we are to be in the Common Market, the Scottish National Party demands for Scotland appropriate votes, seats and representation in every sector of the institutions directly for Scotland, on the basis that where there is wheeling and dealing we want to be in on the act. In other words, if the decision of the people is to stay in, that is the position of my party. We have made this point many times in exchanges during Question Time.

Some hon. Members have made the point that the onus in this debate lies on those who wish to come out of the Common Market. I suggest that that is not the case. I believe that the onus is on those who wish to stay in. I make that point for two reasons. First, in the debates which led to Britain going into the Community many arguments were advanced which have now been proved to be false. No doubt the people who advanced those arguments held them sincerely, but since they have been disproved the onus in this debate should rest with those who want us to stay in.

The second reason is that we were told before we went into the Common Market that entry would be made only with the full-hearted consent of the British people. In the election in 1970 the two major parties said that this was not to be an election issue, and there was a considerable desire to sweep the whole matter under the carpet. However, I have not forgotten all the speeches which were made in the House in the period from 1967 to 1970. The argument about growth rate does not look so attractive now that we have experienced a static growth rate. We were told that after we were in the Common Market we would reach a growth rate of 6 per cent. The argument about prices was also made to look attractive. But the price we paid for entry involved the introduction of VAT and decimalisation, and we all know how those items have contributed to price increases.

We have only to contrast the situation with Norway and to compare its price increases with ours to see the pattern of events. The same is true of other European countries which are not within the Community. On the subject of jobs, we know that there is a 4. 6 per cent. unemployment rate in Scotland and an unemployment rate in the United Kingdom of 3.4 per cent. The situation in Europe reflects the fact that unemployment rose by 40 per cent. in the last period for which we have statistics.

A recent parliamentary answer showed the effect on the investment situation. Again the existence of the Common Market goes against us, since in investment terms we put in more than we get out. I saw a letter written to my hon. Friend the Member for the Western Isles (Mr. Stewart) by the head of a motor vehicle organisation making the point that we needed to go into the Common Market because competition would be good for the motor car industry. One has only to realise what happened to the person who wrote that letter to judge the accuracy of that statement. The invesment situation is not good, and certainly the export situation is against us. Common Market countries are selling more to us than we sell to them.

What has come out of this debate is the fact that many of the economic arguments have turned out to be misleading.

It may be that a certain honesty is creeping into the debate— namely, on the lines that what people are really interested in is the political motive. That factor is now coming into the open at last, and the economic arguments are admitted to be specious. I welcome that honesty. There has been a great deal of dishonesty on the subject of the EEC.

Many pious hopes have been expressed about the White Paper as if those hopes were statements of fact. Those desires are ostrich-like because, for example, we have not yet achieved a common energy policy. Maybe a common policy will never happen, and, if it does happen, it will not attempt to control the rate of extraction of oil in the North Sea, or Scottish oil as I prefer to call it. The achievement of a common energy policy will not govern the price which we can charge or the markets to which we sell, and I believe that the hopes in that respect will be merely pious ones.

Mr. Roper

The hon. Lady will understand that any future policy of the Community has to be agreed by all its members. Therefore, the Government are justified in saying that they will not permit a policy to be introduced which does not give us the power we require.

Mrs. Ewing

We have had many statements to the effect that the consent of all members of the Community is required and that we need fear nothing. Despite that consent, however, terrible things have happened. We have had policies which do not suit us, such as the common agricultural policy. I regard that policy, along with the common energy policy, as a further example of pious hope.

It is the habit of many pro-Marketeers to repeat statements time and again without giving explanations. We have often heard the statement that we must be in the Common Market because it consists of 250 million people, but we are never told that there is a much wider market outside— namely, the market of the whole world. Recent figures have been given to show that Scotland's exports are higher per head than those of any other country in Europe, except West Germany. There is great potential for the development of Scottish trade, which has increased more rapidly outside the EEC than within it.

The second statement which is repeatedly made is that once we are in the EEC we cannot get out—in other words, that there is something inherently dishonest in getting out of treaties. But nations have got out of many treaties in the past. There cannot be anything dishonest in such a course if we let the whole of the voters decide and if we follow their wishes. Indeed, there would be something dishonourable if we were not to follow the wishes of our people following their vote in the referendum. According to my understanding of the situation, we shall get out of the Common Market if the vote goes against our staying in.

We are told that we must be part of a large unit, a great bloc, so that we can be as large an entity as Russia or America. But we are not told why we must be part of that large bloc. I am reminded of the United States lawyer who addressed the jury by saying, "These are the conclusions on which I base my facts." That, roughly speaking, is the kind of argument we have heard often in these debates.

When the Leader of the Opposition was asked a specific question by the hon. Member for Renfrewshire, West (Mr. Buchan), the right hon. Lady answered by quoting the Prime Minister's White Paper. It is at least nice to see solidarity between the two Front Benches. It goes a little way to make up for the lack of agreement in one major party. I remember that in a previous Parliament the present Prime Minister sought to gag his back benchers by threatening to remove their "dog licences". In this debate it is the Front Benchers who are being gagged by not being allowed to voice their opinions. I am sorry that the Prime Minister is attempting to gag his own Ministers, because I am sure that many of them would have interesting things to tell us, especially the Secretary of State for Scotland.

In dealing with the renegotiations, the Prime Minister said: I told Parliament that the renegotiations, begun last April, had now gone as far as they could usefully go"— [Official Report, 18th March 1975; Vol. 888, c. 1456.] Why was fishing omitted? Why was fishing not even on the agenda? That is perhaps one of the reasons why there was a blockade in Scotland affecting every boat and crew. There was total solidarity among people who do not normally want to act in that way. A totally unified industry was there for the first time because it did not want the EEC fisheries policy to come into force on 1st January 1984. There were other matters on the agenda concerning imports from Norway and the 40-ft. boat. I attended all the fishing meetings.

We are not here to discuss the subject of the renegotiations. We are here to discuss the EEC and matters of principle. The renegotiations achieved almost nothing. The formalities of the EEC budget financing remain. There is no fundamental change in the CAP. The results of the renegotiations resemble the piece of paper which came back from Munich. They are not worth the paper on which they are written.

Many speakers in this debate have dissected the renegotiations. There is no point in my rehearsing that matter. The omission of steel is a fundamental point. When the Prime Minister said happily that the renegotiations had gone as far as they could go, he missed out some important chunks— energy, steel and fishing.

As regards the regional fund, there is a strange theory behind the CAP. I live in a country which is self-sufficient in most basic foods. We prefer fresh to frozen food. That is reasonable. We are accustomed to it. The common agricultural policy is designed to put vast quantities of food into cold storage. Some of the member countries do not have enough cold storage to operate this policy, even if they want to. The policy has not worked. If it was intended to prevent increases in prices, it has not achieved that aim. It has resulted in the shocking mountains of butter, beef and milk powder. I am told that there is now even a wine lake.

The common agricultural policy is not fundamentally altered by the renegotiations. The policy is not suitable for Scotland, which could be a food exporting country. In any case, if we chose to subsidise consumers why should we subsidise Russian consumers? Why should we not subsidise poor people in Bangladesh and in other places who need the food? Why should we not subsidise our own distressed pensioners and housewives who, in view of the low wage rates prevailing in Scotland, cannot make ends meet? There have been other failures within the EEC both from our point of view and from that of the other member States.

I am not blind to the argument that it is wonderful that nations which were once at war are now sitting together in a Parliament. I was a child of the war, which affected my home very badly. I recognise that aspect of the EEC.

Unfortunately there is a different motivation behind the EEC, much of which concerns the labelling of the Common Market as a rich man's club and as a friend of the large international companies. On the whole, the small business man in Scotland is not in favour of joining Europe, while the man from the big international company is in favour of doing so. That is a fairly significant observation.

I remember my hon. Friend the Member for the Western Isles saying that a fair definition of the EEC was that it was the taking in of each other's washing machines. There is that aspect which cannot be hidden. There is a great deal of muddle attached to the EEC. For example, I received a letter today from the Secretary of State for Scotland concerning grants to fishing boats. I was told that if a fishing boat had been ordered an EEC grant could not he obtained. I did not believe that. When I visited Europe I had discussions on this matter. I found that that was not the case, and I have a letter confirming it. The EEC grant can be applied for any time before delivery of a boat. Meanwhile there are months of muddle while Ministers in the United Kingdom do net know the rules and regulations. Perhaps that is understandable since the regulations are so numerous.

I asked the Secretary of State for Social Services for information about comparative family allowances in the member States. I was told that I could not be given that information as it was too complicated. I asked for information about the subsidies that were paid to the fishing industries of member States. I cannot be given that information. Neither can the fishing industry obtain such information, according to one official spokesman.

There are alternatives to the EEC. I think that the prophecy of doom— that we must stay in the EEC— is one of the strange things about this debate. We exported goods to the EEC countries before we entered the Common Market. Whatever tariff barriers existed then, we accepted them and beat them. Twentythree per cent. of Scotland's exports go to the EEC member States, excluding England. A far higher proportion of our exports goes elsewhere. The alternatives will be there. Denmark has indicated that she will leave the Common Market if we withdraw. Already the alternatives are beginning to form.

Aspersions have been cast about the strange bedfellows among the pro- and anti-Common Market factions. One thing strikes me as strange. While fighting the last election, the Tory Central Office was keen on supplying people in my constituency with chits asking questions. We were asked the same questions throughout the campaign, which was boring. One question concerned the "Reds under the beds", mostly in the Clydeside area. That question was asked repeatedly. Some people fear that the Communists will take over Britain, although the Communists receive only a tiny fraction of the total vote. The Conservative Party is unified in wishing to remain within the EEC. I find it puzzling that it wishes to rush into this alliance if it is against Communism, since Italy is on the brink of Communism and a large Communist Party exists in France.

I hope that the documents that are issued to the public will not contain pious hopes in the guise of facts. I hope that the truth about the economic failures of past years will be clearly explained. If that is not done, it will be a terrible reflection on this House.

The right hon. Member for Bournemouth, West (Sir J. Eden) said that sovereignty was economic power. I do not accept that. The sovereignty we are talking about is the right to make decisions within a democratic system and to control the decision makers. We can easily envisage a State strong in economic power which does not have the type of sovereignty of which we are now thinking. The statement that there is something noble about economic power is not acceptable to my party. Having spent hundreds of years evolving a parliamentary system designed to give back benchers control over Front Benchers, it seems extraordinary that we are about to throw away the careful controls or the right of scrutiny which we have developed.

Mr. Michael English (Nottingham, West)

Does not the hon. Lady realise that that is perhaps why the two Front Benches want to throw the system away?

Mrs. Ewing

I would not attribute such an evil motive to either Front Bench. They are, after all, both divided, not quite half and half.

I believe that an independent Scotland would have very considerable alternatives. It would be self-sufficient in basic foods and in most fuels. It would be exporting some fuels. It has very sophisticated industries. It has a clever population. It has plenty of space. It has a geographically strategic position of the utmost importance which would make it able to bargain with any bloc or trading group. I believe, therefore, that if the EEC makes its institutions more democratic, as it must do— possibly it will take a rather long time, and maybe too long— it could be that an independent Scotland would keep its options open.

As the EEC stands at present, it is not democratic enough for the Scottish National Party. The regional fund is just a token. The regional funds of the United Kingdom, of which my party makes many complaints, are much more likely to solve regional problems in the north of England, in Scotland and in Wales than is the EEC's fund. But, having said that, we are still critical, because we do not have enough democratic control in this House.

There is a strong anti-Market feeling in Scotland, and we cannot accept a central count. That would be an attempt to hoodwink not just the people of Scotland but every single citizen who votes.

8.22 p.m.

Mr. John Roper (Farnworth)

I hope later in my speech to take up some of the matters raised by the hon. Member for Moray and Nairn (Mrs. Ewing) about the need to achieve a more democratic Europe, but I want to begin by dealing with her remarks about the renegotiations because, unlike her, I believe that the renegotiations have been significant not only in what they have achieved but in what they have indicated to the Foreign Secretary, the Minister of Agriculture and the Prime Minister about what can be done within the Community. All of them have come back to this House to tell us how they have found the Community institutions far more flexible than they had imagined, far more open to change, and far more amenable to the suggestions which my right hon. Friends have made to them. Therefore, the renegotiations are as important for the way in which they have shown Ministers of this Government the value of the Community and the flexibility of the Community institutions as they are for the positive achievements on specific matters in the renegotiations outlined by the Prime Minister yesterday.

As the hon. Member for Moray and Nairn said, one of the difficulties in this debate is that many of those who will vote in favour of continued British membership tomorrow will be voting for very different reasons. The same applies to those who will vote "No". People see the Community not as an end or objective in itself but as an instrument to achieve the very varied purposes for which they came into politics.

I see the Community as an instrument to achieve the objectives for which I joined the Labour Party nearly 20 years ago. I see it as a means whereby we can secure in the long run an increase in people's living standards, although there is no doubt that in the short run the picture is bleak inside or outside the Community.

What is even more important is the social control of industry. This is a matter which has been raised in this debate and elsewhere. In my view, we have a better chance of achieving the social control of industry within a European Community than we would have as one country on our own. I think of firms in my own constituency. They have. And have had for a long time, their international links. They have become transnational companies already, with the result that if pressures are put on them in one country to develop or not to develop, they can move to other countries. It is only as we develop transnational trade unionism and economic and political institutions for the Community that we shall be able to control and harness industry.

Mr. Doug Hoyle (Nelson and Colne)

Can my hon. Friend say whether we are likely to develop these transnational trade unions, bearing in mind the divided trade unions that we have in Europe? Can he also tell the House of any action which has been taken against the multinational companies and how, for example, he would deal with the multinational car companies which are likely to move out of this country into Europe?

Mr. Roper

I was about to come on to the matters raised by my hon. Friend. We have had an advantage in this country because in one sense our trade union movement is more united than those of other countries. We do not, for example, have the problems which have existed in France and Italy with trade unions divided on religious and political grounds. However, the German trade union movement is more united than our own, mainly because it was set up by representatives of the British trade union movement after the war and because it has learned from our mistakes what a trade union movement should be. However, the French and Italian trade union movements have come together remarkably in recent years. We have the important agreements whereby the former Catholic trade unions are admitted to the European Federation of Trade Unions and the Italian Communist trade union is associated with the federation. These developments suggest that the barriers about which we were concerned in the past are no longer as real as they may appear.

As for the multinational companies, of course, one country by itself is very much restricted in what it can do with multinational companies. Already the regulations and controls on some forms of tax evasion are an instance of what the Community can do. But this is an area in which a Labour Government within the Community would want to work with the other Socialist governments towards further controls.

I do not argue that the Community is perfect. I see within its framework a better chance of achieving objectives of that kind than is possible outside it. It is a balance of risks. We have to make a judgment. On balance, I think that we have a better chance in the Community than outside it.

The third reason why I joined the Labour Party was to help to create a more peaceful and just world. I see the Community as a way of achieving that objective. For the reasons adduced by my hon. Friend the Member for Hornchurch (Mr. Williams) and others, I believe that we have a better chance of doing that within the Community than outside it.

I want now to comment on the suggestion made by my hon. Friend the Member for Newham, South (Mr. Spearing) about the possibility, if we were to leave the Community, that we could retain the status quo and that there would be no question of tariff barriers being re-erected against us. My understanding of the GATT is that that would be illegal. It would be improper for us not to extend zero tariffs to everyone with whom we had most favoured nation treatment. Without a free trade agreement, we could not allow our tariffs with one country to be lower than those with other members of GATT. Therefore, it would be necessary to negotiate a Free Trade Agreement with the Community.

It has been argued that the Community would want us because its members sell more to us than we sell to them. The balance of payments deficit of last year has been quoted, but these are aggregates on both sides. While they represent to us 35 per cent. of out export market, we represent to them only 8 per cent. of their export market. We are much less important to them than they are to us. Therefore, the assumption that a free trade agreement would be easily available is a rash one to make. Even if it were, we must remember the point made by my right hon. Friend the Prime Minister yesterday, repeated today by the Opposition, that a free trade agreement would involve us in many of the controls on our rights to introduce industrial and regional aids to industry about which people complain under the present regulations.

Free trade agreements with former EFTA countries have written into them the same restrictions and clauses as appear in the Treaty of Rome. For example, the steel industry of Sweden has to follow price by price the steel industry agreements of the Community. Otherwise it will not be allowed to continue to have free trade access.

We would have many matters which people consider to be disadvantages—for example, enforcing fair competition between countries which have free trade arrangements—without any right to have a Minister in Brussels to take part in the decision making regarding those controls and regulations. Indeed, the Foreign Secretary would not be able, as he was a month ago, to ensure that the regulations are sensible and are adjusted to the needs of this country. I suggest that we would have many of the disadvantages and few of the advantages which we have as a member of the Community.

Other economic arguments have been raised in which hon. Members have quoted remarks made in 1970 and 1971. The economic situation has changed considerably from that time. It would be foolish to pretend otherwise. I have been looking at the White Paper issued by the Labour Government in February 1970 and its economic assessment. It is interesting that in paragraphs 68 to 70, when referring to the effects on the balance of trade with the Community, the Labour Government, when making their application, were aware that the impact of our membership would be unfavourable in that there would be an adverse effect on the balance of trade initially. Certainly nobody thought that it would be as disastrous as the £2.000 million recorded last year. But, as has been said, special factors affecting last year's balance of trade figure with the Community are unlikely to be repeated.

Reference has been made to the fact that big business is interested in the success of the Community and our membership of it. The hon. Member for Moray and Nairn referred to that matter. That is an important point with which I have to some extent concerned myself. Therefore, two or three weeks before the Easter Recess I wrote to 100 firms in my constituency, both large anti small, asking for their views on our continued membership of the Community and, in particular, what they thought would be the effects on prosperity and employment in the area if we were to leave the Community.

I have had replies from a representative sample—not from all of them. These replies are from some of the big firms as well as the small, and from some of the multinationals in both the public and private sectors, in the general engineering sector and that linked with the car industry and in the paper, textile, clothing and food industries. Although two or three of these firms which solely serve the home market say that leaving the Community will have little effect directly on their sales, the extraordinary thing is that the vast majority reply that they consider that leaving the Community would have a serious adverse effect upon their exports and upon employment in the constituency.

As the textile industry has recently been debated in this House, I should like to quote from a letter which I received from a very small firm in my constituency, Messrs. John Faulkner Limited: It is not easy to see far into the future, but the fairly obvious effect on this firm of leaving the Common Market now would quite clearly be disastrous within a relatively brief period. A substantial proportion of our products (synthetic fibre sewing threads) are exported either directly or indirectly to the EEC, and this would certainly be much reduced if we came out. But as you are no doubt aware, textiles generally suffer most from the massive flood of cheap imports either heavily subsidised, dumped, or produced in low-cost areas of Asia. In so far as the United Kingdom lost European markets for engineering products, if we left the EEC more effort presumably would be made to increase exports to Asia where they would either have to be given free as aid, subsidised with long cheap credits, or paid for by even more cheap textile imports. I can really see little hope of my company, even though it has been completely modernised with the very latest machinery, surviving for more than a year or two if we left the EEC.

Mr. Ron Thomas

Will my hon. Friend advise us on what is meant by the first part of that letter—that the company would no longer be able to continue to export to the EEC? The point we were trying to make earlier was that the threat was that the EEC would construct tariffs against us, which would be quite contrary to the GATT, would it not?

Mr. Roper

Thas was the point I had hoped to establish earlier. Under GATT if we left, the EEC would be obliged, and we would be obliged, to return our tariffs to the level of the common external tariff or our previous tariff—the most favoured nation tariff. It would be wrong for us to deal with countries with which we did not have either a free trade agreement or a customs union on a basis of tariffs which were below those which we offered to other most-favoured-nation countries. That is the regulation of the GATT. We would not be allowed to do it. Therefore, this particular firm, as others, assumed that there would be difficulties because the textile industry in the EEC would want to see tariffs imposed against us if we were not in the Community, as might the European chemical industry, or we might see pressures coming from the car industry in the Community. There would pressure within the Community for a re-erection of tariff barriers and, therefore, the barriers would have to go up, under the regulations of GATT, unless we negotiated a free trade agreement.

Mr. Hoyle

Is it not a fact that we have an adverse trade balance on textiles with Europe that is getting wider each year? It has gone from about £4 million to £69 million. The flood of cheap imports has not been reduced because we are in the Common Market. Indeed, we have had to accept imports from the Mediterranean associates. The burden-sharing scheme will not help the textile industry until the 1980s, by which time there may not be a textile industry.

Mr. Roper

I am grateful to may hon. Friend for that intervention. He will know that the British Textile Confederation, representing the textile interests, and the textile trade unions have come to the view that it would be in the interests of Britain if we remained within the Community. I am aware of the fact that we have not increased our exports as much as we would like, but every textile firm in my constituency that wrote to me said that it believed it was essential for its business that we remained within the Community. Therefore, I can only take the advice of the textile firms, and, indeed, accept a view not disputed by the many textile trade unionists either.

I want to comment on another area, which was referred to by my right hon. Friend the Member for Jarrow (Mr. Fernyhough). That is the way in which the Community behaves towards the Third World. When we had these debates in 1971 one of the most serious challenges to the question of our mem bership was the suggestion that the Community was an inward-looking rich man's club and that it was not a body which would care for the poor countries of the Third World. I remember my right hon. Friend the Secretary of State for Education and Science saying how heavily this weighed with him then in opposing British membership. I believe that the most remarkable achievement of renegotiation by my right hon. Friend the Minister of Overseas Development in the past 12 months is the progress that has been made in transforming that image of the Community as an inward-looking organisation to a picture of an organisation which shows its concern and its care for the Third World.

We have spoken already of the Lomé Agreement with 46 countries. It is worth remembering that provision is made in that Agreement for Angola, Mozambique, Namibia and Rhodesia all to be allowed to become members of that convention once they become independent, so it may well be, before long, 50 ACP countries. Indeed, although the agreement on that pattern of trade was restricted to countries which were of a certain kind, we have negotiated commercial agreements with India and Sri Lanka and are doing this with Bangladesh and Malaysia.

What is more important is that my right hon. Friend has persuaded the Community to accept the principle of the globalisation of aid and to agree that the idea that aid should be restricted to those countries with which there have been traditional ties in Africa, the Caribbean and the Pacific should be extended, with a fund which would apply to other countries as well. That is a significant achievement. It has been agreed in principle though not yet worked out in detail. Nevertheless, that is important.

There has also been a significant improvement for the non-ACP countries. Because of the demand of my right hon. Friend the Foreign Secretary in June last year, there have been considerable improvements in the Community's generalised scheme of preferences. Originally, there were 51 sensitive products listed in that scheme. There are now only 16. I must confess that certain pressures for further reductions in restrictions within the generalised scheme of preferences would cause considerable difficulties in areas such as my own, because—certainly with rising unemployment and the rising tide of low-cost products—any move to press the Community to abolish all restrictions on textiles, footwear and cutlery would find considerable resistance, not only in this country but in some other countries of the Community, too. We can say, therefore, that as far as trade and aid policies are concerned, the Community has made remarkable changes in the 12 months, and this has been an achievement of which—

Mr. Spriggs

My hon. Friend has referred to the problem of low-priced products. I would like to know from him, if he can tell us, where these products are, because if they are being imported at low prices, those low prices are not being handed on to the consumer in this country. Can he tell us where they are?

Mr. Roper

My hon. Friend is going some way from the subject of our continued membership of the Community. The Under-Secretary of State for Industry is investigating this matter and has promised to let my hon. Friends know the results of his investigations. But that is a subject far from that which we are discussing today.

Finally, I turn to the question of sovereignty, because this is a point which has been and will be central to our debate. There have been references to two different forms of loss of sovereignty. There has been the loss of sovereignty, to some extent, by this House to the executive at the Council of Ministers which makes decisions, some of which, it is considered, are outside the control of this House. There is also the loss of sovereignty in general terms by the United Kingdom to the Community. Reflecting on a possible loss of sovereignty by this House to the executive in the last 12 months, I would say that the existence of the Scrutiny Committee and debates on the Floor of the House have opened up many of the activities of the Council of Ministers and the way in which the Community operates in a manner which was not thought feasible when we had our debates in 1971. We await with interest the report of the Select Committee on Procedure, which will suggest further ways in which we can improve our treatment of these matters.

I believe that the loss of sovereignty by the United Kingdom to the Com munity was inevitable, as in any application to join a community. That is what a community is about. Certainly, if the decision in June is, as I hope, that we decide to stay in, we must work hard to build mechanisms for democratic control of the Community. That means, as my hon. Friend the Member for Coventry, North-West (Mr. Edelman) said, taking an active part in the European Parliament; giving more power to that Parliament and fulfilling the Anglo-Italian Declaration of 1970 by moving to direct elections to the European Parliament.

I believe that if the referendum results in a decision in favour of our staying in the European Community, many of my hon. Friends who have opposed membership will be among the keenest to develop parliamentary institutions within the Community and to ensure that the democratic processes of this country are extended within the Community of Europe. I hope that that prediction, at least, will prove true.

This is a critical debate. We have alternatives outside the Community, and it is foolish to say that it is a question between utter black and utter white. What we have to do, however, is to judge the alternatives and to weigh in the balance the advantages and disadvantages of staying in or of coming out. I have no doubt where the balance of advantage and disadvantage lies. I believe that this House will express that view overwhelmingly tomorrow night and that the British people will confirm that opinion in the referendum in June.

Mr. Deputy Speaker (Sir Myer Galpern)

The hon. Member said that this was a critical debate, and obviously many hon. Members wish to take part in it. The last three speakers took 21 minutes, 23 minutes and 24 minutes respectively. A greater consideration should have been shown for their colleagues who are anxious to take part in the debate. I hope that my comments will be noted by subsequent speakers.

8.45 p.m.

Mr. John Farr (Harborough)

I can assure you, Mr. Deputy Speaker, that I shall speak more briefly than did the last three hon. Members and he as concise and quick as possible. I will not therefore refer to the speech of the hon. Member for Farnworth (Mr. Roper) except to say that I did not agree with much of it. We have heard today from both sides of the House some particularly brilliant speeches, especially the first two, speeches which have been brilliant for their eloquence and content. However, perhaps the whole tenor of the debate is best summed up by the words of my right hon. Friend the Member for Knutsford (Mr. Davies) who said that the period during renegotiation and since the Treaty of Accession has been one of contemplation to enable the House and the country to decide whether what we did when we signed the Treaty of Accession was right and whether it is desired to reverse that process in the next few weeks. He deployed his arguments in his usual concise and knowledgable way.

I want to deploy my arguments on precisely the same question—whether events have changed significantly in this country since the Treaty of Accession, what we can learn as a result of the subsequent two-year trend of events, and how we should vote on Wednesday night. Very little has been changed in the period of renegotiation. The Labour Party's manifesto with its seven objectives was, I believe, a manœuvre by the Prime Minister to unite, in the only way open to him, the seriously divided parliamentary Labour Party. Great play has been made throughout the country of the achievements of this Minister or that in securing radical alterations to the Treaty of Accession and other fundamental improvements. In fact, the changes are minute. There is nothing fundamental or radical about the seven objectives and the Prime Minister has no ground for boasting about having secured a major achievement. I can therefore conclude only that all the blarney and ballyhoo has been part of a delicate tight-rope act by the Prime Minister which was his only way of securing party unity over the next few difficult months.

The seven objectives which the Prime Minister listed in the manifesto at the last election were dealt with in his statement to the House on 18th March. Each is set out with a comment after it by the Prime Minister explaining what the Government have achieved. The first objective—that major changes in the common agriculture policy should be made—has not been achieved. Minute changes have been secured, but there has been no major change. To give the Prime Minister due credit, he did not seek in his speech yesterday to indicate that a major change had been secured.

However, as one who is interested in agriculture, I can say that the only effect of the renegotiation on many commodities is that there is less security and less guarantee at the end of the road for a farmer producing beef, for example, than there was before. The old deficiency payment has been swept away. The renegotiation has succeeded only in abolishing the intervention board and the intervention policy operated by the EEC, which has left many producers in this country in a difficult position. In many other respects the contribution made by renegotiation has been completely negligible, and the common agricultural policy as a whole, with many of its distasteful aspects, has been virtually unchanged.

The second objective was New and fairer methods of financing the Community budget. Apparently minor improvements have been made, related to the limiting of the size of our contribution, but, even so, those of us who objected to membership in the first place will still object to the possible hundreds of millions of pounds net contribution per annum which this country could pay to remain within the EEC.

Thirdly, the manifesto said that the Labour Party would reject any kind of international agreement … to accept increased unemployment. We reject that objective entirely, because it was never an understanding of any arrangement which my right hon. and learned Friend the Member for Hex-ham (Mr. Rippon) made, when he negotiated the terms for a Conservative Government, that membership would lead to any form of increased unemployment. Conservative Members, whether in favour of membership of the EEC or not, would not accept as a price for that membership a high or increasing level of unemployment.

The fourth objective referred to, The retention by Parliament of those powers over the British economy needed to pursue effective regional, industrial and fiscal policies. I do not regard those powers as having been retained. My hon. Friend the Member for Banbury (Mr. Marten), in an excellent speech, referred to documents on various industrial matters which we receive every week in the House. Three or four weeks ago I had one the size of a telephone book, which I had to consider with some of my colleagues in an hour and a half. I did not have a chance to read it. In any event, it seemed to me and to many other hon. Members on both sides to be a wasted exercise, when we knew that we did not have the power to amend one line or word in that vast document, and that much of its content was produced, formulated and finalised before we even joined the Market. I do not regard our sovereignty and parliamentary control as having been maintained in a right and proper manner.

I have dealt with the fourth objective. The fifth objective concerned the relevant articles of the Treaty of Rome relating to exchange control. The Government conclude that they have used the existing articles to secure their purposes. Therefore, there has been no great achievement there.

I come to the sixth objective, concerning the Commonwealth and developing countries. I do not regard what the Government have achieved for countries such as New Zealand and Australia as being of particular note. Despite the achievements that the Government claim, New Zealand cheese imports will still virtually stop in 1978. The future of New Zealand butter imports is uncertain, and, despite renegotiation we still pay a 20 per cent. import duty on New Zealand lamb and mutton.

The Labour Party manifesto's seventh objective was: No harmonisation of Value Added Tax which would require us to tax necessities. I shall arrive here early on Tuesday to hear what the Chancellor says about that. I and a number of my hon. Friends have written to him in recent weeks on the subject and have received no satisfactory assurance. We can only come to the conclusion that there may be something unpleasant in store.

In the past two years there has been a disastrous decline in our non-oil trade balance with the EEC. We had a credit balance of £132 million in 1970, but in 1974 we had a non-oil deficit of £1,600 million. Food prices have soared in Britain. Between 1972 and 1974 they went far higher than in countries such as Sweden and Norway, which have remained outside the EEC. The food price situation in this country is clouded because of two very bad world harvests in the past two years, which have put up the price of many products. But world prices are starting to decline. We can now buy our wheat and beef more cheaply outside the EEC than within it. I believe that in a year or two's time we could have cheap food, if we were in a position to avail ourselves of the opportunity to import it.

We have quite a number of multi national companies in Britain. One hon. Member mentioned Vauxhall. There is an inevitable conclusion concerning the subsidiaries in Britain of companies such as General Motors, Ford and Litton Industries. Once we are firmly within the EEC, as part of the Nine and with the same economic structure, they will, being international companies of great efficiency and repute, concentrate their production in one or two plants in the geographical centre of the EEC, which is not in Britain but is south of Paris. They will close down their factories in countries which are on the periphery, such as England and possibly Italy.

I am not putting that forward as an idea to frighten people in any respect. I can only say that that is what Litton Industries have already done so far as their typewriter output is concerned. They took over Imperial Typewriters five or six years ago and they had two producing plants in Leicester and Hull, which they have closed in the last few months. They have transferred all their production rights, patent rights, jigs and tools for Imperial Typewriters to a new modern plant they have in West Germany, and that West German plant will be the sole producer of Litton Industries' typewriters within the EEC. However, they have kept another manufacturing outlet in Europe, and that is in Sweden. It is a relatively small plant which will cater for the EFTA group of nations and provide them with a typewriter manufacturing capacity. I believe that if we had remained with EFTA without the EEC, the EFTA typewriter manufacturing capacity of Litton would have been preserved in Leicester and Hull and would not have gone to West Germany, as is now the case.

The example I gave of Vauxhall, Ford and Litton Industries is not very fanciful. It is, for instance, what Whitbread have done. In the past 10 or 15 years they have bought up quite a number of breweries in East Anglia and other parts of the country. They have closed them down within a decent interval of time and built a whopping great new brewery about 60 miles north of London on the Ml, and all the Whitbread production is in the geographical centre of their outlets about 60 miles north of London.

The same thing will make common sense, I fear, to such companies as General Motors, which are in financial difficulties with Vauxhall, and to Ford, just as it has to Litton Industries, and one of the reasons for which Britain should withdraw from the EEC is that we run the risk of losing a good deal of our own industrial manufacturing capacity when the multinational giants choose to move it to the geographical centre of their fields of operation.

I conclude by saying that I do not think that Britain's future lies within the EEC—an EEC apparently heading for a European federal state by the 1980s. Instead. I believe in joining once again our friends in EFTA outside the EEC to trade in peace and harmony with those within the Community, and bound to them of course by the firm links with the North Atlantic Treaty Organisation for defence purposes. I believe, too, that, while outside the EEC, we can continue to strengthen the principles and purposes which hold our Commonwealth together, and that as the centre of that Commonwealth we stand to have a better future than as some peripheral State in a federated States of Europe.

Mr. Deputy Speaker

The hon. Member for Harborough assured the Chair that he was going to help us. I think he ought to know that his speech lasted 20 minutes.

9.4 p.m.

Mr. Ron Thomas (Bristol, North-West)

I agree with a good deal of what the hon. Member for Harborough (Mr. Farr) has said, but I wish to concentrate on other aspects of the White Paper on the renegotiation because that is what I understand we are discussing. I agree with my hon. Friend the Member for Gravesend (Mr. Ovenden) that it is not long since the party of which I am a member was completely opposed to the terms which had been negotiated. However, in the short time since then, we have been told not only that the terms are acceptable but that the White Paper could well have been written by the least objective of the pro-Market groups.

The White Paper concerns me because it might well be a "Comic Cuts" version of it which is distributed to every home in Britain. I wish to refer to certain aspects of it because its phraseology and the way in which the words have been shifted about have created a totally different impression from what is the case.

As the Ministers responsible for industry and employment have been gagged and will be unable to speak in this debate, I wish first to consider the question of regional investment. Document R/650/65 deals with the latest Commission recommendations on regional policy. On page 2 it is stated that the Commission, in exercising its powers under Article 92 of the EEC Treaty, takes account of the fact that the Member States have the best knowledge at the national level … It is put differently in the White Paper, which states: The Commission acknowledges that national governments are the best judges of what is required. That is different from "takes account". The Community document goes on to say: The Commission is always prepared, taking account of the general interest, to consider compatible with the Common Market changes to aid systems, and so on. The White Paper states that changes in national aid systems will not be regarded as incompatible. That is not what the Community document says.

On the question of capital movements, the White Paper states that action to control capital movements in order to protect the balance of payments can be taken when necessary and that the renegotiation objective can be secured under the existing terms of the European Economic Community. It goes on to say in paragraph 100: The removal of barriers to trade relates not only to tariffs but also to … the free movement of firms and of industrial investment". Few would deny that the free movement of capital is a principle enshrined in Article 67 of the Treaty of Rome, in the philosophy of the treaty and in the Common Market regulations.

Paragraph 70 of the White Paper indicates that in practice the Government can act to control capital movements when necessary". If that is so, are the Government satisfied with a situation in which in 1970 direct capital investment by the United Kingdom in the original Six was almost in balance with EEC investment in the United Kingdom, whereas three years later the latest statistics indicate that United Kingdom direct capital investment in the Six was over £450 million as against £97 million by the EEC in Britain?

We have been told by the pro-Marketeers about the great challenge and opportunity presented by the Common Market. My hon. Friend the Member for Farnworth (Mr. Roper) said that he had received letters stating that if we withdrew from the EEC there would be depression in British industry and no one would invest in it. A couple of years ago the same firms were saying that if we joined the EEC they would be falling over themselves like 19th century innovating entrepreneurs to invest in British industry. The reverse has happened. There has been a slump in capital investment at home while overseas investment totalled £1,600 million in 1973 and the provisional figure for 1974 is £1,453 million.

The free movement of capital is a prerequisite for a capitalist market mechanism economy, and that is what is enshrined in the Treaty of Rome and the Common Market regulations. At the same time control of overseas capital investment is essential for a Government which is trying to build a Socialist, or even a socially just, society.

I refer my hon. and right hon. Friends to what was stated in Labour's "Programme for Britain 1973". It said: The idea that free international movements of capital are essential to a liberal world trading system is a discredited notion of the past, which Labour has never accepted, and which few but the most blinkered can believe in today. That is not mentioned in the White Paper. This continual reference to the need to preserve a kind of Ricardian laissez faire system is indicative of the acceptance that the market mechanism must take precedence over regional policy, economic planning, transport and energy policies.

Much has been said about publicly-owned industries. We have been told that there is nothing in the Treaty of Rome to prevent public ownership and extension. I suggest that my right hon. Friends should read Article 90 of the Treaty of Rome which states how those publicly-owned industries should behave. Nothing in that treaty says that we cannot nationalise more industries. As Socialists we are just as much, if not more, concerned with how publicly-owned industries will operate and be determined as we are with the extension of public ownership.

The White Paper insists that the Government are satisfied that membership of the Community in no way impairs the retention by Parliament of the powers needed to pursue effective fiscal policies. Once again I remind my right hon. Friends on the Front Bench of what was said in Labour's "Programme for Britain 1973" about value added tax. It said: In the field of indirect taxation, the Tories have this year introduced a system of Value Added Tax. We have strongly opposed the switch to VAT, which involved a major regressive shift in the tax system… If Britain is to remain in the Common Market, we shall be compelled to operate a VAT of some sort. I have not read the whole paragraph, but Ministers no doubt know it. That is a clear statement by the Labour Party that value added tax as a system of taxation is regressive. Suppose the Government decided to get rid of value added tax. Should we be allowed to do so as members of the Common Market? Value added tax is still a regressive tax. Can we, as members, ever scrap it?

A good deal has been said about the dire consequences of withdrawing from the EEC. It is rather strange that, faced with the calamitous figures of our trade deficit with the EEC, the pro-Marketeers fall back on arguments about the increased deficit with the Commonwealth and the rest of the world. They are conveniently ignoring the 20 per cent. devaluation by the Heath Government which was part of the price of Common Market entry. They are also conveniently ignoring an insistence in many documents that there would be a trade diversion effect which would be detrimental to our balance of trade. We were told that that detrimental effect would be more than offset by an increasing trade surplus with the Common Market countries. The reverse has been the case.

We are now told that the massive deficit is a reason for staying in the EEC and that it puts us in a weak position. I find that kind of recondite and economic reasoning something which I cannot follow.

Would the other Common Market countries cut themselves off from this favourable and profitable balance from the United Kingdom? It is estimated that in 1974 Germany's favourable trade balance with us was £800 million to £900 million, that the Netherlands' favourable trade balance with us was £600 million and that the figure for France was £400 million. Are we suggesting that those countries would cut themselves off from this, that they would break the rules of the GATT and introduce great tariff barriers against us?

Even under the rules of the GATT the marginal increases in tariffs would have little impact on the trade between us and the Common Market countries. I say to my Socialist comrades in my party that I do not believe that it is difficult to go through our manifesto and list this part of it or that which we would be unable to implement if we remained in the Common Market. That manifesto is only the beginning. It is only a pale shadow of the kind of measures we would like to take to build a Socialist society.—[Laughter.] Conservative Members may laugh but it is only the beginning. In my judgment we shall be unable to pursue the kind of policies necessary to build a Socialist Britain if we stay in the Common Market.

Several Hon. Members rose—

Mr. Deputy Speaker (Sir Myer Galpern)

Order. Before calling on the right hon. and learned Member for Surrey, East (Sir G. Howe) I would remind the House that if the ten o'clock motion is carried, the debate continues after the Front Bench speeches until midnight.

9.17 p.m.

Sir Geoffrey Howe (Surrey, East)

I shall try to advance the debate by distilling some of the arguments that have been used so far, whether meritorious or otherwise.

One point which has been clearly established is that the question now is not whether we join the Community but whether we come out. As the hon. Member, for Birmingham, Ladywood (Mr. Walden) made clear in his characteristically brilliant and courageous speech, that is a different question. Moreover, that question has to be looked at today in the context of a different world from that in which we were considering the question of accession two or three years ago. It is a world in which the threats to democracy from isolationism abroad and from revolutionaries at home are far more serious than they were two or three years ago. This was the point made by the hon. Member for Ashfield (Mr. Marquand) and by his hon. Friend the Member for Ladywood. It was also made with great insight, courage and candour by my right hon. Friend the Member for Stafford and Stone (Mr. Fraser).

I share the anxiety of my right hon. Friend and his regrets about the missed opportunities on the part of those who have governed this country over the past 10, 15 or 20 years. However, I do it from a different standpoint. I would have preferred to see Britain as a founder member of the Community rather than remaining apart from it for so long. Now the position is clear. Unless we decide soon on our future course of action and our future relations with the Community, we shall hardly be in a position to say or do anything effective about our future. Some people will be advising us that the only thing to do is "For God's sake say something, even if it's only 'goodbye'."

The third central argument that emerged from the earlier part of the debate is that it is now plain that the burden of proving their case rests at this point upon those who wish us to leave the Community. My hon. Friend the Member for Banbury (Mr. Marten) says that we can do so, and I agree that as a matter of national law we can pass the legislation to bring that about. Even so, it would be a breach of an international obligation. It would involve discarding, within a short space of time after making it, a treaty solemnly entered into by this country. That is not something we ought lightly to undertake. It would be bound to do great damage to our reputation and practical interests.

The burden must be on those who now wish us to leave the Community. Why do they wish us to do so, and, more important, what alternatives do they propose for us in the years ahead? My hon. Friend the Member for Harborough (Mr. Farr) made a passing reference to the Commonwealth at the conclusion of his speech but no one has seriously argued the case, least of all of the Commonwealth, that there is now a different future for us there. The Atlantic Free Trade Area has passed away, to the regret of my right hon. Friend the Member for Stafford and Stone, and the European Free Trade Association is no longer there in the sense that it could offer us an alternative place.

What we are left with is a weak presentation of some new free trade area relationship. I see very little, if any advantage in that as an alternative. It leaves us with no significant power to influence the economic, let alone the political policies of the European Community. That is the kind of influence for which the hon. Members for Ash-field, Aberdeenshire, West (Mr. Fair-grieve) and Farnworth (Mr. Roper) argue.

It is for the sake of guarding the jobs and employment opportunities of our constituents that we are most concerned to remain members of the Community. I cannot accept the parallel put forward by the right hon. Member for Jarrow (Mr. Fernyhough) when he said that we should surely prefer the poverty of living apart from our parents and in-laws, in splendid isolation. That seems to be a post-colonial parallel with little relevance to our situation. I would far rather see us in the Community exerting influence, as it were, as a member of the cabinet, because all the experience to which the right hon. Gentleman referred suggests that people who resign from cabinets or strike out on their own, as did the Members who once represented the constituencies of Lincoln and Woolwich, East, tend to lose their influence, and our position inside the Community would surely follow that course.

If we consider our position in a new free trade area agreement, if we could get it, it is plain from what my right hon. Friend the Member for Finchley (Mrs. Thatcher) and the hon. Member for Farnworth said that we should be there on wholly disadvantageous terms. We should be faced with all the constraints of commercial and industrial policies and none of the advantages. I fail to see how the representatives of the two nationalist parties who have spoken—the hon. Members for Merioneth (Mr. Thomas) and Moray and Nairn (Mrs. Ewing)—can prefer to place us in that situation, which could not benefit the constituents and countries they claim to represent.

If we were to be in a free trade area we should be not on the periphery of Europe but on the periphery of a satellite that was receding from the places where power is exercised. We should still be subject to the gravitational pull of the Community and subject to the rules of the Community but increasingly unable to determine the nature of those rules. I ask the hon. Member for Moray and Nairn how that conclusion would establish what both she and I want to achieve—that we should be able to exercise the right to control the decision makers by democratic processes. We should have cast away that opportunity. We should be not merely taking a leap in the dark but deliberately deciding to set off in orbit in outer space, increasingly remote from where we should be taking decisions.

Why should we wish to reverse the decision which was taken by the House less than three years ago? Why should we wish to come out? It is suggested that we should do that because the Community has not served as a miracle cure for all our difficulties. I agree. Of course it has not. But our troubles, as many hon. Members emphasised, have not been due to our membership of the Community. My hon. Friend the Member for Harborough mentioned the decision of Litton Industries, but it may be that Litton Industries, facing the present economic realities of our country, would have decided to move anyway. That is the reality with which we have to cope.

Least of all can it be argued that the substance of our trade deficit with the Community is due to our accession to it. Several hon. Members made that point clearly, including the hon. Member for Ladywood. Some advocates of the Community may have suggested during the years of our approach to it—and God knows they were long enough—that it could be regarded as a Deus ex machina to liberate us from all our difficulties. It is my belief and that of many people in the country, including politicians, that the expectation of some magic cure and painless treatment for our difficulties is close to the heart of our persistent problems since the end of the war.

As my hon. Friend the Member for Dorking (Sir G. Sinclair) said, Europe is not, and cannot be presented as, a solution to our own national problems. Let us not therefore present our continued membership of the Community in that light. Let us hearken to the advice of my right hon. Friend the Member for Stafford and Stone and avoid presenting it as an escapist solution if we decide to leave the Community. That would be the worst miracle cure of all to take, without a clear idea where we are going and leaving behind the efforts we have put into securing membership.

It has been suggested that we should leave the Community because it is an inward-looking and selfish device that works to the disadvantage of the British people and the rest of the world. Plainly the balance of the argument that has been advanced in this debate has established that that is not so. If we look yet again at the question of food prices, I cannot share the view of my hon. Friend the Member for Harborough that accession to the Community will turn out to have worked to our disadvantage. As my right hon. Friend the Member for Finchley has said, it is important, and will become increasingly important in future, for us to have access to secure sources of food supplies for the British people.

At this stage our food supplies are coming to us from within the Community at no higher price than they would be from outside. That is the important point that was made by my right hon. Friend the Member for Knutsford (Mr. Davies). We are secure within the Community. It is a sensible objective of our national policy to achieve a firm and prosperous future for our farming community. My right hon. Friend was right to make the point that was made in obviously different circumstances by President Pompidou—namely, that a healthy society depends for its political and social stability, apart from anything else, upon the presence of a strong agriculture industry. That is something that the Community will help us to achieve.

Other hon. Members have suggested that the Community is working to the disadvantage of the developing nations. The hon. Member for Sheffield, Heeley (Mr. Hooley) advanced that argument at greater length than anyone else. I must say that I find it difficult to follow one part of his argument. He claimed to be an internationalist yet he asserted that our primary objective should be freedom to scour the world for cheap food in every quarter in which we can find it. That did not seem to be the approach of an internationalist. In fact, we can now see the advantages of the arrangements that have been made within the Community for the developing countries.

I can well remember, when I was speaking from the Dispatch Box as the Minister responsible for trade, that I was pressed on many occasions by hon. Members on both sides about what we would achieve by way of negotiations for the developing countries. The present Government have continued the work that we set in train. The Lomé Convention is a substantial achievement for the 22 Commonwealth countries that are now benefiting from it. Would those 22 countries have been able to get those benefits if we had quit the Community? The answer is "No".

The mandate adopted by the Community for its approach to the multilateral trade negotiations is, I believe, a great deal more liberal as a result of our membership of the Community than it would otherwise have been. It includes a commitment to work towards the liberalisation of trade in agricultural products. The Community's generalised preference scheme has already been producing advantages for Commonwealth citizens in Hong Kong and India. It is a great deal more liberal than it would have been had we not been a member of the Community. It is the framework within which advantages will be produced for Bangladesh, Sri Lanka and Pakistan. What purpose would there be in leaving the Community and abandoning our Commonwealth colleagues, leaving them with no one to press their case within the Community?

Mr. Hooley

I did not say that we should scour the world for the cheapest possible food. I said that the prototype of the kind of agreement that I want was the Commonwealth Sugar Agreement. That agreement gave a fair return to the producers and a guaranteed market as well as reasonable prices for the consumers. I said specificaly that I wanted to see world commodity arrangements along those lines.

Sir G. Howe

Precisely. If that is the hon. Gentleman's objective, that is the kind of objective that will be best achieved by the kind of agreement about which we are now talking. However, that kind of argument sits uneasily alongside complaints about high food prices. If we set out to get fair prices and long-term contracts, we must come to realise that it is not possible to have it both ways.

The final argument advanced is that continued membership of the Community will do irreversible and unjustifiable damage to the sovereignty of this country. On the contrary, I believe that continued membership will act to the benefit of true sovereignty, sovereignty of the kind for which we have striven as elected representatives—namely, our power to influence our own destiny and our power, as elected representatives, to act on behalf of the people. That is what I mean by sovereignty. I believe that that will be enhanced rather than diminished by continued membership of the Community.

One had to consider the implications of sovereignty when the time came for us to join the Community. That was a question which I had to consider perhaps more closely than did many Members of this House. I remember the moment in April 1971 when a devoted member of the Law Officers' Department brought into my room a formidable pile of papers. When I asked him what it comprised, he said that it was the most important instruction which I was likely to have to consider in my lifetime. Over many months—in consultation with my right hon. and learned Friend the Member for Epsom and Ewell (Sir P. Rawlinson), my right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Norman Wylie) and the Solicitor-General for Scotland—I had to contemplate and consider what was involved for our constitution in acceding to the Treaty of Rome.

In that time I read the speeches made by the right hon. Member for Down, South (Mr. Powell) set out in his book, and I also read many of the arguments on both sides of the question. I do not challenge the proposition of my right hon. Friend the Member for Stafford and Stone that this was a question of great and fundamental importance, because it certainly was and it effected important changes in our constitutional position. But they were the same essential changes as they had been ever since the Treaty of Rome was signed in 1957. They were the same essential conditions as existed at the time when my hon. Friend the Member for Banbury and the right hon. Member for Down, South voted in support of Mr. Harold Macmillan's application to join in 1961. They were made after full consideration of the matter in the best interests of the British people. They represent, as experience has shown, a means of enlarging our power to improve the prospects of our own people.

Some Members will remember the ferocity with which the Prime Minister denounced the way in which, in the event, we gave legislative effect to our accession to those treaties. He referred more than once to the way in which we had enacted the Code Napoleon for the benefit of the people of this country. I pointed out on one occasion that the only Bonaparte on that stage was the Prime Minister himself. Although on that night he opposed the Second Reading, I pointed out that his position then was "Not tonight, Josephine". I forecast that the time would come when he, like the rest of us, would assent to the European Communities Act. I am happy to think that that prophecy is now near to fulfilment. Since the White Paper recommends no change in the legislation, we may now say to Josephine "Tomorrow night is the night. Harold Bonaparte is back", even if more than a little battle-scarred at the end of two years.

As I explained more than once to the Prime Minister by reference to paragraph 22 of the White Paper prepared by the previous Labour Government, we were carrying out the constitutional steps that were necessary to secure our accession to the Community. That is why I am glad to see that the Prime Minister appears now not to question our provisions, since the paragraph which I quoted is reproduced verbatim in extenso in paragraph 134 of his present White Paper, Cmnd. 6003.

One other point of greater substance has been firmly established by the passage of time, and I am glad of it. The validity of the Luxembourg Agreement of 28th January 1966 related to the way in which the Community takes decisions. The Prime Minister in those days—and I dare say my hon. Friend the Member for Banbury—would never accept my assurances about the validity and effectiveness of that agreement, so much so that I almost began to wonder whether they were right. However, I am delighted to see that in paragraph 124 of the White Paper the Government set out the view that the practice of the Community is to act only by agreement in relation to important matters—as we had always argued and as was made clear in the communiqué of the Paris summit in December.

These important realities continue to escape some people, such as the right hon. Member for Battersea, North (Mr. Jay), and others who continue to take a legalistic view of the institutions which the right hon. Gentleman still sees as tyrannical. However, by taking that view they are ignoring the practical realities of the way in which the European constitution works from day to day. It is a form of blindness difficult to understand in a citizen of our country when, as was pointed out by the hon. Member for Ladywood, our constitution and our very existence, above that of any other country, depends above all on the conventions of our constitution and not on the small print or, indeed, on any print at all. That is the most important lesson of the last year. It is a pity that it had to be learned at the expense of a prolonged process of renegotiation. That is the way in which the Community works practically and acceptably.

What about the future? The hon. Member for Bristol, North-West (Mr. Thomas) was apprehensive about the threat to growing investment in this coun- try which comes from the possibility—it is no more than a possibility—of the commitment to free capital movement within the Community. A far greater threat to investment in this country comes not from capital movements within the Community but from the continuous freedom of movement on the part of the hon. Gentleman's Bristol colleague, the Secretary of State for Industry. It would do a great deal of good if he could take a more sensible view.

My hon. Friend the Member for Banbury was apprehensive in a different way about the prospect of progress towards economic and monetary union and a directly-elected Parliament. My hon. Friend the Member for Harborough was apprehensive about the impact of our continuing membership of the Community on value added tax. It is made plain in the White Paper that there is no obligation upon us to harmonise the pattern of VAT in the United Kingdom in a way which Parliament regards as unwelcome. There are other good reasons for being apprehensive about the intentions of the present Government in relation to VAT. I fear that they may use our sovereignty to introduce multi-rate VAT, to the great confusion of our hard-pressed traders. However, that fear springs from the continued sovereignty of this House and not from that of the Community.

We must face the realities of the prospect of economic and monetary union and the possibility of progress towards a directly-elected Parliament. For reasons which are set out in the White Paper, there will be no progress towards either of those objectives unless and until Ministers answerable to the House are able to carry them through in this Parliament. That is plainly the fabric and the pattern of the treaties, especially in relation to the change in the situation of the European Assembly. That body requires, before it can come into effect by way of direct elections, a recommendation from the Assembly, a unanimous decision of the Council of Ministers and the implementation of the decision by each member State in accordance with its own constitutional procedures. In other words, as set out in the White Paper, parliamentary approval is required. My hon. Friends will have the opportunity to argue against it. However, I do not foresee the likelihood of rapid progress in that direction, since that will not be possible without the assent of Parliament. That is the reality.

Let us lift our eyes to the road ahead. Let us cease repeating the arguments of yesteryear, fighting the battles of the last Parliament and continuing the delay in taking effective decisions on the part of our people. Let us set about restoring the confidence of our people by reaffirming our determination to conduct our future as committed members of the European Community.

9.38 p.m.

The Paymaster-General (Mr. Edmund Dell)

During the 1950s I saw the creation of the new European spirit. I wanted this country to be part of it. I think that we should have been far better placed today had we been part of it from the beginning. But we were not part of it. It has been repeatedly said in this debate—and by no one more brilliantly than my hon. Friend the Member for Birmingham, Ladywood (Mr. Walden)—that the important fact is that we are now in the Community. The only question is whether we should stay in it or whether there is any alternative to staying within the Community.

I am bound to speak primarily about the economic and financial aspects of this situation. Within that context, two main alternatives are offered to our membership of the European Community. The first alternative offered by some hon. Members is a Britain highly protected from international competition, and behind the barriers of which Britain can rebuild her strength. I believe that if we decided to leave the Community, that would be the most likely alternative for this country to adopt—not the open seas but the closed door, a Britain isolated and cocooned.

Whatever the attractions of such a policy—and it is undoubtedly true that some of the strongest economies in the world at the moment were built up behind such protective barriers—recent experience, and none more than the attempt of this country in 1964 to impose an import surcharge and to maintain it for a long period, shows how difficult, if not impossible, it is in current circumstances to maintain such policies long enough for them to have a beneficial effect, even on the most optimistic interpretation of the consequences of such policies.

I come to what is offered on both sides of the House as the second main alternative to the European Economic Community, which is an industrial free trade area—with the old EFTA, with the EEC or with both; in other words, in some way to negotiate, as an alternative, a European free trade area.

This proposal is interesting because it bears on the question whether membership of a larger and more rapidly growing market is beneficial economically to this country. Evidently those who believe that the alternative to membership of the EEC is membership of some kind of free trade area also believe that to be a member of a larger market, and especially a faster growing market, than our own, would be economically beneficial to the country.

I believe that they are right, though of course I do not expect—certainly not as a result of our entry into the EEC—that such beneficial effects will accrue rapidly. I think that criticisms based on the fact that in the past two and a half years, with the exceptional economic situation of those two and a half years, our economic performance has not been transformed are badly founded. There are great advantages in a larger market. One can expect a steadier level of demand than we have ever achieved since the war. It provides stimulation to the export sector, which is the most efficient and fastest growing sector of our manufacturing economy. The influence of a larger market is even greater if, as in this case, that larger market is more rapidly growing than our own. Also there is likely to be increased specialisation, standardisation and longer production runs as a result of membership of such a market.

That appears to be, so far, common ground with those who believe that we should find some sort of larger market of which to be a member, whether it is the EEC or a free trade area. If one believes that such a market would be beneficial to the United Kingdom, it seems exceedingly reckless to leave the EEC when there is no evidence that we could establish a free trade area with the EEC or even with EFTA. The fact that other countries smaller than our own have done so is no evidence that we could do so. That would be my advice to those right hon and hon. Members who think that this proposition is open to us as easily as they suggest. Here I agree with my hon. Friend the Member for Ashfield (Mr. Marquand). I believe that the experience of our European partners, facing the fact that they have agreed to this renegotiation, would make such negotiations exceedingly difficult if we should leave.

My right hon. Friend the Member for Battersea, North (Mr. Jay) believes that we should stand where we are, that it would be up to us simply to decide whether or not we put up tariffs, and that we could in that way create the free trade area which he wants. I must tell my right hon. Friend that I think that my hon. Friend the Member for Farnworth (Mr. Roper) is right. We are now down to 40 per cent. of the existing tariffs. Under our GATT obligations we are allowed to discriminate in this way in favour of other European member countries only because we are on the way to a customs union. If we left the Community, we would have either to negotiate a free trade area—I am casting some doubt on the ease of that negotiation—or to restore tariffs to their original level.

Why should the European countries give us the advantages of free trade? The ordinary common customs tariffs on industrial goods may add an average of 7½ per cent. But in areas particularly important to us, the tariffs are much higher than the average—for example, chemicals up to 18 per cent., commercial vehicles 22 per cent., and so on with a whole series of items of major interest to this country's manufacturing industry. Therefore why should they give us this advantage to our industrial exports?

Mr. Jay

I agree that from a legalistic point of view it would be necessary to obtain, as has often been done, a waiver from the GATT while a proper legal form was secured for this arrangement. But from an economic point of view, why should the EEC countries wish to restore tariffs when clearly it is very much in their interests to maintain the present position?

Mr. Dell

Unfortunately, it is not clear that in those circumstances it would be in their interests to do so in areas where this country's industrial economy is particularly competitive. I shall explain why later, because I must make other references to the arguments advanced by my right hon. Friend.

What would be the advantages of an industrial free trade area, on the supposition that we could achieve it, compared with our present membership of the European Community? The first, which has been particularly advocated in the debate, is the availability of cheap food. The Government have stated their assessment of food prices in this country following membership compared with what they would have been had we not been a member of the Community. The calculations stand and take account of recent falls in the prices of certain foodstuffs.

However, let me for a moment accept that everything proposed by a number of hon. Members about the availability of cheap food were true. I agree entirely with the point made by my hon. Friend the Member for Coventry, North-West (Mr. Edelman) who posed the question: why should the European Community countries grant us free trade in industrial goods which would be convenient to us if we deny them advantages for their agriculture which is so important to them? Again, my right hon. Friend the Member for Battersea, North seems to imagine that we would have the advantage of industrial free trade and cheap food when in the past the EEC has refused that alternative. Obviously. if the Community is to grant industrial free trade to us, it is only too likely to insist on an agricultural component. Indeed, even within the European Free Trade Area, which was an industrial free trade area, there was increasing pressure for an agricultural component within that community.

Mr. Jay

If my right hon. Friend is to argue that way, may I ask him to explain why the EEC has already agreed to accord to all the EFTA countries precisely the situation which I have proposed of industrial free trade and freedom for their own agricultural policy? Why should they discriminate against us alone?

Mr. Dell

I am afraid that my right hon. Friend must appreciate the difference between the industrial economy of the United Kingdom and that of the much smaller countries of the remaining European Free Trade Area.

Mr. Jeremy Thorpe (Devon, North)

Is the right hon. Gentleman able to confirm, for the benefit of his right hon. Friend who seems in think that EEC countries would hesitate before putting up tariffs against this country, so valuable is our market to them, that they export only 8 per cent. of their total exports to this country and that, therefore, we are a minuscule percentage of their total exports from that standpoint?

Mr. Dell

I entirely accept the figure which the right hon. Gentleman provides, which I believe is correct.

The second alleged advantage of an industrial free trade area as compared with the EEC is that this would grant us freedom from interference in our industrial and regional policies. If I may say so, I had considerable experience of interference with industrial policies in this country. Membership of the European Free Trade Area never gave us freedom from interference with our industrial policy. There was bitter criticism of the investment grant system. The aluminium smelter scheme had to be fought through against opposition of a kind which almost led to the break up of EFTA. If anyone wants an example of an industrial development in this country being inhibited by membership of a community, it is that the British Government in 1968 decided to cut the aluminium smelter project by a sizeable amount in order to meet EFTA objections. Therefore, any idea that one is free from interference in one's industrial policy as a result of membership of a free trade area is totally false.

The Industry Act which right hon. and hon. Members of the present Opposition introduced in 1972, which re-established investment grants in the development areas, would have caused major difficulty in EFTA had we not obviously at that time been leaving EFTA for the European Community. I do not want to discourage any right hon. or hon. Member of the Opposition from supporting the Government tomorrow night, but I would say that the Industry Bill of this year would be having a pretty rough ride in EFTA if we were still a member of that organisation.

It is in our interest that there should be rules governing industrial and regional policy, provided that they leave us sufficient freedom of action. The European Free Trade Area was sheer laissez-faire. There was bitter opposition to everything that interfered with free competition. The European Community has always had a social purpose, which has grown stronger over the years. Industrial policies and regional policies have been increasingly understood as of importance in bringing forward the poorer areas of the European Community, of which we, unfortunately, are one. We shall have far greater freedom on industrial policy within the European Community than we ever had in EFTA.

I repeat the point frequently made in this House: a free trade agreement with the European Community means as much control of industrial policy as, if not more than, membership of the European Community could conceivably mean.

My hon. Friend the Member for Bristol, North-West (Mr. Thomas) referred to Article 92. I do not know whether he has read the free trade agreement with Sweden. This is a unilateral declaration made by the Community—with Sweden not participating in this—regarding State aids. It says: The European Economic Community declares that in the context of the autonomous implementation of Article 23(1) of the Agreement which is the agreement relating to State aids— which is incumbent on the Contracting Parties, it"— that is, the European Economic Community— will assess any practices contrary to that Article on the basis of criteria arising from the application of the rules of Articles 85, 86, 90 and 92 of the Treaty establishing the European Economic Community. We do not escape Article 92 by leaving the Community. All we achieve is that we have no voice at all in the implementation of Article 92.

The third alleged advantage is that we would have no budget contribution. We have always admitted that there would be this net budget contribution, but it is a disadvantage which has been substantially reduced by renegotiation. That is an important gain from renegotiation. It is, however, a disadvantage which we must confess on the current evidence has always been exaggerated in size. The Commission, much criticised, has always been rather sceptical of the calculations made on this point by the British Government—for example, the calculation made in the 1970 White Paper of the then Labour Government and the 1971 White Paper of the Government of hon. and right hon. Gentlemen opposite.

In the current White Paper are given the figures of how we have done very much better than was estimated. Why have we done better? Because the European Community is a political organisation which understands that countries which make contributions will expect a return from them. I must confess to the House that I am in a sense partly responsible for one recent exaggeration of the figures on the extent of this budget contribution, because when we came into office I was responsible for the original calculations which were put to the Community as the basis for the budget renegotiation.

We have since seen, as a result of changes in the situation, that we there rather over-estimated the likely gap between our budget contribution and a contribution based on GNP. A number of factors are likely to reduce the budget burden. For example, any increase in the VAT proportion of our contribution will reduce the excess above our share of GNP because that share is more closely related to GNP than is our levies and duties share. We have, however, achieved certain things through negotiation—a repayment of up to £125 million and a review of the situation if for a period of three years a country has to take advantage of the new corrective mechanism. I would tell my hon. Friend the Member for Gravesend (Mr. Ovenden) that there is no suggestion that the scheme will stop after seven years. There will simply be an assessment of the scheme at that time.

As compared with the original Commission proposals, there has been a useful modification of the balance of payments test which means that a balance of payments surplus does not eliminate the possibility of the review procedure operating. Under the existing proposals, if we had had a balance of payments surplus we would have ceased to benefit and might not then have had a period of three years of benefit from the corrective mechanism, and the review machinery would not then have operated.

The next alleged advantage of leaving the European Community for some other type of organisation, an industrial free trade area organisation, is that there would be no liability to the free movement of capital, a point made by a number of my hon. and right hon. Friends, most recently by my right hon. Friend the Member for Jarrow (Mr. Fernyhough). The manifesto says: We need an agreement on capital movements which protects our balance of payments and full employment policies. But we have found in actual practice during the lifetime of this Government that we have adequate protection when there are balance of payments difficulties, under Articles 108 and 109 of the Treaty of Rome; and we are using that facility now.

A more important influence over the movement of capital will be the fact that the United Kingdom within the community will be a much better place in which to invest than a United Kingdom outside the Community. This will certainly be true for American investors who will bypass this country if we do not have free access from here into the Community —and that is true for many British investors. For example, Imperial Chemical Industries has said that it would be compelled to invest more within the Community and less in Britain if we were not members of the Community.

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