EUROPEAN COMMUNITY (DRAFT BUDGET)

HC Deb 19 July 1976 vol 915 cc1366-434

[Commission documents: Revised triennial financial estimates, 1976–77–78 (R/373/76), Community's budgetary problems, Commission communication (R/672/76), Proposed transfer of appropriations, EAGGF Guarantee section, 1975 (R/794/76), Rate of increase in non-compulsory expenditure, 1977 (R/1117/76), Audit Board Report, 1973 (R/1370/75), Audit Board Report, 1974 (R/118/76), Discharge to Commission in respect of 1973 budgets, draft Council Decision (R/1290/76), Discharge to Commission in respect of 1974 budgets, draft Council Decision (R /1291/76).]

7.15 p.m.

The Chief Secretary to the Treasury (Mr. Joel Barnett)

I beg to move, That this House takes note of Commission Document No. R/1483/76 relating to the EEC 1977 Preliminary Draft Budget. I should like to begin by apologising to the House. I hope that it will not be thought any discourtesy if I am not here for the closing speeches of the debate, but I have one or two other important meetings to attend.

The EEC documents before us today form the usual massive pile. As usual, I should like to express the thanks which I am sure is felt by all Members of the House for the work which the Scrutiny Committee has done in examing these documents and drawing them to the House's attention. In particular, I should like to congratulate it on the speed with which it has examined and reported on the main document before us—the seven-volume 1977 preliminary draft budget, to which Volume 7 provides a useful introduction and summary.

In my opening remarks, I should like to concentrate on the preliminary draft budget itself, which was the subject of the Committee's 27th Report.

Before turning to the substance of the budget, I should like to spend a few moments on the question of the timetable. Today is the first time that the House has been able to discuss the preliminary draft budget before its discussion at the first Budget Council, at which the draft budget incorporating the Council's decisions is established. The Budget Council meeting this year is on 22nd July.

In previous years, the Commission, under the timetable laid down in the Treaty of Rome, has had to submit the preliminary draft budget by 1st September. This year presentation has been brought forward, by informal agreement, to 15th June. The treaty timetable meant that the Scrutiny Committee was unable to examine the preliminary draft budget except during the recess and that the House was unable to debate it before the first Budget Council at the end of September. The position this year is an improvement in that respect, and is in part at least due to a United Kingdom initiative.

However, the new timetable is not solely designed to benefit us here—it should also have advantages for the Community as a whole in allowing slightly more time for examination of the draft budget by the Council and Assembly in the later stages of the budget procedure. The change in the timetable is on an experimental basis this year. The Community will have to consider at the end of the year whether the advantages outweigh the disadvantages.

Disadvantages there certainly are. Most obviously, the Commission, and other institutions, now have to draw up their estimates of expenditure much further in advance of the year to which they relate. This is a dilemma to which there is no obvious solution. This year, we should observe how things go and judge whether they are better or worse than before.

As the Scrutiny Committee recognises, the estimating problems arise particularly on expenditure on agricultural support, which accounts for a large proportion of the budget. The problem is made more acute by the fact that so much agricultural expenditure flows—regrettably—from the excess production of certain commodities, leading to surpluses which have to be bought up and disposed of at EEC expense. Whether, and if so what, surpluses will arise depends on the difference between total EEC production and total consumption for each of the commodities concerned. Quite small changes, due to the weather, for example, can lead to significant deviations from estimates.

It is also very difficult to forecast the world prices at which surplus production will be able to be exported to other countries. This difficulty exists at whatever time the Budget is drawn up, but the earlier this is done the more uncertain the figures must inevitably be. Under the old budgetary timetable, the size of the grain harvest, for example, for the current year, which to a considerable extent determines expenditure in the coming calendar year, was known when the preliminary draft was drawn up, but this will not be the case under the new timetable.

Nevertheless, the Commission has improved on last year. Then, it at first took refuge in merely repeating the provision for agricultural expenditure contained in the 1975 budget and did not produce genuine 1976 estimates until immediately before the first meeting of the Budget Council in September. This year, it has provided genuine forecasts of expenditure in 1977 from the outset. The assumptions on which these forecasts have been drawn up are being critically examined in Brussels.

But, however well the Commission has done its work, it will almost certainly wish to revise the forecast by means of a rectifying letter in September, when production prospects and the other variables will be somewhat clearer. This does not mean that it is any the less important to scrutinse the preliminary estimates now available. Careful examination now will pay dividends when we come to look at the final figures later.

Indeed, in my view, constant revision and scrutiny of the estimates of agricultural expenditure both before and during the year concerned must play an essential part in the EEC's agricultural policy decisions. As the Scrutniy Committee's report point out, this is particularly important at the time of the annual price review, when the main agricultural policy decisions are taken. I am sure that my right hon. Friend the Minister of Agriculture will be seeking to improve on the present position in this respect.

I come now to the size of the preliminary draft Budget. As the House is aware, the preliminary draft is essentially the work of the Commission, which puts forward its own estimates of the cost of Community policies, together with estimates from the other institutions.

This year, its proposals total 9,260 million units of account—£3,858 million—compared with agreed budget provision of 7,637 million units of account in 1976—£3,182 million. This is an increase of about 22 per cent. But it is not really comparing like with like, since the present 1976 total does not take account of the substantial supplementary Budget for 1976 which the Commission has just put forward. The latter amounts to some 632 million units of account, needed mainly to provide for the budgetary consequences of the agricultural prices review in March this year but also for expenditure on food aid and aid to Portugal, offset by gains on exchange. The supplementary has not yet, of course, been approved. It will be deposited in the House as soon as it is available in English. Meanwhile, it is likely to be discussed at the Budget Council on 22nd July. But comparisons with the 1976 position are still not easy, even when the supplementaries are taken into account.

A major complication, with which I shall deal later, is that the Commission has split the provision in many areas of the budget this year into commitment appropriations which are included in the tions. In the first year the effect of doing this is to reduce the level of payment appropriations which are included in the expenditure total. The budget total will also change in the course of its discussion by both Council and Assembly during the budgetary procedures.

Mr. Peter Hardy (Rother Valley)

My right hon. Friend said that the new distinction will make a difference in the first year. Does he agree that that will be an optical illusion in the first year and in the succeeding years, because the commitments of earlier years will be disbursed in the succeeding years and there will be relaively little differnce beween the two figures?

Mr. Barnett

I know that my hon. Friend understands my point. Previously we had nothing like as large a commitment appropriaion provision. Assuming that the Council and the Assembly agree there is a special commitment appropriation and payment appropriation, that is just one more complicating factor in making a comparison.

The Commission treats the preliminary draft budget as a forecasting document, and includes all items on which there may be a need for expenditure, even where these are for policies which have not been adopted by the Council. The Scrutiny Committee has expressed con- cern on this score. I would like to reassure the Committee.

In examining the provision for individual items, a process which comes to a head at the Budget Council, member States take the view, which I hold myself that all items on which there is not Council policy agreement should be deleted, or if agreement is close, that provision should be made in Chapter 100—formerly Chapter 98. The figures now before the House are, therefore, liable to change as a result of Council decisions in establishing the draft budget and thereafter by the Assembly in exercise of its powers to modify and amend the draft budget within the so-called maximum rate provisions.

It may help the House if I indicate the main topics which I think will be discussed at the Budget Council, and give the House some indication of the Government's attitude to the whole exercise and to the main elements within it. I shall not be able to give the House a final view until I have seen the report from the Committee of Permanent Representatives which has been discussing the preliminary draft budget in the last day or so.

First, I should like to deal with the provisions in the budget, and then the presentational issues. Inevitably, our general approach, in line with our approach to domestic public expenditure, will be to seek to restrict increases in expenditure as far as possible and to ensure that provision in the budget represents a realistic assessment of the cost of carrying out agreed Community policies. Indeed, with two exceptions, that is the main rôle of the Budget Council, in the exceptional areas—the Social Fund and food aid—although the policies are framed by other specialist Ministers, the volume of provision is determined by the Budget Council.

As usual, a large proportion of the budget is accounted for by estimated expenditure on agricultural support, that is to say, under the guarantee section of the EAGGF. The reason for this preponderance of agricultural expenditure is well known. It is the one area in which the EEC has taken over virtually the whole of expenditure which would otherwise be borne by the member States. Only in the case of those few commodities not covered by the common agricultural policy do member States spend anything on agricultural support.

What I have said explains the present position. It does not imply that we are happy either with the total sum devoted to expenditure on agricultural guarantees, or with the balance between agricultural and other expenditure within the budget. But neither of these issues can be pursued to any great extent by the Budget Council. Its task will be to ensure that the budgetary provisions properly reflect the cost of carrying out existing agricultural policy, so far as this can be forecast.

In addition to this, we shall, however, want to question the presentational innovations of including the appropriations needed because of the "double exchange rate effect" in a chapter outside the FEOGA titles and thus hiding part of the cost of agricultural expenditure.

We shall also want to challenge the assumptions which the Commission have made in forecasting monetary compensation amounts—a devaluation of the represenative or "green" rate. In practice, these must remain a matter for member States' decisions.

Finally, we object, as do most member States, to the inclusion in Chapter 100 of appropriations for the 1977 CAP price fixing. We, and other member States, have previously emphasised that the provision of such a "contingency reserve" is unacceptable.

The other main expenditure items are less complicated. On staff, our aim will be to limit the increase in staff numbers to those which are strictly necessary.

In the case of the Regional Development Fund, the main question will be whether the Commission's proposed payment appropriations—500 mua—are realistic, given the slow speed at which claims are coming in so far.

On the Social Fund, in the current economic situation I believe that the Commission's proposal of 619 mua for commitment appropriations is probably of the right order of magnitude.

I also expect to press at the Budget Council for the inclusion of provision for aid to non-associates as a means of impressing on other member States the urgency with which we believe a decision in this area is needed.

I turn now to presentational issues. A major issue in this year's budget discussions will be the wider use of separate commitment and payment appropriations. The system is already used for the Regional Development Fund and for research and investment, where it was introduced for expenditure under programmes covering several years.

The Commission has proposed that this system should in future be used in all parts of the budget where expenditure occurs under programmes extending over more than one year.

Annex C of the explanatory memorandum on the preliminary draft budget, which all hon. Members, I know will have read, sets out the difference between commitment and payment appropriations in detail. At present, the position is that the Commission may enter into an obligation to spend money—a commitment in Community jargon—only within the amount of substantive provision in the budget. Once committed, the money may not be spent for any other purpose and must be kept available until the bill is presented for payment.

The disadvantage of this system is that it involves substantial carry-forwards as money which has been committed is carried-forward until payments fall due. These carry-forwards and the need to provide more money in the budget than will be used in the financial year create difficulties for accounting and financial control. It also means that the budget does not give a clear indication of actual expenditure during the year.

The effect of the change proposed would be that the payment appropriations would make provision only for expenditure expected to occur in the financial year. This would then be more similar to the provision made in Votes in this country.

The commitment appropriation would provide the ceiling within which the Commission would be able to commit money for planned future expenditure, a funtion broadly comparable with the United Kingdom expenditure programme. As yet no agreement has been reached by the Council on this issue.

The proposal clearly has advantages, but it is an area in which the precise rules are very important. I shall want to ensure that the system is applied only in those areas—multi-annual programmes—where it is appropriate, and that it is applied in a way that will ensure that the maxima set by commitment appropriations cannot build up into excessive expenditure totals when the time comes to make payment.

It may also be worth mentioning that the introduction of commitments and payments creates problems in calculating the Assembly's margin under the maximum rate provisions. The rate established for 1977 in accordance with the treaty provisions is set out in another of the documents which we are debating tonight—R/1117/76. There is no argument about this percentage which is calculated on the basis of macro-economic statistics. The base—non-obligatory expenditure in the previous year—to which it should be applied is less clear.

There is a continuing problem over the classification of the Regional Development Fund, and this year there is the additional problem stemming from the introduction of commitment and payment appropriations. It is not yet clear how this will finally be resolved.

However, on the basis of comparison adopted in the preliminary draft budget, and assuming the Regional Development Fund to be obligatory, the Assembly's margin will be at least 100 million units of account.

Finally, may I say that I have intentionally concentrated on the preliminary draft budget on which I am grateful for the Scrutiny Committee's Report and on which I would welcome the views of other Members. I shall certainly take account of these in deciding on the United Kingdom line at the Budget Council.

There are, of course, other documents before us tonight on finance and Budget matters. If there are any questions on these, my hon. Friend the Financial Secretary will be happy to deal with them later in the debate.

7.34 p.m.

Mr. Michael Shaw (Scarborough)

We must all be grateful to the Chief Secretary. After having had a very long and, from the appearance of it, a rather gruelling day, to be plunged into the debate on the Common Market is going it a bit. We welcome the very important, full statement on the Government's attitude and their approach to the preliminary draft budget. The Chief Secretary has hit on the main points that will concern most of us in considering the documents.

The first point that we must appreciate is the change in the timetable for the production of the preliminary draft budget because this year we are working under a completely new timetable. We ought to be very grateful to the Commission and particularly to Mr. Cheysson for the tremendous amount of work that has gone into producing that document at this early stage. The timetable now enables us to consider the preliminary draft before the Summer Recess. This means that both the Council and the European Parliament can consider it more thoroughly. My hope is that they will both consider it without the last-minute frenzy that was such a feature of our autumn procedures in the past. The benefit of this extra time extends to the House, to the other place and to the Committees that have already taken advantage of its early production.

The advantage is in having a first discussion of this sort. While I do not believe that we shall get very far by considering the details of the document, at least we shall be able, through discussion, to discover what our approach to the budget is to be in a particular year. That is how we should best look at the document.

We in the European Parliament have had our preliminary discussion, and our respresentatives, of whom I am happy to be one, under the leadership of our President. Mr. Spenale, will be meeting the Council on Thursday to give our initial reactions. I believe that such a meeting will be of considerable value because the problems and policies connected with the budget can then be freely discussed between the two sides before the Council settles down to its own detailed consideration of the preliminary draft budget.

A growing practice of consultation between the Council and the Parliament is essential to the healthy growth of the Parliament. This budget has already been described elsewhere as a standstill budget—indeed, one might call it almost a steady-as-you-go budget, if that phrase does not ring too embarrassingly in the Prime Minister's ears. However, obviously it is right that there should be an ele- ment of standstill at present, in view of the background to the national economic situation throughout Europe. In spite of that, this budget should not be compared with a national budget. At 9,260 million units of account it will be under 2 per cent. of the aggregate for the individual national budget. It is far too small a sum to affect the economy of the Community, whether we raise it or whether we reduce it. Our considerations, therefore, of the budget must lie with the policies represented by the items of expenditure set out in the budget, with the presentation and with the layout of the budget, which has changed considerably in this year, as the Chief Secretary has said.

Finally, we should not neglect the question of control over the budget expenditure and the relationship of that control to the budget. Referring briefly to the policies, the expenditure that appears in the budget does not necessarily represent additional expense to the Community. It would be wrong to look at the items contained in the budget and to ask "Why has this gone up? That will mean that we have to find more money.", and so on.

In projects such as those connected with the aircraft industry, various forms of research and agriculture, expenditure on a Community basis may wholly or in part take the place of national expenditure. Therefore, one will get a true picture only by considering national and Community expenses as a whole. I hope, and indeed expect, to see such a pattern grow, showing, as it will, the benefits to be derived from working together in Europe.

I also welcome the Community proposal to step up its action in connection with the problems of young people. It is a great pity that some national Governments appear to be so slow in taking up the sums committed. It is a weakness in the operation of the Social Fund that the implementation of the schemes, with demands for money as they are implemented, seems to take so much time.

As the Chief Secretary said, by far the largest sector of expenditure continues to be agriculture. This expenditure can rarely be forecast accurately. The right hon. Gentleman mentioned the question of the supplementary budget. It is not true to say that most of that budget is for agriculture. In fact, 717 mua appear in the supplementary budget but they are offset by other savings, reducing the supplementary to 632 mua. Therefore, coming forward seven months after the original budget, there is little use in trying to consider accurately the comparison between the previous year and this year—and who can tell at this juncture whether there will be a need for supplementary budgets to the 1977 budget?

It is important, particularly at the start of our annual budgetary process, to spell out our attitude to expenditure in the agricultural sector. We must ensure, not only that the policies and expenditure are necessary and effective but that we in the European Parliament have a greater control over the expenditure. I am glad that the hon. Member for West Lothian (Mr. Dalyell) is present because he and I serve on the new Sub-Committee of Control. We must be on our guard to ensure that the agricultural policy does not become a policy to preserve a pattern of life and a pattern of production against the pressures for change and modernisation which bear on the rest of our society. Equally, both in the interests of the public in general and of those engaged in agriculture, in particular, we must ensure a proper reward for the efficient producer and a proper incentive for the producer who is prepared to become, and is capable of becoming, efficient.

We have the new Sub-Committee on Control which we hope will eventually, with much striving, turn into a form of Public Accounts Committee. We urgently need, if we are to pursue that task, the rapid establishment of the Court of Auditors. I congratulate the Government on the speed with which they have acted in ratifying the treaty change. I merely ask them to use their best offices to try to persuade other Governments to speed up their processes, because from what I have heard it seems that the Court of Auditors will not be set up before about the middle of next year, and that is far too late.

I wish to say a few words about the proposed new financial regulation. The House many not realise it, but this budget is framed largely on the assumption that the change in the financial regulations—which is another massive document— will be approved in time for the passing of the budget. It would be nice if the Council could adopt the new financial regulation before the end of the year. However, I am aware of the problems which that would entail. Therefore, should that prove impossible, I hope that the Council will be able to accept straightaway the changes in part, leaving the rest to be adopted thereafter as soon as possible. In particular, it would be helpful if the concept of "commitment" and "payment" appropriations could be adopted. There may be difficulties, but this concept will make the presentation of the budget much clearer and resolve the totally unsatisfactory system of automatic carry-forwards which has existed up to now and which leads to so much expenditure being outside the control of Parliament.

I have expressed my thanks to the Commission for the early production of the preliminary draft budget. It is no mean achievement and the way in which, in particular, Volume 7 has been drawn up, with the clear explanatory statements made therein, is a model not only for us in Europe but for other national Governments in presenting their budgets.

While each year has seen an advance in the presentation of the budget, in the consultation between Council and Parliament, and now in the new financial regulations, I am bound to end on this note. The next big advance in our dealing with and authority over the budget for us in the European Parliament must await the holding of the direct elections and an "own resources" budget. Subject to that, this early look at the preliminary budget to enable the attitude of this Parliament and of the European Parliament to be expressed is a step in the right direction.

7.48 p.m.

Mr. John Roper (Farnworth)

Like the hon. Member for Scarborough (Mr. Shaw), I welcome the fact that the budget has been brought forward this year, and I hope that my right hon. Friends, when they attend the appropriate Council meetings, will ensure that the experimental procedure adopted this year will be formalised by the passage of the appropriate regulation so that we shall have, as of right, this opportunity every year.

This budget is considerably clearer than some that we have had from the Commission, and we should pay tribute to the efforts of Commissioner Cheysson, who has been a great success in the post. I hope—it may be a vain hope—that this will not be the last full budget which he presents for the Commission. I hope that when the new Commission is drawn up the proposal included in the British Government's White Paper of December 1975—that there should be a financial commissioner—will be examined again, because, in addition to the Court of Auditors and the Sub-Committee of the Budget Committee of the European Parliament, this is a part of the control mechanism which is necessary if there is to be adequate financial control over the activities of the Community.

I shall also mention one additional control which on occasion has been of value to the Scrutiny Committee in our work over the past year. More frequently than in the past the Commission's proposals have been attached to a memorandum setting out the financial implications. The term of art in this respect is fiche financière. It is important that this House when receiving copies of Community proposals should obtain a document setting out the financial implications so that in considering proposals in that year as well as at the time of the Budget we are aware of those implications in relation to the various matters handled in the Community.

There was discussion with my right hon. Friend the Chief Secretary last year, and indeed again this year, as to what exactly the budget is and what is the function of the Budget Council. I still maintain that the budget is more than a simple compilation of decisions taken by other Ministers during the year. I do not wish to belabour the points made in last year's debate, but the budget represents more than a mere totting up and putting together of a number of decisions. I shall try to explain why I think this is the case.

First, although the Council which makes these decisions is described as a Council of Budget Ministers and is attended by Ministers from member States, such as my right hon. Friend the Chief Secretary, and other Ministers with comparable responsibility in other countries, the Council of Ministers is indivisible. There is no difference between the Council of Budget Ministers, the Council of Foreign Ministers and the Council of Agriculture Ministers. The Council meets as a Council of Ministers, although on occasion Ministers attend who have special expertise. Therefore, it is a simplification to suggest that the Council of Ministers exists merely to tot up sums at the end of the day.

Secondly, Budget Ministers can and do change Commission proposals. If they did not have that power, they would not be a Budget Council but would merely be a set of officials sitting around a table totting up sums. Indeed, my right hon. Friend the Chief Secretary said that he intended to try to change some of the proposals put forward in the budget, and in particular he said that he intended to ensure that aid to non-associates is implemented and perhaps increased.

Thirdly, there are some specific items explicitly controlled by the Budget Council. When the Chief Secretary came before the Scrutiny Committee on 5th July this year, he agreed that the Budget Council controlled the size of the Social Fund. That is an important aspect of the Community's work. If the Budget Council can control areas of the Social Fund, why is it not appropriate for it to consider other parts of the Community's expenditure in the same way?

According to Press reports at the time of the Budget Council's meeting last September, the Chairman of the Council of Ministers was prepared to block the budget if the agricultural figures were not lower, thereby implying that the Budget Council can restrict overspending by Agriculture Ministers.

It seems to me that the Budget Council has a responsibility and a role to help to direct policy. The Chief Secretary said that in the past the European Commission's budget was not a policy-making document. In one sense that could be said to be technically true, but in some ways this document is not altogether very far different from the British Government's White Paper on public expenditure. One could say that that was not a policy-making document because it merely summed up decisions taken elsewhere. None the less, when a public expenditure White Paper is published, or when such a document is revised, it is the result of some fairly difficult discussions within the Cabinet. In the same way the Budget Council acts in a similar fashion because it determines allocations to different parts of the Community's development which in turn influence the policy and direction of the Community.

Therefore, we want more of an overview by the Budget Council, taking its role as the Treasury of the Community in allocating resources as effectively and efficiently as possible. That is the place at which some of the policy choices should be made apparent. If at the end of the day Budget Ministers say "This matter is too difficult for us", they should make the matter explicit and refer it to a meeting of the Council of Ministers. But somewhere priorities should be arrived at and, if not carried out in the Budget Council, they should be determined somewhere else.

One of the unsatisfactory aspects of the way in which the Community deals with agriculture is that it appears to leave it to the Agriculture Ministers to discuss among themselves the amount that should be spent on agriculture. I believe that within the Community, if not within this country, agriculture is too important to be left to Ministers of Agriculture, but to the outsider that appears to be the way in which the matter is dealt with in the Community. I see that the Financial Secretary to the Treasury is looking a little quizzical at that remark. I am sure that he will deal with this topic when he replies.

Within the United Kingdom the Minister of Agriculture puts his point of view in the Cabinet, in which of course there are other Ministers representing other interests. Unlike this situation, the Community Agriculture Ministers get together and argue what is best for agriculture within the Community without the presence of other departmental Ministers. It appears that the only place in which priorities can be worked out is within the Budget Council in attempting to deal with priorities across the board within the whole of the Community activities. In the same way as within the United Kingdom the Treasury or the Chief Secretary tell the various Departments that expenditure cannot be allocated, similarly within the Community's Budget Council attempts are made to ensure proper priorities.

I turn to the question of the Assembly's margin and proportion of increase. The Chief Secretary chose his words with great care when he said that the Assembly would have a margin of at least 100 mua. On one interpretation that would amount to about 8.65 per cent. of this year's budget.

There is an alternative interpretation, which I understand from the Chairman of the Budget Committee of the European Assembly is his view, namely that the Budget Committee will take the view that it is entitled to an increase of 200 mua—that is the full increase of 17.3 per cent.—since the Commission has merely recommended an increase of 6.3 per cent. which is less than half of the maximum amount laid down. I realise that this is an extremely technical point but I would be grateful if my hon. Friend could tell us whether it is the Government's view that the Parliament's margin of manoeuvre is 100 mua or whether, as is thought by some, it is 200 mua.

Next I would like to say a word about the distinction being made over a wider range of the activities of the Community this year between appropriations and commitments. The appropriations are adopted in the draft budget at the request or suggestion of the European Parliament. This may make the document more transparent, more explicit. We may have a better understanding of what is going on. As the hon. Member for Scarborough said, this may prevent us from having to deal with the difficulty of the carryovers which are extremely unsatisfactory and to which the Scrutiny Committee has drawn attention.

As I tried to suggest in an intervention earlier there will be a certain optical illusion. In the coming year, when we first introduce the system, we shall appear to be approving for payment a much lower figure. I suspect that in subsequent years, when we have got the carry overs in their new form, they will become matters to be approved for payment and the budget will go up again to its old level. We may have a situation this year, in which, while it appears to go down, this will be a once-and-for-all effect, and we should not be surprised if next year there is a jump upwards. When people complain next year because of the jump they will have to go back and look at what has been said this year to see that this is merely an optical illusion resulting from the new budgetary technique.

There is a possible problem which should be avoided at all costs. Let us suppose that on the basis of past experience of the rate at which requests are made for expenditure from one of the funds, say the Regional Fund, the approval for payment is only half or three-quarters of the commitment for the year. Is there not a danger that the officials working in the Commission may feel that this is the true ceiling and if applications come in which take the total expenditure towards the amount which has been approved for payment in 1977—although they will still be some way from the amount which has been committed for 1977—they will say "No, we cannot take any more applications"? Although in one sense this is a more realistic system, we must be careful that it does not inhibit Community expenditure, particularly if it gets close to these limits, as will be the case. We must make it clear that these payment appropriations are figures which can be amended by supplementary budgets during the year if it appears that applications from the fund go up towards the limits which have been set.

As well as dealing with expenditure there is within the budget a section dealing with Community sources of revenue. I hope that in preparation for next year—when the United Kingdom representative will be the President of the Council of Ministers for the first six months and when the initial work on the budget is undertaken—my right hon. and hon. Friends are beginning to think about the various problems attached to the Community's future revenue. This is one of the areas which needs to be re-examined. The concept of own resources has not proved totally satisfactory and there may be a case for the Community as a whole to re-examine whether the 1 per cent. levy of VAT is the appropriate mechanism by which to add to its resources. Obviously the fund derived from the customs duties and import levies is an appropriate item for the own-resources heading. In addition, in the past it has been suggested that the 1 per cent. of VAT should go to the Community. That is something which should and could be re-examined, and I hope that my right hon. Friends will devote some attention to that between now and next year.

This method of proceeding is a useful way of considering the budget although, having attempted to look at all of the papers with which we were provided in preparation for this debate, I feel that the amount of time allocated to it is not adequate. In future we shall have to devise some form of consideration which combines a detailed Committee stage with a debate on the Floor of the House.

8.6 p.m.

Mr. John Davies (Knutsford)

It had not been my intention to seek to intervene in this debate, but I am glad to have the opportunity of doing so if for no other reason than to say with what pleasure it was that I listened to my hon. Friend the Member for Scarborough (Mr. Shaw) opening the case for the Opposition. It gave me the opportunity of recalling the many happy hours we spent working on the great task that he is now performing on these European budgetary matters, for which I commend him.

I have some positive and professional points to make. I do not think that there is much of a case for a deep and detailed debate on the terms of this budget, because many of the procedural considerations have already been discussed. I take the opportunity of commending the Chief Secretary and the Financial Secretary for what they have done in bringing about some of the changes that many of us thought were highly desirable in this budgetary procedure. I am thinking particularly of the question of timing, to which reference has been made, and which is a great facility to us in this House and to others.

For my part, there is the whole question of the division of the commitment and payment of appropriations, which is an improvement in the budgetary system and one which will show much more clearly to us what are the realities of the budgetary process in the Community. There is one incidental question that I hope will receive some consideration. I can foresee some difficulties arising in relation to the appropriations where the payment date is seriously deferred in relation to the date of appropriation, if rates of inflation are maintained at high levels. There will be problems arising where the original sums voted in the appropriation become manifestly inadequate to achieve the original purpose by the time the moment of payment arrives. This will need some consideration by our own Ministers and also within the framework of the Community, to see how these inflationary tendencies are to be handled.

The hon. Member for Farnworth (Mr. Roper) correctly referred to the fiche financière question as it affects the budgetary process of the Community. Were a fiche financière system universally applied, the budget would become a mere assembly of the values involved in individual decisions. At this stage that is not the case, and I very much hope that it will be the purpose of the Financial Secretary and his right hon. Friends to ensure that as far as is humanly possible the Community will see that financial values are placed on decisions taken. It is still all too easy for policy decisions of a major kind to be taken in the Community without those concerned having a clear understanding of what is involved financially. I strongly hope that the use of the fiches financière system will be made totally effective.

I regret that it did not prove possible for the Government to submit as a relevant document the supplementary 1976 budget No. 2. In fact, through the courtesy of the Chief Secretary, the Scrutiny Committee has had access to what is contained in the budget. Last week the Scrutiny Committee reported on the matter as requiring consideration by the House, in the hope that it would appeal to the Government as a document to be submitted for today's debate. However, it appears to be too substantial an item for this debate, although the Chief Secretary, with your agreement, Mr. Speaker, referred to it. It completely vitiates the comparisons put forward in the explanatory memorandum and in the document itself.

The figure of 22 per cent., representing the overall increase in the 1977 provisional budget figure compared with the 1976 figure, is already substantially reduced to about 12 per cent. in the light of the supplementary second budget. That throws into highlight the importance of the supplementary budget. It is a pity that it has not been included in this debate, especially as it will stick out like a sore thumb in the recommendations made by the Scrutiny Committee. It seems to be inappropriate to discuss it in isolation. It may well be, the Government having taken the trouble that they have, that the Scrutiny Committee will be required to reconsider the position.

The second document that is of substantial importance and is not available for this debate, although the information contained in it is now known to the Government, relates to the breakdown of the individual support measures involved in the agricultural chapter. At present it consists of the single figure in respect of each main product heading. This is rough and ready stuff compared with the realities of the problem. Even at today's rate, the element of support involved in the dairy product is still unknown, because of the continuing discussion in relation to that section. It is a pity that the knowledge that is already held by the Government, namely, the more detailed figures of breakdown of the agricultural elements, was not available to the House this evening. Perhaps it will be possible for the House to have access to this information, in view of the undertaking given by the Chief Secretary that the information will be made available in due course.

Those are the small points that I wished to make. On the whole, I believe that the budgetary process is improving. The big issues now lie between the European Parliament and the Council. That is where the improvements in the whole scrutiny and consideration of the Budget should now take place in the light of the decision taken on direct elections. It is my hope that the Parliament will progressively prove to be a much more effective and determined monitor, as I believe it wishes to be itself.

8.15 p.m.

Mr. Tam Dalyell (West Lothian)

The right hon. Member for Knutsford (Mr. Davies) is absolutely right in lamenting the cost of too frequent lack of control. Very often it is not what it should be throughout the Community institutions. There should be price tags on every proposal that comes forward.

One of the troubles of the European Parliament or Assembly is that any body that is not responsible for raising its own revenue becomes slightly gay about spending. It puts forward all sorts of resolution without putting a price tag on them. Without the obligation of having to find the money, perhaps one becomes rather light-hearted about such matters. That applies not only to the European Parliament but to the proposed Scottish Assembly. But tempt me not down the path of discussion.

Whereas the right hon. Member for Knutsford and the hon. Member for Scarborough (Mr. Shaw) both praised Mr. Cheysson, rightly, the next time round in the Commission we must not have a Commissioner who is responsible for Lomé, the ACP set-up, developing countries, plus the rôle of Chancellor, that of Chief Secretary, that of Comptroller and Auditor General and other matters. We must have a Commissioner who is responsible for budgetary strategy and, in addition, a Commissioner to undertake what might be called the public accounts function. I do not think it is necessary to increase the size of the Commission. Heaven knows what some of the Commissioners actually do. But it is essential to have someone who is responsible for the developing countries, someone roughly in the position of a Chancellor of the Exchequer, and certainly a third Commissioner in the position of a Comptroller and Auditor General, a Chief Secretary, or a hybrid of the two.

I hope that I can leave the idea with the Financial Secretary that perhaps the British Treasury and the British Government will press whoever is the next President of the Commission, be it the Secretary of State for the Home Department or anyone else, to recognise that there must be a separate Commissioner responsible for the function of monitoring.

On behalf of a man whom I regard as an excellent colleague, a man who won the confidence of his colleagues both in the Socialist group and in the Budget Committee—namely Lord Bruce of Donington, the rapporteur for the 1977 Budget, with whom it is a pleasure to work as a member of the Budget Committee—and of myself, perhaps it would not be out of place for me to say to the Financial Secretary that we appreciate the help that has been given very often by Treasury officials, whom we have found co-operative. My hon. Friend might pass on to Treasury officials in Brussels our appreciation of the co-opera- tion that they have given to the British Members in a purely objective and proper way. Nevertheless, their co-operation has been considerable. I should like the thanks of Lord Bruce and myself to be recorded.

As the hon. Member for Scarborough said, he and I are both vice-chairmen of the Sub-committee of Control, the embryo Public Accounts Committee. I ask the Financial Secretary what I consider to be a crucial question—namely, to what extent is that embryo committee and the Budget Committee to be given access to the civil servants in the various nation States? If we are denied access to questioning civil servants of the independent nation States, I wonder very much how effective we shall be. Indeed, I believe that we shall become very ineffective.

Mr. Douglas Crawford (Perth and East Perthshire)

The hon. Gentleman is talking about nation States, and I believe that Greece will shortly be joining the Community. Is he thinking of Scotland and Wales among the member nation States?

Mr. Dalyell

That is an overwhelming temptation, but having studied the business, Mr. Deputy Speaker, I must somehow bring myself to resist being led astray into making a 35-minute speech on a second subject.

I ask the Financial Secretary what pressure is being exercised by the British Government regarding a Court of Auditors, to which the hon. Member for Scarborough referred? Until it is set up, some of us will have worries about control. I shall give a specific example to demonstrate precisely what I mean. I refer to the malt problem, with which my hon. Friend the Minister of State for Agriculture, Fisheries and Food is well aware. It is quite clear that it is the Commission that decides what information shall be in the hands of its own auditors and what will be denied them. I find it strange for any organisation solemnly to decide itself what information on a delicate issue of great relevance to the auditors shall be given them and what information shall be denied them. Therefore, I think that it is of overwhelming importance that the whole set-up of the Court of Auditors be pressed ahead with as quickly as possible. The Sub-Committee on Control should not try to do the auditors' job. It should use an "expedited" procedure to deal with alleged fraud and scandals.

I gather that there are some technical difficulties in Holland, but I do not worry about those. I gather that there is likely to be delay in the Federal Republic of Germany and that it cannot be ratified until mid-1977. But that has to do with the German elections, and I do not worry about that. What I do worry about—and it has to be said—is that there is very little indication indeed that efforts are being made, first, in Ireland and, secondly, in Italy to do anything about the auditing position. We should bluntly ask, as a member of the Community, what we are doing as a Government to ask the Irish and Italians to be serious about going ahead with the setting-up of a court of auditors.

Mr. Frank Hooley (Sheffield, Heeley)

They have no intention of doing so.

Mr. Dalyell

I would not be indelicate enough to put it in such strong terms as my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) has done, but there is a widespread feeling among people of all nationalities that there is very little intention to do so on the part of the Italians and the Irish. So I ask the direct question—what are we going to do about it? What are we going to do with the Irish and Italian Governments in this matter?

Finally, Mr. Deputy Speaker, I raise a separate issue on which you will rule me out of order.

Mr. Deputy Speaker (Sir Myer Galpern)

I can do that in advance.

Mr. Dalyell

I have known you for 14 years, Mr. Deputy Speaker, and you have watched me like a hawk, so that would be nothing new. It is the question of the expenses of the European Parliament itself. These should be scrutinised very carefully. It is not that there is corruption. Nor do I think that there is great inefficiency about the place. I think that the officials of the Parliament are very efficient and hard-working people. It is the whole set-up by which we wander like nomads between Luxembourg and Strasbourg and Brussels. We have committee meetings in Amsterdam and Newcastle and Rome, and now, with the entry of Greece and Portugal, no doubt we shall become even more peripatetic. Not only does all this throw doubt on the seriousness of the Parliament, but it is extremely expensive in terms of cash—and that the Treasury might look at. There is something more serious—it is expensive in terms of the energy not only of Members of the Parliament, though I put that secondarily, but of a large number of officials of the Commission and of the Council of Ministers and others.

There is the idea that one has to meet in a certain place simply because the prestige of the Government of France is at stake. But Strasbourg is not a very sensible place to do proper business. I remind the House of what Churchill said about it. He was not favourably disposed towards the idea of a Council of Europe at the time, and possibly still less so to the idea of a European Parliament. He said that Strasbourg was "an excellent place where Icelanders and Turks could discuss their common problems". That is very much the situation. I think we have to consider both on a financial basis and on an efficiency basis the peripatetic nature of the European Assembly.

I hope that if my speech has done nothing else, perhaps it will cause the British Treasury to reflect on the answer that my right hon. Friend the Prime Minister gave last Tuesday. I asked him a quick question about the nomadic nature of the Parliament, and with great relief he said that, thank heaven, it was not a problem for him as a member of the Council of Ministers. I have friendly news for him. I fear, after discussion, that it is his problem and that of his colleagues, because it is a matter not for the Parliament or for the Commission but for the member Governments. I do not make any great play of my right hon. Friend having given an off-the-cuff answer that may not have been strictly accurate. That is of no consequence and it was done in good faith. I simply say that the Government should realise that, along with the other Governments, they have the responsibility of coping with this problem.

Mr. Neil Marten (Banbury)

The hon. Gentleman has made great play of this matter, and I respect him for it, because this is the sort of waste I do not like to see either. Did he notice that, in The Economist of the week before last, the cost of this dual Parliament was estimated at £3 million a year and that each time some 60 tons of baggage and paper has to travel back and forth either from Brussels or Luxembourg to Strasbourg or whatever? From his knowledge of the thing, does the hon. Gentleman agree that these estimates were roughly about right?

Mr. Dalyell

One of my many failings is that I am not a reader of the Economist. But it is true that the cost is about £3 million. I would not commit myself to tonnages or kilograms or anything else, but a vast amount of paper is moved in truckloads along that axis.

It is not only a question of cost. There is also the whole idea of having to think which papers the hon. Member for Banbury (Mr. Marten), or the right hon. Member for Knutsford or I or others will ask for, and the sheer amount of mental energy of the highly-paid people in the Commission being sidetracked into the sheer physical, logistical labour of deciding what we shall want and when, where and how. It does not lead to a very efficient Europe.

8.27 p.m.

Mr. Alexander Fletcher (Edinburgh, North)

I would not be indelicate enough to follow many of the arguments which the hon. Member for West Lothian (Mr. Dalyell) has put. Like him, I am a member of the Budget Committee. He will recollect that, on an idea put forward by the hon. Member for Fife. Central (Mr. Hamilton), we looked at the cost of the Parliament moving around and produced some estimate of savings that could be made along the lines the hon. Gentleman mentioned.

It is interesting that tonight of all nights there has been some acclaim on both sides of the House for the improved timetable of the Community budget and the fact that a great deal more time is now being given to the national Parliaments as well as to the European Parliament to discuss in detail the construction of the budget. That is interesting, because in this Chamber tonight we are on the eve of the day of the guillotine at Westminster. Here we are, debating the fact that Europe is giving more time to check legislation, while at Westminster the power is being cut off yet again—or at least, that is what is expected for tomorrow. The effect of that is that as Westminster weakens its scrutiny of legislation and of the Executive, we have before us evidence that Europe is moving rapidly in the opposite direction and giving more time to legislative appraisal and scrutiny of the Executive itself.

One bright spot, as far as Westminster is concerned, is the 45th Report of the House of Lords Select Committee on the EEC, which deals expertly with the vast volumes of the EEC budget and produces a summary that I commend to all hon. Members.

This debate is taking place against the background of an unscheduled Cabinet meeting to discuss yet again the proposals to cut public expenditure in the United Kingdom. [Interruption.] I do not see why Opposition Members do not think there is a connection between public expenditure in the United Kingdom and in Europe. The connection is fairly obvious. There is a certain irony in the fact that the Cabinet meeting is taking place tonight, when one recalls the agonising assessments that took place over the cost of British entry into the EEC and the burden it was said to place on Britain taxpayers and consumers. The mood then was that the United Kingdom would be a great catch for the Community and that the Europeans were very lucky to have Britain as a member. I am not disputing that Europe is lucky to have Britain, but so far it has not been a case of financial luck. That is evidenced by this budget and the previous ones. How differently it has all turned out. One has only to remember the financial cost of Britain in Europe, with the devalued pound making it necessary for the EEC to subsidise food prices in this country, to realise that.

Although the United Kingdom's share of the 1977 draft budget is estimated at something less than 20 per cent., our gross contribution will be offset significantly by receipts from the Community. In 1975 we actually received more than we contributed. None of this should give any satisfaction to hon. Members of this House. The truth is that the United Kingdom, along with Ireland and Italy, forms the second division within the Community.

In his first annual report on the Regional Fund, Commissioner Thomson pointed out the widening gap in per capita income between the second division and those on top of the first division, such as Denmark and Germany. The comparison between the regions was even more striking, according to Commissioner Thomson. In 1970 the gross domestic product of Hamburg and Paris was five and four times higher, respectively, than that of the West of Ireland and Southern Italy. By 1975, Hamburg's GDP was six times higher, and Paris's five times higher. That is the sort of discrepancy that the Regional Fund is finding out about. Finding out the problem is easier than solving it, but at least an effort is being made on a European basis, through the European budget.

These figures point out the importance of the Regional Development Fund to Britain. All parts of the United Kingdom benefit from it, not least Scotland, which so far has received just on one-quarter of the total contributions made from the fund to the United Kingdom.

In his opening remarks the Minister complained, or appeared to complain, about the slow speed of claims from the fund. I suggest that the main reason for this is the fact that these applications have to be digested by the national Governments, and it would speed things up considerably if the local authorities concerned in the United Kingdom and elsewhere in the Community could make claims direct to the Regional Commissioner and his Department and could get their benefit direct from the fund. That might help to remove the problem of additionality, and it would enable the regions to have direct access to Brussels about particular requirements and particular developments. This would make the Community's purpose much more meaningful throughout the member States.

Mrs. Winifred Ewing (Moray and Nairn)

At the last meeting of the Regional Committee, Commissioner Thomson did consider this view, which is shared by many members of the Committee. His answer was that while he thought it was not a bad idea, the difficulty was that he had only his staff. When I asked him for his personal view he said that he thought it would be very difficult, in the foreseeable future, for his small staff to make the assessment speedily.

Mr. Fletcher

That is one case in which a restricted staff budget might not be justified in the interests of the Community as a whole. But that is something for further debate in Brussels and in the European and all the national Parliaments.

The contribution that Britain makes to its own recovery and to the growing strength of Europe depends upon the effectiveness of the meeting in Downing Street tonight, and on other such meetings. Britain's weaknesses have clearly been self-inflicted, and our Community partners and the Community budget can help us only in a limited way. It is for that reason that the credibility of British Ministers in Europe—and that includes particularly British Finance Ministers—must be somewhat limited. That situation gives no comfort to anyone here or in Europe. But if in considering the Chancellor's Budget we encountered as few problems as we do with the Community Budget, Britain's problems would be absolutely minimal.

8.37 p.m.

Mr. Frank Hooley (Sheffield, Heeley)

I wish to comment on Document R/672/76, first, in relation to the policy for co-operation with developing countries. The document says that the Commission is not proposing any new action in 1977 and intends simply to continue the measures already approved by the Council and being carried on at present. However, the triennial forecast of expenditure in Document R/373/76 shows a jump from the 1976 figure of 236 mua to the 1977 figure of 567 mua, an increase of 147 per cent.

I shall be interested to know what that means in terms of new activity. If it means increased activity by the Community in respect of developing countries, I very much welcome it, but it seems slightly odd that it should be suggested that nothing new is to be done in 1977. I entirely support any increased expenditure to aid developing countries, whether in the form of the Stabex scheme or through food aid.

Document R/672/76 refers on page 18 to the JET project on fusion research. There has been considerable argument about the location of the project. I am not clear whether that argument has delayed the project's budget. It is not entirely clear from the document whether the failure of the Council to approve the location has led to a failure to appropriate money. This is an extremly important piece of fundamental research, particularly for this country which has played a leading part in developing its study. We should be told whether funds will be provided for it in 1977 or not.

Pursuing the question of energy, there is a section devoted to this in the paper numbered 672, and I note from that that The Commission is proposing to keep up and expand its efforts concerning research into new energy resources: backing for technological development projects in the hydrocarbons sector and for deep-sea hydrocarbons exploration, and uranium prospecting in the Community. It goes on: The Commission considers that the total financial effort entailed by the two types of intervention in the hydrocarbons sector should be about 70 million u.a. I suppose that that is about £30 million or so.

I should be interested to know on what authority or under what powers the Community will start meddling in deep-sea engineering or exploration for oil and presumably gas within the 200-mile limit or whatever other limit may result from the Law of the Sea Conference. Hitherto, I was not aware that the Commission or the, Community had any powers or responsibilities in relation to the Continental Shelf; I thought that these were matters for the coastal States.

I should be interested to know on what authority and under what section of the treaty the Commission has the right to start interesting itself in deep-sea hydrocarbon exploration, where it proposes to do it, what its effort will be, how it will be financed, and how it will affect British interests in this matter, which I believe are the most extensive of any member of the Community. There are considerable underwater gas resources off the Dutch and German coasts, but in terms of oil I believe that of all members of the Community the United Kingdom has the largest interest in seabed engineering. I am intrigued to know what exactly this 70 mua is to be used for and how it will impinge upon United Kingdom activity in this area.

On page 21 of the same document, we read that the Commission urges that the Community clearly show its resolve to launch measures in the near future for the aircraft industry and transport infrastructure, and aid for investments in the energy sector. Again, how exactly will the Commission start meddling in this important area of technology where, so far, co-operation has been confined to bilateral projects or sometimes trilateral projects between Britain and France, Britain, France and Germany, Germany and Holland, and so on, and has developed on that basis? What is the Commission thinking of in this connection? Are we to have more harmonisation of aircraft design, or of aero-egines? Will the Commission decide who shall produce what, the design of aircraft, and so on? What lies behind this proposal? Since it would hardly have been in the budget unless there were serious intentions in this connection, we are entitled to some information on these matters before the Council of Ministers consider the detailed budget.

To prove that I do not intend to hold up the debate by intervention or excessive speechmaking, I refer briefly to the section on financial control and support strongly what my hon. Friend the Member for West Lothian (Mr. Dalyell said about the great importance of having effective financial control over expenditure from the budget. Alas, we seem to be increasingly getting reports in the Press either of gross maladministration or of deliberate fraud. Within the past few days, reports in The Guardian have talked about the supply of contaminated meat to this country, and some system under which beef could be shuttled across frontiers with different claims being made under different Community rules, resulting not only in handsome profits being made by the traders concerned but also, apparently, in some hazard to the health of the British people if this meat should slip through the control and get into the hands of manufacturing companies in the United Kingdom.

Document No. 672 says that The implementation of the Budget depends for the most part on the operations under- taken and the expenditure incurred by Member States themselves, and on the behaviour of commercial operators on the agricultural product markets. Effective auditing must of necessity be made where the expenditure is actually incurred. It is, alas, true that there are commercial operators in the Community who are only too willing and anxious to take advantage of various regulations and currency fluctuations to make handsome profits.

I am disturbed by the renewed reports from different sectors—sometimes grain, sometimes meat, sometimes other sectors—of gross fraud being carried out, due, presumably at least in part, to inadequate control by member States or the Commission of the disbursement of payments of various kinds for agricultural products.

My hon. Friend the Member for West Lothian referred to the Court of Auditors and asked why the United Kingdom was not bringing pressure to bear on other members of the Community to ratify the convention setting up the court. Document No. 672 says that The Heads of Government have agreed to do their utmost to reach a speedy conclusion with regard to the ratification procedures…in order to enable the Court to start operating in 1976. Yet the very next paragraph reads: At the present time, only the United Kingdom and Denmark have completed the ratification procedures. The House is entitled to inquire why other countries are dragging their feet, since this matter has been approved by Heads of Government. We are entitled to ask the other States to honour the commitment they have made and to get on with establishing an effective and powerful audit system to ensure that fraud and misuse of the system are limited to the minimum.

Mr. Dalyell

My hon. Friend is making an extremely important point. In order to clarify what I said earlier, I add that it is not a question of the budget control committee doing the job of the Court of Auditors. The budget control committee, or this House, should be using an expedited procedure so that the Court of Auditors can get on to a fraud while it is topical and reveal either that it was blown up by Press reports or that something was wrong, and explain how it went wrong and what is proposed to be done about it.

Mr. Hooley

I am grateful for my hon. Friend's intervention. Obviously we need a body to put its finger on the apparent misuse of funds, but, in addition, we need highly competent people to track down the details and find out what has gone adrift and where funds have been misused, through techniques such as those of the Comptroller and Auditor General and the Public Accounts Committee, which have long been established in this House.

I hope that I shall receive answers on these matters in due course.

8.45 p.m.

Mr. Emlyn Hooson (Montgomery)

This debate illustrates the unsatisfactory relationship between the Common Market and its member States.

The hon. Member for Farnworth (Mr. Roper) suggested that we had insufficient time to discuss the budget, but I doubt whether we shall be able to struggle on until 10 o'clock with this debate. We have enough time to discuss the matters of which we have cognisance.

We should realise that the effect of our debates is virtually nil. We have here a public budget with no public accountability. This is a stage in the development of the Common Market which must be brought to an end as soon as possible.

Mr. Roper

The point that I was trying to make was that in a debate of this sort we have time to make speeches on generalities but no time to discuss the details of the budget.

Mr. Hooson

I should have thought that there was a good deal to be said for discussing the so-called budget—it is not a budget in our sense of the term—in, say, a Select Committee, where everyone may put questions. This is an inappropriate forum for that kind of discussion.

We have not got the machinery—it has not yet been developed—for dealing with the important budget proposals of the Common Market. Not being a member of the Scrutiny Committee or of the European Parliament, I found it horrendously difficult to investigate the papers that are the subject of this debate. If we are to have progress in Europe, we require an alert political commitment to Europe among ordinary citizens. They must be aware, as they are of our Budget, of the kind of public expenditure and the taxes involved which affect them. It is hideously difficult for any reasonably intelligent citizen to discover what is involved in the so-called budget.

I have been assured about this matter by right hon and hon. Members who have considered it before. For example, the right hon. Member for Knutsford (Mr. Davies) said that the budgetary proposals were improving. If so, I should say that they still have a great way to go.

The hon. Member for Edinburgh, North (Mr. Fletcher) unfavourably compared the procedures of this House and the way that they have been developed with the procedures in Europe for scrutinising the budget. I thought that was a most unfair comparison.

Whatever our deficiencies in this House, there is no accountability within the Common Market. The logical conclusion is that we must insist on far greater democratic control of the budget in the Common Market. That will no doubt take place after direct elections.

It appears that reference back to national Parliaments of all these proposals is farcical. What influence do we have in this debate? I venture to think that we have very little. Whom can we influence? We cannot influence the people who propose the expenditure, as they are not concerned with the budget, as such. The budget is a quantification of the cost of their proposals, and those proposals are not the subject of discussion here today. Yet the Budgetary Council of the Common Market has no control over the policy. Therefore, whom are we influencing by means of this debate today?

Were it not for the Forty-fifth Report from the Select Committee of the House of Lords on the European Communities, I should have found it virtually impossible to follow the various documents before us. Therefore, the whole system is grossly unsatisfactory.

I am on record as sharing many of the doubts of the hon. Member for Banbury (Mr. Marten) regarding the Common Market, but I took the view that when we were in we should make it work and have proper accountability. The present situation illustrates that we have not moved forward since we joined the Common Market. Therefore, the whole position needs urgent review.

I suppose that agriculture takes up a great deal of the Common Market's budget expenditure, because it is virtually the only sphere in which there was early agreement by the member countries. It is natural that it should take up a good deal of the budget. However, the change in the timetable, which is no doubt beneficial to those who have to discuss these matters in Parliament, and so on, has its disadvantages. For example, anyone knows that trying to estimate agricultural yields at this time of the year is difficult, whereas it is far easier later in the year. Therefore, the change in the timetable, although, as I say, it gives certain benefits, is unsatisfactory in other ways.

My concern at this point—I hope that it is not out of order—is about the failure to police policies. The hon. Member for Sheffield, Heeley (Mr. Hooley) was entirely right to draw attention to the lack of effective machinery for policing certain Common Market policies. Some time ago I pointed out to the Minister of Agriculture that it is well known in agricultural circles that there has been a great racket in the moving of beef about Europe. Indeed, one hon. Member once told me that cattle that he had sold in Scotland had eventually gone into intervention in Denmark, having in the meantime certainly been into Italy. There is an absolute racket going on.

What steps have been taken by the Government and by the Commission to ensure that there is proper policing? If the common agricultural policy is to take two-thirds of the budgetary allocation of the Common Market, it is essential to ensure that there are proper policing methods, yet it seems to me that our national policing system is unable to deal with these matters. There are no enforcement officers here—or, if there be some such system, it is grossly inadequate, and a great deal remains to be done in respect of this one matter on which there has been a general European policy for some years.

The hon. Member for Scarborough (Mr. Shaw) spoke of the unsatisfactory nature of the carry-over provisions of the budget. Bearing in mind, of course, that this is not a budget in our sense but is a series of estimates, I do not take the same view. I have always thought it a highly unsatisfactory element in our budgetary procedure that we do not allow for carry-overs. Everyone knows that towards the end of the financial year there is a good deal of wasteful expenditure, because Departments are anxious to spend their allocation for the year, and the effect of a carry-over in our country is to deprive a Department of the funding that it might otherwise have in the following year.

I am not at all sure that the implication of what the hon. Gentleman said is right—that we should come nearer to the kind of system that we have here, which does not allow carry-over, perhaps because we are so addicted to annual Budgets, annual Estimates, and so on. There is a good deal to be said for having greater flexibility in Europe. I do not know the detail of the carry-over provisions to which the hon. Gentleman referred. I do not have his knowledge. I imagine that he was making a general rather than a specific statement on the matter, but I think that it would be wise to look at the deficiencies in this country before we impose the same kind of straitjacket on the Common Market.

Mr. Michael Shaw

The danger under the old system lies in the automatic carryover. I have previously given the House what might almost be called a lecture on this, and I shall not weary hon. Members with it again, but the problem is that Parliament had no control and has no control over these automatic carry-forwards. Large sums may often be involved. Under the system that we are now proposing in the altered financial regulation, we can make commitment and payment appropriations. The commitment appropriation ends in the particular year, and has to be re-entered the next year, so that one may look at the whole thing without its lapsing.

Mr. Hooson

I am grateful to the hon. Gentleman for expanding on that matter. It deserves further consideration.

I have come to the conclusion that the sooner we have a directly-elected European Parliament and it establishes good, tough budgetary controls, the better. Its present system, whereby budget proposals of this kind are referred back to national Parliaments which have no influence on the progression of events in Europe, is highly unsatisfactory, and the sooner it is brought to an end the better.

9.0 p.m.

Mr. William Hamilton (Fife, Central)

I want to take up in a few moments the latter part of what was said by the hon. and learned Member for Montgomery (Mr. Hooson).

Having listened to nearly all the debate, one is almost driven to the conclusion that we in this House exercise supreme control over public expenditure and that there is nothing at all like it in Europe. In fact, I think that the reverse is nearer the truth. We pretend that we control public expenditure, and certainly we in this House have a lot of sophisticated machinery for doing it, but the most powerful Committee for doing that is investigating how the milk got spilled. The Public Accounts Committee has done just that, and for the past 100 years it has exposed the kind of fraud, or the kind of theft, whatever one likes to call it, that is taking place in the Common Market now.

Every summer we get a big fat volume through the post indicating the way in which the Treasury or some other Government Department has made gross errors, or the way in which there has been a misappropriation of public funds of one kind or another. Therefore, the situation is not peculiar to the Common Market, and I wish that the anti-Europeans—and there are still many in the House—would seek not to make this point as though the problem were peculiar to Europe and were absent from national States, because it is not.

Congratulations have been given to the other place on its document on this budget. Far be it from me to withhold congratulations from the other place, but it has done little more than repeat almost verbatim a whole lot of facts and figures given in the Treasury Explanatory Memorandum on this matter. The hon. and learned Member for Montgomery referred to the impossibility of understanding this budget were it not for the House of Lords document, but he need only have read the Treasury's Explanatory Memorandum and he would have been aware of virtually all that we are talking about today.

We are debating today not a budget in the sense that we understand it but simply what is intended to be spent in Europe during the next financial year. It is almost the equivalent of an annual public expenditure intention, and I think that the Treasury's Expenditure Memorandum and the House of Lords' report put it into perspective. Lest we get worked up about the sums involved, let us consider what is provided. It is true that a sum of £3,800 million is not to be sniffed at, but if one remembers that that is less than 2 per cent. of the total budget of the nine member States, that put it into perspective.

Paragraph 32 of the House of Lords Report says that the United Kingdom …net contribution has been far less than the estimated outturn so that in 1975 the United Kingdom actually received more from the budget than it had contributed. There are special reasons for that which we need not go into now. It is idle, foolish and dishonest for anyone to say that we have made enormous sacrifices and losses as a direct consequence of our entering and remaining in the EEC.

Most hon. Members have raised the question of public accountability. My hon. Friend the Member for West Lothian (Mr. Dalyell) is right. One of the ablest men in Europe is Commissioner Cheysson. Everybody who has watched that gentleman in operation will appreciate that. He described these estimates as "distressingly banal and mediocre". He was simply reflecting the effects of the world-wide recession out of which the European Community could not contract any more than could the United Kingdom.

It is an interesting comparison that this debate is the equivalent of the debate on our own Public Expenditure White Paper. When we introduced the novelty of the rolling five-year programme, it was envisaged that we would have an annual two-day debate which would be a real occasion, top hats and everything, equivalent to what Budgets used to be when I first came here, with the House packed and everybody on edge.

The White Paper debates turned out quite the contrary. As much interest was shown in them as has been shown in this debate, and I suspect for precisely the same reason: hon. Members have more than a hunch that whatever they say or do can have little or no effect on the figures before them or the policies behind those figures because this House is not equipped to challenge the policies, still less the figures which are the result of those policies.

Some more intimate machinery is needed to question and cross-examine Ministers and civil servants in depth. Whatever the House is equipped to do, it is not equipped to do that. Ministers can and do get away with murder in this House. Therefore, the machinery must be elsewhere.

Often the most skilled and highly polished performers on the Front Bench are the very people who are the most eloquent opponents of Select Committees which can cross-examine in depth. One of the best examples is the present Leader of the House. He is a wonderful actor and a great performer but, like all other grea performers, he does not give a damn about the props or about who prepared the script. He can deliver it, but he cannot allow himself—he does not like to allow himself—to be subjected to cross-examination.

Similarly, the right hon. Member for Down, South (Mr. Powell), when he gave evidence to the Select Committee on Procedure on the establishment of the suggested Select Committees, is on record as saying that he believed that the best Back Bencher in the House was he who was the most ignorant. The less aware he was of the facts of the matter, the more open-minded he could be in looking at a particular problem and, therefore, the more likely he was to come to the right conclusion. We have two classical examples of right hon. Members who are star performers in this theatre, but that is not what the House of Commons is for.

If we want to control public expenditure either in the United Kingdom or in the EEC it will not be on the Floor of an Assembly or Parliament, whether it be in Westminster, Edinburgh or Brussels. It will be in an all-powerful committee equipped, serviced and staffed by an organisation similar to that of our Comptroller and Auditor General.

I pay tribute to the hon. Member for Scarborough (Mr. Shaw) for what he has done in seeking to get that kind of machinery going in Europe. The subcommittee of the Budget Committee that is in operation is a completely inadequate substitute for our Public Accounts Com- mittee and nothing less than that will satisfy him or me. Anything less might retard progress toward the ultimate end.

Whilst I am in this mood, I pay tribute to Lord Bruce of Donington. He went to the European Assembly a committed anti-European. Now he is inclined to be much more pro-European because he recognises that we are in Europe and there is no prospect of our coming out of it, and he is, therefore, determined to see it work. When we have more time at our disposal and are able to give the budget debates greater consideration both in the House and in the European Assembly, there will be much more effective debate and we shall wrest from the Commission and the Council much more control of the Budget.

I agree with my hon. Friend the Member for West Lothian that we need price tags on all the proposals that come before us. The first comments I made in the European Assembly were directed to the need for a Public Accounts Committee. Meanwhile, the sub-committee to which the hon. Member for Scarborough referred must have the right of direct access to papers and witnesses throughout the Community if it is to do its job properly. It must also be properly staffed. That function cannot be performed by a sub-committee of the Budget Committee. It must be a main committee in its own right.

The lack of public accountability in the European Community is partly caused by the nine Governments being incapable of coming to a unanimous agreement on the siting of the European Parliament in one place. My right hon. Friend the Prime Minister said recently that it was nothing to do with him. My hon. Friend the Member for West Lothian said that it had everything to do with him. The Prime Minister is one of the nine Heads of State who will have to take the decision, because Parliament cannot get powers of control over expenditure unless and until it is directly elected and sits in one place.

I shall blow my own trumpet here and say that I took an initiative a few months ago to try to compel the Governments to take a decision on this matter. I put forward a resolution proposing that the first meeting of a session should be in Strasbourg. I did not say where the other sittings should be. My resolution was that, of the 11 plenary sessions, the statutory one shall be in Strasbourg, nine shall be in Luxembourg, and, as evidence of our future intent, one shall be in Brussels. The resolution is now in front of, I think, the Political Committee, and two of the other Committees in Europe have pronounced more than favourably on it.

If we can get an almost semi-permanent site in Luxembourg while declaring our desire as European Parliamentarians, for the time being anyhow, that the siting of the democratically-elected Parliament should be in Brussels as a permanent feature of European institutions, it will be a big step in achieving what everybody in this debate wants to achieve—the sort of public accountability that we have become accustomed to in this House. However imperfect it may be, if it is as effective as public accountability anywhere else in the world. I remember Lord Diamond making that statement in this House when the Public Expenditure Committee was set up.

I welcome this debate. I am only sorry that more Members have not shown an interest in it. I should have thought that the anti-Marketeers, in particular, would take this golden opportunity to express their reservations about the EEC. If it is an indication that they are giving up the fight, that is to be welcomed.

9.18 p.m.

Mr. Neil Marten (Banbury)

Perhaps it is appropriate that I should be called now, if only to deny what the hon. Gentleman has just said.

The hon. Gentleman referred to us as "anti-Europeans". I am sure that that was shorthand. I am pro-European. I am "anti" the Treaty of Rome, and that set-up. I am quite serious when I say that. I am not anti-European. I do not think that any of the so-called anti-Marketeers are anti-European; they are "anti" the structure of the Treaty of Rome. We want to see European unity in another way. What is happening in the Community now will, in the long term, destroy the unity of the European people.

The hon. Gentleman also quoted my right hon. Friend the Member for Down, South (Mr. Powell) when he said that the best Back-Bencher was an ignorant one. That goes for not only for Back-Benchers but Ministers. When I was invited by Mr. Macmillan to be a junior Minister at the Ministry of Aviation I said to him "Well, Mr. Prime Minister, I must be honest with you. I will do anything for my country, but I know nothing about aviation whatsoever—except jumping out of aeroplanes during the war." He looked at me with his rather charming, drooping eyebrows, slapped me on the knee, and said "Just the chap." I said "Is that not rather an odd remark?" He said "No. You will enter as a Minister with an empty mind." I commented "Yes, certainly", and he said "Your mind will be filled by the industry on the one hand, and by civil servants on the other, and you must make your own political judgment." I have never forgotten that episode. If we become too expert, perhaps we cease to be politicians, but I am still ignorant about most things.

About 70 per cent. of the budget is for agriculture—the guarantee and guidance sections. The figures in it are provisional. I am sorry that no representative of our agricultural committees is on the Opposition Front Bench, because 70 per cent. of the budget is for agriculture. A representative should be present to hear what is said and to intervene on behalf of agriculture. The amount for the guarantee section has increased by about 25 per cent., whereas the amount for the guidance section, which I have always understood to be the more important section, has fallen by nearly 50 per cent. That is disturbing, and we should hear the views of the agriculturists, certainly those in the Opposition, on it.

It has been said that it is a good thing that we have had more time to debate the budget. I agree. But as we are dealing with 70 per cent. of the budget, and as it is recognised that the figures are only provisional, I am disturbed about what will happen after the question of the harvest has been considered and the letter that we have been promised has been written. The firm estimates will arise in September. They go to the European Assembly from 10th September to 28th October. Then they go back to the Council of Ministers from 29th October to 20th November. Therefore, for almost three weeks the Council will consider the alterations made by the Assembly.

The hon. and learned Member for Montgomery (Mr. Hooson) asked whether we had any control over the budget. Different people have different views about that. However, when it is back with the Council of Ministers, the House should try to exercise its influence or control on our Minister when he goes to the Council budgetary meeting. After the budget proposals have been firmed up, have been sent to the Assembly and have returned to the Council, we in this Parliament) should have, another opportunity to have a go at the budget. I have given notice to the Government Front Bench—I hope that the Minister has received it—that in my view the House of Commons should have another bite at it when we know to a much greater extent what we are talking about. I see no objection to that. Then, if we are dissatisfied with the agricultural budget we should vote against that section of it, because the way in which the money is going into the guarantee section and is not being used for restructuring the guidance section, where the effort should be made, is very unsatisfactory.

In 1972, some of us doubted the wisdom of the common agricultural policy but we were continually told "Do not worry. Once we are in we shall reshape it." We have now been in the Common Market for more than three and a half years and so far as I can see there has been little reshaping of the common agricultural policy by us, or any effort by us to seek to influence the situation. The situation goes on and on and money is being wasted.

I should like to see this House voting against that part of the budget which relates to agriculture, when and if it comes back to this House, just to show that until the CAP is restructured more sensibly we shall oppose these matters in the House. This would give some hope to those hon. Members who go over to the Assembly and who seek to improve the situation. This has been the longest-running farce in Western Europe and there seems to be no sign of any change.

It appears that the budget is up by 22 per cent. on last year's figure. We are told that Her Majesty's Government are about to bring in cuts of up to £1,000 million, on which great rows will take place in the Labour Party. I see that the hon. Member for Fife, Central (Mr. Hamilton) disagrees with that comment. I do not know whether he has been here frequently enough in recent weeks to get the feeling of some of his hon. Friends on these matters. While these cuts are to take place in the United Kingdom Budget, expenditure in the Common Market is to increase by 22 per cent. Obviously, the Common Market has become a sacred cow. Few people will criticise or vote against anything to do with the Common Market. I believe that we must re-examine the position.

As the situation continues we are building up an increase in bureaucracy in this country, although apparently it is official Conservative policy to reduce bureaucracy. In our speeches we often point out that we must take the bureaucracy off the backs of the people. They are fine words, but in legislating on water supplies or evisceration, involving an increase in the bureaucracy, people talk with two voices or adopt double standards when the matter involves the Common Market.

I am also critical of the proposed expenditure on the European Assembly. In a short intervention I mentioned the cost of shuffling backwards and forwards from Luxembourg to Strasbourg—a cost estimated at £3 million a year. The transporting of documents involves a figure of 60 tons of material, taken from Luxembourg to Strasbourg and back. Clearly that is another long-running farce, and practically everybody recognises it. Why, then, do we sit here and do nothing about the situation? Why do we not take the view "Until these matters are sorted out we should not have direct elections"? Why do we not veto the question of direct elections until those responsible are brought to heel? Many hon. Members sit here afraid to criticise the Common Market, but that does not apply to me.

I have also been critical of the Select Committee that has been dealing with the subject of direct elections to the European Parliament. Indeed, I dealt with this matter in a brief speech in the House last week. The Select Committee recommended an increase in the number of members at the European Parliament from 198 to 410, apparently without any study of the cost involved. I regard that as an irresponsible attitude. That is an odd way for a Select Committee to behave.

There is the capital cost for, presumably, a new Parliament to accommodate the extra 212 Members. When Greece and Turkey join, it will presumably have to be expanded. That will be a sizeable capital cost, particularly when we take into account current expenditure for the salaries of the vast numbers of researchers who will obviously proliferate, the secretaries, the offices and the equipment. A visit to the present Parliament at Luxembourg shows the fairly luxurious way in which delegates to the Assembly are serviced in one way or another. None of that, it seems, was costed by the Select Committee when it recommended the increase in numbers.

It must be remembered that we have to pay our "whack" for all that. This must be carefully examined. We must ask where all this expenditure goes. Somehow in this debate these matters are blithely forgotten by the Front Benches —so far, anyhow. I hope that in the reply some attention will be paid to them.

I wish to refer to the state of crisis into which the Community seems to have got itself. I quote from the speech of the President of the Council of the European Communities, Mr. Max van der Stool. I am not cheating by reading an extract, and it will save a lot of time if I read the relevant criticisms that he makes of the Community. He says that the Community is going through a serious crisis. He says that whereas once the motto was "completion, enlargement and strengthening" it has now been replaced by the motto "stagnation, decline and illusion." The Community apparatus…seems to he sterile and ineffectual…stagnation and ineffectualness have also affected other bodies of the Community. He refers to: decline, disintegration and impairment of the Community's patrimony. These signs of disintegration are produced day by day. I ask the House to bear in mind that that is not the hon. Member for Banbury speaking; it is the man who has had vast experience of the Community and who is now the President of the Council of Ministers. He goes on: the realities which at one time were to have formed the basis for our European solidarity now seem to be the cause of differences, of our growing apart and the parting of our ways…The result is that in their attempt to find solutions, the Government seek their salvation outside the Communities —presumably in such places as the Puerto Rica meeting— or through channels which only have a tenuous link with the Community structure. That is harsh criticism. He goes on to say that the Comunity structure has reached an advanced stage of erosion and one may well wonder how long it will be before the European Treaties and everything that has been achieved on the basis of them will simply be valuable historical curiosity…For many years the Community has been suffering from structural difficulties which are caused by its somewhat hybrid nature, namely that of being neither an intergovernmental organisation nor an independent unit which can operate entirely from its own strength…I would point rather to the dangers of disintegration, decay from within which—I repeat—are serious and acute…The Community is suffering from a political anaemia. I think I have quoted enough for me to say that I can agree with what the President of the Council has said about the Community. His solution is that all will be well once we have direct elections. Surely there is no evidence to show that direct elections, given the same powers that they have today, will make one iota of difference, except that there will be the extra cost involved in going from 198 seats to 410.

The reality of the Common Market, and where it goes wrong, is that each State is a nation State and each State is always looking over its shoulder at its own electorate. The nine countries of the Community always seem to be having General Elections, one after another. When they approach a meeting of the Council of Ministers and they have to make a decision, if it happens that the German elections are coming up the Germans will be looking over their shoulder. If it happens to be the Italian elections that are approaching, the Italians will be looking over their shoulder. I hope that quite soon the decisions that the British Government will have to take will mean that they will be looking over their shoulder and that elections will take place very shortly in this country.

That is why the thing will never work. It is foolish to say that direct elections to the European Parliament will make any difference, except to increase the cost.

The House of Commons, including the two Front Benches, should take these matters far more seriously. For once in a while I should like the Opposition Front Bench, when it feels like it, to join in the votes that we have, from time to time, late at night, against Common Market propositions. We should then have much more confidence.

As I have said previously, a Select Committee should be set up—I do not care what the Leader of the House thinks about Select Committees—to monitor the Common Market. It should be in almost permanent session. It should monitor matters outside the scope of the Scrutiny Committee, such as the Tindemans report, and developments from day to day and week to week. In that way we should be able to have a much better view of the matters that we have been discussing this evening.

9.38 p.m.

Mr. Nigel Spearing (Newham, South)

The speech of my hon. Friend the Member for Fife, Central (Mr. Hamilton) was enlivened as usual by his direct and often to-the-point comments. I agree with him about the need for some mechanism in this House for dealing with the budget other than this sort of debate.

I refer my hon. Friend to the debate on EEC procedure on 3rd November 1975, when the former Select Committee on Procedure recommended that a committee be established to consider and debate indigestable lumps of documents such as those now before us and to question Ministers upon them. Had my hon. Friend been a member of that Committee I am sure that he would have been as good at questioning witnesses and making committee points as he is at speaking on the Floor of the House. There are hon. Members who can do both.

In passing, I do not believe that my right hon. Friend the Lord President has his scripts written by somebody else. His scripts in this House are invariably of a high standard, even if the contents are not always agreeable to some hon. Members.

The first point that we can make about this debate is the number of documents involved. I believe that there is only one in the motion and that the others are in italics. That is a procedural innovation. I am not sure whether the documents that are in italics will be considered as having been debated by the Scrutiny Committee.

I think I am right in saying—the chairman of the Scrutiny Committee will correct me if I am wrong—that there was an occasion in the not-to-distant past when a document was submitted for debate that received cursory examination—I think it was on our domestic Budget—and the Scrutiny Committee did not reckon that it had been debated.

A whole list of these documents is connected with the motion, but as they are not part of it I think that they will not be in the Official Report. I will therefore read the list into the Official Report. We read on the Order Paper: The following documents are relevant:— R/373/76, Revised triennial financial estimates, 1976–77–78; R/672/76, Community's budgetary problems, Commission communication; R/794/76, Proposed transfer of appropriations, EAGGF Guarantee section, 1975; R/1117/76, Rate of increase in non-compulsory expenditure, 1977; R/1370/75, Audit Board Report, 1973; R/118/76, Audit Board Report, 1974; R/1290/76, Discharge to Commission in respect of 1973 budgets, draft Council Decision; R/1291/76, Discharge to Commission in respect of 1974 budgets, draft Council Decision. I regret having had to read those titles out to the House, but had I not done so I do not think that they would have appeared in the Official Report, and we know what an invaluable source of information Hansard is.

Had I been able to be on the committee which my hon. Friend mentioned, I, and no doubt others, would have wished to question Ministers on particular parts of the document before the House. But such a committee does not exist, and so the only thing I can do is to draw attention to one or two points in this document. They are technical points and I shall make no complaint if the Minister cannot answer them tonight. I hope that he will write to me and let me have the answers.

There is, however, one point on which I think he will be able to comment. There has been some comment on the matter in the debate, but I do not think that it has been adequate. It is in relation to the Audit Board Report, Document R /118/76. On page 69 of that document, we have a report on the guarantee section of the Agricultural Fund, which is 68 per cent. of the budget of the whole Community. It says: …only very limited examination by the Audit Board of the operations of the Guarantee Section of EAGGF has been possible. As in previous years, the Board has not been in a position to form its own judgment of the manner in which the operations have been conducted or to give an opinion on the reliability of the financial management of this sector of expenditure. Such a circumstance is irreconcilable with the specific task which Article 90 of the Financial Regulation requires of the external audit body and should receive attention from the Council and the European Parliament. I hope that my hon. Friend will give an undertaking that the Council of Ministers will look at this matter. If such a qualification were attached to any firm in this country, the Department of Trade would be down on it at once, there would be Questions in the House, and so on. It is a massive qualification on the way in which the guarantee fund is administered, and we all know what loopholes there can be in matters of storage, grant, and so on.

My hon. Friend the Member for Fife, Central is very active in the European Assembly in pressing for the setting up of the equivalent of our Public Accounts Committee. But it seems that in this matter even the European Assembly has not been able to get very far. I hope that the attention of the House and the country is drawn to what I regard as a prima facie scandalous statement of the first political order.

I turn from a matter of major concern to one which is perhaps not spectacular but which causes anxiety to some of us —the expenditure of the Community on information services. Page 69 of the document 1483/76 shows considerable expenditure in this regard—some 7.5 mua, of which 5.9 mua have been related to expenditure on information, popularisation and participation in public events. In this country we have a very clear practice of knowing on what public money can be properly spent. In the EEC this practice does not apply in the same way.

On page 184 of the budget this sum has been broken down to some extent There is a considerable sum involved here—5.6 mua, considerably more than the 4.8 mua for 1976—on information directed at specific categories of people, such as farmers, consumers, middle and senior management, trade unionists, universities, young people, and educational circles. I do not think that there is any cause for concern in the fact that the EEC is letting these people know about the regulations, but many people are concerned about whether this is information, or perhaps a little more than information—the giving of points of view, bordering on what might be called propaganda.

Mr. Teddy Taylor (Glasgow, Cathcart)

Perhaps the hon. Member could tell me whether the 7.5 mua include the cost of all those trips which my constituents are being offered to go to Europe and hear all about it. My constituents are getting a little annoyed that these trips should be offered to Europe when the local authority cannot even provide them with home helps. They think that this is a very strange situation.

Mr. Spearing

The hon. Member has raised a point that I was about to come to. In the back of many people's mind, there is the question whether this information for these categories includes free trips. Probably it does. Probably the attitude is that one cannot get the full flavour of the European Assembly unless one actually attends it. Visits of all sorts have been arranged. The funds for these may come direct from the EEC or from some European movement. The trips are aimed particularly at people who are in a position to use their influence.

I am not against these people being sent free literature on factual matters, although, as everyone knows, in this country the question whether such information should be supplied out of public funds is one which is hotly debated. If we are to apply these standards to our own Government we should also make sure that standards are applied elsewhere. I am not saying that they should be the same standards, but we should know what standards, rules and practices do apply. Perhaps the Audit Board could look at this. It may find something interesting here.

Mr. Hooley

Would my hon. Friend agree that a little more money could be spent on telling us what goes on in the Council of Ministers? That would be money well spent.

Mr. Spearing

My hon. Friend is very much to the point. Some time ago I put down Questions about the nature of the Council of Ministers and its report to the public. There seems to be some difficulty here. I am not saying that the Council of Ministers should publicise its minutes, or have a verbatim record as we do in this House. I would not go as far as that, although I know that some of my hon. Friends would. However, I believe that after it has met the Council should give us a clear and adequate account of the decisions it has made.

When the Prime Minister came back from the last Summit meeting and gave us his report last Wednesday he said that copies of the communiqué would be placed in the Library. I went to the Library hoping to get some information and found three or four sheets of paper with three or four lines on each. That is the extent to which the Community lets us know what decisions are taken at the Summit.

I am not suggesting that we should get complete detail, but quite clearly if each Minister returned to his Government with his own version of what had been agreed at the Council that could lead to genuine misunderstanding. I would have thought that money spent on information about what had been decided would be money well spent.

Mr. Alexander Fletcher

I am surprised at the hon. Member's timidity on this point. At the last meeting of the Parliament in Luxembourg I put a question to the President of the Council of Ministers asking him to publish the full minutes of Council meetings where the Council was acting in a legislative capacity. I was unsuccessful, but I shall continue to press the point. The Council has dual functions—the executive function and the legislative function—and there is no reason why when it meets in its legislative capacity it should not publish the full minutes of the discussions.

Mr. Spearing

I agree with the hon. Member. I am glad that he thinks that I am perhaps a little timid on this issue because I have been accused of continual and persistent exaggeration. The equivalent of what is required is in this House the Journal of the House. It is the acta of what is legislated here. If the House passes various regulations it is only through the Journal that we can tell what has been agreed, and if we could not do that there would clearly be something wrong with our procedure.

Those who have been calling for greater democratic surveillance of what goes in the EEC should bear in mind the procedures of this House. If we do not get a proper response to our requests we must make plain our dissatisfaction. We are, after all, dealing with money contributed by taxpayers to the EEC. Much of it goes directly to Brussels and we have a right not only to a proper audit board but to proper accountability by the legislative bodies there.

I am concerned about the amount of money spent on subsidising tobacco. We all have experience of relatives and friends or from the hospitals in our constituencies of the ravages which overindulgence in that product can provoke. Few people, however, know that the EEC supports tobacco-growing as part of the agricultural guarantee fund. I do not say that people should not be free to consume tobacco. It is a matter for them. It is also a matter for the EEC to decide where it purchases its tobacco, or whether it grows it itself at a higher cost. Page 349 of the draft budget states that the aim is to secure An adequate income for growers with well-managed undertakings. On the back of that document is a very strange group of figures. I cannot determine whether the sum expended on supporting tobacco growing is 8 mua a year or 80 mua a year. I suspect that it is the latter. Perhaps my hon. Friend will write to me on this point, if he cannot reply tonight, and say whether the Government support such expenditure. We spend about £1 million a year on education in preventive medicine in this country, and it is but a mere fraction of what we are prepared to see allotted to the support of this crop inside the EEC. It is a matter of principle on which both the Government and the public should now ask a few questions.

My last question about this hypothetical Select Committee which we have not got but which apparently everyone wants relates to the comptence of the EEC in spending on matters connected with education. Those of us who remember the referendum will recall how people went on television and radio to assure the British public that education was nothing to do with the EEC. But on 10th June we had a debate in this House, as they did in the other place, on a document entitled "A Programme of Action". On 18th June, I asked my right hon. Friend the Secretary of State for Education and Science what status the meeting of education Ministers "within the Council"—which is the way that it is put—had under the Treaty of Rome. My right hon. Friend replied: Meetings of Ministers within the Council have no status under the Treaty of Rome."—[Official Report, 18th June 1976; Vol. 913, c. 281.] Yet that Council authorised the expenditure of about 500,000 ua for this action programme. It is true that 290,000 ua was for the education of migrant children, under the social programme, no doubt, and that applies to the mainland of the EEC, although it does not apply to us. But there were other sums in this programme of action, and quite a considerable expenditure is now involved.

In a further Answer on the same day, my right hon. Friend the Secretary of State was extremely vague about the article of the Treaty of Rome under which this action was taken. He said that no particular article was cited in the document concerned, which was R/26376, but he prayed in aid Article 2 of the Treaty of Rome, which is, of course, a very general treaty.

We shall shortly be debating in this House and no doubt in the country whether there shall be direct elections to the European Assembly. Those hon. Members who favour this step will be either those who support a federal European State—and that is their concern—or those who say that we should have greater accountability of our Ministers and of European institutions to the people. I have suggested a number of different ways in which we can do that now, through the institutions of this House, through Select Committees and through the acceptance of Procedure Committee which was rejected by the Government on a payroll vote on 3rd November. I have also suggested—and I am supported by a number of Opposition Members—how this can be done better within the Council itself by the publication of more relevant and up to date information.

When we debate this issue, I suggest that there are ample ways in which the Community can be made answerable to national Parliaments and to the Members who represent the public who provide the cash. The British people are becoming very cynical about the authorities—and not only about local councils but about the Government, of whatever colour, and this House. Unless we tighten up on the historic chain of accountability between those who provide the money and those who spend it, not only faith in our own domestic legislature but also faith in and good will towards the EEC will be found wanting.

These budget debates are perhaps less important than some of us would wish. We know that the historic power of this House was founded on its power over what was taxed and what was spent. The way in which the budget of the EEC is presented to us and the way in which we deal with it in this House have been consistently unsatisfactory. We can tighten it. We do not need to await direct elections. We can do it now, if this House thinks fit, by a resolution of the House.

10 p.m.

Mr. Douglas Hurd (Mix-Oxon)

Many references have been made to the improvements in procedures for handling the budget of the Community. I do not think that this House can claim much credit for those improvements; they are obviously due partly to the Commission, partly to the European Parliament and, from what I have heard, not least to the work of my hon. Friend the Member for Scarborough (Mr. Shaw) and his colleagues on our delegation. It is right that those of us who are not members of that delegation should have the opportunity to thank and congratulate hon. Members in the Parliament.

The Chief Secretary had some doubt about the advantages of bringing forward the publication of what he correctly called a forecasting document. He said that the earlier figures were prepared the more uncertain they were likely to be, and that we could not take into account the figures for the harvest which became available later.

I can see the force of that argument, but it would be to the advantage of both the European Parliament and this House to have an early opportunity to discuss the outline of Community spending. This could be valuable if we used it as an opportunity to range over the spending and, therefore, the policies of the Community in an attempt to influence the decisions on that spending before they were made.

I hope that the Financial Secretary will give us a reasonably wide-ranging reply to the various points raised in the debate. It is not good enough to hide behind the limited powers of the Budget Council. The hon. Gentleman is not speaking tonight for the Treasury alone; he is speaking for the Government and for the spending as well as the saving Ministers.

This debate ought to be about a wider portrait of the Government's attitude to Community spending and policies. That is my answer to the questions posed by the hon. and learned Member for Montgomery (Mr. Hooson), who was sceptical about the purpose of the debate. He said that we could not examine the Community budget in detail. That will be the responsibility—perhaps the most important responsibility—of the European Parliament, particularly when it is directly elected.

We can and should—though I do not pretend that we do—influence the Ministers who go to Brussels on our behalf to spend and to approve spending. That should be the purpose of this debate. It should be our purpose to influence not just the Financial Secretary but all Ministers who go to Brussels or Luxembourg on our behalf to approve spending within or without the terms of the budget. I agree with my hon. Friend the Member for Banbury (Mr. Marten) that we should have reached the stage of debating the policies of the Community on their merits—praise where praise is due and blame where blame is due.

On the Opposition side of the House, we have been reasonably good at that. Where there have been policies that we have thought wrong—for instance, on skimmed milk and in respect of the tax on margarine—we have said so. But that policy has not been at work among those hon. Members who opposed our entry. I have yet to hear a passage in the voluminous speeches of the hon. Member for Newham, South (Mr. Spearing) praising a policy or principle of the Community. When that day dawns, when we hear that from the hon. Gentleman—I think we shall one day—and perhaps from my hon. Friend the Member for Banbury (Mr. Marten), I am sure that we shall begin to have better debates on Europe.

Mr. Hooley

One of the difficulties was that when this House took a decision on, for example, skimmed milk we were told that it did not make the slightest bit of difference.

Mr. Hurd

The hon. Gentleman has made a serious point. It is true that this House has not yet learned how to exercise its own influence in time and effectively on British Ministers. We tend to do it too late. We do not set about it in the right way. We have not yet learned our own European dimension. That is the beam in our own eye and we should concentrate on that, with the help of the Scrutiny Committee, before we worry too much about the mote in other people's eyes.

My hon. Friend the Member for Scarborough pointed out that the Community budget is less than 2 per cent. of the total of the budgets of the member States. Therefore, it does not loom very large in terms of public expenditure as a whole. Nevertheless, one cannot consistently press for spending restraints at home and for spending adventures in Europe.

I agree with my hon. Friend the Member for Banbury that we should be as watchful for waste and bureaucracy in the Community, to which we now belong, as for waste and bureaucracy in this country. That is an essential part of the case for direct elections to the European Parliament, because that is where the watchfulness is easiest.

No one could be happy about the balance of spending now in the Community budget. We understand how it comes about that nearly 70 per cent. of Community spending is on agriculture. We understand that, as my right hon. Friend the Member for Knutsford (Mr. Davies) pointed out, we must take account of the total spending on agriculture and of the fact that, if as a Community we spend more, national budgets are relieved and that the principle for agriculture is different from the principle for industry.

I do not believe that if this country had joined the European Community in 1963, or earlier, we would now be considering a Community budget in which more than two-thirds of the spending went on agriculture. It is a balance which is not satisfactory for this country or for Europe in the long run.

On the other side of the balance—the one-third—we have as two of the main items the Regional Development Fund and the Social Fund. I should like to ask the Financial Secretary some questions on both those items. How do the Government sec the future of the fund? This is the kind of question which should be posed and to which the Government ought to give an answer. How do they see the future of the fund after the present agreement, which has one more year to run, runs out? Will they press for it to be renewed? If so, on what kind of basis?

My hon. Friend the Member for Edinburgh, North (Mr. Fletcher) stressed the importance of this matter. It goes far beyond Scotland in its importance.

What about the principle of additionality? I do not want to go into the principle whether it is right for the Community to insist that funds made available through that institution should be used for policies additional to national policies, but that is the basis of the scheme for the Regional Fund. If that basis had not existed, it is doubtful whether the Regional Fund would have been accepted by, say, the Germans, even in the limited form which we now have. When we consider renewing it, they are likely to be even more insistent because they suspect, with justice, that the British Government have not abided by the principle.

Last year when we debated this matter the Minister gave a hazy undertaking that the Government were looking at it. What is the position now? Do the Government accept the principle of additionality as regards the Regional Fund?

On the Social Fund, we concede that already large figures are involved. An answer in the other place showed that last year the United Kingdom was allocated nearly £46 million from the Social Fund. An answer recently given to me showed that, of the £93 million which the Government were spending last year on industrial retraining through the Training Opportunities Scheme, just on £22 million was allocated from the European Social Fund. That is a substantial slice of help from Europe for the alleviation of unemployment and the equipping of our work force with new skills which we all think are extremely important. What is the Government's views about that? How do they see the Social Fund developing?

I do not wish to weary the House with a long speech, but I must interpose here and say that I have much sympathy —I imagine that good many of us do—with the point made by the hon. Member for West Lothian (Mr. Dalyell) about the nomadic nature of the European Parliament. It is not just a question of wasting money, although what he said on that score must be true; there is also a wasting of authority. I cannot believe that a directly elected European Parliament, once established, will feel that it can possibly function successfully or exercise the sort of authority that people in Europe will look for if it wanders about in the present untidy and undignified way. Inevitably—it should be encouraged to do so by this House and by the Government—it must find a place, perhaps settled in advance—I do not want to prejudge the timetable or the place, since we all have different ideas about that—where it can settle down and exercise its legitimate authority.

I come now to the question of the common agricultural policy. As my right hon. Friend the Member for Knuts-ford reminded us, it is difficult to compare like with like in this matter, since no one set of figures is truly comparable with another—perhaps that is the trap into which my hon. Friend the Member for Banbury fell when he quoted figures —but, having looked at the figures as carefully as I can, I find it hard to accept that these large sums are being applied at present in such a way as to make European agriculture more effective and efficient.

The balance between guidance and guarantee is disturbing. We have not had for some time—indeed, not since the referendum, as far as I can recall—a clear statement from the Government about how they see the balance, about how the stocktaking exercise is going from their point of view, and about what they want to do. My hon. Friend the Member for Scarborough raised an interesting question when he wondered why there should be this reticence. In the mythology of these matters, we are accustomed to thinking that it is the French and perhaps the German farmers who are obstructing and holding up the reshaping into a more sensible form of common agricultural policy, but that is certainly not the whole truth. In fact—the document now before us makes this clear-12 per cent. of the present budget goes, or will go, on monetary compensatory amounts, and 20 per cent. of the agricultural budget goes in that way.

How much of that money is now coming to Britain to relieve the British housewife of the consequences that would otherwise flow from the fall in the value of the pound? There was an authoritative Press article at the beginning of June suggesting that we were now benefiting from these European food subsidies by £15 million a month, and I saw an article last week suggesting that the figure had risen to £20 million a month. This is a matter of public interest on which are entitled to an answer.

What is the Government's view of the figure of inflow of help from the Community to assist in keeping down the price of food, which would otherwise rise as a result of the fall in the value of the pound? M. Cheysson has described this as an intolerable burden on the Community—not just from the British angle, since other countries are involved —and I want to know whether the Financial Secretary agrees with that comment.

Mr. Dalyell

Does the hon. Gentleman realise that there are Germans in the European Parliament who think that it is now running at £300 million a year?

Mr. Hurd

I am not sure whether the hon. Gentleman is thinking of Britain alone or of the total—

Mr. Dalyell

Britain alone.

Mr. Hurd

—but at any rate his intervention underlines the need for some straight speaking from the Treasury Bench about the rate at which the figure is running.

I introduce these matters simply to show that almost every country, when it comes to think about Community policies, has a skeleton rattling in its cupboard, or, more accurately, some special interest—some large hungry creature that it hopes to feed from the Community board without others noticing too closely how large the animal's appetite is. That is fine, up to a point. The Community consists of democratic politicians who understand each other's needs and are prepared to be flexible about them, but that cannot be all that the Community is about if the Community is to be worth anything. It is a little like a board of one of those companies that we do not particularly admire, which spends a lot of time discussing what perks and fringe benefits each member of the board is entitled to receive. The discussion of the Community budget in the European Parliament, in the Council of Ministers and in this House should—and I emphasise should—provide an opportunity for a wider look than that at the direction in which the Community should move.

I hope that the Financial Secretary will answer some of the questions asked by my right hon. and hon. Friends and which I have put to him. I hope that we can hear, in particular, how he sees the present balance of expenditure within the Community between agriculture and the rest, and, within agriculture, between guidance and guarantee. Unless we can have debates in this House and express our views on, and influence the conduct of Ministers on, a strategic approach of that kind to the future of the Community, neither Britain nor the Community to which we belong can expect to flourish.

10.16 p.m.

The Financial Secretary to the Treasury (Mr. Robert Sheldon)

The hon. Member for Mid-Oxon (Mr. Hurd) asked for a wider portrait of the problems facing the Community. I am sorry, but I shall not be able to provide that, for reasons which I think he can well understand. What we are concerned with is the Community budget, and that is a more limited aim. I take the point made by my hon. Friend the Member for Farnworth (Mr. Roper), and I shall deal with it in due course, but I am unable to present the whole picture in the way in which the hon. Gentleman wants. I can, however, answer one or two of his questions and ask him to take up the other matters with those with more immediate and direct ministerial responsibility for them.

The hon. Member for Mid-Oxon asked about the amount of money coming to the United Kingdom. He will understand that I cannot give him the amounts arising from the fall in the value of the pound. That will be understood, because this is a recent event and our figures do not cover this period.

Mr. Hurd

Is the hon. Gentleman saying that the fall in the value of the pound is a recent phenomenon? It has been continuing at different rates for a long time.

Mr. Sheldon

I thought that the hon. Gentleman had in mind the events of the past few months during which the pound fell. One would need to specify the periods that one had in mind before being able to make such calculations. In any event, the calculations would be extremely complex because they would take into account changing contributions and receipts. Because of recent changes, even those computations would not be possible, even if they were simpler to make than they are, but the hon. Gentleman will know that in 1975 there was a net contribution inwards to this country of £56 million. That is the last complete figure that we have. That is the last figure that I can give with precision in answer to his question.

The hon. Gentleman mentioned the nomadic nature of the Parliament, and this has been referred to by a number of hon. Members. We can see the problems, and I take note of them.

Mr. Dalyell

No doubt my hon. Friend is sympathetic, but what we have to pinpoint is where the responsibility lies. Will he at some convenient moment, perhaps in a letter, outline precisely where the responsibility lies? There is a good deal of buck-passing in this matter.

Mr. Sheldon

I note my hon. Friend's point but I have no immediate responsibility for the location of the European Assembly, although like any member of this Government I am obviously concerned about the aspect on which he strikes a chord—that of expenditure. I note that expense and it is something that we shall have to consider.

Mr. Michael Shaw

I am sorry to interrupt again so soon, but this is an important matter. If the hon. Gentleman has no responsibility and if the Prime Minister has none, one might ask who has. Is it not the case that the Government have one-ninth of the collective responsibility and therefore should be playing their part in finding a single seat for the European Parliament?

Mr. Sheldon

I understand that point, but what we are considering here is the Community budget. That is the aspect which concerns us and the task of assessing the budget is to ensure that those proposals which are undertaken and accepted by the Community are paid for through the Community budget and are anticipated and that the appropriations are duly made as a result of those policies being implemented. That is what we are debating and that is what I have to deal with.

Mr. Spearing

This bears very much on the point of the hon. Member for Mid-Oxon (Mr. Hurd) about our doubts. Someone has to pay not only for the rents of the halls but for the furniture vans and so on to take all this material back and forth. If that is so, surely there must either be a Vote or it is down on a particular account, and on that matter either the majority of the Council agrees or there is some disagreement. If there was some disagreement, did Her Majesty's Government vote in favour of a single centre, or, if there is agreement, on what Vote does the matter arise and what control do the Finance Ministers have over it?

Mr. Sheldon

The task of the Community budget is to implement those decisions and when a decision is taken to have more than one centre or to reduce the number in any way the amounts of money will be specified and it will be up to my right hon. Friend the Chief Secretary to scrutinise that expenditure and to ensure along with his colleagues examining these matters that that expenditure accords with the provision that has been made by those responsible for the policy. It is up to the Council of Ministers itself to make the decisions on policy in the way we all well know.

Mr. Alexander Fletcher

With respect, the hon. Gentleman is presenting a very narrow book-keeping attitude. He is suggesting that the cost of the policies is different from the policies themselves. Surely, if we are discussing any matter of cost, whether in the United Kingdom or in Europe, we must speak together of the policy and its cost. That is the point to which we are addressing ourselves.

Mr. Sheldon

I understand that the hon. Gentleman wants to get at the policy which underlies the expenditure and I have great sympathy with him. But that is not what we are debating in the Community budget. What we are debating and what we debated last year—precisely the same points were made then as are being made today—is ensuring that those policies which are carried out have the amounts of money accorded to them that were originally envisaged. Hon. Members may, rightly, complain that that is not what they would like to be discussing. There are many occasions in this House when we debate things which we should not like debated and many more occasions when we should like to debate things which it is not possible to debate under our rules of procedure. We are debating a much narrower matter over which my right hon. Friend the Chief Secretary exercises control on behalf of the Government.

My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) asked whether provision for the Joint European Torus was included in the budget for 1977. I confirm that it is, but before the money can be spent there has to be a Council decision on the siting of the project. My hon. Friend also asked me about the development of policies on aerospace, hydrocarbons, transport and other matters, but I cannot deal with questions of policy. These proposals do not come to the Budget Council for approval unless there is agreement that they represent Community policy. My hon. Friend needs to look at Community policy to satisfy himself whether these projects will go forward in the way he wishes.

The hon. Member for Banbury (Mr. Marten) asked for another debate on the budget in the autumn. I understand his desire for lengthy and frequent debates on matters of such great interest to him. Far be it from me to deny him the opportunity of speaking on these matters, but he will know that the timing of debates is for my right hon. Friend the Leader of the House. No doubt the hon. Gentleman will question him at business question time, as he does from time to time.

Mr. Marten

I am not asking the Leader of the House. The Financial Secretary is representing his Department, and I am asking him whether he thinks it right that when the details have been firmed the budget should come back to the House of Commons for further debate in the same way as the European draft regulation concerning New Zealand was debated in blank and came back for a second debate after it was filled in. I am asking the Financial Secretary.

Mr. Sheldon

I am always happy to appear in the House on any occasion when I can be of assistance, but it would be wrong for me to pre-empt the decision of my right hon. Friend the Leader of the House on which business should be taken at which time of the year. That is a matter for him to decide. I can only confirm that I shall be at the service of the House in whatever way I can best help it.

The hon. Member for Banbury also asked me about the guidance section which had fallen in percentage terms. The right hon. Member for Knutsford (Mr. Davies) referred to the division of the commitments and payments appropriations. This is an example of payments appropriations which are expected to be less in 1977.

My hon. Friend the Member for Newham, South (Mr. Spearing) wished that there was a standing Select Committee on these matters—

Mr. Spearing

If I may put it correctly, I want a committee, as recommended by the Select Committee on Procedure, to look at these documents in greater detail over a greater period of time.

Mr. Sheldon

I understand the point made by my hon. Friend. I note the ingenuity with which my hon. Friend raises these matters. He and the hon. Member for Banbury by themselves almost constitute a standing Select Committee. Certainly they bring these matters to our attention and perform a service, perhaps of a slightly different kind from the service which they think they perform but nevertheless useful and valuable to the House.

My hon. Friend the Member for Newham, South referred to support for tobacco-growing. That is agricultural support, and I shall look into the points he raised. Meanwhile, I can inform him from a reading of the documents that there has been a decline in the support given to tobacco growing over the past two years.

My hon. Friend the Member for Fife, Central (Mr. Hamilton) mentioned that the House is not equipped to deal with expenditure, citing the problems of controlling public expenditure here, let alone the expenditure in the Community. I take the point but quarrel with one part at any rate of what he said. The Expenditure Committee does not deal with expenditure not because it is unable to, but, for some reason, because it has not seen fit to do so. The organisation exists for it to take control. We have potentially half a dozen Select Committees, but they have not exercised their muscles, although those muscles are there waiting to be used. But that is all I should say on these matters because they do not lie strictly within the debate.

My hon. Friend the Member for West Lothian (Mr. Dalyell) talked about the discipline imposed upon an Assembly which not only spends but has to raise money. No one can dispute the dangers of an Assembly with the power to spend but without the discipline of raising the money, because that process is a little one-sided. One must look at these institutions with some care, therefore, and we note my hon. Friend's reservations. I noted—indeed, awaited—his comparison between the European Assembly in this respect and the set-up advocated by hon. Members from the Scottish National Party for Scotland.

I thank my hon. Friend for his comments about Treasury officials in the Community and the way in which they have been able to assist in general terms. I shall be happy to pass on his comments to them in due course.

Mr. Dalyell

I also said that it was a bit crucial that the sub-committee on Control of the European Parliament should have access to the civil servants of our nation States. Is my hon. Friend in a position to comment on that?

Mr. Sheldon

I noted that point and was interested in it, but I am unable to comment on it at present. I should like to think it over and consider what implications are involved in it.

My hon. Friend the Member for West Lothian, the hon. Member for Scarborough (Mr. Shaw) and my hon. Friend the Member for Heeley raised important points concerning the need for a Court of Audit, and there was discussion of the problem of ensuring a satisfactory audit. We in the United Kingdom can claim credit for pressing for the Audit Board, a part-time body, to be replaced by an audit court full-time and able to carry out the kind of scrutiny we have come to regard as normal. I noted the point made by the hon. Member for Scarborough about the European Assembly setting up a sub-committee and comparing it with the role of our Public Accounts Committee. Our delegation has played a prominent part in that process and our whole attitude to this matter has been useful and helpful to achieving the kind of detailed scrutiny which we take for granted and which eventually the Community will have to acquire.

My hon. Friend the Member for Farnworth and the right hon. Member for Knutsford wanted the fiche financeère to be made more effective, and I take the point. I think there has been some progress in that direction. I understand that most policy proposals coming to the Council have the fiche financière attached to them. Although the comprehensiveness varies, advances are being made, although perhaps more slowly than we would wish. But I understand the problem, and the United Kingdom will continue to press this matter, which is very important.

The hon. Member for Scarborough spoke of the advantages in commitment and payment appropriations being divided in this way. He gave a useful piece of instruction to the hon. and learned Member for Montgomery (Mr. Hooson) about the problems of carry-forwards and retaining adequate control. This is one of the crucial reasons why we need these commitment and payment appropriations.

My hon. Friend the Member for Farnworth sought to find a comparison between the budget document and the White Paper on public expenditure. Without committing myself whether this is the precise way in which we should proceed, I can say that I understand the point that he was making. We know the way in which developments occurred in this country, over a long period and with great difficulty, until we reached the stage of having a White Paper. No one can say, even at this stage, that we have reached the ultimate solution. We can therefore, understand some of the problems in applying these lessons in a European context. There are certain things which we have learned in our own Parliament which we must press to be applied in the European Assembly, when analogies can usefully be made.

Mr. John Davies

In the course of his response to the debate the Financial Secretary has concentrated almost entirely on the technical and monitoring aspects of the budget. In doing so he has failed entirely to respond to the invitation of my hon. Friend the Member for Mid-Oxon (Mr. Hurd) to give a broader conspectus of the Community, looking at it from a financial and budgetary point of view. It would be a pity if the hon. Gentleman's response were to set a pattern for this debate. The whole purpose of it, knowing the great differences there are between this budget and the national budget, is to look at the Community as a whole in financial terms. I would feel sorry if the hon. Gentleman's response were taken as an indication of the Government's view that we were dealing with the matter purely as a technical or monitoring proposition.

Mr. Sheldon

I understand the point and I can see that there are many who would like to see this turned into something approaching a Budget debate. That does not misrepresent their views. But the debate is not of that type. I must correct the hon. Member for Mid-Oxon. This is a much narrower debate than that. When my right hon. Friend goes to Brussels he does not discuss the whole of the financial arrangements—how much can be spent, where the money can be spent, and so on. If that were so, it would have a much more powerful and much more fundamental role than it is. I must query this interpretation. We are following the pattern of last year's de- bate. What we are concerned with is this kind of budgetary control. It may be that hon. Members who do not like things done this way will be successful in introducing certain changes. Perhaps they can make representations which could be further considered. Such matters cannot fall for consideration during this debate, which is much narrower than some hon. Members would wish.

Mr. Hurd

Surely it is narrow because the hon. Gentleman has made it narrow. The House is discussing not just the responsibilities of the Chief Secretary but a large quantity of documents. In the documents is contained an analysis of a large number of Community policies. It is not unreasonable for the House to ask the Minister to comment on those policies and to provide answers to the points that have been raised. There is no reason for us to accept the narrow definition of the debate.

Mr. Sheldon

I well understand the point that the hon. Gentleman is making, but when my right hon. Friend the Chief Secretary attends these meetings he is concerned, unfortunately for the hon. Gentleman, with the much narrower issues whether the policies have been agreed and whether the appropriations are in line with the policies that are agreed by other Ministers.

Mr. Roper

I appreciate that that has been the tradition of the Budget Ministers' Council, but will my hon. Friend take back to his right hon. and hon. Friends the hope that next year, when the presidency of the Council of Ministers will be in British hands and when British Ministers will be in the chair of various Councils, they will try to develop a new role for the various Councils so that we can manage once again to re-integrate the Council of Ministers?

Mr. Sheldon

I can be much more favourably inclined to the point put forward by my hon. Friend. He has accepted, as I think the whole House will have to accept, that these are traditional rôles in the Community budget. This is what it is about, But my hon. Friend now asks that those rôles should change. I am prepared to consider that and to ask my right hon. Friends who have responsibility for these matters to understand and to take note of the point that is made by my hon. Friend, and, if they can, to bring about such changes both in the Community and among their Community colleagues. When we come to the next debate on these matters we may have something to report if those representations are accepted.

Question put and agreed to.

Resolved,

That this House takes note of Commission Document No. R/1483/76 relating to the EEC 1977 Preliminary Draft Budget.