HC Deb 23 February 1978 vol 944 cc1724-830

4.30 p.m.

The Minister of State, Foreign and Commonwealth Affairs (Mr. Frank Judd)

I beg to move, That this House takes note of the Report on Developments in the European Communities, July-December 1977 (Command Paper No. 7100). The debate on this White Paper gives the House the chance to review the full range of Community activities. Some of the more important activities which it describes have, of course, already been the subject of consideration under the scrutiny arrangements. I should like to take the opportunity of thanking the right hon. Member for Bournemouth, West (Sir J. Eden) and all his colleagues for the important watchdog task that they perform on behalf of the House in their many hours of work in the Scrutiny Committee. Many of the issues described are primarily the concern of Departments other than my own. I think, however, that the White Paper brings out clearly how many United Kingdom interests are now pursued within a Community context.

There will inevitably be a number of detailed points in what will be a wide-ranging debate. My hon. Friend the Under-Secretary of State will deal with as many of them as possible in his winding-up speech.

Any single six-month period cannot, of course, be seen as a watertight compartment in the essentially ongoing life of the Community, but it provides an opportunity for a stock-taking of where we stand, particularly at a time when British attitudes towards the Community have been widely scrutinised, if not criticised.

It is worth stating the basic arguments. There have been, and always will be, honest disagreements about the merits of Community membership. There is no monopoly of truth on any one side. But I believe that the decision is behind us. Constantly to revert to the issue or to approach each problem from the narrowest point of national interest not only tends to undermine our ability effectively to influence the collective policy of the Community in the direction which we believe to be right—and which should, when necessary, respond to the special needs of Britain—but may also tend to weaken the Community's efforts to defend our common interests, including those of the United Kingdom in the wider world.

Rather, as my right hon. Friend the Prime Minister put it, our task is to defend the essential elements of a distinctive policy towards the EEC that will meet the legitimate concerns and interests of the British people and will strengthen unity and democracy in Europe. Healthy roots are essential, but if we remain entangled in them we shall tend to get a worm's-eye view of immediate Community issues. Entanglement of this kind also constricts our view as to how the Community can best evolve in the common interest.

Every six months which passes increases and deepens British experience of Community membership, and, for that matter, Community experience of British membership.

The British tradition of democracy has been pugnacious and combative. In that way it has served us well. After all, we have only to look at this Chamber in which we are debating this afternoon—rebuilt after it was bombed on the insistence of its Members, most articulately expressed by the late Winston Churchill—to realise that the interests of democracy can be best protected by honest confrontation of ideas and priorities rather than by slithering uncertainties of semicircular Assemblies where truth and facts may become blurred in the consequential game of constantly changing alliances.

Mr. Christopher Price (Lewisham, West)

I hesitate to interrupt my hon. Friend's impressive prose which someone has written, or perhaps he wrote it himself. With regard to semicircular Chambers, has my hon. Friend seen the plans for the spec-built Parliament at Luxembourg—the leaning tower of Luxembourg—that will be started in a few months' time? Nothing can stop its being started, and it now looks as though, at a cost of many millions of pounds, the European Community will be lumbered with that Parliament. Will my hon. Friend say something about that in his speech?

Mr. Judd

I can assure my hon. Friend that any decision about where the European Assembly is situated will be a matter for the Council of Ministers. I thank my hon. Friend for his kind remarks about a part of my speech which I drafted myself.

As I was saying—rather than by slithering uncertainties of semicircular Assemblies where truth and fact may become blurred by the consequential game of constantly changing alliances. British Members of Parliament and Ministers are fashioned in that democratic mould. Whether we on this side of the House liked or disliked what he said, we faced a good illustration of it in the speech by the right hon. and learned Member for Hexham (Mr. Rippon) in the Third Reading debate on the direct elections Bill last week. We have taken that tradition with us into the Community.

Other member States are sometimes misled by the forthrightness with which we defend our interests into thinking that our underlying commitment to the Community is necessarily at issue. It is not. In fact, the reverse is true. As my right hon. Friend the Prime Minister has underlined, the degree to which we take our membership seriously is reflected by the degree to which we state our objectives and priorities for the Community in a forthright and unmuffled way. Other member States would also do well to remember our long candidature and the polarisation of attitudes that that inevitably entailed. I am convinced that where important national interests need to be reconciled in establishing a common policy, it is important that this should be done by an honest and open confrontation of the perfectly legitimate interests that have to be brought together.

Moreover, the people whose interests are under discussion must be assured that these interests have been given full weight and not traded off in some hole-in-the-corner manner behind closed doors in Luxembourg or Brussels. The Community must prove itself to be a collection of democratic States and not an authoritarian institution.

When commentators and others express anxiety about tough arguments in the Council of Ministers, I am at a loss to know why. I ask myself whether they want Brussels to become a pale reflection of the centralised bureaucratic and totalitarian systems which they morally condemn. In history, the Community will be judged by the integrity and vigour of the debates between Ministers in their search for solutions in the interests of the widest possible cross-section of its peoples, not by the smooth, manipulative techniques of technocratic government.

Mr. Russell Johnston (Inverness)

Is not the Minister saying rhetorically that the British are the only people capable of open, democratic and forthright debate and that everything else is mean, low and uncertain?

Mr. Judd

What I am basically saying is that we have traditions of which we can legitimately be proud. We have taken these traditions into the Community, and, by bringing them to play within the Community, we shall in the long run help to strengthen it.

There are clearly difficulties since international negotiation is not the ideal way of creating legislation. But, if we expect their support we must be able to show the British people that their interests are being properly represented. For that reason, we welcome the work of this House in examining Community legislation.

The Government respect those who zealously defend Parliament's right to scrutinise and debate Community legislation and to ensure that the British national interest is well and wisely pursued. Their vigilance in following the activities of British Ministers will always be important. This is, after all, what the British democratic tradition is all about. However, what we must also ensure is that we do not lose sight of the wider picture and the need to see that the great potential of the European Community is fully exploited in areas where our interests largely coincide with those of other member States.

We in Britain have also to contend with the dangers of widening disparities within the Community. These are not the result of Community membership. They are rather the result of the differing impact of increased oil prices and the worst world recession in 40 years But it is idle to deny the dangers of economic divergence within the Community. The EEC should provide a framework within which we can secure our national position, not at the expense of other members but by working with them.

The past six months has given some good examples of this process. To those who consider that the United Kingdom always ends up the losers in the Community, I would recall the agreement that the Joint European Torus should be set up at Culham in Oxfordshire, thus giving us a new foothold in the struggle to secure future energy resources. We also saw a satisfactory solution to how Article 131 of the Treaty of Accession, which governs the contributions of the United Kingdom and other new member States to the Community budget in 1978–79, should be applied after the introduction of the European unit of account. There was also a satisfactory agreement on the phased implementation over three years from 1st January 1978 of shorter drivers' hours for domestic road passenger and goods traffic.

On the other hand, there are those who complain that we do not put enough into the Community. Frankly, they have precious little ground on which to base that complaint. There is our substantial net contribution to the Community budget there is the valuable market which we offer to our Community partners; there is the relatively small proportion of agricultural guarantee payments which come to Britain as compared with those which go elsewhere; there is the vital contribution made by British consumption of butter—some 25 per cent. of the Community butter market.

But such a score-card approach is unsatisfactory. Where there has been progress which suits our interests, we should take due credit for it. But all progress means an accommodation of the national interests of all the Nine, and the agreements which I have mentioned fall into that pattern. If the impression is given that one member State is simply interested in chalking up its own successes, this is likely to frustrate future negotiations by creating the counter-productive impression that membership of the Community is narrowly self-interested.

The Community has to retain a balance between national and common interests, and between the narrow interests of its member States and its responsibilities to the world at large. It must not be a rich man's club. The United Kingdom continues to play a distinctive role, and those who criticise it are too often really going for our political style and traditions—of which I for one am proud—rather than for its substance. Where there is a balance, Britain has shown herself ready to contribute as well as take advantage of membership. As The Economist reported not so long ago, our record on the fulfilment of Community obligations is good by comparison with that of most other member States. In its edition of 1st October last, it reported that in the league of prosecutions before the European Court for failure to fulfil their obligations, Britain stood sixth with 12 outstanding cases while Italy had 41, France 35, Belgium 21, Holland 20 and Germany 17.

When direct elections are discussed, more attention seems to be paid to the failure to meet the May-June 1978 target date than to the vital democratic debate that has accompanied the passage of the implementing legislation and to the commitment of the Government to the holding of such elections. The critics sometimes forget the need to respect the democratic processes which the Community is meant to embody.

To turn the argument round and take another example, the Sixth Directive on VAT, which was vital to the Community changing to the own resources system, as it turned out, only Belgium, apart from the United Kingdom, managed to get the domestic legislation through by the agreed target date of 1st January 1978. There will now be a delay of at least another year before the own-resources system is fully in effect. There were no doubt good reasons why other member States could not meet the deadline. But the contrast with direct elections is impressive.

It is when the balance between national interests and the interests of the Community as a whole is upset that dangers arise for the Community. Fisheries is an obvious example of this. The White Paper records briefly the continued efforts during the second half of 1977 to work towards a revision of the common fisheries policy. My right hon. Friends the Secretary of State for Scotland and the Minister of Agriculture, Fisheries and Food have negotiated firmly and skilfully in the search for a settlement that reconciles our basic requirements and the interests of other member States.

Considerable progress has been made towards recognising the need for fair revision of the CFP. This is reflected in the development of thinking about quotas and conservation. I hope very much that the gap which remains between the two sides can be bridged without too much delay. The failure to reach agreement is potentially damaging to the Community's wider interests, and this is a factor which we have to take into account.

But, equally, the other member States need to remember that something like 60 per cent. of the fish stock available to share out amongst member States will come from traditional British waters and that this will happen at a time when the world as a whole is moving towards 200-mile exclusive economic zones at sea for coastal States—a virtual extension of their territory. It is no wonder that fishermen sometimes ask whether we shall gain full access, in return for a CFP, to the vineyards of our Community neighbours.

Other member States also need to recall the origins of the fisheries policy and that it was agreed on the very day negotiations for British accession were opened, that it was unbalanced from the start, and that in Article 103 of the Act of Accession there is clear and unrestricted provision for the extension or modification of existing arrangements. When negotiations resume we must look for a pragmatic solution, consistent with Community law. But it must also be seen to secure the interests of our industry if the balance is not to be upset in a way which would have a damaging and long-term effect on British attitudes to the Community. Justice will have to be seen to be done. This House would never endorse a one-sided solution that failed to safeguard our industry.

But the greatest problems facing Britain and the Community are the major world problems which ominously threaten humanity as a whole. Obviously, in the forefront of these are the inter-related problems of growth, inflation and unemployment. Of course, the ability even of Community Governments alone to make a positive impact on these problems is limited. Improvement will come largely through an increase in the level of economic activity. Member States must do all they prudently can in this respect.

However, the Community agreed in principle in December at the European Council that the Commission should raise a loan of 1,000 million European units of account to stimulate investment, and consideration of this is being pressed ahead. There was, furthermore, agreement on a major increase in the European Regional Development Fund, of which the United Kingdom is a major beneficiary. These decisions will benefit the Community as a whole.

Furthermore, the Community has in recent months, and with British support, taken action to protect certain industries which face particular difficulties, notably steel and textiles. The White Paper describes the decision to allow the Commission to negotiate agreements involving price disciplines with the principal countries supplying steel to the Community.

Before renewing the Multi-Fibre Arrangement at the end of the year, the Commission negotiated with 31 textile supplier countries new bilateral agreements which provide a greater degree of protection against disruptive low-cost imports. I am glad to say that in the process the Community was determined to lessen the impact on the poorest developing countries, some of which rely heavily on textile exports. Our problems are bad enough, but for too many in the Third world unemployment is to be condemned to the certainty of disease, malnutrition and premature death. All of us, in the name of civilisation itself, need to keep a sense of perspective about this.

The domestic problems which face both the steel and the shipbuilding industries are being looked at at Community level. We shall play a positive part in this process while ensuring that our particular interests are fully safeguarded. We must ensure our ability to further our industrial objectives. I recall the firm words of my hon. Friend the Minister of State. Department of Industry, in the House on 24th January to the effect that we cannot accept an across-the-board contraction. Any Community policy must take account of the actual position in individual member States.

I have mentioned some examples drawn from the White Paper. There are others.

The Community has agreed to enter the final substantive phase of the multilateral trade negotiations with a mandate which includes both an offer for the reduction of industrial tariffs and a requirement for a better safeguard mechanism which would be used selectively to stop particular sources of disruption without harming normal trade. Discussion has begun on the mandate for renegotiating the LoméConvention, which continues to provide significant trade and aid benefits to countries in Africa, the Caribbean and the Pacific. The Community has also improved its trade concessions to other developing countries through the Generalised Scheme of Preferences.

Sir Derek Walker-Smith (Hertfordshire, East)

In the context of the LoméConvention, may I ask the Minister to say whether the Government would view with favour the incorporation into the LoméConvention of an obligation on the ACP countries which are parties thereto to observe Articles 3 to 14 of the Universal Declaration of Human Rights?

Mr. Judd

The right hon. and learned Member forestalls me. I was about to come to that point. I was about to say that, if the Community is not as inward-looking as it once was, I hope that the United Kingdom will be able to take at least some of the credit.

But, obviously, there remains much to be done if the Community is to live up to its responsibilities, not only to its member States but to the world at large. For instance, we have many times made clear to our Community partners that we are anxious to see a much more substantial programme of overseas aid to non-associates of the Community in some of which there is the largest scale and most grinding poverty in the world. Although they are a useful beginning, the two ad hoc annual programmes so far agreed were very small. We must get these sums increased.

We must also resolve to press for the inclusion in the new LoméConvention of a provision allowing the Community to cut off aid to any State which is grossly infringing human rights or to ensure that aid is limited to items which benefit the people, not the regime. The present position, as we saw in the case of Uganda last year, simply will not do. It is intolerable that aid or potential trade arrangements should be used to bolster crudely repressive regimes. All this is, of course, part of the wider ongoing North-South dialogue, and much Community time will be going into co-ordinating our approach to the shaping of a Common Fund and of its associated integrated programme of commodity agreements, to a review of policy towards the crippling debt problems of the developing countries, and towards our general political strategy in the new machinery recently established at the United Nations to oversee the many points of the recent North-South dialogue.

This review of the past six months would not be complete without reference to three areas of Community policy singled out by the Prime Minister as of special importance. Our attitude towards the common agricultural policy is based on the central objective to reduce real prices to the level needed by efficient producers. What we must do is to bring about a better balance of supply and demand. This would be of benefit both to the consumers and to the long-term health of the Community.

We are not presenting a fixed blueprint, and we do not seek to undermine the principles of the CAP. But, particularly with enlargement in view, it is essential that there should be changes in the way the CAP operates. We shall judge all new proposals, particularly price proposals, in this light. Our concern to balance better the interests of consumers and producers is already having some effect. Last year the increase in the common price level was the smallest since our accession. This year the Commission has proposed only 2 per cent. This means a reduction in real terms.

Our energy policy will be of critical importance to the United Kingdom and the Community as a whole. A realistic Community energy policy which we support will require perseverance and patience to create, and must take account of basic national interests of all member States. Progress has been made in a number of areas, including a Euratom loan scheme, recommendations on the rational use of energy and the reduction of oil consumption in an oil supply crisis.

The greatest issue facing the Community at present is undoubtedly enlargement. The Government have warmly supported the applications from Greece, Portugal and Spain. Enlargement is crucially important to buttress democracy in these three countries. The House must face this. There will be costs, in terms of money and procedural problems to be overcome. But in our view these are far outweighed by the political gains. As my right hon. Friend the Foreign Secretary has made plain, we attach the greatest possible significance to the responsibility of the Community to further the cause of freedom and democracy in Western Europe.

Nobody should underestimate the gravity of the international economic problems which confront us. There is a real possibility that without determination and imagination the world could crash over the precipice into a new and nasty era of aggressive nationalism. The Community will not solve for us the basic issues of growth, inflation and unemployment. It cannot be used as the scapegoat for national ills, some of which are of many years' standing. But we hope that it will assist in their solution. It provides a framework within which to pursue many of our objecives, both external and domestic. This demands, however, that we keep a balance between our national interests and those of the Community as a whole. It demands a similar restraint on the part of other member States.

The Government are looking for reforms within the Community, but in a constructive spirit, aimed at strengthening the unity of the people of Europe within a democratic framework. As my right hon. Friend the Prime Minister has emphasised, we believe that changes are indeed needed in the interests of the Community as a whole. The Community is not static. Enlargement will certainly create a challenge to which the Community must rise. It is bound to lead to changes in the character of the Community. Such change will come gradually and must take account of the social problems which it involves. But the fact is that the Community has only limited resources. These must be deployed to the best effect if the Community is to make a greater impact on the problems of economic divergence which are the real impediments to the development of its full economic and political effectiveness.

The Government have meanwhile taken an active part in political co-operation of the Nine. Experience has shown that the collective weight of the Nine strengthens the hands of individual member States, including Britain. For instance, Foreign Ministers issued a statement on President Sadat's courageous initiative in the Middle East on 22nd November 1977. In September they published a code of conduct on employment practices for companies of the nine member States with affiliates in South Africa. The Nine are discussing the code with other OECD member States to persuade them to adopt similar measures. The Nine have established their concern for human rights beyond question.

For me, there have always been two questions about the relevance of the Community as an institution. First, all the evidence of recent decades suggests that it is impossible to sustain successfully the viability of open democratic society if power and decision-making become over-centralised and over-remote. Free society is based on the concept of individual integrity and responsibility. People need to see and feel their place within it all. In an age of mass communication and better education, accountability and accessibility of decision-makers become more essential than ever.

It is because we recognise this that the British Government have set their face firmly against the concept of federalism. As I have repeatedly made plain in recent weeks, we believe that the centre of decision-making must remain the Council of Ministers and that the Council of Ministers must for its part remain firmly accountable to the national Parliaments and Assemblies of individual member States.

Secondly, economically and strategically the starting point of all that is relevant in politics is a recognition of the inescapability of international inter-dependence. It is simply impossible for any nation to isolate itself from the pressures of world event. The question arises whether the Community is the right grouping in which we should be working to find the rational international solutions. This would clearly not be the case if the Community were seen as an end in itself. It simply is not self-sufficient.

I hope, however, that in what I have said to the House this afternoon there is an indication that the Community is facing up to this and seeing its role not as a substitute to the OECD, to GATT or to the United Nations but as a grouping of independent sovereign nations determined to work together within these wider organisations in fostering solutions in the interests of the world community as a whole.

It is naive to see any institution as an end in itself. Perhaps our views on the Community have been distorted in recent years because of a tendency to do this. For democrats committed to freedom, institutions are an instrument with which they work for the objective of human evolution and progress.

In the final analysis, how these instruments are used depends upon the will the values and the commitment of the politicians and those they seek to lead. At our best—with self-confidence and vision—I believe that we in Britain have an unrivalled contribution to make in this respect. I also believe that the Community and, indeed, the wider world are looking to us increasingly acutely to make it.

5.2 p.m.

Mr. Douglas Hurd (Mid-Oxon)

We are grateful to the Minister for his stock taking, and congratulate him on his new found richness of prose, although I am not sure that he kept up the impetus of his first purple passage.

It is not the Minister's fault that this debate should have a rather starved appearance, looking at the Benches and the Press Gallery. Few of us are satisfied with the way in which we discuss Community matters in this House. It is partly a matter of machinery. We are awaiting the submission of the Lord President, which is mentioned in the White Paper, about improving the machinery I join with the Minister in paying tribute to my right hon. Friend the Member for Bournemouth, West (Sir J. Eden) and his colleagues on the Scrutiny Committee. It is a pity that the Government while paying tribute, have organised a debate on a day when they knew that members of that Committee could not be here. Within the terms of reference that the House has given the Committee, it does an invaluable job.

I believe that in the mechanics of debating Community matters we have the worst of both worlds. We have vague general debates, rather like foreign affairs debates, which do not attract a great deal of attention. Then we have almost legal debates on specific documents. Somewhere in the middle there should be room for debates on specific issues, regardless of the state of documentation, whether these are about the enlargement of the Community, for example, or the Davignon steel plan. There should be some way in which we can pinpoint important issues and debate them in a timely manner so that we can influence British Ministers as they go to and from the Council of Ministers.

There is also a feeling of dissatisfaction about the way in which the House of Commons reckons with its European dimension. It is partly the spirit that we find in this House. I hope that this debate will be different. But we alone among all British institutions are continuing to fight and fight again the battle of the referendum. This weakens our influence in real life, and is contrary to what practical people are doing elsewhere.

The Foreign Secretary said on D[...]h television yesterday that individual fi[...]s, trade associations and trade unions were coming to terms with the EEC and making the best of British membership of it. He is right. It may be that most of them are starting a little late, but the point is that they are now doing it. Many of us have daily contact with this process and we feel that it is picking up impetus and becoming impressive. I am ashamed that this House, which should take the lead, has fallen behind, in its tone and in sense of reality, in discussions on EEC matters. Only in this House do we scratch away at old wounds, and that makes it difficult for us to look at real issues.

All of us who support the Community have criticisms—sometimes severe—of the way in which it works. Every time we voice these criticisms there is an inane shout from below the Gangway of "You voted for it". It is possible to support an institution without believing that it is perfect. The hon. Member for Newham, South (Mr. Spearing), who is very assiduous in these debates—and I expect that he will seek to catch your eye later, Mr. Deputy Speaker—is one who criticises us for our criticisms. I sometimes think that the day on which the hon. Member makes a speech in praise of some aspect of the Community—I do not care which one— will be the day that the House of Commons will actually have entered its adult life as a national Parliament inside the EEC.

Mr. Nigel Spearing (Newham, South)


Mr. Deputy Speaker (Sir Myer Galpern)

Does the hon. Gentleman wish to catch my eye and make his contribution now?

Mr. Spearing

No, Mr. Deputy Speaker. Indeed, I did not intend to catch your eye in today's debate. Is the hon. Member for Mid-Oxon (Mr. Hurd) forgetting the phrase in the Government's document at the time of the referendum which said that membership of the EEC depended on the continuing assent of Parliament? Does he deny that it is wrong for him to assess Parliament's view of the balance of advantage and disadvantage and the terms on which membership should be continued? If he is saying that, it is very serious and I hope that he will reconsider it.

Mr. Hurd

The hon. Member is dragging me into an argument which has no relevance to the point that I was making. Of course, the Government are right and membership does depend on the continuing assent of this House. We support our continuing membership of the EEC, but we do not believe that this institution is perfect. We do not want our criticisms of it picked up as part of a wholesale, 100 per cent. eternal condemnation of every utterance, every word, every phrase and every paragraph of every document coming out of the Community.

Mr. Spearing


Mr. Hurd

The hon. Member may have a chance to think again about making a contribution at greater length to this debate.

The White Paper brings out the most important and least mentioned aspect of the Community, perhaps the greatest single development of recent years, that is, the extent to which the Community represents us—the British—in discussions and negotiations on international trade. This progress was associated particularly with Sir Christopher Soames, but it has developed very much under his successors. References to this aspect are scattered through the White Paper and the Minister took up some of them.

For example, it is the Community that represents this country at the multilateral trade negotiations which are now taking place. It is the Community that negotiates for us with textile producers under the MFA. It is the Community that is trying to provide the international framework in which the British steel industry can survive. It is the Community that, in parallel with other member States, discusses with Japan the immensely important question of our balance with that country. It is the Community that has worked out the trading arrangements with China which may be very significant in the future. This is all technical, boring and rather neglected stuff, but it happens to be action on which hundreds of thousands of jobs in this country depend.

It surprises me that so many Labour Members—and this also applies to some Ministers—who at present represent the heartlands of British industry neglect in their comments on the Community to emphasise this essential fact, a matter that is extremely important for their constituents above all others.

The international framework within which our industries trade in the world is very much under threat, as the Minister made clear. It is a framework which the Community, rather than individual nation States, is concerned to protect and develop.

Mrs. Gwyneth Dunwoody (Crewe)

I do not know whether the hon. Gentleman has yet dealt with the attitude of the Commission on maintenance of the temporary employment subsidy and its direct correlation to the maintenance of jobs in the textile industry. When seeking to defend the Commission, will he give his views on its attitude to TES?

Mr. Hurd

That is a fair point. If the Community is responsible for saying to Hong Kong "There is a limit to what you may send in"—an attitude that is strongly resented in Hong Kong—and if the Commission believes, and I do not want to enter into the merits of the matter, that there are aids going to a specific industry in a way that is contrary to the Treaty, the Commission is right to examine the matter, as the Foreign Secretary made clear yesterday.

The Foreign Secretary was also right to say that a time of unemployment is not the moment at which to push these matters to extremity. However, the hon. Lady is entitled to draw that matter to our attention. If the Community negotiates a framework of protection under which we are trading, it has a right—and the Treaty confers that right—to ask questions about some of these internal practices.

It is possible to argue whether the Community is too inclined towards free trade or towards protectionism. That is a legitimate argument that no doubt could go on for ever. But it is hard to argue the other case. It is hard to argue that we should go back in this dangerous world to negotiate in these matters as separate countries and be outgunned by the trading strength of Japan, the United States or the Soviet Union rather than to act as a Community—a body which together comprises the most powerful trading group in the world. We should develop and ram home that point more effectively than we have done.

This consideration leads us to a difficulty. The EEC increasingly negotiates as one, but it has great difficulty in reaching decisions. That is the price we pay for insisting that everybody must agree to everything. That is the result of a national veto. One would suppose from reading some reports that the EEC is in some way an efficient and tyrranical institution with overwhelming power. Anybody who has experience of the Community knows that its decision-making is weak and slow. That is the price we pay for the fact that it is a partnership of nation States in which everybody has to agree on everything.

I believe that the national veto will be with us for a long time and that any formal attempt to abolish or limit it by categories is likely to founder for some time to come. However, this makes it all the more important to try to improve the way in which the Community takes decisions by establishing the habit and discipline of working together more effectively than we do now.

One of the benefits of a directly elected European Parliament will be that it will bring pressure to bear on the Council of Ministers to reach agreement and to establish the discipline and habit of which I have spoken. What is needed, and what is still lacking in many instances, is the minimum degree of trust and respect for each other's interests.

This leads me on to what the Minister said about the protection of national interests. So long as the Community is a partnership of nation States, nations will struggle to protect their national interests. There is nothing sinful about that. Everybody does it, and it is not a ground for criticism. I do not dissent from what the Minister said about the fishing negotiations or the Government's efforts to arrive at a legitimate agreement protecting our interests. However, where we go wrong in our debates is that we never discuss how we can protect our interests successfully in the Community. The test is not noise, nor argument nor the cheers which a Minister is given in this House. The test is that of agreements satisfactorily reached and honoured.

Our misgiving and criticism of the Government in this respect is that, judged by that test, they do not seem to us to have been doing very well. It seems to us that they have allowed—this does not apply to all of them—the bargaining strength of this country, as measured against agreements reached, to run down to a dangerously low level.

I must refer—and I shall try to do so fairly—to the performance of the Minister of Agriculture, Fisheries and Food, who in many respects looms large on this scene. I believe that the right hon. Gentleman has two objectives, either of which is respectable but both of which are contradictory.

One of the right hon. Gentleman's objectives is to seek to justify his anti-Community beliefs. Nobody who has watched the right hon. Gentleman at the Dispatch Box, or who has heard his tone of voice and his snide comments when he departs from his ministerial brief, can doubt that one of his aims is to discredit the Community to which we belong. The cheers of many of his Labour colleagues, particularly those below the Gangway, are his meat and drink, his political sustenance. There is nothing wrong with the right hon. Gentleman holding that opinion, so long as he does not at the same time think that he can reach agreements in Brussels which are satisfactory to our national interest. The two views are in contradiction. I fear that we are reaching the stage—and this is a worry—where it is becoming apparent that these two convictions and aims of the right hon. Gentleman are not compatible.

The Minister of State spoke of the change in the balance of the CAP which he would like to see. I do not think many hon. Members on this side of the House would dissent from that view. We have had some fierce arguments over the scope and timing of the devaluation of the green pound. But on the level of common prices, the need to steer inefficient producers out of agriculture, and the need to keep access to New Zealand produced, I do not think there is a great deal of difference between the two sides of the House. I believe that the views held in this House will increasingly find an echo on the other side of the English Channel because they reflect a growing interest in the importance of the European consumer.

What has gone wrong is not the message but the choice of messenger. That choice causes us unnecessary difficulty, and it could be remedied.

Mr. Judd

I hope that the hon. Gentleman will cheer up. He seems to be a bit depressed. May I say in the most friendly spirit that I find his argument difficult to follow? He has said that the messenger is not doing a good job but that the interests of the consumer are increasingly important. Does he not agree that last year's increase in the common price levels was the smallest since our accession and that the Comunity, in putting forward a proposal of only 2 per cent. for this year, is continuing the trend and that this will mean a decrease in real terms?

Mr. Hurd

The hon. Gentleman would have been exact if he had added that the initiative came from the Commission for a comparatively small increase last year and that the Minister was obliged to agree to a larger increase and that this year the Commission has again proposed a relatively small increase. We shall have to see what agreement is eventually reached in the Council of Ministers.

I am not disputing that there has been an improvement in the way that common prices have developed. My view is that the Minister, despite his ability and courage, cannot reconcile the aims of discrediting Europe and working for the national interest, because they are incompatible in his job.

I hope that the Minister who is to reply will say something about access for New Zealand. He will have read reports of yesterday's statement by New Zealand's Minister of Agriculture. The Government are in a strong bargaining position on lamb, because the Minister does not have to ask for a change. He could resist any change.

There are two tolerable outcomes of the sheepmeat negotiations. One would be for the status quo to continue, except that there should be no discrimination against British producers and in favour of Irish producers. The other might be a common policy that steered well away from the mistakes of the dairy products regime and guaranteed access to New Zealand producers.

It is natural that the New Zealanders should be worried about the future, and so, too, should British housewives. I hope that the Minister will be able to give more information about where the Govment stand in these discussions which, I understand, are likely to begin soon.

Discussions of national interest lead us into the question of enlargement. Some people in this country welcome the possibility of enlargement for the wrong reasons. There was a hint of this—and it was taken up fiercely on the other side of the Channel—in the Prime Minister's famous letter to Mr. Hayward. There has been an argument that enlargement will so entrench the powers of the nation States that the central institutions will fade and wither away and that attempts to reach common policies will cease because it will all become too difficult.

That is how the Governments of Spain, Portugal and Greece view the matter. I am told that the Prime Minister of Portugal has said that he would not go to the trouble of taking Portugal out of EFTA in order to join an organisation which was going to turn into another EFTA. They are anxious to join an organisation which is politically important and a symbol of the unity of the continent to which their countries belong. The political case for enlargement to include Spain, Portugal and Greece is overwhelming and should be met.

I asked the Foreign Secretary a question yesterday and he rather brushed me off by suggesting that I should have known all about it. Having looked at the public facts, I do not think that the House does know about it. I am talking about the suggestion that the European Council, faced with significant elections in France and, possibly, Italy and the prospect of enlargement, should emphasise more clearly and firmly that one cannot belong to the Community unless one respects political rights.

There have been documents and declarations from Brussels, Copenhagen and previous Summit meetings. The Foreign Secretary said that something else was being drafted which would not be as specific as he would have liked. Can the Minister develop that and let us know how these freedoms are to be defined? Are they to be economic as well as political? What is to be said about the consequences of not abiding by them? This is an important matter.

It has been taken for granted that membership of the Community implies respect for the basic political rights which we also take for granted, but my hon. Friends and I believe that now is the right time to spell this out more definitely and imposingly.

Enlargement will create great problems, but we regard it as an opportunity to look again at certain practices and procedures of the Community that are not working as well as they should. For example, enlargement must lead us to look again at the question of languages in a European Parliament. I am much less expert on this subject than most of my hon. Friends in the Chamber, but it seems impossible that the Parliament could add to its existing burdens the burden that would fall on it if two or three new and difficult languages were imposed on the existing set-up.

Mr. Spearing

Two or three?

Mr. Hurd

I have always thought that one could get one's tongue round Spanish, but that Portuguese and Greek were very difficult. Of course, this is a personal matter.

Another topic that needs to be examined is the size of the Commission. which will come up for review anyway if there is enlargement, and the procedures of the Council of Ministers.

Mr. Russell Johnston

It is a terribly imperialist Britain thing to say that Spanish and Portuguese are very difficult while English is the normal language of people everywhere and must be adopted.

Mr. Hurd

I am not saying how the problem should be dealt with. I was tempted further than I meant to go. The hon. Gentleman will know from his experience that we cannot add three more languages, whatever their beauties and qualities, to the existing work load of the European Parliament and expect it to function satisfactorily.

It will be difficult to reopen some of these questions, but in welcoming our new partners we must do our best to see that they are looked at again. I hope that the Minister can tell us a little more about what happened at Leeds Castle when these matters were discussed. We have had little public information about that meeting. It was chateau diplomacy and we need to know more about how existing members propose to deal with the problems.

Enlargement should be used as an opportunity to make the present partnership work better rather than worse. That is the basis of our approach. As my right hon. and learned Friend the Member for Hexham (Mr. Rippon) said, the Community has to solve the problems that he mentioned, particularly the problem of enlargement. If it fails to solve them, it will wither away. That is not what he wants, as he made clear in his speech on the Third Reading of the direct elections Bill, and it is not what we want. There has been no backsliding on my party's attitude to Europe and the votes through the debates on the Bill are clear proof of that.

We are not committed to federalism. We were not committed to it under the leaderships of my right hon. Friend the Member for Sidcup (Mr. Heath), Lord Home, or Mr. Macmillan. We have never had that commitment, though there are some of my right hon. and hon. Friends who hold that belief, as do some Members in all parts of the House.

My right hon. Friend the Leader of the Opposition said in a newspaper inter- view last year that our children may want to think again. They may become impatient with the constraints under which we operate. But that is up to them. Our commitment is a different one. It is not a commitment to federalism. It is to make a success of British membership of the Community. It is to build on the partnership which already exists and make that partnership more effective, more democratic and more real than it is today.

5.31 p.m.

Mr. John Prescott (Kingston-upon-Hull, East)

The two speeches that we have had in the debate tend to reflect the changing styles of what we have witnessed in the European debates. One of the most impressive things that I have discovered in my time in the European Assembly is how the mood and style have changed. We can even witness the change within the United Kingdom delegation, and particularly the Labour Party delegation, in which every point of view in the party is reflected. That led to sensitivities and difficulties in our approach to European matters.

That kind of traumatic experience is one that the Government have undergone. The first two years of our membership have been spent in establishing the position that we should take, the sort of policies we should pursue and in what style we should pursue them. There is a difference—I make no arrogant point about it—between the British approach to politics and presentation of the case, particularly in the European scene, and that of other European Governments or politicians.

The report before us covers a six months' period. I want to talk about the 12 months' period which included the British Presidency and brought the immediate conflict on the British style into the arena of the Assembly in which we worked. Our Minister did well in attempting to present what was considered to be an honest British position which was clearly being painted all the time as some kind of a national position, as if that was to be condemned. There were people in our own party, or here in Britain, who felt that there was something wrong in defending or reflecting a British or national position.

I can remember a number of debates in the political arenas in which I worked in Europe, especially in the Socialist Group, in which it was extremely difficult to convince our comrades—particularly if one opposed Britain's entry into the Community, as I did—that there was some validity in the cases one was putting forward. One is treated contemptuously with remarks such as "You are against the Market". There is some truth in both sides of the argument. I feel that it would have been better for Britain to have stayed out of the Common Market, but that is now an academic argument. I do not think that the people would ever vote to leave the Common Market even if they were given a referendum. It seems to be a pointless exercise to become involved in that argument. Therefore, I am bound to look at the future of the organisations or institutions in which I am taking a part.

I could well be accused of seeking to take a course of action which would appear to be what I have previously called the least worst policy. Nevertheless, it is one that accepts that we shall remain a member of the Community. If we do not, events will take care of that. Politicians must make a judgment if they are to be effective in the sort of attitudes they are to adopt on the various policies, whether in the European or the national scene. The change of attitude that I have witnessed in the European Assembly is not the British arrogance, if that is what our critics choose to call it, our confidence or the intellectual force with which we put forward our arguments. The course of events has changed much more. If we look closely at these events, we can see how they are likely to shape our attitudes and how much they are shaping events to which we are asked to adjust ourselves.

The late Anthony Crosland, in his presidential speech to the Ministers of the Assembly, clearly emphasised a message that was not acceptable at that stage to the Community when he pointed out that the great emphasis in economic affairs now was on more desynchronisation in events rather than convergence. This had great and important effects on the economic problems that we were facing.

One can point, for example, to the problems of steel, textiles and shipbuilding and to the growing concern about unemployment in individual countries and in Europe at large. The idea that somehow by belonging to a larger unit we should be able to deal with the problems of growing inflation and unemployment more easily than in the nation State was much more questionable. This does not mean that the argument in favour of the siege economy is any more correct than the argument that we should deal with problems as a Community.

One could argue that in the growing change in world economies, where markets will no longer be open to free trade and where there is a growing tendency towards greater capacity to produce rather than greater capacity to consume, we are faced with ever-increasing problems of how we are to negotiate on a world scene a European share of shipbuilding, steel, cars, electrical goods and all manner of products. Textiles are probably the first example of where these negotiations started.

All that States are doing is what multinational companies have always sought to do, to control somehow the markets. We are embarking upon the same course. If we are negotiating against powerful nations such as Japan and America, it is inevitable that our hand will be strengthened if we can argue on the basis of a European continent. We can act as a countervailing power in the share-out of world markets for world products. So there are things to be learned from the various arguments.

If it is accepted that a new kind of international order is coming about and that markets will be arranged in a more orderly manner, it may be the nature of the political deal that we shall be forced to consider the philosophy embodied in the Treaty of Rome by which economic affairs are organised in the internal concept of the market. The late Anthony Crosland taught us that the desynchronisation process would considerably affect attitudes within the Market. One example of that is that we have witnessed our European colleagues in the Assembly who bitterly opposed in the economic committees any idea of import controls now being prepared to vote for them on steel or textiles. They argue that they are temporary, but that is nonsense. Nothing is ever temporary about economic development. These measures will become permanent in one form or another.

This is a consequence of seeking to achieve an agreed share against those who do not. They are required to make our trading partners, such as the Japanese, recognise the need for agreement. This use of a countervailing power has an effect on those who believe that somehow the free market forces, as in the philosophy embodied in the Treaty of Rome, are a means by which the invisible hand of the market could determine the economic and political relationships in the Community. That is not so. We are witnessing a fundamental change which is about to take place.

I do not find the Continentals getting too caught up about the letter of the law of the Treaty of Rome, unless it comes to TES, which we have recently seen, but that issue concerns questions of political advantage and national interest. But people recognise the real politics involved. We have tended to argue the reality of the political situation, and this has found expression in the national interest argument.

Mr. Roderick MacFarquhar (Belper)

I am following my hon. Friend's argument very carefully and I find it extremely interesting. Does he draw, from his analysis of the aims of the countervailing power of the European Community, a political conclusion for the development of the Community?

Mr. Prescott

Yes. I shall come to that because it is a theme I wish to develop.

It is important to consider how we approach our relationships with other Community members. Many of them have been committed for so long to the concept of a federal Europe with economic and monetary union and the development of greater integration. A watershed for that idea was when the Tindemans proposals were put forward. They were something of a halfway house, but they suited no one and they have been quickly forgotten. There are but passing references to them in speeches, and Ministers will not permit any time for them to be discussed. The whole movement towards that concept has therefore been put back, but I believe that that is more to do with the events of our times than with the conviction that it is a wrong concept to pursue.

I have seen examples of this pursuit of national interest in various committees and in negotiations on certain agreements within my own group in Europe when we have tried to reach compromise formulae. I recall at one stage one of our comrades telling me that he could agree to a particular proposal. When I asked him why he took that view he revealed that he had just spoken to his Foreign Minister. We have not reached the stage of approaching Ministers in that way, and I do not know whether they would talk to us if we did. Certainly we have not reached the stage of having consultations on the telephone, with them telling us what we should do. Indeed, we would not accept such a process.

As an example of my argument it is worth considering what should be done about the monetary compensatory amounts. The German attitude to this aspect of agriculture policy could hardly be labelled a European approach. The Germans were far more concerned with the consequences for their own national developments. Another example is what might happen with VAT if and when we ratify the agreement on it. Ratification would cost us less, but it would cost other countries more. In terms of national interest, therefore, it would be to our advantage to ratify, but that would be contrary to the interests of other countries.

There is a growing awareness of the reality of the politics which dictate the current situation. The latest flight into fantasy must be that of President Jenkins on economic and monetary union. This approach will be proven to be a flight into fantasy, not because it is impossible to introduce such a union. That can be done, provided the member States are prepared to pay the price and provided that the European attitude involves doing something through the economy to deal with unemployment. Unless that approach is adopted, there is little in the Treaty of Rome to solve the problem.

I do not want to go further into the question of economic and monetary union. Clearly, I shall be involved in debate on the subject both within the Socialist Group in Europe and in my own party. It is clear that the level of unemployment will increase considerably due to the cumulative effects of what has happened in the individual States. This reflects the failures of the individual States within the European context, but it also undermines the belief that membership of the Community will help us to solve that problem.

Already the economic targets that were set by the Commission have not been achieved. Inflation rates will be considerably higher, and in the next few years unemployment will go to 10 million or 11 million. No one doubts that. Membership of the Community of itself does not lead to that situation. The situation results from the nature and quality of the economic policies that individual States are prepared to pursue. It is important to make that point in view of the consequences it can have for attitudes to the Community. We accept that a new kind of international economic order is developing, and in that circumstance the countervailing powers that arise from being a member of a larger group may be of some benefit. The influences will change the very nature and character of the present Community.

Let me turn now to the question of the Assembly. I have said that I am opposed to a federal Europe, but events will prevent such a development. One cannot have a federal Europe without economic and monetary union, and that union will be absent if the political control required for it is not forthcoming in the next decade or so. Of course, I may be dead within two or three decades, but I shall not waste the time of the House in assuming the role of the priest by saying what will happen then. The Assembly is not a parliament, and I do not want it to be so. However, I do want it to be more effective. The Minister referred to the fact that the White Paper deals with increasing the powers of this Parliament to scrutinise European legislation. The fear is that there will be a trend towards more European policies through the use of Article 235 of the Treaty and without this country having to ratify other treaties. It is essential that the promise to bring forward a stronger Scrutiny Committee along the lines of the Danish Market Committee should be carried out.

If I may turn to Market mechanisms, an ironic situation surrounds the question of direct elections in that it seems that all countries will make provision for them but they will never take place. I know that I am taking a long shot in saying that, but I feel confident that it will be justified by events. Ministers, it seems, have committed themselves to a particular date, and in doing so they have damaged their own cause. I believe that the date will prove to be June 1979; that is the "nudge-nudge, wink-wink" message that I get. If that is the case, I believe that other member States will start to view the question of direct elections in the light of the consequences that the elections will have for them on their national elections.

Like a number of other nations, I believe that the Germans will feel increasingly sensitive. By that time we shall have had to take the political decision whether to admit Greece to the EEC. If the decision is in Greece's favour, that country will clearly argue that it should take part in the first direct election. That will cause sensitivity for Turkey, Spain and Portugal and those sensitivities will manifest themselves in political pressures.

More important, in the next 18 months, particularly in view of policies adopted on steel, shipbuilding and textiles, for which the Community alone cannot bear the blame, there will be an increasing shakeout in unemployment. It will be seen that the Community is less relevant in solving these problems and that central control and co-ordination is also less relevant. That affects the basic argument for the establishment of democratic control through direct elections. Public opinion is already not very strongly in favour of direct elections in a number of national States, and these developments will serve only to accentuate those feelings.

We are committed to holding direct elections and with these pressures coming to the surface I believe that the individual member States will start finding reasons for changing their approach—perhaps even on such minor matters as the location of the Assembly in Luxembourg or Strasbourg.

I wish to take up the point my hon. Friend the Minister made about the LoméConvention. I hope that he is successful in getting an executive clause written into that agreement. There is unity in the Community in principle on this point. Barbaric regimes which sit with us in other assemblies and condemn South Africa are just as bad as South Africa in that they murder and brutalise their citizens. I hope that this will be one effective and positive contribution towards the protection of human rights and improvement of the quality of life in the Lomécountries.

My hon. Friend the Minister referred to fishing policy. I am sure that in the end there will be a Community policy on fishing. I say that in spite of the rewriting of history by the right hon. and learned Member for Hexham (Mr. Rippon). That agreement will have at its heart an element of dominant preference, but I am convinced that there will be no exclusivity. Everyone who has looked at this problem believes that to be the case. If there is a dominant preference arrangement it means that we shall have to look at the second stage of development in this industry. I hope that the Minister is looking further ahead.

The industry will have to be planned because the raw material resources will determine the number of ships, the quotas, the question of licensing and the restructuring of the industry. The industry will therefore have to be considerably reorganised, planned and developed. I hope that that might be considered a consolation to the area of Humberside, which will be the area most affected by a fishing agreement. It should be regarded as the centre of the fishing policy, as JET has been the centre of the fusion programme, so that it may administer and co-ordinate policy with national bodies. In that way it could co-ordinate training and research and development in the industry. It could make a major contribution to helping Third world countries, especially those in the LoméConvention, develop their fishing industries. Moreover, Europe is now providing money for conservation fleets, which will require bases from which to operate. The one area that is geographically at the centre of European coastal states where the majority of fish exists—is Humberside.

I am not making only a constituency point. The map shows that the area of Humberside is right in the centre. My area will need compensation and tremendous help when the fishing policy comes to be implemented. Those who wish to see the development of the concept of Community policy, which we shall have in respect of fishing, should consider that development in the light of the difficulties and the consequences that will be felt by the areas concerned.

I am sorry that I have spoken so long, but I consider that in the period that we have been in the Community there has been considerable change of a fundamental kind, which Britain has greatly influenced.

My first speech in the European Assembly was concerned with defending the concept of national interests. This was a proper objective within the Community. It is the correction of those national interests which fashion the reality to which we are working slowly towards. I therefore encourage the Government to maintain both their style and policy.

5.52 p.m.

Mr. Russell Johnston (Inverness)

Almost all my remarks will be in a different sense entirely from those made by the hon. Member for Kingston upon Hull, East (Mr. Prescott). I hope that the hon. Gentleman will agree, when we disagree, as we certainly shall during the course of my remarks, that my views are no less firmly and honestly held than his own.

In a general debate of this sort, we can deal only broadly with a limited number of topics. I shall comment briefly on three issues. The first is our general posture, which was dealt with by the Minister of State, the hon. Member for Kingston upon Hull, East and the hon. Member for Mid-Oxon (Mr. Hurd). I shall say something about our objectives as the Government see them and as I see them. Lastly, I shall comment briefly on enlargement.

As a Liberal, I find the Government's attitude and behaviour within the Community to be profoundly depressing in terms of what I should like to see them doing. My depression is not relieved when the Leader of the Opposition proceeds to Brussels to declare that if there were ever a Conservative Government in this country their policy would be little different from that pursued by the present Government.

Mr. Hurd

I was present at the Press conference to which I think the hon. Gentleman refers. The declaration of my right hon. Friend the Leader of the Opposition was in exactly the opposite sense.

Mr. Johnston

If that is so, it was not the sense that was conveyed thoughout the British Press, namely, that the general posture of the Government was not greatly criticised by the right hon. Lady. I did not notice the hon. Member for Mid-Oxon making any notable criticisms this afternoon. I do not think that my remark about the right hon. Lady was all that unreasonable.

The Minister of State's speech in portraying our posture was a strange, sad and funny mixture of national chest-beating—a sort of South Country variant of the old Scottish braggart's toast of "Here's tae us! Wha's like us? Damn few"—and a sort of hesitant, half-hearted recognition of the potentialities and opportunities of membership.

Mrs. Dunwoody

It's nae a bad toast for all that!

Mr. Johnston

I am willing to give way to the hon. Lady, although I am sure that it would not be to my advantage to do so.

The Minister started with a purple passage that called forth the spirits of the vasty deep. I am always deeply suspicious of Labour Ministers who start quoting Churchill, as it is usually a prelude to something extremely questionable.

The hon. Gentleman told us that the British system is marvellous, direct, blunt, honest-to-God and straightforward, and not like the system of those funny Continentals with hemicycles and compromising and odd voting systems, how lucky they were to have us, and that we should beware that they might take advantage of us.

The hon. Gentleman then plunged into a list of items that Britain had contributed to the EEC. Finally, perhaps feeling that he had gone a little far, he said "Such a score card approach is not really satisfactory." However, he had been at great pains to spell out the score card. He ended with a sort of league table of infractions before the European Court in regard to the countries that had done badly or done well.

I say bluntly, directly and straightforwardly that we are regarded by the remainder of the Community as being in it for what we can get out of it and little else. I do not like the expression "us and the Continentals" which was used by the hon. Member for Kingston upon Hull, East. Leaving aside Ireland, the Continentals are those countries on the Continent of Europe. They are seven individual nations with their own priorities and historical pride. They are not a mish-mash of the Continent. In general, in those countries we are being increasingly considered as being in the Community for what we can get out of it and for very little else. We are regarded as not being prepared to make any real commitment, moral or otherwise, to the future of the Community.

I have been attending the European Parliament for most of the past five years since we joined, with one gap. I have noticed very much the change in attitude that has taken place towards the United Kingdom from the moment of our entry until today. It is a historical irony that we are, it seems, trying to prove de Gaulle right in his argument that the British were not committed to the idea of Europe. It seems that we are behaving rather like second-hand Gaullists without the style. Strangely enough, at the same time we are proving that his original contention was not far off the mark.

I cannot stress too strongly that our image of being concerned only with self and with short-term matters is bad in the working out of the long-term economic order, to which the hon. Member for Kingston upon Hull, East referred, and bad from the point of view of the British interests that it purports to defend.

Mr. MacFarquhar

Does the hon. Gentleman agree that, although de Gaulle may have used the argument that Britain would not be committed properly to Europe, it is a historical fact that a major reason for his keeping us out was that he felt that the Community would no longer be dominated by French influence, as it was in the days of the Six and before the change from Adenauer to Brandt, if Britain joined?

Mr. Johnston

I am sure that that was a strong element in his view. However, in fairness to history it is undoubtedly true that throughout that argument he felt that the British were not properly committed. That was his justification for the veto. To a degree, I think that we are proving him right. The bloody-mindedness that we seem awfully good at adopting is not the best way to win friends and influence people.

The Minister said "We state our objectives in a forthright and unruffled way." That leads me to my second point, which is that we do not seem to have any clear objectives. That lack of objectives, added to the abrasive pursuit of short-term aims, adds uncertainty to irritation. We appear almost to say that we should not have objectives, that we should not be involved in any of this business of idealism, and that we must be concerned primarily to make the thing work now. That is a view that did not lead to much dissension from the Conservative Front Bench.

If I remember correctly, the hon. Mem-mer for Mid-Oxon suggested that federalism was a suitable subject for his children but not something that he or the Conservative Party would touch with a barge pole, though he admitted that there were some recalcitrant souls who thought otherwise. I am a federalist. The Liberal Party is federal in its approach.

Mrs. Dunwoody

The hon. Member for Inverness (Mr. Johnston) has got all sorts of problems.

Mr. Johnston

It is always unfair to be nasty to ladies.

Those hon. Members who keep saying that they are not federalists and that federalism is impracticable should be in a position to say something in response to certain questions. I hope that the Minister will indicate his views on these matters.

The hon. Member for Kingston upon Hull, East attacked economic and monetary union and the fanciful ideas of President Jenkins. Although the Minister did not say that, he could well have done so if it had been in his brief. I do not think he would dissent from that view. If we do not have economic and monetary union, what is the alternative? There is the great word "convergence" which is much loved by the Foreign Secretary and was used by the late Mr. Crosland. What does it mean? If the Government are not prepared to face up to any movement towards an economic and monetary union but feel that something should be done and that we need some sort of co-ordination in industrial and economic policies, what is in their minds?

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson)

The hon. Member will recall the speech made by Mr. Crosland to which my hon. Friend referred. Surely the whole approach of that speech, which was widely and warmly welcomed, was that, instead of concentrating on economic and monetary union, the immediate problem was to avoid greater divergence. That was the essence of the speech.

Mr. Johnston

With respect, although I have much admiration for many of the things that the late Mr. Crosland did, I would not say that that speech, which I heard, necessarily received unrelieved applause from everyone. It was not the sort of speech that I should like the Foreign Secretary to make. It is not as simple as the Minister stated. It was not just that Mr. Crosland was saying that he wanted to avoid divergence. He was saying positively that there should be a degree of convergence without the hard, institutional shapes of EMU. I have never understood that as a concept.

Let us take the regional policy. There is not much about regional policy in the White Paper, but paragraph 64 states: Negotiations on the possibility of a non-quota section of the Fund, to be administered by the Commission, are still continuing. We know why they are still continuing. It is because the British Government do not want a non-quota section. It is not as if a large amount of money is involved. The amount of money spent on the Regional Fund is about 2 per cent. of 5 per cent. of the Community's GNP. In 1979, 620 million units of account are to go to the Regional Fund and the Commission proposes that about 13 per cent. of that should be spent at its own hand. If one conceives of a European Regional Fund, one has to allow the Commission, certainly following guidelines which are agreed in concert by all members of the Community, to set about some of these matters directly rather than through individual national parliaments. That is our view, and it is in part the consequence of a federal attitude.

I shall not dwell on the role of the Parliament because there is little time and we have only recently seen progress on the direct elections Bill. Our view is known. We favour a directly elected Parliament being given greater power.

When talking of objectives, even in terms of the Government's and official Opposition's approach to Britain's position, surely Britain, if it is unable to contribute much in the economic area, could pursue a positive catalytic role, trying not to provide division, but to encourage harmony.

One of the dangers in the Community is that the great Franco-German agreement, which has been the cornerstone of the European Community, is in danger of being worn a little. That is because France is probably moving to the Left politically while many people suggest and fear that Germany might be moving to the Right. The French attitude to Germany is changing. That is an area in which Britain could play an important role. Britain could ensure that the rapprochement which was one of the most important things at the beginning of the Community is maintained.

The question of enlargement was touched upon by the Minister. He said that the Government warmly supported enlargement. He said that it was needed to buttress democracy and that the costs were far outweighed by the political gains. That is an admirable thing to say. I should like to know more about what we are prepared to pay, because there is a certain amount of double-think going on.

Everyone says that we owe a political debt to Spain, Portugal and Greece for tossing off the yoke of dictatorship. Everyone says that we must maintain their democracies and help them. But what will be the economic cost of doing that? If we are serious about this, what price are we willing to pay? Some cynical people say that most of the problems will be in agriculture and will not impinge so much on us as they do on the French and the Italians.

But the effect on the Regional Fund will be enormous if it really is to be used to have a redistributive impact within the Community. We shall have to start paying out instead of taking in. If we believe what we say we believe, if we believe that it is important that these three countries adhere to the Community, we must face the cost.

What depresses me is the feeling that the Prime Minister sees enlargement not as an opportunity to strengthen the Community and make it more cohesive but as an opportunity of loosening it and making it a loose confederation of States. Many people see the EEC as a sort of hotted-up EFTA and not much more. They shy away from the advance of the supranational element, which for me is the vital element and one which I want to see developed. Such a development is essential if the EEC is to be able to tackle the internal economic problems of Europe and to play an effective constructive political role in the world as a whole.

6.10 p.m.

Miss Joan Lestor (Eton and Slough)

My hon. Friend the Minister of State, who opened the debate in such an evangelical and eloquent fashion, has accepted the result of the referendum, as I have, and that we are now in Europe and must make the best of it. As he and I fought shoulder to shoulder in the direction of getting Britain out, I hope that when he sees my name on the monitor he will come straight back into the Chamber, because I want to refer specifically to one of the points on which he touched. I shall therefore reverse the order in which I was about to make my speech in the hope that my hon. Friend gets the message.

One of the things that worries me is a small point but it was touched upon by the hon. Member for Mid-Oxon (Mr. Hurd) and my hon. Friend. That was the way in which matters are scrutinised in this House and the way in which they come before the House after decisions have been made.

I recently came across a Press report—I have done my very best to check it and cannot find that it is inaccurate—which made the point that the EEC regulation on cosmetics, which was before the Council in July 1976, has not so far come before the House, although it should have come before the House last month, as was intended. That regulation fails to bar the sale of hair dye which contains ingredients believed both in Britain and in the United States of America to be a potential cause of cancer.

I do not want to make the point any stronger than that, but it is argued by several medical schools and the cancer research departments in this country and in the United States that those certain ingredients have a causal relationship with the development of cancer, and that the permissiveness of the EEC regulation, which has not yet been before the House but has been approved by the EEC, allows those ingredients to be contained in hair dyes without any warnings. In the view of many people concerned with this matter, the scientists in particular, this EEC regulation is more related to commercial considerations than the possible development of health risks resulting from the ingredients.

The Department of Cancer Studies Research and the Medical School of Birmingham University confirm the likely link between those dye components and cancer. The United States National Institute for Occupational Safety and Health has made its concern well known and has issued a warning about the use of these components.

To be fair, at the time that the EEC was discussing these regulations on cosmetics and safety the scientists advising the EEC were not informed, or, rather, the up-to-date position was not then as clear as it is today. In fact the evidence was ambiguous, but I believe that it is far less ambiguous now.

In view of this information, which appears to be well substantiated, I want to know what is the method whereby this House can discuss this new evidence in relation to the component parts of hair dyes. Can we refer back the document in order that the safeguards and the regulations can be amended to take account of this?

The reason why I am so concerned about this matter is that I cannot find within the document anything by which I could have gleaned this danger. I had to go to other sources in order to find the loophole in the regulations, which have already been adopted. When a situation such as this occurs, it is very important that we have information and that the methods of scrutiny should be much stricter and much more fundamental than they are now.

It is on this ground that I pay tribute to my hon. Friend the Member for New-ham, South (Mr. Spearing). There was some indication from the hon. Member for Mid-Oxon that my hon. Friend was a rather funny person, being a watchdog over things that did not need to be watched, and that if we all kept a little quieter there would be a much smoother path for those in Brussels. I welcome what my hon. Friend has done. I wish that I had the energy and time to devote to scrutinising what is coming before the House late at night and a large amount of stuff that no one really has the time to plough through. This is one of the problems with which we are stuck.

I welcome my hon. Friend the Minister of State—I nearly said "comrade"—back into the Chamber. I was very pleased when he opened the debate. I said earlier that he and I fought shoulder to shoulder on similar lines against Britain's entry into the Common Market but have both accepted the result of the referendum. One of the things about which my hon. Friend and I were concerned was the effect that British entry and EEC policies would have on the developing world and particularly, as time went on, on the non-associated countries of the developing world. I was very pleased, therefore, when my hon. Friend referred to the fact that, concerning the developing world in general but particularly the non-associated countries of the developing world, things were nothing like as good as they should be and that there was a great deal more work to be done.

The document refers to 45 million units of account as progress in relation to the non-associated countries. That sum has been increased since the document was printed. It has also been said by at least two Opposition Members that those of us who opposed British entry into Europe have been carping and have been prepared to see nothing good coming out of the situation.

My right hon. Friend the Member for Kettering (Sir G. de Freitas), who is not present today but is a well-known devotee of Britain's entry into Europe, has himself expressed in the House his acute disappointment, in November 1975, about the developments within the Community in relation to the developing world in general. He said that one of the reasons why he had been such a devotee of Britain's entry was that he believed that the unity within Europe of all the member nations would result in better opportunities for the developing countries, irrespective of their relationship with the EEC. He expressed his profound disappointment about this matter.

In the reorganisations that my hon. Friend the Minister of State will remember so well, we asked for a fifty-fifty distribution relationship between associated countries and non-associated countries. As my hon. Friend has said, this has not been implemented.

When my hon. Friend expresses so warmly and, presumably, optimistically the hope that we shall achieve this by increasing the amount for the non-associated countries, I am anxious to know the basis of that hope and where the machinery is whereby this will be done. We may live on hope, but the developing countries cannot live on hope. They can live only on a basic commitment that we can give them and at which they can look in order that they can begin to measure what aid they are likely to get in the future and the effects that it will have upon them.

I remind my hon. Friend that progress on this matter has not been what either of us hoped or, I think, what many who were and are devotees of the EEC also hoped. It is a very great pity—this is why I mentioned my right hon. Friend the Member for Kettering—that people who were so enthusiastic about Europe often leave it to people such as myself to point out deficiencies rather than do it themselves, because it would make life a good deal easier if they also did this and we would not be seen simply as carping. My right hon. Friend the Member for Kettering was right in his comments.

In October 1972, the Paris Summit invited EEC countries to adopt an overall policy of developing co-operation on a world wide scale while continuing and reinforcing the co-operation developed at regional level. That was then known as the association policy. In July 1974, the EEC development countries confirmed the principle of financial and technical aid to non-associated developing countries. The amount was to be fixed by common agreement and it was agreed then that priority would be given to financial commitments to be entered into under the association then being negotiated, which became the LoméConvention.

From March 1975 to February 1976, there was the outline by the Community of a global programme of commitment to all forms of aid, including sums for the non-associated countries, rising from 1 million units of account to 2 million units of account in 1980. From 1976 onwards we got an ad hoc agreement for aid to the non-associated countries of about 30 million units of account, later raised to 45 million and increased more recently to 70 million units of account. I do not know whether the machinery that exists at present for giving any guarantee is to be changed. It rests on hope and on the persuasive patterns that others in the Community, such as those who care about these things, may adopt. That is no guarantee, but at the time of renegotiation I and, I believe, my hon. Friends believed that there was a guarantee under-lying this.

In comparison, those associated developing countries—they are, after all, 20 per cent. of the developing world—are receiving about 3,550 million units of account over the next four and a half years. That works out at roughly 700 million units of account over one year. There is an enormous difference between the two. I have raised this point with my hon. Friend as my main point because I know that he cares deeply about this, as does my right hon. Friend the Minister of State for Overseas Development.

In my submission, unless we can get some guarantee that machinery exists through which those non-associated developing countries will be able to stand equal to the associated countries in relation to aid, technical assistance and the rest, we have been grossly misled by what we have been told as the years passed and the argument continued. For this reason, I ask my hon. Friend to look closely at what is taking place in this connection and to bear in mind the concern which we share over the difficulties which we believed this country would face in this respect if it went into Europe, resulting in difficulties in the developing world.

6.20 p.m.

Sir Anthony Meyer (Flint, West)

I shall not follow the hon. and charming Member for Eton and Slough (Miss Lestor) except to comment that it makes it a pleasure for me to follow her rather than the reverse.

I was very struck by the tone, if not the content, of the speech of the Minister of State. I want to comment primarily on what I took to be the main burden of his speech, which was virtually that the politics of civilised confrontation, which is the tradition of British parliamentary democracy, is the kind of politics we should be pursuing within the Community. I want to question that and primarily to speak about the role of the supranational or transnational—call it what one may—element within the Community represented by the Commission; and it is to that that I shall be addressing most of my remarks.

Let me begin by saying that the collection of flatulent platitudes that constitute the White Paper that has furnished the pretext for this debate does not conceal the fact that the period we are discussing has been one of failure, on the whole, within the European Community. The Community is working badly because the member States of which it consists are behaving badly. The French take initiatives without consulting their partners. They conclude disreputable deals with the Irish to buy Irish lamb, not English lamb and, above all, not Welsh lamb. The Germans refuse to inflate at the rate we would like them to inflate so that we could sell them more of our goods. The Italians seem so preoccupied with their collapsing democracy that they are breaking almost every rule in the book; and even within Benelux, the blue-eyed boys of the Community, enthusiasm for the Community seems to be waning.

All the member States except perhaps ourselves make difficulties over the admission of Spain and Portugal, and to a lesser extent Greece, and over the crying urgency for reforming the common agricultural policy. Every member State has some vital national interest which it puts before the well-being of the Community as a whole. I am bound to say that this is a tendency which has grown and accelerated ever since the day when General de Gaulle, coming to power almost at the beginning of the Community's history, made it plain that he was going to put French interests first whenever they were seriously threatened.

We British are quite different. It is not merely that we have certain vital interests such as fisheries policy, the price of beef or butter, the retention of the pint and the mile or the right of the lorry driver to drive all day and all night without restriction, which we are to uphold at all costs. It is rather that we give the impression, at any rate, that we will uphold every single British interest, whether vital, important or piffling, at whatever cost to the well-being of the Community.

When I used the word "piffling" at Question Time, I was taken up. It is quite true that no interest is piffling to the person directly concerned, but one has to keep a sense of perspective, and pretty well every national interest is piffling in comparison with the continuity of the Community as a whole, because the continuity of the Community as a whole is a vital British interest of a quite different order, even from such extremely important interests as securing a proper fisheries policy. I was impressed by the speech of the hon. Member for Kingston upon Hull, East (Mr. Prescott), who spoke, I thought, with tremendous authority, not surprisingly because we know the esteem in which he is held within the Community, taking into account his previous attitude in the matter. I recall, too, his very courageous attitude at the time we were having a fisheries dispute of quite another kind with Iceland.

The determination to have our way, to have the British way at all costs, is not confined only to those hon. Members on both sides who are, or were, implacable opponents of our membership of the Community. There are many hon. Members, again on both sides, strongly favourable to the Community who are determined that the Community shall not be allowed to develop a will of its own, that it shall be based solely on co-operation among sovereign States and that the role of the Commission should be reduced to zero. That, elegantly expressed, seemed to me to be the attitude of the Minister of State who opened the debate.

Those same hon. Members who say that they will not accept any role for the Commission are usually those who say very loudly that they welcome the maximum degree of co-operation and that they want more and more co-operation on more and more things between fully sovereign States. Co-operation means compromise. Compromise means concession, and concession means that there has to be some British concession. Those same hon. Members who are loudest in demanding that there should be more and more co-operation among sovereign States are usually the loudest in denouncing any moves towards any kind of British concession on any subject whatsoever.

I wonder whether there is any hon. Member in the House who proclaims himself a believer in inter-State co-operation who is ready to say that there is one single British interest, even one piffling British interest, which he is prepared to concede to facilitate that process of co-operation.

Our recent debate on direct elections to the European Parliament seemed to be almost entirely monopolised by a succession of moans and groans about the salaries of the Members of the European Parliament, the powers that would be yielded to that Parliament and whether we should have miles or kilometres, pints or litres. I do not think that the European Community is about that sort of thing.

The Community is not about the salaries of European Members of Parliament. It is not about miles or kilometres. It is not even about stopping French trawlers from fishing in British territorial waters. I recall that not so long ago we were using gunboats to enable British trawlers to fish in Icelandic territorial waters.

The EEC is not even about stopping Russian trawlers from fishing in British or French territorial waters, though perhaps that is nearer the mark, or even about stopping Japanese cars swamping the British or European market, though again that is perhaps a little nearer the mark. What it is about, amongst other things, is whether the European Community, as the largest trading bloc in the world, can do what no one nation State can do, which is to use its immense power to pump more demand into world trade and so cut unemployment.

The Community is also perhaps about whether Europe can do in Africa what the United States Administration appears to have lost the will to do, which is to halt the relentless advance of Soviet imperialism in the Horn of Africa. It is also about whether we can use our influence, as the Americans seem to be unwilling to use theirs, to secure acceptance of the deal concluded in Salisbury and extend it to include the other nationalist leaders of Rhodesia. We have only to reflect on the way in which the French were resolute to intervene in Zaire last year, or the firm action that the Germans took to rescue their hostages at Mogadishu, to see that there is a potential for action in Africa which, if we were to combine our strengths, could be used to great effect.

Above all, however, it seems to me that the European Community is about no war in Europe. Twice in this century European civil war has developed into a world war with millions of deaths. I know that everybody says that it could not happen again, that the nations of Europe are no longer powerful enough to unleash a war on their own and that at any rate it is NATO that saves us from war, not the European Community. But that is to overlook the problem that arises from the division of Germany. I simply cannot believe that a divided Germany could have been restrained from playing East against West, even up to or beyond the brink of European war, in order to secure its unity, had it not been that the chance of playing a constructive role in the European Community provided an outlet for those formidable German energies.

Even without the hypothesis of a divided Germany, I cannot believe that without the European Community France would have indefinitely refrained from her traditional alliance with Russia in order to strengthen her position in Europe. The European Community provided her with an alternative way of strengthening her diplomacy.

The European Community was based on the need to end the murderous Franco-German quarrel. But the men of vision who founded the Community went one better. They set up the first really new political organisation to emerge since the birth of the nation State at the end of the Middle Ages. In this new kind of political organisation there was one essential ingredient, the introduction of a new element, not truly supranational but, I suppose, transnational—the European Commission, which has a very powerful but a very tightly defined role.

The Commission was envisaged not as a passive mediator between States with conflicting views but as an active initiator of policies in the best interests of member States individually and as a whole. As my hon. Friend the Member for Mid-Oxon (Mr. Hurd) expressed it very well at the Dispatch Box, in the common agricultural policy we see the Commission performing precisely that role, not only mediating between member States with conflicting interests but trying to evolve a common policy to the advantage of the member States. That common policy is not merely the result of putting together the various national requirements and pooling them. It is a conscious attempt to devise a constructive policy in the interests of all.

Where I differ sharply with the Minister is that I believe that, federalism or no federalism—like the hon. Member for Inverness (Mr. Johnston), I am a federalist, but I do not think that that is relevant at this stage of the argument—we must accept an active role for this unique creature, the Commission, in evolving this kind of creative compromise—limited powers but a creative role.

The Commission proposes, the Council disposes. But we must beware of preventing the Commission from fulfilling its proper function of proposing. This is miles away from federalism. There will be no advance towards federalism as long as the nations retain their power of veto. More is the pity, say I, but it would be foolish to go on arguing about this.

The system of the Commission as the active initiator of creative compromise—I believe that the proper description is "the Community approach"—and the readiness of the member States to accept and work this system constitute the European Community's epoch-making contribution to political progress and the improvement of man's estate, for this technique enables real co-operation to go very far without removing the power of veto from nation States. But it can work only if the Commission is allowed to carry out its role, as it did brilliantly during the first few years of the Community's existence.

Of course, it is true that the Community approach was gravely weakened by President de Gaulle's ruthless insistence on getting France's way at all costs. But even at his most unbiddable de Gaulle was thought to be, and I think that he was, trying to strengthen the European Community in its relations with the outside world. Unfortunately, that is more than can be said of Her Majesty's Government in their present mood.

I said that the European Community was the first new political organisation to emerge since the end of the Middle Ages, a new and hopeful organisation, but incomplete, because none of the six founder nations had the parliamentary democratic tradition that we have. Surely, they thought. Britain with her 600 years of parliamentary history could supply what the European Community lacked—proper parliamentary control over the institutions of the Community.

Therefore they looked to us, and they looked in vain. Despite the high hopes raised by my right hon. Friend the Member for Sidcup (Mr. Heath) and by the late Sir Peter Kirk as leader of our delegation to the European Parliament, it has now come to this: that Her Majesty's Government, having promised to be ready to hold direct elections in 1978, will not be ready until 1979.

Worse still, hon. Members, faced with the problem of how best to elect the European Parliament, direct all their attention to snarling about salaries and whining that the House may lose power and influence to the European Parliament—this House, which has already surrendered most of our powers and most of our sovereignty to the bureaucracy of Whitehall or to the Trades Union Congress, and which is about to hand over what remaining powers we have to Edinburgh and to Cardiff.

But it does not have to be like this. None of the eternal moaners is present today. When I talk about them, I am obviously thinking of the right hon. Member for Down, South (Mr. Powell), my hon. Friend the Member for Banbury (Mr. Marten) and the right hon. Member for Battersea, North (Mr. Jay). I expressly exclude the hon. Member for Newham, South (Mr. Spearing), who at least has something newly destructive to say every time he makes a speech on the subject. The eternal moaners are always with us, making, as it always seems to me, exactly the same speech in every single debate. That does not bother me. What bothers me is that so many hon. Members on both sides who support British membership of the Community continue to do so in a half-hearted and apologetic way, reluctant to admit that if the Community is to work, we must allow an active role—by which I mean a growing role—to the European Parliament and to the Commission. Unless those who believe in the Community are prepared to say this, I am afraid that the moaners and groaners will have it all their own way.

The European ideal is not dead. This is proved by the enthusiasm of hundreds of thousands of young people. Above all, there is the keenness of the new democracies of Europe to join the Community as soon as they possibly can. I say very firmly that I hope there will be no delay whatever in admitting Spain, Portugal and Greece, and I believe that this must go hand in hand with strengthening the central institutions of the Community.

The European Community can do far more for its citizens—to raise their living standards, to save them from war and to give them a fuller and richer life—than any single member State. It is time for those who believe in the new Europe to say so, and to say so out loud.

6.43 p.m.

Mrs. Gwyneth Dunwoody (Crewe)

The hon. Member for Flint, West (Sir A. Meyer) has, I think, expressed one of the very few reasons that I would ever be prepared to consider for suggesting that the Community is playing a positive role in European development. It is that simply by existing it stops what he chooses to call a civil war and what I would call a war between nation States. But I am afraid that I differ from the hon. Gentleman fundamentally when he then goes on to talk about the Community in terms which, frankly, I do not recognise as being in any way related to the Community as it exists.

Let us start with the Community institutions. The hon. Gentleman says that here we have a wholly unique organisation which has a driving role of initiation. It must decide what is best for the peoples of Europe and put it into operation. That is a total and utter travesty of the truth. I do not believe that the Community is unique. One could say possibly that ancient Rome must have had a similar organisation at the centre in order to control its metropolitan divisions and to spread its administration throughout its existing empire.

But the real hazard about the Community organisation is a fundamental one. It is that the division is staffed at its head by politicians and by a multinational civil service, who are, if I may say so, in a rather difficult position. To begin with, if the Commissioners are to be really useful and effective, they must be soundly based in their own political system. They must be closely linked to their own States in order that there can be a two-way traffic of information between the States and the Commission. The civil servants themselves must have sufficient flexibility and understanding in order to be able to administer what is, after all, a very complex multinational task.

The hazard is that if the Commissioners are soundly based in their own political system they do not want to find themselves in the Brussels set-up. This is clear. Many of the people who spend most of their working lives in Brussels soon become removed, bit by bit, from the reality of the political situation in their own country. Far from representing this supranational idea that the hon. Gentleman puts forward, they reflect all the worst features of the nation States, without being able to perform the political task that is best performed by the Council of Ministers.

There is a fundamental problem, therefore, with the Commission, and the civil servants in that Commission demonstrate the difficulty. No matter how efficient they are in their posts, in many cases the job above them is reserved for someone of a different nationality. The whole structure is an ossified and ossifying one. It is not one that reflects a sensitivity or a flexibility about European politics. Indeed, the very opposite is the case.

We are told that when we have directly elected representatives in the Assembly all will be totally different. I am sorry, but I do not think that that is so. I believe that we shall see a sort of professional organisation of people who are less able to represent the real strands of political thought, and who are more likely to carry on the sort of abstract discussions which we all too frequently now get in European institutions, which owe very little to the day-to-day political rough and tumble of a parliamentary system such as ours.

This is what has dispirited me about the debate. There has been an astonishingly defensive note in the speeches from the Opposition Benches. Hon. Members appear to be suggesting that we had been expected, with our parliamentary system in Britain, to make a very strong contribution, whereas all we are doing is bringing trouble to our good European friends. I wonder whether the hon. Member for Mid-Oxon (Mr. Hurd) will accept that in fact it is the very openness of the British parliamentary system which has the most to contribute to European discussions. It is because we discuss openly in this House, argue openly in this House and debate the important facts in this House, that we are able to contribute practical ideas to our European colleagues. That should continue to be our strength. We should not be ashamed of that sort of discussion. We should try to suggest that these very qualities are of most use.

I want to address myself to one or two very simple but vital points. It is no secret that I was not a great admirer of the European Community and did not wish to see this country enter it, but what now concerns me is something which is, I think, of even greater concern. I detect an increasing tendency inside the Community to close the doors on new ideas and on new types of thought. One of the main planks of the Community is the agricultural policy. It is plain, since it spends 69 per cent. of the Community budget—and, with supplementary budgets, up to 80 per cent.—that if it is to continue, it has at least to show signs of change.

All of us in this House agree that there is manifestly a case for a completely changed common agricultural policy, and yet, far from any real practical thought being given to changes in the CAP, it is becoming increasingly clear that certain member States are actually seeking to reproduce the existing conditions of the CAP in a Mediterranean plan, which they hope to put into operation before the accession of the new Mediterranean States. In sheer cost, in economic and in political terms, the damage that that will do to the European Community is far greater than any so-called unwillingness on the part of the British to contribute to political thought could possibly do. The Mediterranean plan which is now suggested, and which has been briefly discussed in the document before the House, will, I believe, contribute to a growing and frightening tendency on the part of the EEC to build protective barriers around itself.

The CAP increasingly seeks not only to give a reasonable standard to its own farmers—which most people would regard as an acceptable attitude—but to go into competition with other suppliers outside the EEC. If there is any doubt about that, I would draw the attention of the House to discussions that took place with the asociated countries such as Cyprus and Israel, for example, and even with large trading blocs like America.

Internally the CAP is actually contributing to the imbalance that exists in world agriculture. It shows no political will to change. We talk about the fact that the British have problems with regard to the revaluation of the green pound. We talk about the fact that British farmers have difficulty in seeking new investment. But we do not discuss the fact that it was the effect on German farmers which caused the German Government to oppose the revaluation, not because they were too worried about the British doing something which they had been asked to do for many years, but because they were concerned that the German farmers, who have been receiving restitution payments, would suffer considerably if those payments were reduced.

Mr. Hurd

I am following the hon. Lady's case carefully. Does she accept that there is another side to this argument, namely, that on the initiative of the Commission last year—we cannot yet be sure about this year—the French and German Governments, on behalf of their farmers, accepted common price increases which markedly under-recouped their farmers for the extra cost which they had borne because of inflation? Is not that a sign of grace?

Mrs. Dunwoody

I have seen very little evidence of that during the time I have been serving on the Agriculture Committee. The levels at which the overall prices are fixed are always concomitant with the other advantages that can be derived from the CAP for the Mediterranean and German farmers. There is no doubt that that is what is continually happening. It will happen again.

I do not see any evidence of a political will to admit Greece, Portugal or Spain, either in the near future or even within 10 years. There are suggestions that there should be a transitional period of 20 years for these countries before they can benefit from full membership. There are suggestions that there will have to be very long negotiating periods. I detect an astonishing lack of political commitment with regard to widening the Community. The reason is that increasingly the EEC is becoming a small grouping of high tariff barrier protected, commercially oriented countries concerned with defending their own interests.

I take up one point made by my hon. Friend the Member for Eton and Slough (Miss Lestor). In the ACP negotiations with the EEC in Lesotho at the end of the six-month period it was made quite clear that the associate countries not only regarded a commitment of so many units of account as important but required a positive commitment on the part of the Community to change its agricultural policies. They particularly quoted the problems of sugar, bananas and rum.

There were many acrimonious discussions about the measures which the ACP countries felt were needed. Indeed, Commissioner Cheysson seemed to give a clear commitment that he was actually seeking to limit sugar production, for example, in the Community in order to help the ACP countries.

But what happened? When we came back to Europe we found ourselves faced not just with a plan which did not increase the overall level of monetary assistance to the ACP countries but with plans from the Commission to extend export rebates on manufacturing foods into the area of what is already a very delicately balanced world market. As a result, the very actions of the EEC will probably distort the whole world price.

I do not believe there is an idealistic commitment on the part of the EEC, either to the ACP countries or to the non-associate countries. Indeed, there has been astonishingly little evidence of anything of that sort. I should like to see a very different approach, not only from the Council of Ministers, but from our own Government in bringing forward a positive plan to expand the action of the EEC in this regard.

My main argument is that I do not believe that this House has yet learnt how to deal with the flood of legislation that continually pours out of Brussels. Every time we say this we are accused of taking up a British position. There is nothing wrong with that. Working in the European institutions has made it astonishingly plain to me that everyone takes up a national position. People do not find it difficult to do. They are very happy to talk about European institutions and European politics so long as they are talking about them in distant terms. When we talk about the GATT negotiations or the ACP negotiations, we find a common element of agreement among Europeans. But when we talk about some aspect of internal industrial problems, we find very great divisions. There is a very strong defence of the nationalist position.

I do not regard that as reprehensible. What I do regard as reprehensible is the constant carping criticism in this House by people who seem to think that the British are the only people who take this line. The British are perhaps the only people who openly discuss their worries. That will be a hazard with regard to a directly elected parliament, because internally we have seen a clear demonstration of the fact that behind closed doors there will be a great deal of acrimonious, useful and constructive political discussion. But the hazard is getting the same people to make the same points openly in order that other people may learn what their views are on the possible development of Europe.

Europe is at a most dangerous stage. The old six nations are becoming more rigid in their views with regard to the political development of the Community. They are coming increasingly—the hon. Member for Mid-Oxon (Mr. Hurd) may say that it is our fault, but I do not believe it is anything of the sort—to regard the new member States as an irritant, a difficulty and an added hazard. This point has been made time and again. What is dangerously lacking is any political commitment to expand the Community in any way that will make it a stable and sensible political unit. If we do not get that, the remarks of the hon. Member for Flint, West will be pie in the sky, because his whole theory of political stability will go completely out of the window.

What is happening is that the commercialised nations of Europe are building themselves a wall of privilege and defending themselves against anyone who wishes to come in and who may damage their economic or political stability.

I would welcome the immediate accession of Spain, Portugal and Greece. But hon. Members should be in no doubt that that is not the attitude of the majority of nations in the EEC. They are not prepared to pay for it, they are not prepared to support it, and they will do everything that they can, short of using the veto, to make it very difficult to achieve.

I believe that this House should do two things. First, rapidly it should look at the means of examining all of the legislation, internally and externally, which will affect Britain's trade. Second, it must look at the political attitudes that are being adopted. I believe that all the talk about economic and monetary union is almost so irrelevant as to waste our time. I do not believe it is a practical possibility, and I do not believe that the people who talk about it believe that it is a practical possibility. But what is a practical possibility is that, unless we look at our views on enlargement, Europe will face precisely those stresses and strains which Opposition Members wish to avoid, and I see no political will to do anything about that in the Community and its institutions or, I may say, among members of the Conservative Party.

7.0 p.m.

Mrs. Elaine Kellett-Bowman (Lancaster)

I come from a part of the United Kingdom where people are not in the habit of mincing their words. Therefore, I am all in favour of a robust presentation of the national case when we are in Europe. However, my father used to say to me "You do not persuade people to put their best foot forward by treading on their corns", and I am sorry to say that that is what we have done all too often in Europe, especially under our own Presidency.

The hon. Member for Crewe (Mrs. Dunwoody) said that there was a tendency to close doors on new ideas. This simply is not so. The weakness of EEC policies lies all too often in the way that they are implemented by member States. I have in mind, for example, the outrageous implementation of the regional policy by the United Kingdom Government.

The hon. Member for Crewe went on to say that she would welcome the entry of Portugal, Spain and Greece immediately. I am very much in favour of this, but I can imagine nothing less in their interests than for them to be admitted immediately without going into all the problems that they will face on entry.

Naturally, I welcomed the Minister of State's presentation of the work of the Community over the past six months, especially his emphatic insistence that the Economic Community should not be made the scapegoat for events for which it had no possible responsibility. Yet how often is that done by those who are still fighting the referendum campaign? It is astounding, for example, how many people believe that metrication was forced on us by the Common Market, whereas in fact the Labour Government decided in principle in 1965 to go metric and set up the Metrication Board in 1969.

As an hon. Member representing a North-Western constituency, and proud of it, I am particularly glad that the EEC devoted so much effort during the period under review to trying to put an end to the flood of low-cost imports from third countries which are rapidly destroying what remains of our textile industry. It is still sometimes assumed by those who are unacquainted with this vital industry that it is old-fashioned in its attitudes and out of date in its machinery and that for those reasons it cannot compete. Nothing could be further from the truth. It is the most technologically advanced and the most heavily capitalised of any industry in the United Kingdom, with the possible exception of chemicals. Equally important, its industrial relations have always been and continue to be superb. Its work force has adapted rapidly and continuously to new work methods and to every technological advance as it has come along.

Despite all this, the textile industry is rapidly being destroyed by low-cost imports from countries which can by no stretch of the imagination—not even that of the hon. Member for Eton and Slough (Miss Lestor)—be described as underdeveloped. I have in mind countries such as Hong Kong, Taiwan, Brazil and South Korea.

The old GATT Multi-Fibre Arrangement was a bitter disappointment and provided little hope of continued survival for our textile industry. In terms of containing imports, the MFA was like a colander. Now the new bilateral negotiations negotiated with 31 supplier countries will provide a greatly improved degree of protection against low-cost imports, especially graded according to the sensitivity of the product and the degree of market penetration suffered.

Equally important, there will be automatic safeguard mechanisms to bring new sources of disruption under control, thus avoiding the situation which has arisen in the past when low-cost suppliers have sent imports here indirectly via one of the underdeveloped countries one after another as the loopholes have been closed. Now, the Community's application of the new MFA is dependent on the signature of these agreements.

I want to say a few words about the Social Fund, because I have the privilege of serving on that committee. I believe that this fund is far too narrowly conceived. Indeed, it is not at all what we in this country mean by a social fund. It is really basically a retraining fund, and the money which comes to the United Kingdom from it goes, alas, like that of the Regional Fund, into the bottomless pit of the Exchequer's Budget deficit. Indeed, when United Kingdom charities which carry out retraining have asked the Government whether they might apply for EEC training grants, they have been astounded to be told that, without their knowledge, application had been made on their behalf and the resulting cash had been deducted from their normal Government grants. That, however, is not the fault of the EEC. The fault lies in the way that we in this country conduct our affairs. However, I am happy to say that in many ways the Social Fund has been improved considerably in the review of its rules which has just taken place.

One of the greatest problems was the delays between the completion of a project and the receipt of grant. Clearly, the more hard up the institution or country concerned, the less able it was to finance its share of the project for a protracted period. Now, payments will be made by instalments—30 per cent. at the start of the operation and 30 per cent. at the half-way stage. Moreover, the paperwork has been greatly simplified by the adoption of standard costs. Many of the institutions involved have not got the clerical expertise to fill in reams and reams of forms, and this is a considerable improvement.

I look forward to the day when we can make further progress and turn the present Social Fund into a power house of ideas and assistance for imaginative schemes which voluntary bodies struggle to establish and continue. Such initiatives as they bring forward must not be allowed to die for lack of nourishment.

The period under review does not cover the new guidelines for the Community Regional Fund. Suffice it to say that the new guidelines are a vast improvement on the old ones and are the result of the experience gained over the first three-year period of working of the Regional Fund.

Again, it is not the fault of the managers of the fund in Brussels that aid to the United Kingdom is channelled wholly disproportionately to politically sensitive areas such as Scotland and the North-East, since applications can be made only through national Governments. But these are warts which can be removed.

I believe that had it not been for our partnership in Europe, our economic situation and our level of unemployment, bad though they are, would have been infinitely worse. I look to the future to iron out the problems which still exist so that all the member States can move forward together to a more prosperous future.

7.8 p.m.

Mr. William Hamilton (Fife, Central)

I have sat through every minute of this debate, and I must admit that I detect no atmosphere of excitement in it, either in the attendance or in the content of the speeches. But, like the hon. Member for Mid-Oxon (Mr. Hurd), I do not attach too much importance to the sparsity of today's attendance. After all, it is a Thursday, we have been through the trauma of the Scotland Bill for quite a while, and there is to be no vote tonight. For all those reasons, hon. Members have dispersed themselves to their various constituencies. So too much should not be made of that.

What is more relevant is the speech the hon. Member for Inverness (Mr. Johnston), in the course of which he brought in the words "convergence", "economic and monetary union" and "federalism". They are words which are never off the lips of my constituents in Fife. This is where we have failed. It may be our fault. It may be the fault of our public relations. But ordinary people at the moment see little relevance in Europe to their problems as they see them day to day.

In the course of a speech in the plenary session last week or the week before, I said to the President, Roy Jenkins, "Please do not plug this expression 'economic and monetary union'. It is so far in the distance as to be meaningless." People who are in the dole queues, who are existing on supplementary benefit or its equivalent in Europe, do not understand what we are talking about when we speak of federalism and economic and monetary union. These may be long-term ambitions, desirable objectives for some time in the future. At the moment we in this country, and others in Europe, are bogged down with national problems. These are problems which cannot be solved entirely within a national context. That is the point we ought to be plugging.

We cannot afford to adopt a superior "Little Britain" attitude, saying "We can solve our problems better in isolation." Those days are gone. We have to live within a bigger economic and political context. The only regional context which is immediately available to us is the European Economic Community.

When the hon. Member for Mid-Oxon was talking about our lack of ability to conceal what is least important to our national interest the better to get what is more important, my hon. Friend the Member for Crewe (Mrs. Dunwoody) interjected from a sitting position with a revealing comment. I took it down. She said, of our Ministers, "They are doing so well that they are unpopular." That is our trouble. Whether we like it or not, whether it be in NATO, the United Nations or any other international organisation, we have to learn how to compromise and when to compromise. There are several ways of saying "No." Equally there are several ways of saying "Yes."

The Minister of Agriculture, Fisheries and Food came back to the House seeking the cheap plaudits of those on the Labour Benches who are anti-European anyhow. When he was Chief Whip in the 1964–67 Parliament he took us through the Lobby on a three-line Whip in favour of entry into Europe. My right hon. Friend Is, of course, entitled to change his mind. We all are. But it is no good adopting that posture and then going into Europe and trying to get compromises from people when he will not compromise. My right hon. Friend very nearly lost us the JET project as a result of what he did about agricultural prices a year ago.

I remind my hon. Friend the Member for Crewe that when Nye Bevan was trying to get the National Health Service legislation through the House—no one dares oppose the principle of the National Health Service now—he sought the co-operation of the doctors. This is not an exact analogy but it is close enough. We are trying to get bitter opponents on to our side. Nye had to compromise on certain fundamental principles. We are living with them still. The private pay beds were a direct compromise which Nye Bevan had to concede to the doctors to bring the National Health Service into existence.

I want to make one or two comments about the state of the Community which are dealt with in the document before us. The document deals with immediate problems. It is unfortunate in some ways that the idealism with which the Community was established has not disappeared but been very much diluted by the proper concern over immediate problems. I have in mind problems such as unemployment, inflation, sluggish growth and the worldwide recession to which the Minister of State referred. It is the worst recession in 40 years.

Does anyone, irrespective of the side of the argument he is on, believe that any of these difficulties could have been more easily solved, or would be more likely to be solved, if we had remained out of the Common Market or if we got out now? Does anyone seriously believe that we can better solve our problems outside the Community rather than inside? Who believes that we can solve any of our problems alone, whether they concern defence, foreign policy or whatever? The hon. Member for Mid-Oxon mentioned the trade negotiations which the Common Market is undertaking on our behalf. We are better off for that.

It is much more effective that the Nine should speak with one voice than that there should be nine separate voices. The influence we have on South Africa, one of the most detestable regimes in the world, is the more powerful because we speak with one voice, the voice of the Nine. The Minister of State mentioned the undesirability of trying to gauge the advantages and disadvantages of membership simply by arithmetical calculation. I am afraid that we all do it. We try to put the pluses on one side and the minuses on the other. It is strange that people who describe themselves as international Socialists should say, almost as a reflex action "If we have not got more out than we put in it is a bad thing." Even assuming that we could do those sums, I do not believe that that is a very attractive philosophy, certainly bearing in mind the principles we believe in.

The hon. Member for Flint, West (Sir A. Meyer) referred to certain ideals with which the Community was inspired. No man or woman in Europe under the age of 30 has known what a world war was like. I do not say that that is simply because of the existence of the Community. There is, however, no doubt that the Community has made a tremendous contribution in this direction. The fact that the Nine—I hope it will soon be the Twelve—can get round the table and talk to one another, seeking to solve extremely difficult problems, national and international, economic and political, is a great help. The economies of these countries are so interlocked that war between them would be impossible.

The European Coal and Steel Community is in many way the most important organisation within Europe. War between Germany and France, the countries which primarily caused the two world wars in Europe this century, is impossible now because of the interlocking of the iron, steel and coal industries of those countries. That is worth more than 5p on the price of a pound of butter.

When the argument is reduced to the price of butter I say to those under the age of 30 "Are you prepared to pay extra for your butter if, by keeping within this institution, you avoid the horrors of war that your fathers and grandfathers endured?". I know what the answer will be. The young people know. They have a much longer view on these matters than the older generation.

The Nine are pursuing common aims in foreign policy. My hon. Friend the Member for Crewe has visited Israel. Why is Israel interested in the Community? It is because the Community is the biggest trading bloc in the world and Israel wants to be involved with it. It wants some kind of agreement with it. My hon. Friend has played her part there. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has visited the United States under the aegis of the Community engaged in the same exercise. As the world's biggest importer and exporter the EEC is playing a leading role in the North-South dialogue and in the Helsinki agreements, in detente with the Soviet Union, even with the COMECON countries. They are anxious to increase their trade with the European Community.

My hon. Friend the Member for Eton and Slough (Miss Lestor) was not quite happy about the LoméConvention aspect, but it is the intention of the Community to help these countries. There is a better prospect of giving them more help through Europe than through separate national States. Our record on overseas aid is not all that great—in fact, it is something to be ashamed of. The prospects for aid are far greater within the European context than outside it.

I return to the question of pluses and minuses. This is not an attractive argument, but since it is continually put up by some of my anti-European hon. Friends, I feel that I should put some figures on the record. Since our entry our gross payments to the EEC budget have been just over £2,000 million up to the end of 1977. In addition, we have paid some hundreds of millions to the European Investment Bank and the European Coal and Steel Community. Our total contributions to the budget would be about £2,500 million. Aid received by the United Kingdom in the same period has totalled more than £2,000 million. If we insist on doing this squalid exercise, it is more or less a rough balance.

It is true that most of the aid we have received is in the form of loans, but they have been at preferential rates of interest and they have helped in the retraining of young people and the restructuring and modernising of our coal, steel, agriculture and fishing industries and in North Sea oil. European investment has been ploughed into these areas of direct national interest.

Total loans from the Regional Fund were £18.7 million in January this year and £60.8 million for 1977 as a whole. I have comparable figures for help given from the Social Fund, from the agricultural guidance fund and from the ECSC.

I have one or two examples of what has happened in Scotland. I mention this particularly because of my constituency interest. These figures have not had the kind of publicity that they should have had. It is not generally realised just how much help has been given by the Community in the form of grants and loans. Of the £18.7 million just announced for the United Kingdom from the Regional Fund, £6.75 million is going to Scotland.

Mrs. Dunwoody

About one-third.

Mr. Hamilton

Yes, it is about one-third, and my hon. Friend complains about it. But she is not a Scottish Member. I am, and I welcome the aid. Of that £6.75 million, £3.1 million will go on the establishment of a whisky blending, bottling and casing complex at Shield-hall, in Glasgow. There will be great cheers from the Scots at that news. Another £3.3 million is going to Shotts, in Lanarkshire, for producing diesel engines, and there are lesser projects in the Isle of Lewis and the Isle of Skye. These are relatively small in cash terms, but they are very important to small communities.

I shall give a more substantial example of European aid. There is a £25 million loan for improvements to the Edinburgh sewerage system. Edinburgh has been Tory for goodness knows how many years, and its sewerage system has been sadly neglected. Now it will be given help from the EEC.

Mr. Prescott

While I appreciate that all aid is welcome for Scotland, Humberside and other places, I maintain that the aid is only proportional and a very small proportion of the total allowance made by the State. Surely my hon. Friend is not suggesting that these projects would not have gone ahead without the European contribution.

Mr. Hamilton

Certainly I am. The Edinburgh project would not have gone ahead. Of course, these are small sums compared with the total that is being paid, but they are very important. We received about £300,000 from Europe for a reservoir in Fife and we strove might and main to get that cash. It is very important, so let us not underplay it.

It is argued by some that the EEC has not got a human face. I think it has. We must tell our people that many of the improvements taking place in the training of unemployed people and young people, and in the restructuring and modernising of industry and infrastructure are being paid for in significant proportions by European funds. The sooner we say that and are proud of it, the better.

Grants totalling more than £400 million have helped more than 20,000 British workers to retrain. Funds from Europe have been used increasingly to help handicapped people, to stimulate the creation of jobs, and to combat poverty. In terms of national aid, these are small sums, but they are none the less important.

I have been a European ever since the idea of a Community was pioneered. I make no apology for it. I believe that our future lies in closer and closer co-operation within the Community. I regret to say that my Government's record since we entered the EEC is not good. We have given the impression all the time that we are reluctant partners. The reason is that we safeguard and protect our national interest with much less assiduity than others. We are not as skilful as they are. We use abrasives rather than lubricants. We must learn to use the lubricants. At the moment this House is so divided that it must be run by lubricants. We have to learn to live with the Liberal Party because it is enabling my Government to survive and if they can survive for another 12 months it will have been worth while. I try to be nice to the Liberals, even in Europe—

Mr. David Stoddart (Swindon)


Mr. Hamilton

Because life would be much rougher if I were not.

The United Kingdom will stay in Europe. It is unthinkable and unrealistic to pretend that we shall get out. Let us make it work. Let us stop nagging. Earlier in this debate somebody said that we could teach the Europeans a lot. We can teach them nothing. They can teach us a lot. Let us get off our high horse and refuse to accept this superiority. We need the Europeans more than they need us, and the sooner we realise it, the better.

7.30 p.m.

Mr. Hugh Dykes (Harrow, East)

We have just heard a refreshing speech by the hon. Member for Fife, Central (Mr. Hamilton). His views have been well known for a long time, but some of the elements of his argument are not so well known. How refreshing it is to hear such views from the Labour Benches, because on these occasions the hon. Gentleman has a sense of isolation.

The hon. Gentleman emphasised specific ways in which the Community gives aid and assistance to this country in the provision of highly desirable projects. In comparison with the funds available nationally the sums involved may appear to be marginal, but they are important items of expenditure and should be brought home to the British people in practical bread-and-butter terms. They serve to emphasise the benefits of our membership which have been conferred upon us so far in our membership of the EEC.

How right the hon. Gentleman was to underline, with all the emphasis at his command, that the net cost of our membership amounts to a substantial figure. Compared with the figure envisaged in the original White Paper, that cost has been very modest. If we go back to the end of 1977, we see that the net cost, excluding ECSC payments, has been of the order of £100 million as against an annual expected cost of £500 million. Therefore, the net cost, even allowing for inflation since 1973, has been modest.

It appears that the United Kingdom will soon be moving into a position of net surplus in accounting terms. We shall be receiving more than we contribute. The purist economist will argue that that is already the case. I have excluded the net amount of subsidy which has resulted from the green pound arrangements—which figure is now substantially less than it was but nevertheless still comes into the calculations. At its peak, that figure must have been around the £300 million mark when we bear in mind the pressures on the £ sterling in the past. Therefore, one can now exclude that consideration. In other words, the figures have already provided a surplus.

The political and chauvinistic arguments—and I am ashamed that a chauvinistic standpoint is taken in this country, which has always been internationalist in spirit—appear all to be about money, cost and benefits. These matters must not be examined merely from the narrow point of view of contributions, aid, loans and the net amount set out in various budgets, because when we compare contributions with receipts we find that we are doing very well indeed.

I hope that the Government will acknowledge these realities. It is all very well to dismiss this argument and concentrate on the difficulties in negotiations in various Community activities, notably on fishery matters, where we have faced enormous difficulties, but the Government must not feel ashamed of saying to the Community that we are grateful to our fellow partners for their action on various fronts. We can make that clear not in a cringing sense but in an objective fashion. There used to be an old television commercial, which has now been dropped, which ran under the slogan "Get the strength of the insurance companies around you." That is what is happening to the Community in its dealings with this country.

As a specific example, I instance the help given to handicapped people. I have a number of such people in my constituency, and I know that they exist throughout the country. Those constituents are beginning to appreciate the amount of money that emanates from the Community. In other words, they recognise the fact that assistance comes not merely from national funds. I could cite many other examples of such assistance, particularly applying to the more depressed regions, where the benefits of our membership have been considerable.

I join with the hon. Member for Fife, Central in his feeling that the Community should be developed even further. I feel that the Community's budget is too small and should not be restrained and held down by national member Governments and States. The budget in the Community is not similar to our national Budget since it has no strategic implication in terms of deficit or surplus. It is a passive system of receipts and payments only.

We must appreciate that with the prospect of continuing unemployment there will have to be continuing restraint by national member Governments on public spending. I believe that this reinforces the argument aimed at increasing the Community budget. Any increase in net expenditure by the Community at the margins will not have a deleterious effect on national spending in the domestic economy.

Mr. Prescott

Why not?

Mr. Dykes

We could get into a long discussion on that matter. The amount of money being put into the Community's budget envisages that payments out must equal receipts or contributions inward. The Community budget is a self-contained budgetary device and not a budget with leaks at the margin on the lines of most national budgets.

I believe that we should build up the Community budget, which is now only about £8,000 million, getting on for a figure of £9,000 million. Even that is a tiny sum compared with the resources of the Community. It is impossible to say what will happen as the Community takes on more members, but obviously a larger sum will be required in a few years' time.

I personally would welcome a substantial and early increase in the size of the Community budget. It would be more realistic to set that budget in the region of £20,000 million. I believe that an increase over a short period would not have any harmful effects in taking away resources from national economies if there are sufficient growth rates in those national economies to sustain higher contributions. There would have to be inducements for the member nations to achieve that kind of target.

I do not wish to see more money being devoted to the primary element of the Community's budget, three-quarters of which is devoted to agricultural support, price maintenance, intervention, investment and all the rest of it. Those devices have probably reached their limit, even though farmers have lost out in terms of receipts in the last few years in the light of inflation.

I should like to see the situation stabilised to allow for a certain element of inflation and modest price increases. Let us build up the other things. Why is the Social Fund still so small? Why is the Regional Fund so pathetically small? Why does not the Community spend more of the Regional Fund in the depressed regions, particularly in the larger countries?

I wish that the hon. Member for Kingston upon Hull, East (Mr. Prescott) would stop making sedentary interruptions. He made a long speech, to which we listened with great interest, and I am sure that one day he will try to speak twice in the same debate. On this occasion he is not working under the dual mandate which impressed us so much recently when he made a speech and immediately left for Brussels. I am pleased that he is able to stay tonight, and I hope that he will remain here until the conclusion of the debate.

It would be a key priority for the Community to spend more of its funds in larger countries. At present, it is only a pinprick. We could have an elaborate debate with clever people on both sides of the House arguing that the Regional Fund of the Community was just as effective as the thousands of millions of pounds spent by national Governments to little effect in the regions. If the hon. Member for Kingston upon Hull, East had argued for a different approach by the Community and by national Governments, I would have been tempted to agree with him, but I cannot agree with what he said about the Community not working properly while national money had some sort of magical effectiveness.

Perhaps I have dwelt too long on this aspect of the Community. There is a lot more to be said, and some matters are dealt with in the White Paper, which is one of a series that the Government will be producing every six months.

The current White Paper deals with the period of the Belgian Presidency. My hon. Friend the Member for Flint, West (Sir A. Meyer) said that this was a period of failure for the Community. To some extent that is true, but the leadership of the Belgians has shown again that the smaller countries in the centre of the Community remain, despite all the difficulties, the second thoughts, the changes of direction and, to use the ominous words of the hon. Member for Kingston upon Hull, East, the development of the new order, the most European and communautaire of the member States.

I do not want us simply to accept that fact and to say that we are not like them. The Foreign Secretary recently made the amazing and controversial statement that we are an island. I do not want us simply to accept that we have different attitudes from the Benelux countries.

It is notable that the striking exception in terms of attitudes to the Community among the four largest countries is the Federal Republic of Germany. I had the pleasure of attending the German General Election in October 1976 and I saw how, even in a national election, the Germans are more European-minded than any other members. We can all swap comparisons and say where the pluses and minuses are, but that was a remarkable manifestation of German political life.

Cynics may say that there are obvious reasons for the attitude of the Germans and that we should remember what happened between 1933 and 1945. Perhaps the Germans also see it from that point of view, but as a result of their economic success they have had to pay more into the Community than they have got out, except for their agriculture. For all that, they remain devoted adherents to membership and to the ideals and long-term political and economic objectives. I want us to have that sort of psychological commitment, and there is no reason why we should not share that attitude.

Italy has been preoccupied with many problems, and we sympathise with the Italians, but they are still pretty European in their outlook, even though they have different characteristics and traditions.

In the middle, between Britain and Germany, is France. The old attitude in this country used to be that France was a Gaullist nation which wished to use the Community for its own national interests and for no other reasons and that France had no psychological commitment to Europe. I do not believe that that view is accurate now.

France is a very European-minded country. I fear the wrong results in the French elections because they may change certain attitudes to the Community—though I doubt it. I should prefer the Fifth Republic regime to continue so that we can see the build-up of the psychological commitment in France which is an increasingly agreeable manifestation of French political attitudes to their neighbours and fellow members.

I do not wish to be unpatriotic or to detract from the achievements of this country, but the French are right to express dismay, not over British attitudes but over the behaviour and attitude of the Government. I except, in order deliberately to embarrass him, the Under-Secretary of State for Foreign and Commonwealth Affairs, who is now on the Government Front Bench. I do not accuse him or some of his colleagues, but there are some leading lights in the Administration, notably the Minister of Agriculture, who have done immense damage in the Community.

We have to measure every element against other achievements. I am second to none in praising the Minister of Agriculture for his robust attitude in certain circumstances, for example over fisheries policy. It is not a contradiction for me to add that intransigence in negotiations for its own sake, which the right hon. Gentleman is so adept at displaying, is highly damaging and stiffens resistance from other member States when something important to us comes up later.

I was pleased at the decision to site the JET at Culham. That was a triumph for this country and for the Community. It showed that the Community is capable of making that sort of decision. I fear that it was delayed because of the previous attitude of the Government to that and related matters, but I am pleased that the Secretary of State for Energy welcomed the decision and I hope that his attitude towards the Community will now be more amenable.

The White Paper has been described as platitudinous. I suppose that it is, but the Government should be given credit for providing a comprehensive, if rather unexciting, document listing in considerable detail everything that has occurred or will occur as a result of the six months of the Belgian Presidency.

There are a number of matters on which I should like to question the Minister. Paragraph 44 of the White Paper says: At present, vessels of Community States are not fishing in Soviet waters and Soviet vessels are not fishing in the waters of Community States. Have there been any infringements recently? Is that statement still true? There are nasty rumours about certain plundering operations and, although there have been denials from certain quarters, they have not adequately cleared up the matter. I hope that there is no ironic reflection on the discipline exercised by our industry while we are trying to draw up a proper Community policy. That would be very worrying.

Another paragraph in the White Paper deals with co-ordination of national economic policies. This is a large area and it would not be right for me to try to elaborate on it in minute detail. It is a subject that needs an energetic approach by all members, but particularly by Britain. One of the reasons for that must surely be that to which the hon. Member for Fife, Central and I referred earlier, which is the amount of money that this country is now receiving from the Community. This is a very good thing. We welcome it all. We shall see it develop as time goes on.

But one of the sad reasons for that is that we are now getting more than we expected as a result of our differentially poor economic performance in recent years. That is, therefore, the cybernetic mechanism of the Community, which means that if a nation is doing well economically and its GNP builds up, it gets less out of the Community. If that happened to us, if we had been close to Germany in our output productivity and the size of our economy and resources, we should have got less out and have had to contribute more. That is the black side of the reasons why we are getting more money than we expected.

That raises problems of economic co-ordination and convergence, as was referred to by the hon. Member for Inverness (Mr. Johnston). He got rather mixed up. I do not know whether I am misrepresenting him, but I thought that convergence and the need for resumption of economic convergence through developing concerted economic policies in the Economic Council and elsewhere were a concomitant of and the prelude to—or a bit of both—economic and monetary union. I thought that the hon. Gentleman said that one was a substitute for the other. He began to say that at the beginning, and he seemed to change his mind and was not quite sure. I regard convergence and the resumption of convergence as one of the most important tasks facing member Governments in the Community.

But it would be easier and tempting for us to resort to the easy way out and think in terms of Europe à deux vitesse and all the rest of it. There are many variations. But the two-speed Europe is all right for those who believe that we cannot possibly catch up. I should like to see this country in the next five to 10 years catch up with the more successful European economies, and I include France. The Fifth Republic has been an outstanding economic success. I do not see why we should have to trail behind it. I hope that what has happened in the improvement of our financial statistics in the last few months will be followed by economic recovery in the next few years. That recovery must be a real recovery, not a recovery based on the artificial subsidies of North Sea oil. The recovery should be based on real growth and expansion of production so that we are able to involve ourselves enthusiastically and positively in convergence.

I should like to know whether the Minister thinks that this is a marginal matter which he will deal with in a dismissive way or whether it is an essential factor in the Community's economic future. In that context, I very much hope that the Community will more or less give up this artifical behaviour each year—the sort of ritual of drawing up economic guidelines. We all know that the economic guidelines drawn up by the Commission and submitted to the Council are exhortations to each member State to do what it is doing anyway. They are always couched in cautious phrases to fit in with the policies of individual Finance Ministers so that they do not put anybody's nose out of joint by the concerting of demand management economic policies. That is a reflection of what is already happening.

Let us have this new system in which the Finance Council produces a report at the beginning of each year based on a decision reached through the principle of unanimity. I think that it is possible, on decisions by those Finance Ministers, to concert demand management policies and other economic policies for the year ahead, and for the outcome to be meaningful. Economic and monetary union is an enormous field. The White Paper refers at least tangentially to it. I do not know how this will work out. No one knows. Most critics are right. The more modest, limited critics say that President Jenkins was wrong to blurt out the grand design all in one go at the beginning. He could have done it gradually and built up to a crescendo later on.

I am not sure that we can argue that either way. But let us not now drop those objectives. It is not true that economic and monetary union would represent a federalist Europe—nowhere near it. All that could be done without any federal consequences and conclusions of any kind. Let us remember, and keep repeating it, particularly in our late-night prayers and whenever it may be, that Europe is a series of co-operative efforts with common institutions and a background treaty or constitution—the Treaty of Rome. It does not have the automatic federalistic implications that some people say it has. It could have if people wanted it to. But there is no reason why they should. Economic and monetary union should mean just a common structure of economic decision-making with the economic fund for monetary co-operation revived and active and operating without meaning anything more, at least for the next few years.

Why are we terrified about what is a reasonable and sensible contribution to the debate and which would produce much more successful economic policy? Without that arrangement, we still have a situation in which the German Finance Minister is going one way, refusing to expand and pursuing an over-cautious policy, the French may be half-way in between and we are anxious to get going again—at least, I hope that the Chancellor of the Exchequer is. This is most unsatisfactory.

At paragraph 51 on page 9 of the White Paper there is an interesting reference to the European Council agreeing to the establishment, on an experimental basis"— those are interesting words— of a new Community loan of 1,000 MEUA to assist industrial investment. The requisite finance will be borrowed by the Commission and on-lent and managed by the European investment Bank. I believe that I am right in saying—unless there have been a number of small special loans—that this is the first time it has been done. It is interesting and most encouraging, and I hope that it will continue and develop in the future and that there will be other examples.

I should like to see the European Investment Bank extend its resources and operations. That would need a change in its terms of its statutes. It should have to be able to lend more than £50 million in one go. I would like to see it become involved in the financing of the Channel Tunnel. It would be a good idea if the Minister could make a name for himself by encouraging some of those things and by making a few dramatic announcements tonight. However, I suppose that it is over-optimistic to expect something like that.

On page 10, at paragraph 54 of the White Paper, I take the Minister back to the point in the last sentence: UK Contributions to the Community Budget. I refer him to Article 131, which says: the…deficit on the Budget will be financed from extra-budgetary payments. It is quite right to pay tribute to the fact that this country has adopted the VAT Sixth Directive. That was not quite what certain anti-Marketeers were saying when the directive was coming to a final conclusion last year, but now they are apparently proud of it. Other member States have been backsliding and failing to meet our timetable.

It says about half-way through the paragraph that the resulting deficit on the budget will be financed from the most favourable of each of four alternative methods. It continues: These arrangements will leave a final small financing gap; the means of financing this will he decided later. I should like to know from the Minister what he thinks will be the size of that gap. "Small" could mean large, but I should be interested to know his figure and also what is meant by the phrase the means of financing this will be decided later. I would refer to paragraph 63 on page 11, which mentions the United Kingdom exchange controls. Will the Minister be able to confirm tonight or later—I have put a number of points and it would be unfair to expect an immediate reply, since his parliamentary responsibility is more a global one on the Council of Ministers than that of the individual subject areas—that the Government will be able to continue their relaxation of exchange controls in the early future? There is a substantial hope in this country—I have no interest to declare on the matter in a direct sense—that exchange controls will be further relaxed and that what the Government did in a cautious and tentative way at the end of last year will be built on for the future.

I hope, for example—here I have a direct interest, I must say with emphasis—that the premium currency system for portfolio investments will be done away with completely. At the moment we only have the demise of the 25 per cent. Surrender provision.

I would end by dealing with the earlier remarks of the Minister of State when opening the debate on the future development of the Community's institutions. We have had our debates on the European Elections Bill and there is no need for the House to dredge these arguments up again. I believe, however, that there are hon. Members who, although they would not declare it too stridently at the moment, hope optimistically that the Community is not only here to stay but will grow in strength and cohesion and that its institutions will continue to develop.

Too many hon. Members on all sides are beset by an exaggerated anxiety that the Community is not very popular with the public and that they had therefore better keep quiet about it, or, if they refer to it at all, grumble about how awful and wicked it is. They feel that they must say how terrible and wicked the awful European Commission is, proposing as it does dreadful things for this country such as the compulsory installation of bidets in British bathrooms, that British families would have to speak French after 8 o'clock at night, that we should have to drive on the other side of the road, and so on.

This sort of attitude is adopted by some of the more prominent newspapers in this country, and they do an ill service to the people in building up these exaggerated fears. Inevitably, when the cohesion and development of the Community are taking place, it must mean that the Commission is entrusted with the task of producing draft legislation and that it will bring forward a great many proposals. I pay tribute to the members of the Press—at least, I would if they were in the Gallery—for their activities in Brussels in picking out draft proposals and provisional ideas for legislation and rushing a signal back to London. They seek out what the awful and wicked European Commission is pro- posing to inflict on this country. Yet even a couple of years later, because often Community legislation takes a long time, we find that the original proposal has been changed and made much less terrifying and less wicked. I hope that the British Press will pursue a more responsible attitude in this respect and refer to the plus side of membership, to the money that we are getting from the Community and the other advantages.

I do not believe that the British public are as scared of or as unenthusiastic about the Community as are some politicians in this House. There is negative feeling in this Parliament about the Community and about our membership, and it needs to be energetically counteracted. I find on the occasions when I am addressing meetings, not of political activists but of people who are not necessarily tied to one political party or another, that there is a much greater interest in our membership of the Community than we believe. If only politicians were prepared to talk more about the Community, to explain it further, complicated though it may be, and to put the advantages as well as the difficulties, that would be most helpful. Let us try to do that.

In that context, if the House could secure proper scrutiny in the future we should be able to survey the Community and particularly the Commission far more effectively, and that would go hand in hand with the development of the European Parliament. It is perfectly legitimate for this House to castigate the Minister for himself having agreed to delay the direct elections Bill last year and now, at long last, to welcome the fact that the legislation is through the House. We can now build on that and build up the Community, and in that way have reports more frequently in the future than perhaps every six months.

8.5 p.m.

Mr. Roderick MacFarquhar (Belper)

The hon. Member for Harrow, East (Mr. Dykes) will accept that I am as committed a European as he is, and, therefore, I am sure he will not mind if I take issue with him on one point he made.

The hon. Member gravely underestimates the enormous psychological leap that the British people have made in going into Europe and accepting membership of the Community. If he pauses for a moment to think back on the history of this country and the way it has always eschewed Continental entanglements and played one Continental nation off against another for, in the words of the late Hugh Gaitskell, perhaps a thousand years of history, he must accept that the change that has taken place in the last 30 years, with the building up especially in the last 10 or 15 years of the attitude which led us into the Community and led the people to endorse membership by two to one in a referendum, has been remarkable.

I do not criticise as strongly as the hon. Member or my hon. Friend the Member for Fife, Central (Mr. Hamilton) the attitude of Labour Ministers. I do not say this simply because they belong to the party that I support. They are reflecting the psychological problems which will continue for some time as Britain merges more and more closely in the way that both the hon. Member for Harrow, East and I wish to see.

But I do want to take up one matter with the Minister of State and to look critically at the Government's attitude on it. It is most striking that my hon. Friend and other Ministers are critical—rightly so—of the common agricultural policy, a policy which was formed without us in mind but taking account of the attitude of the nations which are protected by it. What is quite reprehensible and unacceptable, however, is that my hon. Friend the Minister, literally in his next breath, referred to the attitude we should adopt on energy policy, taking up the stance of the producer nation which will not be bullied by the consuming nations into surrendering any control of national wealth or heritage. It is legitimate for Ministers to stand up for our national interest, but we have to see both sides of the coin and realise that what is sauce for the goose is sauce for the gander. If we are to criticise the French for protecting their agricultural producers, we cannot automatically assume that our Community partners will think that it is legitimate for us to be tough on our own behalf as energy producers.

I should like to deal with certain points that emerge from the White Paper. I agree with my hon. Friend the Member for Eton and Slough (Miss Lestor) about the LoméConvention. I emphasise strongly, and I am sure that most of the House is with me on this, the importance of incorporating into the Community's aid arrangements the impoverished nations of Southern Asia. Until we do that, we cannot legitimately say that our aid programme is as extensive as it should be.

I am concerned about the discussion on political qualifications. I yield to no one in my belief that one must be severely critical about regimes which slaughter their own citizens. But we are in a dangerous position here when we start to try to draw a line about who should receive our aid. Will it be simply those nations which are engaged in massive repression, such as murder, that should be excluded? One can think of at least one such nation in Africa. Should such nations be excluded from the Loméarrangements? Or do we go a step further and say that we will not accept dictatorial regimes which, while not openly brutal and oppressive, have political systems of which we do not approve? Or do we say, because there is a logical progression in this, that a nation whose rulers waste resources and are, therefore, likely to use any aid resources purely to prop up their regimes should not receive our aid? The Emperor Bokassa spent a vast amount of money on his coronation. Would we say that that kind of waste of resources would exclude a nation from any Lométype agreements?

We face some tricky problems here, and, while I do not by any means decry the sentiments behind the idea of bearing human rights considerations in mind when giving aid, we must be wary of the paths down which that attitude takes us. We might find ourselves with very few nations we, in our European way, think legitimate for the giving of Community aid.

As for political co-operation, it seemed unfortunate that there was no specific mention of the Horn of Africa. That is an issue on which the European nations have all severally expressed their concern, as have the Americans. However, there seems to be no concerted attempt to get any agreement with the Russians. This is an instance where the Community, specifically because it has not put any arms into Somalia, has a right to speak to the Russians.

I shall spend rather more time on our trading policy, and especially to discuss the paragraphs in the White Paper on the Multi-Fibre Arrangement and on trade with Japan. As a Member who has textile firms in his constituency, it appears to me that there is no question but that the United Kingdom textile industry has suffered tremendous body blows over the decades—not merely the past few years—as a result of competition from cheaper foreign suppliers, especially in the Third world.

One of the reasons for our allowing that to happen, much to the anguish of our citizens working in the industry, has been the realisation that must come to all of us in the developed world that, if we do not move aside from some industries, it will not be possible for Third world countries to support themselves. That is because they will not be able to sell to us the things they can manufacture, textiles being par excellence the sort of item that they can start by manufacturing.

Now, when talking about steel the Minister of State said that when we take a Community decision it must not be an across-the-board decision but one that takes account of the differing circumstances of the differing steel industries in each member country. I ask my hon. Friend the Under-Secretary of State, who is to reply, why that should not apply to the Multi-Fibre Arrangement. Why do we not adopt that approach instead of using the enormous weight of the greatest trading bloc in the world, as we repeatedly remind ourselves, against a small British colony such as Hong Kong and clobbering it out of the blue—for the Hong Kong Government were not aware of the extent of the measures that Her Majesty's Government were about to take in concert with their European partners? Should we not consider first the situation facing the textile industries in the other member countries? I am reliably informed that if we did so we would find that their textile industries have not suffered nearly as much as our industry from foreign competition.

Our textile industry has been allowed to be far more open to foreign competition than have the textile industries of most of the other countries of the Community. If that were found to be true, surely the more sensible way to organise a Multi-Fibre Arrangement, thinking in terms of the general objective of helping Third world countries, would be to try to open some of the other Community countries more widely to textile imports rather than to take shelter behind the Community trading bloc because we justifiably feel that we need protection.

That approach should also apply in our relations with Japan. I applaud the evident concern that my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs shows to the need to maintain good relations with Japan. Despite what I believe to be the over-abrasive remarks sometimes made by my right hon. Friend the Secretary of State for Trade, I believe that that is the consistent attitude of the Government. It is vital that the sort of division between Europe and America on the one hand and between Japan on the other that opened up in the 1920s and 1930s must be prevented from happening again.

I do not want to draw dismal conclusions as to what might result from such a division. I merely say that it is vital that the relationship that has been cultivated over the past 30 years between Japan and Europe and Japan and America be preserved. Therefore, in our negotiations with Japan we must not say "My goodness, we are in severe trouble in Britain"—obviously we are—"in cars, electronics and other sectors. Let us get behind the Community blunderbuss and clobber the Japanese, or threaten them that they will be clobbered if we choose to protect ourselves in that way."

We must take into account that the Japanese have built up their industrial strength through hard work, enterprise, diligence and the study of our market. At the same time, we must note that their markets are not nearly as open to us as they should be. I made a speech over a year ago criticising the Japanese on that score. Nevertheless, we have to accept that a major reason for our failure to compete lies with us and not with some Mephistophelean Japanese plot.

If we take cars as an example, we must look around the rest of the Community before we tell our friends in the Community that we must protect ourselves from Japanese cars. As with textiles in the Third world, so with cars and the Japanese. I am reliably informed that it will be found that the British market—unfortunately from our point of view—has for all sorts of reasons been far more open, partly because we play the game, to Japanese car imports than those of many of our Community partners.

Before we go to Brussels saying "Let us take the big stick to the Japanese", let us see first whether the French and the Italians, for instance, are allowing in Japanese cars, or other imports, in the same way as we do in Britain. If we adopted that approach, it may be that we would be able to shift the burden somewhat from Britain. We would, therefore, be less anxious to try to stop the Japanese exporting to us as they do at present, with all the implications that that has for possible protectionism in world trade.

I turn to enlargement, on which a number of hon. Members have dwelt. My hon. Friend the Member for Crewe (Mrs. Dunwoody) said that we should all welcome accession of the three applicants. She said that we should do so immediately. I tend to agree with the hon. Member for Lancaster (Mrs. Kellett-Bowman), who said that it is better to work out the problems first. However, we should all agree that accession is desirable, especially to help the nascent democracies, the new democracies, to strengthen their political institutions. As a consequence, it is right for those of us who are pro-European to say to those who have not even now accepted the verdict of the referendum—I except, for example, my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), who has all along said that he has accepted it—that we cannot say to the Portuguese, the Spaniards and the Greeks "Come on in now. We believe that we can help you strengthen your democracies" if it is still our intention to pull out.

If one of the things that we are able to give the Community is our commitment to democracy and our knowledge of how in open debate across the Floor of the House to strengthen democratic institutions, the last thing we can do is to bring in those three nations only to say "Bye, bye, we have had enough. We are opting out." That would be a total negation of the role that we can play in Europe.

I have always been strongly in favour of the entry of the Spanish and the Portuguese. I have been doubtful about Greek entry. I shall not go into detail about that as I have talked about it in the past. I emphasise that it is not worth our talking about protecting democracy in those countries in an airy-fairy way, the idea being that by clinging to the skirt-tails of the Nine in some way the nations of Spain, Portugal and Greece will be protected.

One of the reasons that allowed us to help Portugal, in 1975 when it was at a difficult stage in its political progression out of dictatorship, preserve its democratic institutions, was that it was at the tip of Western Europe, surrounded by Western European nations. It was because it was a member of NATO and because we had the economic clout to help it.

I am a little concerned because the factors that apply to Portugal do not apply to Greece in the same degree. It seems to me that if Greece is to come in, if Portugal is to come in and if we are to help preserve their democracies, it is far from being a development that is likely to weaken the Community, which is likely to strain the bonds. It must be used, and it will be used if everyone is sincere in his declared aim, as a means of strengthening the bonds of the Community. Only if we can grapple Portugal, Spain and Greece to us with bonds of iron shall we be able to protect them from, if you like, themselves. Indeed, that is what they say themselves. That is what Mr. Karamanlis of Greece has said. They say "We want your help to protect us from the possible erosion of democracy in Greece and elsewhere." But we shall be able to do that only if we allow them to come closer to us than we are to each other at the moment.

I see the development and expansion of the Community not as a weakening force but as a strengthening force.

Mr. Russell Johnston

I have no doubt that the hon. Member sees it that way, but, unfortunately, others see it in a different light.

Mr. MacFarquhar

There are certain hon. Members who do. What I am trying to say is not merely an expression of idealism, but I am also trying, as my hon. Friend the Member for Kingston upon Hull, East tried to do in a different context, to look at the logic of events. I am not saying that I hope we shall do this, but that if we are sincere this is what will happen.

Many hon. Members are concerned about the development of Euro-Communism in the Community. It is likely that it will be a far greater threat if it is the political system in one member State of an organisation which comprises nine States than it will be if it is an expression of politics in one area of the European arena. If it is to be contained, it will have to be contained in a bigger political group. For instance, Italy on its own would not be able to contain it within its own system.

Unlike my hon. Friend the Member for Kingston upon Hull, East, I believe that the logic of political events is towards unity and that the logic of economic events is also towards unity. Despite the most massive trade recession that we have had in the last 40 years, instead of the old protectionism, the Community countries have managed to keep together. This is a striking example of the importance of the links that are already formed and of the likely development—namely, the strengthening rather than the weakening of those links.

Some hon. Members have talked about the development of the Regional Fund and the need for larger funds for aid under the LoméConvention. If we are to have a larger budget—both pro-Europeans and anti-Europeans would probably welcome that—it is likely to lead to greater unity. That is because the more money that there is to fight over, the more important it will be that it is not distributed by straight national bargaining arrangements. The more money that there is, the more tightly organised will have to be the institutions that will decide how it is to be split up.

I am not a closed federalist—I am an open federalist—but I would not wish to say that I think that the immediate logic of the developments that I have outlined is a one-way street to federalism. As I tried to indicate when analysing Britain's psychological adjustment to the Community, I have always tried to take the long view of the logic of events. This points towards increasing unity. It will take a long time. The developments discussed in the White Paper and in some of the speeches point us inevitably in the direction of closer unity. I hope and believe that this Government will welcome that direction.

8.24 p.m.

Mr. John Wells (Maidstone)

I welcome the White Paper because I believe that it indicates to many people with many sectional interests the continuing useful work being done by Community institutions on behalf of the citizens of the entire Community.

The hon. Member for Belper (Mr. MacFarquhar) spoke broadly, but he spoke with particular authority about textile matters, which are obviously dear to his constituents. There is something in the White Paper for every hon. Member from every type of constituency. I hope that the House will forgive me if I address myself briefly to three matters which impinge directly not only on my constituency but on the whole county of Kent.

First, I am sorry that in section VII, which deals with transport and the environment, there is no mention of current Community thinking on the revised plans for the Channel Tunnel. The Chunnel is not dead by any means. There are two prospects open to us—to use the single pilot tunnel and put through trains in batches or to go the whole hog for the tunnel as it was originally envisaged.

It is a pity that this important White Paper does not tell the nation frankly that that prospect is still open and that perhaps it could be done with Community and European money rather than our having to go, begging bowl in hand, round the world for finance. I believe that we should go all out for the original three-tunnel tunnel rather than for the single pipe tunnel. I deplore that there is no mention of that. I realise that an attempt has been made to make the White Paper as concise and readable as possible so that it will have a wide readership.

I turn to the subject of enlargement. I agree with everything that the hon. Member for Belper said about it. I shall direct the attention of the House to Spain. I must declare an interest as an officer of the Anglo-Spanish all-party group in the House. I believe that the friends of Spain in this country are anxious that Spain should attain full membership at an early opportunity.

I now turn back on myself. I represent a prominent horticultural constituency which is set in an area of horticultural growing. When a new country accedes to the Community, the horticultural produce pushes all the way up through Europe. If Spain comes in, the peaches will impinge upon the apples and the apples will impinge upon the pears. The whole thing works its way up from the South with a warm climate to the North with the climate that we have recently experienced.

One must have anxieties. There is still a massive structural surplus of tree fruit in Europe. I use the phrase "tree fruit" although it is not the usual phrase. One usually talks of top fruit, or hard fruit. I refer to the fruits that grow on trees, which take several years to establish and to come into bearing. Generally it takes a massive Government subsidy at some stage to get them going. Is it not absurd that there should be a Government subsidy to get the growers out of the industry?

Without wanting to digress for too long, I must say that we all know that Madame de Gaulle was a great believer in sobriety, and we also know that General de Gaulle was a great believer in good wine. Therefore, the de Gaulles, husband and wife, hand in hand, were very anxious to grub up the excess of bad vines in France so that quality should be improved and quantity reduced. The net result was that vine growers who knew no other way of earning a living except in horticulture went to something else that had a nice ready sale. They planted peaches. Chaps growing peaches planted pears, and the chaps growing pears planted apples, so this whole crazy process of pushing up, as it were, all took place because of Madame de Gaulle's sobriety.

That may seem quite ridiculous, but it is true. I just fear lest in encouraging new countries into the Community we shall have a repetition of the structural surplus to which the sobriety of the good lady led a few years ago.

I am glad to see in paragraph 38 of the document, in the agriculture section, that the Council has begun an examination of the problems of the Mediterranean agricultural position. But Mediterranean agriculture is a sort of euphemism for horticulture—smallholdings, small acreages; I do not speak metric yet—growing almost entirely horticultural produce. Therefore, it would have been nice had this report enabled us to know rather more about the thinking behind paragraph 38.

However, as a horticulturist I get comfort from paragraph 39. That is the paragraph that draws our attention to the fact that the Community is now allowing in greater quantities of apples from third countries because of the present scarcity of Community-grown apples. This must be good because it means that the British housewife is assured of a continuity of supply of apples at reasonable prices. To my mind, that is exactly what the control of fruit is about—that there should be continuity of supply, at reasonable prices, all through.

When the European, and particularly the British, crop comes on to the market next autumn, these Southern Hemisphere fruits will be restricted again. This is a most admirable situation. I hope that it will long continue, year by year, when we have a shortage that should be made up. However, I am fearful lest it becomes a habit in areas where we have a surplus. It would be terrifying if we had our cold stores full and an excess of fruit was allowed in.

I am glad to be able to remind the House that as long ago as 1976 the Worshipful Company of Fruiterers sponsored a lecture by a distinguished South African academic, pointing out the place of Southern Hemisphere fruit within the consumption of the Community, so people all around the world are realising the importance of continuity of supply.

The third Kentish point to which I want to turn is to say how sorry I am that in section V there is no mention of the dumping situation in paper. The hon. Member for Belper and other hon. Members have spoken about textiles, but the House must realise that hon. Members who have paper-making mills in their constituencies, and in particular those who have mills making soft tissues, are suffering very considerably at present from Spanish dumping. I believe that the authorities in Brussels are somewhat dragging their feet about this. I should have been a happier man had there been a paragraph indicating the Commission's attitude to the dumping of paper produced by third countries.

Having spoken earlier in favour of Spain's accession, I might be thought to be somewhat quaint to start complaining about dumping, but it is dumping in the accepted sense that it is coming into this country and other Community countries with a Government subsidy, as I understand it, from Spain, whereas if Spain becomes a full member of the Community, any Spanish Government subsidy would immediately be questioned very much more quickly and more easily than in the present circumstances.

To summarise these three Kentish points, as it were, I conclude by saying that they are, first, that I deplore the lack of mention of the Chunnel; secondly, that I welcome the all-round-the-year apple, though I hope that we shall tread steadily about too much top fruit; and, finally, that the dumping of soft tissue causes considerable anxiety in a number of Kentish constituencies.

8.35 p.m.

Mr. James Scott-Hopkins (Derbyshire, West)

Certainly the House cannot complain about the time that the Leader of the House has given us on this occasion for a debate on Europe. Previously such debates have come late at night. I am glad that the time of debate has been changed so that we have an afternoon and evening for the discussion, but the attendance in the House, I am afraid, shows the amount of interest in the European scene. I deeply regret this, because from the speeches we have heard during this debate and from the White Paper it is clear that the Community's decisions, affecting all aspects of life, are important to everybody; and hon. Members have raised many points of great importance to the citizens of this country. I am only sorry that more hon. and right hon. Members have not been able to spare time to attend and take part in this debate.

I agree with the hon. Members for Fife, Central (Mr. Hamilton) and Inverness (Mr. Johnston) that there is no doubt that during the last six months to which this report refers we as a country have not done particularly well. Looking back, it has been a depressing six months. Although the Minister of State ran through a catalogue of achievements coming out of various meetings of the Council of Ministers, it was a pretty drab and sad catalogue. The hon. Member for Fife, Central, to whose courage I take off my hat—I pay tribute to him for his Europeanism—was right to say that we have not done very well in Europe over the past two and a half years, and particularly during the six months to which this White Paper refers.

It would be wrong to go into the details of the various meetings of the Council of Ministers at which it has been a United Kingdom Minister who has held up matters and stalled. We cannot go into the European Community with the one idea of taking everything out and putting nothing in. There has to be a two-way flow. As a country we have done remarkably well from the European Community over the rather more than five years during which we have been a member. As my hon. Friend the Member for Harwich (Mr. Ridsdale) said, we have done much better than we thought we would, and, although in 1977 there has been a net contribution of £100 million, that has been far less than we had thought it would be, and it has been greatly to the advantage of this country. Like many of my hon. Friends, I regret what has taken place in these six months.

Two or three strands have run through this debate. The first, mentioned by the hon. Member for Kingston upon Hull, East (Mr. Prescott), concerned import controls. My hon. Friend the Member for Mid-Oxon (Mr. Hurd) spoke of it in his opening speech. There has been anxiety within the Community, and certainly among the trading partners in it, as to its present attitude. Are we, as nine countries, becoming more protectionist in outlook than we have been in the past? Are we reverting to what we used to accuse the Community of being before we joined it—being inward looking? There is among some of our trading partners a feeling that this is the way we are going. This has arisen perhaps from the various debates of which they have heard in which views were expressed concerning the likely protection of steel.

Interesting comments have been made concerning the penetration of Japan into markets, not only in the United Kingdom but in Europe, in respect of cars and electronics. This penetration has been considerable. I do not, by the way, agree with the hon. Member for Belper (Mr. MacFarquhar) that if we start questioning other European countries to discover whether they have been as liberal as we have been in accepting Japanese cars into our country, and, when we find that they have not, ask them to liberalise to the same extent as us we shall find that the import of Japanese cars into this country will decrease. I do not think that that will happen. I believe that there will simply be an increase in exports of Japanese cars to other European countries.

Mr. MacFarquhar

But does not the hon. Gentleman agree that the sometimes almost hysterical atmosphere on protectionism that seems to be developing in Europe in regard to Japan would be considerably eased, at least in this country, if the burden of Japanese exports to Europe were more equally shared?

Mr. Scott-Hopkins

That is true in principle. It will be regrettable if Europe becomes more protectionist than she is now. But it is equally fair to say that the penetration of not only United Kingdom but European goods into the Japanese market has been severely restricted by internal Japanese legislation.

Mr. MacFarquhar

I said that.

Mr. Scott-Hopkins

I agree that the hon. Gentleman said it. It is a fact of life. Until the Japanese are prepared to be more accommodating in this respect, it is hard to ask manufacturers and traders in this country and the whole Community to adopt a liberal attitude towards the penetration of our market, though in principle it must be right. We do not want the European Community to become inward looking, but there have been great arguments for taking short-term measures to deal with the problems which have become acute in particular areas of industry, such as steel.

The Community showed its attitude clearly in the Multi-Fibre Arrangement, which was the result of a great deal of hard work. We debated it in the European Parliament last year when we had before us a very good document produced by my hon. Friend the Member for Cheadle (Mr. Normanton). As a reference document it was one of the best I have seen. Negotiations took place on the MFA. The hon. Member for Belper is wrong to say that we suddenly clobbered the Hong Kong Government. They knew that it was coming. They knew that exports from Hong Kong at their level of prices were bound to cause problems throughout Europe and particularly the United Kingdom, not only in the hon. Gentleman's constituency but in mine. These problems have arisen over the past months and years. I hone that the MFA will go some way towards easing them.

I was in partial agreement with the hon. Member for Kingston upon Hull, East when he talked about a new international order. He spoke of overcapacity of production and under-capacity of consumption throughout the Western world. That is not the position over the whole developing world, but it is undoubtedly so in the Western industrialised world, and it results in unemployment there. Therefore, new types of trading arrangements must be made. New systems and methods must be worked out.

The Community's attitude has progressed since the White Paper was written as regards the GATT negotiations, which is where I hope the majority of the negotiations will take place. It is important for the Community to play its full part as one of the biggest trading blocs in the Western world. There will undoubtedly be a rearrangement, but I trust not a sharing out of markets, not a complete stifling of free enterprise. That would be the wrong approach.

I think that the large trading areas will have to arrive much more quickly at better arrangements. I am greatly worried at the very slow progress being made in the various negotiating committees of GATT in Geneva. Perhaps the Under-Secretary of State, when he replies, will give a short resumé of the position as he sees it at the moment. It is in the negotiations in GATT and in the liberalisation of world trade that we should be able to see some hope for the future.

The hon. Member for Eton and Slough (Miss Lestor) touched on the developing countries and the renegotiation of the Lomé Convention. I take the point made by the hon. Member for Belper. I am not all that sure that we can write too rigid a clause into any renegotiated Lomé Convention to the effect that this or that practice must be observed, and specifying human rights. Obviously, one is trying to write human rights into this sort of agreement, otherwise these countries would not be allowed to have associated status and aid would not be granted to them. There must be, I believe, a clause dealing with the wide general acceptance of human rights by the receiving countries. Unless they are prepared to observe what is set out in a clause of that sort, we should be prepared to help only the people themselves in those countries, as I think the Minister of State put it, and should not support the Governments.

Many of the non-associated countries, particularly in South-East Asia, are part of the Association of South-East Asian Nations. The Community is in negotiation with ASEAN. The negotiations were started by Sir Christopher Soames two years ago. They are still continuing, and assistance is being given to the ASEAN countries along the same sort of lines as assistance is given to South American States.

My hon. Friend the Member for Mid-Oxon spoke about the enlargement of the Community. Yesterday at Question Time I asked the Foreign Secretary for his view about the progress being made in the negotiations with Spain, Greece and Portugal for their admission to the Community. It appears that there is no urgency behind the negotiations, although they have now gone beyond the stage of the Commission. The White Paper mentions the negotiations, but, as far as I can see, no real progress has been made in the last few months. Indeed, only last week a Greek delegation went to Strasbourg to meet as many parliamentarians as possible and to plead for added urgency to be given to the negotiations.

I have always said that we must not proceed too fast, and that we must make quite certain that all the issues are understood, and the basic problems properly dealt with, before final agreement is reached. Nevertheless, it would be helpful if we could have some form of programme put before us. Is it possible that Greece will be able to sign with the Community by the beginning of 1979, or is it likely to be June 1979, or even 1980? That is quite apart from the transitional period, of course. I gather that the Commission has been asked to prepare its initial report in regard to Spain and Portugal but that it will not be ready for the next few months, perhaps not until after the Summer Recess. Will the Under-Secretary of State confirm that impression or otherwise?

I sincerely hope that no actions will be taken which will in any way lead to Spain and Portugal thinking for one moment that the Community wishes in any way to delay or hold up the entry of Spain and Portugal once the processes have been gone through. I hope also that nothing that Her Majesty's Government say or do will give any such impression. From their point of view, and from Europe's point of view, it is absolutely essential that they should join.

I am very much of the view that the Community must move forward. I take the line of the hon. Member for Belper, that the accession of three other countries south of the Community, in view of the precarious situation of democracy in which they find themselves—and, I hope that they will never cease to be democracies—can only be good for the Community and can only strengthen its bonds.

I hope we shall not stop there. I hope that the countries of Scandinavia will before long review their situation and apply for membership. I hope that all the countries of Western Europe will want to join and will be accepted by the Community in the years ahead. I believe that that would give a dynamism to the growth of Europe.

I must confess that I am not a con-federalist. I do not believe that the logic of events moves that way. I do not believe that a Europe of separate States can continue. The whole logic of European events means that we must move closer together, small steps at a time. Perhaps this year there will be some movement in elementary monetary union. Perhaps later there will be further steps towards further economic integration. Perhaps the year after there will be more political integration and co-operation.

Contrary to what the hon. Member for Kingston upon Hull, East said, I believe that the logic of events in Europe is that we have a new generation of young people who do not wish the old barriers of my youth to remain. I believe they want Europe to move closer together. What we are now doing is slowly building the ground floor brick by brick. It will be the job of those young people in the years ahead to add further bricks to the first floor, and other floors above that. What we are doing is right.

But it must be done pragmatically and slowly, step by step. We cannot go back. If we try to remain as a Europe of separate countries, we shall disintegrate as a community and we shall be a very loose free trading area. We shall be picked off one by one by those who are not friendly towards us. I see no future in that, either for my generation or for the generation of people coming after me.

It is odd that no hon. Member my hon. Friend the Member for Harrow, East (Mr. Dykes) merely touched upon it—mentioned the budget, which was one of the most important events of the six-month period. I refer to the budget for 1978, which was finalised with the Council in December. As always, it is never enough. Various hon. Members have said that the Regional Fund was not big enough or that the Social Fund was not big enough, but the people who have stopped that have been Labour Members and Ministers in the Council of Ministers. We have always asked for more with regard to the Regional Fund, but the blockage point has always been in the Council of Ministers. I do not know whether it is because the Council of Ministers is frightened of what it is doing.

It was refreshing to hear the hon. Member for Fife, Central underline and illustrate exactly how this country and his own constituency have benefited from the various funds, but he will admit, as I do, that they are much too small. We have to be much bolder in our approach. There has been an increase in this year's budget. The Regional Fund has been increased, but to nothing like the level that it should be, and the reason is temerity on the part of Ministers. What they are frightened of, I do not know.

In the years when Lord Thomson was the Commissioner in charge, the reply always was that the Commission did not know how to spend the money, so there was no point in voting more because the Commission could not get rid of it. But that is not the position now, given the levels of unemployment in the countries of the member States, the imbalance in the Community, and the deprived areas. There is no problem in finding candidates for the money if only Finance Ministers will have the courage to vote it Enormous good can be done, and the hon. Member who said that it was for the Community to do it rather than national Governments was thinking along the right lines. It is also the logic of being in the Community that, to an increasing extent, the Community should take over this type of work and expenditure. I do not know whether the Council of Ministers will have second thoughts. I very much hope so.

Mr. Russell Johnston

Representing the Conservative Party, is the hon. Member saying that he thinks it would be a good idea to have a quota-free element in the Regional Fund?

Mr. Scott-Hopkins

I am sure that the hon. Member has seen the pamphlet that I have written on this subject. I believe that the Regional Fund should be incorporated into what might loosely be called a rural fund involving not only the Regional Fund but the Social Fund and the guidance section of the CAP. If that was done, leading to development of the backward regions and help for the deprived areas, there would be no problem. But that is always assuming that there is enough money in such a fund. If there is, it can be done.

In the coming three months—the remaining period of the Presidency of Denmark—it is hoped that Her Majesty's Government will do better. I hesitate to mention the Minister of Agriculture, Fisheries and Food, who has a great deal of work to do. I wish him well in the negotiations on fishing which lie ahead of him. Let him remember not only that it is the British interest which is of importance but that we are a member of the Community. There is no question of our leaving it, so agreement has to be reached. I do not think that the right hon. Gentleman will have all that much difficulty in the negotiations, because our position is fully understood by our colleagues in the other countries of the Nine.

I also wish the Minister well in his negotiations on the price review which are taking place at the moment. But here he has a more difficult position to defend. He has offended almost everyone in the Council of Ministers of Agriculture. He has shown the most astonishing clumsiness. I believe that it was quite unnecessary for his demand for a 71½ per cent. devaluation of the green pound to have been refused. The way that it was done by the Minister who did it unhappily made it inevitable. But it need not have happened that way at all. If the Minister had been a little more flexible and a little less clumsy in the months preceding it, it would not have happened. He wants a great deal for the British farmer, though I shall not bother the House by detailing it. He wants a lot and he has very little to give. He certainly has no room to manoeuvre. It will be a difficult job.

The right hon. Gentleman is a clever man. I am sorry that he is not here, because I do not like saying things about him in his absence, but I know that the Under-Secretary is more than able to defend him. Although the right hon. Gentleman is a clever man, he will find it difficult to get what is absolutely essential for British farmers, bearing in mind the necessity to hold down the level of the price review this year to roughly what it was last year, if possible a little less. It will not be easy and I wish the right hon. Gentleman well on behalf of this country. Let us hope that all Ministers, when they go to their respective Councils, will bear in mind not only the interests of the United Kingdom but the interests of Europe and the honour of this country.

9.0 p.m.

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson)

I shall not pretend that this has been either a stimulating or enjoyable debate. It has been a wide-ranging one, dealing with British relations with the Community. There have been a vast number of issues raised, which has inevitably deprived the debate of coherence. This cannot be avoided when we try to review in one debate the work of the Community over the past six months.

Before I reply to some of the substantive points that have been raised I must deal with the comments of the hon. Member for Derbyshire, West (Mr. Scott-Hopkins), who castigated the Minister of Agriculture, speaking of his alleged clumsiness. The hon. Member told us what he wants for British farmers in respect of the green pound devaluation. Such comments come ill from his lips, since it was he and his hon. Friends who forced the current situation upon the Minister. It is a matter of great regret that the hon. Gentlemen should seek to personalise the present situation in the agricultural Council.

Mr. Scott-Hopkins

I stand by everything I have said. I and many of my hon. Friends tried to make the Minister of Agriculture devalue by 5 per cent. in the autumn of 1976 and at the same time renegotiate the MCAs for pigmeat. If he had done so then, he would have succeeded. Europe was sympathetic to us in those days. Because the right hon. Gentleman did not act then, the situation grew worse until we were forced to do what we did.

Mr. Tomlinson

I do not find the fact that the hon. Member was trying to force a mistake upon my right hon. Friend in 1976 any justification for his seeking to impose an even worse mistake upon him this year.

I turn to the comments of the hon. Member for Mid-Oxon (Mr. Hurd). I was sorry that, compared with previous debates on the state of the Community, the hon. Member's remarks should have been so much more negative than usual. The first half of his speech castigated those of my right hon. and hon. Friends who are opposed to our membership of the Community. Those who fall into that category and who have participated in this debate have expressed reservations about the Community in a constructive way. That is to their credit. It is a negative approach to castigate those who express honest and sincere views. It is a negation of the constructive spirit in which we should like to approach such a debate.

The hon. Member for Mid-Oxon criticised the Government for their handling of Community business. I shall deal with that later. Together with his other hon. Friends, he mounted a well-orchestrated campaign against the Minister of Agriculture. The hon. Gentleman asked about New Zealand access. At the September meeting of the Council of Ministers my right hon. Friend succeeded in securing a further increase in the cif prices that New Zealand gets for her exports of butter and cheese to the United Kingdom. This increase, the third achieved by the Government, brings prices up to a level 53 per cent. higher than those originally agreed under protocol 18 to the Treaty of Accession. In this way we have been able to enhance the benefit to New Zealand of the special arrangements for her produce without entailing any increase in retail prices on this account. We are determined to stand by all the commitments to New Zealand. There is no reason for anyone in the House to doubt that assurance.

There are as yet no formal proposals on the table for an EEC sheepmeat regime. We expect proposals very shortly, and we shall look closely at them from a number of angles. As the Minister of Agriculture has stressed on many occasions, one of the basic essentials from our point of view is that such a regime must assure adequate access for imports from New Zealand and other third countries.

The hon. Member also raised the question of a possible declaration about democracy. There is agreement among Foreign Minister that such a declaration should be issued at an appropriate moment and that moment might be at the time of the decision on the date of direct elections. The European Council is expected to consider this at its next meeting on 7th-8th April and preparatory work has been begun on that already.

The hon. Member spoke of the question of fewer languages in the Community. I do not think that we can rightly expect any country to give up its language for formal purposes. All official community documents have to be distributed in each member State and sometimes these have legal effect. However, it might be possible to cut down the number of languages used for working purpose.

On the point about Commission procedures, there will be a need to devise a better decision-making structure. The Government doubt whether greater recourse to formal voting in the Council will contribute to greater efficiency. The Council already operates on the basis of informal majority decision-taking, and in matters of great interest to member States the Government believe that discussions should continue until a consensus is reached.

Mr. Russell Johnston

Will the Minister clarify what he said about languages? He said that for formal purposes the Government would not wish to take any strong view on the matter but they hoped to see a cutting down of languages for business purposes. Does that mean action in regard to applicant countries, as well as the existing six languages used?

Mr. Tomlinson

The hon. Member has clarified it perfectly in his latter assumption.

Mr. Dykes

Will the Minister say how the Government would react to the idea that the Council should deliberate more openly in public, especially when legislating rather than negotiating?

Mr. Tomlinson

I can comment on that intervention only at the expense of other matters on which hon. Members wanted assurance.

The enlargement of the Community was mentioned by the hon. Members for Mid-Oxon, for Inverness (Mr. Johnston), for Lancaster (Mrs. Kellett-Bowman), my hon. Friend the Member for Belper (Mr. MacFarquhar) and the hon. Member for Derbyshire, West. The Government's view is that enlargement is the greatest issue facing the Community at present.

We warmly support the applications from Greece, Portugal and Spain. Enlargement from nine members to 12 is crucially important in order to buttress democracy in these countries. Enlargement will lead to problems that will take time to solve, but the political gains greatly outweigh the potential costs.

I was asked about the specific applications for accession. Substantive negotiations with the Greeks began on 10th February. In the sectoral approach agreed for the negotiations discussions on the first mandate for an industrial customs union are well under way. Mandates for other sectors will be discussed shortly. The Government hope that it will be possible to complete negotiations by the end of the year, as the Greeks want.

The Commission's opinion of the Portuguese application is expected in April. There will be further exploratory exchanges with the Portuguese followed by the preparation of the Community's mandate for the substantive negotiation. It is impossible at present to foresee the precise timetable.

The Spanish application was referred to by the hon. Member for Maidstone (Mr. Wells). The Commission's opinion is expected at the end of the year or early next year. The procedure will probably be the same as in the Greek and Portuguese cases. Once again it is impossible to predict how quickly matters will move forward.

The hon. Member for Inverness mentioned the cost of enlargement. It is premature to try to put a precise figure on the average costs. There will be budgetary costs, and there could be some extra costs if any of the applicant countries were to be given special help to bring their standard of living closer to that enjoyed in existing Community countries. At this stage it would be precipitate to try to forecast the cost.

I welcomed the speech made by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). I wish to take this opportunity to pay tribute to him for his contribution to the work of the Assembly in leading the Labour delegation. He made an interesting forecast about direct elections and the consequences of decisions on Greek membership. Time alone will tell, but I suspect that he may be proved wrong and that elections will take place.

My hon. Friend also referred to the subject of human rights. I heard my hon. Friend speak on this subject when he raised the question of human rights matters in the context of Lomé renegotiation at the joint EEC-ACP consultative assembly. The matter, which was also referred to by my hon. Friend the Member for Belper, was dealt with by that body and a resolution was passed signifying its acceptance that human rights issues should be discussed in the Lomé renegotiations.

However, I must point out that the ACP ministerial council meeting held in Lusaka last December passed a contrary resolution deploring any attempt to tackle human rights issues in the context of the Lomé renegotiation. Discussion with the Community on a renegotiated mandate is just beginning, and the Commission's proposals are being studied by the Government. It is too soon to go into detail about the position, but I think that it is right to say that we should like to see improvements in the new convention. These improvements will need to include provision for the suspending of aid to States in which there are gross and persistent abuses of human rights.

When dealing with the matter of industrial policy my hon. Friend the Member for Kingston upon Hull, East referred to one or two sectors. On the subject of steel, I wish to point out that the Commission, in consultation with member States, has continued to take measures to combat the effects of the world steel recession which all steel-producing countries in the EEC are feeling. Guidance on prices and deliveries within the Common Market have been given a mandatory basis in respect of certain provisions. This includes antidumping action against products entering the Community at abnormally low prices.

I must tell the hon. Member for Maid-stone that I can give him no assurance that similar action is being taken on matters of concern to the men of Kent involving imports of paper from Spain.

To guard against disruptive imports from third countries, the Council has approved a mandate for negotiations in principle in regard to countries that supply steel to the Community. The purpose of such agreements, involving price discipline and assurances about quantities, is to restore order to the steel market.

In the meantime—and here I refer to the speech of my hon. Friend the Member for Fife, Central (Mr. Hamilton)—I believe that we shall continue to benefit from the arrangements with the European Coal and Steel Community. A figure of £32.3 million was approved for the United Kingdom steel industry in the second half of 1977.

I wish to mention the subject of shipbuilding—and I appreciate the validity of the contribution made by my hon. Friend the Member for Kingston upon Hull, East. Community co-operation in shipbuilding has shown itself in the OECD. The Community, speaking with one voice, has been able to impress on Japan the need not to lower prices, despite the appreciation of the yen, and to accept a smaller market share than its competitive position might enable it to obtain.

All member States and the Commission are aware of the need to sustain a European shipbuilding industry through the present recession. The strategic and maritime interests of the United Kingdom and Europe make that position essential, but the necessary aid must be provided in such a way as to avoid wasteful competition. Hence the successive directives on aid to shipbuilding which have provided an agreed framework within which national aid schemes can be operated. Last year, our shipbuilding intervention fund of £65 million was highly successful in securing orders for the United Kingdom which otherwise would have gone to non-EEC yards.

Economic and monetary union has been raised by a number of hon. Members. On 5th and 6th December, the European Council considered proposals from the Commission for a five-year action programme towards economic and monetary union and directed that they should be studied further by Finance Ministers. The relevant specialist committees are examining the proopsals and will report to Ministers in due course. The United Kingdom attitude to specific proposals will have to be determined in the light of that study.

Our general position is well known. We recognise the importance of the economic dimension for the future of the Community, but believe, as has been stated by a number of hon. Members in the debate, that attention must be focused on the immediate obstacles to economic convergence.

I have been asked about the views of the President of the Commission, who has argued clearly his case for a leap forward towards monetary union if there is to be any real progress. Obviously, his arguments and the economic premises behind them need careful thought, but the United Kingdom view has always been that the practical foundations of economic convergence must be laid before there is any point in building the overall structures of union. As the Prime Minister said in the House on 7th December, our position is "Show me"—show us the practical benefits of monetary union to the United Kingdom and the whole of Europe in the present conditions of recession.

Sir A. Meyer

Will the hon. Gentleman give way?

Mr. Tomlinson

Oh, very well.

Sir A. Meyer

The hon. Gentleman need not be scratchy. He is among friends and enjoys the great admiration of hon. Members on both sides of the House.

Will he take this opportunity to put on the record something that it might be valuable to have on the record? Will he state categorically that there is no pre-judice in the Government against the Commission because it is headed by a distinguished former member of the Labour Party? There is sometimes the impression that there is a particular animus against the Commission because Mr. Roy Jenkins is at its head.

Mr. Tomlinson

That shows how mistaken I was to give way. That was a nonsensical suggestion which every hon. Member on this side of the House would repudiate.

Mr. Dykes

Why is the Minister being so vehement?

Mr. Tomlinson

Because I have had to waste the time of the House by reaffirming something which is clearly understood by everyone.

In an interesting speech, the hon. Member for Inverness criticised our pursuit of self interest. But which of the interests that British Ministers are pursuing would the hon. Gentleman have us drop? Should it have been the pursuit of the siting of JET, on which we were successful and which people who were not so articulate in supporting the stand of my right hon. Friend the Secretary of State for Energy have since been praising? Should we drop our stand on fishing, or our stand on regional policy and the important principles contained in it? Should we drop our attack on goods in the agricultural sector that are in regular structural surplus? Of course not.

I agree with the hon. Member for Inverness that we must have aims and future ideals, but I do not believe that we pursue the future best by denying the problems of serious interest to this country at present.

My hon. Friend the Member for Eton and Slough (Miss Lestor) raised interesting questions about scrutiny. The Government attach particular importance to making improvements in the arrangements for scrutiny and debate of Community business. This undertaking was given in the Prime Minister's letter to the general secretary of the Labour Party on 30th December and reiterated to the House by the Lord President on 17th February. We note what my hon. Friend said about the example which worried her. The Leader of the House has given an undertaking to make proposals on parliamentary control of Community business.

My hon. Friend the Member for Belper asked about aid to non-associate countries. We are not satisfied with the allocation to non-associate countries, which was 45 million units of account in 1977 and 70 million units of account in 1978. We have many times made clear to our Community partners that we want to see a much more substantial programme of aid to non-associate countries. The two ad hoc annual programmes so far agreed were very small. They marked a beginning. It is now necessary to react to the pressure which has consistently come from this country to increase the sums involved. I am grateful to my hon. Friends for raising that question.

The hon. Member for Flint, West (Sir A. Meyer) made an interesting philosophical discourse, but I believe that his description of the relationship of the Commission to the Council and their job relation to the common agricultural policy as it evolves is one which I suspect will bring a wry smile to the face of my right hon. Friend the Minister of Agriculture, Fisheries and Food if he has time to read it. I do not agree with him about the need of the House to give growing powers to the Assembly and increased powers to the Commission. I reject the accusation that he made about the Government's tardiness in relation to direct elections. The House and those hon. Members who want to understand them have it within their comprehension to know exactly what the difficulties were.

As has been said, it would be well on occasions if those hon. Members who took such persistent joy in seeking to criticise the tardiness of the Government over one aspect of Community affairs were occasionally heard to raise their voices on questions such as the VAT Sixth Directive, on which we are one of the only two countries in the Community to have taken steps to ratify the legislation. I say to those who are concerned about the speed of our involvement with Community matters that it has to be a two-sided process.

My hon. Friend the Member for Crewe (Mrs. Dunwoody) raised the question of the CAP and Mediterranean agriculture, which was also referred to by the hon. Member for Maidstone and on which the Commission submitted a package of proposals just before Christmas. We welcome the Commission's broad approach to the problems of Mediterrean agriculture and the problems contained therein are being studied with care.

My hon. Friend went on to talk about the pursuit of national interests. I agree with her entirely. There are nine States in the Community which all have national interests and which all pursue those national interests. I do not believe that we in this country should apologise for ensuring that the Community appreciates that there are areas of great domestic importance which need to be recognisd not only here but by our Community partners.

The general question of the common agricultural policy was referred to by my hon. Friend the Member for Crewe. I say to her, as the House will understand, that my right hon. Friend the Minister of Agriculture, Fisheries and Food has full support in pursuing the policy of the Government, which remains that the common agricultural policy needs radical change. We should like the Community to stop producing structural surpluses year after year. Our general aim is to move towards a policy that supports prices at the level needed for efficient producers and to bring about a balance of supply and demand to the benefit of consumers.

My hon. Friend the Member for Fife, Central referred to the importance of political co-operation. I readily acknowledge what he said. We have only to look at the range of subjects dealt with in political co-operation—for example, the co-ordination of policy for CSCE, the discussion on the Middle East, consideration of the problems of Africa, including Namibia, Rhodesia and discussion of the Horn of Africa, and the whole question of the United Nations and human rights. All these subjects have been fully dealt with in the confines of political co-operation. Experience has shown that the collective weight of all Nine, when they are agreed on a particular issue, strengthens the hand of individual member States, including this country.

The hon. Member for Harrow, East (Mr. Dykes) quoted figures which were dangerously wrong when talking about the budget. It is grossly wrong for him to include in his figures loans from the various funds of the Community, as if there was a net budgetary advantage. The situation is quite clear. The Chief Secretary to the Treasury stated in a Written Answer on 12th January that the United Kingdom's estimated contribution to the 1978 budget in the light of the settlement reached at the European Council in December would be: gross contribution, £1,120 million, receipts £460 million—a net contribution of £660 million. That is greater than the estimate in the public expenditure White Paper where there was an estimated gross contribution of £640 million.

As the Prime Minister said in the House on 7th December, the United Kingdom contribution towards filling the budgetary gap that was left by the arrangements for implementing Article 131 would be about £40 million. The details of how to meet the residual gap will have to be agreed by the Finance Ministers in due course.

Details of the United Kingdom's receipts and contributions to the budget from accession to the end of the previous year were given by my right hon. Friend the Chief Secretary to the Treasury in a Written Answer to my hon. Friend the Member for Blaydon (Mr. Woof) on 20th January.

Two other questions were raised by the hon. Gentleman on capital movements. The adjustments to the United Kingdom system of exchange control that were announced at the end of last year following discussion with the Commission are limited measures applying in only certain areas. We have the Commission's authorisation to maintain our major controls on exchange flows for a further year up to 31st December 1978. This is a necessary precaution for our balance of payments and for our economy generally.

As for the Community borrowing scheme, it is well known, following the European Council's approval in prin- ciple for the establishment of a new Community borrowing scheme, that the Commission has put to member States a draft Council decision that would give the scheme a legal basis. The text has now been considered by the Finance Ministers. As is mentioned in paragraph 51 of the White Paper, the scheme would involve the Commission borrowing up to 1,000 million European units of account, which would be on-lent to assist industrial investment in member States. The appraisal of projects and on-lending would be managed by the European Investment Bank. The United Kingdom aim will be to find ways of working the scheme that are efficient and straight-forward in administrative terms and that make a real contribution to present economic needs. We would expect to see some benefit ourselves from the operation of the Community borrowing scheme.

Finally, there is the question of Soviet fishing. Reciprocal fishing arrangements with the Soviet Union ended in September 1977 after the Russians had tried to impose unacceptable restrictions on Community fishing in their waters. It remains the Community's objective to negotiate a reasonable reciprocal fishing arrangement with the Soviet Union, but there seems little immediate prospect of a resumption of negotiations. However, there are no Soviet vessels fishing in breach of the position that I have explained. The only vessels involved are those that are legitimately purchasing catches.

I turn to the interesting speech of my hon. Friend the Member for Belper. I refer to two aspects of it, the Multi-Fibre Arrangement and Japan. In 1975 all sectors of the textile and clothing industry faced a recession that has been described as the most serious since 1931. The trade deficit on textiles in the United Kingdom was £220 million, about 5 per cent. of our total trade deficit. There was a serious risk in 1976–77 that the industry might emerge from the recession not only reduced in size and capacity but so disrupted that it could no longer be expected to be competitive in world markets. Jobs were being lost. It is estimated that about 100,000 jobs were lost between 1973 and 1977.

The eight most sensitive products that make up 60 per cent. of total United Kingdom textile imports are now restricted within global limits both for the Community as a whole and for each member State. To allow room for new suppliers, the Community's dominant supplier, Hong Kong, about which my hon. Friend was concerned, has had to agree to accept cutbacks on existing levels of trade. Quota coverage on other products is much more comprehensive than in the past and growth rates in general are much lower. There are also more effective safeguard provisions for items not under quota.

I turn to the question of our relations with Japan. The Commission, supported by the Presidency, is intensifying its discussions with the Japanese and emphasising the need for them to take urgent steps to reduce their large trade and payment surplus. The Commission will be reporting to the Council of Ministers in April. Hon. Members mentioned cars. The Secretary of State for Trade has the situation under close scrutiny. We are seeking further clarification of Japan's intentions.

Mr. Scott-Hopkins

Can the Minister clarify the situation on the negotiations with Japan? There have been reports that the representative commissioner, who was sent over to negotiate with Japan, found that there was no flexibility and had to return. Can the Minister bring the House up to date?

Mr. Tomlinson

I am not in a position to go any further.

I have referred to all the questions asked by hon. Members except that raised by the hon. Member for Maidstone about the Channel Tunnel. Many important questions have been raised on a wide variety of topics. I have tried to answer them all. Most of the contributions have been informed and useful, but a few have been provocative. Some Opposition Members sought to put party prejudice above the national interest when referring to the Minister of Agriculture. I cannot agree with the views that have been expressed on that subject.

This has been an interesting debate. I assure the House that the Government will bear in mind all that has been said when formulating policies in the Community.

Sir A. Meyer

On a point of order, Mr. Deputy Speaker. In view of the unsatisfactory nature of the Minister's reply, I give notice that I shall seek to raise the matter on the Adjournment.

Question put and agreed to.

Resolved, That this House takes note of the Report on Developments in the European Communities, July-December 1977 (Command Paper No. 7100).

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