Commons Sitting of 10 July 1978

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
INDUSTRY

  Industrial Development Assistance
  Mr. Silvesterasked the Secretary of State for Industry what study he has made of the overlap of powers in bodies involved in the provision of assistance for industrial development.
  The Minister of State, Department of Industry (Mr. Alan Williams): I keep under continuous review all aspects of assistance to industry, including the complementary nature of the power of the Government and of other agencies.
  Mr. Silvester: Would it interest the Minister to know that I have counted at least two dozen committees, bodies and departments on the provision of industrial health in the Greater Manchester area alone? Is it not time for the pruning knife?
  Mr. Williams: I congratulate the hon. Gentleman on his arithmetic but not on his conclusions. I am afraid that most of these bodies have specific remits, and, as he will discover, industry normally has no great difficulty in establishing the appropriate source of finance for its requirements. All companies have to do is to approach the Department's regional offices, and we always aim them in the direction of the type of assistance relevant to their operations.
  Mr. Litterick: Is the Minister aware that more than half of all the money that goes in financial assistance to industry for use in research and development is devoted to research and development into armaments? Does he agree that this has a debilitating influence on the ability of British industry to continue to compete in civil and commercial markets?
  Mr. Speaker: Order. The hon. Gentleman has widened the Question. Question No. 1 relates to the overlap of powers. There are other Questions on which the hon. Gentleman can put his supplementary question.

  Lucas Aerospace
  Mr. Rookerasked the Secretary of State for Industry what representations he received from trade unions during his consultations before his recent announcement of financial assistance to Lucas Aerospace.
  The Minister of State, Department of Industry (Mr. Gerald Kaufman): Discussions with the trade unions on the situation at Lucas Aerospace have taken place on a number of occasions recently.
  Mr. Rooker: Will the Minister offer congratulations to the workers in Lucas Aerospace on the breakthrough they achieved last week in the discussions with the company on the corporate plan? Will he now seek to honour the commitment he gave to Labour Members to examine any proposal from the confederation now that that body has called for an inquiry into the role of the Department of Industry in the last two years when it has done nothing to help these workers?
  Mr. Kaufman: I am grateful for my hon. Friend's warm statement since it was partly through my initiative that lay representatives took part in the meeting on 29th June. Therefore, I hope that my hon. Friend will reconsider his latter rather uncharacteristically harsh words. Having said that, I wish to emphasise that if the confederation comes forward with plans or asks for a tripartite meeting, its proposals will be considered. Indeed, I have already told the confederation that, if it wants a tripartite meeting, the Government will convene it.
  Mr. Pavitt: In the representations made by Lucas workers in my area, will my right hon. Friend bear in mind the inner city problems that beset Harlesden, and also remember that the kidney machines made by Lucas are also made in my area and that there is the possibility of an extension along those lines for extra work?
  Mr. Kaufman: My hon. Friend, with his great knowledge of these matters, draws attention to the fact that Lucas already makes kidney machines—something that is being demanded by the combine committee as a development which has not so far taken place. I shall take account of my hon. Friend's remarks.

  Machine Tool Industry
  Mr. Litterickasked the Secretary of State for Industry what steps he is taking to prevent the further decline of the British machine tool industry.
  Mr. Alan Williams: Under the machine tool industry scheme, my Department has made some £30 million available to the industry to promote the development of new products and the modernisation and rationalisation of production facilities. Assistance for the development of new products is also available under the product and process development scheme and through the Mechanical Engineering and Machine Tools Requirements Board. In addition, we are working actively with the machine tools EDC to ensure the achievement of its industrial strategy objectives for the sector.
  Mr. Litterick: I am grateful for that answer, but is my right hon. Friend aware that the level of import penetration in the British machine tool market has now reached 48 per cent. and is apparently still growing? Is he also aware that, in addition to the recent devastating announcement of 700 redundancies at Herbert's, we are informed that the training school is being closed, which represents a retreat by that crucial organisation from the business of creating the next generation of skilled labour which is so essential to the survival of the British machine tool industry?
  Mr. Williams: I fully appreciate my hon. Friend's long-standing concern for the health of this industry. My hon. Friend will know that recently an additional £10 million in funds has been raised in respect of the Alfred Herbert company. Most of those funds are to be devoted to the modernisation, rationalisation and development of new products. One of the difficulties with Edgwick is that it is a plant with a rather
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  low technology compared with the rest of the industry.
  On the general question of import penetration, we put the figure at about 46 per cent. Some of this results from international specialisation through which British firms enter into arrangements with overseas companies so that they complement each other's product range, but the industry is making a surplus on its payments.
  Mr. Ridsdale: Will the Minister look into the fact that the Employment Protection Act is preventing some of the smaller firms expanding in order to achieve delivery? As evidence of this, will he bear in mind that several of the machine tool exhibitors at the industrial exhibition in Korea told me that the Act was having precisely this effect?
  Mr. Williams: If the hon. Gentleman has information, I should like to see it and I shall naturally draw the attention of my right hon. Friend the Secretary of State for Employment to any points relevant to his Department. I must emphasise that the fact that a firm is small does not mean that we should expect its workers to accept standards of protection and security of employment which are lower than those elsewhere.
  Mrs. Wise: Is my right hon. Friend aware that, out of desperate anxiety about the state of their industry, the machine tool workers in Coventry have set up the Coventry machine tool workers committee, with the blessing of the appropriate district committees of their respective unions, with the intention of formulating a plan for their industry? Will he look with favour on such a plan when it is forthcoming?
  Mr. Williams: We welcome any such initiative by a work force demonstrating its concern for the future of its industry. Trade unions are represented on the sector working parties. It is worth bearing in mind that the investment plans of the industry are higher than for any of the last eight years and, in money terms, are more than double the best of the past eight years. In real terms, too, they are considerably above the plans for any of those years.
  Mr. Richard Wainwright: Can the Minister say whether the Government's

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  denationalisation of Kearney Trecker Marwin is producing the benefits that the Government expected?
  Mr. Williams: That is a specific question and I should prefer notice of it, but from the latest information that I have seen there is nothing to suggest that it has not been beneficial.

  Manufacturing Investment
  Mr. Knoxasked the Secretary of State for Industry if he is satisfied with the current level of investment in manufacturing industry.
  The Under-Secretary of State for Industry (Mr. Bob Cryer): I am pleased that manufacturing industry increased its investment substantially during last year. This represents encouraging progress towards the levels of investment I would like to see.
  Mr. Knox: When does the Minister expect that investment in manufacturing industry will rise to the level of 1974? Does he agree that if it is to get back to that level there will have to be a substantial increase in the demand for the products of manufacturing industry?
  Mr. Cryer: While we would like to see the level of investment increase, I must tell the hon. Gentleman that the 1977 level was superior to that of 1972 and 1973, years when the Conservative Government were in power and when, as the hon. Gentleman will no doubt recall, the then Prime Minister called on industry to invest more and pointed out that the Govment had given every inducement to private enterprise to invest but it was still not investing.
  Mr. Ashley: When considering the current level of investment in manufacturing, will my hon. Friend bear in mind that North Staffordshire has been very gravely damaged by the crass incompetence of the British Steel Corporation and that the workers have been betrayed by the broken promises of the BSC? When considering inducements to investment, will he bear in mind the situation in North Staffordshire and consider inducements to help new industry go to that part of the country?
  Mr. Cryer: My right hon. Friend is seriously considering the representations that my hon. Friend and his accompany-
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  ing delegation made last week. My hon. Friend can rest assured that we recognise the serious position he represented and that his representations will be taken into account.

  Planning Agreements
  Mr. David Priceasked the Secretary of State for Industry how many planning agreements have been concluded in the private sector at the latest date for which figures are available.
  Mr. Alan Williams: To date, one planning agreement has been concluded in the private sector.
  Mr. Price: That is an interesting reply. Will the Minister place a specimen planning agreement in the Library so that we can all judge the commitments of both sides? Can he tell us the commitments on the Government's side of the agreement as well as the commitments on the private firm's side? What obligations do the Government enter into?
  Mr. Williams: I suggest that it might be worth while for the hon. Gentleman to look at the documents that are already in the Library. He may find them helpful, and that might save my duplicating what has already been done. Clearly the Government's commitment depends on the sector of industry, the firm and the needs of the firm. Essentially, a planning agreement is an attempt to establish a realistic, continuing relationship between the Government and a firm. It has to relate entirely to the operating circumstances of the firm.

  Confederation of British Industry
  Mr. Giles Shawasked the Secretary of State for Industry when he next expects to have a meeting with the chairman of the Confederation of British Industry.
  Mr. Alan Williams: My right hon. Friend and I will both be seeing the president and the director general of the Confederation of British Industry this evening.
  Mr. Shaw: When the Minister and his right hon. Friend meet the chairman of the CBI, will they draw his attention to the results of a research survey by Opinion Research Centre published in The Daily Telegraph today which showed that the

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  vast majority of the electorate, including those who have tended to vote Labour, are against any further extension of nationalisation? Will he tell the chairman that, in view of this fact, the Government propose substantially to revise their industrial strategy?
  Mr. Williams: I leave it to the CBI representatives to decide their own reading, but I shall certainly take the opportunity to draw their attention to the disastrous consequences of an abandonment of industrial strategy which is implied in the comments from Conservative Benches, particularly the Front Bench. If I get the opportunity, I shall also ask what the CBI leaders think of the possible abandonment of present regional policy, which seems to be outlined in certain comments on the proposed policies of the Opposition.
  Mr. Stoddart: When my right hon. Friend meets CBI representatives, will he draw to their attention the article in The Sunday Times yesterday that appeared to show that the largest industries in this country pay virtually no corporation tax? Is this not rather strange, bearing in mind the attitude of the CBI on taxation?
  Mr. Williams: There is probably no need to draw that article to the attention of the CBI because all it says is what I and my colleagues have repeated on various occasions at the Dispatch Box, namely, that a company in this country with a continuing investment programme does not have a tax bill by the time it has received its grants and tax allowances. Unfortunately, that seems to come as a great surprise to Conservative Members.
  Sir K. Joseph: Will the Minister discuss with the CBI the level of industrial profits in real terms which are catastrophically low if there is to be any hope of more jobs and more investment? Will he also discuss with the CBI whether it would be helpful for the Government to spend less so that they needed to take less out of industry?
  Mr. Williams: There is no difference of view on the fact that it is good for industry to be profitable because profitable industry can invest and sustain employment. We take that for granted. I am encouraged by the fact that, as my right hon. Friend the Chancellor of the Exchequer pointed out, in the last six
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  months before the recent Budget, the liquidity of the top 20 firms improved by more than £1 billion.
  Mr. Mike Thomas: Will my right hon. Friend discuss with the CBI last week's comments on the radio by the right hon. Member for Leeds, North-East (Sir K. Joseph), who appeared, on behalf of the Opposition, to abandon all responsibility for wages in the public and private sectors?
  Mr. Williams: What is frightening about the situation outlined by the Opposition is that they intend, apparently, to allow wages to be free in the private sector while operating a discriminating clampdown in the public sector. This is somewhat difficult to reconcile with their crocodile tears over the nurses, forces, teachers, firemen and any other workers in the public sector who make a wage claim.
  Mrs. Kellett-Bowman: When the right hon. Gentleman meets the leaders of the CBI, will he discuss with them the competitive investment disadvantage of firms in areas such as my own and that of North Fylde, which do not have development area status and have to compete with firms that receive substantial capital grants because their areas have development area status? Will he discuss with them in particular firms in my constituency and fish processors in the constituency of my hon. Friend the Member for North Fylde (Mr. Clegg)?
  Mr. Williams: If I take the advice of Opposition Members, it seems that my discussions with the CBI will overflow into the early hours of the following morning. I doubt whether I shall be discussing the issues that have been raised with the CBI representatives. I reiterate that the CBI has always recognised the need for a strong regional policy.

  British Aerospace
  Mrs. Haymanasked the Secretary of State for Industry when he proposes next to meet the chairman of British Aerospace.
  The Secretary of State for Industry (Mr. Eric G. Varley): I shall meet the chairman of British Aerospace later today.
  Mrs. Hayman: At that meeting, will my right hon. Friend be able to give

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  the chairman news of Government approval for the HS146 project, which is vital not only to my constituency but to the whole of the civil airframe industry?
  Mr. Varley: I shall be discussing with the chairman of British Aerospace collaborative possibilities and the HS146. I ask my hon. Friend to await the views of the Government, which will be set out later this afternoon by my right hon. Friend the Minister of State when he speaks in the debate initiated by my hon. Friend the Member for Kingswood (Mr. Walker).
  Mr. Tebbit: When the right hon. Gentleman next sees the chairman, will he make it plain who is responsible for the overall market strategy of the corporation? Is it the chairman and his board, or is it the Secretary of State?
  Mr. Varley: We look to British Aerospace to give the Government advice about the commercial benefits of collaboration, of the HS146 and of other such projects. However, at the end of the day British Aerospace has to come to the Government for financial resources. We have a view, and we shall make that view known. At the end of the day we shall look to the board of British Aerospace to give us the best advice available.

  Post Office
  Mr. Neubertasked the Secretary of State for Industry when he expects next to meet the chairman of the Post Office.
  Mr. Varley: I have no immediate plans to meet the chairman of the Post Office. However, my right hon. Friend the Minister of State met the chairman on 26th June.
  Mr. Neubert: Will the right hon. Gentleman congratulate the chairman on the breach of the Post Office monopoly implied by the recently renewed licence for the Hull telephone department? Will he urge him to continue the good work by relinquishing the Post Office stranglehold on British air waves, which has inhibited the development of direct person-to-person telecommunications compared with developments that have taken place in the United States? Will he point out that unless the monopoly is weakened the record £360 million profit for this year will be seen as the exploitation of a captive market?
  Mr. Varley: That shows that we cannot win. When a public corporation makes a loss, there are screams of anguish from Opposition Members. When the Post Office or any other public corporation makes a profit, it is seen as some sort of exploitation of a monopoly. It was I who renewed the licence for Hull. We have made it a condition of the licence that there will be no private interests involved. We shall be publishing a White Paper in due course in response to the Carter report, which will adequately answer the points that the hon. Gentleman has raised.
  Mr. Madden: What is happening about the companies whose boards are littered with top Tories who relieved the Post Office of about £9 million by the most dubious means?
  Mr. Varley: At the Government's insistence there was a renegotiation of the contract and the rebate has now been paid. There were those who urged that we should not involve ourselves, but here is a good example of Government intervention which I think is satisfactory to the corporation.
  Mr. Raison: Will the right hon. Gentleman arrange an early meeting with the chairman to ascertain what is happening about the dispute with the telephone engineers? Will he ascertain, for instance, how many people have been unable to have telephones installed or connected over the whole of this year because of the dispute? Will he make it clear that he condemns industrial action that consists of employees deciding which parts of their work they will do and which parts they will not do?
  Mr. Varley: I very much regret the difficulty that has been caused by the industrial action of the Post Office engineers. I have made that view known to the engineers direct. That is why I asked Lord McCarthy to inquire into the dispute. About three weeks ago we thought that some third party assistance would be necessary to bring the dispute to a satisfactory conclusion. I understand that we are likely to receive the report later this week. In the circumstances, I think that it would be unwise of me to make any further comment.
  Mr. Skinner: I revert to the issue concerning Pirelli Cables and others and the

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  Post Office. Would it not be wise for my right hon. Friend to urge the Post Office to reveal the true amount lost over many years as a result of the cartel and the price fixing that was taking place? Does not he agree that it is rather ironic that the right hon. Member for Taunton (Mr. du Cann), who seems to be anxious to use his Committee on many occasions to try to embarrass nationalised industries, has not stepped in to examine the details of the arrangement?
  Mr. Varley: I thought that a good deal of information had been made available by the Post Office. If the House requires further information, I shall ascertain whether it may be made available. It is not for me to ask a Select Committee to inquire into the circumstances of nationalised industries or anything of that sort. If the Public Accounts Committee or the Select Committee on Nationalised Industries wishes to do that, no doubt it will address itself to the question.
  Mr. Norman Lamont: I revert to the supplementary question of my hon. Friend the Member for Aylesbury (Mr. Raison). Is the right hon. Gentleman aware that many businesses are deeply concerned at the Government's lack of action on the Post Office engineering dispute? Does he agree that delays in modernising the network are serious both for users and for the electronics industry? Should not the Government have appointed a mediator earlier? What are they proposing to do about it now? The dispute is long standing.
  Mr. Varley: The hon. Gentleman is incorrect in suggesting that over the years of modernisation in telecommunications Post Office engineers have not co-operated to the full. They have a good record of assisting. In no way can they be regarded as Luddites. They feel strongly about the reduction in their working week. It is a long-standing claim. I regret very much the inconvenience that has been caused. I hope that Lord McCarthy's report, which I hope will be received later this week, will be the basis for calling off industrial action and settling the dispute.

  Yorkshire and Humberside (Financial Assistance)
  Mr. Edwin Wainwrightasked the Secretary of State for Industry how much financial assistance to industry has been
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  given to the Yorkshire and Humberside region over each of the past three years; and what are the amounts granted for the South Yorkshire area.
  Mr. Cryer: With permission, I will publish the detailed information in the Official Report, but the total financial assistance made available to industry in the Yorkshire and Humberside region over the past three years amounts to £129,840,000. It is expected that offers of assistance under section 7 of the Industry Act 1972 included in this total will give rise to 19,000 jobs and safeguard 3,700 jobs in the region.
  Mr. Wainwright: Does my hon. Friend realise that that figure means that the Yorkshire and Humberside region has been dealt with unfairly and unjustly compared with the treatment of other regions? Is he aware that there are large pockets of low wages and unemployment in the region? Is he aware that in the Dearne Valley the Manvers Main coking plant has already declared redundancies? We are informed that there is a great danger of its being closed down. It seems that the Government will not carry out the promise that they made a few years ago to build a chemical plant to replace it.
  Mr. Cryer: The Government fully realise the difficulties occurring in many parts of the country. Yorkshire and Humberside has received more than its fair share of section 8 assistance. Those in the region have been extremely forthright, as one would expect from Yorkshire people, in taking advantage of the many generous schemes that the Government have introduced. The Government offer generous schemes of assistance to the regions and nationally through section 8 schemes. They offer to private industry the most generous tax incentives throughout the whole of western Europe in the form of 100 per cent. grants on investment in plant and machinery. There are difficulties, but some of them must be ascribed to the failure of private industry to take advantage of the schemes that have been offered.
  Mr. Giles Shaw: Will the hon. Gentleman examine the wool textile industry's claim on effluent charges? Is he aware that a report has been made by the Yorkshire Water Authority and the wool textile industry and submitted to his

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  right hon. Friend? Will he agree to consider the matter to ascertain whether the issue may be resolved?
  Mr. Cryer: I know that the hon. Gentleman will want to recognise the fact that the Department of Industry met representatives from the industry some months ago and that, as a result, we jointly agreed to set up the working party that he described. We have received a report and are examining the matter with considerable urgency, because we are concerned that the wool textile industry should maintain its competitive position in world trade.
  Mr. Hardy: Why should not central assistance also include the conferring of adequate capacity to secure the vigorous development of attractive industrial

  ASSISTANCE MADE AVAILABLE TO INDUSTRY IN THE YORKSHIRE AND HUMBERSIDE REGION UNDER THE INDUSTRY ACT 1972

  1975–76

  1976–77

  1977–78

  £000

  £000

  £000

  Part I—Payment of Regional Development Grant: Yorkshire and Humberside Region

  …

  …

  …

  18,000

  23,500

  22,100

  Part II Section 7—Offers of Regional Selective Assistance: Yorkshire and Humberside Region

  …

  …

  …

  5,500

  8,400

  3,900

  South Yorkshire Metropolitan County

  …

  …

  …

  900

  4,100

  600

  Part II Section 8—Offers of Selective Financial Assistance: Yorkshire and Humberside Region

  …

  …

  …

  16,500

  21,500

  10,300

  South Yorkshire Metropolitan County

  …

  …

  …

  600

  3,800

  2,900

  Part III—Assistance to shipbuilding: Yorkshire and Humberside Region

  …

  …

  …

  75

  36

  29

  South Yorkshire Metropolitan County

  …

  …

  …

  —

  —

  —

  Note: Information on payments of regional development grant to firms in South Yorkshire is not readily available.

  National Enterprise Board
  Mr. Aitken10. Mr. Aitken asked the Secretary of State for. Industry when he expects to meet the chairman of the National Enterprise Board.
  Mr. Richard11. Mr. Richard Page asked the Secretary of State for Industry when he expects next to have a meeting with the chairman of the National Enterprise Board.
  Mr. Kaufman: My right hon. Friend meets the chairman very frequently.
  Mr. Aitken: Since the National Enterprise Board is now investing £1,000 million of taxpayers' money, does not the Minister think that he should obtain from the chairman a rather more coherent and precise definition of the NEB's strategy at the present time? In particular, is he aware that there is considerable
  sites for the service of which substantial public funds may have been expended? Is it not clear that that has not happened in the important Hellaby site, by the M18 in my constituency.
  Mr. Cryer: My hon. Friend has raised a detailed point. If he wants to expand on it, I hope that he will write to me. Certainly, from the point of view of the provision of industrial sites, the Department of Industry, through the English Industrial Estates Corporation, makes every possible endeavour to provide not only large and medium advance factories but small advance factories to encourage small firms to act as inducements to private enterprise to go to these areas and to provide jobs.
  Following is the information:
  public confusion whether the NEB is supposed to be a hospital for lame ducks, a high rolling punter in the shares of small companies or a speculative secondary bank? May we have a much more precise definition?
  Mr. Kaufman: The confusion is in the minds of the hon. Gentleman and his right hon. and hon. Friends. There is absolutely no confusion in the minds of the many workers who have benefited from the NEB's investments, including those of my constituents who work for the NEB's subsidiary, Fairey Engineering.
  Mr. Robinson: When my right hon. Friend next meets the chairman, will he draw to his attention our concern that, if the big investment in microcircuits and silicon chips is to go ahead, which may have many desirable features, there should be an adequate balance of risk between

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  the national capital provided and that of certain individuals who stand to gain enormously from it?
  Mr. Kaufman: I take account of the point made by my hon. Friend. I am glad to hear that he believes that this investment is inherently desirable, unlike the utterly extraordinary statement by the right hon. Member for Leeds, North-East (Sir K. Joseph) in his letter of 19th June to my right hon. Friend, in which he said:
  "Many informed people do not consider it prudent to attempt, at this stage, to catch up the Japanese and Americans in the volume production of general purpose computer chips without multinational backing."
  What total defeatism by the former party of patriotism!
  Mr. Page: As the NEB made only £34 million last year, what steps will the Minister take to ensure that it does not slide down the same path as that already followed by the Italian equivalent of the NEB, which owes £11 billion and needs another £3 billion to £4 billion to keep it going?
  Mr. Kaufman: The hon. Gentleman voted for the NEB to slide down a path when he voted to deny it money, but I am glad that the House defeated him and his right hon. and hon. Friends and gave the NEB the necessary funds.
  Mr. Conlan: When my right hon. Friend meets the chairman of the NEB, will he inform him that it was a matter of some regret that in the Northern region, where there is a very high level of unemployment, the NEB contributed to that high level by a recent closure? Will he also inform the chairman that in future we shall be looking to higher and more profitable investment by the NEB?
  Mr. Kaufman: I am aware of the great regret felt by a number of my hon. Friends and of the strong representations that they made on the matter to which my hon. Friend has drawn attention. The NEB took that decision. It was not one that we were able to dispute or to intervene in. I certainly take full account of what my hon. Friend has said. That was one of the reasons why we opened a regional office of the NEB in Newcastle, and why the special NEB for the north-east was set up. I hope that initiatives will be taken to increase employment in my hon. Friend's area.
  Sir K. Joseph: Does the right hon. Gentleman accept that the fact that, as admittedly appears from a leak, the partners in the proposed NEB scheme are to be paid in part abroad is a clear indication that people of enterprise cannot be expected to take risks in the tax climate provided by the present Government?
  Mr. Kaufman: The fact is that the people of enterprise went away under the Conservative Government's tax climate and that they are coming back under ours.
  Mr. Speaker: Mr. Joan Evans.
  Sir K. Joseph rose—
  Mr. Speaker: Order. I shall call the right hon. Gentleman next. Mr. Joan Evans.
  Mr. Ioan Evans: Does my right hon. Friend agree that, in view of the failure of the private sector to invest in manufacturing industry, the NEB will need to play an increasing role in future? Although this is an academic question, because of the concern expressed by workers whose jobs have been saved by the NEB, may I ask whether we have had any view from the Opposition on what they would do with the NEB in future?
  Mr. Kaufman: I fully accept my hon. Friend's view that the NEB should have an increasing role. It is in fact praise-worthily expanding its role all the time. Of course, there is great fear that, if the Opposition were to come to office, they would abolish the NEB. When I met the shop stewards of Fairey Engineering, their great fear was that their security of employment—many of them live in Manchester, including Moss Side—would be undermined by the activities of the Tory Opposition.
  Sir K. Joseph: Will the right hon. Gentleman now confirm or deny that the partners from abroad in the microprocessors scheme are proposing to be paid, in part at least, overseas in order to escape United Kingdom taxation?
  Mr. Kaufman: What I say to the right hon. Gentleman is that any matters—[HON. MEMBERS: "Answer."] I am endeavouring to do so to the best of my ability, limited though it is. The right hon. Gentleman knows that any matters

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  on taxation are for my right hon. Friend the Chancellor at the Exchequer. But I have also said, as my right hon. Friend the Secretary of State stated in reply to that weird letter from the right hon. Gentleman, that any information about these matters which is not commercially confidential and which can properly be made available will be made available by the National Enterprise Board.

  Telephone Subscribers (Deposits)
  Mr. Frank Allaunasked the Secretary of State for Industry if he will now issue a general direction to the Post Office to cease its policy of requiring deposits from all telephone subscribers in certain areas in addition to the usual installation charges.
  The Under-Secretary of State for Industry (Mr. Les Huckfield): No, Sir. But I understand that the Post Office is considering this matter in the light of consultations it has held with the Post Office Users' National Council.
  Mr. Allaun: Has not the Post Office Users' National Council protested against this grossly unfair £50 deposit? Is not this blanket discrimination against everyone living in certain working class areas, whether good payers or not, absolutely contrary to our ideas of justice? Will my hon. Friend therefore scrap the scheme, as has already been done in certain areas, such as the Midlands?
  Mr. Huckfield: I recognise that my hon. Friend has expressed a genuine and continuing concern about this matter, and I note that he has echoed it today. To set this matter in perspective, I should tell him that last year the Post Office had to write off £15 million in unpaid bills after making all efforts to make creditors pay up. Because of that, I think it is right that the Post Office should consider the matter appropriately, but I shall certainly bear in mind what my hon. Friend said.
  Mr. Durant: Will the Minister tell his hon. Friend the Member for Salford, East (Mr. Allaun) that if a policy such as that followed by the Hull Post Office were pursued there would be no deposit?
  Mr. Huckfield: It is easy to make such comparisons as that. If the hon. Gentleman wants to pay tribute to municipal
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  enterprise, I hope that he will be joined by others of his hon. Friends.

  Lucas Aerospace (Corporate Plan)
  Mrs. Wiseasked the Secretary' of State for Industry what steps he proposes to take towards the implementation of a planning agreement with Lucas Aerospace on the basis of the corporate plan for saving jobs by useful production; and whether he will discuss these proposals with the shop stewards combine committee and appropriate trade union officials
  Mr. Kaufman: The Government would welcome a planning agreement with Lucas Aerospace and my right hon. Friend has recently reminded the Lucas group of the advantages. The combine shop stewards committee corporate plan is appropriately the subject of discussion between the unions and company management.
  Mrs. Wise: Is my right hon. Friend aware that his reply to my hon. Friend the Member for Brent, South (Mr. Pavitt), which implied that the Lucas workers were not even aware that they were making kidney machines, was unworthy and slanderous? May I recommend my right hon. Friend to give more attention to the detail of this plan, from which he would learn that the Lucas Aerospace workers want expansion of kidney machine production and the production of portable machines? May I suggest that a serious effort be made by his Department to understand the valuable work which has been done by these workers if it is to have any chance of formulating a successful planning agreement with the company?
  Mr. Kaufman: If my hon. Friend had spent as much time as I in discussions with the Confederation of Shipbuilding and Engineering Unions and the Lucas workers on the corporate plan, as distinct from making public sloganeering statements, she would know that I have involved myself for two and a half years in this issue. She would also know that it was the initiative that I undertook in discussions with Ken Gill that helped to lead, for the first time, to representation by the combine committee in discussions with Lucas management. That breakthrough took place following my discussion with Mr. Ken Gill.

  1015
  My hon. Friend the Member for Brent, South (Mr. Pavitt) said that workers in Lucas industries who were employed in his area make these kidney machines. The workers in the corporate plan asked for the workers at Lucas Aerospace to make the kidney machines.
  Mr. Adley: I thank the Minister for giving us another glimpse of the authentic voice of the kitchen Cabinet. I do not wish to intervene in the fratricidal argument between the Government Front and Back Benches, but does the Minister recall telling us one, two and three years ago how planning agreements were absolutely central to the Government's economic strategy? However, he told us a few minutes ago that one planning agreement only has been reached in the private sector in the four years of office of this Government. If we are to believe the Government in saying that there has been a staggering economic recovery in the last three years and particularly in the last few months, is that in spite of or because of the lack of planning agreements?
  Mr. Kaufman: The hon. Member has drawn attention to the importance of planning agreements. Much advice has been given to the Minister of State on matters which he should raise with the CBI when he sees its members tonight. I shall be in his company and I shall advise him to tell the CBI that its hostility to planning agreements is shortsighted and blinkered, and that planning agreements can help individual companies as well as the Government's industrial strategy.
  Mr. Rooker: Is my right hon. Friend aware that his answer to my hon. Friend the Member for Coventry, South-West (Mrs. Wise) is about worthy of his Department at present? [HON. MEMBERS: "Hear, hear."] Will he note that the change that took place last week followed the accession of Mr. Roy Grantham to the position of leading for the confederation? Why did no Minister from his Department take part in the programme for the Open Uuniversity on the Lucas corporate plan?
  Mr. Kaufman: I realise that taking part in Open University television programmes is a high priority in the Socialist industrial strategy. I also notice that
  1016
  my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) not only votes with the Opposition but wins their cheers. If my hon. Friend, instead of writing letters to newspapers and making speeches, had taken positive action, we might have achieved earlier the type of meeting with the lay representatives of the combine that eventually came about as a result of the patient work of Ministers in the Department of Industry.

  Industry Act Assistance
  Mr. Maddenasked the Secretary of State for Industry how much assistance has been given to private industry under the Industry Act 1972 to the latest available date.
  Mr. Alan Williams: Up to 31st May 1978 offers of selective financial assistance totalling £415 million were made to private industry under the Industry Act 1972. In addition, in the same period, payments of regional development grant totalled £1,513 million, the larger part of which went to private industry.
  Mr. Madden: Is not one of the ironies of modern politics that these colossal sums of taxpayers' money are paid to private companies, many of which donate lavish sums to the Conservative Party, whose industrial spokesman regularly condemns all grants and subsidies as doing great harm?
  Mr. Williams: I agree. I find it incredible that industry should place any reliance whatsoever upon the so-called policy enunciated by the Opposition Front Bench. I gather that section 8 would be abandoned, and I understand that the Conservatives have no intention of going ahead with the industrial strategy. They are ambivalent but are inclined to talk about abandoning the National Enterprise Board. It would be a disaster for the country if they were elected.
  Mr. Alexander Fletcher: Will the Minister confirm press reports that the Secretary of State for Industry has advised workers at the Chrysler plant at Linwood that no more Government funds will be made available to that company? Will he join me in deploring the irresponsibility of those at Linwood who failed yesterday to turn up for a meeting in such

  1017
  numbers that the costly dispute could not be resolved?
  Mr. Williams: I am sure that the hon. Member has seen the reports of what my right hon. Friend said during his Linwood visit. On Friday I chaired a meeting of workers' representatives and Chrysler management in Coventry. I made it clear that if a pay settlement was reached that was in breach of the Government's guidelines, Government financial support could not be provided.

  Northern Region
  Mr. Radiceasked the Secretary of State for Industry whether he is satisfied with industrial progress in the Northern region.
  Mr. Cryer: We shall continue to do everything practical to promote industrial investment and employment in the Northern region. The north's share of the United Kingdom's investment in manufacturing has increased during the past eight years and regional policy has made a useful contribution to this increase.
  Mr. Radice: I thank my hon. Friend for that reply. I accept the difficulties of running a regional policy at a time of recession, but does he agree that there is now a case for a new ingredient in regional policy in the Northern region? Does he agree that there is a strong argument for a northern regional development agency matched by regional, democratic control?
  Mr. Cryer: That view has been promoted by representatives of the Northern Region. But we are satisfied with our regional policy. It represents an intervention in the economy against the private enterprise doctrines of the Opposition, who would seek to abandon regional policy. We have made the whole of the region either a special development area or a development area. In 1976–77 £237 million was spent in the Northern region. But we are satisfied jobs and retain manufacturing industry there. We are always open to further representations.
  Mr. Anthony Grant: Before the Minister castigates private enterprise too much, will he say whether it is his policy to encourage private enterprise small firms in the Northern region?
  Mr. Cryer: We are encouraging small firms in the Northern region, as we are in every assisted area, by a variety of means. On 1st July we introduced the small firms employment subsidy to encourage small firms to take on new employees. The point that I was making earlier was in direct contrast to the view of the Conservative Party—that private enterprise should be left totally alone. If that happened, the regions would be totally denuded because private enterprise would almost certainly drift away from the regions towards London and the south-east. Only through Government support measures has industry developed in the regions with traditionally high unemployment.

  Steel (Production and Sales)
  Mr. Hardyasked the Secretary of State for Industry what was the volume of steel produced and the volume sold by the British Steel Corporation in the last three months and in the same period in 1976 and 1977.
  Mr. Kaufman: This information is properly a matter for the British Steel Corporation, but I am arranging for a table giving this information to be published in the Official Report.
  Mr. Hardy: Given the present low level of world steel demand, is it not clear that the recent story that the British Steel Corporation will be selling off its successful enterprises in South Yorkshire is rather ridiculous? Will the Minister echo Sir Charles Villiers' firm denial of this story, which is clearly a squalid and silly manoeuvre to frighten Labour voters in the Penistone by-election?
  Mr. Kaufman: That report has been repudiated by the chairman of the British Steel Corporation. The Government fully endorse the chairman's statement on that matter.
  Mr. Emery: Will the Minister make it clear to the House that the British Steel Corporation will be unable to increase its sales to British industry unless it modernises its productive process? Will he also remind the trade unions of that?
  Mr. Kaufman: I shall also remind the Opposition of that since they voted against the borrowing powers to provide the money for modernisation.
  Mr. John Ellis: Is my right hon. Friend aware that sales of steel in this country have been affected, despite an agreement with the EEC, by the amounts of steel being made available in the EEC, allegedly to be shipped outside the EEC but which are coming into this country in contravention of the agreement? Will he consult other Ministers so that representations may be made to other EEC countries?
  Mr. Kaufman: I am willing to consider any information that is sent to me. I am willing to discuss the matter with the Secretary of State for Trade.
  Mr. Nelson: Was not production in both periods in question affected by the stockpiling schemes under which hundreds of millions of pounds of taxpayers' money was provided to finance anti-cyclical production of steel? Is it not the case that, in spite of this money being put into the BSC, there are shortages of certain types of steel, particularly of mild rolling bar? In view of the amount of money that has been spent, how does the Minister explain the severe shortages which exist?
  Mr. Kaufman: This is in part due to the fact that the corporation is not yet fully equipped to provide all sections of the market. The programme that it has undertaken for modernisation and for quality improvement, which is very important, can assist, but one does not deny that serious problems exist.
  Following is the information:

  STEEL OUTPUT BY BRITISH STEEL CORPORATION

  Three months ended

  Liquid steel produced Million tones

  Finished steel deliveries Million tones

  29th May 1976

  5·3

  3·7

  28th May 1977

  4·5

  3·5

  3rd June 1978*

  5·2

  3·8

  * 14 week period.

  Source: British Steel Corporation.

LAW OFFICERS' DEPARTMENT (STAFF)
Mr. Dalyellasked the Attorney-General whether he has any plans to increase staff of his Department in 1978–79 and 1979–80; and, if so, why.
The Attorney-General (Mr. S. C. Silkin): Not at present.
Mr. Dalyell: If Lord Scarman and Lord Wilberforce are right in supposing that in order to make the devolution Bills workable there has to be a constitutional court, what would be involved in terms of recruiting new staff? If they are wrong, will someone in the Government tell the senior Law Lords, point by point, why?
The Attorney-General: My right hon. Friend the Lord President indicated in a reply to my hon. Friend last Thursday that it is not intended to bring forward legislation to establish such a court, and I do not think that it is for me to answer the detailed questions that my hon. Friend has put to me.
Mr. Maxwell-Hyslop: Is the right hon. and learned Gentleman aware that the inquiry into the north Devon link road is being held up indefinitely by the failure of the Lord Chancellor to choose an inspector? If the Lord Chancellor's Department is overworked and that of the Attorney-General is underworked, will the right hon. and learned Gentleman transfer some of his staff to the Lord Chancellor's Department?
The Attorney-General: My Department is very definitely not underworked.
Mr. Edward Gardner: Does the Attorney-General agree that delays in the hearing of criminal trials remain a most serious problem which impedes justice? Can he do anything to diminish the delays in initiating prosecutions with which he is concerned without any addition of staff?
The Attorney-General: As the hon. and learned Gentleman makes clear from the form of his supplementary question, the delays, which I agree are very much regretted, are not solely the concern of my Department; they are the concern of my noble Friend the Lord Chancellor, of the police and so on. I am glad to be able to say that as a result of recent representations the Director of Public Prosecutions has received authority to increase his staff. He is now actively seeking to do so. I am sure that when he succeeds in getting staff of the right calibre, that will help a great deal.

DIRECTOR OF PUBLIC PROSECUTIONS
Mr. Skinnerasked the Attorney-General when he expects next to meet the Director of Public Prosecutions.
Canavanasked the Attorney-General when he expects next to meet the Director of Public Prosecutions.
Mr. Attorney-General: Presently.
Mr. Skinner: When my right hon. and learned Friend meets the Director of Public Prosecutions, will he have a serious discussion with him about why giant firms such as Pirelli, which is run by prominent Tories, can fleece telephone subscribers without having criminal charges taken out against them, while councillors can be discharged from office for keeping rents down and people drawing social security benefits who might default for a few weeks can be sent to prison? Surely it is high time that this matter was dealt with in a more equitable fashion.
The Attorney-General: All my discussions with the Director are concerned with the improvement of the administration of justice in order to ensure that justice is done and injustice is not done. I cannot guarantee that the scope of my discussions will cover the matters raised by my hon. Friend.
Mr. Canavan: Will my right hon. and learned Friend ask the Director of Public Prosecutions what action, if any, he is taking about the Department of Trade's report on Lonrho's sanction-busting activities in Rhodesia? Does not he agree that it is about time there was some action on this matter, especially since a decision might he forthcoming about Lonrho's bid to take over SUITS?
The Attorney-General: The investigation into that matter is continuing. On 27th April my right hon. Friend the Foreign Secretary, under the Southern Rhodesia sanctions order, signed an authorisation to the Director of Public Prosecutions which enables him to call for the production of documents. The Director has signed a request addressed to Lonrho asking for the production of certain documents. That request has been served and the investigation consequently will continue.
Mr. Adley: Has the right hon. and learned Gentleman noticed that a British court, albeit a Scottish court, has given an order to the Chilean Government saying that they are right in demanding the return at the hands of the British Government of certain property belonging to the Chilean Government? Since the Attorney-General has just told us that he is concerned with the administration of justice, what steps does he intend to take to ensure that this court order is carried out so that the good name of this country is not confused with the bad name of the Government'?
The Attorney-General: The hon. Gentleman very well knows that that is a question within the jurisdiction of my right hon. Friend the Secretary of State for Scotland and my right hon. and learned Friend the Lord Advocate. He knows that it ought to have been put to them.
Mr. Madden: If the Post Office can be fiddled out of £9 million, is it not fair to assume that other public corporations are equally vulnerable? Therefore, what are the Attorney-General and the Director of Public Prosecutions doing to protect the public interest?
The Attorney-General: The answer to that question is "A great deal". However, I do not entirely follow the purport of the supplementary question. If my hon. Friend will put down a specific Question or will write to me, I will do my best to give him an answer.

BRYANT BUILDING CO. LTD.
Mr. Rookerasked the Attorney-General what was the length of time between the receipt by the Director of Public Prosecutions from the West Midlands police of papers in the Bryant Building Company Limited case and his announcement on 22nd May that there would be no further prosecutions.
The Attorney-General: Fourteen months. The Director of Public Prosecutions received the final papers in the Bryant case in March 1977, and in the same month I gave my consent to prosecutions and summonses were issued. The trial was completed on 17th May 1978 and I made my statement five days later.
Mr. Rooker: Is my right hon. and learned Friend aware that his answer to me on 22nd May, when he said that there would be no further prosecutions, caused great dismay in the West Midlands, not least among the police, who had been involved for so long in the investigation and who know that 1,900 people have got off scot-free? Is he further aware that many people believe that a cover-up is under way because of the great and the good who appear on that list?
The Attorney-General: I am not aware that that reply was greeted with great dismay. I am aware that my hon. Friend has previously made allegations of a cover-up which I have denied. He has previously alleged in this House that the police themselves have spoken about a cover-up, but I have before me a report which clearly indicates that the chief constable has denied any suggestion of a cover-up. There is no cover-up and there has been no cover-up.

DIRECTOR OF PUBLIC PROSECUTIONS
Mr. Christopher Priceasked the Attorney-General when he last met the Director of Public Prosecutions.
The Solicitor-General (Mr. Peter Archer): Recently.
Mr. Price: Has my right hon. and learned Friend the Attorney-General yet decided whether he will give evidence personally to the Royal Commission on Criminal Procedure? Some weeks ago he had not made up his mind. If he has decided so to do, will he advocate publicly an independent prosecuting system in England and Wales?
The Solicitor-General: My right hon. and learned Friend is still considering whether he can helpfully give evidence. If he does, his proposals will be formulated when the evidence is being prepared.

LEGAL AID
Mr. Watkinsonasked the Attorney-General if he remains satisfied with the access that poor people have to legal services.
The Solicitor-General: My noble Friend regrets the restrictions on public
1024
expenditure that prevent him from improving the financial conditions governing access by people of limited means to legal services available under the legal aid scheme. It is his intention to improve them as soon as possible. The Royal Commission on Legal Services is examining the problem of access to legal services generally.
Mr. Watkinson: Does my right hon. and learned Friend agree that the development of law centres has been one of the most significant developments in the provision of legal services for poorer people? Will he do everything he can to encourage this development? Such a centre is being considered for my county of Gloucestershire. Will he give as much encouragement as he can to such schemes and try to elicit from the Treasury a greater share of public funds for the provision of legal services?
The Solicitor-General: I wholly agree with my hon. Friend, and he and I can be fortified by the reflection that my noble Friend the Lord Chancellor agrees with us both. As my hon. Friend has properly recognised, the problem is that one has to stretch the resources to meet the need. As regards the specific law centre which my hon. Friend mentions, I shall draw what he said to my noble Friend's attention.
Mr. Edward Gardner: Does the Solicitor-General agree that one of the prime weaknesses of our legal aid system at the moment is the absence of legal aid for those appearing before tribunals such as the national insurance commissioner, the medical appeal tribunal and others of that kind? Does the right hon. and learned Gentleman agree that this gap in the legal aid system causes great distress to people who have not the experience and ability to represent themselves or the resources to pay for the legal aid which they seriously need?
The Solicitor-General: I agree that there is a need for legal aid for representation in some cases before some tribunals. One of the difficulties, as the hon. and learned Gentleman appreciates, is to screen the cases so that the resources go to the right needs, as well as the difficulty of discerning priorities among the competing needs in this field.

EUROPEAN COMMUNITY COUNCIL (BREMEN MEETING)
The Prime Minister (Mr. James Callaghan): I should like, with permission, to report to the House on the meeting of the European Council in Bremen which I attended with my right hon. Friend the Foreign and Commonwealth Secretary on 6th and 7th July.
We were informed by the President of the Commission that the expected rate of growth in the Community countries this year, on present policies, would be lower than expected, and we agreed that increased growth is a crucial objective to improve employment prospects. As regards measures to combat youth unemployment, we called for decisions within the framework of the European Social Fund to come into force on 1st January 1979. All member States will take necessary measures to increase growth according to their own individual circumstances. But we agreed that countries with smaller inflation and balance of payments problems will do more to increase domestic demand.
We agreed that a zone of monetary stability in Europe was a highly desirable objective, as part of the concerted international action needed for economic recovery. The German and French Governments put forward for consideration a scheme for a European monetary system. A number of Heads of Government, including myself, wished to see the details fully worked out before entering into any commitment by our respective Governments. We therefore agreed that Finance Ministers should formulate guidelines for a possible scheme, taking as a starting point at their meeting on 24th July the Franco-German proposals. Officials would subsequently elaborate the necessary provisions by 31st October, and the final scheme would be in front of the meeting of the European Council on 4th and 5th December for decision and commitment.
This agreed timetable will permit the fuller preparation and consideration which is essential for a durable scheme. We can thus hope to avoid the errors of 1972 when the previous Government joined a similar scheme on 1st May but were forced to withdraw only seven weeks
1026
later, on 23rd June. However, the outlines of the Franco-German proposal contain some new features and the Government will play their full part in the forthcoming studies.
The Government have taken the view throughout these discussions that monetary arrangements are not enough by themselves to ensure a zone of monetary stability. Any new system must be one which will last and will take full account of the economic as well as monetary interests of each member of the Community. Therefore, in company with others, I pressed for parallel studies to be made of the action that is necessary to ensure a greater convergence in the economies of the member countries. especially in such matters as the commitments to growth and transfers of real resources. It was agreed to carry out such studies.
It will be necessary to judge how far all these matters have been satisfactorily arranged when we are called upon to take a final decision on such new proposals as the Finance Council may put forward.
There was a related discussion arising out of the need for a better use of resources in supporting Mediterranean agriculture. This led to an extensive discussion of the common agricultural policy as a whole which brought out the dissatisfaction felt by a number of member Governments with the present scale of agricultural expenditure and with the cost of financing surplus production. This was the most thorough and frank discussion of the defects of the common agricultural policy in which I have participated in the Community, and it revealed a great deal of support for our wish to see a more balanced distribution of the use of Community resources as a whole. The Commission was asked to come back with proposals to remedy this at the next European Council.
As regards energy, the Council adopted objectives for 1985 calling for the reduction of the Community's dependence on imported energy to 50 per cent. of its total requirements, including oil, and emphasised that other industrial countries should set themselves similar objectives.
The Council expressed its readiness to make progress with the developing countries on such matters as trade, commodity

1027
support, stabilisation of export earnings and assistance.
The Council discussed the situation in the Middle East and Lebanon and in Africa. It regretted the lack of progress towards a settlement in the Middle East, and reaffirmed the principles set out in the declaration issued by the Council in London on 29th June last year. The Council agreed on the necessity for early and peaceful independence for Namibia and Zimbabwe on the basis of negotiated and internationally acceptable solutions and expressed support for the efforts which Britain is making, with others, to this end.
This was a constructive meeting in which there was some hard talking because we were getting to grips with important problems. If, as a result, some new solutions can be agreed on the convergence of our economies, on a zone of monetary stability and on the transfer of resources inside the Community, including a better use of resources in the CAP, it could turn out to have been a historic occasion.
Mrs. Thatcher: May I put three points to the Prime Minister, two on the economic aspects of his statement and a third on another aspect? The right hon. Gentleman will recall that a short time ago he put up a five-point agenda to get us out of world recession, one of the main points of which was a currency stabilisation scheme. We have to determine precisely where the British interest lies and we must therefore look at the details of the present scheme and any strings which are attached to it, although it is a rather different scheme from that in 1972 to which the Prime Minister referred. But will the right hon. Gentleman agree, especially in view of his previous welcome for currency stabilisation schemes. that we are more likely to get out of the problem of world recession by co-operating with our partners than we are by standing aside from the scheme which they have put up?
Secondly, although we welcome the concept of a currency stabilisation scheme, will the Prime Minister agree that no such scheme either will work or could ever be a substitute for running our own economy in a sound financial way, and will he accept that one of the things
1028
which shocked the British people was the fact that we are now in the second division economically of European countries, and, since Britain was the victor in Europe, this comes very hard to the British people? However, that has nothing to do with currency stabilisation schemes. It is the result of the way in which the Government have run the British economy recently.
Thirdly, the Prime Minister referred to a number of foreign affairs matters. When he and his colleagues were all together, did they discuss the trials now taking place in the Soviet Union of Mr. Ginzburg and Mr. Shcharansky, and did they come to any concerted view upon them?
The Prime Minister: On the first question, I agree that the proposal which has been put up—I refer to the monetary arrangements—is rather different from that of 1972. It is a great pity, however, that the Opposition when they were in Government did not take the same precautions that we are taking now. I hope to learn from their mistakes in this matter. Of course it is better to co-operate than to stand aside. Indeed, I think that this is what I have been preaching over the past 12 months. We shall continue to examine these matters constructively. I am very ready to do anything which will strengthen our own currency and give it greater reserves, provided that our other interests are satisfied. We shall look at the scheme in that way. I think that that was fully understood by everybody.
On the second point, the right hon. Lady is echoing my own words, that none of these schemes can be a substitute for running our own economy properly. This is indeed what I have been trying to do, with no support from the Opposition, through the industrial strategy and through trying to overcome inflation. I must remind the right hon. Lady, when she talks about the deterioration in our situation, that inflation was much higher when she left office than it is now, and was going up and was forecast to go up over the next 12 months.
Therefore, I do not think that it comes very well from the right hon. Lady to talk about the way in which we have been running our economy recently. It is because of the way in which we have been running it recently that this country

1029
has more hope for the future that it ever had during the early years of the 1970s.
The trial of Mr. Shcharansky was not mentioned at the European Council of Ministers, but it is clear that if the Soviet Union goes ahead with the trial it will place a very severe test upon relations between it and other countries. It seems to bear some of the hallmarks of a return to the trials we knew in Stalinist days. That cannot but effect our relationships.
Mr. Jay: In studying the so-called currency stabilisation scheme, do we have to learn yet again that fixed exchange rates usually lead to unemployment? Can my right hon. Friend assure the House that we shall not accept any schemes resembling this until we have had a genuine reform of the common agriculture policy and a reasonable German contribution to the exchange costs of our forces in Germany?
The Prime Minister: My right hon. Friend is not as accurate as usual when he says that fixed exchange rates lead to unemployment. That depends upon the nature of the economy one is running. As I keep on saying to the British people, what is at stake here is the nature of our productivity and our efficiency and whether we have inflation. That will determine the level of unemployment. Therefore, I hope that my right hon. Friend will not desert a view that he held for many years about the desirability of having less flexibility in exchange rates because of his dislike of the Common Market as a whole.
On the question of the CAP, I have made it quite clear over many months, and, indeed, over years—as has my right hon. Friend the Minister of Agriculture, Fisheries and Food—that it is a matter which needs the most substantial reorganisation. What I think is now being seen by a number of members of the Community is that giving more help to the Mediterranean countries cannot be done by increasing the total budget. The agricultural budget is large enough, if indeed not too large. Therefore, if there is to be additional help for the Mediterranean countries it must come from a redistribution of resources between certain countries and the Mediterranean countries which might seek to benefit. The Commission has been asked to
1030
examine all that and to bring forward proposals in December.
Mr. Russell Johnston: Is the Prime Minister aware that the Liberals very much welcome the major proposal of a parallel currency backed by a European monetary fund, which is part of the manifesto of European Liberal democrats? Despite the existence of certain economic Visigoths around the right hon. Gentleman, can he assure the House that it is the Government's hope and intention to see the details that he mentions worked out positively by the end of the year?
The Prime Minister: I hope to see anything which will lessen monetary instability, which I think has been part of the cause of the decline in international trade, though obviously not the whole cause. I have been one of the most fervent advocates of monetary stability.
What I should like the House, including the Liberal Party, to accept, as I imagine and hope that that party does, is that monetary stability will not be achieved unless there is greater convergence between economies. That is the essential principle that we had to get into the original proposal. It was not there. The proposal seemed to me to be showing a substantial weakness because it was not there. That is what was got in at my insistence. It is something that we must consider between now and December. If we could get both those things, that could be of advantage to the United Kingdom as well as to Europe.
Mr. Roper: I congratulate my right hon. Friend on the realism he brought to the discussions in Bremen. Can he assure the House that it is perfectly appropriate for the Government to maintain a reserve on the specific proposals until the discussions in the Council of Foreign Ministers have made quite clear how the proposals on a zone of monetary stability can be linked with specific proposals which lead to a convergence of European economies as a whole?
The Prime Minister: Two studies are to run in parallel. I hope that the proposals on both will be equally tangible when they appear. Then it will be for the Government to judge whether they are in Britain's interests. I hope that they will be, but we shall have to wait and see the details.
Mr. Maurice Macmillan: Will the right hon. Gentleman accept meanwhile that it does not make it easier to control inflation in this country if he allows his exchange rate policy to increase the money supply unduly? Will talks on the general economic future of the Community include the present position in Africa and the difficulties that the Europeans and Japanese might experience if there were to be any interference with access to raw materials and minerals from that Continent?
The Prime Minister: I think that the exchange rate policy is well known. It is not proceeding unsatisfactorily. Sterling has been stable now for many months, and that is of assistance to our industrialists, who prefer a stable exchange rate. It has varied only within a very small ratio. Indeed, today it seems to be singularly strong, but I do not think that we should look at any one day, any one week or any one month. Over a period sterling is pretty stable, so it is having no adverse impact on monetary policy, which, as the right hon. Gentleman knows, is well under control at present.
As regards discussions on Africa, there is growing concern about the consequences to employment in Europe if there were interruption of supplies from African countries, including, of course, South Africa. But these matters, which are commercial matters are not discussed in open council.
Mrs. Castle: Is not the intention behind the proposals not merely greater monetary stability but the creation of a common European currency as the first step towards full monetary and economic union, which in turn will lead inevitably to a Federal Europe, for which the people of this country have never voted? Therefore, will my right hon. Friend continue to refuse to give any commitment, even in principle, until the House has had a full opportunity to examine the details and vote on them?
The Prime Minister: There is no doubt that any increases in monetary stability can lead in due course to common European currencies and to the kind of situation that my right hon. Friend forecasts and indeed fears. I do not have such fears, because the British Parliament and the British people will always judge this
1032
matter against what they believe to be their proper interests in these matters. But I think that it would be a long way—many years—from having a greater zone of monetary stability to the common European currency that my right hon. Friend forecasts. Indeed, such a thing would be possible and sustainable—otherwise, no Government could possibly accept it or live with it—only if there were a convergence of European economies. If that happened and raised the standard of life of the British people. I should be the first to cheer.
Mrs. Winifred Ewing: May I follow up the question of the right hon. Member for Blackburn (Mrs. Castle) and ask the Prime Minister to explain to me how it is that he has given assurances in answer to me and other hon. Members that there is no question of the Government's committing themselves to the principle of economic and monetary union? How does he square that with those words of his statement in which he talks about entering into a commitment by his Government? Is there not a betrayal of past assurances to the House here?
The Prime Minister: No, Sir. The hon. Lady should try to understand what she reads. What my statement says is
"A number of Heads of Government wished to see the details fully worked out before entering into any commitment by our respective Governments."
That is no betrayal of principle at all. I am sure that this matter will be discussed by Parliament, probably on more than one occasion, before it comes into being.
But, with respect to some hon. Members, I hope that they will not enter into this matter with all their antennae quivering because of preconceived ideas, because of their dislike of our original decision. We must judge it, and they will be betraying their interests if they do not so judge it, against what is in the best interests of Britain, in raising employment, achieving stable monetary conditions and engendering a higher rate of growth.
Mr. Gould: Is my right hon. Friend aware that there is widespread relief, both inside and outside Parliament, that he was strong-minded enough to resist a proposal which would lock us into the present unsatisfactory situation, and

1033
would block off one of the last remaining escape routes from the dilemma posed for us by the obstructive attitude of creditor countries? Can he say what powers he will have stop this dangerous development if the damaging potential becomes even clearer over the next six months than it is now?
The Prime Minister: The present scheme standing by itself is not satisfactory. I made that clear, although there was some pressure for me to go along for the sake of agreement. If we could get some of the redistribution of resources that I would welcome—
Mr. Skinner: If.
The Prime Minister: Of course it is "if". My hon. Friend is not the only one who has done a little negotiation in his time. As I was saying, if we could get some of the redistribution of resources, it would be certainly worth our while to examine it and see. But at the end of the day, as my hon. Friend himself has made clear, we shall have to take a decision whether we re-enter the snake or do not re-enter the snake, whatever name it is given. I shall look at it on that basis. I shall not make the mistake made by the Conservative Government, who did not work out the scheme properly and did not get the conditions they wanted. We should all of us at least try to learn from their mistakes.
Mr. Amery: I fully appreciate the need for giving careful study to the German-French proposals, but is the Prime Minister aware that we have paid a very high price for our refusal under successive Governments to join the coal and steel pool, for failing to join the European Defence Community, and for not getting into the Common Market earlier? Is he further aware that, although there may be obvious difficulties in the scheme at the moment, even if travelling with the convoy means a rough passage for a bit, it may be very much more uncomfortable and lonelier not to be in a convoy at all?
The Prime Minister: There are varying views whether we paid a high price in these matters—the right hon. Gentleman has some knowledge of them. But I am bound to remind him of what he has obviously forgotten—that between 1st May 1972 and 23rd June 1972 it cost us
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$2 billion in seven weeks. That was much too high a price to pay for joining a scheme that was clearly unsuitable. We must have regard to the costs of this scheme and the benefits that will accrue. It is no use joining a convoy if, after seven weeks, one has to jump overboard without a lifebelt.
Mr. Spearing: Will my right hon. Friend expand a little on the question of decision? Is it not a fact that the European Council is not a formal council? Will this scheme be promoted as a draft regulation by the Commission and subject to the procedures of this House prior to the meeting in December? My right hon. Friend says that it would promote stability, but even if that were true, would it not do so at the expense of the authority of Her Majesty's Government to order our own internal finances as they wished?
The Prime Minister: I cannot answer my hon. Friend's first question whether it would be a regulation. No one has got down to that kind of discussion yet. He asked whether it would remove some powers from us. The answer is "Yes"; all these matters remove powers from us. When we joined NATO, we removed some powers from ourselves but it was the general view of the House, continued for a quarter of a century, that in removing these powers we increased our security. That is surely the test that one needs to apply to this sort of proposal. If it meant lessening powers in order to increase prosperity, the House would have to take a decision whether it wished to remain poor and independent or whether it was willing to sacrifice some powers and be more prosperous.
Several Hon. Members rose—
Mr. Speaker: There is another statement to follow. I propose to allow four more questions from each side of the House, which will be a very good run indeed.
Mr. Nelson: I welcome the Prime Minister's statement, but will he accept that many of us see it as a first and welcome move towards full monetary union in Europe and the establishment of a common currency? The Prime Minister referred to the precondition of economies in Europe moving together before such

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a currency could be established. In this country we have areas of different economic performance, yet we have one currency. Why is it not possible within the European context also to have one common currency for different economies and countries of differing performances?
The Prime Minister: The hon. Gentleman hits on the correct point. We can sustain one currency in this country only because there are substantial resource transfers between varying parts of the United Kingdom, from which Scotland and Wales have benefited considerably, as Northern Ireland will in due course. The same condition must apply over a larger geographical area. This is why, before giving a reply to this particular monetary proposal, I have made it an essential condition that I should know what is to happen in the matter of monetary resources. The hon. Gentleman has summed up my stand on this question admirably.
Mr. MacFarquhar: While one knows that one has to wait for the detailed working out by officials and Finance Ministers, could my right hon. Friend say here and now whether Chancellor Schmidt, whose country would have to bear the biggest burden of resource transfer, at least indicated in principle that he was willing to increase West Germany's contribution to regional and social funds and also to European growth?
The Prime Minister: No one was asked to give any answers in principle at the weekend, so I cannot say what Chancellor Schmidt's view would be on that. Whether the amount of resources would be increased is a matter that will have to be found out when we embark on the studies. What could well take place without any increase of resources would be a greater diversion from the common agricultural policy cost to the social fund. That could take place without any addition, although I would like to see an addition. Chancellor Schmidt is being attacked in Germany for his proposal in this matter because there are people there who believe that it would be disadvantageous to Germany and advantageous to other countries. So perhaps all of us had better stand back, see how the scheme develops and then
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look how far we can each get our advantage or disadvantage from it.
Mr. Hordern: As one of the main objectives of these proposals is that of European economic integration, would not this purpose equally well be served in the meantime, before any agreement is reached, by allowing free convertability of European countries, particularly of sterling? Is it not also a remarkable commentary on the prospects for this country that the Prime Minister should see that under a Labour Government all he is really concerned with is quibbling about resources which should be transferred from richer European countries to Great Britain?
The Prime Minister: That is a very unfair way of putting it. As the hon. Gentleman knows, the Government have been concerned, both through their attack on inflation and through the 38 sector working parties, to try to improve the performance of British industry, which lies at the key to this situation. It is not sufficient to say that I am concerned only with the transfer of resources. Even if I were, I would he bound to say that it is a great pity that the Conservative Government were not sufficiently concerned before they lost $2 billion in seven weeks in 1972. That arose because there was a lack of convergence in the economies of the Community then.
Mr. Watkinson: Does my right hon. Friend agree that his opening words mean that the high aspirations of the Copenhagen summit in terms of economic growth have now been abandoned? Can he say what this will mean for unemployment in Europe next year? Are the Continentals prepared to approach the problem of unemployment as a structural one and support the sort of measures that are being taken in this country to protect jobs?
The Prime Minister: It is true that the expected rate of growth in Europe as a whole will lead, unless it is remedied, to higher unemployment in Europe as a whole during 1979. This is a factor that those present had to take into account, and that is why it is, in my view, essential that at the Bonn conference next weekend there should be undertakings to increase the rate of growth by those countries which are in a position to do it as quickly as possible I should like

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to remind my hon. Friend that I said specifically that there was agreement that increased growth is a crucial objective in improving employment prospects. No one dissented from that view. I take it, therefore, that it applies to everybody
As for the structural nature of unemployment, there are differences of view between members of the Community as to how this should be met, but so far I have not seen any better proposals than those which the Government have undertaken. They have resulted in considerable aid to companies and firms which have been in some distress, and have resulted in keeping in employment some 400,000 people.
Mr. Tapsell: By how many percentage points does the right hon. Gentleman expect the rate of inflation in Britain over the next 12 months to exceed that in the Federal Republic of Germany?
The Prime Minister: It will depend on a number of factors, including the level of inflation—[Interruption.] I beg the hon. Gentleman's pardon. It will depend on a number of factors, including the strength of sterling. That is what I wished to say. I apologise to the House for a slip of the tongue. It will depend on several factors, including the strength of sterling, the price of imported commodities and a number of factors of that sort. A great part of the very low rate of inflation in Germany—the lowest in the world. I should think, at the present time—is due to the strength of the deutschmark. [HON. MEMBERS: "Why?"] I will tell hon. Gentlemen that it is because the Germans are so successful in exporting. It is because they are able to have a big balance of payments surplus. I continually impress all these things on the Opposition. I have no doubt that one day they will agree with me that they are true.
Dr. Bray: Did my right hon. Friend have any discussion with his colleagues about the circumstances in which and the frequency with which exchange rates might be adjusted under the new scheme to take account of differing rates of inflation?
The Prime Minister: Yes, there was some preliminary discussion about that. It was pointed out that at the present time there are facilities in the snake. Indeed, many adjustments in rates have
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been made over a weekend when it has been thought necessary to do so. But there was no detailed discussion. It will be a matter for the Finance Ministers to consider in preparing the scheme.
Sir Anthony Boyle: Is the Prime Minister aware that many of our friends overseas, and also those who voted "Yes" in the referendum, will view with gloom the Prime Minister's negative reaction to the proposals concerning European monetary reform?
If other Heads of Government managed to do their homework and to provide positive reaction to the proposals put forward, will the Prime Minister explain why he was not able to do the same?
The Prime Minister: It is a matter of opinion whether it will be viewed with gloom, but there is really no case for the ridiculous euphoria with which the Conservative Government entered in a lighthearted manner into a scheme from which they had to retreat with ignominy in less than two months. I do not propose to repeat that mistake, even though the hon. Gentleman invites me to do so. I do not know what homework was needed in order to produce that piece of paper. I do not think that much was needed. It is a question where our political and economic interests lie. Ours do not happen always to lie in the same direction as those of the other countries. Some of them are getting very great benefit out of the common agricultural policy and do not want it to be touched at all. We are not.
Mr. Ron Thomas: Will my right hon. Friend agree that exchange rates are not simply determined by rates of growth in countries but more often than not by massive flows of speculative funds? Will he agree that the only way, therefore, in which the kind of policy suggested could be sustained is by economic and monetary union, and by the British people having to give up the right to determine their own economic future? Given that the European Common Market countries are certainly bankrupt in terms of ideas to deal with unemployment, can my right hon. Friend tell us why we are moving in this direction?
The Prime Minister: I go part of the way with my hon. Friend. I think that in the short run exchange rates can be very much influenced by speculative

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flows, as indeed was the case in the autumn of 1976, when sterling was depressed far below its real exchange value. That is the case, therefore, for examining a scheme of this sort, to see whether, by putting sufficient reserves behind a central fund, it will he possible to prevent the machinations of the speculators. I am sure that my hon. Friend would be in favour of that. It might mean giving up some control, but we would have to judge, at the end of the day, whether it was worth giving up the control in order the better to protect our currency, provided that the other conditions that I have enumerated are also fulfilled.
Mr. Heath: The Prime Minister has been working himself into a frenzy about the events of the spring and summer of 1972. I remind him that at that time Britain was not a member of the Community. What happened was that Britain was forced off an existing parity by speculation against sterling, in exactly the same way, as the Prime Minister recalled, as in 1976—and, indeed, as happened at the time when he devalued the pound. None of the events, therefore, of those three periods bears any relationship to the scheme which was put forward to the Prime Minister at the recent meeting.
Is the Prime Minister not aware that the whole difference between the present occasion and previous occasions is that the proposed scheme gives a backing to all currencies in order to avoid their being pushed off their parities or unduly depreciated by speculation against those currencies? It is, in fact, a scheme which I put to the German Chancellor in May 1973.
Is the Prime Minister not aware that the importance of this initiative—[Interruption.] I know that Labour Members below the Gangway do not like a progressive scheme of this kind. Is the Prime Minister not aware that the importance of this scheme is that the present German Chancellor has been prepared to commit high German reserves in order to get stability in European currencies, and that the scheme ought therefore to be welcomed?
May I ask the Prime Minister not to give the impression that he is trying to avoid the scheme on principle by insisting on unlimited discussion on detail?
The Prime Minister: I think that the right hon. Gentleman's memory fails him. There are, of course, members of the snake now who are not members of the Community, and who are in exactly the same position as that of Britain in 1972, when we entered the snake. It was not a question whether we were a member of the Community. It was a fact that we entered the snake at a rate of $2·61 and had to emerge seven weeks later at $2·45, having lost $2 billion. That is something that is not worth repeating.
This scheme is not an exact parallel to previous schemes. That is why I think we ought to look at it. There is a proposal to put behind it not just German reserves but also British reserves and the reserves of all Community countries. That would make a useful fund, although it would not add the equivalent of $50 billion, which I have seen stated, because some of this would be a mere transfer of reserves and not the creation of a new fund.
I draw the 1972 parallel only because yesterday the right hon. and learned Member for Surrey, East (Sir G. Howe) was pretending on the radio that this was something very new, and that if only we had handled our affairs properly over the last four years we would be able to go along with it. I thought that it was worth while drawing the historical parallel, and pointing out that the Conservatives tried it and failed and that we ought to do something a little different and a little better.
Mr. English: On a point of order, Mr. Speaker. Quite unintentionally, out of the kindness of your heart, after announcing that you would call only four questioners, you allowed a Conservative Privy Councillor to choose to be the last questioner. May I suggest, Sir, that in future you should choose the order of questioners yourself?
Several Hon. Members rose—
Mr. Speaker: Order. I extended a courtesy to a former Prime Minister. I shall do the same for the hon. Member for Nottingham, West (Mr. English) when he is of that rank.
Mr. Skinner: On a point of order, Mr. Speaker. Notwithstanding that slighting reference to my hon. Friend the Member

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for Nottingham, West (Mr. English), perhaps you will explain to me and to a lot of other Government supporters why it was necessary to have a statement made on this matter by the existing Prime Minister and then at the very end to allow another statement to be made by a former Prime Minister—the one who used to come with all the sunshine stories about the Common Market, the one who dragged in the British people, and the one who is now trying to make excuses? Is it not time that you gave opportunities to those Government supporters who will fight to the bitter end against the Common Market, in the way that you yourself used to do?
Hon. Members: Order.
Mr. Speaker: I have to tell the hon. Member for Bolsover (Mr. Skinner) that he needs to change his ways in addressing me. [HON. MEMBERS: "Hear, hear."] The Speaker of this House is not here to be bullied by anyone, and the hon. Member for Bolsover had better bear that in mind.

SHCHARANSKY AND GINZBURG (USSR TRIALS)
The Secretary of State for Foreign and Commonwealth Affairs (Dr. David Owen): I will, with permission, Mr. Speaker, make a statement on the trials of Anatoly Shcharansky and Alexander Ginzburg which have opened in the Soviet Union today.
The whole House will deplore the fact that the Soviet Government have now put on trial 15 members of the Helsinki monitoring group. The Helsinki Final Act states that individuals have the right to know and act upon their rights and duties in the field of human rights. These trials, inasmuch as the charges relate specifically to activities fully compatible with the Helsinki Final Act, are in direct contravention of the spirit and intention of the Act.
The British Government have repeatedly warned the Soviet Government of the consequences which their handling of such cases could have for the atmosphere of their relations with the United Kingdom, and for the chances of making progress on vital issues in East-West relations generally. I personally made this clear to the Soviet Foreign Minister when I met him on 1st June.
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A preparatory meeting for the CSCE scientific forum is now taking place in Bonn. I have instructed our representatives to raise at the earliest opportunity Soviet actions in relation to the Helsinki monitoring group and to make it crystal clear that we expect all the provisions of the Act to be implemented.
Mr. John Davies: I thank the Foreign Secretary for his statement, the brevity of which is appreciated in view of the fact that apparently it slipped through the net of parliamentary convention and was not made available to the Opposition Front Bench in the usual timely fashion.
The Opposition share the deep sentiments which the right hon. Gentleman expressed. We have a horror of thinking of innocent men being put on trial for crimes which we cannot recognise. May I ask the right hon. Gentleman whether he contemplates going beyond words and taking some action in the matter, as I understand the President of the United States has done in cancelling visits to the Soviet Union?
Will the right hon. Gentleman recognise that this further act reveals the total hostility of the USSR to any efforts to placate it, and will he take that lesson to heart in all his considerations of these fearful problems that we have in Africa?
Dr. Owen: I am grateful to the right hon. Gentleman. I am sorry that the statement was not issued. The main reason was that I was trying to discover whether our representatives had been allowed to take part in witnessing the trial of Mr. Ginzburg in Kaluga. I have not yet obtained information for the House about this, although we know that they have been prevented from attending the Shcharansky trial in Moscow.
As for what specific action can be taken, the House knows that, following the trial and sentencing of Professor Orlov, we stopped a bilateral sporting agreement being signed, and that is still held up. I think that we have to look at the question of what direct action we can take. I do not believe, for instance, that it would be right to call off our participation in the negotiations on comprehensive test bans or on mutual and balanced force reductions. I believe that we have shown in the most practical way our recognition of the deterioration in the atmosphere of detente generally by

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the decision to increase the defence budget by 3 per cent. a year as part of an overall NATO response. I think that that was a necessary response in the light of the events which we have been seeing.
I think also that we shall have to take into account Soviet susceptibilities in our relations with other countries, but I do not think that we will necessarily attach the same degree of importance to them as we might do otherwise. I have in mind our relations with China and other countries. We shall make those decisions on their merits. We seek good relations with the Soviet Union and with other countries, but we will not be intimidated, and we shall not make any distinctions in our approach to detente around the world. The Soviet Government claim that they recognise that detente is indivisible. I agree with the right hon. Member for Knutsford (Mr. Davies) that we must challenge their adventurism and attitudes in Africa.
Mr. Greville Janner: Is my right hon. Friend aware that the very forthright statements made by him and by my right hon. Friend the Prime Minister this afternoon reflect accurately the anxiety and anger of the vast majority of this House and of the British people at these terrible travesty trials and at their increasing tempo? Will my right hon. Friend impress upon the Soviet authorities that when they imprison and exile people such as Orlov, Slepak and Nudel and put on trial people such as Shcharansky and Ginzburg, they not only bring themselves into disrepute amongst those who are happy to find hatred for the Soviet Union but, in particular, they offend and upset those of us who have not forgotten that at one time they were our allies and those of us who want detente and are seeing it relentlessly destroyed by them?
Dr. Owen: I know my hon. and learned Friend's great interest in these issues, and I recognise that he and others want to see progress in detente. But there is a connection, and the Soviet Union had better understand it. That connection lies, if not in the actions of Governments' certainly in the attitudes of the people of our countries. They would not allow Governments to improve relations between the Soviet Union and the United Kingdom were they to sec daily
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evidence paraded before their eyes that the Soviet Union was not respecting the basic provisions of the Helsinki Final Act. The Soviet Government will have to understand that soon they will have to choose. There will not be an improvement in the atmosphere of detente if they continue to conduct matters like this in the way that they are showing every sign of doing.
Mr. Powell: What would be the reaction of Her Majesty's Government if the Soviet Government sought to interfere with the administration of the law in this country?
Dr. Owen: It would be to reject it. For that reason, I have very carefully—perhaps the right hon. Gentleman did not listen to what I said—not referred to the specific court proceedings taking place, and that is why I have always observed that and referred to the Helsinki monitoring group and its activities. Whatever one's disagreements with Governments—and they are very great, especially on this score—we must still respect due processes as far as we can and hope even at this late date that the courts will allow fair and just hearings. I say only that there are anxieties about that in the Soviet Government not allowing the press and officials of other countries to take part in this. That is why I attach particular importance to the trial of Mr. Ginzburg, because the charge relating to him is very similar to the one faced by Professor Orlov. That relates specifically to activities involving the Helsinki monitoring group. I draw a distinction between the two charges.
Mr. Faulds: Will my right hon. Friend accept the warm reassurance and support of the House for his statement, except perhaps for that somewhat dubious comment from the right hon. Member for Down, South (Mr. Powell)? Would my right hon. Friend consider, as a measure of the disapproval of Great Britain and of this House of such Soviet behaviour, the suspension from here on of all cultural connections with the Soviet Union?
An Hon. Member: And sporting.
Dr. Owen: These are difficult questions on which, in terms of culture and sport, there is a considerable element of individual choice. It is often an individual club or an individual orchestra or ballet

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company which will also be able to make its voice heard. In those activities, the decisive voice often is not the Government's but the people's. I believe that it is wise to make a distinction between discussions involving military detente such as SALT, CTB and MBFR and trading and commercial matters—those are best left to carry on in the normal way—and those other aspects which are cultural, sporting and in relation to the Helsinki Final Act where I think there is a strong case for individual actions to take effect.
Mr. Thorpe: In so far as diplomats and journalists from the western world have to date been excluded from both trials, is it not pertinent to remind ourselves that, when the European Court of Human Rights was looking into an allegation made by the Irish Republic against this country, the largest press corps present was from the Soviet Union? Is it not extraordinary that they should show so much interest in reporting human rights matters in other countries and be so frightened of having them reported in theirs?
For the record, is it not right to say that Shcharansky has been held at the Lefortovo gaol incommunicado for 18 months, contrary to the criminal code in the Soviet Union, that he has been denied access to any lawyer, and that the Soviet lawyer, Madame Kaminskaya, who wished to represent him, was told to leave the country because she was not on the KGB approved list of lawyers, which was essential before she could act for him? Finally, since the right hon. Gentleman says he wishes to make crystal clear that the implementation of the Helsinki Final Act matters to this country, will he consider the possibility of Great Britain withdrawing from the scientific forum in Bonn unless we get a satisfactory explanation from the Soviet Union?
Dr. Owen: The right hon. Gentleman asks about the period of detention. Certainly they have been in detention for 16 months without being brought to trial, and I understand that there is a maximum period laid down in the Soviet Union which already has been exceeded. I agree with the right hon. Gentleman that that aspect of itself causes great concern.
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As for being present during the trial, I think that people would find much more sympathy with the point made by the right hon. Member for Down, South (Mr. Powell) if they had seen proceedings in open court with the whole world being able to witness them and form its own judgment about the justice meted out.
As I say, there are problems in relation to the charge against Mr. Shcharansky because it is one of espionage, and in these cases, sometimes even in the western courts, a different procedure is adopted. I do not yet know the situation so far as Mr. Ginzburg is concerned, but it gives cause for concern, too, that even the relatives have been excluded from some of these trials.
The subject of the scientific forum will have to be left open. It is for consideration whether we can continue with the CSCE process while one aspect of it is being flagrantly flouted.
Sir Harold Wilson: As I am the only hon. Member in the House who was a signatory of the Final Act in common with the Heads of Government of every European country and the two North American countries, signing it in good faith and on the assumption that all others were signing it in good faith, may I ask my right hon. Friend whether, on this matter of the breach of certain carefully considered and important aspects of the Helsinki Final Act, he will make it his business, for the benefit of the House and the public generally, to give us a categoric statement in detail linking, section by section, the Final Act of Helsinki with the actions taken? Is my right hon. Friend aware that I believe that if he could make it his business to publish this, whether by way of a White Paper or in some other way, it would be extremely helpful? It would be better than talking a lot about cancelling this football match or that dirt track meeting, which would not have the same relevance in the public mind and could easily be dismissed by those whom he is seeking to influence.
Dr. Owen: I pay tribute to the success of my right hon. Friend the Member for Huyton (Sir H. Wilson) in getting a signature for the Helsinki Final Act, which opened up the prospect of human rights which many people thought

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would never have been able to be included in that Final Act. I have no doubt whatever that it was right for Britain to sign the Helsinki Final Act and I believe that it is right for us to go on, despite all the difficulties, pursuing the possibilities of detente.
Turning to the specific question raised by my right hon. Friend, following the Belgrade meeting we published a detailed White Paper which, although it did not mention the specific cases raised—because the Belgrade meeting was in private—gave a clear account of the representations that were made in a specific and detailed way over a whole range of areas concerning which we were dissatisfied with the implementation of the Helsinki Final Act. I will certainly see whether we can elaborate that White Paper further. We have tried to give as much information as possible to the House about the dialogue that took place at Belgrade. It was both specific and detailed. The point that my right hon. Friend makes is valid. We need to see the process as a whole rather than isolate certain aspects of it.
Sir Harold Wilson: May I put a supplementary question? We all know about the Belgrade meetings. They were at secondary level and they did not come to anything very much. It was a multilateral document that was produced. The fact that my right hon. Friend has asked the leave of the House to make a statement this afternoon suggests that something new has happened since Belgrade. Therefore, what Belgrade said is not, I think, of particular importance at this stage. Will my right hon. Friend present his own assessment, on behalf of the Government, of the position as he sees it today and not the lowest common denominator of agreement among the 35 countries at Belgrade?
Dr. Owen: We made our own view clear in the same White Paper following Belgrade, and not so many months have passed since. What might be interesting to the House are the details of the charges and the record of the 15 members who have already been brought to trial and some of the other members of the Helsinki monitoring group who are threatened at the moment.
Sir David Renton: Is the right hon. Gentleman aware that no one could accuse him of interfering in the internal affairs of the Sovet Union if he were to remind the Soviet Government that the mere holding of these trials is itself a breach of an international obligation?
Dr. Owen: We still have to face the fact that the courts can throw the charge out in the Soviet Union. Most of us would be surprised if that happened. That is the possibility that exists, and the main aim of the defence is to try to show that the case ought never to have been brought. This relates to the point made by the right hon. Member for Devon, North (Mr. Thorpe), that there has been a serious attempt to try to ensure proper legal advice for some of these people, sometimes from people outside the Soviet Union, at their own specific request. We have been unable to get legal advice for them while they have been in detention and unable to get them properly legally represented in the courts. It is this which is causing great concern.
Several Hon. Members rose—
Mr. Speaker: Order. We must be fair to the Private Member's motion which will finish at 7 o'clock. That debate has already been much abbreviated. I propose to call two more hon. Members from each side.
Mr. Whitehead: Does my right hon. Friend agree that the real answer to the right hon. Member for Down, South (Mr. Powell) is total absence of due process where both these prisoners are concerned? Would he not agree that this is bound to condition the way other States see the Soviet Union in the light of the Soviet Union's interpretation of the law in its own country? Does my right hon. Friend further agree that it would be appropriate for Her Majesty's Government to begin preparing now, along the lines suggested by my right hon. Friend the Member for Huyton (Sir H. Wilson), a memorandum which can be submitted at the next review conference in Madrid so that that conference shall discuss questions of civil rights, as was not done at Belgrade?
Dr. Owen: I agree with that, although Madrid is two years away. My right hon. Friend the Member for Huyton wants action rather earlier than that. The

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whole House may wish to debate some of these issues. We have had a discussion on this in the past. I shall draw the issue to the attention of my right hon. Friend the Leader of the House.
Mr. Blaker: I understood the Secretary of State to say that we should not link Soviet breaches of human rights with economic matters. I can see that we would want to think carefully before making such a linkage. However, are not those two matters linked in the Helsinki agreement, and were they not part of one bargain? Are not the economic provisions of the agreement very advantageous to the Soviet Union and sometimes doubtfully advantageous to us?
Dr. Owen: I said "at this moment". My preliminary reaction was that I would not take this into areas of trade. I do not think that we can exclude that possibility. In particular, there has been anxiety about the transfer of technology. The House has to be blunt with itself on this issue. It is one thing for us to withhold technology, but all the signs are that many other countries, many of them our allies, would not do the same. We would put our own industry and economic prosperity at risk. If there is any case for taking action in any of these areas—[An HON. MEMBER: "South Africa."] As for South Africa, it is best that action be taken collectively by the member nations of the world, or, if not the world, in the Community. It is better to look at this in relation to our allies as we have done at Belgrade and in other ways, when we have co-ordinated very effectively inside the European Community through political co-operation.
Mr. Newens: May I ask my right hon. Friend to note that while many of us on the Left deeply deplore the activities of the CIA and utterly condemn any action which it may be taking to intervene in Soviet domestic affairs, as it has done in Africa and elsewhere, we would none the less deeply deplore the trials which are taking place in the Soviet Union at present? Will my right hon. Friend make it clear that it is not people who are habitually opposed to the Soviet Union or to detente who are speaking out against these trials but many of those who are
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committed Socialists and who feel very deeply about the cause of social change throughout the world?
Dr. Owen: This is something which the Soviet Union would do well to understand, that the condemnation and repugnance over this activity is common to all hon. Members and to all people in the country. The Soviet Union must recognise that the people of the United Kingdom will not accept that there can be progress with detente and an improvement in relations between our two countries without progress being made on individual human rights.
Mr. Baker: While I welcome the original statement which has been made, may I ask the Foreign Secretary to convey to the Prime Minister the fact that many people in the country feel that it would be appropriate for the Prime Minister to convey to Mr. Brezhnev at Prime Ministerial level the sense of outrage felt by Britain about the travesty of justice in Russia this week? The Prime Minister should tell Mr. Brezhnev that trials in camera when the verdict is already known are no enhancement of human rights but rather a denial of them. Is it not appropriate that, while Russia continues to treat human rights in this way, it would be a correct and suitable approach for the Government to consider all points of contact—cultural, trading and even defence limitation talks—until there is more evidence that the Government of Russia are prepared to honour the obligations into which they have entered, such as the Helsinki agreement, which they signed?
Dr. Owen: The hon. Gentleman represents a point of view. I do not share it. I do not believe that it would be right at this moment to encourage the United States not to proceed with its discussions on the SALT talks or for us to withdraw from the comprehensive test ban negotiations or the negotiations on mutual and balanced force reductions. We have to try still to seek progress in these areas and not to let a reasonable and wholly justified sense of outrage affect what may be far-reaching consequences for relations between the two countries. I would not accept that at this stage we should contemplate withdrawing from those military dialogues.

HOUSE OF COMMONS PUBLIC GALLERIES (INCIDENT)
Mr. Stanbrook: On a point of order, Mr. Speaker. My point of order concerns the incident which occurred in the Chamber of the House last Thursday after which it was reported that you had ordered that the people concerned should be handed over to the police for prosecution in the magistrates' court. I will say nothing which will be in breach of the sub judice rule. However, if a contempt is given in the face of a court it is almost always followed by immediate imprisonment, sometimes for a long time. A studied or deliberate insult to the House of Commons should surely be treated no less seriously.
There was, perhaps, a humorous aspect to what happened on Thursday but it may not always be so. Because of our security arrangements here it may not always be possible to prevent someone with a real or fancied grievance from doing damage to this place far exceeding the damage that was done to the carpet in the Chamber last Thursday. I believe that there is a facility in the Victoria Tower for dealing with miscreants of this kind. Should it not be put into use?
Mr. Dalyell: Further to that point of order—
Mr. Speaker: Order. I hope that hon. Members will not pursue in public any questions concerning the security of the Chamber. I am about to reply to the hon. Member for Orpington (Mr. Stanbrook).
Mr. Dalyell: Further to that point of order, Mr. Speaker. As one of those who was involved the other day I am aware that there may be serious criticism of those involved with our security. Some of us would like to point out, since the issue has been raised, that there is surely a difference between soft objects, however offensive, and hard objects that would necessarily involve a bomb or something of that kind. There is a difference, and we think that some generosity ought to be shown to those involved with our security who have a difficult enough job.
Mr. Emery: Further to that point of order—
Mr. Speaker: Order. Perhaps it would help the hon. Member if I reply to the original point of order raised by the hon. Member for Orpington (Mr. Stanbrook). Then, I hope, the House will feel satisfied.
The hon. Gentleman was kind enough to give me notice of his point of order. Under Standing Order No. 113, the Serjeant at Arms has the standing instruction from the House to take into his custody any stranger who may be reported to him as having misconducted himself or herself in the Galleries. This method of dealing with the usual form of disturbance in the Public Galleries has the general approval of the House. Certainly I am not aware of any dissatisfaction with it on behalf of the House.
For a disturbance of a more serious nature, as last Thursday night's incident undoubtedly was, the House could indeed proceed by way of its jurisdiction in matters of contempt. I am sure, however, that right hon. and hon. Members will agree that such a course would be complicated. The House should also have regard to the limitations which are, in practice, imposed upon its penal powers.
It was my view in this case that it was better that the offenders should be handed over to the civil powers so that the offence could be dealt with by a court of law. I notified the House that I had instructed the Serjeant at Arms so to do. This was the course followed by my predecessor in July 1970 when there was another serious incident. I am convinced that it was the right course to adopt last week. It may well be that those responsible for the security of the House will want to look again at the various issues which arose out of last week's incident.
Mr. Emery: Further to that point of order, Mr. Speaker. I am sorry to pursue this matter but there is one point which has not been touched upon. It is known that the persons concerned were, quite rightly, handed over to the police, as you have said. There appears to have been some humour made of the House if the charge—after what was quite obviously a major breach of the peace—is to be published as being criminal damage of the carpet of the Chamber. That seems to put the whole incident into a ludicrous light when it is very serious. Would you look again at what action might be

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taken after these persons have left the jurisdiction of the Serjeant at Arms and been handed over to the civil authority?
Mr. Speaker: The answer to the hon. Gentleman is that that charge is not, of necessity, the only one. That is the first charge that is published. We would be wise to leave matters there. We do not know what course will be taken.
Mr. Skinner: Further to that point of order, Mr. Speaker. May I point out, although I may be in a minority on this matter, that we ought not to get terribly hysterical about the lack of security for Members of Parliament in the light of other matters? May I draw attention to the fact there are millions of people who suffer from a lack of security in one form or another, people whom we represent throughout the country? There are people on waiting lists for kidney machines, old people dying of hypothermia in winter. These are things that we, as politicians, might be able to deal with. I think that we should bring our attention to these matters before we become too hysterical about something that has occurred only twice in the course of the eight years that I have been a Member of Parliament. Let us face it, the people concerned were only trying to get a fresh motion before the House.
Mr. Speaker: I am much obliged to the hon. Gentleman. I noticed how fast he moved last Thursday.

AEROSPACE PRODUCTION POLICY
4.38 p.m.
Mr. Terry Walker: I beg to move,
That this House, mindful of the high technology of the British aircraft and aeroengine industries, calls upon the Govenment to come to an early decision on the future aerospace production policy of the United Kingdom; and to ensure that choices on the best collaborative projects are made on commercial grounds in order to protect Great Britain's capabilities in design and development as one of the world's leading aircraft manufacturing nations, as well as protecting the jobs and livelihoods of many thousands of workers employed in these important industries in this country.
Since the last debate which I initiated on a similar subject, on the Adjournment of the House on 26th May, when I sought to impress upon the Government the urgency of making a decision about the future manufacturing programme of British Aerospace, the situation has developed considerably. My right hon. Friend the Prime Minister saw senior management of Boeing, McDonnell Douglas and Eastern Airlines during his visit to the United States. I realise that these discussions were for information rather than negotiation.
The fact remains that these talks, together with the fact that Secretaries of State for Industry and Trade, had similar talks with Boeing, Lockheed and McDonnell Douglas, and also talks with French and German Ministers about the situation in Europe, must mean that the British Government are moving towards the time when they will have to formulate a decision on the matter as a whole. They are fully conversant with the magnitude of the decision that must be taken.
The question is, with which nation or nations should we collaborate on aircraft production in the future? The choice is between working with Europe on the development of a new short-to-mediumrange airliner, or accepting a deal with Boeing or McDonnell Douglas on one of the new jets those companies are planning for the future.
The outcome of that decision will affect the future of both British Aerospace and Rolls-Royce engines. It will also have an effect on the fleet that British Airways

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will fly in future. For the British Government it is a decision of the highest importance with important political implications. All three companies—British Aerospace, British Airways and RollsRoyce—have different views on the way in which the industry should develop. However, in the end the Government will have to decide, and the main consideration will have to be commercial.
The aircraft must be a seller and therefore the commercial considerations are of the highest importance. On both sides of the Atlantic the manufacturers are moving to meet market needs with similar kinds of aircraft. The Europeans rightly feel that the present production set-up—Boeing with 60 per cent., McDonnell Douglas-Lockheed with 30 per cent. and the United Kingdom and Europe with a mere 10 per cent.—is unacceptable. They feel that if the United Kingdom and Europe join together they could prise away a larger share of the market from the Americans.
Conversely, the Americans feel that if they could keep Britain away from the European industry, it will weaken the European project which will then be less of a threat to the Americans and their domination of the market in the future. Not for many years has this country been in a position in which so many people wanted to be our partners on an aircraft project. This bears out the fact that the British aircraft and aero engines industries are very good and very healthy. With so many people wanting us as partners, we should rejoice.
The Europeans want us because they feel that, together with them, we could secure 20 per cent. of the market in future. There are two main projects under consideration by the Europeans. These are the B-10, a derivative of the A-300 Airbus with 217 seats, and the two versions of JET—one with 130 seats and one with 160.
I was with a delegation from the aviation group of the Government side of the House which went to Toulouse last weekend to talk to senior management of Airbus Industrie about the way things were moving. Those people made it quite clear to us that they favour a decision by the partners in going ahead with the B-10 within a matter of days rather than weeks.
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If the United Kingdom did not want to collaborate with the present airbut partners they gave the strong impression that they would go ahead on their own.
But the first question I put to the Government is, are they prepared to make a decision on the B-10 in view of the time scale laid down by the European partners, or do they think that it is too early to commit themselves to this kind of development?
While we were in France the airbus partners also made it clear that it would not be enough for the United Kingdom just to make a decision on the B-10. Germany and France will want us to buy into the A-300 airbus consortium. British Aerospace is not a member of the consortium although it has contracts to make about 17 per cent. of the A-300.
Are the Government now prepared to buy into the A-300 project and, if so, how much will it cost? We were not told this and we want to know before we say that we should proceed with this project. The French and Germans made threatening noises, suggesting that unless we were prepared to buy in on the airbus, we would not be allowed on the B-10. Moreover, if we refused both, and went with the Americans, we would be in danger of losing our 17 per cent. production share of the A-300, because there was a clause in the contract that we must not produce any aircraft which is a competitor. In partnership with either Boeing or McDonnell Douglas, we could be held to be doing just that.
This is a matter of concern to those people who are working on part of the airbus at Chester. This was brought home to us last week when the delegation visited Chester on our way back from France in order to see the situation at first hand. Do the Government feel, therefore, that we should buy back into the A-300? Can we afford to do so? These questions make us rather reticent about the European collaboration.
The big point about the European deal is that Rolls-Royce seems to be excluded from those projects. One of our provisions in going in on the B-10 project surely must be that we should be allowed to produce Rolls-Royce engines for the customers who require them. This is possible if we are allowed to do so. If the airbus consortium seriously wants us

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in on the B-10, it must be prepared to give us greater involvement than is envisaged at present. The supply of American engines must be questioned. At the moment there is 28 per cent. American involvement on the A-300, including the engines and we would feel that we have a right to put Rolls-Royce engines into the B-10 if it comes forward.
It will not be an easy option to go in with the European airbus consortium. The matter will need strong negotiating on our side if we are to be successful in getting our fair share of the work in the United Kingdom. I hope that when the Prime Minister next meets the European Heads in Bonn he will speak to the Germans and the French about this matter. We are told that the decision is imminent.
Boeing's widely publicised offer to the United Kingdom is a partnership in the 757 project. This sounds most attractive to many people because we have been assured that the plane will have Rolls-Royce engines, and Rolls-Royce has made its views known. It supports our going for the Boeing offer.
One factor must be borne in mind. The airlines that will buy these aircraft specify the engines that are used. Boeings can never include as part of the deal the guarantee that Rolls-Royce engines will be used in every case. Indeed, one wonders whether Boeing intend to push Rolls-Royce at all. I have a copy of a Boeing presentation to Eastern Airlines produced in May this year showing comparisons involving three engines. That showed the Rolls-Royce engine to be the heaviest and to have the highest fuel consumption and the lowest cruise thrust—three distinct disadvantages. Even though Rolls-Royce wants to go with Boeing, I wonder whether Rolls-Royce has gone deeply into the matter and is aware of what is being put out by the Boeing company.
Dr. M. S. Miller: I appreciate the kind way in which my hon. Friend is putting forward his argument, but will he take it from me that there is, to say the least, some doubt about the figures we were given in Toulouse? Of the three engines he has compared, only two are in existence. The engine which is looked upon as the best of the three is an engine only on paper. I am sure he agrees that there is a very
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big difference between an engine which is already in use being tested against one which has not yet been put into action.
Mr. Walker: I appreciate my hon. Friend's comment. It is crystal clear to everybody now that perhaps the Boeing arrangement does not represent such a good deal as Rolls-Royce at one time thought. When we consider that it is the airlines which must decide eventually what goes into their aircraft and which engine is to be used, that is not part of the deal and must be discounted if figures of this kind are to be bandied about.
Mr. Robert Adley: The hon. Gentleman is right to make that point, but does he agree that Rolls-Royce has hardly gone out of its way to make it as clear as possible that that is the case? Information sent by Rolls-Royce to certain hon. Members seeks to give the impression that if British Aerospace and Boeing join up in the so-called 757 project, a whole string of orders for Rolls-Royce will follow. That is a quite erroneous impression.
Mr. Walker: I was about to come to that point, and I am glad that the hon. Gentleman mentioned it. To many of us it appears that the Boeing deal is not as attractive as we were lead to believe. Boeing does not particularly need us, and perhaps could manage without us. If we go in with Boeing, I am worried that in future we shall end up as sub-contractors to Boeing. Boeing can see this arrangement as a way of breaking the European competition to the 757, when it appears. The ultimate aim of this country must he to get away from the two separate blocks on either side of the Atlantic. In the long term there must be some collaboration between Europe and the United States.
The situation that is now developing, where similar projects are being embarked upon on either side of the Atlantic, must be deplored because it will lead to fierce competition. That will not be in the best interests of any of the people who work in the industry on either side of the Atlantic. Therefore, the offer of a partnership with McDonnell Douglas on its proposed ATMR aircraft appears to be the most attractive. The big question that remains unanswered is whether it could be linked with the proposed European projects. Perhaps the Minister will deal with this matter in his reply.

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The McDonnell Douglas suggested collaboration, based on a third for the United Kingdom, a third for Europe, and a third for that company, seems to be a most attractive offer. However, the best collaborative project for Great Britain relies on some complex factors, including the best deal that can be obtained for design and work-sharing—a very important consideration—and aircraft marketing. We want to be partners, not sub-contractors. To collaborate on our own with the Americans would lead to our being in a very weak position, but I feel that if we and the Europeans collaborate with the Americans we shall get a fair deal and we shall be in a much stronger position.
ATMR is a new technology aircraft which makes it more attractive to British industry than the half-new, half-old 757, and McDonnell Douglas would be happy for Rolls-Royce RB211–535 engines to power it. We are given to understand that a deal would also include joint work on military projects, and marketing of the HS146 airliner when it has been produced.
This brings me to the HS146 project itself. We were told by Lord Beswick some time ago that a decision was imminent. Judging by the newspaper comment over the weekend and again today, a decision is about to be made. It is to the Government's credit that this project still exists. Certainly the Government have been far-seeing enough to keep the project going, but a decision one way or the other has still to be made. This decision is of significance to Bristol because we understand from the British Aerospace management that some of this work will go to Bristol and some to the constituents of my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman).
We all hope that some way will be found to put a Rolls-Royce engine into the HS146. I hope that we shall be able to go forward with this project, because the time is coming when we need some decision in view of the need for work to keep the factories going. I hope that in his reply, the Minister will deal with this matter.
It will be unthinkable to conclude this debate without referring to the Concorde. That is a great technological
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achievement, and now that the aircraft is fully in service many more airlines are showing an interest in running Concordes on a leasing or buying basis. I hope that the Government will be able to give an assurance that production lines will not be dispersed once the last aircraft comes off the line. If the valuable technical teams are broken up, we might be unprepared for the demand when further aircraft are required.
Looking to the future, supersonic travel, despite the attitude in the United States, is here to stay. At some time the Americans will want to become partners in producing a mark II version of Concorde. I hope that we shall be in a position in future to use all the technology amassed by Britain and France in producing the mark I Concorde to enable us to be at least equal partners with the Americans in producing supersonic aircraft until the end of the century. I believe that supersonic flying will go into the future, despite the dog-in-the-manger attitude by the Americans.
It is a pity that British Aerospace and Rolls-Royce are totally divided on their views about which way the industry should go. The decision must be the right one for all those who are employed in the aero engine and airframe industries. The aero engine industry cannot be divorced from airframe interests. I hope that both sides will recognise their interdependence and how important it is for both sides of the industry to be kept in a healthy condition.
My preference would be the establishment of a strong European collaborative aircraft industry, but I realise that this may not be possible. The price may be too high and the fact that Rolls-Royce engines will probably not be used in European projects may be a factor that the Government will take into account.
To go in with Boeing would reduce us from the mainstream of aircraft production to the role of a sub-contractor to the Americans some time in the future. From what we have been told—and this is all that we have to go on—the McDonnell Douglas offer looks the best, provided that the French and the Germans are prepared to come in on a project with us.
The best project must be a viable one on commercial grounds. That is most important. Whatever is produced must

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be something that we can sell. Our great experience in design, development and production must be protected and the jobs of the workers employed in these important industries must also be protected. I hope that the Government will be able to pledge to keep the British aircraft and aero engine industries viable and independent long into the future.
5.2 p.m.
Mr. Kenneth Warren: I am grateful to the hon. Member for Kingswood (Mr. Walker) for initiating a debate on this vital subject which affects the fortunes of 250,000 people in this country. As an aeronautical engineer I must declare my interest, but the future of the industry affects not only those people but many families and many business men around the industry's factories. They will be affected by whether the Government are prepared to make a statement and whether it is the Government's responsibility to make a statement at all.
The hon. Member for Kingswood said that he was worried about the delay of the Government in making a statement. Perhaps I may remind the House and the Ministers of the time that a number of hon. Members, including the Ministers and myself, got ourselves into the "Guinness Book of Records" by taking part in the longest sittings recorded in the House since 1265 in the Committee discussions on the Bill to nationalise the aerospace and shipbuilding industries. The hon. Member for Feltham and Heston (Mr. Kerr) and I were even able to take time out to go on a Concorde to Bahrein as part of our contribution to those debates.
The Minister of State, who was most assiduous during the whole passage of that Bill, stated categorically on 10th February 1976 that the market strategy in new projects must be for the board of British Aerospace and not for the Secretary of State. I do not expect from him today a statement on behalf of British Aerospace.
Mr. Norman Tebbit: My hon. Friend may have been in the House earlier at Question Time when I asked the Secretary of State for Industry whether he thought that it was for him or for the board of British Aerospace to make the marketing strategy decisions. It is curious that, contrary to what the Minister of State said during the passage
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of the Bill, the Secretary of State told me that he did not know—though he wrapped it up in a lot of waffle.
Mr. Warren: I am grateful for that intervention. It takes me on to the next point. In a recent Question, I asked the Secretary of State whether the Government were able to give us an idea about the market that existed for the HS146. I was told that the Government had no idea about this because they were not equipped to give such information and that only the board of British Aerospace could do so.
I also asked the Minister of Defence whether there was an operational requirement for the HS146, and I was told that there was no military requirement for that aircraft. Yet in The Sunday Times yesterday we were told that, at the British Aerospace headquarters in Weybridge last week,
"a group of 30 civil servants, including senior representatives from the Treasury, Ministry of Defence, Department of Industry and the head of the Think-Tank"
—that puts the coup de grâce on it—
"listened to a full review of the State aircraft manufacturer's future."
That would be fine, but the Minister of State dismissed the Treasury in our Committee debates. He said that the Treasury was not equipped to make an independent judgment about future projects.
I am fed up with the fact that now, as then, the Government admit that they are not equipped to make decisions and we are forced to use the sort of vehicle that the hon. Member for Kingswood has used to bring to the Floor of the House a debate which is crucial to the future of high technology in this country and to the aerospace industry in particular. I am fed up with the fact that we shall not hear from the Government any authoritative statement. They may say that they have backed the HS146 or that they have not, but they do not have the authority, because they have said that they do not have the authority, to say anything other than that which their paymasters in the trade unions have said they must say.
The tragedy is that throughout the Committee debates we were told repeatedly that industrial democracy would come. The hon. Member for Bristol, North-West (Mr. Thomas), the hon.

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Member for Feltham and Heston and all their friends in ASTMS and TASS were fobbed off with the excuse that they did not have to worry because there would be consultations and that more than 50 per cent. of the members of the board would be trade unionists. We were told all this, but we ended up with one luckless individual finding his way on to the board of British Aerospace and no decisions have ever come out of that corporation.
Mr. Ron Thomas: It may have been when the hon. Member was flying down to Bahrein in Concorde, but I recall that in Committee the Government rejected an amendment providing that 50 per cent. of the number of board members should be from trade unions, and such a provision has never, as far as I know, been incorporated in the Bill.
Can the hon. Gentleman tell us whether he thinks that the House ought to have some influence on aerospace policy? It has not been clear from what he has said so far.
Mr. Warren: I assure the hon. Gentleman that I shall give my view on the second point, but, on the first matter, the Minister of State said in Committee that he would be grateful if his hon. Friends did not continue with the amendments that promoted industrial democracy.
I am sure that the hon. Member for Bristol, North-West remembers that. He, the hon. Member for Feltham and Heston and the other trade union lackeys who expected to get something for the unions were fobbed off. I resent not only the fact that they did not get anything for the trade unions but that the workers on the shop floor have got nothing either.
Mr. Russell Kerr: The hon. Member for Hastings (Mr. Warren) will understand that I do not particularly enjoy being described as a trade union lackey. However, I was on the Committee representing, in part, my union. I certainly understood the meaning of the communication that passed between the Minister of State and my hon. Friend the Member for Bristol, North-West (Mr. Thomas) and myself. It was to the effect that, because of certain things that were already being formulated in the Government's mind, it was unneces-
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sary for us to push at a door that would be opened from the inside anyway.
Mr. Warren: Unfortunately, the door has remained locked. I thought that the hon. Gentleman represented Feltham and Heston. I did not know that he represents trade unions.
The problem is whether we in the House have the ability to debate such important questions and to get answers. I hope that we shall get some answers from the Government. In Westminster, this hothouse of politics, we must get away from the belief that there are only political answers to these very difficult questions. There are not. The most important fact is that the decisions on the next generation of civil aircraft can be made only by the customer airlines. The customers choose not only the airframes but the engines.
I was interested in the comments made by the hon. Member for Kingswood about the Rolls-Royce engine. The hon. Gentleman failed to observe that the Rolls-Royce engine happened to be the cheapest of the three engines that he mentioned. Secondly, many airlines already have an existing engine type, whether it be General Electric, Pratt and Whitney or Rolls-Royce. They will not change on account of the marginal differences shown in the analysis that the hon. Gentleman quoted.
I have seen the Boeing analysis in Seattle. I was advised by Boeing that the company thought that about one-third of the engines for the projects that it had in mind would be supplied by Rolls-Royce because the airlines wanted those engines. That is why Boeing has Rolls-Royce engines in its inventory.
It is the customer airlines that will decide whether aircraft are bought. Unforunately, it could be the politicians who decide whether they are built. I am frightened that, without sufficient cuscapital available to the British Aerospace corporation eaten up by a project such as the HS146, a project that buys jobs because it is based on a political decision but does not provide continuing employment for those in the industry.
I recognise the sincerity of interest of the hon. Member for Welwyn and Hatfield (Mrs. Hayman) in the HS146. I served on the shop floor of the Hatfield factory as an apprentice and I feel deeply

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that the Hatfield enterprise has great talent and should be able to suceed. However, when the last Trident has been delivered or is on its way to China, I recognise that it must be felt on the shop floor that there is no more opportunity.
I plead with the Minister not to take a political decision that buys jobs on the shop floor at the expense of not making available to the rest of the corporation the opportunity to proceed with other projects.
Mrs. Helene Hayman: The hon. Gentleman seems to suggest that it is only the Government who are interested in building the HS146. The House gave to the board of British Aerospace responsibility for formulating its plans and making the very assessments that he has been saying should be made of what is for the good of the industry. It was the board of British Aerospace that requested permission to proceed with the HS146.
Mr. Warren: That is what I do not understand. Why does it have to do that? The Minister of State said throughout our debates on the Aircraft and Shipbuilding Industries Bill that it was the right of the board to take such decisions. We gave it the authority in the Bill, when enacted, to have the working capital to fund the project of which the hon. Lady speaks. That is why we provided for capital of up to £50 million.
The Minister of State, Department of Industry (Mr. Gerald Kaufman): It may be helpful if I intervene to clear up any misapprehension about the lines of decision-making. I refer the hon. Member for Hastings (Mr. Warren) to section 7 of the Aircraft and Shipbuilding Industries Act, which makes two important statements. First, section 7(1) states:
"in formulating its corporate plan in each year and in determining the period to which the plan is to relate, and in the general conduct of the operations of the Corporation and its wholly owned subsidiaries in each year, the Corporation shall act on lines settled from time to time with the approval of the Secretary of State."
That is what the Act states, and the hon. Gentleman participated in the enactment of the Bill.
Section 7(3) goes directly to the argument that the hon. Gentleman is making. It states:
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"If the estimated cost to British Aerospace and its wholly owned subsidiaries of the development of any aircraft or guided weapon exceeds such amount as may for the time being be notified to British Aerospace by the Secretary of State for the purposes of this subsection, British Aerospace shall secure that neither it nor any of its wholly owned subsidiaries undertake, or participate with others in the undertaking of, that development except with the consent of the Secretary of State."
The hon. Gentleman was present for a large number of the sittings in Committee, but he and the hon. Member for Chingford (Mr. Tebbit) seem to be unaware of section 7.
Mr. Warren: I believe that subsection (4) still exists. I was hoping that the right hon. Gentleman would quote it. The subsection states that
"'estimated cost' does not include any cost which British Aerospace or any of its wholly owned subsidiaries expects to be reimbursed under the terms of a contract."
That implies that if the corporation and its subsidiaries do not get the money back from customers, subsection (3) will prevail. That makes the HS146 an even more unlikely proposition.
British Aerospace is the only group in Europe that could run a medium jet project as the prime contractor. Airbus Industrie could not do it as it is too heavily committed to its own efforts. It is only because British Aerospace has the capability that McDonnell Douglas and Boeing come to Great Britain to try to get us to opt out of the one chance of prime leadership that remains in Europe.
It is important to remember that if British Aerospace takes that prime leadership it is not expected to provide all the money. The business of McDonnell Douglas and Boeing makes that clear. The prime contractor has to put up only 25 per cent. or 50 per cent. of the capital required for a project. That is quite within the capability of subsections (3) and (4) of the 1977 Act.
I hope that the corporation will take the lead. It must do so if it is to stay in the race. If it fails to do so, it will not be able to get into the following generation of aircraft. To take the lead would not pre-empt it in any way from taking part in such sub-contracts as it can win from McDonnell Douglas, Airbus Industrie and Boeing. There is nothing to stop it from tendering for anything on a good business basis, exactly as it is now doing, for instance, with the Boeing 747.

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The whole essence of the debate is that those outside the House, such as the workers on the shop floor, should remember that they were told two and a half years ago by the right hon. Gentleman that the Aircraft and Shipbuilding Industries Bill was about the extension of Socialism. They should now realise, two and a half years later, that those words have been utterly repudiated and that they do not count any more in Socialism.
5.16 p.m.
Mrs. Helene Hayman: I shall not attempt to take up in all its aspects the somewhat muddled argument of the hon. Member for Hastings (Mr. Warren). I shall deal with the case for the HS146 as I have done on many occasions before in the House. It was the subject of my first speech in the Chamber and I hope that today it may be—
Mr. Tebbit:—the last.
Mrs. Hayman: I can assure the hon. Member for Chingford (Mr. Tebbit) that it will not be my last speech in the House, whatever his wishes may be. However, I hope that it may be the last of my speeches imploring the Government to go ahead with the project.
The hon. Member for Hastings correctly said that only the airlines determine the buying of aircraft. That is exactly the point that many of us have been trying to make to Rolls-Royce on aero engines. The company seems to be seduced by the Boeing offer for the 757 and collaboration. However, airlines cannot buy aircraft unless Governments and aerospace manufacturers build them, and that is what the HS146 decision is all about.
For the past four years the HS146 project has been in the balance. That is because Hawker Siddeley decided before nationalisation to withdraw from the partnership that it had with the British Government to go ahead and develop a feeder liner, for which there will undoubtedly be a market throughout the world in the 1980s. The only thing that has been on our side during the delay of the past four years has been the recession in the aircraft market throughout the world. That is why other countries have delayed decisions. However, there
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is now a flurry of activity in Europe and across the Atlantic. It is clear that the market is picking up. That is especially true for the 70 to 100 seater feeder liner jet market, which is the slot that the HS146 would fill.
We have now reached the stage when, if we do not have a decision, we shall lose out on orders. There are airlines throughout the world that are interested in the HS146. There are airlines that are making their choice now whether to buy the 146 or its competitor, the Fokker F28, one of the second hand jets on the market, or even to remain in the turboprop league.
The HS146 has many advantages over its competitors in terms of fuel economy, cost per passenger mile and its ability to be used on grass strips by third world airlines. I have never argued the case for the HS146 in political or job saving terms. I believe that it can be argued in strict commercial terms and the safeguarding of the design capacity which has been the greatest asset that this country's aerospace industry has ever had.
I do not believe that it is possible for the Government to make major collaborative decisions at this time. There are still things of which, as my hon. Friend the Member for Kingswood (Mr. Walker) pointed out, we are unaware—for example, the exact terms being offered to us in all the possible deals. Whatever our individual predilections for co-operation with Europe, McDonnell Douglas or anyone else, I hope that we are not so blinkered in our approach that we are not willing to listen to the terms of any collaborative project being offered to us. But we do not have the kind of information on which to decide immediately where we are going on the question of the major larger aircraft.
If we make no decisions on aerospace policy now, we shall let the industry go by default. In the last four years we have lost skilled men, designers and engineers, who will be extremely difficult to replace when, as I hope, this country has a positive and dynamic aerospace policy involving many projects and showing that it can compete successfully with the major aerospace manufacturers in the world.
I do not believe that the HS146 is a political aircraft. Of course, it will have

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an impact on jobs. Every hon. Member should be concerned about the possibility of wide-scale redundancies in the aerospace industry. Opposition Members with constituency interests would not be on their high horses so much about the HS146 being a political aeroplane if it were in their constituencies. Of course, it makes a difference to jobs. There is the possibility of 1,500 redundancies in my constituency, 1,500 more throughout British Aerospace and 15,000 in the 1980s in Hatfield, Filton and Manchester, including all the subcontractors in Great Britain.
If hon. Members talk to the designers, the skilled men, the work force, who want to build the HS146, they will not find them arguing in selfish personal terms. These people believe that they have a product that can do this country credit, a product to sell to the third world, a product which will bring in overeseas revenue, a product of which they can be proud.
The hon. Member for Hastings may accuse the Government of all kinds of vile manoeuvring—they could have given us a positive answer much earlier if they wanted to maneouvre—but I pay tribute to my right hon. Friend the Minister of State, who has always shown an interest in this project, and to the Government who have kept it alive, because, if it were not for the intervention of the Labour Government it would have been dead and buried in 1974.
Mr. Adley: The hon. Lady was not here in 1974.
Mrs. Hayman: I should be interested to hear what the hon. Gentleman had to say if he would care to stand up to make his remarks.
Mr. Adley: Perhaps the hon. Lady was not here in 1974. I am not being disrespectful. She won her seat in 1974. The fact is that Hawker Siddeley, faced with the threat of nationalisation, not surprisingly decided that that was no fair way to speculate with its shareholders' money. That is the reality of the HS146. If the Labour Party had not won the 1974 election, that project might have gone ahead then. Indeed, it looked a lot different then from what it does now.
Mrs. Hayman: I am interested to hear from the hon. Gentleman that private
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industry makes such political decisions on its investments. Far from the Government making political decisions, if private industry makes such political decisions about where to put its money, it is a fine reflection on the ability to judge what is in the best interests of the aerospace industry and of this country as a whole.
We have waited four years for this decision. The hon. Member for Christchurch and Lymington (Mr. Adley), not I, said that when Sir Arnold Hall heard about nationalisation he did not want to put the shareholders' money into the HS146. We have waited since then and through nationalisation for the board of British Aerospace to make a decision, which it did not make on any narrow sectarian basis. It had to weigh up all the interests not only of constituents, but of constituencies, and of the industry as a whole. That was its remit in giving advice to and asking the Government for permission to go ahead to spend money on projects such as this one. We delegated that responsibility to the board of British Aerospace in the nationalisation measure.
At the end of March the board decided that it could sell this aeroplane. I recognise that if we get the decision today, no one in Hatfield will sit back and say "We have a meal ticket for the next 10 years." We realise that we have to go out and sell 250 of those planes to get a return on the money invested, that we have to sell 350 to make a profit and that we have to develop a military application and sell 100 in order to prove that the plane can be a winner.
I believe that the Opposition, in their attitude to the HS146—an attitude which has changed much in the last few months—are adopting a political stance. They want to knock any positive decision which will give the aerospace industry the best boost that it would have—confidence in this Government and in its designers, engineers and workers to produce an aeroplane that we can sell in the civil market. I hope that the Minister will tell us today that that is precisely what we shall be allowed to do.
5.26 p.m.
Mr. John Cope: I congratulate my neighbour, the hon. Member for Kingswood (Mr.

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Walker), both on his good fortune in the Ballot and on his choice of subject which, as my hon. Friend the Member for Hastings (Mr. Warren) said, is both timely and extremely important to the country and to many constituencies. I am delighted that the hon. Gentleman used this opportunity to give us the chance to discuss this great series of decisions which are linked, though in some ways they are separate, before the Government take them.
I take the view that any Government must have a great financial interest in these decisions. After all, whatever else happens, the Government will have to put up a lot of the money for these projects, whichever of them goes ahead. As has been amply demonstrated in the debate, no one can be dogmatic about the correct decision at this stage. Apart from Government Members, no one in the House has the full details of what is on offer. That point was made by the hon. Member for Welwyn and Hatfield (Mrs. Hayman). These are matters of judgment. No one with all the figures at his command, however clever he may be and however much he may know, can say whether A or B is the right decision from every point of view. These are matters of judgment—less politely called guesswork. That is what this whole debate is about.
There are genuine divisions of opinion—not all on party lines. There are many divisions within the unions. One of the local TASS branches from Rolls-Royce sent Opposition Members a long paper in favour of the Boeing option. That goes against what the general secretary of TASS said not long ago, because he was in favour of the European option.
I should like to refer to the HS146, which occupied most of the speech made by the hon. Member for Welwyn and Hatfield. There is no unanimity of view on that project on the Opposition side, any more than there is in the country. The Government have frequently said that the decision must be a commercial one. I entirely agree, and I hope that it will lead to the HS146 going ahead.
One element in the commercial decision on this project is the question of in Filton in my constituency. The retenkeeping the skills in Hatfield and, indeed,
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tion of those various facilities would be assisted by a decision to go ahead with this project. I emphasise that this is one of the important commercial factors in considering the HS146 project.
I turn to the next decision in the scale, going up in size. A decision has to be made by the Government about whether to allow British Airways to go ahead with its request to buy the Boeing 737. This is a shorter term decision in the context of the time scale involved. The rival is the BAC111, about which the argument are familiar. I am on record as being in favour of British Airways buying the BAC111. I do not wish to develop my arguments but the Government should bear in mind two factors when examining British Airways' figures and making a decision.
The 737 is the more expensive aircraft. It is the slightly larger of the two. We are told that the costings of the 737 make it the better and cheaper buy for British Airways. There is talk of its remaining in service until 1994. Yet British Airways, on a piece of paper that it sent to me and to other hon. Members, talks of the 737 being replaced by a new stretched BAC111 in the late 1980s. There seems to be some discrepancy about dates. I believe that the argument is in favour of the BAC111. A stretched BAC111 could be a good aeroplane, not only for British Airways and its markets but for sale elsewhere in the world in places where American aircraft will not be so available or suitable. I am thinking of China and Eastern Europe.
Mr. Geoffrey Pattie: Is it not the case that the larger stretched aircraft would have the Rolls-Royce 432 engine and that this would therefore be a worthwhile project to develop? Is there not a good reason for keeping that project going in the short term?
Mr. Cope: My hon. Friend has anticipated my next point. I agree with him.
When making a decision, the Government must bear in mind the question of import duties. It is a matter which I have raised before and I make no apology for doing so again. If British Airways decides to buy the wholly American aircraft, including some American equipment for it, no duty will be payable

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either on the aircraft or on the equipment. But if British Airways decides to buy the BAC111 with the same American equipment it will have to pay import duty on that American equipment. This must be nonsense.
Mr. Warren: Is my hon. Friend aware that if we try to export the BAC111 to the United States we shall not enjoy the reciprocity that the Americans have when they export to this country? We have to pay duty when exporting to America.
Mr. Cope: I am aware of that. I know how the situation has arisen. I have had correspondence with the Department of Trade and I have asked questions of that Department. I always receive negative answers. The Department admits that duty is payable, but it will not take action to end the practice. It is a nonsense that we are in that position.
I hope that the Minister will say that when making a decision he and his officials will exclude in their calculations the element of duty on the BAC111. One hopes that by the time that these aircraft are built, bought and paid for they will have been able to sort out the nonsense involved in import duties which leads to the necessity of including them in calculations.
One must be more speculative about the big decision that has to be made in the long term. The big decision is which of the large aircraft—the 160 to 230 seat aircraft—for the 1980s the Government should back. There are two categories of aircraft which are separate and which should therefore be considered separately. There is the 180 seater and the larger 200-plus seater. They are not comparable aircraft. The question is whether there is a market for both sizes of aircraft.
Boeing has estimated that there is a market for about 1,000 of the 180 seater and a market for about 1,200 of the larger aircraft. Boeing is concentrating its effort on the larger of the aircraft. It is offering us participation in the smaller of the two types. McDonnell Douglas is offering us participation in the smaller aircraft as does the JET project. The difference could be extremely important to the commercial markets in the 1980s and beyond.
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The A-300 B-10 is in the larger bracket and will be in competition, not so much with the 757 but with the 767 and the 777 which will be of a comparable size. If the Government's commercial judgment indicates that the larger bracket is the better commercial bet—and that is Boeing's judgment—that improves the case for going for the B-10 as opposed to either of the other two options.
British Airways currently is speaking about the 757—the slightly smaller category rather than the larger category. British Airways argues that the benefit of that is the use of Rolls-Royce engines.
I have an even larger Rolls-Royce aero engine factory in my constituency than the BAC airframe factory at Filton. I am conscious of Rolls-Royce's position and of that company's arguments. The arguments in favour of the use of Rolls-Royce engines apply equally to the McDonnell Douglas aircraft which can be fitted with Rolls-Royce engines. The question boils down to how much advantage there is in having the so-called lead engine in an aircraft project. It is not nearly as big as an advantage as it used to be. There is no such thing any more as a lead engine. The airlines decide the engine that they want, provided that it will fit, from the options that are available. Saying that the Rolls-Royce engine is the lead engine is not as important as it is sometimes thought to be by those who study these matters.
The principal advantage of the McDonnell Douglas offer is the completeness of the package. It is a much greater package than that which is on offer from Boeing or the Europeans. The package includes the offer of marketing help for the HS146 and the offer of co-operation with the next generation of supersonic aircraft. We have spent vast sums on developing the Concorde, which is now proving successful on the Atlantic and other routes, and we have established with the French a world lead in this aspect of aviation, the great value of which we should not forget.
By the end of the century I believe that more advanced supersonic transports will be flying and in the course of preparation. I do not see such aircraft in terms of a mark II Concorde—the phrase used by the hon. Member for Kingswood. I should be most disappointed if whatever package emerges from the Government's

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decisions does not include work on a future SST. I do not mean that the project should be decided now. I mean that work should be done to determine what the project should be and to examine possibilities of future co-operation to enable us to capitalise on the existing project and get more value out of the money we have spent in getting this far with the Concorde.
The hon. Member for Kingswood has done a service to the House in initiating the debate and allowing us to use the time to discuss this topic. I hope that the Government will listen to the debate and will take the decisions that lie ahead as soon as they can. Once the decisions have been taken, I hope that the Government and the country will be able to stick to them. We have a very bad record of dithering over aircraft projects and of building up a lobby against all sorts of projects that we are building. We have never seen that to greater effect than with the Concorde. All the time we have damaged and destroyed our projects by dithering, bickering and arguing after the decisions have been taken. These decisions are finely balanced, and that is all the more reason not to dither after they have been taken but to make whatever decision we take the right one.
5.43 p.m.
Mr. Phillip Whitehead: I agree with the last sentiment expressed by the hon. Member for Gloucestershire, South (Mr. Cope). I want briefly to support the hon. Member in congratulating my hon. Friend the Member for Kingswood (Mr. Walker) on producing an extremely clear and concise introduction to a very complex and difficult subject.
We have been assured by the press that this debate might see not one but three announcements by way of policy decisions. I rather suspect, looking at the Treasury Bench, that we shall be lucky to get all three, but I believe that all of them are in the offing.
There is immense speculation about what the British Airways order is to be, about the go-ahead or otherwise for the HS146, and about launching aid for the RB211–535 engine. I have a constituency interest in that engine since Rolls-Royce is located in Derby. However, it will become clear to hon. Members that I
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cannot claim to represent the views of Sir Kenneth Keith in what I propose to say.
The strong pressure from the management of Rolls-Royce is for decisions to be taken which will be facilitated but not entirely clinched by a go-ahead on the launching aid for the RB211–535 to enter into a collaborative venture with the Boeing Corporation for the 757 aircraft. That would be with its fuselage already more or less stretched to the limit, with about a 20 per cent.-plus share of subcontracting work for British Aerospace, and with the RB211–535 as the launch, but not necessarily the only, engine for the project. As the hon. Member for Hastings (Mr. Warren) said, an aeroplane can be sold with a variety of engines. The launch engine is not necessarily the only engine. We have to look carefully at the whole pattern of development of the new family of aircraft which Boeing intends to introduce.
It is clear that there are considerable advantages in having a project of this kind. There is the advantage that Boeing already has 60 per cent. of the civil aircraft market. It has a world dominance which this kind of collaboration might intensify. In addition, it has had a succession of winners. If one thinks of its aircraft from the 707 on, it is clear that it has managed not only to penetrate the world market in rapid succession to the American market but to dominate with each of its arcraft. It would launch the RB211–535 engine in a very dramatic manner.
That seems to be the American strategy of Rolls-Royce, which has been followed under various managements and over many years, and which survived the bankruptcy of 1971. The American strategy has a good deal to be said for it. The Americans are dominant in civil aviation throughout the world, and within that dominance Boeing is pre-eminent.
We understand that British Airways would also wish to go along with that, not merely because it proposes and would like to buy the existing Boeing 737, but because it sees a considerable role for the proposed 757 in the 180 seater class aircraft.
I can understand all of these factors. I can understand that British Airways would like to have an all-Boeing fleet with the exception of an extended run of

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the Tristar aircraft and a few Concordes. I can understand that that would be a neater and simpler solution for it. I find it slightly more difficult to understand why it should claim that there would be no market requirement between the proposed 757, or an equivalent when it flies it, and the Tristar which carries very many more passengers. It rules out completely any aircraft like the A-300 B-10 or any successor in that category. I shall deal in a moment with the question of our collaboration with Europe, but it seems that to clinch the Boeing deal at this time would be to strike a mortal blow at future collaboration with Europe to which many of us have looked for a long time.
It is true that Boeing has always eschewed collaborative ventures in its own production. That is probably one of the reasons it has been so successful. It has not spread the design leadership around, and it has not had a number of production lines in different places. It has kept it all to itself, subcontracting a little risk here and there, and ladling out a little gravy. But essentially it has kept things for itself, and very successfully, too. The choice for us is between getting some considerable crumbs from the rich man's table for British Aerospace if we go ahead with this deal and the opportunity for a place at the table for a meal which may not be very well cooked if we go in with the Europeans.
Mr. Warren: Does the hon. Member accept that it would be much nicer if, instead of talking in terms of our collaboration with Europe, we spoke of Europe collaborating with us? We are the strong men in Europe.
Mr. Whitehead: I fully agree with the hon. Member's last point. That fact has been reinforced by the terms in which McDonnell Douglas has put forward its proposed collaboration, which is one-third for itself, one-third for the rest of Europe and one-third for us. I think that is seeing the matter about right in terms of the kind of collaborative projects we want. I shall deal in a moment with the McDonnell Douglas option and say why it is possibly the best of the three.
It seems to me that, if we rule out any further collaboration with the Europeans, with the B-10 project, and if we go in
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now with Boeing over the 757, we shall deal a blow to the JET project which it will not survive. We saw the announcement on Friday that the Europeans are to go ahead with the B-10. It was previously suggested that they would wait until they saw which way the British Government moved. They have not done that. They felt strongly enough to go ahead, with launch orders from Lufthansa, Swissair and, I believe, Air France. They have already been enormously encouraged by the sort of market penetration which they are getting with the A-300.
Anyone who has flown in the A-300, not merely in Europe but in, shall I say, less sophisticated areas of the world and with less sophisticated pilots, and seen how well the aircraft handles and how much the margins of error have been eliminated, will, I think, pay tribute to that design and regret now more than ever that we withdrew in such preremptory fashion from the airbus consortium some 10 years ago. I believe that we should have stayed with it, and I believe aI3o that we should leave the door open now for a collaborative venture with the Europeans, a venture which includes, I remind the House, two possibilities—one in the aero engine sector and the other in the airframe sector.
The great problem in this debate, feel, has been that in British terms the aero engine industry has been set at the throat of the airframe industry, and vice versa. This is totally a tragedy for Britain. We cannot expect to be dominant in either. We can expect a share in projects in both sectors provided that we are, on the one hand, not too greedy and, on the other, not too cowardly or supine. I believe that there is a possibility in joint discussions with either the Europeans or with McDonnell Douglas, or possibly at a later stage even with Lockheed—Lockheed's proposals seem to be somewhat vaguer at this stage—for the utilisation of the Rolls-Royce engines, either the 535, as has been proposed, I think, by McDonnell Douglas, for the ATMR project, or the 432 engine, which has been referred to in the debate.
The extension of the 432 project and a go-ahead for it allows us a certain number of other European options. One of these, which has been referred to already, would be the option of proceeding with

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a new version of the BAC111 rather than going ahead necessarily with JET 1 and JET 2, which are not expected to have British engines in them.
Mr. Pattie: Does the hon. Gentleman not feel, not only from the Rolls-Royce point of view but from the standpoint of British Aerospace interests generally and the good use of resources somewhat under pressure, that that might be a better option than the HS146 option, which will use American engines?
Mr. Whitehead: The hon. Gentleman anticipates me. I shall say a word in a moment about the HS146 and the decision which may come on that. At this stage I wish to finish my point about collaboration with the Europeans and possibly with McDonnell Douglas. It seems to me from what we have seen of the offer from McDonnell Douglas that McDonnell Douglas is proposing to us something which allows triple design leadership, something which does not rule out the compatibility of the ATMR and the JET project, and something which allows a role for the very successful Rolls-Royce company on the aero engine side. All these things keep options open. Going in with Boeing simply forecloses them.
That, I think, was the conclusion which my hon. Friend the Member for Kings-wood reached, and it is a conclusion in which, somewhat regretfully, I have to concur. One would very much like to see pre-eminent in this whole argument the interests of the major firm in one's constituency, but we have to look wider here. I think that Derby workers think of workers elsewhere throughout British Aerospace as much as they think of their own interests and their own future. They realise as much as anyone else does that a total collapse of British Aerospace, or at least of its technical and design capacity, would ultimately be disastrous for them, too.
My personal view is that we should favour a much closer look at the proposals which have come from McDonnell Douglas for a collaborative project with ourselves and the other Europeans, for a co-ordination of the European projects with the ATMR. That offers us rather more.
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A moment ago, the hon. Member for Chertsey and Walton (Mr. Pattie) asked me about the HS146. I must pay tribute here to my hon. Friend the Member for Welwyn and Hatfield (Miss Hayman), who has campaigned long and hard for this project. No one could have pursued a constituency interest more closely or more eloquently, and it may well be that she is successful and the aircraft will be launched.
I think it appropriate, therefore, that it be said—and perhaps especially appropriate that it be said from these Benches—that there are reasons for serious reservations about the financial viability of any HS146 project. If my right hon. Friend the Minister of State refers to the HS146 when he replies to the debate, I should like him to deal with the following points.
First, I believe that the launching aid for such a project to get off the ground will be in excess of £200 million. What kind of sales forecasts do we have for this aircraft, especially since it would enter the market with a rather old-fashioned design many years after an aircraft successfully flying which has over 50 per cent. British components within it'? I refer to the F28. The F28 itself has had a pretty difficult and perilous passage. It is now, I think, breaking into the domestic airline markets of the world. To envisage the HS146 successfully following it—not being abreast of it but following it—rather stretches credibility.
Therefore, if the gallant campaign pursued by my hon. Friend the Member for Welwyn and Hatfield is successful, we shall, I think, need to hear from the Government, if some announcement is to be made, a careful account of how that £200 million can be justified. There are other ways of keeping British Aerospace design teams and British Aerospace workers in business more successfully in the longer term than by following out that project. That is my instinct. I must honestly give it to the House.
I conclude, therefore, by asking my right hon. Friend two other questions. First, when may we expect a decision about launching aid for the RB211–535 engine? The 535, building as it does on the already enormously successful RB211 project, with a scaling down as an earlier development which the Government did fund having managed to increase the power of the engine already, makes it

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the most attractive offer of those proven engine designs in the market for both Europe and North America. In my view, therefore, we should go ahead, and go ahead without delay, on that project.
Finally, can my right hon. Friend tell us at what stage we shall have an announcement from the Department of Trade about the British Airways deal? These things have become interwoven now with the future of HS146 and things of that kind. It would not be right if we made investment decisions about the British aircraft industry as a palliative to balance buying decisions of British Airways, and it seems to me that we are heading again in that direction. I should like to know why British Airways is to buy the 737, if it is, and in that event will it buy that and that alone or will it also be asked to buy some BAC1 111s? It seems to me that the BAC111 is not at the end of its useful life. It is not half as bad an aircraft as publicity and propaganda from British Airways would sometimes have us believe. I should therefore like to hear my right hon. Friend's views on that.
We are always caught short in the civil aviation business. For many years now, it seems, we have been trying to persuade successive Governments that they should hold the line in the great shortfall of orders following the world recession post-1973. Suddenly now the market is opened up again. We see at Rolls-Royce, as is seen elsewhere, that the company does not have the skilled personnel to do all the jobs necessary, suddenly finding that the forecasts for sales and the time scale for new projects have been foreshortened.
We have to make the right decisions. I acknowledge that they are complex, but we cannot make all the right decisions unless we start off in the right way, and there are many of us in the House today who want to be assured that the Government will do just that.
6.0 p.m.
Mr. Robert Adley: I, too, begin by thanking the hon. Member for Kingswood (Mr. Walker) for his choice of subject and congratulating him on his good fortune in being able to give us the opportunity to talk about the future of the aerospace industry.
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We have already seen this afternoon that many of the decisions which face the Government are not only difficult but can be reached across party lines, if there be any party lines in these matters. I agree with the hon. Member for Derby, North (Mr. Whitehead) in having serious reservations about the HS146 project. It is now many years out of date, and it would be idle to deny that the apparent unanimity of view within the board of British Aerospace about it is matched right the way down the line by those within the corporation who will be responsible for the day-to-day decisions and for building the plane. There are people within British Aerospace who have grave doubts about the project.
The hon. Member for Welwyn and Hatfield (Mrs. Hayman) was rather scathing about the role of Sir Arnold Hall. His decision in 1974 on the HS146 may have been influenced, as I am sure it was to a degree, by the possibility of the future nationalisation of the industry. It was also influenced by the oil crisis. Now it is a decision which is four or five years out of date. Going back to an old project of that kind would cause many people to wonder and worry whether the Government, if they took the decision, were taking one that was strictly "commercial"—the word used in the motion.
In a short speech, one cannot deal m great detail with every possibility and prospect for the future of the British Aerospace industry, but some things are clear. The industry is a storehouse for the skill and ingenuity for which this country has always been renowned, but many skilled workers—and not only in the aerospace industry—are sullen and resentful over the way in which they have suffered under the Government's incomes policies. We have seen this in the motor industry and in many other industries. Therefore, the Government have a double duty, not only to the aerospace industry and to those who work in it but in the wider sphere, to those who earn their living by their skill, to see that a viable aerospace industry, with a design capacity, is retained for this country.
We know that we can no longer go it alone on any major new project. Therefore, the question is not "Do we need partners?" but "Who shall our partners be?" I am glad that tonight I think I have detected amongst hon. Members

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who have spoken the realisation that we are not faced with a simple choice between America and Europe. There is a good possibility of the British aerospace industry's becoming involved in two new projects. One could be a form of collaboration with Europe and one with the United States.
My view on co-operation with the Amercians is that co-operation with Boeing is rather like a mouse trying to co-operate with a cat. Partnership under those circumstances is extremely difficult. I suspect that the idea of Boeing is little more than, first, to pay lip service to the need to placate the British Government and British Aerospace in order to obtain an order from British Airways and, secondly, to further Boeing's long-term aims of destroying the independent design capability of the British areospace industry.
On that basis, Boeing has certainly found some remarkable and consistent allies within British Airways over the years. The hon. Member for Derby, North referred to that, and the hon. Member for Kingswood referred to the comments from British Airways. I remind my hon. Friend the Member for Hastings (Mr. Warren) that when he and I first entered the House in 1970 the first public comment that I think either of us made was a joint comment addressed to Mr. Keith Stainton, who had produced a violently anti-Concorde statement.
Mr. Warren: Ross Stainton.
Mr. Ridley: That was not a Freudian slip. I appologise to my hon. Friend the Member for Sudbury and Woodbridge (Mr. Stainton) in absentia.
Ross Stainton saw it as his interest only to take account of the financial future of British Airways. He put at nil his wider responsibility as a senior executive of a nationalised corporation for any other part of the British aerospace industry. I am sorry to say that I think that that attitude still pervades many of those within British Airways. We must recognise that a nationalised industry has a wider responsibility than purely a commercial one. The fact that the Government are involved in such decisions means that they are inevitably to a certain degree political.
I want later to discuss briefly the BAC111 versus the Boeing 737 argu-
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ment. First, I wish to finish dealing with the question of partnership with the United States. I do not think that Boeing points the way to partnership. We have a far more likely successful partnership in prospect with McDonnell Douglas, as a number of hon. Members have pointed out.
Perhaps what we should examine is the twin evils, as many people see them. of partnership with French manufacturers or with American manufacturers. Speaking in private, many people will be very rude about both. Possibly the difference for our industry is that between partnership with a seducer and partnership with a rapist.
Dr. M. S. Miller: And salesmanship.
Mr. Adley: I agree.
I fear that the American industry takes the role of the rapist. I believe that the British industry is more likely to emerge smiling after a difficult liaison with France than after a voracious relationship with the Americans, and particularly with Boeing.
I have touched on the question of the obligations of nationalised industries and whether British Airways buys the BAC111 or the 737. We have heard brave speeches from the Prime Minister about buying British. I pay tribute to him in that I know that he is taking a personal interest in the decision, and I am certain that he wants to get it right. I hope that his words about buying British, aimed particularly at Government Departments and the nationalised industries, will be taken to heart by the Government when they have their final say in the decision whether British Airways should buy the BAC111 or the 737.
A massive propaganda campaign has been carried out by Boeing, aided and abetted by British Airways and Rolls-Royce. When one is dealing with public relations, in the triumvirate of Lord Beswick, Frank McFadzean and Kenneth Keith, Lord Beswick comes a very poor third in the sort of proganda exercise to which many hon. Members have been subjected over the past few months. I think that the Government have come to realise just what has been going on. I hope that as a result their decision will have been aimed rather more at trying to get the right solution for the British aircraft industry.

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The Government may try to say "We can't please everybody. Let's tell British Airways to buy a few 111s and a few 737s." That would be an unsatisfactory solution, because British Airways is already operating a fleet of 111s, although to hear it talk one would not know it. One would think that the 111s were the most unsuccessful aircraft British Airways had ever flown, which is not true.
The Government should come down clearly on the side of the BAC111. Let us take a positive step, perhaps tonight, in this respect. The Government must he aware that a great deal more than simply this order hangs on the decision. British Aerospace has been in lengthy negotiation with the Japanese on a cooperative venture with the BAC111. It is not credible to expect people in countries such as Japan merely to shrug their shoulders and take no interest if the British nationalised airline, the final decision on whose purchases is in the hands of Her Majesty's Government, shows its total disinterest in the 111 by being authorised to buy the 737. I have little doubt that it would have a damaging effect on the sales efforts in Japan if it happened.
Mr. Tebbit: My hon. Friend is being a little unfair to British Airways. We are all delighted when it turns in good profits. It does it by sound management and sound commercial sense. My hon. Friend should understand that British Airways has not said that the 111 is a no-good aeroplane. What it has said is that the 111 has 100 seats and it wants a 120 seater. My hon. Friend is dong very little good to the BAC111 by putting it about that British Airways is criticising it as a no-good aeroplane. British Airways is not doing so.
Mr. Adley: Unusually for him, my hon. Friend is being a little naive. Instead of British Airways coming to British Aerospace two years ago and saying that it wanted a specification for a 120 seater or a 100 seater, whatever it was, it gave British Aerospace just under four weeks to produce a detailed specification and proposal for a new plane. I do not believe that a major international airline with an open mind in looking at its forward purchasing projects would come up with a lead time of four weeks for a decision like that.
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I am speaking frankly about the way in which British Airways has gone about replacing its Tridents. I am sorry if I am offending my hon. Friend about the way in which I say it, but I believe that British Airways has done considerable damage to the BAC111 by the statements that have been made, including those at the press conference in New York given by Mr. Stainton. One recalls also the agreement by the chairmen of the three nationalised industries that they would not indulge in public debate on the issue, yet time and again British Airways has come up with statements. My hon. Friend may not think that those statements have been damaging, but I think that they have, and those involved in the sales effort of British Aerospace in Japan—and I put it no stronger than this—do not exactly think that British Airways has helped them.
Let us also be clear that the American aircraft manufacturing industry post-Lockheed is in bad odour in Japan. No one would be happier to destroy the burgeoning relationship between British Aerospace and the Japanese than the American aircraft manufacturing industry. It is being a little naive not to recognise the interest within the American aircraft manufacturing industry in trying to disrupt or prevent the birth of this long-term partnership relationship between British Aerospace and Japan.
I turn now to a subject which I think will not cause my hon. Friend to chastise me—the situation within British Aerospace. My hon. Friend the Member for Hastings rightly reminded the Minister of some of the things he said to the workers in British Aerospace when the nationalisation proposals were before the House. How sour those words have turned in the ears of those who work on the shop floor in the British aircraft manufacturing industry. The golden era of job security, the preservation and development of technology, and all the other wonderful things that the Minister said would happen have not come to pass.
Mr. Kaufman: During every one of the visits that I paid to most of the aircraft factories during the passage of the Aircraft and Shipbuilding Industries Bill, I specifically said that nationalisation

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would not of itself guarantee one single job in the aircraft industry.
Mr. Adley: I do not have with me the headline that appeared in the Evening Echo, in my constituency, following the meeting that the Minister had with the trade union leaders at the BAC factory at Hum, but if that was the message that he intended to convey, I must tell him that he did a poor job with the union leaders at Hum or with the press afterwards. The impression was very clearly given that job security was here to stay.
Mr. Russell Kerr: The hon. Gentleman was not born yesterday.
Mr. Adley: If the hon. Gentleman could possibly struggle to his feet for a second time in one afternoon, I should happily give way to him. In the meantime, I shall continue with my speech.
The fact is that industrial relations within British Aerospace are a great deal worse than they were two years ago. This may be partly to do with the expectations of better industrial relations through the so-called industrial democracy. That is only one factor.
For example, I can tell the House that the union leaders at Hurn were bitterly disappointed that the management of British Aerospace apparently did not think it necessary to invite any trade unionists to Bristol the other day for the signing of the agreement with Romania on the BAC111, although over 50 per cent. of that order will be produced by BAC at Hurn. At the request of the union leaders at BAC Hurn, I have now established a regular liaison meeting with them so that I can try to find out for them what is going on within British Aerospace. That situation is not very commendable in the light of the promises made about nationalisation improving industrial relations.
I end by referring to the question of the sales of the Harrier. Today the Foreign Secretary, in his statement on the trials of the Soviet dissidents, said that we may well have to reappraise our policy towards the Soviet Union. I believe that the Government, during the past three years, have sensibly and rightly come to share the view which many of us have expressed about the common sense and importance to our industry of
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making the Harrier available to China. That would be a major advantage to this country because it would simultaneously equip the Chinese with a defensive weapon on their long border with the Soviet Union and would equally supply much-needed work and revenue for a very long time to come, to British Aerospace. If we are to have some positive statements today, I invite the Minister of State to make that one of them.
6.16 p.m.
Mr. Lewis Carter-Jones: This process is becoming more complex every day. In my day, it was a Merlin water-cooled piston engine and the airframe made of wood by de Havilland, and it was a good aircraft. I wish that we could go back to those days. It would be delightful.
I have listened carefully to the debate and from it I have realised how many different people have had different briefings from different organisations. I think that I have been briefed by every engine company and by almost every airframe company, but I am still as confused as ever. I have some ideas in my mind, but I cannot help feeling that this debate might not have taken place if the chairman of Rolls-Royce, British Aerospace and British Airways had got together much sooner and decided something better for the advantage of the British aircraft industry as a whole.
This is the first time since I have been in the House that substantal numbers of people are wooing the British aircraft industry. It is the first time that we have ever been in that favourable position. That is why I would not like to have to take the decision that has to be taken in the very near future. The ideal situation would be to have all the airframes, all the avionics and all the engines in a superb aircraft selling in every country and made in Great Britain. But we are not going to get that in the next generation. Therefore, we have to try to get the best of all worlds.
What is significant is that hon. Members are speaking very often with their own constituency interests in mind, and I do not blame them for that. I have no constituency interest, although a very small number of my constituents may be indirectly involved. What worries me is that a substantial number of people will

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be made redundant and research and design teams will be disbanded if, for example, something like the BAC111 is not continued. That has to be said. Whether we like it or not, it would be naive to pretend that the Japanese are not looking at what we decide here now.
My second point about procurement is that Lockheed seems to be left out of the reckoning, apart from a reference by my hon. Friend the Member for Derby, North (Mr. Whitehead). But it is significant that at the moment when specific engines are required Rolls-Royce is deficient, and that is a tragedy; it does not have the right engine at the right time, but it has an engine which, seemingly, will be attractive to Boeing. I have the general feeling from both sides of the House that the House at present does not trust Boeing as far as its care of the British aircraft industry is concerned. We were told clearly that we could become sub-contractors and that we would do well out of the business. However, I realise that time is getting short, so I will quickly end with two observations.
There seems to be a chance of strong collaboration in Europe. The people there seem eager to get us. We have to find a good way in. The late starter from McDonnell Douglas is also very attractive. The one thing which seems to be missing is good consistent figures on the performance and opportunities for each and every one of the industries, whether engine-wise or airframe-wise.
6.20 p.m.
Mr. Norman Tebbit: Perhaps I should start by reminding the House that I have some financial interest, albeit an indirect one, in a subsidiary of United Technologies Limited, whose other subsidiary is Pratt and Whitney, but I do not think that the hon. Member for Derby, North (Mr. Whitehead) need worry unduly about my feelings on that account.
As ever in these debates, we have had some extremely interesting speeches. As ever, they have been liable to give rise to those little scenes in which the Minister of State, Department of Industry, says "Hear, hear" as I chastise one of my hon. Friends. That is unusual, but it makes these debates more interesting. There is a considerable cross-current of opinion. Indeed, I do not believe that
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any of the issues is overtly politically partisan.
We are grateful to the hon. Member for Kingswood (Mr. Walker) for his good fortune and his good sense in getting this debate and in asking all the right questions. I hope that the Minister of State will give some of the right answers, or even some answers. He has not done so before.
My hon. Friend the Member for Hastings (Mr. Warren) was right to point out two important facts—that the customer is king and that the British industry has greater ability than any other in Europe, although its lead is now in increasing danger. The hon. Member for Welwyn and Hatfield (Mrs. Hayman) naturally talked about the HS146. My hon. Friend the Member for Gloucestershire, South (Mr. Cope) referred to the British Airways order, as did the hon. Member for Derby, North and my hon. Friend the Member for Christchurch and Lymington (Mr. Adley).
I say to all of them that I hope that we shall all be fair to British Airways. There is nothing in the legislation relating to British Airways and nothing in the duties which this House lays upon British Airways about considering anything at all except the interests of British Airways. Of course, it is understood that British Airways will not be stupid about these matters and that whenever possible it will assist the British industry. It has done that to no mean extent, for example, in ensuring that the Rolls-Royce RB211 is fitted on the Boeing 747 and goes to other customers as well, and in helping to launch the Tristar with that engine.
We should not be so quick in suggesting that we as politicians should be there at all times, not only telling the aerospace industry what aircraft it should make but also telling the airlines which aircraft they should buy. If we are to do that, why on earth do we need to appoint boards of directors to these great industries? If we continue to look over their shoulders and second-guess them, what sort of men shall we get to take the jobs in these industries?
Mr. Frank Tomney: The decision which British Airways has to make is not one which is

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pro-European or pro-American or anti-American. The decision relates to aerospace development for the next 50 years and how we envisage that development. I say, quite frankly, that it must be transcontinental, and the bigger the size of the market the better. We ought to be interested in the Russian market, the Japanese market, the Australian market, the Canadian market and so on. We should forget the small continent of Europe and aim for the sort of aircraft which can carry the biggest payload, which has the biggest number of passengers, and which has a world-wide market.
Mr. Tebbit: The hon. Gentleman is probably right, but I do not think that his intervention is exactly relevant to what we are discussing.
The hon. Member for Derby, North was a brave man. He was in considerable difference with his major constituency employer, not to mention that formidable figure Sir Kenneth Keith. The hon. Member asked some extremely pertinent questions about the HS146 which may have caused some degree of pain to some of his hon. Friends, and also to some of mine. I agree with him that a decision about the RB 211–535 has to be made pretty soon; otherwise another decision will be made by default—a negative decision.
As in all the recent debates, there has been a theme of anxiety about the decisions running through the speeches of hon. Members from each side of the House. All hon. Members have been asking detailed and specific questions—and, indeed, more generalised ones—in order to try to understand what is the Government's thinking on these matters. I do not think that in the past even the Minister himself would claim to have answered many of the questions or to have dispelled much of the anxiety.
The Opposition have not sought to make partisan capital out of the obvious and growing concern of the Government's own supporters. We know that the decisions are difficult and complex, but we are becoming increasingly concerned—as the Minister must realise his own hon. Friends are—that, for all the brave words, there is a feeling that he is letting things drift and that he is letting events take charge of him rather than taking charge
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of events himself. We are entitled to expect rather more of him.
The Minister supported the proposal in 1974 to take the aerospace industry into public ownership. That proposal was carried through this House in an atmosphere of muddle, of indecision and of incompetence—so much so that it took over two years for the legislation to be enacted. We had the affair of the hybrid Bill, the disputed votes and all the other touches of nastiness which the Minister so often finds attaching to him. The whole affair of the nationalised industry has led to the near paralysis of decision-making in the industry for over four years.
Mr. Ron Thomas: Will the hon. Gentleman give examples of the other privately owned aerospace firms in the world which have, over the last four years, been making these dynamic decisions that he is speaking about?
Mr. Tebbit: Douglas has launched a new aircraft, the DC9-80. Boeing has maintained its impetus and will, I fancy, collect a considerable number of orders very shortly. I would not be in the least surprised if Douglas were to collect quite a few more as well.
The Minister said in Committee:
"I concur absolutely with my right hon. Friend the Member for Sunderland, North, and my other hon. Friends who have made the point, that previous forms of nationalisation are utterly unsatifactory."—[Official Report, Standing Committee D, 16th December 1975: c. 96.]
He went on to say that he would nationalise the industry in a way which would be totally different and completely new. He said that nationalisation was about the advance of Socialism, and that that was what the Bill was about.
I put this to the Minister:
"Sooner or later this board,"
the aerospace board—
"which will be dedicated to the advance of Socialism and not to the advance of the aircraft industry, will come into contact with the boards and salesmen of McDonnell Douglas, General Dynamics, Lockheed and Boeing, and they are dedicated to commercialism. My hon. Friends and I fear that when that happens, commercialism will win the day in the world markets, which will thereby prejudice jobs in this country."—[Official Report, Standing Committee D, 18th December 1975; c. 164.]
That is still the burden of our concern today. Indeed, we are still concerned

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today, as we were during the passage of that Bill in 1975 and 1976, about how the industry would be run.
Let us now look at the Minister's words:
"As the Bill has proceeded through its Committee stage, it has become clearer and clearer that there will be greater advances of industrial democracy in these industries under public ownership than we have ever had in any publicly-owned industries … The days of imposing decisions upon the workers in industry are gone."—[Official Report, Standing Committee D, 22nd January 1976; c. 348.]
That may be true, but the workers in the industry are not imposing any decisions either. In fact, it seems that no decisions are being imposed upon or, indeed, made by anyone.
The Minister was clear enough on 10th February about who would make the big decisions in the nationalised corporations and, despite section 7(1) and (3) of the Act, he said—the words have been quoted to him today by my hon. Friend the Member for Hastings—that the market strategy of the corporation would be in its hands and not those of the Government. Today, it is not even in the Minister's hands. The Prime Minister has felt it necessary to set up a Cabinet committee to consider the options in future civil aircraft construction. That does not sound like the board making the decisions.
We still have some great puzzles, of course. The Government have not yet announced the 146 decision. We expect them to do so soon. But what did the Minister say about that all that time ago? For how long did it go on? On 20th January 1976, the Minister said of the 146 project:
"That will be a matter for the board of British Aerospace to decide, not the Government."—[Official Report, Standing Committee D, 20th January 1976; c. 341.]
But who is making the decision today? It is not the board. The board has made its decision. It has asked for permission to go ahead with the project. If the Government were not stopping it, it would have gone ahead with it by now. The board made that decision in March.
On 6th May 1976, the Minister was even more emphatic. He said that he had just visited the workers at Hatfield, and he spoke today about those visits. In May 1976, he said:
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"I told them that the decision on the HS146 is open and that the representatives of, for example, the CSEU could discuss it with the organising committee. If the organising committee comes forward with recommendations before vesting day, and if those recommendations are accepted by the Government, a decision can be made before vesting day, and we do not have to wait for that."—[Official Report, Standing Committee D, 6th May 1976; c. 2979.]
Vesting day was more than a year ago, and the Minister has still not announced his decision. He was talking nonsense, as he usually does in this House.
Who is managing the industry's affairs? Is it the board or is it the Minister? Is it anyone at all? It is well known that the decision of the board to go for the 146 was reached only after some agonising within the corporation. Some of the professionals in the corporation believed that the £250 million of resources which it would require might be better spent elsewhere. The problem is that the Government do not seem to be able to make up their mind, after all this time, whether that is so or not.
Profitability is all, as the Minister put it at that time. We agree with him. But two factors worry us about the 146. The first is whether it will be profitable—or will it be just another Humber Bridge or another Stocksbridge bypass at Penistone to be brought out in celebration of an election—a touch of sugar on a Socialist pill—rather than because it will secure real jobs in a profitable programme?
Mrs. Hayman: Surely the gravamen of the hon. Member's case was that the Government should accept the recommendations of British Aerospace as the people competent to make decisions in this matter. British Aerospace says that it wants to build the plane. Surely the hon. Member is now going completely against that and setting up a whole set of red herrings against the 146.
Mr. Tebbit: On the contrary, I am sure that those who were contracted to build the Humber Bridge wanted to build it, just as those who are contracted to build the Stocksbridge bypass want to build that. The point is that the Government have sat on this decision, and they continue to sit on it. We want to know whether they have sat on it because they do not believe that the aeroplane is a commercial proposition, whether they

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have sat on it because they do not believe that the country can afford to build it although it is a commercial proposition, or whether they have sat on it in order to bring it out as a by-election or General Election bribe in a marginal seat.
If it is commercially viable, what has been the reason for the delay? British Aerospace says that it is losing orders now because of the delay. It says that it is not launched and that it cannot launch it because of the effect of section 7(1) and (3) of the Act. But, in fact, it is going ahead with spending at the rate of about £1 million a month, and so the project drifts, as so many of these projects drift.
Mrs. Hayman: Would a Conservative Government build it?
Mr. Tebbit: I cannot say whether it would be built. I do not have the information that the Minister has. If we were privy to all the information to which the Minister is privy, we could make decisions. But we cannot make decisions on the commercial activities of a corporation without having the full details of those commercial activities. It is absurd and totally ridiculous to expect anyone to do so. Is it not time that the Minister told us whether that delay has been due to doubts in the Government or whether it has been held up for other reasons?
This morning, I was told that at the meeting last week of the CSEU aviation section with the Secretaries of State for Employment, Industry and Trade the union members present formed the impression that the Government would allow British Airways to order at least some of the 19 737s which it wants and that the Government would then launch the 146 as a sop to British Aerospace, which has not got its way and had the whole of the British Airways order for 737s changed to ills, but that this strategy is delayed—if "strategy" is not too grand a word for it—by the fact that the board of British Airways is being notably obstinate and is not willing to accept the Government's interference with its commercial judgment. I believe that that is true. Is that the way to run an industry? It is rather like the way the rest of the programme seems to be run.
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The major options have been rehearsed today, as they have been on many occasions, almost ad nauseam. The Minister perpetually is peering over the shoulders of the British Airways board, second-guessing the opinions of the very men whom he appointed to make the market strategy. Then the Prime Minister sets up a Cabinet committee because the decision is too big to be left to the Minister whom he appointed. Not content with that, the Prime Minister, to the publicly expressed dismay of British Aerospace, goes off and talks not only to the aerospace manufacturers but to the airlines in the United States. Presumably he does not trust the Cabinet committee, the Minister, British Aerospace or anyone else.
Mr. Robin Maxwell-Hyslop: Very wise.
Mr. Tebbit: My hon. Friend says that he is very wise, but is this really the way that these decisions should be reached?
The big decision to be made is whether we commit ourselves to go it alone or ally ourselves to Boeing, Douglas, Lockheed or Europe. Very few of us think it possible to go it alone in the big league. I am told that the Boeing 757, on which we were offered collaboration, is now being offered to Eastern Airlines in a larger version than that which had been offered earlier, and that takes it perilously close to the Boeing 767 which will be launched earlier.
Then we have the possibility of collaboration with McDonnell Douglas. Are the Government pursuing this vigorously, or are they letting it drift? We know that the Prime Minister saw Mr. Sandy McDonnell recently. But who is taking the lead? Are we waiting for propositions from other people, or are we making the proposition?
More than two years ago, I put it to the Minister that he was in danger of seeing the A-300 decisions drift away from him. The airbus is now Europe's most successful programme, though it is a long way from profitability. The Minister will remember, as the hon. Member for Derby, North said that the Socialist Government pulled out of that in 1968 and left it to private enterprise to stay in, with the result that British Aerospace proudly put out a press release pointing

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out that it had £200 million worth of business out of that private enterprise decision which the present Secretary of State for Energy did his best to muck up.
What is the Government's reaction to the launch of the B-10? Is the Minister content to see us drift out of that programme too? Is he determined to leave the airbus programme, or is he determined to stay—or is it another great"don't know "?
Recently the Prime Minister saw President Giscard d'Estaing, and no doubt these matters were discussed. Probably the right hon. Gentleman discussed them with President Carter too. But is it not time that the Government actually took an initiative? The Prime Minister has been heard to describe the position of our industry as that of the blushing young maiden with a large dowry being courted by a horde of ardent suitors. The danger is that unless the lady says "Yes" or "No"—or even "Come on"—she will be left on the shelf as an old maid.
Could we not take an initiative? Have we put any proposals to the partners in the airbus consortium? Are we trying to discover what investment commitment the partners would require from us? Are we seeking an arrangement to stay in the airbus project and seek a transatlantic partnership as well? Does the Minister take the view that European and American partnerships are mutually exclusive or is he trying to get away with one of each? If not, what is he doing to try to achieve that aim?
The message to the Government that the Minister should understand from the industry and from our prospective partners is short and simple. It is "For God's sake say something, even if it is only goodbye."
6.40 p.m.
The Minister of State, Department of Industry (Mr. Gerald Kaufman): The odious and contemptible speech that we have just heard has demeaned the debate, which up to then was of a very high standard.
I should like to congratulate my hon. Friend the Member for Kingswood (Mr. Walker) both on his good fortune in the Ballot and on the use he has made of it. Like others of my hon. Friends, he is a fine and active champion of his constituents who work in the aircraft industry.
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The decisions on civil aircraft policy which seem likely to be taken in the near future will go far to decide the future of the aerospace industry in this country for the rest of this century. It is right, therefore, that both the House and the Government should give those decisions most careful consideration.
Our debate today has concentrated on civil aircraft. Civil aircraft policy is a vitally important matter. But we must not forget that two-thirds of the aircraft business of British Aerospace and two-thirds of the employment which that business provides relate to military aircraft.
Of course, we have to consider the needs of Rolls-Royce, a major part of the aerospace industry in this country. It is of roughly the same size as British Aerospace, and it faces some of the same problems. In particular, it must seek a proper commercial return in fiercely competitive markets.
Rolls-Royce, as hon. Members will know, is devoting considerable effort to the successful development and promotion of the existing members of the RB211 family. The deal with Pan Am is a most important step in that direction. For the future, the Government are considering the recommendations of the National Enterprise Board regarding the launch of the RB211–535, a proposed crop-fan derivative of about 33,000 lb. thrust. This new engine would be suitable for some members of the Boeing 767/777 family; but its most important potential market would be in airframes such as the Boeing 757 and the McDonnell Douglas ATMR.
We are examining the proposals of the National Enterprise Board very carefully. As with airframes, we shall require clear prospects of commercial viability. I cannot give my hon. Friend the Member for Derby, North (Mr. Whitehead) any more information on that, but I assure him that we share his concern about the importance of these decisions.
A number of hon. Members asked questions about British Airways procurement policy, which has exercised the minds of many people. The Secretary of State for Trade has answered a Question on this matter today telling hon. Members that, following exhaustive discussions and consultation with all interested parties, he has decided to grant approval to British

1099
Airways to acquire 19 Boeing 737 aircraft. British Airways has also carried out an evaluation of its needs, and my right hon. Friend has said that he will at the same time grant approval for the company to enter into negotiations with British Aerospace for the acquisition of between three and six BAC111s.
I come to the question of airframe manufacture, which, naturally, has dominated this debate and which is very close to the hearts of my hon. Friends who have taken part. On the civil side, of course, there is continuing production of the HS125 business jet, which has now sold over 400 copies, and the BAC111, a plane which this Government kept alive by underwriting further production in 1975–77. The recently announced deal with Romania will provide further valuable work. The deal is worth some £300 million and production work for the deal in British Aerospace is expected to last until 1985. The factories at Filton, Hurm and Weybridge all of course do work on the BAC111.
As for the new civil aircraft projects that are being so widely discussed, my right. hon. Friend the Prime Minister said during Questions on 29th June that the facts relating to the difficult decisions we shall have to take must be laid before the House. My hon. Friend the Member for Kingswood has done the House a service by providing an opportunity for these facts to be set out.
The option which British Aerospace has given top priority to investigating is a package involving the B10 derivative of the airbus, and a new design known as the JET—joint European transport. The B-10 is a derivative, with about 215 seats, of the successful 270-seat airbus. Like the existing B-2 and B-4 versions, it would be a wide-bodied, eight-abreast aircraft. It would have two engines, either derated 25-tonne engines or normally rated 20-tonne engines. Rolls-Royce produces suitable engines of these types within the RB211 family; but it must be recognised that existing airbus customers, who would be most likely to order the B-10, might tend to prefer GE or Pratt and Whitney engines because of the well-known argument of "commonality".
The part of the future airline market for which the B-10 is intended is sub-
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stantial. It derives both from the growth of traffic and from the need eventually to replace aircraft such as the Boeing 727. Depending on the rate of growth of air transport, it might require, say, 800–1,000 aircraft during the 1980s. Most of this market—perhaps as much as 60 per cent.—lies in the United States. The B-10 will face formidable competition from the Boeing 767 and 777 and possible other American aircraft. But the recent Eastern Airlines deal has shown that it is possible for a European airframe manufacturer to break into the United States market.
Airbus Industrie has decided to launch the B-10 aircraft subject to respective Governments' approval. It is still possible for British Aerospace to join this programme. This is being considered urgently by British Aerospace and Government.
Mr. Tebbit: How long does the Minister think that the offer will remain open? The French have made it plain that it is open for only a very short time.
Mr. Kaufman: We realise that there is not a very long time in which to make a decision. However, there is still time, and we are considering the matter urgently.
The JET aircraft is a new design in two main versions—the JET1, with 136 seats, and the JET2, with 163 seats. Both would have a six-abreast fuselage, though with a rather wider cross-section than existing narrow-bodied aircraft, such as the Boeing 727. They are designed to be powered by two Franco-American CFM-56 engines of about 24,000-lb thrust. The overall concept is that they would form part of a family of aircraft to be made by Airbus Industrie, and including the airbus and its derivatives.
The market sector at which the JET aircraft is aimed derives partly, again, from traffic growth and partly from the eventual need to replace existing versions of aircraft such as the Boeing 737, the Douglas DC9 and the BAC111. Total requirements for this part of the market during the 1980s seem likely to be very substantial—perhaps as many as 1,500 aircraft. Unlike the market for which the B10 is primarily intended, it is not dominated by the United States. It is expected to split much more equally between the United States, Western Europe and the rest of the world outside the Eastern bloc.

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It is for this sector of the market that the Boeing 757 and McDonnell Douglas ATMR, which have been the subjects of offers of collaboration to British Aerospace, are also intended. These aircraft would be rather larger than the JET2 and are intended to be powered by engines of the type of the proposed RB211-535, of about 30,000–35,000 lb. thrust.
The other collaborative possibility which is under consideration by British Aerospace is the Lockheed Twinstar, also known as the L1011–600. This would he a derivative of the Tristar, of much the same size as the B-10. It could be powered by two Rolls-Royce RB211–524s. It is agreed by both Lockheed and British Aerospace that this possibility would require extensive market and technical studies. British Aerospace is therefore treating it as a less immediate prospect than the others.
These are the aircraft which are the subjects of the collaborative possibilities under discussion. We have to consider them against the context of the organisations with which we would be collaboratting. I emphasise that we shall take our decisions when we have the commercial facts.
First, there is Airbus Industrie—roughly equivalent to a consortium, the members of which are jointly and severally responsible for its liabilities. The existing members of Airbus Industrie are the French firm Aerospatiale, Deutsche Airbus and the Spanish firm CASA. British Aerospace and the Dutch firm Fokker are associates. The main current involvement of British Aerospace lies in its contract to make the wing box for the B2-B4 version of the airbus.
It seems clear that if British Aerospace wishes to collaborate in future Airbus Industrie programmes, it will be expected to become a full member of the organisation instead of an associate. Quite apart from the detailed implications of such a change, which are far from insignificant, British Aerospace would effectively be undertaking a major long-term commitment. Before it could do so, or the Government could back it, it would need to satisfy itself about the long-term commercial prospects. The airbus has been successful. But we must not overlook the fact that Western Europe provides a
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much smaller home market than the United States and that over 40 per cent. of the total of the market sectors I have described lies in the United States. This is one of the reasons why both British Aerospace and the Government are examining the possibility of collaboration between Europe and the United States, if it can be achieved.
I am discussing the possibilities in strict alphabetical order. I do not want hon. Gentlemen to think that we are favouring one more than the other.
I now come to Boeing. Boeing is easily the largest manufacturer of civil aircraft in the world. The company's past record suggests that any aircraft it markets is likely to sell in substantial numbers. So its offer of collaboration on the 757, under which British Aerospace would develop and manufacture the wings and associated components, is naturally very attractive. But there are difficulties. There would be much hard bargaining on the terms of any deal. British Aerospace must naturally take account of the consequences of collaboration with Boeing for its long-term future and its designs and marketing skills.
Lockheed, as I have said, is a less immediate possibility.
Then we have McDonnell Douglas, which has offered British Aerospace collaboration on a long-term basis. The immediate prospects on the civil side would include collaboration on marketing the HS146 and on design and manufacture of the ATMR. But the offer goes much wider than this. It includes collaboration on military aircraft and guided weapons. It also envisages wider collaboration, involving Europe.
These are all attractive features, but there are problems too. In particular, the B-10 and the AMTR are very close in size, and they may conflict in the market This is a matter which is being carefully considered by British Aerospace and its potential partners.
The House will see that all the various possibilities have both their attractions and their difficulties. Difficulties can be overcome. But it is abundantly clear that there are major commercial and industrial issues which require the most careful consideration.
This also applies to another potential project to which many hon. Members

1103
have referred—the HS146. The HS146 is a four-engined jet aircraft intended to relace turbo-prop aircraft on feeder and commuter routes and, to a lesser extent, small twin-jet aircraft. Two civil versions covering a range of about 70 to 100 seats, and a military version are proposed.
The project was originally launched by Hawker Siddeley Aviation Limited in August 1973. The then Government decided to support development of the aircraft by launch aid equal to 50 per cent. of the estimated launch costs. In October 1974 Hawker Siddeley Aviation decided unilaterally to suspend work; but this Government decided to place a holding contract to keep the project alive. Some work continued, first under Government contract and then financed by British Aerospace, to keep open the option of proceeding with full development of the aircraft.
On 22nd March this year the chairman of British Aerospace wrote to my right hon. Friend the Secretary of State for Industry recommending on commercial grounds that full-scale development of the aircraft should be resumed. It was clear that the project, if approved, would require the commitment of substantial resources, in both money and manpower. The Government accordingly felt obliged to give it the most searching examination.
I can now announce that the Government have decided to approve the proposal from British Aerospace, so that full-scale development of the HS146 can now proceed. The first civil version of the aircraft should be in airline service by early 1982. A second civil version and a military version should follow. The Government regard the decision as independent of decisions regarding future collaboration on larger civil aircraft.
Depending on the extent to which British Aerospace arranges to collaborate with other manufacturers, the project will entail an investment of the order of £250 million at today's prices. This expenditure will form part of the corporation's approved capital investment programme which will be financed in the first instance from internal resources and, to the extent that further finance is required, from loans from the National Loans Fund and advances of public dividend capital. British Aerospace will be
1104
expected to earn an adequate rate of return on the whole of its capital.
British Aerospace is in discussion with other European manufacturers on collaboration on the HS146. The engines, subject to satisfactory terms, will be supplied by the United States firm Avco-Lycoming. Avco has also offered to act as risk-sharing contractor for the manufacture of the wing; this is being carefully considered by British Aerospace. All such collaboration will enhance the market prospects for the aircraft.
Work on the airframe of the HS146 is expected to provide over 7,000 jobs in British Aerospace. It is estimated that it should provide a further 4,000 to 5,000 jobs among suppliers of equipment. Both British Aerospace and the Government regard it as of the utmost importance that workers in the aerospace industry should commit themselves to achieving a high level of productivity on this new aircraft and their other work.
The HS146 is the first new aircraft project which British Aerospace has undertaken since it was created a little more than a year ago, and is the first new civil airliner to be undertaken by this country for a good number of years. With the wholehearted commitment of management and workers, I have no doubt that it will succeed.
I wish to pay tribute to my hon. Friend the Member for Welwyn and Hatfield (Mrs. Hayman) for the way in which, ever since she entered this House, she has campaigned for this aircraft and on the great success which she now deserves. I also wish to pay tribute to my hon. Friend the Member for Manchester, Blackley (Mr. Rose), who has also campaigned for this aircraft, knowing the important employment consequences which it has in the Manchester area.
Mr. Tebbit: The Minister has spoken of the jobs that this decision will create. How many jobs does he think will be lost at Shorts of Belfast, where the wings for the competitor are manufactured?
Mr. Kaufman: This helps with over 400 jobs at Shorts. The factories affected are Hatfield, Brough, Filton, Manchester, Chester and Prestwick, with over 400 at Shorts and 4,000 or more jobs in United Kingdom suppliers.

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I am sorry that the hon. Member for Chingford (Mr. Tebbit) has crabbed this announcement. Of course, he crabs everything. The House has a right to know what is the policy of the Tory Opposition. The hon. Gentleman spends his whole time niggling, knocking and narking. He does not state the policy of the Conservative Opposition on any issue. He attacked the BAC 111 deal with Romania.
Mr. Tebbit: No.
Mr. Kaufman: Yes, the hon. Gentleman attacked that deal in his last speech. What is the Opposition's view on the HS146? Do they support this British enterprise? The Government have made their position clear. The aircraft workers at Hatfield, Filton and Manchester have the right to know clearly and unmistakably whether the Tories support or oppose this decision. All that they do is crab.
In our last debate, the hon. Member for Chingford insulted workers in the British aircraft industry. He said:
"I do not think that any of us can have much confidence in the future of aerospace manufacturing in Britain."—Official Report, 28th June, 1978; Vol. 952, c. 1471.]
What a statement from the spokesman of a party that forlornly aspires to become the Government of this country. How are our potential collaborative partners to judge that? If the would-be alternative Government think so little of our aircraft industry potential collaborators might ask why they should think any more of it. But the happy fact is that our potential partners have a far higher opinion of our aircraft industry than has the Tory Party, and while Conservative Members belittle our aircraft industry the great aircraft manufacturers of the world are queueing up to become collaborators with British Aerospace. That is no thanks to the Tory Opposition, whose reckless and negative opposition to the nationalisation Act placed our industry in jeopardy.
It being Seven o'clock, the proceedings on the motion lapsed, pursuant to Standing Order No. 6 (Precedence of Government Business).

EUROPEAN COMMUNITY (DRAFT BUDGET)
7.0 p.m.
The Minister of State, Treasury (Mr. Denzil Davies): I beg to move,
That this House takes note of Volume 7 of Commission Document No. R/1577/78 relating to the EEC 1979 Preliminary Draft General Budget, together with Volumes 1, 2, 3, 4 and 5, and R/1104/78 and R/519/78.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I should inform the House that Mr. Speaker has selected the amendment in the names of the hen. Members for Banbury (Mr. Marten) and other right hon. and hon. Members.
Mr. Davies: The principal document before the House relates to the 1979 preliminary draft budget. Document R/1104 contains the Commission calculation for the maximum rate of increase in non-obligatory expenditure, and this will be taken into account when the Budget Council takes its decisions on the preliminary draft budget. Document R/519/78 contains a global appraisal of the budgetary problems of the Community.
I turn to the documents relating to the preliminary draft budget, and I must at once apologise to the House and to the members of the Scrutiny Committee for the confusion relating to some of them. There were misunderstandings about the availability of certain of the budget volumes and this was compounded by a change in Brussels of the system of numbering them. For example, the volume relating to the Court of Justice was described in volume 1, which was one of the first available to us, as number 6, but turned out to be volume 5.
The House will have seen the second addendum circulated by the Treasury on 6th July to its explanatory memorandum; this clarifies the situation and I hope that it is helpful to the House. Volume 6, relating to the budget of the court of auditors, is not yet available in English translation and for that reason is not mentioned in the motion.
The background on the budgetary procedures, in particular on the relationships between the Council and the European Assembly, is contained in the Treasury's explanatory memorandum of 20th June which also contains comparative figures

1107
of the provision in the agreed 1974 budget and the Commission proposals for 1979. The report of the Scrutiny Committee draws attention to the principal Commission proposals involving increases in expenditure over that in the adopted budget for 1978, whether in relation to extension of existing policies or for new policies.
The Commission proposals for 1979 will be considered by the first Budget Council on 18th July which my right hon. Friend the Chief Secretary hopes to attend. The Council's decisions on the preliminary draft budget will be incorporated into the draft budget which will then be forwarded to the European Assembly. Tonight's debate will enable my right hon. Friend to take account of the views of the House. I should, however, remind the House that, in accordance with the terms of the Treaty, decisions of the Council are taken by qualified majority voting.
This will be the third year of operation of an experimental timetable under which the Commission tables its proposals in mid-June and they are discussed by the Council in mid-July. This has some advantages, including the fact that the House is able to discuss the budget before the recess, but it also means that the estimates of agricultural expenditure, having been made so long in advance of the year to which they relate, are even more uncertain than they would otherwise be.
These estimates are difficult to make, because they depend to a considerable extent on the volume of surplus production, which can be affected by the weather and other factors, and on the course of world market prices at which surpluses will mostly have to be disposed of. The Commission has indicated that, as in the past, it will re-examine the provision in the autumn when better information will be available, for example, on crop yields and, if it concludes that the estimates are out of date, it will send rectifying proposals to the Budget Council in time for its second meeting in November. Any such rectifying proposals will of course be deposited in the usual way.
Mr. Neil Marten: May we have an assurance that when the Council
1108
of Ministers and the Assembly have seen the budget proposal and made amendments to it we shall have another opportunity to debate the matter because it is only at that point that the budget becomes realistic?
Mr. Davies: The hon. Gentleman will appreciate that that is not a matter for me, but I am sure that what he has said will be noted and considered carefully.
The United Kingdom contributes to the Community budget under the own resources system and 1979 is the second of the two final transitional years before the system will be applied in full to the United Kingdom and to the other new member States. At the European Council, is was agreed that all member States would contribute to the 1978 and 1979 budgets in accordance with their own interpretation of article 131. Initially the three new member States, like other member States, would pay over full "own resources", but they would then receive quarterly refunds outside the budget from the original six member States in order to bring down their actual contributions to the level implied by the Commission's interpretation of article 131.
Following the European Council's decision, the Commission has presented the 1979 budget on a full own resources basis and if the budget were finally adopted in identical form with the Commissions' proposals, this would mean for the United Kingdom a gross contribution of 2,801 million units of account, or £1,764 million—20·4 per cent. of the total budget. We would then obtain a refund in accordance with the European Council decisions. I anticipate that the refund to the United Kingdom, if the budget were finally adopted in identical form with the Commission's proposals would amount to some £260 million. The total gross United Kingdom contribution would therefore be of the order of £1,500 million but this will be reduced by United Kingdom receipts from the budget. Receipts are difficult to estimate, but could perhaps be in the region of £400 million to £500 million. This figure does not include the monetary compensatory amounts on our agricultural imports from other member States, which the budget assumes will continue to be paid at the point of export rather than at the point of import.

1109
In any case, we believe it is more appropriate to regard these payments as made for the benefit of the producers in the exporting member States, who are thereby enabled to export to the United Kingdom without suffering any loss of profit, than as a subsidy to United Kingdom consumers. But these figures all relate to the Commission's proposal and the actual United Kingdom contribution will be determined by the size of the budget as finally adopted in December. All I can say is that I anticipate that significant reductions will, by then, have been made on the Commission proposals. For this reason, the figure for the United Kingdom contribution included in the explanatory memorandum must be regarded as illustrative and intended only to show the financial effect of the Commission proposals as originally made and before they have been considered by the Budget Council and the European Assembly.
Because only two member States, of which we were one, had passed in time the necessary domestic legislation implementing the Community's sixth VAT directive, the 1978 Community budget had, in part, to be financed on the basis of member States' GNP shares, these representing a "topping-up" element above the proceeds of customs duties and agricultural levies collected by member States. For the 1979 budget, the Commission has assumed that all member States will have passed the necessary legislation and that contributions based on the system of VAT own resources will replace GNP-based contributions as the third element. As laid down in the own resources decision, VAT own resources are raised by the application of a rate of up to 1 per cent. of a harmonised VAT base throughout the Community. The rate will, of course, depend on the amount of budget expenditure, and the yield of duties and levies, but on the basis of the Commission's proposals in the preliminary draft budget the rate for 1979 is 0·75 per cent.
The maximum rate calculated by the Commission for the 1979 budget of 11·4 per cent, as indicated in document R/1104/78, is relevant to the degree to which the European Assembly has the ultimate power to increase the level of non-obligatory expenditure.
1110
The Commission has explained its approach to this in pages 101 to 106 of volume 7A. The most important point is that it has entered substantive appropriation under budget headings, not only when a Commission proposal has been accepted, but when in the Commission's view a proposal, submitted to the Council by 15th June, has every likelihood of being adopted by the end of the year. Otherwise token entries are made under the appropriate budget headings and on some occasions figures entered under chapter 100. The Budget Council, however, usually takes the view that all items on which no Council agreement exists should be deleted unless agreement is likely in the near future, in which case chapter 100 may be used. In accordance with its approach, the Commission has included provision in the 1979 budget in a number of areas, in particular in relation to energy and industrial policies, where no policy agreement has yet been reached by the councils concerned. I anticipate, therefore, that the provisions will be deleted by the Budget Council.
The Commission has proposed one innovation in the 1979 budget. To the normal budget it has proposed adding a second part, the purpose of which is to cover borrowing and lending operations by the Community. Hitherto, token entries only for such loan schemes have been shown in the budget, these being included to cover any expenditure incurred by the Community in honouring guarantee obligations.
The European Assembly has consistently argued for "budgetisation" of loans, which would involve the borrowing by the Community being entered into the budget as a receipt, and the on-lending as a payment. A number of member States, including ourselves, believe that the Commission's proposal gives rise to a number of practical and legal difficulties which need to be examined in depth. We shall therefore put forward the view that the Commission's proposal for amending the financial regulation, and for having a second part of the budget, should be examined later in the year.
Mr. Tam Dalyell: When we come to the Government's reply, perhaps we may be told about the Government's attitude to the so-called Ortoli loan. Do they favour such things

1111
being the subject of the criteria of the European Investment Bank or are they well disposed towards the Ortoli facility?
Mr. Davies: I shall take up my hon. Friend's generous suggestion to deal with that question in my reply.
Part of the confusion over documentation, to which I referred earlier, related to the budget of the Assembly. The Council will have before it the Assembly resolution of 15th June, a copy of which was attached to the first addendum to the Treasury's explanatory memorandum and which was not available to the Scrutiny Committee at the time that it prepared its report, and the draft budget proposed by the Assembly, which is contained in volume 2 of the preliminary draft budget and is available in the library.
The Council will have the opportunity, if it so desires, to comment on the Assembly's proposals for its own budget. The Council cannot, however, enforce any change because of the non-obligatory nature of the expenditure. However, for the 1979 budget exercise the Assembly is planning a two-stage contribution. Its first draft projects the cost of the Assembly's existing activities, and it will produce a second-stage document towards the end of the year containing proposals which would allow a new Assembly elected by direct universal suffrage to begin its work before the end of 1979.
The Government's general approach to the preliminary draft budget will, as previously, be in line with the Government's approach to domestic public expenditure, and will be to seek to restrain increases in expenditure bearing in mind the constraints of qualified majority voting by the Council, except where increases can be justified in line with our own priorities. I am, however, in considerable sympathy with the views expressed by Commissioner Tugendhat on the need to secure some movement away from the present dominance within the budget of expenditure on the CAP. That can be done only if in the main CAP expenditure can be more tightly controlled.
Agriculture dominates the budget, taking altogether 70·1 per cent. on a commitment basis and 72·7 per cent. on a payments basis. In turn, about 95 per
1112
cent. of total agricultural expenditure is accounted for by the so-called guarantee section, which finances all measures of farm price support.
The fact that the taxpayer is also called upon to make such a large contribution is, as the House knows, largely due to the need to dispose of farm surpluses, which the EEC ought never to be producing. Milk, the most surplus product, accounts for no less than 38 per cent. of the guarantee section and over 26 per cent. of the budget as a whole. It remains the Government's objective to bring supply into better balance with demand, and this essentially means bringing support price levels down in real terms. The increase in support prices for 1978–79, expressed in units of accounts, is only just 2 per cent. on average, which is the lowest increase for many years. Despite this, agricultural expenditure remains far too high. It would have been more satisfactory if there had been no increase at all in the support prices for surplus commodities.
Mrs. Gwyneth Dunwoody: May I, therefore, expect that Her Majesty's Government will make it plain to the Commission that far from supporting any further extension of the existing CAP—for example, a common market of sheepmeat—they will seek to lower the amount of support that is given to the CAP?
Mr. Davies: I can answer that question by saying "Yes". The British Government have no interest in extending the scope of the CAP. Indeed, it is in our interests to try to reduce expenditure on it.
Also, changes in the green currencies, agreed at the same time as the Agricultural Council decided price changes, lifted the average real increase in the EEC as a whole from the apparent figure of 2 per cent. that I mentioned in nearly 7 per cent. if we take the green currency increases into account.
That state of affairs is clearly most unsatisfactory and, as my right hon. Friend the Prime Minister informed the House this afternoon, the CAP was discussed at some length during the meeting of the European Council at Bremen last week. As he said, the Commission has been asked to make proposals. The Government will be looking for proposals

1113
which tackle the problem seriously and bring about a substantial reduction in the budgetary burden. It will be clear from what I have said that the amendment to tonight's motion, tabled in the names of hon. Members on both sides of the House, very much reflects the Government's view of the matter, and I am happy to say that the Government will be prepared to accept it.
Mr. Marten: I thank the right hon. Gentleman for indicating acceptance of the amendment. Year after year we hear that the Government of the day are dissatisfied with the expenditure on the CAP, but nothing effective is ever clone. Will the Minister of Agriculture, Fisheries and Food take with him to the Council of Agricultural Ministers the Chief Secretary to the Treasury, the experienced hatchet man, and really put it on the line that we shall not accept any more such expenditure on the CAP? Until that is done, nothing will happen.
Mr. Davies: The British Government have made it clear that we are not in favour of the way in which the CAP operates. Unfortunately, as the hon. Gentleman knows, we are one member of nine member States. It is one of the factors which, no doubt, was taken into account when the House voted for entry into the Common Market, and when the British people accepted membership in the referendum. These are the constraints within which we operate.
Mr. John Lee (Birmingham, Hands-worth): Is there not some sticking point at which the Government propose to use the veto?
Mr. Davies: My hon. Friend knows that, although the veto seems to be a potent weapon, in view of the bargaining that has to take place in this sort of Community, it is not in practice as strong as it seems to be in theory.
Mr. John Roper (Famworth): In view of what my right hon. Friend the Prime Minister was able to report today about all the Heads of Government, at the meeting in Bremen, being agreed that there should be a reform of the CAP, is not the position in that area somewhat brighter now than it has been in the past?
Mr. Davies: I hope that things look brighter. I think that it was agreed that
1114
there should be a review of the CAP and not a reform. It is not for me to say whether a review will lead to a reform.
It is often suggested that the Budget Council is the proper forum for deciding how much the Community should spend on the CAP and on its other policies. As my right hon. Friend the Chief Secretary told the Scrutiny Committee, this would be a new departure for the Budget Council, because it has up to now regarded its function as being confined to ensuring that the figures on the budget properly reflect the financial consequences of the policy decisions taken in the various specialist councils. Accordingly, all policy decisions on agriculture have been left to the Agricultural Council.
There is, of course, nothing to stop the Budget Council from voting to reduce the provision for agricultural expenditure. But this in itself would achieve nothing, unless the Agricultural Council were to regard itself as bound by that figure. All that would happen would be that the supplementary budget eventually required as a result of the next set of farm price decisions would need to be that much larger than it would otherwise have been. To have any practical effect, it would have to be accepted that the Budget Council's figure should be taken as a ceiling within which the Commission would operate in presenting its farm price proposals and within which the Agricultural Council would take its decisions on those proposals. From our point of view, this might be a very desirable change in the role of the Budget Council. But whether the other member States would look at it in that way is a different question.
There are various other proposals in the budget relating to the Regional Development Fund, the European Social Fund and aid to developing countries. I shall not go into them in detail now, but if hon. Members have questions on these aspects I shall be happy to deal with them.
In conclusion, I hope that taken together with the information provided in the documents before the House, including the Scrutiny Committee's report, the House will now have sufficient information to debate these proposals. My right hon. Friend the Chief Secretary will obviously take account of all comments

1115
made in the debate in deciding our attitude at the Budget Council.
7.23 p.m.
Mr. Michael Shaw: I think that the whole House will wish to thank the Minister of State for opening the debate in the way that he did. I should be interested to know whether he or his right hon. Friend the Chief Secretary will be going to Brussels for the consideration and preparation of the draft budget. I suppose that the lot falls on the usual shoulders.
The preliminary draft general budget for 1979 was discussed last week in the European Parliament. I hope that my hon. Friend the Member for Banbury (Mr. Marten) will excuse me if I continue to call it "Parliament", but that was the decision of the European Parliament some years ago and it is a title which we are accustomed to use. While I know that the use of the word "Assembly" would assist him, it would disadvantage others who are listening to my speech. Therefore, I hope that, with his usual courtesy, he will go along with me in the use of the word "Parliament".
At any rate, the matter was discussed there. The views of the European Parliament will be formally presented to the Council of Ministers on Tuesday 18th July in Brussels. After that meeting, the Council will draw up the draft budget. Therefore, from all points of view, this debate is well timed. I understand that the Chief Secretary will be going to the meeting and that he will go after Parliament has had the opportunity of presenting its views to him this evening.
In describing the proposals for 1979, Commissioner Tugendhat has described his proposals as being modest. I described them last week as being disciplined increases. They are certainly in no sense outrageous. The commitment appropriations have increased by 15· per cent. and the payment appropriations have increased by 12·1 per cent. As the Commissioner explained, this position was made possible by a deliberate policy of containing agriculture. The Minister referred to this matter. It is fair to say that the containment was not as great as the Commission would have wished. Thus, we have preliminary figures for
1116
1979 of 14·6 billion units of account for commitments and 13·8 billion units of account for payments. The Community's preliminary draft budget, therefore, represents 0·88 per cent. of its total gross domestic product, and nearly three-quarters of that is to be spent on agriculture.
Yet the discussion tonight, and, indeed, at the Council meeting next week, is not about agriculture in any detailed way, as the right hon. Gentleman explained. That debate can take place only when the letter of amendment is received in early October. That will then reflect the updated figures calculated after the harvest has been gathered in.
At this stage, we can only hope that the pattern of previous years is not repeated: a pattern in which the Council cuts back the non-agricultural sectors in July—that is, on 18th July this year—and the sums are then more than restored into the agricultural sector in October.
Mr. Lee: Perhaps the hon. Gentleman, who works for this extraordinary organisation, can give us the benefit of his assistance. He has expressed a pious hope, which I am sure is widely shared. Can he say what the pattern of events has been for the last two years? Has it gone up or down in each October review?
Mr. Shaw: The tendency has been for it to go up. So far, the Commission has said that it has got it under better control. The hon. Gentleman is assisting me in the point that I am making. I am asking the representative of the Council of Ministers to do his best to see that that containment continues when the draft budget is produced.
As a country, we must recognise that our future economic well-being and safety depend upon greater co-operation with other countries. Problems and projects which in the past were properly regarded as national more and more require Community solutions. If the Community is to be a leading economic force in the world we must not only develop together the expensive energy and industrial policies of the future but accept that the problems of regional policy, the restructuring of industry, unemployment and retraining must more and more become Community responsibilities.
Mr. Nick Budgen: Does my hon. Friend agree that, if we are to have monetary union within the Community, that will inevitably lead to economic union and that, if we are to have both economic and monetary union, those who want it will also want the biggest possible regional policy?
Mr. Shaw: I think that the two must go hand in hand.
Mr. Budgen: The three.
Mr. Shaw: Yes, the three. We cannot have the one without the others.
Mrs. Dunwoody: Would the hon. Gentleman therefore care to comment on the fact that it looks as though the Regional Fund will be very much smaller this year?
Mr. Shaw: That remains to be seen.
Mrs. Dunwoody: Look at the figures.
Mr. Shaw: I shall deal with that matter in detail later in my remarks. The hon. Lady has looked at the figures, as have I. I shall comment later on the very point that she made.
The way ahead must lie in our drawing closer and closer together, but the benefits of so doing must be shared by all countries. It is against that background and in that belief that the Commission has made its modest proposals. Obviously, such policies will not in themselves be in any way decisive. The sums involved are far too small. However, they are a beginning. By working together through such small beginnings, co-operation in these areas must develop and expand.
For example, the budget figures for energy follow the Commission's strategy, which is based on the development of Community energy resources. That is the only way in which we can reduce our dependence on imported energy. Expenditure on uranium and hydrocarbon exploration is to be increased, as also are efforts to extend the use of coal. Equally, the Commission is right to include the costs of programmes for energy conservation. Over a four-year period the total outlay in this area will be about 150 million units of account.
In industry, the Community must plan an increasing role to assist in reconstruct-
1118
tion and conversion projects, as also in advanced technology. The European Council at Copenhagen was right to emphasise the need to overcome the serious problems arising from structural over-capacity in several industries.
Mr. Budgen: I hope that my hon. Friend will help those of us who are sceptical by defining precisely the areas in which the Community should not interfere.
Mr. Shaw: I believe that we can look at the positive matters that are identified, but I do not believe that at this stage, when dealing with economic development, we can seek to deal with those matters which are not identified because such spheres will change from year to year, as will the requirements.
When dealing with research, it is logical and right for us to develop joint programmes. We have never lacked brains and ability in Europe, but more and more, through the complexity and expense of advanced technology, as individual count-tries we cannot provide the capital and resources to exploit them. If this potential future wealth is not to be lost to Europe, we must work together by developing joint programmes of both research and production. Above all, the Commission is rightly conscious of the seriousness of the unemployment problem in the Community, with all that that means in terms of human suffering and lost production.
Commissioner Tugendhat has told us that he has put expenditure in the social sphere in a central place. That must be right with unemployment in the Community running at about 6 million. Appropriations for the Social Fund have been increased substantially this year. For example, help is being given to farm and textile workers, to people in backward and declining regions, and particularly to the young unemployed. I remind the House that the European Parliament was particularly successful in persuading the Council to increase this expenditure in the negotiations last year on the 1978 budget.
As requested by the hon. Member for Crewe (Mrs. Dunwoody), I turn to the Regional Fund. It is from that fund that help is given to the areas of the Community with special unemployment and development difficulties. The European Parliament feels strongly about this

1119
sector. Expenditure in this sphere represented the greatest difference of opinion between the Council and Parliament last year.
This year, the Commission stated in volume 7, at page 47:
"Continued imbalances between the regions are a major obstacle to European integration and to economic and monetary union. This has been pointed out repeatedly—most recently at the Copenhagen meeting of the European Council on 7th-8th April, which declared that internal economic stability and the reduction of regional imbalances are Community objectives of paramount importance."
I agree with that. But why has the Commission so tamely accepted the figures put forward for the fund last year by the Council?
Last year, the Commission included in the 1978 budget figures which we understood had been carefully prepared. The European Parliament accepted them. The figures were 750 million units of account—that is, about £488 million—for commitments and 525 million units of account—about £342 million—for payments as a minimum requirement. When the Finance Ministers of the Council considered this item, they could not reach agreement. In the end the matter had to go to a meeting of Prime Ministers, who eventually agreed lower figures for the three years 1978, 1979 and 1980. The Finance Ministers of the Council told us that while all other figures were negotiable the commitment figure of 580 million units of account for 1978 was not, because it had been agreed over their heads by the Prime Ministers.
As rapporteur for the 1978 budget, I persuaded Parliament to accept this position. I was not very popular. I took the view that Parliament and Council had to reach agreement and that, since the Council had moved towards our view on other matters to an extent that it had never done in previous years, it was only right that we should concede this point. However, before conceding this position for 1978, the President, Mr. Eyskens, said in the debate on 13th December 1977:
"My view and that of the Council is that, unless we want to run the risk of a serious conflict between the Parliament and Council, we must stick to an amount of 580 million in commitment appropriations for 1978. I would add that for the two subsequent years, 1979 and 1980, despite the European Council's decision of principle, contacts, negotiations and
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amendments will always be possible … I have already said on another occasion that I do not consider it illogical for the 1979 and 1980 instalments of the 620 million and 650 million respectively as decided by the European Council, to be concentrated on a shorter period. That seems to be a working assumption that will require further discussion from 1978 onwards."
He concluded:
"Let us then stick to the first instalment in 1978, otherwise we shall have great political difficulties."
Clearly, the door was open for renegotiation in later years.
I generally welcome the way in which the Commission has presented the preliminary draft budget, but I have two serious complaints about the Regional Fund sector. First, having had to trim its proposals last year, it has now abandoned any thought of returning to them, although it must have known that it had the support of Parliament. Secondly, by accepting the figure that was put forward last year by the Council of 620 million for 1979 and 650 million for 1980, the Commission has closed the door to the negotiations envisaged by Mr. Eyskens last year.
If the fund is to be spent in a shorter period than was envisaged last year, it must be committed more quickly. Equally, figures entered this year by the Commission do not allow for possibly more generous amendments that were envisaged by Mr. Eyskens last year.
The problems of the regions and their development are critical to the future of the Community and to the success of plans such as those that were under discussion at Bremen last week. Can we be assured by the Minister that the Government will be receptive and flexible on the need for maximum help being provided through the Regional Fund? The European Parliament undoubtedly will make this a key point in its discussions with the Council
Mrs. Elaine Kellett-Bowman: In view of the vast importance of this subject, can my hon. Friend account for the Minister's total lack of comment, except for the cursory statement that he might answer questions if they were raised?
Mr. Shaw: I do not speak for the Minister. It is curious, however, because I should have expected to hear what

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part our Government played in the discussions that took place between the Prime Ministers when they arrived at a final decision on the reduced figure. The meeting of Prime Ministers certainly passed down to the Finance Ministers recommendations that they felt impelled to accept.
I turn now to the ideas involved in the budget. Of these, five are listed on page 13 of volume 7, and I shall refer to the first three. The first is aimed at improving a balance between agricultural expenditure and that devoted to the development of other policies. This view has been expressed many times in this House and elsewhere and it needs no further comment from me except to say how much I agree with it.
The second idea is that of taking a selective approach leading, in a limited number of priority sectors, to a real transfer of policies from national to community level. The third is bringing under the Community budget activities which can more advantageously be dealt with both politically and economically at Community rather than national level. An expansion of Community programmes in this way is vital if the Community is to bring benefit to all its parts and to all persons living in it. Perhaps the Minister of State will comment on these ideas as expressed in the preliminary draft budget.
Mr. Denzil Davies: The hon. Member is speaking from the Opposition Front Bench on behalf of the official Opposition. Is what he is saying the Conservative Party's view on all the items he has listed?
Mr. Marten: A good question.
Mr. Shaw: This is the view of the Commissioner—
Mr. Budgen: He is just a glorified civil servant.
Mr. Shaw: Perhaps I may be allowed to complete my sentence. This is the view that the Commissioner has put forward in his preliminary draft budget. If we are to draw nearer to and entertain in any real way economic and monetary union, we must advance such joint projects as JET. It is right for us to learn to work together.
Mr. Douglas Jay: Is the hon. Member speaking this evening for the EEC Commission or for the British Conservative Party?
Mr. Shaw: I believe that if we are to make a success of the Community we must find areas in which we can learn to work together. There was no point in our joining the Community unless we were prepared to carry out this sort of joint undertaking.
Mr. John Biffen: I am sure that my hon. Friend would not want inadvertently to leave the House with the impression that it was the policy that regional policy should be conducted on a Community basis and out of Cornmunity funds rather than on a national basis out of national funds. Will he make his position clear on that point?
Mr. Shaw: At the moment the programmes work through the national Governments, but they are supported by the Community. For the first time there is the possibility within the preliminary draft budget of non-quota aid being given by the Commission, and I believe that help in that way is of vital importance if we are to try to assist the more backward regions of the Community and to bring them up towards the levels of the more fortunate parts of the EEC.
Mr. David Stoddart: I should be grateful if the hon. Member could help me. I have been listening carefully to what he has been saying, and it seems to me that he was committing the Opposition to economic and monetary union. I found that most interesting, particularly bearing in mind the qualified statements earlier this afternoon by the Leader of the Opposition when my right hon. Friend the Prime Minister made his statement. Will the hon. Gentleman clarify the situation?
Mr. Shaw: Obviously we cannot reach any final conclusion, because, as the Prime Minister rightly said, there must be a good deal more examination of this matter. Until the terms have been produced and we are satisfied, I shall take the view that we can safely go into these matters. I do not think that what I have saicl—and, clearly, I am convinced that all those who voted to go into the Cornmon Market must have had these ideas

1123
in mind—[HON. MEMBERS "No."]—because I certainly had—contradicts anything I heard said from this Dispatch Box this afternoon.
Perhaps I may now be allowed to continue with my speech. I have already taken longer than I had intended. I hope that there will be reduction of agricultural expenditure and an expansion of expenditure elsewhere. An increase in those other sectors does not mean an automatic overall increase in expenditure. In so far as programmes are a substitution for national programmes, in so far as they are more efficient and effective and in so far as they create prosperity in place of subsidised poverty, they do not entail such increases in overall expenditure. This point has been brought out by Commissioner Tugendhat, and it was emphasised in the MacDougall report.
Now that the presentation has been made to the Council and to the European Parliament, the Commission's official task is complete. Although its important help and advice will be available throughout the remaining budgetary processes, the budgetary authority must now agree the budget, and that authority consists jointly of the Council and the Parliament. Later this month, the Council will draw up the draft budget based on the document that we are discussing now. In the past it has been the custom for the Council to cut back heavily on the non-agricultural expenditure, as shown in the preliminary draft. I shall be grateful if the Government will confirm tonight whether they continue to favour such substantial cuts this year.
The overall increases are modest, and the projects favoured by the Commission are in the sectors favoured certainly by the European Parliament and, as far as I know, by the Council as well.
After publication of the draft budget, there will follow the exhausting procedure of its consideration and amendment by the Parliament and the subsequent conciliation between Council and Parliament. In practical terms—I shall not go into the complicated and lengthy details—because the Council and the Parliament are the joint budgetary authority, because each institution has the last word on different types of expenditure and because the budget is not finally adopted until it is so declared by the
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President of the Parliament, it is necessary for Council and Parliament to reach agreement either at the proper time in December or, after disagreement, by a complicated procedure during the following year.
Mr. Marten: My hon. Friend began by saying that he would call the Assembly the Parliament. As I have listened to him, I have found his words somewhat confusing, if my hon. Friend will forgive my saying so, especially in the last few paragraphs, because he has referred to the "Parliament" and I have not been sure whether he was referring to the Assembly or to this Parliament here. It would therefore be better if my hon. Friend would kindly use the correct phraseology in this place, using "Assembly" for that thing over there in Europe and "Parliament" for our Parliament here. I do not mind which word my hon. Friend uses over there, but will he please use the word "Assembly" here?
Mr. Shaw: In the last few paragraphs I was referring to the European Parliament.
Last year, although the differences between us were originally substantial, I am glad to say, as rapporteur for the 1978 budget, that agreement was reached, and reached at the proper time. I hope that this year, too, Council and Parliament will be able to show that they have the same objectives in mind and can reach agreement once again.
I am convinced that the successful future of the Community depends not on the increasing of the European Parliament's power but on the better use of its existing powers and, perhaps above all, on the development of a proper and responsible relationship between Council and the European Parliament.
7.51 p.m.
Mr. Douglas Jay: I beg to move, at the end of the Question to add:
'and further notes with deep concern that the policy implied in this preliminary draft budget once again fails to make any reduction in the huge burden of agricultural expenditure under the guarantee section of the European Agriculltural Guidance and Guarantee Fund, in particular, in the cost of disposing of agriculltural surpluses outside the EEC'.
The Minister has wisely accepted the amendment in advance of its being

1125
moved. The essential words of the amendment are that this House
"notes with deep concern that the policy implied in this preliminary draft budget once again fails to make any reduction in the huge burden of agricultural expenditure "—
and so on.
It is not the fault of my right hon. Friend the Minister of State, Treasury that we are now members of the Common Market. I am not absolutely sure how the hon. Member for Scarborough (Mr. Shaw) voted on the European Communities Bill, but I suspect the worst. Certainly, a large part of his speech sounded to me as though it had been drafted by the EEC Commission.
Mr. Michael Shaw: It all depends on what is meant by the worst. I voted for it, of course.
Mr. Jay: That is what I feared.
When listening to the Minister, I was at times rather strengthened in my view that those responsible for EEC procedure and the drafting of documents deliberately make everything so complicated that no ordinary person is likely to understand what is really going on. However, one outstanding fact emerges beyond argument from this draft budget, and that is that over 70 per cent.—I think that the Minister's latest figure was 72 per cent.—of the immense sums involved is still to be spent on the common agricultural policy, which in plainer English means buying up huge surpluses of food at extortionate prices, preventing consumers inside the EEC from getting them at any reasonable price and then selling them at one-quarter or one-fifth of that price to the outside world. Compared with the agricultural budget, the sums to be spent on the Regional Development Fund and the other items are comparatively trivial.
The Treasury's explanatory memorandum which, I am sure, did its best to make matters clear, though giving the total figures did not give the percentage, but I believe that my right hon. Friend gave it as about 72 per cent. But this percentage has remained virtually the same over a number of recent years, or, if anything, it has increased from year to year. This colossal waste of public money —for that is what it is—goes on, and there has been no serious reform of the CAP in practice, despite all the promises that we have been given. Indeed, only the
1126
valiant efforts of my right hon. Friend the present Minister of Agriculture prevent the situation from getting very much worse. In fact, all that my right hon. Friend can tell us when he comes back from these adventures is that as a result of his strenuous efforts it is not quite as bad as it might have been.
I believe that the cause of this trouble and the real mistake which we have made is that the British Government have failed to take the initiative and themselves put forward major proposals for drastic reform. What happens over and over again in our relations with the EEC is that the British Government sit back and wait for other countries or the Commission to come forward with positive projects, such as the latest EEC currency stabilisation so-called plan which we heard about today, and the Government then react weakly to such initiatives coming from somebody else.
I do not believe that the situation will ever change until we take the initiative ourselves. For instance, the new currency stabilisation plan of which we heard only in the past 24 hours, which is really a plan for either fixed exchange rates or much more nearly fixed exchange rates, would in any foreseeable circumstances in this country, I believe, spell unemployment at a higher level than we have now, would weaken this country still further, and, incidentally, would strengthen the grip of the common agricultural policy on all the member countries.
The reason why the French are backing the currency stabilisation plan is that they know that it would tighten the hold of the common agricultural policy, which is what they really care about. We should keep that in mind in considering the currency plan.
Mr. Dalyell: This would be all very well if some of us did not remember those hectic nights in July 1966 and onwards when my right hon. Friend was a senior economics Minister and the rest of us were scurrying about voting for heaven knows what—with Lord George-Brown and the rest—precisely because there were unstable monetary conditions.
Mr. Jay: If I may say so, that is precisely what I am arguing—that a fixed rate of exchange takes away from the Goverment the power to carry out the

1127
economic policies which are in the country's interests. It was then done for the sake of the sterling rate of exchange. It will have exactly the same effect if it is part of so-called economic and monetary union.
I am straying rather far from the immediate subject, but I add just this. It seems to me, for the reasons I have given, that it should be the first condition of acceptance of any plan of that kind that there should be genuine reform of the common agricultural policy first. If we are to have dates fixed in the matter of the currency plan, with what will happen in October, what will happen in December and so forth, we should have similar dates fixed for the reform of the common agricultural policy and not have it perpetually postponed into the far distance.
I should like to be a little clearer than I was even after reading the Treasury's memorandum and listening to my right hon. Friend today on exactly what the United Kingdom's net contribution will be to the budget in the coming year and in later years. On the figures given up to now, I think it true that in the past year the contribution net, after allowing for all the inward payments which we are told so much about, was running at about £700 million sterling a year. After all, in this matter of the budget we were supposed to gain relief here at least from the renegotiation process, but there seems to be no sign that we have got that relief. I hope that the Minister will explain—I shall be delighted if he can do it in his winding-up speech—exactly what relief the renegotiation is providing us with at the present time.
Mr. Marten: The right hon. Gentleman mentioned the figure of £700 million net. I believe that it is estimated to be £800 million net next year, and even more the year after that. Does he agree that that makes absolute nonsense of all the propaganda put out by the Euro-movement, the Commission and so on that we are receiving grants? We are receiving nothing at all. We are paying in all the time. Had we not been members of the Common Market, we could have used all that money to make much bigger grants, if necessary, to our own country.
Mr. Jay: I entirely agree with the hon. Gentleman, but I regard the propaganda
1128
to the effect that we are being subsidised as being of so low a level that it is hardly worth referring to. It is rubbish.
I was trying to establish, with my hon. Friend's help a little later, exactly what we shall now have to pay. This is a payment across the exchanges. I think that my right hon. Friend told us that were the whole own resources system to be enforced, as the explanatory memorandum says it should be, the gross figure would be £1,760 million. I understood him then to say that there was a refund which would reduce that by, I think, £260 million. That brings the payment down to £1,500 million. My right hon. Friend then added that the payments inwards which we should receive to offset against that would be £400 million or £500 million next year. If I have that correct, the conclusion seems to be that the net burden on this country next year will be about £1,000 million, which is a huge increase on the £700 million that we are paying now.
Mr. Denzil Davies: My right hon. Friend is quite correct; but those figures are based on the preliminary draft budget and are fairly provisional.
Mr. Jay: I realise that, but even if the figures are provisional it is well to know what they are. If that is correct, it is ominous for what will happen in the next few years.
Why should even the gross United Kingdom contribution be 20 per cent.—my right hon. Friend gave us that figure again today—of the gross revenue of the EEC? The United Kingdom's gross domestic product is certainly less than 20 per cent. of the total GDP, and I thought that the renegotiation had done something to bring the two into relationship. Perhaps my right hon. Friend will explain that in his reply.
The House has a duty on these occasions. I do not say that it is voting money, because we cannot exactly describe these debates as that, but I suppose that this is as near as we shall ever get to voting our contribution to the EEC. In doing this, we should examine some of the items of expenditure and ask whether economies can be made. What are British representatives, both officials and Ministers, now doing in the EEC institutions to check the extravagance, on the one hand, and fraud, on the other, which are

1129
notorious, in particular in the common agricultural policy? As we must all be brief, I shall mention only one item tonight. I quote from the Financial Times of as recent date as 19th June, when it said:
"Many of the 12,000 permanent staff employed by the European Commission and other EEC institutions have for the past 18 months received higher pay than they are entitled to, because of a technical error.
In some cases, the overpayments are said to be £20 per week.
The error, estimated to be costing the Community several million pounds a year, became known to Commission officials and EEC governments more than a year ago, but has not been disclosed until now."
Is that true? Are these figures correct? The Financial Times continued:
"A plan to rectify it has been drawn up, but it will probably be several months before this goes into effect.
Officials in Brussels believe that it may be difficult to recoup money already paid.
The EEC's permanent staff are among the best-paid civil servants in Europe … The Commission has declined so far to publish complete information on the numbers of staff and the sums involved.
But officials estimate that it may amount to £5 million over the past 18 months."
That does not seem to be exactly a triviality when we are dealing with public money.
Mr. Dalyell rose—
Mr. Jay: Perhaps my hon. Friend has some information about this.
Mr. Dalyell: The matter should be put into perspective. There are fewer civil servants in Brussels than there are in the Scottish Office.
Mrs. Dunwoody: They cost rather more.
Mr. Dalyell: There are considerably fewer. As the hon. Member for Scarborough (Mr. Shaw) and I are vice-chairmen of the committee that is supposed to be looking at the subject of fraud, we frequently ask colleagues whether they have any evidence, because the matter is investigated. My right hon. Friend says that he has evidence of fraud. Naturally, it should be investigated by the Assembly, Parliament or whatever one likes to call it.
Mr. Jay: I did not say that I had evidence of fraud. I said that those
1130
positive statements were made by the Financial Times. I am asking my right hon. Friend the Minister whether they are correct. We should have the answer.
Mr. Stoddart: There seem to be double standards. We have one standard in this country and seemingly quite a different and looser standard in the EEC. A constituent of mine who was engaged at the princely salary of about £28 a week was informed by the Home Office after a month that it had overpaid him and would deduct the money, and it did so to the extent of £12. Is my right hon. Friend telling me that people in Europe who have been overpaid to the extent of many tens and perhaps hundreds of pounds will not suffer the same fate as my poor little constituent?
Mr. Jay: I am in favour of the same standard, whether in the Scottish Office or in the EEC Commission.
On the matter of correcting fraud, I remind my hon. Friend the Member for West Lothian (Mr. Dalyell) that we were told by Ministers only a week or so ago in a debate on the criminal law and proposals from the EEC Commission that changes must be made in criminal law procedure here in order to correct frauds which were going on in Brussels. If my hon. Friend cares to look up the Official Report of that debate, which occurred within the past 10 days, he will find that those statements were made by a Minister and not by a Back Bencher.
Since that debate, reports have been circulating that some of the frauds have been committed not by outside commercial agents but by employees of the Corn-mission. When we are dealing with large sums of money, we should also hear from my right hon. Friend whether that is true. It is a bit much if some officials are not merely grossly overpaid but are responsible for, or are condoning, frauds of public money and frauds on the long-suffering British taxpayer, who is making major contributions to the EEC fund. In the interests of at any rate some economy I shall be most grateful if my right hon. Friend can answer those questions.
Mr. Dalyell: Inadvertently, my right hon. Friend suggested that I had suggested that there was fraud in the Scottish Office. I meant to suggest no such

1131
thing, and I think that my right hon. Friend will accept that.
Secondly, my right hon. Friend is a former Minister of great experience, whom I genuinely and sincerely respect. With his great knowledge of Government machines, how would he suggest—I put this as an interrogative question, with no kind of slant—that the House of Commons puts its oar in on the genuine problem of alleged fraud or possible fraud within the Community? One of the questions I go on and on asking, without getting a very satisfactory answer, is what the relationship should be between the Commission and the European auditors, on the one hand, and the police forces of the various members of the Community, on the other. This is a very serious question. Perhaps my right hon. Friend has some ideas on the subject.
Mr. Jay: Surely one of the basic troubles is that the relationship of the EEC Assembly to the Commission is very different from the relationship of this House to our own Civil Service, because Ministers are responsible to this House under our system and can give instructions to our civil servants. I should have thought that the EEC, by moving a little further to that system, could make it easier to detect these frauds. All I am doing tonight is to ask the Minister to give an answer to the factual questions that have been asked.
8.10 p.m.
Mr. Russell Johnston: I shall be brief because many others want to speak. I intend to deal with only one item in the proposed budget, but before doing so I must say to the right hon. Member for Battersea, North (Mr. Jay) that he employed the tactic of putting a little mark on people. He started off by saying that there was a story in the Financial Times which referred to over-payments. That sort of thing happens in the best-ordered bureaucracies from time to time. He then read from the Financial Times that the money might be difficult to recover.
Then, behold, before we knew where we were, we were hearing that some officials, supposedly grossly overpaid, might be responsible for or condoning the fraud. There is no evidence of that at
1132
all. It is not good enough for the right hon. Gentleman to cover himself in making these allegations by couching them in interrogative form to the Minister. There is no evidence of any general fraud within the Commission, and it is wrong that these generalised criticisms should be made in such a way.
I wish to concentrate on the question of the Regional Fund. The hon. Member for Scarborough (Mr. Shaw) made some comments on it, but unfortunately the Minister did not so do. Amazingly, although this subject was much dwelt upon by the Labour Party at one point, the Minister spent rather more time in contrived flippancies about the common agricultural policy than in dealing with important matters such as the Regional Fund.
The report of the Select Committee is also singularly lacking in comment on the Regional Fund and that part of the draft budget. It is dealt with in one brief and extraordinary sentence which appears on page VII, which sasy:
"There is very little change in the Regional Development Fund, which benefited handsomely in 1978."
I find that an extraordinary comment. The situation has been covered in some detail by the hon. Member for Scarborough, but I shall repeat the figures.
A total of 750 million units of account was proposed by the Commission, which at that time wanted 100 million, which would be quota-free and would amount to about 13 per cent. At the end, we got 580 million and the proposal of 620 million for 1979 and 650 million for 1980, with no non-quota element built into it. How that can be described as a handsome benefit, I do not understand. Indeed, the fund as proposed barely keeps up with the cost of living. Actually, it falls below the inflation level. I find that this is an extraordinary approach to an element of the budget which I at least consider to be of enormous importance, as many other hon. Members do.
I make five brief comments on the situation. First, the Prime Minister has frequently emphasised, as he did again today answering questions on his statement on the Bremen economic summit meeting, that there is great need for a transfer of resources from rich to poor within the Community. I agree completely. I agree that it is desirable and

1133
necessary if the Community is to continue to exist and not to be subject to the sort of political criticism which would break it up, which might please a number of hon. Members present today but would not please, in the end, the people of Europe because of its consequences.
What does the Prime Minister mean by a transfer of resources? It is a question not only of transfer of resources from Germany to the United Kingdom but of transfer of resources from the United Kingdom to Greece and Portugal in the future. Is the Minister in a position to say whether that is the direction in which the Government see the Regional Fund developing because, if there is to be enlargement of the Community, that is the way in which it will have to develop?
Secondly, there is the way in which the Regional Fund is operated is by percentage carve-ups negotiated in the Council of Ministers in advance. Consequently, one could argue that there was some kind of supervised transfer of resources as the fact that Britain gets 28 per cent. of the Regional Fund means that a certain proportion of the budget is transferred back to the United Kingdom.
I do not believe that this is at all a satisfactory system. All Governments, by virtue of the fact that the fund is known two or three years ahead, can easily plan in such a way that they will expend Regional Fund money on projects which would have gone ahead in any event and, therefore, simply use the fund for balancing their books. This is a highly unsatisfactory method of doing it and it does not amount to any real change in resources. Is that the Government's view? Or what view do they have of an expansion of the non-quota element in the Regional Fund?
Mr. J. Enoch Powell: I am not quite clear what the hon. Gentleman wants to do and how he wants to put this right. How is it possible to oblige Governments to lay out expenditure for projects upon which they would have laid it out if there had not been contributions from the EEC?
Mr. Johnston: My answer to that is quite direct. I was intending to mention it a little later, but I will do so now. I would like to see the Regional Fund develop so that, in the first instance, it would
1134
have a reasonable proportion as nonquota—in other words, controlled by the Commission. I know that this is anathema to the right hon. Gentleman, but it is my point of view. I would like to see that non-quota element steadily extended and expanded so that there would be an objective European assessment of what represented regional shortcomings, according to objective criteria. Therefore, there would be a more effective transfer of resources.
Mr. Powell: I can see that that would work provided that all regional aids were from the EEC, but as long as part is national and part is EEC I cannot for the life of me see how national Governments can be prevented from adjusting their decisions to what they know the EEC is going to do. Or is the hon. Gentleman suggesting that the EEC could somehow keep it secret until the national Governments had fully committed themselves, and then out it would come with unexpected presents?
Mr. Johnston: The right hon. Gentleman seems to be suggesting that the long argument, which he will know well, within the Community about additionality is bogus. That is basically what he is saying. I do not think that it is so. First, if one takes the non-quota element as at present, it could effectively be used to correct disparities which may have been caused by Community agreements which may not have had as desirable an effect in one part of the Community as in another.
Secondly, after all, we have to have a Regional Fund within the Community because of a failure of individual national countries, or a lack of capacity by individual national countries, to correct the disparities within their boundaries which currently exist. I can see that one could argue with the right hon. Gentleman for a long time about this, but I dissent from his view that the concept of additionality is bogus. I do not think that it is. What is regrettable is that there is a refusal by national Governments, including, I believe, our own, to recognise that we shall not get a genuine regional policy until we have control of it to a much larger degree by the Commission.
I return to my five points. The fourth concerns the size of the Fund. When I

1135
read out the sentence from the Select Committee at the beginning of my speech, the Minister nodded his head and made an affirmative sound—at least, I judged it to be affirmative but it may have been negative. In fact the Regional Fund, according to the latest figures that we have, created some 60,000 jobs in 1975 and 75,000 jobs in 1976. I regard that not as handsome but as being far below the level necessary.
The Liberals believe that the fund should be increased, but I repeat the point I made in responding to the right hon. Member for Down, South (Mr. Powell) that that would be a proper course only if there was an increasing involvement of the Commission.
Fifthly, a number of hon. Members have said that an increase in the Regional Fund would be indicative of a desire to move towards economic and monetary union, and surely today's statement by the Prime Minister represents, if it represents anything at all, such a move. My answer—although, looking around the Chamber, I do not think that it is a point of view that will find general acquiescence—is that this is politically important to the future of the EEC, and in this regard the allocation to the Regional Fund is disappointing.
8.22 p.m.
Mr. Bryan Gould: Many of the points that I had intended to make have been made in the excellent speech by my right hon. Friend the Member for Battersea, North (Mr. Jay). I shall be brief, and I should like to begin by welcoming some aspects of the budget, and the way in which we are asked to deal with it, which represent an improvement over what we have been expected to do in the past.
First, I think that the different timetable gives us a proper opportunity of debating the broad principles of the budget before they are actually fixed. On the other hand, as my right hon. Friend the Minister of State, Treasury said, it involves us in the difficulty that many of the details upon which we need to form a judgment are simply not there at this stage of the exercise. I think we all recognise the difficulty under which that places us.
1136
The second aspect which is deserving of at least a qualified welcome is that the increase in the budget this year is substantially smaller than it has been in previous years. That is very much to be welcomed. I wonder whether my right hon. Friend would elucidate one small point. The Scrutiny Committee suggests that the increase in the funds allocated to the guarantee expenditure is entirely due to inflation. I wonder whether that is really the case, since the increase seems rather larger than the average inflation rate throughout the Community.
Having made those small points by way of welcome, I think that one is bound to pass to the substantial questions which remain extremely worrying to hon. Members. The first is the point which has been made very strongly already by my right hon. Friend the Member for Battersea, North, that there remains a considerable imbalance between the expenditure on the common agricultural policy and the expenditure on all the other purposes of the Community put together.
I have said before that it is no exaggeration to described the Common Market as simply the common agricultural policy dressed up with a few trimmings, and, as long as 70 per cent. or more of the Community's Budget is devoted to the CAP, I believe that that is an accurate statement. That money finds its way into the most extraordinary forms of expenditure.
We have it in the form of Written Answers from our own Ministers that the total cost of the disposal alone of the food surpluses arising under the CAP amounts to £5 billion a year. That seems to me not only extraordinary but horrifying. It is not only the imbalance as between agricultural expenditure and other forms of expenditure; there is the imbalance, which my right hon. Friend pointed out, between the amounts allocated to the guarantee and to the guidance sectors of the CAP.
I wish to offer a word of caution to those who say that a solution lies in redressing that imbalance. I suspect that, even if we were to spend more on guidance, we should, because of the different structure of our agriculture industry from that obtaining on the Continent, derive very little benefit from that

1137
change. In other words, the CAP, however constituted, is very much to our disadvantage.
What are the real chances of reducing that amount of money spent on the CAP? I believe that the chances are virtually nil. Indeed, all the tendencies and all the pressures are in the opposite direction. We have the enormous problem facing us of Mediterranean foodstuffs. Are they to be dealt with in the same way as the temperate zone foodstuffs are dealt with at the moment? If so, there will be an enormous increase in agricultural expenditure.
Mrs. Dunwoody: Has my hon. Friend seen the speech of Mr. Jacques Chirac, who says that he would demand a guarantee price for wine, particularly for those French wine growers who would be affected by the entry of Spain to the EEC?
Mr. Gould: My hon. Friend is absolutely right. We are put on notice that that is exactly what the French have in mind—an enormous increase in that form of expenditure.
There are other examples of increased expenditure in the pipeline. The sheep-meat regime—an unnecessary regime if ever there was one—will certainly cost further money. It is not just a question of the percentage of the money. It is a question of the total amount being spent on agriculture. I make that point again as a word of warning in relation to some remarks made by the Chief Secretary when he gave evidence to the Scrutiny Committee. He suggested that one could reduce the percentage of the budget devoted to agriculture by increasing the size of the budget as a whole, but that is no solution. That offers us not the difficulty of unnecessary and extravagant agricultural expenditure but the prospect of enormously increased expenditure on a whole range of industrial, social and regional matters which ought properly to remain the preserve of national Governments.
Then there is the second problem, which I think arises from the first—that there is no proper mechanism established in the decision-making procedures of the Community for controlling these global sums. The budget that we are debating today is not, in fact, a budget at all. It
1138
is simply a total, a combination, of estimates prepared by individual Councils of Ministers, therefore the ordinary budgetary and financial constraints and disciplines which would be imposed here in respect of national expenditure simply never come into force when these decisions are being made. Indeed, if there were any attempt to enforce them it would he far too late, because the substantive decisions would already have been made.
That leads me to the third major problem with this budget—again a subject with which my right hon. Friend has already dealt admirably. That is the size of the United Kingdom contribution to this expenditure. We have understood the calculation which was made at the Dispatch Box of the contribution which would arise under these proposals if they were implemented. The figure is probably a little over £1,000 million. It may be less, but the chances are that it may be more.
I know that it is regarded as the rankest bad manners—and, indeed, as a quite unforgivable departure from our Community dogma—to inquire, however timidly, for what it is that we are spending this money. It is a trifling sum. It is only £1,000 million. It is worth a couple of pence off income tax or two percentage points off VAT. But I think that we should know what we get for this money. Even with the best will in the world, I cannot believe that we are paying this price for the sake of our trade balance with the Community, for the sake of the impact of the CAP on our balance of payments or our cost structures, for the sake of fishing, or for the sake of the control which we now exercise over our own industrial and economic policies. Those are not quite enough to justify the expenditure of this sum of money.
I turn, then, to our percentage contribution to the budget. Which is put at 20·4 per cent. under these proposals. Like my right hon. Friend the Member for Battersea, North, I am mystified by this. There seems to be some disparity between that percentage and the percentage which we contribute to the combined totals of the GNPs of Community members. I had understood that the great renegotiation mechanism for budgetary adjustments would protect us against that kind of imbalance or disparity, although

1139
I have a niggling recollection that that mechanism was hedged around with all sorts of limitations, such as that we had to have a three-year cumulative period of being in balance of payments deficit. At the time, people seemed to think that of very little importance. But with the advent of North Sea oil, we cannot take advantage of that mechanism, and it is revealed to be the fraud which we all knew that it was at the time.
I cannot leave this subject without referring to the question whether this budget, with its great emphasis on agricultural expenditure, is likely to be changed in the light of the statement that we heard today from my right hon. Friend the Prime Minister. Here I differ slightly with my right hon. Friend the Member for Battersea, North. I do not believe that it is a matter of demanding a reform of the agricultural policy as the price for agreeing to a currency stabilisation programme. The two are quite incompatible. They cannot go together. They cannot be traded off one against the other. The whole point of currency stabilisation is to entrench the CAP, to ensure its continued existence and to protect it against the irrationality which now threatens to destroy it.
The CAP can survive only on the basis of fixed exchange rates. So long as exchange rates reflect economic divergencies in the Community, the CAP is under threat. It is for those reasons that the French especially are keen on currency stabilisation. We need speculate very little about the Germans' motives for pressing this programme upon us because they have their own and obvious reasons for wishing to maintain the status quo.
I end by recalling a childhood story, which I am sure is familiar to other hon. Members, about a tar baby and the difficulties that people had in disengaging themselves from the tar baby once they came into contact with it. In many ways, the EEC is our tar baby. As soon as we have been limited by one aspect of it, however much we may struggle to disengage ourselves we find that we are stuck in other ways. That is the truth about the proposals for currency stabilisation, and I believe that there is very little in this budget to suggest that we can escape from these difficulties.
8.32 p.m.
Mr. John Biffen: There is something of a contrast between the way that the House deals with a Community budget and the way that it deals with a national Budget. Apart from the fact that there are very few figures of even the most remote degree of reliability in the Community document, the essential difference is that it is perfectly natural for the hon. Member for Southampton, Test (Mr. Gould) to welcome how modest is the increase in the budget whereas the voices heard from the Opposition Benches are, if anything, bewailing the fact that the regional policy is not burgeoning forth and expanding at a sufficiently rapid rate.
That is a paradox with which we cannot live for very long, and I must say to my hon. Friend the Member for Scarborough (Mr. Shaw) that we have to resolve whether it is his belief that regional policy should be transferred from national Parliaments and become a function of Community economic policy, as agriculture is part of a common agricultural policy. In my view, the right hon. Member for Down, South (Mr. Powell) was right to say that there is not a very credible half-way house in this argument.
In common with other hon. Members, I intend to speak briefly because I realise that there are a wide number of interests who wish to be represented in what is a short debate. However, I think that it might be wise to reinforce ourselves with the knowledge of what the European Assembly has been saying about the mark I budget, which, we know, is but a very sketchy outline of what will emerge eventually.
In contrast to the robust and almost Gladstonian comments of the hon. Member for Southampton, Test, I am afraid that I read from Agence Europe, the daily bulletin for 5th July, that, in response to the presentation of the budget,
"On the socialists' behalf, Lord Bruce of Donington considered the preliminary draft budget unimaginative, stagnant and tiny."
He was reinforced by Mr. Cointat, for the European Progressives, who thought that it was
"an austere and compressed budget."
Monsieur Spinelli, on behalf of the Communists, thought that they showed—I quote—"A lack of imaginiation". He

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went on to say—and, my heavens, these are ominous words:
"In agricultural policy, it is necessary not to spend less, but better'"
Finally, there was the comment of Mr. Bangernann, speaking for the Liberals, when he said:
"The Budget was not important enough to exercise the 'anti-cyclical' function which it should occupy."
Mr. Dalyell: Has not the hon. Member learnt by now that the most extreme statements in favour of increasing the European budget often come from the most fervid ex-anti-Marketeers? It is a curious thing.
Mr. Biffen: It is not for me to comment on Monsieur Spinelli, who served on the Commission, which, I would have thought, meant that one could not describe him in such terms.
The advice which I think we should offer to the Treasury Bench when it goes to the next meeting of the Council of Ministers and engages in what I believe will be a fairly swingeing pruning exercise—if precedent is any guide—is as follows. I would have thought that the one clear message, which is repeated constantly, is that the common agricultural policy is an absurdity and a standing reproach to anything remotely approaching the sensible management of public finances.
It is easy enough to make those arguments, but the problem is to find the mechanism that will provide a reform in those expenditures. I suppose that I cannot do more than echo the conclusion of the hon. Member for Southampton, Test. My hon. Friend the Member for Devon, West (Mr. Mills) stated in the evidence that was taken by the Scrutiny Committee:
"Unless the Financial Ministers make a definite stand here you are not going to get the Agricultural Ministers to change their policy."
He went on to quote from his own experience when he was at the Ministry of Agriculture. He said:
"there was no doubt that the Treasury had a very real effect on agricultural policy, so you must start to do this in Europe; to insist that there are changes in agricultural policy to meet the commitments to get within the estimated Budget."
I think that it is a very fair question to ask the Treasury Bench what mechanism
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it sees as being likely to reform the common agricultural policy. If it is to be done through the Council of Ministers, can we really leave the common agricultural policy to be determined by Agriculture Ministers? This, it seems to me, goes to the very heart of the difficulties about the pattern of agricultural expenditure, with, as it were, the poachers being in charge of the hatcheries.
Mr. Peter Mills: Would not my hon. Friend agree that one solution would be to have some form of Cabinet committee within Europe to deal with these things?
Mr. Biffen: I do not know about that. What I do think is needed is a much reinforced status for the Finance Ministers in the Council of Ministers. Whether this can be essayed within the present institutional arrangement I do not know. I am quite certain that the financial control will not come about as a result of the common agricultural policy being preeminently the preserve of the Ministers of Agriculture.
For those in the agricultural community who may think that these sound fairly harsh words, it is worth while observing that as recently as 3rd July, at the opening of the Royal Agricultural Show, the President of the Commission, Roy Jenkins, said in respect of the dairy industry:
"One-sixth of milk output is already surplus to requirements, while total consumption of milk products is declining. We shall not be able to persuade Europe's taxpayers and consumers to support that indefinitely … We must find a way of checking the surplus through prices and the market mechanisms. Otherwise we shall have to introduce direct limits on production that will be less acceptable to producers than is the present position to consumers."
That move to the concept of direct quotas makes it a little easier to understand why the Commission is coming to accept the Milk Marketing Board. It would be the most natural instrument through which to operate a system of quotas in this country.
If my first piece of advice to the Treasury Bench is that it shall do its utmost to contain expenditure upon agriculture in the Community budget, the second piece of advice that I should like to offer is that it should not try to match that expenditure as a means of diluting

1143
it in the Community budget by expenditure upon some kind of industrial policy. I watch the activities of Commissioner Davignon and I think he has clearly a great desire to pursue a Community industrial policy—maybe a Community industrial strategy before we know where we are.
The experience of national Governments when dealing with the intractable problems of the textile industry, steel or shipbuilding is that they are extraordinarily expensive. The belief that somehow or other by elevating these problems into a Community dimension we can diminish the cost of the problems is an illusion. If anything, the cost will be almost certainly compounded. By all means let the Commission do what it can to regulate the use of national subsidies and non-tariff distortions so that there can be broad transparence and compatibility of practice throughout the Community on these important matters, and by all means let that be done in a way which takes account of prospective partners in the event of enlargement. But, above all, let us desist from trying to develop some Community spending programme under the title of an industrial strategy or policy.
Thirdly, I hope that in the budget discussions the Minister will be anxious to avoid those Community expenditures which are designed to trigger off national spending. It is difficult enough for any national Government to contain public spending. These external pressures upon a national Government are almost certain to invoke the argument "You are not paying for all of this expenditure because a certain amount of it comes from a Community treasure house." That was, broadly speaking, the attitude which developed among many local authorities which felt that, if the money was not rateborne but came from the Government, somehow or other it did not come out of anyone's pockets.
Public spending throughout the Community adds to the growth, weight and remoteness of Government, and many of the social problems of today derive from the inability of Government, laregly on account of their growth, to discharge many of the functions which preeminently need their attention. If only on that account, I hope that that third
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factor will weigh with the Treasury Bench.
Finally, will the Treasury Bench approach the whole question of the Community budget believing that it is perfectly reasonable to act in a Gladstonian sense of fiscal rectitude when it considers whatever proposals are advanced from the European Assembly, or from the Commission, because there is a partnership between the Assembly and the Commission which wants to expand the spending power and the authority of those institutions?
If we need any warning of that, it is contained, suitably enough, in the words of Commissioner Tugendhat, and again I quote from Agence Europe:
"Mr. Tugendhat rejected the idea that 1 per cent. of VAT is an 'absolute' rate. It will be necessary to exceed it, and the Commission will present a document to the Parliament on this subject before the end of the year."
We have been warned. There are no limits to the ambition of the Commission—and possibly a directly elected Assembly —to expand its powers and its authority, to the detriment of this institution of the House of Commons.
8.46 p.m.
Mrs. Gwyneth Dunwoody: I find myself in great sympathy with many of the views that have been expressed in this debate, because it is clear from the budget that the basic expenditure is still on agriculture.
Some of the remarks that have been made about one of my colleagues in another place have possibly mildly misrepresented the attitude that he took. Lord Bruce, in discussing this budget in the European Assembly, made clear that he found it utterly intolerable that one could have, for example, the expenditure of a larger sum of money on the storage of surplus foods—a situation which had been created by specific agricultural policies—than on regional matters and the Social Fund.
I believe that Lord Bruce's criticism was justified, because the real problem that we are facing this evening is that we are discussing a budget that is in no way final. Not only does expenditure on agriculture account for 70 per cent. of its estimated figures, but those of us who have followed the progression of successive budgets know that that is a minimal figure, and that by the time the total

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payments have been made they will be greater than the amount that has been entered in the budget for that purpose.
Let us face the situation. Agriculture is the one policy inside the Community that is paramount. It is the policy that will decide the attitude of the existing member States towards enlargement. It is the policy that will determine the attiture of many of the member States towards future developments.
There is a clear indication that the Mediterranean countries, which have already been given a massive injection of capital, will nevertheless, demand that even more money be put into the sort of support systems that are being used for dairy produce. In other words, in next year's budget we shall see not a smaller sum of money for agriculture, but a massive increase, because that is the true meaning of the financial policies that are being followed by many of the member States.
We did not hear from the hon. Member for Scarborough (Mr. Shaw) his attitude about sums of money such as those that have been entered in the budget for the Regional Development Fund. We have been told by members of the Commission that the amount of money to be made available is expected to decrease, and that the Social Fund is likely to be cut in respect of those very things where one would at least assume that there was some small justification for Community support, yet I have no doubt that the amount spent on agriculture next year will be at least as much as, if not more than, it was this year.
What we are talking about is fundamental policy, because that is the attitude of most of the member States. Therefore, what we are doing tonight is going through a somewhat sterile exercise because this House will not be asked to decide when the Council of Ministers have met whether it thinks that the decisions taken there are acceptable. It will not be asked to say whether the way in which the agricultural budget is operating is acceptable. We shall simply be told that this was the agreement, that Britain is one country out of nine and that we can be outvoted, therefore we must go along with the overall decisions taken by the Council.
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Therefore, to ask the Minister to comment tonight is, in a sense, just a courtesy. We are simply asking him for his opinion. In many instances his views and the views of this House will be overridden when it comes to the actual decision. Until this Parliament takes back to itself the right to decide on fundamental questions, many of the debates, such as the one we are having tonight, are frankly just a gentle exercise in the use of words. The final decision will be taken elsewhere and our involvement in it will be absolutely minimal.
I have looked at this budget with great care. Most of it is a total nonsense. Therefore, sensible discussion of it is exceedingly difficult. It is geared basically towards an agricultural policy which is not concerned in any way with defending the interests of the average consumer in the Community. It is geared towards protecting a particular level for the producers, and in many instances it does not even take account of the true effect of these injections of money in agriculture.
There is no evidence at all that the existing CAP, with the amounts of money which will be spent, will alter the siutuation of farmers in southern Italy. There is no evidence whatsoever that the amounts of money spent in the guarantee section will change the situation in many of the regions that have the lowest income. All there is evidence of—and this is shown time and time again—is that the Community is spending a vast amount of money in a totally unstructured and thoroughly incompetent fashion to the cost, in many cases, of ordinary taxpayers.
When we talk about this budget, we should ask the Ministers, whether they wish to protect those things that are important. Let them look at the Social Fund and see what amount of money can be used to create jobs for the young unemployed. Let them look at the fact that the amounts of money written in, minimal though they are, could prouce some help for the handicapped. More than that, let them look carefully at the political implications of many Community policies.
I looked at the subject of teaching of immigrant children on Friday —a scheme initiated with assistance from the EEC. The scheme is operating almost

1147
in a vacuum on the basis of a directive that has not even been fully discussed in this House. Yet money is being spent in this way in many instances without our having proper control over it, or even proper awareness of the amounts involved, or the effect on the children, which is much more important.
The real implications of the budget are political. We are talking not just about the future of the Community, but the effect that the Community has on the world as a whole. There are sums in this budget which will in due course be used to support the growth of particular commodities, such as sugar. Amounts of money will be entered and spent by the Community, and yet the effect of those policies will be felt outside the borders of the Nine. Many other countries will be directly affected by what is spent on the CAP. Yet ther is never any politcal discussion of the policy, and never any clear indication, even from our own Ministers, of the financial implications.
What we are doing tonight is discussing a budget which never at any point demonstrates a cohesive political policy. There is no evidence in the figures presented to us or in speeches made by representatives of other member States of any political will to change the CAP. It is that agricultural policy which informs the political decisions of the Common Market and which will continue to do so for many years to come.
What were we promised in the famous Bremen statement? We were told that there would be an examination of the implications. Those of us who have sat and watched the Agriculture Commissioner seeking to find any change of mind in any one of the member States know how difficult he finds that task. Even with the efforts he is making, we can see how impossible he finds it to get member States to agree to any change in a policy which has supported many of their agricultural communities very handsomely for a long time.
If that is the reality of the situation, in a year's time we shall be having a mirror image debate. We shall be saying "Why is it that our Ministers are unable to demonstrate changes in CAP? When will these pious hopes be carried into political operation?" The Government will have to reply, as undoubtedly they
1148
will tonight, "We are but one of nine—we are governed by machinery over which we have little control."
If we reach that point, the House of Commons will be failing in its duty as a monitoring body and we shall begin to pay the price in terms of public contempt. It will not be possible for us to continue as a serious Parliament if we have to go through the exercise of examining the dribs and drabs of other people's guesstimates. That is what we are doing tonight.
8.57 p.m.
Mr. Anthony Nelson: I do not share the implacable opposition of the hon. Member for Crewe (Mrs. Dunwoody) to all proposals and indeed this budget, which is associated with the gentle expansion at this stage of the European Community, but I pay tribute to the consistency of her opposition. I, in common with many other hon. Members, have been impressed by the sincerity with which she speaks on this subject.
My concern is somewhat different from that expressed by a number of contributors to this debate in that I am increasingly of the opinion that the budget does not go far enough. Document R/ 159/78 suggests that the budget in no way measures up to the part that it is expected to play in the move towards greater economic integration. Although we should give a cautious welcome to the budget, I should be prepared to countenance, as part of my support for the European Community, considerable expansion in the size of this budget in future, with certain conditions attached, particularly if concomitant relief were provided in term of national responsibilities.
The budget committed expenditure of 14·6 billion units of account, which amounts to only 0·8 per cent. of the member States' GDP. That figure is, in my view, too low to begin to move towards some of the basic principles and objectives of the Treaty in terms of economic integration and all the benefits of the Treaty in terms of economic integration and all the benefits which that will bring to this country among other member States.
What percentage one might contribute to the European Community, is an interesting and difficult question. Those Liberals who openly support a federal

1149
system might subscribe to a higher budget as a proportion of member States' gross domestic product. Some commentators feel that a contribution of 20 per cent. to 25 per cent. of gross domestic product is by no means unusual as a contribution towards a federal administration. The MacDougall report, which considered the matter, suggested in more moderate terms that a figure between the band of 2 per cent. to 7 per cent. of GDP would be more appropriate as a medium term objective for the European Community, but in either case this implies a substantial increase in the amount of money and of economic power and influence which the EEC will possess.
If one goes the whole federal hog and accepts a contribution of about 25 per cent., one could be talking of up to 150 billion units of account. That would be an entirely different situation from that which we have been discussing and the minor changes we have been proposing and the criticisms we have been making would be seen in retrospect to he insignificant in the new situation.
In a time scale of the next 25 years, as we look into the next century, I would place greater faith in the pluralism of Europe in making economic decisions for the benefit of this country in Europe than I would in going it alone and having a decreasing real economic influence over our own affairs.
Mr. Budgen: Is that because my hon. Friend mistrusts the people of this country in making their own decisions about economic management?
Mr. Nelson: I certainly mistrust the present Government about making such decisions, and the extent to which the IMF has efficiently taken a great deal of control over the economic management of this country in recent years indicates that we are not entirely in control of our own affairs anyway and the degree to which one is prepared to abdicate sovereignty—to put it in plain terms—to supranational bodies or within a confederation is a matter to be considered pragmatically.
The reality is that, in the world in which we have to live and trade, we are reliant on the activity and behaviour of
1150
the rest of the world. If we cannot control our own affairs the IMF will do that for us, as it has in recent years. I would rather that this country worked in Europe, and I place greater faith in a consensus economic policy based on the most prudent economic management of member States than I would on an entirely supra-national body, such as the IMF, controlling us.
The document to which I referred earlier sets out three functions of the budget. First, it should contribute directly to economic integration in Europe. Secondly, it should contribute to a redistributive function within the Community. Thirdly, it should contribute to stabilisation of cyclical trends in trade and supply.
The budget is only a partial contribution towards integration and is not enough to achieve the measure of European monetary union that I should like to see. A growth in the budget in future can be allowed only if it is associated with a relieving of national budgets and a recognition of the need to reduce regional imbalances.
This point has been raised by a number of hon. Members and arose during questions to the Prime Minister earlier today. His view, which is shared by a number of other hon. Members, is that movement towards absolute or partial monetary union can be achieved only with the precondition of increasing regional assistance within the Community. It is true that if there were a common currency within Europe and a free market prevailed within the Community, regions that were inefficient would have increasing strains placed upon them. But in such circumstances there would be vent the economic consequence of its could let the region run down and offer no regional or other assistance to prevent the economic consequence of its relative failure; it could protect the region by erecting walls within the Community, which in this instance would go against the objectives of the Treaty of Rome; or it could provide a regional fund which openly and directly assisted the inefficient industry for a variety of reasons.
I should like to see such regional funds based on encouraging a regeneration of those industries on a temporary

1151
basis. I would not countenance a Regional Fund based on a permanent application of funds to an area that was basically inefficient. On condition that it was used to make the decline of certain industries more gradual or that such aid was provided on a regional basis to assist new areas and industries to gain prosperity and to spring up, I would be prepared to countenance such a form of regional aid. I accept that that would be a necessary commitment with the sort of European monetary union that I should like to see encouraged.
Some hon. Members have said that the percentage contribution of the budget awarded to the agricultural sector is too large. In absolute terms, the amount allocated in commitment and payment for this year to the other sectors, especially the regional and social funds, is too small. Were that allocation to be increased substantially in absolute terms over a period —not necessarily this year—proportionately the contribution made to agriculture would decrease. Allocation should be increased, especially to the Regional Fund.
In the MacDougall report it is suggested that there should be a 10 per cent. allocation to the Regional Fund. That seems to be reasonable as an objective over a period. It is reasonably consistent with an earlier move towards European monetary union.
In the second part of the budget the document refers to the problems of the European unit of account and refers specifically to the 10 million units of account that will be set aside to cover disparities between the amount allocated to certain areas or recipients and the currency differences that prevail between the dates of deciding of those amounts and payment of those amounts. It relates that sum to the difficulties associated with having to translate the unit of account into a variety of different currencies within the Community.
My views in favour of European monetary union would go to assist in overcoming some of these problems and reduce the necessity for such a measure. I welcome the Prime Minister's announcement—it was a slightly reluctant commitment and cautiously worded in his statement—that he will support consideration
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of measures to move towards monetary stabilisation. I see that move as a step to full common currency and European monetary union.
In my view, it is untenable for any long period to have a currency stabilisation scheme. That must fail. Even if the divergent rates of economic performance within the Community are only 1 per cent. in inflation terms, over 15 years or 20 years it is obvious that that difference has to be reflected in differences of exchange rate, which are nothing more than a token or signal of what is going on within an economy. I believe in freely floating exchange rates, but possibly we shall have to go to the other extreme and have a fixed common currency.
The initial consideration of a scheme of stabilisation is only a means to the end. The end that I support is a common European currency. If a stabilisation scheme is made to last for years to see how it gets on, it must fail. It is quite impossible to have within the Community exactly parallel and concurrent economic performances of member States. If it is used as a means to move towards stabilisation and a common currency, which can be fixed at one period when Governments within the Community have the political will to fix that common currency, I welcome it.
Mr. Powell: Fixed in relation to what?
Mr. Nelson: In relation to each other. If all the common currencies are fixed at one time, as they are for the unit of account, the fixed currency is the unit of account for one's own currency.
It may be asked "What is to be the comparative value of the currency?" My answer is that it must be a freely floating currency on the world markets. Its value will be reflected by its exchange value against other currencies.
Mr. Budgen: Does my hon. Friend agree that we should then need to have detailed common economic policies so that all the currencies remain in that single relationship to each other?
Mr. Nelson: I hope that we shall have a common economic policy within Europe, yes. But I think that my hon. Friend misunderstands what I am suggesting. Individual member currencies will cease to exist. The pound will be replaced. There will be one currency for

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the whole of Europe. The value of that currency will be assessed in comparison with other international rates. But there will be no question of fixing the rate for the new European currency, because such fixation will not prevail for the same reasons as the stabilisation scheme within Europe will not prevail.
I believe that it is essential that we regard a stabilisation scheme as a move towards a common currency within Europe. I was interested to note from the communique that a European monetary fund should be established within two years from the start of the scheme. The commitment reached at Bremen just before the weekend goes rather beyond what the Prime Minister was prepared to admit today, for fairly obvious political reasons.
I believe that stabilisation of exchange rate schemes will be untenable in the long run. In my view, economic monetary union is a pre-condition of economic convergence within Europe. Many hon. Members—indeed, the Prime Minister and others—take refuge in saying that we must get European communities to move more together in terms of economic management and performance and that only then can we consider having a European common currency. I suggest that will never happen. We shall never reach that stage without a major political initiative and will to create a common currency. There will be no organic development of a European common currency. It will need an agreed, not a dictorial, initiative among the member States for that to happen.
I believe that a common currency would bring great advantages. We should not read into a common currency more than it indicates. I believe that it should stimulate expansion of efficient trade, industry and employment. Our original principle and objective of the Treaty of Rome was the free movement of capital and services within Europe. I believe that that can be fully achieved only if we have a common currency.
Furthermore, the vagaries and volatility of international exchange rates, which in recent years have been the subject of increasing comment and concern in industry and business internationally, inevitably create an atmosphere of uncertainty in which people are unable to invest and unwilling to trade.
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I believe that a common currency based on the collective economies of the European Community—based as it would be on a community which comprises the largest trading bloc in the world—would form a more satisfactory international system and the basis of a more confident system of trade and industry within Europe. In my view, it would be a more satisfactory store of wealth.
Implicit in the concept of a European currency is control through a European central bank, which, to a large extent, implies common monetary control of the European Community. However, as a committed Conservative, I place more faith in the pluralism of Europe than in the narrow political approach being adopted by the Government in their own monetary strategy. If we could have a European currency and money supply administered by a body based on the principles and policies of the least inflationary and most prudent States in the Community, I believe that we should be a great deal better off in future, as we might have been in the past had we adopted such an approach. Therefore, I am hopeful that with such monetary control we may move not only towards a more common price movement, either inflationary or deflationary, but towards more price stability because of the prudence to which I referred.
Many hon. Members are worried about sovereignty being ceded outside this country. I am the first to admit that it implies a secession of an element of sovereignty, but I emphasise again that it is no more than has been ceded to the International Monetary Fund in recent years.
The final argument against monetary union to which I should like to put paid is the suggestion that one cannot possibly have a common currency when the economies of member States are divergent. There is no reason why that should be so. One has within confederations and federations of States one currency representing regions with different economic performances, just as we have in this country. One currency may represent a number of regions with different economic performances.
Were we to have a separate currency for Scotland, as perhaps some hon. Members would like, in a freely floating situation it might assume a value different

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from sterling. Yet we manage to survive with one currency throughout this country. I see no reason why we should not in the European context, with different economies and regions, be able similarly to survive with one currency.
I am in favour of an early move towards European monetary union. I recognise that this cannot be done until we have gone through the process of stabilisation. But I hope that the talks which are to take place will be followed by concrete commitments, dates and objectives for moving towards European monetary union. These are certainly proposals which I should be prepared to examine sympathetically and, I hope, give my support.
I find it difficult to support the amendment which has been accepted by the Government, because it fails to envisage the need for an expansive budget in the future. I was particularly concerned at the Minister's response. He said that when considering the future cutback in order to comply with the terms of the budget he would countenance a major cut-back in subsidies to the dairy sector.
I declare a constituency interest. A considerable number of dairy farmers in the Chichester area will not receive his response well. The Minister might consider such subsidies lavish, but there are many severe difficulties in terms of return on capital and costs which my constituents have to face. Such assistance is necessary for strategic and economic reasons. I therefore do not agree with the amendment.
I hope that my comments will be taken as being in support of our continuing membership of the Common Market and of an increased move and support for economic union. I give my cautious support to the preliminary draft budget.
9.18 p.m.
Mr. John Lee (Birmingham, Hands-worth): If it were not for the fact that most hon. Members have a protective sense of humour, we should have the right to be rather angry at the way in which this subject has been presented to the House. What has been served up is, as usual, ludicrously complicated because the whole matter was founded in fraud. Because of the checks and balances, we are powerless to alter the budget.
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It would not matter if the Government had refused to accept the amendment and if the Government had been voted down. That would not have made a hoot of difference to the mandatory authority of the House.
The Minister has indicated clearly that there is no likelihood that the Government will use the veto, however indefensible are the final proposals. In addition, there is every prospect, as in past years, that, far from there being any diminution in the total budget and any diminution in the agricultural constituent of it, it is likely to be increased this autumn.
It is worth remembering that each spring there is a price review. As is clearly stated in volume 7A of document R /1577/ 78, it is likely that there will be a further increase in agricultural expenditure as a consequence of that review, apart from anything else. We can think of no organisation of any repute which would allow its financial affairs to be conducted in this slovenly and haphazard way. Even under our Companies Acts, which are deficient in terms of audit control, there would be no end of a row it matters were conducted in this fashion. I can think of no private club, and of hardly any banana republic diet, which would conduct its affairs in this way.
In so far as I understand the apologists for this organisation—there are not many of them here tonight—this is a welfare and charity organisation primarily for poor farmers in southern Europe but also to ladle out social funds for various deprived areas of Italy. One can compare it, I think, with the Commonwealth Development Corporation expenditure.
Whatever criticisms there may be of that organisation—and I have felt that it has put far too much emphasis on urban development in those parts of the developing world for which we have had a residual and historic moral responsibility since they were part of our old Empire—at least when we consider Commonwealth development expenditure, and other forms of overseas aid we know what we are voting and what we are voting it for. We get some idea afterwards, although perhaps not as much as we would like because the money is going to countries over which we no longer have any control, of how the money has

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been spent and how successfully it has been used on the projects to which it has been devoted. There is no comparison whatever so far with this exercise for the improvement of deprived parts of Europe.
At the moment, with the questionable exception of Italy, the Common Market does not include countries which can reasonably be classified as under developed countries. Most of the EEC countries are in any case in a much better financial position to look after them-selves. Certainly they would be if they had an effective system of domestic taxation, which the French have always lacked. They certainly should not be calling upon us, who have borne the heat and burden of the day outside this country because of our historic role and partly because sterling in the past has been so much of a reserve currency, to make a contribution of anything like that which we make. Even so, as my right hon. Friend the Member for Battersea, North (Mr. Jay) indicated, we are paying far more than is reasonable on a basis of size, and it is not desirable that we should do so.
If any or all of the quasi-developed countries of southern Europe—Greece, Spain, Portugal and, possibly, Turkey—were to be incorporated, that would add a yet more powerful lobby in favour of high-cost agriculture. The CAP would then show no sign of being removed, and there would be little chance of its being mitigated in any way.
I asked my right hon. Friend the Foreign Secretary whether we would make our acceptance of the membership of these nations dependent upon their undertaking to forgo acceptance of the CAP and perhaps, by way of an alternative, adopt a system of deficiency payments such as we operated before we joined the EEC. I got not change out of my right hon. Friend. Whatever other conditions we may impose—and I do not know of any at the moment— it seems that there is no possibility of the Government using their muscle even in that direction. We may confidently expect, therefore, that if these countries are admitted it will be in circumstances in which we can expect the present situation to get worse, not better.
Where do we go from here? Where are the benefits that we have waited patiently to discover, apart from the fact that
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we are net contributors by £700 million to £800 million, rising to £1,000 million, with every prospect of its growing bigger? We export far more capital to the Market than we get from it. From a position of comparative or marginal trade balance in 1970, last year we were in deficit to the extent of some £1,400 million in manufactured goods. Thus, apart from the common agricultural policy, on the other side of the coin, the industrial balance is as bad, and we are now probably running a deficit at the rate of £2,000 million, wiping out and more the benefits which we ought now to be gaining from North Sea oil.
If the Government hope to be able to present to the electorate in October, or whenever it is, the rosy prospect of dramatic economic improvement, they had better take account of the fact that for the time being, or so long as we remain in this structure, we have in all probability gratuitously thrown away the advantages which should otherwise have accrued to us, at least in terms of the balance of payments. I know that that is not the end of the North Sea saga, and in other respects, in terms of accessibility and reliability of oil supplies, some benefit is still there, and neither our membership of the Market nor anything else can gainsay that.
On top of that, we have had the fisheries policy. I see on looking through these volumes that there is to be about a 500 per cent. increase in the so-called "appropriations for commitment" on fisheries. That is an ominous note at a time when even our Minister of Agriculture, Fisheries and Food—bless his heart, who is the best Minister we have in the Government—is not prepared to stand up for a 200-mile exclusive zone in the way the Norwegians have done. His report last Friday, I am sorry to say, was quite the most waffly report—indeed, the only waffly report—that we have had from him, and the reason was that he had virtually nothing to say.
Altogether, it is a sorry state of affairs that confronts us. I do not propose to speak for more than a few minutes more in what may, for all I know, be my last contribution to debate in the House if there should be an October General Election, but I wish to address a few more words to my right hon. and hon. Friends.

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We have made a terrible mistake in agreeing to assent to the European elections. We shall give a spurious legitimacy to an Assembly which, if it goes on as it is at the moment, will be no more than a fatuous and futile talking shop, or, alternatively, if it develops the kind of bureaucratic megalomania which characterises the Commission, must inevitably draw power further and further away from the House of Commons.
Either way, we here shall have no possibility of controlling expenditure. If market's procedures remain as slovenly, and if its systems of scrutiny of expenditure and estimates preparation remain anything like as bad as they are, it will be no wonder that there will be fraud and no wonder that there will be waste, since it will be impossible for the House of Commons any longer to have any hope of controlling it, and it will probably be impossible for the Assembly, gathering up powers as no doubt it will, or will attempt to do, properly to gain effectively control.
What is the prospect for Britain? A small minority of Members in a House of 410, representing—if that be the right word—constituencies which no one can possibly manage and with which no one can possibly contact, will remain locked in a permanent minority situation in an organisation in which at least one, and possibly more than one, country will be in a state of chronic political instability, quite apart from the overall economic prospects which we face.
I hope that my hon. Friends will boycott the elections next year. I shall certainly campaign might and main to persuade people not to vote. I shall vote only for a candidate who pledges—and who I am convinced is genuine in his pledge—that he will in no circumstances take his seat in the Assembly and that he will not go near Brussels, Strasbourg or Luxembourg. If some people lawlessly decide to throw lighted cigarette ends, battery acid and other corrosive substances into the ballot boxes, I cannot say that I shall altogether blame them, though, of course, it is not for us to encourage illegality. I do not think I can ever forgive the fact that my party has agreed to take part in the election.
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What is most extraordinary of all is that the national executive, on which there is a majority of ostensible anti-Marketeers, should have tamely assented to putting forward candidates, on the rather fatuous ground that if it did not do so all sorts of people who would be unrepresentative of the party would present themselves as being Labour candidates, I should have thought that the fact that they were unrepresentative of the party, and were seen to be, would be a good reason for letting them go forward and being seen for what they were. I shall have nothing to do with the elections.
9.31 p.m.
Mrs. Winifred Ewing: I wish first to address myself to the document R/519/78. We are told on page 4 of it that one of the functions of the budget is to finance policies and measures which constitute
"a direct contribution to economic integration."
If one looks a little further around that statement, one finds numerous references in the document which seem to suggest that economic and monetary union, which is a part of economic integration, as understand it, is almost one of the vital statistics of the Community, a kind of fact of life, a fait accompli. Yet many times in the House I have had assurances from the Government that economic and monetary union is not their policy.
Only today the Prime Minister seemed to be going towards that policy. As I put to him in my question to him today, he seemed to suggest that he was now about to change the attitude he has expressed to me and other hon. Members when he has categorically said that the Government are not committed to economic and monetary union.
Quite a number of people who are proEuropeans—I am not putting myself in that category—are nevertheless opposed to that policy. It is time we pinned the Government down on this matter. I hope that the Minister will explain to me whether economic and monetary union will be a commitment in the Labour Party's manifesto on which the next election will be fought. That is a fair question, whether one is in favour of economic and monetary union or against it. I have been asking the question repeatedly. I am sure that Mr. Speaker will remember my asking it. Perhaps he is fed up with

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my doing so. Today we saw a total turnabout by the Prime Minister, who seemed unrepentant when his turnabout was pointed out to him by me and other hon. Members.
I feel much concern about the advisability of considering economic and monetary union at this time. It makes nonsense to consider a unified currency when we have such diverse economies. I am all for independence. Our independence of action would be further restricted if we wished to introduce economic measures that we had decided were tailor-made to our needs for various industries.
That brings me to another question. Shall we see another hurried propping up of a policy because there is a reason for speed? I am thinking of the question of enlargement and the effect it would have on economic and monetary union. Two of the countries concerned are extremely weak industrially and rather weak agriculturally. If we are to envisage a unified currency affecting those two countries, one can imagine the disparity between, for example, the German economy and their economies. In such circumstances, how could there be a unified currency? To that extent, it seems to me that, while enlargement is on the horizon, we do not know how quickly it can come about, although it might come about more quickly than we think.
Will we see another cobbled-up policy of the type we saw in the cobbling-up of the common fisheries policy, which has been such a disaster to the fishing industry of the United Kingdom, which represents 60 per cent. of the fish pond of the EEC—and of that 60 per cent. a high proportion is in Scottish waters, so that again Scotland suffered doubly? Are we to see the EMU concept repeated so often that suddenly, from having been non-Government policy—and I understand that it is also the policy of the Conservative Front Bench—
Mr. Budgen: I am not so sure about that.
Mrs. Ewing: I understood that to he so from the remarks that have been made. Are we to see the EMU concept, just because it is repeated by so many people and in so many official documents, having been a non-policy of the Government, becoming the policy of the Gov-
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ernment? We are entitled to press the Minister to answer that question.
Secondly, I want to address myself to the fact that the budget is one of the testing grounds of the relationship between the various institutions of the Community. It is in a sense one of the only democratic types of power, so far as it goes. Many of the deficiencies of budgetary control have been pointed out, so I will not rehearse them except to say that I agree with many of the comments.
But the actual weapon of approval of the budget, the discharge of the audit, is nevertheless a democratic weapon in the hands of the only democratic institution of the whole set of institutions. It is not as democratic as many of us would like it to be. Some say that it is a talking shop only, but at least it is composed of Members of Parliament who in various ways are responsible to an electorate. At least, to that extent, it is democratic, and this is one of its powers.
I suggest that it would be useful if the European Parliament could reject the budget piecemeal instead of having to reject the whole budget. That would be a useful power which I think must eventually come in logic and common sense. It is a bit like having a power so great that it will never the used. It is a bit like the other democratic power of the European Parliament to sack the whole Commission. It is not likely that we shall dislike the whole Commission enough to sack all its members at one time, but we might dislike one or two.
The power that we have in regard to the budget brings me to consider the relationship between the European Parliament and the Commission and between the European Parliament and the Council. I part company with many of the total opponents of contesting the elections to the European Parliament. The Parliament is there, and the Scottish National Party intends to fight for seats in it. That being so, it is desirable that the Parliament should be more democratic rather than less.
I want to quote from the speech of Commissioner Tugendhat which has already been referred to. It seems to give away the rather arrogant attitude that the Commission all too often adopts to the Parliament. The Commissioners

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talk a little bit like Big Brother. Mr. Tugendhat said that the Commission
"will have to ensure that wherever possible its own proposals are in harmony with Parliament's views."
That seems to me to give the case away. He went on to say that
"the Commission will have to make every effort to demonstrate that it holds the Parliament in high respect."
Is that so difficult?
"The Commission takes the existing Parliament very seriously and relations between the two bodies are, generally speaking, very satisfactory. But it would be a mistake for the Commission to assume that it can take the good will of the directly elected Parliament for granted."
That is possibly very true.
Mr. Lee: Is it really likely, taking the hon. Lady's point about elections, that an elected body will necessarily, by virtue of the fact that its Members are elected, cease to display the kind of arrogance to which she rightly referred?
Mrs. Ewing: That is an interesting question. It is one that I have thought about a good deal. I am absolutely convinced that a directly elected Parliament —which by its nature is bound to be more full time—will, with its responsibility directly to the electorate, be determined to deal with the arrogance of the Commission, if I may call it that. It seems to me that there is a degree of arrogance which appears quite regularly in the relationship between the Commission and the Parliament.
Mr. Dalyell: I feel bound to say that one can disagree—possibly all of us can —from time to time with Commissioner Tugendhat, but to accuse him of arrogance is really wide of the mark. In all our dealings with him, Commissioner Tugendhat has shown no arrogance.
Mrs. Ewing: I should like to endorse what the hon. Gentleman has said. I have found Commissioner Tugendhat's behaviour anything but arrogant. However, in my experience in the Parliament over two years, I have found that quite often this has been the general attitude. It has been shown, for instance, on the question of opening up some of the Commission's deliberations and making more open the way in which it exercises its functions and arrives at its decisions.
Mr. Roper rose—
Mrs. Ewing: I should like to get on with my speech. I have a few more points to make. At least, I should like to finish the point that I am on at the moment.
I suggest that the budget, especially in relation to its faults, is a weapon in the hands of the Parliament. If the Parliament is to achieve more powers after it is directly elected, it will probably have to be at the expense of the Commission. I give way to the hon. Gentleman.
Mr. Roper: I am grateful to the hon. Lady. She made a point about the powers of the Parliament, and earlier she referred to opening up the activities of the Commission. Is it not highly reprehensible that most of the Committees of the Parliament continue to meet in private?
Mrs. Ewing: I agree with the hon. Gentleman. That has been one of the planks that I have taken up in the Parliament, in common with other Members, to try to open up the deliberations of the Council. I have frequently suggested that the Council's deliberations should be open to Committee Members who have an interest in a particular subject. I have also recommended that Committees should open their doors. I see no harm in that. I do not think that we have anything to hide. It might overcome one of the problems about which everyone is talking—that there is not enough interest shown in this set of institutions. I am absolutely in agreement with the hon. Gentleman.
I turn now to the question of the Regional Fund, about which a lot has been said. We are all aware that it is just a small drop in the bucket. The rich get richer and the poor get poorer all the time. I think that the Fund is efficiently administered, however, and that it is operating without an excess of staff. I think that it is doing its best, as far as it goes. Nevertheless, because the Fund is so small, it represents just a drop in the bucket. Indeed, it is a tiny fraction of the United Kingdom's expenditure on regional policy. In spite of the efforts made by successive Governments, in Scotland we have an imbalance of population regionally, and in the west of Scotland we have some of the worst social deprivation. That is despite massive Government expenditure. The expenditure

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of the Regional Fund can only be a cosmetic propaganda exercise in its present form.
I should like by way of contrast to refer to another type of regional aid, namely, that given in Scotland by the Highlands and Islands Development Board. After the war, it decided to build up the western fleet in Scotland. It did this, and continued to do so consistently.
The regional grants of the EEC for fishing boats are made in a rather strange way. There would seem to be no rhyme or reason why one applicant with identical qualifications and experience to those of another should receive aid when that other applicant did not receive it. In a certain way, that type of aid is almost a kind of propaganda exercise, and it causes more harm than anything else because of the unfair way in which it is administered. That would be one of my criticisms of the fund.
As regards the Highland region, I should like to refer to an excellent document which has been prepared by its officials detailing their experience in making applications to the Regional Fund. If the Minister has not seen it, I shall see whether I can supply him with a copy. They make one or two basic criticisms from their point of view, and I mention them as an hon. Member whose constituency is partly in the Highland region.
It is pointed out that, although tourism is an accepted heading, it is not normal to give aid to tourist projects. Infrastructure to help create jobs is an acceptable heading. However, aid is limited to where there are more industries than one. So often in Scotland there is a great need to create jobs in order to keep remote populations in their communities, and there is a primary industry. Therefore, it seems that the very type of area which might claim to have been envisaged by the fund is not eligible when it makes application for aid under headings which are well within the spirit of the Fund but which seem to be disqualified by what I consider to be wrong technical rules.
The document also points to the lack of flexibility in the Fund, which again often prevents aid from being given for projects which I am sure are in the spirit of the Fund. Instances are given in the document, which goes into quite a lot of
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detail. It also makes a very simple suggestion, which I am sure would improve the Fund, that grants should be given to a project which does not need to be studied or which is not necessarily intended to proceed—in other words, a project could be subject to EEC grants. That is perfectly logical, but at the moment the rules are that a grant can be made only if the work is to proceed anyway.
The last matter to which I refer in relation to the Regional Fund concerns the vexed question of additionality. I suggest that it is not good enough for the Treasury to attempt to justify taking the money which comes from the Fund and letting it sink into the ordinary coffers of the Treasury. The original intention was that it should be additional. My information is that this is not the practice in some of the other member States, although I have found it very difficult to lay my hands on proof of this. If I succeed, I shall certainly be raising the matter. It is not so bad if we are all in the same boat. However, it is galling if only the United Kingdom Government take this money so that it is not applied in the way envisaged when the Fund was set up. I hope that the Minister will comment on the question of additionality before the conclusion of this debate.
A great deal has been said about the CAP. I begin to wonder whether there is anyone in this House who approves of the size of the CAP.
Mr. Nelson: Yes.
Mrs. Ewing: The hon. Member for Chichester (Mr. Nelson), who is enthusiastically pro-Market, is the exception. But is there anyone in the House who approves of surpluses and who can justify them in a world where a third of the people have not enough to eat? Any system which has created the absurdity of these surpluses must be found wanting. The truth is that the CAP does not work. Perhaps it cannot be worked.
The hon. Member for Crewe (Mrs. Dunwoody) said that we had to think of the consumer and that the agricultural policy was a great help to producers. It is not a help to all producers. It has not been a help to the pig farmers or to the hill farmers, especially those with small farms.
Mr. Budgen: They are not rich enough to lobby properly.
Mrs. Ewing: They are the very people who need help. They have had to see the loss of jobs. They have had to sack people. Our pig farmers are running at a loss, yet the Danish Government subsidise the advertising of bacon on our television screens to help Danish farmers to compete with our farmers to whom the CAP offers nothing.
We lose out in terms of wine and whisky, too. The French are very good at protecting the regulations for their wines and spirits—and certainly if they go against the regulations the United Kingdom Government do not take them to court quickly enough—yet, when it comes to the whisky industry, which is vital to the Exchequer and important to Scotland's economy in terms of employment, all sorts of artificial rules are made against whisky imports into some of the EEC countries. The CAP is out of control, and I agree with all those who say that the slice of the cake is far too big.
I end by asking the Minister whether his Government really will do anything about the CAP. Is there any time scale plan for reducing it and giving a bigger slice of the cake to the worthy Social Fund and Regional Fund which, although they do not go far enough, at least give help? I certainly dissociate myself from those who are anxious to advance us into further centralist policies—such as common energy policies and common industrial policies. Despite the EEC being such a great trading bloc, we do not seem to be able to protect our shipbuilding industry in European terms even against Japanese competition. The graph for Britain and other countries has gone sharply down since the war while the graph for Japan has gone in the opposite direction.
At the time of the referendum we were assured that the EEC would not affect three matters relating to energy—the rate of extraction, the price of oil, and the markets to which it could be sent. Now I see, in debates on the EEC, a considerable desire to interfere with these three areas of decision making. I see that you are looking at your watch, Mr. Speaker. I end by saying that the budget cannot be a true instrument for any social regeneration unless the CAP is drastically reduced.
9.53 p.m.
Mr. William Hamilton: The timing of this debate is singularly appropriate in the sense that just a few hours ago the Prime Minister was, in effect, saying that our national problems could not be solved solely in a national context but that they must be seen, and the solutions to them must be sought, in a European context, perhaps in a wider international context. In that sense, the proceedings at Bremen last week and the consequent developments flowing from those talks will make the proposals that we are now debating—the Commission's intentions in Europe for 1979—seem to be out of date and irrelevant long before the debates on them get under way in the European Parliament.
When the proposals were presented in the European Parliament last week by Commissioner Tugendhat, they got a frosty reception all round. Representatives from all parts of the political spectrum criticised the proposals on the ground that the non-obligatory expenditure was insufficient in every other area than the CAP. That was the gist of all the arguments. That was not surprising, because those who were making the criticisms would not have been in that Parliament if they did not accept the proposition that our problems—whether they be British problems, German problems or whatever—can better be solved by an additional element in them, a European element on top of and in addition to a national approach to them, whether we are referring to unemployment, structural weaknesses in basic industries or whatever else.
The criticisms that were laid at the feet of Commissioner Tugendhat and the Commission generally were that the overall proposals did not even begin to measure up to the problems that beset the Community as a whole. We all know what they are. They are chronic unemployment as a consequence of the world economic crisis, structural weaknesses in industries such as steel and shipbuilding and the rest, and varying exchange rates within Europe and outside. There is also Japanese competition, which is now being tackled by the Nine together rather than separately as nation States. We also have regional disparities in standards of living and quality of living. Not least there is the CAP, which is a cause of some of the

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disparities in Europe as between rich and poor farmers, and small and large farmers.
I hesitate to call this a budget, because it is not a budget in the sense that we know it. It is a declaration of intent. The Commission is saying "These are the things we would like to do and these are the sums of money we would like to spend in this or that direction." The global figures are trite in terms of national budgets or gross national products. They are minuscule compared with the scale of the problem. They simply cannot be expected to play more than a marginal role in tackling the problems besetting every member of the Community.
The importance of the Community lies in the recognition that we cannot solve our national problems by mouthing sentiments about having our own national sovereignty so as to solve our problems in our own way. It is no good saying that this House is, or should be, sovreign. It has never been sovereign for the past 100 years, and, in so far as it has been, that sovereignty has been steadily diminishing as we have signed and obeyed regional, national and international treaties of one kind or another.
The only common policy that we have so far devised during the 20 or more years that the Community has been in existence is the CAP. It has rightly come in for very rough words all round. I do not think that a kind word has been said for it during the debate. I will risk one. I do not speak as a Member representing an agricultural constituency. It is the case that we have had, partly as a result of the CAP, guaranteed supplies of the kind of foodstuffs that we need at a time when all signs are that there will be an overall shortage of food in the world in the course of the next century.
It would be idle, foolish and dishonest to pretend to the British people that it would be possible to obtain cheap food from other sources for a long time to come. New Zealand is often quoted in this context. Suppose that we got out of the Community and were free to negotiate with the New Zealanders. Does anyone seriously believe that they would guarantee us long-term low-priced food? It is nonsense. The New Zealanders want the same as we do, a high and
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rising standard of living. They seek industrialisation on an increasing scale. They are looking for markets closer to home. For all these reasons, it would be idle to pretend that in the long term we could get cheaper supplies from New Zealand.
If my hon. Friend the Member for Durham (Mr. Hughes) were present, he would have said that it is a fair point to make that a sizeable proportion of the money spent on the CAP goes into regional policies. I refer to such things as drainage schemes in Ireland. The same things are happening in southern Italy and more deprived agricultural areas within the Community. From the President of the Commission downwards, the CAP has suddenly had a diminishing number of friends, largely on account of the enormous surpluses that have been built up without any regard to the relationship between supply and demand. Indeed, farmers have been incited to produce irrespective of demand. The price has been so high that there has been a widening of the gulf between the supply of foodstuffs and the demand for them. This represents what has been repeated many times in this House—namely, the enormous political power of the farming lobby in Europe, which exerted that power long before we went into the Community.
The fault lies in our not being there at the start. It is no good—
It being Ten o'clock, the debate stood adjourned.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, the Adoption (Scotland) Bill [Lords], the National Health Service (Scotland) Bill [Lords] and the Interpretation Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Bates.]

EUROPEAN COMMUNITY (DRAFT BUDGET)
Question again proposed, That the amendment be made.
Mr. Hamilton: I give way to the hon. Member for Banbury (Mr. Marten).
Mr. Marten: The hon. Gentleman has slightly overrun the point on which I wanted to intervene. The New Zealanders

1171
would like to give us long-term contracts, and I suspect that their prices would remain lower than Common Market prices. Also, if we were outside the Common Market—I am not arguing that—we could buy the subsidised exports from the Common Market. Is the hon. Gentleman aware that in Hansard the other day it was calculated that the cost of the disposal of surpluses, calculated in sterling, was £5,284 million? The hon. Gentleman said that there was no insubstantial sum, but it is a large sum indeed.
Mr. Hamilton: I shall not go into the details of that argument, except to say that there is no assurance that we should get long-term cheap supplies from anywhere. The tendencies are all in the opposite direction. The producers of foodstuffs are determined—as we are, and as is the rest of Europe—to get far higher standards of living than they have had hitherto, and that must be reflected in the prices that they charge us and others for their products.
Several hon. Members who have criticised the CAP have asked the Government why they have not yet produced their alternative proposals. I was trying to ask the Prime Minister that very question this afternoon: whether the Government could produce a White Paper showing those policies of convergence before the December meeting of the Nine. It is significant that the Minister of Agriculture, who has a reputation for being extremely negative in his criticism of the CAP, has been extremely loth to produce his own alternative proposals.
Twelve months ago the Socialist group in Europe produced its own document on this subject. I have referred to this before in debates in the House. We obtained the agreement of all nine Socialist parties in Europe to that document. I put more than 100 copies of the document in our Whips' Office, but they were deliberately kept from our Members. It was an embarrassment to circulate those things because it was the only attempt by this party to produce an alternative policy to the CAP. It behoves our Government to enunciate these policies in accordance with what the Prime Minister said this afternoon about the need to get convergent economic policies.
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What makes me particularly angry in the context of this budget is not so much the size of the sums—because they really are chicken feed within a national and international context—as the discrepancy between the sums allocated to the CAP and to the Regional Fund. I shall not labour the point, except to say that this afternoon the Prime Minister emphasised the need to pursue more vigorously European policies designed to remove or reduce disparities of wealth within the European regions. The regional policies of national States and, on top of that, the regional policy of the EEC have an important part to play in that context.
In the draft budget, the Regional Fund is in a worse state in real terms than it was when it was introduced in 1975, as the hon. Member for Inverness (Mr. Johnston) said. The Commission itself, although it has frequently paid lip service to the principles and purposes of regional policies within the Community and to regional funds, has now proceeded to propose sums which are lower than they were three years ago when the policy was introduced. That is not the fault of Mr. Tugendhat or of the Commission. It is the Council's fault. The Commission is in touch with the Council, which has to make the final decision, and the commission knows that the Council simply would not accept over-ambitious figures for regional policy or anything else.
The Commissioners seem to be—I am an inexpert layman looking at this—a disorganised collection of men with no agreed common purpose. They carry varying degrees of political weight, and in that respect they are not unlike our own Cabinet. We look at various British Cabinets and we all know who are the heavy guys and who are the lightweights. This is often reflected in the legislation that is brought to this House. Similarly, in the Common Market we have Commissioners of great variety in ability, stature and weight, and those variations are reflected in the budget.
The budget is replete in trivia. There is little in it of any grand design for Europe as a whole. In yesterday's edition of The Guardian there was a letter from the right hon. Member for Sidcup (Mr. Heath), who came to the aid of the Leader of the Opposition at Penistone recently. That great European, who

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has refused the leadership of the Conservative Group in the elected Parliament, was talking about the sum of money that had been allocated to the European choir. For a start, he did not know what he was talking about. All of us who sit in the European Parliament have had letters about the cuts in the sum available for that choir. Choirs are important, but unemployment, the problems of the steel industry and the difficulties facing our youth are infinitely more important.
This is the great criticism that I have of the budget overall. Fortunately it will be largely overtaken by more important events at Bremen and at Bonn next weekend. The Government were right, in their response to the German and French initiative, to feel sore about being left out in the cold. They were equally right to reserve the right to stand back and study carefully all the implications of the Franco-German proposals without rejecting them out of hand.
I do not often agree with the sentiments expressed by the hon. Member for Chichester (Mr. Nelson). It may be a long time before I agree with him again, but I went along with what he said this afternoon about this House consisting of Conservatives all over the place and right across the board. I would spell "Conservative" with capital letters and apply the term to hon. Members on this side just as much as to hon. Members opposite. The debate today has emphasised this fact.
We look at Europe as if we wish it had never happened, as if we could stop the clock or even turn it back. But we cannot do it. We are in there to stay, and it would be foolish and irresponsible to pretend that we have anywhere else to go
1174
if we get out. That would be nonsense. If we go on pretending that we can solve our currency, economic and defence problems by any other step than joining and co-operating with larger organisations, we are deceiving ourselves and those whom we represent. In that sense, sovereignty here is dead and is diminishing all the time.
When we talk about our problems, we are concerned not only with the strength of sterling but with the strength of the dollar, the yen, the deutschemark and the franc. That is what it is all about. The right hon. Member for Down, South (Mr. Powell), who was at the Treasury, knows that this is the case, and it is now more true than ever. Nevertheless, we have a right to look with a jaundiced eye at any proposition, particularly that which has emanated from the French and the Germans in the last week or so which might result in the imposition on the United Kingdom of further deflationary policies which could lead to a further increase in unemployment and still greater regional imbalances within the EEC. But we should not pretend that the other States would not go along without us. Certainly they would go on without us. Therefore. we must resign ourselves to making the best of a bad job.
We are not powerless in this respect. We have on our side some negotiating power. I believe that the Prime Minister and the Government are facing a momentous challenge. I do not believe that we should be intimidated by those challenges by refusing to meet them because of the raucous clamour of little Englanders and by the disciples of a siege economy.
10.12 p.m.
Mrs. Elaine Kellett-Bowman: I was astonished that in his long opening statement the Minister deigned to make no comment, except in a throwaway offer to answer questions, on the vital subject of the Regional Fund, which is so important to the ordinary citizens of our country, particularly to the region from which I come, the north-west. Since the Minister so signally failed to comment on that important subject, I wish to take this brief opportunity to draw the attention of the House to certain anomalies in the Commission's estimates for 1979 which concern me very much indeed.
On 14th February this year the European Parliament listened with the greatest attention as President Jenkins presented the eleventh general report and outlined the annual work programme of the Commission for 1978. He correctly pointed to unemployment as the major problem facing the Community: He said
"Policy should begin at home."
He remarked:
"In the longer term we are concerned to promote the economic growth which will enable us to provide employment and prosperity for our citizens."
What he asked, can the Community do? His answer was clear:
"First, our sectoral and regional policies must be put together in a coherent way, and we must build on last year's limited but successful steps."
This idea Mr. Jenkins repeated in the speech concluding the debate, when he said:
"We must use the Social and Regional Funds in every possible way to counteract and mitigate the effects of unemployment."
His words have since that date been enshrined in the words of the new draft Council regulation on the Regional Fund which reads in Article 1:
"The European Regional Development Fund is intended to correct principal regional imbalances within the Community resulting in particular from agricultural preponderance industrial change and structural unemployment."
These words were echoed last Monday in Luxembourg by our excellent Commissioner, Mr. Tugendhat. I thought that the hon. Member for Moray and Nairn (Mrs. Ewing)—I am sorry to say
1176
this in her absence—did less than justice to Mr. Tugendhat's speech because I thought it was a masterly exposition. He said:
"We need industrial measures to enable the structural reform required."
By laying such emphasis on the priority which the Regional Fund would enjoy as an instrument of Community policy, President Jenkins without doubt gave new hope and confidence to all of us who for some time have been deeply concerned about the future of the Community's regional policy, and of the Regional Fund in particular. This hope, based on President Jenkins' words and the fine words of the draft Council regulation, have been cruelly disappointed in the draft budget. It appears, alas, that our confidence was misplaced, though that does not appear to have concerned the Minister unduly.
Since uttering those fine words, President Jenkins has failed to stand by the Commission's original figure of 1,000 million European units of account as the resources needed by the Fund to carry out its task in 1979. We have before us instead the miserable figure of 620 mua as laid down by the European Council in December last year.
This year's figure of 580 mua indexed to take account of inflation, is actually a reduction of 64 mua on the amount for 1977. What is even more astounding is that the Commission had proposed no less than 846 mua for 1976 which, if indexed to today's prices, would give a figure of 1,280 mua, so that the Commission is proposing an allocation of less than half its proposal for three years ago, despite the incontrovertible fact that the gap between richer and poorer regions has now reached the staggering ratio of six to one.
I am particularly puzzled by the fact that last year, as my hon. Friend the Member for Scarborough (Mr. Shaw) said, the Commission worked out carefully the cost of an effective Regional Fund and stuck to its guns until the very last minute when the European Council bludgeoned it into accepting a substantial cut in commitment appropriations. Since the Commission suggested in last year's budget a figure of 1,000 mua for 1979 to help cope with inflation and the worsening national and regional situation, it

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would have been reasonable to expect it to increase the amount this year to try to make up the ground that was lost last year. But instead of taking Eyskyns' hint of last year and far from asking for an increase, the Commission has meekly, and without justification, submitted a request for merely 620 mua—less than half, in real terms, what it originally proposed for the fund in 1976 under the old regulations. Those of us who are interested in regional policy feel that the Commission has well and truly sold the pass and its conduct is beyond the bounds of reason.
Mr Jay: Will the hon. Lady give way?
Mrs. Kellett-Bowman: No. The right hon. Gentleman has had quite enough time already. The Copenhagen summit declared that the Community's three priorities—
Mr. Budgen: Will my hon. Friend give way?
Mrs. Kellett-Bowman: No. My hon. Friend has also had too much time. The Copenhagen summit declared that the Community's three priorities would be social affairs, regional affairs and energy.
Mr. Budgen: Will my hon. Friend give way? I wish to help her.
Mrs. Kellett-Bowman: No. My hon. Friend can best help me and the House best by sitting down and shutting up.
It is inexplicable that the Social Fund has risen by 48·84 per cent., the energy sector by 81 per cent., but the Regional Fund by a beggarly 6·7 per cent.
I do not complain that the social and energy sectors have risen. Indeed, I rejoice that this is so, because there can be no industry without energy and no jobs without adequate training.
The House will know of my life-long interest in social problems, which brought me into the House—no doubt to the consternation of my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen). However, I complain bitterly that the Regional Fund, which is so vital to the rejuvenation of our regions and the restructuring of our industry, has been so scandalously neglected. There is not much hope for the expansion of the Social Fund, with its emphasis on retraining, if the Community is failing to promote through the Regional Fund
1178
employment opportunities where they are most needed for people when they have trained. That is especially true of the north-west and my own constituency of Lancaster, where unemployment is well above both the national average and the regional average. Sadly, it rose again last month, and no doubt it will do so again this month.
On a slightly happier note, I welcome the non-quota sector, for which the Conservative group in the European Parliament has fought for so long. I trust that it will be in addition to the eventual figure agreed for the Regional Fund. Small though it is, it is at least a start.
I am aware that my party stands, quite rightly for a reduction in overall public expenditure, so that men and women may keep more of the money that they earn to spend as they think fit on their personal and family priorities. However, all hon. Members who have read the carefully prepared MacDougall report. to which my hon. Friend the Member for Scarborough referred, will know that the higher Community allocation to the Regional Fund could well be bread cast upon the waters and could reduce the burden on national budgets. That is partly because money can be more effectively spent on co-operation and partly because of the increased prosperity and greater employment that it can generate.
It is for that reason that I urge the Minister of State, if he will pay attention, to urge the Chancellor of the Exchequer to refuse his consent to this meagre allocation and insist that a meaningful amount be allocated to the Regional Fund in 1979. I hope that many hon. Members in the Chamber will join me in that plea.
Several Hon. Members rose—
Mr. Speaker: Order. I inform the House that it is hoped that the winding-up speeches will begin at 11 o'clock, which leaves 39 minutes for the four hon. Members who I know are trying to catch my eye.
10.23 p.m.
Mr. David Stoddart: I have found the debate fascinating. Amazing changes of heart seem to have occurred in various parts of the House. There are some on the Opposition Benches who are virtually welcoming additional public

1179
expenditure whereas we usually hear cries from the Opposition for less public expenditure.
When we consider a Budget we are entitled to know what benefits we shall get from it. That is one of the questions that we are bound to ask. What is more, we are entitled to ask what return we shall get for taxation paid, and we are entitled to receive an answer. That is what it is all about.
The British people are paying taxation to the EEC. Therefore, we are entitled to know what return we shall get for the taxation. Furthermore, we are entitled to know what achievements there will be from the very preparation of the budget. It is only right that we should know what the organisation is out to achieve that seeks to tax.
These questions are being asked increasingly by the public, but they are not being asked sufficiently in the House. Many hon. Members are not doing their duty and querying our involvement in Europe and the price that we pay for it. Increasingly the British people are asking "What are the benefits? Where are the benefits? Show us the benefits of our membership of the EEC."
It was clear from the opening remarks of my right hon. Friend the Minister of State—it was confirmed in a later intervention—that we know roughly what our contribution or tax will be in 1979. Our contribution will be about £1,000 million to £1,100 million. Whichever way we look at it, that is public expenditure. There is no other way of looking at it. What is more, it is an increase over the current year of £250 million. I understand that our net contribution for the current financial year will be £750 million. In 1979, there will be an increase of £250 million—33 per cent. in one year.
It is strange—in my book anyway—that our contribution this year should be received with such enthusiasm by the Conservative Opposition who, generally speaking, are opposed to any increase in public expenditure when it applies in the United Kingdom. But this is public expenditure in the same way as public expenditure on pensions, assistance to industry, or what-have-you. But, instead of being criticised, it is welcomed. Indeed, some Opposition Members would have it larger.
1180
Furthermore, it is public expenditure, as has already been mentioned, which will be used to subsidise some of the richest countries in the world. Undoubtedly a percentage of our gross national product will assist Germany, which is one of the richest countries in the world. There can be no doubt but that it will be used to subsidise the rich nations of Europe. We can imagine the squeals of anguish from the Opposition Front Bench if we decided to increase the overseas aid budget to the under-developed countries by £250 million in one fell swoop. Yet we have not heard a squeak from the Opposition Front Bench tonight. Indeed, they would have us pay more to subsidise the rich countries.
Do we get any tangible return from the net expenditure of £1,000 million per annum? We were assured before we entered the Community that there would be substantial benefits through increased trade and the dynamising of our economy. We remember the propaganda that was put across in this country to persuade people that, having gone into the Community, we should remain within it. We were to enjoy the great benefits of trade. The cold wind of competition would hit the British industrial scene and we should immediately become dynamic. Our exports would increase; our standard of living would rise; everyone would be £7 a week better of. Those were some of the promised benefits.
Have they come about? Certainly our trading position has not improved. Far from it. On manufactured goods our balance of payments deficit with the original Six worsened from about minus £90 million in 1972 to £2,000 million in 1977. There is no benefit there, and this budget will give us no benefit in that respect in 1979.
Will the budget help to keep down food costs? After all, most of the budget will be used for subsidising agricultural products. Will it keep down food costs in this country? Of course not. Everybody knows—indeed, even the Government agree—that food costs are higher because we are members of the Community.
Furthermore, part of our contribution is being used to undermine the trading position of Commonwealth countries through the dumping of surplus food on world markets. My hon. Friend the

1181
Member for Fife, Central (Mr. Hamilton) said that the CAP had brought some benefit in that it guaranteed us food supplies at reasonable cost, and he doubted whether New Zealand or Australia would be able to guarantee us the same security of supplies at reasonable prices. My hon. Friend the Member for Fife, Central said that they would never conclude a long-term agreement with us. But I remind him that New Zealand, Australia and Canada did conclude such long-term agreements in 1945. They saw us through the worst difficulties that this country has known in food supply and costs. What was done then could certainly be done now. My contacts with people in New Zealand lead me to believe that they would welcome such long-term agreements, which would be for the benefit of this country and New Zealand.
The contribution that we shall be making in 1979 and the contributions that we have made so far have done considerable damage to many parts of the Commonwealth. Many beef farmers in Australia have gone out of business. Tens of thousands of head of cattle have been destroyed because the farmers can no longer sell their produce to the United Kingdom. We have been helping this trend by our contribution to the EEC budget.
No tangible benefits can be shown. We are being bled white by the Europeans. That view is gathering strength among the people, in spite of the insidious attempts by the BBC and other organs of the media to convince them otherwise by announcing with a great flourish every little loan or grant that comes from the EEC but never informing the people of the total net contribution that we make to the budget.
Mr. Marten: The hon. Member for Swindon (Mr. Stoddart) has overlooked one matter. We must not forget that our net contribution is a transfer across the exchanges and that therefore reduces our invisible surplus to a negative surplus or a deficit.
Mr. Stoddart: I understand that. I am obliged to the hon. Member for Banbury (Mr. Marten) for mentioning it. It has a considerably greater effect on our total economic activity than is obvious from a first glance. There is no doubt
1182
that, because this is a net contribution across the exchanges, it limits to the extent of about three to one the increased economic activity that could occur here were we not making that contribution across the exchanges.
I was most disturbed by the attitude of the hon. Member for Scarborough (Mr Shaw). He appeared to be advocating full blown economic and monetary union. Let us make no mistake: economic and monetary union would merely compound the disaster of British membership of the EEC and lead to a further decline in our economic and industrial base.
The hon. Member for Chichester (Mr. Nelson) waxed eloquent about economic and monetary union. He said that he was happy that public expenditure should be used for regional aid, provided that it was only temporary. History shows that if we become a member of a economic and monetary union, economic activity and finance will flow to the centre. The hon. Member should realise that it is inevitable that, far from keeping regional aid on a temporary basis, it will be made even more permanent than such aid is already. It has happened in this county as a result of economic activity of money and people flowing from Scotland, Wales and Northern Ireland into the south-east. If we get further tied up with Europe through economic and monetary union the same will begin to happen, with the flow-out across the Channel because inevitably economic activity and finance will move to the centre.
This has been a fascinating debate. A lot of economic arguments have been turned on their heads and many hon. Members have thrown aside, it seems, many of their political beliefs simply because they are so besotted with the EEC that anything goes. Things that they condemn out of hand in this country they will accept for the EEC. That is not good enough.
I am glad that this debate has filled its full time. We should have longer debates on the EEC budget, and this House should examine far more closely not only the budget but everything that happens in the EEC. The more we examine it, the more we shall understand exactly what sort of noose this country has put its head into. Perhaps with a bit more examination we can slip the noose off.
10.37 p.m.
Mr. Peter Mills: The hon. Member for Swindon (Mr. Stoddart) said that absolutely nothing comes out of the EEC. If it is any comfort to him, I have information which shows that in his own area there is help from the EEC for bottling equipment at a dairy near him. Not far from him the construction of a potato and carrot store is being undertaken. That will certainly help the consumer in his area. He is quite wrong to say that even such a small area as around Swindon receives no help from the EEC.
Mr. Daniel Awdry: Will my hon. Friend say exactly where these projects are?
Mr. Mills: Certainly. One is at Castle Combe, which, I imagine, is not far from Swindon. The other is further down the road at Ilminster. These will certainly help the consumers in Swindon.
Mr. Stoddart: Those areas are not remotely concerned with my constituency. My point was not that we did not receive grants or loans from the EEC, but that we pay the EEC first to pay us back the loans and grants, and that in the end the EEC makes a damned great profit out of the arrangement.
Mr. Mills: I apologise for delaying the House. I should not have gone down that road. I thought that since I had the information it might help and encourage the hon. Member for Swindon.
I do not take such a negative view as we have witnessed this evening. No one seems to be very satisfied with the enormous amount of paper that accompanies the budget, but at least the printers and paper producers must be pleased with the amount of material that is used. If one reads this documentation, however, one can find much in it that is of extreme value and help to this country. I am a fairly severe critic of certain sections of the Community, but I believe that it is totally wrong to dismiss the whole preliminary draft budget as being of no use. That is totally unfair.
As I look at the budget, paying particular attention to the things that concern me in agriculture and food production, it seems to me that Ministers have still not learn the lessons that they ought to have learnt over the years. This dis-
1184
tresses me. I believe in the CAP—fullstop. I believe that it can be made to work: it should be made to work, and it must be made to work, though I hope that it will be changed to a common food policy rather than a common agricultural policy.
I do not dismiss the common agricultural policy. I just want to see it improved. There are ways of improving it, though I cannot go into that tonight. I have done so at other times. If the hon. Member for Swindon laughs at that, I shall send him my two papers on the subject, where he can read about what can be done to change the CAP.
What disturbs me is the same old problem of the sums of money being in the guarantee fund rather than in the guidance fund. I do not want to spend any more money. What I want to see is money directed within the budget into different sections, and particularly into the guidance fund.
There is no doubt that the CAP is not at present in the interests of British agriculture. That is a fact. Very few farmers whom I know and to whom I speak would say otherwise. I am still up to the neck in agriculture. None of us wants it. We do not want policies of the sort that are produced in Brussels, and it is sad that Ministers have not learnt the lessons that they should have learnt. The present policy is certainly not in the interests of consumers.
We ought, therefore, to have had a much stronger representation from the Government in making those views known in Brussels and in seeing that changes were made. I am amazed when the Chief Secretary to the Treasury tells us in our Select Committees that he will try, that it is difficult, and that we have to change the policy. I remember the time when I was a junior Minister at the Ministry of Agriculture. The Treasury certainly had its sticky fingers on our policy. It saw to it that we did not spend too much money. I should like to see far more determination on the part of Ministers, including the Treasury Ministers, in going to Brussels to change the emphasis from a guarantee fund to a guidance fund.
In the long term, it can do no good to continue with things as they are, and

1185
in the short term it will do no good, either. There has been inadequate recognition that structural problems such as chronic surpluses or social difficulties in particular localities demand specific action. In my view, because most of these problems are the concern of individual members of the Community, they should be tackled by national Governments rather than by the Community as a whole. To continue to bolster up the guarantee side of the budget only stokes the fires of surpluses the whole time. In this sense, the budget is plain stupid and irresponsible, and before the next preliminary draft budget comes before the House we must have far more determination from the Government in dealing with these matters.
Hon. Members always talk about the end price. Although we certainly do not want to see any big increase in the end price, that alone will not solve the problem. We must tackle the problems of the small farmers in Community countries who produce agricultural products just for intervention. Until we find alternative work and until we see that far more money is paid to get some of the small farmers out—not in this country but elsewhere in the Community—we shall never overcome the problem.
The cheapest way to destroy a cow is to kill it, to take it out of circulation. That is the cheapest way of dealing with the surpluses. The amount of money being spent in that direction is pitiful. Something must be done.
I say to the Minister "You must do something about it. You must influence the Minister of Agriculture in Europe." I do not believe that it is too late this year. I believe that something can be done in these matters and that a tough line can be taken.
Mr. Marten: How?
Mr. Mills: My hon. Friend is always interrupting.
Mr. Marten: Tell us how.
Mr. Mills: If nothing is done, it is totally unfair to British agriculture to go on as things are going. In this country we have efficient farmers who are being blamed for the surpluses in the Community. This is totally wrong.
Mr. Roger Moate: What is to be done?
Mr. Mills: I can soon tell my hon. Friend. I can give him my two papers, which will tell him exactly how to right the position.
It is wrong that British farmers should go on being blamed for the surpluses when we are the most efficient in the Community. As a strong supporter of the Community and the CAP over the years, I feel great sadness that the lessons have not been learnt. Much of the blame must rest on this Government for not taking a tougher line in these matters.
10.46 p.m.
Mr. Tam Dalyell: All of us who have remained until this hour of night deserve to go on the mailing list of the hon. Member for Devon, West (Mr. Mills) for his two papers.
Mr. Mills: Here they are.
Mr. Dalyell: My hon. Friend the Member for Swindon (Mr. Stoddart) said that it was possible to become besotted with the EEC. Indeed, the late Jack Mendelson had a colourful expression for it, when he accused some of us of being unreconstructed Stalinist pro-Marketeers. I suppose that in one sense I fall into that category, because I am unrepentant. But, because time is short, and because one hopes not to be too besotted, I should like to make some remarks that may be interpreted as critical.
I have become more and more anxious as a member of the Budget Committee of the European Parliament, when time after time either Commissioners or Commission officials have come before us with yet another new scheme. It starts off with the steel industry. They seem to take responsibility for that. Then we go on to a proposal to reform aerospace, and then we go on to shipbuilding and youth unemployment.
If the Community is to take responsibility for every problem area, for every lame duck, we get into great difficulty, because one of the things that are most damaging—and I do not think that the budget has solved it—is to give the impression that the Community can solve problems that really it cannot solve and does not have the money to solve. The pretence of being able to do so is very

1187
damaging to the idea for which many of us, rightly or wrongly, voted when we joined the Market. Therefore, I hope that the Government and the Council of Ministers, which apparently in this debate is asking for advice, will speak very bluntly to the Commission.
The hon. Member for Oswestry (Mr. Biffen) and my hon. Friend the Member for Southampton, Test (Mr. Gould) were right in making the crucial point that the Commission is no kind of Cabinet. I believe that Roy Jenkins—I do not call him President Jenkins with quite the deferential air of the hon. Member for Lancaster (Mrs. Kellett-Bowman)—has probably tumbled to the fact that the Commission is no kind of Cabinet but a series of satraps who go off on their own sweet way.
That is a very worrying development, because it seems that no kind of coherence is imposed on the Government of any of our nation States by a powerful Finance Minister or powerful Chancellor of the Exchequer. Therefore, I hope that when our Ministers discuss these matters they will tell the Commission that it is high time it produced some kind of coherent strategy and a list of financial priorities and did not come forward with quite so many weird and wonderful schemes. This comes from a pro-Market-eer, and I hope that it is taken on board.
I have two questions. The first concerns the matter of the Ortoli loan, whether there should be a new device through the Commission for making loans for various projects, or whether it should be done, as hitherto, through the European Investment Bank. Many of my Socialist colleagues disagreed, but I want to know what kind of loans should be made, given the state of the capital market, by the Commission through the Ortoli facility that would not be acceptable to the European Investment Bank. After all, the Chancellor of the Exchequer and other Finance Ministers are governors of the bank, but I just wonder why, for this kind of operation, the mechanism of the bank should be passed over in favour of some kind of new device.
One of the difficulties in all this is that, if one presses the Commission as to what it is actually going to do with the Ortoli facility, one gets the answer from Mr.
1188
Ortoli himself, "Perhaps the Channel Tunnel could be financed through this mechanism", or, as the hon. Member for Scarborough (Mr. Shaw) will remember. when we asked certain officials to do with the Social Fund and the ECSC they said that it would help to finance the fusion project.
I think that there is a great deal 01 confusion as to precisely what the Ortoli loan is for, and I hope that, when they go to the meeting of Ministers, my right hon. Friends will find out, one way or another, precisely what they want to do with the Ortoli loan and state the attitude of Her Majesty's Government towards it.
My second question I put in my capacity as rapporteur—Heaven help me—ot the Energy Committee of the European Parliament in relation to the budget we are discussing. What bothers some of us —and I speak for an increasing number of members of the Committee—is again the watering-can effect of trying to do all sorts of things that are probably better done by nation States. I take for example the very grave concern whether it is really the business of the Commission to get involved in the subject of intra-Community trade in coal.
But, having said all this, there are some of us who believe that there are some matters that are better done by the Community than by nation States. Among these I would pinpoint the alternative methods of producing energy. I happen to be very pro-nuclear. I do not think that we can produce a panacea to suggest that somehow wave power, or wind power, or solar power, or even fusion, will be an easy way out of the difficult problems of nuclear waste that we have to face.
Having expressed a certain scepticism, nevertheless there are those of us who also think that people have to be serious about the so-called alternative uses of energy, and if that is so it is better done on a Community basis than on a nation state basis. This brings me to a precise question that I want to put to the Treasury.
The Community has done a great deal of work, very properly, in this matter at Ispra and elsewhere. These are things that it can do well, and those who have been to see know that it has done its work well. Why was it that suddenly, out of the blue, some three weeks ago the British

1189
Government produced a £16 million scheme for British research on the alternative uses of energy, without having so much as informed the European Commission that they were doing so? The Prime Minister this afternoon talked of common objectives in energy by 1985. These are fine sounding words, but I have to tell the Government that they sound a little hollow to those who know that this kind of idea is somewhat marred by current practice.
Why was it, I repeat, that the Department of Energy in this country did not so much as inform the European Commission, or our partners in Europe, that we were to put forward a relatively large scheme for the alternative uses of energy? At the very least, it would have been courteous to do so. It would have been sensible and constructive to do it with our partners in Europe rather than suddenly deciding to go off on our tod and to tell them not a thing about it. It seems to me a very unfortunate way of proceeding.
There may well be an explanation. If the British Government did tell the Commission, and if Commissioner Brunner is wrong in saying to the European Parliament that the Commission had not been informed, let us be told so before the end of the Session, otherwise some will go on and on with our efforts to winkle out an explanation from our Government for what seems to be an embarrassingly unfortunate sequence of events.
Mr. Frank Hooley: My hon. Friend must know that France has had a very advanced and high-powered solar energy programme for years. To the best of my knowledge, France has made no particular effort to consult Britain or the European Commission about it. The Germans have just announced a $1,000 billion conservation programme which they are doing on their own. What is peculiar about Britain pursuing these matters?
Mr. Dalyell: Full information was given to the Commission about the German conservation programme. I would be less certain about the French. It does seem that if we are partners and want to make Europe work—I speak as a reconstructed pro-Marketeer—at least I am entitled to ask this very precise
1190
question. In the next three weeks some of us want it be answered.
10.57 p.m.
Mr. Peter Tapsell (Horncastle): We have in this debate demonstrated that we have now reached the stage where we can discuss the institutions and documents of the Community with the same detached and critical scrutiny that we apply to their British equivalents without calling in question our commitment to British membership of the EEC, in most cases. Indeed, it is only by such a critical approach that constructive progress can be made in improving the many present defects in the functioning of both the British and the European bureaucracies and ensuring their proper subordination to the political will of the democratically elected national Governments and Parliaments.
Those hon. Members who have looked at or even lifted, some of the seven volumes of the EEC 1979 preliminary draft general budget, of which we are asked to take note this evening, can, whatever their past attitudes to British membership of the Community, at least agree that they are of the most enormous bulk, weight, length and obscurity. They tell us everything we could possibly want to know except exactly how much the Commission and the other institutions of the Community are to spend in 1979, and exactly how that expenditure is to be itemised.
Opening the debate, the Minister delicately described this mass of figures as "illustrative" and spoke of "token entries". The truth is that Gibbon illuminated 1,300 years of Roman history in fewer pages than the European Commission has devoted to the obfuscation of its spending plans for 1979. Volumes 7/A and 7/B are two massive tomes which alone run to 1,270 pages, yet they are merely an explanatory memorandum on the preceding six volumes. My right hon. and learned Friend the Member for Hexham (Mr. Rippon), in an understandable moment of exasperation, once threw an Order Paper across the Dispatch Boxes. If I were to throw these two volumes, complete with their deadly metal clips, at the Minister of State, the number of pending by-elections would increase immediately.
However, the Commission does not rely merely on weight. The "playing hard to

1191
get" ploy is also used. Volumes 1, 2, 3, 4 and 5, to which the Notice of Motion refers, reached the Library of the House of Commons only on the afternoon of last Thursday, 6th July, just as we were all leaving for our constituencies. Volume 6 has not arrived at all, presumably because the pantechnicon which was seeking to transport them here collapsed under the weight. Incidentally, the Library has only one copy of each of the other five volumes, and they may not be removed from the Library even to bring into the Chamber. Consequently, there can be few hon. Members who have had a proper opportunity to study the volumes in their original form, the massive contents of which we are invited in an exceptionally inapposite phrase "to take note". Winston Churchill once spoke of "some chicken, some neck". To that, we might now add "some note".
Although there is a comic aspect to all this, it raises a very serious parliamentary point. The relevant documents covering the proposed expenditure of the order of £9 billion, including nearly £1,800 million gross of British taxpayers' money or some £800 million net after the various cross-payments have been made, are not and have not been in any meaningful sense made available to this House before it is invited to approve them.
It is most unsatisfactory that this House of Commons should be expected to proceed in this way, and for all those like me who are supporters of membership of the European Community it has to be borne in mind that this is a major cause of feelings of ill will in this House towards a Commission which so often does not produce documents at the proper time and in a proper form for our consideration. A proper presentation of documents in adequate time for their detailed study is an essential prerequisite for the effective functioning of the democratic process as we have understood it for centuries in this House. That is simply not happening on these European matters, despite the efforts of the Scrutiny Committees in this House and in another place. It is a problem to which the Government and the Leader of the House especially must give much greater attention than they have shown so far.
It is high time also that the nine national Parliaments made it clear that
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they are not prepared to be treated in this cavalier fashion by national Governments and by the Commission. I hope and believe that the British Conservative Members of a directly-elected European Parliament or Assembly will wish to give urgent attention to remedying this situation. Otherwise the Community will not have a proper and effective democratic base.
Mr. Jay: Is the hon. Gentleman saying that he dislikes everything that the EEC does but that he wants us to go on being a member of it?
Mr. Tapsell: I have not so far reached any aspect of what the EEC does, beyond its failure to produce the necessary documents. I hope that that point has now registered.
The second point which needs to be made, and which has been made by a number of hon. Members, is that this is not a budget at all in the sense in which that term is commonly understood in Britain. We are in reality discussing the Commission's opinion of what the 1979 budget might be. It can, of course, still be substantially modified, both by the Council of Ministers and by the European Parliament. This so-called budget is what in British parliamentary parlance would more appropriately be called preliminary draft estimates of the cost of policies, many of which have not yet been approved and some of which appear to be only partially formulated.
Despite, or because of, the enormous length of the documentation before us, there is a marked lack of precision about the content of the budget. For example, volume 2, containing the European parliamentary budget, makes no attempt to estimate the increased cost of the directly elected Assembly or Parliament which will come into being in 1979. As my hon. Friend the Member for Harrow, East (Mr. Dykes) said in the debate last year:
"However, the discrepancies in assessments, and the fact that the final budget is different from the preliminary draft produce enormous obfuscation and an opportunity for deliberate obfuscation by the Council of Ministers. I hope that parliamentarians, national and European—and perhaps, to a lesser extent, even the Commission—will work hard together to overcome this central problem."—[Official Report, 18th July 1977; Vol. 935, c. 1255.]
We can all warmly endorse those sentiments of my hon. Friend, whose devoted

1193
loyalty to the concept of European unity is not in doubt. But we must add that the little headway which has been made in this regard since he addressed the House in those terms 12 months ago is a continuing cause of anxiety.
In 1978 the general budget of current expenditure of the Communities will total about 12·4 thousand million Eua in appropriations for payment. This corresponds to 0·8 per cent. of the gross domestic products of the nine nation States and about 2·5 per cent. of their national budgets. The present conversion rate of the Eua into £ sterling is about 0·65—it fluctuates daily—so that the pound is worth roughly two-thirds of a Eua based on the basket of currencies used.
For the purposes of the budget of 1979 a fixed conversion figure was taken on 1st February 1978 at the lower figure of 0·629926. It is on this fixed figure that conversions have to be made when we seek to undertake the somewhat daunting task of translating all these figures in all these volumes into meaningful amounts of money. On this basis the Commission estimates that the British contribution to the Community budget in 1979 will be £1,764 million or 20·4 per cent. of the total Community budget. I note, however, that the Chief Secretary, when questioned on this point by the Select Committee on 28th June, was unable to confirm this figure, for understandable reasons. It remains in doubt, as the Minister of State made clear by his qualifying remarks in opening the debate.
For 1979 the total budget expenditure proposed by the Commission is 13·8 thousand million Eua in appropriations for payment and 14·7 thousand million Eua for commitment. Translated into English that means £8·7 billion for current expenditure and £9·2 billion for future commitments. This constitutes an increase of 12·1 per cent. over the estimate of current expenditure, and an increase of 15·5 per cent. on the 1978 estimate of future expenditure. We are told that this is the smallest year-on-year increase of expenditure to be proposed for a long time, largely because agriculture's expenditure is not likely to rise by more than 7 per cent. this year, taking the green currencies into account.
No doubt Commissioner Tugendhat deserves considerable credit for limiting this
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overall increase, but it is still too much, and that is my answer to the hon. Member for Swindon (Mr. Stoddart), because percentage increases of public expenditure in the range of 12 per cent. to 15 per cent. are very substantial, even when set against the growth rates of the most dynamic economies in the Community, partticularly in the light of the Prime Minister's report to us earlier this afternoon that growth rates within the whole Community are likely to be lower than expected. I agree with the hon. Member for Swindon that public expenditure, like bureaucracy and corporatism, demands at least as much supervision and vigilance in the European as in the national context.
The Conservative group in the European Parliament has played a leading and notable part in the creation of the court of auditors, as has my hon. Friend the Member for Scarborough (Mr. Shaw), who opened this debate for the Opposition in such an able fashion and who, as a rapporteur of the 1978 budget, and in many other ways, has played a major role in the European Parliament. Clearly, what is needed is a Chief Secretary for Europe, of a Gladstonian disposition. Let us hope that Commissioner Tugendhat will adopt that role.
Of course, it will be argued, and is argued, that the proportion of national budgets—2½ per cent.—committed to the European institutions is still relatively tiny and that increases in Community spending should lead to compensating reductions in national expenditures on the same services, but those who take that point of view are, I think, subscribing to the triumph of hope over experience, because we all know that expenditure programmes develop a dynamism of their own and once started not only tend to grow faster than anticipated but become difficult to rein back. That has been the undoing of the present British Labour Government. Secondly, while the replacement of national expenditures by Community expenditures sounds fine in theory, may it not in practice lead to a great deal of duplication of effort and expenditure unless the European bureaucracy turns out to be very different from all other bureaucracies the world has seen so far?
Indeed, speaking at Luxembourg on this very matter on 3rd July, Commissioner Tugendhat, who is, after all, the EEC Commissioner for budget and financial

1195
control, told the European Parliament that later this year he would be presenting proposals for enlarging the Community's own resources. He went on to say, as my hon. Friend the Member for Oswestry (Mr. Biffen) pointed out, that Community expenditure was rising at such a rate that it would reach the present limit on revenue of a 1 per cent. rate of VAT within three years, and Mr. Tugendhat added:
"We are examining various possibilities for financing the budget when that ceiling is reached."
Mr. Biffen: That is hardly the voice of Gladstone.
Mr. Tapsell: No. indeed. It was the voice of a very young Gladstone. But it was a significant statement, and I hope that the Minister of State will give us some indication of the Government's thinking on this matter of expanding the Community's finances from our own resources. When, for instance, will the EEC be able to start operating the present own resources system by starting to collect up to 1 per cent. of VAT receipts?
Will the Minister confirm that the share of the Community budget falling upon the United Kingdom, which is now 20·4 per cent., is likely to rise by 1982 to about 23 per cent?
The Foreign Secretary recently referred to the need to raise yet again the question of the share of the United Kingdom contribution. What are the Government's proposals on this important subject? What was the basis for the Minister of State's prediction that the 1979 budget will turn out to be smaller than the estimates at present before us? All the evidence of past experience seems to suggest the opposite.
A debate such as this should provide an opportunity to review the whole strategy of the Community's future spending plans. But is there such a strategy'? Despite the unanimous criticism from all sides of the House about the unbalanced nature of the Community's expenditure programme, more than 70 per cent. of the budget will be spent on agriculture again in 1979, and of this nearly 40 per cent goes on one single commodity—milk and milk products. Indeed, 26 per cent. of the whole budget goes on milk.
We all agreed—with the solitary exception of my hon. Friend the Member
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for Chichester (Mr. Nelson)—that this is a nonsense. The Prime Minister indicated earlier today that there is growing support throughout the Community for a revision of these arrangements.
Commissioner Tugendhat made the point to the European Parliament on 3rd July that development of the Community's social and regional policies depended on greater restraint in agricultural spending. But when the Chief Secretary gave evidence to the Select Committee on European Legislation on 28th June, he said that there were two ways of reducing the agricultural percentage of the budget —by cutting agricultural expenditure or increasing expenditure in all other fields. I very much fear that the latter course will prevail.
I had a number of other points that I wanted to make, but we are nearing the end of the time for the debate. I finish by asking the Minister whether he will explain how the Government will implement the statement made to the House earlier this afternoon by the Prime Minister on his return from the Bremen summit. He said that a more sensible distribution of the Community's resources among its members was needed. This British Labour Government have conspicuously failed to achieve that so far.
11.17 p.m.
Mr. Denzil Davies: The hon. Member for Horncastle (Mr. Tapsell) has declared himself, as have others, a whole-hearted supporter of the European Community. They prefaced their remarks by making it clear that they were not seeking to go back on that commitment. Then the hon. Member for Horncastle tells us that our Government are not being firm enough on expenditure on the CAP. I remind hon. Members who supported the European Community that when they voted for it, they voted for the CAP, the way it is financed and the transfer of sovereignty from this House, which makes it very difficult for any British Minister, with a Gladstonian axe or not, to do anything about the CAP.
The hon. Member for Horncastle asked me about the "own resources" system. I confirm that the Commission believes that by 1981 it will have reached the 1 per cent. ceiling on VAT. I understand that it is now working on proposals to meet that problem when it gets to 1981.

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The proposals have not been put to member Governments yet, but when they are we shall look at them very seriously.
My hon. Friend the Member for West Lothian (Mr. Dalyell) asked two questions, which I shall deal with at the outset He asked me about the Ortoli loan facility. This facility of 1 billion Eua is available for investment in the industrial, energy and infrastructure sectors. I cannot give any more details. The fear he had was that the money would be channelled perhaps through the Commission and not through the European Investment Bank. The British Government—and this also applies to other Governments—think that this money should be lent through the European Bank, which has definite criteria for lending the money, rather than through the Commission. But I understand that there is pressure from the Assembly for the money to be lent through the Commission and not through the Investment Bank. But it is our firm view that the Investment Bank is the right vehicle because it has had established criteria.
Mr. Biffen: Would a decision to channel the Ortoli funds through the Commission require the consent of the Council of Ministers?
Mr. Davies: I am not certain of the answer to that question. I am not sure of the legality of the position. I can only emphasise that the British Government and other Governments are pressing through the Council of Ministers for this money to go through the Investment Bank.
My hon. Friend also asked me about energy policy. He made his point strongly, but he will appreciate that this is a matter for the Department of Energy and not for a Treasury Minister discussing the Common Market budget.
Mr. Dalyell: Will my right hon. Friend ask the Department to write to me about the matter?
Mr. Davies: Yes, I shall see that the Department writes to my hon. Friend.
My right hon. Friend the Member for Battersea, North (Mr. Jay) asked me a number of questions. He asked me why we cannot get some money back as a result of renegotiation. The mechanisms for repayment are complicated. They
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depend partly on per capita GNP, partly on balance of payments and partly on various other factors. In respect of the 1978 budget we did not qualify because I am told that in real terms our share of the budget was 15·3 per cent. and our share of Community GNP was 15·5 per cent. Therefore, in the 1978 budget we did not qualify under the mechanism.
For the 1979 budget the figures are provisional, but on the basis of those figures it looks as though we might get some benefit—it might not be very large —as a result of the renegotiation mechanism, which is related to GNP and contributions to the budget. It is difficult at the moment to put a figure on it, but it certainly will not be a large one.
My right hon. Friend also asked me about the report in the Press about errors in payments to staff. I can confirm that in substance that report is correct. A working party has been set up on which the British Government are represented and we are pressing and doing our best to obtain corrective action. There are legal problems into which I cannot go now, but we are pressing very hard for corrective action on that overpayment.
My right hon. Friend asked about fraud. That is similar to asking "When did you stop beating your wife?" If my right hon. Friend has any evidence, no doubt he will supply it to the authorities. But I have no evidence of any fraud, and I am told that the question of payment or overpayment to staff had nothing to do with fraud.
I was also taken to task for not mentioning the Regional Development Fund. I suppose I could have mentioned it in my opening remarks, but it is not as important in this year's budget as it was last year. That does not mean that we do not attach a high priority to the fund. But hon. Members will appreciate that it was the 1977 European Council, after much wrangling and final agreement, that laid down for three years the figures for expenditure on the fund—620 million Eua. It is a little unfair—and here I come to the Commission's defence—to criticise the Commission for not exceeding that agreement reached by Heads of Government. As for the 5 per cent. non-quota section, we feel that we should meet that within the figure of 620 million Eua.
Mr. Michael Shaw: The Minister of State might like to know that several of us voted against Parliament's wishes on loans, and some of us were for the Investment Ban. On the other point may I say that Mr. Eyskens, as President of the Budgetary Council last year, said that there was room for negotiation this year. What interpretation do the Government place on that—because I do not know?
Mr. Davies: We attach, generally, a priority to the Regional Fund, but we must recognise the reality of the decisions taken at the summit and we cannot go into the Council with plans for substantial increases in expenditure in view of the size of this year's budget.
My hon. Friend the Member for Southampton, Test (Mr. Gould) made the good point that we are not discussing a budget. We are discussing estimates, and the Budget Council is not the equivalent of the British Cabinet. The hon. Member for Devon, West (Mr. Mills) asked why Treasury Ministers did not instil some Treasury control into these matters. He recalled that when he was at the Ministry of Agriculture, the Treasury controlled expenditure within that Department. But we are not talking about that sort of situation. There is no salvation in asking why the Budget Council does not sit on the Agriculture Council. If other European Governments operate as our Government operate, their agriculture Ministers take to the Agriculture Council a collective negotiating stance decided upon within government. I imagine that the West German and French Governments operate in this way. To expect an agriculture Minister to argue one way in his Council and the budgetary Minister to argue against him in the Budget Council shows a lack of realism of the way government works. There is no answer in saying that a finance Minister should put a different case from an agriculture Minister of the same country. The Council of Ministers does not sit as a Cabinet. It is a question of deciding priorities. There is no simple solution.
The hon. Member for Devon, West also suggested that we should spend more on the guidance sector of agriculture and less on the guarantee sector. I am not an expert on agriculture, but I understand that we would not benefit all that much by increased expenditure on the guidance
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sector because our agriculture is efficient and the areas of Europe where the industry is not so efficient would get the greater benefit from the guidance sector. If they became more efficient, we would still have the problems of surplus production and price. There is no salvation that way either.
Mrs. Winifred Ewing: Does the Minister intend to answer my questions about EMU and additionality?
Mr. Davies: The answer on additionality was given by the right hon. Member for Down. South (Mr. Powell) in an intervention. There is no problem here because a Government will always, when deciding expenditure on regional policy or anything else, look at the amount of money likely to be coming from another source and will decide its expenditure in that light. I am sure that every Government in Europe operates in that way. There is no other way.
I shall not ask the hon. Lady what she means by economic and monetary union.
Mrs. Ewing: What do the Government mean by it?
Mr. Davies: I am not sure what is meant by the term. All I say is that one cannot have economic and monetary union without a federal Government. It must develop in an organic way. It cannot develop in any other way. It is not the policy of this Government to agree to a federal Government in Europe leading to economic and monetary union. I hope that that answers her question.
Mrs. Ewing: If the term economic and monetary union, which is used daily in the European Parliament, offends the Minister, will he tell us whether it is the new policy of the Government to favour economic integration, to us the phrase which appears in the document?
Mr. Davies: There is no new policy. The hon. Lady is chasing hares. I made it clear that all these matters can never come about except by organic development. When we consider the problems of inflation, exchange rates and different rates of growth in different countries, I do not see how we can move towards the economic and monetary union that apparently the hon. Lady favours.
Mr. Nelson: Does the right hon. Gentleman—
It being half-past Eleven o'clock, Mr. DEPUTY SPEAKER put the Questions necessary for the disposal of the proceedings, pursuant to Standing Order No. 3 (Exempted Business).
Question, That the amendment be made, put accordingly and agreed to.
Main Question, as amended, put and agreed to.
Resolved,
That this House takes note of Volume 7 of Commission Document No. R/1577/78 relating to the EEC 1979 Preliminary Draft General Budget, together with Volumes 1, 2, 3, 4 and 5, and R/1104/78 and R/5I9/78 and further notes with deep concern that the policy implied in this preliminary draft budget once again fails to make any reduction in the huge burden of agricultural expenditure under the guarantee section of the European Agricultural Guidance and Guarantee Fund, in particular, in the cost of disposing of agricultural surpluses outside the EEC.

ADOPTION (SCOTLAND) BILL [Lords]
11.31 p.m.
Order for Second Reading read.
The Lord Advocate (Mr. Ronald King Murray): I beg to move, That the Bill be now read a Second time.
The Bill is a consolidation measure covering enactments relating to adoption in Scotland together with amendments of a technical nature to give effect to two recommendations of the Scottish Law Commission.
The first recommendation relates to the provisions of the Children Act 1975 dealing with the extraction of parental rights on making an adoption order. The extinction should be extended to the functions of a tutor or curator to the child. There is also reference to a duty arising from an agreement that must be corrected for Scots law where a duty can arise from a unilateral promise as well. Provision should also be made for extinction of any alimentary right or duty between a child and a member of his original family. All these recommendations are given effect to in clauses 12(3) and 12(4).
The second recommendation relates to the provision in the Adoption Act 1958 entitling every person to search the index of the Adopted Children Register. It reflected current practice at the time with other registers. An enactment in 1965 purported to import the modern practice for inspection of registers but left the original provision for adoption unaltered so that the respective provisions were inconsistent with each other. The Law Commission recommendation resolves the conflict so it is now only the person applying who is permitted to search the index personally if he does not wish to rely upon the services of the Registrar General staff. That recommendation is effected in Clause 45(3).
The other place approved the Bill after a report by the Joint Committee on Consolidation Bills. I hope that the House will give it a Second Reading.
11.33 p.m.
Mr. Daniel Awdry: I rise to make one point. As I am retiring at the end of this Parliament, this may be

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my last speech in the House. I am glad to make a few observations from the Opposition Front Bench.
At the end of a long day we are embarking on three important consolidation Bills. The first measure, the Bill before us, has 67 clauses and consolidates the law of adoption for Scotland. It consolidates eight Acts of Parliament that have been passed over the past 20 years.
The second measure, the National Health Service (Scotland) Bill, contains 110 clauses, 17 schedules and consolidates no fewer than 13 Acts of Parliament passed by the House since 1947.
The third measure is the Interpretation Bill, which consolidates the 1889 Act and a number of other enactments relating to the construction and operation of a great number of Acts.
The simple point that I wish to make is that Parliament owes a considerable debt to the Joint Committee on Consolidation Bills. I have been pleased to be a member of the Committee for the past year or two. The Chairman, Lord Russell of Killowen, gives a great deal of his time to the Committee's important work.
Above all, we owe a great debt of gratitude to the draftsmen of these measures, who spend endless hours of labour helping to clarify the law, and thus benefit those like myself who try to practise in the law and need to refer to statute law from time to time.
I pay tribute to the work of the draftsmen and express the hope that the work of consolidation will flourish and expand in the next Parliament. It is a task that receives no publicity. The Joint Committee is, perhaps, the most boring Committee to sit upon. It is highly technical work. We never get a line in the papers, yet we sit every week. But it is work which will be of the utmost benefit to future generations who have to try to understand and to administer the laws which we pass in this place and have passed over the years. I pay tribute also therefore to the draftsmen.
The Lord Advocate: I associate the Government with the tribute which the hon. Gentleman has paid to the Chairman of the Joint Committee and to its members—not least to the hon. Gentleman himself, who has been a distinguished member of the Joint Committee
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—and to the draftsmen. I share the hon. Gentleman's hope that consolidation will proceed apace in the future, unrecognised and unheralded though it tends to be. If it be any comfort to the hon. Gentleman, I shall not be in the next Parliament, either.
Mr. Awdry: That is an extremely generous reaction. I am very humble. It is very nice of the Lord Advocate to say that. We both agree that the work of consolidation is important, though it receives no publicity. Let us hope that it will continue, with benefit to all concerned.
11.36 p.m.
Mr. Tam Dalyell: Although I very much hope to be here in the next Parliament, I wish at this point only to ask the lay question which is of some concern to those of us who have to deal with day-to-day constituency cases. Will the consolidation measure which we are now considering make it in any way easier for those at school to protect their privacy?
As we all know, one of the problems is that, when it becomes known at school, particularly at secondary school, that a child is adopted, difficulties often follow. We have all had cases in which this has happened. The fact of adoption has sometimes leaked out in rather odd ways.
I do not know the answer to this question, and I shall value the Lord Advocate's reply. Will what we are now doing make it any easier to protect the privacy of those who are adopted so that it does not become generally known, especially in the case of young children, that they happen to be adopted?
11.37 p.m.
Mr. George Thompson: I welcome these consolidation Bills because I think it important that we consolidate the law, especially when it may be scattered through many statutes. I hasten to say that I am not a lawyer. but I am sure that it must cause headaches to practising lawyers when they have to search for the law in many statutes.
I join in the tribute which has been paid to the Joint Committee which deals with these consolidation measures, and I give a welcome to the three which are coming before us tonight.
The Lord Advocate: By the leave of the House, may I reply to the specific question put to me by my hon. Friend the Member for West Lothian (Mr. Dalyell)? As this is consolidation, with two minimal technical amendments only, I cannot give him much comfort. What I can say, however, is that the amendments to which effect has been given, if anything, slightly tighten the confidentiality of the adoption register.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Jim Marshall.]
Bill immediately considered in Committee.
[Mr. OSCAR MURTON in the Chair.]
The Chairman: With the approval of the Committee, I shall put the Question on clauses 1 to 67 together.
Clauses 1 to 67 ordered to stand part of the Bill.
Schedules 1 to 4 agreed to.
Bill reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
Bill accordingly read the Third time and passed, without amendment.

NATIONAL HEALTH SERVICE (SCOTLAND) BILL [Lords]
Order for Second Reading read.
11.40 p.m.
The Lord Advocate (Mr. Ronald King Murray): I beg to move, That the Bill be now read a Second time.
This is a pure consolidation measure which consolidates a number of enactments relating to the National Health Service in Scotland, the 30th anniversary of which we are celebrating this year.
The enactments relating to the National Health Service in England and Wales were consolidated last year. This Bill does the same for Scotland. The House of Lords has approved the Bill after a report by the Joint Committee on Consolidation Bills to the effect that it is pure consolidation and does not change the existing law. I commend the Bill to the
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House as a useful measure which reenacts a considerable number of enactments from 14 separate statutes in a readily accessible and clearly set out form. I am confident that it will be useful to all those involved in the administration of the Health Service in Scotland.
11.41 p.m.
Mr. Tam Dalyell: I shall not try the patience of my colleagues at this time of night by mentioning the unmentionable. But why was it necessary to do this—there might be excellent reasons—before the Assembly is set up? I should have thought that from the Government's point of view this, of all things, should have been left until the Assembly has been set up at the High School.
The Lord Advocate: This is a highly desirable consolidation measure. That is reflected by the consolidation for England and Wales which took place last year. There are technical drafting reasons why it is satisfactory to pass the Bill before devolution. My hon. Friend the Member for West Lothian (Mr. Dalyell) will realise from his careful study of the Scotland Bill that there are inter-connections with almost every aspect of the devolved functions. One must start somewhere in legislation if one is to make it into an integrated whole. The simplest and best way, from a drafting and legislative view, is to do it this way.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Snape.]
Bill immediately considered in Committee.
[Mr. OSCAR MURTON in the Chair.]
The Chairman: With the approval of the Committee, I shall put the Question on clauses 1 to 110 together.
Clauses 1 to 110 ordered to stand part of the Bill.
Schedules 1 to 17 agreed to.
Bill reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
Bill accordingly read the Third time and passed, without amendment.

INTERPRETATION BILL [Lords]
Order for Second Reading read.
11.46 p.m.
The Parliamentary Secretary to the Law Officers' Department (Mr. Arthur Davidson): I beg to move, That the Bill be now read a Second time.
This Bill, like its two distinguished predecessors, is also a consolidation measure. It consolidates the Interpretation Act 1889 and other measures relating to Acts of Parliament and other instruments. It is based upon the report of the Law Commission and the Scottish Law Commission and incorporates recommendations made in that report. The net result of the consolidation will be that in future Acts of Parliament and subordinate legislation certain verbiage will no longer be necessary. For that, I am sure, we all will feel deeply grateful.
I wish to associate myself with the remarks of my right hon. and learned Friend the Lord Advocate. I, too, would like to pay tribute to the hon. Member for Chippenham (Mr. Awdry). He and I have sat many a night in what is the most exclusive little group of people debating—not at length, because that would be inaccurate—this erudite subject. He is very distinguished in that exclusive area and I am sorry that he will no longer be debating this subject. I am sure, however, that as a practising lawyer he will at least have the practical benefits of the legislation he has helped to pass.
11.48 p.m.
Mr. Tam Dalyell: What happens to this cosy little club to which my hon. Friend referred if the Government get their way and there is an Assembly in Edinburgh? Will it be duplicated? What is the practical effect of the Scotland Bill on my hon. Friend's—
Mr. Deputy Speaker (Mr. Oscar Murton): Order. The Chair, although indulgent, is now becoming mildly impatient. We can discuss only the reasons for consolidation. I am afraid that we must not stray away north of the border.
Mr. Dalyell: I am sure that my hon. Friend is itching to give a 30-second answer.
Mr. Davidson: I am itching to say something about the devolution Bill because I am one of the few people in the House not to have said a word about it. However, itching though I am, Mr. Deputy Speaker, I am always most respectful to your rulings, with which I entirely agree. Therefore, unfortunately I cannot help my hon. Friend, much as I should like to do so.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Committee of the whole House.—[Mr. Snape.]
Bill immediately considered in Committee.
[Mr. OSCAR MURTON in the Chair.]
The Chairman: With the permission of the Committee, I shall put the question on clauses 1 to 27 together.
Clauses 1 to 27 ordered to stand part of the Bill.
Schedules 1 to 3 agreed to.
Bill reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56(Third Reading) and agreed to.
Bill accordingly read the Third time and passed, without amendment.

PEAK DISTRICT NATIONAL PARK
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape.]
11.50 p.m.
Mr. Frank Hooley: I believe that one of the great Socialist achievements of the post-war Labour Government was the creation of the national parks. The Peak District national park is unique in two respects. First, it is like a nut in a nut cracker, the jaws of which are the great industrial conurbations of South Lancashire and South Yorkshire. Secondly, the Peak park planning board is both a national park authority and a planning authority. In this latter capacity it has recently produced a structure plan to determine

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developments for the future of the park into the 1990s, after meticulous consultation with interested bodies and the general public.
In this regard, I should like to quote a brief sentence from a recent Fabian pamphlet on national parks which records the view:
"On all counts the park that comes out by far the best is the Peak District…Its success in provision for the public and care for the land under its remit and in the initiatives it has taken and is taking in recreation is by any yardstick remarkable."
The whole raison d'être of the national parks is to conserve and defend some part of our country from the kind of development that we are obliged to tolerate elsewhere as the price of an industrial society and to defend it also from the ravages caused by the indiscriminate pursuit of each and every form of recreation that ingenuity can devise and commerce profit from. The board endeavours to satisfy these two aims, but in no way ignores the reasonable demands for recreation, holiday caravans, homes, jobs and the national need for minerals.
The response of the Secretary of State to the board's recent proposals has alarmed and dismayed a great number of bodies and persons who are passionately concerned about the future of the park. These bodies include the Council for National Parks, the Council for the Preservation of Rural England, the National Trust, many private individuals and the National Farmers Union, which has made direct representations to me on this matter.
There are three main areas of serious concern: first, the extraction of minerals; secondly, the problems of recreation; thirdly, houses and jobs.
The question of mineral working is the crunch issue between the board and the Minister, and its eventual resolution will, in my view, determine just how far the Secretary of State is fully and truly committed to the concept of a national park.
The board forthrightly says:
"There will be a general presumption against new mineral workings or extensions of existing mineral working activities in the park."
It then goes on to apply two clear firm tests for the determination of any future applications for mineral extraction. First, is it vital to the public interest? Secondly, is it clear beyond doubt that there are no
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practicable alternative sources of supply? Anyone who has seen the ghastly ravages of limestone quarrying already taking place in the park must endorse these two criteria.
The report of the national parks policy review committee—the Sandford report —itself emphasised that:
"a fundamental conflict exists between the purposes of national parks and large scale industrial development".
It goes on to say:
"The presumption against development which would be out of accord with park purposes must be strong throughout the whole of the parks".
The Secretary of State appears to reject both criteria on the grounds that:
"it would be impracticable to require applicants to prove that their proposals were vital in the public interest or that there were no practicable alternative sources of supply".
of the mineral concerned.
I suggest that any competent geologist could give evidence on the second point and that it should not be such a very abstruse calculation to determine the economics of a particular application and the alternatives. As regards the public interest, the very creation and preservation of the national parks are themselves supremely acts in the public interest and ex hypothesi the onus should be placed on those who would tear it to pieces to prove that their proposals are no less vital to the public interest before being allowed to go ahead.
If the Secretary of State for the Environment is now going to throw all the weight and authority of his important office against the considered judgment of a unique national park planning board, which has a quarter of a century of experience in trying to cope with the vast economic power and vested interests of mining companies, the future outlook for national parks is bleak. The general presumption against, which is the planning board's policy, should stand.
However, with regard to minerals there are two particular problems. The board accepts the need for limestone working for chemical, steel, cement and some other industrial uses, but points out that these add up to only 47 per cent. of the rock extracted—chemical 22 per cent., steel, 10 per cent., cement and other uses, 15 per cent. The rest, more than half, is used as aggregate, especially for road building,

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and the board objects to this, proposing to limit planning permission to the need to supply industries
"requiring the unique properties of high purity limestone".
The use of this valuable material for road building has been a national scandal for some time, especially as there are in the United Kingdom vast spoil heaps which could be made to yield up material for this purpose.
Various Government committees—the Stevens committee and the Verney committee—have looked into the question of sensible controlled mineral working and a national policy on aggregates supply. My right hon. Friend the Secretary of State argues that it is not possible to regulate the end use of minerals by planning control. But he recently made a decision on mineral workings at Tunstead, near Buxton, which was entirely based on ICI's need for high purity limestone for use in the chemical industry. The need for aggregates was not upheld.
In these days, when conservation of raw materials, sources of supply, recycling and similar problems are coming more and more to the fore, the Secretary of State's curious abdication of effective planning control over mineral extraction is alarming, and the more robust approach of the planning board is much to be preferred.
The working of fluorspar is a more difficult problem than limestone, because 86 per cent. of United Kingdom deposits of this material are in the Peak park, and it is an important material for steel and aluminium production. It is also used in the petrol, chemical and ceramics industries.
However, a significant proportion of current fluorspar production from the Peak is exported overseas. The board argues with some cogency that the nation's interests might be better served by retaining known resources of this relatively rare mineral for future use rather than going for a short-term gain in export earnings, which have declined in each of the past three years, and amount to only about £1¼ million.
The Secretary of State seems to fall back on a vague phrase about proposals for working fluorspar being considered on their merits. He rejects suggested con-
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trols by the planning board to enforce the least damaging methods of operation. In my view, this would constitute a green light to the mining companies to go ahead with their plans and ignore environmental considerations.
I turn to the question of recreation. In any area designated as a national park there must of necessity arise some conflict between the almost infinite demands for recreation and the basic need to conserve the character of the park and its natural beauty. The planning board is not indifferent to the rising demand for recreation. The number of visitors over the past 10 years has trebled, to about 16 million each year, but the board takes the view that there must be some limits if the overriding duty to preserve and enhance the natural beauty of the park is to be discharged effectively.
The Secretary of State appears to think that recreational use should be pushed to the maximum compatible with natural beauty, and suggests that the scale of provision be increased to a level of use without significant detriment to its character and environment. These phrases would seem to me to imply that the demand for recreation takes priority over the principle of conservation of the park, and if this argument is accepted it would over a period of time undermine the whole purpose of the creation of the national parks.
The planning board makes a presumption against new sites for static caravans. The major objection to static caravans is that they constitute a permanent intrusion on the landscape even when not in use. Moreover, there is abundant scope for such sites outside the park but within easy access of it.
As regards touring caravans, the board wants firm control and discussions with surrounding local authorities to secure sites outside but within easy reach of the park. As the owner of a small touring caravan myself, I would be quite happy to use a site near, but outside, the park. By definition, people with touring caravans have cars to travel within the park if they wish.
The board stresses that the object of residential development, of new housing, will be to meet local need and safeguard the interests of local people, which seems sensible. The Secretary of State appears

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to be more concerned to cater for commuters, ignoring the problems which have already been created by the pressure of external demand on the housing stock in the park, to the detriment of local people. This is not a problem peculiar to the Peak park. People in parts of Wales have complained bitterly that cottages and bungalows have been bought up as country residences at prices way beyond the pockets of Welsh people who would have liked to buy them. Providing housing for the commuter may be a normal feature of life in the south-east. It is not an appropriate policy for a national park. I referred earlier to the Fabian pamphlet on the subject of the parks. This stresses that
"Local unemployment can only really be solved by the introduction of long-term smaller industries suited to the locality."
The board for its part makes it explicit that it is not opposed to industrial development but wishes to ensure that it is on a form and scale appropriate to the needs of particular parts of the park to offset the decline in jobs offered by mineral working and agriculture.
The Secretary of State seems to me to delete the careful safeguards spelt out by the board and to substitute a dangerously loose phrase about employment opportunities that could be accommodated with significant detriment to the character of the locality. This could just be a matter of wording, but in that case I prefer the more precise phraseology of the board to the vaguer terms suggested by Whitehall.
The strength of the structure plan as drawn up by the planning board is that it seeks to build firm, strong defences against developments that, may be blatantly, may be insidiously, erode the character and beauty of the park For this reason, the board is against additional static caravans, against the maximum exploitation of the park for recreation, opposed to new mineral working, and concerned to keep very tight control on industrial and residential development. The Secretary of State appears to want no hard lines, vague criteria and everything considered on its merits. In my judgment, since we are dealing with so unique and irreplaceable an entity as the Peak District national park, a great national asset, the planning board's approach is right and the Secre
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tary of State's attitude, as evidenced so far in his comments on the plan, is dangerous and unsound.
12.2 a.m.
Mr. Arthur Blenkinsop: I want to stress my great anxiety about possible developments in the Peak District national park. Indeed, this anxiety is shown by my being here at all at this hour of the night.
I am concerned because it is clear from the representations that I have had that this is a matter that concerns the whole of the national park planning authorities. They are deeply concerned lest a change in attitude by the Government is taking place, surreptitiously almost, in this way, and many are saying that an attitude that they understood was being maintained by the Government is now being altered.
This is a matter that concerns many of us very deeply. The National Trust has made clear to me its anxiety, too. It believes that the proposals that come from the Minister have clouded rather than made clear the intentions of the Government. Indeed, many of us are particularly anxious lest we are now getting some change in the attitude of the Government towards the national parks. The overwhelming desire of most of us is to ensure that in these areas in particular we shall give priority to conservation, as the Sandford report recommended.
We fear that this very laudable desire and effort is being eroded, and we hope to hear from the Minister at least that that is not so. But we also want to take the opportunity that clearly is not available in the short time at our disposal tonight to press the matter further, because it does raise in our view some matters of very deep concern.
12.4 p.m.
The Minister of State, Department of the Environment (Mr. Denis Howell): I am most grateful to my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) for initiating this debate, and to my hon. Friend the Member for South Shields (Mr. Blenkinsop) for supporting him. It gives me the opportunity to correct some of the misunderstandings that have arisen as a result of misinformed press reports.
I can well understand and appreciate the concern of my hon. Friend and other Members of this House who have written

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to the Secretary of State on the same matter when I read, as I am sure they have done, in sections of the press that the Secretary of State has insisted that controls over mineral working and development should be relaxed, and that the park will be destroyed by major Government changes in its policies, and that the draft modifications proposed by the Secretary of State represent a complete reversal of the aims of the park to put preservation before recreation as defined when the park was originally designated.
This is so far from the truth as to be unrecognisable. We have had a massive public participation exercise which I am sure everybody would welcome. We had the structure plan submitted in August 1976 by the park board. We had the examination in public in February 1977 by a panel, appointed by the Secretary of State, of three most distinguished gentlemen. They reported in September 1977, and now the Secretary of State has published his modifications on 8th June 1978.
After the Secretary of State's publication, six weeks were allowed for objections. I want to announce to the House immediately that, following representations from the board, who thought that that period was perhaps inadequate for its purpose, I am prepared to give a four week extension. That will make 10 weeks in all in which people can object to the Secretary of State's proposals, up to 18th August. Only after that whole process will the Secretary of State take his decisions, and he will certainly take into consideration what my two hon. Friends have said this evening, and any other representations which are made to us.
During the examination, which extended over a period of two weeks, participants in the discussion of the different issues included representatives of a large number of bodies. I will give the list in order to show how extensive was the public participation exercise. The participants included the Countryside Commission, the Nature Conservancy Council, the Council for the Protection of Rural England, the Conservation Society, the Friends of the Earth, the Ramblers Association, the National Farmers Union, the Automobile Associa-
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tion, the Camping Club of Great Britain and Ireland, six county councils, nine district councils, mining and quarrying interests, local chambers of commerce, trades unions and trades councils, and many other bodies with an interest in the use of the land and the provision to be made for recreational activities in the park.
Having taken account of all that those bodies had to say, it is quite ridiculous to expect the Secretary of State for confirm a plan totally unamended in any form at all. That would be unreasonable. The published draft modifications to the Peak park structure plans do not, I repeat, represent any change in Government policy towards the Peak park, nor any weakening at all in the Government's support for the general aims and objectives of the Peak park joint planning board.
I want to quote our circular 4/76, paragraph 35, which we authorised—I spent a lot of time on it myself—some two years ago. It reads:
"The Secretaries of State share the view underlying the Committee's recommendations that these applications"—
particularly in regard to minerals
"should be subject to the most rigorous examination because of the serious impact of mineral workings on the natural beauty of the parks".
That remains our policy.
There is a great dilemma, of course, at any planning inquiry for minerals, and that is how to supply the inquiry with information about alternatives. The evaluation of mineral deposits is an extremely expensive process, added to which there is the very difficult technical point that, even when alternative supplies are located, a judgment has to be made about the feasibility of mining the mineral.
The conflict is particularly acute in the Peak park. Clearly, we wish if possible to keep the park free of intrusive or alien development, but we cannot preserve it completely intact, and the hard fact is that there are important minerals in the park.
The board recognised this and tried to strike a balance in its policies, but it is the way it did it that we have to consider. My hon. Friend has drawn atten-

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tion to some of the words used in the policies. The board proposes a
"general presumption against mineral working",
and then proposes policies which imply that subject to certain criteria some mineral development will be allowed. If, therefore, the general presumption does not mean that it proposes to refuse all applications for mineral working, it must mean that it will apply tough criteria and permit development only if it is satisfied that those criteria are met.
Then there is the question of proof that proposals are vital in the public interest and that there is no alternative source. We do not see how this can be "proved", to use the terms of the board's submission.
The next point is that of regulating the end use of minerals. The plain fact is that the statutes simply do not enable a planning authority to say for what use a mineral shall be sold, any more than a factory's products can be controlled unless a change of use is involved.
Then there is the question of the board's wish to be satisfied that the least damaging methods of operation are to be used for fluorspar working. We do not disagree with this, and this brings me to the policy proposed by the Secretary of State which would, I believe, enable the board to satisfy itself on this matter —and that is the important, indeed, the critical factor. The planning board should be able to satisfy itself. That is what the policy of the Secretary of State seeks to provide. I will read it to the House:
"Proposals for mineral working will be subject to the most rigorous examination. The Board will consider each proposal on its merits in relation to the following criteria:

(a) the national and local interest;

(b) the availability of practical alternative sources of supply;

(c) the extent to which the proposed development might be materially damaging to the environment or character of the Park;

(d) the effect of the traffic likely to be generated by the proposals on the safety and the character of the Park."

I ask the House to note three aspects of our response. The first is that it echoes the words used by this Government in their 1976 response to the report of the Sandford committee. We are confirming in practice what we said two years ago. Secondly, it extends it. It adds the very important consideration of the effects of traffic to the others proposed by the
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board. The board had not proposed that. We are adding traffic considerations to these others. Thirdly, it will be for the board to decide how the criteria should be balanced and how it should exercise development control. I think that we all agree that at the end of the day it is a question of balance in most of these matters.
I turn now to the specific questions and say a word or two about them. If my hon. Friend wants more detailed answers, I shall be happy to write to him.
The first of them is housing. There is really little between us here. The difference between the number of new houses for which the draft modifications provide and the board's top target figures, after allowing for existing planning permission and the board's revised estimate of housing need in Bakewell, is about 40 houses, or a population of about 100 over the period up to 1991. That means 40 houses over a period of 15 years.
One important factor to bear in mind is that the submitted structure plan seeks to restrict permission for new housing development to applicants who can show that they live locally or have local connections. Not only is such a policy unacceptable in planning law, but it would be in conflict with the aims and objectives of the board in seeking to arrest the decline in the population of the park area and to maintain the settlements in the remote areas of the park as viable communities. The average age of the population of the park is already very high, and it is increasing as the years go by. The only hope for renewal lies in an inward movement of younger people, albeit on a limited scale. The draft modifications to the provision for residential development are intended to allow for this.
The next issue is that of jobs. We understand what the board is trying to achieve, and we are seeking to support it. But this cannot be done just by endorsing the language of the board's structure plan. It has said, for example:
"The Board will consider sympathetically, and in some instances may encourage development providing employment opportunities suitable for farms, farmers and their families."
That simply will not do when judging a planning application. It is not possible to single out farmers and their wives.

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We believe, therefore, that the draft modifications will better serve the board's purpose. I quote them:
"The Board will consider favourably any proposals for industrial development which would be accommodated within the Park without significant detriment to the character of the locality and without creating problems of excess traffic or unacceptable nuisance or disturbance."
I turn now to the question of recreation. This is again a matter of balance. It is wrong to suggest that we do not accept that where the duty to promote the public enjoyment of the park cannot be reconciled with the duty to preserve and enhance the natural beauty of the area, the latter should prevail. This is a vital principle and should be adhered to at all times. It was recognised by the joint planning board, that given the increase in leisure time which can be expected in the future as a result of a shorter working week and improved holidays, the use of the national parks for recreational activities is bound to continue to grow.
As the published statement of reasons indicates, the draft modifications to the recreational policies of the structure plan are intended to enable the board to make land use provision for the increase in the use of the park for recreational purposes, which the joint planning board expects to take place, within the framework of policies calculated to ensure that the scale and form of this provision can be accommodated without endangering the conservation of the natural beauty and the character of the environment of the park.
I come now to caravaning and camping. We really must be realistic. There has been an enormous growth in camping and caravaning. This growth is still continuing at a rate of 10 per cent. per year. The plain fact is that if these activities are not reasonably provided for in places which the park board thinks to be appropriate people will solve their own problems in a way which is more detrimental to the park. That is the sensible policy which the Secretary of State is seeking to sustain.
On the subject of holiday caravans, the proposed policies of the submitted structure plan relating to seasonal caravan sites would mean the removal of most, if not all, of such accommodation from
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the park. This is not on. The Sandford committee recognised that seasonal holiday caravans provide relatively inexpensive holidays for many people who might otherwise be unable to enjoy the national parks.
Circular 4/76 stated our conclusion that the concentration of caravan and camping sites outside the periphery of a national park would, in general, be undesirable as it would only create more planning problems outside the park than it would solve within it and it would not meet the requirements of many of the visitors to the park. It would lead to a greater volume of traffic on the roads of the park and into the park. In short it would be unworkable.
We have received a number of representations from individuals and organisations which support this general policy line. We have to cater for this growth, and have tried to do so. We want the sites to be in sensible places agreed by the board, protecting all the main environmental priorities which the board seeks to support and sustain. It is not our job to keep people out of a national park nor do I think that we should seek to give that impression. We have a duty, as has the board, to provide for the public enjoyment of national parks.
I conclude by saying that we recognise that the Peak park is a splendid achievement, that the work carried out by the board in managing the different activities taking place in the park is continually worthy of praise and is a great national asset both to the residents of the park and the many millions of people who visit the area each year. It is our expectation that, armed with an approved structure plan and with its own national park plan, the board will be able to control and manage the different uses of land and the varying activities for which the park provides such admirable facilities and to continue to preserve and enhance the natural beauty and character of the park as an amenity for many generations to come.
That is the policy of the Government and those are the criteria upon which we base it. It is against that background that we ask to be judged. If there are difficulties at any time we shall be pleased to receive deputations in an attempt to

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obtain maximum agreement, because, as I hope I have proved to the House, we are absolutely united in principle, with little between us in practice.
Question put and agreed to.
Adjourned accordingly at twenty minutes past Twelve o'clock.