HC Deb 03 December 1979 vol 975 cc29-47
The Prime Minister (Mrs. Margaret Thatcher)

With permission, Mr. Speaker, I will make a statement about the meeting of the European Council in Dublin, which my noble Friend the Foreign and Commonwealth Secretary and I attended at the end of last week.

There was a general debate on economic prospects, including energy. It was dominated by the feeling of uncertainty about the future of oil supplies, especially in view of the situation in Iran. It was agreed that inflation is still the main economic problem.

Otherwise, most of the time in formal session was devoted to Britain's budget problem. We were not able to reach agreement on an acceptable reduction in Britain's excessive net contribution to the Community budget. Our partners recognise that we have a problem. But they, of course, have their own problems, too. We and they did not see eye to eye on the magnitude and seriousness of the difficulty for the United Kingdom or on the measures that would be required to deal with it properly.

In spite of North Sea oil, we are still among the least prosperous of the member States but are nevertheless expected to be one of the main contributors to the Community budget. On present Community policies, the prospects are that the burden would increase even further. We stressed, therefore, that any solution must be a lasting one. Otherwise, the problem would come up yet again with damaging consequences for us and for the Community as a whole.

Agreement in Dublin would no doubt have been possible had we been ready to accept that changes to the financial mechanism negotiated in 1975 would have settled the matter in full. That would have reduced our net contribution next year by about £350 million, one-third of what we are expected to pay. The House clearly expressed its views on such a settlement in the debate last week. We were therefore confident that we would have the full support of right hon. and hon. Members in saying that this was totally inadequate.

Removing the constraints which limit the effectiveness of the 1975 mechanism can very well form the basis for such a solution, but, by itself, it is nothing like enough. It does not deal at all with the problem that our receipts per head from Community expenditure are less than half the average for the whole Community. This must be the second element in any solution.

There was, however, considerable resistance to any action to remedy that part of our problem. Eventually, it was agreed that the Commission should bring forward proposals for developing supplementary Community measures which would lead to more Community expenditure in this country.

The third and longer-term element in tackling the problem is the pattern of Community expenditure. The Commission suggested that more should be spent on structural measures and less on agriculture. This approach was generally supported.

Several countries which had been helpful in searching for a possible solution felt that more time was needed. We therefore agreed to another early meeting of the European Council to try to find a satisfactory settlement. It is left to the next President, the Italian Prime Minister, to judge when that meeting should be called.

I cannot give the House any reassurance about the success of that further meeting, but, if others will show willing, I am ready to do the same in the search for a genuine compromise. I left our partners in no doubt that my room for manoeuvre was limited, but I did not feel it right to refuse to make this further effort.

The European Council also wanted progress on other current Community issues—fisheries, energy and sheepmeat. These are seperate questions, each of which will be considered on its merits. Indeed, we are already considering them in that way.

So far as the budget is concerned, I naturally regret that this meeting did not find a satisfactory solution. The Community has much to do together in the larger world. We must now see whether the possible elements which we identified in Dublin can be built up quickly in order to produce an adequate and lasting settlement.

Mr. James Callaghan

Before I come to the important question of the Community budget, may I ask about an issue on which the right hon. Lady has not reported in her statement but which is referred to in the conclusions of the Presidency, namely, the serious unemployment situation? It is stated that unemployment can be dealt with "primarily through increased investment". As our own investment is calculated to fall during the next 12 months, will the right hon. Lady say what contributions she made to that part of the debate?

Will the right hon. Lady inform us of her attitude to the reorganisation of working time, which is also mentioned in the conclusions?

With regard to energy, it is stated that the European Council considers that efforts must be made both by producing and consuming countries to create greater stability. The right hon. Lady has not given us any information about that. What steps were proposed to follow this up? Is there to be a dialogue between the Western IEA countries and the oil-producing countries, or in what way is the Community attempting to "create greater stability"?

With respect, Mr Speaker, I should like to return later to the important issue of the budget, but I think that the issues which I have raised are also important and should be dealt with.

The Prime Minister

The answer to the right hon. Gentleman's first question, on serious unemployment, is also to be found in the communiqué, which states: The fight against inflation and unemployment should not be made more difficult through attempting to compensate by increases in money incomes for the real transfer of purchasing power which has taken place to the oil producing countries. Moreover, monetary policy should continue for the time being to support efforts to counter inflation. It was generally realised that unless we tackle inflation we shall continue to have a problem with unemployment, and the whole of the debate on the economy was conducted on that basis.

With regard to the reorganisation of working time, very little time was spent upon that matter. As the right hon. Gentleman knows, many of us believe that the important thing is to keep this country competitive. If there were to be a very strong agreement on work sharing, we should cease to be competitive. That view, I think, was held by most member countries there. It was therefore agreed that the proposals put forward to the Council should be further considered with the "social partners". As the right hon. Gentleman knows, they are both the employers and the representatives of the trade unions.

The energy debate was part of the general economic debate. We did not have a prolonged debate on energy on its own. There were no specific proposals for a formal dialogue between the consumer and producer countries.

Mr. Callaghan

The right hon. Lady's answers are not very satisfactory on either of those matters, especially concerning the reorganisation of working time, on which the Council of Ministers is not considering proposals which have been put forward but has in fact adopted a resolution. However, we shall return to that in due course.

On 16 July last, the Government accepted an amendment tabled by the Opposition stating that what was necessary was a fundamental readjustment of the budget and a reform so that expenditure was a least balanced by, or not greater than the receipts". That amendment was accepted by the Government. We reaffirm it today.

The right hon. Lady said that the result of the Council that had just been concluded was totally unsatisfactory. Those words were used by the right hon. Lady, and I can certainly support them. What I want to ask her is, why did she give the impression before she went to Dublin that there was a deadline if she did not intend to stick to it? When she got there, apparently they had a fierce row and she said 'I want my money"—

Mr. Rost

The right hon. Gentleman did nothing in five years.

Mr. Callaghan

—and returned at the end of the day having said that she was willing to compromise.

What does this mean? Is the right hon. Lady standing by her intention of achieving a broad balance, or by "compromise" does she mean that she intends to go for something less than that? Or is the compromise to be found not in financial terms: is it to be found by making bargains with the Community on some other matters? The right hon. Lady has got herself into the position in which, unless she puts some proposals forward, there will not be another meeting. Thus, we did not press her on her tactics—deliberately so—before she went to Dublin because we assumed that she had some cards up her sleeve, but when she got there we found that she had nothing up her sleeve.

Therefore, the right hon. Lady must now come forward with some proposals. The House will want to press her on what those are and what is to be the nature of the compromise that she is considering.

On reflection, does the right hon. Lady not think that it is a pity that she deserted the price freeze on the common agricultural policy that she inherited from us last spring? Would she not then have gone to Dublin with some levers in her hand instead of going there and returning entirely empty-handed?

The Prime Minister

With respect to the right hon. Gentleman, he is the last person who is in a position to criticise the budget contributions that we have to make to the Community. When he started the renegotiation of the Community contributions, this country was making a net contribution of £16 million a year to the Community budget. It went up during his tenure of office to £281 million, then to £632 million and this year to £919 million, and next year it will be £1,000 million. That was his contribution to renegotiation—to leave us with a considerable and increasing budget. The spectrehanging over Dublin was very much as they said—that we had negotiated on this basis, that we had renegotiated at Dublin previously on this basis, yet we were then coming along to renegotiate yet again. We had to try to perform against that background.

Secondly, the right hon. Gentleman refers to "fundamental reform" of the budget, which certainly was in the resolution passed by the House.

Fundamental reform may be desirable—I happen to think that it would be—but fundamental reform would change all the existing mechanisms, all the existing bases, of the budget. I still think that it is what we need, but anyone who thinks that we could get that immediately does not understand how the budget works.

Therefore, one goes not to fundamental reform but to what we did—to using the existing Community mechanisms. Those were two—to diminish the contributions, and to increase the receipts. Those existing mechanisms were the ones that we were operating on. We were offered £350 million on reducing the contribution, and when it came to increasing the receipts there was considerable reluctance to do that because the other leaders recognised that receipts would have to be reduced in their own countries. But we should not get relief for next year unless we used the existing mechanisms. In the long run, I think there needs to be a change, a fundamental reform, in the budget, but that will take time.

Thirdly, the right hon. Gentleman asked me about the deadline. The instruction from Strasbourg to the Commission and to the Council of Finance Ministers was first to find the facts and then to make proposals in time for decisions at Dublin. That was what we were charged with. All right—it takes longer to get decisions on precise figures. We were offered £350 million. I personally thought that that was not enough, that we should get more and that it was worth while going on negotiating to get more, particularly as a number of countries in that Council of Ministers were trying very hard to help us a achieve a better result.

As for the price freeze, I think that, when the right hon. Gentleman left office, all his economic policies, including a price freeze—he had held up many price increases for the election—and incomes policies were collapsing, and we had to go to a totally different system.

The right hon. Gentleman's final point related to two matters—broad balance, and bargains on other matters. Fisheries, energy and sheep meat are not linked to a solution of the budget problem. They must be tackled on their merits, and they are being tackled on their merits. The broad balance, of course, is the starting point, but the position that was put to me very strongly indeed was that the third element in the solution—that of structural changes in the budget, which consist of getting less spent on agriculture and more on other investment—will take time. Colleagues said to me "Yes, we are prepared to do more to help, but it will take time. Therefore, we must have a period of intense activity between Heads of Government and officials."

Mr. Callaghan

I think that the House will be relieved to know—[HON. MEMBERS: "Not again."] When the hopes of the whole House have been disappointed as they have been, we are right to hold the Government to account for that failure.

I think that the House will be relieved to know that in talking about a compromise the right hon. Lady is not talking about such issues as fish, energy or the other matters that have been raised. We therefore assume that what she is discussing is whether the sum shall be less than £1 billion, or whatever the figure will be next year. If that is so, does she really believe that at some Council which is to be held in February she will get structural alterations in the CAP, which we have been promised for the last five years? She is right: they were promised in Dublin in 1975. Does she really believe that the other members of the Community intend to work out structural changes which will enable her to take anything like £1 billion out of the necessary changes to the CAP by February? Is that not just as unrealistic as her previous deadline?

The Prime Minister

A moment ago the right hon. Gentleman was asking for total reform of the budget. Now he is doubting whether one can even get structural changes, or determination to undertake structural changes, by February.

May I once again point out that there are three elements under existing mechanisms for solving our budget problem? One is on the contribution side, where we have an offer of £350 million. The second is on the receipts side, to increase our receipts. If our receipts from the Community are raised, obviously the net contribution goes down. On that side, we encountered considerable resistance, but that is the side upon which we shall concentrate in the coming three months—as the right hon. Gentleman will have seen from the communiqué, which charged the Commission to find supplementary measures in this country which would raise our receipts from Community expenditure. Certainly the third element, structural changes in the budget, will take longer, but unless they are brought about within the next 18 months we shall be through the 1 per cent. ceiling—[HON. MEMBERS: "Eighteen months?"] We are talking of the financial year 1980–81 —next April to April 1981. Unless some movement is made on structural changes, we shall go through the 1 per cent. VAT ceiling.

Mr. David Steel

Is the right hon. Lady aware that it is well understood in the country that she inherited a rapidly worsening situation and that there is no need for her to labour that point, because it is accepted?

Does the right hon. Lady accept that the question of the budgetary imbalance and the unacceptable distorting effects of the CAP are problems for the Community as a whole, as she has just said, and that it was perhaps a mistake to pretend, pre-Dublin, that she was going to do battle on the British problem? Since the Prime Minister now accepts that it is a question of balancing expenditure on agriculture with other structural measures, why did not her Treasury Ministers support the proposals of our Members of Parliament at Strasbourg for transferring expenditure from agriculture to the regional and social funds?

The Prime Minister

Part of the problem with the CAP arises from the proportion of the budget taken by the agriculture budget. That is what we mean by a structural switch. When it comes to reforming the CAP, some of the proposals before the Council of Ministers—which we did not discuss in detail—were not favourable to Britain. Although we accepted the objective of reforming the CAP in order to reduce its proportion of the budget, we could not accept the particular proposals before the Council of Ministers at this time. They would have damaging effects for Britain on milk and sugar.

One hopes that there will be a determination to reduce the proportion spent on the budget by a specific percentage. It will be remitted to the Agriculture Ministers, who will decide how that shall be brought about. The right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) also asked me why we did not support the European Parliament in its resolution on milk. There is a more important principle at stake as to whether, having agreed in the Council of Ministers on a budget, one should then individually support the European Parliament on issues which happen to suit us. That particular matter would have suited us and therefore we had to take up a position on the larger principle.

Sir Derek Walker-Smith

Does my right hon. Friend appreciate that public opinion is wholly behind her in her stalwart efforts to achieve a sensible and satisfactory solution to these problems? Does she also appreciate that the best argument for her formidable advocacy is the restructuring of the CAP with a view to reducing its proportion of the budget to a much lower and realistic level, from which Britain will certainly benefit? Does she further appreciate that no amendment of the Treaty of Rome is required to bring this about? It need not be a long-drawn-out matter unless there is opposition by vested interests, which I am sure she would overcome.

The Prime Minister

I entirely accept the conclusion of my right hon. and learned Friend that we shall have to restructure the whole expenditure to reduce the proportion spent on agriculture. That indeed is our objective. Italy also feels strongly that we must go ahead and do that because she does not profit from the existing CAP. We shall, of course, continue our efforts in that direction, but I must stress that we cannot wait for the reform of the CAP before getting relief on the budget.

Therefore, the proposals that we made—taken from an excellent Commission paper—were designed to achieve that end. In the short term, we could achieve our aims through relief on contributions and more by way of receipts. We cannot wait for a total reform of the CAP in order to get considerable relief from the heavy contributions that we shall make this year and next year, and the even heavier ones that we shall be making in the years after that.

Mr. Jay

Is it not clear from everything said by the right hon. Lady today that there will be no hope of real economic recovery for this country as long as we remain members of the Common Market?

The Prime Minister

No, that is not clear at all. There will be great hopes for the economic recovery of this country both through existing policies and by a reduction in our net contribution to the Common Market.

Mr. Rippon

Is my right hon. Friend aware that there is widespread support for the Government's efforts to change the size and shape of the budget? Will she consider suggesting that there should be a joint meeting of Finance and Agriculture Ministers to make adequate preparation for the next summit? Does she agree that a series of summits which raise expectations that are not realised is damaging to the cause of a united Europe? Is she aware of the considerable misunderstanding in Italy and in Holland of the Government's failure to support the European Parliament proposal for reducing the farm budget?

The Prime Minister

I thank my right hon. and learned Friend, though I did not know that there was a misunderstanding. If there is, we shall endeavour to put it right. We remitted the agriculture paper not only to Agricultural Ministers but to Finance Ministers. We thought that it was time that the CAP decision-makers had their Finance Ministers sitting by them before they came to expensive conclusions. That is being followed up already.

Mr. Molyneaux

As one who has little faith in summit talking of any kind, may I assure the right hon. Lady that there will be widespread support for really tough action to reassert Britain's interests and rights?

The Prime Minister

I am grateful to the hon. Gentleman. I was not quite certain whether I was being criticised for being too tough or for not being tough enough. I have no doubt that I shall know in due course.

Mr. Dykes

Since the Labour Government, while in office, did nothing about the developing budget problem, hon can the Opposition now have the nerve to be tempted into unleashing a general anti-EEC posture? Will my right hon. Friend reassert the fundamental importance to Britain of our membership of the Community for many reasons, and will she express a feeling of optimism that, at the February summit, solutions will be found?

The Prime Minister

The Community is quite capable, if it wants to, of finding a solution with Britain as a member. At the moment, the Community is reluctant either to contribute more or to take less in receipts. The Community did not like the intensity of our message and the fact that it would have to face up to it but the Community can sort it out. There is no question of our coming out of the Community. Britain is better in the Community, and the Community is much better with Britain as a member.

Mr. Donald Stewart

Is the right hon. Lady aware, recalling her strident bugle calls before she went to Dublin, that she has today reported an unmitigated defeat? In view of the response of our so-called partners, does she agree that she is now faced with the stark choice of either economic suicide for the United Kingdom or our withdrawal from the Common Market?

The Prime Minister

The right hon. Gentleman will not be surprised if I say "Absolute nonsense". In the first place, we have to get relief for the year 1980–81 and also a formula that will give relief in subsequent years. We shall do far better and enjoy a far more important position in the world as a member of the Community than we should on our own.

Mr. Maclennan

Does the right hon. Lady accept that her "all or nothing" stance at the Dublin meeting failed to deliver the necessary £1,000 million? Will she now turn, more constructively, to the third element of the package—structural reform? What is the Government's attitude to the Commission's view that there can be no long-term resolution of this difficulty without increased expenditure on new programmes? Does she agree that if we opt simply for cutting down the CAP budget we shall not see any return?

The Prime Minister

We do indeed support structural reform, but there was a danger at one period during the summit meeting that my European colleagues would want to leave everything until structural reform had occurred. That would have taken far too long. I had to turn down in no uncertain way such an element in the communiqué. I agree that we need structural reform, but it will take longer to achieve that than to secure re- lief on contributions and an increase in receipts. I have made it perfectly clear that I believe that the limit on the budget of 1 per cent. contributions on value added tax should not be exceeded.

Mr. Edward Gardner

Does my right hon. Friend agree that the follies and extravagances of the common agricultural policy have been responsible primarily for what has become to us an unacceptable situation which needs an urgent and equitable solution? Does she accept that her solution, which she pressed with such formidable advocacy and determination in Dublin, has the overwhelming approval of the British people?

The Prime Minister

I wholly agree with my hon. and learned Friend that the main component of the expenditure is the common agricultural policy. The rapid annual increases in the CAP budget have given us tremendous problems. Many of our partners profit far more than we do from that policy. That is why we have to reform it in order to reduce expenditure. However, we must beware that the methods used to reduce expenditure do not act badly on our farmers in any way.

Dr. Gilbert

In any civilised community, be it local, national or international, should not the rich, strong and powerful help those who are less fortunate? Why is the Prime Minister so diffident? Why is she prepared to settle for a mere book-keeper's balance? Why is she not asking the other European countries for a generous contribution to help us all—say £1,000 million?

The Prime Minister

In the opening of my statement I included a section which showed that if we based the calculation on the average gross national product per head we could apply to be net beneficiaries. I did not ask the Community for that. We ask to be in broad balance. Britain is not asking for anything from the Community. Some of our partners in the Community do not see Britain as one of the less prosperous countries, although that is what the figures show. The other countries say to me "You are in the best position of all because you have oil, gas and coal and do not face the uncertainties which the other countries face".

Others see our position differently, but the figures do not support that view. Our Starting position for the next summit is a broad balance. I must in candour say to the right hon. Gentleman that I doubt whether we shall achieve that next year because the structural changes will take longer.

Mr. Peter Mills

I congratulate and support my right hon. Friend on the stand that she has taken. Will she bearin mind that reform of the CAP is not only in our financial interests and in the interests of the consumer but in the interests of the agricultural producer? Will she continue her fight? If she has to take drastic action, as she may have to do, will she bear in mind that those involved in British agriculture will fully support her in achieving a reform of the CAP?

The Prime Minister

I am grateful to my hon. Friend. Obviously we must keep in mind the interests of the producer. Some of the principles of reform which the Commission enunciated unfortunately would have the effect of cutting back on our milk and sugar production. Most of us take the view that we should be producing more food from our own resources. Therefore, we had to enter a reservation against those methods.

Mr. Eadie

Does the Prime Minister agree that she went public before she went to Dublin, in the sense that she informed the British people of what she intended to ask from the EEC budget? Does she agree that for her own credibility and in the interests of the British people she should go public today and explain what she intends to do if she fails?

The Prime Minister

One has only to examine the figures to know what we ask for. Either we ask to be in receipt and in benefit from the budget—and I did not ask for that—or we ask, like France, which is much richer than Britain, to be in something like broad balance. The hon. Gentleman asked exactly what would happen if we did not get our way. It was painfully obvious that a number of our colleagues at the European Council realised that there would be an immediate crisis if we did not move any further than we did at the last Council.

There are only two possibilities. One is to ensure that no further progress is made on any Community decision—which would be disruptive. The other, which we have not so far seriously considered, is to withhold contributions. That of course would also have considerable consequences. There are two schools of thought. Some people believe that to withhold contributions would be better and more direct, and others believe that it would be better to disrupt. Let us hope that we shall move a great deal further before applying either of those suggestions.

Mr. William Clark

I congratulate my right hon. Friend on the firm stand which she took in Dublin, in sharp contrast to the stand taken by the Leader of the Opposition during the so-called renegotiation. Is she aware that most people fully accept that at long last the EEC Commission recognises the unfairness of the budget? Does she agree that the offer of one-third of the amount for which we asked is far better than anything that has been offered in the past?

The Prime Minister

I am grateful to my hon. Friend. I thought that the offer was not bad as a start, particularly since one or two countries indicated that given a little time they were prepared to try to find more. There will be a period of intense diplomatic activity both on a bilateral and multilateral basis to agree on figures before we go back to any other meeting. Unless figures can be agreed behind the scenes, the Council is not the forum where sudden increases will be offered.

Mr. Benn

Is the Prime Minister aware that her speeches have raised public expectations? Is she aware that people now want to know what she is going to do? Is she prepared to follow de Gaulle in boycotting institutions? Is she prepared to amend section 2 of the European Communities Act in order to restore power to this House? In the last resort, is she prepared to contemplate withdrawal? Does she agree that if there is no back-up action all her speeches will be sound and fury signifying nothing and that she will be known, not as the iron lady, but as the paper tigress?

The Prime Minister

With respect to the right hon. Gentleman, an offer of £350 million for a start is not bad. He asked whether we are prepared to boycott. Frankly, I do not think that boycotting and leaving an empty chair is an effective way of conducting ourselves. My Ministers and I will do better to fill the chairs than to leave them empty. In some cases, when one boycotts a meeting, a decision is taken by a majority. What is the point of boycotting? It is far better to be there.

The right hon. Gentleman asked whether we intend to amend section 2of the Act. No, Sir. He asked whether we shall consider withdrawal. No, Sir. I believe that unless it is shown that the free nations of Europe can live together equitably—and it is on that basis that I am seeking a solution—the only people who will cheer are those who are based on Moscow.

Several Hon. Members rose—

Mr. Speaker

I propose to call three more hon. Members from either side and then the Opposition Front Bench spokesman to conclude.

Mr. Hordern

If in future the European Parliament votes to secure a reduction in the real burden of the common agricultural policy, will my right hon. Friend instruct our representatives at the Council of Ministers to support the decision of the European Assembly in support of the Italians and the Dutch rather than to oppose it?

The Prime Minister

May I consider what my hon. Friend has said? There is an enormous principle at stake here: does the Council of Ministers keep control of the budget, or, having agreed a budget, does it then, by minority vote, support a different view taken by the Parliament? To do that would be a considerable step. I personally agreed with part of what the Parliament put up. It was trying to reduce the amount spent on milk, but we did not agree with an increase in the co-responsibility levy on milk. So there was part that we were for and part that we were against.

I must have a look at matters in the light of the larger principle, because, if we did that for things that suited us it could go against us very adversely on other occasions when other Members of the Parliament put up things that would cost us money.

Mr. Spearing

Does not the Prime Minister agree that many people foresaw the effects of budgetary imbalance under the own resources formula, and that those who confidently stated that the EEC would be flexible have been proved wrong? Therefore, does not she agree that, rather than fight a fruitless battle over the next 18 months, it would be much better both for Britain and the Community to have an orderly disengagement, to the benefit of everybody concerned?

The Prime Minister

The answer to the last part of the hon. Gentleman's question is "No". There is not much point in putting everything on the own resources formula. It is not only a question of the gross contributions through levies and value added tax; it is what the Community does with the money when it has those contributions in.

Mr. Spearing

It decides.

The Prime Minister

Indeed, it does, and it is on that side that we have been trying to persuade it to increase receipts in this country. I think that we shall get further. The question is whether we shall get far enough at the next meeting. But I believe that the Community knows how seriously we take our case. I am grateful for support from all parts of the House to indicate that the whole House supports us.

Mr. Critchley

Would not my right hon. Friend have been wiser had she accepted the £350 million offered and then, at the invitation of the EEC, returned, like Oliver, to ask for more?

The Prime Minister

I obviously had to consider that. But, had we accepted the £350 million only, we should soon have been in considerable difficulty again. It was not only a question of accepting that; it would have been in full and final satisfaction of our problem, and, plainly, it just was not enough. We not only want more—I agree with my hon. Friend that we have, like Oliver Twist, to ask for more—but must secure a formula that will sort out our problems so long as we are below average income and receiving comparatively few receipts. So it is future years that I am concerned about as well as next year.

Mr. John Evans

Is the Prime Minister aware that no one in this country is in the least impressed by her Dublin performance, and that the only thing that she has succeeded in doing is to make a laughing stock of herself throughout Europe? Is she further aware that the British people, who are told on every side that public expenditure must be slashed, cannot understand why she does not simply refuse to hand over the £1 billion that we are contributing to the economies of our eight European partners?

The Prime Minister

I put the point that the hon. Gentleman has made, I thought even more cogently than he did. I even pointed out that our £1,000 million contribution to Europe, which is fairly wealthy, is more than the whole of our aid budget, and that does not make sense either.

The fact was that our partners did not like the message that we delivered, for the simple reason that it means their either making more contributions or taking less in receipts. But they will have to do that. After all, hon. Members who suggest that we might leave know that if we did so the Community would have to find the money. Therefore, the Community can find it with us in. That is what the majority of other member countries will wish to do.

Mr. Alan Clark

Does my right hon. Friend accept that the majority of the people of this country are not disposed to compromise on this issue and that whatever measures—I emphasise "whatever measures"—she sees fit to take to enforce concessions from the Community will have their wholehearted and enthusiastic support?

The Prime Minister

I am grateful to my hon. Friend. As he knows, I have always gone about this business on the basis that one cannot have a partnership unless there is equity among partners. Equity, of course, is historically a British concept, but I think that it is one that we bring to the Community. As I think that we have been very generous to the Community in many ways, we are entitled to expect in return understanding of our problem and measures properly to meet it.

Mr. English

Is the right hon. Lady satisfied that the advice she receives from the Civil Service on this topic is always disinterested? Is not Common Market policy advice co-ordinated in the Cabinet Office? Has not the former head of that office left the service of the Crown for the service of the French State, which, the right hon. Lady will be aware, owns the bank that now employs him? Is not that a contrast with the way in which the former head of the Civil Service felt that he should be employed by the Bank of England, not by an outside private or public body?

The Prime Minister

I receive the greatest support and help from all those in the Cabinet Office. I cannot speak too highly of their loyalty and devotion to, and work for, the cause that we are fighting for.

Mr. Shore

The right hon. Lady has said very little to the House today about her intentions, and of course it is her intentions that the House and the country now want to hear about. So may I at least invite her to reaffirm here in the House what she said at the Press conference after the Dublin summit—that what is at issue is our own money? Will she assure the House that she understood the implications of what she was saying? Will she tell the House that she is willing, if she is unable to make progress in the next few weeks, to invite the House to retake those powers of control over its own money that it abandoned seven years ago?

Finally, will the right hon. Lady make it absolutely plain, in all the talk about compromise, that she does indeed mean what she says and that she will stick to her guns?

The Prime Minister

I believe that the right hon. Gentleman is anxious to take us out of the Community, and I must view his questions against that background. I do not believe that that would be in the interests of Britain in the wider world. Therefore, I am not prepared to take Britain out of the Community.

I most certainly said that I believed that in a way this was our own money; we are asking only to have more of our own money. I am determined to try to keep as much of it as we possibly can. The first way is by increasing the receipts. The second, and medium-term, way is by making structural changes. The right hon. Gentleman will have been in negotiations for a very long time. He knows that one cannot go into a negotiation and give absolute pledges.

Mr. Shore

This is too important a point for the right hon. Lady to evade. What is at issue is this: it is either our own money or it is the Community's own resources, to which we have no right. This is a fundamental point—fundamental to the treaties, to the European Communities Act and to any possibility of seriously rectifying the situation. Will the right hon. Lady make clear whether her view is that what we are about is the control of our own money or getting back what is the Community's own resources?

The Prime Minister

The problem is about reducing the net contribution. I do not need to explain that to the right hon. Gentleman. In addition to the £350 million, that could be dealt with wholly by increasing the receipts from the Community. Indeed, we do not even have to bring those receipts up to the Community average per head. We would recover all of the net contribution in Britain if we brought receipts up to only three-quarters of the average receipts per head in the Community. Then the problem of the net contribution would be dealt with.

Mr. Speaker

I have received notice from three hon. Members that they wish to make applications for an emergency debate under Standing Order No. 9. I shall call the hon. Members in the order in which they submitted their letters to me this morning.