EUROPEAN COMMUNITY (BUDGET)

HC Deb 02 July 1980 vol 987 cc1543-698

[Note: Document 8073/80, updating documents 5437/80 and 7767/80, is also relevant.]

Mr. Speaker

I have selected the amendment in the names of the Prime Minister and her colleagues.

4.10 pm

The Chancellor of the Exchequer (Sir Geoffrey Howe)

I beg to move, That this House takes note of European Community document COM(80)147 on Convergence and Budgetary Questions, of the conclusions of the Foreign Affairs Council on 29 and 30 May annexed to the Explanatory Memorandum on document 7943/80, of documents 7943/80 and 7944/80 containing draft regulations implementing the agreement recorded in those conclusions, of documents 5437/80 and 7767/80 on the Community Budget for 1980 and 7389/80 on the Common Fisheries Policy; and welcomes the agreement reached at the Foreign Affairs Council on 29 and 30 May for reducing the United Kingdom's net contribution to the Community Budget. I have no doubt that the House will share my pleasure at our having been able to arrange a full debate on the budget agreement reached in the Council of Ministers on 30 May. I say that because it is the view of the Government that that arrangement will turn out to have been one of the most significant and fruitful developments since we became members of the Community in 1973.

The agreement is significant, first of all, because of the general lesson that we can learn from it about the way in which the Community works. For it is now clear that provided we take a firm but constructive attitude in Community discussions it is perfectly possible to secure changes in the way the Community works—in our interests and those of the Community as a whole. This agreement has been achieved on a complex of problems that touched the essential interests of member States and that only a year ago seemed absolutely intractable.

The second and perhaps even more important aspect of the Brussels agreement is that which opens up the way to the future—the specific commitment to a fundamental review of the scope, balance and operation of the community budget. That decision is the consequence of a very explicit insight on the part of all the member States. It is an insight into the need for changes of the kind that successive Governments have long regarded as essential.

It is becoming surprisingly easy to forget the scale of the problem that we faced a year ago. The state of affairs that this Government inherited when they came to power was profoundly unsatisfactory, and it threatened to deteriorate further. In 1978 the Labour Administration made a net contribution of £860 million to the EEC budget. And the upward trend in our contributions was going to take us, as the House knows, above £1,000 million by 1980, with no prospects of substantial relief.

This steady and increasing cash drain —this is an important point—was accompanied by a reluctance on the part of our partners in the Community even to listen to our case, let alone to do anything about what was already a manifest injustice, and an injustice that was plainly becoming more serious.

We can now see that the previous Government were seriously, indeed doubly, handicapped in tackling this situation.

Mr. Eric S. Heffer (Liverpool, Walton)

If that is the position, will the right hon. and learned Gentleman explain why he and his colleagues, when in Opposition, did not support the then Labour Government when they were making every effort to secure a reduction? When they were in opposition the Conservatives were constantly criticising the Government for trying to get a reduction.

Sir G. Howe

On the contrary; we criticised the style and conduct of the previous Government, and if we judge by results we were entirely justified in doing so. The previous Government launched a well-trumpeted attack on the structure of the Community and set about a much-advertised pattern of renegotiation. As I said, they were totally handicapped from achieving success in that operation.

They were handicapped first by their lack of commitment to the Community and they were handicapped, in the result, by their lack of determination. They failed to achieve what they set out to achieve. Their lack of commitment was apparent to the rest of the Community. That was hardly likely to encourage our partners to work out a solution. The then Government's lack of determination can be judged by what they achieved. They achieved results, in the so-called renegotiation of 1975, that were largely marginal. That is one of the crucial reasons why the position on this issue, among many others, was fundamentally improved by the change of Government just over a year ago.

Mr. Douglas Jay (Battersea, North)

Will the right hon. and learned Gentleman tell us who introduced the European Communities Bill into this House in 1972?

Sir G. Howe

I think that I was one of those whose names were on the Bill. I was certainly one who spent more hours in this House defending the Bill than most other hon. Members. I make no apology for that. In due course I shall come to some of the provisions that we had in mind in 1970–71. I am now dealing with the abysmal record of the previous Government in this matter, despite all their protestations. This must be a bitter pill indeed for Opposition Members to swallow, particularly those who have felt as long as has the right hon. Member for Battersea, North (Mr. Jay) that it was fundamentaly important to secure these changes.

His party launched into these matters in 1975 and they emerged with a busted flush. This Government achieved success in 12 months. We did so in the first place because we made it unmistakably clear to our partners that we were firmly committed to the Community. It was a great deal better than anything supported by Opposition Members. The Labour Party achieved nothing; we have achieved a measurable success. I shall come to that in a moment.

What my right hon. Friend the Prime Minister did at the European Council at Strasbourg, within a month of taking office, was to make plain our commitment to Europe. At the same time she declared, and demonstrated, our complete determination to secure correction of the budgetary situation, which was quite wrong. That was a change of posture that was achieved only as a result of a change of Government and the replacement of the previous Government.

I turn now to the Budget problem and to the history to which Opposition Members have rightly referred. They are quite right to remind us of that. At the time of our entry negotiations in 1970–71 it was recognised that the operation of the "own resources" system— I remember hon. Members discussing it durnig debates—which had come into force in April 1970 could lead to a high level of gross contribution at the end of the transitional arrangements. In addition, it seemed unlikely that we should derive significant net benefit from the then established pattern of Community spending.

We raised those matters at the time of the negotiations and set out our concern about them in the middle of 1970. The Community replied that our fears were ill-founded and gave assurances that the proportion of agricultural expenditure in the average budget of the Community would fall and that there would be a development of regional and other policies. We were assured that Britain, in particular, would benefit from those new Community policies.

It is not, after all, a party matter. In all these matters we were then supported by a substantial number of Opposition Members. Subsequently, in the referendum, we were supported by a substantial majority of the people of this country. It is important to remember that these questions were analysed at that time.

It turned out, as we feared it might, to be a matter of capital importance that at that time the Community gave us an undertaking that if the assumptions made by the Commission and Council did not turn out to be fulfilled—to use phrases that I have quoted before—the very survival of the Community would require its institutions to find solutions to an unacceptable situation that might arise in the budgetary arrangements. That vital commitment was set out in the White Paper published in September 1971, and it was that commitment that laid the foundation on which we were able to build the foundations that have now been completed.

It is true that the Labour Government of 1974 raised the question of the budgetary problem when they announced their intention to renegotiate the terms of entry. That grand-sounding word "renegotiation" suggested something radical and far-reaching. In practice, as could be seen in the result, it achieved only the most marginal adjustments, of which we can now see that the much-vaunted financial mechanism was perhaps the least effectual.

The truth is that 1975, seen from the point of view of Labour Members, was a massively missed opportunity—

Mr. Heffer

The right hon. and learned Gentleman did not say that at the time.

Sir G. Howe

I said "seen from the point of view of Labour Members", who were urging upon their Government that they should renegotiate. It was the Labour Party in Government whose present leader and then Prime Minister returned from Dublin presenting renegotiation as a triumph. It was the Labour Party that supported the then Prime Minister and the then Foreign Secretary in those renegotiations. We now see that by their own standards they were an ineffective solution. Indeed, they were worse than ineffective, because they enabled the Community nevertheless to argue that the commitment to rectify an unacceptable situation had been met when it had not. They attempted to renegotiate, but by their failure to achieve a remedy they made it more difficult for those who came thereafter to do so.

Against the background of the last Government's increasingly reluctant co-operation in so many other areas, it is hardly surprising that the Council showed little willingness thereafter to address the problem seriously. This was yet another example of the way in which the divisions within the Labour Party so often inhibit it from pursuing with vigour and effectiveness policies that might benefit the people of this country. It was only when the present Government came to power that any real momentum was put into the negotiations.

My right hon. Friend the Prime Minister firmly set the ball rolling at Strasbourg at the June 1979 Council. Only one month after we came into office the Community's Heads of Government recognised for the first time that the United Kingdom's net contribution posed a serious problem which, unless solved, could seriously damage the Community. That was real, solid and substantial progress within a short time. That acknowledgement of the problem was vital because it was that that opened the way to further progress and further work by the Commission. It produced its "Reference Paper on Budgetary Questions" which was debated by the House on 22 November, and that demonstrated beyond any possible doubt that an unacceptable situation had arisen.

This did not of course mean that we were instantly offered everything that we wanted, but we made headway stage by stage. At Dublin last year we were offered amendments to the 1975 financial mechanism that would at least give some substance to it and offered to yield a refund of around £350 million for 1980. That alone was unacceptable, but another solid march forward had been made, and ground had been gained.

Recognising that that would not be enough to resolve our problem, the Council then at Dublin asked the Commission to go further and to suggest ways in which the Community might increase its spending in Britain so as to offset our low share of CAP receipts. It was the Commission's proposals on that subject, together with its suggestions for amending the financial mechanism, which also stand on the Order Paper this afternoon.

That document, with some ideas put forward by the French President, formed the basis of discussion at the European Council in Luxembourg, and it was Luxembourg that produced a major step forward. For the first time, at least in respect of 1980, the scale of relief necessary to deal with our problem was clearly recognised. It did not prove possible on that occasion to get the right combination of duration and amount for an acceptable settlement. Moreover, we were asked to agree to a sheepmeat regime which was patently damaging to United Kingdom consumers and New Zealand producers, and to accept a text on fisheries which involved principles to which we were not prepared to agree.

There were those who thought that when my right hon. Friend came back from Luxembourg she should have accepted what was on offer. They have been keeping quite since 30 May because in the period since Luxembourg significant progress was achieved on all these points. It was upon these issues that discussion concentrated in the Foreign Affairs and Agriculture Councils which led to the agreement on 30 May.

Mr. Donald Anderson (Swansea, East)

Will the right hon. and learned Gentleman remind the House of the negotiating posture which the Government adopted at the end of last year and at the beginning of this year, and the criteria then adopted of a broad balance and no tradeoffs, so that it can measure the present agreement against the criteria for success which the Government themselves set?

Sir G. Howe

The House will no doubt have been studying the terms of the Opposition amendment. It draws attention to resolutions of the House of Commons on 16 July and 22 November. It fails, however, to draw attention to the subsequent resolution of the House when, on 24 March, it considered the matter again and adopted a resolution that supported the Prime Minister. in her efforts to secure agreement … to action which will bring about a substantial, immediate and lasting reduction in the United Kingdom's net contribution to the Community Budget and would ensure that there is a commitment by the Council to long-term restructuring of the Budget".— [Official Report, 24 March 1980; Vol. 980, c. 1135.] It is precisely those objectives that the agreement has achieved. Those were the considerations that the House endorsed in the debate on 24 March, rejecting the earlier wording which had been before the House.

Mr. Peter Shore (Stepney and Poplar)

If the right hon. and learned Gentleman wishes to be frank with the House, at least he must draw attention to the major retreat in the Government and by the Government between 22 November and the further debate on the resolution that he quoted in March this year.

Sir G. Howe

The right hon. Gentleman must surely take account of the fact that as a result of these various steps forward in the negotiations the amount available to this country was substantially increased on each occasion. We finished by securing a result that was far beyond the wildest dreams of the Labour Party, and far beyond its miserable achievements.

Mr. Nick Budgen (Wolverhampton, South-West)

I hope that my right hon. and learned Friend will not simply concentrate on the history leading up to the deal. Will he also explain how the Government propose that the EEC budget should be fundamentally reviewed over the next two years and tell us what the Government's attitude will be if it is not so reviewed?

Sir G. Howe

I am grateful to my hon. Friend for his advice as to how I should make my speech. I shall come to deal with those points in due course.

Mr. Eldon Griffiths (Bury St, Edmunds)

Will my right hon. and learned Friend accept the warm support of many people for the nerve that he and my right hon. Friend the Prime Minister showed when a large number of people were saying that they should settle for half a loaf or there would be no bread?

Mr. Heffer

Who was saying that?

Mr. Griffiths

Will he advise the House whether among those who were saying that my right hon. Friend and my right hon. and learned Friend should give in and settle for less than they eventually got were a significant number of people within the higher echelons of the Foreign Office and the Treasury?

Sir G. Howe

I am conducting an open-ended seminar in response to my hon. Friends, and I would not dream of being drawn by my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) into responding to a question of that kind. The Government's decisions are taken by the Government. It was the Government who decided that the earlier offers were not sufficient, an attitude which led us to the result upon which my hon. Friend is congratulating my right hon. Friend.

I was dealing with the agreement as it emerged on 30 May. The House is familiar with the mathematical details of that and I pass on therefore to say that, viewed in the round, this agreement represents a substantial advance on what was on offer at Luxembourg and a vast improvement on the prospect that we should otherwise have faced. We have a minimum rebate of £1,570 million in 1980 and 1981, reducing our estimated net contribution for those years by about two-thirds, we have a risk-sharing formula in case those estimates are exceeded and we have a firm basis for similar arrangements in 1982 if the Community's global review has not by then and by other means removed our problem.

At Luxembourg, by contrast, we were offered a settlement of two years only, with no provision for review of the Community's budgetary arrangements, and dependent, as I have explained, on our agreeing to objectionable arrangements on sheepmeat and fish. Now our budgetary position is safeguarded for three years at least, and the Community is pledged to undertake the longer-term reforms required to avoid a recurrence of our problem. The contrast with the prospect that we would have faced in the absence of a settlement—and this is worth bearing in mind—of a net contribution still higher than the massive ones of the late 1970s and growing steadily is striking. The position has been transformed. Anyone who makes that objective appraisal of what has occurred must surely accept that this is a highly advantageous agreement.

Mr. Jack Straw (Blackburn)

To what extent are the rebates tied to agreements on the budgets for next year and subsequent years? The Chancellor will recall that, immediately after the Brussels agreement, the French delegation issued a declaration. The French were pleased about the agreement because the credits were to come in the budget the following year. That meant that there would have to be an agreement on farm prices adopted before the full payments on the budget were made. That position is reflected in article 2 of the draft regulations. Even though some advanced payments will be made, does the Chancellor accept that it will be open, as the French interpret it and as is clear from the regulations, to any other member State to block the full payment of our contributions unless and until they get agreement on farm prices?

Sir. G. Howe

The hon. Gentleman has raised that matter before. I refer him to the long written answer that my hon. Friend the Financial Secretary gave on 20 June, which appears in col. 693 of the Official Report, which states that there is no reason to fear that the matter will be handled in that way. The proceedings of the Budget Council are recorded, and the United Kingdom's right to apply for advanced payment is also recorded.

Mr. Denzil Davies (Llanelli)

Is it not the case that to get the advance payments there has to be a qualified majority? If France and Germany voted against us, thereby providing 20 votes, there would be no qualified majority and therefore no advance payments.

Sir G. Howe

The matter will not be handled in that way. I also refer the right hon. Gentleman to the discussions that took place at the budgetary Council meeting. This is a good settlement for us and also for the Community.

Mr. Tony Marlow (Northampton, North)

I have been trying for some time to get an answer about when we are to make the payments to the Community and when we shall get the receipts. Before the arrangements with the Community were arrived at, we were committed to a payment of £1,200 million net, which is roughly £100 million a month. We are already six months into the year. I presume that we have therefore already paid £600 million into the Community. As our total net contribution this year is supposed to be only £370 million, why are we continuing to make payments? When will we get the money back? The longer we have to wait for the money to come back, the longer we have to borrow from the public and pay expensive rates of interest. Can my right hon. and learned Friend please tell the House exactly when we are to get the money back?

Sir G. Howe

My hon. Friend has been pursuing that point, and he has written me a letter, to which I shall shortly reply on certain detailed aspects. The reality is that we have secured an agreement that will lead to our receiving the net refunds set out in that agreement by the conclusion of our current financial year. Because of the method of calculation, it is possible that a small proportion of the refunds in respect of each year will fall into the next following year. However, the great bulk will be offset or refunded by the end of this financial year. That is the intended effect, and it will be the effect. However, it will be achieved as a result of co-operation by other member States, which are halfway through their financial years. As a matter of physical reality, it would be unreasonable to expect them to readjust their budgets halfway through their financial years, which run from January to December, to accelerate the payments along the lines that my hon. Friend may have in mind. My hon. Friend will see the matter turning out as we go along.

Mr. Nigel Spearing (Newham, South)

Will the Chancellor give way?

Sir G. Howe

No, I am afraid not. I have given way more times than the House can remember.

I was saying that the settlement is not only a good settlement for this country but also for the Community. As I have just been saying, we must not forget that the agreement involved substantial concessions by our partners, especially Germany, France and Italy. Germany now becomes by far the largest single net contributor, with a contribution this year some three times ours. For the first time France becomes a significant net contributor. Italy remains a net beneficiary, as is reasonable for one of the less prosperous members of the Community, but at a lower level than would otherwise have been the case. It must be acknowledged that some very real sacrifices were made, and I should like to take this opportunity to express particular recognition to my own colleagues, the Finance Ministers of the other member States, who, like myself, are all labouring under the same burden of controlling their own almost remorselessly growing public spending.

A number of other issues were agreed at the same time as the budget settlement. It is those which have apparently provoked the Opposition's amendment to criticise that linkage. However, it was inevitable that our partners, sensing that agreement really was going to be reached in the end, should try to add other issues to make up the package. We resisted fomal linkage of that kind, but agreed, where possible, to make rapid progress with Community issues on a timetable related to that for the budget question. So far as agricultural prices are concerned, the Leader of the Opposition himself, with reference to my right hon. Friend the Prime Minister, told the House on 29 April: we shall support her in not giving way on the agricultural price freeze until the budgetary issue is settled."—[Official Report, 29 April 1980; Vol. 983, c. 1154.] So the principle of linkage in that sense was expressly endorsed by the Leader of the Opposition. Although the Opposition now seek to criticise it, he recognised that the link could work, as it did work, to our very clear advantage.

Even so, it was our clear view that the budget problem was something that had to be set right on its own merits, and it was not merely to be traded off against concessions on other fronts. It was on its own merits that agreement was achieved—

Mr. Norman Buchan (Renfrewshire, West)

Will the Chancellor give way?

Sir G. Howe

I am afraid not.

On sheepmeat, we negotiated arrangements which will be considerably more beneficial to Britain than those offered in Luxembourg. Intervention will not operate within the United Kingdom. Producers will be provided with deficiency payments, based on a guide price well above that set for this year under our national scheme. Consumers will be able to buy lamb at reasonable prices. In the longer term, our receipts from the scheme could amount to £100 million per annum. The interests of New Zealand, and the security of our supplies from there, have also been safeguarded, because the Community scheme will not enter into force until New Zealand has concluded an agreement on voluntary restraint satisfactory to her.

We also obtained a number of important advantages from the farm price settlement, including the continuation of full Community financing for the United Kingdom butter subsidy and a commitment to pay refunds on whisky exports to compensate for the higher cost of grain within the Community. Even taking changes in green rates into account, the average rise in support prices is below the average rate of inflation in the Community, and the level of farm support will therefore be falling in real terms. The impact on the cost of living is minimal—0.7 per cent. on the food price index and only 0.15 per cent. on the RPI. However, the budget settlement in no way reduces our freedom of action in future negotiations on farm prices.

We welcome the new impetus to the fisheries negotiations provided by the statement on fisheries agreed at the Foreign Affairs Council. In setting out the general principles, that text fixed 31 December 1980 as a target for agreement on a revised common fisheries policy. The Government have repeatedly urged rapid progress towards a satisfactory settlement of that. The Foreign Affairs Council declaration in no way prejudiced the substantive issues for negotiation in the Fisheries Council. The matter of fish is allowed to be settled entirely on its merits, as we have always insisted is right. A further Council has been fixed for 21 July.

The budget agreement that was reached on 30 May was noted with satisfaction by the Heads of Government in Venice. It now remains for the legal instruments through which the payments will be made to be adopted.

Two draft regulations are among the documents that we are considering today. The first is a revised version of the 1975 financial mechanism. The second is the draft regulation under article 235 of the Treaty to cover supplementary expenditure in the United Kingdom by the Community.

The size of the rebate through the former will depend on the gap between our gross contribution and our GNP share—an amount that it is not possible to anticipate with precision. There is therefore to be flexibility built into the article 235 regulation, which will enable the Community to spend whatever residual amount remains to be filled between the amount coming through the financial mechanism and the level of rebate specified in the agreement of 30 May.

Those regulations are now being discussed in Brussels. Meanwhile, we are preparing for submission the expenditure programmes in respect of which we hope to get a financial contribution from the Community. The programmes will be chosen so as to meet the criteria laid down in the regulation and will be generally compatible with Community objectives. But I emphasise that it will be for the United Kingdom alone to decide what to include in them.

However, by far the most important part, in the long run, of the outcome of the Council of 30 May is the commitment to review the whole operation of the Community budget. No one should underestimate the extent to which that decision reflects a very striking and im- portant change of attitude to Community financial arrangements by other member States.

Whereas in earlier discussions there has been a tendency—and more than a tendency—to suggest that the operation, for example, of the "own resources" system is immutable and its consequences have therefore to be accepted, the Community has now set in hand a fundamental review, of which the stated purpose will be to prevent the re-occurrence of unacceptable situations for any of the member States.

Secondly, other member States are now increasingly coming to recognise that expenditure on the common agricultural policy cannot be allowed to continue to increase at a rate of over 20 per cent. a year. That rate of increase is now the object of concern, not only in this country, but elsewhere in the Community, and probably most importantly and most strongly in the Federal Republic of Germany. What is more, the French and German Governments have made clear their view that the ceiling on the Community's own resources represented by the 1 per cent. limit on the rate of VAT accruing to the Community must be maintained. This means that radical changes will have to be made in the way in which agricultural expenditure is financed from the Community budget. The historical rate of growth cannot possibly be accommodated within the rate of growth of own resources as at present defined.

In determining to embark on this review, the Community as a whole has at last grasped—and firmly grasped—the point that its budget will have to be subject to the same disciplines as all member States apply to their domestic budgets. Expenditure must be constrained by the amount of money available.

I shall not attempt now to predict the ultimate results of this review, but there is no doubt that it will be the most far-reaching review of Community finance since the late 1960s, when the own resources system was set up. This means that the Community as a whole now has a real opportunity, for the first time, to get the problems of CAP expenditure under control and at the same time to work towards a budgetary structure that will provide a reasonable balance of cost and benefit for all the member States, so that they all have a positive interest in the future development of the Community.

Now that the disputation over our budget contribution is behind us, the United Kingdom can join in these discussions and look at the problems in the same way as other member States. We are no longer one against eight. Others, too, now join with us in wanting to see change. We can work together to find solutions to the problems of the 1980s. I assure the House that this Government will not let the chance go by.

I cannot refrain from drawing a contrast between the achievement and the prospect of further progress under a Government who have been clear-sighted and single-minded in their commitment to the Community and to sensible reform of its policies, and the dismal performance and prospect that was available and would be on offer from the Labour Party. In these circumstances, I advise the House to reject the Opposition amendment.

The amendment, as I have said, refers to resolutions adopted by the House in July and November last year. But on 24 March we adopted a differently worded resolution and specifically rejected an Opposition amendment recalling those earlier resolutions. The resolution adopted on 24 March supported the Government in their efforts to secure agreement to action which will bring about a substantial, immediate and lasting reduction in the United Kingdom's net contribution to the Community Budget and furthermore to ensure that there is a commitment by the Council to long-term restructuring of the budget"—[Official Report, 24 March 1980; Vol. 981, c. 1069.] That is exactly what was achieved by the agreement of 30 May.

The Opposition amendment also suggests that the Government bought the 30 May settlement at the price of unacceptable concessions on other matters, but that is not the case. On sheepmeat we have secured agreement to a regime that, unlike that proposed at Luxembourg, is acceptable and sensible for this country. On fisheries, we have endorsed a declaration that leaves the substantive issues to be settled on their own merits in the appropriate Community forum. On agricultural prices, we have agreed, as I have said, to a farm price settlement that adds only 0.15 per cent. to the retail price index.

It is true that the settlement leaves the United Kingdom as the second largest net contributor to the budget, but, as I have explained, it also commits the Community to a far-reaching review of the development of Community policies. The purpose of the review is to identify the structural changes necessary to resolve the United Kingdom's problem so that the Community can act to ensure that such unacceptable situations never recur. The Community has pledged itself to solve the United Kingdom problem in this way. What better assurance of the Community's determination to undertake fundamental and lasting reform could the Opposition demand?

I understand that the Opposition, on a subject of this kind, face certain fundamental difficulties of their own. I noticed that the right hon. Member for Stepney and Poplar (Mr. Shore) was recorded in The Times of 9 June as saying—I quote his remarkable observation—that there are few issues on which the Labour Party is more united than on its policy towards the Common Market today. He had that to say in the course of— [Interruption.] Look at the spectacle of unity behind him. He had that to say in the course of trying to quell an outbreak of civil war that was initiated on that day by his right hon. Friend the Member for Deptford (Mr. Silkin).

Today the boot is on the other foot, for in the same newspaper we find Labour faces rebellion on EEC vote. A group of pro-EEC Labour MPs are threatening to defy an Opposition three-line whip"— and so on. We shall see, but it scarcely presents the picture of a party that is united in support of anything. The observation does not do much credit to the right hon. Gentleman, and it should not be at all surprising that the same report in The Times states that an electoral college of the Labour Party is facing the recommendations of a four-man drafting committee of the party's commission of inquiry. It must be said that the constitutional arrangements of the Labour Party are becoming as complex as anything that ever emerged from the Byzantine empire.

By contrast, the Government have a clear view and a clear purpose. We do not see the agreement of 30 May as an end; we see it as an important step in the continuing process of improving and developing Community policies. It is a striking example of the way in which, by persistent and diligent negotiation, we can contribute towards making the Community the effective vehicle of our own aspirations and of the hopes of Europe as a whole.

4.48 pm

Mr. Peter Shore (Stepney and Poplar)

I beg to move, in line 12, to leave out from "Policy" to the end of the Question and to add instead thereof: but, recalling the unanimous Resolutions of the House of Commons on 16 July and 22 November 1979, urging a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts, and recalling the Prime Minister's pledge that reductions in Great Britain's grossly unfair net contribution to the European Economic Community Budget would not be traded against sheepmeat, fisheries or further unjustified increases in Common Agricultural Policy prices, deplores the agreements of 30 May which leave Great Britain the second largest contributor to the European Economic Community Budget, which fail to make a fundamental or lasting reform in the European Economic Community's budgetary arrangements, which make concessions on sheepmeat and fisheries and which include further damaging increases in food prices and agricultural support costs.'. This is the fourth debate since the important matter of the 1980 Common Market budget was first brought before the House on 16 July 1979. The documents before us are voluminous and complex. It is as well to remind ourselves of the central issues and the main themes of this and previous debates. They are the swollen size and increasing growth of the EEC budget, the distorted pattern of the budget's expenditure, the unprincipled and bizarre system of taxes which finance it, and, at the centre of our concern, the appalling and disproportionate burden that those arrangements impose upon the British people.

Outside the House people simply cannot understand why it is only now that the scale of the problem has been revealed, and how, above all, it came about that Britain can be subjected to such exactions. We know the answer to both those questions—and no one knows them better, from first hand involvement, than the Chancellor of the Exchequer. He made a brazen and frivolous speech, and gave a version of history that was both distorted and perverse.

I shall begin by putting that matter right. The crisis in our budgetary contribution was, from the start, programmed for 1980. Under the terms which the then Prime Minister accepted in 1971–72 and which were embodied in the Treaty of Accession, the first five years of our membership were governed by a percentage payment related to our share of the Common Market total national product. The percentage was deliberately low in 1973, and rose to its full share in 1977. We began with a gross contribution of £181 million in 1973, which rose to £737 million in 1977. As the House knows, that was not all. From 1978 to 1980 the Treaty commitment obliged us to depart from the key and to pay further contributions based upon the application to Britain of the own resources system of the EEC.

In 1978 we were programmed to pay two-fifths of the difference, in 1979 a further two-fifths, and in 1980 the full amount. As the figures show, Britain's gross contribution leapt from £737 million in 1977 when the key formula was abandoned to £1,348 million in 1978, to £1,606 million in 1979, and to £1,809 million in 1980. Our net contribution rose just as spectacularly from £369 million in 1977 to £1,057 million in 1980.

When we debated these matters in 1971–72 the Government of the day vigorously denied what was in store. They asserted that no one could foretell the magnitude of our payment so far ahead. They accused those who made the necessary calculations of scaremongering, prejudice and worse. On 20 June 1972, when we put the matter specifically in an amendment on the budgetary contribution, the Chancellor and his party voted it down. In 1975, as part of the renegotiations by the Labour Government, an attempt was made to reduce the anticipated burden, and a corrective mechanism was introduced. It was hedged round with conditions, and it achieved very little—as I and the majority of my right hon. and hon. Friends are entitled to say, but about which no conceivable complaint can be made by the Chancellor or his friends in the Conservative Party. He has the gall now to speak about his inheritance. It was he and his party who, when the re-negotiation White Paper was put before the House on 9 April 1975, gave it their uncritical and wholehearted support. Into the Lobbies they trouped, to express their approval in a Division the result of which was 396 in favour and 170 against. The 170 against included virtually all those on this side of the House, and two or three from the Conservative Benches.

Sir Geoffrey Howe

Does the right hon. Gentleman agree that the motion that was carried with the support of Conservative Members was tabled by the Government of whom he was a member?

Mr. Shore

Most certainly I was a member of that Government. We had an agreement, a constitutional precedent, that on this matter we were free to express our judgment, and we did so. That led to the referendum campaign. That is a well-known fact, and the right hon. and learned Gentleman knows it. He cannot disguise the fact that in 1975 he voted specifically for the very proposal that he is now saying we should never have accepted, and that 170 Labour Members voted against.

Several Hon. Members

rose—

Mr. Shore

I shall give way later.

Mr. Heffer

rose—

Mr. Shore

I shall give way in a moment. I wish to finish this point and come to the substance of my remarks.

It is to rescue our people from the folly of these arrangements that we have now embarked upon a most difficult task. What the Conservative Government of 1970–74 conceded was embodied in treaty arrangements which, in their own terms, were incapable of change except with the agreement of all the beneficiaries of our surrender. When the reality of what was at stake hit the nation, with the publication in the summer of 1979 of the Common Market draft budget for 1980, it was our belief that the time had come —and we thought the Government believed it also—to say "Enough is enough".

Mr. Heffer

I refer to the exchange between my right hon. Friend and the Chancellor of the Exchequer. We all feel that the stand that my right hon. Friend and other Ministers took at that time was commendable. I wish to make it clear that they were standing on Labour Party policy—irrespective of what the Labour Government did at that time. [Interruption.] That point is very important because the Labour Party has a good record on this matter. It urged the people of this country to vote "No" at that time, and 8 million did so. In the previous general election 11 million voted for the Labour Party. Therefore, of that 11 million, 8 million supported the Labour Party on the referendum issue.

Mr. Shore

It was a free vote, and people behaved honourably according to their judgment at that time. But that does not in any way—and I know that my hon. Friend does not in any way wish to do so—take anything away from the point that I made earlier, and which I do not need to reiterate.

Mr. Eldon Griffiths

rose—

Mr. Shore

I am doubtful whether I should give way, because I want to proceed. However, I shall give way.

Mr. Eldon Griffiths

I am much obliged to the right hon. Gentleman, and his giving way now will enable him to proceed to what he has described as the substance of his remarks, instead of the knockabout in which he indulged at the beginning of his speech. One presumes that he is speaking for the whole of the Labour Party, because he is the Front Bench spokesman. Will he make it clear whether today he is speaking for all his colleagues, for only that portion who agreed with him and voted against renegotiation, or for those who did not agree with him and who voted for the then Government's White Paper? Who does he speak for now?

Mr. Shore

That is below the hon. Gentleman's normal standard of intervention. It does not deserve a reply, and he will not get one. As I said, it was our belief, having seen the 1980 budget, that it was time to say that enough was enough. In the first debate on 16 July the Opposition tabled an amendment urging the Government to press for fundamental reforms in the budgetary arrangements so that Britain's contribution would at least be not greater than its receipts. That amendment was accepted by the Government, and it received the unanimous approval of the House.

We returned to the matter on 22 November, a week before the Dublin Summit, when the Chancellor of the Exchequer introduced a motion reaffirming the resolution of 16 July, and inviting our support for the Prime Minister in her determination to secure the objectives approved by the House on 16 July."— [Official Report, 22 November 1979; Vol. 974, c. 582.] Now, following the Council meeting of 30 May and the Lord Privy Seal's statement of 2 June, we have at last before us the results of the Government's determination to secure their objectives. It is right, therefore, that we should give our judgment and advice on it. Today's debate requires us to take a forward look at the tasks and the unsolved problems that clearly lie ahead, and, inevitably, to undertake a post mortem on the events that have led to the deeply unsatisfactory arrangements which were wrung out of the Prime Minister and her Ministers in the meetings and negotiations from Dublin onwards, and which were finally conceded by the Foreign Ministers at their Council meeting on 30 May.

No one who has followed our debates, and no one who has studied the Chancellor's speech of 22 November will fail to understand why we are angry and disappointed today. The objectives that the Prime Minister, the Chancellor and the Government set deliberately and carefully for themselves were as follows. The first was the achievement of a broad balance between Britain's contributions and receipts from the EEC budget. The Chancellor will recall that he not only volunteered the phrase as his principal objective—a formula that was originally promulgated by the Prime Minister in her Winston Churchill memorial lecture some months previously—but happily responded to the intervention of my hon. Friend the Member for Blackburn (Mr. Straw) in order to stress and emphasise the point. The Chancellor said: My right hon. Friend and I have repeatedly stated our objective to be a broad balance in the United Kingdom's accounts with the Community. To reinforce the point, he said: I am amazed at my own moderation. Secondly, the Government sought a permanent solution to that problem. On 22 November the Chancellor said that the solution must operate in respect of 1980 and subsequent years. It must be robust. This time the solution must be one which, as far as can possibly be foreseen, will last as long as the problem. He went on to assert: It follows from that that it will not be sufficient to offer a temporary measure that will afford relief for only a year or two and then leave us in as intolerable a position as ever"— [Official Report, 22 November 1979; Vol. 974, c. 593–7.] The third objective which the House discussed, and which the Government accepted—I think with tongue in cheek— was to bring about a fundamental change in the budgetary arrangements, not a tinkering with existing arrangements on taxation or expenditure, but a fundamental change. That can only mean a change in the increasingly absurd "own-resource system" and a major assault on the CAP, whose distortions and surpluses dominate Community expenditure.

On 22 November the Chancellor said that these changes were essential because not only was Britain bearing a large and grossly disproportionate burden, but that there were reasons of principle as to why that could not be tolerated any longer. He said that there was no justification for the position under which the United Kingdom was transferring resources into much richer member States through the Community budget. He said that the budget embraced redistribution with a vengeance, in that it redistributed to those who have, taking away from those who at present have not.

Mr. Marlow

rose—

Mr. Shore

The Chancellor made it plain—how could he do otherwise—that there were no offsetting gains in the balance of trade to justify the United Kingdom being called upon to pay a massive budgetary price to secure them.

On agriculture, in a characteristically British understatement, the Chancellor said: There are some resource costs, not gains, for the United Kingdom over and above the budgetary costs. We do not accept the arguments that special benefits to us outside the budget would satisfy a large budgetary price."— [Official Report, 22 November 1979; Vol. 974, c. 591.] Against that statement of objectives and argument I welcomed the Chancellor's then stance on behalf of the Government. He was indeed a sinner come to repentance, and I promised full Opposition support, provided only that he did not retreat. The House accepted the motion on 22 November.

Little was achieved at the Dublin Summit on 30 May except that the 1975 refund arrangements were to be stripped of most of their cramping conditions. That still left a sum of over £700 million per annum. The Prime Minister said at a press conference in Dublin that the results were totally unsatisfactory and that she was not prepared to accept half a loaf. She said that the next Council meeting would be the last chance and that it was, after all, our own money that we were seeking to reclaim.

So far, so good. But in the Prime Minister's statement to the House on 3 December there was the first significant shift in the Government's position. She said that she was now ready to search for a "genuine compromise", and when I asked her whether she understood the implication of what she had said about our own money, she replied ambiguously: I most certainly said that I believed that in a way this was our own money. But we were still encouraged by three main assertions. First, as the Prime Minister said: I left our partners in no doubt that my room for manoeuvre was limited. The second was her explicit assurance that there would be no trade-off in reductions in Britain's budget contribution against the surrender of British interests in other areas—fisheries, energy, sheep-meat and agricultural prices. The third was her apparent willingness to make up the British argument with direct action. The Prime Minister said on 3 December: 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."—[Official Report, 3 December 1979; Vol. 974, c. 3042.] So, what happened between then and the next Summit meeting in Luxembourg on 27–28 April, I do not know. Although some progress on the size of the refund was made, it was clear that we were falling far short of a broad balance, that no permanent solution was in sight, and that the Community had been pressing hard for British counter-concessions on agriculture prices, sheepmeat and fisheries. It was said that other Heads of Government were even refusing to discuss the matter at the next summit, or any subsequent summit.

The Prime Minister did not then accept the Community's offer—as the Chancellor reminded us—but no one could doubt that a major retreat was under way. It was hardly surprising, therefore, that the final settlement was left to such amenable and agreeable characters as the Foreign Secretary and the Lord Privy Seal at the Council of Ministers on 30 May.

Let us now assess the result. On the positive side the United Kingdom's net contribution for 1980 will be reduced by £700 million, and in 1981 by over £850 million. Fine—until we recall the outrage of these exactions, that it is our own money, and only two-thirds of it is to be restored to us. How does that relate to the Government's repeatedly stated objectives?

First, instead of a broad balance—or a broad balance minus a little room for manoeuvre—the British net contribution in 1980 will be £371 million, in 1981 a minimum of £445 million, and in 1982, although the figures are not yet available, a sum that cannot be less than £550 million. So much for broad balance. Britain is to continue to pay out substantial sums to countries which are in the main "richer than our own"—to use the Chancellor's words. Britain is now to be not the first but the second largest net contributor to the EEC budget. Why? On what principle of equity can one justify Britain being the second paymaster of the Community, when in terms of national income our position is entirely different?

Secondly, we must consider the duration of the settlement. Instead of a solution that will last for as long as the problem, we have at best a three-year arrangement that will expire on 31 December 1982. If nothing is agreed by then, in subsequent years Britain's net contribution will be based on the existing formula under the Treaty, and will be not less than £1,500 million per annum.

Thirdly, a specific pledge was given, first in 1979, during that year's price review, and again this year, by both the Prime Minister and the Minister of Agriculture, Fisheries and Food for an agricultural price freeze. On both occasions, the Minister has eaten those words. The 1979 settlement increased the cost of the CAP by about £700 million, and the 1980 settlement, agreed on 30 May in the Council of Ministers, has added a further £1,000 million to agricultural expenditure. The cost of the budget this year will increase by about 17 per cent.

Fourthly, in spite of the Prime Minister's assurance that fisheries, energy and sheepmeat are separate questions each of which will be considered on its merits, and that they are not linked to a solution of the budgetary problem, the agreement of 30 May must have been a pure coincidence as it conceded to France the sheepmeat regime which it has sought throughout the past decade, and fisheries, on which decisions have yet to be taken, are clearly part of the same package deal.

When I measure the outcome of these negotiations and recall the clear and emphatic pledges of the Prime Minister and the Chancellor, I ask myself whether they ever meant what they said or whether it was all an exercise in cynicism. Is not it a gross contempt of this House that the Goverment can invite and accept resolutions, and then spurn them in negotiations when it no longer suits their purpose?

Mr. Michael Latham (Melton)

How does the right hon. Gentleman have the gall to come to the House and complain about the Government getting refunds of hundreds of millions of pounds, when the previous Government got nothing at all? How does he have the gall to talk about price freezes? When did he ever get a price freeze?

Mr. Shore

I have no intention of going back over the first part of my speech. Had the hon. Gentleman been reasonably alert, he would have heard it and found the answers to his questions.

We must now ask about the future arrangements. This afternoon, the Chancellor obviously attached very great importance to what I suppose we can rightly refer to as paragraph 7 of the 30 May communique. That is the part which points to the special review of Community policies. When the Lord Privy Seal mentioned this in the House on 2 June, he referred to it as being of great importance, together with the restraint imposed by a 1 per cent. ceiling which will enable us to press for lasting reforms, which will among other things, resolve the British budgetary problem".—[Official Report, 2 June 1980; Vol. 985, c. 1045.] That 1 per cent. ceiling, of course, meant the ceiling on the VAT contribution and the approaching exhaustion of "own resources" for the purposes of the Community's finance.

I certainly agree that a major effort will have to be made and that that review has at least a potential importance. But I must warn the Government—[Interruption.]—My goodness me, about the easiest thing that one can get in the European Community is an agreement to set up a special study. First, I must warn the Government against facile optimism. There is no guarantee whatever that this review, any more than previous reviews, will lead to agreement or action. The largest problem is undoubtedly the CAP, which accounts for well over 70 per cent. of the total budget. But the truth is that nearly all Community countries except Britain are beneficaries of the CAP and that every one of them has a veto on policy change. Secondly, the 30 May communique itself gives anything but a free hand to the authors of the policy review. They are hedged in by the Council's specific agreement not to call into question the common financial responsibility for these policies which are financed from the Community's own resources, nor the basic principles of the CAP". Thus, the principle of the CAP and the "own resource" system is specifically entrenched by the Council agreement of 30 May—an agreement to which Britain is now a partner.

Thirdly, I must counsel against too much optimism about the opportunities which will arise when the Community runs out of money in 1981–82. When this happens, it will not be the CAP that will be the first of the Community's expenditures to be cut. The CAP falls under the obligatory expenditure categories of the European budget. It is far more likely that the axe will first swing against the regional and social funds, which are non-obligatory in budget terms and which, are, of course, of some modest benefit to the United Kingdom.

Fourthly, the negotiations and discussions of Community policy are supposed to be completed by the end of June 1981 so that new arrangements can operate from the beginning of 1982. I find that a wholly unconvincing timetable. I am made even more uneasy by the knowledge that our bargaining position will be weakened by certain features in the temporary arrangements for 1980–81 which the Government have agreed.

I am referring in particular to the new regulation under article 235, which authorises supplementary expenditure in the United Kingdom—if it works, the larger part of our refund. To begin with, the regulation is time-limited to 1980–81. Therefore, unless the Chancellor can claim the contrary, any payment to us for 1982 will require a separate agreement by the Council of Ministers. Further, under article 3, expenditures will need the approval of the regional development committee, with endless possibilities for objection and delay. In bringing forward the payments to the current year which the Government obviously wish to obtain, decision is subject to qualified majority vote in the Council. The right hon. and learned Gentleman had better have another look at the regulation. Finally, the Commission itself is entitled, if it is not satisfied with all the details and objectives of each expenditure proposal which Britain puts forward, to suspend the authorisation of payment to us.

Clearly, very considerable pressure could be mounted against us throughout the lifetime of this regulation. In addition, there is more than a hint in paragraph 9 of the Council communiqué of pressure on other Community matters that we will be expected to concede.

Our partners have made their own intentions entirely plain. When addressing French farm leaders in Paris on 5 June, President Giscard d'Estaing stated that if there were again problems in fixing farm prices next year he would insist that the already agreed reductions in Britain's budget contribution for 1981 should not be carried out until farm prices are fixed. On 16 June, France and West Germany warned publicly in Brussels that without solid progress over the next month towards a solution of the EEC fisheries dispute, the implementation of the British budget settlement would be delayed.

This is not exactly a pressure-free bargaining position for Britain to embark upon the major discussions which lie ahead, including, of course, the review of Community policy to which the right hon. and learned Gentleman attaches so much importance, and which is supposed to lead to a permanent solution.

Several Hon. Members

rose—

Mr. Shore

I see little to rejoice about in this settlement.

Mr. Hugh Dykes (Harrow, East)

rose—

Mr. Shore

Indeed, I believe that a major opportunity has been missed. Had the Government sustained their veto on CAP prices this year, there is no doubt that the CAP itself would have been substantially changed. The French would have been driven to national measures—they were absolutely on the point—to sustain their own farmers, an effective ceiling would have been placed on CAP expenditure and the rules would have been irretrievably broken. No wonder there was rejoicing, not only in France but in Brussels as well, where Commissioner Gundelach knew exactly what was at stake!

Mr. Dykes

rose—

Mr. Shore

Equally, the opportunity was missed for Britain, by its own actions, to intercept the outflow of Britain's money going to the EEC. We promised the Government a quick legislative passage for such a measure, but our offer was refused.

It is not only the Opposition and the country who are disappointed and angry with this settlement. Our views are, I believe, substantially shared by the occupant of No. 10 herself. I can well understand it, for, after all, it was the Prime Minister who as recently as 20 March told the House of Commons: First, I adhere to the phrase which I used immediately after the Dublin meeting, that we are prepared to compromise, but that we have very little room for manoeuvre. It turned out to be £1,500 million over three years room to manoeuvre. Secondly, in the last resort we shall have to consider withholding our value added tax contribution. Let there be no doubt about that.

Mr. Dykes

Will the right hon. Gentleman give way?

Mr. Shore

The Prime Minister continued: Thirdly, on the budget and a number of other matters which we need to settle—fish, agricultural prices, sheepmeat, and so on—we shall continue to treat each item on its merits. We simply must do so. Fourthly, the right hon. Gentleman"— that was my right hon. Friend the Leader of the Opposition— asked about a price freeze. It is our intention to stick to a price freeze on products which are at present in surplus."—[Official Report, 20 March 1980; Vol. 981, c. 636.] What can I or anyone else say? But I was certainly not surprised to read the account in The Sunday Times on 8 June of the Prime Minister's meeting with the Foreign Secretary and the Lord Privy Seal at Chequers on their return from Brussels: that they suffered a punishing interrogation, that she deeply disliked the deal and regarded it as a defeat which others put her in the position of being virtually obliged to accept. The returning Ministers, in my view, did not deserve a drink even though, after two hours, according to certain accounts, they were offered one.

Mr. Dykes

Will the right hon. Gentleman give way now?

Mr. Shore

But the real damage is to the Government's credibility and to that of the House of Commons.

Mr. Dykes

rose—

Mr. Shore

The Community countries have now taken the measure of this Government, and I fear that our word and resolve have been seriously devalued. The House has been given assurances of the most specific kind and it has expressed itself again and again in unanimous resolutions. The impotence of Britain and of the House of Commons has been demonstrated in a way that we should all find impossible either to forgive or to forget.

Mr. Dykes

rose—

Mr. Shore

In Common Market affairs, as we have seen so often before, wishful thinking among Ministers, together with briefing and manipulation of our so receptive media, can in the short term deceive people. But the truth will out and this last deal will prove to be no exception.

Mr. Dykes

Will the right hon. Gentleman give way?

Mr. Shore

Nothing has been settled. The Chancellor and the Lord Privy Seal know only too well that a new and exhausting battle will have to be fought. For the sake of our own people, my devout wish is that that battle will be fought by a new Government who have the will to succeed.

5.23 pm

Mr. Patrick Wall (Haltemprice)

The right hon. Member for Stepney and Poplar (Mr. Shore) will forgive me if I do not follow the ramifications of his biased and fanciful speech, because it is well known that the Opposition are split on the Common Market. The Leader of the Opposition takes one view and the right hon. Gentleman takes an opposite view.

I congratulate my right hon. Friend the Prime Minister and my right hon. and learned Friend the Chancellor of the Exchequer on obtaining a good deal for Britain. It needed a great deal of courage. I think that the whole country realises that and is grateful to them.

We are discussing a number of documents today. I want to concentrate on document 7389/80 on the common fisheries policy. The right hon. Member for Stepney and Poplar did not refer to that document at all, despite the importance of the fishing industry to this country. [HON. MEMBERS: "He did."] Only en passant, shall I say? However, it was referred to in some detail by my right hon. and learned Friend. I think that right hon. and hon. Members on both sides of the House will agree that this is an important subject to discuss today because, as my right hon. and learned Friend said, the Fisheries Ministers are to meet on 21 July and hope to devise an agreed common fisheries policy by the end of the year. I am sure that all right hon. and hon. Members wish them well in that difficult task.

The first heading in the common fisheries policy document refers to rational and non-discriminatory Community measures for the management of resources and conservation". Recently, at a conference in London, a Mr. Michael Berendt, the fisheries liaison officer of the European Commission in London, presented a paper on the common fisheries policy. I should like to quote a couple of sentences from that paper because they are germane to the debate. He said: In fact, there are today no Community rules. Once the Council has reached and adopted regulations—we hope early next year—for a revised common fisheries policy, these regulations will have a binding legal force on all member States and will be enforceable through the European Court of Justice and through national courts. They are not today. That is one reason why the fisheries industries of Western Europe are in such a mess.

The second point in the common fisheries policy document refers to fair distribution. Indeed, it refers to the special measures being taken to assist countries with traditional fisheries activities, the special needs of the local population and the loss of catch potential in third country waters. These matters are of great concern to the British fishing industry, both distant water—which has lost so much because of the 200-mile limits around Iceland, Norway and elsewhere—and the inshore industry.

So far the EEC has agreed total allowable catches, but not quotas. It is well known that about 60 per cent. of the EEC stock of fish is found in the British 200-mile zone. When finally it agrees on quotas, they will to some extent be based on the size of the fleet. This is important because the British fishing fleet is rapidly diminishing. If it goes on as it is going on before a common fisheries policy is agreed, we shall get far lower quotas than we expect or deserve.

The next item is "effective controls". Control is the responsibility of member States. I understand that the EEC proposes to bring in a standard log book, to have authorised places of landing, which will cover at least 80 per cent. of Community landings, to have any transhipment at sea reported by the skipper himself within 15 days and to have the total of all these catches debited against the quota of the flag country. That should be done today, but it is not being done equitably. I remember only too well that a certain quota was allowed to West Germany, Denmark and this country in Norwegian waters. The Danes and the Germans between them took up the whole quota. When our vessels went there, there was no quota left for them to fish. That is the position today. One hopes that if there is effective control, as there should be under an agreed common fisheries policy, it will be properly maintained. That, of course, means adequate policing.

The next point in the document relates to structural measures. It states specifically that if the fishing industry of the EEC, and particularly of this country, has to be restructured, financial contributions will be made by the Community. The number of larger vessels in the British trawler fleet is declining rapidly. In 1975 they numbered 300. By the beginning of this year the number was 150. The number is declining month by month. There are fewer than 100 operating today. Anyone who visits the major fishing ports will see many of them tied up. That is largely because of the 200-mile rule.

The fishing industry, particularly that concerning inshore vessels, is facing major fish import problems. In the first four months of 1980 imports of fish went up by 20 per cent. to 126,195 tonnes. That had the effect of depressing fish prices, thereby making it difficult for the smaller inshore boats to make profits. The distant water boats are tied up because of the 200-mile limit. Because of these two factors, the British fishing industry is in a very dangerous position.

Only yesterday there was a meeting at the Palace of Westminster attended by the four major catching organisations and the eight major fish producers' organisations of England and Scotland. At that meeting certain matters were made clear and there was a call for EEC help in due course. The Scottish Fishing Federation said that it had lost at least £12 million in the last six months. Those figures can be verified by the Scottish banks. The British Fishing Federation said that its average losses were £70,000 per trip. The average distant water trawler does only one trip, because of quotas. By September this year, the British trawler fleet's deficit will be £25 million. The British trawler fleet alone would need at least £9.1 million to carry on for the next six months.

The same applies to small ports. Share fishermen have agreed with their crews to reduce salaries by about 50 per cent. In many ports 80 per cent. of small vessels are already in hock to the banks as a result of mortgages. If they foreclose, those vessels will be tied up, since not many people will want to buy them. They are very much affected by increased fuel costs. Indeed, fuel costs will increase again in the near future. It was said that the distant and inshore fishing industry in Scotland and England would need about £35 million to keep it going for the next six months.

Two points were made, which I have been unable to check. However, they are germane to a debate on the EEC. I am told that article 36 of the Treaty of Rome lays down that there should be rough equality in standards of living. Article 22 states that if the level of imports endangers a country's industry, an appeal can be made to the EEC. If the EEC agrees, imports can be limited until they come into balance with the production of that country. I have not had time to verify that, but I commend those articles to the Minister. I am also informed that no member of the EEC has ever appealed under that article. If that is so, I hope that the Minister will consider the issue and do something about it.

Imports are having a serious effect. According to figures given yesterday, Canadian cod is imported at about £15 a kit. The British price for catching and selling the same amount of fish is double that, at £30. As a result of the failure to reach an agreement on the common fisheries policy, it has been impossible to negotiate swap deals with other countries, such as Norway, Greenland, Canada, Iceland and so on. Such deals are negotiated through the EEC and cannot be negotiated by Britain alone. That seriously affects the distant water industry. However, Germany has been fishing off Greenland. Agreements were made between the EEC and Canada that allow certain EEC vessels to fish off the Canadian coast, and in return imports are allowed into Europe. Most of those imports come to Britain. The sooner a common fisheries policy is negotiated, the sooner the distant water industry will have employment for its vessels.

Both the distant water and the inshore fishing industries are in a desperate position. The distant water industry is particularly affected by the 200-mile limit and the failure—as the common fisheries policy has not been negotiated—to achieve a swap deal. The inshore water industry is particularly endangered because of the increase in fuel prices. No subsidy is given to our fleet, although I am told that it might be possible to gain a subsidy from the EEC. I understand that such subsidies are sometimes given to the horticultural industry.

We may be successful in negotiating some form of common fisheries policy on 21 July that will come into force next year. However, the EEC is unlikely to provide any money until that policy is agreed. That will be too late for the industry. I hope that the Minister will tell his right hon. Friend the Minister of Agriculture, Fisheries and Food, who is meeting the industry tomorrow, that hon. Members who represent fishing constituencies agree that the industry is in a dangerous position and must have immediate help from Britain in order to tide it over until a common fisheries policy is negotiated. I wish my right hon. Friend all good fortune in those vital negotiations on 21 July.

5.34 pm

Mr. J. Enoch Powell (Down, South)

I share the interest of the hon. Member for Haltemprice (Mr. Wall) in the fishing industry, and my constituents share the interests of his constituents. I suppose that the subject of fisheries was the first to alert wide areas of the British public to what they had lost through membership of the European Economic Community.

I shall refer later to the paper on fisheries, which, curiously, and perhaps significantly, is included among the bundle of documents placed before the House in the context of the budget; but I want to begin by quoting a sentence written by the Prime Minister, which appeared in a letter that she wrote, on 12 June, to my hon. Friend the Member for Antrim, South (Mr. Molyneaux). In the context of the Community, she wrote: The first task was to deal with the inequitable budget contribution. That we have now done. It would be hard to find words that illuminate more electrically the contrast between the point of view of the budget agreement held here—or at least in some quarters—and that held on the Continent.

That difference of viewpoint is fundamental. It is summed up by the two heads upon which the official Opposition amendment is based. Those two heads are the temporary nature of the budget agreement, and its conditionality.

The right hon. Member for Stepney and Poplar (Mr. Shore) reminded the House that the Government set out to obtain a permanent settlement, which would embody a broad balance of contribution and receipt. It is no accident that the outcome has been the reverse in both respects. Perhaps hon. Members will look at the preamble, and the title, of one of the two framework regulations now before the House through which the budgetary agreement is to be implemented. I quote from the subject heading of document 7943/80: To contribute to the solution of the principal structural problems affecting the United Kingdom and hence to the convergence of the economies of the member States of the Community. It is worth pausing to consider the nature and meaning of that concept of convergence. On this side of the Channel it is taken to mean that, as we continue as members of the Community and as the Community develops, we shall somehow be averaged up to the rest of the EEC; our gross national product per head will arrive at a beautiful equality with that of Luxembourg, Italy and, perhaps in due course, Greece and Portugal. Presumably, also, the structure of our economy will become identified with the structure of the economies of the Continental nations.

If that were the meaning, then certainly the application of the rules would eventually eliminate or greatly reduce the violent disproportion of the net British contribution. But no one can reasonably suppose that that is what convergence will mean.

There is another word in this context which ought to be brought into the picture. The document of the Commission, produced on 20 March, which dealt with the principles on which the budget settlement was to be reached —and on which, indeed, if hon. Members will refresh their memory of the document, it has been reached—set out the principles that must be respected in any attempt to resolve these convergence and budgetary questions. It then went on—and I draw the attention of the House to this sentence: the decisions which the European Council is invited to take have to be seen in the context of the need for Member States themselves to contribute to greater integration within the Community. Thus, explicitly the Community aims at being an integrated economy and in due course an integrated State. Does anyone really imagine that an integrated West European economy of which this country was a part would be an economy in which there was near equality of income per head, measured in the old national boundaries and on the old national definitions? The result would be the opposite. The result of all amalgamations of this sort—its very consequence, as we know it ourselves over the centuries in the United Kingdom—is specialisation, centralisation, differentiation. Those, if hon. Members like—and we do like them in the context of the United Kingdom—are the rewards of unity, the rewards of integration; they are the very success which integration promises.

But that will not result in the net contribution of the United Kingdom, under current rules or anything like them, being painlessly eliminated. What it means, put in other and more direct terms, is that the United Kingdom will sooner or later accommodate itself—its people will sooner or later accommodate themselves —to the role which falls to them in an integrated economy of West Europe. These measures—it says so in the document—are to keep us quiet for a bit, for another year, or two years, or perhaps three years, until we have shaken down even further into the disadvantaged position which is fated for the economy of this country in an integrated EEC. Integration will not result in approximation of the shape of our economy to the rest. We shall still remain largely dependent upon imported foodstuffs. We shall still remain, in a sense that none of the rest of the member countries is, an overwhelmingly industrial country. But we shall learn to pay more and more of the price for being integrated into this particular kind of economy and of State.

Thus, our examination of the unfulfilled ambition to achieve a permanent equation of put-in and take-out—something incompatible with the very nature of the Community—serves to illuminate the contrast and the conflict which we shall find ourselves progressively exploring in the future.

I take the other matter—the matter of conditionality. We were told from the start of the negotiations that "all these matters will be dealt with on their own merits. "There is no connection whatsoever", the Government said, "between the price review, no connection whatsoever between fisheries policy and the budget. The budget is a matter which will be dealt with and settled, and on which we shall get our own terms, separately without regard to the rest." That was not how it turned out. The Lord Privy Seal, when, deputising for the Prime Minister, he made the statement to the House—I do not know whether his speech had been vetted carefully enough—referred to the result as "the package". There he was—reporting on the outcome of meetings of the Foreign Affairs Council, the Fisheries Council and the Agriculture Council; and what did he call it? He called it a "package". Of course, he was right. It is a package.

It is worth the House spending a few moments upon the communiqué put out on 31 May by Agence Internationale Europe, which includes such items as Text of compromise on 'British problem' I take from it the main points which have been mentioned already. First, the review of the common agricultural policy is to be an examination … without calling into question the common financial responsibility for these policies … nor the basic principles of the common agricultural policy. If anyone thinks that that phrase means the flatulent and vague expressions in the Treaty of Rome about economic convergence, he had better try telling that to the French, by whom "the basic principles of the common agricultural policy" are known and understood to be the principles of the common agricultural policy as it was made by France her precondition for any consideration of British membership of the Community. Yet that is part of the settlement. Those words are part of the "Text of compromise" on the British budget contribution.

Then there is the agricultural price fixing: Member States undertake to do their best to ensure that Community decisions are taken expeditiously and in particular that decisions on agricultural price fixing are taken in time for the next marketing season. That might seem to be just a general expression of the desire to get on with the business and not have things held up. It is not to be seen in that light at all; for there is another section of this document headed How the debates went and the main points of the compromise. Well, this was how that debate went: This point"— that is, the point that I have just quoted— is seen by some Member States"— guess which!— to be an intention to guarantee that the United Kingdom does not cause an obstruction next year when the time comes for fixing the common farm prices". So—"No obstruction, and you may get your money." The two are linked together—at least, "some member States" say that they are linked together.

Mr. Ron Leighton (Newham, North-East)

The ones with a veto.

Mr. Powell

The hon. Member says "The ones with a veto". At least they will be included in the qualified majority arrangements.

Then there is finally the matter of the fisheries policy, about which we were talking earlier. This is the text of the declaration: The Council agrees that the completion of the common fisheries policy is a concomitant part … I hope that hon. Members will savour that expression. One cannot deny the verbal fecundity of those who draft these documents. After all, not for nothing was Roget, who wrote the Thesaurus of the English language, a Frenchman, albeit a long-term resident in this country. It goes on: the completion of the common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present."— that is, the British budgetary business. To this end the Council undertakes to adopt, in parallel with the application of the decisions which will be taken in other areas"— please note the words "in parallel with"; one complies and one gets one's money —perhaps. One does not comply and one does not get one's money.

Those decisions include: the decisions necessary to ensure that a common overall fisheries policy is put into effect at the latest on 1 January 1981. Sir, is not that a package? Sir, is not that a decision linked with the budgetary outcome? Sir, is not that a condition? And what sort of a condition is it? We have always known that under the Treaty of Accession the cards in our hand diminished in value month by month as the fatal date of 31 December 1982 approached, when under the Treaty, the other countries will have the right to fish up to our beaches. But we have had two years knocked off it. So there is our bargaining position, with two years knocked out of it! We now have to arrive at that agreement at the end of this year. What sort of bargain does one arrive at, when there is a time by which one must agree with the other eight—who are against us — and when one must agree with them as a condition of everything else that one is hoping to get?

It might seem from some of my phraseology that I am imbued with a critical or even hostile spirit towards the other member States of the EEC. Far from it. There is, of course, an immense misunderstanding here, an immense gulf of meaning and intention between the United Kingdom and the rest of the European Economic Community; but if I had to say who was more to blame for it, I am afraid that I would not point to the rest of the EEC. After all, what do the other nations see? They would say to us "You must have understood all this. You passed an Act of Parliament by which, as a condition of joining the EEC, you stripped yourself of all the appurtenances of a nation, and laid aside your parliamentary jurisdiction, rights and powers. Presumably you did that with your eyes open. Do you not understand, have we not sufficiently explained to you, the intentions, ambitions and ultimate aims with which this Community was established and is being developed? Do you not read the documents? Have you not heard about 'progress towards integration'?" Those would be difficult questions to answer. Yet both sides must find the means of answering them: there must be a recovery of mutual understanding.

There is no sign yet that we are prepared to regard ourselves in the EEC as other than a nation. If we are a nation, then indeed we pay in and we get out in accordance with our national interest. If we are a nation, we bargain on one subject and arrive at a result, then bargain on another subject and arrive at a result on that. If we are not a nation, on the other hand, we will take the consequences of economic and eventually of political integration. If we are not a nation, if our State is superseded by the statehood of the EEC, then of course in the end all questions will be decided in common and one will not be distinguished from another.

Thus, the most fundamental of all issues is raised, and raised between us and the nations of the Continent, by this sham agreement, this agreement of mutual incomprehension, or, worse still, this agreement of mutual consent to mean different things.

As the months go by and the people of this country discover that what they have been told and promised and what the Government assured them they would receive is not forthcoming, there will have to be genuine understanding and genuine decisions taken in the end. We shall have to explain to ourselves and to others that our nationhood in the United Kingdom is incompatible, not with the most far-reaching co-operation, friendship and alliance with the peoples of the Continent, but with membership of the structure of the EEC.

5.55 pm

Mr. Richard Body (Holland with Boston)

I find myself in total agreement with every word spoken by the right hon. Member for Down, South (Mr. Powell). It would be superfluous for me to say anything more, except that I wish that more of my right hon. and hon. Friends would ponder the argument that he put forward and appreciate the consequences for our country.

My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) made a telling point when he referred to the upper echelons of the Foreign Office, and the part they played in this matter. It is disagreeable to speak ill of civil servants for what they have done, when clearly one would rather point the criticism at those who are constitutionally responsible. Nevertheless, in this matter, I believe that we have been badly served by certain Foreign Office officials.

During the week before and the weekend following the meeting of the Council of Ministers when the Foreign Ministers reached an agreement that we should get back a little more of our own loaf, they orchestrated a very skilful campaign in the press through their information officers and the diplomatic correspondents. It should be recorded that some of the latter feel that they were deceived by the information that they were given. They claim that there were half truths, and the matter was presented to them in a very dubious way. They feel accordingly that they deceived their own readers in presenting the story in a way that they would not have done had they known the facts that they now know.

Worse than that, it looks as if that orchestration of public opinion was intended to undermine the Cabinet itself, and make it more difficult—perhaps even impossible—for the Cabinet to reach a more robust view of the settlement that had been arrived at. If Ministers themselves were responsible for the information—or lack of information—that went out, obviously they must share some part of the blame. On the other hand, if they did not, it is time they had firmer control over the activities of those responsible for the information emanating from the Foreign Office.

Is there any reason why this country should be a net contributor at all? In my opinion the essence of a Community is that there should be a sense of comradeship between the rich and poor, and the more fortunate and the less fortunate of those who form the Community. Our wealth, relative to that of other member States, is declining, and has been declining for several years—some of us will say ever since we entered the EEC. There seems to be no prospect now of that relative position improving. All the evidence points in the opposite direction and it is extremely serious to note the almost certain fact that this year will be the first year in five centuries of our history in which we have imported more manufactured goods than we have exported. Some of us are more than well aware of the reasons for that.

We shall become poorer and poorer members of the Community, although—and all Conservatives agree on this, if on nothing else—under the present Gov- ernment our standard of living will improve and our prosperity will gain ground. However, in relation to other States in the Community, our standard of living will decline. The main reason for that must be that we are engaged in a massive transfer of resources from this country to the rest of the Community, and that transfer represents an increasing proportion of our gross domestic product. All the evidence that comes out corroborates that fact, and it should be disturbing to every hon. Member, no matter what view he or she has of our membership of the Common Market. Yet it seems painfuly obvious that that major transfer of resources, representing an even greater part of our domestic product each year, will continue for as long as we remain net contributors.

If the raison d'être of the Community is that the stronger should help the weaker, the rest of the EEC should have understood the arguments deployed so forcefully by my right hon. Friend the Prime Minister in Dublin.

Mr. Marlow

My hon. Friend has told the House about the massive contribution that we are still having to make to the budget. Would he care to reflect also on the massive contribution that our housewives have to make by being forced to buy food at CAP prices rather than at world market prices?

Mr. Body

That is a favourite subject of mine. I do not want to be diverted on to it, but the extra cost is about £3 a week for every household. That is a severe drain on the wealth of this country and has a serious effect on our standard of living. That should be obvious to us all, no matter what view we take of the EEC.

The rest of the Common Market has shown, and continues to show, a lack of understanding in these matters. As the right hon. Member for Down, South said in quoting the French President, other EEC nations do not regard the Common Market as a true community. It remains for them—and I fear that it will have to remain for us—nothing more than a common market where one grabs what one can.

Mr. Nicholas Winterton (Macclesfield)

Like my hon. Friend, I support the views of the right hon. Member for Down, South (Mr. Powell). Will my hon. Friend explain why, if the French can take advantage of the EEC, the British Government and Britain as a whole cannot similarly take advantage and make the EEC act in the interests of this country?

Mr. Body

I agree with what the right hon. Member for Down, South said on that matter. If there are to be accusations about how each country has behaved, I cannot go along with the view that we have behaved totally with honour. We have broken our word several times. The House was not told with complete frankness about the secret talks that took place before we entered the EEC.

In a notable broadcast on French television, President Pompidou explained to the French people that this country had committed itself to the principle of Community preference, which meant excluding imports of food from our traditional suppliers and other consequences that went to the heart of the CAP. I regret that we have resorted to various devices to try to escape the obligations that were imposed on us by France before we entered the EEC.

The British people have not been told the whole story—as the French people were told—of how we came to enter the Community. In that broadcast, President Pompidou quoted General de Gaulle, who said: What I fear about the Common Market is that it will cause Britain and France to fall out. That is one of the major reasons why I am hostile to the Common Market. I believe that as long as it is founded on the CAP it will cause disunity and ill-feeling in Western Europe at a time when we should be seeking unity.

There are attractive arguments for unity in Western Europe. Some of us dearly wish that we could have a clear and united voice in foreign policy, especially in view of the void that has been created by the ineptitude of the United States, but I do not see how we can achieve that voice while its several tongues are haggling over the minutiae of the Common Market. I do not understand why our Foreign Office officials do not appreciate the force of that point.

6.5 pm

Mr. Douglas Jay (Battersea, North)

The Chancellor of the Exchequer seemed to give us a poor defence of a dubious agreement. Of course, he is one of the guilty men who introduced the European Communities Bill in 1972. Therefore, he must bear a great personal share of the responsibility for all the damage that has been done to this country since then and is continuing.

The more the new package is examined, the more illusory and temporary the benefits seem to be. Basically, we have not got a broad balance. Instead, short-term budget reliefs have been bought at the price of an even more damaging tightening of the CAP net on this country. Even the budget reliefs are hedged about with conditions. The Lord Privy Seal told us in his statement on 2 June that the United Kingdom's net budget payment in 1980, which previously stood at £1,088 million, would come down to £370 million and that the payment for 1981 would come down from £1,305 million to £440 million, but even that is conditional on the risk-sharing formula under which we are likely, as I understand it, to pay rather more—we do not yet know how much more—in the first two years.

Certainly, very little is likely to be paid back to this country in 1980. A Conservative Member asked earlier when we would get back the money that we have already paid in the first six months of this year. We have not yet had an answer to that question. All that we are offered is, in the words of the communiqué, the "possibility of advance payments" in the calendar year 1980. There is no doubt from the official documents that even that is subject to a qualified majority decision.

The explanatory memorandum to the document COMM(80)329 says that only a maximum of £102.5 million has been included in the budget for advance payments in 1980. We are told elsewhere in the documents that the figure is £202.5 million. I hope that we shall be told clearly tonight which is the maximum figure for advance payments from the 1980 budget. The truth is, therefore, that we shall get little this year. And still do not know how much it will be. So much for all the hopes held out by the Prime Minister at one time of cuts in the public sector borrowing requirement and lower interest rates as a result of the huge refund that we would get some time this year.

Neither the Lord Privy Seal nor the Chancellor of the Exchequer has told us how much of the £700 million or so of relief that we are supposed to get in the current financial year is to come by way of lower United Kingdom contributions and how much by way of higher EEC spending in this country. That is something which we ought to have been told.

In so far as the relief comes by higher spending, we have now got ourselves into this dilemma. If the spending is additional to what the United Kingdom Government would have spent anyway, there is no relief to the United Kingdom budget or to the PSBR, as we were led to believe. If, on the other hand, it is not additional, needy areas and industries that are supposed to be receiving this benefit are not getting any extra help from the EEC at all. All that happens is that the EEC pays for some aid in Scotland, Wales or the north of England which those areas would have got anyway. It is well that people in those areas should understand.

I understand that all the extra expenditure is to be non-additional, although we have not been told so clearly. This is another matter on which Ministers might inform the House. It is also clear that the specific programmes now to be financed by the EEC have to be approved by the EEC Commission. This can only mean, presumably, that programmes will have to be found that were going forward anyway under the auspices of the United Kingdom Government, that are also able to secure the approval of the EEC and to which the EEC will then contribute 70 per cent. of the cost.

The net effect, therefore, of the whole of this operation on the expenditure side is that control and approval of these schemes is transferred from the British Government and Parliament to the EEC Commission. Article 7 of document 7943/80, another of those before the House, states specifically that this expenditure will not merely have to be approved by the Commission but actually "monitored". There are to be "on-the- spot checks" by Commission officials in this country, presumably continuously throughout the period of the programme. All that really happens is that considerable control over these programmes is transferred from the British Government to the Commission.

All this is for two years only. The Lord Privy Seal—we heard similar words from the Chancellor of the Exchequer today—said that the most important part of the package was the Council's promise to undertake what he called a "radical review" of the EEC budget and other policies. We have heard that often before. The communiqué did not state that it was to be a "radical" or fundamental review. The communiqué said that it was an examination: without calling into question … the basic principles of the common agricultural policy. That is all that we have been promised. I fear that the Lord Privy Seal misled the House. He read out at Question Time, when challenged about that phrase, a number of platitudes that he said were the principles of the common agricultural policy as laid down in the Treaty of Rome.

Mr. Budgen

Will the right hon. Gentleman give way?

Mr. Jay

Not until I have finished this part of my speech. The words that the Lord Privy Seal quoted from the Treaty of Rome are not the "principles" of the common agricultural policy at all. They are the "objectives" of the common agricultural policy. It is one of the troubles of the common agricultural policy that its principles do not carry out its objectives. I am afraid that in this case the Lord Privy Seal had not been reading the Treaty of Rome.

Sir Derek Walker-Smith (Hertfordshire, East)

rose—

Mr. Budgen

rose—

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I am sorry. I do not know to which hon. Member the right hon. Gentleman is giving way.

Mr. Jay

To the hon. Member for Wolverhampton, South-West (Mr. Budgen).

Mr. Budgen

I remind the right hon. Gentleman that the second of those platitudes included the phrase that the earnings of those directly employed in agriculture should increase. Was that not more than a mere platitude? Was it not an expression of the desire of the French people to have a protected and very prosperous agriculture?

Sir Derek Walker-Smith

When one has given way once, it is always convenient to give way another time. It gives the right hon. Gentleman who is interrupted more time to think of a convincing answer to the first point while the second is made. On the point of the platitudes enshrined as the objectives of the common agricultural policy in the EEC Treaty and the Treaty of Rome, it is surely significant that those are the only matters clothed with the authority of the Treaty. All the mechanism of the common agricultural policy can be changed without amendment of the Treaty and given only the political will to do so.

Mr. Jay

I do not altogether share the right hon. and learned Gentleman's idea of convenience. That is not my reading of articles 39 and 40 of the Treaty of Rome, which laid down in effect, what we normally regard as the mechanism and certainly the basic policies—the common prices and common markets, and so on. These are clearly part of the principles of the Treaty. I agree with the implication of the question of the hon. Member for Wolverhampton, South-West.

The most damaging effect of this agreement, in the long run, is the surrender of the Government to a further 5 per cent. increase in food prices as a condition of the budget and in direct violation of the repeated pledges given by the Prime Minister and other Ministers in this Government that no such bargain or surrender would be made.

Is it correct—I do not think that we have been given an official figure—that a sum approaching £1,000 million will be added to total CAP expenditure as a result of this bargain? Before this bargain, the CAP was costing £7,000 million a year. I understand that this total has now been raised to somewhere near £8,000 million. We can surely be given the figure.

Ministers try to imply that another 5 per cent. or 7 per cent. on food prices is not too bad or burdensome. What they do not mention is that most EEC food prices are already at least 100 per cent. above world prices. I would quote only a few of the EEC Commission's latest figures, giving the ratio of EEC food prices to world prices at the present time. These show wheat prices at 93 per cent. above world prices; barley, at 125 per cent. above; maize, 101 per cent. above; beef, 99 per cent. above; butter, 303 per cent. above; and skimmed milk powder even higher. When prices vary from 100 per cent. to 300 per cent. above world prices it is no great comfort to know that they are only going up by another 5 per cent. or 7 per cent.

Mr. David Myles (Banff)

Will the right hon. Gentleman state sugar prices in relation to world prices?

Mr. Jay

The hon. Gentleman knows that for a short time, in the single case of sugar, the world price, which is not very representative for sugar anyway, has gone a little way above the EEC price and will probably stay there for a few weeks. Even if the hon. Gentleman can take any comfort from that situation, I am afraid that I cannot.

On top of all this, sheepmeat is now to be dragged into the common agricultural policy. So far from the French being shamed and made unpopular, as the Minister of Agriculture constantly told us would be the case, as a result of their breaking the law on sheepmeat, the French have gained considerably by their conduct in the whole affair. We are now to have the whole business of intervention, storage and import levies introduced into sheepmeat. In a comment on 31 May on this part of the agreement, the Financial Times said: The agreement to include lamb in the Common Agricultural Policy for the first time represents a capitulation to France on two important points: it introduces the right to use Community funds to buy surplus lamb opening the way to a lamb mountain, and it leaves open the possibility of subsidised exports from the EEC. The Australian Government are already protesting strongly against the renewed threat to lamb exports. I hope that the Minister will explain how we can be sure, with all the apparatus applied to sheepmeat, that United Kingdom lamb will not go into intervention in France. I cannot understand how we can be sure that that will be prevented. Is it true that the Commission is proposing a further 20 per cent. cut in New Zealand imports of lamb into the EEC? May we have an assurance that the British Govenment will not agree to that?

We are told that all this depends on New Zealand's agreement. New Zealand is said to have a veto. But will not New Zealand be told, as has happened so often in the past, that if the veto is used, the French will veto the whole budget package? What assurance have we that that will not happen?

The right hon. Member for Down, South (Mr. Powell) spoke about fisheries. The French Minister in charge of fisheries was reported in The Times of 17 June as saying flatly that France will hold up the budget settlement until a fisheries agreement has been agreed. Until today Ministers have assured us that there is no link between the budget package and sheepmeat and fisheries, although I am not sure what the Chancellor was saying today. If they are not linked, I do not know why the fisheries paper, document 7389/80, is before the House. I know even less why that paper includes the words that the right hon. Member for Down, South quoted. They are worth quoting again. The paper states: The Council agrees that the completion of the common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present". The document says that it is necessary in order to sustain the agreements in other areas, to adopt as swiftly as possible the decisions necessary to ensure that a common overall fisheries policy is put into effect on 1 January 1981. That means that the issues are linked. It suggests that our Government must have reached a private agreement with the French Government as a condition of the budget settlement. The document makes it clear that the two issues are formally linked.

The temporary budget relief, however, is small in relation to the total economic burden of EEC membership on Britain, if it is seen in its true perspective. The cost of membership before the package to the United Kingdom balance of payments was running at £1,500 million a year from the budget and CAP together and at least £2,000 million a year on account of our trade deficit with the EEC in manufactured goods—which deficit totals altogether £4,000 million a year. At the lowest possible computation the total burden of membership is over £3,000 million a year.

Against that, for two years under this Government we are to receive relief of about £700 million in each year. That is about one-quarter of the total balance of payments burden on the country. The rest of the burden will grow and, even with the relief, it is intolerable.

The proposed review is hamstrung from the start because of the veto on questioning the principles of the common agriculture policy. Only one reform of the CAP would really remove the burden from Britain—a change in all cases to a deficiency payments system financed by each country nationally in its own economy. The tragedy of this agreement is that the French, for the first time, were forced to the point when they were willing to do that if we refused to accept the package.

There is one simple way, however, for Britain to return to deficiency payments, to lower the price of food, to restore moderate tariffs on imports of manufactured goods and to secure a 200-mile exclusive fishing zone—and that is to leave the EEC altogether.

6.25 pm

Mr. Selwyn Gummer (Eye)

The speeches so far have had something in common—their attitude towards any documents that emanate from the European Community. It reminds me of the person who opened the first pages of "Wuthering Heights", who is said to have looked at the Bible in order to grab to himself all the promises therein and flung at everybody else the curses. I fear that we approach a debate of this kind by importing into its substance our preconceptions [HON. MEMBERS: "What about yours?"] If my hon. Friends will allow me, I shall admit that I, too. import my preconceptions into the debate.

My preconception is that Britain is a member of the European Community and it is as well to try to make our Community work. We do ourselves no favours by constantly harping on that which we find distasteful and never being generous enough to welcome that which clearly is an improvement. We shall achieve nothing if we write down the real successes that the documents represent and that the Government have managed to bring about.

Mr. Buchan

Will the hon. Gentleman give way?

Mr. Gummer

A number of speeches in one direction have been made and the hon. Gentleman has been kind enough to listen to them. Perhaps I can develop my argument a little.

The right hon. Member for Down, South (Mr. Powell) suggested that there was something intrinsic in the nature of the Continental members of the European Community which made them different from us. He said that because of that the European Community could in no circumstances work. That is what I call the "whole hog" approach. One starts by believing that no restructuring and no system can make the European Community work.

The right hon. Gentleman suggested that within the EEC Britain acted as a nation whereas the other countries saw themselves as other than nations. He said that they looked to a time when they would be able to celebrate their loss of nationality. I find it difficult to draw that distinction between Britain and France.

In its substructure, much of the speech by the right hon. Member for Stepney and Poplar (Mr. Shore) was involved in pointing out how much like a nation France had acted and that France and other nations had sought to inject into the discussions a great degree of national interest and concern. I do not object to that. However, on one hand it is suggested that the European nations, apart from Britain, are straining towards integration and that therefore we cannot be part of the Community. On the other hand, it is suggested that the nations are behaving so much like national units that we do not get a look in. They are not reasonable explanations of what happens in the European Community.

In the Community there are nations, and people within nations, who seek increasingly economic and political unification. I am certainly one of those who look for very close association between the peoples of Europe.

I hope that political and economic close harmony will enable us to grow and act together. Perhaps in that view I am further along the road to integration than some of my right hon. and hon. Friends. There are other individuals and other nations in the Community who take a different view and find it possible to do so within the confines of the Treaty of Rome and as loyal members of the Community.

The problem that we face in this House is that every time we discuss the European Community we do not discuss how to improve it, how to change it or how to make it the kind of Community that will benefit us. We discuss it, as the right hon. Member for Battersea North (Mr. Jay) demonstrated, in terms of whether we should be in or out of it. In looking at these regulations I propose to discuss how best we should see them within the developing framework of the Community.

Mr. Budgen

Perhaps my hon. Friend will explain to me which passage in the Chancellor's speech pointed to any serious attempt to change the Community over the next two years in a way that would become acceptable to us?

Mr. Gummer

I hope that my hon. Friend will follow what I am about to say, because I think that it will answer his question.

It seems to me that when one looks at the documents before us we see a major change in the power structure and mechanics of the European Community. What is now important is that instead of it being Britain which has proportionately less interest in the CAP than other Community members—in my constituency it is not so—and instead of it being Britain which bears the highest proportion of the cost of the CAP, while being the nation pressing hardest for the reform of the CAP, as a result of changes Federal Germany now bears a considerable proportion of that cost. Federal Germany has become the principal paymaster in Europe.

West Germany now has a major reason to press for the changes in the CAP because that policy is becoming increasingly costly for Germany. That is why there was a considerable internal argument in Germany on the question whether this agreement would be accepted. Count Lambsdorff was faced with a major argument because it was seen that once this change takes place Germany will become the mainspring of the change in the CAP. It becomes a much more feasible and fundamental argument to believe that the CAP will be changed because it is in the interests of the principal paymaster instead of being merely in the interests of the country that is least strong in that particular suit.

I start by saying to my hon. Friends that that is a major and important change. If one looks at these documents —I am sorry that the right hon. Member for Stepney and Poplar did not mention the point—and the agreement, one should, first of all, ask what reception they received elsewhere. If this agreement is what the right hon. Gentleman says it is, and if it is an abject surrender to our partners in the Community, what should we have expected? We should have expected dancing in the streets of Paris. The people of Luxembourg, Holland and Belgium would have said that they had won again. But that did not happen, and the right hon. Gentleman said so.

President Giscard d'Estaing had to go to his farmers and explain away the fact that the British had achieved an extremely good result. The French President, making an election speech, had to explain to his most important electors that this agreement was, perhaps not what they thought it was, not what the British thought it was, and not what the rest of Europe thought it was. He had to find excuses.

However, if we are to take too seriously the electioneering speeches of the French President I wonder whether the right hon. Member for Stepney and Poplar should not reflect upon the damage done in the European Community by speeches on the Community made in this country by him and his right hon. and hon. Friends.

Is it any wonder that we have found it so difficult to begin the reform of the Community when most other countries felt, and continue to feel, that Her Majesty's Opposition, when they were Her Majesty's Government, were not in favour of the Community anyway and that they were not embarked upon the reform of the Community but were about its destruction?

The second reason I put to my hon. Friends—

Mr. Straw

Will the hon. Gentleman give way?

Mr. Gummer

If I may continue this point, I shall then give way. The second reason for my believing that this is a major change is that the Community now knows that it is dealing with a Government whose policy towards Europe is based upon two clear principles. The first is that of adherence to the Community itself. We have a belief in the Community and an intention to remain a member of it. The second is that we have the intention and the determination to see that Britain plays her full part in, and receives her full dues from, the Community. For the first time Britain is able to bring to bear upon the Community the kind of pressure for reform that has not been possible before.

Mr. Straw

I am concerned that the hon. Gentleman should not suggest that feeling against the Common Market and its lunacies is specifically confined to the Opposition, though we are, on the whole, united on this matter. Would the hon. Gentleman care to look around him and recognise that, probably, half of his hon. Friends in the Chamber tonight are anti-Marketeers and that they are as opposed to this settlement as are the Opposition?

Mr. Gummer

It is perfectly reasonable for the hon. Member for Blackburn (Mr. Straw) to sum up the views of my hon. Friends or his hon. Friends in his own way. I would not attempt to do that. There is a wide range of views and I think that the hon. Gentleman would accept that those of us who see that Britain's membership of the Community is of the utmost importance both to this nation and to the rest of Europe—as well as to the free world—find it hard to listen to him attempting to bracket my right hon. and hon. Friends with him and his hon. Friends. Opposition reasons for being opposed to the Market are fundamentally different from the reservations expressed by my right hon. and hon. Friends. Many right hon. and hon. Gentlemen are opposed to the European Economic Community because of the fundamental stand that it has taken in relation to the free world and in relation to other free enterprise economies.

When we examine the kernel of the speech of the right hon. Member for Stepney and Poplar, when he addressed himself, as he has often done, to the CAP, we find that he did himself an injustice similar to the one that he did recently in a debate when he left out a sentence from a document he quoted in order to make the previous sentence mean something opposite. The right hon. Gentleman had to be reminded of that. He was not gracious enough to admit it, but on the record one can see that that was so.

Speaking about the CAP, the right hon. Gentleman once again cast aspersions without giving facts. For example, he referred again, as have so many hon. Members, to the principles of the CAP. Later, an interesting discussion flowed backwards and forwards between the right hon. Member for Battersea, South and my right hon. and learned Friend the Member for Hertfordshire, East (Sir D. Walker-Smith) about the nature of these principles.

There is no doubt in our minds—nor should there be in anyone else's mind—that the principles are clearly enshrined in articles 39 and 40 of the Treaty of Rome. Those principles are very clear, and I was sad to hear my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen)—his constituency is not, I admit, an agricultural area—casting doubts upon the most important element in those articles, namely, that they seek to ensure a fair standard of living for the agricultural community by increasing the individual earnings of persons engaged in agriculture.

For those of us who come from rural communities and represent agricultural constituencies it sounds very odd when other hon. Members, particularly Labour Members, talk so disparagingly about the need to ensure a reasonable return for those involved in agriculture—

Mr. Buchan

Oh!

Mr. Jay

Will the hon. Gentleman give way on that point?

Mr. Gummer

No, I shall continue my speech. Many changes to the CAP are necessary, and I and others would support many of them. But I beg Opposition Members to accept that in spite of the wholehearted view of the right hon. Member for Battersea, North, who wants the whole system swept away and replaced by deficiency payments—he is not supported in that by many members of the agricultural community—the CAP is a whole series of arrangements and we should be looking at them one by one to see which should be altered, which should be abolished, and which should be retained. Many of them do a great deal of good for the continuance of agriculture in this country and for the production of food.

Mr. Jay

Does the hon. Gentleman not understand, after all these years of debate, that the difference of opinion is not whether there should be a fair return to those engaged in agriculture but whether it should be financed by deficiency payments or extortionate prices?

Mr. Gummer

The difference of opinion between the right hon. Gentleman and myself is certainly that, but that is not a clear-cut difference, as he may have noticed when my hon. Friend the Member for Wolverhampton, South-West cast doubt even upon the nature of the security that many of us seek for the agricultural community—

Mr. Budgen

I did not.

Mr. Gummer

What worries me and also worries the National Union of Agricultural and Allied Workers is the way in which people talk about cheap food imports as though they were totally different from imports of other commodities, and that somehow it is possible to talk in slighting terms about the cost of food production in this country, suggesting that in that area alone people's livelihoods and returns should not be treated as we would treat those in manufacturing industry.

I come finally to the crucial point raised by my hon. Friend the Member for Holland with Boston (Mr. Body). He suggested that, year by year, our economy will decline compared with the economies of the rest of the Community. He believes that for some reason this is partly the fault of our membership of the Community. However, if my hon. Friend will cast his mind back to the time before we joined the Community he will recall that that was exactly the history of this country. Year by year, compared with our fellow members of the Community and our other neighbours, the British economy did less well. My hon. Friend suggests that that will continue while we are a member of the Community.

I suggest, however, that the reason for that decline lies within the nature not of the Community but of the decisions of successive British Governments and of the British economy. This is not a matter to be blamed on the Community which it has become convenient to blame by all those who do not wish to take the blame themselves. The fundamental reason for the relative decline of the British economy is that we in this country have listened far too much to the economic views of the Labour Party. We have constantly been concerned with egalitarianism. We have sought not to reward enterprise. We have sought constantly to trammel and hold up all the energies of our people by growing State control.

Mr. Arthur Lewis (Newham, North-West)

What about last year?

Mr. Gummer

It is for these reasons that the economy has done less well compared to the economies of other nations. We must not blame the European Community for our failure to take the opportunities that it has offered. If we had shown the enthusiasm and the ability to seize the opportunities shown by the French and the Germans our economy would not be condemned constantly to decline in comparison to the economies of our neighbours.

Therefore, I suggest that my right hon. Friend has produced a remarkably successful solution to our budget problem. If the right hon. Member for Stepney and Poplar had produced anything like it, or if any of his right hon. Friends had done as well, we should never have finished hearing the crowing about it. They have to scrabble around for small points on which to object to the package instead of admitting the truth, which is that within the Community Britain has its best chance to improve its economy and to play a major part in the political decisions of the world.

This country will improve its economic prospects only if it is willing to take the opportunities that the Community gives. If we were half as successful in that direction as is highly nationalist France we should be able to realise what we all dream of, which is that Britain should become a leading nation of the Community and should not have to worry about paying considerably towards Community finances, because we would be where we could be—one of the leading economic countries in the Community.

6.47 pm

Mr. Donald Stewart (Western Isles)

Having listened to the hon. Member for Eye (Mr. Gummer) I see that I was doing a considerable injustice to the negotiators who brought back the agreement we are now discussing. I thought that the evidence that had been laid showed that it was a pretty tattered and disreputable agreement. Having listened to the hon. Gentleman I see now that in some ways our negotiators were stalwart defenders of United Kingdom interests. If, by some chance, the hon. Gentleman were ever landed in that position—

Mr. Jay

God help us.

Mr. Stewart

—to change what the Iron Duke said, he would not frighten the French, but by God he would frighten me.

The hon. Gentleman referred to the common agricultural policy. I have listened for some time to Front Bench speakers agreeing that the CAP is far from ideal, that it acts against British interests, and that it must be changed. This has always been promised to us, like the end of the rainbow. However, we are getting no nearer to changing the policy. It will never be changed to the benefit of this country, and I do not need Highland second sight to assert that. The day that it fails to operate for the benefit of the French and the other countries concerned, they will call it off.

Mr. Russell Johnston (Inverness)

The right hon. Gentleman is presumably aware that both the Scottish and English farmers unions support the CAP.

Mr. Stewart

They have considerable reservations about it now. They are learning as they proceed, in spite of their initial support, that they have backed the wrong horse.

The hon. Member for Eye should not have been too hard on Labour Members. The Chancellor was quite pleased to say today that our entry into the Common Market was supported by many Labour Members. Presumably he was quite pleased that the stupidity that he and his hon. Friends had shown was widely shared beyond the confines of the Conservative Party.

Mr. Arthur Lewis

Some of them have done very well out of it—like Roy Jenkins.

Mr. Stewart

I suggest that the budget settlement is not unconnected with the agreement to arrive at a common fisheries policy by 1981, and in view of what we have surrendered the settlement will be found to be very expensive. It seems to have no more beneficial basis in reality for the United Kingdom than Chamberlain returning from Munich waving a piece of paper and talking of "Peace in our time". I think that our freedom is even more fettered as a result of this settlement.

I want to deal with the document on fisheries policy—document 7389/80. The Scottish Fishermen's Federation has made a submission to the Secretary of State for Scotland which begins: After a period of relative prosperity the Scottish fishing industry has entered a period of recession which, if it continues unabated, threatens to be the worst in the post-war period. If anything, that understates the position. After past recessions, our fishing fleets were able to carry on from where they left off. That option may no longer be open. Unless rational and fair decisions are made by the Government in their negotiations with the EEC, we may see the end of our fishing industry.

The new tariffs agreed on certain species of fish will go some way to counter the unfair competition from some of our alleged partners. The Council's declaration on the common fisheries policy speaks of: measures for the management of resources and conservation. I am not being insular when I say that those measures need to be borne in mind by Continental fishermen more than our fishermen.

The document goes on to refer to: the special needs of certain regions in which economic activity is largely dependent on fishing". I hope that that aim will be at the forefront of the minds of our negotiators in all discussions. Many people in my constituency and elsewhere are angry that the Commission could not see its way to give a derogation for one vessel to fish with a drift net for herring. We should not have a problem with stocks today had the fleets been fishing by that method. The fishermen all agreed that that one vessel could not fish by any other method and that it could fish in that small area of water. However, the British Government were unable to get the EEC to make an exception.

The Commission must adopt the policy that fishing must be for human consumption only. Given the state of fish stocks and the concentration of vessels and types of gear, industrial fishing, which wastes resources and destroys young stock, should not be allowed to continue. It is essential that that is emphasised in any agreement. In view of the activities of some of our alleged partners, it is also essential to devise a system to police the waters to ensure accurate returns of catches. There should be severe penalties for infringement of regulations.

No settlement should be agreed with the EEC on the basis of a 12-mile limit and nothing else. I should welcome the assurance given to me by the Minister of Agriculture, Fisheries and Food a couple of weeks ago that he will not accept an agreement on those terms. However, I recall the assurance that he gave to the hon. Member for Holland with Boston (Mr. Body) that he would not agree to increase prices of produce in surplus, and that agreement was broken in negotiations with the Common Market.

The lobster fishermen in my constituency have today invaded the waters around the rocket range on Uist as a protest against the Government's lack of action over the importation of lobsters from Canada, which has virtually destroyed their market. The Ministry of Agriculture, Fisheries and Food and the Scottish Office have the matter in mind, and I hope that they will take steps to preserve this valuable industry as quickly as possible.

Prawn fishermen are also in difficulties, partly due to the Spaniards trying to extend their fishing into United Kingdom waters. Spain is lining up to join the EEC. In that situation, I imagine that the British Government have some muscle in order to see that our fishermen can dispose of their catches in the same way as in the past.

Oil development is bringing great profit to the United Kingdom exchequer. I shall not go into the side issue of whose oil it is. Fishermen on the East Coast are being disadvantaged because the pursuit of North Sea oil interferes with their grounds, causes debris, destroys their trawls and so on. The Government could at least make a financial contribution to help those fishermen. It is fair that those who gain should in some small way help those who lose.

6.54 pm

Mr. David Myles (Banff)

I sincerely hope that I can make a more constructive contribution than many speakers have so far made. I should like to get away from the gramophone repetition of platitudes about difficulties, and consider what we can achieve from the position that we are now in, rather than that which we might have been in. Harping on the past and saying that we should not have done this or that is of no benefit.

Although the CAP interests me greatly, I shall not go into too much detail. However, Opposition Members, especially the right hon. Member for Western Isles (Mr. Stewart), want to come out of the Common Market. They want cheap food from elsewhere, although the right hon. Gentleman does not want cheap lobsters from Canada or perhaps cheap New Zealand lamb. I do not know how the right hon. Gentleman hopes to solve his constituents' problems by shouting the odds in that way. However, we are used to members of the Scottish National Party putting political gain—

Mr. Donald Stewart

Will the hon. Gentleman give way?

Mr. Myles

It will be worth intervening when I have finished my remarks. Members of the SNP put political gain above the long-term interests of their constituents, and that includes fishermen.

Mr. Stewart

The hon. Gentleman says that I do not represent my constituents. I remind the hon. Gentleman that my constituency was the only one to vote against entry to the Common Market. We are still congratulating ourselves on our foresight and common sense.

Mr. Myles

When the common fisheries policy is complete, and when the European sheepmeat agreement is working, I imagine that the farmers and fishermen of the Western Isles will be at the forefront of those who welcome policies that look after their interests. I shall try to look after my constituents, especially the fishermen.

I have a few suggestions about what we want to see from the common fisheries policy. Although the agreement mentions the common fisheries policy, it does not tie our hands.

Mr. Austin Mitchell (Grimsby)

Will the hon. Gentleman concede that accepting a deadline for the agreement to be in operation by 1 January next year, when our demands have not been accepted by any other member State, is tying our hands?

Mr. Myles

That observation comes ill from the mouth of the hon. Gentleman, considering the deadlines that there have been—perhaps not so much deadlines as dead stops. People just said nothing, or they said "No". We should not behave like the "abominable no-man". That is not the way to be constructive. Having a deadline puts pressure not only on us but also on our European competitors. I shall deal with that later when I talk about fishing matters.

On behalf of the fishermen, I ask for nothing less than the seven "Cs", I do not mean the high seas. I do not mean that we want to claim all the seas. [Interruption.]. If hon. Members will be patient, I hope that they will understand what I am speaking about when I urge the need for being constructive, and so on. These are the "Cs" that I am speaking about.

My first "C" stands for cash, and it is absolutely necessary that the fishermen should have this. If we were to follow a cheap food policy, the fishermen would be denied this "C". The fishermen must have a reasonable return on their catches when they come into the pierhead. If they do not have that, they have nothing. We must therefore ensure that in the common fisheries policy there are no unfair subsidies and things of that sort. We must ensure that third country tariffs are adequate. in that regard, I welcome the 1 July increase in the tariff on whitefish, which I sincerely hope will help the industry in the state in which it finds itself at the moment.

The second "C" is the catch. Our fishermen must be allowed a proper catch. We have the greater share of the European pond, but our fishermen must be allowed to continue to catch the fish and bring them into this country. We must have fair and equitable quotas which will allow our fleets to continue fishing. Nothing in what has been agreed already means that we cannot have equitable quotas.

Thirdly, we must have adequate agreed measures of conservation. From the way that many Opposition Members speak it might be thought that we could suddenly float this island out into the middle of the Atlantic, where we could have 200 miles all the way round it. If we were to insist on 200 miles, it would take us half way into France.

Mr. Leighton

Does the hon. Member agree that, had the whole of the United Kingdom had the sense to vote as the voters of Western Isles voted, we would have had—as far as it was geographically possible—a 200-mile limit within which we could have done as we pleased?

Mr. Myles

I agree with that, but a bird in the hand is not necessarily better than the one in the bush. The one in the bush can, in the long term, be very much better, for the simple reason that when there is no 200-mile limit and median lines are drawn, the fish do not know where the lines are. The fish are liable to swim across and to be caught up in the industrial net that is used by the Danish fishermen and by other fishermen from EEC countries.

We must have control over them if we are to have proper conservation. We can have that control only by being a member of the club. We cannot have control and conservation without having conservation over the whole of the waters—over the whole of the North Sea. We must have that, and we cannot get it unilaterally. As I have already said, the fish do not respect median lines.

My fourth "C" follows from conservation. It is control. We must achieve coastal State control. That is the only way in which it can work properly. We cannot have real control unless there is control by the State whose waters come up to the median line. That is the State which must look after the waters totally. We cannot tolerate any longer the scandal of countries not obeying the conservation rules that will have to be obeyed when we have an agreed common fisheries policy.

The fifth "C" is co-operation. It seems strange to me that the Labour Party, which has a history that is related to the great co-operative movement, now seems to want to abandon all co-operation with anybody else. Indeed. Labour Members can hardly co-operate with each other at the moment. But it is strange that they should now want to abandon totally the concept of co-operation that has been part of their history for so long. We must have co-operation with all other member countries. We must have co-operation with third countries. We must have co-operation within all the sectors of the fishing industry. Sadly, that has been slightly lacking in the past.

The sixth "C" is construction. We must have the construction of fishing boats to keep our independent boat building yards in the North-East and elsewhere—here I include Campbelltown, another "C"—viable. Without construction, there is no way in which we can carry on, and we need EEC money to support that construction.

We should look occasionally at the aid that we get in FEOGA grants—

Mrs. Elaine Kellett-Bowman (Lancaster)

My hon. Friend is presumably[Interruption.]—talking about the scrap and build policy, which no doubt he would support. [Interruption.] Would he agree that under that policy it is only fair that the compensation paid[Interruption.]—should be related—

Mr. Arthur Lewis

The hon. Lady is getting £30,000 a year out of it.

Mrs. Kellett-Bowman

—to the age of the ship that is scrapped? It would clearly be unfair to pay the same amount for an ancient ship as for a relatively new one.

Mr. Myles

We can have control of all those things once we get the common fisheries policy agreed. [Interruption.] I wholly agree—

Mr. Deputy Speaker (Mr. Richard Crawshaw)

Order. One intervention is quite sufficient. The hon. Member for Newham, North-West (Mr. Lewis) has shouted about eight times in the last half minute.

Mr. Arthur Lewis

May I apologise, Mr. Deputy Speaker? I should not have said it, but the hon. Lady gets £30,000 a year out of the Common Market—and so does her husband.

Mrs. Kellett-Bowman

rose

Mr. Deputy Speaker

Order. I have not called the hon. Lady. I am sure that if we were to start to add up what everyone gets we should be here all night. I do not think that the hon. Lady needs to reply.

Mr. Myles

I am very pleased that you intervened, Mr. Deputy Speaker, but really there was no need to do so, with respect. As Conservative Members know —and perhaps Opposition Members ought to know—I am very deaf, so that interventions do not matter much to me.

I was trying to talk about construction, and I certainly have in mind the scrap and build policy. We must have more sensible allocations of FEOGA funds. When my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) intervened, I was about to add my welcome to the £69,000 that will be going to a progressive fish processing plant in Buckie under the recent allocation of FEOGA funds. I also welcome the allocations that have been made for fishing boats.

I sincerely hope that we can hurry up and meet the deadline, so that we can keep our boat yards going with Community funds.

My last "C" is much the most important one—confidence. It could be said to be linked with another "C"—conservative. The one thing that is desperately lacking, and desperately required, in the fishing industry is confidence. No Government can create an industry, or relatively make it succeed without it. It needs confidence in itself to succeed.

I attended the Catch 80 exhibition in Aberdeen. I did not notice many Opposition Members there—especially the right hon. Member for Western isles. He may have been there, and I apologise for my remark if he was. As I walked around the exhibition I was greatly heartened that there was a slight light shining behind the clouds. The industry is beginning to believe that there can be a settlement, and that it can again have confidence. I hope that we can build on that, and not betray its faith. I solemnly believe that the Conservative Party can do that. For so long fishermen have had to put up with the sort of thing that we saw in the "World in Action" programme. The sooner we have control and common sense in our Community fisheries policy, the better. We must have confidence so that the fishermen in one of our greatest traditional industries will invest in the industry and go out and catch fish.

7.11 pm

Mr. Julius Silverman (Birmingham, Erdington)

The Scrutiny Committee will welcome the allocation of a day's debate for this important topic. The Chancellor's speech was most unilluminating, and I do not think that any hon. Member was any wiser at the end of his speech than when he began.

Mr. Arthur Lewis

That was the objective.

Mr. Silverman

I wish to probe the questions relating to the financial part of the agreement. I shall not deal with fisheries—not only because I do not know much about that subject but because I might get lost in the "seven Cs" referred to by the hon. Member for Banff (Mr. Myles). Neither the Government's nor the Commission's explanatory memoranda give any figures. If I provide certain figures that are far out, no doubt I shall be corrected by the Government. I know that some of the figures have to be finally decided because there are certain variables, especially in the figures relating to 1981–82.

I understand that the total amount of relief that we expect to receive under the agreement is about £750 million in the first year. It may not be as much in Subsequent years, but that has to be worked out. That will leave us with a deficit approaching £400 million during the first year. While the amount of relief is substantial, it comes from the wholly unacceptable figure of our present contribution. Many hon. Members, apart from those who have already spoken, may think that it is wrong that we should pay £400 million a year—which is not by any means chickenfeed—as our contribution to a Community of which most other members are wealthier than Britain yet derive more benefit.

The Chancellor pointed out that the German contribution would be substantially higher than our contribution. That contribution is paid by the German Federal Government, who have joined a club from which they gain a great deal. It is a small contribution in relation to the benefits of having an open market in Europe of which West Germany makes the fullest use. It is able to export its goods freely to the extent of thousands of millions of pounds a year. I am not blaming the German Federal Government for taking the greatest advantage of that position. We are on the receiving end on imports. As everybody knows—because it has been stated many times—we have a considerable deficit on manufacturing goods, to say nothing about agricultural produce. I wish to know whether those figures are correct. They are my best calculations, from what has already been said and from what I know of the agreement.

Mr. Spearing

Does my hon Friend agree that one of the lamentable omissions in the Chancellor's attempted exposition was that he made no indication of the proportion of the sum that we shall receive—and I think that my hon. Friend is nearly right—which is to be paid in programmes rather than in so-called cash?

Mr. Silverman

I was purporting to deal with that. I am making estimates based on information from earlier speeches. The amendment of the 1974 financial mechanism will result in about £250 million relief for Britain. This year's EEC budget provides for about £200 million to assist Britain in this respect. Therefore, we hope to receive about £500 million in special measures. These measures correspond roughly with the present regional development fund. Based on that sum, in conjunction with the amount that we shall have to contribute—bearing in mind that the maximum contribution from the Community is 70 per cent., and we may not receive the full 70 per cent. in all cases—it is possible to calculate that the total value of the projects, if they are achieved and if we receive the relief, will be about £750 million. That represents a large number of projects.

During the past two years we received£37 million in 1978 and £70 million in 1979, although the commitments were significantly greater than that. We are embarking upon a programme of projects. It is a restrictive programme related to infrastructure matters. Yet we have not heard a word from the Government about the sort of projects that they intend to approve, what it is all about, and how it will affect the various areas.

Mrs. Kellett-Bowman

The projects are not confined to infrastructure. There is a limit on the amount that can be used for that purpose. I hope to catch the eye of the Chair later in the debate. The new measures are very wide indeed. They cover the whole range of urban renewal, housing and advance factories. They will be of enormous help.

Mr. Silverman

That may be so, but for the most part the documents that I have seen deal with infrastructure in what are called the assisted areas. I should like to deal with that point. By assisted areas, the documents mean areas described as assisted areas on 1 January this year, except in very special cases. That means that apart from those assisted areas, other areas of the country will get nothing at all.

I am particularly concerned from a constituency angle. I am a West Midlands Member. Recently, there was a debate in the House that described the dramatically deteriorating economic situation in the West Midlands. There have been closures and redundancies in my own constituency, and only a few days ago one of the GKN factories in my constituency announced that it was closing, with about 1,000 redundancies. That is happening to small firms and large all over the place.

Birmingham and West Midlands industry and the West Midlands press have pointed out that we would not get a brass cent out of the regional development fund. As a result of this regulation, there will be projects which, if realised, will be several times as large, yet the West Midlands will still not get a brass cent. I hope that West Midlands Members and the West Midlands press will ask why. That is undoubtedly what will happen under the agreement as it now stands. Yet we have not heard a word about it, although it is a serious matter indeed.

There are exceptional cases. I do not know what they are. There is the question of coal, but any scheme for coal will take several years to develop. It is difficult to know how many of these projects will come within a three-year period. Therefore, there are many questions to which we want answers. I have put just some of them. I hope that before the end of the debate we shall receive some real information about this financial agreement. So far, we have received very little. I have not dealt with the question of agricultural prices, fisheries, or the other concomitant agreements that go with it, some of which may be disadvantageous to us. I have merely dealt with the financial element in the agreement. To my mind there are many unsatisfactory aspects to it and many dark spots that require illumination.

I know that other hon. Members want to speak. I shall therefore confine my remarks to that aspect of the agreement, and I hope that the information that I have sought will be forthcoming.

7.23 pm

Mr. Albert McQuarrie (Aberdeenshire, East)

The right hon. Members for Battersea, North (Mr. Jay) and for Western Isles (Mr. Stewart), both of whom unfortunately have now left the Chamber, stressed the fact that we appear to be dealing with a document which should have been considered independently rather than with the budget documents, as it deals entirely with fisheries. By so doing, we would have had a greater opportunity to discuss this very important issue.

In the hope of catching the eye of the Chair, I purposely placed around my neck this tie, on which there is a small fish with a Union Jack on it, underneath which it says "Save Britain's Fish".

That is exactly what the debate would have been all about had it been confined to one on fisheries. I am, therefore, constrained to discuss only document 7389/ 80. If that document does nothing else, it stresses the need to reach agreement on a common fisheries policy by 1 January 1981.

No one should underestimate the enormousness of that task, which has been tried by successive Ministers on both sides of the House, unfortunately without success. The Commission is saying that the regulations will have a binding force on all member States and will be enforced through the European Court of Justice and national courts. I accept that the United Kingdom could take action in the courts here, as it has done on many occasions. However, if we are to take the example of the manner in which the French accepted the decision of the European Court with regard to lamb, what faith can we in Britain have that we shall not see similar examples by member States and third countries that flout the new common fisheries regulations?

It is right to say that enforceable legislation is desperately needed. We have only to look at what is now happening in our own waters fully to support that view. Our fishermen are being fished out of their own waters by third countries and Common Market members which are coming here simply because—as my hon. Friend the Member for Haltemprice (Mr. Wall) said earlier—there are no Community rules.

The European Commission believes that conservation must provide the basis of the new common fisheries policy. That is exactly what we in Britain have been doing in recent years, to the detriment of the income of our fishermen. But where has it placed our fishing industry? Never in the long history of that industry has such a critical stage been reached. There seems to be no light in the tunnel. Despite what my hon. Friend the Member for Banff (Mr. Myles) said earlier the fishermen see no light at the end of the tunnel, hence the reason for their asking for an important meeting with my right hon. Friend the Minister for Agriculture, Fisheries and Food next Thursday, at which I hope they are extremely successful.

All along, our fishermen have played the game, only to see fishermen from other member States and third countries come into United Kingdom waters and disregard our conservation measures, for the simple reason that there are no Community rules. Until there are Community rules, there will be no solution to the difficulties which confront our fishermen. It has reached such a stage that the British fishing industry cannot even wait for the possibility that the new common fisheries policy will come into operation on 1 January 1981. Its present position is such that many vessels will be laid up, the fishermen will have no jobs and there will be no fish in the sea. Where will that place us in our negotiations with our partners with regard to the new common fisheries policy? Total allowable catches will be based on the catching capacity of the member States. If the United Kingdom fleet has been virtually wiped out of existence before the end of 1980, our Ministers' bargaining strength will be considerably weakened.

It is all very well for the document to speak about historic rights and fishing plans, distribution of catches, inspection and control. They are what the British fishing industry has been fighting for over the past years—not fighting just to earn a living, but fighting for survival. Sadly, at present it is not succeeding.

In Scotland and the United Kingdom as a whole, the fishing industry has on the one hand been caught by the unprecedented level of imported fish into the United Kingdom—due to the loss of catching opportunities for our own fleet and to the conservation measures which, rightly, have been imposed by the Government—and, on the other, by falling prices, high interest rates and astronomic rises in fuel and other overhead costs, which no fishing owner could have anticipated.

Even with all those problems, the fishing industry supported both this Government and the previous Government in their efforts to secure a new common fisheries policy. The document before us is but a fraction of the work which will need to be carried out before we eventually see the new common fisheries policy implemented.

The document lays down five basic principles for the introduction of the global policy. It speaks of conservation methods, fair allocation of catches, effective control, adopting structural measures with a Community cash contribution and a long-term agreement with third counties. How hollow those are to the fishermen who are desperately seeking aid! Those matters will be discussed by Ministers over the next six months in an effort to gain agreement on the new common fisheries policy. They are matters in respect of which the British fishing industry must be seen to be receiving a square deal. In no circumstances must Ministers give way on Britain's rights as the major contributor in the fishing waters of the Community, and I am confident that they have no intention of doing so in the forthcoming negotiations.

I turn to the question of historic rights and fishing plans. The Commission has rightly agreed that fishermen in coastal waters must be given a high priority in their country's coastal waters. In the case of the United Kingdom, 68 per cent. of the fish caught in Community waters are caught around the shores of the United Kingdom. For that reason, we have the right to expect that our Government will have control of the inshore waters around our coasts, and will be able to negotiate reciprocal arrangements with other member States and third countries. It is up to our Ministers to prepare the fishing plan within the coastal belt, and to be firm with the Commission as to where we stand in the matter. In all the plans the welfare and security of our fishing fleet must be the predominant factor.

The document indicates that the proposals will not provide a sudden new lease of life to British deep sea fishing, which has been so badly hit by the restrictions placed upon it by Iceland, the Faroes and the Soviet Union. At our meeting yesterday, we were horrified to hear about the vast number of deep sea trawlers that are now lying idle at the quaysides. If that situation continues, at the end of this year we shall be lucky to have 25 per cent. of the vessels that were operating two years ago. It cannot be said that the inshore and middle water fleets will gain unless there is a positive decision by the Community to safeguard the interests of these sectors of the industry.

The Commission must agree, and our Ministers must insist, upon a new common fisheries policy that is the same for all the member States and third countries. It must be a fair policy for British fishermen. There must be equality for all. The fishermen in the United Kingdom have never been militant. They are a decent and honest group, who desire only to follow the calling of their forebears, and give the consumer in the United Kingdom and overseas a food which has a high protein value for health. To do that, they must receive similar honest treatment from the Commission, because it is an industry which has so much to offer to the Community.

Alternatively, the fishing industry will be totally opposed to the concept of the Community—which would be a disaster for the United Kingdom.

The fishing industry has faith in the negotiating power of our Ministers in forming a new common fisheries policy. We fail it at our peril. If we do not wish this wonderful industry to go out of existence, we must exert every effort to ensure that on 1 January 1981 the new common fisheries policy is brought into being with the full approval of the fishing industry, which is dependent upon it for its existence in the years that lie ahead.

7.34 pm

Mr. Russell Johnston (Inverness)

The hon. Member for Aberdeenshire, East (Mr. McQuarrie) made a powerful plea for the fishing industry, to which I shall refer briefly later. His contribution and that of the hon. Member for Haltemprice (Mr. Wall) covered the position well, and it is agreed across party lines.

I refer the House to the amendment that we are discussing. The first three lines, which were referred to briefly by the Chancellor, recall: the unanimous Resolutions of the House of Commons on 16th July and 22nd November 1979, urging a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts, The use of the word "unanimous" is inappropriate and misleading. It makes no allowance for the fact that abstention is often used as a device by hon. Members of both major parties to express disapproval of an official policy. They ab- stain in order to say that they do not like a policy, not to say that they are neutral or uncertain. Technically, we can say that if a vote did not take place, the result was unanimous, but I do not think that that would ever happen. If there was disapproval of this form of words, which describe accurately and precisely what the French call juste retour, why was there not a vote? During the debate on this matter in July the Financial Secretary went out of his way to say that he did not believe in juste retour. He said: This does not mean—I underline these words—that we hold to the concept of the so-called juste retour—the doctrine that each member of the EEC should get cut of the Community precisely as much as each puts in —to the last penny."—[Official Report, 16 July 1979; Vol. 970, c. 1038.]

Mr. Denzil Davies

The Government accepted that resolution, and if the Liberal Party had wished to oppose it, it should have voted against it, but it did not.

Mr. Johnston

The right hon. Gentleman should have been a little more patient, because I was about to deal with that point. The Government did not vote, but then, and indeed in the November debate, the Chancellor opened his speech by commending the resolution. During a debate on the budgetary contribution, the size of which the Government rightly deemed to be too great, they did not wish to do anything that would weaken their case. I agree with the right hon. Member for Llanelli (Mr. Davies) that it can be argued that the Liberals should have voted. Clearly, there is no question that this resolution was accepted unanimously by the House—nor could that be so. That must be stressed. If the principle is that: Britain's contribution to the Budget is at least not greater than the receipts, the whole concept of the Community would be set at naught. If each country simply gets what it puts in, the idea of redistribution of wealth throughout the Community is set aside.

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Johnston

I shall give way in a moment. The right hon. Member for Down, South (Mr. Powell) made that point, and he was right. If that is the principle on which we would operate, we can forget about regional, industrial, redistributive, social policies, and so on.

Mr. Marlow

The hon. Gentleman said that it did not seem right that countries should get out of the Community the same amount as they put in. Equally, it does not seem right that one of the poorer countries of the Community should put in a damned sight more money, and get less out.

Mr. Johnston

That is an entirely different point. If we accept the concept of redistribution, it inevitably and implicitly means that we recognise that the country that is poorer does not pay more. That is common sense. But that is not what the amendment means. It means that a country gets what it puts in, no more or no less. I would never vote for such an amendment, and I ask Labour Members who believe in the potential redistribution that the Community offers whether in honesty they can do so either.

As one who was critical of the Prime Minister's abrasive tactics and who does not necessarily believe that, because abrasive tactics get results, we could not necessarily get the same results if we proceeded in an equally determined but perhaps more good-natured fashion, nevertheless I agree with the Chancellor that the way is now open for a radical restructuring of the budget and that we must take the fullest advantage of it.

The Chancellor paid tribute to his fellow Finance Ministers, in particular to the Germans. I would add a person and a party for congratulations. The first is Emilio Colombo, the Italian Foreign Minister, who, from all accounts, chaired this difficult session very well.

Secondly, I repeat what I said when the Lord Privy Seal made his initial statement in the House—that the influence and effect of the German Liberal Party was significant. A number of the more nationalist hon. Members on the Government Benches interrupted me when I said this before. However, it must be remembered that it was a considerable step for a very small party under serious electoral pressure to stand up for and argue that its country should give away a large amount of money. That should be recognized.

The Chancellor did not go on to give us much idea of the new directions which the Government would encourage the Community to take. I want to indicate some of the directions that I should like to see him pressing.

First—and I think that the House must face this at some time—if we are to have a Community which is capable of pooling resources in a mutually supportive fashion, we must have more than one Community policy. At the moment we have one Community policy. The common agricultural policy is not quite the 75 per cent. about which hon. Members go on about, because lumped in with the CAP budget go Lomé payments, food aid payments—

Mr. Leighton

Administration.

Mr. Johnston

Of course, administration. The hon. Gentleman as a Socialist, should know that more than most. If we remove also the monetary compensatory amounts, which are a financial mechanism, the figure is much nearer 55 per cent. than 75 per cent. of the budget.

Nevertheless, it is an illusion to believe that to solve the budgetary problem all we require to do is to take money from the farmers and to give it to somebody else. Community-wide, the sums are far too small to have any more than a marginal effect on industrial problems.

In this regard, it would be interesting if the Minister who is to wind up would give us an assurance of the cost to the Exchequer if we reverted to the agriculture deficiency payments system that we operated before we entered the Community. It would be an interesting updating of the figure given by the right hon. Member for Deptford (Mr. Silkin), who was Minister of Agriculture, Fisheries and Food in the Labour Administration, before the European elections.

If the Community is to pursue programmes of redistribution, it will require a larger budget. The basic reason why many Members here oppose it is that they are opposed to being in the Community at all. I do not oppose it. I believe in it. It will not work any other way. If one of the main principles of the Community is redistribution, then that it must be.

What do the Labour Opposition think about redistribution? In the debate on 22 November last year there was an exchange between the right hon. Member for Llanelli and the hon. Member for Flint, West (Sir A. Meyer), who inquired about the juste retour. The right hon. Gentleman said: It is late at night. One does not want to get involved in metaphysical, semantic arguments about what these French phrases mean. But broad balance is broad balance; one gets out what one puts in. That, I understand, is fairly close to the concept of juste retour. I asked: Would the right hon. Gentleman apply the same rule to Germany? The right hon. Gentleman said: I would apply the same rule in terms of the Common Market, provided that one was operating the present mechanism. If there was a genuine desire to create a redistribution we should look at the matter again."—[Official Report, 22 November 1979; Vol. 974, c. 706]. Does that mean that if there is a commitment—I hope that the Government will be making a strong commitment—to develop the redistribution element, which means increasing the budget, the Opposition will support it? For example, the record of successive Governments has not been good on the regional fund. The former Foreign Secretary, the right hon. Member for Plymouth, Devonport (Dr. Owen), blocked the proposal by the European Parliament to double the size of the regional fund. The present Government are blocking the small 13 per cent. non-quota section of the regional fund and show no enthusiasm for increasing its size for the basic reason that, because of the rules of additionality, it means greater public expenditure. The same to some extent goes for the social fund as well.

Secondly, I think that the Minister should say something about co-operation in other areas where clearly such co-operation is to our common advantage—for example, in energy. It is not merely a question of what sort of agreement we may or may not reach on oil. There are wide areas, before we get to that admittedly difficult area, in which we can embark on common programmes looking for alternative energy sources, tackling nuclear safety, transport, and so on. One wonders whether we are getting anywhere nearer to having a Channel tunnel or whether other joint ventures are being contemplated, perhaps in the aircraft industry. There are also relations with the Third world.

Fishing has been well defined by other hon. Members. I agree that it is odd that this subject should be tagged on to this debate when inevitably stress will be on the budget and the different views of hon. Members.

I do not believe in quotas. They do not work. Any agreement must be founded on a licensing rather than a quota system. The evidence is that a quota system is easily breached and is extremely difficult to police in an effective fashion. An agreement of some kind is required because the fishing industry is in a desperate situation.

The budget debate, one phase of which was concluded last month, has been extremely acrimonious. I hope that that can be put behind us. I am delighted at the reported agreement on the appointment of Gaston Thorn, the Foreign Minister of Luxembourg as the next President of the Commission. He believes strongly in the capacity of the Community countries to overcome their difficulties, and to do so together. I hope that he will, in seeking to bring that about, have the support of the Government.

7.48 pm

Mr. Richard Shepherd (Aldridge-Brownhills)

In the year that I have had the good fortune to represent Aldridge-Brownhills, there has been a number of debates on the budgetary consequences of our membership of the EEC and points arising out of it. What has been instructive to me has been the range and power of the arguments that have tried to identify to what extent Europe is not in the economic interests of this country. What is also extraordinary is that I have heard no Government Front Bench spokesman argue that there is an economic advantage in our membership of the EEC. I have listened for that, because it seems crucial in any evaluation of our relationship with Europe.

One of the most significant things in the last year has been that my right hon. Friend the Prime Minister has identified the size of our budgetary contributions as a major obstacle in our relationship with Europe. Hon. Members from all parties concur with that. My right hon. Friend the Prime Minister rejected the possibility of a settlement at Dublin. All hon. Members will remember how those in favour of Europe thought that she had done this country a grave disservice. I remember the crabbing remarks that were made at that time. At Luxembourg, she rejected a greater settlement that seemed, on the surface, to be more in our interest.

I am slightly distressed, because I can see no significant improvement in the subsequent terms negotiated by my right hon. and noble Friend the Foreign Secretary and by my right hon. Friend the Minister. In the other place my right hon. and noble Friend said: This Government came to office determined to make a success of our membership of the Community. The first task was to deal with the inequitable budget contribution. That we have now done."—[Official Report, House of Lords, 2 June 1980; Vol. 409, c. 1130.] I cannot agree that we have dealt with the budget problem. We have succeeded only in ensuring that we see a return on part of our contribution.

Many hon. Members have pointed out that the fault lies not only in the size of our net contribution but in the entire own resources policy of the Community. That policy insists that we charge our domestic consumers higher prices than world food prices in order to ensure "a fair and equitable distribution" of agricultural incomes across Europe. That is damaging to our national economy. I would like the Treasury, the Ministry of Agriculture, Fisheries and Food and the Foreign Office to let me know how they quantify the proposition that Europe is in our economic interest.

I almost winced when I thought that negotiations had passed from the Prime Minister's hand to those of the Foreign Office and the Ministry of Agriculture, Fisheries and Food. I am very interested in how we quantify our position when we negotiate. Earlier this week, I tabled several written questions. I shall refer to them, because the answers are revealing. I asked the Minister—who was earlier in the Chamber—the following question: from what countries and for what commodities as the United Kingdom is unable to secure its current imports at third country offer prices. My hon. Friend the Minister of State, replied: I assume that my hon. Friend has in mind the minimum offer prices on which the Euro- pean Community Commission bases its calculation of variable levies. It seems unlikely that the United Kingdom could obtain from any particular country a significant quantity of imports of the main traded commodities at these prices. I find it difficult to accept that that is an honourable reply to a direct question. Of all the commodities that I can think of, only butter provides a possible exception. I should love to know the Minister's view on cereals.

Mr. Budgen

Surely New Zealand can supply the butter?

Mr. Shepherd

I thank my hon. Friend for that intervention. I asked my right hon. Friend the Minister for Agriculture, Fisheries and Food three questions that related to quantifying the cost of membership. First, I asked: What has been the cost to the United Kingdom consumer of the common agriculture policy for each year of the United Kingdom's membership of the EEC; and how it has been quantified. I then asked: What has been the gain to United Kingdom producers of the common agriculture policy for each year of the United Kingdom's membership of the EEC; and how it has been quantified. Finally, I asked the following question: What has been the loss to taxpayers as a result of the common agriculture policy for each year of the United Kingdom's membership of the EEC; and how it has been quantified. It is not unreasonable to suppose that these propositions are needed if one is to argue an economic case and to defend the interest of Britain. My right hon. Friend the Minister deemed the following reply to be appropriate: To answer these questions would require assumptions about the levels at which, and in particular the methods by which, farm production in the United Kingdom would have been supported in the absence of the common agricultural policy. I do not consider that it would be realistic to make a series of hypothetical assumptions of this sort, and in any case the preparation of the answer would involve disproportionate time and effort."—[Official Report, 30 June 1980, Vol. 989, c. 456–8.]

Mr. Dykes

rose

Mr. Shepherd

That reply is slightly less than insulting and an awful approach to quantifying the cost of our membership.

Mr. Dykes

Will not my hon. Friend accept that the wording of those answers is couched in the conventional language that is used when extensive statistics are required at great public cost for hypotheses that cannot be proved? Will he not further agree that the gross cost of our domestic farm support system before we joined the Community in 1972 was £330 million? Allowing for increases in inflation that could amount to over £1,000 million now.

Mr. Shepherd

I do not know what to make of that intervention. However, I am happy to think that we could return to a form of deficiency payment, as the right hon. Member for Battersea, North (Mr. Jay) suggested. The cost—which is borne I nternally—is to the benefit of our own British community, rather than the European Community.

Mrs. Kellett-Bowman

Does not my hon. Friend agree that the same system applies to lamb? A 100 per cent. deficiency payment is paid by the Community.

Mr. Shepherd

I am grateful to my hon. Friend, who is a Member of the European Assembly, for that information.

Mr. John MacKay (Argyll)

Does not my hon. Friend realise that the deficiency payment system exists only in this country? The rest of Europe is subject to the usual "buy for a mountain" policy.

Mr. Shepherd

I am amazed that every time a pro-European hon. Member stands up, he digs his own grave when it comes to costing the CAP.

Mr. Buchan

Does not the hon. Gentleman also agree that, whatever the cost of deficiency payments in relation to British agriculture, it would nevertheless favour British agriculture and allow a cheaper food policy?

Mr. Shepherd

I absolutely agree. In considering an analysis of economic policy a Government's first consideration —and that of any hon. Member—should be the economic interest of their countrymen. In some ways, we let that go too easily. We do so at our peril. Our political interests are never far from our economic interests. The two are indivisible.

I mentioned the answers that I received from the Minister because there should be a better quality of argument at Government level. The country should be better informed of the consequences of the actions that the Government take. Better information will give rise to a more determined fight for our national interests. Certain consequences resulting from events during the last year have distressed other hon. Members and me. In the West Midlands the strength of the pound is criticised. We suffer the strength of that pound when it comes to selling our manufacturing goods to the United States. We derive no benefit from that in respect of buying of foods on the free world market.

It is extraordinary that the Minister has accepted devaluations of the green pound during the past year. That has increased the cost of food to our fellow citizens. I cannot understand how it can be in our interest deliberately to increase the agricultural burden on our fellow people. It has been well pointed out that if we were free to buy on the world market we could buy food at substantially lower prices. I found it extraordinary that the Minister could attack arguments that appeared in The Sunday Times about the cost of the CAP. According to his arguments, it is not worth while to make such quantifications.

The arguments of the institute of Fiscal Affairs is based on some reasoning. My right hon. Friend has decided not to listen. It would seem that no accounting has been undertaken that measures the economic cost of the CAP. The way in which those costs are distributed has not been measured, nor have those costs been assessed against the benefits. If the costs are not measured, they cannot be controlled or monitored. I accept absolutely the arguments of hon. Members on both sides of the House who argue that the interest of our country is best served by scrapping the CAP and returning to deficiency payments.

7.59 pm

Mr. James Johnson (Kingston upon Hull, West)

I enjoyed the speech of the hon. Member for Aldridge-Brownhills (Mr. Shepherd), although I do not wish to take up his remarks.

Some hours ago I listened with care to the Chancellor's speech. I did not enjoy it a bit. I enjoyed very much the speech of the right hon. Member for Down, South (Mr. Powell). He was talking about fisheries and why it seemed to him unusual—I think that he used the word "singular"—that the fisheries document should be alongside the others of the budget. I would sooner use the word "sinister" than "singular" in this package, as regards document 7389/80 being alongside the other two. It is sinister that it should be there.

I find in it some unusual words. On the second line of page 1 there appears the word "concomitant". It is said that the common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present". To me, "concomitant" means integral and essential. It means that the CFP is a solid integral part of the wider package which the present Government hope to deliver.

A little below that, I see phrases such as the following: It is necessary in order to sustain the agreements in other areas to adopt as swiftly as possible the decisions necessary to ensure that a common overall fisheries policy is put into effect on 1 January 1981. Why is it necessary, essential or vital to adopt "swiftly" and to make these decisions as early as possible? What is the object of this action? The CFP should be put into action by old year's night. The Government's stated deadline is that that must be so. It must be in effect and functioning on the first day of the new year. I hope that this means a good Hogmanay for the Scottish fleet. I am not sure whether it will mean that. After listening to the hon. Members for Haltemprice (Mr. Wall) and for Aberdeenshire, East (Mr. McQuarrie), I am wondering whether the all-party fisheries meeting last night conveyed to me as much as it did to them. To me it was doom and gloom, almost inspissated gloom. Good men were present, but more of that later.

The text of the communication is exact, so that all that we need to ask Ministers tonight, and to keep asking them over the coming weeks, is whether we can turn these words into deeds. That is the important thing. Our delegates meet next on 21 July. We last met on 16 June. Luxembourg sources then, particularly in the shape of a French fisheries Minister called Joel Le Theule, gave a stark warning—at least, it sounded to me like a stark warning—that unless the United Kingdom agreed to the terms of accession, there would be serious consequences for Her Majesty's Government. Our Ministers—I am glad that a fisheries Minister is now present—deny this. They say that the words of the French Minister were for domestic consumption only. Perhaps there were some elections in Paris, municipal or otherwise. I am not sure. Perhaps it was a by-election. It is said that it was for that purpose that the French Minister was uttering these fire-eating words signifying thunder—for domestic consumption.

As I understand it, the United Kingdom stands firm for an exclusive 12-mile zone, a preferential 50-mile zone, and beyond that, the largest quotas possible beyond. How large? Are these quotas consonant with the 60 per cent.-plus of fish stocks that lie within our territorial waters, or are they to be the 25 per cent. which has been mooted by Commissioner Gundelach?

I am sure that the Minister of State, Foreign and Commonwealth Office, is listening acutely. He has said that there must be cast-iron guarantees to protect the hard-pressed British industry. A short while ago he answered me in much the same vein, saying that the British quota must be boosted to take account of the fishing grounds lost since 1970. I assume that these are Iceland and Norway, basically.

This is all beautifully stitched up in this document. It says that catches must have regard to the loss of catch potential in third country waters. I take it that those are identical statements in different language.

It is obvious to me that on 16 June there was merely an initial skirmish. Our people were milling about with the others on the Continent. Perhaps the Ministers were dipping their toes into the water. They were not taking any dives into deeper water then. Therefore, I take it that on 21 July the battle begins. Only hard men will survive. If they do not, fishing will not survive. My inner fear is that as time nags away nothing definite will emerge. As has been said, the French have stone-walled. Why should they not do so? It is in their national interest to stone-wall. Deadlock can then follow.

Earlier, the Chancellor said "We are not prepared to accept "—in other words, we shall decide the matters on their own merits. Again, I heard the phrase "No longer are we one against eight". What are we? Are we two against seven? Are we three against six? We have to be nine to nothing, as I understand it, to get what we want when discussing these matters at Ministers' meetings.

August will come. September will come. As each month goes by the industry will slowly bleed away, as it is bleeding now. Firm after firm and family boat after family boat is suffering losses on its voyages—of £2,000, £5,000 or £10,000 a time. They will go bust. We heard last night at the meeting that banks in Scotland now had debts owing to them of about £25 million, from family boats and the like.

Mr. McQuarrie

I must correct the hon. Member. The figure in Scotland is £71 million for loans and overdrafts affecting Scottish boats.

Mr. Johnson

I do not mind accepting that correction, it merely underlines the deficiency. I am scared by this figure of £71 million. It is much worse than I thought. I understood that the deputation would go to the Minister tomorrow and ask for £35 million or something of that ilk.

Those of us who represent fishing constituencies believe that many of these family firms are heading for bankruptcy. Unless they receive some help before September, the fleet as such will disappear. Perhaps we shall have half, or even only a quarter, of our fleet left by the end of the year. Last night my colleagues heard all this stated in an atmosphere of gloom, as one good man after another got up and gave the facts.

There is a Catch 22 situation here. Let us forget the French blockers and the anti-Anglo-Saxon types. If we are to get a beneficial common fisheries policy next week, never mind next month or on 31 December, and if a large part of the fleet is not there to receive the benefits, our so-called partners will argue that we do not have the catching capacity so we will not need these big quotas. Then we would have to do without. That is the headache facing the industry. We all hear the same tale told to us. Unless the industry receives some help to hold the fleet together, when the time comes to accept the policy—even if it is a good one—we shall not be entitled to take up the benefit.

I do not know the answer. If the fleet is decimated in the coming months and there is no Government help forthcoming, there is no answer. The Minister must have had all these arguments ad nauseam. No doubt he will hear them again when the industry meets him tomorrow. He must get the message because it is simple. All of us—Ministers, Back-Benchers and the industry as a whole— must make sure that we have a catching fleet that can put to sea if and when a just, decent and honourable settlement is finally achieved. It may be too late. Many people think that it is. This Government must not sell the pass over the CFP. I do not think that they will. It would be unthinkable for any Government to do such a thing, but if this Government continue to behave in the despicable way that they have behaved over steel and textiles, they may, wittingly or unwittingly, allow the same fate to befall our own fishermen. If that were to happen it would be the worst betrayal that I have ever come across in my political life.

8.13 pm

Mrs. Elaine Kellett-Bowman (Lancaster)

It is a great pleasure to speak after the hon. Member for Kingston upon Hull, West (Mr. Johnson), because I have followed his speeches in many fishing debates and I believe that he is an honourable and truthful man on this matter. I join with him in begging the Minister to ensure that our fishermen, who serve us so well in both peace and war, get a fair deal.

It is pleasant to find the House discussing these documents while the trail is still warm and, for once, at a civilised hour. Far too often we discuss matters of the greatest importance at an hour of the night or in the early hours of the morning when we are almost incapable of thinking clearly.

In December, when the European Parliament threw out the Council's budget, it did so for three good reasons. First, it believed that the budget was unbalanced and that too much was being spent on the common agricultural policy and too little on other Community policies. As someone who is passionately interested in the regional fund, I shared that view. Secondly, it knew that the gap between the prosperous and less prosperous regions of the Community was increasing. The Parliament believed that it should, through its budget, make a conscious and practical effort to reduce that widening gap. Thirdly, the majority of Members of the European Parliament wanted to reform the CAP. There is nothing wrong with the principles of the CAP; it is the way that they are put into practice that is at fault.

Getting the budget into balance will be a long and trying business, but when one is on a long road one must take the first step. I believe that we are further along the road than most hon. Members appreciate. From 1976 to 1979 the growth in agricultural spending averaged 30 per cent. In the budget now before us it has increased by only 12 per cent. By contrast, the non-compulsory spending, which includes the regional and social funds, and which increased by only 15 per cent. In that same period, will increase in 1980 by 21 per cent. That is not as much as we would want, but it is a useful step in the right direction.

Mr. Buchan

rose

Mrs. Kellett-Bowman

No, I shall not give way. The hon. Member for Renfrewshire, West (Mr. Buchan) has interrupted other hon. Members a number of times already.

The rejection of the budget shook the Council, and it was instrumental in causing it to mandate the Commission to restructure the budget by 1982 to give it a better balance—something for which the British Government have constantly striven.

We cannot separate these developments from the Prime Minister's triumphant success over Britain's net contribution to the Community budget. Had either the right hon. Member for Huyton (Sir H. Wilson) or the present Leader of the Opposition been offered a reduction of 350 million units of account in our net budget contribution, as the Prime Minister was offered in Dublin in 1979, they would have rushed home and declared a triumph. When in office, they were both extraordinarily good at dressing up defeats in the robes of victory. That is what they would have done on this occasion. But, thank God, the Prime Minister is made of sterner stuff. She rejected the one-third of a loaf.

The second offer was much more tempting. Messrs. Giscard d'Estaing and Schmidt almost had apoplexy when she calmly declined it, as did a number of faint-hearted Members of this House. But the third offer, made in Venice on 30 May, was a tribute to the Prime Minister's tenacity. Not only did it reduce our net contribution over two years by 1,580 million units of account, with a possibility, if the underlying imbalance continued, of a similar reduction in 1982, it also secured us one ally, and possibly two, in the efforts that we have been making over the years to reform the CAP.

As long as we were paying the piper, Germany and France were content to leave things as they were. They were doing very nicely, thank you. Why should they worry? However, once Germany became the biggest contributor, as everyone in the House now admits that it is, it began to see why we had for years advocated the reform of the CAP to fit in with the needs of the Nine and their consumers rather than only with the needs of the original Six.

Hon. Members will not be surprised to know that I was particularly interested in the fate of the regional fund. Last year, while the right hon. Member for Heywood and Royton (Mr. Barnett) was looking the other way, the European Parliament managed to secure a substantial increase in the regional fund, to 1,100 million units of account. This year, the Commission attempted to build on that progress by proposing 1,200 million units of account for the regional fund commitments—a modest increase, but an increase nevertheless.

The Council, evidently smarting from its reversal in the 1979 budget—many of the Council members had been involved in that budget—reduced the sum to a mere 850 million units of account. That was the first time in the history of the fund that it had been reduced not only in real terms but in money terms. Merely to keep it in line with inflation would have required a sum of 1,005 million units.

The Council realised that it would not get away with its offer of only 850 million units of account and it grudgingly went up to 1,035 million units—just a little above the inflation rate, but nothing like good enough. In the present budget it has increased the amount to 1,165 million units of account. That is still not enough, but it is a vast improvement on the original offer of 850 million units.

But the United Kingdom has gained much more. Document 7943/80, to which is annexed document 80/333, contains an interesting package of measures to increase EEC spending in the United Kingdom and to help to redress the budgetary and regional imbalance. The package is the most flexible that we have ever seen. It can meet not only the needs of assisted areas but, in exceptional cases, the needs of areas outside the assisted areas, as provided for by article 3(2).

The package has two great advantages. It does not necessitate any additional spending by the United Kingdom Government, because payments made by the Government since January count as their share of the expenditure. Secondly, the range of projects that may be covered under article 2 includes all those items that have been found to be most helpful in the past.

For years we did no real assessment of what induces industry to go to the regions. However, a survey was carried out recently and it found that transport, infrastructure, advance factories and the servicing of industrial sites are high among the priorities of those firms which want to go to the regions.

I hope that areas that are particularly hard hit, such as the textile industry areas, parts of Lancashire, and fishing ports such as Fleetwood, which were grievously hit by the previous Government's calamitous policy towards Iceland, will be able to benefit from the money that we shall be getting.

I believe that it is vital that we rectify the growing gap that exists not only between the countries of the Community, but between the North and the South of this country. But even within the areas that are not in the North or the South, there are black spots that we need to clear up. The EEC measures are sufficiently wide to cover help for such black spots outside the assisted areas. We must help places such as the East End of London, which has many problems and which desperately needs infrastructure and an urban renewal programme. It can get such help from this present EEC programme

Mr. Spearing

We not not want EEC help, thanks very much. The hon. Lady should look after her own area.

Mrs. Kellett-Bowman

Thanks to the Prime Minister, we got an exceedingly good deal out of the budget and related measures. It is up to us to build on that for the future.

8.26 pm

Mr. Norman Buchan (Renfrewshire, West)

It is with great pleasure that I follow the speech of the hon. Member for Lancaster (Mrs. Kellett-Bowman). I know of her enthusiasm for Europe and I understand that she has to make the best of the case that she has. The hon. Lady referred to the percentage increase in the regional fund, but the important point is the tiny amount available to the fund from the EEC budget.

The ability of the European Parliament to change the views of the Council of Ministers is narrowly limited. Of a £10 billion budget this year, 60 per cent. is spent on one simple objective—the disposal of food surpluses. The cost of the disposal of food surpluses is £5,580 billion. That is a fantastic figure, compared with the £300 million or £400 million that is available for regional development.

The hon. Member for Lancaster suggested that the Government should claim credit for the new deal under which we are to get money, not in cash, but in a resources element coming back to this country. But it is our money. It has been shipped to Brussels and, under terms, will come back for our use. If it had not gone in the first place we should have had even more flexibility in applying that money in regional aid.

The CAP has been a disaster to the finances and agriculture of Britain, and the EEC as a whole has been disastrous in another way. One of the problems that we face is that the concentration by the Government on a single element of the cost of the EEC, namely the crude financial cost, has minimised the effect of the EEC on the general economic malaise from which Britain is suffering.

We are in the middle of a severe crisis and the heart of it is what is happening to our industrial economy. Given the effect of the EEC and its contribution to that malaise, the £700 million cross-payment of our own money is minimal. It is not the most crucial point. The most crucial thing is what has been happening to our industrial economy since our entry to the Common Market. I want to give one or two figures. In general trade in manufacturing exports and imports, Britain does well compared with the rest of the world. So we should. We have to import a large amount of our food. It would be strange if we did not have a surplus in trade in manufactures.

Britain, in relation to the rest of the world, has a £5 billion surplus in trade in manufactured goods. When we compare out trade in manufacturing with the EEC, that figure is almost exactly reversed. We are in deficit to the tune of £4 billion. Britain is a manufacturing nation. Those figures mean that, in relation to our main competitors in the world market, we are in hock annually to the order of £4 billion. That phenomenon has occurred since our entry into the Common Market.

Before joining the Common Market, we had a small surplus in relation to the EEC. In 1970, we were in surplus to the tune of £103 million. In the years since our entry in 1972, we have gone into hock to the tune of £4 billion. That figure is much more serious than a financial costing factor. It is reflected in the bankruptcies, the liquidations, the redundancies and the closures that the British industrial economy is experiencing. There is the additional cost of the unemployment benefit, probably doubling the figure. That is the real cost.

The hon. Member for Aldridge-Brownhills (Mr. Shepherd), in a courageous and excellent speech, said that it was difficult to get real costings. This is an element of the real costings to Britain— £2,600 million in hock in manufacturing trade to Germany, £800 million to Italy, and £730 million to France. When one considers how rapidly this situation is accelerating, I can even give a more frightening figure.

We depend on the export of manufactures. The volume of manufactured exports from Britain has ceased to grow. Between 1977 and 1979, exports of finished manufactures fell by 2 per cent. At the same time, the volume of finished manufactured imports increased by nearly 40 per cent. This is not just a prescription for saying that the EEC is harmful. It is a prescription for economic and industrial disaster.

We can solve this situation only by taking very radical measures. Those measures cannot be taken due to our membership of the EEC. I do not argue the case for leaving the EEC with acrimony. It is not because I am anti-Europe. On the contrary, if anything has been wrong in nomenclature in this discussion, it is the pro-Marketeers claiming the right to speak as pro-Europeans. I do not accept that they are pro-Europeans. If I want to hear any anti-European nationalism, I have only to listen to the European Conservative Members when they talk about France. Those are the occasions when one hears a bit of chauvinist anti-European nationalism. I happen to love France, and Italy is my second country. I am a pro-European. I am anti-Common Market.

One of my objections to the Common Market—it can be seen in the deal that we are being forced to make in the papers before us—is not only the cost to Britain of the common agricultural policy, which is enormous, but its effect in distorting our agriculture. The proud boast eight years ago that Britain had the most efficient agriculture in Europe is now seriously coming under question. The new report from the Centre of Agricultural Strategy Studies at Reading university suggests that the situation is now altering and that, per acre and in relation to labour force, we are now beginning to decline in comparison with Europe.

Conservative Members, with certain notable exceptions, argue that we must not hark back to the past and must not remind people of what was said. I believe, on the contrary, that it is important to hark back to what was said in the past. Not long ago, when standing at the Dispatch Box during discussions on the Common Market, I predicted exactly what has happened. I was, however, wrong because I minimised the situation. It is more dangerous and more serious than my hon. Friends and I were saying.

It is sometimes necessary to say "We told you so." Otherwise, no one would start thinking how to get out of the mess. I am continuing to say "I told you so" tonight. The real problem for British agriculture is that the Common Market is forcing it towards a cash crop husbandry. No longer does a farmer ask "What is the best crop that I can get?" Britain produces only two-thirds of its temperate food. The farmer no longer asks whether he should grow grass and keep livestock—he wants the best cash return that he can achieve. That means that land which should be used for high quality grass production is being used for expensive cereal production. That is in a world which is starving for lack of vegetable protein.

It makes no sense in world terms or in British terms from the cost aspect. It makes no sense in relation to food prices. The unconcealed cost includes not only our funding of the CAP but the fact that we pay money, not to keep food cheap but to push up prices. This is the only time in recorded history when what we lose on the swings we lose on the round-abouts.

The EEC farm gate price for butter is 3.8 times the world price. Sugar is 2.5 times the world price. We still have a problem with our honour and duty to the developing countries. Wheat costs twice as much. Consumer prices for meat have gone up 200 per cent.—three times as much as they have risen I n North America and Australia.

Mr. Dykes

The hon. Gentleman is wrong about sugar.

Mr. Buchan

I think that my figures are right. However, I shall investigate them again. We are paying dearly for building a high mountain of sugar beet in Europe when we should be benefiting from the importation of cane sugar from the developing countries. That cost must be added to our payments to the CAP. The figure quoted for the guarantee and deficiency price, which might reach £1,000 million, goes towards a factor which is three or four times as high as that deficiency payment, at the expense of distorting British agriculture.

In terms of our primary industry and our secondary industry the cost of being a member of the EEC is not only inhibiting but is a positive danger. We must find a solution to the collapse of our industrial economy. I do not believe that we can find a solution within the rules of the CAP. We must no longer reiterate the argument for not joining the EEC. We must now adduce arguments in favour of our leaving.

We shall leave with no sense of pleasure. It has not been a particularly pleasant experience. However, we must leave without acrimony, understanding that we are no help to Europe if we allow our industrial economy to collapse. It is in the interests of Europe that we should leave. Only in that way can true internationalism and friendship be established. More important, only in that way can we take measures to control imports.

The motor car industry has almost halved production in the last six years. We now import more cars than we produce. Between 56 per cent. and 59 per cent of our cars are imported. About 38 per cent. of our cars come from the EEC. I say "Enough is enough." It is with no sense of acrimony but with a deep sense of reality that I say that we should forget the mock victory and remember the real economic nightmare that we face. We must take the crucial step— and it will be difficult—of leaving Europe.

8.40 pm

Mr. Hugh Dykes (Harrow, East)

The hon. Member for Renfrewshire, West (Mr. Buchan) is a true internationalist and no one quarrels with his affection for the world and the words that he said about Europe. We would quarrel—though the right hon. Member for Stepney and Poplar (Mr. Shore) presumably would not— with his view on the need to leave the Community. That presumably would be the programme of the right hon. Gentleman if he were to be a candidate for the leadership of the Labour Party. Immediate withdrawal from the Community would be his principal plank, I imagine, from what he said in his vitriolic speech today.

However, other hon. Members would probably not come to the same chilling conclusion as the hon. Member for Renfrewshire, West. We all share his anxieties about the state of British industry and British agriculture. I think the underlying reasons for his conclusions are different from ours, and not only in the sense of formulation of policy for the future to counteract this positively chilling trend.

We also see that our problems are not intrinsically the fault of the Community. That is why the conclusion of the hon. Member for Renfrewshire, West is so disturbing. The fault of the Community has only been that since 1973, when we joined, it provided us with what we wanted, namely, a large free market in Europe. Gradually and progressively we hoped that it would be free of all kinds of barriers to trade and that the United Kingdom would prosper thereby.

In the sense of building up trade within the Community we have more recently achieved and developed a more favourable ratio. We are still substantially in deficit, and the disturbing and freezing conclusion is, of course, that we have failed to cope with the opportunity that we were given. We have not, therefore, managed with free trade, and so on.

My conclusion and recipe is to let this country really go for an important and significant revival in our economic strength, output, and manufactured exports, so that we can build. Opposition Members in increasing numbers advocate that we should put up barriers and import controls. I do not believe that that would be a solution.

Can the hon. Gentleman not accept that there is a basic contradiction between his saying that it is sad that regional funds in the community are too small and then insisting on blaming everything on the Community? The same conclusions, I submit—different conclusions from those of the hon. Gentleman—apply to agriculture. I do not think that the first disturbing signs of weakness in British agriculture and industry—on which we formerly prided ourselves as being the most efficient in Europe—that have come along in the last 18 months are intrinsically to do with the CAP. There may be some truth in that, but it is not mainly that. I think that it is the progressive over-capitalisation of the British agricultural industry.

We must remember that substantial grants are available. That can be a good thing in one way, but I think that they have distorted relationships and values in British agriculture much more than the CAP. After all, if we are still the smallest and, happily, one of the most efficient agriculture industries, and we do not contribute as much as other countries to the surpluses, we cannot say that the CAP has had a massive distorting effect on us. That is an intrinsic contradiction.

The total amount of grant available for British agriculture from domestic sources, let alone the CAP, is £300 million, and I think that the low return on agricultural investment and the fact that land values have really reached a very distorted level now—which in many ways is good, because it helps the farmer to cope with a mounting overdraft, though it is bad in other ways—are much more worrying to the Ministry of Agriculture, Fisheries and Food than are some marginal effects of the CAP.

The whole question should be put into perspective. We need to get away from what has always been the narrow-minded chauvinism of the Labour Party, which is affecting a small number of my hon. Friends.

The agreement concluded by the Foreign Secretary and Prime Minister is a tremendous one for this country and a solid achievement for the Government. Everyone should objectively and wholeheartedly congratulate my right hon. Friends and their colleagues on having achieved it. It is spectacular and it is no wonder the Labour Party is jealous of it and furious that it could not have done as well. It did not even begin to think about discussing the matter, except at one or two minor meetings of Councils of Ministers, when it was broached at the tail end of the meeting. It is understandable that the Labour Party is rigid with anger and frustration that this honour did not accrue to its Government. The only reference in the Labour Government's six-monthly White Paper to the problem of our excessive payments was in the last one before they left office. It contained a couple of lines saying that there were disturbing signs of the growth of our contribution.

Let me now return to some of the facts instead of concentrating on the hysteria and grotesque emotion that keeps manifesting itself on the Labour Benches. None of the figures showing the growth in the United Kingdom's gross contributions, adjusted for inflation and the internal devaluation of money here, is in any way removed from or greater than the adjusted figures in the White Paper produced by the Conservative Government in 1971 and containing an extrapolation of what our payments would be. One of the years in that period produced a surplus which the former Chief Secretary to the Treasury in the Labour Government was proud to announce with a flourish. Other than that, the deficit was as we had expected. In those days the figures were small, but because of inflation and, more recently, the rise in the value of sterling, which has been substantial in recent months, the figures have naturally swollen.

Let us consider the elements in the contribution. Because the CAP takes 70 per cent. or even 75 per cent. of the Community budget, the common fallacy among many Labour Members is that we devote three-quarters of our contributions to agriculture. That is not true. The latest figures for 1979 indicate that agricultural levies accounted for 25 per cent. of the gross contribution. The rest came from our normal import payments and the equivalent of a 1 per cent. VAT base paid over as own resources.

The conclusion therefore has two aspects. Germany has the most efficient industry in Europe. It also has an agricultural industry that we regard as backward but that provides the Germans with self-sufficiency in agricultural products. If our farming industry were self-sufficient our agricultural imports would be lower and our levy payments, and therefore our gross contribution, would have been lower. If we had imported fewer industrial goods—consumer durables such as Japanese cars, and white durables—our gross contribution would, again, have been less. The only thing to have been unchanged would have been the VAT contribution equivalent to the 1 per cent. VAT base.

Let us now consider the net contribution and the reasons why, quite rightly, people have said that the CAP has got out of hand in recent years and needs substantial changes. I think that everyone will accept that—even the most fervent Europeans like myself and other sensible hon. Members. The net payments have increased because of that, but not only because of that. One of the reasons is that this country, and principally under a Labour Government, has never argued robustly enough for sufficient budget appropriations in the Community for other desirable purposes, such as the regional and social funds. That is what we must aim at in the future.

I believe that the total Community budget should be larger in the future than may be envisaged. If, for example, there is a strong adherence to maintaining the 1 per cent. figure, the Community will have to look seriously to alternative sources of finance. One that attracts me and a growing number of people who are seriously studying the matter as opposed to histrionically studying it, like my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), is to have an oil market or an energy market on oil levy.

If we could persuade the other member States to consider a marginal percentage on the oil import prices that they will be paying in future—and, after all, they have risen tenfold since 1973, so maybe even ½ per cent. would be sufficient —a considerable amount of extra money would accrue to the Community, and we should not be paying extra as we have our own North Sea oil. Other aspects can also be considered in the future.

If the Community budget is developed gradually and becomes significantly larger in the long-term future, the Community will have the opportunity to do that which is increasingly urgent in underdeveloped regions of member States, which are becoming increasingly clapped-out. National funds are not sufficient to take care of the problem. We need more from the regional and social funds. We need that money, as do Italy, Brittany and even some parts of Germany. It is the sensible way to proceed.

The agreement is not only an excellent and outstanding success for the Government; it is the right way to proceed in the Community. After all, the documents that we are considering are regulations. We do not have to pass legislation in this House. We now have to see how the Commission copes with the difficult task of fitting the details and elements in the two parts—the adjusted financial mechanism and the supplementary payments—to the political figures achieved in the negotiations. That is the way in which the Community works. The legislation therefore has to be framed in accordance with that. Inevitably some parts are vague, which is understandable. There is nothing sinister about that. It is nothing that should cause the continued growth of narrow-minded chauvinism on the Opposition Benches.

Although the Commission has only until June 1981 for the finish of this mandate, which is a colossal task, I believe that it will be successful in producing money for the host of extra schemes that the Treasury will be putting forward. There has to be proper scrutiny of those schemes by the Commission. Without that, hon. Members could say that the Community was chucking money about without proper surveillance.

My final point may appear trivial, but I hope that it will not be regarded as such. It is time for the Commission to return to proper advertising at the site of schemes involving Community money. Signs are erected in Wales, and I want to see more signs in this country, so that people can identify schemes financed by Community money. Since our membership we have received about £4 billion, aside from our budget contribution. The facts will register with the man and woman in the street if they can see how Community money is spent. The more signs that we have—if necessary, even illuminated signs—to show what the Community can do, the better it will be. As we all know, in underdeveloped countries one sees signs at airports saying that such-and-such a scheme has been financed by Canada; "We thank Canada." I should like to see similar advertising in this country.

Hon. Members who still wish to fight a losing battle and be churlish about the new agreement will continue to harp on the theme that it is our money. It is not. We have signed an international treaty. We have, by treaty, assigned those funds to the Community, and they belong to the Community. We should like the other member States to treat contributions in that spirit. People should stop being narrow-minded, defeatist and negative.

8.55 pm

Mr. Nigel Spearing (Newham, South)

I shall not follow the hon. Member for Harrow, East (Mr. Dykes) in what I believe were a number of logical flaws in his speech. I shall refer only to his comment that the Prime Minister has negotiated a magnificent and successful package. I do not think it is magnificent. He gave no reasons why he thought it was.

I do not think that the debate is very good, either. It was opened by a Chancellor of the Exchequer who demeaned his office by not telling us the details of the package. He did not even tell the House how much came in cash and how much had to be accepted in programmes.

The other constitutional matter to which I draw attention is that the package was negotiated by the Foreign Office. It was the Lord Privy Seal who announced the results to this House. We have had a junior member of the Foreign Office on the Front Bench, and the Treasury is now taking responsibility for the debate. That shows the extent to which the Foreign Office has now taken over even in matters related almost to domestic expenditure—a role that it would never have dreamt possible some time in the past. It illustrates the lines that get crossed in our constitution, as our membership of the EEC successively erodes not only the powers of this House but the proper procedures within it.

The half loaf that we have got is nothing like as good as Conservative Members have constantly tried to make out. For the purposes of my argument, I leave aside the fact that it is not the broad balance to which my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) referred in opening the debate. It is in the region of £700 million a year, we are told, for two years only, with a possible extension to a third, but after that it is all up for grabs. In other words, the lasting settlement that the Prime Minister declared was her aim —and that this House twice endorsed as the policy of this House—has been thrown entirely to the winds.

When we get to the longer-term programme that is to be negotiated, there is no guarantee at all of any success. This country, therefore, has time and time again to negotiate from a position of weakness even to hold what we have at present. This package is no exception to that general rule.

I wish to concentrate for a few moments on the so-called programme that we are told will be a part of the repayment moneys. It is contained in a document 7943/80, which is an EEC regulation. It is the sort of document that the Department of the Environment might impose on a local authority. These are the rules which have to be kept in the expenditure of what might be up to £500 million a year.

The hon. Member for Harrow, East has regarded any expenditure of the EEC in this country as a good thing. Many of us on the Labour Benches do not regard it in that way, because that expenditure illustrates the power of the EEC. Article 5 lays down some of the regulations and conditions. It states: The Commission can request all additional information required for the examination and assessment of a special programme. When the success of a special programme requires that public authorities take complementary measures not financed by the Community, these measures will be contained in the programme. It also states that the Commission shall take all necessary steps to ensure that assistance granted in accordance with the present regulation is given suitable publicity. In other words, we shall be told that the EEC has graciously consented to help with some infrastructure project, using our money to do so.

I suggest that the whole of this document stems from an attitude of central Government to a local municipal undertaking. Indeed, article 6 tells us that: The maximum rate of the financial contribution of the Community to a special programme, or part thereof, will be 70 per cent. The Minister should be able to tell us where the extra 30 per cent. will come from. Will it come from moneys which are already in the Estimates? Will these programmes, which include a wide range of activities, be those which are already in the Government Estimates, or will they be additional to them? If they are already in the Estimates, what is the Treasury to do with the money that is ostensibly saved by the EEC providing up to 70 per cent. of it? The House is entitled to those answers in a debate initiated by, and presumably to be wound up by, a member of the Treasury Front Bench.

Even given these sums in restitution, the deal is bad. Not only will those moneys be expended on domestic matters that should be entirely within the responsibility of the House—and we have given to Brussels the choice about what that money should be expended on—but the rest of the package entrenches the common agricultural policy, and makes it even more difficult for a fisheries policy to be negotiated that will be helpful to Britain. It introduces yet another scheme for intervention, this time in the sheepmeat sector.

My hon. Friends mentioned the most important point when they said that the so-called fundamental review cannot be a fundamental review at all. The absence of Foreign Office Ministers from the debate is constitutionally of great significance. [AN HON. MEMBER: "The Minister is from the Foreign Office."] I apologise to the Minister. In an earlier incarnation he was constantly and actively dealing with Treasury matters. I hope that he will answer the questions relating to the principles of the common agricultural policy. Are they the principles which are de jure in the articles of the Treaty of Rome, or are they the principles that have grown up through custom and practice? I do not believe that the Minister could claim that the French would regard the former as being the proper principles, but would regard only intervention buying and the stabilisation of markets as the fundamental principles.

This package contains the seeds of disaster for the future. They will not be immediately apparent. They are apparent to those who have taken part in the debate, and they will be apparent to the country as time goes on. Because of the continued industrial disaster in Britain, the increasing call on the regional fund, which may be looked upon initially as a good thing, will be seen to be making Britain a continual outside pensioner of the EEC.

My final point is important in relation to the regional fund, which is part of the special measures included in the £500 million. As we know, the regional fund is included in the non-obligatory part of the budget, which itself is in the final control of the EEC Assembly. Unless the Minister can give me any reason to the contrary, I take it that all the programmes that we have discussed in relation to the possible £500 million, and that are contained in the regulations, will be not only consequent on next year's EEC budget, but consequent on the permission of the EEC Assembly. If that is not so, perhaps the Minister will explain the matter. The regional fund is dependent upon the EEC, and the regulation is dependent upon the regional fund. It follows that there is a risk that the House, for the first time in its history, will be directly subservient to the directly-elected EEC assembly.

9.4 pm

Mr. John MacKay (Argyll)

I do not wish to follow the hon. Member for Newham, South (Mr. Spearing) into the high spheres of the financial part of the document. I intend to talk about the fishery document. I wish to get away from my hon. Friends the Members for Aberdeenshire, East (Mr. McQuarrie) and for Banff (Mr. Myles), and others who have spoken about the problems of the East Coast. I shall address myself to the problems of the West Coast, including the Firth of Clyde.

I refer to paragraph (b) of the document before us, which says that the common fisheries policy should be based on a fair distribution of catches having regard, inter alia, to traditional fishing activities, to the special needs of certain regions". It is those special needs of certain regions to which I wish to refer—for example, regions covered by the hon. Member for Inverness (Mr. Johnston), whom I can see on the Opposition Benches, and by other right hon. and hon. Members, including my right hon. Friend the Secretary of State for Scotland.

In particular, I want to talk about the subject as it affects my constituency of Argyll, which has a longer coastline than France. I was musing whether that would entitle me to an equal position at the negotiating table with the representative of France, but I doubt whether it would. By and large, that fishing is based on the small ports all along the West Coast. It is based on small ports in the Firth of Clyde, whence came the famous Loch Fyne herring. I should tell hon. Members that if for the next 20 weeks—and only for the next 20 weeks—they scour the shops of this country, they may be able to find some Loch Fyne herring for sale. I hope that they will do so, because it will perhaps remind them of the poor imitations which we import from Canada and that the British palate has been badly soured by the taste of Canadian herring, as a result of which it will rapidly forget the taste of some decent herring.

In the Firth of Clyde, 560 men are involved in fishing, and on the West Coast to the north of the Firth of Clyde 800 men are involved. The most interesting thing about that fishing is that that small number of men—1,360 in all—is involved in 881 boats, all of which are under 80 feet. in length and the vast majority of which are under 30 feet in length.

Those small boats, which are much smaller than those operating elsewhere in United Kingdom waters, operate close to their home port, or at least to a port where daily landings are made. That pattern of smaller vessels, which has inflicted less serious damage on the fishing stocks than other fishing methods, is the very reason why for the next 20 weeks herring can be caught in the Firth of Clyde when they can be caught nowhere else in the United Kingdom.

The fishermen on the West Coast are not nomadic in type. By and large, they fish in the waters which lie near their ports. Therefore, over the years they have known that if they do not conserve and preserve that fishing, their liveihood will disappear and they will have nothing else to do. That is why there are still herring there.

The pattern of fishing, not only elsewhere in the United Kingdom but elsewhere in the world, has been a rapid increase in catch thanks to modern technology, which must then be paid for by a still further increase in catches. Thus, the cycle overtakes the ability of the fishing stock to replace itself, decline sets in, pressure is transferred to other stocks and the cycle repeats itself.

I do not say that the fishermen on the West Coast of Scotland and the Clyde have totally avoided falling into that trap. Indeed, some of them think that they have done so. I was interested to hear the right hon. Member for Western Isles (Mr. Stewart) suggest, as many of my fishermen have done, that had it stuck to the drift net method of herring fishing, the whole fishing industry would still be able to fish for herring, not just in the Firth of Clyde but in the Minch and elsewhere.

When we look at this and other European documents we can see in them—this is what my right hon. and hon. Friends must do when they go to the negotiations—a policy which is firmly based on the need to preserve the fishing industry where it is based on its own home port or on one close by. To that end, the Clyde Fishermen's Association and the Mallaig and North-West Fishermen's Association, basically in the constituency of the hon. Member for Inverness, have produced a fishery plan for the whole area. I believe that that plan is consistent with the Common Market document, and is certainly well within paragraph (c) of the document that we are studying this evening.

In past documents, referred to here and in the treaty, and in various draft resolutions, the EEC has established the right to regional preferences, which is what the scheme from the Clyde and the West Coast involves. Those regional preferences provide special provision for local boats in local waters, and delineate certain areas, not just within the 12 mile limit but beyond it, in which those boats have special privileges. They do so for four reasons: to distinguish and regulate the exercise of the special fishing rights referred to in Articles 100 and 101 of the Treaty of Accession and the exercise of fishing activities within the meaning of paragraph 3 of Article 100 of that Treaty. to contribute towards assuring respect of conservation measures and to promote rational exploitation of the biological resources bearing in mind the social and economic needs of certain categories of fishermen in specific regions of the Community"— the West of Scotland easily falls into those categories—and finally: to assure in regard to those regions, the enjoyment of the natural geographical advantage in catch possibilities within a few hours steaming time from home ports so as to favour balanced development in line with the progressive improvement of fish stocks. It is within those objectives that I believe the Clyde and Mallaig have drawn up a plan which is unashamedly for local preference. It would be a licensing scheme for boats, which would include restrictions on both size and horse power. It would give preference to fishermen operating from the ports in the plan. They must operate from those ports for the whole year, or virtually the whole year, and they must also be domiciled in the area of the plan, so that people cannot slip round the edges. Once the boats are licensed, they will be allocated a percentage of the total allowable catch. For some stocks they will be allocated 100 per cent. of the total allowable catch. For other species, some of the TAC will be left over and that should go to equally licensed and controlled boats from elsewhere—preferably those that have historically fished off the West Coast of Scotland and the Clyde.

Mr. Russell Johnston

I agree entirely with the hon. Member. Does he agree that the Commission's view is that there is no problem with the proposals from the Clyde, Mallaig and the Orkneys and Shetlands? The real pressure in reaching an agreement comes from trawling interests in the United Kingdom, which has often been detrimental to West Coast fishermen.

Mr. MacKay

By implication I suggested that when I said that West Coast fishermen in their small boats and their home-based boat operations had preserved their fish to a greater extent than fishermen elsewhere had done, and that they continue to preserve it and do not allow British foreigners or foreign foreigners to reap the harvest that they have preserved.

I believe that the plan that has been set out obeys the criterion for the application of such a preference. We believe that such a plan is vital for the continuation of fishing stocks in this large area. Only such a plan can preserve the fishing industry—inside or outside of the Common Market. With such a plan we can preserve not only the industry but the fishing communities of the West Coast. By careful exploitation of the methods we use, and the vessels, we can preserve fishing and employment, and continue to supply the British housewife. If we do not have such a plan I fear that large, powerful boats that are super-efficient will come in, and before we know where we are, all that we have preserved will have gone.

The Common Market claims to be mindful of the prosperity of remote areas. This plan gives them an opportunity to preserve their fishing and keep their employment and boats—which they have successfully kept over many years of decline.

The report concludes—I say this also on behalf of my absent right hon. and hon. Friends who will conduct the negotiations on behalf of the United Kingdom—that: It is essential to understand that the West Coast fleet is by construction limited to West Coast waters. If the possibility of maintaining a reasonable livelihood by fishing in these waters is denied, they are left with nowhere to fish. If the opportunity to grasp and deal with the problems raised in this paper is not taken now, then not only will the stocks in the area be exhausted, but 'The Deserted Village' will be a reality throughout the area. Although I am in favour of the Common Market, I am not as fanatically in favour of it as is my hon. Friend the Member for Harrow, East (Mr. Dykes). I apply tests to each and every thing. Frankly, if there is any danger of "a deserted village", the Common Market will have failed the test as far as I am concerned.

9.15

Mr. Donald Anderson (Swansea, East)

For me, the budget settlement of 30 May was a positive step. It is certainly an improvement over the pre-existing situation. No one can gainsay that, whatever queries he may have about the small print. I hope that my hon. Friend the Member for Newham, South (Mr. Spearing), who made a noise, will listen to the rest of my speech. He may then make a different sort of noise. However, it is only fair to begin by saying that it is a positive step, but not a cause for jubilation.

Judged by the criteria that the Government set themselves towards the end of last year as they approached the Dublin summit and before the Prime Minister set out on that steep learning curve that eventually culminated in Brussels, it has not been a major success. We remember the hostages to fortune that the right hon. Lady gave at that time by talking about "our money", despite international commitments to the contrary, allegedly aiming for a "broad balance", and it being made clear by the Government that there was to be no trade-off between our just demands on the budget and the other areas of contention between ourselves and our European partners. Clearly, that linkage resulted. The whole package was described as a comprehensive settlement in the communiqué following the Brussels meeting, and linkage was a fact.

The ghost at the feast following the celebrations on 30 May was that the principle of United Kingdom membership was still a live issue. The agreement on 30 May bought time for two years—the currency of the agreement—and probably for the subsequent year. If the European Governments cannot use those two or three years profitably and wisely to ensure that major changes are not made within that period, we shall have the difficulty of being on the eve of an election in this country and there will be all sorts of unfortunate pressures to make the principle of EEC membership part of the election campaign. That will be at a time when many other issues may be paramount, when people will be searching for scapegoats, and when the fault may be not in the EEC but in ourselves.

Because the system, particularly the CAP, was manifestly working against our interests, as part of the Brussels settlement we received the budget equalisation element and new resources for infrastructure projects within assisted areas of this country, with the emphasis particularly on financial assistance to the coal industry.

I have already said that there clearly was a linkage between the budget settlement, the farm price agreement, the common fisheries policy target date and the introduction of the sheepmeat subsidy. But several basic problems remain. One, which has been mentioned by hon. Members, is the definition of the totality of the cost of membership. I shall not go into that matter, but there was a helpful letter in The Sunday Times on the definition by Mr. G. H. Peters, director of the Institute of Agricultural Economics at Oxford University. It would be helpful if the Government or the Ministry of Agriculture, Fisheries and Food would release detailed estimates under the different headings of the costs of EEC membership to promote a wider debate in this country.

The second obvious matter is that, given the structure of our agriculture, Britain will never benefit greatly from the common agricultural policy. That policy will come under greater strain following the accession of Greece at the end of this year and the accession of the Iberian countries within the next three years. The CAP will suck in more resources, and that will be at the expense of the social and regional funds. It will also be at the expense of making a greater contribution to the less developed countries.

Although the settlement of 30 May may be an advance, it would be naive to assume that it solves the problems of United Kingdom membership. Many questions remain, but, sadly, the Chancellor of the Exchequer did not try to answer them. From the wording of the communiqué, it appears that Britain has undertaken to refrain from disturbing the status quo in the foreseeable future, at least during the currency of the agreement. We have bound ourselves to do our best to ensure that Community decisions are taken expeditiously and, in particular, that decisions on agricultural price-fixing are taken in time for the next marketing season.

In the structural review relating to the financial mechanism we agreed that the basic principles of the CAP would not be questioned. One can discuss what those "principles" are. It has been said that they stem directly from the wording of the Treaty. Perhaps they encompass the custom and practice—the encrustation of practice—that has grown up in the CAP.

It would be helpful to know the Government's attitude to the increase in farm prices. The European Assembly held a debate last Friday and it was said that the decision would mean that the proportion of the budget devoted to the CAP would rise from 75 per cent. to 80 per cent. Do the Government accept that estimate? If so, 80 per cent. of that 80 per cent. will, on past form, be devoted to the disposal of agricultural surpluses.

The increase of between 5 per cent. and 7 per cent. in agricultural prices adds about £300 million to our contribution to the Community. Our farmers, by the same token, will gain at the expense of consumers. Judging by past records, the sheepmeat regime is liable to lead to higher prices. It will have an adverse effect on New Zealand's position. It has a formal veto but, like the nuclear deterrent, it cannot be used in practice. It is likely to lead to sheepmeat mountains.

It is significant that the production levy on fresh milk surpluses has been shelved, at least until February. I did not know what a sacred cow was until I studied the CAP. Faced with the mistakes that have accumulated during the lifetime of the EEC, it is ridiculous that negotiators at the budget settlement could only add to those difficulties and sins. The old Book says: For the good that I would I do not: but the evil which I would not, that I do. The increase in agricultural prices will increase the number of problems. Another question has not been answered properly by the Chancellor of the Exchequer, although we were referred to a written question on the same subject. Does the drawing of compensation funds from the EEC budgets of the years following the years to which they are allocated mean that re-financing—the sums that we are likely to obtain from the EEC budget— is "held hostage" and is dependent on United Kingdom acquiescence on other issues? This is a possible construction of statements attributed to a French Minister. It would be helpful to have a clear indication from the Government whether they accept this construction.

What do the Government envisage to be the areas in the United Kingdom to which the additional resources will be allocated? My hon. Friend the Member for Newham, South has already made the point about the 70 per cent. and the 30 per cent., and the point of additionality. Certainly, coming from South Wales, where we could desperately need such funds, I think that it would be helpful to know at an early stage, given the emphasis on the coal industry both during this budget settlement and at the Venice summit, whether the Government are prepared to envisage additional EEC funds to underwrite the coal industry in South Wales. Of course, we also desperately need funds for our declining steel areas, which decline has stemmed directly from Government policies. The least for which we can hope is that a portion of the additional bounty coming from Brussels will be devoted to the problems arising from the steel crisis in our area.

What structural reforms will the Government promote over the next two years to prevent a recurrence of the crisis that has already arisen? This is a fundamental question. We were given no insight at all in the Chancellor's speech as to the answer, and what he has in mind. How can this House properly carry out its democratic function of debating this settlement if we are not taken into the Government's confidence and given certain guidelines as to the Government's view on this and other key issues?

Over the immediate future there are practical political problems in other member countries. There are the German elections in the autumn and the French elections in May of next year. In the second half of next year we shall hold the presidency of the EEC. Let us hope that by that time we have a clear idea of the structural adjustments that are necessary.

The budget settlement on 30 May, the compromise package, and the Venice summit that followed that are important for Britain in relation to our budgetary contribution and to our relations with our European partners. They are important because there are bound to be fundamental strains on the financial system within the EEC, not only because of the financial crisis that looms next year—the debate about the 1 per cent., and so on—but because of those financial and administrative problems that will be posed by the fact of enlargement. The Government, surely now and particularly before the issue of membership is caught up in a future general election campaign, must produce proof of the benefits of membership and the development of the EEC in a way which is acceptable to the British people. The time has never been better for this. I hope that the Government will start immediately to provide that framework.

I can see no future for this country save in a very close relationship with our EEC partners. If we were to be outside, decisions would be taken that would affect us fundamentally but over which we would have no control. But I find, in the budget settlement and in the other areas, that the British Administration as a whole have to make a substantial propaganda effort in co-operation with our partners.

It is a matter of judgment. If the balance has swung the other way at the end of the period, those of us who fought for Europe will not feel constrained to go all the way if it is clear that the two years plus one year have not been used profitably by us and our European partners and that there has, in fact, been only a postponement of the "big bang".

I hope that this period will give the Government and our EEC partners the opportunity to exorcise from our national psychology the debate about the principle of membership itself, so that the change in Europe in relation, for example, to the movement away from dependency on the absurdity of the CAP and the assertion of a Europe of consumers, as against the way in which the Market has developed so far, can be seen. I hope that we can see developments in a direction that will not ensure that those who all along have held doubts about the fact of our membership will have their position strengthened in the minds of the British public.

9.32 pm

Mr. Nick Budgen (Wolverhampton, South-West)

I find myself in much agreement with many of the points made so well by the hon. Member for Swansea, East (Mr. Anderson). He finds it necessary to criticise my right hon. and learned Friend the Chancellor for the vague way in which he spoke of a future review of the EEC budget. I agree with him entirely. It seemed to me that the Chancellor had much to say about the details of the history leading up to the deal. He spoke most forcefully and eloquently about the advantages of the deal. But the deal has been struck and there is nothing much that we can usefully say that will change it.

On the whole, the deal—or linkage or package or whatever—was probably the best that could be struck if, and only if, my right hon. Friend the Prime Minister took the view that, for wider considerations, she wished to play no more with the risk of coming out of the EEC. I believe that she got the best deal possible because for a long time she was prepared to contemplate with equanimity the possibility of our coming out. When that view was made plain to our allies they gave her a good deal.

However, the Prime Minister has put fire to a very large conflagration which will go on burning and bubbling for the next three years. It will be no good our saying in two years' time "We were in favour of a review of the EEC budget" and then saying "Well, we will fudge it on the night." The British people will remember what the Prime Minister has said over the last six or nine months. She has raised the expectations of the British people and those expectations will not go away.

Therefore, in my opinion, it is dangerous for the Chancellor to say in a vague and unspecified way that there will be a reform of the EEC budget, without giving us further and better particulars. For example, is the reform to be principally directed towards the CAP? If it is, a great deal of persuasion will be needed within the ranks of the Tory Party. The Tory Party—and all parties are coalitions—contains within it those who represent the Whig traditions, who are, on the whole, in favour of low food prices and not too much protection for the farmers. It also contains others, such as my hon. Friend the Member for Banff (Mr. Myles) who principally applaud the EEC because they see it as a means by which they can acquire a level of protection which they would be unable to acquire from my urban constituents, for example.

If there is to be a reform of the CAP there will have to be a great process of persuasion of those in the Tory Party such as my hon. Friend the Member for Banff. However, there are others in the party, including my hon. Friend the Member for Harrow, East (Mr. Dykes), who believe that the best way to reform the EEC budget is massively to expand the EEC regional and social funds. We want an explanation of how we can say that we want a massive increase in EEC expenditure and, at the same time, wish to reduce greatly our future contribution to the EEC. That calls for a great deal more clarity and particularity than has been offered by my right hon. and learned Friend the Chancellor of the Exchequer. We also want an explanation of how we are to reduce our contribution to the EEC budget in future while adhering to all the principles of the CAP as set out in article 39.

I should have thought that the French were entitled to argue that the second of those principles was the way in which they referred to their historic tradition of high food prices and their tradition of self-sufficiency in food, which goes back even before Napoleon's time. It was certainly enshrined in the Code Napoleon, which has created a structure in French agriculture by which farms are not merely owned by comparatively small farmers, but by which ownership has been split up and divided and sub-divided over the past 150 years.

If one wished to hit, in a populist way, the land owners in Britain, one could identify the Duke of Devonshire or the Chasworth estates and say "They can stand a bit of a knock". In France, the land-owning class is about 20 per cent. of the population. The owners may have only small acreages, but they are important to those people.

Those are issues that my right hon. and learned Friend ought to have touched on. In two years' time the issue will not have gone away. I expressed some sympathy with the hon. Member for Swansea, East because I predict that in two years' time the Labour Party will be solidly and fundamentally opposed to the EEC.

Mr. Tristan Garel-Jones (Watford)

They are opportunists.

Mr. Budgen

There is an element of opportunism in us all. What will be the consequences for the Tory Party? It will not be posible for us to say blandly that we spent nine months saying that we wanted our money back and playing the British Gaullists. We shall not be able to say that we wanted a fundamental reform of the EEC budget, but had done nothing about it in those two years. It will be no use our saying, in the words of my right hon. and learned Friend the Member for Hexham (Mr. Rippon), that we felt sure that on the night, with enough cognac, we should be able to knock out a fundamental reform of the EEC budget. That will not work.

The Tory Party must understand that this may be the last chance to reform the structure of the EEC. I understand and respect the arguments of the right hon. Member for Down, South (Mr. Powell), who says that what I suggest may be possible is, in fact, impossible. I suspect that, as one who has advocated our entry and our remaining in the EEC, I grossly under-estimated the forces, particularly of French nationalism, and I probably grossly under-estimated the protectionist element within French society.

I accept that I did not adequately understand or study the institutions of the EEC. None the less, we are now embarked upon an attempt to change the structure of the EEC. It is a massive task, massive within the Tory Party, and massive within Europe. It is no good saying that it can be done vaguely and left until two years' time. By then, it may be impossible, in any event. It will not be enough simply to say "We said it would happen." By then, our clothes will have been well and truly stolen by the Labour Party.

Several Hon. Members

rose—

Mr. Speaker

Order. I must inform the House that it is likely that the winding-up speeches will begin at 10.30 p.m. Seven hon. Members have indicated to me that they hope to catch my eye. On my arithmetic, if there are seven-minute speeches, I shall have one minute to spare.

9.41 pm

Mr. Austin Mitchell (Grimsby)

I do not propose to follow the remarks of the hon. Member for Wolverhampton, South-West (Mr. Budgen) with which I agreed except to express the hope that the eventuality that he foresaw of the Labour Party being fundamentally committed against the Common Market in two years' time comes about. If that happens, I hope that the hon. Member for Harrow, East (Mr. Dykes) becomes the spokesman for the Conservative Party, putting the case for the Common Market against us.

I propose to concentrate my remarks on document No. 7389/80 on a common fisheries policy. I see it in the context of a budget agreement that is fundamentally unsatisfactory. The agreement itself is a bad augury for the kind of fisheries settlement that will come about if it demonstrates how the Government defend the national interest on the budget question.

The budget agreement betrays the promises and belies the hopes that were held out to the people of this country, specifically that we would secure a broad balance between expenditure and receipts and that there would be no connection between the budget agreement, the agricultural agreement and the fisheries agreement. There clearly has been that connection. In the light of that tawdry agreement, the projection by our prostituted press of a national humiliation as a triumph is the worst example of managed news seen in this country for several years.

The press may now regret this song of praise. It has become clear that the Prime Minister is not altogther happy with the settlement that has been brought back. The press is not sure now to whom it should be sycophantic. This creates a division of loyalty. But the manner in which a settlement that was fundamentally unsatisfactory was projected was an appalling example of managed news.

It seems clear that the settlement is unsatisfactory because the pro-Europeans in the Cabinet—that means the overwhelming majority of the Cabinet—were dismayed at the repercussions of the strong stand the Prime Minister was taking and dismayed at the impact in the country where people were discovering what we are paying to be a member of this Common Market club. An anti-European feeling was developing rapidly and on a considerable scale. The right hon. Lady was taken by the arm by the Foreign Secretary and told quietly "Enough is enough ". The result is a settlement that is disastrous in many ways. It is disastrous not only for the concessions made on the common agricultural policy, with the increase in prices and the further impetus to build up mountains; it is also potentially disastrous for fishing—the area to which I wish to address my main remarks.

It is always an ominous sign for the fishing industry when the Foreign Office negotiates on its behalf and takes the issue out of the hands of the Department of Agriculture, Fisheries and Food, which has the industry's interests more at heart. I fear that concessions have been made in advance. Statements from France and Germany indicate a link between the budget agreement and a common fisheries agreement. The Minister vehemently denies that. I hope that he is right, because his career is at stake. If he is entering negotiations with his hands tied in any way it must be made clear to the fishing industry. The industry cannot be defended by a Minister who is in such a situation. The industry will judge the events accordingly.

The industry's demands are clear. They have been expressed clearly and strongly. The industry demands exclusive control over the waters to 12 miles. It demands a dominant share of the catch—or a dominant preference—in the waters up to 50 miles, and the ability to impose national conservation measures to protect threatened stocks in the waters up to 200 miles. Those demands are basic, clear and straightforward.

It is impossible to have a healthy and viable fishing industry without the satisfaction of those demands. Only the nation State has the interests of conservavation at heart, because that conservation represents the future for the industry and its fishermen. That is not true of the multinational arrangements proposed. Our future is in the fish stocks. Without national control, catches cannot be policed unless there is limitation and registration. That is not proposed. National Governments have ignored conservation measures. The proposal does not include measures to ensure that national Governments enforce the regulations. There is no equalisation support proposal.

On the basis of this inadequate prospectus there is no case for the industry abandoning its claim for control over its own waters. To do so would be to swim straight into a purse seine net. The negotiations must be handled independently of any other subject. If necessary, the negotiations must go on beyond the deadline. When our demands suit nobody but us and are opposed by eight other countries the battle will be uphill, particularly if we point a pistol at our own head and accept the deadline. The deadline is lamentable for the industry.

In the light of that I would like to put three questions to the Minister. Will there be any budget repayments before 1 January next year, the date at which the common fisheries policy is to come into effect? If there are no repayments before then the potential for holding us to ransom is enormous. What procedure will be used for the budget repayments? If the procedure involves the use of the qualified majority, it is possible that France and Germany, whose interests do not coincide with ours in this respect, will use the qualified majority to block the repayment to this country unless they get a satisfactory common fisheries policy.

Will the Minister give his interpretation of the text quoted by the right hon. Member for Down, South (Mr. Powell) on the guidelines for the fisheries settlement? It says: The Council agrees that the completion of a common fisheries policy is a concomitant part in the solution of the problems with which the Community is confronted at present. What does "concomitant part" mean? It goes on: To this end the Council undertakes to adopt, in parallel with"— another text says "to sustain"— the application of the decisions which will be taken in other areas, the decisions necessary to ensure that a common fisheries policy is put into effect at the latest on 1 January 1981. What is our Government's interpretation of that text? I am not an expert in Eurospeak or Euroglook, but on any reading that is possible within the Common Market the two things are interconnected and the common fisheries settlement will not be agreed. If it is not agreed the budget repayments will not be made. That, therefore, is the interpretation of the words "concomitant" and "in parallel with". It is therefore important to hear the Government's interpretation of those words.

I am worried and alarmed by the prospects facing the fishing industry, given the indications that the Government are preparing to compromise the just demands of that industry—demands without a constructive response to which there can be no viable fishing industry.

The Government have two ways in which to show that they are serious about the fishing industry. The Prime Minister made commitments which she revised and strengthened considerably in the course of the campaign when she reached Scotland. Those commitments should be maintained. The first way in which the Government can show that they are serious is to take account of the state of the industry. It is an industry in a crisis of galloping proportions. It is the second crisis to hit the industry in six years. It has been caused because costs, particularly fuel costs and interest charges are up and catches are down as a result of drastic over-fishing. Receipts for the catches are down because of the huge increase in fish imports in the first few months of this year. That increase is now slowing, because the cold stores are bursting at the seams with fish. It is impossible to import any more. We are now importing over half our fish.

Given the state of the industry created by the crisis it is imperative that the industry be kept going until the common fisheries agreement is reached. Equally, the Government must show themselves to be serious about providing adequate aid to the industry. They have provided £2 million. In some sense it is an achievement to get that much money out of a Government who are determined to spend nothing. The figure, however, is totally inadequate given the scale of the problem.

Yesterday we met the representatives of the industry and they described the problem to us. They need £35 million in operating aid for the next six months alone. In other words, the figure is running at £70 million a year—the size of the deficit that is accumulating because every trawler is coming back in debt, making no profit on the catch. If we are to have an industry to negotiate for, it is crucial that the Government should show themselves serious in terms of the amount of aid that should be forthcoming in the next few weeks.

The second way in which the Government can show themselves to be serious is to increase the negotiating pressure on our Common Market partners. That approach has proved successful for the French on the question of lamb imports. It is the only technique that promises to be successful where it is Britain against the rest. The Government must increase the negotiating pressure by imposing further national conservation measures to protect our threatened stocks, must help our industry and must put pressure on the countries with which we are competing to increase the mesh size, to accept the one-net rule and to ban beam trawling.

The measures are desperately needed. If the aid is not forthcoming and if the Government do not increase pressure we shall lose not only another industry —industries are falling like ninepins at the moment—but a way of life that is crucial to this country.

9.55 pm

Mr. Tony Marlow (Northampton, North)

If I were to have a text for what I am about to say, it would be the expression dredged up by the right hon. Member for Down, South (Mr. Powell) from a sackful of bits of paper that we were all required to read before starting on this debate—the need for member States to contribute to greater integration within the Community.

I reject that concept absolutely. I believe, in the circumstances in which we now find ourselves, with an increasingly aggressive Russia and an increasingly uncertain United States, that it is absolutely vital for European nations to get together and to work together in certain areas such as foreign policy, defence and our approach to the Third world. Those areas, however, in which we have been integrated in the past, such as trade and agriculture, have, from this country's point of view, proved to be an absolute disaster. Any attempt to move further down the road to integration will destroy what European unity we might otherwise have.

My right hon. Friend the Prime Minister has performed a signal service to this country. Not only has she come back with a much improved position with regard to the Common Market financially. She has also opened the eyes of the country, and of many hon. Members, to the true situation existing between ourselves and the European Community.

Opposition Members will say that the Conservative Party is divided on the subject of Europe. I do not believe that the Conservative Party is divided. It is in the process of transition. Opposition Members will realise that for many years Europeanism in the Conservative Party has been next to godliness. Unquestionable loyalty with regard to Europe has been the requirement. I believe that, even now, many of my right hon. and hon. Friends regard Europeanism as the last memorial to the previous—and perhaps I should say lamented—leader of the Conservative Party.

As Opposition Members will realise, there is always a reluctance to forsake accustomed pilgrimages to the shrines of past gods and theologies. My right hon. Friend the Prime Minister has, in that respect, done the undoable, attacked the unassailable, achieved the unachievable and vanquished the unconquerable. There is no doubt in my mind that she returned from the Continent with a package better than anyone else would have dared to ask for.

My right hon. Friend has done two things as well, both of them beneficial. First, she has alerted the other countries of Europe, as many hon. Members have said, to the inconsistencies, the unfairnesses, the absurdities and the stresses of the system we have at the moment. Secondly, and far more importantly, she has alerted the people of the United Kingdom to the scale and nature of the damage that has already been done and is still being done. Such damage will continue to be done unless and until the remaining problems can be resolved.

Among those problems is that of finance, which we still face. Before the Brussels agreement we were faced with a payment of £1,200 million net to the Community this year. That has now been reduced to £370 million. I have a vision in my mind that on the first Friday of every month a crocodile of civil servants dressed in Civil Service type rig and carrying Gladstone bags boards a plane with £100 million to take to Brussels. On the first Friday in January £100 million went to Europe, on the first Friday in February it was £200 million, in March, £300 million, and April, £400 million. We have already sent £400 million to Europe. When will these civil servants stop boarding the Viscount jet to Brussels with their briefcases? When will someone go there with an empty briefcase to start to bring our money back?

Additional to the cost of our budget contribution is the immense burden on our housewives of having to buy food at CAP prices instead of world prices. A calculation in The Sunday Times put the figure at £1,500 million a year, net of the cost that we would have to pay for agricultural support. My right hon. Friend the Minister of Agriculture, Fisheries and Food in an answer to me said that the figure was £500 million. Let us add the lower figure to our budget contributions. That still makes us net contributors to Europe to the extent of £900 million a year, which is £64 for every family of four in the country. What benefits do we get? If there are benefits, does not every other member State benefit as much as we do? Why should we continue to pay?

Let us take a look at the CAP. When we joined the Community, 60 per cent. of the Community budget was being spent on the CAP. Promises abounded that it would reduce to 40 per cent. It now gobbles up 80 per cent. of the Community budget. The point has been made that, whereas in 1975 the CAP took 60 per cent. of the Community budget, it now takes 80 per cent., and 60 per cent. of the total budget is spent on the disposal of surpluses. In other words, £3 out of every £5 that we spend in this country—£50 for every family in this country—goes on the disposal of surpluses in the Common Market.

Where do those surpluses go? They are spent on butter, which we sell to the Russians for 31p a pound and which the Russians sell to their people for £1.20 a pound, using the profits to make helicopter gun ships, napalm, bullets, rockets and gases in order to bomb and destroy villages in Afghanistan and harass and kill innocent people. Since January, 60,000 tonnes of European beef has gone to Russia, which is more than in any other period since we have been in the Common Market. It has gone through Romania to Afghanistan, to feed the Red Army in its blundering and plundering.

What about the problems of trade? Not only have we surrendered our agricultural policy and our ability to buy cheap food on the world market. We have also surrendered our trade policy. As many hon. Members know, I represent a constituency that manufactures footwear. When footwear is dumped in the United Kingdom, what can we do about it? We can do nothing. We have to go to Brussels. Is Brussels concerned with what is happening in Northampton? When we have problems getting our footwear into other countries because their tariffs are too high or because of unfair trading practices, what can we do about it? We can do nothing.

Hon. Members may say that Europe is our fastest growing market. So it is. However, let those hon. Members remember that when we joined the Community we were in net balance with our manufactured goods. In the past year we had a net deficit of £2,400 million in manufactured items to the European Common Market. We should look closely at our relationship with Europe. Any action that interferes with trade puts up prices and reduces choice, which is bad. It condones inefficiency. Every industry requires a bread-and-butter level of trade in order to cover its overheads and go on to make a profitable output. If through replacement we could produce half that £2,400 million of deficit of manufactured items in the European Community, we could save and bring back to this country 100,000 jobs, so much good is the European Community doing us at the moment.

Despite the magnificent achievements of my right hon. Friend the Prime Minister —[Interruption.] No one would have done better. No one would have attempted what she has done. The European Community is still manifestly unfair to the people of this country, and it is seen to be unfair. Inasmuch as politics have a meaning, realities—however much anyone tries to suppress them and gloss over the top with propaganda—will come through. If the approach and the activities of certain hon. Members of this House do not reflect those realities, then realities themselves will impose their own disciplines by changing the very membership of this House.

We must change our relationship with Europe. We must disengage from the stupid little nitty-gritty, items of harmonisation so that we can the better combine with Europe and our European friends on those issues that are so important to us.

10.5 pm

Mr. Ron Leighton (Newham, North-East)

The last speech underlined the fact that the House has received this collection of documents with something less than euphoria. That is probably because we are now inured to not receiving any glad tidings or any good news, comfort or joy from the Common Market.

Tonight we have heard none of the lyrical enthusiasm for the Common Market that we used to hear some years ago. The hon. Member for Aldridge-Brownhills (Mr. Shepherd) asked why we have not heard from the Front Bench about any of the benefits of membership. I suspect that the reason is that there are no benefits, and that what we discuss now is to minimise the damage that the Common Market is doing to us in terms of the budget, food prices, and fish—and the damage that is being done to New Zealand.

When we talk about internationalism, I remind the House that in 1970 we were receiving 160,000 tonnes of butter from New Zealand. In a year's time we shall be receiving 90,000 tonnes—roughly one-half. Under the same heading of internationalism, I note that Spain has applied to join the EEC, and that instead of that leading to an outbreak of brotherly love it looks as though there is something like warfare between France and Spain.

I should like to look rather more closely at the Brussels deal. When I do so I find it very difficult to come to any conclusion other than that the Government and the Prime Minister have reneged on pledges and undertakings given to the House. We know that the House passed a motion urging Her Majesty's Government to press for a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts."—[Official Report, 16 July 1979; Vol. 970, c. 1096.] I note the words "not greater". I should have thought that, if there were any sense of justice, it should be less—that there should be a broad balance.

What was the Government's undertaking? I refer to the evidence given by the Financial Secretary to the Treasury to the Select Committee on European legislation on 16 April 1980. One of his hon. Friends asked: Would he care to say what he believes would be a reasonable proposal? The Financial Secretary replied: As you know, the Prime Minister has said on a number of occasions that we have very little room for manoeuvre and that she would consider it appropriate, if we were to make a net contribution, for that contribution to be less than that of France. I do not think it would be sensible to go further than that. The Chairman asked: Just for the record, what is the contribution of France? The Financial Secretary said: It is slightly complicated, because if you look at the table you will find that it is roughly a break even ". That is what the Government were asking for—a break-even point.

In Luxembourg the Prime Minister was offered half a loaf with strings, and she rejected it—perhaps slightly to the consternation of the Foreign Office. It was not enough and she stuck out for the full loaf. She said that there would be no package, no linking, and especially no increase in food prices for goods in structural surplus. We heard repeated statements from the Dispatch Box, from the Minister of Agriculture, Fisheries and Food, that he would not agree to price increases for goods in structural surplus. We were assured that those matters would be dealt with on their merits. There can be no possible merit in increasing the price of goods in structural surplus.

The Commission wanted an increase of slightly more than 2 per cent. As was pointed out, one of the ways to reform the CAP would be continually, year after year, not to increase food prices but to freeze food prices for goods in structural surplus.

What came out of Brussels? The details were extremely vague and the Chancellor did not tell us. The Scrutiny Committee reported to the House that: in neither of these instruments is there any indication of the size of the funds likely to be available to the United Kingdom, either in terms of expectation of total reduction of the Budget contribution in 1980 and 1981, or of sums likely to be allocated to the special measures As to the proportions of the refund likely to arise strictly in cash terms available for reducing the public sector borrowing requirement and for financing certain measures, the Council's conclusions are silent. The details of what we are likely to receive are extremely vague.

We were told that there would be no strings. We now know that there are strings. There is to be a 5 per cent. increase in food prices across the board. I regard that as a disgrace and a betrayal of the repeated promises made from the Dispatch Box. The Minister of Agriculture, Fisheries and Food has no further credibility either in the House or in the country after making those promises and then betraying them when he went to Brussels.

The CAP has been entrenched, made worse and more expensive. The European Assembly blocked the budget. One of the reasons for that was to contain agricultural spending—but that spending has increased. Yet the Assembly has agreed to the budget. The so-called European Assembly is a damp squib. It is ineffective and futile, and has no means of establishing democratic control over the EEC. The moral is that we can expect no salvation there.

We were to have a broad balance. We are still the second largest contributor. We belong to a club in which there are only three net contributors—everyone else is a net beneficiary. That is a strange club. Let us consider the German figures, which give an impartial analysis. I am indebted to the embassy of the Federal Republic. The figures refer to millions of European units of account, which I fear that we have to call MEUs. In 1980 Britain will pay 623 MEUs and the French will pay 365 million. In 1981, we shall pay 783 MEUs and the French will pay 335 million. We shall be spending twice as much net, as the French.

I see no justification for that. Part of the condition of that agreement is that we do not interfere with the CAP. The Lord Privy Seal read out article 39 of the Treaty. We were told that it was simply flatulent wording, but, as the hon. Member for Wolverhampton, South-West (Mr. Budgen) pointed out, paragraph (b) states that it is to ensure a fair standard of living for the agricultural community". There is no way in which one can give a decent standard of living to the poorer peasant farmers of the Continent by high consumer prices without at the same time giving huge profits to the efficient barley barons and building up huge surpluses. That is built into the agreement.

I must close, because there is not much time left. In my view, we have been in the Community for a long time and have tried to achieve reforms. We have not got them. This will be a great burden on Britain, not only in budget terms but in trade terms. For example, we have a deficit in manufactures of £4,000 million. I hear that Terry Duffy is going to see the Minister to try to stop Japanese imports into Britain. We already have an arrangement with the Japanese. It is not the Japanese car industry that is destroying the British motor industry, and thereby the British steel industry—it is the French, Italian and German industries, particularly the German. We must negotiate arrangements with the Germans in the same way as we have done with Japan.

If we cannot do so, in the interests of all we must revise our arrangements with those countries on a basis other than membership. Some people fear that. They say "We might be punished. We might suffer if we left the Community". I do not believe that that is so. The Community may say "We will deny you a common fisheries policy". That means that we would have 200 miles around our coasts and all the fish to do what we liked with. It could say "We will refuse to allow you to contribute to the budget". That would not be a bad thing. It could say "We will stop trading with you". The Community would cut its own nose to spite its face, because it has a huge surplus. It could say "We will stop you from trading freely in food". Yet, if we were outside we could trade freely with New Zealand and we could get Common Market food at Russian prices.

Therefore, if we do not achieve reform we should draw the proper conclusion, namely, that we should revise our arrangements with these countries on a basis other than membership. If we did so we would have far better political relationships, instead of continually arguing over the budget, lamb, fish, and everything else.

10.17 pm

Sir Anthony Meyer (Flint, West)

I apologise to you, Mr. Speaker, and to the House for having missed the earlier part of the debate, but I was attending a Select Committee.

From comments that have been made from both sides of the House I have been trying to piece together just exactly what it was that my right hon. and learned Friend the Chancellor said. It is rather like trying to reconstruct the character of Hamlet from the observations of Rosencrantz, Guildenstern and the First Grave Digger. I am not quite sure who the first grave digger is in this equation.

The one thing that has struck me about the debate is how incredibly unrepresentative it has been of opinion in this House. It may represent temporary fluctuations in the opinion polls, but it most certainly does not represent the opinion of this House. My hon. Friend the Member for Northampton, North (Mr. Marlow) said that the Conservative Party was not divided on this issue. It is divided, rather as the iceberg is between its visible and invisible portions.

At times it has struck me that 100 per cent. of Conservative anti-Marketeers are present for this debate and virtually nil per cent.—with the exception of the hon. Member for Swansea, East (Mr. Anderson)—of the Labour pro-Marketeers. In that connection, it has surely not escaped notice that the Opposition amendment conspicuously omits the name of the right hon. Member for Leeds, East (Mr. Healey), whose name might have been expected to figure on that amendment.

The danger of this highly unrepresentative debate is that, amazingly, reports of it might actually be read in foreign capitals, thereby giving a totally erroneous impression. The danger also is that the course of this debate will cause us to lose sight of the historic importance of the budget agreement secured by my right hon. and noble Friend Lord Carrington, thanks to the intransigent toughness of my right hon. Friend the Prime Minister.

I say "historic importance", because, for the first time, Germany is visibly feeling the strain of its budgetary contribution. That means that from now on the Germans will have a vested interest in pressing for a new structure of Community financing. In other words, the agreement has broken the existing budgetary mould, which seemed to be set to our disadvantage. From now on, new perspectives open up in Europe.

I cannot continue my speech without taking issue with my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), who has now left the Chamber. I was disturbed, as were some of my hon. Friends, by his assertion that no Minister has yet set out the long-term economic advantages to this country of membership of the EEC, and by his misrepresentation of the attitudes of Ministers.

He cannot have heard my right hon. Friend the Prime Minister when she made it plain that, however ruthless her determination to secure a better deal for Britain within the EEC, she was not prepared to use Britain's membership as a bargaining counter in that process.

Surely my hon. Friend cannot be ignorant of the fact that my right hon. Friend the Minister of Agriculture, Fisheries and Food, who has fought so hard and successfully for the interests of British farmers, was originally a convinced anti-Marketeer, whose experiences have convinced him of the advantages of membership. Surely he cannot be ignorant of the fact that my right hon. Friend the Secretary of State for Trade, who is by no means the most enthusiastic supporter of Britain's membership, has made it plain that to leave the EEC is not an option for consideration at any point.

Those right hon. Members and the Prime Minister have reached that conclusion for the good reason that decided the Government to apply for membership of the EEC 15 years ago. We applied for membership because outside the EEC we could not face the competition that it provided in the Third world countries. That threat is still there. If we were outside the EEC not one of our problems would thereby be made easier. That is merely if, by some miracle, we were transported out of the EEC. We should add to that the fact that by leaving the EEC we would for ever destroy the credibility of our country as a reliable partner. The argument is totally conclusive.

The budgetary agreement now gives us a chance to go forward, to lift up our minds above the petty squabbles and idle recriminations that have occupied three-quarters of the time of this debate, and to look towards the future. It gives us an opportunity to do something about the common energy policy, to which the hon. Member for Inverness (Mr. Johnston) referred and where we are uniquely well-placed to take the lead. Above all, it gives us an opportunity to remedy the total failure of the second Venice summit to deal with the problems of the Third world and to bring home to the people of this country and to the people of Europe the fact that their short-term prosperity is directly and immediately dependent on taking massive measures now to increase the purchasing power of Third world countries. It is not a matter of being disinterested; it is highly in our interest that we should do something now, through the unique medium of Europe, to assure our own future.

10.25 pm

Mr. Tam Dalyell (West Lothian)

I never was a Euro-fanatic, but listening to this debate I feel somewhat in the position of the last of the Mohicans, as an unreconstructed pro-Marketeer—at least a rare specimen when it comes to the vocal part of the species.

From this position I say that anybody who talks about CAP reform ever so blandly is guilty of cant and humbug. The truth is that we cannot have a Community and, in the words of the hon. Member for Aldridge-Brownhills (Mr. Shepherd), say "Scrap the CAP." If anyone does not believe me, I suggest to him go to Paris and to Bonn to ask and find out. If the British Presidency in the latter part of 1981 thinks that it can do anything about reforming the CAP, I shall believe it when I see it. It has no notion of how to go about it in an acceptable way.

I agree with my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) that there should be more than one Community policy. My hon. Friend mentioned the doctrine of swings and on the roundabouts. A great deal of that, even from the point of view of a pro-Marketeer, is true. Therefore, we have to look at the roundabouts that can be improved.

I start briefly with energy. We have Culham. Let it expand. Let us have more help for nuclear power, but particularly for the coal industry.

The leaders went to Venice. What did they do? First, they said "We must cut down on public investment". At the same time they said "Ah, but we must double coal production".

How is that to be done? It cannot be done quite like that. The Community should give its mind to helping to resolve problems in central Scotland with the sinking of the Musselburgh pit, and, indeed, Selby and others. I say to my hon. Friend the Member for Bolsover (Mr. Skinner)—I know that he will take it—that Mick McGahey, Eric Clarke and many other members of the National Union of Mineworkers in the Scottish area rightly and properly ask for investment because of the real problems that they face, not least with the oil from coal projects.

We have to examine the position under article 235 in relation to the help that can be given by the Community to make up certain unfairnesses to Britain in an area where we need greater coal investment. The same goes for help on the railways, not least the Channel tunnel. That policy is strongly supported by the National Union of Rail-waymen. Any help that can be given to this energy-saving exercise through the European Investment Bank or European funds would be greatly welcomed.

The Community has great problems. I speak as a pro-Marketeer. We have had very little from the Government. I thought that the Chancellor's speech was frivolous. He did not tackle the problem of enlargement. What will happen when Greece, Spain and Portugal join, plus the considerable undertakings that Germany has given to Turkey? It may be that that source of funds, given its obligations to Ankara, will wind up.

Let us be specific about another area in which, in the opinion of many of us, we should act on a Community basis. I refer to Lomé. What will be done on the question of major additional external assistance for food? This is one way in which the roundabouts can be made up. Another is on co-operative management of the world's economy through automatic revenues, as suggested by the Brandt report, in page 274.

What will be done about the World Bank's increased borrowing capacity, to which we are committed both as national and Community Governments? Presumably the recommendation of the Brandt report is acceptable to both the Government and the Opposition. What will be done to strengthen the regional development banks? The Brandt report recommends that that should be done, and it could be achieved through a Community system. What about the additional multinational finance that is required to support mineral and energy exploration in developing countries? Again, the Brandt report recommends that that should be given.

We are aware that help must be given to Zimbabwe. The roundabout allows us to seek help from our partners. Perhaps I could have the Minister's attention, as I should like to ask him a direct question. Indeed, there has been a notable absence of senior Ministers tonight. [HON MEMBERS: "Hear, hear".] Does the Minister think that help should be given to Zimbabwe on an EEC basis? If the New Hebrides need help after 30 July, will it be given on an EEC basis? Some hon. Members think that the EEC, rather than individual countries, should finance such aid. Indeed, the same applies to many other projects.

Some hon. Members are bothered about the number of projects that are being diverted from Britain to Eire. Only tonight an industrial diamond firm with 500 employees has decided to go to Eire rather than to the new town of Livingstone. That might be all right, it were not for the fact that Eire is flouting the EEC's rules.

Perhaps the Government will bear in mind that the Irish development associations have got away with a great deal. Hitherto, a Nelsonian eye has been turned. I see that the Chief Secretary is nodding. It is dangerous to nod when I make speeches. He knows that it is assumed that, as Eire is relatively small and poor, we should not make too much fuss. Projects that might have come to us continually go to Eire. The Irish are unscrupulous about flouting the rules. What is being done to ensure that Eire keeps to the rules? Whether we should have them is another matter. The Irish are flouting the rules. What is the Foreign Office going to do about that?

10.32 pm

Mr. Denzil Davies (Llanelli)

This is the fourth time in the past year that we have debated the Common Market budget. After four debates and three summits the Government have been unable to achieve the objectives that the House endorsed a year ago, on 16 July. Nor have they achieved the conditions that the Chancellor of the Exchequer laid down on 22 November. He hardly referred to them this afternoon. Perhaps I may remind the House of those objectives and conditions.

On 16 July the House accepted a motion that our budget contributions should not exceed our receipts. During the debate in November the Chancellor of the Exchequer said that the Government sought a broad balance between payments and receipts. The year 1980 will involve a payment of at least £370 million, and at least £440 million will be paid next year. The payment could be higher, because a provision allows for an increased payment if the budget is higher. Nobody could argue that those two payments represent anything like the kind of broad balance that the Government endorsed and the Chancellor accepted in the debate in November.

In that debate the Chancellor also said that there must be a permanent solution. He said that it would not be sufficient to offer a temporary solution that would afford relief for a year or two. That is exactly what the Government have negotiated, and exactly what we are being asked to endorse tonight. The Chancellor also said: Neither I nor any succeeding Chancellor wishes to make speeches in this House in a year or two about yet another debate…on this same subject."—[Official Report, 22 November 1979; Vol. 974, c. 593–94.] I do not know about succeeding Chancellors, and who they will be, but clearly that will not happen, because in the next 18 months the House will again debate the Common Market budget at least two or three times, because the Government have not been able to secure the kind of permanent solution that apparently, a year ago, they wished to have. The Government have simply postponed the evil day to the review in 1981.

All that the Government have achieved so far, as the motion makes clear, is that for 1980 and 1981 we shall now be the second largest contributor to the EEC budget instead of being the first major contributor. We shall remain one of the poorest countries in Europe, and it seems that we shall become poorer every day as a result of this Government's policies.

Even that, even the inadequate reduction in our net contribution that the Government have obtained, has been secured—as we have heard time and time again in the debate—at too high a price. The price that the Government have paid is an even worse deal for our fishermen than would otherwise have been made; substantial extra payments for food by the public, not only this year but next year; and—probably the highest price of all—giving up our right to try to change the fundamental principles of the common agricultural policy when the review is carried out in 1981 or 1982.

There have been a number of speeches about a common fisheries policy, which is an important issue. In their haste to reach a compromise the Government have seriously damaged the prospects of obtaining a fisheries policy that will safeguard the interests of British fishermen. The official press agency text of the declaration on fisheries policy made this clear. I quote from paragraph 1, which said: The Council agrees that the completion of the common fisheries policy is a concomitant part in the solution of he problems with which the Community is confronted at present. To this end the Council undertakes to adopt in parallel with the application of the decisions which will be taken in other areas the decisions necessary to ensure that the common fisheries policy is put into effect at the latest on 1 January 1981. The Minister of Agriculture, Fisheries and Food has tried to argue in the House a number of times that the budget agreement is not conditional on a fisheries agreement by the end of this year. If that is the truth—and there are doubts about that construction—as is said in the criminal courts, it is not the whole truth and it is not nothing but the truth.

The reality on fisheries—a reality buried in the documents that we are debating—is that unless we agree on a common fisheries policy under duress by the end of this year we shall not get our money from the budget. That is clear from the documents. The refunds for 1980 that we shall be entitled to under the documents cannot be paid to us unless there is an authorisation in the budget of 1981. For there to be an authorisation in that budget, the Budget Council has to agree.

The Council can vote authorisations in the budget only by a qualified majority. As the Financial Secretary well knows, a qualified majority means 41 votes out of 58. If France and Germany, the two countries with the most to gain from a fisheries policy at our expense, wish to cast their 20 votes against us in that Council, we cannot get an authorisation in the budget estimates for our refunds. If we do not agree a fisheries policy it is very likely that they will not vote for the authorisation.

The documents provide that somehow we can get advance payments before the 1981 budget, but those are also subject to the qualified majority. Once again, France and Germany, casting their 10 votes each, could deny us the payments and hold our Government to ransom until they agree a fisheries policy. I submit that if there is no fisheries policy by the end of the year there will be no payment under the budget. Of course, there will be a fisheries policy, because the Government have linked the one with the other, but the result will be that our fishermen will get a much worse deal than they would otherwise have got.

It has been estimated that of the £1 billion of fish in the European pond—as it is described—about £700 million worth is caught in the British sector. Anything in access of the £700 million that British fishermen are allowed to catch as a result of a fisheries policy cannot be recouped by the budget deal and will be lost to the British fishing industry and the British economy.

The agreement on the budget also means, as the Government have admitted, that British housewives will have to pay an extra £200 million in higher food prices this year. Indeed, there is little benefit for the consumer in a reduction of £200 million on the budget if £200 million has to be paid in higher food prices. There is no point in such a tradeoff.

Not only have the Government agreed to food price increases this year; as part of the deal they have agreed that they will not veto next year's price-fixing agreement. Paragraph 9 of the agreement says: All Member States will do their best to ensure that Community decisions on agricultural price-fixing are taken in time for the next marketing session. That statement and the need to secure a qualified majority to authorise the payments from the budget mean that the Government have effectively traded in their veto on next year's price fixing for this inadequate deal. As a result, British housewives will have to find at least an extra £200 million next year. Inflation in Western Europe will not be very different next year. Price increases this year are 5 per cent. on average and next year they will be at least that.

Mr. Dykes

Will the right hon. Gentleman say what is the total amount spent on food in this country?

Mr. Davies

No. I will not. I am merely contrasting the refund from the budget with the £200 million that will be lost to the British consumer as a result of the deal. That puts the budget deal in a better perspective.

The Financial Secretary to the Treasury (Mr. Nigel Lawson)

Rubbish.

Mr. Davies

I remind the Financial Secretary of the Tory Party manifesto commitment on price fixing and the CAP. We will insist on a freeze in CAP prices for products in structural surplus. This should be maintained until the surpluses are eliminated. That is another of those lies—like the prescription charges lie and the lie about VAT—that were a hallmark of the Tory manifesto in last year's election.

Having saddled the British economy with the extra costs, the Government apparently have no intention of using the extra money to try to limit some of the worst effects of the depression. The Prime Minister has told us that the money will be used to reduce the public sector borrowing requirement. It is clear from the documents that there is no additionality here. It is not a case of money coming from Europe and an additional sum being spent by the Government. The money from Europe will replace expenditure by the Government.

The Prime Minister told the House that the money would be used to reduce the PSBR and interest rates. The Chancellor has not told us by how much the money will reduce the PSBR. Let us assume that it will be £500 million in the current fiscal year, though that is probably on the beneficial side. Let us suppose that £500 million will be taken off a PSBR of £8½ billion, which, according to the newspapers, is increasing. The relationship is not a direct one, but, at best, that could not mean more than a ¼ per cent.—or perhaps ½ per cent.—reduction in interest rates. What use will that be to British industry, which is paying interest at 16 per cent?

The Government should use the money directly to benefit those areas and persons suffering worst from the depression and not merely to reduce the PSBR, which will mean that the depression will get worse. Perhaps, briefly, we can suggest some ways in which the Government could have used the money. Why could it not have been used to increase child benefit, since poorer families in particular are suffering from increases in food prices? Why not do that instead of effecting a token reduction in the PSBR? Why not use that money to help poor families who are suffering from the effects of inflation?

Alternatively, why not use it for the disabled? The disabled are also suffering because of inflation. Why not help the disabled directly instead of using it to reduce the PSBR? If the Government do not like that, why do they not use the money for job creation schemes for young people? Why do they not use it to stop the closure of manpower training facilities, as is now happening? There are many ways of using that money, if it ever comes, that will be more beneficial to the economy than by reducing the PSBR.

The Government seem to have accepted the agreement reached in Brussels in the hope that all the deficiencies and failings of the budgetary system can be swept away somehow when the Community runs out of funds in 1981 and 1982. That point has been touched on in the debate. Apparently in about 1981 it will be all right on the night. The coffee and cognac that we have heard about will secure a fundamental revision and a change of the whole system, and we shall somehow be able—so the illusion goes—on that occasion to rewrite the rules of the club for our benefit.

As so often happens in their dealings with the Common Market, the Government's view is based more on Foreign Office wishful thinking than on any realistic and hard analysis of the true situation. In the negotiations on the budget the Government have given away their main weapon for future negotiations by agreeing not to call in question the basic principles of the CAP.

I hear the Financial Secretary to the Treasury muttering from a sedentary position. If he has something to say he should reply to the debate. The Minister of State, Foreign and Commonwealth Office is present, and we are glad to see him. We do not see him often these days. I am told that his responsibilities include South America, the Outer Hebrides, Heligoland and various other parts of the world. We are pleased to see him, but we wonder why the Lord Privy Seal, the Financial Secretary or the Chief Secretary to the Treasury are not to reply to the debate. The Chief Secretary seems to indicate that he does not wish to reply to the debate. He is making that quite clear. In that case I think that the Financial Secretary should contain himself. He could very well have replied to the debate if he had wished to do so.

In accepting the agreement the Government have given away their main negotiating weapon, because they have accepted—for the first time by any Government since we entered the Community—the basic principles of the CAP. That is clear from paragraph 7 of the official communiqué. It says The examination."— —that is, the 1981–82 examination— shall concern the development of Community policies without calling into question the common financial responsibility for these policies which are financed from the Community's own resources. —that is accepting the "own resources" system of financing: Nor the basic principles of the Common Agricultural Policy. That is accepting the basic principles of the CAP. That is in the text of the communiqué and I am glad to see that the Euro-fanatics on the Government Benches agree with that. Obviously they are very pleased. It is in the text, it is in the agreement, and that is what the Government have done. The Government will not be able to challenge the policy that is causing most of the problems—the common agriculture policy.

I remind Government Members of the principles of the CAP. A common market in agricultural products is not achieved by the efficient use of resources. It is achieved by an artificially administered price. That price is fixed not on the basis of efficiency but on the basis of bargaining between countries.

Mr. Gummer

The principles were quoted in the debate when the right hon. Gentleman was present. Instead of inventing principles of his own and objecting to them, he should refer to the real principles. It is easy to set up one's own Aunt Sally and bash it down. The right hon. Gentleman should stick to the facts.

Mr. Davies

The hon. Gentleman confuses principles with objectives, as he confuses so many other issues relating to Europe. The principles are clear. They are based on an administered price. The income from that administered price does not go to poor farmers or poor regions according to need; it is paid on the basis of production. That is why France, with 30 per cent. of its people employed in agriculture receives a large sum of money from the CAP and we receive nothing.

Mr. Gummer

Will the right hon. Gentleman give way?

Mr. Davies

No, not again.

Mr. Dennis Skinner (Bolsover)

Sit down.

Mr. Davies

We are paid little because we are a non-agricultural country. If hon. Members do not agree, I quote the French Prime Minister, who, a few days after the Brussels meeting, said: We have a common agricultural policy which was designed for producer countries, for countries with a farming population. He is right. Britain long since gave up major agricultural activity. That is the basis of the CAP. That is why it is of no benefit to us and why the Government have given up their main negotiating card.

The Government believe that next year they will be successful. The CAP will remain intact. There will be no changes in it. There will be no reduction in the amount of money spent on it. All that will happen is that the VAT ceiling will be increased from 1 per cent. to 1½ per cent. At the end of the day the total proportion of the amount spent on agriculture might be less, but the budget will be enlarged.

Mr. Keith Wickenden (Dorking)

When did the Labour Party first notice the problems that would arise from the budget deficit? What steps did its members take, in government, to do anything about it?

Mr. Davies

We noticed that in the debates in 1972. The hon. Gentleman was not in the House, but if he looks up the reports he will see that the then Chancellor of the Exchequer moved a guillotine motion and the House was given half an hour to debate the CAP.

In the Financial Times last Friday appeared an article by Mr. Malcolm Rutherford on the 1981 negotiations. The article is interesting, because it is based on background briefings. I do not know whether the Treasury had anything to do with it. There seems to be some connection between the Foreign Office and the Ministry of Agriculture, Fisheries and Food, and I suspect that the Treasury has been left out. The article no doubt owes something to briefings from the Foregn Office and the Ministry of Agriculture, Fisheries and Food. He writes, on the subject of the negotiations in 1981–82 Sir Ian Gilmour thinks that the possibility of going above 1 per cent"— that is, of VAT— will be a lever in the negotiations."— a classic Foreign Office remark. It goes on: Mr. Walker is more inclined to the view that the lever will have to be used. There is probably no other way of reducing the proportion of Community resources going to agriculture. So, ultimately, all that will arise from the renegotiation is that the CAP will remain, the surpluses will build up, money will still be spent, the butter will still be sold to the Russians, the VAT payment and the Common Market budget will increase, and this country will be no better off.

The agreement that we are being asked to endorse—although I do not suppose that it matters whether we endorse it or not—is a typically wet Foreign Office compromise. It is no wonder that the Prime Minister did not have the courage to come to the Dispatch Box to make the statement after the Brussels meeting. It was no coincidence that she sent the Lord Privy Seal to make the statement. He has not been here in the debate, but I understand that he is the leader of the wets in the Cabinet. On this issue, however, is not the Prime Minister, for all her bluster and for all her talk, as wet as the rest of them?

The agreement does nothing to resolve the fundamental conflict between the structure of the Community budget and the interests of this country. It merely enmeshes us still deeper in arrangements that are of little benefit to this country and will make it more difficult, if not impossible, to obtain a fair and just solution in 1981–82. This agreement and the budgetary problem will not go away, and at the end of the day this House will seek to take back the unencumbered power that it once had to decide these matters in the interests of the British people.

10.57 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Nicholas Ridley)

I do not know which was worse—the hon. Member for Newham, South (Mr. Spearing) saying that he thought that I was a Treasury Minister or the right hon. Member for Llanelli (Mr. Davies) saying that he wished that I were one. The right hon. Gentleman made a strange speech, with many inaccuracies, which even a wet Foreign Office Minister like myself will be able to point out to him as I go over the ground of this most interesting debate. Many points have been raised and many questions asked. I shall do my best to answer as many as possible, but there will not be time to answer every one.

I start with the motion and the Opposition amendment. I have a number of quarrels with the amendment. It refers copiously to the resolutions of 16 July and 22 November last year, but it does not refer to the resolution of 24 March this year, which overtook the previous resolutions. The two parts of that resolution have been met, in that the budget settlement achieved a substantial, immediate and lasting reduction in our budget contribution and that a commitment…to long-term restructuring of the Budget"—[Official Report, 24 March 1980; Vol. 980, c. 1135.] and thus the common agricultural policy was entered into by the Community.

Those are the conditions under which the Government were negotiating on the mandate from the House of 24 March, and those were the conditions achieved in the negotiations.

The Opposition amendment says that the settlement of 30 May made concessions on sheepmeat and fisheries. I want to discuss those two statements first, because neither of them is true. Hon. Members have raised many points about them which I can answer.

To say that we made concessions on sheepmeat is a little far from the truth. A variable premiums system was introduced for United Kingdom producers, which has the effect of bringing the price paid to United Kingdom producers of sheepmeat well above EEC prices but leaving United Kingdom prices to consumers well below them. Contrary to what the hon. Member for Swansea, East (Mr. Anderson) suggested, the price of sheepmeat will remain lower as a result of the settlement, whereas the United Kingdom producers will get an increase of 17 per cent., as at present figured, in their return. The right hon. Member for Battersea, North (Mr. Jay) did not understand how that would prevent the taking of sheepmeat into intervention store in France. If the price in Britain is higher than the intervention price, the trade will cease. That is his answer.

The right hon. Gentleman also raised the question of New Zealand. That point is still to be negotiated. The New Zealanders have every opportunity to come to an agreement with the Common Market. As those negotiations have not yet been concluded, it is not possible to say what the result will be. The Common Market is prepared to negotiate in full good faith with New Zealand.

Mr. Jay

Can the right hon. Gentleman assure the House that the British Government will not agree to the further 20 per cent. reduction in New Zealand exports of lamb, which the Commission is apparently suggesting?

Mr. Ridley

I do not like to trespass on negotiations that are about to start, but I assure the right hon. Gentleman that the matter requires the consent of the New Zealanders, and they can look after their own interests perhaps even better than we can.

There were no concessions on fisheries. It is extraordinary how the mention in the amendment that we made concessions on fisheries returns over and over again in the speeches of hon. Gentlemen. The only concession that was made, if it was a concession, was that we would do our best to try to come to an agreement on a common fisheries policy by the end of the year.

Mr. Buchan

The British Government have to.

Mr. Ridley

No. We shall do our best. We undertook to work for agreement on a revised common fisheries policy by the end of the year. We shall stick to trying to do that. We want an early solution. No direct link with the arrangements concerning our budget contribution was made at any time, and the fisheries question was left to be settled on its merits.

The hon. Member for Kingston-upon-Hull, West (Mr. Johnson) and my hon. Friends the Members for Banff (Mr. Myles), Haltemprice (Mr. Wall) and Aberdeenshire, East (Mr. McQuarrie) appear to want to see a fisheries policy agreed with our partners in Europe. However, some hon. Members did not want to see a fisheries agreement concluded. The Government do want to conclude the agreement, and I believe that in that we have the support of the majority of the House. It was no great sacrifice to use our best endeavours to try to get that agreement concluded by the end of May—by the end of the year.

Mr. Straw

Is it by the end of May or by the end of the year?

Mr. Ridley

By the end of the year. My hon. Friend the Member for Haltemprice asked about low-priced imports. As my hon. Friend suggests, there is provision in article 27 of the current fish marketing regulations for reference prices lo be fixed for imports from outside the Community. These have recently been raised for the most important species, the increases ranging from 6 per cent. to 25 per cent. There is also provision for the prohibition of imports that enter the country at prices below the reference price. There is currently no evidence of any serious breach of these regulations.

The Government recognise the serious concern in all parts of the House about the fishing industry. My right hon. Friend the Minister of Agriculture, Fisheries and Food is having very full talks with the industry tomorrow. I would only say to all those hon. Members who have raised this question that it is for him to see what he can do to add to what the Government have done in aiding the industry earlier this year with £3 million. I am sure that he will do the best he can in the difficult period that lies ahead for the industry.

My hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food has been listening to the debate and has heard what hon. Members have said. I am sure that it would be right to pursue these fishery questions with him and with my right hon. Friend on another occasion.

The third thing that the amendment talks about is damaging increases in food prices". I should like to correct the hon. Member for Renfrewshire, West (Mr. Buchan), who was wrong about sugar prices. He might like to know that the world market price of sugar is £70 to £80 per tonne above the European price at the moment. He said that it was the other way round, and he is wrong. [Interruption.] I cannot say what it will be next week.

There was a considerable interest in the question of the increase of 5 per cent., which is the increase in the weighted average price of food target prices and intervention prices in Europe.

The first point that did not appear to emerge at all from the debate was that these are increases in money prices and not increases in real prices. Regrettably, there has been a rise in inflation in this country to 21.9 per cent. in the past year. In those circumstances, an increase of only 5 per cent. in the reward of the agriculture industry is not really very high. I do not know whether there is any other industry which in the last year has managed to cope with a 21.9 per cent. increase in prices with a 5 per cent. increase in its reward.

Mr. Leighton

Is the hon. Gentleman aware that the Minister of Agriculture, repeatedly from that Dispatch Box, despite the things that the hon. Gentleman is mentioning, said that he would not agree to any price increase, regardless of inflation, for goods in structural surplus, and that he misled this House?

Mr. Ridley

I shall come to that, if the hon. Gentleman will allow me to deal with it in the sequence of what I have to say.

The farmers are not overjoyed by the increase in food prices. When I have put the figures to the House I think that hon. Members will get them in prospective. The effect of this increase on the food price index will be 0.7 per cent., and the effect on the retail price increase will be 0.15 per cent. Indeed, in the last eight years, food prices have risen by 200 per cent., of which the common agricultural policy alone has been the cause of 8 per cent. to 10 per cent.

Opposition Members may not entirely understand the way in which this works. [Interruption.] They do not understand everything. Of every 100p that the housewife spends in the shops, 50p goes to British or foreign farmers and Common Market farmers, 20p goes to manufacturers, 20p goes to retailers, and 10p goes to wholesalers. Thus, the effect of inflation upon distribution, processing and relief systems is far more serious than the increase of 5 per cent. in food prices. Taking a 22 per cent. inflation rate on United Kingdom industrial costs, and a 5 per cent. increase in food prices, that gives a 14 per cent. increase in the price of food. That is exactly what is happening at the moment—a 14 per cent. increase in food prices as against a 22 per cent. increase in all other items. That shows that the effect of the price rise negotiations by my right hon. Friend upon United Kingdom costs has been small. The right hon. Member for Llanelli said that food prices had increased by £200 million, but he did not quote the full figures. The total food bill of the nation increased from £26.76 billion to £26.96 billion—not quite what he intended to convey by his remarks.

Mr. Russell Johnston

I cannot remember whether the Minister was in the Chamber when his hon. Friend the Member for Holland with Boston (Mr. Body)—a well-known opponent of the Community—alleged that the CAP was directly responsible for £3 extra per week on the food bill of every housewife. Perhaps the Minister will take this opportunity to correct that.

Mr. Ridley

I heard my hon. Friend the Member for Holland with Boston (Mr. Body), but unfortunately my hon. Friend is not here to hear me. I think that he will be keen to read what I have said. I turn to the point raised by the hon. Member for Newham, North-East (Mr. Leighton). I shall quote the right hon. Member for Cardiff, South-East (Mr. Callaghan), the Leader of the Opposition—

Mr. Leighton

No, I want the Minister to quote the Minister of Agriculture, Fisheries and Food.

Mr. Ridley

When we debated the outcome of the summit in Luxembourg, the Leader of the Opposition asked whether the Prime Minister was aware that our trump card in the budget was a price freeze. Of course, he was right. However, if he had been at the summit he would still have had the trump card in his pocket long after the game had finished. We used that card. Anybody who knows anything about the negotiations will know that it was the use of the trump card that resulted in such a favourable solution to the problem—

Mr. Leighton

I do not think that the Minister understands the matter. The case made by the Minister of Agriculture, Fisheries and Food was that if, during a time of inflation, we kept a freeze on the price of goods in structural surplus, eventually the real price would go down, market forces would make their play, and the surpluses would be eliminated. The Minister repeatedly promised us from the Dispatch Box that he would do that.

Mr. Ridley

I agree that food prices were linked to the budget contribution. I also agree that the settlement on the food prices issue was not exactly that wished for by the Government, but, as I shall show, we achieved a very good bargain overall.

Mr. Denzil Davies

Will the Minister confirm or deny that next year the Gov- ernment will still have the power to veto any price increases in next year's price fixing?

Mr. Ridley

Of course they will have that power. The Government can play what cards they choose—and so can any other member of the Community—in the years to come. No one is bound in years to come, other than by what appears in the budget and the communiqués. We are perfectly able to do what we like over food prices next year.

I was asked by many Opposition Members—the hon. Member for Birmingham, Erdington (Mr. Silverman) in particular, as well as the hon. Member for Newham, North-East, the hon. Member for Swansea, East, and my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd)—to give a much more careful explanation of the settlement that was reached. If the House will bear with me I shall certainly do that, but it is full of figures and a little complicated. [Interruption.] I cannot get it through continuous shouting. A break in the shouting would help to get some of the figures across.

Our net budget deficit with the Community was £369 million in 1977; £804 million in 1978; and £959 million in 1979, making in those three years a total of £2,132 million. After the settlement, our net budget contribution in 1980 is likely to be £370 million; in 1981, £440 million; and in 1982—the figure is very much a guess—£500 million. That is the best guess that I can make, thus making, for those three years, a total of £1,310 million. The saving for 1980—the refund that we have achieved—is £710 million; £860 million for 1981; and, on the same guess, about £1 billion for 1982. Therefore, instead of losing £2.1 billion in the last three years of the previous Government we shall have a net contribution of only £1.3 billion, with £2.5 billion saved.

I should like to explain how the refund is made. For this purpose I take the year 1980 in order to give the House the full figures. These figures will be in million European units of accounts, and not in million pounds. [Hon. Members: "Ah".] Well, hon. Members asked for these figures and I am trying to give them. They must not complain if it is a little complicated.

Our net contribution was to be 1,784 MEUAs, but the refund will be about 1,175 MEUAs, leaving us 609 MEUAs. Of the 1,175 MEUAs, which is our refund, 500 million comes in the form of a cash refund and 675 million comes under section 235 in the form of—

Mr. Frank Dobson (Holborn and St. Pancras, South)

Green Shield stamps.

Mr. Ridley

—payments towards projects. Of that 500 million refund, 75 per cent. will be paid by 1 January and 25 per cent. will be paid in June of next year. That is well in advance of the agricultural price fixing, so the two are unlikely to coincide.

Payments under the section 235 item cannot be held up, because it is written into the budget for next year that they shall be paid. The Commission merely has to consult the Regional Policy Committee but not necessarily take its instructions. There is no power to delay the payment of those sums. Once they are agreed and the necessary checking has been done, they become due.

Mr. Denzil Davies

Will the hon. Gentleman give way.

Mr. Ridley

No, I wish to finish my point first. The House has become a little muddled on the question of making payments in advance of the sums being due. In those cases, payments in advance of sums that are due, which were not negotiated as a possibility under the 1975 renegotiation of the right hon. Gentleman's Government, would be made only if a qualified majority did not object.

Mr. Davies

Is the Minister telling the House that it is not necessary for those payments to be agreed by the Budget Council and for the heading for the payments to be included in the budget? If that is so, there must be a qualified majority in the Council before the entry is made in the budget. Is the Minister saying that that is not the case?

Mr. Ridley

It is obligatory expenditure. The Commission has power to make the payments. It does not have power to make the payments in advance of the sums being due unless there is a qualified majority in favour of so doing.

I commend this settlement to the House. As my hon. Friend the Member for Harrow, East (Mr. Dykes) said, the negotiation has been a great success.

Mr. D. N. Campbell-Savours (Workington)

Will the hon. Gentleman give way?

Mr. Ridley

I have given way many times. I do not have very much time in which to finish my speech.

The House can welcome the renegotiation of the budget contribution. We must realize—

Mr. Campbell-Savours

rose—

Mr. Ridley

We must realise that our partners have made considerable concessions in agreeing to these very big changes in our contribution. As my hon. Friends the Members for Lancaster (Mrs. Kellett-Bowman) and Eye (Mr. Gummer) said, we should not be so churlish as to fail to pay tribute to the way in which they have been prepared to negotiate seriously to find agreement on this extremely difficult problem. As my hon. Friend also said, there has been a profound change in the attitude of our partners in Europe, in that by making them pay the full share of the cost of the CAP that is their due, they have accepted that there is a greater need for reform than they seemed to feel before the negotiation. I do not think that it will be difficult for the House to be persuaded by a quote from the German Cabinet statement of 5 June on the question of renegotiating the budget and the CAP— The Federal Government emphatically agrees with the necessity expressed in the European Community decision to correct existing imbalances in the budget of the Community by structural changes. It underlines in this connection the necessity that the European Commission should in the suggestions which have been put forward by 1 June 1981 provide effective means or, inter alia, the elimination of agricultural surpluses of the European Community. Other changes in the Community's expenditure structure should be made in good time so that they can become effective from 1982 at the latest. There is an example of the sort of sweeping, thorough review of the principles of the budget and of the farm policy that the German Government envisage. Even the French have realised that there must be changes, although they are, perhaps, more cautious in their approach to this problem than are the Germans.

There was much debate today on what were and were not the principles of the common agricultural policy in relation to farming. I think that I can clear the matter up when I say that the only mention of rules relating to agriculture in the Treaty of Rome is in article 39. I do not know whether they are called the objectives, the principles, or what, but they are the ones quoted by my right hon. Friend the Lord Privy Seal in the recent debate. Any other principles that there might be have grown up either nationally or within the CAP and are not principles that are enshrined in the Treaty of Rome.

We have achieved the possibility of getting a great deal more of what we want in the negotiations that will take place on the Commission's proposals. The Commission's proposals will be available by June 1981. If we cannot get agreement on a new system both for the budget and the CAP we are none the less covered by the agreement negotiated by my right hon. Friends in Brussels for the year 1982.

Mr. Spearing

One year.

Mr. Ridley

But it is almost certain that there will have to be agreement. The agreement of 30 May states: For 1982, the Community is pledged to resolve the problem by means of structural changes…Taking account of the situations and interest of all member states, this examination will aim to prevent the recurrence of unacceptable situations for any of them. If the review is not complete by 1982, the Community has undertaken to make arrangements for that year along the lines of those made for 1980–81.

Mr. Campbell-Savours

Will the hon. Gentleman give way?

Mr. Ridley

I do not know—[Interruption.]

Mr. Campbell-Savours

Why does not the hon. Gentleman answer the question?

Mr. Ridley

I do not know what the Labour Party will do about the muddle that it is in. Some Labour Members want us to remain in the Common Market; others, such as the right hon. Member for Llanelli, want us to have another go at renegotiation, and others, such as the right hon. Member for Deptford (Mr. Silkin), want to leave altogether.

What about the doctrine of collective responsibility on the Opposition Front Bench? It was never a very strong tradition in the Labour Party, but it is even more weakened now. The right hon. Gentleman had the cheek to say, in the paper: There are very few issues on which the Labour Party is more united than on its policy in relation to the Common Market. I take the words of my hon. Friend the Member for Northampton, North (Mr. Marlow), that Labour is in a state of transition in its policy towards the Common Market.

We, on the other hand, are going to build on the advantages—[HON. MEMBERS: "Oh."] We are going to forge ahead with strengthening and improving the Community in Europe. I ask the House to reject the amendment and to pass the original motion.

Question put, That the amendment be made:—

The House divided: Ayes 193, Noes 258.

Division No. 385	AYES	[11.30 pm
Abse, Leo	Carmichael, Neil	Davis, Terry (B'rm'ham, Stechford)
Allaun, Frank	Carter-Jones, Lewis	Dean, Joseph (Leeds West)
Anderson, Donald	Cartwright, John	Dempsey, James
Archer, Rt Hon Peter	Clark, Dr David (South Shields)	Dixon, Donald
Ashley, Rt Hon Jack	Cocks, Rt Hon Michael (Bristol S)	Dobson, Frank
Ashton, Joe	Coleman, Donald	Dormand, Jack
Atkinson, Norman (H'gey, Tott'ham)	Concannon, Rt Hon J. D.	Douglas-Mann, Bruce
Barnett, Guy (Greenwich)	Cook, Robin F.	Dubs, Alfred
Barnett, Rt Hon Joel (Heywood)	Cowans, Harry	Dunlop, John
Benn, Rt Hon Anthony Wedgwood	Craigen, J. M. (Glasgow, Maryhill)	Dunn, James A. (Liverpool, Kirkdale)
Bennett, Andrew (Stockport N)	Crowther, J. S.	Dunnett, Jack
Bidwell, Sydney	Cryer, Bob	Dunwoody, Mrs Gwyneth
Booth, Rt Hon Albert	Cunliffe, Lawrence	Eadie, Alex
Bray, Dr Joremy	Cunningham, George (Islington S)	Eastham, Ken
Buchan, Norman	Cunningham, Dr John (Whitehaven)	Ellis, Raymond (NE Derbyshire)
Callaghan, Rt Hon J. (Cardiff SE)	Dalyell, Tam	English, Michael
Callaghan, Jim (Middleton & P)	Davidson, Arthur	Evans, Ioan (Aberdare)
Campbell-Savours, Dale	Davies, Rt Hon Denzil (Llanelli)	Evans, John (Newton)
Canavan, Dennis	Davies, Ifor (Gower)	Ewing, Harry
Cant, R. B.	Davis, Clinton (Hackney Central)	Field, Frank
Flannery, Martin	McCartney, Hugh	Ross, Ernest (Dundee West)
Fletcher, Ted (Darlington)	McCusker, H.	Ross, Wm. (Londonderry)
Foot, Rt Hon Michael	McDonald, Dr Oonagh	Rowlands, Ted
Forrester, John	McElhone, Frank	Sever, John
Foster, Derek	McKay, Allen (Penistone)	Sheerman, Barry
Fraser, John (Lambeth, Norwood)	McKelvey, William	Sheldon, Rt Hon Robert (A'ton-u-L)
Freeson, Rt Hon Reginald	MacKenzie, Rt Hon Gregor	Shore, Rt Hon Peter (Step and Pop)
Garrett, John (Norwich S)	McNally, Thomas	Short, Mrs Renée
George, Bruce	McTaggart, Robert	Silkin, Rt Hon John (Deptford)
Gilbert, Rt Hon Dr John	McWilliam, John	Silkin, Rt Hon S. C. (Dulwich)
Graham, Ted	Marks, Kenneth	Silverman, Julius
Grant, George (Morpeth)	Marshall, David (Gl'sgow, Shettles'n)	Skinner, Dennis
Grant, John (Islington C)	Marshall, Jim (Leicester South)	Soley, Clive
Hamilton, James (Bothwell)	Maynard, Miss Joan	Spearing, Nigel
Hamilton, W. W. (Central Fife)	Meacher, Michael	Spriggs, Leslie
Harrison, Rt Hon Walter	Mellish, Rt Hon Robert	Stewart, Rt Hon Donald (W Isles)
Hart, Rt Hon Dame Judith	Mikardo, Ian	Stott, Roger
Hattersley, Rt Hon Roy	Millan, Rt Hon Bruce	Strang, Gavin
Haynes, Frank	Mitchell, Austin (Grimsby)	Straw, Jack
Healey, Rt Hon Denis	Molyneaux, James	Summerskill, Hon Dr Shirley
Heffer, Eric S.	Morris, Rt Hon Alfred (Wythenshawe)	Taylor, Mrs Ann (Bolton West)
Hogg, Norman (E Dunbartonshire)	Morris, Rt Hon Charles (Openshaw)	Thomas, Dr Roger (Carmarthen)
Homewood, William	Morris, Rt Hon John (Aberavon)	Thorne, Stan (Preston South)
Horam, John	Moyle, Rt Hon Roland	Tilley, John
Hughes, Mark (Durham)	Newens, Stanley	Torney, Tom
Hughes, Robert (Aberdeen North)	Oakes, Rt Hon Gordon	Varley, Rt Hon Eric G.
Hughes, Roy (Newport)	O'Halloran, Michael	Walker, Rt Hon Harold (Doncaster)
Janner, Hon Greville	O'Neill, Martin	Watkins, David
Jay, Rt Hon Douglas	Orme, Rt Hon Stanley	Weetch, Ken
John, Brynmor	Paisley, Rev Ian	Wellbeloved, James
Johnson, James (Hull West)	Park, George	Welsh, Michael
Jones, Rt Hon Alec (Rhondda)	Parry, Robert	White, Frank R. (Bury & Radcliffe)
Jones, Barry (East Flint)	Pendry, Tom	Whitehead, Phillip
Kaufman, Rt Hon Gerald	Powell, Rt Hon J. Enoch (S Down)	Whitlock, William
Kilroy-Silk, Robert	Powell, Raymond (Ogmore)	Willey, Rt Hon Frederick
Kinnock, Neil	Prescott, John	Wilson, William (Coventry SE)
Lamborn, Harry	Price, Christopher (Lewisham West)	Winnick, David
Lamond, James	Race, Reg	Woodall, Alec
Leadbitter, Ted	Radice, Giles	Woolmer, Kenneth
Leighton, Ronald	Rees, Rt Hon Merlyn (Leeds South)	Wright, Sheila
Lestor, Miss Joan (Eton & Slough)	Richardson, Jo	Young, David (Bolton East)
Lewis, Arthur (Newham North West)	Roberts, Ernest (Hackney North)
Lewis, Ron (Carlisle)	Roberts, Gwilym (Cannock)	TELLERS FOR THE AYES:
Litherland, Robert	Robertson, George	Mr. James Tinn and Mr. George Morton.
Lofthouse, Geoffrey	Robinson, Geoffrey (Coventry NW)
Lyon, Alexander (York)	Rooker, J. W.
NOES
Adley, Robert	Butcher, John	Fenner, Mrs Peggy
Aitken, Jonathan	Cadbury, Jocelyn	Finsberg, Geoffrey
Alexander, Richard	Carlisle, John (Luton West)	Fletcher, Alexander (Edinburgh N)
Alton, David	Carlisle, Kenneth (Lincoln)	Fletcher-Cooke, Charles
Ancram, Michael	Carlisle, Rt Hon Mark (Runcorn)	Fookes, Miss Janet
Atkins, Robert (Preston North)	Chalker, Mrs Lynda	Forman, Nigel
Baker, Nicholas (North Dorset)	Channon, Paul	Fowler, Rt Hon Norman
Beith, A. J.	Chapman, Sydney	Fox, Marcus
Bell, Sir Ronald	Churchill, W. S.	Fraser, Rt Hon H. (Stafford & St)
Bendall, Vivian	Clark, Hon Alan (Plymouth, Sutton)	Fry, Peter
Benyon, Thomas (Abingdon)	Clark, Sir William (Croydon South)	Gardiner, George (Reigate)
Benyon, W. (Buckingham)	Clarke, Kenneth (Rushcliffe)	Garel-Jones, Tristan
Berry, Hon Anthony	Clegg, Sir Walter	Glyn, Dr Alan
Best, Keith	Cockeram, Eric	Goodhew, Victor
Bevan, David Gilroy	Colvin, Michael	Goodlad, Alastair
Biffen, Rt Hon John	Cope, John	Gorst, John
Biggs-Davison, John	Costain, A. P.	Gow, Ian
Blackburn, John	Cranborne, Viscount	Gower, Sir Raymond
Blaker, Peter	Critchley, Julian	Griffiths, Eldon (Bury St Edmunds)
Bonsor, Sir Nicholas	Crouch, David	Griffiths, Peter (Portsmouth N)
Boscawen, Hon Robert	Dean, Paul (North Somerset)	Grist, Ian
Bottomley, Peter (Woolwich West)	Dickens, Geoffrey	Grylls, Michael
Bowden, Andrew	Dorrell, Stephen	Gummer, John Selwyn
Boyson, Dr Rhodes	Douglas-Hamilton, Lord James	Hamilton, Hon Archie (Eps'm&Ew'll)
Braine, Sir Bernard	Dover, Denshore	Hamilton, Michael (Salisbury)
Brinton, Tim	du Cann, Rt Hon Edward	Hampson, Dr Keith
Brittan, Leon	Dunn, Robert (Dartford)	Hannam, John
Brooke, Hon Peter	Durant, Tony	Haselhurst, Alan
Brotherton, Michael	Dykes, Hugh	Hastings, Stephen
Brown, Michael (Brigg & Sc'thorpe)	Edwards, Rt Hon N. (Pembroke)	Havers, Rt Hon Sir Michael
Browne, John (Winchester)	Eggar, Timothy	Hawksley, Warren
Bruce-Gardyne, John	Elliott, Sir William	Heddle, John
Bryan, Sir Paul	Emery, Peter	Henderson, Barry
Buck, Antony	Eyre, Reginald	Heseltine, Rt Hon Michael
Budgen, Nick	Fairgrieve, Russell	Hicks, Robert
Bulmer, Esmond	Faith, Mrs Sheila	Hogg, Hon Douglas (Grantham)

Holland, Philip (Carlton)	Montgomery, Fergus	Spicer, Jim (West Dorset)
Hooson, Tom	Morgan, Geraint	Spicer, Michael (S Worcestershire)
Hordern, Peter	Morris, Michael (Northampton, Sth)	Sproat, Iain
Howe, Rt Hon Sir Geoffrey	Morrison, Hon Charles (Devizes)	Squire, Robin
Howell, Rt Hon David (Guildford)	Morrison, Hon Peter (City of Chester)	Stanbrook, Ivor
Howell, Ralph (North Norfolk)	Mudd, David	Stanley, John
Howells, Geraint	Murphy, Christopher	Steel, Rt Hon David
Hunt, David (Wirral)	Myles, David	Steen, Anthony
Hunt, John (Ravensbourne)	Neale, Gerrard	Stevens, Martin
Hurd, Hon Douglas	Needham, Richard	Stewart, John (East Renfrewshire)
Johnston, Russell (Inverness)	Nelson, Anthony	Stokes, John
Jopling, Rt Hon Michael	Neubert, Michael	Stradling Thomas, J.
Kellett-Bowman, Mrs Elaine	Newton, Tony	Tapsell, Peter
King, Rt Hon Tom	Normanton, Tom	Taylor, Robert (Croydon NW)
Kitson, Sir Timothy	Onslow, Cranley	Taylor, Teddy (Southend East)
Knox, David	Page, Rt Hon Sir R. Graham	Tebbit, Norman
Lamont, Norman	Page, Richard (SW Hertfordshire)	Temple-Morris, Peter
Lang, Ian	Parkinson, Cecil	Thatcher, Rt Hon Mrs Margaret
Langford-Holt, Sir John	Parris, Matthew	Thomas, Rt Hon Peter (Hendon S)
Latham, Michael	Patten, Christopher (Bath)	Thompson, Donald
Lawrence, Ivan	Patten, John (Oxford)	Thorne, Neil (Ilford South)
Lawson, Nigel	Pattie, Geoffrey	Townend, John (Bridlington)
Lee, John	Pawsey, James	Townsend, Cyril D. (Bexleyheath)
Le Marchant, Spencer	Penhaligon, David	Trippier, David
Lester, Jim (Beeston)	Percival, Sir Ian	Trotter, Neville
Loveridge, John	Peyton, Rt Hon John	van Straubenzee, W. R.
Luce, Richard	Price, David (Eastleigh)	Vaughan, Dr Gerard
Lyell, Nicholas	Prior, Rt Hon James	Viggers, Peter
Macfarlane, Neil	Pym, Rt Hon Francis	Waddington, David
MacKay, John (Argyll)	Raison, Timothy	Wakeham, John
Macmillan, Rt Hon M. (Farnham)	Rathbone, Tim	Waldegrave, Hon William
McNair-Wilson, Michael (Newbury)	Rees, Peter (Dover and Deal)	Walker, Rt Hon Peter (Worcester)
McNair-Wilson, Patrick (New Forest)	Rees-Davies, W. R.	Walker, Bill (Perth & E Perthshire)
McQuarrie, Albert	Renton, Tim	Walker-Smith, Rt Hon Sir Derek
Madel, David	Rhys Williams, Sir Brandon	Wall, Patrick
Major, John	Ridley, Hon Nicholas	Waller, Gary
Marland, Paul	Ridsdale, Julian	Ward, John
Marlow, Tony	Rifkind, Malcolm	Wells, John (Maidstone)
Marten, Neil (Banbury)	Rippon, Rt Hon Geoffrey	Wells, Bowen (Hert'rd & Stev'nage)
Mates, Michael	Roberts, Michael (Cardiff NW)	Wheeler, John
Maude, Rt Hon Angus	Roberts, Wyn (Conway)	Whitelaw, Rt Hon William
Mawhinney, Dr Brian	Ross, Stephen (Isle of Wight)	Whitney, Raymond
Maxwell-Hyslop, Robin	Royle, Sir Anthony	Wickenden, Keith
Mayhew, Patrick	Sainsbury, Hon Timothy	Williams, Delwyn (Montgomery)
Mellor, David	Shaw, Michael (Scarborough)	Winterton, Nicholas
Meyer, Sir Anthony	Shelton, William (Streatham)	Wolfson, Mark
Miller, Hal (Bromsgrove & Redditch)	Shepherd, Colin (Hereford)	Young, Sir George (Acton)
Mills, Iain (Meriden)	Shersby, Michael
Mills, Peter (West Devon)	Silvester, Fred	TELLERS FOR THE NOES:
Mitchell, David (Basingstoke)	Sims, Roger	Mr. Carol Mather and Mr. John MacGregor.
Moate, Roger	Speed, Keith
Monro, Hector	Speller, Tony

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That this House takes note of European Community document COM(80)147 on Convergence and Budgetary Questions, of the conclusions of the Foreign Affairs Council on 29 and 30 May annexed to tthe Explanatory Memorandum on document 7943/80, of documents 7943/80 and 7944/80 containing draft regulations implementing the agreement recorded in those conclusions, of documents 5437/80 and 7767/80 on the Community Budget for 1980 and 7389/80 on the Common Fisheries Policy; and welcomes the agreement reached at the Foreign Affairs Council on 29 and 30 May for reducing the United Kingdom's net contribution to the Community Budget.