EUROPEAN COMMUNITIES

HC Deb 31 July 1980 vol 989 cc1767-879

Motion made, and Question proposed,

That this House takes note of the Report on Developments in the European Communities, January to December 1979 (Cmnd. 7780).—[Mr. Boscawen.]

4.53 pm

Mr. Peter Shore () Stepney and Poplar

Regular debates on developments in the European Communities are essential and, although on this occasion the White Paper before us covers a 12-month rather than a six-month period, and although we are debating the matter some months after the end of December 1979, it is nevertheless valuable to have an opportunity to review the whole development of the EEC.

Inevitably we concentrate in most debates on the Common Market on a particular aspect—the budget, the CAP, New Zealand, fisheries or the like—but it is only when we are able to look at the larger picture, as we are today, that we can assess and re-assess the progress, or lack of it, that the Common Market is making and see how we can best counter the continuing damage to our national interest that membership entails.

My comments on the White Paper and the developments that have taken place since cannot be anything but highly critical. I suppose that when the great ship Common Market began its voyage the captain and crew knew where they were going. The engines worked and the seas were reasonably calm. Today, if I may pursue the analogy, the great ship gives every appearance of being rudderless and drifting; its navigation system has broken down, the seas are pouring in and the great hulk is in considerable danger of being sunk. It is not surprising that many aboard are looking with special interest at the state of the lifeboats.

Of course, in such circumstances, it is the duty of the officers to give as much reassurance as they can to the passengers and crew; and I take it that that is the main purpose of the foreword in the White Paper to which the Lord Privy Seal has put his name. The same confidence-building purpose runs through the packaging of the various chapters that make up the White Paper.

It is not my intention to examine all the separate chapters. I intend to concentrate instead on three main areas of crisis, missed opportunity and downright failure. First, I shall deal with the much-trumpeted area of political co-operation—the coordination of the foreign policies of the member States of the EEC. Secondly, I shall deal with the external economic policies of the Common Market, and, thirdly, I shall refer to the major and unresolved internal problems that face the Common Market as a whole and its individual members.

Perhaps it is the recognition that so little progress has been made in other major areas of EEC affairs that has led our Foreign Secretary and the Lord Privy Seal to make extravagant claims about success in political co-operation. The reality is different. During the past year the greatest single challenge to political co-operation has come as a consequence of the Soviet invasion of Afghanistan. I can find no evidence of a common position among the Nine, even after months of talking.

There is not even a common position on the continued export of subsidised butter and meat, the export of high technology goods or the excessively generous credit arrangements that West European countries have long provided the Soviet Union. Indeed, after this month's visit of the West German Chancellor to the Soviet Union and the trade deal that he struck there, any attempt at a common policy appears to have been abandoned.

On the Olympics—another matter of some interest and dispute—each country has gone its own way. On Iran, political co-operation produced, after much labour, a sanctions mouse. Our Government so botched it that they were forced into being the odd man out, at least in terms of the action that was taken.

One area in which European Foreign Ministers have advanced to a common position is the Middle East, particularly with the declaration at the end of the Venice summit on 13 June. I have already said that I believe that to be a singularly ill-judged initiative which is far more likely to do harm than good.

Yesterday's events—the blatantly onesided resolution of the United Nations, on which the Nine abstained—and the Bill passing through the Knesset only increased my forebodings. However, it is a matter to which we shall return when we receive the report of the visit and the conversations that Mr. Gaston Thorn is about to undertake. I should make it plain that while I am not impressed by the results I am not opposed in principle to what is called political co-operation.

The meetings of Foreign Ministers in the context of political co-operation—a development, as the House knows, which was not even envisaged by the Rome Treaty and which is entirely unencumbered by its rules—is far closer to my view of the right kind of Alliance relationship that Britain should have with the EEC than are all the confederal and quasi-federal arrangements that control the affairs of the Common Market under the Rome Treaty.

Mr. Tony Marlow () Northampton, North

I wonder whether the right hon. Gentleman agrees with me that one of our problems is that we combine with European countries on issues, policies and institutions where we have no common interest. Because we have so combined it is more difficult to carry out the political approaches about which the right hon. Gentleman and I would agree.

Mr. Shore

When historians come to write the story of Britain's relations with Western Europe one of the paradoxes upon which they will seize is how curiously contrary to the whole effect of the original purpose of joining the EEC the experience has turned out to be. The relationships that were genuinely warm, friendly and co-operative will be seen by the historian to have been soured. They have regressed from the experience of trying to fit the shape of Britain into a pre-set Continental mould. It is the squeezing and the pressure upon our natural and legitimate interests which is the cause of so much friction.

In the area of political co-operation the EEC is a league of democratic European nations seeking to co-ordinate their policies wherever it is sensible or possible to do so. The pity is that so far it has proved to be beyond the reach of member States to make agreements in externa] affairs in those areas where they can have substantial impact.

I turn again to the Middle East. Whatever may be said about the wisdom and timing of Mr. Thorn's mission—I know that there are different views on that—there is, surely, no doubt that the countries of the Nine could have a helpful influence on Middle Eastern affairs if they co-ordinated and reduced their arms supplies to that area. There is now a cynical, dangerous and disgraceful competition in the supply of arms to the Middle East among the countries of the Nine. It is claimed—

The Lord Privy Seal (Sir Ian Gilmour)

May we get this clear? Is the right hon. Gentleman suggesting that there has been any change in policy on arms supplies to the Middle East since this Government came to power?

Mr. Shore

I do not know whether there has or has not been a change. My theme, which I hope the right hon. Gentleman will take seriously, is that in the context of political co-operation, about which the right hon. Gentleman has spoken warmly, there is a substantial area where we can, profitably, get together not only to our own advantage but to the advantage of this endangered area.

I maintain that at present there is extremely dangerous competition in arms supply. It is claimed, and I do not know whether the Lord Privy Seal is able to confirm it, that Saudi Arabia alone has almost as many top-class French battle tanks as has the French Army in Europe. Syria, which allocates about 50 per cent. of its budget to defence is, in addition to receiving supplies from the Soviet Union about to receive tanks and armoured cars from West Germany.

Iraq, in addition to its very large Soviet supplies, is now to receive large quantities of top-grade French weapons including Mirage aircraft, Allouette helicopters and Crotale and Matra missiles. We read in The Guardian today that: Italy is prepared to train about 1,000 Iraqi naval and air force officers, and to supply Iraq with four frigates, six corvettes of 1,000 tons each, and a military supply ship, for which the Baghdad Government will pay about £900 million. Even Libya has been supplied with Mirage aircraft, a range of missiles and, if reports are correct, with about 200 top-class Amx French tanks.

The arms race in the Middle East continues apace and has reached a dangerous level. Since the Yom Kippur war of 1973 the armaments of the main Middle East countries have vastly increased both in numbers and in sophistication. It is almost incredible but nevertheless true that Israel's three Arab neighbours Syria, Iraq and Jordan are now equipped with getting on for 6,000 tanks. That figure is not far short of NATO's total tank strength in Europe.

I do not suggest that the supply of arms to the Middle East can be stopped completely. But common sense suggests that a co-ordinated policy, rather than competitive arms sales, is urgently required That policy should take account of the need for military ability and balance in that area.

I know that the Government are extremely sensitive about their relations with France, but France is now the third largest supplier of arms in the world. France exports about three times as much as Britain, Germany or Italy and often supplies arms in the most reckless way. If political co-operation means anything, it should certainly cut the supply of arms to areas of great tension and to regimes often characterised by rashness and instability.

One further and deadly concern is the danger of the acquisition of nuclear weapons by the Middle East States. The Lord Privy Seal will recall that we had a brief exchange on this matter in the context of the announced French supply of a reactor to Iraq during the last Foreign Office Question Time.

Today I have seen the statement by the French Government that the whole arrangement is under International Atomic Energy Authority control and that, of course, Iraq is a signatory to the non-proliferation treaty. That, obviously, helps to give some assurance. But I tell the Lord Privy Seal, and the House, that I have some apprehensions.

We all know that with experimental reactors it is the grade of the uranium that matters. Anything over 40 per cent. enriched uranium is capable of being used for weapons. If my information is correct, the French are supplying a 93 per cent. enriched uranium to the Iraquis. It is also my information that the French are supplying substantial quantities of enriched uranium, considerably in excess of any immediate needs.

I am very worried, because the information that I have suggests that a reprocessing facility is also being supplied. It is being supplied not direct by France but by arrangement with the Italians. If that is so, a complete uranium cycle is established. There is the enrichment of the uranium, the uranium working through the reactor and, if a reprocessing facility is established, there is the ability to turn the material into plutonium which could have a military use.

I am not making light or frivolous accusations. I am seeking assurances. I think that the right hon. Gentleman would agree with me that, quite apart from the fact that we are members of the IAEA, quite apart from the fact that all Western European countries are members of the Euratom treaty and the fact that France, Britain and Italy are members of the nuclear suppliers' club, we have a common interest in seeking to tighten the rules to ensure that the chances of the development of nuclear weapons is further reduced.

Mr. Frank Hooley () Sheffield, Heeley

I have a great deal of sympathy with the arguments deployed by my right hon. Friend. I think that the supply of arms and of nuclear capacity to the Middle East is highly dangerous. But my right hon. Friend must, in all honesty, admit that while a massive supply of arms continues to flow from the United States to Israel and while Israel fails to sign the non-proliferation treaty, a countervailing action on the other side is bound to develop. My right hon. Friend would do a great service to the House if he commented on that as well.

Mr. Shore

I am very much in favour of maintaining security and stability in the Middle East. The problem is in some ways familiar. We face it in terms of the East-West relationship. We can have security and balance either at a high level of arms or at a lower level. Common sense points to the advantages of the latter. A co-ordinated policy, not only in Europe but with the United States, would be of enormous help, rather than that nations should engage in a competitive race to sell arms. The temptation, especially for oil-dependent European countries, lies in the possibility of large trading benefits.

The second area in which political cooperation could be effectively developed is in relation to Latin America, which is another area of increasing turbulence, mounting arms supplies and seemingly endless military coups. The military have recently taken power in Bolivia. At their last meeting, the Foreign Ministers of the Nine cobbled together a few "tut-tuts". The Government thought so little of what was done that it was not even mentioned in the statement on the outcome of the Foreign Affairs Council by the Minister of State on 23 July. Something far more positive could have been done, such as demands for the safety of the arrested members of the recently elected Assembly in La Paz, outright condemnation of the overthrow of the democratic process in Bolivia and the threat of economic and trade measures if human rights and democratic norms are not restored.

Bolivia is only one of many South and Central America, republics that are threatened by, or experiencing, oppressive military rule. Until the coup in 1973, Chile enjoyed an almost unbroken tradition of civil and democratic rule. The Pinochet regime has committed frightful abuses of human rights. It has only recently stated its firm intention to retain power for at least the next decade. The Government were utterly wrong to announce on 22 July, and in a written answer, that arms would be supplied to Chile on normal terms. That statement was not only a gratuitous encouragement to the Chilean junta but a slap in the face for Chilean democrats. It has been said that there has been a recent improvement in human rights in Chile, but that is not the information that is generally available. If I am correctly informed, the military Government passed an edict as recently as 17 July to make it an offence against internal security even to supply information about abuses of human rights.

On top of all that, the British Government had a surprising and humiliating reaction from the Chilean Government, who stated that they were not interested in buying naval equipment from Britain anyway. Now that naval supplies have been ruled out by the Lord Privy Seal's would-be customer, I hope that he will tell us what equipment the Government are prepared to offer Chile and how they can pretend that non-naval supplies will not be available for political repression.

I return to the theme of political cooperation. It should be possible for the Common Market countries to agree to withhold military equipment to that dictatorship and to agree on trade and aid measures directly linked to the restoration of human rights and democratic norms in that country. Unhappily, similar regimes exist in many Latin American countries. If the EEC is effectively to be a league of democratic nations, consistent support for democracy elsewhere should be a guiding light of political cooperation.

My last illustration in this area concerns Southern Africa. The Government of Zimbabwe was formed and Zimbabwe's independence achieved on the basis of democratic and properly supervised elections, for which we are all very thankful. Britain and democratic countries in Europe and elsewhere have a major interest in the survival and success of democracy in Zimbabwe. In the short term that can best be guaranteed by making substantial aid available. Britain has made a considerable initial contribution, but Zimbabwe's needs for resettlement and reconstruction after many years of war go far beyond the British purse. Here too, the EEC countries could and should make a contribution. I know about the Lomé application, but there is a substantial need for short-term, non-programmed financial assistance at present and probably for the next two years. We should be grateful if the Lord Privy Seal could tell us what discussions he has had on political co-operation and with what results.

It is equally important for the Nine to maintain pressure on South Africa over the conditions of work of African employees of European firms and the crucial question of South Africa accepting externally supervised elections in Namibia. It is remarkable that the Foreign Ministers of the Nine have neither condemned nor called for the cessation of military assaults on Namibia's neighbour, Angola, by South African troops. So much for political co-operation.

I turn to the second area of crisis and missed opportunity—the external economic policies of the EEC. There is no recognition in the White Paper of the continuing and worsening global economic crisis. It is very much "business as usual" with the end of the multilateral trade negotiations, the Lomé convention and the usual range of bilateral trade discussions. However, there is a welcome exception—the progress made towards the UNCTAD common fund.

As the House knows, the world outlook has continued to darken. With the redoubling of oil prices over the past 12 months and the failure of the West to find and make an adequate response, the outlook is as bleak as at any time since before the Second World War. Unemployment is rising in Britain and throughout the West. Production is stagnating and in Britain, thanks to the Government's policies, declining. World trade is bound to contract, competition intensify and economic protectionism grow. Non-oil developing countries will come under ever-increasing economic, social and political strain.

In those circumstances the negative and positive features of the EEC's trade and economic policies rightly come under intense scrutiny. On the negative side, I cite only one example—the food trade under the CAP. We tend to think of the absurdities of the CAP as they affect consumers and taxpayers in our country, but a major and adverse feature has always been its effect on world food trade—its total protectionism against more efficient outside producers and its truly disruptive export subsidy arrangements when it sells its surpluses overseas.

The CAP covers a wide range of foodstuffs, yet only a few weeks ago, as part of the budget package deal, the Government agreed to extend the operation of the CAP to include mutton and lamb. One effect of that is to threaten the trade of Australia and New Zealand in third markets, as they have made abundantly plain. Their reaction has been forceful Counter-measures are inevitably being considered in Australia against the EEC's manufacturing exports. The Australian Trade Ministers warned two weeks ago that over £200 million worth of Common Market exports could be blocked if world food markets continued to be disrupted by surplus and subsidised Common Market food exports.

What has disturbed us most is the failure both of the EEC summit in Venice on 12 and 13 June and the summit of the Seven of 22-23 June even to begin to formulate economic external policies to fight the world recession. What is worse, we have had an over-simple reiteration in the communiques of the dangers of inflation, the acceptance by the Governments of the Nine of further deflationary measures, and a shrugging of the shoulders at the consequences for the world of these policies. From all accounts, the Government's part at both these summits was entirely negative. The comment of a senior British official: They have their problems; we have ours seems to sum up the Government's attitude, and in a most displeasing way.

It is not that the Government lack information on the scale or the seriousness of the world problem. The Foreign Secretary pointed out in another place on 9 July that oil price increases this year alone more than absorbed all the aid given by the West to developing countries. The increases in the price of oil will cost the developing countries, for the same amount of oil, $37 billion more this year. The total of Western aid is $22 billion.

The Government have since March had the help of the analysis, the warnings and the proposals of the Brandt Commission report. The report has been debated twice in the House which, I should have thought, would have helped to enlarge the Government's understanding and send them to the Venice summit with a firmer purpose. It was during the second debate on Brandt that Ministers were persuaded to issue a document of detailed response to the many proposals by the commission. That paper is now available. Like other hon. Members, I find it an astonishing and disappointing document. It is almost wholly negative, and where it is not negative it damns with faint praise. I shall list only a few of its major failings.

First, there is the bold statement of belief in the merits of the present world economic system with its wide reliance on open markets for trade and financial flows. Even this Government must be aware that the main focus of debate for the past seven years in the non-aligned and developing countries has been precisely the need for a new world economic order. I do not suggest that we should adopt all the propositions by the Third world countries, but one of the great strengths of the Brandt report is that it considers seriously the need for major changes in the existing world trading system which is tilted so heavily against the developing world.

The second of the responses is the Government's flat rejection of the timetable for the aid target of 0.7 per cent. of our GNP. Third is the statement that the international capital market can continue to play the primary role in recycling OPEC surpluses to finance these deficits —that is, the Third world deficits. I believe them to be dangerously wrong in that estimate, and I am not alone in that belief. Fourth, and most depressing, is the statement that the Government are convinced that the OECD countries cannot correct the under-utilisation of capacity by a massive extra injection of spending". That is a fatalistic acceptance that the high price of oil—and it is rising higher every year—will continue to force developed and developing countries alike into a substantial period of slower growth.

Mr. Hugh Dykes () Harrow, East

In the circumstances of that argument, why does not the right hon. Gentleman support the idea of a larger Community budget?

Mr. Shore

If the hon. Gentleman is suggesting an increase in the EEC's aid budget I shall willingly look at any proposition that is made. Britain must decide, on aid budgets, whether we have the right balance of distribution to the member countries of the Lomé convention as opposed to the poor and needy Commonwealth and other countries outside Lome, such as India and Bangladesh.

The more imaginative proposals in Brandt for switching resources to developing countries—I refer to the proposed levies on world trade and arms trade—are dismissed with just a few cursory comments.

There is to be a special session of the United Nations between 25 August and 5 September on North-South relations and the whole question of development policies. I have a specific question for the Lord Privy Seal. I understand that EEC guidelines for this special session were agreed at the Council meeting of 22 July. The House wants to know what proposals are being taken from the Council of Ministers to this special session. We know the views of the British Government from the Select Committee document to which I referred. Is this essentially the same brief that the EEC will take to the special session in New York? If it is, very little can be expected to result from that meeting except a great deal of anger and frustration.

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd)

The right hon. Gentleman has spent some time on this point and has spoken entirely in terms of the Community and the developed countries on the one hand and the developing countries on the other. He has quite rightly made the point that the developing countries have been very hard hit by the increase in the price of oil. So have the developed countries which are running deficits too. He has said not a word on what is perhaps the crux of the whole issue which was brought out in the Brandt report—the need for the countries which have benefited from the increase in the price of oil to play their part. It is an inadequate analysis that does not go into that.

Mr. Shore

May I refer the hon. Gentleman to my last speech on the Brandt report? I wish to put some limit on my remarks. Of course, I understand the hon. Gentleman's point very well. There are a number of proposals, including those in the Brandt report, for ensuring that the surpluses of the oil countries can be recycled in an orderly way under international and national auspices, and not just left to the private banking system. However, if we cannot get, through collective agreement, satisfactory arrangements with the OPEC counries to make use of their surpluses in the orderly way that the world economic system requires, the Western countries will have themselves to operate on the international institutions, particularly in terms of the new kinds of credit facilities that will be required and the issues of SDRs, without necessarily having to await the agreement of the OPEC countries.

Mr. Tam Dalyell () West Lothian

My right hon. Friend will not know, since it has not yet appeared in Hansard, that in the debate last night on the role of the IMF and the World Bank the Government were asked specific questions by myself and other hon. Members on the use of gold as a collateral. There was virtually no answer on that point from the Financial Secretary. Before the Minister of State criticises my right hon. Friend, he had better have a few words with the Treasury Minister who did not answer the legitimate questions that were put to him last night.

Mr. Shore

I did not take the Minister of State's remarks as being in any sense criticism. I thought that he was simply seeking a little further enlightenment in this complex subject.

I turn to the last part of my speech, which relates to the more familiar ground of internal Common Market affairs and to the major disadvantages that Britain continues to suffer under the agreements made in the Treaty of Accession to the Treaty of Rome. We have placed our views on the EEC budget arrangements firmly on the record in previous debates, so I can be brief about that. The budget is swollen, as we all agree, and totally unbalanced by the weight of agricultural expenditure. Britain's contribution to it is an outrage and, in spite of the temporary amelioration agreed on 30 May, it remains an outrage.

The Opposition take a very strong view on the budget question because the budget contribution is an additional burden to the grievious disadvantages that we have experienced, and are experiencing, in our trade with the EEC both in manufactured goods and in agricultural products. I take no comfort from the fact that our exports to the EEC are growing, for the good and sufficient reason that our imports from the EEC have grown even faster.

It is a near disaster for Britain that our deficit in manufactured goods with other countries of the Common Market last year totalled £4,000 million. It is a major burden upon every family in Britain that the cost of imported food from the EEC under the common agricultural policy is, according to the Ministry of Agriculture's own figures, about £3,000 million a year more than if we remained free to buy elsewhere at world prices.

If we divert a great demand on to existing world markets that may effect the prices. I understand that. But Conserva- tive Members know sufficient about the matter—and so do I—to know that, taking dairy products as an example, we could procure all the dairy products that we require at prices about one-third of what we pay in the Common Market. For Britain to be a net budget contributor on top of those other great burdens is intolerable.

We shall watch with interest what comes out of the alledgedly fundamental appraisal of the whole operation of the Community budget, which is part of the 30 May settlement. But I stick to my sceptical view that the scope for policy change is already substantially circumscribed by the terms of reference of the Commission's study which instructs it not to call into question the common financial responsibility for these policies which are financed from their own resource, nor the basic principles of the CAP. Nevertheless, opportunity for change is there. I hope that the Government will make major proposals for fundamental changes both in the CAP and in the absurd and arbitrary "own resource" financial system. Further, I hope that they will lay in Green Paper form the range of possible policy changes so that the House and the country can add their voice to this major debate.

All those matters have a direct bearing on the central Common Market doctrine of convergence. For me, and I assume for the House, the test of convergence is the increasing approximation of living standards, of GNP per capita, throughout the Community. The figures do not suggest any such movement. In 1973—the year that we joined—Britain's GNP per capita was equal to 95 per cent. of the average of the Community of the Nine. Five years later in 1978, the last year for which I have figures, it had slipped to 92 per cent. That is not convergence, but divergence. After a longer period among the original Six, Italy slipped from 80 per cent. of the average in 1968 to 77 per cent. a decade later, while Germany, with 114 per cent., in 1968, had advanced to 117 per cent. in 1978. It is time that those trends were more thoroughly investigated and exposed.

I believe that in a large Common Market, where the factors of production—goods, capital and labour—enjoy unrestricted free movement, the natural tendency is for the relatively strong to grow stronger and the relatively weak to become weaker. But for North Sea oil our position would already be close to disaster. Under the Government's policy, we may well get disaster anyway.

It is against that background of economic performance and economic disadvantage that we have to state clearly that we cannot, and will not, tolerate the progressive collapse of our industrial base. In a period of general expansion the disadvantages that I have described might have been borne. But in a period of recession, the strains are becoming intolerable.

The debate on the progress report does not demand specific conculsions. But I must end by saying this—the basic premises on which the Common Market and the Rome Treaty were founded are being steadily undermined. We must be ready to take those actions that are necessary defend the living standards and the employment of our people.

5.35 pm

The Lord Privy Seal (Sir Ian Gilmour)

The debate follows closely upon the debate on 2 July about the budget settlement and related negotiations. I hoped that, for once, the right hon. Member for Stepney and Poplar (Mr. Shore) would put his obsessions behind him and look at the subject in an objective way. Regrettably, he has treated us to the same old gramophone record of carping and sneering from the sidelines, which nearly always characterises the bankruptcy of Labour policies on Europe. He showed a remarkable capacity to abstract himself both from his past and from the past of his party. He mentioned the time when the ship began its journey to the Common Market. But two of the attempts made in the 1960s to get into the Common Market took place when he was a member of a Labour Government—and without any protest from him. Similarly, he talked about arms supplies and complained that there had been some change. Who would have gathered that the Leader of the Opposition said, in 1977: This party really must grow up. They must realise that our commitment is enshrined in the Treaty itself, and we must adhere to the obligations we have and use our best endeavours to comply."—

Mr. Nigel Spearing () Newham, South

No.

Sir I. Gilmour

It is no use the hon. Gentleman saying "No". I am quoting his leader. Perhaps he is not his leader—but he is meant to be. He continued: We are in Europe to stay, and it is high time we realised it. When is the party going to come to terms with reality?

Mr. Spearing

No. Will the right hon. Gentleman—

Sir I. Gilmour

I have only just started. I shall give way later. There was not much sign of the right hon. Member for Stepney and Poplar coming to terms with reality. Another way in which he abstracted himself from his past was that he complained about our budget settlement. How has he the impertinence and the effrontery to complain about our budget settlement when we have knocked two-thirds off our contribution? The right hon. Gentleman and the Leader of the Opposition knocked not a single penny off our contribution. The deputy leader of the Labour Party, the right hon. Member for Ebbw Vale (Mr. Foot)—who, I imagine is a supporter of his leader—is being rather vociferous. He must be singularly ashamed about his failure to knock anything off our budget contribution when the Labour Party was in power.

Mr. Spearing

Will the Lord Privy Seal now give way?

Sir I. Gilmour

It is a little early to do so, but I will.

Mr. Spearing

I intervene only because the Lord Privy Seal referred to my interjection of "No". He is an expert in disagreeing with his leaders. Does he agree that I said "No" in relation to the phrase "we are in Europe to stay?" The Government Paper states that that depends on the continuing assent of Parliament. It is for Parliament to make the assertions for staying, not an hon. Member of the House.

Sir. I Gilmour

The hon. Gentleman is saying that he disagrees with his leader. That is what I said. I do not understand the point of his intervention. The debate gives us an opportunity to assess the progress that has been made since 1979. The right hon. Member for Stepney and Poplar, with considerable effrontery, said that we were assessing the progress, or lack of it. That shows how much he is prepared to be blinded by his obsessions. Any objective person would realise that there has been a considerable improvement in our position since 1979.

The budget settlement is a considerable improvement. If ever there was an argument against adversary politics, it would surely be the behaviour of the Labour Party in regard to these budget negotiations. Any other Parliament in the world would have recognised that we had achieved a great deal.

The right hon. Gentleman referred in some detail to foreign policy questions concerning the Nine—that is to say, political co-operation. Listening to him, I thought that he seemed to regard political co-operation by the Nine as a useful means of wrecking our relations with as many other countries as possible. That seemed to be his intention with regard to Latin America and elsewhere. But that is not how we regard it. Europe is a bulwark of democracy and stability in a highly unstable world. We are surrounded by volatile areas and by countries and regimes with which our relations can be difficult and potentially dangerous—the Middle East, Eastern Europe, the Soviet Union and Africa. Contrary to what the right hon. Gentleman said, I believe that one of the Community's great successes to date has been the progress made in the co-ordination of the foreign policies of member States.

Working together, the Community is a powerful force—for example, in the United Nations where the Nine regularly vote together—and it has played a helpful role on Rhodesia and on the CSCE. The European Council in Venice last month considered the problems of Afghanistan and the Middle East. We believe that we have made a valuable contribution in both areas. On Afghanistan, the right hon. Gentleman referred to the excessive credit arrangements, once again abstracting himself from the past. But who made those excessive credit arrangements? The Leader of the Opposition, and his predecessor as Prime Minister, went off to Moscow in 1975 and made an absolutely ludicrous trade agreement. The right hon. Member for Stepney and Poplar may have been Secretary of State for Trade at the time, but all the time he is abstracting himself from the past.

Mr. Dalyell

The right hon. Gentleman referred to a valuable contribution on Afghanistan. What valuable contribution?

Sir I. Gilmour

The hon. Gentleman is not normally impatient, but in this case he is, because I was just about to expand on that subject, I hope to his satisfaction.

Mr. Shore

The right hon. Gentleman may find it difficult to believe, but I was being as non-controversial as I could. I am a little puzzled by his reaction. As I understand it, it is the Government's policy not to make over-favourable credit arrangements with the Soviet Union. I willingly concede that the arrangements made by the West in previous years have been extraordinarily generous. It is essential that there should be a co-ordination of credit policy, and I simply ask the right hon. Gentleman what progress had been made in this area in regard to political co-operation.

Sir I. Gilmour

Consensus arrangements have been reached, and the right hon. Gentleman might argue that they are still too favourable. However, they represent a considerable improvement.

On Afghanistan, my right hon. and noble Friend's proposal for a neutral and non-aligned Afghanistan, launched by the Foreign Ministers of the Nine at their meeting on 19 February, was, I believe, an important move. It demonstrated the hollowness of Soviet excuses for their invasion, and at the same time pointed a way forward for all countries with a genuine interest in peace. It has won widespread support and has influenced the views of many other countries. The Islamic countries, which are currently in the forefront of attempts to find a solution to the problem, have found these ideas helpful, and the Nine's proposals remain on the table.

However, Afghanistan's problems cannot be seen in isolation. The right hon. Gentleman referred to the Middle East and criticised the European initiative. He seemed to think that the United Nations General Assembly resolution was caused by the European initiative, which is a bit far-fetched. He seemed to blame the Bill on Jerusalem, which had gone through the Knesset, on the European initiative, which seems even more farfetched. It is our view that we cannot condemn the Soviet occupation of Afghanistan and ignore the parallel which the Arabs draw with Israeli occupation of Arab terroritories—something about which the right hon. Gentleman did not speak—nor can we call for the Soviet Union to let the Afghans determine their own future and deny the same right to the Palestinians.

Moreover, instability in the Middle East can only be to the advantage of the Soviet Union. That is why the nine Heads of Government agreed at Venice to send a mission to the Middle East to see whether there is a contribution which Europe can make to achieving lasting peace in the area.

Mr. Shore

I very much hope that the right hon. Gentleman has overstated his own position. Is he seeking to draw any precise parallel between the circumstances in which Israel came to occupy the West Bank, from which we all wish her to withdraw, and the Soviet invasion of Afghanistan? That is the distinct impression that his words have given.

Sir I. Gilmour

All that I was saying is that we cannot ignore the parallel which the Arabs draw in regard to Israeli occupation of Arab territories, and I agree with the right hon. Gentleman that that occupation is something which should be brought to an end. Many differences can be drawn between the two things—I entirely concede that—but I would have thought that the House would have been united in wishing to bring both to an end.

As a preliminary to the European mission there, the Europeans set out their own view of the problem, which is that a solution to the conflict must be based on the principles of guaranteed security for Israel and political rights for the Palestinians. These principles must be respected by all concerned. We do not believe that they are incompatible. On the contrary, we believe that a settlement based on them can be freely negotiated and accepted by those concerned. That is the objective towards which we are working. It in no way conflicts with the Camp David process, but complements it. As the House will be aware, Mr. Gaston Thorn, as Chairman of the Council of Ministers, has just embarked on the first round of his talks.

The mission to the Middle East is a big step forward for Europe, because hitherto Europe has often reacted after the event. Now we have an active European diplomacy which is seeking to forestall a crisis. Again, it is a problem which Europe cannot solve on its own, but any contribution which Europe can make will also be a contribution to stability and security throughout the West.

Of course, there are Labour Members—I think that the right hon. Gentleman can be included—who say that there is no need for Britain to take part in the great enterprise of shaping the political and economic structure of our continent. But our friends elsewhere in the world do not agree. They, including our traditional allies, want us, who still have a significant voice in world affairs, to be a full member contributing to the strengthening of the Community. It is significant that in their official statement on the outcome of the talks with my hon. Friend the Minister of State, the Saudi Government referred to The effective role played by Britain on the international level generally and especially within the European Community". This role helped to give importance to the existence of strong ties between the Saudi and United Kingdom Governments.

The right hon. Gentleman made a number of points about the Community's external economic relations—

Mr. Shore

Before the right hon. Gentleman turns to that matter, can he say anything about the points that I developed at some length on arms trade, and the need to limit in some way what is now becoming an absolutely crazy accumulation of arms?

Sir I. Gilmour

I know that there are far too many arms in the Middle East, but as the hon. Member for Sheffield, Heeley (Mr. Hooley) pointed out, we and Europe are not the largest suppliers. There may be room for an initiative in which all the major powers can take part, but it seems to me that at present we are trying to produce a political settlement quickly rather than to deal with a long-term problem. This is where the right hon. Gentleman and the Government differ.

It seems to us that, if a political settlement emerges, the arms crisis—if that is the right phrase—will solve itself. However, I agree that there are many arms in the Middle East. As the right hon. Gentleman knows, that is a problem which has defied successive Governments in all parts of the world, and at present I cannot say that I have an effective solution to what has eluded the abilities of previous Governments.

The right hon. Gentleman made a number of points about the Community's external economic relations, and my hon. Friend will have more to say about that later. It is worth recalling that the Community currently contributes about 39 per cent. of all economic aid to the developing world. That must be compared with the 25 per cent. contribution made by the United States, and the 1 per cent. contribution made by Soviet Russia. We take 25 per cent. of all developing country exports, the same figure as the United States. Soviet Russia takes 2 per cent. of developing countries' exports.

Through the Lomé convention, in the negotiating of which the right hon. Lady the Member for Lanark (Dame Judith Hart) played a large part, the Community offers special developmental assistance in the form both of trade concessions and financial aid to 58 African, Caribbean and Pacific countries, of which 29 are members of the Commonwealth. It has a generalised scheme of preferences giving developing countries privileged access to its markets. It has a food aid scheme, an emergency aid scheme and a growing aid programme to countries outside the Lomé convention.

On the external trade front, the Community has built up an extensive network of trade relationships with Third world countries, which gives it immense weight in international trade negotiations, such as the MTNs and the multifibre arrangements. These agreements and arrangements cover a wide range of individual countries and groups of countries, both in the developed and developing world. The only major gap is Eastern Europe. But here also the Community interest lies in the establishment of normal trade relations with individual East European countries, and it has recently succeeded in initialling a sectoral agreement with Romania.

As far as Britain's economic relations with the Community itself are concerned —about which the right hon. Gentleman had much to say—the Community's domestic market, strength in international economic negotiations and primary position in world trade gives us a unique opportunity. Throughout our history, now as always, Britain has lived by trade. It accounts for one-third of our GNP. How could we replace the advantages that we now get from tariff-free access to the Community market of 250 million people? Our own market of a mere 55 million offers no comparable opportunity.

Mr. Marlow

I am grateful to my right hon. Friend for his courtesy in giving way. This argument about how important the European market is and how important it is for us to keep within it has been advanced on many occasions. Ministers tell us repeatedly how our exports have increased to the other countries in the Community. However, our balance of trade in manufactured goods with the European Community, which eight years ago was in balance, is now in deficit to the extent of £2,500 million. We have a different economy and different problems from our European partners, and by associating with Europe in this way we are causing some of the industrial problems that the Government are having to face at the moment. In future, will my right hon. Friend please deal with the problems of the balance of trade between Britain and the Community rather than with the simple fact that it is a large export market?

Sir I. Gilmour

I was glad to give way to my hon. Friend. The reason why I hesitated momentarily was that I knew that he would make that point, and I was about to deal with it. Before I do so, I should like to say that it is for British business to see the advantage of this vast Community market. Equally, the British consumer stands to gain from a wider range of cheaper products. No less a person than the right hon. Member for Bristol, South-East (Mr. Benn) recognised that in 1971, when he said I can see really significant opportunities for ordinary people in Britain and in the Six if we can persuade the British public to vote for entry. Indeed, the evidence for improvement already exists. Contrary to what some hon. Gentleman on both sides of the House tell us, we have in fact done better in our trade with the Community since we joined than we have with the rest of the world. The Community is by far our fastest growing export market. The value of our visible exports, including oil, to other member States increased 500 per cent between 1972 and 1979, compared with an increase of visible exports to the rest of the world of 250 per cent. over the same period, Forty-two per cent. of our visible exports now go to the Community, compared with 30 per cent. before we joined. West Germany has taken the place of the United States as our single largest export market, taking £4.2 billion.

In 1979, United Kingdom visible exports to the Community increased four times more than our exports to the rest of the world compared with 1978. As I have said, these figures include the export of oil. There is no reason to exclude oil any more than there is to exclude our other exports. My hon. Friend the Member for Northampton, North (Mr. Marlow) referred to our record in manufacturing trade since accession. The unhappy fact is that our share of world exports has fallen for several decades. Since our accession we have at least been able to achieve a rise in United Kingdom exports to the Community and a share of total Community imports. Between 1972 and 1979 the export-import ratio of our trade in manufactures with the Community deteriorated by 19 per cent.—

Mr. Marlow rose—

Sir I. Gilmour

My hon. Friend should listen to what I am saying, and then he would have no need to intervene. Between 1972 and 1979, the export-import ratio of our trade in manufactures with the Community deteriorated by 19 per cent. while with the world as a whole it deteriorated by 22 per cent. In 1979, our exports of manufactured goods to the Community increased by more than 20 per cent. over 1978, whereas our exports of manufactures to the rest of the world increased by less than 5 per cent. over the same period.

Mr. Douglas Jay () Battersea, North

If the right hon. Gentleman really expects to be taken seriously on this point, having given the figure for the increase of our exports to the Community since we joined and to other parts of the world, will he now give us the corresponding figures for our increase in imports from the Community and the rest of the world?

Sir I. Gilmour

I do not think that the right hon. Gentleman was listening. I pointed out that our ratio of exports to imports has deteriorated less with the Community than with the rest of the world.

Mr. Jay

The right hon. Gentleman's so-called import-export ratio means very litlte. He has given us the straight figures of the increase in exports. Will he now give the corresponding figures for the increase in imports?

Sir I. Gilmour

The right hon. Gentleman said that the export-import ratio means very little, because it does not happen to suit his argument. It is by far the best direct index of trade with the rest of the world, and he cannot shrug it off.

Mr. Ron Leighton () Newham, North-East

Will the right hon. Gentleman give way?

Sir I. Gilmour

No, I think I must get on. We also gain increased investment through membership. Foreign firms—

Mr. Leighton rose—

Sir I. Gilmour

No, I shall not give way. The right hon. Member for Stepney and Poplar (Mr. Shore) made a long speech and I have a nasty feeling that mine will be even longer.

Foreign firms have shown that they are more likely to invest in Britain as a member of the Community than if we were outside. Since we joined, United States and Japanese investment in the United Kingdom has increased substantially. In the period 1969-72, immediately before we joined, we took 22 per cent. of United States non-oil direct investment in Europe. In the period 1972-76, that figure had grown by nearly 50 per cent.

We in Britain depend on the orderly development of world trade. As a major trading nation, heavily dependent on our export markets, we share with our partners a common interest in stemming any further slide into restrictive trade practices. Alone our voice would be very small.

Mr. Dykes

Will my right hon. Friend give way?

Sir I. Gilmour

I shall give way in a moment.

The Community is possibly the most powerful negotiating unit in the world. It accounts for 17 per cent. of world trade—over 30 per cent. if intra-Community trade is included—compared with a United States share of 14 per cent. and a Soviet Union share of 2 per cent. This kind of economic weight is of major importance in achieving our objectives in world political and economic negotiations.

On the other hand, when measures of protectionism have been inevitable because of sudden new competition, the Community has shown that it can act much more effectively than we could have done alone. The Davignon steel anticrisis measures introduced in January 1978 are a case in point.

I believe that we shall increasingly experience the benefits of collective economic action, particularly in high technology, where the cost of research is astronomical. This is a road that we in Europe must follow. The atomic fusion research project at Culham is an example of such an initiative. Airbus, on which a number of member States have co-operated, is now selling on a scale second only to Boeing.

Mr. Dykes

Will my right hon. Friend give way?

Sir I. Gilmour

I should like to get on. I am sure that my hon. Friend will have a chance of catching your eye, Mr. Speaker.

I turn now to the budget agreement on which the right hon. Member for Stepney and Poplar made a number of disobliging comments. As the House has already had an opportunity to debate the agreement in detail, I shall not go over the details again. Its importance lies in the opportunity that it has created for the future, but it is by any standards a remarkable achievement.

I emphasise that the major decisions of principle concerning the amount, duration and timing of payments to the United Kingdom were settled on 30 May. Satisfactory progress has so far been made on the legislative texts which will implement the agreement.

At the Foreign Affairs Council on 22 July, broad agreement was reached on the draft regulation amending the 1975 financial mechanism. Work on the article 235 regulation, providing for supplementary Community expenditure in the United Kingdom, is continuing at official level and will come to the Foreign Affairs Council on 15 September.

The significance of the budget agreement is twofold. In the first place, it provides major short-term relief both in the form of cash and in the support of expenditure programmes. But much more significant in the longer term is the Community's pledge to resolve the problem by means of structural changes. The Commission is to examine the development of Community policies with the aim of preventing the recurrence of unacceptable situations for any member State.

The whole operation of the Community budget and of the common agricultural policy will be reviewed. This is a major undertaking by the Community. This is the best opportunity that the Community has ever had to get the problems of CAP expenditure under control and at the same time to work towards a budgetary structure which 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.

The enlargement of the Community therefore provides both an occasion and an impetus for structural change within the Community. The cost to the member States will depend on the progress of restructuring and of the accession negotiations. But there will also be financial benefits for the United Kingdom in terms of opportunities for increased trade. More importantly, the United Kingdom has a broad political interest in supporting democracy in the applicant countries. Therefore, we remain committed to the success of the Portuguese and Spanish entry negotiations, as were the previous Government.

In approaching the restructuring process, we have no rigid position at this stage. Much preliminary work and internal discussion remain to be done. We shall aim to have this completed well before the Commission produces its proposals in June 1981.

Mr. Shore

Perhaps I may encourage the Lord Privy Seal to look at my suggestion on this matter. If the Government are doing their own work in preparation for this collective discussion with the Commission and other member States about the restructuring of the finances and policies, it could be helpful to have this in Green Paper form so that we may have a debate on it. It is important that we should collectively do what we can to assist. More change is needed.

Sir I. Gilmour

I shall bear the right hon. Gentleman's suggestion in mind. Whether or not there is a Green Paper, we need have no fear that the subject will not be debated in the House. I am sure that it will not suffer from lack of attention.

Even at this preliminary stage it is possible to identify areas where some form of structural change may be desirable. The operation of the own-resources system is one example. There have been suggestions that a ceiling might be placed on the level of net benefit that member States draw from the Community as well as on the level of their net contribution.

In a statement on 5 June, the German Cabinet said: The Federal Government emphatically agree with the necessity expressed in the European Community decision to correct existing imbalances in the Community's budget by structural changes. It went on to say: The question must be put and discussed whether a maximum limit should be arranged for the net contribution of any individual member State and whether a similar principle should be applied to member States that are net beneficiaries. That demonstrates that our partners also see in the agreement of 30 May an opportunity to consider significant structural changes.

The proportion of the Community's expenditure on agriculture will also have to be examined. There are two aspects to this: how to reduce the proportion of the budget devoted to agriculture—at present nearly 75 per cent.—and how to increase that devoted to non-agricultural expenditure. The problems of the CAP are well known. Expenditure on it has been growing at a much higher rate than the increase in the Community's "own resources"; and in 1980 expenditure on surplus disposal will account for well over half the total Community budget. The dairy surplus is particularly acute.

Successive Governments have agreed that the wasteful aspects of the CAP must be eliminated and that its overall cost must be brought under closer control. In the short-term, the present Government have negotiated price settlements in 1979 and 1980 averaging just over 3 per cent. per annum—much less than the 7.5 per cent. annual average negotiated by our predecessors. Moreover, these increases have been much less than the rate of inflation, and the price settlements that we have negotiated have given the United Kingdom greater benefit in 1979 and 1980 than any negotiated under the Labour Government. Specific measures to tackle the dairy problem have also been negotiated. We have retained the butter subsidy for the British housewife and have obtained a generous deal for the whisky industry.

We shall continue to press for restraint in agricultural prices, but it is clear that the Community faces a serious problem which cannot be successfully solved in the context of the annual price settlement alone. The fact that as a consequence of the budget agreement other member States now have to provide an increased share in the cost of the CAP gives them an added incentive to review its operations.

The German Chancellor and French Ministers, including President Giscard, have clearly indicated their view that considerable improvements in the workings of the CAP are necessary. For example, on 5 June, speaking to the French Chamber of Agriculture, President Giscard said: The fundamental principles of the CAP are sacrosanct. But it is true that certain expenditure is growing too quickly and some mechanisms are out of date. We have no quarrel with the objectives of the CAP set out in article 39 of the Treaty and see no reason why adequate changes to the CAP cannot be made which are fully consistent with those objectives.

I turn now to the possibilities that exist for expanding the non-agricultural side of the Community's activities. We do not believe that new policies should be used to justify breaking the 1 per cent. VAT ceiling. We shall be no less rigorous in our demands on the Community to control its expenditure than we are on our own public expenditure. Community involvement must be confined to those areas where the Government have a role to play. But there are many such areas.

The budget agreement of 30 May showed just how effective the Community is at finding solutions to typical problems when the pressure is on. It showed that when a member State has a serious problem the Community responds.

Fisheries are one of the crucial areas of negotiation to be faced in the autumn. As there is to be a debate on the subject next Tuesday, I propose to leave that matter to my right hon. Friend. That has the additional advantage of considerably shortening my speech.

Mr. Richard Shepherd () Aldridge-Brownhills

Does my right hon. Friend agree that the argument on percentage increases or decreases in the volume of trade between countries is particularly specious in the way in which he has used it? An increase in trade to Europe from £1 to £2 could be diagnosed as a 100 per cent. increase, whereas an increase in trade from Europe to this country from £1,000 million to £1,000,000,002 could be seen as a very small percentage. My right hon. Friend used those percentages as if they demonstrated his argument. I did not see how they did.

Sir I. Gilmour

If my hon. Friend refers to Hansard, he will see that he has misunderstood the point. I was comparing like with like and not £1 one way with £1,000 in another. Trade can be measured only by export-import ratios. I repeat that we have done less badly in relation to Europe than we have done in relation to other countries. If my hon. Friend is still dissatisfied after he has looked at the relevant passage in Hansard, perhaps he will write to me, and I shall endeavour to answer his points.

The period covered by the White Paper saw the first direct elections to the European Parliament, the Government warmly welcomed direct elections as a way of increasing the participation of the people of the Community in its affairs. The Members of this new Parliament have been active and energetic in their work. The most striking example of their energy has been the rejection of the Community budget, of which I have already spoken. Whatever view is taken of this Act, within the scope of the treaties, the Parliament has the full right to use its existing powers It would be a sign of weakness in its Members if it did not.

Mr. Dalyell

I wish to ask two questions of fact. Do the Government think that the next European parliamentary elections should be held on the basis of proportional representation? Secondly, what is being done, if anything, about the vexed and peripatetic nature of the European Parliament, which sits in Strasbourg, Luxembourg and Brussels, and about the costs involved? Has there been any fresh thinking about a permanent seat for the European Parliament?

Sir I. Gilmour

The answer to the hon. Gentleman's question is "No". In the first instance, it is for the European Parliament to come up with a proposal. That proposal will then be agreed, or otherwise, by the various Governments concerned. The peripatetic nature of the European Parliament gives rise to great exasperation and inconvenience among its Members. However, the member States must agree unanimously about any proposals. I would mislead the House if I said that I saw any immediate prospect of such unanimous agreement being achieved.

Mr. Tom Ellis () Wrexham

Is it not true that the member States are obliged to agree on the seat of the European Parliament? That is not quite the same thing as agreeing on where Parliament meets.

Sir I. Gilmour

They are obliged to agree on the seat of Parliament and I take that to mean where Parliament meets. I am not sure whether I have understood the hon. Gentleman's question. At present the European Parliament is more or less obliged to meet in three places. Many Members of the European Parliament would like it to meet in only one place. I understand that, but the difficulties of deciding in which of the three it should meet are great.

The right hon. Gentleman gave us an account of the Opposition's approach—or rather his approach—to the Community. He said that he gave it in the most uncontroversial terms possible. It must have cost him a great effort. I am not sure that he was entirely successful. In addition I am not sure how authoritative his account was.

On this, and on many other matters, the Opposition speak with more than one voice. There are those who appear to share the views of the right hon. Member for Deptford (Mr. Silkin) who said on 5 June: We therefore believe that the time has come for the Labour Party to maintain as its clear policy that we ought to leave the Community and that this ought to be a part of its manifesto. On the other hand, there are those like the right hon. Member for Plymouth, Devonport (Dr. Owen) who said: A more certain recipe for splitting the Labour Party cannot be imagined. He, and the right hon. Member for Stockton (Mr. Rodgers) and Mrs. Shirley Williams were courageous when they said that they would have no part in a manifesto commitment to withdrawal. There are also those who prefer the comparatively safe middle ground occupied by the Leader of the Opposition, who said on 11 June: I have always been a pragmatist about the European Community. That is rather different from the earlier quotation that I gave, which was made when the right hon. Gentleman was in power. I am not sure whether his brand of pragmatism is proving a successful form of leadership.

Finally, the right hon. Member for Stepney and Poplar constantly hints at the possibility of withdrawal, without throwing the responsibility of his office behind it. We look forward to hearing where he stands, if, indeed, he knows. Whatever criticisms the right hon. Gentleman can find about the working of Europe—and some are certainly justified—he has singularly failed to produce an alternative. We know that he does not represent all his party, or all of the Opposition Front Bench.

Belatedly, I should like to conclude with four points. First, the fundamental reasons for our membership of the Community are every bit as valid now as they were when successive Governments of both parties in the 1960s applied for entry, and when we joined in 1973.

Second, while it is true that the economic benefits have not flowed as freely and as fast as was sometimes predicted, one must ask how much of that is really the fault of the Community, and bow much was due to other causes—not least world recession post oil-shock—and how much due to our own industrial decline which long preceded our entry into the Community.

Third, there is nothing to be gained and everything to be lost, by changing our mind about Europe now. The House voted overwhelmingly in 1971, and the country in 1975, for membership of Europe. We did not do it on a whim. We did so because the alternatives looked unattractive. We have now come through and, with the budget settlement, largely overcome the problems of transition. Our business men have just adjusted to vast increased trading prospects with Europe, Our partners are just now beginning to accept us as a full partner in the enterprise, with a stake in its future. It would be madness—after seven short years—to throw everything into reverse, and throw away our effort and our reputation with it. There is no case for doing so. I therefore agree with the right hon. Member for Devonport, and others, when they said recently: What alternative do those who oppose British membership of the Community propose? Where also can peace, jobs and freedom be more effectively safeguarded? As the 51st state of the United States? As a neutralised, isolated, ineffective island on our own? That seems to me to be very well said.

Finally, we in the Government have shown by our actions our wholehearted commitment to Europe. It has paid dividends and we have had some remarkable successes. We shall carry on the good work. There is no better course for Britain.

6.17 pm

Mr. Julius Silverman () Birmingham, Erdington

As chairman of the Scrutiny Committee, and having sat on that committee since its inception, I know that it has a unique position from which it can view certain of the Community's activities. I have always been impressed by the astonishing dichotomy between the two sides of the Common Market: on the one hand the Commission, and, on the other members States and the Council of Ministers. The Commission consists of committed federalists who sometimes go beyond the desire for federalism and direct their activities towards the attainment of a unitary State. The member States, as exhibited in the Council of Ministers, pursue their own naked self-interest. That is a remarkable dichotomy.

The Commission introduces various directives and legislation, some of which are intended to facilitate trade. Some of those measures are intended, under the cloak of harmony, to spread common legislation among the member States. Some of the measures have nothing to do with harmony and are just pieces of legislation that many of us think should solely affect member States, and should be administered by themselves.

Only recently, there was the question of doorstep selling. I do not know why the regulation of doorstep selling has anything to do with the Community. It is not as if French salesmen will operate in Britain, or British salesmen will operate in Venice. But in matters such as this the Commission is trying to extend its empire and influence in order to proceed towards a federal State. Some of the proposals are well-intentioned, others are even useful. But some are half-baked and most should remain within the competence of member States themselves.

The member State, on the other hand, are pursuing their own interests, in most cases blatantly. Sometimes it is done by horse trading and sometimes by defiance of Community regulations. In international affairs anyone who is realistic can expect nothing else, because that is how nations behave. The only thing that we can hope is that while we are in the Common Market we should behave in the same way and act in our own interests.

We have a £4,000 million deficit in our balance of payments with the Community in manufactured goods, and this is a very serious matter. I am surprised that the Government take it so lightly. I know the difficulties in a Community that believes in free trade, at any rate in some respects. The message is difficult to drive home, but £4,000 millon worth of excess imports means so much unemployment in this country. A good deal of our unemployment and much of the crisis in our motor car industry, for example, is due to this £4,000 million deficit in the balance of payments. This is a matter which the Government must take seriously. If the Community is to continue, this issue must be taken seriously and there must be some method of dealing with it.

It is said that this is just a matter of competition, but I wonder whether it is. We had one instance the other day when some of us saw a Minister about the Brassfounders Association, which deals with the sale of taps and bath equipment, in which market there is enormous Italian penetration. The association says that it cannot prove that there is a concealed Government subsidy in Italy, but it does not understand how Italian manufacturers, with the same labour costs, largely the same machinery and the same prices of raw materials, which are decided by international markets and organisations, can sell their goods in this country at less than half price. The association says that it does not know how that is done. It is like a conjuring trick. One knows that there is a deception, but one does not know how it is done. This matter is duplicated in other areas. I do not think that the Government should overlook this and say that we are not competitive enough. After all, we sell about £20,000 million worth of manufactured goods to the rest of the world. Our goods cannot be so bad or uncompetitive.

Mr. Dykes

Does the hon. Member agree that, if one looks at the world-wide figures, one will find that we have a deficit with every advanced area in the world? We have surpluses with the underdeveloped countries, excluding the oil producers.

Mr. Silverman

I have not got the figures, but I do not think that that is correct. I am talking about manufactured goods. If it were not for our deficit with the Common Market, one would find that we were in surplus with the rest of the world. Certainly, our exports have performed very well elsewhere—£20,000 million is quite a good performance and it speaks very well for our manufacturers. The argument that we are uncompetitive and that our goods are unsuitable or of low quality does not seem to stand in the light of our performance.

Sir I. Gilmour

The hon. Member is quite right. Our exports have done very well in many parts of the world. He is wrong to imply that they have not done well in Europe. Germany is now our biggest export market.

Mr. Silverman

I concede that. When one completely wipes out all tariffs, one is bound to get more exports to the Community, and more will come in from the Community to us. But the balance is totally against us. That is the point. This deficit is something that the Government must take seriously. If they desire to remain in the Common Market, this matter must be negotiated and it is no less important than the matter of convergence about which we have arrived at a conclusion.

I wish to deal with convergence. I have spoken about it before. Not all of us thought that it was an entirely satisfactory agreement, but there is one aspect on which the Minister can give us more information today. Leaving aside the financial mechanism to which the Minister has referred, there is also the question of the supplementary measures for assistance which consists of about two-thirds or more of the total deal. My own calculation is that this would involve projects amounting to about £750 million, allowing for the fact that the Government will have to put in at least 30 per cent. of their own money.

Can the Government give more information about the sort of projects that have been prepared, what their contribution is likely to be under the agreement, whether any have been submitted to the Commission, and where they will be? As the representative of a West Midlands constituency, I have a constituency interest. I understand from the Commission document and from the Government supplementary memorandum that the project will be confined to the assisted areas except in special cases or in the case of coal. There are areas outside the present boundaries of the assisted areas which also require urgent assistance. There have been complaints from the West Midlands about the fact that no assistance goes there at all. In my constituency—and it is just one constituency—there has been declared, within the last 18 months, the prospect of no fewer than 10,000 redundancies. That is just one constituency in the once-prosperous West Midlands. Yet, except in special cases, no assistance will come to these areas at all. I have mentioned just a few issues that strike me about the Community and which cause many of us grave concern. I expect the Minister to comment on them.

6.30 pm

Mr. Robin Squire () Hornchurch

I hope that the hon. Member for Birmingham, Erdington (Mr. Silverman), who is the Chairman of the Scrutiny Committee, will forgive me if I do not follow the same line as he did. However, I shall deal with the natural characteristic of countries to fight for their own corner in Europe.

I shall examine several areas that are demonstrative of the reason why we are in Europe. They are areas that are beyond the power of us, as a country working alone, to determine. They serve as a remaining sound reason why we should be operating in the various arenas of Europe and why we must keep reminding the faint hearts, let alone people who have never committed themselves to the ideal, why it is so important that we are in Europe. We should remind ourselves of the advantages that we obtain from that co-operation.

It is a pity that, almost alone of the European countries, Britain continues to refight the battles of yesterday. We are never satisfied after taking a decision to work at it within the system. We always return to the arguments of yesterday and yesteryear.

We should congratulate ourselves on the fact that last year the biggest democratic exercise of opinion for many years took place. Nine countries came together and their people were elected to take part in a massive democratic exercise. Goodness knows, we gave the European Assembly little enough power, but within the first year one of the two great powers that we granted to the assembly—namely, the power to reject the budget—has been exercised. Moreover, in exercising that power the European Parliament did as much to assist Britain's case for a better budget as many acts and speeches in this Chamber. We should not be chary of recognising that gesture. Many who voted for the rejection of the budget were from countries which have not benefited from the redrawing of the budget following the successful negotiations.

Of course, progress is slow. Would it ever be anything else? Would nine sovereign countries coming together, with a history of working on their own and sometimes opposing each other in war and in trade, change overnight? Of course not. Slowly, and bit by bit, in areas where we can have no individual standing, such as foreign policy, the countries are moving together and we are seeing some of the benefit of our membership.

I turn to the question of oil. One of the reasons for the last year in Europe being disappointing was the hiking up of the price of oil, which is leading to a world-wide recession. The invasion of Afghanistan was also a worrying factor, but, again, that is no fault of the EEC. I welcomed the Strasbourg summit in June and the commitment to greater conservation, but many people in Britain wish further steps to be taken in Europe generally. In a short time we need to reduce our dependence on outside forces. We can do that by the way in which we use and conserve imported energy.

We have had at least two debates on the Brandt report, which highlights the problems of energy. The report states: The use of energy in the world is grossly unbalanced. The consumption of energy per head in industrialized countries compared to middle-income and low-income countries is in the proportion of 100: 10: 1. One American uses as much commercial energy as two Germans or Australians, three Swiss or Japanese, six Yugoslavs, nine Mexicans or Cubans, 16 Chinese, 19 Malaysians, 53 Indians or Indonesians, 109 Sri Lankans, 438 Malians, or 1072 Nepalese. All the fuel used by the Third World for all purposes is only slightly more than the amount of gasoline the North burns to move its automobiles. We know the facts to be true. We expect the Western countries to give a greater lead in conservation. I welcome the steps taken so far, but I urge the Government to bear in mind that research shows that for comparatively little action there is a real and viable saving in oil used. If we do not take action we shall let down not only our partners but the Thirld world.

I turn to the question of competition as it relates to energy. I am becoming anxious about certain pricing policies I refer specifically to gas. There are several large manufacturers in my constituency. They say that the EEC competition policy is starting to affect them because they are up against competition from Germany, Belgium and Holland. Rightly or wrongly, they believe that such countries provide considerable hidden subsidies for gas. Gas is one of our primary sources of energy, and subsidies in Europe can price our manufactured products out of the market.

The problem can be resolved only in an international forum. We cannot resolve it alone. I urge our representatives to bear in mind that all the incentives in the world, in terms of removing non-tariff barriers, let alone removing tariff barriers, will not assist us ultimately if we are unable to operate with genuine free competition. We might be forced, on somewhat artificial grounds, to take refuge behind barriers that we have to erect because we are unable to recognise what is happening in Europe.

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

If waiting for international agreements on energy prices means the closure of a number of manufacturing industries in Britain, including vast sections of the paper industry, is there not a duty on the Government to take initiatives and, if necessary, introduce subsidies to protect such industries?

Mr. Squire

The hon. Gentleman will forgive me, since I do not have the details of the industry to which he referred. I certainly agree that it is the Government's duty to ensure that we are involved in fair and free trade. If we discover that our competitors are not involved in fair and free trade and our manufacturing industry is put at risk, I am sure that the Government will accept their responsibility to act.

Earlier this year I had the pleasure of visiting China. I admit that I was not the most renowned visitor from the Government side of the House. I commend the activities of the European Commission and Parliament, not only for the 1978 EEC-China trade agreement but for setting up of the Joint Committee in 1979. We have there, in a country that is virtually the unnamed leader of the Third World, unrivalled opportunities for our country and Europe generally to expand on trade and for an enormous amount of cross-country co-operation on scientific advice and shared experience. The possibilities are almost endless. I trust and urge that our country and leaders will be fully aware of this and prepared to give what assistance is necessary to a country that is still 15 or 20 years behind us in most aspects of technology.

The Opposition may think that China is poised to be a great national Power today. They must not run away with that idea. She is not. She is many years behind. But she is able, given sufficient assistance and the correct form of assistance, to play a major role in the Third world and to be a valuable potential ally and friend to Europe if we so see her that way.

I am conscious that in a debate of this nature one could speak for a considerable time. I shall not do so. Perhaps I shall return to the theme that I enunciated at the beginning. I am not surprised that progress in Europe is slow and that those opponents of the European concept who have remained so throughout the 1960s, the 1970s, and now, presumably, the 1980s, will have many targets that they can attack and many Aunt Sallies that they can erect and then knock down of their own volition. That is the very way of things. Those of us who still believe in the ideal know that many young people say "We believe in the European ideal and we want to find some way in which to work to and for it. We believe in recreating something that we have come through in our youth without the same shadow of war in Western Europe that our parents faced."

We now face, for other reasons perhaps, another shadow of war, albeit not necessarily in Western Europe but as a result of increasing tensions in the Western world. Perhaps the greatest responsibility that our European partners and ourselves now face is to ensure that that shadow is removed and that today's children can face their future with the same assurance that others enjoyed in the past 15 years.

6.43 pm

Mr. Russell Johnston (Inverness) The grave economic circumstances in which we find ourselves make it extremely difficult to discuss our situation within the Community other than on a short-term basis. It is quite unavoidable that the rate of inflation and the means of abating it, the grim and growing numbers of our unemployed and the search for jobs, the problems of interest rates and the overvaluing of the pound and their impact on our competitiveness, should wholly preoccupy us. Nevertheless, it is of the most profound importance to our whole economic and political future that we take time to consider in as calm a way as we can—perhaps ridding ourselves of some of our inbuilt historical prejudices—our place within the Community, which, I quite readily accept, means evaluating our experience thus far and trying to determine some settled future political approach. We have had no settled political approach to the Community since we entered it.

Short-term pressures within industrial recession have continually postponed such an approach since 1973. I do not think that we can postpone it any longer. We must define our concept of the way in which the Community is to evolve and what our place will be in it.

Our political structures in this country make this particularly difficult—almost, I might say, peculiarly difficult. I am not saying that because I accept the argument that in some not terribly well specified way there is a qualitative difference between the nature of our difficulties and those of the French, the Germans, or the Dutch of such significance as to make their joint resolution, through common institutions, impossible—the intrinsic incompatibility to which I think the hon. Member for Northampton, North (Mr. Marlow) referred yesterday and about which we have heard so often from the right hon. Members for Down, South (Mr. Powell), Stepney and Poplar (Mr. Shore), Battersea, North (Mr. Jay) and others. No—I say it because I think that the confrontation techniques of our two-party system lead to such violent changes in policy, one of which we are going through at the moment, which inevitably overlaps into Community affairs generally and makes the maintenance of consensus vis-a-vis this country and the Community exceptionally difficult.

A central point of the argument for electoral reform is that it provides, through coalition, compromise and the development of the habit of co-operation, a much more stable political climate within which industry can function.

Alone of the Nine, Britain suffers from this oscillatory form of government, with the emphasis on divergence and imcompatibility. It is quite noteworthy—as I am sure the Minister, if he goes there, will observe—that in the European Parliament it is the British, uniquely, who use every debate as a means of extending their domestic, doctrinal disputes on to the European stage. Perhaps the hon. Member for Crewe (Mrs. Dunwoody) will comment on that. I think that it is very much a product of our system. It is a characteristic, also, which I think indubitably contributes to the continuing tendency for the British to perceive the Community, despite our being members for seven years, as a group of States apart from ourselves, committed—some would say almost unanimously—to the pursuit of policies injurious to us.

For example, for the previous Labour Government it was fair to say that the fact that Chancellor Schmidt was a Social Democrat was a fact of less importance than that Chancellor Schmidt was a German. The concept of transnational political co-operation is one that is extremely difficult, within our tradition, for our people and politicians to accept.

Mrs. Gwyneth Dunwoody () Crewe

Did the hon. Gentleman notice, in the time when he and I were in the European Parliament, that the Socialist group was the only one that contained nine different nationalities, whereas the Liberals had only two? He spoke about the problems that only the British bring to the European Parliament. Has he ever listened to a French Gaullist and a French Communist discussing matters in the European Parliament?

Mr. Johnston

First, with respect to the hon. Lady, her memory is somewhat faulty. It is my recollection that the Liberal group, when we were there, contained not two nationalities but all nationalities bar the Irish.

Mrs. Dunwoody indicated dissent.

Mr. Johnston

Yes—all nationalities bar the Irish. My memory is quite clear on this matter. However, I do not wish to dwell on it.

Mrs. Dunwoody

No.

Mr. Johnston

Certainly I accept that the Gaullists and Communists find themselves in remarkable unanimity. To be truthful. I prefer to see that. Part is due to the nationalism of the French. Part of it is also due to the fact that political extremes very much come together at certain points and manifest themselves frequently in nationalistic form. We see it, too, in this country that it is the extreme Right and the extreme Left who are most frequently the most nationalist. I agree with the hon. Lady in one sense, but perhaps not in the sense that she would wish.

If the Community is to progress, and if Britain is to contribute to it, it will be achieved in the end only by compromise and the recognition that political dialogue and interchange, and political concepts, are more important than nationalist prejudices, notwithstanding the considerable emotional power that they still have.

During the debates on devolution to Scotland and Wales, in which I participated, the hon. Member for Liverpool, Walton (Mr. Heffer), who was a great opponent of devolution, used to ask "What is the difference between the position and problems of the working man in Liverpool and those of the working man in Glasgow?" He used to answer his own question by saying that there was no difference and that we did not need devolution.

Equally, what is the difference between the problems of the working man in Liverpool or Glasgow and those of his counterparts in Lille, Rotterdam or Essen? The same argument holds good. The problems that they all face can be resolved effectively only through political co-operation. Given the nature of nationalism, I do not see how that can be done effectively other than through a common institutional framework such as that which the Community provides.

We have reached the point where we must seek, as a country, to clear our minds. The Community is entering a crucial phase. First, there is the issue of enlargement. It will create great problems. Greece is already a member State. It is an underdeveloped country. There will be no problems with imports of agricultural produce, but there will be problems with Mediterranean product exports. When Spain becomes a member State there will be major problems in the agriculture sector. If the present system persists, Spain will contribute notably to the mountains and lakes that we all criticise. The cost will be intolerable.

Portugal will be in exactly the same position as the United Kingdom as a major importer of food. It will find itself with the same problems vis-a-vis the budget as those in which we found ourselves.

Mrs. Elaine Kellett-Bowman () Lancaster

The problems that the hon. Gentleman says will present themselves with the enlargement of the Community will surely provide the catalyst and essential element to oblige everyone to combine to reform the CAP.

Mr. Johnston

I hope that that will be so. I am itemising briefly the difficulties that we are running into. The three countries will be requiring room for industrial expansion at a time when we have our problems in that regard. They will be looking for support from the regional and social funds.

Secondly, the CAP generally will go through its support ceiling in any event. That will happen before enlargement takes place.

Thirdly, there is the general recognition that the budget requires reform. There is still no clear idea of the form that that will take.

Fourthly, for those of us who are strong supporters of the Community concept, there is the feeling that the Community has worked so far in a period of expansion. That was true at least until British entry. We entered the Community as we began to go into industrial decline. The Community will not have proved itself unless it is effective in a period of recession.

Fifthly, there is the change in the balance of institutions that has been created by direct elections.

The Government must begin to establish guidelines. With all respect to the Lord Privy Seal, he did not say anything very much about what the Government are considering for the future. One of the reasons why the budget debate generated so much heat among our European compatriots was that the British Government's position could not be perceived as being within any general strategy. Indeed, it was not within such a strategy. It was a one-off exercise, and that remains the position despite the talk of long-term effects.

Unquestionably the CAP has an appalling effect on the British budgetary contribution. There is no argument about that. The hopes that there would be a dynamic effect on industry, which would mean that we would not be worrying about it, did not materialise. Everybody talks about reform but no one says how the CAP is to be reformed.

At what stage will the Government make a positive contribution to the argument?

Mr. Teddy Taylor () Southend, East

When is the hon. Gentleman to make a positive contribution?

Mr. Johnston

The hon. Gentleman is becoming excited unnecessarily. I know his great love for things agricultural, which he manifested when he represented Glasgow, Cathcart. He made many speeches in the Scottish Grand Committee upholding the virtues of the agriculture community. I am being sarcastic. I say that for the benefit of Hansard. I always forget that when one speaks sarcastically it seems terribly formal and solemn and indicates exactly the opposite of what was meant when it is read in Hansard the following morning.

Everybody talks of reform. One interesting piece of information—I asked for it when we debated these matters previously, and it was not forthcoming—would be the cost to the Exchequer of reverting to deficiency payments. I do not know whether up-to-date figures are available. The House will recall the famous statement of the former Minister of Agriculture, Fisheries and Food, the right hon. Member for Dulwich (Mr. Silkin).

The Lord Privy Seal kept talking about the CAP taking 75 per cent. of the budget. That is not strictly fair, because it does not take into account the element of the budget that goes towards Lomé and food aid. If we consider the support given to the structure of the policy in terms of own resources, it is probably nearer 55 per cent. than 75 per cent.

Mr. Taylor

On the strict understanding that I am not being sarcastic, does the hon. Gentleman consider it fair and reasonable that people such as he, who are constantly saying to the Government "In which direction do you think the CAP should be changed?" should indicate the direction in which they believe it should be changed?

Mr. Johnston

It is my view that the CAP cannot be changed fundamentally. Secondly, I think it possible to make emendations to deal with problems of surpluses, which are found only in certain commodity areas. Those who condemn the CAP should not overlook the major contribution that it makes throughout a large part of Europe to keeping people working productively on the land and maintaining good and sound social structures.

We require not an attack on the CAP but the production of a balancing concentration on the problems of urban decay, urban problems and industrial problems.

Mr. Marlow

The hon. Member has made a very interesting point. Obviously this is going to require more funds. Is he suggesting that we should increase the 1 per cent. limit on VAT that each country pays into Brussels? If that is what he is suggesting, I think that he will find that he has a very uphill struggle putting that through the House.

Mr. Johnston

The hon. Gentleman can be assured that it has been an uphill struggle throughout the time that I have been a Member of this place. There will be nothing startlingly new about that. The answer to the hon. Gentleman's question is "Yes". I am saying that if we are not to have a major reduction in the CAP and if we want to correct the balance of the budget, it is clear that the budget must be increased.

Mrs. Kellett-Bowman

I agree with the hon. Gentleman that the principles of the CAP, as enunciated in the Treaty, are unexceptional. They are good for consumers, good for farmers and good for production in general. Does the hon. Gentleman agree that the way in which they have been put into practice is wrong and that that must undoubtedly be reformed?

Mr. Johnston

I said that there are certain areas of surplus with which we must deal. There is a difference between what can be described as a prudent surplus and that which is a wasteful surplus.

I revert to the shape of the budget. What are the Government's views on the future of the regional and social funds? The history of this Government and the previous Labour Government is one of talking in general terms in favour of the regional fund but doing nothing in practical terms to increase its size.

I share the view that if we are to correct the balance of the budget and do anything on a Community-wide basis about unemployment and industrial decay, action can be taken only through the two funds. The regional fund might well take a leaf out of the Labour Party's book and employ something comparable to the REP system, which was used so effectively as a measure of regional development within the economy of the United Kingdom when the Labour Government were in office. Unless we have a sound method of fundamentally restructuring the budget we can look forward only to a series of short-term arguments about correcting the situation.

Reference has been made to the fact that within the Market there is a long way to go before trade can be said to be fair as well as free. Two hon. Members, including the Chairman of the Scrutiny Committee, have made this point. It is unarguable that non-tariff barriers operate to the disadvantage of this country, even within the Community, and also unarguable that in the banking and insurance area, for example, we are at a disadvantage and cannot use effectively our advantage in terms of being more efficient. One wonders what the Government are doing in that area. They should be pressing the Commission to take a stronger line on non-tariff barriers.

What is the latest Government view on the European monetary system? In the Queen's Speech, the Government said that they were generally in favour and would look at the matter carefully. If the European Community is to operate effectively as an economic unit and if it is to move towards economic and monetary union, that clearly means coming together in a monetary sense more effectively and developing a common attitude towards the dollar and the yen.

A number of hon. Members touched upon the subject of energy policy. The hon. Member for Hornchurch (Mr. Squire) was right in saying that it is part of the competition question in the Community that there should be a common energy pricing policy. The hon. Gentleman could have taken the instance of the horticulture industry in the Netherlands, as opposed to the South of England. The pricing of energy is the crucial factor in making the Dutch more competitive. That is against the competitive theory of the Treaty of Rome.

The Lord Privy Seal mentioned cooperation in certain areas of energy policy. There is also clearly the question of research and conservation, and perhaps looking towards preferential supply. I am sure that our Community partners have a reasonable argument for saying that we should take a different attitude towards them than we do to the world at large.

Overshadowing all these problems is the Third world and the statement by the Brandt Commission. I agree with the strictures laid upon the Government by the right hon. Member for Stepney and Poplar. I would like to feel that a British Government would be active in pressing the Community to take a more positive and generous role in developing the Third world. Equally, I would say to the right hon. Member for Stepney and Poplar that I feel that the Community acting together has a chance to do more, and to do that more effectively than Britain alone.

If the shortcomings of the Community are to be reduced and its difficulties overcome this will be achieved only through the acceptance of greater supranational decision-making. There is no way round that. That, in turn, means a stronger role for the Parliament, which would perhaps eventually overcome the stress on national differences that finds full expression in the Council and place an emphasis, instead, on political decisions.

It is worth reflecting on the fact that those who allocate blame to the Community for our position to the point of arguing that we leave the Community—there are some sitting in the Chamber—[HON. MEMBERS: "Not 'leave!"] Then they would so emasculate the Community that it would become worthless. I am not sure what would be the difference between emasculating it to that extent and coming out. If those people are asked for their recipe for the resolution of the industrial and economic problems for which they blame the Community, the answers are considerably varied. Withdrawal, in the eyes of the Left, means a siege economy, import controls—

Mr. Hooley

Absolute drivel.

Mr. Johnston

The hon. Gentleman, from a sedentary position, if I hear him correctly, says "Absolute drivel".

Mr. Hooley

That is right.

Mr. Johnston

My understanding of everything that I have read in recent times about the policy produced by the NEC was that it favoured import controls and a considerable extension of public ownership. If the hon. Gentleman wishes to describe that as "absolute drivel" that is a matter for him. It is not an inaccurate description.

The extreme Right hankers after some open-seas concept of the nostalgic days of Empire. In reality, anything that we could do would be constrained by the European Community, and at the worst it would leave us at the mercy of external factors, the only choice being to whom we would be the vassal—the Community or the United States.

I agree with the Lord Privy Seal's concluding remark, but we need much more than generalised expressions of good will. We need commitment to the advance of particular policies. I hope that the Minister will give us some information.

If the advanced countries of Western Europe fail in the great enterprise of the Community, the damage will be not only to ourselves but to the stability of the whole world.

7.6 pm

Mr. Teddy Taylor () Southend, East

The House should be grateful to the hon. Member for Inverness (Mr. Johnston) for giving hon. Members a preview of his memoirs and telling us of his happy days in Europe as a Member of the European Parliament. The hon. Gentleman said that there are those in the Chamber who would like so to emasculate the Community that it would be worth nothing at all. I hope that people like the hon. Member will appreciate that the present position of Britain in the Community is so unsatisfactory that major changes are needed if we are to get a reasonable society, a reasonable Community and also solve the deep-rooted problems in Great Britain.

There can be no doubt about the facts. An answer from the Minister of Agriculture, Fisheries and Food on 30 June showed that the extra burden to Britain of having to pay European prices for food has been calculated at £3 billion. We tend to get a little silly in the House talking of millions and billions. A quick calculation, however, shows that the figure amounts to £5 a week for the average family in the United Kingdom.

Some people—I think one is present—say that if we were not paying European prices we would not necessarily get world prices. There is also the argument that we might be able to buy at lower than world prices as the Russians have shown. We cannot assume that if we moved from European prices to world prices we would necessarily have to pay higher than world prices. We might pay less. That is a fact that the hon. Member for Inverness cannot deny.

A second point that cannot be denied is that the net contribution that we shall have to make to Europe—

Sir Anthony Meyer () Flint, West

All the evidence is that we are moving towards a situation in which there is a grave world food shortage. Are there not some advantages in being part of a Community that is self-sufficient in food?

Mr. Taylor

There are supporters of the Community who argue that there will be a great shortage of food in the world. All the reasonable projections I have seen show that the real problem for a considerable time ahead will be a world-wide surplus of food which will increase. Our problem will be coping with that situation. On security of supply in war-time conditions, I think my hon. Friend will agree that the same argument could be used for total protection of every industry in this country so that we had self-sufficiency.

On top of that unsatisfactory cost of £5 per family per week, there is the question of our net contribution. The Prime Minister achieved a unique result for this country and I am sorry that it has not been welcomed by Labour Members, because that would have contributed to a more helpful debate. My right hon. Friend made remarkable progress in the budget contribution discussions, but even after that progress we still have to pay £500 million net into the EEC. That is far less than it would have been, but it is still a substantial sum and a considerable net movement across the exchanges.

We also have to bear in mind our horrendous trade deficit with the EEC. I found great difficulty in understanding some of the arguments of my right hon. Friend the Lord Privy Seal and the way that he tried to interpret the situation. Those who, like myself, are interested in hard figures are convinced by the simple statistical fact that in 1970 Britain had a surplus in its trade with the EEC and we now have a massive deficit, all of which has a direct effect on jobs in Britain.

There is a growing awareness in the United Kingdom, particularly among our industries, that we have little power to cope with some of the acute problems of dumping and unfair competition that face us. Almost daily workers, managers and others are coming to the House and asking why the Government do not do something about dumping from Czechoslovakia, Romania and elsewhere.

The sad fact is that we can no longer do anything about it ourselves. We have to approach the matter on a Community basis. Getting action is difficult when individual member States are doing special deals, for their own good reasons, with East European countries and others. Reaction is slow and it is difficult to get action.

There is concern not only about the horrendous cost of the CAP but about the outrage that it creates among our citizens and others when they see how some surpluses are disposed of. We are stili exporting considerable quantities of butter and other goods at low prices to Romania and the Soviet Union, who sell the goods at much higher prices. That persuades many people that it is silly to adopt the attitudes that we adopt towards, for example, the Olympics, when we are supplying vast sums of cash to the Russians with which they can buy bombs, helicopter gun ships, and so on.

Mr. Dykes

Will my hon. Friend give way?

Mr. Taylor

My hon. Friend will know that so far this year we have exported 20,000 tons of butter to Russia at prices between 30p and 50p per pound. He will know that the Russians sell that butter at about £1.20 per lb, giving themselves a considerable cash profit which can be used either to finance the Olympic Games or to buy arms to be used in the invasion of Afghanistan.

Mr. Dykes

I share my hon. Friend's dislike of that policy and I hope that it will not continue. However, in order to keep the matter in perspective, my hon. Friend ought to add what percentage of total butter consumption throughout Europe is represented by the amount that is sold to Russia.

Mr. Taylor

I do not have the exact percentage, but several million pounds of profit will have been made by the Russian State trading organisation.

I think that the hon. Member for Inverness will find that a growing number of hon. Members and others are saying that we cannot allow things to go on as they are and that the present arrangements are doing great damage to this country. I was interested to hear the hon. Member refer to devolution. Having been away from the House for 11 months, I witnessed on my return the sort of change in relation to the Common Market that I saw over devolution.

At one time, there was massive enthusiasm in the Conservative Party for devolution. We had started it and were 100 per cent. supporters of it. Time and again, it was argued that we could not reconsider the principle. Later the doubts began to grow and we started to wonder whether devolution was such a good idea and whether it might not be expensive and bureaucratic and lead to the breakup of the United Kingdom.

There was a gradual change of opinion in the Conservative Party. However, change is difficult for any party or Government. Happily for us, there was a miracle. The Labour Government introduced an absurd Bill and it was easy for us to start a step-by-step change, without donning sackcloth and ashes, by opposing that Bill. There may be an opportunity for change on the EEC to emerge from another miracle—the cash crisis that will emerge in the CAP in about a year's time. Surely that will be the time for reconsideration.

Mr. Russell Johnston

The hon. Gentleman started as a fervent devolutionist and ended up being against devolution. As he started as a fervent anti- European, perhaps he may yet come our way.

Mr. Taylor

I do not think that such interventions contribute to the solution of grave problems. We should not approach problems with smart exchanges across the Floor of the House or the silly attitude of trying to extract every possible good thing to say about the EEC. My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) probably knows more than any other hon. Member about the European Parliament, and I am sure that she was interested to hear the suggestion that we should thank the European Parliament because it contributed to the reduction in our net contributions to the EEC by rejecting the budget. I cannot recall any member of the European Parliament saying that his reason for rejecting the budget was that Britain was paying too much cash.

The Parliament's argument was that there was too much agricultural assistance in the budget. Of course, it passed another budget later with almost exactly the same proportion of agricultural assistance. It is wrong for some to suggest that everything about the EEC is bad and for others to try to squeeze out everything possible on the positive side.

Bearing in mind the change of opinion in both major parties in Parliament and a change of mind by industry—I do not suggest that CBI statements have changed, but we can see a great resentment among workers in factories about what they now believe to be immense problems from EEC legislation—

Mr. Dykes

No.

Mr. Taylor

My hon. Friend the Member for Harrow, East (Mr. Dykes) may disagree, but I have met such people in factories and I can assure him that their attitudes are changing. I am sure that even my hon. Friend will accept that there has been a dramatic change in public attitudes.

I do not suggest that it is possible for the policy of the Government or Parliament to change completely, but the enormous burdens that this country has to accept justify our at least thinking "Would it not be in our best interests to have a different relationship other than full membership, which would not involve the CAP and which might give us some freedom in our trading policies?"

It will not help for us to accuse each other of obsession and blindness. There are enormous problems to which no one appears to be proposing solutions. Our country, at a serious time of high unemployment and low activity, is losing a great deal.

Before people say that we should not talk about our membership of the EEC, because it is a closed matter, they should give us some indication of how they propose to solve the problems. One of the big problems is the CAP. The hon. Member for Inverness asked how the Government thought that they would solve that problem. I find on my return to the House that everyone is saying that we need fundamental changes in the CAP. I have even heard my hon. Friend the Member for Harrow, East, saying that. But no one gives the slightest indication, except with a broad brush, about how that change should be achieved.

The basic problems are that production is high and increasing, consumption is static and we have substantial surpluses and high prices. How are those problems to be solved? Will it be by restricting production? The pooor old Commission, which has an impossible job dealing with surpluses, tried to restrict the production of sugar. We know what happened to that. Are we to try constant prices? There is no indication that constant prices reduce production. Indeed, in some cases they increase it. It would also be difficult for the Commission to provide for frozen prices for a considerable period. It is possible that there may be no solution to the problems and that the only real answer will be for each member State to take responsibility for its own agriculture.

After a year away, I believe that there is a real change of attitude in the House of Commons, in British industry and certainly among the population of Great Britain. A crisis lies ahead in the EEC. The Community faces a financial crisis because the cash will run out. I believe that it is time, in the interests of the United Kingdom, that we started to think seriously about what our rightful relationship with the EEC should be. It might perhaps be the one that I would wish. That would mean a relationship involving us in co-operation with Europe where our interests are in common. We should act as separate States in matters such as agriculture, where we can best look after our own problems in our own way.

7.21 pm

Mr. Tom Ellis () Wrexham

I shall follow my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) for a few minutes. He began by lamenting the fact that we had joined a "pre-set" Continental mould. I do not believe that he said that emphatically enough. I believe some of the more desirable qualities of the Community have already been eroded, most noticeably the abandonment of majority voting. The Luxembourg compromise was a major step backwards and it certainly represented change.

Another change has been the loss of the Commission's power. The Council has been transmogrified from a European institution into a horse-trading forum for nine national, sovereign unitary States. That was a change. However, there have been changes for the better. The court has, notably, become a European institution and has consistenly adopted a teleological approach in its interpretation of legislation. At the back of the court's mind there has been the grand vision of the Community of the future.

My point is that far from the Community remaining "pre-set" there has been considerable change. That is only natural. In any democratic political institution there is change. By its nature such an organisation must be organic and dynamic and must change. What we must get into our noddles is that we should be there to help that change. We should change the Community into the institution we want it to be.

It is a question of confidence. I am not English and can, therefore, speak objectively about English history. The English built railways all over the world. They sent their people out to colonise darkest Africa. Basically that was all a question of confidence. Yet, in 1980 we are indulging in pettifogging arguments about 2p here or 2,000 tonnes of butter there. I do not wish to preach a long sermon, but the fundamental issue is one of confidence.

My right hon. Friend divided his sermon into three sections. Speaking as a good Methodist, I appreciate that.

Mr. Leighton

My hon. Friend speaks of the splendid British tradition of railway building all over the world. Will he tell me whether that achievement occurred inside the countries that now form the Common Market? Was not that achievement in the wider world?

Mr. Ellis

If I wished to look at the influence of British invention, determination and entrepreneurial skills in the European Community I should find scores of examples.

My right hon. Friend spoke about political co-operation, the external economic crisis and the Community's approach to it, and about internal matters. It is important that we get fixed in our heads, in relation to foreign affairs and the Community, that for 30 years we have lived as free men in a bi-polar world, characterised by the nuclear stalemate created by the United States and Russia. The golden rule in politics is that nothing stays the same for ever. What has clearly happened in those 30 years is that there has been substantial change. Change is in the air. One could encapsulate that change by saying that American hegemony has been eroded.

American dominance is not what it was 10 years ago. That which I might loosely describe as the Pax Americana, under which we have lived as free men, is wobbling. Change is in the air, militarily, politically and economically. I suppose the symbols are Vietnam in the military sense and Watergate in the political sense, with the shift of influence from the White House to Capitol Hill. It is questionable whether SALT II would have been ratified if the invasion of Afghanistan had not taken place. Far from it being a bipolar world it is a home polar world with a vacuum at the other end. Economically, I suppose, the symbol would be the suspension of dollar convertibility by President Nixon in 1971.

In Britain, in Wales, and in Europe we must say what our response is to be. The response of some of my hon. Friends is to pull up the drawbridge and make ourselves into a tight little island conducting our truncated State capitalist system. That is absolute rubbish. Clearly the Community is developing a foreign policy. The evidence is overwhelming. My right hon. Friend quoted two examples. He spoke of the so-called European-Middle East initiative and he was critical of it. There are legitimate grounds for criticism of the initiative and one of the most penetrating and succinct criticisms of that initiative was made by Mr. Eban, the former Israeli Foreign Minister, in The Times a few weeks ago. I thought some of his criticism was somewhat prejudiced. He seemed to regard the initiative as an entirely pro-Arab exercise, but that was partly because his own perspective might be balanced slightly the other way.

The more important aspect of Mr. Eban's criticism was contained in a question. He wanted to know who were the Europeans to be poking their noses into that big world of theirs. He asked what had Europeans done to justify their pretentiousness. Significantly, Mr. Eban said that had the Community got together as a Community and become cohesive and reasonably homogeneous politically in foreign affairs, the European initiative would be a great boon in the search for world peace. That was the considered view of Mr. Eban.

The argument introduced by my right hon. Friend about the Middle East initiative is one that we have not developed in the Community as strongly as we should have done. His second argument concerned the possible acquisition of nuclear bombs by Iraq. That is an important subject about which we are not always as clear as we might be. With Iraq the initiative is not from the Community. It comes from France. I have nothing against Frenchmen, but if we wish to influence the French, or anybody else in Europe, we shall do it much better as partners in a joint venture. That is for sure. Therefore, whatever criticism is made of the Iraqi adventure it is not criticism of the Community. On the contrary it is a criticism that the Community is not strong enough to influence the French.

In passing, I would like to comment—

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Ellis

I am trying to develop a theme.

Mr. Marlow

The hon. Gentleman is on an interesting theme, but I was wondering how he can reassure the House that our involvement in the CAP actually strengthens our search, with other European nations, for a sensible foreign policy?

Mr. Ellis

My answer to that question illustrates the difference between the hon. Member for Northampton, North (Mr. Marlow) and me. I shall come to the mangel-wurzels in a minute. That is my short answer. At the moment I am talking about fateful events all over the world. In this country, and in other European countries, we have had the luxury of not having to make fateful decisions in principle about peace and war on a global scale. The luxury that we have enjoyed is gradually disappearing. We shall have to make increasingly fateful decisions about peace and war on a global scale. Having dealt with that, we shall get down to the mangel-wurzels. I shall later come to the CAP.

Leaving aside the morals of whether a country should have the technological benefits that we have, we should understand that technological restraint is no policy at all. Dr. Ekland, Director-General of the International Atomic Energy Agency in Vienna, made this remark two years ago, but its message still applies. He said: 'I do not believe that proliferation can be prevented by technological constraints or policies of denial. Allow me to refer to the policy of denial which has prevailed in the area of isotopic separation. He is talking about the research project in Iraq. He goes on to refer to the fuel cycle conference in 1977. At the Saltzburg Conference … it was striking to find that precisely in this area, which has been protected by extreme secrecy, these very circumstances appear to have stimulated research and development activities in a number of countries. As a result we now have international consortia providing services based on the diffusion process and the same is true with respect to the centrifuge process. Only about 18 months ago a private company in Seattle—not a State-owned company—invented a laser process for isotopic separation. We might as well give up straight away if the argument is that we can prevent such development by technological restraint. The answer is political co-operation, such as the non-proliferation treaty. That subject is dear to my heart, and I could wax eloquent on it.

To establish that the treaty does work, let me again quote Dr. Ekland. Over 120 countries are signatories to the treaty or have bilateral arrangements under the treaty. He said: 'No party has openly breached the Treaty. In the judgment of the IAEA Secretariat, based on its safeguards operations, no party has clandestinely breached it either. France used a legal technicality at the time of the American refusal to supply Europe with uranium, which was a major blow. The French refused to allow arrangements for the Vienna agency inspection arrangements in the Community to be done under Community arrangements and legislation. That split the unification.

My right hon. Friend went on to talk about the external economic crisis. He said that as far as the Community was concerned it was "business as usual". He rightly criticised the failure of the Venice and Dublin summits to cater for the world crisis. The Community members must get together and work more energetically as a community in order to cope with these major economic crises.

The Community is a force in economic and trading affairs. Almost without our knowing it, through the GATT, the Community is doing all the work, and rightly so. We do not always achieve the most beneficial agreement. There is criticism that America has sold us down the river over the multi-fibre arrangement. She is an enormously powerful trading country. Traditionally, she is not a trading country. She has exported and imported comparatively little of her GNP. She speaks with enormous strength. If a little tiddler like the United Kingdom argues with the United States we shall not get far. The criticism is that the Community as a major trading bloc is not exercising sufficient muscle. If the Community cannot do so, Heaven help the nine separate States.

The world economy is an even more important issue. There is an important question, the answer to which would give us a good idea of what to do. Why in the 1950s, the 1960s and perhaps part of the 1970s did the world experience an unprecedented economic boom? The standard of living in all the developed countries improved. If we understand the reason for that we shall be well on the way to solving our present problems. One reason is clear. There was American economic hegemony and unified political will. Because the American economy was above question, the Americans could print paper money. The only person to question that was President de Gaulle. He perhaps could not see why the Americans should buy factories in France with paper money. The remainder of the world went along with it. It was the "great motivator" theory. We were dragged along in the wake of the great American boom. America was strong enough then to do it. Ironically, because of the success of Sweden, Germany, Japan, France and so on, with their challenge to American dominance, people began to question the dollar, and the impetus was lost.

It is not too much of an over-simplication to say that there are three major trading blocs in the world. There would be great advantages if two could act institutionally together. Two years ago we suggested to Germany that she should reflate. Helmut Schmidt turned that down flat, because he did not want to be caught with his trousers down. If institutionally we could forget the exhortation and act together as an economic bloc we could guide the destiny of mankind. However, people continue to try to move away from unification. There is the attitude of "Stop the world, Britain wants to get off". It baffles me that people are not aware that that is the problem. A man trained at St. Dunstan's could see it, but not my colleagues. Those are the economics of the matter.

I am sure that many countries in the Community want to change the position. Many proposals could be put forward. People especially want to change the CAP. Even France, who sees Spain knocking on the door, will begin to want to change it. The CAP will be changed, and we should be ready with our ideas.

The CAP has already changed significantly. For the past four or five years, CAP prices have increased by only 2 or 3 per cent., when inflation has risen from 5 to 25 per cent. If the coal miners in my constituency got a 3 per cent. wage increase, with inflation running at 20 per cent., they would regard that as a substantial change. It baffles me how it can be argued that we are not changing the CAP.

My right hon. Friend mentioned regional policy and said that the figure of 95 per cent. for Community gross domestic product had dropped to 92 per cent. The same thing has been happening in this country for a long time. As a Welshman, I am at the worst end of it. I could trot out statistic after statistic to illustrate how this centralised Government have let down my people. So it ill-becomes anyone to tell me that the Community will not do anything. At present it is not doing much precisely because nine separate, jealous national, so-called sovereign States, are still guarding their own little cabbage patch—each a cock in its own midden.

As a Socialist I see the great potential of the Community to be that in practical institutional political terms we can establish what I call a non-hegemonic society, a society in which things must be done generally by agreement, a society which will not be told that the hierarchy at the centre will decide everything, and everything must come here for decision by committee whether on the steel industry or any other industry.

What a hopeless idea such centralisation is for the tail-end of the twentieth century. That is the sort of reactionary policy that some of my hon. Friends are seriously advocating. The answer clearly lies in fundamental political restructuring. We could talk all night about how to do it. but we already have the start of it here in the European Community. I am convinced that, slowly as we have travelled, we shall go a great deal further and we shall take all the peoples of Europe with us.

7.41 pm

Mr. Hugh Dykes () Harrow, East

Even if I were to use the words "sagacious", "encouraging" and "a glass of champagne" I should be describing inadequately the speech of the hon. Member for Wrexham (Mr. Ellis). At risk of embarrassing him in front of his colleagues, I think that hon. Members, irrespective of their views one way or another, will agree that his speech has elevated the debate to a higher plane.

Our EEC debates have become repetitive—and I am partly responsible for that—because they have always centred on the fundamental question of whether we did right in 1973. There are those who will say that we made a mistake, while there are others on my side of the House, with one or two on the Labour Benches, who believe that it was a good move.

It is a pity that that is so, because if only we could have from both sides of the House more of the sort of utterances we heard from the hon. Member for Wrexham we could be making that contribution to the Community which this House deserves to make through its fame, its stature and its collective wisdom. I go further. I hope that the right hon. Member for Stepney and Poplar (Mr. Shore) will forgive me being internationalist, but I detect that that is the sort of thing that is said in some of the Parliaments of the other member States.

I share the anxieties enunciated by the hon. Member for Wrexham when he said that the trouble with the Community is that still it consists of nine member States going their own way, clinging to their own nationalism and national policies. That may be so, but in the other Parliaments when they discuss the EEC—though that happens less often than here, and I believe that they should do it more frequently—they talk about the future and they grumble much less about the so-called failures of the Community.

Perhaps I may embarrass the hon. Member for Wrexham with one last reference to his speech. He said that this issue revolved around the question of confidence. We in Britain lack confidence in our relationships with other countries—Community and non-Community States alike. One does not find that in other EEC countries, even though they are suffering from deep-seated economic problems as we are. Their problems may not be so severe, but unemployment is rising in France. The rate of inflation may be less than here, but people are worried about it creeping up. Even in Germany people are worried about the 800,000 unemployed, although they are not so worried about the rate of inflation there. The attitude to the Community in those countries, partly because they are the original members but also because they have this special confidence, is much more positive. We do ourselves a great disservice in the House of Commons—it does not happen so much in the House of Lords—when we continually build up the divide between the two major parties on the issue of the Community and our membership of it.

I am glad that the Government have reiterated on the front page of the document our solemn allegiance to the original conceptual idea of our joining, and to the validity of our continuing membership. Although it is not referred to in the document, it is relevant to mention here the agreement in the changes on the net United Kingdom contribution to the budget.

One point that has not been made so far is that this White Paper on developments is now well out of date. It was a catching-up exercise by the Government. I am not so sure that it was the best way to approach the problem, and I look forward with impatience to the next of these documents to bring us fully up to date. It might have been better to have had the debate without going into an out-of-date catalogue. However, it was logical to fill the gap in the documentation on the Community, but unless that is to be done quickly—as the previous Government did it, and I pay tribute to them for that—after the events described in the document, there is little point in the exercise.

The next document, which presumably will cover the period until June, will be that much more relevant to the immediate preoccupation that we all now face, namely, how the payments will start to flow from the revised budget agreement. Then arises the much more funndamental and difficult question—and everyone will agree that that is the only appropriate description, however enthusiastic they may be about the Community—of changing the budget structure to accommodate the agricultural excess spending once we hit the 1 per cent. VAT equivalent ceiling.

I, too, am worried about the way in which this will be resolved in the Community. I do not think that it will be easy. Personally I shall be calm, sanguine, delighted, and enthusiastic about penetrating the 1 per cent. figure. Those who are not prepared to do that because they are worried about national public expenditure restraint arguments in the different member States may feel it appropriate to consider alternative sources of revenue. One obvious source which, unfortunately, was not mentioned in the Ian Davidson article in the Financial Times on Saturday about a Community energy policy, is an oil or energy level. There would need to be only a small percentage on the imported price of oil to provide substantial additional resources in the Community. Overnight the United Kingdom would be an automatic beneficiary in that it would be paying much less levy than the other big three member States

The Front Benches and the document have all referred to political co-operation. As an enthusiast for the Community I must deplore the built-in grotesque contradiction—"grotesque" is a mild word to use—that foolishly persists among anti-Marketeers, mainly on the Labour Benches. They grumble about the Community being weak and disunited, and yet at the first signs of any incipient cooperation they complain that our sovereignty is being taken from us. It was interesting that almost perhaps for the first time the right hon. Member for Stepney and Poplar welcomed real political co-operation on foreign policy. I did not detect that attitude under the Labour Government of more than a year ago. Officially there was an adherence to political co-operation, but not with the aim of extruding a genuine, harmonised Community foreign policy on many major issues—not just on the Middle East. I hope that that trend will be built upon.

I should like to see much more enthusiasm for internal Community policies being built up into a unified and cohesive entity in the member States. I hope that the right hon. Member for Stepney and Poplar will be courageous enough to look at the Community again in terms of such policies—mainly economic but also social—at a time of high unemployment.

I believe that I am regarded as a genuine friend of Israel, but I do not find it difficult to welcome the initiative made in the declaration on the Middle East. I believe that in that respect the Community made a carefully balanced and justified attempt to say that the ominous signs of a recurrence of the horrendous violence seen in the Middle East in 1947 and 1948 and the fact that the Camp David process was stalling into total failure were enough for the Community to be spurred into some initiative to secure a balance in the area and to obtain justice for Israel and for the Palestinians.

Mr. Hooley

If Western Europe has now devised such a definite policy on the Middle East, why could not the Nine bring themselves to vote for or against a resolution which 112 nations are able to support in the United Nations? At least the Nine might have taken a stand one way or the other.

Mr. Dykes

I am glad that the hon. Gentleman is expressing his support for the Community's getting closer together to pursue one policy—on both foreign and internal matters.

Page 9 of the White Paper deals with monetary arrangements. That subject has hardly been mentioned in the debate. Only one or two hon. Members referred briefly to it. At the risk of boring the House, I must once again express my great sadness at the fact that Britain has not properly joined the European monetary system. I use the word "properly", because we are part-members of the system in a putative sense, but we are not members of the exchange rate mechanism. The EMS has been an outstanding, even startling, success for the participating members, including Italy, which had acute anxieties about whether it could remain successfully within the system. It would have helped Britain to have a lower rate of sterling against other currencies, for obvious reasons. It would have been a good thing during recent months.

I switch quickly to another subject mentioned at the bottom of page 10 and the top of page 11, namely, milk and milk products—one example of the agonies of the agricultural policy. It is a splendid example of the scaremongering from the Labour Party about the EEC. When the Commission first examined the Milk Marketing Board Opposition Members said that it was a scurrilous, wicked, foreigners' attack on a heroic body. Many hon. Members rose up in alarm because the Milk Marketing Board was, supposedly, under attack. The regulation that come out of the Commission's examination, through the Council of Ministers, said that the Milk Marketing Board was able to provide the consumer with a balanced service of milk, on a secure basis, in a traditional way, in a society where doorstep milk had been the rule rather than the exception—although that practice is now declining. But that is not a reason against the idea of importing, or having our own, cheaper UHT milk. It would widen consumer choice.

We see so much contradiction among hon. Members. In the debate on Friday one hon. Member said that orderly marketing arrangements could often be more important than price. Yet in a previous sentence he attacked the Community price of butter and said that it was outrageous that it was more expensive than the price of butter elsewhere. It is unacceptable that hon. Members, especially Opposition Members, should persist in such contradictions and expect the best of both worlds.

The sum total of today's debate should be that, despite the acute difficulties with the common agricultural policy, we must act positively in the Community to make it better in future. We must move away from the absurd existential preoccupation with whether the original entry decision was right or wrong. We could construct a case that even if the original decision was a mistake—which I do not accept for one moment—the reality of the modern world, our position in it, the priorities of the Western world and the need for Europe to be a unified entity both for its own sake and for the sake of others, mean that we must persist in our membership of the EEC.

Other reasons for persisting with the EEC are even more positive than those. Even on the question of the common agricultural policy, anti-Marketeers pursue a great distortion of arguments, which do a disservice to their consituents by creating in their minds false impressions of the choices available. The last price increase of 5 per cent. for some products and 1½ per cent. for others—perhaps more than we wanted when the original farm price negotiations began—has added a princely total of 0.3 per cent. to the retail price index, in an economic society where we are worried about an annual inflation rate of 20 per cent. Where is the priority and the balance in those arguments?

My hon. Friend the Member for Southend, East (Mr. Taylor) knows that if we retain our domestic farm support system—although a different mechanism—it would cost more than twice the adjusted net contribution under the new budget agreement. It would cost more than £1,000 million.

Mr. Teddy Taylor

I do not agree with that. It is rubbish, illogical and nonsense.

Mr. Dykes

It happens to be true. My hon. Friend was not here for the previous debates because he had not returned to the House. I apologise if I have misrepresented him, but I have certainly heard his colleagues say that we should return to the old deficiency payments system. The great problem in Britain is not Community price rises but the domestic rate of inflation. The CAP—

Mr. Marlow rose—

Mr. Dykes

I shall not give way. The CAP problems are more acute in terms of the volume of production. It is not so much a problem of prices—

Mr. Marlow rose—

Mr. Dykes

I shall not give way. My hon. Friend keeps interrupting.

Mr. Marlow

Give way.

Mr. Dykes

I shall not give way. I am always fair to the House. I shall not be fair if I give way, because the clock will tick away and Mr. Deputy Speaker will, understandably, become irritated. The reality is that volume is the problem in the CAP, not prices. They have been substantially held back in recent years. There must be substantial changes to get rid of the excess surpluses. But let us put the matter in perspective. Even in the worst examples in the managed product range, the surpluses represent only a couple of days', or perhaps two weeks', supply out of the total annual production. It is no use castigating the Commission for allowing surpluses to be produced and then saying that it is wrong to deal with a country, under emergency conditions, which, although I deplore most of its internal and external policies, is the only one willing to take the temporary surpluses. The Commission now realises that it was unwise to conclude that deal. It knows that it is unpopular with most of the member States. I hope that the Commission will not do that again. But we must understand the pressures on the Commission, which is always struggling with its duty to pursue collective Community policies under the Treaty but always beset by a recrudescence of nationalism, which inevitably grows as the economic recession developes. History shows that that is so.

Let us examine the British budgetary contribution to ensure that we are clear about the arguments in an objective and dispassionate sense—even if we are enthusiastic about membership of the Community. We must bear in mind and acknowledge the fact that only a small proportion of our contribution is represented by agricultural levies. The figures for the gross United Kingdom contribution in 1979 show that only 12 per cent. of our contribution was represented by agricultural levies. The other side of the argument would be that if only Britain, like Germany, was self-sufficient in agriculture—which should not be impossible because we are, apparently, the most efficient in Europe—we would pay less in agricultural levies.

None of that is the fault of the Community. The problem accrues to us on the question of payments back. But that is not the fault of the Community, either. If we imported less not only of agricultural products but of other products from elsewhere in the world and if we were more European in our economic and political habits as a member of the Community, the problems would become less. Even so, in coming to the agreement on the budget the Community acknowledged our case. We should have expressed our gratitude.

We do not need to feel ashamed of expressing thanks and gratitude to our partners in the Community. They know that contributions to own resources under the agreement are legally and constitutionally not British money or German money but money that belongs to the Community. The Community realised that we had special problems and was ready to agree with us—and we must build on this—on a modern budget structure, which should involve a larger contribution in future, so that we could spend other resources on desirable industrial revival in the most difficult areas in the member States, especially in Britain, Italy and Western France.

That is the way in which we can take a lead—I am not exaggerating when using that phrase—in the Community. Why should not Britain have a future target to overtake Germany economically, in whatever period that might be regarded as suitable?

Why are people now so defeatist and nationalistic, not only outside but in the House of Commons? The duty facing all of us as parliamentarians is, first, to raise the level of debate in this Chamber; secondly, to restore national morale by the pursuit of successful domestic policies; and, thirdly, to reinculcate a genuine enthusiasm for the Community in the future so that the nation can see that it is beginning to work again.

8 pm

Mr. Eric Deakins () Waltham Forest

The hon. Member for Harrow, East (Mr. Dykes) is to be congratulated on maintaining his faith in the EEC in spite of the overwhelming evidence against it. I hope that he will forgive me, but I do not intend to follow him in the pro and anti arguments that he used.

Unlike many hon. Members, I want to address my remarks to the document that we are supposed to be discussing. I wish to make five points. The first is that there is a major omission in the document, to which reference has already been made, with regard to our adverse trading balance with the EEC.

The Minister may ask how that is relevant to a description of developments in the European Communities. I would point out to him, and to other hon. Members, that paragraph 5.6 refers to: a sharp difference of view on the economic impact of Community policies between the United Kingdom and Italy on the one hand, and the rest of the Community on the other. The latter"— that is, the rest of the Community— regarded this contention as exaggerated, maintaining in particular that the pattern of net contributions to the Community Budget did not provide a reliable guide to the overall economic effect of Community policies". Would it net have been helpful in the Government's discussions of recent months that were aimed at reducing our budget contribution—and they have certainly done that, no one can deny it—to use the economic argument which has been used in this debate about the adverse effects of our membership of the Community? If one looks at it from the other point of view, it is an advantage to the other members of the Community.

If we have a balance of trade deficit in manufactured goods of between £3 billion and £4 billion with the rest of the Community, it stands to reason that it has that amount in surplus with its balance of trade with us. Therefore, it is an advantage to the Community to have Britain as a member. Why could we not use those facts as bargaining counters in our negotiations with the Community? They are perfectly legitimate to use.

I found the Lord Privy Seal's speech a little disappointing, because when talking about trade he obviously was not prepared for some of the interjections. I found that rather surprising. I can only suppose that either his officials, or those in the Department of Trade or his private office, had not provided him with a proper brief. While the right hon. Gentleman gave the figures for the balance of trade in respect of Britain's exports to the rest of the Community—he also talked about our export-import ratio with the rest of the Community and the world—he did not have available the figures for British imports from the Community. I regard that as very bad preparation indeed. I hope that the Minister will convey to the Lord Privy Seal my belief that he ought to kick a few bottoms in both Departments when he goes in tomorrow morning.

Mr. Spearing

Are not the implications even more serious? If a Minister of the Crown accepts a briefing of that sort, does not it show, first, that he is willing to be misled and, secondly, that those who advise him are providing him with material which is perhaps not as objective and accurate as it should be?

Mr. Deakins

I have put a more favourable construction on the absence of those figures from the Minister's speech, in that I believe that it was not his fault that they were not available.

My second point relates to the common agricultural policy.

Mr. Hurd

Is the hon. Gentleman denying the basic point which my right hon. Friend made, that our trading experience with the Community has been less unfavourable over these years than our trading experience with the rest of the world?

Mr. Deakins

I merely quote the figures. I think that our trading experience with the Community has been disastrous. I shall stand to be corrected if, in his reply, the Minister can quote figures that are fair about our balance of trade with the Community. We have been trying to get these figures for months.

Mr. Marlow

Will the hon. Gentleman give way?

Mr. Deakins

I shall give way once more and then I must continue, because other hon. Members wish to speak.

Mr. Marlow

I thank the hon. Gentleman for giving way, because I think that I can help him. I have also asked questions of the Government, and I have been told that about 10 years ago we were in slight surplus with the rest of the world in terms of industrial manufactured goods. That is still the case. It is purely with the other countries of the European Community that we have had this massive deterioration in terms of the balance of trade.

Mr. Deakins

I do not wish to pursue the matter, but I have made the point about the Minister's speech.

The excessive cost of the CAP is rightly mentioned in paragraph 1.4 of the document. I have read the document carefully, and there is nothing in it about a fundamental reform of the CAP, which I assumed was still a major objective of the Government. Surely the Government cannot yet have given up trying to achieve a fundamental reform of the CAP. But, at the same time, we know from experience that the objectives and principles of that policy are unalterable.

I suggest that there are two lines of argument which the Government could use in their dealings with their Community partners. The first is that with the CAP the mechanisms of the policy have been elevated to the status of principles, and there is a clear difference between a principle and a mechanism. I refer here to the question of dumped surpluses on the rest of the world. That is a mechanism of agricultural policy, not a principle. But as we know to our cost—I am sure that the Minister will confirm this in his reply—in spite of the determination of the Cabinet and this House that the Community ought not to sell subsidised butter to Russia, we have been unable to prevent it. That shows that the mechanisms are much stronger than many of those who think that Community policy can be reformed would have us believe.

My second point about the CAP is that from time to time its principles are disregarded. One of its major principles is that there is supposed to be a common price. There is not. Over the years we have had a series of different, negative, monetary compensatory amounts, and now, so far as this country is concerned, we are moving to a system of positive monetary compensatory amounts in regard to some commodities. That shows up the absurdity of trying to aim at a common price policy in agriculture when one does not have fixed exchange rates between members of the Community.

My third point—here I admit that I am disappointed that no Treasury Ministed is present for this important debate—relates to the budget. My criticisms have nothing at all to do with the arguments in recent months about the size of our contribution. The House can rest content that I shall not pursue that point. My point is much more fundamental. The budget procedures within the Community are basically wrong.

What happens is that the budget is decided by the Finance Ministers, and the spending Ministers then come along after the budget and decide how much money they will spend. That is particularly true of the Agriculture Council. Paragraph 5.20 sets that out in very good detail. It refers to the Commission's preliminary draft budget, which included certain assumptions about the outcome of the agricultural price-fixing which differed from the decisions subsequently taken by the Agriculture Council on 22 June". It continues—and these are beautiful words: The Commission therefore presented a Letter of Amendment increasing payment". That was not all, because later the Agriculture Council had another meeting and agreed even more expenditure.

To use a domestic analogy, that is almost as if the Treasury fixed a budget and public expenditure for each Department and the Minister of Agriculture then went off and agreed with farmers that he would spend more money. He would then report back to the Cabinet Office, which would then send a letter of amendment to the Treasury telling it—and it would meekly accept it—that the spending had to be increased. That is precisely the Community system. Once it is put in terms of our own system relating to the control of public expenditure, one can see how absurd the whole process is. It is a bad system of financial control and it needs to be fundamentally changed.

Further, a new feature in this document is that in 1979 there was a dispute with the Assembly over the budget. I shall not go into the details, but the Council agreed an increase in response to representations from the Assembly. Then, because the Assembly was still not satisfied, the Council indicated its readiness to agree even more expenditure on the non-obligatory side of the budget.

Even that was not sufficient to convince the Assembly, and at the end of the year the issue was still in dispute between the two institutions. It is disgraceful that the Council of Ministers, which is responsible for the budget and spending, should have to try to give small increases here and there which eventually amount to hundreds of millions of pounds. That is a bad path for the future. If it merely tries to buy off the advisory Assembly by increasing the size of the budget, that is a disgraceful path, not merely for this Government but for other Governments to follow.

There will be another opportunity for revising the budget procedures when the present ceiling on own resources revenue is reached. But there is nothing in this document that refers to the Government's determination to use that opportunity to make fundamental changes in the structure of the budget and Community policies.

My fourth point concerns political cooperation. That is extending rapidly, and I would argue not about whether we should or should not extend that co-operation but about how useful it has been. Is there anything in any of the paragraphs in section II of the document about our political co-operation with other members of the Community which we could not have done as an individual nation? There is a paragraph in the document on Indo-China which is full of expressions of sympathy for the people of Kampuchea and which states that the war in that country should be ended and that food supplies should be sent. But they are merely words, because I do not think that any member State of the Community has had any effect in that part of the world. One wonders what useful purpose was served by including that item on the agenda.

Is there not a danger of inaction by individual members of the Community while they wait until a meeting is held to consider a particular matter? There are occasions when Governments sometimes have to give instant reaction on foreign policy matters. I hope that the British Government do not feel inhibited in expressing their view forthrightly. That is certainly the case with the Germans and the French in their dealings with the Soviet Union over the last six months.

Paragraphs 6.16, 6.29 and 7.4 refer to a number of features, and one wonders how these matters concern the EEC. Paragraph 6.16 states: On 12 November the Foreign Affairs Council approved a five year research programme on the recycling of urban and industrial waste. Excellent. I have no objection to that whatsoever, but how does it concern the EEC? Why cannot individual countries mount research programmes or simply co-operate on these matters? I shall not go into detail on the other two paragraphs, but the issue of the competence of the Community will constantly be before us in these debates. The Commission and the European Court—I fully accept the comment of my hon. Friend the Member for Wrexham (Mr. Ellis) on the court, which is very much a European organisation on the march—

Mr. Dykes

Before the hon. Gentleman leaves paragraph 6.16, may I point out that part of the programme will consist of an exchange of information arising from all the national programmes?

Mr. Deakins

Yes, indeed. But ultimately the Community will contribute 9 MEUA—about £6 million—over four years. As that amount has to be funded by member countries, why cannot individual member countries fund it themselves?

We must watch creeping Community competence. The Government are aware of the dangers. The Commission and the European Court are permanent institutions which seek to create a federal United States of Europe. I have tried to concentrate on the contents of the document, but that point worries many hon. Members, not merely those who are anti-Market.

There are many pro-Common Market hon. Members who did not vote for entry into the EEC on the basis that it would become a federation. Many sturdy speeches were made by hon. Members on both sides of the House supporting entry but on the basis that we should remain an independent member. Some hon. Members made speeches in favour of federalism, but those hon. Members who do not want federalism will constantly have to remind Ministers when issues of creeping competence emerge. A document such as this, which summarises the work of the Community over a year, plays a valuable part in concentrating our minds, regardless of our view on the Community as a whole.

8.7 pm

Mr. Tony Marlow () Northampton, North

I congratulate the hon. Member for Waltham Forest (Mr. Deakins) on making an important point. As far as our continuing negotiations with the Community—there will be continuing negotiations—are concerned, it needs us more than we need it. That point really needs to be rammed home. It is a vital and fundamental point.

The House has been privileged to listen to my hon. Friend the Member for South-end, East (Mr. Taylor), who has given the deepest, most intelligent, and the most far-reaching speech that I have heard on the subject since I have been in the House. I hope that it indicates the way in which the House can move in the future. My hon. Friend pointed out the change of view towards the Community that is taking place in the country at present. That is a strong political fact, of which the Government will no doubt take note.

The recent public opinion polls show that the Community is even less popular within the United Kingdom than Jimmy Carter is in the United States. Another interesting fact concerns the way in which public opinion, and opinion in the House, is moving. Yesterday I sought leave to introduce a Ten-Minute Bill. I understand that 153 hon. Members voted against it, of whom 85 had been drafted in as members of the Government, members of the payroll vote. If one analyses the other hon. Members who voted, on the Conservative side of the House 25 voted in favour of the Bill and 62 voted against it. In other words, 30 per cent. of the Parliamentary Conservative Party which was allowed to vote, and which felt inclined to vote without being whipped or forced into a particular Lobby, voted in favour of some change in our relationship with Europe. That is a significant political fact.

Mr. Dalyell

The hon. Gentleman should not draw too much from the statistics. His Bill coincided with an exciting moment in the Olympics being shown on television, and some hon. Members thought that it was more important to be upstairs than downstairs.

Mr. Marlow

I accept what the hon. Gentleman said as regards the Opposition side of the House, but I do not think that my right hon. and hon. Friends have got quite the commitment to the Olympic Games that he has.

Mr. Anthony Kershaw () Stroud

Is my hon. Friend justified in assuming that the payroll vote has no mind of its own?

Mr. Marlow

I am sure that the payroll vote has a mind of its own. I am equally sure that hon. Members not on the payroll vote have minds of their own, but most of them supported the Government because of the three-line Whip. I think that very strong-arm action was taken with the payroll vote yesterday. I have no doubt about that whatever.

I am accused, looked upon, and besmirched by the hardened Europeans as an anti-European. In fact, that is not the case at all. I am a passionate European. At the age of 10 I lived in one of the capitals of Europe. I went to two different schools of different nationalities. [AN HON. MEMBER: "Not London?"] Not London. For four years, between the ages of 14 and 18, I lived in a European country and I worked for a European firm. I have travelled in Europe. I have spent much of my life in Europe. I am passionately committed to Europe—continental Europe.

Mr. Donald Anderson () Swansea, East

Will the hon. Gentleman give way?

Mr. Marlow

I will give way just this once, but there are other hon. Members who want to speak.

Mr. Anderson

I think that, with hardly any exception at all, every hon. Member has spent his life in a European country.

Mr. Marlow

I am sure that the hon. Gentleman enjoys his levity, but I think he knew what I meant.

Mr. Anderson

This is a serious point.

Mr. Marlow

Perhaps I may develop that point—not the hon. Gentleman's point, but my point, and he knows the point that I am making.

We live in a difficult and dangerous world. The United States is not as strong as it was. It has lost its sense of direction. It is less dependable than it was. The Soviet Union is becoming stronger, more menacing and more aggressive day by day.

There are vital areas in which Europe must work together. But what worries me is what I call the Four Horsemen of the Apocalypse. My hon. Friend the Member for Hornchurch (Mr. Squire) at last is beginning to see the light—I see from his speech—because he realises the danger and damage that can be done to our industry by the existing arrangements in Europe. But some others of my hon. Friends who insist on standing on their heads and talking nonsense and defending the indefensible will achieve the opposite of what they intend. As I have said, the perception of Europe within the country is low. If people say things which are manifest nonsense, they will further destroy the reputation of European cooperation within this country. It is a damaging thing, and I implore my hon. Friends to desist from continuing in that way in future.

This White Paper—a catalogue of past disasters—really should be edged in black. This year our contribution to the budget, thanks to the magnificent efforts of the Prime Minister, is to be reduced from last year. Apparently it is to be £371 million. As I understand it, earlier this year we were going to put in roughly £100 million a month—January, February, March. We have already put in £700 million. We have got nothing back. We are not quite sure when we are going to get it back. Some of it we are going to get back tied with strings in the next financial year. If we have given that money over, we are having to borrow it and we are having to pay interest on it. So the £371 million that we think the budget will cost this year is a severe under-estimate. It will, in fact, cost us more.

We have talked about the common agricultural policy and its cost. We have been told by the Government that the cost of food through the common agricultural policy is some £3,000 million higher than it would be if we brought that same food at world prices. Hon. Members have said "Deficiency payments! How much would deficiency payments cost?" If one asks the question "If the food which we buy from the rest of Europe at European prices were bought from the rest of the world at world market prices, what would the saving be?", the answer is that that saving would be £630 million. So we know from that that deficiency payments would be less than £3,000 million by a figures of at least £630 million. Also, if we had our own system for looking after agriculture, it would be infinitely more sensible than the monstrosity which springs from Brussels. So we could reduce that figure even further.

Mr. Hooley

Of course, by setting the high food price system, we are aggravating inflation and our industrial costs and making our general competitive position far worse.

Mr. Marlow

I agree entirely with what the hon. Gentleman has said. I was just coming on to the fact that one of my hon. Friends said that it is costing every average family in this country £5 a week. One of the problems that we have in the economy is inflation. If we could take £5 a week off the cost of food to the average family that would have a wonderful effect on inflation. The hon. Gentleman is quite right in what he has said.

We are also sullied with the common external tariff. We have surrendered our right to our own trading policy. Since North Sea oil, we now have a strong currency. Our industry has got completely different problems from the rest of Continental Europe. Of course, we require a different regime to deal with our trade from that which the other countries of the Community, which have very different structures, require for themselves. If we do not do something about that, I am afraid we may well reap an industrial whirlwind.

Another of the disasters in this black-edged White Paper is harmonisation. Night after night we stay up late discussing harmonisation measures from Europe. It could be the tachograph. The tachograph will cost us £300 million to introduce. We know that the Government would not have introduced it at a time when they are trying to cut back public expenditure unless they had been forced to do so by Brussels. Examples of this are legion. The House is forced to pass measures which, on its own account, it would not wish to do.

Mrs. Kellett-Bowman rose—

Mr. Marlow

My hon. Friend has only just come in. She tends to come in very briefly and tries to interrupt. I have given way rather a lot and I know that others want to speak.

Mrs. Kellett-Bowman

On the tachograph, my hon. Friend is quite wrong.

Mr. Marlow

If we add that £630 million for the extra cost of food—let us be charitable—to the £370 million that we are to contribute to the budget this year, that is £1,000 million. I am sure that my right hon. Friend will tell me of the great benefits of membership. What are those benefits in tangible terms? There may be some abstract benefits of membership. There are certainly benefits to the French. The French, with their massive grain surplus and their massive butter churn, have an opportunity to sell their surpluses at fantastic prices. They get a benefit. There is certainly a benefit to the Germans. They have free access to our soft market with our strong currency to sell their manufactured goods during the recession.

There is certainly a benefit to the Dutch. The Dutch are receiving out of the Community fund, although they have only a fifth of our population, the same amount of money as we are getting. There is a benefit to the Danes. Despite the fact that their population is one tenth of ours, they get as much back through the common agricultural policy as we do. There is certainly an advantage to the Irish. Do hon. Members realise that the average Irish family receives £500 out of the Community a year? They have got benefits.

If there are intangible benefits in the Community, those benefits are shared amongst everybody in the Community. Why do we have to pay such an enormous bill when the others do not? We are in the position of left-handers who have joined a club for right-handers. We came in at the wrong time. It was the only club going. We were feeling lonely and we felt that we had to join. If one is a left-hander in a right-handed club one will find that all the equipment is wrong. One is under a severe handicap. There is nothing wrong with the membership of the club, it is just that we are in the wrong club. We must come out and get together with members of another club.

As regards our contribution to the Community, I must ask my right hon. Friend to consider this carefully. I am sure that he would not wish to mislead the people of the country. After all, he is responsible to the people of this country and he has no responsibility to Europe. The answer to our budgetary contribution and to all the money that goes from the United Kingdom to Brussels, is to have a special tax. It could be part of VAT or part of income tax. It could be 3 per cent. or 4 per cent. of VAT, or 5p on income tax. Everybody in the country could talk about a European tax and we would then know how we were spending our money.

Of the money that goes into Europe, 80 per cent. is spent on the CAP. It does not look as if that will change.

Mrs. Kellett-Bowman

Yes, it will.

Mr. Marlow

My hon. Friend would have said "It will" last year. Two years ago, she would have said "It will". If she had been here 10 years ago and if there had been a CAP 10 years ago, she would have said "It will". However, it has not changed and it is not going to. [Interruption.] My hon. Friend and Opposition Members have said that they wish to raise the VAT limit. So that we can put more money into Europe and get more money out.

I am sorry that my hon. Friend the Member for Harrow, East (Mr. Dykes) is not in the Chamber. He was terribly interested in these affairs. He spoke about the size of the surplus and said that it was only a small fraction of the agricultural surplus. He said that the amount of butter that we gave to the Russians was so small. It is not the size that matters. What matters is that 60 per cent. of all Community funds are spent on it. Of every pound that we contribute to the EEC, 50p goes on beef and milk. The right hon. Member for Stepney and Poplar spoke about Europe being a bullock. I am not sure how he spelt "bullock". If Europe is a bullock the CAP is certainly a sacred cow.

I also believe that we must withdraw from the common external tariff. We have a different industry, a different and stronger currency and different interest rates. It is our textile industry, not the European textile industry that is suffering. It is our footwear industry, not the European footwear industry that is suffering. Motor components, paper, wooden doors, foundries are all being hammered. I feel desperately sorry for my right hon. Friend the Secretary of State for Trade. I feel that in his bones, he would like to do something.

Some of these industries, which in the short term could disappear, have a long-term future. There is nothing that my right hon. Friend can do, even if he wished to. He has no powers to do anything, because the powers reside in Brussels. For example, two-thirds of the footwear exported from Eastern Europe into the Community, comes to the United Kingdom. We have a VRA with the countries of Eastern Europe. Those VRAs are negotiated by Brussels on our behalf.

Do you realise, Mr. Deputy Speaker, that earlier this year Brussels wanted to increase our quota? The Minister had to move heaven and earth to maintain the quotas at ther current level. Now dumping is coming in from Eastern Europe. Although my right hon. Frend may wish to do something about it, there is nothing that he can do. Again, the power rests with Brussels. Brussels does not just say "Have the British got a problem". It also asks "Have the Italians or the Germans got a problem". There is nothing that the Secretary of State for Trade can do.

I know that other hon. Members wish to speak. I could say much more, but I will not. Europe, and European co-operation, is fine. I am in favour of it. It is just that we have gone into the wrong things. We are working in the wrong institutions. It will be fine if we can change those institutions, but I do not think that that is possible. I implore my hon. Friend, and those who regard themselves as enthusiastic Europeans, to come with me and to seek, with me, to change those institutions and our relationship with Europe, before the people of this country—perhaps led by the Labour Party—demand such a fundamental change in our relationship with Europe that we shall have no relationship with it.

8.33 pm

Mr. Ron Leighton () Newham, North-East

As my hon. Friend the Member for Waltham Forest (Mr. Deakins) said, we are discussing a White Paper. I have read it and I find it a singularly lacklustre and dispiriting document. Page 1 is probably a good place to start. Paragraph 1.4 states: The growing and excessive cost of the Common Agricultural Policy (CAP) which is threatening to undermine the whole of the Community's activities was a considerable anxiety. The cost arises principally on the disposal of surplus commodities such as dairy products, sugar and cereals and it can best be controlled by holding down CAP support prices for the surplus commodities. That was the policy of the Government when this document was printed. It was the policy enunciated by the Minister of Agriculture from the Dispatch Box. But since the document was printed everything has got much worse. The Minister gave way and agreed to a large price increase.

What does that mean? The report from the Scrutiny Committee which was printed on 9 July explains that the budget for this year has increased by 2,030,000 units of account—that is, £1,370,000. What was that spent on? The most sizeable increase relates to the guarantee section, in which there was an increase of 1,082,000 units of account or 10 per cent. Therefore the cost of the food mountains this year has, since the document was published, gone up by 10 per cent.

It is about time that we stopped being fobbed off by endless talk about reform of the common agricultural policy. We really must face the facts. There has not been, and there will not be, any fundamental reform of the CAP. It is about time that the House accepted that fact.

I pay tribute to the hon. Member for Inverness (Mr. Johnston), who said that it was not a practical proposition to reform the CAP.

The more one studies the Common Market the more one realises that one of the reasons why we do so badly is that we obey the rules and others do not. On page 11 of the document, it is all set out very nicely in paragraph 4.12, which says: The European Court ruled against the United Kingdom main crop potato import ban on 29 March and the ban was lifted with effect from the 10 April. A further judgment of the Court on 25 September ruled against the French sheepmeat import controls. France has not so far complied with the judgment Not only has France not complied with the judgment, but it has got the sheep-meat regime that it wanted. In other words, virtue has been unrewarded and the French have found that crime pays. The House will realise this when we debate the report of the Court of Auditors. Hon. Members will find that the Community is financially completely out of control. But we shall come to that later.

We in this House have been worried about unemployment. When one looks through this document in order to see what the Community intends to do about it, one finds the answer on page 29. Apparently there was a meeting in Paris on 9 and 10 March at which the feasibility and likely effectiveness of reducing working time as a means of increasing employment opportunities was discussed. It was agreed that the Commission would do further preparatory work. In a blinding flash of illumination, the document says that the Community realised that many factors were involved, and it even went as far as agreeing a resolution. On page 30 it says: The effect of the Resolution in the United Kingdom is that the possible introduction of work-sharing measures is a matter for unions and managements to consider in the course of collective bargaining procedures. There is no way in which these fine aims can be achieved, other than at the national level by trade union negotiations.

Mr. Jim Spicer () Dorset, West

Would the hon. Member have it otherwise? Would he like to see the Commission in a position where it could lay down what should happen in this country over work-sharing?

Mr. Leighton

I am always willing to give way to hon. Members who have just come into the Chamber, and on that point I agree with the hon. Member. I am just saying that this document is lacklustre. If we hope to find a solution to our unemployment problems we must not look to the White Paper or to the Common Market.

I wish to examine convergence and trade. In that context the Community is causing unemployment in Britain. Convergence is discussed on page 14 of the document which states that discussion took place on: the implication of Community policies for the Community's declared aim of promoting convergence of economic performance between the Member States". In our last debate we discussed document 5437/80, which contains a letter from Commissioner Tugendhat to the Council. On page 2 of that document the Commission says that it is committed to reducing the disparities between the economies of Member States. On page 3 Commissioner Tugendhat states that work is aimed at reducing regional disparities and that the Council was asked to take action.

The letter reveals that the Council took no action. Some hon. Members might say that that is how it should be. The letter states: The Council has so far failed to adopt the requisite regulations and the Commission does not therefore consider it justified for the present to continue to allocate appropriations for those areas. The Council has done nothing in that sphere.

The object of convergence is to align economic policies, rates of growth and rates of inflation. The object is to bring everyone up to the same standard of living. I remember the either naive or mendacious propaganda put about before we joined the Community to the effect that if we joined we would enjoy the same rates of growth. The truth is different. The truth is that income per head, defined as regional growth value added, in the richest regions is five times that of the poorest regions. The position is becoming worse. The rich are becoming richer and the poor are becoming poorer.

A fundamental contradiction runs through the Treaty of Rome. A commit- ment is made in words to reduce regional imbalances. The preamble to the Treaty states that member States are: Anxious to strengthen the unity of their economies and to ensure their harmonious development by reducing the differences existing between the various regions and by mitigating the backwardness of the less favoured regions. That basic commitment is reiterated in article 2 of the Treaty, which mentions specifically the eastern borders of Germany and the southern parts of Italy. There is also a commitment to free trade, free competition and free factor mobility—that is, free movement of labour, capital and goods. They militate against each other.

The regional employment premium used to operate in Britain. It was seen as a threat to the principle of free competition and it was abolished. The answer to unemployment in Common Market terms is the free movement of labour. When the Prime Minister is asked by my hon. Friends where unemployed people in Wales should go, the answer is not to other parts of Wales but to Germany or Belgium or some such place. The answer is that they should move to other parts of the Community.

The EEC regional fund was held to be a great gain to Britain, achieved by the right hon. Member for Sidcup (Mr. Heath) when we joined the Community. We were to pay huge sums to the maw of the common agricultural policy and gain from the regional fund. We now know that that gain is derisory. It is a cosmetic and almost a propaganda myth. We were given to understand that in return for what is being sucked out of Britain we would receive something equal out of the regional fund. In fact we receive only a drop in the bucket of EEC charity.

Let me give the details from the Treasury paper of 14 April. It gives the figure for agriculture, which is over 107 billion European units of account. The regional fund was only 410 million units of account. The Community spent more on administration, paying Mr. Roy Jenkins, his fellow Commissioners and the other people over there. The Community paid out more for administration than was paid into the whole regional fund.

Let us examine what is happening. I am looking at the latest supplement—June 1980—of the Commission publication "European Economy". It gives the comparisons for the past 12 months. I should like to quote them, as we are talking about convergence.

In Germany industrial production went up by 5.9 per cent. In Britain it went down by 5.7 per cent. Where is the convergence there? The German rate of unemployment went down by 5.7 per cent. In Britain it went up by 13.6 per cent. There is not much convergence there. If we consider the consumer price index, we find that in Germany prices increased by 5.8 per cent. In Britain they increased by 21.8 per cent. There has been absolutely no convergence at all.

The last word on convergence comes from a publication called "Look Europe", which is published by the National Council of Social Service. The latest figure it gives relates to September 1979. This is an index of GDP in European units of account headed European units of account per head in current Prices (all EEC = 100.). In 1970 the German figure was 24 per cent. above the average. By 1978 it was 40½ per cent. above the average. The rich got richer. The Belgian figure for 1970 was 6½ per cent. above the national average. By 1978 it was 33.7 per cent. above the national average.

Let us consider what happened to the United Kingdom. In 1970 our figure was 11 per cent. below the Community average. By 1978 it was 25 per cent. below the national average. Therefore, we have been doing extremely badly. There has been absolutely no convergence at all. [HON MEMBERS: "Why?"]. This is because the effect of the Common Market on us. As a result of the free movement of labour and capital goods, there has not been convergence. Instead of convergence, which we were promised, the opposite has happened. If hon. Members want to know why, I shall explain the reason by discussing trade.

I am sorry that the Lord Privy Seal is not here, because he did not come clean with the House when we questioned him about trade. He skated over this matter quickly. The official trade figures which are bandied about are very misleading. We are told that our trade with the Common Market has increased. Of course it has, although it is still true that we do most of our trade outside the Common Market. However, if we abolish tariffs, the volume of trade will increase. We are told that exports have increased and that Germany is our largest export market. However, when we wanted to question the right hon. Gentleman on imports from Germany, he refused to discuss them.

The official figures are often misleading. First, they do not compare our trade with that of the EEC Six. They include the figures for the Irish Republic and Denmark, with which we had free trade before we joined the EEC. This trade has held up much better than that with the founder-members of the Common Market and we should compare our figures with those of the Six. The figures also include exports of North Sea oil to continental refineries. That is oil that we should be refining ourselves given our huge margin of spare capacity.

The figures include our trade in precious stones. We have a substantial surplus with the Six in that trade. It is mostly in diamonds, which are cut in Antwerp and are not the product of the United Kingdom. These three factors should be left out of the reckoning.

In 1979 we had a surplus of £866 million with the Irish Republic compared with only £39 million in 1970. We had a deficit of £65 million with Denmark compared with £55 million in 1970.

I want to give the House the facts of our trade with the EEC Six. I am grateful to the Library, which gave me the figures. I shall refer to the figures that the Lord Privy Seal was not prepared to be open about. If we adjust the figures so that we have the total trade with the Six less crude oil and precious stones but include trade in food, we had a staggering deficit in 1979 of no less than £4,998 million. That is a deficit of virtually £5 billion in overall trade.

Mr. Hurd

By what process of reasoning does the hon. Gentleman exclude oil and include food?

Mr. Leighton

We would have to trade in food in any event. We are talking about the effect of our membership of the Market. Oil is a boon. It would be a boon if we were not in the Market. The Minister laughs. If he listens, even he might learn something.

Mr. Dykes

Not from you.

Mr. Leighton

North Sea oil would be a boon to us whether inside or outside the Market. Perhaps the Minister does not understand that membership of the Market has an effect on our trade in food.

Let us exclude food and oil for the Minister's benefit. In manufactures we had a deficit—I challenge the Minister to disagree with the figures—of £4,092 million, a deficit with the Six of over £4 billion. That is the truth, and I defy any hon. Member to disagree with it. That compares with a surplus of £5,415 million with the rest of the world, a surplus of about £5½ billion. That is the trading picture. The corresponding figures in 1970 were a surplus of £99 million with the Six and £2,119 million with the rest of the world. The sources are the overseas trade statistics of the United Kingdom for 1979 and the annual statistics of trade for 1970.

There has been a startlingly sharp turnabout in trade. The EEC is inflicting a huge deficit on us—and no one can dispute that. Our performance outside the old EEC is nearly as good in real terms as it was in 1970. Our performance in the EEC is frighteningly bad, and this year it will become worse.

In 1970 we exported 8,873 more cars to the EEC Six than we imported. In 1979, we imported 595,000 more cars than we exported. In the first six months of 1980, the Japanese had 10.64 per cent. of our market and the EEC 38 per cent. of our market. Total imports were 57 per cent.

Mrs. Kellett-Bowman rose—

Mr. Leighton

I shall not give way.

Mrs. Kellett-Bowman rose—

Mr. Deputy Speaker (Mr. Richard Crawshaw)

Order. The hon. Gentleman is not giving way.

Mr. Leighton

Our imports of steel from the Six in 1979 amounted to 1.4 million tonnes, 14 times greater than our imports in 1970. In chemicals, the adverse balance with the Six rose from £58 million in 1970 to £306 million in 1979. With the rest of the world our favourable balance increased from £300 million to £1,816 million. In tex- tiles, the deficit of £11 million in 1970 had increased to £262 million in 1979. In engineering products, we had a surplus with the Six in 1970 of £91 million. That has now been transformed into a deficit of £842 million in 1979. Our surplus with the rest of the world—this is the point of interest—in 1970 was £1,943 million and has now grown to £3,212 million in 1979.

The result of Common Market membership is a trade disaster and our economy collapsing around our ears. A switch of purchases from British factories to continental factories must mean a loss of employment in this country. It is one of the major reasons for the level of unemployment and the longer dole queues. We are paying for our membership of the EEC not only in higher food prices but also in longer dole queues. The vote "No" campaign in the referendum suggested the rise in unemployment from continued membership would be 300,000, that was clearly an underestimate.

How do we react when the consequence of membership of the Common Market is rising unemployment and growing deindustrialisation? All the necessary actions to put Britain back on its feet are likely to fall foul of the Treaty of Rome. We reed to plan our international trade. We need to negotiate with France and Germany the sort of import controls on motors and steel that we have negotiated with the Japanese. We need public investment in British industry because private entrepreneurs are not willing to provide it.

The only policy compatible with the Treaty is the deflationary, monetarist stance of the present Government. If the price of membership is continuing deflation, low investment, high unemployment and cuts in living standards and public services, the price is too high. After seven years of membership, enough is enough. I hope that, at the next general election, the Labour Party will give the electorate a choice and an opportunity to disentangle ourselves from this arrangement that has been so disastrous.

8.58 pm

Mr. Selwyn Gummer () Eye

The document that we are discussing begins, after its introduction, with a whole section on political co-operation. This, in itself, is an encouraging attitude towards the Community. The document starts by dealing with one of those areas that many Conservative Members would like to see considerably extended. A strong and coherent European policy in the world has been lacking for some time. It is vitally necessary when the American hegemony, as the hon. Member for Wrexham (Mr. Ellis) so eloquently expressed it, is beginning to break down. The world is looking for a clear lead from nations that are important because of their attachment to peace and their historical role in world diplomatic affairs.

I wonder whether we have gone far enough. Will my hon. Friend the Minister of State, who is to reply to the debate, comment on the fact that in this section of the White Paper there is no extended reference to our overall attitude towards developing countries? Many of us feel that a growing and important part ought to be played by the EEC in extending the types of aid and influence on international trade that could do more and more for the poorest in the world.

It is noticeable that hon. Members of the internationalist party, as the Labour Party often refers to itself, have mentioned hardly a word about the international obligations of the European Community—a community of relatively rich nations—towards the poorest in the world. It is a sad fact that the recession has led so many so-called Socialists to be so concerned with our own plight that the great needs of the starving people of the world are not mentioned, and we have demands for import controls from those who, five years ago, were constantly talking about the needs of developing countries.

I hope that this country will begin to change course in its demands within the EEC for a much more enlightened and extensive concern by the Community for the rest of the world, particularly the poorest parts.

Although the EEC is not a defence community, it is a collection of some of the largest sellers of arms in the world, and if we are to bring more sense into the world in terms of arms sales we must take seriously the point made by the right hon. Member for Stepney and Poplar (Mr. Shore), with whom I do not often agree, concerning our attitude towards such sales. One of the great problems about adopting a sensible and responsible attitude is that it is difficult to do that if one feels that other nations will immediately fill the gap that one has left.

One of the great advantages of a community is that all the members can say that they will take a more responsible attitude towards, for example, the sale of arms. I hope that the Government will seek to influence our fellow-members of the EEC towards a much more co-operative and firm view on arms sales.

I draw great comfort from the fact that the EEC was willing to take a strong and clear line on an initiative over the Middle East. Many of us who, for many years, have had a great deal of sympathy with the Israeli position, have had to revise our view in the past 18 months and say that the EEC must try to bring home to the State of Israel some of the facts of life that are clearly being ignored by the Israeli Government. Today's news about Jerusalem is one of the most serious developments for world peace that we have heard for a long time. The Community's ability to act together is essential in a world in which the American position has been so eroded.

Surely the first part of the job of the EEC is continually to increase the ability of the great nations of Europe to use their power and influence jointly to create a safer world for ourselves and our children. That is why the position of Europe is so important and why the EEC can do what no individual State can do and what ad hoc arrangements can never achieve.

I am sorry that the hon. Member for Waltham Forest (Mr. Deakins) is not in his place. He asked earlier whether anything had been done which could not have been done by ad hoc arrangements. The answer is that a great deal could have been done, because it is only by constantly and continually working together that the great issues can be faced. The real problem about world affairs is that we meet only in crises. We come together only when we need to solve the problems of tomorrow, when we should be living and working together so that gradually we can solve the problems of the year after next and face the major issues of society.

Mr. Tom Ellis

Is the hon. Gentleman saying that it is crucial that certain things should be institutionalised?

Mr. Cummer

We know that institutionalisation is necessary in our own society, and the Labour Party is the greatest institutionalising force of all. Yet, for some reason they do not understand the principle in international affairs. If we cannot solve these problems with our nearest neighbours, with whom we share religious, cultural and historical links, how on earth can we propose to solve them with Tuvalu and Fiji?

I would have liked to spend more time on the Community's internal economic problems. The hon. Member for Newham, North-East (Mr. Leighton) spent a long time on this issue. I have only two minutes in which to answer the 22 proposals that he put forward. He was searching for a scapegoat—and how convenient a scapegoat the Community is! But to do that avoids the fact that Britain is doing less well than her neighbours. That is because Britain is at fault. We have failed to meet the demands of our society in a way which other countries have not.

Why do people buy Renault motor cars? It is because British people, given a free market choice and given the opportunity to buy from British Leyland or Renault, will buy a car that they think, rightly or wrongly is the better one. The answer to the hon. Gentleman is that we shall succeed in this world only if we build, manufacture and create the goods and services that people wish to buy and not the ones that they are compelled to buy because we seek to stop competition.

That is the answer in many Iron Curtain countries. It is extremely simple. People have to buy the Lada car because they cannot have another make. That is the direct method of controlling the economy, and it ensures that consumers have no choice and, consequently, must buy what their Government consider is good for them.

The message of the hon. Gentleman is not one of hope; it is a message of total despair. It says that Britain is unable to compete and that she has no chance of doing so. I can tell the House how Britain could land herself in that position. Her people could continue to elect, as they did over a period, Socialist Governments who, year by year, made us conform. That was not because Socialism necessarily does that. The Socialist Party in Germany has learnt its lesson and does not try the kind of dirigiste, approach put forward by the hon. Gentleman. That is the reason why he is the Member for his constituency.

The hon. Member puts forward that approach, but it is not the answer to Britain's problems; it is the reason for them. The hon. Gentleman simply asks us to have more of the same and seeks to make that possible by having a fortress Britain with the drawbridge pulled up and the rest of the world being allowed to go hang.

The effect of that on my constituency would be that the £22 million that ICI is now spending on a new resin plant at Stowmarket would not be spent there. It would be spent in Germany, because, if we were not in the Common Market, Stowmarket could not be the centre for the ICI resin production for Europe. People in my constituency would be unemployed if that did not happen. Minworth Metals, down the road, produces molybdenum for the whole of Europe. That firm would not be in my constituency if the hon. Gentleman had his way. It would concentrate its production in Holland.

We are in a difficult position today. We have high unemployment and have a great deal to make up. But we would make matters much worse if we removed the very few advantages that we have, such as the access to the whole of the European market and the opportunity for investment here being on all fours with investment in the rest of Europe. The hon. Member for Newham, North-East (Mr. Leighton) cannot get away with citing a series of miseries, blaming them on the Common Market and then suggesting that we should get out.

We should greet the White Paper with cautious optimism. There is not yet enough in it to show that the Government are prepared to take the lead in Europe and build on the successes of the past 18 months. We want a European Community that has the confidence to lead in a range of areas, that builds a common foreign policy that solves the CAP problems, not only internally but by extending co-operation, particularly over energy, and that has the confidence of its convictions. It is a good White Paper. To be great it should have shown much more clearly the direction in which this Government intend to take the Community, to which we shall continue to belong, even with the continued opposition of the hon. Gentleman.

9.10 pm

Mrs. Gwyneth Dunwoody () Crewe

The White Paper is compendious and has led to a wide-ranging debate. The speech of the Lord Privy Seal was interesting. I felt that it could have been written by a word processor. It contained large chunks of speeches made in other debates. At one point he quoted from a speech of one of my right hon. Friends in 1971. At that stage I realised that he was determined not to tell us what lay behind the Command Paper in terms of European development.

Those hon. Gentlemen who have in the past regarded themselves as pro-European, although that is not an accurate description, have taken part in the debate in order to re-run many of the old battles and mention the difficulties that they foresaw in the attitude of Members of Parliament. Many of my hon. Friends have raised the broader issues of membership and the difficulties that have arisen from the changes detailed in the document. The Lord Privy Seal said that we were part of a great enterprise, forging the economic future of Europe. He gave us some highly selective statistics that did not wholly match the difficulties of our trade position in relation to the Community.

We have had a great deal of detailed information about some aspects of the development of the Community but hardly any about those which particularly concern us. I pay tribute to the Prime Minister. It must have taken a difficult woman to return with the money that she scratched out of the Community, although the response was not what she had firmly said that she would bring home. She told us that there would be many changes, including a fundamental examination of the implications of the CAP and changes in the financial mechanism.

The right hon. Gentleman said that there was broad agreement on amending the financial mechanisms but did not give details. The cash will be welcome. It has been made plain that that money will come to us without matching legislation or commitment by the Government. In other words, the old scheme, particularly in relation to the regional and social fund, where the Government were required to put up matching amounts of money, will not necessarily apply to this money. Therefore, who is to decide the programmes on which the Community will spend its money in the United Kingdom? Who will decide the priorities? Where will the money be spent? Since the Government are already reducing the regional aid areas, and since they are amending the list of assisted areas, who is to decide what priorities will apply? Are we handing over that political power of decision to the Commission, or will that be decided by ourselves, not only in terms of Government strategy but in terms of the priorities of this House?

Although there has been talk of structural changes and of a review of the CAP, astonishingly little has been said in detail about how the Government foresee these mechanisms being changed. Many of my hon. Friends have made it clear that they are deeply worried about the Government's apparent agreement, ahead of examination of the CAP, that there will be no basic changes in its principles. I know that we shall always have quoted to us that part of the treaty that seems to imply that, of course, the consumers* interests must be taken care of in consideration of the CAP. The Minister of State is very good at doing that. He always drags it into our debates. But he does not say that since we joined the Community it has become obvious to us that the meaning and basic tenet of the CAP is very simple. It is to protect the standard of living of the farming community.

When we are talking about a policy that creates as a normal part of its planning considerable surpluses in some products we have the right to ask what the reorganisation and re-examination will consist of. Will there be an examination of new means of supporting farm incomes? Will we consider subsidised prices for the housewife? Or will we simply accept that the CAP must continue as it has since its inception?

The hon. Member for Inverness (Mr. Johnston) has an endearing habit of being honest. He said that he could not forsee any changes in the CAP. I think that he is right. If there is a policy that is to the financial and political benefit of eight members of the Community, there is very little incentive for them to change it in order to accommodate the ninth member. We must face that reality.

In considering the CAP and its surpluses I cannot but ask myself why, during the speech of the Lord Privy Seal, there was no indication of the Government's attitude to supporting food aid more actively. Surely it is obscene, when people are dying of famine, for the Common Market to be spending more money this year than ever on destroying food. That will happen at a time when the EEC is not even hitting its target on food aid. If that is the sort of world of which the hon. Member for Eye (Mr. Gummer) was talking, and if that is the reality of the Community's commitment to helping the Third world, one can only conclude that it is an exceptionally inadequate response.

For Conservative Members to accept the White Paper on Brandt, which calls for a cut in overseas aid because of our economic circumstances, and to say that Labour Members should not criticise the Community because it does more under Lomé for the Third world than Britain could do on its own, means that they are guilty of sheer effrontery. There is no question of our doing more through Lome. There is a clear indication that the poorest countries, even those in the Commonwealth, are not getting the support they would get if we were outside the Community.

I am not suggesting that we should use food aid policy in the Community as a means of dumping surpluses throughout the world without considering the implications. But why has there been absolutely no discussion about the implications for the Third world of the agreements reached both in Venice and at various other economic summits? That is something on which we could give a lead to the Community. If we want a joint policy, let it be one actively to assist the Third world—not only with food surpluses but by freeing sums of money to hit somewhere near the target of 0.7 per cent. of the GDP—something that the Government do not seem prepared to accept.

Hon. Members on both sides of the House mentioned the difficulties that we are encountering with the CAP. They also made clear the real problems that we face in trade. The Minister was dishonest in the way that he put the statistics. He told us that the figures included oil. I remember when the change was made. It made a big difference to the statistics of our exports to the Community when oil exports were included. But he did not tell us at any stage about the disastrous deficit in manufactured goods.

As my hon. Friends have spelt out time and time again, that deficit, when translated into jobs and into lost opportunities for employment, is a specific deficit in real political advantage to Britain. We have lost not only jobs but investment and future employment. The Government have not discussed the effects of the adverse trade statistics that have developed since we entered the Community. One of my hon. Friends said that during the early 1970s, when we were outside the Community, we exported more to the Community. He should have added also that those exports were over a tariff barrier of 12 per cent. At that time our exports to the Community were rising consistently. Currently, they are reducing to a frightening extent.

There has been little discussion about the effect that the trade coming into Britain from the EEC is having on our day-to-day financial set-up. There are other aspects of trade policy that are having an immediate effect. We have discussed the dumping procedures, and the length of time that it takes for dumped goods to be properly examined and for countervailing duties to be applied. When we handed over that responsibility to the Community we were assured that the Commission would be able to undertake the task efficiently, and that it would take action on those occasions when there was clear evidence of dumping. Yet many goods are being brought into Britain that we suspect are dumped—and not only from outside the Community, but specifically from inside the Community.

The hon. Member for Hornchurch (Mr. Squire) began his speech by saying that the Community was the best thing that had happened to Britain. He then proceeded to demonstrate that his own industries were being decimated by subsidised energy in other countries. It is very marked that in the case of the Netherlands, which we know is subsidising natural gas, there has been little action by the Commission to change those circumstances.

I turn to another aspect of Community policy. There have been no indications from the Government about their attitude towards changes in the structure of the Community's institutions. A debate in this House not long ago made it quite clear that we had considerable reservations about the workings of the European Court of Justice, which is taking over more and more of the political decision-making processes and having a deleterious effect on many of the United Kingdom's internal policies. It has already been spelt out that when the British are taken to the European Court of Justice on a specific trade infraction they rapidly comply with the terms of the judgment. What happens in the case of a country such as France is very different. Not only do such countries not comply with the rules, they go on arguing until they get the Commission to accept their initial ideas. If that is the way in which we intend to proceed, one must ask on what basis is the European Court really a court of justice, because the justice appears to be astonishingly one-sided.

Mr. Tom Ellis

Does my hon. Friend agree that the "spy in the cab" saga confirms her view of our approach compared with the Continental approach to the decisions of the European Court?

Mrs. Dunwoody

One of the difficulties for Britain is a fundamental one. We think of the court of justice as being outside political spheres. Rightly or wrongly, we in this House do not have the ability to influence judgments that are given in a court of justice. It is clear that, in effect, the European Court of Justice is a political court. It takes political decisions, and if for any reason those judgments are not complied with, it is plain that political pressures can be, and are, applied. As a result, the very case that was originally argued is fundamentally changed by one of the parties concerned.

That is not our understanding of natural justice, and I hope that we shall see a very different development in the future. Indeed, it is absolutely essential that the structure of the Community institutions is looked at closely. Let us look at the Commission and find out why it is that an ossifying process takes place. Let us not pretend that they are not political appointments. The sad thing about the British is that they have never caught on to the simple fact of life that, within the Community, national interest is all.

Frankly, it is only in this House of Commons that people are criticised for protecting their own national interests. That does not happen in the Netherlands or French Parliaments, or even in the German Parliament. With the greatest respect to my German colleagues, it is very plain that the moment at which they changed their attitude towards the financing of the budget was when they suddenly discovered that the time when we cease to be the largest contributor is when they will become the largest contributor.

Mrs. Kellett-Bowman

The hon. Lady is proving precisely the point that I made earlier—that the Prime Minister fought extremely effectively for the national interest.

Mrs. Dunwoody

I have no objection to anyone who fights effectively for our national interest.

Mrs. Kellett-Bowman

And she won.

Mrs. Dunwoody

I have considerable objections to those who say that they want to hand over all responsibility to Europe while at the same time behaving in a narrow, nationalistic manner and lecturing the rest of us on the need for Europeanisation.

Therefore, this document in effect contains a number of one-line telegrams which give us only some indication of the overall discussion and which do not tell us what the implications are. One slightly frightening point about it is that it demonstrates how far the Community is beginning to impinge on day-to-day life. It is beginning to have a wide impact on all sorts of aspects right across the board. I am not always sure that this House of Commons is fully informed about what is happening in the Community. Indeed, many policies are now being negotiated at central level and are still not being fully reported to the House. Many hon. Members believe that that would be possible in the future if we were to look at the machinery of the Community with a view to seeing how best we can improve it, and how best we can bring the control of much of the machinery that is now out of control back within the purview of the House of Commons.

Mr. Dykes

Should not an institution or agency be located in London, as is the trade mark office?

Mrs. Dunwoody

I believe that before we have any more Community institutions we should look at the ones that we already have, find out how much they cost, whether they are working efficiently, and assess their benefit to us.

I am sorry that the Minister did not take up many of the points that were made by my right hon. Friend, and not simply about the arms race and the fact that Western European countries are engaged in supplying arms to those countries who have least need and find it most expensive. I should like to have seen a reference in the document to the fact that one way in which the Community could assist would be to move towards a tax on trade and on the sale of arms, and to be prepared to transmit that sort of resource to the Third world. That would at least be an earnest of genuine good will. The Lomé convention is an attempt to bring some assistance in those areas where it is most needed. But it is not the sort of machinery that can be fully developed.

I note that we are to look at means of assisting commodity prices. We have looked at the possibility of developing a scheme such as MINEX, but there is still no strong commitment on sums of money from the Community to make such a scheme a workable possibility. There is no point in our talking about giving assistance to the Third world if we are not prepared to back it up with suitable sums of money.

I return to political co-operation—the point at which the Secretary of State began his speech. Looking ahead, he appeared to be saying that Britain has difficulties with the Common Market, and that it is true that, because of our agri- cultural system, we are paying a great deal. I think that he was implying that we could probably get a better deal elsewhere. The Government appear to be saying that we are being damaged in terms of manufactured goods. Nevertheless, they say that it is because we now have a political nous and a political muscle that we did not have before in terms of political co-operation that we can defend our membership on that ground. That is absolutely untrue If the Community is to continue as a viable unit it will have to be radically changed, not only in structure, but in its attitude to member States. It is feasible to cooperate with our European partners and to commit ourselves to a number of common policies if they are manifestly seen to be just and not to be working against the interest of one group or another. There is no co-operation in any partnership where there are unequal partners. There has been no demonstration by the Community that it understands the real difficulties that Britain still has in accepting many of the internal arrangements that developed long before we joined the Community.

If the European Economic Community develops, and if we are a member of it in the future, it will be on the basis of true co-operation and justice. We frankly say that in some instances we do not see that happening at present.

9.35 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd)

Most hon. Members who have taken part in the debate have been faithful attenders at many debates on this subject over the years. I do not think that in our hearts most of us are satisfied with the way that these debates go, whatever our place in the argument, but today's debate has been more lively and contained newer elements than usual.

In real life the Community has changed, is changing and will go on changing. This country had a major change for the better on 30 May with the budget settlement. Yet, often in this country and sometimes in the House the discussion seems to get stuck in a groove, as my hon. Friend the Member for Harrow, East (Mr. Dykes) said, with the critics attacking a Community which they learnt to dislike 15 or even 20 years ago. I am not sure whether that Community ever existed. I do not think that it exists today, yet the image or myth lingers on.

There still is the idea—we have had echoes of it in the debate—of a Community where power is concentrated on an ambitious bureaucracy with creeping competence, as the hon. Member for Waltham Forest (Mr. Deakins) said, a Community dominated by farm lobbies and a Community which admitted Britain only to humiliate and exploit us.

As someone who has only recently begun to attend Council of Ministers meetings in Brussels, I must say that that image bears no resemblance to the Community that one sees in action. Power is firmly in the hands of the Council, which is composed of conscientious and sometimes rather puzzled people wrestling with a whole tangle of problems—many of them similar to the problems which we discuss in the House—conscious all the time of their domestic opinion at home and operating under a system by which decisions on important matters are reached by unanimity.

This is an inevitable system. I do not agree with the hon. Member for Inverness (Mr. Johnston) on this matter. I think that the system of unanimity on most matters will endure for a long time. It makes the taking of decisions slow and painful and it means that some of the procedures are clumsy. That is why it is right that we should look at the system, criticise it and put forward ideas.

On the whole, that does not happen in the debate in this country. We use the European Community as a sort of scapegoat for our own frustrations and anxieties. Therefore, the criticisms do not hang together and they are often contradictory. The Community is blamed by some because food prices are too high. It is blamed by farmers because prices are too low. It is blamed by some because of the high budget contribution and the great burden on the British taxpayer. It is blamed by others because it restrains us from spending millions of pounds of taxpayers' money on new subsidies for industry or on deficiency payments for agriculture.

The Community is blamed by some because it is said to be mean and selfish to countries outside Europe. It is blamed by others because it restrains us from being mean and selfish through sweeping import controls which would shut out other countries' goods.

Through the criticisms runs a line of intelluctual confusion. I listened to my hon. Friend the Member for Southend, East (Mr. Taylor) with great interest and agreed with some of his criticisms—for example, the sale of subsidised butter to Russia. But he left out of his argument the support of British agriculture. My hon. Friend the Member for Northampton, North (Mr. Marlow) dealt with that aspect to some extent.

I am sure that, as good Tories, neither of my hon. Friends would contemplate the collapse of British agriculture. If we were outside the Community, we could sustain our agriculture by levies at the ports, in which case food prices would remain high and that part of the argument, to put it politely, would become a little weak. If we did not do that, we could go back to deficiency payments, which the right hon. Member for Battersea, North (Mr. Jay) has proclaimed in and out of season. If we did that, whatever the estimate, for all CAP products we should place a very large burden on the British taxpayer. Therefore, the criticism about the budget contribution and the burden on the taxpayer would, again to put it politely, lose a little of its validity.

It must be right for us to criticise the Community—and there is a lot to criticise—but it would be better to sort out the intellectual foundation from which we start.

The hon. Member for Crewe (Mrs. Dunwoody)—I have heard her make these points before—talked about the defence of British interests and the fact that all member States defend their interests in the Community; and of course that is right. But what we suffered under the Labour Government was that some Ministers attacked the Community because they thought that was the same as defending British interests. Even in terms of British interests, it did not work. On the budget contribution it did not work in British terms. On the reform of the CAP, it did not work in British terms.

We support the Community. We believe in it and we want it to succeed. We also defend British interests within it. Although it is early days, that mixture seems to be working better—in terms of British interests—than the last one.

Mrs. Dunwoody

Does not the Minister agree that the Prime Minister did not get any change on the budget question until she was quite sharp about it?

Mr. Hurd

Of course my right hon. Friend was quite sharp. But, although she was sharp, she pointed out that we were sharp because we wanted to stay in the Community. The right hon. Member for Deptford (Mr. Silkin) was sharp all the time. He came back. He got his cheers in this House and his headlines. At the time, it was difficult to criticise him. However, it did not work in terms of British interest. That is the difference between the Government's approach and the approach of previous Labour Ministers.

Let us take the simplest and narrowest test, namely, that of progress in the defence of British interest. There can be no doubt about which approach has been more successful, namely, the one that set out to work within the Community for the success of the Community and for British interests. The alternative approach simply used the European Community in order to come back here and attack it, and to say how hopeless it was.

I believe that all hon. Members will accept that we are reaching a critical stage in the Community's life. The agreement in principle to consider restructuring, and to consider achieving a sensible balance in the way that the Community raises and spends its resources, is one of the crucial results and progress points of the Community's discussions in relation to our budget contribution.

From now on, the question of the Community's resources can be seen, and is seen, as a European problem. It is no longer seen as simply a British problem, which the clever British have dreamt up to suit their own arguments and interests. It is clearly seen as a European problem. It is therefore more likely—I should not like to overrate the argument—that progress can be made.

Under the budget settlement, France will pay £350 million more, and Germany will pay £460 million more. Those are quite substantial sums. I am told that in Germany the new taxes needed to pay for the extra amounts are called the "Thatcher pfennigs". There is no harm in that. The fact that extra contributions are being called for strengthens the hands of those in France, Germany and the other Community countries who publicly argue for change.

My right hon. Friend the Lord Privy Seal used some quotations, including one from the German Cabinet and another from the President of the French Republic. They are recent quotations and show that the argument for change is gaining ground all the time.

The hon. Member for Birmingham, Erdington (Mr. Silverman) asked me about article 235, and the supplementary expenditure. The regulation has not yet been approved by the Council. It will come to the Council on 15 September. Until it is adopted we shall not be in a position to submit programmes. The draft proposed by the Commission envisages that the Government will put forward programmes that may include economic and social infrastructure, telecommunications, water and sewerage, advance factories and investment in energy.

The draft also envisages that, in exceptional cases, where there is a special Community interest programmes may be submitted outside the assisted areas. We have not yet decided what programmes to put forward, or in which areas. We are discussing Community finance with the Commission for a series of programmes to help with problems of the disadvantaged regions. It is right to say that the extent of Community participation in such programmes can, if the Commission's draft is agreed, be up to 70 per cent. At present, it looks as if the amount that we shall receive via the amended financial mechanism—the other part of the agreement for 1980—will be £285 million gross, and, under article 235 for supplementary expenditure, about £585 million gross.

Mr. Anderson

Given the serious deterioration of the infrastructure in many of our older areas, can the Minister give us some indication of the time scale of the progress that the Government want to see over the next few months?

Mr. Hurd

At present I cannot add to what I have said about article 235, but no doubt the House will press us for further information as we proceed.

I wish to reply to the hon. Member for Inverness about the timing of discussions on restructuring the Community and the wider question of the nature of the Community and its resources. The Commission will submit proposals by the end of June next year. Before that we shall want to have informal discussions with our partners and with the Commission on the possibilities that exist in order to prepare the ground. After the Commission has submitted its proposals, there will need to be further discussion, and also formal discussions in the Council, although no date for that has been set.

We expect this process—the crucial discussion on restructuring the finances of the Community—to intensify throughout the period of our own presidency which is in the second half of next year. We shall have a lot of work to do. We want to complete the review before the end of 1981, if that is possible. There is a failsafe arrangement for our own budget in the negotiation concluded on 30 May, which will continue the interim relief into 1982 if the restructuring review is not completed.

Mr. Jay

In these proposals for restructuring the budget and the CAP, will the British Government put forward any practical proposals of their own or will they simply wait for the Commission?

Mr. Hurd

Obviously we are working on our own ideas and I cannot say more than that now. We shall not sit dumb on our seats as the discussion proceeds, and we shall certainly have something to put into it.

A number of right hon. and hon. Members raised the question of trade. I can only stand on the figures that were given by my right hon. Friend. I admit that they are unsatisfactory. But our trading figures throughout the world have been unsatisfactory. Our EEC figures are somewhat less unsatisfactory than those for the rest of the world. In manufacturing last year the deterioration in our trade with the Community was less than the deterioration in our trade with the world as a whole—less than that with the United States and less than that with Japan.

If the argument is that British business has been slow to take opportunities in Europe since we joined the EEC we would agree. This is part of our economic problem which we discussed earlier this week. But if the argument is that it is better to leave the Community in order to solve these problems, I do not agree. To those who use that argument I say "Go and look at the order books of the firms in your constituencies on which the jobs of your constituents depend." If one tells those firms that the United Kingdom intends to leave the Community and put at risk export orders to the Community—42 per cent. of export orders—and then tells them not to worry because they will get more of the home market because British customers will be stopped from buying what they want from the Community, the managing directors or the shop stewards concerned will think that that is a very inflationary inefficient and uncertain way to proceed. They would not want us to put their main market at risk.

There is a further point on the trading side. That supposition would mean that a Community without us would still be our main export market. But it would pursue trading policies across the world—in the GATT in the fund and in the Bank—in which we had no part and over which we had no influence. We would be completely outside. For a major trading nation that would be a thoroughly unsafe and uncomfortable position.

Mr. Marlow

My hon. Friend has just said that the deterioration in our trade with Japan is greater than with the European Community in the last year. But the balance of our trade with Japan went from 42 per cent. to 41 per cent.—that is, us importing from them. There is a drop from 42 per cent. to 41 per cent. Can he say what the figures are for the Community?

Mr. Hurd

I cannot give my hon. Friend the figures now. I stand by what I have said and I shall give my hon. Friend the statistics later.

The most dramatic progress that the Community has made is in its dealings with the outside world. The right hon. Member for Stepney and Poplar (Mr. Shore) was interesting in the part of his speech which dealt with that. Within the Community we have built up a remarkable structure of agreements across the world. The content of them is dry stuff, involving quotas, levy reductions and understandings on commodities. However, the political importance is great.

In recent weeks trade agreements have been made with Romania and Yugoslavia. A revived association agreement has been made with Turkey. The Lomé convention signed last October is one of the main instruments in co-operation between North and South. The Community has channelled £3⅓ billion worth of aid to some of the poorest countries. Such actions have been taken by the Community using, on the whole for good, its economic strength in the outside world. It has helped countries which we would like to be our friends. Such actions are not made under political co-operation. They have been under the treaty and are one of the main signs of progress.

The right hon. Member for Stepney and Poplar, straying a little from his text, was cruel about the Foreign Office memorandum on the Brandt report submitted to the Sub-Committee. There is not time to go into that. However, I accept that the memorandum which the right hon. Gentleman criticised is a little short on comfortable rhetoric. The point that we are trying to make is that we want to encourage change through existing international institutions which on the whole have done a good job and which are on the move.

If we were entirely cynical and negative we should welcome the prospect of a global round in which there is no agenda and everybody talks forever about everything. Because we are serious we want a specific agenda and to concentrate on issues on which serious discussion is fruitful. We want to make it clear that existing financial institutions are guided by the Assembly but are not given their orders by it.

Mr. Shore

The hon. Gentleman says that the approach lacks rhetoric, but we think that it is negative, as is revealed in the paper to the Select Committee. Is that the same outlook that was given by the Community in its mandate to the special session of the United Nations?

Mr. Hurd

It is broadly the same, but I do not accept the right hon. Gentleman's description of it. We have decided to take an active and constructive part in the forthcoming discussions.

I turn to the question of political cooperation. I welcome what my hon. Friend the Member for Eye (Mr. Gummer) said on that subject. It is not always possible to reach agreement on foreign policy. The right hon. Member for Stepney and Poplar had a little fun with that in relation to the Olympics. We all retain the ability to pursue our own policies. From time to time that is what we shall do. Overwhelmingly, one comes to the conclusion that often it is better and more effective to work together. The right hon. Gentleman was churlish not to mention the proposals on Afghanistan made by the Foreign Secretary and endorsed by the Nine. They have been helpful in crystallising and focusing opinion on the problem and its solution.

The right hon. Gentleman does not like the Venice declaration on the Middle East. Some of his hon. Friends do like it. I do not want to argue its merits in Middle Eastern terms. However, it has had a much greater impact on the Middle East situation than would an initiative by either Britain, France or any other member State. I say this to my hon. Friend the Member for Northampton, North who is very interested in the subject. It is unrealistic to suppose that we can have the advantages of working for co-ordinated foreign policy in the Middle East if we break up the Community in its other aspects. I thought that the magnificent speech by the hon. Member for Wrexham (Mr. Ellis) was apposite on this point.

We think that political co-operation should improve and develop. We have some ideas about that. It is important that consultation and co-ordination among the Nine could be more rapid, just as emergency decisions at a national level must also be taken rapidly in national capitals. This is the first occasion that the House has been told of this. We have suggested a system whereby a request from any three countries would trigger a meeting within 48 hours. This automatic mechanism would not affect the rule that decisions are taken by consensus. It would simply enable the process to get going quickly.

We believe that the political commitment to co-operation could be made stronger. We propose that the Nine should reaffirm the priority of consultation among themselves on all foreign policy matters and the need to take account of their partners' views in forming national policies.

We have suggested that this strength and commitment should be matched by improved machinery with possibly—we are not dogmatic about this—a permanent staff at the disposal of the presidency. A team of officers seconded from national Governments could work closely with the presidency. That is one possibility, but other arrangements might be envisaged. Those are limited but practical suggestions for improving what is clearly one of the success stories of the Community.

To conclude, it is quite right—and every debate in the House throws up this fact in different aspects—to say that the Community to which we belong is full of defects. Perhaps they dominate our discussion to an excessive extent. Nevertheless, there is a great deal of work which still has to be done. In that work of rectification and improvement we should play a full part. However, if we reflect—and we do not need too long an historical perspective, for Heaven's sake, to do this—we understand that 30 or 40 years ago Europe lay helpless and disorganised to a fantastic extent. We realise how unsuccessful and hopeless were all previous efforts at reconciliation, getting together and keeping some kind of European or international organisation, and how hopeless all that had seemed to every generation since the collapse of the medieval Church.

Now, 35 years on, if we look at the present situation, with all its defects and

all that remains to be done, it is remarkable to notice, not what a mess we are in, but how far we have got. That is the approach of the Government. It is unthinkable for anyone with any sense of historical perspective, to suggest that we should throw away what has been achieved. It is essential that in our own interests as Britain we should build on it and help it to succeed.

9.59 pm

Mr. Tam Dalyell () West Lothian

I do not apologise for speaking at the fag end of the debate. Like some of my hon. Friends I have sat here all this afternoon.

My point concerns the Community's attitude towards Japanese inward investment and the Republic of Ireland. It has been found on several occasions in Scotland that job-giving, inward Japanese investment has not come to Scotland but has gone to Ireland. There is the strong suspicion that for some time Eire has been flouting various Community rules.

Perhaps we could have an undertaking from the Foreign Office that, with the resources at its disposal, it will consider the position in which Ireland finds itself and the way in which it has, possibly, taken investment from Scotland and the North of England by unfair practices, which flout Community rules. May I have the undertaking that the Foreign Office will consider the problem? That is all I ask at present.

Mr. Hurd

Yes, I shall consider the problem and write to the hon. Gentleman.

Question put:—

The House divided: Ayes 96, Noes 9.

Meyer, Sir Anthony	Sainsbury, Hon Timothy	Viggers, Peter
Morrison, Hon Peter (City of Chester)	St. John-Stevas, Rt Hon Norman	Waddington, David
Murphy, Christopher	Sims, Roger	Wakeham, John
Needham, Richard	Speller, Tony	Waller, Gary
Nelson, Anthony	Spicer, Jim (West Dorset)	Watson, John
Neubert, Michael	Spicer, Michael (S Worcestershire)	Wells, Bowen (Hert'rd & Stev'nage)
Newton, Tony	Stainton, Keith	Wheeler, John
Page, Rt Hon Sir Graham (Crosby)	Stanbrook, Ivor	Wickenden, Keith
Page, Richard (SW Hertfordshire)	Steen, Anthony	Winterton, Nicholas
Parris, Matthew	Stevens, Martin	Wolfson, Mark
Penhaligon, David	Stradling Thomas, J.
Percival, Sir Ian	Tebbit, Norman	TELLERS FOR THE AYES:
Price, David (Eastleigh)	Thome, Nell (Ilford South)	Mr. Peter Brooke and
Proctor, K. Harvey	Townend, John (Bridlington)	Mr. Robert Boscawan
Rhys Williams, Sir Brandon

Division No. 440]	AYES	[10 p.m.
Alexander, Richard	Douglas-Hamilton, Lord James	Hogg, Hon Douglas (Grantham)
Alton, David	Dover, Denshore	Hooson, Tom
Baker, Nicholas (North Dorset)	Dunn, Robert (Dartford)	Hurd, Hon Douglas
Berry, Hon Anthony	Dykes, Hugh	Johnston, Russell (Inverness)
Blackburn, John	Eggar, Timothy	Jopling, Rt Hon Michael
Bright, Graham	Eyre, Reginald	Kellett-Bowman, Mrs Elaine
Brinton, Tim	Fairbairn, Nicholas	Kershaw, Anthony
Brittan, Leon	Fenner, Mrs Peggy	Knight, Mrs Jill
Brown, Michael (Brigg & Sc'thorpe)	Fletcher-Cooke, Charles	Lang, Ian
Bruce-Gardyne, John	Forman, Nigel	Lawrence, Ivan
Buck, Antony	Garel-Jones, Tristan	Le Marchant, Spencer
Bulmer, Esmond	Goodhew, Victor	Lloyd, Peter (Fareham)
Cadbury, Jocelyn	Gow, Ian	Lyell, Nicholas
Carlisle, Kenneth (Lincoln)	Greenway, Harry	MacGregor, John
Clarke, Kenneth (Rushcliffe)	Griffiths, Peter (Portsmouth N)	McNair-Wilson, Michael (Newbury)
Cope, John	Gummer, John Selwyn	Major, John
Cranborne, Viscount	Hamilton, Hon Archie (Eps'm&Ew'll)	Mates, Michael
Dean, Paul (North Somerset)	Hawkins, Paul	Mather, Carol
Dorrell, Stephen	Hawksley, Warren	Maxwell-Hyslop, Robin
NOES
Fitt, Gerard	Meacher, Michael	Wainwright, Edwin (Dearne Valley)
George, Bruce	Molyneaux, James
Jay, Rt Hon Douglas	Powell, Rt Hon J. Enoch (S Down)	TELLERS FOR THE NOES:
Kilfedder, James A.	Spearing, Nigel	Mr. Eric Deakins and

Mr. Ron Leighton

Question accordingly agreed to.

Resolved,

That this House takes note of the Report on Developments in the European Communities, January to December 1979 (Cmnd. 7780).