European Community (Developments)

HC Deb 08 April 1981 vol 2 cc965-1041

Mr. Speaker

The Lord Privy Seal.

Mr. Denzil Davies (Llanelli)

On a point of order, Mr. Speaker. I understand that this is a hybrid form of debate in that the Government tabled the motion, but in the past it has been customary, since this is a Supply day, for the Opposition spokesman to start the debate. I hope that we can still follow that precedent.

Mr. Speaker

I am easy, if the House is.

Mr. Davies

I am grateful to you, Mr. Speaker, and to the Lord Privy Seal.

Motion made, and Question proposed, That this House takes note of the Report on Developments in the European Community, July to December 1980 (Cmnd. 8195).—[Sir Ian Gilmour.]

4.16 pm

Mr. Davies

Since we debated the last report on developments in the European Community, just before Christmas, Britain's relationship with the other countries of the Common Market has deteriorated and there has been no progress towards alleviating what many see as some of the more damaging aspects of Britain's membership.

The common agricultural policy, as has been shown by the recent price agreement, is now more entrenched than ever. The Government do not seem to have either the imagination or the strength to propose and press for fundamental reforms.

The Ministry of Agriculture, Fisheries and Food is gradually filleting our fishing industry into minute pieces. Our net contribution to the 1981 Community budget will probably exceed £500 million. The Government's negotiating tactics, if they can be so described, have achieved nothing while arousing the contempt of the French and the anger of the Germans, so that, again, after the last summit, the cry "Perfidious Albion" was heard in the counsels of Europe.

Paragraph 1.4 of the report deals with the common agricultural policy. It contains an even weaker statement on the CAP than the last report that we debated. It merely states: The Government will continue to stress the need to restrain surplus production…and to reduce the…costs of the CAP. Merely to stress the need to reform the CAP will achieve nothing, and nothing has been done to remove some of the damaging aspects of that system.

Only last week the Minister of Agriculture, Fisheries and Food acquiesced in a price agreement which will probably cost the British consumer at least £500 million, will put up prices probably by between 1 and 2 per cent. and will generate even more surpluses which will have to be disposed of at even greater cost.

A report in The Daily Telegraph on Tuesday—I hope that the Minister will comment on it—suggested that the figures given in the House by the Minister of Agriculture about the increase in the price of food were not similar to some of the figures that his officials put to the House of Lords Select Committee. Under the headline Walker Food Prices Wrong Say Ministry", The Daily Telegraph states: The ministry"— not necessarily the Minister— estimation is 7p lb. on butter, 5½p lb. on cheese, 2½p a kilo bag on sugar, 2p lb. on bacon, 5p lb. on beef, and ½p on a standard loaf". I hope that when he speaks the Minister will tell us whether those price increases in The Daily Telegraph were correct.

Mr. Tony Marlow (Northampton, North)

The right hon. Gentleman has probably heard in this House from the Minister of Agriculture his estimate that food prices will go up by 1 per cent. a year. Is he aware that the Commission believes that the average level of food price increases in Europe this year will be 3 per cent. as a result of these measures? I dare say that there are differences between this country and Europe, but is it that we are learning new maths in the Ministry of Agriculture of the United Kingdom whereas they have got old maths in Europe? What is the position?

Mr. Davies

Sometimes we feel that perhaps they have not learnt any maths at the Ministry of Agriculture because it is not very clear, as the hon. Gentleman says, what the increase is likely to be. I said between 1 and 2 per cent., being modest and fair and not wishing to criticise the Ministry too much. No doubt we shall be told what the figure is when the Minister replies to the debate.

There is little doubt that the CAP has been a financial disaster for the British consumer and the British taxpayer. What is not always remembered is that it has not generally provided corresponding benefits to British farming. Many sections of British agriculture would be much better off if we had a system of national aids to agriculture instead of the ridiculous system of the CAP.

Mr. David Myles (Banff)

Would the right hon. Gentleman care to give an example?

Mr. Davies

I was about to give two examples. One is in relation to dairy farmers. It is absurd that there is a levy on dairy products, the reason being apparently to reduce surpluses. But, as I understand it, there are no surpluses of dairy products in this country, so why should our farmers, and our consumers presumably, have to bear this levy?

Another example is livestock producers. Their greatest input cost is the cost of feeding stuff, especially maize imported from North America. The cost of maize is pushed up artificially by the tax on imports and as a result of this settlement the cost of importing maize from North America will increase and these costs will have to be taken into account in next year's price settlement. So that with the CAP prices are putting up costs and costs are putting up prices. It is a quite ridiculous system and certainly not the best way of regulating food production or the agriculture industry.

It is quite clear that we shall not get from the Government any fundamental proposals for the reform of the CAP. It is quite clear from the statements of the Minister of Agriculture that he has no intention or idea of reforming the system. I do not think that we shall see any radical proposals from the Commission, either.

The first paragraph of the report that we are debating states that it covers the last period of the Presidency of Mr. Roy Jenkins, who I believe is this month's leader of the Social Democrats. In a depressing epitaph for the Jenkins' Presidency the January edition of the publication Agra-Europe, which is a respectable publication in Europe on agricultural matters, says that the European Commission, under the Presidency of Mr. Roy Jenkins has failed miserably in the attempt to tackle the problem of farm surpluses in the EEC. Farm support costs have gone up from £3 billion at the beginning of that Presidency to £8 billion at the end—an annual rate of growth of more than 23 per cent. The report goes on: The Jenkins Commission made no recommendations, nor has it initiated any policy changes which have done anything to solve the CAP problems. So on past evidence there has been no real attempt by the Commission to reform the system, and I do not believe that we shall see any attempt in the future. A paper has now been produced called "Some Reflections on the CAP", but all that it does is suggest that the problems can be solved, or at least alleviated, by putting another tax on food. It suggests a tax or a levy which is pompously called a co-responsibility levy, but all that it is is a tax on food production. The only effect that the levy will have will be to put up prices even further, because farmers will decide on the prices they require and the levy will be put on top of that. So prices will go up, and neither the farmers nor the consumers will benefit. The more efficient farmers will suffer more than the less efficient because of the way the system will operate.

The whole object of this tax is to provide more money for the Commission. Why not simply reduce the prices? The object is to provide more money for the Commission so that, presumably, that money can be used to create a new common policy, which will probably be quite as absurd as the ones that we have already.

Mr. Robert Maclennan (Caithness and Sutherland)

I am very interested in the right hon. Gentleman's view on the co-responsibility levy. Is this one of the many matters on which the Labour Party is performing a neat U-turn? Has he completely forgotten that the co-responsibility levy was supported by successive Labour Ministers of Agriculture?

Mr. Davies

That is a rather silly point. The Commission has now brought forward proposals for the reform of the whole system and it is proposing a co-responsibility levy over the whole range of products. That is how the system is to be changed—by putting a tax on food across the board, as I understand it. I should have thought that the hon. Gentleman would agree entirely with my criticism.

The only worthwhile reform of the CAP would be to dismantle it and let each country in the EEC get on with helping its own farmers and its own food industry in the ways best suited to its own traditions, economic factors, and farming structures. I cannot believe that the security and the prosperity of Western Europe would be jeopardised by the disappearance of the common agricultural policy.

Mr. Hugh Dykes (Harrow, East)

In the major debate on the EEC last year the right hon. Gentleman said, in castigating the French, that 25 per cent. of the French population still worked on the land. The real figure, as we know, is 9 per cent. In view of his abysmal ignorance on the subject, why should we listem to anything that he says about agriculture in Europe?

Mr. Davies

I admit entirely that I gave the wrong figure, but the point that I was trying to make then was fair and a right one—that because France is still to a great extent an agricultural country, far more so than we are, there will not be any basic change in the system.

As a start on the process of demolition, perhaps the Government should use the talks which I understand will be starting in the middle of this year for restructuring the budget to try to change the system whereby spending on the CAP is an open-ended commitment. The present position with regard to the budget is quite absurd. We have Treasury Ministers shuttling back and forth to Brussels for budget meetings, arguing about expenditure which is only 30 per cent. of the total EEC budget.

I hope that the Government will press for a change in the system so that the way in which the budget operates in relation to agriculture is no different from the way in which it operates in relation to the regional fund, the social fund and any other form of expenditure. I think that that is a quite reasonable and constructive suggestion to make. There is no case for having an open-ended commitment. I hope that the Lord Privy Seal will tell us the Government's thinking about this matter and the whole process of reorganisation and restructuring of the budget.

If the CAP has been bad for both the consumer and sections of British agriculture, the other common policy, the common fisheries policy, looks like being a disaster for the British fishing industry. In the first section of the report the Government talk about the continuing effort to negotiate what they call a satisfactory common fisheries policy. Of course, the time has long passed for the negotiation of a satisfactory common fisheries policy because the pass was sold when the last Tory Government negotiated entry and agreed in the Treaty of Accession to allow, after a period of transition, the fishermen of the other countries to fish right up to our shores.

The irony of the situation is that one leading member of that Government was the present Minister of Agriculture, who now has to try to pick up the pieces of that betrayal of the British fishing industry and is not making a very good job of it.

Mr. Russell Johnston (Inverness)

I am sure that the right hon. Gentleman is always anxious to be fair and that with his condemnation of the Conservative Government he would wish to associate the Labour Government., who renegotiated the terms.

Mr. Davies

I have never denied that the renegotiation process did not go half as well as we hoped.

There have been two opportunities for discussion on fisheries. The first was before we entered, and the second is now, when we are coming to the end of the transitional period. Now is the time to stand firm on behalf of the British fishing industry. The Government are not doing that because they have given way on the percentage of total allowable catches. They have accepted 36 per cent. when most people, inside and outside the House, said that they should stand fast on 45 per cent. I quote a passage which appears in a House of Lords Select Committee report, which sums up the position: Given that around two-thirds of the Community's catch is taken from United Kingdom waters, a quota of 45 per cent.… seems none too high, and the Committee urge the Government to press for a figure of at least this order in respect of quotas in Community and third-country waters". The Government failed to do that. They caved in and settled for a percentage that was far too low.

Dr. M. S. Miller (East Kilbride)

Does my right hon. Friend agree that the point at issue is not just the amount of fish taken from our waters compared with that taken from other EEC areas; is not the quality of the fish round our shores better than the quality of fish round their shores?

Mr. Davies

I do not pretend to be as much of an expert on fishing as is my hon. Friend, but he is absolutely right, and that factor has to be taken into account.

All that is left now is the final sell-out, which will take place after the French Presidential election. The Government are always optimistic in their negotiations with the French and they think that perhaps after the election the French will be nice to us. Of course, they will not be, and there will be another sell-out on the exclusive zone and the zone of dominant preference.

Will the Lord Privy Seal give an assurance this afternoon that the Government will not abandon either the 12-mile exclusive zone demand or the demand for a dominant preference zone between 12 miles and 50 miles? Will he say categorically that the Government will not budge from that position? If he cannot give that assurance, the statement made by the Prime Minister during the election campaign that fishermen will find a true and determined friend in the next Conservative Government will be seen to be even more false and hollow than it seems now.

The role of the Minister of Agriculture, both in the CAP negotiatons and on fisheries, cannot be better summed up than it is in an article in the magazine "Livestock Farming". A Somerset farmer in the April edition writes as follows: The inability of Mr. Peter Walker to negotiate a fisheries policy, and the plight of our fishermen should fill us with foreboding. The Minister of Agriculture appears to be equally unwilling to deal with our difficulties. Mrs. Thatcher should appoint a Minister of Agriculture of the calibre and vision of the late Tom Williams who would give us sound policies to ensure security, confidence and expansion in place of our present unsatisfactory position. Trade figures are set out in table 2 in the final annex of the report, which shows that for the first time since we entered the Common Market we have a balance in our trade with the Community. As so often in the past, the appearance of EEC matters is different from the reality. We have to look further along that table to see our trading position with the EEC. The figures show only the balance of visible trade, not the contributions across the exchanges that go to the budget. More important than that, for every year since we have been in the Common Market we have had a massive deficit in trade in manufactured goods. There was a deficit of £1.7 billion in 1980, making a cumulative total over the years of almost £9 billion.

Will the Lord Privy Seal tell us how many jobs have been lost as a result of that decline in our manufacturing industry? He might tell me that jobs were not lost, but the Foreign Secretary in Tokyo today gave a stiff warning to the Japanese that if they did not stop sending their goods to Europe import controls would be imposed by EEC countries. He went on to say that he was talking about the loss of thousands of jobs. If our trade deficit with Japan means the loss of thousands of presumably manufacturing jobs, equally our trade deficit with the EEC must mean the loss of thousands of manufacturing jobs. We need an assessment from the Government of what that loss has been.

Mr. Marlow

The right hon. Gentleman is possibly coming to this point, but it is worth emphasising that our trade deficit in manufactures with the Japanese is a mere £800 million a year, whereas our trade deficit in manufactures with West Germany was £1.8 billion in the last year—two-and-a-quarter times as much. That has not been sufficiently taken on board.

Mr. Davies

I am sure that the hon. Gentlman's figures are right. If we have a deteriorating balance on manufactured goods, jobs are lost.

The facts on manufacturing trade have borne out what we said from the Labour Benches when the previous Tory Government were dragooning the country into the Common Market. We said then that British industry was not in a competitive position to withstand the dismantling of tariffs which entry entailed. That is what has happened. If our industry had been competitive the resource cost and the budget cost of the CAP might just about have been carried, but as it is, the substantial deficit in trade in manufacturing goods plus the high cost of the CAP have broken the back of the British economy over the past seven or eight years.

The Lord Privy Seal will argue that the position is improving—that our deficit in manufacturing goods in 1980 was less than it was in 1979. That is absolutely right. In 1980 it was £1.7 billion and in 1979 it was £2.7 billion, so the deficit was less. The reason for that is the depressed state of the British economy, caused mainly by the Government's policy.

Retailers, companies and business men have destocked because they cannot afford to carry large stocks when there are high interest rates and high inflation. Those stocks are largely in cars and other manufactured consumer goods from Europe. It is only to be expected that the deficit in 1980 will be lower, because of the depression and the recession.

If, as the Government say—no one else believes it, but the Government apparently do—we have bottomed out and the economy is gradually on the upturn, there will be more stocking. More cars will be brought in, and more consumer goods, and in 1982, if there is a recovery, the deficit on manufactures will go back to £2.7 billion.

Mr. Tom Ellis (Wrexham)

Will the right hon. Gentleman come clean? When he links the deficit in our manufacturing trade with the Community and other countries with the lack of competitiveness of British Industry, is he advocating a siege economy?

Mr. Davies

I will come to that in a moment. I am not avoiding the point.

The Lord Privy Seal will say that everything is much better now because we have North Sea oil, which we are selling to the Common Market. Indeed, it is the oil that balances the trade between us. The tables show that in 1980 we had a surplus of £2.8 million in our trade in fuels—presumably that was mainly oil—with the EEC. That is more than double the 1979 figure.

We now have the worst of all possible worlds. Our massive deficit in manufacturing and the enormous cost of the CAP are being paid for by the depletion of a finite resource, North Sea oil. There was a time when we debated in the House and outside what we should do with the benefits of North Sea oil. It is quite clear that that avenue has been frittered away in financing the dole queues which the Government have created by their economic policies and in paying the enormous cost of membership of the Common Market.

The hon. Member for Wrexham (Mr. Ellis) asked whether I was in favour of a siege economy. That is an emotive term and I am not sure what it means. Judging from what I have read of his remarks in Tokyo, the Foreign Secretary is in favour of a siege economy. One of the leaders of the hon. Gentleman's party—I do not know whether he is last month's or next month's leader—the right hon. Member for Plymouth, Devonport (Dr. Owen) is also in favour of import controls. The Financial Times of 5 February reported that he made a speech in London to some French industrialists. He said that we might have to impose controls on imports from Europe. We might have to move towards the terrible siege economy that the hon. Gentleman deprecates and seems to fear.

There is already a siege economy in relation to agricultural products. There are controls on food coming into the country. There is no free trade in food. Given the difference in value between the green pound and the natural exchange rate, we pay tax on inter-Community trade in food. With a certain amount of poetic licence, that could be described as a tariff. Therefore, there is a siege economy in agriculture. The country needs free trade in agriculture and some measure of protection for our manufacturing industry. However, the Treaty of Rome does not allow that. The system is wrong and does not suit our structures.

Paragraph 1.2 of the report states that the Commission must produce proposals for the restructuring of the Community budget by the end of June 1981. That is an important statement. I am sure that everyone looks forward to the negotiations. No doubt the Government have some hopes. I do not know their plans or proposals for restructuring the budget. I hope that the Lord Privy Seal will give us some idea of the Foreign Office's radical thinking on restructuring the budget and the CAP. We should like to be told at least the bare outlines. No doubt the right hon. Gentleman will say that he is negotiating and cannot divulge everything, but he should tell us something about the Foreign Office's radical plans for restructuring the budget.

The report does not say that Britain's net contribution to the 1981 Community budget could be at least £500 million. There are differing figures. In March 1981 a pamphlet gave the figure of £570 million. The White Paper on public expenditure gives a smaller figure. However, it will be about £500 million. That is the figure after the rebates that were negotiated at the Foreign Affairs Council on 30 May. Therefore, £500 million will cross the exchanges to our competitors. What is the point of such a system? We are subsidising our competitors in Europe when our economy is in a bad state, when we have had to cut public expenditure and when many of the disadvantaged cannot get any help from the Government. Nevertheless, the contribution could be at least £500 million. I should remind the Lord Privy Seal that a 10p tax on a gallon of petrol would be roughly equivalent to £500 million. No doubt the Lord Privy Seal will correct me if my figure for the 1981 budget is wrong. However, if it is right, it means that we are handing an enormous amount to our competitors in Europe.

Hon. Members will agree that restructuring is most important. We should be given some idea of the Government's thinking. What justification is there for countries paying more into the EEC than they can get out of it? What justification is there for a system in which three countries pay in, namely, West Germany, Great Britain and France, and the other countries are net beneficiaries? What is the purpose of such a system? What is wrong with balancing the books? What is wrong with what the French call the "juste retour"? According to that system, a country pays in roughly the same amount as it gets back. I understand why the Germans are unhappy about their contribution.

If the system under which some benefit while others do not created equality between the poorer and the richer regions of Europe, and if regional disparities were becoming smaller, there might be something to be said for it, but the system is getting worse. The disparities between the poorer and the richer regions are becoming greater. What is the point of some countries paying more in while others get more out? Perhaps the Lord Privy Seal will explain.

Mr. James Hill (Southampton, Test)

The original concept behind the principle of not expecting a juste retour—which was found in the regional development documents and in the regional fund—was that wealth should be spread throughout the Community. The Community has probably suffered because certain member States have always expected £1 back for £1 put in. It is that false, almost shopkeeping approach that has prevented a spread of wealth throughout the Community. In terms of regional development, we could benefit just as other members of the Community benefit.

Mr. Davies

I am surprised to hear the hon. Gentleman criticise a "shopkeeping approach". I should have thought that it was sensible to question the paying of large sums into the Community when nothing happened. The disparities are becoming greater. Where is the money going? What good does it do to the Community as a whole, let alone to the net payers into the EEC?

From 1 July, for six months, we shall hold the Presidency of the EEC. That should be a golden opportunity to reform the CAP and to restructure the budget. Unfortunately, the Minister of Agriculture, Fisheries and Food will chair the Agriculture Minister's Council meetings and the Foreign Office will chair the Council of Foreign Ministers. Therefore, to expect radical change is to expect a lot, particularly from this Government.

If the Foreign Office displays the same appalling negotiating tactics as it used on 30 May in the Foreign Affairs Council there will he no hope of any change. Those negotiations led the West German Chancellor—who has been Britain's friend in many negotiations— to accuse the British Government of cheating. From the communique, most Opposition Members realised that there was a link between the budgetary arrangements and the common fisheries policy and other matters. I am not surprised that Helmut Schmidt thought the same. He read it in the same way. It is time that the Foreign Office looked at the exact words and clauses of the treaties and communiques. It should not negotiate, as it sometimes does, as if it were negotiating with eighteenth century Mogul princes. It is negotiating with highly sophisticated, competent, Continental civil servants.

The British people know that Britain got a bad deal when it entered the Common Market. They know that entry has been bad for the housewife, bad for the taxpayer and bad for our industry. Unless there are fundamental radical changes soon, the increasing demands to free Britain from the damaging provisions of the Treaty of Accession and the Treaty of Rome will become so irresistible that even this Government will not be able to ignore them.

4.48 pm

The Lord Privy Seal (Sir Ian Gilmour)

The right hon. Member for Llanelli (Mr. Davies) treated us to his usual polemic about British membership of the Common Market. He told us that we had made no progress towards alleviating the burdens of membership. He said that the Government had neither the imagination nor the strength to do this or that. Apparently, we have been filleting our fishing industry. He even complained about our net contribution. He said that we needed radical change. He kept attacking my right hon. Friend the Minister of Agriculture, Fisheries and Food. It is noticeable that when anyone does that to my right hon. Friend's face, the person doing so gets very much the worst of it. When hon. Members say such things to his face, they do not get much change.

It was interesting to note that when the right hon. Gentleman tried to find a better Minister of Agriculture he had to go back to Mr. Tom Williams. He was not a member of the last Labour Government or of the one before that, but of the Government from 1945 to 1950. Mr. Williams was a good Minister, and I agree with the right hon. Gentleman's implicit judgment that there has not been a good Labour Minister of Agriculture since then. That means that there has not been a good Labour Minister of Agriculture for 30 years.

What the right hon. Gentleman said was silly enough, but it was absurd when we remember that he was a member of the Labour Government who were in office from 1974 to 1979. One would think that a visitor from Mars would never believe that there had been a Labour Government during the past 15 years or that they had anything to do with the present position in the Community. However, the House knows that the Labour Government did nothing to improve our conditions of Community membership.

At one point the right hon. Gentleman even referred to the rebates that "we" negotiated. It was once said in a Western "Who's 'we' , white man?" It certainly was not the right hon. Gentleman. It was a Conservative Government who negotiated the rebates, and the right hon. Gentleman and the Labour Party did nothing whatever. The right hon. Gentleman complained about the appalling negotiating tactics of the Foreign Office, but one wonders what they were like in his day, because nothing happened.

The right hon. Gentleman makes the debate totally sterile when he draws a veil over the Labour Government's five years in office and pretends that it did not happen. We ought to debate this subject on a more serious level. The right hon. Gentleman also talked about the trade deficit. Of course we have trade deficits with other countries—for example, with the Community and Japan. So far as I can see, the right hon. Gentleman's only remedy is to cut off trade altogether, which would not be sensible.

I am sure that the majority of hon. Members will agree that the White Paper that we are supposed to be discussing describes a busy if undramatic period in the Community. It was a period of consolidation between one important negotiation and another. The report permits us to assess the progress that the Community and Britain within it is making.

It is better to approach this subject in that spirit than to recount developments in a way that makes the Community sound like a boxing ring. We do not regard it as a boxing ring. Obviously, it is our responsibility to stand up for British interests in the Community. The Government have done that consistently, and will continue to do so—I shall deal with some of the right hon. Gentleman's wilder points as I proceed—but, equally obviously, confrontation with our partners is not an objective of our policy. The objective must be fair and fruitful co-operation. I think that I can fairly say that that is what took place in the period that we are discussing.

One of the principal examples of this, which is of close interest to us, is the subject to which the right hon. Gentleman referred in such misleading terms, namely, the budget contribution settlement which was reached on 30 May and was debated in the House on 2 July. That agreement had to be turned into a concrete arrangement. The Community had never done anything like it before. It was no easy task, but it was successfully negotiated and agreed at the Council on 7 October. The outcome was complex, and I set it out in an answer to a question from my hon. Friend the Member for Lincoln (Mr. Carlisle) on 27 October last year.

There were those in Britain, particularly Labour Members, who feared that we would never be able to negotiate that agreement and that our Community partners would not keep their word. We never shared those doubts. We knew that the agreement would be honoured, and it was. The payments are being made on time. Before 31 March we received £645 million, of which £211 million was paid under the financial mechanism—75 per cent. of our estimated gross entitlement. A total of £434 million was paid under the supplementary measures scheme, and that represents 81 per cent. of our estimated entitlement under the scheme. The remainder of our refunds will be paid in the autumn.

It was also agreed on 30 May that the Community should try to reach a settlement of the common fisheries policy by the end of 1980. The right hon. Gentleman said that there was a linkage and advised us to look at the words. I was instrumental in negotiating the words, and I assure him that we paid close attention to them. In fact, there was no linkage. If he looks at the words, he will see that that is so.

Mr. Denzil Davies

In that case, is the right hon. Gentleman saying that Helmut Schmidt's interpretation is wrong?

Sir Ian Gilmour

I am. I am saying that our interpretation is right. I ask the right hon. Gentleman to look at what was agreed on 30 May.

It is nearly five years since, at the Hague conference in 1976, the Community set itself the task of adapting the common fisheries policy to take account of the general move to 200-mile limits and laying the basis for the necessary changes. I doubt whether the right hon. Gentleman thinks that that agreement could have been better, as the Labour Government were in power at the time. However, five years is too long. We were ready to come to an agreement last December, but our French partners were not.

Here again it was wrong of the right hon. Gentleman to imply that it was our fault that there was no agreement on a common fisheries policy by the end of last year. It was not our fault. We were ready, but our French partners were not. We are still ready, but we cannot reach an agreement if other parties are not prepared to do so. We are not responsible for the delay. We regret it.

Obviously, a common fisheries policy is of the greatest importance to the Community. It will enable stocks to be conserved and marketing to be conducted in an orderly way. Without it our industry cannot look forward to a secure future and plan its investment as it would like. We made it clear that we could not agree to arrangements that did not safeguard the interests of British fishermen in our own coastal waters. It is really an abuse of language to say that it is "un-communautaire" to refuse to give priority to the French in those waters. My right hon. Friend the Minister of Agriculture and his colleagues have been scrupulous in ensuring that the interests of our industry will be safeguarded in any agreement.

Mr. Tom Ellis

Does the right hon. Gentleman accept that even if he were to establish an exclusive limit around our shores the problems would not be solved? I ask that because the secretary of the Cornish Fish Producers' Association agreed with me at a public meeting in Plymouth recently that the main threat to Cornish fishing came from Humberside.

Sir Ian Gilmour

As the hon. Gentleman sagely pointed out, those difficulties exist. There are, of course, other difficulties to which the right hon. Gentleman did not refer. For example, fish do not remain in the same waters all the time. They breed in some parts of the waters and then move to other parts. Therefore, the idea of creating the equivalent of a moat around fishing waters would not work.

Mr. Austin Mitchell (Grimsby)

rose——

Sir Ian Gilmour

I shall not give way. The hon. Gentleman can make his own speech. I regret to tell him that I shall be winding up the debate, and I shall have a chance to answer him then.

I should also like to mention the important agreement reached last week by my right hon. Friend the Minister of Agriculture on an agriculture price package, about which he told the House last Friday. In spite of what the right hon. Gentleman said, it is a satisfactory package to us, and it is satisfactory that agreement was reached early in the year.

The right hon. Gentleman and my hon. Friend the Member for Northampton, North (Mr. Marlow), who is no longer present, talked about the discrepancy between what my right hon. Friend said and what was said by Ministry officials in the House of Lords. The Ministry officials were talking about the original Commission proposals, which did not include the savings and gains for us that my right hon. Friend negotiated in Brussels last week.

These are matters of real concern to us. We retained both the butter subsidy and the beef premium. We also obtained improved arrangements for clawback on sheepmeat exports. The regulation governing payment of our whisky refunds, which will be retroactive to 1973, was also agreed. Some measures—for example, agreement on future access for New Zealand butter and the import quota for manufacturing beef—will be especially welcome to our friends in New Zealand and Australia and will mean that the Community will fulfil the international obligations that it has undertaken.

The right hon. Gentleman waxed eloquent about the iniquities of co-responsibility levies. No one would gather from his remarks that the co-responsibility levy originated under the Labour Government. He ought to check his facts a little before making that sort of speech to the House.

The agreement also contains a number of useful savings measures of the same sort in the cereals and, processed fruit and vegetable sectors. We regard it as very important that the Council was able to agree on the need to keep milk expenditure within the 1981 budget provisions. We regret, on the other hand, that the Council did not endorse the view that the rate of increase in expenditure on the CAP should be kept markedly below the rate of increase in our own resources. None the less, we had our own position on this clearly recorded, and we received welcome support from the German and Dutch Governments.

With regard to price increases, our farmers will receive benefits that they greatly need in order to cope with steeply rising costs. At the same time, the cost to consumers has been kept as low as possible. I shall not say to my hon. Friend the Member for Northampton, North what I said while he was out of the Chamber, but I say again that the estimate of 1 per cent. is right. The reason why it may be 3 per cent. in the Community is that we received benefit in the settlement which other countries did not receive. The increase in United Kingdom food prices should, therefore, be no more than 1 per cent.

Mr. Nigel Spearing (Newham, South)

I am grateful to the right hon. Gentleman for giving way. I know that he takes account of debating points. Last Friday the Minister of Agriculture, Fisheries and Food did not reply to me when I asked him how a farm gate price increase of about 9 per cent. reflects itself as only 1 per cent. in retail prices. Can the Lord Privy Seal answer that?

Sir Ian Gilmour

It is due to a number of reasons. Farm prices are only one element in food prices. In addition, the commodities Mat are covered by a CAP are not only part of what everybody eats. A further reason is that things such as milk prices are set by the Government, and not by the Council of Ministers. The effect is only in regard to manufacturing and does not affect the doorstep delivery of milk. I can give a slightly longer and more detailed answer in my winding-up speech, but that is the basis of it.

Mr. Marlow

Will my right hon. Friend give way?

Sir Ian Gilmour

I think not. I dealt with my hon. Friend's point when he was out of the Chamber. He will be able to make his speech later. On second thoughts, I give way to my hon. Friend.

Mr. Marlow

I am delighted that we are to receive benefits from last week's negotiations that will not be received by other countries Our food prices are to go up by only 1 per cent., whereas in the other countries food prices will go up by 3 per cent. These must be massive benefits. Will my right hon. Friend tell us something about them?

Sir Ian Gilmour

I have already mentioned the butter subsidy. I have also mentioned beef and lamb. I have no reason to believe that our estimates are wrong. I do not think that they have been challenged by anyone except my hon. Friend the Member for Northampton, North, who tends to stick out his neck on these matters. But that is up to him.

I deal next with the Community's external relations. Co-operation over foreign policy—no doubt the right hon. Gentleman left that out for the sake of brevity, and I do not complain—is another matter in which there has been increasing interest and willingness to make progress. My right hon. and noble Friend made a major contribution to this in his speech in Hamburg last November, when he called for a framework for a European foreign policy strong enough and flexible enough to respond rapidly to the challenges of the world today". Herr Genscher has since taken up a similar theme.

The importance of the European role in the Middle East is widely acknowledged. President Sadat said that Egypt considered the Luxembourg declaration of last December to be a turning point that was likely to have a constructive impact on the peace process in the near future. As the House knows Mr. van de Klaauw, the Dutch Prime Minister, is continuing his consultations.

Similarly, on Poland, the Ten remain in close contact with one another and with the United States. Europe has underlined to the Soviet Union the obligation of all States that signed the Helsinki final act to base their relations with Poland on the strict application of the charter of the United Nations and the principles of the final act. If they do not, the consequences for relations within Europe and throughout the world will be extremely serious. As the House is aware, this was re-emphasised in the recent communiqué of the European Council at Maastricht.

I hope that the House will share my satisfaction at the entry of Greece into the Community on 1 January. As we know, the Community continues to negotiate with Spain and Portugal on the terms under which they will accede to the Community in due course. Much progress has already been made, but there is considerable ground yet to be covered. We remain determined to bring the negotiations to a successful conclusion with the minimum of delay.

Looking to the period ahead, to which the right hon. Gentleman referred, we have a major task in seeking to restructure the Community budget. The Community committed itself to this under the 30 May agreement, and the European Council at Maastricht urged the Commission to bring forward its paper on restructuring in good time so that the Heads of Government could have a first discussion in Luxembourg at the end of June. Meanwhile, we have been thinking about the various ways in which this task can be approached, and we have been examining ideas on an informal basis with our partners.

We start from certain principles. In future the Community budget must not result in any member State being put in the unacceptable situation in which we found ourselves when we took office—that of bearing an excessively high proportion of the cost of the Community. It would, however, be neither practical nor appropriate to buy ourselves out of difficulty by simply increasing the total of Community expenditure. The Government are firmly opposed to raising the ceiling of 1 per cent. VAT, and both the German and French Governments are firmly on the record with the same position.

Chancellor Schmidt, whose country now bears the largest financial burden, has recently repeated the proposal which he and President Giscard aired last year, namely, that there should be some kind of limit on net contributions to, and receipts from the Community budget. Such ideas as that will need close examination.

There is no magic solution to the overall problem. We hope that the Commission paper, to be produced in June, will give a broad assessment of the possibilities and provide the Community with an acceptable basis for the negotiations that will follow. We shall negotiate with a firm and recognised commitment to making a success of restructuring. We shall press for a much better balance in Community spending policies. This means reducing the disproportionate share of the Community budget taken up by agricultural expenditure, and further developing nonagricultural policies.

Sir Anthony Meyer (Flint, West)

To put the matter of the budget contribution into perspective, and without in any way wishing to reduce its importance, may I ask my right hon. Friend to take this opportunity to tell the House what the total budget contribution—even before the contribution was renegotiated—represented as a proportion of the gross national product?

Sir Ian Gilmour

My hon. Friend has got me there. I shall give the answer later. I do not think that it is a very high percentage, but it is a sizeable sum of money.

Mr. Teddy Taylor (Southend, East)

rose——

Sir Ian Gilmour

I think that the House fully supported us—even though some hon. Members were less than gracious about our achievement—and fully appreciated that it was right that we should seek and get a two-thirds reduction in those contributions.

A number of modest and welcome savings in the CAP formed part of last week's settlement on agricultural prices, but obviously much more thoroughgoing reforms will be necessary in order to provide a permanent solution. To the extent that we succeed in doing that, obviously additional finance will be available for policies such as those of the regional and social funds, which are of particular concern to the United Kingdom.

At the same time, any solution must take into account the accession of Spain and Portugal.

Mr. Douglas Jay (Battersea, North)

If I heard the right hon. Gentleman aright, he said that thoroughgoing reforms of the CAP were obviously necessary. As the Commission will not propose any, and as the British Government are not making any proposals, where are these thoroughgoing proposals to come from?

Sir Ian Gilmour

These things are evidently clearer to the right hon. Gentleman than they are to me. It is not clear to me that the Commission will not make those proposals. We shall have to see—[Interruption.] I do not think that it is clear. The Commission will make its proposals in June. We hope that they will be thoroughgoing proposals. If not, I agree that other people will have to put forward proposals, but in the first instance it must be for the Commission to do so.

What is needed, as I think all hon. Members agree, is for the Community to find a way of ensuring that the budgetary burdens and benefits correspond much more closely than they do at present to the needs and capacities of individual member States, so that unacceptable situations do not arise in future. I believe that we shall find the right way to deal with these matters. There is wide agreement in the Community on the need for change. I think that we are all agreed that we have to succeed.

Clearly, there is a need for confidence and co-operation between member States over the coming year. I believe that the agreement of 30 May last year created a better equilibrium and a better atmosphere in the Community. Various political issues were resolved during that period. Equally, this year's agricultural price settlement was achieved fairly quickly. Against that background, it is easy to exaggerate the degree of crisis within the Community.

I realise that things are often said during elections that should not be taken too seriously. As Dr. Johnson might have said, politicians are not on oath during election campaigns. The allegation that Britain is not prepared to obey the rules of the Community is unfounded. Anyone who makes such a suggestion should specify which rules we have broken and which rules we are not prepared to observe. I hope that anyone trying to do that will at the same time list the rules that his country has broken in the past and list the rules that his country is breaking at the moment.

The idea that it would have been better for the Community to remain a Community of six seems to me parochial and out of touch with history. President Pompidou surely showed the vision of a far-sighted and realistic statesman in agreeing with other founding members to enlarge the Community. he made a major contribution to the construction of Europe. It is perhaps worth noting that President Giscard d'Estaing, to name only the most eminent, was a prominent member of President Pompidou's Cabinet. Mr. Pompidou was able to see that a Community of nine or 10 could work as harmoniously as one of six. Afer all, in the life of the enlarged Community, there has been no empty chair.

Mr. Austin Mitchell

It is possible to argue that President Pompidou, in finding another dumping ground for surplus French agricultural production and surplus German manufacturing production was showing a little self-interest.

Sir Ian Gilmour

I think that the debate is taking place on a more elevated level than that.

We approach the restructuring exercise in a spirit of cooperation and with confidence. Much is at stake. We wish to see a Community greatly strengthened, with an agreed common fisheries policy, less costly agricultural funding, which does not encourage the production of surpluses, and a budgetary system that is equitable.

The White Paper gives an account of the responsible stewardship of British interests within the Community, combined with a real feeling for the benefit of the Community as a whole, which is itself a British interest. The progress made is the result of steady work by a Government who believe in what they are doing. The difficulties that we encounter can be, and are being, overcome. We cannot expect everything to come right at once. To build a Community that is beneficial to us all is not the task of a few weeks or months. If one is building for the future, one has to build thoroughly and well.

It is depressing, therefore, to hear talk of withdrawal by some Opposition Members, although not all. There have been even more curious notions of a sort of selective membership, involving withdrawal from our legal commitment to enforce Community legislation, and the enactment thereafter of only those Community laws with which Parliament agrees. Apart from the legal impossibility of running such a system, our partners would quite rightly not stand for the two-faced commitment that it would represent. We shall not let ourselves be put off course by such ill-formed ideas. The issue is far too important.

It must be kept in mind that the Community is about much more than money and agricultural products, vital though these isssues are. The economic problems of the Community can be resolved in a way that benefits everyone. I believe that the White Paper that we are debating shows solid progress towards that end. Economic questions are not the be-all and end-all. The vision of political unity that inspired die founders of the Community may have become blurred in our severely practical age. Opposition Members show a remarkable lack of vision and a remarkable neglect of what is happening in the world if they are pleased about what they regard as Western disunity. Their approach is not merely parochial; it is a blindfold one.

The realities on which the vision was based—the background of post-war devastation and the wish to drive away the spectre of conflict: in Western Europe, once arid for all—are, if anything, more relevant today than ever before in a world of political and economic uncertainty. The ability to work together in the European Community to deal with our common problems has become riot just a matter of convenience or an optional extra that successive Governments can accept or reject at will. It has become a necessity.

5.15 pm

Mr. Laurie Pavitt (Brent, South)

I am pleased to follow the Lord Privy Seal. I wish to direct most of my comments towards Foreign Office responsibilities rather than to those of the Minister of Agriculture, Fisheries and Food. I do no propose to deal with all 11 sections and five annexes of the White Paper. I shall concentrate entirely on section II.

This is the first time since 1972, Mr. Deputy Speaker, that I have sought to catch your eye in a Common Market debate. The House will recall that I am a convinced opponent of Britain's entry to the Common Market. I am a Francophile. I am one of the vice-chairmen of the Franco-British group. I am also a convinced European. I am grateful that this House sends me to the Council of Europe of 21 countries. I would not wish to be a member of the European Parliament in spite of the fact that my bank manager would probably be most pleased with the balance that I would be able to show for services in that direction.

Since the accession of Britain, I have not spoken on these matters in terms of secession. I was convinced that I did not need to add my pressure. However, I have been watching the situation over the years. One of the saddest aspects of the life of a parliamentarian is the number of times that one can regretfully say "I told you so" about the consequences of Government action. Since our accession, that has been my situation. I have been expecting for some time that the Common Market would drown itself in its lake of wine, kill itself on ascending its mountains of agricultural and other produce or, more likely, choke itself on the miles of documentation which seem to emerge from Brussels. Hon. Members receive a yellow paper once a fortnight. If the documents contained therein were laid end to end I believe that they would reach from Land's End to John o'Groats.

Among the many reasons why I opposed Britain's accession was my feeling that the Community was not outward looking. It was an inward-looking Community. I should therefore like to draw attention to a paradox with which I think the Lord Privy Seal should deal. I address myself to the political arrangements under which the Common Market, for the first time in a considerable period, has shown itself to be outward looking. I do not criticise what is a move in the right direction by the Community in looking out from its own immediate problems.

My complaint concerns section II, dealing with the initiative taken last June and followed up last July in the Middle East and the intervention in arrangements that have been proceeding since 1974 to try to solve the Israel-Palestine problem. I believe that the initiative that has been taken is misguided and is likely to be counterproductive to the purposes that the Community, wishes to pursue.

I support a wider Europe. It will not surprise the House to know that I serve on the health committee of the Council of Europe. It met only a fortnight ago in Israel. One was therefore able to gain an impression, far more than is possible from reading newspaper articles, about how it feels to be an Israeli citizen in the circumstances that have

The initiative last June by the EEC has not helped but has served to complicate an already complex matter. It is right that the desire for peace should be part of the Common Market's outward-looking political programme, but in a dispute of this kind the nations concerned cannot be seen to be independent of the argument when they have their own interests, particularly the oil of the Middle East. The initiatives ignored reality and sought a blueprint in which was put forward, in the guise of an honest broker, a loaded solution to the difficulties of the countries in the Middle East.

Israel, Egypt and the United States—the three signatories to the Camp David accord—have all expressed concern, in varying degrees, especially about the Venice declaration clause in connection with PLO participation in future negotiations. The Arab world, too, received the initiative coolly. It says that the declaration initiative does not go far enough. However, although the EEC initiative has made little impact on the parties involved in the Arab-Israel conflict, the British Government continue to argue that the framework set out in the Venice declaration should provide the basis for reviving the Arab-Israel peace initiated at Camp David.

The White Paper, in chapter 2, focuses attention on the PLO. It is argued that if the PLO were involved in the negotiations the PLO would be bound to recognise Israel, and that would lead to the resolution of the Arab-Israel conflict. There is no evidence for that. It is evident from the recent statements of Foreign Office Ministers that when Lord Carrington takes over the Presidency of the European Council in July the British Government will have an opportunity to upgrade contacts with the PLO. That would be a retrograde step. If a meeting takes place, it will set back even further the peace process in the Middle East.

The Foreign Office analysis of the Middle East contains certain flaws. First, it says that the Arab-Israel conflict, if resolved, would stabilise the region. I do not agree. That conflict is only one of a multitude of crisis points in the Middle East. Even if that conflict were resolved, many areas of tension would remain, notably the Iran-Iraq war, not to mention Libyan and Soviet ambitions for expansion.

Muslims are worried about the increasing conflict between two sectarian groups in Islam—the Sunnis and the Shi'ites. That conflict is likely to cause headaches in the Foreign Office during the next decade—just as Northern Ireland has done during the past 10 or 12 years.

Mr. Roy Hughes (Newport)

Is not my hon. Friend underestimating the long-standing grievance of the Palestinians? Does he deny them their right to the homeland that they so desire?

Mr. Pavitt

My hon. Friend is right to draw my attention to the Palestinians. I shall deal with that matter later. However, the PLO is not the only group of Palestinians with a grievance. There are many Palestinians outside the PLO who do not resort to terrorist tactics. I doubt whether the EEC initiative in trying to involve Arafat and the PLO will take us any further forward.

The Foreign Office assumes that the PLO is prepared to recognise, if the circumstances are right, Israel's right to secure borders—despite about 30 meetings between Foreign Office officials and the PLO, not to mention contact with other European States, and the visits of Gaston Thorn and Mr. van der Klaauw. The PLO even hinted that it would be willing in any circumstances to recognise Israel. To date, no statement of recognition has been issued by any PLO official. A meeting between Lord Carrington and PLO representatives, before any such guarantees were given, would be construed by the PLO as British endorsement of its present position, entrenching even further its refusal to accept Israel's right to exist.

Mr. Marlow

When will the Israeli Government recognise the Palestinian right to exist?

Mr. Pavitt

There have been at least five rounds of negotiations since 1974. That right to exist was accepted by Israel in discussions with President Sadat as a long-term view, and was part of the Camp David arrangements agreed between Egypt and Israel.

There have been five agreements since 1974. There was the agreement between Syria and Israel. In 1975 there was the agreement between Israel and Egypt. Then in 1977 there was the startling and world-shaking meeting between Sadat and Begin. In 1978 there was the Camp David accord. Finally, there was the 1979 treaty beween Egypt and Israel.

The EEC and Great Britain are not neutral bystanders. The EEC initiative should be rethought because it is unlikely to preserve the kind of peace that we are seeking in that part of the world. I shall quote the words of a man whom I regard as one of the great world statesmen and who may return to power after the election in Israel. I refer to Mr. Abba Eban. He said in a recent speech, after talking of all the changes that had taken place as a result of Camp David, American intervention, and Egypt, and the possibilities of a slow and progressive move towards settling the quite legitimate rights of the Palestinians to have their own country with their own autonomy and a democratic system of government, and not one governed by Mr. Arafat——

Mr. Roy Hughes

I apologise for intervening, but I know that my hon. Friend is a keen supporter of the United Nations. When he talks about the right of Palestinians to have a state of their own, does he take into consideration the views contained in successive resolutions of the United Nations on the matter?

Mr. Pavitt

Yes, indeed—especially resolution 242. I could talk on that subject at great length. It may be remembered that I was sacked from my job as PPS in the Foreign Office and my then Foreign Secretary, Michael Stewart, is now in another place.

Mr. Abba Eban said, in connection with the number of changes that had taken place: What has remained unchanged is the PLO's attitude towards Israel. Not one letter in the PLO's Charter has been altered, on the contrary: at the National Council meeting of the PLO in Damascus all the old tenets and policies have again been confirmed. The PLO stands firm behind its wish to 'eliminate the Zionist entity from the Arab homeland'. This inflexibility in the desire to finish Israel off as an independent Jewish state rules out the PLO and its leader Arafat as partners in any discussion. There too the European Middle-Eastern policy starts from false assumptions. I remind the House of the trauma felt by Israel at the time of the Six-Day War. The United Nations peacekeeping force was present, but within 24 hours the guarantees that Israel would not be driven into the sea disappeared and it found itself standing alone. That traumatic experience has deeply embedded itself in Israeli consciousness. It means that any future guarantees must be more effectve. Face-to-face negotiations across a table are more likely to be successful because those principally concerned—the Egyptians, the Israelis and Palestinians in a wider sense—can be assured what will happen.

I am a member of the United Kingdom all-party group to the Western European Union. The union has been discussing these matters. It passed a resolution requiring that Israel should retain its sovereignty and be given a guarantee. The difficulty over the guarantee is who gives it and who, after the withdrawal of the United Nations in 1967, can give the assurance that it will be worthwhile.

Sir Ian Gilmour

I agree with the hon. Gentleman about the important experience of 1967, but that was not necessarily a precedent because had Israel allowed or wanted the United Nation forces to be stationed on its side of the border that particular danger would not have arisen.

Mr. Pavitt

From my reading of the history of that period—and I was then closer to these events than I am now—I believe that there was no such option. The United Nations troops were withdrawn in 24 hours. For seven days there had been a massing of Egyptian artillery. The consequence of that action is that whatever guarantees are given must be copper-bottomed, and whatever happens the outcome must be a negotiated settlement.

My hon. Friend the Member for Newport (Mr. Hughes) asked about the United Nations. Part of my opposition to the Common Market and Britain's membership of it stems from my experience between the wars. Regional associations were shown then not to be a step towards world government. The Axis powers formed regional groups and that killed the League of Nations. When it was most needed it was a dead duck. I would therefore rely on the United Nations rather than on any initiative through the EEC.

My final point requires me to wear another hat. I am a sponsored member of the Co-operative movement. I have no financial interest, but through that movement I declare the interest of the consumer. I am profoundly concerned at the possible disappearance of the ancient British custom of the morning doorstep delivery of milk. I regret that the Consumers Association response to this issue has been related solely to the price.

If present agricultural mechanisms continue to apply we shall be drinking UHT milk purchased in packets. It will be a great boon to the supermarkets, in that people will be encouraged to buy the milk in this form as a draw to other spending. Having saved money on the milk, they will spend more on other items. Although on the face of it the housewife may be able to save a penny on a carton of milk over the delivered price, the process threatens to destroy the economics of doorstep delivery. If the volume of milk handled by the delivery dairies falls, their operation will become uneconomic.

The hon. Member for Flint, West (Sir A. Meyer) was out of the Chamber when I said that I was a Francophile. He knows more about these matters than I do. He understands that milk is a key element in the overall production of Britain's farmers. With the establishment of the Milk Marketing Board it has been possible to have a balanced farm economy in which milk plays its part. If milk is removed from the equation, the inevitable result for the housewife is that all other dairy produce will become dearer as the farmer puts up the prices to compensate for the loss of income from the milk..

I hope that when this issue comes before the Council of Ministers our Minister will bear in mind that while the method of delivering milk to the doorstep is peculiarly British, that is how we like to proceed. If they are denied that method, Britain's housewives will resent not being able to "pick up a pinta" on the doorstep as they have done in the past 100 years.

5.36 pm

Mr. Richard Body (Holland with Boston)

The hon. Member for Brent, South (Mr. Pavitt) has spared me having to make the comment that I almost invariably do in these debates when I follow a Labour Member, to the effect that I agree with every word that has been said. On the first part of his speech I urge him to appreciate that the European Council is primarily concerned with three issues. The first is the withdrawal of Israel from those lands to which no one, least of all someone who supports the efforts of the United Nations, as the hon. Gentleman so warmly does, could claim it has any title. Secondly, the Council has tried to form a reasonable view about the self-determination of the Palestinian people. Thirdly, it has considered the anxious problem arising from the new status of Jerusalem. There can be no prospect of any enduring peace in the Middle East unless those three matters are resolved, and they must be resolved fairly soon.

Mr. Pavitt

I hasten to agree, but I am more concerned with how they are resolved. The Common Market's approach is wrong. The Camp David approach, involving negotiations, will be the most effective.

Mr. Body

That remains to be seen. I am willing to throw almost any brick at the Common Market, but on this occasion I do not doubt its intentions. I think that the initiative can be useful, and I pay tribute not to any Head of State in the Community but to the President of Austria for the lead that he has taken in this matter. If we could make the Council of Europe a more effective organisation, which I would dearly wish to see, it would be an infinitely better forum than the so-called European Council.

On the other point in the hon. Gentleman's speech, he may know that I am a member of the Select Committee on Agriculture. We spent the whole of last year examining the problem of UHT milk. I cannot see how we can exclude it if we are to stay in the Common Market. We have sought to keep it out on two grounds. First, the EEC does not use imperial units. However, now we are going metric we can no longer advance that argument. Secondly, the Government were not satisfied about the hygiene of the processing plants.

Our Committee, which carried out a most careful examination, was unanimous in its view that there could be no question mark about hygiene. Therefore, we have no valid excuse, as long as we are hooked on the common agricultural policy, for keeping out UHT milk. This will be serious for the delivery of the pint of milk on our doorsteps every day or every other day. The Select Committee had strong evidence that once an appreciable amount of milk is purchased by housewives at supermarkets at perhaps 2p a pint cheaper than they can buy it on the doorstep, the economics of the doorstep delivery will collapse and many areas will no longer have that delivery.

We were all entranced by my right hon. Friend's peroration. I made a mental note of one phrase when he was speaking of the Western unity that is evolving. As I understand it, Herr Schmidt arranged for his Foreign Secretary to visit Moscow. As a result, it has emerged that Mr. Brezhnev is to visit Bonn on a date to be agreed. It appears that the visit will take place fairly soon. Most of us applaud this initiative. Was there any co-ordination or consultation, or whatever the vogue phrase is in the Foreign Office, among the Heads of State before the initiative was taken by Herr Schmidt in an area that is obviously of incalculable importance to Western Europe?

The White Paper contains many disappointing paragraphs. Indeed, every paragraph is disappointing. I am more than delighted that my hon. Friend the Member for Flint, West (Sir A. Meyer) is in his place. We remember so well the speeches that he used to make. Is there a single paragraph that my hon. Friend says can justify even the meanest portion of all the propaganda to which we were subjected a few years ago?

Sir Anthony Meyer

My hon. Friend must not tempt me into making the speech that I hope to make if I succeed in catching the eye of the Chair. As we are constantly hearing about the horrifying balance of trade that we have with the EEC, will my hon. Friend care to read the figures contained in the final annex, which tell us that British trade with the EEC is now in balance?

Mr. Body

I think that my hon. Friend has been present throughout the debate. He probably heard the right hon. Member for Llanelli (Mr. Davies), who I think understated the position. The right hon. Gentleman should have made it plain that in our trade with the Community in manufactured products—he rightly said that this was the area that would determine whether jobs and factories would survive—we were exporting 28 per cent. more to the Community than we were importing in 1970, before we joined. We are now exporting 11 per cent. less than we are importing. That is an enormous difference.

I do not want to be unfair to my hon. Friend, but how many jobs are being lost on Merseyside, an area that he knows only too well, and how many factories are being closed as a result of the grave deterioration in our trading relationship with the Community? The hon. Member for Wrexham (Mr. Ellis) referred to a siege economy. Does anyone suggest that we had a siege economy in 1970, or that we were trading unfairly with the rest of the Common Market at that time?

Some hon. Members—at the moment the majority of those in the Chamber—would dearly like to go back to the trading conditions that we had in the 1970s. If that were possible we might have fewer people in the jobcentres queueing for work.

There is one paragraph in the White Paper that is especially disappointing to tens of thousands of extremely poor people in Third world countries. I refer to paragraph 4.6, headed "Sugar and Isoglucose". In July 1980 the Council of Ministers agreed to authorise negotiations for the EEC to join the International Sugar Organisation. Some of us said "About time too". Every other country and trading group has joined it. Soviet Russia has joined it. The USSR is not a sugar exporter but it is peddling the tale to Third countries that it is more interested in their welfare than is the EEC, and its ambassadors and its trade missions are making that point with some success. I hope that those in the Foreign Office who are concerned with containing Communism will bear in mind the importance of the issue, especially when so many sugar producing countries are in strategic positions of great value to the expansion of Soviet Russia.

To join the International Sugar Organisation means subscribing to the International Sugar Agreement. That in turn means that the EEC will have to stop its practice of dumping vast quantities of sugar on to the world market in such a way as to depress the price for sugar that is available for tens of thousands of very poor people.

Sugar consumption in the Common Market is now static. It is about 9½ million tonnes a year. Under the Lomé convention we are bound to import 1.3 million tonnes from a number of Third world countries. That means that sugar production within the Common Market should be no more than 8.2 million tonnes. Any surplus has to go on to the world market at a dumped price, yet sugar production in the Common Market is likely to approach about 12 million tonnes this year. Therefore, we can be certain that about 3 million tonnes will be put on to the world market at a dumped price by the EEC. Every ounce of that sugar will undercut the sugar produced by Third world countries, together with a limited amount from Brazil and Austria.

The 1.3 million tonnes that comes in under the Lomé convention is only half of that which the ACP countries must export to gain the foreign exchange that they need.

If they are to maintain their standard of living, woeful though it is, they must export, at a reasonable price, another 1.3 million tonnes. It is impossible for them to have that market if the Community persists in putting on to the world market such a vast quantity of sugar, as it has in recent years, and as it is likely to do again this year.

The Council of Ministers will consider that matter in the course of the year. No doubt it will say, as it has said so often, that those countries in the Third world should grow something else. There are a number of reasons why it is not feasible for those countries to do so. Cane sugar is one of the few crops in the tropics that can be grown on the same soil for 50 years or more without the yields declining. The experts who have seen the problem cannot think of any other crop that can be grown as successfully as sugar cane in those circumstances. Every other crop has been considered. A queue of experts has gone out to the Third world to conduct experiments with other crops, yet each in turn has come back with the knowledge that there is no substitute for sugar in those countries.

Almost without exception, the tropical countries, which grow sugar at a reasonable price, are in danger of having hurricanes and cyclones at regular intervals. Those will devastate any other crop. Last summer I was in what was said to be the worst hurricane in living memory in the West Indies. The day after, I saw houses and property which were appallingly devastated. However, when I went round the plantations I saw the sugar cane that had survived and that had hardly been damaged. The banana crop was gone for the year. Tomatoes and all the other alternative crops were destroyed, but the sugar cane survived. Even when the hurricane or cyclone strikes when the crop is nearly ready, unless the cane is split altogether the crop can still be harvested. That was so in Mauritius recently, when 45 per cent. of the crop was harvested, although the people had endured one of the worst cyclones in their history. Therefore, the climate is such in those countries that no other crop can be grown. I hope that that point will be argued on their behalf by someone who is their only spokesman in the Council of Ministers—the representative from this country.

May I put forward two other arguments to my right hon. Friend in the hope that they will not be forgotten by those who argue the case? The growing, harvesting and milling of the cane sugar can be mechanised. However, in most of the Third world countries, this has not been done. The Governments of those countries take active steps to prevent mechanisation so that tens of thousands still have a job. Those jobs would be lost if the industry were to be mechanised, as it is in Australia. In a word, the sugar industry is labour-intensive. In those countries no other crop could provide as many jobs as in the sugar industry.

We know why there are so many tens of thousands of people in those countries. Islands such as Jamaica, Barbados and Mauritus were scarcely inhabited when our forebears chose to take them over. The inhabitants at that time have long since disappeared. In their place came hundreds of thousands of slaves and indentured servants. We know that too well. But it is not ancient history. I think that I know how old my right hon. Friend the Lord Privy Seal is. It was in his lifetime that those indentured servants were still being taken to places such as Fiji and Mauritius.

Our moral responsibility is not an ancient one to be written off. It is one of this century and of the lifetime of many of us. It will not be good enough to wash our hands of that responsibility. In this century we are doing as much as we did in the last century to people in those islands so that we might have sugar at a price cheaper than that at which any other Western country could obtain it. I know that my right hon. Friend the Lord Privy Seal will not overlook that moral responsibility.

The Lord Privy Seal is a kindly man. I hope that he will not mind my saying that I remember that more than 30 years ago he used to argue with great conviction on behalf of people whose fortunes were not of the happiest, in magistrates' courts in the poorest parts of London. I dearly wish that some sort of concern could be expressed on behalf of those tens of thousands of people who are now in danger of losing their livelihoods if the EEC goes on dumping such vast quantities of sugar in such a cruel way. It dumps twice as much on the world market as the amount which the Third world countries must get on the world market—apart from the Lomé convention—at a reasonable price to secure their standard of living, which is in any case pretty deplorable.

I visited Australia, another sugar-producing country, about three weeks ago. I was appalled to see that farmers there, who can produce sugar much more cheaply than anywhere else in the world, have a standard of living which farm workers in my constituency would not tolerate. I visited a number of farmers' homes and saw farmers with 100 or 200 acres of well-farmed land. Their homes appeared to have no recently manufactured furniture. Any car outside seemed to be an elderly model. Judging by their clothes and their possessions generally, their standard of living was more than modest. I hope that I am not using unkind words about my hosts.

However, those farmers had sizeable acreages. They had invested their all, yet they were not living as they should live. Adjoining vacant land, which could grow wheat at half the price at which we could produce it, was available for sale at £200 an acre. Other land which could no longer grow wheat had to go over to cotton and other commodities in order to secure an outlet. Above all, some of the dairy farmers had been driven out of business.

The Prime Minister of Australia has said that one-third of Australia's dairy farmers have been driven out of farming because of the EEC dumping butter and dairy products on to the world market. Australian farmers are among the most efficient in the world, but they cannot compete in those circumstances.

The people who support the CAP because they believe that the world is growing short of food should appreciate that there need be no shortage. Only 44 per cent. of the world's arable land is being cultivated, and the remainder will never be brought into production unless those who will cultivate it can expect a reasonable return. I do not want to take the Lord Privy Seal to task, but he is mistaken in saying that the opportunities for getting cheaper food from the rest of the world have gone and only small quantities are available. That is nonsense, when many farmers have gone out of business because they cannot find a market for their produce. If farmers can be assured of an outlet, they will produce the food. As long as they are denied an outlet their production will contract and they will grow less and less food, as is only too visible when one visits Australia and other countries that grow food much more cheaply than, I regret to say, our partners across the Channel.

I also visited Mauritius recently, and was sad to see how many Russian diplomats were there. Similar overture s are made by Russia and her satellites to all the countries with which we have cut our trade. If we do not buy the food that they produce they will sell it to the Russians. When those markets are opened to the Russians it is not only trade missions that move in, as my right hon. Friend knows. Apart from the morality and economics of the situation, I hope that the Foreign Office will understand the strategic importance of the sugar-producing countries and play fair with them.

We must ensure that the EEC acts honourably, subscribes to the International Sugar Agreement and stops the despicable practice of making poor people still poorer.

6.3 pm

Mr. Russell Johnston (Inverness)

It is my lot to follow the hon. Member for Holland with Boston (Mr. Body) for the second time in debates of this sort. I am deprived of the pleasure of saying that I agree with every word that he said, but I agree with most of his criticisms over the sugar problem, although I make no claim to be as knowledgeable about it as he is. However, it would be wrong to proceed from criticising a particular EEC policy to arguing that the Community, per se, is unacceptable. Criticism of one aspect of an institution should not undermine its whole concept.

The hon. Gentleman suggests that because Australian farmers are efficient and can produce food more cheaply they should be allowed to do so, but he should realise that that suggestion has repercussions not only for our Continental colleagues but for our domestic agriculture. I see him nodding.

Unfortunately, these debates are tending to rehearse arguments about membership instead of examining how progress can be made. That was exemplified by the right hon. Member for Llanelli (Mr. Davies) in his remarks on the CAP, when he said that the best reform would be to dismantle it. That is a point of view, but his speech was depressing, because it was arid, cold, lacking in forward projection and without a single positive idea. If he is suggesting that we should get out of the Community because it is causing us devastating damage, what is the promised land that he proposes as an alternative? He did not even faintly sketch an alternative scenario. That is the weakness in the stand taken by the official Opposition.

We on the Liberal Bench believe that withdrawal from the Community would do profound political and economic damage to this country and to the Western Alliance. The Polish situation throws into relief the threat from the East, and we are still far from clear about the direction of the American Administration, so it is mad to contemplate weakening our ties with our natural allies—and if it is suggested that the other countries in Western Europe are not our natural allies, who are?

Trade figures are usually rehearsed in these debates, although this time we have not gone through the well-founded argument, which pro-Marketeers sometimes forget, that oil exports are thrown into the balance. Our trade balance with the other EEC countries is unsatisfactory, but objective commentators accept that the pattern of Britain's industrial decline was well established before we entered the Community. It is unfair to suggest a causal relationship. The question is whether the opportunity to pull out of the decline is greater inside or outside the Community.

Mr. Austin Mitchell

In 1979 our deficit in manufactured trade with the Six was £4,000 million and our surplus with the remainder of the world was £5,900 million, so we are financing a deficit with the EEC out of the surplus that we are still having to run with the remainder of the world. That is the essential pattern.

Mr. Johnston

Our export market with the Community is growing, but our export market with the remainder of the world is declining. The hon. Member for Holland with Boston said that we should go back to the halcyon days of 1970. I am surprised that he did not suggest returning to the situation in 1870, when our trade position was much better. We cannot go back. The hon. Gentleman is a natural-born free trader, and is not in favour of barriers, but there would be no point in coming out of the Community unless we put up trade barriers—even moderate ones—to prevent an inflow of manufactured goods from the Community.

Mr. Body

I do not want to go too far into history, but surely in 1846 the Liberal Party was urging precisely that in seeking to repeal the Corn Laws.

Mr. Johnston

Perhaps we should leave that before we go even further back into history.

The right hon. Member for Llanelli asked what was wrong with the juste retour. We have been through that many times in the past decade, and it is sad to hear that question asked in the House. What is wrong with it is the point made by the hon. Member for Southampton, Test (Mr. Hill), in his intervention. One will never achieve any kind of wealth distribution throughout the Community if one adheres to the juste retour. The logical consequence of the hon. Gentleman's argument is that if one wants redistribution of wealth there must be an extension of the regional and social funds.

I cannot see how successful political enlargement—by which I mean the accession not only of Greece but of Portugal and Spain—will be possible unless there is also some budgetary enlargement. Like other hon. Members, I have visited all three countries and discussed what they hope will be the consequences of membership. Their economic expectations cannot be met within the Community's present budgetary restraints. Nor do I see how the Community can make any progress towards economic convergence and wealth redistribution without contemplating budgetary extension. The Lord Privy Seal re-emphasised that that was not the policy of the Government. I see no possibility of progress unless the Government, as well as Mr. Schmidt and President Giscard d'Estaing, change their minds on that.

On the common agricultural policy, it is sadly true that the Community is, as it were, going sour on milk. One should not overlook the security of supply that the CAP has developed and the agricultural revolution that it has achieved in the original Six. It is an incontestable fact, however, that its budgetary effect has been gravely disadvantageous to this country. Nevertheless, the problem is much more specifically a commodity problem than a general problem of the basis or principles of the policy itself.

If one asks the Government, as I do occasionally at Question Time and at other times, what they intend to do in the Community, the usual answer nowadays is to refer one to the Foreign Secretary's speech in Hamburg. One is told that the text is available in the Library and that one will find all the answers there. I do not deny that it was a good speech. But a speech is neither a strategy nor a set of proposals. The Lord Privy Seal said earlier that the Government wished to see the Community greatly strengthened. How do they intend to do that? I shall put four questions to the right hon. Gentleman.

First, what are the Government's financial proposals? Given the status quo, I believe that there is little argument, even between pro- and anti-Marketeers, about the urgent need for the removal of barriers to invisible trade and of non-tariff harriers to trade within the Community. Both those factors operate to the disadvantage of this country. Their removal would be wholly within the spirit of the Treaty of Rome and the competition policy. What are the Government's views on that aspect?

If the Lord Privy Seal mentioned the terrible term "EMS", he did not do so very loudly, and it slipped past me. Have the Government taken their thinking any further forward on that aspect?

Secondly, how do the Government see the future of Community regional, social and industrial policy? We know that the existing regional policy is a sham. I say that as a pro-Marketeer. I remember the time when everyone was excited about the regional fund. I remember the work put into it by George Thomson when he was our first Commissioner, and the idealism at that time. All that has gone. It is an absolute sham, when it could be very much otherwise. Again, however, if it is to be otherwise, it will require acceptance of budgetary extension.

There is no reason why a regional employment premium should not be introduced, for example. Members on the Opposition Benches frequently—and Conservative Members occasionally—regret the disappearance of the regional employment premium in this country. I should have thought that there could be no objection in principle to such a development on a Community-wide basis.

Thirdly, what developments do the Government wish to see on the energy front? Section IX, on page 27 of the White Paper, is entitled "Energy", but that one page does not tell us much. It certainly tells us nothing about the future.

I ask two simple questions on this. First, are the Government talking to other Governments about Britain's being willing to give priority assurances on oil supply in any crisis situation? It is comforting to know that one's friends may be depended upon if anything goes wrong. We all remember what happened to the Dutch the last time they fell out with the Arabs. Secondly, are the Government satisfied with EEC expenditure on research in two important areas? One is in nuclear safety. I am not against nuclear power, but I accept that many people have reasonable reservations about safety and believe that insufficient attention has been paid to it. It is an expensive and complicated business, and typical of the kind of business that is better carried out by the Community as a whole with more concentrated resources. The same applies to the search for alternative energy resources.

Mr. Dykes

Has the hon. Gentleman considered the idea of a levy on oil imported into the Community? The United Kingdom would benefit through having its own oil and not having to pay the levy. For the others, it would mean a marginal percentage, so as not to deter, on the gross price of a barrel of oil, but it would provide a useful additional source of revenue to the total Community budget in the long term.

Mr. Johnston

That proposal is certainly worth considering.

My final point is, I know, close to the heart of the Lord Privy Seal. He is on record on many occasions as speaking of the need for an effective mechanism to develop political co-operation. How successful has he been in persuading our Community partners to develop, for example, a permanent Secretariat for the Council? Again, speaking personally, I reject the view now very fashionable among hon. Members, that economic and political problems are best solved by increased nationalism. The root of their rejection of the Community is the belief that we cannot solve problems in co-operation with others, but only through our solution alone. They are therefore not prepared to consider negotiation. Sad to say, not since the pressure exerted for the creation of the regional fund have any British Government taken a significant initiative within the Community. The White Paper gives no hint that the Government are considering embarking upon one now.

The White Paper is laid before us at a time of general recession, when incipient nationalism in the Community is growing. I have often said that if Germany behaved with the same degree of nationalism as do Britain and France, Europe would be in grave danger. The Lord Privy Seal is a civilised, reasonable and almost benign man, and I understand that he will be responding to the debate. However, I must say that the White Paper does not give a hint that the Government intend to proceed in Europe with the urgency that is required.

6.20 pm

Mr. Maurice Macmillan (Farnham)

The debate so far has been mostly about the internal affairs of the Community. The problems are real and important. We have gone over them before. Some of my more expert hon. Friends have dealt thoroughly with the details of those problems today.

My right hon. Friend the Lord Privy Seal touched on political co-operation, as did the hon. Member for Inverness (Mr. Johnston). I agreed with much of what he said. The hon. Member for Brent, South (Mr. Pavitt) also referred to political co-operation. However, he dealt with a specific political problem facing the countries of the Community and the Community as a whole rather than the general matters referred to by the hon. Member for Inverness.

Listening to the debate, as to previous debates, I got the feeling that, important though the issues were, they arose only because of the member States' failure to co-operate and the Community's fundamental political and economic weakness in the world.

If we want evidence, a startling fact is that the countries of Western Europe are now no longer able to pay for their own defence. They certainly cannot pay for their own nuclear defence, and they are no longer able to defend themselves with their own armies, navies, air forces and weapons, even on the conventional front.

That seems to be the background against which the debate should be conducted, stating, as it does, the fundamental fact that the Community apparently does not have the will to exist as an independent, or potentially independent, entity in the political world.

I am not suggesting that it will be desirable or possible for the Community to withdraw from NATO or to regard itself as equivalent in strength to the greater Powers, but it should be a modest target to develop our own resources to make a contribution slightly more geared to our potential wealth.

I wish to concentrate on the Community's external political and economic policies, to put forward some ideas, and to hear from my right hon. Friend how he thinks the Community's position in, the world can be strengthened.

The White Paper, in paragraph 5.1, under the heading Section V: Economic, Monetary and Budgetary Questions", states: The European Council … reviewed the operation of the European Monetary System and decided that further development, including the creation of a European Monetary Fund, should be undertaken at an appropriate time. I am moderately glad to hear that, but it does not seem to recognise the urgency of some of the monetary and exchange problems that affect Europe, or some of the basic economic problems that face the Western world. Both the Community and the Western world as a whole are in a classic slump. I think that the Communist world is rather worse off, but for somewhat different reasons.

Savings within this country, Europe and the world are high, and possibly still on the increase, yet investment is low, and possibly still declining. That is one of the root causes of the world's difficulties. In my view at least it stems largely from the fact that the increasing price of oil means that the greater part of our loose resources are flowing to the Arabs, who are not investing them in manufacturing industry or in the Third World, where they have at least as great an interest as Europe.

I am sure that my right hon. Friend will say that the problem requires a wider solution than that which Europe alone can provide. Of course it does. We need a solution based at least on the OECD, and better an even wider one including Japan, but if the European Economic Community means anything it should be trying to take the first step on its own. Must we always wait to do something that could be useful? Must we always wait to try to persuade others to do something that we think will be still more useful? Could not Europe, on occasion, make a start and try to persuade others to follow?

I think that the European monetary fund could be developed into a genuine European bank, which could be developed even more as a true bank than the World Bank. We must have some mechanism by which the vast amounts being earned by the OPEC countries can be rechannelled into investment in the developing and manufacturing countries. We need a mechanism of that kind to deal effectively with investment in the Third world, including the raw material producers, and with some of the dangerous implications of Europe's trade with Iron Curtain countries.

I should like my right hon. Friend to comment on the potential dangers to Western Europe and the EEC of the current situation in Poland, not so much militarily or politically as economically. I understand that Poland's debt to other Governments is more than $20 billion. In addition, Poland is heavily indebted for its current balance of payments to private sector banks in Europe—especially in Western Germany. If Poland's difficulties take too long to resolve, what effect will its economic position have on the Community and what organisation has the Community to deal with it? The answer to the last point is "None". If the dangers that I have suggested are real, we need something more than an undertaking to do something "at an appropriate time", because that is very vague, Also, we in Western Europe, in the Community, have been bedevilled for some time now by problems of rapidly changing rates of exchange—a sort of post-Bretton-Woods situation, in which there is no coherence in the fluctuation of exchange rates in relation to each other. I fully accept that an ultimate solution has to be found which is wider than purely European, but if we had a European Bank we might start an initiative that would attempt to bring about a certain degree of coherence in exchange rates.

I know that we have the EMS. I am one of those who think that the British Government could take a step in this direction by joining the system. I do not think that it is very satisfactory for us, but I do not see how we can urge another system on our partners within Europe until we at least try to make some sense of this one. I do not like a basket of currencies. As somebody once said, if a basket is filled with different kinds of rotten fruit, all the fruit remains rotten whatever combination there is in the basket. The difficulty is that we have no standard against which to measure currencies—no true link with reality. However the situation is organised, in purely monetary terms it will not, in the end, prove very effective.

I am not one of those who believe that it is possible to reforge the link with gold; nor do I think that a gold exchange standard is really workable. But I believe that it should be possible to devise a system of stabilising currencies against an agreed measure of the price of manufactured goods or the price of raw materials, or a combination of the two. Indeed, in about 1973 some work was done within Europe on these lines, the Dutch notably making a very significant contribution.

Paragraph 2.9 of the White Paper refers to a rather slow approach to a better mechanism for achieving political unity. Incidentally, the speech of the hon. Member for Brent, South illustrated the need for a more coherent organisation in order to obtain a policy with some sort of overall identified purpose, rather than one that relied on a whole series of ad hoc approaches to different political problems.

Many years ago I was a rather incompetent amateur soldier, but I was taught one thing that I have always remembered. It is not possible to decide what objectives have to be captured in the course of an operation until it is decided precisely what the object of that operation is. Many good ideas come to nothing because of confusion between the interim objectives and the overall object.

I ask Her Majesty's Government to push rather harder than they have so far—despite the admirable speech in Hamburg of my right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs—to achieve some sort of organisation for working out a clear intention in general before acting in particular cases. This implies a somewhat more coherent approach to defence problems and to NATO, as indeed it does to the need for greater economic effort and co-operation. It still seems ridiculous to me, from a political, defence and, indeed, economic point of view that the countries of Western Europe should be using weapons that cannot even use one another's ammunition. That is absurd. Nor do I believe that the Community can seek to be taken seriously as a political force until its members have shown that they are willing to work together more closely within NATO on the defence side.

As a sideline, I wish that a little more study could be carried out within the Community of the likely economic effect on this world slump situation of trying to improve our capacity to defend ourselves and our own procurement of weapons, transport, and so on.

Looking back, I think it is fair to say that when the then President of the United States, Mr. Roosevelt, started his New Deal, a major contributory factor to its success was the rearmament programme that was undertaken at about the same time. That is something that we ought to look at not only within the United Kingdom but collectively within the Community, in case it might have much the same effect.

In making these few points I have been concerned solely with one overriding consideration, namely, the strength and position of the Community in the world—its political strength, its overall economic strength, and its capacity to act as a serious ally within NATO, including the provision of such help and support as has to be given to our allies outside the NATO area. I hope that when he winds up the debate my right hon. Friend will give the House reassurance on these points, which to me at least are very worrying indeed.

6.37 pm

Mr. Robert Maclennan (Caithness and Sutherland)

When I entered the Chamber at the beginning of this debate my heart went out to the Lord Privy Seal. When I realised who was likely to participate in it, I sensed that he must have felt that he had been here before. Those who are apt to participate are apt to make the same points, and today's debate has proved not altogether exceptional in that respect, although I must say that the speech of the right hon. Member for Farnham (Mr. Macmillan) focused on some of the issues that are particularly pressing at the present time. I am happy to follow him, because he has made my task of speaking in this debate much lighter, as many of the points that he made were on matters to which I intended to address myself.

The difficulty that we face in viewing our place in the European Community is that the perception of the British people of the Community is very different from that of those who are outside the Community. I think that we often underestimate the enormous capacity of the Community to inflict damage, and even more its capacity to intervene powerfully to assist the countries of the world in facing some of the acute political and economic difficulties that characterise our present situation.

Those who attend any of the sessions of the United Nations bodies are made aware of the powerful impact of the collective voice of members of the European Community upon their debates. In the corridors, when discussions of trade policy are taking place, one realises what enormous power the Community has, although it does not always choose to exercise it collectively.

I share with the right hon. Member for Farnham a sense of disappointment that at this time, perhaps one of the most dangerous in the post-war period, there is not a clearer sense of direction coming from the Community, and perhaps from the Government, on the development of our Community role in the world.

The right hon. Member spoke of three issues to which I want briefly to draw attention. Some of them were also touched on by the hon. Member for Inverness (Mr. Johnston).

The instability that we face because of the world slump is not being assisted by a coherent response from the European Community. The Government have not made clear how they can use our membership of the Community to come to terms with issues that are perceived as problems. They have not made clear whether they see for Europe a role in tackling the recycling of oil surpluses. Of course, that problem will have to be tackled in another forum as well, and other members of the OECD should be involved in these issues, but within the Community we are in a position to take a lead, to co-ordinate our views and to seek to effect some of the recommendations which, for example, have come from the Brandt Commission. There is not a great deal about this in the White Paper—indeed, there is nothing about it—allthough I suspect that the Lord Privy Seal will acknowledge that it is not beyond the competence of the European Community to come to terms with this issue.

The White Paper suggests a vague commitment to further development of the European monetary system. There will undoubtedly be differences of view within the Council of Ministers on what that development should be, and the White Paper perhaps cannot sufficiently spell out the position of member Governments on the issue—that is not its purpose. This debate provides the Government with an opportunity to state their view on what further development there might be and the time scale that they have in mind for the creation of a European monetary fund. The White Paper speaks of "an appropriate time". Perhaps the Lord Privy Seal will tell us what the Government think is the appropriate time.

The contribution of the right hon. Member for Llanelli (Mr. Davies) was focused, as his contributions tend to be, not on the wider question of the capacity of the Community to influence the development of arguments in world forums but on the impact of particular European policies on specific parts of the British economy. I thought that the right hon. Gentleman's speech was more than usually empty, not only because it was to some extent repetitive but because it sought to make rather arid debating points.

In his line of argument on the common fisheries policy the right hon. Gentleman seemed to be more concerned with demonstrating the truth of an assertion that he had made some months ago that there was a link between the settlement of the fisheries policy and the settlement of the budgetary differences than with obtaining a settlement of the common fisheries policy that is in the interests of British fishing. He posed briefly as the friend of Helmut Schmidt, an astonishing posture for one who is interested in the future of Britain's fishing industry.

I was not clear whether the right hon. Gentleman was suggesting that the British Government should have acceded to German pressure for the settlement of the dispute with Canada in December. The British fishing industry would not have been at all satisfied if the Government had made that concession. The unwillingness of the Government to accept a part of the package in December cannot properly be thrown at them as a criticism.

Mr. Austin Mitchell

My right hon. Friend the Member for Llanelli (Mr. Davies) did not say that. The hon. Gentleman should not put words into the mouth of my right hon. Friend. That is not what he said.

Mr. Maclennan

I did not suggest that it was what he said. I said that it was the clear implication of what he said. The clear implication was that the British Government, in not acceding to Helmut Schmidt's request in December, were acting in bad faith in their dealings with him. The Government could have acceded to Helmut Schmidt's request only if they had sold out. The right hon. Gentleman cannot ride those two horses at the same time. That is the sort of argument that he constantly produces.

Mr. Roland Moyle (Lewisham, East)

My right hon. Friend the Member for Llanelli (Mr. Davies) is not here to defend himself. The clear implication of my right hon. Friend's remarks was that the relationship that Britain has with her Continental partners will inevitably lead to bad blood and enmity. In talking about the fishery dispute and its resolution the hon. Member for Caithness and Sutherland (Mr. Maclennan) is missing the point.

Mr. Maclennan

I thought that it was the right hon. Member for Llanelli who was missing the point. He was trying to score a debating point at the expense of the Lord Privy Seal and the Government. I thought that he was doing so at the expense of the interest that this country has in a united, bipartisan approach to the resolution of our dispute with the Community about the shape of the fisheries policy.

I do not propose to follow the line taken by the right hon. Member for Llanelli in going through the long list of disagreements that exist between ourselves and certain Member countries of the Community on particular topics. That is perhaps better confined to discussions on specific issues. A debate of this kind allows us to take a broader view of the issues involved in the development of the European Community.

If there is one major disagreement between myself and right hon. Members who speak for the official Opposition about Europe, it is that they have the most selective memories. They seem like men who have suffered a motor cycle accident and have lost their memories about the years when they served in Government. It is almost as if things had never happened. It is as if for the bulk of the time that we have been full members of the EEC they were not personally and ministerially responsible for many of the matters on which they now take such a strong line. Not only are they unwilling to acknowledge the difficulties that confronted them as Ministers and led none of them—not even the right hon. Member for Bristol, South-East (Mr. Benn)—to resign his portfolio, they fail to acknowledge that those problems are still with us. These problems will be resolved only by the step-by-step approach that they espoused when they were Ministers. They were ready to trumpet their small steps in the House.

I accept what the Lord Privy Seal said, particularly when he spoke about the CAP. Successive Labour Ministers of Agriculture, Fisheries and Food had much less to trumpet about when they came back from price fixings with the EEC.

Mr. Jay

Is not the hon. Gentleman's selective memory overlooking the fact that in 1971 the Conservative Party signed the Treaty of Accession, which has limited the actions of every Government and which began all our troubles?

Mr. Maclennan

The right hon. Gentleman's memory seems to overlook the renegotiation of terms, in which Labour Ministers participated. When the issue was put to the British people in the referendum it was not suggested that such matters could not be taken further. Today's leaders of the Opposition said then that what had been achieved was acceptable and should be accepted. Those same people now argue that the impossible can be achieved within the short space of time that elapses between these six-monthly debates.

Mr. Jay

rose——

Mr. Maclennan

I have already given way to the right hon. Gentleman.

Mr. Dan Jones (Burnley)

Will the hon. gentleman give way to me?

Mr. Maclennan

Yes.

Mr. Dan Jones

I worked for my right hon. Friend when he was president of the Board of Trade and a member of the Government. During that period he was against the EEC.

Mr. Maclennan

I have the highest regard for the honour of the right hon. Member for Battersea, North (Mr. Jay) on this matter. I yield to none in my admiration for his consistency. However, it is not mirrored by many of his right hon. and hon. Friends, who have remained members of successive Labour Governments.

Mr. Dan Jones

I did not say that.

Mr. Maclennan

I acknowledge that. The right hon. Member for Battersea, North has a proud record of coherence on this issue. There is a damaging tendency—which has been greatly fostered by some of those who have consistently opposed our membership of the EEC—to attribute post-1973 events to our membership of the EEC. It is a pure coincidence of time and history that 1973 also saw the beginning of a world crisis, which was caused by factors external to the Community. The oil crisis in the Middle East had a disastrous effect on the world economy. It was coincidental with our membership of the Community.

It will not do for hon. Members consistently to support the post hoc ergo propter hoc fallacy in relation to Europe. Our membership of the EEC is damaged by constant shifts in position, which are undertaken, in particular, by the Labour Party. We shall not secure the full benefits of membership if our adherence to the Community is constantly debated. Nor shall we secure the full benefits of membership if we leave ourselves open to the criticisms to which the Lord Privy Seal—with his typical, skilful diplomacy—referred in general terms.

The Opposition are not coherent about what they would do if, by some mischance, they were once again to form the Government.

Mr. Austin Mitchell

Nice.

Mr. Maclennan

It is not nice. It is far from nice.

Mr. Mitchell

rose——

Mr. Maclennan

I shall not give way, because the hon. Gentleman made a silly remark

Mr. Mitchell

rose;——

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. The hon. Member for Caithness and Sutherland (Mr. Maclennan) is obviously not giving way.

Mr. Maclennan

It is not nice that the British people should be in such doubt about what a major party, as represented in the House, would do if it were to enter office.

Mr. Mitchell

rose——

Mr. Maclennan

It is not nice that people do not know whether Britain will be withdrawn from the EEC without consulting them in line with the resolutions passed at the Labour Party conference. It is not nice that people do not know whether the Labour Party's policy is to repeal the European Communities Act and put ourselves in breach of our Treaty obligations. It is not nice that the British people should be left in a state of complete uncertainty. Nor is that nice for our European allies and Community friends.

The truth is that there is a wide spectrum of views within the official Opposition, which they cannot reconcile. As a result, the Opposition Front Bench produces nit-picking arguments that are wholly destructive in intent. They are directed solely at the minutiae of the disagreements—[Interruption.] It has led them to such forgetfulness that they overlook the fact that at meetings of the Council of Agriculture Ministers, Labour Ministers accepted the introduction of the co-responsibility levy. The right hon. Member for Llanelli used that set-piece to beat the Lord Privy Seal round the head. That is political opportunism of the worst type. It does not go unnoticed by the public. Such political opportunism has led many people to become disenchanted with a party that was once proud to speak in more principled terms about some of the great issues to which membership of the EEC gives rise.

7 pm

Mr. Hugh Dykes (Harrow, East)

I agree with much of what the hon. Member for Caithness and Sutherland (Mr. Maclennan) said about the Community and the strong and valid arguments in favour of our membership. I also agreed with virtually everything said by my right hon. Friend the Member for Farnham (Mr. Macmillan). He made a far-sighted and constructive speech, which took the debate substantially away from the routine parameters in which we constantly find ourselves.

We had an enormously depressing and lugubrious opening speech from the right hon. Member for Llanelli (Mr. Davies), who, in his characteristic way, summed up the totally negative and defeatist attitude not only of the official Labour Opposition but of the Labour Party as a whole to our membership of the Community. To many people it is utterly depressing that this is the only member State in which this silly, nonsensical, fundamentalist debate still goes on. [HON. MEMBERS: "Denmark?"] I hesitate to dwell on the Danish situation at too great a length, because it is extremely complicated. To some extent that is a special situation. Instead, I qualify my remarks by saying that in the main member States—the Big Four—and in most of the other member States, no such debate exists.

It is interesting to notice that by and large, but with some dissident voices—for example, the small Labour Party, which no doubt is a noticeable similarity—Ireland, which is only a small country, has been enthusiastic about its membership of the Community.

Mr. Marlow

It is on the gravy train.

Mr. Dykes

I want to see in Britain the inculcation of the original enthusiasm for the Community, which took us in and which was later endorsed by a two-thirds majority in the Labour Government's referendum.

The right hon. Member for Llanelli is a principal financial spokesman for the Labour Party. The House cannot listen to what he has to say, because no one can rely on any of his statistics. He has still not adequately explained why he made the gross error of saying that 25 per cent. of the French population lived on the land, whereas the real figure is 9 per cent. A margin of error of 3 per cent. would be generous, and an estimate of between 6 per cent. and 12 per cent. might be allowable by a tolerant House of Commons; but an estimate of 25 per cent. means that one of the Opposition's principal spokesmen has produced statistics that amount to fantasy and imagination, and are not based on real facts. Therefore, no one will be able to listen closely to any of his other arguments about the Community.

I was also depressed by what the hon. Member for Brent, South (Mr. Pavitt) said about milk distribution. It is contradictory for hon. Members to argue that the Community is heinous because it produces dearer food products and at the same to say that it is all right for British doorstep milk to be dearer, because it is a special case. There is a built-in contradiction in that argument. We wish to develop free trade within the Community on all sorts of items, yet some hon. Members complain that we do not have free trade in food products. Surely we should have free trade in milk-related products as well. The greater competition that will result in allowing in milk from all sources, including France, will give the housewife and other consumers a greater choice. Surely that is preferable to inflicting a monopoly system of distribution upon them and saying "That is all you can have".

It was particularly offensive of my hon. Friend the Member for Holland with Boston (Mr. Body) to refer to foreign milk as positively unhygienic. It is true that at present French milk does not conform to our existing health regulations, but according to the French newspapers France plans to take Britain to the European Court to have the matter re-examined, and the Court may well uphold the French case. It is silly to be offensive in that way about other member States. Once we start being offensive they will be more offensive, we shall retaliate, and the whole furore of dangerous nationalism will build up, just as it has in previous decades. I do not want to see that happen.

Britain has always been internationalist in its nature. We changed the orientation of our internationalism by entering the Community in 1973. I wish that new, modern internationalism and Europeanism to continue, for the benefit of future generations.

I agree with other hon. Members that few positive, enthusiastic signs emerge from the White Paper. It is a catalogue of what is now taking place, but there seems to be very little progress on important issues. There is now an overriding requirement for real co-operation between member States. We must take the Community forward against a background of 8 million unemployed in the Community—particularly youth unemployed—and the need for substantial new industries to be developed. The Community still has scarcely any coherent industrial policy. Those are the urgent requirements of the member States, working together in positive co-operation and friendship, and we should riot be ashamed to say that.

Nothing is sillier than to say that foreigners always try to do us down and that anything that we say is right and anything that they say is wrong. I was struck by the words of the German Chancellor, Herr Schmidt, who said at the weekend that everyone in the Community had to act as positive double agents—agents for their own country's essential interests and agents for the Community's interests as well. That is why it is important for the member States to find a solution to the fisheries dispute as quickly as possible.

I feel that last week's agriculture price package, which resulted in an average price rise of 9 per cent., will help us obtain agreement on fisheries, in the sense that, temporarily and momentarily, a new spirit of co-operation seemed to emerge.

Mr. Richard Shepherd (Aldridge-Brownhills)

Will my hon. Friend give way?

Mr. Dykes

Not for the moment. I want to be brief. That spirit of co-operation emerged then, but in recent weeks we have seen very little of it.

The White Paper deals with developments up to December. However, the budget proportion for farming will be reduced to 69 per cent. [Interruption.] The figures are available from the Ministry of Agriculture, Fisheries and Food. That gives the lie to the suggestion that there is an inexorable rise in the agriculture portion of the Community's budget. That is not so. That tendency has been arrested, albeit against a background of severe inflation. It is a notable achievement.

The 1 per cent. VAT ceiling, while still looming towards us, has not yet been reached, although there were forecasts that it would have been reached by now. It is probably the case, although we cannot be sure, that that 1 per cent. ceiling will be reached later than expected. I suppose that that is partly due to the inflationary rise in total receipts, as well as to the distortions produced, for good or ill, by the MCA changes.

In the context of the Commission's examination of the modern budget system and the CAP, that gives us longer to think ahead about what should be done in terms of a budget for the 1980s. I am sad, therefore, that the White Paper is not more positive about that matter, because some constructive thinking is needed in that regard.

There are several other items in the White Paper to which I should like to refer. I agree with my right hon. Friend the Member for Farnham that we should have joined the European monetary system by now. Had we gone into that enthusiastically, we could have pressed energetically for the EMF to be located in London. After all, London is the financial centre of Europe, and there is a strong case for locating a principlal Community institution in Britain. In the financial sense, London would be the logical location.

In section VII on "Environment and Transport", there is nothing about the Channel tunnel, which is a vital question for Britain. I hope that the earlier, incipient indication by the Commission that Community money for that project would be available in substantial measure will again be pursued by the Government.

I hope that in his reply the Minister will be able to deal, even if only fleetingly, with that matter, which will be tremendously important for this country in the long-term future. One reflects sadly that the ossification of thought in the Opposition and in those quarters that are anti-EEC has overlapping effects on projects such as the Channel tunnel, which should be a bilateral project, and in stopping any progress in such vital areas.

I hope that in a number of other areas, too, progress will be made. The European Parliament is mentioned briefly in the White Paper in a couple of places. The whole debate about the single site for that institution should have been concluded by now. It is a disgrace—that is the only word for it—that the member States that have responsibility for the decision have not yet made it, and have only now begun to whittle down the old-fashioned French insistence on Strasbourg still being the seat of the Parliament when most people would prefer Brussels first and, perhaps, Luxembourg second.

I should like to mention briefly a subject that is not mentioned in the White Paper because it was not discussed over the six months period of the White Paper. I hope that the Government will now begin to revive the arguments for, and the debate about, the European Trade Mark Office. If progress continues at the rate at which it can now be envisaged, that office will probably be set up in about three years' time, once the trade mark legislation is concluded.

There is every chance that because of departmental insouciance the declining reputation of the British trade mark registry—which used to be the best in the world—and a failure of the political will to press the point hard in Community circles, Britain will run the risk of not having the office in this country when it is established. That would be a grievous loss, because the Germans were given the Patent Office and the French are now pressing very hard for the future Trade Mark Office to be set up in their own country in—surprise, surprise—Strasbourg.

These are positive areas in regard to which the hon. Member for Caithness and Sutherland suggested that we should elevate debate rather than continue the obsession with anti-EEC policies. The only person who does it with elegance is, perhaps, the right hon. Member for Battersea, North (Mr. Jay), because of his historical consistency. But for others to continue this old obsession, plus a new-found obsession, for opportunistic reasons of opposition in the Labour Party, is to go back to the idea of withdrawal from the Community. [HON. MEMBERS: "Shame".] My hon. Friends say "Shame", but I use the word "opportunistic" in the sense of slight praise, because this is the kind of thing that, historically in Britain, parties have done when they have gone from Government into Opposition. They have gone back on their previous positions. [Interruption.] In the face of the overwhelming requirement for nations to stand together in the blizzard of the recession, when the dangers of nationalism are now so great, it is above all——

Mr. Marlow

rose——

Mr. Dykes

I shall not give way to my hon. Friend—it is above all important for all of us to revive the old, original rationale of Community membership and to build new ideas for the future.

7.12 pm

Mr. Roy Hughes (Newport)

Command Paper 8195 is entitled "Developments in the European Community July-December 1980". Reports of this kind are growing grimmer and grimmer and ever more depressing in character.

Much reference has been made to consistency on the issue of the Common Market. I have the utmost respect for my right hon. Friend the Member for Battersea, North (Mr. Jay). On a secondary plane at least, I can claim to have been equally consistent, because I spoke against Britain joining the Common Market in the famous debate at the Labour Party conference in 1962.

Some of my remarks, in comparison with other contributions to the debate, will be perhaps slightly mundane in character. The first paragraph of the White Paper, in referring to the period covered by the report, says that it marks the end of the period in which Mr. Jenkins was the President of the Commission.

We are all aware that Mr. Jenkins was always a fervent Marketeer. He was prepared to split the Labour Party from top to bottom over the issue. I would be the last to claim that his interest in the Common Market was only a financial one.

Mr. Arthur Lewis (Newham, North-West)

Why not? I would.

Mr. Hughes

I shall come to the point made by my hon. Friend the Member for Newham, North-West (Mr. Lewis), if he will allow me to do so. I notice that there is no mention in the White Paper of the remuneration received by Mr. Jenkins. It is a fact that as President of the Commission he received £60,000 annually, plus, we understand., very lavish expenses, all of which was tax-free. Presumably, out of that sort of income he was able to put away a few shillings for the future. But, even if he was not, he still gets £30,000—again tax-free—for the next four years, and then £10,000 annually for life.

Mr. Lewis

I am sorry that I interrupted my hon. Friend from a sedentary position, but I want to put it on record that I think that Mr. Jenkins went to the EEC only for the money, because he has been interested only in himself all the way through. Is it not a fact that this dishonest hypocrite declares himself to be in favour of an incomes policy for everyone but himself? Now he is a leader of a party and is proclaiming an incomes policy for everyone but himself. He is a hypocritical crook.

Mr. Hughes

Without using such ardent language, I can again claim to have been equally consistent about incomes policy.

It is apparently not Mr. Jenkins' intention to rusticate in the country, or even to go back to Abersychan, because, in addition to the £10,000 a year that he will be receiving throughout his life, he has a little part-time number with a firm of merchant bankers for which it is suggested he is paid about £10,000 a year. We also note his efforts to save Britain, and——

Mr. Maclennan

On a point of order, Mr. Deputy Speaker. The remarks which have been made suggest that the former President of the European Commission has been motivated by finance. Had those remarks been made when he was a Member of this House—as undoubtedly he will be again very soon—they would have been wholly out of order. Would you confirm that?

Mr. Lewis

Before you deal with the point of order, Mr. Deputy Speaker, I point out that it is a hypothetical point of order. You will have noticed that the hon. Member mentioned what would have been the position if Mr. Jenkins had been here, or if he were to come back to this House. An hon. Member of this House expresses his own views and opinions and is responsible for his own views and opinions. Subject to the Chair allowing him to say it, an hon. Member can say whatever he likes about anyone. If it is my view that Mr. Jenkins has feathered his own nest I am entitled to say it, and I shall say it and say it again.

Mr. Deputy Speaker

I am grateful for the hon. Gentleman's advice. It is true that the matter raised by the hon. Member for Caithness and Sutherland (Mr. Maclennan) was hypothetical. Each hon. Member must take full responsibility for what he says in the House.

Mr. Dykes

On a point of order, Mr. Deputy Speaker. Would not the matter be resolved if the hon. Member for Newham, North-West (Mr Lewis) were to give the House an undertaking that he will say the same thing outside?

Mr. Deputy Speaker

That is not a matter for me.

Mr. Lewis

What I say in the House of Commons is my privilege. If we had fair libel laws in this country I would say it outside, but the laws are weighted in favour of the rich. Roy Jenkins, as a quarter of a millionaire, is a rich man, at the expense of the hard-pressed taxpayer.

Mr. Deputy Speaker

These are not points of order. We should now continue the debate.

Mr. Hughes

I have simply been mentioning the facts. Mr. Jenkins' remuneration, unfortunately, is not mentioned in the report with which we are dealing. The fact that he is now in semi-retirement has given him the chance to participate in the launching of the new party.

The SDP cannot gain much cheer from the White Paper that the House is debating. We know that the party consists of Euro-fanatics. We know that the polls allegedly give the party a good rating. However, the polls also point out that 50 per cent. of the support comes from people who wish to see Britain out of the Common Market.

Dr. M. S. Miller

Will my hon. Friend make sure that "polls" is spelt "polls" and not the other way, because that involves Solidarity?

Mr. Hughes

I take the point made by my hon. Friend. Bearing in mind the support that the SDP is alleged to be receiving, is it any wonder that its bikini-like party prospectus has its overwhelming and dedicated support: for the Common Market well down the list.

I turn to page 9 of the White Paper and its reference to Japan—

Mr. Marlow

The hon. Gentleman is a little closer to this matter than I am. Is there any truth in the substantial rumour that when those connected with this nice party were seeking a title they considered calling it the Brussels party?

Mr. Hughes

I am not much of a gardener. E am not accustomed to this terminology.

I see that the White Paper calls for "moderation of Japanese exports". I understand this point of view. My constituents and I are concerned about imports from our European partners. The steel workers in Newport axe particularly interested in this issue. Forty per cent. of registered new cars—steel forms a great part of their construction—come from European countries, mainly Germany, France and Italy.

I recall, at the start of this Common Market business, Lord Stokes, then chairman of British Leyland, commenting on the marvellous opportunities that lay ahead for the British motor industry. Not long afterwards, British Leyland was almost bankrupt and had to be saved by the Government of the day. What has happened with cars has happened in many industries. Membership of the Common Market bears a major share of responsibility for much of the present unemployment, particularly in South Wales, once a major producer of steel.

Section 9.2 of the White Paper, dealing with energy, speaks of the need to encourage the adjustment of supplies to correct imbalances which pose particular problems for some Member States". This refers to oil supplies. It means, in reality, that countries such as West Germany and France are to have guaranteed oil supplies, untroubled by the vagaries of supplies from the Middle East—in other words, supplies of our North Sea oil.

The Euro-fanatics speak about our improved balance of trade with the Common Market countries. The reality is a little different. It is North Sea oil that pays for many of the imports of manufactured goods such as cars, machinery and domestic appliances. North Sea oil is being used to pay for these imports and to keep our own people in the dole queue. Many of my constituents put their cross in the referendum in favour of Britain staying in the Common Market. They believed what they were told—that out of the Market meant out of a job. Many of those people are now signing on at the labour exchange.

Mr. Keith Best (Anglesey)

rose——

Mr. Hughes

I am sure that the hon. Gentleman will be called to speak, should he catch Mr. Deputy Speaker's eye.

I turn now to the bete noire of all anti-Marketeers, the agricultural policy. I claim no particular expertise in agriculture. I say only that I have never known the farmers in my area to be so disgruntled. I received a huge deputation only last week, rightly indignant——

Mr. Best

Will the hon. Gentleman give way?

Mr. Hughes

No, I will not. The farmers thought that there would be great pickings for them originally from the common agricultural policy. Things have not come up to expectations. Praise has been given to Labour's post-war Agriculture Minister, Tom Williams. Government support for agriculture was put on a firm and realistic basis. It reminds me of the story of the old Tory farmer who declared "It is only since this damned Government have been in power that I have been able to make a donation to the party". That illustrates the goodness that emerged from the policy pursued by Tom Williams. Now we have a contradiction. Not only are the farmers disgruntled; the housewives have had a terrible deal.

Labour Members represent essentially working-class people. We know what percentage of household expenditure goes on groceries. Section III of the White Paper refers to the accession of Greece on 1 January 1981. This can only intensify the problems within the common agricultural policy. Our people will be adversely affected, and still more so by the accession of Portugal and Spain.

I am aware that there has been a recession following the Middle East war of October 1973. I have a fair understanding of the Middle East situation. I have followed it closely for many years. I was vice-chairman of the Labour Middle East council. Before our entry into the Common Market, British households benefited from what became known as cheap food. This, in turn, kept down the level of wage claims. Small tariff barriers that existed had to be swept away when we joined the Common Market. Our products were still competitive in Europe and perhaps even more so in the markets of the world.

All that has changed, and much of the unemployment in Britain is a direct result of our membership of the Common Market. Moreover, we are paying huge membership fees for that doubtful privilege. The White Paper offers no hope. As my right hon. Friend the Member for Llanelli (Mr. Davies) said, the Common Market is wrong for Britain because we need free trade in agriculture and an element of protection in industry. What is more—here I speak as a Welsh Member—the United Kingdom is on the periphery of the Common Market. Wales is on the periphery of the United Kingdom, and the periphery is the area that invariably gets a bad deal.

From a party political point of view, I note with pleasure the growing band of anti-Marketeers on the Government Benches. That is most encouraging.

At the Labour Party conference last October composite motion No. 15, stating that Britain should come out of the Common Market, was passed by the requisite two-thirds majority. I accept that as my party's policy and I sincerely hope that a future Labour Government will have the courage to say "Enough is enough" and bring Britain out of the Common Market.

7.32 pm

Mr. Tony Marlow (Northampton, North)

I am pleased to follow the hon. Member for Newport (Mr. Hughes). He made a far-sighted and eloquent speech.

We have had an exciting day. I am an assiduous attender of debates, but this is the first one that I have attended at which a Member of the new Democratic Socialist Party—the nice party—not only has been present but has spoken. The Liberal Party is very concerned, because it has been ploughing this strange territory for some time. Now it sees this new spectre sweeping up on the outside. So populist and exciting was the oratory of the hon. Member for Caithness and Sutherland (Mr. Maclennan) that I can reassure the hon. Member for Inverness (Mr. Johnston) that after the next general election the Liberal Party will probably still have its nine seats and still be the third largest party in the House.

My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), as always, made a speech of intelligence, courtesy and good humour. I look forward to hearing him wind up the debate later. I was interested in the elevated objectives that he described, but what concern me are the bits and pieces in the middle—the mechanics—that we shall need to get there.

The White Paper deals with political co-operation, enlargement, agriculture and fisheries, social affairs, and the Parliament and Assembly. But one important subject is missing—I hope that my right hon. Friend will see that it is included in the next White Paper, even to the extent of almost taking pride of place—namely, the cost of the Community to the United Kingdom. Our foremost task in the House is to act as guardian of the public purse. We are responsible for Supply and for people's money. Yet the White Paper contains nothing about the cost to the British people of the European Common Market.

How is that cost divided? First, there is the real cost in money terms. Our net budget contribution this year will be about £500 million—perhaps more. That is 10p or more on the price of a gallon of petrol.

Then, there is the cost of monetary compensatory amounts. My right hon. Friend the Minister of Agriculture, Fisheries and Food told me that MCAs will increase our financial contribution to the Community still further. At today's levels, it is anything between another £45 million and £200 million.

Then there is the largest cost of all, but the one that is least recognised. We produce 70 per cent. of our temperate foodstuffs in the United Kingdom. The other 30 per cent. is purchased from other Common Market countries, but purchased at roughly twice the world market price. The Institute for Fiscal Studies, a most respected body, calculates that the additional cost to the British housewife of Continental food is about £1,500 million a year. A recent calculation made by an erudite body in Brussels showed that the effects of the farm price increases agreed last week—roughly 10 per cent.—will cost Britain another £150 million. That makes sense; 10 per cent. costs £150 million. It confirms the other figure of £1,500 million. This country will have to pay £500 million plus between £50 and £200 million, plus £1,500 million in excess of £2 billion a year.

There are many ways in which we would like to cooperate with our friends in Europe, but why must we have this massive burden of £40 for every individual in the country, or £160 for every family? That amounts to about £3 per week. Why must we pay that tribute when no one else in the Community pays anything like as much?

Mr. Myles

Does my hon. Friend agree that the agreement made in Brussels was not for market prices or for the price that the housewife pays, but for the support price? The support price is often below the market price.

Mr. Marlow

I know my hon. Friend's interest in these matters, but I think that he overlooks the fact that world prices this year will be lower than the Commission estimates. The real cost to the British consumer, over and above what he could have bought at world prices, will be even greater than the figures that I have given.

I was describing the costs of Community membership to Britain. The most devastating cost is in terms of jobs. Young people are in the dole queues. Middle-aged men with families are out of work. Elderly men, aged 55 or 60, approaching retirement and hoping to earn a little more money to increase their pension rights, are suddenly thrown out of work. We have 2½ million people out of work. How many of those people have been thrown out of work and put on the scrap-heap by the burdens that have been imposed on this country by our membership of the Community?

I ask hon. Members to consider the sum of £2,000 million. If one takes 1 million jobs and spends £2,000 on each of them, will they not then become competitive? Will not those 1 million workers, rather than sit at home clicking their heels, produce goods that can be sold round the world? I think that it is coming to be recognised in the country that one of the main reasons, if not the main reason, for our massive unemployment, which is at a higher level than that of other EEC countries, is our membership of the Common Market under the devastatingly unfair terms that we are now tolerating.

There is another aspect to the problem of unemployment. There are figures on trade at the end of the White Paper. They are underestimates, in terms of our deficit in trade on manufactures, because they include precious stones and precious metals, which are simply cycled through the country and sent on. In 1977 there was a deficit, in round terms, of £1,000 million. In 1978 there was a massive increase to £2,000 million. In 1979 there was a £3,000 million deficit. Everyone in Europe complains about Japanese imports and the way that they are killing some of our industries but, as I said in an earlier intervention, our trading deficit in manufactures with West Germany is two and a quarter times as much as our trading deficit in manufactures with the Japanese.

Let us make sure that everybody in the country realises that. When, later this year, we go into the negotiations to amend and reform the Community, in which negotiations my right hon. Friend the Lord Privy Seal will play a part—and I know that he will do his best—let us make sure that the people in Europe realise the benefits that they enjoy in being able to dump their surplus manufactured products on our market.

The third point on cost concerns the cost in terms of inflation. CAP prices are twice world market prices. What would be the price of foodstuffs if we went back to the old system of deficiency payments? What about the money that we send to the Community by way of taxation? We could reduce taxation by that amount if we were not in the Community. What about the level of interest rates that we have to pay, and that not only cost money but keep people out of work and keep our unit prices high rather than low? When he replies to the debate will my right hon. Friend let us know how much lower the cost of living would be, could be and should be if we were not now a member of the Community, on the terms on which we are involved?

What is to be the direction of Government policy on the CAP? My right hon. Friend and I went before the British people on 3 May 1979 on the basis of a programme. Let me read two sentences from that programme. We will insist on a freeze in CAP prices for products in structural surplus. I stress the word "insist". That sentence applies to beef, milk, butter, olive oil and many other substances. The programme went further. This freeze, we said to the British people, should be maintained until the surpluses are eliminated. Are there or are there not structural surpluses now? That was a sensible, wise and honest policy to put before the British people.

The CAP, as we all know, and as even some people in Europe know, is a disaster. It gives too much to the rich and too little to the poor. It does not deal with social problems in agriculture. This country, being the largest importer of food throughout the world, is saddled with a system that doubles our food prices, and a system under which 30 per cent. of our temperate foodstuffs have to be bought from other European countries at twice world market prices. My right hon. Friend the Lord Privy Seal is smiling at that. I know that he would say that if we came out of the Common Market world market prices would go up and we should be unable to buy the cheap food that we think would be available. But why should we? As my hon. Friend the Member for Holland with Boston (Mr. Body) said, think of the sugar that we could get on the world market at much cheaper prices. As was stated in The Times recently, the New Zealanders could increase their production of foodstuffs by 25 per cent. without a penny of additional capital investment.

If we organised our affairs correctly, that food would be available not only to the advantage and benefit of this country but to the great benefit of the developing countries—the Third world countries, who would have something to sell us, who would be able to get hold of our currency, and who could then come back to us to buy our manufactured goods. At the moment, however, because of the monstrosity of the CAP we are prevented from doing that.

I come next to my right hon. Friend the Minister of Agriculture. The hon. Member for Newport (Mr. Hughes) told us that his farmers came to him, crying on his shoulder, last week. I do not know how much longer my right hon. Friend will be Minister of Agriculture. The farmers have had it relatively good for the past few years, but now they are beginning to discover that the CAP no longer suits their needs. The time will come when the farmers will gang up against the CAP and the European Community. Then what will happen on the Government Benches?

My right hon. Friend is the Minister of Fisheries. We shall have to wait on that second point. But he is also the Minister of Food. When did we last have a Minister of Food? I have to explain that my constituency is basically urban and contains no farms. Why should my constituents have to pay twice the world market price for their food? What benefit do they derive from the Community that makes it worth their while to pay this money? Are they getting jobs?

Mr. Arthur Lewis

Does the hon. Member not realise that he can tell his constituents that they are helping to provide subsidised food for the Russian Communists? That is what they are getting out of it.

Mr. Marlow

Sadly, there is great truth in what the hon. Gentleman said. My hon. Friend the Member for Southend, East (Mr. Taylor), who has been so perspicacious in this matter and has so rightly and properly followed it up, discovered not too long ago that beef was going by the lorryload to feed the bloated colonial colonels of Kabul—the rapers of Afghanistan. Our beef, subsidised and at knock-down prices, is going to the Russian aggressors.

Mr. Lewis

And the butter.

Mr. Marlow

Yes, and the butter. My right hon. Friend the Minister of Agriculture last week told us what a magnificent deal he had achieved for Britain and for the farmers. That did not include the farmers in Newport, or in Southend, East or any of the constituencies of my hon. Friends. My right hon. Friend told us what a wonderful deal he had done for the consumer. I have been looking very carefully, but even with a magnifying glass I cannot find a good deal that has been done for the consumer. I am sorry that my right hon. Friend the Minister of Agriculture is not here. Even in his absence, however, I say that if he had been responsible for the retreat from Moscow he would have told the House what a magnificent triumph it was.

Last week we missed an opportunity. Our representatives could have sat at the negotiations, pointing to our commitment to the British people not to permit any increases in prices for items in structural surplus, staying there all night, all week, all month, through the French presidential election, saying "No, we will not move. The policy is nonsense and it is damaging the interests of our people." But they did not. Sadly, my right hon. Friend the Minister of Agriculture went back on commitments that he had given to the people of this country—commitments that I had given too, and that matter to me.

Therefore, I have asked in the House that my right hon. Friend should submit his resignation. So far he has not done so. Perhaps he is considering the point. Perhaps it will take him some time to do so. I know that my right hon. Friend has some problems over the Government's policy generally. My right hon. Friend the Lord Privy Seal and all his other colleagues have said how firmly behind Government policy they are in all its aspects, particularly the economic policy. But my right hon. Friend the Minister of Agriculture has not quite managed to make that statement yet. Not only is he perhaps a little unhappy with the way in which Government policy is developing; also, he missed his opportunity last week. It is not just a question of his having missed the opportunity; the credibility of the Government is at stake.

I believe that we all want to attack this problem and that we all want to fight it. It is therefore essential that the next time we are discussing reforms of the common agricultural policy and of the budget we shall have somebody who can point to the manifesto, who believes in the manifesto, who is going to fight for the manifesto, and who is going to fight for the British people. Therefore, I ask my right hon. Friend, in all humility, if he sees his right hon. Friend the Minister of Agriculture, Fisheries and Food, to take him on one side and whisper in his ear that if it pains him to do what the Government are here to do perhaps while he is still thinking about it he may make that decision and come down on the right side.

There are many other hon. Members who want to speak. I am concerned about the waste of money of my country. I am concerned about the suffering that has been caused to us by the monstrosity of the CAP and by the damaging agricultural policy that we have got at the moment. I ask my right hon. Friend to do all that he can to solve the problems that we face.

7.51 pm

Mr. Austin Mitchell (Grimsby)

There is a curiously schizophrenic tone to this debate. It is as if we are on two sides but not talking about the same object and the same Common Market. The reality of the Common Market is as the hon. Member for Northampton, North (Mr. Marlow) has described it—namely, rising agricultural prices, industrial decline, not caused by the Common Market, but accelerated by it, unfair burdens and the theft of our fish stocks.

It would be understandable if the supporters of the Market—their support is on a diminishing scale, but it still exists—said "We accept that there are problems, burdens and disadvantages. However, these are prices worth paying for the inestimable benefits of a seat at the top table, the ability to interpose ourselves between Giscard d'Estaing and Chancellor Schmidt and all the other little benefits." But they do not say that the price that we are paying in jobs, prices and burdens is worthwhile. They say that there are benefits, but they do not list them. They go on to deny the burdens. They deny that there is a trading disaster and an agricultural disaster. They deny the financial burden that the Market imposes on us. In doing so, their argument for the Market loses all credibility. The British people know what the burdens are and the impact of the Market.

The schizophrenia is made worse because we are in an odd constitutional position. We have a fifth column of EEC propaganda officials, whose efforts are backed by a section of British civil servants who are being paid, directly or indirectly, by the taxpayer to discredit and attack the official policy of the official Opposition. They are being paid to gloss over and to distort the economic realities of the Common Market.

The trade argument is a classic example of the process of distortion that is taking place. A couple of months ago it was claimed that we had a trading surplus with the Common Market in 1980. The figures have been revised, and those responsible are now in the humiliating position of having to back-track. They now say that it was really a deficit, yet the impression is being created that we are doing well in trade with the Common Market. Manufacturing trade is especially important, because that is where jobs lie. The present claims are not true and are a reversal of the facts. A false impression is being created by lumping oil into the statistics. It is interesting that one-third of our exports to Germany are oil exports. That oil would be traded whether we were in the Common Market or out of it. It is therefore statistically irrelevant.

Secondly, the trading figures are taken for the Nine. The relevant figures are those for the Six. If gains are to be made from being in the Common Market, they will be gained in the Six and not in Eire and Denmark. We traded effectively with Eire and Denmark before we entered the Common Market.

Then there is a concentration on the ratio of exports to imports—a meaningless ratio statistically. It is as if I went to my bank manager and said "Do not worry about my rising overdraft. Look instead at the ratio of debits to credits."

The basic, stark facts are straightforward. Our exports to the Six rose more rapidly from 1958 to 1970 than they have done since we entered the Common Market. Imports from the Six have increased more rapidly since we entered the Common Market than before. We managed to change a surplus in manufacturing trade in 1970 with the Six—less, as the hon. Member for Northampton, North said, precious stones, which would be traded in any event—of £102 million to a horrendous deficit of £4,000 million in 1979.

I calculated that the deficit for the first eight months of 1980 was running at an annual rate of £3,500 million. The actual figures might be slightly lower. The figures are lower for 1980 compared with the horrendous deficit of 1979 because the Government have used depression and unemployment as their form of import control. That is why there has been a slight decline in the horrendous deficit in manufactured trade. It must be accepted that the deficit is destroying jobs in Britain. It is difficult to measure the loss. However, the number of jobs destroyed by the deficit is considerable. One man's cheap import is still another man's job.

Our surplus in manufactured trade with the rest of the world, which was substantial in 1979, and again in 1980, is now being robbed to pay for our deficit with the EEC. That is why the argument against coming out of the EEC is nonsensical. We are doing so well with the rest of the world that we stand to gain by protecting ourselves from EEC imports or at least by having a reasonable balance in manufactured trade with the EEC.

The deficit in manufactured trade is one of the Government's basic problems. It is one reason why they are unable to expand the economy. There are two reasons why they cannot expand. The first is that inflation would resume. The second is that the Keynesian multiplier is alive and well, but moving to the Common Market at a fairly rapid rate of knots. If the Government were to expand the economy they would merely suck in more imports from the Common Market. The Market is keeping us in the depressed state into which the Government have helped to push us. The same propaganda machine is grinding away at agriculture. It is proclaiming that the decisions of last week were a great victory for Britain. The facts are as the hon. Member for Northampton, North, described them. In the Common Market we are paying about twice the prevailing world rate for foodstuffs. We are paying even higher prices because we are now paying an extra tax. The levy on food imports into Britain from outside the Market in the 1980 calendar year was £233 million. That burden falls directly on the British consumer, and we have added to it by accepting an obligation to pay what amounts to a tax on our imports from the Common Market.

It is unlikely that the CAP will be reformed. If it has not been reformed after all this time, let us not kid ourselves that it will be reformed in the next few years. The Government are now enthusiastic about high food prices. Their concern is not so much with the prices paid by the consumer, but with the budget. They are using the CAP to levy high taxes on the British people, on food consumers.

Much of the yield comes back to the Treasury, so it is a form of tax on food which, effectively, the Government are imposing through the CAP. That amounts to a total change of tune by the Minister of Agriculture, Fisheries and Food and by the Government when we remember what appeared in the Conservative manifesto, which has already been quoted by the hon. Member for Northampton, North. That manifesto makes a joke of the words that appear in the White Paper that we are discussing.

Presumably the White Paper was written before the agricultural settlement of last week. It states: The Government will continue to stress the need to restrain surplus production"— Presumably they will do so by encouraging it, by financing it and by giving more money to produce larger surpluses— particularly in the dairy sector, and to reduce the budgetary and resource costs of the CAP by putting them up. That makes a farce of the words in the White Paper, bearing in mind what happened last week. There is a direct burden on the British consumer, who has now become the milch cow of Europe. Last week's settlement imposes an extra burden of £622 million on the British consumer.

The Lord Privy Seal mentioned fishing. It is difficult, even for the EEC's propaganda machine, to portray what has been going on in the context of fisheries policy as any sort of triumph or move towards European understanding, good will or benefit to this country. The Lord Privy Seal said that fish do not observe boundaries such as the 100 or 200-mile limit. They swim over the North Sea. That is part of the tradition of the Foreign Office in abdicating the interests of this country.

That attitude was characterised by the Lord Privy Seal's reply to my question on President Pompidou. Little things like self-interest do not matter and should be in the gutter. The Foreign Office believes that it is far more important than any other body. It has a tradition of noblesse oblige. Now there is more "noblesse" in the Foreign Office, and there is also more "oblige". The people who are being obliged are the Common Market partners, who have much shrewder, harder heads for those commercial interests than have our Government.

The Lord Privy Seal was effectively saying that because fish do not observe 200-mile limits we have to give away most of our fish stocks to our Common Market partners. The annual catch in British waters within the 200-mile limit is worth about £520 million. The deal so far concluded envisages giving away most of that annual catch, which cannot be compared with oil, which, once it has been dredged up, has gone for ever. It is an annual and renewable resource which is there for every year into infinity unless we give it away. We are now binding ourselves to do that by the agreements reached in the Common Market. For the Minister and the Foreign Office to try to whip up support after swallowing that camel, while straining at the gnat of French fishing rights in the 12-mile limit, is to demonstrate exactly what sort of farce it is.

Those French demands must be resisted. All the demands made on our fish stocks and on our waters should have been resisted far more effectively than has been done. Yet the French attitude is not just a Presidential election gimmick. The French feel that they are legally in the right. The common fisheries policy was cobbled together a matter of days before we joined. The French are in the right according to that policy. That is the essence of the problem. It is wishful thinking to imagine that that demand and that right will go away, because we abdicated our rights by the sort of deal that we accepted in 1972.

Mr. Spearing

Is my hon. Friend aware that at the end of 1982 we go back to a common fisheries policy as agreed? Does he realise that in 1971 the right hon. and learned Member for Hexham (Mr. Rippon) tried to pretend that at that stage we would have a veto? That was the only reason why they were able to get certain people in the fishing industry to agree to what was proposed. As my hon. Friend knows, that veto does not exist.

Mr. Mitchell

My hon. Friend is right. The legal position of the fishing industry and its needs were ignored by the Government, who were determined to rush into the Community in 1972. Because of the legal situation that we accepted, our negotiating position is weak, but our moral position is strong. We bring 70 per cent. of the fish stocks to the Common Market pool. The only solution to the deadlock that has arisen is to do what the 1979 Conservative Party manifesto promised. The Conservatives promised that if the negotiations broke down, or if they were not getting anywhere, unilateral, national action would be taken. That should now be done by imposing national conservation measures to increase negotiating pressure and to demonstrate that we are seriously determined to defend our rights.

Sir Anthony Meyer

I am interested in the hon. Member's solution. Does he also suggest that the inshore fishermen of Cornwall should take unilateral action against the Humberside fishermen who are poaching in their waters?

Mr. Mitchell

That is another indication of the nature of the Common Market argument—divide and rule. The Minister of Agriculture, Fisheries and Food is dividing the fishermen of Scotland from those in England by proposing restricted waters around Scotland, from which Humberside fishermen will be excluded. Given the decline of the Humberside fleet, the effort from British vessels outside Cornwall is there only because there is a Russian market for the fish and because the Common Market has deprived us of other fishing opportunities which we would rather take up. That amount of fishing is puny compared with the overall threat to British stocks from the overmanned over-large Continental fleets with which we are trying to negotiate. It is a gnat's bite compared with the pressure from those over-heavy and over-large Continental fleets. Therefore, we need national conservation measures and I fail to see why the Government have not imposed them.

I had hoped, had time allowed, to cover more subjects, such as the farce of the European Assembly and the perpetual peregrination of the shades of the damned which they resemble. My right hon. Friend the Member for Battersea, North (Mr. Jay) has supplied me with a quotation, which describes a picture of Hell: Wherein the damned in turn Pace the battlements and burn. That is probably an appropriate picture of the European Assembly.

There is also the farce of the European passport, which is being imposed on us with no reference to Parliament. I should not want it as my national passport. I should be ashamed to carry such a document.

There is the farce of the budget and the stream of regulations from the EEC, which the CBI has asked should be halted, having recognised that the Government will do nothing about that matter. I shall not go into those matters, as they would detract from the central argument.

We have had 10 years of experience to show us that the EEC is not doing what its defenders said it would—namely, contributing to international understanding and to building a new Europe and a spirit of European co-operation. It always has been—and has shown no signs of becoming anything better—an agricultural protection society, which does not suit this country, which never suited us, and which we undertook to enter on unfavourable terms in the first place. That makes any negotiation a Sisyphean labour, in which we can never succeed. The terms are heavily loaded against us from the start. The situation will not change and we shall not change it. Consequently, the British economy, which already has its problems, and is already weak, will be further weakened by the burdens, the drain and the costs that are reducing this country to a tragic situation.

I do not know why the Euro-fanatics are so proud of the benefits of the Community. We are being reduced to Europe's offshore social security scrounger, begging for doles and handouts, and—more insulting—ultimately paying for them with our own money. The only benefit today is that at last we are beginning to see a clear choice emerging politically about the Common Market. The Government, for all their periodic bouts of Euro bashing, which will come again when things become difficult for them, are basically loyal and are committed by the attitudes of people like the Lord Privy Seal and the majority of their Back Benchers. That is one point of view—that we should stay in the EEC.

The other point of view is represented by the Liberals. They are enthusiastic pro-Europeans who promote every grievance from Europe, from heavy lorries to overfishing, as if the Common Market never existed, but who will continue to prate their loyalty to and enthusiasm for the Common Market.

They are now joined by the Social Democrats or, to give them their proper name, the rassemblement du peuple Jenkins, in their new guise, as it emerged today. It was interesting to hear the party's policy enunciated. It is a policy of fanatical commitment to the Common Market. I am sorry that the hon. Member for Caithness and Sutherland (Mr. Maclennan) is not here to listen to me, because he would not accept my intervention. He was moved by what he was saying, but he was attacking a nest which he and his hon. Friends have already fouled in a bitter and unforgivable fashion. He demonstrated an attitude that his party is showing more widely. Its members care more for the albatross of the Common Market than for the party around whose neck they hung it in the first place. That is essentially their position. That is the second point of view clearly adopted by the Euro-fanatics or Euro fun party. They will be judged by the electors.

The third position is healthier—leave with Labour. I hope that it will be a manifesto commitment, which is a more democratic and effective way of testing opinion than a referendum. When the people choose a Labour Government they will opt for a commitment to repeal section 2 of the European Commmunities Act, to abrogate the Treaty, to scrap immediately that which is harmful and to renegotiate the remainder. A referendum asking people to make the choice after that would be undemocratic, because it would be calling into question the mandate that the electors had conferred.

Of course, these arguments will never convince the Euro-fanatics. It was said of the free trade enthusiasts that their zeal for the dogma outweighed alike their consideration of its truth and concern for its effects. No amount of argument will convince the Euro-enthusiasts, but a clear political choice is emerging and at least the British people know better. They know the burden, difficulty and drain that the Common Market has been to them and to their country.

8.12 pm

Mr. Keith Best (Anglesey)

I am not normally churlish about the comments of other hon. Members, but the vehemence of my hon. Friend the Member for Northampton, North (Mr. Marlow) should not lead us to overlook his inconsistency. He says that the Common Market sucks in masses of our money which could be better spent by us, notwithstanding previous experience, and that the EEC is directly responsible for a large amount of our unemployment. He also says that we should create Government jobs, each at a cost of £2,000, for every unemployed person. I welcome him to the wets. I did not know that he believed in massive Government subsidies, but I now understand what he has been saying all along.

Mr. Marlow

I said £2,000 for 1 million unemployed people, so the sum would add up. My other point was that it would be money that would be left in the system, instead of being taken out in taxation. I am not talking about Government spending. The Government and Europe would require less money.

Mr. Best

It is amazing that people always find facts to suit their argument. My hon. Friend said not a single word about the benefits that we derive from the EEC.

Mr. Teddy Taylor

Let my hon. Friend the Member for Anglesey (Mr. Best) tell us.

Mr. Best

I shall do so. Let me first say that it is perhaps appropriate that another Welsh Member should follow the hon. Member for Newport (Mr. Hughes), who has no doubt gone to carry out his threat to consult his constituents and to outline to them the terrible tragedy of the EEC. I hope that he will also explain that he wishes to bring us out of the EEC and deny the £20 million voted by the EEC for steel closure areas, with the opportunity of creating 4,000 jobs. He will have a hard time explaining that.

The right hon. Member for Llanelli (Mr. Davies) spoke with stoicism. Although he did not invite sympathy, I suspect that he craved it quietly. He was much happier as a Treasury spokesman. He is in an immense dilemma. He has to attack the EEC, yet he is a Welsh Member, and Wales benefits greatly from our membership. He must have sleepness nights wondering how he can take that attitude in the House and return, craven-faced, to tell his constituents that they will, as a result, be denied EEC benefits.

Mr. Austin Mitchell

What are they?

Mr. Best

Of the first allocation of the budget refunds, £97 million has come to Wales and the North-West. About £24½ million is being spent in Wales on improving the east-west routes to North and South Wales, which is relevant to the constituency of the right hon. Member for Llanelli. Part of the money is going towards the Bridgend bypass, which will make it easier for industries to set up in his constituency.

Mr. Spearing

The Government have made it clear that the refund which the Prime Minister has obtained for two, or at the most three, years is being used only in:place of money that would have come from the Consolidated Fund in any case. Does the hon. Gentleman believe that decisions on voting money for the Bridgend bypass or the Menai Straits bridge should. be made in Brussels and not in this House?

Mr. Best

The hon. Gentleman totally misunderstands my point. He is suggesting that we cane the taxpayer a litte harder.

Mr. Mitchell

It is our money.

Mr. Best

The hon. Member for Newham, South (Mr. Spearing) knows as well as anyone that money that comes from the EEC reduces the burden on the taxpayer. The money would be spent in any event, so less money is having to come from the taxpayer.

Mr. Mitchell

Will the hon. Gentleman give way?

Mr. Best

I shall not give way. The same point will only be made again.

Mr. Mitchell

Will the hon. Gentleman give way?

Mr. Dan Jones

On a point of order, Mr. Deputy Speaker. Hon. Members who have spoken without interruption should accord the hon. Gentleman the same courtesy.

Mr. Best

I am grateful to the hon. Gentleman. I have always respected his judgment.

We should also remember the EEC assistance for Welsh culture. I make no apology for the fact that I intend to make a Welsh speech tonight because the Principality is one of the major beneficiaries of the United Kingdom's membership of the EEC. Money comes to the National Eisteddfods such as the Urdd national eisteddfod and the Llangollen international eisteddfod and to the Royal Welsh agricultural show. That covers quite a broad spectrum.

Mr. Mitchell

rose——

Mr. Best

I cannot give way again. The most important aspect of our membership of the EEC must be the regional policy. I find the attitude of the right hon. Member for Llanelli impossible to comprehend when he speaks of the concept of juste retour. If we adopted that attitude to Wales in the context of the United Kingdom's economy, he would be the first to fight it, bearing in mind the constituency that he represents.

European regional development fund loans and grants to North Wales encompass a mass of projects. I shall spare the House the whole list. In Anglesey £5½ million in loan, plus a further £250,000 in grant, has been provided for the Holyhead harbour and rail terminal project. The Dinorwic pump storage scheme, on which many people in Anglesey have found employment, received £150 million in loan from the European investment bank. It is one of the largest projects ever undertaken with European backing. Again, I welcome that.

Mr. Mitchell

rose——

Mr. Best

I must get on. What is significant about European regional development fund money is that it is for our country's infrastructure. I am afraid that we cannot be certain, on the past record of Governments of both parties, that we shall have sufficient foresight to look after the infrastructure of our nation without that extra assistance from the EEC. The statistics speak only too plainly. The amount of gross national product that we now contribute towards our infrastructure has fallen dramatically. On neither side of the House can we put our hands on our hearts and say that we were not responsible. I therefore welcome European money coming directly to help projects necessary to the future welfare of our country.

Mr. Mitchell

Will the hon. Gentleman give way?

Mr. Best

The hon. Gentleman has had his say. If he could not get it all in then, he will have to try to have another go at a later stage.

In February this year, total net aid to Wales since 1975 was £96 million. Considered in terms of jobs, that is no flea-bite. Wales receives 16 per cent. of the United Kingdom quota from the ERDF. Again, that is no flea-bite for the Principality. Does anyone seriously—I stress the word "seriously"—believe that we would have the same amount of inward investment in this country, particularly in Wales, if we were not in the European Community? Does anyone seriously think that the American and Japanese companies that have come to South Wales would throw in their lot there if they did not realise that they had a market of 260 million people? Of course they would not. It would be nonsense to pretend otherwise.

Mr. Body

Perhaps my hon. Friend would clear up one point. Would there be more or less money for us to allocate out of the Consolidated Fund for the kind of scheme that he has catalogued and for infrastructure and the rest if we were not making our present net contribution to the EEC?

Mr. Best

I believe that there is no doubt that we shall benefit from membership of the EEC in the long term. [HON. MEMBERS: "How long?] All the speeches against membership of the EEC—and it is sad that we have had this argument yet again—have demonstrated myopic vision. They have looked at the immediacy of what is around us without any thought for the future.

Let us consider the three major arguments against the EEC. First, the cost of the common agricultural policy is 70 per cent. of the EEC budget. It is said that that is a terrible amount of money to spend on trying to rationalise agriculture among trading partners and that it is a confounded waste of resources. Looked at in isolation it is easy to adopt that attitude. The arrant folly of that attitude is the failure to comprehend that the total EEC budget is less than 1 per cent. of the whole of the EEC's gross domestic product. Looked at in that context, the whole issue is put into the right perspective.

Mr. Alec Jones (Rhondda)

Is the hon. Gentleman saying that the percentage of money being spent on agricultural support represents the correct degree of support and that industry should have infinitely less?

Mr. Best

I am glad that the right hon. Gentleman has actually given us some common ground. We should all like to see a smaller percentage of the EEC budget spent on the CAP. When we entered the Community, it stood at about 40 per cent. I am sure that very few people imagined at that time that it would race up to 70 per cent. Nevertheless, it is extraordinary to suggest that, just because one does not like the rules of a particular club, one must leave it. I do not understand that argument at all. Surely one tries to change the rules to one's own satisfaction.

The second great argument against the EEC relates to the so-called wine lakes and beef and butter mountains. Nobody has mentioned that those so-called mountains amount to no more than two weeks' supply. That is the reality of the situation. It is time that the people of this country learnt some of the facts about the EEC rather than just heard the rhetoric. One must consider the insecurity of supply from world markets and how the USSR and Poland, with their deserted supply lines, must sometimes envy us. I prefer mountains and lakes to deserts. I believe that that is how the majority of people in this counry like to imagine their future.

Finally, there is the argument about the amount of money that we hand over to the EEC. We spend 17 times more on social security than we give to Europe. That, again, puts the whole matter into perspective.

I end on this note. Of course we need to work towards a better system in Europe. But that does not justify the chagrin of the Opposition in wishing to take us out of Europe altogether and thus deny the people of this country the benefits, some of which I have articulated tonight.

It is ironic that so many Opposition Front Bench Members are from Wales—the principal beneficiary of our membership of the EEC. As has been correctly mentioned, we have now a straight political choice: either in or out. The attitude of the Labour Party towards Europe in trying to take us out will deny it the opportunity of ever again taking office.

Let us not forget the men of vision who had the original concept of the EEC. That vision was born out of the second major holocaust in this century. Are we to destroy that vision or to attempt to remove the cloud that hides its brilliance? Freedom is an expensive commodity. It is worth more than any butter or beef mountain. It is an axiom of history that the surest way to prevent nations attacking each other is by binding them together in economic union.

My generation is potentially doomed, with the nuclear sword of Damocles hanging over its head. Our greatest benefit from the EEC cannot be measured in financial terms, because it is peace.

Several Hon. Members

rose——

Mr. Deputy Speaker

I remind the House that interventions—even sedentary interventions—tend to prolong speeches. Some hon. Members have been in the Chamber for some time waiting to speak, so I ask all speakers to be brief.

8.30 pm

Dr. M. S. Miller (East Kilbride)

I shall not attempt to follow the speech made by the hon. Member for Anglesey (Mr. Best). It was akin to someone being robbed of £1,000 and being very happy to be handed back £2.

I am not anti-European. Indeed, I have a high regard for all EEC countries. If I were asked whether we should leave the Common Market I would pose an alternative to my right hon. and hon. Friends: that we should stay in and get France to leave.

Despite being pro-European, having a high regard for European countries and welcoming co-operation between European countries, I object to the principles of the Common Market. Its Mickey Mouse Parliament is the laughing stock of the Western world. Although I wish to co-operate with Europe I do not want the close and binding ties that the Euro-fanatics want, because I can remember the days when the countries with which some want us to bind ourselves strongly were not adherents to any form of democratic system—certainly not the system that we know today. In pre-war days there was grave doubt about their stability. Indeed, there is even now. Therefore, I do not want to be associated too closely with them. I believe that we should co-operate, but not to the extent that the Euro-fanatics want.

Britain is the mug of the Common Market countries in terms of trade. We take everything, without raising any problems. The other countries with which we trade put up all kinds of artificial barriers. They erect their own tariff barriers, although they are not supposed to do so. Many examples come to mind.

How could the common agricultural policy benefit Britain? How could a policy that devotes 70 per cent. of its income to agriculture benefit Britain? Britain is not an agricultural country. If the CAP took 20 per cent. or 25 per cent. of the total amount, it would not harm us quite so much. The mere fact that the CAP dominates the budget makes it impossible for this country to benefit, regardless of what we do in agriculture.

If the White Paper shows anything, it is that the Government have been very busy. There are wide areas in it on which reports have been made. I do not intend to ramble through the White Paper.

Many of my hon. Friends made brilliant speeches. It is a pity that the House is not better attended to listen to the arguments advanced by my right hon. and hon. Friends—and some Conservative Members, too—pointing out how the Minister for Agriculture, Fisheries—"Fisheries" is a misnomer—and Food has given away our fishing industry. When what has been agreed comes to pass, Common Market fishing boats will come not only to our shores but on to our beaches. We shall not be able to bathe.

I do not intend to try to compete with the speeches of my hon. Friends. I shall concentrate on one point only in the White Paper, namely, paragraph 2.1, on the Middle East, in the section on political co-operation.

The EEC, as we know, has within the last year put forward an initiative on the Middle East and I believe that this is another area in which the Government are making a big mistake. They fail to grasp at least some of the complexities of Middle East politics, and the initiative is based on two false assumptions.

The first false assumption is that the Palestinian Arab issue is the heart of the Arab-Israeli conflict. The Arab approach to the Palestinian question has unfortunately been an opportunistic one rather than one of genuine concern, because during the 19 years between 1948 and 1967 Palestinian refugees languished in refugee camps in Jordan and were ignored by the Arabs and went unnoticed by the rest of the world. Only since Israel occupied the West Bank in June 1967 have the Arabs shown concern over the Palestinian people. Even today they pay only lip-service, contenting themselves with words rather than the financial assistance that they could give.

The Palestinian cause has been taken up by the Arabs not on moral grounds but because it has given them an opportunity to couch their demands in relation to Israel in what they consider to be humanitarian terms. The fundamental commitment of the Arabs is to the doctrine of pan-Arabism, not to Palestinian self-determination, and Arab animosity towards Israel is the result not of Israeli occupation of Palestinian land but, rather, of Israeli occupation of Arab land.

I am not justifying the occupation of territory; I am merely saying what I believe to be the situation today. Any solution to the Palestinian problem short of Israel's physical removal from the Middle East will only marginally affect Arab demands.

The second false assumption on which I believe that the right hon. Gentleman is working is that a comprehensive peace settlement would usher in an era of stability in the Middle East. We have only to look around us to see that major developments in the Middle East are not directly affected by the conflict. A comprehensive peace settlement would neither check the growth of the Muslim Brotherhood nor settle the struggle between the Ba'athist parties of Syria and Iraq. Likewise, the potential that has been unleashed by the Iranian revolution for destabilising the entire Arab world is totally independent of any outcome of the Arab-Israeli conflict. It would have happened if Israel had not existed. In fact, the argument is that if Israel had not existed it would have had to be invented. A comprehensive peace settlement may be President Sadat's meat but it is undoubtedly President Assad's poison, spelling imminent disaster for his political regime.

It is simplistic to believe that the settlement of the Arab-Israeli conflict would stabilise the Middle East, because the traditional instability of that area is rooted within the nature of inter-Arab rivalry, unconnected with the Arab-Israeli conflict. It is hardly surprising that Israel does not view with equanimity the dangerous sacrifices that it may be asked to make, which do not help the situation and which, if they go wrong, could even lead to the elimination of Israel. The adroit political timing in launching the initiative suggest that the prime movers are not particularly concerned with the humanitarian aspects of the problem, since over the past 30 years they have made no effort to solve this problem. Their efforts are directed now to ensuring the oil supplies and expanding their trade. I do not necessarily object to that, but let them be honest in their pronouncements.

In his visit to the Gulf States last year President Giscard d'Estaing clearly illustrated the motives of self-interest that lie behind the initiative. In return for French recognition of the rights of the Palestinians to self-determination, the Kuwaitis promised to sell oil direct to France. Likewise, the United Arab Emirates have promised to supply the French with as much crude oil as they need in recognition of France's support for Arab rights. That report appeared last year in the Financial Times.

Therefore, eager to ensure their oil supplies and noting the apparent success of the French, the logical step for the other members of the EEC, who depend upon Middle East oil for two-thirds of their requirements, was to swap their political endorsement in the form of a European initiative, in exchange for guaranteed oil supplies.

Trade is another aspect of the problem. I well understand the difficulties of countries that are trying to expand their trade. It is estimated that over the next two decades Arab oil revenue will increase fourfold. Needless to say, big business concerns of the Nine will be straining every nerve to have their respective Governments get in on the act, anxious to cash in on idle Arab oil revenue.

Nowhere has this been more evident than in armaments. The chronic instability of the region—again having nothing to do with Israel's presence—coupled with the conviction of some Arab States that the only way to prop up their tottering regimes is by investing in military hardware, has created an arms free-for-all situation in Europe, led by the French. Europe has been very quick to exploit it. In the past year or so the French have concluded agreements with Saudi Arabia and Iraq, and Britain and West Germany have been involved in partnership with France. The military potential of some of these countries is even greater than that of the countries that have supplied them with arms.

I come to the so-called Palestine Liberation Organisation. Over the past year or two prominent European leaders have been wont to emphasise what they say is the moderate stance of the PLO. They cite statements made by PLO representatives. In the House a couple of months ago a PLO representative made hard-line statements that were impossible to reconcile with any contemplated idea of a just and lasting peaceful settlement. The statement asked just for the elimination of the State of Israel.

Not long ago Farouk Kadoume, the head of the political department of the PLO, said: First Israel must recognise the Palestinians' right to create an independent country, and then, we shall see. Three days later the words "we shall see" were explicitly clarified. He said: The PLO will not recognise Israel even if an independent Palestinian state is established. The PLO has deliberately nurtured this double image, saying hard words to its own people and softer words to the Western world, in the hope that the West will hear only the moderate line.

Over the past few years the PLO has continued to attack not troops, not military installations, but women and children. When I was in Israel in January I watched a television interviewer interviewing two terrorists who had been caught infiltrating Israel. The interview was carried out in a calm, mild atmosphere. The interviewer asked them what their task had been. They did not say that their task had been to blow up an installation. They said that it was to kill Jews—simply to kill Jews.

The PLO has consistently refused to amend its constitution, part of which contains that aim. Articles 1 and 9 of the national covenant make clear statements of intent. Article 9 states: Armed struggle is the only way to liberate Palestine and is therefore a strategy and not tactics. The Palestinian Arab people affirms its absolute resolution and abiding determination to pursue the armed struggle. I shall not bother the House with the details. It is clearly spelt out that, one way or another—if two or three steps are needed, the PLO will take them—that is its objective. It would like to succeed without any great difficulties.

The EEC declaration represents not a supplement to but a departure from the Camp David accords. I am not suggesting that those accords are perfect. However, the EEC has gone further than any other party in undermining international recognition of them. It has done so because they represent the first concrete steps towards peace that the Middle East has experienced in the past 30 years. It ill behoves those who believe in peace to try to denigrate an agreement between two countries that have not known a moment's peace for 30 years. A completely peaceful relationship between those two countries is now in prospect.

It is possible that an accommodation will be reached and that another Arab-Palestinian State will be born. However, that State must not be motivated by the elimination of the State of Israel. It may be said that we should negotiate with the PLO, but that is worse than saying that we should negotiate with the IRA because it claims to be the only group to represent Catholics in Northern Ireland.

Mr. Dan Jones

I have also lived in Israel. I spent a good deal of time in the Negev desert. I wish to make a constituency contribution that is directly relevant to the United Kingdom and the EEC. Is the subject of Israel relevant to this debate?

Dr. Miller

I am sorry if my hon. Friend feels that it is not.

Mr. Dan Jones

I do feel that.

Dr. Miller

It is for you, Mr. Deputy Speaker, to decide whether I am in order. However, section II of the White Paper is entitled "Political Co-operation". There is a reference to the EEC initiative. I am trying to explain why that initiative is a mistake. Given all the arguments about human rights, no one could complain that the Camp David agreements infringe any human rights convention.

Israel has bitter memories of Europe's involvement in Middle East affairs. Before and during the Second World War every excuse was made not to lift a finger to help Jews, who were being massacred by the hundreds of thousands. As hon. Members know, that massacre culminated in the holocaust and the extermination of about 6 million Jews. Immediately after the war the wave of sympathy was not sufficient to spur the British Government into adopting a more humane attitude. We know what happened after that.

In October 1973 Israel was attacked by Egypt and Syria. What action did Britain take? The day before war broke out Britain had an agreement to supply arms to Israel. The day that the war broke out the Government unilaterally abrogated that agreement. I wanted to know what Israel had done on the first day of the war that it had not done on the day before. It was not Israel, but Egypt and Syria that attacked.

I go further than that——

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I apologise for interrupting the hon. Gentleman, and I do not wish to comment on what was said by the hon. Member for Burnley (Mr. Jones). However, the hon. Gentleman must confine his remarks to the European connection with Israel and the PLO. He is perfectly in order, but he must refer to Europe.

Dr. Miller

With respect, Mr. Deputy Speaker, this is what the British Government did, and the British Government are part of the EEC initiative. The British Government are part of the Nine who produced the EEC initiative about which I am talking. That is exactly my point.

Not long after we joined the EEC the British Government even refused to allow one of their own allies to ferry war supplies to help Israel, which was being attacked.

I know that the Lord Privy Seal would warmly enter into agreement to produce guarantees in the Middle East area that attempted to allay Israel's fears. However, in my humble opinion, all the EEC countries would find a dozen reasons for failing to comply with such pledges. Not only are the Government wrong in their whole approach to Britain's continuing EEC membership; they are wrong about political co-operation on the Middle East, which I believe is doomed to failure.

8.52 pm

Mr. Teddy Taylor (Southend, East)

The speech of the hon. Member for East Kilbride (Dr. Miller) was different from most of the other speeches. It served a useful purpose because it reminded my right hon. Friend of a substantial worry on both sides of the House about the Middle East problem. The British Government have appeared to move from genuinely looking for a possible way of resolving this difficult problem to an almost unreasonable preference for one side in the dispute. Whereas the Camp David agreement achieved movement on both sides, unfortunately that is not the case in respect of the European initiative, which appears to have done nothing, apart from undermining the successful American initiative.

There have been a number of interesting speeches on the economic aspects of the White Paper. I comment on only one. I was honestly surprised at the speech of my hon. Friend the Member for Anglesey (Mr. Best). He is one of the most able, intelligent and bright new Members in the House of Commons. I was surprised when he advanced some of the arguments which I associate with people who have a closed mind on issues such as this. He said that the Common Market was a splendid thing because lots of Common Market money had gone to Wales. One would think that the inevitable consequence was that if we were not in the Common Market that money would not have gone to Wales. Because of that, he seemed to suggest that Welshmen should support the EEC 100 per cent.

My hon. Friend will know that for every £1 we receive in grants or subsidies from the EEC, Britain must pay almost exactly £2. In other words, every £1 which goes to Wales, Banffshire or any other part of the United Kingdom costs us £2. Therefore, logically, if we held on to the cash instead of contributing it to the EEC we would have twice as much money to spend in Wales, Banffshire and all the other places which need assistance.

My hon. Friend may ask "What assurance do I have that if the Government had twice as much money they would necessarily spend it on worthwhile projects in Wales? Might they not waste it by spending it in Northampton or Southend?" The answer, surely, as he is well aware, is that although the location of these grants is theoretically approved by an EEC committee, the projects are submitted by the British Government. So the area where the money is spent is an indication of the British Government's priorities.

The Government, as we well know, think highly of Wales. They appreciate what needs to be done there. That is why the money is going there. But it is a ludicrous argument to put forward as an advantage of EEC membership that we spend money in Wales. My hon. Friend must be aware that if we were not in the EEC there would be twice as much money to spend. It does not strike me, therefore, as a very strong argument.

Mr. Myles

Rubbish.

Mr. Taylor

My hon. Friend says "Rubbish." He is saying "Rubbish" not just to me but to the Ministers who have been supplying me with most helpful answers over the last few weeks. I asked the Chancellor of the Exchequer what was the ratio of the money that we have received from the EEC in grants and subsidies in relation to the money that we have paid in since we joined the EEC. The answer was 1.95p: £1. That shows that the pound that we get for Wales, Scotland, Southend or anywhere else costs us £2. It is not a basic argument, therefore, in support of our membership of the EEC.

But we are not discussing the merits of joining or of leaving the EEC. Although we have had some of that from the Labour Party, it seemed to me that some Labour Members were trying to convince themselves that if the Labour Party were re-elected there would automatically be a decision to leave the Common Market. The position is far from being as clear as that, as the Opposition Front Bench spokesmen are well aware. The only indication of Labour Party policy that we have had is that a Labour Government might seek to repeal article 2(1) of the Treaty of Accession. We know that there has been a Labour Party conference decision, but we do not necessarily accept that items passed at political party conferences become policy.

We should be looking at the White Paper and making the kind of assessment that the Lord Privy Seal tried to make on the question whether we have made good progress over the last six months; whether we have been making progress in any direction at all.

For those who are interested in major reforms of the EEC the recent agricultural price review was probably the most disappointing event of all time in an EEC context. It seemed to confirm once and for all that there is no prospect whatever of having a major structural reform of the CAP that would be politically acceptable to all its members.

We should have seen some reform. As my hon. Friend the Member for Northampton, North (Mr. Marlow) rightly said, the Government were elected on a manifesto which said that we would insist on a freeze on the price of all goods in surplus. What happend to that manifesto? We know that the Prime Minister, the Lord Privy Seal and other members of the Cabinet are concerned about trying to keep to the manifesto. They are constantly saying "Tories keep their promises". But this promise has not just been abandoned; it seems never to have been discussed at the EEC. It is not because the Government are crooks, rogues or rascals. It is simply because, in the discussions across the table, it has become obvious that our basic manifesto commitment was not a starter in the EEC if we wanted to get any progress in any other direction. That, probably more than anything else, is an indication that it is politically impossible to reform the CAP.

We had a splendid paper from the Common Market Commission that said, in effect, "The most we can possibly add to prices is 7.8 per cent., and even that will need lots of safeguards such as a cut in the British green pound and double co-responsibility levies." The Commission said "That is the maximum we can possibly afford unless we are to have more surpluses, more expense, and the nearer approach of the eventual collapse of the CAP."

But what happened to all these propositions? They were abandoned by the politicians. All the reassurances went, one by one—about the green pound and all other restrictions. We ended up with a much higher price than the Commission said was the maximum that the system could possibly afford. It stands out a mile that unless we have seven years of plague and drought, next year the surpluses in the CAP will be greater than they were last year; next year the expenditure of the CAP will be more than it was last year. What progress has been made towards reform?

Mr. Myles

Is my hon. Friend saying that he would like to see production at levels that would occur in a year of plague or drought? We had two years of drought, not long ago, when the support price for potatoes, about which he complains, was £40 a ton and the price to the consumer was between £200 and £300 a ton.

Mr. Taylor

I was not recommending that prices should be fixed on the basis of drought conditions. Everyone knows that no movement towards reform of structural surpluses has been made in the price review. The cost will be worse next year than it was last year. No movement towards structural reforms to deal with surpluses has been made. The prospect of achieving structural reforms simply does not exist, because of the actions of agricultural lobbies and the views of the French and the Germans.

I ask the Lord Privy Seal whether he honestly thinks that progress has been made. I accept that the Minister of Agriculture, Fisheries and Food, although presenting some strange figures and estimates, not for the first time, has won certain battles for Britain within this package. On the other hand, it is the package that matters. We should be concerned that there has been no movement towards structural reform.

We should also be concerned that exports of cheap, subsidised food to Russia in 1980 were the greatest ever. Some items had not appeared previously. I am told that 149 million litres of cheap subsidised wine at a price of 30p a bottle went to the Russians and was sold for five times the price, so helping to finance the Russian war machine. Butter was sold at between 31p and 40p a pound, again producing massive profits for the Russians. I do not see that the Lord Privy Seal can claim six months of progress.

No movement has been made towards controlling the vast expenditure of the so-called European Assembly. There are two obvious needs. There is the gentleman's agreement whereby the Council of Ministers does not question spending by the European Assembly and the European Assembly does not question spending by the Council of Ministers. No movement has been made to remedy that situation.

There is the crazy level of expenditure involved in the European Assembly meeting in Strasbourg and Luxembourg with the decision-making process in Brussels. A decision by the Council of Ministers in that strange sounding place called Maastricht was that the status quo should be maintained. That means, in other words, maintaining the enormous colossus in Strasbourg, maintaining Luxembourg and also holding meetings in Brussels. It is shameful that the Council of Ministers failed to offer any guidance aimed at cutting this enormous spending, which annoys many people—enthusiasts and critics of the EEC alike.

It is a big disappointment that the White Paper makes no mention of a willingness by the Government to examine the consequences of Common Market membership for our economy, for jobs and for trade, especially at a time when we are supposed to be looking for major structural reform. Speech after speech has been made by those who argue that the Common Market is the biggest job destroyer in Britain. I have heard the Minister say that the Common Market helps jobs. We seem to be moving more towards a fanatical position. My own view is that, on balance, the Common Market has been bad for the British economy. Surely, at a time of 2½ million unemployed and when prospects are bleak, the British people are at least entitled to see the Government introduce some kind of inquiry to try to identify the effects of Common Market membership so that we can try to get the rules changed to help this country.

The questions that I have put to Ministers have been treated in the same manner as the Government treats all questions. Their response is total, blanket commitment and enthusiasm for the EEC. I asked what had been the effect on jobs of the £6 billion deficit in trade in manufactures with the Common Market in the three years from 1977 to 1979. I was told that it was not possible to make an estimate. Yesterday in Japan the Foreign Secretary told the Japanese that their trade was destroying thousands of jobs in Britain, yet we are told that the Government do not know the effect of the massive deficit in Europe.

What about the effect on the contributions? We pay £3,000 million net into the coffers of Europe—more than we have got out of it. Surely, that means something in terms of jobs. We could spend £3,000 million in Scotland, Wales and England, or on reducing taxation or bureaucracy. Surely that would help industry and jobs. We might want to give more subsidies to British Steel and British coal. We might want to reduce taxation. No matter what the purpose, I am sure that we all agree that an extra £3,000 million could be used to create more jobs in Britain.

So what has been the effect? We are not told. What about the effect of entry on the cost of food? We have been given various estimates, all of them hedged with qualifications. The Minister of Agriculture, Fisheries and Food said in a written answer that subject to qualifications it costs the British housewife £3,000 million a year—that is, about £5 per week per family. That is a lot of money. Surely, that affects jobs and prosperity.

We have the evidence of countries which did not join the EEC. What has happened in Norway? Unemployment there was 1 per cent. and is now 1.2 per cent. What has happened to jobs in Austria? Unemployment was just under 1 per cent. and I am told that it is now about 1½ per cent. Of course, other reasons may be involved.

I hope that the Government will take the matter seriously and not just tell us that the situation would be much worse if we were not members of the Common Market. There is overwhelming evidence that the present rules are bad for Britain. Let us consider what changes are necessary, because changes are coming in the EEC. It is time to accept the fact that the CAP cannot be reformed and to seek ways in which national States can run their own agriculture, under article 39, in co-operation with one another.

Sir Anthony Meyer

I note what my hon. Friend is saying about national States co-operating without the common agriculture policy. Will he tell us the outcome of his conversations with Monsieur Debré, when he was in this country, when he suggested that it would be better to have political co-operation without any CAP? Did he get a favourable reaction?

Mr. Taylor

Monsieur Debit said that national responsibility should be built up. When I asked him about the CAP he said that it was a fundamental pillar of the EEC. I, too, would take that attitude if I were a Frenchman. Just because a Frenchman believes that the CAP is a fundamental pillar of the Community and is good for France does not mean that we should accept it.

The Community will run out of cash, and there will have to be changes. We should not be happy about what has happened during the past six months. This is the time when we should be considering major structural changes. There has not been much sign of that happening during the past six months, but I hope that there will be more in the coming months.

9.9 pm

Mr. Dan Jones (Burnley)

I have about two minutes in which to put my case, and I shall do my damndest to do so in that time.

The references from the EEC to this country include textiles. In 1947–48, one of the major industries in Burnley was the textile industry. It was approached by the then Labour Government who begged the people of the area to stay in textiles, although those who had been in textiles since the last century had had enough. Eventually they agreed to co-operate. At that time, of course, it was possible to export floor cloths. Today, that industry is finished. That was the reward for sticking to textiles.

On the social side of the EEC report, I want to mention a coal yard adjacent to a residential area in Burnley. No hon. Member would live in that area for any length of time in the conditions that the people of Burnley have had to tolerate. I have made one application after another to the EEC for help, but each has been turned down, and no help has been forthcoming. Even so, the White Paper refers to the social funds available for improvement. These are urgently needed.

Will the Minister be kind enough to examine what I have said? I am prepared to meet him personally at any time convenient to himself when we may discuss this intolerable state of affairs. As a miner, I have endured coal dust and I know that it is dangerous and leads to lung complaints. I feel certain that some of the people in the area that I have described have suffered from those complaints.

I have now used the two minutes I promised to take for my speech. To avoid prolonging it I simply appeal to the Minister to afford me an opportunity to elaborate on the case that I have made. I have no doubt that the people to whom I have referred deserve far better treatment from the EEC than they have been given.

9.11 pm

Mr. Roland Moyle (Lewisham, East)

I am grateful to my hon. Friend the Member for Burnley (Mr. Jones) for resuming his seat so promptly. We have had a lively if somewhat thinly attended debate, similar to the one that we had in December. To that extent the House reflects the feeling in the country. Membership of the Common Market fails to inspire the country, and the House generally reflects that sentiment on these occassions.

An interesting aspect of these debates is the absence of the right hon. Member for Sidcup (Mr. Heath) and the right hon. and learned Member for Hexham (Mr. Rippon). One might have expected them to attend to bask in the glory that they conferred on the country as a result of negotiating EEC membership, but both have been conspicuous by their absence. I hope that they are not having spasms of conscience.

Mr. Alastair Goodlad (Northwich)

My right hon. Friend the Member for Sidcup (Mr. Heath) is ill.

Mr. Moyle

In that case I apologise to the right hon. Member for Bexley, but he was not here for the December debate, and that is worth bearing in mind.

The Lord Privy Seal answered a question today from my right hon. Friend the Member for Battersea, North (Mr. Jay) about EEC passports. He said that there will be further opportunities for the new format of the United Kingdom passport to be debated before any change is made. May we take that as an undertaking by the Government that there will be a debate on the passport before the new form is adopted? I should like the Lord Privy Seal's assurance on that matter. If on the occasion of that debate the right hon. Gentleman is seeking a compromise to unite the House, may I suggest one for him? He could propose that the passport should be dark blue and that "EEC" be removed from the cover. I am sure that that proposition will unite the House.

Membership of the Common Market is the Government's central foreign policy commitment. An impartial observer would at times find it difficult to understand that. The Government say that one of their main duties, if not the main duty, is to ensure the military protection of their citizens from external attack. However, membership of the Common Market in no way contributes directly to Britain's military security. We are members of NATO but there is no relationship between membership of the Common Market and membership of NATO. France is a member of the Common Market, but although a signatory of the North Atlantic Treaty she is not a member of NATO.

The main motive power of NATO is the United States, which is not a member of the Common Market. It is arguable that that is as it should be—that it is not a hangover from the historic period after the Second World War when the United States was so strong and Western Europe was so weak but is a fundamental requirement.

In this respect I disagree with the right hon. Member for Farnham (Mr. Macmillan), who called for a greater degree of military independence in Western Europe as a result of political co-operation. To detach Western Europe from the United States of America would lead to a great deal of pressure for Western Europe to build up its own massive and sophisticated nuclear retaliation system independent of the American system.

I cannot believe, in opposition to the right hon. Member for Farnham, that the development of a further centre of nuclear decision-making would add to the world's stability. If we separated ourselves from the United States I am sure that that pressure would mount and become successful. Indeed, it is already mounting from the right hon. Gentleman before any such decision has been taken or is likely to be taken.

I believe that both sides of the House agree on the broad principles of political co-operation within Western Europe in diplomacy and foreign policy as set out in the White Paper. The nations of Western Europe occupy much the same geographical part of the globe. Therefore, they have roughly the same spatial relationships with the rest of the world. Their civilisation has common roots and there is much common intellectual inheritance. They have the common aim of defending and promoting democracy. They have many other common characteristics. Even without being members of the Common Market there would be many interests that would compel us all to endeavour to evolve a common foreign policy.

It is interesting to note that foreign policy is outside the Treaty of Rome. There is no requirement under the treaty to develop a common foreign policy, yet a large part of the White Paper is devoted to co-operation in foreign policy. Happily, co-operation is developing and we all agree with that. I have two reservations. There seems to be a tendency at times on the Continent of Europe to watch for a faltering on the part of the United States and to pounce into the gap when that happens. It is not bad in itself to try to supplement the lead that the United States gives in the Western world, but there must not be too great a divergence between the foreign policies of the two groups—namely, the United States and Western Europe. Whatever compulsion there may be to bring a common foreign policy to Western Europe and to evolve a common foreign policy doctrine, there are great gaps between the evolution of that policy and the execution of the policy in practice. There is a great deal of pious posturing that Western Europe, as yet, is unable to implement.

The Middle East has been referred to by a number of hon. Members, including my hon. Friends the Members for Brent, South (Mr. Pavitt) and for East Kilbride (Dr. Miller). It was also mentioned by the hon. Member for Holland with Boston (Mr. Body). Nowhere else is the divergence of policy between the United States and Europe more possible and more likely to be counter-productive than in the Middle East. There is no doubt that the recent European initiatives and statements on the Middle East have had the substantial effect—I should say a beneficial effect—of sharply focusing attention on the vital interests of the Palestinians as a party in the negotiations. That is to be welcomed.

However, the various declarations—especially the Venice declaration—do not fit in easily with the Camp David accords. The Americans have in their favour the fact that the Israelis are determined that they will not readily talk to the PLO in its present form. If anyone listening to the debate had any doubts on that score they were probably put at rest by my hon. Friend the Member for East Kilbride. It must be remembered that the Israelis are one of the two essential parties to any peace-making process in that part of the world.

At the same time as making those declarations, I do not believe that Western Europe can deliver much in the Middle East at this time. Therefore, the aim must be to try to co-ordinate United States and European policy and not to try to demonstrate that Western Europe is better at solving the problems of the Middle East than is the United States of America.

The latest representative of the Common Market to go to the Middle East is Mr. van der Klaauw. It would be interesting to hear from the Lord Privy Seal what has been the result of his recent visit to the Middle East on behalf of the Common Market countries.

The rapid deployment force is basically an initiative of the United States. It would be a bold man who could declare what is the correct current foreign policy and defence solution to the situation in the Gulf, which is fraught and tense. Many of our oil supplies go through the Straits of Hormuz. If anything, the rapid deployment force is a solution fraught with a mass of problems. Not least is the relationship between action in the Gulf and the situation that might subsequently develop in Western Europe. There is also the relationship between the United Kingdom and France, which have forces in that part of the world, and some of the smaller NATO countries.

The right hon. Member for Farnham wanted to know how Western Europe might be strengthened. The Prime Minister would be much more likely to secure her policy objectives in the Gulf if she thought a little more deeply about what she said and how and where she said it, and co-ordinated with friends and allies before she made statements in places such as Washington. Sounding off without adequate preparation leaves our friends in the Gulf with the feeling that they are being treated like the imperial chattels which they felt they were not so many years ago. I hope that the Lord Privy Seal will pass on that well-intentioned piece of advice.

There are other areas where the West European countries have a substantial interest in the maintenance of peace and are exercising political co-operation. There is the war between Iran and Iraq. There is a black spot on the record there, as the French moved quickly to supply arms to Iraq the moment the American hostages were released from Iran. The lesson here is that the one area where there are considerable tensions in the political co-operation between the countries of Western Europe is in the arms trade. It would be helpful to get together on that matter so that the world was not endangered by too reckless a pursuit of the sales of arms to various countries in that part of the world. After all, Iran and Iraq are now under intense pressure. Their resources are being considerably strained by the war. If they are deprived of weapons, they cannot fight that war to its ultimate conclusion and damage to us all.

I shall not go over the past history of the dispute in Afghanistan. The initial Western European reaction was not good. The hon. Member for Southend, East (Mr. Taylor) gave much evidence about that. However, the situation could have been restored. The Foreign Secretary made a sensible suggestion about an international conference, which is not entirely being followed through. There was also the problem of President Giscard d'Estaing, who suddenly launched forth on television with his scheme for settling the problem, without deep consultation with the rest of his allies in Western Europe. There again there was somewhat of a blot on the cooperation in. Western Europe. However, there is much cooperation in that area.

If the Common Market is to carry on in its present form for some time, it at least has the role of conferring democratic respectability on a number of countries which seem to need it, in view of their past history.

I do not wish to sound patronising, but I am happy to join the Lord Privy Seal in welcoming Greece to the Common Market. Its membership sets the seal on the sensible return of the Greek people to democratic government. I, too, believe that Spain and Portugal should join the Common Market as soon as possible. I understand what is meant when it is said that democracy in Spain is fragile, particularly in the wake of the attempted military coup, but in many respects it is not fragile. The great majority of the Spanish and Portuguese people wish to conduct their affairs by democratic methods in conformity with the general standards of Western Europe. However, Spain has a closed military caste, some of whose members have lived a monastic life and developed views at variance with those of almost everyone around them. If Spain becomes a member those people are less likely to have a destructive influence on the development of Spanish democracy, so I urge the Government to make sure that the Mediterranean farmers of France and Italy do not delay the entry of Spain and Portugal.

In the internal bargaining to keep Western Europe working together, and with the success in political cooperation that arises not from the Treaty of Rome and the institutions of the Common Market but from our common interests, why must we accept the bureaucratic top-hamper and expensive budgetary machinery, dominated by the CAP, which is directly against our interests as a nation? I agree with the great majority of speakers in the debate; it brings us a little advantage. I believe that in international tariff negotiations we have the advantage of the general European strength, although that is not accepted by all my hon. Friends. However, the disadvantages are immense. The CAP takes about three-quarters of the Common Market budget, so little can be spent on industrial support, relieving debilitated regions and other social measures, which we need above all else.

Sir Anthony Meyer

I hate to interrupt a most statesmanlike and balanced speech, but will the right hon. Gentleman join me in urging the Government to encourage the Common Market to develop industrial and regional policies in order to counter-balance expenditure on the CAP?

Mr. Moyle

As the hon.. Gentleman confessed in the previous debate, he has been arguing that case for 20 years. If he will possess himself a little longer, I propose to spend most of the remainder of my speech on that matter.

We import food, and wish to do so at the cheapest price. Before we joined the Common Market our deficiency payments system kept our prices down to world prices. We sold our home-produced food to our people at a subsidised price—much cheaper than it would otherwise have been. The CAP, as has been said, is based on the Corn Laws principle—food is not brought into Western Europe until its price has risen to the price at which Western Europe can produce it. Non-European prices have to rise to European prices before the produce is imported. In the past eight years world food prices have been either about the same as European prices or very much cheaper.

At no stage in the eight years during which we have been in the Common Market has there been a substantial amount of food from world. markets at prices higher than European prices. In 1979–80 the Common Market price for wheat was 63 per cent., barley 61 per cent. and maize 90 per cent. higher than the world prices. Barley and maize go into animal feedstuffs. Ii will therefore not surprise the House to learn that beef and veal prices in Europe are about 104 per cent. above the world price. Sugar is about 31 per cent. higher and butter a massive 311 per cent. above the world price.

Incidentally, I see that in answer to a question from my hon. Friend the Member for Newham, South (Mr. Spearing) the Minister of Agriculture has reiterated that the recent agricultural settlement will add only 1 per cent. to the cost of living. The Lord Privy Seal had notice of our discontent with that earlier, in an intervention from my hon. Friend. We should like to know the mathematics of that calculation. It takes a considerable suspension of disbelief to imagine how the settlement could add only 1 per cent. to the cost of living.

All of these factors massively inflate our cost of living. There is pressure on wages to compensate for the increased cost of living and pressure on our industrial costs to compensate for wage costs. This leads to a loss of export competitiveness, particularly for trade manufacturers. I shall not stress the point again. We have been over that ground substantially and the Lord Privy Seal knows that that is our concern, not the overall trade, which includes the price of oil.

As many hon. Members have said, that means that we have to put up with substantially greater unemployment than we need. The problem of balancing our trade and exporting our goods to the world has been the central economic problem in all the 15 years that I have been in the House, both before we joined the Common Market and subsequently. This whole business, however, seems to contribute towards making a solution to that problem infinitely more difficult.

Few would deny the burden of the argument that I put forward. Members of the House therefore fall into two categories. This relates to the point made by the hon. Member for Flint, West (Sir A. Meyer). We are either reformers or deserters. I shall repeat a pro-deserter argument that I put to the House last December and to which my hon. Friend the Member for Grimsby (Mr. Mitchell) alluded. I said: In the early 1960s the argument was that we should join the Common Market in order to stop the CAP. In the late 1960s it was suggested that we should join the Common Market in order to stop the CAP solidifying. In the early 1970s people said that we should join in order to reform the CAP. It is now argued that the CAP cannot go on as it is, and that it is bound to be reformed. Going through all this, one is reminded of the donkey with the carrot tied to its neck and of the advertisement for The Times, which reads: Have you ever wished you were better informed? Nowadays it is said that the budget will run out of money in 1982 and the CAP will therefore be reformed. It is also said that the CAP will never survive the accession of Spain. I repeat the point that I made during the earlier debate: The CAP may be modified, but it will not be reformed. It will remain rooted in its high-price, Corn-Law-type principles. We will not be allowed to trade on the world markets and to buy the cheapest good food"— as we used to, before we joined the Common Market— although that is in our interests."— [Official Report, 18 December 1980; Vol. 996, c. 978–79.] and I believe that it is good Socialism, too.

The situation is even worse, because on 17 November the Minister of Agriculture, talking to the Conservative Brussels Association, defended the CAP in principle. On top of that, for good measure, the Foreign and Commonwealth Secretary, talking to the Ubersee Club in Hamburg on the same night, said that the common agricultural policy was part of the fabric of the Community. That seems to be an abdication of responsibility by those two Ministers, given our economic position, and almost a dereliction of duty. If the Lord Privy Seal is right in his claim that we are to try to reform the CAP, those two speeches have more or less given away our negotiating position before we have started to negotiate.

The latest price increases have added to our problems. It was said—this is in direct contradiction to undertakings given during the general election campaign, as was pointed out by the hon. Member for Northampton, North (Mr. Marlow)—that we would refuse to countenance any further increases for products in structural surplus. We have now piled structural surplus on top of structural surplus. Cereals, beef, veal, sugar and milk—all products under the CAP in substantial structural surplus—have had further price increases. That reduces income to the budget by providing the incentive to produce more European food and less world food, which has to pay a levy when it comes into the Common Market. It is now clear that the Common Market does not conform to British national interests, because the budget is almost wholly dominated by the CAP.

Last year the Prime Minister claimed that she had won a great victory on the budget. She certainly won something, but at best it was minor victory. This is not introduced as carping criticism of the right hon. Lady. I hope that she will go in for more battles of the same kind. Indeed, I have no wish or capacity to carp. But we must not delude ourselves further about the Common Market and the common agricultural policy. It was only half a victory—half a loaf—despite the right hon. Lady's claims to the contrary, because she got only half the sum that she should have got back from the Common Market had justice been done by this country's contribution. That was at the cost of a permanent strain on our relations with our Western European allies. We have produced evidence today that that strain in relations is still carrying on.

That victory was reduced to less than a quarter of a victory, because it was a rebate for a limited period only. This time is now half spent. This time next year we shall again be in a knock-down, drawn-out battle with our allies in Western Europe to secure the same half loaf that we won last year.

The victory was further diminished by the form that it took. Instead of allowing us to keep our money, the Brussels authorities insist on our handing our money to them. They then graciously decide to give it back to us to spend in this country on projects of which they approve. They also claim that this returned money is EEC money.

Only a few days ago I had a press handout from the Foreign Office listing projects in all the regions of the United Kingdom being financed by EEC money. That is not EEC money. It is out money. In the days of yore it would have been raised in this country, it would have been discussed in the House and the House would have decided how the money was to be spent. This procedure bypasses our democratically elected Parliament and diminishes its sovereignty, and it should not be tolerated. That is the answer to the spurious claims made by the hon. Member for Anglesey (Mr. Best).

People are beginning to realise that the common agricultural policy has in no way been reformed and that it will not be reformed. It is part of the essential warp and woof of the Common Market, and it is here to stay so long as we are in the Common Market. That is why the Labour Party, at its last annual conference, voted for a different relationship between this country and the Common Market in future.

The old relationship has been tried and found wanting. We are determined to apply that new relationship on our return to office. It will be one based on friendship with our Western European allies. After all, we have much in common in foreign policy and diplomacy, and have done the ultimate by committing our defence forces to the defence of Western Europe. I am sure that our allies would not wish to do anything to compromise our capacity to maintain that commitment.

The existence of the Brussels bureaucracy and the Brussels budget, based essentially on the common agricultural policy, are irrelevant to our main aims of security and diplomatic co-operation. Therefore, why should we put up with the rigidities of the present Common Market system when they damage our economy to a demonstrable extent? The rigid straitjacket of the common agricultural policy must be removed from our shoulders. The 1972 legislation, which enacted our attachment to the Common Market, was a mistake in principle which ought to be rectified as soon as possible. That is section 2 of that Act. Flexibility and the sovereignty of a democratic Parliament should be our watchwords for the future. That is why we foresee a totally new relationship for the future with the nations of Western Europe.

Sir Ian Gilmour

The right hon. Member for Lewisham, East (Mr. Moyle) began his remarks by complaining about the absence of my right hon. Friend the Member for Sidcup (Mr. Heath) and my right hon. and learned Friend the Member for Hexham (Mr. Rippon). I think that he will admit that that was a fairly cheap remark, because he knows perfectly well that my right hon. Friend the Member for Sidcup is not well and could not possibly have been here. Looking at the House, he knows that there is not much point in noting absentees. I do not see that there is much point in noting them; it would be more to the point to note those hon. Members who are present. The right hon. Member would have done better, I think, to keep off that matter.

Despite the very small attendance, we have heard some extremely interesting speeches and I will try to deal with as many points as I can. The hon. Member for Grimsby (Mr. Mitchell) said that there were some fifth columnists paying officials to attack the official policy of the official Opposition on the EEC. If there were such people they would be extremely clever because, as my hon. Friend the Member for Southend, East (Mr. Taylor) asked, who knows what the policy of the official Opposition is on the EEC? It would therefore be extremely difficult for anyone to attack it.

Mr. Austin Mitchell

It is to come out of the Common Market.

Sir Ian Gilmour

I am not sure that the hon. Gentleman is in a position to speak for the official Opposition. In a recent article by the right hon. Member for Leeds East (Mr. Healey) he talked about Britain's physical survival as well as our economic future depending literally on the skill and sensitivity with which we work within the Western Alliance and the European Community. That does not sound to me like coming out, and it may well be that the right hon. Member for Leeds, East, as the official Opposition spokesman on foreign policy, knows what the official policy of the Opposition is. Otherwise, I think that it must be conceded that there is a good deal of doubt on that subject.

The hon. Member for Caithness and Sutherland (Mr. Maclennan) talked about nitpicking opposition, political opportunism and selective memories. That is a fair critique of some of the speeches that we heard from the Opposition—and I am afraid I do not exclude the right hon. Member for Lewisham, East.

I shall write to the hon. Member for Burnley (Mr. Jones) about the subject that he raised and we might have a meeting. We will certainly take that matter up.

The right hon. Member for Lewisham, East said that he did not concede that the effect of the recent price settlement would be only 1 per cent. on the retail price index. In fact, it will be less than that. We never said that it would be 1 per cent. on the RPI; we said that it would be 1 per cent. on the food price index. It is about 0.2 per cent. on the RPI. That is because the premiums and subsidies that we have obtained for this country for beef, lamb and butter are together worth about £300 million. They help British consumers and are not available to other member States. That is why the effect on the food price index is lower than the 3 per cent. figure that the Commission has suggested.

I also tried to explain to the hon. Member for Newham, South (Mr. Spearing) why a 9 per cent. increase in food prices will lead to only a 1 per cent. increase in the retail food price. First, the common agricultural price regimes do not apply to all food, nor are producers' costs the only element in retail prices.

Secondly, the effect on the British consumer is mitigated by the beef, lamb and butter subsidies. Thirdly, there will be no effect on the liquid price of milk in the United Kingdom, which is fixed by the Government and not by the Council. Fourthly, the fierce competition in the pigmeat market will prevent the Common Market price increase being fully reflected in the retail price. Similarly, the strong competition for shares in the British butter and cheese market will moderate the effect on consumers.

Mr. Marlow

rose——

Sir Ian Gilmour

I will give way to my hon. Friend while noting that he refused to give way when he was speaking.

Mr. Marlow

That is not quite correct; I gave way two or three times.

My right hon. Friend says that we get back from the Community £300 million on butter and beef. Is he saying that we are getting back £300 million more than we would have got back if we had the same arrangements as last year?

Sir Ian Gilmour

Yes. The settlement is a small net gain to the United Kingdom. The inflation rate in the Community has been ignored by some of my hon. Friends. The suggestion made by my hon. Friend the Member for Banff (Mr. Myles) that farmers should be the only people in Europe to get no price increase for their product is highly unreasonable. It is inconceivable that that should happen. For most countries in the Community the price rise is less than the rate of inflation.

My hon. Friend the Member for Holland with Boston (Mr. Body) spoke, rightly, of the importance of our milk delivery system. Our restrictions on imports of milk are designed to protect both human and animal health. We are determined to maintain the protection provided by our health and hygiene regulations. We consider them to be fully and entirely justified.

My hon. Friend spoke eloquently and with great knowledge on the subject of sugar. The whole House will agree with what he said about the importance of sugar to certain countries, particularly the ACP countries. Their imports are guaranteed for an indefnite period under the sugar protocol to the Lomé convention. That applies to the Community as a whole and not just to the United Kingdom. Despite the closure of the Liverpool sugar refinery, the bulk of the ACP supplies will continue to be refined and consumed here.

My hon. Friend also mentioned Community membership of the International Sugar Agreement. It offers the best means of regular balancing of the world market. We support accession to the ISA and hope, now that agreement has been reached on the Community's internal sugar regime, that the mandate that the Commission negotiated can be agreed by the Council.

Mr. Body

Does not my right hon. Friend agree that it will be impossible for the EEC to be admitted to the International Sugar Organisation so long as it goes on dumping up to 3 million tonnes of sugar a year?

Sir Ian Gilmour

We shall see. I hope that my hon. Friend is being too pessimistic.

Several attacks have been made on the fisheries policy. I dealt with our good faith when I was answering the right hon. Member for Llanelli (Mr. Davies). Much has been said about the unsatisfactory arrangements that were negotiated at the time of our entry. If those in Opposition found the arrangements so unsatisfactory, why did they not include them in their renegotiation of the terms of membership? They were not mentioned.

The inequity of the common fisheries policy, which was agreed prior to our coming to office, is recognised in the transitional arrangements and in article 103 of the Treaty, which envisages further arrangements being made.

The right hon. Member for Llanelli asked about zones. My right hon. Friend the Minister of Agriculture, Fisheries and Food has made it clear on many occasions that the Government's objective is to obtain an adequate zone of exclusive access, with preference beyond that designed to benefit coastal communities that are particularly dependent on fisheries. In conducting the negotiations, the Government will continue to maintain the closest liaison with the industry.

Mr. Denzil Davies

Will the right hon. Gentleman clarify that point about the zone of dominant preference? Does his answer mean that the Government will not agree to any arrangement unless they get a zone of dominant preference from 12 to 50 miles?

Sir Ian Gilmour

I have nothing to add to what my right hon. Friend the Minister of Agriculture said. He has carried the industry with him and has made considerable progress.

The hon. Member for Newport (Mr. Hughes) suggested that membership of the Community was the cause of the problems that have beset our steel industry. That is farfetched, particularly as that industry has been uncompetitive in world markets because of the failure of previous Governments to take the necessary decisions. It is interesting to note that the agreement reached in the Council on 30 October—to which reference is made in the White Paper—was much welcomed by both the industry and the trade union.

The hon. Member for Grimsby and my hon. Friends the Members for Northampton, North (Mr. Marlow) and Southend, East spoke about our visible trade balance. They tended to ignore the fact that it was much better in 1980 than it had been in 1979. The hon. Member for Grimsby complained that we used the import-export ratio. He said that it was a meaningless statistic. It is not meaningless. It happens not to suit his argument. He then said that we had a manufacturing deficit with Europe and a surplus with the rest of the world. It is fairly obvious that if a country trades with others that do not have manufacturing capacities there will be a manufacturing surplus. Therefore, that point was singularly irrelevant. If the hon. Gentleman were to compare our trade performance with the EEC with our performance with other manufacturing areas he would find that we have done better with the EEC than with Japan or the United States of America.

As the hon. Member for Caithness and Sutherland said, it is absurd to pretend that the decline in our trade is due to our membership of the EEC. The problem is far more deep-seated than that. As my right hon. Friend the Member for Farnham said, it has been with us for many years. The hon. Member for Inverness (Mr. Johnston) made an extremely positive speech. He called for more Government initiatives in several areas. I am glad to say that we have not been as backward as he thought. My right hon. Friend the Secretary of State for Energy has put forward proposals for a Community fund to help finance investment in coal production in member States. We look forward to further Community action in support of the coal sector. Similarly, Community member States and other countries within the International Energy Authority have acknowledged a need for additional measures to alleviate the problems that might arise if there were problems with oil supplies that fell short of a full crisis. I agree with what he said about regional and social funds.

Several speeches have been made about political cooperation. My right hon. Friend the Member for Farnham spoke eloquently about the need for more co-ordination in the defence sphere. He reminded us of the sober fact that Europe is incapable of defending itself. That will remain the case for many years. My right hon. Friend thought that the Community should have more say in security matters. As he will know, the German Foreign Minister agrees with him. Nevertheless, we must emphasise that NATO must be the primary forum for defence matters. The right hon. Member for Lewisham, East was not right to say that France is not a member of NATO. She is.

Mr. Moyle

France is a signatory of the North Atlantic Treaty, but not a member of the organisation.

Sir Ian Gilmour

She is a member of the organisation, but she has contracted out of the integrated structure.

The hon. Member for Brent, South (Mr. Pavitt) and East Kilbride (Dr. Miller), as well as my hon. Friend the Member for Southend, East criticised the European initiative. There was some support for it in a modified form from the right hon. Member for Lewisham, East. The hon. Member for East Kilbride was wrong when he said that Egypt was opposed to it. As I said earlier, President Sadat has said that the European initiative is extremely important, and he has welcomed it. It is not true that he is against it.

After all, the Venice declaration seeks to secure peace in the Middle East by getting agreement on two basic principles, namely, the security of Israel and the legitimate rights of the Palestinian people. Surely that is something on which everyone should agree. That is in everyone's interest, and it is entirely right that Europe should seek to have those principles established.

Dr. Miller

I have no objection to the right hon. Gentleman's last comment. Perhaps he will check his notes, because I said nothing about Egypt's not wishing to have any association with the initiative.

Sir Ian Gilmour

I apologise; perhaps the hon. Member for Brent, South said that. It is wrong to suggest that the Venice declaration is not even-handed. It is not a good argument to say that no one cared about the Palestinians before 1967. In fact, there have been United Nations resolutions every year since 1948. Even if people did not care about the Palestinians before 1967, that is more a criticism of people in Europe and the rest of the world. It does not mean that the issue was not alive or that it should not be solved.

My right hon. Friend the Member for Farnham asked about Poland. I spoke earlier of our concern at the political situation there and the need for non-interference. The Community has followed developments in Poland with great concern and has been ready to do what it can to give economic help. I confirm my right hon. Friend's figures. They are of that order of magnitude—extremely large and very serious.

On 1 April the Community followed up its December decision to provide food and agriculture products to Poland at the Polish Government's request by a further decision to make available additional amounts of food and agriculture products on special terms.

At heart, our membership of the Community is a political reality, as it was for the founders more than 20 years ago. It was a political decision to join, made many years ago by the Conservative Party, which we constantly reaffirm. The decision was also made by Parliament and by the people of Britain. The hon. Member for Grimsby got into great democratic knots by suggesting that another referendum would somehow be more democratic.

We cannot go on changing our minds about Europe merely because the Labour Party keeps changing its mind.

Mr. Spearing

rose——

Sir Ian Gilmour

I hope that the hon. Gentleman will forgive me if I do not give way, but I have only two minutes left.

This does not mean that we should not seek the best possible economic and financial arrangements within the Community, or that we should not try to track down and eliminate inequities and idiocies where they exist. There will always be some of those.

As the debate has shown, we differ strongly from the Labour Front Bench spokesmen, who basically adopt a "Little Englander" approach. We wish to consolidate and strengthen a Community dedicated to peace and security, which is firmly based on economic structures which are to the benefit of all its members.

Of course, we are not blind to the inadequacies of some major Community policies, but we are setting about the reform. Our record shows that we are capable of getting results and can negotiate much more successfully with our partners than did the Labour Government. Our task will be to strengthen the base of the Community, and Britain within it.

Question put and agreed to.

Resolved, That this House takes note of the Report on Developments in the European Community, July to December 1980 (Cmnd. 8195).

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