SUPPLY

HC Deb 21 July 1982 vol 28 cc411-88

[27TH ALLOTTED DAY]—considered.

Mr. Speaker

I have selected the amendment in the name of the right hon. Gentleman the Leader of the Opposition. I have not selected any of the amendments to the amendment.

4.22 pm

Mr. Eric S. Heifer (Liverpool, Walton)

I beg to move, to leave out from 'House' to the end of the Question and to add instead thereof 'believes that events have shown that Common Market arrangements for the Budget, Agriculture, Fisheries and Food are contrary to the interests of the United Kingdom and that the Treaty of Rome cannot provide a sound and secure basis for long term fruitful co-operation with the United Kingdom's European friends and allies'. It is strange that on a Supply day one has the privilege of moving an amendment before the Government speak to the motion.

Today's debate is undoubtedly overshadowed by the statement that we have just heard from the Secretary of State on the security of the Royal household and particularly by the tragic and awful events that took place yesterday in various parts of London. Therefore, I do not expect that this debate will receive many headlines, and I do not expect the entire press corps to be present to hear about Common Market matters.

Despite the other serious events that have taken place, discussion of the Common Market is of great importance to the future of our country. At no time should we apologise for having important debates of this kind. The debate is on the report on "Developments in the European Community, July to December 1981." That was when the United Kingdom had the Presidency of the Council of Ministers, and it is therefore important to discuss what happened during that period.

The report says that the Government's hopes for this period and how they were realised were summarised in the then Foreign Secretary's speeches to the European Parliament on 8 July and on 17 December 1981. That means that we can have a wide-ranging debate, and the Opposition have put down an amendment that gives us the opportunity to broaden the debate to sake in all or any aspects of the Common Market.

In addition to dealing with budgetary issues and the CAP, the report deals with political co-operation, ranging from East-West relations to the Middle East and South-East Asia.

I should have liked to express a view on many, if not all, of those matters and I should particularly have liked to say something about the Middle East and the views that I and other members of my party hold on that question. I should have liked to say something about Poland and Latin America, but time will prevent my getting too involved with such questions.

I propose to make a brief comment on the steel discussions, in which the Minister for Trade is involved. The Daily Telegraph today contains an interesting and important report. It says that officials from the Department of Trade and British Steel are travelling to Washington to start direct negotiations on quotas with the United States of America, and that the Minister for Trade is reported as saying after the Brussels talks: We will carry more clout. I find that interesting, because we have always been told that the important thing was that when the countries of the Common Market came together they were more united and determined and had more clout than if they acted individually. The hon. and learned Gentleman is making the point which some of us have made for some time, which is that, when it comes down to it, national interests have to be put before just about everything else. I am not arguing with the hon. and learned Gentleman's point. I put it on record that I find it interesting.

On Friday—and this is why I do not propose to debate the matter now—there will be a full debate on the proposed budget for next year. There are some interesting points in that proposed budget and I am sure that that will be an important debate.

The previous Foreign Secretary, in his speech on 8 July 1981, spoke of three main tasks facing the EEC. The first was the reform of the common agricultural policy to end its high costs and scandalous surpluses. He said: It cannot be right that about half of the Community's budget should be spent simply on the storage and disposal of surplus food. The second task, which relates to the first, was to direct EEC resources away from agriculture into industry and services. The right hon. Gentleman said that in the 1950s it was reasonable to suppose that agriculture needed support but industry just needed free competition, but That is no longer the case. The third task was budgetary reform. The Minister said that no country could ever get out exactly what it put in, but that every Member State has to be broadly satisfied that the Community's financial basis is sound and equitable. The Foreign Secretary set out the Government's objectives at that time with admirable clarity. I must say, I hope with equal clarity, that the Government have failed to make satisfactory progress towards any of those objectives.

The Common Market is now heading towards record food surpluses. The Government's opposition to the CAP has been no more than token and their attempt to veto this year's 9.7 per cent. price increase was nothing but a tactical ploy. They had already agreed in principle to an increase of that size.

There has been a similar climb down over the budget. There was a time when the Prime Minister made budgetary reform a personal crusade. All hon. Members will remember that. She made a great point of how she would deal with the budget. I note—I hope that hon. Members and the country have noted it too—that she seems to be keeping her head well down on this issue.

I could raise many interesting points on the budget, but I raise only one in passing. I notice that the Commission has proposed an increase of 351 staff posts, including seven for the publications office. The bureaucratic set-up is obviously increasing the whole time.

Britain and West Germany remain the only net contributors to the EEC budget. France and Italy took out nearly £350 million last year, and Ireland very little less. The Government's commitment to a long-term solution of the budgetary problem evaporated earlier this year, and they accepted a one-year deal.

Mr. Tony Marlow (Northampton, North)

I shall not go the whole way with the hon. Gentleman. The Prime Minister has done a good job in difficult circumstances to get some of our money back.

However, the hon. Gentleman will know, as I do, that there are people traipsing around Britain saying that the Community budget cost only £6 million last year. Have the hon. Gentleman and hon. Members seen the piece of paper that I have from the Treasury? It is a cash flow document that shows that in 1980 the budget cost Britain £706 million, that last year it cost £397 million and that this year, as all hon. Members know, it will cost us considerably in excess of £400 million in cash flow terms. Therefore, the miracle that the Euro-fanatics are talking about has not happened. I hope that the hon. Gentleman will ensure, as I shall, that Britain knows full well what is happening in this regard.

Mr. Heffer

On some occasions it is wrong to give way, but on others it is right to do so. The hon. Gentleman has undoubtedly underlined my basic point. I shall return to some of the points about the budget, but I shall not deal with future budgets.

The two failures of the common agricultural policy and the budget are ultimately of far less importance than the second priority that was mentioned by the then Foreign Secretary, that of redirecting resources into industry and services.

Unemployment in the United Kingdom now stands at well over 3 million. Most of the responsibility for that rests with the Government. However, our membership of the EEC should not be ignored as the EEC controls much of our trading and industrial policies.

The then Foreign Secretary said that free competition was not enough. The truth is that free competition is a major cause of our problems. Free competition is a relic of nineteenth century laissez faire concepts. Contrary to the suggestion of the hon. Member for Southend, East (Mr. Taylor), it is preserved in the Treaty of Rome. It does not, as some pro-Marketeers claim, lead to prosperity for all. It does not lead to equality of wealth between nations. On the contrary, it perpetuates inequality and allows the strong to dominate the weak. That has always been the Labour Party's most fundamental objection to the Treaty of Rome.

One of the nation's leading economists, Lord Kaldor, predicted with great accuracy what would happen to British industry under the Treaty of Rome. The de-industrialisation that he predicted has come to pass. The 3 million plus on the dole are proof of that.

Let me give some figures to show what has happened to unemployment since Britain joined the EEC. I am not claiming that our entry into the EEC was in itself responsible for all unemployment, but I remember, as I am sure every other hon. Member does, the debates at the time of Britain's entry into the Common Market. We were told that unless we joined the Common Market we would have massive unemployment, that there would be no jobs for the boys and that the only way to get jobs for the boys was to go into the Common Market and stay in it.

The total unemployment figures on a seasonally adjusted basis, and therefore excluding school leavers, were, in January 1973, 741,000, a percentage rate of 3.2 per cent., and in June 1982, 2,910,000, a percentage rate of 12.2 per cent. In January 1973 those unemployed under the age of 20 numbered 114,000, and in January 1982, 525,000 I want to contrast those statistics with figures from other European non-EEC countries. In 1972 Austria had an unemployment rate of 1.9 per cent. and in 1981 one of 2.4 per cent. In 1972 Norway had an unemployment rate of 1.7 per cent. and in 1981 it stood at 2 per cent. There was no great and rapid rise. In 1972 Sweden had an unemployment rate of 2.7 per cent., which was not much different in 1981. Switzerland is perhaps peculiar, but, nevertheless, in 1981 it had a rate of unemployment of less than 0.2 per cent. None of those countries is a member of the EEC.

We were told "If you do not join the European Economic Community your industry will collapse and you will find a massive rise in unemployment", but the facts prove the opposite. We could have dealt with these matters in our own way without being inveigled into the Market by the pro-Marketeers. In the six months from October of last year to March this year, our deficit in manufactures with the EEC stood at £2,131 million. In our trade in manufactures with the rest of the world we had a surplus of £3,297 million. This is a long-established pattern. It is our deficit with the EEC that is destroying our industries.

Those who were saying that we should join the Common Market have been proved wrong. Britain's membership of the Common Market has meant—

Sir Anthony Meyer (Flint, West)

rose—

Mr. Heffer

I am not giving way at the moment.

There has developed a massive deficit in our non-oil balance of trade in manufactured goods with the EEC. There has been the burden of substantial annual net payments to the Community budget. There has been the denial of access to cheaper supplies of essential agricultural products, the imposition of unnecessarily high consumer prices for food and the acceptance of an agricultural regime that distorts the rational pattern of production. There has been the takeover by the EEC of significant powers to make laws and to levy taxes that apply to Britain.

Even the most ardent pro-Marketeers cannot possibly claim that Britain has really benefited from its membership of the EEC. An interesting written parliamentary reply to the hon. Member for Southend, East on 8 April showed that between 1 January 1973 and 31 December 1981 the United Kingdom paid £8,799 million to the EEC budget and received £5,314 million. The ratio of payments to receipts is five to three. At the same time as we are paying a levy of 52.92p on every pound of butter coming into the country from outside the EEC, subsidised butter is being supplied to the Soviet Union because of the manner in which the common agricultural policy works at the expense of the British people.

That is one example. There is insufficient time to give all the examples, but if one adds up the whole list the result is fantastic. The amount in 1980 was 142,000 tonnes. Equally, total food levies in the last few years have gone up from £46 million in 1976 to £234 million in 1980. I wish to refer especially to the amounts in 1976 and 1977. The claim is made that the Government achieved a better deal than the Labour Government. It is necessary, however, to take account of the transitional arrangements under the Treaty of Accession. The Labour Government could not possibly have begun to deal with the situation until the transitional arrangements were out of the way. It was then possible to see what was happening. My right hon. Friends made a very good job during that period of defending the interests of the British people. We have nothing to be ashamed of.

Conservative Members accuse the Labour Government of not achieving as good a deal as this Government. The truth is that we were caught by those transitional arrangements.

Mr. Dennis Skinner (Bolsover)

They were Tory transitional arrangements.

Mr. Heffer

That is right. They were brought in by the Conservatives. Our amendment states that the Treaty of Rome cannot provide a sound and secure basis for long term fruitful co-operation with the United Kingdom's European friends and allies. The Treaty stands in the way of Britain's being able to carry out the necessary measures to deal with unemployment and industrial decline. It is argued that the French are carrying out such measures irrespective of the Treaty. That is not true. They have already retreated on a number of issues after coming up against the Treaty.

The Opposition wish Britain to return to full employment as soon as this is humanly possible. To achieve that we believe that it is essential to have control over our own future. We wish, therefore, to avoid open and continual conflict with members of the Community. We could act as some other members of the Community appear to be doing. We could try to get round the provisions of the Treaty by subterfuge. We could ignore the Treaty, pretend that it was not there, and simply go bald-headed for our own interests. Our way is properly to negotiate Britain out of the Community by discussion and agreement. That is what Labour intends to do. In the meantime, while those discussions are going on, we shall carry out the measures which we believe are essential to get British industry back to work and our people fully employed.

Sir Anthony Meyer

Will the hon. Gentleman explain what was said to him by his Socialist colleagues in Europe in response to the proposal that we could negotiate ourselves a special status without prompting any counteraction?

Mr. Heifer

If the hon. Gentleman would like me to speak for another hour I should be able to give a full rundown of what happened at those meetings. I have no intention of doing so. The meetings were fairly well reported in most newspapers, although sometimes totally inaccurately. However, we have given reports to our own people. I shall therefore not become involved in explaining the matter to the hon. Gentleman.

It is necessary to get people back to work and to restore full employment. We shall need to take measures to manage our trade, including controls over the levels of manufactured imports. Such measures are specifically forbidden under article 12 of the Treaty. We shall need to restore and to strengthen our exchange controls and to take powers to regulate the flow of direct investment overseas. Such controls will contravene articles 67 to 73 of the Treaty. We shall need to introduce a comprehensive planning strategy, which will of necessity include selective aids to industry. The Labour Government found to their cost that aids could be contrary to articles 90 and 92 of the Treaty, and we had to water down those aids. We shall need to take measures to control prices and inflation. The agricultural policy of the EEC will not allow us to reduce food prices by obtaining food imports from the cheapest sources of supply.

For all those reasons, the Labour Party believes that the time has come to begin the process of negotiating our way out of the straitjacket of the Rome Treaty. I wish to make it crystal clear that Labour believes in European unity, but a wider European unity not based on the Treaty of Rome. We believe that Europe's future will be best served by the development of democratic Socialist concepts throughout the whole of Europe. The Treaty is not the great Socialist measure that some Conservative Members think. In fact, it stops such a development taking place.

Mr. Skinner

My hon. Friend will, I know, wish to get the facts absolutely straight. On at least a couple of occasions he has used a carefully worded phrase to explain how Labour would negotiate its way out of the Treaty of Rome. Will he be more specific? Will he ally his remarks to the complete and fundamental basic commitment passed at conference that Britain will withdraw from the Common Market without a referendum, and so dispose of any ideas that may lurk in the minds of hon. Members, including myself, that the negotiations might take a considerable time? Let us be emphatic about this. My hon. Friend has a great opportunity to lay the Labour Party's policy straight on the line.

Mr. Heffer

I should have thought that everything that I have said adds up to a clear statement of the party's policy. When one says that one is negotiating withdrawal from the Treaty of Rome—the Common Market is based on the Treaty of Rome—that is making absolutely clear what is intended. I have never denied—I am sure that this goes for the entire Labour Party—that I support the policies and ideas of the Labour Party, as agreed at the annual conference.

As I was saying before I was so nicely interrupted, the Opposition believe that the Government have failed to keep their promises. They have not reached a firm agreement on future budget contributions. There is no firm assurance that the Luxembourg compromise will be maintained. They have not secured any real changes in the common agricultural policy, and there are few signs that such changes will come about. They have not secured agreement on a fishing policy that is in the interests of the British fishermen and people.

There are hon. Members, on both sides of the House, who argue that we should stay in the Common Market and change it from inside. That appears to some extent to be the meaning of the amendment tabled by some Conservative Members. For 10 years we have tried to change the Common Market from the inside. What has changed does not add up to a row of beans. We are arguing that it is time for a real change. That is why I ask the House, including those hon. Members on the Government Benches who obviously agree with the views that I have put forward, to support the Opposition amendment.

4.52 pm

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

As the hon. Member for Liverpool, Walton (Mr. Heffer) said, the report that we are debating covers the period of the British Presidency—the second half of last year. That may seem an odd quirk in our procedures, given the passage of time since then, but the report can provide the basis for useful debate. It shows the essential nature of the Community and its working, the sort of European Community that we want and how we are working towards that end. It enables the Government to restate, and the House to examine, our clear commitment to Europe and the future of Great Britain inside the Community.

A Presidency of six months is, to a large extent, an artificial concept, as we made clear from the beginning. It is rare for any Community proposal to be conceived and brought successfully to birth during one Presidency. That is why it has sometimes been suggested that each Presidency should last for one year. I think that that would be probably too heavy a burden.

During our Presidency about 70 new Community measures were agreed. They vary greatly, and not many of them were spectacular. Few of those measures gained publicity. Even when they are reported, there is sometimes a tendency to mock such achievements and describe them as trivial. Those arrangements often provide a direct benefit to the individual. As examples I cite the decision of the Environment Council in December on measures against pollution and greater public safety; the agreement on social security provisions for the self-employed and help for the disabled; progress in energy—guidelines for dealing with a limited shortfall in oil supplies. Under the guidance of my right hon. and noble Friend Lord Carrington the Community agreed to an important strengthening of its procedures for co-operation on foreign policy. Each of those achievements is limited, but each is significant. Taken together, those 70 measures illustrate the steady, and I think irreversible, construction of the European Community and its political co-operation in foreign policy.

Mr. Nigel Spearing (Newham, South)

Irreversible? Does the right hon. Gentleman agree that Great Britain's adherence to the EEC is with the continuing assent of Parliament? Does he suggest that the development of its institutions is inevitable and irreversible and that it is not possible for the country and the House to disengage from that organisation?

Mr. Hurd

No, of course not. The hon. Gentleman can be listening with only half an ear. I am coming to his point shortly. I believe that steadily, year by year, measures agreed by the member States are building a Community which will not be reversed.

From what was said by others after our Presidency, it is clear that we gained some respect for the brisk and businesslike way in which we handled Community business. I mention—I have never seen it mentioned elsewhere—that we ran the British Presidency in 1981 at a cost, in real terms, of little more than half the cost of the first British Presidency in 1977. Nevertheless, as happens with all Presidencies, and as the hon. Member for Walton pointed out, we did not achieve all that we had hoped. We did not achieve major progress towards the completion of Common Market agreements for services—insurance and air transport. We believe that that is necessary to fill a lamentable gap in the carrying out of the treaty. We have not yet achieved a long overdue agreement on a revised common fisheries policy. We have not found a satisfactory long-term answer to the problems of the Community budget and Great Britain's contribution. As always, there remains plenty of unfinished business. We regard that as a reason for perseverance rather than the despair that the hon. Member for Walton described.

I turn to the present position and the future. We have debated one of the continuing problems—fish—within the past week. I shall not add much, except to stress that the vital interests of our fishing industry will not allow for much more delay in reaching an agreement on a common fisheries policy. There has been good progress towards that in recent months, particularly in bilateral talks. We hope that during the Danish Presidency that progress will continue until an agreement is reached.

I believe that it would be right to record the position about decision-making and the budget problem. My right hon. Friend the Foreign Secretary has reported fully to the House his discussions about future decision-making procedures. At the meeting on 20 June he left our partners in no doubt about our view that, where any member State considers that very important interests are at stake, discussion must be continued until unanimous agreement is reached. That was the practice followed by the Community after the adoption of the Luxembourg compromise in 1966.

That position, restated by my right hon. Friend on 20 June, was supported unreservedly by two member States and by two others with some qualifications. Obviously we should have preferred, as he made plain, a more clear-cut outcome, but the Luxembourg compromise was an agreement to disagree, and that remains the position. In the light of the discussion on 20 June, we judge at present that decisions are in practice likely to be taken on the basis that the Community has followed since 1966, with the one exception of 18 May.

Mr. Robert Maclennan (Caithness and Sutherland)

The Government, in the person of the Minister of Agriculture, Fisheries and Food, said that there was no question of there being a linkage of agricultural policy, fisheries policy and the budget, as those matters were quite distinct. He stated that in the House. At the negotiations, where the Government sought to invoke the Luxembourg compromise, they were linking them. Do the Government now take the view that it is a legitimate exercise of the Luxembourg veto to link matters that are proceeding in other Councils and thereby prohibit their process of decision-making?

Mr. Hurd

We covered that point to some extent in the debate on the Genscher-Colombo proposals. The essential point is that, in a Community of sovereign States, a member State must be the judge of what its important national interests are. If farm proposals cost a lot of money and a member State feels that the general arrangements for distributing burdens in the Community are unfair, there is a direct relevance. The stand that my right hon. Friend the Minister of Agriculture, Fisheries and Food took at the Agriculture Council was entirely justified by the past and by the interests of this country.

Mr. Douglas Jay (Battersea, North)

The Minister said "we judge" when speaking of the present state of the Luxembourg compromise. Is it a formal decision of the Council or the EEC that is recorded or merely a description of the Government's state of mind?

Mr. Hurd

It is our present judgment following the discussion that I have reported, which resulted in an agreement to differ of more or less five to five, restating the Luxembourg compromise, which was an agreement to differ of five to one.

The House will recall that we reached agreement on 24 May on refunds to our budget contribution for 1982. That has given us a valuable breathing space. The £500 million refund for 1982 was less than we would have wished, but that was largely because our net contribution for 1980–81 turned out to be much lower than anyone had expected. That was a point that the hon. Member for Walton failed to take. Taking the three years covered by the 30 May agreement together—1980, 1981 and 1982—we can be reasonably satisfied with the outcome. As I said, it is a breathing space, not a permanment solution. We have achieved what the Labour Government singularly failed to achieve—a reduction during those three years of our net contribution to a level which, although still high, has not been intolerable.

The hon. Member for Walton made an extraordinary excursion into history when he claimed that the Government of 1976–77 was caught helpless by the transitional arrangements, but that entirely ignores the effort over which a great many trumpets were blown at the time—the renegotiation of 1975 carried out by the right hon. Member for Huyton (Sir H. Wilson) and his colleagues. We were told at the end of the renegotiation that it was all right; the great errors of the Conservative Government had been redressed. In particular, we were told about a financial mechanism that would deal with the problem. An elaborate and ingenious financial mechanism was worked out, but it did not work. It did not begin to solve the problem. We had not a penny of refund.

We do not claim that what we have achieved is perfect. I stressed that it has provided only a breathing space, but it is a great deal better than what was achieved, or rather not achieved, before.

Mr. Marlow

My right hon. Friend said that he wanted to look forward, and we want to look forward with him. There is a possibility that the Community budget will run out of funds. We are better able to spend funds frugally than those within the Community. Will he tell the House that the Government have set their face as flint against devising any other sources of Community funds that will be payable from the United Kingdom?

Mr. Hurd

I am prepared to look forward with my hon. Friend. We hold that the 1 per cent. VAT limit, with which he is thoroughly familiar, should remain. No other proposals are yet before us for any other way of dealing with the own resources problem. The problem is not imminent in the sense that the Community is not at present running out of cash, so I cannot add to what I have said.

My hon. Friend is adept at intervening in other people's speeches. In an intervention in the speech of the hon. Member for Walton he brought forward a set of figures about the net position that he had derived from the Treasury. The difference between the two sets of figures is mainly because they are calculated on a different basis, and either basis would be fair. The refunds can be included in the year to which they relate or in the year in which they are paid. The £6 million net figure that my hon. Friend challenged is entirely correct. It takes account of our refunds for 1981 which are being paid this year. The £400 million figure that he quoted takes account only of 1980 refunds, the bulk of which were paid in 1981.

Mr. Marlow

That is not even right.

Mr. Hurd

I have sought to answer my hon. Friend's point.

Before long we shall have to tread the stony path of our budget contribution again. That is a pity. We had hoped by now that it would have been possible to achieve a longer-term settlement so that we did not have to reopen the files and the argument year by year. Our partners have agreed to decide on measures for 1983 and later by the end of November. Again, we shall have to invest much energy in the task. It is a thankless but necessary effort.

It is worth recalling that it is not by our wish that there is the specifically British item on the Community's agenda. In essence, it is a European, not a British, problem. To a large extent, it reflects the illogical lack of balance between agriculture and other items in the Community's spending. The lack of balance means that not only Britain but other member States may from time to time find themselves at an unfair, or even crippling, disadvantage. For example, under present arrangements, there is a risk that Portugal, when it joins the Community, will be a net contributor, even though it will be one of the poorest members For that reason my right hon. and learned Friend the Chancellor of the Exchequer proposed in May last year at The Hague that the problems should be tackled on a European, not simply a British, basis. We regret that the approach was brushed aside and we were left once again to negotiate, as we did, a refund for Britain.

In the long run, the right answer must lie in achieving a better balance of policies. We need to curb the excesses of the agricultural policy. I do not believe that there is much controversy in the House about that. At the same time, we need to build sensible industrial and social programmes for the Community where the Community can do better through shared action than nation States can do individually. We spent a lot of time on that during the long discussion last year under chapter I of the mandate of 30 May which dealt with non-agricultural policies. We showed that the British are willing to identify and build up such programmes, particularly where they will help to deal with problems of unemployment.

We agree that the financial resources of both the regional development and social funds should continue to grow in real terms and that, in particular, we should continue to direct them towards areas of greatest need within the Community. A revised regulation for the regional fund is being discussed, and a major review of the social fund will start soon.

We want to make sure that both funds can make an increasingly important impact on the Community's regional and social problems—for example, industrial decline and youth unemployment. That is important. We shall continue to contribute energetically to that aim.

Mr. Roger Moate (Faversham)

My right hon. Friend has already moved some way beyond the point on which I wished to question him. He answered my hon. Friend the Member for Northampton, North (Mr. Marlow) in a way that could hinder rather than help us. My hon. Friend asked him to reaffirm that not only would the 1 per cent. VAT ceiling be retained, but that no other new sources of revenue would be made available to the Community. My right hon. Friend did not give that latter confirmation, yet the Prime Minister has confirmed that no new revenue resources would be made available. This is not a pedantic point, nor is it a question of debate. If my right hon. Friend does not give that same assurance, the Government will lose their only leverage to secure the reforms about which he is now speaking. Will he therefore give the assurance that I and my hon. Friend have been seeking?

Mr. Hurd

Obviously, I cannot give an assurance for ever. At present there are no proposals for an increase in own resources, and we do not believe that at present any such proposals would be justified. That is as clear a statement of the position as anyone could reasonably expect.

Mr. Ron Leighton (Newham, North-East)

Does the right hon. Gentleman agree with the Prime Minister or not?

Mr. Hurd

I think that I have repeated what the Prime Minister has said. [HON. MEMBERS: "No."] That is usually the position—

Mr. Spearing

Not today.

Mr. Hurd

—and I do not think there is any great difficulty about it.

I was talking about the need for a better balance in Community policies. As that is still lacking, continuing refunds to Britain will still be necessary, and we shall negotiate hard to achieve them.

During the present lull of a few weeks before fresh discussions on Britain's budgetary problems begin, we must remind our partners that this subject cannot be ignored and will not go away. There is still occasional confusion on this subject in the European press. Contrary to what is sometimes written and said, we have honoured our obligations under the treaties. We accept the principles of the CAP as they are defined in the Treaty of Rome. We are not asking for a juste retour. We are willing to remain a modest net contributor, and here I follow word by word the Prime Minister's position.

Our trade has adapted itself to Community membership faster than many thought possible. We badly want to find a solution to this problem so that energies can be channelled elsewhere. A solution will be needed—our partners should be aware of that—to remove this real and justified grievance from the minds of those in the House and elsewhere who debate and decide the form and the fact of our membership of the Community.

The future enlargement of the Community to include Spain and Portugal is another important subject. That is important for the strengthening of democracy in Europe, and the Community has accepted that the political benefits from this enlargement are overriding. At its meeting at the end of June, the European Council reaffirmed what it had said previously, set out the Community's commitment to complete the accession negotiations and stressed the importance of progress.

Mr. Leighton

What are the benefits?

Mr. Hurd

These two countries, with which Britain has had close traditional links, have thrown off one form of dictatorship and not shackled themselves with another. They have told the Community "We want to belong, because we believe that belonging will strengthen our democracy." Anyone with a sense of European history will regard that as important. That request has been made mainly on political grounds, which it would be irresponsible to turn down.

The European Council also asked the Commission to prepare a new inventory of the different problems. We think that would be useful.

Some progress has been made in these negotiations. There have been a number of meetings with Portugal and Spain this year. I shall not go into the details, but they can be given at the end of the debate if hon. Members are interested. There will be a further ministerial conference with both applicants in September and October, which we hope will draw the sides further together. The main chapters not yet tackled—I say this to show that there is still a long way to go—are agriculture, fisheries, institutions and social affairs.

The French have recently expressed concern at the problems posed by enlargement, particularly with regard to Mediterranean agriculture. They have argued that these problems have not been properly tackled inside the Community. We do not disagree with the French claim that there are substantial problems, but in our view the best way to resolve them is to get on with the negotiations. We hope that the Community is not far from agreement on a reform of the wine regime, and progress is being made on fruit and vegetables. We see no reason why negotiations on these matters with Spain and Portugal should not start soon. That is what we are urging on our partners. We want to get on with what is still a difficult job.

The other important international issue facing the Community is the need to deal with the looming problem of our trading relationships with our major trading partners—the United States and Japan. There is the major problem of steel, to which the hon. Member for Walton referred. The Minister who has taken part in the negotiations will deal with that when he replies to the debate.

Mr. R. C. Mitchell (Southampton, Itchen)

Will the right hon. Gentleman confirm that it would be against the spirit of the Treaty of Rome if there were any closed frontiers between two Community countries?

Mr. Hurd

Not just against the treaty, but it is inconceivable that there should ever be a closed border between the territories of two members of the Community.

We listened to the hon. Member for Walton with great care. He again made the case for British withdrawal from the Community, although in terms that were not sufficiently precise to suit his hon. Friend the Member for Bolsover (Mr. Skinner). I do not think that that is a credible policy for the Opposition to put forward. For a start, it is repudiated in explicit terms by the Opposition spokesman on foreign affairs, the right hon. Member for Leeds, East (Mr. Healey), and the Opposition spokesman on home affairs, the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley). It is questioned within the TUC, particularly, if press reports are right, by the TUC steel committee, in forthright terms. From recent election results, we can see that it is proving an absolute dud as a vote winner.

The policy of withdrawal has simply not got off the ground as a political issue. That is because most people, whatever their criticisms of the Community, many of which are valid, believe that it would be foolish to put at risk the thousands of jobs that are dependent on exports and even more at risk the jobs that are dependent on inward investment which clearly and explicitly results from our membership of the Community. Therefore, although I was a little apprehensive about it a year or so ago, it is clear to me from all that has happened that the so-called policy of withdrawal is a dud.

Mr. Jack Straw (Blackburn)

We are used to hearing scare stories about the number of jobs likely to be lost if Britain withdraws from the Common Market. It is interesting to note that the numbers involved vary according to the spokesman. The Minister said that it would be hundreds of thousands, the Secretary of State for Industry suggested 1 million and the CBI 3 million. However, the claims have one thing in common—there is absolutely no substance in them.

What systematic study has the Foreign Office or the Department of Trade made about the effects of withdrawal? If none has been made, will the Government institute a study and make the calculations and conclusions available to the House?

Mr. Hurd

The hon. Gentleman should listen with care before he intervenes. I did not say that jobs would be lost. I said that they would be put at risk. I believe that is a fair statement. Moreover, I referred to thousands of jobs, not to hundreds of thousands. I do not believe that the figure can be quantified. [HON. MEMBERS: "Oh!"] If the Labour Party carried out the policy outlined by the hon. Member for Walton and put on that degree of control, I believe that jobs dependent on exports would probably be lost. Therefore, they are at risk. Even more certainly, quotations from industrialists investing in Wales and Scotland especially make it clear that they have brought those jobs to this country because of our membership of the Community. Therefore, it was entirely fair to say—I chose the phrase very cautiously—that thousands of jobs would be at risk if the Labour Party carried out its policies.

Mr. Richard Body (Holland with Boston)

Will my hon. Friend give way?

Mr. Hurd

Perhaps I could continue for a little.

The reason why the dominant faction of the Labour Party follows that policy was put clearly and honestly by the hon. Member for Walton. Those members of the Labour Party believe that the Treaty of Rome, being based fundamentally on principles of competition that the hon. Gentleman regards as outdated, would prevent the Labour Party from carrying Socialism in one country to the lengths that it plans. On the contrary, some members of the Conservative Party seem to believe that the Community is an ideal vehicle for Socialism.

The truth seems to be that there is nothing in Community membership to prevent elected Governments from carrying out the policies on which they were elected, so long as those policies—this is an important proviso—do not destroy the elements of competition and freedom that are fundamental to the functioning of the treaties of the Community and are written into the treaties that member States have signed.

It is that limitation—and there is no real doubt about it—that irks the extreme members of the Labour Party, because they wish to go much further in import controls and in multiplying State aids than either the French or the Greeks, to name two Socialist Governments now within the Community. The Community and its institutions, without being dogmatic, work in the general direction of free industrial and economic policies while seeking to reconcile that with support for agriculture. I suggest that for a British Conservative there can be nothing strange in trying to run those two aims in harness—general free industrial and economic policies combined with support for agriculture—although we may and do criticise the way in which it is actually done.

Other hon. Members, including some of my hon. Friends, favour a more sophisticated approach than withdrawal. They would like to pick and choose between different aspects of Community membership, keeping some and discarding others. Some, for example, would like political co-operation to continue, but would reject actual membership of the Community, while others would like to see continuation of an industrial free trade area but wish to opt out of the common agricultural policy.

I believe that those who wish to pull Britain out of the CAP have not squarely faced the effect that that would have on British agriculture and, thus, on the British economy. I think that most people would agree that British agriculture should be sustained and encouraged. Yet it is common to hear criticism of the CAP—we heard it from the hon. Member for Walton—on the grounds both that it puts up food prices for the consumer and imposes an unfair burden on the taxpayer. The hon. Gentleman cannot have it both ways. Either British agriculture would be sustained by efficiency payments, in which case the taxpayer would bear a heavy burden, or it would be sustained by levies, in which case prices in the shops would be higher than world prices.

Mr. Heffer

It has been understood since the end of the last war that there must be some public expenditure to help the farmers. Our objection is to helping not our farmers, but the French farmers and all the others in the Common Market.

Mr. Hurd

As I have said, I do not think that the hon. Gentleman has squarely faced the implications of what he says. He criticises the CAP on the grounds both that it keeps food prices up and imposes a burden on the taxpayer. We criticise its excesses, as I have already done. The hon. Gentleman should be aware of the order of cost—I do not think that the Labour Party has faced this—that would be imposed on the British taxpayer if we returned to deficiency payments. One estimate is £2,000 million, and I understand that an academic study is about to appear suggesting that the cost would be £2,400 million. Those are enormous sums even when compared with our total contribution.

Sir Nicholas Bonsor (Nantwich)

My right hon. Friend is not doing justice to the case against the CAP. There are two other aspects with which he has not dealt. First, in many instances, farmers are prohibited from being efficient by the controls imposed on them by the CAP. An example of this is our hyper-efficient milk industry which cannot expand as it otherwise would due to the levies imposed on it to prevent precisely that. Secondly, if the restrictions on food imports were lifted, we would be able to import food at world prices from our old markets outside the Common Market. Therefore, the cost to the consumer would be reduced in significant areas.

Mr. Hurd

I was dealing with the budgetary cost of sustaining British agriculture. We are among the critics of the CAP, but those who wish to demolish it altogether have not squarely faced the resulting cost of sustaining British agriculture. As my hon. Friend will certainly know, British agriculture has done much better out of the CAP in recent years. Indeed, one of the reasons why our net contributions to Europe have been smaller than expected is precisely—contrary to the impression given by my hon. Friend—that British farmers have done a great deal better out of the CAP.

Mr. Body

Does my hon. Friend appreciate that there is an underlying fallacy in what he says? As a result of the CAP, there has been a major shift in British agriculture away from livestock production to two cereal growings? If we continue to grow vast quantities of cereal, he is right to say that the cost of subsidising agriculture would be horrific—perhaps £2,000 million—but if we reverted to the previous system we should be encouraging livestock production again and we are far better at that form of agriculture.

Mr. Hurd

I am not sure that my hon. Friend's view would be shared by the British farming industry as a whole.

Mr. Spearing

Because they get too much out of the system.

Mr. Hurd

No, and I shall rest the argument at that.

Mr. Spearing

It is our money.

Mr. Hurd

The hon. Gentleman is quite right. It is our money anyway, but it is misleading and dishonest to give the impression that all the money would be saved if the CAP were demolished.

I am trying to deal fairly with the argument for an industrial free trade area without an agricultural policy. That takes us right back to the 1950s, because it was commonplace in those times. The late Mr. Reginald Maudling worked with great skill to negotiate just such an outcome, but he could not manage it. During that period, neither the Government of this country nor the House, I think, really understood what was going on in Europe or the political impetus that was creating the Community. For years we thought that we could pick and choose and that everyone would be grateful to serve up to us whatever we fancied from the European menu. That was a mistake then, and it would be a mistake and a backward step now to return to those misconceptions of the past. That approach did not work before and it is even less likely to work now.

There can be and is some flexibility in the matter. We have recently witnessed two examples of Community policies in which all members acquiesced, but in which not all joined. One example is sanctions against Argentina. Italy and Ireland did not join, but they did not obstruct.

Mr. Straw

Pull the other one.

Mr. Hurd

That is a clear statement of fact. Perhaps the hon. Gentleman would like to challenge it?

Mr. Straw

I shall willingly take up the challenge. Surely the Minister does not suggest that the Common Market's disarray over sanctions against Argentina is a sign of its cohesion. It was a serious blemish, even on the record that the right hon. Gentleman presents to the House.

Mr. Hurd

Again, the hon. Gentleman did not listen to what I said. I was using that as an example of a policy being adopted, but not all members joining it. They did not obstruct it.

The European monetary system is another example. We accept that other members join in the exchange rate mechanism within the EMS, but we do not take part. It would be rash to push that principle too far, as the examples that I have given were additional policies. In neither case—indeed, in no case that can be quoted—has any member State tried to reverse or undermine an existing or accepted Community policy.

It is probable that if that right were ever claimed by one member State, it would be claimed by others, and we should rapidly witness the unravelling of the Community. At worst, that could lead to the destruction of the European idea. No hon. Member who has a sense of history would like to see protectionism or excessive nationalism rampage through Europe all over again following the collapse of the Community. At best, the suggested change of policy by Britain would lead to the survival of the Community as a Continental bloc based mainly on France, Germany and the Low Countries. No doubt we could take part, as is suggested, in peripheral arrangements. There would be a smile and a chair for us when we turned up to discuss matters of mutual interest. But that Continental bloc, which is our biggest customer, and several times more economically powerful than ourselves, would take economic decisions that directly affected the livelihoods of most British people, and they would be decisions over which we would have no power or control.

Mr. Spearing

Is that not the case now?

Mr. Hurd

The whole thrust of British foreign policy through the centuries has been to prevent that type of development.

Those are some of the ideas that persuade us that our policy must continue to be based on full and energetic membership of the Community. That is the negative side. When faced with the Opposition, it is reasonable to point out the negative consequences to Britain of their obstinate antagonism to Europe. However, the real argument is positive.

Progress in building the Community has been slow. Many examples of that may be found. It has been so slow that exasperation and impatience are natural. Nevertheless, it is absurd to imagine that, after so many centuries of dispute and war, Europe could be built in a day or even in a decade.

I do not believe that I am a dreamer or a fanatic in these matters. It is hard for anyone who attends meetings of the Council of Ministers to be either. The grind of day-to-day business is wearing, but the point that Opposition Members miss is that, despite that grind, disappointment and delay, the work moves forward.

I hope that Opposition Members will take my views as personal views. Sometimes, after hours of long discussions, one finds that, in spite of the slow and exasperating ways of the Council, there is a sudden move forward and a willingness to make progress. There is even, dare I say it, a feeling of community. Those moments are still few and far between, but they occur. There were a few during the British Presidency. It is worth waiting and working for those moments in the British national interest. Our commitment to do so will remain.

5.34 pm

Mr. J. Enoch Powell (Down, South)

Until he ran into some flack at the end of his speech, the Minister of State had, as he usually does, presented a suave and rather reassuring picture of developments in the Community. We can assure him that no hon. Member is in any danger of mistaking him for either a dreamer or a fanatic. But there was one point at which the mask slipped a little. That was when he applied to the developments the adjective "irreversible". That led to an exchange with the hon. Member for Newham, South (Mr. Spearing). Following that exchange, the Minister of State redefined "irreversible" as meaning what will not be reversed. It would be an interesting disquisition, not suitable for this type of debate, to ascertain the difference between "irreversible" and what will not be reversed. Interesting philosophical regions could be traversed on the way.

I shall refer to one such development that is pregnant with irreversibility in one sense or another. From the beginning of this business of Britain and the European Economic Community, the way has been strewn with assurances and reassurances. At every stage, from the election of 1970 onwards, the public were assured that it was only so much, what they could see in front of them, what was present just at that time, to which they were being asked to give their assent. The House was told over and again that any expansion, any further excursions, any excrescences upon the structure that we were joining, could not happen without the prior consent of the House of Commons. We were reassured at every stage that we would go only as far and as fast as we could carry Parliament and the public with us.

The process has worked differently. It has been a process that reminds me of Professor Housman's description of a man walking—a person putting forward first one foot and then, "by a strange inconsistency", the other. It has been the alternative movement of the minimalist and maximalist feet. At one moment we were reassured that nothing was really happening and then, a few breaths later, the Government explained how they were building a new addition, a new storey, on the great European edifice.

I shall restrict myself to the striking example of that process that is given in section III of the Blue Book. It is headed "Political Co-operation". Surely political cooperation is not merely harmless but positively desirable between nations, between friendly nations, between nations which, for the most part, although there are exceptions, are allied. What could be wrong, asks the minimalist foot, with political co-operation? If we happen to agree, if our interests happen to march with those of other member States of the Community, surely we should do the same thing. That is all we are talking about. That is all that political co-operation means. But to an increasing extent we come to the conclusion that our interests, points of view and intentions happen to be the same—surprise, surprise; hurrah, hurrah—and therefore there is Political Co-operation and we do the thing together instead of doing it separately.

That is one side of the coin but there is another, which was unequivocally exposed in the Report on European Political Co-operation that was issued last November and which is referred to in that section of the Blue Book which is before the House. Throughout that report "Political Cooperation" is not in lower case letters. It invariably appears with capital letters as an actual institutional entity. The careful reader both of that report and of the Blue Book will find that that is so. It is stated in the report: The development of European Political Co-operation over these years has shown that it answers a real need felt by the member states of the European Community for a closer unity in this field". I shall not waste any time on the inherent contradiction and even ungrammaticality of the words "closer unity", but I shall proceed with the following sentences: It is a mark of its proven value that European Political Cooperation has steadily intensified and its scope continually broadened. This development has contributed to the ultimate objective of European Union. That last is what it is about. There is now an institutional framework which is to "contribute to the ultimate objective", taken for granted, "of European union"—institutional union.

That is something different. That is something to which the assent of Parliament and people has not been secured. It is true that two or three months before the ratification of the Treaty of Brussels the Prime Minister of the day, the right hon. Member for Sidcup (Mr. Heath), announced the object of political and economic union by 1980. That date has, reassuringly, gone by. But he had not secured any vote, even in the House, let alone any expression of opinion on that behalf, let alone, to hark back to an old phrase, full-hearted consent from the people. Yet here European union is assumed as an "ultimate objective", and the development of political co-operation is seen as "contributing" to it. So we have moved on. We have moved, in a series of substantial steps, towards the assumed "objective of European union".

The minimalist, or the European in his minimalist phase, might say, "Well, as the EEC is an economic community, there must be some aspects of international affairs which are bound to impinge on any economic community, particularly upon an economic community which, by its structure, absorbs the external trade policies of all its members". For example, it might be argued that if some question arises in foreign policy of using economic weapons—of imposing sanctions, for example—the mechanism of the European Economic Community would be brought into play. One could see an argument being got on its feet that if, in such a context as Poland, Afghanistan or even Argentina, economic action was called for, it would be only natural that the institutions of the Community and the members of the Community should co-operate politically in the economic sphere of international policy.

However, one would not get far with that contention. A study of section III of the Blue Book illustrates that. I shall take two of the three examples that I have given. On Poland the Blue Book states: The Ten have made their views clear to the Soviet Government and the Russians can be in no doubt that direct intervention would have grave consequences for their relations with the Ten and for East/West and international relations generally. That may be a correct statement. It may be an admirable sentiment and a desirable policy. But no one could mistake it for a policy deriving from and circumscribed by the economic functions of the EEC. It has become a statement of international policy. Ultimately it has become a threat of the use of not merely economic but other forms of force.

On Afghanistan, the Blue Book stated: The Foreign and Commonwealth Secretary, in his capacity as President-in-Office"— not as Her Majesty's principal Secretary of State for Foreign and Commonwealth Affairs— went to Moscow on 6 July to present the European Council's proposals for a two-stage international conference on Afghanistan to the Soviet Government on behalf of the Ten. One or two points in that formulation are worth noting. The proposals are the proposals of the European Council, which is a body not provided for nor allocated any functions in the Treaty of Rome. It was not a body that existed when the assent of the House was obtained to our joining the EEC. We find now that the European Council, initially an informal meeting of the Heads of Government of the member States, has become a persona in international affairs, slapping on the table at Moscow, by the hand of Her Majesty's principal Secretary of State for Foreign and Commonwealth Affairs when he is President-in-Office, its proposal for dealing with Afghanistan.

That way lies one of two things—either making a fool of oneself or running into disaster. Fortunately for us, it was the former that happened. We were made a fool of; it was obvious that behind that proposal there lay nothing whatsoever. There lay behind it no intentions; not even the fleabite of economic action lay behind it. It was just the European Council endowing itself with an international persona for the sake of the exercise of building up political co-operation.

One goes on from one instance to another. One can leave the area where any economic factors are likely to come into play for the EEC and find the same thing happening. I take this specimen, for example, from the section on the Middle East, which is rich in instruction: The Ten heard of the assassination of President Sadat with the greatest shock". One imagines the Ten sitting there in a row with simultaneous shock as if an electric current had passed through them. However, it was not that ludicrous aspect to which I wanted to draw attention, but to what was said next: But they were encouraged"— they cheered up— by the orderly transfer of power in Egypt and by the commitment to continuity shown by President Mubarak, who has their full support. Those are not my words, but the words that are printed. President Mubarak has the "full support" of the Ten. What does that mean?

Dr. J. Dickson Mabon (Greenock and Port Glasgow)

That they support him.

Mr. Powell

I see. It means that they support him. If his regime in Egypt were in any danger, what would be the support? When we talk about support in the House we have a fairly precise idea about what we mean by support: we shall get someone into the Lobby. Into what Lobby will the Ten go in their support of President Mubarak? Either that is nonsense—talking for the sake of talking, chattering for the sake of chattering—or we are making a commitment—or rather a commitment has been made on our behalf, because I think that we are one of the Ten—to do something to sustain a certain regime and state of affairs in Egypt.

Mr. Tom Ellis (Wrexham)

Does the right hon. Gentleman agree that a couple of years ago in the real world Mr. Abba Eban was right to choose the word "bizarre" when he said that he found it bizarre that European politicians should squabble among themselves about whether to support American policy on issues such as Afghanistan, the hostages and so on?

Mr. Powell

I shall come to the larger matter of foreign policy and foreign policy in the Middle East. I shall examine how far the expression "squabble", or "squabble amongst ourselves", is applicable, or ought to be acceptable, to the House. Meanwhile I take another example from the same area: Four members of the Ten, with the agreement of their partners, agreed to a request from the United States that they should participate in the Multinational Force and Observers in the Sinai. It says in "the" Sinai, so I suppose it has a definite article. I repeat— with the agreement of their partners. This country was among the four which did so. However minimal in physical terms was our participation, a participation in such a force was a significant political and national act. That was done with the agreement of our partners. What does that mean? Does it mean that if we did not have the agreement—the assent to our participation—of Luxembourg or of the rest of what are called the "Ten" we would not have sent our force? Are the Ten acting as a unit to the extent that one black ball disqualifies? Is this already a unitary policy?

Mr. Hurd

indicated dissent.

Mr. Powell

The Minister of State indicates dissent. In that case, what is the meaning of "the agreement" to the action of the four, signified by Luxembourg and the other five? It means nothing at all, if we would have done it anyhow and if it was an independent decision of ours to take part in such a force, right or wrong.

A larger matter is clearly our relationship with the PLO and with Israel. This goes back to the major event that occurred at the European Council in June 1980 which issued the Venice declaration on the Middle East. That was issued by the Ten. It is quoted as evidence of the Ten continuing to play an active role in the search for a just, comprehensive and lasting settlement in the Middle East". When that announcement was made, I remember asking the Prime Minister whether this was the foreign policy of Her Majesty's Government or whether it was a collective foreign policy—whether the States had, as individual sovereign States, adopted the policy. I was told, and the formula was repeated again this afternoon by the Minister of State, that this is a concurrence of completely independent sovereign States which all, no doubt after discussion, hit upon the same foreign policy.

So let us consider this, in the terms in which it is propounded to us, as United Kingdom foreign policy. Does anyone seriously suppose that the United Kingdom would, as a matter of United Kingdom policy, have confirmed the assertions of the Venice declaration and in particular would, in the terms of the declaration, have recognised the PLO and committed itself to such statements as the right to existence and to security of all the states in the region, including Israel and justice for all the peoples which implies the recognition of the legitimate rights of the Palestinian people"? That is repeated again: A just solution must finally be found to the Palestinian problem … The Palestinian people, which is conscious of existing as such, must be placed in a position to exercise fully its right to self-determination". Note the word "must". That is a word of power. This is the Ten—Luxembourg and the other nine—saying that these things "must" happen at the other end of the Mediterranean and that these things "must" come to pass. The word "must" is being used. They do not say that such things would be desirable or that it would be an agreeable scene or that mankind would rejoice if these things happened. They announce with the verb "must"—if "must" is a verb—that this is what is to be made to happen. There is an implication of the use of power behind those words.

Mr. Maclennan

rose

Mr. Powell

Is the hon. Gentleman simply uncomfortable or does he wish to intervene?

Mr. Maclennan

Not uncomfortable, but increasingly puzzled. The right hon. Gentleman is speaking about a procedure of international consultation which is not novel and not confined to the European Community. We have seen it as recently as in the resolutions of the Security Council in its collective denunciations of the Argentine. The right hon. Gentleman made no complaint about the fact that the British Government fully participated with others in coming to mandatory resolutions in which the word "must" was employed.

Mr. Powell

I am obliged to the hon. Gentleman. He has advanced my argument considerably. We took a decision as a nation and as a Parliament to join the United Nations and accepted the terms of membership. Whether or not we should have done so, we did. That was a conscious and deliberate decision, debated and taken in the open. The Venice declaration is not the result of any such decision, either of the House or of the country. This excrescence or cancer is growing of its own accord. The Blue Book bears witness, as does what is called the London report on political co-operation, to such a growth.

Therefore, are we concerned with a new mandatory body? I am obliged to the hon. Member for Caithness and Sutherland (Mr. Maclennan) for his interpretation of the word "must". Is this to be another mandatory body to which we shall presently find that we shall belong by no volition of the House or country?

I do not believe that it would have been possible for any Government to persuade the House that it was right, or necessary, for the United Kingdom to attach itself to those far-reaching propositions—contradictory and, in some respects, ill-defined as they are—end to change its stance in relation to the PLO. Even after debate in the House, I do not think the Government would have succeeded in doing so. Certainly they would not have dared to do so without the authority of the House behind them.

Mr. Hurd

The right hon. Gentleman is labouring mightily to produce a mouse. We combined voluntarily on several occasions with others in Europe to produce joint statements, or joint initiatives. One may criticise the merits or the phraseology of this or that example, but it is a voluntary effort that increases in scope because we find increasingly that this is the way to exercise influence. If we had not agreed with the terms of the Venice declaration, my right hon. Friend the Prime Minister would not have put her name to it. We did not have to agree, but we did. The sentiments in that declaration have been repeated ad nauseam from the Government Front Bench since the declaration was made by my right hon. Friends the Prime Minister and the Foreign Secretary as British policy.

Mr. Powell

The Minister of State has not taken the point or appreciated the seriousness of what is happening. Are we being told that these are the congruent policies of ten independent sovereign States and that this, therefore, is the policy of Her Majesty's Government, or are we being told that this is a policy that ought to be acceptable, or perhaps a policy that is practicable, because it has been simultaneously adopted by the Ten? That is the first question. Is the declaration commended to us as inherently right and sound for the United Kingdom as a sovereign State, or is it commended to us as something upon which the ten States of the EEC, whose modus of association has nothing to do with the Middle East, have been able to agree at the Venice summit?

The second and more serious point is the relationship with this House. It is to that that I was tending and on which I wish to conclude. It is because these decisions, announcements and initiatives—to use the Minister of State's word—are undertaken collectively by the Ten that the House finds itself in the position to which it has become accustomed—confronted with the result of a collective bargaining operation, either in the European Council or in the Council of Ministers—of being told, "You cannot unpick this now." That is very different from the exercise of the known and the understood prerogative on behalf of Her Majesty by the Government. The Government have an undoubted right to take a decision in foreign policy, even a decision of war and peace, and then submit themselves to the judgment of the House and, ultimately, of the country.

But that is not what is happening here, that is not what happened with the Middle East. The Government did not say "We propose a new initiative in the Middle East which we shall back with all the authority, moral and whatever else we have, of the United Kingdom, and if necessary behind which we shall align ourselves in practical ways. This is what it is. We want to tell the House of Commons what it is. We want your approval and support for it." In those circumstances, it seems to me extremely improbable that this House would have given its assent to that sharp, grave and far-reaching departure which happened as a result of a few paragraphs added to a communiqué of a meeting of the European Council.

Everything which is gained by the European Community is lost by this House. That is axiomatic. What the Community gains in authority, what it gains in institutional strength, what it gains in development, is so much taken away from the control of this House, and therefore from the control of the people of this country.

What I am saying is that Political Co-operation—with capital letters—in an institution which is designed to contribute to the ultimate objective of European Union has its natural consequences. European union in the end means, by definition, the obliteration of the self-governing institutions of the United Kingdom. Under our noses, without so much as a by-your-leave—except that we get a "take note" motion, with an amendment to the motion—that process is going on month after month and year after year. It is time for us to say "Stop".

6.1 pm

Mr. Roger Moate (Faversham)

The right hon. Member for Down, South (Mr. Powell) is right to draw our attention once again to the many instances in which we can discover, in document after document, words which lay down ultimate objectives of European union or such things as a European foreign policy. The fact that we then get denials from the Government Front Bench that such an objective exists, or statements that it is impractical, does not alter the fact that those words remain there and remain apparently as objectives.

I thought that the concept of a European foreign policy, if it has any meaning at all, was undermined, not enhanced, by our experience with the Falkland Islands. It was welcome at the outset of the crisis that a number of European nation States supported our objectives. Indeed, that was as it should be, because I trust that they, too, share our belief in democracy and our opposition to aggression and tyranny. But I am sure that my right hon. Friend the Minister of State, certainly the Foreign Office and certainly the House a week later, when the Community faltered and there was not the full-hearted renewal of the sanctions, felt a sudden and fundamental change of mood throughout the House and country.

I did not believe that the feelings in the House about the Community would ever be the same following the moment when the Community failed to renew the sanctions, except on a weekly basis, and when two members of the Community opted out of those sanctions. It is impossible to describe that as a Community policy on behalf of all the members of the Community when one of them, Italy, opted out, on the reasonable ground that it had a large number of its nationals living in the Argentine and, more significantly, when Southern Ireland opted out on the ground of neutrality. How is it possible to conceive of a Community producing a single foreign policy when one of its members professes neutrality? It can only work, presumably, if we are prepared to compromise on neutrality or to become neutral ourselves. I was reassured by Southern Ireland's pronouncement of its position, because it seemed to me to put paid, at least for the time being, to the extraordinary objective of a Community foreign policy.

The Government's motion asks us to take note of the period of our Presidency. It was a period which was not particularly noteworthy, so the motion is hardly controversial. But the Opposition have tabled an amendment which, by rejecting the Treaty of Rome, as the hon. Member for Liverpool, Walton (Mr. Heffer) accepted, effectively means withdrawal from the Community.

Several of my hon. Friends and I tabled an amendment which has not been selected, but perhaps I may refer to it as an expression of opinion. Had we had more notice of the Opposition's amendment, I suspect that, rather than having seven or eight names on our amendment, we could have got 40 or 50 names. It was an expression of opinion which effectively rejected the likelihood—or indeed the desirability, as expressed on the Order Paper—of withdrawal from the Common Market, but it called for fundamental reform. I am glad that the Opposition have tabled their amendment, because it allows us to express our point of view very clearly.

The Government have frequently referred to the need for fundamental reform, but I regret deeply—and the words of my right hon. Friend rather confirm the feeling—that, while the words "fundamental reform" might come well from the Prime Minister, they do not seem to be supported very strongly by the Foreign Office, by the Ministry of Agriculture, Fisheries and Food, or by other Government Front Bench spokesmen. I believe that the demand for fundamental reform is widely supported in the House and throughout the country, but I do not believe that at present the Government have in hand the necessary plans to secure the fundamental reform to which they are—or were—committed.

I should like to explain why I think that withdrawal from the Common Market is no longer a question of practical politics or a reality. The Labour Party may well adopt that as its official policy, but it is interesting to consider the experience of the Greeks. One of the paramount considerations in their general election was the proposal that Greece should have a referendum on withdrawal from the EEC. The election was won partly on that proposition. Has Greece withdrawn from the EEC? It has not withdrawn, and the likelihood of its doing so recedes all the time. I suspect that exactly the same experience would be encountered if, as is most unlikely, we were to have a Labour Government elected at the next general election.

I suspect—and I believe that this feeling is shared by many sceptics on the Labour Benches—the right hon. Member for Ebbw Vale (Mr. Foot), in his splendid duffel jacket, would go up the steps of the Elysee Palace and would, before long, be hand in hand with his Socialist friend, President Mitterrand, or his friends in West Germany or elsewhere. I suspect that a Labour Government would soon find that there was a necessity to co-operate and work together, and that they would begin a period of renegotiation which might or might not be meaningful.

I suggest that the likelihood of withdrawal from the EEC, under a Labour Government—even if that proposition were supported by the Labour Party at a general election—would be very remote. Therefore, let us forget about it.

It is a fact of life that we have joined the Community, so let us look for fundamental reform. Let us try to reform the Community and ensure that Europe co-operates on the meaningful basis of free nation States. I do not believe that the present position of the Government or that of the Opposition is likely to produce the result that the people want.

Mr. J. Enoch Powell

I am following the hon. Gentleman's argument very closely, but there is a link which seems to be missing in his argument. He says that there should be a demand for a fundamental reform but if there is not the certainty of obtaining that fundamental reform, the consequence of withdrawal from the EEC must presumably follow.

Mr. Moate

I understand the right hon. Gentleman's point fully, but there is no certainty in life. All we can do is to try to secure the best we can. The Labour Government were in office for many years and there was no withdrawal from the Community. The right hon. Gentleman will be the first to admit that he is now sitting on the Opposition Benches rather than on the Government Benches because he believed that there was a prospect of the Labour Government taking us out of the Community. It did not happen, and I believe that it will not happen. Therefore, we must look for fundamental reform. In response to the right hon. Gentleman's point, I suggest that the best bet we have for getting the fundamental reform that we want is in the person of my right hon. Friend the Prime Minister. My right hon. Friend will not achieve that fundamental reform unless she gets much stronger support from the Foreign Office and the Ministry of Agriculture, Fisheries and Food.

My right hon. Friend the Minister of State dealt with some of the questions of reform. He at least acknowledged that some of us are asking for a reconsideration of our membership of the Community in terms of the CAP and other matters. He dealt with it superficially. I should like to know whether a proper study has been made of the consequences of changing the nature of the common agricultural policy. He said that figures had been produced. I should like a Government study showing the consequences of not having a common agricultural policy as presently envisaged. I suspect that there is no readiness in the Foreign Office to concede the possibility of fundamental change. That is why I laboured the point earlier about the limitation on own resources.

What is our leverage to secure the reform that most of us wish to see? If withdrawal is not an option—I believe it is not—what are we left with? I thought that we had the power of veto, which is an extremely powerful lever. I shall return to that later in my speech. If we do not have the power effectively to block progress in the Community by use of the veto, our position will be undermined and it will be much harder to secure the reforms that we need.

Another lever is own resources. It is not a strong lever, because the Community could carry on, although unsatisfactorily, within its existing resources. It would not work well, but it could continue. In practice, given the ambitions of the Community, that limitation would produce some change. However, from what my right hon. Friend said I suspect that there is no determination by the Government to deny the Community additional sources of revenue. I am extremely concerned about that aspect. I hope that my right hon. Friend will reaffirm what my right hon. Friend the Prime Minister said to me in answer to a quesion some time ago—that there is no question of providing additional resources and that there is no question of increasing the 1 per cent. value added tax.

I turn now to the veto and the Luxembourg agreement. The House and the country are entitled to a clearer, fuller and stronger explanation from the Foreign Office about its present position and intentions with regard to the veto. We entered the Community with the understanding that we had the right to veto matters which we believed affected our national interest. There is no doubt that it was left to each country to judge what it felt to be in its own national interest. the Luxembourg agreement, which was so fundamental to our membership and to our ability to defend our national rights, was swept away last year in a most offensive and deliberate manner. My right hon. Friend the Prime Minister and even my right Friend the Minister of Agriculture, Fisheries and Food, who is not known for his antipathy to the Community and its institutions—

Mr. J. Enoch Powell

Recently.

Mr. Moate

Perhaps the right hon. Gentleman is right. There were early days when he was more critical. Both of them spoke angrily about the way the Community had behaved. Since that date we have not restored the position, and we cannot pretend that we have restored it. If next year we were to be faced with an identical situation with regard to farm prices and the linked question of the budget, other members of the Community could do again exactly what they did this year. They could use their votes and override the British veto.

The position has not changed. Have we lost the veto completely? My right hon. Friend said that there was a further debate on that matter and that there was a further disagreement. The majority agreed with us and the minority disagreed with us. So we have this further disagreement about the original agreement to disagree. It is hardly satisfactory if that is what we are left with to defend our national interest. Bearing in mind the comments made by the Prime Minister and others, we are entitled to an assurance from the Government that they will seek a reinstitution in some form or other of that right of veto.

I should like to remind the House of how clearly that right was expressed. In the debate on the European Communities Bill, the then Chancellor of the Duchy of Lancaster said: But assuming that a question arose on which there had been strong feelings in this House, prima facie it would be a matter in the national interest and a British Minister would have power to insist in the Council of Ministers that it was a matter of major national importance which required a unanimous decision and that he could not be part of that unanimous decision."—[Official Report, 15 Februay 1972: Vol. 831, c. 277–78.] That is what we were told on the Floor of the House, and that has been completely thrown away. There is no evidence that the British Government are now fighting hard to restore that right of veto.

Mr. Spearing

I have listened to the hon. Gentleman's argument closely Is this not also of great relevance to his plea for and belief in the possibility of reform? If, indeed, changes can be effected by a majority decision against the interests of Great Britain, then, as the hon. Gentleman said, we want the reintroduction of the veto. But the veto would also be available, if it were reintroduced, to those who wished to stop the reforms that he and Britain wants. Does that not illustrate an irreversible movement, to which the Minister of State inadvertently referred in his opening remarks, that reform is impossible, and that withdrawal is the only way to protect Britain's national interests?

Mr. Moate

Withdrawal is not an option. Therefore, we have to find another way of seeking reform.

Mr. Spearing

rose—

Mr. Moate

I believe that there is an alternative and that that alternative will eventually be forced on the Government of the day by the wishes of the British people and the majority feeling in the House, certainly on the Conservative Benches. We shall have that reform. Ultimately we will amend the Treaty of Accession in such a way as to make it acceptable. The pressure will come not only from this House. It may come from France, which is just as assertive of its national rights. I suspect that in time France will find the Treaty of Rome does not meet its ambitions.

I do not want to hear the Government say that they will try to achieve an entrenchment of our veto powers by accepting something akin to the Genscher-Colombo proposals. I was alarmed to hear my right hon. Friend say that we must go along with the Genscher-Colombo proposals for European union because contained therein is a clarification of the voting procedures.

Mr. Hurd

I did not say that.

Mr. Moate

My right hon. Friend said that he did not say that. I do not think it is unfair to say that that impression has been given. Even taking that point, those proposals do not restore the veto position as it has been understood through the Luxembourg agreement. Even if it were, I suggest that we should not accept the Genscher-Colombo proposals in any form. That would be totally offensive to the philosophy and spirit of this country at this time.

It worries me that sooner rather than later the Government will say that this proposed act of European union—that is one of the phrases used in the explanatory memorandum—will be accepted. As it will be not a legally binding document, which means the veto will not be entrenched anyway, but just an aspiration and an expression of ultimate objectives, the House may not have an opportunity to accept or reject it.

I wish to emphasise why I find the document so alarming and alien to the wishes of the British people and, indeed, the British Government. If the Government were to accept it, I believe that they would do so only in the usual sense of compromise within the Community.

The explanatory memorandum on the European Community document states: The preamble reaffirms the commitment to create a United Europe through the progressive construction of European Union on the basis of the Community Treaties … The Government have welcomed the basic aim of the initiative, which is to give a new political impetus to the European Communities and to European Political Co-operation. This document is very grand in its European objectives. It states: The Government will approach the new text with a view to securing provisions satisfactory to the United Kingdom on these points". The impression is that the Government seek changes of detail, but will accept the document in principle. The document is riddled with expressions of view which, in my opinion, are not supported by the vast majority of Members of Parliament—and I mean the vast majority, including the dedicated supporters of the Community.

As an illustration, I refer back to the statement by my right hon. Friend the Minister of Agriculture, Fisheries and Food, when he reported to the House that we had lost our power of veto on farm prices. I shall quote what he said in a moment, because it links with paragraph 2.4 of this document about the commission: The Heads of State or Government underline the particular importance of the Commission as guardian of the Treaties of Paris and Rome and as a driving force in the process of European integration. They confirm the value of making more frequent use of the possibility of delegating powers to the Commission within the framework of the Treaties. Are we really to accept a document that enhances the position of the Commission as a driving force in the process of European integration"? I do not know who would accept that proposition. I wonder whether it appeals to my right hon. Friend the Minister of Agriculture, Fisheries and Food who, in his statement on 19 May, said: Together with Denmark and Greece we strongly protested when the Presidency, encouraged by the Commission, announced that for the first time since 1966 the principle of obtaining unanimity where a very important national interest had been invoked was to be violated". Further on he said: I placed it on record that I considered that the conduct of the Presidency of the Commission and the member States who had joined in this procedure had created a very sad and damaging day in the Community's history". Finally, he said: With regard to the role of the Commission, over the whole period of the Luxembourg compromise since 1966 it has been no secret that the Commission has always been opposed to it and has been in favour of majority voting. The Commission did everything it could to encourage those who were using that device yesterday".—[Official Report, 19 May 1982; Vol. 24, c. 352–56.] Is it not extraordinary that the European Civil Service should adopt such a positive role in the formulation of the constitution of the Community and in policy making in the Community? I regard that as totally offensive. Many people seem to accept it as a matter of course. That is their concept of the European Community. I regard it as abhorrent that the Commission should adopt such a role. Nevertheless, it has that role and power. I hope that the House will not accept documents which seek to enhance the Commission's position as a driving force in the process of European integration". That is what we could be landed with if the Genscher-Colombo proposals are used as a vehicle to restore the previous position on the veto.

There are many issues on which I could speak, but in fairness to the House I shall not do so. However, I want to make one or two points in connection with this document. We are now approaching the budget renegotiations, and the House and the country will judge the Government as a whole on the outcome of those negotiations. We should remember that my right hon. Friend the Prime Minister proceeded—somewhat in disregard of Foreign Office advice, according to the newspapers—with a determination to secure a substantial return to this country, and she won. I hope that in the next round of budget negotiations she will not be impeded by others who, for the sake of Community good will and European co-operation, will say "We had better not go too far." It is vital that we are not faced next year with the prospect of paying £500 million, £600 million or £1,000 million. That is what the amount could be. I wonder whether my right hon. Friend the Prime Minister has the backing of her colleagues and the determination to use every possible leverage that this country has to secure a major and permanent change in the budgetary arrangements.

I conclude by saying again that fundamental reform is vital. That fundamental reform will come only through a positive determination by the Government expressing themselves clearly in favour of it. We must get away from vague expressions of Community and European union, and the like, and get down to the realities of political bargaining.

Mr. David Myles (Banff)

I am interested to hear my hon. Friend's advocacy of fundamental reform, but he gives no guidelines for that fundamental reform. We cannot have a reform until someone spells out exactly what the reform is. It is easy enough to say that we must have reform, that something is wrong, but it is difficult to achieve reform unless it is spelt out. Will my hon. Friend try to spell it out for us?

Mr. Moate

Much has been going on in the past few years of which my hon. Friend is apparently oblivious. Documents have been produced setting out clearly what we believe the reforms should be if we are to change the basis of the Community. It would be unfair to spell out those proposals in detail now, but fundamental reform is certainly attainable. I hope that the treaty will be changed immediately to remove the powers whereby the Community can make laws which are directly binding on this country. I do not believe that such a simple reform would break up the Community.

On economic policy, the common agricultural policy should be totally recast on the basis of individual national agriculture policies that could well be supervised and co-ordinated, if necessary, by the Commission. Sooner or later we shall have to get away from the present CAP. I believe that we should start afresh and get back to something approaching the original system that worked so well in this country. There will be many proposals.

I only wish that the Government would say that they were examining fully and properly the many alternatives that are available. At the moment, unfortunately, we seem to be stuck in the trench warfare of years ago. If we criticise the Community, we are told that we are trying to break it or that we want to get out. That is not true. I hope that my right hon. Friends will at least recognise the sincerity of those of us who say "We want fundamental reform. We are not advocating withdrawal from the Community, but we must have fundamental reform." The British people will stand for nothing less than that.

6.27 pm

Mr. Nigel Spearing (Newham, South)

I understand the calls from the hon. Member for Faversham (Mr. Moate) and his hon. Friends for fundamental reform. I understand, too, why the Government and those who assist them find it increasingly difficult to obtain those reforms. However, I shall not pursue the matter, because I am afraid that the machine is wound up in such a way that it was intended that they never should. I shall come back to that subject at the end of my speech.

The Minister of State emphasised some of the advocacy of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) without referring to the words of the amendment. The words in the amendment are clear. They assert that we are not getting any advantage from the policies set down there, and that the Treaty of Rome is an unsuitable basis for "fruitful co-operation" between this country and her European friends and allies. The Minister made no attempt to dispute the assertion that the arrangements for the Budget, Agriculture, Fisheries and Food are contrary to the interests of the United Kingdom". Not once did he contest that assertion. Nor, I believe, will any other hon. Gentlemen do so in this debate. If they do, I shall be extremely interested to hear the grounds on which they attack the proposition contained in the amendment.

I am sorry that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) is not here—nor the right hon.

Member for Sidcup (Mr. Heath), nor the right hon. and learned Member for Hexham (Mr. Rippon), nor the hon. Member for Reigate (Mr. Gardiner), all of whom asserted to the contrary. They are not here to attack the assertion made, justifiably, in the amendment.

Sir Anthony Meyer

I cannot participate in the debate because I am having dinner with Mr. Speaker later. I have frequently argued the proposition that the hon. Gentleman claims no one will argue, as have many of my hon. Friends. Although there are serious defects in the budgetary policy and the common agricultural policy, on balance the United Kingdom gains from them. I am prepared to argue the point at any opportunity.

Mr. Spearing

I did not mention the hon. Member for Flint, West (Sir A. Meyer) but I suggest to him that each matter put down here is quantifiable. The next time that he makes a speech, I shall listen to his arithmetic. He cannot assert that the effect of either of those matters or of the balance of trade is in the interests of the United Kingdom. He and his hon. Friends always introduce extraneous philosophical factors that are non-quantifiable. Although they are important, they do not add up to the interests of this country.

The hon. Member for Reigate should be especially worried about the economic effects of entry of the EEC. There was an exchange earlier about employment and jobs at risk. Those who said that jobs would be at risk at the time when we entered the Common Market were presumably arguing against our entry. But Conservative Members who advocated entry took no notice of the risk to jobs then. The word "risk" is used frequently, but the figures show clearly that there is a £3 billion deficit in our manufactures balance of trade with the rest of the EEC. Many jobs have been lost because of that deficit. No Conservative Member could deny that, not even the hon. Member for Flint, West, many of whose constituents in the steel industry lost their jobs as a consequence of the deficit.

Reference was made to enlarging the Community budget and an important exchange took place between the hon. Member for Faversham and the Minister of State. In trying to redress the agricultural balance, the right hon. Member for Hillhead and others say "Spend more on the regional fund and economic aids". It is curious that Conservative Members, who are against public expen-diture, should wish to redress the balance in that way, forgetting that, in doing so, they must raise the money with which to do it.

The Government will be forced to agree with the rest of the Community to enlarge the budget in some way as a quid pro quo for getting some benefit for Britain either in the fisheries negotiations or in the budget negotiations. That is the one thing on which the Government can give way and the one thing on which the Community will ask them to give way. The Commissioners have publicly advertised the possibility of an oil tax.

We must face the possible enlargement of the EEC budget, again at the expense of the taxpayer, not for expenditure that we can decide in the House during an Estimates review but for repayments to Britain out of the Brussels budget, the nature of which will be decided by people in Brussels for people in Brussels and according to their priorities. If the budget is enlarged and we obtain a fair balance, it will mean loss of power to the House and the country.

Mr. Marlow

If any such additional tax which is payable into the European kitty were to be agreed, the Government would promote it in such a way that it must be passed by the House. Surely the hon. Gentleman is not suggesting that the Government would promote it in such a way that it need not go before the House. If it were to pass before the House, is not the hon. Gentleman fairly confident, as I am, that it would not be agreed?

Mr. Spearing

The hon. Gentleman has uncharacteris-tically failed to remember a major feature of the Treaty of Rome that we claim fails to provide a basis for fruitful co-operation with the United Kingdom's European friends and allies. He will correct me if I am wrong, but is he not aware that the European Council, in pursuit of its common economic policies under article 3 of the treaty, could impose a common tariff on oil entering the EEC? That would have the effect of increasing energy costs and notionally increasing the book value of North Sea oil. It would create taxation in Britain, and the House could do nothing about it because the proposal would come direct from Brussels.

The powers of Brussels are even greater than the hon. Gentleman believes, because the Commission could impose such a tax unilaterally, without any debate in the House of Commons. We may try to discuss the matter, but no decision of the House would be required. It is an example of the creeping competence of those who wish to have a European State. Sometimes those who speak from the Dispatch Box also advocate that policy.

Pages 16 and 17 of the White Paper list agricultural items, but there is no reference to cereals. However, on 19 July, in a written answer, the Minister of State set out a table that shows where the surplus of grain from Britain has been sent. That may surprise some of those who did not know that we had a surplus of grain. The common agricultural policy distorts the proper agriculture of Britain, as was brought out in an intervention by the hon. Member for Holland with Boston (Mr. Body). In 1980 Britain sent abroad 2,900,000 tonnes of surplus cereals. No less than 1.5 million tonnes were sent to Eastern Europe, 1 million to Poland and 600,000 to East Germany. That was not normal trade but was carried out with the help of export subsidies that are paid for by the British taxpayer. That assistance cost about £18 million for Poland and about £21 million for East Germany. Although the taxes on that are sent to Brussels, it counts against what Britain spends. When we work out in the EEC budget the "cost to Britain", we must include the £40 million that the intervention board shells out for the export of surplus British grain to Eastern Europe. That fact may shake even those who support the agricultural policy. I hope that it shakes the hon. Member for Flint, West and perhaps he will tell us so in a later debate. If he is not shocked, perhaps he will tell us why.

I understand that the New Zealand butter quota is to be reduced from just over 90,000 tonnes to 89,000 tonnes because of lower butter consumption in the Community. That is not surprising because it is so expensive. I also understand that one of our European "partners" wishes to reduce the quota still further to 60,000 tonnes. Many of them would want to phase it out altogether. I do not believe that many of those who support our EEC membership would want to see that. However, that is the result of our membership and that is the sort of pressure that is being put on us all the time.

I do not need to refer much to fisheries because we had that debate last week and the Minister of Agriculture, Fisheries and Food more or less had to admit that he could only try to get the best deal that he could, but that he had no bargaining power to do so. It looks as though we shall have a bad deal about which we can do nothing because the veto, such as it is, is not in our hands, but in those of other parties.

The budget repayments have been agreed for one more year and the Minister agreed that that did not present a good picture. We shall come back in another year and ask for another extension. As I said in questioning the Prime Minister a few months ago, we have become a client State of the EEC. If we are a client State, we have to do what the other States say. That means that time after time, when we return to the EEC in all these respects, we have to do what it wants.

All this means that we are moving ever towards the state of a European union. The hon. Member for Faversham pointed this out well in his comments on the Genscher-Colombo proposals. At some stage, we shall be asked to assent to some aspects of those proposals, and we shall have to choose between that and not having a continuation of our budget repayments. Make no mistake about it, because of the increasing costs of the CAP, there will have to be some change in the way that the budget is built up in succeeding years.

I fear that the movement towards a European union, both in respect of internal policies and prices, and its effect on external policy, as expounded by the right hon. Member for Down, South (Mr. Powell), will inevitably go forward. The machine will be set up in that way to achieve that purpose. It has inbuilt ratchets that progressively destroy the power of the House and with it the power of the British people to make their own choices.

I agree that in this world we are interdependent and cannot say that we go it alone in every respect. However, we should have the power in this place to decide the balance of advantage on the merits of the case before us. We are increasingly unable to do so because policies that are the concern of people at every stage and level of production and in every part of our society are increasingly being taken out of our hands and put elsewhere, particularly in Brussels.

Therefore, when we are invited to take note of this report, we should take note that at every stage the movement is of power away from the House towards Brussels. The only way that we can arrest this movement is to do as our motion implies and get out of the EEC.

6.44 pm

Sir Anthony Meyer (Flint, West)

For a number of reasons I shall be brief, but I should like to have this opportunity of saying a few words. This is not the speech that the hon. Member for Newham, South (Mr. Spearing) called for, in which I quantify the case for our staying in the EEC. However, I make the point that was originally made when we applied to join. The benefits of joining are difficult to quantify but almost certainly larger than the benefits of staying out, which were easily quantifiable. That still remains the position.

Various hon. Members have made our flesh creep with the awful consequences of our being a member of the EEC. It is easy enough to make the case against membership, even if the case that has been made by Labour Members is full of holes, and if I had more time I should try to demonstrate that. It is simply not enough to make the case against membership. One can say that as members of the EEC we have had an adverse balance of trade and manufactures, but those who say that always leave out oil, for reasons that I cannot understand.

Mr. Marlow

rose—

Sir Anthony Meyer

I shall not give way to my hon. Friend, who always interrupts everything. Oil is the result of exploration that has involved large investment.

Mr. Marlow

rose—

Sir Anthony Meyer

I shall not give way. Oil has to be assessed with everything else. We have a favourable balance of trade. Even if, to give my hon. Friend his point, we deal only with manufactures, the balance of trade, adverse though it is, is better covered by our exports to the EEC than is our trade with other major advanced countries such as the United States or Japan.

It is true that our subscription has represented a drain on the resources of the country. To put that drain into perspective, even at the rate at which it was running two years ago, it still represents only £10 per inhabitant. That is an appreciable sum, but not a crippling one.

We always hear about loss of sovereignty and the creeping advance of the European union, but it does not look like that from Strasbourg or to any dispassionate observer. On the contrary, the dispassionate observer is impressed by the increasing loss of momentum towards any kind of European union.

Even if it can be demonstrated that the balance of our trade in manufactures is adverse, that the subscription is intolerable and that we are losing some mythical sovereignty in a world in which interdependence is more clearly defined than ever before, the case is still not proven. Two further things have to be shown. It has to be demonstrated that there is a better, more satisfactory and more profitable relationship for this country with the EEC than is provided under the present arrangements, and one that will guarantee us a market for our exports, relieve us of the obligation of paying for dear food and enable us to find assured supplies of food on a dodgy world market.

That is hard enough to demonstrate, but even if one could—I have yet to hear any hon. Member on either side of the House give a convincing alternative to our membership—it then has to be demonstrated that we have the bargaining strength to achieve it. Let no hon. Member try on me the theory that the other EEC countries are so dependent on our market that they cannot possibly afford to see us pull out. There is no EEC country other than Ireland for which this country provides a substantial export outlet. That may be the case for the EEC as a whole, but for the individual member countries, apart from Ireland, 7 per cent. is the largest proportion of exports that we represent.

The true strength of our bargaining position in the EEC is that if we pull out we begin a process of disintegration of something that seems to me and to many other hon. Members the most hopeful experiment in international relations that we have seen for a century or more. If that is the strength of our position, we should have scruples before using it.

6.48 pm

Mr. Ronald W. Brown (Hackney, South and Shoreditch)

I am pleased to follow the hon. Member for Flint, West (Sir A. Meyer), because I concur with his views. I am not a student of these debates. Whenever I hear one of them coming, I find myself something else to do, usually in my constituency. Today, I have been asked to be present and take part in the debate. I have always read the debates with keen interest.

The hon. Member for Flint, West was right when he said that nobody had yet advanced any alternative to the EEC. The hon. Member for Liverpool, Walton (Mr. Heffer) started talking about cheap food, but stopped, and we did not find where the cheap food was, where it was coming from and whose standard of living was depressed so that we should have that cheap food. If one wants something for nothing in this world, somebody has to give up something. We have never yet had it explained to us where the cheap food would come from.

I am delighted to see the hon. Member for Faversham (Mr. Moate) coming into the Chamber. I followed his speech tonight and, as always, it was extremely interesting. I normally read the speeches of hon. Members, but today I have listened in person. They are usually all much the same, but the hon. Member for Faversham updates his and that is his great asset. One hears a little extra each time he speaks.

The hon. Gentleman pinpointed a major issue upon which he finds himself in disagreement with the official Opposition. He spoke of the intervention by the hon. Member for Bolsover (Mr. Skinner) in the speech of the hon. Member for Walton asking him to address himself to the amendment tabled by the official Opposition The hon. Member for Bolsover clearly asked why his hon. Friend did not say what was said at the Labour Party conference, namely, "We are coming out". The hon. Member for Walton then did a pas de deux about five times. I am not sure what he actually said, but he did not say "Yes, that is the position." Perhaps the hon. Member for Greenwich (Mr. Barnett) will say "Yes" in answer to his hon. Friend the Member for Bolsover, because that is exacly what he means.

I want to address myself to three areas of the Blue Book, Cmnd. 8525. Paragraph 9.2 is one that I find particularly interesting. It refers to a paper published by the Commission on new technology and social change. That is certainly a matter of great importance to Britain. It says: All were agreed on the need for a coherent Community wide strategy for new technology but views were divided on a claim from workers' representatives for statutory rights to information, consultation and negotiation when new technology is introduced. The House is entitled to know the Government's attitude to that issue. Were the Government one of the dissenters referred to? With 3,200,000 registered employed, there can be little doubt that the Government must be aware of the dangers of any changes in new technology that are proposed in Britain. Therefore, I should like to know the Government's attitude to the proposed directive on workers' information and consulta-tion in large companies.

I understand that the initial reaction of the 10 Community Governments has been surprisingly favour-able to such a directive. Asking around, as they say, I am given to understand that only the United Kingdom virtually dissented. I am told that the Commission's proposals were challenged and that the vast support for the business lobby came from the Secretary of State.

Obviously, the multinational companies need to have the mandatory requirement as put forward by the Commission. The Commission's proposal would make it mandatory for multinational companies to inform their work forces of any key developments in the operations of their subsidiaries. They will have to consult the workers' representatives where the interests of the work force are at stake.

Not surprisingly, almost all the business organisations in the Community have come out against the proposal, while—equally not surprisingly—the trade unions have come out in favour of the proposal. The Secretary of State for Employment was apparently the only Minister of the Ten to express direct opposition to the directive.

These discussions all take place at closed meetings, so that one is only hearing, as it were, from people alleging to be there. It is said that the Secretary of State claimed that the Community should rely on a voluntary code, but that he was firmly told by the French, the Germans and the Danes that experience shows that a voluntary code does not work. The German view was that, while voluntary codes may work under national legislation for national companies, they were wholly inadequate for multi-national companies. The Danes took the same view. Therefore, it is important that the Minister should tell the House the Government's attitude.

In paragraph 9.3 it can be seen that the Standing Committee recognised that certain other actions were needed, particularly the training and retraining of teachers, the use of technology to aid the handicapped, the improvement of technical qualifications and the demonstration of the employment potential of new technology to small and medium sized firms. If ever a country has many teachers who need training and retraining, Britain has, but that is not the attitude of the Government. We should hear tonight what the Government have to say about that.

Paragraph 10.4 relates to the paper on energy strategy. I am one of those who have always believed that we should work towards a common European energy policy. So far, that has always eluded us. I recall my time on the Energy Committee of the European Parliament when we strove manfully to develop a common approach. The nearest that we got was when the right hon. Member for Bristol, South-East (Mr. Benn)—the then Secretary of State for Energy—committed all the United Kingdom oil to the International Energy Agency for its emergency oil scheme. For the first time, one Minister out of the Nine made a positive contribution to the concept of an energy policy for Europe.

Does the Minister confirm that view today? Does he approve of the action of the right hon. Member for Bristol, South-East, and is that still Britain's position? Have we assigned all our oil to the IEA emergency oil scheme? Is it the Government's intention to take the lead in achieving a more effective energy policy within the Community? If so, what steps will the Government take to achieve that? There are few countries better placed than the United Kingdom to lead a fight to obtain a common policy. We are a major oil, coal and natural gas producer. Therefore, it is right that we should do the best we can for our partners in Europe.

I should also like to press the Minister on paragraph 9.11 relating to the anti-poverty programme. To dismiss that vital subject in four lines hardly does justice to it. The recent study on poverty in Europe has established that 30 million people live in poverty in the Community. That number is increasing as unemployment increases. Therefore, the scope of the problem becomes frightening.

The massive increase in the number of unemployed has added to those who are classified as the traditional poor. The burden of the economic crisis has fallen dispropor-tionately on the unskilled, the young, the immigrants and those with mental or physical disabilities throughout the Community. Therefore, there is a need for member States to establish as a political priority an anti-poverty Community action programme. It is incumbent upon the Minister to tell us tonight exactly what he and the Government have in mind.

It is insufficient for the Government to give platitudinous replies, saying that they are concerned. Everyone is concerned. Hon. Members are entitled to ask what the Government are actually doing. It is disgraceful that the document should contain nothing more informative than paragraph 9.11, which shows virtually no interest whatever. The paragraph indicates that Ministers have not read their own report, which ranged over the previous five years. The Minister must say what action the Government propose to take about poverty. It is becoming an increasing difficulty in our own country.

I hope that the Minister will be able to say what the Government are doing individually and together with our partners to come to grips with this enormous problem of poverty. The evaluation report to which paragraph 9.11 refers states: To postpone action is to risk damage to the social fabric which could last a generation". It ends by asserting: The case for resolute action does not rest on any crude calculations of costs and benefits. It rests on equity, compassion and solidarity. Hon. Members are entitled to expect full support from the Government in bringing forward urgent programmes to deal with these important problems.

7.1 pm

Sir Nicholas Bonsor (Nantwich)

I cannot recall the identity of the person who remarked that if one wanted to keep something secret the best method was to make a speech in the House of Commons. I feel sometimes that there is a great deal of truth in the statement. If, however, anyone gets round to flipping through Hansard and finds my speech, I hope that he will also go back a few pages to find the speeches of the right hon. Member for Down, South (Mr. Powell) and of my hon. Friend the Member for Faversham (Mr. Moate).

My remarks are consequential upon points already made. I endorse wholeheartedly the reservations that have been expressed about the Treaty of Rome. There can be no question of this country coming out of the Common Market on a unilateral basis. There is a real danger that if the reforms mentioned in this debate are not carried out the Common Market is likely to fall apart of its own weight and the shortcomings of the terms under which it now operates. No unilateral move by the United Kingdom would be necessary to bring this invaluable Community to a close.

I should like to mention in more depth some of the dangers that I see facing the country should we continue membership under the present terms. The gravest danger, outlined by the right hon. Member for Down, South, is that the whole impetus of the Community at the moment is towards a federation. A federalist system is utterly against the wishes of the British people.

Sir Russell Fairgrieve (Aberdeenshire, West)

Rubbish.

Sir Nicholas Bonsor

My hon. Friend says "Rubbish". I have no doubt that the vast majority of the people of this country are determined to maintain an independent and integral sovereignty. They will resent bitterly any attempt by some supranational State created in Europe to override that sovereignty. That is the view, I believe, of a large majority of the Conservative Party as well as of those who voted for other parties at the general election.

Because of the insidious manner in which sovereignty is eroded by the development of Commission rules, regulations and directives, there is a grave danger that the minority opinion that exists in the Commission, in the European Parliament and among some of my hon. Friends will mean that we shall finish up with a federal State, contrary to the desires and wishes of this House. Both my right hon. Friend the Minister of State and my right hon. Friend the Foreign Secretary continually deny any such intention on the part of Her Majesty's Government. I hope that they will guard against the danger that they might be guided along a path which they are not aware they are following and into a federation which this country has no desire to join.

Another danger to which insufficient attention has been given is the weakening of the Community by Southern European States which are now, or shortly will be, members. I hope that my right hon. and hon. Friends on the Government Front Bench will accept that I state this as a friend, and not as an enemy, of the European Community. I do not wish to see the Community destroyed. I do not wish to see the United Kingdom come out of the Community. I wish wholeheartedly to see the Community reformed so that it contributes to the best interests of all member nations and, most importantly, to my own country.

My right hon. Friend the Minister of State talked of the strengthening of democracy by the widening of the membership of the Community. I cannot see how this country has any lessons to learn about democracy from the experience of Spain now struggling to create democracy for the first time for many years. I cannot see how we have any lessons to learn from Portugal, which experienced what was, fortunately, a bloodless but nevertheless violent revolution a few years ago and which is still struggling back to some form of democracy. Nor have we any lessons to learn from Greece, where the legacy of the colonels is still to be seen everywhere. If any lessons are to be learnt from democracy, it is we who can teach the rest of Europe. I hope that those lessons will be learnt and that a Community will be formed in which our version of democracy rules. I trust that such aims will not be overridden by some form of Government of which we do not approve.

There has been talk of the need to safeguard British interests in the Community. I endorse those remarks. It is vital that the budget contribution of this country should be brought somewhere near to parity. What we pay out should come within fighting distance of what we get back. I agree with the Minister that it would be absurd for us to quibble over demands that the sum coming out should be exactly the same as that going in. We have to be realistic. We have to make some contribution. This need not necessarily be year on year. It is, however, necessary for us to make some contribution from time to time towards the operation of the important institutions of the Community as they develop, despite the fact that I hope that they will not develop in ways that have Peen outlined.

There is a clear need for reform of the common agricultural policy. I do not believe that anyone, apart possibly from my hon. Friend the Member for Flint, West (Sir A. Meyer), is under the impression that the policy as it stands is acceptable. As the other Southern European countries enter the Community so the gap between Northern methods of agriculture and the prosperity of the Northern farmer will come into greater conflict with the poverty and poor performance of the Southern European farmer. It will be increasingly difficult to have a common agricultural policy that is appropriate for the olive growers of Spain and for the milk producers of Cheshire. My right hon. Friend the Minister of State appeared to be under the impression that British farmers are living in the lap of luxury under the common agricultural policy. I can only suggest that he asks my right hon. Friend the Minister of Agriculture, Fisheries and Food what has happened to farm incomes over the last two or three years.

As a farmer—I declare my vested interest—I car say that the income of United Kingdom farmers is 40 per cent. down in real terns compared with three years ago. That state of affairs can hardly be said to underline the success of the common agricultural policy. There has already been reference to the export credits that we have to pay. Exports from the Community under the common agricultural policy cost the Community £8 million a day. A large amount of that subsidy goes directly towards providing cheap food for the Russians. I can imagine no greater folly than to subsidise the food of our natural enemy, which spends 19 per cent. of its gross domestic product on arms with the sole purpose, in my view, of attacking Europe when it feels strong enough and independent enough to do so.

Dr. Mabon

Does not President Reagan defend the sale of cheap American cereals, wheat and grain to the Soviet Union on the ground that this absorbs a large amount of currency which the Soviets would otherwise use to purchase advanced military weapons?

Sir Nicholas Bonsor

I am not interested in the arguments that President Reagan may use to support a policy that is necessary for him to prevent the extreme poverty of American farmers. I believe that it is absolutely wrong for us to 'provide cheap food for Russia, whether from the European Community or from the United States of America. The common agricultural policy needs reforming for those reasons and because it takes such an enormous chunk of the Community budget. There are many areas of need other than agriculture that should be explored in the interests of European countries.

The mammoth percentage of available money that goes into agriculture stultifies the efficiency of many sectors of farming. We have to discover a different and better system to ensure adequate prosperity for farmers and reasonable price levels for food. I believe that my hon. Friend the Member for Faversham is right when he says that we should return to a national domestic structure and that it would be in this country's interests and those of the Community if we were to move along those lines.

I move on to a point that has not been mentioned, and that is the stream of petty legislation that is formulated by civil servants in Europe and overrides what the House and the country feel is right. There has been a stream of unbelievably petty legislation during the past two or three years. We have been told how much noise our lawn mowers should make, what size car wing mirrors should be, the size of packages and the method of packaging and the way in which goods should be labelled in shops.

Those are matters about which our domestic civil servants spend their lives creating regulations. Such regulations are then swept out of the window and other similar ones are swept in at vast expense to taxpayers. I should like to draw the attention of the House to two fatuous examples. I was in the House about a year ago when one of my hon. Friends said to me "You really must stay later this evening, because look what is coming before the House." The heading said something like "European directive 533 part B/3". When one looked more closely, one discovered that it said that it would no longer be lawful for the Government to prevent foreign doctors from Europe practising in this country on the ground that they could not speak a word of English.

I found that unacceptable. I stayed and made an impassioned plea to a House containing at least five other hon. Members. There was a vote on the matter and the Whips, as usual, sent people in appropriate directions, and I think that there were about five or six hon. Members who voted against the introduction of the rule. Even if it had been defeated, I question its legality, because we would have been overridden by the Treaty of Rome and what was decided in Europe. I do not think that the House could have prevented the horde of foreign doctors who do not speak English whom I confidently expect will shortly invade our shores.

A second and more up-to-date example of this folly was handed to me recently. It is headed: The Endangered Species (Import and Export) Act 1976. Section 6 direction"— I gather that it comes from a European directive that deals with the care and the maintenance of European tortoises. I do not know how many hon. Members have young children, as I have, but the next time a young child goes into a pet shop, if the pet shop owner is to do his duty properly, the child will be confronted—assuming he is old enough to read—with a form that he will be asked to sign.

The form deals in some detail with how a tortoise should be properly looked after. I am not against children being told how to look after animals, but it should apply equally to other animals. Subsection 2 says: Constant access to food and water, except when preparing for and during hibernation. Food supply must contain fruit and vegetables (especially green vegetables) and must be supplemented occasionally with canned dog food, vitamins (particularly A, D3 and E and B 12) and calcium. I am sure that that is right. I hope that every member of the Community who has a tortoise will feed it regularly with dog food, although I venture to doubt it. When I had tortoises in my youth, it never entered my head to give them dog food. It seems absurd and beyond the point of humour that a child who fails to feed his tortoise occasionally with dog food should be liable to a fine of £400 under the provisions of this directive.

The Government's efforts should be directed towards getting the Commission to give its attention to rather more useful ways of spending its time than producing a plethora of petty, tiresome legislation, which could be equated to a minor wasp sting. However, a minor wasp sting received often enough, or from a large enough horde of wasps, is as deadly as the deadliest snake.

More seriously, I believe that the threat to our sovereignty is something that the House cannot accept. My hon. Friend the Member for Flint, West—I am sorry that he has an engagement that has taken him away from the House—referred to "the myth of sovereignty" that was being threatened by the Community. Our sovereignty is not a myth. It is the most important element of the work of the House. It is the one safeguard for the people of this nation. We heard recently, in connection with the Falkland Islands, a great deal about self-determination. It would be ironic if, at the same time as we fight for the self-determination of the Falkland Islanders, we should give away our own right to self-determination through the back door to a horde of overseas civil servants.

I do not believe any such move is acceptable. I believe that those who died in the Falklands, those who died yesterday, those who fight constantly for the right of our people to live in freedom, would not allow the creation of a European State to take away the justifiable pride and self-determination of a great British people.

7.17 pm

Mr. Ron Leighton (Newham, North-East)

I was interested to hear the speech by the hon. Member for Nantwich (Sir N. Bonsor), because I did not hear a word of praise for the Common Market. I heard a long catalogue of criticisms and grievances. I believe that the hon. Gentleman is in tune with British public opinion.

I was extremely pleased to hear the debut—I do not know whether I am allowed to call him my hon. Friend—of the Member for Hackney, South and Shoreditch (Mr. Brown) as the spokesman for the Social Democratic Party on Common Market matters. It was an interesting speech. I thought that we might have heard the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). He had some connection with Common Market affairs, was paid a modest salary and, I believe, received a modest pension. He might have given us a tour d'horizon.

The hon. Member for Hackney, South and Shoreditch restricted his remarks to prosaic matters such as industrial training boards. I make no complaint about that. When the spotlight is turned on the issues, they hide in corners. In these debates we hear only criticisms; we do not hear from the parents of the arrangement.

Mr. Ronald W. Brown

In the debate on 26 May in Volume 24 of the Official Report, c. 955, at 5.52 pm my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) made his speech. I believe that the hon. Gentleman was present.

Mr. Leighton

The occasion was more auspicious. The burden of the right hon. Gentleman's remarks on that occasion was that the budget was lopsided; it was spent almost entirely on agriculture; and, as we were not an agricultural nation, it did not benefit us. Why did he not take action during the three years that he was running the show?

Mr. Spearing

I remember the debate well. The right hon. Gentleman declined to give way to me. Perhaps he thought he was still in Brussels.

I disagree with my hon. Friend about the speech of the hon. Member for Hackney, South and Shoreditch (Mr. Brown). I fancy that the SDP does not agree with the arrangement, but he did not tell us why.

Mr. Leighton

The Social Democrats invented the Common Market, and, whatever monstrosities it commits, they will stick with it, through thick and thin.

Mr. Ronald W. Brown

I pointed out the contretemps between the hon. Members for Bolsover (Mr. Skinner) and for Liverpool, Walton (Mr. Heffer). The hon. Member for Bolsover did not believe that the hon. Member for Walton was making a proper case for the amendment. He even persuaded me not to vote for it.

Mr. Leighton

I did not think that the hon. Gentleman would vote for the amendment, but I shall. By a six to five majority at conference the Labour Party decided to make a central part of its next election manifesto that in friendship and amity Britain should leave the EEC. If the understanding of Front Bench spokesmen is different, no doubt they will say so, but I thought that that was what my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said.

We are discussing developments in the Community between July and December 1981. I agree with the right hon. Member for Down, South (Mr. Powell) that the professed goal of the European Council for full union—economic, monetary and political—by 1980, to which it solemnly agreed about a decade ago, has disappeared. I do not believe that that aspiration retains a shred of credibility. It was a noble but naive hope. It was a unique experiment by a group of dedicated nations which hoped to pool their resources and sink their differences into a brave new Western super-State. That hope is now dead. If it is not, the right hon. Members for Sidcup (Mr. Heath), for Hillhead and the right hon. and learned Member for Hexham (Mr. Rippon) and all the others would he here glorying in the phenomenon.

We are basically discussing the period of the British Presidency. At the beginning there was a resuscitation of hope. Great enthusiasm was expressed, but that has been disappointed. The document before us is extremely dispiriting. It contains no hope. In page 6 it states: The Foreign Affairs Council in December approved a Commission list of requests for action by Japan aimed at improving the Community's balance of trade with Japan. It is stating that it is bad that Japan has a trade surplus with the Community and action must be taken.

As the hon. Member for Holland with Boston (Mr. Body) will appreciate, I am enough of a free trader not to worry too much about the Japanese trade surplus. It has no oil. If it is to buy oil, it must have a trade surplus with Western Europe. If the surplus is spent here, we benefit. But the Community is worried and is determined to take action about the surplus. Why is it worried if it believes in entirely free trade? Secondly, should we not be more worried about our larger trade deficit with EEC countries?

The Japanese have one-tenth of our motor car market and the EEC over four-tenths. We have a deficit with the French of more than £500 million per annum and with the West Germans of well over £1 billion. If it is right to restrict Japanese cars coming to Britain, why can we not restrict cars from other EEC countries?

If the Secretary of State for Trade instructed his officials to impose import quotas or tariffs on other EEC countries, the Attorney-General would point out that he was contravening the Treaty of Accession. If he persisted, any British businessman could arraign the Government before the European Court, and Community law would prevail over our law. That is not satisfactory.

Reluctantly, the Labour Party believes that we are in such a weak competitive position that we need managed trade. I do not mean the beggar-my-neighbour policy that already operates with competitive interest rates and deflation. I should like planned growth of imports; but that would be contrary to the treaty.

The theme that runs through the rest of the document is one of futility. In item after item and chapter after chapter one is reminded of the futility of it all. In page 7, referring to the Foreign Ministers meeting on 14–15 December, it says: They had a particularly thorough discussion of the budgetary issues, on which there was general agreement that the United Kingdom faced a problem which should be corrected"— this is the interesting bit— but not on how to correct it. They are always having discussions. Discussions do not cease, but the Ministers never come up with anything sensible. During the period covered by the document there have been no sensible solutions to any of the problems.

The last line in page 29 of the document, under the heading "Social Security", says: Agreement was reached"— "Wonderful", I thought, "at last agreement has been reached. What did they agree on?" — on the basis for further discussion by officials. Is that not wonderful? The officials carry on discussing, but nothing is ever agreed. Page after page, it is all the same.

The annexes are the most interesting parts of the document. They contain one speech by the Prime Minister and two by the then Foreign Secretary. The Prime Minister addressed the European Assembly on 16 December 1981. She referred to the European Council that was held in London on 26–27 November. She said that the main subject of discussion was the mandate of 30 May and that it was worth recalling how it originated. She said: The problem arose when one of the Member States, my own country, found itself bearing an unacceptable and increasing budgetary burden as a result of the combined effect of Community policies. So the combined effect of Community policies was leading to unacceptable circumstances for the United Kingdom. The right hon. Lady continued: The Community agreed, on 30 May 1980, that the problem should be resolved, and I quote—'By means of structural changes'. The Commission was given a Mandate to produce proposals as to how this could be achieved"— again, here is the interesting bit— without infringing basic Community principles. How does one do that without infringing basic Community principles? Continuing, the right hon. Lady said: The Commission's Report was produced in June and concentrated on three main areas or 'Chapters'. These were the reform of the Common Agricultural Policy, the development of other Community policies, in particular economic, regional and social policies and the Community budget". They were all to be considered in parallel. The Prime Minister said that the 30 May mandate laid on the British Presidency the responsibility for reaching decisions by the end of the year. She was hopeful that that would be done. The Lord Privy Seal explained at the Dispatch Box that it would all be done. The Prime Minister, in her speech, continued: I had very much hoped to be able to report to you today that the European Council had been able to reach full agreement on all these matters. Unfortunately I cannot do so. Much progress was made. But on four main areas"— they were the important areas— we were unable to reach any measure of agreement. Complete futility again. A complete waste of time— failure.

The Prime Minister said: We asked our Foreign Ministers to meet informally"— perhaps she thought that, as they never came to an agreement when they met formally, they might do so if they met informally; the right hon. Member for Hillhead had explained over the brandy, coffee and cigars that that might be the case— as soon as possible in a further effort to resolve these matters and to report to Heads of Government. That meeting took place on 14 and 15 December. Despite their best endeavours, Foreign Ministers were not able to reach agreement on the outstanding points. Once again, there was complete deadlock and failure.

Having given the burden of the Prime Minister's speech, I shall now deal with that of the then Foreign Secretary on 8 July 1981. The Lord Privy Seal will be interested in what I have to say as I am referring to the good old days. It is rather piquant. Matters have worsened considerably since then. In his speech to the European Assembly, the then Foreign Secretary—this is the good news—said: First, there was the agricultural price-fixing last March when agreement was reached with a pleasant absence of the delay and acrimony which has occasionally characterised this exercise in earlier years. Everything went right that year. We all know what happened the following year. All hell was let loose. The Minister of Agriculture, Fisheries and Food did not experience that pleasant absence of delay and acrimony. The veto was discussed. We know that the Minister's veto was overruled. I asked the Foreign Secretary what progress he had made in reinstating unanimous voting in European Community Council of Ministers' procedures". He replied that he had requested that that should be done on 20 June. Five members supported the principle that decisions should be deferred where a member State considers that its important national interests are at stake. The position is thus, as it has been since 1966, that there is a division of opinion on this question."—[Official Report, 12 July 1982; Vol. 27, c. 272.] It emerged that there was no agreement and no veto. I was referred to his speech on 22 June, when he said that his position was unreservedly supported by two member States and by two others with minor qualifications … In view of what happened at the Agriculture Council on 18 May, I would obviously have preferred a clear-cut result."—[Official Report, 22 June 1982; Vol. 25, c. 155.] Perhaps he would. But what were we told at the referendum? I have a copy of the official Government manifesto that was issued to all voters at the referendum. It asked in large type: Will Parliament lose its power? The document continues: Fact No. 2: No important new policy can be decided in Brussels or anywhere else without the consent of a British Minister answerable to a British Government and British Parliament. Later in that part of the document, it said: It is the Council of Ministers, and not the Market's officials, who take the important decisions. These decisions can be taken only if all the members of the Council agree. The Minister representing Britain can veto any proposal for a new law or a new tax if he considers it to be against British interests. Ministers from other Governments have the same right of veto. That was the basis upon which the British people voted to remain in the Common Market. They were told that their democratic parliamentary self-government was assured. The British veto was the basis of that argument. That has been abrogated. The other document, which was issued by the right hon. Member for Hillhead, said the same thing.

Mr. Spearing

I have the document here. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) and others went further. The document states: All decisions of any importance must be agreed by every member". It did not say that such decisions would be on a matter of national importance. No wonder the people were misled by what was said by those who were still Members of the House.

Mr. Leighton

That furthers my point that the basis on which we entered the Community has been abrogated. I should like to hear what the Minister has to say on that.

In page 57 of the Blue Book it is stated: The basis of the Community's renewal must be the restructuring of the Community budget and the review of the Community's expenditure policies that goes with it. There has been no restructuring. The budget is dominated by expenditure on one sector. The attempt at rectification for Britain has been botched up. The budget is ad hoc and temporary. No change has been made.

We are told by the Foreign Secretary that there should be changes in the CAP to discourage the production of surpluses and to limit the costs to which they give rise. It cannot be right that about half of the Community's budget should be spent simply on the storage and disposal of surplus food. This is an expensive and wasteful anomaly that must be corrected"— then comes the catch— but not so as to undermine the principles of the CAP. How does one reform anything without changing it? I should like to hear the Government's view on that matter.

I should like a change. I could explain exactly how to make a change. However, there is no way of making a change because the vested interests are so great. It would be sensible to end common policies on agriculture or for this country at least to opt out and to return responsibilities for agriculture to the member States and let them run their own agriculture as they see fit. At the moment we have a siege economy in agriculture. That cannot be right. The present CAP widens the gap between rich and poor because the subsidies that are paid via the high prices primarily go to the efficient. By definition, those are the rich farmers, who become very rich. No one can say that the prosperity and security of Europe depend on the CAP. It is a complete monstrosity and we should get out of it as soon as possible.

Mr. Marlow

Is the hon. Gentleman aware that the European Assembly is recommending that £20 million should be made available for elections in 1984? Is he aware that that money is to be made available to the political parties—a small proportion will go to the European information office—and that £45,000 will be made available for each constituency, whereas the allowable expenditure in this country is £13,000 for each constituency? For the Conservative Party, some £32,000 for each seat or perhaps a little less will probably find its way to Central Office funds. Is not that a lot of money? Is it not a matter of concern about which he, as I, would like to know more?

Mr. Leighton

The hon. Gentleman has raised a relevant point. There is the vast expenditure of the Commission on glossy publications that land on my desk. Who pays for those? I suppose that the Community taxpayers do. Then there is the European Assembly, which is one of the most futile talking shops ever invented. It has the most minimal effect on Community affairs. If what I read in the newspapers is true, many European Members of Parliament travel to the Assembly solely to draw their exorbitant expenses without taking part in the debates—wisely, because the debates are useless and futile—and straight away go home. All that is at vast expense to the taxpayer, for no useful purpose.

Mrs. Elaine Kellett-Bowman (Lancaster)

Will the hon. Gentleman give way?

Mr. Leighton

I would rather not give way. The hon. Lady can make a speech in Strasbourg.

Mrs. Kellett-Bowman

rose—

Mr. Leighton

I am always willing to give way to a lady.

Mrs. Kellett-Bowman

In view of what the hon. Gentleman has said, he will be glad to know that reform is under way so that only those who do the work will be properly paid.

Mr. Leighton

I am pleased to hear about that reform. Those who do the work will be properly paid, whereas before people were paid exorbitantly at taxpayers' expense for doing nothing. We are told that matters will improve. I am sure that the hon. Lady will benefit because I have no doubt that she is a hard worker.

The Foreign Ministers met on 14 and 15 December. On 17 December the Foreign Secretary said: We were able to have a useful discussion. I would naturally have liked to be able to reach agreement on this matter during our Presidency". He was talking about the common fisheries policy. He said that agreement still had to be reached. He can say that again. If I understand it aright, two-thirds of the fish in the Community pool come from United Kingdom waters. If we were outside the Common Market we would have our own 200-mile exclusive zone. The fish would belong to us. Inside the Community, however, we shall see a sell-out of the British fishing industry and we shall be robbed of our reserves.

In paragraph 10 of his speech on 17 December the Foreign Secretary said: the Community has made disappointingly little progress towards full liberalisation in such fields as insurance and air transport. In other words, in areas where Britain could benefit, such as insurance and banking, the blocks have been put up. The Common Market has not been completed, so Britain loses out.

In page 67, paragraph 15, the Foreign Secretary said: Divergence among Community states has increased rather than diminished. That means that the rich areas have been getting richer and the poor areas have been getting poorer. That does not surprise me. The benefits of free trade do not fall equally. That is a fact of economics. If they did, there would be no need for regional policy. We have a regional policy to readjust the effects of free trade. The United Kingdom has a regional policy for Scotland, Wales and the North to try to counterbalance the effects of free trade.

Mr. Body

Does the hon. Gentleman agree that the largest subscribers to the European Movement and to the "Yes" campaign, in industry, have invested vast sums in Belgium, Germany, France and other parts of Continental Europe, providing tens of thousands of jobs for people in those countries, instead of investing in this country and providing jobs for British people?

Mr. Leighton

The hon. Gentleman is right. That problem has been exacerbated by the lifting of exchange controls. Last year about £4 billion of British portfolio investment flowed outside this country to re-equip our competitors, the better to compete against us.

I have heard it said that we should stay inside the Common Market so that we should be the recipients of Japanese inward investment, but we would then become a conveyor belt for Japanese goods into the Community. We would not need foreign investment if we could keep a percentage of our own investment in this country.

The experience, common sense and, indeed, self-respect of our people lead us all to the same conclusion—that it would be far better for us to leave this arrangement. It was not designed for us and it was not reformed for us. We should not have been so arrogant as to have expected anyone to reform it for us. Why should they? On the basis of friendship and amity, we should leave. The Labour Party conference had a five-sixths majority in favour of such a policy. I am certain that that will form the central point of our election manifesto at the next general election. I shall support it wholeheartedly.

7.50 pm

Mrs. Elaine Kellett-Bowman (Lancaster)

I have always believed that far and away the most important reason for establishing the European Community was to safeguard the peace of Europe and, as far as possible, that of the rest of the world. It is a pity, therefore, that the period that is supposed to be under review by the House tonight does not strictly include the Falkland Islands crisis, when the Council, the Commission and the European Parliament backed us immediately and wholeheartedly.

The Community's next most important task is to increase the well-being of its citizens. In this task nothing is more important than the combined work of the Community's three instruments—the European Investment Bank, the regional development fund and the social fund referred to in paragraphs 7.3, 7.4 and 9.1.

In his opening speech my right hon. Friend referred to the illogical lack of balance between agricultural and other Community spending. He stressed that we need a better balance of policies and must build a more sensible industrial and social programme for the European Community in order to lessen the gap between its regions. No one can deny that progress is slow, but progress there is, and we would not be human if we did not want more rapid progress.

The hon. Member for Newham, North-East (Mr. Leighton) quoted from the Prime Minister's speech in Strasbourg. My right hon. Friend was the first Prime Minister of a European country to speak at the European Parliament in Strasbourg. The hon. Gentleman quoted the Prime Minister as saying that we had been given the responsibility of reaching decisions by the end of the year. He did not add that her next words were that that target was always ambitious. Ambitious it was, but nevertheless a great deal of progress was made under the dynamic leadership of the British Presidency.

I have served on the regional and social policy committees of the European Parliament for seven years. For years we have demanded better co-ordination between the various Community instruments, which we felt at one time were completely unco-ordinated and at times overlapped or, even worse, worked in opposite directions. Gradually the three main instruments have been brought into harmony so that a concerted attack can be made on the problems of the Community. This is very well covered in the document now before us.

However, the complete lack of comparable statistics made it very hard to work out a common policy. Statistics simply did not exist. We could not compare the policy of one Community State with another in any direction. We had no map to chart the journey that we wished to follow. That gap is now being filled, and in the period under review the Commission has published the first periodic report on the state of affairs in all the regions of the Community, giving information on all manner of subjects—unemployment levels, gross domestic product per head, demographic tables, and so on, for all the regions.

That is an invaluable basis on which we can build proper European policies to defeat the scourge of unemployment that afflicts all European countries and the whole of the free world. Over the years the proportion of the budget spent on regional and social policies has steadily increased. The United Kingdom has done very well from those policies. In 1981 nearly £200 million came to the United Kingdom from the quota section of the regional fund to a very wide variety of projects. If the regional fund regulation is amended in the way that the Commission suggests, we will do even better in the future.

Providing an industrial infrastructure in bricks and mortar is only one half of the story. Working practices are changing rapidly, and the social fund plays a major role in assisting the efforts, particularly of our MSC, in training or retraining people to fit the jobs of the future. This country has always been behind in training and we are rapidly trying to catch up. We are relying heavily on social fund assistance for the training programme that the House was discussing a month ago.

Mr. Heifer

The hon. Lady says that we were behind in training and I accept that we were not as good as we should have been, but we had some training boards until the Conservative Government destroyed them.

Mrs. Kellett-Bowman

I was not referring to that type of training. I was referring to the fact that 90 per cent. of the youngsters leaving school at 16 in Germany go on for further training or apprenticeships compared with roughly 45 per cent. in this country. Therefore, the Government are doing what a Labour Government failed to do to fill in that training gap. The Government have brought forward a programme costing £1 billion to fill the training gap and help our youngsters to catch up. For that we shall rely heavily on money from Europe.

Spending from the social fund will be substantially increased this year. Last year the training programme was considerably over-subscribed. Therefore, more money will be put in so that that gap can be plugged and young people helped to fill the jobs of the future that will become available as the economic upturn begins.

One of the most useful instruments for helping industry in the assisted areas is the European Investment Bank. My own constituencies of Lancaster and Cumbria benefit substantially from European Investment Bank loans. The rates of interest are lower than those prevailing in the United Kingdom. They are fixed for the term of the loan, and that makes it much easier to plan ahead. The repayments do not begin until two years after the commencement of the loan, by which time the investment is usually earning its keep.

The European Investment Bank is a flexible instrument. It has played a useful role in helping us to modernise our infrastructure. We in the North-West—this is one point on which the hon. Gentleman will agree—have the worst sewers in the United Kingdom. There is a major sewer collapse in the North-West every day of the year—and an extra one in leap year. The North-West water authority has received massive loans from the European Investment Bank, as has the North-West electricity board. Many of our large industries, such as paper making and shoe manufacturing, have also received loans.

The European Investment Bank is not for the big boys only. Small firms and investment projects as small as £30,000 can receive loans. An increasing number are doing so, and thereby improving their capacity to compete in an increasingly competitive world.

One of the unquantifiable benefits referred to by my hon. Friend the Member for Flint, West (Sir A. Meyer) is the free entry to a market of 265 million people. There is no country more dependent on world trade than the United Kingdom. If we adopted the siege economy mentality and policy of the official Opposition, we would have to leap over a common tariff wall to get our goods into Europe. It is hard enough as it is to compete in markets, but if we had in addition to pay tariffs, our trade and the jobs dependent on that trade would be decimated.

I end as I began. Europe is a bulwark of democracy in a troubled world. My hon. Friend the Member for Nantwich (Sir N. Bonsor)—who, alas, is no longer in the Chamber—said that we had no lessons in democracy to learn from Spain or Portugal. Nobody has suggested that we have, but I believe very strongly that the Spanish and Portuguese might never have thrown off the yoke of tyranny if they had not had the hope of joining the European Community. I believe that the fragile democracies that now exist there will be strengthened and preserved by their joining the Community. Europe is not just about butter or lawn mowers, as my hon. Friend seems to think. It is about living together in peace in an increasingly dangerous world. I believe that that weighs a thousandfold in the balance against the niggling, querulous criticisms of the official Opposition.

8 pm

Mr. Lawrence Cunliffe (Leigh)

I apologise to the House for leaving during the earlier part of the debate, but I had to attend a sitting of the Services Committee, dealing with security—a subject of great importance, particularly at present. Therefore, I hope that the House will understand if I repeat points that were made in the earlier part of the debate.

We are dealing with a complex subject, and the period that we are discussing ended in December 1981. The right hon. Member for Down, South (Mr. Powell) was extremely agitated over the Middle East initiative taken by the Ten as a result of the Venice declaration. I did not fully share his views and anxieties about the declaration, although I accept that some of his arguments have been proved, with the events now taking place in the Middle East, to be partially correct.

My interpretation of the Venice declaration concerning a European peace initiative was that it was a paper tiger. Its intentions—to be generous to those who drew up the declaration—may have been sincere, but it has proved to be a political damp squib. It was ill-conceived. It was expedient for the leaders of the Ten to have some sort of formula to bring back to their Parliaments and Governments, commenting generally on the position in the Middle East, but events have proved the document to be rather meaningless. Indeed, I should like the Minister, in replying to the debate, to tell us to what extent the objects of the declaration have been achieved. We have had a talking shop, and the events in the Middle East have been glossed over in many respects, because the former Foreign Secretary happened to be the President of the EEC Council at the time in question.

None of the parties involved—Israel, Egypt and the United States—received the declaration with acclamation. It was coolly received not only by the countries which were signatories to the Camp David accords, but by the Arab world generally. The Minister of State nods his approval at that comment. It is no use the Government denying that opposition to the aims and objectives of the declaration has been clearly spelt out.

The right hon. Member for Down, South said that European involvement was not necessary and that, generally speaking, the reaction had been unfavourable. He felt that the Government had given a total commitment. He asked whether there was a guarantee that the Ten would automatically respond to an invitation by President Mubarak on any of the issues affecting his policy in the Middle East.

The spokesman of the PLO was clear about its attitude to the European initiative. The PLO says that it has the right to speak for itself. Its spokesman said: We can never allow any party to interfere in our affairs, especially in two major matters: our non-recognition of Israel and our refusal to amend our national character in any way. I hope I am making myself clear to everyone everywhere, especially to the European countries. We have said over and over again that we refuse to recognise Israel. This is an unchangeable, permanent policy". That statement was made by Farouk Qaddame, head of the political department of the PLO, in an interview with the Beirut weekly, Monday Morning, in April 1981.

The right hon. Member for Down, South referred to President Sadat. I happened to be in Egypt when President Sadat was assassinated. People throughout the world mourned the passing of such a fine and worthy statesman who had brought some stability to the Middle East, but the PLO security chief, Abu Iyad, said: We are happy over the assassination of the master traitor. Europeans like Kreisky, Mitterrand and Giscard d'Estaing are free to be sad as they want, but we are happy and we make no secret of it. I have a further quotation from the PLO on the death of Sadat: This is the best news we have had in many years! It is the Egyptian people that has got rid of Sadat. The Egyptian people has also rid itself of the shame and the dishonour that Sadat had imposed on the grand history of Egypt". How can one talk rationally, in the interest of peace in the Middle East or world peace, to people of that kind? It is highly regrettable that inflammatory comments of that sort are made. Such comments as I have quoted can never be relevant to achieving a permanent peace in the Middle East.

We all deplore the tragic events now taking place in the Lebanon. We detest the horrors of all wars, whether large or small. They are immeasurable in terms of human misery. We have recently experienced in the Falklands a war of a minor character, but with very serious consequences for those who lost their lives or were maimed. But we have been reminded, in regard to the conflict between Israel and the PLO in the Lebanon, that we also relied on article 51 of the Unitied Nations Charter in defence of out action in the Falklands.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Order. I am sorry to interrupt the hon. Gentleman. I am listening carefully to his speech, but I am having difficulty in identifying his current remarks with the amendment that we are debating.

Mr. Cunliffe

My remarks are related to the section of the document on Middle East affairs, paragraphs 3.6, 3.7, 3.8 and 3.9.

Mrs. Kellett-Bowman

The Falklands are not in the Middle East.

Mr. Heller

The document covers not only budgetary matters of the Common Market, but discusses the Ten's views on the Middle East, South-East Asia, Poland and so on. The hon. Member for Lancaster (Mrs. Kellett-Bowman) may remember that I said in my speech that I should have liked to speak on those issues but lack of time prevented my doing so. My hon. Friend may have strayed a little from the subject, but, within reason, he is In line with what is set out in the document.

Mr. Cunliffe

With respect to the House and to you, Mr. Deputy Speaker, I was trying to make out a case for the uselessness of the Venice declaration. That is the basis of my peroration today. It is relevant to discuss current events in the light of what has happened and to put into perspective what flows from reports of this type.

It is appropriate to quote Disraeli, a Jewish statesman, who said: It is much easier to be critical than to be correct. I accept his point. The Israelis have been subject to strong criticism and attack. There has been a degree of over-kill which Europeans, Asians or others have failed to prevent. It is regrettable, although inevitable, that the reservoir of friendship towards Israel has been somewhat diminished and damaged by recent events. I accept the point that the Prime Minister has made in statements over a period of time. In this case, I claim that two wrongs do not make a right unless they are atoned for.

In defence of Israel's position, we must understand that it is a young nation that has faced continual hostilities and has at the same time an immigration problem. No rnatter what one says, Israel established a fine and reasonable democracy—the only democracy in that part of the world to sustain itself. We must try to understand the thinking and mentality that force the Israelis into their current position. We must acknowledge that Israel is making positive efforts to bring about the evacuation of PLO terrorists from Beirut. They have granted access—

Mr. Deputy Speaker

Order. I cannot see that the hon. Gentleman's remarks have anything to do with the amendment that we are debating. He must confine himself to the subject of the debate.

Mr. Cunliffe

In conclusion, Mr. Deputy Speaker, I should like to refer to a point made by the hon. Member for Lancaster (Mrs. Kellett-Bowman) about European grants. She said that the North West region had inherited paper manufacturing and other industries that had received substantial grants from the European Community. If she had been present in the House last week during the regional debates when every area was represented she could have examined the mammoth unemployment figures and compared those with the figures for the North West region, where there are 456,000 unemployed—the highest number of unemployed for any region—

Mrs. Kellett-Bowman

rose—

Mr. Cunliffe

—the hon. Lady could have examined the built-in regional disparities that have existed in this country during the periods of different Governments and viewed them in the perspective and framework of the European grants that are available. She would have seen that, by a national Government decision—that of her own Government—80 per cent. of the North West region was degraded in aid status from 1 August.

Mrs. Kellett-Bowman

I thank the hon. Gentleman for giving way. He has raised an interesting point, because my constituency was one of the worst in the North West when the hon. Member for Liverpool, Walton (Mr. Heffer) came to see us years ago, and he gave us no help at all. However, with the help of European and other aid, we have now brought ourselves up. Now we are not merely better than the regional average, but better than the national average. Much of that is due to the help that we have received from Europe. So one part of the North West has made positive use of Europe and has benefited from it.

Mr. Cunliffe

I remember when the right hon. Member for Leeds, North-East (Sir K. Joseph) was Secretary of State. Degrading proposals were introduced—

Mrs. Kellett-Bowman

Downgrading.

Mr. Cunliffe

Downgrading, degrading—call it what one will. It is the same thing. When an area goes down in the financial league in terms of grants, it is degrading. It is degrading the areas. Towns like Blackpool and Lancaster were upgraded. They were given an uprated financial status at that time, to the detriment of many of the older industrial towns and constituencies. Eighty per cent. of the North West region has been removed from assisted area status. This is perhaps a matter that the House could debate on another occasion. It was a question of robbing Peter to pay Paul. There was political chicanery to help marginal Conservative seats. There is no argument about that.

Mr. Bill Walker (Perth and East Perthshire)

rose—

Mr. Deputy Speaker

Has the hon. Member for Leigh (Mr. Cunliffe) finished?

Mr. Cunliffe

Yes.

Mr. Deputy Speaker

I call Mr. Tom Normanton.

8.17 pm

Mr. Tom Normanton (Cheadle)

I am grateful, Mr. Deputy Speaker, that you have allowed me to catch your eye at this stage of the debate, and to follow the hon. Member for Leigh (Mr. Cunliffe). He may think that my speech is a strange successor to his contribution, but I happen to be chairman of the all-party political group, Friendship with Israel. In that sense, I go a long way with the argument that he made as a major part—however minor it should have been—of his speech.

His reference to the late President Sadat is relevant to our membership of the Community and to the report of the Presidency, in that it was the first time that a statesman of such great and international importance sought permission to address the elected parliamentarians of Europe. That was his interpretation of the significance of the Community for his country—and, therefore, for Israel. His assassination was one of the greatest tragedies for Egypt-Israel relations.

However, that subject is not the main purpose of our debate this evening, as you will be quick to remind me, Mr. Deputy Speaker. I want to refer to the hon. Member for Liverpool, Walton (Mr. Heffer), whom I am glad to see in his place. I apologise to him for having missed part of his opening speech. However, the part that I did hear convinced me completely that his views were thoroughly predictable and consistent with what he has said for a long time. That consistency is devoid of any serious comprehension of how the European Economic Community works and of our membership of it. Would that that lack of comprehension were restricted to the hon. Gentleman and other Labour Members, but unfortunately it is not.

Anyone listening to the debate would be justified in believing that it was a re-run of the great debate of "should we, shouldn't we; are we in or are we out?" To politicians both inside and outside the House, the "in-out" debate is as sterile and unproductive as any could be. I deplore the consistency with which that campaign is pursued because it is inimical to Britain's maximising the opportunities presented by membership.

I shall not mention all the points in the report but touch on issues which have a bearing on it and which the Government might find a little embarrassing. First, the British Presidency that we are discussing was our first constructive Presidency since we joined. By "constructive", I mean that there was never any doubt in the minds of the political leaders, the Heads of Government and all concerned in the Community institutions that Britain was anxious to contribute energetically and dynamically to the collective benefit of Europe and especially Britain. That approach by Britain could and should have been spelled out in the report, although it may have caused a little shyness.

Secondly, because of the calendar, the Presidency lasted a short six months. In effect, it was four and a half and not six months of intensive effort. That more limited period was restrictive for a Presidency that had made comprehensive and intensive preparations well before assuming it. In my nine and a half years experience in the European Parliament and experience of the Political Affairs Committee where such matters are constantly discussed, that was a unique occurrence. The Government can take satisfaction from that achievement.

Moreover, the impact that Britain made upon the political leaders of the other nine member States was profound and, though insufficient, will prove to be long-lasting. That impact should be compared with the impression made upon the political leaders of what were then only eight other member States, when the Presidency was in the hands of the Labour Government four and a half years ago. The impact of that Administration is that an albatross had been round Britain's neck for many years. At long last it has been removed by the clear and unequivocal declaration of my right hon. Friend the Prime Minister and the Government that we are in Europe and that we are determined to be energetic and dynamic in our contributions.

In case my right hon. Friend the Minister of State and other hon. Members believe that I am being sycophantic about the Government's performance during our Presidency, I have no hesitation in saying that they have a long way to go before Britain as a whole—the Government have a part to play—is fully au fait with the European Community system. But I am confident that the matter will be put into perspective when we remember that Britain has been a member for only nine and a half years, whereas the founding members set up the Community 25 years ago. It is obviously a political adventure for British Ministers, industry and institutions to enter Europe. It is new ground, but until we devote ourselves entirely to the Community we shall not benefit from the opportunities that are open to us.

I am highly critical of some ways in which we approach the Community's policies. We all applaud the way in which British industry and its representatives—the CBI is only one mouthpiece of British industry and I am a member of the European committee of the confederation—is benefiting increasingly from our membership, but until industry understands how to influence decision-taking processes at Community level our industriial performance will fall short of what should be achieved. To illustrate that point, the European development fund represents about 5,500 million units of account, but the portion of that fund given to British industry is minuscule compared with what other member States have managed to grasp. That is because industry has not come forward with requests to tender for major contracts.

A different perspective of Community membership was offered during a meeting with a German Minister. During our discussion, I asked, "I wonder for how much longer Germany will be the paymaster or the milch cow of Europe." I shall not repeat in English his exact words—he responded with ardour—but the tenor of his reply was "Do not talk arrant nonsense. For' every deutschmark that Germany puts into the Community, German industry benefits by three deutschmarks." As he put it, "Where can you get a better deal than that?"

We shall get that kind of deal and we must benefit from that kind of involvement in our membership of the Community. It is up to industry, with the encouragement and stimulus of Government, to show that we can operate even more profitably and successfully than we are.

In the normal way, I should never dream of talking about regional policy for the good reason that my hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) is a member of the European Parliament, is in a Committee and is recognised as being one of the most knowledgeable Members involved in this subject. We have to move away from the concept of substituting Community funds for national funds. Additionality must be the line that we should follow. Britain is not alone in this—every member State is falling short. We have to move more in the direction of the original intention that the regional funds would be additional to those from national Governments.

I could not help being reminded, in the course of contributions from hon. Members on both sides of the House, of the trade union leaders pulling their voting cards out of their pockets and saying, "Here is my power." If that is, or were to be, the significance of the Luxembourg compromise, we should be doomed to disaster. It is not by the use of a veto that we shall achieve what Britain and the Community want. It will be by force of argument and by the determination of all who take part in Community activities—Government, Civil Service and industry alike.

I cross swords with the Government on the subject of the size of the budget. It wall have to expand for a variety of reasons, each of which in itself would be the subject of a long debate in the House. Joining the EMS is a matter not just of timing but of political significance and again I do not subscribe to the views expressed on this point.

My last point concerns civil servants. Some right hon. and hon. Members may ask what the debate has to do with civil servants. However, I wish that we would treat our civil servants, in the context of our membership of the Community, in the way that the French treat their civil servants. I commend to Ministers a close look at the full significance of this. No French civil servant who aspires to high office and influence will go anywhere unless he plays an energetic and dynamic role in the institutions of the Community. We should take a leaf out of that book.

I strongly believe in the concept enuniciated by a former, well-respected right hon. Member of the House. I refer to a speech made by the late Sir Winston Churchill, in which he said that if Europe were to survive we had to move in the direction of a United States of Europe, or some such thing. I am not in the least concerned whether this is federal or confederal but I am determined—in my modest way I shall continue to play my role in this direction—to ensure that we move in the direction of unity of Europe. Without unity across the whole political spectrum, there is no future for Britain or Europe.

8.34 pm

Mr. David Stoddart (Swindon)

The hon. Member for Cheadle (Mr. Normnanton) said that the debate was a re-run of the "in-out" argument. I have news for him. There will be many more re-runs of that argument, not only in the House but in the country. That is because many hon. Members and people in the country know perfectly well that we should never have gone into Europe and that we should not stay in Europe because our membership is inimical to Britain's best interests. Many people who voted to remain in Europe in the referendum have now come to the conclusion that they made the wrong decision. If they were given the opportunity, they would make a different decision now.

Before we entered the EEC Britain was misled on every count by people who should have known better and who should have told the truth. We were told that going into Europe would enable is to take a great economic leap forward. We were told that we would sustain the cold wind of competition that would make our industries blossom and make us more competitive in the huge market of 265 million people. The reverse has happened. Far from thriving in Europe, our membership of the Community has caused economic devastation, higher prices and many other ills that we could have avoided.

There are few hon. Members in the House tonight to discuss this matter. There has grown up about the EEC a cynicism, a dislike and a feeling that the whole matter is irrelevant. However, people are mistaken. It is necessary to discuss the affairs of the EEC in detail on every possible occasion to see how Britains' influence and interests are being undermined by our memebrship of the Community.

My hon. Friend the Member for Newham, North-East (Mr. Leighton) said that hopes of a federal European State were dead. I assure my hon. Friend that they are not. Many hon. Members, particularly in the Social Democratic Party, would be delighted to see Britain merged into a federal European State.

We must always be on our guard against that proposition. There is no doubt that some hon. Members have little regard for our present constitution or for the history of our people and little regard for, or at least understanding of, the future benefit of Britain. Therefore, they would be quite happy to see us merge into a federal European State, which is supposed to be the be-all and end-all. We must be ever-watchful that such people do not gain an influence in the House and the country that would enable them to undermine the British consitution that has lasted, developed and thrived over a thousand years.

The document before the House is entitled "Developments in the European Community July-December 1981". It is worthless. There have been no developments during that period. There have been no developments in the CAP. We have been saying ever since we became members of the Community that the common agricultural policy upon which the whole Community is based must be reformed. Every six months a document comes before the House which says exactly the same. No reform has taken place. I assure the House that no reform will ever take place.

The whole Community is based on the common agricultural policy. If the policy is undermined in any way, the Community will fall apart. Yet if the common agricultural policy is not reformed, this country will continue to get the neck of the chicken and the wrong end of the stick and will continue to be a big payer into Community finances. There have been no developments in the last six months or in any previous period of six months on the major and vital issue of the Common Market.

We were assured before we entered the Community that, once we were a member, we would be able to reform the common agricultural policy. Is that not what we were told in 1975 during the referendum? It was argued that if only we could get into the Common Market we would be able to reform its institutions and change the Treaty of Rome. We have done nothing of the sort. We shall never be able to do anything of the sort. The sooner hon. Members realise that, the better it will be.

There has been no real reform of our contribution to the budget, nor do I believe that there will be any. It is not in the interests of other powerful countries in the Community to bring that about.

Events have also gathered about us that show this country where its interests lie and those who are its friends. We saw during the Falklands crisis exactly those who would stand by us in a period of great trial. The first to come to our aid and comfort were the people we sold out in 1973—New Zealand and Australia. We almost crippled New Zealand's economy then. If some people had their way, its economy would be crippled even further.

We saw how the EEC, at a crucial point in the negotiations at the United Nations, stabbed us in the back by refusing to continue sanctions for a reasonable period. We saw two members of the Community, one just across the water, withdraw sanctions completely and give comfort to an enemy that had invaded British territory and taken British people under its Fascist wing. We saw exactly who our friends were. They were not in Europe.

Many of the countries of Europe stabbed us in the back one day and then, on the issue of the veto, held us to ransom the next. They were thinking of their own pockets and their own interests. They were prepared to take advantage of our trial and tribulation to line their pockets at the expense of the British consumer through higher prices in the shops.

There were no real developments in the European Community in the six months to which the document relates. There were signs to show us who were our friends. I warn the House that even now suggestions and plans are being made further to injure those friends who supported us over the Falkland Islands dispute. There are plans to reduce the amount of New Zealand butter that can come into the country. If Eire, one of the countries which was least helpful to us, has its way, the amount of New Zealand butter entering the country will be reduced from 92,000 tonnes to 60,000 tonnes a year. That would be a devastating blow to New Zealand—to our people, who have been prepared to stand by us through thick and thin on many occasions. I hope that hon. Members will take note of what happened during those perilous times and of the people who stood by us and gave us not only moral support but material aid. I believe that hon. Members will eventually understand what they have to do.

I want to refer to the amendment moved by the hon. Member for Faversham (Mr. Moate).

Mr. J. Enoch Powell

It has not been moved.

Mr. Stoddart

It is on the Order Paper. I am sorry that it has not been called. It would have been interesting if it had been.

I understand the position of some Government Members. I believe that the feelings of members of the Conservative Party throughout the country are changing, and that the past six months have shown grass-roots Conservatives where they should go and where their loyalties should lie. Those Conservative Members who believed that they understood the EEC from the beginning have recently begun to understand it even more. They can take comfort from the new feeling in the Conservative Party. The amendment to the Opposition's amendment shows progress; it shows that Conservative Members are now prepared to stand up and be counted. I believe that the sooner more of them do that the sooner the country will realise its true potential, understand its heritage and withdraw from the absurd European Community.

8.49 pm

Mr. Bill Walker (Perth and East Perthshire)

The hon. Member for Swindon (Mr. Stoddart) made interesting and direct comments, some of which I agree with. His remark that New Zealand has always stood by us in time of need is particularly relevant in the light of the recent events in the South Atlantic.

The hon. Member for Liverpool, Walton (Mr. Heffer) also made a good speech. He would not expect me to agree with all his conclusions, but I hope that he will not be too offended if I tell him that he speaks much better from the Front Bench than from the Back Benches. I hope that that does him no harm.

My hon. friend the Member for Lancaster (Mrs. Kellett-Bowman) mentioned the aids that were available from Europe. When the taxpayer is told that we contribute Y to the European coffers and get back Z, and that he has to pay the difference, and, on top of that, that we are getting money from Europe, I wonder what he thinks. All the money coming from Europe is merely British taxpayers' money recycled. We should be honest. It is a disservice to any organisation to pretend that it is different from what it is.

I do not believe that the hon. Member for Newham, North-East (Mr. Leighton) really believes that Members of the European Parliament go there merely to draw expenses. The next thing that he will tell us is that Scottish Members come here merely to draw expenses. The expenses that I can draw would be the last thing that would encourage me to come here. We come here, and I imagine that the MEPs go to Europe, to influence what happens. But some of the things that come from the European Parliament make me wonder what they are doing. Seen from the United Kingdom's position, some of those things are frightening.

I fully support the comments of my hon. Friends the Members for Faversham (Mr. Moate) and for Nantwich (Sir N. Bonsor). Because of the time, I shall not go over in detail what they covered.

We must start to look at fundamentals. In the six months under review much has happened in Europe and in the United Kingdom. Low productivity, endemic high inflation, high unit labour costs and the low profitability that has bedevilled us for many years are not a result of our membership of the EEC. The failings of management and the intransigence of the unions will not be altered by the fact of our being inside or outside the EEC.

We must consider whether our membership of the Community as it is presently run is helping or hindering our prospects of improving our economic performance. Sadly, it does little to help us in these difficult times. If we cannot help ourselves to sort out our problems our standard of living will continue to deteriorate. That is why, with my hon. Friend the Member for Faversham, I put my name to the amendment which has not been selected.

Statements about trade, and in particular trade in manufactured goods, generally concentrate on the number of jobs that depend on exports to other EEC countries. I have looked at the figures. We sell in surplus to the rest of the world and in deficit in manufactured goods to Europe, so we must consider the jobs involved in exports to countries outside Europe. I repeat that our efficiency in trading depends not on the potential of a market of 255 million individuals, but on our capability to penetrate and to perform consistently in the market inside or outside Europe. What is important is that we recognise that we must sort out our problems.

For a long time I have been disturbed about the discrimination within Europe against insurance companies. The British insurance companies are the finest in the world, and I am pleased to say that the largest employer in my constituency is an insurance company. That corporation regularly performs well world-wide, but it could perform better in Europe if it were not discriminated against. That is contrary to all that we were told when we agreed to enter the EEC.

I should like to comment on the trade embargo with the Argentine during the difficulties in the South Atlantic. I welcome the support that we received from the majority of European countries, but I regard the behaviour of the Irish Government as despicable. Once again, they stabbed us in the back. I have said that they stabbed us in the back, but let us consider what is happening. One of the whisky companies in my constituency has built up trade with the Argentine during the last 17 years to the point where turnover is now £3 million or 30 per cent. of whisky sales to the Argentine. That should be remembered by the Government, particularly when the Scottish people speak out against the action of the Irish Government and how member States behaved or did not behave.

Scotch whisky is in world-wide competition with Irish whiskey, and that fact should not be forgotten—[Interruption.] The right hon. Member for Western Isles (Mr. Stewart) should not shake his head. Scotch may not be in competition in the Palace of Westminster, but it certainly is world-wide. The Scotch whisky industry has a remarkable export record. One does not need to be terribly clever to know that if sales to the Argentine are adversely affected on a permanent basis Irish whiskey will be sold instead and, therefore, the Irish will benefit at our expense. That will influence the way in which the electors of Perth and East Perthshire will judge the behaviour of Community members. In particular, they will look carefully at the way in which the Irish have behaved.

Mr. Donald Stewart (Western Isles)

I agree with the tenor of the hon. Gentleman's argument, but why does he think that the Irish Republic should be faithful supporters of the British Government?

Mr. Walker

I was viewing the Irish as members of the EEC. We have been told that Europe works collectively on matters that affect a member or the Community as a whole. The behaviour of the West Germans, French and others during the South Atlantic conflict was impeccable, but the Irish Government deliberately stabbed us in the back. That must he placed on record and remembered.

When the EEC seventh directive on VAT on used vehicles comes into operation, I believe that it will cause considerable problems to United Kingdom distributors of used vehicles, such as garages. I shall not bore the House with details, because I do not have time, but if the directive is implemented as intended people selling second hand cars will find that they are paying more VAT than the profit that they can possibly make.

However one looks at that, it makes no sense. Anyone who handles VAT knows that that cannot happen with the input-output arrangement. But this can and will happen, and something must be done about it. The lesson from West Germany is that the distributors of new cars do not sell second hand cars. Those of us who trade our cars in for new ones will find that we shall have to go to Charlie or somebody else down the road. The whole thing will turn into an enormous problem, so we must deal with it quickly.

I am not anti-Europe. That is on record. At the beginning I worked to keep us out of Europe, but since going into Europe I have worked strenuously with the party to make Europe work. I still want it to work, but unless there are fundamental changes I believe that the Labour Party's posture of withdrawal from Europe will have more and more appeal for the British electorate. We must recognise that that will not benefit the Conservative Party, Europe or Great Britain. Therefore, we must ensure that those fundamental changes take place and that we benefit from them.

9 pm

Mr. Eric Deakins (Waltham Forest)

I shall be brief because of the time. I entirely agree with the last remark of the hon. Member for Perth and East Perthshire (Mr. Walker).

I wish to make three points. The first was appropriately raised by my hon. Friends the Members for Swindon (Mr. Stoddart) and for Liverpool, Walton (Mr. Heffer), who opened for the Opposition. Our country's record of Community achievement is one of unrelieved failure. That point does not need labouring at this stage of the debate. We have failed to achieve any fundamental reform. The soothing and anodyne words in the various sections of the document have been repeated ad nauseam over the past six to seven years under Governments of both parties and we have got nowhere.

I am looking forward, as other hon. Members must be, to the next report which will cover the period of our dismal failure over the Luxembourg compromise on majority voting. It will be interesting to see what anodyne expressions will be used to paper over not a crack but a fissure in the structure and fabric of the Community.

My second brief point is about trade, as the Minister for Trade is present. Will he say why Ministers keep boasting about the increasing proportion of our trade, particularly exports, which goes to the European Community? What difference does it make whether we sell a motor car in Germany, Japan or Brazil? What matters is the total volume of our trade, not whether the proportion going to one part of the world is growing or contracting. There can be nothing inherently good in a greater proportion of a given volume of exports going to one particular part of the world.

My third point is about political co-operation. I see great dangers here, although this seems to be our only success story in the Common Market. The first danger, concerns a common foreign policy. I shall not belabour it as it arose in Question Time a short while ago, when the Minister gave a Delphic answer to a question that I and others had raised about the difference between a common foreign policy and political co-operation. He said that the one depended on the other, but he did not make it clear whether the Government favoured or opposed the emergence of a common foreign policy.

The second danger has already been seen. The Commission and the federalists in Europe, having noted the success of political co-operation, will increasingly wish to bring it within the treaty framework of the Community because it is the one success story. That is why we were recently confronted with that absurd document—a draft European Act. It was indefensible and full of Community jargon. I hope that we have seen the last of it, although I suspect that we have not.

The third danger is that of confusing political cooperation with the functions of NATO. We have seen that political co-operation in the EEC can sometimes produce a view, such as that on the Middle East, that is different from that of the United States. That is all well and good, but there is an increasing danger that political co-operation within the Community will try to cover defence and security matters. If there is to be co-ordination of defence and security policy, it must be within the NATO context, not in the Common Market, if only for the simple reason that NATO includes the United States—a pillar of the Western Alliance—and the EEC does not. We must avoid confusion and overlapping. We must keep the Common Market out of defence and security matters and retain NATO for the discussion of those important issues.

There is a gap to which I must draw the Minister's attention. Where do the United States, Britain and other Western European powers jointly discuss foreign policy? At the moment, there is no machinery for such discussions. Political co-operation in the EEC does not cover our friends across the Atlantic. The NATO council excludes several nations that are in the Common Market. Nor does it cover wider political issues.

There is an urgent need for new political consultation machinery at ministerial level to cover our friends across the Atlantic. We saw much confusion about Poland when Solidarity was banned and the military took over. It was discussed within both NATO and the Common Market. There was a great deal of confusion in the Western Alliance as a result of that division of discussion and responsibility. I hope that the Minister will say something about the Government's thinking on the matter for the future.

9.6 pm

Mr. Teddy Taylor (Southend, East)

Most hon. Members attend all debates on European matters. Nevertheless, they tend to be rather similar. I hope that the Minister, his colleagues in the Foreign Office and the rest of the Government will realise that there has been one difference today—the majority of Conservative Back Benchers do not agree with the Government's approach to Europe. Indeed, they want major structural change. They disapprove of moves towards any type of political union or federalism. Perhaps the Government will note that there is a Conservative amendment and that the majority of Conservative Back Benchers do not agree with the way that the Government are going.

I hope that the Minister of State will accept a few points. First, with regard to reform, the six months have been a complete non-event. We have always talked of the need to reform the CAP and the budget. The past six months were different because there were not just the usual words; there was a mandate. It was decided that such reform had to take place by a given date. Far from reforming the CAP, we agreed to higher price rises than even the Commission suggested. Moreover, surpluses will be much higher.

How on earth do the Government believe that we will achieve any reform in the CAP when we have not done so in the circumstances of the past few months? How on earth will we reform the budget? The Prime Minister has worked hard to get rebates, but once again, we must now pay £500 million net per year.

My hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) tells us in every debate on these matters about the wonderful so-called European money that is being spent in the North-West where there is almost the highest unemployment in Europe. Because of the silly funds, for every pound that the EEC spends on sewers in Lancashire and elsewhere the British taxpayer must pay £1.72. Without the silly funds and money going back and forth, we could spend an extra £3,000 million on the sewers of Lancaster and the problems in Perth and East Perthshire that exist in spite of the excellent way in which my hon. Friend the Member for Perth and East Perthshire (Mr. Walker) represents that area.

There has been no progress with the food mountains. Does the Minister appreciate that it has just been revealed that the Common Market spends £8 million every day on exporting cheap food to third countries? That is a staggering amount. It means that since we started the debate, the Common Market has spent about £3 million of our money ensuring that foreigners have much cheaper food than we can supply to our own people. We know that that is wrong.

It is scandalous that the Russians should be propped up with so much money. In every debate the Government say that that is wrong and that something must be done about the cheap food that is going to Russia. What has happened? Two years ago almost 1 million tonnes of cheap food went to Russia. We were told that that was an outrage. Everyone from the Foreign Office to the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) was going to get that sorted out. We were told that the exports would be restricted to traditional levels. In 1980 the figure was not 1 million, but 2 million tonnes. The figure in 1981 was not 2 million tonnes but 3 million tonnes, so the exports of cheap food to Russian have soared.

There has been no reform or movement. The most worrying aspect is trade and jobs. I hope that the Minister will comment on that. We were told that jobs would be safer in the Common Market. We have seen what has happened. We used to sell as much to Europe in manufactures as it sold to us. That was a good and pleasant relationship. We had a profit in trade and manufactures in every one of the 10 years before we joined the Common Market. However, the situation has become worse until last year with Germany alone we had a deficit of about £2,000 million, double the deficit with Japan.

The Minister kindly revealed to me only the other day that over the past six months our deficit in manufacturing trade was £ll million a day with the Common Market. Our profit with the rest of the world was £15 million a day. That represents many jobs. If Europe is selling us £l1 million more in manufacturing trade per day then we are selling to it, that means a lot of jobs. It sickens me when we are told about the tens of thousands of jobs that have been lost in Britain because of Japanese exports.

Conservatives must rethink the issue of the Common Market. The Labour Party is doing so. There is a splendid article by Bob Rowthorn in Marxism Today. He said that Socialists now realised that the way to achieve Socialism was to stay in the Common Market. Let the Government look at New Socialist, where Francis Cripps and 'Terry Ward, two of the closest supporters and advisers of the right hon. Member for Bristol, South-East (Mr. Benn), say that the EMS should be supported and expanded. The CAP is a splendid thing, they say, if we could have a similar industrial policy.

Let the Government look at the article in New Statesman, where Ann Clwyd says why she now supports the Common Market. It is time that the Conservative Party realised that many of the hard Left believe that they can achieve real Socialism in Britain by staying in the Common Market, on the present relationship. It is time that we started rethinking, just as Labour's Left is now doing.

9.12 pm

Mr. Guy Barnett (Greenwich)

The document that we have been debating and the amendment tabled by my right hon. and hon. Friends has enabled the House to have a wide debate. I have listened with great interest to the majority of speeches.

The debate has centred, inevitably, on the three objectives that Lord Carrington set out at the beginning of the British Presidency and which my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) quoted. Those objectives were to deal with three main problems: first, the costs and surpluses that arise from the common agricultural policy; secondly, the proportion of the budget that is currently spent on agriculture; and, thirdly, the unacceptable aspect of the budget, which creates an inequitable situation between member States, especially for the United Kingdom. The issues are of major concern to us in Britain and have been mentioned repeatedly during the debate.

Other matters have come up during the debate. I hope to refer to some later. The hon. Member for Southend, East (Mr. Taylor) referred to trade and employment. Fisheries, which was debated in the House last week, was also mentioned. I listened, as everyone did, with interest to the right hon. Member for Down, South (Mr. Powell) speaking about the degree to which political co-operation as an objective is a process that is designed to lead, and will lead inevitably, if unchecked, to political union.

I shall spend a little time on the CAP and the budget, because the targets of the then Foreign Secretary were unrealistic and have subsequently proved to be so. My hon. Friend the Member for Swindon (Mr. Stoddart) mentioned the fact that time and again, before we went into the EEC and (luring the referendum, we were assured by those who were in favour of entry that we would be able to alter the Common Market from inside and that that was why we should go in.

The argument was that we would be able to alter the Common Market to suit our own priorities and requirements. I find it surprising, therefore, to see the amendment tabled by the hon. Member for Faversham (Mr. Moate) and others and to hear him suggesting dial: it is still possible, after all our experience so far, to change the terms of membership of the EEC. Does the hon. Gentleman really believe that he is talking in practical terms?

We were told years ago, before we entered, that: we could change the EEC from inside, but the common agricultural policy remains intact. The Continental system of industrial preference remains, and so does a budget contribution mechanism that is designed to exact from the United Kingdom a disproportionately heavy contribution.

What makes matters worse—and this has properly been mentioned over and over again—was what happened on 18 May, when the Luxembourg compromise was overruled. Far from making progress during our Presidency, and subsequently, matters have become even worse.

I read with interest an article in The Sunday Times of 23 May by Ronald Butt. He quoted an anonymous senior Conservative Back Bencher who said: All Government statements when we went into the Community, and my own speeches, assumed that the ultimate safeguard of the veto in our national interest was there. I would never have been able to persuade my constituents, or myself, that it was right to join but for the veto. I hope that that senior Back Bench Conservative agrees with the amendment tabled by the hon. Member for Faversham, because the Minister of State gave no assurances today. Many other hon. Members including my hon. Friend the Member for Newham, North-East (Mr. Leighton) agree with me on that.

In answer to my question on 7 July the Minister of State said that since 18 May the Luxembourg convention had not been breached again—that was remarkable, for one or two weeks—and that what counted was how decisions were taken in future. We all agree on that. However, the fact is that the convention has been breached, and what worries me and many other hon. Members is that, after all the huffing and puffing from the Government immediately after 18 May, things have gone remarkably quiet. Therefore, I suggest that Conservative hon. Members who think that there is a real chance of changing the Common Market from the inside should think seriously again.

It has been suggested that we should take some comfort from the fact that the share of budget resources now devoted to agriculture has declined. I believe that that is due to temporary factors in world markets, which has enabled the EEC to cut export subsidies paid to dump surpluses on world markets. The evidence is that the long-term picture is bleak.

A study recently completed by British and American economists at Stamford University shows that the budgetary cost of the common agricultural policy is likely to rise by the end of this decade from about 11 billion or 12 billion ECU's to nearly 44 billion ECU's. That is a threefold increase. It typifies the mad logic of the whole common agricultural policy. It is illustrated by the farm settlements of last year and this year. There is no escape from that.

Every European country has institutionalised farm lobbies, with ministries to take account of their interests. A mechanism is built into the whole system for the creation of surpluses. Our membership of the Common Market commits us to a system that guarantees the creation of agricultural surpluses as a means of raising the incomes of farmers in Europe, in some cases to extremely high levels. It also commits us to the disposal of those surpluses on to world markets, dumped at subsidised prices, thus depressing world prices and destroying the livelihood of farmers in the Third world.

My hon. Friend the Member for Newham, South (Mr. Spearing) referred to the degree to which subsidies are used in the disposal of surpluses to countries behind the Iron Curtain. That is serious enough, but I find much more serious the disposal of surpluses on to world markets that depress world prices and have such damaging effects on people in the developing world who are trying to earn a living.

In no case is that more serious than with sugar. Several of the poorer countries export over 80 per cent. of their sugar production, and for many of them it is a major source of employment. It is subject anyway to the devastating consequences of fluctuations in the international sugar market. World sugar stocks, at the end of 1981–82, are forecast to have been at 36 per cent. of world consumption—the highest figure ever.

Between 1971 and 1977 the Common Market contributed to a quarter of world sugar production increase through the planting of beet. It subsidises beet production, it protects beet sugar producers against cane producers in the Third world, and it still refuses to sign the international sugar agreement, although it benefits from it as a free rider. One illustration of the result is that in the second half of 1979 Jamaica needed to produce 2.7 times as much sugar to buy exactly the same amount of manufactured goods as it did in 1970.

Another example of the serious effect of the common agricultural policy on the Third world is in terms of food aid. Katherina Focke, in a report which I believe she made to the European Assembly, made the following damning comment on the Community's food aid policy. She said that it is dictated by agricultural interests rather than any intention to promote development; it is an inefficient way of distributing European surplus production to the poorer countries, associated with high costs, countless mishaps, delays, wrangling over responsibility and bureaucratic obstacles. A Select Committee in another place on the European Communities' report on "Development Aid Policy" points up the damaging effect which indiscriminate distribution of food surpluses can have in the Third world. The report says: Although the dangers of food aid can be avoided, the way in which the EEC proceeds to give food aid makes it as difficult as it can be to ensure that the negative effects are avoided and positive effects are attained. What it does, in effect, is to depress prices in the countries where it is distributed, bankrupt local farmers, who are desperately trying to make a living and to help themselves, and at the same time fails to meet the needs of those who are really starving. So long as we remain a member of the EEC, we are a party to those policies and we are helping to pay for them.

The right hon. Member for Crosby (Mrs. Williams) says from time to time that withdrawal from the Common Market by Britain would involve a retreat from internationalism. I am interested to note her absence this evening, and that of the dog that did not bark in the night, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), who ought to have been here to defend the EEC. I heard the right hon. Member for Crosby make that remark about retreating from internationalism when thousands of people came to the House to lobby us about the Brandt report. But this is not internationalism. At worst it is international brigandage. At best it is an attempt to move not towards internationalism but towards the creation of a larger country—a sort of economic autarchy—regardless of the cost that it imposes and the damage that it does to some of the poorest people in the world.

I shall be told that there is the Lomé convention, which guarantees access to the products of the ACP countries. A recent accession to the Lomé convention as a new ACP country is Zimbabwe, also a new member of the Commonwealth. The House should hear what the Prime Minister of Zimbabwe said about the Common Market's treatment of the Third world, particularly through the Lomé convention and the way it affects his country. This is a quotation from The Times dated 28 May: Mr. Robert Mugabe, Prime Minister of Zimbabwe, told the European Commission that his country was 'gravely concerned by the protectionist measures adopted by the Community', in restricting some exports from Lomé Convention countries to the EEC. This, he said, was a clear violation of the commitment entered into under the terms of the convention. Maize, wheat, bran and offal were all affected by these measures, he said, while tariffs on Lomé exports of cocoa and butter, and safeguard measures on poultry exports, were also contrary to the conventions. The result of this, he said, was that the Lomé share of EEC markets had fallen from 7 per cent. to 5.5 per cent. in a year, while the EEC increased its exports to the Lomé market by 4 per cent. over the same period. This, in turn, had limited the investment capacities of the Lomé states, and made urgent corrective measures necessary". I repeat that so long as we remain in the Common Market we are parties to those policies and are paying for them. It forces us to discriminate against Commonwealth countries in a host of ways.

One of the most damaging forms of discrimination—damaging in terms of good relations between this country and Commonwealth countries—is the treatment of overseas students. The Government have instituted a system of full costs for overseas students, involving tuition fees of between £2,000 and £3,000 a year, despite opposition from Labour Members. If a student is not supported by the ODA, the British Council, or under the Commonwealth Fellowship plan, he or she has to pay the full cost—unless, of course, the student comes from the Common Market or from a French dependent territory such as Martinique. Then the student pays only about £700. If the student comes from Hong Kong or the Falkland Islands, he or she has to pay the full cost.

I have some interesting figures which show that between 1979–80 and 1980–81 there was an 11 per cent. increase in EEC-based students, a 43 per cent. drop in students from the Caribbean, and a 24 per cent. drop in students from the Third world Commonwealth as a whole. Is that internationalism? Does it show any regard for the education needs of the Third world?

I am glad that my hon. Friend the Member for Swindon mentioned the Falkland Islands. The Common Market received much publicity for the grudging support that it gave us during that period. The right hon. Member for Hillhead made this remark in an article in The Guardian of 7 June: We should have been aware that the Community thought we owed them some gratitude over Argentine sanctions. I contrast that with the remark that was made by the Secretary-General of the Commonwealth, Shridath Ramphal, speaking on behalf of many desperately poor countries in the world which backed us to the full, along with New Zealand, Australia and many others: In making a firm and unambiguous response to Argentine aggression Britain is rendering a service to the international community as a whole".

Mr. Normanton

May I put to the hon. Gentleman a situation that could arise? Let us suppose that Britain were to withdraw from the European Community. Is the hon. Gentleman seriously and honestly saying that the developing countries that are members of the Lomé convention would come out of the convention and sever their relationship with the Community and align themselves with us? If the hon. Gentleman thinks that, he is living in a world that is divorced from reality.

Mr. Barnett

I am not saying that those countries would tear up the Lomé agreement. In so far as it is of any benefit to them, hope that they will continue to operate in Lomé, but I hope that we, having come out of the EEC, would give better terms to the Third world than the Common Market does. However, I shall say more on that subject in a moment.

The Opposition amendment refers, very properly, to British interests. Perhaps the most serious damage done to our interests has been in trade. I am glad that the Minister for Trade is on the Front Bench. Normally, Britain imports nearly half of its food and most of its raw materials and pays for them by earning a surplus in manufactures. Therefore, we must trade predominantly with those countries that find it cheaper to buy their manufactures from us rather to make them themselves, or we must trade with countries that can sell us food more cheaply than we can grow it.

The EEC countries do not belong in either of these categories. Nearly all of our natural trading partners are Commonwealth countries. That is a fact that has nothing to do with political sentiment or trading preference. Politically motivated interference with natural trading patterns can only damage our economy and since we entered the EEC the evidence is that it has done so. It is remarkable that our trade with the rest of the world in 1980 was £5,000 million in surplus, although we no longer enjoy preferential treatment there and are denied the chance of giving non-EEC countries reciprocal advantages in the EEC markets.

It is right that our amendment should deal with British interests, but the debate is about something more fundamental. A well-known gentleman, Mr. Mansholt, said: The Common Market is not just about the price of butter. We joined the Common Market at a time when Britain was losing its position and influence in world affairs and when we felt our political and economic power slipping away. We made a fundamental mistake then, but today our membership of the Common Market is irrelevant, not merely to our interests, but to the contribution that we should be making in a dangerous and divided world. There are mounting problems of poverty, deprivation, unemployment and insolvency in the Third world, and what do we do? We belong to an association that ensures that our market gives preference to Common Market producers over Third world producers. We subscribe to a system that results in the disposal of surpluses in world markets, which makes it more and more difficult for Third world countries to make a living for themselves and to solve their problems of economic and social development.

That is not internationalism, but the creation of a larger nationalism—a "fortress Europa". R.H. Tawney said: A poor society cannot be too poor to find a right order of life, nor a rich society too rich to have need of it. That is the issue, and that is why I support the Labour Party's policy to seek disengagement from the Treaty of Rome.

9.32 pm

The Minister for Trade (Mr. Peter Rees)

After an interval of some years, it is a great privilege for me to take part in a debate on the European Community. It is an important subject. We have had a coruscating debate and a charming consistency in the views of most of those who have taken part. I have taken the precaution of reading the most recent debates, for example, on the Genscher-Colombo proposals, on fisheries policy and earlier reports on Community affairs. The same names appear and the views expressed do not alter perceptibly, which perhaps adds substance to them. We must refine those opinions during the debates.

I turn, first, to the contribution by the hon. Member for Liverpool, Walton (Mr. Heifer), who rode tandem with his hon. Friend the Member for Greenwich (Mr. Barnett). They identified certain weaknesses in the Community that this Administration recognise, as doubtless did previous Labour Administrations. As is evident from the document before us, we hoped to correct those weaknesses during our Presidency and, as we did not entirely succeed in so doing, we hope to do it in the years to come. We set out with high hopes, but a Presidency lasts for only six months, which is rather less than the parliamentary year. If we reflect on how much or how little we achieve during one Parliament, it may put our efforts in one Presidency into slightly better perspective.

I readily concede that we need fundamental changes in the common agricultural policy, the budget and the direction of resources into industry and services. Those points were made by both Opposition spokesmen and by many right hon. and hon. Members on both sides of the House.

I am always a little surprised by the contributions from the Opposition Front Bench, because there is total amnesia about the renegotiation in 1975. I recognise that the hon. Member for Walton has a stainless record on that matter and that the hon. Member for Greenwich was not a member of that Administration. It must have been hard for the Shadow Cabinet to find two Members who could speak with such robustness about the problems but who did not carry the burden of what was apparently not achieved in those renegotiations.

I remind the House—although it may not be necessary—of what the right hon. Member for Huyton (Sir H. Wilson) said in his opening speech on 7 April 1975: My judgment, on an assessment of all that has been achieved and all that has changed"— that is as a result of negotiations is that to remain in the Community is best for Britain, for Europe, for the Commonwealth, for the Third World and the wider world".—[Official Report, 7 April 1975; Vol. 889, c. 837.]

Mr. John Silkin (Deptford)

He was wrong.

Mr. Rees

The right hon. Gentleman says that the right hon. Member for Huyton was wrong. It is easy to disown one's former leaders.

Mr. Guy Barnett

I voted against it.

Mr. Rees

All credit to the hon. Gentleman, but he was in a small minority in the Labour Party at that time.

Mr. Jay

Does the Minister recall that not only did my hon. Friend the Member for Greenwich (Mr. Barnett) and I vote against the proposals, but that the Conservative Party voted wholly in favour of them?

Mr. Rees

We certainly did, and there is no shame in that. We recognised that, as the right hon. Member for Huyton said, to remain in the Community would benefit Britain, Europe and—I say this to the hon. Member for Greenwich—the wider world.

How shall we approach the problem in future if, contrary to my hope and expectation, a Labour Government are returned to power at the next general election? The hon. Member for Walton owes it to the House and certainly to the hon. Member for Bolsover (Mr. Skinner) to give a clearer statement of the Labour Party's position.

The hon. Member for Greenwich made special play of the problems of overseas students. He will know that the Overseas Students Trust produced a paper that has been considered carefully. It is not for me to forecast the result of the consideration, but there could be an amelioration of the position.

As to sugar, the hon. Gentleman will be aware that the Foreign Affairs Council agreed in January to an increase in the price offered for ACP sugar this year from 7.5 per cent. to 8.5 per cent. We shall remain closely in touch with the international sugar organisation about the development of the international sugar agreement, but, as no changes seem to be proposed to the structure, we are bound to have reservations about the result of the agreement.

The intervention of the right hon. Member for Down, South (Mr. Powell) was coloured by his special brand of sardonic wit and his fastidious preoccupation with language. His argument appeared to be that it was idle to try to reconcile the foreign policies of Community members unless there was an institutional framework. Unless one has such a formal link, no weight could be given to the views and they would simply be a coincidental expression of opinions by the member States. I did not grasp the force of that argument. It would still be to our advantage and to that of the world to know that ten countries of comparable outlook, with strong economic ties through the Community, could approach a problem with the same view and with the same objective in mind.

I know that the right hon. Gentleman is always keen to see that form is matched to substance, but in this instance I should have thought that there was plenty of substance underlying the co-ordination of our foreign policy. Nor could I accept his proposition, either in logic or fact, that everything gained by the Community is necessarily something lost to the House.

My hon. Friend the Member for Faversham (Mr. Moate) was courteous enough to tell me that he would not be here for the wind-up speeches. He, like many other hon. Members, touched on the palpable breach of the Luxembourg compromise, about which there can be no argument. The position was clearly, lucidly and adequately covered by my right hon. Friend the Minister of State when he opened the debate. However, we expect to see this convention continue.

It is not for me to speculate on the precise position of those who have breached the compromise, but I imagine that they will reflect on the implications of what has occurred. It may be necessary to reconsider in the future what constitutes a vital national interest in this context.

Mr. Marlow

I am grateful to my hon. and learned Friend for giving way. He is very courteous to do so at this stage. Is he aware that the House and the country joined the Community on the basis of the Luxembourg compromise operating? There is no doubt about that. We have discovered now that it does not operate. Is it not time that the Government did something about that?

Mr. Rees

I recall, perhaps more clearly than my hon. Friend since I was in the House at the time, the statement made by my right hon. and learned Friend the Member for Hexham (Mr. Rippon). I recall the important part that he took in those debates. However, I think my hon. Friend the Member for Northampton, North (Mr. Marlow) is jumping to conclusions rather hastily in assuming that the compromise is entirely defunct. I suspect that we shall find that it still has considerable validity and will govern the debates in the Community. If it turns out to be defunct, that is a different position, which we shall have to reconsider.

Mr. Heffer

Will the hon. and learned Gentleman clarify one point, which is of great importance? The Government have, on a number of occasions, made a clear statement that they intend to stand by the Luxembourg compromise and accept that it is an agreement to disagree. We do not know quite what that means, but apparently it means that they want to accept the previous position. Is the hon. and learned Gentleman now saying that the Government are moving away from that clear statement to the House? Surely that is the Government once again giving way under pressure from the rest of the Common Market?

Mr. Rees

Nothing like that can be construed either out of what I have said or out of what my right hon. Friend has said. My right hon. Friend may have put it a little more eloquently, at greater length and more clearly than I have. However, I rest on what he and I have said. If the hon. Member for Walton has any doubt, he can study Hansard tomorrow.

I shall now answer some of the points made by the hon. Member for Newham, South (Mr. Spearing).

Mr. Stoddart

rose—

Mr. Rees

Time is rather against us. I have given way a great deal already. I shall come to the contribution of the hon. Member for Swindon (Mr. Stoddart).

Mr. Jay

rose—

Mr. Rees

I know that the right hon. Member for Battersea, North (Mr. Jay), with commendable patience, has sat through much of the debate without contributing. Perhaps he will allow me to proceed a little further.

Mr. Jay

This is a matter of some importance. The hon. and learned Gentleman said that he had made the matter clear. He said that the Luxembourg compromise was not entirely defunct. Is it now the Government's policy that it is only partially defunct?

Mr. Rees

I was merely stating my view of a set of circumstances and facts that had nothing to do with Government policy. I was merely asked to respond—

Mr. Ioan Evans (Aberdare)

rose—

Mr. Rees

I shall not give way on this point any more. Otherwise, I shall not be able to do justice to the contributions of hon. Members. In addition, if time permits, I have one or two small things to say on my own account. Surely that is permitted to the Minister who replies.

The hon. Member for Newham, South asked whether the Community could impose any fresh taxes that would be binding on Britain without the authority of the House. The answer is clearly "No". That would have to be by the unanimous decision of the Council of Ministers, ratified by the House. I hope that will reassure the hon. Gentleman.

Mr. Spearing

rose—

Mr. Rees

No, I shall not give way. I have made the position clear. I could not have made it clearer.

Mr. Spearing

I did not ask that question.

Mr. Rees

It is the hon. Gentleman's good fortune that he has attributed to him an important constitutional point. He will now be better informed and will not have to raise it on another occasion.

Mr. Spearing

rose—

Mr. Rees

We have heard from the hon. Member for Newham, South in Common Market debates on many occasions. I hope that he will now allow me to continue.

Mr. Spearing

rose—

Mr. Rees

I am not giving way to the hon. Member for Newham, South. I could not make my position clearer.

Mr. Spearing

The hon. and learned Gentleman dare not give way.

Mr. Rees

The hon. Member for Hackney, South and Shoreditch (Mr. Brown)—speaking I assume on behalf of the Social Democratic Party—raised several specific points. His first point concerned the anti-poverty programme that is discussed in paragraph 9.11. That was considered by the Council of Ministers in the spring. It is a small but valuable programme to which the Government certainly subscribe.

The hon. Gentleman then raised the Community energy strategy that is referred to in paragraph 10.4 That was considered at the Council of Energy Ministers this month, and useful conclusions were reached on coal. More work has to be done on a coal programme that would certainly benefit the United Kingdom as Western Europe's largest coal producer. The hon. Gentleman also touched on the Vredeling report. I cannot promise progress on that highly controversial report. I do not think that the Government would subscribe to many of the propositions enshrined in it.

The hon. Member for Newham, North-East (Mr. Leighton), as one would expect, raised many points. He attempted to suggest that my right hon. Friend the Minister of Agriculture, Fisheries and Food was selling out the British fishing industry. I reassure the hon. Gentleman and the House that the Minister has kept closely in touch with the fishing industry and, in negotiating, he has its full support.

The hon. Gentleman also referred to Japan, which leads to some general points on trade to which I hope the House will let me turn. My hon. Friend the Member for Southend, East (Mr. Taylor)—to whose contribution I hope that I shall have time to come if interventions allow—said that the imbalance in our trade with Germany is about the same as the imbalance in our trade with Japan. However, there are two fundamental differences to which I would draw the attention of the House.

First, the Japanese penetration of our market is in one or two narrow sectors and is therefore rather more destructive to British industry than is that of Germany. Secondly, the German market is open to our exporters, while we have considerable reservations about the difficulties encountered by British exporters in the Japanese market. There is a great range of barriers and difficulties to be encountered there.

It has been the Government's consistent policy as part of the European Community to bring pressure to bear on our friends in Japan to ensure that we have the same free access to their markets as they have to ours. As a result of that pressure during the United Kingdom Presidency, an emergency import package was announced by the Japanese Government to reduce the surplus on its current account, and there was a clear statement of its intention to introduce the tariff reductions agreed in the Tokyo round two years earlier than planned.

Beyond that, an ombudsman was appointed to handle complaints by foreign companies. I hope that British companies will take advantage of that. Subsequently, just before the Versailles summit this summer, Prime Minister Suzuki announced a further package of measures. He has publicly encouraged the import of goods and has set up an inquiry into Japanese distribution networks. In the case of Japan and, indeed, in relation to other trade questions, the United Kingdom carries more clout as a member of the European Community than it would do on its own.

I was happy to hear the commendation of my hon. Friend the Member for Cheadle (Mr. Normanton) of the United Kingdom's Presidency. My hon. Friend speaks with great authority on these matters. He suggested that the United Kingdom has not yet learnt adequately how to influence events in the European Community. One of the biggest disadvantages from which we suffer is that a major party in our parliamentary system still seems not to have learnt the true lessons of our adherence to the Common Market and still seems dedicated to taking us out. The precise terms on which we would be taken out must be explored in any way open to us.

The hon. Member for Waltham Forest (Mr. Deakins) drew particular attention to the trade figures. The hon. Gentleman asked why Department of Trade Ministers boasted of an increase in our trade. I am not conscious of having boasted of any increase in our trade with the European Community. I merely stated it as fact to underline the importance of the European Community as a market for our industry and the people who work in it.

Hon. Members will have studied with admiration the powerful article in The Times today of my hon. Friend the Member for Southend, East. My hon. Friend has also produced a great pamphlet for the Monday Club. He and the hon. Member for Walton should perhaps get together. The hon. Member for Walton and his right hon. and hon. Friends have their reservations about the European Community. They feel that it will impede the introduction of full blooded Socialist policies. My hon. Friend the Member for Southend, East seems to feel that our membership of the European Community will facilitate the introduction of these policies. It is difficult for me to intervene in this specialised debate.

Mr. Teddy Taylor

Why does not the Minister extend his reading? If he reads New Socialist and Marxism Today, he will see that a great fundamental change is taking place on the extreme Left of the Labour Party where it is realised that the real road to Socialism lies through institutions like the CAP, which is a Socialist nonsense.

Mr. Rees

Why bother to read the backroom boys when we can hear it all from the Front Benches? This is a specialised debate that I feel I should leave to the hon. Member for Walton and my hon. Friend the Member for Southend, East to resolve between themselves.

I wish to refer briefly to steel. I regret that there is not more time available. The United States Administration has imposed countervailing duties on the products of a number of Western European steel companies and is in the middle of an anti-dumping investigation. In the case of the United Kingdom, these duties affect principally the British Steel Corporation but also some private producers. The countervailing tariff in respect of the British Steel Corporation amounts to 40 per cent. It would, I believe, if not modified or rescinded, effectively shut out about 200,000 tonnes of British Steel's exports to the United States.

While we recognise that the United States' steel industry is, in a period of world recession, going through a difficult time, we cannot accept that debts written off by Her Majesty's Government or moneys introduced into British Steel by the British taxpayer to restructure it and to reduce its capacity from 24 million tonnes a year to about 13½ million tonnes and to halve its work force can be regarded in any sense as a subsidy to exports to the United States. Such a view would, we feel, involve a travesty of the facts. I stated as much to Commerce Secretary Baldrige who, it will interest the House to know, commended, in a speech that he made recently to Congress, what the British Steel Corporation has done.

Intense representations have been made by European steel companies, by individual Governments and by the Commission to the United States Administration but so far, I regret, without success. A further attempt by the five European countries most directly affected, including the United Kingdom, and orchestrated by the Commission, will be undertaken during the next few days to beat the American legislative deadline on 24 July. I cannot predict the outcome of that attempt.

The Community is extremely disturbed by that and other transatlantic trade developments. The Community has raised at GATT those countervailing duties as contravening GATT rules. At my insistence the European Community will also raise a new United States copyright law which has just passed through Congress over a presidential veto. It will have the effect of restricting the printing of many English language books sold in the United States of America. We regard that as a damaging and protectionist measure. Finally, there is the trans-Siberian pipeline. I emphasise that while we share their detestation of what happened in Poland, and the principles, practices and policies of the USSR, we feel that the burden of any economic measures taken against the Soviet Union should be shared fairly.

The Government were not slow earlier in the year to put together a tough package of economic measures aimed at both Poland and the Soviet Union, but we object strongly to the introduction by the United States Administration of measures which are extra—territorial and retrospective in their effect without full and detailed consultation. For that reason we have activated the first part of the Protection of Trading Interest Act. If the position requires it, we shall not hesitate to bring that Act fully into effect.

It is evident that the European Community—I know that the Opposition may have reservations—is the central focus for Great Britain's trade. During the past decade our exports to the Community grew at twice the pace of those to the outside world. I state that as a fact, not a boast, because it reflects no particular credit on me or the Government. Exports reached a level of over £20½ billion in 1980. British industry has carried out a more far-reaching reorganisation over the past 30 years than any country in Europe. It has involved massive changes, as the more technologically demanding markets of Western Europe have taken the place of the relatively less sophisticated markets of the Commonwealth in their importance to our trade and economy.

However one regards the aspirations expressed by the hon. Member for Greenwich, that is commercial fact, and we should fly in the face of reality if we imagined that that trend could be reversed without considerable damage to British industry, as has been pointed out by the CBI. The Opposition Front Bench owe it to the House and the country to explain clearly what their policy is. Is it, as stated by their discussion paper, to which the hon. Member for Walton put his name in July 1981, to withdraw without further ado if they are returned to power, and to negotiate an agreement with the European Community afterwards? I shall willingly give way to the hon. Member for Walton if he will clarify that. Is it now the Opposition's declared policy that in the event of the Labour Party forming the next Government it will, without negotiation, withdraw the United Kingdom from the European Community?

Mr. Heffer

The hon. and learned Gentleman obviously did not listen to my speech. I made it absolutely clear that we reject outright withdrawal, and that we would negotiate our withdrawal from the Common Market on the basis of proper agreements. That is what I said.

Mr. Rees

The hon. Gentleman and his hon. Friends have possibly been influenced by the admirable pamphlet produced by the Labour Group for Europe which I believe talks more sense than the Opposition Front Bench. On another occasion the hon. Gentleman must tell the House with more candour than he has tonight exactly what terms he and his hon. Friends would stand out for, which they feel that they would be able to negotiate with the European Community.

The amendment in the name of the official Opposition is characteristic of a party which is divided on fundamental issues, which is incapable of reconciling its differences and which has demonstrated clearly that it is not fit to be entrusted with the responsibilities of government. I invite the House to reject the amendment with contempt.

Question put, That the amendment be made:—

The House divided: Ayes 209, Noes 322.

Division No. 287]	[10 pm
AYES
Adams, Allen	Benn, Rt Hon Tony
Anderson, Donald	Bennett, Andrew (St'kp't N)
Archer, Rt Hon Peter	Bidwell, Sydney
Ashley, Rt Hon Jack	Booth, Rt Hon Albert
Ashton, Joe	Boothroyd, Miss Betty
Atkinson, N. (H'gey,)	Bottomley, Rt Hon A.(M'b'ro)
Bagier, Gordon A.T.	Bray, Dr Jeremy
Barnett, Guy (Greenwich)	Brown, Hugh D. (Provan)
Barnett, Rt Hon Joel (H'wd)	Brown, R. C. (N'castle W)

Brown, Ron (E'burgh, Leith)	Jay, Rt Hon Douglas
Buchan, Norman	John, Brynmor
Callaghan, Jim (Midd't'n & P)	Johnson, James (Hull West)
Campbell, Ian	Johnson, Walter (Derby S)
Campbell-Savours, Dale	Jones, Rt Hon Alec (Rh'dda)
Canavan, Dennis	Jones, Barry (East Flint)
Carmichael, Neil	Kaufman, Rt Hon Gerald
Carter-Jones, Lewis	Kerr, Russell
Clark, Dr David (S Shields)	Kilfedder, James A.
Clarke, Thomas C'b'dge,	Kilroy-Silk, Robert
A'drie	Lambie, David
Cocks, Rt Hon M. (B'stol S)	Lamond, James
Coleman, Donald	Leadbitter, Ted
Concannon, Rt Hon J. D.	Leighton, Ronald
Conlan, Bernard	Lewis, Arthur (N'ham NW)
Cook, Robin F.	Lewis, Ron (Carlisle)
Cowans, Harry	Litherland, Robert
Cox, T. (W'dsw'th, Toot'g)	Lofthouse, Geoffrey
Craigen, J. M. (G'gow, M'hill)	Lyon, Alexander (York)
Crowther, Stan	McDonald, Dr Oonagh
Cryer, Bob	McElhone, Frank
Cunliffe, Lawrence	McKay, Allen (Penistone)
Cunningham, Dr J. (W'h'n)	McKelvey, William
Dalyell, Tam	MacKenzie, Rt Hon Gregor
Davidson, Arthur	McNamara, Kevin
Davies, Rt Hon Denzil (L'lli)	McWilliam, John
Davis, Clinton (Hackney C)	Marks, Kenneth
Davis, Terry (B'ham, Stechf'd)	Marshall, D (G'gow S'ton)
Deakins, Eric	Marshall, Dr Edmund (Goole)
Dean, Joseph (Leeds West)	Marshall, Jim (Leicester S)
Dewar, Donald	Martin, M (G'gow S'burn)
Dixon, Donald	Mason, Rt Hon Roy
Dobson, Frank	Maxton, John
Dormand, Jack	Maynard, Miss Joan
Dubs, Alfred	Meacher, Michael
Duffy, A. E. P.	Mikardo, Ian
Dunnett, Jack	Millan, Rt Hon Bruce
Dunwoody, Hon Mrs G.	Miller, Dr M. S. (E Kilbride)
Eadie, Alex	Mitchell, Austin (Grimsby)
Eastham, Ken	Molyneaux, James
Edwards, R. (W'hampt'n S E)	Morris, Rt Hon C. (O'shaw)
Ellis, R. (NE D'bysh're)	Morris, Rt Hon J. (Aberavon)
English, Michael	Morton, George
Evans, Ioan (Aberdare)	Moyle, Rt Hon Roland
Ewing, Harry	Newens, Stanley
Faulds, Andrew	O'Neill, Martin
Field, Frank	Orme, Rt Hon Stanley
Flannery, Martin	Park, George
Fletcher, Ted (Darlington)	Parker, John
Foot, Rt Hon Michael	Parry, Robert
Forrester, John	Pavitt, Laurie
Foulkes, George	Pendry, Tom
Fraser, J. (Lamb'th, N'w'd)	Powell, Rt Hon J.E. (S Down)
Garrett, John (Norwich S)	Powell, Raymond (Ogmore)
Garrett, W. E. (Wallsend)	Prescott, John
George, Bruce	Price, C. (Lewisham W)
Gilbert, Rt Hon Dr. John	Race, Reg
Golding, John	Radice, Giles
Gourlay, Harry	Rees, Rt Hon M (Leeds S)
Graham, Ted	Richardson, Jo
Hamilton, James (Bothwell)	Roberts, Allan (Bootle)
Hamilton, W. W. (C'tral Fife)	Roberts, Ernest (Hackney N)
Hardy, Peter	Roberts, Gwilym (Cannock)
Harrison, Rt Hon Walter	Robertson, George
Hart, Rt Hon Dame Judith	Robinson, G. (Coventry NW)
Hattersley, Rt Hon Roy	Rooker, J. W.
Haynes, Frank	Ross, Ernest (Dundee West)
Healey, Rt Hon Denis	Rowlands, Ted
Heffer, Eric S.	Ryman, John
Hogg, N. (E Dunb't'nshire)	Sever, John
Holland, S. (L'b'th, Vauxh'll)	Sheerman, Barry
Home Robertson, John	Sheldon, Rt Hon R.
Homewood, William	Shore, Rt Hon Peter
Hooley, Frank	Short, Mrs Renée
Howell, Rt Hon D.	Silkin, Rt Hon J. (Deptford)
Hoyle, Douglas	Silkin, Rt Hon S. C. (Dulwich)
Hughes, Mark (Durham)	Silverman, Julius
Hughes, Robert (Aberdeen N)	Skinner, Dennis
Hughes, Roy (Newport)	Smith, Rt Hon J. (N Lanark)
Janner, Hon Greville	Soley, Clive

Spearing, Nigel	Weetch, Ken
Spriggs, Leslie	Welsh, Michael
Stallard, A. W.	White, Frank R.
Stoddart, David	White, J. (G'gow Pollok)
Strang, Gavin	Whitehead, Phillip
Straw, Jack	Whitlock, William
Summerskill, Hon Dr Shirley	Williams, Rt Hon A. (S'sea W)
Thomas, Dafydd (Merioneth)	Wilson, Rt Hon Sir H.(H'ton)
Thomas, Dr R. (Carmarthen)	Wilson, William (C'try SE)
Thorne, Stan (Preston South)	Winnick, David
Tilley, John	Woodall, Alec
Tinn, James	Woolmer, Kenneth
Torney, Tom	Wright, Sheila
Urwin, Rt Hon Tom	Young, David (Bolton E)
Varley, Rt Hon Eric G.
Wainwright, E. (Dearne V)	Tellers for the Ayes:
Walker, Rt Hon H.(D'caster)	Mr. Derek Foster and
Watkins, David	Mr. Hugh McCartney.

NOES
Adley, Robert	Cockeram, Eric
Alexander, Richard	Colvin, Michael
Alison, Rt Hon Michael	Cope, John
Alton, David	Cormack, Patrick
Amery, Rt Hon Julian	Corrie, John
Ancram, Michael	Costain, Sir Albert
Arnold, Tom	Cranborne, Viscount
Aspinwall, Jack	Crawshaw, Richard
Atkins, Rt Hon H.(S'thorne)	Crouch, David
Atkins, Robert(Preston N)	Cunningham, G. (Islington S)
Atkinson, David (B'm'th,E)	Dickens, Geoffrey
Baker, Kenneth (St.M'bone)	Dorrell, Stephen
Baker, Nicholas (N Dorset)	Douglas-Hamilton, Lord J.
Banks, Robert	Dover, Denshore
Beaumont-Dark, Anthony	du Cann, Rt Hon Edward
Beith, A. J.	Dunn, James A.
Bendall, Vivian	Dunn, Robert (Dartford)
Benyon, Thomas (A'don)	Durant, Tony
Benyon, W. (Buckingham)	Dykes, Hugh
Best, Keith	Eden, Rt Hon Sir John
Bevan, David Gilroy	Edwards, Rt Hon N. (P'broke)
Biffen, Rt Hon John	Eggar, Tim
Biggs-Davison, Sir John	Elliott, Sir William
Blackburn, John	Ellis, Tom (Wrexham)
Blaker, Peter	Emery, Sir Peter
Bonsor, Sir Nicholas	Fairbairn, Nicholas
Boscawen, Hon Robert	Fairgrieve, Sir Russell
Bottomley, Peter (W'wich W)	Faith, Mrs Sheila
Bowden, Andrew	Farr, John
Boyson, Dr Rhodes	Fell, Sir Anthony
Braine, Sir Bernard	Fenner, Mrs Peggy
Bright, Graham	Finsberg, Geoffrey
Brinton, Tim	Fisher, Sir Nigel
Brittan, Rt. Hon. Leon	Fletcher, A. (Ed'nb'gh N)
Brocklebank-Fowler, C.	Fookes, Miss Janet
Brooke, Hon Peter	Forman, Nigel
Brotherton, Michael	Fowler, Rt Hon Norman
Brown, Michael (Brigg & Sc'n)	Fraser, Peter (South Angus)
Brown, Ronald W. (H'ckn'y S)	Fry, Peter
Browne, John (Winchester)	Gardner, Edward (S Fylde)
Bruce-Gardyne, John	Garel-Jones, Tristan
Bryan, Sir Paul	Gilmour, Rt Hon Sir Ian
Buck, Antony	Ginsburg, David
Budgen, Nick	Glyn, Dr Alan
Bulmer, Esmond	Goodhart, Sir Philip
Burden, Sir Frederick	Goodhew, Sir Victor
Butcher, John	Goodlad, Alastair
Cadbury, Jocelyn	Gorst, John
Carlisle, John (Luton West)	Gow, Ian
Carlisle, Kenneth (Lincoln)	Gower, Sir Raymond
Carlisle, Rt Hon M. (R'c'n)	Grant, Anthony (Harrow C)
Cartwright, John	Grant, John (Islington C)
Chalker, Mrs. Lynda	Gray, Hamish
Channon, Rt. Hon. Paul	Greenway, Harry
Chapman, Sydney	Griffiths, E.(B'y St. Edm'ds)
Churchill, W. S.	Griffiths, Peter Portsm'th N)
Clark, Hon A. (Plym'th, S'n)	Grist, Ian
Clark, Sir W. (Croydon S)	Grylls, Michael
Clarke, Kenneth (Rushcliffe)	Gummer, John Selwyn
Clegg, Sir Walter	Hamilton, Hon A.

Hamilton, Michael (Salisbury)	Monro, Sir Hector
Hampson, Dr Keith	Montgomery, Fergus
Hannam, John	Moore, John
Haselhurst, Alan	Morgan, Geraint
Havers, Rt Hon Sir Michael	Morris, M. (N'hampton S)
Hawkins, Sir Paul	Morrison, Hon C. (Devizes)
Hawksley, Warren	Morrison, Hon P. (Chester)
Hayhoe, Barney	Mudd, David
Heath, Rt Hon Edward	Murphy, Christopher
Heddle, John	Myles, David
Henderson, Barry	Neale, Gerrard
Heseltine, Rt Hon Michael	Needham, Richard
Higgins, Rt Hon Terence L.	Nelson, Anthony
Hill, James	Neubert, Michael
Hogg, Hon Douglas (Gr'th'm)	Newton, Tony
Holland, Philip (Carlton)	Normanton, Tom
Hooson, Tom	Nott, Rt Hon John
Horam, John	O'Halloran, Michael
Hordern, Peter	Onslow, Cranley
Howe, Rt Hon Sir Geoffrey	Oppenheim, Rt Hon Mrs S.
Howell, Rt Hon D. (G'ldf'd)	Osborn, John
Howell, Ralph (N Norfolk)	Page, John (Harrow, West)
Hunt, David (Wirral)	Page, Richard (SW Herts)
Hunt, John (Ravensbourne)	Parkinson, Rt Hon Cecil
Hurd, Rt Hon Douglas	Parris, Matthew
Irvine, Bryant Godman	Patten, John (Oxford)
Irving, Charles (Cheltenham)	Pattie, Geoffrey
Jenkin, Rt Hon Patrick	Pawsey, James
Jessel, Toby	Penhaligon, David
Johnson Smith, Sir Geoffrey	Percival, Sir Ian
Jopling, Rt Hon Michael	Pink, R. Bonner
Joseph, Rt Hon Sir Keith	Pitt, William Henry
Kaberry, Sir Donald	Pollock, Alexander
Kellett-Bowman, Mrs Elaine	Porter, Barry
Kershaw, Sir Anthony	Prentice, Rt Hon Reg
Kimball, Sir Marcus	Price, Sir David (Eastleigh)
King, Rt Hon Tom	Pym, Rt Hon Francis
Kitson, Sir Timothy	Raison, Rt Hon Timothy
Knight, Mrs Jill	Rathbone, Tim
Knox, David	Rees, Peter (Dover and Deal)
Lamont, Norman	Rees-Davies, W. R.
Lang, Ian	Renton, Tim
Langford-Holt, Sir John	Rhodes James, Robert
Latham, Michael	Rhys Williams, Sir Brandon
Lawrence, Ivan	Ridley, Hon Nicholas
Lawson, Rt Hon Nigel	Ridsdale, Sir Julian
Lee, John	Rippon, Rt Hon Geoffrey
Lennox-Boyd, Hon Mark	Roberts, M. (Cardiff NW)
Lester, Jim (Beeston)	Roberts, Wyn (Conway)
Lewis, Kenneth (Rutland)	Roper, John
Lloyd, Ian (Havant & W'loo)	Ross, Stephen (Isle of Wight)
Lloyd, Peter (Fareham)	Rossi, Hugh
Luce, Richard	Rost, Peter
Lyell, Nicholas	Royle, Sir Anthony
Lyons, Edward (Bradf'd W)	Rumbold, Mrs A. C. R.
Mabon, Rt Hon Dr J. Dickson	Sainsbury, Hon Timothy
McCrindle, Robert	St. John-Stevas, Rt Hon N.
Macfarlane, Neil	Sandelson, Neville
MacGregor, John	Shaw, Giles (Pudsey)
MacKay, John (Argyll)	Shaw, Sir Michael (Scarb')
Maclennan, Robert	Shelton, William (Streatham)
Macmillan, Rt Hon M.	Shepherd, Colin (Hereford)
McNair-Wilson, M. (N'bury)	Shersby, Michael
McNair-Wilson, P. (New F'st)	Silvester, Fred
Madel, David	Sims, Roger
Magee, Bryan	Skeet, T. H. H.
Major, John	Smith, Dudley
Marland, Paul	Smith, Tim (Beaconsfield)
Marshall, Michael (Arundel)	Speed, Keith
Marten, Rt Hon Neil	Speller, Tony
Mates, Michael	Spence, John
Maude, Rt Hon Sir Angus	Spicer, Jim (West Dorset)
Mawby, Ray	Spicer, Michael (S Worcs)
Mawhinney, Dr Brian	Squire, Robin
Maxwell-Hyslop, Robin	Stainton, Keith
Mayhew, Patrick	Stanbrook, Ivor
Meyer, Sir Anthony	Stanley, John
Miller, Hal (B'grove)	Steen, Anthony
Mills, Iain (Meriden)	Stevens, Martin
Mills, Sir Peter (West Devon)	Stewart, A. (E Renfrewshire)

Stewart, Ian (Hitchin)	van Straubenzee, Sir W.
Stokes, John	Vaughan, Dr Gerard
Stradling Thomas, J.	Viggers, Peter
Tapsell, Peter	Waddington, David
Tebbit, Rt Hon Norman	Wainwright, R.(Colne V)
Temple-Morris, Peter	Wakeham, John
Thomas, Jeffrey (Abertillery)	Waldegrave, Hon William
Thomas, Rt Hon Peter	Walker, B. (Perth)
Thompson, Donald	Wall, Sir Patrick
Thorne, Neil (Ilford South)	Waller, Gary
Thornton, Malcolm	Walters, Dennis
Townend, John (Bridlington)	Ward, John
Townsend, Cyril D, (B'heath)	Warren, Kenneth
Trippier, David	Watson, John
Trotter, Neville	Wellbeloved, James

Wells, Bowen	Williams, D.(Montgomery)
Wells, John (Maidstone)	Winterton, Nicholas
Wheeler, John	Wolfson, Mark
Whitelaw, Rt Hon William	Young, Sir George (Acton)
Whitney, Raymond
Wickenden, Keith	Tellers for the Noes:
Wiggin, Jerry	Mr. Anthony Berry and
Wilkinson, John	Mr. Carol Mather.

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That this House takes note of the Report on Developments in the European Community, July to December 1981, Cmnd. 8525.

c411
1. European Community 26 words