Commons Sitting of 21 February 1983

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS

  Australia (Message of Sympathy)
  Mr. Speaker: I have to inform the House that on Friday I took upon myself, in the name of the House, responsibility for sending a message to Sir Billy Snedden, the Speaker of the House of Representatives, Canberra, before Australia's day of national mourning:
  "The House of Commons sends heartfelt sympathy at this time of sorrow in Australia.
  George Thomas
  Speaker".

Oral Answers to Questions
  TRADE

    Exports/Imports
    Dr. John Cunninghamasked the Minister for Trade whether he has conducted any recent studies into the export performance of different sectors of the economy over the last decade.
    Mr. Cunliffeasked the Minister for Trade whether he has conducted any recent studies into the degree of import penetration in different sectors of the economy over the last decade.
    The Minister for Trade (Mr. Peter Rees): The statistical services of the Departments of Industry and Trade regularly collect and publish statistics on export performance and import penetration. A study of these covering the last decade was published in the June 1980 issue of Economic Trends. More recent data were published in the issue of British Business dated 21 January 1983. Both publications are available in the Library.
    Dr. Cunningham: Is the Minister aware that our trade balance in manufactured goods has fallen from more than £5,000 million in 1977 to only £225 million last year? Is he further aware that rising imports coming into either static or falling home markets are devastating British manufacturing industry, where 1·5 million jobs have been lost since this Government came to office? Given that industrial—
    Mr. Speaker: Order. That is too long. It is not fair to the House.
    Dr. Cunningham: Given that disastrous decline—
    Mr. Speaker: Order. I have just said that it is not fair to the House. The hon. Gentleman has asked a question, and two further questions.
    Dr. Cunningham: I want to ask the Minister what he proposes to do about it.
    Mr. Speaker: Order. This is the only way to control it.
    Mr. Rees: I am afraid that the hon. Gentleman has misread the statistics. If he had fastened on to the fact that exports, for example, increased last year by 8 per cent. in value and 1 per cent. in volume, against a background of contracting world trade, he would know that his fears were completely unfounded.
    Mr. Cunliffe: I have examined the figures that are available in the Library. Is it not manifestly clear that other countries do not now abide by the British Queensberry rules when it comes to fair trading? Is it not time that they accepted that retaliatory measures will be taken against countries that are guilty of unfair trade practices? Is it not an act of criminal folly for the Minister to ignore such practices at the expense of the wholesale decimation of our textile, engineering and motor industries?
    Mr. Rees: The hon. Gentleman and the House should take comfort from the fact that textile exports are worth £2 billion a year. In any case, when other countries have discriminated unfairly against our exports we have taken and are ready to take, action in these cases. I hope that the hon. Gentleman will make specific allegations rather than wild general statements, so that we may assess their validity.
    Mr. Sims: Will my hon. and learned Friend confirm that one of the best export performances over the past decade has been that of the Scotch whisky industry? Does he accept that that industry can maintain its performance in the present difficult overseas conditions only if it has a firm home market base? If so, will he mention that fact to his right hon. and learned Friend the Chancellor of the Exchequer, lest he be tempted to add to the industry's burdens?
    Mr. Rees: I pay tribute to the export performance of the whisky industry. The House may be interested to know that between January and November last year total exports were worth £800 million, of which £188 million went to the European Community and £64 million to Japan. I am sure that my right hon. and learned Friend will take full account of what my hon. Friend said.
    Mr. Archer: Does the hon. and learned Gentleman recognise the need to identify those sectors of industry with prospects for growth and where the spin-off may stimulate the economy? Has he had an opportunity to study the recent paper by Mr. Geoffrey Chandler, the director general of NEDO? On reflection, does his noble Friend the Secretary of State now regret his outburst at the February meeting of NEDC in response to this serious and sensible initiative?
    Mr. Rees: Mr. Chandler's paper was interesting, and I believe that it gave rise to a stimulating discussion. However, the record is confidential. I do not know how the right hon. and learned Gentleman knows about the detailed contributions of individual members. Perhaps he will explain in due course.
    Mr. Marlow: The questions refer to "different sectors". Did not British Leyland increase its exports by about 25 per cent. last year—its best performance for five years? Is that not some measure of the success that is now taking place in the heartland of British industry and being built on at the moment?
    Mr. Rees: My hon. Friend is right to draw attention to British successes instead of dwelling overlong on false stories of gloom. In addition, the exports of British automotive products are strongly in surplus.

    Monopolies and Mergers Commission
    Mr. Canavanasked the Minister for Trade how many times since May 1979 a recommendation from the Monopolies and Mergers Commission has been overruled.
    The Minister for Consumer Affairs (Dr. Gerard Vaughan): The Government have not followed the commission's recommendations in three cases.
    Mr. Canavan: Instead of hon. Members listening to the monkey, is it not about time that the organ grinder himself was brought from the House of Lords to the Bar of this House to explain why he is jeopardising the jobs of more than 3,000 Scottish workers at Anderson Strathclyde by abrogating his responsibilities and allowing the Monopolies and Mergers Commission to be overruled because he happens to be lining his pockets out of shares in a racist company—
    Mr. Speaker: Order. I am satisfied that that remark should be withdrawn. No one can be an honourable man and a Minister and line his pockets at the same time. The hon. Gentleman must withdraw that charge.
    Mr. Cryer: He has the shares; he does not hold them for charity.
    Mr. Speaker: Order. The hon. Member for Keighley (Mr. Cryer) must stop that running interruption. I am addressing the hon. Member for West Stirlingshire (Mr. Canavan).
    Mr. Canavan: I rephrase my words and say that he is filling his pockets with money from shares in Charter Consolidated.
    Mr. Speaker: Order. I am talking about a charge of dishonour in the accusation that a Minister of the Crown is lining his pockets at the public expense. The hon. Gentleman will withdraw that remark.
    Mr. Canavan: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. No point of order arises on that. I have asked the hon. Gentleman to withdraw his accusation.
    Mr. Canavan: I shall withdraw it and replace it with the words, "filling his pockets out of shares in a racist company such as Charter Consolidated."
    Mr. Speaker: Order. I believe that that is the company about which the Secretary of State overruled the Monopolies and Mergers Commission. I give the hon. Gentleman one last opportunity to withdraw that remark. Otherwise, I shall have to instruct him to leave the House.
    Mr. Canavan: I am not withdrawing something which I know to be true.
    Mr. Speaker: I direct the hon. Member for West Stirlingshire to withdraw from the House for the rest of this day's sitting.
    The hon. Member withdrew accordingly.
    Mr. John Fraser: Why did the Secretary of State for Trade not declare his interest in Anderson Strathclyde at
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    the time that he made the decision to refer the bid to the Monopolies and Mergers Commission rather than at the time that the commission announced its findings?
    Dr. Vaughan: As the House knows, my right hon. and noble Friend the Secretary of State behaved with perfect propriety. Because of his shareholding, he has distanced himself from both the report and the decision. I think that that was correct, and so did the court.
    Sir Russell Fairgrieve: Is it not a bit odd for a nation such as Scotland, which has sent its people all over the world to run other people's industries, to be so frightened of itself that it cannot accept a sensible rationalisation in Scotland's interests? The proper people to decide the issue are the shareholders of Anderson Strathclyde. It should not be done by a statutory body taking a subjective judgment about the public interest.
    Dr. Vaughan: I am glad that my hon. Friend has raised the matter. There are two important issues here. One is that we are discussing an engineering company with a great international reputation which needs its overseas markets to carry on its business. The other is that we are discussing the implications for Scottish employment. The Monopolies and Mergers Commission recognises the need for the company to have its international base and my hon. and learned Friend has recognised that in his decision.
    Mr. Maclennan: Does the Minister realise that it is a serious matter when a member of the Monopolies and Mergers Commission feels prevailed upon to resign because of the Government's attitude in this case? Does he recognise that the entire management of the Scottish company is deeply worried about the implications for Scottish employment? Why have the Government paid so little attention to the considerations that have been in the minds of those who know the companies interests best?
    Dr. Vaughan: I do not accept that the Government gave little attention to this matter. My hon. and learned Friend set out the reasons clearly in the press notice, which was issued on the report's publication, and in his statement to the House on 22 December. Professor Bain's resignation is regrettable, but it was a personal matter. Members of the Monopolies and Mergers Commission are free to make public statements of their views.
    Dr. Bray: Why did the Secretary of State not make his interest known in the press release that was issued by the Department, but only when I raised the question with the Prime Minister at Question Time that afternoon?
    Dr. Vaughan: As I have said, these events take their course, and my right hon. and noble Friend made his statement in a perfectly proper way at the right time.
    Mr. Beaumont-Dark: Does my hon. Friend accept that one of the important points that many hon. Members have made about the Monopolies and Mergers Commission is that too many people think that it should have the final say? Is it not proper that the House should have the final say as to what is in the public interest? Otherwise, we are handing over the Monopolies and Mergers Commission to those who were not elected. Should not we reinforce public control, not those who are selected to control?
    Dr. Vaughan: The matter was established clearly by the courts recently. The primary function of the Monopolies and Mergers Commission is to investigate and

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    then to report on any matters that are referred to it, including whether those might be expected to operate against the public interest. It is then the Government's responsibility to decide what action, if any, is necessary.
    Mr. John Fraser: Will the Minister now answer my question as to why the Secretary of State did not declare his interest on 2 June 1982 when he made a decision to refer the matter to the Monopolies and Mergers Commission, rather in December 1982 when he received the report?
    Dr. Vaughan: The hon. Gentleman is trying to go over ground that has been fully investigated. There is no point in going further.

    Competition Act 1980
    Mr. Campbell-Savoursasked the Minister for Trade whether he will review the operation of the Competition Act 1980.
    Dr. Vaughan: I have no present plans to do so.
    Mr. Campbell-Savours: Will the Minister amend the Competition Act 1980 to define precisely what is an anticompetitive practice? Is not the solicitors' monopoly on conveyancing an anti-competitive practice? Are not the Law Society's rules preventing solicitors from advertising a form of anti-competitive practice? Do they not both act against the public interest? Will the Government do something about it?
    Dr. Vaughan: We have no plans at the moment to alter the Act. If the hon. Gentleman wishes to raise points where he believes that there are difficulties, I should be glad to look into them. I should say that the present Government have done more to extend competitiveness and to improve trade in that area than any previous Government.

    European Community (British Exports)
    Mr. Knoxasked the Minister for Trade what percentage, by value, British exports to the European Community have represented of total exports in each of the past three years.
    Mr. Peter Rees: In 1980, 1981 and 1982 United Kingdom visible exports to the other countries of the European Community represented 43 per cent., 41 per cent. and 42 per cent., respectively, of the United Kingdom's total visible exports.
    Mr. Knox: Will my hon. and learned Friend confirm that since we joined the EC in 1973 our exports to the Community have increased more rapidly than our exports to other parts of the world? If we were to withdraw from the EC, would not that trend be put in sharp decline?
    Mr. Rees: It is true that the other countries of the EC provide our fastest growing export market. Indeed, of the top 10 countries to which we export, about seven or eight are members of the EC. That healthy export trend might be imperilled if we were to follow the absurd advice of the Labour party and withdraw, on whatever basis, from the EC.
    Mr. Roy Hughes: Will the Minister reveal to the House the value of manufactured goods being imported into Britain and paid for with precious North sea oil
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    revenue? Is it not time that the Government realised that the undermining of our manufacturing industry is putting so many of our people out of work?
    Mr. Rees: The hon. Gentleman conveniently overlooks the surpluses that are generated by non-manufactured exports, by oil exports and by exports from the service sector.
    Mr. Kenneth Carlisle: How many of these exports come from companies in this country set up with foreign investment? Does my hon. and learned Friend believe that such investment would continue if we withdrew from the Common Market?
    Mr. Rees: It is true that the United Kingdom is a favoured base for investment by, for example, United States and Japanese companies. It is very likely that if we withdrew from the European Community on the basis suggested by the Labour party that trend would not continue.
    Mr. Straw: Is not the reality that the 43 per cent. figure includes oil and services and that our record on the export of manufactures and semi-manufactures is much worse? Do not almost two thirds of our exports of manufactures and semi-manufactures go to countries outside the EC? If our export record to the EC is successful, how does the Minister explain the fall in our proportion of exports of manufactures to the EC in each year since 1979'?
    Mr. Rees: The hon. Gentleman, like his hon. Friends, is highly selective in his choice of statistics. A Fairer approach is to consider total British exports, including the exports that have been achieved in the service and oil sectors. I have already demonstrated that our exports, by volume and by value, increased in 1982.

    Motor Vehicles (Imports)
    Mr. Huckfieldasked the Minister for Trade whether, in order that assemble-only operations shawl not take place, he will now introduce legislation requiring a minimum domestic content for imported motor vehicles sold in the United Kingdom, either based on numbers of units sold, or with provision that such units must have specific United Kingdom manufactured components or parts.
    Mr. Peter Rees: No, Sir. Such legislation would not be in the long-term interests of the United Kingdom.
    Mr. Huckfield: Does the hon. and learned Gentleman accept that the recent decision of British Leyland to import Rover gear boxes from France merely epitomises the problem that now faces all motor car assemblers in this country in that they are increasingly importing engineering and other advanced components? Does the Minister further accept that at least 31 countries already have some minimum domestic content legislative requirement and that there may soon be similar legislation in the United States? Is he aware that if we do not have similar provisions we shall not have a motor vehicle industry for much longer?
    Mr. Rees: The hon. Gentleman is wrong to refer to the Ottinger legislation in the United States, which would be extremely damaging to the free flow of world trade. It is a matter on which we have made representations. The hon. Gentleman overlooks the successful export record of

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    British automotive manufacturers. It is true that some motor car manufacturers in this country are importing a considerable number of components from abroad. However, it is a two-way flow. I am sure that British motor manufacturers are capable of judging their best commercial interests.
    Mr. Stokes: Is my hon. and learned Friend aware that the British components industry is unfortunately in some difficulty and that it should be more competitive in both quality and price? Is this a matter for the industry alone, or is there any way in which the Government can help?
    Mr. Rees: My hon. Friend draws attention to the difficulties. He will recognise, as I am sure the whole House will, that the industry has a good export record. I do not believe that it would assist the industry, this country's economy, or the consumer, if legislation of the kind suggested by the hon. Member for Nuneaton (Mr. Huckfield) were introduced.
    Mr. Cryer: Is the hon. and learned Gentleman aware that the Government seem to do little to prevent the decimation of British manufacturing industry and are not prepared to introduce legislation of the kind requested? Does this not contrast strangely with the Government's view of farming, where Ministers are prepared to control imports of UHT milk to protect British farmers? Do not the Government believe that domestic manufacturing industry is worth some regulation of trade, or are they prepared to see the whole thing go out of the window?
    Mr. Rees: The hon. Gentleman overlooks voluntary restraint arrangements that offer a measure of temporary protection, particularly in respect of automobiles of Japanese manufacture. The import of UHT milk is a matter for my right hon. Friend the Minister of Agriculture, Fisheries and Food.
    Mr. Hal Miller: As there is unlikely to be time for legislation before a final decision is taken on the Nissan project, will the Minister do his part to see that any requirement on component content in that project is based on direct manufacturing costs, not on ex-works price?
    Mr. Rees: My right hon. Friend the Secretary of State for Industry has made it clear that we welcome the possibility of investment by Nissan in this country. We would be even more enthusiastic if Nissan gave some assurance about local content. The point put by my hon. Friend is well made.

    Spain (Balance of Trade)
    Mr. Hal Millerasked the Minister for Trade if he will make a statement on the trend in the balance of trade with Spain in 1982 (a) overall and (b) in manufactures.
    Mr. Peter Rees: In 1982 the total of visible trade between the United Kingdom and Spain moved into approximate balance, but the growing trade in manufactures remains in deficit.
    Mr. Miller: As the EC appears to be unable to deal with our grievance against Spain over the grossly distorted tariffs applicable to the automotive trade, will my hon. and learned Friend say whether the Government are now considering what unilateral action should be taken?
    Mr. Rees: My hon. Friend is a little premature in saying that the Commission is unable to address itself
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    effectively to this question. There have been considerable negotiations in Brussels and in Madrid, and the Commission will be reporting to the Foreign Affairs Council tomorrow. My hon. Friend would be well advised to await the outcome.
    Mr. Sheerman: If the Minister continues to fiddle while manufacturing exports dwindle, and if he does not take measures to remedy the situation, we shall be further down the road towards an undeveloped economy, exporting raw materials and sucking in highly sophisticated manufactured goods. Is he aware that this is a crisis that the Government have failed to recognise?
    Mr. Rees: The flaw in the hon. Gentleman's argument is that our manufacturing exports are not continuing to dwindle.
    Mr. Beaumont-Dark: Does my hon. and learned Friend accept that many manufacturers, including the Ford Motor Company, are taking an unfair advantage of tariffs in Spain, whereby the Spanish charge 10 times the tariff that we charge? Is he aware that, whichever party forms the Government, many people in the west midlands do not believe that this state of affairs should be allowed to continue and that we, as Members of the House, will not allow it to continue?
    Mr. Rees: My hon. Friend has discussed the tariff imbalance with a number of my right hon. and hon. Friends and with me. We are aware of it. It is for that reason that we brought strong pressure to bear on the Commission to enter into negotiations with the Spanish Government.
    Mr. Archer: Does the hon. and learned Gentleman not have a sense of urgency about this matter? Is there not some need in the EC for the equivalent of the smoking gun reaction in America towards unfair trading? Can he give the House any idea of how long it will take before the EC takes sone action? Alternatively, will the Government take action?
    Mr. Rees: References to the smoking gun come ill from a member of the previous Government. So far as I am aware, that Administration was supinely unaware of the growth of the problem.

    Inter-regional Air Services
    Mr. Colvinasked the Minister for Trade if he has had any recent discussions with his European counterparts on the deregulation of inter-regional air services; and if he will make a statement.
    The Under-Secretary of State for Trade (Mr. Iain Sproat): As I reported to the House in my reply to a question from my hon. Friend the Member for Preston, North (Mr. Atkins) on 23 December, ministerial discussions on the proposed Community directive to liberalise the approval of new inter-regional air services failed to reach agreement for the third time shortly before Christmas. This was a most disappointing outcome, but I still very much hope that when we return to the subject at the next Transport Council on 6 June it will be possible to agree at last on a measure that should benefit both the airlines and their passengers.
    Mr. Colvin: I wish my hon. Friend better luck next time. Does he agree that deregulation would not only help

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    Britain's third level airline operators but would also take some of the pressure off London's airports by stimulating the development of regional airports? When he goes back to the conference table, will he ensure that the seat limit for the aircraft covered does not fall below 70 because of the proposal by British Aerospace to introduce its advanced turboprop aircraft which has only 65 seats?
    Mr. Sproat: Yes. I shall bear my hon. Friend's last point strongly in mind. This measure should help both regional airports and third level airline operators. It is a determined part of the Government's policy to help the regional airports, as we have done at Manchester and Leeds-Bradford among others.
    Mr. McNally: Does the Minister realise that his statement that he now hopes for progress in June following three failures is disgraceful and that it brings the whole process of negotiation into discredit? What new action does he propose to try to get movement? Will he bear in mind that it would be sensible for any agreement to take account not only of airlines and regional policy but of the development of the aerospace industry itself, especially the fact that British Aerospace has the right aircraft for the right routes ready to go into production?
    Mr. Sproat: I shall certainly bear in mind the hon. Gentleman's final point, but I cannot accept his sad advice that, because I did not succeed at first, I should give up. We shall go on trying. When we started the process there were only two European countries in favour and eight against. At the latest meeting there were eight in favour and only two against. We shall win in the end.
    Mr. Squire: Will my hon. Friend continue the pressure, which I know he is applying as hard as he can, to achieve an agreement, because it would be a concrete example of the advantages of European co-operation?
    Mr. Sproat: I am grateful to my hon. Friend for those remarks. He is right. I hope that all our European partners will agree with him in the summer.

    Multi-fibre Arrangement
    Mr. Stottasked the Minister for Trade if the full details of the new bilateral agreements under the multifibre arrangement have yet been published.
    Mr. Peter Rees: The Council regulations containing details of the provisions of the new MFA bilateral agreements, together with all the 1983 quotas, have now been published in the Official Journal—L.374, dated 31 December 1982. A copy is available in the Library. The texts of the individual bilateral agreements will be submitted to the appropriate Committees of both Houses in the usual way, once they have been formally signed, and will be deposited in the Library.
    Mr. Stott: Bearing in mind that the textile and clothing industry is an important part of British industry, is it not serious that details of imports into this country are not yet available? How will the Minister monitor import penetration and ensure that imports do not exceed the level that he negotiated under the MFA?
    Mr. Rees: The hon. Gentleman may not have been able to digest my main answer. The 1983 quotas are available, but they are long and complex and about 600 groups are involved. It will take a little time to work out all the
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    details. They are being run through the Commission's computer, but I assure the hon. Gentleman and the House that we shall be able to monitor imports effectively this year and we shall make certain that countries stick to their quotas.
    Mr. Bowen Wells: Is my hon. and learned Friend aware that some textile manufacturers in this country, notably Gents of Barnsley, are exporting to such countries as Hong Kong and Japan? Does not that suggest that the MFA should be eased to ensure that other textile manufacturers in this country make their products competitive and of a design that is attractive to export markets, instead of seeking protection?
    Mr. Rees: My hon. Friend is right to draw attention to the healthy aspect of the clothing and textile industry. Exports are running at £2 billion a year and some bold and imaginative companies have broken into the Hong Kong and Japanese markets, and deserve congratulations.
    Mr. Woolmer: The Minister glossed over the unavailability of statistics. How could he sign an agreement and put it before the House when, even now, he does not have details of the quotas on imports up to 1986?
    What is the Minister doing about reducing restrictions on our exports of clothing and textiles to such countries as America, Australia and Brazil, whose tariff barriers are vast compared with our modest restrictions?
    Mr. Rees: It was possible for the Commission to assure us that the figures negotiated would be comfortably within the set global ceiling. Strong representations are continually made about tariffs of individual developed countries, but the hon. Gentleman will realise that a solution cannot necessarily be achieved immediately by unilateral action.

    Balance of Trade
    Mr. Chapmanasked the Minister for Trade what were the United Kingdom balance of trade figures for the last month for which figures are available and for the year to 31 December 1982.
    Mr. Peter Rees: The current account of the balance of payments in December 1982 was in surplus by £822 million. The balance for 1982 as a whole is estimated at a surplus of £4·6 billion.
    Mr. Chapman: While I welcome those figures, which presumably would be improved further if one took into account invisible earnings, will my hon. and learned Friend tell us whether he feels that the recent depreciation in the value of sterling is likely to help or to hinder the United Kingdom's balance of payments during 1983?
    Mr. Rees: The figures that I gave take into account invisible exports, which make an invaluable contribution to our export figures. The service sector provides employment for 11½ million of our fellow countrymen. The depreciation of sterling against some other currencies will certainly increase the export opportunities of certain sectors of the British economy.
    Mr. Ioan Evans: Will the Minister not be too complacent about those figures? Have not the Government received £40,000 million from the sale of North Sea oil, which is included in the figures that he gave? Will he also

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    confirm that in the current financial year there is a £5,000 million deficit in manufactured goods with the Common Market alone?
    Mr. Rees: The hon. Gentleman's final figure is wrong. On a balance of payments basis, the surplus of trade in manufactures last year was about £2·4 billion.
    Sir Anthony Grant: Will my hon. and learned Friend confirm that the figures do not substantiate the myth being perpetuated by the Opposition that our manufacturing industry has failed to contribute to our economy? Will he state clearly that our manufacturing industry has held up remarkably well at a time of trade recession and that, because of Government measures, it is probably in a better position to compete in the world?
    Mr. Rees: My hon. Friend, who has great experience in these matters, is right. I pay tribute to the export record of the British manufacturing industry. I dissociate myself from the distorted messages of gloom coming from the Opposition Benches.
    Mr. Archer: Since £4·4 billion of the £4·6 billion balance to which the Minister referred is represented by oil, is the hon. and learned Gentleman not disturbed by the fact that Morgan Guaranty and the OECD agree that Britain's prospects of long-term recovery are being irreparably damaged, that the CBI is troubled about continued unemployment, that the French Finance Minister is asking for international reflation and that even the American Government are abandoning Reaganomics? At the previous Trade Question Time the Minister suggested that I had not been in my job long enough. Is it possible that he has been too long in his?
    Mr. Rees: I am so glad that the right hon. and learned Gentleman is feeling more at home in his present position, but he gave us a series of random, unconnected and largely baseless forecasts. As he mentioned France, I should tell him that the French ran a deficit on their current account last year of about 80 billion francs—about £7½ billion. So that was not a very helpful comparison.

    Film Industry (Review)
    Mr. Maxtonasked the Minister for Trade if he has yet completed his review of the film industry; and if he will make a statement.
    Mr. Dormandasked the Minister for Trade if he will make a statement on the policy of Her Majesty's Government towards the film industry.
    Mr. Sproat: A statement will be made as soon as my review of the industry is complete.
    Mr. Maxton: Is it not disgraceful that the Under-Secretary can give us such an answer when we were promised that the review would be completed by the autumn of last year? Will he complete the review as quickly as possible, consult as many people as possible and give the House an assurance that the review will be designed to help the British film industry and will not be simply a cost-cutting exercise?
    Mr. Sproat: I am reluctant to cross swords with the hon. Gentleman about completing the review by the autumn of last year, because we had hardly started it by then. I have said many times that we hope to finish taking evidence in about March and to publish our conclusions
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    in about June. That is the timetable to which we shall stick, and I assure the hon. Gentleman and the House that the review is designed to help and that it will do so.
    Mr. Dormand: Is it not clear, from the ending of the quota system and the threats to the Eady levy, to the National Film Finance Corporation and to the interim action committee, that the Government have no intention of maintaining a British film industry? Does the Under-Secretary agree that some of the most successful films of recent years, which have won international acclaim, would not have been made without public money? Will he have second thoughts about the disastrous proposals that are now being talked about?
    Mr. Sproat: The answer to the hon. Gentleman's first question is no, and with regard to the implications of his second question, these are the points that we are taking into account in our review.
    Mr. Pollock: In carrying out this review, will my hon. Friend bear in mind the problems faced by provincial cinemas, whereby only one picture is allowed in the schedule over holiday periods? Is my hon. Friend aware that, for example, during the Christmas break many young children in my constituency, including my six-year-old daughter, were able to see the film ET, but were denied the chance to see the film Sleeping Beauty because of the arrangements between the film distributing companies? [HON. MEMBERS: "Disgraceful".]
    Mr. Sproat: My hon. Friend makes a good point. I am aware of the problems in Elgin and how hard my hon. Friend is fighting to overcome them. The House may not know that similar problems are occurring in Glasgow, and I am surprised that the hon. Member for Glasgow, Cathcart (Mr. Maxton) did not bother to mention that in his supplementary question. This matter has been referred to the Monopolies and Mergers Commission and I hope to receive its report within a few weeks.
    Mr. Woolmer: In his review of the financial support schemes for the British film industry, will the Minister take into account the fact that in six weeks as many people will watch films on video as will watch films in cinemas in a year, and in a week they will see as many on television as they see in cinemas in a year? Will the Minister consider extending the principle of the film levy—rather than abolishing it—to reflect present-day realities and to ensure that money from video and television audiences finds its way into the film industry to ensure a thriving and flourishing British film industry, which thereby helps not only the industry but the viewers?
    Mr. Sproat: It was precisely because we are aware that moving image technology these days covers television, videos, cable and satellite as well as cinema that I set up the review. I am considering whether to abolish or extend the levy.
    Sir William Clarke: Does my hon. Friend agree that the Government have helped the film industry in that the 100 per cent. capital allowances have been extended from two to five years?
    Mr. Sproat: I am glad that my hon. Friend has drawn attention to that. It is certainly something of which the film industry is deeply appreciative.

    Balance of Trade
    Mr. Proctorasked the Minister for Trade whether he will introduce new initiatives to improve the United Kingdom's world trading position.
    Mr. Peter Rees: The British Overseas Trade Board and the Export Credits Guarantee Department are constantly examining their services and facilities to ensure that they meet the needs of United Kingdom exporters.
    Mr. Proctor: Does my hon. and learned Friend agree that one new initiative might be the creation of free ports, an initiative which has all-party support and which would provide new trading opportunities, new investment and new real jobs?
    Mr. Rees: My hon. Friend and the House may know that a working party has been set up under the chairmanship of my hon. Friend the Economic Secretary to the Treasury. It will take a close look at this problem. I know that my hon. Friend the Under-Secretary made a distinguished contribution to the proceedings.
    Mr. Campbell-Savours: Is not the United Kingdom's trading position with France prejudiced by the introduction of measures against that country over the importation of milk that are transparently dishonest and unworthy of the British people?
    Mr. Rees: There is no evidence that United Kingdom exports to France have been so prejudiced but I am sure that the general proposition made by the hon. Gentleman will be noted by my right hon. Friend the Minister of Agriculture, Fisheries and Food.

    Heliport
    Mr. Wellbelovedasked the Minister for Trade if his Department will study the effect on London of the development of a short take-off and landing airport or heliport on the Thames bank opposite Erith town centre development.
    Mr. Sproat: Study of the impact of such individual development proposals is for the local planning authorities in the first instance. I understand that the local planning authority, after consulting other local authorities concerned, has already granted permission for the private helicopter pad to which the hon. Gentleman refers. However, it will not offer the permanent facilities for public helicopter services that the London area needs. A separate planning application to build a STOL port in Docklands has recently been called in by my right hon. Friend the Secretary of State for the Environment and will thus be the subject of a public inquiry.
    Mr. Wellbeloved: Is the Minister aware that both these proposals threaten danger and unacceptable disturbance to the local communities, and that the heliport on the banks of the Thames has met with widespread disapproval since the local authorities granted planning permission?
    Mr. Sproat: The heliport at Rainham marshes has been granted permission for only some 30 movements a week, so will not be very disturbing. There will be a public inquiry about the STOL port, and the hon. Gentleman and his constituents, and anybody else, are free to give evidence to it.
    Mr. Haselhurst: Will my hon. Friend have particular regard to the effect that the establishment of the STOL port could have on reduing the number of movements of smaller aircraft at Heathrow?
    Mr. Sproat: Yes, among the many things that we have to take into consideration with regard to Heathrow and other airports, the point that, my hon. Friend has made will be borne in mind.

    Origin Marking
    Mr. Wallerasked the Minister for Trade if he has any plans to amend the regulations relating to marks of origin.
    Dr. Vaughan: I am aware of my hon. Friend's great interest in this and I am glad to tell him that I am currently reviewing the origin marking order introduced in January last year.
    Mr. Waller: I thank my hon. Friend for that reply. Is he aware of the great number of prosecutions that there have been recently relating to the fibre content of imported cloth, particularly from the EC? As the Trade Descriptions Act 1972 defines the country of origin as that in which the last processing act took place, does my hon. Friend agree that that is not very helpful to the British consumer who wants to buy British?
    Dr. Vaughan: I am looking at this, and I am aware of the difficulties, as is my hon. Friend. I have asked the trading standards service for an urgent report on this and other difficulties, and have underlined my concern that the order should be effectively enforced.
    Mr. Cryer: Does the Minister accept that one of the greatest difficulties concerns garments that are made up of imported cloth but which, because they are assembled in the United Kingdom, are marked "Made in the United Kingdom." This is highly deceptive and the Minister has already promised to review the order, but time is slipping by. When will he introduce amending legislation so that people know whether the cloth is made in the United Kingdom?
    Dr. Vaughan: I am aware of the difficulties about this. I underline that I am most anxious that people should be able to identify British goods of quality, and the origin marking is an important factor in this. The basic message is a simple one—where British is best, buy the flag.
    Mr. Neil Thorne: When my hon. Friend looks at this matter, will he bear in mind that, because of the complexity of the manufacture of a number of goods these days, the parts often come into the country and are only assembled here? Therefore, will my hon. Friend look at the possibility of showing what percentage of the manufacture has been carried out here before allowing manufacturers an origin marking saying that the goods are made in Britain?
    Dr. Vaughan: Yes, I am considering that.
    Mr. Sheerman: Will the Minister send one of his civil servants to Greece to look at the cloth being sold in so many of the markets and shops and see the many fraudulent markings such as "Made in Huddersfield", "Made in Yorkshire" and "All British Wool"? Can the Minister put a stop to this? We have had promises in the House year after year, but nothing has been done. Cannot the Minister's civil servants afford to fly to Greece?
    Dr. Vaughan: I am aware of the problems in this kind of trade, and with other kinds of counterfeiting. This was why we recently set up a counterfeiting unit in the Department of Trade, under my hon. Friend.
    Mr. Dykes: Is my hon. Friend satisfied with the EC initiatives to protect origin marks and the related and specific question of trade marks? As we are the world leaders in trade mark matters, will my hon. Friend press to have the EC trade mark centre established in Britain?
    Dr. Vaughan: We are pressing hard for the European trade mark centre to be located here, as it will be of great value not only to us but to Europe.
    Mr. John Fraser: Will the Minister make regulations to extend origin markings to advertisements so that, for instance, with motor vehicles sold under a well-known British name, people will know whether they were manufactured in Britain, Belgium or Spain?
    Dr. Vaughan: Yes, we are looking at this, but, as the hon. Member will know when it comes to advertisements, particularly for such things as mail order goods, there are difficulties over publishing times and knowing from where the goods are coming. We shall have to see to this.

    Balance of Trade
    Mr. Strawasked the Minister for Trade when, on present estimates, he expects the net contribution of oil to the balance of trade to begin to decline.
    Mr. Peter Rees: It is not the practice to forecast at this level of detail.
    Mr. Straw: Is not the reality that, having squandered North Sea oil revenues on 3½ million unemployed, and having caused a collapse of British manufacturing industry twice as large as that which occurred during the great slump between 1929 and 1931, the benefits of North Sea oil will run out faster than was previously expected, particularly given the drop in the oil price? In those circumstances, the Government have no possibility whatever of securing a firm foundation for manufacturing to replace what we shall lose when the oil runs out.
    Mr. Rees: The hon. Gentleman talks about reality, but he lives in a world of fantasy. I do not know why he should share his bad dreams with the House. Last year's manufacturing exports were up by 8 per cent. in value and by 1 per cent. in volume, at a time when world trade is contracting. That does not demonstrate that we live in an industrial wasteland.
    Several Hon. Members rose—
    Mr. Speaker: Order. I propose to call the Front Bench and to allow one minute extra at 3.30 pm.
    Mr. Archer: Will the hon. and learned Gentleman use this occasion to comment on reports that the Treasury is threatening the aid and trade provisions and the future of export credits, and that his Department is very sensibly resisting such a mindless and doctrinaire step? If those reports are accurate, will he permit me to wish him more power to his elbow?
    Mr. Rees: I am grateful for those extremely courteous observations by the right hon. and learned Gentleman. I will not confirm what he has to say. We attach considerable importance to the role of the export credits guarantee department and to the ATP programme.

  OVERSEAS DEVELOPMENT

    "Common Crisis"
    Mr. Tom Clarkeasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the report of the Brandt commission, "Common Crisis".
    Mr. Frank Allaunasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the policy of Her Majesty's Government towards the conclusions of "Common Crisis" by the Brandt commission.
    Mr. Ioan Evansasked the Secretary of State for Foreign and Commonwealth Affairs what action is proposed on the Brandt second report "Common Crisis" recommendations.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Malcolm Rifkind): My right hon. Friend the Minister for Overseas Development is in the Falkland Islands at present and has asked me to reply.
    The Government welcome the Brandt commission's timely memorandum. It will be carefully and constructively studied. We share the concern of the Brandt commission about the very serious economic difficulties facing developing countries.
    Action in the areas covered by the memorandum will be under active discussion at a number of international meetings in 1983. We shall approach these meetings constructively with the aim of agreeing practical action where appropriate.
    Mr. Clarke: Does the Minister agree that his statement and the report are worthy of the widest possible debate, including an early debate in the House? Does he further agree that such debate would improve the editorial appreciation of the report by such newspapers as The Daily Telegraph and the Financial Times?
    Mr. Rifkind: As the hon. Gentleman will appreciate, those are matters for the Leader of the House, but I understand that he is sympathetic to a suggestion of that kind, and no doubt the matter will be pursued in the usual way.
    Mr. Allaun: Is it not a fact that Willy Brandt has returned to this issue because Governments, including ours, have done nothing about it? Would not helping the poorer nations of the world help us too, because they would then be able to afford our goods and provide jobs for our unemployed?
    Mr. Rifkind: The second Brandt report contains a number of detailed proposals, a considerable number of which have already been accepted by the United Kingdom Government and by several other Western Governments. We acknowledge the importance of the report and there will be opportunities at several conferences this year—for example, the economic summit at Williamsburg and the UNCTAD conference—to consider the matters in greater detail.
    Mr. Ioan Evans: Will the Government seek to implement the recommendations of the second Brandt report, having done very little about the first report? As both reports refer to the massive arms expenditure in the

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    world, with £600,000 million being spent in preparation for war, while 800 million people are living on the borders of starvation, why can we not divert the arms expenditure to help the underdeveloped countries?
    Mr. Rifkind: Concerning arms expenditure, the best advice that the hon. Gentleman could give would be to the Governments who seek to purchase arms. If their perceived needs for arms were reduced, no doubt their resources would be available for other purposes.
    The hon. Gentleman is quite wrong to suggest that the United Kingdom Government have not responded to the Brandt recommendations. With regard to the recommendations in the second report, the IMF has recently doubled the useable resources available. The United Kingdom has waived aid loans to developing countries. We have already ratified the common fund on commodities. We are already a member of six commodity agreements and we have supported the proposal for a World Bank energy affiliate. Those are examples of Brandt recommendations that have already been accepted by the United Kingdom Government.
    Mr. Bowen Wells: I congratulate the Minister on his constructive response to the second Brandt commission report—perhaps we may call it "Son of Brandt". Is he aware that the report recommends that global negotiations should be started as quickly as possible at the United Nations? Is he also aware that our ambassador to the United Nations said, at a meeting in this House, that those negotiations were virtually dead? Will the Minister do something to revive those negotiations, in accordance with the Brandt report recommendations, and help them to get under way at the earliest moment?
    Mr. Rifkind: I agree with my hon. Friend about the desirability of global negotiations going ahead. The only thing that prevents it happening at present is that certain detailed amendments have been suggested by Western countries to the G77 group of developing countries. If they felt able to respond on some of the few detailed points that remain outstanding, there would be nothing to stop global negotiations beginning.
    Mr. Brocklebank-Fowler: Do the Government intend to increase substantially their contribution to IDA at the earliest possible opportunity, and will they support even larger resources being made available to the IMF?
    Mr. Rifkind: The United Kingdom was the first of the major donors to release its full contribution to the IDA sixth replenishment. That shows the importance that we attach to this form of international assistance.
    Mr. Hooley: Will it be the policy of Her Majesty's Government to support the creation of special drawing rights and to allocate them particularly to developing countries?
    Mr. Rifkind: As the hon. Gentleman may be aware, that matter was on the agenda of the recent meeting of the interim committee of the IMF, chaired by my right hon. and learned Friend the Chancellor of the Exchequer, at which important progress was made.
    Mr. Beaumont-Dark: Has the Minister seen the figures showing that more children die every three days from starvation than died at Hiroshima? Does he agree that that shows the enormous amount of work to be done to capture the understanding and concern of the people of
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    Britain and the rest of the world? What are the Government doing to make the facts clear to our people, and what can the Brandt commission do to make those facts known to the rest of the world?
    Mr. Rifkind: I am sure that measures to combat child deprivation would command support on each side of the House. For the forthcoming year we are giving the greatest amount we have ever given to UNICEF, and that will he an important contribution to dealing with the problem.
    Mr. Guy Barnett: Is the hon. Gentleman aware that we are very encouraged by the speech that the Foreign Secretary made in response to the Brandt report, and also by the remarks that the hon. Gentleman is making this afternoon? They are in considerable contrast to the complacent response to the first Brandt report. Does the hon. Gentleman recognise that, after three years of delay, "Common Crisis" regards the present world situation as a matter of emergency and believes that we shall be facing catastrophe unless action is taken fairly quickly?
    Has the hon. Gentleman noticed a considerable shift in thinking on economic policy within the United States Treasury? As a consequence of the hon. Gentleman's encouraging remarks, can we expect a considerable shift in the economic and financial direction of the British Government?
    Mr. Rifkind: I am grateful to the hon. Gentleman, at least for his earlier remarks. I think that the Western countries have responded and that they have recognised the urgent need for action of the kind suggested. In the North-South dialogue, the North consists not only of the Western countries but of the Socialist countries from the eastern part of Europe, including the Soviet Union, where the contribution towards assisting in the North-South dialogue has been very poor.
    The Williamsburg sun-unit will provide an opportunity for the West to develop further some of the aspects of the Brandt recommendations.

    West Indies
    Mr. Proctorasked the Secretary of State for Foreign and Commonwealth Affairs what is the current level of aid in total and to each country in the West Indies.
    Mr. Rifkind: In the past financial year we provided £25·8 million bilateral aid for countries in the Commonwealth Caribbean. In addition £6·1 million was disbursed by the Commonwealth Development Corporation. Details of our aid to individual countries will be published in the Official Report.
    We expect to provide a similar amount in total in the current financial year.
    Mr. Proctor: Will my hon. Friend tell the House whether there is any legislative bar to the use of aid funds to help those people from the West Indies who are here and wish to return to their own islands, or to spending the aid on new towns or training facilities in the West Indies, so that such people may take advantage of them when they get there?
    Mr. Rifkind: I believe that the House would clearly expect that moneys voted for overseas aid would be used for overseas development. The wording of the relevant legislation is that such aid should be used for

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    "promoting the development or maintaining the economy of a country or territory outside the United Kingdom or the welfare of its people".
    Mr. Dalyell: Compare that £30 million with the £880 million price tag that is now put on Port Stanley airport. When the Minister for Overseas Development returns from the Falklands, will the Minister ask him what is his priority?
    Mr. Rifkind: I believe that the hon. Gentleman speaks neither for the House nor the country when he makes such a point. The vast majority of people in the country recognise the obligations that we have properly undertaken in the south Atlantic.
    Following are the details:

    British Bilateral Aid to the Commonwealth Caribbean 1981–82

    Country

    Gross Public Expenditure

    (of which CDC) £

    Anguilla

    1,341,619

    —

    Antigua

    750,232

    —

    Bahamas

    29,050

    —

    Barbados

    4,627,584

    (4,000,000)

    Belize

    3,814,269

    (150,000)

    Bermuda

    2,648

    —

    British Virgin Islands

    1,350,033

    —

    Cayman Islands

    160,645

    —

    Dominica

    1,480,776

    —

    Grenada

    38,522

    —

    Guyana

    1,761,020

    —

    Jamaica

    6,989,372

    (1,572,000)

    Montserrat

    1,350,470

    —

    St. Kitts/Nevis

    735,797

    —

    St. Lucia

    1,795,944

    (370,000)

    St. Vincent

    825,548

    —

    Trinidad and Tobago

    66,161

    —

    Turks and Caicos

    4,776,784

    —

    Total

    31,896,474

    (6,092,000)

    Somalia
    Mr. James Johnsonasked the Secretary of State for Foreign and Commonwealth Affairs what was the sum total of aid given to Somalia for the years 1980, 1981 and 1982 respectively.
    Mr. Rifkind: The total development assistance given to Somalia in the years 1980, 1981 and 1982 was approximately £1·4 million, £1·1 million and £1·5 million. The 1982 figure is provisional. In addition, food aid and disaster relief have been provided, and special assistance has also been made available for refugees in Somalia. I am circulating details of these amounts in the Official Report.
    Mr. Johnson: Bearing in mind that Ethiopia, with the aid of the Soviet Union, is making constant attacks upon Somalia, is bent upon the destabilisation of the Horn, and has created at least 1 million refugees who have to be looked after in Somalia, cannot the Government give a little more than they are doing at the moment? In the wider context, cannot the Minister talk to his fellow Ministers
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    and get them to do something, together with the Americans, the EC and others, to deal with the destabilisation of the Horn and so prevent a disaster in the north-east of Africa?
    Mr. Rifkind: The hon. Gentleman is right to emphasise the refugee problem in Somalia. Over the past three years the United Kingdom Government have given some £2 million towards helping to deal with it. The sums to be given in general aid for Somalia for the next year are likely to represent a modest increase.
    Mr. Sever: I recognise the Minister's anxiety about this matter. Will he also accept that the stabilisation of Africa may depend on the outcome of current circumstances and that, apart from the aid problem, the area's political importance deserves recognition?
    Mr. Rifkind: I assure the hon. Gentleman that the Government recognise that the Horn of Africa is a sensitive area that deserves the recognition of its problems, such as the hon. Gentleman has mentioned.
    Following are the details:

    Aid to Somalia in 1980, 1981 and 1982 included, in addition to development amounts (figures are rounded):

    1980

    1981

    1982

    £

    £

    £

    Food Aid

    1,400,000

    1,200,000

    1,000,000

    Disaster Relief

    2,000

    141,000

    —

    Financial Years

    1980–81

    1981–82

    1982–83

    £

    £

    £

    Refugee aid (cash grant to UNHCR)

    500,000

    1,000,000

    500,000

    Sir Anthony Grant: On a point of order, Mr. Speaker. Do you recall that approximately a year ago you rightly reproved me and a number of other hon. Members for having tabled identical questions on the Order Paper since it had the effect of depriving hon. Members with questions in between of the opportunity to ask those questions? I recall apologising. Do you not think that questions 38, 49, 50 and 53 are sufficiently near in content as to be almost identical and that, if this practice continues, it will have the effect of preventing hon. Members with questions on different subjects getting the ear of the House?
    Mr. Speaker: With respect, I believe that there is one difference. The hon. Member is correct about the event a year ago, but there is considerable interest on both sides of the House in the second Brandt report. I honestly felt therefore that it was different in degree from the last occasion.

  Ordered,
  That the Merchant Shipping Bill [Lords] be referred to a Second Reading Committee.—[Mr. Garel-Jones.]

European Community Budget
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.
3.33 pm
The Financial Secretary to the Treasury (Mr. Nicholas Ridley): I beg to move,
That this House takes note of European Community Documents Nos. 4348/83 (Amended proposal for contracting loans under the New Community Instrument for the purpose of promoting investment within the Community), 10960/81 (Mandate of 30th May 1980—Report on the application of the Financial Mechanism), 5980/82 and 8874/82 (Commission's second and third reports on the implementation of supplementary measures in favour of the UK), COM(83)23 (Preliminary draft supplementary and amending budget No. 1 for 1983), the subsequent draft supplementary and amending budget No. 1 for 1983, 4417/83 (Proposal for a Council regulation amending Regulation No. 2744/80 establishing supplementary measures in favour of the UK, 4418/83 (Proposal for a Council regulation establishing specific measures of Community interest relating to energy strategy) 11125/82 (Communication from the Commission on the compensation for the UK: the subsequent solution), 4826/83 (Commission communication on the future financing of the Community); and supports Her Majesty's Government's efforts to negotiate arrangements for the Community budget which will ensure that the sharing of burdens between member states is equitable.
The motion lists 10 documents relating to the Community budget which the Scrutiny Committee has recommended for debate. I should like to thank the Scrutiny Committee, under the chairmanship of the hon. Member for Birmingham, Erdington (Mr. Silverman), for all its work and for recommending the documents for debate. The debate is about the European budget and our contribution to it. It falls to me to report to the House, because I am the Minister who represents the Government on the Budget Council. The Scrutiny Committee has not recommended for debate the Labour party document recently published by the hon. Members for Liverpool, Walton (Mr. Heffer) and Aberdare (Mr. Evans). No doubt, however, they and others will talk about it. They will try to turn this debate, as they do all European Community debates, into a debate about whether we should be in or out—a kind of rehash of the debates that took place leading up to the referendum organised by the Labour Government in 1975. The Government believe that the issue was settled by the people, who voted 67 per cent. in favour.
Nevertheless, I cannot resist sharing a few gems from the document with the House before I come to the Community budget. The most important reason for the growth in our trade with Europe, which grew from 20 per cent. in 1958 to 43 per cent. in 1982, is given by the hon. Gentlemen on page 5 of their document. It states:
"It has come about through the growth of foreign travel and the use of international languages."
Tell me another! On page 32 the document states:
"On women's rights decisions of the European Court have conferred some benefits but they fall short of the Labour party's intentions in this area."
Watch out, chaps!
Mr. Peter Shore: The Financial Secretary is in a somewhat bantering mood. May I turn him to a rather more serious course? He has referred to the increase in the percentage of Great Britain's exports to the EC. Will he tell us what percentage of our increased exports are oil exports and what has happened to manufacturing exports over the past 10 years?
Mr. Ridley: I shall be delighted to give the right hon. Gentleman that information if he will specify over which period of years. Perhaps he will put down a question and I shall give him full and accurate information.
As the House knows, in December the European Parliament rejected a supplementary budget which made provision for our budget refunds for 1982. We were naturally disappointed by that vote, but we saw it as a stage only in the process and the Finance Council agreed the following day that it would respect the agreement of 26 October on our refunds for 1982. If would then do all that it could to have it implemented. The Commission undertook to ensure that the United Kingdom and Germany would not be put in a worse position than was intended under that agreement. The Commission has honoured that undertaking.
In response to the rejection of the 1982 supplementary budget, the Commission prepared a revised supplementary budget, this time for 1983, which the Council broadly endorsed and sent to the Parliament. As hon. Members will know, in its plenary session in February Parliament voted to adopt the new budget. It also gave opinions on the two draft recommendations which provide the legal basis for our refunds. Therefore, the way is now open for the Council to adopt regulations and for the Commission to grant us our basic refund for 1982 of £630 million gross or £500 million net as agreed last October.
Mr. Tony Marlow: Although these refunds will be coming in, they will be late, and late money deserves interest payments. Will we, in effect, be in the same position as we would have been had we had the money at the right time? Are there any strings attached in terms of people going through our books and deciding what we can spend money on?
Mr. Ridley: I shall be coming to the second point raised by my hon. Friend, but on the first point I assure him that the Commission deposited the money in an account in London so that we did not pay interest on it and we had full use of the money. It did not cost us anything.
With the exception of some hon. Members on the Opposition Benches, the House will welcome the outcome. Now that it is virtually all over, I should like to share three thoughts with the House about these events. First, on the problem of budgetary imbalances, I believe that there is a new sense of urgency in the Community—a new mood of realism, a feeling that there must be a lasting solution and that things will not be quite the same again. Indeed, the rejection of the budget may prove to be a blessing in disguise, although I agree that the disguise seemed extremely good last December.
Between the rejection of the 1982 supplementary and the adoption of the 1983 supplementary there was urgent and highly constructive debate among Council, Commission and Parliament. I took part in it. I spent a great deal of time in Brussels and Strasbourg. I believe that the Parliament has come a long way towards persuading the Council of the urgency of finding a lasting solution to the problem of unfair budgetary burdens. We have been arguing since we came to power for such a solution. The Parliament, by using its powers over the budget, has insisted that progress must be rapid. I also think that the Parliament appreciates that, with the best will in the world, putting a lasting solution in place is bound to take time and that interim arrangements will be needed to pave the way for that lasting solution.

667
This new sense of purpose is heightened by the Commission's announced estimates of the next budgetary positions of individual member states for the calendar year 1982. They show that before refunds our net contribution for 1982 was about 2 billion ecu, or £1·2 billion. That has made it clear to everyone that the problem has not gone away.
My second thought on looking back is how right we were not to over-react in December, as the right hon. Member for Stepney and Poplar (Mr. Shore) typically did. We judged at the time that the best course would be to see whether we could turn the events of December to good account. I believe that we have done that. I pay tribute to the good counsel and good sense of British Members of the European Parliament at Strasbourg. We worked closely with them, particularly our friends and colleagues in the European democratic group.
Thirdly, the Council reached the agreement with the Parliament without making unacceptable concessions. In its rejection of the 1982 supplementary last December, the Parliament drew attention to a number of specific issues in addition to the urgent need for a lasting solution to the budget problem instead of ad hoc arrangements—the staging of payments of grants to the United Kingdom and Germany; the need to integrate the payments with Community policies, not least energy; and the classification of expenditure as obligatory or non-obligatory. The agreement finally reached covered all those points in a manner satisfactory to us. I shall explain how.
On the staging of payments, the Council agreed that grants should be paid as to 90 per cent. immediately, with the remaining 10 per cent. following certification of expenditure on programmes attracting grants. That repeats the arrangements made for our 1980 and 1981 refunds.
The Council agreed to the Commission's proposal for dividing our refunds between supplementary measures of the type that we received for 1980 and 1981 and special energy measures under a new regulation. About £230 million of our total gross basic refund of £630 million is to be granted under the new energy regulations. Grants under that regulation will be classified as non-obligatory in accordance with existing practice for other Community expenditure on energy. The agreements reached among the institutions on these matters are reflected in documents Nos. 5 to 8.
I should now like to take the House through the budget refunds that have been won over the past three years by the Government.
Mr. Teddy Taylor: Would the Minister be kind enough to tell the House what happens if the budget committee of the European Assembly is not happy with the way in which we have spent the money on special energy measures? What happens if it feels that our allocation is not in accordance with its view of what are special energy measures?
Mr. Ridley: The list of qualifying projects is nearly completed and will soon be agreed. I assure my hon. Friend that there is no likely difficulty about finding adequate candidates to absorb all the money provided and, indeed, much more.
Mr. Marlow: Could my right hon. Friend tell the House—this is the important part—where the power resides? Who can finally decide whether we get that money?
Mr. Ridley: The processes are now complete except for the final approval by the Council. That money will now be paid. We are discussing the end of this particular saga. But I must tell my hon. Friend—although I am sure that he knows—that there are two budgetary authorities, the Council and the Parliament. The budgets must be agreed by both before they can become legal.
I would now like to take the House through the budget refunds that we have won over the past three years. The refunds already received for 1980 and 1981 amounted to over £1·4 billion net of our gross contributions. We expect to be granted next month a further £500 million of basic refund for 1982. If the Commission's latest estimates for our net contribution for 1982 are confirmed, we should be entitled to further repayments under the risk-sharing arrangements. That brings our total net refunds over the three years to about £2 billion. That shows what can be done by patient negotiation and perseverance.
I hope that it will not be thought immodest if I point out how our record compares with that of the Labour party. The Labour Government, in their infamous renegotiation of the terms of entry, secured agreement to a financial mechanism regulation designed to reimburse some of our gross contribution in certain circumstances. How much money have we had from that regulation? Not one single ecu. The right hon. Member for Stepney and Poplar did not read the small print which prevented us from qualifying. The second document listed in the motion gives that very small print.
Mr. Shore: Did the right hon. Gentleman agree the original mechanism, not merely in principle? Did he vote for the package of renegotiation when it came before the House in 1975? Did he not have the opportunity with his colleagues to renegotiate the financial mechanism? Since the renegotiation of the financial mechanism in 1980, has the situation improved? Have we received a single penny under the renogiated financial mechanism?
Mr. Ridley: I voted to support the Labour Government"s attempts to improve our refunds from Europe. I imagine that the right hon. Gentleman will vote in favour of our very much more successful attempts to do the same.
On the second point, yes, we did renegotiate the financial mechanism and, no, we got nothing out of it, and the right hon. Gentleman knows that perfectly well. It was overridden by the agreement of May 1980 under which we got the full refund. That is much more successful than anything the right hon. Gentleman did.
Mr. Julius Silverman: When the May agreement was brought before the House, did not the Government make a strong point that there were two elements in it—the financial mechanism and the supplementary measures? At that time the Government attached great importance to the financial mechanism, even though we have not had a penny from it since.
Mr. Ridley: Yes, and that shows how wise it is to provide two triggers. If the first trigger does not succeed, at least the second does.
The Labour party has made much of the cost of our membership being £1 million a day on average since we

669
joined the Community. In the Labour Government's last three years of office, the United Kingdom's contribution was £1 million a day in 1977 and £2·25 million a day in 1978, rising to more than £2·5 million a day in 1979.
The Opposition amendment relates to our estimated net contribution of £616 million for the financial—not calendar—year 1982–83. That figure is taken from the recent public expenditure White Paper. However, special factors have inflated the figure for the current year. We had an unusually high VAT rate in 1982 and our basic refund for 1982 assumed that our net contribution would be much lower than it turned out to be. We are therefore due to receive extra refunds later this year through the risk-sharing arrangements. When one adds to that the fact that nearly £2 billion has been returned through our efforts, the House can judge whose stewardship of our European budgetary affairs has been more successful.
The greater part of our refunds for 1982 will again take the form of supplementary measures, but 400 million ecus, or £230 million, will be for special energy measures. The draft regulation makes it clear that the new special energy measure will be confined to the United Kingdom and Germany. They do not amount to a new Community energy policy.
The document referring to the new Community instrument has a separate subject from the other documents for debate. It demonstrates a positive and helpful aspect of the Community endeavour, which will be unwelcome to Opposition Members. The facility is designed to cover borrowing in the Community's name to help to finance projects in member states in energy, industry and infrastructure. The aim is to back up member countries' efforts to stimulate investment and to try to control unemployment. The further 3 billion ecus now being approved will cover an additional category of "other productive sectors" and, as before, the Council will continue to authorise each tranche of borrowing and to lay down guidelines on lending. I commend that constructive development.
The vital question, however, is that of finding a long-term solution to the financing, including our own budget problem. The most positive result of recent events has been the growing consensus in the Community about the urgent need for a lasting solution. Discussions between member states are now beginning. They will not be easy, but there is no need for pessimism. The hon. Member for Walton wrote in his infamous document:
"Any agreed restructuring of the EEC budget is most unlikely given the balance among the Member States".
In the same paragraph he alleged that West Germany's
"budget receipts and contributions have tended to be broadly in balance".
Such ignorance is worrying. Germany's net contribution has not been £1 million a day; it has been more like £3 million a day. It is necessary to approach these discussions constructively and optimistically with a firm determination to find a lasting solution which, as the motion states
"will ensure that the sharing of burdens between member states is equitable."
The second to last of the documents listed in the motion contains ideas for interim arrangements which the Commission put forward last autumn. The last of the documents, the Commission communication about the future financing of the Community, is relevant to the long-term solution. The Commission's paper on future financing contains a number of far-reaching ideas which if implemented, would have major implications for the
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scale of the Community's expenditure and revenues. The paper is clearly a discussion document. The Commission has imported our term "Green Paper". It is not a firm set of proposals; firm proposals are promised for this spring. The green paper begins by calling on the Community to develop and extend non-agricultural policies and produce a better balance in the budget between agricultural and other spending. That general objective is one that we endorse.
The Community's expenditure on agriculture has fallen from over three quarters of the budget when we took office to about two thirds now. As to the development of Community policy, we recently published a booklet called "Positive Approach" which sets out some of our own ideas.
The green paper then suggests that the extra financing needed for the development of Community policies should be found partly by containing the growth of agricultural expenditure—an objective that we share—and partly by increasing the Community 's revenues or own resources. We do not share the Commission's views on the need for extra own resources. No one has yet demonstrated that an increase in own resources is necessary. If agricultural expenditure is properly controlled, the Community's existing revenues should provide the necessary financial resources for the development of Community policies and, indeed, for enlargement.
It would be wrong to rule out the idea of changes in the structure of own resources as opposed to the total of their yield. Our budget problem arises because we pay into the Community budget much more than the Community pays out to us. That is primarily because we are not a surplus agricultural producer. One obvious contribution towards solving the problem would be to restructure own resources so that we pay less. The Commission's paper discusses the possibility of a new resource, based on the value or value-added of agricultural production in each member state. Our share of that would be considerably smaller than our share of VAT own resources.
If VAT own resources were to be partly replaced by an own resource based on agricultural production, it could make a useful contribution towards reducing the United Kingdom's budgetary burden. It would be even better if it were based on the production of agricultural surpluses. The green paper states, rightly, that one objective of any reform of the Community's financing system should be to contribute to the correction of budgetary imbalances between member states, but it does not contain specific proposals. There are some hints in the sections dealing with the proposed new agricultural own resources and financial equalisation systems. We shall make it clear to the Commission that it should give special attention to this crucial problem in its further work between now and the spring.
Our views on the nature of a lasting solution were summarised in Brussels earlier this month by my right hon. and learned Friend the Chancellor of the Exchequer. Copies of his statement are in the Library. We want an arrangement that will solve the problem of unfair budgetary imbalances once and for all and which, once implemented, will remove the need for budget refunds and take the entire subject off the Community's regular agenda.
Mr. Eric S. Heifer: The right hon. Gentleman says that the views of the Government

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were outlined by the Chancellor of the Exchequer in his speech on 8 February, but the Chancellor said nothing—nor has the right hon. Gentleman today—about the other proposals in the document, one of which is:
"Any new development of the Community's financing system should, in the Commission's view, reflect and enhance the role of the directly elected European Parliament."
An important part of the document is the suggestion to strengthen the Parliament and the Commission, the introduction of majority voting, the introduction of all-round harmonisation and reducing the House of Commons to a regional body. Is that the Government's view? Are they prepared to give us a categorical assurance that they will not accept that proposal, as the Minister was prepared to give about not increasing the one per cent. VAT?
Mr. Ridley: My right hon. and learned Friend's statement was made on the same day as the publication of the Commission's green paper, so of course he did not refer to it. They were coincidental. On budgetary contributions, the Parliament seems to be on the same side as the vast majority of hon. Members. We must see how the matter evolves. The powers of the Parliament are laid down in the treaty and it would require major upheavals to change them. We should not consider the matter deeply on a day that has been set aside for discussing the budgetary imbalance.
The solution should include the development of Community policies as one component, but there is no way in which that could solve the problem completely. A lasting solution is likely to require changes in the financing of the Community as well. My right hon. and learned Friend the Chancellor of the Exchequer mentioned two practical ideas in this connection. They are ideas—not proposals—which would solve the problem with minimum disturbance to the Community's existing arrangements. One is that the VAT liabilities of member states now bearing excessive budgetary burdens might be reduced by placing an upper limit on them. Such limits should be calculated by reference to relative prosperity and GDP. The other is that the VAT liabilities of net contributor countries might be reduced to take account of the difference between their shares of CAP receipts and their contributions to CAP expenditure, this relief being progressively phased out for more prosperous net contributor countries.
The Government are being constructive and optimistic. I do not disguise the fact that hard negotiation lies ahead. The Government will continue to negotiate with determination in the interests of this country. I commend this approach to the House.
Opposition Members are totally preoccupied with the idea of withdrawing from the Community and retreating into isolation and protectionism cloaked in international rhetoric.
The document of the hon. Members for Walton and for Aberdare contains one gem, with which I would like to close:
"The Labour party is an internationalist party. We believe in a wider European unity. We hope that eventually the whole of Europe will be under a democratic Socialist system."
It is curious that those countries which find it necessary to include the word "democratic" in their titles are always countries which do not practise democracy. An example is the German Democratic Republic. Why does Europe
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have to be under a socialist system? There has been no shortage of socialist governments in the European Community, including the last United Kingdom Government. Why are United Kingdom Socialists so different from French or German Socialists? Do the Opposition want Europe to be like the east European satellites? Would it not be better if those countries were free members of the European Community? One of the important points about the European Community is that it helps to avoid—and this is what the Opposition say they want—the whole of Europe falling under a democratic Socialist system.
Mr. Heffer rose—
Mr. Ridley: That is the kind of European Community from which I for one would certainly wish to withdraw.
I ask the House to support the motion and to reject the amendment, if the Opposition have the temerity to move it.
4.4 pm
Mr. Peter Shore: I beg to move to leave out from semi-colon to end and add
'deplores the continuing failure of Her Majesty's Government to end the scandal of Britain's inequitable contributions to the EEC; recalls the unanimous Resolutions of the House of Commons on 16th July and 22nd November 1979 urging a fundamental reform of the Budgetary arrangements so that Britain's contribution to the Budget is at least not greater than its receipts; declines to approve the Preliminary Draft Supplementary Budget under which the Government has agreed that Britain is to make a further £616 million payment to the EEC in 1982–83; and demands that the Government resist any new EEC proposals that would increase the tax burden on the British people.'
The House has listened to a speech that I can best describe as something of a sandwich. There was frivolity at the beginning and at the end. In the middle there was a large slab of platitudes and wishful thinking. Frankly, the Financial Secretary's capacity to mislead the House is far below his ability to deceive himself. That is a judgment that I have formed, having listened to his attempts to explain and to see a way out of the present impasse, in which we have been for so long, in our budgetary arrangements with the EC.
The Financial Secretary opened his remarks with some reference to trade. As it is the totality of our relationships that gives so sharp and cutting an edge to the budget imbalance, it is right for me to inform the House and the Financial Secretary, as he does not seem to know anything about it at all, what has happened to our balance of trade since we joined the EC.
I shall quote the incontestable figures in terms of our manufacturing and semi-manufacturing trades. In 1972, which was the year before we joined, the United Kingdom had a balance of £82 million in its manufacturing trade. In the first half of 1982—this is appalling—our deficit was about £4,800 million. The reason why this has not yet turned into an unmanageable balance of payments crisis is that in 1972 we had a virtually nil balance of trade in oil products with the members of the EC, but in the first half of 1982 we were exporting an annual £4,000 million of North sea oil which helped, but did not overcome, the defict that had accumulated in our manufacturing trade.
It is against that background—and it is only one of the major issues that we seek to raise on the totality of issues involved in our membership of the EC—that we turn to the

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special levy, the special tax and the special exaction that is imposed upon the British people through the budgetary arrangements.
This is the sixth debate in this Parliament on Britain's inequitable contribution to the European Community budget. In the first of these debates, on 16 July 1979, the House unanimously approved the motion, substantially reiterated in the Opposition amendment today, that
"in view of the United Kingdom's massive and ever increasing net contribution to the Community Budget"—
the Goverment should—
"press for a fundamental reform of the Budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts."
That same resolution was reiterated in the second debate on 22 November 1979 when the Chancellor of the Exchequer outlined the Government's two main policy objectives: first, that there should be
"a broad balance in the United Kingdom's accounts with the Community",
and, secondly, that arrangements embodying a broad balance must operate
"in respect of 1980 and subsequent years."
As the Chancellor then put it:
"This time the agreed solution must be one which, so far as can possibly be foreseen, will last as long as the problem … Neither I nor any succeeding Chancellor will wish to make speeches in the House in a year or two about yet another debate within Europe on this same subject."—[Official Report, 22 November 1979; Vol. 974, c. 593–97.]
That was the Government's position, and hon. Members know that at the Dublin summit, which followed in late 1979, in spite of the vehement statements by the Prime Minister that she would no longer play Sister Bountiful to the Community—it was, after all, our own money—the Government were driven to a shoddy, shameful and continuing unsatisfactory compromise.
Since the stamp of the Chancellor of the Exchequer was put upon the two major objectives of the Government's policy in relation to the Economic Community in those debates in 1979, and again in his attempts to explain why he did not get it in 1980, I greatly regret that the right hon. and learned Gentleman is not defending this further failure from the Government Front Bench today. I have been in touch with him, and he knows very well that I expected a senior member of the Government to be speaking from the Dispatch Box today. I hoped that we would at least have had an opportunity of substantial answers not only to the questions that I shall put—I shall put quite a few—but to the pertinent quesion of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) about the Government's attitude towards the latest proposals to remove from the House further powers on financial and taxation arrangements, as is suggested in the documents before us.
As a junior Minister, the Financial Secretary is not entitled, and has no right, to speak for the Government on this matter. That is all the more reason why the Chancellor, who is not exactly on the eve of his own Budget, should have been present today. He is not attending any international conference; he is sitting in Great George street thinking of how he can dress up his package on 15 March in a way that is most acceptable to the electorate.
I have outlined the Government's position in 1979 before the Dublin conference. By the time we reached our third debate on 2 July 1980, the Government had settled for an arrangement under which we had to be content with
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a substantial refund. That arrangement fell far short of broad balance. Moreover, it would last initially for two years and, at most, for three. Meanwhile, the Community agreed to make what the Chancellor described as a fundamental review of the scope, balance and operation of the Community budget, the stated purpose of which would be
"'to prevent the re-occurrence of unacceptable situations' for any of the member states."—[Official Report, 2 July 1980; Vol. 987, c. 1556.]
At the centre of today's debate, amid all the documents before us, is the outcome of the third and final year of the 30 May 1980 agreement. Amid those papers is the crucial one containing the Government's weak-kneed agreement to pay no less than £616 million to the Brussels authorities for the fiscal year 1982–83. However £616 million may be described, it is clearly not a broad balance. It is better described as a good example of the so-called resolute approach.
The fundamental review of the Community budget—the so-called mandate of 30 May 1980—has run predictably into the sands. As I warned at the time, the so-called mandate gave the Commission and the Council anything but a free hand. They were hedged in from the start by their terms of reference. Those included the Council's specific agreement not to call into question the common financial responsibility for Community policies that are financed from the Community's own resources; nor to call into question the basic principles of the CAP.
Mr. Marlow: Will the right hon. Gentleman explain why he is so scathing about the Government when in 1978 the deficit was more than £800 million and in 1979 it was £900 million? That was a time when the Labour Government had responsibility. Instead of raking over the ashes and coals of the past, would it not be a favour to the House if the right hon. Gentleman said how we could get out of the mess that we are in at present?
Mr. Shore: I am sure that I shall assist the hon. Gentleman in his great distress before I finish my speech. I was among those who rejected not only the arrangements in 1975, which led to the payments that we are now financing, but the original agreement that set the whole arrangement in concrete, not in 1975, but in 1971 and 1972 when every member of the then Opposition voted enthusiastically for the arrangements from which we are now seeking to disengage. The hon. Gentleman will forgive me if I do not feel the slightest sense of self-reproach when I discuss this subject.
After 13 months of deliberation, the Commission submitted its report of 22 June 1981. It is a long, turgid essay on relaunching the Community, on strengthening the powers of the Commission, on increasing the Community's resources, and it is a plea for economic and monetary union. The United Kingdom's disproportionate budget contribution—the unacceptable situation, which was the whole purpose of the study—was dealt with in precisely six paragraphs in the 50-paragraph text. For the Commission, the main thing was not to meet the British need but to increase its own revenues to finance new policies. It summed it up as follows:
"the Commission cannot accept that an artificial ceiling be put on own resources and propose that they be increased when this becomes necessary to achieve agreed objectives."
The report on the mandate was not accepted by the Council of Ministers, and last year, in a desperate attempt to force agreement on a permanent solution to the United

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Kingdom's budget problem, the Government sought to withhold their approval from the annual farm price review. In short, they sought to exercise their veto on the financing of the CAP under the Luxembourg compromise. That occurred in May last year, but that effort led to the other members of the Community jettisoning the Luxembourg compromise and reverting to the qualified majority voting provisions as laid down in the Rome treaty. Thus, the central constitutional convention of the EC—the right to veto, which was presented as the principal safeguard to the British people in the 1975 referendum—was at a stroke overturned.
The Minister of Agriculture, Fisheries and Food bitterly complained in the House that the Council had violated an accepted convention under which all previous price fixings had been adopted. The following day the Prime Minister said that the decision was "without precedent". The Foreign Secretary was then dispatched to the subsequent Council of Ministers, but came back to the House with the unsurprising news that he could neither reverse the decision on agriculture prices nor attain any binding promise from his EC colleagues that they would not in future, when they thought fit, override the British veto.
That was in June 1982. Since then we have not had a word from the Prime Minister, the Chancellor of the Exchequer or the Foreign Secretary. I suppose that this is another example of the resolute approach. So, for the third year running, we have no broad balance, which the Chancellor set out to achieve three and a half years ago, nor do we have a permanent solution. Instead, we have the payment by Britain of £616 million, a continuation of our position as the second largest net contributor to EC funds, and no agreement is even in sight on the long-term solution of the budget problem.
Indeed, following their abortive attempt to play the veto card last May, the Government found it extremely difficult to get any agreement at all, and only then after quite exceptional delays and with increasingly humiliating conditions.
One cause of last year's problem was the failure of the revised financial mechanism to operate. That was the subject of an earlier exchange between the Financial Secretary and myself. As document 10960/81 makes plain, one of the main qualifying conditions for the operation of the financial mechanism—that the claimant country has a per capita GNP of less than 85 per cent. of the average per capita GNP of the Community—was not met. It was not met, not because the per capita GNP of the United Kingdom increased in relation to the Community's average—on the contrary, it actually fell—but because the pound sterling, owing to the Government's insane monetarist policies, rose against the ecu. As the document puts it:
"The main factor that underlies the failure of the mechanism to operate as intended is the increase during the period 1979 to 1981 of the United Kingdom's GPD share expressed in ECU. Over this period the rate of real growth in the United Kingdom remained on average significantly below the Community average. At the same the time, the value of the pound increased relative to ECU while the United Kingdom had an above average rate of inflation."
That is what the document says. I do not know how the Financial Secretary reconciles that with what he said about it to the House half an hour ago.
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The overvaluation of sterling that followed the money supply and high interest rate policies of the Government led not only to the decimation of British industry but to the wiping out of our claim for monetary refunds under the financial mechanism. The whole of this year's repayment had to be financed under the guise of supplementary measures. As we all know, that is the device under which refunds of the United Kingdom's money are allocated to regional projects, to infrastructure projects and, increasingly now, to energy projects in the United Kingdom.
Having at last reached agreement on this in October 1982, the European Assembly then decided to intervene. It rejected the proposed supplementary budget and forced the Commission and the Council of Ministers to come up with a new package, designed, as the explanatory memorandum to document 4417/83 puts it,
"to bring out in a more positive manner the Community character of the measures proposed."
Earlier, I used the word "humiliating" advisedly when I described the conditions under which we receive our money back. These refunds of our money that the Commission, the Council of Ministers and now the European Assembly have so kindly permitted us to receive, are subject not only to their allocation to different projects in the United Kingdom but to inspection and invigilation by the Commission staff. I know that the hon. Member for Southend, East (Mr. Taylor) will listen to what I say now with particular interest. As the explanatory memorandum to document 8874/82 describes it, the Commission staff
"carried out a control check on the Yorkshire and Humberside railways sub-programme in March, and in May, further checks were made of the land reclamation and housing sub-programmes in Northern Ireland. The purpose of these checks was to verify the use of the Community funds granted and to check that the sub-programmes were being implemented as planned."
The House will be glad to know that
"apart from a minor problem on housing, these visits were completed to the Commission's satisfaction,"
and the remaining balances were then paid to the United Kingdom.
I have said that we have now reached the end of the third year of the interim arrangements that were agreed on 30 May 1980. What now lies ahead? One thing is clear. The Government have not the slightest idea. In the most recent public expenditure White Paper published in February, the Government make forecasts for the three years 1983–84, 1984–85 and 1985–86. The entries for our net contribution to the EC budget during those three years total £1,400 million. Of course, those figures are covered by a note in the text which reads:
"the level of our net payments will depend on the outcome of further negotiations in the Community on budget refunds."
The House will wish to know that, in the absence of agreement for the years ahead, Britian's net contribution in 1983–84 is estimated at £1,504 million, in 1984–85 at £1,588 million and in 1985–86 at £1,700 million. This is the true measure and extent of the folly that was committed as long ago as 1971 when, in their anxiety to join the EC, the Government of the right hon. Member for Sidcup (Mr. Heath) agreed to accept the financial arrangements of the European Communities. This agreement was embodied in the treaty of accession in 1972 and began to take effect from the moment of our entry in the following year, but built up slowly in the seven-year transitional period that the treaty of accession permitted.

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There is not a member of the present Government who did not enthusiastically agree to the terms of entry to the EC that the then Prime Minister so weakly and foolishly accepted. There was one exception, so far as I can recall. Certainly the present Prime Minister cannot object. The right hon. Lady voted for the terms of entry, and she voted specifically against the amendments which we tabled to the European Communities Bill during its course through the House in 1972. The Chancellor of the Exchequer, so prominently absent today, shared the burdens of driving the Bill through the House of Commons with his right hon. and learned Friend the Member for Hexham (Mr. Rippon).
Mr. David Stoddart: He sold us out.
Mr. Shore: We warned, again and again and at the time, of the appalling burdens and exactions that the Community's financial arrangements—its "own resources" system—would impose on the United Kingdom. But our warnings were ignored and overridden.
Mr. Ridley: Although the right hon. Gentleman is going back over this ground, it carries no shame for me personally. When the Labour Government renegotiated the terms of entry and presented them to the country in the referendum which approved them, was the right hon. Gentleman content to remain a member of that Government? Was he happy, if he now has these views, to remain a member of a Government with which he now says he did not agree?
Mr. Shore: The right hon. Gentleman will recall that we had an exceptional arrangement within the Labour Government—[Interruption.] There is nothing to laugh at. We had the phenomenon—the House has had no other experience in this century of so-called dissenting Ministers—by which we were free to campaign against what we disagreed with. I campaigned as vigorously as I knew how. I was right, and those who support these arrangements were wrong. If, in the immediate aftermath of having lost that referendum, I had said that I was no longer going to abide by the rules of the game, the House would not have thought that particularly honourable behaviour on my part. I shall leave it at that. I have not at any stage concealed my strong objections and dissatisfaction and, what is far deeper, my determination to put it right.
The consequences of these arrangements are clear to anyone who bothers to look. Unless new arrangements are made, we shall revert in the coining year to the original arrangements entered into under the treaty of accession with those appalling sums, which I mentioned earlier, being due under Community law for Britain to pay to the Brussels Commission. So it is with particular interest tht we must now all turn to the document "The Future Financing of the Community" which was released by the Commission on 4 February 1983.
What do we find? Basically, the same tired old remedies. First, expand Community policies other than agricultural support policies, which are, of course, virtually sacrosanct, in the hope that this will somehow rectify the imbalance in the United Kingdom's budget payments—the difference between contributions and receipts. Secondly, as a consequence of new policy developments, the enlargement of the Community's "own resources"—in short, the increased taxation of member states by the EC.
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In raising more money, there is no doubt which is the Commission's favoured remedy. As the Commission puts it:
"of all the possible sources of additional general revenue for the Community budget, value added tax has obvious attractions."
The VAT contribution is limited by the 1 per cent. ceiling, and the Commission seeks the removal of that ceiling.
Secondly, there is the proposal for what the Commission describes as "progressivity". The basic proposal is that VAT contributions should be made at different rates, reflecting the GDP per capita of the member states. The third proposal is for a special agricultural output-related tax—to which the Financial Secretary referred—which the Commission concedes would be only a temporary measure.
Fourthly, the Commission examines the prospects for financial equalisation—the raising of new funds to finance expenditure in the least prosperous member states. It states:
"the resources so transferred need to be subject to the necessary consistency with community policies and subject to proper community control".
Finally, the Commission document argues for an extension of the powers of the European Assembly. It brings forward once again the proposal first made in 1973 to amend article 201 of the EC treaty so that
"the institutions of the community can create additional sources of revenue without having to obtain ratification by national parliaments."
There will not be many supporters for any of those proposals in the House.
The suggestion that the European assembly should be given the power to raise additional taxes, without the consent of the House, can be rejected out of hand Nor do I believe that, apart from a few Euro fanatics—I recognise one or two in the Chamber—there is any opinion in the House in favour of increasing the own resources of the EC. In any event, no variation in the tax-levying aspect of the EC's budget would meet the massive discrepancies between the United Kingdom's payment and its receipts. Indeed, the Chancellor of the Exchequer, in his statement in Brussels, made that point. There is no means of closing the gap without dealing with the specific question of Britain's unequal contribution. That change in receipts can be brought about only by the substantial demolition of the CAP—which the remainder of the Community would not allow—or by a massive increase in other Community programmes, which would involve a substantial increase in the tax revenues of the Community. So there is no way out there.
The Opposition warn the Government not to proceed down those paths. The remedy that we have consistently urged upon the Government, since they first resolved to obtain a broad balance in their budget accounts with the EC, is to amend the European Communities Act 1972 to enable the House to intercept the outflow of British money to Brussels and, thus, to reduce our contribution to the level of our receipts. After three and a half years of first threatening and then dithering, it is time for decisive action. It is time for a resolute approach.
A resolute approach on this will be among the first measures that the next Labour Government will take when they begin the process of withdrawal from the Rome treaty.
4.34 pm
Mr. J. Enoch Powell: It is almost exactly five years since this House decided to create in its own image—or in a caricature of its own image—a body in the European Community that was destined to exercise within the Community, over this country, the powers that the House had gained and exercised throughout the centuries. I need hardly add that the House was operating under a guillotine when it reached that decision. In recent years it has been our custom, when there was to be any great change in our constitutional arrangements—any marked sacrifice of our rights and liberties—that the House should deny itself the opportunity of debating them in full. Perhaps that was in part due to a nice sense of reluctance to hear too much and to perceive too clearly what we were doing.
It was however clearly perceived and stated in the House in 1977–78 what would be the consequences of the establishment of a directly elected European Assembly. I shall trouble the House with only one half paragraph that sets the point out concisely:
"The moment that the right to reject the budget or to dismiss the Commission is in the hands of those who sit in the Assembly by the same right as we sit here, it will be found that those are very far-reaching powers indeed."
The reference is to the treaty powers of the Assembly.
"It will be found that the Assembly has become a body which the Commission will have to obey—whatever the forms"—
we have been discussing some of the forms in the debate today—
"under which it obeys—and it will be a body which the Council of Ministers will be unable to defy."—[Official Report, 24 November 1977; Vol. 939, c. 1790.]
Those who divest themselves of their rights and privileges and hand them over to be used against them by others seldom have to wait very long for the opportunity to perceive what they have done and to regret the consequences. For us it has begun with the transactions that we are investigating this afternoon.
The elected European assembly has made the first move towards exploiting its inherent powers—the power over the budget and the power over the Commission. Its resolution, which opened the door to the refund of 1982—for which the Financial Secretary appears to take so much credit—stated:
"It considers this supplementary budget, to which it raises no objection"—
the reason it raises no objection is that since the first objection was taken a treaty has been made between the Commission and the assembly—
"a first step towards more ambitious objectives for the Community."
The terms of that treaty are discreetly expressed in Europese, a tongue which owes something, no doubt, to the diplomatic language which the Foreign Office has taught the world. However, they can be read and translated. Before Britain was to receive the refund, before there was to be a budget, undertakings had to be given to the assembly by the Commission, in consideration of which it would take no objection to the supplementary budget. The Commission undertook namely:
"to bring forward proposals as soon as possible to expand existing policies and diversify the own resources system."
Again, the assembly noted that the Commission had undertaken
"to present at the earliest opportunity proposals aimed at furthering and developing such policies and introducing a more diversified system of own resources."
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Hon. Members who have looked no further than that sentence might be misled by the word "diversify". It is a delightful euphemism. It does not refer to resources of the same total quantity raised in different ways. It is clear that "diversify" is a euphemism for "increase". The Commission's document, the essay which the Commission showed up to its masters in the assembly during the period between the refusal and the agreement, between the objection and the non-objection, makes that clear enough.
I quote now from paragraph 13 of Commission document No. 11125/82—I am sorry about the barbarous figures—which says:
"the Commission starts from the assumption that the existing range of own resources will remain intact; and that any new forms of revenue would constitute an addition to this range."
That is what is meant by "diversification". It then says, on the subject of those further policies which are mentioned in capitulation by the Commission to the assembly:
"The Commission regrets that, as a result of the current stagnation of Community decisions in many areas, the relationship between the development of national and Community policies is not moving as expected in favour of Community programmes."
Did the House hear that? The Commission regrets that we are doing so much ourselves upon our own decisions with our own revenues, instead of more being done by the Community—and not just more being done by the Community, but less, in consequence, being done by us. It is also stated that the increase is not desirable "simply"—a lovely word—"for its own sake". The increase is desirable for its own sake, but not "simply" so. The Commission continues:
"All expenditure at Community level should be rigorously scrutinised with a view to showing that it represents a cost-effective alternative to national programmes … the corollary of increased Community expenditure should be a reduction in expenditure at the national level."
One could not have a more open or a more insolent assertion by the Commission to the Community's face that it intends to take more from us in order not that we shall pay more in total but that we shall control less.
It would be a mistake to suppose that the capitulation is painful to the Commission. On the contrary, it is wholly delightful to the Commission; for the power which the assembly gains will be power gained at the expense of the Council of Ministers—that is, at the expense of the component nations. Who will be the gainer by that? It will be the would-be bureaucratic dominator of Europe. It will be the would-be bureaucratic empire of western Europe, which will arrogate to itself the powers which the leverage of the assembly has removed from the local democratic—I do not know whether I dare use the word after what the Financial Secretary said—control of national assemblies.
At a critical stage in our own constitutional development, the power of this House, which depended upon its control of the budget, was consciously used by the Crown as a means of exalting the power of the Executive. When the Reformation statutes were being passed, Henry VIII said, "We are nowhere so high in our estate Royal as in this our High Court of Parliament." The Commission will be nowhere so high in its imperial, bureaucratic power than when it is exercising what has been extorted by the assembly's budgetary powers enshrined in the treaty—the budgetary veto of the assembly.
In case that assertion were to be misconstrued as mere deduction, mere statement of arguable consequences, we have it set out—it has been mentioned by the hon. Member

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for Liverpool, Walton (Mr. Heffer) and the right hon. Member for Stepney and Poplar (Mr. Shore)—in the overt assertion by the Commission that in any future rearrangement of the finances of the Community, the assembly's role must be increased. I quote:
"In the Commission's view, it is essential that in any further renewal of the system proper provision should be made for the exercise by the directly elected European Parliament of budgetary powers and responsibilities which adequately reflect its status."
Let there be no misunderstanding, then, about the nature of the initial victory: the first step has been taken at the expense of this House and this country by the elected European assembly which we ourselves brought into existence.
"Give me the budget and I will control the Government."
Archimedes' principle might be restated in that form. We gave the assembly control of the budget by treaty. We gave it the right to direct election. Now we are beginning to reap the consequences, but not only in matters financial. It may have been in financial matters that our predecessors, centuries ago in the embryo of this place, first exercised their power. But that was not for long. They soon turned to the matters upon which the moneys which they granted would be expended. They soon turned to control the domestic policy, they soon turned to control the foreign policy, of the Crown.
We have been injudiciously anxious—the Government, or, for kindness and accuracy, I should say a part of the Government, have been only too anxious—to cast over the European Community the mantle of a sovereign state in respect of the conduct of international affairs. Now the assembly is moving up to exploit that field too. We learn that it intends as an assembly—as the directly elected body, with its thumb on the jugular vein of the Government—to investigate and conduct hearings on the internal affairs of this country and its relations with the Irish Republic, that it will proceed to hold hearings in London, Belfast and Dublin and sit in judgment on the policies of Her Majesty's Government and the internal affairs of the United Kingdom.
That has to stop somewhere. Somewhere, even the Government, who could swallow the treaty of 1972 and who can take pride in the humiliation of the supplementary budget of 1982, must put some limits to their surrender and cession of the rights of us here and of the powers that ought to belong to the House. Before the debate is concluded we ought at any rate to have a plain assurance that Her Majesty's Government will make it perfectly clear—they have the means to do so—to the European Community that it has no business, and that the assembly has no business, to concern itself with internal matters of the United Kingdom, over which the House and Parliament alone are sovereign.
I shall give just one little reminder and just one little warning to the Financial Secretary. He was talking about the refunds that would be obtained in the future. He was saying—I heard him say it, although he is only the Financial Secretary—that we would not be agreeing to an extension of Community revenues from this country. I thought that the right hon. Member for Stepney and Poplar over-indulged his natural generosity in saying that only a tiny minority in the House would ever be found agreeable to an increase of the types of revenue that we pay to the Community. I do not agree with the right hon. Gentleman there: I think that he was too generous. He has taken too
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little account of the power of the lever which we ourselves, only a few years ago, put in the hands of the European Assembly.
It will be no use, when the Commission comes forward with proposals for increasing the sources of the Community's revenue, for Her Majesty's Government or this House to say, "But we shall not agree to an increase in our VAT contribution," or, "We shall not agree to the derogations in the incidence of VAT being removed," or, "We shall not agree to any additional form of taxation going hence to the EC." We cannot say that. Why not? Because the assembly will answer again, as it did in 1982–83, "In that case, you get no refund, no supplementary budget." The Government have lost the power, this nation has lost the power, so long as we are parties to the Treaty of Rome, to say what we will or will not do, what we will or will not pay. Such is the depth to which we have fallen. It is a depth from which we can still recover ourselves; and we shall.
4.50 pm
Sir Russell Fairgrieve: I listened with interest to the right hon. Members for Stepney and Poplar (Mr. Shore) and Down, South (Mr. Powell). It worries me that when we debate European matters, mainly Opposition Members, but also some Conservative Members, come back to the basic idea of withdrawal, no matter what the subject. I say to the right hon. Member for Stepney and Poplar that, as 40 per cent. of our exports go to the European Community, if we withdraw from the Community we shall probably put at risk the jobs of as many people as are currently unemployed in this country. If the right hon. Gentleman wishes his party to go into the election with mandates calling for increased unemployment—and relaxation of immigration rules at the same time—it will not be very popular with the electorate.
Mr. Jack Straw: From where does the hon. Gentleman get his figures for potential job losses? Is he aware that the Minister of State, Foreign and Commonwealth Office—a Euro-fanatic, if ever there was one—put in his own claim in a debate last year of only tens of thousands? Is he further aware that no one in the Government has made any study of the employment consequences of leaving the EC, presumably because it is realised that there would be a benefit for employment?
Sir Russell Fairgrieve: I was very careful about the figures that I gave. The figures have been worked out at 2·5 million jobs being at risk in industries that export to Europe. One reason why we have been in trouble with Europe from the beginning is that we did not join each of the European institutions at the very beginning. One of the things that I learnt in my business career was that, if a new product came into the field, one tried to market it first. One did not wait until everyone else was doing so. That has been our trouble in Europe. It happened in the case of the European defence community from which we pulled out, thus causing France to pull out. It happened in the case of the steel and coal community—Schuman' s brilliant idea to prevent ever again war between France and Germany. We did not enter, but we had to do so in the end. It has been the same sorry picture throughout.
Then there were the Messina talks, at which we were improperly represented, and the final signing of the treaty

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of Rome. When did we enter? We entered just at the moment when oil prices were hijacked in the western world, which then went into slump.
We know the problem of the budget. It is the common agricultural policy. We know that agriculture claims far too high a proportion of the Community budget. I know that this Government will do all they can to redress the balance. That is what would have happened had we been in at the beginning. I remember the words well, when we first considered the CAP—that it would pay to grow wheat on the top of Ben Nevis. It is still not right. Although I accept that French, German and Italian agriculture have reduced considerably the number of people employed, their efficiency is miles away from that of our agriculture. It is still wrong that a man in Europe can come back from his normal job and it pays him to keep a couple of cows in his back shed. Those are anomalies that we must straighten out, and I am sure that the Government will do that.
I believe that this Government have done a fine job in budgetary repayments. They did a fine job recently over the fishing agreement. Again, had we joined at the beginning, we should not have had an agonising 10 years in getting a fishing agreement, because there would have been a different agreement from the start.
I end with a word about the future. Again, we have made a mistake in not joining the EMS at the beginning, because we shall have to join it some day. There is never a right time, if one does not join at the beginning.
I leave the House with this thought, which I know will be anathema to some Opposition Members. Although I may never live to see it, I hope that we are approaching a generation that can travel from London to Rome via Bonn and Paris without having to produce passports or change currency.
4.55 pm
Mr. Tony Benn: I shall not pursue the argument of the hon. Member for Aberdeenshire, West (Sir R. Fairgrieve), because what has emerged from this debate is what has been the key question from the beginning. In having this debate we find that relationships in this House have completely changed. We have not heard a responsible Minister telling us what he has decided. We have had a petitioning Minister reporting on how much he was allowed to have back of the money that our electors have paid in taxation. This is not about money or energy conservation.
We are studying the effect of transferring real power from the people of this country, who only lend it to us Parliament by Parliament, to others who will have a growing role in the control of our society. When we are told that Community inspectors will come to see how far we have obeyed the instructions under which we have to operate in order to receive our own money back, the extent of the power shift becomes apparent. This derives from the treaty of Rome which we did not draft and cannot amend, and to which we were joined by a treaty of accession which was not even published before it was signed by the Prime Minister of the day, using the Royal Prerogative for that purpose.
It is not irrelevant to go back into the history of this matter. We have now had over a decade of membership. There have been many conflicts over the common
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agricultural policy, steel policy, fisheries, trade, taxation, and now over the budget. The issue has always been the same: whether we were right to hand over the powers of self-government to the Community, and what were the consequences of that transfer.
The hon. Member for Aberdeenshire, West said that he would like to see more travel in Europe. So would I. He said that he would like to see people moving more easily from one country to another without a passport. So would I. After all, passports were introduced only quite recently, in 1914 I think, for travel in other parts of the world. What the hon. Gentleman will not see is that the treaty of Rome is a permanent barrier to co-operation between this country and other countries in Europe, because it asks us to sacrifice our rights of democratic self-government in order to co-operate with those who live across the channel. We are a provincial assembly, and we will not have it. However long it takes—and it may take some time—the British people will break with the treaty of Rome.
I want briefly to divide my comments into three parts. First, why will the British people never accept these arrangements? Secondly, how do we get out? Thirdly, what sort of Europe do we want to see? Let me say—for we are moving into a period when we shall have much public debate about our relationship with Europe—why it is that we shall not accept the treaty. It is not a nationalist response. Indeed, the treaty of Rome is as hostile to the interests of working people in Germany, Italy and France as it is to those of our own working people. [Interruption.] Hon. Members should reflect on why, after the horrors of Nazism, the Common Market looks better to those countries than it does to us and it will be realised that after such an experience the Community looks better than what went before. [Interruption.] That is true. Apart from Ireland, we are the only country in the Community that has not lived under Fascism or Nazism or been occupied by Fascists or Nazis. That explains the different attitude which I experienced as president of the Council of Ministers, and when I sat on that council for many years as Secretary of State for Energy. It was the history of those countries that made them see the Community as acceptable, and it is not acceptable to us. It is certainly not insularity, because we have always been a worldwide trading nation.
Sir Anthony Meyer rose—
Mr. Benn: I shall give way in a moment.
We shall not accept the treaty, but not because anyone in Britain thinks that our problems have been caused by Common Market membership. To the best of my knowledge that has never been said. It is not because we think that withdrawal would automatically solve our problems, because nobody has said that either. The reason is that, like every other colony in the British Empire, we want self-government. We need to break with the treaty of Rome to solve our problems because—this is an issue that the House has not yet faced—if a Government were elected on a programme involving, as it must if our economy is to recover, exchange control, trade planning and public investment, those policies would not only be contrary to the views of the European court in interpreting the treaty but to the British judges in whom we have invested the power to apply European legislation against an elected Government. What Lord Denning did to Mr. Livingstone over cheap fares in London it would be the

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duty of British courts to do to an elected Government committed to trying to solve the problems by applying our policies.
Sir Anthony Meyer: Is it not possible that to countries such as Spain, Greece and Portugal, which knew at first hand and have recently emerged from the horrors of totalitarianism, the idea of pooling a measure of their sovereignty in order the better to defend their freedoms is an attractive one?
Mr. Benn: The hon. Gentleman had better be careful. If he says that countries that have apparently willingly accepted a loss of democracy do not find much difference in the Community, let him be careful that he does not say that a country that has struggled over many centuries to achieve democracy should not now mind giving up the rights of its people. Again—I repeat the point—the House has never been sovereign. It is the electorate which is sovereign, whose interests and opinions we seek to represent, and it was not and is not for us to yield its power to others.
How shall we get out of the EC? In his final words, my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) alluded to withdrawal. People in election year want to know how that will be done. They know that there are many criticisms of the Community, many of which have been made in the House. I want to turn my mind for one moment to how that withdrawal will be carried out.
First, we must make it crystal clear that, although we may have to negotiate about the details of our withdrawal, there will be no negotiation about the decision to withdraw. There will not be another renegotiation. Many Labour Members felt cheated when the last Labour Government came to a conclusion that did not meet the objectives that we set. We are saying, for the reasons that I have tried to set out, that Britain will withdraw from the Common Market.
We have also said that, in order to do that, we must repeal the European Communities Act 1972, not just section 2, to restore the power of the House of Commons and thus remove the potential capacity of some new Lord Denning to tell an elected Government that the policies to which they are committed are illegal.
We must then abrogate the treaty of accession. I do not know whether the House noticed, but I alluded earlier to the fact that the treaty of accession was signed under the Crown Prerogative. Therefore, it cannot be wrong for an incoming Government to use the Crown Prerogative to abrogate it. Those who think that this House or the other place would have any control over that act of abrogation have misread our constitution. I happen to think tht it is entirely wrong that Parliament, unlike the American Senate, has no power to ratify treaties. As a general proposition, I am in favour of the House ratifiying treaties, but under our constitution it does not and does not have to ratify the abrogation of treaties. Therefore, the abrogation of the treaty of Rome will be an executive act that can be undertaken on the advice of a Labour Prime Minister using the Crown Prerogative.
Let me deal with the way in which that transfer can be made with the minimum of disturbance. I should be perfectly happy, once the Act was repealed and the treaty abrogated, that we should have a status quo agreement about many of the arrangements that have been reached with the Community. Indeed, we would have no
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alternative because many industries would be dependent on those agreements. But a status quo agreement where we, as a Parliament, have the power to change the status quo is completely different from a status quo enforced upon us by a Commission that we have not elected. I go further. I would be perfectly happy to see British Ministers as observers at the Council of Ministers, trying to participate in the development of sensible acts of harmonisation. But the fact that we must withdraw, abrogate and restore to the House the power to govern itself, cannot be denied.
What sort of Europe do we want? The Financial Secretary to the Treasury made some fun, he thought, of what the Labour party was saying. However, he is wholly wrong to suppose that the argument that we put forward is insular in character. We have repeated time and again that we want a united Europe but not a Europe in which we are tied to a commission with powers under a treaty that we cannot alter.
For the sake of greater clarity, I have marked the passages in "Labour's Programme 1982" which spell out our policy with great simplicity. It says:
"The Labour Party and the labour movement in general, is now firmly committed to Britain's withdrawal from the European Economic Community."
On foreign policy it says:
"we should like ultimately to bring about the simultaneous dissolution of both NATO and the Warsaw Pact."
That relates to a European security arrangement. It goes on to say:
"We welcome the contribution made by the Euro-Communists in this respect"—
that is European unity—
"and consider that this is an important factor which helps the labour movement in Europe as a whole to work for a European socialist alternative … We need to encourage and develop economic links with Eastern Europe, as this constitutes one of the main elements of our policy of detente. We believe that such co-operation is of mutual benefit, and that a rupture of an East-West dialogue would be detrimental to world peace and security."
It goes on to say:
"We live in a divided Europe, yet we must work to open the frontiers of peace, working towards a genuinely socialist Europe. Our objective is to work towards the creation of a wider but much looser grouping of European states—one in which each country is able to realise its own economic and social objectives, under the sovereignty of its own parliament and people."
I shall finish with one further quotation. I shall not inform the House until afterwards whose remarks I am quoting.
"Can anyone doubt that, if we had had, in 1939, the unity between Russia, this country and the United States that we cemented at Yalta, there would not have been the present war? I go further. Can anyone doubt that, so long as we hold that unity, there will not be another war?"—[Official Report, 28 February 1945; Vol. 408, c. 1514.]
That was Anthony Eden speaking in the House of Commons on 28 February 1945. The perspective of a united Europe in which people are able to live and work together without either the curse of the arms race or the divisions imposed by the Common Market on the one hand and Comecon on the other would be greatly in the interests of our people—[interruption.] The hon. Member for Wrexham (Mr. Ellis) does not speak for anyone in this House. He should resign and seek a mandate, like the former hon. Member for Mitcham and Morden, Mr. Bruce Douglas-Mann.
Mr. Tom Ellis: On a point of order, Mr. Deputy Speaker. I wonder what protection I can have. I

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represent the electors of Wrexham who voted me into the House. What protection exists for me when the right hon. Member for Bristol, South-East (Mr. Benn) says that I do not represent anyone in the Chamber?
Mr. Deputy Speaker (Mr. Paul Dean): I cannot help the hon. Gentleman. It is not a point of order for me. It is a point of debate.
Mr. Benn: It is a point for the hon. Gentleman's constituents. He will not give them the chance to decide whether they want him under his new label.
Fifty years ago, Hitler came to power. We live with the legacy that he left. The legacy was, first, a divided Europe that has caused great anxiety and uncertainty to people on that continent, secondly an anti-Russian crusade that the Prime Minister has taken up, and thirdly, ideas that are being reintroduced into society by the Government over whom the right hon. Lady presides. I believe that the electors should reject all of them and that, in moving forward, we should progress towards a vision of a different sort of Europe—a Europe of unity, not of disunity, a Europe of self-government in the East as well as the West and a Europe that allows the people of that continent to have a larger say in their future than is permitted under the treaty of Rome.
5.13 pm
Mr. Teddy Taylor: The right hon. Member for Bristol, South-East (Mr. Benn) has added greatly to our knowledge of the kind of Europe that he wants and of the steps that the Labour party would take to get us out of the Common Market. It is, however, accepted by the Opposition Front Bench that a minimum of 18 months would be required for this to happen and that the achievement of a united Europe would probably take considerably longer. Irrespective of whether a Labour Government are elected or the Conservative Government are returned to power, there will be a period of at least two years during which a serious budget problem will have to be resolved. Although my right hon. Friend the Financial Secretary to the Treasury spoke with great sincerity, it is not clear how that problem will be resolved. It is clearly more serious and urgent than ever.
My right hon. Friend the Financial Secretary has stated that if nothing is done our net contribution this year and next year will probably be more than £1,000 million. Over the past three years, we have had the advantage of substantial rebates negotiated by the Prime Minister through her determination and courage. However, this avenue now appears to be blocked. The signs are that there will be no rebate in 1983 and 1984 unless the British Government are prepared to make substantial concessions either by accepting a new system of budgeting or by giving more powers to the European assembly.
Hon. Members—those for and those against Europe—should be concentrating on how we can get out of the mess. It is not a question of whether the blame lies with the Government who signed the treaty or with the Labour Government who did not renegotiate very well. The fact is that Britain has an urgent and serious problem. Sadly, there has been no proposal from anyone, apart from the right hon. Member for Down, South (Mr. Powell), for dealing with it. It is implied that our weapons are not strong. What weapons do we possess to resist the
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Commission and the Parliament combined if they come to us and say that they will give us another rebate, or a rebate for five years, if we agree to increase the resources of the Community? This is a matter that hon. Members should be examining. The Government should state their views and the Opposition, despite their clear objection to membership, must say precisely what they consider should be done.
There is not a great deal to be gained by arguing the membership case yet again. We have some strong weapons in the back of the armoury. It should not be forgotten that we have contributed an enormous amount to the Common Market. I have received a recent answer from the Treasury showing our net payment to date at £3,911 million—well over £1 million a day since we joined. That is a substantial sum. We also make an important contribution to European employment. My hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve) said that 2·5 million jobs are at risk in our trade with the Common Market. If so—the figure has been given by the CBI—there must be at least three million jobs on the continent equally at risk.
One thing that has emerged since we joined the Community is a horrendous trade deficit with Europe. The deficit now stands at about £5 billion a year. That compares with a situation before membership when we always had a profit. There is no weakness. Certainly, many jobs in Britain depend on Common Market trade. However, far more jobs in the Common Market depend on exports to Britain.
If trade with Europe stopped tomorrow, according to the logic used by the CBI, 700,000 more jobs would be created the same day. That would not, of course, happen. Things do not work like that. Trade does not stop. It was expanding with Europe before we joined the Common Market. If there is a disruption of trade, everyone suffers. If, however, the argument is conducted on the basis of figures and this kind of loose logic, there would be a net gain of jobs. Europe would suffer more severely than Britain in respect of manufacturing jobs. To that extent, we have a lever.
We also have the lever of the common agricultural policy. I can never understand why Labour Members object to the CAP. It seems to be the ideal kind of Socialist arrangement that many of them suggest for British industry. They want to protect jobs in our traditional industries. If there were a planned policy for steel, for cars, for ships and for coal, like the common agricultural policy, this would surely be the answer to all Socialist dreams. One can imagine the Government saying to car workers, coal miners and shipbuilders that they intend to introduce an EC scheme under which they can produce as many ships and cars and as much coal as they want, that there will be a guaranteed price at least twice that of the world price and that there need be no worries about selling whatever they produce because sales can always be made to the Russians for one third of the price. That would guarantee full employment for shipbuilders, for miners and for car workers. We could all live happily ever after. The cost would be extraordinary. The developing countries would be damaged. However, this is what the CAP is all about. I cannot therefore understand the root and branch opposition of the Labour party when it has a golden opportunity during the budget negotiations to achieve exactly what it wants.

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Our only hope of getting more cash is by agreeing to give the Common Market more cash. That money is wanted by the Common Market to develop more nutty, Socialist, nonsensical schemes, such as the common agricultural policy that damages us, benefits the Russians and cripples developing areas such as the West Indies and Pakistan. Many hon. Members feel deep down that the parties, by some gigantic mistake, have ended up on the wrong side. Some of the sentiments expressed by the right hon. Member for Bristol, South-East could be used by Conservative Members on other issues. At the same time, Conservative Members are supporting Socialist nonsense, such as the CAP, either for farming or for other reasons. We hear Conservative Members talking about the undermining of parliamentary sovereignty, which they never used to do, and we hear the opposite from Labour Members.
Whether my arguments are right or wrong, the British Government and Parliament face an appalling problem over budget payments. It is an urgent problem which will not go away.
What worries me most is that, while everyone agrees on sentiments, no one gives us any clear ideas. The Chancellor of the Exchequer, in his excellent speech on Europe, said that, as part of the deal that the Government had negotiated, there would have to be a reduction in the cost of the CAP through the elimination of structural surpluses and that agriculture spending would have to be subjected to the same financial disciplines as other national spending programmes. Those were splendid sentiments with which hon. Members on both sides of the House would agree, but no one will tell me how those aims are to be achieved.
Should we say that we will freeze prices? There is not the slightest evidence that a freeze would reduce structural surpluses. There is ample evidence that farmers would increase their production to maintain their incomes. We will not solve the problem that way. The CAP is not in the business of reducing or freezing prices.
Mr. Geraint Howells: If the hon. Gentleman had his way, which policies would he introduce to safeguard the interests of British agriculture?
Mr. Taylor: The only way that can be done is to give responsibility to the British Parliament and Government to do what they think is right. If we decide that it is in our national interest to pay our farmers twice or three times the world price for their products, that is up to us. Parliament and the Government would also have to decide whether they wanted to do the same for the car industry, coal mining and everyone else.
As we are not net exporters of food, we could afford to do that for our agriculture, but we cannot afford to do it for ourselves and for Europe.
I urge the Government to give us some guidance about what they intend to do. If we have a clear policy on what we should strive for, it might be possible to get all-party unity until the membership issue was decided at the next election or thereafter. It is optimistic to talk in terms of withdrawing from the Community within 18 months. Greenland had a referendum a long time ago and decided that it wanted to leave the Common Market, but it is still a member. Negotiations are continuing, and some of us doubt whether Greenland will ever leave.
Some say that one answer to the problem would be to increase Community spending and to set up CAP
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equivalents for cars, textiles, coal and any area where we could get more out of such an arrangement than could other members of the EC. It is suggested that we ought to look for any industry or area where we waste more public spending than does the rest of the Common Market and get that industry or area included in an EC scheme.
I know that the Prime Minister and the Cabinet are willing to go along with the nonsensical aspects of the Common Market, because they think that it might be possible to improve them, but I do not believe that they would agree to set up CAP equivalents for coal, cars, steel and so on. That is not on. We will not be able to solve the problem by increased Community spending.
Another suggested solution is that we should change the basis of contributions. Our main problem is that contributions are calculated on the basis of VAT and customs duties. Because we import more from the rest of the world, we pay more in customs duties. The French have said that we will not solve the problem by changing the basis of contributions.
Could we change the CAP? Although my right hon. Friend the Minister of Agriculture, Fisheries and Food complained bitterly about the overturning of the veto, there did not appear to be much complaint about the speedy implementation of the price increases. I doubt whether we shall ever see the day when a British Government will ask for the sort of fundamental changes that will reduce the amount, spent on the CAP.
There is increasing urgency. Partly because of the weather, partly because we are stuffing our cows with more imported tapioca from south-east Asia to increase their yields, and partly because our farmers are producing more through efficiency, the CAP problem will be a lot worse this year. Last year we spent £7 million a day on subsidies to export cheap food to the rest of the world, including Russia. Such exports to Russia totalled 3 million tonnes last year, 2 million tonnes in the previous year and 1 million tonnes in the year before that. That problem is getting worse.
I can see no long-term progress being made unless Britain is prepared to be very tough and to use the weapons at its disposal, which are the payment of cash, trade coming into this country and our contribution to the CAP. The only answer that would make sense to a Conservative is the running down and eventual abolition of the CAP. That is the only way to get a permanent and sensible answer to the budget problem—unless we go the other way and create CAP equivalents for other industries.
It may be asked how we could achieve that when we cannot even achieve a reform of the CAP. I believe that it would be easier to abolish the CAP than to change it. Much would be gained and nothing would be lost if we made it clear that it was the responsibility of each member state to look after its own farmers and agriculture and to decide how money was to be allocated for food exports.
Hon. Members on both sides of the House have talked about the importance of getting agreement and co-operation between European countries. The CAP is a divisive factor which does enormous damage to friendship and co-operation within Europe.
Some may say that the abolition of the CAP is not the right answer and that there are better ways, but such people always talk in generalities. They say only that there could be adjustments here and greater emphasis there.
It may have been hoped that we could stagger from year to year by having more rebates. Until recently I thought

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that that was the answer, but the European assembly has made it clear that we will not have any more rebates. Something must give.
The Government's battle will be made more difficult if we continue to swap slogans on whether it is a good thing or a bad thing to be in the Common Market. I accept that many things are wrong. Our trade performance has been horrendous, we have been mugs in many areas, and I find it impossible to justify the fact that we have reduced the number of jobs in our steel industry by more than the rest of the EC members put together, under an agreement that was meant to be "European".
The Government will have to explain how we can sort out the budget problem permanently. They will need the co-operation of both sides of the House and will have to act with great determination. Unless we are willing to accept a solution that would be unacceptable to Conservative principles and to common sense, we must go for the abolition of the CAP and leave each member state to make its own decisions on agriculture. If we did that, there would be less disagreement within Europe and a better deal for Britain. We could then move forward to achieve more co-operation and harmony within Europe.
5.28 pm
Mr. John Roper: The hon. Member for Southend, East (Mr. Taylor) is one of the more seductive critics of the European Community and his arguments have to be listened to and, on occasions, responded to. I agree with much of his basic analysis of the budget problems and he helpfully brought the debate back to the subject under discussion.
No one can doubt that a long-term solution to the imbalances in the Community budget is considerably overdue. There is a tendency in the House to consider that this is purely a problem for this House and this country, whereas the problem of the Community budget, as the recent document from the Community and the recent debates in the European Parliament have shown, is much wider than the particular problem, serious though it is, of the British contribution and the British payments. As the hon. Member for Southend, East said, the problem goes much wider, and if the solution that he suggested—that of abolishing the CAP—were to be accepted, it would have a substantial impact throughout the Community.
It may not be entirely the fault of the present Government that a solution has not been found, but it certainly seems that the annual bickering over our refunds and the way that they have been conducted have not necessarily brought the long-term solution any closer. The Government's give-us-our-money-or-else attitude has distracted attention from attempts at long-term solutions of the budgetary problems and given many among our Community partners who are sceptical about our commitment to Europe more grounds for suspicion.
The emphasis of our effort must shift from trying to get as much back in any one year as possible to trying to find a satisfactory solution on a longer-term basis. This can serve not merely our national interest but the interest of the Community as a whole. Such a solution, as has been made clear in what has been said so far, must consider both sides of the budget, income as well as expenditure.
I do not accept the view of the Financial Secretary that there is no need for further own resources. It is fortuitous
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that the tendencies in world food prices over the past two years have saved the Community within those two years from hitting the limits of own resources. The problem of the admission of Spain and Portugal to the European Community means that it is necessary to look carefully at the phrase about the diversification of own resources, and I note what the right hon. Member for Down, South (Mr. Powell) said about that. He quoted from the Community's document, which says:
"It should be possible to show the people of Europe that any increase in the Community's resources should not automatically involve an additional burden on the European taxpayer; on the contrary, in many cases the corollary of increased Community expenditure should be a reduction in expenditure at the national level."
The solution of the problem of the community budget will lie not in the way suggested by the hon. Member for Southend, East, of reducing the Community's activities, but by diversifying sources of revenue and of expenditure. That solution will take some time to be reached, and there will obviously be a fairly long period for these negotiations. I doubt whether in this year we shall get, for the budget of this year, that solution. It will be necessary also to find a short-term solution for 1983.
Signs of frustration and impatience halfway through the negotiations, or the unilateral measure suggested by the right hon. Member for Stepney and Poplar (Mr. Shore)—the threats of not making payment—are not liable to lead to the right long-term solutions being made in the Council of Ministers.
Mr. Nigel Spearing: Can the hon. Member be a little more explicit about something? He said that he did not favour greater Community taxation, but went on to say that perhaps we should get our revenue from diverse sources, and that that will take a little time. Surely that is taxation, whatever the source. The hon. Gentleman is saying that he favours additional taxation, but he is not saying how he thinks it should be raised.
Mr. Roper: I shall be returning later to the subject of the diversification of resources. I said that I did not accept what the Financial Secretary said about there being no need for any further own resources. I then went on to refer to what the Community document said, which is that it is not necessarily the case that if there is increase of expenditure by the Community on the Community's budget and projects there needs to be an increase in public expenditure in Europe as a whole, and therefore by the European taxpayer as a whole. It may be there that the hon. Gentleman misunderstood me, and I am glad that I have been able to put him right.
Mr. Heffer: I am sure that the hon. Gentleman must have read the speech by Mr. Gaston Thorn in which he said:
"Even if we can achieve savings thanks to tighter management of budgetary funds, and funds allocated to the common agricultural policy in particular, new own resources will be needed to bring Community intervention to the critical level at which it will have a real impact and provide the stimulus and guidance we expect of it."
Mr. Roper: Obviously I did not make myself clear. I was trying to say that there is a need for increases in the Community expenditure and for diversification of own resources. What is not necessarily the case is that that increase in Community spending need lead overall to an increase in public expenditure throughout the Community, if what is happening is a transfer to the Community budget

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of matters that have previously been the responsibility of the national budget. I hope that I have made that point clear.
Mr. Douglas Jay: In that case, the hon. Gentleman is saying that some expenditure that was previously decided by the British Government and the British Parliament will, in future, be decided by the authorities in Brussels.
Mr. Roper: With parts of Community policy, such as energy policy or transport policy, it makes a great deal of sense for us to develop policies together. For example, on research and development on such projects as the joint European Torus, it makes much more sense to carry out these projects on a European basis so that we can match the research and development of Japan and the United States, rather than doing it by penny packets by individual European states. If there is to be a regeneration of industry in Europe, it will be by developing such policies on a Community basis. There is an opportunity for the use and development of European policies to bring people throughout the Community back to work.
It is clear that equitable reform of the budget will not be achieved solely by increasing expenditure on programmes that would benefit Britain. This point was made by the Financial Secretary. The scale of the problem caused by the CAP, which devours between 60 and 70 per cent. of the Community budget, is too great. The Chancellor, in his remarks in Brussels, pointed out, for example, that the regional development fund would, on the present quota basis, need to be increased by 50 billion ecu, twice the totality of the whole Community budget, to give Britain net receipts equivalent to the 1982 refund of 850 million ecu.
To think that one can get the problems of the imbalance and the unfairness of the budget and of getting the United Kingdom net contribution right by increasing programmes such as the regional fund without looking at the contributions is nonsense. The problem will become greater and probably insuperable after Spain and Portugal have joined the Community in the near future.
Expansion of some of the programmes, to some of which I have already referred, and the introduction of new ones will help to ease the budget problem and will have a valuable effect of their own. The Community needs to develop programmes to bring economic activity in Europe back to the level that is required. Here, some expansion of the regional and social funds would be of advantage. Transport and energy policies could be further developed, and we have seen in the refunds for 1982 a great deal of that. As the Financial Secretary said, about a third has been devoted to energy projects in this country, that is, about £230 million out of the £600 million that is coming. Indeed, the solution for 1983 will require far more specific contributions to energy and transport schemes in Britain. But further resources should also be devoted to joint industrial research and development projects.
I have already referred to the example of the joint European Torus, and I believe that there would be opportunities in, for example, the financing of Airbus Industrie, which could be used as a way of developing Community initiatives.
The Financial Secretary referred briefly to the projects that have been agreed for 1982, and it is interesting that those projects outside the CAP that are arranged in order
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to give us our refund are classified as non-obligatory expenditure. It is worth noting that the European Parliament's discretion to increase the budget is related to the share of non-obligatory expenditure within the total budget. Non-obligatory expenditure has gone up last year as a result of the refunds to the United Kingdom, and it will presumably go up this year. If, as has been hinted by the chairman of the budget committee in his speeches, that expenditure increases, so will the Parliament's control over the budget.
Mr. Ridley: I might be able to help the hon. Gentleman with the facts on what is an important point. The supplementary measures before the supplementary budget for 1983 have always been classified as obligatory. In the supplementary for 1982, paid in 1983, about two thirds remain in supplementary measures—the £400 million, which is still obligatory. The other third, about £230 million, relates to energy measures and is classified as non-obligatory, but the Parliament has given its undertaking that it will not take that into account as part of the base, thereby being unable to increase its total expenditure for next year.
Mr. Roper: I am grateful to the Minister, but I understood that, although the Parliament has given that assurance for 1984, it has not given such an assurance for 1985. Indeed, Mr. Lange, the chairman of the budgets committee, has suggested that whatever is agreed in terms of specific projects this year would affect the 1985 budget. Therefore, the growth of the non-obligatory section of the Community's budget has some effect upon the leverage, referred to already, that the Parliament has on the totality of the Community's budget. I am not opposed to it, but it is a matter of which the House should be aware in its discussions.
I believe that the Parliament is aware of the need for long-term reform of the budget. Indeed, its activities in the last few months have helped in the direction of finding sensible long-term solutions for the problems of the Community as a whole, as the Financial Secretary said in his opening remarks.
It will be virtually impossible to expand any of the financial non-agricultural policies unless fundamental changes are made in the ways in which the Community collects it resources. We shall be hitting the 1 per cent. limit VAT ceiling in the very near future—if not in the course of this year, it will almost certainly be in the course of 1984.
Reform is made all the more necessary because of the particular problem that the desirable accession of Spain and Portugal to the Community will bring. The paper outlining the Commission's initial ideas—the so-called green paper—has in a sense provided us with a helpful basis for considering ways of diversifying revenue and, indeed, perhaps increasing it. I accept what was said by the right hon. Member for Down, South, that diversification might be seen by some to be a euphemism. It is, I believe, intended, as he said, to refer to an expansion as well as to a variation in the resources to which we are referring.
While raising or removing the 1 per cent. VAT ceiling would probably be the simplest solution and has always had some advocates, I should not wish to see it introduced if there are other possibilities, as I believe there are. It would have particular disadvantages for the two countries

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which are at the greatest disadvantage in terms of the Community's present budget—the Federal Republic of Germany and the United Kingdom. By itself, it does nothing to reduce the burden of the net contributions on those members of the Community.
The Financial Secretary, in his note on the Community's proposals, is a little sceptical about the proposal that to link the VAT contributions to national GDP would help solve the problem and would also help to remove the present imbalance in the budget by introducing an element of progressivity. If it could be notionally linked with the regional variations in income throughout the Community, it could be seen to be in line with the treaty of Rome, the aim of which includes bringing together the levels of wealth in different regions of the Community. That progressivity—although I believe that it would be most rational to link it to the percentage of VAT that was contributed—could, as was said by the Financial Secretary, be in the form of a tax on national GDP. There are certainly substantial advantages in providing the Community with other resources based on taxes other than value added tax.
The Community has suffered in the past from its narrow and inflexible tax base. The proposal for an agricultural tax that is made in the Commission's document, although I do not think it would be welcomed very quickly by some Community members, would have the greatest effect in redressing the imbalance between net contributors and net recipients, as it would fall most heavily on those countries which at the moment are the largest recipients of funds from the CAP. Certainly that aspect should continue to be explored.
I am sorry that the Commission, in its final document, did not put forward its earlier proposal that there should have been some form of energy import levy. That idea has much to commend it. I believe that it would be fairly acceptable to a number of countries in the Community, if not to all. I think that it would be acceptable, for example, to France, which is concerned about its investment in nuclear and other power stations. It would probably be acceptable also to the Federal Republic of Germany. I hope that the Financial Secretary and the Government will, in the discussions on the document, ensure that the idea of an energy import levy is kept in play as one of the effective ways of increasing the revenues of the Community and, by diversifying them, of helping very considerably the problems of the United Kingdom. As a net exporter of energy, we would not, of course, be a contributor to that particular Community levy.
It is likely that a final solution of the Community's budget problem will require a combination of several of the proposals that the Commission has made for the diversification of own resources. I hope that the Government, in the discussions, will take a rather more positive attitude towards the proposals than seemed likely from some of the things that the Financial Secretary has said today.
Rather than pointing out the disadvantages—obviously almost any tax has certain disadvantages—the Government should try to ensure a development of new sources of revenue for the Community, in the interests of trying to get a solution to the fundamental problem of the budget.
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The demonstration of our commitment to the Community and of our political will to achieve the necessary reforms in regard to expenditure and revenue raising is essential. If we are obstructive this year, we shall find ourselves bickering over refunds next year, the year after and the year after that. The potential benefits to Great Britain of Community membership will once again fail to be realised. They are available now, and I hope that the Government will take advantage of these proposals to ensure that they are realised.
5.49 pm
Sir Michael Shaw: I follow the hon. Member for Farnworth (Mr. Roper) by saying that I believe that it is important that we look at the problems to see how we can develop our future role within the Community. I feel that there has been a danger in some of the earlier speeches—I fully understand it—of rehearsing diametrically opposing views. We have heard from those hon. Members who felt genuinely that it was a mistake ever to have joined the Common Market and who equally genuinely still believe that it is a mistake to remain in it.
I voted in favour of joining, and I have always been in favour of staying in. I believe that we can play a valuable part for the people of this country and for Europe by staying in and seeking to make it the maximum possible success in the future. In furthering those ends I believe that we have an important duty today to look at the way in which the budget debate in Europe has been going because it involves refunds due to the United Kingdom and, this year, to Germany also; to their implementation and to the ways in which the need for such refunds can be avoided in the future.
The first proposals put forward by the Commission in the 1982 supplementary budget for reimbursement last year were discussed in great detail and, finally, for reasons that I shall deal with later, were not adopted. Revised proposals were put forward in the first 1983 supplementary budget and have been happily agreed. After the production of the draft 1982 supplementary budget, the Council took the proposition put forward by the Commission and, after considerable discussion, hammered out an agreement on 25 October last year. However, the European Parliament had not been consulted and there were several matters upon which it felt strongly. As was right, it expressed its views equally strongly.
First, the Parliament felt that there should be greater control over how the rebates were spent. In other words, if money was being paid back it should be paid back for energy projects, and so on, that could be checked and controlled properly by the Community. That is one of the reasons why I believe we should get away from this concept of rebate as soon as possible. We want to contribute the correct amount to start with rather than contribute too much and then have the money handed back later.
The second point about which Parliament felt strongly was that there should be a limit to annual ad hoc arrangements of refunds. The European Parliament claimed that it should be the last occasion upon which these ad hoc arrangements should be made. Frankly, I do not believe that that is a realistic concept. I understand it for the purpose of argument and bringing pressure. If one reads the debates that took place in the European

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Parliament on 10 February this year—although not couched within the official resolutions—one sees that members had doubts about that proposal.
The third point was that the European Parliament felt that in reaching agreements such as the supplementary budget there should be proper consultation between the Council and Parliament. The stumbling block in 1982 was the European Parliament's insistence that this would be the last occasion upon which such ad hoc arrangements would be made. The Council offered to make a general declaration recognising the importance and urgency of finding, in the context of the development of common policies, a lasting solution to the Community's internal imbalances so as to avoid future ad hoc adjustments. In support, the Council noted publicly that the Commission was submitting proposals to it on the Community's future financing. Parliament's view at that stage can be summed up fairly as, "We have heard all this before. We have heard these policies and nothing seems to have happened." As a result, the supplementary budget was not accepted.
I have a good deal of sympathy with the European Parliament's view. For several years I was involved in the conciliation process between the Council of Ministers and the European Parliament. However, the faults were not one-sided. In the early days the Council may have been reluctant to take the European Parliament seriously but, for its part, the parliamentary delegation was far too prone to stand on its dignity and insist on its rights. That is no posture in which to seek genuine negotiations. A genuine role for the conciliation machinery had not been worked out at that time. It was only after the 1975 treaty, which was ratified in 1977, that the need for conciliation became clear.
The Community's budgetary authority became a joint budgetary authority consisting of the Council of Ministers and the European Parliament. From then on, Council and Parliament had to learn to get on with each other. I am glad to see that the 1983 budget was agreed and adopted at the proper time in December. It was to the credit, not just of the Council and Parliament, but particularly of the Parliament's budget rapporteur, the MEP for Upper Thames, Mr. Robert Jackson.
In every debate on this subject in which I have taken part, I have stressed the fundamental need for Council and Parliament to learn to work together as the budgetary authority. I stress that once again. Whatever difficulties may have to be overcome in the successful development of the Community, such agreement is fundamental to future progress.
The first supplementary budget of 1983 was a re-hash by the Commission of the first attempt in 1982. The negotiations that have taken place this year, prior to the final agreement reflect considerable credit on all involved—on the Commission for the way in which it prepared the document, taking account of all the criticisms and comments beforehand, and particularly on the Council and the Parliament for the way in which they genuinely sought an agreed solution, and in doing so showed themselves willing to move significantly towards each other's point of view. The obstacles that made agreement impossible in late 1982 were finally overcome in early 1983. Where there's a will, there's a way.
I believe that there is now a willingness on the part of the Council, even if not on the part of all members of it, to acknowledge the partnership involved in developing the role of the joint budgetary authority. I suspect that in that
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process my right hon. Friend the Financial Secretary to the Treasury has played a constructive and helpful part. I congratulate him.
The Council has agreed to much greater control over the refunds than was originally contemplated. For its part, the Parliament has accepted the fact that genuine efforts are being made to reform and develop the Community's future financial framework. Agreement has been reached by genuine conciliation.
We must consider whether the ad hoc payments to the United Kingdom and West Germany will be necessary in future. The simple answer is yes, probably, until the entry of Spain to the Community. At present there is an imbalance in the budgetary contributions of individual member countries. The reasons are well known.
By definition, it means that if the United Kingdom pays too much, as it does, other countries do not pay enough. To put it bluntly, I do not foresee the latter agreeing to a permanent change from a system that is advantageous to them unless there is also advantage to them in a change. But changes will be necessary when Spain joins. Nowhere will they be more necessary than in the CAP. The countries now advantaged by the CAP will then insist on changes. It is in just such negotiations that our justified demand for a fairer long-term solution to the present imbalance in budgetary contributions can best be made.
Until that time I suspect that short-term arrangements for ad hoc rebates will have to continue. In the meantime, it is vital that we should prepare plans and discuss ways in which those changes can be brought about, so that if and when Spain accedes we are ready to put into the changes that will then become necessary methods whereby the character of the budgetary contributions will be fair to all.
6.4 pm
Mr. Julius Silverman: I follow the hon. Member for Scarborough (Sir M. Shaw) in agreeing that a long-term solution to the budgetry problem will not be found quickly. I wonder whether it will be found at all.
It is now about 18 months since the Commission failed to fulfil its promise to bring proposals before the Community and the Council on structural changes in the finance of the Community. Eighteen months later we get a green paper. Apart from discussing options and possibilities and showing the Commission's desire to increase expenditure and taxation, it takes the matter no further. There are no concrete proposals. I shall be surprised if proposals come forward in the spring, as the Minister said. If they come forward in a form acceptable to members of the Council I shall be absolutely astonished.
The fault of this budget is the fault of all EC budgets that have come before the House. They all suffer from the CAP. That is the problem. It bestrides the whole of the Community's finance. Even today, when the proportion has been somewhat reduced, it is still the dominant feature in Community finance and all revolves around that huge concentration of finance. It is because of the CAP that we have the problem of compensation for the United Kingdom and that the Commission feels that it has no room for manoeuvre.
In its green paper the Commission talks about raising finance here or there, but it does not question the existence of the CAP. There is no suggestion of taking even the most modest steps to reduce the expenditure. That is astonishing. When we talk about finance we are talking

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about expenditure as well as raising revenue. The green paper is one-sided and I do not believe that it will take us very far.
When the May agreement was entered into we were told that there were what the Minister called two triggers. One, the financial mechanism, soon went. My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) told us why. We did not possess the qualifications, due to a large extent to the Government's economic policy. That trigger has gone. We are left with the supplementary measures, of which we are getting only £400 million, and we are told that we shall get £230 million on unspecified energy programmes. No one has been told anything about them. We do not know what sort of programmes they will be or where they will be sited. We are merely told that a programme will be coming forward. I look forward to that with interest.
I wish now to deal with the matter from a constituency angle. I represent a west midlands constituency in Birmingham. So far not a single penny has gone to the west midlands from the supplementary measures. The money is devoted entirely to certain designated areas which the British Government and not the Commission are responsible for choosing. The west midlands does not get a single penny.
The west midlands is today one of the most depressed areas in the country. Its decline from past prosperity has been rapid, dramatic and disastrous. It is now almost at the top of the list of regions with high unemployment. Every week there are fresh closures and fresh redundancies. There have been several thousand redundancies in the city of Birmingham during the past few weeks, and 20,000 jobs have disappeared in my constituency during the past three or four years.
There is no daylight to be seen. In the past, Governments might have said that the depression in Birmingham was temporary. They might have said that the west midlands was a resilient area and that it would recover. Today, the position is desperate. Industries are disappearing and there is no sign of recovery. One might have expected that, where there were some programmes to distribute, something would have gone to the west midlands, but not a single penny of this money is going to the west midlands. I do not know whether any of the energy programmes will go there. Perhaps the Minister could tell us in due course. I am interested not only in the supplementary measures but in the regional fund. As for the regional fund, I have here a table entitled: "Fund assistance 1975–1981 and main social and economic indicators". I shall give the figures for assistance in the various areas in those years. For the north of England, the figure is 80·51 million ecu; for the north-west, 27·72 million ecu; for Yorkshire and Humberside, 73·63 million ecu; for the east midlands 13·24 million ecu; for the south-west, 31·85 million ecu; for Scotland, 331·36 million ecu; for Wales 196·70 million ecu and for Northern Ireland 182·75 million ecu. For the west midlands, the figure is 0·10 ecu per capita.
I want the Minister to explain why this state of affairs continues when conditions are so desperate. One or two hon. Members have asked whether the west midlands will now have access to Community funds and the Minister has replied that, for the time being at any rate, there will be no such access. In view of the desperate position of the
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west midlands, what are the Government going to do about this aspect of their policies? What assistance will they give? What proportion of these funds will go to the west midlands, and what change of policy will the Government make with regard to that very distressed area?
6.13 pm
Mr. Alan Haselhurst: My approach to the budget problem depends on three factors: first, the assessment of the benefits of membership to Britain; secondly, the certainty or otherwise of Britain's membership of the Community; and, thirdly, what I wish the Community to be and what I wish it to do.
I apologise to the hon. Member for Birmingham, Erdington (Mr. Silverman), with whom I have the honour to sit on the Select Committee on European Legislation &c, for not taking up what he said, especially from his regional point of view. However, I doubt whether industrialists and business people in the west midlands would necessarily draw, as he does, a gloomy conclusion about membership of the Community.
It is impossible to assess Britain's benefits from membership of the Community simply by considering our performance today and deducing that, because we have been members of the Community, we have done less well than we would, had we been outside the Community. We must try to assess what would have happened to Britain had we not joined the Community and then compare our position today. That exercise was carried out by the group economic adviser to Lloyds Bank and published in its January economic bulletin. The conclusion of Mr. Christopher Johnson was:
"The cumulative effect of our EEC membership on the UK's GNP is estimated at a £19 billion gain on industrial exports, and a £7 billion loss on agricultural Budget transfers, leaving a net gain of £12 billion, or 5 per cent. of this year's GDP."
That shows that there is an economic gain to Britain, although the gain may not be as great as many of us would wish.
Nor has Britain lost from the common agricultural policy. There have been benefits to both British agriculture and the consumer from our membership of the CAP because we have security of food supplies. We may not have been better off by buying on the great world market where prices have fluctuated considerably for some time and that will offer no certainty of cheapness in the long term.
Mr. Arthur Lewis: Will the hon. Gentleman give way?
Mr. Haselhurst: No. The hon. Gentleman has only just arrived in the Chamber and has not been listening to the debate. Other hon. Members wish to speak—
Mr. Lewis: I have heard the hon. Gentleman's comments.
Mr. Haselhurst: —and I shall not give way to the hon. Gentleman.
The reason why Britain has not done better in the EC may lie in the fact that we have not put our industrial house in order in other ways. We have suffered from overmanning, poor management and obstructive trade union practices, all of which have held up Britain's performance compared with our continental partners. Those matters cannot be dismissed and ignored when we

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consider what Britain has done in the Community. We could have done better, and we shall do better only if we sort out our industrial difficulties.
We should not ignore the political importance of our membership. It is impossible to put a price on that, and one of the most fundamental reasons for our membership is the great advantage of our growing closer to our European partners, which is a force for peace and good in the world. That stands above all other benefits of membership.
If we are to take a sensible approach to the budget problem, we must know how we have done realistically within the Community, and how well we might do if we sorted out our industrial difficulties, and we must get rid of the continuing doubt about whether we are serious about our membership. Our industry is damaged by the uncertainty, and especially by the fact that a major party in Britain will campaign in the next election for this country to leave the Community. Very few people in industry and commerce believe that it is a sane and credible policy for Britain to pull out. When they know that the Labour party is advocating that policy, it must act as some form of restraint on their commercial and business decisions. That uncertainty is damaging to the further development of the British economy.
While this uncertainty exists, how do we look to our partners in the Community? How can they be expected to debate and negotiate seriously on what should be a fair deal for Britain and for all the Community members if our partners are not sure that Britain will remain for much longer a Community member? That cause for doubt is understandable. If they appreciate the downright hostility that was shown this afternoon by the right hon. Member for Stepney and Poplar (Mr. Shore) they may imagine that we are at war with them, rather than in partnership as members of a community dedicated to common objectives.
The so-called internationalism of the Labour party, as demonstrated by the right hon. Member for Bristol, South-East (Mr. Benn), is of the vague and waffly variety. The Labour party is very good at talking about the brotherhood of man in broad international terms, but when it is asked to get down to the nitty-gritty details of co-operating with its next-door neighbours in Europe it falls well short. That uncertainty must be removed. The Labour party should realise the damage it is doing to Britain and to the British people by continuing to keep the issue open.
Mr. Heffer: Is the hon. Gentleman aware that at the end of the second world war the Labour party resuscitated the Socialist International, whereas the Conservative party resuscitated nothing about internationalism? Is he also aware that it was the Labour party which, consistently over the years, stood foursquare with those who were seeking their national independence? When the Labour party came to power in 1945, it was responsible for ensuring that India and other nations gained independence. That is true internationalism.
Mr. Haselhurst: The hon. Gentleman demonstrates that he is living in 1945 and not in the present. The British Labour party has the opportunity of standing foursquare with the Labour and Social Democratic parties of the continent of Europe, and to their despair it is failing to do so. That is the test of internationalism and the brotherhood of Socialism. We must get rid of this uncertainty as an important part of ensuring that Britain gets the best budget deal in the future.
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The final consideration is what kind of Community should exist in the future—[Interruption.] I have already given way to the hon. Member for Liverpool, Walton (Mr. Heffer). I am not prepared to give way to him if he continues a sedentary commentary. He might do the House the courtesy of remaining silent or seeking to interrupt if he wishes.
The Community should be an expanding and dynamic body. I do not have any hang-ups on sovereignty. Today, it is absurd to rely upon narrow national sovereignty. I am not happy with the idea of clinging to the nation state. While I am proud of my country's history, I look back on the history of the world to see that the nation state has created a lot of distress in the conduct of its policies. If a way can be found of getting away from the nation state and embracing the idea of a wider community, that is far better for the development of mankind than relying on narrow nationalism or an overt jealous guardianship of sovereignty.
The Community's role must be expanded. In this modern world, many things can be done only on a Community basis. If this country is to retain a worthwhile industrial presence in the world, we must work in alliance with our partners in Europe. That will enable the financing of some of the projects that will form the core of tomorrow's industrial world. Unless countries are prepared to act together, nation states will be unable to find the resources individually to fund the industries that will create work for the future. We should be thinking about new research projects as well as regional development when we look at what the scale of the Community's budget should be. More money will have to be found in the future.
I hope that my right hon. Friends will not take too rigid a view of not expanding the contribution to own resources. If there are worthwhile reasons for putting money into the Community's budget, I hope that those will be paramount.
The solution to Britain's problems can come about only as part of an expansion of the Community budget towards defined purposes. My hon. Friend the Member for Southend, East (Mr. Taylor) suggested that these principles were Socialist. They are the pragmatic approach of a Government and country seeking to find realistic answers to the industrial problems of tomorrow. Those answers cannot be found solely within these shores. That is not a Socialist conclusion. It is in an expansion of the Community budget that one will be able to solve the contribution that Britain should make towards that budget.
I commend Ministers on the imaginative and resourceful speeches that they have recently been making on the continent of Europe. I hope that they will keep those qualities of imagination and resourcefulness to the fore when they are engaged in the detailed negotiations on Britain's future contributions. It is only by the enlargement process that we shall achieve a fair answer for all the individual countries as well as a contribution that is fair and reasonable.
6.28 pm
Mr. Nigel Spearing: I am grateful, to you, Mr. Deputy Speaker, for calling me immediately after the hon. Member for Saffron Walden (Mr. Haselhurst) with whom I frequently agree on matters in the House. We are both members of the Select Committee on European Legislation. First, I pay him a compliment. He has expressed in colourful language a common view held

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by members of his party, and some members of the British public, about the Common Market. That view is erroneous.
I wish to remark on one of the points the hon. Member made earlier about how Britain can benefit from the European Community. I have every reason to suppose that the hon. Member's constituency is benefiting from the Community's agricultural policy. The United Kingdom cereals harvest for 1982 showed a surplus of about 6 million tonnes. Not all of it will be exported. Some of it may be sent to the EC, Russia, East Germany or Poland. If it is exported it will require a subsidy of between £400 million and £500 million. If that surplus was not available to export, Britain would not get the money from the European Community and we would be contributing another £500 million net.
Many of the so-called "benefits" in the budget calculations go to particular sectors of society. The common agricultural policy is distorting the agriculture of the United Kingdom in a way which may be of short-term benefit to some of the hon. Gentleman's constituents. In the long term it will not benefit agriculture in the United Kingdom.
The hon. Gentleman said that the treaty of Rome encouraged co-operation and partnership and that it is an international treaty. That is not true. The treaty of Rome is a commercial, economic and political treaty. I can find nothing in that treaty relating to world co-operation and partnership. Those are qualitative matters in relationships between states. I shall be interested to see whether any hon. Member can point to any provision in the treaty of Rome that encourages those necessary qualities. I suggest that the treaty prevents the development of the qualities that we all wish to see.
The common language is an example. We talk about partners. The essence of partnership is that each person contributes to the common weal without an account book calculation of how much he is putting in. In fact, that is never the case in the EC. The other member states are our competitors rather than our partners. They are competitors forced on us by the articles of the treaty, which require competition as the sine qua non of the economic organisation of the Community.
The hon. Member for Saffron Walden said that he wants to see an expanding and dynamic Community. Perhaps he does not realise that he is encouraging a hierarchical organisation that takes power from the nation state. I agree that in the modern world the nation state cannot solve problems on its own. That is why the United Nations and hundreds of international agencies look at matters issue by issue to see whether some sort of arrangement can be made. Of course, the nation state cannot do it on its own, but, unless there are nation states, they cannot co-operate with one another.
Those who support the EC in terms of the hon. Gentleman's logic want to do away with Britain as a nation state, as with France and Germany—[Interruption.] The hon. Member for Harrow, East (Mr. Dykes) waves his hand. He should wait until the end of my remarks to see whether he feels so confident, because that is the aim of those who wrote the treaty of Rome. They have put inside it an automatic screw which, wherever it moves—and it moves annually—inexorably and automatically moves in that direction. It is built into the mechanism, and was seen
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to be so by hon. Members long before we signed the treaty. Conservative Members, Ministers, and perhaps even the Foreign Office, have just woken up to that fact of life.
I wish to make three relatively brief points on the procedure that we have adopted in these matters, on the mandate of 30 May and on the power of the assembly, which is growing and ought to be diminished. We have before us in this long and complex motion no fewer than 11 documents. Attached to each is a Government explanatory memorandum, some of which are also accompanied by reports from the Scrutiny Committee. In other words, between 20 and 30 documents ought to be perused by hon. Members taking part in the debate.
Notice was given of the debate in principle last Thursday week, but it was not until last Friday that the general public and most hon. Members could possibly know what documents would be contained in the motion. The motion was not tabled until then, and it was not until then that the Hansard containing the list of documents was printed. If we are to do justice to our procedures or, indeed, to the Community, that is not the proper means of proceeding. I hope that the Leader of the House and others concerned with these matters will look at this point.
My second point on procedure is perhaps more important. We have been discussing the powers of the assembly. It has been assumed by some, including the right hon. Member for Down, South (Mr. Powell), that the powers of the assembly, which it is now wielding so effectively, were in the treaty of accession. They were not. The treaty has been printed as Cmnd. 6252, dated 1975. The assembly's enhanced powers over the budget were given by this House on the evening of 8–9 December 1975. However, that effective amendment to the treaty of Rome was not understood by the House, which considered two definition of treaties orders that were passed without any change whatever.
Mr. Roper: The hon. Gentleman will remember the date as well as I do, because he took part in the debate, as I did. If he rereads the speeches, he will find that there were a number of references to the importance of those treaties.
Mr. Spearing: I do not deny that. On that occasion, my speech was nothing like as strong as it should have been.
The question on the Order Paper at that time was that the House should approve two statutory instruments. I shall now proceed to explain how they amended the treaty of Rome. The schedule to each of those domestic statutory instruments referred to a number of treaties—about 12 in all—of which Cmnd. 6252 gave greater power to the assembly in respect of the budget. That was how we amended the treaty of Rome and handed over the power.
Some of us may have had a clue about what was going on, but I doubt whether any hon. Member believes that that was the way to give the assembly greater powers over the budget. Therefore, procedural matters in respect of the Community and this House require considerable scrutiny.
My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) has already referred to the mandate of 30 May 1980, which was hailed by Conservative Members, particularly by the right hon. Member for Chesham and Amersham (Sir I. Gilmour), then the Lord Privy Seal, as a great breakthrough. The Cabinet was sold it the day after it had been agreed, and everyone thought

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that they were on the way. However, that communiqué—because that was all it was—contained the phrase
"without calling into question the principles of the CAP".
The problem is that the principles and practices of the CAP are the keystone to virtually everything that goes on in the Community, pre-eminently the budget.
Mr. David Myles: Which principles in the CAP does the hon. Gentleman wish to do away with?
Mr. Spearing: The problem is that the CAP objectives are laid down in the treaty, but it is the means whereby those objectives are achieved that have become custom and practice. One of the objectives, I think in article 64, is the "stabilisation of markets". It is on those three words that the whole system of intervention depends, as well as the ways in which it has grown and in which the previous agreement affects future expenditure.
One of the features of Common Market operations is that immediate difficulties are usually solved at the cost of putting greater difficulties and expenditure into the future. That has happened time and again. When it was agreed that there should be a modest withdrawal of crops, modest intervention and the setting up of an agricultural fund, I doubt whether anyone realised the extent to which the CAP had grown. Once started, it could not be stopped. It cannot be stopped because of the dependence on electoral votes in each country concerned. Politicians on both sides of the Channel have got on to a rising spiral that they cannot get off. That is one of the principal characteristics of the Community.
Mr. Myles: I wish to pursue this point further. The hon. Gentleman has not said which of the principles of the CAP he would wish to jettison either in or out of Europe. Is it the stabilisation of markets, which was mentioned, or one of the others?
Mr. Spearing: I am grateful to the hon. Gentleman because, perhaps inadvertently, he has hit upon the great problem that faces the CAP.
One can agree with objectives, but one can disagree with the means adopted for achieving them. If I were a Frenchman, I would perhaps uphold the policy of taxing food from outside because I would believe that, internally, French rural society should be sustained by such a policy. I believe that our policy of deficiency payments was much better suited both to British agriculture and to the British people. Therefore, the answer is that one has two means of achieving the same objective. I do not believe that they can be harmonised because of history and the differences between our two peoples. That was one of the good reasons why many people were against going into Europe. They foresaw the problems that we now face.
My third point relates to the role of the assembly in our current problems. The British rebates have come across continual problems. They were negotiated for a two-year period, with a one-year extension. Now, in this final year, after an enormous amount of discussion, the assembly, as described by the hon. Member for Scarborough (Sir M. Shaw) with great accuracy and detail, has said no. It did so for obvious reasons. I shall quote from Europe dated Friday 17 December 1982 under a heading "Strasbourg Thursday 16 December 1982". It states:
"By a very wide majority—258 votes in favour and 79 against—the Parliament has adopted the report and the resolution by the Italian communist Carla Barbarella which amounts to a rejection of the amending budget for 1982".
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It goes on to explain the reasons. Carla Barbarella was not present in a party capacity. She was chairman of the committee which reported. Neither Conservative Members nor the Foreign Secretary, who was Chief Whip of the Government which pushed through the measures, would have believed that in 1982 an Italian Communist deputy, being chairman o f a committee, could move a motion in the assembly which would wipe away £500 million or £600 million of public money from Britain. That is what is happening.
We all know why it has been done. The right hon. Member for Down, South used the word "lever". It is not only that the Parliament was against this payment because it did not have the necessary strings attached to it, but because it wanted to enlarge the powers of the assembly as against those of the Council and the Commission. The Parliament was using this as a convenient lever in its hands to do so.
The hon. Member for Scarborough outlined the need for consultation. He emphasised time and again the need for agreement. Of course 'that is so, but it takes two to make an agreement. The more consultation there is, the more power the assembly will have over and above the Council. It may be that the effective power is even greater than that given by the treaty. We all know that the real power in politics is based not only on the written law or on written rules, but on the leverage which might be brought to bear. It is clear that the European assembly, in going about its work, has enlarged its powers and brought publicity on itself that it would not otherwise have received and is spoiling for the next round.
We have only to read the communiqués which appeared in Europe on 11 February. Referring to the long resolution which came about at the end of the deliberations, it said that the Parliament
"considers this supplementary budget, to which it raises no objection, a 'first step towards more ambitious objectives for the Community."'
What can the "more ambitious objectives" be? The hon. Members for Saffron Walden and Harrow, East might like to fill those in. The hon. Member for Farnworth (Mr. Roper) has already filled in what the SDP thinks. The SDP agrees with the Community on this matter. The SDP wants to enlarge the budget and increase its scope. It wants the EC to spend more and national Governments to spend less. That was the burden of the speech of the hon. Member for Farnworth.
It is no good the Government saying that they do not think there should be an increase in the 1 per cent. limit. The report of the Select Committee on European Legislation summarises it as follows:
"The Commission contends that for these aims to be realised an extension of the Community's own resources is unavoidable, and does not accept that the 1 per cent. ceiling on VAT own resources should be a permanent constraint."
Later, summarising the Commission's views, it states:
"The Commission concludes its paper with a discussion of the role of the European Parliament as one branch of the budgetary authority, noting that while sensitive issues were raised in 1973 by its own proposal that the Community institutions should be empowered to create new budgetary revenue sources without the need for ratification by national legislatures, a greater degree of independence in this respect was nevertheless desirable."
In other words, the Commission is leaning in the direction of the assembly when the assembly wants to increase its powers.
I close my remarks on the connection between money and policy, on a point made by the right hon. Member for

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Down, South. We all know that control over money equals control over policy. In political terms, policy is often money—not always, but often. The assembly clearly wishes to extend its competence, and competence over the budget is but the first step. Other people also wish to extend the competence of the Community.
In a press release, dated 26 November 1982, Herr Kohl, Chancellor of the Bundestag as he then was—this was kindly sent to us by the West German embassy—referring to the period when Germany will have the Presidency of the Council—a period now with us, but of course preceding the German elections—said:
"Above all, this applies to the German-Italian initiative on a European Act, which we hope will provide new impulses for European unification. When my country assumes the presidency of the European Community, we shall therefore make vigorous efforts to promote this initiative."
That document is not before us today, but the power of money which would push that document is not in this House alone—it is with the assembly. When Conservative Members read the document, they may not say "Hear, hear". The mechanisms of the Community, which I mentioned in reply to the hon. Member for Saffron Walden, have within them an automatic screw towards European unification—unification of its political authority; unification of its public expenditure; unification of its laws; and unification of its foreign policy.
I do not believe that that is the right step. I do not believe that the fruits of co-operation, fellowship and friendship can come from the tree of the treaty of Rome. They must be achieved in some other way. The Government must realise that once a year the screw will be turned on an automatic ratchet, and that ratchet is the annual budget. They must make a resolute approach and realise that the friendship and partnership that we want with our friends across the Channel cannot be achieved by the treaty of Rome.
6.50 pm
Mr. Peter Lloyd: I am pleased to follow the hon. Member for Newham, South (Mr. Spearing) because I agree with the main part of his argument. My only disagreement is with his comment that it takes two to make an agreement. That is not true in the Community, where it takes at least 10.
Everyone agrees that Britain pays too much, or that it receives too little, but I suspect that some Community enthusiasts regard our contribution as a not unbearable surcharge for the privilege and benefit of belonging to the EC, and as an inevitable penalty for not joining earlier and being present for the formulation of the original rules. That view was taken by my hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve).
Most people in Britain, and certainly in the House, believe that the Prime Minister was wholly right to insist on the temporary adjustment that she achieved in 1980. Contrary to what the hon. Member for Farnworth (Mr. Roper) said, I believe that in so doing she focused, not distracted, attention on the basic long-term problem. Since then we have been waiting for the promised new permanent arrangement to ensure that the problem does not arise again for Britain, or for any other member state. So far, we have waited in vain.
The obvious injustice to Britain, tardily recognised as such by our friends in the Community, is that we are in
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an unacceptable position which, on entry to the EC, we were promised would be put right. The fact that that remains unresolved strikes most people as, at best, sloth and inertia and, at worst, a deliberate and mean desire to keep arrangements that might profit them at our expense. But neither view really explains why the matter remains unsettled, despite the sustained pressure of Foreign Office and Treasury Ministers during the past three years. Those suspicions do an injustice to, and underestimate, our friends in the Community.
Of course, our fellow members would be unusual if they were enthusiastic to find ways of paying more so that we could pay less. But the underlying reason why nothing is done is surely that the budget question inevitably touches upon the fundamental character of the EC. The way that it is eventually settled will determine the way in which the Community will evolve. Therefore, every solution canvassed has a more significant implication than its effect on the United Kingdom's net contribution and the extra that our fellow members will have to pay. The documents underlying the debate show that.
But if the Community is to continue to be welded into a federal European state or, to use a less provocative description, some sort of supranational unity—which is undoubtedly the ideal of most of those with the responsibility for running it and the path down which, in the fulness of time, they mean to go—witness the statement of Herr Kohl referred to by the hon. Member for Newham, South. There are others we could pray in aid on that point.
If the Community is to advance in that direction, it must ensure that it continues to be financed from its own resources, to do with as it determines. It must also view with great suspicion any idea of a juste retour arrangement, as it would destroy the Community's potential as an organic unity if each country was guaranteed that it would get out whatever it put in, less a percentage for expenses. The Government undoubtedly understand that, because it is implied, if not quite stated, in the green document which has been in the Vote Office for some considerable time, unlike some other documents being debated today. It is dated September of last year and is entitled "The Budget Problem". On page 7, the Government argue strongly that they are not asking for a juste retour but that they want a formula to ensure that the transfer should be from the richer to the poorer. That sounds to me, and no doubt to our colleagues in the Community, to be a refined version of the species—a somewhat juster juste retour than simply getting back what we put in. My hon. Friend the Under-Secretary, who knows that passage, will say that Britain is prepared to be a modest net contributor, but we are being disingenuous to say that the principle is not really being breached by what we ask.
The most communautaire way to deal with the United Kingdom budget problem is to develop other Community policies that would provide the desired offsetting net benefit. But there is surely something grotesque in the idea of developing policies not for their intrinsic merit, but to make the statistics look better. That would be a gigantic misappropriation of public funds. Yet the Government, in the document, insist that they have long wanted a more rapid development of EC policies, especially regional and social. I hope that they will explain why.
Are the Government really saying that Brussels can spend our money more effectively in those and other areas,

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and do so better than we can ourselves? If so, they must tell us how that can be. I suspect that efficiency and value for money have little to do with it, and that the answer is that the Community idealists and managers in Strasbourg and Brussels regard those as the necessary steps in what they call "building Europe". We will be moved to accept that as the most promising way of achieving the appearance of getting our money back. For, in truth, development of those policies will mean that the Community, including the United Kingdom, will have to find additional resources to finance them. That, thanks to the additionality rule, will exert an upward pressure on public spending at home, which the Government have taken nearly four determined years to bring under control. That would not be a satisfactory outcome, although it may have some attraction for Opposition Members.
As my hon. Friend the Member for Southend, East (Mr. Taylor) said, the budget problem would almost entirely evaporate if there was a genuine common market in agriculture, in which prices were determined by supply and demand rather than expensively engineered by politicians. Yet the Government, in the document, protest that they are not trying to undermine the CAP and that over-production and the consequent dumping on the unfortunate Third world can be dealt with without altering the principles of the treaty of Rome, or even the fundamentals of the CAP constructed upon it. It is high time that the Government told us how the trick might be done, because I do not believe that it can. I shall resist the temptation of explaining why, because it is not strictly relevant to the debate. But I recommend any hon. Members who wonder why to read the brilliant book on the subject recently published by my hon. Friend the Member for Holland with Boston (Mr. Body).
Despite my critical stance, I support the Government—at least in their efforts to obtain a permanent rebate. But they are facing a far harder and more dangerous task than they have ever admitted. The way that the issue is resolved will have a major influence on the direction in which the Community will develop. Those who make the decisions on the other side of the Channel will insist that any change conceded must extend the authority and the influence of the Community. Thus I fear that the only solution—
Mr. Myles: Does my hon. Friend want us to come out of the Community?
Mr. Lloyd: No. I would much prefer that the Community should be changed. If it cannot be changed, I am afraid that that will be the only option open to us.
I fear that the only solution—I hope that it will not be—that the Government will eventually find that it can secure will involve a further increase in EC own resources and a larger area of United Kingdom decisions and spending controlled or supervised from Brussels, which will be less cost-effective and responsive in practice than Whitehall would have been and deeply unwelcome in principle to the British people and the House.
7.1 pm
Mr. Ron Leighton: I am pleased to follow the extremely thoughtful speech of the hon. Member for Fareham (Mr. Lloyd).
I fear that the House must approach this debate with a sense of déjà vu. Once again, we are obliged to turn to the
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sad and sorry saga of Britain's still unsolved budget problem. Here we are yet again tiresomely haggling over the grossly inequitable exactions that are demanded from us by the EC budget and the still unreformed lunacies of the common agricultural policy. It is no wonder that there is a sense of exasperation and weary disillusion in the country over the whole wretched business.
Last week I asked the Foreign Secretary whether he was aware that the British people were sick and tired of the annual haggling and wrangling over the British budget contribution. He said that he understood that well and asked me how I thought he felt. Presumably he feels exactly the same.
The EC budget is a Heath Robinson contraption, which it is misleading to dignify with the description of budget. The Common Market has nothing like a Chancellor of the Exchequer who sits down and takes a series of conscious decisions. All the main decisions are taken separately in meetings of the Council of Ministers. The decisions on policies are laid end to end. The expenses are estimated, added together and presented as a bill to be paid. That is what is called a budget.
Conscious decisions can be made only in the small sector known as non-obligatory expenditure. Much the greater part is obligatory or compulsory expenditure, mainly on agriculture, where there is no discretion. The task is merely to estimate the cost of running the CAP, the cost of financing the huge, surpluses exceeding demand and the enormous costs of subsidising their dumping and export on world markets. Then the bill is presented. Therefore, the Council of Agriculture Ministers is in many ways more influential on the outcome than the Council of Finance Ministers. The latter just picks up the tab.
Our Minister of Agriculture, Fisheries and Food could have helped if he had carried out the promise in the Conservative election manifesto to freeze the prices of goods in structural surplus. However, he has not. He has done the opposite. Last year the price increase was over 11 per cent. That served only to worsen, entrench and fortify the CAP, not to reform it. The farm whey is becoming more lunatic than ever. It gives open-handed guarantees for everything produced. That is why it produces the food mountains. It has unduly benefited the larger, richer producers and has widened rather than reduced the gap between the richer and poorer regions.
It puzzles me why, in equity, the United Kingdom should pay anything at all to the EC budget. Even the Chancellor once said that in the EC resources should flow from richer to poorer countries and regions, as they do within national economies, and that the balance of contributions should flow from conscious overall decisions, not simply from putting individual policies end to end.
I do not know what the budget will be like this year, but in our domestic budget normally some heed is paid to the ability to pay and to the need for expenditure. The more deprived regions in the United Kingdom receive more than they pay. There is a redistributive effect. The preamble to the treaty of Rome talks of
"reducing the differences existing between various regions."
If the policy is really one of encouraging convergence of economic performance and wealth, why should there not be large subventions to the United Kingdom? Why are we not a net beneficiary? After all, most of the other member states are. They receive subsidies and net payments, yet they are some of the richest countries in the

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world, certainly in Europe and in the Common Market. Surely that is entirely perverse. There is no relationship between contributions and receipts on the one hand and each country's wealth on the other. The budget, and the mix of policies that it finances, does not promote a fair distribution of resources within the EEC or the convergence of economic growth. It does the complete opposite.
Document 6329 is an explanatory memorandum from the Treasury. It is stated in paragraph 8:
"in real terms, economic growth in the UK has remained on average significantly below the Community average."
That takes me back to the discussions, which my right hon. Friend the Member for Bristol, South-East (Mr. Benn) will remember, when we had the referendum. When our growth rate was contrasted with that of the Community, we were told that if only we would join, by some unexplained process or infection, the United Kingdom would have the same growth rate as in the Common Market. However, in the decade before we joined the Common Market our growth rate was higher than it has been since we joined. I must not be diverted down that path.
I return to the budget. It was eminently predictable and was predicted—our words are on record—that the financial regulations devised by the original Six to suit themselves would not suit our different circumstances, economy and trading patterns and would lead to a haemorrhage of British resources to the continent, and that effectively we would be grossly exploited by our richer neighbours. In the 10 years that we have been members of the Community we have handed over about £4 billion. At 1983 prices, it would be much more than that. That growing disaster was concealed by the transitional arrangements. Their ending coincided with the election of the Conservative Government. The Prime Minister was confronted with the full horror of a bill for £1 billion for policies that damaged us. The right hon. Lady averred that she would have none of it. She went to Dublin to demand our money back. She wanted the whole loaf, and she had the full support of the House. I shall quote what was reported in Hansard on 16 July 1979—just a couple of months after she was elected. The House passed a motion urging Her Majesty's Government
"to press for a fundamental reform of the budgetary arrangements so that Britain's contribution to the Budget is at least not greater than the receipts".—[Official Report, 16 July 1979; Vol. 970, c. 1096.].
That was the policy of this House in July 1979.
At that time I was a member of the Select Committee on European Legislation, &c., the Scrutiny Committee, and I well remember on 16 April 1980 the Financial Secretary coming along to tell us what that meant. I quote:
"As you know, the Prime Minister has said on a number of occasions that we have very little room for manoeuvre and that she would consider it appropriate, if we were to make a net contribution, for that contribution to be less than that of France, I do not think it would be sensible to go further than that".
The Select Committee Chairman said:
"Just for the record, what is the contribution of France?",
to which the Financial Secretary replied:
"It is slightly complicated, because if you look at the table you will find that it is roughly a break even".—[Official Report, 3 July 1980; Vol. 987, c. 1667–8].
That was the position of France, and the Financial Secretary said that he wanted our contribution to be less
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than that of France. Presumably he wanted either a break even or for this country to become a slight net beneficiary. I should have thought from that statement that nothing could be clearer about the Government's policy.
The Prime Minister insisted on what she called a permanent solution based on a broad balance. We all know that we do not have that. Can anyone say that we have anything like that? Of course not. It is as far away as ever. All we have is a temporary ad hoc arrangement, giving us half a loaf, with promises. The promise was the famous mandate to the Commission in May 1980—I remind the House that that was three years ago—for an examination of Community policies following the temporary settlement with Britain to prevent a recurrence of unacceptable budget situations for any member state. That mandate was fatally flawed. It was confined and circumscribed because, in May 1980, the Council re-affirmed that the commission must not call into question common financial responsibility for EEC policies or the basic principles of the CAP. How does one reform anything without changing it? Is that possible? Of course not.
However, there was a pathetic and naive optimism. The right hon. Member for Chesham and Amersham (Sir I. Gilmour), then the Lord Privy Seal, said in June 1980:
"With the review commissioned for 1981 and the proximity of the 1 per cent. VAT ceiling, we have an unrivalled opportunity to bring about sensible adjustments to the operation of the CAP and to put the Community's finances on a sounder basis than ever before".—[Official Report, 2 June 1980; Vol. 985, c.1046.]
That was three years ago. We have had it again today. We have heard it for years. We have always been going to do these things.
Sadly the right hon. Gentleman is no longer with us in that capacity to muse upon what went wrong. His successor, the right hon. Member for Spelthorne (Mr. Atkins), coming perhaps with some relief from Northern Ireland, was even more sanguine. By then, the Commission, under the mandate, had reported, and he told us on 29 October 1981—it is embarrassing to hear his naive optimism:
"The European Council at the end of June this year agreed on the procedure for handling the report. It called for work to be done so that conclusions could be reached by the Heads of Government at the next meeting of the European Council in London on 26 and 27 November. It is a major priority of our Presidency to ensure that we make decisive progress on the subject".
Does the House remember the great hopes that were held out by the British Presidency? The former British President, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), is not present. My hon. Friend the Member for Birmingham, Erdington (Mr. Silverman), the Chairman of the Scrutiny Committee, was taken aback by that, and intervened to ask whether that was realistic. The then Lord Privy Seal went on, very optimistically:
"In June, when the Heads of Government met in the European Council, again, they called on member countries to sit down, discuss, negotiate and work out how best to solve the problem, whether by adopting the proposals or in some other way, and present Heads of Government with decisions for them to endorse, or, if decisions were not possible, at least alternatives to discuss and decide on. That is what is happening. Discussions have gone on steadily and intensively over the past weeks and months.
I am glad to say that at the Foreign Affairs Council that I attended earlier in the week all member States represented recognised the need to accelerate the work, because 26 November is not far away. To facilitate decisions at the November meeting we are under instructions from our Heads of Government to do just that. It is accepted by all the countries that

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it is necessary to arrive in November at a position where the Council can take decisions."—Official Report, 29 October 1981: Vol. 10, c. 1047.]
That was in 1981.
Mr. J. Enoch Powell: Just think what he was like in Northern Ireland.
Mr. Leighton: That was pie in the sky. I do not know what the right hon. Gentleman was like in Northern Ireland, but here, I believe that he had been a Whip before that. What he said was a fantasy, a dream world, complete nonsense. He, too, is no longer with us in that capacity—nor are his illusions. We have no permanent solution. We have still only a patched-up, botched-up, unsatisfactory temporary arrangement. All these years later we are still engaged in ad hoc-ery, in bitter demeaning annual wrangling and haggling, and it will get worse. Quite soon, we shall start on another round. I pity the Minister on the Treasury Bench if he has anything to do with it. There will be more bitterness and more bad blood.
The financial arrangements do not suit the United Kingdom, but to change them we should have to undo and unravel the whole package that the original Six contrived for themselves. Why should they undo it? They are enshrined in the treaty of accession that we so foolishly signed—but, presumably, with our eyes open. The measures for Britain are seen by the theologians and purists of the EC as exceptional and purely temporary concessions.
It is we and we alone who want to reform the CAP, but if that is to be done it is the other countries which will have to change their agriculture systems. Why should they change their agriculture systems to suit us? Are they likely to do so? I do not think so. It has been said that Germany is now the largest net contributor and therefore might be an ally. But Germany's agriculture voters get great benefits from the CAP. I notice that Herr Helmut Schmidt from time to time gave lip service to criticisms of the CAP, but Herr Ertl went merrily ahead looking after his Bavarian farming vote. I see no help there.
What leverage do we have? We cannot veto the farm price review, can we? Our veto was steamrollered out of existence. We have a Minister who is in favour of higher prices for the farmer and who is not worried about consumers. He just wants to please the farming community, so there is no hope there.
There are all sorts of other difficulties in the Minister's way. He will have observed the recent shenanigans in the EC assembly. I do not know whether that is a futile body. It seems to be, but it does have powers under the treaty. Something which has not yet been mentioned is the prospect of new elections. The people who sit in that rather curious body will want to flex their muscles to justify their existence to their sceptical voters. Is there not a great temptation for them in the run-up to the Euro-elections next year, when we return as a supplicant, to make all sorts of conditions? There are rumours that they may sack or put pressure on the Commission; they will certainly seek to strengthen their position before the next elections.
The right hon. Member for Down, South alluded to the fact that the House obtained its powers historically by its control of Supply and the assembly will do the same. That is the only way that it can obtain extra powers and establish its position.
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Some people think that the solution is to throw money at the problem—as the Prime Minister would say —to have a larger budget and to set up new funds. I am afraid that that is no solution. Even if we did that, all that we should be doing is throwing more money after bad because, although we now have a small net gain from the minuscule regional and social funds, even that will disappear from enlargement, and after enlargement the United Kingdom will be in deficit, even on the regional and social funds. Therefore, to increase the size of the budget and to breach the 1 per cent. ceiling on VAT will not help us.
The only moral to draw, the only sensible conclusion, is to recognise the stark and simple truth that these arrangements do not suit the United Kingdom. They were not negotiated by us, and they were not meant to suit us and they do not. If they continue, they will be a constant source of acrimony, discord and conflict between us and our neighbours. It is ludicrous and demeaning to go on year after year with these wearisome disputes. Let the continentals run their agriculture as they wish, but let us take back the powers that we ceded to run our agriculture as we wish. Instead of these destructive disputes, let us arrange our relations with our neighbours on a basis other than membership of the Common Market.
7.25 pm
Mr. Hugh Dykes: Instead of continuing with wearisome disputes as described by the hon. Member for Newham, North-East (Mr. Leighton), we should divest ourselves of his wearisome speeches which, if he does not mind me saying so, are always similar. It is a rather shaming reality that instead of dealing in detail with the specifics of the subject in hand, such as the budget, EC debates, particularly the speeches of Labour Members, hysterical and monotonously repetitive tirades against working with wicked foreigners who have horns and a tail, who are not to be trusted at all, and who are seeking to do us down at every opportunity, seem to set out to show how ghastly the whole thing is.
The British public do not fall for that nonsense. That is part of the internal cathedral of the Labour party's domestic agonies and problems. Whenever it is in opposition, it must be fiercely anti-EC. If by some mischance it were to win a general election in future, which seems increasingly unlikely, it would presumably find convenient reasons for being able to declare that withdrawal from the EC is no longer a good idea for Britain, or, indeed, an essential prerequisite—to use some of the phrases that we have heard today.
Without wishing to sound pompous in any way, as an hon. Member who is part of the post-war generation, how saddening and shaming—for that is the right word—it is that this is the only Parliament in the EC where such absurd quasi-fundamentalist debates take place with monotonous repetition, with the hysterical outbursts and silly speeches such as that made by the right hon. Member for Bristol, South-East (Mr. Benn) and the equally absurd tirades and hysteria of the right hon. Member for Down, South (Mr. Powell), who is not here at the moment. Presumably we shall have an even more hysterical outburst later from the hon. Member for Liverpool, Walton (Mr. Heffer).
That does not serve the nation or the British public well. They want to hear serious and detailed arguments about the inevitable problems that arise in the normative and conventional context of our EC membership, not the

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hysterical, chauvinistic, xenophobic rubbish that we hear repeatedly from the Labour party for its own internal reasons. It is a little presumptuous of it to inflict the domestic intra-party wranglings and struggles that it has, one comrade against another, on the long-suffering British public when its stance is not genuine but is born out of the traditional agonies and pains of its disunity in opposition. Although I want the disunity to remain so that it remains perpetually in opposition, it should bring forward much more constructive views about the budget and what should be done in future.
We all know the problems of the EC budget without the hon. Member for Newham, North-East telling us. They are perfectly understandable and natural problems which need not cause the hysteria within the Labour party to which I have referred. They are that Britain's traditional trading patterns still reflect the past, although we are gradually achieving better harmony with our colleagues and friends within the Community. We still import far more from non-EC countries and because our agriculture is based on a higher level of activity pro rata, with a much smaller base of operatives and output, we contribute more to the CAP than we get out. Those are the main reasons. There are some detailed exceptions such as the differential size of our GDP which is also added to the budget problem.
The awful Catch 22 illogicality of the Labour party is that it grumbles about such things but does not wish to see the permanent solutions to the problems that are even now being proposed in this series of documents. The Commission is constantly beset, as are the hapless members of the European Parliament—I pay tribute to them, particularly the British Members, and even the Labour ones who realise that they have a worthwhile job to perform—by the dilemma of being deprived by the Council of Ministers of the essential power and authority to propose solutions on issues such as the budget that would overcome the objections mentioned by the hon. Member for Newham, North-East. There are some hon. Members mainly on the Opposition Benches but even one or two sadly on the Conservative Benches—
Mr. Teddy Taylor: A growing number.
Mr. Dykes: —who are not prepared—my hon. Friend the Member for Southend, East (Mr. Taylor) made a much more thoughtful speech today—to wish the powers on the Commission to propose solutions.
The documents before the House contain sensible proposals, some aired for the sake of debate while others are more concrete. The Government are responding in a series of complicated but nevertheless essential meetings to those suggestions. I share the view expressed by my hon. Friend the Member for Saffron Walden (Mr. Haselhurst), in an excellent speech, and by my hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve), that the 1 per cent. ceiling is out of date and that it should be breached as a matter of deliberate policy to provide more resources for the Community budget. At a stroke, that would allow the hon. Member for Newham, North-East to be satisfied that, at long last, the agricultural ratio was coming down and that more funds would be available for spending on desirable areas in this country and others.
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The Commission is proposing all the things that Labour Members want—more money on industrial and commercial activities, more money for the less developed regions of Britain and less on agriculture. Yet, when these proposals are put forward, there is the traditionally hysterical reaction from the Labour party. We need to support the ideas that the Commission produces. We need to reinforce the authority of the Commission. We should welcome the increased budgetary powers of the European Parliament with the additional insurance policy and protection provided by the fact that it is a joint budgetary authority with the Council of Ministers.
I wish that the Council of Ministers, not only in financial and budgetary matters, but in other matters, had had the courage and wisdom to cease adopting a nationalistic position. It is worse here than in any other state, including France. However, it exists everywhere, as a result partly of the economic recession. If the Council of Ministers had had the courage to withstand those pressures and had acted together positively to build up the Community and the budget in recent years, we would have fewer problems. The United Kingdom's less developed areas are crying out for more Community money.
This would not be a total substitute for national money. The purposes can be different. No one can provide the planning—a word congenial to Labour Members—on a scale and with the cohesion and harmonisation in deciding priorities better than the people in Brussels who can assess the needs of the entire Community. Of course, nation states remain strong entities that are more powerful than the Community. I accept that with enthusiasm. I am a patriot and a nationalist in that moderate sense. Why should that contradict the development of the Community taking common actions that benefit member states—tasks that cannot be done so efficiently by the nation states?
Mr. Leighton: Will the hon. Gentleman explain why he wants to send even larger sums of money to Brussels to finance an even more swollen and bloated budget in the hope of getting back a little more for our deprived regions when we could keep the money here and allow the House to decide what should be done with it?
Mr. Dykes: The hon. Gentleman misunderstands. The answer is lengthy. I shall deliberately avoid giving it, because you, Mr. Deputy Speaker, would rightly become impatient. I should like, however, to give two examples to show how the hon. Gentleman continually takes the wrong path. When a nation state alone decides which regions should receive additional aid, the west midlands, which needs it, does not get it. If the Community had the power, over and above national money, to decide upon areas of the Community that needed additional assistance, that problem would be overcome.
The hon. Gentleman continually undermines the confidence of his constituents about Britain's membership of the European Community and its long-term future in respect of expenditure that amounts to 2·5 per cent. of the total public spending of all member states. It amounts to less than 1 per cent., even following the latest increase, of the total amount of GDP of the entire Community. It is illogical and irrational that the hon. Gentleman should fuss and fret ten times as much over these issues when billions of pounds can be voted late at night without hon. Members paying proper attention. This shows the obsession of the Labour party.
Mr. Richard Body rose—
Mr. Dykes: I hope that my hon. Friend will forgive me if I do not give way. He has not been present for much of the debate. It will take time if I give way.
I implore Opposition Members and some of my hon. Friends, although there are not, thank goodness, many of them—this is the wise party in all respects—to drop these incredibly biased obsessions and irrational judgments about the European Community. They have ceased to be amusing. They have become positively alarming and worrying. This is the only Parliament within the Community where one hears such self-doubting, hysterical and paranoid debates about membership of the Community. Even in France, which cannot be accused of being other than an extermely robust and proud nation state, such debates do not take place in the National Assembly. That is not because the National Assembly is weak. It has powerful debates on many subjects. There is no debate even among Socialists in France about the essentials of Community membership even though there are problems within the Community which has not arranged everything marvellously for France.
Mr. Teddy Taylor: If there are any hysterical and alarming arguments, they surely come from my hon. Friend. It was true Conservatives like myself who fought the last election saying that we wanted to control unnecessary public spending. Now that this has been achieved, my hon. Friend wishes to increase public spending by the back door through the Common Market.
Mr. Dykes: That is one way of describing the situation. It is, however, my hon. Friend who gets carried away and becomes over-excited. The Community budget is not only small; it is also virtuous. In this country we have become accustomed to continued chronic deficits. Now, following four years of painful policy making by my right hon. and learned Friend the Chancellor of the Exchequer, they are much smaller. The Community budget is self-contained. There is no deficit. No debt is created. The receipts and the payments are supposed to balance. This will presumably continue to be its structure.
There are enthusiastic Europeans like myself who say that the budget, logically, like national budgets, should develop some kind of debt ratio. However, that does not happen at the moment. My hon. Friend does not need to get too worried. It is essential to determine the areas of genuine spending need in the Community budget and to fit tight financial control and surveillance of those figures into the budgetary procedure by increasing the powers at the margin of the European Parliament and by encouraging the Council of Ministers to operate more in the spirit of a community. They should operate on the basis that member states and those running the Governments in them actually like each other—not on the basis of hostility and dislike portrayed by the Opposition.
My hon. Friend the Member for Southend, East argued again about the wickedness of sending butter to the Soviet Union. On a visit I made to Moscow last April, I found that most of the butter in the shops came from New Zealand. My hon. Friend the Member for Southend, East will presumably argue that it is heroic and brave of New Zealand to send butter to the Soviet Union as a means of getting rid of a surplus. Yet he describes it as wicked and monstrous if the Common Market does the same thing. That is nonsense. I hope that the European Parliament will
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develop greater self-confidence. In its December debate and vote it held out the hand of assistance to this country over the dilemma of the budgetary problem. The European Parliament was saying, with total justification and accuracy, that the system of rough and ready rebates, which are not fair either to the majority of member states or to Britain, was silly and illogical and that a permanent solution had to be found.
I do not believe that we can achieve a permanent solution without being much more open-minded and flexible, not only on going through the 1 per cent. ceiling on VAT-equivalent payments, but on considering other sources of revenue for the budget.
Why is the 1 per cent. ceiling regarded as so sacrosanct? I agree with my hon. Friend the Member for Southend, East about the need to exercise ruthless control over public spending, but there is no magic about the 1 per cent. figure. It is only because there has been an anomalous effect on the differentials in world food prices and export subsidies and because VAT receipts, before the rate of inflation slowed down in Europe a year or two ago, were higher than expected, that the 1 per cent. ceiling had not been breached. It might have been breached if circumstances had been different and then a solution would have had to be found, because the pressure on spending in farming and other areas would have demanded it.
There is nothing fixed about the 1 per cent. limit. Of course it is a psychological jump to move to 1½ per cent., but it should be easier for people at least to think constructively about alternative sources of revenue.
One hon. Member suggested that an energy levy should be considered. I regret that such a levy is not an intrinsic part of the Commission's proposals. It makes much sense in many ways to develop a number of alternative, individualised sources of specific revenue for the EC budget. Overnight, this country would be an automatic beneficiary. The amount that we would receive would be very large and we would pay little into an energy levy budget because we are an oil-producing country.
I hope that the House still prides itself on its flexibility, though I sometimes doubt it when listening to debates such as this. The House should consider alternative possibilities, and I am sure that my hon. Friend the Under-Secretary of State for Foreign and Commonwealth Affairs, who is to reply to the debate, will refer to a number of options that could be developed in future.
There is no substitute for developing the Community budget constructively and in a non-inflationary way to spend money in the right areas in all the member states. There is also no substitute for much more co-operation, which is the essence of a convergence of action and decision making by Finance Ministers to help to get a Community-based, Community-wide recovery.
The slump in Europe is getting worse and the EC is the only body which can take a lead in bringing the whole of Europe out of the economic and industrial degradation and developing squalor into which it has sunk.
Mr. Leighton: Why has the Community not done so?
Mr. Dykes: Because the Council of Ministers never has the political will to get everyone round the table to decide to do things, which means spending Community money.
Surely the Mother of Parliaments should have more self-confidence in its constitutional abilities and capacities

719
to stand up to the relatively weak European Parliament and other European institutions, which are still a modest collection of bodies. If that is not possible, there must be something wrong with this House and, to a lesser extent, with another place, which is also proud of its constitutionality and is not panic-stricken about the Community. Debates in another place reveal a continuing enthusiasm for our membership of the EC, even among Labour peers, who reflect a more sensible period of the Labour party's history of about 10 years ago.
It is not right for the right hon. Member for Down, South to compare exactly the constitutional procedures and long-term historical reality of our control over taxation proposed by the Executive and approved by the Parliament with the developing and modern procedures of the European Community. The essential difference is that there is a separation of powers in the Community which does not exist in this Parliament. The absence of a Government in the European Parliament changes the situation completely. Even though the Council of Ministers and the Parliament revolve round each other more constructively, the Council still calls the tune. None of the budget proposals can be approved unless the British representative on the Council of Ministers agrees that they meet the wishes of the British Government.
In the light of that incontrovertible fact, I suggest that everyone can be much calmer and less hysterical and silly about the future of our membership of the Community.
The comforting irony for Conservative Members is that, although detailed aspects of the Community are, inevitably, unpopular—it is a pity that we do not do more to present the facts to the public—there seems to be no inclination among the British people to leave the Community. That is yet another fatal flaw in the Labour party's negative and miserable manifesto.
7.47 pm
Mr. Bob Cryer: We have come to expect those measured tones of smooth support from the hon. Member for Harrow, East (Mr. Dykes). He is a Eurofanatic who sees nothing wrong with the EC and continues to trot out a sort of PR panegyric on the virtues of the Community.
The hon. Gentleman acknowledged that the EC, too, is in recession. I remind him that at the time of the referendum on our membership, the employers' organisations ran a campaign entitled "Jobs for the Boys" in which they claimed that the budgetary and economic arrangements of the Community would provide a solution to all our economic ills.
It is apparent that those claims were palpably false. The EC does not provide any solution to our economic ills, but the employers' organisations now claim that pulling out of the Community would be even more devastating than the devastation that membership has wreaked on our economy, particularly over the past three years.
The Community is in crisis. The argument about the budget is an annual event and no long-term arrangements can be made, because of the make-up and constitution of the EC. Therefore, as long as we remain members we shall have this annual wrangle.
This year we have managed to get a refund of our own money, but it is likely that next year we shall make a net contribution of about £700 million. When the Labour
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Government were in office, the then Leader of the Opposition, the present Prime Minister, used to claim that we were too abrasive with the Common Market and that a more co-operative and helpful approach was necessary. The right hon. Lady adopted the supine attitude towards the Community that the hon. Member for Harrow, East always displays.
However, since taking office, the Prime Minister has had to argue fiercely with the Common Market to obtain relatively minor results. There have certainly been no major results in the form of a reorganised Common Market.
Reorganisation of the Common Market is impossible because it depends on unity, and there are vested interests in the Common Market that benefit directly to a far greater extent than we do from the CAP. Those countries are not likely to give their consent to any changes that will deprive them of their farming benefits.
We are in an unfavourable position. Britain is the fourth poorest nation in the Common Market. Yet only Britain and West Germany are net contributors. Even in those circumstances, there is pressure from the EC to increase the own resources contribution by upping the 1 per cent. levy from VAT.
The translation of the letter from the Commission of the European Community signed by Mr. R. Burke, member, in paragraph 4, says:
"The Commission has on a number of occasions explained why it believes an extension of the Community's own resources to be necessary and why it cannot accept that the present ceiling should constitute a permanent constraint upon the growth of the Community's budget. In his programme speech of February 1981 to the European Parliament the President of the Community emphasised that the Community could not remain simply a Community of one per cent. In the first place, this is because of the need to safeguard the maintenance of the full range of the Community's existing policies. The Community is already living in the shadow of the exhaustion of its current financial resources".
There is pressure for an increase in the levy that finances the Common Market. We need an assurance that the Government will resist any pressure to increase the levy on VAT that goes to the Common Market. Conservative Members, such as the hon. Member for Harrow, East, specifically say that the Common Market has to extend beyond the 1 per cent. limit. That is a significant part of our money over which this Parliament does not have control.
The hon. Member for Harrow, East said that we should be able to stand up to the Common Market and not worry about things too much. However, Parliament has been nurtured and developed as a democratic institution over many years. The vote has been fought for by people over many years. People see Parliament as an institution of democratic endeavour. When we see that institution eroded and the power of controlling financial expenditure shifted away to a Council of Ministers with non-accountable Commissioners in the EC, we worry.
The touching faith of the hon. Member for Harrow, East in the Council of Ministers is remarkable. The Council is undemocratic, it meets in secret, it has considerable powers and it can effectively legislate without any opportunity for lobbying, except indirectly to a Government before a Minister sets off for the Council of Ministers. There is no spotlight of publicity through open doors covering the proceedings of the Council of Ministers. It is a secretive body. If such a body had those powers in this country, I hope that Conservative Members

721
would ask for it to be subject to more democratic proceedings. We do not want any more resources from the United Kingdom going to an essentially undemocratic body that is unaccountable for its decision-making. The pressure for the increase in own resources must be fiercely resisted.
Another aspect of the danger of the increase in own resources and of the Community's budget is the decision over the farm price review. The Government have said that they regret and are opposed to the decision but it took place, and the Luxembourg compromise was effectively seen to suffer a major alteration. There is no guarantee that in future there will be pressure for majority decision-making to be acceptable as the norm in the EC — I suspect that a few Euro-fanatics on the Conservative Benches are prepared to accept that—rather than some aberration that they are powerless to stop.
Mr. Allan Roberts: And the SDP.
Mr. Cryer: As my hon. Friend has reminded me, the SDP has specifically said that it is hook, line and sinker for—if it is for anything at all—majority voting in the EC. I imagine that its watchword at the next election will be, "Vote for us. We want majority voting in the EC." This would be a major breach of faith with the British people, because the Government's pamphlet "Britain's New Deal in Europe", which was distributed to every household in the United Kingdom, unequivocally stated:
"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 … The Minister representing Britain can veto any proposals for a new law or a new tax if he considers it to be against British interests."
That patently was not the case over the farm price review, which set an important precedent. I know that the Government expressed some opposition at the time, but they cannot give an unqualified guarantee that the same pressures will not arise again for majority decisions to be taken over important issues.
When we discuss the budget we recognise that, because of the nature and organisation of the Common Market, the vast proportion of the budget goes to support the CAP. There have not been any changes in the CAP over the past three years, or even since the formation of the EC. It is an intrinsic pillar of the Common Market. Countries with vested interests, particularly France, which benefit from the CAP, will see no virtue in agreeing to any changes. As long as there is a right of veto in the Common Market there will be no change in that system.
The CAP is an obscene system, and everybody pays lip service to its obscenity. Even the Euro-fanatics say that the CAP gives rise to obscenities in a world in which many people are deprived of food. For example, in 1981 over one million tonnes of fruit and vegetables were taken off the market by the EC, and 300,000 tonnes were destroyed.
Mr. Dykes: The hon. Gentleman has just been saying how wrong it is to have a majority voting system. Now he says that the trouble with the CAP is that there is a veto. Why does he not solve the muddle in his own mind?
Mr. Cryer: That is one of the difficulties of the Common Market. The veto was guaranteed by the United Kingdom Government, but they cannot guarantee that the right of veto will be maintained in future. On the farm price review, the veto was useless.
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France will attempt to maintain the veto, as will West Germany, because it is in their interests, as it is in the interests of other beneficiaries of the CAP. The hon. Member for Harrow, East is making the point that if the veto system disappeared, the CAP might be changed because a majority system would be brought into operation. That lies in the distant future. In the meantime, our experience is that the majority system has been used only rarely, and against the interests of the United Kingdom.
In 1980–81, 78,000 tonnes of tomatoes were taken into intervention, of which 67,000 tonnes were destroyed; 517,000 tonnes of apples were taken into intervention, of which 114,000 tonnes were destroyed, and 8,000 tonnes of cauliflowers were destroyed, but I do not have the figures for the number of tonnes taken into intervention. To allow that quantity of food to be destroyed, without any likelihood of a fundamental change in the system, is appalling when we bear in mind that two thirds of the world's nations are short of food.
Mr. Myles: Does the hon. Gentleman agree that fresh food deteriorates rapidly? If it were not taken off the market, it would be destroyed, in effect, on the trees.
Mr. Cryer: It would not be destroyed if it were eaten. The hon. Gentleman is an enthusiast for sophisi.cated weapons systems. I suggest that it is not beyond the wit of mankind to take that surplus food and distribute it to hungry people. That could easily be done before the food became rotten. It is done every day throughout the world. But, because the CAP operates an obscene system, it does not allow that sort of thing to happen. As we know, it is a system for propping up the inefficient, uneconomic farmers of the Common Market.
The Government have recently demonstrated yet again their devotion to the farmers' cause. The hon. Member for Holland with Boston (Mr. Body) has written a very useful book showing the amount of support that has gone into farming in the European Community compared with manufacturing industry.
The Government, who are supporters of free enterprise—the Prime Minister says that British goods must compete on fair terms with the rest of the world—have done a complete U-turn over UHT milk imported from France. They say that the milk is horrible, tastes nasty and should not be imported. Yet they are denying the very principle that they purport to support—that the consumer should be allowed to make the judgment. The Government, in their effort to plan trade—that is what they are doing—say that the importing of that milk would disrupt British farming. For whatever reason they can find, they are determined to control the importing of French milk into Britain. All I ask is that they take the same robust attitude to manufacturing imports.
One of the objections to UHT milk relates to hygiene. Have the Government considered the safety aspect of manufactured goods? The Government do not employ safety officers at ports in Britain to examine imported manufactured goods arriving here. If any manufacturer in any other Common Market country wishes to exhibit machinery in Britain, he is free to do so, and it can then be sold. At that stage, it may be discovered to be faulty.
When a British manufacturer takes his machinery to West Germany, for example, and puts it on a stand at an exhibition, it is inspected to determine whether it is safe.

723
If it does not conform with safety standards, it has to be withdrawn from the exhibition, and it is not allowed to be sold. The Government should institute reasonable safety standards for goods coming into Britain, rather than reacting, as always, after an accident has occurred or after some product has been found to be defective. The Common Market budget is geared very much towards the common agricultural policy and very little towards manufacturing industry.
The European Community is very good at public relations. It widely advertises the fact that it contributes to factory nursery units, to new factories and to regional development programmes. It claims to represent a great stride forward in international relations. Yet even the hon. Member for Harrow, East accepted that expenditure on the regional fund needs to be increased. He wants to reduce the disparity between the money spent on manufacturing industry and the money spent on the common agricultural policy. He wants to do that not by a switch of existing resources, but by increasing the expenditure on manufacturing industry through increasing the contributions from the various member states, particularly the United Kingdom. It simply will not work.
We have to emphasise continually that every penny that is spent by the Common Market inside the United Kingdom is our own money, but with the important difference that it is not under the control, generally speaking, of the United Kingdom Government and is not subject to scrutiny by our elected Parliament. By increasing the EC's own resources, we shall be pushing more and more power across to the Common Market.
The hon. Member for Harrow, East said that some people take a nationalistic view of the Common Market. That criticism does not apply to Labour Members. We do not take a narrow nationalistic view of the Common Market. We do not accept that a minority of western European nations represents the world. The EC is a tariff club. It is a Common Market with a tariff, a barrier. Those who look inwards are the EC supporters.
We want to have trading, cultural and international relations with the whole of the nations of the world. [Interruption.] With the Communist bloc as well, of course. As my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) has said, if we do not live with the Russians, we shall die with the Russians, so of course we want international relations with the Communist bloc, and also with the capitalist countries, but not just those within the EC.
Our withdrawal from the EC would not be accompanied by the dire results predicted by those who in the past have said that our membership would bring us great benefits and been proved to be so wrong. The United Kingdom is a massive, rich market for the EC countries. Since our entry in 1973, in motor vehicle production alone we have lost about 1 million cars and 150,000 commercial vehicles. That is one of the reasons why our manufacturing industry is in such dire straits. When the manufacture of vehicles is reduced to that extent, the ripples spread throughout the whole of the United Kingdom. For example, there is no longer any demand for the textiles used in tyres. The effects are also felt by the manufacturers of components and of car batteries. Head-lining and upholstery from the textile industry are also affected. All those items have a cumulative effect.
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We have seen what has happened as a result of our membership of what was to be a buoyant Community. Our industry was supposed to grow. Much of the loss of British manufacturing has been taken up not by Japanese imports, but by imports from the Common Market, as the new car registrations will show.
We are in a very powerful position to organise quota arrangements to ensure that British manufacturing industry survives and is not swamped by Common Market products. The western European countries want to enter our market and we want to plan trade, so on that basis we can arrive at a suitable quota arrangement. After all, the Government have done it in arriving at the multi-fibre arrangement. There is not a Conservative Member of Parliament representing a textile constituency who objects to the multi-fibre arrangement. Some of them may object to some of the details, but they do not object to the MFA in principle. The only Conservative Members who object to the MFA are those who are comfortably away from the textile belt, but they should remember that the textile and clothing industries employ over 600,000 people directly and represent a very important section of our manufacturing industry.
The multi-fibre arrangement is a precise quota arrangement operated and negotiated by the EC with Third-world countries. The problem is that we cannot negotiate quota arrangements with other EC members because the majority of textiles that affect the United Kingdom come not from Third-world countries but from within the EC. There is a massive case for having trading and international relations with a much broader spectrum of countries than those within the narrow confines of the EC.
As the EC's budget resources increase and pressure grows, the power of an institution such as Parliament, which has been built by blood, sweat and tears over many years, is being gradually eroded. We can see that in the regulations and directives that are spewed out from the EC one after the other week by week.
We know that there has been erosion. Yet too many people shrug their shoulders and accept it as part of the status quo. The EC is not simply a trading arrangement; it is a political arrangement, a federal system, to convert a number of nations working together into a gigantic amorphous mass in which the major political and economic decisions are taken behind closed doors by the Council of Ministers.
There is no reason why nation states cannot come together and work in amity, extend relationships, and enter into quota arrangements. Indeed, people get on far better if they do, because the span of human understanding is limited. People have an appreciation, an understanding and acceptance of their position within a nation. If nations are combined into a great sprawling mass, such as the EC, people's sense of belonging disappears. They become more, not less, alienated.
The notion that people coming together in the EC has been some kind of bridge in international relations is not true. People feel isolated. The arguments over the budget demonstrate people not coming together but engaging in an unseemly scramble over the allocation of resources. It is far better to engage in international trade as a group of equal nations on a basis of trust and equality. It means that we must leave the Common Market and all this budgetary nonsense can be left behind.
8.12 pm
Mr. David Myles: I am glad, Mr. Deputy Speaker, to have the opportunity of catching your eye. I had thought that I might do so earlier but the hon. Member for Keighley (Mr. Cryer) was drafted in rather hurriedly by the Opposition to prop up some of their weak arguments and perhaps carry the batting on a little longer. That was demonstrated by the way he put his case. His arguments were unusually ill-rehearsed. He had to scribble down one or two things during the speech of my hon. Friend the Member for Harrow, East (Mr. Dykes). It is rather unfortunate that the Opposition are so short of speakers who want to oppose this motion that they had to resort to that subterfuge.
I have been in the Chamber for almost the whole of the debate. The only time that I had to leave was when my hon. Friend the Member for Southend, East (Mr. Taylor) was speaking. I should have liked to hear what he said, but I have heard him speak on this subject on many occasions so I may, perhaps, be allowed to guess at a little of what he said today.
I have been trying to find my place in this argument, because we have heard both extremes. Unfortunately, we have mainly heard from the Opposition that the only answer to our relationship with Europe is to leave. It is remarkable that the right hon. Member for Bristol, South-East (Mr. Benn) did not seem to go to that extreme. He seemed to be saying that although we should leave the present European Community, we should form another. I was listening with a certain fascination. That is not the right word, because a rabbit is fascinated by a ferret, and I did not feel fascinated like that, although there must be many people who are influenced in that way by the right hon. Member. I was interested in his argument because he seemed to say that he wanted a union of European Socialist republics. He said clearly that Europe would not be united unless it was Socialist. He did not mind giving up our sovereignty for a union of European Socialist republics but he did not want to give it up for a confederation of European democratic republics. It is amazing that the right hon. Member for Bristol, South-East should go on so much about democracy.
Opposition Members who go on about sovereignty—with the exception of the right hon. Member for Down, South (Mr. Powell) whose long-held views on this matter I respect—and who are terrified of giving it up still say, "Let us lay down our arms. Let us throw away sophisticated weapons." That is what the hon. Member for Keighley said. Surely that is a bigger surrender of sovereignty than any co-operation or confederation in Europe.
I ask the House to consider carefully the far greater dangers that there could be in giving away sovereignty in that way than there is in the European Community. We have not given away sovereignty. I do not want to give it away. I believe that the House and the country should have control of our legislation. We must recognise that if we live in a world where travel difficulties are always decreasing, we must expect certain disciplines. That is the right word to describe the things that we must pay attention to within the Community. They are a great discipline.
The other factor that has been ignored by the Labour party in the debate is that the disciplines apply not only to us but to the other side. In the common fisheries agreement, for instance, we were able to get a discipline
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imposed on the Danes so that they would not continue to rape the seas and destroy fish stocks. We could have had the control in no other way than by agreement. We achieved it within the EC. I congratulate my right hon. Friends on their tremendous hard work in achieving the agreement, which is one of the true common policies that we have had in Europe.
International agreements such as on the financing of the EC budget are not easily achieved and are even more difficult to alter if only one state in 10 wants such a change. The situation is not helped if, in the interim, there has been renegotiation and an agreement again reached, backed up by a referendum of the whole country. It is therefore pleasantly surprising that so much recognition of our budget contribution problem has been given by our Community partners.
Mr. Marlow: In Paris?
Mr. Myles: Most certainly. Otherwise, we would not have obtained the refund. Our Community partners would not have been willing to give the refund. Under the strict terms of the agreement, we were not entitled to the refund, but, because of an understanding of our problem, we obtained a substantial refund.
There is, however, a great need to find a longer-term acceptable solution, as my right hon. Friend the Minister suggested. I am sure that our Community partners are amenable and are anxious to find such a solution, unlike the Labour party. The only solution that it and, I am sorry to say, my hon. Friend the Member for Southend, East have is to abolish the EC—get rid of it, come out, give up, contract into our shell and not compete. That is what is argued so often from the Opposition Benches.
Mr. Arthur Lewis: I have not heard one hon. Member on the Labour Benches say what the hon. Gentleman alleges. I would like to have one person named.
Mr. Myles: I am interested to hear the hon. Gentleman complaining. I have heard people say continually in the debate that they wanted to come out of Europe or abolish the CAP.
Mr. Lewis: But who said that we should wrap ourselves up in a cocoon?
Mr. Myles: Ah, no. No one said that. As usual., the hon. Gentleman has scored a hit. I beg his pardon. But it is the logical implication that I draw from what is said.
Mr. Lewis: Sweden is not in the Common Market and it is not in a cocoon.
Mr. Myles: I am sure that the House would be surprised if I did not come quickly to speak of the CAP. It has been a remarkable Community achievement. Along with the CFP—we hope to see the benefits of that, too—it is one of the agreements that has worked. Not only has agricultural production increased—the hon. Member for Keighley was complaining about manufacturing production not increasing—but the percentage of the budget that the CAP has required has been steadily reduced, especially since this Government came to power.
The surpluses are constantly complained about. It is strange to complain about plenty. We are the only area that complains because we have enough food. The complaint would be far more valid if it were about shortages or the failure of the Community to provide food for the poor people of our countries as well as for the rich.
Mr. Marlow: My hon. Friend is a farmer and knows a great deal about agriculture. Could he tell the House about the long periods during which the British people suffered from deprivation of food, outside periods of war, when this country was not a member of the European Community or involved in the CAP?
Mr. Myles: Outside periods of war? I do not dwell on history. I want to move forward. I want to consider future supplies for the increasing population in this country and in the world. If my hon. Friend wants to study history, he should consider what Thomas Malthus said. I do not doubt that the surplus in western Europe would have existed even if we had never fashioned the CAP. The carrot of stable, guaranteed Community prices for some agricultural products—only a few—has done far less to increase production than the new agricultural technologies. There have been genetic improvements in seeds and livestock, an increased understanding of the benefits of fertiliser usage and increased use of herbicides. Many of those new techniques have been stimulated because the guaranteed prices have been set at levels lower than those to which input costs have escalated.
The hon. Member for Keighley spoke about motor cars and how we have lost ground in our markets for motor cars. I can demonstrate graphically how this may have happened under the 1974–79 Labour Government, when the economic management of his country was so disastrous that inflation, wages and everything else was allowed to roar on. In 1973 it took 22 5 cwt. hill calves to buy a British-made Ford 4000 tractor. In 1979 the same Ford 4000 tractor would have cost 39 of the same 5 cwt. hill calves. In 1973 it took one calf to buy 1,000 gallons of diesel; in 1979, three calves. That is how farmers in the Community and everywhere else have to pay their bills.
That is the reason for the surpluses. As input costs rose, the farmer had to increase his production to meet them, or go out of business. It may be that many Labour Members want farmers to go out of business. If that is what they want, let them say so clearly and not say, like the hon. Member for Newham, South (Mr. Spearing) who has now left the Chamber, that we could rely on the old-established deficiency payment system. A deficiency payment system that would maintain agricultural prices in this country at present levels would cost far more than our net contribution to the European budget.
Mr. Marlow: Not true.
Mr. Myles: That is a recognised fact. There are two deficiency payment systems within the CAP—one is the beef premium scheme and the other is the sheepmeat regime that we enjoy. I say "enjoy" because farmers get a reasonable return for their labours and the housewife can buy lamb at market price with no added value. It is commonly said that the sheepmeat regime has dragged down the price of other products such as pigmeat. There is no guaranteed price for pigmeat or many other agricultural products in the Community.
The problems in the CAP are with grain, milk and milk products. Many other areas should follow the example of the Aberdeen milk marketing board, which has increased its sales of liquid milk during the past year. Then we could get out of our surplus milk difficulties. When did a milkman ever come to the door and ask, "Can I give you better service? You are not taking so much milk this week." We need a little more marketing, which will be
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stimulated by the "Food from Britain" campaign that was launched successfully last week and that will help our surplus problems much more than rhetoric from Opposition Members.
It would be foolish to suggest that an easy solution could be found to the volume of expenditure on the CAP while at the same time adhering to the aims of the treaty of Rome. The hon. Member for Newham, South said that it would be difficult, and it is. Nor is it sensible to increase spending in other areas to try to balance our contribution. In that, I agree with some of my hon. Friends. Care should always be taken in spending public money. However, there is a danger that we shall procrastinate on this matter until a crisis occurs, believing that a solution can be found because of the motivation caused by that crisis. I urge my right hon. and hon. Friends to find a solution before the crisis develops, so that we are not forced into a funding position that we do not relish.
8.32 pm
Mr. Doug Hoyle: The speech of the hon. Member for Banff (Mr. Myles) was one of the most unusual that I have heard in the House. I did not believe that I would ever hear, from either side of the House, such a defence of the common agricultural policy, because it is almost indefensible. The hon. Gentleman's acceptance of a common fisheries policy that has given away Britain's rights was almost unbelievable. His speech moved well away from other speeches and from the subject of tonight's debate, which is the budget and how much longer we shall put up with paying an unfair amount.
As always, we have heard the same excuses about why we cannot get our just deserts from the Common Market. We are always promised another reform, but from what the Minister said it appears that budget reform will be even more difficult in future. Now the Minister says that we shall not be given a rebate as such but that the money returned will have to be earmarked for specific purposes. It will be impossible for us to cope with that because the majority of hon. Members wish to change the nature of the budget. Despite what the hon. Member for Banff said, we all wish to change the 65 per cent. spent on agriculture.
Following the advent of Spain and Portugal, we shall get a demand from those countries for more support for Mediterranean products. More money will be spent on agriculture rather than less. As long as we are faced with this dilemma, Ministers will always say, "We are fighting for British interests. We have not got them yet. Just leave it with us. Sooner or later we shall persuade these benevolent people in the other countries in the European Community, although they have a vested interest in retaining the CAP."
One can understand why France has a vested interest in agriculture, and why there is a demand to prop up the inefficient farmers in France and Germany. One can understand why they will in no way agree to any changes.
My hon. Friend the Member for Keighley (Mr. Cryer) said that this has been a bad deal for Britain. The whole of the EC has been a bad deal for Britain. Many hon. Members remember that we went in with a blowing of trumpets. It was said that membership could lead to a bonanza for this country and solve all our problems. Membership was not relevant to the problems we were facing at that time. When we examine the position we can see that we were bound to be put in a more unfavourable position than we were before.

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Before we joined the Common Market, Britain had the problem of trying to carry one of the major currencies of the world. That was not relevant to the problems faced by the other countries that had joined the Common Market. Our problems were not those faced by France, which was an agricultural country with some industry, nor were they the problems faced by that most efficient industrial machine, Germany, which was looking for new markets. Of course those countries welcomed us into the Community. They have exploited the situation.
Many people are not surprised at what has occurred. Many hon. Members argued against going into the European Community. In 1975, hon. Members on both sides of the House argued that Britain should come out when we were given the opportunity to do so in the referendum. We have been proved right in what we said on both occasions. The tragedy was that the British people did not listen to us when they had the choice.
There is no doubt at all about the unpopularity of the Common Market now. It would be wrong to lay all of our problems at the door of the Common Market. However, the Common Market has made our position far worse, especially as a manufacturing nation. It is in our interests to buy our food and raw materials in the cheapest world market. It is in our interests as a manufacturing nation to look to the world as a whole to get a market for our manufactures.
What has happened now that we are in the Common Market? Our trade deficit in manufacturing goods has been £15 billion in the past 10 years. That must be compared with our surplus with the rest of the world of £40 billion. How can joining the Common Market have been a good thing for us? The Minister tried to grapple with the cost of our being in the EC. It has been costing Britain £1 million a day.
My hon. Friend the hon. Member for Keighley was right to talk about the cost in relation to motor vehicles. I agree with him. There is no point coming to the House and talking about a plan for the import of motor vehicles and telling the Japanese to cut back on their imports when the real problem is imports from the EC, which far outnumber imports from anywhere else in the world. About 40 per cent. of our imports come from the EC. If we wish to protect our automobile industry so that it can have a chance to recover and make itself competitive with the rest of the world, we should be talking about global quotas and of restricting imports from all parts of the world, and that includes the EC. That will be impossible so long as we remain in the EC. The cost to us has been tremendous.
Mr Cryer: The proponents of free trade have long held that trade should not be planned or interfered with. That applies to the Common Market. In 1982, we achieved the lowest output of British motor vehicles since 1957. If we do not plan our trade we shall be virtually wiped out within the next 10 years.
Mr. Hoyle: I agree with my hon. Friend. The motor vehicle industry is reaching crisis point, just as the textile industry did, yet we are unable to deal with the crisis because we are members of the Common Market and, therefore, cannot deal with the biggest threat to our motor industry.
When we talk of the automobile industry, we are not merely talking of the automobile factories, but of the
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components industry that supplies them. In other words, we are speaking of some of our most basic industries. For example, many jobs in steel have been lost because of the import of motor vehicles. The textile industry has suffered just as much, as has the rubber industry, which is part of the components industry. We are, in effect, talking about a large part of our manufacturing industry.
Since 1979, our steel industry has lost 100,000 tonnes, because of steel imports or the import of products made of steel, such as motor cars. That is something that we cannot continue to accept, not if we are to remain a manufacturing nation.
The deficit between the export of goods to the EC and the import of goods from the EC is now about 30 per cent., or £900 million. In other words, about 750,000 jobs have been lost solely through our membership of the EC. Some people argue that jobs would be at risk if we pulled out of the EC, but they do not give the other side of the equation and say how many jobs have been lost because of our membership. We certainly know that our manufacturing industry has been unable to stand up to the competition that has resulted from the Common Market.
The hon. Member for Banff waxed eloquent about the CAP. He did not seem to think that there was anything immoral about the surpluses that have occurred, but rather that there was something good in creating them. It would be good if those surpluses benefited the world as a whole, but instead they often distort world trade. What has happened with sugar is nothing short of criminal. Such surpluses often help the Soviet Union. We certainly do not get the benefit. Last year, the EC spent £2·8 billion disposing of agricultural surpluses.
The hon. Member for Banff said that he spoke for the farming community, but he did not represent the farmers who took part in the Farmers Weekly poll, which showed that 78 per cent. of our farmers were worried by these wasteful surpluses. Such surpluses are a vast handicap to our people, who must put up with the high prices that result from both the CAP and the surpluses.
There has been a net export of investment away from Britain. We were promised that, if we joined the Common Market, investment would flow into Britain, but investment has left this country and has gone to the Common Market. We are far from being a beneficiary. That investment should have been taking place in Britain, because it was badly needed in manufacturing industry.
We are led to only one conclusion—that Labour has the right policy in relation to the EC. We have to decide that enough is enough and that we must come out of the Common Market. We have put it plainly at the forefront and I am hopeful that it will be stated in our campaign document and in Labour's manifesto that we shall withdraw. We shall try to do so in an orderly fashion. We shall try to do it with the least disruption to trade within the EC. Of course, it would be quite wrong if we did not say here and now that we shall be discussing withdrawal with our EC partners. We could talk for ever but talking cannot be allowed to go on for ever.
The first thing that we would try to do on coming to office would be to amend the European Communities Act 1972. We would ensure that the Act did not apply in this country. We would return to Britain the sovereignty that was taken away by our entry into the EC. The next step after the negotiations had taken place would be a complete repeal of the European Communities Act. Conservative Members have fairly asked what would be the result of

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withdrawal. I believe that we should not rejoin EFTA—although some Opposition Members would accept that policy—but should have the same type of relationship with the EC as America and Canada, which would mean applying a common tariff policy to the EC which, equally, would apply a common tariff policy to us. We would be the beneficiaries of such a policy.
If we withdrew and applied such a policy, it would not mean, as some critics of our policy have said, that we would stop trading with Common Market countries. Of course we would not. There is a self-interest involved. Can one imagine the French giving up a market for their agricultural produce? Can one believe that Germany would want to give up the market that it has developed for its manufactures? The difference would be, of course, that outside the EC we would be trading on more favourable terms with those countries. It would also give us the opportunity to develop our markets in the rest of the world.
I for one, wish to retain our close associations with the French Socialists and with the West German, Dutch and Danish Socialists. We wish to have a close liaison with them. We could gain many advantages from close association. We could discuss with the French some of the Socialist policies that they are trying to incorporate, albeit with difficulty in some cases, because of the membership of the EC. The French are having problems with their balance of payments because they are trying to apply Socialist policies while remaining in the EC. That is a lesson from which we should be able to benefit.
The Labour party policy would be popular with the British people. The British people as a whole believe that they were sold a false prospectus over the Common Market. They have seen jobs disappear and our steel industry decimated. They have seen our automobile industry going the same way as a result of imports. They have seen us pay far more for our food than we need to—all by reason of our membership of the Common Market. They will welcome a party that will give a lead not from a narrow, nationalistic angle, but from an internationalist angle. Britain can then trade freely with all the nations of the world. It could help the developing countries, which would benefit if we imported more food and raw materials from them. I want Britain to enter into a long-term arrangement with them that will benefit their economies.
While Britain remains a member of the EC, there will be no recovery of manufacturing industry. Instead, we shall see the death of one industry after another. It is not the time to argue about the budget—we must argue about the whole philosophy of remaining in the EC. Conservative Members who are highly critical of the Common Market are not prepared to support that argument. They believe that the EC can be reformed while Britain remains a member. I do not believe that.
It would be far more sensible and honest to tell our partners that we must leave the EC. It does not mean that we shall leave them altogether. We shall still co-operate with them, but on equal terms. The only way to do that is to withdraw from the EC after negotiation with our partners. We must do so in an orderly manner that does not destabilise our economy or have a bad effect on the economies of our partners. If we follow that course, not only shall we remain on friendly terms with them, but we
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shall continue our trade with them while we re-open our discussions and trade with the remaining nations of the world.
8.52 pm
Sir Brandon Rhys Williams: The Financial Secretary said that the vital issue was to find a lasting solution to the budgetary problems. I am sure that all hon. Members in this House agree with him, as do the elected representatives in Strasbourg.
The difficulty of Britain's budgetary position has been exaggerated by our uneasy relationship with the EC, which has been caused by reasons other than the imbalance of the budget. In recent years, the rates of exchange between Britain and the main manufacturing member states have been favourable to imports and unfavurable to our exports, with the result that we have not enjoyed the extension of our trade for which we hoped when we joined a large, expanding, free trade area.
Another reason for our uneasy relationship is the demands of the CAP. A number of hon. Members also find the constitutional issues extremely difficult, even after 10 years of membership. However, we signed a treaty that set up a common fund and also an elected body to supervise the way in which the bureaucracy which determines the spending of the common fund manages its affairs. Those who opposed the signing of the treaty are entitled to their view, which is that the solution to the budgetary problem is to withdraw from the Community. The Government take a different view, and I am glad that they do.
The Community is still holding to a target of 1 per cent. a year for its current account, which puts into perspective the real size of the budgetary problem. We are debating a sum of money in dispute in our current account which is only a fraction of 1 per cent. of the British tax base. Although that is a substantial sum, we must realise that the current account is not the only consideration.
The Government are right to look at ways of changing the nature of the sources of revenue from which the 1 per cent. is raised. However, I make no secret of the fact that I am convinced that it would be better for this country if we joined the member states that are seeking to enlarge the fund. The case rests on the basis of "the bigger the fund, the bigger the refund". Although it will be difficult to reform the common agricultural policy, if the fund were somewhat larger, there would be a more than proportionate expansion in the amount of money for the social and regional funds, from which this country stands to benefit so much.
I therefore welcome the Commission's initiative in its so-called green paper on exploring ways in which the budget might be expanded in the course of time. We shall not see a runaway expansion that will jeopardise the financial independence of Britain, France, Germany or other member states, but within the current account there is room for certain expansion. This country would stand to gain very much if that expansion were allowed. Therefore, I hope that the Government will keep in mind the possibility that that is the solution to our budgetary problem, which we shall find in the end.
I should like to say something about the reform of the CAP. The difficulty arises from historical conditions that go back to our decision to repeal the Corn Laws in 1846. The member states on the continent took a different view on the protection of their agriculture. There are, however, some suggestions one could make. We should press for

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forestry to be included in the scope of the CAP to a far greater extent than now. Of course I realise that forestry is not a current account but a capital account matter. We could place also more emphasis on the avoidance of waste, recognising that the CAP is primarily intended to provide a social fund to assist an industry which is grossly overmanned. We, too, have such industries and we need help with them. It is not a food policy or an economic policy, but a social policy. If the money that is spent in support of agriculture went directly to the people instead of towards sustaining a uniform price as the main aim of policy, it would achieve its objective in a better way. With the accession of new member states, that is the way in which the CAP will have to be reformed.
I would like to draw the attention of the House to the Commission's intentions in regard to the capital account, which stands in the long run to be far more significant for this country than anything in 1 per cent. or 1½ per cent. Europe, or whatever ends up on the current account. The Ortoli facility will be expanded by the Commission's current proposals. Is the Commission simply duplicating the work of the European Investment Bank? I do not think that it is, because the EIB is not short of funds for the sort of lending that it does, which is a scrupulous operation. The EIB has never had a bad debt. That implies that it takes on only a certain limited category of capital investment. The Commission is now proposing something different, but has not fully worked out its intentions.
In article 2 proposed in document 4348 on 13 January this year, it is stated that the council is to lay down the guidelines for eligibility for these loans. I have pressed Mr. Ortoli and have not had a satisfactory answer as to precisely what the Commission has in mind. The House should give its mind to it.
The real difficulty of industrial lending in Britain and other member states is not the shortage of funds but the anorexia which is afflicting our industries. They will not take advantage of the funds which are available for all sorts of reasons. How will the new fund overcome those problems? It has scope first where Government support is necessary or consequential expenditure is needed, for projects such as the Severn barrage. Presumably there will be planning and other considerations besides the generation of power on which the British Government should collaborate with the Commission. Secondly, it has scope where the project requires the co-operation of more than one Government. The channel link is an obvious example. There is also scope for the Ortoli facility where the timespan of risk is beyond the cover obtainable through normal market mechanisms. I am sorry to say that that applies now to most industrial restructuring plans, in both the private and the public sectors. Finally, there is scope for the Ortoli facility where there needs to be a stimulus or a subsidy element which has deliberately to be included in the loan as a matter of policy.
If we, as a Community, plan to spend more money, the Commission has to show that exenditure jointly incurred is likely to bear more fruit than expenditure of the same order undertaken by member states without the co-operation that is envisaged under the treaty. If nothing is to be gained by co-operation between the European democracies, the treaty has only a limited value. But I believe that the people who hold that Britain can solve all its economic problems entirely on its own are in a minority in this country, and will be shown to be in a minority when the election comes.
9 pm
Mr. Eric S. Heffer: Despite the fact that we are supposed to be discussing only the supplementary and amending budget No. 1 and the green paper, we have strayed well beyond those subjects, which is perfectly understandable when we realise that the budget is at the heart of the whole issue of the Common Market.
Before I come to the issues that are connected with the budget, I want to make one or two comments on what the Financial Secretary said. I thank him for giving publicity to the document that I and my hon. Friend the Member for Aberdare (Mr. Evans) issued last week. I hope that those right hon. and hon. Members who have not seen the full document will get hold of Labour Weekly of last week, which gives at least part of the document. Of course, the document is much more lengthy and contains many interesting details. The hon. Member for Harrow, East (Mr. Dykes) said that we should have serious and detailed arguments, and I quite agree. Any serious and honest person, after reading the paper, will agree that the case against being in the Common Market is proved, I would say almost beyond doubt.
I want to say a word about democratic Socialism. It is often implied by Conservative Members that we want to bring in some form of east European state, and I want to answer that charge briefly. Such charges, bandied about in the Mother of Parliaments, undermine democracy and democratic argument, democratic discussion and democratic institutions.
For the benefit of those Conservative Members who do not know what democratic Socialism is, I shall explain it briefly. It is the opposite of democratic centralism; that is the point. It is Socialism by the consent of the people through an elected Government, who can of course be thrown out at the next election if the people so desire. We are passionately concerned to uphold the basic democratic parliamentary system that we have in this country, and in which democratic Socialists believe in every other country. For the benefit of those who do not understand it, the first people who were imprisoned in the Soviet Union during the Bolshevik revolution were democratic Socialists. The first people who were put in prison in Hitler's Germany were democratic Socialists. We believe in a pluralistic democratic system. I want to put that on the record, because hon. Members and others often make slanderous statements which, in my view, do great harm to democracy in this country.
In passing, I suggest that the Financial Secretary to the Treasury and the hon. Member for Southend, East (Mr. Taylor) seem to get their ideas of Socialism more from the "The Servile State" by Hilaire Belloc and the books of Edward Bellamy than from genuine Socialists such as William Morris and Keir Hardie. I suggest that they read the last two authors and, if they do so, it will be with great effect.
There are two aspects of the supplementary budget. First, that Britain is to receive compensation is hailed by the Government as a great victory, as we have heard so often this afternoon. It is a tune which we have heard before. We heard it about the fisheries agreement. What has happened is that Britain has lost far more overall than it has gained because, first, there is no guarantee whatever for the future. My right hon. Friend the Member for Stepney and Poplar (Mr. Shore) spelt out in detail exactly what can happen if there is no agreement in future. It is

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interesting to consider that we start from a completely false premise on the fisheries agreement. We make a little gain by a concession but have done so after having given everything away, and that is hailed as a great Government victory.
Secondly, the Government have said nothing about the cocky attitude of the European assembly which has flexed its muscles and used what powers it has to strengthen its position and is now demanding greater powers. The Commission is proposing that the assembly should have a bigger role in future. What is slowly but surely happening is that, by stealth, the assembly is being transformed into a real Parliament with real powers at the expense of the House and, therefore, of the British people.
In a statement made on 7 February at Brussels, the Chancellor of the Exchequer said:
"To begin with the 1982 supplementary budget, I naturally regretted the Parliament's decision last December. That an agreement reached after so many months of painful negotiation in the Council should be thrown out at the final stage came as a considerable shock."
It certainly did not come as a considerable shock to many hon. Members, but it shows that the Government were shocked. He went on to say:
"The Council has responded positively and constructively on all these points in the recent dialogue and the new draft budget. It has travelled a remarkable distance in a short time. I hope very much that Parliament will now respond in a similar spirit of flexibility and co-operation".
We heard from the hon. Member for Scarborough (Sir M. Shaw), who knows a great deal about this matter, that there was conciliation by consent. I would say that the Parliament, or so-called Parliament—the assembly—used what powers it had, flexed its muscles, in order to ensure that it developed further powers in future. It will use those powers each time as effectively as it can at the British people's expense. If that process is not reversed, sooner or later we shall find that increasingly important decisions affecting our people will be taken at Brussels or Strasbourg and, as we were warned by some when we entered the EC, we shall become a sort of regional authority which inevitably must look to Brussels for guidance. Some may argue that that is an exaggeration. I shall be examining it when I come to discuss the green paper. It proves beyond doubt the sort of future that some within the Community envisage for us. They want to see a federal Common Market—an EC with an enhanced Parliament that has the powers, and what they will be spent on.
I come back to the supplementary budget. Following the hours devoted to it and the compromise reached on 25 and 26 October by the Foreign Ministers, the Commission proposed in a document that the United Kingdom should receive the whole of the 1982 budget refund entitlement. Despite all the work of the Foreign Ministers, this was rejected by the European Parliament which later agreed new proposals by 183 votes to 33 with five abstentions. Those proposals gave Britain the compensation we had originally proposed but with strings attached, which mean that the Parliament decides how the rebate or part of it will be spent. I believe that I heard an hon. Member say "democracy".
Mr. Cryer: It was the SDP—the hon. Member for Farnworth (Mr. Roper).
Mr. Heffer: It seems funny that, when the Council of Ministers has agreed on an amount, it is overthown by the
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Parliament which is to decide how the British Government will use the money. It is not simply a matter of telling the Government how the money will be spent. It is telling the British people. Barbara Castle, the leader of Labour's delegation in the European assembly, was right when she said:
"The compensation to the United Kingdom is inadequate and the insertion of a part of the common energy scheduled measures is not necessarily in line with United Kingdom priorities." Barbara Castle, speaking on behalf of the Labour party, put the case absolutely correctly.
We are now paying into the EC budget the second highest amount of any EC country. The Government's White Paper on public expenditure still envisages a net payment of £680 million. It could be more. On 2 February, The Times stated:
"That rough assumption of a two thirds refund may prove over-optimistic in the face of the hard negotiating to come with Britain's EEC partners, and on the big agriculture element in the EEC budget the White Paper concedes that Community spending on agriculture, and Britain's corresponding contributions, will continue to rise."
Sir Michael Shaw: The hon. Gentleman argues that it is presumptuous of the European Parliament to seek to deny the passage of the 1982 supplementary budget because it has been fully thrashed out by the Commission and the Council. I fail, therefore, to understand why the Labour Government in 1975 agreed a new amendment to the treaty whereby the budgetary authority of Europe was to consist in the future of both the Council and the Parliament acting together. In 1977, all members of the Community agreed to that change in the treaty. What is the purpose of having a joint budgetary authority if the two members of it are not both consulted and do not get together in a genuine discussion about what should be done?
Mr. Heffer: When we discussed direct elections and the establishment of a European assembly, many Labour Members and, I am sure, some Conservative Members believed that sooner or later that assembly would be given increased powers and we would become a sort of local Parliament without power to control our future. We made our position clear at the time. The Labour party opposed the whole basis of the assembly, and we wanted Britain to come out of the Community.
My right hon. Friend the Member for Stepney and Poplar made his position clear earlier, and I make my position clear now.
Mr. Ridley: That is not quite good enough. The hon. Gentleman was a member of the Administration who allowed this to go through and he remained a member of that Administration—not for ever, I know, but he did not resign on this issue. Why is he raking over this ground as though he had not approved of it when he was in office?
Mr. Heffer: The Financial Secretary to the Treasury ought to know what goes on in the House. I left the Labour Government on the question of the Common Market. If the right hon. Gentleman has not caught up with that yet, he is a few years out of date. He clearly does not know what went on at that time.
Our contribution to the budget is second only to that of West Germany. We have heard much about the money that we get back through grants. One of my hon. Friends listed a number of regions that have received grants. Merseyside receives grants and loans from time to time, but we are

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merely getting back the money that we have paid in. The figures show that we get back far less than we put in and in some places we may be getting money that we do not want and which could be better used in other places if we had control over that money.
Mr. Teddy Taylor: Did the hon. Gentleman see the recent helpful reply from the Treasury that explained that every pound of aid that the EC gives to Merseyside and other areas costs the British taxpayer £1·71?
Mr. Heffer: I am grateful for that helpful intervention. If any other hon. Member wishes to intervene with similar statistics I shall be happy to allow him to do so.
The decision of the European Parliament can be summed up as meaning that there will be a rebate for Britain this time, but never again. That needs to be examined with some care. We know that the Government want to find a solution to the budget problem. They want to find it within the EC and we want to find it outside the EC.
The European assembly's resolution on the supplementary budget was described as a
"first step towards more ambitious objectives for the Community".
On 8 February this year, Mr. Gaston Thorn, the President of the Commission, spoke to the European Parliament. Every hon. Member ought to study that revealing speech carefully. Mr. Thorn spoke about the need to fight unemployment and admitted that the Community had totally failed in that respect. At the end of his speech he turned to the future of the EC's finances, argued that the Community required more finances and said:
"The limit on our own resources has almost been reached … Why does the Community need new own resources? The answer is simple. Even if we can achieve savings thanks to tighter management of Budgetary Funds, and funds allocated to the Common Agricultural Policy in particular, new own resources will be needed to bring Community intervention to the critical level at which it will have a real impact and provide the stimulus and guidance we expect of it."
I am sorry to quote at such length, but this is an interesting and important speech. He continued:
"In addition to this institutional constraint, there is the Council's insistence on unamity on every question, even where the basic legislation does not require it. It is high time we turned our backs on quarrels about the Luxembourg compromise which has been increasingly detrimental to the Community of Nine and the Community of Ten and which, if the practice it instituted were to persist, would completely paralyse a Community of Twelve. It is no longer acceptable that Community decisions, when they finally emerge, can only be described as 'too little too late'."
That is clearly a call to get rid of unanimity and have majority decisions. He continued:
"I do not propose to go through the details here. Suffice it to say that the Council, which is to begin considering our proposals, shortly, is asked to delegate more executive tasks to the Commission and to accept that there should be more majority decisions. These decisions would require the formal assent of this House, which would thus be more closely involved in the Community legislative process."
That is what Mr. Thorn said, and there is the great Social Democrat, the hon. Member for Farnworth (Mr. Roper), who is so democratic that he changed his party without a vote, nodding his head in agreement. He does so because he, like all the other Euro-fanatics, in the House and outside, wants a federal Europe and wants to get rid of the conception—
Mr. Ridley: It is a free country.
Mr. Heffer: Of course it is a free country, but in the process of the so-called freedom the powers and rights of the House of Commons will be destroyed. That is what the hon. Member for Farnworth wants.
There are four financial proposals in the green paper. There is a suggestion of an increase of the 1 per cent. in the VAT payment. The hon. Member for Harrow, East asked what was wrong with that, and other hon. Members have said much the same. What is wrong with it is that VAT is a regressive kind of tax that hits ordinary working people harder than anyone else. We opposed it for those reasons and we would oppose it again.
Let us take the so-called progressivity. This would relate each state's contribution to the EC budget more directly to its prosperity as measured by GDP, and could be done by VAT adjustments or taxation. There are three other proposals, all of which were outlined earlier. All these proposals in the green paper in the long run could and, I agree with the right hon. Member for Down, South (Mr. Powell), would, mean an increase in the taxation of our people.
The Commission is suggesting a long-term solution but at further cost to the British people. The fishing agreement is part of that. We have been discussing the CAP and much has been said about it. However, as far as Gaston Thorn and the majority of the countries in the EC are concerned, the CAP is sacrosanct. As Gaston Thorn said in his speech:
"There can of course be no compromise on the fundamental principles of the Common Agricultural Policy."
If that is so, I would assume that the CAP financing would, despite the proposals, continue largely as before. That would mean high prices for the housewife for her foodstuffs.
The proposals for the rote of the European Parliament are included in the green paper:
"Any new development of the Community's financing system should, in the Commission's view, reflect and enhance the role of the directly elected European Parliament as one branch of the budgetary authority."
I could go on giving quote after quote. They all add up to enhanced powers for the European Parliament, and I regard them as being very serious.
The debate has been wide ranging and I want to end by looking very briefly at what 10 years' membership of the Common Market has meant for us. I want to consider the so-called gains that we have achieved as a result of our membership.
Unemployment in Britain has increased by 2·5 million since we entered the Common Market. In manufacturing industry alone, unemployment has more than trebled. In the steel industry it has increased fivefold. Industrial output has fallen by 16 per cent. The annual output of motor vehicles has fallen by almost 1 million. Our accumulated trade deficit in manufactured goods with the EEC over the 10 years amounts to over £15 billion, whereas our trade surplus with the rest of the world exceeds £40 billion.
Since we joined the Common Market, we have paid not £1 million a day but—according to figures that the hon. Member for Southend, East received yesterday—more than £1 million a day into the EC budget. Our consumers have suffered a decade of high food prices under the CAP policy.
In view of the statement made by my right hon. Friend the Member for Bristol, South-East (Mr. Benn), it is necessary, in order to clarify the position, to see where the Labour party stands on the question of withdrawal from the

739
EC. The Labour party conference on three occasions has made it absolutely clear that it will take this country out of the Common Market. In addition, the TUC Economic Review 1983, published a week ago, says:
"A further set of constraints is imposed by our membership of the EEC … It is for that reason that the TUC is campaigning for the UK to withdraw from the EEC."
So it is not only the Labour party that wishes Britain to come out of the European Community. The TUC is also against our continued membership and is arguing that we should withdraw.
How should we seek to achieve our objective? As my hon. Friend the Member for Warrington (Mr. Hoyle) said, we shall do it in an orderly way, by proper negotiations, and not by threats or high-handed action. When we have a Labour Government, we shall immediately begin negotiations—[Interruption.] The British people, at the next election, will give Conservative Members a real political bloody nose, and there is no doubt about that. We shall have a Labour Government after the next general election. When we get it, we shall begin negotiations with the EC countries. We shall agree on a timetable and we shall issue a White Paper.
We shall immediately repeal vital parts of the European Communities Act 1972, which would mean that EC law would no longer be applicable to this country. We should then carry out the main negotiations which would culminate in the repeal of the 1972 Act and the formal abrogation of the treaty of accession. That is the way in which we intend to leave the European Community. That is the Labour party's clear position. There is no dubiety about it. I want to make that absolutely clear to the House and the country. The Labour party believes that in the long run we cannot solve the problems relating to the CAP, the budget or other matters without making a clear statement of that kind and without leaving the European Community.
9.30 pm
The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Malcolm Rifkind): This debate has, perhaps not surprisingly, ranged over a number of issues not directly related to the budget. It might, therefore, be appropriate to respond to certain of those points first.
The right hon. Member for Down, South (Mr. Powell) raised the fact that some members of the European Parliament are seeking to have discussed within it matters involving Northern Ireland. He asked the Government to respond by making it clear that we could not support any such proposal and that we should not consider it to be within the European Parliament's competence. I am happy to give him that assurance, which, I believe, will be welcome also to hon. Members on both sides of the House. I understand that no firm decision has yet been made on that request, but that a committee of the European Parliament will discuss it later this week. We have no doubt that a domestic matter such as that does not fall within the European Parliament's competence, and that it would be inappropriate for it to be discussed. Of course, we have no formal means of preventing the Parliament discussing whatever it wishes. However, the practical consequences of any such discussion will be completely negative, and it is desirable that the matter be considered in that light.
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The hon. Member for Liverpool, Walton (Mr. Heffer) and other hon. Members asked whether the proposal in the green paper that has been issued by the Commission which calls for an increase in the European Parliament's powers commands the Government's support. My hon. Friends the Members for Saffron Walden (Mr. Haselhurst), Aberdeenshire, West (Sir R. Fairgrieve) and Harrow, East (Mr. Dykes) said that they would have some sympathy with the proposal. As has been said on a previous occasion, the Government do not see any reason to increase the European Parliament's powers. That proposal does not find favour with the Government.
Perhaps one of the most curious contributions to the debate was the speech by the right hon. Member for Bristol, South-East (Mr. Benn). He was asked why Socialist and working-class people in this country had to treat the Community as an enemy whereas Socialists in West Germany, France and other countries of the Community could treat it as a friend and something with which they could work and accept as being within their interest. His response was that, because they had lived under Nazism and Fascism, their attitude towards the Community was different from ours. The right hon. Gentleman nods his head. That is an extraordinary condemnation of the contemporary Labour party. It believes that only Socialists who have experienced Nazism and Fascism can work together within the European Community rather than try to disrupt it.
Another even more remarkable observation by the right hon. Member for Bristol, South-East was that if a Labour Government were returned to office after the next election, they would have the power—presumably he would wish it to be used—to use the Royal Prerogative to abrogate the treaty of Rome. He put that as one of the first actions of such a Labour Government. We are aware that the Labour party and the right hon. Gentleman, having once burnt their fingers with a referendum, no longer wish to consult the British people. We now find that they do not even wish to consult Parliament. This great tribune of the people wishes to use the Royal Prerogative for that purpose.
Mr. Benn: The hon. Gentleman should consult the record of his own party. The Prime Minister who took us into the Common Market stood on a manifesto that he was committed to negotiate—nothing less, nothing more. He then signed the treaty of accession, without publishing it, using prerogative powers. It was my hon. Friends and I, and the Labour party of which I am a member, who provided the referendum, having said throughout that this matter must be decided by an election or a referendum. The Labour party will be committed by its manifesto to withdraw and the British people will vote on withdrawal in the election which brings back a Labour Government later this year.
Mr. Rifkind: The right hon. Gentleman doth protest too much. Great democratic Socialist that he is, he has shown himself today to be a great admirer of the Royal Prerogative. That is contrary to the Socialist pretensions he has applied on other occasions.
I have studied the motion and the Opposition amendment. I have also listened with care to the speeches of the right hon. Member for Stepney and Poplar (Mr. Shore) and of the hon. Member for Walton. I did not expect to hear congratulations to the Government on what they have so far achieved in reducing the burden of the

741
European budget. I am well aware that comparisons between what we have achieved and what the Labour Government managed to produce will not find favour with Labour Members, but they cannot avoid the fact that during the five years of the Labour Government not one single penny was refunded to the British taxpayer—not one solitary ecu was repaid to the British Treasury. That was the achievement of the Labour Government of which those right hon. and hon. Gentlemen were members.
In 1975, the attempt to renegotiate the terms of our membership of the Community did not in any way remedy the problem. When this Government came to office in 1979 there was not even an attempt being made at that time formally to renegotiate the burden of the European budget. Yet right hon. and hon. Gentlemen have the sheer effrontery to attack this Government. During the last two years of the Labour Government, Britain's contribution to the European budget was no less than £1,580 million, and not a single penny had been refunded. That can be compared with the first three years of this Conservative Administration, when we have had no less than £2,000 million refunded. One can sum it up by saying that the Labour party talks about budget reform, but the Conservative Government practise it and will continue to do so.
I said that the right hon. Member for Stepney and Poplar was vague in his comments about the budget and how he would wish to see it altered. He has been vague about a number of other matters, too—in particular, the relationship that he would like to see between Britain and the Community in the event of Britain's withdrawal. He does not want to see a free trade relationship continuing between Britain and other members of the Community, but he has equally professed himself to be no full-blooded protectionist. We are entitled to wonder where he exists in the spectrum.
I am reminded of a doggerel written 70 years ago about a politician in a similar situation:
"I'm not for free trade and I'm not for protection,
I approve of them both and to both have objection.
In going through life I continually find
It's a terrible business to make up one's mind,
So in spite of all comments, reproach and predictions
I firmly adhere to unsettled convictions."
That would be a suitable epitaph for the right hon. Member for Stepney and Poplar, after the view that he has taken.
Several hon. Members referred to the recent decision by the European Parliament not to approve the original draft supplementary and amending budget. Like other hon. Members, the Government regretted that decision by the European Parliament. Indeed, it was an ironic decision for it to take. We understand that its main motivation was to draw to the attention, in particular, of the Council of Ministers, its disapproval of one interim solution after another and the imperative need for a long-term resolution of the problem.
When we consider that the Government hold this objective more than any other, it would have been somewhat ironic if the United Kingdom had suffered most as a consequence of that decision by the European Parliament. In the event, both the Council of Ministers and the Commission insisted that the United Kingdom would not suffer as a consequence of that decision, and the European Parliament approved the subsequent budget that was put before it.
In one important way, that incident may have been beneficial. It focused the attention of the Council of
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Ministers on the importance attached to a long-term reform of the budget. It emphasised the fact not only that the United Kingdom believes that existing arrangements are unsatisfactory, but that there is broad support within the European Parliament from parliamentarians of other countries who realise that some resolution of this difficulty by long-term restructuring is essential. That can only be beneficial to this country.
A number of hon. Members referred to the so-called green paper tabled by the Commission, perhaps partly in response to the growing feeling on this subject. That document is very important. For the first time we have a review of the revenue as well as the expenditure aspect of the European budget. As the Government have emphasised for some time, we must balance those considerations if we hope to resolve this difficulty.
It is too early to form any definite views on the details of the green paper, which has not long been published and which is composed largely of ideas rather than firm proposals. The Commission has said that it wants to await the response of the Council of Ministers, the European Parliament and other interested bodies before making any firm proposals either to the Council of Ministers or to the European Parliament.
Mr. Heffer: Will the hon. Gentleman give us a firm assurance that if the European Parliament makes it clear that it will not agree in future to Britain having some temporary ad hoc arrangement, unless it gets the powers suggested in the green paper and also outlined by Gaston Thorn in the same process, the Government will not agree to those powers? If it insists and we are faced with a huge bill, will the Government then refuse to pay it and perhaps do the sort of thing that was suggested by the hon. Member for Southend, East (Mr. Taylor)?
Mr. Rifkind: The hon. Gentleman does the Commission a disservice. Nowhere in the document to which he referred does the Commission suggest that an increase in the powers of the European Parliament should be a necessary and inescapable part of any package that might be agreed.
Mr. Heffer: Yes, it does.
Mr. Rifkind: If the hon. Gentleman reads the document, he will see that the Commission indicates its preference that consideration should be given to increasing the powers of the Parliament. I have said that the Government do not share that preference, and the Commission does not suggest that that should be a necessary precondition of any resolution of the budgetary problem.
The European Parliament has not ruled out the idea of giving support to further interim solutions if there is a clear sign that the Council of Ministers and the Community are moving in a realistic way towards a resolution of the long term budgetary problem.
It is clear that any satisfactory attempt to deal with this problem must approach the expenditure as well as the revenue side of the European budget.
Some points have been made about expenditure. My hon. Friend the Member for Fareham (Mr. Lloyd) asked about the expansion of the regional and social funds and other non-agricultural parts of the Community budget. He asked whether it was sensible or wise, or the Government's policy, significantly to seek to increase the

743
Community's overall expenditure as a means of helping to rectify the budget problem. While we certainly see a role for expanding the non-agricultural element of the Community's expenditure to get a more sensible balance within the budget, we would not suggest that that should be brought about by a significant or dramatic increase in the total expenditure of the Community. We are talking about a balance within the Budget and not the total resources available to the Community.
The development of non-agricultural expenditure can play an important part in achieving a balance, although I put it no higher than that. At present, Britain receives about 29 per cent. of expenditure on the social fund, which is desirable. We have said that we shall support proposals for selective assistance to high technology industries, information technology and the development of energy policies. The United Kindgom has also taken a lead in the promotion of a Community strategy on the coal industry. Progress can be achieved in several important areas. I assure my hon. Friend the Member for Southend, East, (Mr. Taylor) and other hon. Members who have commented on this matter, that it is neither realistic nor desirable to propose that the non-agricultural expenditure of the Community can be so expanded as to resolve the major imbalance that now exists. We must consider these measures as only a contribution towards that problem.
Mr. Marlow: Will my hon. Friend agree with me that there is no justification whatever for any increase in Community expenditure at a time when the Government are trying to reduce their own expenditure?
Mr. Rifkind: I shall deal with own resources later, but my hon. Friend will appreciate the fact that, even without any change in the formal structure of the Budget arrangements and finances, the 1 per cent. ceiling on VAT has not yet been reached, and there is still buoyancy in the existing arrangements without formal new decisions being taken.
There is broad agreement in the House that reform of the CAP is necessary, but not because we do not recognise that the policy has provided some advantages. It is worth noting that the increase in agricultural prices during the past 10 years has been lower than the rate of inflation, and the proportion of agriculture as compared with the overall size of the Community budget has reduced during that period from about 80 per cent. to about 65 or 66 per cent. Clearly, the uneconomic and expensive surpluses that have been generated are not in the interests either of this country or of the Community. They must be a major objective of reform.
The green paper produced by the Commission refers, significantly for the first time, to the need for changes in the revenue structure of the Budget. The document puts forward some ideas about which the Commission is thinking. My right hon. Friend the Minister of State is attending a meeting of the Council of Ministers in Brussels today, where preliminary discussion is taking place on such matters. He intended to try to establish with greater clarity the ideas that the Commission is considering. However, I emphasise the fact that the Government's approach is very much that outlined by my right hon. and learned Friend the Chancellor of the Exchequer in his speech at The Hague in June 1981. He said that if we are to move on this matter, we must find a proper balance
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between the net receipts and the net contributions in the Budget to ensure that, if progress is to be made, we must acknowledge the relative prosperity of member states and their populations.
We do not suggest that there must be a mechanical formula to guarantee that each member state receives back exactly the sum that it contributes. I doubt whether that is possible, even if it were desirable. However, as my right hon. and learned Friend said, if there is to be an element of redistribution in Community expenditure, any net transfers should be on the basis of movement from the more prosperous to the less prosperous members of the Community. It is essential that the criteria applied should be defensible and logical. I hope that that will command support on both sides of the House.
Mr. Shore: The hon. Gentleman is speaking with great authority on behalf of the Chancellor of the Exchequer, whom we are now pleased to see in his place. Is it still the policy of his right hon. and learned Friend and that of the Government to achieve a broad balance in Britain's budget contribution with the EC? If so, over what time scale does he intend to achieve it?
Mr. Rifkind: It is desirable to achieve a broad balance. The right hon. Gentleman will be well aware that the Chancellor of the Exchequer and the Prime Minister have stated that the Government would not object if the result of these procedures and negotiations was a modest net contribution by the United Kingdom. We maintain that the existing arrangements are unacceptable. Any long-term solution should be based, if there is to be a net transfer, on account being taken of the relative prosperity of the individual member states of the Community.
My hon. Friend the Member for Northampton, North (Mr. Marlow) asked about own resources and whether the Government could support any increase in the own resources available to the Community. Within the existing 1 per cent. ceiling on VAT there is an element of buoyancy which enables some growth in expenditure to take place and some flexibility to be applied without any formal change in the revenue-raising powers that the Community has at its disposal.
The Government have not changed their view. No argument can be put forward with any conviction that it is necessary or desirable to increase the own resources of the Community.
I say to my hon. Friend the Member for Scarborough (Sir M. Shaw) that the Government do not believe that the likely accession of Spain and Portugal to the Community, which we hope will happen in the relatively near future, will materially change own resources. The Government do not approach this question in a dogmatic or ideological way. We maintain that at present, for pragmatic reasons and for reasons relating to the natural buoyancy of existing arrangements, it is not necessary to contemplate a change of that kind.
The hon. Member for Walton mentioned his great pride in the new document on the Labour party's policy on the Common Market. This is a document to which I and my hon. Friends have been giving some attention. The front page is quite interesting. It is called "Labour's Socialist Approach". It says that it is issued on behalf of the hon. Member for Walton and the hon. Member for Aberdare (Mr. Evans). I was puzzled and curious about the reference to the document being issued on their behalf. I presume

745
this was as a result of the determination of their research officer to show that he had written it and not the hon. Gentlemen. The document is not on behalf of the Labour party, the Opposition Front Bench nor the Shadow Cabinet, but only on behalf of those two hon. Members. Perhaps this is another example of the precedent that the right hon. Member for Stepney and Poplar referred to, of a potential agreement to differ in that the remainder of the Opposition Front Bench wish to reserve the right to agree or disagree with such aspects of this document as take their fancy.
Mr. Heffer: The hon. Gentleman is making a lot out of nothing. My hon. Friend the Member for Aberdare (Mr. Evans) and myself are Front Bench spokesmen. The statement is similar to the one issued by my hon. Friend and his team. It is the views of the Front Bench spokesmen of the Labour party, and is totally in line with Labour party policy.
Mr. Rifkind: The hon. Gentleman is correct in saying that the hon. Members are Front Bench spokesmen. This document is not issued on behalf of the Shadow Foreign Secretary. He is a Front Bench spokesman with some interest in the European policy of the Labour party. He has not even graced us with his presence this evening. Perhaps he is in Bermondsey. I would not advise my hon. Friends to read this document. I would not advise Opposition Members to read it. It is one of the most turbid documents one could hope to find. It is one of those documents that, once it is put down, is difficult to pick up again.
In its conclusion is a reference to the Labour party being an internationalist party. You could have fooled me, Mr. Speaker. Its belief in internationalism leads it to wish to break up the best example of international co-operation in western Europe. They go on to say:
"We hope that eventually the whole of Europe will be under a democratic socialist system."
It seems that President Mitterrand of France, Mr. Papandreou of Greece and Senor Felipe Gonzales of Spain have not been persuaded that the break-up of Western Europe is necessary to achieve that objective.
The most interesting statement of all is contained in the conclusions, which state:
"We believe in a wider European unity."
I am happy to accept that the hon. Member for Walton is a model European—after all, what is a model but a small imitation of the real thing!
This extraordinary document also states that, after the next Labour Government have withdrawn Britain from the Community, they do not wish to indulge in a siege economy. We are told that the policy of the next Labour Government would be to impose a common external tariff on imports from the Community. It is suggested that this should be a tariff of about 9 per cent., but the hon. Gentleman and his hon. Friend have the nerve to go on to say that they do not expect retaliation, despite the fact that 43 per cent. of our exports go to the Community, whereas only 7 per cent. of Community exports come to the United Kingdom. In those circumstances, retaliation is not only likely but almost inevitable and would be greatly to the disservice of this country.
The hon. Gentleman also said that after withdrawal from the Community the options available to the United Kingdom would be severely limited. He does not anticipate that we should contemplate any agreements with the Community that would inhibit the freedom of a
746
Socialist Government to impose Socialist policies on the United Kingdom. He goes on to state that the power to impose Socialist solutions
"amost certainly excludes rejoining EFTA"
and excludes negotiating
"a bilateral preferential trading agreement with the EEC".
Even Communist Romania and Yugoslavia have bilateral preferential trading agreements with the Community. It seems that the hon. Gentleman's objective is a relationship between Britain and the Community, of which it is now a member, of even less significance than that shared by the Communist states of eastern Europe.
The truth is that the Labour party's whole policy on the Community has become a complete shambles. Its one fixation is Britain's withdrawal from the Community. It has not the faintest idea of what that will lead to or what relationship Britain would then have with the rest of the Community. Indeed, I am reminded of the scathing remarks that Voltaire made about the Opposition of his day 200 years ago, when he said that the Opposition was like a eunuch—it knows what it wants, but it does not know how to get it.
That summarises a Labour party that has rejected the results of the referendum and the trading benefits for our exports to the Community that have developed over the past 10 years. It represents a Labour party that has produced proposals that bear little relationship to the true needs of the United Kingdom and that ignores the fact that the investment that we have achieved over the past 10 years, particularly investment from the United States and Japan, would in all certainty not have come here—
Mr. Heffer rose—
Mr. Rifkind: I shall not give way. It ignores the fact that much of the investment that has come to the United Kindgom over the past few years would not have come but for our membership of the Community.
I understand that a survey this month has shown that the United Kingdom was the first choice for investment by United States electronics companies, half of which said that they would reconsider if Britain were outside the European Community. One quarter of those companies flatly said that they would not have set up in the United Kingdom but for our membership of the Community.
I have no hesitation in rejecting this foolish and absurd amendment, and I invite the House to vote for the Government's motion.
Question put, That the amendment be made:—
The House divided: Ayes 220, Noes 314.

Division No. 73]

[10 pm

AYES

Adams, Allen

Buchan, Norman

Allaun, Frank

Callaghan, Rt Hon J.

Anderson, Donald

Callaghan, Jim (Midd't'n & P)

Archer, Rt Hon Peter

Campbell, Ian

Ashley, Rt Hon Jack

Campbell-Savours, Dale

Ashton, Joe

Cant, R. B.

Atkinson, N. (H'gey.)

Carmichael, Neil

Barnett, Guy (Greenwich)

Carter-Jones, Lewis

Barnett, Rt Hon Joel (H'wd)

Clark, Dr David (S Shields)

Benn, Rt Hon Tony

Clarke, Thomas (C'b'dge, A'rie)

Bennett, Andrew (St'Kp't N)

Cocks, Rt Hon M. (B'stol S)

Bidwell, Sydney

Cohen, Stanley

Booth, Rt Hon Albert

Coleman, Donald

Boothroyd, Miss Betty

Concannon, Rt Hon J. D.

Bottomley, Rt Hon A. (M'b'ro)

Cook, Robin F.

Bray, Dr Jeremy

Cox, T. (W'dsw'th, Toot'g)

Brown, Hugh D. (Provan)

Craigen, J. M. (G'gow, M'hill)

Brown, R. C. (N'castle W)

Crowther, Stan

747

Cryer, Bob

McCartney, Hugh

Cunliffe, Lawrence

McCusker, H.

Cunningham, Dr J. (W'h'n)

McDonald, Dr Oonagh

Dalyell, Tam

McElhone, Mrs Helen

Davidson, Arthur

McGuire, Michael (Ince)

Davies, Rt Hon Denzil (L'lli)

McKay, Allen (Penistone)

Davis, Clinton (Hackney C)

McKelvey, William

Davis, Terry (B'ham, Stechf'd)

McMahon, Andrew

Deakins, Eric

McNamara, Kevin

Dean, Joseph (Leeds West)

McTaggart, Robert

Dewar, Donald

McWilliam, John

Dixon, Donald

Marks, Kenneth

Dormand, Jack

Marshall, D (G'gow S'ton)

Douglas, Dick

Marshall, Dr Edmund (Goole)

Dubs, Alfred

Marshall, Jim (Leicester S)

Duffy, A. E. P.

Martin, M (G'gow S'burn)

Dunnett, Jack

Mason, Rt Hon Roy

Dunwoody, Hon Mrs G.

Maxton, John

Eadie, Alex

Maynard, Miss Joan

Eastham, Ken

Meacher, Michael

Edwards, R. (W'hampt'n S E)

Mikardo, Ian

Ellis, R. (NE D'bysh're)

Millan, Rt Hon Bruce

English, Michael

Miller, Dr M. S. (E Kilbride)

Ennals, Rt Hon David

Mitchell, Austin (Grimsby)

Evans, Ioan (Aberdare)

Molyneaux, James

Evans, John (Newton)

Morris, Rt Hon A. (W'shawe)

Ewing, Harry

Morris, Rt Hon C. (O'shaw)

Faulds, Andrew

Morris, Rt Hon J. (Aberavon)

Field, Frank

Moyle, Rt Hon Roland

Foot, Rt Hon Michael

Mulley, Rt Hon Frederick

Ford, Ben

Newens, Stanley

Forrester, John

O'Halloran, Michael

Foster, Derek

O'Neill, Martin

Foulkes, George

Orme, Rt Hon Stanley

Fraser, J. (Lamb'th, N'w'd)

Palmer, Arthur

Freeson, Rt Hon Reginald

Park, George

Garrett, John (Norwich S)

Parker, John

Garrett, W. E. (Wallsend)

Parry, Robert

George, Bruce

Pavitt, Laurie

Gilbert, Rt Hon Dr John

Pendry, Tom

Golding, John

Powell, Rt Hon J.E. (S Down)

Gourlay, Harry

Powell, Raymond (Ogmore)

Graham, Ted

Prescott, John

Hamilton, James (Bothwell)

Price, C. (Lewisham W)

Hamilton, W. W. (C'tral Fife)

Race, Reg

Hardy, Peter

Radice, Giles

Harrison, Rt Hon Walter

Rees, Rt Hon M (Leeds S)

Hart, Rt Hon Dame Judith

Richardson, Jo

Hattersley, Rt Hon Roy

Roberts, Albert (Normanton)

Haynes, Frank

Roberts, Allan (Bootle)

Healey, Rt Hon Denis

Roberts, Ernest (Hackney N)

Heffer, Eric S.

Roberts, Gwilym (Cannock)

Hogg, N. (E Dunb't'nshire)

Robertson, George

Holland, S. (L'b'th, Vauxh'Il)

Robinson, G. (Coventry NW)

Home Robertson, John

Rooker, J. W.

Homewood, William

Ross, Ernest (Dundee West)

Hooley, Frank

Ross, Wm. (Londonderry)

Howell, Rt Hon D.

Rowlands, Ted

Hoyle, Douglas

Sever, John

Hughes, Mark (Durham)

Sheerman, Barry

Hughes, Robert (Aberdeen N)

Sheldon, Rt Hon R.

Hughes, Roy (Newport)

Shore, Rt Hon Peter

Janner, Hon Greville

Short, Mrs Reneée

Jay, Rt Hon Douglas

Silkin, Rt Hon J. (Deptford)

John, Brynmor

Silkin, Rt Hon S. C. (Dulwich)

Johnson, James (Hull West)

Silverman, Julius

Jones, Rt Hon Alec (Rh'dda)

Skinner, Dennis

Jones, Barry (East Flint)

Smith, Rt Hon J. (N Lanark)

Kaufman, Rt Hon Gerald

Smyth, Rev. W. M. (Belfast S)

Kerr, Russell

Snape, Peter

Kilroy-Silk, Robert

Soley, Clive

Lambie, David

Spearing, Nigel

Leadbitter, Ted

Spellar, John Francis (B'ham)

Leighton, Ronald

Spriggs, Leslie

Lestor, Miss Joan

Stallard, A. W.

Lewis, Arthur (N'ham NW)

Stoddart, David

Lewis, Ron (Carlisle)

Stott, Roger

Litherland, Robert

Straw, Jack

Lofthouse, Geoffrey

Summerskill, Hon Dr Shirley

Lyon, Alexander (York)

Taylor, Mrs Ann (Bolton W)

748

Thomas, Dr R. (Carmarthen)

Whitlock, William

Thorne, Stan (Preston South)

Wigley, Dafydd

Tinn, James

Willey, Rt Hon Frederick

Torney, Tom

Williams, Rt Hon A. (S'sea W)

Varley, Rt Hon Eric G.

Wilson, Rt Hon Sir H. (H'ton)

Wainwright, E. (Dearne V)

Wilson, William (C'try SE)

Walker, Rt Hon H. (D'caster)

Winnick, David

Warden, Gareth

Woodall, Alec

Watkins, David

Woolmer, Kenneth

Weetch, Ken

Wright, Sheila

Welsh, Michael

White, Frank R.

Tellers for the Ayes:

White, J. (G'gow Pollok)

Mr. George Morton and

Whitehead, Phillip

Mr. Harry Cowans.

NOES

Adley, Robert

Costain, Sir Albert

Aitken, Jonathan

Cranborne, Viscount

Alexander, Richard

Critchley, Julian

Alison, Rt Hon Michael

Crouch, David

Alton, David

Dorrell, Stephen

Ancram, Michael

Douglas-Hamilton, Lord J.

Arnold, Tom

Dover, Denshore

Aspinwall, Jack

du Cann, Rt Hon Edward

Atkins, Rt Hon H. (S'thorne)

Dunn, Robert (Dartford)

Atkins, Robert (Preston N)

Dykes, Hugh

Atkinson, David (B'm'th,E)

Eden, Rt Hon Sir John

Baker, Kenneth (St.M'bone)

Edwards, Rt Hon N. (P'broke)

Baker, Nicholas (N Dorset)

Eggar, Tim

Banks, Robert

Elliott, Sir William

Beaumont-Dark, Anthony

Ellis, Tom (Wrexham)

Beith, A. J.

Emery, Sir Peter

Bendall, Vivian

Eyre, Reginald

Bennett, Sir Frederic (T'bay)

Fairbairn, Nicholas

Benyon, Thomas (A'don)

Fairgrieve, Sir Russell

Benyon, W. (Buckingham)

Faith, Mrs Sheila

Berry, Hon Anthony

Farr, John

Best, Keith

Fell, Sir Anthony

Bevan, David Gilroy

Fenner, Mrs Peggy

Biffen, Rt Hon John

Finsberg, Geoffrey

Biggs-Davison, Sir John

Fisher, Sir Nigel

Blackburn, John

Fletcher, A. (Ed'nb'gh N)

Blaker, Peter

Fletcher-Cooke, Sir Charles

Bonsor, Sir Nicholas

Fookes, Miss Janet

Bottomley, Peter (W'wich W)

Forman, Nigel

Bowden, Andrew

Fowler, Rt Hon Norman

Boyson, Dr Rhodes

Fox, Marcus

Bradley, Tom

Fraser, Rt Hon Sir Hugh

Braine, Sir Bernard

Fraser, Peter (South Angus)

Bright, Graham

Fry, Peter

Brinton, Tim

Gardiner, George (Reigate)

Brittan, Rt. Hon. Leon

Gardner, Sir Edward

Brooke, Hon Peter

Garel-Jones, Tristan

Brotherton, Michael

Gilmour, Rt Hon Sir Ian

Brown, Michael (Brigg & Sc'n)

Ginsburg, David

Brown, Ronald W. (H'ckn'y S)

Goodhart, Sir Philip

Browne, John (Winchester)

Goodhew, Sir Victor

Bruce-Gardyne, John

Good lad, Alastair

Bryan, Sir Paul

Gorst, John

Buchanan-Smith, Rt. Hon. A.

Gow, Ian

Buck, Antony

Gower, Sir Raymond

Budgen, Nick

Grant, Sir Anthony

Burden, Sir Frederick

Gray, Rt Hon Hamish

Butcher, John

Greenway, Harry

Butler, Hon Adam

Grieve, Percy

Carlisle, John (Luton West)

Griffiths, E. (B'y St. Edm'ds)

Carlisle, Kenneth (Lincoln)

Griffiths, Peter (Portsm'th N)

Carlisle, Rt Hon M. (R'c'n)

Grist, Ian

Cartwright, John

Grylls, Michael

Chalker, Mrs. Lynda

Gummer, John Selwyn

Channon, Rt. Hon. Paul

Hamilton, Hon A.

Chapman, Sydney

Hamilton, Michael (Salisbury)

Churchill, W. S.

Hampson, Dr Keith

Clark, Hon A. (Plym'th, S'n)

Hannam, John

Clark, Sir W. (Croydon S)

Haselhurst, Alan

Clarke, Kenneth (Rushcliffe)

Hastings, Stephen

Cockeram, Eric

Hawkins, Sir Paul

Colvin, Michael

Hayhoe, Barney

Cope, John

Heath, Rt Hon Edward

Corrie, John

Heddle, John

749

Henderson, Barry

Mayhew, Patrick

Heseltine, Rt Hon Michael

Mellor, David

Hicks, Robert

Meyer, Sir Anthony

Higgins, Rt Hon Terence L.

Miller, Hal (B'grove)

Hill, James

Mills, Sir Peter (West Devon)

Hogg, Hon Douglas (Gr'th'm)

Moate, Roger

Holland, Philip (Carlton)

Monro, Sir Hector

Hooson, Tom

Montgomery, Fergus

Horam, John

Moore, John

Hordern, Peter

Morgan, Geraint

Howe, Rt Hon Sir Geoffrey

Morris, M. (N'hampton S)

Howell, Rt Hon D. (G'Idf'd)

Morrison, Hon C. (Devizes)

Howell, Ralph (N Norfolk)

Mudd, David

Howells, Geraint

Murphy, Christopher

Hunt, David (Wirral)

Myles, David

Hunt, John (Ravensbourne)

Neale, Gerrard

Irvine, Rt Hon Bryant Godman

Needham, Richard

Irving, Charles (Cheltenham)

Nelson, Anthony

Jenkin, Rt Hon Patrick

Neubert, Michael

Jessel, Toby

Newton, Tony

Jopling, Rt Hon Michael

Nott, Rt Hon Sir John

Joseph, Rt Hon Sir Keith

Onslow, Cranley

Kaberry, Sir Donald

Oppenheim, Rt Hon Mrs S.

Kershaw, Sir Anthony

Osborn, John

Kimball, Sir Marcus

Page, John (Harrow, West)

King, Rt Hon Tom

Page, Richard (SW Herts)

Kitson, Sir Timothy

Parkinson, Rt Hon Cecil

Knight, Mrs Jill

Parris, Matthew

Knox, David

Patten, Christopher (Bath)

Lamont, Norman

Patten, John (Oxford)

Lang, Ian

Pattie, Geoffrey

Langford-Holt, Sir John

Pawsey, James

Latham, Michael

Penhaligon, David

Lawrence, Ivan

Percival, Sir Ian

Lawson, Rt Hon Nigel

Pink, R. Bonner

Lee, John

Pollock, Alexander

Le Merchant, Spencer

Porter, Barry

Lennox-Boyd, Hon Mark

Prentice, Rt Hon Reg

Lester, Jim (Beeston)

Price, Sir David (Eastleigh)

Lewis, Sir Kenneth (Rutland)

Proctor, K. Harvey

Lloyd, Ian (Havant & W'Ioo)

Rathbone, Tim

Lloyd, Peter (Fareham)

Rees, Peter (Dover and Deal)

Loveridge, John

Renton, Tim

Lyell, Nicholas

Rhodes James, Robert

Lyons, Edward (Bradf'd W)

Rhys Williams, Sir Brandon

McCrindle, Robert

Ridley, Hon Nicholas

Macfarlane, Neil

Ridsdale, Sir Julian

MacGregor, John

Rifkind, Malcolm

Maclennan, Robert

Rippon, Rt Hon Geoffrey

Macmillan, Rt Hon M.

Roberts, Wyn (Conway)

McNair-Wilson, M. (N'bury)

Rodgers, Rt Hon William

McNair-Wilson, P. (New F'st)

Roper, John

McNally, Thomas

Rossi, Hugh

Madel, David

Rost, Peter

Major, John

Royle, Sir Anthony

Marland, Paul

Rumbold, Mrs A. C. R.

Marlow, Antony

Sainsbury, Hon Timothy

Marshall, Michael (Arundel)

St. John-Stevas, Rt Hon N.

Marten, Rt Hon Neil

Sandelson, Neville

Mates, Michael

Scott, Nicholas

Maude, Rt Hon Sir Angus

Shaw, Sir Michael (Scarb')

Mawby, Ray

Shelton, William (Streatham)

Mawhinney, Dr Brian

Shepherd, Colin (Hereford)

Maxwell-Hyslop, Robin

Silvester, Fred

750

Sims, Roger

Vaughan, Dr Gerard

Skeet, T. H. H.

Viggers, Peter

Smith, Sir Dudley

Waddington, David

Smith, Tim (Beaconsfield)

Wakeham, John

Speed, Keith

Waldegrave, Hon William

Spence, John

Walker, Rt Hon P. (W'cester)

Spicer, Jim (West Dorset)

Walker, B. (Perth)

Spicer, Michael (S Worcs)

Walker-Smith, Rt Hon Sir D.

Sproat, Iain

Wall, Sir Patrick

Squire, Robin

Waller, Gary

Stainton, Keith

Walters, Dennis

Stanbrook, Ivor

Ward, John

Stanley, John

Warren, Kenneth

Steel, Rt Hon David

Watson, John

Steen, Anthony

Wells, Bowen

Stevens, Martin

Wells, John (Maidstone)

Stewart, A. (E Renfrewshire)

Wheeler, John

Stewart, Ian (Hitchin)

Whitelaw, Rt Hon William

Stokes, John

Whitney, Raymond

Stradling Thomas, J.

Wickenden, Keith

Tapsell, Peter

Wiggin, Jerry

Taylor, Teddy (S'end E)

Wilkinson, John

Temple-Morris, Peter

Williams, D. (Montgomery)

Thomas, Rt Hon Peter

Williams, Rt Hon Mrs (Crosby)

Thompson, Donald

Winterton, Nicholas

Thorne, Neil (Ilford South)

Young, Sir George (Acton)

Thornton, Malcolm

Younger, Rt Hon George

Townend, John (Bridlington)

Townsend, Cyril D, (B'heath)

Tellers for the Noes:

Trippier, David

Mr. Carol Mather and

van Straubenzee, Sir W.

Mr. Robert Boscawen.

Question accordingly negatived
Main Question put and agreed to
Resolved,
That this House takes note of European Community Documents Nos. 4348/83 (Amended proposal for contracting loans under the New Community Instrument for the purpose of promoting investment within the Council), 10960/81 (Mandate of 30th May 1980—Report on the application of the Financial Mechanism), 5980/82 and 8874/82 (Commission's second and third reports on the implementation of supplementary measures in favour of the UK), COM(83)23 (Preliminary draft supplementary and amending budget No. 1 for 1983), the subsequent draft supplementary and amending budget No. 1 for 1983, 4417/83 (Proposal for a Council regulation amending Regulation No. 2744/80 establishing supplementary measures in favour of the UK), 4418/83 (Proposal for a Council regulation establishing specific measures of Community interest relating to energy strategy), 11125/82 (Communication from the Commission on the compensation for the UK: the subsequent solution), 4826/83 (Commission communication on the future financing of the Community); and supports Her Majesty's Government's efforts to negotiate arrangements for the Community budget which will ensure that the sharing of burdens between member states is equitable.

European Community Budget

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Motion relating to Ways and Means may be proceeded with, though opposed, until any hour.—[Mr. Lane.]

Orders of the Day

  Parliamentary Constituencies (Wales)
  Order read for resuming adjourned debate on Question—[16 February]—
  That the draft Parliamentary Constituencies (Wales) Order 1983, which was laid before this House on 7th February, be approved.—[Mr. Mayhew.]
  Question again proposed.
  10.14 pm
  Mr. Tom Ellis: When the debate was adjourned last week, I was commenting on one or two points that had been made by hon. Members. The right hon. Member for Rhondda (Mr. Jones) said that the Boundary Commission for Wales was incompetent, at least to the extent that it failed to appreciate the need for what he called natural communities. In some wards or villages there might have been aberrations in that aspect of the Boundary Commission's work. I cannot discuss individual issues in parts of the country that I do not know, but if the right hon. Gentleman is serious about having natural communities represented by an electoral system, he will have to depart from the present system. It cannot be done under that system. For example, Cardiff, North-East, or Cardiff, West, or Cardiff, Central, or Cardiff, South-East can hardly be regarded as natural constituencies. Clearly, the natural constituency is Cardiff. One could say "I am the Member for Cardiff', and that would sound natural. Cardiff, North-East or Central or West is quite the opposite of a natural constituency.
  Let us consider the present position of the hon. Member for Flint, East (Mr. Jones). The error there will be rectified as a consequence of boundary changes in the county arrangements, but his constituency is at present three distinct parts of the county, separated by chunks of the old county of Denbighshire. It has the industrial complex along Deeside, with its steel making, textiles and aircraft manufacture. It has a small patch of the old Flintshire, with a population of about 1,000. That is essentially a dormitory suburb for Chester, Merseyside and the Wirral. Then there is a rural part of Flintshire, called Flintshire detached, with a population of about 5,000 to 6,000 people. That community is entirely different from the hon. Gentleman's present main base in industrial Deeside. It is an example of what was forced on the then Boundaries Commission, which had to accept unnatural communities because of the rules imposed on it by this House. Therefore, I cannot see the strength of the right hon. Gentleman's argument.
  Mr. Alec Jones: Despite the hon. Gentleman's lack of knowledge of south Wales—I have the same lack of knowledge of north Wales—he will accept that for a commission to produce a proposal suggesting that Aberfan village is not a part of the community of Merthyr seems to imply that the report was not based on much real knowledge of community life, certainly in the valleys of south Wales.
  Mr. Ellis: The feature of the Boundary Commission's work over the past three to four years that has struck me more than anything else has been its readiness to respond to evidence put before it. I should have thought that the right hon. Gentleman would be pleased that the
  752
  commission, to the limit of its ability, and given the terms of reference forced on it by our present electoral system, accepted the evidence presented to it about Aberfan.
  The hon. Member for Flint, West (Sir A. Meyer) said that he thought that the Boundary Commission had been far too radical and enthusiastic. He said that there were really no problems in Wales, at least compared with some of the problems that existed in England. He pointed out, for example, that we have no rotten boroughs, no deserted city centres, and so on, and that all that was needed was to tidy up a little and take account of shifts in population. I can only say that the hon. Gentleman must be living in a dream world. In north Wales, which is his part of the world and mine, we have the two counties of Gwynedd and Clwyd, which under the old dispensation would each have had four constituencies. The voting population on the 1981 count in Clwyd was 296,000, and the voting population in Gwynedd on the 1981 count was 176,000—a discrepancy of nearly 2 to 1. If Gwynedd and Clwyd were each to remain with four constituencies, the whole point of trying to get an electoral quota, or something approaching an electoral quota, would have been a nonesense. A further point arises. When the commission decided to give five constituencies to Clwyd and three to Gwynedd to meet the requirements laid on it to try to approach as near as possible the electoral quota, it meant that a particular constituency—what one might call the Welsh language constituency—was disfranchised. The rural Welsh-speaking, hill-farming Merioneth was being attached to the hotel, boarding house, coastal strip of Llandudno and was virtually subsumed within that strip, which is an entirely different society and constituency.
  In order to obtain an electoral quota of somewhere within 10 per cent., and at the same time to arrange for representation of those constituencies, the only real answer is that which would have met the case of the right hon. Member for Rhondda—multi-member constituencies. That could easily be done but it means an entirely different electoral system.
  If the objectors to the various proposals are serious in their claim that they are anxious to obtain genuine democratic and fair representation, they must face up to the fact that they cannot do that and at the same time insist on retaining the present system.
  Several Hon. Members rose—
  Mr. Speaker: Order. I want to call as many hon. Members who represent Welsh constituencies as I can, but I understand that the hon. Member for Goole (Dr. Marshall) has a special point to make.
  10.20 pm
  Dr. Edmund Marshall: I rise as a mere Englishman to seek clarification on two points that were raised before the start of the debate on 16 February.
  First, my hon. Friend the Member for Ogmore (Mr. Powell) asked who was entitled on such occasions to sit in the place which is normally recognised to be that reserved for special Government advisers. If, on an occasion such as this, we have in that place within the precincts of the House an official of the Boundary Commission, the Government would have somebody to advise them whom they claim is an official of a completely independent body.
  At Question Time on Thursday 17 February, the Prime Minister said:

  753
  "I agree that the Boundary Commission's decisions are independent".—[Official Report, 17 February 1983; Vol. 37, c. 466.]
  The Government cannot have it both ways. Either they regard the Boundary Commission as independent of and separate from the Government or they do not. If it is not independent of the Government, we shall know the Boundary Commission's recommendations for what they may be worth. If the Boundary Commission is independent of the Government, there is no place for a Boundary Commission official in the place reserved for Government advisers. The Government must consider their position on that matter closely so that future such orders will be debated in a proper manner.
  Secondly, prior to the previous debate I raised a matter related to the spelling of one ward in the definition of the Vale of Glamorgan constituency—"Peterson-super-Ely". If that were a spelling or typographical error, I can understand that all hon. Members might regard it as a trivial point to make. However, it now appears that the spelling of "Peterson-super-Ely" in the draft order was a deliberate modification by the Government of the spelling of that ward's name as it appears in the Boundary Commission's report. If there has been a deliberate modification of the spelling of Peterston-super-Ely—it is a place which you, Mr. Speaker, know well and of which you know the correct spelling—under the terms of the statutes governing the procedure for bringing such orders before the House, the Home Secretary is required to give his formal reason for such a modification. It was shown last Wednesday evening that such a reason has to be part of the order laid before the House. Hon. Members need full clarification from the Minister on both these points.
  10.25 pm
  Mr. Geraint Morgan: My observations will be confined to the county of Clwyd to which reference has already been made by the hon. Member for Wrexham (Mr. Ellis). I wish particularly to draw the Home Secretary's attention to the Boundary Commission's proposals for that county, now enshrined in the draft order, and to ask him to recast its provisions, as he and the House have the power to do. I appreciate that this is asking a lot of any Home Secretary at this stage. The Boundary Commission is an entirely independent body. Any tinkering with its findings by the Government is apt to create the suspicion, however unworthy, that it savours of gerrymandering and seeking to obtain some party political advantage by so doing.
  I submit that the recommendations relating to Clwyd are so unreasonable and involve so much unnecessary and purposeless ripping up of historic boundaries and community ties that have stood the test of time that my right hon. Friend would be fully entitled to and should review the recommendations in the interests of sensible redistribution, which all hon. Members would accept. My point is that the commission could have effected its purpose, adhering in so doing to the principle both of creating electorates of almost equal numbers and of not crossing county boundaries, just as well, if not better, by having regard to old-established and historic community links, as, indeed, the redistribution rules enjoin it to do. However, these links are so completely ignored that one is left with the impression that it was felt that there was some signal virtue in so doing. Such an attitude, in my view, cannot be right.
  754
  The effect of the recommendations for the county of Clwyd is that five constituencies will be created in place of the virtual four that exist now. I say "virtual" because, ever since the local government reorganisation came into force in 1974, there has been a parliamentary overlapping of the boundary between Clwyd and Gwynedd.
  A sizeable proportion of the present Merioneth constituency has been in Clwyd and a smaller but more populous area of my constituency of Denbigh has been in Gwynedd. I mention this particularly, because no reasonable person could have any quarrel with the commission's proposals to straighten out constituency boundaries and make them coterminous with the new county boundaries. Most people accepted that this would be inevitable when the next parliamentary redistribution took place after local government reorganisation.
  One could not fairly find fault with the commission's recommendations that the county of Clwyd should contain five constituencies. Clwyd has the fastest growing population of any county in Wales. The increase in the number of its electorate clearly justified the creation of five seats. If one divides the 1981 electorate of Clwyd by five, one arrrives at a figure of 59,191, which is almost the identical figure fixec by the commission as the optimum quota of 58,753 for the average Welsh constituency.
  The commission was therefore plainly right in deciding that four constituencies would be too few and equally justified in rejecting the rather bizarre suggestion put forward by the Clwyd county council and by at least one district council that there should be six. This fanciful and unrealistic notion seemed to be based on the idea that there should be a Member of Parliament for every borough or district council, of which there are 37 in Wales. I doubt whether this would be a good basis or a parliamentary constituency in any event, much as it might please some chief executives. It was a non-starter both in Clwyd and in Wales generally, because it ignored the vast disparity in the numbers of electors in various borough and council areas. The result of adopting this system would have been to defeat the basic purpose of redistribution—achieving a comparative equality of numbers in electorates.
  So far, so good, but at this point I entirely part company with the commissioners, who, in their proposed redrawing of Clwyd constituency boundaries, appear to have been obsessed with the numbers game to the exclusion of almost every other consideration. To achieve this, they ignored not only historic community links, but even the local government boundaries created as recently as 1974, to which the local inhabitants are only just beginning to become accustomed.
  For example, a proposed new constituency boundary would run, without any rhyme or reason whatever, right through the areas of the Colwyn and Rhuddlan borough councils. Indeed, one might be forgiven for thinking that the commission was all set to disturb the new local government entities painstakingly brought into being in 1974. A particular absurdity in Clwyd is the separation into different constituencies of the towns of Rhyl and Prestatyn, united for local government purposes in 1974, which have so much affinity with each other that there is virtually no visible demarcation line between them.
  In passing, I mention—mainly, though not wholly, as a matter of historic interest—that the redistribution will mean that, for the first time since 1552, the names of Flint and Denbigh will disappear from the list of constituencies

  755
  represented in the House. It is interesting that the first representatives of Flint and Denbigh sat in the House alongside the last representative for Calais.
  The commission's proposals can be fairly criticised on another ground, too. In its zeal to achieve equal numbers of electors, it recommends constituencies that are grotesquely out of balance in geographical area. That is particularly reprehensible, because there is at present a great imbalance in the sizes of the Clwyd constituencies—Denbigh, with an area of well over 500 sq miles, being bigger than Flint, East, Wrexham and Flint, West put together. Instead of seeking to redress that imbalance, the commission has made it much worse by recommending the creation of a vast new constituency of South-West Clwyd, which would stand out on an electoral map of north Wales rather like the state of Texas on a map of the United States.
  Perhaps I might digress at this point to say a word or two about the proposed South-West Clwyd constituency, which is a smudgy amalgam, if I may use that honoured expression, if ever there was one. It lumps together areas that have virtually no affinity with each other. Districts like the industrial fringe of Wrexham, largely Anglicised in speech, are thrown in with distant agricultural areas like Edeyrnion where the Welsh language is as strong as anywhere in Wales.
  Small wonder, therefore, that this strange creation was condemned from the outset, not only by my party, but by Liberals and Socialists. The critics included, for example, the Maelor-Wrexham borough council and the Rhosllanerchrugog community council—neither of which is, I imagine, exactly a power house of Toryism in Wales—and, even more significantly, the group of Welsh Labour MPs and the Welsh Labour party.
  All the criticism was rightly based on the undoubted fact that there was no affinity between the vastly different areas and the interests that it was proposed to fling together in the new constituency. I remember that the Liberal candidate for Denbigh was moved to write to the Denbighshire Free Press and he permitted himself a mild witticism when he said that the Liberals would never agree to a shotgun marriage between Llanfar Talhaiarn and Esclusham Below or Esclusham Above—Llanfar Talhaiarn being in the Welsh-speaking area of the old county of Denbigh and the other quaintly named places being in the Anglicised area around Wrexham.
  My party in Clwyd, having given due weight to the need to adhere to county boundaries, on the one hand, and to increase the number of constituencies to five, on the other, produced, after the most careful consideration, some counter proposals that would have retained, to some extent—for they could do no more—the old Denbigh and Flint, West constituencies, even though the former would have had to cede a good deal of territory in the south to the new fifth seat. These proposals had the merit of preserving many community links, making the geographical size of the new constituencies more balanced and equitable, and, last but not least, achieving an even better equality in electoral numbers than those of the commission.
  I am afraid that these excellent proposals were wrecked by the attitude adopted by those who turned up at the inquiries, particularly Socialist representatives who did a complete volte-face from their attitude of condemnation.
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  I do not quite know what to say about the Liberals, because they quarrelled among themselves and with their partners in the alliance.
  The assistant commissioner—this is not without significance—in his report to the commission said that, had it been left to him, he would have preferred the Clwyd Conservatives' proposals to those of the commissioners. He went on to say, as he was bound to, that he was unable to recommend any acceptance because all the other political parties had either opposed or not supported them. One can readily understand the quandary in which he found himself.
  As I said, it would be most unusual for the Home Secretary to interfere at this stage. However, I am asking him to do that on three grounds. First, the assistant commissioner expressed the unequivocal opinion that the counter proposals were preferable to those of the commission. Secondly, having come to that conclusion, he was wrong—loyalists would say that he misdirected himself—in not recommending that the counter proposals be accepted because there was no consensus among the political parties about them. Thirdly, in any event, so far as this is or should be material in this context, there had been such full consensus among the political parties at the outset.
  Procedurally, this would mean the withdrawal and redrafting of the order. There can be no doubt in my view, in the interests of reasonable and equitable redistribution of constituencies in Clwyd, that that is the only proper course for the Home Secretary to take.
  Several hon. Members rose—
  Mr. Speaker: Order. I remind the House that the debate will last for an hour and a half. I hope that hon. Members will bear that in mind, so that all who wish to speak can be called.
  10.37 pm
  Mr. Dafydd Wigley: I welcome the new Minister of State, Welsh Office to the Front Bench. I am glad that his long Trappist period is coming to an end.
  There has been condemnation of the report of the commissioners from both sides of the House, both in the first part of the debate and tonight. However, we should differentiate between the first report and proposals that the commissioners made and the eventual outcome. The first proposals were a load of nonsense. They were lines on maps that took no notice of natural communities. They must have been put together rapidly and with little thought. However, the second and final proposals, following the hearings, were very different. I have the impression, as have other hon. Members, that there had been a positive response to the commissioners' representations from all parts of Wales. There was a great difference between the final report and the first tentative proposals.
  That is something that I welcome and that all hon. Members should welcome. The procedure of holding local hearings has borne fruit. That is all to the good. However, those local hearings could have been all the more valuable had the first set of suggestions been more sensible. That would have enabled us to look constructively at the detail rather than have to oppose, lock, stock and barrel. We could have looked in detail at some of the proposals, particularly the more nonsensical ones such as the one

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  suggesting that Aberavon should go into the Aberdare constituency, and in the north, that the Merioneth constituency should run through into Llandudno. It will be useful to put on record some of the points that future commissions should be considering in greater detail at an earlier stage, to avoid that sort of difficulty.
  The commission was given very strict guidelines—or at least it interpreted them very strictly—to adhere to county boundaries and to adhere to a norm, or a quota, for a seat. In the event, in order to get constituencies that had any meaning in community terms, the commission had to depart from that strict quota or average figure.
  I think that commissions would in future be well advised, rather than going rigidly for an average of 58,000 or however many votes, to start with a plus or minus 10 or 15 per cent. and to have a greater consideration of the community of interest.
  In looking back to the discussion in 1948, when perhaps the greatest debates took place in this Chamber—the background to the present legislation—we can see that it was then clear that Wales, Scotland, and perhaps parts of England, had greater representation for specific reasons. Those specific reasons included the sparsity of population, the difficulties of travel and the geographical nature of those areas.
  Future commissions in Wales should bear in mind that if Wales is, purely statistically, over-represented—with 36 seats compared with 31 or 32 on a straight British average—that over-representation is because of specific characteristics of Welsh geography, Welsh topology and sparsity of population. If it is right to have more seats on account of those geographic characteristics, those extra seats should be in the areas where the geographic characteristics themselves exist. In other words, an over-representation in Wales in average terms should not be used as an excuse for over-representation in those areas where there are no justifiable characteristics leading to such a representation.
  The second question is whether being coterminous with country boundaries is such an overwhelmingly important basis for a commission's consideration. We have heard only a moment ago of the uniting of Colwyn Bay and Llandudno as one seat. Many people could argue that the uniting of Colwyn Bay and Llandudno would make a much more natural and homogeneous area, but that, of course, would go across the county boundaries.
  I suggested in my evidence to the commission—I think that many other hon. Members have the same feeling—that on a day-to-day basis we have much more affinity and much more to do with district councils than with county councils. Indeed, an analysis of my correspondence over a period of 12 months showed that there was three times as much correspondence with the district council as there was with the county council. That should be borne in mind.
  There are other equally important boundaries, such as the boundaries of the local DHSS or of the Department of Employment office. There are many parameters that come into the judgment and not just one overriding parameter, the county boundary, as has been put forward.
  The final report seems to a large extent to be much more sensible than the first one. In giving 38 seats to Wales rather than 36, it overcomes some of the problems. It gives Wales a little more voice in this House. We in Plaid Cymru do not accept that that is anything like what we need to overcome our problems in Wales. But, having said all
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  that, we appreciate the way in which the commission listened at the inquiries, and we are grateful that the final report is that much better than the original proposals.
  10.43 pm
  Dr. Roger Thomas: May I move the debate to the south-west part of Wales, to the county of Dyfed, and state that there is a unanimity of opinion within the present county of Pembroke—or rather within the Pembroke constituency that since 1974 has been within the enlarged county of Dyfed—that the constituency boundaries should remain the same. That opinion cuts right across all party political divisions, and it is with some regret that one is forced to be critical of the Boundary Commission in choosing to ignore such a great weight of public opinion. It is, of course, at present the constituency of the Secretary of State for Wales.
  When there was a comparatively minor health reorganisation in Wales, the Dyfed health authority was divided into a Pembroke health authority and the remainder of Dyfed into the much larger East Dyfed health authority.
  It appears that the proposed boundary change runs wholly counter to that employed in making the present constituency coterminous with the new health authority. If the changes go through part of the Pembroke health authority will be in the new constituency of Ceredigion and the much larger southern part, including the district general hospital at Haverfordwest will be in the Pembrokeshire constituency.
  Alternative proposals have been put forward to the effect that there should be a tolerance of some 20,000 in the electoral quota on the ground that to use the electorate as the sole criterion was to ignore the great variations in the geographical and sociological features in Wales. Although the present Pembroke constituency has the third largest electorate in Wales, to my knowledge no complaints have been received to the effect that the area is under-represented. The absence of support for the provisional recommendations shows that the electorate is satisfied with the constituency and the status quo, if not with the status quo of the Member.
  Due account should be taken of the special geographical considerations—the size, shape and accessibility of the area. The peninsular nature of the former Pembrokeshire makes it a distinct geographical entity and any attempt to hive off part to another parliamentary constituency would be a patently artificial device aimed at complying with the rules of the numbers game.
  Whereas all Pembroke polling stations are now within a 30-mile radius of Haverfordwest, the commission's proposals would result in some polling stations being as far as 50 or 60 miles from Aberystwyth on which the Cardigan constituency is based. Besides being out of line with district council boundaries, the proposed new constituencies would divide other units of local government and associated bodies—the Pembrokeshire health authority, the petty sessional divisions of Dewsland, Fishguard, Haverfordwest and Narberth, the South Wales tourism council and the Development. Board for Rural Wales.
  It is probably true to say that no area of the United Kingdom resisted the 1974 local government reorganisation as vocally or vehemently as did Pembrokeshire. More

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  than eight years on, the "Bring back Pembrokeshire" campaign is no less active than it was in 1974, as witness the number of car stickers to that effect still in the county.
  Pembrokeshire generally regards itself still as a sociological entity. As a political entity, it now exists only as a parliamentary constituency, but any attempt to complete the task of political dismemberment would be seen as flying in the face of other developments which have tended to restore the Pembrokeshire identity.
  May I say on behalf of a large section of the Pembrokeshire constituency, in particular the Presili district council, for the wards which are being transferred from the Pembrokeshire constituency into the new Ceredigion constituency, that they have taken soundings of local opinion in their wards and have encountered complete opposition to the idea of change in the parliamentary constituency boundaries, thus taking them into the Ceredigion constituency.
  It is the common view that special geographical considerations and local ties should be given precedence over any attempt to approximate to an arbitrary electoral quota in determining the pattern of parliamentary representation in south-west Wales. I therefore ask the Home Secretary to reject the revised recommendations of the Boundary Commission for Wales and to retain the Pembroke county constituency in its present form.
  10.49 pm
  Mr. Gareth Wardell: I confine my attention to three points regarding the commission's proposals for Gower.
  First, paragraph 157 reads:
  "The Gower constituency (59,792) was of a suitable size to remain unaltered, but the electorate of the adjoining Swansea West constituency (66,826) was too large to remain unchanged."
  The county of Pembroke is recommended by the commission to have an electorate of 66,998. Yet that figure is too large for Swansea, West. No doubt there are excellent reasons to be found somewhere for such apparent jiggery-pokery.
  Secondly, the three north-eastern wards of the Gower constituency are to be included in the constituency of Neath. The rationale for this change comes in this deeply convincing sentence in paragraph 161:
  "These three eastern wards were linked by main road to Neath."
  There is not a word about the fact that the main pattern of communication lies along the Amman, Swansea and Neath valleys, which run in a north-easterly to south-westerly direction. There is not a hint that the largely Welsh-speaking community, with its rich culture, is to be linked to a mainly English-speaking community. There is no mention of the fact that the proposed parliamentary boundary will split in two the large village of Pontardawe. There is not even a murmur that the transference of these wards will end the inclusion of the entire Lliw valley borough council in the constituency of Gower.
  Thirdly, the Commission proposes the transfer of Mumbles to the Gower constituency. The evidence and rationale for that are given in paragraph 162:
  "This was the southernmost ward of the present Swansea West constituency and seemed to have some affinity with the Gower peninsula."
  What an intriguing sentence! The latter part is worthy of repetition:
  "and seemed to have some affinity with the Gower peninsula."
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  If such a description of Mumbles had been offered by a secondary school pupil in a geography O-level examination, "Waffle" would have been confidently written on the script. No assistant examiner worth his salt, certainly in the Welsh joint education committee, could ignore such imprecision.
  What could the commissioners have had in mind? If we assume that they were not using the word "affinity" in its chemical sense, perhaps they meant a structural resemblance between Mumbles and the Gower peninsula. Where does that lead us? The truth is that on virtually all criteria, Mumbles is inextricably linked with the city of Swansea. Indeed, it is a suburb of that city. Of course, affinity may be found between two areas almost anywhere on terra firma. It is clear that an adept geographer has managed to convince a spatially inept commission that insignificant similarities are elevated to the rank of affinity, while no mention is made of the obvious and significant similarities.
  Those three points convince me that the Boundary Commission for Wales has produced a most unsatisfactory report. How much better it would have been had the commission turned its attention to the words of Robert Frost in "Mending Wall":
  "Before I built a wall I'd ask to know
  What I was walling in or walling out,
  And to whom I was like to give offense."
  The commission has redrawn lines on a map, but I give the warning that bad boundaries make bad neighbours.
  10.55 pm
  Mr. Roy Hughes: I was interested in the remarks of my hon. Friend the Member for Goole (Dr. Marshall) about the commissioners. The words "independent" and "impartial" have been bandied about, but in Welsh terms such terminology is untruthful. The figures are not representative of life in Wales—they are establishment figures. As late as the election of 1966, the Tory representation of Wales could have been brought to the House in a Mini with space to spare. Those people have no identity with the majority of opinion about the life of Wales. My hon. Friend asked about the secretary to the commission advising the Government from the box. Any last vestige of impartiality tends to go by the board.
  Some have been surprised by the interest shown in the proposed Welsh boundary changes. People have now realised the diabolical changes that are being foisted on the people of Wales. The hon. Member for Flint, West (Sir A. Meyer) spoke about some of my colleagues and myself trying
  "to cheat the hangman's noose."—[Official Report, 16 February; Vol. 37, c. 421.]
  All that we are trying to do is to resist the iniquitous proposals that are so detrimental to the life of Wales.
  One can ask oneself "What has Wales ever had from the Tories?" Gerrymandering in Wales has been one of the least of their crimes. As a result of this terrible Conservative Government, Wales is now experiencing mass unemployment on a scale that it has not known for the past 50 years.
  The commissioners simply drew lines on a map, based on numbers. They showed complete ignorance of life of Wales and ignored our mountains, valleys and, above all, our communities. Under the revised proposals, only one constituency is the same as in the original proposals. That, to say the least, is significant. but the exercise has taken

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  more than three years, and the cheek of it was that we were given only one and a half hours last Wednesday night to discuss these important changes. It is disgraceful. No wonder there has been concern.
  In fairness to the hon. Member for Flint, West he described the commission as:
  "inept and insensitive … which has done its work badly".—[Official Report, 16 February 1983; Vol. 37, c. 423.]
  Many hon. Members would endorse those sentiments, especially in respect of their own areas.
  I have had the privilege and honour to represent Newport for the past 17 years in the House. It has had a very bad deal from a community point of view. It is argued that boundary changes are to do with movement of population. All Newport has had is butchery. Even the names of the new constituencies are a misnomer. Southeast and south-west Gwent will be more relevant to what is happening. Half of Newport is to be handed over to the one constituency of Newport, East, and the other half is to be handed over to the constituency of Newport, West. There is linkage with much of the surrounding area in respect of the two proposed new constituencies. What contribution these proposals can possibly make to the community life of Newport I am at a loss to understand.
  The town of Newport has a slightly declining population. It could have been left alone, as it is a compact and centralised community. These proposals will cause a lot of problems and confusion for the people of Newport. The town is being mucked about to suit neighbouring areas. The people of Newport never got over those disastrous local government changes made a decade ago. It was a complete upheaval, which cost the earth. Now, despite all of the money that has been paid out, we have less efficient services. All that the people of Newport have had to do is pay.
  Over the years Newport has seen its very good education and police service go. The control of the roads in Newport has gone as has its water undertaking. In the process, community spirit has been undermined and the identity of the town taken away. The cost in financial and community terms has been high.
  When one turns to the position of local government, one realises the confusion and chaos that the Government are causing. I was speaking to the leader of the Newport council today. He said that he was completely exasperated with the attitude of the Welsh Office about boundaries and local government. There is a definite linkage between local government and parliamentary boundaries. A chaotic situation exists in Newport. The boundaries for the districts have not been finalised. The leader of the council said to me that this weekend is probably the deadline for the forthcoming May election. All manner of representations have been made to the Welsh Office. So far they have been of no avail. Newport, in view of its population, is under-represented on Gwent county council. That is not fair or just. Such anomalies need to be ironed out. Then there is Torfaen, Blaenau Gwent and Islwyn. I understand that their boundaries are not likely to be settled until after the county council elections of next year. There seems to be a link between these local government boundaries and the parliamentary boundary.
  The Government lecture people about so-called business efficiency. They make me weep. These proposals are highly detrimental to the people of Newport. They are part of a scheme of things—a gerrymandering exercise—to obtain a better representation for the
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  Conservative party in Wales. Particularly in this climate, with mass unemployment and industrial stagnation, these efforts will be repudiated, and I hope before not too long.
  11.6 pm
  Mr. Ray Powell: I hope that the House will forgive my husky voice. It is the result of a cold that I picked up after being thrown on to the icy streets of London at midnight last Wednesday.
  I am glad to catch the eye of the Chair tonight to expose the blatant butchery of my constituency by the Boundary Commission, for Wales. I should like to express and explain the tremendous anxiety of the county councils, the borough councils, the district councils, the town and community councils, political parties of various persuasions and numerous other organisations whose strength of objection should have received far more sympathetic consideration from the commissioners than that contained in this third periodical report.
  I should like to cover other areas within the Principality, having received letters from various parts of Wales strongly objecting to the report, but for the moment, I confine my remarks to the Ogmore constituency, the Ogwr and Taff-Ely borough areas, where the commissioners propose a new parliamentary seat of Bridgend.
  Details are contained on pages 31, 91 117 and 119 of the report, and I shall deal with paragraphs 121, 122, 125, 126 and 127, together with the revised recommendations after explaining the representations that were made before the commissioners produced this report.
  The areas involved are the Ogmore constituency with an electorate of 73,993, parts of the constituency of my right hon. and learned Friend the Member for Aberavon (Mr. Morris), with an electorate of 23,722, and part of the constituency of my hon. Friend the Member for Pontypridd (Mr. John), with an electorate of 8,756.
  The Ogmore constituency is shaped like one's right hand—the four fingers representing the valleys of Llynfi, Garw, Ogmore and Abercardin and Gilfach; the thumb the Pencoed and Heol-y-cyw area; the palm the town centre of Bridgend; and the base of the palm the coastal belt of Southerndown, Ogmore-by-Sea and Merthyr Mawr. It is without question one of the best constituencies in the country, with its mix of four beautiful valleys, a rural spread, a coastal belt overlooking the Bristol channel, a market town and a large trading estate.
  Since local government reorganisation in 1973, the area went through amalgamation of five local authorities without any great upheaval, and the town of Bridgend became the centre of all activities, with the borough council officers based there and most of the departments under the one roof. It soon meant that all areas spreading throughout the length and breadth of the borough of Ogmore gravitated towards Bridgend. The main police station, the shopping area, the DHSS offices, the jobcentre, the bus station, the railway station, the industrial estate, the magistrates court, education offices, social services offices and many other activities are centred in the Bridgend area. Without elaborating further, this was the main centre servicing an electorate of 97,715 and a population of 125,000. The part of the Aberavon constituency of 23,722 electors is already within the borough of Ogwr and is included in the figures that I have just mentioned. The main centres of population are Bridgend, Maesteg and Porthcawl, but a number of other towns are situated to the north of Bridgend.

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  The valleys that I have mentioned, probably more than any other single influence, have shaped the pattern of life in the constituency. Socially, economically, culturally and politically, the influence of these famous valleys upon their communities in particular and on the constituencies in general has been immeasurable.
  I do not apologise for taking time to emphasise what must already be perfectly plain to the House, because in my view the commissioners' proposals do not pay sufficient regard to the significance of the valleys. For example, a home interview conducted by the borough council in 1975–76 in connection with the preparation of the Ogmore and Garw district plan provided relevant information on certain links between the Ogmore and Garw valleys and Bridgend. The survey showed that 50 per cent. of the working population of the two valleys worked outside the area, and of these 32 per cent. worked in Bridgend. It showed that 24 per cent. of weekly convenience goods shopping trips were to Bridgend while for durable goods shopping trips the figure increased to 53 per cent. These figures show clearly the important part which Bridgend plays as an employment and shopping centre for the residents of the Ogmore and Garw valleys.
  The commissioners' proposals to cut off the valley communities on an east-west line would create a serious and unfortunate imbalance between the two comstituencies. One is a relatively prosperous constituency with tremendous potential for economic growth, while the other is less prosperous and lacks such potential. I believe that the proposed Bridgend constituency would benefit at the expense of the Ogmore constituency and that the people of the Bridgend constituency would benefit at the expense of the people of the Ogmore constituency.
  In my submission, therefore, the proposals fail miserably in numerous regards, especially for parliamentary representation. To place all the greater economic and social problems and disadvantages in one area and all the advantages in the other area is both undesirable and overwhelmingly unwelcome, to say the least. The economic and social imbalances which would result by dividing the existing constituency along the lines proposed by the commissioners would manifest themselves in, for example, housing, industry, rate income, age of educational facilities and ancillary health services, and would be made even more acute by the four wards of Taff-Ely being added to the proposed Ogmore parliamentary constituency.
  These four valleys are separated by mountains rising in places to almost 570 metres above mean sea level. As a consequence of topography and road conditions, the time taken to drive by car from the top of the Llynfi valley around the main settlements of the proposed constituency and returning to Maesteg, the constituency's largest settlement, would be at least two and a half hours and cover about 70 miles.
  For those reasons, I spoke at length to the inquiry held at Pontypridd on 9 and 12 February 1982 and requested a north to south division based on the rivers Llynfi and Ogmore, which would have divided the area proposed into two constituencies from the heads of the valleys to the estuary—a natural division that existed before the Tory party was even dreamt of. How much more impartiality can one display than that? In addition, the division from north to south would have given an electoral quota of
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  57,189 in one constituency and 55,553 in another, which is much nearer to the 58,000 sought by the commissioners in their original proposals.
  I have already explained the essential difference between the commissioners' proposals and the counter proposals. Because there was special emphasis on the electoral quota, alternatives were offered to meet the figure of 58,000. There is no doubt that the proposals to the inquiry of the north-south division could have been achieved without offending against any of the recognised criteria. It could have been achieved without creating social imbalance and problems. It would be fairer to both Members of Parliament and would leave undisturbed the established communities of the valleys. The proposals offered would have achieved all that, and would have received the support of the people—something that the commissioners' proposals do not attract.
  When we received the statement from the Boundary Commission for Wales, and the provisional recommendations for Mid-Glamorgan, it outlined in detail the rules applicable. It referred to the electorate of Ogmore county constituency as being well in excess of the electoral quota. That is quite true. I have already said that Ogmore has an electorate of 75,000. However, under the final proposals presented to the House tonight, the figures for the Ogmore constituency are reduced to 51,000. The commissioners' proposals divide the Ogwr borough from east to west and adds wards from the adjoining constituency of Pontypridd.
  Following the publication of the commissioners' recommendations for the parliamentary constituency of the county of Mid-Glamorgan on 25 June 1981, discussion by numerous groups took place and 60 organisations presented their views. They had memberships of 100 or more in accordance with the rules and guidelines laid down by the commissioners. In addition, numerous individuals and small groups expressed separate opinions. Of the 60 organisations, 57 objected to the proposals and only three supported the commissioners' recommendations. Those three are listed as the Aberavon Conservative Association (Porthcawl Branch), the Ogmore Conservative Association and some dubious body called the Rhondda Conservative Association.
  At the Pontypridd inquiry in February 1982, 21 organisations, directly or indirectly, verbally or in writing, submitted proposals supporting the alternative division of the borough of Ogwr to that of the commissioners—their proposals being a division from east to west, and the alternative proposals being from north to south, using the rivers Llynfi and Ogmore as the natural division. The organisations objecting included the Mid Glamorgan county council, the Ogwr borough council, the Taff-Ely borough council, the Llanharry community council, the Llantrisant and Llantwit Fardre Trades Council, the Mid Glamorgan county Labour party, the Aberavon constituency Labour party, the Ogmore constituency Labour party, the Ogwr borough Labour party, the Pontypridd constituency Labour party, the Welsh parliamentary Labour party, the Members of Parliament for Aberavon, Pontypridd and myself, and many other groups and individuals far too numerous to mention, but contained in the report of the local inquiry for Mid Glamorgan. All those mentioned requested a division from north to south. Pages 26 to 43 of the 53-page report of the inquiry deal with the division of Ogwr borough and the extra seat.
  I could go into graphic detail on the number of representations, but I know that other hon. Members wish

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  to speak. I could list numerous alternative proposals that we, the Ogwr borough and the Mid Glamorgan county Labour party have presented, but I shall hurry along and refer to rule 7 on the electoral quota. That is disregarded for Ogmore, as it has been throughout the Principality. Furthermore, section 2(2) of the House of Commons (Redistribution of Seats) Act 1958 refers to the fact that the commissioners
  "in discharging their functions … shall take account … of any local ties which would be broken by such alterations".
  The local ties in the present proposals have been not merely broken but savagely butchered and severed—it is worse than the recent murders in Cricklewood that we have been reading about.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I am sorry to interrupt the hon. Gentleman. In the spirit of good will which prevails tonight, he might bear in mind that the Opposition Front Bench would like some time to wind up, and I am sure that the House will wish to hear from the Minister.
  Mr. Powell: That is why I made my point of order last week and why I requested you, Mr. Deputy Speaker, to consider extending the debate. For two and a half hours I spoke at the inquiry at Pontypridd. Even then I had to trim what I had been requested to say by many people and organisations in the Ogmore constituency and the Ogwr borough area.
  If the order is passed, its effects will last for at least 10 to 15 years, and could last until the early part of the year 2000 and beyond. The House allowed the commissioners to spend more than three years compiling their report, and inquiries to take place, but we are allowed only one and a half hours to debate what will happen to 36 constituencies and the creation of two extra seats. That is a total disregard of the rights of Members of Parliament, who should be here to expound on their constituents' behalf the reasons why the order should not be accepted.
  It is essential, important and imperative that we get the boundaries right. The proposals will probably last for 15 years. I cannot understand the Government's undue haste. Are they going for an Easter election or an earlier election than June? Why should we not have a full-scale debate on the issues affecting Wales? Hon. Members would like to raise issues on their constituents' behalf. I tabled an amendment. It has not been called as the order is not amendable. If we cannot amend the order to make a difference for the one seat of Ogmore, we have to call on every hon. Member to vote against the order, whereas we could well be satisfied with most of the Boundary Commission's suggestions.
  Despite the shortage of time, Mr. Deputy Speaker, I must say that, although there is tremendous support for a north to south diversion with proposals for sharing the electorate to ensure the electoral quota, within a few hundred, we must ask why the commissioners did not think that the alternatives commanded greater acceptance locally and complied with the statutory provisions and the commission's principles. Why did it not agree to the great public support for a change in its proposals? Why did it not hold a further inquiry after receiving those representations?
  It is suggested that the proposals are formulated by the commission from its position of independence and impartiality. If that is so, is it not passing strange, to say the least, that it completely ignored the views of all the
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  numerous objectors and accepted the support of three Conservative organisations. That smacks of hyprocisy as much as if not more than the Franks report, if that is possible.
  I am firmly convinced that the parliamentary constituency of Bridgend 'was designed with the politically motivated bias of attempting to create a Tory seat. The electors of Ogmore will not allow such gerrymandering and if the proposals go through tonight they will turn out in force to return a Labour candidate to show their utter disgust at the Boundary Commission's proposals and total disregard of the legitimate objections raised inside and outside the House.
  I regret that I must conclude because I have enough to say to last another hour and a half. As the proposals will last for 10 to 15 years, if there are objections—even if only to one or two seats in the Principality—Parliament should be able to amend and alter the proposals. I have listed my action on behalf of my constituents. I have complied with all the rules. I believe that I have made my case. Therefore, if the Home Secretary is not prepared to listen to the arguments and table an order to amend, I shall ask the House to reject the proposals and vote against them tonight.
  11.27 pm
  Mr. Donald Coleman: The tenor of the debate this evening has been, I think we can all agree, far less acrimonious than was the case last Wednesday evening when the House previously debated the order. Perhaps that is because the Government have learnt not to be dismissive of representations that are serious and of great importance to many people.
  My right hon. and hon. Friends sought last week by means of points of order to carry out a duty that was laid upon them as hon. Members. It was the Government's responsibility to seek to deal sympathetically with the issues that they raised rather than to be seen to he driving the order through the House at all costs. We have had to come back to it and in doing so we have had a much more even-tempered debate in which all hon. Members have been able to express their justified concerns and worries about the effects of the order and the Boundary Commission's proposals on their constituencies, and, more importantly, on their constituents.
  There is a matter outstanding from last week's proceedings that concerns me. I rose on a point of order which, upon a reading of Hansard, I find received no reply. I return to it again tonight, not as a point of order but as a question to the Minister. On the assumption that the point of order of my right hon. and learned Friend the Member for Aberavon (Mr. Morris) was correct and that the Secretary of State had failed to fulfil his statutory duties, since we have had an order made and shall presumably proceed to pass it, what certainty is there that the order will be valid? What recourse have my constituents, who would be affected by the order, if it is found to be invalid? This is an important matter. I would be grateful if the Minister of State can assist the House, my constituents and myself in the matter.
  I wish, on behalf of the Labour party, to place on record our appreciation of the action of Mr. Justice Talbot and his fellow commissioners in arranging for the informal exchange of views in Cardiff when we took advantage of the opportunity to express our opinions, although others did not.

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  This debate has demonstrated that Wales is not fully satisfied at the outcome of the Boundary Commission report. A number of expressions of dissatisfaction have been heard tonight. My hon. Friend the Member for Carmarthen (Dr. Thomas) has referred to the position in Pembroke. There is no part of Wales that has shown more feeling about what is proposed than Pembroke. It still smarts from what was done by the Tory party in the 1974 reorganisation of local government. This has never been accepted by the people of that part of Wales. Now, along comes the Boundary Commission, under another Tory Government, further to hurt the pride of the people of Pembroke.
  Time does not permit me to go further into these matters as I would have wished. My right hon. and hon. Friends and some Conservative Members have voiced their fears about the position that will be created in Wales. We shall not oppose the order tonight. I hope, however, that what has been stated on both sides of the House will cause the Government to consider, even now, whether the Boundary Commission has got it right.
  11.32 pm
  The Minister of State, Home Office (Mr. Patrick Mayhew): I have listened carefully to everything that has been said tonight and in the debate last week. One factor that has emerged prominently is the sincerity and fervour with which right hon. and hon. Members have spoken from both sides of the House in defence of local loyalties and links, often of long standing, which regrettably are to be disrupted if the proposals of the Boundary Commission are given effect.
  I agree with the hon. Member for Neath (Mr. Coleman) that all the worries that have been expressed are valid. The hon. Gentleman asked me what would be the position if the point made by the right hon. and learned Member for Aberavon (Mr. Morris) were correct and the Home Secretary had failed to fulfil his statutory obligation to lay a statement of his reasons for making any modification if, indeed, he had made a modification. It is not for me to pronounce on what the position on law might be in hypothetical circumstances. However, section 3(7) of the House of Commons (Redistribution of Seats) Act 1949 states:
  "The validity of any Order in Council purporting to be made under this Act and reciting that a draft thereof has been approved by resolution of each House of Parliament shall not be called in question in any legal proceedings whatsoever."
  I consulted my right hon. and learned Friend the Solicitor-General, in the absence abroad of my right hon. and learned Friend the Attorney-General, and he authorised me to say that, having considered the arguments, he has expressed the view that the draft constituencies order does not effect a modification of the recommendations of the Boundary Commission for Wales contained in its report.
  It is important to emphasise that we are dealing with the recommendations and report of a commission that is not the creature of any Government of the day but is a wholly impartial commission created according to a formula approved by Parliament to secure its very impartiality. It is important that that should be borne in mind.
  The commission has been unable to base its final recommendations on new local government boundaries
  768
  and district wards in every instance. That is naturally disappointing, but the commission was required by statute to submit its proposals to reduce the present disparities in electorates between 1979 and May 1984. As there was little prospect of the Local Government Boundary Commission for Wales completing its special community and district reviews by May 1984, it would have been dangerous for the Parliamentary Commission to have deferred the start of its review, or the submission of its report, any longer. Had it done so, the next general election would have been fought on boundaries based on 1965 electorates, during which time an entire generation of new electors has emerged.
  This does not mean that the changes that have still to be made to local government areas and district wards, which will result in the new constituencies being divided by new county boundaries or new district or ward boundaries, cannot be rectified before the commission completes its next review in 10 to 15 years' time. As I said last week, it is open to the commission to make interim recommendations to take account of such changes where it thinks it right to do so. It does not have to be at the motion of the Government of the day; it can do so of its own motion. That is important. Such reviews are intended to take account of changes in local government boundaries. I think that the commission will give sympathetic consideration to requests for such reviews.
  Necessarily I have a short time in which to reply to the issues that have been raised, but I feel that I should deal with the points made last week by the right hon. Member for Rhondda (Mr. Jones). He expressed his disagreement with the commission's recommendations for Pembroke and Ceredigion. I understand his view. The right hon. Gentleman's criticisms of that part of the report were supported today by his hon. Friends the Members for Carmarthen (Dr. Thomas) and for Neath and by others. I am aware of the degree of concern that has been expressed. The commission took the view that the electorate of the Pembroke constituency would be nearly 80,000 if it acceded to the objections that were made. My right hon. Friend is confident that it would be unacceptably high. However, I fear that what was said last week and today is not sufficient, in the Government's view, to justify a modification of the commission's recommendation.
  The right hon. Member for Rhondda also referred to the recommendations on Ebbw Vale, Abertillery, Rhynmey, Porterdown and the upper Swansea valley, particularly as regards the transfers from Gower to Neath, which were also raised by the hon. Member for Gower (Mr. Wardell). The commission faced a difficult problem because, although the Gower constituency was an acceptable size, the remaining constituencies were not. Alterations to them inevitably involved alteration to the Gower constituency. Representations made to the commission after the local inquiry clearly commanded much sympathy among its members, but, as they explain in paragraph 174 of the report, they found that they could not accede to the objections without creating unacceptable disparities.
  When considering whether the Home Secretary ought to modify some recommendations, to meet a local anxiety, such as that voiced by the hon. Member for Gower, we have to bear in mind that there is always a knock-on effect which can cause further disagreements.
  My hon. Friend the Member for Flint, West (Sir A. Meyer) spoke eloquently of the anxieties in his constituency, and he was joined tonight by my hon. and

  769
  learned Friend the Member for Denbigh (Mr. Morgan). I have time to deal only cursorily with their case. The assistant commissioner concluded that the commission's proposals for Clwyd were not seriously at fault or unworkable, whereas the counter proposals were opposed by the majority at the local inquiry.
  The main reason why the existing constituencies had to be radically altered was that Clwyd is entitled to five seats. The existing Denbigh constituency has parts in the county of Gwynedd; Merioneth, most of which is in Gwynedd, has parts in Clwyd; and Flint, East is divided into three parts. One can sympathise with the commission's feeling that it had to make fairly radical changes there.
  The hon. Member for Goole (Dr. Marshall) spoke about Peterston and Peterson. The ward in question was created by the Borough of Vale of Glamorgan (Electoral Arrangements) Order 1982 and the spelling of the name in the draft Order in Council reflects that in the electoral arrangements order. The commission's recommendations contains a typographical error, the correction of which is not a modification. A modification within the terms of the Act has to modify the effect of the commission's recommendations and not be a mere typographical inaccuracy.
  I understand the anxieties that have been expressed, but my right hon. Friend the Home Secretary is convinced that they are not sufficient to enable him to meet the anxieties by modifying the recommendations of the Boundary Commission. I believe that the House can confidently give effect to those recommendations in toto.
  Question put:—
  The House divided: Ayes 238, Noes 9.

  Division No. 74]

  [11.43 pm

  AYES

  Alexander, Richard

  Carlisle, Kenneth (Lincoln)

  Alison, Rt Hon Michael

  Carlisle, Rt Hon M. (R'c'n)

  Ancram, Michael

  Chalker, Mrs. Lynda

  Aspinwall, Jack

  Channon, Rt. Hon. Paul

  Atkins, Rt Hon H.(S'thorne)

  Chapman, Sydney

  Atkinson, David (B'm'th,E)

  Clarke, Kenneth (Rushcliffe)

  Baker, Kenneth(St.M'bone)

  Cockeram, Eric

  Baker, Nicholas (N Dorset)

  Colvin, Michael

  Banks, Robert

  Cope, John

  Beaumont-Dark, Anthony

  Corrie, John

  Beith, A. J.

  Costain, Sir Albert

  Bendall, Vivian

  Cranborne, Viscount

  Bennett, Sir Frederic (T'bay)

  Critchley, Julian

  Benyon, Thomas (A'don)

  Crouch, David

  Benyon, W. (Buckingham)

  Dorrell, Stephen

  Berry, Hon Anthony

  Douglas-Hamilton, Lord J.

  Best, Keith

  Dover, Denshore

  Bevan, David Gilroy

  Dunn, Robert (Dartford)

  Biffen, Rt Hon John

  Dykes, Hugh

  Blackburn, John

  Edwards, Rt Hon N. (P'broke)

  Blaker, Peter

  Eggar, Tim

  Bottomley, Peter (W'wich W)

  Elliott, Sir William

  Bowden, Andrew

  Ellis, Tom (Wrexham)

  Boyson, Dr Rhodes

  Emery, Sir Peter

  Braine, Sir Bernard

  Fairbairn, Nicholas

  Bright, Graham

  Fairgrieve, Sir Russell

  Brinton, Tim

  Faith, Mrs Sheila

  Brittan, Rt. Hon. Leon

  Fenner, Mrs Peggy

  Brooke, Hon Peter

  Finsberg, Geoffrey

  Brotherton, Michael

  Fisher, Sir Nigel

  Brown, Michael(Brigg & Sc'n)

  Fletcher, A. (Ed'nb'gh N)

  Browne, John (Winchester)

  Fookes, Miss Janet

  Bruce-Gardyne, John

  Forman, Nigel

  Bryan, Sir Paul

  Fowler, Rt Hon Norman

  Buchanan-Smith, Rt. Hon. A.

  Fox, Marcus

  Butcher, John

  Fraser, Rt Hon Sir Hugh

  Butler, Hon Adam

  Fraser, Peter (South Angus)

  Carlisle, John (Luton West)

  Gardiner, George (Reigate)

  770

  Garel-Jones, Tristan

  Murphy, Christopher

  Goodhart, Sir Philip

  Myles, David

  Goodhew, Sir Victor

  Neale, Gerrard

  Goodlad, Alastair

  Needham, Richard

  Gorst, John

  Neubert, Michael

  Gow, Ian

  Newton, Tony

  Gray, Rt Hon Hamish

  Onslow, Cranley

  Greenway, Harry

  Oppenheim, Rt Hon Mrs S.

  Grieve, Percy

  Osborn, John

  Griffiths, Peter (Portsm'th N)

  Page, John (Harrow, West)

  Grist, Ian

  Page, Richard (SW Herts)

  Grylls, Michael

  Parkinson, Rt Hon Cecil

  Gummer, John Selwyn

  Parris, Matthew

  Hamilton, Hon A.

  Patten, Christopher (Bath)

  Hamilton, Michael (Salisbury)

  Patten, John (Oxford)

  Hampson, Dr Keith

  Pattie, Geoffrey

  Hannam, John

  Pawsey, James

  Haselhurst, Alan

  Penhaligon, David

  Hastings, Stephen

  Percival, Sir Ian

  Hawkins, Sir Paul

  Pollock, Alexander

  Hayhoe, Barney

  Price, Sir David (Eastleigh)

  Heddle, John

  Prior, Rt Hon James

  Henderson, Barry

  Proctor, K. Harvey

  Higgins, Rt Hon Terence L.

  Rees, Peter (Dover and Deal)

  Hill, James

  Renton, Tim

  Hogg, Hon Douglas (Gr'th'm)

  Rhodes James, Robert

  Hooson, Tom

  Rhys Williams, Sir Brandon

  Hordern, Peter

  Ridley, Hon Nicholas

  Howe, Rt Hon Sir Geoffrey

  Ridsdale, Sir Julian

  Howell, Rt Hon D. (G'ldf'd)

  Rifkind, Malcolm

  Howell, Ralph (N Norfolk)

  Rippon, Rt Hon Geoffrey

  Howells, Geraint

  Roberts, Wyn (Conway)

  Hunt, David (Wirral)

  Rossi, Hugh

  Hunt, John (Ravensbourne)

  Rumbold, Mrs A. C. R.

  Irvine, RtHon Bryant Godman

  Sainsbury, Hon Timothy

  Jenkin, Rt Hon Patrick

  St. John-Stevas, Rt Hon N.

  Jessel, Toby

  Scott, Nicholas

  Jopling, Rt Hon Michael

  Shaw, Sir Michael (Scarb')

  Joseph, Rt Hon Sir Keith

  Shelton, William (Streatham)

  Kaberry, Sir Donald

  Shepherd, Colin (Hereford)

  Kershaw, Sir Anthony

  Silvester, Fred

  Kitson, Sir Timothy

  Sims, Roger

  Knox, David

  Skeet, T. H. H.

  Lamont, Norman

  Smith, Sir Dudley

  Lang, Ian

  Smith, Tim (Beaconsfield)

  Langford-Holt, Sir John

  Speed, Keith

  Latham, Michael

  Spence, John

  Lawrence, Ivan

  Spicer, Jim (West Dorset)

  Lawson, Rt Hon Nigel

  Sproat, Iain

  Lee, John

  Squire, Robin

  Lennox-Boyd, Hon Mark

  Stainton, Keith

  Lester, Jim (Beeston)

  Stanbrook, Ivor

  Lewis, Sir Kenneth (Rutland)

  Stevens, Martin

  Lloyd, Ian (Havant & W'loo)

  Stewart, A.(E Renfrewshire)

  Lloyd, Peter (Fareham)

  Stewart, Ian (Hitchin)

  Loveridge, John

  Stokes, John

  Lyell, Nicholas

  Stradling Thomas, J.

  Macfarlane, Neil

  Taylor, Teddy (S'end E)

  MacGregor, John

  Thompson, Donald

  McNair-Wilson, M. (N'bury)

  Thorne, Neil (IIord South)

  Madel, David

  Townend, John (Bridlington)

  Major, John

  Trippier, David

  Marland, Paul

  van Straubenzee, Sir W.

  Marlow, Antony

  Vaughan, Dr Gerard

  Marshall, Michael (Arundel)

  Viggers, Peter

  Marten, Rt Hon Neil

  Waddington, David

  Mates, Michael

  Wakeham, John

  Maude, Rt Hon Sir Angus

  Waldegrave, Hon William

  Mawhinney, Dr Brian

  Walker, B. (Perth)

  Maxwell-Hyslop, Robin

  Waller, Gary

  Mayhew, Patrick

  Ward, John

  Mellor, David

  Watson, John

  Miller, Hal (B'grove)

  Wells, Bowen

  Mills, Sir Peter (West Devon)

  Wheeler, John

  Moate, Roger

  Whitelaw, Rt Hon William

  Monro, Sir Hector

  Whitney, Raymond

  Moore, John

  Wickenden, Keith

  Morris, M. (N'hampton S)

  Wiggin, Jerry

  Morrison, Hon C. (Devizes)

  Wigley, Dafydd

  Mudd, David

  Wilkinson, John

  771

  Young, Sir George (Acton)

  Tellers for the Ayes:

  Younger, Rt Hon George

  Mr. Carol Mather and

  Mr. Robert Boscawen.

  NOES

  Cowans, Harry

  Skinner, Dennis

  Cryer, Bob

  Welsh, Michael

  Dixon, Donald

  Martin, M(G'gow S'burn)

  Tellers for the Noes:

  O'Neill, Martin

  Dr. Roger Thomas and

  Parry, Robert

  Mr. Gareth Wardell.

  Powell, Raymond (Ogmore)

  Question accordingly agreed to.
  Resolved,
  That the draft Parliamentary Constituencies (Wales) Order 1983, which was laid before this House on 7th February, be approved.

  Parliamentary Constituencies (Wales)

    INTERNATIONAL TRANSPORT CONVENTIONS BILL [LORDS]
    Order for Second Reading read.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 66 (Second Reading Committees), That the Bill be now read a Second time.
    Question agreed to.
    Bill accordingly read a Second time.
    Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

    WAYS AND MEANS

      INTERNATIONAL TRANSPORT CONVENTIONS [MONEY]
      Resolved,
      That, for the purposes of any Act of the present Session to give effect to the Convention concerning International Carriage by Rail signed on behalf of the United Kingdom on 9th May 1980, it is expedient to authorise the payment into the Consolidated Fund of fees received by the Treasury for certificates issued in pursuance of that Act.—[Mr. Major.]

    PLANT VARIETIES BILL [LORDS]
    Order for Second Reading read.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 66 (Second Reading Committees), That the Bill be now read a Second time.
    Question agreed to.
    Bill accordingly read a Second time.
    Motion made—[Mr. Spearing]—and Question, That the Bill be committed to a Select Committee, put and negatived.
    Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  Plant Varieties [Money]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act of the present Session to amend the Plant Varieties and Seeds Act 1964, it is expedient to authorise any increase attributable to the said Act of the present Session in the sums payable out of money provided by Parliament or into the Consolidated Fund under the said Act of 1964—[Mr. Major.]
  11.54 pm
  Mr. Nigel Spearing: The Bill contains a provision for about £1,000 charge on public funds for the administration of the Bill. As the purpose of the Bill is perhaps to put money into other people's pockets, it might be interesting to know what the provision is for. The Bill, which has been read a Second time, raises a number of national and international issues hitherto unsuspected. I believe that for that reason it would have been better for the Bill, having left the House after Second Reading, to go to the new experimental public Bill Committee where its purport and methods of operation could have been studied by a Select Committee before it was further debated.
  Unfortunately, that experimental provision is not in force during this Session, although it was in the previous Session, and that is why I moved the motion a minute or two ago, calling for a Select Committee, because without the Select Committee scrutiny I do not believe that the House will have dealt with the Bill in a proper and public fashion.
  11.55 pm
  Mr. Frank Hooley: I should like to support my hon. Friend the Member for Newham, South (Mr. Spearing). I believe that the House would have benefited considerably from the advice of a Select Committee on this Bill. It has technical and international ramifications which may not be immediately plain from a Bill that looks so innocuous. I am sure that those hon. Members who have read the proceedings in Committee will be aware of some of those ramifications.
  I should like to know the purpose of the money resolution. I am slightly puzzled, because page 3, clause 6(4), states:
  "Nothing in this Act shall impose any charge on the people or on public funds, or vary the amount or incidence of or otherwise alter any such charge in any manner, or affect the assessment, levying administration or application of any money raised by any such a charge."
  Discounting all the gobbledegook, it seems to suggest that if the Bill is enacted we are not entitled to charge any more money. It may, of course, be a technicality arising from the fact that the Bill started in another place, but if it is the Minister should explain the subsection. The Minister should also explain what she can usefully buy with £1,000 of public funds. We are nowadays accustomed to talk in terms of £1 million or £1 billion. What one can buy for public expenditure of £1,000 is a little obscure.
  Before we pass the money resolution we should have an explanation from the Government about why they objected so strongly to the proposal of my hon. Friend the Member for Newham, South that the Bill's ramifications should be examined by a Select Committee. It is unfortunate that the Lord President has declined to reactivate the system the Government introduced last
  774
  Session or the previous one of special Select Committees. I accept that we cannot examine the Bill under that procedure because the resolution has not been put down. As my hon. Friend the Member for Newham, South said, it would still have been possible to have committed it to a Select Committee under the existing Standing Orders of the House. It is a great pity that that opportunity was missed. It may, of course, lengthen our proceedings in Committee more than would otherwise have been necessary.
  I am interested to know what this £1,000 or £2,000 will be spent on, with the rate of inflation that we have had under the Government, and what exactly is the purport of clause 6(4) which seems to say that the Bill is not entitled to make any charge. No doubt the Minister will enlighten the House on those points before we agree to the money resolution.
  11.59 pm
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): I shall not get drawn into the arguments for sending the Bill to a Select Committee, because a vote on it has been taken.
  It has been pointed out that the money part of the Bill is likely to be minimal. The Bill introduces amendments to part I of the Plant Varieties and Seeds Act 1964, which established the system of plant breeders' rights in the United Kingdom. The Bill has three primary purposes—to provide for an increase in the maximum period for which plant breeders' rights are exercisable from 25 to 30 years and the minimum period from 15 to 20 years; to enable the United Kingdom to ratify the 1978 revised text of the international convention for the protection of new varieties of plants; and to make certain other amendments that have become necessary since the enactment of the original legislation to take into account changes in the plant breeding and marketing industries, and other factors.
  The financial effects of the Bill are minimal. However, the following clauses may be perceived to have minor financial implications. Clause 1 provides for the increase in the periods of protection referred to. As fees for the combined exercise of the grant of rights are payable on an annual basis, it may be expected that the provision will increase the income from that source, but as normally only a small proportion of varieties are retained for the full period of grant—a point I made in Committee—the additional income is not expected to exceed £1,000 to £2,000 per year for the foreseeable future.
  Clause 1 at the same time repeals the provisions whereby the Controller of Plant Variety Rights may extend the periods of protection in cases where he is satisfied that the holder of rights has not been adequately remunerated by his grant. That should produce a saving of administrative costs involved in considering applications for extension.
  Clause 2 enables Ministers to extend plant breeders' rights in certain species to the marketing of imported parts of products of varieties protected in Great Britain. That would call for the amendment of statutory instruments, requiring small additional expenditure of administrative staff time and resources.
  Clause 3 has two main provisions. Subsection (1) widens the scope of the factors to be taken into account by the controller in considering compulsory licence applications by requiring him to endeavour to secure that,

  775
  where an export market exists for a variety, it is supplied from United Kingdom resources. Subsection (2) provides that representations in compulsory licensing applications involving a company in which the Government have an interest, such as NSDO Ltd, may be made by interested persons or organisations who will be afforded a hearing conducted by the controller or, indeed, any person appointed by him.
  The effect of clause 3 could be to increase marginally the number of compulsory licence applications and the costs involved in processing them. It is not possible to quantify such extra costs, but they would be minimal and containable within existing resources.
  Any additional costs resulting from the Bill will be contained within public expenditure limits. The money resolution is widely drawn and is intended to cover increased payments into the Consolidated Fund as a result of the extended periods of protection and any increased costs that result from the extension of powers in clause 2 and the widening of the scope of the controller's duties in clause 3.
  Question put and agreed to.
  Resolved,
  That, for the purposes of any Act of the present Session to amend the Plant Varieties and Seeds Act 1964, it is expedient to authorise any increase attributable to the said Act of the present Session in the sums payable out of money provided by Parliament or into the Consolidated Fund under the said Act of 1964.

  Statutory Instruments, &c.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): By leave of the House, I will put motions 7 to 10 together.
  Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committees on Statutory Instruments, &c.)

  Statutory Instruments, &c.

    EXPORT GUARANTEES
    That the draft Export Guarantees (Limit on Sterling Commitments) Order 1983, which was laid before this House on 27th January, be approved.
    That the draft Export Guarantees (Limit on Foreign Currency Commitments) Order 1983, which was laid before this House on 27th January, be approved.
    That the draft Export Guarantees (Extension of Period) (No. 5) Order 1983, which was laid before this House on 27th January, be approved.
    That the draft Export Guarantees (Limit on Overseas Investment Commitments) Order 1983, which was laid before this House on 27th January, be approved.—[Mr. Major.]
    Question agreed to.

  Bedford-St. Pancras Railway Line (Electrification)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Major.]
  12.3 am
  Mr. T. H. H. Skeet: In this debate I am joined by my hon. Friends the Members for Luton, East (Mr. Bright), Luton, West (Mr. Carlisle), Bedfordshire, South (Mr. Madel), and St. Albans (Sir. V. Goodhew) and my hon. and learned Friend the Member for Hemel Hempstead (Mr. Lyell), who will soon become the Member for Mid-Bedfordshire.
  The prolonged delay in the operation of the Bedford-St. Pancras electrification is a public scandal. Construction began in 1976 and the project was completed to Moorgate in May 1982. It remains unused, with 48 sets of rolling stock remaining at sidings at Bedford, Nottingham, Derby and Cricklewood. The unions have complained about the lack of investment in British Rail, but when a project is carried through to completion they inhibit its use, regardless of the pleas and discomfort of commuters who travel daily between Bedford, the intermediate stations, and the metropolis. It could happen only in "Alice in Wonderland" that, from a total investment of £154 million, electrical equipment, overhead wiring and rolling stock worth £85·6 million lie idle to weather and rust, while a further £68·1 million is in partial use.
  After the Taj Mahal, the pyramids and the groundnut scheme, Bedford electrification remains a monument to union ineptness and irresponsibility and managerial inability to control events.
  According to my hon. Friend the Minister, in a written reply
  "The investment which has been lying idle represents about £150,000 a week in interest costs".—[Official Report, 18 November 1982; Vol. 32; c. 272.]
  There could be a saving for British Rail. On 8 April 1982, my hon. Friend said:
  "current costs of train crews, fuel, cleaning, shunting, maintenance and depreciation on rolling stock are estimated at approximately £4·10 per mile for each four-car diesel-multiple-unit set and at £3·20 per mile for each four-car-electric-multiple-unit set."—[Official Report. 8 April 1982; Vol. 21; c. 474–75.]
  On a rough estimate, the capital loss to October 1983 is about £5 million, and the revenue loss is about £1·5 million.
  The current timetable is something of an enigma. Work was completed to Moorgate in May 1982 and was estimated to be completed to St. Pancras in October 1983. If we assume a McCarthy settlement of £6 per shift of duty within 14 days, which is optimistic, 50 per cent. of the service could be operational on a slower timetable by July 1983, with full operational service by October 1983, or one and a half years after completion of the works. I hope that my hon. Friend will give his verdict on the timetable.
  However, the House is more concerned with drivers' wages today and what they are likely to be on average. The basic wage is £105 a week. If we add 10 per cent. for unsocial hours, which is £10·50, overtime and Sunday working another £30, and London weighting allowance £15·80, that makes a total of £161·30. If we add an estimated extra £6 a shift claimed by ASLEF—it is claiming £7 but will probably get £6—that brings the total to £194·30. We must then add a further 6 per cent. on the
  778
  McCarthy proposals, which will eventually be backdated to September 1982, which brings the total pay of drivers to £200·60 or £10,430 per annum.
  Those figures are extraordinary when compared with the Tyneside metro, which is a drivers-only operation. The wage for those drivers is £165, including overtime and continental rostering. Yet we are told by ASLEF that the extra responsibility assumed would account for the difference between those figures. I cannot believe that.
  Mr. David Madel: Does my hon. Friend agree that with such wages it is time for the drivers to think about the suffering commuters who must continue to travel in dirty diesel trains from Bedfordshire to St. Pancras?
  Mr. Skeet: I am grateful to my hon. Friend for mentioning that. I am one of those unfortunate commuters who come from Bedford, and my hon. Friend comes from a station on the line. We have been suffering those appalling conditions for too long. The unions entirely ignore the comfort of the travelling public.
  Mr. Graham Bright: Is my hon. Friend aware that many commuters from Luton are now travelling by the excellent coach services that are running from that town to Victoria? The commuters are finding that more pleasant, because the coaches are comfortable and cheaper. That must be damaging the long-term prospects of this line, and the unions are responsible.
  Mr. Skeet: The unions, especially ASLEF, must recognise that the more they continue with restrictive practices, the more they are destroying their own system which gives them a good living.
  I wish to refer to the preliminary electrification scheme. The two main projects are Paisley to Ayr at a cost of £25 million and Colchester to Harwich and Ipswich to Norwich at a cost of £29 million. A formal proposal relates to the main east coast line of Leeds to Newcastle at a cost of £118 million.
  I hope that I have the Minister's assurance that no new electrification project will be undertaken or permitted until ASLEF agrees to work the Bedford-St. Pancras facility. I am certain that my hon. Friends will agree with that.
  Last year there was a dispute between ASLEF and British Rail over flexible rostering. It lasted for 17 days but was spread over several months with the eventual acceptance of the McCarthy proposals, but unhappily it was not decided what extra payment was due to the drivers on a single-man operation. It is extraordinary how oblivious the members of ASLEF have been to the difficulties of the travelling public and to the fate of their own enterprise on which they depend for their living and which was subsidised by the taxpayer to the tune of about £1,000 million per annum in 1982–83. The commuter remains disadvantaged, yet cannot lay a claim against the unions for any loss sustained.
  On Thursday 10 February I was travelling to Bedford on the 16·35 and sat in a compartment which had no heating. The guard was helpful and told me that the carriage—FO 3198—had been referred three times to the authorities but nobody had bothered to correct the defect. This is certainly not an isolated example. I have come to the conclusion that the trouble with British Rail is that it is overstaffed, that management at certain levels is either afraid or reluctant to manage and that the unions in their

  779
  rivalry make the administration of the system virtually impossible, especially when they choose to cause disruption regardless of the loss, damage and discomfort of third parties who may choose to travel by rail.
  Why was the cost of running the operation of the Bedford-St. Pancras line not settled with ASLEF and the NUR before British Rail embarked on building the project? Secondly, as British Rail is a state corporation, for which the Minister has responsibility, how long is he prepared to tolerate the painfully slow negotiating procedure that has contributed to endless meetings and the wasting of national assets?
  Thirdly, will the Minister confirm the assurance given by a former Secretary of State for Transport that, unless there is to be proven productivity and a reasonable rate of return on public investment, new electrification projects, wherever they be, will not be contemplated?
  Fourthly, will the payment of the 6 per cent. awarded to railway workers by Lord McCarthy pursuant to a settlement of the recent dispute be made contingent upon union readiness to operate the Bedford-St. Pancras line?
  Fifthly, does the Minister realise that if a private company was conducting these operations, and if it could not use profitably the £150 million worth of assets for a year following completion, it would have little hope of keeping its enterprise from voluntary liquidation, and that ASLEF should be made to realise that there must be some limit to its inordinate demands and restrictive practices?
  Will the combined efforts of this wretched union through the accumulated loss of British Rail, to which it has contributed, place at risk the Bedford-Bletchley rail link? Will he confirm that the loss to that line, after crediting the value of the tickets, amounts to £14 per person who travels on that line?
  This is an extraordinary example of modern technology. The money has been provided by the taxpayer, yet unions that are outdated in their own experience are holding back what should have been a profitable exercise.
  12.15 am
  Mr. John Carlisle: This is a significant debate for those of us with constituencies on the Bedford-St. Pancras line. We are all grateful to my hon. Friend the Member for Bedford (Mr. Skeet) for raising the matter.
  It is significant that the Opposition Benches are empty. I refer especially to the absence of the hon. Member for Nuneaton (Mr. Huckfield), who was so vociferous during the recent British Rail dispute in support of ASLEF, which is entirely to blame for this dispute.
  I represent constituents who are running out of patience. As my hon. Friend said, this is a scandal. We can only wonder at the resilience shown by our constituents over the last few months while this dispute has dragged on. It is a disgrace that thousands of them have travelled to London each day and seen at Cricklewood the new rolling stock waiting to be manned with weeds growing through the wheels, all the more so as they have been forced to travel in the most out-of-date and filthy carriages now available on British Rail. All our constituents must be grateful to my hon. Friend for raising this matter.
  Most galling of all is that the cost is increasing, despite the return that could be achieved not only to the drivers
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  but to the well-being of our constituents. There is no doubt in my mind that jobs are being lost in the Bedford, Luton, St. Albans, and Hemel Hempstead areas because this line has not yet reached fruition. The opportunity for new housing is being lost because the line is not operational. I know of many employers who would willingly come to the towns in that area if and when the service is available.
  The Minister must understand the deep resentment that is now felt against British Rail and the union concerned. I do not completely share my hon. Friend's dissatisfaction with the management. I compliment Mr. Harry Reed, the divisional manager, who tried to apologise to commuters for the trouble that has been caused. The blame lies fairly and squarely with the bloody-minded attitude of Mr. Ray Buckton and the ASLEF union. They, and they only, are responsible for this delay and for the fact that this investment has not yet come to fruition.
  Only one result should come from this sad affair. Not only should British Rail refuse to go ahead with any further electrification until the line is opened, but those drivers who continue to refuse to man the line should be dismissed and replaced by those—and there are many—who are willing to be trained to man the line. If that does not happen, as my hon. Friend the Member for Luton, East (Mr. Bright) said, people will find alternative means of transport.
  The ball is fairly and squarely in the court of the union. I hope that the debate and the Minister's remarks will emphasise that fact so that we can start the trains running as quickly as possible.
  12.20 am
  The Under-Secretary of State for Transport (Mr. Reginald Eyre): I know that my hon. Friend the Member for Bedford (Mr. Skeet) has been seriously concerned for a long time about the issue that he has raised tonight. I note that my hon. Friends the Members for Bedford and Luton, West (Mr. Carlisle) are supported by the presence of my hon. Friends the Members for Bedfordshire, South (Mr. Madel), St. Albans (Sir V. Goodhew) and Luton, East (Mr. Bright) and my hon. and learned Friend the Member for Hemel Hempstead (Mr. Lyell).
  Many of the constituents of my hon. Friend the Member for Bedford will have suffered as a result of the rail unions' refusal to operate the new electric trains on the Bedford to St. Pancras line. I also understand the concern of my hon. Friend the Member for Luton, West. Luton is the main intermediate stop on this line. My hon. Friend's constituents would have benefited, as he described, from the introduction of the new service. I share their indignation and appreciate fully the strength of feeling expressed by my hon. Friends on behalf of their constituents.
  For nine months, trains which would have provided a faster and more frequent service, generating more revenue, have been standing idle at Cricklewood gathering rust and surrounded by weeds, within view of the long-suffering passengers in the shabby old diesels, which still provide the service. We know the reason only too well. It is because the rail unions—first the NUR and now ASLEF—have refused to agree on terms for driver-only operation, for which the trains were designed. They have become a symbol of union intransigence and resistance to change. It is impossible to take seriously the unions'

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  commitment to a modern railway and their requests for new investment when they are blocking the full use of investment worth more than £150 million.
  Suburban services to Bedford are still operated by diesel multiple units introduced in the late 1950s. In the mid-1970s, a decision had to be taken on their replacement. The Railways Board proposed that the service should be electrified and extended along the Midland City line to Moorgate. A new station, known as King's Cross Midland, would be built to improve connections with the underground at King's Cross and St. Pancras, an important interchange served by five tube lines.
  An extensive programme of engineering work has been carried out. Several stations, including Luton, were substantially reconstructed and a completely new station was built at Bedford. The maintenance depot at Cricklewood was rebuilt to cope with the new rolling stock. Colour light signalling was installed from St. Pancras to north of Bedford. Extensive track improvements were made. In order to make room for the overhead power lines, many bridges were reconstructed and the track on the Midland City line lowered. King's Cross Midland station was built, with links to the underground. And, of course, the overhead wires were installed.
  All this work was completed within the time scale set at the start of the project and within the cost target. The Bedford-Luton section of the line was switched on in January 1981 and used for driver training. The line to Moorgate was ready in May 1982. Electrification of St. Pancras station was completed during last summer, as planned. But the new trains still did not run.
  At present, the service is being provided by trains that should have been withdrawn. British Rail has had to face extra maintenance costs to keep them in service. The railways, their customers, and the taxpayer have lost the benefit of nine months of using the new trains on the Bedford-St. Pancras line. Luton and St. Albans should be served by four trains an hour in each direction throughout the day, and Bedford by two. The average journey time from London to Bedford should have been reduced by 20 minutes and to Luton by 11 minutes. As it is, passengers on this line have had to suffer a reduced service and overcrowding at peak periods. I regret this. Luton and St. Albans have only two trains an hour in each direction during the day, and Bedford only one.
  The pity is that this is totally unnecessary. The travelling public have suffered. The image of the railways has been harmed and the climate for further investment has been made less favourable as a result of the unions' action. Yet the issue is basically a simple one. The new trains for the Bedford-St. Pancras line have been designed and built so that they can be operated by the driver alone. The Railways Board has, therefore, decided, quite rightly, that it makes no sense for trains to have both a driver and a guard. It sees this as one of the central areas where there is scope for productivity improvements to help to reduce its costs.
  The board, and many railwaymen, realise that they must achieve productivity improvements to secure the modern and efficient railway we all want to see. We must compliment BR on what it has done so far in that direction. Of course, more needs to be done, and the board can count on the Government's full support in its continuing efforts to achieve further improvements.
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  The search for improved productivity on the railways has not been exclusively the province of the Railways Board. The rail unions have advanced their own ideas for achieving better productivity, and several Opposition Members have given the House the benefit of their ideas. These have always had the same theme—"Increased investment leads to improved productivity; give us the investment and we will deliver the productivity " The appalling example of the Bedford-St. Pancras saga shows a completely different picture. Here we have some £150 million invested in new rolling stock and special infrastructure designed to provide a modern, fast, efficient and comfortable service by May 1982. But what has happened? The benefits to the customers have been lost. The only real journey that those new trains have made is into the sidings; they are still there.
  Mr. Skeet: When will we have the electrification?
  Mr. Eyre: I am seeking to answer that question to my hon. Friend's satisfaction.
  Let us examine the reasons why the new trains are still standing idle in Cricklewood sidings. Diver-only operation of trains on the Bedford-St. Pancras line was one of the six productivity points in the twin agreements on pay and productivity which formed part of the 1981 railway pay settlement. There then followed a full year of negotiations about what the unions were supposed to deliver under the terms of the productivity understanding, when they were supposed to deliver it, and what should be the role of guards on trains that have no need for them. It was only after Lord McCarthy, in an arbitration award on pay and productivity in September last year, had suggested a formula that would allow single manning to take place with guards retained for a period of six months on non-guard duties, that the NUR agreed to the principle of driver-only operation.
  The Railways Board therefore opened negotiations with the NUR and ASLEF on supplementary payments for staff whose responsibilities would change under the new arrangements. It made an offer which the NUR accepted, ASLEF chose, to take the issue through all the stages of the negotiating machinery. It now rests with Lord McCarthy, the chairman of the Railway Staff National Tribunal, to arbitrate on this question. I am sure that the whole House will join me in hoping that Lord McCarthy makes his award clear and realistic, and that he makes it quickly.
  Hon. Members will, I am sure, have seen the press reports of remarks made by the chairman of the Railways Board about railway negotiating procedures. He cited the Bedford-St. Pancras negotiations as an example of how the industry's existing machinery of negotiation was inadequate to cope with the need for rapid change. I emphasise that it is, of course, entirely a matter for the Railways Board to negotiate any changes to the existing machinery with the unions which it may conclude are necessary. The Government have no locus in this, although, of course, we shall look forward with interest to seeing how its ideas on this important subject develop.
  The House will wish to know how that sad story affects the case for further electrification. The Government have already approved electrification to Harwich, Ipswich and Norwich, and preliminary work has started on this scheme and on the line between Paisley and Ayr. We have the board's proposals for the electrification of the east coast

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  main line to Leeds and Newcastle, the schemes with top priority in its 10-year programme of main line electrification. We hope to announce a decision shortly on the board's proposal to electrify the Tonbridge-Hastings service, and we are awaiting further information to establish whether it would be worth while to electrify both lines to Cambridge, from Royston and Bishop's Stortford.
  We have told the board that we cannot reach a decision on the east coast main line proposals without regard to prospects for the inter-city business, which would be the major beneficiary. Inter-city has a remit to run at a profit; and when we see a satisfactory plan for the business, the way will be open for a decision on the electrification of the east coast main line. We hope to receive the board's
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  business plan shortly. Decisions on the balance of the 10-year programme will have to be reached in the context of the debate on the future of the railway as a whole.
  However, the case for electrification, as for any other major investment, is bound to be affected by the unions' readiness to co-operate in improving productivity. The more the railways can save through higher productivity, the more will be available to invest in worthwhile schemes. The problems on the Bedford-St. Pancras line show how slowly this lesson is being learnt. But I hope, for the sake of my hon. Friend's constituents, whose interests they have represented so strongly, that the unions will yet show, by quickly agreeing to operate the service, that they realise how far the future of the railways is in their hands.
  Question put and agreed to.
  Adjourned accordingly at half-past Twelve o'clock.