Commons Sitting of 20 February 1984

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

    Bogside Mine, Fife
    Mr. Douglasasked the Secretary of State for Energy if he will make a statement regarding the consultation which took place between the National Coal Board and his Department before the announcement on 3 February of the cessation of production at Bogside mine in Fife.
    The Under-Secretary of State for Energy (Mr. Giles Shaw): Colliery closures are a matter for the National Coal Board, which has well-established arrangements, agreed with the mining unions, covering procedures at local and national level. These do not call for consultation with my Department, and none took place.
    Mr. Douglas: Is that not an extremely innocuous reply in the circumstances? As in England, the NCB sees fit, in its wisdom, to ask the mine managers' union to give cover, while in Scotland it has decided not to request similar cover for maintenance and safety, will the Minister institute an inquiry, preferably public, into all the elements surrounding the problems affecting the Bogside closure on 3 February, so that there will be a halt to the NCB's vindictive attitude in Scotland, which is causing disruption in the coalfield?
    Mr. Shaw: I regret that the hon. Gentleman should see fit to criticise the NCB management in any part of the United Kingdom on such a matter. I do not intend to intervene in a matter involving safety provision. That must be for the local NCB management and the active discussion of those involved.
    Mr. Mason: In view of the increasing numbers of pit closures in recent months, what changes have taken place in the closure procedures used by the NCB? Is the Minister aware that there seems to be a new element of dictatorship in pit closures? Who is responsible for the introduction of that dictatorship—the chairman, Ian MacGregor, or the Department of Energy?
    Mr. Shaw: The right hon. Gentleman is referring to a range of pit closures, all of which have been through the normally accepted procedures, and all of which have resulted in closure by voluntary redundancies. The right hon. Gentleman should recognise that over 11 years there were 295 closures and over the years both management and many others commenting on the industry have said that that is essential if the industry is to recover some viability with its enormous loss-making capacity.
    Mr. Orme: I support my hon. Friend the Member for Dunfermline, West (Mr. Douglas) on his strong point. Does the Minister agree that there appears to be a change in procedure and an escalation in the effect of pit closures? Will he comment on the report in The Observer yesterday, which forecast the loss of 37,000 more jobs over the next 12 months, with 30 pits to close? Will that also lead to a change in procedure? What has the Minister to say to that?
    Mr. Shaw: The right hon. Gentleman is wrong to infer that there has been any change in procedure. The procedure for the evaluation of pits is traditional in the industry, is annual in extent, and covers every pit in the United Kingdom, as the right hon. Gentleman knows. The facts of the closure are similar today in relation to decisions taken to those during the period of the Labour Administration when, in 11 years, 295 pits closed.
    Mr. Douglas: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise this matter on the Adjournment at the earliest opportunity.

    Gas-gathering Projects
    Mr. Wallaceasked the Secretary of State for Energy what consultations he has had regarding further North sea gas-gathering projects; and whether he will make a statement.
    The Secretary of State for Energy (Mr. Peter Walker): I am in regular touch with the oil industry over its plans for offshore developments, including, as appropriate, plans to expand or extend the present gas-gathering infrastructure.
    Mr. Wallace: As the Government's failure to back an integrated gas-gathering project in 1981 now means that we have to import more expensive Sleipner gas, and as private industry has failed to respond to the initiative at the end of last year for a gas-gathering system in the central North sea, do not the Government have a duty to take an initiative in this matter to ensure future continuity of supplies from our resources and to avoid the loss of, according to one estimate, up to 20 per cent. of our North sea gas reserves?
    Mr. Walker: Before making such remarks the hon. Gentleman should learn more about the facts. It is wholly untrue that, as a result of not preparing certain pipelines in previous years, we shall now be dependent upon importing gas from Norway. As the hon. Gentleman should know, we have been importing gas from Norway for some time. It can even be argued that certain changes in the pipelines in the period that the hon. Gentleman mentioned will mean that the gas will be available in the 1990s, when it will be more needed.
    Mr. Rowlands: Is the Secretary of State aware that in 1981 the integrated gas-gathering line proposal was sunk and sabotaged by the Cabinet, against the advice, it appears, of the right hon. Gentleman's predecessor and the Minister of State of the day? When shall we have in place a comprehensive gas-gathering pipeline, whether financed by the private or the public sector?
    Mr. Walker: The hon. Gentleman will be delighted to learn that a great deal is going on at present. Three major schemes have been approved during the past year. I am very confident that what we are now seeing is the

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    completion of a network which will bring us a great deal of gas at the time when we need it. Compared with 1979, for example, the amount of gas flaring now required is down by 45 per cent.

    Energy Efficiency Office
    Mr. Rostasked the Secretary of State for Energy if he will make a statement on the policy objectives of the Energy Efficiency Office.
    Mr. Peter Walker: The objectives of the Energy Efficiency Office are to encourage increased efficiency in energy use; to help all consumers to get better value for money from the energy they consume, and to increase industrial and commercial competitiveness.
    Mr. Rost: Does my right hon. Friend agree that one measure of success ought to be the effectiveness of the energy efficiency industries, which are now working at well below capacity? Will he brief himself on the recent meeting between the Energy Efficiency Office and the Structural Insulation Association, at which weaknesses in the working of the Homes Insulation Act 1978 and inadequacies in the building regulations were pointed out?
    Mr. Walker: We are very carefully studying the results of that meeting. I am pleased to say that for the coming year there will be a substantial increase in the provision of grants for home insulation. I hope that full advantage will be taken of this. In all spheres, industrial and domestic, we are encouraged by the very considerable increase in activity over the past few months.
    Mr. Orme: What discussions has the Secretary of State had with the Secretary of State for the Environment to enable financial guidelines to be given concerning insulation work for housing?
    Mr. Walker: I am delighted to say that in one or two places where there were snags in the last few months of this financial year, as a result of overspending of capital allocations, it has been possible to have allocations of more than double for next year.

    Domestic Energy Prices
    Mr. Canavanasked the Secretary of State for Energy if he will list the increases in the domestic prices of coal (pithead price), electricity and gas that have taken place since January 1981.
    Mr. Peter Walker: The Department of Employment index shows that the domestic price of coal has increased by 22 per cent. over the period January 1981 to December 1983, that of gas by 54 per cent. and that of electricity by 21 per cent. The average pit-head price of domestic coal increased by 21 per cent. over the same period.
    Mr. Canavan: Bearing in mind the excessive nature of the increases, particularly with gas, where the price increase has been over twice the rate of inflation, why are the Tory Government, who claim to be non-interventionist, intervening to put prices up, thereby plunging hundreds of thousands of families into fuel poverty? Will the Secretary of State give us an absolute assurance now that no further demands will be made on the energy supply industries to raise their prices even further?
    Mr. Walker: If the hon. Gentleman holds those views, he should start canvassing vigorously for the Tory
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    candidate in Chesterfield. During the period for which the Labour candidate for Chesterfield, Mr. Benn, was responsible, domestic coal prices soared at much faster rates, as did gas and electricity prices.
    Mr. Skeet: In view of the Government expenditure programme for 1984 to 1987, under which the electricity and gas supply industries will have to pay considerably more to the National Coal Board, would it not be a fairer result to allow electricity and gas to make a takeover bid for the NCB?
    Mr. Walker: I have detected no signs of eagerness on their part to do so.
    Mr. Hardy: Does the Secretary of State agree that the figures he gave the House confirm that the Government's commitment to energy conservation is based overwhelmingly on a reliance on pricing? Does he further accept that present domestic prices of coal, gas and electricity are higher than they need to be, higher than they ought to be, and that, for industry, they are higher than those charged by our competitors who pursue more intelligent policies?
    Mr. Walker: No, Sir. Before the hon. Gentleman makes assertions of that kind he should look, for example, at the recent CBI survey, which shows that in the majority of industries that simply is not true. The CBI identifies a minority of industries where there are some problems, but it says that the majority of industries are very competitive. The astronomic increases in industrial charges that took place under the last Labour Government are in stark comparison with what has happened under this Government.
    Mr. Rathbone: How do the prices of coal, gas and electricty in this country compare with those in other EC states?
    Mr. Walker: Certainly over the past year prices in, for example, France, Italy and other European countries, have risen far faster.

    British National Oil Corporation
    Mr. Haywardasked the Secretary of State for Energy if the Government have any intention of altering the status of the British National Oil Corporation.
    Mr. Peter Walker: I do not envisage changes in the status of the corporation. The review of BNOC's operations promised by my predecessor to the Select Committee will be completed shortly.
    Mr. Hayward: Does my right hon. Friend the Secretary of State accept that the creation of Britoil has been fairly successful, and that BNOC would benefit from a further splitting off into separate entities?
    Mr. Walker: At present I have no plans to do that, but I agree that Britoil has been successful.
    Mr. Douglas: What would be the status of agreements with the oil companies, in terms of oil coming to BNOC, if any changes were made, and what losses does the right hon. Gentleman expect BNOC to make?
    Mr. Walker: I do not at present anticipate any losses by BNOC, and I hope that during the past year it will have made a profit.
    Mr. Rowlands: I remind the House of the crucial role that BNOC played in trying to stabilise oil supplies in this country during the crisis in 1979. In view of the serious

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    situation that is developing now between Iran and Iraq in the Gulf, will the Secretary of State hold urgent discussions with BNOC and the International Energy Agency to ensure that we are better prepared than we were in 1979?
    Mr. Walker: I agree that stability in prices is very important, and BNOC has an important role to play in that connection. As for consultation, I am in constant contact with BNOC.

    Coal Subsidies
    Mr. Rogersasked the Secretary of State for Energy what is the current level of production subsidies to the coal industries of the United Kingdom, Belgium, France and Germany, respectively.
    Mr. Peter Walker: Production benefits both from capital investment financed by the Government and from direct subsidies on coal production. The figures from the European Commission for production subsidies and investment finance in 1982 are:

    £ million

    United Kingdom

    1,088

    Federal Republic of Germany

    682

    France

    347

    Belgium

    138

    Mr. Rogers: Does the Secretary of State accept that in giving the figures in that way he is distorting them? [HON. MEMBERS: "No."] I know that the Secretary of State is an expert at realigning figures. Will he not accept that it would be far fairer to relate the answer to the total tonnage and the number of people involved, instead of distorting the picture, as he did in his answer?
    Mr. Walker: I am willing to compare those figures with those for any country in western Europe. No country in western Europe currently has such a good record towards its coal industry as this Government have towards ours. I suggest that the hon. Gentleman has a good look at the record of the Socialist Government in France on the coal industry there during the past two years.
    Mrs. Currie: Does my right hon. Friend agree that subsidies of £1,000 million during the past year to the British coal industry are far too high, particularly bearing in mind everything else that we have to spend money on? Does he agree that they simply put off the evil day when loss-making pits must be closed?
    Mr. Walker: It is correct to invest heavily in new coal production, because that will be far more efficient and economic for the future. The coal industry has an important part to play in supplying the country's future energy resources. This year the NCB will receive more than £900 million in subsidies, which is equivalent to £90 per miner per week.
    Mr. Foulkes: Is it not true that the Secretary of State has twisted the figures yet again, and that the subsidy per tonne of coal produced in Belgium, France and Germany is much higher than in the United Kingdom? Those countries are supporting their coal industries for patriotic reasons, but once Mr. MacGregor has his way, under the direction of the Secretary of State, the coal industry in Wales and Scotland will be devastated, and the social consequences of running the industry down in the
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    peripheral areas will be disastrous. Will the right hon. Gentleman admit that compulsory redundancies in the coal industry will be inevitable?
    Mr. Walker: I find that sort of nonsense from the Opposition quite remarkable. It could not be better illustrated than by the fact that their candidate at a certain by-election is the man who was the last Labour Minister responsible for the industry. In real terms, he paid the miners less, invested less in the mining industry, achieved lower productivity and gave less generous payments to redundant miners than at present.

    Privatisation
    Mr. Marlowasked the Secretary of State for Energy if he will outline his timetable for privatisation within the energy industry.
    Mr. Peter Walker: I am of course examining the scope for transfers to the private sector in the state-owned energy industries. I will inform the House in due course of my conclusions.
    Mr. Marlow: Since, as my right hon. Friend just said, the coal industry is costing everybody in work in this country nearly £1 per week, does he have any plans for privatising it, and if not, why not?
    Mr. Walker: I do not believe that the coal industry at the present time is in a situation in which we can consider privatisation. The important thing is to ensure that one takes advantage of the massive investments being made in order to produce an efficient and economic industry. That is what we are doing.
    Mr. Lofthouse: When does the Secretary of State expect the sale of the Wytch farm oilfield to be completed? Does he support the stand of the British Gas Corporation in refusing to sign and complete the arrangements abroad, given that such completion would deny the Government £3 million in stamp duty? Will the right hon. Gentleman give an assurance that that asset, and any other assets, will be sold only at the full economic value? Is the right hon. Gentleman aware of a letter sent by his predecessor, advising the BGC to sell the Wytch farm oilfield to the Dorset bidding group at less than the full economic value?
    Mr. Walker: I expect that completion of the Wytch farm sale will take place within a very short period of time. Contrary to the hon. Gentleman's suggestion, I know of no such objections by the BGC. As the hon. Gentleman knows, the BGC has been negotiating with the group that put in the highest tender.
    Mr. Renton: With his customary vigour, will my right hon. Friend ensure that, by the time of the next election, the domestic consumer has more than one choice as to where to buy his electricity or gas? Is my right hon. Friend aware that natural gas is still not available to many hundreds of houses in my constituency and that the local gas board has no plans to make it available? Surely the consumer would welcome competition in the industry, just as he welcomes it in British Telecom.
    Mr. Walker: It is highly unlikely that two supplies of gas and two supplies of electricity would be available to individual domestic consumers anywhere in the world. There are not many free enterprise countries—certainly not Japan, America, Germany, for example — where

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    there are two such options. I am certainly in favour of those industries being as efficient as possible. Under the 1983 Act, anyone is entitled to set himself up as a supplier, in competition, if he so wishes.
    Mr. Allen McKay: Will the Secretary of State reconsider his answer to the hon. Member for Northampton, North (Mr. Marlow)? The right hon. Gentleman spoke about there not being privatisation at the present time. Does that mean that he intends to privatise the industry at some future date?
    Mr. Walker: I have made it clear several times from the Dispatch Box that I should be willing to consider any offer by the miners to form a workers' co-operative. If at any stage they wish to do that, individually or collectively, I shall be interested in considering it.
    Mr. Heathcoat-Amory: Does my right hon. Friend agree that, although a change of ownership is necessary, the overriding need is for greater diversity of competition? Will my right hon. Friend therefore be cautious about privatising such industries without first removing their privileges.
    Mr. Walker: I shall carefully examine any privatisation proposals to discover the advantages and disadvantages. I know that my hon. Friend, with his knowledge of the industry, will recognise that there is little likelihood of each household in his constituency being offered two gas supplies and two electricity supplies. That is the reality. Certainly one could have a system which is far less bureaucratic, less subject to political interference and with more incentive to efficiency than the present system.
    Mr. Mason: Will the Secretary of State reassure the House that he has no intention of privatising deep coal mine output? Can he now tell the House what he has in mind for privatising ancillary activities?
    Mr. Walker: I repeat that at present I have no plans for the privatisation of the coal industry—certainly in the foreseeable future. The long-term future is a matter to be considered in the future. If we could put the coal industry in a position so that we could find a better system of ownership in the interests of the country, I should like to pursue that.
    Mr. Rathbone: When encouraging or attracting private capital to present operations, will my right hon. Friend encourage the suppliers of energy to report their performance in return-on-investment terms, which are more comparable with the normal private sector measurements than the terms presently used?
    Mr. Walker: Yes. That is a valid point which we shall look at.
    Mr. Orme: Are the electricity and gas showrooms included in the Secretary of State's timetable for privatisation?
    Mr. Walker: I have no specific timetable or proposals for privatisation at present. I am examining all the prospects, and I shall be delighted to inform the House as soon as conclusions are reached.

    Gas (Self-sufficiency)
    Mr. David Atkinsonasked the Secretary of State for Energy how long he estimates Great Britain will be self-sufficient in gas.
    Mr. Peter Walker: Estimates of proven United Kingdom continental shelf gas reserves are equivalent to some 14 years of gas consumption in Britain at 1983 levels. The life of United Kingdom continental shelf gas reserves is, however, prolonged by the availability of gas imports, which currently provide between 20 and 25 per cent. of total supplies to the British market.
    Mr. Atkinson: I thank my right hon. Friend for that reply. In view of his answer to the hon. Member for Orkney and Shetland (Mr. Wallace) today, will he comment on Friday's press reports that the British Gas Corporation is seeking to import Norwegian gas at a price one-third higher than the cost of producing from British fields? Does my right hon. Friend or British Gas have any plans to import gas from Siberia?
    Mr. Walker: I have no plans to import gas from Siberia.
    Mr. Foulkes: Why not?
    Mr. Walker: I should certainly like to send certain people to look at it.
    The British Gas Corporation is in the process of conducting negotiations with Norwegian gas suppliers. Of course it will report to me on the state of those negotiations, but nothing has been finalised.
    Mr. Hardy: Does the Secretary of State accept that extended self-sufficiency is hardly assisted by the extensive gas flaring to which he has already referred. Does he further accept that the position in 1979 was due largely to the special circumstances of the Brent field? Should we not have learnt to do a great deal better in the intervening five years?
    Mr. Walker: The hon. Gentleman will be delighted to know that we have done a great deal better. Gas flaring is now about 45 per cent. less than it was then.
    Sir Dudley Smith: Further to the point made by my hon. Friend the Member for Mid-Sussex (Mr. Renton), is my right hon. Friend aware that a varied minority of my constituents are extremely puzzled by the fact that, although some of them live within a mile of a gas pipeline, they cannot get gas supplies? I suspect that that applies in many areas. In the circumstances, because of their feelings in this respect, will my right hon. Friend have discussions with the chairman of the British Gas Corporation about the problem and consider bringing forward fresh legislation to make it much easier to extend gas supplies?
    Mr. Walker: If my hon. Friend draws my attention to a specific case in his constituency, I shall be only too delighted to refer it to and ask the chairman of the BGC to consider it. The coverage of domestic users in this country is very high compared with most other countries. In many countries where there is freedom to operate private as well as public utilities, substantial numbers of the population do not have gas supplies made available to them.

    Electricity Generation (Nuclear Power)
    Mr. Berminghamasked the Secretary of State for Energy if he will indicate the percentage of generated electricity produced by nuclear power in 1981, 1982 and 1983, respectively.
    Mr. Giles Shaw: In England and Wales, nuclear power supplied 11 per cent. of total electricity generated in 1981–82 and 14 per cent. in 1982–83. The latest estimate for 1983–84 is 14 to 15 per cent. Matters concerning electricity generation in Scotland are the responsibility of my right hon. Friend the Secretary of State for Scotland.
    Mr. Bermingham: In view of the excess that already exists in generating capacity in Britain—the percentage of excess depending, of course, on how one calculates it —does the Minister agree that any further investment in PWR-type reactors would be a waste of money, because we have more than enough capacity, in any event, without increasing investment in that area?
    Mr. Shaw: The hon. Gentleman's reference to the Sizewell B inquiry must remain sub judice for the time being. On his general point, he must agree that the importance of diversity in fuel policy lends great weight to the sensible development of alternative technologies, of which nuclear technology is one, and that is a central part of the Government's policy.
    Mr. Crouch: Does my hon. Friend think that the figures that he has given for generated electricity from nuclear power will be sufficient in future? Does he agree that by the end of the century we shall need at least 20 per cent. of electricity to be generated by nuclear power?
    Mr. Shaw: My hon. Friend is right. One of the obvious facts of comparison between generation costs in this and other European countries is that there are significantly greater percentages in European generation, and that of itself has given rise to complaint that our electricity prices are not quite so low.
    Mr. Campbell-Savours: If the Minister wishes to retain an efficient nuclear power industry in Britain, would it not be better to retain it within the public sector? May we have an absolute assurance that BNFL will not be privatised during the lifetime of this Government?
    Mr. Shaw: The hon. Gentleman knows that the future of BNFL is a matter which at present is naturally causing the greatest possible examination. He will agree that the operations of this industry must be of the highest possible standard of safety. That question will, therefore, continue to concern the Government, and we have committed full resources to achieve that.
    Mr. Kenneth Carlisle: Is not the price of electricity in France much cheaper than it is here because so large a proportion is generated by nuclear power?
    Mr. Shaw: My hon. Friend is right. The average price in France is significantly less for industrial users because of the high proportion of nuclear generation.
    Mr. Chapman: In answer to an earlier supplementary, question my hon. Friend referred to Sizewell B. Has he been given any information about when the inquiry will conclude and when the report of the inspector will be presented to his right hon. Friend?
    Mr. Shaw: The timing of the inquiry and all matters relating to it are in the extremely capable hands of Sir Frank Layfield, and he will come to his own conclusions.

    Coal Industry (Investment)
    Mr. Burtasked the Secretary of State for Energy what was the annual level of capital investment in the coal industry during the years 1974 to 1983.
    Mr. Giles Shaw: Total capital investment during the years April 1974 to March 1979 and April 1979 to March 1983 was £1,472 million and £3,138 million respectively. I have arranged for the annual breakdown of these figures to be published in the Official Report.
    Mr. Burt: Will my hon. Friend confirm that the NCB's investment in the Asfordby pit is the largest since approval was given by the 1970–74 Conservative Government for the Selby project? Is this not a further reason why the good voters of Chesterfield will be knocked over in the rush of miners to be first to the polls on by-election day to vote for the Conservative candidate?
    Mr. Shaw: There can be no question but that investment by Conservative Governments in the coal industry has been second to none. In the period between 1974 and 1983, £7·5 billion in real terms was invested in the coal industry. My hon. Friend is right to say that Asfordby is a powerful demonstration that the coal industry has a future, provided that it is productive, efficient and competitive in price.
    Mr. Boyes: Is the Minister aware that 700 men at Herrington colliery in my constituency are interested in his opinion that the coal industry has a future? They will set that against their meeting with Mr. MacGregor last week, when they argued that the pit should be kept open. As my hon. Friend the Member for Rhondda (Mr. Rogers) suggested, would it not make sense to use some of the Government's investment to keep pits open where there is still coal, rather than create longer dole queues?
    Mr. Shaw: The hon. Gentleman will have to choose between exploiting reserves at prices that the market will find acceptable and regarding the coal industry from an entirely different point of view and allowing it to decline. When the Asfordby investment is completed, it will yield about 2·2 million tonnes per annum at highly competitive prices. Each coal board area must recognise these factors, and I believe that there is that recognition.
    Mr. Eggar: As the National Union of Mineworkers has failed to live up to its part of "Plan for Coal", is my hon. Friend satisfied that the nation is getting a decent return on its investment in the coal industry?
    Mr. Shaw: The nation has not been getting an adequate return on its investment in the coal industry for decades. It is high time that the Government, having control of the nation's economy, made strenuous efforts to ensure that that position is reversed. That is the object of my right hon. Friend's policy.
    Mr. Rowlands: Does the Minister agree that some of the finest investment has been in some of the oldest pits and that that has resulted in production as well as productivity records being broken? Those engaged in the mining industry in my constituency can testify to that. We have read press reports over the weekend of Mr.

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    MacGregor's so-called survival plan. Is the hon. Gentleman aware that it will be seen in many coalfields not as a survival plan but as a recipe for the destruction of the industry?
    Mr. Shaw: I agree that there have been many instances of good returns from investment in old pits. There have also been many instances of considerable productivity improvements. However, the hon. Gentleman will be aware that an average improvement of 4 per cent. a year was achieved only last year, when it was the intention of "Plan for Coal" to achieve an annual improvement in the rate of produtivity of 4 per cent. That is the way in which the industry has to go.
    Following is the information:

    Total additions to fixed assets in the United Kingdom including interest and leasing:

    Year

    Capital Investment £ million

    1974–75

    145

    £1,472 million in five years April 1974 to March 1979

    1975–76

    217

    1976–77

    280

    1977–78

    350

    1978–79

    481

    1979–80

    661

    £3,138 million in four years April 1979 to March 1983

    1980–81

    807

    1981–82

    812

    1982–83

    858

    1983–84*

    800

    *Approved.

    Energy Conservation
    Mr. Mark Robinsonasked the Secretary of State for Energy what assessment his Energy Efficiency Office has made of potential savings from energy conservation in industry, and, in particular, the steel industry.
    Mr. Peter Walker: The Energy Efficiency Office estimates that British industry could save 20 per cent. of its energy use from cost-effective energy efficiency measures. In 1982 prices, that is equivalent to a saving of £1·3 billion. There is considerable potential for further savings in the steel industry.
    Mr. Robinson: I believe that my right hon. Friend's answer demonstrates the value of the Energy Efficiency Office. Is assistance available to firms which wish to monitor energy conservation? Are any specific energy conservation projects available to the steel industry?
    Mr. Walker: I assure my hon. Friend that grants are available for energy surveys and audits, for example. The Allied Steel and Wire project at Cardiff has produced energy savings of 90 per cent. with a six month pay-back. I am glad to say that the Government contributed to the survey that resulted in that success.
    Mr. Wallace: Is the Secretary of State aware that 30 per cent. grants are not available for firms in Scotland investing in ventilation control, draught exclusion and cavity wall insulation? What consultations has he had with the Secretary of State for Scotland on this issue?
    Mr. Walker: I have the closest collaboration with my right hon. Friend the Secretary of State for Scotland. A great deal of progress is being made in Scotland as well as in England.

    Alternative Forms of Energy
    Mr. Chapmanasked the Secretary of State for Energy if he will report progress on United Kingdom research into alternative forms of energy.
    Mr. Peter Walker: Continuing progress is being made in research on those technologies with the best prospects.
    Mr. Chapman: I appreciate that Government grants for research into alternative forms of energy have increased more than fourfold in the past five years. Will my right hon. Friend confirm that research work is being undertaken in collaboration with other EEC countries to ensure that there is no waste or duplication of necessary effort?
    Mr. Walker: I am grateful to my hon. Friend for asking that supplementary question, because I think that there is waste and duplication. I have recently had talks with a number of European colleagues who are responsible for energy to ascertain whether we can collaborate more closely. I am having talks next month with the American Secretary of State for Energy to see whether similar collaboration can be achieved with the United States.
    Mrs. Renée Short: What support is the Secretary of State giving to British firms that are developing wind energy as an alternative source of energy for the desalination of sea water, bearing in mind that that has considerable interest for Third-world countries and the export potential for British firms?
    Mr. Walker: This matter is of interest. I know that the hon. Lady will be pleased to hear that a few months ago I gave the go-ahead for a £3·2 million wind generator project at Carmarthen bay.

    Industrial Gas and Electricity Supplies
    Mr. Tony Lloydasked the Secretary of State for Energy if he has issued any guidelines about the termination of gas and electricity supply to industrial users; and if he will make a statement.
    Mr. Giles Shaw: No, Sir. This is primarily a matter for the judgment of the gas and electricity supply industries.
    Mr. Lloyd: Does the Under-Secretary of State accept that industry and employment already suffer because of high energy prices and that in the tragically all too frequent number of firms going into receivership the gas and electricity boards have a responsibility to be flexible, especially towards companies such as James H. Dennis, in my constituency in Trafford Park, which went into receivership? Does the hon. Gentleman consider that the North-Western electricity board, in insisting on being treated as a secure creditor for all outstanding debts before it maintained the electricity supply was irresponsible, threatening as it did the survival of the company? Will the Minister reconsider the answer that he has just given?
    Mr. Shaw: I shall not reconsider my answer. I accept that there are occasions when there must be flexibility. I am sure that, as a matter of course, the gas and electricity boards have such flexibility. It is important that they act commercially in relation to their supply contracts. I believe that the hon. Gentleman has a particular constituency case in mind. I am sure that my noble Friend

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    the Under-Secretary of State who is responsible for these affairs in the Department of Energy will see him and discuss those matters.

    National Coal Board
    Mr. Dormandasked the Secretary of State for Energy when he next proposes to meet the chairman of the National Coal Board.
    Mr. Jannerasked the Secretary of State for Energy when he next expects to meet the chairman of the National Coal Board.
    Mr. Peter Walker: I meet the chairman of the NCB regularly.
    Mr. Dormand: Is it not suspicious that Opposition Members cannot get a straight answer about the reports in yesterday's edition of The Observer about the Government pressing the chairman of the NCB to close 30 pits and get rid of 30,000 jobs? When will the Secretary of State realise that closing a pit destroys a whole community? We are talking, not just about miners and their families, but about small and large businesses, the location of industry, and so on.
    Mr. Walker: There is no direction from the Government to close any number of pits over a particular period. Therefore, any such report is untrue. Of course I recognise that pit closures cause difficulties to local communities. The hon. Gentleman, who has been a Member for a long time, will recognise that over eight years of Conservative government there were 68 pit closures, but over 11 years of Labour government there were 295 pit closures.
    Mr. Ryman: Does the Secretary of State appreciate the enormous seriousness of the rumours circulating in the north east of England about possible pit closures and redundancies, particularly the Bates colliery in Blyth? For example, is the right hon. Gentleman aware that a rumour is circulating that about 800 men are to be made redundant in the north east as a result of secret redundancy plans of the NCB?
    Mr. Walker: There is no such thing as secret plans, in the sense that there is an agreed procedure with the National Union of Mineworkers that has to be followed when pit closures are proposed.
    Mr. Orme: Why does the Secretary of State not give a direct answer to the question about the MacGregor survival plan? It does not represent survival for the industry, as we see it. Are the facts in yesterday's edition of The Observer true or not?
    Mr. Walker: I gave a direct answer. There is no direction from the Government about the number of pit closures taking place. Mr. MacGregor is following the procedures that were followed by the Labour Government when they closed 295 pits.

    Cross-Channel Electricity Link
    Mr. Hannamasked the Secretary of State for Energy when he expects the new cross-Channel electricity link to come into operation.
    Mr. Giles Shaw: I am advised that the CEGB expects to commission the first stage of the link in 1985, with the
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    second following a year later. The House will recall that the link was approved in principle in 1978, in order to facilitate the transfer of electricity in both directions.
    Mr. Hannam: I welcome my hon. Friend's reply. Does he agree that there are two main benefits from that link: first, that there will be greater flexibility of supply at times of peak demand; and, secondly, that we shall be able to sell our surplus electricity to the European grid system at good prices?
    Mr. Shaw: Yes, my hon. Friend is quite right. There was, and is, intended to be a two-way benefit from the supply and distribution of electricity.

    Electricity Council
    Mr. Cohenasked the Secretary of State for Energy when he will next meet the chairman of the Electricity Council.
    Mr. Peter Walker: I have regular meetings with the chairman of the council.
    Mr. Cohen: Will the Secretary of State consider discussing with the chairman the question of electricity prices, particularly the disparity of prices for electricity from the same grid? The cost in inner city areas can be higher than the cost in nearby areas. Some of my constituents have to pay 15 per cent. more than people living in Chingford, just down the road in the same borough.
    Mr. Walker: There are variations between different electricity boards. That has been so since the various electricity boards were set up in the regions. The hon. Gentleman has a problem in that his constituency covers the border between two electricity boards. I am sure that his constituents are relieved that the overall increase in the price of electricity is 2 per cent., and that the increase in standing charges is nil.

  HOUSE OF COMMONS

    Oral Questions
    Mr. Wareingasked the Lord Privy Seal if he will arrange for the rota of oral questions to be amended to accommodate a period for the Parliamentary Secretary to the Treasury.
    The Lord Privy Seal and Leader of the House of Commons (Mr. John Biffen): No, Sir.
    Mr. Wareing: Does the Lord Privy Seal recall the abuse of Executive power in the House on 18 November 1983 when I attempted to relieve the distress of many disabled people by introducing a private Member's Bill? Does he agree that the Minister who was responsible for the Whipping on that day should be answerable in the House? Does he further agree that private Member's days, especially the abuse of Executive power on such days, should be fully investigated by the Select Committee on Procedure?
    Mr. Biffen: I cannot share the hon. Gentleman's anxiety about there having been an abuse of Executive power on the date that he introduced his private Member's Bill. It seems to me that what happened then was exactly what had happened in the preceding Parliament on 21

    559
    February 1969 on the Disabled Persons' Pensions and Miscellaneous Provisions Bill introduced by my right hon. Friend the Member for Waveney (Mr. Prior). Consideration of such matters in a Procedure Committee is a possibility for the future.
    Mr. Aitken: Although the idea of Chief Whip's questions has a superficial attraction for both sides of the House, will my right hon. Friend firmly resist it, not least because he will know better than anyone else that the House works only because the usual channels are an entirely private method of communication?
    Mr. Biffen: I must agree with my hon. Friend. The virtues of the present convention of the usual channels are overwhelming, and it is that much more attractive than the prospect of the eloquence of my right hon. Friend the Chief Whip.
    Mr. Foulkes: If the Lord Privy Seal will not look at that type of oral question, will he have another look at the position whereby Welsh Question Time is in a three-week cycle, whereas Scottish Question Time, about which twice as many hon. Members are concerned, and in which many subjects involve the Scottish Office, is in a four-week cycle? Does the Lord Privy Seal agree—
    Mr. Speaker: Order. Is the hon. Member asking that the Parliamentary Secretary to the Treasury should answer those questions?
    Mr. Biffen: The powerful position of Scottish business in the affairs of the House excites general concern, but the matter raised by the hon. Gentleman could first be considered by the usual channels, and possibly ultimately by the Procedure Committee.

    Private Members' Motions
    Sir John Biggs-Davisonasked the Lord Privy Seal if he will propose the establishment of a Select Committee on Procedure to consider the procedure governing private Members' motions.
    Mr. Biffen: I hope to bring forward very shortly proposals for the establishment of a Select Committee on Procedure. If these are agreed to by the House, it will be open to the Committee to review any aspect of our procedures.
    Sir John Biggs-Davison: Declaring a non-interest as one who drew lucky in the ballot for private Members' motions, may I ask my right hon. Friend whether he will give favourable consideration to the proposal that I have put forward on a number of occasions, in vain, that Members of the House should be given a better chance in the ballot by those who are successful having their names withdrawn for the Session or Parliament?
    Mr. Biffen: I took note of my hon. Friend's remarks at the beginning of his speech in a recent debate that he initiated on this topic. However, the matter should be considered further within the answer that I have given.
    Mr. Mason: Instead of considering another Select Committee, will the Leader of the House consider abolishing the lot?
    Mr. Biffen: I suppose that that would provide a natural break in the sequence of events in our affairs. I shall give quite serious consideration to that point, but not until the next Select Committee has been established.
    Mr. Robert C. Brown: Does the Leader of the House agree that as long as there is time for private Members' motions, Front Bench speakers should have no right to abuse private Members' time, as they have increasingly tended to do?
    Mr. Biffen: All I can say is that it is an abuse, if that it be, practised by the Administration of which the hon. Gentleman was privileged to be a member.

  CIVIL SERVICE

    Redundancy Policy
    Mr. Chapmanasked the Minister for the Civil Service if he will make a statement on redundancy policies affecting civil servants.
    The Minister of State, Treasury (Mr. Barney Hayhoe): As my hon. Friend is aware, by April 1984 the Government will have reduced the Civil Service by over 100,000 since 1979. About 10 per cent. of that reduction will be accounted for by redundancies, and it is our policy to rely on natural wastage to the greatest extent possible.
    Mr. Chapman: How many of that 10 per cent. were industrial civil servants who, by the nature of their employment, were doing specialist jobs and who therefore could not be offered alternative employment within the Civil Service? In the further proposals for a reduction of 37,000 civil servants by 1988, have the Government estimated the likely number of involuntary redundancies that will be entailed?
    Mr. Hayhoe: I cannot give the figures in precisely the form for which my hon. Friend has asked, but, of the 10 per cent., about 2,500 were non-industrial civil servants and about 8,000 were industrial civil servants. In the future rundown of the Civil Service we shall continue to rely on natural wastage as much as we can.
    Mr. Meadowcroft: In view of the Minister's previous sympathetic reply on the question of secondment, is he prepared to consider secondment before redundancies are made for senior civil servants?
    Mr. Hayhoe: I am not entirely clear what the hon. Gentleman means by secondment in connection with the retirement of senior civil servants. There is a premature retirement arrangement which is used across the Civil Service, but I am not sure which of the examples the hon. Gentleman has in mind. If he writes to me, I will try to give him a detailed reply.
    Mr. Burt: Will my hon. Friend ensure that the search for reductions in the Civil Service does not become an end in itself rather than a means to an end? In the Inland Revenue, civil servants who are taken away from inspecting taxes may be bringing in more than the Government save by axeing their salaries. Will my hon. Friend advise caution? Will he advise that, where reductions are made, they are effective and not just for the sake of reducing the head-count?
    Mr. Hayhoe: Yes. My hon. Friend is right in saying that we should make reductions for the sake of effectiveness. The question of civil servants in the revenue Departments—the Inland Revenue and the Customs and Excise — was referred to in our debate on the Civil Service last October. I refer my hon. Friend to the remarks that I made then.
    Dr. McDonald: Is the Minister aware that the non-mobile, low-paid civil servants at GCHQ have three options — redundancy, accepting the ban on union membership, or being found work in one of the 10 Civil Service establishments within daily travelling distance of Cheltenham? Is he further aware that there are, at best, only 1,000 posts in the grade in question within daily travelling distance of Cheltenham and that there are over 1,000 civil servants in that grade in GCHQ? Do those civil servants not therefore have to choose between giving up their right to union membership and being blackmailed into redundancy?
    Mr. Hayhoe: There is no question of blackmail. The hon. Lady's facts are entirely correct. She drew them from my replies to questions. She should address her suppositions and detailed questions to my right hon. and learned Friend the Foreign Secretary.

    Financial Management Inititative
    Mr. Eggarasked the Minister for the Civil Service if he is satisfied with the speed of implementation of the financial management initiative.
    Mr. Hayhoe: Good progress is being made in strengthening financial management in Government Departments but a lot remains to be done.
    Mr. Eggar: Exactly what role is the Management Personnel Office carrying out to ensure that the more that needs to be done is done?
    Mr. Hayhoe: Central Departments are advising Departments. I know that my hon. Friend takes a close interest in these matters. He will find that progress is being made. We are committed to a White Paper in July this year to report on the plans that were announced last September. I am sure that it will show that significant progress is being made.

    Trade Union Membership
    Mr. Teddy Taylorasked the Minister for the Civil Service what percentage of civil servants are members of trade unions.
    Mr. Hayhoe: Detailed figures of the total number of civil servants who are members of trade unions are not available.
    Mr. Taylor: Apart from the major dispute, when the Government felt it right to withdraw automatic pay comparability, relations with the Civil Service unions have been marked by responsibility, integrity and co-operation. Will the Government bear that favourable record in mind when seeking solutions to current problems?
    Mr. Hayhoe: I am sure that they will.
    Mr. Winnick: Do not the reports show that quite a number—possibly a majority—of staff at GCHQ are refusing to abandon their trade union membership? Is the Minister aware that there can only be admiration for those who refuse to sell their rights in a democracy for 1,000 pieces of silver?
    Mr. Hayhoe: I utterly repudiate the hon. Gentleman's emotive language. My right and learned Friend the Foreign Secretary has been answering questions about the figures involved at GCHQ. There is at least one more question on the Order Paper for answer later this week.
    Sir Kenneth Lewis: Will my hon. Friend confirm that among the civil servants employed in the Cabinet Office and other top echelons of the Civil Service there are many trade unionists and that there is no difference between their position and that of those at Cheltenham?
    Mr. Hayhoe: As I have already said, detailed numbers right across the Civil Service are not held, but there will certainly be civil servants in the Cabinet Office who are members of unions. I suppose that throughout the Civil Service about three out of four civil servants are members of unions, but the proportion varies considerably between Departments, between different levels in the service and between different locations.
    Dr. McDonald: How does the Minister know so accurately the number of trade union members at GCHQ, but not throughout the Civil Service?
    Mr. Hayhoe: I have not replied to a question about the number of civil servants at GCHQ who are members of unions. That information is not available to me. The hon. Lady will know that where the check-off system is working, we know how many civil servants are subject to that system; but we also know that there are other civil servants who are members of unions but whose subscriptions are not worked through the check-off system.
    Mr. Dubsasked the Minister for the Civil Service what percentage of civil servants are members of trades unions.
    Mr. Hayhoe: I refer the hon. Gentleman to the reply that I gave to question No. 41.
    Mr. Dubs: Is the Minister aware that this Thursday there will be a mass lobby of Members of Parliament by civil servants because they wish to assert their rights to be members of trade unions? Can the Minister explain why there appears to be a deliberate policy on the part of senior Civil Service officials to deny leave to those civil servants who wish to exercise their democratic right this Thursday to lobby their Members of Parliament?
    Mr. Hayhoe: A note has been circulated by the industrial relations division of the Treasury, as is normal in such circumstances. Granting leave is subject to management discretion. Departments will be dealing with leave requests in accordance with normal procedures.
    Mr. Teddy Taylor: Is my hon. Friend telling us that quite a number of civil servants at GCHQ and elsewhere are not trade unionists but that people at Cheltenham who never have been, do not intend to become and perhaps, for reasons of conscience, do not want to be members of a trade union will be offered £1,000 not to join one?
    Mr. Hayhoe: I understand that the offer of £1,000 is made to all staff at GCHQ who fulfil the conditions.
    Mr. Foulkes: Has the Minister noted the increase in the percentage of senior civil servants who are not members of trade unions, who retire on large salaries and then take up highly paid jobs in industry, the City and commerce? Is it not about time that the rules governing that were looked at again?
    Mr. Hayhoe: The rules governing that were looked at by a Select Committee about three years ago, and certain changes followed. I understand from reading press reports that there is a possibility that the Select Committee will wish to look at the matter again.
    Mr. Winnick: On a point of order, Mr. Speaker. Question No. 37, standing in the name of the hon. Member for Berwick-upon-Tweed (Mr. Beith), was not called. It deals with Opposition time and taking into account the composition of the House. Is it not interesting that the Liberal Member who tabled the question is not here to ask it, although the question relates to a topic that is of great interest to the House?
    Mr. Speaker: The hon. Member for Berwick-upon-Tweed (Mr. Beith) withdrew his queston. That is not unusual.
    Mr. Meadowcroft: Further to that point of order, Mr. Speaker. It might interest the House to note that question No. 2 was also withdrawn, although that covered an important topic. As you said, Mr. Speaker, that often happens.

Withdrawn Drugs
3.32 pm
Mr. Michael Meacher:(by private notice) asked the Secretary of State for Social Services if he will make a statement about the circumstances in which withdrawn drugs can still be prescribed.
The Minister for Health (Mr. Kenneth Clarke): The circumstances in which the four drugs mentioned in recent press reports have been withdrawn are varied. In some cases the drugs have been withdrawn by the manufacturers, even though their product licences have not yet been withdrawn. In other cases product licences have been withdrawn on the advice of the Committee on Safety of Medicines.
In all cases, however, action has been taken to prevent further uninformed or unintentional prescribing of the drugs. Letters were sent to every doctor and pharmacist informing them of the withdrawal, and in each case the manufacturing company withdrew its stocks from wholesalers and retail pharmacists, reimbursing them for the cost of stocks reclaimed. However, a few pharmacists have retained stocks.
Doctors are free to prescribe whatever treatment they think necessary in the interests of their patients, even where a drug does not have a product licence. It is an important part of the exercise of doctors' clinical judgment that they should be free to decide whether the benefits resulting from the use of a particular product for a given patient outweigh the risks involved.
The Government's first responsibility is to ensure that the professional people concerned are fully informed of the position and that the drugs are not freely available. I am, however, concerned about the position revealed by reports in the Daily Mail. I propose to investigate further whether existing arrangements are operating satisfactorily and shall seek the advice of the Medicines Commission on those provisions of the Medicines Act 1968 which exempt doctors and pharmacists from the controls imposed on products by the Act.
Mr. Meacher: Is it not an extremely serious failure of Government regulations that four drugs linked with 29 deaths are still being prescribed several months—in one case 11 months—after they were withdrawn? Will the Minister ensure that the inquiry that he is undertaking will find out precisely how widespread is the breakdown in controls, whether the present voluntary arrangements need to be replaced by regular use of the prohibition powers under the 1968 Act and why the Government monitoring system failed to pick up the need for the use of those powers in the four cases?
Is it not a serious anomaly that it is not illegal for either a doctor to prescribe or a pharmacist to dispense drugs whose withdrawal has been called for by the Committee on Safety of Medicines? Will the right hon. and learned Gentleman undertake to amend the law as necessary to ensure that death in those circumstances will never be allowed to happen again?
Mr. Clarke: It would not be right to make it absolutely illegal ever to prescribe or dispense drugs that have lost their product licence. After the withdrawal of the licence from the drug Opren, a doctor at University hospital in my constituency approached me, anxious to get supplies of
566
that drug for patients suffering from psoriasis, who were visibly deteriorating before her eyes because they were unable to get the only drug to which they responded. The doctor believed that the clinical risk was worth taking to restore those patients to fit and healthy life.
In this case, the doctor who prescribed the drugs did so in the public interest as a test case and knew that he was prescribing drugs that had been withdrawn from the market. The majority of the pharmacists who were approached were puzzled by the prescription and asked the patient to return to the doctor and consult him about the prescription. In only three out of 30 cases was the drug, with reluctance, dispensed. 'That was legal. However, I agree that it is worrying that this is happening on slightly more than rare occasions. Therefore, the Government are considering the evidence supplied by the Daily Mail and we are asking the Medicines Commission to examine the operation of that part of the Act.
Mrs. Jill Knight: I assure my right hon. and learned Friend that there will be much satisfaction over the fact that he has at once announced that he is setting up an inquiry into the matter. Does he not think it ludicrous that a committee of 20 highly paid and extremely expert people spend their time under a chairman deciding which drugs are safe and which are not—even to the extent of producing or refusing a product licence—yet doctors are free to prescribe the drugs which those experts have said should not be prescribed?
Mr. Clarke: In this case the doctor obviously knew what he was doing. It was a test case in the public interest, but he knew exactly what the problem was with those drugs. Each and every pharmacist had also been written to and told why the drugs were being withdrawn from the market. They were offered reimbursement in full for the stocks that they returned to the manufacturing company. For the reasons that I gave, small stocks might legitimately be held by some pharmacists.
As I explained to the hon. Member for Oldham, West (Mr. Meacher), I am describing rare and exceptional circumstances, where doctors and pharmacists should be free to prescribe a drug to a patient. What this evidence shows is that there were more stocks of the drugs about and that they were more available than would have been expected. I agree with my hon. Friend that we should look into that.
Mr. Michael Meadowcroft: There will be general satisfaction at the Minister's statement that there is to be an inquiry into the evidence. Does he accept that section 62 of the Act exists precisely to cope with the circumstances outlined in the report? Will he therefore accept that there is a need for action to be taken in view of the existence of that section?
Mr. Clarke: I assure the hon. Gentleman that the Government would not hesitate to use section 62 in a proper case, just as we have not hesitated in the case of any of the four drugs either to withdraw the licence or to ensure that the product is withdrawn from the usual market. Section 62 is appropriate where, to take an extreme example, one has a batch of a drug contaminated with cyanide, which would not be safe in any circumstances. Under section 62 we would call in Me drugs and ensure that no pharmacist could legally dispense them.

567
That would be too draconian in the present case, where the occasional doctor may wish to prescribe one of the drugs because his patient, who is suffering acute pain, will not respond to any other drug. In the present case, therefore, section 62 is not appropriate. However, an urgent inquiry into the position on these four drugs is appropriate, and that is what we are undertaking.
Dr. Brian Mawhinney: The quick action of my right hon. and learned Friend is much appreciated. Will he confirm that a patient who, without his knowledge or agreement, is prescribed a product whose licence has been withdrawn for safety reasons is free to take legal action against the manufacturer, doctor or pharmacist if he subsequently develops the symptoms and difficulties which were originally suggested might follow from the administration of that drug?
Mr. Clarke: It would be open to the patient to take legal action only if the doctor had been negligent in prescribing the drug, or the pharmacist negligent in dispensing it. If a doctor makes the clinical judgment that the benefits to the patient outweigh the risks to him, he is free to prescribe the drug. It is a matter for the doctor how far he advises the patient about the calculated risk that he is taking.
To return to negligence, I emphasise that in this case 27 out of 30 pharmacists approached would not dispense the drug and sensibly told the patients to return to the doctor, presumably so that the doctor would have the opportunity to think twice about whether this drug was the one that he intended to prescribe. The legal position is as I have described it.
Mr. Laurie Pavitt: When did the Minister last examine the mechanism of procedures for informing general practitioners about pharmaceuticals, not only in this sort of case but on the whole question of values? Is the procedure now computerised? Is the Minister satisfied that the procedures, apart from the law, for the Committee on Safety of Medicines are satisfactory? Is he aware that, outside this provision, sweeteners have recently been shown to be injurious to health? They are not medicines, but what powers can he take to protect those who take damaging sweeteners?
Mr. Clarke: We are always revising our procedures and ensuring that we inform professional people of the risks of drugs, and we act promptly when we discover that there are unacceptable dangers associated with some drugs. We intend to computerise the system by which doctors notify the Committee on Safety of Medicines of adverse reactions to drugs. We inform doctors of problems by writing to them individually when a product loses its licence or is withdrawn from the market. They are told what has happened and why it has happened. In the case of all drugs that are freely available, many of which have adverse side effects for some patients, data sheets are readily available and should be consulted by every doctor.
Sweeteners are a separate issue, and I should be happy to discuss the evidence with the hon. Gentleman on another occasion.
Mr. Robert McCrindle: Have we not stumbled almost accidentally on a rather worrying grey area, in that until now most members of the public
568
will have assumed that medicines which are effectively banned by the Committee on Safety of Medicines are not permitted, in any circumstances, to remain in circulation? Will my right hon. and learned Friend take this opportunity to clarify what powers the committee possesses and, in the process, help those members of the public who may be worried to get the matter into perspective?
Mr. Clarke: I agree with my hon. Friend that all of us assume that once a product is withdrawn, and especially when its licence is suspended, it vanishes from the market and is no longer prescribed or dispensed by anyone. As I said, in some cases that can be an error, because there are rare exceptions to the rule. Nevertheless, I and those who advise me were surprised by the extent of the evidence produced by the Daily Mail showing that these drugs are being dispensed to a number of patients. We shall examine the matter and will go to the Medicines Commission, which is the best qualified body in this area of the law, to give us urgent advice.
Mr. D. N. Campbell-Savours: Now that it has been proved that Professor Turner, the chairman of the Government's toxicology sub-committee which approved aspartame and its use, had a commercial interest in Searles of the United States, the manufacturer, through the Synthelabo Foundation—an organisation that funds its own research—does that not place a major question mark over the use of aspartame? Should not the decision that was taken last October be reviewed, and can that product be withdrawn from the market pending further investigation by the Government?
Mr. Clarke: This is not the occasion on which to examine the evidence for and against the safety of aspartame. There are clear rules about the declaration of interests by those involved in advising us. In the first place, the Government must go to leading experts in any area to get the best possible advice for the public on the safety of drugs. Inevitably, a number of those whom we approach are involved with manufacturers and pharmaceutical companies. However, the rules are clear: they declare their interests and keep out of decisions on matters where they have a direct interest. We ensure that we take the best objective advice on the products involved.
Sir Dudley Smith: The hon. Member for Oldham, West (Mr. Meacher) gave a figure, but can my right hon. and learned Friend say definitely how many deaths due to adverse reactions to the drugs have been reported to his Department?
Mr. Clarke: I regret to say that, off the cuff, I cannot give the total number of deaths due to adverse reactions to the four drugs. I have a feeling that the figure given by the hon. Member for Oldham, West was more or less correct.
Mr. David Crouch: The House will appreciate the concern that my right hon. and learned Friend has shown and the care with which he has answered questions on this worrying matter. Where a drug has had its licence withdrawn on the advice of the Committee on Safety of Medicines, is it not unlikely that a pharmacy in a hospital would issue such a drug to any consultant or doctor in that hospital seeking to prescribe that drug? Does that not show that in hospitals at least there is tight control

569
once a drug has had its licence withdrawn, and is that not different from the looser application of the regulations that appears to operate in general practice?
Mr. Clarke: We are all anxious that dispensing should be tightly controlled both in the hospital service and in general practice. I agree with my hon. Friend that when we acted as promptly as we did to suspend the product licence for Flosint, our expectation was that supplies would rapidly go back to the manufacturers and no more patients would receive it, and that if any patient received Flosint again it would only when a doctor had made a considered judgment about an individual patient whom he found reacted to that and nothing else and who suffered serious symptoms which would not otherwise be alleviated. I accept that, on the face of it, the Daily Mail report shows a rather looser approach than that being adopted by a few pharmacists. We shall look into that to see whether the law needs tightening.
Later—
Mr. Campbell-Savours: On a point of order, Mr. Speaker. In reply to my question about an interest of the chairman of the DHSS toxicology sub-committee, the Minister for Health replied that sometimes there are medical links between research foundations and individual members working—
Mr. Speaker: Order. I am not certain that this is a matter on which I can rule. I hope that the House will understand that we are getting rather too many points of order concerning unsatisfactory answers. If we allow that sort of thing to happen we shall not get very far with our business.
Mr. Campbell-Savours: To abbreviate the point, Mr. Speaker, may I lay it on the record that the Government, in a reply to me—
Mr. Speaker: Order. That is just what I feared. It is not a matter for me.
Mr. Campbell-Savours rose—
Mr. Speaker: Order. I think that the hon. Gentleman has shot his bolt for today.

Oral Questions (Transfer)
3.47 pm
Mr. Speaker: Following the points of order on Wednesday last, I undertook to make a statement about a question addressed by the hon. Member for Monklands West (Mr. Clarke) to the Secretary of State for Scotland, which was transferred to the Secretary of State for Trade and Industry.
This question was tabled on 1 February to the Secretary of State for Scotland and came out No. 5 in the shuffle on that day. On 2 February it was transferred to the Secretary of State for Trade and Industry. I understand that, at the request of the hon. Gentleman, the Table Office checked twice with the Scottish Office that this transfer was exactly as intended, and this was confirmed. The position, therefore, remained as on the Order Paper on Wednesday last, namely, that the question stood addressed to the Secretary of State for Trade and Industry at No. 39 and not to the Secretary of State for Scotland at No. 5. I can find nothing in this process to which exception can be taken on procedural grounds.
May I reaffirm two points which I made on Wednesday. The first is that, as my predecessors and I have said many times, the Chair has never had any responsibility for transfers between one Department and another: it is entirely the Government's responsibility to decide which Minister is to answer a question. The second is that the Table Office is concerned with establishing the responsibility of the Government for answering a question and therefore whether or not it is in order. It does its best to advise hon. Members on which Minister a question should be addressed to, but clearly it can have no responsibility for the choice of Minister to answer a question.
Mr. Robin Maxwell-Hyslop: Further to that point of order, Mr. Speaker. Is it not open to any hon. Member, if he wishes so to do, before tabling a question at the Table Office to telephone the private office of the Minister or the Secretary of State of the Department concerned and ask whether the Minister or the Secretary of State will accept a question in the form in which he wishes to table it? If the answer were in the affirmative, the hon. Member would have a real grievance if the Minister then did not do so. Is not that protection open to any hon. Member— it is his choice, not that of the Table Office—in deciding to which Minister he should put his question?
Mr. Speaker: I understand that this has been done frequently.

Written Answers (Press Release)
3.50 pm
Mr. Gerald Bermingham: On a point of order, Mr. Speaker. The Order Paper for today contains a written question, No. 312, the answer to which is not yet available to the House. The question deals with a matter of grave public importance, namely, the increase in summary fines under section 143 of the Magistrates' Courts Act 1980. Many of us will have learnt the details of the written answer through the newspapers this morning, or heard them on the radio programme, on which a junior Minister gave the details.
This is a matter of great importance to many of our citizens who will be affected by the increase in fines and whose ability to pay may be affected; indeed, their liberty may be at stake. Should not such a matter be dealt with by an oral statement, so that hon. Members who have views on it can bring them to the attention of the Minister concerned?
Mr. Speaker: The hon. Member for Surbiton (Mr. Tracey) tabled a written question, No. 312, and it has been answered.
On the general point about answers being available to the press before being made available to the House, the House knows my strong views. I believe that the House should always hear the answers first before they are given to the press.

Oral Question (Clarification)
3.52 pm
Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. It is on a completely different subject.
Mr. Speaker: Provided that it is, I shall hear the hon. Gentleman.
Mr. Campbell-Savours: It relates to the intervention of the Leader of the House in the middle of a question that I asked during business questions on Thursday last. The words in the Official Report do not accord with my views, because I was prevented from putting the balance of the question. It was not you, Mr. Speaker, in your wisdom, who prevented me from placing my views on the record; it was the Leader of the House. Would you permit me to add to the words in the Official Report in order to ensure that my views as expressed in my question are not misrepresented?
Mr. Speaker: I regret that I cannot allow the hon. Gentleman to do that. As I was saying a few moments ago, we are getting a considerable number of points of order raised on unsatisfactory answers, or because hon. Members have not made themselves plain. I think that we had better leave it at that.

Statutory Instruments, &c.
Mr. Speaker: With the leave of the House, I shall put together the Questions on the three motions relating to statutory instruments.
Ordered,
That the draft Carriage by Air Acts (Application of Provisions) (Overseas Territories) (Amendment) Order 1984 be referred to a Standing Committee on Statutory Instruments, &c.
That the Grants for Guarantees of Bank Loans (Extension of Period) Order 1984 be referred to a Standing Committee on Statutory Instruments, &c.
That the Scented Erasers (Safety) Order 1984 (S.I., 1984, No. 83) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Donald Thompson]

European Communities (Budget)
Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.
3.54 pm
The Economic Secretary to the Treasury (Mr. Ian Stewart): I beg to move,
That this House takes note of the Preliminary Draft General Budget of the European Communities for 1984, of the Draft General Budget for 1984, of the Letter of Amendment to the 1984 Budget, of European Community Documents Nos. 10447/83, 10105/83, the Modifications and Amendments by the European Parliament to the 1984 Budget, of the Decisions by the Council on modifications and amendments by the European Parliament to the 1984 Budget, of European Community Document No. 11094/83, financial compensation for the United Kingdom and Germany for 1983, and of Official Journal C 357, the Annual Report of the Court of Auditors for 1982; and supports the Government's efforts to secure budgetary procedures and control which are in the best interests of the United Kingdom and of the Community.
These days the European Community figures large in the proceedings of the House. We all recognise that the Community has reached a crossroads and must take important decisions about its future. Decisions on financial reform, on the CAP, on enlargement by the accession of Spain and Portugal, would have far-reaching effects. Unfortunately, although these are decisions about the future, they have to be taken alongside the now customary annual dispute about refunds due to Britain in respect of an earlier period. Today's debate covers a series of documents related to the Community budget recommended by the Scrutiny Community for consideration by the House, and provides a further opportunity for us to discuss many aspects of the Community and our membership of it.
In each of the past two months, we have had major debates on European matters. We discussed various proposals relating to the Community's future financing arrangements and the CAP on 1 December, just before the Athens summit, and again on 26 January, in the context of the White Paper covering developments in the Community during the first six months of 1983.
The documents under review today cover the past and the present, as well as the future. The Court of Auditors report considers the implementation of the 1982 budget. The documents on the refunds regulation relate to the mitigation of our net contribution to the 1983 budget. The 1984 budget documents, covering the whole of the budget timetable between June 1983 and the eventual adoption of the 1984 budget by the President of the European Parliament on 20 December, set out the arrangements for the year ahead.
Taking the documents in chronological order, I welcome—as I hope, will the House—the inclusion of the annual report of the Court of Auditors on the 1982 budget in the motion today. In the past two years, we have considered these reports separately in short debates, but I hope that by incorporating this year's report in today's debate hon. Members will have a further opportunity to comment on this important document, if they wish. Last year, my right hon. Friend the then Financial Secretary sent copies of the debate on the court's report to Mr. Christopher Tugendhat, the Budget Commissioner, as well as to the chairman of the European Parliament's Budgetary Control Committee. I shall be happy to do the same this year.
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Perhaps I should first remind the House about the procedures governing the Court of Auditors reports. In June each year, the court audits the Commission's accounts for the previous financial year. It then presents its comments to the Community institutions by 15 July. The institutions must reply by the end of October, so that the court can formally send its report to the Council and the Parliament by 30 November. The Council's Budget Committee then considers the report in detail. This is the stage that we have now reached on the 1982 report.
Our objective when examining the Court of Auditor's report is to ensure that the management of the Community's finances is no less efficient than we would expect in the United Kingdom and other individual member states. The court does a valuable job in scrutinising financial procedures and exposing waste or irregularity within the Community budget and administration. We do not believe that the court's activities should be limited to this, however, since it also has an important role to play in assessing value for money from Community expenditure more generally.
In this context, I draw the House's attention to the court's report on financial management within the Community, which was considered by the European Council at Stuttgart last summer. The court's report, which was issued last October, contained strong criticism of the CAP and the own-resources system, much of which we would endorse. On the own-resources system, for example, the court argued that it had not led to sufficient assessment of the effectiveness of the Community's expenditure policies, because the Community's automatic revenue was not so directly seen as a charge on taxpayers as in the case of national taxes. Partly for this reason, the Community budget has continued to be largely expenditure-determined. We aim to change that so that revenue available governs expenditure, and not vice versa.
Mr. Teddy Taylor: How?
Mr. Stewart: If my hon. Friend the Member for Southend, East (Mr. Taylor) will be patient, I shall come later in my speech to the proposals that we have put to our European colleagues.
Mr. Tony Marlow: There was a rather distasteful caterwauling at the back of the Chamber just then, and I say to my hon. Friend the Minister that I was not participating in it. However, I have an important question for him. He is talking about the control of Community expenditure. As he knows, there was a debate last week in the European Assembly concerned with the national veto. There is, in June, an election to that European Assembly. Will my hon. Friend say what the Government's policy is with regard to that veto, because if that veto is abolished, the powers of this House will be removed, bit by bit, piecemeal, and taken across the Channel to Europe? As this is a very important democratic process, and as constituencies are about to select and adopt their candidates for the European election, will my hon. Friend be very careful to tell the House so that the whole country will know what is the Conservative party's policy on the veto in the European Assembly?
Mr. Stewart: I hope that the House and the country already know that the Government's view is that no such change should be made. We shall oppose any proposals to do so. Indeed, they could not be introduced without the approval of individual member states.
Mr. Nicholas Budgen: I understand that 22 members of— I believe it is not called the Conservative party but the Democratic party —voted for the abolition of the veto. Although a lot of money is spent by the European institutions on publicising their activities, I have so far, sadly, found it impossible to discover the names of those 22 members. I am sure that my hon. Friend has excellent relations with the European institutions and I wonder whether, through them, he could suggest that the names of those individuals should be published so that those who wish to uphold the European ideal at its highest level may know whom to congratulate.
Mr. Stewart: I shall have to leave my hon. Friend to do his own research. The Government and, I hope, Conservative Members would be strongly against the suggestion of my hon. Friend the Member for Northampton, North (Mr. Marlow).
On the court's report on the 1982 Budget, we agree with many, though not all, of its criticisms and recommendations and will be pressing the Commission to implement them. But we could not agree with its criticisms of the Commission's action in implementing the agreement on 1982 refunds. In establishing a special account into which the refunds were paid the Commission was simply acting in proper accordance with the conclusions of a Council decision.
Meanwhile in 1983 Community expenditure continued its relentless increase. Agricultural guarantee expenditure rose by more than 25 per cent. to over £9 billion or nearly 16 billion ecu. Britain therefore again faced the prospect of a heavy net contribution. It was against this background that my right hon. Friend the Prime Minister sought and obtained agreement at the European Council in Stuttgart last June to a refund for 1983. The net figure agreed for the United Kingdom for 1983 was 750 million ecu or about £430 million. The refund documents in the motion are the regulations to allow these refunds to be paid.
In the Commission's preliminary draft budget there had been no provision for the British and German refunds in respect of our 1983 contributions. These, therefore, had to be entered in the budget by the Budget Council last July. The Council decided that the refunds should be spent on energy, employment and transport measures in the United Kingdom. The Council agreed that the refunds should be entered "on the Budget line", which had the effect of allowing them to be paid as soon as the regulations were approved; and also that they should be classified as obligatory expenditure, so that the Council and not the Parliament should have the last say. The House will know that in adopting the budget the European Parliament has moved our refunds to the reserve chapter 100 of the budget and has re-classified them as "non-obligatory", thereby giving the Parliament the final say on their repayment. At the Budget Council in December I was supported by other delegates in an attempt to restore our position. But agreement with the Parliament could not be reached and the budget was then adopted with our refunds in the reserve chapter and classed as non-obligatory. The Council has recorded its objection to this outcome. But it means that for the bulk of our refunds to be paid before the end of March—and that is our firm aim—not only must the Council approve the regulations and the Commission propose a transfer of the refunds out of the reserve chapter, but this transfer proposal must also be approved both by the Council and the Parliament.
Mr. Roland Boyes: Will the Economic Secretary comment on last week's press reports that the Government might ask the European Parliament to hold a special sitting to obtain approval for the measures to go through in time? Is it not ludicrous that the Government should have to beg the European Parliament to hold a special sitting?
Mr. Stewart: As I hope to say later in my speech, the current arrangements between the Community's institutions for dealing with the Budget process are unsatisfactory. However, my right hon. and learned Friend the Foreign Secretary is today at a meeting of the Foreign Affairs Council where that process will be discussed. No doubt the hon. Gentleman's question will be considered in that forum.
I shall say a word about the regulations themselves. The employment measures regulation, under which we would receive about £158 million, or nearly £280 million ecu, will enable us to help the unemployed. The principal programme to benefit is likely to be the job release scheme which—as hon. Members know—creates opportunities for unemployed people by encouraging employees nearing retirement age to give up work earlier than they would otherwise have done.
Under the transport regulations we are due to receive some £265 million and we are submitting projects to ease traffic bottlenecks and to improve routes that are important for the movement of people and goods within the Community. Projects that we are putting forward range from the A9 in Scotland to the M25 motorway and the outer London ring-road.
Mr. Marlow: Surely the job release scheme and what happens to roads within the United Kingdom, particularly round London and in Scotland, are matters that are wholly within the interest and competence of the United Kingdom Government. Is it not nonsense to receive handouts from Brussels on such issues? Should we not retain the money in advance and not pass it to Brussels to be laundered and returned, havind had a severe fraction taken off on the way?
Mr. Stewart: Decisions on road building are for the Government to make, and will remain so. However, I hope that my hon. Friend will welcome, as much as I do, any Community funds that are available to assist with the financing of such roads and to solve the problem of our refunds.
Under the energy regulations, we are putting forward a number of large-scale power station construction projects by the CEGB and various smaller projects throughout the United Kingdom which are of considerable practical and technological interests both here and in the Community, such as the cross-Channel power link. We should receive about £150 million under this regulation.
These regulations, which enable public expenditure programmes in the United Kingdom to be sustained at levels higher than we could otherwise afford, have now been sent to the European Parliament and the Court of Auditors for a formal "opinion". The Parliament considered the regulations last week but declined to issue an opinion after some of its proposed amendments for the regulations had been found unacceptable by the Commission. There is no doubt that these amendments would make it more difficult for the United Kingdom to receive the bulk of our funds by the end of March.

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For instance, the Parliament has proposed that the refunds should finance only projects initiated after 1 January 1983. This can be regarded only as a wrecking amendment—[Laughter.] I do not know why that is a matter of so much amusement to the House. I should have thought it important that we try to safeguard our interests in this area. There are simply not enough major new infrastructure projects to allow us to receive our refunds in full. Moreover, even those projects started since January 1983 have relatively small expenditure implications in the early years. Furthermore, the Parliament, with the shameful support of British Labour members, is seeking to reduce the rate of grant on eligible projects from 70 per cent. to 50 per cent. Seventy per cent. has been used in all the special measure regulations for refunds since 1980 and there is no reason why it should be reduced now.
Acceptance of the 50 per cent. rate would make it very difficult to secure our full refunds. Instead of tabling an amendment urging the Government to withhold contributions to the Community budget today, the Opposition would do better to prevent their representatives in Europe from voting to make it harder to obtain our refunds in time. We have repeatedly made it clear that we expect to receive the bulk of our refunds by the end of March. If we do not do so, we shall have to take whatever steps are necessary to safeguard our position, but I have no doubt that to withhold payments today, as the Opposition amendment proposes, would be premature and counter-productive.
Mr. Budgen: Does the principle of additionality apply to such projects, or is the money to replace money which would have come from our domestic resources in any event?
Mr. Stewart: I thought that I had made it clear earlier that the refunds which we have obtained, amounting to about £2½ billion over the last four years, have enabled public expenditure in the United Kingdom to be maintained at levels which could not otherwise have been reached. In that sense my hon. Friend's question has already been answered.
The obstacles that we currently face in obtaining our 1983 refunds from various expenditure programmes and the similar problems that we have had in the past confirm the Government's view that the solution to the problem of budget imbalances must be implemented, not by expenditure, but on the revenue side of the budget. It is simply not realistic to expect that new expenditure can be implemented on a scale which would sufficiently reduce our net budget contributions.
Mr. Teddy Taylor rose—
Mr. Stewart: I have already answered my hon. Friend the Member for Southend, East and there have been many other interventions.
We were told throughout the 1970s that this was how the problem of the British net contribution would be solved, but the opposite has happened. Indeed, to achieve the same effect as our refunds in the last four years, the regional fund for example would have had to be increased by about 30-fold. Clearly, this is not practicable and we must therefore have an automatic arrangement—like the safety net which we have proposed—designed to correct inequitable burdens on any net contributor. The solution
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must also be a long-term one that lasts as long as the problem. I hope that no one in Europe is under any illusions about that.
Mr. Teddy Taylor: I am sure that all hon. Members on both sides of the House will be delighted that the Government—my right hon. Friend the Chancellor of the Exchequer, my right hon. and learned Friend the Foreign Secretary and my right hon. Friend the Prime Minister—should say that terrible things will happen if the continentals, or the Common Market, default on 31 March. We have heard that strong action will be taken, although we do not know what it is.
What will be done about the default of £42 million which happened on 31 December in relation to the 1982 rebate? The Minister kindly told me that my right hon. and learned Friend the Secretary of State for Foreign and Commonwealth Affairs sent a letter to the Commission on 3 January. When I asked about it last week I was told that no reply had yet been received. How can the continentals accept that the Government are firm, because when they defaulted by £42 million all that we did was to send them a letter to which we have not yet had a reply?
Mr. Stewart: My right hon. and learned Friend the Foreign Secretary wrote to the Commission. I understand that he received a reply over the weekend, although I have not yet seen it. I have no doubt that the reply will be considered and that we shall take whatever steps are necessary over the 1982 risk-sharing refund. The document before the House today—
Mr. Teddy Taylor rose—
Mr. Stewart: If my hon. Friend does not want to hear the answer to his question I do not propose to comment further on what he said.
Dr. Oonagh McDonald: The hon. Member for Southend, East (Mr. Taylor) has rightly questioned the Minister about the letter. It is astonishing that the Minister has not seen a copy of the reply. Since the debate will continue until 10 o'clock, will the Minister send a message so that the letter is brought here and read out since it is an important part of the debate?
Mr. Stewart: I am sure that my hon. Friend the Minister of State has heard that request. I understand that the letter is addressed to my right hon. and learned Friend who is in Brussels— [Interruption.] That might be a matter for mirth to Opposition Members, but fortunately the Government treat such communications seriously and do not deliver judgments before they have had time to consider them.
Mr. Marlow: On a point of order, Mr. Speaker. As the letter is obviously of importance to the debate. is it possible to ensure that somehow a copy of it is put on the Table of the House so that hon. Members who wish to participate in the debate may be made aware of its contents?
Mr. Teddy Taylor: Further to that point of order, Mr. Speaker. We are talking about a vital document containing the Community's response to a default issue. Would it not be sensible to adjourn the debate and to meet again tomorrow when we may know the response now received to a letter that my right hon. and learned Friend the Foreign Secretary sent on 3 January? Could we adjourn the debate and meet again tomorrow?
Mr. Speaker: That would be possible, but I do not think that I can accept such a motion. Laying the letter on the Table of the House is a matter for the Government. The letter has not been quoted in the House and therefore has no official status.
Mr. Stewart: Further to that point of order, Mr. Speaker. The 1982 risk-sharing refunds are not among the matters being considered in today's motion.
Mr. Robin Cook: Even if that issue is not formally before the House, matters involving significant sums are the subject of debates on such occasions. The Economic Secretary cannot expect the House to accept that, because the only copy is in the Foreign Secretary's vanity case in Brussels, it is not possible to produce the letter. There are such things as photocopies and telex. We are not still living in the days of the pigeon post. May we have an undertaking that by the end of the debate the letter will be produced, because it may have a bearing on the way in which some Government Back Benchers vote in the Division?
Mr. Stewart: If my hon. Friends were influenced by it they would be misguided because it is not included in today's motion. There is a difference between the 1982 risk-sharing refunds and the 1983 refunds, in that the risk-sharing refunds are -the subject of disagreement between the Government and the Commission and the Council, whereas the 1983 refunds which we are discussing today are supported by the Commission and the Council who agree that we should receive them.
We believe that a system such as the safety net would provide a lasting solution to the budget imbalances problem in a simple and fair manner, and that it does not conflict with either the principles or the objectives of the Community. Indeed, to the extent that it would encourage economic convergence it would significantly further one of its main objectives. There is a further point about the current system. At the moment, it works in such a way as to encourage member states to look at every policy primarily in terms of what they get out of it against what they have to pay towards it. But with a proper arrangement to ensure that individual members are not placed in an unacceptable position overall, coupled with effective control of agricultural and other expenditure, this problem should diminish. National Governments could more readily assess items of Community expenditure on their intrinsic merits. Our proposals are therefore in the interest not only of the United Kingdom but of the Community as a whole.
Although our 1983 refunds have dominated much of the discussion of the 1984 budget, they are in total a relatively small part of the budget as a whole. Of the documents under review today the first in the budgetary process is the Commission's preliminary draft budget which was sent to the Council in June last year. In this the Commission proposed a Budget totalling nearly £15 billion. This would have used up almost all the Community's resources under the 1 per cent. VAT ceiling.
The Council of Ministers was concerned about going so close to the ceiling without leaving any margin for error. In July it therefore established a draft budget for 1984 which reduced the Commission's spending plans by about £400 million. The Council sent its draft budget to
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the Parliament last autumn, and the Parliament, which has the final say on non-obligatory expenditure, then reinstated most of the reduction.
The main reason why the Community budget has now reached the 1 per cent. ceiling is that expenditure, particularly on agriculture, has consistently risen faster than the revenues of the Community. The own resources of the Community grow more or less in line with the economies of member states through the link with VAT expenditure and levies and duties on imports. But the Community expenditure has far outstripped this. Agricultural expenditure in 1983 took nearly two thirds of the whole Budget, and there is no doubt that had it not been for the 1 per cent. VAT ceiling, the 1984 guarantee provision would have been even higher.
As it is, this year's farm price-fixing exercise is, for the first time, being conducted against the painful reality that the money is running out. The CAP problem is not, however, just a financial one. It makes no sense to leave unreformed a policy that results in increasing surpluses for which there is no market at economic prices.
This experience reinforces our conviction that a strict and effective financial guideline for agricultural expenditure must be established. We have proposed that the rate of increase in CAP guarantee expenditure in any year should be lower than the increase in the Community's budget overall. Although all member states agree in theory that agricultural expenditure should be contained this involves difficult decisions for us all and there has been no agreement so far on how it should be done. This is one of the key items on the agenda for the European Council in March.
It is not enough, however, to control agricultural expenditure alone. The Community budget should be subject to no less discipline than public expenditure in individual member states. Various proposals have been put forward, notably by the Commission, by the Dutch and by Mr. Delors, the French Finance Minister. We need a system that is binding and effective in practice, and I believe that the Delors proposal could form the basis of such an agreement.
The 1984 budget adopted by the European Parliament contained a number of features which are not agreed by the council, such as the level of commitment appropriations; the classification of certain budget lines, including in particular those for British refunds; the Parliament's additions to the revenue side of the budget; and the inclusion of a new special category of commitment appropriations for the Parliament's proposed European industrial policy.
Mr. Marlow: Will my hon. Friend explain the Delors proposals?
Mr. Stewart: The Delors proposals are at present confidential to the negotiations — [Interruption] —and again, I fail to see why that should be a subject of such amusement to Opposition Members. I should have thought that if the representatives of members states were not able to negotiate these difficult matters in confidence, it would be much harder for them to reach agreement.
Current arrangements for resolving disputes between the council and the European Parliament are not satisfactory. Reform of the budgetary processes is, therefore, another central element on the Brussels agenda.

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Whatever mechanism is adopted, it must be firmly and formally embodied in the budgetary procedure of the Community.
Control of the budget and the CAP would give scope for the Community to consider other worthwhile and more cost-effective projects. To take the 1984 budget as an example, expenditure under the common fisheries policy and the regional development fund—two categories of expenditure from which the United Kingdom benefits—have both been increased. Spending on fisheries is up by almost 45 per cent. on 1983, while regional fund expenditure in 1984 has been increased to over £800 million. Provision for the social fund, from which we are also net beneficiaries, is now over £700 million, and spending on transport, industry and research and investment all show increases. But the development of all of these programmes has been hampered by excessive expenditure on the common agricultural policy.
I conclude my remarks on the budget documents for 1982–83 by looking further to the future. Unlike the Opposition, the Government are committed to the Community and to making a success of our membership of it. We want, and intend, to play a constructive role in the development of Europe. Many of our proposals need not impose burdens on the taxpayer. We are anxious to see the creation of a true common market both in goods and services, which was meant to be the foundation stone of the Treaty of Rome.
The practice has fallen well below those aspirations. British traders, manufacturers and business men are daily confronted by a range of non-tariff barriers and administrative restrictions. We want to see simplification of frontier controls, the liberalisation of air services and lorry movements, a free market for financial services, particularly insurance, among many others.
Until the financial and budget problems are resolved, it is difficult to make progress in other ways. The Community faces momentous decisions in the coming weeks, but I believe that our partners are coming to acknowledge the strength of the case that we have put forward. We are determined to see the present negotiations reach a successful conclusion, but as for the budget, it must be a conclusion which recognises the interests of those who pay for the Community as well as those who gain from it.
I commend the motion to the House.
4.25 pm
Mr. Robin Cook: I beg to move, in line 11, to leave out from "and" to the end of the Question and to add instead thereof:
"urges Her Majesty's Government to withhold from the United Kingdom's contributions to the 1984 Budget a sum equivalent to the unpaid rebate for 1983."
If the speech of the Economic Secretary served any clear purpose, it was to demonstrate the importance of this House having another opportunity to debate the wider issues relating to European affairs before the summit in March. The hon. Gentleman referred to a reply—a copy of which is not, apparently, available anywhere in Whitehall or in London—and to Mr. Delors' proposal, which apparently the Government find satisfactory but dare not tell the House in case hon. Members should find it slightly less satisfactory.
They may all be matters which at present cannot be shared with the House, but I assure the Economic
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Secretary that hon. Members would take a dim view of the matter if the leading representatives of the Government were to disappear to Brussels in March without the House having had the opportunity to give its view on whether it finds the Delors' proposals satisfactory.
Before we could do that, we should need an assurance that the Delors' proposals went rather further than the proposals attributed to Mr. Delors. They were trailed in the press just before the Athens summit in a way which suggested that all that Mr. Delors had in mind was a new mechanical relationship between the Finance Council and the Agriculture Council so as to give Finance Ministers a say in the agricultural farm price review.
That may be desirable and an advance, but it certainly does not add up to reform of the CAP. I assure the Economic Secretary that there can be no question of the official Opposition agreeing to an increase in own resources on such a cosmetic change in the CAP regime as was proposed by Mr. Delors in December.
Every time we have debated this matter in the past three months we have been greeted with evidence of further movement in the Government's position in relation to own resources. Last week's report of Europe Agence Internationale quoted Mr. Mitterrand at the Hague as saying that an increase in own resources was essential and adding that
"most of the Heads of government have already spoken along the same lines."
The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind): Most.
Mr. Cook: The quotation continues:
"Mrs. Thatcher confirmed that she will not oppose this increase, if agricultural expenditure is controlled and the present imbalances corrected."
Those who have followed these debates closely in the last two months will detect in that yet another movement. The previous position adopted by the Prime Minister was that, if agricultural expenditure was controlled and the present imbalances corrected, she would be prepared to consider an increase in own resources, but to consider it on its merits. If she is being correctly quoted in her conversations with Mr. Mitterrand, then, according to what Mr. Mitterrand has been sharing with his audience at the Hague, the Prime Minister has now gone one stage further and on condition that her two requirements are met, she has already given an undertaking not to oppose the increase in own resources.
I do not expect the Economic Secretary to confirm such a statement; doubtless these statements are all confidential and the only copies of what was said are in Brussels. However, it is clear from what is seeping out from the holes and cracks in briefcases as they go across the Channel to Brussels and elsewhere that another movement is going on in the British position.
If the Economic Secretary is really genuine in the view that revenue should determine expenditure, rather than expenditure determine revenue, there is no better way of ensuring that than by resisting pressure for the increase in own resources. No hon. Member can be under any illusion that if more revenue were available we should, for instance, be witnessing even more expenditure in the farm price review this year.
In the negotiations that are going on in confidential places with confidential documents, the figure that is now being proposed for the increase in own resources is no

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longer 1·4 per cent. in VAT, as we understood in December, but now represents a target of 2 per cent. of VAT from each member state, a higher target precisely to free the Commission and the EEC from the awkward necessity to go back to national Parliaments at a future date to get further increases beyond 1·4 per cent. I am sure that if such a figure is laid before the House it will meet with opposition in all quarters.
Mr. Marlow: The hon. Gentleman is obviously concerned about what the Government might do, what changes there might be in Government policy, and whether the Government will give in or will not give in on the subject of own resources, but is this not a major constitutional issue as to whether we give more resources and whether we surrender even more sovereignty to the European Community? It is not the Government who decide that, and it is not the Government who dispose. Those responsibilities lie with the House of Commons. Does the hon. Gentleman not have faith in the House of Commons and the decision that it will reach in those circumstances?
Mr. Cook: I have already made it clear in what I have said today and in previous debates that unless there is an unprecedented breakthrough, for which the Government have given us no grounds for belief, the official Labour Opposition—I cannot answer for all parties who sit on the Opposition Benches, and one Opposition party has already said that there is a case for caving in now—will oppose an increase in own resources. I am sure that we shall be supported by other parties.
The hon. Member for Northampton, North (Mr. Marlow) asked whether I have faith in the House. The answer to that question depends entirely on how many Conservative Members have the strength of their convictions and the courage to put their votes where they have already put their voices. I am sure that the hon. Member for Northampton, North will vote with the Opposition. I look to him to let me know whether I can have faith in an adequate number of his hon. Friends joining him.
Mr. Rifkind: Does the hon. Gentleman accept that the outcome will depend in part on how many of his right hon. and hon. Friends bother to vote in the Division? On the previous occasion when there was a vote at the end of an EC debate — that event was not so long ago — the Opposition were defeated by 312 votes to 69. Does he have any confidence that more than 69 of his colleagues will turn up on that evening?
Mr. Cook: I can happily assure the Minister that there will be more than 69 of my colleagues with me in the lobby that evening.
Mr. Rifkind: How many? Will there be 71, for example?
Mr. Cook: I live in hope — perhaps the hon. Member for Northampton, North can assist me —that even 69 Conservative Members will vote with the Opposition.
Mr. Hugh Dykes rose—
Mr. Cook: With great respect to the hon. Gentleman, I wish to proceed with my speech. I have no doubt that he will find something with which he disagrees in a later part of my speech, and he may wish to intervene at that stage.
I trust that the House will not regard me as eccentric if I make some initial comments directed to the expenditure side of the budget. After all, there are two sides to a balance sheet. The purpose of raising revenue is to meet the commitments on the expenditure side. This year's budget opens with the startling statement that it is the first step in translating into reality the commitment by President Thorn to double the structural funds. Although that statement is contained in the text, I find in the tables that it is by no means certain that the process of doubling the structure of the funds in five years is likely to be achieved.
The Economic Secretary to the Treasury claimed that there had been an increase in expenditure on the regional fund. That is true, but expenditure overall on regional policy will fall by 20 per cent., instead of doubling over five years. Expenditure on industrial policy will fall by 7 per cent. The budget is very much the same as previous budgets and contains the same major imbalance. It is dominated by expenditure on agriculture.
In the draft preliminary budget, the proportion of resources to be spent on agriculture rises from 64·2 per cent. in 1983 to 67·4 per cent. in 1984. President Thorn has been obliged to revise his own bold objective of doubling expenditure on the structural funds. He said last week in Strasbourg to the European Parliament:
"If there is no solution to the Community's financial crisis very soon, either member states will have to reach a unanimous agreement to foot the extra bill themselves or cuts will have to be made in, say, the social fund, or the regional fund, to make more money available for agriculture."
There we have it. As bankruptcy approaches over the horizon, it is the 5 or 6 per cent. of the budget that goes to the regional fund, the social fund or the industrial fund, which will be expected to absorb financial constraints to protect the agriculture lobby, which will continue to receive the lion's share of the budget. In the present year the draft preliminary budget provides for a increase in agricultural expenditure of 17·4 per cent. That will take place in a year in which the Commission expects the rate of inflation throughout the EC to be 7 per cent. I concede that there is no reason why the rate of inflation in agriculture should be precisely the same as the standard rate of inflation. Equally, it is implausible that the rate of inflation in agriculture will be 250 per cent. of the standard rate of inflation.
The increase cannot be explained away by referring to the need for support to be given to support small marginal farmers, a laudable objective which we are always told is at the heart of the CAP. Paragraph 32 relates to structural measures for less favoured areas, and we find that it provides for only a 3·5 per cent. rise. In other words, after inflation, expenditure on small marginal farms will fall rather than increase.
We are confronted with a general increase in support expenditure because, yet again, more products will be produced than will be needed, there will be larger surpluses and we shall pay higher prices for some commodities. Once again there will be a widening of the disparity between the incomes of large and small farmers and a widening of the disparity between the incomes of those who produce commodities that are favoured by the

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CAP, such as milk and cereals, and the incomes of those who are in the sectors that are neglected by the CAP, such as poultry and pigmeat.
The increased expenditure on agriculture will be 250 per cent. in excess of the rate of inflation. That is being proposed in precisely the same year in which we are assured that the Commission is likely to go bust. Against that background, we can well understand the exasperation of Mr. Dalsager, the Commissioner with responsibility for agriculture, when he complained that some seemed to think that reform of the CAP means ordering smaller oysters and cheaper brands of champagne. The Government cannot escape complicity in the crisis that we face. During their first three years in office they were happy to order the most expensive champagne on the menu. For the first three years they supported increases in farm prices which were even greater than those requested by the Commission.
We are now assured that the Government are of reformed character and that they are committed to the reform of the CAP. However, we have noted as the debates have proceeded over the past few months that what the Government mean by reform of the CAP, instead of gaining in clarity and precision, has gained imprecision. It reached a new depth of vacuity last month when the Economic Secretary, in reply to my question on what was meant by reform of CAP, said:
"The hon. Member for Livingston discussed reform. I believe that the changes needed to deal with Community expenditure and with the CAP amount to a need for reform. We can see only as negotiations develop and as new decisions are taken what that means." — [Official Report, 26 January 1984; Vol. 52, c. 1139.]
When I first heard that, I assumed that it would be one of the instances in which a private secretary would rush to Hansard to rescue sense from the rubble of the Minster's syntax. When I received my copy of Hansard, I was delighted to discover that the gem had been preserved on the record.
The Economic Secretary came close to saying that we can ascertain what the Government mean by reform of the CAP once they have discovered what they have got out of the negotiations. That will not do. If the Government are sincere in their desire to obtain reform of the CAP, one test of their resolve is coming up in the immediate future, and may even be presented to them before the Brussels summit.
The test will come when the Government make their decision on the farm price review. Although the review has its weaknesses, it is more realistic than anything we have seen yet. I cannot resist referring to a speech by Commissioner Tugendhat while in Britain only a week after our previous EC debate. He said:
"It is not surprising that the agricultural lobbies throughout the Community have criticised these proposals"—
or the farm price review—
"they are simply doing their job. What does surprise me is the eerie silence of leading politicians from those Governments who are on record as deploring the excesses of the CAP and urging the need for lower prices".
About whom could he have been thinking? I hope that he did not care to make that speech in Britain because he was thinking of the British Government. I hope that the British Government will not only speak out in support of the Commission's proposals, but will ensure that there are no increases above those proposed by the Commission. I warn
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the Economic Secretary that the Government's commitment to reform of the CAP will ring hollow if they permit any increases above those already on the table.
There is one other test which the Economic Secretary might turn over in his mind when he returns to the Treasury, because it is a matter wholly within the gift of the Treasury and the Ministry of Agriculture, Fisheries and Food. This matter was referred to also in Commissioner Tugendhat's speech. Unless any hon. Member suspects that Commissioner Tugendhat may be a partial witness in these matters, I put it on the record, since legions of new Conservative Members of Parliament have joined us since Commissioner Tugendhat left us, that he once sat on the Government Benches, and, I believe, is still a Conservative party member.
A fortnight ago Commissioner Tugendhat said that
"it is now nearly four years"—
my arithmetic tells me that that does not put it within the period of this Government—
"since the positive monetary compensatory amounts —a tax on imports which effectively raises the price of food—have been applied in the UK. In everyday terms this means that prices paid by processors, and ultimately by consumers, have been higher. generally by at least 5 per cent. and often by much more, than the Community level. This is tantamount to an additional tax which is in no way imposed on the UK by the Community. It is a self imposed food tax".
The reality, as I am sure that the Economic Secretary would be the first to confirm, is that not even this Government would dare to come to the House and ask for 5 per cent. VAT on food prices. Yet it is precisely that effect that the Government are achieving by the way in which they operate MCAs. If the Government are serious about reforming the CAP and genuine in their claim that they are not the party of the farm lobby, let them show it by acting — this does not require further negotiation, further confidential proposals from Mr. Delors or further exchanges of letters — to eliminate the positive MCAs and abolish the iniquitous 5 per cent. tax on food.
Mr. Robert Jackson: If the hon. Gentleman is so keen to find a minimum definition of the reform of CAP, perhaps, instead of asking the Government for their views, he might help them by enlightening them what he would regard as a mimimum definition of reform of CAP.
Mr. Cook: I am surprised that the hon. Gentleman needs to ask me about that point. He will recall that during the period when MCAs were in operation under the previous Labour Government matters were so arranged that the MCAs were negative rather than positive, which ensured that food prices were lower than they would otherwise have been. The Conservative party came to power in 1979 with a commitment to realign MCAs with the exchange rate over the lifetime of a full Parliament. They did so within nine months, and since then have deliberately kept MCAs below the level of the exchange rate. That is where the contrast lies. So long as we are to have MCAs, let us keep them above, rather than below, the exchange rates.
Mr. Jackson rose—
Mr. Cook: I hope that the hon. Gentleman will forgive me, but I wish to make progress in my speech.
We find a major imbalance also on the revenue side of the budget. That imbalance must be even more disturbing to the House than the imbalance on the revenue side. The

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imbalance is clearly represented in the report by the Court of Auditors, which shows that in 1982 Britain paid 29 per cent. of agricultural levies and received in return 11 per cent. of the CAP expenditure. We find in those two contrasting figures the structural deficit in which Britain finds itself in relation to the budget. Had it not been for the accession of Britain in 1972, the EEC would have entered upon its financial crisis at least one year earlier than it has done.
We enter upon the year of this budget with no agreement on a rebate for this year and with no agreement even that there should be a rebate this year. We enter the year also without payment of the rebate for 1983. It is with respect to the 1983 rebate that the Labour party has tailored its amendment to recommend to the Government that they withhold payment from the 1984 budget in respect of that 1983 rebate. We do so in a spirit of being helpful to the Government.
There are three reasons for the amendment. The first reason is equity. Britain is one of only two net contributors to the EEC budget, yet it is one of the four poorest member states. Only Italy, Ireland and Greece have a lower per capita GNP than Britain. Italy contains two separate distinct economies, and it is arguable that per capita GNP in northern industrial Italy is now higher than in Britain.
Officially, Britain is now a less prosperous country. If we are in the position of being designated by the EEC as a less prosperous country, why should the EEC continue to regard us as the milch cow of the EEC? Against that background, the demand that we achieve a broad balance in contribution to expenditure is one of stunning moderation. It is not clear why a nation as poor as Britain should have as its highest ambition the wish to get back as much as we put in when much wealthier nations get more than they put in. The present method of financing the EEC budget resembles only too closely the inequity of the Government's domestic taxation policy, in which the heaviest burden is put on the poorest while only the wealthiest pay less.
The second reason for the amendment is one of common prudence. We are assured, by the Government themselves, that o the EC is running out of money. Last autumn the commission ran out of money for a while and for a short period suspended agricultural payments. One can be certain that when the EC suspends agricultural payments, it must have its back to the wall. It might, therefore, be simple prudence to anticipate and avoid the outcome in which we do not receive a rebate because the money is not available.
Thirdly—we come to the nub of the reason why we urge the amendment on the Government—in so far as we can understand the Government's strategy, it is to rely on the imminence of bankruptcy and the threat of the bailiffs to oblige the EEC to mend its ways and to come to terms. Let us do what we can to hasten that happy moment. Let us make a deduction from the monthly receipts from the second largest net contributor to concentrate minds on the required reforms. If we do so, it may be possible to reach settlement at the March summit, rather than twiddle our thumbs waiting until the June summit, hoping that, by then, the bank manager will have sent for the Commission.
I listened carefully to the Economic Secretary. If I picked up correctly what he was suggesting to the House,
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it was that the Government do not propose to accept the Labour party's modest amendment. In so far as I could find a reason for the Government's resisting our modest amendment, it was that they believed that action before 31 March would be premature and that we should wait until 31 March to find out whether we shall be paid our 1983 rebate. That attitude is hilariously out of touch with reality. If there were anyone sufficiently complacent to imagine that our rebate might have been paid by 31 March, that person would surely have had his dreams shattered by last week's meeting of the European Parliament. The European Parliament is now on record not only on insisting on a permanent solution to the financing of the budget, which, as far as that Parliament is concerned, means an increase in own resources, but in demanding a greater say on how that rebate is spent in Britain and suggesting—this suggestion must have caused palpitations among Treasury officials when they heard of it — that expenditure of the EC's rebate on Britain should be matched by equivalent sums from the British Government. Having imposed all those conditions, the European Parliament then announced that it would not finalise the precise details of the controls until it met again on 12 March, only a fortnight away from the deadline.
It should be noted in passing that that motion was carried in the European Parliament in the same week in which it debated and adopted the Spinelli report on European union. The report recommends a federal structure for Europe that is akin to the constitution of the United States of America, if I could use an analogy which the Minister of State, Foreign and Commonwealth Office unhappily stumbled on in our last debate. That report was voted on last week in Strasbourg, the same week in which the same Parliament took a stand hostile to the British interest. Yet a majority of Conservative Members of the European Parliament who cast a vote in that debate voted for the Spinelli report on European union. Of the 30 present, 23 voted for European union.
I do not know where the rest of the Conservative Members of the European Parliament were, but I know where the most distinguished was. The leader of the group of Conservative Members was not present to give them resolute leadership on that issue, nor even to let us know what he felt about the Spinelli report. Sir Henry Plumb had returned to Britain on the night of the vote. The engagement to which he returned is revealing with regard to the priorities of the Conservative group of European Members of Parliament and lobbies that are influential on them. Sir Henry Plumb missed the vital vote on European union so that he might attend the annual dinner of the National Farmers Union.
Mr. Marlow: Perhaps I can reassure the hon. Gentleman yet again. He has heard forthright statements of the Government's policy from my hon. Friend the Economic Secretary to the Treasury with regard to the veto. The Government's policy is that the veto must remain in the foreseeable and far future. It is obvious that the Members of the European Assembly who were so bold as to vote against the veto last week will either not put themselves forward for election at the forthcoming European elections, or, if they do, will not be selected in Conservative constituencies.
Mr. Cook: I fear that what the hon. Gentleman has said will be taken down and used in evidence, if not against

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him, against some of his colleagues. I note what he says. It is a matter of passing interest to us in the Opposition, as we move towards the completion of the process of adoption of candidates, that the Conservatives are still only at the early stages of the process. I am delighted at the hon. Gentleman's comments. We shall watch carefully which existing Conservative Members of the European Parliament are adopted in the constituencies and make sure that the hon. Gentleman's remarks are shared with Labour candidates standing against them.
Mr. Russell Johnston: The House will recall that when the hon. Gentleman became a spokesman on this matter he took time to go to Strasbourg and talk to his Socialist colleagues. Is it not a matter of political concern to him that, when he talks about the European Parliament taking a specific attitude, he is talking about Members of the European Parliament right across the spectrum, notably his own apparent political colleagues?
Mr. Cook: Representatives of all groups voted for the Spinelli report. However, I am happy to assure the House and the hon. Gentleman that no member of the British Labour group voted for the Spinelli report. I do not believe that any responsible leading politician in the United Kingdom, given our historic experience of the EEC over the past decade, could, while the fate of the issues that have given us that unfortunate and unsatisfactory experience hangs in the balance, responsibly advocate further union through the various institutions which have imposed upon us the handicaps of recent years. Presumably, had the hon. Gentleman had the opportunity to be in Strasbourg for the vote, he, too, would have voted for the Spinelli report on European union along with the massed ranks of the European Liberal group, which supports it. I am sure that that commitment will be noted with interest by electors throughout the highlands and islands of Scotland, where the hon. Gentleman is standing. I shall make sure that his view on the matter is also conveyed to the Labour candidate who will stand in that constituency.
Mr. Eric Forth: Will the hon. Gentleman comment on the position of the bulk of the Socialist group in the European Parliament and its attitude to the Spinelli vote, because it will be relevant for the electorate to know how the British Labour group has influenced the Socialist group and how in future the British Labour group might fit into the Socialist group, in view of that group's voting on Spinelli?
Mr. Cook: We have made it clear that those elected as Labour Members of the European Parliament in Strasbourg will take a place in the Socialist group and will seek to influence the views of that group, and to reach a common view, whenever that is possible. However, at the same time we shall of course reserve the right to defend our national interest when we differ from our colleagues, as they differ from us in turn. We are not afraid of entering into a joint group and having a debate with our colleagues of a similar political persuasion. We do not propose, like the Conservative group, to rope ourselves off into a separate clique with only a few hangers on from independent reactionary parties in Europe.
I am disappointed, but not surprised, at the priorities of Sir Henry Plumb, but I am both disappointed and surprised
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that the Government have not chosen to accept our amendment. After all, the Government have hinted that they will stop at nothing to make sure that they get a fair deal in the EEC and will even withhold their contributions to do so. When 31 March comes, no doubt we shall be told that a letter of complaint is on its way. No doubt when we meet to debate the matter in April we shall be told that the reply has been received and is in Brussels with the Foreign Secretary.
We have put to the test the Government's bluster. They shrink from matching bold action to their resolute rhetoric. I am disappointed that they will not accept our amendment, but I have the satisfaction of having called their bluff. There may be something in the jest that part of the payments of the United Kingdom for the variable sheepmeat premiums are in respect of our Foreign Secretary.
There is another reason why I am disappointed that we shall not be able to make progress on the matter tonight. It is that, as long as this undignified debate on the budget continues, the whole of Europe will be distracted from the much more fundamental problems facing us, which are at present being wholly ignored. While we are fixated with how we pay to support 8 million farmers, we drop into a memory hole the 12 million unemployed or the 30 million or more citizens in Europe who experience unemployment in any one year. If there is a challenge to Europe, that is the challenge that should be taken up. Instead, all the exciting work on pan-European co-operation in the economy is taking place outside the EEC, on projects such as the "out of crisis" project of voluntary economists gathered together in ad hoc bodies, or in the OECD. which revealed in a study last week that, for any additional public investment expenditure, the stimulus in any one state is doubled and the adverse effect on its fiscal deficit and trade balance is halved if its neighbours make the same increase in public investment at the same time.
The challenge facing us is whether we can break out of the sterile stagnation imposed upon us by competitive deflation, in which we each vie in vain to grow strong by beggaring our neighbour. We should substitute in its place a programme of co-ordinated reflation in which we can expand together out of this slump. That is the true perspective in which to view the budget. The true perspective in which the budget must rest is the billions of pounds worth of production that has been destroyed by the monetarist dogma now in the saddle of so many capitals in Europe.
Mr. Rifkind: What about France?
Mr. Cook: The hon. Gentleman refers to France. The mistake that the French Government made when they first came to power and started making a dash for growth was that they assumed that the rest of Europe would behave rationally. They were wrong. The rest of Europe responded irrationally. One of the strongest advocates of co-ordinated reflation is the French Socialist party, because the difficulties of any one country breaking out of the slump on its own have been exposed to it. It is on that experience that we can found the case for co-ordinated reflation, so that we can all get out of the slump together. If we try to get out together, the cost for any one member state will be halved. That is what we should be concentrating our minds on.
Mr. Rifkind: Spinelli.
Mr. Cook: The hon. Gentleman must get this right. It is not Spinelli. It would involve co-ordination and cooperation which might well transcend the EEC and bring in other countries.
Mr. Rifkind: The hon. Gentleman has just made the remarkable statement that the French Socialist experiment failed because it was unable to get the support of the rest of the European Community. Does that mean that the Labour party will call for a single economic policy in the EC, and greater economic integration?
Mr. Cook: If we are to say that the French Government's economic policy has failed, we will be unable to find terms of abuse sufficient to describe the economic record of the present Government of this country.
Mr. Dykes: The hon. Gentleman is changing the topic.
Mr. Cook: No, I shall take up the Minister of State's point in a moment. I wish first to make it clear that we do not accept his entirely false premise. [Interruption.] If the hon. Member for Harrow, East (Mr. Dykes) will be kind to his hon. Friend the Minister, I will give the Minister an answer. I presume that the question was intended to elicit a reply from me. [Interruption.] It is disappointing for me to have said nothing in the past half hour with which the hon. Gentleman disagrees sufficiently to intervene from a standing posture.
The record of the French Government's economic policy is better than that of any other member of the EEC. The increase in unemployment in France is lower than it is anywhere else in Europe. Unemployment fell for most of the first two years of the French Socialist party's period in office, while during the first two years of the hon. Gentleman's Government unemployment nearly doubled.
It is not a matter of economic integration. It is a question of arranging together to carry out domestic policies which reinforce and support each other, rather than following domestic policies which deflate competitively against each other. I assure the hon. Gentleman that the Socialist parties of Europe are indeed discussing apace a co-ordinated programme which we could offer Europe in place of the stagnant sterility and barreness which they are offered by the monetarism that rules from here to Bonn.
Mr. Forth rose—
Mr. Cook: No, if the hon. Gentleman will forgive me, I have been generous in giving way and I am concluding my speech.
It is for these reasons that we must put behind us the arguments over the budget and resolve the deficit of the millions of pounds by which we are out of pocket because of it. This budget is both irrelevant to the real economic problems of Europe and perverse in the way in which it is financed. Above all, it offers no hope to the 12 million unemployed in Europe who should be our first priority.
5.3 pm
Mr. Geoffrey Rippon: We are all very grateful to the Economic Secretary for the lucid way in which he introduced the weighty documents before the House, even though he was not helped on his way by some of the interruptions. I agree with the hon. Member for Livingston (Mr. Cook) on at least one point. He is right to say that we must put some of these budgetary issues in
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a much wider perspective. We all know that the Athens summit was a failure, but it was not necessarily a disaster. I believe that the Prime Minister was right in rejecting yet another botched-up compromise—another communiqué in the same old terms leaving all the issues that face us to become even more acute and more difficult to resolve in the years ahead.
On the other hand, we know that genuine solutions to the major issues of budgetary policy and effective control of agriculture and other expenditure are the precondition of the Community's future development, and that, in that regard, time is running out. Judging from the press reports, we cannot be particularly encouraged by what has been happening over the weekend, at yet another meeting of the Council of Foreign Ministers. Clearly we must give the highest priority to negotiating a settlement that strikes a fair balance to the mutual advantage of all member states. That must be our purpose, because if we fail to reach that agreement we shall all suffer. Some right hon. and hon. Members are a little unfair in asking my hon. Friend the Economic Secretary exactly how those negotiations are being conducted. They must be conducted at every level, and particularly at the diplomatic level, because the last thing that we want is another frustrating summit where Heads of State are asked to resolve issues that ought to be dealt with at ministerial level long before strategic decisions have to be made.
As the Prime Minister has said, we are not half-hearted members of the Community. We are in, and we are in to stay. I welcome what my hon. Friend the Economic Secretary said about the Government's constructive approach. We must defend British interests as others defend theirs, but British interests are indissolubly and inevitably linked to European interests. We all have complementary interests, and they go far beyond either the existing budget proposals or the common agricultural policy.
I welcome the Government's willingness—provided that the immediate issues are resolved—to consider an increase in the total resources of the Community. That is the only way to carry out the proposals that the British Government have themselves made concerning transport and energy policy, the environment, innovation and advanced technology.
Many criticisms are made of the CAP but we should not forget its contribution to the interests both of the British farmer and of the British consumer by putting the source and the price of our food on a stable economic basis. Milk and other surpluses have got out of hand, but since we joined the Community our farmers' home food production has increased from 60 per cent. to 75 per cent. of our needs and that has certainly been in our national interest. We will be glad of that import saving when North sea oil runs out. While agriculture expenditure must be contained, we would be wrong to ignore the effect on farmers' incomes, and so on farm workers' wages, of savage cuts in support prices or an excessive devaluation of the green pound. We should not forget that, as we are not members of the European monetary system, the pound sterling is liable to fluctuate much more violently than the currencies of our partners.
With the budget it is a case of the chicken and the egg, and the members of the Community may be playing at brinkmanship. It must be in the interests of the Community as well as of Britain to change the size and shape of the budget, as the hon. Member for Livingston has hinted. Our

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criticisms of the present budget and its impact on financial flows between members states can be solved ultimately only by developing common policies on a scale which will put the budget and CAP into a much truer perspective. I entirely agree with the hon. Member for Livingston—and I assume that his view is the view of the Labour party —that the biggest challenge to the Community lies in the industrial sector, with an overriding need to deal with the rising levels of unemployment.
As the hon. Member for Livingston pointed out, more than 12 million people in the EC are unemployed. That represents 11 per cent. of all adults. Worse is the fact that among the under-25s the level of unemployment is between 25 per cent. and 27 per cent. According to commissioner Mr. Ivor Richard who is responsible for these matters, if we do nothing about that we can expect unemployment of 15 million by 1985–86 with the same horrifying 25 per cent. to 27 per cent. youth unemployment. The social and political consequences of unemployment continuing at that level makes the budgetary dispute relatively insignificant. We must revitalise and modernise European industry. We know that it is falling behind the United States and Japan in nearly every aspect of technology and innovation. That is why the ESPRIT programme, for example, which the British Government fully support, must be implemented without undue delay. The ESPRIT programme will not close the growing technological gap between Europe and the United States and Japan, but without it we shall have little chance of catching up. It is only through such measures on a Community scale that we can create jobs to the desired extent.
McKinsey's, the consultants, have estimated that if information technology is developed in Europe as it has been in the United States, 2 million new jobs could be created by the end of the decade. However, it points out that if we continue to fall behind we shall lose 2 million more jobs in that sector alone. In information technology alone about 4 million jobs are at stake.
I agree with my hon. Friend the Minister and the hon. Member for Livingston that British interest in the EC is not confined to those matters which are or ought to be covered by the budget. As has been said, there is a major interest in policies which do not involve substantial spending, notably the dismantling of trade barriers and bottlenecks at frontiers.
When it is finally agreed, our budget contribution could be much more easily justified and acceptable if our Community partners made a real effort to create a genuine free market in goods and services which is provided for in the treaties to which they rightly attach such importance. We all know that freedom of trade in services hardly exists. Customs officials are as numerous as ever and some customs regulations have recently become more rather than less stringent as protectionist policies have developed.
Mr. Forth: In this context would my right hon. and learned Friend say that we should make the relaxation of the restrictions on freedom of movement a quid pro quo of any increases in the Community's resources, or would he rather that there was a maintenance of a ceiling in the resources until we get guarantees on that vital aspect of the Community — abolition of internal markets for goods and services?
Mr. Rippon: It is a fair negotiating point. It is sometimes a mistake to express these matters in terms of a quid pro quo. Our position would be easier and more acceptable — and it would be in the interests of the Community—if progress were made on these matters. I should like our partners to show more willingness to meet us on this point. Perhaps my hon. Friend the Minister will say in his winding-up speech whether the French Presidency has in mind meetings of the internal market council in the next few months. I would be happier about some of the French Foreign Minister's remarks if he could show some willingness to make progress in this regard. We might make common cause with the French lorry drivers, one of whose grievances is frontier delays.
Some reference must be made to the European Parliament, as we describe it by courtesy. It might have shown itself to be more constructive and have a more realistic approach. Although we give the European Parliament that courtesy title, it should remember that it is constitutionally only an Assembly and that its best hope of acquiring more authority and influence lies in its acting reasonably and responsibly. It has not helped the cause of European unity by blocking he budgetary refund to which the United Kingdom is entitled or by pursuing a will o' the wisp of a new treaty on European unity which is highly unlikely to materialise. There is no great objection to the Spinelli resolution and initiative. It is a vision of the future to which people may legitimately aspire but I should have thought that we must make a greater success of the treaties that we have already signed before contemplating entering new ones.
Members of the European Parliament would do better to hold the Heads of State and Government to the terms of the solemn declaration on European union which they adopted and signed at Stuttgart last year. Our Prime Minister was one of the signatories. The declaration provides a basis on which we can hope to move forward —as President Pompidou used to say—step by step with realism. The Stuttgart declaration declares the signatories' will to move towards a European union, however that may be defined, and sets out at considerable length the way in which the Heads of State and Government are determined to deal with many matters which should be reflected in the Community budget — social, regional, industrial, technological and cultural.
There is no reason why we should hold up the proposals made by Heads of State and Government for culture. They could be implemented at little cost and in areas on which we all agree. At Stuttgart the Heads of State and Government decided, among other things, to develop the activities of the European Foundation and the European Institute of Florence. They also decided to increase exchanges of students and teachers, to promote joint action to protect, promote and safeguard cultural heritage and generally to intensify exchanges of experience, especially among young people — trade unionists as well as academics. The European Parliament would do better to press the Heads of State and Government to implement the decisions that have been made.
Britain is not always the laggard. We are the only country so far to have ratified the treaty which establishes the European Foundation. That treaty was agreed in Rome to mark the 20th anniversary of the signing of the Treaty of Rome, and was signed in Brussels to mark the 25th anniversary of that treaty. I wish to declare an interest in that I am a member of the preparatory committee for the

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establishment of the European Foundation. I am afraid that the powers-that-be have failed to agree after 18 months on the appointment of the co-ordinator for whom the Heads of State and Government called. If we are having so much difficulty getting ratification and implementation of a treaty which simply involves a few million pounds a year spread among all the members of the Community, it seems a little unrealistic to believe that we can carry forward the Spinelli proposals within a reasonable period. We should do better to concentrate on matters in which there is a reasonable hope of progress.
The documents which we are debating are interesting and detailed. You, Mr. Deputy Speaker, will no doubt have studied them carefully to ensure that no right hon. or hon. Member strays beyond their confines. They cover almost every human endeavour. Some of our debates on them are rather trivial in the context of the circumstances in which Europe finds itself today.
Everyone in the House must recognise that a European Community divided and disorganised will exercise no influence in the world; it will continue to fall steadily behind its competitors—notably the United States and Japan; unemployment will rise and social policies will be increasingly threatened. The political dangers of disunity are even greater.
I am glad that my right hon. Friend the Prime Minister has pledged that she and her Ministers will work for the unity of Europe as a force for peace, freedom and democracy. That must remain the firm purpose of us all because it is a common European interest. It has been well said that dogs in a kennel snarl at each other, but when a wolf comes along they become allies. If we in Western Europe are not careful we may be too late.
5.21 pm
Mr. Russell Johnston: It is a pleasure to follow the right hon. and learned Member for Hexham (Mr. Rippon), to whom I have listened on many such occasions. One of the sad aspects of these debates is that so few Members attend —and those who do are always the same Members.
Mr. Robin Cook: The hon. Gentleman was not present at the last debate.
Mr. Johnston: The whole pattern of the debates becomes predictable. The right hon. and learned Gentleman said that the solution to the budgetary problem must be a fair balance of mutual advantage. I could not agree with him more. In the end, the solution must be a package. There is no getting around that; it is a political reality. Looking at the hon. Members in the Chamber, I suspect that much of the debate will be confrontational and critical in tone. It is a great pity that the right hon. Member for Old Bexley and Sidcup (Mr. Heath) is not here. It is rather sad that he does not attend at least some of the European debates.
Mr. Rippon: My right hon. Friend spoke in the debate in December.
Mr. Johnston: I would have liked to have heard the right hon. Member for Old Bexley and Sidcup develop some of the points that he made in an interview in The Times, which I found extremely interesting. He dealt at length on the need for a consensus approach in general
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matters; he pointed out that we always talk about the Community in confrontational terms, while at the same time calling for closer and more sustained East-West dialogue. I am not in any way arguing against that; I am simply pointing out the contrast. There has been too great a confrontational approach during the past few years.
There was a rumour in the newspapers last week that the Prime Minister intends to appoint two Conservative commissioners to the Commission when the span of the present commissioners, Mr. Richard and Mr. Tugendhat, runs out. I hope that that is not true. There has been a good example in the appointments so far of the importance of sustaining some national political consensus at the very heart of Community institutions. There is a case for a Liberal or an apolitical person to be appointed. This is another example of the contrast in the way that European countries approach these matters compared with Britain's approach. The approach that I suggest would be regarded as normal in most Community countries. I hope that the Prime Minister does not appoint two Conservatives. I further hope that she does not, as reports suggest, see the task of the two British commissioners as being to advance the British interest solely—which is quite contrary to the notional job. If that is true, clearly her concept of the national interest is close to her view of the Conservative party.
Mr. Forth: Would the hon. Gentleman prefer the appointment of an anti-European Labour person or a pro-European Conservative person to the second place in the Commission?
Mr. Johnston: It would not make any sense to appoint someone who is opposed to the whole operation of the Community. But I have no doubt that there are plenty of people within the Labour party who are in favour of the European Community.
Mr. Boyes: The hon. Gentleman is asserting that there should not be two Conservative commissioners, and I understand that the alliance is calling for wider consultation with its members. This is the second debate in quick succession on EC matters, but on the last occasion no representative of the Social Democratic party entered the Chamber. Indeed, we do not need to be mathematicians to count how many of them are present today.
Mr. Johnston: It is true that we do not need to be mathematicians—there are only six Social Democratic party Members, and they cannot be everywhere at once — and there are only six of them because of our electoral system.
As the right hon. Member for Old Bexley and Sidcup said in the newspaper interview, it is more difficult to find a consensus solution with people who disagree than to embark on the attacking approach adopted by many hon. Members—such as the hon. Member for Southend, East (Mr. Taylor) who, in an earlier intervention, spoke about "the continentals" as though that was some leprous breed of humankind to whom one would not dare to speak or to touch.
Mr. Teddy Taylor: I am accustomed to the hon. Gentleman's unjustified and unfair attacks. He talks about consensus, but never tells us what that is. When I referred to continentals, I meant the non-British members of the EEC. If he can think of a better or shorter definition perhaps he will tell me.
Mr. Johnston: I am grateful to the hon. Gentleman for his intervention. There are Irishmen who, as far as I know, do not live on the continent of Europe, However, I shall not pursue that matter further.
I come now to the budget and the budgetary solution. There was a meeting of Liberal leaders in Stuttgart in January. It was attended by four Foreign Ministers from the Community, a number of Finance Ministers and the President of the Commission. It was a representative meeting at which persons involved in the decision-making process could talk together for the better part of a day. Despite the differing national positions that emerged, at the end of the day they agreed a common approach and a common communiqué—part of which I shall draw to the attention of the House.
The statement had three basic elements. First, there was the acceptance that steps must be taken quickly to contain agricultural production. To subsidise agricultural production where there is no market makes no sense. That is the key reason why the budget is out of balance. At the same time, we must face the fact—some hon. Members do not—that if we cut agricultural production, as we must do — whether by price or by quota — we cannot do anything immediately. It will take three or four years if we are to do it in an acceptable way. I mean acceptable not only on the continent or in Ireland, which is a classic example, but in Great Britain. The idea that we can produce a magical reform of the common agricultural policy which can be implemented the day after tomorrow is nonsense.
There should be a budgetary settlement which involves a system of correcting the injustices in revenue and an increase in own resources. The communiqué says:
"The Community's budgetary problems must be resolved, in particular and in combination"—
I stress the words "in combination"—
"by:—the introduction of stricter rules on budget spending, although the need for savings must not be used as a pretext for blocking the Community's development."
That refers to a matter that comes later. The communiqué continues:
"—the creation of a better balance between the Community's policies"—
that refers to the preponderance of the CAP
"and the ensuring of a fairer distribution of the financial burdens between Member States."
That is a direct reference to the British position and what would become in time the Portuguese position and is becoming the German position. It then refers to
"the rejection of the system of 'juste retour'."
If we go on the basis of "juste retour", there will be no redistribution of anything in the Community. That would be quite contrary, one would have thought, to the views held on the Opposition Front Bench.
The communiqué goes on:
"— the increase of own resources by raising the ceiling of VAT paid to the Community. The sacrifices entailed by these reforms and the raising of the ceiling on own resources will be all the more justified in order to enable the Community to embark on a new stage in its internal development and to admit Spain and Portugal as new members."
Spain's and Portugal's prospective adherence has not yet been mentioned, and perhaps hon. Members do not think that it is relevant to a budgetary debate, but it is. Their impact on the budget will be considerable, and the political imperative of including them is important. We may have to pay a price for it.
Mr. Nigel Spearing: In view of the importance of the document, which represents a strand in pan-European thinking, will the hon. Gentleman tell the House whether it went so far as to give a percentage of the VAT base, which has been canvassed by the Commission and the Italian Government? I believe that 1·4 per cent. and 2 per cent. have been mentioned. Did the group come to any conclusions?
Mr. Johnston: No, we did not come to a conclusion on that because the representatives of the countries taking part held different views. However, we all agreed that there should be an increase and that the minimum increase should be in line with the Commission's proposal of 1·;4 per cent. I favour the higher increase, but there was no agreed figure.
Mr. Teddy Taylor: The hon. Gentleman said that the group wants eventually to reduce agricultural production. Will he give me some idea of how it thought that that could be achieved? That would help many hon. Members.
Mr. Johnston: The hon. Gentleman asks me how agricultural expenditure will be reduced. Is that right?
Mr. Taylor: The hon. Gentleman referred to the gathering of Liberals and Democrats, who agreed that a reduction could not be done quickly, but who aimed in time to reduce agricultural production. I listened to his words carefully. Did those great Liberal thinkers show how they would recommend to this Government or other Governments how such production would be reduced?
Mr. Johnston: I shall give two answers to the hon. Gentleman. I shall take his point in a serious and straightforward manner. The communiqué refers to
"the introduction of guarantee thresholds which can be varied according to the product concerned."
That refers to operating the price mechanism as a means of containing production. There are many difficulties in that, as the hon. Gentleman knows. If we are to have an immediate impact on production through the price mechanism, we would probably need cuts of about 20 per cent., which would have the gravest effect in Europe. Seventy per cent. of dairy production comes from about one-quarter of the producers. If there was a 20 per cent. price cut, those people would be affected, although not all that adversely. The great milk factories would take their own measures, but many small farmers would be severely affected. Therefore, we must grade the reduction.
The concept of quotas met with more favour. The hon. Gentleman knows that we can argue from dawn till dusk about the quota for the common fisheries policy, and the right hon. and learned Member for Hexham would agree. Quotas would be one way of varying it. If quotas were fixed for Ireland on 1981 or 1983 production, the difference would be 17 per cent., because the Irish have been expanding like fury. It would be difficult for and unacceptable to the Irish Government if such draconian steps were immediately taken. As I said earlier, whatever we do about the CAP, we cannot do it instantaneously but must phase it over a period of time.
The third element in our approach was to seek to develop a programme for expansion. There can be no programme of expansion unless there is an increase in own resouces. Even if we contain or reduce expenditure on the CAP, we could not do it quickly enough and we would not

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release enough money. We would need more own resources to tackle unemployment in the way that it should be tackled.
The essence of what we would commend to the Government for the Council meetings on which they are about to embark is contained in the communiqué:
"Our common experience of recession over the last decade has demonstrated that economic recovery is impossible to achieve if nations act independently. To restore our industries' competitiveness and to fight unemployment, our priorities must be:

— more vigorous action by the Commission to prevent Member states from introducing technical trade barriers designed to protect their own markets;

—full achievement of the internal market to ensure that the vast efforts, in terms of research, training, and investment required by the challenge of new tachnology, can be rapidly made profitable and brought to fruition".

The German Foreign Minister agreed to that, although the Germans are major culprits in that area. The communiqué continues:

"—establishment of a genuine European policy for the research and development of new technology, with the immediate adoption of the ESPRIT programme … as a first step towards a commitment to the sectors of the future represented by telecommunications and biotechnologies;

—consolidation of the area of economic and monetary stability created by the European Monetary System, which must be extended to all the Member States."

The Minister said nothing about that today, nor did the right hon. and learned Member for Hexham.
Mr. Rippon: I did mention it— although I cannot cover everything—when I referred to the difficulty of altering the green pound at a time when sterling fluctuates wildly because we are outside the European monetary system, which I believe we should join.
Mr. Johnston: I apologise to the right hon. and learned Gentleman and I know that he has always said that in the past.
The basis of the agreement exists, but the question is whether the requisite will exists to do something about it.
I was disappointed with the speech of the hon. Member for Livingston (Mr. Cook), which was good, but very cutting. He has a cutting edge to him and a silver cutting tongue, but there was no positive element in his speech. It was almost like an accountant's speech at a board meeting that dealt with all the bits and pieces, but said nothing about policy. Towards the end of his speech the hon. Gentleman had the gall to talk about strategy. I had not heard a word about strategy previously, unless it was the old strategy of the Duke of York—marching up and down and sometimes wandering round in the middle.
I am not sure what the Labour party's present policy is on the European Community. It used to be that we should withdraw, but I understand that it has changed. The hon. Member for Livingston suggested an in-out approach—one day we would be in, and the other day we would be out. But I should not be flippant. It is bad for Britan if the Labour party is isolated from its natural political allies in the rest of the European Community. Much fun is poked at the European Parliament, but it provides a great opportunity for politicians of all shades to meet and work together, to understand each other, and to go back and make contact with their Governments. The Labour party lacks that quality.
The Conservative party also lacks that quality. I agree with the hon. Member for Livingston that it is remarkable
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that the Conservative group in the European Parliament could not link with any other Conservative group. The Christian Democrats, for example, regarded the British Conservative group as being too Right wing.
Mr. Robin Cook: Who is the hon. Gentleman going to link with?
Mr. Johnston: I am linked already, thank you.
Mr. Allan Rogers: Which group will the hon. Gentleman join in the European Parliament if he stands in the June election?
Mr. Foulkes: He is trying to do an old lady out of a job.
Mr. Johnston: I am not laughing at the interesting but somewhat ill-informed question from the hon. Member for Rhondda (Mr. Rogers), but at the sedentary observation of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). I would join the Liberal group in the European Parliament. British Liberals are members of the European Liberal Democrats, who are represented in the Parliament by the Liberal group.
The Government must stress the fact that Community States can create more jobs and achieve industrial renewal only by expanding their economies together. The Government should press the Community to take an initiative in advocating joint international action. They should join the Europen monetary system and should support an expansion of the regional and social funds to create more jobs and to help people to adjust to industrial change. If they take such a positive approach, the other necessary element—that the revenue side of the budget must be changed to take account of the present position —will follow. The Labour Government negotiated that budget and we had a referendum on it. The other members of the Community who become a little short-tempered about the budget are entitled to do so, because we came to an agreement but now we want to change it again. But they have accepted the fact that it must change again, but that will not happen immediately.
It is clear that the common agricultural policy is out of control. Therefore, we must reduce intervention prices for products in surplus, while ensuring income support for the poorer farmer. We must phase that in in a way that is politically acceptable and reasonable. The CAP should be linked with a reshaped budget so that contributions from member states reflect their ability to pay. That is what the Government are trying to do.
The Community is nearing the crunch. Its survival and expansion is of the utmost importance to our own survival and industrial expansion, and we must never forget it.
5.44 pm
Mr. Hugh Dykes: One is bound to agree with much of what the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) said. I agree with his inference that, at a time when the Community is facing a serious crisis, once again the House of Commons has a traditional EC debate. The posturing of the Labour Opposition produces, as the hon. Gentleman said, no positive demonstration of their policy for not only the survival of the Community but its revival, reinforcement and augmentation in the future. All hon. Members will dismiss the remarks of the hon. Member for Livingston (Mr. Cook) for what they are. The Opposition must remain as united as possible, although that is very difficult.

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Labour party members are psychologically committed withdrawalists, but cannot admit it. They have had to back away from that policy and at the same time try to satisfy what one might describe, without breaching parliamentary rules, as the new Kinnock wing and the old Benn wing of the Labour party.
Mr. George Foulkes: Will the hon. Gentleman give way?
Mr. Dykes: Not at present.
Mr. Foulkes: Come on.
Mr. Dykes: I shall not give way now, because the hon. Gentleman might welcome an opportunity to intervene later when I have concluded my opening remarks.
It is inevitable that the Labour party will never make a positive suggestion about how to make progress in the Community. One saw again the awkwardness of the hon. Member for Livingston when he tried to describe the so-called relationship between the British Labour Members of the European Parliament—I emphasise the word "Parliament" because it is developing into one—with the members of the enlarged Socialist group in that Parliament. Labour Members do not know how to play this game. They want to indulge in their little Englander of nationalism, which has been the hallmark of the Labour party for decades, yet they must pretend to be reasonably enthusiastic members of Socialist International.
Mr. Boyes: Will the hon. Gentleman give way?
Mr. Dykes: I am becoming so enthusiastic about this theme that I shall not give way. I may do so in a moment, but I wish to conclude this part of my speech.
There may be some suggestions from the alliance, but we must rely on my hon. Friends the Minister of State and the Economic Secretary to the Treasury and the Government to put forward suggestions for making real progress in the Community. I am a well-known enthusiastic adherent to our membership of the Community, and I wish it to develop properly in the future so that we can get through the crisis. However, I have reservations about some signs of the Government's lack of enthusiasm for developing the Community.
Mr. Boyes: The hon. Gentleman made the accusation that British Labour Members of the European Parliament were petty nationalists. Does he agree that at least British Labour Members sit in a group with nine other nations and about 12 other political parties, whereas the British Conservative group has not managed to attract another full group anywhere in the political spectrum, except for two Danes? Are not the Conservative MEPs the isolated petty nationalists in Europe?
Mr. Dykes: I shall answer the hon. Gentleman's point with a personal opinion. Since we were in the old European Parliament, I have been on record as being in favour of British Conservatives linking with the Christian Democrat group.
I hope that my hon. Friend the Minister of State will say something about the meeting this weekend at St. Cloud. I missed the first few minutes of the debate, so perhaps my hon. Friend the Economic Secretary made some reference to it then—[HON. MEMBERS: "No."] It would be helpful—
Mr. Foulkes: They are still all over there.
Mr. Dykes: There may be problems at the GPO, but let us focus on the fact that there was an important meeting at the weekend and that it is difficult, to say the least, for the House comprehensively to debate this matter without some reference to what happened at that meeting, or at least an allusion.
It is ironic that had the Community developed in the way that good Europeans in all members states would wish, and had we by now proceeded to qualified majority voting on financial and budgetary matters—this is a tentative suggestion, but I am becoming more convinced of it in the context of recent European history —probably a year ago, or little more than that, the panoply of the United Kingdom's rebates would have been agreed, for at that stage only one or two members states were being difficult. The rest were more and more inclined to agree with us.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon), in his otherwise excellent speech, perhaps overdid his omission in not understanding fully the feeling of collective frustration shown in the European Parliament among all political groups at the failure of the other institutions to develop the Community as a cohesive entity. The European Parliament, through various resolutions, through its reaction to the Spinelli report--again, often irrespective of political groups—repeatedly expresses its frustration — indeed anger — that the Community is not making progress at a time when the whole of western Europe is facing such grave issues that it should be doing so. Therefore, it falls exclusively to the European Parliament, which is constitutionally weak -- that is also why it feels frustrated—to try to take this development forward, but it cannot because the member states will not themselves do anything about it and because the European Council is a quasi-autonomous institution overlaying the European Parliament and the Council of Ministers and further slowing down the collective development process.
That applies to the budget as well. That is why it is right for Members of the European Parliament and, I hope, hon. Members here to realise the validity of developing all this, and be in favour of the budget evolving, as well as the EEC as a whole. It is a great sadness that the budget is not larger. What a miserable little instrument it is for cohesive financial decision making, developmental progress, reducing unemployment, building up the regions and so on, particularly when so much goes on agriculture, although that has a positive regional effect that must not be ignored.
The fact remains that the gross myopia of all the member states' Governments, irrespective of political complexion or the majority in any of their Parliaments, has in recent years produced a gradual paralysis of the Community, which is not merely disturbing but terrifying. Therefore, I hope that Her Majesty's Government will understand again their solemn obligations and not only drat which is the immediate prerogative and preoccupation of the debate — getting through the budget crisis and finding a just and fair solution for the United Kingdom..
Without exaggerating that requirement—which is valid but should not be overstated at the expense of other,—there are even more important policy requirements. I hope that on that basis and, I hope, a successful resolution at the end of March at the summit on this short-term crisis, the Government will become one of the most enthusiastic member states of the European Community. They will have

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seen that, despite the constitutional rigidity and institutional paralysis of the Community, the other members states—allowing for their exasperation with us, which must also be acknowledged, although it does not make me unpatriotic to say this—have come our way and agreed with us. Many of them feel that in Brussels, in the other institutions—the Commission and elsewhere — the United Kingdom has exaggerated these problems, although we feel differently for understandable reasons.
The amounts involved are minuscule and the EEC budget is an unrealistic instrument for gradual EEC fusion, harmonisation, collective policies, or European union, to use that convenient but vague constitutional term. That is why I am enthusiastic about going through the own resources ceiling as soon as possible and do not feel alarmed at the idea of 2 per cent., which may seem radical and over-dramatic, but is not in that sense anything other than the beginning of what could be the first stage of a realistic Community budget.
There is no way in which farm spending can be significantly reduced in absolute terms. It may be possible to reduce some of the surpluses — and even they are exaggerated, except the dairy surpluses—but only to a limited extent. If farm spending is to be kept more or less in broad terms at existing levels, allowing for a normative annual increase, it will be unrealistic to do other than increase the size of the EEC budget and spend money on other desirable areas.
What a farce it is that the British Labour party Is unwilling, despite the fact that it is obsessed with spending public money in this country, and the more the better, to agree to that in the European context, when so many of its Socialist colleagues are involved in the European Parliament and elsewhere. What an exaggeration it is for this national Parliament and others to talk about the need for financial discipline and to avoid bankruptcy in the EEC budget. We all know that that term is even more technical than in the concept and sense of domestic bankruptcy. At least the EEC budget does not have a deficit, as do all other national Parliaments. The budget deficit in Italy is £50 billion; in ours the borrowing requirement is about £9 billion. The EEC budget needs to be bigger. I hope that in future there will be a change in the treaty that will produce a debt ratio gradually developing as long as that money is to be invested in desirable purposes throughout all member states.
There is a need for proper financial discipline, and the Court of Auditors has been rightly critical in a number of important aspects. It also criticises us, as much as the other member states, on certain financial matters, so we are not uniquely virtuous in any sense in that context. There are many criticisms about the way in which money can be transferred from one chapter to another—the so-called continental habit of budgeting and financial expression —and rightly, on both sides of the House, criticism about the way in which amounts can be taken from one annual period to another and all the rest, which is a different approach. Morever, there is no case, other than in the past few years of severe deflation in this country, for saying that there is instrinsically less financial discipline in the management and operation of the EEC budget than there is in the member states, with the possible
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exception of one or two. I hesitate to mention them now, because I do not want to annoy some of our colleagues on the other side of the Channel.
Therefore, if that is so, let us maintain a sense of realism about these matters. Let us go into the resolution of the present short-term crisis and build up and enlarge the Community budget thereafter with equanimity and enthusiasm, because we know that the United Kingdom will benefit substantially from spending money in other sectors where budgets are held back artificially by the unreality of maintaining the own resources limit, which is getting increasingly out of date.
Mr. Budgen: My hon. Friend is courageously putting forward a view that is not popular on this side of the House.
Mr. Rippon: It is to some of us.
Mr. Budgen: I am grateful to my right hon. and learned Friend the Member for Hexham (Mr. Rippon) for that correction.
All of us are listening to the Government's remarks with great care, and those of us who disagree with my hon. Friend's proposition take the view that the Government's position is ambivalent. It may be that my hon. Friend has heard remarks from the Government that support his view. If so, we are grateful, because it is something that we fear but are at present open minded about.
Mr. Dykes: I am not sure to whom my hon. Friend was referring when he said "we".
Mr. Budgen: Those of us who disagree with my hon. Friend.
Mr. Dykes: The "we" might have been verging on the royal. I think that Government policy has been and is clear —I support it—and I think that what I am talking about is also clear.
Mr. Budgen rose—
Mr. Dykes: I shall continue, if my hon. Friend will allow me.
There is no problem in that context. As the stages of negotiation have continued — and this is the normal process — the Government have developed more enthusiasm for those objectives in the future than they had at first, when they were naturally preoccupied with trying only to get the rebates fixed in amounts and obtain them from the budget Council and summit meetings.
We have proceeded beyond that stage, which is logical, and there is no divergence between what I am saying and what appears to me to be the Government's policy. Therefore, there is an opportunity to be used after the March summit. It is reassuring that the summit is in the hands of the French presidency. Although in the conventional mythology we suggest in this House that everybody on the continent is basically wicked, but that the French are even worse than the rest, I do not believe that to be the case. The Socialist Government of France are concerned to resolve the immediate crisis and to try to develop the Community further. They, too, know that the old pattern of saying that the budget is mostly concerned with agriculture spending, with only a little on the rest of the items, is no longer valid. The Community has to pass beyond that paralysed stage of inefficiency and lack of achievement. It is important for the Government to recognise those factors.

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It is asking a lot to have a system that will continue for ever, so we may have to have a compromise mixture of annual periods of adjustment in the rebate and a safety net system, with some kind of mixture coming out of the very intricate negotiations. I hope that the Government will remember—as others should—that the amounts involved are very modest. I am not referring to the total excess payment, which we could regard as an aggregate rebate concept. We would, after all, settle for some deficit payment—some net contribution. Although we might think that it is unfair, we have already said that it would be justified.
Therefore, the amount of money that we are discussing is equivalent only to three days' public spending in the United Kingdom. That is the measure of the crisis that has been precipitated by the excessive adherence to nationalism in all the member states, including the United Kingdom, at the expense of the Community, for the sake of objectives that have assumed all too great a political posture, way out of proportion to the amount of money involved.
Therefore, it is not only a matter of establishing a proper rebate system, and the amounts of money which should be in an enlarged budget in the future; we should be doing other things conjointly with economic decision making. In the end, it is also a matter of joining the EMS. It is sad that the Government have not yet been able to make the decision. The EMS has been an unqualified success, apart from several hiccups which were only a matter of adjustment in the rates, and entirely within the operational framework of the policy. The Government are already halfway there as a member of the reserve sharing system, so that it would be a good idea to go the whole way and join the EMS.
My conclusion must be that the motion is correct, that the Government are pursuing exactly the right policy to get the correct result at the end of March, and that the Opposition's policies are ludicrously irrelevant and outdated. They even embarrass their own members. We have seen nothing of the alliance today, apart from the few hon. Members who appeared during the concluding remarks of the hon. Member for Inverness, Nairn and Lochaber. It is for the European party par excellence in this House—that is, the Conservative party—to find the right solutions.
6.3 pm
Mr. Nigel Spearing: This is only the second occasion in about 14 years when I must resist the temptation to reply to some of the remarks of the hon. Member for Harrow, East (Mr. Dykes)—particularly his opening and closing remarks—but I have no doubt that my hon. Friends will deal with them adequately in due course.
The debate and the motion illustrate some of the problems facing the House in grappling with the issues of the European Community. We have five issues before us in the motion, mostly related to finance.
I think it would be in order for me to comment on at least one point made by the hon. Member for Harrow, East, who is advocating up to 2 per cent. of VAT base as the limit to which the Community can draw on our funds. I remind the hon. Gentleman that that would mean that about 22 per cent. at the current rate of our VAT take
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would have to be transferred to Brussels. He may well feel that that is proper, but I suggest to him that there would be, some debate at least in this House over such a figure.
The first of the five topics, at which the House is looking simultaneously is the draft budget, together with the two amending documents. These were described in HC 78-ii, the Second Report of the Scrutiny Committee, over which I have the honour to preside.
The second topic relates to the repayments to the United Kingdom and Germany. They were discussed earlier in the debate, together with the importance of their being either obligatory or otherwise. Those matters were reported in HC 78-xi, the Eleventh Report of the Committee.
We also have before us, as third topic, the Court of Auditors' report for the financial year 1982—OJ C357—running to 243 pages, on which the Scrutiny Committee reported on 5 February in HC 78-xiv, which is not yet published.
We have before us also the motion which refers to future financing, and the Scrutiny Committee reported to the House on that in HC 78-vi. The Foreign Secretary appeared before us on 15 February last, giving us further evidence.
Finally, the Opposition's amendment deals with the policy of holding back our rebates.
Mr. Anthony Nelson: If I heard the hon. Gentleman correctly, he said about a minute ago that 2 per cent. would amount to 22 per cent. of the VAT yield. Would he care to explain that in relation to the point about 2 per cent. of 15 per cent.?
Mr. Spearing: I shall try to answer the hon. Gentleman's question, although I do not want to take long over it. I am not at all surprised at the hon. Gentleman's surprise, but one of the functions of the Scruntiny Committee is to look at some of the essential facts which might otherwise escape the attention of the House, the country, or some of the other members of the European Community.
When we speak of the all-important 1 per cent. of VAT, we remember that there have been various interpretations. I admit that some time ago I thought that it was 1 per cent. of our VAT take; other people thought that it was a 1. per cent. rate on the current 15 per cent. VAT. But it is 1 per cent. maximum of the assessed VAT base, which works rather like a rateable value, in that it is assessed annually by the Commission and by the Council. It is a rate of up to 1 per cent. of that base which has to go to the EC. The current rate—I think it was last year's rate—amounted to no less than 11 per cent. of the VAT take.
I should add that the amount every year will necessarily vary because the base can vary marginally. The percentage of the base can vary, and, in addition, the rate of sterling against the ECU will also vary. If sterling goes down., our contribution goes up, even if the notional rate is the same. I hope that I have fully explained the matter to the hon. Gentleman. I am obliged to him for his inquiry, because this point has not been very well understood. Indeed, it has perhaps emerged only in the last few months.
I do not want to spend too long on any of the five issues. I want to concentrate on two points in particular—the Court of Auditors' report for 1982 and the report of the Scrutiny Committee on it—and also on some of the major points arising from the Committee's Sixth Report dealing with the future financing of the Community.

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I turn to document HC78-xiv, which is available in the Vote Office. Unfortunately, although the Committee reported on 8 February, it is not yet fully available to the House. The process whereby the Court of Auditors' report is discharged is perhaps crucial in the control of the Council of Ministers over the way in which money is spent. Last year we heard from the Minister that letters had been sent to the Council and that things had been said. I hope that he will be able to give us assurances again, because we understood that in the past the discharge of the Court of Auditors' report had sometimes been taken as an "A" point in the Council of Ministers and had not even received very much discussion. It is a pity, because, as is said in paragraph 6.26 of the Court of Auditors' report, in respect of the European regional fund—which is often a feature of our debates on these matters—there is a
"narrow conception of regional development measures … the impact on the region of the various national and Community policies—agricultural, industrial or social—is mentioned for the record only, without any attempt to translate it into figures or indeed any precise indication of what results are envisaged".
It appears that the all-important regional fund does not contain much evaluation of the results that are expected from the expenditure authorised.
I wish to draw particular attention to the report of the Court of Auditors on the European development fund. It is funded direct from the Vote of the Overseas Aid Appropriation, and is not part of the EC budget formula that we have just been considering. The report that we made on that subject to the House illustrates the many serious difficulties encountered in the implementation and programming in favour of developing countries. The Court of Auditors' report, and our report to the House, pointed to one or two issues where there have been difficulties, including a spectacular failure in relation to a road in the Congo. Some 33 million ECU were spent on 77 kilometres of road, the expenditure being nine times that of the initial estimate. The report points out that it was an exception to the general rule, but it raises disturbing issues.
I also wish to draw attention to the Court of Auditors' report, paragraph 15.72, dealing with the place of the European Investment Bank in the activities of the European development fund. It states:
"The Commission's files regarding projects for which it has paid an EDF contribution to the EIB are inadequate to permit the Court to perform the duties imposed on it by the Treaties".
It goes on to say that insufficient material is available for its scrutiny. Paragraph 15.78 — it is an extraordinary admission—also states:
"The Commission delegations"—
the Commission's own diplomatic representatives abroad—
"are rarely informed of EIB financing decisions and project progress. In Mauritius, it was only through the local press that the delegate learned of a decision to grant an EIB loan with EDF interest subsidy."
There are other points about the EDF accounts, in particular, the arrangements — or lack of them — for monitoring scholarships. Paragraph 15.12 says that
"from July 1981 to December 1982, there was no record in the EDF accounts of the expenditure incurred by the scholarship management agencies in Belgium and France."
It goes on:
"It is therefore impossible to check the accuracy of the figures presented."
I mention these matters only because the Court of Auditors' report, which is about 240 pages long, is our
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only method of control over EC public expenditure—or, rather, its advisability and proper accounting method. This is a matter that exercises our minds equally on both sides of the House—indeed, if anything, perhaps more so on the Government Benches, where nowadays many hon. Members hold particular views on public expenditure. The matters dealt with in the report are just as much public expenditure as is expenditure in this country when it comes to scrutiny by this House.
Mr. Dykes: I am sure that the hon. Gentleman would be the first to agree with me, not only because of the modest sums involved but because the problem has not yet been solved by the House of Commons, that the problem in the Community pales into insignificance compared with the problems that face the British Parliament.
Mr. Spearing: I am not sure that I agree with the hon. Member for Harrow, East, but as Chairman of the Committee I cannot go too far down that road. I suggest to the hon. Gentleman that the powers of the Public Accounts Committee and of the Comptroller and Auditor General, now an Officer of the House, put him in a position vis-a-vis our domestic expenditure that is somewhat different from his position vis-a-vis EC expenditure. I commend that point to the hon. Gentleman.
Before leaving the subject of the European development fund, I point out that in the Second Report of the Select Committee on Overseas Development on the renegotiation of the Lomé convention—Lomé II—HC 586 of Session 1977–78, the then Government clearly said:
"Experience has shown that such programming"—
of the EDF—
"needs to be conducted with care and that projects within programmes should not be considered as commitments until they have been examined in detail".
That was the view of the then Government in negotiating Lomé II. We are now negotiating Lomé III, and I hope that the remarks of the Government and the Select Committee at that time can be incorporated into the negotiations that are now in progress in producing Lomé III.
I turn now to the second part of my comments, about the future financing of the EC and the problems inherent in it. We read in the press this morning of a triangle of forces between the institutions. In its report to the House on 23 November last—HC 78-vi—the Select Committee tried to give an objective summary of the problems now facing Her Majesty's Government and the House. I draw attention to the table on page 7 of the report, which sets out the full position on payments; the sources of payments to the EC and the receipts that we received. The last full figures are for 1982. They show that our total gross payments amounted to £2,863 million, of which the VAT contribution was £1,554 million. Our net contributions for that year, without refunds, amounted to no less than £1,600 million, although our refunds for that year were £1,000 million, giving a net payment of £600 million. Of course, much of that £1,000 million of refunds was on expenditure in this country, which we would have to bear under our own Budget were we not a member of the EC.
However, I draw attention to the fact that of the total of receipts—£1,238 million—no less than £791 million came under the heading of the European agriculture guidance and guarantee fund. I stress that £791 million—virtually £800 million, some two thirds of the receipts from the EC—went to the agriculture sector. In view of the discussions that are now taking place, partly in the National

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Farmers Union and partly in other circles, we should realise that the receipts to Britain come largely within that one economic sector.
In the summary of United Kingdom expenditure, given in the equivalent report to the House by the Intervention Board, Cmnd. 8963, for the same financial year, the split in some of these figures is interestingly set out. Cereals support was £184 million, dairy support £170 million and support for whisky was £81 million. We had export refunds of £27 million for sugar and £28 million for the private storage of sugar. So there was £737 million in agriculture at that time.
The problems that we face are well illustrated by the question and answer session that we had with the Economic Secretary on 21 November 1983. The questions and answers were fully taken into account in the Sixth Report, which was published on 23 November, and show that the Government have a formidable task ahead in pursuing the Stuttgart objectives. Question 90 asks:
"Who will take those decisions—Treasury or Agricultural Ministers?"
The Economic Secretary replied:
"There has been a proposal that Finance Ministers should be more involved with the decisions, but the mechanism has not yet been agreed."
That illustrates the nub of the problem facing us all. Agricultural expenditure is rising as production increases, so the ceiling is rising. Such expenditure needs to take account of world prices, which we cannot control. If world prices fall, so the floor will go down.
Therefore, the problem for the Government in controlling agricultural expenditure—the condition that they have put down, which is supported by both sides of the House — is how to achieve that aim. From our question to the Economic Secretary, it is clear that control is not yet to he vested in our equivalent of the Chancellor of the Exchequer. It is to remain largely in the hands of Agriculture Ministers. The distinction between those who have the responsibility for raising money and those who have the responsibility for spending it lies at the heart of the problem. Indeed, it goes to the question of control by the House—the control that it used to exercise, that it obtained from elsewhere and that it still holds.
That is the measure of the problem. Therefore, it will come as no surprise to hon. Members that difficulty and controversy will continue, at least until the summer, and perhaps even longer.
6.21 pm
Mr. Robert Jackson: When I was elected to this honourable House in June last year, I hoped that I might have the chance on one or two occasions to bend the ears of my colleagues on the subject of the European budget and the CAP, on which I have specialised as a Member of the European Parliament. However, as things have turned out, we have had many more than one or two —some might say too many—opportunities to discuss such matters. So may I congratulate the usual channels on the number of European debates that they have sponsored in the past few months. Certainly no one can say that Back Benchers have not had the opportunity to express their views on the issues currently under negotiation in the Community.
In that spirit I shall discuss the principal points at issue in one important sector of the current Brussels negotiations. I refer to the reform of the European budget.
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I call this only "one sector", because budget reform is only a single element among the several that comprises these negotiations. Another crucial element, which was mentioned by the hon. Member for Newham, South (Mr. Spearing), is the reform of the finances of the CAP. However, I shall not address myself to that subject today, but will instead focus on the problems raised by our efforts to install an automatic budgetary corrective mechanism in the European budget.
The first question concerns the way in which such a corrective mechanism should operate. The Government have proposed that it should be done by an abatement of the revenue contribution from the United Kingdom—that is to say, by an abatement of the payments that flow out of the United Kingdom to the Community budget rather than, as has been done since 1980, by means of exceptional measures of Community expenditure in the United Kingdom. After four years in the European Parliament, I have no doubt that this is the correct approach, because, among other things, as long as compensation for excessive net contributions takes the form of special expenditure in Britain by the Community, it will continue to be very difficult to get public opinion in the other member state to understand that Britain has not sought, and is not obtaining, any form of special treatment. I hope, therefore, that the Government will stick to their guns with regard to the method by which the corrective mechanism is to be paid.
The second question concerns the method of calculation of the amount to be paid, or, rather, to be abated, by way of compensation. I hope that the Government will not relax their position on the method of calculation of the size of the net contribution that has to be corrected. Here I am referring not only to the Commission's ideas about how to redefine the British share of that Community expenditure: those ideas are not and never have been acceptable.
More seriously, the Government should not be willing to accept that in calculating the size of the British gross contribution, the so-called traditional own resources—that is to say, customs duties and levies—should be left out of account. It is a specious argument that a corrective mechanism that includes a measure of compensation for the duties and the levies would somehow be incompatible with the principle of Community preference. Community preference would in fact continue to operate if duties and levies were thus taken into account, because it would continue to apply to the decisions made by economic operators who have to decide how much to import. The question of how much compensation is paid to the United Kingdom Government in terms of public expenditure would be quite irrelevant to the decisions of those operators—so as far as they are concerned the principle of Community preference would continue to hold.
I hope, therefore, that the Government will maintain their position that the total gross contribution must be taken into account in assessing the gap which has to be compensated. I say this because there is a danger that if we accept that the net contributions gap should be calculated only in relation to the VAT contribution, the amount of compensation that is eventually agreed may appear to be too large in relation to a net contribution which is measured on such a narrow basis. And if it appears to be too large, it will be very difficult for us to explain and justify it to opinion elsewhere in the Community.

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However, while the Government should stand firm on how to calculate the size of the net contribution, I hope that they will show some flexibility in the design of the compensatory safety net that we must and will have for Britain. I am afraid that it will not prove to be workable for the net contribution of any member state, including Britain, to be limited to a fixed ceiling, whatever the size or rate of growth of the Community budget. Our purpose should be to obtain equity in the Community's budget system rather than merely to attempt to put a ceiling on the net contribution of any single member state.
Consideration of this question of equity leads us to one of the most difficult issues in the negotations, which is how budget compensation for the United Kingdom and the Federal Republic of Germany should be financed. It is very tempting for British people to feel that it is not really a problem for us, and that the main thing that we have to worry about is obtaining the money rather than fussing about how it is to be paid. I shall yield to that temptation by not dwelling on this point other than to say that we in the Community cannot go on putting on the backs of the Germans a heavy financial burden to pay for all the rest of us. Germany has been willing to make a very substantial net contribution to the operations of the Community. The German attitude has reflected the historical and political situation of Germany since 1945. However, a new generation is rising in that country, and it is not acceptable or understandable to it that Germany should continue to be in such a position.
Mr. Marlow: Is it not the case that the Germans have a massive surplus in exports of manufactures with the rest of the Community, and that therefore it is worth while for the Germans to pay a considerable membership fee for the Community whereas the opposite is true for the United Kingdom which has a massive manufacturing deficit?
Mr. Jackson: I entirely agee with my hon. Friend. But he must recognise that we cannot overload the Germans, because the political consequences of a change of attitude on this point could be very serious.
So the first point to make about who should pay is that it should not be only the Germans. What we must do is to get the Community's richer net beneficiary countries to pay their fair share. I shall take the case, for example, of our good friends the Dutch. They have indeed been good friends to us in Europe. The point I want to make to them should appeal to them because they are not only a businesslike but also a conscientious people. The Netherlands has one of the highest incomes per capita in western Europe and, indeed, the world. Nevertheless, that country has been a net beneficiary from Community expenditure since the Community's beginning. And over the past three years it has been a net beneficiary of such expenditure to the tune of some £200 million per year.
Since about half of all the net benefits in the Community are paid for by the United Kingdom—the other half is paid for by Germany—a quick back-of-the-envelope calculation shows that we in Britain have been transferring resources to the Netherlands to the tune of about £100 million a year. It is not, I think, wholly unfair to compare that figure with the £110 million in resources that we transfer to India each year. Our Dutch friends
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should appreciate that we through the Community transfer more resources to the Netherlands than we do to India. They should try to do something about it.
Another crucial question in the negotiation is that of the duration of the proposed budgetary corrective mechanism. The ideal must be to obtain for us a mechanism which, as my hon. Friend the Economic Secretary said, would "last as long as the problem lasts". Indeed, it would not be acceptable if the mechanism operated only for an arbitrary number of years. It could not be logical for the Community to recognise the problem of net budget contributions and then to decide that the solution to the problem should operate for only a few years rather than for every year in which it arises.
I fear, however, that the Community may not yet be ready to undertake the changes in the budget system which are necessary to solve the problem permanently. I hope that it is, but I fear that it may not be. I fear, therefore, that it may be necessary for us to accept that the duration of the mechanism will be linked to the duration of the proposed increases in own resources.
I should regret that outcome because it can only store up future problems for Britain and the Community. But I should be prepared to accept it—as should the House, if the Government propose it as being the best deal that we can obtain in the present negotiations.
In accepting such an arrangement, however, we should recognise what it implies. At the risk of being thought unhelpful, I shall spell out the implications as I see them. The price of a further renewal of the budget when the next tranche of own resources is exhausted is likely to be our agreement to a still further increase in the Community's own resources in due course.
If that analysis is correct, we must recognise that the time is coming when Britain will have to have a more fully developed policy for Community public expenditure. Such a policy must, of course, include the elements on which we have hitherto laid such stress — the control of agricultural expenditure and other manners of control to which the Minister has referred. We must indeed continue to maintain a policy of vigilance and care to ensure that Community expenditure is cost effective.
But if the size of the Community budget is to be increased as a result of the current negotiations—and I believe that it will be—and if the perspective is of further growth in Community expenditure in the future, it will be necessary for us to think more deeply about what sort of expenditure and what sort of policies we want for Britain out of the growing Community budget. In this context what the hon. Member for Newham, South said about the proportion of VAT that might have to be paid across is correct.
The Government must take the initiative in this task. And I am sure that it will be the occasion for many more agreeable European debates in the future.
6.33 pm
Mr. Roland Boyes: The right hon. and learned Member for Hexham (Mr. Rippon) said that the social and political consequences of unemployment made the budgetary debate insignificant. I agree with him, in part. The political and social consequences of unemployment on the European scale will be tragic unless something is done about it.
I am the Rapporteur of a report on the social consequences of unemployment which was prepared by a

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committee which examined suicide, illness and other problems which affect unemployed people. The debate is not insignificant, because it illustrates the relationship between the Community's institutions and the consequential problems into which the Government have got themselves.
Until June 1984 I shall be a Member of the European Parliament. From day one over the last five years I have continually opposed the right of the European Parliament to interfere in the budgets of member states. I am even more against the right of the European Parliament to determine how the budget rebate is spent. In three or four years' time, or perhaps sooner if the Prime Minister continues to have the same problems, the Labour party will be in power in the United Kingdom. I shall certainly not then welcome a Right wing-dominated European Parliament trying to block our moves towards socialism.
Mr. Rifkind: The hon. Member for Houghton and Washington (Mr. Boyes) says that he strongly opposes the European Parliament interfering with the way in which refunds are spent. Can he explain why the British Socialist group in the European Parliament, of which I presume he is a member, voted against previous practice and against other British Members of the European Parliament to try to insist on the rate of refund for projects on which the refund is spent being reduced from the normal 70 to 50 per cent.?
Mr. Boyes: The Minister has been misinformed about the voting.
Mr. Rifkind: No, I have not been misinformed.
Mr. Boyes: I am the one who goes there. If you would like to discuss it with me after the debate I shall be happy to do so. I am making you an offer. I do not usually make offers of a chat to Conservatives, but on this occasion I am prepared to bend my self-imposed rules and discuss the matter with you.
Mr. Speaker: Order. The hon. Member is bringing me into the debate. I should love to talk to him, but I fear that he does not mean me.
Mr. Boyes: I was referring to the Minister. Why is the European Parliament taking such a negative attitude? I regret to say that part of the reason is the isolation of the elected Conservative group in the European Parliament.
Mr. Forth: Can the hon. Gentleman comment on the isolation of the Socialist group in the European Parliament and on the number of times that it has been at odds with Socialist colleagues in that group?
Mr. Boyes: If the hon. Gentleman will be patient for 10 seconds, I shall come to that.
Mr. Budgen rose—
Mr. Boyes: I am trying to make a short contribution and I hope that the interruptions will be taken into consideration.
Mr. Budgen: The hon. Member for Houghton and Washington (Mr. Boyes) is being unkind to the Conservative group in the Assembly. It has given up its old-fashioned name "Conservative". It has allied itself with Danish parties. It has called itself the Democratic group to show that it is new and European, and 22 of its members voted against the veto. Surely that is an indication that a large section of the Conservative group has a splendid idealistic view of a future United Europe.
Mr. Boyes: The interesting point about that facetious comment is the way in which the hon. Member for Wolverhampton, South-West (Mr. Budgen) described the Conservative group because its members call themselves European Democrats. They are not democrats in a European way and they do not act democratically.
Mr. Jackson: I would like to make a serious point out of an amusing exchange. It is arguable that Conservatives in the European Parliament are isolated, but it could be said that Labour Members in the Socialist group are isolated. The important thing is that our country should not be isolated in European discussions.
Mr. Boyes: I promise to deal with that, because a number of Conservative Members have said, erroneously, that the British Labour group is anti-European, when in fact we are greatly pro-European. [Interruption.] On a number of issues we work closely with our European colleagues. For example, we are working together for a nuclear-free Europe and we are working within the European trade union movement for some control over multinational companies.
Mr. Budgen: How does that square with what the hon. Gentleman said—
Mr. Boyes: If the hon. Gentleman will rise to his feet, I shall give way.
Mr. Budgen: The hon. Gentleman says, on the one hand—
Mr. Boyes: No, the hon. Gentleman did not get to his feet quickly enough. I shall not give way if he cannot come out with whatever he wants to say straight away. In any event, I hope that I shall be permitted to make at least one complete point without being interrupted.
The Government have got themselves into the ludicrous position of having to beg the European Parliament to convene a special meeting so that we can get some of our money back. The British Government should examine this situation carefully to ensure that it cannot recur. The European Parliament is in no mood to compromise with the British Government, and it is this Government in particular with whom the European Parliament is concerned because it knows that any rebate is simply absorbed into our public sector borrowing requirement. When I write to the Chancellor of the Exchequer pointing out the effects of high unemployment on my constituency and asking how, when we receive a rebate, it will affect areas such as mine, I am usually told that the money will be absorbed and that he regrets he cannot do anything to help us.
Mr. Teddy Taylor rose—
Mr. Boyes: I promise to give way to the hon. Gentleman later.
I regret that one of my sparring partners, who obtained for me much publicity in the past, a former President of the European Parliament, the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), is not in his place, because many of the problems that we are discussing occurred because of the road down which he took us. I do not want to attack him in his absence. I wish that occasionally when we have European debates such as this he would attend so that we can make points about what he did. As I say, I do not want to make such comments in his absence, especially as there are no representatives of the SDP in the Chamber.

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The British Government should now demonstrate what they feel about the European Parliament's interference, and to do that we should call its bluff and repeat the words that appear in the Opposition amendment today. Let us make it absolutely clear that we shall stop paying money into the Community if we do not get a fair deal in return.
One of the most disgraceful speeches affecting people such as my constituents was made by the President of the Commission, Mr. Gaston Thorn, to the European Parliament in Strasbourg on 15 February 1984, and I hope that I shall be forgiven for quoting rather more extensively than did my hon. Friend the Member for Livingston (Mr. Cook) from his remarks on that occasion. Having referred to a few small advantages resulting from the activities of the Community, he said that
"the fact of the matter is that even these modest achievements will come under threat if the Community persists in displaying an inability to adapt to change and face up to the new challenges posed by the march of time."
He mentioned in particular the common agricultural policy and said that it was
"perhaps, the most striking example of this inability to adapt."
The solution to the problem concerns me, because he went on:
"You know that this year we have our backs to the wall and little room for manoeuvre. The Commission will keep you abreast of developments"—
he was talking to the European Parliament—
"and, at all events, I will be reporting to this House on the Brussels European Council. Clearly, if no decisions have been taken by then to ensure the financing of agricultural expenditure, the Commission will eventually be forced to propose appropriate action, however harsh, to the budgetary authority."
Mr. Thorn's speech was printed in the document that I have with me. However, we were all issued with an addendum. In other words, the addendum was not designed to contain some slack words, as it were, added to the speech by some civil servant. The words of the addendum must have been carefully thought out, and they include this passage:
"Let us have no illusions. You know only too well that if it does come to this, there are only two ways to balance the 1984 Budget. Either the Member States will have to agree — unanimously, as you well know — to foot the extra bill themselves, or cuts will have to be made in, say, the Social Fund or the Regional Fund to make money available for agriculture."
The Foreign Secretary, at a meeting in Paris in recent days, made his position clear. Alan Osborn, Common Market correspondent of the Daily Telegraph, reported:
"Britain has insisted that it will not consider any increases in the EEC's annual income from member governments until its two demands are met … and those are … sweeping reforms to reduce EEC farm spending and correct imbalances in the budget."
Thus, the only solution left is to cut the social fund. Small though it is—I said in a debate earlier in the year that the amount of cash available was analogous to trying to treat a man run over by a steamroller with a Band-aid—the Commission is proposing to reduce the amount of cash available to the social fund to try to solve the Community's problems.
When we remember that there are at least 12 million people unemployed in the EEC — and the trend is upwards—with more than 35 million people living in poverty, it is wise to consider what cutting the social fund would mean. Over the next three years, £500,000 has been earmarked for a poverty programme. A simple calculation—a calculation slightly more difficult that counting the
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number of SDP Members present in the Chamber today — shows that if only £500,000 is available for 35 million people living in poverty, not much more than 1p per person will be available. Yet Gaston Thorn has the audacity to stand before the European Parliament and say that, because of the present crisis, money will have to come from perhaps the only fund that is designed to help the people whom we in the Labour party represent—the unemployed, the poorest and the young people without jobs.
Mr. Forth rose—
Mr. Boyes: What a disgrace to propose such cuts.
Mr. Johnston rose—
Mr. Boyes: If hon. Members wish to intervene, I will take them one at a time.
Mr. Johnston: The hon. Gentleman might feel, on reflection, that he is being a little unfair to the President of the Commission. Does he agree that the Commission has in the past, and under Gaston Thorn, pressed for increases in regional and social funds, as has the Parliament itself, but that those efforts have been blocked by the Council? Is he aware that what the President was saying, in effect, was that if one was in a budgetary crisis one would have to fulfil the obligatory expenditure, and that the only area of fluidity was the non-obligatory expenditure to which one was not legally committed?
Mr. Boyes: I cannot agree with that. I tried to illustrate the ethos of Mr. Thorn's speech by quoting extensively from it. They were his remarks; I was not reading from a newspaper report of what he said. He was speaking to the European Parliament, and that is why I stressed that it was not any slip of a pen but a well thought-out and determined policy.
Mr. Forth: We know that there is a British Socialist representative in the Commission and we assume that he must have agreed with the collegiate view that was expressed by Mr. Thorn. However, does he agree that the British Government's position is entirely different and that they have consistently laid stress on control of the agricultural sector to maintain programmes involving the regional and social funds?
Mr. Boyes: The cash that is available for the social and regional funds is still extremely limited. One of the most serious problems with the EC is that Members of this place can question a Minister only when he has been to an EC meeting. The House has no way of determining what he should say when he gets there. The remarks of Government representatives of the Ten are said to be confidential and secret. That being so, I cannot be sure what half of them have been trying to do. On a number of social issues—for example, the Vredling issue—only one Government have stood out against all the other member Governments, and that it is the British Government. Our record on social measures in the Council of Ministers is—
Mr. Allan Rogers: Appalling.
Mr. Boyes—bad. The matters that we have discussed will be well understood by those who are present. We all understand how the various institutions interrelate. But much of what has been said will mean little to those

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outside this place. I shall illustrate the interrelationship of the institutions in a way that everyone whom I know will understand.
The Commission has taken the British Government to court over the harmonisation of tax on wine and beer. I speak as an ex-working men's club secretary and a member of about a dozen working men's clubs in my constituency. In case you ever invite me for drinks, Mr. Speaker, I must ask you to ensure that tomato juice is available, as I do not drink alcoholic drinks. I declare an interest in clubs and the price of beer, but I do not have a vested self-interest.
The European Court has determined that the tax on wine and that on beer must be brought more closely together. This is an issue which my constituents and those in the region understand very well. They know what an additional 7p on the cost of a pint of beer means. None of us really understands what 300 million ecu or £1 million means. The figures are so huge that they are beyond comprehension. Much of what we have discussed this evening has been beyond comprehension, but a man knows what an extra 7p on his pint means. A man who runs a club knows that 7p a pint on his beer will close his clubs. Most of us know that the clubs and pubs are now under threat.
Brewery representatives know, too, that an extra 7p on a pint of beer will so reduce the amount of beer that is bought that unemployment will increase as a result.
Mr. Marlow: I wish to agree with the hon. Gentleman and support him, particularly as more working people actually vote for the Conservative party than any other party in the country. There are many people on this side of the House who would be very anxious indeed if the Government were to increase taxes on beer so that we could subsidise claret for the Social Democratic party. I should like to go back to the point that the hon. Gentleman was making about social policy. Does he believe that social policy should be decided by Brussels—
Mr. Boyes rose—
Mr. Marlow: —or decided here?
Mr. Boyes: Can I decide to give way to an intervention, Mr. Speaker, and subsequently decide not do so?
Mr. Speaker: No. However, the hon. Member may now respond to the inteventon of the hon. Member for Northampton, North, (Mr. Marlow).
Mr. Boyes: I wish to concentrate on beer prices and the mess from which the Government must extricate themselves as a result of the European Court's ruling that taxes on wine and beer must be brought closer together. The harmonisation of tax on wine and beer does not relate directly to tax matters. The issue has arisen because there is a surplus of wine and there is a wish to sell more of it. It is hoped that the harmonisation of taxes will cause the British people to drink more wine than beer. I concede that the amount of wine that is being consumed in Britain is increasing slightly, but I cannot envisage the miners, shipyard workers and other working people in my constituency going into pubs and beginning to be white wine drinkers. They will want a pint of beer.
What are the revenue implications? According to the best information that I can obtain, an increase of 1p in the cost of a pint of beer will bring the Chancellor of the
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Exchequer an additional £95 million. An increase of 1p on the cost of a bottle of wine will bring him in only £5 million. If the Chancellor increases the price of a pint of beer by 7p, he will rapidly lengthen the dole queues. I know that the Government have not cared about that for the past five or six years, but I think that the implications of lengthening the queues still further are now becoming apparent and alarming to them.
If the Chancellor of the Exchquer reduces the price of wine, he will want to retrieve the loss of revenue from another source. It is not in the nature of this Government to give away money. For example, if he reduces the price of a bottle of wine by 19p, he will have to collect nearly £100 million from somewhere else. Where will he find that extra revenue?
The problems that are caused by the interrelationship of the institutions will continue for as long as we have a European Parliament that can block the budget and a Commission that can take member states to court. If the results of this messy interrelationship are allowed to work their way down to ground level, we shall find that an extra 7p a pint will be added to the price of a pint of beer. We shall continue to find ourselves in severe difficulties from time to time if the present interrelationship is allowed to continue.
The Government must take two measures. One is important and the second is vital. First, they must examine the interrelationship between the institutions. We cannot have the European Parliament determining what happens to the budget. Secondly, we must make it clear that we shall not solve the problem of the CAP by putting the greatest imposition on the poorest people in Britain, especially the working people. It is vital to ensure that 7p is not added to the price of a pint of beer and that we find another solution to the problem that is caused by the Italian wine lake.
6.58 pm
Mr. Teddy Taylor: The hon. Member for Houghton and Washington (Mr. Boyes) seemed to give way to almost everyone under the sun, and I am only sorry that he chose not to allow me to intervene. He obviously knows far more about the European Assembly than anyone who has contributed to the debate so far, and he explained that to us in detail. As someone who has spent so much of his time in that institution and who realises the amount of time and energy that it consumes, perhaps he can say whether working people in his constituency and in mine would be any worse off if we did not have a European Assembly or Parliament. Having listened to all those who have spoken about the great problems within the Community and how nothing can be done to solve them, it seems that the first step that we could usefully make would be to abolish the European Assembly as from tomorrow. No person in Britain or elsewhere in the Community would be worse off, and a little more help would be provided for some of the worthy interests supported by hon. Members on both sides of the House.
The hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) in a thoughtful speech said that the House was empty. He made that point the last time he spoke in a similar debate. He tried to make it clear that that had nothing to do with the fact that he was speaking and that he was not scaring other hon. Members away. I believe he knows why the Benches are empty. It is clear that the

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parties are put in the difficult position of arguing the opposite of their usual arguments. The Conservative party has just published a White Paper pointing to the importance of cutting public expenditure and the Government not making decisions about where money goes in investment. The Government want to stop expenditure in Britain, but they are supporting it in the Common Market.
The hon. Member for Livingston (Mr. Cook), who usually makes good speeches, will admit that he was knocked for six by a splendid intervention from my hon. Friend the Minister of State, Foreign and Commonwealth Office, who suggested that if he were arguing for European co-operation and spending for jobs and welfare, he was arguing for the further development of the Common Market.
A major problem is that the Labour party clearly sees that in the Common Market it has the vehicle to achieve all that it—the Labour party—wants for society. The Labour party can have its developed regional policy, an extended social fund and many bureaucrats running around deciding how to spend more and more public money in the hope that somehow it will solve the problems of unemployment. That is Labour's rightful place. It should be enthusiastic in developing the Community and extending its budget. I suggest that, for the same reasons, it is ridiculous for the Conservative party, while arguing as it rightly does for the curbing of public expenditure and state interference, to think that Community problems would be relieved by increasing the amount spent by the Community.
The most interesting speech made from the Conservative Benches came from my hon. Friend the Member for Harrow, East (Mr. Dykes). He referred to the amount of the budget taken by agriculture. His solution to the percentage problem was to increase spending elsewhere. I hope that the Government will reject that proposal. It is similar to saying to one of our constituents, worried about the fact that he is spending more than half his income on whisky, "If you spent more on tobacco and gambling, you could cut that amount to 25 per cent." That is what my hon. Friend was suggesting, and I hope that it will be rejected.
It is timely that we should be debating the Common Market budget a few days after publication of the White Paper on future public expenditure in Britain. The two documents show the stark difference between the spending attitudes of those institutions. The White Paper is marked by savage restraint in spending, while the Common Market budget shows its usual casual disregard for the use of taxpayers' money. It is possible to go through the long pages of the Community budget in a nit-picking way, commenting on the many examples of profligacy and waste that we have come to expect from the Common Market, but the real issue is the vast percentage of the total budget taken by agriculture and—this is more important to me—the huge proportion of the agriculture budget that is swallowed by the disposal of surpluses. That is done either by increasing the size of mountains and lakes or dumping the surpluses at knock-down prices in the Soviet Union and elsewhere.
I hope that my hon. Friend the Minister of State will take some steps to explain some of the items of expenditure in the Community budget. Page 25 of the
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document refers to a fixed entertainment allowance of £1·5 million. At the foot of page 25, there is a reference to entertainment expenses of an additional £650,000. Who receives those substantial allowances? What is done with them? I understand that they relate only to a small number of people appointed by the Commission. The high level of entertainment expenses may account for the alarming amount that appears to be spent on invalidity allowances for the Commission's staff. Why is it necessary to pay in invalidity pensions to a staff that is smaller than the Scottish Office and smaller than the GLC more than is paid to the entire British Civil Service? What is wrong with the Community? Does it spend too much on entertainment and, therefore, its staff are invalidity-benefited, or is there some other reason? I hope that the Minister can give us the answer.
We know that the Community is spending vast amounts of money—
Mr. Allan Rogers: Did the hon. Gentleman say that the pension of the retired President of the European Commission was larger than that for the whole of the British Civil Service?
Mr. Taylor: I was referring not to an individual, but to invalidity benefit pensions which, I understand, differ from the pension received by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). The fact that there are never members of the Social Democratic party at these debates should not be taken as a sign that they have been invalided out. I understand that they are busy people who want to go to lots of places, except the House of Commons.
What is meant by the reference to spending several hundreds of thousands of pounds on informing young people in the European spirit? I believe that the Minister is aware that most of us, people in towns and guilds, doctors and dentists and those who have positions in society, have been invited to join the traditional free trip to Strasbourg to meet the Commissioners. We know that a vast amount is spent on publicity, including handing out silly glossy pamphlets. At any conference there is always a European stall at which free glossy pamphlets are handed out. They are usually rubbish and end up in the bucket.
There is now a new venture—a special programme to inform young people in the European spirit. On what is the money being spent? How and by whom is it being spent? What are the Common Market and the Government doing —I hope that this is not an extension of entertainment—in giving so much money to support the so-called European Movement — an organisation promoting federalism, which today the Government said we oppose? I understood that my hon. Friend the Economic Secretary to the Treasury was worried about the fact that some Conservative, so-called European Members of Parliament have been voting against the veto and in favour of federalism. The Economic Secretary to the Treasury said that that was against all that the Conservative party stands for, yet we are giving a vast amount of money, through Common Market funds, and, I am ashamed to say, British Treasury funds, to keep that organisation going. That organisation is fully in support of the Spinelli plan and advocates it publicly.
That costly enterprise, the Commission, is spending most of its money on agricultural policy, which promotes waste and extravagance.
Mr. Marlow: My hon. Friend has told the House about various items of Community expenditure. He is a great expert and knows more about the Community than probably any other hon. Member. He may be aware that last December the Commission opened plush new premises in London. Does he know how much those premises cost and how much larger they were than those occupied previously? I have asked the Government for information on that subject, but so far I have not received any.
Mr. Taylor: I am afraid that my hon. Friend will find that what the silly European Assembly spent is not controlled by this Government. We are on a totally new spending exercise at a higher level. The Commission's expenditure is an unfortunate example of public expenditure getting out of control. That is shameful. We should be more careful with public funds. I know that some hon. Members take the silly view, "What is £1 million here or there?" If they realised the worry people face in paying their taxes—not just on their income but every time they spend money in the market — they would have a more careful attitude towards public spending. Although there is that careful attitude within the Government, it is not shown in the EEC.
We are all worried about the amount of spending on agriculture, but I am more worried about the huge amount being spent not on farms in France, Britain elsewhere, but on dumping agricultural surpluses. According to written answers that I have received, 40p in every pound spent by the Common Market is used in disposing of agricultural surpluses. That is done by selling them at knock-down prices to the Soviet Union or other countries. A great deal of damage, distress, poverty, misery and death is caused to the poorest countries.
Some of us get upset—I am sure that our friends at the Treasury are more upset than anyone—at the way in which Common Market money is wasted. If we as a nation and the Common Market are stupid enough to pay our farmers prices that are vastly above the world price, that is up to us. If we want to ensure that every farmer has 10 Mercedes cars, that is a matter for us or the Common Market. We are entitled to take those decisions, whether they are right or wrong, but we are not entitled—I hope that the Government will do something about it—to cause so much damage, hardship and distress to some of the poorest countries, which are trying to get a decent return from their agricultural produce, but cannot because of Common Market dumping.
I had the pleasure to visit Pakistan early last year. It is an ideal country for sugar growing. There are perfect conditions for it. The people are trying to get a decent price for it, but cannot. I am sad to say that when they try to sell their produce. they find that the price is rock bottom, because the Common Market is dumping surpluses. The world price for sugar is about £120, but the price for British, French and Italian producers is about £350 to £360 — about three times the world price. It is the same for dairy products and cereals.
The Stuttgart summit made it clear that we accept the structure and principles of the CAP, and that all we are looking for are modifications and adjustments. That should be said in case some of our supporters or members of the public were disappointed. The Government are asking not for a reform of the CAP, but for modifications and adjustments.
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I hope that those who have influence in the Common Market will at least agree that, whatever we do, we should not wreck the world markets. If we want to charge our people five times the world price for butter, that is our decision. If we want to charge them three times the world price for sugar, fair enough. If we want to charge people double the world price for cereals, that is our business and our stupidity. However, we must not wreck the poorest countries. I am surprised that some of the great Church leaders, who are always marching up and down complaining about the Government's policies, never protest outside the doors of the Common Market Commission about the damage, poverty and distress caused to the poorest people. If there is any place those leaders should demonstrate, it is there.
Some of my right hon. and learned Friends talk about the Brandt report and how we must try to help the underdeveloped world. Why do they not also say that the CAP is doing great damage to the world's poor and stopping those countries from getting a decent living? They cannot get it because Common Market salesmen are ruining the world market by indiscriminate dumping at knock-down prices.
Mr. Bryan Gould: That is exactly right.
Mr. Taylor: It is exactly right. But what are we going to do about it? That is the important thing.
Mr. Foulkes: What have the Conservative Government done?
Mr. Taylor: I do not want to become involved in party political points. The hon. Gentleman must know that at least the Conservative Government have achieved a little more than the Labour Government. They got the famous rebates. We are still arguing about them.
Mr. Foulkes rose—
Mr. Taylor: The hon. Gentleman is and always has been a troublemaker. However, I shall give way.
Mr. Foulkes: The hon. Gentleman said that the Government got the rebates. Yet, earlier, he said that not only has the rebate for 1983 not been paid, but the rebate of £42 million has not been paid. Can he tell us when we shall get the rebates?
Mr. Taylor: I am afraid that that information is not available to me. I was going to come to that point. The hon. Gentleman should not try to stir up animosity. The parties are on the wrong sides. He and his hon. Friends are attacking the Common Market, which stands for all the things that Socialists should support. I see some Opposition Members nodding. We should accept this, as it would make things so much easier. If we want the workers to control industry, we will never get it through the British Parliament or the Labour party, but we will get it through the Common Market. If we want a great European policy for spending vast sums of money to try to resolve unemployment in Europe, we will never get it through a Labour Government—they thought that they would, and they know how they were stopped—but we will get it through the Common Market. If we want grand harmonisation measures, a European social policy, and bureaucrats sitting on boards all over the place deciding how Governments, civil servants and social subsidies can solve problems, we can get that through the Common Market. One of the tragedies is that the Labour party should be enthusiastically shouting for it.
Mr. Austin Mitchell: Will the hon. Gentleman tell us how we could get a policy for shovelling money into the pockets of farmers, who constitute such a large majority in the Cabinet and one quarter of Conservative Members of the European Parliament?
Mr. Taylor: We cannot change anything in the Common Market, except by unanimous agreement. The Labour Government tried to do a little about the CAP, but not much. This Government cannot and have not achieved anything. They can do so only by unanimous agreement, or if the money runs out.
The House should not think for a moment that I am suggesting that industry, commerce and agriculture are in favour of free enterprise and competition. Far from it. When there is a carved-up market, nobody likes to complain—neither the manufacturer nor the consumer. If there is a cosy arrangement, nobody complains.
We have talked about CAP reform for 10 years since joining the Common Market, but progress has been impossible because we require unanimous agreement for any changes. However, now that we have the first chance to achieve CAP reform because additional resources require the consent of every Parliament, it is regrettable that the Government have agreed to refrain from even asking for reforms. Our position, as I understand it, is that if the Common Market agrees to a permanent budget reform providing for us to pay about £400 million a year net and if it agrees to restrict the rate of increase in agricultural spending, we shall agree to even more cash going into the EEC. If the Government agree to a permanent solution, restricting our annual contributions to about £300 million, £400 million or £500 million, and if they agree to restrict the rate of increase in agricultural spending, more cash could be forthcoming. Such modest demands throw away the first and perhaps only chance that we shall have of changing the Common Market.
We should make it abundantly clear to the EEC that its budget shows that there is no need to increase resources. If we are spending 40p of every pound already on dumping food abroad, how is it possible to say that there is a need to expand the resources of the Community? As long as we talk about spending 70 per cent. of all the money on the CAP, how can we say that more spending is required? One simple solution that would sort out the problem for six years would be to take milk out of the CAP and let each member state look after its own milk production and milk surpluses, and do what it wishes.
The wasteful CAP should be drastically reformed, or have its throat cut. Apart from our national budgetary interests, there can be no security for British agriculture in the long term so long as it operates under a policy that has round its feet the ball and chain of the vast and growing continental food surpluses that nobody wants. There is no point in denying that British farmers have done extremely well—perhaps remarkably well—out of the CAP. That is why most of them have supported it until now. However, they must realise that in the long-term future, when Britain has had a dramatic increase in production and the continental countries are poised for an even greater increase, there will be no security for British farming so long as there are vast agricultural surpluses on the continent.
In considering the budget, we are also considering the EEC policies that the budget finances. While we preach the importance of freer trade and always talk about the
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importance of cutting down trade barriers, the various EEC economic policies seem to be aimed at increasing protectionism rather than freedom of trade. If those policies succeed, we shall be saddled with a series of common policies for steel, coal, chemicals, and so on, which will simply ensure that industrial basic costs in Europe are higher than those of our manufacturing competitors. That cannot suit Britain, which depends on world exports to survive. Nor should we look with any favour on the various devices that are used to get round the GATT restrictions on tariff increases. The so-called voluntary restraint agreements with Japan and other countries — for example, on video recorders and television sets—are simply devices to raise prices in Europe and so give protection by requiring countries, such as Japan, to charge us more for such products than they would normally do. The agreements were presented as a means of protecting jobs in Europe, and were supported by Socialists. We asked the Japanese kindly to charge us more for their videos. The Japanese must have been laughing all the way to the bank.
The Davignon steel regime has been applied in a way that is brutally unfair to Britain. It is well on the way to becoming another CAP. Even if Mr. Davignon were able to get all that he wants—
Mr. Foulkes: Viscount Davignon.
Mr. Taylor: I apologise. I am not quite as aware of such matters as the hon. Gentleman. Even if Viscount Davignon were able to achieve all that he wants and to cut down on production all over Europe, how precisely would we be able to maintain the gap between European and world prices? Again, the only answer will be the creation of a CAP. We are already well on the way to that. The control of industry on the basis of bureaucracy, subsidy, back-door tariffs through bogus health and safety requirements, quota production control and central direction is wholly at odds with the sensible policies that the Government are pursuing at home.
Before we provide the Common Market with greater resources to develop its policies, we should carry out an impartial assessment of the impact on our economy to date. The consequences on trade have been disastrous. We always had a surplus in trade in manufactures with the EEC before membership, but there has been a substantial deficit every year since then. In the first nine months of 1983, the deficit was about £6 billion. If we use the rather suspect comparisons that are used to make the claim that 2 million British jobs depend on trade with Europe, we can conclude that the change in the pattern of trade has cost Britain 750,000 jobs since we joined the EEC. Some people say that that is the fault of the lazy British workers, inefficient British management, and so on. However, despite those so-called problems, our trade with the rest of the world has improved dramatically and sharply.
The cash drain has been horrendous. We have contributed net about £4 billion. No country can afford such a transfer in aid to other countries without damaging itself. The budget demonstrates the extent to which the Common Market has become a spendthrift, bureaucratic, protectionist trading block, wholly opposed to the principles of conservatism. It would be an outrage if we responded to the budget by supplying even more resources which could be used to develop policies which are an affront to commercial common sense and damaging to the future of our nation.

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The one encouraging theme that we have heard from the Government on several recent occasions has been a warning that there will be dreadful consequences for the Common Market and for Europeans if we do not get our rebate on 31 March. I am sure that my hon. Friends will have heard and approved the ringing tones in which Ministers have warned of the appalling consequences for other countries if we do not get our money on time. If we do not get £450 million by 31 March, they say that something dreadful will happen.
If we are to react to a default in that strong and substantial way. what have we been doing since 31 December when the Common Market defaulted on £42 million of the money due in 1982? The issues were just as clear then. The money was due to us. What did we do? Did we send the fleet? Did we alert our lorry drivers to be ready to block French roads? No. On 3 January, our splendid Foreign Secretary sent a letter to the Commission. Week after week since then, I have embarrassed and troubled the Government by asking when the reply was to arrive. We were told earlier today that it arrived at the weekend, but we do not yet know what it contains, because the Foreign Secretary has it in his possession in Brussels.
I hope that we shall hear today the Commission's response. I hope that we shall not have to engage in long correspondence. I am not opposed to long correspondence, but, if we are sending out warning signals to the Common Market, it could undermine our position if it were thought that our only response to a default is to send a letter and to wait six weeks for a reply.
I hope that the Government will realise that the best answer to all the problems is to say, "No more resources." I would find it difficult to tell my hard-pressed constituents in Southend that, although we have to cut down—rightly, I believe—on many areas of local government —on housing benefits and health and social services—we are going to pour more billions into the extravaganza of the Common Market. That does not make sense. I hope that we will be cautious in our spending at home, and realise that the best way to bring about reform of the EEC is to give it no more money at all.
7.27 pm
Mr. Bryan Gould: It is common ground throughout the Chamber that the EC is in crisis because it is about to run out of money. The recognition of that fact was perhaps the only shaft of realism that penetrated the fog of fantasy that has characterised some of the speeches that we have heard. The EC is in crisis not simply because the sums do not add up. I agree with the hon. Member for Harrow, East (Mr. Dykes) that it is not simply a shortage of resources—that it is not the usual budgetary problem. The range of European resources available to meet the relatively small increase in expenditure which is required is enormous. The significance of the budget dilemma is that it reflects what is wrong with the structure of the EC. It is the structure of EC policies which has plunged it into crisis, and it is the unwillingness of the Government to go along with that structure that will in the end—I believe and hope—mean that we shall not allow an increase in our payments to the EC.
The EC is unusual or perhaps unique in that it has policies that stimulate spending. The only consequence of providing additional resources to the EC, as the hon. Member for Harrow, East advised us to do, would be to
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encourage even more spending. The more money we provide, the greater will be the incentive to increase expenditure. The only way to get a grip on the situation is to get control of that expenditure and limit it. That is the dilemma. That is the hard fact that the EC faces. That is why it is in crisis—not because it cannot raise an extra £100 million.
There is of course a subsidiary problem. The budget also creates circumstances in which Britain must make an unfairly large contribution. There are those who are so carried away with their Eurovisions that they are inclined to say that that must be Britain's fault. They say that we have not adjusted, that we are constantly demandeur, and that that shows how un-European we are. There is an implication of moral culpability in that charge.
We are un-European. In the past 100 years or more our economy has developed quite differently from continental economies. When, towards the end of the previous century, the real price of world food dropped we, who had had our industrial revolution, responded by opening up our markets to the cheapest and most efficient producers so that we could feed our large urban and industrial populations as cheaply as possible. We then developed an agricultural policy that ensured that prices for the consumer were kept low. Our continental rivals protected their agriculture. They kept it at its then size and kept it inefficient. They reaped an uncovenanted benefit in that they then had to adjust to higher industrial costs and to do that they had to become more efficient manufacturing nations.
Because of that different economic history and because we remain net importers of food, we are inevitably penalised by the EC arrangement. There is nothing that we can do about that. No fault is involved. It is simply that our economy does not suit the way in which the EC works. Indeed, in some ways it was because our economy does not suit the structure of the EC that we were brought in in the first place. We contribute to the EC twice. We make our budget contributions and we make another enormous contribution as consumers. If we were not foolish enough to be buying EC food surpluses at roughly twice the world price, the enormously expensive surpluses which the hon. Member for Southend, East (Mr. Taylor) rightly identified as a major head of expenditure would cost even more to store and dispose of.
It suits the Government to take the simple fact that I have outlined, look at the net direct payment and identify it as our major problem with the EC because they believe and hope that they can do something about it. They can quantify it, hold it up to the British people and say, "We shall reduce it in some way and bring money back. Once we have done that our problems with the EC will be over." I do not argue that the budget and our contribution to it is not important, but it is far from the only or most important element in the damage that we suffer from being members of the EC.
According to the Institute of Fiscal Studies, the common agricultural policy costs Britain £1 billion a year in real resource terms. In trade in manufactured goods —my figures are even greater than those cited by the hon. Member for Southend, East—we had a deficit last year of £8 billion and we have had a turn round in our trade in manufactured goods of £10 billion since we joined. At a conservative estimate, that is worth 1 million jobs in British industry. That is the important damage that we have suffered from being members of the EC.

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I agree with the Government that the budget is a salient issue as it provides us, perhaps for the first time, with a lever. We can use it to exert pressure. We are now able for the first time legitimately, within the terms of the treaty of Rome and our treaty of accession, to refuse to make payments to EC coffers unless we get some fundamental change that suits us. Having that opportunity means that the Government are posed with a real challenge. They will now be asked to do something as they have an opportunity to do it. They can no longer take refuge behind the fundamental sell-out that occurred when we first joined. Nor can they take refuge behind the intransigence of our partners because at long last they have an instrument which will enable them to achieve what they say they want to achieve. All that is needed is political will.
I am the first to concede that, in trying to secure that objective, the Government are handicapped by at least two major factors. The first is that throughout our membership of the EC Britain's major diplomatic failure has been not explaining to our European partners, the politicians, officials and the man in the street what is damaging us and why we, uniquely, always appear to be asking for something. The Foreign Office has been so anxious to represent the EC in Whitehall that it has forgotten that its principal job is to represent Britain's interests abroad. I hope that the Minister who will wind up will give some assurance that at long last the Foreign Office understands its responsibilities.
The second factor is the responsibility not so much of the Foreign Office as of successive politicians who have appeared at the Dispatch Box to discuss these matters. In the 10 years of our membership, successive Governments have talked tough with an eye on the electorate, but have regarded it as essential to placate the Helmuts, the Valerys and the others.
Mr. Dykes: And the Francoises.
Mr. Gould: Indeed. That has been the key to Britain's European policy. It is little wonder that, in those circumstances, when the Government start talking tough again our European partners think that it is merely for domestic consumption and that the British political establishment recognises only too well the weakness of their position as demandeur.
Mr. Jackson: The hon. Gentleman refers to talking tough. He is a distinguished lawyer and has said correctly that the British Government have a powerful lever in whether to increase own resources. How does the hon. Gentleman, as a lawyer, square the Labour party's proposition that we should resort to illegal action with his view that we have available to us a powerful negotiating weapon which, as he said, is perfectly legitimate?
Mr. Gould: I shall deal with both of those issues in a moment. My point is that in limbering up or girding their loins to face those issues, the Government have been fatally handicapped by the record of successive Governments. Time and again Governments and officials have said—we hear the weasel words even now—that it is necessary to make concessions, to show ourselves to be good Europeans and to go through the humiliating process of asking for £300 million or £400 million back each year. I cannot believe that negotiations on a budget mechanism,
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a safety net or whatever else will resolve our problems with the EC. They will merely reinforce our position as supplementary benefit claimants in a wider European economy. That is not right for Britain.
The legal issue as to whether we should make more payments while an agreed refund is outstanding is an open question. In those circumstances, I certainly support the Opposition amendment and urge the Government — I hope that this is their policy—that if the refund is not paid on the due date to offset it against any future contributions that might be demanded.
Mr. Jackson: If it is an open question the hon. Gentleman must, as a lawyer, accept that the method by which such questions are normally determined is by reference to a court. There is a court in this matter. Why then does he propose that action along the lines that he suggests should be taken?
Mr. Gould: I do so because it is by now well established EC practice that, in such circumstances, the defaulting party should wait to be taken to the court. I believe that we should simply pursue a policy that, for once, suits our interests. If we are then taken to court, we can argue our case.
There is a more important question than that of the refund, which I consider to be of marginal importance only. Far more important is the question of the demanded increase in what is laughingly called own resources. In fact, they are increased contributions from the VAT payments made by every man and woman in Britain. The Government have told us repeatedly that that issue can be decided only in conjunction with some fundamental reform of expenditure — principally the common agricultural policy. We should examine precisely what is meant by that. The Foreign Secretary has said recently that they are linked issues that must be considered together, and that they can be linked also with budgetary refund. That is not good enough. It is not what he was saying a few months ago. I see that the Minister is shaking his head —I presume paradoxically in agreement with what I am saying, which is that the Foreign Secretary is not to be thought of as saying that.
Mr. Ian Stewart: We have always maintained that there is no connection with the current negotiations about our refund and the future financing of the Community.
Mr. Gould: I am glad to hear that. But there are signs from the Foreign Secretary that the issues are intermingled and the distinction between them is not as clear as the Minister has just indicated. I am glad to hear him speak in that vein.
On the link between the increase in own resources—the demanded payment from us—and the reforms that we seek, our refusal to countenance an increase in payments is not simply a precondition of securing the changes that we need. It is more than that—it is the only mechanism by which we can secure such a reform. We have a unique opportunity. If we fail to press that advantage we shall never have the opportunity again. That is why I believe that this is the acid test for the Government. It is the time when all their protestations about their keenness to reform agricultural spending and to limit public expenditure in that form are being put to the test. Their bluff is being called. The power exists to ensure that the Government need not agree to that expenditure.

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In principle, the position allows the Government the luxury of saying that, whichever way it turns out, there is no case for increased payments. Without the reforms that we are demanding, the Government are entitled to say no increase. Yet with the changes that we are demanding, the Government are equally entitled to say that there is now no need for an increase. It is not only I who say that; the Commission, in its budgetary estimates, made it clear that without any change in the CAP, and on assumptions about substantial increases in the regional and social fund expenditure, the actual increase in VAT contribution—the level of take that would be required over the next few years—would be fairly marginal.
If we were to obtain the sort of limitation on spending that would significantly reduce the 40 per cent. of EC expenditure referred to by the hon. Member for Southend, East, the case for any increased payment in the light of those changes would melt away. I hope very much that the Government will show their mettle. There are great advantages to them to throw off the image with which we have been saddled for so long—talking tough but acting weak. The quicker that the Foreign Secretary and the Government can convince our partners that they mean business, the easier the position will become and the quicker we can arrive at a solution, whatever it might be.
I apologise that I did not hear the Minister's opening speech. One thing that the Government must now do, both because it is practically desirable and necessary, and because it is tactically useful, is to make it clear that we have in place contingency arrangements for the moment when, at some point during the year, the money runs out and our farmers say, "From where is the money to come?" We should have made legal, financial and practical arrangements to make national payments to our farmers in those circumstances.
That would provide a great opportunity for us to detach our agricultural policy from the whole miasma of the CAP. We could actually pursue the more flexible, rational policy that the Government have professed that they want to see. It is a great opportunity for the Government to prepare for such a position and to say precisely in what way they wish to change the CAP to introduce a much more adaptable and convenient national agricultural policy.
We have a great distance to go. As my hon. Friend the Member for Houghton and Washington (Mr. Boyes) said, the speech made by Mr. Gaston Thorn a few days ago demonstrates beyond any words that I could use just how impregnable is the CAP—how much it is in the centre, how much is it is a fundamental edifice and how much the other fripperies of the regional and social funds are simply trimmings. It is the CAP that our friends in Europe will protect and defend to the last breath. We must, therefore, seize the opportunity that will be presented when the money runs out to detach our agricultural policy from that disastrous failure.
I entirely endorse the Opposition amendment. I and many other hon. Members, and others elsewhere, will be watching the Government closely. We suspect that the Government are very much more in the pockets of the farming industry than they care to admit. This is the acid test. This is when we shall know whether they are prepared to abandon those interests in the interests of the country as a whole. We shall watch carefully to see whether the Government's actions match their words.
7.47 pm
Mr. Robert Hicks: Sadly, I detect that in debates on EC issues there is a disturbing tendency to fall into the trap of magnifying our differences, of accentuating some of the anomalies and absurdities and, as a consequence, of failing to put the subject into true perspective. That is why I think it essential to put the current discussion and disagreement about the Community budget and the future financing of the EC into perspective.
At present, the Community budget takes just 0…8 per cent. of the aggregate gross national products of the 10 member states. Of course the budget issue must be settled —I hope as a matter of urgency—but it is important that the United Kingdom, and especially the House, should not allow itself to become bogged down in eternal bickering about the size of our contribution and related matters. It amounts to a fraction of 1 per cent. of our national income. At the same time, we are allowing the very policies from which the Community and ourselves stand to gain so much to go by default.
Many of us who voted on 28 October 1971 with enthusiasm for the principle—
Mr. Marlow: Guilty men.
Mr. Hicks: I do not consider myself a guilty man. It was the most significant debate in which I have participated during the 14 years that I have had the honour to be a Member of the House. Some hon. Members voted with enthusiasm on that historic occasion for the principle of United Kingdom membership of the European Community. Sadly, we are to some extent disappointed by subsequent events. This is not the occasion to expand on the reasons for that unfortunate position. Some are international, others relate to the workings of the Community and, in that context, British Governments have not always been as helpful and as imaginative as I would have wished.
My right hon. and learned Friend the Foreign Secretary, however, has on more than one occasion in recent months clearly stated the British Government's position. As I interpret it, the United Kingdom will be prepared to consider an increase in own resources provided, first, that an agreement is reached on effective control of the rate of agricultural and other expenditure and, secondly, that it is accompanied by an arrangement to ensure a fair share of the financial burden. Inherent in that is a settlement for an adjustment of current imbalances, to which hon. Members have referred this afternoon.
Ministers are right to emphasise to their European colleagues the importance of achieving a permanent arrangement to ensure that budgetary burdens are shared equitably between member states. The safety net formula which the Foreign Secretary first suggested in June 1981 in a speech at The Hague, which has since been modified, merits further attention. I hope that those proposals featured highly in the discussions which took place at the weekend and which are taking place in Brussels today.
As to the required constraint on agricultural expenditure, which accounts for almost seven tenths of Community expenditure, I remind the House that inherent in the CAP are not only farm support prices but food aid expenditure, and an important component part which can be described as a rural development fund. Hon. Members are all too well aware of the deficiences of the CAP. Prices

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have been set unnecessarily high, especially in the grain sector. The relationship between demand and supply has been ignored, with the consequence that too many producers are merely producing for intervention, and these surpluses have become increasingly expensive to store and to dispose of.
Mr. Dykes: Despite the problems, would my hon. Friend concede that in many comparisons the policy stands up rather well? Does he agree that it can in no way be compared with the grossly wastefully and extravagant United States farm support system? Does he agree that if we had our domestic farm support system of the old days, it would now be much more expensive than our contribution on farm spending, and that in those days we also produced surpluses of dairy products?
Mr. Hicks: My hon. Friend is correct. To take one of his points, had we carried on with the pre-1973 domestic support for agricultural production, the cost to the United Kingdom Treasury is estimated to be almost £3,000 million a year.
Mr. Marlow: Who by?
Mr. Hicks: I refer my hon. Friend to parliamentary replies given to questions in the House on a number of occasions.
The point that I wish to develop in this context was made correctly by the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston). He said that whatever modifications and adjustments may be made during the discussions of the next few months in Europe, those modifications and adjustments — whatever their character—cannot be made overnight. There will not suddenly be a dramatic change in the financing of the Community. I go further—I expect the hon. Gentleman and other hon. Members who have spoken will agree—and say that when the financial decisions are made, which in turn will affect the level of expenditure on the CAP, I hope that Ministers will be aware of the effects that they will have not only on producers but on the economic structure and social fabric of the countryside.
Mr. Marlow: I understand why my hon. Friend says that. He is a generous man and is enthusiastic in supporting and agreeing with the point made by my hon. Friend the Member for Harrow, East (Mr. Dykes). One of his points was that there were massive surpluses in dairy products before we joined the Community, but I shall correct that. There are now sufficient butter stocks in surpluses and intervention stores in Great Britain to fill the Chamber 20 times over. Before we joined the Community we were 16 per cent. self-sufficient, and so we had to import 84 per cent. There were no surpluses then, but there are surpluses now. My hon. Friend was wrong on that point, as he was on all the others.
Mr. Hicks: All hon. Members can choose examples to suit their cases. As a child I lived in a small village in the west country, and I remember that our previous system of deficiency payments encouraged a surplus of milk, which was poured down the drains, quite legitimately. I do not have to go back so far; I remember the difficulties in the autumn of 1973. It is far better to have products marginally in surplus than to have shortages. My hon. Friend will not disagree with that general principle.
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In conclusion, I return to the fundamental point that I have attempted to get across to the House. The European Economic Community was founded for political purposes. The expansion of the European economy from 1956 until the mid-1970s provided a prosperity which formed a sound basis for its political objective. The momentum has been lost in recent years.
Mr. Gould: I have heard that argument used so frequently that I cannot resist the opportunity to point out that the economy of the member states grew faster before the EC was set up than in the decade after it was set up.
Mr. Hicks: The circumstances in the late 1940s and early 1950s were somewhat artificial. During those postwar years the Marshall plan and all manner of other additional economic aids and forms of assistance were being given to Europe. Therefore, to make the generalisation that the aggregate economy of the EC grew more quickly before 1956 than after 1956 overlooks those facts. The hon. Gentleman is a fair man and will acknowledge that one can argue one's case either way, both of which stand up intellectually.
The effect is that the momentum has been lost during the past decade. However, my right hon. and learned Friend the Foreign Secretary claims that the basis upon which the British case proceeds in looking for radical solutions to the current problems of the Community is that the process of Community development must be accelerated and given a much higher priority. That means speeding the negotiations towards enlargement, to include Spain and Portugal. It also implies giving a higher priority and greater impetus to extending and completing the Community's internal markets, as well as work in other areas, such as industrial, regional, social, environmental and energy co-operation.
Not surprisingly, I welcome that wholeheartedly. However, in bringing about what I consider to be those sound objectives, the Government may have to adopt a more flexible and amenable approach than hitherto to the preconditions on additional own resources and increasing receipts as part of the budgetary settlement.
8.1 pm
Mr. Allan Rogers: I am pleased to be able to speak in the debate, although I step with some fear and trepidation into the rather incestuous discussion about whether British farmers tipped away more milk before we joined the EEC or after we joined it. I do so because I know that the experts are in the Conservative party. They know what the farming industry has been doing for many years, and they know how the British consumer has been taken for a ride for many years.
However, I must speak in the debate especially because of the celebrations of European solidarity that have gone on this weekend in the Alps. It is especially appropriate that we should have the debate today after that great festival. I am pleased that the French lorry drivers enjoyed themselves, because at least now they have taken action against their Government's policies rather than taking it out on British lorry drivers in the essential spirit of the European Community in which they always act. I wish that some of our lorry drivers and workers would behave towards French imported goods as the French behave towards ours.

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We should do well to remember that, as a device to create disharmony in Europe, the EEC has made a greater contribution during the past few years than anything else. That underlines the need for reform.
As the hon. Member for Southend, East (Mr. Taylor) said, the European Parliament has little function, and as a Member of the European Parliament for the past four and a half years I have been a sorry witness to the continual grovelling of the British Government to try to get our money back from Europe. We are asked to believe that the Prime Minister rides out on her white horse to recover the money from the bandits of Europe, but the money belonged to the people of Britain originally. We are not getting a handout from Europe — the money properly belongs to us.
The hon. Member for Harrow, East (Mr. Dykes) said that he wishes to join us in the European Parliament, or that if he was with us he would wish to join the Christian Democrat group. I know some of the members of that group. and although Habsburg-Lothringen and von Bismarck might welcome his company, the friends of Mr. Strauss and the other neo-Nazis in the Christian Democrat group would not.
Many Conservative Members have spoken about the common agricultural policy. The hon. Member for Southend, East described the problems in the sugar industry resulting from the CAP, but he did not say that action has already been taken. It is not a matter of saying that Pakistan would be a wonderful place to grow sugar cane; there are wonderful places that can grow sugar cane which have already been destroyed by the CAP. British Guyana's economy was completely destroyed. As well as the jobs lost in the sugar refining industry in Liverpool, the sugar cane industry of the West Indies was destroyed by the CAP and the dumping of sugar on world markets. Who benefits from that? The supporters of the Conservative party—especially the big business farmers in the east of England.
When Conservative Members got into an incestuous argument about surpluses, they did not say that one of the biggest contributors to surpluses in Europe is the British farmer—not the hill farmers of Wales and Scotland, nor the smallholders in the west country, but those who have invested in the east of England and who have ploughed up the hedges in their money-grabbing exercises. They have not only destroyed the countryside, but have laid waste to other countries' economies.
It is extremely important to put the budget in the wider context of a continual sell-out of British interests. What disturbs me greatly is the fossilised attitude of. Pro-Marketeers in the Conservative party. The right hon. and learned Member for Hexham (Mr. Rippon) — [Interruption.] I hope that the House does not mind if I drop an "h" here and there. I come from the valleys and did not go to a public school, as did most Conservative Members. In the vernacular of the Welsh valleys we sometimes drop our "h's".
The right hon. and learned Member for Hexham said that we are in the Community and that we should stay in. What a fossilised attitude. We are in an economic union that is already many years out of date and is coming apart completely at the seams. Why should we stay in, and for whom? The union was structured in a post-war Europe that had special tensions, political problems and food
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problems. That was the basis of the CAP. But now that we have moved on, the fossilised argument is that we should stay in because were are in. That attitude is negative.
Mr. Johnston: What is the bright, non-fossilised alternative?
Mr. Rogers: The bright, non-fossialised alternative would be to renegotiate, at the very least, the present treaties.
Mr. Marlow: I thought that we had done that.
Mr. Rogers: Yes, but it was done badly. We were sold down the river, but at least the Labour party had the courage to put it to the electorate. However, as a result of the propaganda and lies spread at that time, the British public became slightly confused about the issues.
The economic union to which we belong is completely out of date. It needs revising, but it is incapable of revision because of the vested interests that are so manifest not only within itself but within the budget, which is coming up in the same form as it has in other years. I am further disturbed by the Goebbels-like repetitions from the Conservative Benches that if one is anti-Market, one is anti-Europe. It is complete nonsense to suggest that the Common Market is all of Europe. Europe is far larger and wider than the Common Market. One cannot confine a geographical continent within an economic treaty. I am sure that that offends the people of Norway, Sweden, Finland, Spain, Portugal. Austria, Czechoslavakia, Romania, Bulgaria, Yugoslavia and European Russia. On this point, I wonder whether Conservative Members would, in their European idealism and at the appropriate time, accept as members of the European Community some of the latter countries, especially as the leader of their party has recently visited some of them.
The English nationalist movement within the Conservative party holds the same view as I do— that we should withdraw from the European Community, —but I base my opinion on different reasons. I believe that we should be looking for progress in Europe and proper relationships with other countries. We should be looking at progress and defining why and in what sectors we need this progress.
I am concerned by the moves in Europe towards economic and political union. On 19 June 1983 we had the Stuttgart declaration, which was signed by the Prime Minister. What was this declaration, which is often referred to so loosely? Here is a selection of some of its propositions and statements. It says that it is
"resolved to continue the work begun on the basis of the Treat les of Paris and Rome and to create a united Europe … determined to achieve a comprehensive and coherent common political approach and reaffirming their will to transform the whole complex of relations between their States into a European Union … Desiring to consolidate the progress already made towards a European Union".
Throughout the document runs the Prime Minister's affirmation that she wants us to move to a European union. What is the proposition arising out of the summit, and what is the legitimacy of the statement? We saw the answer in the European Parliament last week, with the preliminary draft treaty to establish a European union. The basis of that was the Stuttgart declaration, which is mentioned throughout the Spinelli explanatory statement, besides being specifically mentioned in the draft treaty.
Many hon. Members have spoken of Spinelli as though he is a visionary, but if he is, he is having the wrong

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visions, particularly if they result in what is proposed in the document. It proposes to sell away the democratic rights of the peoples of this country. Conservative Members of the European Parliament supported these moves towards European union. It will be interesting, in the run-up to the European election on 14 June, to see what the Conservative party's views will be. Will they be the late views of the Prime Minister and the Government, who want to adopt a hard policy towards our European partners, or will it be the policy that Conservative Members of the European Parliament support?
Conservative Members have to come clean eventually. I challenge the Government to come clean tonight as to their position on European union. They must tell the country exactly where they stand on this issue. Do they stand with Conservative Members of the European Parliament, of whom 22 voted for the resolution and only six against, with four chickening out by abstaining and 19 who, even worse, did not bother to turn up to vote even though they were around? They did so because they did not have the courage to indicate which way they would vote. Some of the Members who did not have that courage are hon. Members of this House. If the Minister does not believe in what those hon. Members did last week, he should be taking them to task.
Mr. Johnston: Will the hon. Gentleman remind the House that Spinelli is a Left-wing Socialist?
Mr. Rogers: Yes, but I am sure that the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) will accept that there are many brands of Left-wing Socialism, and Mr. Spinelli is a European Communist who wears garbs that are different from ours. Mr. Spinelli and his Committee are proposing to remove from the member states the right of veto on all the issues relating to the development of Europe towards a European union. The document is alarming, and it disturbs many of us greatly.
The budget is not the only important issue before us this evening. We should remember that the Government, in bringing forward the budget in its present form, show that they have no real will to resolve the crisis and the problems in the European Community. There is an answer— withdraw from the European Community unless our partners are prepared to renegotiate the treaty from stage 1. If they are prepared to do that, we should go forward positively, but if they are not, we should get out so that the British people do not have to pay as much as they do in their present burden.
8.17 pm
Mr. Tony Marlow: The hon. Member for Rhondda (Mr. Rogers) talked about the disharmony and discord caused by the Community. One of the great tragedies of Community membership and the way that the Community has been structured so far is that it has caused a great deal of disharmony between countries which have a great many interests in common. I hope that is something that we can put behind us; but the hon. Gentleman is right in that, although I do not agree with many of the other things that he said.
The hon. Member for Rhondda asked the important question: where does the Conservative party stand on European union? I do not think that he heard what my hon. Friend the Economic Secretary to the Treasury said earlier,
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because he made it clear that the Conservative party is in favour of retaining the veto and is therefore against a federal Europe and a European union. That is reassuring for the hon. Member for Rhondda, although it may cause severe problems for some members of the European Democratic group, who will be going to selection meetings wishing to stand again for the European Assembly and who will then discover that they are out of sympathy with Conservative party philosophy and thinking on this issue. That could cause distinct and real problems as they seek to pursue their careers.
Mr. Austin Mitchell: As the hon. Gentleman is telling us about the determination of the Government to resist moves towards European unity and to insist on the national veto, why is it that in the debate on the Spinelli reports on the European union the Conservative Members of the European Parliament—who had a free vote on the issue, which is a curious thing for a party as committed as the hon. Gentleman suggests—divided, 18 for Spinelli, four against and three abstaining?
Mr. Marlow: As the hon. Gentleman probably knows, the best people to ask are the Members of the European Assembly, because I should not have taken that view. Whether one is pro-Europe or anti-Europe, I think it will be agreed that there has been much sterile argument over the years. If something in Europe is good, we are in favour of it: if we have the power to do it, we do it. If something in Europe is bad and we can stop it happening, we try to do so.
My hon. Friend the Member for Harrow, East (Mr. Dykes) has pursued his philosophy on Europe for a considerable time. Edward Pearce, that well-known correspondent of the Daily Telegraph, has described my hon. Friend as a "sacramental European". In his view, anything that comes from Europe is good. That is not the view of the party that I represent. We are in favour of the national interest. We are virtually attached to Europe. It is just across the Channel. We have friends in Europe, we have business in Europe, and we have interests in common with Europe. If something European is good, we are in favour of it; if it is not good, obviously we are against it; and if we can do something about it we do it.
We are now at a crucial and critical time for our relationship with Europe. We are embarking upon the relaunch of the Community. Obviously, the first thing that we have to tackle is the common agricultural policy. Hon. Members on both sides of the House have referred to the fact that the common agricultural policy accounts for about 70 per cent. of European expenditure. To be fair, that is not quite right. The common agricultural policy accounts for 70 per cent. of European expenditure if we gross it up and include the rebates that are paid to ourselves and the Federal Republic of Germany, but in terms of actual expenditure on actual programmes and policies of the Community, the common agricultural policy takes up nearly a staggering 80 per cent. of Community expenditure.
Not only is there much wrong with the common agricultural policy, and not only is it growing so fast that it is rapidly getting out of control, but it takes the overwhelming share of the Community budget, so that something must be done about it. What are we to do about it?
Opposition Members have said that the Conservative party is the party of the farmer. That idea is out of date;

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it is history. At the last general election, many Conservative Members were returned for seats which had not had Conservative Members for a long time. We on the Conservative Benches represent more working people and more urban constituencies than are represented by the Labour party. Of course, some of our constituencies are rural, but we have other very great priorities as well.
Mr. Austin Mitchell rose—
Mr. Marlow: I should like to finish my point before giving way to the hon. Member for Great Grimsby (Mr. Mitchell), for whom I have great respect. He took on the solicitors' monopoly in regard to conveyancing. I am delighted that the Government saw the problem in the same way arid that that monopoly will be overcome. The Government are taking on all monopolies, wherever they happen to be. The Government's policy is in favour of the consumer and in favour of the wide range of people in the country. The Conservative party is not just the party of the farmer. The hon. Gentleman may have seen in the newspapers last week the report that there are only five constituencies with Conservative Members where the farming community makes up the majority achieved at the last election.
Mr. Mitchell: I am grateful to the hon. Gentleman for defusing my point before I had made it, but there are several matters which arise from his claim about representation. What is important is not who actually voted for the Conservative party, but whose interests it serves. A party which has put 4 million working people out of jobs, shovelled money into the pockets of the farmers and caused an astronomical increase in land prices, which can benefit only the land owners, cannot claim to be representing the working class and must be representing the farmers.
Mr. Marlow: The hon. Gentleman is trying to reduce what I am trying to make as a general statement on European policy into a party political issue. I do not want to follow him in the direction of the generalities of economic policy.
What can we do? It would be nice — it will not happen — if we could knock 10 per cent. off cereal prices. The cereal farmer is currently getting too much; he does not need the amount of money that he is getting. If we did that, we would cut back on the price to the consumer, we would cut back on the cost of disposal of surpluses, and we would cut back on the price of feedstuff to the livestock sector, which currently is not making sufficient return. We would cut back on the price of land. We would cut back on the levels of Community expenditure on the common agricultural policy, and at the same time provide a sufficient and adequate return to farmers. That is one way that we could move.
We have had discussion about deficiency payments. I am not suggesting that we can embark upon a system of deficiency payments, or that we can persuade the Europeans to go for a policy of deficiency payments, but there has been a lot of nonsense and rubbish talked about deficiency payments and the expenditure that would be involved in going back to such a system. If we had deficiency payments, we would not have to make the massive contributions that we are currently making to the common agricultural policy. If we had deficiency payments, we could buy food on the world market at cheaper prices, allowing cheaper prices to the consumer.
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We would not have to buy expensive Community food. We could buy cheaper world price food. With deficiency payments there is a cheaper price of food to the consumer. When we add up the lower cost of food and the lower cost of taxation, we can see that the consumer and the farmer and everybody together in Britain would be better off under deficiency payments than under the existing system. In addition, those who are the weakest and poorest in our community, those who are dependent, as pensioners of the state, those on supplementary benefit or unemployment benefit, those on retirement pensions—a vast proportion of whose budget goes on food—would be better off, and they in real terms would be a lesser cost to the state. We may not be able to have deficiency payments, but let us not talk nonsense about them. We would be better off under a system of deficiency payments than we are under the common agricultural policy.
There is a third way in which we could tackle the problems of the common agricultural policy. We could have a similar regime to the one that we have at present. We could have lower levels of prices and a finite limit on the amount of money that each country could take from the common agricultural policy. If there were a growth of surpluses in one Community country or another, the national exchequer of that country would have to take up the excess expenditure over a certain level. That would have a highly beneficial effect.
Today, countries can vote for increases in prices knowing that they do not have to pick up the tab or to pay the bill; they do not have to go to their taxpayers for more money. They can satisfy their farmers by having higher prices but they do not have to upset the taxpayers, because the bill is picked up at Community level. Bring the bill home. Let the chicken come home to roost, so that those countries wishing to vote for higher common agricultural fund expenditure will themselves have to pick up the surplus expenditure that arises.
What are we to do about the budget? We have first to bear in mind that the budget is not the only financial burden that we bear as a result of Community membership. By being within the common agricultural policy we are force-fed with European food in preference to any other food from the world market. We are net importers of food. The food that we import largely comes from other European countries at twice world market prices, or even higher rates above world market prices. So we have the budget contribution to make and the food price contribution which our consumer has to make.
Mr. Cheysson, a Frenchman, says that we signed a treaty and that because we signed that treaty we have to accept all that follows from it. But not only did we sign a treaty; we had discussion at the time we signed the treaty. In the Government's document, "Britain in the European Community—the Budget Problem", students of the history of the European Community will see that it says:
"During the 1970 negotiations over Britain's accession to the Community, the British negotiators pointed out that the Community's financial arrangements, if unchanged, would leave Britain carrying an excessive burden from the budget after the transitional period. This was because of the dominance of the common agricultural policy, from which Britain's share of expenditure would be low because of the relatively small size of its agriculture.
The Community replied that this would not happen because the balance of the Community's spending policies would change, and in particular agriculture would take a much smaller share of

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budget spending. The Community added that should unacceptable situations arise, the very survival of the Community would demand that the institutions find equitable solutions."
Let us hope and pray that that is what will happen, because unacceptable situations have arisen. If unacceptable situations arise, the Community is destabilised by them.
Those who want to work together with our European friends for the policies that we hold in common will not be able to do so if Britain is unjustly and unfairly treated by the budget, as has happened in the past. We have a strong case. We have justice on our side.
The same document says that at the moment
"we are paying as much in our net contributions to the European Community as we pay in overseas aid".
It is fantastic that we should pay as much to the rich in Europe as we do to the Third world countries. This is reinforced by the disgraceful situation that, as my hon. Friend the Member for Southend, East (Mr. Taylor) said, we are dumping food on the world market, which prevents the poorer countries in the world from getting a proper price for the one product that they can produce to sustain the standard of living of their people.
We have conditions precedent before we talk about the possibility of an increase in moneys available for the Community budget. Those conditions must be satisfied before we even talk about it. In fact, it is rather strange that we heard observations from the Opposition that the Government had gone back on those conditions precedent and that everything was in the melting pot together. I am delighted that my hon. Friend the Minister said that these two issues, the budget and the common agricultural policy, have to be satisfied before we can start considering whether to increase Community expenditure. I am glad that we had it clear and loud today.
If those policies are satisfied, apparently we can consider increases in the budget contribution on the basis of new policies. Let us look at the possibility of these new policies. We may wish to increase expenditure to assist the introduction of Spain and Portugal into the Community. Are we saying that Spain and Portugal will not come into the Community unless we actually pay for them to come in? Instead of people applying for membership, and applying with a membership fee, do they have to be subsidised to come into the Community, and if so to what extent?
One asks that question and the answer is given that there are other things more important than money and that it does not matter. We hear great statesmanlike remarks that Spain and Portugal must come into the Community for other reasons than filthy lucre. We are told that money does not matter. It is a great issue of principle. That is why we have the problems that we have today—because in the past people were concerned about the great issues of principle and did not get involved in sufficient detail to prevent the injustices from which we are currently suffering.
The Government, quite rightly, want to move towards a common market in insurance. The Government, quite rightly, want to move forward in other areas of European policy. That will not cost any money. We do not need to increase the budget for that.
The Opposition have a whole realm and plethora of Socialist-type policies — regional policies, social policies, unemployment policies, training policies —which they would wish the Community to operate and run.
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Do they really believe that these policies are better directed from the Community? Do they really believe that our money should go across to Brussels to be laundered, reduced and sent back to us with strings attached before we introduce our own policies? Are we in favour of more Socialism, more bureaucracy, more control for Brussels? Do we not have sufficient confidence in our own ability to control and spend our own money? So, surely, that is not what we shall give more money to the European Community for.
Then there is the theory that unless we allow the VAT ceiling to go up those countries that will have to pay our enhanced rebate will not be allowed — within the existing VAT ceiling—to put enough money into the Community for it to be able to give us our money back. That is not right either. A look at the triennial estimates by the Commission, table 2, the alternative Commission figures, shows that there is plenty of money there to pay the rebate. So we do not need to increase the VAT limit to get our money back. We do not need to increase the VAT limit for Spain and Portugal, and why should we? We do not need to increase the VAT limit for the policies which Her Majesty's Government will rightly wish to pursue. We certainly do not want to increase the VAT limit for Socialist policies.
So there seems to be no case. I have to say that I have a great deal of confidence in my Government, and I am sure that if there is no reason for suggesting an increase in own resources they will not suggest an increase in own resources. However, if that unthinkable were to happen, if the suggestion were to be made that we should provide more money to the EC, an increase in own resources, that would be a major constitutional issue. We joined the Community and we signed up under certain finite terms with regard to agricultural levies, with regard to 1 per cent. VAT, with regard to the common external tariff.
At a time when we here are restricting our own public expenditure, cutting housing benefit, rate-capping, making savings in the Health Service, are we really going to say to our people that we must cut here but we can justify more expenditure in Brussels? Are we to say to our people here, at a time when daily we read in our papers of the waste of money, the maladministration of money within the European Community, that, instead of looking after and controlling our own money and our own policies here, we should be giving more money to the bureaucrats of Brussels to misapply, to miscontrol, to waste? At a time of lack of success of so many European policies, and the absurdities of the common agricultural policy, are we to say to our people here that we must give the Europeans more money so that they can have more control over more policies? It is unthinkable.
At a time when European policies are becoming increasingly dictated by the vested interests, by the institutions, by the Assembly, by the Commission, by the people who have an interest in European unity, are we to say to our people here, "Let them pursue our interests. Let us surrender just a little bit more sovereignty"? We have no proof that they know how to use it. We have no proof that it has been to our benefit. Are we to give more away in this respect?
This House — brought into being by Simon de Montfort to control expenditure by the Crown, this House which, when the Crown got too far removed from what the people of this country wanted, chopped his head off—

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not the Government, not the Council of Ministers, will decide in the fullness of time whether Europe gets an increase in its own resources.
8.37 pm
Mr. Austin Mitchell: I shall not follow the argument of the hon. Member for Northampton, North (Mr. Marlow). Essentially, I agree with what he said, because he was speaking for what is right. The misfortune in his speech was that in it he had to justify a Government who are not acting on what is right—certainly not in this instance.
There has been talk today of a crisis of the European Community. Crises are a way of life in the Common Market, and I have no doubt that the atmosphere of cliff-hanging tension has been exaggerated and projected as a way of getting more money out of us and of solving its own financial difficulties. It is not so much a crisis for the Common Market itself—as usual, it will fudge it or bludge it out of us—as a crisis of our relationship with a Community which basically does not suit this country. Because it is a crisis that affects all the basic aspects of that relationship, it is a chance to change it drastically for the better.
If we concentrate tonight on the financial aspects of the budget—the gains of a few million pounds here or the losses of a few million pounds there—we shall distract attention from the main issue. The budget in so far as it affects us, is the nature of the EC itself. It is a budget in which 64 per cent. —that is two thirds, for practical purposes—is devoted to agriculture. An institution that devotes that proportion of its spending on agriculture is not a great venture in European unity or international idealism. It is essentially the National Farmers Union turned into a system of government. It is an agriculture protection society. That is why the case for change for Britain is a strong one. As long as there is that emphasis on agriculture, we inevitably suffer, because we are and will remain a net agricultural importer. That means that we shall pay out more to the budget, and we shall receive less from the budget. It means that our problem can never be redressed. As long as that is the basic nature of the Common Market, there is no way round the problem.
We pay 29 per cent. of the agricultural levies paid in the EEC. That is the largest single contribution to agricultural levies. We pay 26 per cent. of the total custom duties. That is the second largest contribution. We pay 22 per cent. of the total of VAT. We are the third largest contributor in that respect. So, because of the emphasis on agriculture, our contributions will be bigger than anyone else's. We get back less. Our share of the CAP is 11 per cent. of total CAP expenditure. Given the comparative unimportance of agriculture in Britain, that relationship will always be the same. No amount of haggling, argument, or histrionics from the Prime Minister can change that.
Yet that situation should be changed. It is ludicrous in terms of our gross national product and our standard of living that we should be such a large contributor although we are one of the poorest states in the EEC. Indeed, it is ludicrous that we should contribute at all, as we suffer in so many other ways from our membership. We suffer from the £8,000 million lost in real resources through the CAP and we suffer massively because of the Common Market's impact on our manufacturing industry.
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Today, various estimates have been given of the deficit in manufacturing trade, but the basic fact is that from a surplus in manufacturing trade with the Six in 1970 we moved to a deficit last year of more than £8,000 million. That loss in manufacturing trade must be worth more than 1 million jobs in this country. In 1970, we exported eight cars to the Common Market for every five that we imported, but we now export one for every 10 that we import. In other words, there is a massive deficit in manufacturing trade, which has had a disastrous effect on jobs.
Hon. Members have asked about West Germany's contributions. However, that country's manufacturing industry reaps the benefit of having access to our market in a way that has destroyed our own manufacturing industry. A nation that stands in that relationship to the Common Market and that has to face that massive loss on agriculture and on industry should, at the very least, be paid to be in the Common Market and should not have to contribute as we do now. I am not talking about small contributions or even level pegging. We should benefit massively from the budget to compensate for the other disadvantages of membership.
Those disadvantages stem from the fact that we entered a club that does not suit this country or the basic realities of our agriculture or manufacturing industry. As the club suits the other members of the Community, the system will never be altered to suit us unless, as a result of the sort of crisis that we are now approaching, the crunch comes and so allows a fundamental readjustment. Without that readjustment our relationship with the EEC is bound to be a continual plaintive, miserable haggle. We shall be continually on the defensive and fighting to get back that which was sold away in the entry negotiations, and which will not be given back to us because it does not suit the Community.
Therefore, we need to seize the opportunity of bankruptcy. However, as far as I can assess the Government's approach, seizing that opportunity is not the Government's policy. It is worth asking why. The first reason seems to be the importance of farming to the Conservative party. Many Conservative Members have tried to play down that farming interest, but it alone seems to account for their deference to the EEC. Farming is the fifth column and has benefited by the Government's approach to the EEC. The rest of the country is suffering in order to keep the farmer fat.
A quarter of the Conservative Members in the European Assembly have a farming interest. We have a Cabinet that has a substantial landed and farming interest represented in it. We have a Government who, by their manipulation of the green pound, have totally reversed what happened under the Labour Government, when the green pound was used effectively to cushion the consumer. Because the green pound has not been revalued and because of the monetary compensation amounts that our farmers are receiving to export to France—to lead only to the sort of peasants' revolt and protest against British agriculture now witnessed there—the green pound is now being used to put money into the farmers' pockets and to tax the consumer.
That tax must put our food prices 5 per cent. or 6 per cent. higher in a club that already has the highest food prices in the world. That is a direct subsidy to the farmers

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and it has formed the whole basis of the Government's policy. It is a tax on the consumer in order to benefit the farmer.
Mr. Nicholas Soames: Does the hon. Gentleman seek to do to the farmers what he has done to the solicitors? Is this a genuine attack on a so-called privileged monopoly, or is he just seeking to make a point?
Mr. Mitchell: If the Government are against professional monopolies, they should be against that sort of subsidisation of the farmer. Indeed, such subsidies are not of direct benefit to the farmers themselves, although many of them misguidedly think that they are. Since we entered the Common Market, land prices have escalated enormously and so the benefit passes directly to the land owner. Therefore, we are pouring money into the pockets of a very small section of our society. In order to do that, the United Kingdom is bearing the onus of participation in an agricultural protection society that makes it difficult for us to carry on trading relationships with the rest of the world.
When the Treasury and Civil Service Committee went to Washington at the beginning of last year we were often asked in the Senate and elsewhere why Britain was joining an agricultural protection society and protecting agriculture to that extent when it was harming trading relationships with the United States of America and the developing countries. People said that it was not in our interest. Indeed, as net agricultural importers, it is not in our interest to have the burden of that agricultural protection society hung round our necks.
The second explanation of the Government's attitude is that, like so much of their approach to politics and to national issues, their approach to the EEC is one of government by public relations. It is not what they do so much as what they say. We saw that approach on the issue of taxation, when the Prime Minister proclaimed her intention to cut taxation. However, everyone is now bearing a higher burden of taxation. We saw the same attitude towards public expenditure. The Government proclaimed their determination to cut public spending, but public expenditure has increased by 3 per cent. per annum over the past three years, and as a proportion of gross national product. The same approach can also be seen in the Government's attitude to unemployment.
The Government's approach to the Common Market is that the Prime Minister bustles around in her busy fashion looking active while meanwhile there is government by Bernard Ingham. He is reinterpreting reality as though something had happened. That is not prime ministerial government, but an attempt to change reality. The real government consists of the public relations exercise that is carried on from No. 10. When it comes to the Common Market, we hear the din of battle and the Prime Minister declaring her determination to fight for the national interest as if something has been achieved, yet nothing is achieved. We do not change the terms of our relationship, although they are unfavourable to us, or even attempt to subvert the CAP, which is the most disastrous element of that disastrous relationship. However, the Government are not tackling that in any way.
We see continual claims about a budget rebate, but that rebate has been reduced every time. In 1981 it was worth £1,000 million. In 1982 it was worth £631 million, with
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a lot more strings attached than in 1981. In 1983 it was worth £457 million, but it was the rebate that never was and that we shall never obtain. Yet last June the Prime Minister told the House that she had not only achieved a settlement of the British refund for that year but had also made
"encouraging progress towards a long-term settlement of the financing problems which have so long bedevilled Community discussion." — [Official Report, 23 June 1983; Vol. 44, c. 146.]
That £457 million has not been paid. The Assembly has made it a condition of paying it that the Council meeting in Brussels in March should reach a satisfactory agreement on reforms. However, for the Assembly, a sine qua non of such a reform is an increase in own resources which this country cannot and must not agree to. If that deadline of 31 March is not met, the rebate will not be paid. Therefore, what the Prime Minister said about the rebate was incorrect. We are not going to get the money, and that is the only test. What she said about encouraging progress on a long-term settlement was also incorrect, because the speech of the President of the Council of Ministers, Mr. Cheysson, to the European Assembly on 18 January indicated no progress at all in the Government's demand for a permanent settlement to the problem of unfair budget contribution.
Mr. Cheysson said:
"There is a problem and it must be dealt with—at least for a certain period."
Britain has proposed a safety net system under which we would get back the overpayment on VAT the following year, but this would require a change in the April 1971 own resources treaty which requires that the same VAT rate for EC budgetary purposes be levied in all the member states.
Mr. Cheysson said:
"There is no question of amending the provisions of the treaties on this subject—and I am astonished that this has even been rumoured".
What is the Prime Minister talking about? There is no prospect of a long-term settlement. What is more, sacrifices have been made of vital interests to get even the budget repayments that we have. The Dublin mandate, which the Prime Minister won after all that eclat and noise, meant a budget refund, but the condition was that she did not question the fundamentals of the common agricultural policy and that we compromised on the common fisheries policy.
Fishermen in Grimsby and throughout the country were sold down the river by an inadequate settlement which is disastrous for the British fishing industry. The Prime Minister has sold out on issues of major importance to win temporary, inadequate deals on the budget.
If the Government cannot achieve the fundamental reforms to which they say they are committed with an Opposition who are and who have been committed to withdrawal, when will they achieve them? Without that voice in the country and that backing, what possibility is there?
Mr. Marlow: That is an interesting point. Is the hon. Member absolutely convinced that the Opposition are committed to withdraw from the Community at this moment?
Mr. Mitchell: In the period 1980–83 the clear commitment was to withdraw. We are now committed to withdraw as an option. That is important. Personally, I

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would withdraw from the Common Market tomorrow, as would the hon. Member for Northampton, North (Mr. Marlow). I do not decide what Government will decide in four years time when the Labour party will be elected. I am speaking of my personal view. For that period, and certainly at the last election, our commitment was to withdraw. In the face of such opposition, if the Government cannot win concessions from the Common Market, when will they? That is a straightforward question. The Government show no prospect of achieving concessions.
At the end of their abysmal record the Government are preparing to abdicate on the one negotiating power, the one lever and one spanner in the works that they have—the ability to wreck the system to produce fundamental change by the budget crisis. Already they are abdicating that power.
The Government are accepting that we remain modest net contributors. It is ludicrous to accept that disastrous burden. The Government are accepting that we shall increase the so-called own resources on two impossible conditions: first, a lasting solution to the budget problem—when there can be no such solution given the importance of the CAP—and secondly, that there be strict budgetary control, which cannot happen in that organisation.
On the basis of two conditions, both of which are almost certain to be fudged by an organisation which is a past-master at the art of fudging, the Government are preparing to abdicate the power to produce fundamental change. An increase in own resources, beguiling as it may sound, is a betrayal. It is rather like playing a bad record. It is not improved by turning up the volume because that makes the bad record worse. There is no guarantee that if we agree to an own resources increase other funds will develop.
It has been said by the President, Mr. Thorn, that other funds would have to be cut to make way for agriculture. That is the most appalling statement that I have heard in a long time. Agriculture is insatiable. Not only will other funds not increase, but agriculture will continue to be the drain that it has always been. With the certainty of more money automatically being generated, it will take an increasing share of funds.
There is no prospect of the Government's conditions being fulfilled. It is ludicrous that two thirds of the budget goes on the CAP and only one eighth on measures which grapple with unemployment. It is ludicrous because the Common Market supports 8 million farmers and 13 million unemployed. What a ridiculous division of budgetary resources that is. Resources are being used to support wealthy farmers, almost as if Hinduism has become the religion of the Common Market and the sacred cow was free to wander the streets of Brussels.
The only way out is to allow the crisis to bust the bank and to force reform. We must do that by an adamant refusal to increase own resources and then use the situation to redress terms which were inadequate at the start and which have remained disastrous. My hope is that the whole thing breaks up, but here is a heaven-sent opportunity to change a situation which every Government have said that they want to change but about which no Government have done anything. If we do not change, our future is one of a declining periphery, with development siphoned away to the golden triangle and an increasing tide of manufactured imports destroying jobs in the United Kingdom.
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The Common Market is not strong enough to help us, but it is strong enough to do positive harm to us. The distortion machine that has become part of the Community's way of life is one of the reasons for the prevailing alienation of politics. The gobbledegook and Goebbels-isation of British life, produced by attempts to explain membership of an institution which fundamentally does not and cannot suit us, is one of the main distortions.
That explanation and distortion has been carried on at our expense by the Commission's fifth column which has put over a totally inaccurate view of what is happening. It tries to tell us that decline is improvement; that black is white; that ruining our manufacturing industry is actually a benefit; that the burden of high food prices is an advantage; and that the budget to which we contribute on a large scale gives us access to opportunities which are not there. All these distortions have produced what I can only describe as the Goebbels-isation of British life.
It is, therefore, the duty of Opposition Members to put backbone into what has emerged, for all their brave talk, as a weak, nervous, grovelling and deferential Government who are on the point of abdicating the one weapon to have come into our hands in the EEC from 12 years of a disastrous relationship. They should use that weapon, abandon public relations and stand up for Britain and British interests. Perhaps I could offer the Government a slogan which, though it was not used all that successfully on the first occasion, has great potential in the Common Market. They should take up the slogan "Can't pay, won't pay."
9 pm
Mr. Kenneth Carlisle: I shall not follow the highways and byways taken by the hon. Member for Great Grimsby (Mr. Mitchell), or I should find myself in a quagmire of words.
This debate has no meaning unless it is seen in the wider context of our position in Europe and the reasons for our continued membership of the Common Market. Indeed, we should sink without trace if we got involved in the seven volumes of the draft budget. The failure of Europe is that it has not succeeded in persuading people that Europe is not just about things, such as the import of caramel and caramel products, but is concerned with much more important and fundamental matters affecting our future as a country. We can overcome the problems of, and opposition to, Europe only if we persuade people of the real meaning of our membership of the Common Market and if they are persuaded to understand that our membership is fundamental to the future of our country.
I believe that people understand in their hearts that our membership of the Common Market is necessary for our security with our fellow members. They understand that our membership is essential for our businesses and industry, as trade and jobs depend largely on our future in the EEC. They certainly understand that, if we were not members, there would be little future for us in the world and in the decisions affecting the future of the world.
I am often saddened by the Labour party's acceptance of our role as a little England and in the abdication of any role in the future decisions which affect the world at large. It is essential, therefore—if we are to accept the large issues that are at stake—that we find a solution to the budgetary problems. If we do that, we can concentrate more on the matters that are central to our future as part

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of Europe. And, if we accept that our future is in Europe, we are more likely to find a solution to the budgetary problems.
Budgetary reform is needed for two basic reasons. The first is that it is only fair that we should not contribute more than fellow members—that we should pay according to our wealth, a principle to which reference has been made several times during the debate. It is fundamental in our search for a solution that we should at least make a fair contribution. At the same time, I was glad to learn from the Economic Secretary that we are determined to secure in March the repayment which has been accepted for us.
The second reason why we need reform of the budget is that reform of the CAP is essential. As the hon. Member for Great Grimsby said, we are spending a large proportion of Europan money on the CAP. Without doubt, guaranteed prices only lead to surpluses. Indeed, without some market discipline it is impossible to get hold of the agricultural surplus system, because more will be produced. The Foreign Secretary was correct when he said that he would vote for an increase in own resources for the budget only if we have effective control of expenditure. That means getting a proper reform of the CAP and regaining a fair share of our financial burden.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon) was right when he said that, as we face the reform of the CAP, farming should not be allowed to decline. It has an important part to play in the future prosperity of this country and of the rural areas. The hon. Member for Great Grimsby went overboard in his attack on the farming community and showed a complete lack of understanding of the position when he said that farmers benefited from rocketing land prices. Any true farmer does not want his land to be worth all that much because he will not sell it but farm it and will wish to pass it on to his sons, and that is impossible if the price of the land is too high.
However, we should accept the fact that the system of farm support is wrong. First, it produces surpluses and, secondly, it leads to the destruction of the countryside. Habitats for wildlife are at a premium in the United Kingdom. The Nature Conservancy Council claims that we shall have only just enough habitat to secure our wildlife for future generations if we stop the destruction now. It is one thing to farm existing farm lands as well as we can and quite another to destroy valuable habitat merely to produce surpluses.
The current system of support is encouraging surpluses and, in turn, destruction. This is happening in Ireland, for example, where millions of pounds are encouraging the drainage of hill river valleys. Valuable wetland sites for wildfowl and waders are being destroyed to produce surpluses of wheat that are not required, or excess dairy products. In Britain, it is CAP money that is encouraging, for example, the drainage of North Duffield Cans in Yorkshire, a water meadow site of international importance. Without the subsidies for wheat from the Common Market, such drainage would not be considered.
Any new farm support system that is evolved—we must have some such support—must avoid the plague of surpluses while linking farming development with proper consideration for conservation.
We have a skill in service industries, such as financial services, insurance and the provision of air services. We must wrest from the Common Market free competition for
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the service industries. In the recent past we have not been so competitive in manufacturing industries, but we have free competition in that sector. Let us now secure free competition for financial services.
In our fight to secure a reformed budget, I should like the Government to push for greater emphasis to be placed on the conservation of wildlife and habitat. That will be needed for the quality of life of future generations. Secondly, I urge the Government to press for fair competition for service industries. I hope that everyone in the House will accept that our future lies in Europe. If we are in Europe, we can have a wider vision of the world. We shall be able to play a full part without sinking into becoming an isolated and scorned little England.
9.7 pm
Mr. Phillip Oppenheim: It would be all too easy to talk about the many superficial absurdities of the EC—for example, the millions wasted on the absurd so-called EC information campaign. I could talk of the fact that Britain was meant to provide almost 20 per cent. of EC employees, but accounts for less than 10 per cent. I could talk also about the millions that are wasted internally by EC bureaucrats.
I had personal experience of trying to install a small network of micro-computers for the European democratic group. I tried to learn what I could of what the EC, the Commission and the Parliament had planned for their internal network. Whenever I contacted someone who was meant to have responsibility, I found invariably that he was out for lunch or taking a two-month sabbatical.
I discovered some appalling examples of waste. On some entirely dubious grounds, a large consignment of Italian word processors was ordered two years ago. The machines have still not been delivered or installed, yet the design has been out of production for nearly a year. This is ridiculous, but all this expenditure and waste is be a drop in the ocean compared with the cost of the common agricultural policy. The CAP is the key because it is the most developed part of the EC.
The CAP is much criticised and it is certainly far from perfect, but that should not obscure many of the sound reasons that lie behind it. Agriculture is entirely different from other industries. It is different because land is a finite resource. It is different because it costs more per unit of production the more we try to produce per acre. It is different also owing to the uncertainty of prices in a free market because of factors outside the producer's control. All those factors in a free market would serve to depress production, so that we would be not self-sufficient in Europe but heavily deficient in production.
Systems of guaranteed prices for agriculture are not unique to the EC. They are common to most developed nations, including the United States, and, before 1972, Great Britain. Guaranteed price systems iron out the worst of the market uncertainties and ensure reasonable levels of production. It is worth remembering that, although the EEC has a heavy surplus production in milk, it has only a 15 per cent. surplus in grain production, is in balance in beef production, and has a 30 per cent. deficit in sheepmeat production. It is no coincidence, however, that countries with guaranteed price structures have the best-fed consumers. Those without guaranteed price support often go short.
It is true that agricultural support costs money, but the money that British farmers receive from the EEC is less

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than the total spent on the coal and steel industries. Would Labour Members who call for the abolition of any support for agriculture be consistent in calling for the abolition of support and return to world prices especially for the coal industry? The coal and steel industries produce less and employ fewer people than agriculture.
It is far from true to say that, with the possible exception of sugar, the Third world suffers from EEC pricing policies. Quite the contrary, it is generally agreed that a lack of support for prices in those economies leads to food shortages. The low prices for which farmers in those economies must work encourage not production but subsistence farming leading to shortages for the mass of the population.
Assuming that one wants to get away from the system of guaranteed prices, what are the alternatives? One alternative is to go to world prices. If the EEC were to go to a system of world prices for farming products, it would mean a cut in production of about 30 per cent., which would bring Europe heavily into deficit for all products, except possibly milk. It would mean billions of pounds worth of imported food and total dependence for our food on the United States or, worse still, on South America. That would mean also a return to a huge rise in world prices. Anti-marketeers admit that EEC price support depresses world prices, but they must admit also that, if we went away from a guaranteed price structure, world prices would correspondingly increase. There is no doubt that if the EEC abolished price support and went on to a system of world prices, those world prices would increase sharply.
Another consequence of moving to world prices would be that small farmers, many of whom had invested heavily in capital equipment in the reasonable expectation of a certain price level, would be bankrupted. Ironically, it would be the larger grain farmers who would do well. It is true that they would probably have to cut grain production, but lower imputs per tonne of grain produced would mean higher margins on those tonnes of grain. A return to world prices would possibly even increase the profitability of the large grain farmers.
The consumers would suffer if we went to a system of world prices, because they would be totally dependent for food on North and South America and would have no protection against the fluctuations of world prices and supplies.
Another alternative to the current prices support system operated by the EEC would be a return to national policies of price support. That may be an answer, but, in terms of what United Kingdom farmers receive, price support would probably cost as much as it does now. After all, before 1972, British farmers received no more or no less in real terms than they do now. However, to argue that some form of price guarantee system for agriculture is necessary is not the same as saying that the current CAP does not need radical reform. It is surely 'grossly unfair to expect the British taxpayer to go on financing huge overproduction by the French and the Dutch. Not only do the French and Dutch seem to want our markets to sell their surplus goods to, but they want us to pay for the privilege. For every pound that we pay our own fanners, our taxpayers contribute a further 50p to French and Dutch farmers. Therefore, perhaps some national financing of overproduction over and above what the Community can absorb would help the French and the Dutch to see our point of view as well as theirs. I also cannot see the logic
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of asking our dairy farmers to cut back production by 6 per cent. just so that we can import more French milk. That seems to be an absurdity.
Another way in which the EEC should be going is to return more of the benefits of agricultural spending to the consumer. Deficiency payments schemes, where possible, such as the sheepmeat regime, achieve that purpose to some extent. Additionally, the sale of more intervention grain to the livestock sectors would lower feed costs and thus lower the cost of the end product. Surely that is the direction in which we should move.
We need to reform the CAP, but to use the CAP' s many excesses and absurdities as an excuse to scrap the whole policy would be to throw out the baby with the bathwater.
9.16 pm
Dr. Oonagh McDonald: In some quarters, the debate has been marked by complacency. For example, the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) appeared to be reading out the Liberal manifesto for the forthcoming European Parliament elections. He has disappeared from his seat. Perhaps the Liberal manifesto has overcome him. He talked about the need to reform the common agricultural policy, but it was a long and slow reform. Apparently neither he nor the Liberal party has any notion of the urgency of the matter as agricultural spending continues to increase and get out of hand. Perhaps that is typical of the alliance's approach to political problems, which is marked by the lack of a sense of urgency or reality.
By way of contrast, one or two Conservative Members seemed to delight in their praise for and adoration of membership of the European Community, so much so that they were prepared to tolerate an increase in the membership fee. If the Commission proposes to raise the VAT ceiling to 1·4 per cent., they will accept that. They might even accept a doubling to 2 per cent. Some of them seem to be unaware of its implications for taxation here.
As my hon. Friend the Member for Newham, South (Mr. Spearing) said, the present ceiling means that 11 per cent. of VAT is contributed to the European Community. Any rise in that ceiling would greatly increase VAT. Those who spoke in favour of raising the ceiling did not say where they expected the taxes to fall. There could be an increase in the already high 15 per cent. VAT, or there could be a widening of the base for the collection of VAT, perhaps to cover items at present zero rated, such as food and children's clothing. However, Conservative Members did not tell us what would be the effect on the British tax system of a raised ceiling.
The Economic Secretary took us on a brisk trot through the technicalities of the budget. I was particularly interested in some aspects of his speech. He welcomed the liberalisation of lorry movement throughout the Community. He must have had a busy few weeks in France, either stopping the hijacking of British lorries or heaving them out of the way when they are blocking the holiday routes.
More seriously, the Economic Secretary's speech had a couple of interesting features. First, he said that the EC was at a crossroads. That was a surprising understatement after Stuttgart and the abysmal failure of Athens. It was an astonishing statement to make when even Mr. Cheysson, the French Foreign Minister, sees the Community as galloping towards a precipice unless urgent action is taken by the end of March.

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The Economic Secretary also said that it would be premature to withhold payments. He said that we have until the end of March to get our rebate from the EEC. The end of March is not far away, and the signs do not yet seem very hopeful.
In view of the heavy weight of the documents, which we have, of course, all dutifully read over the past few days to prepare ourselves for this debate—[HON. MEMBERS: "Hear, hear."] I am glad to hear that hon. Members are so hard working. In view of the size of these documents, it seems churlish to complain of lack of information, but I shall do so.
The hon. Member for Southend, East (Mr. Taylor) referred to the missing letter—the reply to the Foreign Secretary's request for the £42 million owed to us since 1982. That reply is with the Foreign Secretary who is now in Brussels, having been in Paris over the weekend. I hope that we shall be given a statement this week giving us all the details of the discussions at St. Cloud near Paris at which the Foreign Secretary has been present. I hope that there will be a statement, because a number of issues arise from press reports today of the weekend meetings.
The Foreign Secretary was prepared to say that the meeting had been "mildly encouraging", but, despite that overt statement, the briefings which the press received do not encourage us at all, and I doubt whether the Foreign Secretary was as encouraged as he chose to pretend. For example, it appeared that some countries were not prepared to offer Britain the long-term budget settlement on which we quite rightly insist. That appears in a number of press reports, including one in The Times today. There is also a fear that President Mitterrand's visits to the various capitals of Europe may represent an attempt to put together a secret deal behind Britain's back. Other problems concern France's attempt to impose a five-year limit on any budget agreement and to keep the reduction in Britain's payments to less than 1 billion ecu. All those features of the weekend's meeting disturb us.
We also have no information about the various proposals which are apparently being discussed about the way in which the size of contributions to and rebates from the Community should be assessed. There are proposals from Mr. Delors and from the Dutch, and Gaston Thorn also has other ideas for new methods of calculating budgetary imbalances. It is not surprising for those who have heard Gaston Thorn's statements about Britain and our claims concerning a rebate that his proposals reduce the apparent net contribution and the potential rebate which Britain could hope to claim.
We cannot sensibly discuss the 1984 budget and any plans that the Government might have to get us out of our difficulties with it without knowing, in detail, what the proposals are. We should be able to examine them critically and, if necessary, offer other ways in which to assess each member country's benefit from the Community and the amount that it sacrifices or pays to it. Even with the enormous pile of documents involved, the debate has been a waste of time, although by that I do not wish in any way to be disrespectful to my hon. Friend the Member for Livingston (Mr. Cook), who made a brilliant speech, and to others who have spoken. I am merely setting out the debate which we should have before 31 March.
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We must examine the proposals in detail and know precisely why the Government regard the refusal to pay our contribution to the budget before the end of March as premature. We need to know the Government's detailed proposals to ensure that agricultural spending is controlled. We need to know what trade-off the Government are considering in terms of allowing our contribution to the budget to be raised or for allowing the ceiling to be raised. We all recognise the difficulties of engaging in a negotiating process such as this, but as the decisions are being taken in a crucial year, and as they could affect the development of budgeting for the Community for many years to come, the Government should take what the House has to say about these matters fully in account. As has been pointed out, there appears to be a gap between the Government's rhetoric and their actions. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) described that gap beautifully. I shall not attempt to follow his eloquent description of the activities of Mr. Ingham and the press office at No. 10. Nevertheless, we have all seen the gap and are worried about its possible extent in the future.
The report of the Court of Auditors provides us with much ammunition with which to defend Britain's stance. It mentions what happens to agricultural funds and argues that a large proportion of the £9·28 billion which is allocated to agriculture could be saved if the CAP were made more effective. Apparently, on CAP guidance for farm modernisation, the court deplores the absence of a clear and stringent programme which is designed to help farmers abandon production in surplus sectors. It also says that sound financial management is as much a key to averting the EC's cash crisis as raising the ceiling on the EC budget measures.
Many right hon. and hon. Members have rightly argued that strict financial controls—we all agree that they have their place—will not solve the problems of the CAP. It has a built-in tendency for overspending, as many factors can change in one year. In present legal circumstances, Brussels must meet the demands that are made of it. Changes in world prices, changes in the exchange rate and the way in which surpluses might unexpectedly build up all mean that spending on agriculture is bound to overrun. It has done so in the past—it increased by 183 per cent. during the 10 years from 1973 to 1983, and there is no reason not to expect it to continue to increase in the years to come.
We suspect that the Government will stop short of financial controls on the agricultural policy and will back off from the notion of the fundamental reform that needs to take place, not only to stop overspending, but to stop the build-up of the obscene surpluses—the butter mountains, the wine lakes, and so on. The surpluses are stored at enormous expense and occasionally released at knock-down prices to other parts of the world. That kind of policy is not only financially unacceptable, but is rapidly becoming morally unacceptable—not only in this country but throughout the remainder of the Community.
If the Government merely go for financial control they will be giving up an important part of the initial rhetoric, which was to go for fundamental reform of the agricultural policy. It is not surprising that the Government back off. My hon. Friend the Member for Great Grimsby was attacked for his statement about the importance of farmers to the Conservative party. A more acceptable source for

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the Conservative party, The Economist, also had its doubts about the Government's determination to press for a reform of the agricultural policy owing to the barnful of farming Cabinet Ministers responsible for such decisions.
Mr. Marlow: On a point of order, Mr. Speaker. Is it proper for the hon. Lady to suggest that members of the Cabinet let their personal fortunes come in the way of their decisions about the policies needed for this country?
Mr. Speaker: I did not hear the hon. Lady say anything that was out of order.
Dr. McDonald: It will be for the Minister to try to rescue the Government from criticisms.
The Opposition are concerned about another aspect of the current negotiations. Mr. Gaston Thorn talked yesterday about the possibility of plundering the EC funds that aid employment measures and the regions. It is true that the Commission is not under a legal obligation to continue those payments during 1984, although they have been laid down in the budget. It is, however, obliged to continue to meet all the demands made on it by the agricultural policy.
We want from the Government tonight an absolute assurance that they will reject any move by other member states and the Commission to spend on agricultural policy money that should be used to aid the impoverished regions of the Community or on employment measures. Admittedly it will be hard for the Government to do that, but if they were to make their objections clear that would give them an additional lever in the negotiations that must take place during the next few weeks.
The Community is in a crisis. It is wrong to dismiss the budgetary matters as though they were irrelevant to the development of the Community. They are not—they are a constant diversion and a constant source of bad feeling and hostility between members of the Community. They lead to wasteful spending on agriculture and raise the prices of food to consumers because of overspending. It is high time that the agricultural policy was thoroughly reformed, and if the Government keep their nerve they can do that. They can refuse to pay their contributions to the European budget this year, not only if they fail to receive their rebate but to ensure that the reform of agricultural policy, which must take place, actually does take place. To accept a short-term compromise solution now and to allow the moment of crisis to go by without taking the necessary fundamental and long-term action would be crass weakness on the part of the Government. Despite all their rhetoric, we fear that that is what is going on behind the closed doors at St. Cloud, and that the Government will not live up to what they say they want to do.
The Government have already backed down, as we have seen from their statements, and we are afraid that they will do so once again and take an easy compromise solution—the easy way out—and that consumers in Britain will end up paying more taxation as the budgetary contributions are increased because the ceiling on their own contributions is raised. The Government are prepared to go for the soft solution and to allow everyone else to pick up the tab for the weakness of their decisions.
The Opposition want a commitment from the Minister that all the information necessary for the House to make a decision will be revealed, that we may have a further debate before the Government come to a conclusion, and that they will not abandon their rhetoric, but will instead
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push for the fundamental reforms in the EC agricultural policy which are absolutely necessary if the EC is to survive.
9.37 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifland): The hon. Member for Thurrock (Dr. McDonald) and many other hon. Members who have spoken have quite properly concentrated their remarks on budgetary matters. I say "properly" not only because that is the subject of the debate—those were the issues recommended by the Scrutiny Committee—but because that issue is most central to the problems facing the Community now and the negotiations upon which all the member Governments are embarked.
The hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) and my hon. Friend the Member for Harrow, East (Mr. Dykes) emphasised their desire that during the negotiations the British Government should not address the matters in a narrow short-term frame of mind but that they should remember the broad, overall objectives of the Community and the long-term interests of Britain and the Community as a whole. The Government do not wish to dissociate themselves from that consideration. Hon. Members rightly and properly made that point.
It is equally important that all member states should consider it perfectly proper to emphasise to the Community during the negotiations the vital national interests that are at stake. It would be wrong and improper for anyone to expect any member Government, including the United Kingdom Government, not to take into account the vital national interests.
The Community was not invented and has not developed on the basis of ignoring the vital interests of member states. Rather it has survived and prospered by being able to reconcile the conflicting interests of many member states. That feature has survived over the years and is the essential strength of the Community.
During the past few years the United Kingdom has been in the forefront of calling for reform of the Community. That has led to some suggestion that the United Kingdom is not fully committed to membership of the Community, and that it is only a part-time member. My right hon. and learned Friend the Member for Hexham (Mr. Rippon) was right to emphasise that the 'United Kingdom is not half-hearted in its approach to Community membership, and that it is wrong for anyone to suggest otherwise. We reject and resent such accusations.
I recollect how, in the late 1960s, France under General de Gaulle was so anxious to protect its vital interests, as it saw them, that it withdrew from the Council of Ministers for seven months, without anyone trying to question its basic commitment to the Community. In the present negotiations every member state has vital interests, and one does not blame them for trying to ensure that they are respected.
I was astonished by the suggestion of the hon. Member for Great Grimsby (Mr. Mitchell) that the Labour party's commitment to withdrawal from the Community, at least until the previous general election, was an asset to the Government during the past few years in their negotiations with the Community. He has obviously not spoken to any of his fellow Socialists in Europe or to anyone else. The great embarrassment for the Government during the past few years has been that other member states, until the last

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election, could say, "What is the point of trying to reform the Community in the direction that the United Kingdom wishes if the advent of a Labour Government would mean British withdrawal in any case?"
Mr. Austin Mitchell: If, faced with the dire threat of an Opposition who are committed to withdrawal, the Government could get no concession from the EC, when do they hope to get concessions?
Mr. Rifkind: There are two fundamental errors in the hon. Gentleman's remarks. First, during the past few yars £2,000 million has been refunded, apart from the sum due at present. That compares favourably with the complete lack of success of the Labour Government. Secondly, the Hon. Gentleman must appreciate that as the other member states had no internal dissension such as Britain had until the previous election, that could not be an asset in the negotiations.
Several of my hon. Friends and other hon. Members referred to the unresolved dispute between the Government and the European Parliament about the net payment of £430 million arising out of our 1983 refund. Let us be clear what the dispute is not about. It is not about our entitlement to that sum. No one—not the Council of Ministers, the European Parliament, nor the Commission—oubts our entitlement to the sum. Nor is it a dispute between the United Kingdom and other member Governments. It is not a dispute with the Commission. At this stage it is a disagreement with the European Parliament, which is trying to insist that the payment of the sum should be linked to progress on the Stuttgart negotiations. The Government fundamentally disagree with that assertion, and I would go so far as to say that, in making that proposition, the European Parliament is acting improperly, unfairly, illogically, unwisely and dangerously.
First, its action is improper because there is no basis for establishing a link between progress on the Stuttgart negotiations and the payment of the refund. Anyone who reads the Stuttgart communiqué, and the speech of Herr Kohl, the German Chancellor, when he reported to the European Parliament, will be aware that no such link is justified.
Mr. Jackson: The European Parliament was not party to the Council meeting in Stuttgart and cannot, therefore, have been bound by its decisions. We should understand that in trying to evaluate the problems that have been caused by the Parliament.
Mr. Rifkind: My hon. Friend is correct to say that the Parliament was not bound by the Stuttgart negotiations. Nevertheless, it should take into account the basis on which this payment was agreed. The agreement did not depend on other factors; it was agreed because Britain is entitled to the refund. Any attempt to establish links would be improper.
Secondly, the proposition is unfair because in many respects—certainly following the Arndt resolution by the European Parliament—the United Kingdom is closer to the thinking of the Parliament than almost any other member state in its desire for a permanent solution to the budget problem and for sensible control of agricultural expenditure. Therefore, it is somewhat unfair of the
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Parliament to take such action against the country that is the closest to its own thinking in this respect. Thirdly, it is illogical for the Parliament to establish such a linkage because, if it is seeking to bring pressure on the Community as a whole, it is rather difficult to understand its policies. The suggestion that the French, the Italians or the Irish would be persuaded to be more reasonable on progress in the negotiations because a refund due to the United Kingdom is not being paid is rather illogical.
Mr. Johnston: On the point about the European Parliament, in which the hon. Gentleman is interested, he said that the Parliament was unfair because the British Government was more in tune with the views of the European Parliament than anybody else. That would suggest that the European Conservative group is more in tune with the views of the Parliament than Parliament itself, which is illogical.
Mr. Rifkind: On the contrary. The Conservative Members of the European Parliament have been in the forefront in pressing for the money to be paid within the due course of time, unlike the Labour group, which has not been helping the Conservative group and has been putting forward wrecking amendments to prevent the money being paid.
Fourthly, the Parliament's position is unwise because it spends a great deal of its time persuading member states to increase its powers and responsibilities. Anyone who might have been sympathetic to the approach will hardly be persuaded if the Parliament abuses it existing powers by seeking to withhold sums due for reasons that are not linked to entitlement to those sums.
Finally, the action of the Parliament if it refuses to pay these sums at the right time may be dangerous because clearly, as my right hon. Friend the Prime Minister has shown, this is not something to which the United Kingdom would acquiesce and we would take steps to defend our position.
The hon. Member for Livingston (Mr. Cook) has tabled an amendment that invites the House as of now to insist on the withholding of sums due to the European Community. The Opposition's amendment is both precipitate and irresponsible. I say that for two reasons. At the moment, no one is suggesting that the Community is in default of the £430 million. The United Kingdom has made clear all along that that is the sum that falls due to be paid by 31 March this year. Our actions cannot be questioned. If the House were so misguided as to accept the advice of the hon. Member for Livingston and the Opposition on this matter, that would put the United Kingdom in the wrong because it would have acted in a way that was hostile to the Community when its rights to the sum had not been attacked.
Mr. Marlow: While I accept and respect entirely what my hon. Friend has said, will he confirm to the House that if virtually all of the money is not paid by the due date, withholding is one of the options that will be considered by Her Majesty's Government?
Mr. Rifkind: My right hon. Friend the Prime Minister has made it clear that we cannot rule out any method of responding to such actions. It is not in the interests of the country to say at this moment what might happen if circumstances that we hope and believe will not occur should take place.
Mr. Robin Cook: The House will be rateful to the Minister for pointing out that action that is advocated by the Opposition is irresponsible on 20 February, but when advocated by the Government on 2 April is no longer irresponsible. As the Minister has spent the past five minutes fulminating at the illogicality, the danger and the lack of responsibility of the European Parliament, will he tell the House what possible reason there is after last week's sitting of the European Parliament for imagining that anyone will release the rebate in time for 31 March?
Mr. Rifkind: Two points need to be made. First, there is a fundamental difference between taking action after the Community has defaulted on a sum due to the United Kingdom and contemplating action today when no such default has taken place. Secondly, there is still no procedural reason why sums due to the United Kingdom should not be paid by the end of March. The European Parliament has itself indicated that it is fully aware of the significance of that date, and until that date has lapsed we are prepared to give the Parliament the benefit of the doubt. That, I believe, is the only reasonable, proper and responsible thing to do. [Interruption.] I do not expect Labour Members to act in a responsible or constructive fashion. They did not do so when they were in office, and it is hardly likely that they will do so in opposition. That is something that my hon. Friends will appreciate.
Mr. Jackson: In considering what is potentially a very serious matter, will the Minister explain what legal status the date 31 March has in any Community decision?
Mr. Rifkind: I shall not embark now on a detailed legal analysis, but my hon. Friend will be aware that in the past the sums have been paid by that date. It is not a matter in dispute, either in the Council of Ministers or in the European Parliament, that the proper course of action is that the sums due to the United Kingdom in respect of refunds are paid within the United Kingdom's financial year.
Mr. Teddy Taylor: While the House is greatly reassured to hear about the strong action that will be taken if the Common Market defaults on 31 March, will my hon. Friend say what strong action was taken following the default on 31 December last by the Community over the £42 million which should have been paid but was not, bearing in mind that the Foreign Secretary sent a letter on 3 January and that, we understand, a reply has just been received? I hope that the Minister will be able to tell us what that reply from the Common Market says.
Mr. Rifkind: The £42 million risk-sharing sum, unlike the other sums that we have been discussing, does not arise out of a dispute between the United Kingdom and the European Parliament. It arises from a quite separate basis—from a difference of view within the Council of Ministers as to the proper sum that is due for the risk-sharing element for 1982.
Secondly, the £42 million, unlike the other sum, is in dispute. I said earlier, with regard to the £430 million, that there was no dispute in any quarter of the Community as to British entitlement to that sum. That is not the case with the £42 million. The United Kingdom emphasises that that sum is due, arising out of the risk-sharing element. Other member states and the Council of Ministers do not take that view.
My hon. Friend the Member for Southend, East (Mr. Taylor) has referred to correspondence between the
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President of the Commission and Her Majesty's Government. I am not at liberty to indicate the contents of correspondence of that kind. In saying that, I am not saying anything new; it is a position with which the House is familiar. But the Commission agrees with the United Kingdom that the sum which has not been paid arises out of a political decision by the Council of Ministers and does not arise out of any legal entitlement or disentitlement that the Commission recognises. Therefore, this is a matter which now has to be dealt with within the context of the inter-governmental negotiations now taking place, and it is clearly an issue which will be raised in that context.
Mr. Boyes: Will the Minister give us an assurance that well before 10 pm he will have a word with me about a possible increase in the cost of a pint of beer? I know that Ministers do not give way once they reach 9.55 pm, because they are in a hurry then.
Mr. Rifkind: The hon. Gentleman will be aware that questions of excise duty are more a matter for my right hon. Friend the Chancellor of the Exchequer than for me, and the hon. Gentleman would not wish me to anticipate my right hon. Friend's decision in that respect. That is all I can say on that issue.
With regard to the more general question of the reform of the budgetary system and budgetary imbalances, what we are seeking to do, as several hon. Members have said—I was particularly attracted by the remarks of my hon. Friend the Member for Wantage (Mr. Jackson)—is to achieve an equitable system which is fair to all member states of the Community.
Before the own resources decision of 1970, there was, indeed, an equitable system, because then the three major states of the Community—France, Italy and Germany—each paid 28 per cent. of the Community's costs, with the remaining costs shared by the other three smaller members. That system was changed not because of any desire to move away from an equitable system but because of the perfectly reasonable desire to achieve a position in which the Community had its own resources. But that does not remove the need for a basic equity in those arrangements, and it is a fundamental part of the objectives of Her Majesty's Government that in the negotiations we should achieve a system in which there is an equitable burden shared between the member states, based on the relative prosperity of the stales in question.
My hon. Friend the Member for Southend, East and others suggested that the Government are not serious about the reform of the common agricultural policy. However, we believe that expenditure on agriculture and the Community's expenditure as a whole need to be reformed. We were the first to argue for the need to have a strict financial guideline to ensure, for the first time in the history of the Community, that there should be control of agricultural expenditure and of the Community's expenditure as a whole. Other member Governments, as well as other commentators, have suggested that we need declarations of intent, saying that the Council of Ministers, or the Agriculture Ministers, should declare their intent, their good faith, to try to control total expenditure. To those who say that, I commend the wise words of Lord Home, when Prime Minister, when he said:
"If a politician tells you that his word is as good as his bond, then always ask for his bond."
That is the approach that we are taking in the Council of Ministers. We are arguing that it is essential, if there is to

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be control of expenditure, for that control to be in the form of a change in the budgetary mechanisms, if there is to be a proper and adequate control of the Community's expenditure.
I listened with interest to the hon. Member for Livingston. Today, as on previous occasions when we debated these matters, he completely failed to reveal the alternative Labour policies on agricultural or budgetary matters or any other matters. If the House is to be denied the benefit of the Labour party's views it has at least one other way to discover what the hon. Gentleman believes. He is trying to identify what I am about to quote from, but I can tell him that it is our own local paper, the Edinburgh Evening News. It was the prime beneficiary of the hon. Gentleman's views on the matter, in a speech that he made to the Scottish Organisation of Labour Students. I shall quote his words to that august organisation. He gave Labour's four-point plan for contesting the European elections. He started by saying—this could be a reference to the Labour party, as well as to the European elections:
"Our job is to place internal problems and concerns within a European context".
We can only speculate on what he meant by that. He went on to say something quite remarkable in a speech that was meant to be about the European Community:
"To those concerned about the Health Service we must connect the cuts in public expenditure to the world recession and the contribution Ministers throughout Europe have made to it."
That is what the electorate will be subjected to in the debate on the European Assembly.
Mr. Robin Cook: The Minister will be well aware that shorthand in local newspapers is not all that might be desired. I am happy to assure the hon. Gentleman—who, I know, has listened to speeches from me during the past 15 years—that I said no such gobbledegook. As I have the privilege of the Minister's ear, and as he has tweaked me for having said nothing positive about what should be done on agricultural policy, I remind him that I made a strong and strenuous suggestion about what the Government should do as an earnest of their intention to reform the CAP, and that is to realign the green pound exchange rate and thereby abolish the 5 per cent. tax on food. That request was put also by Commissioner Tugendhat. Does the Minister propose to accept that recommendation as a positive step that can be taken on agriculture before we reach 10 o'clock?
Mr. Rifkind: I am interested to see the hon. Gentleman's anxiety to deny the words that he is reputed to have said in what is, after all, a most reputable newspaper.
Mr. Foulkes: Oh, not at all.
Mr. Rifkind: The correspondent who quoted the remarks of the hon. Member for Livingston was the paper's European correspondent—not some part-time reporter. Indeed, it is consistent with the Opposition's attitude, because throughout the past few months, in every public comment that they have made, they have emphasised their determination to avoid European issues which they know fundamentally divide their party, and they will try to fight the elections on domestic issues which they believe will bring them more satisfaction.
This debate has been about the Community budget. The Government have already achieved massive refunds for the United Kingdom taxpayer, and the fundamental objectives of our present negotiations are to ensure a fair deal for the British taxpayer and the British public in the years to come. The Community is, for the first time, addressing itself to those fundamental issues. We believe that we shall succeed, and I invite the House to reject the Opposition amendment.
Question, That the amendment be made, put and negatived.
Main Question put and agreed to.
Resolved,
That this House takes note of the Preliminary Draft General Budget of the European Communities for 1984, of the Draft General Budget for 1984, of the Letter of Amendment to the 1984 Budget, of European Community Documents Nos. 10447/83, 10105/83, the Modifications and Amendments by the European Parliament to the 1984 Budget, of the Decisions by the Council on modifications and amendments by the European Parliament to the 1984 budget, of European Community Document No. 11094/83, financial compensation for the United Kingdom and Germany for 1983, and of Official Journal C 357, the Annual Report of the Court of Auditors for 1982; and supports the Government's efforts to secure budgetary procedures and control which are in the best interests of the United Kingdom and of the Community.

European Communities (Budget)

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Occupiers' Liability Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Sainsbury.]

Orders of the Day
  Occupiers' Liability Bill [Lords]
  Not amended (in the Standing Committee), considered.
  Occupiers' Liability Bill [Lords]
    Clause 2

      VISITORS USING PREMISES FOR RECREATION TC.: MODIFICATION OF UNFAIR CONTRACT TERMS ACT I977
      10 pm
      Mr. John Morris: I beg to move amendment No. 1, in page 3, line 10, leave out from 'occupier' to end of line 12 and insert
      '(whether the occupier makes a charge or not) unless the granting of such access by the occupier constitutes a commercial activity'.
      I do not think that any hon. Member who sat on the Committee considering this Bill would accuse me of undue prolixity and I do not intend to alter my approach tonight. In Committee, we discussed two different amendments that had the same objective as amendment No. 1. Their objective, like that of amendment No. 1, was to remove anxiety from those who make their land available for recreational or educational purposes not being by way of business of the occupiers.
      On Second Reading the Solicitor-General said that five years of the working of the Unfair Contract Terms Act had resulted in one unintended effect. It had reduced access to the countryside and so the provisions needed fine tuning.
      That was certainly queried in the course of our discussions. At one stage the Solicitor-General said:
      "The question may be asked, 'Will landowners change their practice if the law is amended? Will they not continue to refuse access?"'
      The right hon. and learned Gentleman then said:
      "There is good reason for optimism."
      He concluded by saying:
      "For those reasons the object of clause 2 is one that I believe will be supported not only by the Central Council for Physical Recreation but by landowners who wish to see access to their land put back on a proper legal footing."—[Official Report, Second Reading Committee, 14 December 1983; c. 6.]
      I think that I said that the words "I believe" were akin to a rather weak affidavit on the part of the Solicitor-General, and that those words were not the firmest that he could have used if he had been confident that he would have the support of the Central Council for Physical Recreation.
      In due course we returned to the matter in Committee, but the Solicitor-General was quite satisfied that the clause, without any amendment being made, was "clear, unambiguous and helpful."
      In reply I said that he had pitched his flag rather high. I said that I would be pleased if the fears that I had expressed carried the message of the Central Council for Physical Recreation, the National Farmers Union, the Country Landowners Association and the Law Society and that there would be "great joy in heaven" if they were so satisfied with the Solicitor-General's observations that they withdrew their objections. I invited them so to do.
      The sky tonight is black with chickens coming home to roost. I have received a letter from the CCPR which states:
      "I regret that we are still most unhappy regarding the wording of clause 2 despite the reassurance given by the Solicitor-General. In fact, because this problem has been highlighted we
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      are fearful that landowners will be even less likely than before to grant access if in levying a charge to cover expenses they run a risk of being unable to contract out of liability for injury, etc."
      The Country Landowners Association differs in its view from what the Lord Chancellor said on Report in another place. He said that if one started charging one would be in difficulties because, broadly speaking, the activity would become a business activity.
      The Solicitor-General was much more robust. In Committee he said:
      "There will be cases of a small charge being made which might go to the gardeners' benevolent fund or to pay the wages of a gatekeeper who controls entry onto the land or into gardens. No one could sensibly say or would ever suppose that the occupier is thereby running a business."—[Official Report, Standing Committee J, 2 February 1984; c. 8.]
      I do not wish to intrude into the private grief of a conflict between the Lord Chancellor and the Solicitor-General, but the divergence of views does not assist those who must use and rely upon the clause. They are the people for whose benefit it is intended. The idea was to remove the anxiety, to ensure clarity and to ensure that the Government did good, not by stealth but openly. Unfortunately, having tried to do good, the Government have not satisfied the Country Landowners Association because it says:
      "Unless the amendment is made, CLO (and NFU, which supports this amendment) will not know how to advise their members; perhaps their advice should be to be safe rather than sorry."
      The National Farmers Union said:
      "we would like to place it on record that we do not consider his answer to the criticisms of Clause 2 to be adequate, because the Clause is concerned with very special circumstances."
      Earlier, it said:
      "If any occupier is in doubt as to his position and he is properly advised, he will refuse access for recreational or educational purposes rather than risk potentially costly litigation over a question which is likely to be of little or no consequence to him financially."
      Three out of the four bodies which I invited to give me an assurance that would have put me at my ease failed to give that assurance. If they had given that assurance, I should have been satisfied. The only body which did not rise to the bait was the Law Society. Perhaps, since the Government are proposing to give conveyancing rights to bankers, building societies and others, it has greater things to contemplate. It cannot be that the Government have failed in their mission, a worthy one, of seeking to allay anxiety, of seeking to avoid the unintended consequences of the Unfair Contract Terms Act and to ensure that people have access to the countryside. It is regrettable, however—it will remain the case unless an amendment of this kind is accepted—that those fears remain.
      Mr. John Heddle (Mid-Staffordshire): I feel greatly outnumbered this evening. I am not a lawyer, nor am I qualified to discuss the legal definition of "a business". I am a mere surveyor, but I joined the right hon. and learned Member for Aberavon (Mr. Morris) in tabling the amendment because I am a member of the legal and parliamentary committee of the Country Landowners Association.
      The right hon. and learned Gentleman said that the sky was not blue. I think that it is; indeed, in my view the economy is getting bluer by the day. It is certain, however, that the law is not black or white, and it is in an effort to ensure that the law becomes more clearly defined that we tabled the amendment.

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      The spirit of clause 2 is to amend, and perhaps more closely define, the terms of the Unfair Contract Terms Act 1977 so as to exclude from its strict liability provisions the situation where an occupier allows access to premises and is able to contract out of liability should those premises be opened up and used for educational and recreational purposes. In that event, the occupier will be able to contract out of liability for accidental damage occasioned to people who are invited on to premises, for example to look at a country house, at its contents or at the farming methods.
      The problem that arises is whether his intention is to carry out that activity—to invite on to premises members of the general public for educational and recreational purposes—for business purposes, which means for profit, or as part of his intention to educate those who do not readily have access to agricultural holdings, country estates, and so on.
      It seems that the definition of "a business" as drafted is somewhat vague. Perhaps when he replies the Minister will advise me—and so advise members of the Country Landowners Association—whether he feels it should be left in its vague definition as at present, or whether that vagueness should be tightened so as to make the legal definition of "a business" more black and white.
      Under clause 2 as drafted, the occupier will not know whether he can safely levy a charge for access to premises to enable the general public to look at the contents. For example, if he levies a charge he will be faced with the decision whether that charge is for a business activity or is simply to defray out-of-pocket expenses to cover the outgoings necessarily incurred in making those premises available to the general public.
      What happens if the occupier makes a profit, perhaps inadvertently? What happens, for example, if more people than he anticipated decide to take advantage of the facilities that he is offering to the general public for educational and recreational purposes? I understand that the word "business" suffers from a surfeit of conflicting definitions. Not being a lawyer, I do not know what those definitions may be. I only know that in Committee my right hon. and learned Friend said something along these lines: "There will be cases of a small charge being made which might go to the gardeners' benevolent fund or to pay the wages of a gatekeeper who controls entry into the land or gardens." No one could sensibly say whether those charges would go towards defining the business, or recreation and education purposes, as being a business in the legal sense of the word. There seems to be an area that is grey rather than black and white. I defer to my right hon. and learned Friend, but I ask him to consider whether it would not be better to have a more precise definition of what a business really is in the context of opening country houses, farms, estates and other premises that are used for recreation and education purposes, and for that definition to be built into the Bill.
      10.15 pm
      An occupier at one end of the scale who is in the "recreation business" should not benefit from the exemption from the 1977 Act. Obviously a person at the other end of the scale who gratuitously allows access should surely be able to benefit. What about the many who own farms and estates who fall within the two broad
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      categories? It is for them, who make up the broad membership of the NFU and the Country Landowners Association, that I thought it appropriate to append my name to the amendment.
      I started by saying that I am not a lawyer, but I am sure that, as in all other matters, lawyers will have the last word. I look forward to the honeyed and pearled words of wisdom of my right hon. and learned Friend.
      Mr. Andrew F. Bennett: I support the amendment. Somehow the law and recreation do not seem to fit together especially well in the United Kingdom. When I first became a member of a local council I became aware of the problems that were experienced with open spaces around schools. All the open spaces carried notices telling people not to trespass on them. When I made inquiries of the education department I discovered that it did not matter to it whether children went on to the land. The notices had been erected to satisfy lawyers in the legal department that, as long as notices were displayed telling people not to go on to the open spaces, the local authority would not be liable if youngsters used the open spaces and had an accident. That was the approach of the legal boffins.
      The Bill has entered the House largely because of the fear of landowners that if they allowed the public to climb on rocks, to pothole or to participate in water sports, they could become liable for accidents suffered by individuals because they had allowed them to go on to their land.
      I was out climbing recently and I stopped at a farm to ask whether it was all right to leave my car at the edge of a farmyard. I asked the farmer whether it would be in his way and, secondly, whether I could climb on to some of his rocks. He explained that he did not like giving permission for such things because he had been told by a lawyer who advised the NFU that if he said it was all right for someone to park his car and to climb on his rocks, he might be liable for any damage done to the car or for injuries if an individual happened to fall while climbing.
      I hoped that the Bill might make the present legislation much clearer. I hoped that it would make it clear that if people went mountaineering or rock climbing on someone's land, or if they went potholing or engaged in water sports on a river or lake within someone's land, the owner of the property would not be liable for any accidents they incurred. I understand that the main part of the Bill is designed to make that clearer, but within clause 2 we come to the problem of the possibility that someone who charges for something which is ancillary to the activity, or in some instances is necessary for it, may become liable for accidents that occur. I have not come across anyone who has had the cheek to charge for someone to climb on to rocks, but it is fairly common for people to charge for car parking on land close to where people climb. If a farmer charges someone to park his car on a field and firmly says that the charge is for car parking, I am not sure whether the owner of the land, under the Bill as it stands, is liable for accidents which occur while that person goes rock climbing. That would be absurd. If there is doubt in the legislation, it may encourage some farmers who do not wish to encourage rock climbing to be especially cautious.
      I could repeat the same arguments for potholing. There are the same problems. It is rare for farmers to charge someone to go down a pothole on their land, but it is common for them to charge for car parking, which is ancillary to the potholing.

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      The position is different with water sports. Frequently, a small charge is levelled for people to go fishing or boating. Usually, the justification is that it is necessary to maintain the waterway by providing drainage, repairing banks and carrying out other activities. It is important that it is made clear that, if people are providing services enabling water sports to be provided and are making a profit not necessarily from the water sport but from car parking and the provision of refreshments, they are not liable for any accidents.
      I am sure that people who go into the countryside for recreation—whether for climbing, potholing or water sports — are well aware that they are responsible for their own safety. They accept that it is their responsibility to apply for insurance. If they feel that the landowner has done something that makes the area less safe, for instance by putting barbed wire across fences which people have a right of way to cross, or by putting bulls in the field, they believe that the landowner should be liable. They would not want the landowner to be liable for actions which they had chosen to carry out. They would not want legislation that would discourage landowners from making rock faces, potholes and water areas available. I hope that the Solicitor-General can assure us that the legislation will not leave any ambiguity or the possibility that it will be more difficult for people to enjoy the countryside.
      I support the amendment. I hope that the Solicitor-General will accept the amendment or give assurances that the law will be clear and will encourage, not discourage, the use of the countryside.
      Mr. Gerald Bermingham: The Bill as drafted leaves open the question of the hon. Member for Mid-Staffordshire (Mr. Heddle) about what is meant by a business activity. While that question remains open, people who occasionally allow the use of their land on open days and for visits by a school or other groups to a farmyard—that is necessary for children who live in urban areas if they are to see anything of the countryside—or who let part of their farm or estate need to be thoroughly protected. That is why I support the amendment moved by my right hon. and learned Friend the Member for Aberavon (Mr. Morris).
      We should all like greater access to and use of these facilities. The matter has been discussed at length. If, after the Bill has been considered, people still have the same concerns and reservations about the use of facilities such as estates and farms, it is only right that the House and the Government should take note of what they are saying. Those people are speaking from experience and saying that the Bill as drafted fails to meet the problems which they foresee. There is a risk to those who allow occasional use of their land, whether for a small charge or no charge. They still face the risk of liability for incidents that might occur through no fault of their own when that land is used.
      The amendment is extremely simple and clear. I hope that the Government at this late stage will have the courage to accept that the wording is better than that in the Bill. It removes doubts and makes the situation such that all can understand it. I should have declared an interest at the beginning of my speech, in that I am a solicitor. There is nothing worse than passing an Act of Parliament that is left so wide open that, as with the current law, lawyers can play on the accidents and injuries of others. Surely it is not too much to ask the Government, even at this late stage, to accept the amendment, which removes that possibility
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      and means that ordinary people are granted greater access to the countryside. It also enables landowners to open up their land to many more citizens, without risk or worry on their part.
      The Solicitor-General (Sir Patrick Mayhew): I am grateful to hon. Members who have taken part in this short debate. It is one of those debates in which we find ourselves on common ground on the objective, which is that landowners should not be deterred by any provision of the law from granting access to their land for purposes of recreation or education. The possibility that they will be deterred is based upon the fact that the Unfair Contract Terms Act 1977 prevents people — I put this in shorthand—from excluding their liability for negligence, including the negligence referred to in the Occupiers' Liability Act, in circumstances in which people, in this context, are upon their land for business purposes.
      The Unfair Contract Terms Act was passed by Parliament. It was an all-party measure that won general agreement because it had for long been thought unfair that by putting a clause into one's contract, one could avoid liability for harm that befell someone through one's negligence and failure to carry out obligations to others. The Act had the unintended effect that people who, out of a sense of public obligation or sheer kindness, had previously allowed people to come on to their land but had sought to exclude liability in respect of harm that befell oncomers through the condition of the premises were advised that they should no Longer do so.
      The Law Commission thought about the matter because my noble and learned Friend the Lord Chancellor referred the issue to the Law Commission after the well-known case of Herrington, in which a boy of six was injured on the live rail of a railway after he had trespassed on to the railway, having reached the line by getting through a broken-down fence from a recreation field. The railway was found liable. There were five separate speeches in the House of Lords. Unfortunately, although they were unanimous about the right result, they arrived at it by slightly differing routes. That case therefore created some uncertainties about the exact state of the law. Everyone hopes that we can now overcome the fears that have led to the withholding of access. There is no disagreement about that. Nor—if I may say so to the right hon. and learned Member for Aberavon (Mr. Morris) —is there any difference between what I said in Committee, or what I am about to say now, and what my noble and learned Friend the Lord Chancellor has said on the question of a charge.
      10.30 pm
      The Lord Chancellor said:
      "I now come to the amendment of my two noble Friends. This question of a charge for entry is a red herring. I have taken advice about it since, and I was right in what I said in Committee-namely, that it is a factor which is relevant in the context of the whole facts of the case but it is not conclusive either way." — [Official Report, House of Lords, 8 November 1983; Vol. 444, c. 707.]
      That is also the essence of what I said in Committee.
      The amendment is identical in its terms to one moved in the House of Lords. I share its objectives of trying to make the statutory provision crystal clear. There should be no grey area, as my hon. Friend the Member for Mid-Staffordshire (Mr. Heddle) has said. However, in trying to do that, the amendment creates new difficulties. First,

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      it introduces two elements not in the existing clause—the express reference to a charge, and the replacement of the concept of access
      "within the business purposes of the occupier"
      by the idea of the granting of access itself constituting commercial activity.
      An identical amendment was moved in the other place, and two other amendments to similar effect have also been considered during the passage of the Bill. On the earliest of those occasions the Lord Chancellor said that a charge was relevant but not conclusive. It is relevant because the ordinary purpose for which one charges money for entry on to land or for carrying on activities on it is likely to be a business purpose—but that is not necessarily so. The idea of the business purpose is the key to the matter. That is the expression used in the Unfair Contract Terms Act, and the scheme of the Bill is to add to section 1(3) of that Act these words:
      "but liability of an occupier of premises for breach of an obligation or duty towards a person obtaining access to the premises for recreational or educational purposes, being liability for loss or damage suffered by reason of the dangerous state of the premises, is not a business liability of the occupier unless granting that person such access for the purposes concerned falls within the business purposes of the occupier."
      Whether a charge is levied is a matter to be taken into consideration, but it will not be conclusive one way or the other as to whether that is a grant of access
      "within the business purposes of the occupier."
      It is a matter for consideration, but it is only one consideration, and I do not see merit in making a specific reference to it in the Bill.
      As so often, hon. Members are expecting too much from legislation. One cannot sensibly try to legislate to cover every possible factual circumstance. One has to legislate in terms of a concept and to rely upon members of the public — and, if it comes to it, the courts—to judge, using common sense, whether the facts of a case fall within that concept or outside it.
      An example was raised by the hon. Member for Denton and Reddish (Mr. Bennett). In the use of a car park, if a charge is made reasonably to meet the cost of providing hard standing for cars in which people travel to look at famous limestone crags, for example, that is plainly not a business purpose of the landowner who generously makes his premises open to the public for that purpose. If, however, the car park charges form part of a great leisure complex which is a substantial source of income to the landowner who makes money commercially out of the leisure opportunities that his premises afford, it falls into a completely different category. It is not possible, for reasons that I hope I shall illustrate shortly, to specify in black and white terms exactly what the circumstances will be in every case.
      If the amendment were accepted, section 1(3) of the Unfair Contract Terms Act 1977 would contain the following two expressions side by side — "business purposes" and "commercial activity". Section 1(3) reads:
      '(3) In the case of both contract and tort, sections 2 to 7 apply (except where the contrary is stated in section 6(4)) only to business liability, that is liability for breach of obligations or duties arising—

      (a) from things done or to be done by a person in the course of a business (whether his own business or another's); or

      (b) from the occupation of premises used for business purposes of the occupier;

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      and references to liability are to be read accordingly.'
      If we import into that subsection the concept of commercial activity, we shall give rise to more difficulties than it is the intention of the sponsors of the amendment to get rid of. I am not sure what is intended by any distinction, but when there are different phrases in one Act of Parliament the courts must assume that they have different meanings. I confess that I do not envy the judge who, if the amendment is accepted, would be put to the task of examining the difference between "business purposes", which is already in the Act, and "commercial activity". That is a difficult matter for a court to determine, especially when there is no guidance as to what distinction is intended. Nor would I envy the unsuccessful litigant who had taken the issue to the courts and had ultimately to pay the costs, perhaps as far up the chain as the House of Lords.
      I acknowledge that it is a matter of regret, as the right hon. and learned Gentleman said, that the Country Landowners Association and the National Farmers Union are not yet satisfied that the matter is beyond doubt. It is also regrettable that we cannot make matters black and white, as my hon. Friend the Member for Mid-Staffordshire would have preferred. However, that is not possible and one gets into much more difficulty if one tries than if one concentrates on a concept such as "business purposes" which has done service for the past six years, has given rise to no difficulty and has occasioned no known case of a matter being taken to the courts for interpretation. It is better to build on a known and tried concept than to introduce a new concept in the same section and expect the two to live side by side without giving the courts any idea of what distinction is intended.
      Therefore, I fear that I must ask the House to reject the amendment. It is not a case of not having the courage to accept an amendment at this late stage, as the hon. Member for St. Helens, South (Mr. Bermingham) said; it is a matter of considerable thought, as my noble Friend made clear in another place. He went back to the parliamentary draftsman and put the matter to him. He asked whether there were grounds for misgivings. At the end of his speech he said:
      "I say quite seriously to the three noble Lords who have spoken that I have gone into this matter with very great care, absolutely conscientiously, without any kind of preconception that I am always right, or anything like that. I have been advised that I am right, and I still think that I am." — [Official Report, House of Lords, 8 November 1983; Vol. 444, c. 707.]
      It would be nice if any of us could say that more often.
      I say with great respect to the advisers of the important institutions, to whose opinions we pay great attention, that it does no service to their members or to the public who seek access to land for educational or recreational purposes to continue to harp upon fears that have received very authoritative consideration in another place. If I felt that there was any real means by which this legislation could be made clearer, I would be happy to accept an amendment.
      For the reasons that I have given, perhaps at undue length, I am satisfied that the amendment would do more harm than good. That alone is the reason why I must advise the House to reject it.
      Mr. John Morris: The fact that the Lord Chancellor says three times, "I am right, I am right, I am right" does add much greater weight than had he said it only once. We are duly impressed.

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      The Solicitor-General is right to criticise the words "commercial activity". I have no special attachment to any form of words. I am not the father of these words; they come from the organisations concerned. I make no apologies on that score because I have tried two other forms of words, with the same object in mind as that of the Solicitor-General and the Lord Chancellor. I have tried with three different forms of words to achieve certainty, but at the end of the day the siren voices from the organisations concerned make me unhappy. It may be that they are wrong and the Solicitor-General is right to tell them, "Go forth and give courage to your members". On the other hand, they may be right. In due course the courts may punish those who rejected the advice of the associations and followed the advice of the Solicitor-General. We know not.
      Mindful of the fact that not only did the Lord Chancellor say "I am right" three times but the Solicitor-General said in Committee, "I am right, too", and has said it again tonight, I hope that the statement five times of "I am right" will mean that the object of giving certainty has been achieved. That is our common purpose. I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Order for Third Reading read.
      Queen's and Prince of Wales's consent having been signified—
      10.43 pm
      The Solicitor-General: I beg to move, That the Bill be now read the Third time.
      During my remarks a few moments ago I think that I adequately explained the purpose of clause 2 of the Bill. However, some of what I said — about the Law Commission—is appropriate to clause 1 rather than clause 2. It shows the care with which the Lord Chancellor has taken into account the fears that have been expressed. It will reassure the House if I say that both on the detailed wording of the Bill — our debate a few moments ago centred on the terms used—and on its broad purpose, which is set out in clause 1, considerable care has been taken by the Law Commission and by my right hon. and learned Friend the Lord Chancellor.
      The first objective of the Bill derives from the Law Commission's report on liability for damage or injury to trespassers and related questions of occupiers' liability issued in 1976, of which it implements parts Ito IV. The second is to effect an amendment to the Unfair Contract Terms Act 1977—a piece of legislation which might at first be thought remote from the world of occupiers' liability but which had an unforeseen and undesired consequence in the restriction of access to countryside by landowners.
      I have sufficiently, as did the Committee on the Second Reading procedure, followed through the history of this legislation. It is enough to say that the recommendation of the Law Commission, endorsed by the report of the Royal Commission on Civil Liability and Compensation for Personal Injury — the Pearson commission — finds its form in clause 1. I dwelt a little upon that in the previous debate.
      We have discussed clause 2, and I shall not repeat my remarks. It is sought through clause 2 to amend part of the Unfair Contract Terms Act and thereby once again to underwrite the opening of the countryside to those seeking access for recreational or educational purposes. Clause 2
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      does not seek to relieve from liability those occupiers whose granting of access falls within their business premises; nor should it do so. Those who do so from a sense of public obligation, or from kindness—they are many — should be free to exclude liability by taking their circumstances outside the ambit of the 1977 Act's business liability. The Bill achieves that.
      Those are two modest but worthwhile objectives, and I urge the House to give the Bill a Third Reading in that spirit.
      10.47 pm
      Mr. John Morris: I endorse the latter remarks of the Solicitor-General that this is a modest and useful Bill. The House will be grateful for his careful explanation, even at this late hour, because our other proceedings were in Committee and the world at large should hear what the Bill intends. In Committee we canvassed some of our fears about clause 1. Unfortunately, I visualise that there may be some resort to litigation, although the Government are seeking, in accordance with the recommendations of two commissions, to codify the common law and the five different and somewhat divergent ways in which the Law Lords reached their conclusion.
      We debated clause 2 a moment ago. It is a matter of regret that the certainty and the helpfulness which the Government hoped would be instilled into this area of ensuring that people have access to the countryside, and that those who were generous enough to afford such access would not run undue risk in so doing, are not yet plain. My fears remain, but the heart of the Government is in the right place on this matter, if on no other, so I advise the House to give this modest but worthwhile Bill a Third Reading.
      10.49 pm
      Mr. Andrew F. Bennett: I support the Third Reading of the Bill, hoping that it will achieve the objective that everyone has claimed for it, which is to encourage and make easier access to recreational facilities in the countryside. Although the Bill has gone through both Houses without much controversy, I hope that if it is found not to work the Government will bring it back at an early stage to make alterations that will meet the real problems.
      I also hope that groups such as the Country Landowners Association and the National Farmers Union will he able to go to their insurers and get an insurance policy which is cheap, or which might even be included in the membership of the two organisations, to cover their members who carry out the provisions of the Bill in the spirit in which we have discussed the measure. If the lawyers do not come up with a solution, perhaps the insurers can draw up a policy to cover the matters about which we have been concerned and, because it is such a small risk, do so in a way and at a cost that will not discourage those who are opening up their land to access.
      With those points met, I hope that the legislation will work. Most important, I hope that providing access will not lead to accidents, whoever may or may not be liable for them.
      Question put and agreed to.
      Bill accordingly read the Third time and passed, without amendment.

    STATUTORY INSTRUMENTS, &c.

      LOCAL LOANS
      Motion made and Question put forthwith pursuant to Standing Order No. 79(5) (Standing Committees on Statutory Instruments, &c.)
      That the draft Local Loans (Increase of Limit) Order 1984, which was laid before this House on 26th January, be approved.—[Mr. Garel-Jones.]
      Question agreed to.

  Street Prostitution
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]
  10.51 pm
  Mr. Tom Cox: The Adjournment debate this evening is on a subject that I have often debated in the House. I have lost count, over the years that I have been an hon. Member, of the number of debates and questions in which I have been involved that have brought to the attention of Ministers this problem in my constituency. Indeed, as long ago as when Mr. Alexander Lyon was the Under-Secretary of State for the Home Department, he met a number of residents from my constituency to discuss with them the problems that they faced from street prostitution.
  Prostitution in part of my constituency has been a problem for many years. The experience that women of all ages, including school girls, face day in and day out from the individuals who come to the area seeking to pick up prostitutes are invariably degrading and disgusting. The remarks and the threats are faced all the time. Equally, the experiences of local residents when they express their views to both the women and the kerb crawlers who are seeking them are disgusting. There are threats to local people from the pimps and minders who can be clearly seen in the area. Windows have been broken. In one case of which I am aware, a car was driven at a person. We are in no doubt who does such things. Parents find contraceptives outside their homes or in the car parking spaces where young children often play, and that is just another example of the problem. The list of the incidents that I could give is endless.
  Locally, I have had many meetings with the police and residents over the years. We accept that the police know of the problem and have sought to help, but we also know that they have had, and still have, manpower problems. I give them credit for drafting more officers into the area. Moreover, the women then move out and and it seems as though the problem is partly solved. However, we are then told by the local police that there is not evidence of prostitution on the streets in the area and they cannot therefore keep as many officers in the area doing such work. So the problem continues. The problem is not only in my area, but in many other areas such as London, Nottingham, Manchester, Birmingham, Southampton, Norwich and Leicester.
  I have here a press cutting of 24 June last year, which highlights the problem in Luton. So, sadly, the problem exists in many parts of the country.
  Last October, the problem was tackled in a different way. Nottingham police, who had suffered from the problem for many years, acted under a law that goes back hundreds of years. They took action against the kerb-crawlers under the Justice of the Peace Act 1361. Following that action and the success in the courts, other police forces took similar action. I welcome that, because at long last something is being done to try to rid areas of the problem.
  In London, the police operated under a different Act—the Metropolitan Police Act 1839, giving the right to take action regarding insulting behaviour that is likely to lead to a breach of the peace. I welcome that action, but I am far from happy with it.

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  We are trying to deal with a modern problem—the kerb-crawler — with laws that go back hundreds of years. I understand that most of the people who have appeared in courts have pleaded guilty, but a time will come when someone will plead not guilty. The case could well go to appeal, possibly even to the High Court. What the outcome will be, only time can tell. I am in no doubt—and when I speak to senior police officers I find that they, too, are in no doubt—that this will ultimately happen. No one — neither the Home Secretary nor anyone in the Home Office—can be happy with the present position.
  I put it firmly to the Minister that it is an abnegation of responsibility on the part of a senior Government Department, in dealing with a major problem in many parts of the country, not to seek to introduce a more modern law to tackle this problem.I do not have the figures in the cities that I mentioned of the number of offences that have been taken to the courts under soliciting for prostitution. However, I have the figures for my area. They highlight how drastic the problem now is in my constituency. In 1981, there were 145 convictions for soliciting. In 1982, the number had risen to 313. In 1983, the number had risen to 802. I suggest that similar figures could be given for all the other areas where prostitution is a problem. There is a problem, and no one denies it. Nor, I am sure, will the Minister dispute it. Unfortunately, the problem is getting worse. When I am told by senior police officers in my area that women who operate in the area can earn up to £600 a week, I realise that it can be a very profitable way of life.
  In December 1982, we had the report of the Criminal Law Revision Committee on offences relating to prostitution. The report clearly stated that the public wanted action to try to stop the problem, which, as I have said, exists throughout the country. In paragraph 344, it says about the kerb-crawler:
  "this offence should be punishable with one month's imprisonment or a fine of £1,000 or both".
  In the past, I have been told by successive Ministers—in the last Adjournment debate that I had on this subject it was the present Home Secretary who replied—that we would have to wait for the report. I have also been told that there could be problems in taking cases to court for conviction. Like many of my constituents, I refuse to accept that. If the Home Office is prepared to allow police forces up and down the country to take such people to court under laws that go back hundreds of years and that were not introduced for such an offence, it is inconceivable that it should say that, despite what the Criminal Law Revision Committee has suggested, there will be problems, so it cannot consider that point very seriously. I beg the Minister not to give me that sort of reply tonight.
  From the figures that I have given, it is clear that the situation has become worse. After all, how would the Minister feel if, when he got home, his wife told him that she had been accosted by a kerb-crawler who had asked how much she wanted for him to have sex with her? I am sure that he would be revolted by the fact that his wife had been through that experience. However, it happens day after day and night after night to women in my constituency, irrespective of their age.
  Kerb-crawlers come into my constituency—and into all the areas that face this problem—from the early afternoon until the early hours of the morning. The local
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  residents who attempt to voice their concern and to get such people out of the area are abused and threatened, as I have said, by the very people who live off prostitution. Some time ago I wrote to the Home Secretary about this issue, and he told me that he was not in a position to interfere with the actions of the courts. That may be so. However, the Home Secretary and the Lord Chancellor have made their views known to judges—and I have welcomed it—who have tried rape cases. Local people have complained that such people have been dealt with appallingly leniently given the offences that they have committed.
  Fairly recently, someone was charged at the local South-Western magistrates' court with living off immoral earnings. That person pleaded guilty and was fined £100. I bet that frightened that guy! I bet he shuddered when he heard his sentence. Therefore, I ask the Minister to consider that point. The time has come to introduce legislation under which the police can act. The cost in police manpower in those areas where the police are now acting must be enormous.
  I have outlined the problem in my area. I see the hon. Member for Southampton, Itchen (Mr. Chope) in the Chamber, and I am sure that he, along with many other hon. Members, could echo my remarks. We do not want any more expressions of concern. We do not want anyone to tell us to be patient because the problem will go away in time. We know that it will not go away in time. Therefore, we look to the Home Office to introduce a meaningful law to rid those areas of a problem that they have to live with day in and day out.
  The Minister and I know the Wandsworth Borough News very well, because it circulates in the borough that we represent. A statement by a senior local police officer appears in that newspaper this week. Talking of a meeting with local residents about the problems of prostitution in the area, he said:
  "Until a law is passed in Parliament which specifically allows us to arrest kerb crawlers the problem will never be solved."
  There speaks a senior police officer with responsibility for dealing with the problem. He sums up what I believe to be true, as do the vast majority of my constituents who have to live with the problem day in and day out.
  We accept that there must be discussion of the proposals by the Criminal Law Revision Committee. We beg the Minister to give us hope that in the foreseeable future meaningful legislation will be introduced to allow the police to take the action that they wish to take and which will once and for all rid such areas of the problem with which we have had to live for so long.
  11.5 pm
  The Under-Secretary of State for the Home Department (Mr. David Mellor): I am grateful to the hon. Member for Tooting (Mr. Cox) for giving us the opportunity once again to consider this important matter. It is a particular pleasure to me to reply to the debate since the hon. Gentleman is the senior Member of Parliament for the London borough of Wandsworth and I am one of the two junior Members. For me this is a local issue as well as being of national importance. Genuinely, and not in arty sense piously, I say that representing a neighbouring constituency I have noted the brave and determined stand that the hon. Gentleman has taken on the issue. I hope that in my response I shall show how important I regard his comments.

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  In the fight that the hon. Gentleman has sustained for so long, he has been well supported by local councillors. I am glad to see in the Chamber two former members of that council who are now hon. Members of the House—my hon. Friends the Members for Glanford and Scunthorpe (Mr. Hickmet) and Southampton, Itchen (Mr. Chope) —not in the latter case merely because of an interest in Wandsworth but because he has similar problems in his constituency.
  The hon. Member for Tooting has the support of his constituents and I understand the distress that they feel about the issue. We are under no illusions about the nuisance caused by prostitutes soliciting in the streets, or the genuine distress experienced by respectable and law-abiding residents who live in the vicinity of red light areas. This is particularly so in Bedford Hill where large numbers of prostitutes congregate and, through their presence, encourage large numbers of equally undesirable people who kerb-crawl and become involved in other offensive behaviour in their quest for prostitutes.
  It is clear that for some time the Bedford Hill area of SW12 has been an established haunt for street prostitutes. There is ample evidence, I am sad to say, that in recent years the number of women engaged in this activity has greatly increased.
  The hon. Gentleman rightly quoted the prosecution figures which show the extent of soliciting in the area. In 1980, 116 women were charged with the offence and 369 were cautioned. By 1982 the figures had risen to 318 charges and 676 cautions. Last year the figures were 802 charges and 415 cautions. That is evidence of the increased prostitute activity in the area and of the welcome increase in police attention to the problem.
  The hon. Gentleman was right to say how we would feel if it were members of our families who were insulted by the offensive behaviour that this activity involves. I can well understand how the residents of Bedford Hill feel about it, and I know that the consequences for them are very unpleasant indeed. It is clear beyond peradventure that many innocent women have been subjected in error to offensive overtures by the influx of largely car-borne men seeking the services of prostitutes and that the streets are made unsightly by great quantities of litter left by the men and women, a number of them items that one would not want members of one's family to come across.
  I also understand that, over a period of time, this obviously leads in the minds of residents to a general lowering of the tone of the area and that that works to the detriment of the whole area and, indeed, can gravely damage property values and so on. Plainly, people are right to be particularly concerned about their children.
  It is with pleasure that I can report to the House the activities that the police and the community have taken over a protracted period and the success that has been achieved in dealing with this issue in recent months. Until early in 1982, the police in the Tooting area had attempted to contain the problem by cautioning and, if need be, arresting prostitutes whenever offences came to light in the course of normal patrol. Additionally, from time to time as information about offences came to light, they proceeded against those persons who acted in control of prostitutes or managed brothels.
  But in the latter part of 1982 and in early 1983, in response to the rising number of prostitutes and growing
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  public concern, police action was stepped up. Considerably more police resources were deployed in the area against vice generally and street prostitutes in particular. Foot patrols were increased and the number of arrests rose, as I have demonstrated.
  Unfortunately, however, neither the overall number of prostitutes nor the level of their activities changed, and this was obviously deeply disappointing to the police and the local community; indeed, frustrating for those who had made such great efforts to bring about an improvement. Residents formed ad hoc associations and spokesmen arranged public meetings to discuss the subject so that the local community could be mobilised against it. Street meetings were held and local residents patrolled the streets in small groups, airing their feelings and trying peacefully to dissuade prostitutes and their followers from frequenting the area.
  In the final months of 1983, the police introduced a new line of action aimed at deterring prospective clients and, in particular, kerb-crawlers. It is not without significance that it is a relatively recent phenomenon that attention has focused on those who come to seek the services of prostitutes, not merely on the prostitutes themselves and those who are involved in the business of operating and controlling prostitutes.
  Police patrols were intensified and a proportion of officers were deployed in plain clothes. The police sought to involve the community to an even greater extent in these activities; meetings were held with officials and so on, and it was accepted on all sides that there was need for a really concerted effort. A marked police patrol van was deployed daily in the area as a centre of operations, so that there was a contact point for the public and visible deterrent to offenders.
  The major weapon that the police are using to deter the kerb-crawler—one which they believe has been most effective—is publicity. Since the inception of this latest campaign, every possible use has been made of national and local press, radio and television publicity. Happily, the work of the police and the community has been given wide coverage. Names and addresses of convicted offenders have been published in newspapers local to the areas in which they reside, and similar information has been published in The Standard and national daily newspapers.
  It is, therefore, pleasant to be able to report to the House that the Commissioner of the Metropolitan police informs me now that the overall picture in Bedford Hill is, for the first time and after all this effort, beginning to give some cause for satisfaction to both police and public. This happy situation has prevailed for the past three or four weeks. The number of kerb-crawlers has been reduced from literally hundreds daily at the beginning of the campaign to only a handful on most occasions recently. Officers employed on the prevention of vice have reported that the level of activity has greatly reduced. Arrests of prostitutes continue to be made in significant numbers. Eighty were arrested in the first six weeks of the year, but that is a reflection of the heightened police activity. The ratio of arrests to the number of prostitutes frequenting the area is much higher than before. The number of prostitutes on the streets is now down to a low level. The Commissioner intends that police action should continue at the present level and in the manner that I have described for the foreseeable future. The effort that has been made, now that it has had such results, must be maintained and, indeed,

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  will be sustained. I am sure that the House will agree that credit must be given to the Metropolitan police, in association with the community and the hon. Gentleman, for the efforts that they have made.
  Rightly, the hon. Gentleman was not merely concerned with the problem in his own constituency. He cast his net wider to the national scene, and I, too, shall direct myself to the more general question of prostitution. Loitering and soliciting for the purposes of prostitution carry a fine for first offenders of £50 and for subsequent offenders of £200. By the action of the Home Secretary announced today, taking effect in May, the fines will be doubled. I hope that the courts will not hesitate to impose heavy fines where it is clear that a business is being operated and only a heavy financial penalty will do.
  It was the clear wish of the House of Commons, expressed in Committee when the 1982 Bill was passing through the House, that imprisonment should be removed as a penalty for soliciting for prostitution, and that was done. I am bound to say that the penalties for those who control prostitutes, or live off immoral earnings, are rightly very high. Seven years' imprisonment is the maximum for each of these offences. I hope that the courts will not hesitate to use the powers that Parliament has given them to deal severely with those who are running a business out of these girls and causing distress thereby.
  We must address ourselves to the prostitute and those who control her and the kerb-crawler, and it is to the kerb-crawler that I wish to devote the remainder of my remarks. We do not underestimate the nuisance and annoyance, and the fear, that are placed in the minds of those in areas such as Bedford Hill when droves of men descend in cars and start openly touting for the services of prostitutes, propositioning respectable women as well as those who are involved in the trade.
  We must balance the factors that would militate both for and against the creation of a new offence. There is a real difficulty in catching kerb-crawlers who are the clients of prostitutes and differentiating them from others who may be innocently pulling up their car to ask for directions or something of that sort. If they are hauled before the courts, let alone convicted, a terrible threat could be posed to their future careers. If there is to be a specific criminal offence, we shall need to ensure that it is carefully formulated. I am sure that I take the hon. Gentleman with me when I say that.
  I recognise that this issue must be examined with care and with a sense of impetus. It is true that there are many
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  other areas apart from Tooting which suffer from the problem. We have the 1361 Act and, to some extent, the Public Order Act 1936. These measures have been employed with great effect in Tooting, where there were 34 convictions against kerb-crawlers in the last three months of 1983, and in other parts of the country. However, the hon. Gentleman is right to question, as did the Criminal Law Revision Committee in its working paper, whether in the longer run this is the appropriate way of dealing with the problem.
  I do not need to remind the House that the law in this area is being considered by the Criminal Law Revision Committee. It produced a working paper at the end of 1982 which proposed no fewer than three offences on kerb-crawling. It was not its final report. It was a working paper designed to stimulate a public response. It proposed that it should be unlawful for a man to accost a woman from a motor car for sexual purposes so as to put her in fear, to accost her for sexual purposes so as to cause her annoyance, or to accost her for the purposes of prostitution.
  The committee will shortly be re-examining these proposals in the light of the comments that it has received. In deference to the hon. Gentleman, I wish to say clearly that I recognise the importance that is attached to receiving its concluded recommendations. I have therefore asked the committee, bearing in mind the widespread concern, to give us its views on this issue as soon as it possibly can. I thought it right to ask Lord Justice Lawton whether the committee would find it possible, because of the particular concern that attaches to kerb-crawling, to bring forward its report on kerb-crawling in advance of its more general report on prostitution. I am glad to say that he has responded to this request extremely positively, as one would expect, and as a result we may expect to see the committee's final recommendations on kerb-crawling by the autumn. When we have the recommendations we shall all be in a position to know how best we should proceed. I assure the hon. Gentleman that we shall want to consider the recommendations with great care. The concern that he has expressed has not fallen on deaf ears.
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at twenty-one minutes past Eleven o'clock.