European Community (Developments)

HC Deb 26 January 1984 vol 52 cc1075-146

[Relevant document: Cmnd. 8838, "Developments in the European Community, June to December 1982."]

4.52 pm

The Minister of State, Foreign and Commonwealth Office (Mr. Malcolm Rifkind)

I beg to move, That this House takes note of the Report on Developments in the European Community, January to June 1983, Cmnd. 9043.

Mr. Speaker

I have selected the amendment in the name of the Leader of the Opposition.

Mr. Rifkind

It has been the custom to debate developments in the European Community on the basis of reports tabled in the House. As the House will be aware, there are two such reports at present, one of which in normal circumstances would have been debated some months ago but for the unexpected intervention of the general election, which made its debate inappropriate. I hope that it will be for the convenience of the House to discuss both reports today.

The period in question is July 1982 to June 1983—a period packed with important developments in the Community, concluding with two especially important occasions, the Stuttgart summit and the British general election when the electorate repudiated by an overwhelming majority the Opposition's call for Britain's withdrawal from the Community. I shall not dwell on that point, because I do not wish to intrude on private grief. I appreciate the sensitivities of the hon. Member for Livingston (Mr. Cook) and his colleagues in not wishing to discuss it.

Several important decisions were made at the Stuttgart summit, one of which was the approval of the United Kingdom refund for 1983 of about £430 million. That refund, together with the refunds for the previous three years, means that during the Conservative Administration a total of £2.5 billion has been refunded, which is equivalent to about two thirds of our unadjusted net contribution. That is a tremendous achievement for which the Government can take credit, and it compares favourably with the inability of the Labour Government during their five years in office — despite having, in their words, "renegotiated" the terms of our membership of the Community—to obtain a single pound of refund for the United Kingdom. It would not be unfair to describe the Labour party's approach to those matters as the Opposition's zero option. That has been their record so far, and it would no doubt be the case if they came to office again.

The sums due are normally paid within the financial year, and both sides of the House were gravely disappointed and concerned by the decision of the European Parliament to put the appropriate sum into the reserve chapter of the Community budget. The Community is not in default at present, and a similar although not identical problem a year ago was resolved within the appropriate time.

Mr. Teddy Taylor (Southend, East)

The Common Market is in default because it has not paid us the £42 million that was due on 31 December. As we always understood that the Government would act firmly on default, will my hon. Friend tell the House what they are doing about the default of 31 December?

Mr. Rifkind

I was talking about the refund of £430 million. As to the sum which my hon. Friend mentioned, my right hon. and learned Friend the Foreign Secretary has already written to the European Commission pointing out the facts to which my hon. Friend drew attention and stating our desire that the Commission should introduce proposals to resolve the problem. We treat this matter seriously, and it is our firm desire that both matters should be resolved in the way that I have mentioned.

Mr. Taylor

The Foreign Secretary wrote to the Commission on 3 January stating that it was in default by £42 million. Is not the House entitled to know whether he has received a reply and, if so, what sort of reply?

Mr. Rifkind

The House is entitled to know that. My right hon. and learned Friend has not received a reply. We await it as eagerly as does my hon. Friend.

Mr. Tony Marlow (Northampton, North)

My hon. Friend will appreciate, as will the rest of the House, that if moneys are paid late, they incur interest charges. Will Her Majesty's Government insist that, when we get this money, we also get interest for the use of that money during that period?

Mr. Rifkind

Perhaps I may take my hon. Friend's remarks one at a time. We are anxious to ensure that the sums due for 1982 and 1983 are paid, and we expect the European Parliament to take the necessary action to allow that to happen during this financial year.

The Stuttgart summit was one important event referred to in the report, but it would be wrong to omit at least some reference to other major developments during that period in which the House will have an interest. One of the most important was the resolution of the long-standing common fisheries policy. The ability of the Community to reach a conclusion, which has been accepted by all British fishing interests, was a major achievement not only in the details of the agreement, but especially because it showed that the Community can adapt a policy that was devised for a Community of six to meet the requirements of a Community of ten. That is an important precedent which shows that, where the will exists, it should and will be possible to reach agreement on other matters that were devised for a smaller Community.

The reports also refer to the important new rules of the social fund, which enable about 75 per cent. of the funds available to be allocated to young people in the Community. The regional fund has been adapted so that it now recognises, for example, the economic and social problems of Northern Ireland. It has provided generous sums for urban renewal in Belfast, which I hope will be especially welcomed by hon. Members from the Province.

Mr. Nicholas Budgen (Wolverhampton, South-West)

We welcome the special funds for Northern Ireland, but does my hon. Friend recognise the proposition that those who pay the piper should be entitled at least to inquire into the tune? In those circumstances, is it not likely that the EC will wish to inquire into the political institutions in Northern Ireland before it makes available extra finance?

Mr. Rifkind

Agreement has already been reached on generous grants for urban renewal in Belfast, with no suggestion of the conditions that my hon. Friend mentioned. The functions and responsibility of the Commission and the Community are well known in the House and in Brussels. We lose no opportunity to ensure that neither the Commission nor the European Parliament goes beyond its properly defined area of responsibilities.

An important matter during the period covered by the report was political co-operation. Both in regard to the middle east and preparatory matters for the conference on security and co-operation in Europe in Madrid, the Community spoke with a single voice. Sometimes within the Community we do not realise the importance that the rest of the world attaches to the fact that Europe can speak with a single voice on international issues. It is of benefit not only to Britain but to wider European interests. Therefore, it is something that we wish to encourage.

I mentioned earlier the Stuttgart summit. The conclusions reached there were not just in regard to the refund. They looked forward to the long-term reform of the Community and led to the Athens summit in December. The results of that summit were an overwhelming disappointment to this country and to the whole of the Community. It is important and worth while to make two observations on that summit. In the past in the United Kingdom we have often been tempted to assume that whenever there is a crisis in the Community, or the Community has been unable to reach agreement, that has been purely on issues in which Britain has taken a special interest. It has often been assumed that when there has been disagreement, Britain has been on one side and the rest of the Community has been on the other.

Whatever truth there might have been in that in the past, that would be an unwise and inappropriate way to describe the Athens summit. At that summit a substantial agenda included issues other than those in which Britain is particularly interested. The agenda included not only the common agricultural policy and reform of budgetary arrangements, but enlargement of the Community, the future of monetary compensatory amounts, new policies and other issues in which Britain is interested but does not take a prime part.

Mr. Marlow

In regard to enlargement of the Community—a very important subject—will my hon. Friend confirm that the Government's view on the accession of Spain and Portugal would be dictated purely by the interests of the United Kingdom? Will he undertake to tell the House, before any decision is made, what will be the cost to and the effect on employment in the United Kingdom of the accession of Spain and Portugal?

Mr. Rifkind

The criteria which are relevant to the accession of Spain and Portugal are the economic considerations that my hon. Friend has taken into account and the political consideration that Spain and Portugal are now democratic countries. There have been expressions of opinion from both sides of the House, as well as from other Community countries, to the effect that the democratic institutions in Spain and Portugal would be greatly strengthened by their membership of the Community. There is no doubt that the Governments of Spain and Portugal take the same view. I also agree with my hon. Friend that that does not mean that they should be given a blank card in regard to membership. Serious negotiations are taking place. The United Kingdom and other members of the Community wish to ensure that the economic and financial implications of enlargement of the Community are reasonable and can be accommodated without undue damage to other interests of the kind to which my hon. Friend has drawn attention.

Mr. Robin Cook (Livingston)

I hope we can begin the proceedings pleasantly by making non-partisan points. The Minister will be aware that accession to the EC involves accession to Euratom, and Spain is not a party to the non-proliferation treaty. Membership of Euratom would, of course, entitle Spain to access to nuclear technological information, which would be contrary to the non-proliferation regime. There is no precedent for a non-nuclear weapons state acceding to Euratom. Will the Minister assure the House that the Government will use their influence to encourage Spain to become a party to the non-proliferation treaty before it is allowed into Euratom?

Mr. Rifkind

I assure the hon. Gentleman that the British Government and the Community as a whole are well aware of that point. If the problem is to be resolved, it will be done either by Spain becoming a signatory to the non-proliferation treaty or by other arrangements that would take account of the point to which the hon. Gentleman has drawn attention.

As I have said, some of the issues covered at the Athens summit were not ones in which Britain has been specifically a front runner. Equally, if one considers the various issues on which there was inability to reach agreement, one finds that on each of these issues there were different groups of countries on each side. For example, Britain was one of the majority strongly in support of enlargement of the Community for the reasons that I have indicated. The future of MCAs is primarily an issue between France and Germany, with other countries having a lesser interest. In regard to the future of the common agricultural policy, Britain and the Netherlands have a similar outlook on the need for reform, whereas on budgetary issues it is Britain and the Federal German Republic that see eye to eye. Therefore, there is no permanent group of countries on one side on all the issues, with Britain either by itself or in a tiny minority on the other side. It is appropriate that each issue should be considered on its merits. That is the sensible way of doing it.

As the Athens summit was such a failure, the responsibility for determining how to proceed falls primarily on the French presidency. France has indicated that its main interest will be in pursuing a procedural path of regular Council meetings with a series of bilateral meetings between individual Governments. We have no objection to that approach, although we have emphasised the importance of maintaining an overall umbrella control of the process of negotiation because, if success is to be achieved, it will be—

Mr. Doug Hoyle (Warrington, North)

The point that the Minister has been making is that we are always calling for reform, whether through enlargement of the Community, or by reconsideration of the budget or the CAP. Will he explain what the chances are of getting any of these things?

Mr. Rifkind

I shall be dealing with some of those points. I have already said that we are not isolated on any of them. We have the support of some countries on some issues and of other countries on others. The whole movement of opinion is increasingly in our direction. Up to the time of the Stuttgart summit there was unwillingness to accept the need for reform of the common agricultural policy or to deal with budgetary imbalances. Since Stuttgart that has not been in dispute, and we are seeking a solution that is acceptable to all countries.

The two main outstanding issues are the common agricultural policy and budgetary imbalances. On the CAP, perhaps one of the most curious aspects is that it has to some extent been a victim of its own success. A policy that was initiated largely to ensure guaranteed supplies to consumers and a greater degree of self-sufficiency and to protect the legitimate interests of the farming community has, because of the dramatic increases in productivity, through technological advances and other forms of incentive, produced vast surpluses in some areas and the increasing risk of surpluses in others with which we are all familiar.

All hon. Members will recognise the legitimate interests of the farming community. I believe there is an increasing body of opinion in the Community that shares the British Government's view that those interests cannot be safeguarded simply by ever-increasing surpluses that are expensive to maintain and equally expensive to export. Such exports often conflict with the wider global interests with which the Community should be equally concerned.

The British Government's approach is to advocate what we have referred to as a strict financial guideline—that, at the beginning of each financial year, the Community should decide the amount that is available for agricultural expenditure. That is not a radical measure or a dramatic change. [HON. MEMBERS: "Oh."] I am glad that the fact that it is not a radical measure appeals to Opposition Members. There is not a Government in the Community who do not believe in at least trying to control their own expenditure. If that is true for individual Governments, it should be true for the Community as a whole. If it is true for the Community in regard to total expenditure, it should be equally true in regard to agriculture, which represents such a high proportion of Community expenditure.

Sir Nicholas Bonsor (Upminster)

If such a solution as my hon. Friend puts forward is adopted, the income of farmers in this country, which, as he well knows, has already fallen substantially over the past three years—Opposition Members will know that I speak as a farmer and therefore have an interest in and knowledge of the subject—will fall further, and farming will no longer be a viable industry.

Mr. Rifkind

My hon. Friend rightly draws attention to what I have already referred to as the legitimate interests of the farming community. What is the appropriate way of safeguarding those interests? I do not think that the majority of members of that community would say that there is a logical or sensible argument for continuing to build up huge surpluses for which there is no market either at home or abroad. That cannot be the appropriate way forward, and I think that most reasonable people would accept that view.

If a strict financial guideline can be agreed, specific decisions will also have to be taken on individual commodities. The British Government's approach is based on a firm pricing policy, guaranteed thresholds and the avoidance of some of the proposals for new forms of revenue-raising in the Community, such as the oils and fats tax which has been proposed by the Commission, which we believe to be highly inappropriate for a number of reasons.

Mr. Nigel Spearing (Newham, South)

Does the Minister agree that the crucial issue in respect of EC and, therefore, common agricultural policy finance is whether the financial limits are set by the Finance Ministers at the Finance Council before the Agriculture Ministers take the decision? Is he aware that the evidence given to the Select Committee by his hon. Friend the Financial Secretary to the Treasury showed that until now those decisions have been taken, in effect, by Agriculture Ministers. not by Finance Ministers? Does he accept that that is the root of the problem?

Mr. Rifkind

The hon. Gentleman raises a fair point, and it is one that the British Government have emphasised. Our proposals envisage a strict financial guideline being determined and the Agriculture Ministers taking their decisions on individual commodities within the framework within which they know they have to operate. That would ensure that proper control was exercised. If it were believed at any time during the year that, for reasons beyond control, a supplementary budget was required, the issue would have to go back to the Council for a seperate decision. We believe that there would have to be a unanimous decision if it were to be recognised.

The other main problem that has to be resolved is that of budgetary imbalances. There has been a substantial change of opinion. My understanding is that all member states within the Community recognise the existence of the problem and the need to do something about it. The most obvious exampleof how artificial, absurd and arbitrary the existing arrangements are is that if, as many of us hope, Portugal joins the Community while the existing rules apply, and does so without any special provision, it will have the dubious pleasure and privilege, as the poorest member of an enlarged Community, of joining the United Kingdom and Germany and becoming the third largest net contributor to the EC. Any system that produces such an absurd and artificial consequence, however unintended, requires reform, and that is something that we have emphasised.

Some of our partners suggest that in seeking reform we are pursuing what is referred to as juste retour—that we are expecting to get back from the Community exactly what we put in. That has never been the Government's position. We have always argued that the system must be fair and equitable, and that if there is any element of redistribution within the Community, the only defensible basis for it is a movement of resources from the more prosperous members to the less prosperous members that is not artificial and arbitrary.

We have argued for a safety-net system that would ensure that the maximum net contribution of any one country would take into account its relative prosperity within the Community. We do not believe that such a system would meet the British situation, but we consider it to be a solution that would be, or should be, acceptable to other member states. The problem is not peculiarly a United Kingdom one, although the United Kingdom may have taken the lead in pointing to a suitable way forward.

Mr. Budgen

Will my hon. Friend explain why the richer states might wish to make contributions to the poorer states? Is there a new mood of EC socialism abroad?

Mr. Rifkind

My hon. Friend's caution — and suspicion—is by no means unusual, and it is natural for him to express it. If there is to be a system that involves net contributions from certain states, the maximum contribution forthcoming from any one state should take account of its relative prosperity within the Community as a whole. That is a system in which even my hon. Friend would not have too much difficulty in acquiescing.

Mr. Marlow

My hon. Friend has set out the principle of a safety net. Many right hon. and hon. Members probably go along with that. What is President Mitterrand's view about that?

Mr. Rifkind

Over the past few months President Mitterrand has suggested that he accepts that there is a need to resolve what is sometimes referred to as the British problem. He has said in recent weeks, especially at the Athens summit, that the solution should continue for a certain period. M. Cheysson, the French Foreign Minister, repeated that view while addressing the European Parliament. The British Government take the view that any acceptable solution to the problem must have certain essential ingredients. We say that the solution must be durable; in other words, that it must last for as long as the problem continues, and that it must provide a degree of relief that is commensurate with the burden that countries such as the United Kingdom experience. We also say that it must apply automatically each year. We cannot have a solution which has to be approved annually by the European Parliament or the Council of Ministers. Annual approval would again bring the difficulties that we have experienced over the past few years.

Mr. Budgen

Does my hon. Friend intend to say something about the own resources problem? It seemed that he might conclude his speech by saying nothing about it. An important statement appears in the Stuttgart declaration, which is dealt with at page 44 of the White Paper, "Developments in the European Community January-June 1983", where our Government agreed to agree measures which, taken as a whole, will avoid the constantly recurrent problems between the member states over the financial consequences of the Community's budget and its financing. Does that mean that the only way in which the problem can be solved automatically is to increase own resources? Is that what the Government have in mind for the future?

Mr. Rifkind

The Government have made it clear that they will be prepared to consider an increase in own resources, provided that there is an acceptable solution to the problem of budgetary imbalances and the control of agriculture expenditure. We believe that the linkage between the two makes a great deal of sense. The member states which are the most anxious to have an increase in own resources are those which are seeking to change the decision that was taken in 1970 to set up the own resources system, which is the main contributory factor to the budgetary imbalances problem that we now face. These factors are all part of the same problem, and it is not unreasonable that there should be a link of the sort to which I have referred.

We wish to resolve these problems so that the Community can give more attention to its future and to many of the new policies that many would like to see. Some of the new policies that are occasionally advanced may involve an element of increased expenditure, but there are many ways in which the Community can and should develop that would involve no extra expenditure and represent substantial savings for all member states.

I draw attention, for example, to a speech made by Commissioner Christopher Tugendhat in Glasgow in September 1983, in which he said: it has been estimated that the total cost of passing intra-Community frontiers is at present around £6.75 billion a year which is about half the total cost of the Community budget. Preliminary calculations by the Commission suggest that the cost of frontier formalities could be equivalent to between 5 and 10 per cent. of the actual value of the goods before tax. I have spent some time on the details of the Government's policy on the Community and its developments. I am bound to say that, so far, although we are now more than half a year away from the general election, we have no detailed knowledge of the Opposition's policies on many of these matters. For example, immediately after the election, the Opposition abandoned their commitment to withdraw from the Community. Indeed, so anxious were they to abandon that commitment that some of them gave the impression that they wished they had never had it in the first place. They should have recalled Churchill's dictum — that a politician should never commit suicide, as he might live to regret it. That happened to the Opposition, and it is an experience from which they must take great discomfort. Although we welcome the withdrawal of that Opposition commitment, we are entitled to ask, "How complete a. withdrawal is it?"

We saw an extraordinary conflict of comments between the Leader of the Opposition and the deputy Leader of the Opposition on withdrawal. The present Leader of the Opposition, writing in The Guardian on 18 July last year. said: By 1988 Britain will have been in the Common Market 15 years. That will not make withdrawal impossible—it will obviously remain as a constitutional right for all member countries. The Leader of the Opposition emphasised that it remains a constitutional right to be used in the last resort. The deputy Leader of the Opposition, also writing in The Guardian—that paper seems to be the repository of all Labour wisdom—on 8 August last year, referring to the comments that I have just quoted, said: To say 'we retain the constitutional right to withdraw' from the Community is either to say nothing or to say something so damaging that its implications ought to be fully understood and described in precise language".

I remind the House that those comments were made, not when the two right hon. Gentlemen were Leader and deputy Leader of the Opposition, but when they both aspired to leadership of the Labour party, and therefore did not feel the need to agree with each other on every issue. Perhaps the deputy Leader of the Opposition no longer feels able to express his views in quite such robust language. However, we are entitled to ask the Opposition what their views are, for example, on the future of the common agricultural policy. We know that they do not like it, but with what do they want to replace it?

Reference has been made in various speeches to a deficiency payments scheme. Have the Opposition ever tried to cost that? Do they seek it just for Britain, or for the Community as a whole? Have they any support from any other member state or Socialist party in the Community for a policy of that nature? What is their policy on budgetary imbalances? Do they support the Government's policy, and will they give it all the support that they can?

The amendment tabled by the Opposition today is a disgrace. It has little relevance to the Community. It shows the Opposition's passionate desire to avoid any debate on the Community and to use every occasion, both in the House and in the coming European Parliament elections, to concentrate solely on the national economic policy of this Government. We do not mind debating that, but it reveals the bankruptcy of thought of the Opposition on these issues.

Mr. Robin Cook

Rubbish.

Mr. Rifkind

The hon. Gentleman says, "Rubbish." I had the benefit of reading the article that he wrote in The Times two days ago, when he informed his leadership that he was about to start on a series of provincial speaking engagements on Europe that stretches right up to the blessed relief of Euro polling day in June". We shall have a veritable Cook's tour — [HON. MEMBERS: "Oh!"]—but at least the other Cook's tours have been privatised. I wish the hon. Gentleman had been privatised.

The hon. Gentleman also said in the same article that he does not trust the House of Commons to be the repository of his wisdom on matters of this kind. He said: Why then do I embark on this extended peregrination? There are two answers. The first is that it is likely to be more fruitful than Parliament. The House of Commons is a civil place in which to debate, but there is little chance of winning converts there. The hon. Gentleman is a man of little faith. If we cannot be the repository of his views on details of the Opposition's policy on the EC, we hope that on this occasion, or during his extended tour of the United Kingdom, he will expand on these matters.

Mr. John Prescott (Kingston upon Hull, East)

it is a perfectly proper form of electioneering.

Mr. Rifkind

Indeed. But normally a debate in the House of Commons on the European Community should be seen as at least a relevant occasion for the Opposition to explain their policy. If the amendment is anything to go by, we cannot assume that. It contains no reference to the CAP. It makes no reference to budgetary imbalances. It makes no reference to any of the issues covered in these reports or to the subject of the Athens or Stuttgart summits. It shows the extent to which the Opposition, because of their internal divisions, wish to avoid any detailed comment on the European Community.

When the hon. Member for Livingston and his colleagues speak for their candidate in Chesterfield, we shall be interested to hear their pronouncements. Mr. Benn made his position clear. In the House, on 21 February last year, he said: the British people will break with the treaty of Rome". —[Official Report, 21 February 1983; Vol. 37, c. 684.] Unlike the hon. Gentleman and right hon. Gentlemen, he has not changed his views on that subject. Presumably, he will fight the by-election as a politician who is committed to withdrawal from the Community. Will Opposition Members support him in that view? If not, will they make that clear to the electorate? That is something that we and the electorate are entitled to know.

I end on a more cheerful note than the problems faced by the Opposition. Many people express their disappointment — it is understandable — and distress about the difficulty that the Community has faced in recent years in reaching agreements on many of the matters that need to be resolved. Although it is a matter of disappointment, it is not a matter that depresses or surprises me. We are dealing with a group of countries which, for hundreds of years, have solved their problems by shooting at one another, by regular wars and by internecine conflicts. If the Community finds it difficult, by the mere process of negotiation, to resolve all its problems in as short a period as we would wish, it may be a matter for disappointment, but it should not be a cause for significant depression. It was pointed out to me recently that the United States, when it first came into existence in 1776, took 16 years to agree on a common currency, and that it took a further 50 years for that to become a reality. If that was the case for a group of territories with a common language and history, and without any background or desire to retain national sovereignty—

Mr. Robin Cook

The Minister is making a bold analogy. If he relies on that analogy, will he say whether he sees Europe ending up with the same degree of federation as the United States— if necessary, with a major war along the way?

Mr. Rifkind

No, we do not want anything of the sort. I am making the perfectly valid point, as the hon. Gentleman is intelligent enough to realise, that if a group of territories, with a common language and without any history of national sovereignty or desire to preserve their national sovereignty, nevertheless takes several generations to agree on a common currency, it is not surprising or a cause of depression on the part of most reasonable people that the Community—consisting, as it does, of 10 nations which wish to preserve their national sovereignty and which have a history of division and different historical backgrounds—takes a considerable time to reach agreement on this matter.

The most encouraging sign is that the people of the United Kingdom and of the Community as a whole believe more strongly than ever that if western Europe is to make progress in the interests of the prosperity and well-being of its people, it requires success within the European Community. Her Majesty's Government will do all in their power to make that a reality.

5.29 pm

Mr. Robin Cook (Livingston)

I beg to move, at the end of the Question, to add 'and regrets that within the period under review Her Majesty's Government has continued to pursue in the institutions of the EEC the same negative and destructive policies in industry and the economy which have caused so much damage in the United Kingdom, and the same regressive and divisive social policies which have widened inequality and injustice in the United Kingdom.'

I find it quite extraordinary that, after yesterday's exchanges on the Foreign Secretary's answer concerning the meeting of the Foreign Affairs Council and after December's debate on the budgetary contributions and the common agricultural policy, when the House witnessed divisions within the Conservative party, the Minister should choose to taunt the Opposition about being divided. Moreover, he substantiated his claim by grubbing around for quotations that are now six months old or, in the case of Mr. Benn, the future right hon. Member for Chesterfield, a full one year old. When the Minister comes to the crunch question—inviting the House to approve an increase of the Community's own resources or, more appropriately, our tax payments to the Community, I suspect that he will find that the Labour party will be united. In his heart he must know that it is improbable that the Conservative party will also be united.

Viscount Cranborne (Dorset, South)

The hon. Gentleman seems to have shifted the ground of the crunch question which my hon. Friend asked him. Will he support Mr. Wedgwood Benn's commitment to take Britain out of the EC during his campaigning in Chesterfield? He owes it to the House to tell us whether he will support that commitment.

Mr. Cook

It is plain that Conservative Members are anxious for Mr. Tony Benn's return to the House. Even when he does not have a seat they cannot debate this subject without referring to him. Mr. Benn—I am glad that Conservative Members anticipate his success in Chesterfield—will stand on the same platform that I and the leader of the Labour party endorsed at conference. He put his name to that platform as a member of the national executive committee. That platform was presented unanimously to conference. Moreover, the platform employed exactly the same phrase that the Minister quoted my right hon. Friend the Leader of the Opposition as having written in an article. There is no distinction between the document to which Mr. Benn put his name in October and my right hon. Friend's article, which the Minister quoted. I shall campaign with enthusiasm for the election of Mr. Benn in Chesterfield. We look forward to his election.

Viscount Cranborne

Does the hon. Gentleman agree with Mr. Benn?

Mr. Cook

The hon. Member for Dorset, South (Viscount Cranborne) will be aware that I am standing at the Dispatch Box as the spokesman for the Labour party. I speak to Labour party policy which was approved at conference on a draft which was approved by Mr. Benn. It defeats me how the hon. Gentleman perceives a distinction between my supporting that policy and Mr. Benn drafting that policy.

Viscount Cranborne

The hon. Gentleman wants to avoid my question.

Mr. Cook

The hon. Gentleman dislikes the fact that there is not a difference where he thought that there was one and is now shifting his ground.

The White Paper deals with the period January to June 1983. The Minister rightly suggested that Opposition Members would prefer to forget some of what happened in that time. I concede that without hesitation. However, I was surprised that there were some events in that period which the Minister chose to remember with pride. I was especially struck that he took credit for the approval of the common fisheries policy. I am not sure that that approval is shared by the fishermen of Scotland and England. Indeed, under the CFP our trawler fleet has been more than halved. Moreover, Hull, which used to depend on the trawling industry, no longer has one trawler.

Only yesterday we had a meeting with the Scottish Fishermen's Federation in another part of the House. A spokesman for the federation, in a striking though perhaps perplexing metaphor, described the CFP as a jungle which we cannot see through. I am happy to campaign until June, though possibly not in landlocked Chesterfield, on the basis of the damage that has been inflicted on our fishing fleet—that affects all constituencies which include a coast — by the Government acceding to the CFP.

Many points in the White Paper lead on to what has happened since June 1983. One of the surreal features about debates such as this is that there is a six or seven month gap between the period that we are debating and the debate. The White Paper takes us no further than Stuttgart. It is interesting how developments covered by the White Paper have run into the sand. We look forward with eager anticipation to reading the White Paper that covers the period July to December 1983.

My plea is that we are not kept waiting for four months before we debate it. We can expect that White Paper's publication in the spring. I hope that the Minister will show a greater sense of urgency in arranging for the House to debate it so that we can discuss developments that took place between July and December 1983 before the European elections. In view of the quickening crisis in the EC there is a quaint irrelevance in our debating developments seven months in arrears. However, that practice has the advantage that we can see what was expected and compare and contrast it with what has happened.

We debated the budget contribution last month. We are due to debate the 1984 budget soon. I take this opportunity to remind the Minister that we have not forgotten about that debate. I shall therefore confine myself to comparing how much developments since the publication of the White Paper have fallen away from the promises that were held out during January to June 1983.

At paragraph 5.13 of the White Paper we learn: negotiations would be taken forward urgently". In the past seven months we have seen exactly what urgency means in terms of Council of Ministers' agenda. We can compare what happened with what was promised when the Prime Minister spoke to the House immediately after Stuttgart. She said: we not only achieved a settlement of the British refund for this year but also made encouraging progress towards a long-term settlement". — [Official Report, 23 June 1983; Vol. 44, c. 146.] It is interesting that the Prime Minister used the past tense. With regard to the first clause in that statement, the Prime Minister might have achieved a settlement but she has plainly not yet achieved payment. We are still awaiting one penny of the refund which she assured us was settled in June 1983. Moreover, we cannot receive it until 31 March at the earliest because the European Assembly has frozen it until then.

The Minister asked, perfectly properly, whether the Opposition support the Government in this matter. I shall answer him directly: No, we do not. We think that the time has arrived for the Government to withhold part of our 1984 contributions because of the EC's failure to repay our 1983 refund. It is extraordinary that we should have commenced our first payment for 1984 while we are still waiting for a penny of the 1983 refund.

Mr. Rowland Boyes (Houghton and Washington)

I am sure that the Minister is aware that one of the reasons why we are not receiving the refund from the EC is that the Conservative Members of the European Parliament did not support the resolution put forward in that Parliament to try to get it back.

Mr. Cook

I am grateful to my hon. Friend for that added information. He observed the circumstances first hand as a member of the European Assembly.

Mr. Robert Jackson (Wantage)

It is not true.

Mr. Cook

The hon. Member for Wantage (Mr. Jackson) will have an opportunity to intervene in due course. I understand that there is room for interpretation as to how Members vote in the Strasbourg proceedings. I remember that the same dispute occurred when the refund was dealt with last time, during which a dozen Conservative Members failed to vote, but subsequently claimed that they had. Doubtless the same confusion may exist on this occasion. I would welcome a statement from the hon. Member for Wantage, about whether he fully supported the movement by the British Labour Group within the Strasbourg Assembly to obtain early payment of the British refund. If so, did his colleagues support the movement for an early or immediate payment of the refund?

Mr. Jackson

The Conservative group put down, and voted for, its own resolution.

Mr. Cook

The hon. Gentleman will be aware that its amendments did not seek an early and unconditional repayment of the refund as did the amendment by the British Labour Group.

We have not obtained payment of the refund, which we were told was settled in June. Moreover, the Government have commenced payments to the EC for 1984, which they would have been well advised to withhold, rather than having to go through the same undignified cap-in-hand approach to try to get a refund later this year or early next year.

The second part of the Prime Minister's statement runs: we … also made encouraging progress towards a long-term settlement". Hon. Members will note the past tense.

The Minister referred to the recent statement by Mr. Mitterrand. He will also be aware of the similar statement by Claude Cheysson, on Wednesday last, who said: There is a problem, and it must be dealt with"— that statement, I agree, is progress. at least for a certain period.

That statement was made a full seven months after the Stuttgart meeting, when we were told that progress had been made in achieving a long-term settlement. The country that now has the presidency of the Council of Ministers has not accepted that there should be a long-term settlement. It seems that the French are unaware that we achieved progress at Stuttgart towards such a settlement. It is manifest that there is no prospect of the Government securing a permanent settlement of value within the immediate future.

We have reached the same impasse with the common agricultural policy. We would search in vain through documents issued in the past two months to find any impact on the thinking of the current presidency of the Council of Ministers' concerning reform of the CAP. I shall quote some statements from M. Cheysson's speech to which the Minister did not refer. He said: They must take account of social realities. I assume that he means southern French farmers. He also said: Community preference must be protected and strengthened which means, when interpreted into idiomatic English, that we must keep out cheaper food imports from the rest of the world. He also said: There should be an increase in levies on imports of some agriculture products which is a coded reference to an increased tax on oil, fats and margarines. One of the most objectionable features of the debate on the CAP is that it is seriously proposed that the poor should pay more for margarine to encourage them to consume more expensive butter. There is not much hint in the statements made last week that the Government have made progress in achieving reform of the CAP.

Mr. Rifkind

Will the hon. Gentleman state the Opposition's policy on this topic? Speeches have been made in the country which express the belief that a deficiency payments scheme for the entire Community would be appropriate. Is that the position, and if so, what costings have been made of its effect on European taxpayers?

Mr. Cook

I shall be happy to deal with that later. I wish to draw the attention of the House once again, as I did during the December debate, to the extent to which the word "reform" has vanished from the Minister's vocabulary. No one since Stuttgart has discussed reforming the CAP. Further progress was made towards vacuity during the statement by the Foreign Secretary at yesterday's Question Time in which he described one of his conditions for an increase in own resources as the effective control of agricultural and other spending".— [Official Report, 25 January 1984, Vol. 52, c. 914] and not reform of the CAP.

Mr. Robert Hughes (Aberdeen, North)

Selling the pass again.

Mr. Cook

The Minister has not yet sold the pass. My hon. Friend anticipates what he will do. The Minister is preparing the ground carefully and taking us by granny's footsteps towards the point at which he sells the pass.

Price restraint this year is welcome, but it has weaknesses and inadequacies. It is absurd, given the grotesque surplus of dairy products, that no proposal has been made to cut the support price of milk. During the past two years, in which the EC has supposedly attempted to cut milk production, there has been an increase in production of 4 to 5 per cent.

Mr. Wilkinson, the assistant to Mr. Tugendhat. said only last month that if the additional milk that has been produced since 1981—I am not dealing with the base level—were placed in a fleet of milk tankers it would stretch, bumper to bumper from London to Athens and back. Given that enormous milk surplus and the failure to control growth, surely we can expect in the annual price review, not merely a price freeze, but an absolute cut to diminish the surplus. Instead, we have the continued proposal to phase out the butter subsidy, which will have the daft and perverse efect of increasing the price of dairy products in Britain.

Mr. Jackson

rose—

Mr. Cook

I shall not give way. I understand the hon. Gentleman's impatience must be consuming him.

While the price freeze is welcome, it does not go far enough. Even if it did, and represented what the Foreign Secretary might accept as "effective control" over agriculture spending, effective control of spending within the CAP must not be confused with its reform. The basic lunacy of the CAP is that it insists on raising the price of food so that it can provide an adequate income for small farmers. To do that it has to raise the price to a level that consumers cannot afford to pay and above the level at which it can buy food in the outside market.

That has two predictable consequences. It means that the large farmers grow fat on the same high prices which are supposed to protect the small farmer. We are left with increasingly large surpluses as the fat farmers bring forth greater produce, which the consumers find more and more difficult to afford to buy. Food mountains are inherent in the structure. It obliges British consumers, including the 4 million unemployed, to subsidise Sir Henry Plumb, to give but one name at random.

We shall not accept that the CAP has been reformed until the burden of social support for farming income is shifted from the consumers' shoulders to where it belongs, on the broader shoulders of the taxpayer. We want the burden of social support—that is what is meant in terms of the small farmer's income—shifted to the national taxpayer. If the French choose, for perhaps good social reasons, to sustain large numbers working on small, uneconomic farms in the rural areas, that is a matter for them, but they must bear the cost of that policy. It is wrong to expect the British consumer to meet the cost of that policy in his bread basket.

Mr. Budgen

Does the hon. Gentleman agree that it would be better if that support for the farmer were paid for by an annual contribution, which can be discussed and complained about by those who pay for it, rather than by an increase in own resources, which would be automatic not shown in public expenditure figures, and which would thus put under the carpet the real cost of supporting the farming community?

Mr. Cook

That anticipates the point to which I am drifting. A happy event is coming our way. I do not regard it with the same gloom and doom as it is sometimes regarded by the Foreign Office or the Euro-fanatics. A moment of financial truth is dawning in the Community. It is about to bump up against the upper ceiling. That brings me back to what I said earlier about this year's price freeze. No one in the Chamber, including the Minister, can be in the least doubt that, had heads not been bumping up against that ceiling, we should have had not the price freeze, but the same spendthrift policies that have existed in previous years. That is why it is so essential that the financial ceiling is retained.

Mr. Jackson

When talking about future policy will the hon. Member for Livingston (Mr. Cook) please tell us how much discrimination against British producers he would be prepared to accept, in the name of social payments by other member states to their farmers, and by how much it would be necessary to cut the price of milk to achieve market balance?

Mr. Cook

Over a period the cut in the milk price would need to be significant. I do not deny that. The immediate effect of us saying that we are not going to continue the annual ratchet of further increases, but that we intend to look for a cut in the price to find what the market will bear, would be a signal to the whole of the agricultural industry, which hitherto has guided its produce to obtain the biggest subsidy and the fattest price through the CAP.

It is clear from what we have heard in the past few months in the Chamber that the Government are preparing to sell out on own resources. This is exactly the point on which they should not sell out. I hope that the Government will not put the House in the embarassing position of having to reject such an increase in own resources. Opposition to such a proposal will not come from the Labour Benches alone. I can, though, assure the Minister of support from the alliance Bench and I have no doubt that he will rejoice in its support. The hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) has said that there is a case for an increase in own resources. I assume, therefore, that the alliance will be prepared to vote for any increase, however tawdry the settlement.

We have the SDP record to guide us. We do not need to look to the future. One sixth of the parliamentary party was once President of the EC. The right hon. Member for Glasgow, Hillhead (Mr. Jenkins) had control over and responsibility for agricultural policy. It is worth reminding the House of what Agra Europe's director said when he attacked the right hon. Gentleman for his miserable failure to tackle the problem of farm surpluses". He said: absolutely nothing has been done by the Jenkins Commission to bring the problems of the Common Agricultural Policy under control. Those problems are, as they were in January 1976: increasing surplus of the major agricultural commodities, increasing costs of disposing of these surpluses, and increasing disparity between the incomes of the rural rich and the rural poor. The right hon. Member for Hillhead must take responsibility, but he has avoided coming to the Chamber to do so. Given that record of responsibility, I am confident that the right hon. Gentleman will vote with the Minister for an increase in own resources, however miserably the Minister has failed to achieve the two conditions. We shall oppose the Minister in the Lobby so that the social cost of agriculture policies can be transferred to national budgets, where they belong.

The Opposition have said repeatedly that one of the main objectives in reforming the CAP is to shift the balance of expenditure from agriculture to the other areas of Community expenditure. When we examine those other areas we find that some budgets are cast out in the shadows of CAP expenditure. For example, the regional programme receives 5.4 per cent. of the total expenditure, the social programme 6 per cent. and the research and energy programme 6.6 per cent. That compares with the 66 per cent. that goes on agriculture expenditure. Although we all say that those areas should receive more attention and more money—

Mr. Teddy Taylor

Who says that?

Mr. Cook

I should not have included the hon. Member for Southend, East (Mr. Taylor). I do not claim to speak for him, but I can claim to carry both Dispatch Boxes with me.

Mr. Budgen

If the hon. Member for Livingston (Mr. Cook) is in favour of increased payments from the social fund to this country, including Ulster, does he agree that, inevitably, that will result in interference in our domestic affairs because the Community will say that it will pay only when it approves of the institutions to which it pays money?

Mr. Cook

I accept that, of course, a degree of modification in this country's policies will be necessary to accommodate some of the expenditure required from Brussels. Some people in the country, and perhaps in the Chamber, might welcome modification under that pressure. I do not duck the principle. We pay too little attention to these areas of expenditure.

I shall begin by referring to the ESPRIT programme, to which reference is made in paragraph 6.8 of the document. Before Christmas I wrote to the Foreign Secretary about the Government's decision to withhold their contributions to ESPRIT. It is a programme to fund and facilitate collaboration and research in high technology by European companies. It is important for Europe. It is exactly the type of programme that is necessary if Europe is to respond collectively to the greater economic weight of the USA and Japan. It is also important to Britain because, despite the industrial dereliction of the past four or five years, Britain retains an important lead in high technology.

Of the 36 private projects designated under ESPRIT, no fewer than 21 involve United Kingdom companies. It is a matter of acute concern that the Government are blocking that programme. The reply that I received from the Foreign Secretary was pusillanimous. He sheltered behind the attitude being taken by the West German Government. I understand that at Monday's meeting the West German Government put forward a compromise to allow expenditure on the programme so that it could go ahead. Did the British Government accept that compromise, or do they still intend to block any funds for the programme — even though it is already one year behind schedule?

The sums involved are modest. The total programme, spread throughout Europe, will cost less than £200 million per annum. That is modest compared with the extraordinarily large sums that we pour into the maw of the CAP. It beggars belief that we can find billions of pounds to subsidise the dairy industry, but cannot find £200 million to support the information technologies of tomorrow. It is politically perverse of the Government to take that action because they are jeopardising much of the support that they might otherwise receive on issues of more central interest to the British case.

That negative attitude is betrayed in the White Paper in a number of other areas such as regional, social and industrial expenditure. There is a penalty for not using the funds positively, which is that we lose out on the very areas where we might wring some benefit—albeit small — from the great expenditure that we pour into agriculture in other European countries.

There is no better example of that than the Belfast project, which comes under the integrated operations programme described in paragraph 6.5 of the White Paper. Only two projects have been launched under that programme—one in Naples and the other in Belfast. Both projects were initiated for discussion at about the same time in 1980. They therefore provide us with something approaching a controlled experiment for judging the Government's success in obtaining funds compared with another member state.

The project in Naples is now in full swing. Expenditure is being made on infrastructure to provide sanitation, transport, training and industrial investment. About 15,000 jobs are being provided directly by the programme, and many thousands more by the construction associated with the programme. Approval was not finally obtained for the Belfast project until May 1983. There was a three-year delay in discussion while the haggling continued between London and Brussels. There was a spectacular piece of incompetence in that the British Government proposed to use almost all the expenditure on housing, only to discover after two years of negotiation that that was outwith the rules for eligibility of expenditure under the programme.

There is an unedifying contrast between the Italians, whose programme is in full swing, and the British who have taken the same time simply to reach the starting line—

Mr. Marlow

rose—

Mr. Cook

I shall not give way. I hope that the hon. Gentleman will agree that I have been generous in giving way. I must now make some progress with my speech.

I have sat through many previous debates with the Foreign Secretary in his previous incarnation as Chancellor of the Exchequer. When we debated the economy he was given to treating anything that happened in Italy with a certain sense of derision. Indeed, to suggest that the Italians were doing something in economics was to prove that there was no point in examining that idea. I find it a rather odd commentary on those many merry jests that I had to endure in our economic debates that we now find that the Italians have been successful in getting under way their project—which started at the same time as our project—substantially faster than us. It must be an illuminating comment on the failure of the current Administration to use positively the funds that would be of interest and value to the British people.

We can see that same attitude in the social fund. 'The White Paper provides a revealing illustration of the Government's priorities. In the three pages dealing with the social fund there is not a single mention of expenditure on the training of women, although the discussion on that took up a large part of the six months covered by the White Paper. It is not really surprising that the Government wish to draw a veil over that side of their activities. In 1982, of the expenditure on the training of women under the social fund Germany received 57 per cent., France received 23 per cent., Italy received 8 per cent. and Britain received 5 per cent. It is not surprising that the Government's failure to use the opportunity for the training of women has earned them the clear and overt criticism of the Equal Opportunities Commission.

That attitude betrays the Government's Victorian prejudices towards a woman's place in the work force. That prejudice was demonstrated in last July's rather sad debate, when a Minister deliberately mocked the consultative document on women's rights that he was obliged to introduce by an EC directive. That process of sham consultation is a familiar response by the Government to EC initiatives in that area. They did the same with the consultation document under the Vredeling directive. That document plumbs new depths of cynicism because it was accompanied by a press release showing that the Government are wholly opposed to it, and inviting evidence from business to support their prejudices.

I have no doubt that the Government will obtain such evidence. Some companies will supply them with evidence that is as tendentious as the press release that accompanied the document. They may even obtain evidence from Caterpillar which, two or three years ago, lobbied intensely in Strasbourg and Brussels against the directive. In 1981 that company wrote to Members of the European Assembly saying that there was no need for legislation to oblige it to give information to its employees because it already made a "substantial effort" to do that. On 31 August 1983, Caterpillar announced the closure of its Birtley works with the loss of 1,000 jobs, with no consultation whatsoever with the work force. The first that it read about the closure of its plant was in the local newspaper. That practical example of the extent to which working people were denied information about the future of their plant and of their company should weigh far more heavily in the scales than any mountain of paper of factitious responses that the Government get as a result of trailing their coat on the consultative document.

Nowhere in the European capitals is there more fierce resistance to initiatives than in London. Business Europe this month says that Dublin is "hesitant" about the directive, that Germany is "lukewarm", but that Britain is "vehemently opposed" to it. If in that area the Community faces semi-paralysis—to use the words of the Foreign Secretary—it it is because the Government block every positive move.

The tragedy is that we are denying our industry and our working people precisely those benefits that they could obtain in return for expenditure on French agriculture. The Government need not think that that failure will remain forever hidden by tough talking about the budget, especially as that tough talk appears to be ending in failure.

Nor are we surprised at the Government's attitude towards progress. After all, it is the same Government who have persistently undermined the rights of workers at home and abdicated their responsibility to intervene in the economy to protect the jobs of our workers. It is not surprising to find the same dogmatic prejudices animating their policies in Europe as animate their polices at home. Just as we condemn the damage that they have inflicted on society in Britain, so tonight we shall take pleasure in voting to repudiate the same policies that are damaging the wider European Community.

6.10 pm

Mr. Teddy Taylor (Southend, East)

We all enjoyed the speech of the hon. Member for Livingston (Mr. Cook), which was rather unusual. It did not entirely clarify our concept of the Labour party's attitude to the EEC, which is clearly still developing. It will be interesting to see where the Opposition end up.

We have had many of these debates. They are usually rather boring, except to the fanatics on both sides of the arguments, who always like to exchange insults. This debate is rather unusual in two ways. First, while in previous debates we have all aired our complaints about the Common Market and suggested what needs to be done without the slightest hope that we could achieve anything, we now have a chance of getting something done. The reason for that is simple: the cash is running out.

However, having read the report, and having listened to the Minister's excellent speech and other recent ministerial speeches, I am scared that we are about to throw away a unique opportunity to achieve reform which is open to us this year and may never be open again. If we accept the proposals to increase own resources and then to give power to European Parliament and others to increase the own resources element by further stages of 0.4 per cent., Parliament will lose an opportunity that we have never had before and may never have again.

Mr. Rifkind

My hon. Friend should be aware that the British Government and a number of other Community Governments have made it clear that in no circumstances will they agree to the Commission's proposal to enable the European Parliament to make further increases in the level of own resources. We have made it abundantly clear that at any stage any increase in own resources could be authorised only by a unanimous decision of the Council of Ministers ratified by national Parliaments.

Mr. Taylor

I am delighted to have that assurance, but I hope that the Minister will accept that even if we allow 1 per cent. to be increased to 1.4 per cent. and no further, the opportunity of achieving real reforms may not arise again for five, six or seven years. In the last 10 years we have not been able to achieve any reforms—although the Government achieved a great deal in getting rebates on our contributions — and there will not be another opportunity for some considerable time if we allow own resources to be increased.

My fear, like that of the hon. Member for Livingston, is that the Government not only do not seem to be hopeful of reforming the common agricultural policy but do not seem even to be asking for reform. I accept that it would be difficult to persuade the continentals to accept fundamental reforms of the CAP, but it is clear from the report and from the declaration adopted by the European Council in Stuttgart that all the countries of the Community agree that we are not in the business of looking for reform of the CAP. The wording of the Stuttgart declaration was that the basic principles of the common agricultural policy would be observed in keeping with the objectives of article 39 of the treaty.

The only reference in the statement is to adaptations and adjustments of the policy. The basic principles, which I think every Conservative would find deplorable if applied to any industry other than agriculture, have not been challenged. The Minister spoke well today and abandoned some of the silliness of previous debates. He should ask himself seriously whether it would be sensible for this country to ask for reform of the CAP, bearing in mind that it is an appalling policy which deserves to be changed. If during the negotiations we do not ask for it to be changed, we will certainly not get another chance.

The second major change has been the adjustment in the apparent policy of the Labour party. In all previous debates of the six-month periods, the Conservatives have said that the Common Market was the best thing since sliced bread and Labour Members have said that they want to get out quickly. The situation has been ridiculous. Government spokesmen have had to search for any possible trend, statistic or clue that might convince people that the Common Market is helpful to Britain—and on the Opposition side the reverse has been the case. We have read silly propaganda pieces — churned out by the Commission, the European Movement and sadly, on occasion, the Conservative party — about the massive increase in Japanese investment, the fact that food prices have not really risen much, and all our trade with the Community.

The Minister was very helpful. He did not engage in silly political points. I hope that in future debates we will not have to go through the nonsense of trying to find figures and statistics to prove what is not true.

Despite those improvements, what worries me is that, although we have been in the Common Market for 10 years, no attempt appears to have been made by the Government to quantify the real effect of membership. They have provided only slogans. Such an assessment would give us a clear idea of what our direction should be and what changes we should seek.

After 10 years in the EEC, and now that reform is a possibility, the Government should make a serious attempt to look at the reasons for, and implications of the alarming downturn in our trade with Common Market countries. In each of the 10 years before we joined we made a profit on manufacturing trade with the Common Market. In every year since we joined we have made a substantial loss in the trade in manufactures. It has now reached alarming proportions. In a parliamentary answer the other day, the Minister of State told me that even in the first nine months of 1973 we had a deficit of over £5 billion on trade in manufactures. We sold Europe goods worth about £11 billion, and Europe sold us goods worth over £16 billion.

There may be many reasons for that. It may be inevitable that as a member of the Common Market the United Kingdom is a peripheral part of a large area, and that manufacturing industry, investment and decision making will pour towards the centre of the Community.

Mr. Jackson

My hon. Friend's figures are correct and the trend is as he has described it, but one can draw quite different conclusions about their implications.

Mr. Taylor

That is why I want the Government to consider them. It may be that the trend is natural and cannot be altered. It may be caused by the extra cost of the CAP and the other consequences of membership. It may be caused by faults in British industry, which does not like dealing with countries where English is not the spoken commercial language. It may be that our investment has been wrongly directed.

The general view is that it is our fault—that the lazy British workers and hopeless British managers are to blame. If that is so, why is our trade with the rest of the world so good? Every year we make up for the horrendous deficit on our Common Market trade by substantial profits in our trade in manufactures with other countries. I hope that the Minister will accept—in the new atmosphere that prevails—that I am not trying to make an anti-Market point. The reason may have nothing to do with the Common Market. However, we must find out why our trade in manufactures with the Common Market has undergone such a disastrous slide when compared with our trade for the rest of the world.

The job implications are substantial. We have heard much silly nonsense from propaganda organisations about the fact that 2 million jobs depend on the Common Market. If we accept that, it must also be true that 3 million jobs in the Common Market depend upon British trade.

Obviously, we both depend on each other, and that is important. But surely the slump in our manufacturing trade might point to the reason why Britain seems to have suffered more in economic terms than most other European nations. On the basis of those figures, our membership of the Common Market and the consequences of it—which may be the Common Market's fault, our fault or nobody's fault — have led to an increase of about 700,000 in the numbers of those unemployed. The Government must look seriously at that point.

I should like the Government to tell us about the changes that they want to make in the common agricultural policy. The Under-Secretary of State once again said today that Britain had to limit spending on the CAP. We must cap such expenditure, just as we are telling bad local authorities in Britain that they must not spend more than a certain amount. However, the Minister must be aware that to do that has policy implications. If I tell my wife that she can spend only half of the amount she spent last week, there are policy implications. She may change the shop at which she buys her food, I may not get breakfast in the morning or she may not buy any more clothes. Whatever the result, there are policy implications. I am worried, because the Government have not given us the slightest clue as to how a reduction in agricultural spending can be achieved. That is not good enough.

I appreciate the Government's difficulty. In the silly rate capping Bill, we found that the Government wanted to change everything about rates with the exception of charging farmers' rates. We know that farmers have enormous political power. Indeed, the whole City of London is involved. They are all interested in keeping up the artificially high price of land. But how do the Government suggest that agricultural spending should be controlled? Are we to limit the production of our farmers? If so, how? Do the Government intend to tell every farm or every country to reduce its production? Are we to tell the Milk Marketing Board that it should buy only a certain proportion of milk? If the Common Market is to take us seriously, we must give it some idea of how the job can be done.

Mr. Spearing

From an analytical point of view, I think that the hon. Gentleman is a little too simplistic. Is it not possible for the amount spent on the CAP to be pegged and the policies — whether good or bad — to remain? Any shortfall in EEC agricultural support could be made up by national measures. Surely that is one possibility. I think that the hon. Gentleman has missed another point. The Prime Minister and the Minister talk about the effective control of agricultural spending, but that does not necessarily mean capping or stopping expenditure. It could mean a claimed control over the increase in spending. That is quite different.

Mr. Taylor

Sadly, the Prime Minister has said that a condition for increased resources is not stopping or freezing agricultural spending but curbing the rate of increase in such expenditure. As the increase last year was 40 per cent., it is not asking a great deal to curb it. We must give our farmers and the Common Market some idea of how the job can be done.

Mr. Marlow

I wonder whether between us my hon. Friend and I can help my hon. Friend the Under-Secretary of State, who mentioned the possibility of deficiency payments. My hon. Friend the Under-Secretary is a very honest gentleman and I do not think that he has had enough time in which to consider the implications of deficiency payments. He said that if we had a system of deficiency payments it would cost a great deal of money. However, he must bear in mind that if there was system of deficiency payments other moneys would be available from the CAP as presently constituted to be put towards them. The price of food would be considerably lower than it is now, so the taxpayer would have more money in his pocket. Under a system of world prices and deficiency payments we would not have to pay a massive impost for the import of preference food from the ECC. Therefore, although deficiency payments may cost money, the cost to this country, to the taxpayer and to the consumer will be significantly less than the current cost under the CAP, and thereby we might make the significant savings that my hon. Friend the Member for Southend, East (Mr. Taylor) seeks.

Mr. Taylor

There is not the slightest chance of getting the Common Market or the NFU to agree to a system of deficiency payments. I should like to see such a system but I do not think that it is a starter.

The Government have not spelt out their intentions. Any significant reform of the CAP would probably hit our farmers harder than those on the continent. If we said that the production of milk had to be curbed to 1981 levels, it would hit our farmers harder, because the increase in our production has been greater. If we told every wheat producer that he had to produce only 80 per cent. of what he produced in 1981, it would hit our farmers harder than those on the continent, because our efficiency and production are higher than theirs.

If we sought meaningful reform of the CAP, we would find to our horror that it would hit our farmers harder than those on the continent. Therefore, reform of the Common Market cannot be achieved. In addition, I very much doubt the Government's willingness to ask for it. If we accept that, there are only two ways out of the budget dilemma. One way was suggested by the hon. Member for Livingston — that, if such agricultural nonsense is to continue we must set up other policies and have a CAP for steel, shipping and for many other industries as well as for regional and social funds. There could be a flood of public expenditure from the Common Market to balance the money spent on agriculture.

Sir Nicholas Bonsor

I am surprised to hear my hon. Friend agree with the hon. Member for Livingston (Mr. Cook). My hon. Friend must be aware that the overall subsidy to agriculture as an industry, and as a percentage of the return on that industry, is smaller than the domestic subsidies given to most of the major industries, and particularly to the steel industry. Therefore, my hon. Friend is asking for a mammoth increase in subsidies in addition to the domestic subsidies that are already given. That could only exacerbate the present situation.

Mr. Taylor

I think that my hon. Friend has misunderstood me. I was not agreeing in any way with the hon. Member for Livingston. I was pointing out that the hon. Gentleman had suggested one way out of the dilemma, although I would deplore it just as every Conservative Member should do. We should not try to solve the problem by trying to balance a wasteful and foolish agricultural policy with similar policies that are set up to increase the already massive public expenditure in other areas. I believe that there is only one way out of the dilemma, and I hope that the Government will consider it seriously. It is to abolish the CAP and to let it wither away. The Government may say that it would be a breach of our obligations under the treaty of Rome. However, it would not be. The article only calls on member states to have a common agricultural policy that is fair to producers and consumers alike.

Mr. Jackson

How could the Common Market survive if it was abolished for agricultural products?

Mr. Taylor

I am not suggesting anything of the sort. I am sorry that I have taken so long to make my points, but there have been many interventions. However, others may find that they do not now have to make their speeches.

If we abolished the CAP, the appalling support mechanism that goes with it and the dumping, every country could decide how it wanted to support agriculture. Inter-community trading could be fixed at levels decided by the Commission and the support given to one's domestic agriculture could be agreed by the Commission, thereby ensuring a common agricultural policy that is fair to consumers and producers alike. Hon. Members may say that the French and Germans would never agree to that. At present, they would not agree, but if the Government stood firm about not increasing resources they would be driven to it. It is the only answer unless the nonsense of the CAP is to continue.

I appeal to the Minister and the Government to accept that the CAP is not only a piece of Socialist nonsense with protectionism, planning, controls and so on, but an evil policy in respect of the Third world. All of us are aware that, although we are entitled, if we so wish, to give every farmer in Britain or France £1 million a week for doing nothing and that is our business, we are not entitled to cause ruin, hardship, hunger and sometimes death to the people of poor countries struggling to build up their agriculture. They will survive in the world only if they get a reasonable return on their production. For example, in Pakistan there is a lot of poverty. It is an ideal country for growing sugar. However, the poor people there can obtain only £100 per tonne for it because the Common Market is dumping surplus sugar all over the world, wherever it can. Our farmers receive their guaranteed £340 a tonne, and every pound of the sugar can be bought. We can have whatever economic nonsense we like, but I hope that the Government will give me a clear assurance that in the long term they will not accept the continuance of a policy that causes terrible hardship to the poorest countries which are desperately trying to build up their agriculture.

I know the silly arguments of Opposition Members. Some say that if we have this policy it will save us from importing. We could put forward the same argument to provide for banana growing in Southend as a major industry. I am sure that we could have an efficient banana growing industry by using glasshouses, and that the industry would create jobs and save us from importing, but it would be nonsense to grow bananas in Southend when there are plenty of places in the world where they could be grown efficiently and cheaply to provide a reasonable living standard for the poor. I hope that there is all-party agreement that, despite what we do with the CAP, we must stop the agricultural policy from causing genuine hardship, hunger and famine in the poor countries by dumping food.

First, the Government must decide that they will not try to resolve the problems facing us by having extra public spending. Those hon. Members who, like me, voted last week with the Government for necessary curbs on public spending would feel let down if the Government were to agree to a scheme whereby there would be massive public spending increases directed from Europe.

Secondly, I appeal to the Government to make a genuine attempt to examine whether there is any need for CAP. My hon. Friend the Member for Wantage (Mr. Jackson) has said that the policy is vital to the continuation of the EEC. I am sure that that is not true. Surely the agricultural policy is the one factor that sets the British, the French and the Germans at each other's throats. They are always squabbling. The abolition of the CAP would ensure that the countries of the Common Market could work together more sensibly and agreeably in bringing forward policies of mutual interest.

Thirdly, will the Government give us an assurance that we will stop being the mugs of Europe? As a person interested in the steel industry, I am appalled that in a short time we have cut our manpower in the steel industry by more than half because of a Common Market request. In the meantime, other countries have not made cuts and in some cases they have increased their steel production. Just the other day, during the proceedings of the Select Committee on Trade and Industry, British Steel told us that the Common Market had instructed British Steel to make cuts and abolish another strip mill. We must stop being the mugs of Europe.

I hope that the Government, to show that they are serious, will tell us about their fall back plan if we do not reach agreement at the discussions. If the cash is to stop coming from Europe our farmers—they do not have any money — will want to know whether the intervention board will continue spending. Will there still be intervention buying? Will people be given subsidies for exporting goods to Russia? The Government are obliged to make a statement about what will happen if the plan goes wrong. What is the contingency plan? Will we continue paying our farmers and those who export food to Russia and elsewhere if the money stops coming from the Common Market? If the Government expect to be treated seriously, they should make their fall back plan clear. What I have said might be a basis for proceeding. It is important that we do not agree to increase resources unless we can see a great deal for that approach.

Several Hon. Members

rose—

Mr. Speaker

Order. As the House knows, I have no ability to control the length of speeches. I realise that the hon. Member for Southend, East (Mr. Taylor) was interrupted several times. We would be able to include most hon. Members who wish to speak in the debate if they spoke for 10 rather than 25 minutes.

6.34 pm

Mr. Tom Clarke (Monklands, West)

I shall endeavour, Mr. Speaker, to follow your guidelines.

The hon. Member for Southend, East (Mr. Taylor) made a number of valid points, and perhaps the most valid was that this has been a constructive debate. Hon. Members might recall that the speakers so far have been the Minister of State, Foreign and Commonwealth Office, my hon. Friend the Member for Livingston (Mr. Cook) and the hon. Member for Southend, East who is still associated in many people's minds with Glasgow. It may be thought that the Government Whips' office has now had its way and we are now having a debate on "Scotland in Europe", as the Whips have been requesting for some time.

Given the necessary restrictions on time I shall address myself to the White Paper, "Developments in the European Community, January to June 1983", and apply its words to the problems that my constituents feel ought to be considered and debated. If they do not deal with these problems on a day-to-day basis, they observe them on television day after day. They therefore stand aside and ask, "What contribution has Europe made? What contribution is Europe capable of making? How. in the light of the White Paper, can the House invite improvements?"

I have three major points: first, the White Paper's reference to industrial and regional policy, including the policy on coal and steel which is an appropriate subject in my constituency and Scotland generally; secondly, development aid; and, thirdly, peace. Has the Community been the influence for peace that we were led to believe it would be during the great debate on the referendum? What is the Community's record in terms of human rights?

Europe is facing the great problem of 14 million unemployed, including nearly 4 million in this country. Europe's problem is reflected in the problems facing hon. Members, especially in my part of the country. I realise that those problems are shared elsewhere. In my constituency, far from seeing the type of industrial expansion that was promised, especially during the debate on the referendum, we have seen the contraction and almost total decline of industry with the closure of Cardowan colliery, the last pit in my constituency. We have not seen the type of initiative from Europe to provide new jobs that many on both sides of the House, and on both sides of the major argument in Europe, would wish.

I am delighted that the hon. Member for Southend, East said that many people frown upon the reductions in jobs within the steel industry. The steel industry in this country is working below capacity. It is nonsense, given the contribution that Britain has made to European policies on steel, that there should be any doubt about the future of Ravenscraig and Gartcosh in Lanarkshire and that we should have suffered job losses in other parts of the steel industry. I believe that, because of the sacrifice, we are entitled to say to those in other parts of Europe who are asking for more that enough is enough. Far from conceding jobs, and given our declining industries, we should say that we are looking for a greater share in the employment potential of the Community. Two thirds of the EEC's budget is spent on the common agricultural policy, 5.4 per cent. on regional aid, 6 per cent. on social spending, 3 per cent. on development aid and 6.6 per cent. on research and energy.

Many people see a relationship between those functions and wish to see more achievement than is reflectd in the White Paper. Local communities believe that the benefits of our association with Europe should be more tangible and that, if we have a responsibility to Europe, Europe has an equal responsibility to us.

We recently had a most interesting Adjournment debate on possible job losses at Bathgate. In his opening speech today, my hon. Friend the Member for Livingston, with characteristic modesty, did not refer to the excellent speech that he made on that occasion. When he and my hon. Friend the Member for Linlithgow (Mr. Dalyell) emphasised the possible job losses at British Leyland, the Under-Secretary of State for Trade and Industry made a most interesting observation which is well worth repeating today. Referring to recent industrial history, the Under-Secretary of State said: The result has been too much capacity chasing to little business within Europe, which has reduced volumes and drastically squeezed margins throughout the industry. I mentioned a moment ago that, at the same time as it attempted to weather these storms in Europe, Leyland also faced considerable difficulties in its export markets. These were caused largely by the severe economic difficulties of many important Third world countries, which led to very sharp falls in the demand". — [Official Report, 23 January 1984; Vol. 52, c. 748.]

I acknowledge the accuracy of that summary but I urge the House and those involved in the discussions to recognise that it is not too difficult to persuade our constituents that the fight for jobs is consistent with asking the Community to give greater priority to development aid. Indeed, enlightened self-interest makes the proposition attractive. We can help our own industries while giving greater priority to development aid than is reflected in the White Paper. In dealing with the Lomé convention the White Paper illustrates the grave problems of world hunger and food supply. In the discussion on commitment to aid, I have no doubt that the writer of the text on page 8 was well intentioned, but a great deal more imagination could have been shown.

In the referendum campaign the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) and the former Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) impressed many voters by suggesting that the history of war in Europe provided a case for our closer involvement in the Community. If the British people believe that, they must be very disappointed at the contents of the White Paper. There is a greater danger of nuclear war in Europe now than there was when we entered the Community. There is tension in the middle east. The problem of Palestine and Israel has grown since we entered the Community. Earlier today, the hon. Member for Halesowen and Stourbridge (Mr. Stokes) rightly stressed the need for more consideration and debate on the growing problem of the Lebanon, which is also mentioned in the White Paper.

Above all, in recent times we have become increasingly aware of the problems of central America. I have criticised the White Paper, as was my intention, but it may well be right, if indeed it is not an understatement, to say that a political, not a military, solution is needed in that part of the world. President Reagan may pay little attention to the views expressed by the British Parliament and Government, but perhaps he will take on board the views expressed in a document presumably supported by other European countries.

A few weeks ago in the far east I had the privilege to have discussions with representatives of the Asian nations. They were greatly involved in human rights and had specifically excluded Sri Lanka from membership of their organisation. I regret to say that at the same time one of the Ministers of State, Foreign Office described that country to the House as one of the gems in the crown of democracy among the various countries with which we are associated. A great deal of progress remains to be made in the search for peace associated with the commitment to human rights.

In November, the Foreign Secretary, in a speech in London, referred to the Stuttgart conference and events in Williamsburg. Ministers constantly refer to Stuttgart, Athens and the rest, but my greatest regret is that opportunities have constantly been missed. Perhaps the greatest missed opportunity of 1983 was Williamsburg. At the time of the general election the Government seemed to appreciate the importance and potential of the conference far less than did other countries attending.

The White Paper urges the Government and the Community to take these matters seriously. I sincerely hope that the Government will take firmly on board the subjects of peace, human rights and the contribution that Europe can make. I believe that Britain's contribution will be all the better for that.

6.47 pm

Mr. John Stokes (Halesowen and Stourbridge)

This is the first time that I have addressed the House on EEC membership since the United Kingdom entered the Community. Although always broadly in favour of the idea of the Community, especially as support for NATO and as an expression of the solidarity of the West—the old ideal of Christendom, as it were—I have never been an unqualified champion of all aspects of the EEC.

I have always been concerned, for instance, about the role of the Assembly, or the Parliament as it is now called. Personally, I should prefer to feel that my country was represented in Brussels solely by its Prime Minister, its Foreign Secretary or its Minister of Agriculture, Fisheries and Food, responsible to this House rather than by a collection of people who are supposed directly to represent very large constituencies in the United Kingdom.

I do not wish the EEC Parliament to have any more power than it already has and I certainly do not want a federated Europe. The approach of direct elections in June makes it especially appropriate to dwell on proposals put forward by the European Parliament for constitutional reform of the Community. As the House will know, the European Parliament is to consider a proposal for a new treaty of European union. The essence of the change is to effect a shift of power away from the executive Council of Ministers who represent national Governments in favour of a system in which the Parliament's power will be greater than in its present role.

I view these developments with foreboding, because they revive in a powerful way the old arguments about the sovereignty of Parliament that we thought we had settled to our reasonable satisfaction upon accession in 1973. For all their imperfections, the current constitutional arrangements of the treaty of Rome in my view maintain a reasonable balance between the sovereign claims of national Governments on the one hand, and the desire for greater integration on the other. I believe the proposed treaty would tilt the balance unacceptably.

Those of us who support the Common Market do so partly because we know that the changes it proposes take a long time to come to fruition, and thus give member states a chance to prepare and adapt. At present, measures that are liked can be delayed and amended by the Council of Ministers, and this is no bad safeguard. We also support the Community because we know that the grounds on which legal changes may be put forward are limited to areas where the functioning of the Common Market is directly affected.

The proposed treaty is to be based on the principle that the Community should act jointly only where this would be more effective than members states acting alone. I find this too vague for comfort and, to the extent that a more powerful European Parliament would find itself at loggerheads with national Governments, this strikes me not as an expression of democracy but a denial of democracy.

Most worrying of all perhaps is the abandonment, after a 10-year transitional period, of the national veto in matters of vital national importance. We should vigorously resist this. We should be astute to resist a reformed Community that weakens the authority of national Governments and that can launch irresistible changes on the United Kingdom and its people.

The White Paper covers a vast area of subjects. The EEC does not yet have a harmonised foreign policy, and I believe it may take a generation to reach that stage, but I think the EEC has had from time to time, and can have, a useful collective view. We were certainly very glad in this country, during the Falklands conflict, to have the support of the European Community. On the middle east the White Paper in its EEC policy gives a fair place to the rights of Palestinians, and is probably the only counterpart, however small, to the immensely powerful Jewish lobby in the United States and elsewhere. Indeed, I believe the EEC appears to have a far more balanced view of Lebanon, Syria and Israel than, for instance, President Reagan. I hope the Prime Minister and the Foreign Secretary will continue to work very closely with President Mitterrand and the other European leaders in this matter.

I welcome the decision by Spain to reduce tariffs on some Community car imports, but all of us in the west midlands feel that Spain still has a long way to go before the tariffs are fair compared with our own.

As regards Gibraltar, I hope there will be no question of Spain joining the EEC as a full member until she has given satisfactory assurances about the future of that territory.

I also welcome the EEC's attempts to take defensive action against unjustifiable trading practices by some countries, and above all by Japan, although I am sorry that these moves take such a long time. Our trade to EEC countries, although very large, has been disappointing compared with our imports from those countries, as my hon. Friend the Member for Southend, East (Mr. Taylor) pointed out in his, as I thought, fair and powerful speech. The shops here, as we all know, are filled with EEC products, and that visibly demonstrates, I am afraid, to some extent the lack of competitiveness in British firms. In cars, household appliances, television sets, electrical goods, clothing and shoes we have seen massive import penetration from the other EEC countries. Things are slowly improving. Let us hope, for instance, that we can greatly increase our exports to Germany now that that country is coming out of the slump. Recovery here, I believe, is sound and well-based, but still has far to go. Unfortunately, except in cars, it has not yet reached the west midlands.

I do not believe that the EEC should be about matters of trade only. It ought to be about noble ideals. The fact that we Europeans are no longer killing each other, as we have been doing for centuries is after all, my hon. Friend the Minister said in his opening speech, a massive step forward.

The other day in Strasbourg I met a German of my age, a real Prussian, with a big head, short hair and almost no neck. He explained how he had been in the German army on the Russian front in the first months of the war, and he said how cold it was, particularly as they had no overcoats.

Mr. David Penhaligon (Truro)

I wonder how he described the hon. Gentleman.

Mr. Stokes

That is a very good point. After a typically turbid session of the Council of Europe, with all its longueurs and limitations—I do not know the European Parliament, but I expect it is worse—I suddenly began to see what we are all trying to do—in the Council of Europe, in the EEC, in the Western European Union— with all the problems of the excess of butter, the stupidities of the CAP and the unfair budget. We are not, at least, shooting at each other, as I shot at Germans and as my father did, and as the German and his father shot at us and the French. As I told the German this, I saw tears pour down his stern cheeks.

6.57 pm

Mr. David Penhaligon (Truro)

I appreciate the speech of the hon. Member for Halesowen and Stourbridge (Mr. Stokes) because I have always regarded our membership of the European Economic Community to be as natural as the fact that my county is a member of the British Parliament. My reason is that by sheer chance—it had little to do with me — I was born on 6 June 1944. Indeed, my parents have told me on occasion that they were going to call me Montgomery as a result. I have always regarded the fact that they did not as my first political break because there are certain problems with getting Penhaligon on a political sticker, let alone Montgomery Penhaligon. The fact of such a coincidence clearly has an effect on one's life.

I regard our membership of the European Community as something to be welcomed. I have always welcomed it. Indeed, it was one of the fundamental reasons why I chose to join the Liberal party some 20 years ago, as opposed to some other organisation in which it might have proved slightly easier to get elected to the House.

I am not a regular contributor to debates on Europe. My hon. Friend the Member for Inverness, Nairn and Lochaber (Mr. Johnston) is currently in Moscow with the leader of my party, serving the nation more usefully perhaps than by contributing yet again to a debate on Europe. I see no reason why the Liberal Bench should be ashamed of that excursion from our shores.

Mr. George Foulkes (Carrick, Cumnock and Doone Valley)

Since the hon. Member is explaining the unfortunate absence of his hon. Friend the Member for Inverness, Nairn and Lochaber (Mr. Johnston) perhaps he could explain, first, where the hon. Members representing his partners in the alliance are, and why they are not present. Perhaps he could also explain whether he is speaking on their behalf.

Mr. Penhaligon

The hon. Gentleman will be aware that the Alliance makes a far bigger impact in this House than its numbers represent. Indeed, if he applies some secondary school mathematics to the subject, he will find that the alliance has as high a proportion of its membership here today as has any other party. In that respect we can probably beat the Labour party's representation in the Chamber by perhaps 0.1 per cent., though I admit that the Conservative party must be in the lead, with nearly 20 out of its 390 Members in attendance. As for my Social Democrat friends, where they are just now I do not know; nor am I responsible.

The irony of the situation is that while the Conservative party negotiated the terms of our membership of the Common Market, it seems to have been forgotten in the debate that it was the Labour party, when in government, which renegotiated the terms, and that was the time when all the reforms which Labour Members claim are absolutely essential—I agree about some—should have been made.

My recollection of that renegotiation was that it produced avalanches of paper—even more paper than is complained of by the hon. Member for Southend, East (Mr. Taylor)—but no discernible progress on any issue of whatever level of significance to which one chooses to apply one's mind. The ironies of these debates are extraordinary.

My party looks forward to a growth in the Community because we believe in it. However, we take the view that there are some fundamental issues, to which reference has been made in the debate, that represent a hurdle over which the whole Community will have to jump before we move into another spell of progress along the lines that we wish to take. Agriculture is clearly the key to that.

While I am aware that I am in an urban-dominated House, it has struck me, while listening to the references made today to agriculture, that some hon. Members think that agriculture is something that happens somewhere else. Occasionally I discuss agriculture with urban friends in my party, some of whom constantly refer to food as items produced by Tesco and Sainsbury. An operation takes place before that stage, to which it would be unwise not to apply our minds occasionally. That stage occurs in the soil of our land.

My first complaint about the Government is that not many months ago the former Minister of Agriculture, Fisheries and Food attended a meeting of my county's NFU and to a question about what he wanted Cornish farmers to do he replied, "Produce, produce, produce." When questioned further about that surprising statement —given the situation over milk in Europe and the fact that Cornwall depends on little other than milk production —he clearly emphasised that he thought that there was every reason for Britain, Europe, the whole democratic West, the Third world and everybody else, to produce more and more milk.

I am not certain whether that was good advice at the time. The repercussions are there to be seen and one must question whether the problem that we now face is not partially his fault. I understand that the Government's official solution to the milk problem lies in the belief that we can achieve some equality between production and consumption. As a rural Member, I recognise that there is vast over-production which can on no grounds be justified, and we must do something about that both here and in Europe. I am not denying the fundamental problem.

Sir Nicholas Bonsor

Will the hon. Gentleman accept that, although there is vast over-production of milk in the Community, there is none in this country and that we do not provide sufficient milk for our own people?

Mr. Penhaligon

I recognise that, but that narrow, partisan way of looking at the issue will not provide the solution. If one thinks back a decade, to the rough balance that existed between production and consumption, and if one considers the shifts that have occurred to cause the present surplus, it is clear that Britain's extra production and reduced consumption has made a contribution. I agree that there are countries in Europe which are more to blame for the surplus, but we cannot solve the problem simply by taking that view. It may be the argument that our farmers want to hear, but to discuss the subject in that way is being too narrow and partisan.

I understand that in the view of the Government—I thought that the hon. Member for Livingston (Mr. Cook) gave it as the Official Opposition's view too — the problem can be solved in total by reducing the price of milk. One of the great ironies of the incredible milk surplus in Europe is that in those places where milk is produced, its production is not that profitable. It is a great myth that all our farmers have a licence to print money. That may be true of some of the grain producers of East Anglia—land prices suggest that there is more than a figment of truth in that — but it is not true of milk producers.

I warn the Government and the Labour party that marginal decreases in milk prices would have the opposite effect to the one that they desire. Even if the price of milk were marginally reduced, the farmers in my constituency would undoubtedly milk more and more cows. Sadly, the production of milk has nothing to do with how fast the grass grows in the fields. It has far more to do with a farmer's willingness to buy food concentrates for his cattle. A solution in terms of marginal reductions in milk prices would not be even a half-credible solution, and I find it worrying that the Government should even be applying their mind to it. What I fear is not that they are looking for marginal reductions in the price of milk but that they are looking for substantial cuts in milk prices.

Mr. Ron Leighton (Newham, North-East)

The hon. Gentleman has raised an interesting point. Will he accept that this country has no surplus of milk, but that the surplus is produced elsewhere?

Mr. Penhaligon

I thought I had flogged that point to death earlier in my speech, though I am willing to go over it again if need be. I appreciate that the hon. Gentleman follows EEC matters closely, but if he considers the situation today in relation to what it was 10 years ago, he cannot reach a conclusion other than that we have contributed to the situation in which we now find ourselves in Europe, even if his basic point is right.

It is important for Britain's rural areas, especially those dependent on milk, to realise that the sort of price reduction required to reduce the surplus is about 20 per cent. When I ask experts how they arrive at that figure, they do not give a definitive reply. However, for the sake of the debate, let us take it as factual that a 20 per cent. reduction would reduce production in this country and throughout Europe. I believe that to be true.

I also believe that there will be no solution of the problem without somebody's blood being spilt on the street; a problem of this magnitude cannot be solved without many people being extremely disappointed, feeling that they have been misled and believing that the investments that they were asked to make represented a misguidance by those in power. I warn the Government that a 20 per cent. reduction in the price of milk to solve the problem would not result in just a little blood being spilt on the street. It would mean the bankruptcy of the entire rural fabric of at least my part of the country, which depends on milk. There can be no doubt about that. Cereals cannot be grown easily in my area. It keeps raining and cereal crops do not like rain. When the wind blows, as it often does, they are flattened.

Mr. Marlow

If the price of milk comes down one can still make a profit, if the price of cereals comes down also.

Mr. Penhaligon

That may be true, but one suspects that if that equilibrium were maintained at its present level, we should be no nearer solving the problem. I am admitting as a rural Member—it is not easy to say this, representing a rural seat — that the farmers of my constituency must look forward to the fact that in five years from now the will be producing no more, possibly less, milk than they are now. As an Opposition Member I can say that there are not many votes in that, but it is a realistic view.

The House has no interest in seeking the collapse of the rural economy. There are two possible solutions. Either we shift the advantages of milk production to those areas most suited to it by taxing the concentrated foodstuffs or fertilisers used on the land — that would not be my solution, but it is a possibility worth considering—or we face up to the immense difficulties that indelibly exist in quotas.

The EEC not only flirts with quotas, but advocates the system and bases it on 1981. There are good reasons for suggesting a year base other than 1981 because of the peculiar weather conditions that year. However, that is a minor point compared with the fundamental point that the Government would serve British and European agriculture better if they stopped looking for a massive reduction in the price of milk and investigated how to operate the quota system. The latter solution would not be overwhelmingly popular, but it would be a better solution to the problem facing the Government.

The House must not forget that fundamental to the problem is the rural economy of our nation. Agriculture is not merely a useful industry in areas such as my constituency; without it there is no future for large swathes of Britain. Hon. Members cannot believe that we have an interest in the short, medium or long term in laying our agricultural areas to waste, but the Government are not far short of committing themselves to pursuing a policy which will, in the final analysis, result in that. I look forward to hearing what the Minister will say about that later.

Mr. Robin Cook

I am grateful to the hon. Gentleman for his observations, and I have followed with fascination his exchanges with other hon. Members. His remarks demonstrate the imperfections of trying to provide stable and adequate supplies to the consumer and at the same time a secure income to farmers in rural areas, because of the difficulties with the price mechanism. To escape from the traps which he pointed out, we must return to something approximating to the income support measures and the deficiency payments that we enjoyed before the CAP.

Mr. Penhaligon

That alternative is worth investigating. I have never been convinced that the deficiency payment system works anything like as well in a surplus agriculture situation as it does in a deficit agriculture situation. Under a deficiency payments scheme, world market forces set the price, and the Government set a minimum level for their farmers which the Government pay them to reach.

Given the present position, if we allowed milk to find its real commercial price within Europe under the auctioneer's hammer, farmers would pay milk consumers to take it away. Then the deficiency payments scheme would not result in a marginal contribution towards the costs of producing the foodstuffs, but the Government would pick up the bill for the lot. I do not dismiss the system for all commodities, but it could have only a negative effect for milk.

There has been progress within Europe in the fishing industry. During the past fortnight I have had several conversations with fishermen, and I have reached the conclusion that British fishermen believe that fish are in the sea by ministerial decree. It has nothing to do with a natural biological cycle; if there are not fish enough to catch, in the final analysis it is the fault of Ministers.

I make no apology for raising a local point about mackerel. The Government and the EEC, belatedly — although it is welcomed—introduced in my area what is known as a mackerel box. The idea is that within the box fishing for mackerel is banned, with the exception of hand liners and — unfortunately we missed it at the time — bottom trawlers. There is no reason why bottom trawlers should not have such an exemption, because a genuine bottom trawler does not catch much mackerel. It is possible to catch a few as the net goes down or comes up, and it is even conceivable that the odd drunk mackerel might forget where he is supposed to swim and be caught. However, if bottom trawling is carried out in the way that every fisherman knows that it is supposed to be, hardly any mackerel would be caught.

There is great anguish in my area because the exemption is clearly being fiddled. A new system of fishing has been developed, which can only be described as bottom trawling at mid water. That is due to the suddenly and never previously experienced difficulties of the Scottish fishing vessels, which do not seem to be able to get their bottom trawls down to the bottom. The boats managed it for 50 or 60 years without difficulty, but coincidental with the exemption it appears that bottom trawls will not reach the bottom.

Dr. Norman A. Godman (Greenock and Port Glasgow)

There is a pronounced distinction between bottom trawling gear — commercial fishing gear — and pelagic gear. The Scottish fishermen are not quite the rogues that the hon. Gentleman suggests. Does he agree that the box significantly harms the interests of Scottish purse seine fishing vessels?

Mr. Penhaligon

I do not accept that. I said earlier jocularly—perhaps I should have been more harsh—that people talk as though mackerel are in the sea by ministerial decree. The reason why mackerel stocks are in such a ludicrous state is that over the years every conservation that has been needed has been applied to mackerel two or three years too late. The south-west fleet unwillingly took on the entire capacity of the Scottish fleet when it could no longer catch herring. I am pleased that there has been a great recovery in herring stocks, but there is no doubt that the general conspiracy between the Government and fishermen everywhere except in Cornwall has resulted in a massive reduction in mackerel stocks.

A mackerel is supposed to be a foot long, but the only one of that length remaining in Cornwall is stuffed and in a museum. Mackerel is now one of the great delicacies served in the House — I pay tribute to the Scots for developing new methods of eating it—but the specimens presented to me in the House must have been on a diet. I understand why fishermen do it. They have invested money in their boats, and they have employees to pay. It is not an easy problem, but there is no doubt that the mackerel box introduced by the Government and the EC, and supported by fishermen of nearly every class in the United Kingdom and Europe, is being avoided by this method of bottom trawling.

The solution is simple. The Government must impose a 15 per cent. by-catch limit on bottom trawlers in the mackerel box. The few that they catch on the way down or on the way up will be all right, but if a serious attempt is made to fish for mackerel mid-water the 15 per cent. by-catch limit will stop the abuse of the regulations.

The hon. Member for Southend, East referred to the country's great loss in manufacturing. Why the House cannot face up to what has been a major contribution towards that I do not know. For reasons that are perhaps understandable, although I do not support them, the Government have pursued a policy of a high exchange rate. In the last decade two phenomena have helped to shift the British exchange rate relative to European competition. One was the chance of finding oil and the other has been the Government's internal economic policy.

Many people are manufacturing items that anyone else can manufacture. In engineering that covers much that is produced today. The production of cars is not unique to Britain, Europe, America or the far east. A motor car can be produced anywhere with varying degrees of success. Therefore, the exchange rate of our currency against others is of considerable importance — and "considerable" is not a strong enough word in this context. The Government have pursued a high exchange rate policy. The exchange rate is the result of someone else's perception of the value of a currency rather than being an accurate valuation.

Three or four years ago I said in the House that we had to think out the exchange rate consequences of finding oil and of Government policy. Many effects of Government policy can now be seen. We have lost a large percentage of our industrial base and our balance of payments position relative to Europe, because of the effect of Government policy on industrial production, is bad or appalling, whichever description one chooses. So long as the Government pursue their current policy, that tendency will continue, whether or not we remain in the Common Market. The policy has more to do with internal economics than with membership of the Common Market.

I have raised two or three points. Other hon. Members will want to raise more. Mr. Speaker asked us to take only 10 minutes each. My eyesight is not good enough to see the clock, but I think that I may have exceeded the allocated time.

7.23 pm

Mr. Robert Jackson (Wantage)

As my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) made clear, there is still a great deal of ground to be covered in the negotiations that are going on in the Community, but the issues have been refined and the choices have been clarified. The outlines of a package deal are emerging to deal with the interlinked problems of net contributions, of CAP costs, and of the provision of new financial resources to financing new policies and to pay for enlargement. I should like to take the opportunity to consider what our policy in Europe should be after we have resolved these difficult issues to which we have devoted so much time and intellectual energy over the past four years.

Our purpose in Europe should be twofold. First, we must seek to increase our influence in and through the Community by making ourselves less of an "outsider" in Community affairs. Secondly, we should bring into sharper focus the European dimension of our efforts to restore the vitality of the British economy.

My hon. Friend rightly stressed that Britain is not standing on her own in the current negotiations. Let us hope that the Government can succeed in ensuring that we continue not to be isolated. For amid the inevitable cross-cutting of interests that have been identified by my hon. Friend, we should not disguise from ourselves the fact that Britain is still in large measure an outsider in the Community. This is one of the reasons why we have had so much difficulty in getting our partners to recognise the seriousness of our problems: if we had been any other country in the Community, I think we would have been able to get it recognised earlier.

Britain still lives with the consequences of our mistaken aloofness from Europe in the 1950s and of the destructiveness of Labour party politics during the 1970s. This attitude has allowed a pattern in European affairs to crystallise so that they are organised around two diplomatic systems, in neither of which we play a part. On the one side there is a fundamental and consistent drive by France and Germany always to find themselves on the same side of every question—although, of course, they will argue from time to time about MCAs and other issues. On the other side there is the tendency of Italy and the Benelux countries to address every question in terms of the opportunities it may afford to advance the process of European integration.

Both these systems in Europe are deeply entrenched, and we are not part of either of them. In particular, the entente between France and Germany has struck deep roots. That is the political fact underlying a Community design which gives economic opportunity to Germany and a kind of political primacy to France.

I do not believe that two systems will dissolve easily, or that they could be easily dissolved; nor do I think it would be easy for us to muscle in on either of them. And I hope I do not need to stress the supreme fatuity of the idea that we could overcome the consequences of these international alignments simply by ignoring them, perhaps by leaving the Community. Our best course is to try to reduce and remove the rigidities in the existing patterns and to diminish the force of the myths that have placed us in our outsider position. If and when we succeed in the negotiations on the budget and the common agricultural policy, this will greatly help. In a sense it could be said that we will have completed the accession negotiations 10 years after joining.

In thinking about what we should be doing to get more flexibility into our position, I suggest three points to the House. First, we need to end our rhetorical guerilla war against the common agricultural policy. I shall not develop the arguments put so excellently by the hon. Member for Truro (Mr. Penhaligon). I will only say that it is time we began to bring our words on the common agricultural policy into line with our deeds, which include a massive expansion of British agriculture under Governments of both parties since we joined the European Community. On this point about the gap between words and deeds, I noticed that the hon. Member for Livingston (Mr. Cook), in spite of his rant about the common agricultural policy, when asked specifically about his policy on price cuts, immediately fell back into the language of "over a period of years".

The second thing we need to do to get away from our outsider position is to take more seriously the preoccupations of our partners with institutional questions. These are not questions of gadgetry. They go to the heart of the ambitions that they or we have or might have for Europe. What sort of machinery do we need to further the ambitions we have for Europe? I ask my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes), who made a considered speech, to address himself to these questions.

Thirdly, we must reflect much more deeply on how a more coherent and concerted European economic policy could contribute to the restoration of vitality and growth in the European and British economy. We have to begin to look ahead beyond the peak of North sea oil production, which most experts believe will come in the mid-1980s. After that the oil supply will go more or less rapidly downhill. We must ask what lies on the other side of the hill.

We face a serious danger that is reflected in the balance of trade figures to which my hon. Friend the Member for Southend, East (Mr. Taylor) referred. Britain's world trade figures in 1982 showed an oil surplus of £3.7 billion and surplus on invisibles of £3.8 billion. But agriculture showed a deficit of £1.3 billion and there was a deficit of £3.6 billion on manufactured and semi-manufactured goods. Moreover, in the first three quarters of 1983, the deficit in manufactured trade rose to £7.7 billion. This is very serious. How will we be earning our living when the net surplus on oil begins to fade? The remedies in terms of promoting competitiveness lie, of course, mainly in our own hands—and we should be greatly strengthened by a more constructive attitude from the Labour party. But we cannot afford to turn our backs on the possible contribution which a more dynamic European policy could make.

The Government rightly lay great stress on deepening the Common Market so that industrial rationalisation can be carried forward on a European scale. That is obviously a major factor. It is right also that the Government should be taking a close interest in co-operation in promoting new technologies. Let us hope for an early and positive decision on ESPRIT and the airbus. But is this enough? I believe that the Government underestimate the consequences of exchange rate instability for investment and growth. It is the failure of investment caused, among other things, by that instability that underlies the poor strade figures that we have been discussing.

I shall give a concrete example from my constituency. The Rutherford Appleton laboratory is the organisation through which a large part of our research in high energy physics is conducted. We currently invest £36 million a year in high energy research through CERN in Geneva. Every year there have been problems because costs have been increased by exchange rate changes. Last year it was necessary to find from the science vote an extra £7 million to deal with the consequences of exchange rate fluctuations for CERN. This has produced real concern about the future of our investment in that form of research.

Over the years I have had many arguments with Ministers and officials about these issues. I have always been told that exchange rates do not really matter because any company that wants to invest abroad needs only to buy foreign exchange on the forward markets. I do not believe that that is so. And judging by the way in which the Government have handled the CERN foreign exchange rate costs, I do not believe that the Government find it a practical proposition either.

In thinking about Britain's industrial future as the oil runs out, we need to consider much more deeply than we yet show signs of doing such issues as the scope for concerted demand management in Europe, the scope for promoting exchange rate stability, and the possibilities of developing in the Community a more coherent and effective European external economic and monetary policy in our relations with the United States and Japan.

In the negotiations that lie immediately ahead, Britain enjoys a relatively strong position. It is stronger than some of the Government's critics on both sides of the House seem prepared to admit. However, over the middle to longer term, I believe that our position is by no means so strong. Indeed, it is weaker than some of those very same critics seem to think. We have a giant task ahead of us to ensure that Britain attains a full measure of the influence in and through Europe that could be available to us, and to give ourselves the economic base to sustain that influence. Ten years have passed, and it is surely time to begin.

7.35 pm

Mr. Roland Boyes (Houghton and Washington)

The hon. Member for Wantage (Mr. Jackson) talked about Britain being isolated and an outsider. I shall demonstrate later why the policy and practices of the Conservative party in this Parliament and the Conservative group in the European Parliament have led to that situation.

The Opposition's amendment draws attention to the same negative and destructive policies in industry and the economy which have caused so much damage in the United Kingdom". Having been a Member of the European Parliament and a member of the social affairs committee, it will not surprise the House to hear that my remarks will be directed primarily to social affairs. A meeting took place on 22–23 February when the Secretary of State for Employment took the opportunity at the meeting of presenting a discussion paper outlining United Kingdom's thoughts on how EC Employment Ministers could most usefully direct their efforts, notably in the fight against unemployment. I have found no evidence of any beneficial effects of that meeting in the fight against unemployment in my constituency. I conclude that there is a crisis in Western capitalism and that those who are paying the price are those who are least responsible for it—the workers.

Unemployment has risen continuously throughout the Community and is now at least 12 million. In Britain the official figures are that 3.1 million are unemployed, but the job gap is possibly greater than 5 million. Unemployment is turning the area that I represent into a disaster area. In my constituency unemployment is more than 30 per cent. I do not know whether Conservative Members who represent constituencies with much lower levels of unemployment realise what such a high rate of unemployment really means. In my constituency it means that 7,500 are out of work. There are famous phrases about travelling to work, but my constituency is in a borough where the official male unemployment figure is over 26 per cent. It is in a region where unemployment is more than 20 per cent.

There are those who say that there is hope for the future, but an independent study by the projection department of Warwick university shows that unemployment in my area will increase slightly up to 1990. Those who are suffering the most—this shows how wicked and evil Conservative Members are—are the youngsters. Nearly half of those unemployed are below 20 years of age. In the north, 30 per cent. of those under 18 years of age are unemployed while 35 per cent. of the 18 to 19-year-olds are unemployed.

It is clear that the British Government have contributed nothing within the EC to alleviate unemployment. Social fund allocations as a percentage of the EC budget are the equivalent, when dealing with unemployment, of dealing with a man who has been run over by a steamroller by running up to him and offering him a Band-Aid. In other words, the amount of money available would not touch current unemployment, even if all of it were directed to my region.

It is probably because of the Conservative group's isolation in the European Parliament that we have been unable to make the necessary changes. The isolation of the British Government has had a similar consequence. The house will be aware that the Vredeling proposal was based on multi national companies informing their workers of the changes that they wished to make in industry and consulting them accordingly. Unfortunately, Conservatives have contempt for workers. The Member of the European Parliament who produced the report was a member of the Conservative party. In terms of Left and Right, he is one of the most moderate of the Right-wingers in the European Parliament. I suppose he is the equivalent of the TUC general secretary in Britain. I refer to Oscar Vetter. He said: We cannot constantly refer to a dialogue while refusing workers in undertakings the simplest rights or granting them no more than ineffectual, sham rights. During the public debate it has been said that information entrusted to workers might not be treated confidentially. I ask myself what image do those who harbour this politely worded suspicion actually have of the worker?

When I went to the House of Lords to give evidence on the Vredeling proposals, I rapidly came to the conclusion that the people there who were members of the Conservative party had no idea about trade unionists or trade unions. Since I have been a Member of this House, and listened to some of the speeches from the Conservative Benches, particularly on the subject of trade union democracy, I have concluded that Conservative Members here know no more about it than those in the shop round the corner.

Mr. Richard Caborn (Sheffield, Central)

Is my hon. Friend aware that the author of the amendments that gutted the Vredeling proposals was a member of the Conservative party and a QC? He was in the pay of a multinational company — the Mars Corporation. There is plenty of documented evidence, and the Bar Council is now considering it. Unfortunately, the code of conduct for QCs covers only the Palace of Westminster, not the European Parliament. I just wondered whether my hon. Friend realised that the main instigator of the gutting of the Vredeling proposals was a Conservative Member of the European Parliament, who is also a QC and on the payroll of a multinational company.

Mr. Boyes

Yes. The Mars Corporation retained a top Washington law firm, Patton Boggs and Blow, to advise on the amendments for the Vredeling directive debates, and they were discussed with Amédée Turner, the Conservative Member for Suffolk, although, in fairness, he has denied up to now that he is on Mars' payroll.

We saw multinationals at their worst in the European Parliament. Hardly a week went by when I did not receive a glossy brochure from a multinational company asking, demanding, or attempting to twist our arms to vote against the proposal. Ivor Richard, the Commissioner, told us that his carpet was worn thin by multinationals coming to see him almost daily to get him to oppose the Vredeling proposal. A £70,000 video was prepared and hawked about the United States to show the worst aspects, and the Community employers' organisation, UNICE, continued to resist it.

I could go on in detail about Conservative Members in Europe who resisted it. However, in this Chamber I am more worried about the people here. What is the United Kingdom Government's position on Vredeling? It will not surprise hon. Members to know, from John Wyles in the Financial Times in 1982, that Mr. Norman Tebbit, Britain's Employment Secretary, stood alone among Community Ministers yesterday in rejecting the idea of EEC-wide legislation to guarantee employees' rights to information and consultation. In a report in 1983, again in the Financial Times, John Wyles said: The extent of the United Kingdom Government's disillusionment with the European Commission's proposals on workers' rights — the Vredeling and the Fifth Directive — is shown clearly in its consultative paper". He said: the paper is less a description of the proposals … a sustained, closely argued polemic against their provisions. The Economist—I deliberately chose papers that can be relied on to support the Conservative party — said that the British are "frankly hostile". So we are isolated in our activities over there, and it is no wonder that we cannot get the changes that we want.

The hon. Member for Wantage used the word "isolated". Even in the European Parliament the Conservatives could get no other nation or political group to sit with them. They are the only single party group. They may tell me about a couple of Danes, although I gather that one of them attacked Britain in a fishing boat. In fact, the Conservatives are isolated, and within the Parliament's framework they are looked upon by all other political groups as nationalist and reactionary. That is why, as long as the Conservative party is in power, we shall never get the deal that we want for our workers. As long as the Conservatives are in power, unemployment will continue to rise, particularly in the deprived regions.

Mr. Jackson

Will the hon. Gentleman remind the House, however, that Conservative Members of the European Parliament were part of a healthy majority in voting to gut the Vredeling directive?

Mr. Boyes

One cannot answer the point about isolation, why Conservatives sit alone and why no one speaks to them, by asking a trivial question.

I want the Vredeling proposal, with the support of the British Government, to strengthen the rights of workers to consultation, to know what is happening to them and to know when new technologies have been introduced in companies. I do not pretend that that will save jobs, but it would at least prove me wrong when I say that Conservative Members have absolute contempt for workers.

Mr. David Crouch (Canterbury)

I am learning to listen to the hon. Member for Houghton and Washington (Mr. Boyes), because he is no fool. However, I have a feeling that he may be in danger of spoiling that reputation. To say that we on the Government Benches are not concerned with better communication in industry and better industrial democracy is to deny the truth. We have been concerned to produce real industrial democracy, not a mock industrial democracy. I have worked in industrial relations for many years. When I was in Brussels many years ago, I met the right hon. Member for Blanau Gwent (Mr. Foot) and Len Murray. The right hon. Gentleman said, "What are you doing here?" I replied, "I am coming to study industrial democracy." "Oh," he said, "you will not get much industrial democracy here — industrial bureaucracy if you like." That was the view of the former Leader of the Opposition. Perhaps the hon. Gentleman should take that to heart.

Mr. Boyes

I shall comment on the hon. Gentleman's words, not on the words of someone else in a private conversation. I do not do that sort of thing. However, that is by the by.

Why do the multinationals use the same words as the hon. Gentleman has just used to me? I sat at a table in New York with representatives of some of the top multinationals and they said, "We do it already—the things that you are asking for." I replied, "If you do it, why are you worried about it being obligatory rather than voluntary? What are you really worried about?" What are Conservative Members worried about?

As an illustration, I should like to recount what happened to a company in which some of my constituents work—Caterpillar. No one wrote me stronger letters against the Vredeling proposal than that company. Yet that company—I hope that every Conservative Member will condemn what that company did — made its closure announcement in Scotland, throwing more than 1,000 men out of work in the area of highest unemployment in Britain where the chances of alternative jobs are nil.

The news was picked up by the Scottish press, and the people working in Caterpillar read it on their way to work. They bought the Newcastle Journal on their way to work, and read the headline that the Caterpillar company was to close. Some apprentices were interviewed on television. They started work that morning and were told by lunchtime that they were out of work. That is not hypothetical; that is what happened. When that happens statutory obligations should be put on multinationals to inform and consult employees about changes in working operations or conditions. That is no more than any right hon. or hon. Member should expect in 1984.

7.50 pm

Mr. James Hill (Southampton, Test)

If Shakespeare were alive today he would have to say, "Oh cursed CAP." The debate has drifted away from the subject of the CAP. Earlier speeches concentrated on milk, grain, fisheries, olive oil and the 101 other things that the Select Committee on European Legislation must examine. If only we could return to the day in 1972 when the Government were negotiating the 3,000 directives, if only we could have thrown 2,850 of them out of the window and said, "Yes we shall join the Community but please exclude us from the CAP." The CAP is a disaster. It is the root of all the trouble in Europe today. The fine ideals of Europe are being ground into the soil because of subsidies and the lack of money to make deficiency payments.

The crunch is now upon us—31 March will be the day when we shall have to think almost on the lines of my hon. Friend the Member for Southend, East (Mr. Taylor) and other almost violent anti-marketeers whom the House has known. We shall have to say, "No more." We must insist that there will be no more money until we get a proper reform of the budgetary system. That system is now inadequate. We are faced with another grave problem—Spain and Portugal joining the Community. They are not industrial giants that will pour wealth into the coffers in Brussels. They are both agricultural countries which will be looking forward to great subsidies from the CAP.

It is possible that the £437 million will be grubbed together and paid to Britain — it should be. If that happens perhaps the crisis will strike again a year later because the Commission, the European Parliament and the Council of Ministers have once again been unable to agree budgetary commitments. Spain and Portgual will then join the Community and there will be another crisis. When I was in the European Parliament, it was said that the Community moved forward in a crisis, that the Community welcomed a crisis because it gave it direction and forced it to make decisions. It now seems to have gone into a slumberland.

Differences of style at Heads of State meetings in the past 10 years have been mentioned. My right hon. Friend the Prime Minister's style is correct. We have had enough. We must have a sensible contribution to the budget.

The House agreed to a Court of Auditors to keep a check on the waste and inefficiencies that were knee deep in the Community. They still are. We have discussed the 1981 Court of Auditors document. I sometimes wonder whether the Commission follows up its findings. Do our colleagues in the European Parliament initiate discussions about the utter waste and inefficiency which the Court of Auditors in Luxembourg has unearthed? That would be an interesting debate.

I have been a European from day one, but I am getting pretty sour about it. I was chairman of transport and regional planning in Brussels when that excellent Commissioner, George Thomson as he then was, was responsible for regional development.

Mr. Bill Walker (Tayside, North)

He is a good Scot.

Mr. Hill

Indeed.

We thought that we would introduce paradise to the periphery of the Community. That has not happened. There is not enough money to go into regional planning or the social fund because it is being gobbled up by the farmers of Europe. When we got a good percentage— 28 per cent. — of the regional fund allocated to the United Kingdom, I thought that that was the beginning and the making of Europe. That was not so. Transport infrastructure has not benefited. Indeed, there has been hardly any progress on transport in the Community.

It is necessary only to look through the list in the White Paper to see that our Ministers seem to be in constant motion between London and Brussels. They are being faced with some difficult decisions. The Community wants majority voting on most things. That will be the last possible veto against the excesses that the CAP produces.

Unless the rest of the Community demonstrates a reasonable approach on 31 March, I for one will be extremely dissatisfied. If that is their idea of keeping faith, they can keep it.

7.57 pm

Mr. Ron Leighton (Newham, North-East)

It is a great pleasure to speak after the hon. Member for Southampton, Test (Mr. Hill). I was with him when we visited the Court of Auditors.

The House is supposed to be debating the White Paper, so it might be useful if I refer to it and then make one comment on the motor industry. The document is not inspiring. Indeed, we have had no inspiring documents for a long time. Europeans, such as the hon. Member for Test — we are all European in that we were born in a European country—have long since given up any hope of reading good news from the EC in such documents. That is why, I suspect, attendance at these debates is not high.

The White Paper is an account of what we might call the latest state of play in the haggling and wrangling between member states. It is unfortunate that we are looking back at the first six months of last year and considering things only in retrospect. It is an exercise in futility. There have been many false dawns and many people, such as the hon. Member for Test, have become disillusioned.

The second paragraph of the document states: The European Council in Stuttgart on 17–19 June launched a major negotiation on the reform of the Community's financial system. The agenda is then referred to, and the paragraph continues: The negotiation will be conducted at special meetings of the Council and the results are to be submitted to the Athens European Council on 6 December. Although that sounds enthusiastic — we can look back with hindsight—Athens was a predictable fiasco.

The next paragraph states that our net refunds are "two-thirds of our net contribution."

I remember the Prime Minister, when she went to Dublin, saying that she was not willing to be fobbed off with half a loaf, but that is what she has.

Why should Britain pay anything into the budget? If it is meant to be a means of redistribution and if we are one of the poorer nations, surely, in all justice, we should be a net beneficiary. We are a member of a strange club of nine or 10 members in which only two make any contributions. We are one of those two. That is a monstrous arrangement.

I agree with the hon. Member for Test that enough is enough. Unless a sensible arrangement can be made within the next two or three weeks, we should withhold our excessive contributions.

The next paragraph deals with the "social and employment sphere". The social fund is entirely peripheral. Financially, it consists of peanuts, and we need not waste time on that. Mass unemployment exists throughout the Common Market. The paragraph also refers to the "regional field". If any genuine regional policy operated, the United Kingdom should be a net beneficiary, but the European Community does not have a real regional policy. The rich countries are in no way helping the poor. The policy is nugatory. We all know that the richer countries and regions in the European Community are getting richer and that the poor are getting poorer.

Paragraph 1.9 states: the Government welcomed a unilateral decision by Spain to reduce tariffs on … car imports. I shall say a word about that later. The Community concluded an agreement with Japan restraining exports to the Community".

In other words, the EC is lauding import controls. I thought that the EC agreed with free trade, but it is patting itself on the back for imposing import controls on Japan. The truth is that the EC is damaging our motor industry, not Japan's. If import controls are to be implemented, they should be against France, Germany and Italy, not Japan.

Page 6 refers to the internal market, and paragraph 1.15 states: The Government welcomed this initiative towards speeding up the process of making the free movement of goods and services within the Community's very large internal market more complete. In other words, a European Common Market does not exist. I believe that there are now more customs officers than before the Common Market was formed.

However, some developments have taken place. Page 10 refers to the directives allowing wedding gifts to pass across frontiers without being subject to controls.

Page 9 of the document states: There were also useful contacts with the United States on the problems in agricultural trade. We all know that the fact that we have subsidised food exports to the world markets has caused the most acrimonious of relationships with the United States. No wonder the document skates over that subject.

Then the paper turns to fishing. Countries throughout the rest of the world have a 200-mile fishing limit. Such an arrangement would have suited the United Kingdom well. As a result or our being in the European Community, we have an arrangement under which the United Kingdom contributes the largest share of fisheries to the Common Market pond. Our arrangements for quotas allow continental fishermen, who have fished out their own waters, to help themsleves to quotas of our fish.

A brief reference is made to the European monetary system. The figures dealing with the flotation of currencies show they have been used all over the place. Economic convergence has not taken place. The document shows that, with different rates of inflation, there is no chance of fixed parities operating.

Reference is also made to a substantial discussion on the draft non-life insurance services directive. There is nothing more, so that proves that nothing has happened. The Minister is smiling happily. Before we joined the EC, we were told that the City of London was extremely efficient and that great gains would be made, but we have not been allowed to compete.

Page 17 of the report, referring to a discussion on financing, says: The Commission produced proposals on future financing in May. They proposed that the 1 per cent. limit on the VAT … take from member states be increased initially to 1.4 per cent., with provision for raising the new limit subsequently by further tranches of 0.4 per cent., subject to unanimous agreement in the Council and a three-fifths majority of votes cast in the European Parliament, without the need for ratification by national Parliaments. The suggestion is that we should be taxed, for example, at rates and by amounts that we did not decide, by people whom we did not elect and whom we cannot remove and in ways that we did not choose.

We have given away many of our powers. I note that the Minister is smiling. I hope that I can take the beneficent look on his face as confirmation that we shall never submit ourselves to such an indignity. It is absolutely and entirely unacceptable.

Paragraph 5.14 refers to the Court of Auditors and Financial Control, which should interest the hon. Member for Test. He will agree that on our visit we discovered that the report was really a catalogue of frauds and irregularities. There is no proper financial control whatever in the European Community. That is why discussion on the topic consists of only five lines.

Page 18 refers to the German "butterships". It says: Germany has still to agree to abolish the exemption from VAT and excise duties on goods sold on board the 'butterships' sailing on non-landing cruises from North German ports despite a European Court judgment of July 1981. We have a wonderful picture of hausfraus shopping on the high seas. That is a Gilbert and Sullivan arrangement that is completely illegal. They pay no excise or other taxes, but the Germans are doing great business with their butterships.

The Commission has put forward two draft directives on wine and beer. One is to allow the free movement across frontiers of six litres, not four litres, of wine. It seems that the wine lakes can be moved from one country to another.

Paragraph 5.20 states: the commission has alleged that the United Kingdom's duty structure discriminates in favour of home-produced beer and against imported wine. That is the explanation for successive Finance Bills which have increased the duty on British beer. That is why the price of beer in Britain is being increased.

In a Commission paper on progress towards a common policy for inland transport there is agreement to proceed "step by step". That sounds rather pedestrian and specific proposals from the Commission are still awaited.

The main damage to Britain is done by the appalling and horrifying deficit on manufactured goods. That is dealt with in annex F to the document, which says that in the first six months there was a deficit of nearly £4 billion. Our deficit in manufactures with the EC is about £10 billion. That probably costs about 1 million jobs for Britain.

When we joined the Common Market, for every eight cars we sent member states, they sent five to us. Lord Stokes, in his full-page advertisements, told us how our joining would benefit the motor industry. Today, for every car that we send to Common Market countries, they send us 10.

I was recently with the hon. Member for Upminster (Sir Nicholas Bonsor) on a visit to the Ford Motor Company, which is closing its foundry, where thousands of redundancies are to take place. The fear is that Ford in Britain will operate just an assembly plant.

The Financial Times of 18 January contained two articles. The first, about Ireland, stated: Ford Ireland is to close its car assembly plant in Cork this year with the loss of 800 jobs.

The article continued: Ford pointed out that tariff protection for car assemblers in Ireland would end in January next year after pressure on the Irish Government by the EEC Commission. To compete in the Irish market against imported cars would have left Ford 'fighting in the free-for-all which is bound to develop with one hand tied behind its back.' Ford operated happily in the Republic of Ireland with a limited amount of protection. When the tariffs were removed, Ford was no longer competitive. It was willing to keep the factory working when Ireland was outside the Common Market. When Ireland went in, the company was producing 80 Sierras a day and it was happy, but when it could import them more cheaply from the continent it shut the plant in Cork.

In the same issue of the Financial Times a major article refers to the Ford Motor Company's decision to build a $500 million export-orientated factory in Mexico". That shows the way in which a national Government, even in a country such as Mexico, can lay down conditions for the multinationals and insist that they play the game by that country.

The article states: Production of 130,000 cars a year will begin at the end of 1986 … The main factor … behind the Ford venture is that its new plant enables it to comply with the Mexican Government's regulations. The article explains that in the past the motor industry has been a heavy drain on Mexico's balance of payments. In 1981 it accounted for 58 per cent. of Mexico's trade deficit. That is similar to the United Kingdom's position, but the Mexican Government decided to do something about it and passed a decree in Parliament which stipulates that by 1987 all cars manufactured in Mexico must have at least 60 per cent. local content. The article continues: Not only must Ford balance its foreign exchange account, but it also has a $500 million foreign exchange obligation to clear.

The boss of Ford Mexico stated: failure to clear the obligation would mean the gradual squeezing of Ford out of Mexico, since imports would cease to be authorised. Rather than put up with that, Ford is building a new plant which will involve Mexican parts and produce a balance of payments surplus for Mexico. Why do we not do that? Spain did it.

A few years ago Spain had no motor industry, but today Spain produces more cars than the United Kingdom. Spain said to the multinationals, "If you want our market, you will manufacture here. It is your choice. You can have the market, but only if you manufacture here or use a percentage of Spanish parts in your cars." The multinationals complied and built factories in Spain. We could do the same.

Our industrial base is disappearing. It is our responsibility. The multinationals have no loyalty or patriotism. If they can make more profit by producing elsewhere, they will. Our duty is to our own country. We should lay down the conditions. Why do we not do that? The reason is that it would conflict with the treaty of Rome. We should work out policies that are in the British national interest, regardless of the treaty of Rome. The sooner we have a Government who do that, the better.

8.17 pm

Mr. Michael Howard (Folkestone and Hythe)

The hon. Member for Houghton and Washington (Mr. Boyes) criticised the Government's attitude to the Vredeling directive and sought to link that with the attitude of the Caterpillar company to those workers in his constituency whom he said were made redundant without proper consultation. We do not need the directive to deal with that situation, because a remedy is already available in the Employment Protection Act. If the facts are as stated by the hon. Member, the workers have a remedy and will be advised to make use of that remedy.

I make no apology for seeking to divert the attention of the House from the CAP, own resources and all the excitements to which other hon. Members have referred. I make no apology for raising another matter because it is of fundamental importance in the long run to relationships between the United Kingdom and the European Community.

It is 10 years since Lord Denning, then Master of the Rolls, described the treaty of Rome and its relationship to English law as being like "an incoming tide." He said: It flows into the estuaries and up the rivers. It cannot be held back.

In drawing attention to that tide, it is not my intention to invite the House to adopt a Canute-like posture towards it, but I suggest that that tide is capable of causing danger of two kinds. Constitutionally the position is deceptively simple. On matters which touch the Community, Community law is supreme. If an inconsistency arises between the two, identified by the European Court of Justice, for example, Community law must prevail. The first difficulty is that not all Community legislation is superior to United Kingdom law. One would need to be in thrall to a quite exceptional admiration for the Community and its works to need much persuading of that.

The second danger is that, even where the merits of the two are more evenly balanced, the automatic and relentless invasion of what has hitherto been our sovereign preserve gives rise to a great deal of irritation and resentment, even among our fellow citizens who are not hostile to the Community or to United Kingdom membership of it. In many instances, the process brings the Community into disrepute.

That feeling of irritation and resentment is not entirely foreign to hon. Members. It is especially marked when we are presented with documents that we are told, correctly, we cannot amend or reject because they are introduced pursuant to directives of the Community or decisions of the Court of Justice, and that we must accept them without question as part of the price that we pay for our continued membership of the Community.

What makes that difficult to accept is that the tide of which Lord Denning spoke seems to flow in one direction only. Unlike other tides, it never seems to ebb. When the European Court of Justice rules that our domestic law is inconsistent with some Community regulation or directive, the automatic reaction is to set in trend—sometimes sooner and sometimes later—the necessary procedures to bring domestic law in line with the Community edict.

I contend that there are opportunities for reversing the flow and encouraging the ebb tide. We should be astute to identify, exploit and enhance those opportunities. Of course, I recognise that if the Community edict is clear in its meaning and recent in its origin and has received the approval of the Council of Ministers, the Community edict is unlikely to be denied its supremacy and it would have to be enforced. But where those features are absent, that should not necessarily follow.

The edict may be a consequence of a decision taken only by the Commission; it may never have been before the Council of Ministers. It may be outdated and no longer represent what the Council of Ministers may desire in present circumstances. It may be unclear and there may be a great deal of doubt about whether the interpretation placed upon it by the Court of Justice was that intended by the Council of Ministers. In such cases, our initial response should not be to ask, "How do we change our domestic law to conform with the edict?" but to ask, "Does the Community really wish to insist on the supremacy of its edict in current circumstances?"

I shall cite an example of the sort of problem that could and does arise. The Sex Discrimination Act 1975 contains a provision that exempts small businesses—firms with no more than five employees—and domestic households from many of its employment provisions. That provision was not put into the Act by a Conservative Government; it has been there since the Act was introduced by a Labour Government in 1975. The year after the Act was introduced, the Council of Ministers adopted a directive on sex discrimination. We must presume that it did so with the approval of the British Government. If the Government of the time had thought that there was any inconsistency between that directive and the Act that Parliament had passed the previous year, they would have sought either to change the directive or to amend the Act. As they did neither, we are entitled to assume that no inconsistency was thought to exist.

The directive and the Act lived together quite happily for many years—but not, unfortunately, for ever after. In November last year the European Court of Justice considered the relationship between the two and found the statute wanting. That point was raised during the debate on the Sex Equality Bill on 9 December 1983, when the hon. Member for Peckham (Ms. Harman) intervened in the observations that I was addressing to the House. I must confess that I did the hon. Lady rather less than full justice in my riposte on that occasion.

The question arises what should now be done about the discrepancy between the directive and the statute. I contend that it does not follow, and should not follow, that the automatic response to the decision of the Court of Justice should be to amend the Sex Discrimination Act to bring it into line with the directive. The automatic response should be to try to amend the directive. Procedures exist to enable such an attempt to be made, and I hope that it will be made.

But we need something more. We need an automatic reference back to the Council of Ministers of any Community measure that is held by the Court of Justice to require a change in the domestic law of member countries. Of course, if the Council of Ministers affirms the Community edict, as loyal members we must accept that decision. But the Council's view may have changed, or it may never have contemplated that the edict would be interpreted in a particular way. Indeed, it may never have had the opportunity to consider the matter. I suggest that where an apparent inconsistency arises between Community law and domestic law, a change in domestic law should be the last rather than the first resort.

Mr. Spearing

Does not the hon. and learned Gentleman realise that he has woken up 11 years too late? We had debates in the House when the then Solicitor-General, now the Foreign Secretary, argued these very points. Section 2 of the European Communities Act 1972 makes it abundantly clear that enforceable Community legislation and court findings of the EC supersede any domestic legislation. Therefore, the hon. Gentleman's suggestion, although worthy, is not practical and, unfortunately, goes against the statutes passed by this House.

Mr. Howard

Many of us learn from experience, and I hope that we have learnt from the experience of the past 10 years. We must put that to good use and seek to change the procedures that have not been working well. Although section 2 of the 1972 Act provides for the direct implementation of some Community measures into our law, it does not apply to all the matters that would be covered by the procedural change that I am advocating. It is never too late to seek to change an institution, and I urge the Government to that end. I urge the Government to seek to establish within the Community the machinery to enable those steps to be taken. If we can restore a two-way flow of tide on European law—

Mr. Budgen

Has my hon. and learned Friend taken account of the important analogy, given by the Minister when he opened the debate, of the federation of the United States? Perhaps what my hon. and learned Friend suggests would be analogous to the attempted secession of the south and might even bring an armed attack by other EC countries on Britain.

Mr. Howard

My hon. Friend's vivid turn of phrase is combined with a dramatic imagination. I shall not follow him along that path. I find his analogy rather less persuasive than most of his observations.

I urge the Government to pursue the establishment of machinery to enable the steps that I have suggested to be taken. If that change were introduced, it would do much to affect the attitude of many of our fellow citizens who, although broadly speaking in favour of the Community and of our membership of it, are irritated and frustrated by the many occasions on which our domestic law is obliged to give priority and precedence to the law of the Community without any good reason.

8.31 pm

Mr. Richard Caborn (Sheffield, Central)

The hon. and learned Member for Folkestone and Hythe (Mr. Howard) referred to the analogy that has been drawn between the development of the United States of America and that of the European Community. [Interruption.] The Minister may have made a Freudian slip, but I refer to the attitude now prevailing in Community institutions. "The Relaunch of Europe", the report of the three wise men and the Spinnelli report all refer clearly to federalism. Conservative Members should question their fellow Conservatives in the European Parliament, and the Minister should tell us clearly tonight whether the Front Bench merely made a slip or whether we are laying the groundwork for full membership of the European monetary system. Have the documents that have been under discussion for some time — "The Relaunch of Europe", the Spinnelli report and the report of the three wise men—been accepted by the Front Bench? If that is so, the position should be made clear to the British public. I do not believe that the Government have a mandate to move in that direction. We have heard this evening that the 1 per cent. ceiling may well be controlled by the decision-making mechanism of the Ministry and of Europe rather than coming to the House. That is a dangerous development.

The Labour party has been accused of being isolationist in relation to the EC. One of the more positive parts of the Stuttgart communique was on the question of central America. Under the Greek Presidency, the Ministers have agreed to try to activate the proposals of the Contadora group. Whenever the topic has been raised, the British Minister has procrastinated and called for further reports on the situation in central America, with the clear aim of not taking action on the Contadora group proposals. Our Ministers have done us a disservice. It may be that we are puppets of the American President. We do not know whether that is so, but it seems very likely.

Reference has been made to the common agricultural policy and to the balance of trade. The steel industry is a specific industry under the direction of the European Coal and Steel Communities treaty. In the United Kingdom, the industry has been devastated. It has lost 25 per cent. of its capacity over the past five or six years. It has lost 100,000 jobs, more than 50 per cent. of all the steel redundancies in the Community. Ministers are meeting in Brussels as I speak. It is thought that the Italians will not come to an agreement on the steel plans and that by 4.30 tomorrow morning the talks could be in disarray. Arrangements in Europe have broken down. The European steel industry is in disarray and the steel industry in the United Kingdom has been devastated.

Furthermore, the Commission adopts a fairly mild-mannered approach towards the United States and, again, the United Kingdom steel industry has borne the brunt. An agreement was made in 1982 to run from November 1982 to December 1985. It referred to 10 major steel products from the EC, amounting to under 6 per cent. of the American market. In that case, an agreement satisfactory to the Americans could not be reached until we agreed to negotiate on pipes and tubes as well. That agreement is now running, but in 1983 the Americans came back for a second bite at our steel industry and, in particular, the special steels industry. They brought in the argument on subsidies, under section 201 of the United States Trade Act 1974. The argument is that we are damaging their industries. The contents of section 201 of that Act are different from the contents of section 301, which was used in 1982 on the question of carbon steel. Section 201 refers to with respect to serious injury, the significant idling of productive facilities in the industry, the inability of a significant number of firms to operate at a reasonable level of profit, and significant unemployment or underemployment within the industry. The Commission has capitulated. Discussions are still going on under the GATT arrangements but an extension of 40 days has been granted and apparently we shall not be taking on the United States on the special steels sector. Indeed, there may be a capitulation on global trade figures. That would be highly detrimental to the special steels industry, which is an important part of the steel industry and supplies our high technology industries. The Ministers should put pressure on the Commission to prevent such a capitulation. This week it was reported in the International Herald Tribune that the Bethlehem Steel Corp. and the United Steelworkers union file a petition Tuesday that asks the government to impose a significant reduction in steel imports, through tariffs, quotas or a mixture of both. That will affect the 1982 agreement. A complaint was filed under section 201 asking that the penetration of the United States steel market, which stands at about 22.3 per cent., should be brought down to about 15 per cent. If that petition is accepted, if the Commission acts in the way in which it has acted on two previous occasions, and if the United Kingdom Minister who represents us in Europe accepts a deal which resembles the deal accepted in the past, we can say goodbye to the British steel industry. Conservative Members have told us that we have been asked to close down another of the British Steel Corporation's strip mills.

We have suffered a disproportionate amount of cuts both in terms of capacity and numbers employed, and if we continue to accept them, they will lead to the collapse of the British steel industry, whether it is developed under Phoenix 1, 2 or 3. Those cuts are detrimental to the industry. If this further development in the relationship between the EEC and the United States of America continues in the same way, it will have a serious effect on the British steel industry.

8.39 pm

Mr. William Powell (Corby)

It is worth bearing in mind the context in which the events described in the White Paper came about.

By January 1983 we had just seen the collapse of Herr Schmidt's Government in West Germany. The new West German Government faced an election in March. Thus it was not surprising that that Government were hardly in a position to make significant political decisions about the future of the Common Market. At the same time, the French Government had to come to terms with the fact that their attempts to go it alone had failed. They had to reverse their national economic policies. Meanwhile, in Britain, the first six months of last year were almost entirely taken up with the gathering election momentum, which in itself led to the election in June. In Italy, there was yet another election shortly after the British general election, and before then the Italian Government had been no more than a weak caretaker Government. Against that political background, it is not surprising that the events described in the White Paper should be an immense disappointment.

We must also bear in mind the economic backcloth. However, we need to examine it over a slightly longer period. Between the foundation of the Common Market and the first oil crisis—a period of about 14 years—growth throughout the Community averaged about 4.6 per cent. per annum. The effect of the first oil crisis and the measures that were taken thereafter was to slow down growth throughout the Community to less than half of that. That meant that the slowdown in growth that occurred in the Community was greater than that in the countries of our principal trading rivals, the United States of America and Japan. The consequences of that slowdown in growth have been absolutely devastating for the economies of western Europe.

The reduced growth has brought about an increase in external debt and a reduction in profits. With that reduction in profits, there has been a decline in net investment. As a result of that decline in net investment, our competitiveness has suffered badly compared with Japan and the United States. One consequence of that has been the much higher rate of inflation experienced in the Community compared with the United States of America and Japan.

An examination of the net profits on sales of the 100 largest companies based in western Europe shows that between 1973 and 1981 they averaged 1.4 per cent., about half that achieved by Japanese companies. In the United States, the figure rises by three-and-a-half times. Of course, there has consequently been a catastrophic decline in manufacturing investment. There has also been a decline in productivity as all western European countries have maintained incomes at the expense of investment.

There has been a capital outflow of funds from western Europe to the United States, as people within the Community have found more profitable investments there. As a result, over that period the countries within the Community have lost 3 million jobs. There are 3 million fewer people in employment in the Community — not just in Great Britain, but throughout the Community—than in 1973. However, in the United States of America, there are 15 million more people in employment.

We can only judge the policies that must be pursued in the EC against the background of the change in employment patterns. I wish the Government well in their attempts to come to terms with the two major problems that dominated 1983 and which still persist. I refer to the problems of dealing with the CAP and with our contribution to the Community budget. Much has been said about those problems tonight and I wish only to observe that they are symptomatic of the fundamental difficulties that the EC now faces. Those fundamental difficulties are the economic protectionism that is now growing in the Community and the political paralysis.

I shall briefly examine each difficulty in turn. The Common Market speaks the language of free trade, but it is just as protected in its institutions as the institutions of the ancien regime of 18th century France or of the Zollverein of Germany in the 19th century. The simple fact is that we constantly try to protect ourselves from the decline in jobs, and each time we do so we beggar ourselves. The way out of the job crisis in western Europe lies not in protectionism but in stripping away the barriers to free trade. That is what we must do.

My hon. Friend the Under-Secretary of State referred to the scandal of the customs posts throughout Europe. It would cost nothing to remove all that bureaucracy and red tape. If we did that, there would be a marked effect in improving trade between member countries. People are perfectly entitled to refer to the decline in our manufacturing position, but they should remember that what also matters is our volume of trade. The volume of trade that we have had with the Community since our membership has grown greatly, and must continue to do so. Economic protectionism is to be found throughout the Community, and nowhere more so — as has been stressed—than in the CAP. The system of MCAs that member states have erected to protect their own agriculture has become one of the greatest scandals of Europe.

We shall make no significant progress in dealing with the growing joblessness in Europe unless we strip away that economic protectionism. The solution does not lie in any country trying to go it alone. That has been tried in Britain and in France. No country in Europe is strong enough to go its own way—not even West Germany. However, if we try to grow together and to achieve a convergence of our policies, there is evidence to suppose that we can regenerate the level of growth that was characteristic of the early years of the Community, and which has been so persistent in its absence during the past eight to 10 years.

Above all, we must deal with growing protectionism in the public sector. It is government that is the principal evil when it comes to the problem of analysing where protectionism exists. We all know that there will be no European aircraft industry unless we have one European aircraft industry that is able to sell to member countries, and, on the basis of a strong home market, export to the rest of the world. There is not a single company based in Texas that regards itself as Texan first and American second. There is not a single company in California that regards itself as Californian first and American second. They work in a free market, whereas we simply talk the language of the free market while erecting the very barriers that beggar us. We need an end to the political paralysis that is preventing us from stripping away those barriers. No hon. Member can feel that there is anything other than complete paralysis in western Europe.

This year I hope that, taking advantage of the political stability resulting from the West German and British elections, a change in direction can be negotiated so that the customs scandals are dealt with, the public procurement policies are eliminated and action begins to be taken on the report that was prepared by my hon. Friend the Member for Cheadle (Mr. Normanton) as long ago as 1977 on a common procurement policy in defence industries. All those actions are necessary.

My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) is fond of reminding us that he became a Member of Parliament in 1950 on Mr. Churchill's slogan about setting the people free. No policy is more necessary now than an attempt to set the people free in Europe by burning all restrictions and protections. That is the only way in which we shall prevent joblessness. In fact, 1983 was the 11th successive year in which joblessness had increased in Europe, and unless we take action 1984 will be the 12th successive year, and the trend will continue.

Respectable institutions reckon that, instead of the present 12 million jobless in the Community, by the end of the decade there might be 20 million. That is not a fact that any hon. Member wishes to contemplate. There is only one way out: a growing convergence of our economic policies and a common desire to sew those policies together and to strip away all the barriers to industry, investment and achievement.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Paul Dean)

Order. Before I call the next hon. Member, the House will wish to know that the winding-up speeches are expected to begin at about 9.10 pm. A number of hon. Members still wish to speak. Short speeches will be of great help to everyone.

8.52 pm

Dr. Norman A. Godman (Greenock and Port Glasgow)

I shall take your advice on board, Mr. Deputy Speaker.

I listened carefully to what the Minister said about the accession of Spain and Portugal to the EEC and the fact that they would not be given a "blank card" on accession, which I believe was the expression he used.

The negotiations on Gibraltar will change somewhat with Spain's membership of the European Community, and therefore Spain's fishing fleet concerns me. I would say to the hon. Member for Truro (Mr. Penhaligon) that I know what a mackerel looks like. As someone who made his first voyage to Bear Island and Spitzbergen at the tender age of 12, I can even spot the difference between a cod and a haddock. However, the hon. Gentleman is not here to hear what I have to say about that subject.

I am worried about the EEC's approach to fishing, but I am especially concerned about the social affairs section of the White Paper. I represent a constituency that has massive unemployment and may have even higher unemployment if—perish the thought—Scott Lithgow closes.

About two thirds of the EEC's budget is distributed to the CAP, about 5.4 per cent. goes on regional aid and about 6 per cent. on social spending.

Unemployment in my constituency is high, especially among young people. In Port Glasgow, youth unemployment is as high as 80 per cent. About 3,000 school children in my constituency receive free school meals. What future do they have? Will they move from receiving free school meals to the dole queues? It is not just those youngsters, but often their fathers and mothers, who are unemployed.

Those who suffer other deprivations are highlighted in a book a chapter of which was written by Ronald Young, a Strathclyde councillor. Writing about unemployment in my constituency, he said: On a clear day the view would have the estate agents sharpening their epithets for a killing. The Clyde Estuary at your feet—and the sweep of the Argyll peaks beyond putting Ben Lomond to shame. This, however, is Strone-Maukinhill — a council house scheme of 10,000 people, 40 per cent. of whose male population is unemployed. There is no killing for estate agents because about two-thirds of the households are … on rent rebate and the few who could afford a mortgage don't fancy the houses or the area. Only about half a dozen houses have been sold in that area, one reason being the dreadful dampness that affects thousands of houses in my constituency. Recently, the Secretary of State for Scotland received a letter signed by 45 doctors expressing their fears about growing unemployment and the medical problems generated by it.

Given the dependence of the Clyde, especially the lower Clyde, on shipbuilding and marine engineering, the allied industries should be given equal status with coal and steel within the European Community in terms of accepting the dreadful social consequences in those industries and providing social funds for the people who are so badly stricken. That does not mean that I accept the inevitability of the closure of Scott Lithgow. I have made my views well known to the House on the way forward for Scott Lithgow and on the Britoil contract. Shipbuilding and marine engineering should be given preferential treatment in areas, such as Strathclyde, which suffer from high unemployment and multiple deprivation. Therefore, funds should be directed to the Clyde for community enterprises and to provide other forms of new employment. That is my plea to the Government.

8.58 pm

Mr. Michael Fallon (Darlington)

The debate has rightly ranged wider than the problems of the budget and agricultural expenditure, notably in the fascinating speech of my hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) which was marred only by his further maligning the much-maligned King Canute who, in fact, shared Lord Denning's analysis and not my hon. Friend's.

The aspect of the White Paper to which I shall draw attention may at first seem minor but it is related to the more general problems of the Community in that it reveals the Community's structural bias towards the illiberal member states and the producer lobbies and against the more liberal member states and the consumer. Paragraph 3.12 of the White Paper notes a most significant development not just in external trade, which would be significant enough, but in the use of Community mechanisms and influence to escape the letter and spirit of GATT.

The restraints referred to in that paragraph, which were agreed by the Community with Japan for the first time in February last year and have now been followed by further restraint agreements with other newly industrialising countries, cover not just infant industries, for which the protection argument has always been admitted, but an increasingly wide range of ordinary manufactured goods. The so-called voluntary export restraints are not voluntary at all. They are forced on the offending third country by the Community in our name. They are wholly illegal under GATT and are a clear example of growing but covert protectionism.

The agreement with Japan about video cassette recorders in February 1983, which is noted in the White Paper, has been extended for 1984 to no fewer than 10 so-called "sensitive" sectors. That agreement allows European manufacturers to set higher prices than they normally could because it guarantees them sales. The consumer thus loses in two ways. He loses if he buys the European product at the higher price and he loses if he buys the Japanese import because of the secret Japanese floor price fixed by the Commission and Japan.

There is a constitutional point here. Just as it is wrong for the United Kingdom Government to shelter behind Community machinery in negotiating agreements that may contradict the rules of GATT, so it is wrong for Ministers to impose and enforce what are in effect export cartels against their own citizens. I have always supported the Community because I believe that a strong and free common market throughout the Community would not only benefit our industry but would be a force for good in world trade. I ask the Minister and his colleagues to use all their influence to ensure that GATT is upheld not just in letter but in spirit and that no more voluntary agreements will be "endorsed", as the White Paper puts it, by the Foreign Affairs Council.

Finally, I ask the Minister not to allow Foreign Ministers or the Trade Ministers to pander to identifiable but minuscule job protection, the cost of which is inevitably borne by millions of consumers who are far less politically organised. If he can help the Community to resist such tempations he will ensure its transition from being a convenience for Governments to being a genuine benefit for individuals.

9.2 pm

Mr. Bill Walker (Tayside, North)

I thank my hon. Friend the Member for Darlington (Mr. Fallon) for his brevity, which has allowed me to participate in the debate. If others had taken the same attitude, other Conservative Members who wished to participate might have been able to do so. I greatly appreciate my hon. Friend's example.

Dr. Godman

What about mine?

Mr. Walker

I also appreciate the brevity of the hon. Member for Greenock and Port Glasgow (Dr. Godman).

The debate relates to the period from January to June 1983, but everyone is aware that as the EEC comes closer to the day when it will run out of cash much of what took place in that period and much of what has been said since then seems less and less possible or relevant. We are rapidly leaving the age of idealism and entering the age of realism. We now have to find the answers.

Much has been said today about the need for reform of the common agricultural policy. My hon. Friend the Minister of State spoke of the need for proper financial control, and I cannot disagree. There is a desperate need for proper control of all Government and European expenditure. At the same time, I remind the House that there is nothing unusual or wrong about using public money to support and protect sectors or areas for what we describe as social reasons or for strategic and defence reasons. It is in the latter two categories that I see the support expenditure on agriculture in the United Kingdom. As the hon. Member for Aberdeen, North (Mr. Hughes) is aware, I am desperately trying to help in the case of Scott Lithgow, as I have done in areas like Prestwick. If the hon. Gentleman were a little more charitable, he would realise that some of us care as deeply about jobs in Scotland as he does.

I believe that the lessons of the last two world wars, when we were desperately short of food, should never be forgotten. That is why I have never found it difficult to support the use of public money to maintain sheep and cattle on the hills of Scotland. What I have never accepted is the view of some of my colleagues that decisions affecting the hill farmers of Scotland were best made in Europe. Indeed, I am deeply concerned that Scotland's hill farmers are faced with uncertainty, due to the financial and cash flow problems of Europe.

The raspberry farmers of Tayside are finding to their cost that raspberry pulp from eastern Europe is being dumped in this country via Holland. Indeed, evidence has been produced by the Scottish NFU which clearly demonstrates that, during the period under discussion, more raspberry pulp has come into the United Kingdom from Holland than the entire production from that member state. This is not satisfactory, and cannot be in the interests of Europe or Britain.

Against this background, I view the situation in Europe today with considerable apprehension. I also watch developments in France, in particular the action of French farmers, as warning signs — the combination of the French economic failure and the failure of the CAP to resolve the problems facing French agriculture, particularly French livestock producers, and the pig producers are the ones most badly affected—that we should not ignore. Indeed, I would go further and say we ignore them at our peril.

Coupled with that is the entry of Spain into the Community, and the difficulties that may arise because of the potential in that country for agricultural expansion—expansion on a scale we cannot comprehend because of the land mass, the weather, irrigation that could be provided from Euro funds and a massive Euro market. That is why I believe that we must take this unique opportunity today offered by the Community running out of funds to bring about fundamental reforms in the EEC.

We were not in at the beginning. Consequently, we were required to accept substantially the conditions on offer when we joined 10 years ago. Sadly, however, if experience is a guide, I believe we will not grasp the opportunity, and the Council of Ministers, the Commission and the European Assembly will conspire to maintain the status quo. They will fudge issues such as net contributions, and we shall end up with the CAP substantially unchanged. An increase in own resources is more likely, and this will be presented to us in an effort to meet the other EEC programmes. These programmes will involve the collection of taxes in the United Kingdom and other member states, and the moving of these funds through the European institutions and organisations, which can only mean substantial reduction in the worth of these taxes when spent on nation state programmes. Whether this will be good for Europe in the long term, I cannot say. I am sure, however, that, if we do not grasp this opportunity to bring about substantial change now, it may be many years before a similar opportunity recurs.

I believe this will result in the increased probability of people behaving like the French farmers, with all the risks for democracy that this presents. That is why I put my faith in what my right hon. Friend the Prime Minister has been saying for a long time, that we must bring about changes, and her views on these matters are not dissimilar to my own. I am confident that she will not disappoint me.

9.9 pm

Mr. George Foulkes: (Carrick, Cumnock and Doon Valley)

It is a great pleasure to follow the hon. Member for Tayside, North (Mr. Walker) particularly after he has revealed something that we were all wondering—that is, who is the brains behind the Prime Minister.

I did not think that I would be replying to a debate on Europe and saying that I could agree with some of what the hon. Member for Southend, East (Mr. Taylor) said, particularly when he commented that changes on both sides of the House made this a less sterile and more constructive debate. That has, indeed, been the case.

I shall reply to as many of the points that were made in the debate as possible, and I hope that in so doing I shall set an example to the Economic Secretary, who will reply to the points that were made and answer the questions asked rather than read from a Treasury brief prepared some hours, if not days, ago.

The hon. Member for Southend, East agreed with the hon. Member for Southampton, Test (Mr. Hill), in itself a noteable change from previous debates, perhaps brought about by a combination of disillusion and realism. I appreciate why the Minister of State does not like our amendment; he does not like us to draw attention to the fact that the Government's European policies are as bankrupt and disastrous as the policies that they have pursued in the United Kingdom.

Mr. Robert Hughes

Speak of the devil.

Mr. Foulkes

I am pleased to see that the Minister of State has returned to the Front Bench. My hon. Friend the Member for Aberdeen, North (Mr. Hughes) is aware of the Government's policies in both areas and is aware of their bankruptcy in both. During (he past five years we have seen an increase in inequality, poverty increasing, with the rich getting richer and the poor getting poorer. We have seen industry being destroyed—reference was made to the steel industry, but the same is happening to the coal industry—because of the policies being pursued by the Government both here and in Europe.

We have witnessed regressive, rather than progressive, policies. The deeds have not matched the words. We saw the Prime Minister being interviewed by Mr. Brian Walden and heard her frank admission, but we have seen this process even more in the European Community. Stridency and shrillness, which is what we get from the right hon. Lady, are no substitute for real action and urgency. Stridency and shrillness are not necessarily the best way to bat for Britain.

It is clear from almost all the contributions today—it is also clear from the choice of the Minister who will reply and from what the Prime Minister keeps talking about at summits and elsewhere — that the central issue is and remains the budgetary crisis and particularly the rebate or refund. It is on this issue that we expect some action arid urgency — not stridency and shrillness — outside the House. But no sense of urgency has been apparent.

I say without disrespect to the Minister who will reply, that he represented the Government at meetings of the Council of Ministers when the European Parliament decided to impose its veto on our refund. That was a matter of great importance to the United Kingdom. It was understandable that other Governments were not represented at the highest possible level. But we did not show the right sense of urgency in getting our refund in not being represented at a higher level. We should have had our big guns firing there, and then we might have got some alteration in the decision of the European Parliament.

It was pointed out earlier that we are now, in time, half-way between Athens and Brussels, and we wonder what prospect there is of success. What indications are there that agreement will be reached in Brussels when it could not be reached in Athens? [Hon. Members: "None".] My hon. Friends say none. I have been trying to discover the answer to that recently from reading various publications, including The Scotsman, one of the newspapers that I take regularly, as the Minister of State knows. I read: EEC Foreign Ministers have, we are told, agreed to an eight-week timetable in which to lay the foundations for a new European Community before the Brussels summit meeting in mid-March. How many times have we heard that? In reality there has been little progress. If we can believe our Foreign Secretary, it has fallen to him to inject urgency into finding solutions to problems which have plagued the EEC for years. Hon. Members saw him at the Dispatch Box yesterday. Would he inject urgency into finding solutions? The Opposition do not detect such urgency, and I doubt whether other people do.

Yesterday I asked the Foreign Secretary what would happen if there was no payment of our refund by the end of March, which is the deadline. We received no answer, only the usual guff about taking appropriate action. It was a weak and pathetic response. We repeat the question tonight: what is meant by taking appropriate action? We ask the Government to pledge that if the money is not paid by the end of March, we will withdraw all or part of our contribution for this year. No less than an unequivocal pledge from the Minister on that will satisfy us that the Government is resolved and determined.

The Minister must beware of bargaining and of a tradeoff for an agreement. If the decision of the European Parliament is anything to go by, the sort of trade-off that it requires for an agreement to increase Community own resources would not be acceptable to the Opposition or to many conservative Members.

The Prime Minister has said on television and elsewhere, "We need the money, it is our money," but will the Minister tell us for what purposes the money will be allocated? Will he guarantee that the money will be used for new schemes to reduce unemployment or to combat poverty? Is it not more likely to be used to reduce the PSBR or to pay for the bombs that so delight Conservative Members? I doubt whether the money will be allocated for additional expenditure. The Government lack resolve, and are all talk and little action.

Many hon. Members mentioned the CAP, including the hon. Member for Truro (Mr. Penhaligon). I did him a disservice, yet he came back fighting, and the score on that battle was Truro 1, Ayrshire 0.

I have now solved the problem of the missing Members—the Euro-fanatics who have benefited so much from the European Community, especially the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), who still benefits from it. If I had done the reading I should have done earlier in the day, and which the hon. Member for Truro could not have done, I could have quoted to him the headline in today's Glasgow Herald. It said, Roy Jenkins fights for fossils". We know, therefore, that he is doing something much more worthwhile than being here today.

Mr. Boyes

We should emphasise the fact that every party is unrepresented in the Chamber at times. Although I have not been in the Chamber all the time, I have never seen a member of the SDP here. Does my hon. Friend agree that their constituents should know that it is not enough to catch Mr. Speaker's eye at 3 or 3.15 pm, at prime time when all the press are present? Some hon. Members have to work on such debates. In view of the SDP position on the Community, would not my hon. Friend have expected an SDP representative to be here tonight?

Mr. Foulkes

In the spirit of the speech of the hon. Member for Southend, East, I shall be generous and say that we regularly see Conservative Members—too many of them — morning, afternoon, evening and early morning. We regularly see members of the Labour party and the Liberal party here, but we do not see SDP Members regularly.

My hon. Friend the Member for Livingston (Mr. Cook) answered the questions on the CAP raised by Conservative Members. I hope that the Minister will be in no doubt about the strength of opposition to the oils and fats tax. I am not one of those who kow-tows to the United States—indeed, I have been critical of American action in Grenada and on many other issues—but there is no need for the oils and fats tax to aggravate our relations with the United States unnecessarily. Yesterday I talked to the American Under-Secretary for Agriculture, and it is clear that if the tax were introduced it would create much contention between Europe and America. It would cause havoc in some parts of America, and there is no guarantee that people would switch to eating butter simply because the cost of margarine was inflated artificially.

My hon. Friend the Member for Sheffield, Central (Mr. Caborn) mentioned steel. The Government's record on steel is pretty poor—

Mr. Boyes

Appalling.

Mr. Foulkes

It is appalling, as my hon. Friend says. The British Steel Corporation has taken an absurd share of the cuts, with 45 per cent. of all steel jobs lost in the Community being British jobs. West Germany has lost only 20 per cent., and France has lost only 15 per cent. Britain is the only country that seems to take Community decisions seriously. Others seem to ignore them, especially the Italians. The Italians threatened to walk out of today's meeting on steel. Will the Minister assure the House that Britain will not continue on the suicide trail of job cuts in the steel industry? We cannot continue to lose those jobs when other countries do not contribute their fair share to the European steel policy. That is not what the European Community should be about. As my hon. Friend for Sheffield, Central said, the position could become worse if America continues to find new ways of objecting to steel imports from the EC.

Unfortunately, it has been too easy for the Government, because of their doctrine of cuts in public expenditure, to accept the end of steel subsidies in the United Kingdom. Because of their blind adherence to their philosophy, they have failed to notice the hidden subsidies in other European countries. Coal is subsidised much more than it is in the United Kingdom, freight charges are subsidised in Belgium and Germany, and short-time working payments subsidise the steel industries of other countries. Subsidies in Britain represent only £11 a tonne; in Germany the subsidy is £15, in France it is £18, and in Belgium it is £19.

We need assurances from the Government that they will stand up for Britain on steel, not stridently but with action and urgency. On behalf of all my Scottish colleagues and my colleagues south of the border, although there always seems to be a predominance of active Scots in these debates, I seek a guarantee on the future of Ravenscraig. It is not good enough for the Government to say that it is all right for the next two or three years; we need a long-term commitment.

My hon. Friend the Member for Newham, North-East (Mr. Leighton) and others, who have a long and honourable record of being critical of the European Community, find it difficult to accept that from time to time the Community suggests things that are beneficial to this country, especially when we have a Conservative Government and the European Community makes radical suggestions. Some of its suggestions are enlightened and can be used to encourage the Government to take a more enlightened attitude.

I was disappointed that one of my colleagues dismissed the social and regional funds as being of little importance. Unfortunately, as my hon. Friend the Member for Livingston said, there is not enough money in the funds; resources should be switched from the agricultural sector—

Mr. Budgen

Does the hon. Member agree with the hon. Member for Livingston (Mr. Cook) that if the social fund was much expanded, inevitably the EC institutions would want increasing control over the way in which the money was spent?

Mr. Foulkes

No, my hon. Friend did not say that. He advocated a switch, not an increase, in the resources from the common agricultural policy to the social and regional funds. Local authorities in Scotland and England have used money from the European Community to promote local employment initiatives. In the context of the huge number of unemployed, these are relatively small amounts, but they will be even less because of the domestic policies of the Government.

Mr. Jackson

Will the hon. Gentleman remind the House that the Government worked hard to secure a 50 per cent. increase in the social fund last year?

Mr. Foulkes

I shall leave the Government side divided; perhaps I am not sorry that I have brought about a division.

If the Government have their way on rate capping, the reduction in funds for local authorities will mean that the local employment initiatives that have been taken by local authorities will cease. Ironically, this will mean that our net contribution to the budget will go up and the deficit problem will become worse.

Mr. Teddy Taylor

I accept the hon. Gentleman's sincerity and his right, as a Socialist, to be in favour of lots more money being directed to lots more funds to be spent by lots more Government officials and civil servants, but surely he cannot expect a Conservative Government, who want to cut spending, subsidies, waste and bureaucracy, to be in favour of cutting Britain's expenditure and shoving more money into the Common Market.

Mr. Foulkes

I am glad that I gave way to the hon. Gentleman, who I knew would be helpful. He has served to highlight the difference that is inherent in the Opposition amendment between Conservative Members and Labour Members. Secondly, he has given me an opportunity to say that I am talking about redistributing the wealth that is available in the European Community. That is Socialism, and that is something of which my right hon. and hon. Friends are proud.

That brings me to the anti-poverty programme, which has received scant attention from the Government. The pilot scheme proved successful, and the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) is aware of that in the area that he represents. I know that he will be disappointed by the lack of attention that it has received. The Government have not acted to try to ensure the continuation of the programme.

It would seem that there are two European Communities that are quite separate from each other. There is a real Community and an imaginary one. The Government believe in the imaginary Community in which agreements appear to be reached. They think that they have been reached, and we saw examples of this after the Stuttgart and Dublin meetings and on many other occasions. That is the Community of sweetness and light. There is the Community of progress, which is the imaginary creature of the Government.

The other Community is the one that we all know and which the people outside the House know. It is the Community of hi-jacked lamb, delay and procrastination. It is the Community of surplus and waste and crisis after crisis leading to deepening crisis as time passes.

We are asking the Government to come to terms with the real Community. We ask them to cast aside the shrillness and stridency of which the Prime Minister is so fond and to get down to some real action. We contend that policies that benefit the working people of Britain, whether they come from Westminster or Brussels, will come only after 14 June, when we return more Labour Members to the European Parliament.

Dr. Mawhinney

Is that the imaginary one?

Mr. Foulkes

The hon. Gentleman has anticipated my final remark. Such policies will be possible only when a Labour Government are returned to Westminster.

9.34 pm

The Economic Secretary to the Treasury (Mr. Ian Stewart)

This must be the first debate to take place in the House on the European Community in which all four Front Bench spokesmen have been Scots, although I accept that I am in exile for the time being. Nevertheless, I hope that our partners in the Community will accept that there is a canny team in the House of Commons dealing with Community matters.

The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) said that he would try to reply to as many of the points raised in the debate as time would allow. The debate has ranged so widely that it was impossible for him, as it will be for me, to deal with every issue. I listened carefully to what the hon. Member for Truro (Mr. Penhaligon) said about mackerel boxes. I listened to my hon. Friend the Member for Darlington (Mr. Fallon) talking about restraints of trade. I listened to my hon. Friend the Member for Tayside, North (Mr. Walker) talking about dumped raspberry pulp. We had comments about the steel industry from the hon. Member for Sheffield, Central (Mr. Caborn). Those are all important matters, but I shall have to ask my hon. Friend and the hon. Gentlemen to accept that in many cases I shall have to deal with the matters by drawing them to the attention of my right hon. Friends the Secretaries of State for Scotland and Trade and Industry, and the Minister of Agriculture, Fisheries and Food.

A number of issues were raised in the debate about the future of the Community. My hon. Friend the Member for Southend, East (Mr. Taylor) asked what would happen if and when the CAP ran out of funds. I have corresponded with my hon. Friend on this subject. The position is unprecedented, and if that were to happen we should be moving into uncharted territory. In such circumstances, all the member states would need to get together and discuss how to deal with the situation. [Interruption] Opposition Members may find it funny, but if the CAP were to reach that point, it would be a most dramatic event and would help galvanise the Community into reaching decisions that have been deferred for far too long.

The hon. Member for Carrick, Cumnock and Doone Valley asked me to say something about the oils and fats tax. I have no more regard for it than he does, and I can give him the assurance for which he asks.

In opening the debate, the hon. Member for Livingston (Mr. Cook) spoke about—

Mr. Marlow

Does my hon. Friend agree that it ill-becomes right hon. and hon. Members on the Opposition Benches to make fun of our discussions in the Community, because when they were in charge of the affairs of this country, and when they had discussions in the Community, they achieved absolutely nothing whatever?

Mr. Stewart

I agree that they stand condemned by their record.

The hon. Member for Livingston raised the question of the ESPRIT programme. Certainly, it is an important programme for the Community. However, although the German Government took an initiative in the Foreign Affairs Council on Monday, they in fact proposed that, to be sure of funds being available for ESPRIT within the present 1 per cent. of the present VAT ceiling, other research and industrial support programmes would be held back. We would prefer economies to be made in the CAP to allow the ESPRIT programme to go ahead. However, we shall consider the German proposal carefully.

The hon. Member for Livingston also said that we were blocking the funds. That is not true. There is a provision in the 1984 budget, for which I voted in the early hours one morning in the Budget Council in Brussels, for the early stages of ESPRIT, and the full size and scale of the programme remained to be worked out.

A number of hon. Members asked about the international position of the Community. The hon. Member for Monklands, West (Mr. Clarke) thought that the Community was being too soft. The hon. Member for Sheffield, Central thought that the Community was too mild mannered with the United States. My hon. Friend the Member for Halsowen and Stourbridge (Mr. Stokes) was concerned about our trading arrangements with third countries. In all these ways, however, experience has shown during the past few years that the collective voice of the Community is stronger and more effective than the voices of individual Members would be on their own.

Several hon. Members asked about the ultimate future of the Community and mentioned federalism or a European union. If anyone is in any doubt about what my hon. Friend the Minister of State said, he should read his speech in Hansard tomorrow. I am sure that his speech will not bear any of the interpretations which have been made today. Federalism is an extremely remote idea. Political union is far over the horizon and very likely to remain there.

Mr. Caborn

The important point concerned the European monetary system. I asked about it because the Minister mentioned it in an aside. Are the Government preparing the ground for us to join as a full member of the EMS?

Mr. Stewart

We keep our stance on the EMS under review. We do not believe now, nor have we believed in the past, that it would be appropriate for sterling, which is a petro-currency, to become a full member of the EMS.

Mr. Budgen

Will my hon. Friend give way?

Mr. Stewart

No.

Mr. Budgen

Is the Government's stance that they favour joining the EMS in principle but are merely waiting for a suitable time to do so?

Mr. Stewart

We keep the subject under review. I do not regard it as a matter of principle. It is a practical matter which must be decided on its merits.

Several hon. Members mentioned our trade with the Community. The proportion of our exports to the Community as against imports from it has been rising steadily. Between 70 per cent. and 80 per cent. of visible trade was covered in the early 1970s. That rose to more than 80 per cent. in the late 1970s and it has reached 90 per cent. in the past three years.

Dr. Godman

That is because of oil.

Mr. Stewart

That hardly seems to be an unsatisfactory trading record. Those who maintain that we are put at a disadvantage by being members of the Community must have overlooked the fact that, last month, we had a £700 million balance of payments surplus. I suppose that they blame that on the Community as well.

Mr. Teddy Taylor

Like all hon. Members who have taken part in the debate, I am a searcher after truth. The Minister for Trade said recently that in 1972, the year before we joined the Common Market, we had 6.3 per cent. of Europe's market and that now we have only 6.1 per cent. of it. Therefore, our share of trade in manufactures is less than when we started.

Mr. Stewart

All countries, especially Britain, have many aspects to their trade which includes invisible trade as well as trade in manufactures. In the most recent report of the EC, Britain's economy is rated as the fastest-growing in the Community in 1983 and 1984. The arguments of hon. Members who have said that our membership of the EC has inhibited our recovery and economic development are disproved by the figures.

Mr. Leighton

Will the Minister give way?

Mr. Stewart

I have already given way too much. My hon. Friend the Member for Corby (Mr. Powell) and the hon. Members for Greenock and Port Glasgow (Dr. Godman) and for Houghton and Washington (Mr. Boyes) mentioned serious unemployment. All industrialised countries now face it. The only way in which to deal with it is to reduce inflation and to achieve industrial recovery such as is now taking place. The Community has played its part. The social fund has contributed £1,000 million to the United Kingdom. Some of that money has been devoted to youth training and similar projects.

Many hon. Members asked about refunds and the budget. In the past four years we have achieved £2.5 billion-worth of refunds. The hon. Member for Newham, North-East (Mr. Leighton) should bear in mind the fact that that represents about 66 per cent. of our gross contribution.

We have had real refunds, and not imaginary refunds as the Labour party received. The hon. Member for Carrick, Cumnock and Doon Valley asked if we would deal—

Mr. Leighton

rose—

Mr. Speaker

Order. The Minister said earlier that he would not give way.

Mr. Stewart

If I give way to every hon. Member to whom I refer in my winding up, I shall be unable to respond to the debate.

The hon. Member for Carrick, Cumnock and Doon Valley asked for urgency, which we are applying, and for determination. To describe our approach as one of "taking the appropriate action at the right time" is correct. The circumstances which will develop during the next two months are at present hypothetical. The hon. Gentleman also asked whether money received from the European Community would represent additional expenditure for this country. We would be unable to maintain domestic public expenditure at the current level if it had not been for refunds that we have obtained from our net contribution.

The serious issue of the Community's own resources running out has been discussed in the current negotiations. I have been asked on several occasions during the debate about the 1 per cent. ceiling on VAT. It will remain in place until there is a unanimous decision to the contrary by all member states. Before the ceiling could change in this country, a resolution would have to come before the House and the change could not become operative unless the resolution was passed.

As has been said by my right hon. Friend the Prime Minister and other members of the Government on many occasions in recent months, we do not believe that the case has yet been made out for an increase in own resources. We remain to be convinced of that.

My right hon. and learned Friend the Foreign Secretary said in the debate just before Christmas that the onus is on those who want an increase to demonstrate the need and the case for it. Such a need cannot be considered until the Community takes far-reaching decisions about the new structure which is essential for its financial and agricultural policies in the coming years.

Of course, the CAP is in a serious state. It is reaching a point of crisis. It has been far too effective in the original objective for which it was established—to encourage the development of European agriculture. It is high time that major decisions were taken to deal not only with the general expenditure levels in the Community budget, but specifically with the CAP.

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.

An increasing number of member states in the Community recognise that greater budgetary discipline is needed and that tighter control must be placed on CAP expenditure from this year. That is a great advance in realism.

We have proposed a strict financial guideline.

Mr. Cook

The Minister will be aware that the Government's position is that reform is one of the conditions for an increase in own resources. For the Minister to tell the House that reform to them means something to be decided as the negotiations proceed is unsatisfactory. Will he say what is meant by "reform" and recognise that this year's price freeze is because the EC is running out of money? If it is given more money, a price increase will result.

Mr. Stewart

That is why it is necessary to get strict control, be it a strict financial guideline or some form of variant which would have a similar effect. Of course. we need strict price control of the individual regimes, and the Commission's proposals this year recognise that. We also need a lasting system of control which will work down to the individual regime and cause changes in its structure.

We believe that revenue should determine expenditure and not the other way round. That is why we have also proposed a proper system to redress the imbalances between member states and their contributions.

Each of our proposals on the CAP and imbalances complements the other because control of agriculture expenditure would reduce pressure on the budget and a redistribution of the burden of financing the Community budget would cause those who are always beneficiaries to think much more carefully about the merits of increasing certain expenditure.

Some suggest that we could resolve the question of imbalances by developing new policies and by more expenditure on the regional and social funds. It is calculated that a 50-fold increase in the regional fund would be required to offset the present level of United Kingdom deficits caused by agriculture.

Fundamental changes are needed. As my hon. Friend the Member for Southampton, Test (Mr. Hill) said, the crunch will come soon. The Council meeting at Athens was a failure in many ways, but it was a success in one sense. It brought home sharply to all member states the fact that unless major financial changes are made there is no way ahead.

The European Council meets in Brussels in two months time. No one can tell whether a satisfactory solution will be worked out on that occasion. By that time all the representatives and heads of Government will be much more aware of the impending financial crisis in the Community and that urgent steps are needed to deal with it.

It is a bit rich for the Opposition to suggest that the Government have lacked a sense of urgency and purpose in their dealings with the Community. At all stages we have tried to take a positive and constructive view of the development of the Community and at the same time to call the attention of other member states to the fundamental problems caused by the development of the CAP at the expense of other policies. There is agreement in many parts of the House about that.

We are also looking for other changes. We are looking for the creation of a genuine common market in goods and services. My hon. Friend the Member for Corby (Mr. Powell) referred to protectionism and customs barriers. They must be dealt with. Changes in transport policy and in financial services, particularly in the insurance market, are needed so that the European Community can provide a genuine common market between the member states—a phrase use when the Community was set up.

If we are preoccupied with the Community's financial aspects I fear that the way ahead will be sterile until we have resolved the problems. We have taken every possible step to convince our partners that new policies are important but that the funds for them cannot come out of a continuing escalation in the revenue that member states pay into Community coffers regardless of how expenditure is controlled.

It would make no sense for Ministers to return to their Parliaments to seek increases in European Community expenditure on a major scale when they are making every endeavour to control public expenditure within their own countries. That is why the future development of the non-financial aspects, of many of the special funds and other planned initiatives within the Community depend crucially on resolving the budgetary imbalance and above all, on establishing control of expenditure in relation to the budget and the CAP.

Reform of Community policies is needed on all those fronts. That is the purpose of the Government's efforts in all their negotiations with the Community in the last few months and years. We shall maintain our efforts. We would like to feel that we had behind us a House of Commons with an Opposition which took the subject at all seriously. Even by the Opposition's standards, their amendment is outstandingly daft. It reaches new depths of irresponsibility; it pays no attention to the Government's efforts over a wide front or to the negotiations that have been taking place and the efforts of Ministers in the individual councils of the Community to ensure a better deal for Britain.

It may be well to recall that in 1975 the then Labour Prime Minister, Lord Wilson of Rievaulx, returned from what he described as the great renegotiation of the terms and condititions of Britain's membership of the European Community and said from this Dispatch Box: The arrangements which the Community has now agreed would, if Britain remains a member of the EEC, give us an assurance of a repayment of hard cash if we found ourselves in the future paying an unfair share of the Community budget." —[Official Report, 12 March 1975; Vol. 888, c. 511.]

How much did we get in hard cash out of the financial mechanism that the then Labour Prime Minister so proudly negotiated in 1975? We got not an ecu, not a penny, not a bawbee. Nothing returned to this country as a result of the much-vaunted renegotiation by the then Labour Government.

A number of hon. Members have said that sometimes the United Kingdom appears to be treated as an outsider, isolated from our colleagues. Nothing has done more to achieve that position than the record of prevacaration of Labour Members, both in Government and in Opposition. They have altered their policy on the Community faster than a crew in the boat race can paddle in and out. At one general election their policy is to stay in the Community; at the next it is to pull out.

I shall give a quotation that I recommend as required reading for anyone interested in the subject. It comes from the Labour party manifesto at the last general election. The next Labour Government, committed to radical, socialist policies for reviving the British economy, is bound to find continued membership a most serious obstacle to the fulfilment of those policies … For all these reasons, British withdrawal from the Community is the right policy for Britain.

The Opposition said that only a few months ago. Is that still their policy? Do they still wish to take Britain out of the Community? Have they abandoned that commitment? If they have, have they abandoned the logic that by staying in the Common Market they will be abandoning also their radical socialist policies for reviving the British economy to which Britain's membership of the Community creates serious obstacles?

Not only have the Opposition already failed to spell out their policies on future membership of the EC, they have produced such a stream of conflicting statements from all their leading spokesmen that not even their own party members—let alone the House—can tell what they are trying to do. They should be judged on their record. When they had the opportunity to deal with these matters, they achieved absolutely nothing. It is approaching impertinence for them to come to the House and charge the Government—who have dealt seriously, effectively and successfully with EC matters during the past four years—with not being urgent and determined in their efforts to sort out the problems that the Labour party left behind. Had they done their duty when they were in power, we should not now be facing such difficulties with the budget.

I ask my right hon. and hon. Friends to support the Government in their determined efforts to achieve a satisfactory result in the current negotiations and to reject the irrelevant amendment of the Opposition.

Question put, That the amendment be made:—

The House divided: Ayes 69, Noes 312.

Division No. 144]	[10.00 pm
AYES
Anderson, Donald	Hogg, N. (C'nauld & Kilsyth)
Atkinson, N. (Tottenham)	Hoyle, Douglas
Banks, Tony (Newham NW)	Hughes, Robert (Aberdeen N)
Beckett, Mrs Margaret	Jenkins, Rt Hon Roy (Hillh'd)
Bermingham, Gerald	Kaufman, Rt Hon Gerald
Blair, Anthony	Kilroy-Silk, Robert
Boyes, Roland	Leighton, Ronald
Brown, Gordon (D'f'mline E)	McCartney, Hugh
Brown, N. (N'c'tle-u-Tyne E)	McDonald, Dr Oonagh
Caborn, Richard	Maclennan, Robert
Campbell-Savours, Dale	McNamara, Kevin
Clay, Robert	McWilliam, John
Cocks, Rt Hon M. (Bristol S)	Madden, Max
Cohen, Harry	Marek, Dr John
Cook, Robin F. (Livingston)	Mikardo, Ian
Corbett, Robin	Millan, Rt Hon Bruce
Corbyn, Jeremy	Morris, Rt Hon J. (Aberavon)
Crowther, Stan	Nellist, David
Davis, Terry (B'ham, H'ge H'l)	Owen, Rt Hon Dr David
Deakins, Eric	Pike, Peter
Dobson, Frank	Prescott, John
Dormand, Jack	Redmond, M.
Evans, John (St. Helens N)	Rees, Rt Hon M. (Leeds S)
Fatchett, Derek	Richardson, Ms Jo
Foulkes, George	Shore, Rt Hon Peter
Fraser, J. (Norwood)	Skinner, Dennis
Freeson, Rt Hon Reginald	Smith, C.(Isl'ton S & F'bury)
Garrett, W. E.	Smith, Rt Hon J. (M'kl'ds E)
George, Bruce	Snape, Peter
Godman, Dr Norman	Soley, Clive
Gould, Bryan	Spearing, Nigel
Harman, Ms Harriet	Tinn, James
Haynes, Frank	Wareing, Robert

Welsh, Michael	Tellers for the Ayes:
Wilson, Gordon	Mr. Tom Clarke and
Wrigglesworth, Ian	Mr. Allen McKay.

NOES
Adley, Robert	Fallon, Michael
Aitken, Jonathan	Favell, Anthony
Alexander, Richard	Fenner, Mrs Peggy
Alison, Rt Hon Michael	Finsberg, Sir Geoffrey
Amess, David	Fletcher, Alexander
Ancram, Michael	Fookes, Miss Janet
Arnold, Tom	Forman, Nigel
Ashby, David	Forth, Eric
Aspinwall, Jack	Fowler, Rt Hon Norman
Atkins, Rt Hon Sir H.	Franks, Cecil
Atkins, Robert (South Ribble)	Fraser, Peter (Angus East)
Atkinson, David (B'm'th E)	Freeman, Roger
Baker, Kenneth (Mole Valley)	Gale, Roger
Baker, Nicholas (N Dorset)	Galley, Roy
Baldry, Anthony	Gardiner, George (Reigate)
Banks, Robert (Harrogate)	Garel-Jones, Tristan
Batiste, Spencer	Gilmour, Rt Hon Sir Ian
Beith, A. J.	Glyn, Dr Alan
Bellingham, Henry	Goodhart, Sir Philip
Bendall, Vivian	Goodlad, Alastair
Benyon, William	Gorst, John
Berry, Sir Anthony	Gow, Ian
Bevan, David Gilroy	Gower, Sir Raymond
Biffen, Rt Hon John	Greenway, Harry
Biggs-Davison, Sir John	Gregory, Conal
Blaker, Rt Hon Sir Peter	Griffiths, E. (B'y St Edm'ds)
Body, Richard	Griffiths, Peter (Portsm'th N)
Bonsor, Sir Nicholas	Ground, Patrick
Bottomley, Peter	Grylls, Michael
Bowden, A. (Brighton K'to'n)	Hamilton, Hon A. (Epsom)
Bowden, Gerald (Dulwich)	Hamilton, Neil (Tatton)
Boyson, Dr Rhodes	Hampson, Dr Keith
Braine, Sir Bernard	Hanley, Jeremy
Brandon-Bravo, Martin	Hargreaves, Kenneth
Bright, Graham	Harvey, Robert
Brinton, Tim	Haselhurst, Alan
Brittan, Rt Hon Leon	Havers, Rt Hon Sir Michael
Brooke, Hon Peter	Hawkins, C. (High Peak)
Browne, John	Hawksley, Warren
Bruinvels, Peter	Hayes, J.
Bryan, Sir Paul	Hayhoe, Barney
Buck, Sir Antony	Hayward, Robert
Budgen, Nick	Heathcoat-Amory, David
Burt, Alistair	Hickmet, Richard
Butcher, John	Hicks, Robert
Butterfill, John	Hill, James
Carlile, Alexander (Montg'y)	Hind, Kenneth
Carlisle, Kenneth (Lincoln)	Hogg, Hon Douglas (Gr'th'm)
Carttiss, Michael	Hooson, Tom
Cartwright, John	Hordern, Peter
Clark, Hon A. (Plym'th S'n)	Howard, Michael
Clark, Dr Michael (Rochford)	Howarth, Alan (Stratf'd-on-A)
Clarke, Kenneth (Rushcliffe)	Howarth, Gerald (Cannock)
Clegg, Sir Walter	Howell, Ralph (N Norfolk)
Coombs, Simon	Hubbard-Miles, Peter
Cope, John	Hunt, David (Wirral)
Couchman, James	Hunt, John (Ravensbourne)
Cranborne, Viscount	Hunter, Andrew
Critchley, Julian	Hurd, Rt Hon Douglas
Crouch, David	Jackson, Robert
Currie, Mrs Edwina	Jenkin, Rt Hon Patrick
Dickens, Geoffrey	Jessel, Toby
Dicks, T.	Johnson-Smith, Sir Geoffrey
Dorrell, Stephen	Jones, Gwilym (Cardiff N)
Douglas-Hamilton, Lord J.	Jones, Robert (W Herts)
Dover, Denshore	Joseph, Rt Hon Sir Keith
du Cann, Rt Hon Edward	Kennedy, Charles
Dunn, Robert	Key, Robert
Dykes, Hugh	King, Roger (B'ham N'field)
Edwards, Rt Hon N. (P'broke)	King, Rt Hon Tom
Eggar, Tim	Knight, Gregory (Derby N)
Emery, Sir Peter	Knowles, Michael
Evennett, David	Knox, David
Eyre, Sir Reginald	Lang, Ian

Lawler, Geoffrey	Ridley, Rt Hon Nicholas
Lee, John (Pendle)	Ridsdale, Sir Julian
Leigh, Edward (Gainsbor'gh)	Rifkind, Malcolm
Lennox-Boyd, Hon Mark	Rippon, Rt Hon Geoffrey
Lewis, Sir Kenneth (Stamf'd)	Robinson, Mark (N'port W)
Lightbown, David	Roe, Mrs Marion
Lilley, Peter	Ross, Stephen (Isle of Wight)
Lloyd, Ian (Havant)	Rossi, Sir Hugh
Lloyd, Peter, (Fareham)	Rowe, Andrew
Lord, Michael	Rumbold, Mrs Angela
Luce, Richard	Ryder, Richard
Lyell, Nicholas	Sackville, Hon Thomas
McCrindle, Robert	Sainsbury, Hon Timothy
McCurley, Mrs Anna	Sayeed, Jonathan
Macfarlane, Neil	Shaw, Giles (Pudsey)
MacKay, Andrew (Berkshire)	Shelton, William (Streatham)
Maclean, David John.	Shepherd, Colin (Hereford)
McNair-Wilson, P. (New F'st)	Shepherd, Richard (Aldridge)
McQuarrie, Albert	Shersby, Michael
Madel, David	Silvester, Fred
Malins, Humfrey	Sims, Roger
Malone, Gerald	Skeet, T. H. H.
Maples, John	Smith, Sir Dudley (Warwick)
Marland, Paul	Smith, Tim (Beaconsfield)
Marlow, Antony	Soames, Hon Nicholas
Marshall, Michael (Arundel)	Speed, Keith
Mates, Michael	Speller, Tony
Maude, Francis	Spence, John
Mawhinney, Dr Brian	Spencer, D.
Mayhew, Sir Patrick	Squire, Robin
Meadowcroft, Michael	Stanbrook, Ivor
Mellor, David	Stanley, John
Merchant, Piers	Stern, Michael
Meyer, Sir Anthony	Stevens, Lewis (Nuneaton)
Miller, Hal (B'grove)	Stevens, Martin (Fulham)
Mills, Iain (Meriden)	Stewart, Andrew (Sherwood)
Mills, Sir Peter (West Devon)	Stewart, Ian (N Hertf'dshire)
Mitchell, David (NW Hants)	Stokes, John
Moate, Roger	Stradling Thomas, J.
Monro, Sir Hector	Sumberg, David
Montgomery, Fergus	Tapsell, Peter
Moore, John	Taylor, John (Solihull)
Morris, M. (N'hampton, S)	Taylor, Teddy (Send E)
Morrison, Hon C. (Devizes)	Temple-Morris, Peter
Murphy, Christopher	Terlezki, Stefan
Neale, Gerrard	Thomas, Rt Hon Peter
Needham, Richard	Thompson, Donald (Calder V)
Nelson, Anthony	Thompson, Patrick (N'ich N)
Neubert, Michael	Thorne, Neil (Ilford S)
Newton, Tony	Thurnham, Peter
Nicholls, Patrick	Townsend, Cyril D. (B'heath)
Norris, Steven	Tracey, Richard
Onslow, Cranley	Trippier, David
Oppenheim, Philip	Trotter, Neville
Oppenheim, Rt Hon Mrs S.	Twinn, Dr Ian
Osborn, Sir John	van Straubenzee, Sir W.
Ottaway, Richard	Vaughan, Sir Gerard
Page, John (Harrow W)	Viggers, Peter
Page, Richard (Herts SW)	Wakeham, Rt Hon John
Parris, Matthew	Waldegrave, Hon William
Patten, Christopher (Bath)	Walden, George
Patten, John (Oxford)	Walker, Bill (T'side N)
Pattie, Geoffrey	Walker, Rt Hon P. (W'cester)
Pawsey, James	Waller, Gary
Peacock, Mrs Elizabeth	Walters, Dennis
Penhaligon, David	Ward, John
Percival, Rt Hon Sir Ian	Wardle, C. (Bexhill)
Pink, R. Bonner	Warren, Kenneth
Powell, William (Corby)	Watson, John
Powley, John	Watts, John
Prentice, Rt Hon Reg	Wells, Bowen (Hertford)
Proctor, K. Harvey	Wells, John (Maidstone)
Pym, Rt Hon Francis	Wheeler, John
Raffan, Keith	Whitfield, John
Raison, Rt Hon Timothy	Whitney, Raymond
Rathbone, Tim	Wiggin, Jerry
Rees, Rt Hon Peter (Dover)	Wilkinson, John
Renton, Tim	Winterton, Mrs Ann
Rhodes James, Robert	Winterton, Nicholas
Rhys Williams, Sir Brandon	Wolfson, Mark

Wood, Timothy
Woodcock, Michael	Tellers for the Noes:
Yeo, Tim	Mr. Carol Mather and
Young, Sir George (Acton)	Mr. Robert Boscawen.
Younger, Rt Hon George

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That this House takes note of the Report on Developments in the European Community, January to June 1983, Cmnd. 9043.