Foreign Affairs Council

HC Deb 20 June 1984 vol 62 cc293-302 3.42 pm

The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe)

With permission Mr. Speaker, I will make a statement on the outcome of the Foreign Affairs Council which met in Luxembourg on 18 and 19 June. I represented the United Kingdom, together with my right hon. Friends the Minister for Overseas Development and the Minister for Trade. Ministerial negotiating conferences with the Portuguese and the Spanish and a ministerial meeting of the EC-Yugoslavia Co-operation Council were held in the margins of the Council.

The Council discussed preparations for next week's European Council. I made it clear that if discussion at Fontainebleau was to be of real value, the negotiations started at Stuttgart must also be completed.

On the budget question, I took the opportunity to have a series of separate meetings with each of my Community colleagues, the President of the Commission and the French Presidency. I made clear the view of the British Government that it remains to complete the negotiation on the basis of the texts circulated by the French Presidency at the Brussels European Council by reaching agreement on the notional figure for 1983. This would determine the scale of our contribution td the Community in future years.

There was also some discussion of the Commission's proposal for a loan to cover the forecast budget overrun in 1984. A number of member states again expressed reservations about the proposal, reinforced by a recent report by the European Court of Auditors, which criticised the Commission's estimates. I reiterated the need for further savings to be found. The issue was remitted to the July Budget Council.

The Council agreed that further work on budget discipline should be undertaken by Finance Ministers. I reminded the Council that an effective system of budget discipline remains one of our conditions for an overall settlement.

The Council discussed the Community's position for the ministerial negotiating conference in Luxembourg on 28 and 29 June between the Community and the African, Caribbean and Pacific signatories of the Lomé convention on a successor to the present convention.

The Council also considered possible changes in the conciliation procedure for reconciling disagreements between the European Parliament and the Council. In view of Danish opposition, however, no text was adopted and discussion was adjourned.

At the ministerial conference with the Portuguese, the Community presented declarations on agriculture and on some outstanding points in the external relations chapter. At the ministerial conference with Spain, the Community presented substantive declarations on agriculture and industrial tariff transition.

The Council formally adopted the new regulation for the European regional development fund, following a successful conciliation procedure with the European Parliament.

The Council discussed a package of 15 directives designed to agree common standards for industrial products throughout the Community. We made it clear that the few outstanding technical problems should be speedily resolved so as to clear the way for adoption of the package and of the common commercial policy regulation to which it has been linked.

Finally, we underlined the importance of agreement at the July Council on arrangements for continuing supplies of duty-free newsprint for 1984.

Mr. Robin Cook (Livingston)

The right hon. and learned Gentleman referred to the Stuttgart summit. May I remind him that it is a full year since that summit, at which agreement was achieved on the rebate for 1983? How much longer does he expect we shall have to wait for that rebate to be paid? In particular, is he confident that it will be paid before September, when the Community finally runs out of money in the bank?

The Foreign Secretary also referred to the private meetings that he had in the corridors around the Council. He will no doubt be aware that three of the papers—printed on the newsprint which is to be free of duty—contain reports of what went on at those meetings. Two of the three describe his offer as a "compromise" on the British position, and the third refers to it as a "concession". I congratulate the Foreign Secretary on having in record time achieved the first climbdown in the Government's position since the election.

It is surely the case that if the right hon. and learned Gentleman offered a compromise, he obtained some sign of movement from those with whom he was negotiating. Will he share with the House what offers of compromise he obtained from the other member states in return for the compromise which he offered them?

The Foreign Secretary said that he pressed for further savings in the Community budget. May we have an assurance that one of those savings will be found in the social and regional funds which, until last week, his party was assuring us were so valuable to the inner-city areas of our country? Having committed his Government to expanding those funds, he will surely not now connive at those funds being cut.

May I draw the right hon. and learned Gentleman's attention to the report of the Select Committee on Foreign Affairs, published today, which calculates that the increase in our own resources to which the right hon. and learned Gentleman has agreed in principle will add £670 million to our net contribution to the Community budget? Will he confirm that such a sum would virtually wipe out the amount of rebate that he has been negotiating this week? What, if anything, did he secure this week in Luxembourg that could possibly justify him in asking the House to agree to such a whopping increase in our payments to Brussels?

Sir Geoffrey Howe

There was, as the hon. Gentleman points out, a clear commitment to pay refunds to this country for 1983. The refunds are due to be paid during the current year and we plainly expect that agreement to be honoured.

I reiterated our position at the discussions which took place this week. We believe that it should be possible to resolve the remaining differences. What is now needed is on further move to clinch an agreement. As Chancellor Kohl told the press after his meeting with President Mitterrand on 20 May, that progress can be achieved only if all sides move towards each other. That remains our position and there is no question whatever of any climbdown.

The savings that have to be found need to be sought prudently in every area where they can sensibly be found —[Interruption.]—yes, in every area where they can sensibly be found. As for any increase in own resources, that remains conditional on the fulfilment of the conditions clearly set out in the Stuttgart mandate.

It would be interesting to know exactly where the Labour party stands on such matters. Its representatives seem to have argued during the election that they would be prepared to accept the case for own resources, but they have failed to clarify the conditions upon which they would do it.

Mr. Terence Higgins (Worthing)

Does my right hon. and learned Friend agree that no clear case has been made to the House for any increase in own resources? Does he further agree that the question of our refund should not be linked in any way to the question of increased own resources, as we are entitled to the former anyway?

Sir Geoffrey Howe

As I have already explained to the House, the question of our 1983 refund is something on which agreement was reached at Stuttgart and in respect of which we expect payment to be made during the current year. We shall not agree to any increase in own resources unless we are satisfied that we have achieved the mechanism to control Community spending and an equitable budget settlement. If those conditions are fulfilled—we have repeated them many times—we shall be ready to consider an increase to meet the realistic costs of enlargement by the end of the decade, a modest growth in structural funds, limited growth in the cost of new policies and, of course, budget reliefs for the United Kingdom.

Mr. Roy Jenkins (Glasgow, Hillhead)

Does the Foreign Secretary agree that there appears to be a substantial difference between the briefing that he gave to the British press, which appeared in at least two newspapers yesterday, and his account to the House today? His briefing was rather more interesting than his account to the House, in which he put forward several British political initiatives, some of which seem to be very sensible.

What was the right hon. and learned Gentleman's attitude in those British proposals to rolling back the use of the veto? That should be done, especially with a Community of 12 members. As he told us this afternoon, a discussion was held on relations with the Parliament, but agreement was not reached, because of Danish opposition. That will happen increasingly in the case of one country or another, on issue after issue. There will not be the change in the Community that is so desirable in British and general European interests.

Sir Geoffrey Howe

I made some reference in my remarks to the press yesterday to the ideas for the future development of the Community that were recently offered to our European partners by the Prime Minister, in a paper that is intended as a contribution to discussion at Fontainebleau.

Our position on the veto is unchanged. We make it plain that the provisions for majority voting set out in the treaty should be respected and acted upon, that the provisions of the Luxembourg compromise that are attached to it, whereby a country is entitled to reserve its position in respect of vital national interests, should also be observed but that the Luxembourg compromise should not be abused. That position was clearly stated in our manifesto and has been stated many times in the House. Only on that basis will the Community be able to make the progress that the right hon. Gentleman wants.

Mr. Bowen Wells (Hertford and Stortford)

Will my right hon. and learned Friend describe to us the degree to which he was able to negotiate the budgetary discipline that he seeks to apply to the European budget as a precondition for the increase in own resources?

Sir Geoffrey Howe

The budgetary discipline text was provisionally adopted at the European Council meeting in Brussels. Since then, the details for its implementation are being worked out by the Finance Ministers, to whom it has been remitted. I stressed yesterday at the Foreign Affairs Council that the text agreed at the March European Council requires Ministers to adopt measures that will guarantee effective application of the principles agreed by the Heads of Government. The Finance Ministers are applying themselves to that task.

Mr. Nigel Spearing (Newham, South)

Does the Foreign Secretary agree that, if the Government agree some 40 per cent. increase in our VAT payments to the Community under own resources, the two mechanisms of which he has spoken will be considered to be satisfactory? Will the formulae and texts of those two mechanisms be included in the treaty, which will effectively be placed before the House for approval?

Sir Geoffrey Howe

The text that is likely to be presented to the House will concentrate on an increase in own resources, if such is recommended, and on the budgetary mechanism for the fairness of the budget system that will be incorporated in the own resources decision. That text is not likely to contain the conclusions that are necessary to fulfil the commitment to secure effective budgetary discipline. Finance Ministers are now engaged on drawing up that text.

Sir David Price (Eastleigh)

When will the Council of Ministers make progress on the numerous non-tariff obstacles to trade? When will they make a reality of the articles in the Treaty of Rome appertaining to a common market in service industries? For example, when will the French open their coast to British coastal shipping, and when will the Germans allow British insurance companies to work and seek insurance policies in Germany? Are those not major actions against the spirit of the Treaty of Rome?

Sir Geoffrey Howe

I entirely agree with my hon. Friend about the importance of making progress, both in the establishment of a common market in services and in the removal of unnecessary non-tariff barriers to the Common Market in goods. Those are matters to which the Brussels European Council text draws attention, specifically identifying insurance services as one of the areas in which we need to make progress. I remind my hon. Friend that the package of 15 directives that was before the Council yesterday—subject to the removal of technical objections to about three of them, the directives are likely to be adopted—covers the establishment of common technical standards for industrial products affecting construction equipment, lifting and mechanical handling equipment, gas appliances, pressure vessels, lawnmowers and electro-medical equipment. In some of those areas, notably construction equipment and electromedical equipment, British exporters will secure real trading advantages from those directives, which are close to bring adopted as a result of yesterday's decisions.

Mr. Bryan Gould (Dagenham)

Did the Foreign Secretary mean to imply, in his press briefings at any rate, that all that remains to be settled is the mechanism for our budget rebate? Will he make it clear how far he thinks we have got with the fundamental changes that he laid down as preconditions for any increase in our VAT contribution? Is it just coincidence that all this talk of compromise and all these preparations for what looks suspiciously like a sell-out have come within just a few days of having got the European election safely, or perhaps not so safely, out of the way?

Sir Geoffrey Howe

There is no question of any sellout or change of posture. Agreement on the propositions established at Stuttgart, including satisfactory mechanisms for budgetary discipline and a satisfactory conclusion of the budget problem, is a necessary condition for a recommendation for any increase in own resources. The hon. Gentleman should reflect, before talking about the reaction to the election, that in fact it showed that the Government are still preferred to the Labour party by the voters of Britain. The expectations of the Labour party are now so low that anything short of total disaster is claimed as a victory. The results on Sunday gave the Labour party the lowest percentage of the vote in any general election since 1931, with the single exception of 1983. That is a sorry yardstick for the Labour party.

Mr. Teddy Taylor (Southend, East)

Does my right hon. and learned Friend agree that, if we agreed to reduce our rebate request to £675 million, allied to an increase in own resources, Britain would face an horrendous and growing annual contribution to the EEC? What estimate has my right hon. and learned Friend made of that? Will he confirm that it is still the Government's basic minimum demand that there should be a permanent budget settlement, not just one for a period of years? Will my right hon. and learned Friend confirm that as long as the Common Market is spending £100 million a week on dumping or destroying food, it is nonsense to talk about budget discipline?

Sir Geoffrey Howe

The position remains exactly as it has always been, in that any variation in the own resources decision has to be linked to the arrival at a satisfactory conclusion on the fairness of the budget system. If we can achieve a fair budget decision, it will be incorporated in the own resources decision.

With regard to the second point raised by my hon. Friend, the need to reduce the substantial Community expenditure is the reason why this country, together with the other Community countries, has been facing tough and difficult decisions on farm policy. It is only by continuing to apply the need for discipline in the common agricultural policy that we shall achieve success along the lines that my hon. Friend wants. However, he should not deceive himself into thinking that that is an easy task or that it can be easily achieved without grave discomfort and difficulty for our farming industry.

Mr. John David Taylor (Strangford)

What are the general headings of the further savings which the Foreign Secretary personally recommended to avoid an overrun of the 1984 budget?

Sir Geoffrey Howe

Each of the committees concerned with programmes of the Community, including the Agriculture Committee and the Finance Committee, has been instructed to examine further ways of achieving those savings. In addition, proposals have been put forward by some member states, all of which are being re-examined.

Mr. Peter Bottomley (Eltham)

Does my right hon. and learned Friend accept that market discipline will be improved by dealing with overspending on agricultural surpluses and by dismantling non-tariff barriers, to which my hon. Friend the Member for Eastleigh (Sir D. Price) referred? Do other member states recognise that progress will lead to greater advantages than will the stalling of negotiations about the budget rebate and resources?

Sir Geoffrey Howe

My hon. Friend is right to draw attention to the need for improved market performance both by agricultural price regimes and by the removal of non-tariff barriers. There is a recognition, though not as strong as I would wish it to be, of the important part that can be played in that direction and of the need to make progress and resolve the budgetary dispute. The report of the Foreign Affairs Committee, to which the hon. Member for Livingston (Mr. Cook) referred, is helpful when it says that it would undoubtedly assist our reaching a final settlement on the budget if other Governments in the Community recognised the extent of the concessions made by the British Government and our commitment to the Community.

Mr. Ron Leighton (Newham, North-East)

Will the Foreign Secretary tell the House what the legal position is of the so-called summits? The decisions at Stuttgart were not carried out because summits have no status under the Treaty of Rome. What is the point of going to Fontainbleau when the decisions made at the Stuttgart meeting have not yet been carried out?

Is the Foreign Secretary aware that the Government appear to be a sick joke by paying our full gross contribution for this year when they have not received half of our relief from last year? When will they bring in legislation to intercept these excess payments, which we are making unnecessarily to the European Community? Does the right hon. and learned Gentleman accept that, as the right hon. Member for Worthing (Mr. Higgins) said, there is no basis for an increase in VAT payments, and that that view has the widest possible support in the House?

Sir Geoffrey Howe

I do not accept that that is the right conclusion. I mentioned some of the factors that would justify a possible recommendations for an increase in own resources, but only when the conditions that I have described were fulfilled. We shall seek to arrive at a final agreement on those conditions at Fontainbleau?

Mr. Nigel Forman (Carshalton and Wallington)

Is my right hon. and learned Friend aware that the linked ideas, about which he spoke in his original statement, may form the basis of an acceptable compromise at Fontainebleau? Is he further aware that it would be easier to take the Labour party seriously if it were not for the fact that during a Harris poll on Euro polling day, 14 June, only 16 per cent. of those who supported the Labour party said that they did so because they believed in Labour's European policy?

Sir Geoffrey Howe

I do not doubt that it was difficult for those who voted for the Labour party to assert that they believed in its policy, because it is obscure.

Mr. Russell Johnston (Inverness, Nairn and Lochaber)

As the Foreign Affairs Council took place after the European elections and discussed conciliation procedures, did it also discuss the elections? The Foreign Secretary is thought to be a fair-minded man. Does he agree that a system which allows 20 per cent. of the population to vote for a party and yet obtain no representation is completely indefensible? Does he agree also that if we had proportional representation, such as that which operates in Ulster and the rest of the European Community, the alliance would have had 15 or more representatives? Will he assure me that the Government will not allow such an injustice to happen again and that he will raise the matter at the next Council meeting?

Sir Geoffrey Howe

The hon. Gentleman's views on this matter are well known. He must accept that there is a wide range of electoral systems in the Community. I hope that if he looks at the results he will recognise that in this election, as in previous elections, the use of proportional representation in other member states has not inevitably provided a boost to democratic values. The voters in the European Community have sensibly decided to sustain a Centre-Right majority in the European Parliament, supported by a majority in the British Government.

Mr. Nicholas Budgen (Wolverhampton, South-West)

How is it possible to make a substantial reduction in expenditure in the European Community this year when two-thirds of the expenditure goes on the common agricultural policy, when price levels have already been agreed and as the volume of production and world prices are not controlled?

Sir Geoffrey Howe

It will be difficult to achieve the many savings that are necessary, but I wish that my hon. Friend, who frequently makes his views known on this matter, would understand and accept the solid practical difficulties of securing the changes that are necessary for an agricultural regime which has done great good for the farming industry throughout the Community but which is having to face uncomfortable decisions. He would do better to commend the decisions which the Government had the courage to take and help to commend them to the country.

Mr. Tom Clarke (Monklands, West)

In view of the presence at the meeting of the Minister for Overseas Development, will the Foreign Secretary tell the House precisely what discussions took place about overseas aid?

Sir Geoffrey Howe

Yesterday there was a discussion of the basis on which the Community would approach the meeting on 28 and 29 June with the representatives of the ACP countries. The main elements of the Community's position have been put in place. It should be recognised that the Lomé trade regime is a generous one and that about 98 per cent. of ACP products enter the Community free from tariffs and any quantitative restriction. The final decisions must be taken at the end of the negotiating process.

Sir Anthony Kershaw (Stroud)

Does my right hon. and learned Friend accept that his report exhibits a high degree of flexibility in the negotiations in which he has taken part, on which he deserves congratulations? Does he accept also that if the Fontainebleau summit should no be a success, it would not be a tragedy?

Sir Geoffrey Howe

I recognise that that thought is one of the many interesting ones to emerge from the report of the Foreign Affairs Committee, over which my hon. Friend presides. He was right to make that point in the report. It is right that we should strive to reach a conclusion of the Stuttgart mandate, if that can be done on terms which can be commended.

Mr. Tam Dalyell (Linlithgow)

Will the Foreign Secretary satisfy my curiosity about what he described as a ministerial conference with the Spanish Foreign Minister at the margins of the Council? Was it a chat over a cup of tea or a casual meeting in the washroom? What did the Foreign Secretary say to the Spanish Foreign Minister when he met him in those conditions? Did they discuss the joint statement of King Juan Carlos and President Alfonsin about the islands? Did he, for example, add that even Mr. Peregrine Worsthorne—no political friend of ours—now suggests that the Spanish Foreign Minister should negotiate? Did he raise the question of the rock — not the Rock of Gibraltar, but the thousands of tonnes of rocks that we are carrying from the northern to the southern hemisphere because the rock in the Falkland Islands is not good enough for the Margaret Thatcher international airport?

Sir Georffrey Howe

I am sorry to have to disappoint the hon. Gentleman, but the meeting was not as he described it. It was a formal meeting between representatives of the Council of Ministers and the Spanish Government concerned with the negotiations for the accession of Spain to the Community. It would not have been appropriate to raise the matters which he seems to be able to raise on every possible occasion, right or wrong.

Mr. Timothy Yeo (Suffolk, South)

Did my right hon. and learned Friend take the opportunity to convey to his Common Market colleagues the fact that a considerable body of opinion in Britain believe that the British Government would be entirely justified in withholding our contributions to the EC budget in the event that the agreed refund due to us for last year continues to be denied to us?

Sir Geoffrey Howe

On several occasions our partners in the Community have been left in no doubt about the importance attached by the House and people outside it to the points made by my hon. Friend.

Mr. Dennis Skinner (Bolsover)

Does the Foreiign Secretary realise that the British people will not believe that this two-faced Government can provide money for the Common Market one day and a plan for the Community another day —they are to find another £670 million, which is equivalent to £2 million a day, for all the gravy trains—yet not set up a "Plan for Coal"? They will not even adhere to the last one——

Mr. Speaker

Order. The hon. Gentleman must stick to the point.

Mr. Skinner

I am sticking to the point.

Mr. Speaker

Order. This has nothing to do with the "Plan for Coal".

Mr. Skinner

What I am trying to suggest to the Foreign Secretary and to his adherents in the Cabinet is that the Government are two-faced, because they are prepared to prop up the Common Market by £2 million a day extra——

Mr. Speaker

Order. The hon. Gentleman is supposed to be asking a question about the summit meeting.

Mr. Skinner

Yes. They are prepared to provide £2 million a day extra to pay for the gravy trains, to prop up the Mafia and to pay for uneconomic farming, but at the same time they are allowing the British mining industry to collapse. In simple English, that is hypocrisy.

Sir Geoffrey Howe

If that represents even a fraction of the truth, how does the hon. Gentleman explain the fact that in the elections last week the Conservative party secured 48 out of the 78 mainland seats and had a substantial majority in the popular vote, which represents a completely different judgment by real people from that which the hon. Gentleman expresses?

Mr. Alan Howarth (Stratford-on-Avon)

Does my right hon. and learned Friend agree that the achievement of budgetary discipline points logically towards a containment of expenditure rather than to an increase of expenditure which an increase in own resources would undoubtedly carry with it? Does he also agree that there is an apparent inconsistency between the disciplined approach to public expenditure at home, of which he is such a powerful advocate, and the relatively relaxed approach which he seems to be willing to contemplate in Europe? Does he agree that an increase in own resources raises major questions which should be fully debated in the House before the Government make any commitment in Europe?

Sir Geoffrey Howe

I have already explained to the House the procedure that will be adopted for consideration by the House of any possible increase in own resources. I entirely agree about the pervasive importance of a consistent attitude towards public expenditure. It is for that reason that we have pressed so hard, and will continue to press hard, for texts to be adopted on budgetary discipline which will guarantee the fulfilment of the agreements made at the Brussels summit on 20 March. My hon. Friend should take some comfort from the fact that several of our Community partners are now seeking to achieve exactly the same conclusion. Of course, it is important to achieve that result.

Mr. Robin Cook

May I remove the obscurity in the Foreign Secretary's mind about the Opposition's view on own resources? We believe that no case has been made for an increase in own resources, and no case could be made on the basis of the proposals under discussion.

If one of the Foreign Secretary's conditions is that agricultural expenditure must be brought under effective control, may I tempt him to comment on the draft budget for next year, which was published earlier this month and which shows that the proportion of the budget spent on agriculture will increase next year? Does that not demonstrate that expenditure on agriculture, far from being under effective control, is accelerating out of control? In those circumstances, many hon. Members, not only Opposition Members, will not agree that we should pay even more to fund even larger surpluses.

Sir Geoffrey Howe

I emphasise to the hon. Gentleman that this is not a Community budget but the Commission's proposals for a budget. The preliminary draft budget should be revised to comply with the obligation to respect the ceiling of own resources.

There remains intense mystification about the Labour party's policy. It has been changed at each election during the last 15 years. Perhaps now, instead of being half in favour of staying in the Community, it is half in favour of getting out.