HC Deb 28 March 1984 vol 57 cc295-303 3.52 pm
The Secretary of State for Foreign and Commonwealth Affairs(Sir Geoffrey Howe)

With permission, Mr. Speaker, I should like to make a statement about the Foreign Affairs Council which met in Brussels on 27 March.

The main purpose of the Council was to review the position following last week's European Council and to see if further progress could be made on the remaining areas of disagreement. Ministers also had a short discussion of political co-operation issues, and approved four declarations prepared during the European Council on 19 to 20 March. These declarations relate to East-West relations, the middle east, Latin America and Cyprus. I am arranging for copies to be placed in the Library of the House.

On the main question, most of yesterday's meeting was devoted to the issue of budget burdens. The basis for our discussion at this meeting was that there should be only one more year of ad hoc refunds covering 1984, to be followed by the introduction thereafter of a lasting system for a fair sharing of the budget burden.

It did not, however, prove possible to reach agreement on the figure that would be the basis for such a system. This figure is of greater significance than is implied by the crude size of the gap between the figure of 1,000 mecu —£590 million—which is being proposed to us, and the figure of 1,250 mecu—£737 million—which my right hon. Friend indicated at the European Council that we would be ready to accept. Since this is the starting point for a durable system, and not just a figure for one or two years, it is important to get it right at the outset. Further work will now be set in hand. Foreign Ministers will take up the issue again at our meeting on 9 April.

The regulations covering our outstanding refunds for 1983 remain blocked. I have made clear to our partners that this is unjustified and misconceived.

As the House knows, the Commission has made a request for an advance payment of the own resources due in April. The principal justification for that advance was to provide for the payment of United Kingdom and German refunds by the end of March. Since those refunds remain blocked, the case for the advances can no longer be sustained. We shall not, therefore, ask the House to approve the Supplementary Estimate for the advance payment that the Commission requested for 30 March.

I do not need to remind the House that one of the main issues in the negotiations has been the proposal by other member states and the Commission to change the basic decision under which the Community is financed by increasing the VAT ceiling. That proposal requires the unanimous consent of member states and national Parliaments. The Government have indicated their willingness to entertain that proposal, but only if there is effective control of Community spending and a fair sharing of the budgetary burden. Both those conditions remain crucial.

It is bound to be difficult to reach agreement on fundamental reforms of the sort now under discussion. The decisions will determine the future of the Community for a considerable number of years ahead. It is for that reason that the Government believe that it is in our interest to take no action that might damage the prospects of decisive progress. We shall continue to work constructively for a settlement of the negotiations on a basis acceptable to the Government and to this House.

Mr. Robin Cook (Livingston)

The House will be grateful to the Foreign Secretary for his statement on how he has discharged the Prime Minister's instructions. As we have not been favoured with a similar statement from the Minister of Agriculture, Fisheries and Food, will the right hon. and learned Gentleman say whether any items have been agreed in the Agriculture Council meeting? If not, how does he hope to pretend to the House that we are making progress towards controlling the agriculture expenditure of the Community? Have the Government shown any willingness to accept the removal of the beef premium, which would add 7p to the price of a pound of beef in the shops?

The right hon. and learned Gentleman referred to the Government's willingness to entertain an increase in own resources if certain conditions were met. Is that not a shift from their previous view, which was that they would be willing to entertain such a proposal on its merits if the conditions were met? Is the right hon. and learned Gentleman now telling the House that the Government have no view on the merits of an increase in own resources? Is he willing to surrender that simply as a bargaining chip in the process of negotiation? If so, has not he noticed that the formula agreed on own resources at the summit last week would result in an increased VAT payment by Britain of £700 million in 1986 and £1,000 million in 1988?

Has the right hon. and learned Gentleman failed to grasp that those sums are larger than the sum on which he has failed to get agreement for the British rebate? What possible evidence does he draw from the past two weeks to show that if the increase in money was made available to the EC it would not be squandered on even larger farm surpluses?

The statement referred to the withdrawal of the advance payment due this week. Does not the right hon. and learned Gentleman appreciate that that is the most limpwristed gesture that he could have found? As he stated, it is an advance on the April payment. Will he confirm that the April payment is due on the first banking day in April—that is, next Monday? Is he not withholding payment this week to pay it on Monday? Which of our continental partners are supposed to be impressed with that negotiating tactic?

Does the right hon. and learned Gentleman remember that only three weeks ago he advised me that it was unreasonable to speculate that the rebate would not be paid by 31 March? Does he still take that view? Has he the faintest hope that the 1983 rebate will be paid by Saturday? If not, what will he do about it? Has he forgotten that on the Sunday before the summit he said that if the rebate was not paid by 31 March it would be necessary to safeguard our position? When will he safeguard the British position? If the right hon. and learned Gentleman is afraid of the right hon. Member for Old Bexley and Sidcup (Mr. Heath) being unimpressed by and not in favour of such action, I assure him that he will have the united support of Members on the Labour Benches for the just and necessary measure of withholding from our 1984 contribution the rebate that he has failed to obtain for 1983.

Sir Geoffrey Howe

The Agriculture Council met on Monday and Tuesday of this week. It adjourned to resume its meeting on Friday and, if necessary, Saturday of this week. All the issues already before it remain for further discussion. In particular, the question of the beef premium was raised and was emphasised as a matter of importance by my right hon. Friend the Minister of Agriculture.

On own resources, the hon. Gentleman does not understand two things that the proposal for an increase in own resources in 1986 is one thing, and that the proposal for a possible further increase in own resources in 1988 is another quite separate thing. Each of those would require separate consideration by the Council, a separate unanimous vote by the Council, and separate approval by this House. Of course, the figures involved in an increase in own resources, even on the first step to 1.4 per cent., would involve a substantial transfer of resources from this country. That is why we are seeking an adjustment of the budgetary burdens to ensure that we are protected from the full impact of that increase. That is why our position remains exactly the same. The Government have indicated their willingness to entertain that proposal, but only if there is effective control of Community spending and a fair sharing of the budgetary burden. I emphasise that both conditions remain crucial.

In answer to what the hon. Gentleman said about withdrawal of the Supplementary Estimate that was before the House, that Estimate related to an advance of payments by one month from 20 April. There is now no need for that to take place.

We intend to safeguard United Kingdom interests in all respects through these negotiations. One of those interests is to achieve the right outcome of the negotiations. I shall not be guided in our assessment of the best way of achieving that by the prospect of uniting the Labour party.

Mr. Julian Amery (Brighton, Pavilion)

Is my right hon. and learned Friend aware that this is no time, when negotiations are so close, for back-seat or Back-Bench driving? Is he further aware that he has achieved a great deal more than any of us expected? [HON. MEMBERS: "Oh."] I accept that brinkmanship is the essence of all negotiations, but does my right hon. and learned Friend agree that there is a difference between brinkmanship with adversaries and brinkmanship with friends?

Sir Geoffrey Howe

The important feature of the negotiations is that they are taking place with the other member states of the Community, with whom we have been in partnership since we joined the Community, and with which we shall remain in partnership hereafter. In the course of the negotiations, as in any other negotiations, differences of position appear, and sometimes those differences are sharp. However, we are determined to continue to work for decisive progress towards and eventually agreement on the content of the Stuggart agenda. Throughout the negotiations, we are and have been flexible where that is right, we are robust where that is right, and throughout we are honourable as well.

Mr. J. Enoch Powell (Down, South)

Does the Foreign Secretary recall that, when Britain joined the Common Market, the people of this country were told that parliamentary sovereignty remained intact and that it could be reasserted at any time? Will the right hon. and learned Gentleman guarantee that it will be used as and when it is necessary to secure this country's rights?

Sir Geoffrey Howe

Parliamentary sovereignty is exercised in accordance with the treaties that this House has endorsed. The right hon. Gentleman will remember that the treaties involving our accession to the European Community were the subject of endorsement and legislation in the House. Any change following these negotiations involving an increase in own resources will similarly require the approval of this House.

Mr. David Crouch (Canterbury)

When my right hon. and learned Friend considers the question of the sovereignty of this House, will he bear in mind that behind him on these Benches, as well as on the Opposition Benches—certainly on the alliance Benches—there are many hon. Members who are wholeheartedly in favour of our making a success of Europe and our participation in the Community, and that it is not just a question of making a success of the cost of our membership? Will he bear that thought in mind as he seeks to find a solution to the present crisis?

Sir Geoffrey Howe

I entirely agree with my hon. Friend. The majority of Members in this House and in the country, as was shown in the last election, want our membership of the European Community to continue and to be successful. In that respect, it is important at this critical stage to achieve the right outcome to the negotiations, because they make fundamental changes in the financing arrangements of the Community. The issues are bound to be intractable, and we are therefore bound to take some time to reach the right conclusions. However, I have no doubt that I have the support of the whole House in seeking to achieve the right outcome.

Mr. Bryan Gould (Dagenham)

Will the Foreign Secretary make it clear that any decision to safeguard our interests by withholding payments is, as a matter of domestic law and as a matter of the constitution, entirely for this House, and that it is entirely within its competence to take that decision?

Sir Geoffrey Howe

The way in which the House exercises its competence must always have regard to our international obligations.

Mr. Anthony Beaumont-Dark (Birmingham, Selly Oak)

Does my right hon. and learned Friend accept that many of us feel that Brussels has spawned an organisation that has redistributed wealth from the consumer to the farmer, and often from poorer countries to richer countries? Does he accept that Her Majesty's Government deserve all the support they can get in stopping this insanity so that we may have a long-term Common Market that will not be a bloodsucker on the backs of the British taxpayer?

Sir Geoffrey Howe

I am not sure that I wholly share my hon. Friend's view of the Community. His question relates to two critical problems for the Community. In every developed country the problem of reconciling the interests of the agricultural community with those of the rest of the community is formidably difficult. The changes that are now in prospect are likely to involve difficulties and sacrifices for the farming community throughout Europe. It is important for us to press ahead to the right conclusions, which must be compatible with effective control of Community expenditure.

The need to ensure that the distribution of resources within the Community has regard to relative wealth and ability to pay is no less important. The gap between the figures of 1,000 million ecu and 1,250 million ecu is already substantial for the United Kingdom, but in terms of the cost to other member states the gap is relatively small when divided between eight or nine contributors. I therefore regret that, so far, our partners have been unable to take on the small additional burden to bridge that gap.

Mr. Roy Jenkins (Glasgow, Hillhead)

Does the Foreign Secretary appreciate that if he continues to take the Prime Minister's instructions, to use her word of yesterday — a rather odd word — about her Foreign Secretary, not to negotiate, he is unlikely to achieve a negotiated settlement? Will he tell us whether any of our recent traditional supporters on the issue—the Dutch or the Italians, or anyone else — were still on our side yesterday?

Sir Geoffrey Howe

In all the negotiations, including those that took place yesterday, a number of our partners were prepared to take positions that were helpful to our own. In the negotiations, which are clearly crucial to the Government and to the country, the position that we take is a matter of consultation between my right hon. Friend and myself and other senior Ministers, frequently and as appropriate. It would be quite wrong to believe that we do not approach the matter with flexibility.

I fully understand the need for us to demonstrate that we are searching for an agreement, but it should not be forgotten that during the negotiations last week, when most of the discussion took place about the size of the gap, we agreed to work on the basis of the VAT expenditure gap rather than the own resources gap. Again on the figures last week, we moved on more than one occasion to arrive at the figure of 1,250 million ecu. So there has been flexibility at different stages, and on both sides of the negotiations. It remains crucial to reach a conclusion that is a basis for a durable system. It must be looked at, not just as a figure for one year, but as the foundation for a system that will last and grow for many years.

Several Hon. Members


Mr. Speaker

Order, I appreciate the importance of the subject of the statement, but the House will know that we have to consider a Report stage today under the guillotine, a ten-minute Bill and an application under Standing Order No. 10. Therefore, I am afraid that I can allow questions on the statement to run for only a further 10 minutes.

Mr. Teddy Taylor (Southend, East)

I applaud my right hon. and learned Friend for not accepting the deal on offer, but is not there a danger that we might already have gone too far in pledging ourselves to spend several hundred millions of pounds a year on top of a net contribution to date of £5,000 million? Does my right hon. and learned Friend agree that, when we have just heard that the Common Market is now exporting six times as much cheap food to Russia as in 1979 at the rate of 100,000 tonnes a week, it is rather silly for it to ask for more resources without cutting down on its waste and extravagance?

Sir Geoffrey Howe

My hon. Friend is directing attention to a crucial point in the negotiations. The way in which the common agricultural policy has developed over the years has generated growing surpluses and expenditure. If that process is to be halted and reversed, as is now happening, it is bound to be of great discomfort to all sides of the Community. That is the process to which we are now applying ourselves with great energy and vigour.

Mr. Roland Boyes (Houghton and Washington)

Will the Foreign Secretary assure the House that, when he said that the Government had shown their willingness to entertain that proposal "only if," the ifs included cash to offset the social consequences of unemployment, an acceptance of the Vredeling proposals for greater industrial democracy, but, above all, cash to get Europe going again so that the 15 million people who are out of work have a chance to find work and the 35 million people living in poverty and squalor have an opportunity to get out of it?

Sir Geoffrey Howe

We are not, as I have said on several occasions, disposed to look favourably on the Vredeling proposals. In our judgment, they go too far in the direction of legislative and bureaucratic intervention. Of course, our negotiations with the Community and our conduct of Community policy is directed to the reduction of unemployment and the improvement of economic performance in the Community. But in Europe, as in the United Kingdom, it is not necessarily the right way to achieve those ends simply to throw more money at them.

Sir David Price (Eastleigh)

How far have my right hon. and learned Friend and my right hon. Friend the Prime Minister raised with their colleagues in the Council of Ministers the important fact that the non-tariff barriers to trade produce enormous economic disbenefit in trying to produce a common market and that if they are removed there will be more than enough economic growth to take care of all that we and everyone else are asking for?

Sir Geoffrey Howe

That is one of the matters that has been at the heart of our proposals for new policies which were under consideration at last week's European Council. I am glad to say that some progress is being made towards the adoption of more common policies to remove such barriers. I refer in particular to proposals for the adoption of common standards which are likely to move forward as a result of last week's discussion, proposals for the removal of barriers to road haulage traffic within the Community, and proposals for improvements in the insurance industry.

Mr. Eric Deakins (Walthamstow)

Has the system for effective control of Community expenditure yet been agreed ? Is it part of the right hon and learned Gentleman's negotiating stance that this must be embodied in the budgetary procedures of the Community and, if so, will he give us some idea how that is to be done?

Sir Geoffrey Howe

The proposals for more effective control of agricultural expenditure and Community expenditure generally formed a large part of the discussions last week. We have gone a long way towards reaching conclusions about that. All those conclusions depend upon each other before they are adopted. There are steps set out in the draft conclusions which would have the effect of achieving that control, the last paragraph of which says that the Council of Minister will bring forward proposals for guaranteeing the effective application of the principles set out in the text of the conclusions. The Council of Ministers will now be getting down to that work.

Mr. Nicholas Lyell (Mid-Bedfordshire)

Will my right hon. and learned Friend remind the House that our trump card in the negotiations is our ability to prevent any increase in own resources? Will he remind the Labour party that its siren invitation to go down the road of breaking treaty obligations is unlikely to improve Britain's position?

Sir Geoffrey Howe

I am not likely to be beguiled by invitations of any kind from the Labour party. My hon. and learned Friend's point is of great importance. A number of other member states in the Community are proposing an increase in own resources. Such an increase would require approval by every member of the Council of Ministers and by every national Parliament. It is only if agreement is reached on all the other components of the Stuttgart package, including the two to which I have already drawn attention — effective control of Community expenditure and a fairer distribution of budgetary burdens—that there can be agreement on a decision to increase own resources.

Mr. Dennis Skinner (Bolsover)

Is the Foreign Secretary aware that there is a general view abroad in the country, and perhaps to some extent in the House, that the Prime Minister and her pupil the Foreign Secretary are doing a bit of electioneering before 14 June, after which the Iron Lady will pay the brass? Will he bear in mind that we are now reaching the stage where, thankfully, the British people understand that the Common Market has reached crisis proportions? We do not need a master of detail to try to get us out of it. It is now a question of principle.

The Labour party has not changed its anti-Market attitude at all. It announced unanimously today at the national executive committee meeting that the only way to deal with the problem is not to hand over the money and to make the necessary plans to get out of the Common Market once and for all, which will suit a great proportion of the British people.

Sir Geoffrey Howe

One is grateful for advice about the attitude of the Labour party towards the European Community from almost any quarter, but I am not prepared to accept advice on behalf of Her Majesty's Government from the hon. Gentleman, whose contributions to these discussions represent an almost unique cocktail of insult and unwisdom.

Sir Anthony Meyer (Clwyd, North-West)

Is my right hon. and learned Friend aware that he used the words "the main question" to describe the long drawn-out process of waiting for the other nine to accept the British point of view? He used that expression at a time when the voice of Europe is quite silent on issues such as East-West relations and in particular, on the opportunities which now seem to be opening up in the middle east. Has something gone wrong?

Sir Geoffrey Howe

I appreciate the importance that my hon. Friend attaches, as do I, to reaching the point where the Community can effectively play a much fuller part in all the other questions with which the Council of Ministers and the Foreign Affairs Council should be concerned. However, it has been for some months, and is still, engaged in negotiations about the future shape of the Community that are of crucial importance. As I said in my statement, having touched briefly on the political topics, we had a great deal of discussion on the main question of the negotiations yesterday. At present there can be no doubt that the resolution of the Stuttgart agenda is the main question before the Community. It is of great importance. It should be resolved in a fashion acceptable to all member states as soon as possible. Then, I entirely agree with my hon. Friend, we can get on with further and even more important business.

Mr. David Penhaligon (Truro)

Will the Foreign Secretary confirm that the British Government have reduced production of milk in Britain—which is less than self-sufficient in milk production—by three times as much as France which is largely responsible for producing the surplus? What will be the cost of that remarkable reduction by the British Government to the British farmer? Just what arrangements are to be made for implementing that measure, which can only result in the reduction of a large swathe of our prosperous agriculture industry?

Sir Geoffrey Howe

As the Foreign Secretary, I am answering questions on the proceedings of the Foreign Affairs Council. I appreciate the importance of the hon. Gentleman's point on agriculture, particularly about milk production. As I have said already, the process of checking the growth of the mountains of butter and lakes of milk is a profoundly uncomfortable one. The pace at which that takes place is related to a number of factors, including the rate and scale of growth in different member states during recent years. Conclusions on that matter have not yet been arrived at. The hon. Gentleman will have the opportunity to ask questions of my right hon. Friend the Minister of Agriculture, Fisheries and Food in due course.

Mr. Nicholas Winterton (Macclesfield)

Is my right hon. and learned Friend aware that those of us who believe in justice and in playing by the correct rules expect the refund due to the United Kingdom to be paid by the appropriate date, which is 31 March, which happens by chance to be my birthday? Is he further aware that the British livestock and dairy sector is not prepared to accept the responsibility placed on it by the inaction and irresponsibility of successive Governments? Will he respond more directly to the question asked by the hon. Member for Truro (Mr. Penhaligon?

Sir Geoffrey Howe

I responded plainly to that and I cannot move into a different position. The British livestock and dairy industry, like the livestock and dairy industries of other Community countries, is bound to face the prospect of uncomfortable change if the runaway cost of the common agricultural policy is to be checked and halted.

Mr. Winterton

We are not producing the surpluses.

Sir Geoffrey Howe

The way in which that is dealt with is, of course, a matter for extended debate with the Minister of Agriculture, Fisheries and Food and is not for debate now.

The answer to the first point raised by my hon. Friend is that the decision taken to delay the payment of our refund beyond the end of this month is, as I have said, unjustified and misconceived.

Several Hon. Members


Mr. Speaker

Order. I gather that no Opposition Front Bench Member desires to put a question on this subject, so I shall call one more Member from the Opposition Back Benches.

Mr. Kevin Barron (Rother Valley)

What has been the biggest single issue in the last fortnight to have made the British Government capitulate over the payment of the refund? Is it not a fact that in the last two months the Government appear to have been banging a big drum but now find that they cannot deliver?

Sir Geoffrey Howe

No, Sir. Throughout these matters, as I said, we are determined to safeguard British interests in the most effective way. One of those important British interests is the interest of the Community in arriving at a conclusion to these negotiations that is acceptable to ourselves and to other member states.