HC Deb 02 April 1985 vol 76 cc1061-70 3.32 pm
The Prime Minister (Mrs. Margaret Thatcher)

With permission, Mr. Speaker, I should like to make a statement about the European Council held in Brussels on 29 and 30 March, at which I was accompanied by my right hon. and learned Friend the Foreign and Commonwealth Secretary. I have arranged for the conclusions of the Council to be placed in the Library of the House.

The European Council effectively completed the negotiations for the entry of Spain and Portugal into the European Community. The treaty of accession will soon be submitted to the 12 national Parliaments for ratification, opening the way for the entry of Spain and Portugal on 1 January 1986.

The terms are very satisfactory for the United Kingdom. In particular, there will be quicker dismantling by Spain in the early years of its high tariffs on certain industrial goods, including cars, to the benefit of the United Kingdom exporters. There will be no detriment to our fishing industry, no reductions in the important quotas available to British fishermen and no new access for Spanish fishing boats to the North Sea fishing grounds. There will be a full opportunity for the House to consider these points when the act of accession is presented for ratification.

The European Council also agreed on the financing of what are called integrated Mediterranean programmes over a period of seven years to help the Mediterranean member states adjust to the effects of enlargement on their own economies. A total additional amount of 1.6 billion ecu — about £950 million — will be made available for these programmes.

As a result of the Fontainebleau agreement, the United Kingdom financing share will be some 7 per cent.—less than £10 million a year. The poorer Mediterranean areas will also benefit from the structural funds and from 2.5 billion ecu of loans from the European Investment Bank.

We had a full discussion of the economic situation, with particular reference to the creation of enterprise and jobs and the achievement of a single large market by 1992. In the course of this I proposed, first, that the European Council should cut the burden of bureaucracy on businesses by reducing the number of existing Community rules and regulations, and should scrutinise any proposed new Community legislation with regard to its effect on business. Secondly, we were all greatly concerned to moderate labour costs and remove restrictive practices, especially with regard to new technology.

The United Kingdom's initiative was widely welcomed in the European council and is reflected in the conclusions. The Commission has been asked to follow it through.

We also broadly endorsed the first report of the Committee on Citizens' Europe. This contains a number of specific proposals for easier movement across frontiers, higher travellers' allowances, right of residence linked to proof of adequate resources, easier arrangements for road transport and mutual recognition of qualifications — all of them designed to bring advantages to individual citizens.

With regard to frontiers, I made absolutely clear the need to maintain strong controls against drugs, terrorism and illegal immigration and also that the completion of the single internal market does not imply tax harmonisation.

The Council agreed the text of the revised decision on the own resources of the Community, and I am arranging for copies to be made available in the Library. It will be submitted to national Parliaments for ratification. The text provides for new own resources generally to be available from 1 January 1986. It also puts into law the Fontainebleau arrangements for abating the United Kingdom's contributions by reducing the amount of VAT paid to the Community. It includes the United Kingdom's 1,000 million ecu abatement for 1984, which will become available after ratification of this decision and without waiting for any general increase in the Community's own resources.

The European Council discussed the measures to strengthen technology in the Community, in particular through mutual recognition of industrial standards and the opening up of public procurement to competitive tender from firms across the Community.

We also discussed East-West relations, welcoming the opening of the Geneva negotiations, and exchanged views on the middle east, Latin America and South Africa, where we expressed grave concern about recent events.

This European Council marks the conclusion of a period of important decisions in the European Community — agreement on the entry of Spain and Portugal; agreement on the implementation of the favourable budgetary arrangements for the United Kingdom negotiated at Fontainebleau; agreement on the integrated mediterranean programmes; progress on the environment, including the recent agreement on vehicle emissions; and the launching of an initiative truly to open up the Common Market and to reduce the burdens on business as a means of stimulating the creation of more jobs.

It is a particular source of satisfaction to us all that 40 years after the end of the second world war the European Community has further demonstrated in this impressive way its capacity to resolve its problems and move forward in a spirit of partnership and co-operation.

Mr. Neil Kinnock (Islwyn)

First, I welcome the enlargement of the European Economic Community membership with the accession of the newest European democracies of Spain and Portugal, especially as the pressures generated by that enlargement must surely bring the consequence of radical reform of the Common Market.

Secondly, I endorse the Prime Minister's view that any proposals to dismantle border controls must be resisted so that we can retain that vital means of combating terrorism and drug trafficking.

As the Prime Minister has failed to use the British veto either to control our contributions or to restrict the growth of the agricultural budget, will she now specify the sorts of occasion on which she will use it to protect the interests of this country — can we now assume that she has thrown away the veto?

Does the right hon. Lady admit that, however necessary the extra aid to the poor Mediterranean countries, the programme will involve the redeployment of regional and other funds away from Britain? As half of the Common Market's 15 poorest regions are now in the United Kingdom, why did she not press for a similar programme of help for Britain's stricken areas?

As the Prime Minister appears to have approved the inter-governmental agreement, will she confirm that it involves no switch in budget spending away from the 74 per cent. of the budget that goes to the common agricultural policy? Against that background, will she tell us why she has allowed the development aid budget to be cut in real terms while the agricultural programme — including food mountains — continues to grow remorselessly?

About 14 million people in Common Market countries are out of work and two out of five of them are under 25 years of age. Why has the summit yet again done nothing tangible to give those people help in getting jobs? Does the Prime Minister agree that the European Council would be better engaged planning jobs than discussing common passports and other gimmicks such as the so-called citizen's Europe?

The Prime Minister

I welcome what the right hon. Gentleman has said about enlargement and border controls. Prices under the agriculture budget are subject to majority voting and not unanimous voting. Only if a fundamental national interest is involved does the Luxembourg compromise come into play. We are not, therefore, able to exercise a veto on all agriculture pricing matters. [Interruption.] There was no need to use a veto on Spain. It was Greece which attempted to use a veto on Spain and we managed to overcome that by making reasonable arrangements.

Britain has done well out of the social and regional structural funds. The special arrangements under the integrated Mediterranean programme come from the increases in structural funds. It was made clear in the communiqué that the fundamental rules which govern the structural funds will continue to be the criteria.

We examined development aid, particularly in relation to African countries, and a report will be issued shortly. We came to the joint conclusion that sufficient food is being sent and that the real need is to ensure efficient distribution.

Sir Anthony Meyer (Clwyd, North-West)

Is my right hon. Friend aware that, welcome though the entry of Spain and Portugal is, it strengthens the need for effective means of decision making within the Community? As my right hon. Friend said, the use of the veto must henceforth be restricted to when major national interests are at stake.

The Prime Minister

I am grateful to my hon. Friend. The veto can be used only in those circumstances. We have had occasion to use it, but the future of these matters will be considered in the debate on the Dooge committee in June. My hon. Friend knows our position. We shall not agree to any change in the treaty on these matters. It should stay exactly the same.

Mr. Roy Jenkins (Glasgow, Hillhead)

May I endorse the view implicit in the Prime Minister's statement that this is our most successful European Council, for which a great deal of the credit, as on previous occasions, belongs to the Italian Presidency? Does the right hon. Lady agree that if the entry of Spain and Portugal had been delayed it would have spelt disaster for the whole Community? Does she also agree that, since no further candidates are likely, the Community can finally settle down with a membership of 12 for some time? In those circumstances, how does the right hon. Lady intend to improve the decision-making process? Does she recognise that wanting a reformed and changed Community—as I believe that she and her Government do—unanimity in a Community of 12 is a recipe for inaction and not for change?

The Prime Minister

I think it likely that 12 will be the limit of the Community for a very long time. The treaty provides for unanimity on certain crucial issues. The treaty must continue, since I think that on most issues it is important for debate to continue until unanimity is achieved.

On majority voting, the tendency has been to go to unanimity even on matters such as standards which require only a majority vote for agreement. Where majority voting is possible we can act without unanimity if most countries vote in favour and a small minority abstain.

Sir Anthony Kershaw (Stroud)

I congratulate my right hon. Friend upon three years of sterling work in Europe, the result of which has been greatly to the advantage of the United Kingdom and Europe itself. Does she agree that it is time to press on as fast as possible with the breaking down of barriers to trade before enlargement? After that takes place, things will become much more glutinous and accordingly more difficult to move.

The Prime Minister

One of the comparatively difficult issues to negotiate with Spain was changes in industrial tariffs. It was vital to the United Kingdom to achieve a reduction in Spain's industrial tariffs arid to secure the main part of it in the early part of the transitional period. That has now been achieved, and it would be greatly to the advantage of our car industry if it were achieved. I agree that it is important to break down any further barrier to trade within the Community and to complete the Common Market in internal services.

Mr. Merlyn Rees (Morley and Leeds, South)

The Prime Minister did not mention the much reported 30-minute meeting that she had with the Taoiseach. To dispel what must be misplaced rumours, what is afoot?

The Prime Minister

There was a brief communiqué issued after our meeting. We had a comparatively short meeting. It was held in the margins and was not part of the European Council. There is nothing further to report. The position is exactly as it was after the Chequers communiqué.

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

Will my right hon. Friend comment on what the EEC will do about Japanese trade, bearing in mind that the United States of America is finding, as we are, that the Japanese have pillaged much of its industry and its hopes? Are we to act with America in ensuring that at least the Japanese go in for fair competition by opening their country to our products, or are we to sit by in Europe and America while the Japanese grow fruitful and we grow bare?

The Prime Minister

This matter will be considered at the Bonn economic summit. My hon. Friend knows that there is a certain number of voluntary agreements between industries in the United Kingdom and Japanese industries on cars and certain machine tools. One of the fundamental difficulties is that the Japanese people are not as ready to purchase foreign goods as the British people, who are accustomed to doing so. We are constantly in discussions with the Japanese on how they can and should open up their markets further to exports from other countries. No one can expect to export to the whole world unless he is prepared similarly to open his markets.

Mr. Tom Clarke (Monklands, West)

Bearing in mind the concern which was expressed at the Council about drug trafficking, is the Prime Minister aware of the unanimous view of the Civil Service unions that the reduction in the number of customs officers has been unhelpful? Does she agree that member countries should be doing far more in allocating resources to deal with this problem?

The Prime Minister

An additional 60 customs officers were put on drug matters, followed by a further 100. We now have 160 extra customs officers tracking down the drugs as they come in. They had a record year last year in the amount that they discovered. Nevertheless, drugs remain one of our most serious problems. I was concerned that if we had only a few checks at borders in the Common Market we might be preventing ourselves from checking the movement of drugs. I made the observation that certain things must be checked at the borders, and it was well received.

Mr. Terence Higgins (Worthing)

Why do we continue to make advances of own resources before they are legally due?

The Prime Minister

They are legally due on 1 January. This was to help Britain, possibly among others, to get its 1,000 million ecu refund this year by a deduction in the amount of VAT that would be payable in future and not by having to go through the previous arrangements with the European Parliament.

Mr. Jack Ashley (Stoke-on-Trent)

Does the Prime Minister recall that the Commission's President urged wealthy countries to pay more to help the poor nations of the EEC? That obviously included us. Is the right hon. Lady aware that the Chancellor of the Exchequer is undermining our claim for European funds by his bogus party political claim that Britain is no longer the sick man of Europe, especially in view of the fact that our wealthiest and relatively more prosperous area—the south-east—is, in terms of income per head, below the national average?

The Prime Minister

I doubt very much whether the right hon. Gentleman would wish us to compete for resources with Portugal, Greece and certain parts of Italy. With regard to the financing of Mediterranean programmes for some of those countries, we shall be paying 7 per cent., but Germany will be paying 33 per cent. and France 27 per cent. All told, we have a reasonably good deal. I should have hoped that Opposition Members would be prepared to help poorer countries and to help Portugal which, after all, rose up and asked for its country back from the Communists who threatened it.

Mr. David Harris (St. Ives)

Will my right hon. Friend explain how the fishing agreement with Spain is not to the detriment of our fishermen when the number of Spanish fishing boats in the western approaches to Cornwall will increase and Spain's hake quota will more than double? Given those increases, what steps will we take to increase our policing to ensure that there is no wholesale increase in cheating by Spain?

The Prime Minister

I said in my statement that there will be no detriment to our fishing industry. There will be no reductions in the important quotas that are available to British fishermen and no new access for Spanish fishing boats to the North sea fishing block. I think that I am right in saying that we do not take up our full amount of hake. To let the Spanish have a larger quota of hake will, therefore, not affect our fishermen. I think that, on the whole, the hon. Gentleman will find that this is a very good fishing agreement. The fisheries protection fleet will continue to keep its normal careful watch on overseas vessels.

Mr. Russell Johnston (Inverness, Nairn and Lochaber)

In dealing with enlargement, which is very much to be welcomed, the Prime Minister stressed throughout her statement that the terms were not just satisfactory but "very" satisfactory to the United Kingdom. Does she agree that, if enlargement is to work, Spain and especially Portugal, where poverty is marked and which threw off the yoke of Salazar, rather than the Communist party, should be treated with not just political understanding but economic generosity? That is very important. Is the North sea agreement permanent or transitional?

The Prime Minister

The hon. Gentleman will remember that, well after Salazar, Portugal was nearly taken over by the Communists and it could have stayed a Communist country. Due to the great bravery of the Portuguese people, Portugal was rescued from that for democracy. [Interruption.] I am sorry that the Opposition do not appreciate the fantastic efforts made by the Portuguese people.

Spanish vessels will be subject to strict limits on the number of boats, permitting 150 to fish at any one time. There are strict reporting and monitoring requirements. Spanish vessels will have access only to those species controlled by the TAC and the quota under the common fisheries policy for which Spain receives quotas under the EC — Spain fisheries agreement — hake, monk, megrim and anchovy. Spanish vessels will not have access to the North sea. Those measures are to endure for the full duration of the common fisheries policy — to the year 2002.

Mr. Ivor Stanbrook (Orpington)

Is my right hon. Friend aware that much of the disillusionment in this country with the Common Market is due to the great disparity between its aims and the realities? The internal market is choked by national restrictions and internal air fares are outrageously high. Will my right hon. Friend devote all her considerable gifts and energy to making real progress on these matters before 1992?

The Prime Minister

One of our objectives is effectively to complete the internal market. I agree with my hon. Friend that that is not yet complete, as clearly there are a number of non-tariff barriers operating, and we are far from completing an internal market in services. I agree with him that air fares are one of the matters with which we have had difficulty. My right hon. Friend the Secretary of State for Transport has been successful in negotiating much cheaper fares on a bilateral basis, in particular, to Holland and Luxembourg. We have set the year 1992 for the completion of an effective internal market.

Mr. Nigel Spearing (Newham, South)

Bearing in mind the Government's well-known policy for the reduction of taxation and expenditure within the United Kingdom to the pain of the people of this country and of her party, is it not anomalous that expenditure and taxation within the EC are increasing?

The Prime Minister

With the agreement that we have obtained, the amount that we shall be spending and that will be going towards Europe is less now than it would have been if we did not have the Fontainebleau agreement.

Mr. John Mark Taylor (Solihull)

Does my right hon. Friend accept that many of us on the Conservative Benches are pleased with the result of the European Council and her role, but may we none the less have a word of reassurance about the position and role of the Gibraltarians?

The Prime Minister

As my hon. Friend is aware, the border between Gibraltar and Spain was fully opened a short time ago. That was absolutely necessary to enable the enlargement to go ahead. The position of Gibraltar is protected.

Mr. Tam Dalyell (Linlithgow)

On the discussions on latin America to which the Prime Minister referred in her statement, can she give us the names of those countries that supported her attitude towards President Alfonsin?

The Prime Minister

I cannot remember the particular name or the country being mentioned in our discussions.

Mr. Nicholas Budgen (Wolverhampton, South-West)

Will my right hon. Friend confirm that one of the reasons why she was in favour of the accession of Spain and Portugal was her belief that thereby she would support democratic government in Spain and Portugal? Will she further confirm that, if Turkey adopts a democratic Government and applied to join the EEC, she will be in favour of that application?

The Prime Minister

If that were the case and Turkey applied, we should have to decide what position to adopt. I recognise the force of the point that my hon. Friend is making. The European Community is a community for which democracy is an absolutely vital condition of entry. One of the reasons why we are anxious to have Spain and Portugal in is to enlarge the area of democracy and to consolidate in those countries. I do not believe that we shall be faced with another application shortly, but if we are we shall have to consider it.

Mr. Dave Nellist (Coventry, South-East)

Does the Prime Minister remember the referendum campaign in 1975 when giant posters bearing the words of the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) promised jobs for the boys through Britain's entry into Europe? What happened? Does the Prime Minister recognise that Britain's membership of the Common Market has cost £1.5 million a day since then? For that, working people in this country are on the lowest level of social security benefits as a percentage of former earnings, compared with any of the Ten. What did the summit do to take up those problems?

The Prime Minister

The hon. Gentleman is plainly wholly against the EEC. There is a communiqué on what we are trying to do about jobs. If he wishes to read in more detail, there was a full economic report following the Dublin European Council. Yes, there are problems on unemployment in Europe. There are far more problems than in the much freer enterprise economics of the United States and Japan. If perhaps we followed more their free enterprise tenets, we might have more jobs.

Mr. Eric Forth (Mid-Worcestershire)

Will my right hon. Friend confirm that before the House debates the treaty of accession and ratifies it we shall be given the fullest possible information about the cost of the enlargement of the Community to the United Kingdom and her people, in particular, the potential loss of social fund benefits, regional fund benefits and the flood of money from the CAP, from north to south, after the entry of Spain and Portugal?

The Prime Minister

We shall, of course, put as many of the details of the costs as we can before the House, but our share of the enlargement costs, because of the agreement which we negotiated at Fontainebleau, is only 7 per cent. That was a very good agreement for Britain.

With regard to the regional and social funds, as was said in the communiqué: The structural fund will continue to operate normally on the basis of a Community-wide regional policy in accordance with the regulations which have recently been revised. Over the past five years the regional fund has committed £1,236 million and the social fund has committed £1,245 million to the United Kingdom. The United Kingdom has done very well from both funds.

Mr. Eric Deakins (Walthamstow)

How can the Prime Minister justify improved rights of residence in Britain for people from the Common Market when our own Commonwealth citizens are so shabbily treated by the British Nationality Act and the immigration rules and procedures? Will the right hon. Lady come to my constituency in Walthamstow and justify to my Commonwealth constituents the reason for the increasing inequality between them and Common Market citizens?

The Prime Minister

The hon. Gentleman knows that that is a part of being a common market. We arranged during the discussion of the Committee on Citizens' Europe that the right of residence in one another's country should be linked to proof of adequate resources. I hope that the hon. Gentleman will welcome that decision.

Sir Anthony Grant (Cambridgeshire, South-West)

In view of the fact that one of the biggest burdens upon business today is instability of exchange rates, was there any discussion about Britain joining the European monetary system, particularly as the majority of exporting industries in this country now support such a policy?

The Prime Minister

Not at this particular meeting, although we have had such a discussion before and shall probably have it again in June. The recent instability has also affected the currencies in Europe. Indeed, the deutschmark has been affected as much as if not more than sterling, so joining the EMS exchange rate mechanism has not shielded people from the shifts in the dollar, and would not do so.

Mr. John Evans (St. Helens, North)

By how much will unemployment in Britain be reduced as a result of the measures adopted at the summit, and what were those measures?

The Prime Minister

As I have said, the measures were to encourage the development of enterprise, which was discussed in detail at the Dublin Council and in particular to try to get growth in labour-intensive industries, which are many of the service industries. There were measures designed to get across the fact that unit wage costs are very important. The hon. Gentleman is aware that it may be right for him to ask that question, but it is most unwise for anyone at this Dispatch Box ever to answer it.

Several Hon. Members


Mr. Speaker

Order. I remind the House that there are two other statements and a ten-minute Bill before we reach the Committee stage of the Interception of Communications Bill, so I ask for brief questions.

Mr. Tony Marlow (Northampton, North)

I congratulate my right hon. Friend on the completion of western Europe through the inclusion of Spain and Portugal, but as she looks for a positive direction as Europe goes forward will she give an undertaking that she will not attempt to make any changes that undermine her right to veto increases in expenditure programmes or the right of the House to throw out any legislation with which it may disagree?

The Prime Minister

On the latter point, there is nothing that I could do to undermine the rights of Parliament. They are absolutely vital. On the veto, I believe that the position should remain as it is under the treaty, together with the Luxembourg compromise.

Mr. Gerald Malone (Aberdeen, South)

Is my right hon. Friend aware that in Scotland there will be a broad welcome for the accession to the Community of the democracies of Spain and Portugal? Is she further aware that the sharpest criterion brought to bear on those accession arrangements is by fishermen in the north-east of Scotland? According to that criterion, she has passed the judgment of those fishermen, and accession is welcomed.

The Prime Minister

I am grateful to my hon. Friend. The fishery provisions gave rise to a great deal of negotiating difficulty, but I believe that we fully protected the rights of our own fishermen in the agreement that we obtained.

Mr. Harry Greenway (Ealing, North)

Bearing in mind the resistance in this country to changes in our currency, will my right hon. Friend say whether there was any discussion of a common currency for Europe and, if so, what was said?

The Prime Minister

From time to time there are requests and expressions of hope that the ecu will become much more of a common currency than it is now. Of course, the ecu is dealt with in the City of London. Undoubtedly some of our Community colleagues would wish it to begin to rival the dollar in its importance as a reserve currency. I confess that I believe that it will take a long time before that happens.

Mr. Andrew MacKay (Berkshire, East)

In the light of the welcome news of Spain's accession to the Community, can my right hon. Friend tell the House when she expects to have an extradition treaty with that country?

The Prime Minister

I cannot at the moment. The matter is being pursued in the customary way.

Mr. Tim Yeo (Suffolk, South)

Does my right hon. Friend agree that for ordinary men and women the elimination of passport controls would be one of the most tangible and welcome consequences of British membership? Will she give the House an assurance that Britain will participate fully in any such experiment?

The Prime Minister

Subject to what I have said about checks at certain frontiers—I believe that they are vital to apprehend those dealing with drugs and in terrorism, and illegal immigrants — it is important that we have freer movement among the countries of Europe.

Mr. David Heathcoat-Amory (Wells)

Does my right hon. Friend share my concern about the nature of the pay-off to Greece and the extra payments to Italy and France for agricultural restructuring? Does she agree that that will increase the production of Mediterranean foodstuffs and lead to the same problems of surplus that we have with milk and cereals?

The Prime Minister

The figure is about 1.6 billion ecu—less than £1 billion—for the three countries over a period of seven years to enable them to make the necessary changes and adaptations to their own economies, bearing in mind that many of their products will have enormous increases through the enlargement, with the accession of Spain and Portugal. I agree that we already have surpluses, and it is for those countries to make the requisite changes over that period using the moneys to enable them to do so.