European Communities Budget

HC Deb 22 January 1985 vol 71 cc886-955

[Relevant document: Treasury and Civil Service Committee Third Report, House of Commons Paper 158, Session 1984–85.]

5 pm

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

I beg to move, That a supplementary sum, not exceeding £119,218,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1985 for expenditure by the Treasury in connection with payments to the Budget of the European Communities not covered by direct charges on the Consolidated Fund under section 2(3) of the European Communities Act 1972, as set out in House of Commons Paper No. 145.

The Supplementary Estimate before the House today relates to a payment of £119 million in respect of the supplementary budget for the European Community for 1984. This finance was arranged through an intergovernmental agreement between the member states of the Community last October because supplementary finance could not be provided last year as the Community had reached the ceiling under the VAT 1 per cent. own resources limit. The payment for the United Kingdom is 201 million ecus—the sterling equivalent is £119 million—in the form of an advance on own resources to the EEC and payable in eight half-yearly instalments from June 1986.

Some interest has been expressed in the form in which this payment is being brought before the House for consideration and approval. Last year, the Government introduced an order under section 1 of the European Communities Act 1972 to designate the intergovernmental agreement as a treaty ancillary to the European treaty. That subject was of some interest to various Select Committees of the House and an application was made to the courts about the order. The decision of the High Court and the Court of Appeal vindicated comprehensively the Government's contention that this was a lawful and appropriate means of dealing with the matter.

The proposal now before the House under the Supplementary Estimate procedure is in respect of payment following the intergovernmental agreement of 1985. In the context of the agreement, there is reference to a payment to the Community in 1984 and for the avoidance of doubt the Government decided that it would be appropriate to use the Supplementary Estimate procedure now that we are in 1985.

Mr. Eric Forth (Mid-Worcestershire)

Can my hon. Friend confirm that this procedure will not be repeated under the auspices of the so-called new budget discipline measures that we might expect in the future and that this will be absolutely the last time that any such measure will come before the House?

Mr. Stewart

I should like to think that supplementary budgets for the European Community would not be a thing of the future, but that would be too optimistic. I shall have more to say about that later.

Dr. Oonagh McDonald (Thurrock)

Does that mean that the Minister has no faith in the budgetary discipline which the Prime Minister achieved and which she has been proclaiming so loudly as the real budgetary discipline that she set out to achieve? Are not the Minister's comments an implicit criticism of the Prime Minister's achievement?

Mr. Stewart

No, my remarks were certainly not that. They were a recognition of the realities of agriculture expenditure, which cannot be precisely predicted at the beginning of any one year. Any hon. Member who suggests that it is possible to predict exactly what agricultural production totals will be, what the weather will be in each of the 10 member states at the beginning of the year, and who claims that there will never be any circumstances that would require the Community to have a supplementary budget is not living in a realistic world.

Mr. Tony Marlow (Northampton, North)

I rise on a slightly different point, which is also very important. Will my hon. Friend tell the House whether it is outside the competence of Her Majesty's Government to prevent further supplementary budgets?

Mr. Stewart

If the Government agree to a supplementary budget for which finance is available under the normal procedures of the Community, we would expect that to be brought forward. If special finance is required, as it was in 1984, and because normal procedures for that are not available, it requires the agreement of the Government. I shall deal with the points about budget discipline later.

The need for the supplementary finance derives from the fact that there has been an overrun of expenditure in 1984. It would have caused considerable disruption of markets if it had not been possible to finance the unavoidable expenditure in 1984 through agricultural and other policies.

Mr. Neil Hamilton (Tatton)

As my hon. Friend is doubtless aware, article 199 of the treaty states that all items of revenue and expenditure of the Community should be included in the Estimates drawn up at one point in the year. It further provides that the revenues and expenditure shown in the budget should be in balance. As the treaty can be amended only in accordance with article 236—a procedure that, in this instance, we have resolved not to adopt—can my hon. Friend tell me whether, if we agree to what the Government are proposing, we would be conniving in an illegality? Why is it that an illegal budget for Liverpool city council is something that we should revile but, for the European Community, is something that we should endorse?

Mr. Stewart

After my hon. Friend's legal tour de force of the Community's business, I can tell him that the funds about which we are deliberating today are to be provided by agreement between the individual member states and not through the Community's own mechanisms. That is an important difference.

Mr. Nicholas Budgen (Wolverhampton, South-West)

rose—

Mr. Stewart

I shall not give way. It would be much better if I tried to explain some of the points rather than allow hon. Members to object to them in advance.

Mrs. Elaine Kellett-Bowman (Lancaster)

rose—

Mr. Stewart

I give way to my hon. Friend.

Hon. Members

Sexist.

Mrs. Kellett-Bowman

Before my hon. Friend was interrupted by a number of hon. Members, he said that the measure was to deal with agriculture and other policies. Will he confirm that if the measure is not passed today there could be a considerable hold-up in the payments of regional and social fund to this country?

Mr. Stewart

I can confirm that. The level of cash balances of the Community for 1984 is now very low. If the payments are not made in the very near future, the United Kingdom recipients under the fund would not receive their money.

Mr. Budgen

My hon. Friend used the expression "unavoidable expenditure". If the Agriculture Ministers had set the price structure at a lower level, all the expenditure would have been avoidable.

Mr. Stewart

As is so often the case. I warmly agree with my hon. Friend. Had the correct decision about pricing been taken in 1983 and 1984, I have no doubt that it would have been possible to avoid the overrun.

The figure in the intergovernmental agreement is very much below that which was originally set by the Commission of 2,300 million ecus. We had that reduced to 2,000 million ecus by June, in the July Budget Council it was reduced to 1,350 million ecus and at the September Budget Council meeting to 1,003 million ecus. I believe that that is the absolute practical minimum with which the Community could discharge the commitments flowing from its policy in respect of the 1984 Budget.

During the negotiations in the Budget Council, not only was I seeking to get the lowest possible figure for the supplementary finance; I wanted to ensure three other important United Kingdom objectives. First, I wanted to make it clear that we would not consider making payments until refunds for 1983 had been received by this country. Secondly, I made it clear that measures necessary to guarantee the principles of budgetary discipline should be adopted by the Community and, thirdly, that supplementary finance should be decided by the Parliament of the United Kingdom and not by the Community or the European Parliament.

In the context of the intergovernmental agreement, specific reference was made to the refunds for 1983. At the time that this was drawn up they had not been released. However, they were released soon afterwards, in October. They bring the total of refunds that this Government have negotiated to over £2,500 million since 1980, compared with the figure of zero that was negotiated under the financial mechanism adopted by the Opposition.

I was also able to obtain a commitment from the Ministers of other countries in the Budget Council that, whatever decisions were taken about the mechanism for dealing with the Community's financial decisions in 1985, they would commit themselves to implementing in 1985 the Fontainebleau agreement on the 1,000 million ecu abatement for 1984 to the United Kingdom. If the Fontainebleau proposals are approved by the national parliaments, we in this country will qualify for an automatic abatement of our future contributions. Therefore, instead of having to negotiate with great difficulty and with much acrimony and dispute about obtaining refunds from our net contributions in the future, we should be entitled to deduct automatically a part that represented two thirds of the equivalent of our VAT share in the previous year. That seems to me to be a major advantage of the new proposals.

The next point that I wanted to be included in the intergovernmental agreement was budget discipline. We insisted that we should not bring this matter before the House of Commons until budget discipline had been agreed by the Community. That was finally ratified in December by the European Council at Dublin. It sets a guideline for agriculture expenditure that is due to grow at a rate below the increase in the own resources base. Some of my hon. Friends have suggested that this can be very easily overturned by qualified majorities. The position is that the Commission's price proposals could be overturned only if there were unanimity in the Council. Since the Commission has given an undertaking that it will submit its proposals in line with the need to keep to the agricultural guidelines, unanimity would be required to go beyond that.

To elaborate upon what I said about future supplementary budgets—

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

These are very fine, pious words and the EEC only runs on pious words, but if there is to be no mandatory sanction and if this will have to depend upon good will, which has not existed so far, and upon the good will of people who have broken their word to this country after we have paid up time after time, why should we now be satisfied that the past will not go forward into the future, as seems so obvious to all of us?

Mr. Stewart

The conclusions of the Council are binding upon it and they are embodied in the budgetary procedure of the Community. The overall reference framework for the agriculture guidelines has been agreed by all member states and it has been ratified by the European Council. It was one of the major items left over from the Fontainebleau agreement.

Mr. Forth

rose—

Mr. Stewart

May I finish my reply in response to the previous intervention? I shall then give way to my hon. Friend. The idea of budget discipline was first initiated two or three years ago by this country. During that time we have been able to persuade fellow member states that the problem is more serious than they had recognised, that special measures needed to be taken to deal with it and that specific measures of this kind ought to be taken. It was a major achievement by this country. As I said to the Select Committee, budgetary discipline is not just a British "wheeze". It has now been accepted by all member states as being essential if the finances of the Community are to be orderly in the future.

Mr. Forth

My hon. Friend has mentioned the reference framework. Would he confirm that the budget discipline document contains a provision whereby the framework can be altered by a majority vote? Does not this undermine the validity of the framework upon which my hon. Friend lays great stress? Could my hon. Friend also tell me what would happen under the terms of the budget discipline document if there were to be, for example, three consecutive years of exceptional harvest whereby the clawback which is supposed to be allowed for in the budget discipline document could not occur?

Mr. Stewart

As for overspend, I have no doubt that the Commission would have to take increasingly stringent action on price-fixing year after year. That would be the inevitable consequence of the proposals my hon. Friend has mentioned. On the reference framework, it is the component parts of the expenditure that matter. The non-obligatory expenditure is controlled by the maximum rate. That is a fixed formula. The obligatory expenditure under the agriculture policy would be limited by the guideline. Not to have the normal means of adjusting the reference framework if there were changes in the two component parts would be impracticable. However, the component parts are controlled. Control over the agriculture guideline would permit both this year and next year increases of about 5 or 6 per cent. per annum. That has to be compared with an increase in agriculture expenditure of the order of 20 per cent. or more in the last two years. This will represent a very tight constraint, particularly given the fact that already there are very high intervention stocks in the Community which will need to be financed in the coming years.

Mr. Teddy Taylor (Southend, East)

How can the Minister possiby talk about restraint when he knows that under the agreement the Commission will be fixing prices on the basis of actual spending in 1984 and 1985, which were years of enormous surplus, and that it will then add something on top? How does the Minister expect me to go back to Southend and tell the prudent council there that if, through unfortunate or aberrant circumstances, it exceeds its spending it will be controlled and eventually ratecapped, but that, despite the normally excessive spending of the EEC, it will apparently be allowed to exceed its spending by means of a Supplementary Estimate?

Mr. Stewart

What I hope my hon. Friend will tell the burgers of Southend, although I am not entirely confident that he will do so, is that it is impossible to determine in advance any form of agricultural support. If there were a national form of deficiency payments, there would be an element of variability according to the outcome during the year in question. It seems to me that the farmers who live around Southend would be able to explain this matter to my hon. Friend, even if his constituents do not understand it. It is because I, the Government and my hon. Friend are concerned that Community expenditure in the past has been so much out of control that we have been very anxious to put in place a system that will apply control to Community expenditure in the future.

Mr. Marlow

As my hon. Friend said so rightly, this matter can be controlled if prices are controlled. My hon. Friend said that the Commission has undertaken to come forward with low increases in farm prices. What will be the position if the Council does not agree with the Commission? Has the Commission given an undertaking that it will not raise those prices?

Mr. Stewart

The Council would have to be unanimous in overturning the Commission's proposals. An important part of the budget discipline arrangements is that Finance Ministers as well as Agriculture Ministers will be involved in any dispute involving decisions of that kind. That will be an important factor in obtaining an improved procedure.

Finally, I said that I thought it was right that this matter should come to Westminster for a decision rather than that it should be decided in Brussels and Strasbourg. The Commission originally proposed that this money should be made available by means of a loan under article 235. That would have involved scrutiny by the European Parliament but no scrutiny by the United Kingdom Parliament. It seemed to the Government that this was not a proper procedure. Therefore, we insisted, and I was able to have this included in the text of the undertaking, that the United Kingdom and certain other member states would require the parliamentary approval of their own Parliaments before such a payment could be made.

This is an agreement of member states; it is not an instruction from the Commission or the Community. We have undertaken to provide finance, provided that Parliament approves it today, because we believe that it is necessary. The difficulty has arisen because of lack of budget discipline in the past. Significant progress has been made in reforming the financial arrangements of the Community during the past year. To deny payment of our contribution today, apart from amounting to a rejection of an undertaking made with other European countries, would only add to the problems of the Community at a time when it has at last been committed to the major financial improvements that Britain has been seeking. The Government's aim is not to disrupt the Community's finances but to reform them. The agreement is part of that process. Accordingly, I hope that the House will give its approval today.

5.20 pm

Dr. Oonagh McDonald (Thurrock)

In his opening remarks the Economic Secretary explained the reason for the Government now requesting Parliament's approval for the payment of £119 million into the Community's fund for the shortfall in the 1984 budget under the Supplementary Estimates procedure. He did not explain why the Government originally considered laying an order under the European Communities Act 1972 and then changed their mind, in spite of having been successful in the courts and having their views upheld at least as far as the Court of Appeal, and switched back to the Supplementary Estimates procedure. It would be useful if the Minister would explain why that change was made.

One reason that was mentioned to the Treasury and Civil Service Select Committee, the evidence and report of which we were grateful to have in time for the debate—

Mr. Neil Hamilton

Otherwise the hon. Lady would not have known what to say.

Dr. McDonald

There is plenty of other material.

Mr. Ian Stewart

The hon. Lady mentioned the Treasury and Civil Service Select Committee. I was about to pay my own compliments to the Chairman and members of that Committee for the speed and efficiency with which they have produced their report when one of my hon. Friends sought to intervene and I regret that I omitted to do so. In that report the hon. Lady will find that I gave extensive evidence about the procedural matters that she has raised.

Dr. McDonald

We are not at all surprised that that Freudian slip by the Minister occurred in respect of the Treasury and Civil Service Select Committee's report. I do not think that the reason why the first procedure was chosen and then the change made was dealt with, except with reference to the question of speed, when the Minister rightly pointed out that most of the other member countries had paid the additional contribution. Indeed, all of them have paid, except for Belgium and Luxembourg, which are due to pay this week, and, if Parliament agrees tonight, the British contribution will be paid.

What will be left out is the Italian contribution, which is the second largest. It would be interesting to know what has happened to that. We should bear in mind recent press reports about what is happening to Community money.

Mr. Budgen

What about the poor official from the Court of Auditors who had his legs broken?

Dr. McDonald

I was particularly sorry to notice that it was an Irishman to whom that happened.

In reply to one of his hon. Friends, the Minister referred to the payments which would be made out of this amount under the social, industry, energy, and, not surprisingly, agriculture funds. The extra amount for the social fund is tiny. Under the heading of "Industry and Energy", £32 million additional money is going to the Community. A proportion of that £32 million will be spent on administration, technical operating expenditure and certain contractual obligations. However, the Minister has failed to tell us how much out of that additional £32 million payment to various members of the Community will come to Britain. Do we benefit at all under the heading of "Industry and Energy" payments from the £119 million, plus the contributions from other members of the Community?

The largest part of the supplementary budget will, not surprisingly, go on agriculture. Certain questions were raised in the Treasury and Civil Service Select Committee's report about the reimbursable advance, and it did not receive a clear reply. The difference between that and a loan was not made clear, but the most important point relates to the repayments that are due to commence in June 1986.

What guarantee do we have that those repayments will be made so far ahead? The Minister gave us no guarantee at all that we would get back, possibly in June 1986 onwards, some of that reimbursable advance. We shall get some of that money back. Yet, even in June 1986 and the years thereafter, we shall be giving more money to the Community that we get back from our reimbursable advance. The Minister gave us no reason for optimism on budgetary discipline that the Community would not ask for another reimbursable advance in the years to come. We have had no assurances that that reimbursable advance will be repaid in future.

The main reason for the overrun is, once again, agricultural spending. The Minister has already admitted that in the evidence that he gave. He said that the bulk of the overrun was the result of changes in the markets, the volume of production and the price at which it can be sold. Much of it related to livestock, and a smaller proportion related to Mediterranean products. That was the main reason for the EC's overspend in 1984.

When one begins to look at other sources, one finds additional reasons. For example, the Eurostat statistics for the first and second quarters of 1984 show that producer prices continued to rise at a faster rate than farm costs. Those are the latest available statistics. Therefore, prices were ahead of farm costs by more than 3 per cent. That means an average increase of almost 4 per cent. in real incomes for the farming sector of the Community. That happened despite the smaller than traditional price increases in 1984, the limitations on dairy production and the not necessarily favourable outturn for part of the livestock and crop sectors.

The favourable cereal harvest helped to boost average farm incomes. That meant that agriculture was one of the few major sectors of industry in the Community to show an increase in income, when reduced output, incomes and redundancy hit almost every other major industry. We know that the money has gone where it usually goes—to boost farm prices and farm incomes.

Mr. Phillip Oppenheim (Amber Valley)

rose—

Dr. McDonald

I shall not give way. We have a limited time for the debate.

Mr. Teddy Taylor

On a point of order, Mr. Deputy Speaker. Will you advise the House whether the debate is limited?

Mr. Deputy Speaker (Sir Paul Dean)

The debate can continue until 10 o'clock. I am not saying that it will, but it can.

Dr. McDonald

Nevertheless, I wish to continue with my remarks. The money has gone to maintain farm incomes at a better level than those in other areas of industry.

Other reasons for the cost overrun were successfully tabulated in the Court of Auditors' report for 1983. There is no reason to suppose that what occurred in 1983 did not recur in 1984 and will not recur in future. First, the cost of storage of surplus farm produce continues to be an extremely expensive item in the Community's budget, yet it is not properly itemised or budgeted for in any of the Community's accounts. Secondly, the cost of storage will continue to rise in 1984, and there is no reason to suppose that it will come under control.

The Court of Auditors' report for 1983 estimated that £7 billion disappeared from the accounts of the Common Market. These nitty-gritty questions are omitted from the general statement on budgetary discipline and the generalised efforts which are allegedly to be made in future to control the continuing rise in farm prices. The lack of financial control at that level will be a reason in future just as it has been in the past for the failure to curb the recurring overspend on agriculture in particular and on the Community as a whole.

Mr. Marlow

The hon. Lady has made many important points, and she has made them well. We are debating the future of £120 million of public money. I know that the Opposition are as concerned about public money as we are, but can she send a Whip to whip round the Tea Room to see whether he can get more than two Opposition Back-Bench Members to attend this important debate?

Dr. McDonald

I suppose that I must thank the hon. Gentleman for his kind initial remarks and omit any reference to his additional remarks.

Not only is there a lack of financial control, which should have been the concern of the Council of Ministers when it worked on the agreement, but there is corruption, to which many hon. Members will refer. It has been nicely covered recently, in both The Times and The Guardian of 17 January, to the effect that the Mafia is extracting millions of pounds from the European Community. That claim is made by Italian members of the European Parliament. I am interested to see that they are prepared to make such comments.

That could mean that our additional payment of £119 million will not be devoted to useful purposes, despite the Minister's claim for its necessity to make up standing payments to agriculture, industry, energy and, to a limited extent, the social fund. In fact, these millions of pounds will disappear in an entirely corrupt manner.

Surely the Government should have been more seriously concerned about the level of accounting before they accepted the generalised agreement on budgetary discipline and regarded it as a sufficient basis for making this additional payment.

Mr. Teddy Taylor

The hon. Lady has obviously studied the budget papers with far more care than the majority of hon. Members present. She has explained how substantial sums have gone from this and other countries to pay the Mafia for destroying non-existent tomatoes or for the produce of non-existent farms. In her studies, has she found anything in the new proposals on budgetary discipline which would stop the Mafia from continuing to get millions of pounds for the destruction of millions of tonnes of non-existent tomatoes?

Dr. McDonald

I presume that the truth of the press reports must be validated. We need a full examination of them. My point is that the agreement on budgetary discipline is extremely general. The detailed matters of accounting procedure and so on, which were discussed in the Court of Auditors' report, obviously were not discussed as part of the agreement. Apart from the faults in the general agreement on budgetary discipline, unless the Commission gets better accounting procedures, money will continue to disappear not only at the hands of the Mafia, but in other ways. Certain activities of the Commission—for example, the storing of food and the losses from selling stored stock—are not properly presented in the Commission's accounts. The Court of Auditors' evidence on the matter is extremely important. Unless those matters are also dealt with, we shall continue to face problems of Community finance. I agree entirely with the hon. Gentleman's point.

Mr. Budgen

Is there not another problem, in that the EC has a Court of Auditors to comment somewhat from afar upon the way in which policy is carried out? If an individual nation state connives in or fails to investigate fraud within its borders, no supervisory body from the EC can force the conniving or ignoring nation state to deal with that fraud.

Dr. McDonald

I agree with the hon. Gentleman. There are two different problems, with one of which the Commission can deal to some extent. If some member states refuse to co-operate and plan to delay payment of the milk levy, the Commission has recourse to the European Court. I agree that connivance in fraud and lack of proper supervision in member states can account for the disappearance of money. We cannot talk about controlling Community expenditure unless we are prepared to examine it properly at every level. From the report of the Court of Auditors, it would appear that it is about time that Ministers turned their attention to this matter, not only in their national Parliaments but in the Council of Ministers, so that something can be done to obtain much more stringent control of Community spending.

Mr. James Hill (Southampton, Test)

Is it not true that the Court of Auditors, which was appointed only a short time ago, presents reports only after the event and that it is up to the national Governments to act on those reports? The Commission is not obliged to take any action.

Dr. McDonald

That is exactly what I was saying. The reports should be considered not only by national Governments, but by the Council of Ministers. I am sorry if the hon. Gentleman's attention wandered while I was trying to make that point.

This payment will be made from the Consolidated Fund and it is a Supplementary Estimate to that. The Minister did not tell us whether the additional money would come from the contingency reserve or whether it is additional public spending. If it is the latter, presumably it will squeeze out other public expenditure. We wish to know under which heading it falls. If it is additional public spending, what will be squeezed out?

The Minister said that the Government are justified in introducing the Supplementary Estimate because they have reached an agreement on budgetary discipline. However, his opening remarks highlighted the lack of budgetary discipline. He said that he hoped that it would not be necessary in future to make requests for such additional payments to the EC. However, he said that one could not be sure of that in relation to agriculture because of changes in the weather and in production. He should have added that we cannot be sure because the payments made by the Community under the heading of agriculture spending are demand-led. There can be no budgetary discipline until the common agricultural policy is reformed.

Hon. Members on both sides of the House have made that point repeatedly. Apart from the weaknesses in the wording of the agreement, we cannot achieve the budgetary discipline that the Government wish us to believe has been achieved in the 1984 negotiations without the fundamental reform of agricultural spending. It is bound to overrun the estimates. and it will cause us endless trouble in the years to come, just as it has in the past. Nothing has been achieved to end the trouble.

The Government have abandoned their original commitment to reform the CAP. They changed the terminology for their aims in the Community to talking about budgetary discipline and financial control. They are whistling in the wind if they believe that that has been achieved by any agreement. Other Ministers in the Community believe that it has not been achieved. Mr. Genscher, the German Foreign Minister, called it the budget of indiscipline. The French Agriculture Minister consoled the 2 million French farmers by telling them that they had nothing to worry about and that they would continue to receive money through the CAP.

The agreement is faulty because it creates many loopholes. It was not built into Community legislation, as the Prime Minister wished. The right hon. Lady would have preferred financial regulations, but she failed to get agreement for that from the other nine countries. This agreement represents conclusions which are binding on the Council but which are full of escape clauses. The agreement can be suspended in exceptional circumstances, and its corrective mechanism can be set aside in the event of aberrant developments. There is no hope of budget discipline. Fundamental reform of the CAP has not been achieved, and the Government long ago abandoned that aim. The agreement is full of loopholes, and there is no attempt to impose stringent financial control on the Community at the level which the report of the Court of Auditors made abundantly clear is vital if spending is to be controlled.

For those reasons, we are opposed to spending another £119 million of our money on the Community simply to boost farm incomes yet again.

5.47 pm

Mr. Terence Higgins (Worthing)

I shall make three initial points in the broad context of the Common Market. I believe profoundly that our membership of the Common Market has great political and economic advantages, and I have no doubt that those who take that view are right to support it. But it is essential that those who take that view should make it clear that if the Community is travelling on completely wrong lines, or if necessary reforms are not being carried out, we have a duty to speak out and to say that it is happening. I am surprised that many of those who have been enthusiastic supporters of the Common Market are not present for this debate to make some of the points that must be made.

It has long been the case that there is a basic inconsistency between the economic philosophy underlying the main part of the Common Market and that underlying the common agricultural policy. Until now, the price that we have had to pay for the overall benefits has been the disadvantages of the CAP. But now that limits on Community finance are finally coming into operation, we have an opportunity to reform the CAP. That is why it is important to consider carefully the financial position and the negotiations that have taken place.

My second point, again in the broad context, relates to the control of public expenditure. In recent days in the House we have had several debates among those who advocate tax cuts as a means of alleviating unemployment and those who advocate more expenditure on the infrastructure. It would be extremely silly if that debate were conducted in terms of black and white.

We must appraise whether a tax cut or item of public expenditure has merit. To divide it in this simple-minded way, however, is not a fruitful method of considering the matter. The Government's overall policy of seeking to control public expenditure effectively is important, especially if we are to get the economy right and deal with the problem of unemployment.

We are being asked to spend another £120 million, and that sum must be appraised against other possible claims on public expenditure. We have had passionate debates recently, for example about student grants. In that case, a cut has been made of £120,000 a year in the provision for adult education. Yet we are talking today of £120 million a year. We have also had passionate debates on overseas aid, broadcasting by Britain to overseas areas and capital payments by local authorities for housing.

The proposal before us seems inconsistent with the Chancellor's overall objective of reining back expenditure. It is clear from the evidence we took in Committee upstairs that this proposal has not been considered in relation to the other items of public expenditure to which I have referred, some of which, compared with the sum we are now debating, are absolute candle ends.

We see from the face of the Estimate that it is not cash-limited. Why have we not adopted the same stringent approach in this case as we have in other areas that are cash-limited? Let us remember that we are not dealing with an obligation under the Community treaty as part of own resources. This is being paid over and above the limit on own resources to bail the Community out of a situation into which it has got itself. We did not get it into that situation, one which may be implicit in the mechanisms which need reforming. It is essential, therefore, that we put this in the overall context of public expenditure.

Mr. Russell Johnston (Inverness, Nairn and Lochaber)

The right hon. Gentleman is being simplistic over this in the way in which he is criticising others for being so. It is not simply a question of saying that the Community has got us into this mess and that we have had no responsibility for it. We had a great deal of responsibility because we also failed to rein in agricultural production and persuade others to do likewise. It is not long since the Minister of Agriculture, Fisheries and Food was asking dairy farmers to produce, produce, produce.

Mr. Higgins

I am interested to hear that statement of Liberal agricultural policy, which will be noted in fanning constituencies.

The Treasury Select Committee has done a useful job in informing the House about the situation. There would not, under our previous procedures, have been any way in which the House could have understood the position as clearly as it can in the light of the evidence which we took on the Fontainbleau agreement, from the provision for budgetary discipline which was published with our autumn statement and report or from the evidence that we have had in recent days. The present system of Select Committee scrutiny is vital, and I pay tribute to the staff of the Committee, and the clerk in particular, because we have been under tremendous pressure of time.

The Government proposed originally to proceed under section 1(3) of the European Communities Act 1972. They went to the Statutory Instruments Committee on the issue and fought the matter through the High Court and Court of Appeal. Suddenly they threw the whole engine into reverse and decided to do it not by that means but by way of an Estimate. It is arguable whether they should not have done it by that means in the first place.

They said that they wanted to take it through the courts to establish the legal position over the so-called intergovernmental agreement. Why did the Government not go on to seek a clear judicial interpretation in the Lords on that point? We are now left with the matter rather like the smile on the Cheshire cat's face after the cat has gone. We need to know the legal obligation for the Estimate that we are being asked to approve.

The Minister has referred all the way through to the intergovernmental agreement, but that argument was adduced when the Government proposed to use the other procedure. The legal obligation from the point of view of the Estimate is not clear, though one cannot help but note that it says on the face of it that it is being done under the sole authority…of the Supplementary Estimate and the confirming Appropriation Act. I hope that the Minister will make it clear whether this is being done under the intergovernmental agreement. The House is entitled to an answer to that straightforward question. If it is a straight Estimate, is additional public expenditure, is not cash-limited and if we have no legal obligation, that information is relevant to our deciding whether this money should be spent.

We are talking here of £120 million. On 17 January we were told in answer to a written parliamentary question that another £99 million would be advanced out of the Contingencies Fund and that it would eventually be clawed back under the Consolidated Fund, a procedure used by the Government on several previous occasions. That may have been an appropriate, if debatable, procedure on those previous occasions.

I am not clear why we should be paying that other £99 million out of the Contingencies Fund with a proposal to claw it back under the Consolidated Fund when we have a perfectly good occasion—today—to do it by way of an ordinary Estimate, plus a perfectly good occasion—under the Consolidated Fund Bill tomorrow—to deal with it, and why the two have been separated instead of being taken together.

We were told clearly by the Prime Minister some months ago that it was not right for the EEC to raise loans for budgetary purposes. However, we are suddenly being told, "We propose to make instead a reimbursable advance." As a semantic joke, this is an interesting way of going about it. But in terms of substance—despite the efforts of the Parliamentary Secretary to the Treasury, in evidence to the Committee upstairs, to differentiate the two—we in the Committee do not see any real difference. It is contrary to the spirit, and perhaps to the letter, of the treaty that we should advance this money and then claw it back.

In answering questions about that, an official of the Department said that under an arrangement made in 1980 there was provision for the Community to receive other revenue, and he referred to its ability to receive gifts or bequests. Apparently this Estimate comes into the category of gifts or bequests, and hon. Members may wish to bear that in mind when deciding whether to approve it.

However, it is being categorised as "other revenue". I have difficulty over that because it has always seemed to me important to distinguish between loans and revenue. If it is revenue, one has it; if it is a loan, one must give it back. How is it, therefore, that we should be making a reimbursable advance under a provision which allows the Community to receive revenue? The mind boggles. The matter is very worrying, and I hope that my hon. Friend will give us some answer today.

The truth is that the arrangement has been a matter of pure political expediency. By next weekend I understand that the Community will be literally out of money. We must therefore ask whether budgetary discipline, which we were told was to be a hard and fast condition, is to be effective.

Mr. Hugh Dykes (Harrow, East)

My right hon. Friend speaks with authority, and we listen with great interest to what he says. However, although my right hon. Friend has talked about the dangers of taking a simplistic view and of seeing things in black and white, I fear that he is in danger of being carried away. The combined aggregate deficits of all the member states amount to well over £100 billion, and we are still talking about temporary arrangements for a Community budget that is virtuous in that its receipts normally equal its payments, and it has no deficit at all.

Mr. Higgins

I wish that we could see the matter in terms of black and white. The trouble is that we are in the middle of a greyish fog. The entire picture is being befogged by semantic and other devices.

That is certainly so in the case of budgetary discipline. We were told that we would not hand over the money without effective provisions for budgetary discipline. Yet we are now told that such provisions are not to be incorporated, as I believe that my right hon. Friend the Prime Minister would have wished, in the major formal mechanism of the Community. We are also told that we are not to have an effective veto in the case of the reference framework. More particularly, we are told that the system is to work on a basis of clawback. If there is to be effective discipline on the basis of clawback running several years ahead, that is a very strange arrangement.

We all know that the real problem is that, because of the way in which the common agricultural policy operates, it is not possible to forecast what the commitment will be. One could deal with that problem simply by providing so much headroom so that at no conceivable prices would we run out of money. That might be appropriate. However, the reality is that we ought to be able, within reasonable limits, to predict the cost. That means that we must change the CAP itself, and that is something that, clearly, the budgetary discipline procedure is not capable of doing, and will not be capable of doing.

There must be a reform in that area, and the opportunity for that reform arises when the Community runs out of money. It has now done so. We are in danger of missing our opportunity. Before we consider the question of increasing own resources, we must ensure that we do not have a system of budgetary discipline of the kind that is now said to be acceptable. It may be said to be acceptable but, for all the reasons already given, it will not be effective. If the Community itself is to make real progress and to be of benefit to all its members, we must carry out a real reform.

We are told that agricultural expenditure will not rise faster than the general increase in expenditure. I have heard no case whatsoever made for any increase at all in agricultural expenditure. We know perfectly well that there are obscene surpluses in many agricultural products, and that they are getting steadily worse. Instead of accepting that the rise will be no steeper, we should simply have said that there must be no increase in agricultural expenditure. There is no case for such an increase, especially against the background of the Chancellor's stringent budgetary attitude to the overall management of our own economy.

I therefore believe that the present situation is very dangerous. However, our final opportunity for dealing with the matter has not yet been lost. The proposals for an increase in own resources are still to come forward. We should not accept them unless there are reforms such as I have suggested.

6.5 pm

Mr. J. Enoch Powell (South Down)

It is difficult to know whether this day's doings are more discreditable to the Government or to the Opposition. There is a period in politics which is peculiarly dangerous to the maintenance of the rights and powers of the House. We are at present in such a period. The Opposition are divided, discouraged and discredited, their attention is fixed upon matters and problems outside the House, they are not able to give their full attention to duties in the House of Commons.

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

Will the right hon. Gentleman give way?

Mr. Powell

I will give way at this stage, if I must. However, as I shall have much more to say about the Opposition later on, the hon. Gentleman might find it more economical to wait.

Mr. Foulkes

I am sure that the right hon. Gentleman will have much more to say about the Opposition. However, my hon. Friend the Member for Thurrock (Dr. McDonald) and I, as the official spokesmer. for the Opposition, have heard and will hear every word in the debate. It is our responsibility to speak for the Opposition in this debate, and we will discharge that responsibility. [HON. MEMBERS: "Where are the others?"]

Mr. Powell

I do not deny that it so happens for once that the Front Bench is manned. Clearly it is somewhat sparsely manned; but the hon. Gentleman is right to say that it is manned. But there is no need for the Opposition to be over-sensitive. I have more to say, and the Opposition spokesmen can then share the honours with the two juniors on the Government Front Bench.

The Government, in such a period as this, present a combination of two dangers. They have a large majority in the House, which enables them to feel that, with the assistance of the Whips, they can put anything through. They have also got themselves into a jam with their programme for the Session, so are terrified of being unable to find the necessary parliamentary time for the things to which they are committed. That combination provides the ideal circumstances for such inroads on the rights of the House as are represented by the manner in which this business is brought before us.

The object of the Opposition today—their one achievement, which was snatched from them—had been to connive with the Government to restrict the time that the House could spend—even under the present arrangements—in discussing the matter. How undesirable that would have been is evident already from the speech which we have been able to have the advantage of hearing from the right hon. Member for Worthing (Mr. Higgins).

The Government's object has been equally clear, and equally adverse to the power and rights of the House. Their aim has been at all costs to avoid any risk of having to legislate. At all costs they wish to withhold from the House the supreme method by which, when asked for money, it examines in detail the reasons why the money is requested, the manner in which it is to be used and the conditions under which it is called for.

A shoddy story lies behind today's proceedings. The Government began by claiming that they could deal with the matter by an Order in Council under section 1(3) of the infamous European Communities Act 1972. Thanks to the public spirit of a private citizen, that proposition was tested both in the High Court and in the Court of Appeal, and the Government expressed themselves satisifed with the result. However, they did not proceed in that way, after all. They told the Treasury and Civil Service Select Committee the reason why: the reason why they did not proceed was for the avoidance of doubt". So in the mind of the Government there was still a doubt whether, if they proceeded by Order in Council, that might be found defective when it was again tested—as it could be—in the courts not under a prerogative writ but as an order which purported to have already been duly passed by both Houses. What would have been the difficulty for the Government, what embarrassment would they have faced, if that doubt had proved well founded? They would not have lost the opportunity of making the payment, they would not have been prevented from making the payment, by discovering that the order was ultra vires and not within the terms of section 1(3) of the 1972 Act. No, they were afraid that they would have to legislate. It would have been necessary for them, if they could not make an order under section 1(3), to resort to primary legislation, and primary legislation—the opportunity for the House to consider in legislative form what was being asked of it—was what the Government were determined not to face. They therefore resorted to a method which they reckoned would as effectively as possible abort debate by the House: they proceeded by putting the sum in a special Estimate and then having a Consolidated Fund Bill to give it statutory approval.

That procedure has been considered in the past by the House and its Committees. It is a procedure to which the House, for obvious reasons, has been steadily hostile. The outcome of those historic occasions is summed up in page 791 of "Erskine May" by the statement: the Treasury, in answer to such comments, have justified the practice on grounds of emergency rather than of principle. I had, I must admit, assumed when I was preparing these remarks that, in laying the Estimate before the House, the Minister would at least have had the courtesy of referring to this breach of the normal procedure required by the House—this disregard of the House's objections to proceeding by way of Estimate—and would have explained whether this is indeed an emergency. "Emergency", as it is used in that passage of "Erskine May", does not, however, mean that the money is needed in a hurry to meet circumstances long foreseen. It means a genuine emergency which can only be met by a payment made there and then and which could not have been foreseen. It was only in such circumstances as those that the House agreed with the Treasury that money may legally be granted by means of an Estimate followed by a Consolidated Fund Bill. The net result has been to deprive the House of the opportunity of proceeding by way of legislation.

This is a matter on which the Government are on record in the present Session. I can quote the Government against themselves. It is not long since we passed the Second Reading of the Milk (Cessation of Production) Bill—quite an interesting parallel case to what is before the House today. The Minister, in introducing the Bill on Second Reading, said: it was clearly right that specific statutory authority should be obtained as soon as an opportunity in the legislative programme could be found. I made it clear at an early stage that I would seek this authority as soon as possible."—[Official Report, 10 January 1985; Vol. 70, c. 917.] That was authority which, in the terms of what the Government are doing today, was not necessary, for there was already an Estimate covered by a Consolidated Fund Act which covered the payments being made by the Ministry of Agriculture, Fisheries and Food. Nevertheless, speaking for the Government, the Minister enunciated the correct principle—that as soon as possible in such a case, statutory authority must be secured.

We must consider the Minister of Agriculture, Fisheries and Food lucky to get a Bill which put him right with the House. The House was able duly to give statutory authority to the payments being made. The method the Government have adopted today is designed to prevent any such thing—to prevent the House from being able to consider, in terms of a Bill, the justification for what is being asked of it.

This is something which cannot be defended or just brushed down by today's brief debate. Indeed, in any Parliament—I am now coming back to the Opposition—in which an effective Opposition was functioning, the Opposition would have used the powers which Oppositions have to see that, on the Government Front Bench, was the Chancellor of the Exchequer himself accompanied, if necessary, by the Prime Minister, nothing less, to try to justify to the House the insult which is offered it by the deliberate choice of this method of avoiding legislation.

The thing is even worse than that. It is not isolated or insulated, not just one payment in isolation for which authority is being sought in an improper way so that we might shrug it off and forget as it recedes into the past. The Government's agreement to make what the right hon. Member for Worthing (Mr. Higgins) said must be either a gift or a bequest under the rules of the Community—their agreement with other Governments to steamroller Parliament into authorising this payment—was not an agreement made in isolation. The agreement was part of a package, in another part of which the Government consented in principle to an increase in the Community's own resources.

So one element in that package is being fulfilled without the opportunity of the whole package and its justification being properly explained and debated in the House. We shall be told, and our partners in the Community would be justified in telling us, "Well, you have accepted the package, for you implemented the first element in it by making this special payment, whatever it be—loan, bequest or gift." We shall yet see the Government coming back to the House and reminding us that we have already entered the process of implementing the Fontainebleau agreement. So by the hem of the garment, a kind of presumptive acceptance by this House of that agreement has been secured by these anti-parliamentary means.

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

The right hon. Gentleman is uncharacteristically incorrect. The Government agreed to recommend an intergovernmental agreement of the type that is before the House on condition that two factors are satisfied. The first was that the British refund was paid—it has been—and the second was that there were satisfactory arrangements for budgetary discipline. The right hon. Gentleman will be aware that the Government asked the House for its approval of what had been agreed on in regard to budgetary discipline in a debate on 11 December 1984. At the end of that debate, the House unanimously endorsed the Government's motion.

Mr. Powell

The Minister is evidently under the impression that what is called unanimous endorsement in the course of that type of debate is a substitute for parliamentary authority to what is necessary as a consequence of the agreement of which the budgetary directive is a part. That budgetary agreement, on which there was no Division, is integrally connected with an agreement in principle, given by the Government on behalf of this country, to up the own resources of the Community. Now the ne plus ultra, the line which, from the beginning of our entry into the Community, was advertised to the House and to the public, who were told, "It is quite all right, it is only 1 per cent. worth to which you are committed," was that if ever — and it was extremely unlikely—the Community were to dare to propose that the percentage should be increased to 1.2 per cent. or 1.4 per cent. or 1.8 per cent. — the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnson) thinks of 2 per cent.—it would be necessary to legislate once again. We were told, all through those weary months, that, if that happened, the whole issue would have to be reopened; there would have to be proper legislation in full form to authorise any such change.

Mr. Forth

Does the right hon. Gentleman's memory conform with mine in this matter? Have we been given an undertaking that the request for an increase in the Community resources will be brought to the House only when the enlargement negotiations have been concluded, and that therefore there is another contingent factor? We are being asked to agree that the enlargement of the Community to include Spain and Portugal will also require an increase in the Community resources, and these two are being linked by the Government.

Mr. Powell

There is almost no limit to what can be extorted by what I might call the package principle, on which the European Community operates.

This afternoon, we shall need from the Government the clearest possible assurance that there will be no question of section 1(3) being used to increase the own resources of the Community, and that, notwithstanding the wrong that has been done in the payment of this sum of £119 million, there will be full legislation to authorise any such change. This resolution could be drawn by the Government into a precedent by which we could be cheated out of our right to full legislative opportunity whenever that proposition is made to us, to debate where we stand, where the Community is going, and whether the House and the nation are in agreement with what is involved.

It is fortunate that the cosy agreement that had been made between the two sides of the House—always a sign that somebody will be cheated out of something—was aborted by the presence of mind of one or two private Members, so that we are in a position, if we find it necessary and desirable—that is a matter for the House to decide — to debate this, under our rules, until 10 o'clock. At any rate, a protest has been entered against the wrong that has been done to the House.

6.21 pm

Mr. Michael Knowles (Nottingham, East)

My position is analogous to that of my right hon. Friend the Member for Worthing (Mr. Higgins) in that I am one of those who have always supported our membership of the Community and would wish it to be developed. However, like him, I feel that there is a duty on people who hold that position to be most critical when they see things that are wrong. That is true of agricultural funding in the Community. Any demand-led expenditure is, by its very nature, open-ended, as we all know. If we do not have a cash limit, and expenditure is demand-led, we are asking for large bills, and that is what we have. If we do not close that loophole, we shall constantly have to find fresh resources for agriculture. Sooner or later we must deal with that problem. I would like to think that at Fontainebleau we have achieved budgetary discipline, but like other hon. Members I am a little sceptical. I shall wait and see, because we have heard it before.

Other hon. Members have asked why the Government wished to present this matter to the House in this form. I shall concentrate on an earlier point. Why have we arrived here through an intergovernmental agreement rather than working through European institutions? That question highlights the problems that we have in the Community. National Governments wish to keep power to themselves, so we have cramped and limited those institutions, and we have not allowed them to develop properly. We then promptly shriek that they are not working effectively, although it is we who have crippled them. It is not surprising that they do not work effectively.

Some hon. Members have spoken about fraud going on, perhaps with official connivance, in some Community countries. The logical solution is that the Community should have its own investigative sources to deal with such problems, but I can imagine what the same hon. Members would say if such a proposal came before the House. They would be the first to object. I can write the Daily Express headline now.

This Supplementary Estimate is separate from the increase in VAT, but it derives from the same settlement at Fontainebleau. At Fontainebleau, the Government had three conditions, and we have forgotten how crucial they seemed at the time. The first was the release of the 1983 refunds. One can remember the arguments in the House about those refunds and how important they seemed. Those refunds have now been released. The second condition was effective arrangements on budgetary' discipline. We now have arrangements, although I confess I am a little dubious about them. However, the Government are satisfied. The third condition was parliamentary approval, which is what today's debate is about.

One thing that might aid budgetary discipline in the new financial situation is that West Germany and France will become payers. When just one of the larger members was a net payer into the Community, we were fighting a lonely battle. The odds have tilted slightly now. Once it becomes in someone's interest to retain financial discipline, he has more interest in doing so.

Although I am trying to be helpful to the Government, I am not sure whether my next point will be so. I am in favour of it, but I know that hon. Members on both sides of the House may disagree with it. It is that an implicit part of the Fontainebleau agreement was that what was expected was political delivery from this country. We had stopped haggling about finance, which we had been doing for years, thereby preventing talk about political development in the Community. Our partners in the Community will now expect us to deliver. As the Prime Minister said about the Fontainebleau agreement: It will make possible a relaunching of the Community in which Britain will play a full role". I am in favour of that, but, judging by what has been said in the debate, I am not sure whether some of my hon. Friends will be.

The Stuttgart agreement was even more explicit about European union, and statements were made during the recent visit to Chancellor Kohl. Now, the rest of the Community wants closer co-operation and unification. We promised it, we keep on signing the bits of paper, and sooner or later we shall have to deliver, and I think that will be this year.

Mr. Eric Deakins (Walthamstow)

Under what authority did the Government pledge this country to greater unity, particularly political unity, beyond what is already implied in the European Communities Act 1972?

Mr. Knowles

The European Communities treaty says nothing beyond what is in it and that is the authority. The words of the preamble say: to lay the foundations of an ever-closer union among the peoples of Europe". It speaks not of the Governments but of the peoples of Europe. All that has been said has reinforced what we signed 12 or 13 years ago. This year, our partners will ask us to start delivering politically.

Mr. Dykes

Does my hon. Friend agree that in the document submitted by Her Majesty's Government to the Fontainebleau meeting there was an emphatic commitment—reiterated more than once — to the vital need for greater majority voting in more areas on more subjects?

Mr. Knowles

My hon. Friend is correct. My point to the Government is that that pressure will come on us. Rather than just sitting still and objecting to other people's initiatives when they come, could we change our stance? This year, could the Government bring forward their own initiatives and tell us what their vision of Europe is? They might find that they have many friends, not only in the House and in the country but across Europe.

Several Hon. Members

rose—

Mr. Speaker

Mrs. Ann Clwyd.

Mr. Beaumont-Dark

On a point of order, Mr. Speaker. Some hon. Members have been sitting here all afternoon. The hon. Member for Cynon Valley (Mrs. Clwyd) has only just come into the Chamber. Is that the abuse that is to go on?

Mr. Speaker

Order. The hon. Lady was in the Chamber when I arrived. She had told me by letter that she wished to take part in the debate. I had not realised that she had just come in, but I have called her.

6.29 pm

Mrs. Ann Clwyd (Cynon Valley)

That is not true, Mr. Speaker. If the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) had looked earlier, he might have seen me here for a considerable part of the opening of the debate.

The European Community budget is not large. In 1984 the total budget was about one eighth of the national budget of this country. Of this relatively small budget about two thirds go on agricultural policy, as my hon. Friends have made clear. A third of what is left goes on the regional and social funds. Even allowing for administrative expenses, one might expect a good proportion of what remains to be devoted to the development of new European Community policies, particularly in the vital areas of technology, research and energy. This is far from being the case. In 1984 it accounted for only 2.56 per cent. of the budget. In the draft budget for 1985 the percentage is slightly higher at 2.59.

As my hon. Friend the Member for Thurrock (Dr. McDonald) questioned, rightly, how much of this part of the budget will actually come to us? There is a greater discrepancy between Community spending on technology, research and energy and its spending on agriculture. Vital as the common agricultural policy may be, it is worrying to note that, for example, the payment appropriation in the 1985 draft budget for ESPRIT is little more than one fifth of that for production aid for tomato-based products—

Mr. Phillip Oppenheim

rose—

Mrs. Clwyd

—yet ESPRIT has been hailed by national Governments and Community institutions alike as a key element in the Community's fight to become competitive in new information technology. The energy appropriations, therefore, do not reflect the true needs of Community energy policy as laid down in numerous resolutions of the European Parliament. In particular, they do not reflect the need for a constructive and balanced solid fuels policy.

This argument has been made again and again by my former colleagues in the European Parliament, in the Rinsche report, prepared following a resolution presented by myself to the European Parliament on the imminent threat of closure of British coal mines, in the Rogalla report on financial support for industries producing solid fuel, in the Quin opinion on the same subject and in the opinion voiced by Gordon Adam as budget rapporteur for the energy committee. Since we are talking about the estimates, it is important that we argue that Community money and our money should be spent in the most sensible and appropriate ways.

Mr. Oppenheim

The hon. Lady has stated that it is ludicrous that so much Community money should be spent on agriculture and such a small proportion on other items such as information technology. Is it surprising if the majority of EC spending is on agriculture when that is the only really international EC policy? Almost all other items, such as regional aid, information technology support and industry support are covered by national budgets. If the hon. Lady considers the British budget for industrial support, information technology and other such matters, it outspends agriculture by a factor of about 3:1.

Mrs. Clwyd

The hon. Gentleman is obviously not aware of how the budget works, otherwise he would know that national Governments still spend money on agriculture.

Mr. Oppenheim

A very small proportion.

Mrs. Clwyd

The Rogalla report sets out clearly the failure of the Community to translate firm declarations for a strengthened solid fuel industry into practical measures. For this failure the Council of Ministers is clearly responsible. Unless present EC policies are changed, the coal industries of member countries face continued decline and eventual eradication.

Community strategy to reduce dependence on imported oil has been relatively effective but at the same time the Community has become dangerously dependent on imported coal. The international coal report of January 1985, published by the Financial Times, shows that, according to Trade and Industry Department statistics, United Kingdom imports in the first 11 months of 1984 were running at more than double 1983 levels. By the end of November 10.1 million tonnes had been imported at a price of £59.46 per tonne whereas comparable British coal could have been produced for between £44 and £57 per tonne. Similarly, anthracite, which is being imported at £112 per tonne, can be bought on the British market for between £44 and £70 per tonne.

Two features paramount in the increase in imports have been substantial imports of house coal from all sources, and substantial imports of industrial coal, largely from the United States and South Africa. Many people believe that the new business will not cease when the strike ends. By contrast, in an effort to protect markets in videos and computers, the ESPRIT programme has been established. The same approach is needed in the Community to defend our coal markets.

The only current policy of the Community is to close pits. This is particularly important to us when we are talking about our money, which goes into the budget. The Commission argues that a sudden substantial drop in Community coal production would lead to a major rise in world selling prices. At the same time it argues that there must be investment in new production. There is a serious weakness in the Commission's documents. It is not fully realised that there is considerable potential to develop new mines which would be fully competitive with imported coal at current prices.

There are no technical reasons why an additional capacity of 120,000 tonnes per year could not be brought into production, given the will to invest. The investment cannot be carried out in five minutes. We should argue for this investment here and now. If we get the necessary investment in energy it would allow for a period of transition and protection for pits under threat of closure. The social implications and the implications for regional economies must be taken into account. [Interruption.] Financial aid for coal stocks should be provided in the transition period.

Secure markets are needed for the coal to be produced. The opportunity for commitment was present during the 1984 budget procedure. I suggest to those Conservative Members who have been arguing that this has nothing to do with the subject under discussion that they listen more closely. It must be noted that the Council failed miserably to take up the challenge. The report by Albert and Ball on European economic recovery, which was initiated by the colleagues of some Conservative Back Benchers, argued that employment and economic recovery in Europe depend heavily on investment in the energy section.

A recent opinion on the regulations concerning financial support by the Community for industries producing solid fuel argued against some Commission proposals. The Commission has put forward an amended set of proposals on investment in energy and the eligibility criteria have been tightened rather than made more flexible. The Community level of investment potentially qualifying for support has been reduced from 1,520 million ecu to 1,200 million ecu and the total proposed Community funding for investment support has been reduced from 300 million ecu to 200 million ecu. In addition, the Commission has dropped its original proposal of aid for the running down of coal stocks in view of the need for tighter budgetary discipline. If only the same rules applied to the CAP.

The Commission states that production in Community coal-producing countries has fallen from 241 million tonnes in 1982 to 229 million tonnes in 1983, with a further reduction of 9 million tonnes likely in 1984 even without the effects of the coal strike in the United Kingdom. The Commission's conclusion is that the Community coal industry continues to have great difficulty in financing essential investment. It is unfortunate to say the least that the Commission's latest proposals will make it more difficult to finance needed investment than the Commission's original proposals.

The Commission is maintaining its simplistic threshold figures and it has actually increased them so as to make fewer investments eligible for support. The Commission has taken a narrow view of the value of Community investment in the coal industry, and has taken insufficient account of the importance of such investment for the coal mining regions of Europe where, typically, unemployment is high and alternative employment possibilities are low.

To link investment to levels of output per man shift is nonsense.

Mr. Higgins

rose—

Mrs. Clwyd

I shall not give way now. I shall do so when I have completed this argument.

To link investment to levels of output per man shift is nonsense. As we have been arguing in South Wales for years, there is a direct correlation between the investment that a pit receives and its capacity to produce coal. No investment means inevitably decreasing productivity. There is a classic "Catch 22" situation — a declining spiral of low investment and low productivity—and that is exactly the position in which south Wales finds itself. The Commission's recommendations would deny south Wales investment and pile still more into the productive power station coal producers, which would succeed only in making that market even more vulnerable to glut. What co-ordination exists between the Commission's strategy and that of the National Coal Board and the Government? Is the case for increased investment being urged in the corridors of the EEC?

A fourth group of academics and accountants have now challenged the accounting reports of the NCB and the board has appointed independent accountants to assess its accounting techniques. Arguments about the economic viability of individual pits are at the core of the coal dispute, yet the fundamental accounting information that is used in public debate appears to be suspect. The question that the most recent group of academics has posed—the group includes a Price Waterhouse professor of accounting at Manchester—is the difficulty of achieving informed public debate—

Mr. Forth

On a point of order, Mr. Speaker. I am reluctant to raise this matter but I am driven to do so. I am trying hard to relate the remarks of the hon. Member for Cynon Valley (Mrs. Clwyd) to the debate. I am wondering whether she is trying to use the debate as a way of securing a discussion of the coal industry and the dispute through the back door. Will you please advise the hon. Lady whether she is in order, Mr. Speaker?

Mr. J. Enoch Powell

Further to that point of order, Mr. Speaker. Is it not the case that we are having an Estimates debate on supplementary finance to the budget of the European Communities? Is it not in accordance with our normal procedure when debating Estimates that an hon. Member can refer to any matter that falls within the budget?

Mr. Nigel Spearing (Newham, South)

Further to the point of order, Mr. Speaker. May I draw to your attention and that of the House, including the hon. Member for Mid-Worcestershire (Mr. Forth), the written answer to one of my questions which appeared on 10 January? It states that the Supplementary Estimates before us include an extra 134 million ecu for "Industry, Energy etc". Is not energy policy and expenditure on our indigenous coal resources well within the scope of the debate?

Mr. Speaker

I am obliged to the right hon. Member for South Down (Mr. Powell) and the hon. Member for Newham, South (Mr. Spearing) for their help. They are entirely correct and the hon. Lady is not out of order.

Mrs. Clwyd

Thank you very much, Mr. Deputy Speaker. If Conservative Members had waited a little longer, they would have managed to associate my remarks with the Estimates.

If we are to convince our colleagues in the European Community that they must increase the share of the budget to be spent on energy policy, we must set up as soon as possible an independent review body as proposed by the churches in Wales and supported by the NUM nationally, Labour Members, Liberals and Plaid Cymru Members. The sooner that is discussed the sooner we can get back to talking rationally with our EEC partners about a common energy policy. There is the realisation that both "Plan for Coal" and the National Coal Board proposals for 1984 have been overtaken by subsequent events. The events include the loss of production of between 60 million and 70 million tonnes, the fall in the value of the pound and the effect of that on the cost of foreign coal, the possible loss of markets and the deteriorating situation in mining communities. These factors have strengthened support for the initiative of the church leaders.

I am sure that our colleagues in the European Parliament will shortly be suggesting to us that the Government should set up an independent review body, that there should be no pit closures until that body presents its report and that the review body should report on a date that is agreed jointly between the parties in the dispute. I am sure also that our partners in the Community who are concerned about the Community's future energy policy and the tonnage that each coal-producing member is producing believe that these proposals are capable of enabling the parties to the dispute to resume negotiations and to bring the strike to an end.

In view of our anxiety to get our just share of energy investment from the EEC budget, why should any democratic Government choose continued confrontation rather than bringing an economically and socially damaging strike to an end? The assertion of the Chancellor of the Exchequer that the destruction of a great union and the suffering of thousands of men, women and children is a worthwhile investment in the future of the British economy must be received by our EEC partners with horror and incredulity. The Government's perverted charade of non-involvement in the strike, while making it known that they are opposed to the very idea of a negotiated settlement, is a demonstration that they are washing their hands of national interests and the interests of the community.

It will be a hollow victory if the Government sit back and wait for the miners to return to work. In south Wales only 1 per cent. of the mining work force has returned to work. Whatever the outcome of the strike, we in south Wales will be able to walk tall. If the Prime Minister has learnt anything from the Falklands war, it should be that when people want to talk about peace their efforts should not be torpedoed. The Government bear a responsibility because without a negotiated settlement employee-employer relationships in the coal industry will be in turmoil for years to come.

Finally, the Prime Minister ought not to look at this as a fight to the finish. Mr. Scargill—

Mr. Speaker

Order. I think that the hon. Lady is straying rather widely from the Estimates, which have nothing to do with the solution to the strike.

Mrs. Clwyd

I have just one more sentence to deliver, Mr. Speaker.

Mr. Scargill has said that he wants to negotiate—

Mr. Speaker

Order. The hon. Lady will have to be a little more ingenious than that.

Mrs. Clwyd

My colleagues in the European Community will, of course, be pleased, as we all are, to hear that Mr. Scargill wants to negotiate. They will be glad to know that he has said that he is prepared to return to the negotiating table without preconditions. I am sure that they will join my hon. Friends in saying that, to ensure the future of a great industry, an industry which can contribute much to the European Community, the Prime Minister should do the same.

6.50 pm

Mr. Roger Freeman (Kettering)

After that interesting interlude, may I return briefly to the mainstream of the debate, as a strong supporter of the European Community and one who regards the measure before the House as inevitable and sad? However, I do not intend to waste any time crying over spilt milk. It is more important to concentrate on the shortcomings as I see them of the proposed budgetary discipline to which the Minister referred in opening the debate. I wish to raise three points concerning the proposed budgetary discipline regime.

The first is the degree of real control over expenditure and the evidence that the House has before it of the steps taken during 1984 to control that expenditure. We are told that the expenditure overrun was reduced from 2.3 million ecu to about 1 million ecu — the Herculean task to which the Minister referred in opening the debate. However, when one examines the documents a little more carefully, one sees that it amounts to not such a tremendous feat of controlling revenue expenditure as first appears.

The Minister of State, on 10 July 1984, told the House in a written answer that one way of controlling expenditure was simply to defer cash expenditure from 1984 into 1985. Indeed, in evidence to the Treasury and Civil Service Select Committee on 29 October 1984, the Economic Secretary referred to another way of controlling the overrun this year — by bringing forward sugar levies from 1985 into 1984. I submit that cash management, albeit sophisticated cash management, is no substitute for proper control of revenues. I am somewhat saddened to note that in evidence to the Select Committee the Economic Secretary cited 150 million ecu as the only example of a reduction in revenue expenditure in fiscal 1984. That arose apparently from changes in policy towards destocking items in surplus. The figure of 150 million ecu represents 0.6 per cent. of the budget. I submit that there is little evidence thus far of proper economies in Community expenditure being achieved.

The second of my three points concerns the timing of the introduction of the budgetary discipline and the so-called clawback mechanism, which I think on closer examination turns out to be not a clawback at all. It should be drawn to the attention of the House that the budgetary discipline mechanism does not become effective until 1986, a year in which it is assumed that the new value added tax ceiling will be higher than 1 per cent.

In volume II of the Government's public expenditure White Paper which was published this afternoon, I note that there is, indeed, an assumption that a supplementary budget will be brought before the House during this calendar year. Doubtless that is an assumption, but it is important for the House to appreciate that the new regime begins in 1986, that there is a two-year period in which the Ministers of Agriculture must try to control excessive expenditure and that therefore the first year in which we in this country can expect to see the benefits of any corrective mechanism or action taken under the budget discipline is 1989. In 1986, the rules will come into operation, and there is a two-year period following 1986 for intervention prices to be altered. Therefore, the benefits will not accrue until 1989. I submit that that is a very long period in which to correct excessive expenditure.

Mr. Budgen

My hon. Friend omits to mention clause 2 of the Fontainebleau agreement which states that the maximum rate may be increased to 1.6 per cent. on 1 January 1988 by unanimous decision of the Council. Although not a legal commitment, that was surely a moral commitment by the signatories to make a further increase in own resources in 1988 should that be necessary.

Mr. Freeman

I think that my hon. Friend is wrong.

Mr. Budgen

Why?

Mr. Freeman

I will explain, if I may, why my hon. Friend's point is not directly relevant to the point that I am trying to argue. The budgetary discipline measures proposed and accepted relate to the increase in the size of the value added tax resource base. The rate of payment, whether it is 1 per cent., 1.4 per cent. or 1.6 per cent., is not directly relevant to the control of the increase in agricultural expenditure.

If I may develop the second point a little further, I wish to draw to the attention of the House the fact that the clawback mechanism is not quite as effective as it may at first seem. I refer here to article 5: In the event of failure to respect the qualitative guideline referred to in Article 2"— that is, the control of agricultural expenditure— the Council shall, during the following two financial years"— and I have already referred to the timetable effect of that— ensure that, barring aberrant developments, agricultural expenditure is brought back within the limits imposed by this guideline. There is no mechanism for recovering excessive agricultural expenditure, and it is important that the House should appreciate that.

The third of my three points relates to the rate of increase of agricultural expenditure. I believe that the Treasury and Civil Service Select Committee has done a service to the House by drawing attention to the fact that no specific percentage has been identified by Ministers as the lower rate at which agricultural spending shall rise in relation to the growth in the value added tax own resource base. In evidence to the Treasury and Civil Service Select Committee, the Minister effectively admitted that the limit was the increase in the VAT resource base rather than holding out the hope to the House or to the country that agricultural spending would be limited to a lesser rate of growth.

In conclusion, I believe that the pressures of greater agricultural spending are already evident. As my right hon. Friend the Member for Worthing (Mr. Higgins) said, we are asked to advance a payment of the monthly VAT sums and, while that has nothing to do with this debate, it is a sign that in 1985 the pressure of agricultural spending above budget may already be there.

Unless we move to a system of cash limits, which I favour but which is complicated, the only way to control agricultural spending—the test will come this spring—is for the Ministers of Agriculture to resolve the issue and to make certain that agricultural spending in 1985. and not 1989, is controlled and rises by less than the increase in our VAT own resources base.

6.59 Pm

Mr. Russell Johnston (Inverness, Nairn and Lochaber)

I, too, shall be brief. I agreed very much with the last point made by the hon. Member for Kettering (Mr. Freeman). I shall return to agriculture later, but what the hon. Gentleman said is the essence of the matter, and he is quite right.

The Minister did not seem to be actually unhappy, but he was far from bubbling, boisterous or buoyant. He explained the situation very clearly. It is certainly unsatisfactory. It might also be described as messy. It boils down to the choice between contributing to easing the problem or actually making it worse. I agreed with most of the comments of the right hon. Member for Worthing (Mr. Higgins). One of the things that weary me about these debates is the habit of many hon. Members—one or two of them are here today—of asserting that everything that is wrong with the Community is the fault of others, as though we had no share in the responsibility. Our agriculture Ministers share the responsibility for failing to get a grip of the CAP more quickly. We cannot dodge that.

Mr. Forth

Does the hon. Gentleman agree that the British Government have been virtually alone in pressing for the use of the price mechanism in a real attempt to control agricultural output, but have been thwarted by almost all other members of the Community? Surely it is legitimate to say that we, almost alone, have struggled for many years to bring the price mechanism to bear on the problem of agricultural surpluses but have been denied any results by the concerted efforts of other member states.

Mr. Johnston

I do not entirely agree, although it would take a long time to argue the matter. The agricultural element in the United Kingdom is smaller and thus less politically significant whereas in France it is clearly a major factor. All Governments to some extent respond to pressure from their constituents, although I do not deny that what the hon. Gentleman says is partly true. When we signed the treaty in 1973, all the other member states took that to mean that we accepted the situation as it then was. Our apparently continuous failure to do so has thus caused considerable resentment.

It has been clear for the past five years that a continued open-ended system of agricultural support was bound to lead to trouble, compounded by the seldom mentioned fact that the problem is not just open-ended production with the need for subsidy capping, as it were, but the rapid and expensive result of advances in agricultural technology, as the support system was devised without the expectation of full production or production in balance with demand. Ministers tend to talk as though budget reform is already complete and we can gallop off into the sunset, no doubt smoking a full-strength cigarette, happy that it is all over, but that is far from the truth.

Alliance Members regard four elements as essential to the integrated package referred to by the right hon Member for South Down (Mr. Powell), who was right to stress that all these things affect one another.

First, there is still no real movement towards linking the contributions of member states with the wealth of those member states in an institutionalised way, related to GNP or whatever. Until that is achieved, there will be continuing objections from various countries.

Secondly, we are still a long way from reform of the CAP. We have made some hesitant attempts with the dairy industry, but we shall shortly have to do something about cereals if President Reagan changes the agriculture policy pursued for some time in the United States. If instead of paying farmers not to produce grain he takes away the payment and they produce the grain, there will be enormous problems for the common agricultural policy because the United States will be producing grain far more cheaply than we do.

Thirdly, there is a need for growth in common policies, especially in relation to new technology. The hon. Member for Cynon Valley (Mrs. Clwyd) referred to ESPRIT. Europe must be able to compete in this area. In addition, there is the question of the regional and social funds.

Fourthly, all those things mean higher own resources. There is no way around that. That, in turn, must be linked with budgetary discipline.

Those four elements constitute what I would regard as a sensible package. We must also accept that, unless we proceed sensibly and prudently in concert with the rest of the Community, the whole enterprise is bound to fail. We should remind ourselves much more often that we are not playing a game of the United Kingdom versus the rest of the Community. The hon. Member for Cynon Valley referred to the Mafia. Undoubtedly, they are a disreputable lot. The impression is vaguely given, however, that the Germans, the French and indeed the Italians do not object to the Mafia. That is absolutely not true. All Governments object very much to frauds of the kind that have been discovered. If we do not appreciate that we are involved in a common enterprise, the enterprise cannot succeed.

My next point is in the form of a question. On the last occasion, I asked eight questions, none of which was answered either in the debate or afterwards by letter. I felt very neglected, but I am sure that the Minister replying to today's debate will take a more generous view. No budget has so far been fixed and the Germans are blocking this until Spain and Portugal enter the Community, which on the most optimistic time scale will not be earlier than June or July. Indeed, they may not get in at all. Mr. Andreas Papandreou may make sure of that. What then happens to the budget? If we have no more resources and no fixed budget, do we simply ask for a further £100 million or so?

A number of hon. Members have commented on the renewable loan.

Mr. Foulkes

Reimbursable.

Mr. Johnston

The right hon. Member for South Down seemed to think that it might be some kind of bequest, and. at the end of the day he may not be too far off the mark. If there is to be a reimbursable loan, future European Community budgets must take account of that fact. It is doubtful, even for the most optimistic pro-Europeans such as myself, whether the notional increase in own resources—some hon. Members do not like that idea, but it looks as though it will come off—will be enough to cover the current demands on the Community, quite apart from the hopes for the other aspects to which I have referred. That must cause us concern.

I was puzzled by the fact that the Economic Secretary, with an appearance of self-satisfaction, made a positive point about the fact that the European Parliament was excluded from any involvement in this exercise. There has been wild applause from certain well-known quarters for that statement. I do not believe that that exclusion is prudent. The Government's wish to bypass the European Parliament does not bode well for the evolution of better democratic procedures Europewide and is not in the spirit of Fontainebleau and the Prime Minister's commitment in the splendid paper the right hon. Lady submitted on that occasion.

Mr. Forth

There is a simple rationale behind this type of approach. Recent history has demonstrated that the European Parliament, in its capacity as the budgetary authority of the Community, is apparently capable only of moving the budget upwards. Every year it asks for more and more to be spent. It is simple logic to suggest that, if one is seriously in the business of controlling and curtailing Economic Community expenditure, the European Parliament should be excluded from that process as far as possible. I suggest that reason to the hon. Gentleman.

Mr. Johnston

I am grateful to the hon. Gentleman for making that suggestion. I point out, however, that the various directions in which the European Parliament has sought to increase the budget have all been aspects about which most hon. Members would agree.

Mr. Forth

No.

Mr. Johnston

Yes. In the main, the Parliament has sought to increase expenditure on the regional and social funds, support for under-developed countries and the like. That type of expenditure has been opposed by national Governments, because those Governments have been committed to sustaining heavy expenditure on the CAP, which is another aspect that hon. Members simultaneously criticise. I hope — this is inevitable if the European Community is to continue — that the European Parliament will develop a more important role in the Community. That can be done only by national Governments giving the European Parliament more responsibility.

Mr. Beaumont-Dark

There is one born every minute.

Mr. Johnston

If that is so, we shall soon have a majority.

It is all very well for certain hon. Members—they do this frequently in such debates—almost to take a delight in the fact that there are weaknesses in and criticisms to be made of the Community. A flawed and malfunctioning Community is not to the benefit of this country—very much the opposite.

7.13 pm

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

These Common Market debates show, if nothing else, a type of sick humour. We heard the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston) say that the way to cure the problems of the Common Market is to give it more power. That is like saying that the way to cure an alcoholic is to give him more whisky.

The problem with the Common Market is that it cannot and does not genuinely work. There is no doubt that the Government, in the shape of my right hon. Friend the Prime Minister and my hon. Friend the Economic Secretary to the Treasury, have worked hard and long to bring some sense into this senseless organisation. The Common Market cannot really work, because, as we show in our report, there are budgetary disciplines and regulations that are not mandatory. If they are not mandatory, each country does what it wants and agrees to abide by the rules as long as it suits that country's self-interest. The evidence we took has shown that.

As with this £119 million, we shall be asked year after year for more and more money. Most of us want to tell the Government, who are possibly the only sensible people in this incredible organisation, that a message should go out to the Common Market stating that the own resources increase nonsense is unlikely to be voted through by the House. Giving more and more money to Europe, as the hon. Member for Inverness, Nairn and Lochaber said, and giving more power to the European Parliament will mean only that the money will disappear and our means of putting our own structure and economy right will go to Europe and will be wasted there.

This very afternoon we have seen that £1.4 billion out of the £2.05 billion capital expenditure programme has gone towards supporting food surpluses. Over the years, we were promised that if we supported agricultural food prices for a generation — even before the Common Market was set up—those support prices would even out the bumps and dips giving an even price for food. Land is priced at £3,000 an acre—land prices hold the secret of the agricultural support business nonsense — not because that is a sensible price for the land that is used to grow food but because of the agricultural subsidies that can be absorbed by those who own that land.

Mr. Marlow

Is it not a truly remarkable achievement of the Community and the common agricultural policy that in the United Kingdom £1.4 billion of agriculture expenditure — three quarters of the Community's expenditure — is on agricultural surpluses while the United Kingdom produces only 17 per cent. of its own foodstuffs?

Mr. Beaumont-Dark

My hon. Friend is absolutely correct. What has happened to the price of land since some common sense was introduced into the milk quota system? The price of agricultural land has decreased by 15 per cent. If we had a more sensible common agricultural policy, a few landowners might scream but a few more sensible working farmers would be able to farm land at a worthwhile price. That would be better than subsidies going into the hands of landowners who add nothing to the value of that land, but simply build vast estates.

Mr. Geraint Howells (Ceredigion and Pembroke, North)

I have listened with interest to the hon. Gentleman. Does he suggest to hon. Members that the quota system for the dairy farmers is beneficial to us in the United Kingdom? Does he suggest that the Minister of Agriculture, Fisheries and Food and his Department should introduce quota systems for producers of other goods?

Mr. Beaumont-Dark

No, I do not. The one great problem with the milk system is that, as ever, the British people are the only ones playing the game. I made that point before. French farmers, who are meant to be reducing their production, are exporting more milk to this country at the expense of British farmers. If we had a sensible agriculture policy, if farmers did not believe that they could go on producing sugar beet we do not want, mountains of wheat we do not need, turnips no one wishes to eat and wine lakes of indescribably poor quality wine, and if people understood that food would be treated as other sections of our manufacturing and commercial life are, we would have better priced food, more prosperous manufacturers and a sensibly based Economic Community. The problem with the whole of the Community is that no Government—in Britain, France, Italy or Germany—have the courage to tackle possibly the greatest ever cartel in the world—the agriculture industry.

If manufacturing companies were allowed to produce cars that could be stored, and if every car produced by British Leyland had to be bought by the economy, what a wonderful, prosperous world the west midlands would be. But it is not sensible to produce cars that cannot be sold. Therefore, it is not sensible to produce food at 'exorbitant prices that we cannot afford.

If the Government are to do anything, they should—painful though it may be for some — get a genuine debate going about when the kissing in the agricultural world will stop. If we continue to encourage people to plough up fields and hedges to grow food that we do not want, more and more food will be produced, more and more subsidies will be required and more and more will the CAP destroy the rest of the basis of Europe.

Although I believe that the Government are doing the very best that they can, quite frankly we are having yet another battle which, although we have lost it with some dignity, we have nevertheless lost. The greatest battle of all will be about own resources and what we must do about the CAP. There has been a great deal of talk and the Government have rightly slapped many wrists and kicked a number of bottoms. However, we still go on and on paying out money. That must end some time. If it does not, we shall keep on tearing ourselves apart in our own internal budget by knocking £10 million off that expenditure, £20 off expenditure on students or whatever and £50 million off the NHS. Where will the money go? It will be wasted. The time for reality is now.

This debate, although it has continued for longer than some wished, is one of the most important debates that we shall have. I hope that it will set the tone for the Government but, above all, I hope that it will set the tone for Europe. It must be realised that Britain will not allow this expenditure to continue. The British people and the British Parliament will not allow that.

7.22 pm

Mr. Nigel Spearing (Newham, South)

Many hon. Members will agree with the forceful and colourful argument put forward by the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). I certainly agree with him. However, the debate is more important than even he and other hon. Members have realised. We are being asked to approve a Supplementary Estimate of £119 million which goes towards no less than £1 billion additional EEC expenditure for 1984.

This is an important constitutional debate because we are debating the fundamental power of the House—the power of the Legislature over the Executive, whether that Executive be in Brussels or in Whitehall. The difference between this debate and other debates on the EEC is whether we have theoretical or actual teeth in answering the question. The House must authorise the additional expenditure, and we are being asked to do so in a manner that has never happened in the House since we joined the EEC more than 10 years ago.

The delicate mechanism of financial control—both of taxation and of expenditure—which is found within the procedures of the House has now become enmeshed with the inordinate complexity of the financial, political and constitutional procedures of the EEC. I shall try to clarify this matter, not only for those present but for the record, and I do not intend to be brief. I shall quote a number of EEC instruments that pertain to this matter.

We are today involved in a procedure of financial precedent, which is also of constitutional precedent. It was right that the business motion that was tabled earlier was not passed so that the matter could be adequately aired. That throws into light the difficulty with the Consolidated Fund Bill which is set down for Wednesday. It will go through on the nod and there will not be the customary period for debate. We must note that.

The obligation of the House on finance for the EEC is contained in the European Communities Act 1972, section 2(3), which states: There shall be charged on and issued out of the Consolidated Fund or, if so determined by the Treasury, the National Loans Fund the amounts required to meet any Community obligation. The proposal is not a Community obligation. If it were, it would be covered by the Act and there would be no need for a debate, an Estimate and a vote. That is why we are under only a claimed obligation.

Following questions asked by some Conservative Members, and especially the hon. Member for Nottingham, East (Mr. Knowles), what is the nature of the Community obligation? The answer is that there is no obligation. I have yet to see any statutory basis in European Community terms for the request now being made. As I shall seek to demonstrate, I believe that the payment to the EEC, for the supplementary benefit of the EEC, has no basis and is, therefore, illegal.

It is true that the intergovernmental agreement, Cmnd. 9395, into which the Government have entered and which, in effect, the debate endorses, is under no such limitation because it is an agreement outside the terms of the treaty of Rome, outside the statutory form or constitution of the EEC, and, therefore, it is perfectly proper for members of the club to say that they will make a voluntary loan to the organisation.

The point is that the organisation, by its own rules, has no power to spend more than the legal maximum and that legal maximum would be exceeded if supplementary benefit No. 1 is implemented by the expenditure of money that we are now discussing. Therefore, we must ask ourselves two questions. Is the Supplementary Estimate within the scope of the European Communities Act, sections 1(3) or 2(3)? The answer, quite clearly, is that it is not. If it fell within section 2(3), we would not be debating it; and if it fell within section 1(3) we would be debating not a Supplementary Estimate but a draft Order in Council. The Government, for reasons that have been given, decided not to take that path.

This whole question was foreseen as long ago as 14 March 1972, both in the Chamber and in Committee, during the passage of the European Communities Act. The right hon. Member for South Down (Mr. Powell)—then the right hon. Member for Wolverhampton, South-West — picked immediately on the word "ancillary". He asked whether a treaty such as the intergovernmental agreement before us was ancillary to the treaty of Rome. The debate raged for some hours.

My former colleague Mr. Douglas Jay, then the right hon. Member for Battersea, South, said: If I understood aright, the Solicitor-General said it was quite clear that a treaty under subsection (3) must be within the scope of the Community treaties. The Solicitor-General said: It is on that ground that the vires of an Order in Council could be challenged if it sought to give the status of a Community treaty to something which could not and should not be regarded as a Community treaty 'as herein defined'." — [Official Report, 14 March 1972: Vol. 833, c. 350.]

That is exactly what happened. I might say now, "Enter Mr. Smedley." It was Mr. Smedley who, as a citizen exercising his judicial rights, sought a judicial declaration in the courts that the draft statutory instrument was illegal because it had no vires.

I do not intend to discuss the judgment of the three learned judges, including the Master of the Rolls. Despite the fact that the order has been withdrawn, I understand that there may he further applications and petitions. Therefore, the judgment is still sub judice. However, I hope I can correct the statement by the Economic Secretary to the Treasury—that the court has said that this procedure is lawful. It may have done so. Although the court quite clearly said that the treaty is capable of being regarded as a Community treaty, it did not say that it was a Community treaty. The judgment of the court was that that decision must be partly for the court and partly for the House. We are not discussing that order. Therefore, I shall not discuss its vires. We are discussing the vires of the order that is before the House. It rests upon the constitution of the Community in so far as it relates to Community finance.

In his application, Mr. Smedley asked how the order could be legal because the treaty of Rome did not permit expenditure to be incurred over the so-called 1 per cent. limit. Therefore, he said that the order and the supplementary budget were illegal. In trying to satisfy the Select Committee on Statutory Instruments, which has an interest in this matter, the Treasury, in a statement that is contained in House of Commons Memorandum No. 25, VI, stated: The undertaking of 2–3 October does not qualify under the first head since none of the Communities was a party; it is however a treaty to which the United Kingdom is a party and which is ancillary to the EEC treaty and to the Own Resources Decision of 21 April 1970 and also to the ECSC, Euratom and Merger Treaties. All of these are Community Treaties within the meaning of the 1972 Act. I believe that they are, but the question to which the Treasury memorandum did not address itself was whether those treaties are capable of allowing agreement to the expenditure to be given. I suggest that the memorandum placed before the Select Committee on Statutory Instruments was at best partial and at worst misleading.

It is at this point that I need to go into the history of the affair. Without doing so, I cannot demonstrate to the House the inadequacies that have so far transpired. The Treasury memorandum from which I have just quoted referred to the very important EEC decision of 21 April 1970 which initiated the own resources mechanism under which we now work. Article 1 clearly states that the Communities have to ensure that their budget is in balance. Article 4 states: From 1 January 1975 the budget of the Communities shall, irrespective of other revenue, be financed entirely from the Communities' own resources. Such resources shall include those referred to in Article 2 and also those accruing from the value added tax and obtained by applying a rate not exceeding 1 per cent. to an assessment basis which is determined in a uniform manner for Member States according to Community rules. That is the basic statute relating to what the Community can do. It made it clear beyond peradventure that not only had the income and expenditure to balance, but that the expenditure must not go above 1 per cent. That was the initial decision.

However, it became something very much more than that. It became entrenched in Community statutes by virtue of the accession of the United Kingdom, Denmark and Eire to the Communities. A little known but vital article in the treaty of Accession, article 131, which is to be found in Cmnd. 7463, made it quite clear that at the time of ratification of the United Kingdom treaty of Accession to the European Communities the means of raising revenue was entrenched in treaty form. For the record, article 131 provides: From 1 January 1978, the Communities' own resources and, where appropriate, the financial contributions referred to in Articles 4(2), (3) and (4) of the Decision of 21 April 1970, shall be due from the new Member States, in full, subject to the following provisions. Those provisions do not now apply. Therefore, it was made clear from the very start that the 1 per cent. was clearly enshrined in Community law, as was the obligation to balance its books.

That was the position until last autumn when the Community found itself short of funds for 1984. It could have clone one of two things. First, it could have stopped the payments in the current year and made the payments due in 1984 from the 1985 budget. That would have meant a delay in payment. Perhaps farmers would have been paid later. However, the Community did not do that. Secondly, the Community could have said that it must meet its obligatory payments, but that perhaps it was not absolutely necessary to meet its non-obligatory payments. However, the letter of Mr. Andriesson to member states —communication 8514 of 1984—made it abundantly clear in paragraph 7 that the Community had no intention whatsoever of trimming its non-obligatory expenditure, because, to use its words, this would advocate an upheaval of those policies which are financed by non-obligatory expenditure and the Commission would not in any circumstances propose transfers of expenditure which would have that effect. In other words, there were three ways in which the Community could have reduced the expenditure. It took none of them. Instead, the Community requested member states to promulgate the undertaking, Cmnd. 9395 — and to lend to it the £1,000 million that we are debating tonight.

The Select Committee on European Legislation is not responsible for the Estimate that we are debating. However, it looked at the promotion of the draft supplementary budget. Although it may have been legal for Members of the European Parliament to promote that international agreement, I question whether it was legal for the EEC to promote a preliminary draft supplementary budget to allow it to spend money which it had not got. It would be spending money to which it had no legal right. The Scrutiny Committee —House of Commons 1978, XXXV—in a paragraph describing that supplementary budget, said: The Committee note that this action based on an intergovernmental agreement outside the terms of the Treaty was taken by the Representatives of all the Governments of Member States meeting within the Council.

The Committee then goes on to point out that it had originally wanted to deal with the matter through article 235, but thought that that would not be a proper way of doing so. I hope that that makes it clear to those Conservative Members who have been slightly mystified that the supplementary budget has no basis whatever in EEC law. If it has no basis in EEC law, whether in the treaty of Rome or any other treaty, have the Government any real basis on which to present their Supplementary Estimate to the House?

I am sorry to see that the Government, in paragraph 8 of the memorandum which they presented with the Supplementary Estimate, make no reference to the matter being extra-treaty at all. Under paragraph 8 — policy implications — they just state that it arose out of Fontainebleau and make no mention of the draft supplementary amending budget. It is, therefore, an improper arrangement and one to which the House should not give its assent.

The control and reform of excessive expenditure has, historically, been the concern of the House and is the only way in which it has final power over the Executive. Therefore, the vote on which we shall embark tonight is one of those rare occasions when the House can, if it chooses, exercise control over the Executive of the day. In that respect, it is a new and unprecedented situation. It is ironic in many ways because, as many hon. Members have said, the profligate and uncontrolled expenditure of Europe is in stark contrast to the unjust parsimony of the Government's expenditure inside the United Kingdom. Therefore, I suggest that there is ample cause for complaint.

But one further irony remains of which the House is not yet aware. The judicial procedures, of which I have just spoken, are still in train. I understand that Mr. Smedley has submitted a petition to the House of Lords. In that petition he claims, as I understand was his case in the court, that there is no statutory basis for this payment at all. Article 177 of the treaty of Rome, as has been said, is a matter of preliminary ruling. It deals with the powers of the European Court over the courts of nation states.

Let me remind Conservative Members — some of whom are only too well aware but others, I regret, members of the Treasury Bench, are only too unaware — that when the House passed the European Communities Act the other place was no longer the highest judicial court in the land. Through a vote in this place, we passed the powers of judicial determination of the other place in its judicial capacity to the European Court. Article 177, which speaks about matters of interpretation of the treaty or interpretation of its statutes, says: Where such a question is raised before any court or tribunal of a Member State, that court or tribunal may, if it considers that a decision on the question is necessary to enable it to give judgment, request the Court of Justice to give a ruling thereon. Where any such question is raised in a case pending"— I presume that that includes a petition— before a court or tribunal of a Member State, against whose decisions there is no judicial remedy under national law, that court or tribunal shall bring the matter before the Court of Justice. As I understand it, that clearly refers to the House of Lords. There is no appeal from the House of Lords, and the terms of the article say that there is a case pending. I should have thought that, under Community law, there was an obligation on their Lordships' judicial branch to refer that to the European Court. In view of the rather lengthy and, I admit, boring but necessary quotations that I have given to the House, I cannot see how the European Court could rule otherwise than that supplementary budget No. 1 is extra-treaty, ultra vires and, therefore, illegal.

I do not know whether the other place has taken such steps. Knowing the European Court, I cannot guarantee that it would come to that conclusion, but, in the circumstances, it would be difficult not to do so. Even if it does not, and even if the Government win the vote tonight, the Smedley case has brought a new insight into and advanced the ancient argument of the rights of the Legislature against the Executive that much further. Without the Smedley case we should have had an hour and a half to debate what we have been discussing tonight. Without that gentleman having petitioned the House of Lords, the test to which I have just referred would not necessarily be in question, and perhaps the power that the House has already voted away would not become so well known as I hope it will.

The House and the country owe a debt to that gentleman because he has done what people have done over the centuries — used their democratic individual rights as citizens to seek redress in the courts and to contribute to the strength of the House in its control over the Executive of the day. That is the basis not only of individual freedom but of democracy as we understand it.

7.46 pm

Mr. Nicholas Budgen (Wolverhampton, South-West)

In substance, Mr. Smedley triumphed, and it is to him that we owe this debate. But technically, Mr. Smedley lost, and I understand that the Government intend to have their costs from Mr. Smedley. I hope that there may be some expression from the House that, although the Government have a legal right to those costs, it would be the most disgraceful and ungenerous attitude to enforce that order against Mr. Smedley.

The hon. Member for Newham, South (Mr. Spearing) spoke of his part in 1973. We are all prisoners of our memories on this issue. I always speak with great embarrassment on the EEC when I speak either after or in the presence of the right hon. Member for South Down (Mr. Powell). I remember that when, 11 years ago, I went before the Conservative Association at Wolverhampton, South-West, shattered as it was by the knowledge that its sitting Member was not prepared to take part in what he described as a fraudulent election, I said that if we remained in the EEC we would reform the common agricultural policy. In the constituency which was represented for 63 years by C. P. Villiers, the man who year after year moved the abolition of the Corn Laws, it is difficult to advocate the continuance of the common agricultural policy. I genuinely believed, in my youth and naivety, that if we remained in the EEC the common agricultural policy would be reformed.

But we must understand that, if the House supports the Fontainebleau agreement, it is probably goodbye for ever to reforming the common agricultural policy. Let us look for a moment at what the Fontainebleau agreement provides. First, it provides that until the increase to 1.4 per cent. comes along, we shall provide supplementary money for 1984 and for 1985. In 1986 it is assumed that the national Parliaments will agree to the increase to 1.4 per cent., but it is worse than that. In clause 2 of the Fontainebleau agreement, a moral commitment is given to increase own resources to 1.6 per cent. by 1 January 1988. I fear that my naive promise to the people of Wolverhampton in 1974 that the CAP would soon be reformed will not be honoured in 1988, nor even in 1994.

We must ask ourselves whether any of the nation states —in that I include the Government and people of this country—genuinely want the CAP to be reformed. Are we doing the easiest thing in politics, that is, are we merely talking about wishing to see it reformed and not being prepared to will the detailed means for it? Our position is clear. We have a veto on this increase or loan. We have a veto as a nation and as a House on any increase in 1985, and we have similar vetos upon the 1.4 per cent. and 1.6 per cent. increases.

The fact is that the Government know that, if we follow the Fontainebleau path, expenditure on the CAP will continue to escalate. If the House does not believe that, pray have a look at today's public expenditure White Paper. Previously, the Tory Benches were filled with those who were deeply angry on behalf of their richer constituents who were to have to pay the massive sum of £39 million towards the education of the richer, more privileged university undergraduates and students.

On page 13, volume I, of "The Government's Expenditure Plans 1985–86 to 1987–88" there is a chart of areas where expenditure over and above last year's White Paper is planned for next year. In 1985 net payments to EC institutions will increase by £200 million, and there will be an increase of payments to agriculture of £130 million. I must remind my constituents who were so angry that that amounts to £330 million, which is about 10 times as much as the increase in the cost of their students' education about which they were complaining — understandably because they had not been warned.

Mr. Deakins

Does the hon. Gentleman agree that to £130 million extra for agriculture is United Kingdom expenditure on agriculture, and that it is in addition to any increases that will come from the largesse of the Community?

Mr. Budgen

That is not quite right. I was about to deal with that. Technically it is British expenditure, but as a preliminary to EC expenditure. If the hon. Gentleman looks at page 54 of "The Government's Expenditure Plans 1985–86 to 1987–88", volume II, he will see that a further £190 million and £30 million are going to the intervention boards, which are technically under the control of national expenditure, but which, when the produce is sold, are taken over by the EC.

On page 48 it is plain that an extra £200 million is budgeted to be spent in 1985. I refer to paragraph 50, laughingly described as "Budget discipline", which shows that a second Supplementary Estimate will be brought before the House to provide for a further £200 million in 1985.

The House has a veto, and should stop this escalation. Otherwise the promise that I gave to those who became my constituents in Wolverhampton, South-West that the CAP would be reformed will be as nothing. It will be a fraud upon the people of the United Kingdom. Indeed, there can be only one honourable reason for voting for the measure. It would not be that budgetary discipline is effective—my hon. Friend the Member for Kettering (Mr. Freeman) nods in agreement, albeit from a different standpoint—but that the system of budget discipline is entirely dependent on the will of the nation states. If they wish to obey or avoid it, it is technically perfectly possible for them to do so.

Are there any signs within the nation states that they have a deep-seated political will to reform the CAP? Of course there is not. The French Minister of Agriculture first sounded deeply angered because he feared that there might be a system of budgetary control that was effective, and then, when he saw the loopholes, he thought that it was splendid and that everything could carry on as before. Recently, we heard that the Germans had decided no longer to collect the milk levy because they had found that they were the only nation in the EC to collect it. Moreover, the Germans say that they do not think much of the idea of reducing cereal prices this year by 5 per cent. There is no evidence in the EC of any fundamental deep-seated political desire to reform the CAP.

Let us be clear about this. If the House throws away the veto either tonight or on subsequent votes upon the escalation of our contributions to the EC, it will not be possible for hon. Members like me to go before their electorate and again say that the CAP will be reformed because we shall have made it impossible to reform the CAP. What is more, in future it will not be possible for us to say, "It is the fault of all the other nations in the EC". By our vote tonight we take within our hands the power to prevent such escalation. If we throw it away, it will not lie within our mouths to blame other nations for our neglect.

7.57 pm

Mr. Eric Deakins (Walthamstow)

I shall not detain the House long, because it may wish to move to other business. I congratulate the right hon. Members for Worthing (Mr. Higgins) and for South Down (Mr. Powell) on drawing the attention of all hon. Members to the nature of what the House is being asked to agree.

It is an extremely important matter. Many doubts remain and many questions that have been asked need to be repeated to the Treasury Bench. I am glad that the Chief Secretary to the Treasury is present although, as the right hon. Member for South Down said earlier, it would have been even better if we had managed to ensure the attendance of the Chancellor of the Exchequer, if only for the reply.

One of the main questions has been whether the sum is a loan or a repayable advance. We have heard of the semantic difference between the two. In his evidence to the Treasury and Civil Service Select Committee last year, the Minister tried to draw a distinction. If it is not a loan, is it a repayable advance? If it were a loan, it would be repaid with interest. If it is a repayable advance, will it be repaid with interest? The motion does not say when the money will be repaid to Britain. What will happen if that loan or repayable advance of about £120 million is not repaid? Obviously, it will be a political matter, but what power would we have under the Community's laws to insist on the return of our money? Whatever the sum is called, it must be the Government's intention to get it back at some point. How can we ensure that that happens?

Several hon. Members have said that this is an unusual procedure. The terms of the motion could be applied to any supplementary estimate at any time, in respect not only of EC expenditure but of domestic expenditure. Is it not unusual for the Government to act in this way? Will the Minister reassure the House that this will not constitute a precedent for other supplementary estimates relating to public expenditure in the United Kingdom?

I join the hon. Member for Wolverhampton, South-West (Mr. Budgen) in criticising the common agricultural policy. I shall not waste the House's time by mentioning the many debates that we have had and the many serious criticisms of that policy. Ministers, especially the Prime Minister, have made much of the document on budget discipline. Some people have said that it is not worth the paper on which it is written, but that is a little harsh on the agreement. Much work has gone into it, but in practice it will not have much impact. Last year, I asked the Prime Minister why the agreement had not been embodied in a financial regulation, and it was clear from her reply that she would have preferred that to happen. However, she had to say that we could not get our way. Why could we not get our way? What must have happened was that the other member Governments, represented at the highest level when these matters were debated last year, did not wish the noose of financial control to be tied too tightly around the neck of the CAP. I apologise for mixing metaphors, but perhaps they decided that it would be better to have the CAP on a looser rein.

Why do the CAP agreement and the budget discipline give farmers in the Community almost everything that they wanted? The Government have not obtained an agreement to restrict agricultural expenditure; the agreement will automatically increase such expenditure year after year. No one in his right mind would say that the Community's own resources will diminish.

Under the agreement on budget discipline, there is no longer an incentive for reform, fundamental or otherwise, of the CAP. As long as CAP expenditure can be kept within the limits of the increase in own resources—it would go from 5 per cent. to 10 per cent. a year under the agreement—expenditure on agriculture will be able to grow by that amount. Who can doubt that it will grow by the maximum amount permissible, and perhaps even by more?

Would we accept the principle of allowing expenditure under one vote heading to increase by the amount of a revenue that was appropriated for that expenditure in respect of public expenditure in the United Kingdom? Would we say that expenditure on defence, education or any other major public service will be allowed to grow from now on, regardless of the opinion of the House, which is supposed to control expenditure, following an automatic increase in income tax arising from inflation in any year? That is an absurd principle which the Treasury would throw out of court immediately, yet the Treasury and the Prime Minister have accepted it in respect of EC expenditure.

Many hon. Members who spoke in this and previous debates have not yet grasped the point about the increase in own resources to 1.4 per cent., which we shall soon be asked to approve, then to 1.6 per cent., and no doubt to more if we remain in the Common Market. When the VAT expenditure ceiling is increased from 1 per cent. to 1.4 per cent., there will be a substantial increase in the own resources of the EC in that year. Therefore, it will be possible under the agreement on budget discipline for expenditure on agriculture to grow by 20 per cent., 30 per cent. or 40 per cent. in a year. That must be insupportable.

My hon. Friend the Member for Newham, (Mr. Spearing) dealt in great detail with the status of the intergovernmental agreement. Where is the authority for what we are debating tonight and being asked to approve in the treaty of Accession, which ties the House and the people of Britain to the legislative and financial procedures of the EC? There is no such authority, and there must be at least some doubt whether what we are being asked to approve is ultra vires.

We must control Community expenditure. Some would argue that we should increase the powers of the European Assembly. The hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston), who is an admitted federalist—there are fewer and fewer of them in the House as time goes on, although there are still a few left in government — wants the European Assembly to have increased powers. We must resist that at all costs, and the way to do so is to ensure that at least this Parliament pays much closer attention to controlling our proportion of EC revenues as one means of securing effective financial control over all EC expenditure.

I should like to think that debates similar to this one are being conducted in the Parliaments of the other nine member states. I should like to think that questions are being asked of their Ministers, that they are discussing strict financial procedures and raising points because of what they are being asked to do. I hope that that is happening, but—I do not wish to appear too cynical—I am under no illusions, knowing what happens in some Parliaments, that it is. They are not as interested in financial control and inquiries into such matters as we are. That is a defect from which Britain suffers in the EC. It is a case not just of our playing by the rules and other countries not—it would be unfair to mention names—but of Britain taking its membership seriously while others accept what comes along. They do not have the same parliamentary interest in controlling what is happening in the EC as we do. Therefore, I beg the House to reject the motion, because it will set an undesirable precedent.

8.8 pm

Mr. Tony Marlow (Northampton, North)

May I say at the outset that I sympathise with the Government, who are in a difficult position. On all these issues they have worked manfully and heroically, and they have achieved more than any other collection of Ministers could have achieved. They have done us proud. I sympathise especially with my hon. Friend the Minister of State, Foreign and Commonwealth Office—the hon. Member for Edinburgh, Pentlands (Mr. Rifkind)—who will be replying to the debate. He is one of my favourite Ministers, and my comments will apply especially to him.

Those of us who are friends of Europe and know how the Community works must be concerned about what has been happening. The Commission—the ultimate antidemocratic quango—with its own vested interests and values, proposes Community policy. The Council of Ministers, which includes a representative of the United Kingdom and nine other countries—with its own vested interests and values—discusses, processes and eventually spews out many bastardised compromises. Some of them are bad, some are very bad and some are not so bad, but few of them are good.

On the last occasion when we went through this process, a Conservative Government dedicated to the market were forced to impose on our farmers a system of rationing through milk quotas. A Government who thought that the best way of dealing with the problem was through price had to deal with it through a system of rationing.

On this issue, I am afraid that Her Majesty's Government have little power. They are the victims of the unenviable position that has been presented to them by the processes indulged in by my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). There is little the Government can do, but that does not mean that Parliament must do nothing. This is a matter of Supply — of cash, of taxation, of money. This House is entrusted with responsibility for the people's money. We can take issue on this measure, even though the Government, through no fault of their own, cannot.

Perhaps I may be so bold as to distil the views of the House on Europe by saying that there are those who are fundamental opponents and would still like us to get out, and there are those, such as the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston), who are Euro-fanatics and would like us to be involved in a federal Europe.

However, I suggest that the view of the House as a whole is that we are in, will stay in and should make the best of it and work and trade with the countries of Europe. I wonder whether, at the same time, we wish Europe to be a large spender of money. Do we want Europe to have the funds to indulge in expensive policies? Do we want a continuation of common agricultural policies? We want to co-operate with Europe in those areas where we have interests in common, but we do not want it to be a financial burden round our necks.

Mr. J. Enoch Powell

There is another category, which the hon. Gentleman has omitted. I refer to right hon. and hon. Members who are determined to recover to this Parliament its powers of control over law, money and jurisdiction but who wish to see, subject to that, the widest possible co-operation with neighbouring nations on the continent.

Mr. Marlow

I respect the point that the right hon. Gentleman makes and I am sure that many people, if they search their minds and consciences on this issue, will agree with him.

Before we vote on this matter, hon. Members should ask themselves three questions. If they say yes in answer to one of them, they should support this expenditure. If they say no to all three, they should oppose what is being suggested.

First, we are talking about £120 million of taxpayers' money. If we have that amount to spend, is this the best way to spend it? My right hon. Friend the Member for Worthing (Mr. Higgins), in a brilliant speech, dealt with that point. We in this country have been going through a process of agony—as my right hon. Friend said, dealing with candle ends—in respect of expenditure on overseas aid, parental contributions, cutting £20 million here and £150,000 there to try to make the budget balance. The Government are, rightly, concerned with public expenditure. Should we be spending £120 million of our people's money in this way?

How will that money, if we agree to spend it, be supervised? Can we be sure that it will be well spent? Or will it be wasted? We heard the ghastly story last week of a fraud by which the Mafia took £30 million of Community funds. Should we be considering increasing the amount we allow for Community stewardship when stories such as that are regularly coming through?

The consciences of hon. Members were touched when we debated cutting heating allowances. The sum involved in this Estimate would provide £1 a week throughout the winter for every home with a pensioner. Should we spend the money that way or should it be used to top up a budget that has run wild?

Many of my hon. Friends have spoken of the need to spend money on Britain's infrastructure. It is their right to call for such expenditure, but they cannot have their infrastructure and eat it; we cannot spend the same money twice. If we spend £120 million making up an overrun in the European budget, we cannot spend it on the infrastructure as well.

Secondly, will this money be spent in the interests of the United Kingdom? I understand that we shall get some of the £120 million back in agricultural support, though nobody has said how much. We can be sure, however, that there will be an increase in the net contribution of the United Kingdom to the Community as a result of this action.

We in Britain have been fighting like mad to control Community expenditure. We have had a limit put on our net contribution. As a result of this device, that limit will be overcome and our net contribution will increase.

We are concerned about our farmers because we want a prosperous and profitable agriculture industry. This year the arable farmers have had the uncovenanted blessing of 4 million tonnes of grain which they did not anticipate getting, and that has been worth £500 million to them. It has been as manna from heaven, money they were not expecting. Must we provide them with an extra £100 million from Community funds out of the pockets of United Kingdom taxpayers?

Mr. Richard Body (Holland with Boston)

Does my hon. Friend agree that the large scale arable farmers have been having a bonanza while the small livestock farmers might be called an endangered species?

Mr. Marlow

My hon. Friend, as always on these matters, is right. There has for long been the question of horn versus corn. Since we have been in the Community, corn has prospered and horn has been downtrodden.

The latest advisory brief to be presented to the European Legislation Select Committee is entitled, "The Budget Transfer No. 21/1984." It explains how money is transferred from one part of the Community budget to another. It explains how 270 million ecu have been transferred out of the cereals budget in terms of intervention and public storage costs and how 240 million ecu have been transferred to the distillation of wine. We grow cereals but we produce little wine. Thus, money has been taken from a part of the budget that benefits the United Kingdom and put into a part that does not benefit us. If that had not happened, this £120 million from the United Kingdom would not have been needed. In other words, having been had once, we are being had yet again.

Thirdly many hon. Members are concerned for the EEC and its institutions and want the Common Market to succeed. If we vote this money tonight, will it actually benefit the EEC? In his opening speech, my hon. Friend talked about unavoidable expenditure. There was a little debate between us, by way of interventions. It was suggested to him that if the price rises under the common agricultural policy had not been so great, we would not have had this unavoidable expenditure. If we agree tonight to spend more money, next year, surely, like this year, there will be more unavoidable expenditure. People will have learnt that the House of Commons is always prepared to dish out more cash to cover price increases that should not have been agreed in the first place.

Mr. Phillip Oppenheim

I do not disagree with much of my hon. Friend's thesis, but I believe that his contention that price rises are the problem is false. Over the past 10 years or so, general prices have risen three and a half times whereas prices received at the farm gate have risen only two and a half times. It is not price rises that are the problem so much as the increases in production caused by technological developments. In real terms, prices have fallen.

Mr. Marlow

My hon. Friend has a point. There is a mixture of factors. If price rises had not been so great, some of the product would not have been produced, there would not have been the storage costs, and the cost to the CAP would not have been so great, and we would not have had to have this sad debate.

Are the interests of the Community served by our agreeing to the payment of this money? We are told that it is a reimbursable advance, not a loan. When is a loan not a reimbursable advance, and when is a reimbursable advance not a loan? As my right hon. Friend the Member for Worthing has said, that is a question of semantics. I understand that the advance is due to be repaid in eight tranches, beginning, I believe, next July. No interest is payable on it. Perhaps that is the answer to the question. Perhaps the difference between a loan and a reimbursable advance is that one pays interest on one but not on the other. I can see no other difference. When the time comes for the reimbursable advance to be repaid, it will not be repaid. There will be another reimbursable advance to pay for it. The system is quite straightforward. It is easy to understand.

The Government say that, before they agreed to this measure, there was to be a very important condition precedent. It was that the Community should instil financial disciplines. We have heard about the financial disciplines. We have heard how the framework can be changed by majority voting. We have heard how certain things can be voted through in exceptional circumstances. Many hon. Members believe that exceptional circumstances always apply in the Community. We therefore believe that there will be no financial discipline.

I appreciate the problems and the difficulties of the Government. However, in the end, one has to ask oneself, "If we vote for this increase in funds for the Community tonight, is it more or less likely that there will be financial discipline?" I believe that if we vote against the payment of the money, what we want and what the Government want—proper, prudent, efficient financial management in the Community—will come about, whereas if we let the money go through we can say goodbye to it.

8.25 pm

Mr. Teddy Taylor (Southend, East)

Irrespective of our views on the motion, we should all be grateful to Mr. Oliver Smedley. Had it not been for his initiative, we would probably have discussed the order for one and a half hours, beginning at 10.30 or 11 pm. It is appropriate that we should have more time to debate it because—as has been said time and again — this is a matter of constitutional significance.

Treasury Ministers constantly try to find ways to avoid paying out money. That being so, the present situation is astonishing. Treasury Ministers seem to be looking for any possible device, legal or otherwise, to pay this money over as quickly as possible.

My hon. Friend the Member for Northampton, North (Mr. Marlow) asked what the difference was between a loan and a reimbursable advance. There is a very important difference. My right hon. Friend the Prime Minister herself, speaking in the House, has said that a loan would be illegal under the terms of the treaty of Rome. She said that, within the EEC, it is not right to raise loans for budgetary purposes".—[Official Report, 27 June 1984; Vol. 62, c. 1003.]

The only effective difference between a reimbursable advance and a loan is that, as the Prime Minister has said, a loan would be illegal.

The Government are well aware that we have stretched the law significantly to make this payment, but, even if it were claimed that we had not stretched the law, we would have certainly stretched parliamentary precedent. No one knows under which law the payment is authorised. I believe that my hon. Friend the Minister is well aware that there is no law that justifies the payment. The Government have decided that, in the absence of a law to justify the payment, there must be a Supplementary Estimate.

Throughout the history of the House of Commons, it has been only in genuine emergencies that Governments have resorted to Supplementary Estimates without legal backing. There is no emergency here. We have all known for over a year that some such situation would arise. We are therefore creating a major precedent, and I think that that should worry us.

We have an opportunity today to decide whether or not to give an extra £119 million to the EEC. We have no statutory obligation to do so. Do we wish to give even more money to the EEC?

The House of Commons often talks in terms of millions or billions of pounds. We should remember that £119 million is a lot of money. It could provide 6 million pensioners who receive heating allowances with an extra £20 each to help with fuel bills. It could be used to give the family of every unemployed man an extra £40 to help with expenses. The Government are telling the EEC, "If you spend more money, we will foot the bill." Can that be squared with their other policies?

Southend borough council is one of the most prudent local authorities in Britain. About three months ago, when its money began to run out, it stopped paying improvement grants. I am sure that many local authorities could tell the same story. When the money began to run out and they drew close to the limit set or advised by the Government, they decided to stop essential spending.

Southend health authority is under-funded within the region. Because it is reaching the limit set by the Government, the health authority is obliged to consider whether to close hospital wards.

I entirely accept that, in the national interest, we should control public expenditure. If Departments overspend, we must tell them to stop. If local authorities or health authorities overspend, we must tell them to stop. Horrible choices have to be made and essential services curtailed. As Conservatives—supporters of the Government—we can bear the situation so long as there is consistency. But how can I tell my health authority to close wards, tell Southend council to stop paying improvement grants, or tell Government Departments to stop providing essential services if the Government are telling the Common Market at the same time that if it spends more money they will pass a special resolution in the House of Commons?

What can I tell Southend health authority or the local council about how the EEC is to spend the money? We heard the other day that some £14 million had been lost in the Community accounts. An article in this month's Accountancy Age shows that the accounts of the EEC are absolutely crazy. Money simply disappears and no one can account for it.

We are also well aware that substantial sums of money are being paid out to the Mafia for the produce of non-existent farms and for the destruction of non-existent tomatoes. That has gone on year after year and there is no incentive for anyone to do anything about it because Common Market funds are paid out by national Governments. Under existing procedures, nothing can be done about that except through special reports of that splendid body the Court of Auditors, which brings up such issues from time to time. Even if I tell the Southend health authority to forget about the money being paid to the Mafia and the money that is lost, my hon. Friend the Minister knows that, under the Common Market's regular spending, the vast proportion of the cash goes simply on dumping food, Russia and Eastern Europe being among the major beneficiaries.

We know that about two thirds of Common Market spending goes on agriculture and that more than half of that goes on dumping, destroying or storing food surpluses. The quantities are not small. We sent the Soviet Union alone 157,000 tonnes of food every week last year, and at the most crazy prices. While we have to pay a substantial price for beef, we sell it to the Russians at 40p a pound. We sell them also sugar at 5p a pound and wine at the unbelievable price of 7p a litre. That is where the money is going. I suggest, with all due respect to the Government, that, although we appreciate that such Common Market nonsenses have gone on for years, it is appalling to present this type of measure to the House when almost every public authority in Britain is having to cut services because they are told to by the Government. They are told that there is no alternative but to budget and that that is in the national interest, even if it means cutting essential services. We cannot have two standards—one for the Common Market and another for ourselves.

In justification, the Government have said that things will be different, that if only we vote this extra money and support the increase in own resources, things will change and there will be tough budgetary discipline. Most of us have a great admiration for my hon. Friend the Economic Secretary to the Treasury but, no matter how much we try to kid ourselves, we know in our heart of hearts that the budgetary restraint mechanism is bogus. It is a load of rubbish and I do not believe that anyone has been taken in by it. Other members of the Common Market certainly have not. They know exactly what the score is. They are prepared to say anything to get the extra cash but, when it comes to operating the restraint, nothing happens.

We should examine what has been proposed for agriculture. This year, there has been horrendous overspending and the mountains have grown higher than ever before. The Common Market is planning under the Fontainebleau mechanism not a cut in expenditure but a further increase. Under the budgetary mechanism, even if it worked, agricultural spending for future years is to be based on actual spending in 1984 and 1985, plus a percentage to take account of the increase in the Common Market's own resources. Even if the scheme works, we are still to pour more and more money into surplus agriculture.

I can well understand the hon. Member for Cynon Valley (Mrs. Clwyd)—who popped in for a second, made a speech and popped out again—talking about the coal industry. She feels, rightly, aggrieved. If we have this arrangement for agriculture, why should we not do the same for coal? Why should we not keep all the pits open, guarantee a price three times higher than the present one, employ every miner and give him a guaranteed amount of money?

One of our problems in getting the Conservative party to adopt a sensible attitude towards the Common Market is the Labour party's opposition to it. I cannot understand why the Labour party has been against the Common Market. Surely it is the answer to a Socialist dream—lots of intervention, lots of subsidies, lots of guarantees and lots of social funds. If I were a Socialist I should be strongly in favour of the Common Market. If we get more little ladies like the hon. Member for Cynon Valley who pop in, say that, as a Socialist, they like the Common Market, and then pop out again, it will become even more respectable for Conservatives to stand firm in opposition to it.

Mr. Marlow

The Commission, which is a bunch of bureaucrats, initiates policy. If a bunch of bureaucrats initiates policy, we get Socialist and interventionist policy.

Mr. Taylor

My hon. Friend is telling us what will happen, and it is very sad.

Even if I thought that there was some merit in the Government's proposals, we now have the only chance that we shall ever have of getting changes in the Common Market and the CAP. Sadly, I doubt whether the Government even want changes in the CAP. We hear about the changes that they would like and about reforms, but a structure setting out how agriculture might be changed is never put before the House. Promoting the reform of the CAP will involve substantial battles and some difficult decisions. It will be difficult to deal in a small way with agriculture, just as we are trying to do with Mr. Scargill and his hooligans in the coal industry.

If there were any merit in what the Government want to do and if they had some determination to do it, there might have been a minor move in regard to the scandal that upsets people in Selly Oak as much as people in Southend—the fact that agriculture is the only industry in Britain that does not pay rates. There was talk, for a very short time, of the Government doing something about that. After much pressure, my right hon. Friend the Prime Minister announced that the Government had decided not even to consider the problem.

If we accept the Supplementary Estimate and an increase in own resources, we shall throw away our only opportunity to get reforms in the EEC structure. If we throw away this opportunity we shall be condemned by the people of Britain and by future generations. I know many people who genuinely supported our membership of the EEC and who said that they knew that there was much wrong with it but that we should wait until we got a seat at the table and a chance to do something. They said that there would then be changes, but there have been none. We have had no reform because nothing can be done without unanimous agreement. When that prospect was abandoned, we were told that we should wait until the Common Market ran out of money, as we would then have a chance to do something. That time has now come. If we throw it away, we shall throw good money after bad and lose our only chance of achieving Common Market reform.

I am delighted to see my hon. Friend the Under-Secretary of State for Employment nodding. There is a great deal of quiet support on the Front Bench, but we never hear about it. Some day we must take our courage in our hands, even if it means offending a few cereal farmers. Reform will ultimately be in their best interests as well. We must take courage, stand firm and tell the Common Market, just as we tell the Southend borough council, the Southend health authority, the Department of Employment and others, that it must have a budget and keep to it and that it will not get one penny more unless it changes its spendthrift ways. That must be the House's message. I hope that that message will be approved by a majority.

8.38 pm

Mr. Richard Body (Holland with Boston)

Needless to say, I agree with every syllable that the House has heard from my hon. Friend the Member for Southend, East (Mr. Taylor). I am glad of the opportunity to pay tribute to Mr. Oliver Smedley, as we should not be debating this matter now if it were not for the legal proceedings that he instituted in the High Court, took to the Court of Appeal and now proposes to take to the House of Lords. I hope that he will not mind my saying, without getting too sentimental, that he is an old-age pensioner. He has only limited capital, but he has been ready to risk it all. I hope that he will be regarded as someone who has championed our liberties. Perhaps those who have to make the decision about costs will bear that in mind when the time comes.

We are here only because the cost of the CAP goes up year after year. I am saddened by the fact that this everlasting increase in the cost of the CAP is doing nothing for the good name of agriculture. As the cost of the CAP goes up, so the number of farmers goes down. When the CAP began, there were 20 million farmers in the Community, but the number has now fallen to 10 million. If people assert that the purpose of the CAP is to keep small and inefficient peasants on the land, or whatever phrase they may choose, that is a gross mistake. The profits are being garnered by those who have the largest number of acres. In our country, every year since the CAP began, some 3,000 to 4,000 farmers have left the land. That is 3,000 to 4,000 more families who are no longer supported by agriculture. That is true of the Common Market as well.

My hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) spoke admirably, and I apologise if I interrupted him with so many "Hear, hears". He was right to identify where the money is going. It is supporting not farmers, but landowners. One can relate the amount of price support money to the inflation of land values. Since we began the system of price support, about £64,000 million of public money has allegedly gone towards agriculture. However, land values have gone up in real terms by almost exactly the same amount. What has happened in the United Kingdom has been matched throughout the Community.

We are not supporting farming. How can we be supporting farming through the CAP when so many farmers are going out of business? We are inflating land values everywhere in the Community. However, every time we vote more money towards the CAP—and no country is voting more money than the United Kingdom—we do it to support not farmers, but landowners.

It is time that the message got through to those who are, after all, the paymasters of the system. The Government Front Bench has it within its power to put this right. It is time that we reminded ourselves that we are, with West Germany, one of the two paymasters of the CAP. In pouring this money out as we are, we are doing no service to agriculture but only to those who have the good fortune—I am one of them—to own land. We see the assets that we own going up and up in value.

It is time that we realised that we have, at some stage, to decide whether we are in earnest about reforming the CAP. We can decide it tonight, later this spring when we have further legislation, at some later stage this year or at some other stage. However, we must decide whether we will exercise the powers that we have as paymasters of the system and put it right. We have only to say that we shall not go on paying out more and more money to support allegedly fewer and fewer farmers.

Mr. Alfred Morris (Manchester, Wythenshawe)

The hon. Gentleman has spoken of how well landowners have done under the CAP. Is not another result of the CAP that we can scarcely any longer speak of one agricultural community in this country, and that such are the sharply contrasting fortunes of arable and livestock farmers that we now hear of the two agricultural communities in Britain? Is that not another serious implication of the CAP?

Mr. Body

The right hon. Gentleman's intervention is music to my ears, because that is precisely the position. The beneficiaries of the CAP are, broadly speaking, the cereal farmers. The greatest exodus of farmers is to be found among the livestock producers. Of the 3,000 or so farmers who go out of business every year, the overwhelming majority are livestock producers. It is they who are consumers of the cereals. If we artificially inflate the price of cereals by imports levies and so on, forcing up the price of wheat or barley to 30 or 40 per cent. more than it should be, that extra cost has to be borne by the livestock producers. In effect, it is a tax on them, and one of the reasons why so many of them have been put at risk in recent years and why so many of them have gone out of business.

I am grateful to the right hon. Gentleman for having raised that point because it underlines my argument that we are not, despite what my hon. Friend the Member for Southampton, Test (Mr. Hill) said earlier, supporting farmers. If we were, there would be more, not fewer, farmers in business. It is time that we recognised that fact.

I hope that the time has now come for the Government to decide whether they are in earnest in their resolve to reform the CAP. If they allow it to carry on, so be it. We shall go on voting the money year after year. However, the Government have the power to say no. The House has the power to say no, and I hope that tonight we shall say that the time has come for this process to stop. We must show that we are in earnest. For that reason, I shall not be supporting the motion.

8.47 pm

Mr. Neil Hamilton (Tatton)

This debate has shown the House of Commons at its best, and those who have protracted the proceedings beyond the time that the usual channels expected have no need to apologise for what they have done. It enables the country to reduce its net contribution to the Community by enabling other hon. Members who have been outside the Chamber throughout the debate to eat more of the surpluses.

One of the more peculiar characteristics of this debate has been the way in which the Whips have operated. I am accustomed to Government Whips sidling up to me at some stage in a debate and asking me to curtail my remarks or forgo them altogether. However, I find it astonishing when the Government Whips are joined by Opposition Whips embarking on the same errand. The hon. Member for Glasgow, Cathcart (Mr. Maxton) has been most assiduous in his attempts to persuade hon. Members not to continue at as great a length as they might otherwise do. I do not know whether that is because he has certain fears about reselection in his party and that we can expect to see him on the Conservative Benches in due course.

A characteristic of debates on the Common Market is how few speeches are in favour of the Government's position. The debates are entirely dominated, on both sides of the House, by critics of the Community. That may not be surprising in view of the difficulties that advocates of the Community face—difficulties that arise out of the untenability of the position that they are advocating.

The hon. Member for Thurrock (Dr. McDonald) opened for the Opposition. Her speech can perhaps best be described as entrancing—not in the sense that it was transfixing, but more that it was numbing. I am sure that my hon. Friend the Member for Mid-Worcestershire (Mr. Forth), during the contributions from the Opposition Benches, was more than once reminded of his previous manifestation in the European Assembly, particularly during the remarks addressed to us for 21 minutes, read word for word, by the hon. Member for Cynon Valley (Mrs. Clwyd), who appeared for three minutes at the beginning of the debate, for the 21 minutes of her own speech, and who has not been seen since.

Mr. Foulkes

I can take the insult to my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton), although I assure the hon. Member for Tatton (Mr. Hamilton) that I am reliably informed that my hon. Friend does not have the kind of problems that the hon. Gentleman would wish upon him. When it comes to insulting two ladies, neither of whom is present in the House for only a short time—

Mrs. Kellett-Bowman

They should be here.

Mr. Foulkes

The hon. Member for Lancaster (Mrs. Kellett-Bowman) has, thankfully, been away for most of the debate. I hope the hon. Member for Tatton will get on with the substance of the debate.

Mr. Hamilton

We seem to have stung the Opposition into some response. Perhaps I can add injury to insult and point out that if the Chancellor is proposing in his next Budget to introduce VAT on speeches the efforts of the two hon. Ladies should be zero-rated.

It is a characteristic of this Parliament that the Opposition are ineffective. Having sat through 157 hours of Committee on the Finance Act 1984 and seen how little was achieved by the Opposition during that protracted proceeding, I have come to realise that that is what we can expect on every subject in almost every debate. Instead of being the watchdog of the constitution as Her Majesty's loyal Opposition, a little chihuahua has been buzzing around—

Mr. Deputy Speaker (Mr. Harold Walker)

Order. I hope the hon. Gentleman will come to the business that is before the House.

Mr. Hamilton

I move to the meat of my speech when I point out that perhaps one of the reasons for the apparent lack of interest shown in the debate is a result of the abandonment ultimately of sovereignty which formerly lay in Parliament. Before these proceedings were protracted, it was discreditable that two measures which emanated from an authority outside the House had been proposed for discussion. The country at large does not realise how the European Community has diminished the authority of the House and limited the power of the Government to control their expenditure. Regional policy is a good case in point. Effectively, the maintenance of regional policy has been dictated not by the merits or otherwise of that policy, but by the need to diminish the net contribution of this country to the European Community. The right hon. Member for South Down (Mr. Powell), in a devastating indictment of the constitutional impropriety that we have been invited this evening to support, pointed that out many times.

In an intervention in the speech of my hon. Friend the Economic Secretary to the Treasury I asked about the legality of this proceeding and referred to the provisions of article 199 of the treaty, which are designed to ensure that the Community budget is not overrun in any one year. It is impossible, within the terms of the treaty, to provide for such an overrun to be paid for. I pointed out that the treaty can only be amended under the provisions of article 236, which would require an ancillary treaty—a course of action that the Government do not propose to adopt.

The constitutional basis of the loan, or whatever one may call it, has been raised in many speeches, and much fun has been had as to the nomenclature of this amount of money — whether a loan is equal to a reimbursable advance or whether it is a gift or a bequest. It cannot be a gift. It can only perhaps be a bequest. Let us hope that it is bequest in the form in which bequests are normally given—as a result of a last will and testament. Perhaps this is the last will and testament of the overspending Community, but I doubt it.

An alternative course of action might have been available to the Government. I shall be interested to hear whether I am on the right lines. Would it not have been possible for the Government to solve the problems which would have arisen in this country, in so far as they would have affected individuals who might otherwise have been expected to be paid out of the Community, by paying them separately? If this amount of money is voted through this evening, we shall have to subsidise others in the Community as well instead of confining the benefit of what we are proposing to people in our own country.

The reimbursement proposed is to come back to us from June 1986 onwards, although, like many other hon. Members, I doubt whether we shall ever see it. Certainly no interest is proposed on this so-called advance.

A question which we might properly ask, and which was asked by the Select Committee in its report, is whether the European Assembly will be involved in the reimbursement process. If it is, that will mean that yet another example of the way in which control of expenditure, on which the constitutional rights of the House have been built, has been taken out of our hands. The problem with which we are dealing derives entirely from the control of public expenditure. My right hon. Friend the Member for Worthing (Mr. Higgins) arid others referred in their speeches to the battles that the Government have had on public spending in recent weeks. The argument has been whether tax cuts or further public expenditure will go to reducing unemployment. What is certain is that encouraging expenditure not in this country but elsewhere in the Community will be extremely ineffective in reducing unemployment here.

Budgetary discipline in terms of the European Community is almost a contradiction in terms. The result of accepting what is proposed, following on from the negotiations that the Government have carried out in the Community, is that we shall, of course, pay less than we would have done had there not been agreement, but the net contribution that the Government will provide to the Community will be greater than it has been in recent years. Therefore, let nobody think that as a result of the agreement in the Community we shall be reducing public expenditure in the long term. Public expenditure in the Community will rise inexorably because there are no effective controls proposed as part and parcel of the negotiations on agriculture spending. In 1986 and in the years following the maximum amount, which will also no doubt be the minimum amount, expendable on agriculture will be based on spending in 1984 and 1985—two years of record production and expenditure. In addition, there will be a percentage based on the increase in own resources which will accrue in years to come. Even that limit, inadequate as it is, may be exceeded if there are exceptional or aberrant cases. That may be done, not unanimously as was said erroneously by several hon. Members, but on a majority vote of the member states of the Community.

The advance is designed to be reimbursed to us by way of clawback, but that clawback is disregardable in special, undefined, circumstances. So we shall go on with this agricultural rake's progress, which, as was pointed out by my hon. Friend the Member for Holland with Boston (Mr. Body), benefits not the agriculture industry, but only those whose assets are tied up in land.

During 1984 we were spending £100 million per week storing, destroying and dumping surpluses and aiding the economies of those whom we are building up arms to oppose in the unlikely but possible event that we may be drawn into conflict with them in years to come. Agriculture expenditure will rise to meet the ceiling of expenditure which is allowable. That is the ineluctable law of the Community, because the rate of rise in agriculture spending will be in line with the own resources basis of the Community. It is a form of Parkinson's law. That is the opinion expressed by the Select Committee in its report on the Supplementary Estimates and in the report on the Fontainebleau summit some months ago. Paragraph 7 of the Seventh Report from the Select Committee on the Treasury and Civil Service reads: However, on what is probably the key component of any lasting settlement, Budgetary control, little or no substantive progress was made on the position agreed at the Brussels Summit.

One of the reasons that is cited for requiring an increase in own resources in the Community is the possible accession of Spain and Portugal. It is certain that further irresistible demands will be placed upon the agriculture budget of the Community if either or both of those nations become member states. In addition to all the other mountains and lakes, we shall have mountains of tomatoes and lakes of olive oil and wine.

One of the most absurd arguments in favour of an increase in own resources to fund the admission of Spain and Portugal instead of requiring them to impose disciplines on their own spending on agriculture to benefit the rest of the Community is that it is necessary to do so to preserve democracy in those two countries. It is difficult to believe that allowing them to accede to an institution in which there is no effective control from an elected position, financial or otherwise, that can be converted into law will do anything to safeguard or promote democracy on the Iberian peninsula.

I can see no reason why we should abandon the one real control that we have over the growth or the reduction of waste in the Community—the ceiling on the expenditure which is available by way of own resources to the European Community.

I accept that the Government have tried during negotiations to get the best deal for Britain. I join those of my hon. Friends who have congratulated Ministers on the efforts that they have made to benefit Britain. Negotiation is a long, time-consuming and tedious process, and my right hon. and hon. Friends have had considerable success. In essence, diplomacy leads to compromise. That is the essence of that profession. It has brought certain problems for us in many parts of the world in years gone by, including more recent years. If compromise is inevitable in any diplomatic negotiations, it is all the more important for the House to take the final limit out of the hands of the Government and to impose a limit that they will be able to tell those who are pressurising them in the Community for more expenditure that they are unable to breach because the House will not stand for it.

It is not the degree of success that my right hon. and hon. Friends have enjoyed in the Community in negotiating on the size of Britain's budget contribution that matters. The principle that really matters is that of eradicating waste, not freezing in time or in aspic the degree of wasteful expenditure that now takes place. We shall reduce the wasteful expenditure by removing the basis of the problem which caused the need for a budget settlement to arise, not by reforming the budget settlement itself.

As the Government have not managed to remove the basis of the problem to any acceptable degree, I shall not be able to support them when the Division takes place. I invite my right hon. and hon. Friends to place upon the Government a limitation that they themselves seem unable to impose. Let us take the matter out of their hands so that the rest of the Community realises that they can go thus far and no farther.

9.3 pm

Mr. Hugh Dykes (Harrow, East)

Bearing in mind the strictures that were applied to the hon. Member for Cynon Valley (Mrs. Clwyd) for coming into the Chamber rather briefly, making a speech and then disappearing, I must be careful. I think that my credentials are somewhat better than those of the hon. Lady because I have been in and out of the Chamber during the evening. At one stage when I wanted to listen to the comments of some of my hon. Friends I was called out of the Chamber. I hope that the House will accept my apologies. I thank you, Mr. Deputy Speaker, for allowing me to participate in the debate. In view of the circumstances, it behoves me to be brief and to make a spontaneous contribution as opposed to reading a carefully prepared handwritten text and delivering a tirade on the EEC, which has been the hallmark and characteristic of most of the speeches of my hon. Friends. I shall read them with great care when Hansard appears tomorrow. Once again, as always, the House gets bogged down in these speeches by a relatively small number of Members on both sides in their traditional, posturing outbursts about the fundamentals of membership. That is what it is usually all about, or it is to that that the comments end up referring in an unfortunate way.

I must concede, bearing in mind, for example, the notable contribution of the right hon. Member for South Down (Mr. Powell), that there is a strong argument for establishing the important difference that even those who are keen adherents of our membership of the Community—and I am sure they have already indicated this in the debate — have at least some doubts about the actual procedures whereby the money is voted. There is, therefore, a substantial difference between those two points. There are the technical or constitutional — or both—objections to the modalities of the voting of this money, instead of having separate or secondary legislation or a proper order, and the more fundamental arguments about membership. That is why the latest speeches raking over the old arguments about the common agricultural policy do not take us any further.

I limit myself to making two or three brief points. First, since the matter has been dealt with in that fundamentalist way, I reiterate my own view, and what I detect to be the substantial view of the overwhelming majority of Members of the House, that there is powerful support for continuing membership, an enthusiasm about the terms and details of the Fontainebleau agreement and the document that was submitted to that gathering as the Government's testimony of their enthusiasm for the EEC and an expectant and optimistic anticipation at long last—and let us finally cease all those tedious delays—of real, solid developments in the Community.

I was very struck by the comments of my hon. Friend the Member for Southend, East (Mr. Taylor), who is no longer present. He said that the real trouble is that it always insists on unanimous voting and therefore the Community can never make proper decisions. I must not expect that he would agree, were he present, if I were to suggest that he, or perhaps other hon. Members who take a hostile view of the EEC, would also be shrilly complaining if the system of majority voting were adopted—

Mrs. Kellett-Bowman

Absolutely.

Mr. Dykes

—in greater measure, not only on the most important aspects of Community membership and collective decision-making, but on the lesser items as well. There would be a howl of protest and an expression of disgust, particularly from the Opposition Benches, at that idea. However, the majority voting enshrined in the Fontainebleau documents is the only way now to take the Community forward. Indeed, that means that all national parliaments of all the member states have to accept the existence of Community legislation and Community procedures.

What I thought was equally absurd, although not a contradiction in that sense—just an emotional outburst that revealed ignorance without any knowledge of the facts—was the comment made earlier by the hon. Member for Walthamstow (Mr. Deakins), who is no longer present. He said that he hoped that other national Parliaments would be as solicitous as we are about their financial control procedures and expenditure control procedures nationally and vis-à-vis the Community, but that of course was not the case because they were terrible foreigners and had no idea about parliamentary control, the exercise of genuine parliamentary democracy and real control over Government spending. What arrant rubbish and ignorant nonsense that is. There are those of us who want the country at long last to be an enthusiastic member of this international community which we joined years ago, and it is about time we settled down to it.

The hon. Gentleman probably has no idea of what happens in other Parliaments. It is chauvinistic rubbish to suggest that they have no proper control procedures and a gross insult to our friends and colleagues in the Bundestag and in the European Parliament who wish to develop these procedures and exercise greater control not only over their traditional share of the Community budget but over other areas of spending. It is particularly absurd for an Opposition Member to make that kind of comment—how heroic the House of Commons is, that hundreds of Members of the House are most concerned about this kind of thing and that it does not exist anywhere else—when, while he was addressing the House, thee was a total of approximately 14 Members present in the House. What rubbish that kind of thing is.

Mr. Body

Is my hon. Friend suggesting that these proceedings would have taken place even if Mr. Oliver Smedley had not brought his case?

Mr. Dykes

I was making a somewhat different point about the expenditure control procedures of this House not necessarily being connected with a judicial procedure outside.

I believe that votes of this kind could be better handled in the future. I believe that many hon. Members accept that—for example, there was a great deal of support for the comments of my right hon. Friend the Member for Worthing (Mr. Higgins)—but that is not the same as saying that one is fundamentally hostile to membership of the Community. It is about time for this country, which prides itself on being a receptacle of progress and imaginative handling of international as well as domestic affairs, to accept that we are entitled, with apology to the Labour party, to be most enthusiastic about our membership of the Community.

9.10 pm

Mr. Eric Forth (Mid-Worcestershire)

This debate gives us the opportunity to look back over the Community's expenditure control record but also to look forward. The question has been asked time and again why the EEC seems so incapable of exercising financial control over its own activities. I believe that the answer is relatively simple and that it provides the clue to the future. It may also provide a clue as to why so much disquiet has been expressed today.

There are two budgetary authorities in the EEC—the Council of Ministers and the European Parliament. Because each of the 10 member countries has different vested interests in different items of expenditure, in the Council of Ministers they all tend to support one another's favourite items, with the result that none of them, jointly or singly, can take any effective decisions on expenditure limitation. Such a one-way process can lead only to increased expenditure. That is compounded by the fact that, in the past few years, the European Parliament has sought other ways in which to increase the Community budget. Parliamentarians, too, have their own pet schemes and their own methods of spending other people's money ever more rapidly and, they would argue, more effectively.

The result is that the two authorities which in theory should be acting to control and regulate the budget manage in their different ways to increase Community expenditure. Put in the simplest terms, that is why the Community has proved incapable of controlling its expenditure in the past. It also provides the clue to the problem ahead, because neither of the factors that I have described is likely to change significantly.

The Government have asked us to accept that there is now a new feature—budgetary discipline. We have been offered a document which seeks to provide a procedure whereby the forces that I have described will somehow be curtailed. In fact, however, it does nothing of the kind. Perhaps the Minister will explain how a document containing patent loopholes can be an acceptable vehicle for budgetary control and discipline in the future. If there is one thing that we have all learned, it is that things are bad enough when a European Community document claims that it will achieve good things and then fails to do so but when such a document does not even claim to be doing anything particularly effective we are entitled to be more than usually suspicious.

The document before us refers frequently to "exceptional circumstances", "aberrant developments" and other delightful possibilities. Then there is the sheer nerve of the claim in one of the final provisions that the framework for discipline established can be altered if the discipline proves too onerous. How on earth can that ensure effective control of Community expenditure?

To tell us that somehow there will be a political will in the future which has not existed in the past is to ask us to suppose that the Council of Ministers will magically decide to alter this framework in the future and to suppose that the European Parliament—understandably, it is ever anxious to promote its powers and influence—will have a new vision of Europe under budgetary discipline. To ask us to expect that both those institutions will turn over a new leaf and have a new idea of a Europe under controlled financial provisions is to ask far too much. That would be bad enough. But another element will enter this equation making it impossible to control — the proposed enlargement of the Community, to which my hon. Friend the Member for Tatton (Mr. Hamilton) referred.

Another aspect is even more worrying than the fact that, legitimately, the proposed new member states—Spain and Portugal — will add to the existing problem of agricultural surpluses. They will do that even on existing levels of production and with existing products. What will happen when the Spaniards persuade us to give some of the Community's money for irrigating their agricultural areas to increase output? That will be bad enough, but what will happen when the EEC's economic and political balance alters? The resulting problems are, as yet, unforeseen and little discussed in the context of enlargement.

When Spain and Portugal enter the Community, there will be a potential realignment in Europe, giving rise to the possibility of Greece, Italy, Spain, Portugal and, if it suits her, France lining up to demand the shifting of available resources from the traditional recipients of agricultural support, the northern countries—which have received support for cereal and milk production—to the south. Spain and Portugal are poorer countries and will have a strong claim. They will demand that we give additional support to their products.

That same demand will be made in the context of regional and social policies and the many other policies that hon. Members have claimed benefit the United Kingdom. Let us not suppose for one moment that the relatively poorer countries, such as Spain and Portugal, will allow the United Kingdom to continue to receive its present share of regional and social fund money. The real costs of enlargement of the Community are potentially enormous. There will be the cost of shifting the moneys now available to the Community away from the United Kingdom. Britain's claims on the money available from the common agricultural policy have been small enough, but, inevitably, money available under the CAP and from the regional and social funds will move from Britain.

However much the rationale behind the enlargement of the Community is based on grand arguments about the defence of democracy and the strengthening of the West, when it comes down to the reality of the budget of the enlarged Community, resources will move inevitably from the north to the new south of the enlarged EEC.

We should look not only at the temporary stop-gap unnecessary expenditure which has been suggested but at the question that will be posed later this year, after the completion of the enlargement negotiations. We will be asked to agree further resources for the EEC. That question must be seen in the context of the viability of the budgetary discipline document about which we have had as yet little satisfactory explanation. We must consider the problems caused by the enlargement of the Community and the failure of the Community to have the political will to control its expenditure.

I hope sincerely that the House will be given ample opportunities to discuss the proposed enlargement of the Community in its full context in the light of the important budgetary effects which will influence not only the United Kingdom in the long term but the EEC's shape, viability and direction. We have not yet been asked to consider those matters. We have been asked to consider merely the tip of a large iceberg. I hope that on another occasion the House will seriously consider these fundamentals of the future of Europe.

9.20 pm

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

Perhaps unexpectedly, this has been a wide-ranging debate, thanks to—in their different ways—the right hon. Member for South Down (Mr. Powell), my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) and Mr. Speaker. I must tell the right hon. Member for South Down that we do not in any way object to such a wide-ranging debate.

The hon. Member for Harrow, East (Mr. Dykes) did not have the opportunity to hear a great deal of the debate. If he had, he would have been surprised on a number of occasions by the lack of posturing by hon. Members. Perhaps the most telling criticism of what the Government are doing came from those who are basically in favour of the European Community. That makes them all the more—

Mr. Dykes

Dangerous.

Mr. Foulkes

The hon. Gentleman will find out when he reads Hansard tomorrow.

It is clear that most hon. Members did not want this debate, as the hon. Member for Tatton (Mr. Hamilton) rightly said in one of the more lucid and unobjectionable parts of his speech. In some ways it must be an unexpected debate for hon. Members who were in the House on 27 June 1984—and this has been referred to already—when the Prime Minister said: article 199 of the treaty provides that the revenue and expenditure shown in the budget shall be in balance, so it is not right to raise loans for budgetary purposes … I believe that methods other than loans will have to be found to bring the budget into balance, because it is contrary to the treaty to have a deficit on the budget, and that must be taken into account in any proposal."—[Official Report, 27 June 1984; Vol. 62, c. 1003.]

I suspect that the Minister will try to argue that what we call the reimbursable advances are not loans. But as hon Member after hon. Member has said, that is a semantic point. They are loans by any other name; they are loans in every essence. Therefore, what the Prime Minister said on 27 June has been proved to be wholly incorrect.

I can, therefore, understand the nightmares of the Economic Secretary who, in a rare moment of confession to the Select Committee, said: In the middle of the night on two occasions I found myself thinking how should I explain these proposals to the House of Commons." As we have seen, he has had great difficulty in explaining them.

There has been a U-turn from what the Prime Minister said in June. The whole basis is being questioned. Conservative Members have even gone as far as saying that it could well be an illegal budget. One hon. Member said that, if the Government took one attitude towards the illegal budget of Liverpool, they should not take a different attitude towards the Community.

Having about-turned on the principle, the Government have also about-turned on the procedure. That is peculiar because of the evidence given to the Joint Committee on Statutory Instruments by Mr. Fitchew from the Treasury who argued strongly and eloquently—as the right hon. Member for Worthing (Mr. Higgins) can testify — against the procedure currently before us. He said: So far as the consolidated fund bill route is concerned, the convention, as I understand it, is that the special consolidated fund bill itself would not be debated. The supplementary estimate can be debated …."— we are debating it now— at the cost of preventing other estimates being debated, because the days available in the Parliamentary year for debating estimates are limited. Mr. Fitchew also argued against the current procedure because there would be no reference to the House of Lords.

I should like to put on record both my thanks and those of my hon. Friends to the Select Committee on the Treasury and the Civil Service for producing its third report so quickly. The Select Committee expresses disquiet at the way in which this matter has been brought before the House.

I should also like to put what we are considering into a slightly wider perspective. Although she was perfectly in order, I shall not go quite so far as my hon. Friend the Member for Cynon Valley, but it is true that the finances of the Community are in a shambles. There is no better word for it. My hon. Friend has participated eloquently in many of these debates and has pointed out on many occasions the shambolic nature of Community finances.

However, one does not need to take my word for it. One can take the word of the new chairman of the Council of Finance Ministers, Signor Andreotti, who has admitted that as yet there is no agreement between the Council and the Parliament on the 1985 budget. Signor Andreotti says that there is no agreement on budgetary discipline. He is quoted in the Financial Times as pinning his hopes on guiding the EEC out of its budget crisis—it has no budget for 1985—on a quick end to the enlargement negotialions with Spain and Portugal. He is anticipating by a couple of months the entry into force of the decision on the increase in revenue from VAT. Therefore, it is to be expected that the increase in own resources from VAT that we as a Parliament are to be asked to approve will come into force some months before agreement is reached.

Signor Andreotti went on to say: But West Germany ties increased contributions to the EEC with the fact of enlargement, scheduled for January 1, 1986. Signor Andreotti wants an end to the enlargement negotiations during the spring and then a rapid ratification by national parliaments of Spanish and Portuguese accession. Assuming that there is to be an end in the late spring to the negotiations over the accession of Spain and Portugal, ratification will then be rushed through the House of Commons. The increase in own resources from VAT will then have to be rushed through the House of Commons.

If the right hon. Member for South Down is concerned about the procedures that have been adopted so far relating to the Supplementary Estimate, perhaps I may quote what was said by somebody on the other side of the Atlantic. If what is anticipated by Signor Andreotti comes to fruition, "You ain't seen nothing yet". The result will be that more and more measures of this kind will be rushed through the House of Commons.

We oppose the loan for two main reasons. The main condition which the Government have set themselves for the payment of the loan—for that is what it is—has not been fulfilled. It was a question not just of budgetary discipline but of budgetary discipline being guaranteed. That is not a word which we on this side of the House take lightly. I hope it is not a word that the Minister of State who is to reply takes lightly. As was said by the hon. Member for Wolverhampton, South-West (Mr. Budgen) in his questions during the proceedings in the Select Committee on the Treasury and Civil Service — it is reported in detail in the first report of the Select Committee on the Treasury and Civil Service—we have given up two powerfull vetoes: the veto on overspending, and the veto on the increase in own resources.

What do we have in return? We have the illusion of budgetary discipline. There is no regulation to enforce it. It is not legally binding because, as several hon. Members have said, agriculture expenditure is demand-led and therefore uncontrollable. I hope that the Minister will say what he or his right hon. and hon. Friends in the Treasury will do about meeting the Agriculture Ministers to ensure that the farm price review does not get out of control, because that is a crucial element. Although one Conservative Member said that it is not just prices but the level of production that matters, certainly price is an essential and important element. I hope that there will be some sign that the Government will use the opportunity of a joint meeting between Finance and Agriculture Ministers to make sure that the Agriculture Ministers are controlled. Once they fall under the influence of the farming lobby they tend to get a little out of control.

We have also heard that the budgetary discipline is an illusion because it requires only a qualified majority to alter it. We know that it is an illusion because of what other people say about it. Even Michel Rocard—for those who do not attend these debates I point out that he is the French Agriculture Minister—said: It allows sufficient flexibility for the continued operation of the CAP. Rather more forcefully, Agra Europe, a well-known and influential journal in relation to what happens in Europe, has a headline "Budgetary discipline agreement 'value-less'." It goes on to say that it is not worth the paper it is written on. The two major flaws that have been identified by several hon. Members on both sides of the House are the exceptional circumstances let-out and the qualified majority.

By far the most eloquent criticism of the illusory nature of the budgetary discipline appears in that well-known magazine Farmers Weekly, which has a headline: Nothing to fear in EEC formula. That is a magazine for farmers, not for accountants or politicians. It says: Farmers have nothing to fear from the EEC budget discipline … it is so full of escape clauses … the ceiling has been set so high that by 1987, the year after Spain and Portugal become EEC members, the formula allows for an extra billion ecu … to be spent on farm support. It finishes by saying: When Spain and Portugal join the EEC in 1986 there will be a stronger majority of countries benefiting from the CAP, with the ability to out-vote the 'payers', Britain and Germany, if they object to spending increases. What could be a more eloquent testimony to the illusory nature of budgetary discipline? The Government have clearly failed on their own criteria.

We oppose the proposal for another reason which has been mentioned by several hon. Members, particularly the hon. Member for Southend, East (Mr. Taylor). It relates to the fact that spending is about priorities. We are talking about spending priorities in this context both at home, which the hon. Gentleman touched on, and in Europe. Cut after cut at home has been referred to this evening, not by Labour Members — the normal complainers about Government cuts—but by Conservative Members who are becoming increasingly worried. We have heard about the anxiety about cuts in student grants. There has been only a mild amelioration on that. We have heard complaints about the cuts in overseas aid, in the external services of the BBC, and in heating support for old-age pensioners. Hundreds of thousands of pensioners are now getting up to £1 a week less in their heating support. We have also heard about cuts in the regional support grant.

It appears that only two areas are exempt from Government controls. One is fortress Falklands, which I hope to speak about on many future occasions, and the other is the European Community, especially the CAP. We need to say to the EC that the CAP, which is effectively a bottomless pit, is not acceptable because the Government do not have a bottomless purse, and because we have other priorities on which we wish to expend resources.

The matter also concerns priorities within the EC budget. The draft budget of the EC for 1985 shows an increase in agricultural spending, from 67 per cent. to 74 per cent. of the budget and further proposed increases, not the guaranteed controls, about which the Government assure us. The social fund is the Community's main weapon against unemployment, yet it gets a measly 5 per cent. of the budget, although we know from our experience, the Community and the EC annual report that unemployment is increasing. In 1978 unemployment in the Community as a whole stood at 5.5 per cent. Now it stands at 11.5 per cent. Hon. Members on both sides of the House have expressed anxiety about the effect of unemployment on young people. In the under-25 age group unemployment has increased from 13.5 per cent. to 24.5 per cent.

Mr. Marlow

Would the hon. Gentleman like more money to be spent through the European social fund? If so, why does he believe that money which is sent to Brussels and returned to us is more efficiently used than money which we decide to spend directly?

Mr. Foulkes

That is a good point. It relates to the question of Community spending versus domestic spending. The irony is that at present the Government are so reluctant to spend money from their domestic budget on employment programmes that the Community is one of the few areas from which we are getting money.

I turn to the matter of instilling confidence in our young people. Mr. Delors, the new President of the Commission and former French Finance Minister, recently addressed the European Parliament in Strasbourg about pulling down the frontiers of Europe. He said of young people: Pulling down the frontiers will not convince them of our resolve to do away with massive unemployment. Here, too, the credibility of the European venture is at stake It is at stake. Unless we encourage the Community to switch priorities from the uncontrollable expenditure of the CAP to such areas, young people will lose confidence in the EC and in the politicians who lead it.

I now come to the point raised by my hon. Friend the Member for Cynon Valley. The areas scheduled for cuts in the EC budget are areas which my right hon. and hon. Friends wish to see expanded—for example, transport, energy, science and technology, research, industry, information and innovation. The Community should spend more money on them.

We wish to see expenditure on overseas aid to be given higher priority. We heard from the Prime Minister—it was echoed by other members of the Government—a great fanfare of trumpets about the fact that the decision made at the meeting of the Heads of Government in Dublin would result in 1.2 million tonnes of cereal being sent to African countries, especially Ethiopia. That is a miserable amount when one considers that there are 12 million tonnes of cereals in intervention. It is even more disgraceful when one discovers, from answers to several questions that I put to Ministers, that although the decision was taken on 4 December and was trumpeted by the Prime Minister and others, and although we would have expected a sustantial amount of the 1.2 million tonnes to be on its way to feed the starving people of Africa, only 13,000 tonnes of grain have arrived there. It is about time that the Minister and his colleagues got the bloated bureaucrats of Brussels off their behinds in the Berlaymont and got the grain to the countries in Africa.

I urge my hon. Friends and Conservative Members to vote against the Supplementary Estimate. They should vote against it because of its doubtful legality, because of the doubtful precedent that it creates, because it represents the wrong spending priorities at home and in Europe, and, above all, because there is no guarantee of budgetary discipline. Some Conservative Members may be thinking of waiting until we have the debate on the increase in own resources before rebelling against the Government. I urge them not to wait, because there are already great dangers that that decision will be pre-empted. We know that £165 million has already been advanced in own resources, and we now have this loan of £120 million. The time to tell the EC "Enough is enough" is now.

9.42 pm

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

I listened with great interest to the speech of the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). I and my hon. Friends noted with interest the announcement yesterday that the Labour party — Her Majesty's Opposition — attach such enormous importance to Community issues that they have decided to disband their shadow EC team. The hon. Member for Livingston (Mr. Cook) will go to greener pastures. When the hon. Member for Livingston was appointed, we were told that he was to mastermind the campaign for the European Parliament elections. His new appointment is to mastermind the Labour party's next general election campaign. I would say only that, recollecting that his efforts before the European elections resulted in the Labour party losing that election and coming second, I hope that he has equal success in his new appointment.

Mr. Foulkes

Perhaps I may correct the Minister on two points. There is still a European team, represented by my hon. Friend the Member for Hamilton (Mr. Robertson) and myself, in the shadow foreign affairs team. Therefore, with no disrespect to my hon. Friend, the team is as strong as ever. Our aim in the next general election is to do what we did in the European election — [HON. MEMBERS: "Lose."] No. It is to double our representation in this Parliament, as we doubled it in the European Parliament.

Mr. Rifkind

I have known the hon. Gentleman for many years, and I note that his modesty is as strong as ever. Indeed, we all hope that the Labour party's results in the general election are similar to those in the European election.

The hon. Member for Thurrock (Dr. McDonald) asked whether and, if so, what proportion of the money would be spent in the United Kingdom. Our best estimate is about 50 per cent., through agricultural, regional fund and social fund expenditure. Several hon. Members, especially my right hon. Friend the Member for Worthing (Mr. Higgins) and, in a somewhat flamboyant way, the hon. Member for Carrick, Cumnock and Doon Valley, asked whether the money would be a loan or an advance and what was the difference between the two. I do not argue that there is any significance between the two, and that is the basis of the point that is really at issue; it is not relevant whether we describe this as a loan or an advance.

The point to which the Prime Minister was referring in June was whether it was competent under the treaty, and in particular under article 235 of it, to use the mechanics of the treaty to provide for loans, given that the treaty does not permit deficit financing. Because we believed that it would create a highly undesirable precedent to allow the treaty in its present form to be used, in effect, to produce a loan that would allow deficit financing to take place, the British Government, along with other Governments, insisted that if there was to be any accommodation of this extra expenditure it could not be under the treaty but had to be outside the treaty through an intergovernmental agreement. For that reason, the agreement reached is an intergovernmental agreement and not one under the terms of the treaty.

My right hon. Friend the Member for Worthing then asked, in relation to the procedure that the Government have adopted, why, when the matter had been considered by the court and by the Court of Appeal in the case brought by Mr. Smedley, the Government did not decide to take the matter to the House of Lords. The simple answer is that we won in both earlier courts and that it is not for the party that wins to take the matter to the House of Lords.

Several hon. Members, notably the right hon. Member for South Down (Mr. Powell), asked why, having won, the Government did not continue to use the Order-in-Council procedure and why the matter was before the House in the form of a Supplementary Estimate. When the court considered the Order-in-Council procedure under the action brought by Mr. Smedley, it found in the Government's favour. Had we been able to have these matters considered during 1984, it was our intention to use the Order-in-Council procedure.

Because the intergovernmental agreement refers specifically to a commitment to introduce and agree these matters in 1984, we were concerned lest, if in 1985 we continued to use the same procedure, there would be a considerable possibility of further challenge. The Government have been extremely conscientious in desiring to avoid legal problems over the procedure they employ. For that reason, it was thought safer, and for the avoidance of doubt, to use the Supplementary Estimate procedure.

Mr. Marlow

We are talking about increasing our commitment to the Community by £120 million. I understood my hon. Friend to say that we would get about half of that back by way of the agriculture and social funds. In other words, we are talking about increasing our net contribution by £60 million. What shall we get in return for that? What is the bargain or benefit? Why should we agree to this expenditure?

Mr. Rifkind

I am first dealing with specific questions raised during the debate. Later I shall come to general points, including the proposition to which my hon. Friend refers.

I am in honour bound to respond to the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston), who complained that in the past the Minister replying to the debate had not even attempted to reply to him. His main point was about the 1985 draft budget and he wondered what would happen if it was not approved.

The European Parliament has chosen to refuse to approve that budget. Consequently, there is no budget in effect for the current year. Under the terms of the treaty, the provisional twelfths regime operates. Under that, the Community can spend no more than it spent in the equivalent month of the previous year. We are bound by that until the European Parliament agrees to a new budget, and the onus is on it if it wishes to see a more liberal procedure.

The official Opposition have a nerve. In his final remarks, the hon. Member for Carrick, Cumnock and Doon Valley said that the Labour party does not take budgetary discipline lightly, but there have been virtually no Labour Members present during the entire debate. Furthermore, when the House of Commons debated budgetary discipline on 11 December last year, and the Opposition had an opportunity to defy the House and to show the public exactly how they felt about the matter, they did not divide the House. They refused to vote, and allowed the Government's motion to be approved without a Division. That was an extraordinary response by an Opposition who claim to believe seriously in budgetary discipline.

Could the Opposition also kindly explain to the House and to the country why, under the last Labour Government, agriculture expenditure in the Community increased each year by an average not of 5 or 10 per cent. but of not less than 28 per cent? That was the record of the Labour Government when they had to deal with these matters.

Under the present Government, the average increase in agriculture expenditure has been reduced to 11 per cent. On the proposals likely to be put before the Community in the next few weeks, an increase of 5 per cent. is expected. That is a dramatic improvement. It is not as great an improvement as we or the people of Britain would like but it shows significant progress in the direction that the House has called for for many years and to which Her Majesty's Government are committed.

As the last Labour Government presided over annual increases of not less than 28 per cent., I am not prepared to hear Opposition Members say that they are concerned about the matter and that they would be effective in dealing with problems.

Mr. Spearing

The hon. Gentleman would not wish to mislead the House. Is it not true to say that all those years were during the transitional period, when prices rose and levies were increased as we entered the Community?

Mr. Rifkind

With respect, that is a different point. I am not now talking about Britain's net contribution or the question of a refund. I am talking about agriculture expenditure. There is no reason why such dramatic increases should have occurred if the Opposition, when in government, had been effective in dealing with these matters.

Criticisms have also been made by those hon. Members on both sides of the House who are basically opposed to British membership of the Community and do not wish the problems to be resolved in a harmonious and flexible way that would strengthen the Community. I do not say that all those who have made criticisms take that attitude. However, a number of my hon. Friends and Opposition Members are basically hostile to the Community. They would be delighted if the Community were to face a crisis, and hope that the United Kingdom would do nothing to help to resolve that crisis. Because the Government do not share such objectives, we cannot be expected to share such tactics. I shall therefore concentrate my remaining remarks on criticisms made by those hon. Members who take the view that membership of the Community is desirable but who, from that standpoint, wish for a major reform in the operation of Community finances.

Mr. Beaumont-Dark

My hon. Friend glosses over the problem of agriculture and proposes to turn his attention to those hon. Members who oppose membership. Could my hon. Friend answer the point made in Fanners Weekly that farmers have nothing to fear, because there are to be no changes that will not benefit them? Would not my hon. Friend agree that that is the great weakness and the great drain on the finances? If the farmers have nothing to fear, the rest of us have a great deal to fear.

Mr. Rifkind

There are different views on that point. [HON. MEMBERS: "Ah."] I can quote some views different from those expressed in Farmers Weekly. The German Finance Minister, Mr. Stoltenberg, says that We now have for the first time an effective instrument to bring about a sensible control of expenditure". The French association of chambers of agriculture has described the budgetary discipline proposals as a real financial straitjacket for the CAP". The Italian newspaper Il Sole referred to a complete change in the direction of the CAP". Those quotations show that there is a different assessment.

My hon. Friend the Member for Nottingham, East (Mr. Knowles) made a most important point. He stressed what the Treasury and Civil Service Select Committee also stressed — the important factor in these budgetary discipline proposals is the position of countries that are, or are likely to become, net contributors. That is a fundamental change which is taking place in the Community and which could have a profound effect on its financial future. As a result of these measures, any increase in the Community's net expenditure — which would result in an increase in our net contribution—will involve a two thirds refund for the United Kingdom. That means that our contribution to the increase will be fixed at a maximum of 7 per cent.

Mr. Foulkes

Will the Minister give way?

Mr. Rifkind

Not yet. That should be compared with France, which will have to finance 27 per cent. of expenditure, and West Germany, which will have to finance 32 per cent. of contributions, without any compensating balance to reduce the burden on their national exchequers. It is therefore easy to see why Herr Stoltenberg, the German Finance Minister, and the French Finance Minister will have an enormous vested interest in ensuring proper control of expenditure.

Mr. Foulkes

If the Minister is so convinced about the effectiveness of budgetary control, will he now give the House the assurance that the Economic Secretary to the Treasury failed to give earlier—that the Government will not introduce ever again another Supplementary Estimate for money for the Community?

Mr. Rifkind

If the hon. Gentleman had done his homework properly he would know that we have still to find a way in which to resolve the problem for the current year, before the new budgetary discipline procedures have come into effect.

Mr. Foulkes

Ah.

Mr. Rifkind

The hon. Gentleman knows perfectly well that that is the case. He knows that, under the agreement that has been reached, it is the price fixing of a few weeks' time that will determine for the first time the budgetary discipline proposals.

Mr. Budgen

Will my hon. Friend give way?

Mr. Rifkind

Perhaps my hon. Friend will allow me to continue—I have only a few minutes.

The Government's objective throughout the negotiations has been to ensure that the Council of Ministers and the Commission have the power to control agricultural expenditure, and that of the Community as a whole. We believe that the measures that have been agreed will provide a new and much improved basis for controlling that expenditure.

Mr. Budgen

Will my hon. Friend give way?

Mr. Rifkind

Not now.

We have also been anxious to ensure that if, despite these new procedures, some items of which have been described as exemptions or loopholes, Community expenditure increases substantially, the United Kingdom taxpayer is protected from the effects of such increases in a way that has never been possible in the past. Because the British contribution to any increased expenditure, which would increase our net contribution, can represent only 7 per cent. of the total expenditure involved, we can say with considerable justification that the United Kingdom has achieved a protection for the British taxpayer and for the House that has not been available under any previous rules.

Under the Labour Government, not one ecu was recovered for the British taxpayer. That is to the permanent shame of the Labour party. When it had the opportunity, it failed completely to save the British taxpayer money. We have already recovered £2.5 billion for the British public and ensured that no increases in Community expenditure can produce an intolerable burden for the British taxpayer.

The vast majority of the British public support our membership of the Community and want the financial controls of the Community to be improved substantially. They also expect their Government to act responsibly and constructively in improving the Community.

Mr. Teddy Taylor

rose—

Mr. Rifkind

On that basis, I can say that the conditions that the Government laid down have been satisfied. I therefore invite the House to approve the Supplementary Estimate.

Question put:—

The House divided: Ayes 349, Noes 189.

Division No. 74]	[10 pm
AYES
Adley, Robert	Brinton, Tim
Alexander, Richard	Brittan, Rt Hon Leon
Alison, Rt Hon Michael	Brooke, Hon Peter
Alton, David	Browne, John
Amess, David	Bruce, Malcolm
Ancram, Michael	Bruinvels, Peter
Arnold, Tom	Bryan, Sir Paul
Ashby, David	Buck, Sir Antony
Ashdown, Paddy	Bulmer, Esmond
Aspinwall, Jack	Burt, Alistair
Atkins, Rt Hon Sir H.	Butcher, John
Atkins, Robert (South Ribble)	Butler, Hon Adam
Atkinson, David (B'm'th E)	Butterfill, John
Baker, Rt Hon K. (Mole Vall'y)	Carlile, Alexander (Montg'y)
Baker, Nicholas (N Dorset)	Carlisle, John (N Luton)
Baldry, Tony	Carlisle, Kenneth (Lincoln)
Batiste, Spencer	Carlisle, Rt Hon M. (W'ton S)
Beith, A. J.	Carttiss, Michael
Bellingham, Henry	Cartwright, John
Bendall, Vivian	Cash, William
Bennett, Rt Hon Sir Frederic	Chalker, Mrs Lynda
Benyon, William	Channon, Rt Hon Paul
Biffen, Rt Hon John	Chapman, Sydney
Biggs-Davison, Sir John	Chope, Christopher
Blackburn, John	Churchill, W. S.
Blaker, Rt Hon Sir Peter	Clark, Hon A. (Plym'th S'n)
Bonsor, Sir Nicholas	Clark, Dr Michael (Rochford)
Bottomley, Peter	Clark, Sir W. (Croydon S)
Bottomley, Mrs Virginia	Clarke, Rt Hon K. (Rushcliffe)
Bowden, A. (Brighton K'to'n)	Clegg, Sir Walter
Bowden, Gerald (Dulwich)	Cockeram, Eric
Brandon-Bravo, Martin	Colvin, Michael
Bright, Graham	Conway, Derek

Coombs, Simon	Howarth, Alan (Stratf'd-on-A)
Cope, John	Howe, Rt Hon Sir Geoffrey
Cormack, Patrick	Howell, Rt Hon D. (G'ldford)
Corrie, John	Howell, Ralph (N Norfolk)
Couchman, James	Howells, Geraint
Cranborne, Viscount	Hubbard-Miles, Peter
Critchley, Julian	Hughes, Simon (Southwark)
Crouch, David	Hunt, David (Wirral)
Currie, Mrs Edwina	Hunt, John (Ravensbourne)
Dickens, Geoffrey	Hunter, Andrew
Dicks, Terry	Hurd, Rt Hon Douglas
Dorrell, Stephen	Irving, Charles
du Cann, Rt Hon Sir Edward	Jenkin, Rt Hon Patrick
Dunn, Robert	Johnson Smith, Sir Geoffrey
Durant, Tony	Johnston, Russell
Dykes, Hugh	Jones, Gwilym (Cardiff N)
Edwards, Rt Hon N. (P'broke)	Jones, Robert (W Herts)
Eggar, Tim	Jopling, Rt Hon Michael
Emery, Sir Peter	Joseph, Rt Hon Sir Keith
Evennett, David	Kellett-Bowman, Mrs Elaine
Eyre, Sir Reginald	Key, Robert
Fairbairn, Nicholas	King, Roger (B'ham N'field)
Fallon, Michael	King, Rt Hon Tom
Farr, Sir John	Kirkwood, Archy
Favell, Anthony	Knight, Gregory (Derby N)
Fenner, Mrs Peggy	Knight, Mrs Jill (Edgbaston)
Finsberg, Sir Geoffrey	Knowles, Michael
Fletcher, Alexander	Knox, David
Fookes, Miss Janet	Lamont, Norman
Forman, Nigel	Latham, Michael
Forsyth, Michael (Stirling)	Lawler, Geoffrey
Forth, Eric	Lawrence, Ivan
Fowler, Rt Hon Norman	Lawson, Rt Hon Nigel
Fox, Marcus	Lee, John (Pendle)
Franks, Cecil	Leigh, Edward (Gainsbor'gh)
Fraser, Peter (Angus East)	Lennox-Boyd, Hon Mark
Freeman, Roger	Lester, Jim
Gale, Roger	Lewis, Sir Kenneth (Stamf'd)
Galley, Roy	Lightbown, David
Gardiner, George (Reigate)	Lilley, Peter
Gardner, Sir Edward (Fylde)	Lloyd, Ian (Havant)
Garel-Jones, Tristan	Lloyd, Peter, (Fareham)
Glyn, Dr Alan	Lord, Michael
Gorst, John	Luce, Richard
Gow, Ian	Lyell, Nicholas
Gower, Sir Raymond	McCrindle, Robert
Grant, Sir Anthony	McCurley, Mrs Anna
Greenway, Harry	Macfarlane, Neil
Gregory, Conal	MacGregor, John
Griffiths, E. (B'y St Edm'ds)	MacKay, Andrew (Berkshire)
Griffiths, Peter (Portsm'th N)	MacKay, John (Argyll & Bute)
Grist, Ian	Maclean, David John
Ground, Patrick	Maclennan, Robert
Grylls, Michael	McNair-Wilson, P. (New F'st)
Gummer, John Selwyn	McQuarrie, Albert
Hamilton, Hon A. (Epsom)	Madel, David
Hampson, Dr Keith	Major, John
Hanley, Jeremy	Malins, Humfrey
Hargreaves, Kenneth	Malone, Gerald
Harris, David	Maples, John
Harvey, Robert	Marland, Paul
Haselhurst, Alan	Marshall, Michael (Arundel)
Havers, Rt Hon Sir Michael	Mather, Carol
Hawkins, C. (High Peak)	Maude, Hon Francis
Hawkins, Sir Paul (SW N'folk)	Mawhinney, Dr Brian
Hayes, J.	Maxwell-Hyslop, Robin
Hayhoe, Barney	Mayhew, Sir Patrick
Hayward, Robert	Meadowcroft, Michael
Heath, Rt Hon Edward	Mellor, David
Heathcoat-Amory, David	Merchant, Piers
Heddle, John	Meyer, Sir Anthony
Henderson, Barry	Miller, Hal (B'grove)
Hickmet, Richard	Mills, lain (Meriden)
Hicks, Robert	Mills, Sir Peter (West Devon)
Hill, James	Miscampbell, Norman
Hind, Kenneth	Mitchell, David (NW Hants)
Holland, Sir Philip (Gedling)	Monro, Sir Hector
Holt, Richard	Montgomery, Sir Fergus
Hordern, Peter	Moore, John
Howard, Michael	Morris, M. (N'hampton, S)

Morrison, Hon C. (Devizes)	Skeet, T. H. H.
Morrison, Hon P. (Chester)	Smith, Tim (Beaconsfield)
Moynihan, Hon C.	Soames, Hon Nicholas
Mudd, David	Speed, Keith
Murphy, Christopher	Spence, John
Neale, Gerrard	Spencer, Derek
Nelson, Anthony	Spicer, Jim (W Dorset)
Neubert, Michael	Spicer, Michael (S Worcs)
Newton, Tony	Squire, Robin
Nicholls, Patrick	Stanbrook, Ivor
Norris, Steven	Stanley, John
Onslow, Cranley	Steen, Anthony
Oppenheim, Phillip	Stern, Michael
Oppenheim, Rt Hon Mrs S.	Stevens, Lewis (Nuneaton)
Osborn, Sir John	Stevens, Martin (Fulham)
Ottaway, Richard	Stewart, Andrew (Sherwood)
Page, Sir John (Harrow W)	Stewart, Ian (N Hertf'dshire)
Page, Richard (Herts SW)	Stradling Thomas, J.
Parkinson, Rt Hon Cecil	Sumberg, David
Parris, Matthew	Taylor, John (Solihull)
Patten, Christopher (Bath)	Terlezki, Stefan
Patten, John (Oxford)	Thatcher, Rt Hon Mrs M.
Pattie, Geoffrey	Thomas, Rt Hon Peter
Pawsey, James	Thompson, Donald (Calder V)
Peacock, Mrs Elizabeth	Thompson, Patrick (N'ich N)
Penhaligon, David	Thorne, Neil (Ilford S)
Percival, Rt Hon Sir Ian	Thornton, Malcolm
Pollock, Alexander	Thurnham, Peter
Porter, Barry	Townsend, Cyril D. (B'heath)
Portillo, Michael	Tracey, Richard
Powell, William (Corby)	Trippier, David
Powley, John	Trotter, Neville
Prentice, Rt Hon Reg	Twinn, Dr Ian
Price, Sir David	van Straubenzee, Sir W.
Pym, Rt Hon Francis	Vaughan, Sir Gerard
Raffan, Keith	Viggers, Peter
Raison, Rt Hon Timothy	Waddington, David
Rathbone, Tim	Wakeham, Rt Hon John
Rees, Rt Hon Peter (Dover)	Waldegrave, Hon William
Renton, Tim	Walden, George
Rhodes James, Robert	Walker, Rt Hon P. (W'cester)
Rhys Williams, Sir Brandon	Wallace, James
Ridley, Rt Hon Nicholas	Waller, Gary
Rifkind, Malcolm	Ward, John
Rippon, Rt Hon Geoffrey	Wardle, C. (Bexhill)
Roberts, Wyn (Conwy)	Warren, Kenneth
Robinson, Mark (N'port W)	Watson, John
Roe, Mrs Marion	Watts, John
Ross, Stephen (Isle of Wight)	Wells, Bowen (Hertford)
Rost, Peter	Wells, Sir John (Maidstone)
Rowe, Andrew	Wheeler, John
Rumbold, Mrs Angela	Whitfield, John
Ryder, Richard	Whitney, Raymond
Sackville, Hon Thomas	Wiggin, Jerry
Sainsbury, Hon Timothy	Wilkinson, John
Sayeed, Jonathan	Wolfson, Mark
Scott, Nicholas	Wood, Timothy
Shaw, Giles (Pudsey)	Woodcock, Michael
Shaw, Sir Michael (Scarb')	Yeo, Tim
Shelton, William (Streatham)	Young, Sir George (Acton)
Shepherd, Colin (Hereford)
Shersby, Michael	Tellers for the Ayes:
Silvester, Fred	Mr. Robert Boscawen and
Sims, Roger	Mr. Ian Lang.
NOES
Adams, Allen (Paisley N)	Blair, Anthony
Anderson, Donald	Body, Richard
Archer, Rt Hon Peter	Boothroyd, Miss Betty
Ashton, Joe	Boyes, Roland
Atkinson, N. (Tottenham)	Bray, Dr Jeremy
Bagier, Gordon A. T.	Brown, Gordon (D'f'mline E)
Banks, Tony (Newham NW)	Brown, Hugh D. (Pro van)
Barnett, Guy	Brown, N. (N'c'tle-u-Tyne E)
Barron, Kevin	Brown, R. (N'c'tle-u-Tyne N)
Beckett, Mrs Margaret	Buchan, Norman
Beggs, Roy	Budgen, Nick
Bell, Stuart	Caborn, Richard
Bennett, A. (Dent'n & Red'sh)	Callaghan, Jim (Heyw'd & M)
Bidwell, Sydney	Campbell, Ian

Campbell-Savours, Dale	Loyden, Edward
Canavan, Dennis	McCartney, Hugh
Clark, Dr David (S Shields)	McDonald, Dr Oonagh
Clarke, Thomas	McGuire, Michael
Clay, Robert	McKay, Allen (Penistone)
Clwyd, Mrs Ann	McKelvey, William
Cocks, Rt Hon M. (Bristol S.)	Mackenzie, Rt Hon Gregor
Cohen, Harry	McWilliam, John
Coleman, Donald	Madden, Max
Concannon, Rt Hon J. D.	Maginnis, Ken
Cook, Frank (Stockton North)	Marek, Dr John
Cook, Robin F. (Livingston)	Marlow, Antony
Corbett, Robin	Marshall, David (Shettleston)
Cowans, Harry	Mason, Rt Hon Roy
Cox, Thomas (Tooting)	Maxton, John
Craigen, J. M.	Maynard, Miss Joan
Crowther, Stan	Michie, William
Cunningham, Dr John	Mikardo, Ian
Dalyell, Tam	Millan, Rt Hon Bruce
Davies, Rt Hon Denzil (L'Ili)	Miller, Dr M. S. (E Kilbride)
Davies, Ronald (Caerphilly)	Mitchell, Austin (G't Grimsby)
Davis, Terry (B'ham, H'ge H'l)	Morris, Rt Hon A. (W'shawe)
Deakins, Eric	Morris, Rt Hon J. (Aberavon)
Dewar, Donald	Nellist, David
Dixon, Donald	Nicholson, J.
Dobson, Frank	Oakes, Rt Hon Gordon
Dormand, Jack	O'Brien, William
Douglas, Dick	O'Neill, Martin
Dover, Den	Park, George
Dubs, Alfred	Parry, Robert
Dunwoody, Hon Mrs G.	Patchett, Terry
Eadie, Alex	Pavitt, Laurie
Eastham, Ken	Pike, Peter
Edwards, Bob (W'h'mpt'n SE)	Powell, Rt Hon J. E. (S Down)
Evans, John (St. Helens N)	Powell, Raymond (Ogmore)
Ewing, Harry	Prescott, John
Fatchett, Derek	Radice, Giles
Field, Frank (Birkenhead)	Randall, Stuart
Fisher, Mark	Redmond, M.
Flannery, Martin	Rees, Rt Hon M. (Leeds S)
Forrester, John	Richardson, Ms Jo
Foster, Derek	Robertson, George
Foulkes, George	Rogers, Allan
Fraser, J. (Norwood)	Ross, Wm. (Londonderry)
Freeson, Rt Hon Reginald	Rowlands, Ted
Freud, Clement	Sedgemore, Brian
Fry, Peter	Sheerman, Barry
Garrett, W. E.	Sheldon, Rt Hon R.
George, Bruce	Shepherd, Richard (Aldridge)
Godman, Dr Norman	Shore, Rt Hon Peter
Gould, Bryan	Short, Ms Clare (Ladywood)
Gourlay, Harry	Silkin, Rt Hon J.
Hamilton, Neil (Tatton)	Skinner, Dennis
Hamilton, W. W. (Central Fife)	Smith, C.(Isl'ton S & F'bury)
Hardy, Peter	Smith, Rt Hon J. (M'kl'ds E)
Harrison, Rt Hon Walter	Smyth, Rev W. M. (Belfast S)
Hart, Rt Hon Dame Judith	Snape, Peter
Hawksley, Warren	Soley, Clive
Heffer, Eric S.	Spearing, Nigel
Hogg, N. (C'nauld & Kilsyth)	Stokes, John
Holland, Stuart (Vauxhall)	Strang, Gavin
Home Robertson, John	Straw, Jack
Hoyle, Douglas	Taylor, Teddy (S'end E)
Hughes, Dr. Mark (Durham)	Thomas, Dafydd (Merioneth)
Hughes, Robert (Aberdeen N)	Thomas, Dr R. (Carmarthen)
Hughes, Roy (Newport East)	Thompson, J. (Wansbeck)
Janner, Hon Greville	Thorne, Stan (Preston)
John, Brynmor	Tinn, James
Jones, Barry (Alyn & Deeside)	Torney, Tom
Kaufman, Rt Hon Gerald	Walker, Cecil (Belfast N)
Kinnock, Rt Hon Neil	Wardell, Gareth (Gower)
Lambie, David	Wareing, Robert
Lamond, James	Weetch, Ken
Leadbitter, Ted	Welsh, Michael
Leighton, Ronald	White, James
Lewis, Ron (Carlisle)	Wigley, Dafydd
Lewis, Terence (Worsley)	Williams, Rt Hon A.
Litherland, Robert	Wilson, Gordon
Lloyd, Tony (Stretford)	Winnick, David
Lofthouse, Geoffrey	Woodall, Alec

Young, David (Bolton SE)	Mr. James Hamilton and
	Mr. Frank Haynes.
Tellers for the Noes:

Question accordingly agreed to.

Resolved, That a supplementary sum, not exceeding £119,218,000, be granted to Her Majesty out of the Consolidated Fund to defray the charges which will come in course of payment during the year ending on 31st March 1985 for expenditure by the Treasury in connection with payments to the Budget of the European Communities not covered by direct charges on the Consolidated Fund under section 2(3) of the European Communities Act 1972, as set out in House of Commons Paper No. 145.

Bill ordered to be brought in upon the foregoing Resolution by the Chairman of Ways and Means, Chancellor of the Exchequer, Mr. Peter Rees, Mr. John Moore, Mr. Barney Hayhoe, and Mr. Ian Stewart.