European Community

HC Deb 20 June 1985 vol 81 cc464-531 5.10 pm

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

I beg to move, That this House takes note of the White Paper on Developments in the European Community, July to December 1984 (Cmnd. 9485), of the Report to the European Council of the Ad Hoc Committee for Institutional Affairs (the Dooge Report), and of European Community Documents Nos. 11911/1/81 on a conciliation procedure between the European Parliament, the Council and the Commission, 10350/82 on stronger action in the cultural sector, 8667/82 and 4469/85 on the easing of controls and formalities applicable to nationals of member states at Community internal borders; and welcomes the Government's determination to seek early progress towards completion of the Common Market and to ensure that the easing of checks at frontiers is compatible with the fight against drug trafficking, terrorism and illegal immigration.

Mr. Speaker

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

Mr. Rifkind

The Government welcome this opportunity for the House to consider not only the report of the Ad Hoc Committee for Institutional Affairs and the other documents mentioned in the motion but the important questions to be dealt with at the Milan summit later this month. No one will dispute that that summit will be discussing issues and perhaps reaching conclusions which may chart the whole future of the Community in the next few years. It is therefore right and proper that the House should have the opportunity to condsider the issues as the Scrutiny Committee has suggested.

I intend to concentrate on the Dooge committee and other matters to be dealt with at the Milan summit. My hon. Friend the Parliamentary Under-Secretary of State will comment on the Frontier proposals, on questions of culture and on matters raised in the debate when he replies. As the House will shortly have an opportunity to consider important budgetary and own resources questions, I shall not comment on those matters today apart from some brief observations on one point referred to in the White Paper regarding budgetary discipline.

In the recent disagreement among Agriculture Ministers, the German Government used their veto in relation to cereal prices. It has been suggested that that was clear evidence of the Community's inability to consider proper budgetary discipline. Two simple points should be borne in mind by those who make such accusations.

First, this was one of the increasingly frequent but still all too rare occasions when the dispute was not about a price increase but about the appropriate size of cuts. The Agriculture Ministers had already agreed cuts throughout the whole range of agriculture prices apart from cereal and rapeseed. Even on the latter two commodities all the Community Governments, including the Germans, accepted the principle of cuts but disagreed about the appropiate size. That is substantially different from the type of debate that used to take place just a few years ago.

Secondly, in the past the United Kingdom was always in a minority of one to nine on these matters. On this occasion the voting was nine to one but we were in the majority. All member states, including the United Kingdom, supported the principle of reduction so that instead of arguing a lonely case we were in the company of the French, the Italians and the vast majority of other member states.

Mr. Tony Marlow (Northampton, North)

My hon. Friend seems to be suggesting that sense and reason have suddenly broken out in relation to the common agricultural policy, but can he say by how many percentage points the proportion of the total Community budget taken up by the common agricultural policy will be lower this year than it was last year?

Mr. Rifkind

Under the provisional draft budget proposed by the Commission agricultural expenditure would be about 64 per cent. of total Community expenditure compared with 71 per cent. in the current year. Those are the latest figures available.

Mr. Nicholas Budgen (Wolverhampton, South-West)

What assumptions are made about the value of the dollar?

Mr. Rifkind

The Commission has to work on the basis of the information available to it. It is no more able than any national Government to speculate about future trends in exchange rate. No one can suggest that the Commission, the Community or the Council of Ministers should be blamed for exchange rates over which they have no control.

Mr. Budgen

What are the assumptions?

Mr. Rifkind

The Commission works on the facts available to it at this stage, not on vague assumptions of the kind to which my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) seems to be addicted.

Mr. Teddy Taylor (Southend, East)

Is there not a danger of the Minister inadvertently misleading the House by suggesting that price levels relate to budgetary discipline? In fact, the consumers pay the food prices. The Common Market pays the dumping and storage costs. Does my hon. Friend agree that £7,000 million per year or £20 million per day is spent on the storage, dumping and destruction of food surpluses and that there is no suggestion in next year's budget or anywhere else that that expenditure will be reduced?

Mr. Rifkind

My hon. Friend may be surprised to know that the Government share his desire for important reforms in relation not just to the dumping of surpluses but to their creation in the first place. I believe that the whole House is united on that.

Mr. Budgen

Will my hon. Friend give way?

Mr. Rifkind

My hon. Friend will forgive me if I do not give way to him again. I am sure that he will have an opportunity to participate in due course.

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

This is the official Opposition rather than the unofficial opposition. Will the Minister confirm that the EEC budget has been drawn up on the basis of a 3 per cent. cut in cereal prices? If that is not achieved, will there be a request to member states for a loan or some kind of reimbursable advance?

Mr. Rifkind

The Commission has said that in the absence of an agreement on cereal prices it is taking certain administrative actions on the basis of a 1.8 per cent. reduction in cereal prices. Those proposals could be changed if a decision is reached by the Council of Ministers on a different level of reduction.

Mr. Foulkes

That is exactly my point. If the operation is based on 1.8 per cent. and the budget on 3 per cent., there will be a shortfall. How will that shortfall be made up? Will it be made up by means of a further loan or what is known as a reimbursable advance requested from member states? In other words, will we be asked for more money?

Mr. Rifkind

The Commission proposals for a 1.8 per cent. reduction in cereal prices are entirely consistent with the permitted framework for agriculture expenditure arising from the Fontainebleau mechanism. I hope that that will reassure the hon. Gentleman and his colleagues.

On the Dooge report and the Milan summit, since the Fontainebleau agreement the British Government have been able to concentrate their activities on putting forward major improvements in the working of the Community across a wide range of issues. A significant factor in the past 12 months has been the extent to which, for the first time in many years, the Community has ceased to be obsessed with the single dominant issue of United Kingdom relations with other member states. That is a matter of great satisfaction to the Community as a whole as well as to the United Kingdom. As a result, the British Government can now take on the role in the Community that many people believed that we could take from the moment of joining some 10 years ago.

In the Dooge committee, in the informal meeting of Ministers at Stresa and in relation to the forthcoming Milan summit, the United Kingdom has taken the initiative on a wide range of issues including political co-operation, completion of the internal market, improved decision-making, political co-operation on other aspects of foreign policy, and other important subjects. Our approach to these questions is to be progressive and idealistic but to insist on a hefty dose of realism in the various reforms put forward for consideration within the Community.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

Do I understand that the Minister said that the Government are progressive and idealistic?

Mr. Rifkind

I most certainly did say that. It is sensible for the Government and for the United Kingdom to be idealistic in their attitude towards the European Community. I also emphasised that we believe, unlike the hon. Gentleman and his colleagues, that idealism should always be balanced by sound common sense. Indeed, that is the basis of our approach. We are often sceptical about the various initiatives that are proposed in some quarters, but we are never cynical about the need for change and progress in the European Community. Traditionally and rightly, the country is cautious when serious and radical proposals are put forward to change institutions. I do not believe that such caution is a matter of shame, nor should it be a source of embarrassment. A policy based on realism, common sense and caution is quite consistent with the original ideas of the European Community. Jean Monet, one of its founders, said that Europe would be built one step at a time. That is also the view of the Government.

Some of the specific proposals that are discussed in the report of the Ad Hoc Committee for Institutional Affairs will undoubtedly be considered at the forthcoming summit in Milan. There are three main issues on which the Government hope there will be progress at Milan—the completion of the internal market, the improvement of political co-operation and improvements in decision-making in the Community.

With regard to the internal market, the United Kingdom is probably one of the first countries in the Community to emphasise the extent to which the Community has failed to implement one of the obligations under the treaty of Rome.

For some time we have emphasised the need for steps that will result in the completion of the internal market. Such steps should be greater than the simple declarations of intent and should involve practical measures and form a timetable for these matters to be implemented. Those proposals, which I in my capacity as the Britsh representative on the Dooge committee put forward, were unanimously endorsed by that committee in its recommendation to the European Council. We were delighted when Mr. Delors, the new President of the Commission, said, in his opening speech, that he also regards as a priority the completion of the internal market by 1992. It is a target to which he and the Commission are firmly committed and for which they intend to press with all the strength at their disposal.

Earlier this week we published the White Paper of Lord Cockfield, the Senior British Commissioner in the European Commission, which makes many proposals for harmonisation and approximation of laws which the Commission argues are necessary and desirable for the completion of the internal market. The Government welcome that document and the broad thrust of its proposals, especially the target date of 1992 and the detailed way in which it states that it hopes that the proposals will be implemented.

There are some 300 proposals for harmonisation in that White Paper and we shall examine each in close detail. It might be helpful for me to give the Government's attitude about harmonisation. We do not believe in harmonisation for its own sake. When harmonisation or approximation of laws assist, the improvement of competition in the Community and benefits consumers and the public generally, the advance is desirable. However, if it is not possible to demonstrate such advantages for people, the Community or the economic interests of member states, harmonisation is unnecessary and undesirable.

Mr. Marlow

As my hon. Friend knows, in Brussels, many of these things are put together in a batch—"We scratch your back and you scratch ours." Can he give a commitment to the House that, if faced with three measures, two of which are good and one of which is bad, he will still decline the bad one?

Mr. Rifkind

I am sure that my hon. Friend realises that the Government would never wish to accept or agree to a proposal that they believed was contrary to the interests of the United Kingdom, whether it be one out of three or one out of 53.

Most of the proposals in Lord Cockfield's White Paper seem highly sensible and attractive at first glance but in one example—tax harmonisation or approximation—the case has not been proved. The case has been put forward by the committee and we shall consider the proposals in close detail and in a constructive spirit. However, we do not believe at this stage that the case has been argued with sufficient conviction that, to achieve an internal market which will encourage competition and benefit trade and economic development such as we would like, we must achieve tax harmonisation.

The United States has 50 separate states, many of which have their own direct and indirect taxes. We have not yet heard a convincing argument that those differences have led to inadequate competition or an inadequate internal market there. That factor is of interest to the United Kingdom, but the United Kingdom is not alone in having strong views on the matter. Some member states would have to make even more substantial changes than the United Kingdom if tax harmonisation were adopted in the Community.

If we take the example of excise duties, for example, we find that if France were to harmonise its wine duty there would be an increase in excise duty of no less than 229 per cent. which is unlikely to be popular in France. In Germany, approximation of excise duty on beer would require an increase of 223 per cent. In Italy, approximation of tax on diesel would require an increase of not less than 886 per cent. In Greece, the approximation of excise duty on spirits would require an increase of over 2,500 per cent. This is clearly a matter of controversy in the Community and the Government will consider such evidence as may exist on how tax harmonisation or approximation would assist the objective of the internal market and improvement of the prosperity of the Community as a whole.

Mr. Teddy Taylor

Although I welcome what my hon. Friend said about one of the points in Lord Cockfield's White Paper which was considered vital for the completion of the Community, will my hon. Friend make it abundantly clear that the Government are not prepared to depart from their consistent, oft-repeated policy that they will not impose value added tax on food, gas or electricity?

Mr. Rifkind

My hon. Friend is aware that that is a matter for my right hon. Friend the Chancellor of the Exchequer. My hon. Friend will not expect me to speak on such matters. However, I am aware of no proposal to do anything of that kind.

Mr. Nigel Spearing (Newham, South)

Before the hon. Gentleman leaves Lord Cockfield's White Paper, can he put us in the picture procedurally? Is it not a fact that this is not a White Paper but a communication from the Commission? Secondly, has that communication been officially received by the Government and will it be presented to the House? Will it be discussed formally or informally at the Milan summit?

Mr. Rifkind

I confirm that the White Paper is a communication from the Commission as a whole and not from an individual commissioner, though the noble Lord has taken a leading role in its preparation. I hope that the document is currently available in the Library. The Government have received it in the last few days. There will undoubtedly be a general discussion about the internal market at the Milan summit, and the subject will be raised by some of those present. Given that this is a series of proposals from the Commission, I would not expect a decision on tax approximation either to be reached or sought as early as the Milan summit.

Mr. Budgen

I should be grateful if my hon. Friend would take the opportunity of commenting on the proposal on page 15 of the Dooge report called Gradual establishment of a homogeneous judicial area because it suggests that the European Court of Justice may play an even more important role in future. That may show that the Government are in favour of encouraging people, such as Myra Hindley, further to undermine the supremacy of Parliament by appealing against—[Interruption.] The European Court of Justice is referred to in the document as part of the European family of institutions. Would my hon. Friend be good enough to descend to detail, to look at page 15 and to say what the Government's position is?

Mr. Rifkind

I am sorry to say that my hon. Friend seems, somewhat unusually, confused. As I understand it, Miss Hindley's potential application is to the European Court of Human Rights. I am not aware of a suggestion, either in the Dooge report or elsewhere, that people in her position would be able to appeal to the European Court of Justice. Certainly, the European Court of Justice's present terms of reference and its likely competence in the foreseeable future make it improbable that such an application would be competent for it.

Mr. Eric Forth (Mid-Worcestershire)

This is an important point, and there should be no confusion about it. On page 15 of the Dooge document it states that the establishment of a homogenous judicial area means increasing protection of fundamental freedoms and rights as they derive from common basic principles and the European Convention on Human Rights. Therefore, the convention is mentioned in the Dooge document and forms the basis for the activities of the Court of Human Rights in Strasbourg.

Mr. Rifkind

I thank my hon. Friend for his question, which was intended to be helpful. I am not sure whom it was intended to help, and perhaps I should have asked him before I gave way. Neither the British Government nor other Governments intend to contemplate giving to the European Court of Justice competence for dealing with such matters. I am not aware of a proposal to that effect from any member state, nor do I believe that it is likely.

I shall now deal with the second main issue, which will be of considerable importance at the Milan summit—the question of political co-operation. In many respects political co-operation is one of the success stories of the Community. During the past 15 years a substantial habit of close co-operation and consultation has developed between the member states on matters of foreign policy. Indeed, political co-operation is an excellent example of how, without any amendments to the treaty, it is possible for member states to develop and achieve close co-operation and consultation on matters of mutual interest. The United Kingdom benefited considerably from the strong unanimous support given by member states when the Falkland Islands were initially invaded. The European Community, through the Venice declaration, made a substantial impact on the thinking on matters affecting the middle east.

The Government's proposals at the Stresa meeting of Foreign Ministers are intended to improve political co-operation. First, we believe that it is highly desirable that at this stage in the development of political co-operation a small secretariat should be established to assist the Presidency of the Council of Ministers at any given time. Because the Presidency changes every six months, there is insufficient continuity, which causes problems. It is widely recognised that there should be a small secretariat. No one, and certainly not the British Government, wants an unwieldy bureaucracy or anything other than the minimum required to assist Community Foreign Ministers.

Secondly, it is desirable to see progress made to enable the Council of Ministers to discuss issues affecting other parts of the world, and to involve themselves in questions of security. Clearly, there is an important distinction between security and defence. Given the fundamental commitment of most member states to the NATO Alliance, it would not be appropriate for the 10 Foreign Ministers to involve themselves with issues of defence. Clearly, there are political implications to matters such as East-West relations, the attitude of Western Europe to the countries of Eastern Europe, and the consequences of development in NATO and elsewhere. In the view of the British Government and most of the Community Governments, it is desirable that such matters should be available for discussion by the Council of Ministers when they meet in session.

Mr. George Robertson (Hamilton)

In what way would that complement or conflict with Western European Union?

Mr. Rifkind

As the hon. Gentleman will know, Western European Union is primarily concerned with defence, as is the North Atlantic Alliance. The Community should be primarily concerned with political implications rather than defence implications, especially as countries such as Ireland are not members of the Alliance, and other countries in NATO are not members of the Community. Therefore, it is necessary to make a distinction. I concede that there is no neat and easy line of demarcation. However, it is helpful and sensible for EC countries to be able to consider East-West relations and attitudes, and other such matters.

The third main question, which the House will consider to be the most important, relates to decision-making within the Community, the national veto, and the objective of majority voting. Some people suggest that in recent years the Community has been experiencing a form of paralysis in its inability to make progress on matters of supreme importance. The British Government do not accept that. Although progress has been slow, the agreement at Fontainebleau, the success of enlargement negotiations and other recent important developments show that the Community is able to reach decisions.

With 10 member states it is not suprising that the Community takes a considerable time to reconcile the often different traditions and interests of member states, and to reach agreement. We believe that, although progress has been made, it is sensible to consider ways in which quicker, more effective progress can be achieved, especially in the light of the imminent enlargement of the Community to include Spain and Portugal. Clearly, a Community of 12 member states will find it even more difficult to reach agreement on a wide range of issues.

The Government believe that it is desirable to encourage more majority voting within the Community. We should like to see more majority voting under those clauses of the treaty that already provide for majority voting, and where the practice has grown up for the Presidency not to ask the Council to reach a decision, unless the Presidency is already assured of a unanimous response. We do not wish to see a change in the treaty, nor do we see a need to consider amendments to the existing treaty. However, on a wide range of issues where there is an overwhelming and qualifying majority, it should be normal to proceed to a vote, and for the Council to come to a decision. I must emphasis that our support for more majority voting within the Community can be forthcoming only on the basis of a continuation of the right of national veto when matters of important national interest are at stake.

The Government believe that it is right to keep a balance between a general increase in majority voting in the Community and those occasions when important national interests are at stake and the member state will wish to continue to have a fundamental right to insist that discussions should continue until agreement is reached. We do not wish the veto to be abused. We wish to ensure as far as possible that member states are discouraged from using the veto in matters that are not of vital national interest. Ultimately, that must be left to the discretion of the national Government. We cannot accept the suggestion that any member state would be able to determine what was, or was not, of vital national interest to another member state.

Mr. Hugh Dykes (Harrow, East)

Would my hon. Friend agree that, because Governments have far too frequently emphasised the importance of the veto and suggested that it should be applied to matters of less than grave and profound national interest, they have not been able to condemn, for example, Germany's selfish refusal to agree to increased cereal prices? if there had been a more positive attitude towards the importance of majority voting, that action could have been condemned, as it should have been, by other member states. Indeed, the Germans might have hesitated before taking that drastic action.

Mr. Rifkind

I must emphasise that, although we disagreed with the German Government about the desirability of their action, we were emphatic that they had the absolute right to take the action if, in their judgment, a matter of vital national interest was at stake. That was the view not only of the British Government but of all the member states, apart from the Benelux countries and Italy.

Mr. William Cash (Stafford)

The Dooge report states at page 26: When a Member State considers that its very important interests are at stake, the discussion should continue until unanimous agreement is reached. The footnote states that my hon. Friend the Minister considers that, in order to prevent abuse, a member of the Council insisting that discussion should continue in this way should, through a special procedure of the Council, explain fully and formally why his Government considers that a very important interest is at stake. In other words, reasons should be given. Could my hon. Friend explain more about that?

Mr. Rifkind

I had intended to do so, before the interventions. Although we believe that the national veto should remain, we should attempt to discourage its use for relatively trivial matters. The British Government have put forward proposals that will help towards that end.

There is rarely a vote in the Council. Those who wish to block progress sometimes need not publicly identify themselves and need never produce public justification for their actions. They must merely show their inability or unwillingness to support a proposal. The matter is put off until another day in the hope that their view might change. We believe, as do many member states, that if it is clear that a majority of the Community wishes to move in a particular direction, the normal procedure should be that the Presidency calls for a vote. Those who wish to block progress by invoking the veto should be required to do so publicly and, if necessary, produce a public explanation as to why they believe that there is a vital national interest at stake, instead of being able to do so privately and without revealing themselves. That would not prevent a member state using the veto procedure whenever it chooses but it would ensure that a Government would have to balance the domestic political advantages of using the veto against the political disadvantages in terms of their relationship with the Community and their objectives in other areas.

Mr. J. Enoch Powell (South Down)

When the Minister uses the expression "publicly", is it now envisaged, as many of us have long thought should be the case, that the proceedings of the Council should be public and reported, since the Council is the legislature of the Community? How, otherwise, can the declaration be public?

Mr. Rifkind

No such specific proposal is being considered, but the British Government have said that they would positively welcome the introduction of a procedure whereby, when the veto was invoked, the reasons given to the Council of Ministers as to why a vital national interest was at stake are subsequently made public knowledge. We have put forward that proposal, and we are willing to consider modifications to it to help to achieve the objective that we have identified.

Another matter that we would wish to encourage, as was suggested by my right hon. Friend the Prime Minister and by the Dutch Prime Minister at the Dublin summit, at the beginning of this year, was that, in some areas where unanimity is presently required, if a member state wished to abstain rather than to oppose a measure, it would be possible for progress to be made notwithstanding the unanimity provisions of the treaty. Clearly, that would be at the discretion of the Government concerned, who would not be bound to act in that way.

The completion of the internal market, the improvement of political co-operation and the improvement of decision-making would, if agreed to by member states, represent a substantial and healthy package which would be of significant importance to the future of the Community. However, other matters are likely to be considered at the Milan summit, and I wish to speak briefly on some of those. First, we welcome the French proposal for EUREKA—for co-operation on European high technology—because we recognise the desirability of Europe achieving true competitiveness with the United States and Japan. But, as President Mitterrand has already said, the present problem is not inadequate expenditure on research. Indeed, Europe spends more on research than does either the United States or Japan. Therefore, the objective must be to achieve better value for the expenditure that is already being incurred by closer co-operation and co-ordination of our efforts.

Some people would like major changes to be made in the powers of the European Parliament. The British Government believe that the European Parliament has significant powers and that it should concentrate its efforts on the responsible use of its existing powers, not on considering whether they should be changed or increased. However, we are willing for the European Parliament to try more effectively to influence the Council of Ministers when matters are being considered, for the simple reason that, at present, the European Parliament's view is often made known only when the Council of Ministers has already made up its mind. That is unlikely to lead to its views being taken into account. We have introduced proposals that would enable the European Parliament's view on any proposals of the Commission to be considered at a much earlier stage, so that when the Council of Ministers is reaching its conclusions on such matters it is aware of the views of the European Parliament and can take them into account in a sensible and constructive way. We do not believe in joint decision-making between the Council of Ministers and the European Parliament, as some have advocated. The decision-making right rests with the Council of Ministers, as it has done for many years. But we should welcome the opportunity for the Parliament to let its views be known in the way that I have suggested.

Mr. Dykes

Further to the interesting suggestion of the right hon. Member for South Down (Mr. Powell) about the Council of Ministers—being a legislative body, not a policy body—being susceptible to public hearings, does my hon. Friend believe that the committees of the European Parliament should hold all sessions in public, or more sessions in public, rather than excluding the public and the press, as they now do?

Mr. Rifkind

That is for the European Parliament to determine, but we would welcome anything that might lead to an improvement in the reputation of the Parliament and its ability to influence developments constructively. However, it must be for the Parliament to decide whether that proposal would enhance its objectives in the desired way.

The last matter on which I wish to comment is the proposal made by the majority of the Dooge committee, and which we have heard from some other quarters, that we should convene an intergovernmental conference to consider the future of the Community and to make recommendations to the Heads of Government on any changes that may be forthcoming. The Government, and a substantial number of other member Governments, do not see any necessity for an intergovernmental conference such as is proposed. One could say with some justification that the best intergovernmental conference is the European Council itself, being the body of Heads of Government whom we hope will be able to reach decisions at Milan on the matters that are to be considered. Those who wish to see an intergovernmental conference of the kind recommended by the majority in the Dooge committee, with a view to amending the treaty, are misguided about the best way of making progress in the Community.

Once one embarks on the road of treaty amendment, one must bear in mind that, in whatever area it is amended, it will require not only the unanimous agreement of all 12 member Governments but the unanimous ratification of all 12 national Parliaments. Even if any proposals were considered to be acceptable, at the least we would be contemplating a delay of one, two or possibly even three years before such a process would be complete. Her Majesty's Government believe that major progress can be made at the present time without amending the treaty and we would wish to see discussion focused on the particular issues that I have discussed.

Mr. Eric Deakins (Walthamstow)

Will the Minister confirm that the discussion on the documents that we are considering this afternoon is taking place on a motion to take note? Will he confirm that Her Majesty's Government will not, therefore, deduce from today's discussion that the House approves of any or all of the recommendations in the documents?

Mr. Rifkind

I happily accept that. As the hon. Gentleman correctly says, the motion is a take-note motion and in any event it would have been the intention of Her Majesty's Government to report to the House after the Milan summit. If any significant decisions are reached at Milan, it would be right and proper for the House to have an opportunity to consider them and express its views on them. Any position taken by member Governments at Milan will be subject to the proper opportunity of their national Parliaments to consider any decisions that have been reached.

I look forward to the contribution that the Opposition will make to the debate. I regret that their amendment incorporates none of their ideas on the overall future of the Community. I can understand the reasons for that and I appreciate the difficulty for the hon. Member for Hamilton (Mr. Robertson). The only significant development made by the Opposition in the past year has been to sack Mrs. Barbara Castle as the leader of the Labour Members of the European Parliament. I hope that the hon. Member for Hamilton will join me in saying how much he regrets the sacking of Mrs. Castle by her colleagues and that he will recognise her as a person of considerable experience. Although we disagree with many of her views, she is able to make a serious contribution to the work of the European Parliament. We note that her successor seeks to see Britain withdraw from the Community and that his views are totally at variance with those of virtually the entire Socialist group in the European Parliament. I look forward to the hon. Gentleman's comments on that matter.

Her Majesty's Government believe that Britain is making an important and constructive contribution towards the vital debate about the future of the Community. We have had considerable discussions about the sort of harmonisation that is appropriate in the European Community. The Government do not believe in harmonisation for its own sake or that every member state should be encouraged to lose its own national identity. We believe that we should seek to bring together the countries of the Community where closer co-operation makes obvious sense.

Perhaps our objective and our attitude were best summed up in a remark made by G. K. Chesterton many years ago, before the European Community was ever conceived of, when he said: The golden age of the good European is like the heaven of the Christian: it is a place where people will love each other; not like the heaven of the Hindu, a place where they will be each other. That is not an unreasonable approach to take in our overall attitude towards the European Community. We seek to see the member states of the Community coming together in ever closer co-operation. We seek to see them join together where joint action makes sense and is beneficial to the citizens of our respective countries. It is on that basis that I ask the House to take note of the documents referred to on the Order Paper.

5.55 pm

Mr. George Robertson (Hamilton)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: calls on the Government to ensure that proper control is exercised over the Common Agricultural Policy; expects the Government to take all possible steps to ensure that expenditure is made subject to effective limits and urges the Government to use the British veto as necessary to protect very important national interests; urges the Government to ensure that areas in Britain with special needs receive a proper share of the regional aid budget; believes that the European Council should be fully engaged in planning jobs and giving particular attention to youth employment and should not dilute its energy by focusing on less important goals; urges the European Council to cut the burden of bureaucracy and to reduce the number of Community rules and regulations; and urges the Government to resist any proposals to dismantle border controls which would interfere with its ability to combat terrorism and drug trafficking.". We in the Opposition are extremely glad that, even late in the day, the Government are debating in the House the major issues which will come before the Heads of Government conference at the European Council next weekend in Milan. It is not before time that the House of Commons had its opportunity to have a say on the great issues that preoccupy those who run the affairs of state in the European Community. A mere eight days before the summit, it would be fair to say that it is somewhat late for the House to have such a discussion. However, the Opposition have tabled an amendment in reasonable terms sufficiently criticising those aspects of the Community that we consider worth criticising. We hope that, in the light of the spirit in which it is moved, the Government will join us in a common approach to these problems.

Mr. Marlow

The hon. Gentleman mentioned the Opposition. Perhaps he would like to take the opportunity to explain to the House where the Opposition are today.

Mr. Robertson

If such remarks are going to characterise the comments made by the hon. Gentleman, I shall not give way to him again.

From the Minister's point of view, it is interesting that the vast majority of Conservative Back Benchers are here to attack rather than support the Minister. That will become apparent as the debate progresses.

The Minister rightly said that we need to pay special attention to the conclusions and proposals of the Ad Hoc Committee for Institutional Affairs, the Dooge committee, on which the hon. Gentleman sat as the Prime Minister's personal representative. The Dooge committee was set up to look at the problems that are presently afflicting Europe. It was intended to scythe through the tomes of paper, the miles of minutes and mountains of speeches, and to establish a blueprint for the new Community. Yet that committee was to turn out a mouse. It is destined to be a mouse of the wrong breed, colour and generation, and as a result to be thrown out of the litter. It is peppered with caveats and surrounded by reservations; notes of exception and explanation are all about; and now even the most acceptable recommendations look threadbare only a few months since its presentation. Lord Wilson once said: A week is a long time in politics. Two months in the European Community is an eternity.

There has been talk of European union, of new treaties, of majority voting, and of the outlawing of the veto. There have been dreams of an intergovernmental conference, of a dynamic, thrusting, reinvigorated European Parliament, of a shining new external identity for the Community; and they all lie in the dust of a couple of months of the real European world. More than anything they lie in the wake of the cloud of high phrases, lofty ideals and naive aspirations, which were to founder significantly on a 1 per cent. increase in cereal prices.

Mr. Robert Jackson (Wantage)

Is the hon. Gentleman by any chance referring to the Leader of the Opposition's call for a new Messina conference some years ago?

Mr. Robertson

The hon. Gentleman refers to the call for that conference, but not to the context in which it was called for.

I shall deal with the Opposition's proposals and our positive ideas for using the Community for the betterment of all citizens in the Community. The only support for the more extreme and full-blooded approach of the Dooge committee comes from the Members of the European Parliament who represent the British Conservative party. The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) makes great play of the internal machinery of the British Labour group, but he would be wise to look at the voting record of the Conservative group. It has accepted a number of the radical suggestions that the Minister this afternoon dismissed as unreal and not fitting the context of the idealism epitomised by the Prime Minister and her Government.

Mr. Rifkind

Would the hon. Gentleman use this opportunity to say whether he agrees that the dismissal of Mrs. Castle is greatly to be regretted and that it is most unfortunate that the Labour group at Strasbourg is now led by someone who is committed to taking Britain out of the European Community? We are entitled to know the views of the official Opposition.

Mr. Robertson

I do not know what on earth that has to do with this House. Mrs. Castle was not dismissed. She stood in an election and somebody else won it. She has served with great distinction this House, the country, and the Labour party and she accepted with dignity the decision that was taken by the Members of the European Parliament who serve on behalf of the Labour party.

All that we are promised at the Milan summit next weekend are cosmetic formulas about majority voting, palliatives for the European parliamentarians and yet another vision, this time from the reborn Lord Cockfield, of a Europe without lorry queues, passports and tax differences. It is small wonder that the meeting of the Foreign Affairs Council this week turned from a two-day event to a one-day event that had security at Athens airport at the top of its very thin agenda. The lesson of this latest attempt to drag up yet again the roots of the European Community to examine whether they are growing is that one is looking at the wrong plant.

What is the European Community today? It is a conglomeration of 12 countries, all of them in the teeth of a recession; all of them with high and static unemployment levels and with worrying levels of young people out of work; all of them agonising in the face of competition from Japan, the low-wage economies of the far east and the expansion-led boom in the United States of America; all of them practising different economic policies; all of them part of the European Community, with all of them paying lip service to its objectives but all of them, this nation included, doing their own thing whenever the common rules do not suit them.

One stark fact stands out above all others: 14 million citizens of the European community of nations are without jobs, and two out of every five of them are under the age of 25. I am sure that the British people will notice that during the Minister's 50-minute speech this afternoon he did not utter one word about unemployment, or express one degree of sympathy for the unemployed millions across Europe, and that he did not offer a single suggestion about how the European Community could reform itself so that some of the 14 million might find work.

That issue should be concentrating the minds of the Heads of Government next weekend. It should be galvanising action for growth and employment among the leaders of the European Community. That fact alone should be at the top of the agenda of every meeting of every committee. The fact that it is not and that it remains the great unmentionable, both in Brussels and in the Minister's speech, signifies the paralysis that affects the European Community today. It underlines the cynical betrayal of the jobless generation who seek work, a future and hope but who see the councils of this immense community of nations playing, even tinkering, with institutions when what is missing is the political will to act. Without that political will and an agreed commitment to take joint action for growth, all the institutional tinkering in the world will be seen as an irrelevant and distracting sideshow in the face of the plight of these people.

The sad, bitter truth of the exercise that was the Dooge committee was that it followed the path of the dreamers and idealists whose vision ignored present problems and imagined that by institutional devices—some new and some reworked—a new direction would be discovered. The French veto, whether official or unofficial, on a new round of GATT talks and the spectacular German veto on grain prices was all that was needed to dispel the clouds of emotional rhetoric which curtained off the genuine dilemma facing the people of Europe.

I concede that there is a place for dreamers and visionaries, but I give my voice—and I know that my party would give its voice — to those who dream of work, of secure incomes and of no poverty, whose vision is of a prosperous, growing European economy that is able to deliver the goods to its people.

Sir Russell Johnston

Does that mean that the Labour party has ditched idealism for pragmatism?

Mr. Robertson

I should like to take this opportunity of congratulating the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) upon his elevation to the knighthood. I do not know whether that signifies anything about his idealism, but I know that the House will warmly welcome his elevation to the Establishment. The answer to his question is no, it does not mean anything of the sort. The Labour party is as committed to the ideal of full employment as it ever was, but the idealism that we envisage for the European Community relates to what it can do for the people of Europe, not to the kind of institutions that it can erect as memorials to great statesmen.

Mr. Dykes

Does that mean that the Labour party is also officially committed to Mr. Lomas's manifesto objective of taking Britain out of the European Community?

Mr. Robertson

The Labour party is committed to the manifesto of the Labour party, not to the individual views of either that spokesman or the spokesman in the European Parliament.

The Dooge committee made no precondition about co-ordinated expansion, or research programmes, or any protection for areas that are likely to be casualties because of the envisaged new competition; nor, more importantly, did it look at the absurdity and the irony of the uncontrollable, unreformable common agricultural policy. How, in all conscience, can we look to a revamped, reorganised, freshly committed European Community without facing the contradictions of the CAP? It swallows the Community's cash. Its appetite for resources leaves all the other spending programmes savaged. The CAP stocks up obscene mountains of food as we watch every night on television millions of starving people, yet it cannot efficiently move the stockpiles to the places where the food would be useful.

The CAP is becoming the common market, and it is the obstacle to real action. It is the obstacle to research projects and to progress on energy, industry and even reorganisation. Its pre-emption of over 74 per cent. of Community resources, however the Minister of State may choose to interpret the figures for the coming year's budget, reduces all other programmes to a joke, yet the Dooge committee ignored it and in the process devalued the purpose of the exercise. The CAP has made a mockery of budget discipline. The eternal promise from each summit and the Bill that we shall be debating next Tuesday demonstrates what budgetary discipline really means—the football hooliganism of European accountancy.

May I now deal with the central, specific recommendations of the Dooge committee: the abolition of the veto in meetings of the European Council, increased powers for the European Parliament, and reform of the internal common market. First, nobody minimises the frustrations of the European Members of Parliament who are denied any real role in the European Assembly. They are caught up in the web of bureaucracy and the lost direction of the Community. However, that alone is not a reason for increasing the powers of the European Parliament. There appears to be a degree of unanimity between the Government and the Opposition on that point.

The committee's suggestion with respect to new powers over revenue raising is a move into dangerously uncharted territory and towards a form of federal union that would not be acceptable to most of Europe's national Parliaments. The idea floated in this document is not backed up with any full measurement of the move's significance and consequences, and it has little future. The European Parliament does not need an increase in its competence to be more effective. It must use its existing competence more efficiently. Given the political inertia of other Community institutions, it is both desirable and within the European Parliament's existing powers to put forward more positive initiatives. I strongly endorse the point made by the hon. Member for Harrow, East (Mr. Dykes): the fact that the European Parliament's committees are not open to the public is not something of which it should be proud.

Mr. Marlow

If the hon. Gentleman does not want to increase this institution's influence and competence, would it not be better to refer to it as the European Assembly? It is not a parliament. It does not have legislative powers. If people increasingly refer to it as a parliament, they will give it ideas beyond its station and it will want to increase its influence and competence. If, like me, the hon. Gentleman would like to keep that institution in the position for which it was designed, will he refer to it as the European Assembly?

Mr. Robertson

I am always willing to take advice from my betters, but I think that the courtesy title of "Parliament" will be sufficient, although it is an Assembly, as I have said.

With the abolition of the veto we are moving into an apparently much more radical idea where pie in the sky has been elevated to a political ideal. The past few weeks have seen the first use since 1967 by the Germans of the veto. That was over a modest—one might even say feeble—attempt to restrict agricultural spending this year. The past few weeks have also seen the threatened veto by France in another GATT round. Today's newspapers show that Germany is again willing to exercise its negative power over the recent agreement to curb vehicle exhaust fumes. This is the reality behind the rhetoric.

Everyone says that he wants majority voting—as if that panacea alone would answer all the unanswered problems—but no one is willing to give up the veto. Hans Dietrich Genscher, the German Foreign Minister, was quoted in yesterday's newspapers as saying that he disagreed with the German Government's use of the veto. I am tempted to suggest that the degree of unity in the German coalition is almost as close as the unity in the Conservative coalition in Britain — and just as successful, judging by recent election results. One newspaper article stated: Mr. Genscher indicated in the interview that he had disapproved of the German veto, and said it underlined how vital it was to make changes so that similar conflicts could not recur. We have the dramatic situation in which the Germans are strongly and enthusiastically in favour of eliminating the veto so that the German Government will not feel tempted to use it and all the threats that follow its use. Although the Minister of State has advocated greater use of majority voting, he has not spelt out where and when that will happen.

One must of course make the reservation that individual states will always protect their national view. It is inconceivable in a community of sovereign states that the right of each nation to define its national interests should not be integral to the Community's structure. That right cannot simply be wished away. The European Community is not a federation, even if some pretend that it is or would like it to be one. It would be more honest if the Government were to rely less on vague pronouncements of "more majority voting" and instead spelt out the precise areas where they would wish to reserve the right to protect the nation's interest. The Government have not done that so far. Are they to save this remarkable formula for Milan, or is it all part of the general Europe ideology which seems to be bound up with the general debate on this summit?

I turn to the question of the internal market, the sweeping away of frontiers, border controls and barriers to trade, both visible and invisible. Just in time for the summit, along comes this true-blue blueprint in the somewhat improbable shape of the exported Lord Cockfield, who has shot to fame with a vast report, which became available only today, demanding an immediate full Common Market.

I draw the attention of the House to an article in the Financial Times on Tuesday this week in which, remarkably and unusually, the headline told more than the text. The headline stated: Lord Cockfield: Little to lose and he knows it … The article went on to eulogise his ideas. It stated: When Lord Cockfield stood before the Press on Saturday to present his White Paper on Completing the Internal Market to the public, he waxed positively lyrical. His presentation was delivered in the same slow, almost pedantic way which must have infuriated his British Cabinet colleagues. But the content was thunderous rhetoric… 'it will fundamentally alter the face of Europe for the rest of our lifetimes'—and even a few well-placed jokes. His Lordship was in his element. Later this glowing tribute to Lord Cockfield—he was peremptorily dismissed from the Prime Minister's Cabinet without any election—stated: When it became clear that he was determined to press ahead with the idea of fiscal reform—bringing the indirect tax rates of member states roughly into line, so that frontier tax checks would prove superfluous—the idea caused consternation to the Treasury. Lord Cockfield was summoned back to Downing Street to explain himself. The independent commissioner was hauled back by the Prime Minister to explain his revolutionary concept for Europe. Today, the Minister of State put the final seal on Lord Cockfield's report by telling us that harmonisation of tax levels is not on.

In this context, both Dooge and Lord Cockfield again missed the central point of today's Euro-economic-sclerosis — the problem is one of a deficiency of demand, idle people and idle factories, overcapacity and unused resources. To break down the barriers and to make competition more equal throughout the Community is not to facilitate the sharing of prosperity; it is to facilitate the sharing of misery.

The Dooge committee referred to the dynamic effects of a single market with immense purchasing power. This would mean more jobs, more prosperity and faster growth and would thus make the Community a reality for its citizens. This is pure hogwash. Rightly, these words are not supported with the intellectual justification that is necessary to justify such grandiose promises.

Twelve countries with 12 very different GDPs and vastly differing economic conditions and policies will not be magically transformed into an engine of growth simply by removing Lord Cockfield's barriers. It is a foolish, and even wicked, delusion to peddle the fiction that they will.

On Monday, the Financial Times—the great European newspaper—quoted the chairman of the Italian-based company Olivetti as saying that the barriers identified by Lord Cockfield were secondary issues. The article stated: The real problem, he says, is that too many managements lack entrepreneurial verve: 'in many cases, they are looking for alibis. I am not convinced that they really want to eliminate the obstacles … Too many Europeans just want additional guarantees that they'll keep what they already have.'. That is the voice of industrial experience in the Community.

For Britain, the changes envisaged by Lord Cockfield and knocked on the head by the Minister would have serious implications. Harmonisation of VAT would see its imposition on food, children's clothing, books and other commodities such as gas and electricity that are now zero rated. If the VAT level were to be raised to continental levels, it would mean a substantial increase in the cost of living. In Denmark, VAT is 22 per cent., in France 18.5 per cent., and in Italy 18 per cent. In this country and in Ireland, VAT affects only 40 per cent. of consumption, as against 90 per cent. in the rest of the Community.

Mr. Dykes

Is not the hon. Gentleman being somewhat irrelevant and illogical to address these complaints to Lord Cockfield, who after all has the Commission portfolio responsibility of promoting the internal market? Would it not be more logical if the hon. Gentleman were to address his strictures about the deficiency of demand and so on to the Council of Finance Ministers, which, if it were able to operate more frequently on the basis of qualified majority voting, would begin to make joint collective financial decisions to revamp the European economy?

Mr. Robertson

It would be nice to think, along with the hon. Gentleman, that that would be likely to happen. However, he should look not at the words and aspirations of those who would like to take majority voting decisions but at the speech made by the Minister this afternoon. He said not a word about the economy of Europe or unemployment, and gave not a word of hope or encouragement for the millions out of work. There is not a lack of decision making in the councils of Europe but a paralysis of political will to deal with the problem. If there were such political will, there are already institutions that would transform the position. In some sectors, Europe is beginning to turn towards that, without any great encouragement from the British Government.

Lord Cockfield's blueprint for the future, or what remains of it after the Minister's running down this afternoon, would see also the abandonment of our traditional and effective measures of border posts and entry controls, with all that that would mean for preventing traffic in drugs and terrorism.

After the diversions of the Dooge committee, and before it of Spinelli, the draft treaty, the Genscher-Colombo plan and the others, what can the Community do to revive its potential and start providing hope for its citizens? It can first relegate the fancifully packaged people's Europe report to what it is — a series of gimmicks and novelties, some of them valuable, most of them trivial, but all of them inconsequential to the central issues for our people. However, the potential of the Community is still there, but only if we have the political will to act, and act together.

Co-ordinated expansion is urgently required, and it can be done if further priority is given to jobs, especially for the young. The power and influence of multinational companies can be controlled only at European Community level, but the present craven capitulation to their arbitrary and unaccountable activities allows them to mould our future rather than we theirs.

Co-operation on high technology, which the Minister dismissively mentioned in a few sentences towards the end of his speech, is possible and the EUREKA project should be a more tangible subject on the Milan agenda than all the dreams of new institutions. EUREKA could transform what the Financial Times called the lip service paid to the idea of the EEC spending programmes to improve European technology. It might balance the drain of brains and funds to America's strategic defence initiative programme.

Genuine action at European Community level on the growing problem of acid rain and environmental pollution is possible, but only if the British Government can open their eyes to what everybody in Europe knows is going on. Co-operation need not be confined to the European Community. Euratom involves, in addition to the Community countries, both Switzerland and Spain. The Esprit programme and airbus projects are based on more than just the Community, and they work. Much more co-ordination with the Nordic countries is possible, and the development of an external identity is also welcome when it represents a common agreed position of the member nations. Useful initiatives in the middle east, on central America, South Africa and in the past on the Siberian pipeline show what can be done.

The present obsession with institutional changes means that we continually miss the vital point that national interest need not be devolved from the common interest of all 12 nations if we care enough about what is wrong. We are faced with one major reality. It is a common disappointment with the European Community today. Even for those—I was one—who believed in the vision of a closer union among European nations, and who still take comfort from the successes so far—arguments over milk quotas and cereal prices are infinitely better than arguments over Alsace-Lorraine and the Oder-Neisse line—must still be dismally disappointed by the failures to grasp the real opportunities of all-Europe action to expand, grow, compete, invest, research and provide a secure future for the European peoples.

That sadness can only be compounded as the summit next week surveys the ruins of yet another still-born institutional reform and then goes on pretending that gimmicks such as common passports, postage stamps, European national anthems and even harmonised taxes and the diversions of remodelled institutions can still play a major part in a European revival. Dooge is dead, and it will be buried in Milan, but out of the ashes had better come a genuine recognition of the scale of the crisis before us, and with it the common determination to deal with it across the Community. If that happens, Senator Dooge's exercise may not have been in vain.

6.27 pm

Mr. David Howell (Guildford)

I listened with care to the speech made by the hon. Member for Hamilton (Mr Robertson) to try to pick up the code words showing where the Labour party has got to in its thinking on the European Community, and whether it is against or for it. However, it would be impossible to divine what stage its cogitations have reached. All that one can say is that, when it comes to the EEC, the Labour Front Bench is eager to wound but afraid to strike.

I congratulate my hon. Friend the Minister not merely on his speech but on the brisk and practical manner that he brings to matters affecting the development of the European Community. I hope that that compliment does not do him too much damage. He has a touch in these matters that we all value and for which we are grateful.

I shall pursue one of the practical matters with which I hope that my hon. Friend will be concerned, although he did not mention it in his speech. It is referred to in the Dooge report and in the Government's White Paper. I shall not pursue the dreams in the Dooge report about revising treaties, or the golden Europeanism to which my hon. Friend referred. I wish to deal only with one practical matter that involves no revision of any treaties, no agonising debates in 12 national Parliaments, but a simple practical decision to improve our interests within the Community.

I refer to European monetary integration and the EMS. I shall ask a series of questions and I hope that my hon. Friend the Under-Secretary will be able to enlighten us a little. My basic question is: what now is our policy towards joining the exchange rate mechanism and becoming full members of the European monetary system? Is it our policy to aim to join, not to join or just to hang about and wait and see, in the hope that we will arrive in the lift at the right floor in the department store? These are questions that it would be nicer to put aside, like so many difficult questions, but we may be reaching a point—even as soon as the Milan summit next week—when we have to be more precise in our views, for several reasons.

The reasons are concerned, first, with our specific national interests. Whether we like it or not—I know that some of my hon. Friends do not like it—we have a policy towards the exchange rate. In effect, we have politicised sterling. My view is that this was inevitable and does not clash at all with sensible management of monetary policy. We may do rather better with an exchange rate target than we did with our notoriously and ever unreliable friend, sterling M3. For better or worse, we now have that policy.

The argument against our involvement in the ERM always used to be that this would politicise the exchange rate and that we wanted to stay clear of that sort of thing. But we have not stayed clear of it. We have developed objectives and we have found extreme difficulty in trying to influence the sterling exchange rate. The question that has to be addressed from the practical point of view of the nation is whether we might not improve our own ability to influence the exchange rate and include it as a target within our monetary policy, if we were in the ERM. That is a question for ourselves; it is perhaps not a European question. I do not think that question can wait much longer.

We can see big financial storms ahead. No one knows whether the dollar will drop dramatically, drop slowly or rise again. However, we know that we are in for a big upheaval. It would not be happy for the country or for the Government if we had to go through the gyrations of January again, with bank interest rates jumping 4.5 points in a desperate effort to fight the lone battle on sterling's behalf.

That is the national scene. Then there is the European question about the EMS, which relates closely to almost everything that my hon. Friend the Minister of State said in his excellent speech. He said a great deal about completing the internal market. Ministers have devoted much energy to identifying the barriers and urging that they be removed. I am not sure that they meant to go quite so far as Lord Cockfield decided to go in his heroic list of measures, but in general this has been the thrust and emphasis of policy. Indeed, that was repeated and emphasised at Fontainebleau.

If that is so, there can be no doubt that one of the most considerable barriers to the completion of the internal market is the volatility and variation in the currencies, particularly between sterling and the currencies in the exchange rate mechanism. It would not be unreasonable for our European allies to say, "If you in London are really serious about removing barriers to the internal market, should this not include addressing yourselves to, and reaching a decision on, the exchange rate mechanism?" Perhaps a decision would be reached that we should never join, in which case sterling should leave the ecu basket altogether. That might be the right thing to do. On the other hand, it might make more sense to be within the EMS; then the drive to remove barriers and compete in the internal market would carry greater credibility and realism. There is a major question there.

Mr. Dykes

What is also interesting and a little strange is that the Government's policy is to join the ERM. I think the formula of words is that we should join when the time is right or appropriate. Has my right hon. Friend a distinct understanding of what that formula means?

Mr. Howell

I have lived long enough to understand all about the doctrine of unripe time. It is a most wonderful formula to avoid reaching an undoubtedly difficult decision. I realise the need to get the negotiation and the entry point right, but in my view the rightness of time would have been before the upsets of January. If it was right then, it is much more right and ripe now to move during, shall we say, a momentary lull, when sterling is strengthening and before the next storm strikes. It is hopeless to make such decisions at times of weakness.

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Renton)

My right hon. Friend is expert on these matters. He has asked me a question. May I pose two questions to him in turn on the exchange rate mechanism? Why, out of his expertise, does he think that if we could have been in the exchange rate mechanism over the past five years or so fluctuations in sterling would have been any the less, if he does think that? Secondly, given the great quantity of sterling that is held internationally—greater than any continental currency—and given the fluctuations, is he certain that our presence in the ERM would be much welcomed by our European partners?

Mr. Howell

On the second point, I have only the evidence of the welcome extended by the governor of the Bundesbank and of almost every Government with currencies already in the ERM. They are extending an invitation; it may not stay that way. I agree that the invitation may be withdrawn, but for the moment the invitation is very strong. Among those making the invitation are the people from Bundesbank of West Germany, who have always been the conservative and cautious people in the development of European monetary integration.

As to the past, I do not think it would have been right to have been in the ERM over the last five years. I hope I did not give that impression. I suggested that if we had been in over the Christmas 1984 period it might have been clearer to currency markets just what the British aims were for the sterling exchange rate. We might have avoided the enormous pressure that built up on sterling and the very sharp increase in interest rates that was necessary to stabilise the position. I think that view is shared outside the House, even by the Governor of the Bank of England; I hope I am not misinterpreting his view.

If we are serious about the completion of the internal market, about putting emphasis on more competition and about creating the vigour in the European Community to go forward, we must address ourselves to the question of where we stand on full membership of the EMS.

The third problem that now confronts the Government rather sharply is that in the monetary area there will be a two-tier development in the Community. We often hear it muttered about in other areas—the convoy theory, the inner group agreeing to this, that or the other, and the outer group not doing so. Nothing much has happened on that front. We have now reached a point in the monetary area where something of this kind is bound to happen for the simple reason that there is no conceivable way in which the forthcoming members, Spain and Portugal, or even some of the existing members, could hope to participate in the ERM. They could participate in the ecu basket of currencies as sterling does, but in no way could they participate in the exchange rate mechanism.

If, as is clearly the intention, the inner core of members wish to press ahead with further developments in the European monetary system—some idealistic and some more practical—they will have to do this with an inner nucleus of members. The question for the Government is, do we wish to be a member of that nucleus? At this stage it is a difficult question because we indicated at Fontainebleau that we wished to be positive in contributing to the development of the European Community politically and in other ways.

Now that question comes back to Britain in the form of another question. If that is the case, do we wish to participate in the inner nucleus of countries that will develop a degree of European monetary integration, or do we wish to stay outside?

Mr. Forth

Does my right hon. Friend agree that the concept of a two-speed Europe may not be as bad as has always been assumed, provided there is proper customs union throughout the Community and provided that those who wish to progress—as it is usually put—are prepared themselves to bear the burdens that they are imposing and to leave the others to enjoy the benefit of the customs union and those other bits they choose? Does my right hon. Friend agree that this is a possibility and need not necessarily be dismissed out of hand?

Mr. Howell

If it could be so engineered, obviously it would have benefits, but in the area that I am discussing it is difficult to see that choice emerging. The real choice is not between staying out of the exchange rate mechanism or joining with the other countries that will form a nucleus; it is between completing the present stage of the European monetary system—as the West Germans argue and as I would favour—or going on to the more ambitious and, frankly, unrealistic aims of forming a European monetary co-operation fund, so moving into areas of monetary union for which I do not think Europe is ready. Indeed, I question — in a world in which we want to see more decentralisation—whether we ever want to see such a centralisation of monetary control as some of the idealists of EMS-building are proposing.

We must examine the present stage of the European monetary system and decide whether we, the West Germans and others wish to complete that. That means British participation, a reduction in the capital controls in place in France and in exchange controls in Italy. It means, in other words, the completion of the present stage. No new stage is needed, nor would I advocate that. That is the choice before us.

There are those who say that we could not contemplate that now because we would find ourselves with impossible tensions vis-a-vis the deutschmark. I question whether that is the right way to look at the matter. If the West German and our economies are converging in terms of policy—they are converging closely at present—the two great trading currencies, sterling and the deutschmark, together in the European exchange rate mechanism would strengthen the mechanism.

However, it would undoubtedly—this message will be indigestible and unwelcome to Labour Members—impose disciplines on the pound so as to maintain the policies towards convergence that have been absent in the past and from which Labour policy-makers from time to time demand that we escape by reflation, expansion or whatever they want to do that will, they believe, solve the problem of unemployment.

Those options would be limited in the exchange rate mechanism. I believe that that would be a good thing, and if there ever were a future Labour Government in Britain who felt that it was all very terrible, then, as they would undoubtedly make a mess of things, they could use that as an excuse and alibi. Labour Members would certainly need excuses and alibis were they ever to put through the sort of policies that they are proposing.

I have put the questions that the Government now face and may have to address at Milan because issues of a European nature are closely related to the European monetary system. I do not disguise my view. It is that if we truly want to reduce barriers and complete the internal market, in so far as it is practicable to do so, if we want to be prepared for the enormous financial storms that are ahead, and if we want to influence the Japanese situation—it was said in earlier exchanges in the House that the yen is ridiculously low; we want to see the whole of Japanese financial policy liberalised—we must reach a decision at Milan. The British will have to indicate their view there of the strengthening of the European monetary system and say whether they are really serious about preparing for negotiations to enter the exchange rate system.

At the time of the last currency upheaval the European leaders were miserably ill-prepared. They will not be lightly forgiven if they are equally ill-prepared when the next upheaval comes—which will be soon.

6.44 pm

Sir Russell Johnston (Inverness, Nairn and Lochaber)

When I spoke in the foreign affairs debate on 27 April, I devoted a considerable part of my speech to the Dooge report. A few days earlier, on 23 April, an early-day motion was tabled by the Liberal and Social Democratic parties. I shall read that motion into the record because it summed up succinctly the alliance view of the next stage in the evolution of the Community. The words also provide a clear marker to which my subsequent comments may be related. The motion stated: That this House recognises that without genuine European co-operation and integrated decision-making no single European country can achieve the technological development or exercise the political and economic influence effectively to overcome the problems of unemployment and inadequate social provision in a world at peace; therefore welcomes the visit to the United Kingdom of a delegation from the European Parliament to discuss the draft of a new Treaty to establish a united Europe; notes the support given to this by the Socialist group, the Conservative group and the Liberal group in the European Parliament; and urges Her Majesty's Government to advocate at the European Council in Milan the establishment of an intergovernmental conference to achieve this. Since then, as a variety of hon. Members have said, the most significant and, in our view, most regrettable development has been the exercise of its first veto by the Federal Republic of Germany over cereal prices.

I have no doubt that that has adversely affected the sense of momentum towards better decision-making processes, built up in the first instance, to his great credit, by Altiero Spinelli and subsequently commented on by the admittedly cautious but positive response of the majority of the Dooge committee.

Mr. Forth

The hon. Gentleman has made play of the support that was given in the European Parliament to the proposals to which he is referring. Does he agree that there is a large element of vested interest on the part of politicians in that institution in favouring proposals which appear to give them greater influence in decision-making? Is the hon. Gentleman unsurprised, therefore, that they should have given wide support to such a series of proposals?

Sir Russell Johnston

I am never incapable of surprise, and I shall be dealing with the point that the hon. Gentleman has raised.

Mr. Cash

The hon. Gentleman referred to alliance policy. He may recall that not long ago the right hon. Member for Plymouth, Devonport (Dr. Owen), referring to the use of the veto, urged the Prime Minister to give an assurance that in no circumstances would the Government ever get into a position in which they failed to use it when to do so was necessary. Against that background, how does the hon. Gentleman equate his position within the alliance with the position of federalism adopted by the leader of his party?

Sir Russell Johnston

The motion that I read was in the names of the leader of the Liberal party and the right hon. Member for Plymouth, Devonport (Dr. Owen), the leader of the Social Democratic party. In relation to the veto, the Dooge report, on page 25, stated: The majority of the Committee favour the adoption of the new general principle that decisions must be taken by a qualified or simple majority. Unanimity will still be required in certain exceptional cases"— Dooge did not, contrary to what I think the hon. Member for Hamilton (Mr. Robertson) suggested, suggest doing away with the veto— which will have to be distinctly fewer in number in relation to the present Treaties, the list of such cases being restrictive. On page 26, the Rifkind reservation, which was supported by Denmark and Greece, stated: When a Member State considers that its very important interests are at stake, the discussion should continue until unanimous agreement is reached. The same form of words is adopted in the Labour party amendment, which urges the Government to use the British veto as necessary to protect very important national interests. The Luxembourg compromise refers not to "very important national interests", but to "vital national interests"

I do not want to be pedantic or legalistic, because I find that rather a bore, but I suspect that in these matters one has to be a bit legalistic as to what people actually mean. It seems to me that wishing to be able to use the veto on a "very important national issue" goes further than wishing to be able to use it on a "vital national issue". I suspect that the Government are bringing more issues into the net than were previously affected by their view on the veto. I should like the Minister to respond to this. If the answer is yes, it is very bad indeed and a very nationalistic step backward; but if the answer is no, presumably the status quo obtains. From the alliance's position, the status quo is very unsatisfactory and not in the interest of this country or of the Community as a whole.

Mr. Forth

rose—

Sir Russell Johnston

I have a number of points to make, but I will give way.

Mr. Forth

I am most grateful. I remind the hon. Gentleman that in his opening speech the Minister quite specifically said that Her Majesty's Government wanted to see a combination of more votes and a greater use of majority voting to make progress where it could reasonably and productively be made and the retention of the veto for each country to safeguard its national interests. Those are the proposals that the Government are making. Would not the hon. Gentleman be able to go a very long way with those proposals?

Sir Russell Johnston

I do not see any reason why the Government should have introduced a reservation. It seems to me that what Dooge sets out is perfectly reasonable. The Minister referred to majority voting, but he did not make clear whether, if the decision under discussion was unfortunately likely to go against us, we would take a different view from that which we take now. If we do not, the whole thing is totally meaningless—all words, as so many of these things are.

The German position has been referred to by the hon. Member for Hamilton. There is no doubt that it has produced a great deal of stress within the coalition in the Federal Republic. Our Liberal colleagues, the Free Democrats, are very unhappy about it. The hon. Member for Hamilton quoted Herr Genscher in The Guardianyesterday. But what is the Government's view of the German veto? I think that it is extraordinarily equivocal, and the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) did not make it any clearer when he spoke. They obviously did not approve of the veto. What is a 1 per cent. difference in cereal prices? It is a marginal price difference in a crisis situation in which everybody agrees that even the Commission position is nowhere near radical enough to control. On the other hand, they felt obliged—and the hon. Member for Pentlands said so in a ringing fashion—to support the German right to use the veto. Indeed, many press leaks showed that the Government seemed quite pleased that they did so, because it meant that any post-Milan conference would effectively be scuppered. I find that a very difficult position to follow, and I do not think that the Government have faced the logic of it.

What are the difficulties on which the Government are laying stress? The hon. Member for Pentlands mentioned them: control of the runaway agriculture budget, obviously, and extensions of the internal market. Those are the two principal targets, but to them can be added three other major areas: technological co-operation, including—as the hon. Member for Hamilton said—EUREKA; monetary co-operation, as the right hon. Member for Guildford (Mr. Howell) mentioned in respect of EMS and the like; and, lastly, a common line on security. All those are important.

How do the Government see the possibility of introducing financial discipline into the CAP if they support the right of the Germans to have a veto on cereal prices? If they support that right, does that not also remove their capacity to persuade the Germans not to use their veto? I really do not see any sense in that. As far as I can see, the Government are prepared to cut off their nose in order to have the right to spite someone else's face later, and that makes no sense at all.

Mr. Marlow

rose—

Sir Russell Johnston

The hon. Gentleman has been less than sharp in his interventions, and I do not want to expose myself to one of them.

Vested interests will always block if they have the chance, and the Government are accepting that they have the right to do that. In my view, that is where they are wrong. The Labour party too is wrong in its alliance here with the Conservative Right wing in the shape of the white knight, the hon. Member for Northampton, North (Mr. Marlow), with whom it is nationalistically in accord.

I do not think that one can in logic pour condemnation—as the Labour party does, as the hon. Member for Southend, East (Mr. Taylor) and others do, and as many other hon. Members from a much less entrenched position do—on a lack of financial discipline and inadequate operation of the internal market and simultaneously deny the opportunity institutionally to solve those problems. That is where the hon. Member for Hamilton is wrong. It is not true to say that institutional change is irrelevant. It is relevant because it will enable decisions to be made which currently are not being made.

Mr. Marlow

rose—

Mr. Dykes

rose—

Sir Russell Johnston

I shall give way once more to the hon. Gentleman.

Mr. Marlow

The hon. Gentleman did not see that I rose first.

Mr. Dykes

He cannot take it. The hon. Gentleman will understand that this is a difficult moment for my colleague, and therefore he will need time to recover. Indeed, it is not easy; it needs a Liberal knight rather than the white knight. I apologise for interrupting, because the new knight is being extremely persuasive in his arguments.

Mr. Marlow

No he is not. He will not allow any arguments.

Mr. Dykes

Does the hon. Gentleman agree with this continuation of his thesis — that the tragedy of that whole episode is that undoubtedly when no veto should have been imposed by the Germans on a matter that was not of vital national survival and was merely the product of a party split between the CSU in Bavaria and the CDU, if "vetoitis" is further encouraged by various member states, that will be quoted again and again as a good example of when the veto can be used legitimately, because not a single formal protestation was made by any other member state?

Sir Russell Johnston

The hon. Gentleman supports my argument very felicitously, as I knew he would when I gave way to him.

The Minister referred to Lord Cockfield's paper and to the fact that it contained 300 points on the internal market. How do the Government—who favour this paper, as the Minister made clear—expect it to be implemented if simultaneously they support the right of every individual country with an important interest to say that it will do nothing? That is contradictory, and it is nonsense.

In my view, we have three options. First, we can stay put. That would not be in our interest or in the Community's interest. Secondly, we can proceed on some sort of gentleman's agreement. That is what the Government would really like to see. Where are the gentlemen? That is a good question. Not even our own Prime Minister, literally or metaphorically, falls properly into such a category. Thirdly, we can have institutional change, either modest, as Dooge proposes, or radical, as Spinelli argues.

I believe that the third choice is the only one, and I very much regret the Minister's peremptory rejection of an inter-governmental conference after Milan before Milan takes place.

I refer back to the early-day motion that I quoted at the beginning of my speech. We can only overcome our employment problems, social challenges and technological inadequacies together, and if we want to have a say in political and security matters in the world it has to be together as well. I have said before, and I repeat, that the enlargement—which the Minister rightly conceded makes decision—making processes worse—which brings in Spain and Portugal and gives them political support in the changes which they have undergone, will fail and thus have the consequences of political failure if this political good will is not matched by economic generosity. That is not going to be possible in present circumstances, and that has consequences equally for NATO and all the rest of it as well.

It is the fashion for anti-Marketeers in the House and for some others who should know better to behave in a superior way towards the European Parliament. They pour scorn on it, talk about what those little people want and ask what relevance they have. I have always found that sad in an elected Parliament such as ours. I was glad when this country accepted the go-ahead for direct elections. It was at the time of the Lib-Lab pact, as hon. Members may remember. It enabled the Community to have the largest free election in the world. I thought that that was good, even if this country operated an inappropriate and unfair electoral system.

Hon. Members and the Government must face the fact that the less scope the European Parliament has to contribute effectively and realistically to legislation and to have a significant say in the budget, the less will be the likelihood that it will behave constructively and responsibly. The less power we give to people, the more irresponsible they are likely to become.

Mr. Forth

rose—

Sir Russell Johnston

I shall give way when I have finished this point. I notice that the hon. Gentleman has cleverly moved from one place to another. He seems to believe that, because I am short-sighted, I shall think that he is someone else.

It is equally a fallacy to believe, as many hon. Members do, that keeping the European Parliament weak will strengthen parliamentary sovereignty in respect of European Community legislation. It will only strengthen the Government and compound the perceived remoteness — often, indeed, the real remoteness — of European Community legislation from democratic accountability.

Mr. Forth

Does the hon. Gentleman agree that there is an alternative way of looking at the European Parliament? The European Parliament has considerable powers which, if its Members chose to exercise them responsibly and carefully, could greatly enhance their participation in Community decision-making. The problem has been that in too many cases Members of the European Parliament want to go on to the world stage and participate in a wide political arena, but they fail to use their considerable existing powers in a detailed, consistent and responsible way. We can reasonably look to them to give a lead and show us how they propose to exercise their considerable existing powers before we give them any more.

Sir Russell Johnston

I do not want to argue in detail, because I could go on for a long time. I was merely talking about the unfair attitude that hon. Members have towards the European Parliament. The hon. Gentleman's remarks were unfair. It is not true to say that Members of the European Parliament are always irresponsible. They do a great deal of constructive work in the committees, for example, even if they are held in secret. Sometimes that is not all that had. That is against Liberal policy, but never mind.

A fortnight ago, the European federation of Liberals and Democrats in the Community met in Groningen in the Netherlands. A resolution on institutional reform was passed unanimously. I should like to end by quoting from it, because it was a congress of 11 Liberal parties—to some degree, a spectrum of views—clearly united about some matters and trying hard, as I think we should all be trying, to find common ways forward within the Community. The resolution stated: We want the present Community to develop into a free European Union of equally respected states and peoples within which national, regional and local powers of decision-making are placed in the context of the new European dimension and thereby given added significance. The task of the Union will be to complete the Community process of integration and unification, on the twin foundations of liberal democracy and human and civil rights. Furthermore, it must assume its role in ensuring European security and in the world at large, it must stand for the principles on which it itself is founded: peace, freedom, equal rights, individual responsibility and social justice. That is the right way forward — not the cautious, hesitant one put forward by the Government and Labour Front Benches. If ever there was a time for idealism, it is now.

7.4 pm

Mr. George Gardiner (Reigate)

My hon. Friend the Minister was right to concentrate on the Dooge report, and he was also right not to underestimate the supreme importance of the decisions that face the forthcoming summit in Milan. The aim expressed in the Dooge report is to secure a single, fully integrated internal market in the Community by 1992. I should like to consider that, and the institutional development of the Community in that light. A call for completion of the internal market has become rather commonplace in the House. We frequently point to those areas where the United Kingdom might expect to benefit. There has been little recognition of how sweeping are the changes needed and there has not been a great recognition of the overriding necessity to this country and to our partners in Europe of completing the internal market.

I shall give an example that relates to jobs. The hon. Member for Hamilton (Mr. Robertson) spoke of hew vital employment issues are. I agree with him on that, although he would not expect me to agree with the solutions that he put forward. Since 1973, the United States of America has created a net total of 15 million new jobs by exploiting a home market of 226 million people. Over the same period, Japan has created 3 million net new jobs by exploiting a home market of 118 million people. What has the European Community done? Over that period, it has built up a home market of 270 million people—much greater than that of the United States—and yet we have lost 2 million jobs in western Europe. A substantial reason for that must be that we have failed properly to use our home market. The European Community still in many respects consists of 10 related but separate markets. By continuing with that pattern, we cause injury to ourselves and to the employment prospects of our people.

Mr. George Robertson

I am grateful for the hon. Gentleman's interest in employment, although I am sure that we shall disagree on the diagnosis. Will he bear in mind that the United States of America has created jobs through what has been an expansion-led boom and that Japan's increase in employment has been advanced by exploiting Europe's home market?

Mr. Gardiner

There are many elements to the issue. The thrust to deregulation has also played an important mentpart in the United States experience. I am merely seeking to contrast how, with those not completely dissimilar home markets, our performance has been so different.

Our experience in Europe has been that internal tariff barriers have gone but that too many other barriers remain and some have even been increased. We can rattle off examples with ease. Frontier delays alone cost European industry and commerce some £500 million a year. That often adds as much as 20 per cent. to the cost of goods crossing our internal frontiers.

We have conflicting national standards that are doggedly maintained. Research is duplicated among countries. It takes us five years to get even a modest joint research programme off the ground. We have rigid barriers to the sale of services across frontiers; British life insurance cannot be sold in West Germany. We have no common transport system that remotely compares with that of the United States or Japan. The growth of our air services is choked by restrictive cartels. Public works contracts are still nationally based.

The result of all that is, first, that the industry and commerce of western Europe cannot achieve the economies of scale that such a large home market can offer, and they have to sell overseas and at home against United States and Japanese competitors whose own home markets confer upon them just that advantage. Secondly, European research and development costs, once incurred, must be covered and recouped from a narrow national market and far too rarely from that of the European Community as a whole.

If we want an example of how that has afflicted us, we need look only at information technology. European Community IT industries have only 10 per cent. of the world market and only 40 per cent. of their own home market. That story is repeated in one form or another in one advanced industrial and commerical area after another.

There was that chilling piece of speculation by Lawrence Eagleburger not so long ago, that unless it is careful, in 40 years western Europe could find itself in the top tier of Third world countries. After enlargement, Europe will have a home market of 320 million, which is 100 million more than the United States. In terms of population and combined gross national product, the European Community will be the biggest commercial power in the world—or, more accurately, it could be.

Will we draw on that power or will we continue to try to compete not just with one hand tied behind our backs, but with both feet tied together, too? Unless a genuine free, total common market in all goods and services is created quickly, we had better forget all our hopes for a better economic future and for more jobs, and concede eternal superiority to nations with smaller home markets than the one potentially available to us. The completion of the internal market in western Europe is not just a possible option; it is a matter of our survival. It is a measure of the challenge facing the Prime Minister and her colleagues at the coming Milan summit. The proposals are in the Dooge report. We also have the detailed programme put forward by Lord Cockfield on behalf of the Commission. The future of every family in Europe hangs on that.

Therefore, the question we must ask about the Community's institutional development is not what blueprints accord most closely with our personal notion of what the Community or European union could mean, but rather what institutional changes are necessary to speed the decisions that bring that total internal common market into being as quickly as possible.

I believe that my hon. Friend the Minister was right to express strong reservations about some of the proposals—some of which were mentioned by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). For example, my hon. Friend was right to express strong reservations about the proposal in the Spinelli draft treaty to make the European Parliament a joint legislative authority with the Council, and requiring a unanimous vote in Council if European Parliament legislation is to be rejected.

I can think of nothing more likely to lead to friction and to a reduction in the Community's effectiveness than a constitutional arrangement such as that. Our need is not for a mechanism of fine checks and balances; it is for an engine to power the changes that we know are so essential. I am convinced that that engine must still be located within the Council, working within the relationship that has already been established with the European Parliament and the Commission, and with the Council reconciling the national policies of 12 different states. For the same reason, I believe that my hon. Friend is right to record reservations about the more vague suggestion in the Dooge report for joint decision-making by the European Parliament and Council.

Following that logic, we see that the need is to strengthen the decision-making process within the Council. The need for rapid progress to the full internal market that is so essential makes much more frequent qualified majority voting imperative, with the right of ultimate veto retained, but very strictly defined.

We are realistic to recognise that no member state will accept being overruled on a matter of crucial and vital national importance. But that is very different from using the veto or from putting a proposed reform into permanent suspense simply to shield some internal interest group.

My final point concerns a matter that has been raised by a number of Members of the European Parliament and has been referred to in this debate. It is the possibility of what is often called a two-speed Europe. I have heard the fear expressed by colleagues in my party in the European Parliament that unless we accept some of the more radical institutional proposals, Britain will be left behind, travelling in the slow lane, while our partners go full steam ahead in the fast lane. That fear has been focused by the proposal in the Spinelli draft treaty that it should enter into force when ratified by a majority of members of the Community which together represent two-thirds of the total population.

That fear of an institutional two-speed Europe is I believe without foundation. As my hon. Friend the Minister said, article 236 of the Rome treaty provides that amendment can take place only after unanimous acceptance by all signatories. Therefore, I do not believe that there is any real danger of a two-speed Europe developing in respect of institutional and constitutional mechanisms.

But, of course, a variety of practical arrangements can be reached between a limited number of member states to their mutual advantage. I do not see why those should necessarily be unwelcome. Nor is it the case that in these matters Britain is invariably travelling in the slow lane. I shall cite two examples.

Recently, France, Germany and Benelux agreed to scrap all border formalities. It is recognised that it is impossible for an island such as ours to join in that sort of arrangement, for reasons that we well know, such as immigration and drug control, rabies prevention, and so on. Therefore, it was perfectly reasonable and commendable that those states should travel in the fast lane and that Britain should find itself in the slow one.

However, Britain and the Netherlands have set the pace in another area — that of liberalising and thereby cheapening air services in Europe. We are in the fast lane and many others who are fond of lecturing us within the Community are sticking doggedly in the slow one. I hope that there will be more areas in which Britain can set the pace. I hope that in moving towards a full common market, the Milan Council will set a fast pace. That is vital to all our futures, but the time at our disposal is fast running out.

7.20 pm

Mr. Eric Deakins (Walthamstow)

I agree with the hon. Member for Reigate (Mr. Gardiner) on major institutional reform in the EEC, although I take issue with one point in his interesting speech. It is a common misconception that the United States is somehow one vast internal market. In fact, it is at least four or five major internal markets, and British exporters and American manufacturers agree that they have to tailor their products and services to the needs of those individual markets within the vast continental United States.

I thank the Minister of State for his reassuring statement that this is a take-note motion and that any proposals at the Milan summit which the Government might consider accepting, especially the Dooge proposals, will come back to the House for debate and, if necessary, subsequent approval.

I wish to concentrate on three subjects—the common agricultural policy, politial co-operation and the Dooge recommendations.

On agriculture, the Community is in great difficulty, given the statements on budget discipline set out in the White Paper. When we debated the budgetary discipline arrangements earlier this year, I expressed a great deal of scepticism but, like many other hon. Members, I said that we should wait and see what happened. We have now seen what has happened in terms of discussions of the Council of Agriculture Ministers. It has failed to agree a package which would ensure that the costs of the common agricultural policy continue to fall as a proportion of total EEC expenditure, and it has failed to reach agreement on cereal prices. I make no comment on the German veto as I support the use of the veto and must accept the consequences that flow from it. It is also, of course, a factor which must be taken into account in considering the impact and influence of the new procedures for budgetary discipline and financial control, especially in common agricultural policy expenditure.

Expenditure in the 1985–86 agriculture year is likely to exceed what the Commission originally intended. The key question that no one — not even the Minister of Agriculture, Fisheries and Food—can yet answer is by how much the latest European Community budget, which was based on an assumption about cereal price cuts, will be exceeded in 1985–86. To the extent that it is exceeded — it certainly will be — it will call into question the whole issue of budgetary discipline arrangements within the Community. As we know from the White Paper and from earlier debates on the subject, those arrangements will apply to expenditure in 1986, which is the subject of decisions taken in 1985, and that must also apply to common agricultural policy price determination.

Mr. Marlow

The hon. Gentleman says that the German veto on cereal prices will have serious implications. Does he accept that if the House does not agree to increase the own resources of the Community the implications of that might, unlike the German veto, have positive consequences for the common agricultural policy?

Mr. Deakins

I did not intend to mention the 1.4 per cent. as I understand that we shall have a full day's debate on that next week and shall be able to go into the subject of own resources in detail in Committee the following week. I was thus deliberately avoiding that important and highly relevant topic.

The costs of the common agricultural policy are still not under control despite the budgetary discipline agreement. If agricultural expenditure in 1985–86 exceeds the guideline, there will be a sense of crisis in the Community. Certainly many hon. Members who favour continued membership of the EEC will look askance at its latest effort to get agricultural spending under control.

We all know that the entry of Spain and Portugal is bound to raise the total cost of the common agricultural policy. That is one reason, though not the only reason, for the attempt to increase own resources. There are also other factors. Failure to agree on cereal prices means that still greater cereal surpluses will pile up. The gap between EEC and world cereal prices will become greater, so export restitutions will cost more. Competition in world agriculture markets could drive world agricultural prices even further down, leading to even greater export restitutions and a greater burden on the common agricultural policy budget and thus on the Community budget as a whole.

I believe that we are now entitled to call into question the whole budgetary discipline agreement. Will it really stick? In the next few months it will undergo its first major test. I am sceptical, but we shall have to wait and see.

Mr. Spearing

My hon. Friend has referred to the White Paper. Paragraph 4.2 refers to the mechanism on which he casts doubt. It states that the Council has bound itself to observe various disciplinary matters. Is my hon. Friend aware, however, that the Council has reached a conclusion which is not, as I understand it, binding upon itself, so the phrase that I have quoted is open to question?

Mr. Deakins

I am as sceptical as my hon. Friend, but we shall have to wait and see. I believe that the budgetary discipline agreement will be broken, although there will no doubt be a diplomatic attempt to patch it up.

On agricultural expenditure, paragraph 4.13 of the White Paper refers to a decision made by the European Assembly in November last year which proposed a number of amendments and modifications to the 1985 draft budget, including a substantial increase to agricultural expenditure". No one in his right mind would look to the European Assembly to exercise financial discipline on agricultural expenditure in the EEC as it is clearly dominated by parties which, like many national Governments, depend on the farm vote. The only way in which financial discipline can be enforced is through national Parliaments such as this one. It is up to us to take on that task and to exert much more pressure on the Government when Ministers go to Brussels.

If we are not careful, there is a serious risk of an agricultural trade war between the United States and the EEC, which would drive down world agricultural prices and raise the cost of the common agricultural policy. My colleagues may not agree, but in my view the cause of that war is basically the EEC export restitution system which has taken away traditional export markets for United States agricultural produce. I speak with some knowledge and feeling on this, having just returned from a conference with members of Congress, the State Department and the Defense Department at which these matters were discussed.

The Americans are very worked up indeed about this. That applies both to the Administration and to Congress. It is unusual for the two to work together in the same direction, but they are at one on the need to restore those traditional agricultural markets. I believe that Congress has the bit between its teeth even more than the Administration has and is determined to pursue a policy of subsidising United States agricultural exports with a fund of about $2 billion in direct competition with EEC exports. I believe that the recent sale at very low prices of 1 million tonnes of grain to Algeria, a traditional EEC market for cereals and grain, was a warning shot across the bows of the common agricultural policy and it should give us all cause to think very carefully.

The Americans are getting so worked up about this not just because of EEC export restitution and the strength of the dollar but because the United States farm belt is suffering a great deal more than farmers are suffering in western Europe despite the cuts in dairy quotas. At least one third of United States agricultural assets are considered to be at risk and we were told that 300 rural banks might collapse in the next year or so, all of which puts pressure on legislators in the United States as similar circumstances would put pressure on legislators in western Europe.

That might be resolved by our having GATT negotiations, but as the French have blocked them for the time being and do not want agriculture or the CAP to be at risk in those international negotiations the only way out is something that the Americans will suggest to the EEC, which I hope that the Minster will bear in mind in further discussions. I refer to an international conference of the major agricultural exporters — Australia, Argentina, Canada, the United States, the EEC, India and Thailand. Those countries should get together and work out some ground rules to avoid what might be an extremely damaging trade war.

Section XI of the White Paper deals with political co-operation. Everybody pays lip service to political co-operation. The White Paper has a succession of little paragraphs of bland communiqués and declarations. A great deal of faith is put in them. I wonder why so much emphasis is put on political co-operation. A basic reason is economic imperialism in the Common Market, by which I mean the protectionism of the CAP and trade policies with the rest of the world in terms of dumped and subsidised agricultural products, the network of client states in the Lomé convention and association agreements. That great economic power has not brought compensating political power, so there is an effort to go in another direction to try to restore western European influence in the world to what people—mainly older politicians—think it ought to be and perhaps what it once was.

We have a series of virtually meaningless declarations and communiqués at almost every summit and often at Council meetings which, perhaps in the Government's view, are a temporary substitute for much closer union or for federalism. The communiqués and declarations are often trite. The Minister said that they have some impact. I remain to be convinced. I have seen no evidence of any declaration of political co-operation by the EEC having any influence outside western Europe. The most notable example was the Venice declaration on the middle east. It has had no impact on the course of events in the middle east. It was a worthwhile declaration in that many people agreed with its sentiments. I do not want to pursue that subject, however, although it is covered in the White Paper. The point is that the declarations are hardly worth the paper that they are written on and pander to the political vanity of the politicians who attend the meetings.

There have been joint stands in the United Nations Organisation, but even they and speeches by the Presidency on behalf of all 10 Community members have only papered over the cracks of political disunity on major items of policy, as was seen in two recent and important instances. First, we and West Germany are to follow the United States' line and withdraw from UNESCO because we have not been able to get our way on reform internally. Secondly, the Community is completely split on the United Nations convention on the law of the sea. Several members have signed the convention and treaty, but we, the United States and West Germany have gone out of our way to emphasise our differences with the rest of the world.

There is no political future for Britain in a bloc of rather tired western European nations whose relative political and economic influence in the world is in decline, and rightly so. Western Europe has dominated the world for the past five centuries. I do not know what God-given or any other right we have to consider that we have a right to continue to exercise such influence and power. We should let other nations take over and concentrate a little more on trying to unify rather than dominate the world. There is no future for a party with a Socialist vision of the world and Britain's place in it.

The Minister was kind enough to dwell at some length on the Dooge committee and its recommendations. The Government are not accepting the committee's recommendations because they are basically federalist—they try to make the way clearer and smoother for a federal union in western Europe. That is a perfectly honourable intention, provided that it is made explicit. The federalism is implicit. The Minister said that there was some reference to security, but that it would be only the political implications of defence policy. However, page 20 of the Dooge report contains recommendations that go further than that and talk of joint weapons procurement and the standardisation of weapons. Those are defence issues, not security issues. They are defence decisions, not the political implications of defence decisions. Dooge is pressing in every direction.

Like most right hon. and hon. Members, with the exception of the federalists, I am glad that the Government have entered caveats, but once Britain's budget problem was disposed of satisfactorily, according to most member states, the impetus to get the dynamism of federalism going re-emerged. The Government are in a dilemma. They want to placate the federalists in western Europe and in Britain. There are some of them. I disagree with them, but their view is perfectly honourable provided that it is declared openly. We must always bear it in mind, however, that the British public is generally dead set against any further loss of sovereignty, and certainly against the concept of a federal state of western Europe.

The White Paper refers to completing the internal market to promote a more united Europe". Those are beautiful words because they can be taken both ways. Federalists can take them to be a description of a future united states of western Europe, and they can be taken by non-federalists as meaning just closer co-operation. The Dooge committee goes further and wants to give more power to the European Assembly.

Some right hon. and hon. Members will agree that the European Assembly is a pathetic institution, but that it is potentially extremely dangerous when it is flattered with the prospect of more power and influence over Community business and, ultimately, against the power of all Parliaments. As long as we stay in the EEC, there is an increasing risk of a major conflict between the requirements of this House and our responsibility to the people who elected us and the responsibilities of the European Assembly, especially if responsibilities and powers are extended without our amending the treaty of Rome. That is the new path. It is a path of creeping federalism. Federalism is not faced head on but sought in roundabout ways which do not draw public or national parliamentary attention.

The value of a debate such as this is that it enables us to put on the record our fears and doubts and our warning to the Government, and any Opposition who care to go along with the type of thinking that we are debating today.

7.37 pm

Mr. Robert Jackson (Wantage)

We will all take more seriously the credentials of the hon. Member for Walthamstow (Mr. Deakins) in seeking to unify the world when we see more signs of a positive attitude to the unification of Europe or even more signs of unity in the Labour party.

For some months now, although there has been some evidence of wavering determination recently, the Milan meeting of the European Council has been billed as the "institutional" council—as the meeting at which, at last, the Heads of Government will take stock and reach decisions about the Community's institutions and how they can be improved.

The central purpose of today's debate must therefore be to express the view of the House before those discussions take place. But this is not at all easy, because nobody can pretend that the discussions in Britain about European institutional issues have been especially lively or well informed. There has been a great wave of political argument about these matters on the continent. But this has been one of those movements of opinion among our nearest neighbours which so frequently seem to pass us by. There has been a plethora of resolutions, declarations and reports engaging all sections of the political classes and public opinion on the continent—but this is our first debate on the subject, and all that we have to guide us is seven admirable pages in the most recent report of the Select Committee on European Legislation, sandwiched between four pages on air transport policy and three pages on Community immigration policy. In short, this is yet another example of the proverbial newspaper headline, "Fog in the Channel, continent isolated."

I propose, however, to take advantage of the fact that the argument on these matters in Britain is still so undeveloped to consider not the complex technicalities of the various proposals which are now before the Community and for which the House is perhaps not yet ready, but rather the frame of mind in which we in Britain address these proposals. Let us try for a moment to stand outside ourselves—in General de Gaulle's phrase, To gain height and distance —and to consider the strengths and weaknesses of the way in which we in Britain characteristically approach this argument.

The British approach to the institutional organisation of Europe is governed by instinct, not by reason or logic. We are not inclined to ask ourselves questions such as, "What are we trying to do?" and, "How can we best do it?". Rather, we look at European institutions in terms of our very special natural history and experience. The consequence is that our judgment about how those institutions should develop is based mainly on an instinctive assimilation of the European constitution with our own constitution, and of the principles of its development with the principles of British constitutional development.

That instinctual and historical approach informs the prejudices which we characteristically exhibit when European institutional questions are discussed. We have, for example, an instinctive preference for proceeding by conventions rather than by formal legal texts. That is how our own constitution works, and we find it easy to take it for granted that that must be the best way for the European constitution to work. Similarly, we hold that constitutions develop by evolutionary process rather than by a process of rational deliberation which relates means to ends. Somehow we have acquired from our history a notion that those things which happen without our knowing it are more enduring and substantial than those which we consciously choose to do. We also have an instinctive preference in Community affairs for machinery which gives the greatest possible freedom of manoeuvre to the Governments of the member states — as opposed to machinery which obliges them to take account of the will of supranational institutions or to follow prescribed legal procedures, or even to be bound by their previous undertakings.

I hope that no hon. Member will think that what I am saying is a disparagement of our characteristic British way of looking at these matters. In any historical perspective the British polity has been remarkably successful. Although that success has been due at least as much to geography as to our political institutions, the values that our experience secretes deserve to be taken seriously.

The British approach to the question of European organisation certainly has many virtues. For a start, it is solid. We say what we mean, and we mean what we say. In the British approach, head and heart are closely united—in contrast to the approach of other political traditions in Europe, when the heart may go faster than the head, as is the case with the Germans, or the head may go faster than the heart, as is the case with France.

The British approach also has the virtue of realism, or, at least, of that type of realism which reflects an accurate appreciation of the material, and perhaps sordid, interests that sometimes motivate, and more often oppose, the progress of ideas. There is little danger of Britain ever finding herself in the extraordinary position into which the Federal Republic recently found itself propelled by the agricultural lobby in Germany — and I hope that our German friends will forgive us on this side of the Channel for the small exhibition of Schadenfreude which we allowed ourselves on that occasion.

Solidity and realism are the virtues of the British approach to European politics. Let us now consider our vices. The first must be that we are remarkably slow moving and unimaginative in our approach to Europe. The danger of our instinctual approach to politics is that it clings to the familiar, and finds it difficult to assimilate novelties. For example, in the 1950s we failed to recognise the speed with which Britain's historic position in world affairs was being eroded, and the dynamism of the Europan movement on the continent.

Mr. Deakins

The hon. Gentleman is making an interesting philosophical speech. He criticises our general philosophical approach to change. Surely his allegation of our lack of imagination is disproved by the experience of the transformation of the British empire, first into the British Commonwealth and then into the Commonwealth by a process of evolutionary change over a short period of time without major institutional reform.

Mr. Jackson

That was a most remarkable historical process. It took place in the same way as the empire was created, largely "in a fit of absence of mind", and to some extent it happened because of a lack of institutional innovation in the empire. Indeed, that may be a reason why in the end the attempts to run the Commonwealth as a world force came to nothing. We failed to institutionalise it. I would indeed say that the experience to which the hon. Gentleman referred demonstrated a certain, lack of imagination, which goes to prove my point. For, just as we failed to understand the dynamism of the European movement in the 1950s, similarly, today in the 1980s, it seems that we are failing to take the full measure of the challenge which all of us in western Europe face from the superior technological and economic performance of the United States and the far east.

Mr. Marlow

Could my hon. Friend let us into the recesses of his mind by passing judgment on a specific case rather than on the general points, which he is making so eloquently? Immigration rules, for example, are highly political and sensitive issues. Does he feel that they should be decided one way or the other by this Parliament and institution, which is democratically accountable, or by a foreign institution which is accountable to nobody?

Mr. Jackson

We should embody the concept of human rights in our domestic legislation. So long as we fail to do that, it is inevitable that our citizens will resort to the European Court to get rulings on matters of human rights—matters which I agree should rather be settled under our own constitution.

Returning to my argument, if slowness and a certain lack of imagination are the defects of our characteristic political approach, so also is a certain insensitiveness. Often we fail to understand the power of the emotional and idealistic factors in the continental attitude to the organisation of Europe. In this House, for example, we affect a manly derision for the desire of our partners for symbols of European unity, while forgetting our own remarkable attachment to the symbolic and emotional side of politics. Moreover, it must also be admitted that there is a trace of arrogance in our attitude to the "European" aspirations of the continentals. We sometimes allow ourselves to see a certain fancifulness and extravagance in those aspirations, believing that it is the part of more sober, responsible, mature elements, such as ourselves, to temper and correct those exaggerations. So often we have declared that this or that European project is unrealistic or "not on", only to find that the continentals have found a way. Indeed, I have often felt that we carry our lack of sensitivity so far that we fail even to notice the extent to which our assumptions of superiority are resented by our partners.

What practical conclusions do I draw from this examination of the strengths and weaknesses of our approach to the organisation of Europe? First, we should not deceive ourselves about the sincerity and determination of the continental drive to give stronger institutional expression to the idea of European union.

Mr. Forth

I well understand the direction of my hon. Friend's argument, but would he care to comment on the attitude of the Italians to rulings of the European Court of Justice? We are lectured constantly by the Italians on all the great and good European matters, and castigated by them for our dog-in-the-manger attitude, but the Italians have the worst record of flouting the rulings of the European Court of Justice, to which they pay so much lip service.

Mr. Jackson

My hon. Friend is right. I said earlier that our commitment to Europe, although more cautious, was perhaps more solid than that of some other member states. Perhaps we should introduce proposals for institutional developments that might improve the Community's processes for enforcing and supervising the implementation of Community law.

To return to my thread, we must not deceive ourselves about the sincerity and determination of the continentals with regard to the idea of European union. I hope that no one in the House will mistake the significance of Germany's embarrassment over its recent veto at Luxembourg. If anything, that episode, and the shame and guilt which I believe that it evokes in Germany, will strengthen the determination of the German Government to prove their European credentials. That may become a serious diplomatic problem for us.

My second conclusion is that we should re-examine our aversion to proceeding in the Community by legally binding instruments rather than by the evolution of conventions. The main lesson that most continentals will draw from the German experience is that which is now being drawn by Mr. Genscher — that it proves that conventions are not enough. After all, the German Government entered into a strong moral commitment on the so-called veto at Stuttgart only 18 months ago, so that many will say that the latest episode proves that the veto will constitute permanent temptation as long as it exists. I have no quarrel with the Government's position on majority voting, nor do I doubt that it, or something like it, will be adopted by the Community at the Milan summit, or later. But we should keep an open mind about the way in which that position is expressed in Community law.

My third conclusion is that we should beware that our instincts do not lead us to undervalue the role and importance of the supranational as opposed to the intergovernmental elements in the Community system. If we will the end of a completely unified internal market, must we not also will the means of strong central institutions for initiative, decision-making and enforcement? That point was made by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth). If we will the objective of a more effective European role in world affairs, must we not also will the means of strong central institutions that are capable of defining and expressing that role? The Government have taken a tiny but significant step in that direction in their proposals for a small secretariat for political co-operation. But I hope that my hon. Friend the Minister will forgive me if I predict that the secretariat will, as was said by the hon. Member for Walthamstow, turn out to be an inadequate instrument for developing any serious European role in foreign policy.

Finally, we must overcome the instinctive resistance which leads us to underestimate the force of the logic underlying the development of the Community's institutions. Let me cite only one example—that of the European Parliament. It is probably true to say that the sentiment of the House on this matter can be expressed in one sentence: the more power the European Parliament has, the less we have. But the truth is that the key institution in the Community is the Council of Ministers, and the House is in the process of losing whatever power it may have had over the Council. No doubt that will be graphically illustrated in the debate and vote next week.

For years, we have been accustomed to Ministers reminding us, when they come under fire in the House, that they must have a free hand in Brussels to negotiate in the national interest. In the future, when the ideas for majority voting put forward by the British Government and reported to the House today are implemented, Ministers will return from Brussels with an even more dampening message—"Sorry, but we were outvoted."

Neither the House nor the Community is ready for it, but I have little doubt that, within a few years, we shall recognise that the logic of majority voting in the Council leads inevitably to giving the European Parliament the power of co-decision with the Council.

If what I have said today, and once or twice on previous occasions, may seem critical of my hon. Friend the Minister of State, may I end with a word in his praise, which I hope will be passed on to him. Today, as always, he made a lucid, forceful and elegant presentation. During the past year, he has been fighting a difficult brief, and we all know that he has a demanding client. I hope that he will appreciate my remarks about the instinctive bias of the British mind in these matters, for there is certainly no one better capable than he of blending that bias with the rational will that is from time to time required.

7.55 pm

Mr. Nigel Spearing (Newham, South)

We have heard excellent speeches from the hon. Member for Wantage (Mr. Jackson) and from my hon. Friend the Member for Walthamstow (Mr. Deakins). The hon. Member for Wantage may be surprised to know that I agree with many of his perceptions, although I disagree with his conclusions for precisely the same reason as I disagree, curiously, with the conclusions of my hon. Friend the Member for Walthamstow. I hope that I do so on the basis of objective observation rather than of personal preference, although it may be the latter, too.

The hon. Member for Wantage said that to achieve the common market that he and the hon. Member for Reigate (Mr. Gardiner) want so much we must have strong central institutions with legislative and financial power. My hon. Friend the Member for Walthamstow also mentioned that, but he called it a federal movement. As we know from the treaty of Rome, and from any objective analysis, the movement which the hon. Member for Wantage vividly described in his closing remarks is not federal, but unitary. That is why the attitudes and aspirations of the British people will not be towards the form of unitarism to which he aspires. It is not practical, for reasons that he perceived.

The two speeches to which we have just listened underline the problem of British Governments, of whatever party, now and in the future. The problem is whether we are talking about a "union" or about European unity, and the Government had to face the problem in their response to the Dooge report.

Mr. Jackson

I cannot allow the hon. Gentleman to leave the impression that I believe that the future constitution of Europe should be a unitary one. I believe that we must have much stronger central institutions in Europe, which will, of course, be balanced by the institutions on the periphery. The present problem in Europe is a lack of energy, power and drive at the centre. We should give it that energy, power and drive, but that does not necessarily mean a unitary state.

Mr. Spearing

I am not sure that the hon. Gentleman has reached the right conclusion in that respect. As I understand it, the treaty of Rome does not allow for national Parliaments to have any role at all, except where it occasionally uses the phrase "in accordance with national procedures." We shall discuss that principle next Tuesday, as the hon. Gentleman said. Indeed, he made a prophecy with regard to the outcome of the vote. His closing remarks were the answer to the point that he has just made. There is an inevitability about that, provided that the financial controls and authorisations continue, as no doubt they will—although with some dissent—next Tuesday.

The Scrutiny Committee, of which I have the privilege to be Chairman, devoted eight pages of its 21st report to the Dooge proposals. In that, we were helped by the Minister of State, with whom we had a long session on 15 May. To that report we have attached the Government's memorandum to the House of Lords Select Committee, which was examining the same matter. Paragraph 15 of the memorandum states: HMG is committed by the Treaty of Rome to ever closer union among the peoples of Europe. We are equally committed to the Solemn Declaration of European Union to review progress towards European unification no later than five years from signature (ie by June 1988)". Paragraph 16 states: The United Kingdom wants to see greater European unity. Within the European Community this means Europe united as a single market. In both those quotations we can see the Government's dilemma and the way in which they are approaching the Dooge report, while trying to resolve the problems. As we know from the Minister's evidence to the Committee, the Government have several reservations about the report. In our report we say that the Dooge committee was established 'to make suggestions for the improvement of the operation of European Co-operation in both the Community field and that of political, or any other co-operation. There will be a considerable impact even if not all the proposals are made. The balance of power of the institutions will be changed. We say in paragraph 5 of our report that the proposals If implemented … would have major consequences for the scope and impact of the Community and for the balance of power between its institutions. In other words, the dynamism that the hon. Member for Wantage wanted may be strengthened by the adoption of at least some of those proposals.

My hon. Friend the Member for Waltham stow mentioned defence. The Minister made a distinction between defence and security. That is true in terms of Whitehall Departments, but we have seen from the events of the past two or three years that security—which may be a matter for the Foreign Office—and defence are often two sides of the same coin. As the Dooge report said, the design and purchasing of armaments should be considered together. The Minister says no. That matter needs to be kept under review because it affects not only EEC policy but our policy at home and the whole of our foreign policy and defence policy throughout the world as well as our relations with partners, particularly across the Atlantic.

I should like to refer to voting. The Luxembourg non-agreement has been the subject of quite a lot of comment during the debate, but we must remember that it is not part of the treaty. An increase in qualified majority voting, which the Minister mentioned, will raise the question of the basis on which it can be legitimately used. That matter has been raised by hon. Members on both sides of the House. It must be a gentleman's agreement if only because the present agreement is extra-treaty. Therefore, if a country is to declare its use, as the Minister suggested, on what grounds should it do so? When is it legitimate to say that that procedure will be used? The Minister said that a country could use the procedure if necessary. Who is to judge whether it is necessary?

If the procedure is adopted, which Her Majesty's Government agree with to a point, it is clear that there will be some form of practice, custom, development and convention inside the Council as to when the Luxembourg arrangement will be used and when it will not be used. If that is so, as I suspect it will be, I commend it to the attention of the hon. Member for Wantage because it is the sort of procedure that we have in the House. We have Standing Orders, but we also have arrangements through the usual channels and occasionally even behind the Chair. In other words, if the Luxembourg arrangement continues on the lines suggested by the Minister, we shall be adopting the procedures which, in the House, we have found to be convenient and for the benefit of all. Whether that will be ultimately to the benefit of the country or the Community, I shall not venture to say, because that is not my object.

I should like to refer to a matter which is in the motion as well as in Dooge but which so far has attracted no attention. Quite a lot in the motion has not yet attracted attention in the debate, the scope of which is wide. It has been said that Parliament can pick up an elephant or a pin in its procedures, but I am not sure whether we can do both at the same time. I have a sense of unease at the amount of material in the motion, and indeed in our amendment, with which we are not able to deal.

I refer to the conciliation procedure between Community institutions, which was reported on by the Select Committee on European Legislation, &c in its 19th report. The document on that procedure was published by the Commission, and deals with the developing procedures for agreements and discussions between the Council and the Assembly. That point has been discussed by hon. Members.

In our report, we said that the proposal which, no doubt, will be debated at Milan, and which forms part of the Dooge package, extends the time limits for discussion, and widens the range of subjects to include all important Community measures, whether or not these have appreciable financial implications. The Minister did not refer to that directly, but he did refer to Her Majesty's Government's view that it would be appropriate for the Assembly to have greater powers in that respect, and that the views of the Assembly should be made known at an earlier date so that the Council could take account of them and thus be more realistic in its decisions. That sounds practical, but it means that representatives of both bodies will meet. As Chairman of the Scrutiny Committee, I have to tell the House that we have received reports from Ministers saying that that is pending a meeting between representatives of the Council and representatives of the Assembly. That means that the House is more in competition with the Assembly in terms of getting the ear of the Council because members of the Assembly and the Council are meeting in conciliation, meetings that are redolent of industrial relations bargaining.

Mr. Deakins

My hon. Friend is referring to an important matter. Perhaps I can convey a message to the Parliamentary Under-Secretary of State that the Minister of State was a little vague about the new forms of consultation between the Assembly and the Council as an aid to improved decision-making. As I recall, the hon. Gentleman was not specific on the matters to be raised between the Council and the Assembly. Like my hon. Friend, and probably the House as a whole, I had assumed that they were matters within the treaty competence of the Assembly—in other words, where it had some advisory or practical power with regard to the budget. If my hon. Friend is right, and if the area of consultation is to be widened so that the Assembly will be consulted on many matters on which it has no power to be consulted at the moment, that needs to be made clear in the winding-up speech.

Mr. Spearing

I am grateful to my hon. Friend. I emphasise that I was quoting the report of the Select Committee; it is not only my view. We know only too well, because of the lack of the 1985 budget until recently, that if one has power over finance, one can use that control. In certain circumstances, however, one loses control. No doubt that theme will be pursued on Tuesday. It is clear that in exercising financial control the Assembly has indirectly gained the conciliation that I mentioned.

The Minister of State did not refer to one matter that is relevant to the European Assembly that is contained in the Dooge report. It was reported on by our Committee. We said: With regard to the standardisation of voting procedures, Mr. Rifkind indicated that the Government would support a single standardised system of elections to the European Parliament. I am surprised that in technically an excellent speech the Minister did not refer to that matter, for it is of constitutional consequence. The European Assembly Elections Act 1978 does not specify a system that is consistent with those used in other countries. I take it that the Minister's statement to the Committee, and our reporting of it, is a sign of future legislation on this matter. If that is so, I hope that the Under-Secretary of State who is to reply to the debate will let us know.

Mr. Forth

Does the hon. Gentleman agree that in his evidence to the Committee the Minister made it absolutely clear that the Government would be prepared to consider a genuinely uniform system of election throughout Europe but that they would not be interested in a number of variations of proportional representation on the continent, with Britain having to give up the system that it preferred, and does he agree that the Minister said that he would look at the position before legislation was introduced?

Mr. Spearing

I am grateful to the hon. Gentleman. I cannot immediately look up the answer to question 67. Perhaps I should have done so and included it in the quotation. We need to pay attention to that point. It demonstrates that the Government are considering some change, or at least that they are open to suggestions.

May I refer to previous reports of the Committee that have relevance to the amendment. We do not know what the Government's attitude to it will be. They may accept it. The amendment calls on the Government to ensure that proper control is exercised over the Common Agricultural policy; expects the Government to take all possible steps to ensure that expenditure is made subject to effective limits". That theme has underlined this debate. The Scrutiny Committee followed up this matter, as it was bound to do, during the last two years. Referring to the preparedness of the United Kingdom to consider an increase in own resources, the Foreign Secretary said that we would be so prepared, provided first, that agreement was reached on an effective control of the rate of increase of agricultural and other expenditure; and, secondly, that it was accompanied by an arrangement to ensure a fair sharing of the financial burden."—[Official Report, 14 November 1983; Vol. 48, c. 611.] The legislation that now takes the form of the European Communities (Finance) Bill incorporates that proposal. The Bill contains no proposal, however, for control of the money that is to be raised. I am not sure that control is provided for anywhere in terms of legal enforcement. In our report on the disciplinary mechanism to which my hon. Friend the Member for Walthamstow referred we concluded: The Committee do not perceive any legal implications in the Conclusions as presented in this document but have already commented on the unusual nature of its status, and the fact that it does not have legislative form. That conclusion is contained in our second report: House of Commons 5, II, of the 1984–85 Session. It appears, therefore, that the legislation now before us contains a provision for the expenditure of money, but it does not contain any balancing provision concerning its control. According to the Foreign Secretary, this was one of the two conditions upon which extra payments were to be made.

The Scrutiny Committee will endeavour to keep the House informed upon these matters of fact and constitution and upon the extent to which European legislation has an impact in law or political importance upon the House, in particular upon its powers to raise money and control expenditure and upon the laws which determine the lives of British subjects.

8.15 pm

Mr. Christopher Murphy (Welwyn Hatfield)

I shall confine my remarks to one document, as yet almost ignored in this debate, Stronger Community Action in the Cultural Sector", and express certain reservations about the European Community setting itself guidelines for greater involvement in the arts and heritage.

Whatever the arguments about the merits and demerits of the Community, it should be noted that there is a growing tendency to move away from referring to it as the European Economic Community towards the simpler European Community. This must be recognised as a movement to involve the Community in a greater part of European life. The particular document to which I refer is evidence of that. Although it has no impact on United Kingdom law and no financial implication, it is understood that the Commission intends to submit formal proposals which could have a legislative consequence and increase expenditure.

I believe it is appropriate in this debate to make clear to our European partners the importance attached to the arts and heritage by the people and Government of the United Kingdom. It has long been recognised that Britain, because of its historic and contemporary position in the world, has a unique contribution to make in cultural matters. That responsibility is taken both thoughtfully and carefully. It is also highly relevant to draw to the attention of other Community members the Conservative belief, being put into practice, that much of the action in cultural matters should be left in the hands of private individuals and of organisations which have shown their dedication to the arts and heritage, the Government being there for assistance and support, if and when necessary.

The Council of Europe already provides on a wider scale a proven forum for ensuring that greater attention is paid by its 21 member states to the difficulties encountered in safeguarding the arts and heritage. Much of our culture has a common foundation with interconnected European themes, and this we hold in trust together for the generations yet to come. But many problems do not even need the Council of Europe's direct intervention; they need the co-operation and good will of nations on a bilateral basis, so that must add to the query about the necessity for a Community initiative potentially involving more laws and more cash. The Council of Europe itself represents that spirit of co-operation and good will among the democratic nations of this continent, and it is advantageous that it concentrates upon the general rather than the specific aspects of protecting and promoting the cultural benefit so evident in Europe.

The EEC document envisages that, although the treaty of Rome is not specifically concerned with cultural affairs, its social, economic and fiscal provisions should nevertheless be implemented in the cultural sector. The Commission also disavows any intention to direct or co-ordinate national cultural policies. The first would surely create a conflict of sovereignty. The latter would equally create an overlap with the Council of Europe. However, the net result of seeking to complement could become a recipe to duplicate. The dangers of additional bureaucracy and political antagonism in decision making must be avoided with all determination.

The Select Committee on European Legislation felt that this document, Strong Community Action in the Cultural Sector, raised questions of political importance. I urge my right hon. and hon. Friends on the Treasury Bench to be circumspect in the interests of the arts and heritage as well as in the interests of our national law and national expenditure.

8.20 pm

Mr. Jeremy Corbyn (Islington, North)

Unfortunately, this debate is not well attended. It contains much of great significance because there are considerable long-term implications for political life in Britain and Europe in what the Minister of State said and the Dooge report proposed. I support what my hon. Friend the Member for Walthamstow (Mr. Deakins) said about the way that Europe treats Third world countries and the way in which Europe treats and throws out people who have come to Europe in search of work after Europe has grossly exploited their Third world countries. [Interruption.] The hon. Member for Northampton, North (Mr. Marlow), who is mouthing his usual platitudes from a sedentary position, might have the sense to tell what he believes, or is he still as obsessed with his continual attack on divided black families as he has been for the past few weeks since the welcome court decision in their favour? I hope that the House will for once give some attention to the plight of migrant workers throughout Europe

Mr. Marlow

Does the hon. Gentleman accept the competence and jurisdiction of the European Court of Human Rights, or would he rather that these decisions were made here?

Mr. Corbyn

I accept that a decision made by that court is legally binding in this country. If the hon. Gentleman preaches law and order, as he frequently does, he should accept that decision rather than mouth the racist platitudes he has uttered for the past few weeks.

In March 1985 I tabled early-day motion No. 537 on a refugee charter for Europe. It was supported by 45 other hon. Members. I asked that migrant people working in Europe be given political rights similar to those given to people already resident in Europe. I said that migrant workers should not be discriminated against continuously and systematically or be ignored by all the European institutions and, above all, by this Government. That early-day motion sought to explain the way in which asylum-seekers and migrant workers are badly treated and systematically excluded from political life and political consideration. Indeed, they have become an expendable part of the European work force. These serious matters affect 15 million people throughout Europe and should be properly investigated.

Recently, I attended a conference in France of the European Committee for the Defence of Refugees and Immigrants. That is not a Common Market body but a voluntary organisation. About 35 countries, most of which were European, attended the conference, but representatives from Africa, Asia and Latin America attended also. A daily bulletin was produced during the conference, reporting on the session and on the feelings and treatment of migrant workers in Europe. One bulletin contained a cartoon juxtaposing a car factory in the early 1960s with one in the early 1980s. During the early 1960s, this factory rapidly produced cars and employed migrant workers from all parts of the world. Those migrants came from poor communities, which were often impoverished by European policies — for example, countries in west Africa. The same company made a great deal of money during the 20 years to 1985. It then went bust and the workers were thrown out of the factory, their homes and Europe. I believe that the plight of migrant workers and refugees deserves serious consideratiion. They need political rights.

It is to President Mitterrand's credit that he has proposed that migrant workers in France should be given the vote in local elections. I believe that that right should be extended to national elections. Indeed, all migrant workers in Europe should be able to vote in all elections. In that way, their case could be properly considered and the discrimination practised against them would end.

Recently, there has been a number of discussions on these matters in the European Parliament. Two significant motions have been passed and a commission has been set up to combat the ever-growing threat of racism and fascism in Europe. Government Members might choose to ignore that threat, but it is a serious and growing menace. Fascism and racism thrive on economic stagnation, poverty, unemployment and zenophobia. They are led and promoted by zenophobic politicians, such as some Conservative Members, judging by their remarks when I began to speak. They are the sort of people who promote the horrors faced by many people in Europe. They are similar to the sort of people who turned a blind eye to the growth of fascism in Germany and other European countries during the 1920s and 1930s.

Mr. Forth

Will the hon. Gentleman give way?

Mr. Corbyn

I give way.

Mr. Forth

I am grateful to the hon. Gentleman for his unfailing courtesy. When talking about a committee such as this, will the hon. Gentleman help the House by distinguishing between the Right and the Left of politics? What does he find so objectionable about what he calls "fascism"—which is undefined—and what does he find so acceptable about the extreme Left? Will the hon. Gentleman assist the House by identifying what he means?

Mr. Corbyn

This is not a debate on political science. If the hon. Gentleman does not know what fascism or racism are, their basis or what they thrive on, he has no right to represent anyone. If he cannot recognise the evil of fascism, I fail to understand what he is doing here. He knows perfectly well what it is. Far too many people in Europe died because of fascism and the lack of opposition to what went on before the last war in Germany and other countries.

Mr. Richard Body (Holland with Boston)

rose—

Mr. Corbyn

The situation is serious. One can only welcome the fact that some European Parliament Members have been prepared to take up this issue and investigate the financing and sources of the fascist propaganda that is promoted throughout Europe.

Two other motions were recently passed by the European Parliament. One concerned the plight of Tamil refugees arriving in Europe because of the fear of intimidation in Sri Lanka. The other concerned the specific case of a migrant couple in Britain. The communal divide in Sri Lanka is great. The systematic exclusion of Tamil political leaders from Sri Lankan political life has led to an ever-widening gulf and serious violence. Many Tamil families have left their homes and either gone to India or sought to come to Europe to seek asylum. It is important to recognise that refugees and asylum-seekers have rights, whatever the country from which they come or the country to which they are going. If we turn our backs on them, we shall turn our backs on the basic humanitarian policies that should be enforced in every European country. The European Parliament was saying that the removal of Tamil refugees, and sending them back to Sri Lanka and the considerable dangers that they will face, is a serious matter, and that it was opposed to it.

However, a decision has been taken by the British and Dutch Governments, following the visits by the British Prime Minister and by a delegation of Dutch parliamentarians to Sri Lanka, which claims that it is safe for Tamil refugees to return, although there is no evidence to support that. Because those Governments are not prepared to consider the plight of the Tamil asylum-seekers whether they are in the Netherlands or here, who are trying to get out of the fear and terror of Sri Lanka, they have introduced a system of exclusion.

On 29 May, the Home Secretary introduced a visa requirement for any Sri Lankan national wishing to leave Sri Lanka and come to Britain. It is the first time that that has happened to a Commonwealth country, and it has serious implications. It is also, I believe deliberately, confusing refugees and asylum-seekers with the other issue of migrant law. The popular newspapers, and many of the less popular Tory Members, have sought to add to that confusion.

The United Nations High Commissioner for Refugees has addressed this problem of Europe and how it reacts to the influx of people from Third world countries. It is significant that a special session was held by Mr. Poul Hartling to discuss the large-scale influx from developing countries. He says that this has been a prominent feature of the world refugee situation. The report compares the large number of economic or political refugees taken in by countries in the Horn of Africa, central America and Asia with the position in Europe. There: Negative public attitudes and in some cases xenophobic reactions have tended to focus on asylum-seekers largely because of inadequate appreciation of their special status and needs as a group distinct from the much larger category of alien economic migrants, but also for reasons such as their limited prospects for successful integration in the prevailing economic climate. The report continues: the High Commissioner would like to suggest two guiding principles for co-operation between European Governments:

1. (a) that international obligations regarding the admission of the refugee/asylum-seeker arriving directly from his country of origin should be clearly reaffirmed,
2. (b) that practical arrangements for the reception and treatment of refugees/asylum-seekers should be in conformity with the particularly liberal and humanitarian spirit in relation to persons who seek asylum on their territory, which is part of the common tradition of countries in Western Europe."

Those are important statements, and the Government would do well to listen carefully to what Mr. Hartling has said, and the way in which he has put his case to the European Governments. They cannot go on treating people from the Third world countries as they do.

There is a large catalogue of cases of individuals who have been badly treated by either the British or other Governments with regard to migrant law or migrant status. I have already mentioned the recent European Court decision on divided families and one must hope—it is perhaps a faint hope—that the British Government will accept that decision, not in the grudging, miserable way that they have so far, but in its entirety and spirit. I hope that they will introduce the necessary regulations and changes to ensure that the judgment is carried out to the letter and in the spirit in which it was proposed.

I now move to a specific case, which was the subject of a motion carried through the European Parliament last week by 135 votes in favour with 28 against and three abstentions. The case concerns a Cypriot couple, Katerina and Vassilis Nicola, who unfortunately fell just outside the terms of the 1982 special arrangements that the Home Office made for political refugees from Cyprus. Tory Members may laugh and say that that is a good thing, but they have not seen the misery that those regulations cause to people and the honor and fear felt by many families because of the way in which our immigration laws operate.

This couple lost their home in the northern part of Cyprus in the war there in 1974, when the Turkish army invaded. They spent some time in a refugee camp and eventually made their way to Britain. They have worked consistently since their arrival here in 1976 and have made a good contribution to our society. However, they are treated as illegal immigrants and they have been threatened with removal. They have sought refuge in a church in Euston, and have already spent over 100 days there.

It is significant that newspapers and the media on the continent treat the story with far more seriousness and greater coverage than newspapers here. They see it as an indictment of what we would call a civilised society that a young couple should be forced to take refuge in a church to avoid being removed to a house that does not exist and to a country to which they cannot go. It is important that these issues be raised, and one must thank those Members of the European Parliament who are prepared to do so.

I fear that a debate on the prospects for European co-operation in the future and the proposals of the Dooge report ignore many things—the status of migrants and refugees, specifically — and deliberately ignore the economic relationship between Europe and many Third world countries. Such relationships tend to perpetuate the sort of economic neo-colonialism that was a feature of European prosperity in the past and some people intend it to be the case in the future.

If that is not serious enough, there is an even more serious aspect, which is the proposal implicit in the Dooge report, and other reports, of greater European defence reliance on NATO. The threat of a nuclear war in Europe is far greater, and is worse as a result of the proposals for the integration of some countries in Western Europe as part of NATO. I do not see any peaceful intention in those proposals, but merely an aggressive proposal that can only bring greater danger to the people of western Europe, and greater expense. That money could be much better used on many socially useful things.

8.37 pm

Mr. Tony Marlow (Northampton, North)

I am sorry that the hon. Member for Hamilton (Mr. Robertson) is not present and that, as a red herring in the debate, he sought to attack the Government on unemployment. Goodness knows how much and how deeply the Government care about the tragic problem of unemployment. Goodness knows how much the Government have done and achieved in fighting the evil of unemployment. Massive resources have been given to the Manpower Services Commission, imaginative programmes have been set up for young people, and there has been a freeing of business so that commerce and industry can provide real jobs for our people.

The hon. Member for Hamilton put the problem of unemployment into the European context, but he did not have the honesty to mention the fact that, of our population of working age, a bigger proportion of people is in work than in any other major western European country. I can see in my constituency the deep and worrying problems of unemployment. The level of unemployment in Northampton, North is lower than the level of unemployment in north Rhine Westphalia, the area in Germany in which the Ruhr valley is situated. If we have problems here, does the hon. Gentleman not recognise that other people have problems? All this simplistic, heart-on-the-sleeve concern, this throwing of other people's money at the problem without any thought about it, is something that we should deprecate.

Mr. Foulkes

Will the hon. Gentleman concede that they have problems in Germany, because Chancellor Kohl is following the same stupid, deflationary monetary policy of our Prime Minister and Government?

Mr. Marlow

I believe that the hon. Gentleman feels that he has made a cogent and devastating point. However, if he looked a little further, to France and Italy, which follow the Socialist policies that he would like here, he will see that they have the same problems as us. In Italy, they are rather worse.

Those who follow these debates in the House and outside, like Gaul, divide themselves in three parts. First, there are the nationalists. I have sympathy with them, but I am not a nationalist on this subject. They believe that we should have nothing to do with Europe. They believe that we are different, that we should have our own laws, that we should trade internally, that we should put up barriers and frontiers and that we should be self-sufficient. I have sympathy, but that I do not agree with.

Then there are the extremists, the Euro-fanatics, the federalists. They divide into two groups. There are those who want a united Europe by stealth — two steps forward, one step backward. Then we are in a position of no return—locked in with the chains around us. We are in a federal Europe and there is no way out of it.

They do this in several ways. In today's Daily Telegraph—and I dare say in other papers as well—there was a reference to a European organisation that calls itself the People's Committee, headed by a Signor Pietro Andolino, an Italian professor. The committee has suggested that there should be a European flag, a European anthem and a European sports team. I have not had a single letter from any of my constituents demanding these things, yet this is supposed to be a People's Committee.

These federalists try to insinuate policies in areas in which they have no competence. I have before me a draft conclusion on the European dimension in education. According to this, there is to be a European dimension in relevant subjects of the school curriculum and in teacher training courses. So Europeanism, federalism, is to be taught in schools—at the expense of what? Is it to be at the expense of religious education? I hope not. Is it to be at the expense of peace studies? The GLC should survive to see that.

There is also a draft directive on illegal immigration. What has that got to do with the European Economic Community? We discover that some of these European organisations suggest that we should have an immigrants day. Perhaps we should, but not as a result of a European request.

The next one is good. It is suggested that we should have a declaration against racism. Ken Livingstone should be here to enjoy that.

Then there are those who are more direct and even more extreme in the way that they try to achieve a federal or—as they would call it—unified Europe. At the top of that list are the Members of the European Assembly.

Another document kindly provided by the Commission arises from a draft protocol put forward by European Members of the Assembly. The Commission suggests that in the territory of member states—that is, throughout the whole of the EEC — a Member of the European Assembly—no doubt a very important person—should have immunity from any measure of detention and from legal proceedings at any time, not just during a session. So the Member could commit any crime or felony; he could go to a hotel or restaurant, refuse to pay the bill, and storm out. I suppose he might have droit du seigneur if he wanted it. Adolf Hitler should be here this very day; he would be queuing up to join the European Assembly so that he could breed his master race without let or hindrance.

As well as the nationalists and the Euro-fanatics, there are the vast majority like myself—the moderates—who believe that we are European and that we belong to western Europe. We always have done; it is just across the sea. We need Europe. We have interests in common with Europe. We want to trade and work with Europe. We have many common ideals. We want to work together, but only in free association on those ideals that we hold in common, as my hon. Friend the Minister of State said from the Front Bench at the beginning of the debate.

We must watch out for this creeping European federalism. There are two watchwords that we should bear in mind. We must watch the funds and we must watch those areas where people are trying to extend their competence. Above all, we must watch the European Assembly. At the moment it lacks power, but its only motivation is to achieve and acquire more power for itself.

We have said for a long time that the time would come when the common agricultural policy would cost so much that it would bump up against the ceiling of European own resources and that this would force a change in the common agricultural policy and bring about necessary reform. As we see, the opposite has happened.

I have before me an answer from my right hon. Friend the Minister of Agriculture, Fisheries and Food which sets out the cost of the common agricultural policy. For every £55 that was spent in 1981, in 1982 £63 was spent; in 1983 £80 was spent; in 1984 £92 was spent; and the budget estimate for this year is £100. On the basis of estimates alone, that expenditure has almost doubled over the short period of four years. When my hon. Friend introduced the debate, he tried to indicate that agricultural expenditure was under control. Even on the budget, it is 8 per cent. greater this year than it was last year. Heaven knows, the budget will be overrun, as it always is. One can rest secure on that.

Mr. Foulkes

It is guaranteed.

Mr. Marlow

It is guaranteed, as the hon. Gentleman says.

In European agriculture we are increasing production at the rate of 2 per cent. per year, and we are not increasing consumption. There are parts of the world, such as north Africa, which are desperately short of food. There are other black holes. Russia? Perhaps, but for how long?

We have an increasing surplus of agricultural production in Europe. There are problems in agriculture in the United States. In most of the world, competence in agricultural self-sufficiency is increasing. My hon. Friend said that the matter is under control and that we have got a grip on agricultural expenditure, but that has been said before. It was said four years ago, and expenditure went up. It was said three years ago, and expenditure went up. It is being said again this year, and expenditure will go up.

There is only one way to crack the problem of agricultural expenditure, and that is to put a ceiling on it. My advice to the House is to take the matter seriously. If we want a sensible agricultural policy and if we want to control the funds that our constituents as taxpayers have to spend on this extravagant area, we must think carefully about increasing European own resources.

I profess to being a good European, but those who have a different instinct and set themselves up in their way as good Europeans should think twice before approving this increase in funds. By approving the increase they will bring about the very horror that they are seeking to prevent. If they want to control European policy and have a sensible agricultural policy, they should not sign the cheque.

Mr. Forth

Does my hon. Friend share my concern that the Government's case for allowing an increase in resources is based on a budgetary disciplinary mechanism that they say will come into effect? Is he aware that the document on which that is based is littered with expressions such as "exceptional circumstances," "other developments" and "changing the reference framework"? Does he believe that the loopholes in the document mean that it is of little or no value in the context of discipline?

Mr. Marlow

The thing is littered with as many holes as Al Capone after he had been machine-gunned. It is like a colander: the cash will run through it. There is no safeguard in that document, as my hon. Friend has so rightly pointed out.

Of course, some people say that we might one day get agriculture under control. They are being totally unrealistic, unless we put a ceiling on funds. If agriculture did take up a decreasing proportion of European expenditure, what would the other money be spent on? Would it be spent on other policies? Do we want Europe to have other policies? If there is money to be spent, is it not better spent by ourselves, in our own countries, such expenditure being decided upon by our national Parliaments rather than by European institutions?

Mr. Corbyn

Is there not something obscene about the EC running up huge agricultural surpluses, in many cases denaturing or destroying crops, while only a couple of thousand miles away, in north Africa, thousands of people are starving for want of that food? Does the hon. Gentleman accept that the best action we could take would be to ensure that that food gets to north Africa as quickly as possible?

Mr. Marlow

I have no brief for the common agricultural policy as it currently exists, and the hon. Gentleman is right to say that there are massive surpluses. To be fair, however, at least 1 million tonnes of grain have been earmarked, and much has already been moved to that unfortunate area of the world. However, that will not solve the problem, because in north Africa there are political, distribution and other difficulties. I am sure that we should all like to solve the problems of that unfortunate area.

I am also worried about the creeping extension of competence in the EEC. Some able and ambitious people go to Brussels as Commissioners, civil servants—

Mr. Forth

As MEPs.

Mr. Marlow

—and as MEPs, as my hon. Friend rightly reminds me. Having arrived, they want to change things. They want power. The result is that in many areas where policies are not needed and where harmonisation is not required, these ambitious people put forward ideas and seek to promote themselves and their reputations. They often do that by bringing about measures which nobody really wants.

I said to the Minister in an intervention that Europe was about barter. Directives come forward thick and fast, in a basket, some of which we want and others we do not. To get those that we want, we must agree to directives that we do not want.

Yesterday we debated fast frozen foods, the debate resulting from a proposed directive that we agreed we did not want. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food said that the Government were against it, but that if it was changed, it might be found to be acceptable. I suspect that it will be changed, and while the Minister may not, even then, find it acceptable, as a result of the moral blackmail imposed by other European countries which want it—despite the fact that we in this country eat more frozen foods than any other European nation—we will be told that, in the view of the Government, sensible changes have been made and the directive is acceptable.

When that happens, a Government who say that they wish to reduce the amount of legislation will be introducing laws that the country does not want, placing burdens on people and increasing costs on retailers—in this case retailers of frozen foods — and setting up a hierarchy of inspectors and bureaucrats to make sure that the regulations are properly applied.

The Dooge committee wants a judicial area and a new media, a sort of EBC — a European broadcasting corporation. While I have no objection to anybody setting up such an organisation, I say let them do it with their own money. If established, it will not be successful. Indeed, it will probably prove to have an even smaller audience in the United Kingdom than Welsh language Channel 4 television.

The Dooge committee also wants to give the Commission greater executive responsibility. Is that the way in which we in Britain work — by giving more power to the bureaucrats? Should not power be vested in Parliament and Ministers?

The two main points that I have made are that we must watch the money and the power. It is our responsibility, on behalf of the people we represent, to control as much of the power and the money as we possibly can.

8.55 pm

Mrs. Ann Clwyd (Cynon Valley)

The hon. Member for Northampton, North (Mr. Marlow) would benefit from a period in the European Parliament, rubbing shoulders with people of nine other nationalities. It is clear that he knows little about the European Parliament. That was clear from many of the assertions that he made in his 20-minute speech, but more of that later.

I wish at the outset to pay tribute to the retiring member of the British Labour delegation in the European Parliament, Mrs. Barbara Castle. The Minister showed considerable interest earlier in the fate of Mrs. Castle. As one who served under her there for five years, I wish to pay a special tribute to her qualities of leadership. She is still the only British politician of international standing in the European Parliament. She is respected by people of all parties for the contribution that she has made to that Parliament in the last five years.

Much has been said in this debate about the old argument of national sovereignty. The longer I am in this House, the more I am amazed that, in particular, Conservative Members still believe that national sovereignty exists. Bernard Crick recently put the concept of national sovereignty in its place when he described it as an 18th century Whig doctrine intended to scare the respectable in the smaller nations into believing that if they do not leave the key decisions to London, law and order will break down. I am surprised that its proponents still believe that national sovereignty could enable us to opt out of what is a highly interdependent economy.

About 65 per cent. of the world's GNP is controlled by 1,000 multinational companies. Those companies have such powers to switch jobs and capital that they can upset Governments and economies. Companies are increasingly planning their corporate strategies on a Europe-wide basis. What influence national sovereignty then?

The hon. Member for Mid-Worcestershire (Mr. Forth), who is always keen to leap to his feet when this subject is discussed, played a key part in defeating an attempt in the European Parliament to control the activities of multinational companies. Those who claim that that Parliament has no powers should ask why the multinational companies spent so much time, when we were attempting to get that legislation through, lobbying Conservative Members in an attempt to frustrate what was a modest step to control their powers.

Mr. Forth

Does the hon. Lady agree that the wealth-creating powers of the multinational companies far exceed any power that we have yet seen from centrally controlled bureaucratic or Socialist systems and that the potential and actual power for good of the multinationals is correspondingly greater? Cannot she see the evidence for that with her own eyes?

Mrs. Clwyd

It is very interesting that the hon. Gentleman was one of the key people in the committees of the European Parliament and in the Parliament itself in frustrating the attempt to control the power of the multinationals. Whatever he may say tonight, that was a very retrograde step and one which many Members on the Government Benches I believe now regret. When, as one of the documents that we are dealing with tonight says, they are continuing to debate the Vredeling directive in an attempt to resurrect it, I hope that hon. Gentlemen realise the error of their ways.

The attempt to introduce the Vredeling proposals provoked a controversy out of all proportion to what was being proposed. Employers' organisations in Europe, individual companies and, above all, American-based multinationals launched a campaign of unprecedented virulence. Members of the European Parliament were lobbied with a persistence and intensity that had never before been experienced. Indeed, some Conservative Members, whose party is of course represented in the European Parliament, were very prominent in the success in frustrating those very modest proposals. If only some of them had come clean and told us quite clearly that they were representing some of those multinational companies, perhaps some of the employees' organisations in Europe would have launched a similar campaign in an attempt to get that legislation through the Parliament.

Mr. Corbyn

Does my hon. Friend know roughly how many jobs have been lost in all parts of Britain as a result of multinational companies shifting their investment out of this country into Europe because of the free movement of capital that is explicit within the European Economic Community? Is she aware how many of those jobs would have been lost as a direct result of the activities of Conservative MEPs in opposing the move to try to bring some measure of democratic control over completely undemocratic and ruthless multinational organisations?

Mrs. Clwyd

Yes, and I seem to recollect that the hon. Member for Cheltenham (Mr. Irving), when he found that a multinational company was proposing to move from his constituency to another constituency overseas, also expressed the view at that time that he wished we had something similar to the original Vredeling proposals operating in this country.

Thousands of jobs, certainly in my old European constituency, were lost because multinational companies were not forced to consult and inform their workers about their plans to relocate overseas. I hope that as soon as possible the European Parliament will be able to resurrect the Vredeling proposals.

I want to talk briefly about the powers of the European Parliament, because I believe that they ought to be increased. I do not believe that one should criticise the European Parliament for not being particularly progressive in the past five years. When one considers how long it has taken to win radical reforms at Westminster, it seems unrealistic to suggest that the European Parliament could have delivered a lot in the past five years. The Parliament lacks power to back its sometimes radical proposals with anything except draconian measures, such as sacking the Commission en bloc or throwing out the whole budget. So, in my view, we cannot criticise the European Parliament—it is like hobbling a horse and then expecting it to run — while the major powers rest with the Council of Ministers.

One proposal is coming before the Council of Ministers next week which in my view will have a considerable effect on employment prospects in this country, particularly in Wales, where the steel industry has already been badly affected by the draconian cuts imposed upon it by this Government some years ago. Once again it looks as though the Government are going to sell out on a matter of considerable importance to the Welsh steel industry. Hon. Members on the Government Benches who have been crying crocodile tears tonight over employment will know that Wales, like other regions of the United Kingdom, is suffering from the effects of the policies imposed upon it by this Government, and is particularly badly affected at this time.

Therefore, the EEC directive on containers of liquids for human consumption, which was considered by the Scrutiny Committee yesterday, is a matter of considerable importance to us in Wales. I should like some specific assurances from the Minister tonight that he will ensure that when this directive is implemented—as it appears it will be, because the United Kingdom Government is to agree to it next week—the steel industry in Wales will be protected.

Mr. Marlow

Does not that emphasise the point that I was making? The hon. Lady and Her Majesty's Government know that that is a bad policy and that we do not want it, but because of the bartering—if one wants two reasonable policies one has to put up with one nonsense—we are having that policy. That is one of the problems with the Community.

Mrs. Clwyd

There are many problems in the Community, all of which I cannot address tonight. One which I believe the hon. Member for Northampton, North would agree is of some importance is that in the Council of Ministers next week the United Kingdom Minister will agree that directive. He has assured us that, provided some measures are vigorously applied by the Commission, the directive will provide a defence against the erection of artificial trade barriers. That relates, in particular, to safeguards which will ensure non-discrimination between different types of container and different types of packaging and to the non-obstruction of products in one member state which are legally produced and marketed in another.

It would be helpful to know what criteria and procedures will be instituted by the Commission to ensure that no discriminatory legislation is allowed to be implemented, because the Commission does not have a good record of ensuring that steel quotas, for example, are implemented in all member countries with the same rigour.

The Government are clearly aware of the deep anxiety in south Wales about the discriminatory nature of the deposits systems and the dangers that they hold for the tinplate industry. The long-term future of the beverage container and, therefore, that important sector of the British Steel Corporation's business will now become dependent upon the existence of a proper framework to ensure that the latest qualifications to the directive are properly monitored by the Commission and the rules rigidly applied.

Apparently, the Government look to the Commission to secure the implementation of the promised safeguards for United Kingdom trade and hope that the trade will inform the Commission of any potential infringements. Proper enforcement is clearly a crucial factor in the Government's acceptance of the directive in its present form, but considerable anxiety still exists, and existed within the Scrutiny Committee, as to the Commission's ability to monitor the operation of the directive in the various countries of the Community.

We expect any serious difficulties that occur to be reported by the Government to the House. The Minister told us that a satisfactory programme can be based on voluntary agreements without recourse to legislation. If that proves not to be the case, I hope that the Government will bring forward appropriate subordinate legislation, because this country's tinplate industry must not be penalised by lack of proper scrutiny of the legislation by the Commission.

In the document entitled "Developments in the European Community, July to December 1984", a section is devoted to social affairs, especially to the recommendations on positive action for women and the changes in the European social fund.

I am a member of the European Parliament and of its social affairs and employment committee. We warned the United Kingdom that changes were taking place in the social fund-so—called reforms—which would adversely affect the United Kingdom. We said that if those reforms went through there would be less money available in the social fund for the United Kingdom. No notice was taken of those warnings. That shows a serious lack of understanding by the Welsh Office—I am sorry that the Secretary of State for Wales is not present to reply to this point—because Wales has a strong argument to put forward against reforms of the social fund which would mean spreading money more thinly throughout the United Kingdom. I was told by the Welsh Office that it was a matter for the Department of Employment and not for the Welsh Office. The Welsh Office should have been fighting Wales's corner to ensure that it received its fair share of the money available under the social fund.

Those warnings have been borne out because, strangely enough, Powys is the sole area in Wales that will not receive any benefit from European Community assistance for training projects for at least the next three years. That point has already been taken up by Powys county council through representations to the Government and to its representatives in the European Parliament. However, no notice was taken of the particular situation of Powys and other rural areas in Scotland and Cumbria that have also been excluded from that section of the social fund. I am sure that that will not go unnoticed in Brecon and Radnor.

An interesting suggestion in the European social fund directive is to make special allowances for categories of pople who have difficulties in the job market. Those cover vocational training for or recruitment to jobs for women in occupations where they are under-represented. But again, the record of the United Kingdom Government on that aspect of the social fund is very poor. Millions of pounds have already been lost to the United Kingdom and thousands of women have been denied training opportunities because the Government have broken the sex discrimination laws on their application of the European social fund. That is again further evidence of the Government's disregard of women's needs and rights.

Fifty-eight per cent. of money in the European social fund for the training of women has gone to West Germany, while only 3 per cent. went to the United Kingdom The only people we can blame for that are the Government. The fact that the highest proportion of the £16 million in that section of the fund went to West Germany is a measure of the importance that that country gives to the training of women compared with the attitude in the United Kingdom. Training programmes for women have received financial backing from the European social fund and have taught women a wide variety of skills in their countries. They have been trained as mechanical engineers, toolmakers, mechanics and fitters. They have been trained in manual skills as painters and joiners. In electronics, they have been trained as fitters and engineers.

The Government have operated a deliberate policy to conceal that section of the fund. I have had lengthy correspondence with relevant Ministers over several years that emphasises that point. I was told by the Department of Employment that it does not advertise that section of the social fund because it discriminates in favour of women—despite the fact that the sex discrimination laws allow for such discrimination in areas where women were previously discriminated against. I hope that now that that section of the fund is being reintroduced the Government will implement it fully so that women in our country may have the benefit of it.

The Government have sent the draft directive on parental leave to 30 organisations for consultation. The way that the consultative paper has been framed is clearly designed to put people off the idea. It is crucial that that directive is implemented and that we give it full backing.

Given the need to change the structure of the employment market because of high unemployment, if parental leave applied to both parents men could take time off without loss of identity. The draft directive would help create a much-needed balance between home and work because it applies equally to men and women and would give men the legal right to take time off when their children were born. That is a further example of the work being done in the European Community to achieve equal rights for men and women and of the work that should be done by the United Kingdom Government.

9.15 pm

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

When replying to a debate, it is not uncommon to begin by saying that it has been a wide-ranging debate but few debates are as wide ranging as debates on the European Community and that is even more true of today's debate in view of the large amount of documents before us.

It is a pity that in opening the debate the Minister of State — I see that he has not yet returned—spoilt an otherwise good speech with a cheap jibe about Mrs. Barbara Castle. As my hon. Friend the Member for Cynon Valley (Mrs. Clwyd) pointed out, Mrs. Castle has a great record of service in the European Parliament. Moreover, her successor was elected in almost exactly the same way in which the Minister's heroine, the Prime Minister, displaced her own predecessor, in a democratic election.

The Minister's comment was unfortunate for the Government, but it was fortunate for me as it allows me to mention briefly the serious split within the Conservative group in the European Parliament and between that group and Conservative Members of Parliament in Westminster. As the report produced by Mr. David Curry shows, the split is so severe that the Government have had to employ a redundant Conservative Member of the European Parliament at the taxpayers' expense to try to patch up the differences. The report referred to personal back-biting between Conservative Members of the European Parliament and Conservative Members in Westminster and stated: We should stop pretending that we can reform the CAP or even the budget. That shows the wide gulf between the Government and their representatives in the European Parliament.

Even more seriously, last Wednesday when the European Parliament considered important documents about European union and the recommendations of the Dooge committee, Spinelli and the rest, the British Conservative group—unlike the British Labour group—was split, eight of its members voting against the resolution and the rest voting in favour of it.

In the light of all that, it ill behoves Ministers to talk about proper democratic elections within the group.

Mr. Renton

I should put the record straight about David Curry's report. The report did not say that the CAP could not be reformed. It said that action was required from the Council to reform it. That is what we are doing.

Mr. Foulkes

I have the report here, but that is not what I read.

I am sure that the hon. Member for Northampton, North (Mr. Marlow) does not agree about reform of the CAP. A parliamentary answer to the hon. Gentleman today from the Minister of Agriculture, Fisheries and Food showed that the amount of money being swallowed up by the CAP had effectively doubled in four years. No one could describe that as effective control.

Mr. Norman Buchan (Paisley, South)

Mr. Curry did not just say that the CAP could not be reformed. He said that we should stop trying to hoodwink people into believing that it could be reformed.

Mr. Foulkes

My hon. Friend is absolutely right.

I hope that the whole House will also deplore the complacent attitude of the Minister to the bankruptcy of the European Community. We hear very little about that. I have attended two or three debates in the past 12 months in which we have discussed ever more loans to the European Community—in Eurospeak they are known as recoverable advances because technically we are not allowed to give loans—involving hundreds of millions of pounds. I gather that the Community has today demanded that £115 million be paid immediately, one month in advance, because it is so bankrupt because, as my hon. Friend the Member for Paisley, South (Mr. Buchan) said, the CAP is out of control.

As my hon. Friend the Member for Hamilton (Mr. Robertson) said, it is regrettable that the Minister of State did not mention unemployment. The hon. Member for Northampton, North took that up. I said in an intervention that deflationary policies in Germany are helping to create the same level of unemployment there. The hon. Gentleman also mentioned France. It is facing difficulties because it is trying to reflate whereas the majority of member states are following deflationary policies. We look forward to there being more Socialist countries, all of which are reflating and creating jobs, wealth and growth in the Community.

My hon. Friend the Member for Hamilton said that unemployment is the great unmentionable. Budgetary discipline is equally unmentionable.

Mr. Spearing

It does not exist.

Mr. Foulkes

Perhaps it is wise not to mention it because, as my hon. Friend the Member for Newham, South (Mr. Spearing) says, it does not exist.

It is unfortunate that the Community seems to concentrate on trivia such as flags, anthems, European passports and more duty-free goods. Extra duty-free goods are fine for those of us who are rich enough to fly backwards and forwards, but for the majority and the 4 million unemployed desperate for an opportunity of a job, such matters are trivia indeed.

The hon. Member for Welwyn Hatfield (Mr. Murphy) mentioned cultural co-operation. The Commission, those great men of experience, are talking about studying the employment implications of new audio-visual technology, which is useful, and closer co-ordination of European media policies to avoid internal competition and to strengthen cultural industries against external competition. In other words, Koronationstrasse is to be protected against the invasion of "Dallas" and "Dynasty". Our highly paid commissioners have more important things to discuss. As the hon. Member for Welwyn Hatfield said, the Council of Europe has a remit for considering such matters on a wider front.

When the Commission and the Community talk about such trivia, they also come up with things that are a little more sinister. For example, the Commission recently said in a programme: European citizens should be able to travel freely throughout the Community"— this is the sting— without being inconvenienced as consumers by differing VAT rates. The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) and I can cope with the different VAT rates. Behind such a suggestion is harmonisation upwards. My hon. Friend the Member for Hamilton mentioned other tax rates.

I have said that trivia are being discussed, but what should be being done? We have much poverty in Britain. The first scheme under the poverty programme was highly successful, and £21 million is proposed in the second scheme. Unusually, 70 per cent. of the finance for programmes put up by voluntary organisations to help with research and other activities concerned with poverty comes from public sources. On 21 December 1984, the Secretary of State for Employment told the hon. Member for Manchester, Withington (Mr. Silvester) that the programme would continue. The Government expert from the Department of Health and Social Security said that those programmes can be very important and most effective in countering the effects of poverty.

They will be important and most effective in Wales and England, but not in Scotland. My hon. Friends who represent Scottish constituencies will be especially worried that one of the good helpful schemes from the European Community, which even the critics of the Community would welcome, will not be available in Scotland. The Minister of State who represents a Scottish constituency, which includes Wester Hailes and other areas which could benefit from the scheme, should be particularly ashamed that we are not going ahead with it.

The regional fund can also benefit the United Kingdom. My calculation—I used one of the new demonstration telephones that we are to have in the House, no doubt at enormous expense, which have the advantage of a calculator—

Mr. George Robertson

And being British made.

Mr. Foulkes

As my hon. Friend said, another advantage is that the telephones are British made. With that calculator I worked out that only 5.6 per cent. of the new Community budget would be spent on the regional fund. There will be a decrease in the draft budget. The Government's own review of regional aid shows clearly, as does a reply I received from the Parliamentary Under-Secretary of State for Trade and Industry on 5 March, that vast areas of England, Scotland and Wales will lose out on regional aid because of the reviews of travel-to-work areas and of regional assistance. As a result of that, European aid will be lost to vast areas of the United Kingdom. Therefore, we shall receive less of that 5.6 per cent.

There is the integrated Mediterranean programme. The Greeks are a shrewd lot. In agreeing to the arrangements for the accession of Spain and Portugal, the Greeks extracted three conditions from the EC. The third was a redeployment of budget finance towards Greece. If we redeploy 6 billion ecu to Greece — a huge sum—it will mean less for our poor areas. Britain will lose out yet again.

Mr. Deakins

My hon. Friend makes an important point, because the agreement with Greece is merely the first step. It seeks to safeguard the Greek position on Mediterranean agricultural products before the entry of Spain and Portugal to the Community. When Spain and Portugal become member states, there will be increased pressure from Greece, and the Spanish and Portuguese will also ask for more.

Mr. Foulkes

I am grateful to my hon. Friend for that support and amplification.

The social fund is only 4.9 per cent. of the budget because of the huge sums swallowed up by the common agricultural policy. Again, there will be no increase. Yet demand in the social fund has increased by nearly 60 per cent., as my hon. Friend the Member for Cynon Valley pointed out. The social fund is a success story, and more and more people and employers want to take advantage of it.

Mr. Marlow

Why do we have to send money to Europe for regional or social funds so that the Community can allocate priorities and send it back to the United Kingdom? Why do we not keep that money here? The hon. Gentleman says that we are missing out on these schemes. He should realise that under our system of rebates we receive a finite sum and, therefore, if we do not receive it for one policy, we receive it for another policy.

Mr. Foulkes

I understand the circular argument, and it really is a circular argument. One of the ironies is that money is spent on areas, which if it were not for the Community and because the Government are so reactionary, they might not spend money. Although demand has increased by nearly 60 per cent., the supply will increase by only 6 per cent. The rules have been changed, and areas have been excluded. As my hon. Friend the Member for Cynon Valley so eloquently said, one of the areas excluded was Powys, in which is Brecon and Radnor. I hope that that will be shouted loud and clear—I shall be there a week today—from the hills and in the valleys—

Mr. Rifkind

In Welsh.

Mr. Foulkes

Most of the people in Brecon and Radnor speak English, as the Minister of State knows. Indeed, 8 million people in the Community will lose out because of the restrictions on the social fund.

Fourthly, I must mention the importance of food aid. It has been mentioned by several hon. Members, and many of my hon. Friends were especially worried about the cost of the mountains. It is a criminal disgrace, and a blot on the landscape of the Community, that it costs nearly £2 billion to store those huge mountains. My hon. Friend the Member for Paisley, South knows the great work that was done by the MEP for Glasgow, who obtained some frightening figures for the rate of destruction of the food. For example, the Community destroys 5,266 oranges every minute. That is criminal when people in the Third world are starving. Recently, I obtained information about the growth of the mountains. Far from being controlled, they are now out of control. The butter mountain has increased by 36 million tonnes, worth £50 million, and the beef mountain trebled between December 1983 and December 1984.

At the same time, the report of the Select Committee on Foreign Affairs—I pay tribute to the Chairman of that Committee, the hon. Member for Stroud (Sir A. Kershaw), and to my hon. Friend the Member for Newham, South, who is a distinguished member of the Committee — entitled "Famine in Africa" points out some of the problems. Its recommendation No. 34 suggests that The Government should initiate urgent action to make … intervention stores … readily available for emergency aid. The report also states that the intervention stocks are owned by the national Governments but that the EC must finance them when they are sold out of intervention. But the EC does not have the money. The limited amount that it has been using has been taken from other areas. Money taken from the Bangladesh budget has gone to sub-Saharan Africa. It is taken from those who are starving and given to those who are dying.

The hon. Member for Northampton, North said that the commitment made at the Dublin summit was to supply 1.2 million tonnes of grain, but only a few thousand tonnes have been delivered. The Ministers who represent us in the Community must put on some pressure to send those disastrously huge stocks to the starving people in the Third world.

I could have mentioned many more matters, but I wish to give the Minister time to reply to all the points that have been made. However, in the time remaining to me, I shall make two final points. First, the report of developments in the EC between July and December 1984 mentions political co-operation. When he introduced the debate, the Minister of State was as selective as usual when speaking about political co-operation. He exaggerated the support that Britain received on the Falklands. Much arm-twisting was done to get some of the reluctant member states into line. However, I share his analysis of the Venice declaration. What he did not mention — I am raising these matters because I have a Front-Bench responsibility for them, as does the Minister who will reply to the debate — was Latin America. The European Parliament has passed an important resolution on Chile, suggesting that Ministers combine to take some action against the vicious, oppressive regime in that country. It is about time that the EC considered a joint political approach to the matter, and I agree that the setting up of a small political secretariat might help in that direction—[HON. MEMBERS: "Oh!"] I have got some Conservative Members worried now.

Secondly, I refer to Central America. There was a useful meeting when the Foreign Ministers of the Community met in San Jose to discuss the joint action by the Community countries towards Central America. I hope that the Minister will say that that will be followed up, and that the British Government support Claude Cheysson's initiative for financial aid to some of the poorer countries of Central America. I hope that, with political co-operation in the Community, there will be scope for the countries of Europe to develop an independent line instead of slavishly following the dangerous American line, particularly on Nicaragua. That would make political co-operation worth while.

We in the Opposition recognise the importance of the Community as a forum for positive co-operation between the countries of Europe. It is an important forum, but it is not the only forum. Our co-operation has produced the airbus without the need for institutions, which has been good. We have the Council of Europe, as the hon. Member for Welwyn Hatfield said, but we agree that we should use the Community, while we remain members, to promote our common interests. As my hon. Friend the Member for Hamilton rightly said, the national interest need not necessarily be divorced from the common interest. We have seen useful work on the Esprit programme and acid rain, and we hope to see it on EUREKA as well. However, as has been said by many people, we regret how much the Community is dominated by the common agricultural policy.

We recognise the value of a European voice in foreign policy so that we can be more powerful in our criticism of the superpowers, where it is appropriate to do so. Perhaps we can be a greater force for peace in Europe. The Opposition support the increasing awareness among our sister Socialist countries of the need for a policy of co-ordinated expansion to end the common scourge of unemployment. Countries such as West Germany will be Socialist. It is a race between Britain and West Germany to see which returns to Socialism first.

We believe in co-operation in areas such as high technology, which is necessary to counter the increasing domination of the United States and Japan. However, we reject the worship that we see among Conservative Members of the internal market as an end in itself. It may help in the long term, but it will not solve the major problems of unemployment and poverty that face us at the moment. If the Government think that it will, it is a vain hope.

We reject any idea of a united states of Europe. We reject petty harmonisation for the sake of it, for example on the internal temperature of frozen peas, as we saw last night. Nevertheless, we recognise the need for positive co-operation with our neighbours on matters of mutual interest. We look forward to a Labour Government co-operating with other Socialist Governments in the European Community to get Britain and Europe back to work.

9.38 pm

The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Renton)

I can agree with the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) on one thing: it has been a wide-ranging debate. But I cannot agree with him on very much else.

One thing that I noticed—I am sure that my hon. Friends did too—in the speeches of the hon. Gentleman and of the hon. Member for Hamilton (Mr. Robertson) was that they reminded me of the wolf in the children's story that says, "I'm going to huff and I'm going to puff and I'll blow your house down," to the piglets. The two hon. Members both huff and puff, but they do not quite blow the House down. Why is that? It is because in them both there is a strange sense of worry. On the one hand, they think that they should appease their hard Left, oppose Europe with all their strength and oppose anything that the Conservative Government support. On the other hand, they have a nasty feeling that perhaps the Common Market will succeed, so they should be pressing for more reform more quickly. They talk about EUREKA and Esprit and ask why we do not get on with those things more quickly. They try to ride, therefore, two horses at the same time and, like Barbara Castle who did the same thing, they do the splits. That comes out in their speeches.

The Opposition will adopt the same ambivalent position when I tell them that the Government propose to accept their amendment. The hon. Member for Hamilton said how important it was to have a debate on these documents, so it is a great pity that nowhere does the Opposition amendment mention the documents. Although we accept the amendment, I have reservations about its wording.

First, it refers to "planning jobs." We do not believe that the job of the European Council is to plan jobs. Nevertheless, it is of very great importance to it. The hon. Member for Carrick, Cumnock and Doon Valley referred to unemployment in the European Community as the "great unmentionable", but he perhaps forgot that at the European Council in March it was reaffirmed that it is of prime importance that each Government in the European Community should combat unemployment. Therefore, the Government do not accept those words, although we accept the importance of tackling unemployment.

Secondly, the Government do not believe that the reference to the European Council diluting its energies by focusing on less important goals is right. The goals upon which we have focused — improvements in decision-taking, the internal market and political co-operation — are very important.

In a well thought out and philosophical speech, my hon. Friend the Member for Wantage (Mr. Jackson) referred to the British as "slow-moving, unimaginative, insensitive and arrogant." All of these words referred to our failure to work more quickly and speedily towards taking the European Community more seriously. I would say to him, in the words of Clemenceau, "Pour commencer, il faut commencer." In the last 12 months since the Fontainebleau summit there has been a sea change in Community affairs. I say this with some pride because it has a great deal to do with the leadership that Britain has given. At Fontainebleau, the long, enervating struggle for budgetary reform came to an end. The policy was established of budgetary discipline through agreed financial guidelines. From the not very easy position of demanding difficult and unpopular reform the United Kingdom has moved smoothly and far from unnoticed to a position of constructive leadership in Community affairs. Our hands are at last off the brake and on to the steering wheel.

Mr. Forth

My hon. Friend has just touched upon one of the keystones of the Government's policy: his claim that budgetary discipline has been introduced. Will he tell us in what respect discipline can exist when the very document that purports to bring that discipline into existence includes explicit references to exceptional circumstances, aberrant developments and changes in the reference framework, all of which appear to allow for the complete breaking of any discipline that we may have hoped to introduce into the budgetary procedures?

Mr. Renton

I am sure that my hon. Friend will catch your eye, Mr. Speaker, next Tuesday in the debate on own resources. I am sorry that he did not catch your eye this afternoon.

The process began at Fontainebleau — [HON. MEMBERS: "What is the answer?"] I shall not become involved in next Tuesday's debate tonight, unlike my hon. Friend.

Mr. Speaker

Order. I am afraid that I cannot guarantee that!

Mr. Renton

The change began at Fontainebleau and developed through the Dooge committee. I should like to join in the tribute paid by my right hon. Friend the Member for Guildford (Mr. Howell) and other hon. Members to the work of my hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) in the Dooge committee. I know that his thinking on the internal market was very much reflected in the final report.

Mr. Marlow

Will my hon. Friend give way?

Mr. Renton

I should like to make some progress and then I shall give way.

The steps that have been taken during the past few months have embodied British ideas, initiatives, modifications and improvements that have increasingly met with the approval of other Governments. These are, in effect, the means towards completing the internal market, towards quicker firmer decision-taking to bring it about, towards closer political co-operation in dealing with the world at large and towards a more efficient, institutional balance, thereby building a more coherent and successful European partnership in which, as the hon. Member for Hamilton said, more employment in the Common Market would be a main objective.

Cultural co-operation and frontier control are two issues that arise from the documents. One of the documents that the Scrutiny Committee recommended for consideration was "Strengthening of Community Action in the Cultural Sector". It is essential to avoid stifling creative expression by bureaucratic controls, whether they be national or Community. Culture is not strengthened by organising it — I note the comments of my hon. Friend the Member for Welwyn Hatfield (Mr. Murphy) on caution and circumspection—hence the independence that we allow our cultural institutions. Nevertheless, we believe that there is a case for greater co-operation on cultural questions in the Community, provided it does not cut across activities in the Council of Europe.

Our approach, therefore, is to encourage co-operation between Community cultural bodies where this will be productive and, on occasions, between Community Governments. I remind the House of the CSCE cultural forum in Budapest on which there has been close co-operation between member states.

We believe that it is right to encourage our partners to think of the European Foundation as the right body to take on cultural tasks. What of Labour's cultural policy for Europe? The last we heard was from the Leader of the Opposition who proposed shipping the Elgin Marbles around the world from country to country as a kind of travelling Acropolis. Has the right hon. Gentleman developed these exciting plans any further?

Mr. Buchan

As the person who gave the pledge that we will return the Elgin Marbles, I repeat it—we will return the Elgin Marbles. Does the hon. Gentleman agree with the cultural commissioner, Carlo Ripa di Meana? Does the hon. Gentleman know what I am talking about? If not, will he not be quite so clever?

Mr. Renton

We must treat this matter with considerable circumspection. We believe in the independence of our cultural institutions. This is an area in which the Community is advised to move circumspectly and cautiously. I am pleased to hear the hon. Member for Carrick, Cumnock and Doon Valley say "Hear, hear".

The House must consider two documents on frontier controls in the European Community. I remind the House that, when Ernest Bevin was asked about his foreign policy aim, he said that it was "To go down to Victoria station, get a railway ticket and go where the hell I like without a passport or anything else." I have a lot of sympathy with this point of view, which corresponds to the strong feeling of ordinary men and women who travel abroad in their millions, many of them bound for destinations in the Community. The reduction of frontier controls is part of the drive to which we have given priority to make a reality of the Common Market by doing away with unnecessary bureaucratic controls at Community frontiers.

I had talks on 4 June with my French opposite number, M. Baylet, about improving the arrangements for excursionists going to France, but we have to recognise that Ernie Bevin's vision will not be realised overnight. As the people's Europe committee pointed out, there are differences between land frontiers on the one hand and sea and air entry points on the other. The United Kingdom for example is able, for geographical reasons, to rely on controls on the frontier instead of internal controls.

Moreover, it is vital that freer movement across the frontiers should not weaken defences against drug trafficking, terrorism or illegal immigration. Recent events have demonstrated yet again how important it is not to drop our guard against terrorism.

Therefore, the answer for us is clearly that we have to consider how to work with our partners to find ways and means of allowing bona fide travellers and goods to cross inter-Community frontiers with a minimum of dislocation and delay. If this movement is to make progress, we shall have to think in terms of strengthening the Community's external frontiers. The answer is to keep track of terrorists and drug smugglers not only out of the United Kingdom but out of the European Community as well.

Mr. Marlow

My hon. Friend the Member for Mid-Worcestershire (Mr. Forth) asked a question about financial discipline, as my hon. Friend the Under-Secretary had said that this was operating. My hon. Friend the Member for Mid-Worcestershire then proved that financial discipline was not operating in the Community. My right hon. Friend the Minister of Agriculture, Fisheries and Food gave me an answer today saying that agricultural spending this year is budgeted to be 9 per cent. greater than it was last year and, as we all know, the budget will be exceeded by a good 10 per cent. Can my hon. Friend tell us exactly how financial discipline is operating, because the House is waiting with bated breath?

Mr. Renton

I regret that I gave way to my hon. Friend. I shall now deal with some of the other points raised in debate. My hon. Friend will have his opportunity to speak on Tuesday, if he catches your eye, Mr. Speaker, and will be able to discuss own resources.

My right hon. Friend the Member for Guildford, in a thoughtful and well-informed speech, spoke of the EMS. We have an open mind on it. We have considered it carefully and we are still ready to consider joining it when the time is right. However, with regard to his remarks about the governor of the Bundesbank welcoming us, I should point out that we have had fewer restrictions than many other western European countries, including the federal reserve, on the use of ecus and the holding of ecus in our country. This has been a progressive step forward for us.

I join others in congratulating the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) on his recent award. He spoke about decision-taking, a subject also touched on by the hon. Member for Walthamstow (Mr. Deakins). I shall briefly sum up the position of the Government and the Secretary of State. While accepting the continuing principle of the national veto, we wish to see use of the possibilities under the existing treaty, first to make more use of majority voting, which can be used under the existing treaty. Secondly we wish to use the abstention procedure so that decisions are not prevented where the treaty requires unanimity. Thirdly, we agreed that where the European Council decides on a specific objective, member states should not use unanimity procedures to prevent implementation. Lastly, we agreed to seek agreement where member states ask that the voting be postponed because of an important national interest that they will explain formally to the Council. Against that background, our proposals will be considered at the European Council next week.

Sir Russell Johnston

rose—

Mr. Renton

I ask the hon. Gentleman to forgive me, but I cannot give way as I wish to make progress.

My hon. Friend the Member for Reigate (Mr. Gardiner) spoke well on the attention that should be given to employment and the development of high-tech within the Community. I wholeheartedly agree, and it is remarkable that 15 million new jobs have been created in the United States over the past 10 years, whereas no net new jobs have been created in the Community. It is for that reason that I have already called attention to the importance the March Council attached to unemployment within the Community.

On high technology as well it is clear that if a technological Community is to develop we have to change from being so dependent on the United States and on Japan for our supply of computer equipment and electrical goods. These are all problems that will be at the forefront in considering the French suggestion of EUREKA.

I must come back to the question of Mrs. Castle, of whom the hon. Member for Cynon Valley (Mrs. Clwyd) spoke so warmly. Although I am sorry Mrs. Castle lost her job in the European Parliament, I do not think that we should have too much sympathy for her, bearing in mind that it was she who led the walk-out of the Labour MEPs during President Reagan's speech—[Interruption]—in celebration of the 40th anniversary of VE day and thus caused us shame in front of that entire nation on which we most depend as our strongest NATO ally in the defence of western Europe. I heard cries of "That hooligan". Who has appeared to a greater extent as the political hooligan of western Europe than Les Huckfield who produced a hooter to drown the debate in the European Parliament, thus causing the sitting to be suspended? I wait for any comment from the Opposition Front Bench or from the Leader of the Opposition on the new leadership of the Labour party delegation to the European Parliament. The new leader is Mr. Lomas, a member of the World Peace Council, a body in which the hon. Member for Oldham, Central and Royton (Mr. Lamond) is so active.

Mr. Foulkes

On a point of order, Mr. Speaker. Is it in order for the Minister at this late stage to enter into a personal attack on a Member of the European Parliament in such a disgraceful way? Does this not indicate that he is totally incapable of answering the debate properly?

Mr. Speaker

Every hon. Member and every Minister makes his own speech and must justify it.

Mr. Buchan

On a point of order, Mr. Speaker. This is the general rule of the House. When the last two minutes of a debate are taken to make this kind of attack, unless we get an opportunity to reply, it is a disgrace to the rules and traditions of the House. The Minister should withdraw his remarks now.

Mr. Renton

Methinks the hon. Gentlemen doth protest too much. They know very well that Mr. Lomas is dignified by one thing only, that he has reasserted his party's belief that the Community is no place for this country. Is that the view of Opposition Members? That is what we should have a statement on from the Labour Front Bench.

We in Britain are now leading our partners in the European Community. We should continue to do this as we settle into this new but not unnatural role. We have come far. It is a long time since Ministers from the Labour party returned from Community Council meetings in Brussels boasting about how they had held up the Community's business. May that time never return.

British ingenuity is not to be used to frustrate European progress but rather to guide the 12 in the direction that we all wish for common prosperity, security and liberty. Now there is a will to turn words into deeds. The Government look for action in Milan. We want action now. We hope others will follow.

Amendment agreed to.

Main Question, as amended, agreed to.

Resolved, That this House calls on the Government to ensure that proper control is exercised over the Common Agricultural Policy; expects the Government to take all possible steps to ensure that expenditure is made subject to effective limits and urges the Government to use the British veto as necessary to protect very important national interests; urges the Government to ensure that areas in Britain with special needs receive a proper share of the regional aid budget; believes that the European Council should be fully engaged in planning jobs and giving particular attention to youth employment and should not dilute its energies by focusing on less important goals; urges the European Council to cut the burden of bureaucracy and to reduce the number of Community rules and regulations; and urges the Government to resist any proposals to dismantle border controls which would interfere with its ability to combat terrorism and drug trafficking.