§
Amendment moved [27 June]: No. 7, in page 1, line 13, after `Communities)', insert
`but not Article 17 thereof .—[Sir E. du Cann.]
§ Sir Edward du Cann (Taunton)I believe it was wholly wrong to truncate the debate on 27 June on the subject of tax harmonisation. It is also wrong that the time for the debate this evening is so limited.
For most of our fellow citizens there is no more significant subject than tax levels. The amount of tax that they have to pay, direct or indirect, is of crucial importance. Taxation is a subject of universal interest. I believe that it would be right to say that there will be universal fury if the future cost of living increased as a result of increases in taxation which are outside the control of this Parliament.
It may be convenient for the Committee if I rehearse the points that I was endeavouring to make in the earlier part of our debate. First, there is a strong impetus in the European Community to harmonise taxation—that is undoubted. It follows therefore that a vote against this amendment tonight is a vote for harmonisation. Secondly, if taxes are harmonised it will inevitably mean that the discretion of a British Chancellor of the Exchequer to decide the level of taxation in our country will disappear. It follows therefore that a vote againt this amendment tonight will be a vote for the impotence of the Chancellor of the Exchequer.
Thirdly, if, at the option of the Council, future taxes are harmonised, the influence and command of this House will inevitably be reduced. The sovereignty of this Parliament will equally reduce. It follows therefore that a vote against this amendment tonight would be a breach, on the part of those who walk through these Lobbies, of the clear undertaking given at the time of the great debates in our nation about the appropriateness or otherwise of signing the treaty of Rome.
§ Mr. Tony Marlow (Northampton, North)Is there not an apt quotation from the Bible for those who will oppose this amendment tonight:
Father, forgive them; for they know not what they do.
§ Sir Edward du CannI should not like to swap biblical quotations with my hon. Friend but I think there is a growing sense of impatience among the British electorate at the apparent indifference of some Members of Parliament to the consequences of the situation in which we now find ourselves.
The fourth point I was endeavouring to make in our earlier debate was to ask whether the House of Commons was content that, in future, a non-elected commission should decide British taxation levels rather than the elected representatives of Britain. If that is so, it therefore follows 505 that a vote against the amendment is tantamount to deciding that, in taxation matters at any rate, we no longer wish to be masters in our own nation. [Interruption.]
§ The Chairman of Ways and Means (Mr. Harold Walker)Order. I should remind the hon. Member for Bournemouth, West (Mr. Butterfill) that it is not in order to pass between the Chair and an hon. Member who is addressing the Committee.
§ Sir Edward du CannThe fifth point I was endeavouring to make was that there are substantial pressures for more money to be spent by the Commission. Strong evidence of that was given in the fifth report of the Select Committee on the Treasury and Civil Service which we have been discussing. Such evidence can also be drawn from the decision of the European Court during the course of the week. Members of this British Parliament will need no reminding of the constant intention of Members of the European Assembly to make themselves responsible for the expenditure of greater and ever increasing amounts of taxpayers' money.
As there are such pressures for the Community to spend more, it inevitably follows that a greater amount of revenue will be needed. The figure of VAT participation is already—unduly early—up to 1.4 per cent., and it is openly discussed that it will not be long before the figure requires to be 1.6 per cent.
§ Mr. Ian Gow (Eastbourne)Is it the case that it is the policy of the Liberal and Social Democratic parties— there is no representative of either party here, which is why I must direct the question to my right hon. Friend—that the 1.4 per cent. limit on VAT should be raised to 2 per cent.?
§ Sir Edward du CannMy hon. Friend does the electorate a service in emphasising that point. Let it be clearly understood that if at any time through some unfortunate mischance the Liberal and Social Democratic parties had any hand in government or influence over it, taxation would substantially rise, as my hon. Friend has pointed out, with an inevitable vicious twist to the rise in prices.
It follows that, if there are strong measures to spend more, and if more revenue will be needed, it is essential that our nation retains the right of veto over what nonelected people might propose in the Council. I hope that we shall have a clear undertaking from my hon. Friend the Minister that that will remain the case. It also follows from what I am saying that a vote against the amendment would be a vote for higher taxes.
Sixthly, I was endeavouring to make the point that it is essential that during the debate my hon. Friend the Minister should give us an assurance that the zero rate will remain. The zero rate is under challenge in the European Court, as right hon. Members already know. It is inevitable that if the zero rate goes, henceforward there will be VAT on such items as gas, electricity, water, food, books, and, I dare say, rents. We always set our face against taxation on certain commodities and services as a matter of social principle.
§ Mr. Jonathan Aitken (Thanet, South)Children's shoes.
§ Sir Edward du CannMy hon. Friend reminds me of a subject that gave rise to great political controversey in Britain.
506 We need a clear and categoric assurance from my hon. Friend the Minister that the zero rate will remain. It is certain that a vote for harmonisation and against the amendment in my name and that of other right hon. and hon. Members must mean that the zero rate will disappear.
Finally, when the debate was terminated I was endeavouring to make the point that there is something immoral as well as foolish and away from the traditions of the House in voting money before we understand properly what the expenditures will be for and how they will be supervised and controlled.
It is a dereliction of duty on the part of the House if it is willing to vote money to be spent by the European Community irresponsibly and in ever-increasing amounts with no proper system of control. Therefore, for all those reasons, I urge right hon. and hon. Members on both sides of the House to support the amendment.
§ Mr. George Robertson (Hamilton)At the beginning of my remarks I should reiterate the violent objection that so many of us in the Chamber this evening have to the way in which the debate has been artificially and ludicrously truncated. These are massively important issues for this Parliament and for Britain and to try to concertina them all into one-hour debates is to undermine Parliament's credibility in the eyes of the public.
It is interesting that it should be this debate that follows upon the previous one. The Government were able to drive their Estimates through the House of Commons—they have a majority to do practically anything that they want —but the two tellers for the amendment in the name of the right hon. Member for Worthing (Mr. Higgins) were both Conservative Members. However, it is worth putting on the record that one of them—the hon. Member for Slough (Mr. Watts)—was earlier this week appointed by the Prime Minister to be the chief finance officer of the Conservative and Unionist party. If in the same week of that gigantic elevation for a fairly young Member of the House he finds it impossible to support his Government, it tells us and the country something quite clearly about the trouble that the Government are in.
Why should we vote for the amendment this evening which on the face of it would eliminate from the Single European Act the new article 17? On the face of it, the new article 17 substitutes in the treaty of Rome a provision which would make voting on tax harmonisation unanimous and not subject to the majority rules that apply to the rest of the items which the Government make part of their drive towards the internal market. I say that that is what it says on the surface, but, as the right hon. Member for Taunton (Sir E. du Cann) has ably pointed out, that is a superficial analysis. Those hon. Members who listened to the previous debate, never mind the numerous other debates, simply do not believe the Government.
The previous debate this afternoon was on the European budget. Even the hon. Member for Eastbourne (Mr. Gow), who came to the House last October and assured us that the financial commitments of the Government would be obeyed, felt obliged to vote with the Opposition against the Government. All the promises and assurances that were given have been clearly shown to have little or no foundation, so why should the House believe the Minister and the Foreign Secretary when they tell us that article 17 is the ultimate guarantee for the 507 United Kingdom that we shall not have foisted upon us the harmonisation of our VAT rates with the rest of the EC?
Last June the Financial Times wrote a remarkably glowing account of Lord Cockfield's role within the European Commission. He was a Minister and had attracted little or no attention from anybody, never mind the Financial Times. However, the internal market crusade on which he was hell-bent did attract attention. The Financial Times said:
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".We shall be told by the Minister that that is our great guarantee, because every time Lord Cockfield speaks out of turn the Prime Minister will drag him back to No. 10 and tell him that he is being naughty and that he is not allowed to do this part of what Lord Cockfield believes to be fundamental to the drive towards the internal market.But Lord Cockfield is not alone. He is not the only one who believes that harmonisation of indirect tax is crucial to obtaining a proper and reasonable internal market in Europe. Sir Henry Plumb, the leader of the Conservative group in the European Parliament, and somebody who, I understand from the tapes—all that we have to rely on this evening — said that this afternoon's budget agreement in the European Parliament was a great triumph and something on which we should be congratulated. Sir Henry Plumb said on 11 December last year:
It is hard to see how there could be an internal market without a measure of harmonisation in fiscal matters.I think that it is scarcely being sceptical, pessimistic or disruptive for us on these Benches to say to the Government that we are not happy about the assurances that have been given that article 17 and the unanimity rule will protect the British taxpayer from harmonisation of VAT.
§ Mr. Nigel Spearing (Newham, South)Can my hon. Friend confirm—the Minister might like to touch on this in reply — that existing directive No. 6 on VAT, which already requires a good degree of harmonisation, still applies irrespective of what is contained in this article? In other words, the Chancellor can still receive letters and be brought before the court in infraction proceedings if the existing VAT directives are not complied with.
§ Mr. RobertsonAbsolutely. My hon. Friend, who is a great expert on the minutiae of these matters, makes a valid point, which I am sure the Minister will want to answer. The fact is that there is a body of evidence that can be deployed against the Government's assurances, although they are freely given and sound emphatic to many ears. That body of evidence would tend to raise doubts in the mind of anyone making an objective judgment.
An objective outside expert who wished to come to his or her own conclusion could also look at what was said by the House of Lords Select Committee on the European Communities in a voluminous report entitled "Indirect Taxation and the Internal Market". The Committee spent 508 a large amount of time on this because its terms of reference allow it to examine these matters in more detail than is possible in a Select Committee of this House. The Committee said at paragraph 111:
On the evidence before them, particularly on the basis of the experience of the Irish Republic and the United States of America, the Committee are convinced that the abolition of frontiers without first approximating indirect taxes would have unacceptable consequences".The Committee said that from the basis of another belief that it has. It then said at paragraph 110:The Committee believes that there is a good case for approximation of indirect taxes as an end in itself, in the interests of fair competition.This great Select Committee, which includes a wide variety of knowledgeable peers, went on to say:if it proved necessary to impose a low positive rate of tax on these items, the Committee consider that the disadvantages in the terms of cost of living would be compensated by the advantage of a broader tax base and perhaps a lower standard rate.Their Lordships, of course, do not suffer the problems that those of us in the House of Commons have of being elected. One cannot imagine even the strongest federalists who may exist in the House of Commons going round advocating to people that we start levying VAT in its own right on food, children's clothes, books, gas and electricity — all areas that British Governments of whatever complexion since the introduction of VAT have chosen to exempt from that tax.
§ Mr. John Butterfill (Bournemouth, West)Does the hon. Gentleman imagine that, if harmonisation did take place, it would automatically mean that we would have to drop our practices rather than other countries adopting some of ours?
§ Mr. RobertsonI can only imagine that the hon. Gentleman is being disingenuous. He knows what the reality is. After all, he is a member of a party that came to power in 1979 and said that it was not going to increase VAT, yet managed in its first Budget virtually to double it. Therefore, I do not think that he should expect anyone in the House, and certainly not the British people outside it, to accept that if harmonisation took place it would necessarily all be at the lowest rate and that we would not go on to Denmark's 22 per cent. VAT, France's 18.5 per cent., or Italy's 18 per cent. One can bet one's last ecu that, when harmonisation takes place, it will take place at the highest rate that can be got away with.
§ Sir Anthony Meyer (Clwyd, North-West)I listened with some surprise to the hon. Gentleman holding up the House of Lords Select Committee to obloquy because their Lordships are not elected. As I recall, in previous debates he has quoted with enormous approval the conclusions of the House of Lords Select Committee that these measures involved some diminution of the national power of veto.
§ Mr. RobertsonOn the contrary, I am holding up their Lordships' report to considerable approval because I think that it pricks the balloon of the nonsense already spoken on this subject. Their Lordships point out their view of the advantages and say that they believe that the internal market cannot be accomplished unless that harmonisation takes place.
Therefore, we should look with the greatest scepticism and distrust at the fresh assurances being given to us by the Government. I do not believe that there is anything to 509 suggest that the Government mean any part of what they say; nor, indeed, even if they did, that they would be capable of controlling the great moving mountain once they started it on its trail. I therefore ask hon. Members on both sides of the House to vote for the amendment after this all too brief debate.
§ Mr. ButterfillIt is extraordinary that the speeches we have heard so far have assumed, first, that the unanimity provisions now proposed are not a substantial increase in the safeguards that the House and the British public have against any future action under the treaties; and, secondly, that in any future negotiations on harmonisation we shall be the ones who will change absolutely while nobody else will change at all.
I would be the first to acknowledge that it is eminently desirable that those goods that are presently zero-rated should remain zero-rated. I believe that, although indirect taxation in the form of VAT has many advantages, it is also necessary to protect the least well-off people in society from the effects of this somewhat restrictive tax. That is why successive Governments have chosen to exclude from the incidence of VAT essential commodities such as heating fuels, children's clothing, shoes and food. I do not see that we shall be unable to persuade our partners in the Economic Community that that remains a desirable objective for them as well.
It is not true to say that all other European countries have higher rates of VAT on many of these items than we have. Indeed, I have had many representations from the hotel and tourism trade in my constituency complaining that on many comparable commodities in the Community the rates are lower than in the United Kingdom and there is, thus, unfair competition.
§ Sir Edward du CannWhile I understand my hon. Friend's point about VAT and his idea that maybe we shall not be pressured to abandon the zero rate, if that is so, why is it that over many years there has been that pressure, and why has the United Kingdom been taken to the European Court by the Commission complaining about our zero rate and demanding that it be abolished?
§ Mr. ButterfillIt is certainly true that the Commission's objective is to achieve harmonisation, as it always has been. It is true that it has put pressure on all Governments who operate different rates from those of other member Governments in the Community. Their objective is undoubtedly to achieve standardisation, but I believe that it ought to be possible to deploy arguments with our partners to adjust many of the anomalies. There is no doubt that many of the anomalies and some of the high rates in other European countries are there as a hidden deterrent to some of our exports, and exist to the detriment of our own exporters.
France has been clever at arranging its rates of VAT to favour some of its products but to disadvantage some British products. There will undoubtedly be many ways in which harmonisation will be to the benefit of all of us. Therefore, we should not proceed with the pessimism that has been expressed in some parts of the House that automatically harmonisation will mean that all the things that we value, treasure and rightly seek to uphold will disappear, and we shall automatically go to everybody else's higher rate. That is not likely to be the case. It would 510 not be necessary in terms of the revenue objectives of the member Governments, so we should look at this much more constructively.
Under this article, we have much more control because, for the first time, it is spelt out unequivocably that any change must be unanimous. That is a great protection for the House and for any future Government.
§ Mr. Michael Foot (Blaenau Gwent)It is monstrous that the debate on these important questions should be compressed, and the speech made by the hon. Member for Bournemouth, West (Mr. Butterfill) underlines the effect of that.
Because of the falling of the guillotine, I shall summarise the important arguments made by the right hon. Member for Taunton (Sir E. du Cann), and ask that the Minister give a specific answer to certain questions. Is it the case that, with the passage of the Bill and the rejection of the amendment, the capacity of the British Government or the British Parliament to reject the imposition of VAT on books will be in any way weakened? I hope that the Minister will give a clear answer. If the answer is honest, it must be yes, and the House would not pass that proposition if it knew what it was doing.
Only a few months ago there was a huge outcry among the public when it was thought that the Chancellor of the Exchequer would impose VAT on books. Eventually, he rightly bowed to the protests and did not do so. Perhaps he had never intended to. However, I want to know from the Minister whether our power over such impositions is in any way diminished by the passage of the Bill.
The right hon. Member for Taunton mentioned other commodities and I want to know how the Bill will apply to them, and to the imposition of VAT on newspapers. Perhaps if the newspapers were to have VAT imposed on them without the British Parliament having a final say in the matter, they might start to awaken and understand what is happening in the House and what has been and will be done. It will not be much good British newpapers protesting in the future about the imposition of VAT on newspapers if they do not print the reports of the debates on these matters. I hope that the Minister will give us direct answers to those questions.
§ Mr. Eric Forth (Mid-Worcestershire)Great and unbounded though my respect for my hon. Friend the Minister is, I am disappointed that this evening we do not have with us a Treasury Minister to give the Treasury view on this most vital matter. It must be self-evident to the Committee that the ability of any one member state to manage its affairs could be greatly affected and impeded by the proposals in this part of the Bill. I would have thought that the Treasury would have wanted to be represented this evening to reassure us that it is behind what is being proposed. I can only draw my own conclusions from the fact that my hon. Friend has been left, no doubt admirably and robustly, to defend the position. I am in some doubt as to why the Treasury has not seen fit to send a representative this evening.
Two aspects of this part of the Bill concern me. The first is a more superficial political one, although it surprises me that advocates of the Community and its development are prepared to take the political risk in the short to medium-term that may go with the imposition of harmonised VAT rates on such sensitive articles as children's shoes, food, 511 clothing or books. Those who wish the Community to develop rapidly would be disappointed, and would find their campaign set back considerably, were this to happen.
My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) spoke about the protection of the unanimity rule. We all know that the way in which the Community works is that any harmonisation will be done as part of a package. There will be a quid pro quo, or a trade-off, with other member Governments. They will say to our Government that if they all want to do this and the British Government particularly want to do that, part of the deal will be the imposition of VAT on food, children's shoes or whatever. That is why the apparent protection of the unanimity rule would not be as complete, total or reassuring as my hon. Friend asks us to believe.
§ Mr. ButterfillMy hon. Friend knows very well, because he has been a Member of the European Parliament, that the negotiations may involve a trade-off, but the trade-off might be a higher rate for goods that are already subject to VAT, so that we might go to a French or Danish rate on certain high value goods, but that would mean that we would then keep zero rating on food and other essential commodities. We would not necessarily have to sacrifice our exemptions.
§ Mr. ForthMy hon. Friend is right, but, as my right hon. Friend the Member for Taunton (Sir E. du Cann) said, the pressure has consistently been the other way. The evidence suggests that if there were to be a movement towards harmonisation it would be away from zero rating on items that we regard as sensitive.
There is a fundamental inconsistency between the stated demands of the Community for what is called in the jargon convergence, and the demands of tax harmonisation as an instrument of fiscal policy. Those who have a passionate belief in the Community believe that it is in its interests that we bring together the levels and rates of development and social and economic growth of all the member states. Instruments of policy have been devised in the Community to try to bring this about. One of the most notorious is the regional policy, which has misguidedly tried for several years to apply subsidies and taxpayers' funds to reduce what I believe are the natural differentials between the economies of the Community.
However, to bring about a convergence of economies as disparate and different as those of Denmark and Greece, or Luxembourg and Ireland in terms of gross national product per capita one must accept that for a long time to come the tax, fiscal and other domestic policies of these countries must be quite different, distinguished and differentiated. If one attempts to move towards tax harmonisation based on the argument of the internal market and the freedom of movement and the uniformity of policy one will endanger one of the other stated objectives of the Community—convergence.
Those who want the Community to progress and who adhere to and support convergence must come clean. They must tell us what they think it means, what they believe in and, more importantly, how they believe they will achieve that policy objective against a background of harmonisation of tax. It is not likely or possible to bring about the 512 convergence of the economies of Luxembourg and Ireland if we impose on them from the centre identical rates of tax for harmonisation.
Therefore, one of the reasons why I am opposed to the Bill and wish to support the amendment is that I fear that there is a lack of clear thinking from those who have framed the legislation. As is so often the case in discussions on the European Community, those who support it have submitted themselves to the warm and comforting sound of the words. We like the words "harmonisation" and "convergence". People feel comfortable with them. They like the idea that, some time in the future, Greece will be as wealthy as Denmark, or Ireland as wealthy as Luxembourg.
However, the great danger is that in allowing ourselves to be massaged by these words and to be made to feel comfortable by them we are allowing at the same time a continuing deception to be perpetrated whereby the policy objectives are quite different and, indeed, quite incompatible. Until I am much more satisfied that these objectives can be squared and, if I may use the term, can themselves converge, I am quite unable to support this part of the Bill.
§ Mr. J. Enoch Powell (South Down)When the right hon. Member for Taunton (Sir E. du Cann) said that a vote against this amendment was a vote in favour of harmonisation of taxes, he spoke nothing less than the literal truth. We are putting a new article into the treaty, and that article is mandatory. It says:
The Council shall … adopt provisions for the harmonisation of legislationconcerning taxation.Reference was made at an earlier stage in the proceedings to the word "shall", and I am grateful to the Minister of State for having written to me since then on the subject. She is quite plain about it. She says that the meaning of the word "shall" is mandatory, as one would naturally assume it to be. She said:
The Council has a duty to act. That is the meaning of the word `shall'.So we are deliberately writing into our law and into a new treaty an obligation which we are imposing upon the Council as a matter fo duty: to act in such a way as to bring about the harmonisation of indirect taxation. That view is reinforced, if one compares the wording of the old article which is being displaced. The old article said: "The Commission shall submit proposals to the Council." It then went on to say:and the latter"— that is, the Council "shall decide upon the matter.So what we are doing is perfectly clear. We are substituting for an obligation to decide upon a proposal from the Commission an obligation to pass proposals which carry with them the harmonisation of taxes.What is quite certain about the harmonisation of taxes, whether it is up or whether it is down, is that the resultant system of taxation will not be one which this country has chosen. It will be a system of taxation which has been proposed to this House or which has been legislated for by this House. It cannot be harmonious and it cannot converge, if that is the case. There is no respect more than this in which the will to political power, by membership of the EEC and the EEC structure, is evident.
The alleged purpose here is the completion of the internal market. If the internal market means freedom of 513 exchange and freedom for the movement of goods, it is quite untrue to say that such freedom is dependent upon the approximation of the various tax systems in the different countries of the Community. All taxes have an economic effect. Therefore, if we want to harmonise the economies of two or more countries, we must enforce harmonised taxation in those countries, but there is no necessary connection between the harmonisation of taxation and the freedom of trade, other than that freedom of trades a pretext and a cover for the will to power and the will to political unification.
This is a mandatory provision which will bring that scope nearer by enforcing upon the Council, and by committing this House to enforce upon the Council, that harmonisation of taxation which is necessary for the creation of political unity but which is not necessary for the completion of an internal common market or a market for the free exchange of goods.
§ Mr. Richard Shepherd (Aldridge-Brownhills)I echo the words of the right hon. Member for South Down (Mr. Powell). I am not at all sure that there is any economic basis for this measure, in terms of the benefits that it will bring to the Community. In fact, it will be contrary to the interests of the Community, as it is trying, obviously, to edge its way towards a federal state.
I take up the right hon. Gentleman's argument by contrasting the measures that are implicit in this Bill with the states of the United States where there is a federal economy which has never insisted upon the constituent states harmonising their taxation. The very vigour of a much more vigorous economy than any economy in Europe is such that the flow of economic values from area to area reflects the exigencies or needs of each state and its tax policy. One gets more vigour from a wide economy by allowing flexibility of tax rates than one gets from imposing any other system.
We shall probably end up by levelling down the economic vigour and interests of the Community instead of raising them. This is very much against Britain's interests. Each nation should determine what is the most appropriate level for its tax rates. If we were to insist upon local authorities levying the same rates bills, it would mean suicide for some authorities. That is what we are trying to do by means of this absurd proposal. In economic terms, it has not been thought through convincingly.
Many people feel very strongly about the primary financial role of this House. The long march of every man towards a democracy in which people are free was due to the determination of this House to set its own rates of taxation. That is fundamental and it touches on the spirit of our people.
This is an abnegation of a very important principle. It is extraordinary that the Government feel that they can edge us towards something which will contradict our history, interests and outlook. If they really wanted to build up the Community, they would stand up against these preposterous announcements. Many people are in favour of free and open trade but that does not require harmonisation. Harmonisation would lead to shackles being placed upon individual nation states that can work well together and trade well together without this particular part of the Bill.
§ Mr. Ron Leighton (Newham, North-East)Our objection to this part of the Bill is the loss of fiscal 514 sovereignty. The right hon. Member for Taunton (Sir E. du Cann) was quite right. In the 1971 White Paper we were told that we should keep control over our indirect taxation, but the completion of the so-called internal market means that that will go. We were conned then and we are being cheated now.
If the proposal in the Commission's document 7674 were implemented, alien institutions outside this country, not elected by us, would decide upon the taxation of the British people. This House would give up its competence to vote Supply, the historic source of its powers. In the past the House wrested these powers from the king in the name of parliamentary government. Are we to surrender them now to those who would be unaccountable to the voters?
We are told that the completed internal market is to comprise an area without frontiers. Fiscal barriers are to be dismantled. To achieve this, indirect taxes are to be approximated throughout the area of the internal market. The most important of these indirect taxes are value added tax and excise duties. VAT occupies a special position in the EEC. Member states are required to adopt it as their principal indirect tax and are required to pay a proportion of the VAT receipts to the EEC as part of its own resources. We now pay about 11.5 per cent. of our VAT yield to the EEC.
Excise duties are levied on the consumption of such goods as wine, beer, spirits, tobacco and hydrocarbon oils. At the moment, VAT and excise duties vary considerably between the member states. Italy, for example, has VAT rates that go up to 38 per cent. Italy relies more on VAT because it finds that it is difficult to collect income tax. The Commission's white paper makes it clear that these duties will have to be approximated.
What would this mean, in particular, for the United Kingdom? If we take cigarettes, with the exception of Denmark, we have the highest rates of duty. On beer, with the exception of Ireland, we have the highest duty. On wine, again with the exception of Ireland, we have by far the highest duty, while Italy and Germany have none at all, and France virtually none. The main effect of approximation on the United Kingdom would be to lower excise duties, to increase VAT and to end zero rating. It would revolutionise our system of indirect taxation, and in the opposite way to that which most of us would want. It would shift taxation from alchohol and tobacco and load it on to everything else, including, for the first time, food and children's clothing. To come into line with the weighted average of the other member states we would have to increase the burden of VAT as a fraction of gross domestic product by two fifths while reducing the duties on alcohol and tobacco by about a quarter. So £4 billion would be taken off excise duties and placed on VAT. The total of VAT plus excise duties as a fraction of GDP would have to be increased by 10 per cent. The total indirect taxation on the British people would be increased, and by methods we would deplore.
No other state in the EEC, apart from Ireland, currently applies such broad relief from VAT as a result of exemption and zero rating. Fuel, transport and most foodstuffs are currently zero-rated in Britain. All that would go. Is that what we want to have foisted on us by bodies not elected by us and not responsible to the British people? It is a monstrous proposition that we should even consider it. The Chancellor could throw away his Budget box, because he would not be allowed to use it any more.
515 What is supposed to be the purpose of this? It is allegedly to abolish border controls, the physical barriers between member states, to end the distortion of competition caused by zero rating and to save money on bureaucracy. But investigation shows that little of this is likely to happen. Would frontiers disappear? Would those delays and checks at, for example, Dover end? They would not, because border controls would still remain for immigration, drugs, counterfeit goods and public security. Also, the United Kingdom's only land frontier is with the Irish Republic and perhaps, in the future, with the Channel tunnel. So all travellers would have to be stopped once to establish whether they had come from the EEC. Let us be clear that the physical barriers will remain.
Will we save much money by approximation? Again, the answer is no. The Commission proposes that exports between member states should cease to be zero-rated and that importers, provided that they will sell the goods on, could reclaim from their Governments VAT levied on imports by the country of export. That would increase the tax revenue in the country of export and reduce it in the country of import. Here is the rub—to deal with this, a "clearing house" procedure would be established for transferring the revenue raised on exports in the country of export to the tax authorities in the country of import, exactly offsetting the repayment claimed from them by the importer. An entire new bureaucracy is to be set up. Traders would have to supply more information under that arrangement than they do at present, increasing the cost of record-keeping. The Dutch Government have already said that they would not trust a system which did not involve communication between tax authorities on each individual transaction. Such a clearing house would raise serious questions on the compatability of data processing systems of the member states.
Spain and Portugal have only just introduced VAT and Greece has not done so. Yet the clearing house would require much improved procedures for mutual administrative assistance between tax authorities to prevent abuse — indeed, for it to work at all. It will be a bureaucratic nightmare. As it will not remove frontiers or border controls, as it will not be cheaper to administer, as it will remove decisions on taxation of the British people from their elected representatives and increase indirect taxation in the United Kingdom, including placing VAT on food, fuel, books, newspapers, transport and children's clothes, why on earth should we even consider this gross interference in our domestic affairs? We should not. We should reject it with contempt by passing the amendments. All that the internal market has done so far is to lead to the export of British capital and employment. We should vote against it tonight.
§ Sir Anthony MeyerWe have had a far better debate tonight because of the timetable motion than any debate we have had up to now. Hon. Members who spoke stuck to the point. I shall vote against the amendment and I shall do so with far more conviction than when I voted against the amendment which was proposed in the previous debate by my right hon. Friend the Member for Worthing (Mr. Higgins), because I cannot rid myself of the sneaking suspicion that the Community must be put under some sort of pressure to limit the growth in its budget, if only 516 because so much of the budget is spent on things on which the Community should not spend money, such as the inexorable growth in surpluses.
The amendment goes against what the Community should be doing because it is designed to make it more difficult for the Community to move towards the completion of the internal market. If the Community completes its internal market, it can do the things which it is especially well qualified to do. It can sustain a technologically advanced European industry and provide more jobs for the workers of Europe.
During the debate we have heard much from hon. Members on both sides of the House who oppose British membership of the European Community. I make it plain that my hon. Friend the Minister will come under every bit as much pressure from those Conservative Members who believe that we should go further as she will from those who do not wish to go as far as this. Those of us who wish to go further are much more representative of the Conservative party.
§ The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker)Tonight we heard a slight horror story from the hon. Member for Newham, North-East (Mr. Leighton). If he were correct, it would be a horror story, but I am glad to say that he is not.
I shall concentrate on some of the facts because they should help to put hon. Members' minds at rest. First, the amendment seeks to delete from the scope of the Bill the new article 99 on the harmonisation of indirect taxation. Article 99 is not a commitment to tax harmonisation. Harmonisation is provided for only to the extent necessary for completing the internal market by 1992. It is more restrictive than the former article 99 because that provided for tax harmonisation,
in the interest of the common market.It follows, therefore, that there is no diminution of sovereignty involved in the amendments to the treaty.I understand the anxieties of my right hon. Friend the Member for Taunton (Sir E. du Cann), but they are much overplayed. Of course, there must be discussion on how far, if at all, the current differences in tax rates between member states must be reduced to complete the internal market, but no one can force the United Kingdom to increase its tax rates nor to reduce them because such decisions remain with our Chancellor of the Exchequer. Any change to the rules would require unanimity, and that is in no way changed by the Single European Act. Nor are hon. Members' powers to oppose the imposition of VAT on some items in any way diminished.
The rules that we already have—I am thinking here of the VAT directives — primarily establish, as far as possible, a common basis for the assessment of VAT from which most of the Community's resources derive. If everyone chose to operate the system under different rules, we should soon discover that some countries were paying more than was properly due and others were paying less.
§ Mr. Teddy Taylor (Southend, East)Is it the Government's policy that the internal market can be completed within the timetable laid down, by 1992, without the removal of the zero rate of VAT?
§ Mrs. ChalkerI am sure that it is possible to complete the internal market by 1992 without the removal of zero rate VAT. My hon. Friend has, on previous occasions in the debates on the Bill, suggested that if the Council failed 517 to agree on future harmonisation legislation and the Commission took the view that the United Kingdom was blocking progress it could take us to the European Court of Justice. I must put that misconception right. Article 99 lays down no obligation on individual member states. Under the article, it is for Council to adopt legislation to the extent necessary for the stated purposes. Once such legislation has been adopted by unanimity, a member state which, in the view of the Commission or that of other member states is not complying with that legislation, may then be taken to the court. No member state can be taken to court for refusing to agree on harmonising legislation. In that respect, too, the new article 99 is no different from the previous one.
Zero rating has been the substance of many hon. Members' contributions on 27 June and tonight. Zero rating in the United Kingdom is unaffected by the changes to article 99 which we are debating. Zero rates are expressly provided for under an existing directive which could be changed only with this country's agreement.
In his Budget speech in 1985, the Chancellor of the Exchequer said that the Government did not intend to propose extensions to the VAT base during the lifetime of this Parliament. I think that will answer the point of my right hen. Friend the Member for Taunton. We had further debate about zero rating because of the Commission's current challenge to the United Kingdom's interpretation of article 17 of the second VAT directive, which permits zero rating for,
clearly defined social reasons and for the benefit of the final consumer".The Commission is challenging our zero rates only to the extent that they do not fall clearly into that category. Most items which are zero-rated in the United Kingdom, for example, food, children's clothes and the supply of gas and electricity to the final consumer, are not affected. We are, in any case, fighting the case vigorously in the European Court. However, I must stress again that that challenge predates new article 99 and will not, in any way, be affected by it.In earlier debates on the Bill, the hon. Member for Walthamstow (Mr. Deakins) asked about the Council's ad hoc group on the removal of fiscal barriers. The group made its final report to the Economic and Finance Council on 16 June. The Council has now asked the Commission to present, by 1 April 1987 and without prejudice to the Council's position or that of individual member states, detailed proposals on the rate structures, and on the accompanying systems which the Commission regards as necessary for the completion of the internal market. This will help member states to assess the Commission's approach regarding especially its wider budgetary, economic, social and industrial implications. It does not, however, imply that we shall necessarily do that. That matter must be discussed and will ultimately be resolved by unanimity.
It has also been suggested that we shall come under pressure from other member states to harmonise duties or VAT rates—
§ Mr. SpearingWe have.
§ Mrs. ChalkerIt has been suggested specifically in the context of article 99. However, there is no suggestion that there should be complete harmonisation of either VAT or duty rates. My hon. Friend the Member for Bournemouth, West (Mr. Butterfill) said that it is hardly likely that other 518 member states will want the harmonisation which was suggested by some hon. Members because it could require France to increase wine duty by more than 200 per cent., Germany beer duty by more than 200 per cent. and Greece its duty on spirits by more than 2,000 per cent. Those threats are wholly unlikely and unrealistic.
The right hon. Member for South Down (Mr. Powell) referred to the letter which I wrote to him on 7 July in response to earlier debates on this matter in Committee. He referred to the word "shall" and the meaning of that word. He was right in everything that he said, but he did not go on to say that the Council has a duty to act, but only within the terms and discretion provided by the article. He should have added—
§ It being one hour after the House resolved itself into a Committee on the Bill, THE CHAIRMAN put the Question already proposed from the Chair, pursuant to the Order 1 July].
§ Question put, That the amendment be made: — The Committee divided: Ayes 149, Noes 212.
520| Division No. 250] | [8.15 pm |
| AYES | |
| Adams, Allen (Paisley N) | Fisher, Mark |
| Anderson, Donald | Flannery, Martin |
| Archer, Rt Hon Peter | Foot, Rt Hon Michael |
| Ashton, Joe | Forrester, John |
| Atkinson, N. (Tottenham) | Forth, Eric |
| Banks, Tony (Newham NW) | Foster, Derek |
| Barnett, Guy | Foulkes, George |
| Barron, Kevin | Fraser, J. (Norwood) |
| Beckett, Mrs Margaret | George, Bruce |
| Bell, Stuart | Gilbert, Rt Hon Dr John |
| Bennett, A. (Dent'n & Red'sh) | Godman, Dr Norman |
| Bermingham, Gerald | Gould, Bryan |
| Bidwell, Sydney | Hamilton, W. W. (Fife Central) |
| Boyes, Roland | Harman, Ms Harriet |
| Bray, Dr Jeremy | Harrison, Rt Hon Walter |
| Brown, N. (N'c'tle-u-Tyne E) | Hart, Rt Hon Dame Judith |
| Brown, R. (N'c'tle-u-Tyne N) | Haynes, Frank |
| Brown, Ron (E'burgh, Leith) | Heffer, Eric S. |
| Budgen, Nick | Hogg, N. (C'nauld & Kilsyth) |
| Caborn, Richard | Home Robertson, John |
| Callaghan, Jim (Heyw'd & M) | Howarth, Gerald (Cannock) |
| Campbell, Ian | Hoyle, Douglas |
| Campbell-Savours, Dale | Hughes, Dr Mark (Durham) |
| Clark, Dr David (S Shields) | Hughes, Robert (Aberdeen N) |
| Clay, Robert | Hughes, Roy (Newport East) |
| Clelland, David Gordon | Janner, Hon Greville |
| Clwyd, Mrs Ann | John, Brynmor |
| Cocks, Rt Hon M. (Bristol S) | Jones, Barry (Alyn & Deeside) |
| Cohen, Harry | Kaufman, Rt Hon Gerald |
| Coleman, Donald | Kilroy-Silk, Robert |
| Cook, Frank (Stockton North) | Kinnock, Rt Hon Neil |
| Cook, Robin F. (Livingston) | Leighton, Ronald |
| Corbyn, Jeremy | Lewis, Ron (Carlisle) |
| Cox, Thomas (Tooting) | Lewis, Terence (Worsley) |
| Crowther, Stan | Litherland, Robert |
| Davies, Rt Hon Denzil (L'lli) | Lofthouse, Geoffrey |
| Davies, Ronald (Caerphilly) | McDonald, Dr Oonagh |
| Davis, Terry (B'ham, H'ge H'I) | McKay, Allen (Penistone) |
| Deakins, Eric | McKelvey, William |
| Dewar, Donald | MacKenzie, Rt Hon Gregor |
| Dixon, Donald | McTaggart, Robert |
| Dormand, Jack | Madden, Max |
| Dubs, Alfred | Marek, Dr John |
| du Cann, Rt Hon Sir Edward | Marlow, Antony |
| Duffy, A. E. P. | Martin, Michael |
| Eadie, Alex | Maxton, John |
| Eastham, Ken | Maynard, Miss Joan |
| Edwards, Bob (W'h'mpt'n SE) | Meacher, Michael |
| Ewing, Harry | Michie, William |
| Fatchett, Derek | Mikardo, Ian |
| Field, Frank (Birkenhead) | Millan, Rt Hon Bruce |
| Fields, T. (L'pool Broad Gn) | Miller, Dr M. S. (E Kilbride) |
| Morris, Rt Hon J. (Aberavon) | Shore, Rt Hon Peter |
| Nellist, David | Short, Ms Clare (Ladywood) |
| O'Brien, William | Skinner, Dennis |
| Park, George | Smith, (Ilsl'ton S & F'bury) |
| Patchett, Terry | Soley, Clive |
| Pavitt, Laurie | Spearing, Nigel |
| Pendry, Tom | Stewart, Rt Hon D. (W Isles) |
| Pike, Peter | Strang, Gavin |
| Powell, Rt Hon J. E. | Straw, Jack |
| Powell, Raymond (Ogmore) | Taylor, Teddy (S'end E) |
| Prescott, John | Thompson, J. (Wansbeck) |
| Proctor, K. Harvey | Torney, Tom |
| Randall, Stuart | Walker, Bill (T'side N) |
| Redmond, Martin | Wardell, Gareth (Gower) |
| Rees, Rt Hon M. (Leeds S) | Wareing, Robert |
| Richardson, Ms Jo | Welsh, Michael |
| Roberts, Ernest (Hackney N) | White, James |
| Robertson, George | Williams, Rt Hon A. |
| Rogers, Allan | Winnick, David |
| Rooker, J. W. | Young, David (Bolton SE) |
| Ross, Ernest (Dundee W) | |
| Rowlands, Ted | Tellers for the Ayes: |
| Ryman, John | Mr. James Hamilton and |
| Sheldon, Rt Hon R. | Mr. John McWilliam. |
| Shepherd, Richard (Aldridge) |
| NOES | |
| Adley, Robert | Dykes, Hugh |
| Alexander, Richard | Eggar, Tim |
| Alton, David | Emery, Sir Peter |
| Amess, David | Eyre, Sir Reginald |
| Ancram, Michael | Favell, Anthony |
| Arnold, Tom | Fenner, Mrs Peggy |
| Ashby, David | Fookes, Miss Janet |
| Ashdown, Paddy | Forman, Nigel |
| Atkinson, David (B'm'th E) | Forsyth, Michael (Stirling) |
| Baker, Nicholas (Dorset N) | Fowler, Rt Hon Norman |
| Baldry, Tony | Fox, Sir Marcus |
| Banks, Robert (Harrogate) | Franks, Cecil |
| Batiste, Spencer | Fraser, Peter (Angus East) |
| Bendall, Vivian | Freeman, Roger |
| Benyon, William | Gale, Roger |
| Best, Keith | Galley, Roy |
| Biggs-Davison, Sir John | Gardiner, George (Reigate) |
| Blackburn, John | Garel-Jones, Tristan |
| Blaker, Rt Hon Sir Peter | Glyn, Dr Alan |
| Bonsor, Sir Nicholas | Goodlad, Alastair |
| Boscawen, Hon Robert | Grant, Sir Anthony |
| Bottomley, Peter | Greenway, Harry |
| Bowden, A. (Brighton K'to'n) | Griffiths, Sir Eldon |
| Bowden, Gerald (Dulwich) | Grylls, Michael |
| Boyson, Dr Rhodes | Gummer, Rt Hon John S |
| Braine, Rt Hon Sir Bernard | Hamilton, Hon A. (Epsom) |
| Bright, Graham | Hancock, Michael |
| Brinton, Tim | Hanley, Jeremy |
| Browne, John | Hannam, John |
| Bryan, Sir Paul | Hargreaves, Kenneth |
| Burt, Alistair | Harris, David |
| Butler, Rt Hon Sir Adam | Harvey, Robert |
| Butterfill, John | Havers, Rt Hon Sir Michael |
| Carlile, Alexander (Montg'y) | Hawkins, C. (High Peak) |
| Cash, William | Hawkins, Sir Paul (N'folk SW) |
| Chalker, Mrs Lynda | Hayhoe, Rt Hon Barney |
| Chapman, Sydney | Hayward, Robert |
| Chope, Christopher | Heathcoat-Amory, David |
| Churchill, W. S. | Heddle, John |
| Clarke, Rt Hon K. (Rushcliffe) | Heseltine, Rt Hon Michael |
| Clegg, Sir Walter | Hickmet, Richard |
| Colvin, Michael | Hicks, Robert |
| Coombs, Simon | Higgins, Rt Hon Terence L. |
| Cope, John | Hind, Kenneth |
| Corrie, John | Hogg, Hon Douglas (Gr'th'm) |
| Couchman, James | Holland, Sir Philip (Gedling) |
| Cranborne, Viscount | Holt, Richard |
| Crouch, David | Howard, Michael |
| Currie, Mrs Edwina | Howarth, Alan (Stratf'd-on-A) |
| Dorrell, Stephen | Howell, Ralph (Norfolk, N) |
| Douglas-Hamilton, Lord J. | Howells, Geraint |
| Dunn, Robert | Hunt, David (Wirral W) |
| Durant, Tony | Hunter, Andrew |
| Hurd, Rt Hon Douglas | Robinson, Mark (N'port W) |
| Jackson, Robert | Roe, Mrs Marion |
| Johnson Smith, Sir Geoffrey | Rowe, Andrew |
| Johnston, Sir Russell | Rumbold, Mrs Angela |
| Jones, Gwilym (Cardiff N) | Ryder, Richard |
| Jones, Robert (Herts W) | Sayeed, Jonathan |
| Jopling, Rt Hon Michael | Shaw, Giles (Pudsey) |
| Kellett-Bowman, Mrs Elaine | Shelton, William (Streatham) |
| Kennedy, Charles | Shepherd, Colin (Hereford) |
| Kershaw, Sir Anthony | Shersby, Michael |
| Key, Robert | Silvester, Fred |
| Kirkwood, Archy | Sims, Roger |
| Knowles, Michael | Skeet, Sir Trevor |
| Knox, David | Smith, Sir Dudley (Warwick) |
| Latham, Michael | Smith, Tim (Beaconsfield) |
| Lawler, Geoffrey | Soames, Hon Nicholas |
| Lawrence, Ivan | Speed, Keith |
| Leigh, Edward (Gainsbor'gh) | Spencer, Derek |
| Lennox-Boyd, Hon Mark | Spicer, Jim (Dorset W) |
| Lester, Jim | Spicer, Michael (S Worcs) |
| Lilley, Peter | Stanbrook, Ivor |
| Livsey, Richard | Stern, Michael |
| Lloyd, Sir Ian (Havant) | Stevens, Lewis (Nuneaton) |
| Lloyd, Peter (Fareham) | Stewart, Allan (Eastwood) |
| McCurley, Mrs Anna | Stewart, Andrew (Sherwood) |
| MacGregor, Rt Hon John | Stewart, Ian (Hertf'dshire N) |
| MacKay, Andrew (Berkshire) | Taylor, John (Solihull) |
| MacKay, John (Argyll & Bute) | Temple-Morris, Peter |
| McNair-Wilson, P. (New F'st) | Terlezki, Stefan |
| Malone, Gerald | Thomas, Rt Hon Peter |
| Maples, John | Thompson, Donald (Calder V) |
| Maude, Hon Francis | Thompson, Patrick (N'ich N) |
| Mawhinney, Dr Brian | Thurnham, Peter |
| Meyer, Sir Anthony | Tracey, Richard |
| Morrison, Hon C. (Devizes) | Trippier, David |
| Moynihan, Hon C. | Twinn, Dr Ian |
| Neale, Gerrard | van Straubenzee, Sir W. |
| Needham, Richard | Vaughan, Sir Gerard |
| Nelson, Anthony | Viggers, Peter |
| Norris, Steven | Wallace, James |
| Oppenheim, Phillip | Waller, Gary |
| Ottaway, Richard | Ward, John |
| Page, Sir John (Harrow W) | Wardle, C. (Bexhill) |
| Page, Richard (Herts SW) | Warren, Kenneth |
| Parkinson, Rt Hon Cecil | Watson, John |
| Patten, Christopher (Bath) | Watts, John |
| Pawsey, James | Wells, Bowen (Hertford) |
| Percival, Rt Hon Sir Ian | Wheeler, John |
| Portillo, Michael | Wilkinson, John |
| Powell, William (Corby) | Wolfson, Mark |
| Powley, John | Yeo, Tim |
| Renton, Tim | |
| Rhodes James, Robert | Tellers for the Noes: |
| Ridsdale, Sir Julian | Mr. Tim Sainsbury and |
| Rippon, Rt Hon Geoffrey | Mr. Michael Neubert. |
§ Question accordingly negatived
§ Mr. Alan Williams (Swansea West)On a point of order, Mr. Walker. I understand that within the last few minutes the Government have been defeated by 18 votes in the House of Lords on the Dockyard Services Bill. You will recollect, Mr. Walker, that in today's business statement that Bill was listed for consideration by the House on Friday 18 July. I ask you to use your good offices on behalf of the Opposition to ask the Leader of the House if he will come here tomorrow at 11 o'clock to make another business statement to the effect that the Dockyard Services Bill, in view of its now prime importance, will be accorded prime time on a normal day.
§ The ChairmanThe right hon. Gentleman knows that we are in Committee and that the point he has raised is not a matter for the Committee or for me. No doubt what he has said will be communicated to the Leader of the House.
§ Mr. John McWilliam (Blaydon)Further to that point of order. The Committee is aware of the importance of the Dockyard Services Bill and the effect that the resultant Act would have on our strategic ability to defend ourselves in time of war. May I ask you to prevail upon Mr. Speaker to consider today's business statement and to ask Mr. Speaker why a vital Bill like this that affects our strategic capabilities— —
§ The ChairmanOrder. I remind the hon. Gentleman that we are on a tight timetable and that a large number of hon. Members wish to speak on the business before the Committee. I cannot usefully add to what I have already said.
§ Mr. Teddy TaylorI beg to move, in page 1, line 13, after `Communities)', insert 'but not Article 20 thereof.
§ The ChairmanWith this it will be convenient to consider amendments Nos. 23, 24 and 25.
§ Mr. TaylorArticle 20 refers to economic and monetary union. The purpose of the amendment is essentially to find out what article 20 is about and precisely to what it committed the Government. More important, we wanted to get the advice of the Minister clearly on the record. Our experience of getting European matters on the record is not a good one. Earlier today we had a discussion about the European Budget and we said that only a few months ago we had the clearest of assurances that budgetary control was now applied and that expenditure on agriculture would be contained and that the 1.4 per cent. VAT rate would last for several years. Those assurances have been proved to be utterly worthless, and budgetary control has not been practised. This issue is rather less emotive than expenditure and I ask my hon. Friend the Minister of State to say exactly what Great Britain is committing itself to under article 20. It could be argued that we are confronted with nonsensical verbiage which means nothing, or that we are committing ourselves to the convergence of monitary policies within the EEC. If we are committing ourselves to such policies, we are taking a big step. It is something that we should discuss and think about extremely clearly. As these matters have been set out in a treaty and are being set out in law, it is possible for the European Court, on an approach to the Commission, to interpret policies that are applied by the Council or member states.
8.30 pm
Is it a good thing for Britain to have harmonised our convergent economic policies with other members of the Common Market? We have a number of international relationships with OECD countries and we have commitments through the GATT to reduce tariffs. Is it good for Britain to enter an economic union that would be part of a political union? Is it in our interests to do so? I can well remember those who said when we joined the EEC that our entry would prove to be a recipe for more jobs, more prosperity and better trade with EEC countries. We have found, to the disappointment of many and the surprise of some, that far from achieving those goals we have entered a period of economic decline and mass unemployment. We have a horrific deficit with the EEC in our manufacturing trade of no less than £10,000 million. Is it in Britain's interests economically to join up more with a part of the world which is clearly in structural 522 decline? Our trade figures show that we have a horrific deficit in manufacturing trade with the Common Market and a substantial surplus in manufacturing trade with the rest of the world, and the gap is growing. Unemployment figures throughout the world show that the areas of growth and job creation are far away from the EEC.
The second factor which should make us wonder whether it is a good thing to tie ourselves up in economic terms with the EEC and to harmonise economic policies is the structural decline of the area. Do we wish to become a peripheral part of it? I am probably more aware of these issues than most because I have spent most of my life as a politician in Scotland. For years the English have put vast sums into Scotland and Northern Ireland to try to equalise the ability to create jobs, welfare and prosperity. Despite all the endeavours of the English, Scotland has not enjoyed the same prosperity as that which has been present south of the border. That is not the result of a nasty plot on behalf of the English. The answer is that there is a natural economic movement and tendency for jobs, decision making and investment to move towards the centre of the market.
I find myself now in a prosperous part of the United Kingdom, but Southend does not have the grants, allowances and bonuses in terms of public expenditure that are received in the north. If we harmonise economic policies and make ourselves a greater part of economic and monitary union, I fear that Britain will become a peripheral part of an area of the world which is clearly in structural decline. It is an area that is suffering from mass unemployment, and it faces serious problems in competing with the growth areas of the world.
To what are we committing ourselves in the convergence of economic policies? We must bear in mind that the United Kingdom, especially under my right hon. Friend the Prime Minister, has a particular attitude to economic affairs. Will we not be removing our freedom and the liberty of the House to determine Britain's economic policies if we agree to the harmonisation of economic policies within the EEC? We know that most of the countries of Europe have Governments that are far to the left of that of the United Kingdom. Other European countries are more interventionist in their ideas. We know that most European countries believe in the expansion of public expenditure. I ask the House seriously to consider whether the clause commits us, however gradually, to the cohesion, harmonisation or convergence of economic policies. Does it not remove a huge amount of the ability and freedom of the British Government to determine their own economic policies?
Another factor is the commitment to harmonise monetary policies. It might be helpful if the Government were to say at this stage exactly what their attitude is to the European monetary system and why they think that it is a good thing. I have been heartened by many of the things which the Prime Minister has said from time to time on the Common Market. I was delighted on 11 March to hear her say that we would fight against the supplementary budget of £1 billion that had been put forward by the Commission. I was disheartened today to learn that, instead of fighting hard, we had caved in within six hours and had agreed to another supplementary budget, and one which is larger by £1 billion than its predecessor. I was heartened, however, by what the Prime Minister said on the EMS on 10 June. She said: 523
At present there is no intention of joining the European monetary system. To do so would deny us an option that we have at present … We would be denied the option of taking the strain on the exchange rate. I do not think it right to deny us that option at present.—[Official Report, 10 June 1986; Vol. 99, c. 171.]In other words, my right hon. Friend the Prime Minister thought that joining the EMS would remove the option of taking the strain of economic pressure on the exchange rate instead of on interest rates, fiscal policy or other forms of restriction. My right hon. Friend has always taken the view that we believe in a free exchange rate. On the other hand, other Ministers have said, especially Foreign Office Ministers, who appear not to have the same convergence as the Prime Minister and as the Government are hoping that we shall have with other Common Market countries, that Britain wants to join the EMS when the time is right. It would be helpful if we could have some indication from the Foreign Office, whose policies seem to be partially at variance with those of the Prime Minister, of the circumstances that it would deem to be appropriate for joining the EMS. Secondly, is it the Government's clear intention and desire to join the EMS when they think that the circumstances are right? If this is the position, perhaps the Foreign Office will explain the advantage to Britain of joining the EMS when the time is right.If we were to join the EMS, the Government would be restricted severely in protecting the pound at times when it came under attack. If there were pressure on the pound, we would have to use the nasty devices that we employed when Britain had a fixed exchange rate. The choice of joining the EMS or not is rather similar to the choice of opting for a fixed or varied exchange rate. Like everything else, money has its market price. It helps our economy if we let the exchange rate take the strain instead of declaring an artificial rate for our currency. If we opt for an artificial rate, nasty things have to be done, such as taking unpleasant decisions on fiscal policy and interest rates. Freedom for our exchange rates, in so far as it is reasonably possible, assists in securing the freedom of our economy. I believe that most Conservatives believe that it is helpful.
There are a number of people—especially our friends in the CBI — who seem to regard the Common Market with a great deal of delight. The CBI has said that it would be good for Britain if we were to join the EMS as our entry would assist trade, but in a way that I cannot understand. It says that a fixed exchange rate with the rest of Europe would help us to export goods to Europe in a way that would not help other Europeans to export their goods into Britain. I cannot understand the logic of that argument. If we were to join the EMS, we would restrict severely the freedom of the Chancellor of the Exchequer. The freedom that we have had since opting for a free exchange rate would be denied to us, which would present problems for a country which depends considerably on income from oil and oil resources.
I hope that the Government will explain exactly what we commit ourselves to in article 20. Is it nothing, just a general sentiment? Or is it the Government's clear intention to harmonise our economic and military policies with the EEC, as opposed to maintaining our alliance with the rest of the world?
I hope that the Government will bear in mind the possible danger to us in a harmonised economic and 524 monetary policy of further problems with our relationship with the United States of America. I have been extremely worried at the way in which the crazy CAP is driving a wedge between Europe and the United States. Contact between Britain, Europe and the United States is absolutely vital and helps us towards an internationalist position, instead of being part of a narrow protectionist group surrounded by a high tariff wall.
All the signs are that the EEC is becoming more protectionist, not merely through tariffs, but through some of its non-tariff measures, voluntary restraint agreements and so on. A move towards economic and military union would be a step towards removing a great deal of freedom and liberty which we enjoy in economic policy, and towards protectionism in Europe which is, I believe, where we are going and what the intention is. I hope that the Government will say what is involved and that they will clarify their view on economic and military union.
§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)One of the most discomfiting things about these debates is that we in the Labour party often find ourselves agreeing with the hon. Member for Southend, East (Mr. Taylor). Having disagreed with him on many occasions in the past, I am glad to have found one statement in his speech to disagree with. He talked about the huge sums being pumped into Scotland. That happened when he represented Glasgow, Cathcart because there was a Labour Government, but since he was, rightly, removed by the electorate the opposite has been happening and money is not being invested in areas such as Glasgow as it was under the Labour Government.
§ Mr. Teddy TaylorI am sorry that things are not so good in Scotland now as when I left it. Will the hon. Gentleman at least accept that, whereas England has tried to invest money in Scotland, Britain is committed to pouring large sums into the continent of Europe?
§ Mr. FoulkesAgain I partly agree with the hon. Gentleman. It is not since he left Scotland but since the Labour Government left office that Scotland has been disadvantaged.
It is clear to the House that the whole tenor of the Single European Act from the preamble, with its talk of moves towards European union and economic integration, to the extra powers and the competencies of the Community institutions, is towards a united states of Europe or a federal Europe. It is clear that that is happening because the parents of the Single European Act, the people who were behind its genesis, such as Spinelli and Dooge, are passionate enthusiasts for European integration. I do not doubt their sincerity, but we in the Labour party disagree with what they are trying to do and with the way in which they are trying to move the United Kingdom within Europe.
Only a few years ago I was told by hon. Members on both sides of the House that Spinelli was a fanatic and a wild dreamer, and that old men were entitled to their dreams and not to worry. I am sure that those comments sound better in Italian. In reality, a great deal of what Spinelli has been pressing for is now becoming a reality. When one considers the Spinelli treaty passed by the European Parliament on 14 February 1984, of the four main parts, three are now incorporated in the Single European Act and will soon become law.
§ Mr. William Cash (Stafford)Does the hon. Gentleman recall that Spinelli is a Communist and always has been? What influence does he attach to that?
§ Mr. FoulkesI would attach no importance whatever. Spinelli was an integrationist and was in favour—
§ Sir Anthony MeyerWill the hon. Gentleman give way?
§ Mr. DeakinsOn a point of order, Mr. Deputy Speaker. Would it be in order to remind hon. Members that they have no need to give way to hon. Members who sought to truncate the debate by voting for the guillotine?
§ Mr. FoulkesI am grateful to my hon. Friend.
The three Spinelli proposals incorporated in the Bill are important. They arc for an institutional status for the European Council, greater majority voting and a central role for the European Parliament in the legislative process. Only the new system for appointing the Commission is not yet included, but no doubt we shall have pressure also to include that.
The Labour party argues that with the accession of Spain and Portugal there is in the EC a much wider disparity in wealth income, interests and so on. Therefore, talk of tax convergence and economic integration is less relevant now than it has been at any time in the history of the Community. The original aims of the Community—to prevent a further war in western Europe, to integrate Germany after the destruction of the war, and to enable western Europe to deal on an equal basis with the superpowers—were laudable, but they have been lost in the detail of the specific, unnecessary harmonisation, whether A be of the size of eggs or the noise of lawnmowers, as it was so eloquently described earlier. As one of my hon. Friend's said, the move is no doubt so that lawnmowers can pass freely across borders in the EC. I am sure that many lawns cross borders, but when the noise levels of lawnmowers is harmonised it will undoubtedly be much easier for them to cross borders.
§ Mr. Butterfillrose——
§ Mr. FoulkesThe great ideals have been lost in detail and in the scandal of the cost of storage and of destruction of foodstuffs. Above all, with today's wider, looser Europe, joining the exchange rate mechanism of the European monetary system is also less relevant now than at any time previously. I certainly endorse the questions which the hon. Member for Southend, East asked the Minister, and I hope that we shall receive clear answers.
We in the Labour party support European cooperation, but European co-operation between independent nations and parliaments, not between parts of a united states of Europe. We support the use of a range of different mechanisms for co-operation. One forgets the good job being done, for example, by the Council of Europe and its Committees. We are aware that technical co-operation can take place beyond the framework of the Community—for example, the European airbus, which had nothing to do with Community institutions. Political co-operation takes place within the Community on issues which include other countries, and in some cases some Community countries reserve their position.
We support the amendment and reject the move towards closer economic integration and convergence in Europe. We unequivocally oppose the move towards a European super state or a united states of Europe.
§ Mr. BudgenI so often and usually completely agree with my hon. Friend the Member for Southend, East (Mr. Taylor) that I want to make only one point and to explain where I disagree with what he said. In his opening remarks he asked whether Europe was good for Britain, and talked about Europe being an area in structural decline. He made what seemed to be an essentially materialistic argument.
I dislike the idea of economic convergence, because I believe that a nation is perfectly entitled to choose policies and laws which may exhort objectives which are not materialistic. For the sake of argument, a nation is perfectly entitled, if it wishes, to say that a quarter of its population may be Roman Catholic priests. Perhaps that was the position at one stage in Spain. A nation is perfectly entitled, if it wishes, to educate a large number of people in the classics. That may well not have an immediate effect upon its GNP. My hon. Friend the Member for Southend, East (Mr. Taylor) was arguing as if there were some obviously agreed priorities in every nation state that they would subvert all other objectives to the improvement of their wealth and riches.
I object to the idea of economic convergence because of the second argument that my hon. Friend put forward. The British people are perfectly entitled to have the sort of economy that suits their character. In my opinion, they should be able to have that sort of economy without the disadvantage of being constantly barracked and harassed by their politicians telling them to work harder or being exhorted by the Europeans to become more European minded. Of course, it is for the politicians to explain to them that if they happen to like striking, for example, or if they happen to like sleeping in hay fields during the summer they are unlikely, at the same time, to be producing consumer goods. We do not want to suggest at any time that the sole purpose of a modern state is to increase wealth, more especially to increase taxable wealth. The people of any state always have a diversity of objectives and they show it in a variety of inconsistent but none the less important ways. One of the great vulgarities of modern thought and the distorted idealism of the European concept is the belief that we are all exclusively materialistic beings.
§ Mr. J. Enoch PowellIn this debate we are arguing and eventually voting for or against the principle of monetary union. If I am asked how I know that, my answer is because it says so. By article 20 we are writing into the law and the treaty
Chapter 1,Co-operation in Economic and Monetary policy (Economic and Monetary Union)Note the brackets. It begins:In order to ensure the convergence of economic and monetary policies which is necessary".There is nothing which comes nearer to sovereignty, self-government or what politics is about than control of money. From the beginning of time it has been the attribute of sovereigns that they made or declared money. Their image and superscription was found upon it. That is what made it money. In our day, supremely the subject in politics about which we dispute, debate and vote between elections is about how the control of money shall be exercised and how the state to which we belong shall use the power of the modern state to make, or sometimes to unmake, money.There are signs that a general election has been discerned on the horizon by the parties in the House. One 527 of the principal issues, if not the principal issue, between the parties which will be put to the electorate is alternative ways in which the British state ought to use the money-making power. If there is to be monetary union, that decision is to be taken away from the British people. It is no longer to be a subject of politics in this country. It is a subject which will be decided by the general and common authorities of a monetary union. Consequently, there is nothing more directly and clearly inimical to the political process in this country than the professed intention to enter into a monetary union. We are professing that intention by what we do in this article and by an extraordinary procedure. It was your decision, Mr. Walker, that amendment Nos. 23 and 25 should be debated with amendment 9 by the extraordinary procedure of writing a preamble into the law of this country. The preamble uses important words. It states:
Moved by the will … to transform relations … into a European Union.It goes on:Whereas at their Conference … the heads of State … approved the objective of a progressive realisation of Economic and Monetary Union.It is all very well, and it will no doubt happen, for the Minister to tell us from the Dispatch Box to take no notice. She will say that it is not binding, that it is the preamble and that it is just words and has no effect. However, that is not what we will be told when it becomes an Act. That is not what we shall be told when steps are taken and enforced upon us, possibly by a guillotine in due course, towards economic and monetary union. We shall be told "In 1986 the House of Commons said so. The House of Commons embodied those words in an Act of Parliament." That is not nothing. After all, this Government make agreements with foreign powers about the government of the United Kingdom under which they undertake to make determined efforts to come to agreement with those foreign Governments on the internal affairs of the United Kingdom. Are we to be told that those words will never be quoted against us in future and that we shall never be told that we approved those objectives solemnly and put them on the statute book of this country by writing the words of a preamble into an Act of Parliament?
§ Mr. PowellI shall give way to the hon. Gentleman, because he voted against the guillotine.
§ Mr. CashWould the right hon. Gentleman agree that it is not simply a question of how that matter will be interpreted in our own court but, by virtue of the European Communities Act 1972, it is also a question of it being interpreted by the European Court of Justice and its methods of interpretation take us into a completely new dimension? The question that the right hon. Gentleman is putting to the House will be interpreted by the court further and toward the notion of European union which could invoke federalism in due course.
§ Mr. PowellI am wholly in agreement with the hon. Gentleman. He has performed a service to the debate by emphasising that point. We are not doing nothing by this legislation. We are doing something which is significant. It is something which will be quoted against us in future 528 and to which we will be held, if not by future Governments of this country, by authorities external to this country with which we are making a new compact. It is a renunciation of the rights, the sovereignty and the political entity of the people of this country, and we ought not to be engaged in it.
§ Mr. SpearingI reiterate precisely what the right hon. Member for South Down (Mr. Powell) has said. In respect of the authority of other courts I shall quote the memorandum from the Foreign Office in appendix A to the report of the Select Committee on Foreign Affairs. It talks about the preamble to the treaty and says:
It typically recites the purposes of the Treaty and the background against which agreement was reached. Its principal significance is as part of the context of the Treaty for the purposes of its interpretation.That is what the European Court will rest on if the British Government and this Parliament is taken to court for not moving towards economic and monetary union which is clearly spelt out in the preamble to the treaty and in article 20, which we now wish to delete. I shall take it further than the right hon. Member for South Down. I am sure that he will agree that economic and monetary union requires an authority to exercise the policy in respect of money and economics throughout the area of the union. At the moment, that is exercised, alternately perhaps, by the Bank of England, the Treasury and the House—a sort of internal triangle of economic and monetary policy. What would it be if that policy and the authority -were transferred to European institutions? Article 20 spells it out clearly in paragraph 2, which states:Insofar as further development in the field of economic and monetary policy necessitates institutional changes, the provisions of Article 236 shall he applicable.9 pmThat means that any member Government can propose amendments to the treaty. The paragraph goes on:
The Monetary Committee and the Committee of Governors of the Central Banks shall also be consulted regarding institutional changes in the monetary area.I repeat:the Committee of Governors of the Central Banks".Whether this country joins the European monetary system, which is connected to, but separate from, European monetary union, the latter implies not only a central monetary authority, but one that decides or influences such matters as the interest rate and exchange rate policy. In respect of exchange rates, article 20, or another article, changes article 70 of the treaty of Rome, paragraph 1 of which states:The Commission shall propose to the Council measures for the progressive co-ordination of the exchange policies of Member States in respect of the movement of capital between those States and third countries. For this purpose the Council shall issue directives, acting unanimously. It shall endeavour to obtain the highest possible degree of liberalisation.That is how article 70 stands, but the Single European Act changes the unanimous provision to one of qualified majority. In other words, it means that the control of our own exchange policies — I know that the present Government do not have a policy in that direction, but future Governments might — will no longer be in the hands of the British Government and of Her Majesty's Treasury should the House so wish and should the majority of the electorate so wish. It will be in the hands of authorities elsewhere. I leave hon. Members to suspect or guess who will be the most influential member of the Committee of Governors of the Central Banks. Of course, 529 it will be the most influential currency at the time when decisions have to be made. I do not have to tell hon. Members that the most stable and strongest international currency inside the EEC is the deutschmark. I think that is generally agreed.The proposals implicit in the so-called European common Act will impel this country into an economic and monetary union where central authority is basic to its thesis, and where a new economic imperialism will depend upon this country in just as sure a way as a new economic imperialism made itself felt across the border, as evinced in the exchanges between my hon. Friend the Member for Carrick. Cumnock and Doon Valley (Mr. Foulkes) and the hon. Member for Southend, East (Mr. Taylor). I believe that Conservative Members who are not in the Chamber do not know what the amendment is about. If they did, they would not vote against it.
§ Mrs. ChalkerSeveral hon. Members have suggested during the debate that the Single European Act embodies new commitments to economic and monetary union, and to European union. The first thing that I must say is that it does not. The term "economic and monetary union" is not a new concept, yet tonight anybody would have thought that it was. Let me remind the Committee that it has been accepted by every British Government since we joined the Community. For instance, it was a Labour Government who subscribed to the European Council's statement in November 1976 that
the achievement of economic and monetary union is basic to the consolidation of Community solidarity and the establishment of European Union.Those may not have been words that a Conservative Government would have used, but they were used by a Labour Government, with the support of many Opposition Members, some of whom may not be here tonight.Some of my hon. Friends said that monetary cooperation between member states was a new concept, a new idea. Member states already have an obligation to coordinate their economic policies under article 105 of the treaty of Rome. That has been with us since 1972. The references to monetary co-operation in the Single European Act are defined as being "in accordance with the objectives of Article 104." No new obligations are involved.
§ Mr. Eric Deakins (Walthamstow)Then why have it?
§ Mrs. ChalkerIt is there for a good reason. It brings together all the parts that, in the past, we wanted to be brought together. It is nothing new. The way in which it is drafted carries no new implication—for instance, that all member states, including the United Kingdom, should participate fully in the exchange rate mechanism. That is not contained in the article. The point is that the new articles merely formalise the existing position.
§ Mr. SpearingWhat about the preamble?
§ Mrs. ChalkerI shall turn to the preamble in a moment. The other thing that the article does not do is to open the door to any new proposals that we would be forced to accept against our better judgment. I know that many of my hon. Friends have been concerned about that. However, they seem to have forgotten that the Commission already has the right, under article 235, to make proposals in the monetary sphere. For instance, the 530 regulations setting up the ecu were adopted under article 235. In such cases, a unanimous Council decision has been required and will continue to be required.
Moreover, the Single European Act stipulates that any further institutional developments in the field of economic and monetary policy will be governed by article 236. That means that they must be agreed by all member states and approved by their national Parliaments. In other words, they must be brought forward in a treaty form and have the approval of the Parliament concerned as well as the other 11 national Parliaments.
§ Mr. SpearingThe Europeans as well?
§ Mrs. ChalkerThe hon. Gentleman, who spoke at considerable length in our earlier debates, tempts me to go over old ground. For the sake of those who asked questions tonight, and because only a short time is available, I shall not do so.
I turn to the broader question of European union that a couple of my hon. Friends and the hon. Member for Newham, South (Mr. Spearing) raised. As is customary, the preamble recalls existing commitments, such as the treaty of Rome, which lays the foundations of an ever closer union among the peoples of Europe. The Stuttgart solemn declaration identifies union as being achieved by
deepening and broadening the scope of European activities so that they coherently cover, albeit on a variety of legal bases, a growing proportion of member states' mutual relations and of their external relations.That means practical steps, not vague constitutional concepts. That is why article I of the Single European Act, which has been debated previously, refers tomaking concrete progress towards European unity.
§ Mr. Marlowrose— —
§ Mrs. ChalkerIf my hon. Friend is quick——
§ Mr. MarlowI shall not even thank my hon. Friend for giving way. Can my hon. Friend tell us what significance the preamble will have in the eyes and the judgments of the European Court of Justice?
§ Mrs. ChalkerWe are to have a debate on that subject later tonight. My hon. Friend already knows that the preamble to the treaty is an integral part of it. It does not confer rights or obligations.
§ Mr. SpearingOh yes, it does.
§ Mrs. ChalkerIt does not. The legal status of the preamble is as I have already defined it. No doubt I shall do so again. The Single European Act does not represent what the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) suggested — a step towards a united states of Europe. My right hon. and learned Friend the Foreign Secretary told the House quite clearly on 23 April that we are not talking about the declaration or proclamation of a united states of Europe, or about vague political or legal goals. We are talking about practical steps towards the unity that is essential if Europe is to maintain and enhance its economic and political position in a harshly competitive world. I should have thought that some hon. Members would be pleased that, instead of the ill-defined notion of European union which had been discussed in the past, we now have a clear statement of what we are talking about. It is practical co-operation of the kind that we and our predecessors have always advocated. As far hack as 1961, the then Prime Minister, now Lord Stockton, told the House: 531
In this modern world the tendency towards larger groups of nations acting together in the common interest leads to greater unity and thus adds to our strength in the struggle for freedom.I believe that it is both our duty and our interest to contribute towards that strength by securing the closest possible unity within Europe." — [Official Report, 31 July 1961; Vol. 645, c. 928.]Those words were fully accepted by the House. They were backed up in 1966 by the then Prime Minister, now Lord Wilson, when he said:We are talking about Britain's joining the Community and joining in the great drive towards European unity which I am now convinced more than ever is possible and within our grasp."—[Official Report, 8 May 1967; Vol. 746, c. 1093.]
§ Mr. DeakinsHe did not tell the British people that.
§ Mrs. ChalkerThat is what he said in the House, which is well reported. If that is not telling the British people—
§ Mr. Nicholas Budgen (Wolverhampton, South-West)It does not follow that, because someone has a certain job, his words are accepted.
§ Mrs. ChalkerIt may not be accepted by my hon. Friend — I fully accept that—but it has been by hon. Members in debate after debate under Governments of both complexions.
A number of hon. Members have suggested that the new treaty text would oblige sterling to join the exchange rate mechanism of the EMS. That, too, is a misconception. Although the exchange rate mechanism has played a valuable role in helping participating countries with anti-inflationary policies, the United Kingdom has substantially reduced inflation while remaining outside the system. The Government have repeatedly made it clear that the question of membership is kept under review but the balance of economic arguments is not a simple one. No doubt, the decision will be taken by my right hon. Friend the Chancellor of the Exchequer. But that is not a matter for the moment. As my right hon. Friend the Prime Minister has said, at present there is no intention of joining. She did not rule it out. It may, at some stage in the future, be right that we should join that system.
My hon. Friend the Member for Southend, East (Mr. Taylor) was concerned about article 20 and what it meant. The article brings together the existing position in a formalised way. Any institutional change would require treaty amendment and the approval of this and every other national Parliament. My hon. Friend went on to ask about the proposed treaty amendments. They merely refer to existing arrangements and previous statements. They do no more than that. I genuinely do not believe that my hon. Friend's concerns are well founded. He wants to change provisions that the House of Commons decided many years gone by, in 1972 and in our debates since. My hon. Friend is simply seeking to turn back the clock on this decision made long ago.
We actively participate in the EMS and we have discussions on its future development. We deposit 20 per cent. of our gold and dollar reserves in the European monetary co-operation fund. That will not suddenly change. We support efforts to strengthen the EMS further, but we will not take the decisions about which my hon. 532 Friend the Member for Southend, East is concerned without a full and rigorous analysis of what is required for the best for this country. That is—
§ It being two hours after the House resolved itself into a Committee on the Bill, THE CHAIRMAN put the Question already proposed from the Chair.
§ Question put, That the amendment be made:
§ The Committee divided: Ayes 60, Noes 168.
533| Division No. 251] | [9.14 pm |
| AYES | |
| Bennett, A. (Dent'n & Red'sh) | McKay, Allen (Penistone) |
| Bermingham, Gerald | McKelvey, William |
| Bidwell, Sydney | McWilliam, John |
| Brown, Ron (E'burgh, Leith) | Marlow, Antony |
| Budgen, Nick | Martin, Michael |
| Callaghan, Jim (Heyw'd & M) | Maxton, John |
| Canavan, Dennis | Maynard, Miss Joan |
| Clay, Robert | Michie, William |
| Cocks, Rt Hon M. (Bristol S) | Miller, Hal (B'grove) |
| Cohen, Harry | Nellist, David |
| Cook, Robin F. (Livingston) | Patchett, Terry |
| Davis, Terry (B'ham, H'ge H'I) | Pendry, Tom |
| Dixon, Donald | Pike, Peter |
| Dubs, Alfred | Powell, Rt Hon J. E. |
| du Cann, Rt Hon Sir Edward | Powell, Raymond (Ogmore) |
| Eastham, Ken | Prescott, John |
| Ewing, Harry | Raynsford, Nick |
| Field, Frank (Birkenhead) | Redmond, Martin |
| Foot, Rt Hon Michael | Robertson, George |
| Foster, Derek | Sheldon, Rt Hon R. |
| Foulkes, George | Shore, Rt Hon Peter |
| Fraser, J. (Norwood) | Skinner, Dennis |
| George, Bruce | Spearing, Nigel |
| Hamilton, James (M'well N) | Stewart, Rt Hon D. (W Isles) |
| Harrison, Rt Hon Walter | Taylor, Teddy (S'end E) |
| Haynes, Frank | Walker, Bill (T'side N) |
| Hogg, N. (C'nauld & Kilsyth) | Wareing, Robert |
| Hoyle, Douglas | Welsh, Michael |
| Hughes, Dr Mark (Durham) | |
| Kaufman, Rt Hon Gerald | Tellers for the Ayes: |
| Leighton, Ronald | Mr. Max Madden and |
| Lewis, Terence (Worsley) | Mr. Eric Deakins. |
| McDonald, Dr Oonagh |
| NOES | |
| Adley, Robert | Clegg, Sir Walter |
| Alexander, Richard | Coombs, Simon |
| Amess, David | Cope, John |
| Ancram, Michael | Crouch, David |
| Ashby, David | Currie, Mrs Edwina |
| Atkinson, David (B'm'th E) | Dorrell, Stephen |
| Baker, Nicholas (Dorset N) | Douglas-Hamilton, Lord J. |
| Baldry, Tony | Dunn, Robert |
| Banks, Robert (Harrogate) | Durant, Tony |
| Batiste, Spencer | Dykes, Hugh |
| Bellingham, Henry | Eggar, Tim |
| Benyon, William | Eyre, Sir Reginald |
| Biggs-Davison, Sir John | Fallon, Michael |
| Blackburn, John | Favell, Anthony |
| Bonsor, Sir Nicholas | Fenner, Mrs Peggy |
| Boscawen, Hon Robert | Forman, Nigel |
| Bottomley, Peter | Forsyth, Michael (Stirling) |
| Bottomley, Mrs Virginia | Forth, Eric |
| Bowden, A. (Brighton K'to'n) | Fowler, Rt Hon Norman |
| Bowden, Gerald (Dulwich) | Fox, Sir Marcus |
| Boyson, Dr Rhodes | Franks, Cecil |
| Bright, Graham | Fraser, Peter (Angus East) |
| Brinton, Tim | Freeman, Roger |
| Bryan, Sir Paul | Gale, Roger |
| Burt, Alistair | Galley, Roy |
| Butler, Rt Hon Sir Adam | Gardiner, George (Reigate) |
| Butterfill, John | Garel-Jones, Tristan |
| Cash, William | Glyn, Dr Alan |
| Chalker, Mrs Lynda | Griffiths, Sir Eldon |
| Chapman, Sydney | Grist, Ian |
| Chope, Christopher | Grylls, Michael |
| Clarke, Rt Hon K. (Rushcliffe) | Gummer, Rt Hon John S |
| Hamilton, Hon A. (Epsom) | Oppenheim, Phillip |
| Hanley, Jeremy | Ottaway, Richard |
| Hannam, John | Page, Sir John (Harrow W) |
| Harris, David | Page, Richard (Herts SW) |
| Harvey, Robert | Percival, Rt Hon Sir Ian |
| Hawkins, C. (High Peak) | Portillo, Michael |
| Hawkins, Sir Paul (N'folk SW) | Powell, William (Corby) |
| Hayes, J. | Rhcdes James, Robert |
| Hayward, Robert | Rippon, Rt Hon Geoffrey |
| Heathcoat-Amory, David | Robinson, P. (Belfast E) |
| Heddle, John | Roe, Mrs Marion |
| Hickmet, Richard | Rowe, Andrew |
| Hicks, Robert | Rumbold, Mrs Angela |
| Hind. Kenneth | Sainsbury, Hon Timothy |
| Hogg, Hon Douglas (Gr'th'm) | Sayeed, Jonathan |
| Holland, Sir Philip (Gedling) | Shelton, William (Streatham) |
| Holt, Richard | Shepherd, Colin (Hereford) |
| Howarth, Alan (Stratf'd-on-A) | Shersby, Michael |
| Howell, Ralph (Norfolk, N) | Smith, Sir Dudley (Warwick) |
| Howells, Geraint | Smith, Tim (Beaconsfield) |
| Hunt, David (Wirral W) | Soames, Hon Nicholas |
| Hunter, Andrew | Speed, Keith |
| Hurd, Rt Hon Douglas | Spencer, Derek |
| Johnson Smith, Sir Geoffrey | Spicer, Jim (Dorset W) |
| Johnston, Sir Russell | Stanbrook, Ivor |
| Jones, Gwilym (Cardiff N) | Stern, Michael |
| Jones, Robert (Herts W) | Stevens, Lewis (Nuneaton) |
| Jopling, Rt Hon Michael | Stewart, Ian (Hertf'dshire N) |
| Kennedy, Charles | Taylor, John (Solihull) |
| Key, Robert | Temple-Morris, Peter |
| Kirkwood, Archy | Terlezki, Stefan |
| Knowles, Michael | Thompson, Donald (Calder V) |
| Knox, David | Thompson, Patrick (N'ich N) |
| Latham, Michael | Thurnham, Peter |
| Lawrence, Ivan | Tracey, Richard |
| Leigh, Edward (Gainsbor'gh) | Trippier, David |
| Lennox-Boyd, Hon Mark | Twinn, Dr Ian |
| Lester, Jim | van Straubenzee, Sir W. |
| Lilley, Peter | Wallace, James |
| Livsey, Richard | Waller, Gary |
| Lloyd, Sir Ian (Havant) | Ward, John |
| Lloyd, Peter (Fareham) | Wardle, C. (Bexhill) |
| MacKay, Andrew (Berkshire) | Warren, Kenneth |
| MacKay, John (Argyll & Bute) | Watson, John |
| McNair-Wilson, P. (New F'st) | Watts, John |
| Major, John | Whitfield, John |
| Malone, Gerald | WilKinson, John |
| Maples, John | Wolfson, Mark |
| Mawhinney, Dr Brian | Wood, Timothy |
| Meyer, Sir Anthony | Yeo, Tim |
| Moynihan, Hon C. | |
| Neale, Gerrard | Tellers for the Noes: |
| Needham, Richard | Mr. Michael Neubert and |
| Norris, Steven | Mr. Francis Maude. |
§ Question accordingly negatived.
§ Mr. Teddy TaylorI beg to move amendment No. 11 in page 1, line 13, after `Communities)', insert 'hut not paragraph 2 of revised Article 130R in Article 25 thereof.
§ The Temporary Chairman (Mr. James Lamond)With this it will be convenient to take amendment No. 21 in page 1, line 13, after `Communities)', insert
'but not Article 25 thereof'.
§ Mr. TaylorThe Minister, when replying to the last group of amendments, gave the impression, perhaps inadvertently, that she was replying to the speech that she thought I would make rather than the speech I actually made. For that reason I want to be absolutely precise about what I say on amendment No. 11.
This amendment relates to article 25 of the Single European Act which extends the competence of the Common Market to issues affecting the environment. Article 25 states what action would he taken and in which 534 areas, and certain principles are established as being acceptable for all member states. It further states when the Community would take action which it considers would be better administered at Community level than by individual member states.
Paragraph 2 of the article states:
Action by the Community relating to the environment shall be based on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source, and that the polluter should pay.My first question to the Minister is whether it is now the policy of Her Majesty's Government that the polluter should pay. That is a simple and precise question. As the Government have agreed to this treaty, do they now take the view, as stated in the Act, that the polluter should pay?I should like to know the answer because I am worried about my area of Essex and the enormous problems created for health and the environment by nitrate pollution of the public water supplies. We are all aware of the great concern that has been expressed both in the World Health Organisation and in the European Community about the possible dangers to health posed by nitrate pollution. The World Health Organisation has decided that a level of 50 ml per litre in the public water supplies is the maximum acceptable level. The Common Market has now made that a statutory level and states that all member states should insist on a 50 ml maximum in water supplies.
My understanding is that, until now, the Government have adopted the clear policy that the water consumer rather than the polluter should pay for the pollution. Various water authorities, including Anglian Water, have announced enormous capital programmes which are necessary to bring nitrate pollution down to the acceptable level. The Government have given exemptions on various grounds to some authorities for not bringing the nitrates down to the acceptable level. The fact is that water boards are spending a great deal of money simply to reduce the nitrate level in public water supplies.
We all know who causes the pollution. There is a great deal of natural pollution, but in the areas where there is a special problem the nitrate pollution comes directly from the activities of firms such as ICI which buy large expensive advertisements in the national press to tell us that nitrate fertilisers are good for the country. They are good in the sense that they greatly increase cereal production, but that is not particularly good when the Common Market is already having to spend £150 million every week for dumping surplus foods, largely cereals.
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Until now, my understanding has always been that while farmers create the pollution by putting nitrates into the public water supplies, it is the water consumer who pays to take them out. That has always seemed to be rather unjust but it is interesting that that was the Government's clear policy and, naturally, as a Conservative Member of Parliament I feel a general obligation at least to give some support to the views of my party. On the other hand, the Government now seem to be changing their policy because they have accepted the Single European Act which clearly states that the polluter should pay. I simply want to know whether the Government have changed their policy, and, if so, shall we now insist that the polluters should pay for the pollution that they create?
Secondly, as this is now legislation which can be interpreted by the European Court of Justice, once the 535 public water supplies have been privatised, which my right hon. Friend the Secretary of State for the Environment tells us will take place after the next election —presumably if there is a Conservative Government, although I am far from clear whether a Social Democrat controlled Government would support the privatisation of public water supplies—could a privatised water board now go to the European Court to demand that the cost of reducing nitrate pollution should be borne by the polluters?
So long as that is simply a policy, there is not much that one can do in relation to the European Court, but as this is now part of a treaty which can be interpreted by the European Court, would it be open to the privatised water boards, or, indeed, to aggrieved water ratepayers, to go to the European Court to insist that that policy as set out in paragraph 2 should be applied?
Finally, will my hon. Friend the Minister give us some idea of the latest estimate of the cost in capital and revenue to the water boards of reducing nitrate levels in accordance with the EEC directive? That is not one of those silly questions which people bring up because they want to make a fuss. We all know that nitrate pollution is serious. It has been identified by the World Health Organisation as a serious potential health hazard. We know that even in Britain our medical officers of health have to be advised if pollution goes above 50 ml per litre. We know that in Britain if nitrate pollution goes above 100 ml medical officers of health have to supply bottled water to babies to avoid their possible death. Therefore, it is a serious matter. Under this article there could be a complete change and I want to know how it will come about.
Paragraph 4 states that the Community shall take action where the objectives can be better attained at Community level than by individual member states. The EEC has already passed a nitrate regulation which says that no member state can permit, unless there is a special exemption, more than 50 ml. Therefore, it seems that the decision has already been taken by the EEC that this matter is better dealt with at Community level than by individual member states.
But for other issues, who decides what is better dealt with at Community level? Is it done by majority vote or by unanimity? I hope that the Minister can give me answers to those questions. They are important and could be significant not only for the Treasury and for water boards, but also for the water ratepayers and all those concerned with public health in our nation.
§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)I will not go into the detail that the hon. Member for Southend, East (Mr. Taylor) did, but I will talk about the general principle of whether new competences and powers should be given to the European Community and written into the powers of the Community. We believe that there should not be new competences and powers because in our view the existing competences and powers are not fully used by the Community. Because in some cases the powers are exercised de facto by the Community, it is suggested that they should be written in, but we do not understand why that is necessary. In certain areas, such as research and development and technology, co-operation does not need to be constrained by the institutional framework that the Community has. One notable example 536 that I gave earlier, to which I am sure the hon. Member for Tayside, North (Mr. Walker) will be referring, is the European airbus. We think that that kind of voluntary cooperation is better than forcing every country of the 12 to co-operate.
We are also concerned that, as de facto competences become legalised, there will be pressure for more competences, and this will lead to an escalation of the powers of the Community. In our view, further discussion is needed about the levels at which powers should be exercised, as the hon. Member for Southend, East said. One of the new levels at which certain powers will be exercised soon after the general election is the Scottish assembly.
Finally, we are concerned that one of the areas where it is proposed that these extra competences should be legalised is research and development, and here the British Government have been instrumental in making cuts in the budget. With regard to suggestions that there should be greater co-operation in research and development, for example, EUREKA and ESPRIT — I can never pronounce these acronyms properly because they do not really have a proper pronounciation, and I think that we should agree to have a free market in the pronounciation of acronyms—the Government have been instrumental in cutting the money available. Budget cuts have taken place to make way for the burgeoning expenditure in agriculture.
For all those reasons, we are against the extension of powers and competences and the legalisation of competences currently undertaken by the European Community.
§ Mr. Bill WalkerArticle 25 is an important and serious one. As you will be aware, Mr. Lamond, the water authorities of Scotland are controlled by the regional councils. My hon. Friend the Member for Southend, East (Mr. Taylor) has properly asked the Minister how the polluter will be made to pay, and who will go to the trouble of finding out who the polluters are. When nitrates get into the public water supply, the source is usually farmers. As farmers, we are aware — I represent a very large agricultural constituency — that farmers using nitrates have been encouraged by the Government to introduce a voluntary code.
What happens when scares arise as a result of measurements laid down by Europeans was shown by what happened with the lambs. Problems, scaremongering, a lack of confidence and difficulties in agricultural communities were all created. Outside the areas affected directly, a lack of confidence was felt. When an area is judged to have problems, finding out who the polluters are presents enormous problems.
If we were leaving this even to some ghastly assembly that we shall never have in Edinburgh—
§ Mr. John Home Robertson (East Lothian)The hon. Gentleman will not be there.
§ Mr. WalkerI have no wish ever to be there, and I doubt whether either the hon. Gentleman or I will see it in our lifetimes. However, if we want to dwell on these flights of fancy, it is important to examine them. The important thing is, as I understod it, that under article 25, the European Community will be given powers. As a result, the new assembly, if it ever comes to pass, will not be able to do anything anyway. This is just a diversion.
537 This is a fundamental change to the way in which we have handled such problems, certainly in Scotland. I have never known farmers being harassed or brought before any European court on this matter. There was a problem of pollution in the local water supplies, and this has duly been resolved by a voluntary agreement. I do not have to remind my hon. Friend the Minister that water is an important ingredient of our most famous export, and without the water we would not have the famous export.
§ Mr. FoulkesHaggis.
§ Mr. WalkerHaggis may be a famous export for Ayrshire, but that is not the case in the highlands of Scotland. The hon. Gentleman knows that my constituency is in the highlands of Scotland; therefore, I am talking about whisky.
There is an interest in matters affecting pollution and what it may do, but the important thing is whether we are prepared to give these extra powers to the Community, which will be further away from the source of pollution, which it may fail to understand. There is a worry, based on the recent experience of what happened with lambs, that we may he agreeing to a measure that will give us enormous confidence problems, and which would be better dealt with locally.
§ Sir Anthony MeyerThe hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) had a terrible nightmare. He dreamt that he was addressing the House as a Socialist, arguing that matters of international cooperation are things with which Governments should not concern themselves, but should be left entirely to private enterprise, and that pollution was something best dealt with by national Governments. He woke up in the middle and found that he was making that speech.
It is a pleasure for once to find myself in complete agreement with my hon. Friend the Member for Southend, East (Mr. Taylor). and the powerful speech that he made arguing that article 25 of the treaty is essential if we are to have effective anti-pollution measures. It is legitimate to argue, as many hon. Members have, that there are a great many matters with which the European Community concerns itself that could be equally well dealt with by national Governments. However, one cannot possibly argue that about environmental pollution, which knows no frontiers.
§ Mr. FoulkesDoes that not equally apply to cooperation with countries in Scandinavia or eastern Europe, or with other non-member states of the Economic Community? I was talking about co-operation between countries on this issue and not necessarily restricting it to only 12 countries dealing with the problem. I am sure the hon. Gentleman agrees that environmental pollution does not stop at the boundaries of the European Community. The Norwegians and the Swedes are just as concerned as we are about acid rain and other pollutants.
§ Sir Anthony MeyerI do not disagree for one minute with the hon. Gentleman, but if we say that we cannot cooperate effectively within the European Community, a fortiori we shall be unable to co-operate with countries outside it. The Community provides a basis for effective co-operation. If there is any field in which co-operation has to he made effective, it is precisely in the area of environmental pollution. Acid rain pollution of rivers and seas knows no national harriers and makes a mockery of 538 our claim to absolute national sovereignty and of all the piffle about being able to control everything completely from this Chamber. If there is any argument that is unanswerable, it is that which is based on this article. I do not see how anybody can possibly accept this amendment.
§ Mrs. ChalkerWe have had an unusually speedy debate on this article and amendment No. 11, and I shall try to answer the concerns that rightly were expressed by my hon. Friend the Member for Southend, East (Mr. Taylor). I understand his anxieties. On 14 May 1986 he asked the Parliamentary Under-Secretary of State for the Environment, my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold), a question about nitrates. She said:
The polluter pays principle is not formally incorporated into United Kingdom law, although it is an aim of Government policy that the principle should be observed. This is reflected, for example, in parts of the Control of Pollution Act 1974. The Government also support the 1972 OECD and 1975 EC recommendations on the PPP,"—the polluter pays principle—but these are not legally binding; nor do they require payment where discharges are within the level acceptable to the control authority.My hon. Friend went on to say in her answer that "nitrate enters public water supplies from a variety of sources".—[Official Report, 14 May 1986; Vol. 97, c. 490.] That is true. It is also true that nitrate builds up over a number of years. For that reason, we have not made the polluter pays principle an aim of Government policy and it is not formally included in United Kingdom law. The Bill will not change that policy.Paragraph 2 of the proposed new article 130(R) refers to "action by the Community", not by individual member states.
My hon. Friend asked about the latest estimate of capital and revenue costs to the water boards of reducing nitrate levels in accordance with the EEC drinking water directive. We should want to do this, anyway, but this worthy item of public expenditure amounts to a capital cost of £50 million and a revenue cost of £5 million. However, the drinking water directive allows a derogation if there is no threat to public health. Such derogations would be issued only if they were based on medical advice.
§ Mr. J. Enoch PowellWould it be convenient for the hon. Lady to deal at this point with a difficulty that exercises me and certain other right hon. and hon. Members? Effectively we are dealing with section 2(1) of the European Communities Act 1972. We are extending the treaties that are referred to in that section, which deals with the "rights, powers, liabilities, obligations and restrictions from time to time created or arising by or under the Treaties". What are the rights, etcetera, which will be added to those provisions by the inclusion of this provision which is the subject of the amendment? There must be some effect from the inclusion of this article in the new treaty which is being written into section 2 of the 1972 Act.
§ Mrs. ChalkerI have written down most carefully the point made by the right hon. Member for South Down (Mr. Powell), and I shall come to it in a moment. These general questions form the background to exactly the problems about which the right hon. Gentleman is anxious. There are principles enshrined in article 25, but they are no more than guidelines for the Council of 539 Ministers and they are included in the environmental action programmes which have so far guided Community action on the environment.
My hon. Friend the Member for Southend, East sought to find out if there was anything more than the guidelines to which we already adhere. It is quite clear that Community action on the environment is well established. As my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer) said, pollution knows no boundaries. We have adopted numerous instruments, especially on water quality and atmospheric pollution, and we have used article 235 of the treaty of Rome to do that.
The new treaty articles, about which the right hon. Member for South Down spoke, bring the treaty of Rome up to date with practice and give a firm basis for the new Community measures. The right hon. Gentleman asked what rights would be added to the existing provisions. The principles that have been laid down are those which we already have in our domestic legislation. Preventive action is better than retrospective action, and action by the Community has to take account of the differing environmental conditions in the various regions. We may not all be equally affected by the way in which pollution travels.
We go further on pollution measures because we say that the potential costs as well as the benefits must be weighed up before action is taken. The Community should act only to the extent to which environmental objectives can be better attained at Community level than at the level of individual member states. That is exactly the policy we seek to follow.
§ Mr. MarlowDoes that mean that at no stage will the Community have any impact as to the quality of drinking water that comes out of taps in the United Kingdom?
§ Mrs. ChalkerIt cannot. We have never tried to force on another country the principles that I have outlined. Unanimity applies here, and in that connection my hon. Friend the Member for Southend, East asked a question about paragraph 4 of article 130(R). Unanimity applies and if there were to be a proposition to set a certain figure with which Britain did not agree we would not have to accept it. I hope that answers the question asked by my hon. Friend the Member for Northampton, North (Mr. Marlow).
§ Mr. MarlowIn terms of article 130(R), would it be proper for the Commission to put such a proposal forward anyway?
§ Mrs. ChalkerUnder the treaty, the Commission could put forward a proposal, but we are protected by the unanimity rule. The Commission is unlikely to do anything like that because we have worked in tandem with it as partners and it would not put forward something that other partners as well as ourselves were not prepared to have. If we were not prepared to have it, we would not accept it and our partners could do likewise and it would fall.
§ Mr. Teddy TaylorThe Minister is being helpful in giving us the answers to our questions. Is she saying that, apart from setting out some general principles, there is nothing in this at all? Does it mean that there is no way that a water board could use this if it thought that the 540 Government were not applying the polluter pays policy? Is this just a set of general principles which do not really help anyone in particular?
§ Mrs. ChalkerI shall come to my hon. Friend's point about the water boards in a moment. We have sought to make sure that we have sound principles for Community environmental action, if that is what is needed, because pollution knows no boundaries. We are after the best possible means of tackling the environmental problems. The acceptance of amendment No. 11 would change things, and I hope that hon. Members will realise that that is not necessary in following through the policy that has been adopted by the Government. Having listened to the speeches of hon. Members, I have concluded that they support our policy. Community action will be taken only when it is more appropriate than action at state level. The cost-benefit analysis has to be taken into account as well as scientific evidence and regional differences.
I am well aware that my hon. Friend the Member for Southend, East is anxious about the future of water boards. His anxiety is shared by many hon. Members and by many outside the House. My hon. Friend is anxious to know whether a water board will be prevented from improving its quality of supply. There is nothing in the article to prevent a board doing that. If my hon. Friend is anxious also, as I believe him to be, that a water board will feel that it is being asked to do too much, I remind him of the answer which my hon. Friend the Member for Mitcham and Morden (Mrs. Rumbold), the Under-Secretary of State for the Environment, gave him on 14 May. She spelt out clearly the principles that are applied. In general terms, the water board problem, if that is the appropriate term, relates to farmers.
My hon. Friend the Member for Tayside, North (Mr. Walker) has talked about farmers, and the principle that the polluter pays is being observed by farmers, who incur costs or lose revenue. They follow the requirements of the code of good agricultural practice so as to reduce the risk of nitrate pollution, which is one of the issues that is considered by the nitrate co-ordination group. That is something that will continue irrespective of article 130(R).
The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) asked about new competences. We are continuing with the principles that we have been following, but putting them together in a way which makes sense. The Community is involved only if a policy can be pursued more effectively at a Community level than by the individual state.
§ Mr. FoulkesWill the Minister confirm which body will decide whether a policy is better pursued by the Community than by the individual country?
§ Mrs. ChalkerThe Council of Ministers will decide, and by unanimity.
My hon. Friend the Member for Southend, East asked about privatised water boards and wanted to know specifically whether an aggrieved privatised water board or an aggrieved water ratepayer could go to the European Court and demand that the cost of reducing the nitrate pollution be borne by the polluters. That is excluded by second paragraph of article 130(R) of the treaty of Rome, which states,
Action by the Community relating to the environment shallbe based on the principlethat the polluter should pay.541 Community action, therefore, should take account of this principle. If it does not, there will be the potential for a member state, or any of the institutions of the Community, to apply for judicial review by the European Court of Justice. The paragraph itself would not provide a basis for action by a national, meaning an individual, against the polluter. That was the essence of my hon. Friend's question.
§ Mr. Teddy TaylorBut I am disappointed.
§ Mrs. ChalkerI understand that my hon. Friend is disappointed, but perhaps we are talking about something that will apply in future. As an island, Britain is rather less affected than many of the mainland countries within Europe.
We would be ill advised to agree to the amendment. The polluter pays principle gives us a guideline. But because of time, as in the case of the filtration of nitrates through the soil, it may simply not be possible. Therefore, the principle is there, but the legal requirement is not in the Bill.
The hon. Member for Carrick, Cumnock and Doon Valley, strangely, got on to the subject of Community expenditure on research and development. I say "strangely'', because it did not quite fit in with other comments that have been made. He would be the first to complain if we allowed Community expenditure to rise without constraint and due consideration.
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It is not a question of cutting Community expenditure on research and development. The European Council agreed to a gradual increase in expenditure on research and development which is what happens under the new framework programme, about which my hon. Friend the Minister for Information Technology spoke last week. That new framework programme is under discussion and it will apply to research and development which relates 542 specifically to the implementation of ideas in a commercial manner. We want to ensure that we can get the best possible outcome in production and marketing.terms from the resources put into research and development, even if they start off at a basic level.
§ Mr. MarlowOn a point of order, Sir Paul. I expect I am wholly wrong, but is it not normal for the debate to conclude at 10 o'clock unless some other measures are taken?
§ The Second Deputy Chairman (Sir Paul Dean)I remind the Committee that in this case the 10 o'clock business motion does not apply because we are working on a guillotine motion which the House agreed some days ago.
§ Mrs. ChalkerI shall finish quickly, as my hon. Friend the Member for Northampton, North (Mr. Marlow) is obviously anxious that I should. I was seeking to answer questions raised during the debate.
My hon. Friend the Member for Tayside, North seemed to think that there was a fundamental change in our approach. I hope that what I have said makes it clear that there is no fundamental change. I have already answered the questions about farmers being forced to pay.
It is important that we should work together to reduce pollution, as we are doing, and that we should take on at Community level only those matters which know no boundaries. We should certainly act, as indeed we are, to reduce pollution where it occurs within each member state. I ask the House to reject the amendment.
§ Mr. Teddy TaylorAs there is obviously nothing in this particular article and as it does not do any good to any-one but simply sets out a pile of general principles, if the House is agreeable, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.