Commons Sitting of 5 March 1986

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  DEATH OF A MEMBER
  Mr. Speaker: I regret to have to inform the House of the death of John Deane Spence, esquire, Member for Ryedale, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the hon. Member.
Oral Answers to Questions
  FOREIGN AND COMMONWEALTH AFFAIRS

    Human Rights
    Mr. David Atkinsonasked the Secretary of State for Foreign and Commonwealth Affairs when he last met the Secretary-General of the Commonwealth to discuss the human rights situation in member states.
    The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Tim Eggar): My right hon. and learned Friend has not met the Commonwealth Secretary-General specifically to discuss the human rights situation in member states and has no present plans to do so.
    Mr. Atkinson: Can my hon. Friend confirm that at least a third of the member states of the Commonwealth do not satisfy the human rights criteria of the United Nations' declaration? If so, will he suggest to Sir Shridath Ramphal that the team of eminent persons currently investigating human rights in South Africa should also investigate and report on the situation in the member states of the Commonwealth?
    Mr. Eggar: At Nassau, we and other Governments welcomed the recent establishment of the human rights unit in the Commonwealth secretariat. We believe that this is the best instrument to assist in promoting understanding of and respect for human rights within the Commonwealth. Where specific human rights issues arise and have come to our attention, we have made representations, where appropriate, to the Government concerned.
    Mr. Tom Clarke: Does the Government's concern for human rights extend to Pakistan?
    Mr. Eggar: As the hon. Gentleman knows, Pakistan is not part of the Commonwealth.
    Mr. Sims: Is my hon. Friend aware that 12 months have elapsed since I visited Sri Lanka on behalf of the
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    parliamentary human rights group, together with the hon. Member for Knowsley, North (Mr. Kilroy-Silk)? Our report on our visit listed a number of ways in which human rights are violated in respect of many members of all the communities in Sri Lanka. As the efforts of the Secretary-General of the Commonwealth and the Prime Minister of India to resolve the problems in Sri Lanka do not seem to have borne fruit, are Her Majesty's Government, who are held in high regard in that country, prepared to offer their services as a mediator?
    Mr. Eggar: We see our role as continuing to support efforts by India and others to encourage direct talks between the Sri Lankan Government and Tamil representatives. India's contribution to the peace process is valuable and positive, and we believe that a negotiated settlement is the best route to a lasting peace.
    Mr. Nellist: As one who, with the hon. Member for Ealing, North (Mr. Greenway), was not acceptable to the Sri Lankan Government to make such a trip on behalf of the parliamentary human rights group, unlike the hon. Member for Chislehurst (Mr. Sims), may I ask the Minister whether, if he is so concerned about the abrogation of human rights in Sri Lanka, he will break off military and police training, economic links and the support that the Government continue to give to a Government who, on any examination of the facts, are clearly guilty of a serious attack on human rights in that country?
    Mr. Eggar: As we have repeatedly said, we deplore the continued violence within Sri Lanka. The Sri Lankan Government have taken steps to prevent undisciplined action by their security forces and have assured us that they continue to further those efforts.

    South Africa
    Mr. Litherlandasked the Secretary of State for Foreign and Commonwealth Affairs if he will give examples of specific responses made by the South African Government to Britain's diplomatic pressure over the past three years.
    Mr. Nellistasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about Her Majesty's Government's latest representations to the Government of South Africa.
    The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): The full details of our representations and of the specific South African responses must naturally remain confidential. However, we believe that the many representations made during the past three years have helped in modifying actions and encouraging reforms. On 25 February Her Majesty's ambassador raised the enlargement and projected "independence" of KwaNdebele homeland; the shootings in Alexandra; the detentions of Venda community leaders and the case of the Sharpeville Six.
    Mr. Litherland: Has the right hon. and learned Gentleman seen the article in The Guardian today which states that the Prime Minister has personally blocked a move by the Bermudan Government to introduce limited sanctions against South Africa, even with respect to the import and sale of krugerrands? At the moment, our Government are considering barring the import and sale of

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    krugerrands. Does the right hon. and learned Gentleman not agree that that smacks of double standards and is a sop to apartheid?
    Sir Geoffrey Howe: No. It smacks of precisely the opposite — the perfectly rational conclusion that the Government's decisions on measures taken in relation to South Africa should be uniform not only in the United Kingdom but in colonial territories. That is why the position of krugerrands is under consideration in relation to Bermuda as with the United Kingdom.
    Mr. Nellist: Are not the attitude and reply of the right hon. and learned Gentleman to these questions mere finger wagging at apartheid? In view of the £11 billion of British investment in South Africa, do not the objections of the right hon. and learned Gentleman and the Prime Minister have more to do with the profits made by British firms because of apartheid than with these latecomers moralising about apartheid? When will Britain take serious economic action against a system that degrades the people over which it rules?
    Sir Geoffrey Howe: If it were left to the hon. Gentleman to judge these matters, the result would be more likely to promote the destruction of the South African economy and of the British economy, to the disadvantage of all the peoples living in both countries. I assure the hon. Gentleman that the balanced policy adopted by the Government of making it plain that we wish apartheid to be brought to an end quickly and of supporting that aim by policies and representations is far more likely to be effective in pursuit of the objectives shared by hon. Members on both sides of the House.
    Sir Peter Blaker: Is it not clear that many of those who call for a policy of serious economic sanctions have not thought through the implications? For example, would not a policy of compulsory divestment, for which I understand the hon. Member for Coventry, South-East (Mr. Nellist) is calling, in practice involve the confiscation of part of the property owned by British subjects and its free handover to South Africans?
    Sir Geoffrey Howe: That would be one of the many perverse effects of the measures advocated by the hon. Member for Coventry, South-East (Mr. Nellist). I entirely agree with the point made by my right hon. Friend.
    Dr. Owen: Has the right hon. and learned Gentleman made representations against the selective ban on television reporting? Does he accept that many of us find that quite unacceptable?
    Has the right hon. and learned Gentleman made representations about the decision to go ahead with United Nations supervised elections in Namibia in August and the fact that they should not be dependent upon and linked to the withdrawal of Cuban forces? Such action would be welcomed by both sides of the House, but I believe that the United Nations resolution should be undertaken anyhow.
    Sir Geoffrey Howe: We have already made representations expressing our regret at the curtailment of the rights of television and other reporters in South Africa. We have welcomed the reaffirmation by the South African Government of their commitment to implement Security Council resolution 435, because we believe that that would offer an opportunity to make early progress on the whole Namibian question and would reduce tension throughout
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    the region. The right hon. Gentleman knows perfectly well that we do not recognise any formal linkage with any requirement for Cuban withdrawal as part of that settlement. South Africa has made it clear, not only in yesterday's announcement, but many times in the past, that it will not agree to implementation of resolution 435 unless a satisfactory arrangement is found with respect to the Cubans. It is my judgment, having talked about this matter to a large number of people in that part of Africa, that the practical opportunity to implement resolution 435 is most likely to be fulfilled on the basis of United States-led negotiations in the context of the announcement which we now welcome.
    Mr. George Gardiner: Will my right hon. and learned Friend, in his dealings with the South African Government, bear in mind the wisdom of encouraging as well as censuring—using a carrot as well as a stick? To that end, would there not be some value in saying that steps to broaden the base of government in South Africa might be reflected in an early relaxation of some of the provisions of the Gleneagles agreement on boycotting sporting contacts?
    Sir Geoffrey Howe: I do not immediately see the connection between my hon. Friend's specific point, which is a matter for my right hon. Friend the Secretary of State for the Environment, and his more general point. However, I agree that we should be ready, not only to criticise where criticism is due, but to offer encouragement where that is due.
    In addition to welcoming the announcement about the implementation of resolution 435, I am also glad to welcome the announcement about the lifting of the state of emergency, which is a matter that has been addressed by hon. Members on both sides of the House. I hope that that action will help to ease the tension and assist the promotion of dialogue, which is so urgently needed. That is what we must all hope for.
    Mrs. Dunwoody: Has the Foreign Secretary read the remarks of Chief Johnathan, in which he makes it clear that it was the refusal of the British Government either to offer proper support to the state of Lesotho or to make adequate representations to the South African Government that led to the downfall of an elected Government in that state?
    Sir Geoffrey Howe: I have seen reports of certain remarks made by the deposed Prime Minister of Lesotho, Chief Johnathan. It is not true that Britain was in any way involved in his overthrow. In response to Chief Johnathan' s request for assistance, we immediately asked the South Africans to lift border restrictions and to talk to Lesotho.
    Sir Geoffrey Finsberg: Will my right hon. Friend confirm that British diplomats attended the funerals in Alexandra today? Will he also say whether diplomats have been similarly instructed to attend the funerals of black policemen murdered by fellow blacks?
    Sir Geoffrey Howe: I shall bear in mind the points made in the last part of my hon. Friend's question. It is true that our diplomatic post, together with the posts of other Western Governments, was represented at the funerals today.
    Mr. Healey: Will the Foreign Secretary tell the House why Her Majesty's Government have failed to carry out

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    the undertaking they gave nearly five months ago at the Commonwealth summit to ban the import of krugerrands, especially as the United States Administration have found no difficulty with the general agreement on tariffs and trade in banning krugerrands, even before the Commonwealth summit?
    Does the Foreign Secretary believe that there is something lacking in British influence when, according to Amnesty International, 8,000 persons have been detained—many of whom have been tortured and murdered in prison—and nearly 800 people have been murdered by the police as a result of South African policy? Of those detained and murdered, a quarter were children. How can the Foreign Secretary excuse breaking his commitment at the Commonwealth summit in the face of those facts?
    Sir Geoffrey Howe: The right hon. Gentleman knows perfectly well that one of the many reasons why we wish to see an end to apartheid is that that would help us to reduce the adverse impact on human rights in South Africa. The United Kingdom is not the only country that has found it necessary to consider the general agreement on tariffs and trade implications on the proposed ban of krugerrands.
    Sir Anthony Grant: Has it occurred to my right hon. and learned Friend that our relations with South Africa might perhaps have been much better, and certainly the whole beastly business of apartheid, which we all deplore, would perhaps have been avoided, if power had not been handed over to the Afrikaners in 1907 by the Liberal Government?
    Sir Geoffrey Howe: My hon. Friend has brought his characteristically penetrating rhetorical insight to the subject.
    Mr. Lofthouseasked the Secretary of State for Foreign and Commonwealth Affairs when the Council of Ministers will next discuss progress in South Africa on ending apartheid.
    Mr. Loydenasked the Secretary of State for Foreign and Commonwealth Affairs when the European Economic Community Council will next disucuss its policy towards South Africa.
    The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): Foreign Ministers of the Twelve have had frequent discussions about South Africa both in the Council of Ministers and in political co-operation. No date has been set for their next discussion.
    Mr. Lofthouse: Will the Minister of State make it clear to the South African authorities that the lifting of the state of emergency will be meaningless if all the detainees are not released and if the restrictions on media coverage and political meetings are not lifted?
    Mrs. Chalker: The hon. Gentleman heard the remarks of my right hon. and learned Friend the Foreign Secretary on the subject of the media refusals. He knows full well that we are opposed to detention without trial. We shall remind the South African Government of that when and as it becomes necessary to do so.
    Mr. Loyden: In September the Council of Ministers agreed to sanctions on oil exports to South Africa. When will it consider the regulations necessary to impose those sanctions?
    Mrs. Chalker: The question of oil was considered at a recent meeting. I cannot from memory say whether it was on 27 January or the following week. The United Kingdom has never sold oil to South Africa. Under the 1979 guidelines, the sale of North sea oil is confined to the European Community and certain other countries. The measure does not apply to petroleum products. The guidelines apply to indirect as well as to direct exports, so, in relation to this country and our partners, the hon. Gentleman need have no worries.
    Mr. Ian Lloyd: Will the Government seek to persuade the Council of Ministers, which has great influence in these matters, to distance itself from the anti-apartheid movement whose regard for the truth is becoming of almost legendary inaccuracy? Does my hon. Friend agree that the approach to apartheid should discriminate and distinguish between those features which are unique to aparthied and those, perhaps of an illiberal regime, which are shared by some 90 other member countries of the United Nations? Is there not a great danger that in relation to South Africa our attitude tends to sweep both aspects together so that we expect to impose standards of achievement in public life which in a sense are almost unattainable, or at least have not been attained, in 90 other countries of the United Nations?
    Mrs. Chalker: I think that my hon. Friend forgets why we totally oppose apartheid and favour its total elimination in that country. Many people there have no vote, and all black people are unfairly treated. I do not seek to teach my hon. Friend, but our concern about the denial of human rights is clearly shared by every one of the Twelve, and we must stand against that denial. In that situation, there is no way in which we can differentiate, as my hon. Friend seeks.
    Mr. Dykes: As a large number of South African citizens have been murdered by the South African police and army and the number of such murders is growing, will my hon. Friend make representations to her colleagues in the Council of Ministers to ensure that the Council repeatedly emphasises to the South African Government the need to discontinue that murderous policy and to release the detainees forthwith?
    Mrs. Chalker: That has already happened, and. I assume that it will come up again next time we discuss the matter.
    Mr. Anderson: On 1 July this country assumes the presidency of the Council of Ministers. Previous Presidents have met the African National Council at ministerial level. Will the Government, consistent with their present policy, continue to refuse to meet the ANC at that level after 1 July?
    Mrs. Chalker: We expect to maintain contact at official level at all times. We shall have to see what progress has been made before reaching a decision when we assume the presidency of the European Community.

    Nelson Mandela
    Mr. Altonasked the Secretary of State for Foreign and Commonwealth Affairs what recent representations he has made to the Government of South Africa concerning the release of Nelson Mandela.
    Sir Geoffrey Howe: Our views about the release of Mr. Mandela are well known to the South African Government. I last raised Mr. Mandela's case when I saw the South African ambassador on 13 February.
    Mr. Alton: Will the Foreign Secretary take every opportunity to make it clear to the South African Government that the continued incarceration of Nelson Mandela is an affront to the people of South Africa and that his release is a prerequisite to reconciliation between black and white people there? Will he instruct our ambassador in South Africa to visit Nelson Mandela and to seek an interview to establish the present state of his health and wellbeing?
    Sir Geoffrey Howe: We have made clear on many occasions our belief that the unconditional release of Mr. Mandela would constitute a major act of reconciliation in South Africa and could provide the impetus for genuine dialogue and a peaceful settlement. We have stressed, and will continue to stress, the importance of that point to the South African Government.
    Mr. John Carlile: Does my right hon. and learned Friend accept that the prerequisite of the South African Government for the release of Nelson Madela, that he should renounce the use of violence, is reasonable? It is in the interests of the ANC that he remains incarcerated while it performs its own acts of violence in South Africa and outside.
    Sir Geoffrey Howe: I cannot accept my hon. Friend's conclusions about the situation, although I join him—and I am sure the whole House will join him — in condemning violence from any quarter. The ANC is clearly an important focus of black opinion in South Africa. Nevertheless, we thought it right to establish official contact with the ANC specifically to stress our commitment to dialogue and to impress upon it the need to bring an end to all violence in South Africa.

    Falkland Islands
    Mr. McKelveyasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the current position with Argentina over the Falkland Islands.
    Sir Geoffrey Howe: We continue to stand by our commitments to the Falkland Islanders. At the same time, we are working for better relations between the United Kingdom and Argentina. The expressed wish of my hon. Friend the Parliamentary Under-Secretary to meet the Argentine parliamentarians who visited London was only the latest in a series of initiatives which we have taken since 1982. We were disappointed that they did not take up the offer, but we shall continue our efforts to promote better bilateral relations.
    Mr. McKelvey: Does the Secretary of State agree that it is now time to re-establish full diplomatic relations with Argentina and to discuss sovereignty with a view to reaching an honourable settlement? We could then reduce the staggering £654 million which is the average cost of maintaining Fortress Falklands at the moment.
    Sir Geoffrey Howe: I am afraid the hon. Gentleman offers a misguidedly simple insight into this problem. We want—and I emphasise it yet again—to move towards more normal relations with Argentina. It was for that
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    reason that my hon. Friend the Parliamentary Under-Secretary of State offered to meet the Argentine parliamentarians when they were here. My hon. Friend would have explained to them why we are unprepared to negotiate on sovereignty. My hon. Friend would have been prepared to listen to the Argentinians' position. He would also have made clear our wish to see more normal relations, towards which we have taken step after step, none of which has been met with a parallel response.
    Sir Anthony Meyer: Does my right hon. and learned Friend accept that the visit by the Argentine parliamentarians should be seen as part of a long, slow and necessarily patient progress towards the gradual normalisation of relations? Does he further accept that neither the expectation of the Argentine visitors nor the intention of Her Majesty's Government was that this visit should be used as an occasion for initiating negotiations of any kind?
    Sir Geoffrey Howe: I accept precisely the two points made by my hon. Friend. The intention of the meeting offered by my hon. Friend was not to undertake, launch or conduct negotiations, but to explain our position on sovereignty. That has been well and often stated to Argentina. My hon. Friend wished also to impress upon them the sincerity of our wishes in other respects to move towards more normal relations with Argentina. That is and must be a sensible position.
    Mr. Beith: Does the Secretary of State accept that many of us who met the Argentine delegation found them to be a constructive and courageous group of people? Does the right hon. and learned Gentleman recognise that their unwillingness to have a meeting with Ministers during their visit was quite understandable, considering the view that would have been taken in Argentina of accepting British terms as the basis on which such a meeting would be conducted? Will the Secretary of State recognise that he is dealing with a democracy, not a dictatorship? When the Government were dealing with a dictatorship, they were prepared to give away sovereignty. The Government should at least be prepared to have sovereignty on the agenda and not feel that their ability to negotiate is inhibited by opening the discussions.
    Sir Geoffrey Howe: The hon. Gentleman has not got it right. There were no strings attached to the offer made by my hon. Friend to meet the Argentine parliamentarians. He was prepared to meet them to explain why we will not negotiate sovereignty and to listen to their statement of their position on that matter.
    We have expressly welcomed the restoration of democracy in Argentina. My right hon. Friend the Prime Minister sent a message about that as soon as it happened. We have taken steps to support the Argentine economy and to help that democracy. It would be unhelpful to that democracy, however, to offer unrealistic goals on negotiations about sovereignty. Although, since 1982, democracy has returned to Argentina, the fact which makes a fundamental difference to the question is the invasion of the Falkland Islands by a main force at that time. Therefore, it is quite unreasonable to expect us to put the clock back to before the invasion, as though it had not happened.
    Mr. Key: Will my right hon. and learned Friend be certain to pursue current Government policy with regard to the Falklands and reject the calls made from a sedentary

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    position by Opposition Members to buy out the Falkland Islanders? Will he further ensure that hon. Members know that the major stumbling block in the gradual long-term solution to the problem is that Argentina has forfeited the trust of the Falkland Islanders and has to start building relations with them?
    Sir Geoffrey Howe: My hon. Friend is absolutely right. It is most important, as a matter of common humanity and democratic principle, that respect be paid to the wishes of the Falkland Islanders by this Parliament and by the democratic Parliament of Argentina.
    Mr. Foulkes: Does the Secretary of State not understand that all of us who were able to meet the Argentine delegation, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, found them extremely reasonable people and willing to talk positively about the guarantees that their Government will give the islanders about their way of life? In view of the crippling cost of Fortress Falklands and the lost opportunities in trade with the whole of Latin America, surely everything is to be gained and nothing to be lost by entering into direct discussions with the Argentine Government about all aspects of the future of the islands to try to find a solution which is acceptable to Britain and Argentina, and which protects the interests of the islanders?
    Sir Geoffrey Howe: The hon. Gentleman should not imagine that the fact that there is a difference between us and Argentina is now a significant factor affecting our trade with Latin America, or the rest of our relations. Of course we wish to go further to establish more normal relations with Argentina. We have taken step after step in that direction. It is simply not sensible to deceive ourselves into thinking that the issue of sovereignty can be disposed of as the hon. Gentleman suggests. The Argentine Government's stance was restated only a month or two ago. They reaffirmed their unswerving determination to re-establishing the territorial integrity of the republic. They are determined to do that regardless of the wishes of the people who live in those islands. That is not a basis that can sensibly commend itself to the House.
    Mr. Shersby: Is my right hon. and learned Friend aware that there is very strong support on the Tory Benches for the Government's unwillingness to consider negotiating the sovereignty of the Falkland Islands? Is he further aware that the people of the Falkland Islands pay great regard to their freedom and believe that the British Government will support it? What are the Government doing to normalise relations with Argentina with a view to their taking back their war dead? What discussions have there been with Argentina about that problem?
    Sir Geoffrey Howe: I am grateful for my hon. Friend's support. We have made clear to the Argentine Government more than once our willingness to accept a suitably prepared visit to the Falkland Islands under International Red Cross auspices by close relatives of Argentine service men who are buried there, and our willingness to consider any other sensible arrangements that might be proposed. It is one of the many human proposals that we have put forward. We are genuinely anxious to move towards the gradual restoration of normal relations between the people of this country and the people of Argentina.

    South Africa
    Mr. Fatchettasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on Her Majesty's Government's policy on South Africa following the speech of President Botha to the South African Parliament in January.
    Mrs. Chalker: We welcome the positive proposals in President Botha's speech and hope that they will be speedily implemented. We now wish to see further movement towards the fundamental elimination of apartheid and the beginning of peaceful dialogue between the South African Government and genuine representatives of the black community.
    Mr. Fatchett: In that speech, President Botha once again made acceptance of resolution 435 conditional on the withdrawal of Cuban troops from Angola. In an earlier reply the Foreign Secretary seemed to acquiesce in that stance. Why? Would it not be in the interests of the Namibian people for the British Government to demand South Africa's unequivocal acceptance of United Nations' resolutions?
    Mrs. Chalker: I do not think that it would. We must ensure that the United States-led negotiations can continue and that the formal talks that were held earlier this year in Luanda continue. That is why we believe that the South African Government's reaffirmation of their formal commitment to Security Council resolution 435 is right. It could offer the opportunity to make the early progress that we all want. We want a reduction of tension in the region. I sincerely hope that the United States-led negotiations will now be intensified and that all parties will show flexibility and realism.
    Mr. Adley: Does my hon. Friend agree that the sporadic violence of the ANC is as nothing compared to the permanent state of attrition practised by the South African Government on the black and non-white population of South Africa? Is she aware that there is, albeit not always vocal, widespread support on the Tory Benches for the Government's determination to establish relations with the ANC? Will she please continue with the policy of "jaw-jaw", in the interests of trying to bring some influence to bear from Europe on the problems in South Africa?
    Mrs. Chalker: We know, sadly, that violence is not confined to one group. It happens on both sides of the border in Southern Africa and it also happens as a result of some activity by the South African Government. However, wherever violence occurs, whether it be from the ANC, the South African Government or any other body, we deplore it and we shall work to see that those who promote violence are dissuaded from doing so in whatever way we possibly can.
    Mr. Flannery: Is it not a fact that where there is no democracy in a country and where the officially enshrined policy of the Government is racialism and apartheid, there is bound to be, at some stage, a fight back from those who are being oppressed? In view of a question asked earlier by a well known racist on the Back Benches of the Tory party—[Interruption.]
    Mr. Speaker: Order. First, that is not parliamentary. Secondly, we cannot deal with questions that have been asked earlier.
    Mr. Flannery: I am sorry that this Chamber will not allow me to tell the truth but in view of that fact—
    Hon. Members: Withdraw.
    Mr. Speaker: I think that the hon. Gentleman, who is an experienced parliamentarian, is withdrawing that allegation.
    Mr. Flannery: In view of the fact that I am being forced to withdraw it, in order to continue with the rest of my question, I shall do so. Will the Minister make it clear, as the Foreign Secretary does not, that the policy of brutality against the vast democratic majority of the African people in South Africa is being maintained, and that we, as a Chamber, are totally opposed to the official violence of the South African Government against the vast majority of its people?
    Mrs. Chalker: The hon. Gentleman does my right hon. and learned Friend a gross disservice. He and this Government have consistently impressed upon South Africa the need fully to respect the independence and the territorial integrity of its neighbours, and we shall continue to do so.

    Middle East
    Sir John Biggs-Davisonasked the Secretary of State for Foreign and Commonwealth Affairs what part Her Majesty's Government are playing in international efforts to bring about pacification in the middle east.
    Sir Geoffrey Howe: We shall continue to support all realistic initiatives for peaceful solutions of the region's conflicts. I discussed the situation in the middle east with my European colleagues on 25 February and with the Syrian Foreign Minister on 3 March.
    Sir John Biggs-Davison: Did my right hon. and learned Friend discuss with the Syrian Foreign Minister the danger of conflict between Syria and Israel? Did he ask him to use his good offices for the release of British citizens imprisoned in Syria and in Lebanon, where Syria has so much influence?
    Sir Geoffrey Howe: I certainly impressed upon Mr. Shara the need for both sides, Syria as well as Israel, and the other states in the region, to sustain the search for a basis for long-term peace. I also raised with Mr. Shara, specifically, the case of Mr. Alec Collett, and enlisted his continuing help in trying to secure the release of that British citizen along with other hostages held in that country.
    Mr. Faulds: In view of the recent re-invasion of Lebanon by Israel—[Interruption.] It would be a benefit to the House if occasionally questions could be asked without interventions persistently made from a sedentary position.
    Mr. Speaker: Order. I am here to look after the hon. Gentleman.
    Mr. Faulds: Thank you, Sir. Elder statesmen should be treated with respect.
    In view of the recent re-invasion of Lebanon by Israel, which uses international terrorism as a continuing policy of state, is it not time that the Government took the initiative in the EEC to get it to abrogate, or at least suspend, its trading and financial agreements with Israel?
    Sir Geoffrey Howe: I am glad that the hon. Gentleman was able to make himself heard. I do not think that, even at his invitation, it would be right to take that step, but I join him in deploring the continuing residual presence of Israeli defence forces, and the security zone, in Lebanon, which is provocative and without justification. I agree that the recent Israeli incursion into Lebanon will not help to meet the legitimate concern expressed on both sides of the House about border security.
    Mr. Walters: While it is generally agreed that the failure of King Hussein's courageous initiative has been a grave setback to progress towards peace in the middle east, does my right hon. and learned Friend agree that as the essence of the conflict is about Palestine and Palestinian rights, it would be absurd to try to exclude the legitimate representatives of the Palestinians from any future negotiations?
    Sir Geoffrey Howe: I join my hon. Friend in regretting the fact that the initiative taken by King Hussein has, so far, led only to the statements that he made about it—quite understandably—in the past week or two. I agree that we must continue to support the Palestinians' right to self-determination. It is not for us to say by whom they should be represented. We do not accept that the Palestine Liberation Organisation is the sole legitimate representative of the Palestinian people, but it should play a part in negotiations. It is above all important—this is the point that King Hussein was pressing—that it should make plain its recognition of the importance of Security Council resolutions 242 and 338, and renounce violence.
    Mr. Janner: In talking to the Syrian Foreign Minister, did the right hon. and learned Gentleman raise with him the murder of the mayor of Nablus, for which credit was claimed by two Syrian-backed terrorist organisations? If so, what response did he receive?
    Sir Geoffrey Howe: I had already made plain—and I make plain again today—the serious view that we take of the tragic death of the mayor of Nablus, Mr. Zafer alMasri. That brutal murder of a moderate, courageous Palestinian must be seen as a setback to hopes of a just and lasting peace in the middle east. Of course we raised and discussed that matter with Mr. Shara and made plain our abhorrence of that act, which can only damage Palestinian interests. We urged him in that context, and more widely, to end Syrian support to terrorist groups. He made plain his Government's position of opposition to terrorism.
    Dr. Blackburn: Will my right hon. and learned Friend kindly take note of the historic, forthcoming Israeli visit of my right hon. Friend the Prime Minister, who will be the first British Prime Minister in office to visit Israel? Does my right hon. and learned Friend agree that the future key to peace in that part of the middle east lies in the full implementation and acceptance of the Camp David agreement?
    Sir Geoffrey Howe: I am glad to welcome what my hon. Friend has said about the forthcoming visit of my right hon. Friend the Prime Minister to Israel, which I know will be welcomed there and supported in this country. I do not think that it would be helpful at this point for me to support this, that or the other of the many principled plans put forward for the solution of the main Arab-Israel problem. The problem is not to define or

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    redefine principles, but to find effective representation that will bring both sides together in meaningful negotiations to that end.
    Mr. Donald Stewart: Is the Foreign Secretary aware that it is unrealistic to demand the renunciation of violence prior to any discussions with the PLO, because if they do that, there is not the slightest chance of getting the Israeli Government to pay any attention to the PLO's legitimate demands?
    Sir Geoffrey Howe: The right hon. Gentleman is entitled to take that view if he wishes. It is certainly necessary to acknowledge that the renunciation of violence in the context of seeking an end to a dispute of this kind cannot be secured easily. It is necessary to go on pressing the case for violence to be renounced and for the parties to come together on the basis of agreed objectives and principles.
    Mr. Cyril D. Townsend: In view of the Prime Minister's forthcoming visit to Israel, may I ask what arrangements will be made for her to be brought into contact with Palestinian viewpoints? What plans are there for her to visit the occupied territories? Is my right hon. and learned Friend aware that many people regard it as most important that the visit should be seen to be balanced in its approach?
    Sir Geoffrey Howe: Obviously I cannot comment at this stage on the precise details of the plans for my right hon. Friend's visit. I acknowledge, as does my right hon. Friend, the importance for our interest in the problems of the region to be balanced, not only in regard to the visit, but more widely. I remind my hon. Friend that it is only some six months since my right hon. Friend made a visit to Jordan and there saw another aspect of the same question.
    Mr. Ernie Ross: Will the Foreign Secretary take the opportunity of the visit of the Prime Minister to Israel to encourage the Palestinians to believe that Britain wants to play a role by ensuring that the Prime Minister makes it clear that when the Foreign Secretary assumes the presidency of the European Council on 1 July, he will continue the long-standing arrangement, which we broke in 1980, of meeting the chairman of the Palestine Liberation Organisation, Yasser Arafat?
    Sir Geoffrey Howe: I think I am right in saying that since 1976 there has been contact at official level with the Palestine Liberation Organisation. As I have already made clear, we recognise that it will have to be associated with any peace negotiations. Of course, the Palestinians and their interests will have to be taken account of at each stage of all our consideration of the question. That will not be absent from the mind of my right hon. Friend when she goes to Israel.
    Mr. Deakins: What views did the Syrian Foreign Minister express to the right hon. and learned Gentleman about the way forward in resolving the Palestinian problem? Did the right hon. and learned Gentleman agree with those views?
    Sir Geoffrey Howe: I do not think that I am in a position to offer a long exposition of the views of the Syrian Foreign Minister. He gave a long talk yesterday at Chatham House about the matter. The point that I sought to impress upon him is the need on the Arab side to try to
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    secure the involvement of all those countries which in different ways and at different times have expressed an interest in a peaceful solution. That is why we have given encouragement, not merely to the initiative of King Hussein, but to a possible and constructive interest by Israel and have also noted the important initiative by President Mubarak the other day. All the initiatives have to come together and meet a corresponding disposition from the Israeli side. Our effort is to try to promote all those things.
    Mr. Anderson: President Assad has recently again called for the tearing up of the Camp David accord and showed himself fundamentally opposed to the Hussein-Mubarak initiative. In view of that, and of the fact that it now seems certain that there will be a change of Prime Minister in Israel, does the Foreign Secretary realistically see any life left in the Hussein initiative? Does he not see the looming confrontation between Syria and Israel on the Golan as the major point of tension in the middle east?
    Sir Geoffrey Howe: I am not seeking from the Dispatch Box to give the impression that all is, or is about to be, sweetness and light. Of course, the House acknowledges, as does King Hussein himself, that his determined efforts to carry forward the peace process with Arafat and the PLO have received a setback. But he remains determined to continue his search for a peaceful settlement. I accept the point made by the hon. Gentleman that some of the observations of President Assad in his recent speech about the need for confrontation and a continued arms struggle are not likely to help that peace process forward. There are plenty of hazards in sight. Without unduly raising expectations, it must be our task to continue to encourage all those who are trying genuinely to advance the peace process.
    Mr. Beith: Did the Foreign Secretary find at his meeting with the Syrian Foreign Minister that the Syrians are keen to see British involvement in the peace process? Is that not a particularly useful context in which to stress again the need for Syria to play an active part in stamping out the terrorism which led to Mr. Zafer al-Masri's death, which was greeted with universal grief in the Palestinian community?
    Sir Geoffrey Howe: It is absolutely right that we should take this opportunity of stressing to the Syrian Government and the Syrian Foreign Minister not just our abhorrence of that senseless murder but our opposition to terrorism of all kinds from whichever quarter it may come in the Arab-Israeli dispute. We took the opportunity of pressing that point very clearly. The hon. Gentleman, like everyone else concerned, stresses the British role in helping to promote a solution to this problem. I must continually remind people that although we have a real interest, and are willing to play as full a part as we can, it must be essentially for the parties involved in the region to take the crucial steps that are necessary to bring about a solution.

    ANC and SWAPO
    Mr. Cohenasked the Secretary of State for Foreign and Commonwealth Affairs what arrangements he has made for the free passage into the United Kingdom of members of the African National Congress and the South-West Africa Peoples' Organisation conducting their business in the United Kingdom.
    Mrs. Chalker: Entry clearance visas are issued to representatives of the African National Congress and the South-West Africa Peoples's Organisation in accordance with the terms of the current immigration rules.
    Mr. Cohen: Will the Minister undertake to have talks with the Home Secretary to ensure that the Prevention of Terrorism Act is not abused, as it was on 22 September last year when the chief representative of SWAPO sought to enter Britain at Heathrow? Surely we should be supporting the ANC and SWAPO in their struggle against racist domination rather than putting spurious blocks in their way.
    Mrs. Chalker: I am aware of the difficulties that Mr. Shapua Kaukungua had in September last year, but what happened then was something that could happen under the prevention of terrorism order to anyone passing through that airport—[Interruption.] Hon. Members may laugh, but on one of my recent visits overseas I had all my baggage opened under the terms of that Act.
    Mr. Wilkinson: If the Government are sincere in their laudable determination to help to prevent terrorism, could they, as part of the five-nation Contact Group, do everything within their power to ensure that there is not free passage of SWAPO guerrillas—trained, supported and supplied by Cubans in Angola— into South-West Africa?
    Mrs. Chalker: We do our best to bring to bear all those influences that would avoid just the situation described by my hon. Friend.
    Mr. Meadowcroft: Is the Minister aware that the long progress of African countries towards freedom from white minority rule has often been impeded by the reluctance of the British Government to encourage representatives of the liberation movements to come here for talks on the diplomatic circuit? Will the Minister ensure that this mistake does not occur again in respect of the last remaining white-dominated countries such as Namibia and South Africa? Indeed, will the Government assist their representatives to come here so that they can make proper contacts to help in the process?
    Mrs. Chalker: As both my right hon. and learned Friend and I have said, on every occasion when we can promote dialogue we shall do so, but part of that process is the renunciation of violence by whosoever commits it. That is the other part of the balance that we are trying to create. I am quite determined that the dialogue shall continue wherever it can bring about peace.

    Human Rights (CSCE)
    Mr. David Sumbergasked the Secretary of State for Foreign and Commonwealth Affairs whether the United Kingdom delegation to the conference on security and co-operation in Europe meeting in Berne in April will raise the issue of the freedom of individuals to practise their chosen profession without being subjected to religious or racial discrimination.
    The Minister of State, Foreign and Commonwealth Office (Mr. Tim Renton): Although strictly speaking this issue is outside the mandate for the meeting, we are opposed to discrimination on the grounds of religion and race and will continue to raise this issue on all suitable occasions.
    Mr. Sumberg: I am grateful to my hon. Friend for his reply and also for the constant pressure that he and his colleagues in the Foreign Office have put on the Soviet Union, which has indirectly contributed to the release of Mr. Shcharansky. Will he make it clear to Mr. Gorbachev on as many occasions as possible that until the Soviet Union can be seen to be observing its own constitution on non-discrimination, it will be difficult for the West to believe that it will honour the agreements that it must enter into for real détente to come about?
    Mr. Renton: I thank my hon. Friend for what he has just said. Unfortunately, in the case of Mr. Shchransky, one swallow does not make a summer, and there is as yet very little sign that in its treatment of human rights the new Soviet leadership will be very different from the previous one. But we shall certainly continue to raise this issue on every possible occasion, and the Berne meeting gives us another opportunity to do so.
    Mr. James Lamond: If the Minister believes that our record is clean on this matter, will he raise with the West German Government the long-standing question of the berufsverbot— the law under which civil servants are prevented from holding professional positions because of what are usually Left-wing views—which is in my view a sign of Fascism creeping back into West Germany?
    Mr. Renton: That seems to be above all a matter for the German Government. However, the Berne meeting, to which the question refers, is specifically concerned with human contacts and such matters as family re-unification, about which we shall wish to raise some serious cases.
    Mr. Dickens: When my hon. Friend talks about racial and religious matters at the meeting, will he be sure to point out that where there are religious differences and customs, people will be expected to observe the laws of the country in which they reside?
    Mr. Renton: I return to the fact that the Berne meeting, about which the question is concerned, is about such matters as travel, emigration and family re-unification. It does not cover a wide area, but I hope that there will be useful contacts on the issues that are covered by basket 3 of the Helsinki final act.
    Mr. George Robertson: On the subject of the Berne meeting, may I draw the Minister's attention to the speech made by Mr. Gorbachev in Moscow last week—I had the distinction, and stamina, of listening to all five hours of it — and particularly the part about the interdependence of the world, which abandons the Soviet Government's previous position of irreconcilable camps in the world? Does he agree that that augurs well for continuing dialogue and discussion in the CSCE process? May we have some news about any progress that is being made in those talks?
    Mr. Renton: I congratulate the hon. Gentleman on his patience and ability to listen to all five hours of Mr. Gorbachev's speech at the party congress. There is often a sense of frustration about the CSCE process, but it is worth reminding the House that it is a forum at which the important question of human rights can be discussed. I often think that it is interesting that Labour Members, who are so trusting of the Soviet Government regarding arms control, put down early-day motions about Soviet abuse of human rights, although the same Soviet leaders are involved in both issues.

    African National Congress
    Mr. Cabornasked the Secretary of State for Foreign and Commonwealth Affairs if he will give an account of the circumstances appertaining to, and the discussion during recent meetings between, the African National Congress and representatives of Her Majesty's Government.
    Mrs. Chalker: We arranged the meeting in Lusaka on 3 February between a senior official of the Foreign and Commonwealth Office and representatives of the African National Congress to reinforce the urgent need for dialogue within South Africa, and the general suspension of violence called for in the Commonwealth accord.
    Mr. Caborn: I welcome that statement. I also welcome the hon. Lady's recent speech in which she called for the unconditional release of Nelson Mandela and said that that would show to the world that South Africa meant business. Does she not find a twinge of inconsistency in calling for that release, but being unwilling to meet representatives of the African National Congress in London?
    Mrs. Chalker: There is absolutely no inconsistency. We have always said that we believe that the unconditional release of Nelson Mandela would constitute a major act of national reconciliation in South Africa, and could provide the impetus for genuine dialogue for a peaceful settlement. We have stressed the importance of that move to the South African Government. In the same way, the official level contacts with the ANC are also to promote dialogue and to get it to renounce violence, and so to bring a peaceful end to the present awful position in South Africa.
    Mr. Forth: Will my hon. Friend confirm that meeting ANC representatives in no way condones or supports the techniques of terror that they are prone to use in South Africa? What would be her reaction if a foreign country approached Her Majesty's Government to make representations on the legitimate imprisonment of one of our citizens?
    Mrs. Chalker: My hon. Friend is right. In no way do we condone violent behaviour. However, I must tell him that when a foreign Government approach us, we consider each approach on the facts as they are known to us. One cannot give a blanket response to cover the wide variety of approaches with which we must deal from many different countries.

    Falkland Islands
    Dr. Marekasked the Secretary of State for Foreign and Commonwealth Affairs what discussions he has had with European Economic Community partners concerning the United Kingdom's attitude to negotiations with Argentina over the Falkland Islands; and if he will make a statement.
    Mr. Eggar: As I explained to the House on 18 December 1985, our EC partners are briefed, as appropriate, on the international aspects of our Falklands policy, bilaterally and within the framework of European political co-operation. We have ensured that they are aware of our commitment to the Falkland Islanders, and of our desire for better relations with Argentina.
    Dr. Marek: Is the Minister aware that one step along the path towards normalising relations with Argentina would be to end the unprincipled and extremely damaging fishing free-for-all in the waters round the Falkland Islands? Is he aware that many hon. Members, the islanders and Argentina want it ended? If he cannot get anywhere at the Food and Agriculture Organisation talks in Rome, will he do something himself quickly?
    Mr. Eggar: We share the hon. Gentleman's anxiety about fishing off the Falklands. As he knows, we are actively pursuing efforts to achieve agreement on multilateral arrangements for fisheries under the auspices of the FAO. We have urged other Governments to cooperate with the FAO, and we were heartened by the signs that Argentina is ready to support the FAO initiative.

British Leyland
3.31 pm
The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Paul Channon): With permission, Mr. Speaker, I wish to make a statement.
As I informed the House on 19 February, an invitation was extended to interested parties to declare by 4 March a firm intention to make a bid for one or more of the Land Rover, Freight Rover, Leyland Trucks and related businesses.
I can now report to the House that appropriate declarations have been made to BL's bankers by Schroder Ventures on behalf of some institutions and some members of BL management in respect of Land Rover, Range Rover and Freight Rover; by Lonrho in respect of Land Rover and Range Rover; and by Aveling Barford in respect of Land Rover only. General Motors has also confirmed its intention to make a bid for Land Rover, Range Rover, Freight Rover and Leyland Trucks.
The Laird Group and Aveling Barford are each in discussion with BL regarding the acquisition of Leyland Bus, for which proposals on behalf of some members of the management are also expected. Discussions in relation to Leyland Bus are taking place over a slightly different timescale from those concerning other Land Rover-Leyland businesses. I shall make a further statement to the House on these in due course.
The BL board is giving careful consideration to all the proposals received on or before 4 March and I hope to have its recommendations shortly. The board and the Government remain anxious to end the present uncertainty surrounding the businesses as soon as possible in the interests of the companies, management and work force and dealers and suppliers.
I take the opportunity to inform the House of a forthcoming change in the chairmanship of BL. Sir Austin Bide's appointment as chairman of BL was extended in late 1984 on the basis that he would continue as chairman until a convenient moment for his retirement was reached. Sir Austin has kindly agreed to remain as chairman until decisions have been made on the future of the main Land Rover-Leyland businesses. That will represent the start of a new phase in the development of BL and, on my nomination, the BL board proposes to invite Mr. Graham Day, at present chairman of British Shipbuilders, to join the board and to become full-time chairman of BL at a date to be determined. I express the Government's thanks, and add my warmest personal tribute, to Sir Austin, under whose leadership BL has achieved notable progress.
I am appointing Mr. Phillip Hares, the present deputy chief executive and board member for finance of the corporation, to succeed Mr. Graham Day as chairman of British Shipbuilders.
Mr. John Smith: As this tangled web becomes more and more confusing and complex, is it not clear that the Government should never have departed from the concept of British Leyland remaining a integrated and public sector operation strongly supported by the British Government?
Will the Secretary of State confirm that the Government approached General Motors as long ago as April 1984, and for 18 months General Motors has been able to consider
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and negotiate its position, while all other bidders have been given little more than 20 days? Does that not show that the Government were already predisposed to sell the lot to General Motors? In view of the representations made to the Minister of State by my right hon. Friend the Member for Swansea, West (Mr. Williams) and my hon. Friends the Members for Blackburn (Mr. Straw) and for Preston (Mr. Thorne), why is it that Lancashire Enterprises Ltd. does not appear in the list of those permitted to make a bid for parts of the operation?
What will the time scale be? Is it correct, as is widely rumoured. that the Government will impose a time scale whereby the whole operation has to be completed by the end of this month? Given the fact that the Secretary of State confirms that the only bidder for Leyland Vehicles is General Motors, has that not put the Government in a hopeless position whereby General Motors will be able to insist on acquiring Land Rover as a condition for acquiring Leyland Vehicles? How do any sensible Government put themselves in such a hopeless bargaining position?
After this asset-stripping operation is completed, what will the new chairman be chairman of? Should he not be called chairman of Austin Rover? The Secretary of State will have seen a report on the back page of the Financial Times today, of a speech by Mr. Bob Lutz, chairman of Ford of Geneva. The article says:
"Ford was willing to restart talks about a possible takeover of Austin Rover … He said the Government had panicked recently when it told Ford to end the talks".
What is the Secretary of State's comment on that? In view of that ominous statement, will he give us a crystal-clear guarantee that, throughout the lifetime of this Government, there will be no talks by the Government, or by British Leyland at their instructions, with Ford about the Austin Rover Group?
Mr. Channon: I shall try to deal with the points that the right hon. and learned Gentleman has raised. What he said about selling is unreasonable. It has been known for many years that the Government had every intention of privatising British Leyland and its component parts. That has been known ever since the last general election. There is no question of reopening talks with Ford or Austin Rover; and any rumours to that effect I disown and reject. I am satisfied that bidders had adequate time to put in a firm indication of interests. We shall study them carefully on their merits, and there is no question of any member of the Government having made up their minds before these careful considerations have taken place. I assure the House that that is the case. [HON. MEMBERS: "That is not what the Prime Minister said."] That is indeed what my right hon. Friend said.
We shall consider carefully the indications of interest that have come in. As to Lancashire Enterprises Ltd., people from it had meetings with my hon. Friend the Minister of State early yesterday, and every assistance was given to it to try to get it into a position to make a firm indication of interest, but I understand that by last night it had not given any such indications.
Mr. Michael Grylls: Does my right hon. Friend agree that, whatever the outcome of the consideration of these different bids, parts of BL are now desirable packages and it is a good thing to have several different bidders so that one can choose from them? Does he accept that the Government are no longer a good owner because these businesses need considerable sums of capital

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investment if they are to keep up with the international market, and the Government will always have more pressing demands on their money for things such as schools and hospitals, and industries in which they have an interest will always come bottom of the list? The sooner these firms are returned to the private sector, the better for the firms, the better for production and the better for the people who work in those firms.
Mr. Channon: I entirely agree with my hon. Friend. He has made three very important points. First, he draws attention to the fact that, under this Government, British Leyland is in a much better state than it was when the Opposition had control of it. Secondly, it is quite true that large sums of capital investment are required in various parts of British Leyland if they are to be in a position to compete in the long term. Thirdly, what we are trying to do and what we shall continue to try to do is to secure the long-term commercial future of these industries and the jobs of the people who work in them.
Mr. David Steel: Having talked yesterday to both the management and the shop stewards at Land Rover, may I put a question to the Secretary of State that I have asked repeatedly both of him and of the Prime Minister? What formal consultations will there be with the 8,000 employees of Land Rover about their future before decisions are made? We appreciate that in terms of making a fast buck or short-term employment the case for selling the whole organisation to General Motors must seem attractive to the Government, but in terms of the long run—the design, manufacturing and engineering capacity of this country—surely it is worth while to take a little longer and to try to find British-based solutions for each division of the company?
Mr. Channon: On the right hon. Gentleman's last question, I think I am right in saying that Mr. Andrews makes it clear in his letter that he is anxious for a quick solution because he thinks that it is very damaging if this uncertainty drags on. I cannot therefore agree with the right hon. Gentleman that we should take a long time. We want to have a reasonable period in which to consider the indications of interest that have been expressed and to put forward proposals that meet the best long-term interests of the companies concerned. There the right hon. Gentleman and I are at one. Consultation with the work force is a matter for the companies concerned. They tell me that they are keeping their work force informed continually and that they will continue to do so. My hon. Friend the Minister for Industry has received deputations from the work force and from the trade unions, and we shall be delighted to continue to do so.
Mr. Hal Miller: Will my right hon. Friend confirm that not only was it the long-standing policy of the Government to return these businesses to private ownership once they were profitable but that that was also the declared policy of the British Leyland board and of the subsidiary boards? Will he also confirm that we should welcome the fact that these enterprises have become successful, that a return to the private sector is now possible and that the Government's decision will be based upon the best interests of those who work for and supply those companies?
Mr. Channon: My hon. Friend is entirely right. As I have explained to the House on a number of occasions, the
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BL board agrees with that policy. It is entirely right that these subsidiaries should be returned to the private sector. If the Opposition had been in power, the companies certainly would not be in a profitable state.
Mr. Terry Davis: Will the Secretary of State confirm that Freight Rover has consistently made a profit on the manufacture and sale of Sherpa vans in this country, whereas General Motors is making a loss on its van operations in this country? Will he also confirm that Freight Rover is now selling more vans than General Motors is selling in this country? Does he agree that for General Motors to take over Freight Rover would be for a loser to take over a winner?
Mr. Channon: I had better give the hon. Gentleman the figures for 1983 and 1984 for Land Rover (UK) Ltd. I can give him the published figures for the first half of 1985; I do not have the later figures. In 1983, Land Rover (UK) Ltd.—which includes Land Rover, Freight Rover and parts and equipment—made a loss of £14·5 million. In 1984 there was a small profit of £2·4 million. In the first half of 1985 the profit, before interest and tax, was £5·7 million.
Mr. Davis: Freight Rover.
Mr. Channon: Of course, one has to split the figures between Freight Rover and Land Rover. I agree with the hon. Gentleman to the extent that, in so far as one can appropriately work out the interest payments and apportion them correctly, Freight Rover is more profitable than Land Rover.
Mr. John Mark Taylor: In considering the options for the future of Land Rover, will my right hon. Friend take all factors into account and not merely the biggest bid?
Mr. Channon: Yes, I have explained to the House that we are trying to seek the best long-term future for the companies and, as my right hon. Friend the Prime Minister said yesterday, for the jobs of those concerned.
Mr. Tony Benn: May I ask the Secretary of State about the interests of the American Government in this sale? Have the Government been in touch with the United States Government and is it a fact that General Motors has been able to say to the British Government that, if it is allowed to acquire parts of British Leyland, the United States will place orders with British Leyland following the sale and that that is the real reason why the sale is going through?
Mr. Channon: No, Sir; I repudiate what the right hon. Gentleman says.
Mr. David Madel: In relation to the bid from General Motors, can my right hon. Friend assure me that the Government will be seeking clear and firm assurances from General Motors on the future of jobs and investment in the Bedford truck plant in Dunstable before deciding whether to accept GM's bid? There is great anxiety in Dunstable, for obvious reasons.
Mr. Channon: Yes, I understand my hon. Friend's concern, and naturally I shall want to discuss that matter before coming to any decision. Indeed, we should discuss what will happen in either eventuality — whether the General Motors bid goes through or whether it does not.
Mr. D. N. Campbell-Savours: Is it true that the chief executive of the Laird Group has written to

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the chairman of British Leyland saying that the only basis on which Laird is willing to take over Leyland Bus is if the two plants at Workington and Lowestoft are closed and the Farington plant reduced but retained? Will the Secretary of State rule out that option today at the Dispatch Box? Will he also give me the assurance that in the event that the management buy-out is submitted and is fully funded, it will be given the maximum consideration by the Department, but that if it is not fully funded it will still be treated as a new corporate plan and an alternative option for a Leyland Bus reporting direct to the Leyland board and being retained in public ownership?
Mr. Channon: On the hon. Gentleman's last point, we shall naturally consider any properly funded management buy-out proposals from the management of Leyland Bus. Indeed, I say in my statement that we expect that proposals may come. We shall naturally consider them carefully.
I understand that Laird has given a preliminary view of its proposals to British Leyland. Nothing final has been proposed and we shall consider that on its merit on the same criteria — what will be best for the long-term commercial future of the company.
Mr. Anthony Beaumont-Dark: Will my right hon. Friend accept that, as my hon. Friend the Member for Solihull (Mr. Taylor) said, when we come to a solution as to how the Land Rover problem in particular is to be dealt with, we shall not be preoccupied with making a quick buck—the best sum—but what is in the best long-term interests of the motor manufacturing companies of Britain?
Bearing in mind the Government's preoccupation with those over the other side of the Atlantic solving our problems, was there no British industrialist who would have had the confidence of the manufacturing entities in Britain who could have been appointed instead of yet another person from across the Atlantic? There are good people in Britain who have the confidence of the manufacturing companies in the west midlands and the whole of Britain. Why always overseas?
Mr. Channon: I am rather surprised by my hon. Friend's last point. Mr. Day is a British citizen and he comes from Canada. That has not usually debarred people from appointment in Britain. As to my hon. Friend's first point, I can confirm that we are looking at the long-term interests of the companies concerned.
Mr. Andrew Faulds: As to the work forces and the managements of the various parts of BL, is it a question of management informing the work forces about developments or consulting the work forces about developments?
Mr. Channon: The management and the work force must carry out the normal procedures in cases of this kind. I am extremely anxious, as my hon. Friend the Minister of State has shown, to receive deputations, if they are appropriate, from any of the trade unions that wish to come and see me and make their case direct to the Government.
Mr. Richard Page: May I endorse the calls by my hon. Friends for a long-term solution and ask my right hon. Friend to ignore the siren voices for short-term expediency? Has not the way in which the Opposition have tangled the publicity on this
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matter added to the time constraints faced by my right hon. Friend in finding the right solution and restoring market confidence to British Leyland as soon as possible?
Mr. Channon: My hon. Friend is entirely right. It is essential to bring these talks to a reasonably early conclusion after full consideration has been given to these matters. I repeat what I have told other hon. Members: we are anxious to achieve the solution that is best in the longterm interests of those in the company.
Mr. Stan Thorne: Is the right hon. Gentleman aware, following the meeting yesterday morning with the Minister, that Lancashire Enterprises Ltd. sent a telex to Hill Samuel stating its intention to make a bid? Will the right hon. Gentleman confirm that that has not happened?
Mr. Channon: My information is that the company had not, by the close of play, expressed a firm indication
Hon. Members: Play?
Mr. Dennis Skinner: Public schools coming out now.
Mr. Speaker: Order. The Secretary of State.
Mr. Skinner: The right hon. Gentleman should declare his innings.
Mr. Channon: I shall answer the question if I am allowed to do so. My hon. Friend the Minister saw a deputation yesterday led by the hon. Member for Blackburn (Mr. Straw). The deputation was given a full opportunity to declare a firm indication of interest but it did not do so.
Mr. John Carlisle: Will my right hon. Friend accept that there is some significance in the fact that only General Motors has bid for the whole package, including the loss-making aspect of Leyland Trucks? Will my right hon. Friend refute the allegations by the Opposition and by my right hon. Friends the Members for Old Bexley and Sidcup (Mr. Heath) and for Henley (Mr. Heseltine) that General Motors is not a good employer? We in Luton refute those allegations and look forward to the amalgamation of the two companies.
Mr. Channon: I am sure that General Motors has been an excellent employer in the Bedford region. I think that that is well recognised.
Mr. Skinner: What is the right hon. Gentleman's average?
Mr. Channon: Very bad, I would say. My hon. Friend the Member for Luton, North (Mr. Carlisle) is quite right. We must consider what will be best in the long-term interests of the truck industry.
Mr. Dave Nellist: Is the right hon. Gentleman aware of the overwhelming opposition of trade unionists inside Leyland and of working people in Coventry, the midlands and elsewhere to selling off to private profiteers, whether American or British, any part or all of Leyland? Will the right hon. Gentleman get in touch with the Leyland board and condemn its actions in the past two weeks in attempting to soften up the work force by dismissing two Transport and General Workers Union conveners at Land Rover, Solihull and Unipart, Coventry for their stated opposition to privatisation?
Mr. Channon: I regret that I am unlikely to be able to please the hon. Gentleman in conducting these negotiations. I think that an early-day motion has been tabled about the point he raised. That is another matter.
Mr. Patrick Cormack: Can my right hon. Friend give the House an unequivocal assurance that the Government would prefer a British solution?
Mr. Channon: We want a solution that is in the best long-term interests of those involved.
Mr. Norman Atkinson: If the bid from General Motors for the Leyland heavy vehicle division is rejected, what contingency plans have the Government made for heavy vehicle manufacture?
Mr. Channon: We must first of all consider all the indications of interest that have come in, and then decide what to do.
Mr. Den Dover: Will my right hon. Friend pay particular attention, if the truck division is separated from the bus division, to the 2,000 workers at Multipart, Chorley, which is a highly computerised, extremely efficient and profitable operation? The workers want to ensure that they can service both Leyland Bus and Leyland Trucks and other manufacturers in future.
Mr. Channon: I will certainly bear in mind what my hon. Friend has said in his important intervention.
Mr. Doug Hoyle: Will the Secretary of State accept that he is not playing a cricket match and that this matter affects people's livelihoods? The hon. Gentleman said that he wants a quick decision, so will he give us the actual timetable as that is very important? Will the right hon. Gentleman bear in mind that the employees of British Leyland have no confidence in being informed by a management that previously denied that any talks were taking place? It is not information but consultation that is needed. Can he say what wages will be paid to the employees? The employees should have a say in the matter when their jobs are at risk.
Mr. Channon: I have already answered the hon. Gentleman's last point in the reply that I gave to his hon. Friend the Member for Warley, East (Mr. Faulds). In reply to his point about the speed of the decision, I have tried to explain to the House on a number of occasions that we want the quickest conclusion possible that is consistent with arriving at a decision after a detailed examination of the indications of interest that have been put forward. It is in no one's interest that the matter should be dragged out. I cannot today say what the timetable is, as a detailed study has not yet been made of the indications that have come forward.
Mr. John Stokes: Is my right hon. Friend aware that the main concern among the hard-headed workers in BL is the security of their jobs? They do not like the politicking on the Opposition benches. Is my right hon. Friend further aware that not all BL employees and BL suppliers wish to remain pensioners of the taxpayer?
Mr. Channon: I am grateful for my hon. Friend's comments, and I agree with them.
Mr. Robin Corbett: What time scale has the Secretary of State given to the British Leyland board? Is the Secretary of State aware of the
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complaints from bodies such as the West Midlands enterprise board that they were denied access to information from British Leyland? Will he ensure that all those who need information to which General Motors has had access for about 18 months, will now get that information?
Mr. Channon: I am assured that anyone who has asked for information has received it. I have already tried several times to answer the question about the time scale. We shall be as quick as we can but the matter will require some study and the House would expect that proper study would be made before proposals were put forward.
Mr. Robert Adley: On that last point, is my right hon. Friend aware that I was informed this morning that Lonhro was unable to have meetings with the management of BL, was unable to meet the work force and was not supplied with the information which it would have normally have expected to receive if it was to put in a bid? Will my right hon. Friend give the House a simple, straightforward assurance that what I have just said is wrong and that all the bidders were provided with precisely the same information as was available to General Motors?
Mr. Channon: Lonhro, and everyone else who asked, was given a packet of information which I am assured by my advisers, as well as by the advisers to BL, was normal practice. Lonhro has made a firm indication of interest and we shall treat that seriously and consider the proposals.
Mr. Ian Wrigglesworth: Does the Secretary of State accept that the motor industry plays a central and strategic role in manufacturing industry in any country in the western world? Will he therefore give us an assurance that at least one motor manufacturer in this country will remain under the control of people in this country so that that strategic role can be properly performed?
Mr. Channon: I have already told the House, in answer to the right hon. Member for Chesterfield (Mr. Benn), that there is no question of any talks going on in connection, for example, with Ausin Rover. I think that that answers the hon. Gentleman's point.
Mr. Alan Howarth: Does my right hon. Friend accept that those who are prepared to be rational on this subject are actually much more numerous than he may have supposed at times in recent weeks and today, that they agree with him that British Leyland ought to be in the private sector and that, if it is to be successful there, it will need access to substantial capital and to major markets? If British participants are credibly able to offer those benefits, so much the better. Would my right hon. Friend agree that last-ditch little Englander attitudes threaten jobs and the future prosperity of British Leyland?
Mr. Channon: I am sure that my hon. Friend is right. We must have a solution that takes account of the points that he has made and one that is in the interests of those who will work in the industries and so keep a viable industry in this country.
Mr. Harry Ewing: Is the Secretary of State aware that, under the chairmanship of Graham Day, more than 20,000 employees of British Shipbuilders lost their jobs and that, far from giving BL employees confidence in the future, Graham Day's appointment alone will strike fear into their hearts? Will the Secretary of State

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confirm that the bid from General Motors includes a substantial sum for the immediate declaration of 1,000 redundancies in BL and that GM is on public record as saying that 1,000 people will lose their jobs almost on the day that it takes over BL
Mr. Channon: None of the indications of interest have been examined in detail, but that is clearly a point that one would wish to consider in detail with anyone who comes forward with suggestions. I am surprised at the hon. Gentleman's comments about Graham Day, as he was appointed by the Labour Government in the mid-1970s. The hon. Member for Liverpool, Walton (Mr. Heffer) said of Graham Day:
"He was well thought of on Merseyside, particularly in Cammell Laird. He did a first-class job."—[Official Report, 9 December 1976; Vol. 923, c. 629.]
I can give quotations from any number of Labour Members if the House wishes.
Several hon. Members rose—
Mr. Speaker: I will call those hon. Members who have been rising in their places.
Mr. Tony Favell: If the talks between Austin Rover and Ford are truly dead, will my right hon. Friend tell the board and workers of Austin Rover to get their fingers out because in the past 25 years British car manufacturers' share of the home market has dropped from 90 per cent. to 34 per cent.? Does he agree that if yesterday's prophecy by the chairman of Ford (UK) turns out to be right and the abandonment of the talks turns out to be a tragedy for Britain leading to widespread job losses and Austin Rover ends up in the lap of Honda of Japan, a lot of people will have a lot to answer for, including Members of Parliament who blocked that deal?
Mr. Channon: I agree to some extent with my hon. Friend—at least to the extent that it is exceedingly important for Austin Rover to increase its share of the United Kingdom and European car markets. It has under 4 per cent. of the European car market. I very much hope that it will achieve that increase. It has already made some improvement and I hope that that will continue.
Mr. Eddie Loyden: Will the Secretary of State resist making quick decisions on this matter and give careful consideration to the long-term future of the British car manufacturing industry? Will he now respond to the question asked by my hon. Friend the Member for Warrington, North (Mr. Hoyle) and say what weight he believes should be given to the opinion of the work force about the future of the industry in which they work?
Mr. Channon: We will, of course, give careful consideration. We must try to achieve reasonably speedy but careful consideration. The House must understand that the two aspects are not necessarily inconsistent. I hope that the closest talks will take place with the work force. Indeed, the companies concerned tell me that they are engaged in talking to the work force, and my colleagues and I are very happy to receive any further deputations.
Sir Paul Bryan (Boothferry): Can my right hon. Friend explain why Labour Members are happy to implore the Japanese Nissan company to set up in this country but will have nothing to do with co-operation with American companies which have already supplied far greater and better employment than BL in the past 20 years?
Mr. Channon: It is impossible for me to explain the workings of Labour Members' minds.
Mr. Bill Michie: Have BL workers and ex-BL workers who have a share interest in BL been properly and legally consulted in this matter?
Mr. Channon: I understand that all legal requirements are taking place. Now that the indications of interest are in, it is essential that the usual procedures be followed.
Mr. Frank Dobson: What interest has Aveling Barford shown in Leyland Bus and how is that company's interest connected with the Laird bid?
Mr. Channon: So far, we have had only preliminary indications from Aveling Barford. Subject to correction, I do not think that there is any connection with the Laird Group. I will certainly take advice on that, but I am not making a statement about Leyland Bus today.
Mr. Jeff Rooker: Just as BL came into the public sector largely by accident, are we not in danger of getting rid of it by accident? Is the Secretary of State bound to accept the views of the BL board, as he said in his statement? What is wrong with workers having a vote in their own and their families' future?
Lastly, will the Secretary of State place in the Library a copy of every statement made by Ministers since the last general election which could be taken by business men outside as an invitation to the effect that BL or parts of it were up for auction? Where is the evidence for that and can it be placed in the Library?
Mr. Channon: My own statements in the past month would fill a book, so anxious has the House been to hear from me in the past few weeks. The House knows that we have always made it clear that in our view the best future for the car industry and other industries is a return to the private sector, which is far better for them than the public sector.

Rate Support Grant
4.5 pm
The Parliamentary Under-Secretary of State for the Environment (Mrs. Angela Rumbold): With permission, Mr. Speaker, I should like to make a statement.
The House will be pleased to know that my right hon. Friend the Secretary of State for the Environment was yesterday able to tell the local authority associations that he could guarantee that £500 million of grant would be available to be recycled in 1986–87 and that authorities would be able to take this into account in fixing lower precepts and rates.
As the House will recall, in the rate support grant debate on 20 January my right hon. Friend explained that if local authorities budgeted to spend more next year than we allowed for in the RSG settlement the grant forfeited by overspenders would go into a pool which would then be recycled to all authorities. He illustrated the grant gains to authorities if the pool were £400 million. Those figures could only be illustrative at that stage, because they depended on authorities' budget decisions.
This week, in the light of the latest figures available, we are in a position to go much firmer than that. It is clear that the pool of grant to be recycled will be some £500 million. This means that the grant gains will be bigger than those illustrated in January and that authorities will get more grant than they have assumed. Moreover, to avoid all doubts the Government are prepared formally to guarantee that £500 million of grant will be recycled. My Department has written to all authorities telling them the amount of extra grant that they will receive from that amount of recycling in addition to their grant entitlement under the RSG settlement announced in December. I am placing a copy of the table in the Library.
Councils will now know the size of their grant entitlement more clearly and this will allow them to make a lower call on their ratepayers. Where the rate making has not been completed, I hope that hon. Members will urge their local authorities to revise their rating plans in the light of these figures.
My right hon. Friend wrote to the local authority associations as soon as he was in a position to confirm the level of recycled grant that would be available. Local authorities are now making their rating and precepting decisions, and it was essential to provide them with this information immediately. I am sure that all hon. Members will agree that rate increases should be no higher than absolutely necessary.
Mr. Jack Straw: Will the Minister confirm that no new extra money is involved in the statement, and that since the abolition of targets last July every local authority treasurer has been aware that a sum of this size would be available for recycling? If there is any substance in the statement, why have the Government waited until most shire counties have set rates for 1986–87?
Is the Minister aware that, so far, Conservative shire counties have increased their rates by far more than Labour shires have done? Is she aware that Kent is raising its rates by 13 per cent., East Sussex by 19·9 per cent., Dorset by 20 per cent., and Buckinghamshire by 30 per cent.? Does she expect any shire authority which has set its rate to change its decision now, and, if so, by how much?
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As this is supposed to help lower spending authorities, will the Minister explain why, of the 21 authorities shown in the tables to receive absolutely nothing, nine are Conservative-controlled, including authorities such as Hillingdon, Westminster, South Bucks, Chiltern, Elmbridge, and Epsom and Ewell? Why are those authorities to receive nothing?
Will the Minister confirm that the sums specified in the tables are gross figures and take no account of what has already been lost? As the sums are supposed to be guaranteed, what happens if the authorities spend over the budget assumptions on which they are made? Will they get the money anyway?
Lastly, is the Minister aware that yesterday's announcement and today's statement are no more than a cheap and highly misleading public relations stunt by Ministers who have been panicked by high rate rises in Tory shires and by the financial uncertainty and chaos that they have created in Labour and Conservative authorities alike?
Mrs. Rumbold: I am surprised to hear the hon. Member speaking in such terms. I should have thought that he would have the grace to welcome the new announcement simply because it gives local authorities a greater certainty. That is a rather poor way to respond to news which is important to local councils, especially when they are about to go before their ratepayers to make this announcement.
The answer to the hon. Gentleman's question about the shire counties is that there is still time for them to reconsider their rate levels. In the light of this new information, one hopes that those shire counties which have taken a pessimistic view on what their grant entitlement, through recycling, might have been will reconsider the submissions that they have made. There is still time for the shire counties to do that.
I believe that many local authorities will welcome today's statement, and I trust that most will not share the pessimistic and uncharitable view of the hon. Member for Blackburn (Mr. Straw).
Several hon. Members rose—
Mr. Speaker: Order. I propose to give preference to those Members who were not called on 28 January. I said that I would do this.
Mr. Allan Roberts: Is the Minister aware that not only have some of the Tory shire counties set their rates without taking account of this flowback money, but that some local authorities decided to organise their budgets to take account of moneys which they thought they might get?
The Government have just come to the rescue of local authorities such as Sefton, which, until today's statement, have made a deficit budget. Sefton was set to "do a Liverpool" and break the law. Is the Minister aware that this miserly amount of money will not make a significant difference, because Sefton will still have a 26 to 30 per cent. rate increase? All the rates will go up by massive amounts on Merseyside, and that is a direct consequence of the cost of abolishing Merseyside county council.
Mrs. Rumbold: I am aware, and I think my right hon. Friend is aware, that some local authorities' treasurers were advising considerable caution about the money which my right hon. Friend said was recycled money. That is one

321
reason why some local authorities were taking a slightly pessimistic view. For those local authorities which were proposing to make a higher rate than they had hoped to make this announcement will make all the difference to what they do, and indeed it has been greatly welcomed by them.
Mr. Ian Gow: Is my hon. Friend aware that her statement will be widely welcomed on these Benches? The warm welcome that I give to her statement is coupled with a question: what will happen next year? The way in which the announcement has been made and the timing of it—the fact that we are told on 5 March that there is to be a change in the settlement for the coming year—is the reverse of perfect.
Mrs. Rumbold: I understand the difficulties with which some councils have been presented. My right hon. Friend had a greater awareness of the amount of money that he hoped to find in the recycling pool because of information sent in daily of budgets set and estimates announced. That is why we have been a little late. However, I understand the point that my hon. Friend has made. I shall relay that message and take note of it in the future.
Mr. Simon Hughes: First, will the Minister explain why the announcement was made outside the House before being made in the Chamber? Secondly, will the Minister explain how it is possible for those counties which have already set their rates to do anything to take into account the figures announced today? Thirdly, will the Minister explain how it is possible to justify the decision by her right hon. Friend only two months ago that the average rate increase would be 7 to 9 per cent. when we now know that many Conservative-controlled counties have set rate increases of 30 per cent.?
Lastly, will the Minister explain why the Government believe that they can change the rules of the game at this late stage? In January the Government did not suggest with any certainty that they would so so. Are the Government fully aware that it takes more than a matter of minutes for local authorities to recast their budgets, even if they have not set their rates by today?
Mrs. Rumbold: It was regarded as important that local authorities, many of which were last night in the process of starting to make their rate settlements, should have the information as quickly as possible. That was my right hon. Friend's decision. The information was given to the local authorities because of that decision, and was brought to the House as quickly as possible.
A number of shire counties are setting their rates to spend 10 per cent. more. That is not welcomed by my right hon. Friend or, indeed, by his colleagues. It is sad, and it is to be deprecated that these local authorities are setting their rates quite so high. As the deadline for authorities to set their precept is Monday, we hope that those authorities which have already set their rates will take the opportunity to reopen negotiations when they learn of the substantial sums of money that will come to them in grant. It is possible for them to do that.
I must reiterate to the hon. Member for Southwark and Bermondsey (Mr. Hughes) that this is information that
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local authorities will welcome. If the information is a little late the Government regret that, but it is better for the local authorities to have this information at this stage than not at all.
Sir Ian Gilmour: Any increase in money is welcome, but will my hon. Friend clarify her statement? Will she confirm that the difference between what she has said today and what my right hon. Friend the Secretary of State said in January is £100 million? That will make a difference in Buckinghamshire of about £1 million, but, compared with the £26 million which the Government have already robbed from Buckinghamshire, that is not a large sum. As the shire counties must increase their rates because of Government policies, does not my hon. Friend think it wrong for her not to regret that?
Mrs. Rumbold: Buckinghamshire is now certain to receive £7,403,000, which will make a difference to the county's rate making. My right hon. Friend the Secretary of State has always taken the view that local authorities should take care to study the hopes and expectations of central Government expenditure plans when setting their rates. We had hoped that local authorities would be careful to ensure that they did not exceed the Government's expenditure plans.
Mr. Peter Bruinvels: I welcome the news that £8·5 million extra recycled grant will be given to the county of Leicestershire and hope that Leicestershire county council will reduce the 27 per cent. increase in its rate, but will my hon. Friend explain why Leicester city, which has increased its rates by 80 per cent., will be given an additional £431,000? It is the greatest candidate for being rate-capped.
Mrs. Rumbold: I understand my hon. Friend's position on his local authority of Leicester city. However, recycled grant has to be given even-handedly across the country, otherwise the system will collapse. I sympathise with my hon. Friend, but I hope that he will go back to his constituency and beseech the council to be far more responsible in its attitude towards its ratepayers. It is the business ratepayer who will suffer most because of the exorbitant 80 per cent. rate increase.
Sir Geoffrey Johnson Smith: I join my hon. Friend the Member for Eastbourne (Mr. Gow) in welcoming the Minister's statement. Will she tell us how much East Sussex will gain? What advice will she offer to the leader of the East Sussex county council, which has already made its budget?
Mrs. Rumbold: East Sussex will get £7·432 million. My advice to the leader of the East Sussex council, who is a friend and a well respected council leader, is that if he is so minded, he may like to call a council meeting before Monday and adjust the precept. That is perfectly possible.
Sir Peter Hordern: Does my hon. Friend agree that, although what she has announced is an improvement, there must be a better way in which to handle our rate support grant system? Would it not be a much better system if it allowed local authorities which spend less than their grant-related expenditure assessments to get more, and those who spend more than the Goverment think they should to get less grant?
Mrs. Rumbold: I understand the logic of what my hon. Friend says, but the system by which we allocate grant is national. GREAs are made on national expenditure notions, so it is rather difficult to adjust the figures as I suspect my hon. Friend would like, which is in essence to play balances against and for in such a way as would be inequitable across the country. We have to allocate grant as fairly as possible. We all agree that that is right.
Mr. Clement Freud: Does the Minister agree that, although she regrets the rate increases in the shire counties, it was the rate support grant legislation which caused an increase of more than 15 per cent. in Cambridgeshire? Is she aware that if one quantifies her statement, one finds that the Cambridgeshire rate, which is £1·94, can now go down to £1 ·92½—or could do had it not set a precept last week? Does she agree that good management in local government depends on planning, and that that is impossible if the goal posts are moved while the game is in action? Will she at least give the House a promise that West Derbyshire and Ryedale will not have an extra rate support change before the by-elections?
Mrs. Rumbold: I prefer to ignore the hon. Gentleman's latter remark, as I do not think that it is worth answering. Cambridgeshire is a Liberal-Social Democratic alliance-controlled council, and it has chosen to raise its rate by a disgraceful 33 per cent. this year. That is unnecessary. If the council had examined its expenditure carefully rather than played with figures and toyed with ratepayers, it could have kept its rates far lower. It has set a very high rate. I hope that it will take this opportunity to rethink the position, for the sake of all of its ratepayers.
Several Hon. Members rose—
Mr. Speaker: Order. I said earlier that I would try to call those hon. Members who had been rising regularly. I shall do my best to get everybody in.
Mr. Colin Shepherd: Does my hon. Friend agree that there will be a temptation for authorities which have set their precepts without taking account of the possibility of a recycling grant? For example, LiberalSDP-led shire counties such as Cambridgeshire, might be tempted to put that grant in the bank in balances and not reflect it in a reduction in the rate precept this year. Will my hon. Friend publish a list for each local authority which has set a precept showing what would be possible if it recycled the grant all the way into a reduced rate precept?
Mrs. Rumbold: My hon. Friend is absolutely right. There is likely to be a temptation for authorities which have already set the precept to bank the money. The information in the Library will enable my hon. Friend to see what the reduction could have been if authorities had taken a responsible attitude to their ratepayers and reduced their rates according to the amounts of money that are now guaranteed.
Mr. Richard Holt: My hon. Friend knows that Cleveland is the second smallest county, but that it is the second highest rated county, at 235p in the pound. Does she agree that it is highly unlikely that there will be any reduction for ratepayers, but that there will be a huge temptation for the Labour-controlled authority to spend the money without any regard for the national economy?
Mrs. Rumbold: I hope and trust that my hon. Friend will do his best to ensure that his constituents and others in Cleveland are well aware of the amount of money available to the local authority, so that they will be able to draw their own conclusions should the council's expenditure rise.
Sir Ian Percival: Is my hon. Friend aware that, despite the sour grapes of the hon. Member for Bootle (Mr. Roberts), what she said will be very welcome to the ratepayers of Sefton?
Mr. Allan Roberts: It will not make any difference.
Sir Ian Percival: The guarantee that she has given, together with other things in the pipeline, could enable Sefton council to fix a rate increase at a figure about 5 per cent. lower. That is to say that, instead of looking at an increase of 25 per cent.—or even 30 per cent. and upwards if the Labour and Liberal parties had had their way over increased spending by the passenger transport authority—we may now hope to be looking at 20 per cent. or less. Is my hon. Friend aware that, contrary to what the hon. Member for Bootle said, this is nothing to do with abolition, but that the main increase is due to the excessive spending of a body that is not abolished—the passenger transport authority? Is she aware that my constituents and I are conscious of the fact that only the efforts of the Government, in curbing the excesses of that authority and then guaranteeing this extra money, have saved us from a really high increase?
Mrs. Rumbold: I am delighted that my right hon. Friend the Secretary of State has been able to help my right hon. and learned Friend. I am also delighted to learn that Sefton council now feels much more able to set a reasonable rate.
Mr. Charles Morrison: Although I welcome the improvement in the grant, is my hon. Friend aware that the real solution lies in rather more generous treatment of shire counties right from the beginning? In that regard, is she aware that she would have full support for her arguments in trying to persuade a mean-minded, parsimonious and apolitical Treasury to be more generous with shire counties in future?
Mrs. Rumbold: I am certain that the Government's overall expenditure plans for the country are right. I am glad that Wiltshire will be a happy beneficiary of my right hon. Friend's guaranteeing the £500 million, but I believe that shire counties, like all other local authorities, should be exhorted to try to contain their expenditure in the interests of the national economy.
Mr. Michael Marshall: Will my hon. Friend give the figure for West Sussex? Will she confirm that, because of the scale that she has announced, the fact of West Sussex being the lowest-rating precept authority in the country cannot be taken into account? Will she reaffirm that she looks to fundamental changes in the system to begin to address the problem in the future?
Mrs. Rumbold: The figure for West Sussex is £7·656 million. I hope that that will be of some advantage to the council. The Green Paper "Paying for Local Government" is, we hope, the basis for a completely different way of paying for local government which I hope all hon. Members will consider.
Mr. Robin Squire: May I, on behalf of Havering, welcome my hon. Friend's announcement, believing that even the whisper of virtue being its own reward is welcome in the light of recent years' experience? Will she undertake to give the widest publicity to the comments of the hon. Member for Cambridgeshire, North-East (Mr. Freud) about the two areas that he mentioned, as the Liberals seem reluctant to see any support going to those areas?
Mrs. Rumbold: My hon. Friend knows that London as a whole has greatly welcomed my right hon. Friend's announcement, because most local authorities are about to make their rates. I note what my hon. Friend said, especially about Cambridgeshire and elsewhere.
Mr. David Sumberg: The metropolitan authority of Bury, which is by no means a rolling and wealthy shire county, will be extremely grateful for the announcement, which means nearly £1·5 million of additional resources. Does my hon. Friend agree that that Conservative-controlled authority has loyally followed the Government's plans for controlling local government expenditure, and that its ability to go further is now severely limited?
Mrs. Rumbold: I hope my hon. Friend will recognise that this announcement will greatly benefit the prudent and sensible authority in Bury, and I trust that this will serve to show that the Government recognise the difficulties under which the authority may have been labouring until now.
Mr. Robert C. Brown: Will the Minister concede that every prudent treasurer, including the city treasurer of Newcastle upon Tyne, will have already anticipated this recycling and built it into a recommendation for the finance committee? Is this not simply a vicious confidence trick on ratepayers up and down the country? Would she care to let the House know what percentage the £2·894 million which Newcastle is supposed to be getting back is of the money that the Government have pinched this year from the ratepayers of Newcastle upon Tyne?
Mrs. Rumbold: I think that that is rather a cheap remark. The treasurer of Newcastle upon Tyne and other treasurers may well have been cautious, but they did not need to be quite as cautious as they have been, because my right hon. Friend told them clearly in January that the money would be available. Although those treasurers may have prayed caution in aid and wanted to maintain their position, it is the councillors who should determine what a rate should be or should not be. It is the councillors who have been fully aware of the sums that have been available to them.
Mr. David Harris: Does my hon. Friend agree that the £3·665 million which is being given to Cornwall under these arrangements makes nonsense of the pathetic propaganda attempt by the Liberals on that council to put the whole of the blame for an unnecessary 20 per cent. increase in rates on the Government?
Mrs. Rumbold: I support what my hon. Friend has said, and I agree with his sentiments.
Mr. George Gardiner: Will my hon. Friend accept that her statement is good news to all those who have always supported prudent spending councils, as in
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Surrey, and who resented it when they appeared to be penalised for so doing? Is it not obvious that there must be a better system for apportioning central Government funds among local authorities, which avoids taking with one hand and giving back with the other?
Mrs. Rumbold: I am grateful to my hon. Friend, and I am glad to know that the authorities which felt that they had not been as well served as they should have been feel much more secure in their position now. I refer my hon. Friend to the proposals which my right hon. Friend has made in his Green Paper, "Paying for Local Government".
Mr. Patrick Thompson: Will my hon. Friend be able to clarify what this statement means for a low-spending shire county such as Norfolk, which has followed careful budgeting over many years? Will she be able to explain to the leader of Norfolk county council, when she meets him later this week, what he will be able 'to advise for a change in the rate precept or spending levels?
Mrs. Rumbold: I have been trying to explain to the House that for Norfolk the amount that is now guaranteed as recycled money is £7·2 million. If the leader of Norfolk council is minded to look again at the precept that he is levying, he will see that it is possible for him to make adjustments accordingly to save money for the ratepayers.
Mr. Timothy Wood: I was one of those who were deeply disappointed in the reduction of rate support grant for the home counties in particular, and I am relieved that prudent councils may now get more rate support grant. In Hertfordshire the initial loss of rate support grant was £20 million, and I am not sure whether my hon. Friend is aware that Hertfordshire county council has already set a rate precept increase of 21 per cent. How will the proposals that we have heard today help Hertfordshire?
Mrs. Rumbold: The proposals will help Hertfordshire in that it is now assured of receiving almost £12 million of recycled money. Perhaps that will be of some assistance to it in looking at its rates.
Mr. D. N. Campbell-Savours: Is the Minister aware that when the Conservatives on the Conservative-controlled Cumbria county council were trying to fix a rate some weeks ago and realised the implications of the rate support grant settlement, like a bunch of municipal cowards they ran away because they realised that to set a reasonable rate and maintain services was impossible? Is it not equally fair to say that today's statement will effectively mean no more money? I have just spoken to the treasurer of Cumbria county council, and he says that the proposals will have a negligible effect on the precept. Is that not the truth?
Mrs. Rumbold: I think that it is difficult for someone to say that the proposals will have a negligible effect when it is certain that Cumbria will receive nearly £4 million extra. [Interruption.] Of course, it does have some effect. The treasurers who were being prudent and advising their authorities not to take the extra money into account may well have been able to influence the councillors whose decision it is, I have to reiterate, not the treasurers, to take the money into account. One hopes that now that they have a guarantee from the Secretary of State they will think again.

Bates Colliery (Judicial Review)
4.36 pm
Mr. John Ryman: On a point of order, Mr. Speaker. May I briefly draw to your attention a matter of which I have given you prior notice? It concerns a difficulty which may occur in relation to the business of the House on Friday, when you have kindly granted me an Adjournment debate on the monstrous decision of the National Coal Board to close Bates colliery. The difficulty has arisen because of a case which is starting in the High Court tomorrow on that matter.
I am instructed that tomorrow morning a High Court judge will begin the substantive hearing of an application for judicial review by the Northumberland area of the National Union of Mineworkers against the National Coal Board. My respectful submission is that on Friday it may arise that the matter will be sub judice because the hearing will still be continuing, the judgment will not have been given or a notice of appeal may have been entered by the party which lost the case. May I draw your attention to your powers in this matter, as set out on page 343 of the current edition of "Erskine May". The relevant portion says that you have a discretion in sub judice matters of this nature and can allow a debate to take place
"provided that there is no real and substantial danger of prejudice to the proceedings."
My respectful submission is that a Friday afternoon Adjournment debate will in no way influence a High Court judge hearing a complicated case for a judicial review on Thursday and Friday.
There are three reasons why the matter is urgent. First, at this colliery—
Mr. Speaker: Order. Is this not hypothetical? The hon. Gentleman gave me notice of his point of order, and I have looked up the reference in "Erskine May" which he has quoted. We do not yet know what the position will be. It would save the time of the House and of the hon. Gentleman if I were to say that I have this matter very much in mind and I shall give my ruling at the appropriate time.
Mr. Ryman: I am grateful, Mr. Speaker. I shall be able to shorten my remarks on the matter. I have to anticipate the events that will happen on Friday because it may be that the debate will not take place and I will then be in difficulty.
There are three reasons why the matter is urgent. The first is that preparatory salvage work is now taking place at that colliery—the seams are being heightened. Secondly, Mr. MacGregor, the chairman of the National Coal Board, is about to step down from his office. He spoke to the Prime Minister yesterday, so his departure is imminent. He conducted a personal vendetta against that colliery. The third and important reason is that this egg is impossible to unscramble. If the colliery closes, 29 million tonnes of workable high quality coal will be buried under the sea and lost for ever. It is on those three grounds that I submit that the matter is urgent. One has to anticipate the events which will take place the day after tomorrow.
Mr. Speaker: I have nothing to add to what I have already said. I shall bear the matter in mind. The hon. Gentleman has made a strong case.

Lambeth and Liverpool (Surcharge of Councillors)
4.39 pm
Mr. John Fraser: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the upholding of the surcharge on Lambeth and Liverpool councillors".
Just over an hour ago, the High Court upheld the surcharge on over 70 councillors in Lambeth and Liverpool; in consequence, subject to appeal, they could be disqualified from holding office. This latest episode in the Rates Act vendetta has been a sort of political St. Valentine's day massacre, with the possibility not only of 70 Lambeth and Liverpool councillors but of many others being disqualified. I hope that it is self-evident that the matter is specific and important. It means that an unacceptable price will be paid for dissent, and the loss of political rights is alien to our traditions.
The matter is very important because, depending upon the accidents of time, it is possible that the disqualification will take place in the middle of the campaign for the May elections, so it is not simply a matter of a penalty being imposed on those councillors; it also affects the conduct of municipal elections due to take place in May this year. Not only will those councillors be affected, but it is possible that hundreds of other councillors in about a dozen local authorities throughout the country will be similarly affected if the district auditor takes a similar view to them as he has taken to those in Lambeth and Liverpool.
If this were a matter that affected Ministers or civil servants, an Act of indemnity would be presented immediately to the House. The effect on individual councillors and on the conduct of the elections in May is such that the matter should take precedence over the Orders of the Day. I submit my application for your consideration, Mr. Speaker.
Mr. Speaker: The hon. Member for Norwood (Mr. Fraser) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration., namely,
"the upholding of the surcharge on Lambeth and Liverpool councillors".
I listened with care to what the hon. Gentleman said , but I regret that I do not consider that the matter that he raised is appropriate for discussion under Standing Order No. 10. I cannot, therefore, submit his application to the House, but I am sure that he will find other parliamentary ways of bringing it into our discussions.

News International (Pensions)
4.42 pm
Mr. Frank Dobson: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 10, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the actions of News International in the current industrial dispute, which have resulted in pensions and other benefits not being paid to retired members of SOGAT '82".
This is a specific matter, because it refers to several retired members of SOGAT '82 and others entitled to benefits provided by that trade union, including an 80–year-old constituent of mine. He, like 1,500 pensioners, should receive payments from the London central branch of SOGAT '82. As a result of the court action brought by the American owners of News International, the sequestrator blocked their pension payments and the payments of pensions to SOGAT '82 pensioners from other branches of the union. He has also blocked payments of lump sums to 120 members of the branch who retired recently. The matter is important for them and their families. It is also important because it reveals how the Government's industrial relations policies are being exploited in every possible way by ruthless employers who in their pursuit of profits do not flinch from harming innocent pensioners. In the words used by the hon. Member for Devizes (Mr. Morrison) earlier, it is mean-minded and parsimonious.
The matter is urgent not just because the pensioners need the money but because the sequestrator stopped payments of funeral benefit to 60 widows of SOGAT '82 members. It is an urgent matter that merits consideration.
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Therefore I hope, Mr. Speaker, that you will see your way to allowing the matter to be debated.
Mr. Speaker: The hon. Member for Holborn and St. Pancras (Mr. Dobson) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the actions of News International in the current industrial dispute, which have resulted in pensions and other benefits not being paid to retired members of SOGAT '82".
I regret that I have to give the hon. Gentleman the same answer as I gave to the hon. Member for Norwood (Mr. Fraser). I cannot submit his application to the House, but I hope that he will find other ways of bringing the matter before us.

BALLOT FOR NOTICES OF MOTIONS FOR FRIDAY 21 MARCH
Members successful in the ballot were:
Sir Philip Goodhart
Mr. Timothy Wood
Mr. John Watts

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: By leave of the House, I shall put together the Questions on the motions relating to Statutory Instruments.
Ordered,
That the draft Professions Supplementary to Medicine (Winding up of Remedial Gymnasts Board) Order of Council 1986 be referred to a Standing Committee on Statutory Instruments &c.
That the Legal Advice and Assistance (Financial Conditions) Regulations 1986 be referred to a Standing Committee on Statutory Instruments &c.—[Mr. Peter Lloyd.]

Right to Co-operate
4.45 pm
Mr. David Alton: I beg to move,
That leave be given to bring in a Bill to give tenants in the public and private sectors the guaranteed right to establish housing co-operatives.
The House may be tempted to wonder why such a Bill is necessary at all, but, as I described in an Adjournment debate on 20 December, council tenants in my city of Liverpool have been the victim of an interminable offensive calculated to destroy local housing co-operatives initiated there.
Vindictive and spiteful retaliatory measures have been taken against the leaders of the Eldonian co-operative in the Vauxhall area of the city and against other co-operatives. The city council was even prepared to turn away £6 million of public money, and the building jobs and new homes that were part and parcel of the Eldonians' plan for new dream homes on the site of the old Tate and Lyle factory, to support their own brand of dogma, became a nightmare as Labour Militants and fellow travellers such as councillor Tony Byrne set out to crush that group of mainly unemployed council tenants.
Sheer guts and tenacity saw the Eldonians through their fight, but other co-operatives without the determination and the inner strength of that group were ruthlessly smashed. Only today those Labour councillors have been disqualified from public office. For many people in Liverpool it is two years too late. The tragedy is that it has taken so long for the Labour leadership to wake up to the menace of the Militant Tendency. If Labour leaders had listened to the moderates in the Vauxhall ward Labour party, to the Liberals and to the housing co-operative movement, two years of tragedy for Liverpool could have been averted.
If we are to ensure that such things do not happen again, we must have a Bill to give tenants in the public sector the right to form housing co-operatives, a right guaranteed at law. It would also represent a realistic hope for ordinary people of becoming home owners, in a way that the Conservatives' right-to-buy legislation cannot, especially for the unemployed or less well off. The right to buy will never bring the most powerless people into a property-owning democracy, but the right to co-operate will. A Bill giving people the right to co-operate would break asunder the feudal vassal or serf-like status that so many tenants endure today.
However, this is a Bill for private tenants, too. For the Government, the right to become a home owner seems always to be reserved for the buyers' market, and for the sitting council tenant who can afford to buy, yet no such right to buy is given to sitting tenants in private accommodation. My Bill would give tenants in the private sector the right to take control over their homes, too. Far too often, the battle lines in the housing debate are drawn between the tenants' and the owners' camp. My Bill is based on a partnership between the two. It represents a genuine third choice for housing.
The Bill aims to give council and private tenants the automatic right to serve notice on their landlords that they wish to form housing co-operatives. The Bill will define clearly what constitutes a co-operative and what types of dwelling are suitable. It will ensure that landlords cannot
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unreasonably withhold from tenants permission to form co-operatives where two thirds of the occupants wish to do so.
My Bill will do six specific things. First, it will define the types of tenancy to which the right to co-operate will apply. Secondly, it will identify the dwellings that the right to co-operate will embrace. Thirdly, it will set out the circumstances in which the right to co-operate may arise and certain tests that will have to be satisfied. Fourthly, it will set out the circumstances in which the right to co-operate may be refused by a landlord, but will state that consent to the right to co-operate may not be unreasonably withheld; there might be an appeal mechanism to the Secretary of State for the Environment. Fifthly, the Bill will set out an economic incentive or restrictions that would go hand in hand with the right to co-operate. Lastly, it will establish the means by which the right to co-operate may be promoted. That might take the form of enabling legislation, possibly extending or reinforcing the powers of the Housing Corporation with associated funding or it might establish a new mechanism to promote co-operatives. Present funding for co-operatives is inadequate—in fact, it is derisory—and must be re-examined in the context of the Bill.
My Bill recognises the desire of many ordinary people to take control of their own homes from the planners and from the "we know best" politicians who have maintained a vice-like grip on entire communities. The Bill will encourage and protect those who want to form housing co-operatives from recalcitrant local authorities and unco-operative private landlords alike. It is high time the House recognised that the existing monolithic housing structures no longer meet people's needs and that an entirely new approach is needed. All over Britain council tenants are getting a shocking repairs service. Estates are disintegrating, and public money is being poured away as an Elastoplast solution is administered to the ailing patient.
Commenting on the growth of housing co-operatives in Liverpool, the Architects' Journal said that the greatest housing revolution in 60 years had been taking place quietly and unnoticed. The real testimony to the spectacular success of schemes such as Hesketh street housing co-operative in my constituency, which Prince Charles visited last year, and others at Leta street, Claudia street, Prince Alfred gardens and Southern crescent, is that council tenants who moved into those housing co-operatives say that they would never go back to being council tenants. These oases in the middle of so much dereliction, decay and neglect exude pride and confidence.
The story does not end there. Liverpool city council spent over £250,000 last year on a team of glaziers whose entire time was taken up in replacing broken windows in council owned properties. Those windows did not wear out; they were vandalised. In housing co-operatives we do not find broken windows, because people care about the homes they are living in. They have a stake in the community and feel a real sense of responsibility for those areas. Nor would one find the £11 million of rent arrears currently owed on council properties in the city. Nor would one find empty properties, unlike the 6,000 vacant council properties which are boarded up and which are an affront to the thousands on the housing waiting list in Liverpool.
Liverpool tenants get a second-rate service in dreadfully managed estates. That will not improve until

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the tenants are given responsibility for the ownership and management of their own estates and homes. Far too often the housing department behaves as if it is the master of the people instead of their servant. My Bill sets out to challenge that.
Liberalism is an enabling philosophy. That is why we do not see housing policy as simply a question of bricks and mortar or house building figures. The provision of homes is about so much more. It is the key to many people's aspirations. It is the solid result of years of effort. To have control of their homes rather than being beholden to municipal or private landlords can give people a tremendous boost in self-confidence and can lead to the removal of nagging fears about security. It can be the key to the successful creation of dynamic communities where people care about their neighbours and share in the decision making.
Housing co-operatives based on devolution of power, the creation of self-reliance and common concern and the widest possible extension of ownership are the epitome of all that my party stands for. Conservatives, too, should recognise in housing co-operatives the qualities of self-help which they admire. Socialists should rekindle the sharing spirit of the Rochdale pioneers. Housing cooperatives will enable communities to take power for themselves and to pull themselves up by their bootstraps. That is why I commend my Bill to the whole House and hope that I shall be given leave to bring it in.
Question put and agreed to.
Bill ordered to be brought in by Mr. David Alton, Mr. John Cartwright, Mr. Simon Hughes, Mr. A. J. Beith, Mr. David Penhaligon, Mr. Geraint Howells, Mr. Clement Freud and Mr. Archy Kirkwood.

RIGHT TO CO-OPERATE
Mr. David Alton accordingly presented a Bill to give tenants in the public and private sectors the guaranteed right to establish housing co-operatives: And the same was read the First time: and ordered to be read a Second time upon Friday 2 May and to be printed. [Bill 101.]
Mr. Robert Parry: On a point of order, Mr. Deputy Speaker. I seek your guidance because the hon. Member for Liverpool, Mossley Hill (Mr. Alton) several times mentioned the people in the Vauxhall area of my constituency and also the Eldonians, whom I represent. I support housing co-operatives in principle. The hon. Member is always creeping around other constituencies and breaking the conventions of the House. He has even been to co-operatives in my constituency without giving me advance notice. As the hon. Member is recognised by all hon. Members as a political weasel and a guttersnipe, I seek your advice.
Mr. Alton: Withdraw that.
Mr. Parry: I will not. The hon. Member is a guttersnipe.
Mr. Deputy Speaker (Mr. Harold Walker): Order. I very much doubt whether I can give the hon. Gentleman the guidance he seeks. I hope that at all times hon. Members will observe the courtesies and conventions of the House.
Mr. Alton: Further to that point of order, Mr. Deputy Speaker. I should like to know what protection hon. Members can be given from such unparliamentary comments.
Mr. Parry: The hon. Member is a guttersnipe. He admitted that he had been to my constituency.
Mr. Deputy Speaker: Discourteous words may have been used, but I have not heard anything that was out of order.

European Community
4.57 pm
The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker): I beg to move,
That this House takes note of the White Paper on Developments in the European Community January to June 1985 (Cmnd. 9627) and of European Community Document No. 8616/85, the Commission' s opinion on the Proposal for Amendments to the EEC Treaty.
Mr. Deputy Speaker (Mr. Harold Walker): I have to inform the House that Mr. Speaker has selected the amendment in the name of the Leader of the Opposition.
Mrs. Chalker: The period covered by the report saw the conclusion of the accession negotiations with Spain and Portugal, culminating in the signing of the treaty of accession and the start of the process which led to the signing of the Single European Act, whose provisions the House will soon have an opportunity to debate and approve.
Mr. George Foulkes: Hon. Members, including some Government Back Benchers, are anxious to know exactly when the House will be given an opportunity to debate the Single European Act. It is important that we have an indication of the time scale.
Mrs. Chalker: The hon. Gentleman knows that the timing of the debate is a matter for discussion within the usual channels, but it will take place as soon as we can bring it forward. I shall write to the hon. Gentleman as soon as I have an indication of the timing. I hope that it will be within the next three months.
It is on the intergovernmental conference, and the changes to which it will lead, that the House will wish to focus this afternoon. Hon. Members will have seen the special report prepared by the Select Committee on European Legislation. The House will be most grateful to the Chairman, the hon. Member for Newham, South (Mr. Spearing), and his Committee for the thoughtful and constructive report. The hon. Gentleman kindly wrote to me to explain that he is chairing a Committee upstairs and that he will join us as soon as he can.
The report of the Select Committee on European Legislation draws some preliminary conclusions about the scrutiny arrangements, which are of great importance to hon. Members. I assure the hon. Member for Newham, South that we shall consider carefully and positively the suggestions made by his Committee. I am glad to tell the House that I am happy, too, to accept the Opposition amendment which will be moved shortly.
The desire for reform which led to the intergovernmental conference set up last June was commonly felt throughout the Community. At Fontainebleau in 1984, we achieved a settlement of the long-standing issue of our contributions to the EC budget. We also set in hand the imposition of budgetary discipline, particularly over the common agricultural policy. After years in which price rises were the norm, we secured two price fixings in a row in which prices fell in real terms.
It was against that background that the Community turned its attention from problems to opportunities: to such pressing questions as how to make Europe competitive in the new technologies; how to create the large market that would give us economies of scale, prosperity and jobs; and how to ensure that decisions were taken more quickly.
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As the House will know, we believed that those objectives could be achieved by political agreement. But many other member states argued that it was essential to entrench reforms in amendments to the treaty, both to give them binding effect and as a symbol of the Community's determination to tackle its problems.
In the period covered by the report that we are debating this afternoon, there was intensive discussion of a wide range of proposals which were put forward, including some that would have radically altered the balance of the Community institutions. We tabled ideas of our own, particularly on decision-making procedures, and how the European Parliament might be enabled to contribute more effectively. Our proposals were notable for their severely practical focus, which contrasted sharply with the severely impractical—though no doubt visionary—flavour of some of the other ideas in the field.
Yet as member states focused more and more closely on the implications of the various proposals under discussion, it became clear that there was no widespread support for sweeping changes. There was, however, support for measures which would deal with the Community's most pressing needs.
Sir Russell Johnston: When the Minister refers to impractical and visionary proposals, is she suggesting that the Italians—who 'were reluctant to sign the Luxembourg agreement unless it was approved by the European Parliament—were being impractical and visionary?
Mrs. Chalker: The hon. Gentleman knows that I meant nothing of the sort. He also knows that at certain stages a number of quite strange ideas appeared. I am glad to say that the view was taken that they would not be right in respect of the writing of the Single European Act.
It was on that basis that the intergovernmental conference, which is dealing with the Community's most pressing needs, was established, and it conducted and completed its work. That is now embodied in the Single European Act which incorporates the changes to the EEC treaty and the new treaty provisions on European cooperation in foreign policy.
The House will have a full opportunity to debate the treaty changes that were agreed at Luxembourg when it considers the forthcoming Bill to incorporate them into the European Communities Act, but it may be helpful if I describe the main features now.
It should be said, by way of preface, that the treaty changes agreed are modest in their legal scope, but they embody a political commitment which is practically significant.
Mr. George Robertson: Why is it called the Single European Act?
Mrs. Chalker: That is a very good question. I do not think that my colleagues have given me any good reason as to why it is called that, but I shall consult and see whether I can come up with the real reason. I think that the hon. Gentleman is having fun at my expense.
The first noteworthy feature of the Single European Act is that it contains a new commitment to create, by 31 December 1992 a genuinely free internal market, which is vital. Britain has long championed the achievement of the freedoms set out in the treaty of Rome: the free movement of goods, persons, services and capital. We

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now have an important commitment to accelerate progress to that end; and to the extent that barriers have not been overcome by 1992, the Council may decide before the end of that year on the mutual recognition of national measures.
To enable progress to be made as quickly as this, the Single European Act introduces improved decision-making procedures. Qualified majority voting replaces unanimity for most internal market directives establishing common standards and procedures; for consideration of whether there should be policies for sea and air transport and how those policies should operate; for directives on co-ordination of policy on capital movements between member states and third countries; and for measures to remove obstacles to freedom of provision of services by nationals of third countries.
This extension of majority voting should make it harder for a few member states to block the adoption of measures liberalising air and sea transport, or the common standards for industrial products which help British firms export to Europe.
I should assure the House, however, that our special interests are fully safeguarded. Unanimity will still be required for tax measures; for the movement of persons across national frontiers, for example; and for the rights and interests of employees. We will also continue to be able to protect our high standards of animal and plant health. There has been no change whatsoever in the so-called Luxembourg compromise. It remains open to us, where necessary, to invoke that compromise to protect a very important national interest.
Mr. Foulkes: Why have the British Government insisted that unanimity should remain in respect of the rights and interests of employed persons? The hon. Lady will know that the British Government are blocking any agreement on parental leave, which would be of great help to people in this country and which the House of Lords Committee has indicated would cost nothing extra. Why are the Government blocking that? Why have we not moved towards majority agreement on this item?
Mrs. Chalker: When we talk of unanimity, we refer to the rights and interests of employees as a whole. So far as I am aware, parental leave is not at present being considered on that basis. That cannot be so, because we do not have the ratification by each of the 12 member states of the Single European Act. The matter may be resolved in the meantime, but we shall face it as it arises. At present, the unanimity rules will remain for all the matters to which I have referred because the Act will not have been ratified during the coming discussion on that issue. If I am in error, I shall come back to this when I reply to the debate.
Mr. Tony Marlow: Where majority voting takes place, can the veto still be applied?
Mrs. Chalker: That was the point of my last remark before I gave way to the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). Of course, it remains open to us, where necessary, to invoke the compromise. That is exactly what I said.
The second important area covered by the Single European Act is research and technological development.
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The Community has long been concerned with research and development. The existing programme includes the exciting ESPRIT programme, in which more than 60 British companies are successfully participating, and which is playing a major role in helping to make our companies competitive in information technology. Up to now, the Community's R and D programme has lacked a sense of direction and purpose. It grew up in the 1970s, when energy needs dominated our thinking, and it has failed to adjust to Europe's industrial needs for the 1980s and 1990s. That will now change.
The purposes of Community research and development are clearly defined in the new Act in terms of practical application and the needs of industry. The Community will encourage research and technological development activities by companies, including small firms, as well as by research centres and universities. This will be supported by exploiting the potential of the internal market to the full, opening up public contracts and removing legal and fiscal barriers to co-operation.
The framework programme, which establishes the financial envelope for Community R and D over each five-year period, will in future define much more clearly the content, objectives and priorities of research and development programmes. That overall framework will remain subject to unanimity. The specific programmes to take place within it will subsequently be decided by qualified majority. In the early discussions on the next research and development framework programme we are already starting to see the benefits of the more industry-oriented approach which the Community is now adopting. There is much more emphasis on projects which will strengthen the foundations of European industry, such as RACE—research in advance communications in Europe —and BRITE—research to help modernise traditional industries, for example, through computer-aided design and manufacture. Those are the areas in which the Community needs to catch up in order to be able to compete. Those are the areas in which we shall now have the necessary legal framework in which to set Community activity.
The third major area covered by the new treaty amendments is the environment. Here, too, the Community has a long-standing involvement, as of necessity it must. Pollution knows no boundaries. Effective conservation requires an international effort. The Community has already taken many useful environmental initiatives, such as improving water quality, reducing pollution from motor vehicles, handling dangerous substances in industry and protecting the agricultural environment.
What we have now done is to establish the criteria for those activities. The criteria stipulate that the Community should take action relating to the environment only to the extent that environmental objectives can be better attained at Community level than at the level of individual member states; that the Community should weigh the potential benefits and costs of action before taking it; and that it should weigh the environmental conditions in the various regions of the Community. What is necessary in the Mediterranean may not be necessary in the North sea. We will be able to ensure that, where we wish, decisions continue to be taken by unanimity.
In reaching these decisions, the Heads of Government had to consider carefully the institutional balance within the Community. The European Parliament, directly

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representing an electorate of 320 million people, has an important role to play in decision taking. As we said in our manifesto for the European elections last year, on a growing number of issues, the Community is regarded as the voice of Europe. Yet the existing institutional arrangements have not enabled the European Parliament to play the positive role that it could and should. What we have therefore sought is a means of maximising the European Parliament's contribution and influence without, however, any change in its formal powers.
That is the effect of the new co-operation procedure which is most usefully and clearly analysed in the Scrutiny Committee's report. The procedure provides that, in certain areas where qualified majority voting applies in the Council, the European Parliament will be able to propose amendments if a majority of its members agree. If the Parliament proposes amendments, the Commission has to decide whether or not to amend its proposal accordingly. But it should be emphasised—in the words of the Scrutiny Committee report—that
"at end of the day the European Parliament still has no power to insist and the last word remains with the Council."
Nor could any intervention by the Parliament lead to a vote which would normally be taken by unanimity in the Council being taken by qualified majority instead. That could not happen.
What we hope and expect, however, is that the potential of the European Parliament for constructive involvement in the development of Community policy can now be more fully realised. Too often in the past the European Parliament has used its negative powers to block proposals and delay decision-making when it has not—perhaps because it has not—been properly consulted, and when full weight has not been given to its opinions.
Sir Russell Johnston: I appreciate that the Minister has given way generously. It is not fair for her to attack the European Parliament on the ground of delaying decision-making when delaying decision-making lies firmly at the door of the Council.
Mrs. Chalker: I am sorry if the hon. Gentleman thought that I was making an unjustified attack on the European Parliament. There are times when there are delays in decision-making, as the hon. Gentleman knows. The point is that the whole of the Community has been bedevilled in much of the progress that it has sought to make by all sorts of delays. I was referring to a way of consultation through which we may minimise future delays.
Mrs. Elaine Kellett-Bowman: Will my hon. Friend give way?
Mrs. Chalker: I will give way for the last time.
Mrs. Kellett-Bowman: The European Parliament frequently introduces reports on minor subjects which may be of interest to a limited number of people but which clog up the works. If the minor reports were not introduced, the major crucial reports could go through faster and delay would be obviated.
Mrs. Chalker: I have a great deal of sympathy with what my hon. Friend says. She is referring to the whole of the management of Community business, not just in the European Parliament but in the Community institutions. I hope that it will be possible to improve the management so that the major issues can get the attention that they rightly deserve.
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In discussing the Single European Act, in the sphere of foreign policy, an increasingly potent symbol of unity in European policy was vividly demonstrated last week in the Philippines. It was a major goal of the Government throughout the negotiations to secure treaty provision for such co-operation, and it was finally agreed in very much the form that we originally proposed before Milan. The new provisions consolidate for the first time in legal form the existing commitments of European political cooperation to consult and co-operate, although they remain juridically separate from the treaties establishing the Communities. The Twelve undertake to consult before adopting a position on foreign policy issues of general interest and to avoid any action particularly in international fora, such as the United Nations, which could undermine their cohesiveness and ability to act as a force internationally. The treaty also strengthens the commitment to consultation on certain aspects of security questions.
The treaty enshrines the general feeling that the time has come after 15 years to give formal recognition to political co-operation as an important component of the policies of the Community of Twelve. We do not expect dramatic overnight improvements in cohesion on foreign policy issues. But there is now a more serious commitment to move foward together, while the creation of a small secretariat will provide permanent small machinery to enable the Twelve to react to events with greater facility than hitherto. As my right hon. Friend the Prime Minister told the House on 5 December, we expect that there will continue to be differences between us, but the Twelve will in future try to work together as far as possible to ensure that their voice is more generally heard and better respected. That has already begun to happen.
I have discussed how, in the period covered by the report, we prepared the way for the changes which are being introduced into the treaty. I have discussed the main features of the Single European Act by which they are to be accomplished. We warmly welcome the outcome of the Danish referendum last week, and the signing of the Single European Act by Denmark, Italy and Greece. The way is now clear for national ratification procedures, and, as the House knows, we plan to introduce a Bill as soon as practicable to carry that through. From now on our focus must be on the implications of the Act.
Mr. Marlow: Will my hon. Friend give way?
Mrs. Chalker: I have already given way a considerable number of times, and I understand that many hon. Members wish to speak, so I must finish my remarks.
The excellent Scrutiny Committee report discusses the particular implications for scrutiny by the House. That is one important aspect at which we wish to look carefully.
However, there are also implications for the development of the Community, and for Britain within the Community. During the second half of this year, Britain will assume the presidency of the EC. It is my earnest hope that, before the end of the year, the Single European Act will take effect. The Community will then have a good opportunity to build for the future, and Britain, in the presidency, will have a special responsibility to direct that process.
I want a Community that is relevant and is seen to be relevant by its people, especially the British people. The completion of the Common Market is the most important

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single step that we can take to achieve that aim. The treaty changes and other new procedures agreed in Europe will help us in taking that step. It is an important step for the future not only for Britain but for peace in the Western world. I commend the motion to the House.
5.20 pm
Mr. George Robertson: I beg to move, at the end of the Question to add,
'and, noting the First Special Report of the Select Committee on European Legislation (Session 1985–86), calls on the Government to undertake to co-operate in improved procedures so that the House can effectively scrutinise proposals under the Treaties as they would be amended by the Single European Act.'.
The Minister properly avoided the vast bulk of the White Paper that we are supposed to be debating and concentrated more on the future than on the past. Her peroration included memorable words about the importance of the EC being relevant to the people, and then invoked the internal market as the method by which the people should judge the effectiveness of the EC. If the people outside were consulted, they would consider the internal market, or the creation of Lord Cockfield's dream world, a most remarkable method of judging a Community of 12 nations in such a deep recession.
Such debates are, by definition, retrospective, but they are also an opportunity carefully to consider developments in the European Community and to look forward to what the Community could or should do for the people of Europe and for the people of Britain. All too often, our debates on the EC are dominated by its chronic budget problems. The Minister of State, Treasury, is here as an observer of the debate. No doubt he is relieved that the massed ranks of the Tory anti-marketeers are, surprisingly, absent today, leaving the Floor free — [Interruption.] The massed ranks are absent; only the hon. Member for Northampton, North (Mr. Marlow) is here to speak on their behalf. The Minister of State, Treasury, must wish that he could stand at the Dispatch Box today instead of on a later occasion, when his hon. Friends will be ready, knives in hand, to scalp him.
Our debates on the EEC budget usually degenerate into unintelligible, fairly negative and introspective seminars that do not enlighten the outside world about the potential of a 12-nation Community to contribute to solving Britain's and the European Community's problems.
As the Minister said, we are fortunate to have the first special report of the Select Committee on European Legislation. I am sorry that bad scheduling has meant that the Chairman and members of the Committee cannot be here for the beginning of the debate. The report includes an excellent analysis of the practical problems that we shall face because of the process of so-called reform, which started at the beginning of last year and therefore during the period that we are considering. The process has culminated in what is called the Single European Act. I look forward with interest to the Minister's explanation of that peculiar translation of a French phrase.
Mrs. Chalker: It seemed to be such an obvious phrase that I did not question how the Act came to have that name. However, I have thought about it and obtained a little help from my friends, and I can say that the changes to the European treaty and the new treaty on co-operation on
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foreign policy are brought together in a single Act. It is European and it is an Act. Indeed, it is a surprisingly logical name to come from the EC stable.
Mr. Robertson: But the hon. Lady's friends had to explain it to her. We accept, with gratitude, that information, which makes the Single European Act seem all the brighter. No doubt the practical problems that will be thrown at us will be greater than the interpretation of the name.
Our scrutiny of European legislation should worry us greatly. In 1984, the Select Committee published a report which damned the Government's attitude to scrutiny in general and cited examples of major changes that went through the Council of Ministers before debate or discussion took place in the House. It gave the examples of the ESPRIT programme and the new arrangements for the regional development fund. Those examples and the report came long before the increase in majority voting, which has made the problem much more severe and which will increase when the Act comes into force.
The latest report of the Select Committee shows how much worse the position will be if the new Luxembourg system comes into effect. Of course, that depends upon the House and 11 other Parliaments ratifying it. It will pose a genuine dilemma to the House of Commons. We have tabled this amendment because of the complex problems of the scrutiny of European legislation and the likely increase in workload. We are grateful that the Government have taken on board our point and have accepted the amendment. I am probably the only Opposition Front-Bench spokesman who has managed to get not just one but two amendments accepted by the Government. No doubt the "Guinness Book of Parliamentary Records" will note that.
Sir Anthony Kershaw: On a point of order, Mr. Deputy Speaker. It is not the Government who accept amendments, but Mr. Speaker or the Chairman of Ways and Means.
Mr. Robertson: I must correct the hon. Gentleman. Mr. Speaker simply selects an amendment. It is for the Government—the parent of the original "take note" motion—to accept the Opposition's amendment. I hate to dance round on a pedantic pinhead, but, uncharacteristically, the hon. Gentleman is wrong in this case.
We must consider how best we can effectively monitor, supervise and scrutinise the mass of important detailed legislation affecting our people which is being enacted by the Community and as a consequence of section 2 of the European Communities Act 1972. It is not enough for the House to have debates such as this — considering a period that started 12 months ago—and pretend that we get to the heart of keeping tabs on developments in the EC.
Mr. Marlow: The hon. Gentleman knows that the House of Lords Select Committee is allowed to comment, and quite properly comments, on the merits of the proposals put before us, but the House of Commons Scrutiny Committee is allowed only to decide whether a matter should be put for debate either in Committee or before the House. Would the hon. Gentleman like to see the Scrutiny Committee have the powers to comment on the merits of a particular proposal with regard to the United Kingdom interest?
Mr. Robertson: The hon. Gentleman makes a valuable point. I have not put forward any conclusions, but my hon.

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Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) will deal with a number of positive suggestions that are available to us about the way in which we deal with such scrutiny. The House continually turns for advice to the House of Lords Select Committee and it is an example at which we should be looking carefully, especially given the fact that the bulk of scrutiny will increase substantially should Parliament choose to ratify the Single European Act.
The debate concerns a six-month period a year ago. We are now only a few months away from this country's tenure of the Presidency of the Community, and the debate would have been an opportunity for the Minister to set out an agenda for that period. She could have inspired us with the vision of reform and revitalisation that will motivate the Government when they hold the steering wheel of Europe in July this year. We might have expected her to tell us how they will take on the challenge of fighting for jobs in a recession-hit Community, with over 14 million of its citizens out of work.
The Minister might also have enlightened us as to how the Government see Europe grasping the opportunities for technological and industrial co-operation across the Community. We might even have expected to hear how they intended to deal with the recurring problems of the European budget, and what they intend to do with the common agricultural policy, whose faults threaten not just budget discipline—that has gone out of the window—but the whole of the Community. We might have expected to hear all that, but we waited in vain, and we can reasonably conclude that, not surprisingly, the Government have as little idea of what to do in the European Presidency as they have of what to do with the economy of Britain. The economy of Europe and our country are at the heart of politics today.
Mrs. Chalker: It is not true.
Mr. Robertson: The hon. Lady may say that, and she may tell us that the litany of clichés that she brought out was a substitute for the agenda for the Presidency. The idea that reform of the internal market will inspire confidence among the 4 million unemployed in this country, never mind the 10 million others out of work across the Community, leaves me in mystification, and will give no hope to the people of Europe.
The European Commission, in its annual economic report and programme for 1986, has elevated the strengths and potential of a co-operative strategy for growth. In its opinion, there is now a unique opportunity to boost wealth and reduce unemployment by 30 to 40 per cent. over five years. Even without Spain and Portugal, there are 14 million unemployed in the European Community, and 45 per cent. of them are young people, a growing proportion of whom are now chronic long-term unemployed.
The President of the Commission, Mr. Jacques Delors, said at the beginning of 1985, when he presented the Commission's first programme:
"Faced with the uncertainties and worries of the future, what people are looking for above all else is not freedom of movement (of peoples and goods) … Pulling down the frontiers will not convince them of our resolve to do away with massive unemployment. Economic convergence will be meaningless to people if we have not reversed the tide of unemployment within the next 2 years."
We might reasonably have expected the British Government, who will take over the Presidency, at least to echo some of those heavily weighted sentiments.
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Will the Government, during the Presidency, initiate talks to achieve a co-operative growth strategy to reduce unemployment by 1 million in the United Kingdom alone, as all the economic experts and the European Commission believe possible?
The Commission stressed in its 1986 programme that one of its strategic objectives will be
"the adoption of a framework programme for research and technological development … clear in form and content and attractive to firm and research centres encouraging them to cooperate."
The Minister touched on this matter in her speech, but the Government must give an answer both in the House and beyond it, because the Presidency has a wider responsibility. Are the Government willing to increase the funds for ESPRIT and meet the challenges that it faces, and will they commit themselves to future financing of EUREKA projects? We have had many fine words about technological co-operation, but will they be accompanied by the standard public parsimony that the Government inflict on every programme that could make a contribution?
How can a clear European framework conducive to cooperation develop, when the Government have agreed to participate in the strategic defence initiative research programme in the United States, and when they have not laid down any guidelines regarding intellectual property rights and the ability of British scientists to use their work in Europe? How can Europe hope to establish some kind of technological superiority if it allows the technology to flow to the United States?
What is most disturbing of all—the Minister's speech highlighted this only too well—is that the Government have now adopted, as the flavour of the month, the crusading zeal of Lord Cockfield in his drive to create a true common market by improving the internal market. The internal market—in this Eurospeak which reduces the meaning of everything that we say in these debates —is a more clear-cut free trade area, which will involve wide and sweeping changes. This will have fundamental and dramatic implications for Britain, and there is no sign that the Government have grasped any of the issues thrown up by what they are saying.
For example, do the Government know what the effect of these changes will be on the structure of British industry, on employment, on our balance of trade in manufacturing policy or our invisible earnings through the free exchange of services about which we so often hear? From the answer that the Minister for Trade gave my hon. Friend the Member for Carrick, Cumnock and Doon Valley, it would seem that they do not have the slightest clue as to the implications.
Either the Government have carried out detailed studies of the effects, in which case they have an obligation to present them to Parliament in the form of a White Paper so that we can all judge their merits, or we can conclude that they have no real idea of the effects of the changes, and are simply gambling with Britain's future for the sake of a free market ideology. A free market ideology is just as valid in the internal market of the United Kingdom as it is in the internal market of the European Community. As the Minister for Trade, who gave such a characteristically vague, almost useless and optimistic reply to my hon. Friend, is one of the high priests of the

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free market, one can only conclude that the Government do not have the slightest clue about the implications of Lord Cockfield's dream on the structure of industry.
The evidence is clear. The Government's view of the internal market differs sharply from that of other European Community countries and from the view of the Commisson. The Government believe that the internal market will require the harmonisation of value added tax, which has been repeatedly stressed by both the President of the Commission, Jacques Delors, and by Lord Cockfield, but nobody except the Conservative party believes that on its own a free trade area will do anything for Europe and its problems. The Commission's programme for 1986 makes it clear that
"Completion of the internal market must not be allowed to compromise the Community's social priorities."
However, the British Government have expressed no view about that.
When he presented the Commission's programme in January, Jacques Delors said:
"The creation of a vast economic area based on the market and business co-operation is inconceivable, I would say unattainable, without some harmonisation of social legislation."
That criterion, which was quite right and proper, was laid down by the President of the Commission. There is no possibility of creating an internal market if the social obligations that accompany it are not recognised. However, this Government have not only stopped the people of Britain and the rest of the European Community from enjoying the benefits of directives on employee consultation and information, parental leave and worker participation by vetoing them every time they have been raised, but Lord Young of Graffham has presented a new programme of deregulation under which many of the benefits that are enjoyed in this country and in the European Community—for example, the benefit of equal opportunities—would be withdrawn.
In the letter last month of the Minister of State, Foreign and Commonwealth Office to my hon. Friend the Member for Carrick, Cumnock and Doon Valley—in his intervention the hon. Member for Northampton, North was getting, in his probing style, to the heart of the matter, although from a different direction from mine—she said that, despite the treaty changes which allow for majority voting in a number of other areas,
"Directives affecting the rights and interests of employed persons will remain subject to unanimity."
What is the point of majority voting if British industrial employees are still to be denied the best that the European social structures have been able to offer to European employees for some time?
The prime example is the draft directive on parental leave, which the Government are opposing on the simple ground that it would impose costs on industry. The report of the Select Committee of the House of Lords has already been mentioned. It favoured the directive and declared that it could find no reason to believe that industry would suffer from the introduction of that directive.
The Government talk about a "people's Europe". They go along with the idea of a common stamp, a common flag, a common passport and a European anthem. If, however, the European Community is to be credible, as the Minister of State has said that it should be, and is to benefit the people of the Community, surely it must be allowed to be used in these areas where it can be of use.
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In recent months we have heard much about multinational companies that have the freedom to play off against each other the workers in their various subsidiaries, but many of these abuses can be curbed only by measures that can be applied on a European basis, such as those that are proposed in the directive on worker information. However, they have all been vetoed by this Government.
Mr. Marlow: If the hon. Gentleman wants more of these policies to be decided at the European level, does he consider that more powers should be given to the European Community? If so, will he say which powers he would give the Community?
Mr. Robertson: My point is that there are aspects of the European Community which would benefit the people of this country but that this Government, who pretend to be enthusiastic about Europe, choose to deny to the British people the opportunity to raise the level of benefits and increase the social infrastructure. They concentrate instead upon mealy-mouthed platitudes and upon reducing the standards that apply to British industrial workers.
The internal market will lead to a greater concentration of wealth and production. Even its advocates admit that any benefits will have to come through economies of large-scale production, in which case there is an even greater need for a European Community regional policy which is effective and which has sufficient resources to fulfil the demands that are caused by inequality in the European Community, especially on account of the greater disparities that accession have created. This will require a fundamental reform of the European Community's budget and, as a prerequisite, reform of the common agricultural policy. That is of major importance, in view of Britain's future Presidency of the European Community. The Minister of State chose not to deal with that point in her speech. My hon. Friend the Member for Carrick, Cumnock and Doon Valley will deal with it at some length and in devastating detail if he catches your eye, Mr. Deputy Speaker, at the end of the debate. Its importance should not be under-estimated.
Almost inevitably, our European Community debates tend to be over-critical—sometimes justifiably critical—and almost always pessimistic. The problems facing the Community always seem, to our eyes, never to exploit the opportunities that a huge community of nations provides for us. That is unfortunate. The House and the Community have a duty to offer the population of Europe and the British people more than just an eternal wrangle over incomprehensible details, or an endless financial crisis, or an agricultural policy which goes from the absurd to the obscene. Politicians, like our Government, who continually dodge all the real challenges and prefer playing with the sideshows of European politics are simply squandering the future of our continent.
5.46 pm
Sir Anthony Kershaw: A measure of the way in which European debates have almost become a part of our domestic scene can be gathered from the attendance this afternoon in the House of Commons. They rate slightly below Scottish housing debates.
The hon. Member for Hamilton (Mr. Robertson) made a very good and typical Opposition Front Bench speech. He railed against the Government. He criticised every kind of point and, luckily for him, he avoided making any

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positive statement. He complained that in these debates we spend our time wrangling over details. Every debate about Europe cannot turn into a Second Reading debate on whether or not Britain ought to be in the European Community. Of course we are wrangling over details, in a sense, but we are addressing the points that are of importance to our electors and to this country.
The hon. Member for Hamilton slightly puzzled me when he said that a free trade area in Europe would be useless. I thought that that was the policy of the Labour party.
Mr. George Robertson: I did not say that.
Sir Anthony Kershaw: The hon. Gentleman went on to amend that statement by saying that there must be more use of the European dimension. My hon. Friend the Member for Northampton, North (Mr. Marlow) intervened on that point. However, the hon. Gentleman should be careful. Although his party is in favour of free trade in Europe, it is against the extension of the European dimension.
Mr. George Robertson: I do not want to take up the time of the House, but I must correct the hon. Gentleman. I did not say any of those things. I criticised the Government's lack of precision in measuring the effect that the changes in the internal market will have upon the British economy. A better internal market would create a more common market for Britain, but we must consider its effects upon industry and upon employment in Britain before we embark upon it.
Sir Anthony Kershaw: I regret that I did not understand that to be what the hon. Gentleman said. I am grateful to him for having given us another explanation.
We must choose only a few of the tasks in the White Paper with which the presidency will give us an opportunity to deal. The first that I want to mention is European political co-operation. Not since Roman times has Europe spoken with one voice, and more is the pity. If it were able to do so, its influence—
Mr. Eric Deakins: Charlemagne, Napoleon, Hitler.
Sir Anthony Kershaw: It depends on who is in charge. If the hon. Member for Walthamstow (Mr. Deakins) or I were in charge, that would be all right.
The influence that Europe could exert would surely be beneficent in the world, because Europe, considered as a whole, is a satisfied power. We have no claims on other continents or countries; none of the sorts of claims which so disturbed the world before 1939 and brought us nearly to ruin. Therefore, our political experience and weight applied together would be a beneficent influence for the peace of the world.
In trade, there can be no doubt whatever that unless Europe stands together we cannot possibly have any influence in the Western industrial and economic scene. As individual countries we are incapable of facing the might of Japan and the United States, so it is necessary for us to act together. Some problems obviously cannot be settled without Europe working together. The world debt problem is one. The problem of aid to developing countries can surely not even approach a solution, let alone have one, except by European co-operation.
In the White Paper mention is made of the European attitude towards South Africa. The weight which a
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combined opinion in Europe can bring to bear upon the South African Government could be a great deal more useful than the specific sanctions that are urged by some. The influence that Europe has already exerted has caused the South African Government to shift their ground to some extent, and the attitude which the Foreign Ministers of the Twelve took at Lusaka was considerably more helpful to the South African scene than that which was taken at the Commonwealth conference in Bermuda.
We shall have to wait to see whether the recent speech of President Botha is implemented. On the face of it, he said that a great deal would change, but those who are close to him say that his words should not be so interpreted. It is a fact, and I am glad that it appears in the White Paper, that the Ministers were agreed that, unless desegregation is the objective at which the South African Government are ultimately aiming, no cosmetics short of that will cure the situation. I hope that the Foreign Ministers and the Prime Ministers of Europe will be able to continue to make that view clearly known to the South Africans.
Another matter which was discussed last year and which is in the White Paper is terrorism, on which the Government have taken a lead in putting the issue before the Ministers. Clearly that is another sphere which cannot be tackled usefully without general co-operation. I ask the Government to consider one thing, which I am sure they have done, but nevertheless 1 hope that they will consider it again if they have rejected it or been unable to persuade our allies—that to break off diplomatic relations is a weapon to use against states which harbour or encourage terrorists. If diplomatic relations are broken the diplomatic bag does not travel to and fro, and we all know that grave infractions of the law about diplomatic bags have occurred. It would be useful if we could make that easy transit of weapons, and apparently of people sometimes, more difficult. The more difficult terrorists find it to get weapons, and the more difficult they find it to move, the more difficult they will find their terrible tasks.
The White Paper also mentions the problem of overseas aid, and I want to single out one particular case where European co-operation could effect useful changes. Ethiopia is the largest recipient of European aid, mostly food aid. The amount of food aid that is promised, and doubtless will be delivered, at least to the ports of Ethiopia during the coming season will be enough to feed the people who need it to the extent that is considered essential. Unfortunately, whether it will reach them is another question. However, no doubt a lot of it will, and so the arrangements that have so far been made to. feed the starving Ethiopians are satisfactory.
What goes on inside Ethiopia is not satisfactory at all. The resettlement programme is a scandal. No doubt it is necessary, because it is impossible, especially during the late season before the rains start, for people to live in the arid regions from which they are being moved, but it is the way in which that is being done that is so reprehensible. It is said that the camps to which the people are moved have more casualties than the camps or areas from which they came. That is an unsatisfactory state of affairs which could be remedied by example and by our assistance.
The leadership of the Ethiopian Government is at fault. Mr. Mengistu seems to be a most unsatisfactory person. He has done his best to reduce his country to misery, and he does not stop intervening in the affairs of those round him. He sustains a civil war in the Sudan. He was active

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in Aden when that civil war broke out, and he keeps his own civil war on the boil all the time. He has reduced his country to misery and seems to want to do it to his neighbours as well. We should get together with our allies. I know that Italy has a soft spot for, or a guilty conscience about, Ethiopia—I do not know which—but nevertheless something should be done to try to alter that Government's policies, and Europe working together could do so.
Mr. Colin Moynihan: Does my hon. Friend agree that the steps that have been taken by the international community in Ethiopia to encourage major reforms in the handling of the resettlement programme and the agreement by the Ethiopian Government to put an embargo on further resettlement as from 1 January this year are important moves and that we should monitor closely the success or otherwise of those proposals in assessing the effectiveness of the programme?
Sir Anthony Kershaw: I am grateful to my hon. Friend for that, because he has just come back from Ethiopia, having seen those camps. I am sure that what he says is wise and I hope that it is followed by the countries concerned and by ourselves.
Inside the EEC there is a long list of what at first sight may be thought comparative trivialities, although certainly the common agricultural policy cannot be classed as a triviality. I hope that it will be possible during our presidency to edge that policy along in the right direction. There are, however, one or two bad signs. For example, I notice that we are increasing the price of beet, which takes the place of cane sugar. Europe does not have to grow beet; it is unnecessary. I have a sneaking suspicion that most of the beet in northern Europe is grown only for the partridge shooting. If that were stopped, we would be able to take a great deal more cane sugar from countries which can export nothing else.
I notice also in the introduction to the White Paper that Portugal is being given an exemption to import 75,000 tonnes of cane sugar, but for only five years. What will happen after that? Will the Portuguese be condemned to buy French sugar or German sugar? It is absurd to increase the price of beet, which we do not want, at the expense of people who have nothing else to sell and are in dire straits.
I know that my hon. Friend the Minister of State, as a former Minister of State, Department of Transport, is very much aware of the ridiculous restrictions imposed at frontiers in the European Community. I am told—I may be a little out of date, but I am sure that my hon. Friend will correct me if I am—that it does not take a long time for a lorry to cross the German frontier. It takes about an hour of formality, but the driver must pay 45 deutschmarks—no one knows why.
Dr. Norman A. Godman: The Germans want it.
Sir Anthony Kershaw: Yes, but to what end?
The average lorry crossing the French frontier takes one and a half hours to go through the formalities and the driver has to pay a contribution towards the new computer which the French Customs has bought. I should have thought that the French could afford their own computer.
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I do not understand why each lorry should pay. Occasionally it becomes a tremendous business, with a French Customs officer deciding that goods inside a sealed container are liable to VAT. How does one open a sealed container without destroying it? This causes delays.
The other day one of my constituents took two large lorries to France. A trivial part of the form filling had not been done correctly—a signature or some such detail was omitted—and the driver was allowed, by mistake, to go through the checkpoint at Le Havre. He was pursued by the gendarmerie, arrested and brought back to Le Havre police station. The trucks remained at the side of the road and, in the end, £150,000 worth of machinery was dumped in a wood and he returned to Gloucestershire. That is absurd and should not be allowed.
Getting into Italy is virtually impossible if one is a truck driver. If, by chance, the driver does get in, he has to pay a thumping tax, which is levied, believe it or not, by the local province to pay for the paperwork.
We all know about sheepmeat. We are not entirely without fault in these matters. Of course, we have to certify that French milk coming into Britain is fit to drink. Unfortunately, we take such a long time making up our minds about sending someone to see what is happening that by the time he gets there the milk is indeed not fit to drink. We should, of course, look at our own actions.
Paragraph 6.6 of the White Paper seems to show that there are now or will be opportunities for British coastal shipping to enter continental ports hitherto banned. I am glad to note from paragraph 5.19 that the European Court is considering insurance law, especially in Germany. We expect the decision to be made by the summer. This is a blatant example of discrimination. It is a bit of a cheek for the Germans to buy our insurance companies, yet we cannot buy theirs.
Paragraph 5 is full of points which I hope will be cleared from the agenda during our presidency. Taken one by one they may not look important, but, taken together, they will make Europe a much more economic area. This will enable us to tackle the unemployment problem, to which the hon. Member for Hamilton referred, and the many other difficulties in Europe.
6.3 pm
Mr. J. Enoch Powell: In this rather desultory and at times, it appeared, desolate debate, there were signs early on that discussion might centre on the results of the Luxembourg conference and that peculiarly named—it is still peculiar after the Minister's attempted explanation—Single European Act.
We have been assured by the Foreign and Commonwealth Office in its explanation memorandum on the second of the documents before the House:
"In the United Kingdom any such amendments"
that is, such amendments as the proposed amendments to the treaty by means of the Single European Act—
"would be submitted to the house for approval."
It is important at this stage that the Government should make it clear what sort of legislative approval this will be. The Minister used different and contradictory adjectives in different parts of her speech. She referred to it first as a "formal opportunity" and then referred to it as a "full opportunity". The difference between the two is crucial.
In 1972 the House made a comprehensive renunciation of its powers—legislative and financial—and of British judicial authority and of the control of the House over

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policy. It did it on the then basis of the treaty to which we were acceding, but did it only after a most exhaustive examination of a Bill occupying some six months of a parliamentary Session. That Bill itself was limited because it presupposed the terms of the treaty and did not propound them to the House for examination. Nevertheless, the nature of the Bill was such — because of the comprehensive renunciation which it embodied — that during those debates the House was able to examine—or would have been able to examine but for the guillotine which the Liberal party enabled to be imposed—the major features and consequences of the treaty to which we were acceding.
That treaty is being profoundly altered by the proposed new treaty. Many of the aspects of that treaty which were taken for granted as the basis on which the House passed the legislation of 1972 are altered by the proposed Single European Act. It would be wrong if the House of Commons were to give its approval to the new treaty—that is what in effect it is—with a less comprehensive parliamentary procedure than that which was available to it in 1972.
I believe we should insist that the Government make clear in advance what kind of legislation they envisage, whether they are sincere in claiming that it is legislation that will give the House a "full opportunity" of addressing itself to the respects in which the treaty to which we acceded in 1972 is being altered by the Single European Act in matters which affect the House and Britain. I hope that, if we obtain nothing else either in, or as a result of, this debate, we shall bring home to the Government the necessity of being candid well in advance with the House about the nature of the legislative progress to which they will look before the new treaty can be ratified.
Every alteration proposed in the new treaty is an alteration which diminishes the powers of the House. The powers of the House were drastically diminished by the original treaty — that was why we had to have the renunciation embodied in the 1972 Act — but if we examine the changes which would be introduced by the Luxembourg conference, we shall find that in almost every case we confront a further erosion of the powers of the House, which means a further erosion of the opportunity for the British people to influence the policy and the laws under which they live.
Sir Russell Johnston: Does the right hon. Gentleman agree that if powers are eroded one's judgment of the consequences must rest on what the effect is? Does he agree that there is an argument for saying that as a consequence of our membership of the Community we have access to greater powers than if we were not in it?
Mr. Powell: That is the old trick of substituting one meaning of the word "we" for another meaning in successive sentences. I do not dispute that there are those, including the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston)—the hon. Gentleman has made no secret of this—who believe that we would take better decisions and be better off in this country if we in the House had less control and discretion over legislation and Government policies. That is a point of view which can be argued. It is not a point of view that I share, which is why I would like to draw the attention of the House to two specific areas in which the proposed treaty changes will limit in effect the legislative power and authority of the House.
Mr. Hugh Dykes: I am grateful to the right hon. Gentleman for giving way on a second occasion.
The right hon. Gentleman always uses the phrase the powers of this House." Would it not be more accurate and more helpful to the nation to describe them as the powers of the Executive within the House? Is this not, in all international comparisons, a parliamentary system in which Parliament is at its weakest in many respects, in comparison with the overriding powers of the Executive, which, in our system, is based on a simple majority system on a minority vote?
Mr. Powell: I am old-fashioned enough to think that one of the functions of this House is to criticise the manner in which the Executive exercises its powers and, by criticising, effectively to limit and control those powers. If the House does not do that, it is not exercising one at any rate of the functions for which it exists.
Another function of the House, which the hon. Member for Harrow, East (Mr. Dykes) may have had in mind, is to entrust the Executive with powers: part of the activity of hon. Members consists in defining the powers which we will concede for use by the Executive. Indeed, in the greatest periods of the power of this House—when it had real power—it was used by the Executive as an arm for creating law which the Executive would be able to use.
In both the respects to which I want to draw the attention of the House, the treaty which is by implication before us will limit the influence, the authority and the opportunities of the House.
The first is the legislative respect. Even with the assistance of the Select Committee on European Legislation chaired by the hon. Member for Newham, South (Mr. Spearing), whose presence we are glad to welcome at a late stage—not as a result of his fault, but because of an unhappy rearrangement of business—it is not easy to be certain as to the consequences of the change in the legislative process which the new treaty will embody. If I have understood it correctly—and there are those who will correct me if I have not—I believe that when the European Parliament—as we are to authorise it in future to be called — proposes amendments and those amendments are adopted by the Commission in a revised proposal submitted to the Council of Ministers, the proposal so submitted ceases to be a proposal requiring unanimity and becomes a proposal that can be dealt with by qualified majority.
Mr. Dykes indicated assent.
Mr. Powell: I am obliged to have the assurances of the hon. Member for Harrow, East, a careful student of these matters. I seem at any rate to have got it right so far.
Mr. Marlow rose—
Mr. Powell: I would like to continue without assistance from Northampton at this stage.
If that is so, the opportunity of this House through the Government as represented in the Council to influence and affect legislation is automatically diminished. That must be so as a consequence of the substitution of a qualified majority for unanimity as a result of the adoption by the Commission of amendments initiated by the European Parliament.
That is one of the consequences which were portended when we decided—mistakenly in my view and in the view of a considerable proportion of the House at the time

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—to agree to a directly elected European Assembly. One could not in the end deny to that Assembly control over both finance and legislation. Of course a rearguard action is being fought, and the so-called co-operation mechanism embodied in the Luxembourg agreement is part of that rearguard action. However, the rearguard action has been lost to the extent that the European Parliament has gained an effective input into Community legislation which automatically reduces the extent to which the House through its scrutiny and other procedures can influence Community legislation.
Mr. Marlow: The right hon. Gentleman will agree with me that he heard the Minister of State say that even in circumstances where unanimity is no longer required Her Majesty's Government will still have a veto in the Council of Ministers.
Mr. Powell: It is true that the Luxembourg compromise is, if I understand it correctly, comprehensive in its application. Nevertheless—and this is relevant to the amendment which has been proposed and which the Government have said they will accept—the powers of scrutiny, of influence and of intervention by this House are necessarily diminished by the procedure which will be followed wherever the Commission accepts amendments put forward by the Parliament. A kind of co-operation is established between the Parliament and the Commission which to that extent aborts the input from this House. Therefore, in legislation, as in other matters, the new treaty will curtail the control of the House.
Mr. Dykes: Is the right hon. Gentleman not really indulging in monumental fantasies in his continuing reiteration of absurd theoretical arguments that have no relevance or reality to modern-day constitutional parliamentary practice? The right hon. Gentleman objects to the real majority, which has to come from a qualified majority system which is developing in the Community, but he accepts a minority—majority system which appears to obtain here. What does the right hon. Gentleman mean when he refers to the House making policy and inputs into the Government? The Executive decides policy, whichever Government are elected. The Executive then bestows that on the House and the Whipping system ensures that it gets through.
Mr. Powell: That is an interesting insight into the mind of one of the most vigorous supporters of the European Economic Community. The hon. Gentleman thinks that the Executive "bestows" on the House the fruits of the exercise of its authority. I believe that the processes of debate, backed by the processes of voting in the House, do influence the information and behaviour of Governments. We do not have to exercise our memories very severely in March 1986 to recall recent examples where the House has, by its reaction and criticism of Government behaviour, brought about alterations in the way in which the Executive behaves. No doubt the hon. Member for Harrow, East regrets that—the hon. Gentleman, after all, wants our Executive to be absorbed into a larger Executive which would be beyond even what he calls the nominal control of this House. However, I will not weary the House further by demonstrating, as I am
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afraid he enables me progressively to do, how much I dislike and reject his view of the House of Commons and its function.
Another area in which authority—I shall continue to use that notion in the face of the hon. Member for Harrow, East—is effectively withdrawn from this House is that termed political co-operation. One can easily be mistaken about this because if one looks at the terminology it appears to be concerned with a desire for unanimity through consultation. For example, one of the subsections of a proposed clause says:
"In order to ensure the swift adoption of common positions and the implementation of joint action, the High Contracting Parties shall, as far as possible, refrain from impeding the formation of a consensus and the joint action which this could produce."
Of course, under that terminology one is still allowed to dissent; but by an international instrument we shall have bound ourselves as a nation to make every possible endeavour to arrive at common positions and to arrive at them by "swift adoption."
"Common positions" and "swift adoption" are significant terms. In the past 10 years we have had much experience of the operation of political co-operation. It means that the Foreign Secretary has joined his colleagues from the other member states of the European Community and produced a European policy which is promulgated as such and as subsuming the assent of all the member states. Precisely through this process of political co-operation, the Foreign Secretary's and the Government's relationship with the House is profoundly altered in reality. The Foreign Secretary comes to the House after the event and says, "As in duty bound to attempt, I have concurred with my colleagues in the rest of the Community to achieve a European consensus and here is the European policy that we have produced." It is far more difficult for Members of this House to criticise a foreign policy decision when it can be presented as part of a collective European decision.
Sir Anthony Kershaw: A short time ago the Danish Parliament did exactly that which the right hon. Gentleman says is impossible here.
Mr. Powell: The Danes have a different arrangement, which I do not necessarily commend, in relation to European legislation and policy. In any case, they recently found themselves overruled by a popular vote into compliance with the very procedures that I am criticising.
The mere fact that the process is consultative and voluntary rather than binding in form does not deprive it of the power to diminish the input of this Assembly and of public opinion in this country into the formation of our foreign policy. The foreign policy of the United Kingdom, adopted by the United Kingdom as such, has to rest, and be seen to rest, upon the consent of the House of Commons —if necessary emerging out of debate. When it is part of a European foreign policy under the political cooperation arrangements to which we are binding ourselves by treaty, it is possible for a Government effectively to escape from all those pressures and from the necessity to stand upon the common will of this House as representing the electorate of this country.
I therefore stress the necessity not to be distracted by the apparently voluntary and optional form of the wording. To bind oneself by international agreement to arrive if possible at a consensus with 11 or 12 other states is a major

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derogation from the responsibility of the Executive to this House. In this context, it is right to draw attention to a fact to which the Select Committee referred in the context of the effect of this enlargement of the community on the relative position of the United Kingdom within the Community. On page 10 of its first special report the Select Committee made three points:

"(i) the position of the Big Four (France, Germany, Italy and the United Kingdom) has been reduced;

(ii) two members of the Big Four do not have, by themselves, a blocking power;

(iii) the new Mediterranean block (Greece, Italy, Portugal and Spain) can exercise a major influence."

In the past 12 months there has been a real shift of power inside the institutions of the European Economic Community. When deciding, as I hope that we shall be able to decide in due course in due legislative form, whether the House accepts the new treaty for a Single European Act, we must bear in mind the real invasion that it represents into the existing relationship between Parliament, the Executive and the institutions of the European Economic Community. I hope, at any rate, that this debate will not conclude until we have secured from the Government a specific undertaking that the legislative process will enable these matters to be separately explored, separately debated and separately decided.
6.25 pm
Mr. Michael Knowles: I was heartened—as, I suspect, were others although I doubt whether they included the right hon. Member for South Down (Mr. Powell)—to read the comment of my right hon. and learned Friend the Foreign Secretary that the Community is not just a forum in which to defend national interests but a forge in which to fashion the means of achieving common objectives. Those of us who support the Community will endorse that. Our only question is why we were not there 20 years ago saying exactly that and fashioning the means to carry out that policy.
I wish to address much the same problems as the right hon. Member for South Down addressed, although my views differ somewhat from his. The White Paper on developments in the European Community, like others before it, suggests that we are groping towards agreement but that there is no positive means of getting action. One can see both opportunities and dangers ahead for parliamentary scrutiny, particularly with the Single European Act. One of our problems as a national Parliament was created quite deliberately in a way that marks us out from, I believe, all other members of the Community, in that we have no institutional link between this House and the European Parliament. Whenever such a link is suggested, it is opposed in all parts of the House. Labour Members are always very much against it, but I suspect that many Conservatives who take the same view are content to hide behind the opposition put up by the Labour party.
There is no institutional link but we kid ourselves if we suppose that the process that we use in this House gives us any real influence. I am honoured to be a member of the Select Committee on European Legislation. The Chairman, too, is present in the Chamber. In fact, however, because we cannot consider anything until we actually receive a piece of paper, by the time we discuss an issue and it is debated in the House things have gone so far down the road that we cannot influence them. If we wish to influence matters in the European Community, we
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must get in at an earlier stage, as a House and as a democratic institution. The bureaucratic link between the Commission and Whitehall is well built in, with constant contacts and plane flights, but if any Member of this House wishes to ring a Member of the European Parliament he has to pay for the call himself.
This House is effectively chopped off from the European Parliament, and that is no accident. The Select Committee therefore cannot act effectively. Indeed, it is designed not to act effectively. Yet any suggestion that its mandate should be widened is constantly resisted by the Executive because that would shrink the power of the Executive. That is the normal interplay of forces. We have a powerful bureaucratic link, but a democratic deficit between this Parliament and the European Parliament. We have been so jealous of our rights and prerogatives that democratic control of any kind over these decisions is being lost. This is a problem to which we must address ourselves—we need to be informed much earlier. The House of Lords is of more use to Parliament than are its Select Committees.
On 27 January, the House of Lords had an interesting debate on its report on the external competence of the European Communities. The debate contained serious implications which the House has not picked up. The fact that the Community can sign an external treaty means that, within the Community, the process, in terms of law, operates backwards. It overrides laws passed by this House or any other national legislature. The attention of the House was not drawn to that. There is no way in which this House can pick that fact up from the Select Committee procedure, and indeed it is not designed to pick it up. In this case the House of Lords is doing the job that we should be doing.
There is no point in our being jealous and moaning continuously about the European Parliament if we will not do the democratic job. It is my view that someone must do the job. If we fudge the job, then let the European Parliament do it. However, think we could and should do the job.
Mr. Nigel Spearing: I think there is a slight misunderstanding. Although I agree that the reports from another place are often informative, surely there is nothing to prevent the appropriate Committee— the Select Committee or departmental Committee—in the House from fulfilling that parallel objective on merit if it so wishes. For instance, the hon. Member for Stroud (Sir A. Kershaw) and his Committee could if they wished look at the merits of the Single European Act that we are discussing. Any hon. Member may take part in the debates of the Select Committee on European Legislation and Standing Committees considering European documents.
Mr. Knowles: We know that that does not happen. That is the theory, not the practice.
I believe we need a better system. Some people have suggested a Grand Committee system. I am not enough of a parliamentary expert to know whether that is the answer, but the present system does not work and certainly a job which needs to be done is not being done. We must find a way of doing it. If this is not done, the House will lose power not to the European Parliament but to the Executive —somewhere between Whitehall and the Commission. That is the reality and that is what I oppose.
We shall soon assume the Presidency and I suspect that it will pose certain problems for Ministers. With the

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collapse of the dollar, there will be a great pressure on the CAP, to which an enormous part of the budget is still devoted. I suspect—I hope that I have to eat my words —that before the end of the year requests will be put before us for more money. It will be in some disguise, but it will be a request for money. The VAT increase of 1·4 per cent. will not take the strain.
We must address ourselves to the central problems and avoid fudging the issue. Is there a proper system of control? How is the Council of Ministers supposed to operate? The Council is sometimes treated as an intergovernmental conference or just as a sounding board for national disputes. At other times it is seen as the engine of the Community, which will push things along. It is sometimes viewed as a legislative body, but if it is I think it is the only one in the democratic world that meets in secret the whole time.
As we are debating the Single European Act, this is the right time to consider how the system operates. We are a member of the Community and we should stay a member and make it work effectively. That means that there must be great changes. There must be changes to the Council, to the Commission, and to the European Parliament. This House has to examine how it is carrying out its mandate of democratic control in this area. I do not believe that we are fulfilling that function.
6.34 pm
Mr. Eric Deakins: The importance of a parliamentary debate must not be measured by attendance at the debate. There have been many occasions in parliamentary history when there has been a low attendance at debates on matters of great importance.
I agree with a number of the comments made by the hon. Member for Nottingham, East (Mr. Knowles). Although we disagree fundamentally about progress in the EEC and Britain's role in it, I agree about the legislative role of the House. I applaud his work and the work of my hon. Friend the Member for Newham, South (Mr. Spearing) in the Select Committee on European Legislation.
This is an all-embracing debate. My hon. Friend the Member for Hamilton (Mr. Robertson) mentioned unemployment, social policy, and so on. The hon. Member for Stroud (Sir A. Kershaw) raised a number of issues which are mentioned in the six-monthly report. There is a danger that we shall ramble on from one subject to another without a coherent theme. I think that the theme pursued by the hon. Member for Nottingham, East is important, and I shall return to it later. However, I wish to concentrate on three areas where things are going wrong and which carry serious future implications for the House and the country. Those issues are mentioned in the six-monthly report. The first issue is the common agricultural policy, the second is the Single European Act and the third is the continuing dispute over finance between the Assembly and the Council.
With regard to the CAP, I draw the attention of the House to paragraph 1.10 of the six-monthly report. That paragraph relates to what was said by the Minister of Agriculture, Fisheries and Food in a written answer last year but which was never followed up. Last year, the House will recall that in the price fixing for agricultural commodities, in particular cereals, the Germans used the
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veto in the Council of Ministers to prevent cereal prices to farmers being reduced. That veto stood. However, the Commission, in its wisdom, subsequently managing the market in the absence of the Council's agreement, reduced cereal prices to the level to which they would have been reduced had the veto not been applied. That is mentioned in paragraphs 1.10 and 4.1 of the report.
Thus, the Commission has allocated to itself powers which are only for the Council. The Commission has no authority to change agricultural prices once they have been agreed by the Council. In the absence of the Council's agreement to change the previous year's agricultural prices for a particular commodity, the previous year's prices apply. Therefore, the cereal prices should not have been reduced. I believe they should have been reduced, but that is a separate issue. It is a matter of principle as to which body has the power to reduce the prices. I am surprised that hon. Members have not pursued the Minister and the Government on this issue. We have agreed, in default, to give extra powers to the Commission which are not laid down in the treaty of Rome, nor are they to be laid down in the Single European Act or in any other legislative provision.
It is a fact, within the memories of all hon. Members, that in the past year the argument for increasing the VAT contribution to 1·4 per cent. and subsequently 1·6 per cent. rested on an assurance and undertaking by the Government that that was all very well, but as a quid pro quo there would be strict control over Community expenditure on the CAP by the budget mechanism of financial guidelines. That has gone ahead and everyone has accepted it. Some of us had doubts about the validity of the financial guidelines, but at least we were prepared to give them a chance. The Minister may not read every written answer in Hansard, but I do every weekend, and it is amazing what one learns. I have to inform the House that the Minister of Agriculture, Fisheries and Food, in a written answer on 26 February, when talking about the agricultural price proposals put forward for the current year by the European Commission and the Council, said:
"I commended the Commission's determination to place the main emphasis on action through price, but I expressed concern about the proposal to exceed the financial guideline for agricultural expenditure. I made clear my very strong objections in particular to those aspects of the proposals."—[Official Report, 26 February 1986; Vol. 92, c. 549.]
I shall not bore the House with those proposals, but I draw attention to the significance of the financial guideline. The Minister of Agriculture, Fisheries and Food is now telling the House that, although he disagrees with it, the Commission, which was supposed to have agreed to be the guardian of the financial guidelines, has now put forward price proposals for agricultural products for the current year which "exceed"—his own word—the financial guideline. If that is not a devastating admission on the part of the Government, I do not know what is. It should give us all cause for concern, whatever our views on the EEC.
The Minister "expressed concern" about the financial guideline being exceeded, but he used stronger language when talking about the possibility of income support for some small farmers—he strongly objected. Why did the Minister not object to the major issue of exceeding the financial guideline? He could have objected to other things —one has no objection to that—but he, or his civil servants, must have chosen the words of his answer very carefully. I hope that the answer does not mean that the

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Government are now backtracking on their commitment to ensure that the Council of Ministers observes the financial guideline.
Paragraph 3.10 of the White Paper refers to the intergovernmental agreement which gave the Community extra money by way of non-repayable advances, which are outside the scope of the treaties. Those advances are not included in the treaty mechanism procedure; they are agreed by a special Council meeting.
I am sure that my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) will stress in his winding-up speech that more intergovernmental agreements will come this year. I challenge the Minister to deny that. My concern is not merely that more money will be allocated to the Community than was put forward in the budget discussion, but that it will weaken our case before the European Court later this year in the dispute between the Assembly and the Council. The prospect of further intergovernmental agreements to raise extra money to meet commitments and appropriations under the EEC budget will undermine our case.
If the Minister feels that there is some doubt about that, I refer her to the legal submission on behalf of the United Kingdom Government to the European Court, which was put in the Library at the end of January. It is an entirely legal submission. Paragraph 21 and following paragraphs give the view of the Assembly and say why it disagrees with the Council. One of the Assembly's arguments against the Council's budget and in favour of its own illegal budget is that the draft budget as adopted by the Council does not make adequate provision for existing commitments.
The Assembly's case for an illegal budget is likely to be supported by the Government having to come to the House later this year for extra money in 1986. I beg the Minister to take that point on board. I am glad to see the Minister of State, Treasury present as this matter is important for our future relations with the Community and for relations between the Assembly and the Council, which have a spin-off for the House.
The Single European Act represents a defeat for the Government. That is admitted in the White Paper, paragraph 2.7 of which says:
"[On the second and third points the European council decided by unprecedented majority vote to convene an intergovernmental conference to draw up a treaty]".
We know from what the Prime Minister has said that she did not want any treaty amendments or a Single European Act, and we must assume that she was speaking for the Government as a whole. The Act was therefore a defeat for the Government. Since June, the Government have been involved in a part public relations and part damage limitation exercise. Once the intergovernmental conference was convened, the federalists in Italy, Holland and elsewhere, the Commission and the Assembly tried to get real amendments to the basic treaties which moved in a federalist direction. The Select Committee has done the House a service by drawing attention to the fact that, although we have limited the damage, as the right hon. Member for South Down (Mr. Powell) said, there have been incursions into the sovereignty of the House as a result of that relatively modest—so its supporters would claim—Single European Act.
The conflict between the Assembly and the House about the Assembly's legislative powers is merely postponed, but the Assembly has been encouraged by the
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Single European Act. The Assembly, thinking itself even more democratic than national Parliaments, will, given an inch, try to take much more. In due course, there will be further incursions into national sovereignty. The Assembly is being backed by the Commission. One of the safeguards mentioned in the final Act is removed by the fact that the Commission may accept amendments to a Council legislative proposal pushed through by the Assembly.
Of course, the Commission wants the Assembly to have more power and national Parliaments to have less, so it will always accept the Assembly's amendments. That will pose the dilemma, which the right hon. Member for South Down mentioned, about the powers of the House and those of the Council when it comes to rejecting, by qualified majority, the amended proposals put forward by the Assembly and the Commission. This is an additional power to the Assembly, courtesy of the Commission and of the Council having to work by qualified majority.
The major battle between the Assembly and this Parliament is still to be fought. These are preliminary skirmishes, but they are significant. If we do not stop the rot now, when considering the Single European Act, we shall have more incursions.
That brings me to the budget dispute, which has not received much publicity in the House or outside. assure the House that, as far as I can see, it is of the utmost significance in terms of relations between Community institutions and the House of Commons and the Government. The pretensions of the Assembly for financial control may not be all that well known. If not, I recommend hon. Members to read a publication of the European Assembly entitled "Effective Parliamentary Control of European Finances," which is basically a foreword from the President and an introduction by the Chairman of the Committee on Budgetary Control. There are many suggestions in it. From the foreword of this year's report—which may be an annual report, I do not know—the President, Pierre Pflimlin, says:
"The need for democratic control of Community revenue and expenditure underlies the increase in the European Parliament's budgetary powers brought about by the revisions of the Treaties of Paris and Rome in 1970 and 1975."
Therefore, it is quite clear that the Assembly is using this dispute over the 1986 budget as a test case for its powers. That is why we in this House must take it very seriously.
Sir Russell Johnston: Does the hon. Gentleman find it interesting that this view is expressed by the President of the Parliament, not as a party politician but as someone speaking for the whole Parliament? That is something we seldom get in the same way in this House.
Mr. Deakins: I accept that the President was purporting to speak, and may well have been speaking for all I know, on behalf of 100 per cent. of the members of the European Assembly. That does not surprise me in the least, as, with the possible exception of a few British Labour members—I am not making a party political point—the vast majority of members of the European Assembly are federalist at heart. They want to see the European Assembly in complete control of the legislative procedures in the Community and of the budgetary procedures and so on. It is their right to demand that and it is our right to resist—certainly those of us who have the interests of the House at heart.

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I have quoted the President, but I now wish to point out two features of the 1986 budget dispute which have perhaps gone relatively unnoticed. The first is on expenditure. Fortunately, that is mentioned in the legal submission against the illegal budget made by this country to the European Court. On expenditure, the Assembly is now ignoring the maximum rate of increase on non-obligatory expenditure and, for the first time, it is also trying to increase obligatory expenditure. I ask hon. Members to think seriously about the implications of the second point, if it is upheld by the European Court. It will give the European Assembly the right to increase expenditure on the common agricultural policy. In the past year the Assembly has passed at least one resolution saying that not enough money was being spent on the common agricultural policy.
That is bad enough, but worse is to come. There is an issue that has gone unnoticed in the legal submission, and I should be grateful if the Minister would give us some assurance that it will at least be looked at. I cannot expect her to answer it in the space of a few hours because it may need to be looked at by legal experts. The Assembly has put forward a balanced budget for 1986. The budget which it had rejected by the Council, the November budget, was also a balanced budget. As the Assembly had increased expenditure in its illegal budget, I was at a loss to know what happened on the income side. Therefore, I tabled a question to the Chancellor of the Exchequer. The reply came from the Minister of State, Treasury, who is present. I will not bore the House by reading the details, but he was referring to the Assembly's budget. He said:
"Within the 1·4 per cent. VAT ceiling, the amount of VAT own resources at the uniform rate was increased in the adopted budget".—[Official Report, 27 February 1986; Vol. 92, c. 691.]
For the first time, the Assembly has sought to arrogate to itself the power to increase taxation. That has not happened before. I know that we are opposed to the illegal budget, and if it is thrown out by the European Court, as we hope, the issue will not arise. However, I want to put down a marker, and I think that the House would also want to do so, because until now the Assembly has been trying to increase expenditure but has done nothing about taxation. In the illegal budget — as we claim in the House — it has tried to increase, and has increased, expenditure. That expenditure will be financed by a revenue increase which will not have been approved by the Council of Ministers. I need hardly say what the implications of that will be if the illegal budget is upheld by the European Court towards the end of this year.
Mr. Spearing: I have been following what my hon. Friend says with great interest, particularly in relation to the question he asked the Chancellor of the Exchequer because it had escaped my attention. Is he saying that, irrespective of the court's judgment on the legality or otherwise of the Assembly's budget, the Assembly's motion will increase revenue? Surely in terms of the treaty of Rome, that was not within its competence. Had there been a Table Office, such a motion would have been ruled ultra vires.
Mr. Deakins: I hope that my hon. Friend will forgive me. I agree with his point and will come back to it.
On the national legal action which is now being taken by the Government against the Assembly—the Council
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of Ministers is also taking action and the two actions are running in parallel—one has to accept that there is no machinery in the treaty of Rome to curb the actions or the pretensions of the Assembly. That is the fault of the founders of the treaty of Rome. I think that there is such machinery in article 37 of the European Coal and Steel Community treaty, which is now merged with the other two basic treaties into a single uniform treaty for the Community. The Assembly is trying something on. I am not convinced that the court will not try to help it along that particular path.
The Assembly is claiming increased budgetary powers, but in the treaty of Rome there does not seem to be any direct provision for the Court of Justice to get at the Assembly for exceeding powers which are granted to it in the treaty of Rome. I believe that that was a mistake by the EEC states in 1957 and that mistake has been repeated in the latest treaty amendments in the Single European Act. There is nothing in the Act which would give the Council a proper power to take the Assembly to the European Court for abusing or trying to exceed the new powers which have been given to it in the Single European Act.
I read with great interest the United Kingdom submission to the court. I think that it put a strong case. It is obviously cogent and well argued. However, I have two questions, if not for the Minister who will reply, to be taken on board by the appropriate Ministers. I have had correspondence with the Prime Minister about these issues. First, why are we not taking action, in addition to article 173 of the treaty of Rome—it does not directly mention the Assembly but there is at least a legal argument for saying that by analogy the Assembly is caught by that provision—under article 177, paragraphs (a) and (b)?
It might help the House if I quote briefly from article 177:
"The Court of Justice shall have jurisdiction to give preliminary rulings concerning:

(a) the interpretation of this Treaty;

(b) the validity and interpretation of Acts of the institutions of the Community".

Surely, an illegal budget by the Assembly is, at least in part, a matter of interpretation of the treaty. I am astonished that the Law Officers, the Government in their wisdom, and the legal advisers of the Foreign Office have not thought fit to ensure that our case runs on two lines, one under article 173 and the other under article 177. It is still not too late to put in a separate submission and I hope that the Government will consider that.
Why have we not put anything in the legal submission on the Assembly claim, which I mentioned earlier, to have tax-gathering powers — powers over increasing the revenue of the Communities by increasing the VAT contributions within the 1·4 per cent. ceiling? The Assembly has no such powers under any of the basic treaties, so where does it get the power from? As it does not have the power, it should be possible to undermine its position by an appropriate reference to the court.
I am not a legal expert, but in my view, if the Assembly had wanted to increase expenditure and there had been a disagreement, the illegal budget should have been returned to the Council, and if the Council agreed with the extra expenditure that the Assembly wanted, it would have had the right to say, "We shall increase the revenue to make sure that we have a balanced budget, which we have to do." That has not happened. The Council is at fault. I have

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not seen its submission to the court yet, but I hope that it will also be made available to hon. Members. We might be able to offer some useful suggestions through our own Government as to the line that the Council might take, because, on the issue of authorising extra taxation, there cannot be any two ways about it. Either the Assembly or the Council will have that power. It cannot be shared between two institutions of the Community, both of which have democratic pretensions. I know which one most hon. Members will support—the Council.
We must shoot down the Assembly's case on that point by the end of the year. I am emphasising this point so much because I am not yet convinced that we have taken it on board in our legal submission. I do not expect a reply now on such an important matter, but I hope that the Minister will take it away and come back to the House with an answer in due course.
7.1 pm
Sir Anthony Meyer: I shall return to budgetary discipline, which was so exhaustively dealt with by the hon. Member for Walthamstow (Mr. Deakins). It well illustrates the difficulty that the Government will find themselves in through rash boasts of their ability to contain increases in budgetary expenditure.
Like every speech that the right hon. Member for South Down (Mr. Powell) makes in debates on these matters, his speech today was brilliant and lucid. It was, at every stage, introvertible. At the end he had succeeded in creating an impossible object, which one sometimes sees in ingenious drawings. It was an impossible object of great terror to him and to those who feel like him. an impossible object that I and those who feel like me may marvel at; it was an impossible object none the less. It was the impossible object of a Community that was so organised that it could control its own destiny, sweep aside the will of the House and vote itself the money that it wanted to create the things that it wanted. Alas, it does not exist. I am sure that the right hon. Gentleman, in his heart of hearts, knows that it does not exist and rejoices thereat.
On these occasions, I usually find myself defending the Government against hon. Members on both sides of the House who want to stop the world and get off and who never lack for plausible reasons why we should all do so. I should be particularly glad to be able to do so today, with my hon. Friend the Minister of State at the Dispatch Box, because I know that she, like her predecessor, my right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Rifkind) who was sitting in the Chamber a few moments ago, is more aware than almost any other Minister of the vital need for this country to exploit to the full the opportunities that membership of the Community offers.
However, it is not always too easy to defend a Government who, apart from four or five Ministers, are so half-hearted, so full of qualifications, reservations and withdrawals in their own defence, and who are so reluctant to proclaim the advantages that may arise for our country through a policy of full-hearted participation in a European Community that really works. The Government are far too ready to make concessions to their adversaries in that matter. So determined are they to avoid any charge of weakening in their defence of the right of national veto that they have, as the report on the activities of the six months in 1985 makes plain, contributed towards a further enfeeblement of the decision-making powers of the
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Community which, now that it has grown to a Community of 12, urgently needs to strengthen its decision-making capacity if it is not to relapse into total paralysis.
So keen are the Government to parade their zeal for budget-cutting that they are raising a series of hopes of being able to contain increases in the European Community budget. The fall in the value of the dollar and the consequent huge gap, which is becoming wider, between Community food prices and food prices in the rest of the world will impose a colossal strain on the budget of the Community, and it will be increasingly difficult to contain the increases within the ceiling that has been set.
Of course, the merchants of gloom are right. They are nearly always right. It will not be possible to reform the common agricultural policy because those same merchants of gloom refuse to consent to the improvements in decision taking which alone would enable the reforms to be made. Budgetary discipline will break down precisely because the unreformable common agriculture policy will run out of control.
However, I do not want to speak on that matter. I want to talk about developments in industrial policy in Europe in the period under review. There were no developments in industrial policy in the period under review. Here at home there were two tremendous industrial issues. At any rate, they were tremendous in the political sense. Those two issues were Westland and British Leyland. If there is to be such a thing as European industrial policy—that is to say, at its very lowest, a conscious attempt by European Governments to ensure the survival of some part of their manufacturing industry and the jobs that go with it by encouraging closer co-operation among European firms to enable them to withstand United States and far east competition—surely there should have been a credible European alternative to an American takeover of Westland and British Leyland.
Even so, the American solution might very well have been the more attractive choice for workers, shareholders and even the nation. However, despite the efforts of my right hon. Friend the Member for Henley (Mr. Heseltine), there was no credible European alternative for Westland. The total lack of interest by Her Majesty's Government and the short-sighted greed of the European helicopter manufacturers saw to that.
As for British Leyland, successive Governments of both parties who for years propped it up with large subsidies have systematically neglected to use that leverage to push it into a European partnership of near-equals and have contented themselves with allowing British Leyland to become a broken-winded Trojan horse to smuggle Japanese cars into the Common Market.
I do not go all the way with those of my hon. Friends who say that Land Rover must remain British at all costs, still less the rest of BL. However, if Land Rover is to be used as a sweetener to get General Motors to swallow the other more gristly bits of BL, why on earth was no attempt made to put together a similar dowry to tempt a European bridegroom? Once again, the American solution may well turn out to be the best for all concerned in the end, but why was there no choice? Thus, the last British helicopter facility, and the last British motor manufacturer, are passing out of British hands and straight into American hands, with no attempt by the British Government, or, for that matter, the other Governments in the Community, to

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devise a short or long-term policy to strengthen European helicopter capacity or consolidate European car manufacturing industry.
If what has happened in helicopters and motor cars has not happened in civil aircraft, it is precious little thanks to British Governments of either party, and no thanks whatever to British Airways. It is due solely to the foresight of Hawker Siddeley, which put its money into European Airbus, a family of aircraft that has been a big success, despite the British Government. Now, here too, continued British participation in further development is at risk because the Treasury is holding back on the launch aid that is necessary to keep British Aerospace in the later stages of the project.
There has been a series of sins of omission, each one excusable and possibly justifiable on its own but adding up to a culpable failure to have any coherent strategy to defend British industry and jobs. Such a strategy must have as its main element—I do not say its sole element because often there will be partnership legitimately with Japanese or American firms—the use of the vast economic potential of the European market.
The Government have two answers to the charges of negligence. The first is that each case should be judged on its merits. I am not saying that each industry needs to find a European solution to its problems. Nor can it make sense to ignore altogether the fact that we are a member of the European Community and that the mechanism of cooperation and the habit of working together on projects are already there, waning though they may be for lack of Government interest. To say that each case must be judged on its merits is another way of saying that we have no policy.
The other answer is to say that things must be left to the play of the free market, the judgment of the stock exchange and so on. That was the answer given in the Westland case. It is manifest piffle. What possible free market can there be in the technologically advanced industries which are defence-related when national Governments are the only purchasers?
Fortunately, the Government do not believe their own nonsense; they use their purchasing power to exert a British preference, very understandably, in arms purchases. All Governments in the European Community are in the same business of using their purchasing power to favour their own industry. In 1982, the last year for which figures are available, the United Kingdom spent no less than 98·3 per cent. of Government cash on equipment made within our own borders. The 1·7 per cent. left over is not much with which to encourage any joint European venture but it is at least better than the 0·3 per cent. left over by the Germans, the 0·09 per cent. left over by the French, or the nil per cent. left over by the Italians, every penny of whose procurement expenditure went on goods made within the Italian frontier.
All the political pressures in this Parliament, as in every other European national Parliament, will be exerted in support by a "buy national" policy. There are no votes in European co-operation; it just happens to be necessary for industrial survival. Not only do Governments vitiate, by blatantly protectionist policies in public procurement, the free markets to which they claim to be attached, but their attitude towards the completion of a single market in Europe, which in itself or by itself could do a lot to sustain
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a competitive European industrial base, is all too reminiscent of Arthur Clough's version of the sixth commandment:
"Thou shalt not kill; but need'st not strive Officiously to keep alive."
We British complain about German, French and Italian frontier delays, with good reason, but we all know how effectively Her Majesty's Customs manages to hold things up at our sea ports and with what derision it treats the notion of a green customs channel. It looks as if it will shortly be transferring its energies to ensuring that after the Channel tunnel is built it will take longer to get from London to Paris by train than it does at present by ferry.
I hope that the Liberal party will not offer itself as the champion of effective European industrial policy. The only Liberal voices that we heard during the whole Westland affair were those of the two hon. Members who had a direct constituency interest in a quick sell-out to the Americans. I am still waiting to hear proposals from the Liberal party for a thought-out European solution for the future of British Leyland. We know that, with the sole exception of the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston), who is an invariable attender at and participant in debates—he is the European policy of the Liberal party—the party is now giving all its attention to more electorally fashionable topics.
As for the Labour party, it is still officially committed to taking Britain out of the European Community.
Mr. Foulkes: No, we are not.
Sir Anthony Meyer: We are not sure about that. Although there may be legitimate doubts as to whether the Labour party means to take us out of the European Community, and whether it means that more than any of the other things it says, there is no doubt that the Labour party is still the same narrow, insular, suspicious party that it always has been. The hon. Member for Hamilton (Mr. Robertson) made a fair fist of something that sounded like a European speech. That was because none of his minders was present apart from the hon. Member for Walthamstow, but he is so amiable that I do not think he would strike fear into anyone's heart.
Only a Conservative Government can give the urgently needed new impulse to the evolution of an industrial policy which will enable Europe to remain an industrial society well into the next century.
Mr. Foulkes: The hon. Gentleman has said that only a Conservative Government can give such impetus. It is on public record that he wants a change in the leadership of the Government. Since we know that the Prime Minister is not the most enthusiastic European, is that one of the reasons why he wants a change in leadership? Does he want to make sure that the initiative he is talking about takes place?
Sir Anthony Meyer: I want to make sure that the policies of my right hon. Friend are successfully defended at the next general election. My right hon. Friend may be the person best qualified to defend her own great European achievements. As to my right hon. Friend's commitment to the European idea, I do not see how any impartial observer could question the depth of her attachment to the concept.
In the effort to ensure that Europe will remain an industrial society, we have a start of sorts in the EUREKA project—not, I fear, a British initiative, although it

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should have been. It covers only a tiny number of projects in the most advanced area of technology. It will not help us to keep our steel industry, our car industry or our aircraft industry, but we cannot keep those going by our own unaided efforts. We must work more closely with our European partners to create the conditions in which our industries can survive. I look to this Government to get on with it. It would be no use looking to any other.
7.17 pm
Sir Russell Johnston: It is a pleasure to follow the hon. Member for Clwyd, North-West (Sir A. Meyer) whose courageous consistency in defence of the ideals of the European Community through fair weather and foul must attract general respect. I say that despite the somewhat limp slap on the hand which he felt obliged to give to the Liberal party.
It is also a great pleasure to welcome to the six monthly "take note" debates the Minister of State, the hon. Member for Wallasey (Mrs. Chalker). If it is not an embarrassment to her in her absence, I must say that I have always found her an exceptionally fair-minded Minister, not given to being dogmatic, but willing to listen—which cannot be said of all Ministers. Her arrival on the European scene will enhance the Government's contribution. We could do with more people with her engaging, intelligent frankness. I say that unreservedly.
In these debates we ask ourselves where we are in the Community and where we are going. An optimistic view, which is becoming fashionable, is that not only the Government but the great official structures, such as the Foreign Office, the Treasury and the Department of Trade and Industry, think that we are making progress, that we must make more progress and that there is movement and a more positive attitude.
One gets a taste of this in the first paragraph of the White Paper, which states:
"The enlargement negotiations were completed and the Spanish and Portuguese Accession Treaty signed. Agreement was reached on the new own resources decision embodying the budgetary corrective mechanism for the United Kingdom. With these long-standing issues resolved the Community was able to give greater attention to its future development and in particular to institutional reform and better decision-making."
More than anything else, that changed attitude was enshrined in the paper presented by the Prime Minister to the Fontainebleau European Council in June 1984. Many of us felt that the hon. Member for Harrow, East (Mr. Dykes)—I am sorry that he has left the Chamber—had written that document in secret and that its publication was to be the precursor of his meteoric rise to office. Sadly, that did not happen.
It was certainly a positive document. I am surprised at how few hon. Members have read it. I strongly recommend it. It had the most positive tone of any document produced by any United Kingdom Government since the halcyon days of the right hon. Member for Old Bexley and Sidcup (Mr. Heath). Indeed, it will make an interesting speculation for future political historians whether, had the right hon. Gentleman won the 1974 election, our path into Europe would have been very different and whether we would have ridden the oil crisis that coincided with our entry quite differently. The pro-European mood was certainly there, as the 1975 referendum demonstrated, but thereafter it was steadily dissipated, first by an unenthusiastic Labour party and secondly by a very nationalistic lady.
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What is now the status of the Fontainebleau paper? It was quite at variance with the spirit of the Fontainebleau paper—first, on institutions—that we should ally ourselves with Denmark and Greece in making reservations on the Dooge report. That is referred to in paragraph 2.6 of the White Paper, when the present Secretary of State for Scotland had the job of chumming up with Mr. Papandreou and the Danish representatives. It was also at variance with the spirit of Fontainebleau that, in making the argument for budgetary adjustment to take account of the United Kingdom's continuing economic decline and the GNP relative to other members, we should simply make a United Kingdom case without establishing this in a Community frame to take lasting account of the problems of other countries. For example, Portugal was in exactly the same position, but from an even lower economic base.
I also suggest that in our appointments to the Commission we gave no evidence of a wish to promote United Kingdom politicians of the first rank, far less those with enthusiasm for the institution that they were joining. In parenthesis, let me record that I very much regret the departure of Ivor Richard, who was beginning to do a very good job.
I again ask what the status now is of the Fontainebleau document, and I hope that the Minister will say something about it in his reply. I also hope that he has read it, studied it and agreed with it.
The Luxembourg meeting took place after the publication of the White Paper, but, even if the Government went along with the conclusions of the Luxembourg agreement and prised themselves apart from Denmark and Greece, their role was one of brake, not accelerator, and the vision one saw in the Fontainebleau agreement was surpressed.
In passing, I entirely agree with the Minister of State and am pleased with the result of the Danish referendum. I congratulate the various forces in Denmark on their success, particularly my political friends in Venstre.
Over the years, there have been a variety of approaches to reconciling the enthusiastic call of the Six with the others who joined later—who have always been a bit difficult, with the possible exception of Ireland, which has managed to get quite a bit out of it. In 1974, Socialist Willy Brandt coined the idea of a two-speed Community, and the Liberal Ralf Dahrendorf afterwards came up with the idea of an a la carte Community, although that had many federal connotations. The new French President of the Commission, Jacques Delors, was the variable geometry man. They have all been trying to find a way of reconciling those two problems.
Although the decision-making process was approved in Luxembourg, it must still be put to the test of vested interests. I was not terribly encouraged by what the Minister of State said. She said that our special interests were protected, and we all know the result of that. She also said that the Luxembourg compromise holds, but what happens then? The only direct thing that she said was that we will decide things for ourselves. That did not encourage me to think that the Government were of a mood to go in for majority decision making.
Even if all this works, we shall thereafter need stronger mechanisms for regional regeneration and for dealing with changing technology. The hon. Member for Hamilton (Mr. Robertson) spoke about this, and he was quite right.
Mr. William Cash: I take it that the hon. Gentleman is speaking on behalf of his party. Does the leader of the SDP agree with him on majority voting in all material respects?
Sir Russell Johnston: The leader of the SDP and myself have a very amicable relationship—
Mr. Cash: Will the hon. Gentleman answer my question? He will appreciate that this is central to the development of the European Parliament and the Community in the context of the aspirations of the alliance in a couple of years time. Therefore, it is important for the nation to know where the alliance stands on this very important question.
Sir Russell Johnston: If the hon. Gentleman wants me to answer his questions, he should oblige me by not interrupting before I have got through my preamble.
The Liberal and Social Democratic parties produced a joint programme for the European elections that dealt with majority voting. We stated our position quite clearly, and that is the position that I have just enunciated.
The Government's continued obstruction to an increase in the powers of the funding of the regional and social funds is difficult to understand. I have remarked before that I will never forget the enlightened first speech of my right hon. Friend the Member for Glasgow, Hillhead (Mr. Jenkins) as President of the European Commission in Luxembourg, to which I listened as a member of the European Parliament. His central theme was the increasing divergence between the magic square of Hamburg, the Ruhr, Paris and London, and the peripheries, which include the highlands of Scotland, which I represent, a great swathe of the United Kingdom almost down to the midlands, and Mediterranean countries and Portugal. Incidentally, I must say to the right hon. Member for South Down (Mr. Powell) who referred to Portugal as a Mediterranean country that it is Atlantic and quite different in attitude.
My right hon. Friend the Member for Hillhead believed that the trend must be reversed. Because of the Council's resistance, he could not do much about it, and since then the position has worsened. In those days a great deal of hope centred on the enlargement of the non-quota section of the regional fund. Now it has been abolished, which is a bad thing. I am referring to section V, paragraph 5.1 of the White Paper. Did the Government support that, and if so why?
The non-quota section, which at one stage increased to 13 per cent., seemed to hold out the best chance for the neglected peripheries of the Community to obtain help. I greatly deplore that change. Most, if not all, of the peripheries suffer from neglect by their central Governments. The opportunity to involve people from outside, operating on agreed criteria, was immensely helpful. That was certainly the view of Mr. George Thomson, now Lord Thomson of Monifieth, the Commissioner who established the regional fund. Incidentally, we also continue to ignore additionality.
Do the Government accept that economic convergence will not work unless it is balanced by social and political mechanisms? When the hon. Member for Hamilton said that enlarging the market is not likely by itself to inspire the confidence of the unemployed, he was right, especially
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regarding the peripheries. Nor will economic convergence work unless it is buttressed by an integrated financial system.
It is extraordinary that no hon. Member has yet uttered the three letters EMS. The hon. Member for Nottingham, East (Mr. Knowles) referred to the Foreign Secretary's speech which is reported in The Times of today, in which the Foreign Secretary said that perhaps we could not continue saying that the tide was not quite right. Shakespeare said:
"There is a tide in the affairs of men"
and in this matter the Government seem to be marooned on a tideless sea, unwilling to take any decision.
Jacques Delors, the President of the European Commission, said at the Luxembourg meeting:
"The Commission's proposal is for keeping on the idea of European Union. This resolve has been asserted by a number of heads of state and government. Now, it is hard to suppose European Union can come about without eventually operating on the basis of unified institutions. I freely admit this it is not feasible now. But we must nurture the feasibility of it in the future, given the close interdependence between foreign policy and security on the one hand and what may be called stewardship —economic, financial and monetary affairs—on the other. Again, stewardship involves the social side, the arts, the will to get along together."
The issue of will is fundamental.
I did not expect to find very much about the European Parliament on page 38 of the White Paper, largely because in the contents it states that the Court of Justice is dealt with on page 39. What a miserable report it is. I accept that the Minister expanded on it. The reports are interesting and useful, and record in careful bureaucratic fashion in the peculiarly neutral language of the Committee Clerk what has happened, but it would be of immense advantage and would give bite to these debates if they included the Government's forward views. They do not. What do the Government think of the European Parliament in the long term?
At Luxembourg Jacques Delors said of the European Parliament:
"I would stress that it is necessary to increase the powers of the European Parliament. Is the European Parliament a parliament of the same standing, and the same nature, as the national parliaments? We shall not settle that question: anyhow, the answer differs from country to country. I would, though, make the point that the heads of state and government decided the Parliament should be elected by universal suffrage; and, however much some of its debates may on occasion be ridiculed, its members are elected by universal suffrage …We could help it by making it more responsible and involving it more in Community decision-making."
That is not impractical or visionary, to use the Minister's phrase, but rational and positive. How do the Government respond to that question?
At the next European elections, the Parliament has responsibility for making proposals about a uniform electoral system. The Bocklet report is now before it as the successor to Seitlinger. What is the Government's view on Bocklet? We have not the faintest idea from the White Paper. After the 1979 European elections it was recognised, even by Mr. Angus Maude as was, that it was disgraceful that the Liberal party got 13 per cent. of the vote but no representation. In 1984 the alliance got 20 per cent. of the votes but no representation.
I do not know whether the Minister reads The Scotsman. He nods wisely, but that could mean anything because Ministers have a tendency to nod wisely when anything dangerous is in the offing. The Scots were asked what they thought about proportional representation, and

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57 per cent. said that they would like to see it introduced. Even 50 per cent. of the Labour party thought that proportional representation would be more effective than the present system, and only 19 per cent. thought that it would be less effective. Those were the results for our present system of national government, and the argument for European elections is far greater because there is not the problem of direct accountability to constituencies.
If the Community is to move towards greater cohesion, even à la carte cohesion, there must be a democratic oversight, and the Council does not represent that. It is a compromise Council, negotiating inter-state disputes. It has none of the necessary supranational overview of a permanent commission of an elected parliament. What is the Government's view on that?
I began by asking about the Prime Minister's Fontainebleau paper. Since then the big change, or part of the change, is that British interests in the Community are now defined, not just by the Government, but by many other elements in the country, as lying in the reinforcement, rather than the erosion, of existing economic and commercial commitments and the strengthening of political co-operation. At last that is being recognised as the means to exercise greater influence, rather than a component in the reduction of our influence.
Mr. Foulkes: The hon. Gentleman's speech has been helpful and interesting, but he has not mentioned agricultural policy. As he knows, the CAP is a major part of Community expenditure. Recently, the other part of the alliance — the Social Democratic party — agreed that quotas are inevitable for all supported farm production. Does the Liberal party agree that quotas are inevitable in all those areas? Is that the policy of the alliance as a whole?
Sir Russell Johnston: It is true that I have not dealt with agricultural policy. One cannot deal with everything, and I have already spoken at some length. I have discussed the CAP previously. It must be evident to the hon. Gentleman that much discussion is necessary when two different parties work out policies—[Laughter.] It is all very well to laugh, but that is a fact. The same is true of any coalition on the continent. The hon. Gentleman asked what I think about quotas—
Mr. Foulkes: No, the Liberal party.
Sir Russell Johnston: The party is in negotiation. Personally, I accept that quotas are inevitable across the board, and that the SDP is correct.
The anti-Europeans have now mostly fled the Chamber. The only two Opposition Members who spoke before me were anti-Europeans—the right hon. Member for South Down who has a well-established and almost mythical record in this regard, and the hon. Member for Walthamstow (Mr. Deakins). Whatever criticisms they may have—I agree with some of them—they must begin to square up to the fact that the Community provides a bedrock of commitment and predictability to the United Kingdom. All of us must ask ourselves how best we can develop that, but they more than others.
The Liberal party and its alliance partners, the Social Democrats, are convinced that the only viable future for Britain — if it does not want to become a nation of hamburger salesmen, as my right hon. Friend the leader of the Liberal party remarked recently — is within the
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European Community, with all its industrial and technological challenge, in which we play a part. The hon. Member for Clwyd, North-West mentioned that. We must give the citizens of Europe a say in the political future of the world, strung taut as it is between the United States and the Soviet Union.
7.42 pm
Sir Brandon Rhys Williams: I warmly welcome my hon. Friend the Minister of State, Foreign Office, who opened this broad-ranging debate so satisfactorily. She began her political career in Kensington, which gave her the background for an informed and penetrating weltanschauung, as she has already shown us in her new post. The debate has ranged widely, and I hope that the House will not think that I am straying too far if I deal with some fundamental issues which it is important to review in the light of Britain's assuming the presidency of the Community during the second half of this year.
We have heard the usual chorus of hon. Members expressing their anxieties—one might almost call them heebie-jeebies—about the way in which the European Parliament appears to be growing in importance and the budget is becoming a slightly heavier burden on our national economies. I could not help but wonder whether, if one turned back to the accounts of the debates in the early years of the state legislatures in the United States of America, one might have found people with an equally timid and provincial outlook in view of the growth in importance of Washington as a force in the development of the United States. We can all be glad that the federal forces in the United States won in the end; the world has been a better place as a result. It would be good if, in time, the federal forces gained the ascendancy over the national parliaments in the EC. However, I also believe in the inevitability of gradualism, which is attractive to Opposition Members. We do not wish to build our constitution too quickly, because trees that grow quickly tend to decay quickly too.
We have not made great progress in the European Community since the striking move forward in the Fontainebleau agreement in June 1984, which can be counted as a special success for my right hon. Friend the Prime Minister. Since then, we have been marking time after Europe began to recognise the force of my right hon. Friend's arguments, very persistently put, on the necessity to control the budget, to reform the agricultural policy and to improve the workings of our institutions.
Britain has had the difficulty since its late entry to the EC that it feels some reticence about its membership. We have been members of the Community since 1973, yet to some extent we still regard ourselves as outsiders. That is partly due to the continuing attractions of our Commonwealth links. It is also partly due to the English-speaking link with the United States of America, which gives us hope that we can still build on our special relationship with that country. In dealing with economic matters, we still cling to the idea and the tradition of sterling as a world currency and the most important medium of trade. Unfortunately, it is no longer that, although it is still an important international currency.
That reticence has caused us to cultivate in the House of Commons and elsewhere what one might call the "greater Switzerland" fallacy: that we can have a friendly relationship with the Common Market, but that we will

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never be completely integrated into it. We think that somehow we can retain our independence and customs, look back on our independent history and never allow ourselves to be completely trapped in the clauses of the treaty of Rome. The difficulty with a "greater Switzerland" relationship with the Common Market, however, is that Britain is too big to become an appendix of a great continental economy, which is what happened to Switzerland. We cannot live in a marsupial relationship with the German economy; but, equally, we are too small to be a world power in our own right. Therefore, the greater Switzerland fallacy fails in both respects: Britain is too small in one way, and too large in another, to fit into that formula. If we are not careful we shall become a greater Iceland, because we shall have drifted away from the continent in business terms. We cannot afford to contemplate that.
The continent sees Britain as a timid child running to and fro at the edge of the swimming pool, but afraid to jump in and join the other children enjoying themselves in the water. We cannot afford to continue looking like timid members of the Common Market. Our half-hearted relationship with the Community has continued for too long.
However, Britain has lately been successful in persuading the other members to make the reforms which we believe are important if we are to participate more fully. That process must continue when Britain assumes the presidency. We must maintain the momentum for control of the budget, and we must continue the policy of agricultural reform while recognising that the agricultural vote is still an important factor affecting the democratic policies of the continental parties.
I hope that there will be some new, positive British initiatives while Britain has the presidency. The most important initiative will be the completion of the internal market. As a London Member, I believe it is vital that London should play the most active possible part in the development of a united European economy. We have set ourselves the target of creating an internal market by 1992, which is what one might call a six-year plan. Socialists usually love six-year plans, but they do not seem to be too enthusiastic about the six-year plan to complete the internal market. It must be the major British interest, since we are a nation that depends on trade. It is no good belonging to a so-called Common Market that maintains ridiculous frontier barriers and obstacles to the free movement of goods and services.
Lord Cockfield's excellent report on the subject is a tribute to what British thinking can offer to the Common Market, and it has been very widely supported on the continent. The British Government owe it to Lord Cockfield to give the maximum possible support now to his campaign for the completion of the internal market. We should also recognise the lead that has been given by Jacques Delors in this respect. He is a man of particular integrity and foresight, and the type of Frenchman upon whom one can rely to act in the interests of the Community and not just in the interests of France. This is an important matter, because we tend to be over-suspicious of prominent French individuals who take a lead in the Common Market, because we suspect that their first
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loyalty is to France, and we retain a suspicion that it is bound to do us harm to become too closely involved in their initiatives.
I had the pleasure of working for Jacques Delors for three years when he was chairman of the Economic and Monetary Committee of the European Parliament, and I can say that he is a man to whom we can look for a first-class lead in the Community. He has thrown his weight of influence behind the creation of the internal market, and I am sure that he accepts the necessity for the internal market to be not just a matter of the exchange of goods and services, but, what is particularly important for London, the way to the complete integration of the European market for capital.
It is no good thinking that Europe is a Community that can live on current account alone. We are trying to build a capitalist society—a society in which people can take long-term decisions. We must build a context in which long-term decisions are likely to be taken in the most fruitful possible way. That is also vital for London's financial institutions, which are not concerned just with insurance, with which the Government seem to be preocccupied in dealing with this aspect of the internal market.
On the stock exchange, in house purchase finance, in the commodity markets, and in all the other activities in which London is pre-eminent and is capable of making an important contribution to the smooth operation of the Community, we still have formal and informal institutional barriers, barriers of tradition, and protective devices of all kinds, which prevent the operation of a genuinely effective integrated European market for capital.
One of the major difficulties is that we are still clinging to our national currencies, repeating the mistakes of the 1930s. The British Government should be seen to be taking a long-term approach to currency stabilisation. But we are waking up to the fact that we are facing a great decision. Do we want the world to be organised into two zones of time for the movement of capital, one based on Tokyo and one on New York, with London taking a subordinate and suburban position, related to both the great capitals, but not making any great contribution? Or do we insist that the world should be divided into three time zones, in which London, making its contribution as the pre-eminent financial centre of the Common Market, is able to hold its own for eight hours of each day and contribute to the success of a world economy that is founded on three great centres of excellence rather than two? The crucial decision whether we belong to a world with two time-zones of 12 hours or three time-zones of eight hours is likely to be made in the coming year. The Government must recognise the importance of their opportunity, with the presidency of the European Community, to do what is necessary to create an integrated European market for capital.
The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) complained that nobody had yet spoken about Britain and the European monetary system. I have spent a considerable amount of time on this subject, and I had the opportunity to study it for more than 10 years as a member of the Economic and Monetary Committee of the European Parliament.
At the moment the EMS can be regarded as a considerable success, but it is a solar system in which Frankfurt and the deutschmark constitute the sun around

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which the other currencies revolve. If sterling were to join that solar system, we would face the danger of creating a solar system in which there were two suns which, from time to time, would be likely to move eccentrically. This could be disturbing for all concerned and eventually lead to what occurred when we tried to join the snake more than 10 years ago. After only a few weeks of membership, we had to withdraw. As I am committed to the necessity to achieve an integrated currency system in the Common Market, I do not want Britain to join the EMS and then have to withdraw prematurely.
We might create the conditions in which Frankfurt and London moved together, or sufficiently closely for the system to co-operate fruitfully, if we reintroduced capital controls. That is not only undesirable, but virtually impossible, and I would not support it under any circumstances. The other way that we can move is towards the complete integration of the capital market between London and Frankfurt, by the perfection of arbitrage and by broadening the relationship between London and Frankfurt, so that we achieve something approaching the stability and continuity that one sees between Chicago and New York.
If we do not achieve something like that, the pound and the deutschmark will inevitably drift apart. We need a single real underlying rate of interest under the currency values of the national currencies, and we need a single market for the distribution of savings into investment opportunities. The European market will have to be seen as an extension of our home market, or even as our home market itself. This means a great leap forward in the thinking of our business people.
Inevitably, the long-term currency relationships must be based on the purchasing power parities. Is that what we would achieve if we joined the EMS as it now is? We have to ask ourselves two questions when considering whether this is the right moment for Britain to join the EMS. The first is whether we have the currency relationships on a stable basis. Is the pound now facing the deutschmark on a rate of exchange that is likely to continue?
Until recently I had not felt that we had achieved purchasing power parity between the pound and the deutschmark; but now we have come a great deal closer to it. It has been achieved because of the movement in the price of oil, and nobody can predict what will happen next to that. However, I hope that it would be Treasury and Bank of England policy, if we joined the EMS, to retain a structure of currency relationships between sterling and the deutschmark and the other major currencies of the continent that corresponded as nearly as possible to the purchasing power parity. That is the right way to turn the Common Market into a real, genuine, home market for British goods and services.
The second question is whether we have gone far enough with the integration of the capital market to be able to regard London and Frankfurt as sufficiently closely bound to each other to be able to co-exist in the same monetary framework for a period not just of months but of years. The answer to that is yes, if our membership of the EMS permits us to adjust the pound to its purchasing power parity in an orderly way from time to time; but the answer has to be no if it means that we are obliged to gear ourselves to a system which inexorably brings sterling back to a condition of perpetual over-valuation.
Many people are waking up to the fact that the decline of British industry relative to the industries of other major
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manufacturing economies, such as the United States, Germany and Japan, has been due to the Bank of England's persistent policy of maintaining the pound as an over-valued currency. This has been a wonderful background for the prestige of the City of London, but a disastrous background for manufacturing.
I would not want to see the deutschmark, with an inflation rate of less than 1 per cent. per annum, tied to sterling, with an inflation rate still of 4 or 5 per cent. per annum, if the relationship were regarded as so permanent that we were gradually dragged up and up again into overvaluation. But other currencies that are inflating faster than the deutschmark have belonged successfully to the EMS and have made occasional adjustments to the deutschmark without obstructing the system unduly. Therefore, I feel reasonably confident that we can now do that as well.
How do we define the most important target for our presidency, which we hope our Ministers will bring a great step nearer? It is not just joining the European monetary system, and it is not just having certain agreements for winding down controls at the frontiers or eliminating certain particular difficulties in the operation of the capital market. We must create the conditions for the most successful achievement in the creation of wealth by an international capitalist economy within a genuinely democratic framework. Of course, it is an enormous and very ambitious task. The conditions that we have to achieve must be clearly foreseeable over a long span of time so that business men can take ambitious investment decisions, in the confidence that they will prove to be right.
Capitalism is not working in western Europe in the way that we hoped, because many business men are unable to look ahead for even a few weeks.—[Interruption.] If the right hon. Member for South Down (Mr. Powell) were a business man—I know it is claimed that he is many things, but I do not think that anybody has ever claimed that he is that—he would understand a little bit better what I am saying. One needs to be able to have a reasonable degree of confidence that decisions based on knowledge of the market and on knowledge of one's product will prove to be right. They do not prove to be right if there is unpredictable Government interference, or central bank interference, or tax changes, or other incidental movements which mean that decisions proved to be wrong, through no fault of the original investors or the economic planners.
This does not require merely the free movement of goods and capital. It requires also continuity and a favourable policy in matters of taxation, about which I want to say a few words. When we refer to the harmonisation of goods and services in the internal market, we must not forget the vital importance of tax harmonisation and the harmonisation of policy in regard to changes in taxation that will also be necessary.
Looking towards this country's Budget, I should like to say a word in support of those who are campaigning for a reduction in the stamp duty on investment decisions. We want to create favourable tax conditions for the integrated capital market. We want to take off London the burden which we ourselves have imposed upon London. I do not want just a halving of stamp duty. There should be an end to stamp duty altogether on investment decisions on the London stock exchange. We should set London free to exert its strength for the benefit of the whole Community.

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We should also seek out the best ways to end the artificial frontiers that are created by differences of taxation interpretation, such as the different treatment of particular classes of goods for value added tax. Next, we should make a serious effort to tackle the anomalies that are created by the different systems for the taxation of corporations in all of the member states. We made a considerable study in the Economic and Monetary Affairs Committee of the different systems of corporation tax which operate in the different member states. We tried to find a way in which we could work towards their eventual harmonisation so that we could end the tax frontiers created through the corporation taxes. We reached the conclusion that the only practical road to the harmonisation of corporation tax was the progressive abolition of corporation tax altogether.
This is not such a wild ambition when one realises that corporation tax is simply a tax on the eventual consumer of the goods or services that the company provides. But it is virtually a random system of tax, and it is very unfair and uneven in its operation, whereas value added tax, which is a similar tax, in that it puts the ultimate burden on the eventual consumer, operates in a much more comprehensible and more even and general way. It would be better even to have a slow increase in value added tax if it were accompanied by a step by step reduction in corporation tax, and eventually brought us to the total elimination of corporation tax throughout the European Community.
I realise that I have caused mirth on the Opposition Benches and that what I am saying constitutes ambitious objectives; but do we sincerely want to raise the level of the British economy in order to suck into profitable employment all the people who are looking for cash rewards for their work? Are the Government—and, for that matter, the Opposition—sincerely looking for a way to reduce the level of unemployment in this country? If so, we have only one road to follow. That is to make a success of our membership of the Common Market. If we continue to stay on the fringes of the Common Market and do not make a success of it, we shall waste the opportunity that is provided for us by the treaty of Rome to create a really successful economy and one which needs the services of all the people who are willing to work. We must help the other member states to do the same.
Our presidency offers us the opportunity to make important progress. The continental members of the Community have accepted the Prime Minister's lead in the control of the budget and the reform of the common agricultural policy. I believe that they would also welcome a major British initiative towards the creation of the internal market.
I should like to say a few words about preparing British opinion for the consequences of completing the internal market. This is a job for the British Government at home. We talk about the internal market, but we have not yet prepared ourselves for what it means. It means that economic nationalism will become an obsolete and impossible policy. It will bring much greater efficiency, far superior exploitation of capital and more rapid technical advances, but it will also mean the amalgamation and rationalisation of old established industries.
In recent weeks we have seen the excitement that has been caused by talk of the rationalisation of this country's
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motor industry. We have seen manifestations of a movement of opinion which has been interpreted as anti-American sentiment, or as a determination to keep our industries British, and to rebut amalgamation with the car industries of other countries. I do not think that British sentiment is anti-American or, for that matter, anti-Japanese; but British workers do not want to be dominated by people whose decisions are taken far away in a totally different economic context. We do not want to be dominated from overseas by people who do not have a very close relationship with the particular interests of this country.
Public opinion polls have already begun to show that British workers do not feel the same degree of suspicion where Common Market enterprises are concerned. The reason for this must surely be that they are beginning to feel a sense of community with the Common Market countries which we do not generally feel to the same extent with the Japanese or with the dollar countries. This, at bottom, if we analyse it, must be because we have the protection of the Rome treaty. The treaty is a highly detailed device for creating a market in which its members work together, instead of against each other's interests in forms of competition, which is unfruitful. It is a relationship which is far more precise and much closer than we in Britain could ever hope to achieve either with yen area industries or with the industries of the dollar area.
I have spoken at length, and the House has been indulgent, but I should like to make one last point. I regard it as an important recommendation for our presidency. We should seek to make the most of the Lome convention, not just because it is a link with our former overseas territories, but because the accession of Spain and Portugal means that we have the opportunity to suggest a widening or a fresh development of the Lome convention, so that more formal relationships can be established with the Spanish and Portuguese-speaking territories that lie outside the European Community. We need to put Government enthusiasm into creating a better understanding of and better relationships with these important economic areas.
I have said before, and I should like to repeat it, that we must look ahead to the influence which satellite television will exercise before very long in the context of the world economy. We may not understand this, but the Americans and the Japanese already understand it. They are making progress which will either leave us behind or leave us out of the picture altogether. I should like to see, as a development of the Lome convention, the production of regular tapes for educational purposes. They could be shown in English, French, Spanish, Portuguese and, for that matter, in Russian on a world wide basis in order to give people at home in their own institutes of education what we used to try to give them by bringing them to this country for technical training, language practice and training in other subjects. Those services would be building on the success of the BBC overseas service and the Open University. We have taken the lead in those areas in an English-speaking context, but we have not yet grasped the idea of putting a world university of the air into effect as part of the EC's relationship with the outside world.
I should like to see a conscious, deliberate move by the Government during their presidency to take into account the influence that we can have, now that Spain and Portugal are members of the Community, on the Spanish

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and Portuguese-speaking territories of the world. This is an important EC opportunity to teach other nations how to live.
Let me conclude by wishing all success to our Ministers, who now have the duty to take the lead for six months in the running of the European Community.
8.10 pm
Dr. Norman A. Godman: We have listened to some grand and formidable compositions tonight. I want to follow the advice offered by the hon. Member for Stroud (Sir A. Kershaw) that in these debates we should occasionally wrangle over details of EEC decision making. That is precisely what I would like to do vis-a-vis the fishing industry.
I want to make a comment or two on the common fisheries policy in the light of what the White Paper and the Official Journal of the European Communities have to say. The White Paper devotes all of one paragraph to fisheries, an industry that is important to Scotland, particularly its more remote maritime communities. In that single paragraph the White Paper says:
"Under the common fisheries policy the European Community logbooks and Landing Trans-shipment Declarations were introduced on 1 April 1985. Along with the European Community's Fisheries Inspectorate they will help ensure that the common fisheries policy is applied equally and fairly to all Community fishermen and that member states observe TACs and quotas."
It is that equal and fair treatment of fishermen on which I want to comment.
Given the present circumstances of the common fisheries policy and the approval, albeit qualified, that it engenders among fishermen, it is now time to strengthen some elements of it in order to ensure the continuing viability of the industry and—the industry is dependent upon it—the continuing viability of the commercially important stocks.
Last night, during the Second Reading of the Salmon Bill, harsh words were spoken about the devastation inflicted upon salmon by interceptory fishing methods employing monofilament nets. I have a great deal of sympathy for those views, but at the same time I have some concern for the villains in that drama—villains to some hon. Members. They are the fishermen of the northeast of Scotland drift net fishery. We need European Community-wide measures to deal with that and other problems.
In addition to what was said last night by the Under-Secretary of State for Scotland, a statutory instrument was laid this morning—the Inshore Fishing (Prohibition of Carriage of Monofilament Gill Nets) (Scotland) Order 1986. It says:
"The carriage of monofilament gill nets for any purpose in any British fishing boat in the specified sea area"—
that is Scottish waters—
"is prohibited."
Apart from the friction and anger that that order and the Government's proposals in the Salmon Bill will create for the drift net fishery, it will also create in the fishing ports on both sides of the border some considerable tension. These are piecemeal measures within the EEC framework. The Government should follow the advice contained in the report of the Select Committee on Scottish Affairs on the fisheries protection service which was published this morning. Paragraph 77 says:
"The ban on monofilament will apply to all British boats in Scottish inshore waters. The SFF,"—
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the Scottish Fishermens Federation—
"when questioned on this point, said that there was no opposition amongst its members to a ban per se, but there was strong opposition to a ban that affected only Scottish fishermen."
That legislation affects British vessels in Scottish waters, not the vessels coming into Scottish waters from other member states.
The Committee went on to say:
"The Committee sympathises with the Scottish fishermen. In our view, the strongest possible representations should be made to MAFF and to the EEC for a total ban in EEC waters. The banning of monofilament nets could well be an important move to help protect salmon stocks; but it should not be selective."
I hope that the House is given the opportunity to debate that report; at the very least, the Scottish Grand Committee should take it on board.
The report also has a sensible word or two to say about the vexed question of by-catches and the level of by-catches is again determined under the auspices of the common fisheries policy. The report says:
"The problem of by-catches by industrial fishermen has several facets. The permitted by-catch level is itself a matter of dispute. The permitted level returned to 10 per cent. at the end of May 1985; we were told that there was pressure within the EEC to raise the level to 18 or 20 per cent. again. There is to be no derogation from the 10 per cent. limit during the 1985–86 pout fishery."
The members of the Committee go on to say:
"We commend the successful outcome of the negotiations by UK Fisheries Ministers to retain the 10 per cent by-catch limit, and we hope that no attempt will be made by the European Commission or Member States to raise the limit in future years."
Let us hope that those member states opposed to an increase in the by-catch pay heed to that sensible observation and resist any attempt by the Danish Government to shift the percentage upwards. Such a move would be disastrous for the commercially valuable stocks of fish in the North sea.
The report also says:
"DAFS"—
the Department of Agriculture and Fisheries, Scotland—
"told us that they had arrested boats carrying both a 16 min and 80 mm net and had not experienced any problem in securing a conviction, but that they had nevertheless taken up with the Commission the question of banning the carriage of 80 mm nets on industrial boats".
On that important issue, the Committee says:
"We support the efforts of the Government to secure a ban on the carriage of 80 mm nets by boats fishing for industrial species. It is our view that no fishing vessel should be permitted to carry both types of gear at one and the same time."
Again, I hope that the Government and the House remain vigilant on those matters.
Conservation measures of the kind introduced into Scottish and English waters need to be extended through our European Community seas. That should be the objective of the House and the Government. In the meantime, I commend to the House the report by the Select Committee on Scottish Affairs. I am a member of that Committee and—I hope the House will forgive my modesty—one of the authors of what some would call a commendable report.
Chapter 6 of the annual report by the Court of Auditors for the 1984 financial year deals with certain aspects of the common fisheries policy. Dealing with expenditure on biological studies carried out by institutions in the European Community, the annual report states:
"The appropriations for biological studies, entered in Article 412 of the 1984 budget and amounting to 640,000 ECU, are intended to enable the Commission to obtain, by means of

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specialized studies commissioned from external bodies or experts, the scientific information needed for the implementation of the policy for the conservation and management of resources."
I am not sure that that work is being done well.
The report states:
"Up to the end of 1984, contracts for biological studies were mainly concluded on the basis of proposals submitted by research institutes in the Member States. These studies should meet needs identified in advance by the Commission and set out in clear and precise terms; this has not been the case up until the financial year in question."
Replying to that criticism, the Commission stated:
"The Commission has decided to introduce a system of checking and, as far as possible, competitive tendering. The requirements will depend on the amounts involved."
In its defence, the Commission stated:
"In the fisheries sector, however, the specialized nature of the studies to be taken plus the geographical constraints severely limits the number of research institutes potentially capable of satisfying the requirements. Consequently, the Commission's choice is inevitably restrictive from the outset."
I believe that that is a weak defence of this poor method of controlling research.
The Commission should take a leaf out of the report by the Comptroller and Auditor General, entitled "Achievements and Costs of the Common Agricultural Policy in the United Kingdom". In regard to the poorly commissioned and inefficiently controlled research studies, it is worth pointing out that paragraph 45 states:
"While recognising the political problems involved in having (and indeed arriving at) precisely defined objectives, it seems to me that if greater attention were concentrated on the settlement of criteria and targets associated with the objectives, the negotiation of cost-effective measures to achieve them would be made easier."
I commend that advice to those who seek to commission research within the European Community.
Paragraph 6 of the White Paper refers to the need for a more co-ordinated system of maritime transport. In paragraph 6.6 we are offered some hope of a more equitable system of cabotage. I suspect that that is a vain hope, given the reluctance of some member states to make any concessions. The Minister of State, with her experience in another Department, will perhaps agree. The British coastal trade suffers badly in this regard. When will there be an improvement in community maritime transport routes and practices?
The importance of the fishing industry cannot be over-emphasised. For many Scottish communities, it is the only industry that can provide employment not only for the present employed generation but for the youngsters who are still at school. In the long run, if it is managed properly and efficiently, it will provide employment and a first-class food for the consumer long after the offshore oil and gas industries have been shut down. The House has an important duty vigilantly to monitor the decisions taken in Brussels on fishing operations in United Kingdom waters.
8.26 pm
Mr. William Cash: I find debates of this kind somewhat disappointing, because so few hon. Members attend them, yet this debate concerns a matter of great importance to our constituents. It has oscillated frequently between the Euro-fanatics and the Euro-haters. The Government's position is made more difficult by this polarisation.
Legislative and harmonisation programmes and the problems of agriculture, commerce and competition policy
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are all matters upon which our legislation is firmly hinged on the European Community. People in our manufacturing and service industries are greatly affected, yet so little attention is paid to what is happening all the time behind the scenes.
I am a member of the Select Committee on European Legislation. This afternoon, that Committee had the good fortune to see my right hon. Friend the Minister of Agriculture, Fisheries and Food. I thought that it was important to ask him, in relation to his policy on Europe, whether we should adopt a sector by sector approach. The common agricultural policy takes up an enormous proportion of the Community's budget and directly affects farmers, including those in my constituency. I believe that the Government would like to help them, as I would. Farmers are greatly affected by overproduction, but opportunities to make alternative use of the land and to reduce the amount of nitrogen fertiliser used in farming are not being taken up.
It is all very well for us to complain that there is massive overproduction of food, but, in trying genuinely to help the farmers concerned, we should look at what we are doing in the European Community to help them. We should look through the mass of verbiage at the complexities of the market mechanism and consider whether wheat is grown in Duisburg and whether all the other factors are taken into account in determining target and intervention prices. However, when we consider everything, we are really talking about overproduction.
Why is there overproduction? There is overproduction, in part, because, according to the experts, there is too much use of nitrogen fertiliser. Instead of overly concentrating on the elaborate legal framework set up in the Community, we should ask questions, the answers to which will be of practical help to the farmer.
At present the Agriculture Bill is approaching Report. New clause 1 of that Bill includes several useful provisions provided by the Government. They provide that the farmer shall have services and advice available to him. I am sure that farmers will be extremely keen to take up that offer. However, it is no good providing such services and advice if, when farmers ask what they should do about overproduction, there is no opportunity for them to take advantage of alternative use policies because they are constrained by planning requirements from putting the land to alternative use. I urge those responsible in agriculture to consider such practical questions and, through consultation with the Department of the Environment, to find ways and means to alter the planning guidelines which were tagged on to the policies pursued in the mid-1970s. That will enable us to improve the rural economy, provide alternative land uses, such as forestry and tourism, and enable the farmer to maintain his income in practical terms.
I urge that we do not maintain the co-responsibility levy in connection with milk or cereals as is now being proposed by the Commission. I hope that the Minister will fight hard for the British farmer in that respect. I also urge the Minister to keep the beef variable premium scheme for which he fought so successfully last year.
The White Paper covers the question of the internal market and competition law. All of our commercial policy—the rows in the City about mergers, whether the City is ripping people off and the extent to which huge companies are entering into relations with one another and causing difficulties for the small investor and British

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industry as a whole—is dependent on our applying competition policy effectively. Our competition laws are based on the treaty of Rome. At the eighth European conference on competition law recently, the experts clearly stated that competition policy simply was not working. If that policy is not working and we cannot apply it, it is not surprising that criticisms are levelled against us about the difficulties that are cropping up through mergers and monopolies in the City.
The same problem could arise in connection with financial services. I am a member of the Committee on the Financial Services Bill. We have not so far reached the competition policy provisions in Committee, but they have a direct bearing on how our economy functions. We must recognise that there are problems and consider whether the provisions of the treaty of Rome are working effectively for the benefit of the people of this country.
I tabled a question to the Minister concerned, asking if he would be good enough to examine whether, for example, regulation 17 could be revised. One assumes a glazed expression as soon as the boring and technical subject of regulation 17 is mentioned. I find the whole thing very boring, but the fact is that it is upon such legal principles that so much of our commercial policy operates. There is no point in pretending that problems do not exist. The Civil Service operates upon such regulations and our courts make decisions based on them. In fact, all commercial policy is developed on the basis of such regulations. If they are not working effectively, we must seriously consider how to improve and reform them.
Reference is made to science and technological research in paragraph 5.13 of the White Paper. At the risk of trespassing on a subject in which I have been involved for the past few years, I would ask those concerned to consider whether, under headings such as science and research, policies are being developed and directives formulated on human genetic engineering. In its own way that topic is as important, if not more important, than the atomic bomb. We must consider whether, by developing policies along these lines at European level, we are storing up serious problems, which we will later regret, for ourselves and for future generations.
In connection with external relations, trade and aid, I sincerely hope that the proposals for the new general agreement on tariffs and trade are successful this time round. This matter brings me back to the central theme that I developed on the question of competition policy. I hope that the people responsible for negotiating the GATT will come up with a practical proposal which will deal effectively with the Japanese problem and whether the Japanese are importing a sufficient amount of manufacturing products from other countries.
I have been to Luxembourg and Brussels recently and had the opportunity to discuss overseas development in relation to food aid with people in the European Commission and with the Court of Auditors. I returned very depressed about the poor showing in providing food aid to the countries which needed it during the emergency. I appreciate that there are difficulties and that there are no magic wands. However, when one examines the way the process developed, the Court of Auditors' report is worth reading. The reality is that the European Commission, for some reason or another, did not respond effectively enough. If we place the responsibility for handling such
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matters in the hands of the people in Brussels, then I hope that they will come up with something rather more effective than occurred on that occasion.
I am not by any means anti-European in terms of political co-operation. One of the mainsprings of the European Community has been a desire to move closer to a sensible degree of political co-operation. By that I emphatically do not mean political integration.
The ideas raised this evening by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) about majority voting and federalism are extremely dangerous for this House.
Paragraph 13 of the White Paper deals with Parliament, and in two paragraphs it disposes of the work of the two Select Committees on the European Communities. Legislation and harmonisation have an amazingly important impact on how we conduct our affairs in commerce and in industry. There is almost total ignorance of the principles of law upon which these operate. Those responsible for organising the examinations in the Law Society and in other colleges of law should give a higher priority to examinations in European law and legislation. We have been a member of the European Community since 1973, yet these subjects are not even part of the normal curriculum for law students. That is an extraordinary state of affairs, given the impact of that law and legislation on our daily lives.
I wish to touch briefly on the Single European Act, which has been deposited in this House, and the cooperation procedure that will operate under it. The Minister kindly wrote to me when I asked a question about this the other day. I appreciate that the nature of the Act makes it difficult to give a precise answer, but one is left with serious worries about the way in which it will operate in practice and about the apparently significant increase in the powers of the European Parliament which will accrue at the expense of this House. I appreciate that the Council of Ministers can have the final say, but that is not the real world.
In reality, constant accretions of power exercised within the Council, subject to the co-operation procedure as it develops, are gradually whittling away the powers of this House in relation both to scrutiny and to the mariner in which legislation is devised. The fact that so few Members are present for this debate shows the difficulty that we face in this respect. When matters of vital concern to our constituencies are debated at a late hour or come before the Select Committee on European Legislation for scrutiny, without in any sense being anti-European we must ask ourselves whether we examine these matters sufficiently carefully to ensure that the system of law being devised is genuinely in the interests of those whom we represent. Is it not possible for those with responsibility in these matters to ensure that the Select Committee is able to consider prospective legislation affecting our constituents at the earlier "avant-project" stage when the working groups of civil servants who go to Brussels are considering these matters?
There is no doubt that under the new procedures a number of things will occur. For example, there will be an increase in the number of matters subject to majority voting, which will undoubtedly reduce the power of individual member states to put a brake on progress. if they are so minded, the other member states can cut short

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attempts at negotiation and proceed to a vote, and that will have a significant effect on the way in which legislation affecting this House goes through.
It is also clear that, following the accession of Spain and Portugal, the position of the "big four"—France, Germany, Italy and the United Kingdom—has been reduced. Two of those four states will no longer be able to exercise a blocking power and the new Mediterranean bloc of Greece, Italy, Portugal and Spain will be able to exercise a major influence.
The first special report of the Select Committee on European Legislation shows one uncertain element at the centre of the whole question—the extent to which the Luxembourg compromise will operate under the new arrangement. There has been pressure to require member states to identify the very important interests that they seek to protect by invoking the compromise, but none of that appeared on the face of the Single European Act—nor could it do so, because, as the Select Committee pointed out, the compromise is not legally binding. In reality, however, because the compromise currently lies at the root of the way in which voting takes place, which is the basis on which we determine whether to insist on unanimity or go to majority voting, the question of whether the arrangements under the Single European Act will necessarily be in the interests of our constituents is vital.
Finally, although some of us take a pragmatic and, I hope, practical view of progress in the European Community and are in no sense anti-European, we wish to ensure that when legislation goes through this House it is properly scrutinised so that, when we have to answer to our constituents for the decisions taken in their name, we can give reasonable answers to the questions that they reasonably ask about the legislation that goes through. I therefore ask that great care be taken to ensure that the procedures under the Single European Act are truly in the interests of our constituents and that, when making procedural changes in this House, we ensure that the scrutiny procedure really works in a way that is both fair and reasonable to those whom we represent.
8.46 pm
Mr. Nigel Spearing: The reference to "decisions taken in their name" was one of the most important aspects of the comments of the hon. Member for Stafford (Mr. Cash) because one such decision was taken in the name of the British people when the Minister of State signed the Single European Act on the royal prerogative. I do not think that the hon. Lady is yet a member of the Privy Council, but I make no complaint about that.
I am grateful to the Minister of State for her remarks about the Scrutiny Committee, of which I have the honour to be Chairman, and I apologise for not being present at that time. My absence was perhaps a symptom of things to come, in that it was the timetable of the European Council and of this House which prevented some Members from being present at that time as we were listening to evidence from the Minister of Agriculture, Fisheries and Food at a meeting arranged some weeks ago. But more of that anon. The Minister of Agriculture also take decisions for the people of this country, although he and the House have lost control over British agricultural policy— indeed, there is no longer any such policy.
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I referred earlier to the prerogative of the Crown. We are now discussing, with other developments in the EEC, an Act which was signed by Her Majesty's Government unwillingly, as the Prime Minister told us when she went to Milan last June. I wonder when a Government last invited the House to ratify a treaty that the Government had signed unwillingly. I can think of no context in which that would have been possible in the past.
Mr. J. Enoch Powell: The Anglo-Irish agreement.
Mr. Spearing: That may be true, although there was a majority in the House for it, but the right hon. Gentleman will at least agree that that related to the British Isles and not to mainland Europe.
The assumption about the royal prerogative in signing treaties was, ever since the Labour Government of 1923, that nobody's Government would sign a treaty which could not command the majority of their own party. That was, as it were, taken as read.
When the Ponsonby rules were adumbrated, they said in effect that a treaty would lie on the Table, as a statutory instrument might, for some 40 days. If it was not prayed against or voted against it was deemed to be ratified. The Minister may go into greater detail on this but she and other Ministers have kindly said that our ratification procedure will not be of that type for this particular treaty. It will be subject to further legislation. We can be grateful to that extent. However, the right hon. Member for South Down (Mr. Powell) was right when he asked in what way we can actually scrutinise the terms of this treaty— which runs to 77 typewritten pages, some not full—and which is legislation by reference and changes the treaty of Rome.
In effect, that means changing the written constitution that exists in the United Kingdom. One might say that there is no written constitution; indeed, that is one of the things which people are taught in history. In practice, however, we know that it is not true. The written constitution of this country consists of a whole number of written documents. I believe that the Standing Orders of this House are one such document and the mysterious documents circulated by Prime Ministers inside the Executive may be another. It also includes a number of other Acts of Parliament such as the Representation of the People Acts, and the Quinquennial Act. These documents are all bound together by a series of understandings, custom and practice. That is our constitution plus the treaty of Rome.
The treaty of Rome is to be substantially amended by the treaty which has been the subject of discussion tonight. As the preamble has not been read this evening, I shall do so:
"Moved by the will to continue the work undertaken on the basis of the Treaties establishing the European Communities and to transform relations as a whole among their States into a European Union, in accordance with the Solemn Declaration of Stuttgart of 19 June 1983. Resolved to implement this European Union on the basis, firstly, of the Communities operating in accordance with their own rules and, secondly, of European Cooperation among the Signatory States in the sphere of foreign policy and to invest this Union with the necessary means of action".
That is the preamble to the treaty. It is important to study some of the facets because they will make a great deal of difference to how this House keeps track of legislation and other developments which are continually going through the European system.

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That system is complex. Many hon. Members present will know that, when listening to informed speeches such as that of my hon. Friend the Member for Walthamstow (Mr. Deakins) it is difficult to follow the labyrinthine constitution which has arisen. Indeed, I would suggest —the Minister may know this for herself—that unless one has been involved with these issues for perhaps the past 10 years and has organically developed with this tangled mass of interlocking growth, it is almost impossible to understand it, no matter how many lectures one might attend.
The greatest change occurs in the way in which legislation is created. It means a change in the scrutiny and oversight of this House, of how Ministers behave or of how, to refer back to the text given by the hon. Member for Stafford, "decisions made in our realm" are carried out and the way Ministers are accountable. The work of the Scrutiny Committee—recently committed to the House —will probably be changed by the changes in the treaty, if they are effective. It is up to the House to decide whether changes in our constitution are made.
The Danish people had a referendum on this matter only six days ago. It is true that they decided—not by a big majority—to go ahead with these changes. However, the referendum showed that there was a major divison of opinion in that country, just as there has been a difference of opinion in Britain on the main question.
Mr. Deakins: Does not a difficulty face any country with a written constitution—how those changes should be put to the Parliament or assembly concerned to represent the opinions of the people? We are faced with a difficulty which does not face countries such as the United States which have a written constitution. In the United States they consider constitutional amendments individually and can discuss them in great detail. In Britain we have to consider amendments en bloc and have no opportunity to consider them in detail; nor are we able to accept this or reject that. We have to accept or reject them all at one stage.
Mr. Spearing: Yes, that is one of the disadvantages of the way in which our constitution has arisen. It is based on an assumption that the Crown would not give away power. It also assumed that nobody would go against the Act of Praernunire—that is to give prior allegiance to another sovereign power. They are the assumptions on which our constitution rests. Thus, in respect of EEC legislation, there are difficulties which have been pointed out by my hon. Friend.
I do not wish to be partisan. It is clear that there are different views about how the EEC should operate. The hon. Member for Kensington (Sir B. Rhys Williams) made it clear that he wants progress towards a United States of Europe. I do not think I am doing him any injustice.
Sir Brandon Rhys Williams indicated assent.
Mr. Spearing: Indeed, he nods his assent.
However, that is anathema to other hon. Members. In the discussion of this Act and the changes in the constitution there is a continual difference of emphasis between the people who take those views. I suggest to the Minister that even among people of differing views there is a fundamental common interest, that democracy, whether on a United Kingdom or pan-European level—which the hon. Member for Kensington wishes to see—
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is effective, efficient and seen to be democratic and is understood by the people whom it seeks to sent. When "decisions" are made in their name, whether at national level or at pan-national level, as with the EEC—it is not federal—they are understood and there is a chain of accountability which commands confidence. That view will bridge all opinions in the House, including the hon. Member for Kensington and even the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). Public life and democracy demand confidence and transparency. Without them, the quality of democracy falls apart, just as rotting cement will cause a building to fall.
I should like to consider the change in the new article 149. At the moment, the House can examine documents and proposals on a proposal from the Commission, and anything to do with the internal market or harmonisation requires unanimity. As has been said, that will be changed to a qualified majority. We shall therefore get more harmonisation a la the Cockfield Green Paper, and it will come more quickly. Moreover, it will be more difficult for the Government to hold up 'those proposals if that is to the national advantage.
Of course, there is always the so-called Luxembourg agreement, but I think that, the Minister will agree that there are moves afoot—they may be right—to see that it is used in a less liberal way. Perhaps there are written orders. If one uses a dangerous weapon such as that agreement too often in the wrong way, it may become a little blunt. I suspect that we shall have more harmonisaiton, which it will be more difficult to keep track of.
Sir Anthony Meyer: This is all getting very muddling. I assume that the hon. Gentleman is talking about the traditional Luxembourg compromise and not the agreement that was recently reached there.
Mr. Spearing: The hon. Gentleman is quite right. I was referring to the historic non-agreement.
Sir Anthony Meyer: The agreement to disagree.
Mr. Spearing: The second feature of legislative change will be the insertion of a second round for some legislation. Hon. Members will be aware of what can happen. Instead of the Council trying to change a Commission proposal by sending it back, whence it will return in revised form, if the Council does not agree with what the Commission says, having obtained the opinion of the Assembly/Parliament, it has to produce what is called "a common position". That phrase appears in the treaty. The "common position" is passed to the Assembly/Parliament, which can amend it or reject it by simple majority. If the Commission receives an amended "common position", it puts a new proposal before the Council of Ministers, which can be passed by a qualified majority. If the Assembly/Parliament rejects the "common position", the Council can only insist by unanimity. That means that the House and the Scrutiny Committee will be faced with a second round, which I think I will call a second reading, for some legislation, including that relating to harmonisation and achievement of the internal market, which has aroused some of the greatest controversy.
The Select Committee said in its report that there could be difficulties, as there might be more, longer and possibly more acrimonious debates in the House. Moreover, the

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decisions might be more difficult for the Government as the pace of harmonisation could well increase. There might not be a single proposal. We all know that, in the EEC—I shall not say that it does not happen elsewhere —there is linkage to produce a package proposition. One considers the whole and cannot distinguish between the parts. That is one of the least satisfactory features of what is going on.
If the EEC is to work properly in the next two or three years, we want proper partnership and co-operation. I am anxious to carry the hon. Member for Kensington with me. One of the distinguishing features of a healthy and proper partnership is that one of the partners can say no, knowing that it will not be penalised. I am afraid that, as I understand it, all too often in EEC affairs a partner says no at its peril, whatever the merits of the issue.
Sir Brandon Rhys Williams: Is not the great danger that some other member will say no and that Britain will be penalised? We need progress with the Community. If other member states can block it, we may suffer the worst.
Mr. Spearing: The hon. Gentleman may be correct. However, there is an opportunity for blocking—it will be reduced to some extent; although some people believe that a reduction in the power to block is progress, other people take a different view—which I think is one of the inherent problems in the EEC. Its ambitions in terms of integrated Common Market harmonisation, whatever their merits, are so politically ambitious when one is faced with the vested interests, proper or improper, spoken or unspoken, which will prevent that, the whole machinery, good or bad, falls into disrepute.
I suggest that we shall see a new phase in the life of the EEC if this treaty is agreed. It will make life more difficult for this House, particularly in keeping up with legislation, because there will be more of it, it will move faster and it will be further away from the control of this House, and therefore from the people. I will not dwell on this at length, but that includes the creation of what some people will dub a European foreign office, which is now a treaty obligation.
There will be an obligation for consultation at every level and an obligation to have an EEC party group, if I can put it like that, inside every international organisation or conference where members of the Community are present in any number.
Therefore, we will find that most of the features on which we have prided ourselves through the ages, such as being a sine qua non of a Parliament and parliamentary democracy, will be diminished. We know that those features are legislation—the power to appoint judges, the power to tax and the power to control expenditure. There are other criteria but those are the primary ones. In respect of legislation, we know that we will now share it more and more and, for the first time, an Assembly which is not of this country will have a hand in originating legislation which then becomes binding on every citizen.
We know only too well from some dramatic examples in the past fortnight and exchanges across the Floor of the House, indeed even in statements from the Government, that the ruling of the European Court, whatever its merits, will be of increasing importance in this country. We know that our own courts have increasingly, formally or otherwise, to refer cases to the court of the EEC.
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We still have, just about, the power to determine maximum levels of taxation—1·4 per cent. of VAT and so on. However, I suggest that we have largely lost control of the EEC's expenditure. It is true that we may not be too great on that inside the United Kingdom, but the Government are accountable and may be broken by the House. Therefore, when we passed greater powers of taxation to the EEC we did it, did we not, on the understanding that there was budgetary discipline? Some hon. Members have already said tonight that all the signs are that it will not bite in the year when we thought it was going to bite. It is becoming increasingly clear that in 1986 there will not be the budgetary discipline which the House was promised as one of the conditions of its voting extra money.
Therefore, if all those factors come together and if the House approves the Single European Act, we will be in a completely new phase of the EEC where it will accelerate and widen the ambit of its competence, not only to help the environment and other things of that sort, but in terms of a European foreign policy.
About 12 years ago, at the time of the great debate on the subject, the right hon. Member for Old Bexley and Sidcup (Mr. Heath) said that the position of the Queen would not be affected. I do not think that the right hon. Gentleman understood some of the basic constitutional principles on which the country has evolved. That is perhaps a charitable view, and it may be a startling view for someone who was then Prime Minister of our country. The position of the Queen, or the monarch, was not affected as much as the position of the Crown by the decision in 1973. It will be further affected if the Single European Act is approved by the House. Until that date, it was the Crown, in one form or another, which approved legislation, appointed the courts, and, in Parliament, was the highest point of appeal in the House of Lords. It also decided the level revenue of taxation.
That was not so on 1 January 1973. The power of the Crown in those matters, and so the power of the British people themselves, was diminished. I suggest to the House that if the Single European Act is ratified, it will be diminished further.
9.11 pm
Mr. George Foulkes: I join my hon. Friend the Member for Hamilton (Mr. Robertson) and the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) in congratulating and adding my welcome to the Minister of State, who has joined our debates as well as the foreign affairs Front Bench team. I was going to say that the British motorists' loss was the Europeans' gain, but I thought that it might be taken the wrong way, so I shall confine myself to welcoming the hon. Lady.
In my reply I shall have some difficulty in living up to the billing given to me by my hon. Friend the Member for Hamilton, but I shall do my best, because, unlike the hon. Member for Stafford (Mr. Cash), who was a bit disparaging about the debate, I thought that it was unexpectedly interesting in several ways, and quite worth while. I was not expecting some of the comments and contributions that we have had. I accept that it has not been an exciting debate, but it has been interesting.
I should like to ask the Minister some questions. I hope that I shall receive some answers tonight, but, realising that this is a complicated issue, I shall understand if I do

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not. The Minister and I are becoming regular correspondents—[Interruption.] "Letter writers" might be a better phrase to use. Perhaps we can continue our letter writing on the points that the hon. Lady cannot answer tonight.
In the short time available to me, I hope to get down to the essentials of these complex matters. I sometimes think that the jargon, the Eurospeak and the gobbledegook that surround this area are designed as deliberate obfuscation by the Eurocrats, so that we know little about what is happening, and so that they can get on with things, and we remain without knowledge and understanding of what they are up to. I think that some of them like to keep the public and Parliament in ignorance of what is going on in the Community. I hope that part of our job is to try to sweep that away.
The right hon. Member for South Down (Mr. Powell), as usual, made some excellent points about the Single European Act. We now understand why it is called that. It is not a singular sensation for the House. However, it would be helpful for us to know how the Act will be considered by the House. I know that to some extent that is a matter for the usual channels and the Leader of the House, but obviously the Foreign Office is involved. When will we get it? Many Conservative Members, some of whom have not been here today, are anxious to know. The Minister said that it would be within three months. That is a fair leeway. I hope that it will be in the earlier part of that period. When we get it, what will the procedure be for its consideration? It is important to know whether we can amend it.
Many comments have been made about the useful report from the Scrutiny Committee. I should like to pay tribute here, as I do informally on other occasions, to my hon. Friend the Member for Newham, South (Mr. Spearing) for the work that he does. He is extremely valuable to my hon. Friend the Member for Hamilton and myself.
The major point that I want to make is to endorse on behalf of the Opposition the recommendations in the report on the need for greater parliamentary scrutiny of all the matters that come to us from Europe. As the hon. Member for Stafford said, whether they have been traditionally pro-European or anti-European, all lion. Members are anxious for greater accountability. Even in 1984 the Scrutiny Committee said that scrutiny was inadequate. It is clear from the present report that there will be more proposals to be examined. Because of majority voting, the House will have to debate major issues much earlier than it did in the past, and the British Government will not be able to hold up decisions of the Council of Ministers pending a debate in the House. For those reasons, scrutiny becomes even more important.
Even in 1984 the report of the Scrutiny Committee was already critical of the Government's attitude to scrutiny. As my hon. Friend the Member for Hamilton said, it pointed to major changes which had been agreed by the Council of Ministers before we had had the opportunity to debate them. I am thinking, for example, of ESPRIT and of the new arrangements for the regional development fund. Both those who are for and those who are against Europe think that it is wrong that changes should be made before we have had an opportunity to discuss them.
I hazard a guess that the United Kingdom is among the poorest, if it is not the worst, of the European Parliaments in its arrangements for scrutiny. It has already been said
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that within this Parliament the House of Lords does a better job than we do. The House of Commons is woefully inadequate in carrying out scrutiny. My hon. Friend the Member for Hamilton said that I would try to put forward proposals. I shall not go that far, but I shall suggest some points which may be taken into account by the Government, especially as they have said that they will accept the Opposition amendment.
Statements to the House after meetings of Ministers have to be drawn from the Government like rotten teeth. My hon. Friend the Member for Hamilton is on the telephone regularly to the Foreign Office asking for statements. I am referring not just to Foreign Affairs Council meetings but to important meetings of the Energy Council and the Environment Council. When matters of importance are on the agenda when decisions are being made or when consideration is undertaken on our behalf, it should be a natural course to have regular reports to the House. If that means that time for other debates is squeezed, consideration must be given to another way of dealing with the statements. I shall come in a moment to the suggestion of a Grand Committee—
Mr. Deakins: Does my hon. Friend agree that, in addition to having more oral statements, we should revert to the procedure whereby there was a separate slot of 20 minutes in Foreign Office Question Time for oral questions on European Community matters?
Mr. Foulkes: I am grateful to my hon. Friend for mentioning that. That was to be my fourth point but I shall deal with it now.
I do not want to criticise anyone. We ought to look at the arrangements for European questions, but we should do so without taking any time away from foreign affairs. Today, for example, questions were raised about South Africa, the middle east and the Falkland Islands, and an hour a month is not a great deal of time. We should therefore consider the possibility of having a separate Question Time for European matters, because today there were no questions at all on the EEC.
Sir Anthony Meyer: Perhaps the hon. Gentleman will recall that when we did have EEC questions hon. Members were allowed to table only questions that related directly to the Foreign Office, whereas one wanted to table questions relating to all European activities. That was the great defect of that 20-minute slot.
Mr. Foulkes: I accept that. That is why I said that I would have difficulty in living up to my billing. I am not trying to be definitive. I am merely trying to point to the way in which the Government ought to examine this matter.
Sir Russell Johnston: I thought that the Labour party was active in taking Europe out of foreign affairs questions. In the negotiations, I was certainly opposed to the idea.
Mr. Foulkes: It was agreed as an experiment, and I am sure the hon. Gentleman agrees that foreign affairs questions require a lot of time. The subject covers the whole world, and quite often certain issues are not covered.
Our one Scrutiny Committee is overwhelmed by paper. I do not criticise it in any way, because it does a

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marvellous job. Perhaps we should look at the House of Lords or at the possibility of having more Scrutiny Committees.
There is also the possibility of setting up a European Grand Committee, which might have a separate Question Time, to deal with statements and consider European business. I know that there are problems about that, and I am not advocating it. I am merely saying that these are some of the things at which the Government should be looking.
I also hope that we will look at other national Parliaments in Europe. I think that we can learn from our European partners and from their parliamentary set-ups. Having accepted the amendment, I hope that the Minister will tell us how the Government will consider this matter, and how Parliament will be allowed to consider any report that they make.
Having dealt with scrutiny as a principle, let me refer to some of the issues that we are scrutinising today. The Government keep stressing the blue-eyed concept of the internal market, about which they seem to be star struck, but the implications have not been spelt out. This is a very important development, but the House has not had the opportunity of dealing with it.
There is the proposed common market in banking and insurance and the liberalisation of financial services. What does that mean in relation to control over the City and Lloyd's? There will also be changes in public procurement policies. What does that mean in terms of safeguarding United Kingdom industries? There will be European directives on radio and television—not, I hasten to add, that that will mean "Coronation Strasse" for the Germans —[Interruption.] I thought that hon. Members might moan at that. The development of satellites raises some very important matters. What effect will that have on the Bill of the hon. Member for Davyhulme (Mr. Churchill)? There will also be the harmonisation of competition policy, including mergers. What effect will that have on the current merger mania that is under way in the City?
I have tried to obtain some answers from the Government. I tabled a question to the Secretary of State for Trade and Industry asking about the effects of the European internal market on the structure of British industry, the level of employment in the United Kingdom, the level of British exports to the EEC, the level of British imports from the EEC, the balance of payments and the rate of growth of the British economy. That gave the Minister for Trade an ideal opportunity to spell out what the internal market means. He said:
"Progress towards completing the internal market will be one of a number of factors influencing the development of the British economy. In general, removing barriers to trade within the Community should further increase our trade with other member states and reduce costs to business. It should, therefore, help to stimulate increased efficiency in the use of resources and accordingly encourage growth of the economy."—[Official Report, 24 February 1986; Vol. 92. c. 422.]
Where have we heard that before? It is not an answer to the question. I hope that the Minister will make the position clear.
The Government's views, as we understand them, seem to differ from those of other countries, which believe that the international market will require harmonisation of VAT, which causes us great anxiety. Does it mean that? The Minister shakes her head, but Jacques Delors, Lord
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Cockfield, and others seem to think that. Why cannot we have a White Paper on the effects of some of the proposals? We get parliamentary papers of one kind and another on less important issues, yet these matters are not spelt out for Parliament and the people.
Another area for scrutiny is the budget and its overrun. During the six-month period that we are considering, a supplement of £120 million was requested, as my hon. Friend the Member for Thurrock (Dr. McDonald) will remember. We had to agree to pay our share of a £1·1 billion non-refundable advance. Soon the Community will run out of euphemisms for the money that it keeps asking us for. Although the limits on agricultural spending for 1986 were agreed only in June 1985 and the new budgetary discipline—that sounds good and rigid—was to be invoked in 1986, in the first year of their operation agricultural expenditure will break the limits. Yet the Government said that the great control was a major achievement and would be effective. Indeed, they said that they had agreed to the increase in own resources only because there was to be effective control and, preferably, legally binding control. They have now forgotten that, and the ceiling has been broken in the first year.
In The Scotsman recently, Mr. Andriessen, the farm Commissioner, is quoted as saying that surpluses are a time bomb. The headline was:
"EEC may seek £450 million supplement to budget."
The Council spokesman, Mr. Junker, said in December that there would be a supplementary budget by the end of the year. May we have a categorical assurance from the Government that they will make no further requests for loans, non-refundable advances, or whatever they are called? The Minister must answer that question, which Labour Members have asked previously. We have the discipline, and if it is effective, there is no need for additional funds. Indeed, if it is effective, the Ministers should be using it to effect and we should have no further requests.
We in the Labour party are demanding fundamental reform of the common agricultural policy. Price freezing is not enough, as Mr. Andriessen has made clear. The system itself must change. We must have an end to a system which allows the EC to dump subsidised produce on world markets, causing great harm to developing countries. The latest inequity is dumping under-priced sugar in Jamaica. The EC is undermining the economies of Third world countries and making it more difficult for them to pay their debts.
I have been fairly critical of some areas, but I should like to welcome one aspect. Perhaps some of my hon. Friends will disagree with me, but if they consider the matter and understand fully the implications, they should welcome co-operation on foreign policy. But we must know how the secretariat will operate and where it will be sited. I understand that it will move with the presidency. We would welcome joint foreign policy co-operation if it meant more effective co-operation on South Africa and if it forced the Government to impose stronger sanctions on South Africa, as our European partners wish. We would welcome it if it meant that the European Governments could persuade the British Government to join the condemnation of American aid to the Contras in Central America. Indeed, Congress is considering further aid to the Contras to undermine the duly elected Nicaraguan Government.

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Finally, I should mention the "people's Europe". The people who I meet in Dalmellington high street do not think that the internal market is a major priority. They do not talk much about it when I meet them on the street. They do not say how marvellous it would be if United Kingdom banks and insurance companies could sell their wares to other European countries. However, they are worried about unemployment. In my constituency there is 28 per cent. unemployment. In the Community 14 million people are unemployed—nearly half of them young people—and their despair, despondency and anxiety cannot properly be understood by anyone in the House. School leavers have a less than 50 per cent. chance of obtaining jobs, although, to give it credit, the Commission is proposing joint reflation.
Will the Government take the opportunity of their presidency starting on 1 July to advance a strategy of cooperative growth to reduce unemployment? Will they give more money to ESPRIT, EUREKA, the social fund and the regional fund, which would also help to reduce unemployment? The Minister will not give us that answer tonight. I assure the House that, after the next election, when the Labour party is returned to office, we shall use the mechanisms of the Community to ensure joint reflation among the increasingly Socialist Governments of Europe. Our priority will be a reduction of the appalling unemployment.
9.32 pm
Mrs. Chalker: With the leave of the House, I thank hon. Members for their kind remarks and for their welcome to this maze of a Community debate. It has been a long debate covering more than the documents before us. There were many ideas and misconceptions, and I am sorry that I shall be unable to comment on everything that has been said in more than five hours of detailed debate, with questions from hon. Members on both sides of the House. A few moments ago, I thought that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) wanted, instead of a system of filibustering, a system of Eurobustering. That might be even less workable than the unsatisfactory system that we have now, but which we are trying to change for the better.
We have heard three sorts of contributions to the debate. Some hon. Members were highly critical, and we share some of their criticisms. Others were anxious, and some were forward-looking. My hon. Friend the Member for Kensington (Sir B. Rhys Williams) made some especially ambitious remarks. I should make two general points to those who were highly critical and anxious. In 1972, the House decided to join the Community. In 1975, the Labour Government conducted a referendum in which that decision was endorsed. Since then, we have been through a difficult process of accession—the most recent being that of Spain and Portugal. With two major allies making the decision to join us, we know that they, like us, consider the economic and political growth of the EC to be tremendously important.
Of course, there are problems with the essential workings of the Community. There is no way in which a Community of 10 or 12 would not have such problems, and we shall not be satisfied until we achieve better working methods and better scrutiny, as I have already told the hon. Member for Newham, South (Mr. Spearing), whose Select Committee has done such a good job.
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Over a long time we have frequently experienced irrational results, but that must not mean that when things go wrong we should sit back and refuse to look at possible solutions to making the European Community a better and more workable institution. The length of time that it takes to consider many parts of European business is a problem. Coming to this matter from the Department of Transport, I am reminded of the average timetable from the inception of a road to putting the first vehicles on it, which is 13 years. There have been long-drawn out considerations but now, having had progress bedevilled for many years and after hard work in a number of Committees in past years, we have the Single European Act, which is an important step forward.
I shall try to go through the fears and anxietes expressed by a number of hon. Members, because I understand some of them. Other hon. Members have been more positive. I listened to the speech of the right hon. Member for South Down (Mr. Powell), as always, 'with respect. He is an authority on constitutional law, but I fear that his obsession with a narrow interpretation of national sovereignty is misguided. Every international treaty can be interpreted as a diminution of national power, in so far as it limits freedom of independent action, yet, inevitably and rightly, we have entered into treaties because we believed that the benefits of combined action at international level outweighed the theoretical limitations on our sovereignly. NATO is one such example, and political co-operation is another. We live in an international world, not a national environment that automatically seeks and abides by boundaries. The Single European Act acknowledges and gives form to the excellent and useful practices that have developed.
The hon. Member for Newham, South said that we were asking the House to approve an agreement that the Government had signed unwillingly. He rightly pointed out that in Milan we argued against an intergovernmental conference because we believed that the improvements that all member states recognised to be necessary could be achieved by other means. But once the decision was taken to hold a conference, the Government's main concern was to ensure that the outcome was one with which we could willingly agree. That is what happened, and that is why, on 17 February, I signed the initial stage in the process.
I have been asked about the nature of the legislation that follows from the Twelve having signed this agreement. The House will have a formal presentation—not going through on the nod—and a full opportunity to debate the matter. As my right hon. and learned Friend the Foreign Secretary made clear in the House several weeks ago, we shall introduce a Bill to amend the European Communities Act. The issues raised by hon. Members tonight can be aired on Second Reading and no doubt in Committee, on Report and on Third Reading.
Mr. Foulkes: When?
Mrs. Chalker: I wish that I knew the date on which the Bill will be introduced, for it would make my diary planning easier. I can say that it will come up within the next three months. The Bill will then pass on to the House of Lords.
The right hon. Member for South Down misunderstood what I said in my opening remarks about the co-operation procedure involving the European Parliament. There are no circumstances in which the European Parliament can

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cause decisions to be taken by a qualified majority that would otherwise be taken by unanimity. It is true that if the Commission incorporates amendments to its proposals, they can be further amended only by unanimity. That, however, is a feature of the existing provisions of the treaty, under article 149. So no change in the existing constitutional balance is involved.
The hon. Member for Newham, South asked about the extension of European Community competence on foreign policy. The treaty provisions in the sphere of foreign policy are entirely separate from Community treaties. There is no extension of Community competence. The treaty leaves us free to maintain, where necessary, a separate position. That we shall do, where necessary.
The hon. Member for Walthamstow (Mr. Deakins) asked whether there would be further intergovernmental agreements. He knows that this is an own resource decision. It neither provides for nor excludes further intergovernmental agreements. Such an agreement would be proposed only if the 1·4 per cent. value added tax ceiling were found to be inadequate to meet proposed expenditure. That is not the position now. Unanimity in the Council would be required if a proposal for an intergovernmental agreement were to be put forward. We could not proceed without it.
Mr. Terence Higgins: Will my hon. Friend give way?
Mrs. Chalker: I apologise to my right hon. Friend, but I have many questions to answer.
Mr. Higgins: Could my hon. Friend just confirm—
Mrs. Chalker: No, I shall not give way, because the time in which I can respond to all the points that have been made in this debate has been very severely clipped.
I was asked about the breach of financial guidelines. The 1986 budget is within the financial guidelines. However, recent developments, particularly the decline in the dollar-ecu rate, have led the Commission to say that it will need to seek a provision within the supplementary budget, which will be needed later this year anyway to cater for the expected increase in the United Kingdom's abatement. If we cannot get our abatement without a supplementary budget, then, for the sake of Britain, I am in favour of a supplementary budget. It depends upon the outcome of the price fixing. It would be idle to pretend that we can insulate ourselves from the effects of exchange rate movements. That is not possible.
The hon. Member for Walthamstow also asked about the budgetary powers of the European Parliament. Since the call-up of revenue in the Community is the product of expenditure decisions, the actions of the European Parliament have revenue implications. One cannot get away from that; we are dealing with the two sides of the balance. That is one of the reasons why the Council has decided to take the European Parliament to the European Court of Justice. The point is therefore covered in the Council's challenge. Our national case is that we are challenging the European Parliament's power unilaterally to set the level of the budget as a whole. Other nations are doing the same. I shall look at what the hon. Gentleman said about taking up the matter in another way.
The hon. Member for Walthamstow also suggested that we should give consideration to a preliminary ruling from
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the European Court of Justice under article 177 about the validity of the European Parliament's actions. I shall need to check that, but I understand that article 177 allows for preliminary rulings on points of European Community law that are raised in proceedings before national courts, not before the European Court of Justice. If that is the case, the proper way for us to challenge the European Parliament's decision is by direct action in the European Court of Justice. That is exactly what we are doing.
Several hon. Members referred to the budget. Of course we are concerned about the cost of the budget. However, it is unrealistic to expect there to be no net cost for member states such as Britain, which has an above average gross domestic product. We should expect to contribute to policies from which we benefit. Whereas, before Fontainebleau, we contributed at a level which did not reflect our relative prosperity, our contribution has now been established on a fair basis. Following Fontainebleau, the Federal Republic of Germany makes a net contribution three times as high as ours and France's net contribution is broadly on a par with ours. As a result of the two thirds abatement that was agreed at Fontainebleau, the rebate that we receive from the Community has doubled in two years from £440 million in 1984 to £605 million in 1985, and the estimate is that it will be £900 million, or more, in 1986.
In view of the remarks that have been made tonight, and also because I believe it to be vital, I need to address a fundamental problem that underlies so many of the Community's anxieties—the common agricultural policy. No one disputes the contention of several hon. Members that the costs of the CAP are too high. What is questionable is whether some of the simple solutions that have been suggested would have the effects that have been claimed for them.
The recent report of the Public Accounts Committee, House of Commons Paper No. 71, rightly pointed out that the objectives of the CAP are broadly the same as those of the Agriculture Act 1947 passed under the then Labour Government. The balance between achieving security of supply and reasonable prices to consumers has always been difficult to achieve, and the faults of the CAP are reproduced in most national schemes—not simply in Europe, but in other parts of the world as well.
There is no magic solution, save to those who would offer no support for agriculture, thereby putting at risk the security of supply, the working population involved in agriculture and the 80 per cent. of our land mass which is rural. The Community has not funked the issue of reform. Again, as the Public Accounts Committee reported, over the past four or five price fixings the price of wheat has been reduced in real terms by about 12 per cent. What makes the achievement of reforms at once necessary and difficult is the fact that technological improvements have led to a parallel growth in productivity. I shall be looking at the remarks made by my hon. Friend the Member for Stafford (Mr. Cash) who was obviously concerned about the productivity from the land today.
We cannot duck the fact that farmers have benefited from technological change, particularly in the cereal sector where one quarter of the surplus stocks in intervention are accounted for by United Kingdom production. We need no sudden about turns, but a sustained programme of reform. As a result of the Government's policies, we have achieved price reductions in real terms in six out of the last seven price fixings.

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This year the Commission's price proposals are for a 4·1 per cent. reduction in real terms which, with its other reform measures, amount to savings of 408 million ecu in 1986 and 786 million ecu in 1987. That would be equivalent to a real terms price reduction of 7 per cent., and that is the direction in which we should be going.
The hon. Member for Walthamstow asked about the use of the German veto on the CAP and subsequent action by the Commission. There was no question of the Commission unilaterally implementing price cuts. Based on its own powers, the Commission managed the market arrangements and the timing of the intervention arrangements to achieve savings in costs, particularly in cereals. That is completely within its powers. I should have thought that the savings in costs were exactly what hon. Members wanted. Therefore, if it was possible by management, we should not decry it.
The hon. Member for Hamilton (Mr. Robertson) was worried about European Community White Paper debates. White Papers on Community developments have been a regular six-monthly feature since 1974. Debates on them in the House are usually held within three months of publication, but on this occasion that was not possible. The White Paper before us, as everyone knows, was published in September, but at the end of last year the House gave its attention to several major Community matters, including European Community Finance Bills and various EC budget documents, as well as the European Communities (Spanish and Portuguese Accession) Bill. That was all in the last two months of 1985.
Against that background I hope that hon. Members will agree that there was no lack of opportunity, but I assure Labour Members that I will do my level best to persuade my right hon. Friends that we should have debates within a reasonable time.
The hon. Member for Hamilton also asked about a White Paper on the projected benefits and implications of the internal market. It has not been the practice to publish White Papers on such matters. The proposals have been made available to the House and we have had several opportunities to debate them. However, it would be pointless to keep publishing projections. That is the sort of thing that centralised economies go in for. The hon. Gentleman gave us an interesting example earlier in the day when he told us that he had had a five-hour briefing in Moscow from President Gorbachev. We prefer results to hypotheses. It is clear to us that the liberalisation of the European market will be of benefit in its impact on jobs and prosperity.
Several comments were made on the need for a cooperative growth strategy. The Government's policies have led to the creation of more jobs than in any other European Community member state. We have a common strategy for growth. All the Heads of Government—Socialist as well as Conservative and other Governments—have agreed that jobs and prosperity can come about only by the continuation of the type of policies that we and all other European Community Governments are pressing. It is only the Labour party that has a different view—different even from its fellow Socialists in Europe. It is the only one that is out of step.
I want the benefits of the European internal market to be brought to the ordinary people of Britain. The Opposition are out of touch if they continue to claim that it is irrelevant to try to achieve a reduction in barriers to trade and an internal market. We have achieved cheaper
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air fares for travellers. In the first year of the United Kingdom-Netherlands air agreement, we had 10 new services, a 16 per cent. increase in traffic growth between London and Amsterdam and 70,000 extra passengers who would not otherwise have travelled. The pattern is exactly the same between the United Kingdom and the Federal Republic of Germany.
We have opened new markets for British goods and services. We are doing away with the barriers and the delays which cost the United Kingdom and the rest of the Community £6 billion a year. We intend to create the prosperity and the jobs that a single large market can bring. The Opposition claim to see no connection between a single internal market and new employment in Europe. The connection is there. It is obvious and crucial. We shall continue to ensure that it works to the benefit of people seeking employment in Britain, because that is what the liberalisation of the internal market is all about.
The hon. Member for Greenock and Port Glasgow (Dr. Godman) asked whether we would make progress on maritime cabotage. That is probably a strange subject for many of my colleagues. I am happy to tell the hon. Gentleman that we are making real progesss. A package of measures to liberalise maritime transporting, including cabotage, is now before the Council. The Dutch presidency is pressing hard, and we shall continue to make this an important part of our work in the second half of this year. As time is short, I shall write to the hon. Member for Greenock and Port Glasgow about fisheries.
The hon. Member for Inverness, Nairn and Lochabar (Sir R. Johnston) asked about the regional fund and the abolition of non-quota measures. As I think he is already aware, the regional fund will make allowance for a quota range as well as for the Community programme. We believe that we shall have every opportunity to be a substantial beneficiary, as in the past. I remind the House that, in 1985, the United Kingdom received nearly 24 per cent. of the fund. We have not been doing badly, and we intend to continue to do our best to get that which is due.
My hon. Friend the Member for Stafford asked about the new GATT round. I very much share his view on the importance of the new round. Preparations are under way in Geneva. I believe that it is important that we reach agreement on the outstanding issues to enable the launch of the new round at the next GATT ministerial meeting in September. We are taking a positive attitude to the GATT round, and I hope that other member states will take a similar attitude.
Many hon. Members raised the issue of the scrutiny procedures. We are well aware of the unsatisfactory nature of the arrangements which have been pointed out by the hon. Member for Newham, South, who is Chairman of the Select Committee on European Legislation. The Select Committee considered the operation of the arrangements in 1984. That was spelt out in House of Commons Report No. 527. The Select Committee concluded that the Government should make greater efforts to ensure that debates on European Community documents were held in good time. We revised our guidelines in August 1985 with the aim of ensuring that debates should, as a rule, take place as soon as possible after the Committee makes a recommendation. We are committed to doing everything possible to make the new scrutiny procedure work effectively. I should like to examine the Select Committee

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report. We must work within the new guidelines already accepted and consider other suggestions in the Select Committee's report.
It is sometimes very difficult to strike the right balance between debating a proposal at a very early stage, with the risk that it may be amended out of all recognition by the time that it goes to the Council of Ministers, and debating it late in the day when the debate may have to be hurried through at the eleventh hour. I give the hon. Member for Newham, South an undertaking that we will do our best to have the debate at the right time.
I should like to give further consideration to the suggestion about a Grand Committee. I do not believe that the House wishes to weigh itself down with yet more detailed debates, as some hon. Members already complain about the verbosity of other hon. Members on occasions when we discuss procedure.
My hon. Friend the Member for Stroud (Sir A. Kershaw), who unfortunately could not stay this evening as he had a prior engagement, made a number of remarks about political co-operation. It is helpful to be in firm political combination with our partners in Europe, as we have shown in the past two months in the statement on terrorism and the influence that Europe is having on the South African issue. My hon. Friend the Member for Stroud spoke about Ethiopia, and the views he expressed about resettlement are shared by the Government. I am glad to say that they are also shared by many of our partners in the Twelve.
Matters are frequently discussed and views exchanged. I am grateful for the welcome given by the hon. Member for Carrick, Cumnock and Doon Valley to the political co-operation part of the Single European Act.
It would be impossible to recount all the matters which have produced the present position. My right hon. Friend the Prime Minister's report, "Europe: the Future", is important, and we stand by it. It is positive and realistic. Equally, we have few reservations about the Dooge report. I pay tribute to my right hon. and learned Friend the Member for Edinburgh, Pentlands (Mr. Rifkind), now Secretary of State for Scotland, for all that he did to bring that about and to ensure that Britain's views were thoroughly and well known by our European partners.
I should now like to emphasise the importance of the second six months of this year. We have heard both negative and positive comments tonight. I hope that we can cease living in the past, wake up to the present and
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start working for a positive future. Although some hon. Members may not be reconciled to EEC membership, the negative comments and that lack of reconciliation have more to do with nostalgia than a realistic assessment of United Kingdom interest in many of the matters we have discussed.
We need the unity of the European market if our economy is to be competitive enough to provide prosperity and jobs. We need the strength of a united western Europe if collectively we are to counter Soviet foreign policy. We must also meet the commercial challenge of the United States and Japan rather than try to hang on as national champions. We need unity to fend off the growing threat of protectionism from whatever source.
The Community has achieved many things in the past few years. Some things, like Fontainebleau and the effective start of agricultural reform, are well known. Others, less well known, are none the less important to our prosperity. I was glad that the Community's research programme was mentioned by a number of hon. Members tonight, including research into information technology.
Environmental decisions are another important feature. These include exhaust emissions which protect the environment and preserve the unity of a single market. There has been a breakthrough on standards by the adoption of the 15 directives which had long been blocked, and agreements on future mutual recognition of standards. I mention toy safety because for many people that has been a major issue. How many families in this country do not have small children for whom they wish to buy a toy at Christmas?
There are many other areas in which we shall be working with our European partners. There are many objectives to be gained as well as interests to be defended. We shall do our best to achieve those objectives and to defend the interests of the United Kingdom and of the Community as a whole.
Amendment agreed to.
Main Question, as amended, put and agreed to.
Resolved,
That this House takes note of the White Paper on Developments in the European Community January to June 1985 (Cmnd. 9627) and of European Community Document No. 8616/85, the Commission's opinion on the Proposal for Amendments to the EEC Treaty and, noting the First Special Report of the Select Committee on European Legislation (Session 1985–86), calls on the Government to undertake to co-operate in improved procedures so that the House can effectively scrutinise proposals under the Treaties as they would be amended by the Single European Act.'.
10 pm
The Minister of State, Treasury (Mr. Peter Brooke): I beg to move,
That this House takes note of the Annual Report of the European Court of Auditors on the financial year 1984, together with the replies of the Institutions, and supports the Government's efforts to ensure implementation of the Court's recommendations where these would improve the Community's financial procedures.
The annual debate on the Court of Auditors report offers a valuable opportunity for the House to discuss expenditure planning and control within the Community. Our discussion tonight will be much helped by the lucid report from the Select Committee on European Legislation, which highlights important themes from the court's report, and I pay tribute to the Committee's work.
The role of the Court of Auditors report in the Community's budgetary procedure is set out in the explanatory memorandum which I submitted to the House on 17 January. As the House will recall, one of the functions of the European Parliament, after advice from the Council of Ministers, is to grant a discharge each year to the Commission in respect of the implementation of the Community budget. The Court of Auditors report is the main document which the Council takes into account when making its recommendations to the Parliament.
Last year, at the request of the Netherlands and the United Kingdom, the ECOFIN Council discussed the court's annual report for the first time. That report related to the 1983 budget. This year, at the meeting arranged for 10 March, the ECOFIN Council will discuss the court's report on the 1984 budget. For the first time, the president of the court will attend to present the report. These arrangements for discussion in the ECOFIN Council are a sign of the importance which the Council now attaches to the work of the Court of Auditors.
As the Select Committee acknowledges in its report, the court has a formidable task. The United Kingdom has always strongly supported the court's efforts to improve financial control in the Community and welcomes the Commission's statement in part 2 of the report that many of the court's recommendations are already being carried out. There is, however, no room for complacency. The latest report provides ample evidence that further improvement is both possible and necessary.
I do not propose to discuss the court's detailed recommendations. It may, however, be helpful to the House if I draw attention to half a dozen areas in which the Government warmly support what the court has said, and to a couple of issues of budgetary procedure on which we respectfully beg to differ.
First, we strongly support what the court has to say about the overhang of past commitments, notably in the structural funds. The court notes that outstanding commitments increased again in 1984. It is evident, as the court says, that a better balance has to be struck between payments and commitments, within the framework of the budget discipline arrangements. The Community needs to cut back on new commitments so as to leave sufficient room for meeting inescapable commitments from the past. In the Budget Council disussions on the 1986 Community budget, the United Kingdom strongly opposed the provision of additional budgetry resources outside budgetary discipline limits to deal with the so-called "cost of the past."
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Secondly, the court has recommended that the commission should improve the accuracy of its revenue and expenditure forecasts with a view, among other things, to reducing the number of expenditure appropriations which turn out to be in excess of need. A related recommendation is that the Commission should give more attention to multi-annual forecasting of revenue and expenditure. These recommendations, too, the United Kingdom strongly supports.
Thirdly, the court makes the telling point that functions should be carried out at Community rather than national level only if benefits are likely to be superior to national programmes of a similar cast. this again echoes arguments which the United Kingdom has put forward on many occasions.
Fourthly, the court has paid special attention, as in previous years, to the administration of development cooperation and food aid. The report highlights the continuing difficulties of delivery and timing. It is a matter of concern that, as we suspected, emergency food aid was not arriving significantly faster in 1984 than non-emergency aid. In 1985, by using flexible procedures outside its normal food aid arrangements, the Community was able to arrange swift deliveries of food to the African countries worst affected by famine. We have left the Commission in no doubt that the current review of food aid procedures must produce arrangements which are more responsive to emergency needs.
Fifthly, the court is critical, rightly in our view, of some aspects of the administration of the European development funds. There is still some way to go. In the light of previous Court of Auditors' reports, however, the United Kingdom has succeeded in obtaining agreement to some useful changes. The Commission will now introduce a more systematic method for forecasting contributions by member states, together with procedures to avoid accumulation of excessive balances. It has also brought forward proposals to charge interest on late payments by member states.
The court also draws attention to the problem of fraud and irregularities in the agricultural guarantee section of the budget. The Government take a serious view of this matter. We are concerned to ensure that all reasonable steps are taken to prevent fraud and to ensure that any fraud which does occur is promptly identified and dealt with.
Mr. Terence Higgins: My hon. Friend said that the Government hope that there would be a better balance between revenue and expenditure. It is not clear from the Court of Auditors' report that the treaty requires that there should be an exact balance between the two? Do the Government agree with that view?
Mr. Brooke: Clearly there should be a balance between revenue and expenditure. If the budget is drawn up and the Commission asks us to pay a contribution towards that budget under the usual procedure, there may be occasions when, although expenditure is allowed for in the budget, it is not actually spent. That is what I think my right hon. Friend was referring to.
Mr. Higgins: I was thinking in the other direction, namely, when expenditure appears to exceed revenue. Does my hon. Friend agree that that situation is not allowed under the treaty?
Mr. Brooke: My right hon. Friend has anticipated the issue relating to the Court of Auditors' comment. I was intending to deal with that as one of the issues on which we disagree with the court.
There are two matters of budgetary procedure on which the Government do not agree with the Court's recommendations. The first concerns the legality of the intergovernmental agreement for 1984 the court argues that, by using this agreement to provide some 1 billion ecu to finance inescapable financial commitments in 1984, member states failed to fulfil their treaty obligation to ensure that revenue and expenditure balance.
As explained in a memorandum which the Treasury submitted to the Treasury and Civil Service Committee last month, the member states, including the United Kingdom, do not share this view. In our view, payments under the intergovernmental agreements for 1984 and 1985 were entirely consistent with article 4 of the Community's 1970 own resources decision. This referred to the budget as being financed out of own resources "irrespective of other revenue". The Community receives other revenue, such as gifts and bequests. The Government consider that contributions under the intergovernment agreements are likewise a form of "other revenue" and are therefore available to balance the budget in accordance with article 199 of the EEC treaty.
The second area of disagreement concerns the Commission's proposal, in its supplementary budget for 1984, to cancel certain expenditure appropriations which it was then clear would not be needed. These cancellations enabled the Commission to raise less extra revenue from member states than would otherwise have been needed to finance the supplementary budget. This has been criticised by the Court of Auditors, but in the Government's view the Commission was right to reduce the calls on taxpayers in member states in this way.
In conclusion, then, the Government respectfully take a different view from the court on two general issues of budgetary procedure, as well as on certain specific cases discussed in the court's report. But the areas of agreement are far more important than the differences, and we continue to support the court's efforts to ensure that the community's expenditure is properly managed and controlled. I commend the report to the House.
10.9 pm
Dr. Oonagh McDonald: I welcome some of the Minister's comments about the Court of Auditors' recommendations for stricter financial control at perhaps a lower level than overall budgetary discipline. There is much to be done in that regard if the Community is not to engage in wasteful expenditure. I am glad that the Government want some of the recommendations to be carried out.
I was anxious to note that the Government do not accept the Court of Auditors' strictures about the use of the intergovernmental agreement in 1984. The Minister's remarks lead us to expect a similar IGA in 1986. The Minister should make that absolutely clear. We have already heard that Mr. Andriessen, the farm Commissioner, talks about an extra £450 million being necessary to cover certain aspects of farm expenditure. If that is so, and the case is pressed, the Government will have to ask for another IGA.
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I could not help smiling when the Minister referred to other forms of revenue such as gifts and bequests, as he merely suggested that the IGA was a form of gift. We shall probably find ourselves making a similar gift this year.
The Minister skipped rather lightly over some issues, such as the Court of Auditors' report for 1984, which made it clear that agricultural spending had increased by 16 per cent. over 1983. As is clear from my reference to Mr. Andriessen's demand for more money, nothing has been done to curb farm expenditure. We expect it to rise once again this financial year. It cannot be contained because the budget discipline is not strict enough, as the Minister of State, Foreign and Commonwealth Office said in winding up the previous debate. She said that the Community could not be isolated from changes in the exchange rate. That is true, and budgetary discipline is obliged to recognise it, but farm spending is bound to escape. We can expect a future Court of Auditors' report to show another large increase in agricultural spending this year.
The Minister should have drawn our attention to another feature of the Court of Auditors' report—the fact that a substantial proportion of farm spending in 1984 was squandered on storage. Storage accounted for almost half of farm spending and the losses on intervention stocks ran at 2·5 billion ecu. They are massive losses which affect dairy products, especially butter, skimmed milk powder and beef. It is plain that those substantial losses are about to occur again in 1986 and I think that the Minister should have referred to that. The whole design of the common agricultural policy leads to a continual growth in intervention stocks and as they decline in value, money is wasted, first in storage and secondly in further losses as the stock deteriorates.
The Minister referred to what had happened in food aid; that is a sorry story indeed. Not only were goods delivered late—cereals 14 weeks late, milk powder 23 weeks late and butter oil 19 weeks late— but even emergency consignments were late. He might also have mentioned that not only were many of the shipments made far too late, even when they were designed for emergency purposes, but they actually overran the date set by the mobilisation authority. Even worse, some of the food shipped out had to be rejected. For example, Indonesia had to reject over 1,000 tonnes of skimmed milk: its quality was unacceptable because of breakages of packets and excessive humidity during the voyage there.
The Court of Auditors once again draws the attention of member states to the disgraceful and sorry story of intervention stocks, the expense incurred by the Community in storing food and the further loss of value, as compared with what happens to food aid. Not only do we waste food by producing more than we need, but we cannot even manage to get food of decent quality to places which desperately need it on time. That is no record for a civilised community. We all ought to be ashamed and I hope that the Government will make the fiercest possible condemnation of such late deliveries and of the poor quality. More than that, I hope that the Government will take firm action within the Community to ensure that it does not happen again. It is something of which we are all thoroughly ashamed, but shame is not enough; action is what is necessary.
To cap that, millions of ecu—the Court of Auditors estimate 6 million—are lost in fraud. Unofficial estimates put the amount at 30 times the sum given in the

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Court of Auditors' report. The report lays specific charges against member states. It states that they do not report fraud before payments to the Commission, they do not scrutinise subsidy claims adequately and they refuse to cooperate with the Commission in the investigation of fraud. Some member countries are particularly guilty in that regard.
Once again, within the Community we want the Government to ensure that money is not wasted in that way. It is bad enough pouring millions of pounds into a wasteful and expensive agricultural policy. To be subsidising fraud, particularly in other member countries, makes matters even worse. I want an assurance from the Minister that our own methods of investigation and control are entirely adequate, that we co-operate with the Commission and that we do everything in our power to ensure that other member countries do the same.
I am glad that the Minister recommended the Court of Auditors' report to the House, as indeed I do. However, it tells a sad tale of the behaviour of the Community over the management of its funds and its disgraceful agricultural policy and it should give hon. Members cause for thought.
10.19 pm
Mr. Terence Higgins: It is noticeable that the motion that the House is being asked to consider refers to the House taking note of rather than approving the annual report of the European Court of Auditors.
I found the speech by my hon. Friend the Minister of State, Treasury disappointing in several respects. In the memorandum that the Government submitted to the Select Committee on the Treasury and Civil Service this week, which is now in the Library, they say:
"The United Kingdom considers that the Court of Auditors has a key role to play in improving financial control within the European Community. The proposed discussion in the ECOFIN Council of the recommendation for discharge provides an opportunity to support the Court's work and to ensure that the Commission responds to the Council's comments."
The extraordinary thing about the speech by my hon. Friend the Minister of State is that he is projecting some of the points that the Court of Auditors made about the proper financial workings of the Community. He is in a similar position to a company chairman, who, having received qualification of his accounts from the auditors, stands up at the annual general meeting and says, "I do not agree with what the auditors said." Those who were investing in such an enterprise might react in a sensible way. Alas, the taxpayer is not in a position to do so. The plain fact is that the report of the Court of Auditors confirms all the misgivings that I have expressed on previous occasions and which, more particularly, the Treasury and Civil Service Select Commitee has expressed, about the way in which the Community has been conducting its finances.
The Court of Auditors' annual report comments on the practice of using reimbursable advances authorised by means of intergovernmental agreements to finance short falls in the European budget. The court is clear about that, as, indeed, the Select Committee has been on previous occasions. The court says:
"financing the budget by means of reimbursable advances does not fulfil the obligations placed on the Member States by the EEC Treaty".
The court is absolutely clear about that. In his remarks, my hon. Friend said that that was not the Government's view.
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If there is a conflict between the auditors and the Government, how is the matter to be resolved? It is perhaps rather unfortunate that at a time when rightly, in my view, the Government are taking the European Parliament to the European Court, arguing that it has made an illegal budget, they are, at the same time, opposing the views expressed by the Court of Auditors that what they the Government have been doing is illegal. That does not seem to be a good arrangement, because the law should be indivisible.
The Court of Auditors is also critical of the introduction of article 302. That is an item in the accounts, the expected balance for the current year. It says:
"The Court considers that the introduction of this article into the budget of the current year was simply a device for disguising the fact that the budget expenditure exceeded available revenue, that is, own resources, plust the reimbursable advances, which is contrary to the provisions of Article 199 of the EEC."
The Court of Auditors expressed that view in very clear terms. I have great difficulty in understanding why my hon. Friend the Minister is not prepared to accept the view that the court expresses, and which the Select Committee has pointed out on previous occasions.
After the Fontainebleau summit, on 27 June 1984, at column 1003, the Prime Minister told the House that
"it is not right to raise loans for budgetary purposes because it is contrary"
to the treaty of Rome. The intergovernmental agreement substitutes the words "reimbursable advances" for "loans". The Select Committee, in its report on the special supplementary estimate in January 1985, said:
"A distinction was argued between 'loans' and 'reimbursable advances'. We are not convinced there is any real difference and the requirement now proposed would certainly seem to be contrary to the spirit of those who originally drafted the treaty".
I should be grateful for my hon. Friend's views on a more technical point. The Court of Auditors is there to audit; it is for it, not the Government, to audit. It says that the IGA does not come within the category of gifts and other bequests to which the Minister referred. The hon. Member for Thurrock (Dr. McDonald) rightly drew attention to the fact that that would be humorous if it were not so expensive.
My hon. Friend the Minister has not dealt with the point as to whether the Community is entitled to receive a reimbursable advance. Perhaps he would give his attention to that because it is separate from an advance which is not reimbursable. We may find that the two are indistinguishable because the advances which are said to be reimbursable do not come back to this country, as they are supposed to do. Perhaps my hon. Friend will be kind enough to tell us when he expects to get the advances back and whether they are likely to arrive back on time.
It is extraordinary that the 'Treasury, which is rightly stringent in many aspects of domestic expenditure, seems to be so profligate—that is the only word that I can use —in going along with such a proposal. It would be intolerable if the House were again asked to approve an intergovernmental agreement in the face of the clear view expressed by the Court of Auditors that intergovernmental agreements providing such advances are contrary to the treaty, not least because it means that once again, when we come up against the VAT limit—in this case 1·4 per cent. as against the previous 1 per cent.—we would be able to put off the evil day when the House had to be asked for an increase in that limit. We know all the consequences which would follow for the United Kingdom on rebates. After all, rebates do not continue indefinitely if the

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conditions on which they were granted are no longer fulfilled. The problem now is very serious. It should not be subscribed to by the Treasury, the British taxpayer or by those who might otherwise have the money spent upon them at a domestic level.
Budgetary discipline is also mentioned in the report of the Court of Auditors. After the Select Committee took evidence from my hon. Friend and further evidence from Treasury officials this week, I cannot avoid the conclusion that the idea that there is any real budgetary discipline in the Community is a farce. The extent to which that is so is amply demonstrated by the fact that the Government themselves are taking the European Parliament to the European Court on the grounds that the budget that has been made by the Parliament is illegal. Clearly the European Parliament has not the slightest intention of subscribing to any system of budgetary discipline. That is immensely sad.
The House has been told by my right hon. Friend the Prime Minister:
"More EC member countries are becoming net contributors. Frankly, that is the best discipline we can possibly have."—[Official Report, 27 June 1984; Vol. 62, c. 1001.]
That has scarcely been borne out by the way in which some of the net contributors have been performing against the background of the European Assembly's own illegal budget; some of the net contributors are among those who have been less than forthright in taking the line that Her Majesty's Government have rightly taken on the issue.
If one goes into more detail on the report of the Court of Auditors, one should refer to paragraph 3.4 which says:
"Article 199 of the EEC Treaty provides that all items of revenue and expenditure of the Communities shall be included in estimates to be drawn up for each financial year and shall be shown in the budget".
It then takes particular exception to two items. It says:
"The amending and supplementary budget No. 1, adopted on 25 October 1984, increased the VAT own resources rate to the 1% ceiling. The shortfall was covered within the budget by two new budget lines."
The next words are very important:
"The Court"—
the Court of Auditors—
"considers that these do not comply with normal budgeting principles, nor with the requirement of Article 199 of the EEC Treaty that annual revenue and expenditure of the Communities should be in balance".
It is not good enough for my hon. Friend simply to say that the Government are sorry, that the auditors have qualified the accounts, but that they disagree with the qualification.
Article 820 relates to amounts to be financed by reimbursable advances granted by member states. It states:
"The Court adheres to the view which it expressed in its opinion No. 1/84, that financing the budget by means of reimbursable advances does not fulfil the obligations placed on the Member States."
The same can be said of article 302 relating to expected balances from the current year.
One can go along with the view expressed in the motion that we should support the court's recommendations where these would improve the Community's financial proceedings. The regrettable and sad fact is that, on the most crucial aspect of the Court of Auditors' findings, the Government are not prepared to go along with what it recommends.
This is all in the past, and in one sense we are shutting the door after the horse has bolted. That would be
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worrying enough—and one accepts that it is difficult to claw back the money—but even more worrying—this was the point on which the Minister of State would not give way to me earlier—is that, having shut the door after the horse has bolted, they are opening the door again so that another horse can bolt. That is totally unsatisfactory.
It is deplorable that the Government should have taken such an attitude. They should stick firmly to the letter of the treaty. That is in the interests not only of United Kingdom taxpayers but of the future of the European Community itself. It cannot hope to get the support that it needs for the many other desirable objectives that have been mentioned if, when a report of this kind has been put before the House of Commons, the Council of Ministers and the Commission, those concerned are not prepared to face the true consequences of what it says.
10.33 pm
Mr. Nigel Spearing: The ninth report of the Select Committee on European Legislation—HOC 21-ix of the current Session—attempts to summarise the auditors' report which is the subject of this debate. It is proper to point out that the Committee is assisted in its task by Officers of the House, and our weekly reports and this special report are greatly enhanced by their skill. When people thank the Committee and its members—sometimes even its Chairmen—they should be aware of the fact that it is assisted by Officers of the House.
I use that phrase advisedly, because this House is responsible for the proper expenditure of taxpayers' money. When, some time ago, the EC was running out of money, people said, "Ah! Wait till it hits the ceiling. When the 1 per cent. ceiling is reached there will be some budgetary discipline," and we all stood by as the graph reached the ceiling. However, as the right hon. Member for Worthing (Mr. Higgins)—who is Chairman of the Treasury and Civil Service Select Committee—pointed out, instead of discipline being applied at that point, the ceiling was pierced, and all that we had were ecus falling around the wreckage. That was achieved through the intergovernmental agreement, to which the right hon. Gentleman properly referred, because it was thought to be the way in which the House and taxpayers throughout the Community would achieve discipline. The Government are extremely hot on that in domestic expenditure, but the right hon. Gentleman outlined why that did not work.
Will that view, which I suppose will be adhered to, feature in the meeting on 10 March when the ECOFIN Council meets to discuss the budget? It is a little ironic that the budgetary discipline mechanism applying now will also be on the agenda. I understand that Agriculture Ministers will request that budgetary discipline is put into abeyance for the present year. It will indeed be ironic if budgetary discipline is put in abeyance this year through some treaty let-out, while at the same time the Government will tell the president of the Court of Auditors, who will be present, that they disagree with the court's findings in respect of the intergovernmental agreement in paragraph 3.6 on page 30 of the Official Journal at column 326.
I hope that the Minister will not take that view, but if he does he should so inform the House. In effect he will be picking and choosing from the auditors' report. He will be saying, "We accept a great deal of what the auditors

411
say, but we do not agree with the part where the court says that we have been party to providing illegal funds." Indeed, that is implicit in the words of the motion. That may suit the Government politically, but it is novel for a Treasury Minister, or, indeed, any citizen, to pick and choose from an auditor's report. Indeed, it is a terrible thing to behold. But it appears that the Government will do that.
The position is even worse than the right hon. Gentleman suggested. He properly quoted the important paragraphs, in particular paragraph 3.6 of the report. I shall quote from the Commission's reply to those matters. Page 175, paragraph 3.6a states:
"In order therefore to ensure that Community obligations could be met and that Community policies could continue to be implemented, whilst respecting the requirement in Article 199 of the EEC Treaty, that the budget be in balance, the Commission made a proposal based on Article 235 of the EEC Treaty, for the Member States to make supplementary finance available to the Community in 1984 which would be repaid when new own resources became available."
That did not happen, because the Council decided that that would not be the right way to proceed. The paragraph continues:
"The Legal Service of the Council shared the Commission's opinion that Article 235 was an entirely proper basis for the regulation."
I do not think that the Council thought that, because the paragraph continues:
"In the event, the Council did not adopt such a regulation. The Member States decided rather to make an intergovernmental agreement to provide additional finance in 1984. The Commission regrets that this agreement was entered into outside the framework of the Community treaties."
The view of the Court of Auditors that this was ultra vires and outside the terms of the treaty was apparently shared by the Commission. How can that organisation get away with such activities when a Select Committee of the House, the Court of Auditors and the Commission—with which some of us do not always agree—interpret them to be outside the terms of reference?
The Minister quoted an article in relation to miscellaneous income, but article 199 provides:
"All items of revenue and expenditure of the Community … shall be included in estimates to be drawn up for each financial period."
The intergovernmental agreement did not feature in the estimates, or in the so-called budget. That is a bit dodgy, too.
The right hon. Member for Worthing said that no taxpayer could do anything about it. However, one taxpayer tried. The Government tried to get one intergovernmental agreement through by way of statutory instrument under section 1(3) of the Act, and we all know what happened. There was a court case; the Government withdrew from that route and, properly, introduced a new Consolidated Fund Bill, as they should have done from the start. The taxpayer lost his case because of the judge's view of the word "ancillary".
At that stage, we did not know that the Commission believed that the matter was outside the framework of the Community treaties. Mr. Smedley lost his case, and I understand that the Treasury is still asking him to pay its expenses. I do not expect a reply from the Minister tonight, but I put it to him that if the Court of Auditors, the Commission and another article of the treaty give at least some substance to Mr. Smedley's case on judicial review, it is a bit much for the Treasury, after picking and choosing whether to accept qualifications, to come down
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on a British taxpayer, and an old-age pensioner to boot, and insist on his paying its expenses for the test case. I hope that the Minister will note that point, if nothing else.
The role of the Court of Auditors is fundamental to transparency and confidence in the financial operations of the Community. In many ways, it does a good job—so good a job that apparently the Government object to its drawing attention to payments which the Government consider to be legal. In some ways, that is an excellent testament to its work and a large question mark against the Treasury, which persists in picking and choosing between qualifications in an audit report.
10.43 pm
Mr. Dennis Skinner: As hon. Members have said many times, the Common Market has been riddled with fraud from the clay that it started. Although we have auditors in Britain who are supposed to examine malpractices and corruption, in the Common Market the British taxpayer has been paying heavily to be a member of the club. According to official answers, the total net cost to the British taxpayer during the first 10 years of membership, taking into account the barrowloads of money that the Prime Minister was supposed to bring back after all her well-publicised arguments with the Common Market, was £4,726 million. British taxpayers have had to pay a great deal of money for the United Kingdom to be a member of the club.
I read not so long ago that in Italy there were olive trees that existed on paper only and that the moneys claimed for them went to the Mafia. What would happen if a British local authority was involved in fraud to the extent of about 10 per cent. of its budget? That has been suggested of authorities in other countries on many occasions. That sort of money is not available in Britain to allow that degree of fraud to continue. I want to know why the Government have given the nod and the wink to others in the Common Market. Why have they allowed them to fiddle the British taxpayer at such an exorbitant level? A Minister told us the other day that there is not enough money to allow the Government to give pensioners another 40p a week. That was just about enough to allow pensioners to buy mustard plasters during the coldest February that we have had for 40 years. However, another Minister is accepting a report that details £600 million-worth of fraud.
As the right hon. Member for Worthing (Mr. Higgins) said, the Common Market was bailed out this Session by the British taxpayer to the tune of £252 million. Even then, it was still running an illegal budget. A stop must be put to all the money that is pouring out to all the gravy trains in the Common Market. The ex-leader of the Social Democratic Party is being paid a fat pension by the Common Market, and I notice that he is not in his place this evening. He is not present to defend the budget that is before us. I wonder where he has got to.
Where are all the other SDP Members who joined the then Conservative Prime Minister to drag an unwilling British nation into the Common Market without the issue having been put to the vote? Where are Dr. Death and all the rest of them? I suppose that they are in Fulham, but I bet that they are not telling the electors in Fulham of the extent of the fiddling within their beloved Common Market. I note that the hon. Member for Truro (Mr. Penhaligon) is in his place. He should be complaining

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about the demise of the 500 tin miners in Cornwall instead of trying to defend the rotten system that prevails within the Common Market.
The stage has been reached when we should put an end to this carry-on. The right hon. Member for Worthing has talked about illegal budgets and they have been acknowledged by the Government, including the Prime Minister. However, nothing has been done. That can be said on a day when 80 of my colleagues in Liverpool and Lambeth have been surcharged and threatened with being kicked out of office and made bankrupt for expenditure of less than £250,000. At the same time, others are gallivanting around the world from the Common Market. They are using British taxpayers' money to do so. I read that 63 of them have gone on a trip somewhere. In doing so, they are said to have just about exhausted the moneys that are available for trips, but I do not believe that. I am sure that some more money will be found. Those whose responsibility it is will come rabbiting to the Government for more money. The 63 have taken with them their wives, mates, friends and God knows who else.
However, in the British High Court the judges have decided to hammer 80 councillors for expenditure of less than £250,000. Those who have come before them have not been involved in fraud and they have not rigged the market. They tried to stop the Government from crippling the ratepayers and others who depend on services in Lambeth and Liverpool. That is why it makes me sick.
I have in my hand an article that I saw towards the back end of last year. It is headed "EEC's £600 million fraud" and it says:
"The official auditors to the common market have uncovered evidence of wholesale fraud in the trade of farm produce. Exporters are claiming millions of pounds in subsidies for food which in many cases does not exist. As much as £600 million a year could be involved … Among the irregularities discoved were: Falsified documents. According to customs officials, a British company was caught trying to export non-subsidised vegetable oil as heavily subsidised butter."
There is another system of fiddling, called "the roundabout." The article says:
"Traders claim several subsidies by sending their produce repeatedly across the same frontier after smuggling it back into the country … At one stage Northern Irish farmers were sending the same cattle across the border so frequently that, in the words of one customs official, 'the cattle knew the way themselves'."
There is another fiddle, called exploiting levies. A trader inports a low-fat product which attracts a low import levy, adds oil and re-exports it, claiming subsidy at the full rate. We can laugh at it, but the trouble is that the British people are having to pay through the nose to be in the Common Market. It is time that the British people understood what is happening.
Today, after a £600 million fraud, this Tory Government are giving a nod and a wink to all this irregularity and corruption. If the Government were really concerned about the British taxpayer, the pensioners, the nigh on 5 million people who are in the Tory dole queues, the disabled and all the other people who need assistance, they would not be doing what they are doing tonight. They would be saying to the Common Market, as the right hon. Member for Worthing said earlier, "We are not going to wear this. Take it back. Sort it out. We are not going to take note. It is time that you cleaned up the Augean stables over there in the Common Market."
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There has been too much of this Euro-fanaticism during the last decade. We were promised all kinds of wonderful things. The British people were told that the Common Market would get rid of the dole queues, that there would be economies of scale, that in this giant market of 250 million people the economies of scale would result in more efficiency and that all kinds of British goods would be produced. British cars would be sent across to this wonderful market on the Continent and we would have more car workers. Industries in the west midlands and everywhere else would be burgeoning and there would be jobs for everybody.
The whole system has been a fraud from beginning to end. This is the tail end of it—after all these years, after something like £4,700 million, net, has been paid by the British taxpayer, after an illegal budget, after £252 million has been handed out to bale out the Common Market in this parliamentary Session. Yet the Prime Minister is continually telling sections of our society, "Oh, the Government have got no money. It all belongs to the taxpayer." But the British taxpayer has had to foot the bill for this. It is time that we put an end to it.
I do not know what this Minister is going to do tonight. I suppose he hopes that at this late hour he can sneak it through and that we shall carry on again. Then next year the Mafia in Italy, and all the rest of them who have been engaged in these fiddles, will be able to say, "Well, it has gone through that Parliament. It has gone through the others. They had a little bit of a set-to late one night in the British Parliament but they managed to get it through. They've got a 160 majority. One or two people complained." And on and on they will go. Those fat cats in Europe will continue to ride on the gravy trains and to laugh at the British taxpayers who will have to foot this bill.
10.55 pm
Mr. Brooke: With the leave of the House, I should like to reply to the debate.
This has been a brief but interesting and lively debate, and I am grateful to my right hon. Friend the Member for Worthing (Mr. Higgins) and those Labour Members who have participated in it. They have underlined once again the importance which the House rightly attaches to the sound management of Community funds.
The views expressed here this evening will certainly be helpful to myself and other United Kingdom representatives as we prepare for the forthcoming Council discussion in Brussels. As in previous years, I intend to draw this debate to the attention of the Community's Budget Commissioner, Mr. Christophersen, and the Chairman of the European Parliament's Committee on Budgetary Control, Herr Aigner, by sending them a copy of the Official Report of today's proceedings.
I should like to deal briefly with some of the points which have been made. The hon. Member for Thurrock (Dr. McDonald), like myself, welcomed much of what is in the report and supported it, but she did have three worries. The first related to intervention stocks. The Government share the court's concern at the level of public intervention stocks and the costs involved, both in budgetary and economic terms, in their purchase and maintenance. We remain firmly of the view that the only satisfactory long-term solution to the problem of increasing intervention stocks lies in a rigorous price policy, enforced over a number of years, which will bring

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the markets back into balance and enable existing stocks gradually to be sold off. That will restore intervention to its correct role as a seasonal or emergency support for agricultural production. The Court of Auditors has urged a more systematic approach to the depreciation of intervention stocks. That, however, can take place only after having regard to the availability of resources under the financial guidelines for agricultural expenditure.
The hon. Lady went on to talk about food aid, to which I also referred earlier. I said that the performance on the emergency side had been significantly better in 1985 than it had been in 1984. The average time taken to deliver most food aid which was given balance of payments support is not significant. Shipments may, for example, have to await the right market conditions in the recipient country. What concerns us is the fact that the emergency shipments have not moved significantly faster than non-emergency shipments. The Commission is now reviewing its food aid procedures, and we have left it in no doubt that we expect the review to produce more streamlined procedures for emergency aid.
The auditors do not suggest that their examples of badly packaged food aid, to which the hon. Lady referred, are typical of the programme as a whole. The Commission has spent more on quality control recently, and we have no reason to believe that the amounts of food aid from the Community unfit for consumption are higher than from other food aid donors, but of course we shall continue to pay attention to that.
The third subject mentioned by the hon. Lady was fraud, and in that she was supported by the hon. Member for Bolsover (Mr. Skinner). Of course the Government are concerned, as I stressed earlier, to ensure that all necessary steps are taken to eradicate fraud from the operation of the CAP.
Mr. William Cash: Paragraph 4.28, page 44 of the Official Journal of the European Communities says:
"The main thing the Court noted was a certain indifference on the part of the Member States to the financial interests of the Community and a more or less general lack of cooperation in a number of areas".
I should like to be sure that when it comes to investigating such matters, Britain will not fall into the category described in paragraph (c), which says:
"finally, the Member States have frequently shown little inclination to cooperate with the Commission's enquiries, particularly when frauds or irregularities within their territory were involved."
I want to be sure that that will not apply to Britain as a member state.
Mr. Brooke: I am grateful to my hon. Friend for raising that matter. I had intended to come to our position. We are generally satisfied with the current arrangements, but of course we are prepared to co-operate in any intensification of activity in that sphere, although naturally we would hope that controls and anti-fraud activities were cost-effective.
Reference has been made to the potential volume of undetected fraud and the fact that it might be larger than the figure that the Court of Auditors has quoted. It is easy to allege that there is a volume of undetected fraud, but if it is undetected it is, by definition, difficult to quantify.
The United Kingdom is active in the field in the prevention of fraud, with Ministry of Agriculture, Fisheries and Food and International Board for Agricultural Produce investigation units and Customs and
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Excise co-operating, not only internally, but through the mutual assistance framework with the authorities of other member states.
Dr. McDonald: The hon. Gentleman has rightly explained what the British Government are doing. Nevertheless, as I stressed in my speech, the activities of other member states leave much to be desired, to put it mildly. Just what is Britain doing to ensure that other member states play their pant? There is no reason why the British consumer should subsidise the fraudulent activities of others, never mind the wasteful CAP.
Mr. Brooke: I sought to say, both in my first speech and just now, that we are supportive of the general attitude to these problems. I give the assurance that the hon. Lady seeks.
The hon. Member for Bolsover quoted from a newspaper report and was good enough to state that people were being caught and arrested. Nevertheless, I have to contest the language that he used.
The hon. Member for Thurrock generally approved the report by the Court of Auditors, and in that respect we share her view.
Mr. Spearing: The hon. Gentleman referred to my hon. Friend the Member for Bolsover (Mr. Skinner) and implied that his language was a little extravagant. On the issue of the Mafia and olives, will the hon. Gentleman at the meeting to which he referred, request the president of the Court of Auditors to state his view or, if not, to report in the succeeding year?
Mr. Brooke: I acknowledge that the level of control exercised in certain member states has been a cause for concern. Olive oil production is obviously one of the issues to which that applies. As the president of the Court of Auditors is coming to the Council's meeting, no doubt there will be an opportunity for a discussion on that matter. the Commission has been assiduous is pursuing the allegations, but has not yet been able to substantiate them. Clearly, the pursuit continues.
My right hon. Friend the Member for Worthing returned to the subject on which he intervened during my first speech. My right hon. Friend and the hon. Member for Newham, South (Mr. Spearing)—I pay tribute to the Select Committee on European legislation, of which the hon. Gentleman is Chairman—referred to the intergovernmental agreements. As I said in my opening speech, the Government do not share the court's views on this matter. I take the point made by my right hon. Friend the Member for Worthing that we are taking issue with an observation by the auditors. I must say, in passing, that disagreements between auditors and their clients are not unknown in the conduct of ordinary professional business.
Whatever one's opinion of the desirablilty or otherwise of such agreements, the Government have no doubt that the agreements for 1984–85 were perfectly compatible with the treaties and involved no infringement of them. All other member states shared the Government's view, as did the Master of the Rolls in our Court of Appeal, as the hon. Member for Newham, South said.
Mr. Higgins: Will my hon. Friend take up my point about reimbursable advances? I said that if extra money was obtained by way of gift, or whatever, that was legitimate, in his view. The Court of Auditors and I do not agree. What about what are effective loans or reimbursable advances? Under what paragraph of the treaty do they fall?
Mr. Brooke: In my first speech I went on to refer to gifts and bequests, but I specifically referred to the phrase in article 4 "irrespective of other revenue" meaning items embraced by the measure.
Mr. Higgins: A reimbursable advance is not revenue; it is a loan.
Mr. Brooke: Just as the Government are in conflict with the Court of Auditors, so it appears that on this subject there will be a continuing debate between us and my right hon. Friend the Member for Worthing.
My right hon. Friend continued to refer to budgetary discipline and correctly identified the dispute between the Council and the parliament, as a dispute which the council is undertaking both in the context of the legality of the budget and to ensure that budgetary discipline is maintained. The hon. Member for Newham, South also drew attention to this matter.
Mr. Higgins: I am grateful to my hon. Friend for giving way. He is always very courteous, and I apologise for intervening again. Under which provision of the treaty is the Community allowed to accept a loan?
Mr. Brooke: It is clear that there are outstanding issues on which, as I said a moment ago, my right hon. Friend the Member for Worthing and I must correspond. I should like to return to the point that all member states are in agreement with the view that we have taken.
Mr. Spearing: They are all wrong.
Mr. Brooke: My right hon. Friend went on to refer to the two new budget lines. The Commission entered in the supplementary budget a new article entitled "expected balance for the year". I referred to this in my opening speech as the cancellation of expenditure appropriations which it was clear would not be needed. By taking this action we will improve budget transparency and ensure that revenue and expenditure are more accurately matched.
The hon. Member for Newham, South referred to the ECOFIN meeting on 10 March. The next step, which will follow the court case which the Council and our Government have initiated, is to ensure that budget discipline is respected in 1987. The ECOFIN Council meeting next Monday is due to discuss the confirmation of the 1987 reference framework. In particular, we will consider the Commission's figures for calculation of the 1987 agricultural guideline, and that will be an important constraint on the 1987 price fixing negotiations.
Mr. Spearing: The point that I made was about the 1986 agricultural settlement and the proposal which I understand will be made, which would breach the framework to which the Minister referred. Will this matter be decided on 10 March and so settle this year's non-budgetary arrangements?
Mr. Brooke: The issue will come before the Council on 10 March, but the Council of Agriculture Ministers will not discuss the matter until 25 March. Preliminary discussions were held a short while ago.
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The hon. Member for Bolsover referred to fraud and drew attention, as did my right hon. Friend the Member for Worthing, to the text of the motion. My right hon. Friend referred to the fact that we were taking note. That motion goes on to endorse the Government's efforts to ensure implementation of the Court of Auditors' recommendations where these would improve the Community's financial procedures. This reveals the Government's strong support for the report from the Court of Auditors and its contribution to the draft procedures. I ask all right hon. and hon. Members to support the motion.
Question put:—
The House divided: Ayes 67, Noes 8.

Division No. 93]

[11.08 pm

AYES

Alton, David

Mather, Carol

Amess, David

Merchant, Piers

Baker, Nicholas (Dorset N)

Nicholls, Patrick

Baldry, Tony

Osborn, Sir John

Brandon-Bravo, Martin

Peacock, Mrs Elizabeth

Brinton, Tim

Penhaligon, David

Brooke, Hon Peter

Portillo, Michael

Brown, M. (Brigg & CI'thpes)

Powley, John

Butcher, John

Proctor, K. Harvey

Butterfill, John

Raffan, Keith

Cash, William

Rathbone, Tim

Chalker, Mrs Lynda

Rhys Williams, Sir Brandon

Chope, Christopher

Roe, Mrs Marion

Clarke, Rt Hon K. (Rushcliffe)

Sainsbury, Hon Timothy

Cope, John

Sims, Roger

Dover, Den

Spencer, Derek

Durant, Tony

Stanbrook, Ivor

Dykes, Hugh

Steel, Rt Hon David

Eyre, Sir Reginald

Stern, Michael

Gregory, Conal

Stewart, Allan (Eastwood)

Griffiths, Sir Eldon

Stradling Thomas, Sir John

Grist, Ian

Thompson, Patrick (N'ich N)

Ground, Patrick

Thurnham, Peter

Hamilton, Hon A. (Epsom)

Wallace, James

Hargreaves, Kenneth

Waller, Gary

Higgins, Rt Hon Terence L.

Watson, John

Howells, Geraint

Watts, John

Hunt, David (Wirral W)

Wells, Bowen (Hertford)

Knight, Greg (Derby N)

Wheeler, John

Lennox-Boyd, Hon Mark

Whitney, Raymond

Lilley, Peter

Wood, Timothy

Livsey, Richard

Lloyd, Peter (Fareham)

Tellers for the Ayes:

Lyell, Nicholas

Mr. Donald Thompson and

Maclean, David John

Mr. Michael Neubert.

Malone, Gerald

NOES

Clwyd, Mrs Ann

Parry, Robert

Duffy, A. E. P.

Spearing, Nigel

Godman, Dr Norman

Leighton, Ronald

Tellers for the Noes:

Lloyd, Tony (Stretford)

Mr. Dennis Skinner and

Loyden, Edward

Mr. Harry Cohen.

Question accordingly agreed to.
Resolved,
That this House takes note of the Annual Report of the European Court of Auditors on the financial year 1984, together with the replies of the Institutions, and supports the Government's efforts to ensure implementation of the Court's recommendations where these would improve the Community's financial procedures.

PETITION

  Allied-Lyons (Takeover Bid)
  11.19 pm
  Mr. Roy Mason: With your permission, Mr. Deputy Speaker, and that of the House, I beg leave to present a petition from the joint trade union committee of the food division of Allied-Lyons plc, initially signed by Mr. Sam Vickers of the Bakers, Food and Allied Workers Union, Mr. Malcolm Self of the Association of Scientific, Technical and Managerial Staffs, and Mr. John Reed of the Electrical, Electronic Telecommunication and Plumbing Union—three senior shop stewards—backed by the signatures of 671 workers of the Barnsley bakery.
  The workers in Allied-Lyons are alarmed at the threat to their jobs because of the proposed takeover bid by Elders IXL Ltd. of Australia. They fear that if the bid is successful, Elders IXL will hive off the food division of Allied-Lyons and the 1,500 workers in the Barnsley bakery believe that they will lose their jobs, especially because of the asset-stripping history of Elders IXL and the nature of the bid. They also believe that this foreign firm will disregard any social consequences of such an act, which could be quite disastrous in an area of 20 per cent. unemployment in the Barnsley, Central constituency.
  The petition reads:
  Wherefore your petitioners humbly pray that your Honourable House will urge the Secretary of State for Trade and Industry to take into account these factors when considering the desirability of such bids for the economy of the United Kingdom.
  And your petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.

PETITION

  Sunday Trading
  11.20 pm
  Mr. David Amess: With your permission, Mr. Deputy Speaker, and that of the House, I beg leave to present a petition which has been signed by more than 1,000 of my constituents who are deeply worried about proposals for unrestricted trading on Sundays. They very much wish to keep Sunday a special day, and I entirely share their sentiments.
  The petition reads:
  To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled. The humble petition of residents of Basildon constituency, sheweth that the undersigned are opposed to the provision for unlimited Sunday Trading in the Shops Bill currently before Parliament, recognising that Sunday has special characteristics as a day of rest, recreation and worship for the benefit of our family and community life.
  Wherefore your Petitioners play that your Honourable House do maintain legal limitations on Sunday Trading to ensure that the special character of Sunday is protected.
  And your Petitioners, as in duty bound, will ever pray, etc.
  To lie upon the Table.

Orsett Hospital
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Archie Hamilton.]
11.22 pm
Dr. Oonagh McDonald: I make no apology for talking about the plight of Orsett hospital, which serves the majority of my constituents.
The hospital's future has been under discussion in the Basildon and Thurrock district health authority area for the past few months. Because so many doubts have been raised about some of the services offered there, my constituents made their views felt by a petition, which 55,000 of them signed. That constitutes almost the whole electorate.
A poll of 500 residents showed unanimous opposition to the removal of any services from Orsett hospital. On 27 February, the district health authority again considered the future of services in the area and proposed this time that all maternity, gynaecological and children's surgery should go to Basildon hospital, subject to a three-month consultation period.
Before I continue, I want to say that I am deeply concerned about the possibility of any cuts in hospital provision in the Basildon and Thurrock district health authority area. Nevertheless, at the moment it is the future of Orsett hospital which is causing me and my constituents great concern.
Although Orsett hospital is situated in the east end of the borough and is in fact in the Billericay constituency, it largely serves my constituency from the west end of the borough. Although Orsett and Basildon hospitals might appear to be not too far apart geographically, the journey from Basildon, from the west end of my constituenly, is very difficult. Constituents—mothers-to-be—travelling from Grays, Purfleet, Tilbury, West Thurrock, Aveley and South Ockendon, find the journey to Basildon hospital even more difficult than the journey to Orsett hospital. If an ambulance had to bring an emergency patient to the hospital, the additional few miles could cause tremendous problems. Traffic in the area is very bad and it would be possible for an ambulance to be held up, perhaps a little too long, to the detriment, even death, of a patient.
The hospital has been described as an excellent hospital in which the maternity unit and antenatal care form a good service for my constituents. About 40 percent. of births in the area take place at Orsett hospital, and it has about 1,700 births per year. I asked the Department of Health and Social Security for figures and found that the number of births at Orsett hospital per year is about average when compared with other maternity units in England and Wales.
The maternity unit at Orsett hospital does not have a special care baby unit, which wouuld be desirable. However, there are about 60 other hospitals with maternity units which do not have special care baby units. If my constituents are to be provided with a full and proper service, not only should the maternity unit remain, but the hospital should be provided with a special care baby unit so that the needs of my constituents can be fully met.
The district health authority has problems of staffing, but it is difficult to be sure what form those problems take. For example, the district health authority suggests that it wishes to phase out a particular grade of specialist in the maternity and gynaecological unit, but when I questioned the Department on that matter, I found that it was not
422
Department policy for that particular grade to be phased out. Staffing problems are indicative of financial problems. Since 1982, the district health authority has had its budget reduced by £2·5 million—5 per cent. Some of that is due to the resource allocation working party formula and some is due to a reduction in efficiency.
Over the period 1984 to 1993 there is a planned reduction for the regional health authority in the long-term resource allocation. All of those cuts will mean not only the disappearance of the maternity unit at Orsett hospital, but the ear, nose and throat, children's services, pre-convalescent geriatric services, cuts in the family planning service and other general cuts. Those cuts are being made in an area which is growing. At present the need for maternity units at Basildon and Orsett hospitals is based on population figures that are somewhat out of date. In fact, the area is developing pretty rapidly. In Thurrock, my constituency, the number of houses has already increased substantially, and most of them are occupied by young families, many of whom will have children in future years. That feature of the area has been picked up by the local press. For example, the Basildon Evening Echo reported on 28 February:
"Essex, already one of the largest shire counties in the country, will be the centre of another massive population explosion between now and the year 2001."
The paper goes on to comment that the prospective baby boom is one of the main Problems·worrying county hall officials, and that possibility should be worrying the district health authority more than it appears to be at the moment.
I also wish to refer to the accident and emergency unit. I have, of course, discussed the matter with the district health authority, including the district manager, Mr. Taylor. He has given me assurances that the district health authority has committed itself to two-centre planning for accident and emergency units—one at Basildon and one at Orsett. In my view, those two units are essential not only because of the population, but because of the serious risks from the industry in the area. Thurrock, in particular, is noted for oil refineries, power stations, petrochemicals and the docks, and the M25 and the dualled A13 are extremely busy roads. As I fear we know all too well, traffic on such roads can mean serious injuries in accidents.
Although I have been given assurances, I am extremely concerned about the future of the two units in view of the cuts in the resources of the district health authority. Some of the savings that the district health authority expects to make will come from competitive tendering for cleaning services and so on. Other savings are supposed to come from increased efficiency. I am sure the Minister knows that, as few services in the Basildon and Thurrock district health authority area have been put out to competitive tendering, the prospective savings from that can be only guessed at, and cannot be regarded as certainties. I do not expect the Minister to admit that, but, on the other hand, the efficiency savings are to be found more on paper than in actuality.
Therefore, I am concerned about the future of those services, in spite of the fact that I believe that the district health authority does not want to see the two accident and emergency units disappear. That point was also covered in the Basildon Evening Echo in some detail on 3 March, just this week.
I referred to the maternity unit, and that of course is my prime concern. It is an efficient and attractive unit.

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Patients readily turn to it. They value the services provided by Orsett hospital very much, and many of the older residents in Thurrock regard Orsett as their hospital. Let me give the Minister a little history. The original hospital for Thurrock was in Tilbury, in the docks area. It was brought into being by public subscription. Eventually that hospital became out of date and was transferred to a new building at Orsett. The hospital is very much the result of past community effort. Any cuts in services, particularly in maternity services, would be bitterly resented by the whole community.
The Minister and other hon. Members have had experience of dealing with petitions. They will know that the obtaining of 55,000 signatures on a petition in a very short time, without any real effort by the organisers, shows the depth of feeling in the constituency about any threat to the maternity services and the accident and emergency units at Orsett.
The number of live births, 1,771 in 1984, means that the maternity unit is about the same size as other maternity units throughout the country. In regard to the views of the medical profession, Professor Sorors, professor of paediatrics at University College hospital, commenting on a suitable and viable size for a maternity unit, said:
"Not less than 2,000 deliveries a year would be ideal … but it is not practicable, I do not suppose, for every woman in this country to be delivered in a unit of that size."
The West Midlands regional health authority has said that a minimal work load of 1,500 deliveries per year is acceptable for a maternity unit. The professor suggested that a large unit was ideal, but he recognised that other considerations were important besides the mere number of deliveries per year. The maternity unit must be acceptable and accessible. Patients must be able to reach it easily, should they find that the birth is more imminent than expected, or is risky. If a patient has to be rushed to hospital, the accessibility of the maternity unit is important.
Because of the antenatal care provided at Orsett, a mother has her baby in familiar and friendly surroundings. I have visited the maternity unit more than once for constituency, not personal, reasons. I have also visited the prenatal unit. I was most impressed by the care and concern shown by the staff, by the brightness and friendliness of the surroundings and by the way in which people are treated in the maternity unit.
The maternity unit is a valued part of the community to which the residents feel they have contributed in the past. They are determined that it should remain. If the petition is anything to go by, my constituents will not accept the closure of the maternity unit. They find the journey to Basildon long, difficult and expensive by public transport. They want their familiar and friendly hospital. The medical and financial reasons are not adequate justification for refusing to let the residents of Thurrock have the service that they need and desire.
The present population want the services. Mothers who are moving into my constituency in large numbers want a convenient maternity unit. If the number of births is to be a consideration, the growth of the population will remove that as a justification for closing the maternity unit. To close the maternity unit only to find that the growth in population necessitated its reopening would be a grave error that would cause unnecessary anxiety and suffering. It would simply be a financial mistake.
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I hope that the Minister will take account of what I have said and begin the consultation period, which will be completed in May. I know that my constituents are relying on me to present their views tonight, and they will no doubt present their views very forcibly indeed during the consultation period.
We expect the Government to ensure that a good maternity service will remain at Orsett hospital to serve my constituency. We hope that the Basildon and Thurrock district health authority area will not experience cuts and loss of services.
11.41 pm
Mr. K. Harvey Proctor: rose—
Mr. Deputy Speaker (Sir Paul Dean): Do I understand that the hon. Gentleman has the agreement of the hon. Lady and the Minister to intervene?
Mr. Proctor: Yes, Mr. Deputy Speaker.
This is the third in a series of Adjournment debates on the reorganisation of health services by the Basildon and Thurrock health authority, and the hospital to which the hon. Member for Thurrock (Dr. McDonald) has referred is in my constituency. I ask the Minister to assure my constituents that Orsett hospital is quite safe. Such an assurance is needed for morale and recruitment reasons which my hon. Friend will readily understand.
Orsett hospital is a larger hospital than Basildon district hospital. It is providing substantially more general surgery and medicine than Basildon. It is the only ENT in-patient service in the Basildon and Thurrock district area. It is less than 15 years old, and in investment terms it is today worth between £30 million and £35 million. There is bound to be at least 60 years of life left in it, and it is needed to provide a substantial part of the acute services for my constituents.
I should be grateful for an assurance from my hon. Friend about the safety and the future of Orsett hospital, and I look forward to his response to the comments of the hon. Lady on the maternity and accident and emergency units.
11.42 pm
The Parliamentary Under-Secretary of State for Health and Social Security (Mr. Ray Whitney): I recognise that the subject that the hon. Member for Thurrock (Dr. McDonald) has chosen is of great importance and concern to her constituents and to the constituents of my hon. Friends the Members for Billericay (Mr. Proctor) and for Basildon (Mr. Amess), whose presence I also welcome.
As my hon. Friend the Member for Billericay said, this is the third debate in as many months on the organisation of NHS facilities within the Basildon and Thurrock health authority. The views of the constituents of my hon. Friends were represented in the debates in January and December. Following the earlier consultation— as the hon. Lady recognised—the district health authority decided not to proceed with its earlier proposals, but on reconsideration it has issued a further set of proposals relating solely to the provision of maternity services.
As in the previous debates, at the centre is the proposal that has been put out for public consultation by the health authority. I must emphasise that it is only for consultation. The proposal is for the centralisation of maternity, gynaecology and paediatric in-patient services on one site

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in the district. If the community health council, which represents the views of the community, objects to the proposal, and if the regional health authority then supports the plans, it will come to Ministers for final decision.
The hon. Lady will well understand that it would not be appropriate for me to pronounce at this stage on the validity of the arguments either for or against the proposals that the district health authority put out only on 27 February for consultation. Therefore, as I hope the hon. Lady will understand, I cannot respond in favour or against her points. I achnowledge that she has properly used the procedures of the House to make clear her constituents' anxiety, which is shared by those of my hon. Friends, but I may not respond in a way that might prejudice the well established procedures for dealing with such important matters.
Comments on the consultation are required by 30 May 1986. All that is said in this debate, and all other relevant factors, will then be weighed carefully by the health authority to see what is best for the overall interests of all its patients. Therefore, the time for Ministers to play their part has not yet arrived, and there is no certainty that it will.
One issue is central to the proposal to relocate Basildon and Thurrock's in-patient maternity services upon which I can comment. It is not unique to this proposal, and it keeps cropping up wherever Health Service reorganisa-tions Are discussed. It is the question where best to locate services in a district with several large population centres. I reiterate the points made by my right hon. Friend the Minister for Health in the Adjournment debate in the House on 3 December, when my hon. Friend the Member for Basildon spoke so eloquently and movingly to express his great concern about the proposal at that time to withdraw in-patient maternity provision from Basildon hospital, and to concentrate maternity services at Orsett. Although the proposal now is to centralise these services at Basildon and not now at Orsett hospital, the points made then remain valid.
First, it would not make sense to provide all facilities come what may in every large town in a district. I hope that the House will accept that. It must be recognised that where it makes no medical or economic sense to preserve the status quo, change is essential and extremely difficult decisions must often be taken. That proposition finds wide agreement in principle, but in practice real and strongly held objections will arise when a town is chosen for a closure or major change of provision. But the health authority has a duty to make those difficult decisions, and to seek to get the balance and distribution of services right for the majority of its patients.
Secondly, I understand that the district health authority continues to believe that mothers and babies in the district will receive better and safer in-patient care, if they are cared for in a central unit where there is adequate
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paediatric cover. I understand that it is proposed that outpatient ante-natal and post-natal clinics will continue at both Orsett and Basildon, as will accident and emergency services. The authority has also said that it is committed to maintaining the integrity of both hospitals as acute hospitals. I hope that my hon. Friend the Member for Billericay will accept that undertaking, which is not challenged.
I understand that there is also a genuine staffing resource problem over providing obstetric services at more than one hospital. The district reports an unstable and unsatisfactory medical staffing structure that would be brought up to standard by centralisation.
Those reasons together suggest to the district health authority that a safer, enhanced standard of service will be provided only if in-patient services for maternity, gynaecology and paediatrics are concentrated on one site. The future organisation of those services are now being considered on their own, and not, as previously, as part of a package covering other services. As a result, the district believes that the services should be centralised, not, as the hon. Member for Thurrock has argued, at Orsett, but at Basildon. I stress that that proposal is service-led and revenue-neutral and does not stem from a desire to save money.
In response to the hon. Lady's point about funding, I hope that she accepts that the issue here is how best to provide maternity cover of the highest quality for her constituents and those of my hon. Friends. It is not a matter of finances. Inevitably, there are financial problems, of which we are all aware, but I repeat—as I have done many times during debates on changes in health provision—that it is important to recognise that the proportion of resources, in real terms, devoted to our health services is steadily increasing. Next year, there will be an increase of no less than 6·7 per cent., with forecast inflation of 4·7 per cent. Of course, RAWP also has an impact here, but North-East Thames regional health authority will receive an increase of 5·7 per cent. —significantly above the forecast rate of inflation.
The district health authority has problems, but here, too, I hope that hon. Members will recognise and acknowledge the achievements of the district authority in treating more patients. For example, between 1982 and 1984, in-patient treatment increased by no less than 12 per cent., and the number of day cases treated increased by 24 per cent.
The district health authority is managing its resources well and is extremely sensitive to the needs of the community. It is seeking better provision, and I hope that the consultation exercise will achieve that. I assure the hon. Lady and my hon. Friend that their contributions to the debate will be taken carefully into account as part of the consultation exercise which an issue of this seriousness and importance merits.
Question put and agreed to.
Adjourned accordingly at nine minutes to Twelve o' clock.