Commons Sitting of 11 July 1988

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  NORTHAMPTON BILL [Lords]
  Read a Second time and committed.
Oral Answers to Questions
  TRANSPORT

    Pedestrians (Casualties)
    Mr. Robert G. Hughes: To ask the Secretary of State for Transport what research has been undertaken in the last two years into measures to reduce pedestrian casualties.
    The Parliamentary Under-Secretary of State for Transport (Mr. Peter Bottomley): A lot. This is one of our highest priorities.
    Mr. Hughes: I thank my hon. Friend for that full answer to my question. When looking at pedestrian casualties, has my hon. Friend taken into account the important part that can be played in preventing casualties by using speed humps to slow down vehicles? Does he agree that it is almost impossible for a local authority to institute speed humps, because the road either has too much or too little traffic and never seems to be quite right?
    Mr. Bottomley: I may arrange to have more detailed information placed in the Official Report. This year we are spending £1·5 million as part of a £5 million pedestrian-related safety programme.
    We are on our second or third set of regulations relating to speed humps. I should be delighted to relax the regulations again. They have been made tight in the past to avoid their being rubbished because of one accident, but they can prevent many. I hope that we will find ways of reducing or eliminating the cost of drainage, which accounts for two thirds of the cost of road humps. More road humps could then come in. I will pay special attention to the degree of traffic.
    Mr. Allen: The Minister will be aware that the North report on road traffic law has been published, and he will have a copy. When will that report be brought before the House in the form of legislation, especially to avoid pedestrians being killed by reckless driving or—under the North recommendations—the new offence of "bad" driving?
    Mr. Bottomley: The House will know that my right hon. Friend has promised a preliminary report before the end of this Session—the rest will follow on. I look forward to the time when heavy goods vehicles will stop intimidating and crashing into cars; cars will stop crashing into motor cycles; motor cyclists will leave cyclists alone; cyclists will leave pedestrians alone; and pedestrians will not get so drunk and kill so many of themselves. We all need to recognise the importance of co-operation on our roads.
    Mr. Simon Coombs: Does my hon. Friend recognise that the answer to pedestrian safety lies in education? What discussions have he and his departmental colleagues had with the Department of Education and Science about pedestrian safety tuition being included in the core curriculum for all schoolchildren?
    Mr. Bottomley: It is not so much a question of incorporating that into the core curriculum, as of trying to go from one school out of five knowing what it is doing about road safety training to five out of five. The

    3
    Department of Transport, the Department of Education and Science and local education authorities have a responsibility to ensure that any parent, teacher or governor can work through a checklist so that more can be done to provide safety for the children in their school.

    Traffic (Central London)
    Mrs. Ray Michie: To ask the Secretary of State for Transport what plans he has to reduce the density of private motor traffic within central London.
    The Secretary of State for Transport (Mr. Paul Channon): I aim to promote measures to help the existing traffic to flow more freely. The measures that we are taking are improving trunk roads to take traffic round, rather than through, London; promoting the use of new technology to improve traffic management; encouraging more effective parking controls; and working with British Rail and London Regional Transport to improve the quality of the rail and Underground systems.
    Mrs. Michie: Does the Minister have a view on the report in the press today that four private consultant firms consider that London should have a network of new toll roads? Would it not be much better for the public to use public transport? How will he encourage them to use it much more?
    Mr. Channon: On the first part of the hon. Lady's question, that is an extremely unlikely idea. She is referring to a progress report by consultants who have been working on the project for two years and have another year to go. None of the suggestions has had the blessing of the Government. They are merely progress reports to be considered by the relevant people.
    It is absolutely essential to increase investment in public transport. I am determined that we should have a better commuter service into London and a better Underground service. That will be done by providing, as we have, large measures of investment in those services.
    Mr. Squire: In view of the congestion in the Westminster area, will my right hon. Friend confirm that his Department is looking at proposals to build a tunnel under the Thames to take through traffic well away from Westminster?
    Mr. Channon: Westminster city council and the Government have commissioned a consultants' report to examine that matter. We await the report.
    Mr. Corbyn: Will the Secretary of State take this opportunity to tell the House and the public at large that the report in The Guardian today is accurate, that he condemns the plans to demolish 5,000 homes in London and introduce toll roads in London, that he will call a halt to all major road building in London, and that instead he will put far more resources into public transport and diverting traffic around London? Is he aware that when the GLC was controlled by Labour the use of public transport increased significantly and that road traffic in London was reduced because London's transport policy was directed towards the needs of the people of London rather than towards the minority of car commuters and heavy goods vehicles traversing London?
    Mr. Channon: I assure the hon. Gentleman that the use of public transport is increasing a great deal faster now
    4
    than it was when the GLC was in existence. Investment in the Underground is 60 per cent. higher in real terms than it was under the GLC, which starved the Underground of investment.
    Mr. Tony Banks: Oh, come on.
    Mr. Channon: Well, I shall give the figures to the House. Today, investment is running at £365 million a year. That is 60 per cent. higher in real terms than when the GLC had control of the Underground. As for the first part of the hon. Gentleman's question, I have already made it clear that these are progress reports of studies that were announced two years ago. The sensational story in The Guardian today merely repeats an answer that my hon. Friend the Under-Secretary of State for Transport gave to the House on 27 June and information that was placed in the Library over two weeks ago.
    Mr. Cormack: But is not the time coming when my right hon. Friend will have to consider radical remedies, such as charging people extra for driving regularly into London and restricting deliveries by goods vehicles to the hours of darkness?
    Mr. Channon: I should be very reluctant to charge people for travelling into London by road. It would allow only those who could afford it to come into London by car. It would be very difficult and bureaucratic to operate and would lead to many unfairnesses. My hon. Friend may be right. One day somebody may have to do that, but it is a deeply unattractive option which I am not at all keen to pursue.
    Mr. Tony Lloyd: Will the Secretary of State, in what might be described as a moment of glasnostian candour, admit that his Department does not have a clue what about to do about getting cars off the roads of London? His response to his hon. Friend the Member for Staffordshire, South (Mr. Cormack) illustrates that fact. Does the Secretary of State admit that on the Kensington-Fulham border, where four years ago the Government refused to allow the GLC to invest £25 million to improve the rail system, the Government are now talking about an investment of £150 million to build two miles of road, which would mean pulling down houses and bringing further traffic on to an already too dense traffic system?
    Mr. Channon: I cannot understand why the hon. Gentleman should show this sudden interest in Kensington. So far as I know, he has never before asked a question about Kensington and I suspect that he will never again. I repeat that we have no new proposals for changing the road system in Kensington.
    Mr. Harry Greenway: Why is not more use made of the River Thames and other waterways in London, which would take traffic off the roads? Will my right hon. Friend take a trip to Venice and see the effectiveness of the water buses there and introduce them on the Thames?
    Mr. Channon: I cannot imagine anything nicer than a trip to Venice. My hon. Friend is on to a good point. In the past we have neglected the Thames far too much. I hope that commercial services will start very shortly. Such a service already exists between, more or less, this House and

    5
    docklands. I hope that it will be extended to Chelsea. It will play a useful part in carrying a proportion of the traffic that wants to come into the centre of London.

    Roads
    Mr. Blunkett: To ask the Secretary of State for Transport what action he proposes to take in the light of the Audit Commission report on local authority maintained roads; and if he will make a statement.
    Mr. Channon: The main action is for local authorities. I have already urged them to implement the commission's recommendations for spending up to their provision on maintenance, and for improving the efficiency of their arrangements. I repeated this message at a meeting with them only last week.
    Mr. Blunkett: The Secretary of State will be aware that the Association of Metropolitan Authorities has welcomed the bulk of the Audit Commission's report, but obviously some matters still cause it concern. Over the 10 years to 1986 traffic on urban roads increased by more than 20 per cent., but spending fell by 10 per cent. Deregulation has put more traffic on the roads, and revenue support for public transport fell from £512 million to £249 million between 1982 and 1987. As a consequence, and as has already been said this afternoon, there is a major crisis in road maintenance and traffic management. Does the Secretary of State have any positive proposals rather than encouraging local authorities to spend more and then penalising them when they do so?
    Mr. Channon: I am not doing the latter, as the hon. Member knows. I have provided local authorities with nearly £150 million for 1988–89 above their estimated expenditure. If only local authorities will get on and spend that money, local roads will be considerably improved. That is the action I am urging them to take.
    Mr. Brandon-Bravo: I am sure that my right hon. Friend agrees that people living in our larger cities, such as Nottingham, hold their district council responsible, when it is the county council that holds the purse strings. Will he re-examine that aspect and either insist that counties spend their full allocation, or make the money available to districts, so that they can deliver what the public demand of them?
    Mr. Channon: I shall consider my hon. Friend's suggestion, although I suspect that it might turn out to be mildly controversial. The important point is that the relevant authorities have had the money and they must spend it, or our local urban roads will deteriorate, and then the cure will be very much more expensive.

    British Rail
    Mr. Roy Hughes: To ask the Secretary of State for Transport when he last met the chairman of British Rail; and what matters were discussed.
    The Minister for Public Transport (Mr. David Mitchell): My right hon. Friend the Secretary of State last met the chairman of British Rail on 24 May. They discussed a variety of railway matters.
    Mr. Hughes: In view of the announcement that is expected this week about new investment schemes for the
    6
    Channel tunnel project., can the Minister give a preliminary indication that British Rail will be allowed to invest in Wales, Scotland and the north of England, and that there will not be just another bonanza for south-east England? Will the Minister bear in mind that the port of Calais is a relatively deprived area, but stands to gain considerably from the Channel tunnel project?
    Mr. Mitchell: British Rail expects to publish its study on Thursday. The hon. Gentleman will know that British Rail is planning to invest about £3,800 million over the next five years. Moreover, whatever area of the country may be the subject of viable British Rail proposals for investment, I shall consider them sympathetically.
    Mr. Gale: My hon. Friend has been instrumental in securing improved road transport facilities for north-east Kent. When he last met the chairman of British Rail, did he impress upon him the need for a rail service to replace the rather mediocre one from which we suffer at present, which, in these days of high-speed trains, transports passengers at an average speed of 40 mph?
    Mr. Mitchell: As to Kent passenger services, part of the reason for the study being published on Thursday is to ensure that British Rail can cope with Channel Tunnel traffic without damaging commuter services.
    Mrs. Margaret Ewing: Does the Minister agree that it is vital that investment in the so-called regions of the United Kingdom be increased? Is he aware of the high demand for increased electrification of the east coast line north of Edinburgh, and of continuing demand for a rail crossing at Dornoch Firth? Both are of vital importance if we are not to be disadvantaged when the Channel tunnel comes on stream.
    Mr. Mitchell: Investment in British Rail is designed to meet the volume of passenger or freight demand. In the further regions of Scotland the passenger volume is a great deal less than it is in some other parts, but wherever British Rail has a viable business project to bring forward for investment purposes we shall look at it very carefully.
    Mr. Nicholas Bennett: When my hon. Friend saw the British Railways Board, did he stress that when the board brings forward proposals for privatisation it will not be thought acceptable for British Rail merely to be transferred to a private monopoly? What Conservative Members want is competition.
    Mr. Mitchell: These are very early days in our plans for the longer-term future of British Rail, with privatisation as an option, but I shall of course keep my hon. Friend's point in mind.
    Mr. Snape: When the Minister next meets the chairman of the board, Sir Robert Reid, will he impress on him the need for proper facilities for both passenger and freight traffic arising from the Channel tunnel development? Those facilities are necessary across the provinces and regions, and particularly in the west midlands.
    Will the Minister also insist that on-train customs and immigration facilities should be provided on cross-Channel trains, in the same way as they are in the rest of Europe? Will he ignore the reactionary views of the Home Office, which predictably wants more bureaucrats than passengers on the trains?
    Mr. Mitchell: I shall of course ensure that the hon. Gentleman's comments about proper facilities for Channel traffic are conveyed to the chairman. Substantial consultation is taking place about the services, particularly freight services, that should be provided from north of London and throughout the country to maximise the benefits from the Channel tunnel.
    When I next meet the chairman, I think that I should tell him that we are very pleased to learn from his recent report that he is getting there—and getting there much faster than we expected. After all, 1987–88 was an outstanding year, with the highest operating surplus in British Rail's history. Passenger volumes were the highest for 27 years, and passenger earnings were the highest in real terms since nationalisation.

    Road Crossings
    Mr. Chapman: To ask the Secretary of State for Transport what is the Government's policy on providing equestrian, cycling or pedestrian bridges across, or tunnels under, major roads, and what criteria are laid down for such projects.
    Mr. Channon: We consider suggestions and proposals on their merits.
    Mr. Chapman: Will my right hon. Friend look sympathetically at the need for a combined equestrian, pedestrian and cyclists' crossing on the section of the A1 between South Mimms and Stirling corner, not only because it is effectively of motorway standard, but because of the volume and velocity of the traffic on the road? For example, 800 horses are stabled in that corridor of that part of north London.
    Mr. Channon: My hon. Friend has raised this difficult matter assiduously on behalf of his constituents. As he says, the Al is a very large road with a great deal of traffic, which makes it very difficult to cure the problem of horses crossing it. What my hon. Friend suggests would cost a good deal and I shall have to consider it carefully, but it is an important point and I shall certainly look into it.

    Crowlas Bypass
    Mr. Harris: To ask the Secretary of State for Transport what representations he has received seeking a bypass for Crowlas on the A30.
    Mr. Peter Bottomley: Penwith district council, the A30 Action Group, the Crowlas A30 Action Group, Ludgvan parish council and the Ludgvan conservation society have supported my hon. Friend in pressing for the inclusion in the national roads programme of a bypass for Crowlas.
    Mr. Harris: My hon. Friend will know from letters that he has received from the bodies that he has listed of the strong and entirely justifiable feeling of residents of those communities, whose lives are made a misery by the amount of traffic on the existing road that masquerades as the A30. Will he give an undertaking that the long-awaited bypass will be included in the programme to be announced, presumably, next spring?
    Mr. Bottomley: Without prejudging decisions to be made then, I can say that it will certainly be considered.
    Mr. Tredinnick: Although I am sympathetic to the problems of the A30, is my hon. Friend aware of the difficulties facing my constituents because junction 1 on the M69 goes only in a northerly direction? Will he consider pressing his Department to answer the requests made three years ago for an inquiry into why that is, and take express measures to get the southern link built?
    Mr. Bottomley: The Department will consider what my hon. Friend has said.

    Wheel Clamping
    Dr. Michael Clark: To ask the Secretary of State for Transport what guidelines and advice he has given recently on wheel clamping and the circumstances in which it should be used; and if he will make a statement.
    Mr. Peter Bottomley: Requests for wheel clamping areas may be made by local highway authorities to my right hon. Friend. We issued a guidance note on selection criteria in May 1987. Responsibility for operational matters rests with the police.
    Dr. Clark: Does my hon. Friend agree that wheel clamping should be reserved primarily for deterring motorists from parking in no-parking areas, and that clamping motor cars parked in residential areas without permits or at parking meters after the clock has run out is an inappropriate use of clamps which should have low priority?
    Mr. Bottomley: Most people will agree that what is important is that when a car should not be parked in a certain place an effective deterrent is needed—clamping is certainly that. The other matters are rather more operational and I shall make sure that they are considered in the appropriate places.
    Mr. Campbell-Savours: May we have an inquiry into how a back-street garage in Brighton managed to secure the contract for removing vehicles from the streets of Brighton?
    Mr. Bottomley: I do not have a clue.
    Mr. Higgins: While, in general, wheel clamps seem to waste an enormous amount of police time and slow down traffic even more than would have happened if the vehicles were not clamped, will my hon. Friend consider putting massive wheel clamps on coaches on Westminster bridge which discharge their passengers into the centre of the road and are likely sooner or later to cause a serious accident?
    Hon. Members: Hear, hear.
    Mr. Bottomley: The House notes my right hon. Friend's persistence in this matter. It would be appropriate if the Department encouraged the relevant authorities to get together to try to solve the problem before there is a serious accident.
    Mr. Tony Banks: Is the Minister aware that the low level of enforceability of parking restrictions in London is a matter of massive concern to hon. Members and Londoners generally? What does he think about the proposal that local authorities should take over responsibility for the traffic warden system? If we could decriminalise parking in London, the fines that could be

    9
    levied by the local authority run traffic warden system could go direct to paying for the cost of the system, in which case we could perhaps get somewhere with enforcing parking restrictions in London.
    Mr. Bottomley: The hon. Gentleman is good at encouraging us to suck eggs. The important part of this question and the answers to it is that the privatisation of wheel clamping and towing away has led to a higher degree of deterrence, which is to be welcomed. I know that the hon. Gentleman is against the privatisation or contracting out of anything——
    Mr. Tony Banks: Why does the Minister not answer the question? He is so stupid and smug.
    Mr. Speaker: Order.

    Driving Instructors
    Mr. Michael Brown: To ask the Secretary of State for Transport what further measures are being taken to improve the quality of driving instructors.
    Mr. Peter Bottomley: Targeting and extension of check testing; widening the syllabus and introducing a banding system in the written examination; and limiting failures in the practical tests.
    Mr. Brown: Does my hon. Friend agree that although those actions will go a long way towards increasing the quality and standard of driving instructors, it might also be a good idea to publish league tables showing how successful individual driving instructors and schools are?
    Mr. Bottomley: It is certainly true that for a market to work effectively one needs not only competition but information. The point my hon. Friend makes is being considered and discussed with the associations of driving instructors. There are problems, especially those of identifying a candidate with a particular instructor, but we shall report to the House when we have come to a conclusion on these matters.

    Inner Cities
    Mr. Sayeed: To ask the Secretary of State for Transport what action his Department is taking to aid the regeneration of inner city areas.
    Mr. Channon: We have under construction or in our plans, road schemes worth £2 billion to assist inner city areas. Transport supplementary grant is assisting local roads costing £600 million in these areas. The London Docklands light railway has shown how innovative public transport can help to attract private sector development.
    Mr. Sayeed: In welcoming my right hon. Friend's excellent answer, may I ask whether he would care to amplify it by saying what contribution he is encouraging from private finance to increase the transport systems in inner city areas?
    Mr. Channon: We are working very closely with the private sector to try to bring enterprise back to inner city areas. The best known example is Canary wharf, where the developers are jointly funding the Docklands light railway
    10
    extension. Another example is the Meadowhall development in the Don valley, to which my Department will contribute 30 per cent. of the cost of the access roads. I am sure that there is scope for further extending this process.
    Mr. Rees: Who will have responsibility in the UDC areas that the Government have set up for the planning of roads?
    Mr. Channon: Local highway authorities will have that responsibility.

    Public Transport (London)
    Mr. John Marshall: To ask the Secretary of State for Transport if he expects to announce a major initiative to improve public transport in London.
    Mr. David Mitchell: My right hon. Friend the Secretary of State announced a study into the overcrowding problems on British Rail and London Underground services in central London in March this year. It is too early to say what proposals may emerge from it.
    Mr. Marshall: May my hon. Friend tell the House when he expects this study to be concluded? May we have an assurance that a major factor in the study will be the proposals that have been put forward to improve the capacity on the Northern line, which has been described by the chairman of London Regional Transport as "an abomination"?
    Mr. Mitchell: We expect the central London rail study to report shortly to Ministers. We shall have to consider it before we can come to any conclusions on it. Investment for improvements to the London Underground is running at the rate of £1 million a day, and that is nearly 60 per cent. higher in real terms than in 1984–85.
    Mr. Home Robertson: Will the Minister take this opportunity to say something about the shameful chaos at London's airports? Why are the Government failing to carry out the investment programme that is required to bring air traffic control in the south of England up to the standard that ought to be required?
    Mr. Mitchell: That is a somewhat different question, but I can tell the hon. Gentleman that the problem lies, not in the airports, but in congestion in the air space.
    Sir John Biggs-Davison: Can my hon. Friend confirm the report in Private Eye that London Buses Ltd. is thinking again about the introduction of one-person operated buses in central London?
    Mr. Mitchell: London Buses Ltd. identifies appropriate services for the introduction of one-man operation. It is not the intention of London Buses Ltd. to operate such buses throughout the system. It is a question of considering the matter route by route and forming a judgment about the best method for each route.

    Ferry Crews
    Mr. Tony Lloyd: To ask the Secretary of State for Transport what steps are taken to ensure that existing procedures avoid any risk of double counting by his inspectors of crew numbers on ferries.
    Mr. Channon: Some 118 inspections of cross-Channel ferries carried out in the last six months have revealed no evidence of double counting of crew.
    Mr. Tony Lloyd: Will the Secretary of State confirm that all inspections of the ferries are done by prior arrangement with the ferry operator? Would he care to comment on what steps his Department took to examine the allegation that appeared recently in the press to the effect that crew members were being shifted from ferry to ferry in order to make up the crewing complements?
    Mr. Channon: The hon. Gentleman is wrong. The inspections are not all done by prior arrangement. I have checked carefully and repeat that some are not done by prior arrangement. My marine surveyors have found no evidence to support the allegation in the hon. Gentleman's supplementary question.
    Mr. David Shaw: Will my right hon. Friend confirm not only that the Government have implemented many of the proposals of the Sheen inquiry about ferry safety, but that all the people who work on our ferries are now working on ferries that are far safer than they have ever been in the history of Britain's ferry transport?
    Mr. Channon: We have carefully implemented a great many of the recommendations of the Sheen report. We may have to consider more. I confirm what my hon. Friend says about the immense amount of work that has been done and the immense amount of work being caried out by my surveyors to make sure that ferries are sailing safely.
    Mr. Skinner: In the past few months there have been several major accidents and lack of safety has been central to almost every one of them. Those accidents were at Zebrugge, King's Cross and now in the North sea. In the light of that, would it not make sense for the Government, instead of taking the side of Jeffrey Sterling and P and O, to institute a proper inquiry into all the complaints about lack of proper inspection on the ferries? Would it not make sense to get on with the job and carry out an impartial investigation instead of siding with the management?
    Mr. Channon: I do no such thing, as the hon. Gentleman knows perfectly well. I treat his remarks with contempt. We investigate carefully any allegations that are made, from whatever source they come.

    Coach Safety
    Mr. Cran: To ask the Secretary of State for Transport what was the outcome of his discussions in June with the Bus and Coach Council on improvements in coach safety.
    Mr. Peter Bottomley: The outcome of the discussion was that the Bus and Coach Council agreed to make progress on the safety of power doors and the need to fit seat belts.
    Mr. Cran: Does my hon. Friend agree that, as his Department's figures show that bus passengers are three times more likely to be injured than, for example, rail passengers, the cost of £1,000 to £1,500 to give seat belts to all passengers in a 57-seater bus is cheap at the price?
    Mr. Bottomley: It is worth remembering that we need to go step by step. The House passed the Motor Vehicles (Wearing of Rear Seat Belts By Children) Bill 1988. We are
    12
    requiring seat belts in the exposed front seats of coaches, but is has not yet been made mandatory. I prefer to see coach operators fit seat belts voluntarily and then see whether passengers are willing to use them. I agree with my hon. Friend that we need to continue to try to improve safety in all forms of transport, but travelling by coach is substantially safer than travelling by car. Perhaps we should turn our attention to car safety, even more than to coach safety.
    Sir Anthony Grant: Is my hon. Friend aware that one of the greatest contributions that could be made to safety in coaches would be to stop them going too fast in the wrong lane on motorways, too close behind other vehicles? Is he aware that, in Japan, heavy goods vehicles are fitted with lights which show when they are exceeding the speed limit and that it is perfectly possible to have a system which shows when they are too close behind another vehicle? When will he do something along that line?
    Mr. Bottomley: Very shortly. Legal speed limiters on coaches are coming in, and that is greatly welcomed. The excessive speeds of coaches have been reduced dramatically. Speeding by HGVs and by cars has come down, although not speeding by motor cycles. We should pay attention to my hon. Friend's point about automatic visibility signs on speeding vehicles. In Singapore, for example, light vehicles flash a yellow light when they are going too fast and the police just wave them in.

    Minibus Services
    Mr. Pike: To ask the Secretary of State for Transport what percentage of services in England outside London are now operated by minibuses.
    Mr. David Mitchell: Information is not available in the form requested. Deregulation has encouraged operators to introduce minibuses on their services and they now represent about 10 to15 per cent. of all PSVs used on local services. Passengers in over 400 areas are benefiting from this flexible form of transport.
    Mr. Pike: With respect, does that answer not show that the Minister does not really know what has happened as a result of the Transport Act 1985? Should the Government not do more to survey the congestion that arises in some areas, as well as boasting about the improvements achieved? Many people have suffered a deterioration of service. Why does the Minister not analyse the situation and give a full report to the House?
    Mr. Mitchell: The hon. Gentleman will be interested to know that the latest research shows an increase from 400 minibuses operating in 40 places throughout the country before deregulation to no fewer than 5,600 in over 400 places. The big advantage of the minibus is that it reaches those parts that bigger buses cannot reach.
    Mr. Hind: Is my hon. Friend aware that I, like the hon. Member for Burnley (Mr. Pike), come from Lancashire and that, in the rural parts of Lancashire that I represent, there are more minibuses than ever before, which are reaching far more customers in those areas and are greatly appreciated by the communities there?
    Mr. Mitchell: I am grateful to my hon. Friend for calling attention to one of the most phenomenally successful aspects of deregulation.

    Waste Imports
    Mr. Butler: To ask the Secretary of State for Transport what assessment he has made of the impact on the trunk roads network in Merseyside of increased heavy vehicle movements consequent upon the importation of American waste for dumping in Warrington.
    Mr. Peter Bottomley: None.
    Mr. Butler: Will my hon. Friend now proceed to such an assessment, given that 600 22-tonne lorry movements will be involved every day from Liverpool to Warrington for five years, bringing in 7½ million tonnes of rubbish to my constituency? Does he not think that that is an unacceptable strain on the road network in the area?
    Mr. Bottomley: My hon. Friend would be on stronger ground if he were to refer the House, as I will, to the clear statement made by my hon. Friend the Under-Secretary of State for the Environment on 30 June. I imagine that some cases involve a Department of Transport interest, but it is worth noting that those issues are mainly the responsibility of my right hon. Friend the Secretary of State for the Environment, with some important aspects for my right hon. Friends the Minister of Agriculture, Fisheries and Food and the Secretary of State for Social Services.

    Road Bridges
    Mr. Tom Clarke: To ask the Secretary of State for Transport how many motorway and trunk road bridges are currently in need of repair.
    Mr. Peter Bottomley: Between 5 and 10 per cent. of the department's 8,500 or so bridges need structural maintenance each year.
    Mr. Clarke: Does the Minister accept that that is quite a high figure and that those of us who use the motorways and the north-west trunk road bridges realise that, apart from avoiding accidents, there are opportunities to provide jobs in the construction industry?
    Mr. Bottomley: We can no longer say that the country has a major problem with jobs in the construction industry. Some of us consider that in some parts of the country the position is slightly the reverse. Programmes of maintenance have kept pace with the need for general repairs, and the special needs of older bridges in particular are being tackled under a 15-year strengthening and upgrading programme.

  ATTORNEY-GENERAL

    Birmingham Pub Bombings
    Mr. Mullin: To ask the Attorney-General when he last met the Director of Public Prosecutions to discuss the investigation by City of London police into telephone calls made by Dr. Frank Skuse during his appearance as a witness at the Old Bailey in the case of the six men convicted of the Birmingham pub bombings.
    The Attorney-General (Sir Patrick Mayhew): On Friday 8 July 1988.
    Mr. Mullin: Has Sergeant Paton been asked when he was last in touch with Dr. Skuse, and if so, what was his reply? If the Attorney-General cannot answer that question now, will he undertake to supply an answer later?
    The Attorney-General: I will undertake to remind the hon. Gentleman of the course that the inquiry has taken. On 17 March he made the assertion that Dr. Skuse had been in touch with the former Detective Sergeant Paton in the course of his evidence at the Court of Appeal hearing. My hon. Friend the Minister of State advised the hon. Gentleman to place any evidence he might have of any possible irregularity before the police. It was not until 3 June, in response to a request made on 9 May from the Commissioner of the City of London police for the source of the information, that the hon. Gentleman identified the source of his information. That turned out to be somebody who, in turn, had it from somebody else, anti he has refused to identify that person. Therefore, the inquiries have come to an end.
    Mr. Marlow: What is the value to IRA fund raisers in America of the campaign by subversives and muddleheaded Opposition Members to undermine the credibility of British justice? What is the cost in United Kingdom lives?
    The Attorney-General: On 20 June, when I Last answered questions on these matters, I said that I deprecated as being very harmful, determined attempts, as they are seen to be, to undermine confidence in the administration of justice. I reiterate that opinion today in response to my hon. Friend.
    Mrs. Clwyd: To ask the Attorney-General when he last met the Director of Public Prosecutions to discuss the further police inquiry into telephone calls made by Dr. Frank Skuse during the Birmingham pub bombings appeal.
    The Attorney-General: I refer the hon. Lady to the answer that I have just given to the hon. Member for Sunderland, South (Mr. Mullin).
    Mrs. Clwyd: Is the Attorney-General aware that during the previous police inquiry carried out by the Devon and Cornwall police, Sergeant Paton changed his statement to make it fit in with Dr. Skuse's version of events? Has he been asked why he did that?
    The Attorney-General: I recall that the Court of Appeal, in its judgment delivered in February, had this to say about the scientific evidence to which much of the inquiry and the fresh evidence had related. I shall cite what was said by the Court of Appeal:
    "We repeat the question which we posed for ourselves before considering the impact of the fresh evidence and answer it without any hesitation as follows: nothing has emerged from this mass of material which causes us to doubt that the scientific evidence proves that one or more of these appellants had been in recent contact with explosives."
    The conclusion of the judgment states:
    "As has happened before in References by the Home Secretary to this Court under Section 17 of the Criminal Appeal Act 1968, the longer the hearing has gone on, the more convinced the court has become that the verdict of the jury was correct.
    We have no doubt that these convictions were both safe and satisfactory."
    As to whether any witness at the main trial or at the hearing before the Court of Appeal gave conflicting

    15
    evidence in any regard, each of those matters was considered in a hearing before the Court of Appeal, which lasted longer than any similar hearing. That is the measure of the confidence that the country should have in the outcome.
    Mr. Baldry: Is not the fact of this case that my right hon. Friend the Home Secretary exercised his powers to refer the case to the Court of Appeal? Having heard all the evidence that the men's legal representatives wanted to put before the Court of Appeal, the court decided that the convictions were safe and that there was no reason to interfere with them. Having regard to the length of time that the Court of Appeal took in hearing the case, is it not now time to say, once and for all, that there is absolutely no reason why those convictions should in any way be questioned or interfered with?
    The Attorney-General: It is very important to remind ourselves that every opportunity was given to those who take the view of the hon. Member for Sunderland, South (Mr. Mullin), that there was something unsafe in the original convictions, to call fresh evidence and review the previous evidence before the Court of Appeal. I have read, because I thought that it would be helpful to do so, the opinion of the Court of Appeal on that fresh evidence. Accordingly, to keep on and on seeking to undermine the reliability of the conclusion of the Court of Appeal without further evidence is very harmful to public confidence.

    "Spycatcher"
    Mr. Cryer: To ask the Attorney-General if he will make a statement on the implications for his general policy on initiating litigation of the costs of legal actions relating to the book "Spycatcher".
    The Attorney-General: To enforce the duty of confidentiality owed to the Crown I shall, on behalf of Ministers collectively, continue to take such steps by way of civil proceedings as appear to the Government to be appropriate.
    Mr. Cryer: Does the Attorney-General accept that where there is a serious criminal seditious conspiracy, it is a civil servant's duty to expose that conspiracy, and that an attempt to bring down the 1974 Labour Government is set out in Peter Wright's book "Spycatcher"? Is it not shocking that the Attorney-General should spend in excess of £1 million trying to suppress that book, which no Government officer has tried to contradict, when those people in MI5—Tory supporters—who tried to organise the downfall of the democratically elected Government of the day are getting away with it scot-free? What is the Attorney-General going to do about law and order and maintaining the reputation of British justice if he lets those Tory people in MI5 get away with it?
    The Attorney-General: The litigation that has been conducted on behalf of the Government in these courts and in courts elsewhere in the world has resulted in an affirmation of the duty of confidentiality that is owed by those who have served in the security services. It is extremely important that, where there is reliable evidence of criminal activity, that should be investigated. The Director of Public Prosecutions has expressed his conclusions with regard to the assertions that the hon.
    16
    Member for Bradford, South (Mr. Cryer) has in mind. It is equally important that the duty of confidentiality owed by former members of the security services should be enforced. If any Government were to shrink from enforcing that duty, the cost would soon be paid, not in money, but in lives.
    Mr. Lawrence: Is it not typical of Opposition Members to attach such a low financial price to the upholding of a principle so important for a free society as the confidentiality of those secret service agents who are sworn to protect the nation's secrets?
    The Attorney-General: This is yet another example of the wide gulf between the opinions of all our constituents on the one hand and the opinions of certain Opposition Members on the other.

    Landlord and Tenant Laws
    Mr. Fraser: To ask the Attorney-General what studies the Lord Chancellor is currently undertaking into the law relating to landlord and tenant, in the light of recent reports from the Law Commission.
    The Solicitor-General (Sir Nicholas Lyell): The Government have under current consideration three recent reports of the Law Commission relating to different aspects of landlord and tenant law.
    Mr. Fraser: During his canvassing in north Kensington, has the Solicitor-General been struck by the unanswerable case for leasehold reform for flats? Since the report of the Law Commission into strata title makes it immensely easier to have a framework for enfranchisement, will the Government announce that they are now as in favour in principle of leasehold enfranchisement for flats as for houses?
    The Solicitor-General: As the hon. Gentleman knows, that is a matter for my right hon. Friend the Secretary of State for the Environment. The Law Commission's most recent report is an agenda for consultation.

    North Report
    Mr. Allen: To ask the Attorney-General what further consideration he has given to the implications for prosecuting policy of the North report on road traffic law.
    The Attorney-General: The implications for prosecution policy of the report of the road traffic law review will not become apparent until the detailed scrutiny of its recommendations now under way is complete, and my right hon. Friends the Secretaries of State for Transport and for the Home Department have made such legislative proposals as they may then think fit.
    Mr. Allen: The Attorney-General may not be aware that in Transport Questions one of his colleagues said that the North report recommendations might come before the House before the summer recess—[Interruption.] He said a lot else besides. If the Under-Secretary of State for Transport wants to contribute, he will have to wait. Does the Attorney-General—[Interruption.]
    Mr. Speaker: Order. These are questions for the Attorney-General.
    Mr. Allen: Well, I hope that we get further than we did with the Under-Secretary of State for Transport. Does the Attorney-General agree with the Solicitor-General that the courts will have the power in future to extend sentences relating to "bad driving" should the "bad driving" offence, which is one of the recommendations of the North report, be agreed by the House? Does the Attorney-General endorse that view?
    The Attorney-General: That is not a matter for me. It is a matter for my right hon. Friend the Home Secretary. However, as I am always anxious to express an opinion on something that interests me, the style of drafting recommended, by the North report when referring to "bad driving" or "really bad driving" is very much to be commended as everybody understands what that means. It is a welcome suggestion.

  OVERSEAS DEVELOPMENT

    Overseas Aid (Education Projects)
    Dr. Michael Clark: To ask the Secretary of State for Foreign and Commonwealth Affairs what proportion of overseas aid from Britain is directed towards education in the recipient countries.
    The Minister for Overseas Development (Mr. Chris Patten): In 1987 almost a fifth of the bilateral programme—some £140 million—was spent on aid for education and training.
    Dr. Clark: I am delighted with my hon. Friend's reply. However, does he agree that to spend money on education aid to Third world countries is one of the best ways of priming the pump? Bearing in mind the many excellent education hooks in English, does he agree that it is vital that there should be a supply of English language teachers, and is he giving that sufficient priority?
    Mr. Patten: I agree with my hon. Friend about the importance of English language teaching as part of our aid programme. We are expanding English language teaching and 275 English language teachers are now working in developing countries with the support of our aid programme. I am pleased that we have recently managed to increase our English language teaching programme in Sri Lanka, Tanzania, and China. I should like to pay a particular tribute to the British Council, which acts as our agent and does the job with considerable distinction.
    Dr. Reid: Is it not a shameful indictment of the Government that when the British people have shown unbounded generosity towards charitable works at home as well as abroad, the Government have halved overseas aid as a percentage of GNP? Will he match the generosity of the people who elected the Government by pledging the Government to support the 0·7 per cent. campaign to make that proportion of GNP the measure of our overseas aid?
    Mr. Patten: The premise of the hon. Gentleman's question is wrong. It is important and valuable that we are now increasing our aid programme in real terms.

    Joint Funding Scheme
    Mr. Andrew Mitchell: To ask the Secretary of State for Foreign and Commonwealth Affairs which organisations receive grant assistance from his Department under the joint funding scheme; and what criteria are applied to applications from organisations seeking assistance under this scheme.
    Mr. Chris Patten: During the 1987–88 financial year my Department provided grants under the joint funding scheme to 53 non-governmental organisations. I shall arrange for a list to be published in the Official Report.
    There are four main criteria: projects must be designed to promote economic and social development, rather than emergency relief; they must fit the local communities' aspirations and needs; the costs and benefits must be clearly identified within realistic objectives; and the projects must have the potential to become self-sustaining after our support has come to an end.
    Mr. Mitchell: Will my hon. Friend draw public attention, not only to the substantial increase in public funds forthis important scheme, but to the clearly targeted developmental work that it does? In particular, will he note that the sum available from public funds has quadrupled during the past six years and that it goes on a pound-for-pound basis to match the work that major national charities are doing in this important area?
    Mr. Patten: I agree with my hon. Friend about the importance of the work of non-governmental organisations. They can often operate at a level that is more difficult for Government-to-Government programmes. That is why this year we have increased by 75 per cent. on the original allocation for last year the sum that is going to the joint funding scheme, which is supporting about 800 projects throughout the world.
    Mr. Jack: In considering the non-governmental projects, many of which concern tropical rain forests, will my hon. Friend ensure that the Institute of Terrestrial Ecology has sufficient time for its projects on tree cloning to come to fruition?
    Mr. Patten: It may well take tropical forests slightly longer to come to fruition than I am likely to be standing at this Dispatch Box. [Interruption.] I am not sure whether I am lucky or unlucky in making that observation. I wholly agree with my hon. Friend about the importance of forestry as part of our aid programme and that is why we have increased the funds available to it. One of the areas in which non-governmental organisations can work most valuably is in environmental protection and enhancement.
    Following is the information:
    Agencies receiving grants under the joint funding scheme in 1987–88

    Action Aid

    Aga Khan Foundation

    AHRTAG

    Aid for India

    Associated Country Women of the World

    Boys Brigade

    British Red Cross Society

    CAFOD

    Care

    Cerebral Palsy Overseas

    Christian Aid

    CIIR

    Commonwealth Human Ecology Council

    Commonwealth Trade Union Council

    19

    Co-operation for Development

    Duke of Edinburgh's Award

    Euro Action Acord

    Feed the Minds

    Food Agricultural Research Mission

    Friends of Urambo and Mwanhala

    Hand in Hand

    Health Unlimited

    Help the Aged

    Institute of Cultural Affairs

    International Voluntary Service

    International Year of Shelter for the Homeless Trust

    Jalchatra Project

    Leonard Cheshire Foundation

    Leprosy Mission

    Mission Aviation Fellowship

    National Children's Home

    OXFAM

    Plan International

    Population Concern

    Population Services

    RCSB

    Richmond Fellowship

    Save the Children Fund

    SCIAF

    Scouts

    SOS Sahel International

    Sport Aid

    St. Johns Ambulance

    Tanzania Development Trust

    Tear Fund

    Uganda Society Disabled Children

    VSO

    Water Aid

    Work-Start Overseas

    World University Service

    Worl Vision

    World Wildlife Fund

    Y-Care

    Aid Donors
    Mr. Barron: To ask the Secretary of State for Foreign and Commonwealth Affairs what information he has as to the average percentage of gross national product given in aid in 1987 by donor nations, excluding the United Kingdom, that are members of (a) the Group of Seven leading industrialised nations, (b) the European Community, and (c) the development assistance committee of the Organisation for Economic Co-operation and Development.
    Mr. Tom Clarke: To ask the Secretary of State for Foreign and Commonwealth Affairs what information he has as to the average percentage of gross national product given in aid in 1987 by donor nations, excluding the United Kingdom that are members of (a) the Group of Seven leading industrialised nations, (b) the European Community, and (c) the development assistance committee of the Organisation for Economic Co-operation and Development.
    Mr. Chris Patten: In 1987 net aid as a percentage of GNP, excluding the United Kingdom, averaged 0·32 per cent. for the Group of Seven; 0·5 per cent. for those members of the European Community for which the development assistance committee has published figures; and 0·34 per cent. for all development assistance committee members.
    Mr. Barron: Does the Minister accept that, of the 18 OECD major industrialised countries, we now come 14th compared with 12th in 1979? Does he further accept that we are below the average on every percentage that he read
    20
    out? In 1979, when the Labour Government were in office, 0·52 per cent. of our GNP went towards the 0·7 per cent. target that was set by the United Nations 20 years ago. Now only 0·28 per cent. of our GNP is spent on that. Does the Minister understand that it is no good saying that the figures are better than last year's? We are trying to cure the evil of the wrong distribution of wealth throughout the world and we can do that only by aiming for the target percentage of our GNP, not by saying that we are giving more than we gave last year.
    Mr. Patten: It is probably the case that most of the international financial institutions to which the hon. Gentleman may have inadvertently referred would be more encouraged if more developing countries and more countries in general followed the economic policies of this Government rather than if they continued as they are. Thanks to our economic growth our aid programme is now growing in real terms. We shall spend over £90 million more this year than last year.
    Mr. Clarke: In view of the appalling nature of these comparisons, will the Minister tell the House when he last had a person-to-person meeting with the Prime Minister on these matters?
    Mr. Patten: I last had a person-to-person meeting with my right hon. Friend the Prime Minister on these matters about a month ago, since when I have been in several countries and she may have been, too. I suspect that, unusually, the hon. Gentleman may have drafted his supplementary question before he listened to my reply.
    Mr. Rowe: Is it not absolutely true that my hon. Friend the Minister is to be congratulated on the considerable progress that he has made towards achieving many of the objectives of the aid programme that were manifestly not met when the Labour party was in power? Is it not also true that there is still a large gap between rich and poor countries and that it is to all our benefit if we in richer countries share a larger proportion of our income with poorer countries?
    Mr. Patten: I agree with my hon. Friend. That is why we have to continue giving a lead on issues such as the further liberalisation of trade and debt. I am delighted that the Toronto economic summit reached the conclusion that it did, which is a great tribute to my right hon. Friend the Chancellor of the Exchequer. I hope that this week the Paris Club will make a good deal of progress in implementing the terms of the Toronto economic summit communiqué.
    Mr. Jacques Arnold: Does my hon. Friend agree that it is much better to give an increasing amount of aid? Rather than merely considering a higher percentage of a low gross domestic product, is it not better to have perhaps a slightly smaller percentage of a GDP which is now very much greater?
    Mr. Patten: I agree with my hon. Friend. As I said before, the effects of the Labour party's policies on our economic growth rate would ensure, without anything being done to the amount being spent on aid, that our aid as a proportion of GNP went up rapidly, and soon.
    Miss Lestor: Does the hon. Gentleman not recognise that there is a distinction between an intellectually attractive presentation of a policy and the reality of a performance? If he continues to argue that what is important is not the proportion of GNP but the amount

    21
    that he has contributed, unless that amount goes up as a proportion of GNP it follows that the gap between the countries that we are supposed to be assisting and the richer countries will widen. That is why the United Nations had a target of 0·7 per cent. of GNP. so that when GNP went up the proportion to the developing countries would also go up. That is where the Minister is failing the Third world.
    Mr. Patten: I am grateful to the hon. Lady for what I think began as a compliment. [Interruption.] Perhaps I
    22
    misjudged her. I apologise for that. It is important that our aid programme should go up in real terms, which it is doing. It is also important that our economic growth rate is now sufficiently rapid and based on sufficiently secure foundations to make sure that we can play the leading role in the international financial institutions and in issues of trade and debt that a country of our history should be able to play. Alas, under our predecessors, we were on the way to becoming a developing country.

Housing Action Trusts
3.31 pm
Mr. Clive Soley (by private notice) asked the Secretary of State for the Environment if he will make a statement on his intention to enforce the takeover of local authority housing by Government-appointed housing action trusts.
The Minister for Housing and Planning (Mr. William Waldegrave): Subject to approval by both Houses of Parliament of the Housing Bill and of the necessary designation orders, my right hon. Friend proposes to establish housing action trusts in:

Lambeth: Loughborough and Angell Town estates;

Southwark: North Peckham and Gloucester Grove estates;

Tower Hamlets: Solander Gardens, Shadwell Gardens, Berner, Boundary and Holland estates and part of Ocean estate;

Leeds: Halton Moor, Seacroft South and Gipton estates;

Sandwell: Windmill Land and Whiteheath estates; and

Sunderland: Downhill, Townend Farm and Hylton Castle estates.

Maps have been placed in the Libraries of both Houses today showing the areas that might be covered by the housing action trusts. My right hon. Friend will shortly be appointing consultants to advice him further. Final decisions on the areas to be designated will be taken in the light of the consultants' studies and of local views.
My right hon. Friend has chosen those areas taking account of the matters listed in clause 60(5) of the Ho using Bill. The combination of problems associated with the rundown council housing in those areas is such that a radical approach is necessary to give tenants decent housing, better services and more choice. It will therefore be the job of each housing action trust, in consultation with the residents, to carry out a major programme of renovation, to bring empty council properties back into use, to improve the way in which estates are looked after and generally to help improve the economic, environmental and social conditions of the area.
The creation of housing action trusts provides an opportunity to target resources on some of the areas where major concentrations of poor quality public sector stock create very intractable problems. I therefore hope that the local authorities concerned will co-operate fully in setting up housing action trusts so that tenants can gain as soon as possible from the benefits that they will bring. My right hon. Friend is writing to the leaders of the councils concerned today about the proposals. He is also writing to all local residents who might be affected.
Mr. Soley: Yet again, we have had to drag information out of a reluctant Government who are increasingly embarrassed by their housing crisis.
First, why is there no choice for tenants or residents in those areas? What has happened to the word "choice"? Secondly, why has there been so little consultation? Thirdly, what guarantees will we be given that the local communities will not be squeezed out and replaced by people from other areas? What guarantees are the Government giving to homeless people so that they will be able to get housing in those areas and to local authorities so that they can provide that housing for those people?
The Minister said that he was anxious to get empty council property back into use. Will he make sure that the housing action trusts have the same powers to bring back
24
into use empty Government-owned properties, given that there are three times as many empty Government-owned properties as there are empty council-owned properties? Will housing action trusts have the same powers to bring back into use empty housing association properties—there are marginally more of those properties empty than there are council-owned properties—and empty private sector housing, given that there are nearly twice as many of those properties empty as there are empty public-sector properties?
I recognise that, in Committee, the Minister conceded that tenants would be able to go back to the local authority when a housing action trust was wound up if they so wished. It is important that he ensures that that is not just a paper promise, that local authorities have the housing finance to allow them to take those tenants back and that cuts are not imposed on local authorities which would make it impossible for them to offer to repurchase the estates.
What guarantees do we have that landlords such as Mr. van Hoogstraten will not benefit, given that he has already described the Housing Bill as a "step in the right direction"?
Mr. Waldegrave: The hon. Member for Hammersmith (Mr. Soley) knows the answers to most of those questions because he asked them in Committee and he was given the answers then. I had intended to answer a written question put down by the hon. Member for Newham, North-West (Mr. Banks), but I am delighted to answer this matter orally.
The hon. Member for Hammersmith knows very well that there will be consultation with the tenants at all stages and that all the plans and directions, if any, from the Secretary of State will be published. I believe that the hon. Gentleman would welcome that. The hon. Gentleman also knows that the interests of local people are central to the housing action trusts. I had hoped that, rather than taking the usual negative attitude, he would have welcomed what amounts to an additional £125 million over three years for six of the areas where there is most need for that money to be spent. I am sorry that he has not found it in him to welcome that. There is a duty to co-operate with local authorities on homelessness, and he is aware of that. I believe that it is slightly unlikely that there will be Ministry of Defence properties on any of the estates, but if there are, we shall hope to get them back into action as soon as possible.
The hon. Gentleman is well aware of the system for the return of the estates to local authorities if they are willing to have them back, and these authorities will be free to purchase the estates back if they wish to do so.
There was no need for the cheap remark about Mr. van Hoogstraten because the hon. Gentleman knows that any transfers out of HATs will be to "tenant-guaranteed" landlords, housing associations and co-operatives. It is a bit of a cheap scare story to bring Mr. van Hoogstraten into this.
I believe that, in the next few weeks, when the tenants in the designated areas receive the information about the immense potential benefits on offer, they will take a slightly more generous and positive view than the hon. Gentleman.
Mr. John Heddle (Mid-Staffordshire): Will my hon. Friend accept the congratulations of all the tenants in the

25
areas that he has mentioned, as the opportunity that he has just announced will enable them to release themselves from the clutches of unsympathetic local authority landlords? Will my hon. Friend accept that HATs will do more to relieve the plight of the homeless? Will he further accept that those areas such as Southwark, which has rent arrears of £30 million, will be relieved from debt? Does my hon. Friend also agree that HATs will produce better housing management and more sympathetic living conditions for those who are currently homeless?
Mr. Waldegrave: I welcome my hon. Friend's support for this extremely important matter. To put it politely, it is perfectly obvious that some local authorities that cover the estates cannot grapple with the severity of the problems that they presently face—[HON. MEMBERS: "Why?"]—and central Government are now bringing resources to bear to do that. Labour Members may ask why, but the answer is exactly the same as why they and the leadership of their party would like to see different people in power in many of those local authorities.
Mr. Merlyn Rees: What will be the constitutional position of the new areas in Leeds? On Saturdays, many Leeds constituents consult their Members of Parliament about the allocation of houses and repairs, and I wish to know whether it will be in order now to table private notice questions and to write letters to Ministers. Will the Secretary of State take the place of the local authority? If he is not to do that, who is?
Mr. Waldegrave: The right hon. Gentleman is running a little ahead. The HATs will not be established until the House and another place have debated the matter. In due couse, it will be for the boards of the HATs to deal with management problems. My right hon. Friend the Secretary of State will be ultimately responsible to the House.
Sir George Young: Is my hon. Friend aware that his statement will be widely welcomed, not least by tenants in difficult-to-let estates throughout the country, who have been failed by their local authorities? Will he tell the House when the first HAT will be up and running? Will he confirm that in many instances there is a need for physical improvement and better management afterwards? Will he confirm that HATs will put into effect localised and efficient repair services to maintain the momentum that the HATs begin?
Mr. Waldegrave: My hon. Friend, as usual on these matters, is entirely right. We hope to have HATs set up early next year. If the Labour party feels that the playing of party games in opposition on all these matters is inevitable, that will delay the bringing of benefits to the tenants whom they claim to represent. The localised management of the priority states project teams and Estate Action, if carried forward, will be carried forward also in the HATs. That is what we shall be doing.
Mr. Simon Hughes: As a representative of a borough that is to have an HAT, may I say that more Government money for housing in rundown areas of England is welcome? However, I have one or two questions for the Minister for Housing and Planning. First, is this a "this is your choice" designation
26
or is it a "there is no alternative" designation? Will there be a veto? Will tenants be able to approve the proposal, or will it go ahead irrespective of the views of local people.
Secondly, will representatives be on the boards of the HATs, having been democratically elected by local people? Thirdly, will the rents and the tenants' rights that are now enjoyed continue to be enjoyed in a similar way after the trusts have been created? Lastly, will local councils be able to nominate all the homeless in an HAT area, people whom they have a duty and a responsibility to house?
Mr. Waldegrave: We debated some of the hon. Gentleman's questions in Committee. First, I hope that there will be local representatives on the boards of the trusts. My right hon. Friend the Secretary of State and other departmental Ministers will be meeting local authorities to discuss these matters with them. The hon. Gentleman knows that there is no veto over the establishment of an HAT. Ultimately, it is for the House to decide whether a trust is established.
We have said repeatedly that rents will not increase before improvements have been made, and even then may increase only in line with local authority rents generally. As new money will be brought to bear—it will not be borrowing from the local authority—tenants will enjoy the benefit of smaller increases in rents than there would otherwise be for such improvements. They will remain secure tenants while they are in the HAT.
Mr. Robin Squire: Is there not a simple fact behind my hon. Friend's excellent statement: that the HATs are an imaginative way of bringing assistance to estates that have reached a level that is unacceptable? Is my hon. Friend aware that all men and women of good will will wish the initiative godspeed, not least on behalf of tenants who have suffered too much for too long?
Mr. Waldegrave: My hon. Friend puts succinctly what is surely the truth. I have visited most of the estates where HATs are to be established, and I think that, between us, I and my ministerial colleagues have recently visited them all. Opposition Members know many of them extremely well. I should be most surprised if anyone were willing to say that the estates do not merit the best efforts of the House and additional resources to bring them into a better condition.
Mr. Tony Banks: Is the Minister aware that I read out to the Secretary of State the list of estates that he presented at the Dispatch Box this afternoon during the all-night sitting on 14 June on the Housing Bill? When I read out exactly the same list, the Secretary of State said that no decision had been taken. When was the decision taken?
Mr. Waldegrave: The hon. Gentleman is amazingly perspicacious. As a matter of fact, his memory is at fault—the list is not the same.
Mr. Ian Gow: Is it not a sign or the confusion of the Labour party—not on housing policy alone—that it does not know whether to applaud or to deprecate my hon. Friend's announcement? Will my hon. Friend confirm that if—as Conservative Members believe to be the case—the housing action trusts turn out to be a great success, this pilot scheme will be extended to other parts of the country?
Mr. Waldegrave: Yes, and doubtless at that point the pushmi-pullyu opposite—which remains stationary, emitting peculiar noises—will come down on our side and join us, as it has on the right to buy and so many other policies.
Mr. Peter Shore: On many deplorable estates, not least in the borough of Tower Hamlets, the issue that the Minister must consider is whether this is the best way of dealing with those problems or whether he should pursue the previous policy of priority estate projects and begin to repair some of the housing investment programme allocations that have been so grievously reduced in the past few years.
I fear that I know already what the answer will be, but can the Minister really say, despite what he has previously said about consultation, that if both the local authority and the tenants on the estate do not wish to have a housing action trust, nevertheless it will be imposed upon them?
Mr. Waldegrave: I answered the last question when I told the hon. Member for Southwark and Bermondsey (Mr. Hughes) that it will be for the House to decide.
On the right hon. Gentleman's first question, he knows very well that if additional allocations were made to a number of boroughs—perhaps I say this in relation to his borough—the way in which that money would be spent would be extremely unpredictable, to put it politely, and it may be wasted. I believe that this is the best way forward. We shall continue Estate Action and the priority estates programme where that is the best way, but in some areas the problems are so great that a much longer and more concentrated direction of resources is now needed.
Mr. Robert Banks: I congratulate my hon. Friend on his statement today and especially on choosing Leeds. Is this not the implementation of a policy for real action that will bring tangible benefits to many people in the rundown areas? Will he especially monitor the progress of the housing action trust when they get under way, so that we can be kept fully in the picture as to their success?
Mr. Waldegrave: My hon. Friend makes a good point. We should monitor this new policy very closely, and we shall do so. I join him in saying that the policy is likely to bring real benefits, choice and hope to some areas that have been short of them for too long.
Mr. Peter Snape: Does the Minister accept that Sandwell's housing problems have been considerably worsened in recent years by the consistent underfunding of its HIP allocation? That is not politics, but fact. Can he assure us that the local authority and the local voluntary housing sector will be encouraged to set up these trusts, or will the trusts be confined entirely to the private sector, which has consistently failed boroughs such as Sandwell for many years?
Mr. Waldegrave: These trusts are not in the private sector, but are part of the public sector. They will be established by the House and they will be responsible to my right hon. Friend. We hope for good co-operation from the local authorities, the many housing associations and other housing experts operating in those areas.
Mr. Robert G. Hughes: Does my hon. Friend accept that his statement today will bring real relief and help to people in Labour-controlled areas who have been left to rot by successive Labour councils in places in which no Labour Members would wish to live? Does he
28
accept that there will be some disappointment that his statement does not include more areas to be designated as housing action trusts? When does he expect to be able to extend the housing action trusts to Bradford, Manchester, Newham and other areas where the Labour party has failed the people?
Mr. Waldegrave: That remains open to us for the future. If the new policy goes well, I hope that additional housing action trusts will be nominated. My hon. Friend was entirely right when he said that if anybody can doubt that national resources are now needed for these areas to bring them back into decent—[Interruption.] If anyone believes that some of the present housing management is capable of that, he is living in cloud-cuckoo-land.
Mrs. Harriet Harman: Can the Minister assure the people who live in north Peckham and Gloucester grove that they will benefit from any additional investment in their estates? Does he recognise that, based on the experience of the London Docklands development corporation in the north of the borough, there is widespread concern that existing tenants will not benefit? It is feared that they will be driven out in favour of those who can buy.
Mr. Waldegrave: There is not all that much comparison between a UDC and an HAT. The interests of existing tenants are central to an HAT's purpose. The failure or the success of housing action trusts will be judged by whether they have brought benefits to the hon. Lady's constituents who are tenants of those estates.
Mr. Jonathan Sayeed: Why has there been no announcement for Bristol, with all its inner-city housing problems that my hon. Friend and I know so well? Could it be that it helps if there is co-operation with the local authority when establishing housing action trusts? One sees from the past actions of the Labour-controlled Bristol city council that it is more interested in bigotry than in caring for the community.
Mr. Waldegrave: My hon. Friend will well understand that Bristol was not forgotten. I was interested to hear him say that he believes that a housing action trust for Bristol might be worth considering for the future. He is quite right that we face the spectacle of Bristol city council wasting a considerable sum of ratepayers' money by pointlessly petitioning against the UDC, which most people in Bristol warmly welcome.
Mr. John Fraser: Reverting to the two estates in my constituency, if the majority of the tenants oppose the order, will that influence the Government and will they not proceed with it? Secondly——
Mr. Speaker: Briefly.
Mr. John Fraser:—if the Government are to provide extra resources for estates such as Angell town, why will the same resources be denied to similar estates in the neighbourhood, such as Tulse hill and Stockwell park? What is the difference in principle? Thirdly, will the Minister give an undertaking that all vacancies will be made available to Lambeth people, and will Lambeth be able to spend only 20 per cent. of its capital receipts, or the whole lot?
Mr. Waldegrave: The hon. Gentleman opposes these proposals but then asks why the same cannot apply to

29
other estates. There were difficult decisions to make about the estates that were in most need. We have selected some estates that we believe will benefit dramatically. On the hon. Gentleman's first important point, I have already made it clear twice to his right hon. Friend the Member for Morley and Leeds, South (Mr. Rees) and to the hon. Member for Southwark and Bermondsey (Mr. Hughes) that it is for this House ultimately to decide whether to pursue housing action trusts.
Mr. Chris Mullin: What consultation was there with Sunderland borough council before the decision was made to designate estates in its area? Is the Minister aware that public housing in Sunderland is extremely well run and that the only problem it faces is the shortage of funds from central Government?
Mr. Waldegrave: There were no formal consultations with local authorities before the estates were designated. That has always been made clear. The time for consultation is now. My right hon. Friend the Secretary of State looks forward to discussions with the Sunderland borough council and others in the months ahead. There is nothing new about that. It is right that the proposals should be put to the House before they are discussed with outside interests. I have no doubt that had we done it the other way round the hon. Gentleman would have been jumping up and down and saying, "How dare you consult outside before coming to the House to announce the list?"
Several Hon. Members rose——
Mr. Speaker: Order. I remind the House that this is a private notice question and that we have had a long run on it. I shall give precedence on a subsequent occasion to those hon. Members who have not been called.

Type 23 Frigates (Orders)
3.53 pm
The Parliamentary Under-Secretary of State for Defence Procurement (Mr. Tim Sainsbury): With permission, Mr. Speaker, I should like to make a statement about the Government's plans to place orders for further Duke class type 23 frigates
The type 23 frigate will form the backbone of the Royal Navy's anti-submarine warfare surface force in the future. Principal features of this ship include a towed array sonar to detect low-noise submarines, a 4·5 in gun, a helicopter capable of carrying Sting Ray torpedoes and sonobuoys, Harpoon anti-ship sea-skimming missiles and vertical launch Sea Wolf missiles to counter the air threat. The type 23 will be more capable than the types of ships it is replacing.
Tenders were sought for orders for one to four ships from the four main warship building yards in the United Kingdom. We are very pleased with the outcome of the competition. The precise value of the order is commercially confidential but the prices submitted were very keen. Following evaluation of the tenders, I am pleased to be able to tell the House that an order for three ships is to be placed with Yarrow Shipbuilders Ltd. The ordering of all three ships from Yarrow provides best value for money in terms of prices and contract conditions. The average unit cost of the three new ships is some £10 million below the average of the last three ordered in 1986. That reflects, among other things, the keenness of the competition; the benefits of batch ordering; Unproved efficiency in the shipyards, due in part to improved fabrication methods; and greater experience of building those types of vessel.
I take this opportunity to thank all the yards which participated in this excellent competition and which submitted such competitive bids. Although tenders were sought for up to four vessels in order to explore the benefits of batch ordering, an order now for four—even if all from one yard—would not be significantly more attractive in terms of unit price than an order for three. Therefore, we have decided that it is best to include the fourth ship in the next batch competition. That will enable all the yards that participated in this competition to have an opportunity to bid again for that ship, together with further possible orders.
This decision brings to 10 the number of new frigates now on order, excluding the three type 22 frigates accepted by the Royal Navy from tire shipbuilders this year. In recent days, there has been much comment in the press and from the Opposition about the size, age and availability of our surface fleet. I regret that much of it has been ill informed. My announcement today demonstrates in the best possible way the Government's commitment to maintaining a highly capable escort force of about 50 destroyers and frigates.
Mr. Allan Rogers: We welcome the Minister's statement, but we also have grave misgivings about it. We welcome it because it will mean an enhancement of our surface fleet, which has been much reduced in capability and in relative effectiveness because of the Government's gross inability properly to manage the defence economy over the past few years. We also welcome it because it will provide much-needed job

31
opportunities and safeguards in Glasgow, where the vessels will be built. My hon. Friends the Members for Glasgow, Hillhead (Mr. Galloway) and for Glasgow, Garscadden (Mr. Dewar) are very pleased that Yarrow Shipbuilders has won the order, which will mean maintaining jobs in an area that is currently ravaged by unemployment as a result of the Government's policies.
However, my hon. Friends the Members for Tyneside constituencies are completely dismayed by the Minister's announcement. The recent completion of a type 23 frigate on time and within budget gave them the hope that Swan Hunter would be given one frigate out of this order, or out of the four—a point to which I shall return. Instead, Swan Hunter has been given nothing, which will mean an almost immediate loss of 700 jobs and a potential loss of 2,000 jobs in the near future, with the possible complete closure of the yard.
We note that the original announcement concerning the frigates was made at last year's Tory party conference. We are grateful that the Minister, unlike so many of his colleagues, has on this occasion used the House to make such an important announcement. In making the observation that this is the second announcement of the same order, I note that at last year's Tory party conference the Secretary of State for Defence received 32 seconds of applause for his announcement there. Are we to understand that that is now to be the Government's technique for ordering three frigates a year—once at the Tory party conference, and once in the House?
It should be remembered that the requirement for three frigates a year is a basic requirement laid down in the Select Committee's report. Are the Government returning to ordering one frigate a year, as they have done since 1981—a policy, incidentally, that has reduced the Navy even further than was envisaged by Sir John Nott in 1981? That led to the resignation of one of the hon. Gentleman's colleagues, but he is not particularly concerned.
Can the Minister give an assurance on the orders? When will the ships be delivered—or are we to have another announcement about that? If tenders were sought for four frigates and if, as the statement said, there are significant advantages in batch ordering, why are the Government ordering only three out of four? Why is the fourth frigate to become number one for next year, and how many are to be ordered next year? What is the Government's continuing policy—or are they dealing with the matter on an ad hoc basis?
As the Select Committee said in its recent report, the Navy desperately needs surface ships if it is to service our commitments in the Gulf and the south Atlantic and to NATO. Although the announcement is welcome news for some of our yards and is undoubtedly a welcome enhancement of our surface fleet, it will lead to dismay on Tyneside and is certainly not enough for our Navy.
Mr. Sainsbury: The hon. Gentleman is very hard to please. His reaction to the announcement, which he is grudgingly prepared to admit is good news, reminds me rather of the remark attributed to Oscar Wilde when he first saw the Niagara falls—that they would be more impressive if they flowed the other way.
The hon. Gentleman asked a number of questions, and it may not be possible for me to answer them all. He asked particularly when the ships would be delivered. As he
32
knows, for operational reasons we do not give acceptance dates in advance, but we expect fabrication of the first of the three ships to start in about six months' time, and for work on the others to follow at roughly six-month intervals. He also asked why there should be three rather than four ships. I thought that I had explained that clearly in my statement. It is perfectly acceptable for the fourth ship to be included in the next order, for which we expect to invite tenders next year.
The hon. Gentleman referred, rather to my surprise, to much reduced capability in the Royal Navy. I entirely reject that allegation. The new ships, like others in the Royal Navy, are highly capable—much more capable than the ships that they are replacing.
Several Hon. Members rose——
Mr. Speaker: Order. May I ask for brief questions? We have a heavy day ahead of us.
Sir Antony Buck: Does my hon. Friend agree that it is not a very happy precedent for a Minister responsible for the Navy to start quoting Oscar Wilde? However, apart from his last few remarks, my hon. Friend's announcement will be warmly welcomed.
Does my hon. Friend agree that it is important to emphasise that the new types of frigate being ordered have a vast capability compared with those that they will replace? Will he be able to tell us soon when the other orders will be made, so that we can keep our commitment to a surface fleet of around 50 major ships?
Mr. Sainsbury: I am grateful to my hon. and learned Friend for his reaction. I can confirm that the ships are a great deal more capable, particularly in their antisubmarine warfare capability: they have much enhanced sonar capability, and are also much quieter. In addition, they carry a smaller crew—170 as opposed to 220, which was the complement of the previous type of antisubmarine warfare ship.
The next competition will be next year. We have not yet decided how many ships will be involved, but the number will be consistent with an ordering pattern to retain a modern and highly capable fleet of about 50 destroyers and frigates.
Mr. John Cartwright: Does the Minister include the Select Committee on Defence in his sweeping dismissal of the Government's critics as being ill informed? In particular, does he challenge the Committee's assessment that no fewer than 25 of the existing escort vessels will reach the end of their planned lives over the next 10 years, and that that means 14 orders over and above what he has announced today if the surface fleet is not to become smaller and less capable than it is now? Why do the Government not attempt a planned approach to ordering, instead of the drip-feed approach that they have demonstrated again today?
Mr. Sainsbury: I am glad to say that I did not describe the Select Committee as ill informed. I referred to the reaction to its report, much of which has been ill informed, particularly the reaction on the Opposition Benches. I am sure that the hon. Gentleman, who is I believe a member of the Committee, will know that paragraph 72 of its report refers to the 25 ships that he has just mentioned, and

33
also suggests that two orders are required this year to retain the escort fleet at about 50. I have just announced an order for three.
Mr. Michael Mates: Does my hon. Friend accept that this is excellent news for the Royal Navy, for Yarrow Shipbuilders and for the hundreds of subcontractors who will benefit from the orders? Excellent as it is, however, the news does not mean that my hon. Friend is out of the wood in his determination to keep a destroyer frigate force of about 50. Does he accept that he must order a further two next year, two in 1990, three in 1991 and two in 1992 just to keep pace with the aging quality of the present fleet?
While I have no doubt that my hon. Friend can do that, would it not make sense for him to be able to tell the House as soon as possible that it is his intention, and that it is in the long-term costings? That is the best way to achieve confidence in the Navy, and among other yards that failed this time but stand to succeed in subsequent orders.
Mr. Sainsbury: I am grateful to my hon. Friend for his welcome for the announcement, and for what he said about Yarrow's and particularly about subcontractors. A large number of companies throughout the country will benefit from the subcontracting work associated with this major defence contract, which is not always the case.
I take my hon. Friend's point about the need to order new ships to keep the capability and numbers of the escort fleet up to the required level. My hon. Friend will have heard what I have said about another order next year. I think that he will understand why I do not give precise numbers or timings, looking several years ahead. I am, however, happy to repeat our commitment to retaining an escort fleet of about 50 ships, and to assure him that they will be very capable. The new ships are much more efficient and effective that those that they are replacing.
Mr. George Galloway: Notwithstanding the fully justified reservations of my hon. Friend the Member for Rhondda (Mr. Rogers), the Minister will be aware that the news will be greeted with delight and satisfaction on the Clyde, particularly in my constituency. It is certainly good news for the Clyde shipbuilding industry and the Royal Navy. It follows not from ill-informed criticism, but from extremely well-informed criticism relating to the need to keep our service fleet up to strength at about 50.
The Government's good-sense decision reflects—for once, perhaps—a recognition of Britain's real defence needs in the real world and on the real seas, rather than the nuclear preoccupation of the fantasy world in which some military strategists persist in living. This is good news for Glasgow and very good news for the constituency and Yarrow's, which is a centre of excellence. I offer the Minister thanks from my constituents.
Mr. Sainsbury: I am grateful to the hon. Gentleman for his reaction, which, as he said himself, was perhaps a little more genuine and honest than that of his hon. Friend the Member for Rhondda (Mr. Rogers), who seemed to be looking for reasons to complain about good news. I can do no better than to say that a total of 27 major naval vessels with a value of nearly £4·6 million are now on order for the Royal Navy, or under construction. Some 64 major ships and submarines have been ordered by the Government since they came to power in 1979.
Mr. David Martin: Will my hon. Friend confirm that the money saved by the very efficient procurement of these ships will be kept within the defence budget for further procurement?
Mr. Sainsbury: I am glad to be able to confirm that. One of the principal reasons for our drive for more competitiveness and value for money in our procurement expenditure is to provide for the opportunity to buy more equipment with the money saved.
Mr. Frank Field: Does the Minister need to be reminded of the bitter disappointment that will be experienced in Cammell Laird this afternoon as a result of his announcement? May I remind him of Cammell Laird's substantial order book for conventional submarines? Will he open negotiations with the yard in the near future on the timing of the placing of those orders, so that any employment effects of today's announcement can be minimised? Will he assure the House that all these orders were decided on price? Having spoken to the shop stewards before coming here, may I extend an invitation to the Minister, now that the tenders have been decided, to visit the yard in the near future?
Mr. Sainsbury: I appreciate what the hon. Gentleman says about the disappointment that will be felt by Camrnell Laird. As I said in my statement, I appreciate the contributions of all the yards that took part in the competition, and the keen bids that they put in. I can assure the hon. Gentleman that the award of the three ships to Yarrow Shipbuilders Ltd. was on the basis of price. I may add that Yarrow's bid was fully compliant in terms of contract conditions.
A number of other ships will be coming forward for invitation to tender. We recently had a presentation on the aviation support ship. I have already mentioned inviting tenders for a further batch of type 23s next year. There will be further orders for auxiliary oiler replenishment vessels, single-role minehunters and type 2400s in due course. I shall be happy in due course to pay a visit to Cammell Laird to see the shipyard.
Mr. Neville Trotter: Does my hon. Friend accept that, although there will be general welcome for this addition to the strength of the Royal Navy and the work for the contracting part of the marine industry—the subcontractors—there will be great disappointment on Tyneside that Swan Hunter, the major frigate builder, did not share in the order? Does he accept that there is a strong case for having a long-term ordering programme to avoid uncertainty, with all the problems that that rise gives to for employment?
Will my hon. Friend say a little more about the next batch of type 23s? When he refers to next year, does he mean that the process will start then or that the order will be placed then?
Mr. Sainsbury: As I said in answer to the hon. Member for Birkenhead (Mr. Field) about Cammell Laird, so I appreciate the disappointment in my hon. Friend's constituency at Swan Hunter. I am equally grateful to it for its participation and contribution to this effective competition. As I said, there will be another order next year. I shall not commit myself now to saying how many ships will be involved, but it will be a batch order and the process will start next year. It might even come to order next year—it is as yet too early to say. As with Cammell

35
Laird, there are Royal Navy ships under construction at Swan Hunter, which I hope will submit competitive tenders for the future opportunities with which it will be provided.
Mr. Bruce Millan: Is the Minister aware that what he has just said about a further batch order next year will be welcomed by every hon. Member with a naval shipbuilding interest in his constituency? In the meantime, his announcement today will be warmly welcomed on Clydeside, especially as it is clear that the order went to Yarrow strictly on merit—and as, without the order, Yarrow would have been faced with a substantial rundown in the labour force in the next few months.
Mr. Sainsbury: Of course, when I announced the intention to go out for another batch order next year it is clear that not all the yards can win if we place the orders in batches. That is the inevitable consequence of seeking the best value for money for the Navy. I hope that we please the whole House by getting effective competition and being able to order three ships at an average cost of about £10 million less than the previous group. The clear consequence is that not all yards can be successful on each occasion.
Sir Geoffrey Johnson Smith: I welcome my hon. Friend's statement this afternoon, but may I ask what reliance is he placing on the use of advanced weapons systems on surface vessels as a way of maintaining and, if possible, increasing their numbers and prolonging their lives?
Mr. Sainsbury: I am grateful for my hon. Friend's welcome for the announcement. The weapons systems and sonars and radars on the type 23s are, as, he would put it, modern and very capable. There are some advantages in some of the latest systems because they are easier to enhance and modernise than some of the older ones. That should enable us to keep some aspects of the sensors and weapons of the modern ships in the most up-to-date condition without the difficulty of refitting, which we have run into on previous occasions when we virtually had to rebuild some of the earlier Leanders.
Sir Russell Jonhston: In associating myself with the general welcome for this announcement—particularly as a Scottish Member—may I associate myself with hon. Members on both sides who have argued that there is a case for a long-term ordering programme? Does the Minister agree that, as well as getting value for money, it is of great importance to maintain our warship building capacity? Without a long-term building programme there is a risk that some of it could be lost.
Mr. Sainsbury: I am grateful to the hon. Gentleman for his welcome for the order. Of course, there are always requests for long-term programmes for this and that. He will be as aware as I am that long-term programmes tend to change, and the longer-term and more highly defined the programme, the less flexible it inevitably is. The last thing that we want to do is to commit ourselves too far in advance to ordering precise numbers of particular types of
36
ship with particular categories of arms, sonars and radars, when we are faced with an evolving threat and must continually judge what is required against it.
Sir David Price: Is my hon. Friend aware that, although his statement will give encouragement to the Royal Navy and Yarrow, it will give nothing but disappointment to my constituents in Vosper Thornycroft? May I take it that as a result of that disappointment, of which I am sure my hon. Friend is aware, his Department is bending every effort to assist Vosper Thornycroft in getting orders for both mine hunters and mine sweepers, particularly in the Gulf and for Arab states? Will he add anything in that respect?
Mr. Sainsbury: I appreciate what my hon. Friend said on behalf of Vosper Thornycroft, which is the third unsuccessful yard in this competition. I repeat to him what I said to our hon. Member the Member for Tynemouth (Mr. Trotter) and to the hon. Member for Birkenhead (Mr. Field) about the yards' participation in this competition. Like Swan Hunter and Cammell Laird, Vosper Thornycroft has an opportunity to tender for further orders that come along. Like the other yards, it has ships for the Royal Navy under construction, and it can bid for other work from overseas and from the civil sector as well as from the Ministry of Defence.
Mr. Chris Mullin: Will the Minister accept that, while no one begrudges the work going to Yarrow, there is considerable disappointment about the announcement? In fact, it is a bit of a kick in the teeth for many in the north-east that not one of the orders has gone to Swan Hunter. What hope can the hon. Gentleman hold out for the thousands of workers whose livelihoods depend on Swan Hunter? Does the Minister agree that the merciless application of market forces should not be the only criterion he takes into account when deciding where to place such orders?
Mr. Sainsbury: I am glad to note the hon. Gentleman's enthusiastic welcome for defence orders of considerable size. I appreciate that not every yard can win if a batch order is placed, but I am somewhat surprised that he should suggest that we should incur extra expense by splitting the order. Depending on how the order was divided, the extra expense to the Royal Navy would have between £11 million and £20 million if we had not taken advantage of the best offer. We have a responsibility to ensure that that money is saved to be used for other equipment to ensure that we have the best possible Navy.
Sir Ian Lloyd: My hon. Friend will be aware that, apart from recent events in the Gulf, the evidence given before a Congressional defence committee last week—that modern weapons systems depend completely on their electronic capability—reinforces the point made by my hon. Friend the Member for Wealden (Sir G. Johnson Smith). When was the specification for the electronic equipment frozen; how old will it be when it is installed; how frequently will it be updated?
Mr. Sainsbury: My hon. Friend will know better than most that it is difficult to answer that question because there are about 62 or 63 different systems in the type 23, and almost all of them have electronic components. The answer to his question would be different for each one, but

37
I take on board his point about the need, when ordering complex electronic equipment. to bring to bear the sort of approach that he recommends.
Mr. Bruce George: Many—probably most—Opposition Members welcome the Minister's announcement as a step towards achieving his own target of 50 frigates. However, to achieve that goal would require ordering about two or three a year. Over the past five or six years the Government have averaged about one a year. To achieve the target would require far more than simply the ordering process that we have heard about. Does the Minister agree that perhaps his citing of Wilde was quite apt because many ships have been lost in the ordering process? To lose one was surely unfortunate, to lose two was careless, but to lose an extended family of ships amounts to neglect.
Mr. Sainsbury: In the relevant Oscar Wilde play the parents were found again. Perhaps the Select Committee's comments on the ordering rate overlooked the inevitable implications of a reduction in the overall size of the escort fleet from the figure in the 1970s down to about 50, which remains our target size. As the hon. Gentleman will be aware, paragraph 72 of the Select Committee report suggests a required ordering rate of 2·6 ships a year, which is the equivalent of two more orders this year. I have just announced three and that seems a good start towards achieving what the Committee asks for.
Mr. Jonathan Sayeed: My hon. Friend's announcement will be warmly welcomed with a great sigh of relief by the Royal Navy. That is because it is aware that it is not able to fulfil its peacetime commitments without withdrawing from some NATO exercises. It is extremely perturbed about the lack of type 23s, in particular the towed array sonar frigates required for the northern area. It is also worried about the impossibility of defending the sea lanes of communication in wartime. Will the Minister reassure the Navy by introducing into the long-term costings a clear programme of continuous ordering of surface units?
Mr. Sainsbury: While I welcome my hon. Friend's reaction to this order, may I say that I do not accept the "impossibility" as he puts it, of defending the sea lanes. The Royal Navy would feel that to say that was selling it short, given the ships that it has, let alone the new ships that we are talking about ordering. I agree that the towed array sonars, which will be one of the main weapons systems of the type 23s, give a greatly enhanced anti-submarine warfare capability, which will be of great value to the Royal Navy.
Mrs. Margaret Ewing: May I also welcome today's announcement which will be greeted with enthusiasm throughout Scotland where we justifiably regard the words "Clyde-built" as demonstrating the pride that we feel? Can the Minister say whether emphasis is being placed by the Ministry on decentralisation of defence procurement expenditure? Is he aware that recent estimates show that 68 per cent. of this massive budget was concentrated in the south-east and south-west? Surely some of the pleas that we have heard from the northern regions of England show the need for decentralisation. Will the subcontracted steel come from Ravenscraig?
Mr. Sainsbury: It is apparent that the welcome for this order is not just from Scotland but from all those who have the interests of the Royal Navy at heart. Subcontract work is a matter for the prime contractor, and where he obtains his supplies is a matter for him. I am sure that he will find, as the hon. Lady would expect, some very competitive suppliers in Scotland.
Mr. Allan Stewart: Further to the points made by the right hon. Member for Glasgow, Govan (Mr. Millan) and the hon. Member for Glasgow, Hillhead (Mr. Galloway), may I ask my hon. Friend whether he agrees that this is magnificent news for the west of Scotland and a tribute to the professionalism and dedication of the management and work force in Yarrow who have won this contract on merit? Is my hon. Friend able to say anything more about the consequences of the contract for the preservation and creation of jobs? Does he agree that the lesson for the whole of Scottish industry is that the way to preserve and create jobs is to be competitive?
Mr. Sainsbury: Indeed. I am grateful to my hon. Friend for his welcome. We estimate that about 10,000 jobs will be sustained in the defence industry by these orders. He is absolutely right that in defence equipment supply, as in other industrial and commercial activities, competitive effectiveness in meeting the customers' requirements most efficiently is the best way to ensure the preservation of jobs and to create more jobs in Scotland and throughout the country.
Mr. Frank Cook: While the Minister's announcement of the batch order will be welcomed by the Royal Navy, it will be bitter news for the community surrounding Swan Hunter, where it will immediately mean 700 redundancies in the short term and probably 2,000 in the not-so-long term. Many of those people will be constituents of mine who travel to and fro each day.
Has the Minister taken into account the fact that the three orders announced today may yet fall short of the "about 50" that the Royal Navy considers adequate, especially taking into account the increased down time in modern operations and the need to update and relit these vessels more regularly? Will the Minister also take into account the fact that we need not only to renew our vessels but to retain our capacity to renew them? If we close the yards, as is happening at present, we need never look for another conflict like that in the Falklands because we shall be unable to furnish the equipment to send to such a conflict.
Mr. Sainsbury: I appreciate that the hon. Gentleman's constituents, like other people in the area of Swan Hunter, will be disappointed that Swan Hunter has not won this order. Of course the size and shape of the work force at Swan Hunter are matters for the company, but I hope that its continuing programme to improve productivity and efficiency, of which I am aware, will enable the company to win extra orders from the Ministry of Defence, from the private sector or, indeed, from overseas.
Mr. John Wilkinson (Ruislip-Northwood): While warmly welcoming this order, which will be a valuable addition to the fleet, may I suggest to my hon. Friend that his financial problems next year may be even greater than they were this year, in that defence expenditure is projected to continue to decline in real terms as a proportion of

39
Government expenditure and as a proportion of GDP? In those circumstances, how will he fulfil his worthwhile and laudable objective of a surface fleet of about 50?
Mr. Sainsbury: I am grateful to my hon. Friend for his welcome for this order. Expenditure on defence is projected to remain at about a constant level for the next two years. This order is a demonstration of one of the best ways in which we can meet the objective that my hon. Friend and I share—getting better value for money. As I said, the average cost of the three ships for which I have just announced the order is about £10 million less than the last three which were ordered in 1986. That is getting better value for money through more effective procurement, and is one of the best ways to ensure that we can meet the requirements of the Ministry of Defence and the Navy.
Mr. Tony Worthington: The Minister's statement will be greeted with great relief on Clydeside and especially by my constituents. It is not often realised that Yarrow is the largest single employer in manufacturing industry in Strathclyde. There are about 5,500 jobs in Yarrow, and subcontractors will depend on this order. It is difficult to overestimate the importance of the order, and enormous credit is due to the management and work force who have won this order on merit.
I should like the Minister to try to be a little less reticent about the batch system and about what it means to defer one of the ships into the next batch. When does he expect to be more explicit about the number of ships and the timing of the next batch? So far he has been a little reticent about that.
Mr. Sainsbury: I appreciate the hon. Gentleman's welcome for the order. Like some other hon. Members, he is seeking more information, but I am afraid that at this stage I am unable to give that to the House. Obviously, the batch system means that we order ships not singly but in groups. I have already announced that next year there will be another invitation to tender for a further batch. By normal standards that is quite precise. For the reasons that I have already advanced, I do not wish to commit myself further. I repeat our commitment to maintaining an escort fleet of about 50 ships. Those ships will be highly capable.
Several Hon. Members rose——
Mr. Speaker: Order. I appreciate the interest in this statement and I hope that I have called all those hon. Members who have a direct interest. I shall call hon. Members who are still rising but I ask them to be brief because other hon. Members wish to take part in the subsequent debate.
Mr. Robert Banks: Does not the chorus of delight from the Opposition Benches contrast with the performance of previous Labour Governments? Does my hon. Friend agree that the viability of a shipbuilding industry in this country is a major factor in securing competitiveness for the building of warships? Has he given careful consideration to the effect on Swan Hunter, in particular, as a result of his decision?
Mr. Sainsbury: My hon. Friend is right in his observation. If I recall correctly, when the Labour party was in power from 1974 to 1979, it cut the defence budget
40
on no fewer than five occasions, which does not give us great confidence about what it would do in the future. I assure my hon. Friend that we are conscious of his point and that we keep under review the overall capacity of the shipbuilding industry, as we do the ship repair industry, to meet the requirements of the Royal Navy.
Mr. Anthony Nelson: Is my hon. Friend aware that his welcome statement this afternoon will mark a major enhancement of our commitment to the defence of the east Atlantic and of NATO's northern flank, as well as to the pre-eminent reputation of our Royal Navy in anti-submarine warfare? However, will he be somewhat cautious about accepting the rather superficial arguments in favour of a longer-term batch ordering policy, not only because there are other priorities in defence procurement, but because it implies a sort of Buggins's turn, which cannot be in the long-term interests of our defence procurement policy?
Mr. Sainsbury: I am grateful to my hon. Friend for those remarks, with which I very much agree. The Royal Navy contributes about 70 per cent. of the NATO surface fleet in the east Atlantic and the Channel. That is a reflection of the important contribution of the Royal Navy to the NATO Alliance.
Mr. James Couchman: This is very good news for the Royal Navy, for Scotland and for Yarrow, but may I join my hon. Friend the Member for Tynemouth (Mr. Trotter) in articulating the fact that it is bad news for Swan Hunter, which is having considerable troubles with its present orders, particularly the AOR? When will my hon. Friend order more ships of the types that he mentioned, including ships for the amphibious forces, and will he lay down a more specific timetable for the next batch of type 23 frigates?
Mr. Sainsbury: One of the reasons why I cannot fully satisfy my hon. Friend's curiosity about the precise timing of the next order is that it takes quite a long time to analyse the tenders when they come in. As he will be aware, it is not at all unusual nowadays for there to be perhaps two or even three rounds of tendering to ensure that the Royal Navy obtains the best price and that the tenders are fully compliant with the contract conditions. That can take quite a long time and it is difficult to predict in advance exactly how long it will take. Therefore, I must leave my hon. Friend with no more information than I have already given to the House.
Mr. Julian Brazier: Following the point of my hon. Friend the Member for Harrogate (Mr. Banks), may I congratulate my hon. Friend on the excellent deal that he has struck? However, may I put it to him that we must keep at least two effective frigate builders in being, if we want to be competitive in future? That will almost certainly mean that, at some time in future, we shall have to pay a little more for our frigates than the price at which Yarrow would be able to produce them because, inevitably, Yarrow now has a strong competitive advantage. I put it to my hon. Friend that Swan Hunter should be that other yard.
Mr. Sainsbury: I aware that, to retain competition, we need more than on supplier. As my hon. Friend will recognise, we went out to four yards—not just two—all of which put in bids for that batch. I hope that a number of

41
yards will continue to compete for future orders to ensure that we have competitive prices. I do not accept that that will necessarily mean that we shall have to pay more than we would otherwise do to ensure that we retain at least two yards with the capability of building new frigates.
Mr. Barry Field: I appreciate that the order is an early stage, but is my hon. Friend able to confirm that the radar contract will be awarded to Plessey, which will be good news for its employees on the Isle of Wight, and can he say whether the helicopter requirement of those new warships will be met from existing resources, or whether additional helicopters will be required, which will be even more good news for Westland employees on the Isle of Wight?
Mr. Sainsbury: As I said earlier, there are a number of subcontractors and suppliers throughout the country, including the Isle of Wight, which are likely to benefit from the announcement of the order. In due course, those new frigates will carry the EH 101 helicopter, which is currently being developed and is supplied by Westland. I hope that my hon. Friend's constituents, like constituents in many other parts of the country, will benefit from that order.

Points of Order
4.34 pm
Mr. Tam Dalyell: On a point of order, Mr. Speaker. In the light of new information, according to a headline in The Evening Standard, I wonder whether there is any possibility of your reconsidering your decision, taken at 11.30 am, when the information was not available regarding my wish to make an application under Standing Order No. 20. The headline in The Evening Standard states:
"I reported Piper gas leak".
The article contained other assertions—[Interruption.] I represent, as do some other hon. Members, those people who have been widowed in this most tragic and ghastly accident.
In the light of the new information, Mr. Speaker, I wonder whether I could make an application under Standing Order No. 20, requesting a statement regarding the urgent interviewing of those people who received telephone calls from people who later died on the rig, as the telephone calls, with all the publicity and emotion, may well be overprinted in the minds of those who received them.
Mr. Speaker: I fully understand the hon. Gentleman's concern about this matter, but I am not aware of anything new that has happened since we discussed the matter earlier today.
Mr. Eric Forth (Mid-Worcestershire): On a point of order, Mr. Speaker. Will you confirm that there is a long-standing convention of this House, which has served us well over many years, that hon. Members, particularly senior Members, when abroad, do not criticise the Government of the day? Have you been able to reprimand the Leader of the Opposition for his disgraceful comments on his recent foreign trip?
Mr. Speaker: I am responsible for order in this House. I am not responsible for what anybody may say outside it.
Mr. Tony Marlow: On a point of order, Mr. Speaker.
Mr. Speaker: It is not a matter for me. It is not a point of order at all. Is there a different point of order?
Mr. Marlow: It is a different point of order. As my right hon. and learned Friend the Foreign Secretary is present in the Chamber at the moment, would it be possible for him to make a statement as to whether it is possible for him to withdraw the passport of the Leader of the Opposition?

Points of Order

  STATUTORY INSTRUMENTS, &c.
  Mr. Speaker: With the leave of the House, I shall put together the 14 motions relating to statutory instruments.
  Ordered,
  That the Tyne and Wear Development Corporation (Vesting of Land) (Various Local Authorities) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (Borough of Sunderland) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (British Shipbuilders and British Steel Corporation) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.

  43
  That the Black Country Development Corporation (Vesting of Land) (British Steel Corporation) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (Port of Tyne Authority) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (British Coal Corporation) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (Borough of Walsall) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (Borough of Sandwell) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (British Railways Board) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (Tyne and Wear Passenger Transport Executive) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (General) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Black Country Development Corporation (Vesting of Land) (Central Electricity Generating Board) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the Tyne and Wear Development Corporation (Vesting of Land) (City of Newcastle upon Tyne) Order 1988 be referred to a Standing Committee on Statutory Instruments, &c.
  That the draft Set-Aside Regulations 1988 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Lennox-Boyd.]

Orders of the Day

  European Communities (Finance) Bill
  Order for Second Reading read.
  [Relevant document: Fifth Report from the Treasury and Civil Service Committee (House of Commons Paper No. 358 of Session 1987–88) on European Community Finance.]
  Mr. Speaker: I have selected the reasoned amendment in the name of the Leader of the Opposition.
  4.36 pm
  The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe): I beg to move, That the Bill be now read a Second time.
  As the House will appreciate, as well as the report from the Treasury and Civil Service Committee, the debate also provides scope for consideration of the Community documents specified at column 122 of the Official Report for 7 July.
  United Kingdom policy in the Community, throughout the past five years, has had three dominant aims. We have sought to put the Community's finances on a sound basis of good management; we have sought to bring discipline to CAP spending; and we have sought to make a reality of the Community's commitment to a genuine internal market, 320 million strong.
  That agenda, originally set by Britain, has become the European agenda as well, and it is being carried into practice. The House heard from my right hon. Friend the Prime Minister only ten days ago about the progress made at Hanover towards the single market, the third of the objectives that I have described.
  The Bill is concerned to implement the first two of those objectives—sound finance and control over agricultural spending—on the basis of the agreement that we achieved at the Brussels European Council last February. I believe that those achievements have been welcomed by the great majority on both sides of the House.
  Attitudes towards the Community in the country at large, as well as in this House, have indeed moved a long way in recent years. The decade of debate about the merits of our membership is well behind us. The common objective now is to see how we can make the Community work as effectively as possible. Certainly that is where the interests of the United Kingdom lie, and the interests of Europe as well.
  Of course, I do not by that imply that our perception of our interests will always be in line with the views of our partners. That is the nature of any genuine partnership. On such occasions—there have been many on the road to the Brussels and Hanover European Councils, and there will be many more—we press our country's case with vigour. So, quite rightly, do others. The challenge of Europe is to find what is best in each nation's position, and to offer that to the whole, making the most of our common strength. Real progress is being made when all can see their interests being advanced.
  Mr. Eric Forth (Mid-Worcestershire): I am grateful to my right hon. and learned Friend for giving way at this early stage. Will he assure the House that the combination of the effects of the Single European Act and the proposals in this measure will give ample opportunity for any

  45
  member state, particularly our own, still to defend what it sees as its essential national interest, whether in financial or politico-economic matters? Is he satisfied of that, and can he reassure the House?
  Sir Geoffrey Howe: Yes. I am grateful to my hon. Friend for giving me the opportunity to take one intervention at this stage. A large number of hon. Members wish to speak in the debate which, as so often, has started an hour late. I make no complaint about that, but I hope that the House will forgive me if I do not give way to a range of interventions, because I wish to set out the argument in support of the Bill as a whole.
  I begin by acknowledging the point made by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth). Incidentally, I reject the argument that it is wrong for us ever to shift our views for the sake of a common position. If 12 nations are to make the most of their separate resources and talents, each must be ready to join in the search for agreement. But equally, I reject the argument that it is somehow bad form within the Community to fight for what we think right. The suggestion is occasionally made—it was made by some in this House during our struggle for better Community budget discipline—that the right course must always be to go along with the consensus. But that obviously depends whether the consensus is right—right for us and right for the Community. For us to fall in with the majority, where we think it charts the wrong path for the Community, would be to fail the Community, as well as Britain.
  I make no apology—and the House would not expect anyone to make an apology—for the fact that the recent far-reaching review of the Community's finances and policies took place at the insistence of this country. The other member states now acknowledge, publicly and privately, just how necessary that review was. The new own resources decision and intergovernmental agreement now before the House are among its results: today's debate gives us an opportunity to review them all.
  Mr. Nicholas Budgen: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: I am normally fascinated by the points that are made by my hon. Friend. I hope that he will forgive me on this occasion, but I wish to stay within the pattern of the argument.
  The principal result is a series of deep-seated changes in the way the Community budget will in future be run. The Community now has the solid foundation which it needs in the run-up to 1992. That demonstrates the wisdom of this Government's determination to make a success of the Community through concrete internal reform, consistently and tenaciously pursued, even when many in Brussels urged us to settle for less. Our tenacity in pursuit of those objectives is in sharp contrast to the ineffectual, toothless, gnawing attitude one sometimes detects from the Benches opposite, where vacillation has become accepted as a substitute for leadership and consistency, and resolution and patriotism are conspicuous by their absence.
  Mr. Tony Marlow: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: No, but I am sure that I carry my hon. Friend with me in what I have just said about the Opposition.
  46
  The same contrast is evident in the attitudes of the two sides of the House to the completion of the single market. That is the next key task for the Community. It is another where the United Kingdom has set the pace, and the tone has been set by my right lion. and hon. Friends.
  Good progress is being made. In the six months of the German presidency, agreement was reached at Council level on a record number of 56 individual single market measures. That brings the total since the Milan European Council in 1985 to nearly 200. Those key measures included a number of considerable importance to the United Kingdom, such as the removal of controls on capital movements by all member states. That is a prerequisite of a genuine free market in financial services. It will be a major boon to the City of London.
  The measures included the full liberalisation of road haulage by the end of 1992. That means the end of continental lorry quotas. British firms will be able freely to compete for business, and costs to consumers will be cut. I mention as well the liberalisation of non-life insurance services—another change of major benefit to the British insurance industry.
  Why has there been the acceleration of progress on the single market?
  Mr. Stuart Holland: Lord Cockfield.
  Sir Geoffrey Howe: I am almost delighted that the hon. Gentleman is paying tribute to a British member of the European Commission. Certainly he deserves tribute.
  Mr. Holland rose——
  Sir Geoffrey Howe: I have taken the hon. Gentleman's point.
  We have made such rapid progress because, throughout the Community, there has been a growing recognition of the significance of 1992, and the benefits that it will bring, and because the completion of the future financing review, the principal reason for this Bill, has provided the foundation for single market success.
  Mr. Budgen: No dialogue—just reading out the Foreign Office brief.
  Sir Geoffrey Howe: I am delighted that my hon. Friend is taking such a close interest in what I have to say. He will find it even more fascinating, as I go on.
  The accession of Spain and Portugal on 1 January 1986 brought the Community two new members with incomes significantly below the Community average. Their entry coincided with a strong and increasing awareness of the link between the single market programme and the Community's spending plans. In particular, it was clear that the full development of the single market would best be accompanied by further expansion of the structural funds, to improve the economic infrastructure of the poorer Community regions.
  Thus, it became clear too that the ceiling on the Community's own resources agreed at Fontainebleau in 1984 would be insufficient to provide for the needs of a Community of 12 in the run-up to 1992. In consequence, the Commission brought forward, in February 1987, proposals for the comprehensive restructuring of the Community's finances and an increase in the level of the Community's own resources.
  From the beginning, the future financing review provided both threats and opportunities. On the positive

  47
  side, the Commission's proposals called for a comprehensive reform of the common agricultural policy. That included, for the first time, the introduction of automatic stabilisers in all the main agricultural sectors, with increased supervisory power for the Commission to prevent possible overshoots. The Commission also proposed improved budget management procedures. The aim here was to improve forward financial planning. To all that, the United Kingdom gave strong support.
  But the Commission's proposals also contained dangers. Chief among them was a proposal for a new method of calculating the British abatement which, on our calculations, would have left the United Kingdom hundreds of millions of pounds worse off in each year up to 1992—and by about £700 million in 1992 alone.
  The Commission also proposed an increase in the own resources of the Community to 1·4 per cent. of Community GNP. The United Kingdom argued that an increase of that scale—equivalent to a rise of nearly 50 per cent.—was not required, and would impose an unnecessary burden on taxpayers.
  Another unwelcome Commission proposal was for a new tax on the consumption of oils and fats. That was designed to lay upon consumers the burden of the Community's oils and fats support regime—by increasing the costs of margarine and vegetable oils by up to 31 per cent. We strongly opposed that tax: it would have been degressive, and it would have done little to address the basic problem of over-production.
  In the negotiations which followed, we made four points clear: first, any further increase in Community resources must be accompanied by effective and legally binding controls on expenditure; secondly, there would have to be effective measures to reduce agricultural surpluses; thirdly, there should be no oils and fats tax; and fourthly, we were determined to preserve in full the Fontainebleau abatement mechanism.
  We also made it absolutely clear that we were not prepared to agree to any element of the future financing package until we were satisfied with every individual element in the package as a whole. We succeeded on all counts.
  We succeeded in getting in place agricultural stabilisers for cereals, oil seeds and the other principal agricultural commodities. Those stabilisers have subsequently been implemented by a series of detailed agricultural regulations covering each of the crops involved. By the standards of Community agriculture in the previous two decades, that stabiliser regime is revolutionary and long overdue. For the first time, we have an automatic mechanism, with teeth, which will control the growth of financial support.
  To improve overall control of the common agricultural policy, the Brussels European Council also agreed, again for the first time, to make the financial guideline for agricultural spending legally binding. In future, the Commission's price proposals must always be consistent with the agricultural guideline.
  Mr. Jonathan Aitken: In the catalogue of success that my right hon. and learned Friend is relaying about how well we are now controlling expenditure, why has he omitted the lack of legally binding controls on the non-obligatory sector? How are the intergovernmental
  48
  discussions supposed to equate with the legally binding controls that we were promised by my right hon. Friend the Prime Minister at the Dispatch Box?
  Sir Geoffrey Howe: As my hon. Friend has acknowledged, the arrangements now coming into force provide legally binding controls for obligatory expenditure under the agricultural guideline. They also provide for legally binding limits year on year on the aggregate Community budget. The combination of those two effects provides a legally binding control on the non-obligatory expenditure. In addition, the matter is fortified by the inter-institutional agreement that was also arrived at as part of the arrangements. The point made by my hon. Friend—[Interruption.] This is the point. Even the hon. Member for Vauxhall (Mr. Holland) finds it difficult to follow the complexity of these matters. For that reason, the intervention made by my hon. Friend the Member for Thanet, South (Mr. Aitken), confirms the wisdom of my original decision to allow a relatively small number of interventions. These are technical points, and we must look at the matter as a whole.
  Mr. Marlow: Why is the package so complex?
  Sir Geoffrey Howe: With his characteristic wisdom, even from a sedentary position my hon. Friend the Member for Northampton, North (Mr. Marlow) has asked, "Why such a complex package?" It is complex to satisfy the legitimate anxieties of my hon Friends to gain effective control in the circumstances.
  In future, as I have said, spending on the CAP will be able to grow at a maximum of just three quarters of the rate of growth of Community GNP—that is, about 2 per cent. per annum in real terms. That compares with an average growth rate of 5 per cent. per annum over the years 1980–87. Crucially, it will ensure that the CAP has access to a steadily shrinking percentage of the Community's GNP.
  Mr. Teddy Taylor: Will my right hon. and learned Friend give way?
  Sir Geoffrey Howe: No. I hope that my hon. Friend will forgive me. No doubt the House is looking forward with great interest to what my hon Friend has to say.
  The Brussels agreement also eliminated the general provision for additional expenditure in so-called "exceptional circumstances." Instead, the new budget discipline arrangements make specific and tightly controlled provision for a reserve of 1 billion ecu which will become available only in response to substantial in-year changes in the dollar-ecu exchange rate.
  World agricultural prices are in dollar terms, so when the dollar falls against the ecu, CAP budget costs rise. When in future such extra costs exceed 400 million ecu, the new reserve will be triggered, and may be drawn down, but only up to the limit of 1 billion ecu. The arrangement is symmetrical: when the dollar rises, the reserve will fall, automatically reducing the amount available for CAP support.
  In line with the provision in the Brussels conclusions that all these controls should be in legally binding form, detailed texts governing agricultural budget discipline, the financing of the CAP and of stock depreciation, and the financing of FEOGA intervention, have been drawn up

  49
  since February. They were formally adopted by the Council on 24 June and copies have been placed in the Library of the House.
  The conclusions of the February European Council also provided for a useful tightening of arrangements for budgetary mamagement. Those provisions too are embodied in a Council regulation adopted on 24 June and deposited in the Library of the House.
  As I explained earlier in reply to my hon. Friend the Member for Thanet, South, a helpful additional control on spending arises from the agreement between the Council, the European Parliament and the Commission on an inter-institutional agreement covering Community expenditure between 1988 and 1992. Under the agreement, all three institutions commit themselves to respect a reference framework, or financial perspective, for spending over the five-year period which is consistent with the conclusions of the Brussels European Council.
  So much for the framework. How are the new arrangements working in practice? The Commission's 1988 price-fixing proposals for support prices for agricultural products were within the agricultural guideline for 1988, as was the compromise package agreed by the Council on 23 and 24 June. The Commission's proposed provision for agriculture in the draft 1989 budget is within the guideline for 1989.
  The signal to farmers and the markets is clear. The scandal of soaring CAP costs, at the expense of taxpayers, consumers and developing countries, is at last being brought under control.
  Mr. Teddy Taylor: To preserve his superb reputation for fairness and honesty, will my right hon. and learned Friend the Secretary of State accept that on the basis of the information provided by my right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food, the 2 per cent. increase referred to in 1989 actually compares with a year of 14 months and that that 14-month year was created by the £5 billion overspend under the previous strict budgetary controls?
  Sir Geoffrey Howe: It is important that my hon. Friend should give me the opportunity to deal with that matter. I heard him muttering about it, so I thought that I would give the House the opportunity to hear about it.
  A change was made last year to alter the arrangements so that the financial control of agricultural expenditure shifted from the system of advances to reimbursements. Whereas previously money used to be advanced by the Community to member states for them to pay, it is now paid by way of reimbursing expenditure actually incurred. We regarded that change as desirable because it gives tighter control. Member states are given money when they have paid it out.
  As a matter of practice in making the change, it involved reimbursing after a two-and-a-half-month delay. There was a change in the pattern of timing. If we compare the two years, we see that the figure for 1988 covers the period from 1 November 1987 to 15 October 1988. The second period for the 1989 figure covers 16 October 1988 to 15 October 1989. The two periods are comparable, and the 2 per cent. increase to which I have referred results from comparing like with like.
  I am anxious to make that point. It answers the point raised by my hon. Friend the Member for Southend, East (Mr. Taylor) and no doubt he will have an opportunity to
  50
  investigate it further. The House will understand that it is possible to make these points only with a high degree of comprehension, as characterised by the intervention made by my hon. Friend the Member for Southend, East.
  The change to which I have referred is already having a powerful effect in practice. In the dairy sector, as many hon. Members will be aware from their experience, where milk quotas were first introduced in 1984 and strengthened under our presidency in 1986, the reduction of intervention stocks has already been impressive. Between the end of April 1987 and the end of April this year, butter stocks in the Community have been reduced from some 1·1 million tonnes to about 570,000 tonnes. That is a reduction of almost 50 per cent. in 12 months. Similarly, stocks of skimmed milk powder were reduced from 766,000 tonnes at the end of April last year to just 101,000 tonnes at the end of April this year. That is an 87 per cent. reduction.
  All those important agricultural reforms have been achieved without the introduction of the oils and fats tax, despite strong support for such a tax from a number of member states.
  Mr. Rhodri Morgan: Is the right hon. and learned Gentleman implying that this is the first time that there has been a sharp reduction in the level of butter and skimmed milk stocks, or does he recall that a similar reduction took place in 1982 without such a scheme?
  Sir Geoffrey Howe: This is the first time that one has been deliberately sought in the face of market conditions that might have produced the opposite result. It has been achieved as a result of the determination with which the Government have sought this precise reform in agricultural policy. One of the most notable contributions was made by my right hon. Friend the then Minister of Agriculture, Fisheries and Food, when presiding over the December 1986 Farm Council. who brought to bear on the working of the Community all the authority that came from his experience as a Government Chief Whip and achieved a good result.
  I see this willingness to accept the reform of the common agricultural policy agreed at Brussels as an impressive demonstration of the new seriousness of purpose in the Community. However, it will have 10 be sustained and intensified for years to come. More, much more, must still be done to make the agricultural sector worldwide more responsive to market signals. The opportunity arises in the current GATT negotiations.
  Almost every one of the industrial economies needs to discover ways of promoting the health of their rural communities that do not depend upon the artificially protected production of food surpluses. That need was recognised at the Toronto economic summit. The message that the Toronto summit gave the GATT negotiators in Geneva was clear and can be put simply and graphically: that, if the countryside is to find a different way of maintaining its economic health, we should "start beating ploughshares into golf clubs". [Interruption.] Well, it is a striking phrase which should appeal to the hon. Member for Hamilton (Mr. Robertson), as it has a great appeal in Scotland.
  It is a serious point, because for too long we have been devoting resources, not just in Britain or in the Community but throughout the world, to supporting, sustaining and protecting agriculture to enable it to produce food surpluses that cannot be consumed, at prices

  51
  that are artificially sustained. The task of reform is the message that we have been driving home at the Tokyo, Venice and Toronto summits. That task must be dramatised and we must look for other ways of sustaining our rural communities. I make no apology for the phrase. Yes, let us start beating ploughshares into golf clubs. Planning permission is part of the argument.
  We want action soon, and, over and above that, we want an agreed framework for major cuts in protection and support in the longer term as well in the short run. Through the Community, Britain will be working—
  Mr. John Redwoodrose——
  Mr. Phillip Oppenheim: Will my hon. and learned Friend give way?
  Sir Geoffrey Howe: If my hon. Friends will forgive me, I shall not give way; I have given way sufficiently already.
  Through the Community, we shall be working to ensure that the GATT negotiations reach a successful conclusion.
  Mr.Oppenheim rose——
  Sir Geoffrey Howe: I shall give way for the last time.
  Mr. Oppenheim: I thank my right hon. and learned Friend for giving way. I know that he is greatly concerned to free the agricultural market, and as moves seem to be in hand to do just that, is it not also true that the Commission is taking an increasingly protectionist stand on the import of non-EEC industrial goods? At the moment, the EEC has a series of quotas, voluntary restraint agreements and spurious anti-dumping duties against a range of goods from steel to typewriters, and from photocopiers to canned mushrooms in brine. How can that help the industries which use those products, and how does it square with the Government's policy of deregulation and freeing the markets?
  Sir Geoffrey Howe: That intervention may have to substitute for my hon. Friend's speech, although I hope not. It raises a range of question. As my hon. Friend knows, the fact is that on almost every commodity for which there is an argument for anti-dumping regulations and protectionism, more often than not a United Kingdom constituency is arguing for such protection. It is important that the right balance is struck. On the whole, and certainly as far as the United Kingdom is concerned, our pressure is constantly for more liberalisation. I take as an example the removal of quotas in the steel industry, an arrangement which was operated to the advantage of the Community steel industry as a whole for some years, but which we wanted to get rid of, and we have got rid of it, pressing the Community in a more liberal direction.
  The conclusions of the Hanover Council clearly record that we want to be sure that the achievement of the single market does not amount to the erection of a new protective hedge around the Community. It is important that we should continue to work as we are doing to achieve more liberalisation of the countries of the European Free Trade Association. However, it is equally important that we should not give away a protection if we could use it to win a corresponding deal from another trading bloc. The matter should be handled intelligently. My hon. Friend's point was worth making, and will be taken on board.
  52
  As I mentioned earlier, a further important element of the review of future financing was the adoption by the Council again on 24 June, of a new regulation on the structural funds, putting into effect the decision of the Brussels Council to increase structural funds commitments by some £1 billion a year over the period 1989–92.
  The increase will go primarily to the poorest, to Greece, Portugal, Spain, Italy and Ireland, but Britain will remain a major beneficiary from the funds. We shall continue to receive more than £750 million a year——
  Mr.Redwood rose——
  Sir Geoffrey Howe: No, if my hon. Friend will forgive me, I will not give way.
  The particular problems of Northern Ireland will continue to receive special attention. Areas affected by industrial decline will still benefit from the regional and the social funds. Social fund resources will still be available to tackle unemployment, especially youth and long-term unemployment. The Highlands and Islands, mid-Wales and Devon and Cornwall will continue to qualify for support from all three structural funds.
  The final element in the Brussels Council package was the agreement to increase the level of own resouces available to the Community, and to change the way in which member states' contributions were calculated.
  The new own resources decision, the implementation of which is provided for by clause 1, gives effect to the February decision to increase the overall limit on the amount of resources available to the Community.
  As I have explained, some increase was inevitable, and always foreseen as likely, given the terms of the Fontainebleau agreement, the accession of Spain and Portugal and the increase in the structural funds required in the context of 1992. The new limit has been set this year at 1·15 per cent. of Community GNP. It will rise through a series of annual sub-ceilings to 1·2 per cent. in 1992. The original Commission proposal, strongly supported by a number of member states, was, of course, for 1·4 per cent.
  The new own resources decision also embodies a change in the structure of the Community's own resources. Under the new arrangements, the VAT rate will continue to be limited to 1·4 per cent., but the VAT base in each member state will be capped at 55 per cent. of its GNP. The remaining portion of resources due from each member state will be calculated according to its share in Community GNP. The Council has agreed a directive—a copy of which has been placed in the Library of the House —to ensure that member states' GNP statistics are comparable and uniform. Calculating an element of member states' contributions on the basis of GNP will bring the own resources structure more in line with the relative prosperity of member states—another change which the United Kingdom has consistently supported.
  Most important of all, the new own resources decision preserves the Fontainebleau abatement mechanism intact. Some member states initially argued that it should be abolished outright. Others wanted to see it greatly reduced, or made degressive so as to disappear by 1992. However, in the end all accepted that it should continue. The Fontainebleau arrangement has been worth some £3,000 million to Britain over the past three years. It will be worth some £1,600 million this year. It ensures that,

  53
  even if Community spending were to reach the new ceiling, the United Kingdom net contribution could amount to no more than about 0·25 per cent. of GNP.
  The abatement mechanism will last as long as the new own resources decision itself, and even thereafter can be changed only by the unanimous agreement of all member states. The Commission's document setting out how the abatement will be calculated in future has been deposited in the Library.
  The Bill also seeks the approval of the House for payments to be made under the 1988 intergovernmental agreement. This is needed to ensure that the Community can meet its commitments during the rest of this year, pending the entry into force of the new own resources decision The procedure of using a single Bill for the new own resources decision and the intergovernmental agreement was expressly commended by the Treasury and Civil Service Select Committee in its report of 18 May, and follows the precedent of the 1985 European Communities (Finance) Act. The present Bill supersedes and repeals that Act.
  Throughout this spring, we made it clear that we would not be prepared to recommend to this House an increase in Community own resources until all the decisions reached at the Brussels European Council had been embodied in firm and legally binding texts. With the adoption of the package of texts by the Council on 24 June, that stage has been reached.
  Effective CAP reform is at last in train. The Community's finances are at last firmly based. On this foundation the single market can be, and is being, successfully built. Three key United Kingdom aims are thus achieved or under way. The Community's interests are also being enhanced. To set our sights high was right —for Britain and for the Community. We have hit the target, and I commend the Bill to the House.
  5.10 pm
  Mr. George Robertson: I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof,
  "this House declines to give a Second Reading to a Bill which fails to provide a genuine and expeditious programme for a substantial reduction in common agricultural spending or a corresponding increase in budget allocations for the social and regional funds, for the environment or for assistance to developing countries."
  One is tempted to start this debate by saying that it is the same old debate with the same old characters at the same old time, only the figures are bigger.
  Mr. Forth: And the hon. Gentleman will make the same old speech.
  Mr. Robertson: The hon. Gentleman says that I shall make the same old speech. I hope that he has taken the precaution of looking at my 1985 speech and comparing it with what the Foreign Secretary said then.
  There is a major difference today. It is not just that the figures are much larger than they have ever been, but there is the presence of the Foreign Secretary to open the debate. That is surprising because this is not his Bill, but a Bill presented by Mr. Chancellor of the Exchequer. Where is he? Nowhere to be seen. He is not present to defend or even to describe the Bill. That has been left to the man
  54
  whose job the Chancellor is said to covet even more than a level of interest rates which may stay steady for more than 10 days at a time.
  That is all the more surprising since the Treasury has its own European Minister who could have launched the Government's flag ship today. The Paymaster General is present, giving a serious imitation of being awake, which is more than several of his hon. Friends have managed during the Foreign Secretary's speech. The Paymaster General is usually cast adrift on the parliamentary ocean at the mercy of all the sharks on both sides of the House. But he is no mean figure to sail this particular dead fish, if one is to continue with these nautical analogies. He is not a minor Treasury Minister; in his spare, unpaid, time he is the chairman of the Conservative and Unionist party. Who better to tell us of the iniquities of today's creative accountancy which will allow the Common Market once again to escape bankruptcy?
  After all, the right hon. Gentleman was appointed to eliminate the charismatic mark of the right hon. Member for Chingford (Mr. Tebbit), who won the election but lost the Prime Minister's ear for being too explicit in saying aloud what she allows only to be unattributably leaked. Even in her most demented moments she could not have appointed the Paymaster General to do for the Conservative party what he managed to do for the European Community. For all that, the Paymaster General has the clout and the prestige to launch the Bill, but he is not doing it.
  Mr. Forth: Will the hon. Gentleman give way?
  Mr. Robertson: No.
  Instead, it is the Foreign Secretary, who on 30 June opened a full day's foreign affairs debate. Today he is here to open the debate on this important Bill which has been stolen from the Treasury, and on Friday he is back at the Dispatch Box opening a full day's debate on Hong Kong.I put it to you, Madam Deputy Speaker, that three opening speeches in two weeks would make even the most sleepy Lobby journalist stop suspiciously for a moment. After weeks of speculation——
  Mr. Forth rose——
  Mr. Ian Gow rose——
  Mr. Robertson: I shall consider giving way to hon. Gentlemen who are jumping up and down when I come to an appropriate point in my speech.
  We have seen weeks of speculation. On 28 June The Sun,among the usual abuse of the Labour party which we have come to expect, had an editorial headlined, "Bye, Geoffrey", which stated:
  "In a speech Sir Geoffrey Howe claimed credit for Britain's economic success.
  But what he was really doing was fighting for his political life.
  Too late, Geoffrey. You would have done better if, instead of siding with Nigel Lawson in the row over the pound, you had supported your Prime Minister.
  Now all you can do is wait until October 17 when you're due for the chop."
  Clearly, The Sun knows more than even the right hon. and learned Gentleman about how he will go and the precise date on which it will happen.
  Perhaps the Foreign Secretary has spotted a chink in the door at No. 11 Downing street, with the fourth interest

  55
  hike in two weeks allowing a previous Chancellor a brief moment at the Dispatch Box to show up in public the present incumbent——
  Mr. Gow: On a point of order, Madam Deputy Speaker. When the Opposition Front Bench spokesman makes an opening speech on the Second Reading of a Bill should not the spokesman direct his mind and words to the Bill rather than to outrageous attacks upon my right hon. and learned Friend?
  Madam Deputy Speaker (Miss Betty Boothroyd): The hon. Gentleman will realise that a Second Reading debate is wide-ranging and hon. Members should be allowed to develop their comments as they see fit.
  Mr. Robertson: It is indicative of the embarrassment of right hon. and hon. Gentlemen that they have to stoop to such a weak debating point to interrupt a speech. The House is now graced with a predecessor of the Paymaster General, who is sitting on the Back Benches, having fallen out with the Prime Minister, as have so many sitting around him. He was in the position of making up all the fanciful tales about European Community budgets which were told to the House.
  My point is that this is a Treasury Bill and the Secretary of State for Foreign and Commonwealth Affairs is moving it. It is legitimate for the House to ask why that is and where on earth the Chancellor of the Exchequer is during this debate on his Bill.
  It is difficult to explain the Foreign Secretary's completely irrational desire to open the debate on this of all Bills, which provides so little evidence of judgment, efficiency and political or financial prudence. Is the truth that he was left with the short straw yet again because even the Chancellor, who has peddled a few secondhand policies in his time, could not face selling this particular old banger? One can see why anybody, boasting, however fraudulently, of national financial success, would want to keep far from this Bill.
  The Foreign Secretary has tried his best to confuse because, obviously, he cannot convince the House that when the bluster, jargon and funny money is set aside, the news in the Bill is not bad for Parliament and for British taxpayers.
  Mr. Forth rose——
  Mr. Redwood rose——
  Mr. Robertson: When we strip away the interinstitutional agreements, the intergovernmental agreements, the non-refundable advances, the fourth resources, the stabilisers, the green pound, the social spaces, the financial engineering and all the Euro mumbo-jumbo, the Bill permits a dramatic increase in the Common Market's budget of 25 per cent. on what it spends now. That is one extra pound for every four that the Community is spending.
  Last year, after getting everything back that we were due and after receiving the much-vaunted rebate that the Government are so proud of, Britain paid a total of £1,347 million to the Community—that was our total net contribution. For those who struggle to understand these
  56
  concepts, that is the equivalent of the total amount that the Government spent on the National Health Service's capital investment programme last year.
  Mr. Teddy Taylor: Is the hon. Gentleman aware that the figure has since been revised yet again, for the fifth time? The net contribution last year was £1,649 million. There has been a further revision—the revisions occur regularly. That, of course, is an enormous figure.
  Mr. Robertson: I am grateful to the hon. Gentleman. At least one expatriate Scot who got away from the fragile and dangerous areas for Tories north of the border makes a constructive contribution. We are now talking about considerably more than what the Government spent on the NHS's capital investment programme last year. As a consequence of the Prime Minister's negotiations and generosity at the Brussels summit, the figure is expected to go up by between £200 million and £300 million, which is the equivalent of the total arts budget of this country. That will be the extra amount paid to the European Community this year.
  Mr. Budgen: Will the hon. Gentleman comment on the increase in the structural funds? We have been helped very much by a document from Conservative Central Office, which tells us some of the things that the Foreign Office is not prepared to draw attention to. It points out that the structural funds will go up by 80 per cent. in real terms. I dare say that the hon. Gentleman, who I expect believes in plenty of industrial and social engineering, will applaud that, and he might even provide us with Tory arguments for the increases. My right hon. and learned Friend the Foreign Secretary did not have anything to say about the 80 per cent. increase in real terms.
  Mr. Robertson: I know that the right hon. and learned Gentleman did not. That is why I shall come to that. The hon. Gentleman makes a good point. I presume that the briefing that he mentions is issued under the name of the Paymaster General. I am sure that when he winds up the debate the right hon. Gentleman will be pleased to give careful attention to the material that is coming from his own researchers, buried deep in the bowels of Conservative Central Office.
  I am giving equivalents of the large sums because such large amounts are almost meaningless. They seem meaningless to the Prime Minister because she agrees to them with such aclarity—[HON. MEMBERS: "Alacrity."] I am sorry. The Euro-jargon is even getting to me.
  In the context of those remarkable increases, I should like to draw attention to an exchange in the Select Committee on Treasury and Civil Service, to which I pay fulsome tribute for producing, yet again, an excellent report on the subject. The exchange was between the hon. Member for Bridlington (Mr. Townend) and Mr. A. J. C. Edwards, under-secretary to the European Community Group in the Treasury.
  The hon. Member for Bridlington asked:
  "I just wonder what would be the attitude of the Treasury if one of the spending departments came up with a request to increase spending by 25 per cent."
  Mr. Edwards replied—these are precious words—
  "Well, it is no secret that we would not be well pleased."
  The language of Sir Humphrey permeates all this. I recently heard a Minister say at a public gathering that if

  57
  people thought that "Yes, Minister" was a comedy, he was able to vouch for the fact that it was a documentary. There is ultimate proof in that quotation.
  Mr. Nigel Spearing: My hon. Friend quoted from the explanatory and financial memorandum to the Bill, which says that the net increase in expenditure will be between £200 million and £300 million a year. Does he not agree that that is an estimate, which takes account of what the Government hope will be spent in Britain at Brussels' behest? Would it not he more accurate to say what the extra liability would be? Should not the Paymaster General tell us that? Despite that being the former job of the Foreign Secretary, he did not have the grace to tell us what the liability is.
  Mr. Robertson: My hon. Friend makes an excellent point. To spare the House the complete tangle of statistics, I left out that substantial point for the moment. As the hon. Member for Wolverhampton, South-West (Mr. Budgen) said, the structural funds will play a large part in the net calculation that will apply to this country next year. I intend to deal with that and to show that the optimistic assumptions of the Prime Minister and the Foreign Secretary have little or no chance of coming to fruition. Therefore, the £200 million to £300 million extra that we shall pay to the Community will be substantially below the amount that we shall get. Indeed, we shall pay far more than that.
  The recalculation of the budget financing on a GNP basis is welcome, being fair and much more straightforward than the previous convoluted system, but it is being used simply as a cover for the 20 to 25 per cent. increase in the Community budget that is now proposed. We remain rightly sceptical of the calculation of GNP that will apply in many Community countries, not least our own, but those figures are not the only bad news with which the Chancellor of the Exchequer does not want to be associated.
  The second and entirely separate part of the Bill puts the Chancellor's signature on a splendidly generous cheque from the Treasury to the European Community, even more generous than the cheque that the Minister for Social Security and the Disabled handed over to ITV's Telethon at prime time only a few weeks ago. That cheque to the Common Market will be for no less than £765 million. It is the intergovernmental agreement sum that we shall pay as an extra amount to the European Community this year.
  It is difficult to find equivalents to show how generous the Government are and how much they have given away, but if I say that the combination of that payment plus the extra payment that we shall give the Community will probably be close to the total spent on the roads programme in the whole of the United Kingdom, perhaps some people will get the gist of what has been conceded.
  Mr. Ian Taylor: Will the hon. Gentleman give way?
  Mr. Robertson: No.
  It should he noted that this year we intend to give close to £2 billion as our contribution to the European Community. That extra-generous cheque, which will go under the title of an intergovernmental agreement yet again, a non-refundable advance on our contribution, will add up to 57 per cent. of our net contribution. That
  58
  special, one-off payment will add up to 57 per cent. on top of our present bill for membership of the Common Market. It is small wonder that the Chancellor of the Exchequer stayed away today. Even he does not have the brass neck or the cheek to tell us how prudent or sensible that amount is.
  The expensive saga is still not over because what follows is even more reason for the Chancellor to keep out of the firing line and let the Foreign Secretary take the shellfire, perhaps all the better to benefit the Chancellor in his desire to take over his predecessor's job.
  What do those gigantic sums mean for Britain? What does the deal that was wearily accepted by the Prime Minister in the wee small hours in Brussels in February do for our country or even for the European Community? I come back to the point made by the hon. Member for Wolverhampton, South-West. For one thing, it will double the structural funds of the European Community—the European social and regional funds. Before she went to Brussels, the Prime Minister said that such an increase would be lacking in any "rational justification"
  In the House of Lords, Lord Brabazon of Tara said:
  "The proposal by the Commission for a doubling of the structural funds is in our opinion quite unrealistic".—[Official Report, House of Lords, 9 November 1987; Vol. 489, c. 1243.]
  Of course, he simply reads a script written by the Treasury, because in May the Paymaster General told the House that such a figure was "wholly unrealistic." The structural funds will not go up by 50 per cent., but by 1992, they will go up by 80 per cent., with good reason, of course.
  The House of Lords Select Committee on the European Community recently published a report "Reform of the Structural Funds" which says:
  "Differences in unemployment rates have intensified throughout the Community. Comparing the Community with the USA, it"—
  the Commission—
  "estimates that regional disparities in the Community are twice as high as regards incomes, and three times a high as regards unemployment rates."
  Mr. Budgen: What proportion of the structural funds are obligatory and what non-obligatory? I believe that almost all of them are non-obligatory and if so, they are not subject to any legally binding constraints.
  Mr. Robertson: The bulk f the structural funds are non-obligatory, but in order to reduce the amount of money in the compulsory and agricultural sector next year, the Community has transferred some of that money to the non-obligatory sector and is now claiming a triumph in reducing the agricultural component of the 1989 budget. The accountants employed by the European Community beat anyone employed by any local government organisation in Britain
  When the Prime Minister returned from Brussels she had no regrets about her volte-face on the structural funds but said:
  "We receive about £750 million from the structural funds."
  The Foreign Secretary repeated that this afternoon. However, she went on to say:
  "Indeed we do fairly well out of the funds. We hope"—
  note the word "hope"—
  "that this figure will increase to about £1,000 million in 1992." —[Official Report,15 February 1988; Vol. 127, c. 10]

  59
  The division of the structural funds is being negotiated presently and one thing is clear—Britain will not do well, whatever the Prime Minister and the Foreign Secretary may say.
  In the 1989 draft budget, 80 per cent. of the social and regional funds will be devoted to what is entitled "Objective I areas". Most of those areas are in Spain and Portugal and only one United Kingdom area, Northern Ireland, is featured. That area alone will benefit from the lion's share of the new cash that will be poured into the structural funds. Therefore, many suffering British regions and many of our acutely disadvantaged communities will be off the European assistance map for years. The Prime Minister may "hope", but our regions will suffer from her unwillingness to bargain. Her redrawing of the British regional assistance map has kept us out of the reckoning. When the intergovernmental agreement contained in the Bill is endorsed, our only real bargaining lever for a fairer deal on the structural funds will go for many years to come.
  Sir Russell Johnston rose——
  Mr. Robertson: I have given way enough and I would like to leave time for others to speak in this important debate.
  We are told that the next benefit in Santa Howe's package is the cut in the near-obscene expenditure on agriculture. Anyone who thinks that this much vaunted package will stop the unique protection from market pressures and currency fluctuations that is given to farmers and farming—a protection that is not given to any other industry or work force— will, predictably, be sadly disappointed.
  We are assured that there are to be new legally binding controls on agricultural spending. The fatal flaws in 1984 Fontainebleau package about which we and other Members of the House repeatedly warned the Government, have been supposedly spotted and eliminated. This time we are told that it is all watertight.
  Certain hon. Members have asked, "What about 1984?" Let me take the Foreign Secretary back to 25 June 1985 when we considered the European Communities (Finance) Bill of that year. In reply to an intervention by the hon. Member for Wolverhampton, South-West and describing the great momentous controls that had been negotiated, the Foreign Secretary said:
  "If that does not amount to the effective imposition of budget discipline, I do not know what does …We have achieved the fundamental change in the operation of the Community"—[Official Report,25 June 1985; Vol. 81, c. 798–800.]
  The then Economic Secretary to the Treasury went beyond that and he wrote an article in The Times that appeared on that very day. Of course, the Economic Secretary is now dealing with defence and great issues of the nation's security. I met him today on his way to Washington and he expressed a great desire to be in Washington and not in the House this evening. In that article, he said:
  "we achieved a system of budgetary discipline designed to bring the growth of Community expenditure under much tighter control … we see that the new budgetary disciplines are now beginning to bite ….Fontainebleau has changed the rules for good."
  60
  That is not what the Foreign Secretary said today, rather that Fontainebleau was rubbish. It is like Gorbachev at the all-party union conference a couple of weeks ago when he said that everything in the past was wrong, but that everything that he says now is 100 per cent. correct. Out of modesty I will not read out large chunks of my speech on 25 June when I predicted precisely the fatal flaws that the Foreign Secretary is now willing to admit in his confession today.
  We have been told that all the loopholes have been closed—we hope so. I do not believe that anyone in this House does not hope that the controls will work and that the Community will get on with tackling the necessary and urgent problems that face all European countries. However, the House should be as sceptical about those controls as the fifth report of the Select Committee on the Treasury.
  The excellent House of Commons Library reference sheet, which has been produced on this Bill, states:
  "A more likely scenario is that violation of guidelines by the Commission might be renewed pressure from some member states, already unenthusiastic about budgetary discipline, to change the rules themselves. This would require unanimous agreement; but so of course have the successively more expensive budgetary packages agreed up until now."
  That says it all.
  In his evidence to the Select Committee, the Paymaster General underlined the concept of legal enforceability by reminding the Committee that, on behalf of the British Government, he took the European Parliament to the European Court of Justice when that Parliament broke the treaty provisions on legal spending limits. He told the Committee that we won the judgment, but he conveniently forgot to remind the Committee that we had to pay the substantial cost involved in fighting that action and that the eventually agreed budget was larger than the one which he had taken the European Parliament to court to stop. If those are the guarantees on the legal enforceability of this budget, we and the Committee are right to be sceptical and suspicious about the controls—all the more so when they apply to the common agricultural policy.
  Mr. Tim Smith rose——
  Mr. Robertson: Time does not allow me to give way.
  The Foreign Secretary is aware that, on the crucial cereals threshold, the Prime Minister was forced to accept what she knew to be a ludicrously generous stabiliser of 160 million tonnes. Before she attended that summit, she had said that that level would be
  "an attack on the taxpayer and the housewife"
  The Foreign Secretary is aware that the accumulating price cuts with which the Prime Minister dazzled the House in February do not start until the year after the stabiliser limits have been exceeded. At the same time, the right hon. Lady's Government, without using the negotiating power that they had over the IGA to get a fair deal for these extra structural funds, have thrown a bonus of £750 million into the expenditure hole of the 1988 budget, the budget which the Prime Minister has despised.
  If the Foreign Secretary was trying today to get back into the limelight, to get back into the reckoning for succession to the Prime Minister, or even to survive the knives of the autumn, he chose a bad cause to plead and a bad case to present to the House. Four years and two weeks have passed since we debated the Bill which

  61
  followed the Fontainebleau summit, yet we are still offered only hopes and promises on the financing of the Community.
  The Government and the Prime Minister see no vision of a Europe that works for all its citizens, including the young, the unemployed and those whose jobs are threatened by Japanese or United States competition, who could all benefit from genuine pan-European programmes. Instead, the Prime Minister sees a deregulated, free-for-all Europe that is made easy for big business. This sad financial Bill says it all about Thatcherism at home and abroad—prudence for those who need help and profligacy for those who already have the cash.
  5.42 pm
  Mr. Terence L. Higgins: The extremely long preamble and peroration of the hon. Member for Hamilton (Mr. Robertson), in which he complained that it was my right hon. and learned Friend the Foreign Secretary who proposed the Bill's Second Reading and not my right hon. Friend the Chancellor of the Exchequer, might have been more convincing had the hon. Gentleman been the shadow Chancellor.
  It is rather difficult to regard the increase in own resources that we are debating as more than a further step on the rake's progress which the EEC has developed over the years. We must recognise, however, that the Government have been making strenuous efforts to bring matters under control. The progress that they have made with the United Kingdom abatement is to be welcomed.
  It is fundamental to the Government's policy that own resources should not be increased unless there is effective budgetary discipline. Developments on that front have been chronicled over a period by the Select Committee on the Treasury and Civil Service. On budgetary discipline, I fear that it is no consolation to any member of that Committee to say, "I told you so." The matter was made clear to the Government by that Committee at the time of the Fontainebleau agreement. That is something which none of us can rejoice about.
  We must recognise that it is extremely difficult for a Head of Government, as a lone voice, to continue saying no time and time again. It is important to view the developments that we are debating today against that extremely difficult background.
  I wish, first, to comment on a major change in the basis of our contribution to own resources from VAT to gross national product. The Select Committee on the Treasury and the Civil Service, in the final paragraph of its report, draws attention to the real dangers that accompany that, especially the GNP statistics. The Committee observes that the United Kingdom's GNP statistics are deficient. I am glad that the Treasury has agreed about that and has introduced a review that will, I hope, result in more accurate statistics. These statistics are used in governing the country and in organising the economy, and when it comes to our contribution to the EEC they mean hard cash.
  I was disappointed by the way in which my right hon. Friend the Prime Minister answered a question which I put to her following her statement on returning from the Hanover summit. I asked my right hon. Friend to check that our own GNP statistics were all right and similarly to check those for the rest of the Community. My right hon. Friend said:
  62
  "I agree with my right hon. Friend that a change from a percentage of VAT to a percentage of GNP is significant …Obviously, I cannot force the rest of the European Community to do that"—
  that is, to initiate an inquiry—
  "but we are making strenuous efforts to see that our statistics are as accurate as we can make them."—[Official Report,30 June 1988; Vol. 136, c. 528.]
  It is crucial that the review should encompass our own statistics and those of the other member states. If it does not, we may find ourselves paying more to the EEC than we should. I hope that the Treasury will take this matter on board and that we shall have more forthcoming answers in future than the one which I received to my question.
  Mr. Spearing: Will the right hon. Gentleman give way?
  Mr. Higgins: I shall give way only once. Complaints have been made that Privy Councillors speak for too long, and I am anxious not to do that.
  Mr. Spearing: Perhaps the right hon. Gentleman's remarks are illustrative of a scrutiny problem. Is he aware that the Government have produced an explanatory memorandum and that the EEC has produced a Commission working paper on GNP? If we read the titles of the documents that are italicised in the Official Report for Thursday 7 July, which the Leader of the House did not repeat, we find that they are notionally for debate today. I do not blame the right hon. Gentleman. because there is a great scrutiny problem.
  Mr. Higgins: I agree that scrutiny is tremendously important, and I pay tribute to the work of the Select Committee on European Legislation, which the hon. Gentleman heads, in that area. So many directives are being rushed through in anticipation of 1992, and this happens during any presidency of the Council. It is increasingly difficult for the House to ascertain what the directives really mean. It is a problem to which the House should give careful attention. I much agree with what the hon. Member for Newham, South (Mr. Spearing) has said.
  Should budgetary discipline be legally binding? We know that the Prime Minister was disappointed, rightly, that what she believed would be effective budgetary discipline at the time of the Fontainebleau agreement was not. She then said that it must be legally binding. I do not think that the House and the Government are making sufficient use of the legal restraints available to them in controlling those matters, while complying, rightly, with the legal restraints that are imposed on us.
  A few days ago, we had to go along with the European Court's decision on imposing value added tax on certain items. It is difficult to understand why we do not insist on imposing legal restraints on matters such as expenditure in the EEC. We have had successive debates on the reports of the Court of Auditors in the EEC, which have said that various devices used to expand the expenditure in the EEC, beyond the limits that were thought right, were illegal. However, the Council of Ministers, the Commission and the EEC as a whole have not pointed out that, if this is illegal, it should not happen. I do not like the asymmetrical way in which, on the one hand. we are complying with our legal obligations but, on the other, we are not using the legal mechanisms to ensure that the EEC stays within the legal limits that have been imposed on it.
  Will the agreement embodied in the Bill result in effective budgetary discipline? In that respect it is

  63
  important to distinguish between non-obligatory and obligatory expenditure and to ascertain whether the present arrangements provide an effective means of legal control. When giving evidence to the Select Committee,my right hon. Friend the Paymaster General said:
  "There will be a legal instrument. To take you back to the debate we have had in this committee room on previous occasions, we have previously not had legally enforceable instruments. Member States or the Council have recourse to the European Court if a legally enforceable instrument is in fact being infringed."
  When the Prime Minister originally said that we would agree to an increase in own resources only if there was a legally enforceable instrument, I do not recall that a distinction was made between obligatory and non-obligatory expenditure. The impression created was that it would apply to both.
  I shall deal with obligatory expenditure first. The agreement that we have reached imposes an arrangement whereby limits will be set on obligatory expenditure. But if the limits are exceeded in any given year, there will be a clawback over the next two years—most of it, we hope, in the following year. I understand that, but it is not a very prompt means of securing budgetary discipline.
  What is more worrying is that paragraph 8 of the guidelines submitted for a decision of the European Council that dealt with this legally binding arrangement says:
  "The budgetary effect of such exceptional circumstances shall be cancelled out within a three year period. If any overruns have not been offset by the end of the period, the Commission and the Council shall assess the situation and decide how to deal with the overrun."
  That does not seem to be an effective way of imposing a legally binding agreement. I hope that when the Paymaster General replies, he will make it absolutely clear how this mechanism will work, so that if there is an excess, it will be possible for any Government to take the EEC and the relevant authorities to the Court.
  I move from the obligatory expenditure side, which appears to be a little loosely worded, to non-obligatory expenditure. The Select Committee was told that it was not possible to make a legally binding agreement because
  "it would fetter the powers which the institutions enjoy under the terms of the budgetary articles of the Treaty."
  If I understand it correctly, this is effectively an amendment to the treaty. I am not the least bit clear why we could not amend the treaty in such a way as not to affect those bodies said to have powers that would be fettered if we were to have a legally binding agreement on non-obligatory expenditure.
  My right hon. and learned Friend the Foreign Secretary said that we need not worry about the lack of a legally binding agreement on non-obligatory expenditure, because there is a limit on obligatory expenditure and a limit on the total. Therefore, effectively there is a legal limit on the lot. Will the Paymaster General concentrate on that point in his reply?
  Mr. Holland: Wake him up.
  Mr. Higgins: I know that he is giving careful attention to it. I do not understand how the mechanism described by the Foreign Secretary will work in practice. One problem is that there are considerable doubts about the way in which it will work and how it will be made legally binding.
  64
  The increase in own resources is substantial. The limit on agricultural expenditure will only keep it in line with the increase in GNP—in contrast with earlier attempts to reduce the percentage spent on agriculture. That is worrying. However, some progress has been made in this direction and I hope that the Paymaster General will deal with those points in his reply.
  It is worrying that the periods specified for the restraints on expenditure are too long. There is a limit for a particular year and any excess is clawed back in the next year or the year after that. We should try to monitor it quarter by quarter. I hope that, in reply to this debate or in Committee, the Paymaster General will assure us that the figures will be produced each quarter, so that the Select Committee can ensure that the restraints are working within a year and, if necessary, report back to the House. Corrective action can then be taken before the annual limit is exceeded.
  The Bill contains some improvements. It is certainly an improvement on the Fontainebleau agreement, but, as the hon. Member for Newham, South (Mr. Spearing) said, we should continue to impose as tight a scrutiny as we can on the way in which the somewhat complex and nebulous proposals are put before us.
  5.58 pm
  Sir Russell Johnston: In fending off questions at the beginning of his speech, the Foreign Secretary said that we had only a half-day debate, because the statement had reduced the time available. He added:
  "I make no complaint about that."
  I suggest that he should have complained to his business managers who had allocated only a half day when, as can be seen from the number of hon. Members in the Chamber ——
  Mr. George Robertson: It is not a half day, it is a whole day.
  Sir Russell Johnston: Then I can be somewhat more relaxed. I had it firmly in my mind that it was only a half-day debate, so I withdraw unhesitatingly my first remarks.
  I welcome the Bill. It represents an important step forward in the slow but steady integration of the European Community and the development of stable financial arrangements within it. It is very much in line with the views that I and other of my right hon. and hon. Friends have expressed from this Bench over many years. In his opening speech, the Foreign Secretary referred to the virtues of consistency and their alleged absence from the Opposition Front Bench. Be that as it may, I can claim with justice and no exaggeration that Liberals have been consistent and clear on these matters since the war.
  Looking back to the successful Brussels summit in February, the fact is that, when faced with the choice of either jeopardising the achievement of the common internal market or agreeing to a modest and sensible increase in the Community's own resources, the Prime Minister chose the latter. That is fair enough, but I wonder why she was not prepared to endorse what was substantially the same agreement when it was first discussed in Copenhagen at the end of last year. The reality is that the Prime Minister's tactics held back the development of the Community by two to three months, for no reason and to nobody's benefit.

  65
  I must mention two related points. First, there is the continuing mystery of why Her Majesty's Government will not join the exchange rate mechanism of the European monetary system when it is known that the Chancellor of the Exchequer, the Treasury. the Foreign Secretary and most business men —most of whom support the Government—are in favour of it. Yet we continue to say that now is not the appropriate time.
  Secondly, there is the mystery of the Prime Minister's attitude to the central European bank proposition. It seems to me that that is a very natural proposition on the road to European integration, that it will certainly come to pass in time and that it will he of great benefit to all the members of the Community. Nobody was asking the Prime Minister to commit herself in advance to any specific plan. All that she was required to do was to keep an open mind and to consider the potential benefits to Britain and to the Community as a whole. This, regrettably, she did not do. She made a sweeping attack on the whole idea, saying that it was absurd and ridiculous and that it should not be entertained because it would mean casting away sovereignty.
  Perhaps the right hon. Lady had not read the July issue of Expression, which is published by American Express. It contains an article by the Minister of State, Foreign and Commonwealth Office, the right hon. Member for Wallasey (Mrs. Chalker), in which she said:
  "A truly liberal banking system throughout Europe would help—as would greater private use of the ecu."
  I am sure that the hon. Member for Northampton, North (Mr. Marlow) would welcome greater private use of the ecu. The Minister continued:
  "These are both things that we"—
  that is, the Government—
  "are encouraging in the move towards a single market."
  There is a conflict between that clear position and the Prime Minister's equally clear position. The members of the Community have committed themselves to the free flow of capital within the European Community by 1990 and this is likely to be of major benefit to the United Kingdom, but the absence of a common bank and a common currency could produce large swings in interest rates as Governments tried to avoid harmful fluctuations in the value of their currencies.
  Furthermore, from the point of view of the ordinary individual, the sheer cost and bother of changing money will cause more and more irritation as the single market develops. When my middle son, David, went on a school trip to Italy at the beginning of this year, I thought that he ought to have a few lire with him in case he had trouble changing money. I trotted off with my £10 note to the National Westminster Bank's bureau de change, where I was told, "We do not have any lire." Then I went to Barclay's bank where I was told, "We will change it, of course, but it will cost 70p. Are you a member of our bank?" When I said that I was not, I was told that it would cost me another £1. It cost me £1·70, not to buy anything but to change £10. That was immensely annoying. The Prime Minister's original dismissal of even discussions about a central bank was nothing short of ridiculous, and it bolstered Frankfurt's claim to house such an institution when it is established.
  An unspoken side of the consequences of the Bill concerns democracy. I do not think that the Foreign Secretary was at the Hague conference earlier this year. He was represented by his right hon. Friend the Member for
  66
  Wallasey. Perhaps she told him of the remarkable speech by the President of the Federal Republic of Germany, Richard von Weizsdcker, who said:
  "Europe needs democracy. The democratic process exists on a national level and direct elections to the European Parliament represent a significant step towards a European supra-national democracy, but we must go further in this direction. A European Union which aims to protect democratic values in the world can no longer be satisfied with a parliament whose powers are inadequate. As long as the road to Europe is bound up with a loss of parliamentary power there will be no progress, because our European aim is democracy and that means it is bound up with parliamentary legitimacy."
  Such remarks would predictably raise the ire of a number of hon. Members who object to that kind of approach. but to me the logic is inescapable.
  Mr. Spearing: The hon. Gentleman said that to him the logic is inescapable. Does his party espouse Mr. von Weizsdcker's remarks, and are they similar to the remarks of Mr. Kohl and Mr. Delors?
  Sir Russell Johnston: The short answer is yes. I shall refer in a moment to Mr. Delors
  Before making these points about European development, the hon. Member for Hamilton (Mr. Robertson) made the kind of speech that one would not hear from the President of the Federal Republic of Germany or even from an ordinary member of the Bundestag, despite the fact that Germany's net payments to the Community far exceed ours. Germany's attitude is still very different from ours. I shall not weary the House with an extended rebuttal of the hon. Gentleman's tatty argument, in which he compared individual Government expenditures with our total net Community contribution. The last time that I remember that argument being trotted out ad nauseum was when Concorde was built. People said that if Concorde was not built we should be able to do this, that or the other. It was a poor argument.
  I must comment, however, on the hon. Gentleman's strange remarks about the structural funds, which I did not understand. I presume that he agrees that the limited amount of money that is available for the structural funds, in particular for the regional fund, should go to the most needy countries in the Community, which are Portugal and Greece. Thereafter, one should look at the most needy areas and regions. Scotland has missed out considerably by not adopting earlier a more positive attitude to certain schemes that she could have implemented. However, because of enlargement, the position has changed.
  Equally, when making such remarks, the hon. Gentleman ought to recognise that one of the failures of the United Kingdom's regional fund is that we have failed to operate the addionality rule and to a large extent have ourselves undermined the regional policy's effectiveness.
  Mr. George Robertson: It is not a mean debating trick to point out the equivalent value of the payments to the European Community. I made those comparisons, but I make them more forcibly about the additional payments. The intergovernmental agreement will cover a one-off payment covering a hole in the budget about which there is severe disagreement. I know that it will appeal to the hon. Gentleman when I say that that figure is more than that for Scotland's housing programme in the current financial year. I refer to the additional payment and not to our net Community contribution, which can vary from year to year.

  67
  I will clarify my comment about the structural funds. Of course we are in favour of more money being paid, and we believe that it should go to the neediest countries and to the neediest areas within individual countries, such as our own. That can only sensibly be done if there is some curtailment of the money wasted on agriculture, which is a perfectly good area where savings could be made, so that the budget does not have to grow.
  Sir Russell Johnston: I do not want to engage in an extended argument, particularly because of pressures of time. The hon. Member for Hamilton must surely recognise, as do other opponents and, in some cases, justified critics of the Community's excessive agricultural expenditure, that one cannot turn that situation around suddenly and quickly. The degree of agreement now achieved gives promise that it will happen, but in a steady and organised way. If one tries to make that change suddenly, and in a draconian fashion, which certain hon. Members sometimes suggest, it would cause great social upheaval.
  I return to the democratic component. First, it remains utterly disgraceful that the United Kingdom continues distorting the whole political composition of the European Parliament by refusing to allow election to that Parliament in proportion to voting support, as do all other member countries. I see no justification for that injustice, and I regret the absence of any reference to it in the amendment in the name of the Leader of the Opposition.
  Secondly—I address these remarks to the hon. Member for Newham, South (Mr. Spearing)—Jacques Delors is right when he says that we need to look now, as we reassess the basis of our financial contributions, towards what he called "an embryonic European government". That means looking actively for means whereby the European Parliament can play a steadily more significant part in overseeing Community policy and legislation; otherwise, there will be no directly elected democratic control. I say again that Jacques Delors is right and that the Prime Minister should congratulate him on his directness and foresight. What he suggests will not happen overnight, but that prospect must be faced.
  Thirdly, it will also be necessary in the long term to examine direct finance-raising powers for the European Parliament.
  I conclude by expressing disappointment at the thrust and style of the Foreign Secretary's speech.
  Mr. John Watts: What thrust?
  Sir Russell Johnston: That is a fair point—perhaps "thrust" is the wrong word, and I do not argue with that.
  Mr. Budgen: The hon. Gentleman's speech could do with some thrust and style.
  Sir Russell Johnston: I beg the hon. Gentleman's pardon?
  Madam Deputy Speaker: Order.
  Sir Russell Johnston: I am grateful to you, Madam Deputy Speaker; I believe that there was some form of abusive remark, which I shall ignore.
  The greater part of the Foreign Secretary's speech was given over to trying to prove that the United Kingdom has single-handedly reformed the whole European
  68
  Community, and has done so in the face of opposition, hesitation, obstruction and goodness knows what else. Apparently, we had no allies in that struggle, because none was mentioned. It seems that we thought of it all ourselves and won the day by logic, remarkable innovative ability, and will power. Not only is that an even greater caricature of reality than is our representation in the European Parliament a mockery of the way in which people voted, but it gives no encouragement that the Government yet understand the need to begin concentrating on political solutions and arguments and to cast aside the old nationalist prejudices and out-dated nationalist attitudes that still colour our debates far too much.
  6.14 pm
  Mr. Tony Marlow: First, I congratulate the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) on the thrust and style of his speech. I know that the Labour party, such of it as is here at the moment, believes in open government, so I hope that it will not mind if I tell a little secret. Conservative Members have received a piece of paper from our Whips' Office, and under Monday night there are three black lines. Like most secrets, it is not what it seems. It is not a three-line Whip from the Government but a three-line Whip from Mr. Delors, that we should vote for this package tonight.
  Let me explain what I am saying. My right hon. Friend the Prime Minister has throughout these negotiations done more than any human being could do, from the point of our national interests and from the point of view of the Community. Time after time she has to meet the same group of people. She has to sit down with them. She has to debate with them. She has to discuss with them. She has to take account of what is happening in Europe as a whole and what is happening in NATO as a whole. She does what is best for our country in those circumstances. But we are not the Prime Minister. We are the House of Commons —part of the Parliament of the United Kingdom. It is up to us also to do what we deem to be best for the interests of the United Kingdom and for Europe.
  I should also like to congratulate my right hon. and learned Friend the Foreign Secretary—I am sorry that he is not here at the moment—on the tremendous efforts that he has made on behalf of Britain and on behalf of the European Community. It is a question of damage limitation. He comes back here when the damage has been done. Perhaps we have been defeated, but not annihilated, and that is some progress. He comes back and says, as he is bound to do, that although it did not work last time —as he said last time—it will work this time. This time, he said that it did not work last time—it is going to work next time.
  There is one point of criticism of my right hon. and learned Friend. The tax we are talking about and this financial package are complex. My right hon. and learned Friend said that of course it must be complex in order to be fair. He was for a time a very distinguished Chancellor of the Exchequer. When we have a system of taxation, to be fair it must be simple. People must be able to understand it. My constituents and the people out there do not have a clue what is being done on their behalf. One of the great criticisms of European Community finance is its complexity. People feel that they are being taken for a ride.

  69
  I shall he voting against the Bill for two reasons. The first reason is the less important. The two reasons are money and sovereignty. A haemorrhage of cash—that is important. But more important than that is the loss of sovereignty that is taking place, drip by drip, bit by bit, day by day—loss of sovereignty, the atrophy of a nation's soul. Take a commercial company. It can lose money. It can have a couple of years' losses, but it can still survive. But if it goes into liquidation, that is the end of it. That is what I am concerned about—the way in which we are moving in the European Community at the moment, our country is slowly, bit by bit, ceasing to exist as an independent national state.
  We all of us in the House want control of expenditure. Community expenditure was up to a level of 1 per cent. VAT, then it went up to a level of 1·4 per cent. VAT. Now we are increasing the amount of money available to the Community by another one quarter—by another £1 in £4, I believe the Minister said; £5 where it was £4 before. But that is basically for the same group of policies. This time, we are increasing regional policies. We have been doing our best to cut down regional policies in the United Kingdom, but basically this additional money is buying us the same package as it did before.
  There are two ways of looking at Community expenditure. First, there is the gross contribution—the amount of money that we spend on this fixed clutch of policies. We make a gross contribution to the Health Service and to the Ministry of Defence. Little by little, by 1, 2 or 3 per cent. a year, it goes up. But the Community gross expenditure for this area of policy controlled by the Community goes up by leaps and bounds, year after year. Surely what is good for financial control in Britain ought also to be good for financial control in the Community. If we can make it work here, why cannot they make it work there?
  Secondly, there is the net contribution. The Community budget is a zero sum. Some people put money in, and some take it out. Why do we, even now, have to pay a vast sum into the Community budget, net, for nothing—our membership fee—when richer countries such as Holland, or those with overburdened levels of public expenditure but still richer than ourselves—such as Denmark—take money out? Countries such as Greece that do not even abide by the legislation and regulations that come out of the Community put their hands in the Community bowl and take out a lot of money. Why should we have that? There is no justice in it and no good reason for it. It is just history. Why should our people have to pay net vast sums into the Community budget?
  We can control this expenditure. In an important speech, my right hon. and learned Friend talked about obligatory and non-obligatory expenditure. We can control all the expenditure in the Community. It is a simple matter. We do not have to have it on trust; we do not have to say whether the devices that my right hon. and learned Friend talked about today would work. All that we have to do is throw out the Bill today: no Bill, no money. The amount that the Community is allowed now is the amount that it would be allowed in the future. It would then have to cut its coat according to its cloth. When it has done that and we are getting value for money, we can come back to it again and see whether we want to vote it more money later.
  Mr. Budgen: Why should we? There will be no need for it then.
  Mr. Marlow: As my hon. Friend says so succinctly, if they have taken the medicine—taken the bait —got the message, they will not need the money. Let us do them a service. Let us vote against the Bill.
  There is also the important question of sovereignty. The name of Mr. Delors has been mentioned. Mr. Delors, as we know—it must be so, as I saw it in an issue of European Parliament-EP News—said that before long 80 per cent. of legislation in the economic, financial and social spheres would be of a European nature and thus beyond the control of domestic legislatures. I think that we are a domestic legislature. I believe that we used to control 100 per cent. of the laws that affected the people of this country. In future, for every five issues that we control now —if I may return to the mathematics of the hon. Member for Hamilton (Mr. Robertson)—if Mr. Delors is right, we shall only have any control of, say in or influence over one. One fifth—that is how low we shall sink if Mr. Delors has his way.
  Mr. Delors, of course, wants a united states of Europe. Do we want a united states of Europe? The hon. Member for Inverness, Nairn and Lochaber, who has just left the Chamber, wants a united states of Europe. But does the House want it? Is that what we negotiated? Is that what my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) negotiated with the Community? If it was, why did he not tell the British people? Why should the British people be dragged kicking and screaming and by default into something that they have not been told about, when they were promised something else?
  I do not believe that we want a united states of Europe. What we want—or what most of us want; some of my colleagues may not want it, but I am happy to have it—is a single European market. I am very much in favour of 1992, and of European co-operation in foreign and defence policy. We ought, with those with whom we have interests in common, to co-operate where we have those common interests. But to bring that about certain actions are necessary. Certain other actions are unnecessary, however, and those actions—those regulations, those directives—are being showered upon us day after day, week after week. Those unnecessary actions have nothing do do with a single European market or with co-operation between nation states, but they are very much to do with enmeshing us in a unified united states of Europe, which we have never requested or wanted.
  Sir John Biggs-Davison: Does my hon. Friend think that the country to which M. Jacques Delors belongs wants a united states of Europe either?
  Mr. Marlow: My hon. Friend may have a point. The country to which he belongs may or may not want a united states of Europe. But given the way in which the institutions and powers are cast in the European Community at present, that is what it will get unless it does something about it. I hope that my hon. Friend will help me in taking the first slow step towards stopping it.
  We in the House have slumbered to a certain extent while the legislation has been introduced. Because of that, we have been lumbered with various edicts with which we do not agree. Let me give a couple of examples of some of the things that have gone wrong. Recently, we were required by the European Court of Justice ——
  Mr. Hugh Dykes: These foreigners have no sense of fair play.
  Mr. Marlow: I am sure that my hon. Friend will make a very fluent and compelling speech later. In the meantime, if he will forgive me, I shall continue with mine.
  Recently, we were required to put VAT on commercial construction. That is not necessary to a single unified European market. It is not necessary to free trade between free member countries of a European community. It is Europeanisation. How did it come about? On 29 November 1976, there was a debate in the House on a directive about VAT. Let me tell the story of that directive. That directive was scrutinised by the European legislation Select Committee and was referred to the Chamber for debate. It was debated late at night, and the vote finished after midnight. About 123 hon. Members voted—less than one fifth of the number in the House. The directive that was voted on then was not the complete directive; it then went back to Brussels and was changed significantly.
  The vote that night was a vote to take note, not a vote to approve. If it had been a vote to approve, it would have been approval of something that was subsequently changed. The European Court of Justice interpreted that directive, which forced us to impose VAT on items on which the Government of this country did not wish to impose it. We were told that Parliament had had its chance, that Parliament had scrutinised it and that there had been parliamentary control over it. Nothing could be further than the truth. Parliament had no power and no control, and was not even involved in the final directive through which that VAT was raised.
  There is a second way in which important things can go wrong. Part of the package of measures will be a directive that will measure the gross national product of each Community country, so that we can assess the amount that must go into the European kitty. That directive was to be assessed by the European legislation Select Committee. There is something called a scrutiny reserve. The Government should not reach an agreement on the directive until it has been debated in the House, if that is what the Select Committee wishes the House to do.
  The Select Committee did not have an earthly. The Government overruled it. The directive has been agreed. This is an important directive: it decides how we are to assess exactly how much each Community country will have to pay into the Community kitty. There are good things in it. It is not bureaucratic. Each country will decide what is its own gross national product. Or is that such a good thing? What is Italy going to decide about its gross national product? How will we in the House be able to influence it? When will we be able to debate it? What Italy does not pay, we shall have to pay. That is it: that is the end of sovereignty. That is the end of our control over the issue.
  Mr. Delors is right when he says that there is something called the democratic deficit. There is no democratic control over these matters at all. Vitally important issues that would in the past have taken weeks of legislative time are going through on the nod because of the lack of proper democratic control. What can we do about it? We are the only people who have a chance of doing anything about it. If someone feels hard done by, he can have recourse to the law. We can take the matter to the European Court of Justice. But can we? Is it a court of justice or is it a court of Europeanisation? It is not the former; it is the latter.
  72
  The European Court of Justice is there to impose a centrally controlled European state on the member nations of the European Community.
  What else can we do? We can give more power, influence and discretion to the European Parliament, but will it be objective? Is not the common characteristic of almost everyone who sits in the European Parliament that, individually and collectively, they all want a united states of Europe?
  If we cannot rely on the Court or on the European Parliament, there is only one institution that we can rely on —the House of Commons. Slowly, the lifeblood of nation states ebbs away; the powers of the House are shorn just as surely as Samson had his locks cut. There is a solution, a cure to this near terminal disease. It is painful, risky and controversial. It is to throw out the Bill.
  6.30 pm
  Mr. Nigel Spearing: I can answer one of the questions posed by the hon. Member for Northampton, North (Mr. Marlow). He, like the Chairman of the Select Committee on the Treasury and Civil Service, the right hon. Member for Worthing (Mr. Higgins), referred to the gross national product directive: it is COM(88)176. It has been referred for debate by the Select Committee on European Legislation, of which I have the honour to be Chairman.
  That document is notionally being included in today's debate, but the fact that such a sharp-eyed Member as the hon. Member for Northampton, North and such a well-informed person as the right hon. Member for Worthing were not aware that the document was being debated—I must admit that until just before the debate it had escaped my memory, too—shows the extent to which the House is already not even scrutinising the matters that its own Select Committee suggests that it should. I do not blame anyone in particular. It is the mass of paper that descends on us from Brussels that has put us in this parlous state. It is a little parable of the difficulties that face us.
  The Paymaster General courteously wrote to me some time ago saying that it would be for the convenience of all to discuss this document in this debate, and my Committee acquiesced in that. Nevertheless, given the numbers of documents that we have it is easy for some of them to be overlooked, and it is hardly possible to discuss the document this afternoon——
  Mr. Higgins: It would seem from the answer that we received after the Hanover summit about GNP statistics that the Prime Minister had also failed to realise that.
  Mr. Spearing: That may well be so.
  The Prime Minister and hon. Members have forgotten several things. As recently as Thursday last the Prime Minister said:
  "the principal achievements of our forebears in 1688 remain and ensure that the will of the people be exercised through Parliament rather than by intimidation or pressure practised by any one group or faction— [Official Report, 7 July 1988; Vol. 136, c. 1231.]
  Alas, I do not believe that is so. It is clear that Parliament, perhaps through its own choice in 1972, does not enjoy that power now. Sixteen eighty-eight is a reminder to us that, in respect of the intergovernmental undertaking of which this Bills seeks to approve, we are supplying the deficit in 1988.

  73
  Supplying the deficit is a fundamental piece of parliamentary language: we vote supply. Originally, that was to supply the deficit incurred by the Crown, I suspect that we are back in the waters of 1688, because we are being invited by the Bill to supply the deficit in the funding of the EEC which, under article 199 of the treaty of Rome, is illegal, because it states that the budget must be in balance, which it clearly is not. If it were, the second part of the Bill would not exist.
  Mr. William Cash: Does the hon. Gentleman agree that, contrary to what he has just said about the Prime Minister's remarks about the glorious revolution, we retain the power in this House by virtue of the fact that we passed the European Communities Act 1972? That is a crucial point, and it remains. Furthermore, if we used the procedures of the House, as I have consistently argued that we should, to enable us to scrutinise what is happening more effectively, we would be able retain the degree of real control represented by what is called sovereignty.
  Mr. Spearing: The hon. Gentleman is confusing approval of a particular tax —VAT, for example—with our power of removing section 2(1) of the 1972 Act. But the real day-by-day control by voting money and creating laws has, to some extent, departed.
  Mr. Dykes: Will the hon. Gentleman agree with two quick points? First, remarkably, in February last year the Chairman of the Public Accounts Committee agreed that £150 billion of United Kingdom Government spending went through this place on the nod and unnoticed, much of it late at night, with most hon. Members paying not the slightest attention to it. On the other hand, a single pound increase in Community expenditure attracts monumental hysteria on the part of certain anti-EEC hon. Members. Is not that a reflection of double standards and hypocrisy?
  As Chairman of the Scrutiny Committee, would the hon. Gentleman agree that if there were a national Committee scrutinising every item of domestic legislation, it, too, would be swamped by the weight of legislation? So that is not a material point. Are not the hon. Gentleman's remarks tantamount to saying that he and his Committee are not doing their job properly?
  Mr. Spearing: I shall not give way again; time presses. The House has the opportunity, through its own procedures, to call a halt to expenditure or legislation at any time. Whether hon. Members choose to use that potential adequately is a matter that we can debate. I shall return to the hon. Gentleman's remarks at the end of my speech, when I deal with the prospective value added tax. Unless the House takes further steps it does not have the same degree of potential control over European matters as it has over the things that the hon. Gentleman mentioned. However, I agree that it is desirable that the Scrutiny Committee, of which he and I are members, should be able to scrutinise more deeply and that there should be more glasnost about European matters in the House, because as has been shown, we do not have the proper means to ensure transparency in what is afoot.
  I shall illustrate the degree to which we have already lost control by referring to the passing of the Single European Act, which the hon. Member for Harrow, East (Mr. Dykes) gaily voted for, whereas others, notably the
  74
  hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) were aghast when they discovered what they had agreed to.
  Article 100A of the treaty of Rome stipulates that any legislation relating to the achievement of the single European market can be passed in the Council of Ministers by a qualified majority. It is possible for a law passed by the Council of Ministers which is a directly acting regulation to be imposed on the House even if the ministerial representative of the British Government in Brussels votes against it.
  The hon. Member for Harrow, East has said that that is democracy, but I question that. The Council of Ministers does not meet in public; it is rather like Parliament was before 1688—or even further back. It does not yet have our democratic controls, and the debate in the House that precedes a Council of Ministers' decision has no control, as yet, over what the Minister does there. All that we can do is to have a debate brought about by the Scrutiny Committee and perhaps by the resolution, but we cannot control the Minister. The Minister goes away and decides whether the Government will vote yes or no. The Prime Minister decides whether under article 99 the new VAT excise proposed by Lord Cockfield will be imposed on the House.
  Mr. Dykes rose——
  Mr. Spearing: I will not give way to the hon. Gentleman because he will have a better opportunity to speak about the matter in Committee.
  I hope that I have illustrated to the House how we have lost detailed control of legislation from Brussels which even the Government opposed and of prospective VAT on such things as books, newspapers, water, public transport, drugs and charities. The imposition of that tax will depend on how the Prime Minister or the Chancellor of the Exchequer, whoever that may be, behaves in the Council of Ministers. The House will be able to debate only the general principle, and the Prime Minister or the Chancellor will negotiate.
  During the election campaign the Prime Minister did not say, as she could have said, that the Government would object and use their so-called veto on unanimity voting—if that operates—to prevent any increase in value added tax. If she had said that, most people would have agreed that it was right, but she did not. She said that she would veto VAT on children's clothing and on fuel and power but she did not say that she would veto the items in the list that I have read out. When the Prime Minister or the Chancellor of the Exchequer or perhaps, appropriately enough, the Paymaster General, who is competent in these matters, goes to the Finance Council, he or she will have to take the Cabinet's decision on the matter and not the decision of the House.
  There is a way out in respect of VAT and it is not by refusing to pass the Bill. I commend the method to the hon. Member for Northampton, North, who asked what we could do. It would be possible and appropriate this year when we are celebrating 300 years of the House's superiority over the Crown to tell the Ministers of the Crown that they can go to the European Councils only if they do or do not do certain things. It is quite within the power of the House to pass such a resolution and it is not outwith the treaty of Rome. That is what the Folketing in Denmark has done ever since Denmark has been a

  75
  member of the Community. It is a matter of the internal constitution of our land. One of the steps that we could take to ensure that the House has control in future is to pass such a resolution.
  I shall now pursue the Prime Ministerial cries. The Prime Minister is adept at persuading the British public that she somehow does not like the European Community. She reminds me of a person who loves to go racing and who perhaps spends too freely on the horses. Such a person says that he does not want to be dragged to race meetings but when he gets there he is in his element. Why is the Prime Minister in her element when she gets to the EEC? It is because she is a worshipper, as are Conservative Members, of the free market. If we are to have a single European market that is free of frontiers, as the treaty dictates, somebody must decide the rules on either side of what was a frontier. That presupposes a supranational authority and if one is not there one must be established. That is as plain as a pikestaff.
  Conservative Members talk a great deal about education and one of the matters they talk about is the need for Latin. I do not think that Latin grammar is very good but Latin vocabulary is very important. There is all the difference in the world between inter and super and extra and ultra. If we are to be international there must be something to be international about. I think that there is some agreement about that in all parts of the House. But the treaty of Rome is not international. By intent, purpose, operation and structure it is supranational. I see that the hon. Member for Harrow, East agrees. The institutions are there. Mr. Delors and Herr Kohl are quite right. Those institutions were there from the origin of the Community. There is the Council, the Commission, the Parliament and the Court, and those four institutions are growing in power day by day.
  My final point is that the House has added to the power of those institutions against its will. The Government have also done that and I shall prove it. When the Prime Minister was invited in Milan to agree to an international conference to revise the Treaty of Rome, she said that a new treaty was not needed and suggested progress by pragmatism. She was probably right, but what happened? There was an international conference and we had a new Single European Act, very detailed and full, which provides for the majority voting of which I spoke. That is in one of the important articles, article 100A. The Government did not want that Act and to some extent they managed to dilute it—or so they thought. I suppose that some people thought that it was not strong enough —people such as Mr. Tindemans and others.
  The Act was brought to the House in 1986 and put through on the guillotine, even though we have proof positive that the Government did not want it at all. Since when have the Government brought to the House a Bill with which they disagreed, and put it through on a guillotine? That is the extent to which the Prime Minister is dragged hapless into supporting an increasing tendency for power in the EEC.
  That brings me to my concluding thought, which is about 1688. In that year the monarchy was sent packing by the House because the House said that it would decide the
  76
  finance and the law. Today we have a new protomonarchy and a new proto-imperium which is growing daily in Brussels. It is time that the House cut off the air supply to Brussels.
  6.47 pm
  Sir Anthony Meyer: The hon. Members who have expressed concern about the Bill, none with more passion than my hon. Friend the Member for Northampton, North (Mr. Marlow) or with more remorseless logic than the hon. Member for Newham, South (Mr. Spearing), were right to express fears. The agreement on finance in the Community to which the Bill gives the force of law is a major step towards giving the European Community an independent existence and a means to sustain it. I quite understand why that process is deeply upsetting to hon. Members in all parts of the House.
  Faced with these fears and concerns, some Ministers, although not on this occasion my right hon. and learned Friend the Foreign Secretary, have sought to dismiss them as groundless or, at worst, as greatly exaggerated. People who adopt that attitude will lay up trouble for themselves in the House and in the country if they seek merely to quell those doubts by bland assurances. That will be all the more likely if those bland assurances are the reverse side of a coin, the front of which is a policy towards the Community that aims to secure all our national interests without being prepared in return to make any concessions to the national interests of others except as part of a very crude horse trade that refuses to accept that closer co-operation between member states is a good thing in itself and will bring benefits to all members of the Community.
  To be communautaire is to be an effective champion of national interests. The kind of minimalist, apologetic approach to the Community that I have been decrying is not, in the fairly short run, the best way for Ministers to avoid trouble, although no doubt it will avert any possibility of their seeing their majority shrink too much at the end of the debate. Far less is it the way to derive maximum benefit for the United Kingdom and its people from membership of the Community.
  Ministers would be far better advised to go over to the attack, as my right hon. and learned Friend the Foreign Secretary did so conspicuously in the debate. They should demonstrate the gains that can come not only to the Community as a whole but to each of its members and to the United Kingdom by a maximalist and enthusiastic policy of co-operation.
  It is true that national Parliaments are losing influence and power to the institutions of the European Community, although perhaps not to the European Parliament, which is not yet a proper Parliament in the sense that we understand it here, with the power to overthrow or effectively criticise Governments. However, even the European Parliament may have to become a proper Parliament if national Parliaments continue to behave like the Parliament of Lilliput and continue to fail so lamentably in their job of effective democratic control of the Council of Ministers, which is, of course, where power resides in the European Community, as the hon. Member for Newham, South pointed out.
  This Parliament, by treating the European Parliament and its Members as some kind of lepers who have to ring bells before they can gain entry, has contrived to achieve

  77
  the worst of all possible worlds. National Parliaments are losing influence because they cling so pathetically to the illusions of national sovereignty after the reality has gone. Those illusions make no sense at all in these days of nuclear defence, worldwide pollution of the environment, the overweening powers of multinational corporations and the problems of footloose hot money and Third-world debts.
  An example only the other day brought that home vividly. Our overcrowded air space is putting air travellers in danger because national air traffic control systems will not accept the overriding authority of Eurocontrol, so, as an aircraft passes from one airspace to another, it has to switch from one system of control to another.
  Co-operation is very much in our interests in respect of the European monetary system—we should have joined the exchange rate mechanism long ago—and, above all, in the calls for a European central bank, which were so summarily dismissed by my right hon. Friend the Prime Minister. Of course we can dismiss those ideas as Utopian, but they do not appear Utopian to our partners. We once dismissed the idea of a Single European Act as totally unnecessary, but we now bless it as one of the few ways in which any decisions can he taken within the Community of 12. If we continue to block agreement on such matters as the European central bank, we shall find that we are losing one of our principal assets within the European Community—the vital role played by the City of London as the principal financial centre of the European Community.
  I say to hon. Members who have expressed their doubts about or hostility towards the Bill that they were quite right. The measure is a step towards an independent, self-sustaining Community, although not, alas, towards federalism. If they can defeat it—my hon. Friend the Member for Northampton, North made no secret of his desire to do so—we could then preserve the tattered shreds of sovereignty and we could become a sort of proud, independent western European Albania. Is that really the way in which a great nation such as ours can play the part that it is called to play in one of the world's three superpowers? Is that the way to ensure the prosperity, safety and hopes of our people?.
  6.52 pm
  Mr. Peter Shore: I am sorry that the Foreign Secretary is not with us, because he would have heard some interesting speeches—the great candour of the hon. Member for Clwyd, North-West (Sir A. Meyer) about the reality of the loss of parliamentary sovereignty; the pure joy expressed by the hon. Member for Harrow, East (Mr. Dykes) whenever he hears that this nation has been stripped of, and that this Parliament has lost, more and more powers; and some good suggestions from my hon. Friend the Member for Newham, South (Mr. Spearing) about how, if we have the will to do so, we can gain greater control over Ministers before they give their consent to propositions, resolutions, decisions and directives in the Council of Ministers.
  I understand—I can hardly believe it—that the Foreign Secretary is appearing on the Terry Wogan show. I find it a strange discourtesy to the House and a strange choice of priorities that the Foreign Secretary, introducing a Bill seeking to tax the British people and hand over the proceeds to the European Commission, should leave this
  78
  Chamber and prefer to be summoned into the presence of Mr. Terry Wogan in some studio, wherever it may be, in London. It is as though he himself believed the prophecies of those who say that, in a few years' time, we shall be reduced to nothing more than a provincial assembly. The Foreign Secretary owes the House an apology and I hope very much that we shall hear from his right hon. Friend the Paymaster General, who will wind up the debate, that there is a reason other than a television interview to explain the Foreign Secretary's absence.
  Mr. Budgen: Does not the right hon. Gentleman think that, even in a borough council, if an important speaker in a debate went off to appear on the local town chat show, even the borough council might take it amiss?
  Mr. Shore: I have made my point, and the hon. Gentleman makes his point, which reinforces it.
  That apart, I was going to say that I thought it extremely fitting that the Foreign Secretary should introduce this Bill and debate because, after all, it is a finance Bill. The Foreign Secretary is an ex-Chancellor of the Exchequer, but this is a finance Bill of a special kind because it is a European finance Bill and the Foreign Secretary has quite a track record in that area. I t was he who last introduced such a measure European—Communities (Finance) Act—in June 1985. We are now seeking to withdraw that Bill and to substitute the measure before us today. No one more than the Foreign Secretary can claim to be, if not the author, the co-author, of the original European Communities Act 1972, which first imposed the European Community's tax regime on the British people.
  We knew then, at the end of those protracted negotiations with the EEC, that the terms of entry were heavily disadvantageous. That was shown nowhere more clearly than in the arrangements made for the British contribution to the EEC budget. Why was it so disadvantageous? The House probably knows why, but there are two clear reasons. First, EEC budget expenditure was, and still is, overwhelmingly in support of agriculture and was bound to be much less in Britain, with its comparatively small agricultural sector, than in other continental European nations.
  Secondly, although our receipts from the EEC budget would be smaller, our tax burdens would be heavier. Levies on imported foodstuffs and customs duties on third country imports were bound to fall with exceptional severity on the United Kingdom, whose pattern of food and non-food trade was much more heavily geared to the Commonwealth and other non-European countries than was the case with out continental neighbours.
  The problem that originated with the treaty of accession and the European Communities Act 1972 remain with us today. It is fitting, therefore, that the Foreign Secretary, like Sisyphus in Hades, is condemned and doomed to push up the hill the boulder of reform of the CAP and changes in the European tax system and to see it fall down again to the bottom of the hill, where he has once again to resume his labours.
  To be fair, the Prime Minister has fought hard to reduce those original burdens. She negotiated a temporary refund on a year-by-year basis for the first three years of her premiership. Then, at the Fontainebleau summit in 1984, she secured what was described as a durable system for the abatement of our contribution. That was an abatement of

  79
  two thirds of the United Kingdom deficit of budget payments to, over receipts from, the EEC, to be deducted from the United Kingdom VAT payment.
  But to obtain that abatement, a price had to be paid. The previous ceiling on VAT contributions of 1 per cent. was raised to 1·4 per cent. To those who questioned that virtual 40 per cent. increase in the EEC's own resources only four years ago, the Prime Minister and the Foreign Secretary gave specific assurances that CAP spending would be curbed by budgetary disciplines year by year.
  Now, in the Bill before us today, we have a re-run of 1985. Once again, the EEC has been authorised to increase its tax take. But instead of increasing the 1·4 per cent. VAT contribution to a new ceiling of 1·6 per cent.—as had been envisaged in the 1985 Finance Act—a new formula has been evolved, to cap the VAT base at 55 per cent. of GNP in each member state, while maintaining the maximum rate at 1·4 per cent. In addition, a fourth own resources tax has been added. That is to take the form of a percentage of GNP at whatever rate is needed to make up the budget over and above the yield of the other three own resource taxes. In all this, the United Kingdom abatement is to be retained. It will still consist of 66 per cent. of the difference between our payments and our receipts.
  Again, let us consider the price that has had to be paid. The Community, whose tax yield under own resources was increased by 40 per cent. only three years ago, is now to have a further increase of 25 per cent., with a new ceiling of 1·2 per cent. of Community GNP—equivalent to 1·9 per cent. VAT. Once again, we are assured that agricultural spending will be controlled by budgetary discipline, by the so-called legally binding mechanisms for each of the agricultural stabilisers.
  Judging by the Bill and its predecessor in 1985, the British bargaining has amounted to this: the United Kingdom receives some abatement of its original intolerable and unsustainable net financial burden, and in return, abandons its veto, its one power to reshape the EEC budget, and is obliged to permit an increase in EEC expenditure and taxation. Each time, of course, the United Kingdom pays more.
  What it has meant for Britain in terms of its net contribution since the Fontainebleau summit is a net contribution of £759 million in 1985, £943 million in 1986 and £1,125 million in 1987. The estimate for 1988 is £1,250 million and for 1989, £1,500 million. That is roughly a 100 per cent. increase in the United Kingdom's net contribution in four years. In the same period, the total spend of the European Community will have risen from 28 billion ecu in 1985 to an estimated 46 billion ecu in 1989 —a vast increase of some 64 per cent., but still significantly less than the increase in the United Kingdom's net contribution.
  At the same time, we note that the draft general budget of the European Community for this year, 1988, within a total of 43·4 billion ecu, will spend no less than 30·7 billion ecu on all forms of agricultural expenditure. This is made up of the guarantee expenditure, the guidance section and, in addition, the new provisions to underpin the ecu-dollar exchange rate and the amount set aside for the depreciation and disposal of existing surplus agriculture
  80
  stocks. The total commitment to agricultural expenditure is 30·7 billion ecu, or more than 70 per cent. of the total budget.
  I have been listening to Ministers making speeches about reforming the CAP and reducing its share of the total EEC budget since 1964. When the first Macmillan negotiation took place, Mr. Marjolin and Mr. Mansholt produced great plans for reforming a then intolerably expensive and inefficient CAP. But in those days, it did not take more than 70 per cent. of the total. Throughout the 1980s, there has been only one year in which it has exceeded the 70 per cent. that we are committed to paying during 1988. If that is an example of how budgetary disciplines work, I am not at all impressed with them, and nor should any other right hon. or hon. Member be. So much for cost control of the EEC budget.
  The House can easily anticipate within the next three years, if not before, another European Community finance bill raising still further the EEC tax ceiling and budget expenditures, and the British Government once again conceding it, and withholding their veto because of the fear of losing their abatement, in part or altogether. When the House makes its decision tonight, hon. Members should reflect on the fact that the Bill, to increase further the taxation of the British people and to transfer that tax yeild to the Commissioners in Brussels, is only a part of a continuing process of steady erosion of the rights of the House and of the British people, with a corresponding growth and extension of Community competence throughout taxation, legislation and policy decisions.
  The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) cannot have enough of it, and mentions with regret the facts that we are not members of European monetary system, that we have not abolished altogether our separate financial institutions and that we do not have a common currency or a central European bank to look after our financial and monetary affairs. But that is not the view of most hon. Members. In the past 12 months, zero-rating provisions of our own VAT legislation have been swept aside unceremoniously by decisions of the European Court. We know, too, that the Single European Act, with its commitment to a Europe without frontiers by 1992, threatens an unprecedented harmonisation of virtually all United Kingdom indirect taxation, and a widespread extention of majority voting throughout the EEC.
  We have seen the Government's plans for the disposal of Austin Rover to British Aerospace delayed and jeopardised by the intervention of the Commission. Only last Wednesday, Mr. Jacques Delors, the President of the European Commission, before the European Assembly, told us that this House and the existing system of national Parliaments in Europe would have to give way to the embryo of a European Government within the next seven years.
  I warn the House now—I address my warning to my right hon. and hon. Friends on the Labour Front Bench as well as to the Paymaster General—that the issue of Britain's membership of the EEC, now dormant, will remain so only so long as it remains basically a customs union, with sensible co-ordination of economic, environmental and other policies—in other words, a Europe des patries. But if the trend continues towards a European union, a federal Europe, a European Government, and if our democracy and our Parliament are to be stripped progressively of the powers that make us a sovereign state,

  81
  of that sovereignty that belongs inalienably to our own people, to future generations as much as to those who have the rights of citizenship today, there will be a tidal wave of protest and opposition. The whole bizarre, unnatural and flimsy structure of European Commission, European Court, European Assembly and the thousand and one treaties that have burgeoned forth will be swept away.
  7.8 pm
  Mr. Nicholas Budgen: I wish that I had made as fine a speech as that of the right hon. Member for Bethnal Green and Stepney (Mr. Shore). For many years he has spoken for so many of us who feel the pull and the inspiration of British nationalism. His was a fine statement of that nationalism which is felt in every class and every section of the British community, and which, to a very large extent, is now denied even by the Labour party.
  The main purpose of my speech is to give a sincere and unqualified apology to the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). Four years ago, when we were debating the proposed increase in VAT from 1 per cent. to 1·4 per cent., the hon. Member for Inverness, Nairn and Lochaber got up and said that his party, the Liberal party, was in favour of a very substantial increase in the take from VAT, up to 2 per cent. I remember rudely deriding all that.
  On that happy note, the whole of the Tory party present at the time agreed with me. It was ridiculous to suppose that any party should be so ridiculously and fanatically in favour of the EEC as to want to increase the rate of VAT to 2 per cent. Not only that, but the hon. Member for Inverness, Nairn and Lochaber explained that the Liberal party, and especially Lord Jenkins, who was then the right hon. Member for Glasgow, Hillhead, who was not often the flavour of the week with the Tory party, were in favour of a massive increase in the structural and regional funds.
  On that note of abuse and rhetoric, I was able to find whole-hearted support from the whole of the Tory party, as I abused the hon. Member for Inverness, Nairn and Lochaber. Now, of course, we find that these proposals are not quite the increase to 2 per cent. as the hon. Gentlemen wanted. Sadly, the increase is only up to 1·9 per cent.
  Everyone who votes in favour of the Bill tonight should be aware that the Liberal party and Lord Jenkins have entirely converted all the Tory party, and they have subverted the Prime Minister, to their views. They are owed the deepest apology. They have won in every respect. The Government have become as ridiculously Euro-fanatic as we believed the Liberal party was four years ago.
  Sadly, I am not authorised to apologise on behalf of the Government. However, I repeat my deep apology. My hon. Friend the Member for Northampton, North (Mr. Marlow) was particularly vocal about the measure some four years ago and I am certain that he will also want to apologise. We who derided the Liberal party and who continue to deride it are now a small and disgusting minority in the Tory party. Tonight, when the hon. Member for Inverness, Nairn and Lochaber enters the Lobby with the bulk of the Government, I hope that he is greeted as the friend that he should be recognised for. Most of all, he should he applauded because he has won on the structural funds.
  82
  My right hon. Friend the chairman of the Tory party has been very helpful. He has given all of us who wished to apply at the Whips Office a most excellent Conservative research department brief, which is much more informative than any document that the Foreign Office gave my right hon. and learned Friend the Foreign Secretary. That brief emphasises in very clear terms that, as a result of the massive increase in the funds for the Community, the structural fund will be increased in real terms by 80 per cent.
  That is a very useful figure. By increasing that part of the budget which is not spent on the CAP, it enables the Government to say that they have kept the CAP down as a proportion of overall expenditure to the derisory amount of only 70 per cent. or whatever it is. That is plainly a sign of the fundamental reforms that were promised four years ago, which are promised now again today and which will be promised again in three years' time. As my right hon. and learned Friend the Foreign Secretary said on Wednesday, we are taking concrete steps towards reforming the CAP and we will continue to take concrete, but not dramatic, steps towards reforming it.
  While a massive extension of the structural funds may pose little philosophical doubt in the minds of Labour Members, with the exception of those splendid British nationalists who want to rely on the membership of the House of Commons and the concept of sovereignty even before they are Socialists, I would have thought that for a Tory Government who are alleged to be totally dominated by Thatcherism—whatever that may be there must be—at least some explanation for he 80 per cent. increase in real terms in the structural funds before we vote.
  The structural fund is designed so that the EEC may progress towards economic and social convergence. In short, it is a practical expression of EEC Socialism. 'The concept of the structural fund means that, if we go to the toe of Italy and happen to notice that people there seem less economically active than people in Stuttgart, or if they have less money than people in Stuttgart, we may say to them, "My friends, we are going to shake you into economic and social convergence. We shall either do it by directive or by showering money on you. But in some way or another, you've got to become the same as the people in Stuttgart."
  Sir Russell Johnston: The hon. Gentleman's speech is going off course. I thought that he was redeemed.
  Mr. Budgen: I do not think so.
  When the great and the good go to the toe of Italy and try to shake the Sicilians into becoming like those people who manage the Scottish Widows' Fund in Edinburgh, they may find that the good people of Sicily simply take the money, but do not want to converge. They may want to use the money for greater leisure.
  It is extraordinary that the Prime Minister can say that she welcomes the extension of this vast social fund because she believes that we will get some kickbacks from the money that we put in. Perhaps we shall, but what has the Prime Minister to say about the handling costs? What about all those gentlemen in Brussels who will be signing the cheques, receiving the money and deciding whether Tom, Dick or Harry should receive this largesse? She does not seem to recognise that the costs will be great.
  Before the House votes for this vast increase in the structural funds, I hope that hon. Members will

  83
  understand that there is a fundamental ambiguity about the way in which the EEC handles its funds. That ambiguity is raised constantly whenever we debate the reports from the European Court of Auditors.
  I remember some years ago accompanying my hon. Friend the Member for Horsham (Sir P. Hordern) to talk to the splendid gentlemen who run the European Court of Auditors. We sat for half a morning listening to them. I was feeling rather tired, so I was able to contain myself for nearly an hour. I listened to a story about the number of olive trees in southern Italy. I was told that if there were that number of olive trees, there would not be one house, one field or one runway in the south of Italy. I heard all about cows in Bavaria.
  Eventually, I decided that it sounded as if there was gross fraud in the way in which money was distributed in the EEC. I asked the gentleman a few unkind questions. After that, my hon. Friend the Member for Horsham straightened his Rifle Brigade tie and asked me to go outside. He gave me the worst rocket that I had received since I was late as a national service subaltern. I stood to attention and mumbled that I was very sorry. It made me reflect even more on the ambiguity that we shall never have an EEC system for policing expenditure in the EEC.
  If, for the sake of argument, we arranged for the Metropolitan police fraud squad to go to Sicily, there would be a major uprising there against the assertion that there was some form of central control in the EEC. In the same way, I have no doubt that if a gentleman from Italy came to inquire about the amount of quota that was or was not being used on a dairy farm in Britain, there would be a strong resurgence of English nationalism and the Italian would be invited to leave the farm.
  Therefore, there will be no accountability for the bulk of expenditure on the structural fund. The House will not have proper control and there will he no philosophical agreement, because the proposal is based on a belief in equality and in social, industrial and pan-European convergence. That is completely antipathetic to everything that Conservative Members have been taught to believe in during the past 15 years or so. The Prime Minister used to oppose the extension of the structural fund, yet she comes back to the House and mouths words which imply that she approves of it.
  We should remember that, if the EEC institutions had been reformed, the Bill would be unnecessary. If we want to extend the policy of regional development, we can do so through our own national policies in the House. The Bill is unnecessary; it is, most of all, an affront to anybody who has any sense of the history of this House.
  7.22 pm
  Ms. Joyce Quin: When we debate the Bill we are examining the priorities within the EEC and, in particular, the British Government's priorities in the European negotiations in which they take part. Having listened to the Foreign Secretary, it seems that the Government's European priorities do not appeal greatly to the Opposition and I had the strong impression that few Tory Members were convinced by his remarks. The reaction was—to put it mildly—somewhat mixed.
  It is clear that the much-trumpeted budget agreement on spending and on the way ahead leaves much to be
  84
  desired, especially for the citizens of the United Kingdom and it does not give a particularly good deal to most of the other citizens of the EEC. The priorities of agricultural reform and control of agricultural spending are priorities which we all share, but progress seems to have been almost non-existent. We seem to have been marching in the wrong direction in the past year, as there has been an increase in agricultural spending.
  The system of export refunds and the huge gap between world and EEC prices persist, and little seems to be being done about that. We are still far from a fundamental reform of the agricultural policy or agricultural spending. We are told that the great priority for the Government is the creation of the large single market in 1992. Every time we switch on our televisions sets we are assailed by glossy advertisements telling us of the benefits that will accrue. That naive trust in the automatic benefits of a large, free market is unjustified.
  I should like to suggest four priority areas for the Government to consider in their EEC spending and policies. They are regional, industrial, social and environmental priorities and I should like to deal with each briefly.
  I do not believe that the budget settlement gives a good deal to most of Britain's regions, despite the increase in the structural funds. We have learnt that the regions will be divided into two categories. Category 1, which is basically for agricultural, underdeveloped countries of southern Europe, plus Ireland and Northern Ireland, will get by far the lion's share. While I accept that those areas have real needs and I would not like to deny them any funds, I am worried that the second priority, which is the money given to declining industrial regions, will be severely downgraded as a result of the agreement. I do not want to see that happen.
  Coming from the northern region of England, I fear that that region, which has the highest level of unemployment of any region in the United Kingdom, apart from Northern Ireland, may receive much less from the European Community budget in the future. I should like the Government to give us a commitment tonight that that will not happen and that in their continuing negotiations in the coming months they will do their utmost to promote the profile of the northern region and the other industrial regions of Britain.
  It does not help regional policy when the Prime Minister keeps telling other European countries how well we are doing. That masks the reality of Britain as we know it and the dramatic regional divisions which persist. Regional policy means more than just funds. I am concerned that unless some compensatory measures are taken, the creation of the internal market will be bad news for the regions and will simply increase the prosperity of the already prosperous areas to the detriment of the needy parts of the country.
  I should like the Government to give us a commitment that there will be a proper detailed study of the likely effects of the internal market on our least prosperous regions. The Government should not move towards the internal market unless they can come up with some detailed figures to show the benefits to the regions. No such detailed regional study has been undertaken.
  The Government's lack of commitment to regional spending and regional policy could not have been made clearer to me today with the announcement that the Marconi radar factory in Gateshead will close. The other

  85
  Marconi factory, in Chelmsford, is situated in an area where there are job vacancies for that type of employment. That shows on both a British and an EEC level the Government's total failure to stand by those regions that most need help and positive policies.
  On industrial policy, the United Kingdom Government have failed to provide any EEC funds to help older industries such as steel, shipbuilding and textiles to renew themselves and have woefully neglected to provide research and development money on an EEC level. In fact, the United Kingdom Government are well-known for blocking money for EEC research and development. They took a great deal of time to agree the research framework programme, and in 1986 the amount of EEC budget that was spent on energy research was only 2·1 per cent. That was lower than the amount given to support tobacco growers, who managed to get 2·3 per cent. of the budget.
  The third area of priority for the Government should be social measures. Again, they need to be considered in conjunction with the whole debate about the internal market. In the Government's desire to see common standards and freedom from barriers on trade—I concede that they sometimes have beneficial effects—there has been virtually no discussion of other matters such as the common social benefits of policies that could improve people's quality of life. That has been conspicuously absent. European Report states:
  "The Prime Minister argues in favour of deregulation on all fronts even in the social sphere. She apparently expressed her desire for no new rules in the realm of company law relating to worker participation in company structures. This dampening down of any commitment to regulate economic and social equilibrium in the Community was greeted with disappointment, notably by President Mitterand who said 'It is shocking that progress has been made to free the movement of capital but workers have been left by the wayside."'
  The Government have taken a cheeseparing, penny-pinching attitude to environmental issues and have been unwilling to campaign for or agree to an increase in moneys to fight environmental pollution which threatens us all and seems to be one of the most important issues on which EEC countries can co-operate. I am thinking of money to fight the threat of acid rain and to prevent more of it from being produced, to combat the depletion of the ozone layer, to clean up our beaches—our performance has been disgraceful—and to improve the quality of our drinking water, which still fails to meet EEC standards in many areas. The Government should have given a much higher priority to those issues.
  What are the Government trying to create? Is it a European Community which will help people or simply a Europe for big business and capital? Surely the pursuit of profit should not be an end in itself but a means to an improved quality of life for all. In terms of improving the quality of life for the general population of the EEC and particularly for those in the least prosperous regions, the Government's EEC policies and their spending priorities have been an abject failure.
  7.31 pm
  Sir Peter Hordern: The hon. Member for Gateshead, East (Ms. Quin) seemed to favour an increase in the European Community budget. If that is the case, she is the only hon. Member, except for one or two of my hon. Friends, who has so far done so in this debate.
  I thought twice about putting my name down for this debate and if I had known that my hon. Friend the
  86
  Member for Wolverhampton, South-West (Mr. Budgen) would refer to me in the terms that he did, I would have thought three times. My recollection of the incident differs markedly from his and the only resemblance is that I have my regimental tie on today, just as then, in order to give him a similar rebuke.
  I have not spoken in a European debate for some time because I have felt that the arguments were much the same. I approach this subject as an EC supporter, but one who is entirely cynical about the assurances given on every occasion when budget measures are introduced.
  First, as the House will know, we are invited to vote for a Bill which increases our net contribution to the Community budget by £200 million to £300 million a year. Our share under the intergovernmental agreement is some £765 million at a particular rate of exchange with the ecu. How does that square with the estimate in the public expenditure White Paper on total expenditure for 1988–89 of £1,780 million? If there is a difference, it will undoubtedly come from the contingency reserve, but I should like my hon. Friend the Minister to define what he thinks the net difference will be.
  The increase has arisen because of the increasing expense of the common agricultural policy. I was delighted to hear my right hon and learned Friend the Foreign Secretary say that he wanted to convert ploughshares into golf clubs. As the parliamentary golf champion I welcome that suggestion, but it shows the extent to which our policy has changed so that we are talking about supporting, not farmers and their production, but an agricultural community. That is important not only for internal budgetary reasons or European budgetary reasons, but for the real danger that exists of forming a tariff wall against imports of agricultural products from other countries, particularly the United States of America.
  The House will know that the United States Congress has passed a trade Act. If conditions become more difficult for the United States as they find further difficulty in reducing their budget deficit, they will certainly take countervailing measures against the EC. The best way we can help the United States and, indeed, other countries is to reform the common agricultural policy and allow more imports of agricultural products. That would do a great deal to help our cost of living and it would improve and increase efficiency, of which we stand in need.
  It is absurd that so much money has been spent on agriculture for so many years, and further work needs to be done. That not only has a serious impact on the United States and other countries, but has its worst impact on developing countries which are unable to export their agricultural surpluses to us.
  I am not an opponent of the European Community. I have watched developments with interest for some time and we must admit that we do not possess the clout within the EC that we should. We are in danger of becoming too much of an observer. Never an enthusiastic member of the EC, always thinking about the snags and difficulties, there is a risk of finding ourselves in a halfway house, neither a full member of it nor prepared to accept the progress that is going on, and at the same time jibbing at and finding fault with almost every aspect of it.
  I used to be agnostic about the European monetary system, but recently I have come to believe that it would be to our national advantage to join it. It is time that we examined our attitude and policy. It is not a question of whether one is sufficiently communautaire to join the

  87
  EMS. When one talks about being communautaire I always feel that that is best left to the prandialists. It is vital to our internal economic policy that we should now become a member of the EMS. I say that not from any particular enthusiasm for Europe, but because in recent times we have shed our ability to control our monetary aggregates internally and we now rely almost entirely on the interest rate to control inflation We are placing too much weight on a rather slender instrument and we need the additional strength and resources which membership of the EMS could bring.
  That important point is nowhere more important than in the current debate which appears to be taking place openly—I should like to say, behind the scenes—between the Prime Minister and other members of her Cabinet. We are not a member of the EMS—or, more accurately, we have no formal link with the deutschmark—because my right hon. Friend the Prime Minister is against it. The reason is that her advisers feel that the turnover in the foreign exchange markets is far too high for our slender reserves. If we were members of the European monetary system, most of the speculation—most of the dealings are speculative—would disappear so long as there was credibility that we had a firm policy of alignment with the deutschmark. So that is not a good argument, although it is a natural apprehension to have.
  There is also the argument that an interest rate differential would occur between the deutschmark and sterling, which the Germans would take advantage of. The only way in which they could do that would be to buy sterling in sufficient quantities. That would put up the price of sterling and then it would not be necessary to have such a high level of interest rates. So that argument is answered as well. There is also the possibility of a run on sterling that would leave us with no power to devalue.
  I do not decry any of those reasons as being entirely wrong or illogical in themselves. They all contain much force, but they fall down in that they are essentially short-term negative lawyer-type considerations—it is the views of lawyers mixed with those of academic economists of the sort who write in that admirable journal produced by the Institute of Economic Affairs. The time to read that journal is on a very long, wet railway journey when one has run out of one's other newspapers.
  It appears to me that those academic economists have more power than they are expected to have and than they properly should have. I am sorry that that should be so. It must come as a great surprise to them that anybody reads, let alone acts upon, their work. They appear to have extraordinary power to influence the course of events.
  I regret that the good, common sense approach appears to be lacking. That is the approach adopted by business men. A business man would ask what the alternative would mean, if we remained outside the European monetary system. The European countries would get closer together in some form or other of European monetary union. That is inevitable. The question is whether we should do better to remain outside or within the European monetary system. In essence, that is the argument for membership of the European Community itself.
  I any business man were asked what would happen in the European Community—the idea of a single European
  88
  market commends itself—he would guess that in the long run there would be closer monetary union. If that is so, surely it is much better for us to be a part of it, a full member of it, rather than standing on the sidelines, criticising the operation of the European monetary system and insisting on having what we strongly call our independent sovereignty.
  But in this issue, independent sovereignty means that we would be an offshore island of which little notice was taken by the European Community or still less by our old partners, the United States. What business would the United States have with a special relationship with an offshore island when there was a real community of nations to deal with in the European Community? So the present attitude, apparently held at the highest level, is mistaken and in the long run damaging to our interests. Therefore, I sincerely hope that it will change.
  I do not believe that we shall have the luxury of selecting which bus we shall catch in future. It would be of great importance to us, for our own internal monetary discipline reasons, to align sterling with the deutschmark as soon as possible. For the wider reasons that I have given, we should catch that bus now and help to drive it.
  7.44 pm
  Dr. John Reid: I entirely agree with my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) that it is a matter of some regret that the Foreign Secretary, having opening the debate, could not stay and hear some of the contributions on the Floor of the House. I understand how pressing the desire can be to share the evening with Mr. Wogan. If the Foreign Secretary's contribution on "Wogan" is as unconsciously amazing, amusing and entertaining as his contribution in the House, we shall see "Wogan" rocketing in the viewing ratings.
  The only word to describe the speech by the Foreign Secretary is "incredible". He presented us with a veritable catalogue of victories that we had won in Europe on EEC funding over the past few years. I think that some of us can be forgiven for asking how it is that on EEC funding we seem to go from victory to victory to final defeat each and every year.
  The Bill would be the latest of those defeats, the latest in a long line of mechanisms for attempting to finance the European Community. It addresses problems raised at Fontainebleau in 1984 and at various other summits over the past few years. The fundamental problems when we entered the Community many years ago are patently getting worse. It is obvious to most people and to most hon. Members that the minutiae of the Bill do little to conceal what is happening to the EEC budget. The Opposition have tabled a significant amendment to show that little has changed since Fontainebleau in 1984 and even since 1979. The fundamental imbalances, excesses and, some would say, almost iniquities of the EEC budget have worsened and there is little hope that anything that the Government have done or are likely to do will be of significance in changing that.
  The problems addressed in 1984 at Fontainebleau and again today are nothing new and should elicit at least some frustration, if not embarrassment, from the Government Front Bench because the continuing excessive common agricultural policy spending, which seems to be on an almost inexorable rise under this Government, shows

  89
  nothing less than incompetence. No one would pretend that the scandalous rise in agricultural spending and the under-allocation of the social and regional funds—all we have is promises—is anything new or unique to the Government. The problem goes to the heart of our membership of the EEC.
  What is galling is the image presented by the Foreign Secretary, and by the Prime Minister on other occasions on her skirmishes in Brussels and elsewhere. We need little reminding of how many years the Prime Minister has had to fight Britain's case. We need little reminding of how many volumes of Churchillian rhetoric have been expended in attacking the EEC before she goes off to the various summits, which she presents as victories when she returns.
  Of all the quotations from the Churchillian volumes, perhaps the one that describes best the Prime Minister's attitude to the EEC in practice is that she has been "resolute in her equivocation" over the EEC budget. If I were to paraphrase an ex-leader of the Labour party, it seems that the Prime Minister is prepared to "lose, lose and lose again" to preserve her antipathy towards the Common Market budget.
  We need little reminding that as 1992 and the open market come upon us, we have hardly been able to shift the debate towards common sense in the Common Market. The Government have failed consistently to fight our case and win real concessions. How many years will it take for the Government to make real progress? Where do we stand today? We have a CAP budget which is out of control and a social and regional fund which is merely papering over the cracks of industrial decline and inner city decay in Britain.
  The Government have constantly stood by and watched the worsening imbalance between revenue and expenditure which lies at the heart of the Community's financial mess. There are two causes of that imbalance—first, a failure of budget discipline controls to check excessive expenditure, especially on agriculture, and secondly, revenue ceilings, which the Court of Auditors believed were artificial and took insufficient account of the Community's financing needs.
  The collapse of internal EEC financial control is scandalous. It is also scandalous that agricultural spending has increased two and a half times since Fontainebleau —not since the initial agreement when Britain joined the EEC, but since 1984. Many right hon. and hon. Members have already said that the waste must stop somewhere. When the treaty of Rome was signed in 1957, one in four of the working population of the then EEC was employed in agriculture. That is clearly not so now. Today the total working population involved in agriculture in the original six nations is down to about 5 per cent.; for the Community of Ten—before the accession of the Mediterranean countries—it is roughly 10 per cent.
  My hon. Friend the Member for Hamilton (Mr. Robertson) made a comparison of the amount spent by Britain on the EEC agricultural budget and the amount spent in Britain on the National Health Service. It is worth enlarging on that comparison, and to put the runaway agricultural spending in its grim perspective, we need look no further than the NHS. When the Government refuse to find £1 billion needed to get the NHS out of the current decline from which it is suffering so badly, they should remember the sickening immorality of the £11 billion a year that is spent solely on dumping, destroying and
  90
  storing food surpluses within the EEC. Such spending must appear increasingly beyond the control of any democratic body. What have the Government done about that imbalance?
  I notice that the Foreign Secretary has returned from addressing the masses through the medium of light entertainment. May I remind him of the fifth report of the Treasury and Civil Service Select Committee on EEC finance, which was especially instructive on the imbalance? It shows that the gap between the regional and agricultural budgets is widening. The agricultural budget for 1986 amounted to two thirds of Community spending, while the regional fund amounted to 7·6 per cent. of total spending.
  In a previous debate on this matter the Paymaster General pointed out something that he thought had gone unnoticed by me—the fact that the expansion of the social fund was agreed in Brussels by the European Council. But it was agreed as a prediction and promise, and those of us who are interested in the Common Market know that past promises and predictions from Ministers rarely bear much relationship to the reality of EEC funding.
  During a sitting of the Treasury and Civil Service Select Committee, my hon. Friend the Member for Gateshead, East (Ms. Quin), who spoke so eloquently tonight on the need for the extension of programmes on industrial, social and environmental matters, pressed the Paymaster General to come clean on the imbalance. She managed to extract from him the information that 72 per cent. of this year's budget will be for agricultural guaranteed expenditure, which represents an overall increase. The tone of that question and answer session must have been embarrassing for the Government. They seem to be taking steps in the wrong direction.
  No matter how much the Government try to belittle the annual increase in agricultural spending, it is clear that each little step forward in agricultural spending is one huge leap backwards for Britain and the British economy's contribution to overall EEC spending. We cannot rely on the Government to reduce the CAP budget and it is also depressingly clear that that budget is on the increase and out of control.
  The Chairman of the Select Committee put the matter succinctly to the Paymaster General and said that the House was
  "told some time ago … that the proportion on agriculture was going to go down, and that was the part of the original budgetary discipline package.
  On that occasion, the Paymaster General had to admit —as the Government should admit to us today—that it is common knowledge and an embarrassment for Britain that the arrangements that were secured in 1984 to restrain agricultural spending were completely ineffective. That appears to be the real story behind the sabre rattling that accompanied the return of the Prime Minister from the Brussels meeting.
  The Government are all talk and no action, just like the £7·9 million advertising circus surrounding 1992 and the open market. There is a worrying aspect to that advertising, because, although it is beneficial to alert the British public to the 1992 open market, the nature of the advertising is in grave danger of becoming the tip of a corrupt iceberg. The advertising for the open market and the advertising for the Department of Trade and Industry and the Scottish Office smooth over distinctions between the state, the Conservative party and the largest benefactors of the Conservative party, who are now

  91
  appearing nightly on our television sets glorifying the free market. Ministers may smile, but those smiles may disappear when they realise that the smoothing over of the distinctions between the state and the Tory party appears to be worrying one or two other people.
  Tonight I learnt that Mr. Alex Pagett, who left his job at the Scottish Office only three months ago to become the director of publicity for the Conservative party, has resigned his post. He has informed us that he is now going to work for the Reo Stakis organisation. I also understand that he informed the press that his decision is the result of his
  "taking advantage of the enterprise culture".
  Some of us suspect that he has found the blurring of distinction between the state and the Tory party too strong to take.
  The Paymaster General told the Treasury and Civil Service Select Committee that, this year, much effort has gone into reinforcing the 1984 arrangements. Why should we believe the Government when the financial forecast for CAP spending is that it will continue to increase in real terms by 2 per cent. per annum? We have been let down by the Government, not least because the corresponding loss to this country's declining regions and inner cities will be keenly felt while the farmers of France, Germany and Benelux will receive their usual annual boost.
  How can anyone deny the stark contrast between the House of Commons agreeing to increase, once again, the massive subsidies to inefficient French farmers and the fact that I have to go back to my constituency and to the county of Lanarkshire, where the steel men and the steel mills, particularly Ravenscraig, are breaking record after record, heightening efficiency, increasing output and delivering quality goods on time, and tell them that, although there is a threat over their heads, the Government cannot and will not find the money even to convince the British Steel Corporation that it has a right to survive on its record.
  That same Government, however, can find money by the barrelload to plough into Europe's inefficient agricultural sector. That contrast is so stark as almost to boggle the imagination. The Government cannot expect anyone to swallow that. They must break out of the dogmatic straitjacket that has suppressed and guided their previous actions on Europe.
  We need a certain pessimism of the intellect when we study the Government's past actions. We need also some optimism of will, which the Government seem incapable of achieving. It is possible to make a leap of the imagination and to define measures that could be taken within the EEC that would assist Britain and the rest of Europe to overcome some of our greatest industrial and financial problems.
  Some comments and criticisms have been levelled at Mr. Delors, and we need not accept everything that Mr. Delors says. For example, he said recently that he looked forward to a European Government in 10 years' time. However, there are many developments for which he has been fighting which we could usefully take on board as being beneficial to Britain. He has called for a social market, including the opening of the books by, and industrial democracy within, European big business. He has proposed new rights for European trade unionists, an increased budget share for social spending and a European
  92
  recovery programme, all of which would be suitably enhanced if the Government were to direct their attention to them.
  These proposals are opposed by the British Government, but not by the other member state Governments. The British Government are committed to deregulation in Europe on a scale that has not been supported even by Chancellor Kohl.
  The message to the Government should be that co-operation does not necessarily imply integration. A co-ordination of effort by sovereign states on a European scale does not necessarily imply the undermining of national sovereignty. Indeed, if it is to be a co-operative approach rather than an integrated one, the national sovereignty of the states involved could be reinforced.
  The Labour party has made it clear that it would take such initiatives and stop the trend of budget allocation being decided at the centre. A Labour Government would be involved in co-operative and co-ordinated efforts.
  Once more, we have been asked to acquiesce in a failure by the Government to secure reasonable terms for Britain. They have failed to show sufficient imagination in approaching the problem. This is a failure for Britain's industrial and social base and for the future of the EEC.
  8.3 pm
  Mr. Jonathan Aitken: The hon. Member for Motherwell, North (Dr. Reid) began his speech with a few good-natured digs at my right hon. and learned Friend the Foreign Secretary for leaving the Chamber to appear on the Terry Wogan show this evening. I am sure that my right hon. and learned Friend delighted his viewing audience of millions. I am only sorry that some of us were unable to see him and enjoy an interesting experience.
  Those of us who have sat through four and a half hours of this debate have had a remarkably interesting time, too. From whatever viewpoint a speech has been made, there has been a sense that this debate takes place at a time that amounts to something of a watershed in the affairs of Europe. It is no ordinary Bill that we are debating. It is no run-of-the-mill piece of EEC legisation, even though my right hon. and learned Friend sought to present it as a routine measure, suggesting that everything in the garden was rosy and successful.
  The Bill is a significant revision of the EEC fundamental treaty rules. It gives the House an important opportunity to take a real decision on the hitherto highly unsatisfactory spending arrangements of the Community. It should be said at the outset by way of warning that our scope as a Parliament for taking such decisions in future may be extremely limited if some Euro-enthusiasts get their way.
  As several hon. Members have warned, the debate is taking place against a background of much arrogant muscle-flexing by the EEC, especially by the Commission's President, Mr. Delors, who has emerged as the villain of the piece, according to many of those who have contributed to the debate. I see Mr. Delors in that role. He appears to be assuming the mantle of a latter-day Louis XIV, complete with a spending record that displays a consistently extravagant folie de grandeur. Some of his speeches embody the Sun King's notorious dictum, "L'etat c'est moi." We have heard repeatedly——
  Mr. Cash: Does my hon. Friend agree that he might add to these famous epigrams, "Apres moi, Delors."?
  Mr. Aitken: I hesitate to contribute further to this game of French quotations. There has been a deluge of criticism this evening and it is apres that that I am speaking.
  Criticism has been rightly directed to the remarks of Mr. Delors. Many hon. Friends, including the right hon. Member for Bethnal Green and Stepney (Mr. Shore), have referred to Mr. Delors' speech in which he said that within 10 years 80 per cent. of legislation in economic and social areas will be taken from the House of Commons and put under the control of European institutions. That gauntlet having been thrown down, many parliamentarians, quite rightly, would wish to take it up.
  Whether we share Mr. Delors's vision or whether we do not, it is certain that the EEC juggernaut is rolling in the direction that he is suggesting. If he and his fellow visionaries have their way, in 10 years this House will be no more than a glorified county council. It is certain that there would be a massive erosion of sovereignty. It would mean the loss to our Parliament of even the minimal controls on EEC expenditure that we are debating this evening. We must see the EEC treaty revision that is enshrined in the Bill not as a small rule change, as my right hon. and learned Friend the Foreign Secretary tried to present it, but as representing an important preliminary battle in the coming political war of survival, in which the issue will be whether to surrender to Euro-federalism or to retain the independence of member nation states and their national legislatures.
  From the big picture, I turn to some of the details of the Bill. One of the most worrying aspects of the Bill is the contrast between the tight way in which we control the spending of taxpayers' money at home and the loose rein that we are giving to the EEC to spend the same taxpayers' money on our behalf in Europe.
  Almost every nook and cranny of public spending in Britain has felt the threat, and sometimes the lash, of Thatcherite discipline, and rightly, too. District council treasurers, hospital administrators, DHSS managers—almost everyone in a public responsible position—have learnt to live with cash limits, budgetary restraints, ceilings, cappings and all the other instruments of Treasury torture that are handed down from the modern Court of the Star Chamber.
  This smack of firm Government has not been felt on the bottoms of the EEC bureaucrats. The big spenders of Brussels must feel that they are living in the court of King Midas. Whenever they have touched a budget limit in the past, even a so-called legally binding one, it has exploded into an El Dorado of overspending.
  Let us consider the figures that lie behind the Bill. Under the IGA, the United Kingdom taxpayer has to start by coughing up £765 million to pay for past EEC overspending. Perhaps what is past is past; there is no point in crying over spilt wine lakes today. But will overspending stop with this legislation? I think that the case for pessimism is much more convincing than that for optimism. For a start, they have mighty generous budgets over there in the EEC. At home, Ministers go before the Court of the Star Chamber——
  Mr. Win Griffiths: The hon. Gentleman has been stressing the amount of money that we pay into the EEC budget. What percentage of our gross national product do we pay into that budget?
  Mr. Aitken: I am coming to that. It is a somewhat misleading figure. In measurable terms, we were paying 1·4 per cent. of VAT, and we are now paying 1·9 per cent. That is a more measurable statistic than the GNP statistic, which I shall come to later.
  There is a great contrast here at home with our Ministers appearing before our domestic Court of the Star Chamber, cap in hand, to try to get an extra 4 per cent., 5 per cent., or, if they are really lucky, 5·5 per cent. increase for their domestic budgets. But the European Parliament has recently approved an increase in the EEC budget of 20 per cent. The Bill envisages an increase in EEC resources of 25 per cent.
  The only good thing to be said about that is that it is only half as much as Mr. Delors wanted for the own resources ceiling. He wanted an increase in own resources of 50 per cent., which is equivalent to 2·3 per cent. of VAT. The awful thing is that I expect that he will get it by one method or another in the foreseeable future. After all, we were told that the 1·4 per cent. limit would be unbreakable. There is spirit over there in the EEC—in the words of the late Mr. Wilfred Pickles—of, "Give him the money, Mabel."
  Every Commission seems to be able to get cut of national Governments more and more money by all sorts of methods, some of which have been no more than conjuring tricks in creative accountancy. Those tricks and devices have many labels—the negative reserve, the reimbursable advance and the carryover. Tonight we heard about the 10-month metric year that has been invented to give a favourable statistical comparison with the previous 14-month year.
  The new conjuring trick is that, instead of an own resources limit of 1·4 per cent. of VAT, which is upgraded to at least a measurable 1·9 per cent., we have something called the fourth resource, which is a levy of 1·2 per cent. on the gross national product of member states. As my right hon. Friend the Member for Worthing (Mr. Higgins) said, the trouble with the fourth resource is that the GNP calculations are notoriously difficult to measure. Even in the United Kingdom there are different ways of calculating it—the income method and the expenditure method—and after reading the EEC draft directive, I have grave doubts whether the statistical basis of the Greek or Italian GNP take into account the black economy and whether we are using the same methods of comparison.
  The fourth resource is a recipe for obscurity, and obscurity in financial figures is usually the mother of indiscipline. That is a worrying aspect of the calculations on which we are asked to base our approval of this measure.
  The message from the Foreign Secretary was, "Do not worry, this time we really have the big spenders under control, because their spending limits are legally enforceable." We have had legally enforceable limits before. They were enforceable by the Council of Ministers, which did not take a blind bit of notice, so the limits were never enforced, and spending soared. On this occasion, we have heard the Foreign Secretary say that the spending conrols will be written into the regulations, thus making

  95
  the budgetary limits strictly legally enforceable. That phrase is somewhat contradictory, because the European Court has no penal sanctions with which to enforce them.
  However, it sounds good—at least until we look at the small print. As I said in my intervention to my right hon. and learned Friend, the categories of EEC expenditure, broken down between obligatory and non-obligatory expenditure, are not on the same basis when it comes to those legally enforceable limits. Whereas obligatory expenditure is covered by the regulations, which are pretty generous, allowing agriculture to grow by 74 per cent. of Community GNP—which seems extremely generous to those who believe that agriculture has grown quite enough —the non-obligatory expenditure category is not covered by legally binding regulations.
  The budgetary discipline for the non-obligatory expenditure category depends not on law, but on what are called "inter-institutional discussions" among the European Council, the Commission and Parliament. Those inter-institutional discussions sound like one of the softest touches known to political life. Imagine Zorba, Jacques and Franz all going off to have lunch together and having an instant inter-institutional discussion on whether to have potato soup or caviare. I bet that they will end up buying the caviare.
  On the basis of the track record, who really believes that those inter-institutional discussions will mean more firm and effective spending limits for our taxpayers? The whole culture and thinking of the European Community these days is focused not on budgetary discipline, but on dreams of glory, of federalism, of 1992 and all that. The much more prosaic but essential requirements, such as spending controls, are being brushed aside as the grand designs for the future political state of Europe take priority.
  I make no apology for returning to the need to envisage the Bill in the context of the coming struggle between national sovereignty and Euro federalism. Apart from the futuristic pronouncements of Mr. Delors in favour of a European Government, we already have contemporary and concrete proposals on the table for a European central bank, a European common currency and a European economic and monetary union. There are even discussion papers circulating in the Commission with ideas on how to introduce a common system of direct European taxation. If those plans are anything like the experience of direct European expenditure, they are not likely to be beneficial to the British taxpayer and the British public, and they will put our Chancellor of the Exchequer out of a job.
  Before we vote on the legislation, which substantially amends the EEC treaty rules on expenditure, we must pause and reflect for a moment on the direction in which we are being led. In the history of the American wild west, there used to be a legendary bar known as the Last Chance saloon. I believe that that establishment was traditionally located on the edge of the frontier where the good and bad guys mingled together before going out to fight over how the west was going to be won and by whom. We are now in or close to the Last Chance saloon of the European future.
  As a sovereign Parliament, very soon we must decide whether we will slither into President Delors' vision of a federal Europe, with all the financial and legislative laxity that that implies, or whether we will take a stand and fight
  96
  for our national sovereignty, for the rights of our national Parliament and, on the positive side, for a different vision of Europe. The one that I prefer is General De Gaulle's "Europe des Patries".
  That Gaullist vision of a Europe of independent nation states is enshrined in the person of my right hon. Friend the Prime Minister. I have the greatest confidence in my right hon. Friend's ability to resist the worst of the current EEC proposals leading us down the primrose path of Euro-federalism. Despite some signs to the contrary, my right hon. Friend has not yet been conclusively proved to be either invincible or immortal, so her fine words and instincts need to be backed up by parliamentary action and support.
  Small in number though we may be in the Division Lobby, some of my hon. Friends are determined to sound the tocsin of alarm about the rising tide of federalism in Europe. A vital factor in reasserting some national parliamentary resistance to the federal big thinkers and big spenders is the retention of effective levers of control on EEC spending. Those effective levers of control are lamentably absent from the legislation, and that is why I shall vote against a Second Reading for the Bill.
  8.17 pm
  Mr. Win Griffiths: I shall preface my remarks by mentioning some of the constitutional issues that seem to have played a great part in the debate— the lament about the loss of sovereignty through our membership of the European Community.
  The problem is far wider than the effect on our constitutional processes since we became a member of the European Community. It is the far more fundamental one of the roles of the Executive and the legislature. Conservative Members who complain about the European Community must examine the roles of the legislature and the Executive as they have developed especially in the past decade, when measure after measure has been steamrollered through without much opportunity being given for the real will of the House to be heard.
  I dare say that not a single word of any of these agreements will be changed as a result of this debate or any of the debates that we shall have when we go into a Committee of the whole House. Conservative Members should think about that. We have become puppets of the Executive, who pull the strings as they desire and bring us agreements that have been made in secret, which they have no intention of changing, and which they want us to rubber-stamp. I look forward to the opportunity in Committee to try to make some major changes.
  There is a reference in paragraph 3(iii) of the explanatory and financial memorandum of the Bill to a new fourth resource. Do the Government accept that, if the House agrees, it should be deleted from the Council's decision of 24 June? Why do the Government feel that a fourth resource is needed? Do they believe that the budgetary agreements on discipline will not hold and that this safety net will enable them to provide more finance for the Community without having to return to the House and suffer embarrassment here? How large a part of the budget will the new fourth resource be? Will it be 1 per cent., 2 per cent., or 10 per cent.? Or might it be 20 per cent. of revenue? The Government do not have much idea, but they probably inserted the proviso to overcome any future problems over budgetary indiscipline.

  97
  We are told that the intergovernmental agreement provides for contributions to a monetary reserve, but that such contributions would be triggered only if the dollar depreciated against the ecu. Only last week we were told by the venerable scribes who write in The Economist that that is likely to happen. They forecast that, because interest rates in America are coming into line with world interest rates and because of the uncertainty caused by the presidential elections, the dollar's rally is likely to be short-lived. They predict that over the next 12 months the dollar will touch new lows against the yen and sterling. It will not necessarily depreciate against the deutschmark, but it might still depreciate against the ecu. Any substantial downward movement in the dollar will affect the amount of money that we spend on the common agricultural policy.
  The Foreign Secretary nailed the Government's flag to the mast of the Single European Act and to the budgetary agreement. According to the Commission's preliminary draft general budget, which has the title "General picture", the Single European Act will strengthen the Community's decision-making capacity and will set several fundamental goals. The first is
  "the completion of a large internal market by 1992."
  The Government are well and truly committed to that goal. It has been rammed down our throats in glossy television advertising every night of the week. However, whenever we ask the Government what they think the impact of the internal market will be on employment in the regions, the Government say that they are encouraging business men everywhere to grasp this opportunity, that they expect extra jobs to be created in the United Kingdom but that there is no way of telling what will happen in the regions and that they do not intend even to attempt to find out.
  In the light of the way in which the Common Market has developed, the regions are likely to suffer from the creation of the internal market. A minority of high-tech companies are located in the regions. The Japanese factories in south Wales will no doubt prosper, but the distribution of high-tech companies cannot be better illustrated than by a Hewlett Packard advertisement that appeared in several newspapers during the past fortnight. Hewlett Packard claims that it covers the nation with its high-tech services. It has 19 centres in the south-east. In Wales it has one, and in the north it has two. That is the kind of involvement that the regions have in high-tech industries. The Government are committed to the internal market, but they are not committed to employment in the regions.
  The second goal provided for in the Single European Act is
  "greater economic and social cohesion between the Member States."
  However, the United Kingdom Government have been doing exactly the opposite. There is no greater economic and social cohesion between the constituent parts of the United Kingdom. There are great disparities. The wealth gap and the employment gap are growing all the time, to the detriment of the regions.
  The third goal is
  "speeding up the development of a common policy on research."
  98
  The Government have had to be dragged, kicking and screaming, into supporting European Community re-search programmes, which in financial terms are chickenfeed.
  The fourth goal is the
  "development of social policy, monetary integration and environment policy."
  However, the Government have been hopelessly dragging their feet over all those aims. Because of their failure properly to apply the equal opportunities directives, they have been taken to the European Court on several occasions. They have blocked the parental leave directive. They helped to torpedo the famous Vredeling directive that would have allowed for greater consultation with workers if there were major changes in the company's activities, or if it was proposed to close it.
  Whatever we may think of monetary integration, we know that the Government want no part of it. They have declared their opposition to joining the European monetary system and the creation of a European central bank. The Prime Minister continues to refuse to countenance the United Kingdom joining the EMS. The Government have reluctantly agreed to implement the directives on bath water and tap water quality, on sulphur emissions from large industrial plants, on lead in petrol and on the ozone layer only after immense pressure from other member states.
  The Government do not support the proposal to alter the basis of the European Community's revenue. It was amazing to hear the Foreign Secretary speak about the Government's consistent approach to the structural funds. When the Prime Minister reported to the House on 8 December 1987 after the European Council meeting in Copenhagen, she said:
  "On the second aspect, structural funds, the Commission had proposed a doubling of the resources devoted to those funds by 1992 … I made it clear that this was out of the question."—[Official Report,8 December 1987; Vol. 124, c. 167]
  A few months later, an agreement was signed that will lead to an 80 per cent. increase in real terms by 1992. By 1993 there will be a doubling of the structural funds.
  I welcome the Prime Minister's conversion to a regional policy for the European Community. What worries me is how Britain will benefit from a doubling of the structural funds. We know that in all likelihood 80 per cent. of the regional fund will go to the southern states and only 20 per cent. to the north. On the basis of the projected figures for 1992, that will mean about £2·6 billion at the very most being available to help in priority two assistance for helping traditional industrial regions suffering from major job losses. Even if we receive one third of that money, we will be lucky to get the £1 billion that the Prime Minister said at one time she hoped we would get.
  The Government themselves have already halved the amount of money available for regional policies in the United Kingdom and there is a real possibility that the Government will reduce that figure even further. The regional fund contributions are on a shared basis, and there must be a commitment by the Government as well as from the Community. Even if that money were available to us, I foresee that our own spending on regional policy may be insufficient to enable us to take up all the available money. I shall be interested to know whether the Government have considered the possibility of that imbalance occurring in the future.

  99
  I fully endorse the Opposition's amendment, and I hope that it will receive the support of Conservative dissidents who are unhappy about the way in which their Government are moving. However, from the tenor of their remarks, I gather that they would prefer to put up some kind of iron curtain around the United Kingdom anyway.
  We need to underline the fact that the Bill will lead to a major increase in Community spending that is likely to find its way, without much diminution, into the agricultural sector, leaving the very real needs of Britain's industrial areas not being met. If the Government want to see Community spending increase, they must ensure that the balance is more towards that part of the budget that is described as non-compulsory expenditure.
  8.32 pm
  Mr. David Curry: It was inevitable that this debate would take on the tones of a constitutional argument, yet that is to disfigure it. We are not facing a choice between nationalism and federalism in the European Community. We signed a treaty, the first indent of which stated that its signatories are
  "Determined to lay the foundations of an ever-closer union among the people of Europe."
  Both the Conservative and Labour Governments spent many years travelling around Europe getting the right to sign that treaty. What is now happening flows from it. It is true that in Britain we have often made the mistake of pretending that there is a distinction to be made between economic and political development; as if one could have greater economic integration without concomitant political moves as well. Perhaps that is catching up with us.
  Tonight, we should be debating the Community's practicalities, recognising that in heading for the 1992 target, we are saying that we shall let the market be the motor. Well, the market may well lead us into directions that entail political decision-making. It may be that we shall move more in the direction of pooling our political activity, but to argue that it is a question of sovereignty against federalism is to be a generation behind the debate.
  I pay tribute to those hon. Members who have tonight made emotional speeches, many of which have been tours de force. However, they have said nothing to me intellectually, because they have not offered any vision of where we will take this island—I yield to nobody in being proud of being born a Briton in these islands—when we have a few miles away a continent that is undergoing the process of political and economic unification. That is the strategic context in which tonight's debate must be placed.
  I wonder whether the Opposition will divide the House, because I noted that the Leader of the Opposition wrote recently to the European Parliament's Socialist groups subscribing to the notion of a common manifesto for the next European elections a year from now. It has also been observed that almost all the European Parliament's Socialist groups have endorsed the deal from Brussels. I fail to see how the Labour party can square its adherance to the notion of a common manifesto with its opposition to the measures that underpin it.
  Mr. Holland: I do not know whether the hon. Gentleman would like my reply to that point now or later.
  Mr. Curry: Let us hear it now.
  Mr. Holland: Then I can tell the House that my intervention will take some time.
  Madam Deputy Speaker: Order. Interventions must be kept fairly brief.
  Mr. Holland: That is why, Madam Deputy Speaker, I suggest that the hon. Member for Skipton and Ripon (Mr. Curry) stays for the end of the debate.
  Mr. Curry: I look forward with keen anticipation to the hon. Gentleman's reply, and I am happy that he has given himself time to work it out.
  In judging the measures that are before the House, we should not look for an absolute and perfect solution, because all of us know that such is not likely to present itself. We are all rather tired of talking about the Community in terms of absolutes. It is not that kind of organisation. Instead, we need to know whether the Brussels deal is materially better than that which went before it. First, will there be a discipline in farm spending? Secondly, will it offer the Community a period of stability and an end to what seem to be interminable demands for yet more emergency funding? Thirdly, is it a good deal for the United Kingdom? Finally, is it a good deal for the whole of the Community, in the sense that it will open the way to those developments that have been endorsed, promoted and demanded by the United Kingdom? I believe that we can make a positive response on all those counts.
  The Brussels deal plugs the deficiencies of Fontainebleau, and we must be honest and admit that it did have deficiencies. Also, it introduces medium-term planned expenditure, and the inter-institutional agreement deserves rather more credit than it has been given tonight. It also reinforces the rebate mechanism and improves upon it in certain respects. It also opens the way to 1992, by establishing the political balance—which is where the increase in the structural funds comes—that will clear the way for decision-making towards that goal.
  What were the faults of the Fontainebleau agreement? It was not legally binding on the European Council or on the Commission. There was nothing to prevent the Commission from making proposals that contravened Fontainebleau's guidelines. Finally, it was not translated into specific and binding controls on the individual agricultural support programmes.
  The Brussels deal provides legally and formally binding control over agricultural expenditure, because the Brussels commitments had to be passed into legislative texts, which went their course through the European Parliament and Council and were then legislated into existence during the course of last month. They both fix an overall limit on farm spending and define it as a percentage of the growth in Community resources. Those provisions are in texts that can only be overcome by a unanimous vote of the Council, and there is no organisation in the world that will bind itself in all circumstances whatsoever and not leave the possibility of unanimity changing the situation.
  Whereas Fontainebleau was riddled with special circumstances, the Brussels deal permits the single special circumstances of the dollar-ecu relationship. It does so both ways. If the dollar starts to rise—the recent pressure on the dollar has been upwards—those economies are realised, just as, if the dollar declines, the funding will be made available, I recommend that the hon. Member for Vauxhall (Mr. Holland) reads the text, where he will find

  101
  that provision. Secondly, the Commission must never make proposals exceeding the guideline. Thirdly, we have in the agricultural regimes about 20 specific measures for legally bound stabilisers.
  It is easy enough to say that this is nothing but yet another rerun of Fontainebleau. The fact is that it is a radically different animal. Let us not denigrate Fontainebleau: it laid the basis for our rebate arrangements, and they came under intense pressure. It is difficult to exaggerate the unpopularity of the rebate provision at the time, but they have now been reinforced and enhanced by the Brussels agreement. Fontainebleau was a milestone along the road, although it did not provide the certainties for which many hoped at the time.
  Will the arrangement work? That is a perfectly legitimate question. I have been examining some of the agricultural sums for this year. In this year's farm price review, we have had a Council compromise, which is still hanging on the Greek distinction between points and percentages in monetary compensatory amounts, and which added 289 million ecu to the cost. That has been entirely compensated for by reduced aid for incorporation of skimmed milk powder, for milk to be fed as a liquid to calves and for liquid to be used for casein manufacture, and by savings in export subsidy. The total savings are 285 million ecu.
  The Ministers went into the negotiations saying that they would chop the green rate and play on the level playing field. What happened? They were told, "No." As a result the changes in the green rate are deferred until next year. They could not drive a coach and horses through the settlement as they had done in the past.
  Let me make a forecast for next year: I think that it will be impossible to spend the money in the agricultural guideline. I think that we will end up 1 billion ecu in the black in both 1989 and 1990. We have a 350 million ecu margin in the preliminary draft budget before we reach the guideline; the slight increase in inflation in the Community gives us another 50 million ecu to play with; the savings in the dairy sector are substantial; and the drought in the United States will have a dramatic impact on the amount that we need to subsidise production of oilseed rape and soya, and on the lower restitutions on the cereal harvest.
  That extra 1 billion ecu will permit the full depreciation of stocks and, if it is what Ministers want, the dismantling of MCAs. The importance of such an automatic depreciation is difficult to exaggerate. It introduces a step of budgetary integrity that did not exist in the past. The overvalued stock represents a disfigurement of the budget, and that is now being tackled.
  We can argue that the CAP is now palpably coming into balance, albeit slowly. There is no skim milk powder to be had. My right hon. and learned Friend the Foreign Secretary gave figures for stocks at 1 April. A telephone call to Brussels would have obtained the figures for 30 June, which show that there is no skim milk powder to be had, and that the butter stocks, which peaked at 1·4 million tonnes in 1986 and were 1·18 million tonnes a year ago, stood on 30 June at 378,339 tonnes. That is a very significant decline. What is important is that that is not reaccumulating: it is not going into stock now. It is a net decrease in the level of stocks.
  There is a good argument for saying that, although some sectors remain difficult, the general shape of the CAP is very different from that of five years ago. I invite those who regard quotas as merely a tinkering with the system to
  102
  visit my constituency—a dairy-producing area with many small farmers—and to propose their thesis in front of the Craven tenant farmers association. I should like them to see what response they would receive.
  The second important gain has been what can only be described as the medium-term expenditure plan incorporated in the inter-institutional agreement, which limits expenditure on a scale to 1992. Many hon. Members have said that that means that there is no budgetary discipline in the non-obligatory sector. Having lived through the negotiations with the committees of the European Parliament that wish to spend the money and having told them that the limits that were now to be enforced, I believe that there is an effective discipline, although it is different from that in the obligatory sector. It is worth noting that the only part of the non-obligatory sector in which there is any prospect of significant expansion is research. That line in the budget is the most favourable to the United Kingdom.
  The third gain is the rebate, which has been safeguarded. That was by no means an obvious achievement. It has been taken outside the framework of the budget, which gets us away from the difficult problem of the "dead money" that the rebate imposes on the budget. The gross national product scheme will benefit the United Kingdom, possibly to the tune of 500 million ecu a year.
  In a sense the most important criterion is whether the deal relaunches the Community as a growing and dynamic concern. There is striking evidence from the past six months that it does. We have had the agreements on capital movements, road haulage, the mutual recognition of diplomas and the controls on large combustion plants. The Community will always go in fits and starts; we shall never achieve a great consistent movement. The history of presidencies shows that each tends to start as a period of stagnation, with a great rush towards the end. I do not think that there is anything wrong with that. I feel that we have political lift-off, and commercial lift-off as well.
  I invite hon. Members to read the Financial Times day by day and to note the extent to which industry is positioning itself ahead of its 1992 market. The 1992 objective is a British objective. We claim that we invented it. But the Community is enlarging the horizon as it emerges as a world power. It has always been a world power waiting to be invented: now it is taking material shape. We see that in the reactions to the Reagan-Gorbachev detente on security measures, which imposes on the Community the heavy political burden of demonstrating its capacity for unity.
  The states of eastern Europe are now queuing up for Community recognition. How long will it be before Mr. Gorbachev pays a visit to the Commission headquarters in Brussels, and until the President of the Council goes to Moscow? We have already seen the first agreement signed with Hungary. The frontiers of the Community are, in a sense, extending towards the East. The Community is aleready an economic magnet to those countries. Already we begin to see the new candidate states lining up. In Norway, Austria and even Switzerland, politicians are asking, "What is the relationship with that greater Community? Can we not be a member of it?"
  A politically strong Community, competent to handle its worldwide relations as an ally of the United States, is a major British objective. What would happen if we said no—for the House could vote against the measure? First, we

  103
  would continue the long period of disunity and internal warfare that has so characterised the Community, just when we most need to present a united visage to the world. I apologise for the French: the word means "face".
  Mr. Holland: I om abliged to the hon. Gentleman for giving way to me, but, first, I do not need lessons in French, and secondly, several hon. Members still wish to intervene, although we have postponed the wind-up.
  Mr. Curry: I am drawing to a conclusion. The hon. Gentleman will know that I have sat through every second of the debate.
  Secondly, we would throw away our gains in budget discipline—the rebate and expenditure control. Thirdly, we would dislocate the whole movement towards 1992. The rest of Europe will not say, "What are we going to do to accommodate the British? How can we get round the problem?" They will not come galloping to us when they have just agreed one of the most difficult political compromises in the history of the European Community. The damage would be done to British objectives.
  We are no longer behind the rest of the train. We have caught up through our efforts and our negotiating skills in Brussels. This marks a new stage in Britain's full, sensible and pragmatic participation in the development of the Community, and I commend it to the House. It is part of my vision of the future.
  8.50 pm
  Mr. Tam Dalyell: I hope to catch Mr. Speaker's eye on Wednesday in the debate on short speeches, so I shall just ask six questions, five of which are friendly and may be answered by letter.
  First, the Foreign Secretary spoke with approval about the reduction of stocks—beating ploughshares into golf clubs, as he put it. That has something to be said for it, except that we have all seen the dramatic pictures from Iowa and Nebraska. What is the Government's estimate of the effect of the American bread-basket weather conditions on policy towards European stocks?
  The second question concerns European action on the environment, about which my hon. Friend the Member for Gateshead, East (Ms. Quin) quite properly asked. When reducing stocks, is there any policy of increasing habitats that might well be put to other uses? I think in particular of the wetlands and of the dramatic figures published only last week by the Royal Society for the Protection of Birds showing the likely decline and possible elimination of many European species. Has that been taken into account in policy-making?
  I am glad to see the Parliamentary Under-Secretary of State for Education and Science here. Last Thursday week we had an interesting debate in Committee during which the Under-Secretary of State for Foreign and Commonwealth Affairs spelt out policy on the ozone layer and on chlorofluorocarbons. I pay tribute to the work that has been done by British civil servants in the Foreign Office, who are internationally distinguished and who have a great reputation in Europe and around the world for their expertise on the Antarctic. In answer to a specific question the Prime Minister replied that the Secretary of State for the Environment was the lead Minister in all
  104
  matters relating to the ozone layer. The problem of the Arctic and the Antarctic should be handled on a European basis. Are the Government coming around to that view?
  A third matter that should be handled on a European basis—if it is not, we shall not have much effect—has to do with the rain forests. It is no good turning around to the Brazilians, the Indonesians and Laotians—my hon. Friend the Member for Vauxhall (Mr. Holland) knows a great deal about this—and telling them that the responsibility is entirely theirs. It is an international responsibility and a matter of self-interest. Is it Government policy that this should be dealt with on a European rather than a British basis?
  My third question is much shorter. The Under-Secretary will remember this from a previous incarnation when he was responsible for these matters as a Minister of the Department of Education and Science, and I believe he has a continuing interest in the issue. Clause 8 of the Bill contains a great deal of money. What is the policy towards Ispra and Karlsruhe and the other European institutions that we have debated but about which no final decision has been reached? There are certain tasks that are probably better performed on a European basis if the institutions function properly. One such task is waste management and the storage of toxic waste. For example, all the toxic waste arriving at the mouth of the Mersey creates enormous problems. Surely it would be rational to deal with that on a European basis?
  Fourthly, what is the policy towards setting aside money for a disaster fund? When I was a Member of the European Parliament I was also a member of the budget sub-committee which was responsible for going to Friuli after the earthquake. I was impressed by what the Commission did. The Parliamentary Under-Secretary of State for Education and Science will recall the disaster from his days as assistant to Sir Christopher Soames. At any rate in the early stages, the Commission did an extremely good job, whatever happened later on.
  Should not disaster operations come more and more to be done on a European basis? I am consumed by constituency problems arising from the Piper Alpha disaster, which was extremely harrowing for all concerned. Should not oil slicks, for instance, be a matter for European action rather than action by those whose rivers are most affected?
  Fifthly, as an NUR-sponsored hon. Member I ask again about policies on customs. We have trains travelling at 47 miles an hour; the French trains travel at 165 in the Pas de Calais. An all-party Channel tunnel visit takes place tomorrow and as a member of it I shall know a little more in 24 hours' time, but the briefing that NUR sponsors had from Sir Robert Reid fills us with alarm. Someone must tell the Home Office to get its act together. I believe that the Department of Transport is doing its best, but Scotland and the north of England must not be disadvantaged by inflexibility of the customs.
  My final question will be received less well. At the Hanover and Toronto summits we saw pictures of the Prime Minister. In Hanover, we saw her going up the Herrenhausen steps—that beautiful palace of Hanover—flanked as usual by Mr. Charles Powell. If Mr. Powell was so inefficient at the crucial time in January 1986 that he failed to tell his Prime Minister anything about what she should know about the role of the then Secretary of State for Trade and Industry, how is it that he remains such a crucial and powerful foreign policy adviser in the tradition

  105
  of Sir Horace Wilson? I surmise from the chuckles of Ministers that they know exactly what I am on about, thereby giving the game away. Enough said.
  8.57 pm
  Mr. Ian Taylor: Of the many speeches by Conservative Members I noted two in particular with some sadness. My hon. Friend the Member for Thanet, South (Mr. Aitken) got stuck on his worries about sovereignty—rather painfully stuck in the swing doors of the Last Chance saloon to which he referred.
  I also noted the speech of my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen), which I felt was notable for its wit, style and complete lack of facts. He addressed the central problem of whether we Conservatives want the Community and are prepared to take the consequential decisions arising from our membership of it. Those of us who believe that what the Government have achieved with the Community partners is to be lauded are not uninterested in the control of expenditure. I wish that debates on other areas of Government expenditure were treated with the same enthusiasm, pound for pound, when we scrutinise parts of our domestic budget.
  It is not surprising that the European Community budget has grown. After all, we are now in a Community of 12 member states and 320 million people. The budget, even this year after the increases, is approximately £29 billion. In relative terms, that is nearly one fifth of the United Kingdom budget. If we look at it another way, we see that our contribution to the EC budget is running at about 1 per cent. of the total United Kingdom budget.
  These are vital sums and it is important that we control them. I ask hon. Members to review them in the context of the Community that we are trying to build and the benefits that we have derived from it. The Community is leading us towards a single market, which is very much Government policy, and I suspect that it will have to be part of the policy of the Opposition if they go as far as signing the common manifesto about which my hon. Friend the Member for Shipton and Ripon (Mr. Curry) spoke. Therefore, it is not so much the magnitude of the budget that we should be discussing as the discipline required to control it and the direction that the expenditure has now taken.
  The Brussels summit in February was a notable success and showed the strength of the negotiations led by the Prime Minister and the Foreign Secretary. What did it achieve, and what are we considering? It achieved a degree of budget discipline which has not before been practised within the Community and led to a control of the common agricultural policy which has not previously been seen in the Community. It led to a shift in balance in the budget progressively away from agriculture, and that also has not previously been seen in the Community. It retained the Fontainebleau agreement and our abatement system which is of such great importance to us.
  The concept of legally binding expenditure is written into the agreement. I endorse what was said earlier. This is a new departure. There was nothing comparable in the Fontainebleau agreement. That is why we are effectively amending the treaty of Rome, an order of magnitude which gives strength to the nature of the agreements and their legally binding character.
  106
  Perhaps the Paymaster General will go a little further into the ways in which Britain will ensure that those legally binding measures are enacted. How will the legal options be used and what recourse will he consider having to the Court of Justice if there is a variation? Greater understanding here of the procedures would lead to a great deal more confidence about the nature of the agreements that have been reached.
  Budget discipline will also be helped by other factors in the Community, not least that France has become a net contributor to total funds. For example, if we look at the intergovernmental agreement that we are being asked to approve and at the order of magnitude of this year's contributions, we find that West Germany will contribute £1·16 billion, France £967 million and the United Kingdom £741 million. However, the United Kingdom position is even more favourable than that.
  The hon. Member for Hamilton (Mr. Robertson) did not give way to me earlier. If he had, I would have advised him that the IGA figure that we are discussing is an advance on own resources. We shall receive additional receipts as a consequence and,, of course, the differential amount will be treated under the abatement procedure. The arrangement is of great benefit to Britain.
  As I have said, under own resources the United Kingdom's gross contribution to the Community is little more than 1 per cent. of GNP after abatement, and that is well below the contribution of the other member states. Having secured our relatively favourable position, we find that the toal agreement derived from the Brussels summit has established the revised basis of own resources in the Community. It enshrines the reform of accounting practice, such as the ending of the old hoary accounting measures that are used to distort figures, such as the carry forward of unused budget appropriations and negative reserves. It has enforced budgetary discipline, especially in agriculture, by way of the guideline limits and the removal of exceptional circumstances through which under previous agreements the Commission regularly drove a coach and horses. It has established price proposals in the guidelines and automatic stabilisers and new rules for depreciation and treatment of agricultural stock.
  The results are a signal success for the Government. They show that when the Government give leadership in the Community they win support and are able to make significant progress and major changes. We are now talking about major changes in the budget and the common agricultural policy.
  Through our leadership we have encouraged the other countries in the Community to abolish capital controls on a phased basis. That is a remarkable event, which has not received sufficient appreciation in the House. The French Minister, in particular, has already acknowledged that the cost to France in 1990 of removing capital controls and liberalising exchange controls could be a net outflow of 200 billion francs, but he is still prepared to take the measure in the interests of moving the Community forward. We cannot have a single market with the capital controls that currently exist in member states other than Britain.
  I agree with my hon. Friend the Member for Horsham (Sir P. Hordern) that the problem is that this country so often treats the European Community in a half-hearted way. We are in, but we are not terribly enthusiastic. However, I urge the Government to build on their successes at Brussels and Hanover, to take advantage of

  107
  the agreements that are now to be ratified throughout the Community and to get stuck in and assume a proper leading role within the community.
  That will entail our deciding how the EMS is developed by becoming a member of the exchange rate mechanism. It is an incredible oversight for the Government, having succeeded in encouraging other member countries to give up capital controls, not, at the same time, to take the consequences, go into the exchange rate mechanism and take up leadership there and in the inevitable discussions about monetary policy. Moves forward are not just driven by the Commission, as if we have to fear members of the Commission as ogres. Some of us talk to businesses around the country. When they start to appreciate the benefits of the European Community, they say, "Why is it that, with those benefits, we do not take the consequences further, join the exchange rate mechanism and take the lead rather than having those questions decided by the Germans and the French?"
  If we do so, we can ensure that the Community develops on a basis of deregulation rather than on one of more and more regulation. I fear that we shall have to address that matter carefully in the next few months, during the Greek presidency, when we will hear old favourites under the new heading of social dimensions, which should be resisted.
  Finally—it is appropriate that my right hon. and learned Friend the Foreign Secretary is in his place—if we take the initiative in the economic area of the European Community, we can also continue and strengthen our role as the leader in foreign policy. This is a particularly vital period when we are beginning to open up towards the Eastern bloc and when there are many signs that that will perhaps be the key area of policy development in the next few years.
  It is not a question of giving up sovereignty; it is a question of redefining it. It is a question whether we are to be a mere outpost of a Community of 320 million people or take the leadership of that Community and ensure that the sort of policies that we as a Government would endorse will be accepted by our 11 partners.
  9.8 pm
  Mrs. Alice Mahon: Whenever I see the Government twisting and contorting over the insatiable alien that is the EEC budget, I cannot help wanting to say, "I told you so." It could not happen to a more deserving Government. The tragedy is, of course, that the Governent and the people whom they represent are not paying the full price. The full price is being paid by the skilled workers languishing on the dole. We have lost over 1 million jobs in manufacturing since we joined this expensive club. The low-paid workers in my constituency are paying a high price for food.
  I do not want to waste too much time talking about the ills of joining the Common Market because I am aware that time is short and that, whatever speeches may be made by Conservative Members, the rebellion will fizzle out when we go into the Lobbies. I want to concentrate on who will get what from the new structure and, to that end, I shall address my remarks mainly to the proposal to enlarge the structural funds.
  108
  Those funds are important to areas of unemployment, particularly those areas of high unemployment and deprivation, because they are still contributing to that increase in tax. My constituency lost assisted area status in 1981. Because we do not have assisted area status, certain EEC grants are not available. Halifax is in a textile closure area. Until the end of March, local firms can benefit to some extent from the regional fund, but the local authorities do not present such a cosy picture. What is the good of grants being available from Europe when, because of their spiteful attitude to local government, the Government have prevented councils from taking advantage of such grants? The councils have also lost out heavily on regional grants because of Government policy towards local government.
  In Haifax, there is to be a major factory closure, KP Foods. Conservative Members who talk about the benefits of 1992 should listen carefully. When the KP Foods factory closes in 12 months' time, it will cost nearly 1,000 jobs. In answer to a question from a colleague about the internal market in 1992, one of the directors of KP Foods said:
  "Internal market 1992.
  You are right to wonder if this had been considered in our appraisal of the future biscuit-making capacity and efficiency because it certainly has. There is no doubt that there will be increasing competition from many sources in the EEC for a share in the United Kingdom Market. This is happening now and imports from the continent are already rising".
  That is clear confirmation.
  Mr. Bob Cryer: Does my hon. Friend agree that that internal market will lose us jobs in 1992? My hon. Friend will be interested to learn that I sent a copy of that letter to Lord Young, and asked him to use it in his advertising campaign—on which he is spending £3·5 million—extolling all the alleged virtues of the internal market in 1992, to explain to people that the internal market will lose jobs in Bradford, South and in Halifax.
  Mrs. Mahon: My hon. Friend is absolutely right and I welcome his intervention. Halifax has also been subjected to the Nestle takeover of Rowntree. I attended both meetings in the House and questioned the directors of both companies in detail about the effects of the takeover. I have also received replies to letters which have confirmed that part of the reason for the takeover and the subsequent rationalisation is 1992. It will be quite devastating for towns that have already lost out because of Europe.
  Under the European regional development grant, Halifax has been caught in a Catch 22 situation. We do not have assisted area status, but in March, we shall also lose out under the European social fund. The KP Foods factory would have gained grant under the European social fund, but will now lose assisted area status in Europe also.
  It is particularly hard for the employees of that factory in Halifax because it employs mainly women and we shall now lose retraining grants which would have been available for those women, because of the changes in grant allocation. The work force is 70 per cent. women, and 80 per cent. are part-time. Approximately 550 women will lose their jobs but will not appear on the unemployment figures because of the way in which the Government calculate figures. The Government are presenting unemployment statistics that will be detrimental to our own people, because they will lose grant. That is

  109
  disgraceful. The Government are denying our own people the right to funds which are, after all, all that we are getting back for a very huge payment.
  I have listened to most of the debate and what I have heard does not convince me that things will get any better. I believe that things will get much worse. There is a crisis in the regions and what I will call "invisible" unemployment. The "disappeared" exist. They know that they exist and hon. Members who represent towns like Halifax know that they exist. I challenge whoever replies to this debate to come to my constituency and see the real problems caused by our being in Europe. In particular, he should come and see the "invisible" women at KP Foods who will not show up in the Government's statistics. I assure hon. Members that those women exist.
  9.11 pm
  Mr. William Cash: I welcome the Bill primarily because it is an opportunity for us, within the procedures of the House, to control legislation. Unlike so much other legislation which passes through the Select Committee on European Legislation, of which I am a member, this Bill gives us an opportunity to comment upon and consider the implications. That point has been made when we consider the wide variety of views that have been expressed on the Bill's merits today.
  When we talk about the percentage of money involved in relation to the overall United Kingdom budget, we see that, although the Bill would increase the resources available to the Community by 25 per cent., in terms of the overall volume of money passing through our economy, that is still a relatively small sum. I am far less concerned about that than I am about the other aspects of the Community and what I refer to as "creeping federalism", expressed best in the views of Mr. Jacques Delors, the President of the European Commission, only some 10 days ago.
  I wrote an article in The Times shortly before that in which I warned about creeping federalism. It is naive and absurd for us to ignore the fact that there are people in the European Community and elsewhere who would like to see a federal Europe.
  The other day I was on a television programme with a Conservative Member of the European Parliament. Quite expressly, he said that he was a federalist and that my right hon. Friend the Prime Minister had got it all wrong. He said that the Conservative party would have to come round to his point of view.
  Recently we dealt with the liberalisation of telecommunications. Despite our Government's protests and those of most member states, the European Commission is determined to ignore those protests and introduce that measure on the basis of what it wants rather than to consider the views of the Council of Ministers, the European Parliament, the Economic and Social Committee—ECOSOC—and the national Parliaments. We should take very seriously what Mr. Delors is saying.
  There are other signs of creeping federalism. I am in favour of a European Community which can provide opportunities that are exemplified by the Single European Act. It is possible to ensure that we gain the benefits and create a mutual and reciprocal Europe and at the same time retain greater effective control over what is happening in the House.
  110
  We had a debate on the glorious revolution the other day. We would not want to throw away the advantages that we have accumulated over the past three centuries in return for inverted control over our affairs. We must accept the opportunity to maintain the rights of the people who elected us and speak for them in this House on matters that increasingly affect them.
  Mr. Delors is right: about 80 per cent. of the industrial, commercial and social legislation affecting the electorate is increasingly being moved into the European domain. It is up to us—as I tried to point out in my article in The Times—to ensure that we are truly involved. It is through that involvement and representation that we shall be able to demonstrate our commitment to the greater purpose and to represent the electorate more effectively.
  9.20 pm
  Mr. Rhodri Morgan: I am pleased to have the opportunity to make one or two remarks that follow from the Foreign Secretary's introduction to the debate. He said that one purpose of the change in the budget system was in the increase in the structural fund required in the context of 1992. I hope that I have quoted him correctly. He implied that the gap in the standard of living between the south and east and the north and west of this country is likely to remain a serious problem for public policy. I assume that he did not mean the alternative interpretation, which is that the regional differences within the Community, between the Mediterranean regions, which have never been industrialised, and the industrial regions, will remain wide.
  If the Government had represented the whole country, rather than being dominated by the south and the east, they would have effected a different compromise between their desire to see discipline brought into agricultural expenditure and the need to explain the structural funds to solve the north-south, east-west gap in this country, as well as the problems of the Mediterranean regions.
  This is a compromise; it is not a victory. The Government love referring to victories, and Back Benchers have been falling into that trap tonight. Every time Ministers return from a Council of Ministers meeting, they are like slightly cultured football hooligans, always talking about victory, success, and leadership, but never about compromise, which is what they have just made. Obviously, the legislation is a compromise, and it is a Tory compromise. It does not take sufficient account of the needs of the regions.
  However, the Foreign Secretary said that, in the context of 1992, the north and west of this country—Wales, Scotland and the northern region, not just Northern Ireland, which he emphasised—will have serious problems. Therefore, we need a greater emphasis on the regional and structural funds. We need them to be oriented to solving the problems in the industrial regions and to addressing the question of how those regions will catch up with the south and east, which have all the geographical advantages of being next to the Channel tunnel and the centre of the Community as an economic market.
  I hope that the Paymaster General will give us an explanation of what he will do to bend the Community and its policies towards a solution of the problems of Wales and the other disadvantaged regions of the Community.
  9.22 pm
  Mr. Stuart Holland: We have had a wide-ranging debate, which is appropriate because the Bill is concerned with the Community budget until the early 1990s and the allegedly magic date of 1992. We have covered major issues, including sovereignty and whether the Community brings about a loss of sovereignty rather than its extension. We have discussed internationalism, federalism, confederalism and regional interests, and it is clear that there is division on many of those issues. Government and Opposition Members have different views on those matters and that is understandable.
  The Community itself is not an unchanging institution and has changed dramatically over the years. When the Coal and Steel Community was founded in the early 1950s, it was described by Maurice Schumann, the then French Secretary of State for Foreign Affairs in glowing terms. He said that the Coal and Steel Community would mean that war between France and Germany would be not only morally unthinkable, but materially impossible. Sadly, that forward-looking initiative was nonetheless retrospective. The main issue facing Europe was not a possible war between France and Germany, but future relations between east and west Europe, to which some hon. Members, notably the hon. Member for Skipton and Ripon (Mr. Curry) referred. They asked how the Community should now respond to the recent overtures of Comecon, the Eastern European countries and the Soviet Union.
  My hon. Friend the Member for Bridgend (Mr. Griffiths) made a telling point. When we talk about sovereignty and effective parliamentary democracy, just how effect is the democracy in this Chamber on this Bill? I am advised by those with experience of this matter that it is virtually impossible to amend the Bill. In one sense this reflects the Government's majority, in that, despite the dissenting voices of some Conservative Members, they can use it to get the Bill through. But in any effective democracy it should be possible to amend a Bill both in Committee and on the Floor of the House. It should be possible to use the scalpel rather than the steamroller. Otherwise, we are applying double standards in saying that the European Assembly is an ineffective talking shop which cannot restrain the increase in agricultural spending when it is not clear whether we can do so.
  My hon. Friend the Member for Newham, South (Mr. Spearing) also made some telling points, such as we have become accustomed to from him. He spoke about the considerable significance of the Bill, especially as it reflects the Single European Act which, in terms of public perception, has quietly transformed the long-standing Gaullist veto agreed at the Luxembourg compromise in January 1966 into the reintroduction of majority voting. It is argued that increased payments will be made which have not yet been approved by our Parliament and which may have been opposed by British Ministers in the Council of Ministers. We shall have a 25 per cent. increase in real terms in EC expenditure.
  Hon. Friends, especially my hon. Friend the Member for Hamilton (Mr. Robertson), have already pointed out that commitments at Fontainebleau have not been realised and we have not managed to restrain spending on the common agricultural policy. One of the most effective ways of reducing spending under the CAP would be to do something not yet mentioned in the debate, which is to
  112
  achieve a reduction in prices inside the Community. That should include threshold prices, and commodities which are produced by other countries, particularly the least developed countries, which can achieve no comparative advantage in the modern and advanced technology industries open to the Community. They are highly, if not completely, dependent on such access for an increase in their income and standard of living. The European Community has not addressed that sufficiently, just as its aid disbursement has been notoriously slow and ineffective.
  The Community has further problems with the regional fund. It may be said that the structural funds, including the regional fund, will increase by x, y or z per cent., and some of those percentages look dramatic. But we should bear in mind how ineffective the Community regional fund has been to date. In recent years it has varied between one twentieth and less than one fifteenth of the total EC budget. Since total EEC spending itself for most of that period has been less than 1 per cent. of GDP, this amounts to a very minor fraction of the Community's GDP as a whole. Granted that only one tenth of the regional budget changes hands between member countries, one then has about one two hundredth of 1 per cent. of the Community's GDP changing hands, so one is talking about one which comes within the accounting errors of virtually any well-managed international agency.
  So I am not terrified, and I think that other Opposition Members are certainly not terrified, by an increase in the spending under the regional fund. What we want to see is effective spending under that regional fund and we should get some social indicators for that spending. The issue of juste retour should be addressed in a new sense. Jacques Delors has argued for a social market and social criteria inside the Community and if we are talking about that we should make certain that there is a net shift of resources towards the less privileged people in the lesser and least developed regions of the Community. However, it does not make any sense to have such a spending programme if, as has traditionally been the case in the Community, it is only to be on infrastructure rather than on enterprise.
  It is absolutely classic to say, when in doubt, build a road. When doubly in doubt, build oneself a free enterprise zone, which is an elaborate form of the advance factory building programme that we have in the United Kingdom. We have learnt through our experience in this country and as introduced by the Labour Government in the 1970s, that one needs a much more public entrepreneurial approach. That is what we argued for in the case of the Scottish and Welsh Development Agencies. The Government have not scrapped those agencies—they have not dared to do so.
  Yet when the Community comes forward with a reasonable proposal for local and regional government sponsorship of entrepreneurial ventures to strengthen the regional fabric of the Community, as we learnt in the most recent debate touching on those issues in May, the Government will not support that. If I may say it to the hon. Member for Skipton and Ripon, that is one difference between our position and that of the Government.
  The other aspects of such difference are certainly easy to elaborate. I can illustrate them by what the Foreign Secretary said in the opening debate. I was entertained when he said that the Government would seek finance on a sound basis, that some progress had been made at

  113
  Hanover, and that we would find the best way of doing this. He then claimed that the agenda had been set by the British.
  I say to him and again to the hon. Member for Skipton and Ripon that that agenda was not in fact set by the British. It was set by Andreas Papandreou at the December 1984 summit in Athens and echoed by Francois Mitterrand in June 1985. It was there, when the Community was stuck in the mud of the common agricultural policy and could not set a serious agenda on any major issue affecting either the recovery of the European economy, the restructuring of European industry or our relations with the Third world, that it was put by a Socialist Prime Minister and a Socialist President that we needed fundamentally to rethink the institutions of the Community. They proposed a new Messina conference. That conference has the same relation to the Rome treaty as, for example, Bretton Woods has to international monetary affairs. It was from their arguments and their pressure that much of the recent change that we have seen has been realised.
  Jacques Delors has been mentioned more than once during the debate. The hon. Member for Skipton and Ripon argues that the proposals coming from the Government or the Community are not accepted by us and asks how our position is different. It is very different, as is Jacques Delors' position. He has argued that the liberalised internal market must be complemented by a social market, that there must be a raising of practices at work to the best standards available in the Community, that we have to achieve an opening of the books, with accountability and industrial democracy in leading enterprises in the Community, and that we have to take measures to promote small and medium firms and enable them to network and gain the advantages from mutual size through joint ventures in Community. For many years Jacques Delors has notably argued that we need a recovery programme in the European Community.
  Our Government are identified with none of those proposals. Yet such proposals could make 1992 of real interest to working people throughout Europe. At the moment all we have is the proposal for the harmonisation of passport covers, but not the abolition of tariff barriers. A harmonisation mania has taken over without the willingness for joint international action to co-operate on some of the urgent issues that face Europe, especially joint action for jobs and joint accountability of the new multinational companies that are dominating the Community.
  When I first raised the matter of multinationals with the Government I stressed the major increase in the market share held by the top 100 companies in the Community from the early 1960s to the 1980s. They have doubled their share of the market. That increase is coming home to the public, through the press, because of bids made by multinational companies for British companies. I would not say that all of my hon. Friends are against such bids, but they want a means of accountability for such bids and a public policy framework that countervails the power of multinational capital in Europe. My hon. Friends want work practices safeguarded and workers rights extended. Within that framework our position differs from the Government about what 1992 is or should be about.
  We believe that the GDP base is a better foundation for budget assessment. It is interesting to see from the proposals before us that there will be a working party of
  114
  the Commission, which will constantly evaluate what GDP is about. I was quite amused when one hon. Member said, almost spitting the words, "the Italians". By implication he was talking about the Italian black market and meant that the Italians' GDP would be understated and therefore their contribution would be less than it should be.
  As it happens, one reason for the increase in the growth registered in the Italian economy is precisely because the Italians have made estimates of their black economy and their shadow economy and included them within their assessment. By and large such things can be sorted out provided that we can break into the private language game between the professional economists and get some sense into the argument.
  If we are to have a new committee for accounting within the Community, we should implement articles 85 and 86 of the treaty of Rome. We should gain transparency on the activities of the octoploid multinational enterprises, which are presently not accountable to any Community procedure—they are accountable to virtually nobody but themselves. If we were to do that we would discover a lot more public interest in what is happening in the Community.
  The position that we argue is not federalist, it is internationalist. We argue for joint international action within the Community, but, in contrast with some hon. Members on both sides of the House, I would not argue that this denies one's sovereignty. Effective joint international action can extend one's sovereignty and it is a collective expression of it. The contrast therefore is not between nationalism and supranationalism. The case must be made for changing the political agenda of the Community and for putting on its agenda and of our Parliament the issues that concern not only our people, but the peoples of Italy, Spain, West Germany and elsewhere. The tragedy is that our Government will simply not join or extend that debate.
  The Prime Minister has dismayed her counterparts abroad—and I am not just talking about Socialist Prime Ministers or Heads of State. When the Prime Minister kept on about the rebate and only the rebate, Mr. Chirac made a remark that was something like "I've had enough of this cracking of nuts." It is quite clear that the Prime Minister could not co-operate with the then Prime Minister of France. She cannot even co-operate with the present Chancellor of West Germany.
  In coming to a conclusion in supporting the reasoned amendment that the Opposition have put forward, I draw attention to a report by Patricia Clough in The Independent on 8 July. I have never met Patricia Clough and I do not know her views on Community matters, but she wrote:
  "Highly influential German politicians, who wish Britain well, are intensely irritated by the way Mrs. Thatcher has been built up in Britain as the senior and most prestigious European statesperson who can speak for Europe on a world platform. They are staggered that this can be claimed of a person who has been, and is still, obstructing progress to European unity. 'She does not speak for Europeans. She does not think like a European and she does not even try to understand them' said one. 'She only speaks for Britain's narrow provincial interests.'"
  That is the bottom line of the weakness and limitation of the Government's position. It is one reason why we have argued for an extension of the structural funds—for spending on the social fund, the environment, regional

  115
  development and the developing countries. It is one of the reasons why I am sure that my right hon. and hon. Friends will join me in supporting the reasoned amendment in the Lobby this evening.
  9.40 pm
  The Paymaster General (Mr. Peter Brooke): This has been a colourful debate. My hon. Friend the Member for Thanet, South (Mr. Aitken) talked about Louis XIV and the Last Chance saloon. My hon. Friend the Member for Horsham (Sir P. Hordern) played a role as the parliamentary golf champion. The hon. Member for Linlithgow (Mr. Dalyell), not disagreeably, but irrelevantly, introduced Mr. Charles Powell into the debate.
  The hon. Member for Hamilton (Mr. Robertson), in opening the debate on behalf of the Opposition, spent an enormous amount of time on the presence of my right hon. and learned Friend the Foreign Secretary, a presence which all of my right hon. and hon. Friends welcomed. I can assume only that the time that the hon. Gentleman devoted to that was designed to conceal the absence from the Opposition Front Bench of the Leader of the Opposition, the right hon. Member for Manchester, Gorton (Mr. Kaufman) and the right hon. and learned Member for Monklands, East (Mr. Smith).
  I shall comment on several of the subjects that have been raised and I shall take them in the order in which they were raised. The structural funds were spoken of initially by the hon. Member for Hamilton, the hon. Members for Gateshead, East (Ms. Quin), for Motherwell, North (Dr. Reid), for Bridgend (Mr. Griffiths), for Halifax (Mrs. Mahon) and for Cardiff, West (Mr. Morgan), and by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).
  I would never describe my hon. Friend as a member of a small and disgusting minority, as he did. I thought that he was a little less than generous in his remarks about the Whips' Office and the documentation that is available there. I sensed that he might not be supporting the Government. I am sorry that he is not subject to the same military discipline as that which he described when referring to my hon. Friend the Member for Horsham at an earlier stage.
  The hon. Member for Gateshead, East raised a number of subjects when talking about the structural funds and I shall respond to the general topics. In that process, I hope that I shall deal with the contributions of other hon. Members. The United Kingdom can be expected to benefit from all of the five priority objectives which were agreed at Brussels and enshrined in the framework regulations.
  As the hon. Member for Gateshead, East said, Northern Ireland has been included in the agreed list of less-developed regions, in recognition of its special political and economic difficulties, although it does not meet the standards or criteria for inclusion under the objective. Most of the United Kingdom assisted areas should continue to be eligible for support under the second objective, which is to help with the problems of industrial decline. That includes the major areas of decline. Help for the peripheral areas, such as the Highlands and Islands, rural Wales, and many parts of south-west England, will
  116
  be available under the fifth objective. The third objective is to combat long-term unemployment and the fourth is to improve training, especially for young people.
  The social fund will continue to be focused on activities that are priorities for the United Kingdom, such as youth training and assistance for the long-term unemployed. In 1988, social fund commitments for the United Kingdom totalled over £400 million, and the funds as a whole total £750 million.
  As I have said, the fifth objective is to promote rural development. It is important that a link has been made between the operation of the funds and the reform of the CAP. There will also be commercial opportunities for British companies and employers in other parts of the Community in terms of the application of funds there.
  The hon. Member for Halifax invited me to her constituency. I may have to go in my capacity as chairman of the Conservative party rather than as Paymaster General, but I gladly accept her invitation. The hon. Member for Gateshead, East and other hon. Members referred to research. I stress that it is necessary to ensure that we get value for money in research and development expenditure and that we do not fund bad research.
  My right hon. Friend the Member for Worthing (Mr. Higgins) was the first to mention GNP statistics, and he was followed by the hon. Member for Newham, South (Mr. Spearing) and my hon. Friend the Member for Thanet, South. It is precisely because our statistics and those of others are not good enough that the European Council decided in February that a directive was needed on the harmonisation of GNP statistics.
  The directive's aim, which has been agreed by the Council, is to guarantee the comparability and uniformity of national GNP statistics and to provide for them to be verified and revised as necessary. The directive explicitly provides for the scrutiny of member states' GNP estimates by a management committee containing national experts of all member states. In reply to my hon. Friend the Member for Thanet, South, I should say that hon. Members must be aware that many of the weaknesses that apply to GNP statistics apply to VAT statistics, too.
  The hon. Member for Hamilton mentioned the IGA and implied that it is on top of the increase in own resources provided for in the Bill. Total payments to the budget for 1988, including the IGA and own resources payments, will be within the new ceiling of 1·15 per cent. of GNP. He seemed to forget that the IGA is a gross contribution that will give rise both to extra receipts by the United Kingdom and to extra abatement next year. Expressing the IGA contribution as a percentage of our net contribution is not comparing like with like.
  My right hon. Friend the Member for Worthing joined the hon. Member for Hamilton, and was joined by my hon. Friend the Member for Esher (Mr. Taylor), on the subject of legal enforceability. The Council can limit the exercise of its powers over obligatory expenditure, on which it has the last word, but it cannot limit the powers of the European Parliament over non-obligatory expenditure, on which the Parliament has the last word. We could not have obtained the agreement of other member states to amend the treaty to limit significantly the budgetary powers of the Parliament—nor was such a treaty amendment necessary. But by imposing own resources sub-ceilings, we can limit the amount of

  117
  resources available for total spending. Given the limits on agricultural spending, that limits the resources for non-obligatory expenditure, too.
  The hon. Members for Hamilton and for Newham, South mentioned the effect on our gross contribution of the increase in the own resources ceiling. On the basis of the 1988 figures, the increase in the own resources ceiling 1·2 per cent. of GNP will increase our gross contribution, before abatement, by up to a maximum of a little under £1 billion. However, that will be greatly offset by additional receipts and some extra abatement.
  The right hon. Member for Bethnal Green and Stepney (Mr. Shore) may have misunderstood the effect of moving from 1 per cent. VAT to 1·4 per cent., and described it as a 40 per cent. increase in own resources. Other aspects of own resources need to be taken into account, so the overall effect was less—some 15 or 20 per cent.
  My hon. Friend the Member for Horsham mentioned the public expenditure White Paper projection of net payments to the Community institutions in 1988–89. That projection was £800 million, not £1,470 million. The £1,470 million related to 1989–90. The Brussels package will increase our net payments by £200 million to £300 million a year, but I fear that my hon. Friend will have to wait until the Autumn Statement for a more detailed projection, giving revised figures year by year.
  The hon. Member for Bridgend referred to the fourth resource. On the basis of the 1988 figures, GNP contributions could amount to up to 25 per cent. of the budget, if expenditure were at the 1·2 per cent. of GNP ceiling. The Government could not accept amendment of the Bill to exclude GNP contributions from own resources: that would be tantamount to rejecting the new own resources decision. The Government support the introduction of GNP contributions, as they bring own resources more into line with relative prosperity.
  The hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) apologised to me for having to leave the debate early to go north. He referred first to what had been said by Mr. Delors. My hon. Friend the Member for Northampton, North (Mr. Marlow), who also apologised for having to leave early, the right hon. Member for Bethnal Green and Stepney and my hon. Friend the Member for Thanet, South also referred to Mr. Delors.
  I am aware of the statement by the President of the Commission to the European Parliament in Strasbourg on 6 July. It reflected Mr. Delors' personal view.[Interruption.] If the hon. Member for Walsall, North (Mr. Winnick), who has been here for only part of the debate, will excuse me, I have read the speech in French. Mr. Delors explained that he was speaking personally. It is important to remember the audience that he was addressing.
  Mr. Delors' views do not reflect those of Her Majesty's Government. We do not believe that in 10 years' time 80 per cent. of economic, social and fiscal legislation will originate in the Community. Mr. Delors' statement was more indicative of the audience that he was addressing than of the true facts. I suspect that his intervention was intended to stress the need for national Parliaments not to accept uncritically what is happening in Brussels. He did not include this House in his remarks.
  My right hon. Friend the Member for Worthing referred to the monitoring of agricultural expenditure and sought an assurance that agricultural expenditure would be properly monitored. I am happy to give him that
  118
  assurance. Under article 6 of the budget discipline decision, the Commission will submit monthly reports on the development of agricultural expenditure, sector by sector, both to the Council of Ministers and to the European Parliament.
  Mr. Higgins: Many hon. Members are puzzled by what my right hon. and learned Friend the Foreign Secretary said, and my right hon. Friend has just repeated that obligatory expenditure will be subject to binding legal restraints, or budgetary discipline, but that that will not apply to non-obligatory expenditure. My right hon. and learned Friend also said that none the less there is an overall legally binding budgetary discipline and that therefore we need not worry about the fact that it does not apply to non-obligatory expenditure. We are puzzled by that. Perhaps my right hon. Friend will spell it out. if it means merely the GNP ceiling, that is not an effective measure.
  Mr. Brooke: The inter-institutional agreement that was approved by the Ecofin Council on 13 June, and by the European Parliament on 15 June, is a political agreement on the procedural and financial framework for implementing the conclusions of the Brussels European Council on budgetary discipline and the level of expenditure. The reference framework for the agreement is the financial perspective for 1988 to 1992, drawn up in accordance with the Brussels conclusions. The perspective will be subject to technical adjustments—for example, to update it to current prices. Other revisions to individual elements can be made only by agreement between Council and Parliament and then only within the overall expenditure ceiling, plus a safety margin for unforeseen expenditure of 0·03 per cent. of GNP. The payment ceilings in the inter-institutional agreement, together with the safety margin, constitute the annual own resources sub-ceilings, set out in the own resources decision. The ORD also includes for the first time a ceiling on commitments.
  It would not be possible to have such a legally binding instrument on budgetary discipline for non-obligatory expenditure, because it would fetter the powers of the Parliament that I have described. The inter-institutional agreement is a political agreement between the institutions, and the sub-ceilings in the ORD are a legally binding constraint on both revenue and overall expenditure. Given the legally binding limit on agricultural and on other obligatory spending, the sub-ceilings necessarily limit the amount available for non-obligatory expenditure.
  My hon. Friends the Members for Clwyd, North-West (Sir A. Meyer), for Horsham, for Skipton and Ripon (Mr. Curry), for Esher (Mr. Taylor) and for Stafford (Mr. Cash) all made speeches that varied between the eloquent and the pithy in supporting the Community.
  The hon. Member for Linlithgow asked me six questions, the first five of which were rather more relevant. and serious than the last. Nevertheless, he indicated by the tone of his questions his basic support for the Community. As for his question about the American drought, it is too early to assess its precise impact on the Community budget. If the recent increase in world prices for many commodities is sustained, expenditure on Community subsidies should fall. I do not accept that occasional adverse weather justifies a policy of maintaining large food stocks in the Community. I have seen a recent report that

  119
  the United States has in store six months' supply of food, and there is therefore no reason to expect any serious disruption in food supplies.
  Dr. Reid: Can the Minister explain to the House what he meant by the Government continuing to monitor agricultural expenditure? Once, there was a Scottish goalkeeper named Frank Haffey who, in retrospect, could be said to have monitored the ball going into the net behind him at Wembley. Is that the kind of monitoring that the Minister has in mind?
  Mr. Brooke: I congratulate the hon. Member for Motherwell, North on his analogy. The monitoring takes the form of reporting by the Commission to the Council. As the hon. Gentleman knows, that reporting process places an obligation on the Commission and on the Council to respond to the situation in which they find themselves.
  The hon. Member for Vauxhall (Mr. Holland) referred to the amendment which the hon. Member for Hamilton moved on behalf of the Opposition. Going back into history, there was a speech made by the now noble Lord Callaghan, in the heartlands of the Labour party, in Islington, on 26 April 1975, when he said:
  "In the matter of the Budget, we made a flat request that Britain's share should be reduced in certain circumstances … Long and arduous negotiations produced a satisfactory result. Britain will now pay less."
  The effect of those renegotiations in 1974–75 was that they did not save us a single ecu.
  By comparison, my right hon. Friend the Prime Minister said at Luxembourg on 18 October 1979:
  "Britain cannot accept the present situation. It is demonstrably unjust. It is politically indefensible … the balance is not compatible with the spirit of the Community. Its continuation would undermine the sense of solidarity and common obligation which lies at the base of Community endeavour."
  As a consequence of the Government's actions, we achieved negotiated refunds of more than £2·5 billion between 1980 and 1984, and the Fontainebleau abatement has been worth £3 billion since then.
  The hon. Member for Newham, South quoted Latin. I have long been conscious that the Latin word for left is "sinister". I say to my hon. Friend the Member for Thanet, South, who placed Mr. Delors in the Last Chance saloon, that Conservative Members will recall that Mr. Delors is a Socialist.
  Question put, That the amendment be made:—
  The House divided: Ayes 184, Noes 330.

  Division No. 403]

  [9.59 pm

  AYES

  Abbott, Ms Diane

  Body, Sir Richard

  Adams, Allen (Paisley N)

  Boyes, Roland

  Allen, Graham

  Bradley, Keith

  Anderson, Donald

  Bray, Dr Jeremy

  Archer, Rt Hon Peter

  Brown, Gordon (D'mline E)

  Armstrong, Hilary

  Brown, Nicholas (Newcastle E)

  Ashley, Rt Hon Jack

  Brown, Ron (Edinburgh Leith)

  Barnes, Harry (Derbyshire NE)

  Buchan, Norman

  Barron, Kevin

  Buckley, George J.

  Beckett, Margaret

  Campbell, Ron (Blyth Valley)

  Bell, Stuart

  Campbell-Savours, D. N.

  Bennett, A. F. (D'nt'n & R'dish)

  Canavan, Dennis

  Bermingham, Gerald

  Clark, Dr David (S Shields)

  Blunkett, David

  Clarke, Tom (Monklands W)

  Boateng, Paul

  Clay, Bob

  120

  Clelland, David

  Loyden, Eddie

  Clwyd, Mrs Ann

  McAllion, John

  Cohen, Harry

  McAvoy, Thomas

  Coleman, Donald

  McCartney, Ian

  Cook, Frank (Stockton N)

  Macdonald, Calum A.

  Cook, Robin (Livingston)

  McFall, John

  Corbett, Robin

  McKelvey, William

  Corbyn, Jeremy

  McLeish, Henry

  Cousins, Jim

  McNamara, Kevin

  Cryer, Bob

  McTaggart, Bob

  Cummings, John

  McWilliam, John

  Cunliffe, Lawrence

  Madden, Max

  Dalyell, Tam

  Mahon, Mrs Alice

  Davies, Rt Hon Denzil (Llanelli)

  Marek, Dr John

  Davies, Ron (Caerphilly)

  Marshall, Jim (Leicester S)

  Dewar, Donald

  Martin, Michael J. (Springburn)

  Dixon, Don

  Martlew, Eric

  Dobson, Frank

  Maxton, John

  Doran, Frank

  Meacher, Michael

  Duffy, A. E. P.

  Meale, Alan

  Dunnachie, Jimmy

  Michael, Alun

  Eadie, Alexander

  Millan, Rt Hon Bruce

  Eastham, Ken

  Moonie, Dr Lewis

  Evans, John (St Helens N)

  Morgan, Rhodri

  Ewing, Harry (Falkirk E)

  Morley, Elliott

  Fatchett, Derek

  Morris, Rt Hon A. (W'shawe)

  Faulds, Andrew

  Morris, Rt Hon J. (Aberavon)

  Field, Frank (Birkenhead)

  Mowlam, Marjorie

  Fields, Terry (L'pool B G'n)

  Mullin, Chris

  Flannery, Martin

  Murphy, Paul

  Flynn, Paul

  Oakes, Rt Hon Gordon

  Foot, Rt Hon Michael

  O'Neill, Martin

  Foster, Derek

  Orme, Rt Hon Stanley-

  Fraser, John

  Parry, Robert

  Fyfe, Maria

  Pike, Peter L.

  Galbraith, Sam

  Powell, Ray (Ogmore)

  Galloway, George

  Primarolo, Dawn

  Garrett, John (Norwich South)

  Quin, Ms Joyce

  Garrett, Ted (Wallsend)

  Radice, Giles

  George, Bruce

  Redmond, Martin

  Godman, Dr Norman A.

  Rees, Rt Hon Merlyn

  Gordon, Mildred

  Reid, Dr John

  Gould, Bryan

  Richardson, Jo

  Graham, Thomas

  Robertson, George

  Grant, Bernie (Tottenham)

  Robinson, Geoffrey

  Griffiths, Nigel (Edinburgh S)

  Rogers, Allan

  Griffiths, Win (Bridgend)

  Rooker, Jeff

  Grocott, Bruce

  Ross, Ernie (Dundee W)

  Harman, Ms Harriet

  Rowlands, Ted

  Hattersley, Rt Hon Roy

  Sedgemore, Brian

  Haynes, Frank

  Sheerman, Barry

  Healey, Rt Hon Denis

  Sheldon, Rt Hon Robert

  Heffer, Eric S.

  Shore, Rt Hon Peter

  Hinchliffe, David

  Short, Clare

  Hogg, N. (C'nauld & Kilsyth)

  Skinner, Dennis

  Holland, Stuart

  Smith, Andrew (Oxford E)

  Home Robertson, John

  Smith, C. (Isl'ton & F'bury)

  Hood, Jimmy

  Snape, Peter

  Howarth, George (Knowsley N)

  Spearing, Nigel

  Howell, Rt Hon D. (S'heath)

  Steinberg, Gerry

  Hughes, John (Coventry NE)

  Stott, Roger

  Hughes, Robert (Aberdeen N)

  Thompson, Jack (Wansbeck)

  Hughes, Roy (Newport E)

  Turner, Dennis

  Hughes, Sean (Knowsley S)

  Vaz, Keith

  Illsley, Eric

  Wall, Pat

  Ingram, Adam

  Wardell, Gareth (Gower)

  Janner, Greville

  Wareing, Robert N.

  John, Brynmor

  Welsh, Michael (Doncaster N)

  Jones, Martyn (Clwyd S W)

  Williams, Rt Hon Alan

  Kaufman, Rt Hon Gerald

  Williams, Alan W. (Carm'then)

  Lambie, David

  Wilson, Brian

  Lamond, James

  Winnick, David

  Leadbitter, Ted

  Wise, Mrs Audrey

  Leighton, Ron

  Worthington, Tony

  Lestor, Joan (Eccles)

  Wray, Jimmy

  Lewis, Terry

  Litherland, Robert

  Tellers for the Ayes:

  Lloyd, Tony (Stretford)

  Mr. Allen McKay and

  Lofthouse, Geoffrey

  Mrs. Llin Golding.

  121

  NOES

  Alexander, Richard

  Dykes, Hugh

  Alison, Rt Hon Michael

  Eggar, Tim

  Allason, Rupert

  Emery, Sir Peter

  Amess, David

  Evans, David (Welwyn Hatf'd)

  Amos, Alan

  Evennett, David

  Arbuthnot, James

  Fallon, Michael

  Arnold, Jacques (Gravesham)

  Favell, Tony

  Ashby, David

  Fearn, Ronald

  Atkins, Robert

  Fenner, Dame Peggy

  Atkinson, David

  Field, Barry (Isle of Wight)

  Baker, Rt Hon K. (Mole Valley)

  Finsberg, Sir Geoffrey

  Baker, Nicholas (Dorset N)

  Fookes, Miss Janet

  Baldry, Tony

  Forman, Nigel

  Banks, Robert (Harrogate)

  Forsyth, Michael (Stirling)

  Batiste, Spencer

  Forth, Eric

  Beaumont-Dark, Anthony

  Fowler, Rt Hon Norman

  Bellingham, Henry

  Fox, Sir Marcus

  Bendall, Vivian

  Franks, Cecil

  Bennett, Nicholas (Pembroke)

  Freeman, Roger

  Benyon, W.

  French, Douglas

  Bevan, David Gilroy

  Gale, Roger

  Biggs-Davison, Sir John

  Gardiner, George

  Blackburn, Dr John G.

  Gill, Christopher

  Blaker, Rt Hon Sir Peter

  Gilmour, Rt Hon Sir Ian

  Bonsor, Sir Nicholas

  Glyn, Dr Alan

  Boswell, Tim

  Goodlad, Alastair

  Bottomley, Peter

  Goodson-Wickes, Dr Charles

  Bottomley, Mrs Virginia

  Gorman, Mrs Teresa

  Bowden, A (Brighton K'pto'n)

  Gorst, John

  Bowden, Gerald (Dulwich)

  Gow, Ian

  Bowis, John

  Grant, Sir Anthony (CambsSW)

  Boyson, Rt Hon Dr Sir Rhodes

  Greenway, Harry (Eating N)

  Braine, Rt Hon Sir Bernard

  Greenway, John (Ryedale)

  Brandon-Bravo, Martin

  Gregory, Conal

  Brazier, Julian

  Griffiths, Sir Eldon (Bury St E')

  Bright, Graham

  Griffiths, Peter (Portsmouth N)

  Brittan, Rt Hon Leon

  Grist, Ian

  Brooke, Rt Hon Peter

  Ground, Patrick

  Brown, Michael (Brigg & Cl't's)

  Grylls, Michael

  Browne, John (Winchester)

  Gummer, Rt Hon John Selwyn

  Bruce, Ian (Dorset South)

  Hamilton, Hon Archie (Epsom)

  Buck, Sir Antony

  Hamilton, Neil (Tatton)

  Burns, Simon

  Hanley, Jeremy

  Burt, Alistair

  Hannam,John

  Butcher, John

  Hargreaves, A. (B'ham H'll Gr')

  Butler, Chris

  Hargreaves, Ken (Hyndburn)

  Butterfill, John

  Harris, David

  Campbell, Menzies (Fife NE)

  Haselhurst, Alan

  Carlile, Alex (Mont'g)

  Hawkins, Christopher

  Carlisle, John, (Luton N)

  Hayes, Jerry

  Carlisle, Kenneth (Lincoln)

  Hayhoe, Rt Hon Sir Barney

  Carrington, Matthew

  Hayward, Robert

  Cash, William

  Heathcoat-Amory, David

  Channon, Rt Hon Paul

  Heddle, John

  Chapman, Sydney

  Heseltine, Rt Hon Michael

  Chope, Christopher

  Hicks, Robert (Cornwall SE)

  Churchill, Mr

  Higgins, Rt Hon Terence L.

  Clark, Hon Alan (Plym'th S'n)

  Hill, James

  Clark, Dr Michael (Rochford)

  Hind, Kenneth

  Clark, Sir W. (Croydon S)

  Hogg, Hon Douglas (Gr'th'm)

  Clarke, Rt Hon K. (Rushcliffe)

  Holt, Richard

  Colvin, Michael

  Hordern, Sir Peter

  Coombs, Anthony (Wyre F'rest)

  Howard, Michael

  Coombs, Simon (Swindon)

  Howarth, Alan (Strat'd-on-A)

  Cope, Rt Hon John

  Howarth, G. (Cannock & B'wd)

  Cormack, Patrick

  Howe, Rt Hon Sir Geoffrey

  Couchman, James

  Howell, Rt Hon David (G'dford)

  Cran, James

  Hughes, Robert G. (Harrow W)

  Critchley, Julian

  Hunt, David (Wirral W)

  Currie, Mrs Edwina

  Hunt, John (Ravensbourne)

  Curry, David

  Hunter, Andrew

  Davies, Q. (Stamf'd & Spald'g)

  Hurd, Rt Hon Douglas

  Davis, David (Boothferry)

  Irvine, Michael

  Day, Stephen

  Irving, Charles

  Devlin, Tim

  Jack, Michael

  Dickens, Geoffrey

  Jackson, Robert

  Douglas-Hamilton, Lord James

  Janman, Tim

  Dunn, Bob

  Jessel, Toby

  Durant, Tony

  Johnson Smith, Sir Geoffrey

  122

  Jones, Gwilym (Cardiff N)

  Portillo, Michael

  Jones, Robert B (Herts W)

  Powell, William (Corby)

  Kellett-Bowman, Dame Elaine

  Price, Sir David

  Key, Robert

  Raffan, Keith

  King, Roger (B'ham N'thfield)

  Raison, Rt Hon Timothy

  Kirkhope, Timothy

  Rathbone, Tim

  Knapman, Roger

  Redwood, John

  Knight, Greg (Derby North)

  Renton, Tim

  Knight, Dame Jill (Edgbaston)

  Rhodes James, Robert

  Knowles, Michael

  Riddick, Graham

  Knox, David

  Ridley, Rt Hon Nicholas

  Lamont, Rt Hon Norman

  Ridsdale, Sir Julian

  Lang, Ian

  Rifkind, Rt Hon Malcolm

  Latham, Michael

  Roberts, Wyn (Conwy)

  Lawrence, Ivan

  Roe, Mrs Marion

  Lawson, Rt Hon Nigel

  Rossi, Sir Hugh

  Leigh, Edward (Gainsbor'gh)

  Rost, Peter

  Lennox-Boyd, Hon Mark

  Rowe, Andrew

  Lester, Jim (Broxtowe)

  Rumbold, Mrs Angela

  Lightbown, David

  Ryder, Richard

  Livsey, Richard

  Sackville, Hon Tom

  Lloyd, Sir Ian (Havant)

  Sainsbury, Hon Tim

  Lloyd, Peter (Fareham)

  Sayeed, Jonathan

  Lord, Michael

  Scott, Nicholas

  Luce, Rt Hon Richard

  Shaw, David (Dover)

  Lyell, Sir Nicholas

  Shaw, Sir Giles (Pudsey)

  McCrindle, Robert

  Shaw, Sir Michael (Scarb')

  Macfarlane, Sir Neil

  Shelton, William (Streatham)

  MacGregor, Rt Hon John

  Shephard, Mrs G. (Norfolk SW)

  MacKay, Andrew (E Berkshire)

  Shepherd, Colin (Hereford)

  Maclean, David

  Shersby, Michael

  McLoughlin, Patrick

  Sims, Roger

  McNair-Wilson, Sir Michael

  Skeet, Sir Trevor

  McNair-Wilson, P. (New Forest)

  Smith, Sir Dudley (Warwick)

  Madel, David

  Smith, Tim (Beaconsfield)

  Major, Rt Hon John

  Soames, Hon Nicholas

  Malins, Humfrey

  Speed, Keith

  Mans, Keith

  Speller, Tony

  Maples, John

  Spicer, Sir Jim (Dorset W)

  Marland, Paul

  Spicer, Michael (S Worcs)

  Marlow, Tony

  Squire, Robin

  Marshall, John (Hendon S)

  Stanbrook, Ivor

  Martin, David (Portsmouth S)

  Stanley, Rt Hon John

  Mates, Michael

  Steen, Anthony

  Maude, Hon Francis

  Stern, Michael

  Maxwell-Hyslop, Robin

  Stevens, Lewis

  Mayhew, Rt Hon Sir Patrick

  Stewart, Allan (Eastwood)

  Mellor, David

  Stewart, Andy (Sherwood)

  Meyer, Sir Anthony

  Stradling Thomas, Sir John

  Miller, Sir Hal

  Sumberg, David

  Mills, Iain

  Summerson, Hugo

  Miscampbell, Norman

  Tapsell, Sir Peter

  Mitchell, Andrew (Gedling)

  Taylor, Ian (Esher)

  Mitchell, David (Hants NW)

  Taylor, John M (Solihull)

  Montgomery, Sir Fergus

  Tebbit, Rt Hon Norman

  Moore, Rt Hon John

  Temple-Morris, Peter

  Morrison, Sir Charles

  Thatcher, Rt Hon Margaret

  Morrison, Rt Hon P (Chester)

  Thompson, D. (Calder Valley)

  Moss, Malcolm

  Thompson, Patrick (Norwich N)

  Moynihan, Hon Colin

  Thorne, Neil

  Mudd, David

  Thornton, Malcolm

  Neale, Gerrard

  Thurnham, Peter

  Needham, Richard

  Townend, John (Bridlington)

  Nelson, Anthony

  Townsend, Cyril D. (B'heath)

  Neubert, Michael

  Tracey, Richard

  Newton, Rt Hon Tony

  Tredinnick, David

  Nicholls, Patrick

  Trippier, David

  Nicholson, David (Taunton)

  Trotter, Neville

  Nicholson, Emma (Devon West)

  Twinn, Dr Ian

  Onslow, Rt Hon Cranley

  Viggers, Peter

  Oppenheim, Phillip

  Waddington, Rt Hon David

  Page, Richard

  Wakeham, Rt Hon John

  Paice, James

  Waldegrave, Hon William

  Patnick, Irvine

  Walden, George

  Patten, Chris (Bath)

  Walker, Bill (T'side North)

  Patten, John (Oxford W)

  Waller, Gary

  Pattie, Rt Hon Sir Geoffrey

  Walters, Sir Dennis

  Pawsey, James

  Ward, John

  Peacock, Mrs Elizabeth

  Wardle, Charles (Bexhill)

  Porter, David (Waveney)

  Watts, John

  123

  Wells, Bowen

  Wood, Timothy

  Wheeler, John

  Woodcock, Mike

  Whitney, Ray

  Yeo, Tim

  Widdecombe, Ann

  Young, Sir George (Acton)

  Wiggin, Jerry

  Wilkinson, John

  Tellers for the Noes:

  Wilshire, David

  Mr. Robert Boscawen and Mr. Tristan Garel-Jones.

  Wolfson, Mark

  Question accordingly negatived.
  Main Question put:—
  The House divided: Ayes 323, Noes 195.

  Division No. 404]

  [10.16 pm

  AYES

  Alexander, Richard

  Cran, James

  Alison, Rt Hon Michael

  Critchley, Julian

  Allason, Rupert

  Currie, Mrs Edwina

  Amess, David

  Curry, David

  Amos, Alan

  Davies, Q. (Stamf'd & Spald'g)

  Arbuthnot, James

  Davis, David (Boothferry)

  Arnold, Jacques (Gravesham)

  Day, Stephen

  Ashby, David

  Devlin, Tim

  Atkins, Robert

  Dickens, Geoffrey

  Atkinson, David

  Douglas-Hamilton, Lord James

  Baker, Rt Hon K. (Mole Valley)

  Dunn, Bob

  Baker, Nicholas (Dorset N)

  Durant, Tony

  Baldry, Tony

  Dykes, Hugh

  Banks, Robert (Harrogate)

  Eggar, Tim

  Batiste, Spencer

  Emery, Sir Peter

  Bellingham, Henry

  Evans, David (Welwyn Hatf'd)

  Bendall, Vivian

  Evennett, David

  Bennett, Nicholas (Pembroke)

  Ewing, Mrs Margaret (Moray)

  Benyon, W.

  Fallon, Michael

  Bevan, David Gilroy

  Favell, Tony

  Biggs-Davison, Sir John

  Fearn, Ronald

  Blackburn, Dr John G.

  Fenner, Dame Peggy

  Blaker, Rt Hon Sir Peter

  Field, Barry (Isle of Wight)

  Bonsor, Sir Nicholas

  Finsberg, Sir Geoffrey

  Boswell, Tim

  Fookes, Miss Janet

  Bottomley, Peter

  Forman, Nigel

  Bottomley, Mrs Virginia

  Forsyth, Michael (Stirling)

  Bowden, A (Brighton K'pto'n)

  Forth, Eric

  Bowden, Gerald (Dulwich)

  Fowler, Rt Hon Norman

  Bowis, John

  Fox, Sir Marcus

  Boyson, Rt Hon Dr Sir Rhodes

  Franks, Cecil

  Braine, Rt Hon Sir Bernard

  Freeman, Roger

  Brandon-Bravo, Martin

  French, Douglas

  Brazier, Julian

  Gale, Roger

  Bright, Graham

  Gardiner, George

  Brittan, Rt Hon Leon

  Gill, Christopher

  Brooke, Rt Hon Peter

  Gilmour, Rt Hon Sir Ian

  Brown, Michael (Brigg & Cl't's)

  Glyn, Dr Alan

  Browne, John (Winchester)

  Goodlad, Alastair

  Bruce, Ian (Dorset South)

  Goodson-Wickes, Dr Charles

  Buck, Sir Antony

  Gorst, John

  Burns, Simon

  Gow, Ian

  Burt, Alistair

  Grant, Sir Anthony (CambsSW)

  Butcher, John

  Greenway, Harry (Ealing N)

  Butler, Chris

  Greenway, John (Ryedale)

  Butterfill, John

  Gregory, Conal

  Campbell, Menzies (Fife NE)

  Griffiths, Sir Eldon (Bury St E')

  Carlile, Alex (Mont'g)

  Grist, Ian

  Carlisle, Kenneth (Lincoln)

  Ground, Patrick

  Carrington, Matthew

  Grylls, Michael

  Cash, William

  Gummer, Rt Hon John Selwyn

  Channon, Rt Hon Paul

  Hamilton, Hon Archie (Epsom)

  Chapman, Sydney

  Hamilton, Neil (Tatton)

  Chope, Christopher

  Hanley, Jeremy

  Churchill, Mr

  Hannam, John

  Clark, Hon Alan (Plym'th S'n)

  Hargreaves, A. (B'ham H'll Gr')

  Clark, Dr Michael (Rochford)

  Harg reaves, Ken (Hyndburn)

  Clark, Sir W. (Croydon S)

  Harris, David

  Clarke, Rt Hon K. (Rushcliffe)

  Haselhurst, Alan

  Colvin, Michael

  Hawkins, Christopher

  Coombs, Anthony (Wyre F'rest)

  Hayes, Jerry

  Coombs, Simon (Swindon)

  Hayhoe, Rt Hon Sir Barney

  Cope, Rt Hon John

  Hayward, Robert

  Couchman, James

  Heathcoat-Amory, David

  124

  Heddle, John

  Morrison, Sir Charles

  Heseltine, Rt Hon Michael

  Morrison, Rt Hon P (Chester)

  Hicks, Robert (Cornwall SE)

  Moss, Malcolm

  Higgins, Rt Hon Terence L.

  Moynihan, Hon Colin

  Hill, James

  Mudd, David

  Hind, Kenneth

  Neale, Gerrard

  Hogg, Hon Douglas (Gr'th'm)

  Needham, Richard

  Holt, Richard

  Nelson, Anthony

  Hordern, Sir Peter

  Neubert, Michael

  Howard, Michael

  Newton, Rt Hon Tony

  Howarth, Alan (Strafd-on-A)

  Nicholls, Patrick

  Howarth, G. (Cannock & B'wd)

  Nicholson, David (Taunton)

  Howe, Rt Hon Sir Geoffrey

  Nicholson, Emma (Devon West)

  Howell, Rt Hon David (G'dtord)

  Onslow, Rt Hon Cranley

  Hughes, Robert G. (Harrow W)

  Oppenheim, Phillip

  Hunt, David (Wirral W)

  Page, Richard

  Hunt, John (Ravensbourne)

  Paice, James

  Hunter, Andrew

  Patnick, Irvine

  Hurd, Rt Hon Douglas

  Patten, Chris (Bath)

  Irvine, Michael

  Patten, John (Oxford W)

  Irving, Charles

  Pattie, Rt Hon Sir Geoffrey

  Jack, Michael

  Pawsey, James

  Jackson, Robert

  Peacock, Mrs Elizabeth

  Jessel, Toby

  Porter, David (Waveney)

  Johnson Smith, Sir Geoffrey

  Portillo, Michael

  Jones, Gwilym (Cardiff N)

  Powell, William (Corby)

  Jones, Robert B (Herts W)

  Price, Sir David

  Kellett-Bowman, Dame Elaine

  Raffan, Keith

  Key, Robert

  Raison, Rt Hon Timothy

  King, Roger (B'ham N'thfield)

  Rathbone, Tim

  Kirkhope, Timothy

  Renton, Tim

  Knapman, Roger

  Rhodes James, Robert

  Knight, Greg (Derby North)

  Riddick, Graham

  Knight, Dame Jill (Edgbaston)

  Ridley, Rt Hon Nicholas

  Knowles, Michael

  Ridsdale, Sir Julian

  Knox, David

  Rifkind, Rt Hon Malcolm

  Lamont, Rt Hon Norman

  Roberts, Wyn (Conwy)

  Lang, Ian

  Roe, Mrs Marion

  Latham, Michael

  Rossi, Sir Hugh

  Lawrence, Ivan

  Rost, Peter

  Lawson, Rt Hon Nigel

  Rowe, Andrew

  Leigh, Edward (Gainsbor'gh)

  Rumbold, Mrs Angela

  Lennox-Boyd, Hon Mark

  Ryder, Richard

  Lester, Jim (Broxtowe)

  Sackville, Hon Tom

  Lightbown, David

  Sainsbury, Hon Tim

  Livsey, Richard

  Salmond, Alex

  Lloyd, Sir Ian (Havant)

  Sayeed, Jonathan

  Lloyd, Peter (Fareham)

  Scott, Nicholas

  Lord, Michael

  Shaw, David (Dover)

  Luce, Rt Hon Richard

  Shaw, Sir Giles (Pudsey)

  Lyell, Sir Nicholas

  Shaw, Sir Michael (Scarb')

  McCrindle, Robert

  Shelton, William (Streatham)

  Macfarlane, Sir Neil

  Shephard, Mrs G. (Norfolk SW)

  MacGregor, Rt Hon John

  Shepherd, Colin (Hereford)

  MacKay, Andrew (E Berkshire)

  Shersby, Michael

  Maclean, David

  Sims, Roger

  McLoughlin, Patrick

  Skeet, Sir Trevor

  McNair-Wilson, Sir Michael

  Smith, Sir Dudley (Warwick)

  McNair-Wilson, P. (New Forest)

  Smith, Tim (Beaconsfield)

  Madel, David

  Soames, Hon Nicholas

  Major, Rt Hon John

  Speed, Keith

  Malins, Humfrey

  Speller, Tony

  Mans, Keith

  Spicer, Sir Jim (Dorset W)

  Maples, John

  Spicer, Michael (S Worcs)

  Marland, Paul

  Squire, Robin

  Marshall, John (Hendon S)

  Stanbrook, Ivor

  Martin, David (Portsmouth S)

  Stanley, Rt Hon John

  Mates, Michael

  Steen, Anthony

  Maude, Hon Francis

  Stern, Michael

  Maxwell-Hyslop, Robin

  Stevens, Lewis

  Mayhew, Rt Hon Sir Patrick

  Stewart, Allan (Eastwood)

  Mellor, David

  Stewart, Andy (Sherwood)

  Meyer, Sir Anthony

  Stradling Thomas, Sir John

  Miller, Sir Hal

  Sumberg, David

  Mills, Iain

  Summerson, Hugo

  Miscampbell, Norman

  Tapsell, Sir Peter

  Mitchell, Andrew (Gedling)

  Taylor, Ian (Esher)

  Mitchell, David (Hants NW)

  Taylor, John M (Solihull)

  Montgomery, Sir Fergus

  Tebbit, Rt Hon Norman

  Moore, Rt Hon John

  Temple-Morris, Peter

  125

  Thatcher, Rt Hon Margaret

  Wardle, Charles (Bexhlll)

  Thompson, D (Calder Valley)

  Wells, Bowen

  Thompson, Patrick (Norwich N)

  Welsh, Andrew (Angus E)

  Thorne, Neil

  Wheeler, John

  Thornton, Malcolm

  Whitney, Ray

  Thurnham, Peter

  Widdecombe, Ann

  Townsend, Cyril D (B heath)

  Wiggin, Jerry

  Tracey, Richard

  Wigley, Dafydd

  Tredinmck, David

  Wilkinson, John

  Trippier, David

  Wilshire, David

  Trotter, Neville

  Wolfson, Mark

  Twinn, Dr Ian

  Wood, Timothy

  Viggers, Peter

  Woodcock, Mike

  Waddington, Rt Hon David

  Yeo, Tim

  Wakeham, Rt Hon John

  Young, Sir George (Acton)

  Waldegrave, Hon William

  Walden, George

  Tellers for the Ayes

  Waller, Gary

  Mr Robert Boscawen and Mr. Tristan Garel-Jones.

  Walters, Sir Dennis

  Ward. John

  NOES

  Abbott, Ms Diane

  Evans, John (St Helens N)

  Adams, Allen (Paisley N)

  Ewing, Harry (Falkirk E)

  Aitken, Jonathan

  Fatchett, Derek

  Allen, Graham

  Faulds, Andrew

  Anderson, Donald

  Field, Frank (Blrkenhead)

  Archer, Rt Hon Peter

  Fields, Terry (L'pool B G'n)

  Armstrong, Hilary

  Flannery, Martin

  Ashley, Rt Hon Jack

  Flynn, Paul

  Barnes, Harry (Derbyshire NE)

  Foot, Rt Hon Michael

  Barron, Kevin

  Foster, Derek

  Beckett, Margaret

  Fraser, John

  Bell, Stuart

  Fyfe, Maria

  Bennett, A. F. (D'nt'n & R'dish)

  Galbraith, Sam

  Bermingham, Gerald

  Galloway, George

  Biffen, Rt Hon John

  Garrett, John (Norwich South)

  Blunkett, David

  Garrett, Ted (Wallsend)

  Boateng, Paul

  George, Bruce

  Body, Sir Richard

  Godman, Dr Norman A.

  Boyes, Roland

  Gordon, Mildred

  Bradley, Keith

  Gorman, Mrs Teresa

  Bray, Dr Jeremy

  Gould, Bryan

  Brown, Gordon (D'mline E)

  Graham, Thomas

  Brown, Nicholas (Newcastle E)

  Grant, Bernie (Tottenham)

  Brown, Ron (Edinburgh Leith)

  Griffiths, Nigel (Edinburgh S)

  Buchan, Norman

  Griffiths, Win (Bridgend)

  Buckley, George J.

  Grocott, Bruce

  Budgen, Nicholas

  Harman, Ms Harriet

  Campbell, Ron (Blyth Valley)

  Hattersley, Rt Hon Roy

  Campbell-Savours, D. N.

  Haynes, Frank

  Canavan, Dennis

  Healey, Rt Hon Denis

  Carlisle, John, (Luton N)

  Heffer, Eric S.

  Clark, Dr David (S Shields)

  Hinchliffe, David

  Clarke, Tom (Monklands W)

  Hogg, N. (C'nauld & Kilsyth)

  Clay, Bob

  Holland, Stuart

  Clelland, David

  Home Robertson, John

  Clwyd, Mrs Ann

  Hood, Jimmy

  Cohen, Harry

  Howarth, George (Knowsley N)

  Coleman, Donald

  Howell, Rt Hon D. (S'heath)

  Cook, Frank (Stockton N)

  Hughes, John (Coventry NE)

  Cook, Robin (Livingston)

  Hughes, Robert (Aberdeen N)

  Corbett, Robin

  Hughes, Roy (Newport E)

  Corbyn, Jeremy

  Hughes, Sean (Knowsley S)

  Cousins, Jim

  Illsley, Eric

  Cryer, Bob

  Ingram, Adam

  Cummings, John

  Janman, Tim

  Cunliffe, Lawrence

  Janner, Greville

  Dalyell, Tam

  John, Brynmor

  Davies, Rt Hon Denzil (Llanelli)

  Jones, Martyn (Clwyd S W)

  Davies, Ron (Caerphilly)

  Kaufman, Rt Hon Gerald

  Dewar, Donald

  Lambie, David

  Dixon, Don

  Lamond, James

  Dobson, Frank

  Leadbitter, Ted

  Doran, Frank

  Leighton, Ron

  Duffy, A. E. P.

  Lestor, Joan (Eccles)

  Dunnachie, Jimmy

  Lewis, Terry

  Eadie, Alexander

  Litherland, Robert

  Eastham, Ken

  Lloyd, Tony (Stretford)

  126

  Lofthouse, Geoffrey

  Rees, Rt Hon Merlyn

  Loyden, Eddie

  Reid, Dr John

  McAllion, John

  Richardson, Jo

  McAvoy, Thomas

  Robertson, George

  McCartney, Ian

  Robinson, Geoffrey

  Macdonald, Calum A.

  Rogers, Allan

  McFall, John

  Rooker, Jeff

  McKelvey, William

  Ross, Ernie (Dundee W)

  McLeish, Henry

  Rowlands, Ted

  McNamara, Kevin

  Sedgemore, Brian

  McTaggart, Bob

  Sheerman, Barry

  McWilliam, John

  Sheldon, Rt Hon Robert

  Madden, Max

  Shepherd, Richard (Aldridge)

  Mahon, Mrs Alice

  Shore, Rt Hon Peter

  Marek, Dr John

  Short, Clare

  Marlow, Tony

  Skinner, Dennis

  Marshall, Jim (Leicester S)

  Smith, Andrew (Oxford E)

  Martin, Michael J. (Springburn)

  Smith, C. (Isl'ton & F'bury)

  Martlew, Eric

  Snape, Peter

  Maxton, John

  Spearing, Nigel

  Meacher, Michael

  Steinberg, Gerry

  Meale, Alan

  Stott, Roger

  Michael, Alun

  Taylor, Teddy (S'end E)

  Millan, Rt Hon Bruce

  Thompson, Jack (Wansbeck)

  Moate, Roger

  Townend, John (Bridlington)

  Moonie, Dr Lewis

  Turner, Dennis

  Morgan, Rhodri

  Vaz, Keith

  Morley, Elliott

  Wall, Pat

  Morris, Rt Hon A. (W'shawe)

  Wardell, Gareth (Gower)

  Morris, Rt Hon J. (Aberavon)

  Wareing, Robert N.

  Mowlam, Marjorie

  Welsh, Michael (Doncaster N)

  Mullin, Chris

  Williams, Rt Hon Alan

  Murphy, Paul

  Williams, Alan W. (Carm'then)

  Oakes, Rt Hon Gordon

  Wilson, Brian

  O'Neill, Martin

  Winnick, David

  Orme, Rt Hon Stanley

  Wise, Mrs Audrey

  Parry, Robert

  Worthington, Tony

  Pike, Peter L.

  Wray, Jimmy

  Powell, Ray (Ogmore)

  Primarolo, Dawn

  Tellers for the Noes:

  Quin, Ms Joyce

  Mrs. Llin Golding and

  Radice, Giles

  Mr. Allen McKay.

  Redmond, Martin

  Question accordingly agreed to.
  Bill accordingly read a Second time.
  Mr. Bob Cryer: On a point of order, Mr. Speaker. When I came out of the No Lobby, two Tory Whips, led by the hon. Member for Staffordshire, South-East (Mr. Lightbown) whose rather menacing bulk can now been seen at the Bar of the House, were taking down the names of those Tory Members who voted No. That could be regarded as besetting and intimidation and, as you know, Mr. Speaker, by law that cannot be carried out by trade unionists. If the law is good enough for trade unionists, it should be good enough for Tory Members and should stop them intimidating their hon. Friends. If there is any intimidation, I ask you, Mr. Speaker, to carry out an investigation to see if there is a serious breach of privilege by those Tory thugs.
  Mr. Speaker: I have no knowledge of any intimidation. The Whips might have been inviting those hon. Members to dinner.
  Bill committed to a Committee of the whole House.—[Mr. Ryder.]
  Committee tomorrow.

  European Communities (Finance) Bill

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Court of Session Bill [Lords] may be proceeded with, though opposed, until any hour.—[Mr. Ryder.]

  European Communities (Finance) Bill [Money]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act resulting from the European Communities (Finance) Bill, it is expedient to authorise—

  (1) any increase attributable to that Act in the sums to be charged on and paid out of the Consolidated Fund or the National Loans Fund, or payable out of money provided by Parliament, under the European Communities Act 1972; and

  (2) the payment of any sums into the Consolidated Fund or the National Loans Fund.—[Mr. Brooke.]

  10.33 pm
  Mr. Bob Cryer: The money resolution, which represents an increase in expenditure of at least £200 million to £300 million net and, according to the Minister earlier, as much as £1 billion gross, should not be allowed to pass unchallenged. That is against the background of some £4·7 billion in net expenditure to the Common Market. After all the grants, repayments and gains from rebates which the Prime Minister alleges, since 1984 we have paid out more than £4 billion, and we shall continue to do so. That money could be used for the excellent purpose of helping to rejuvenate and regenerate the National Health Service or in providing long-term jobs and stopping the continuing erosion of jobs to which the Common Market has led.
  Membership of the EEC has been a millstone around our necks. We have a deficit in our balance of trade of manufactured goods of some £11 billion. The Minister said that some of the payments in this money resolution—between £200 million and £300 million—would go to the structural funds in order to offset the adverse impact of the development of the internal market by 1992. It is patently absurd for our Government to hand to another organisation money which it then scrutinises and from which it takes a hefty percentage for administration, only to hand some, but not all, back to us for some sort of remedial action in the regions. It is no longer in the province of the elected Government.
  While I disagree with virtually everything that the Government do, they are elected and are to some degree accountable. Certainly, they will be accountable at the general election, which is not true of the Commissioners. It is largely the Commission and its machinery which decides where the money will be spent. The Council of Ministers, which meets in secret so is not publicly accountable as we are in this House, lays down only general spending guidelines. The Commission and various directorates-general decide where the money will go.
  It is absurd for us to hand over an additional £200 million to £300 million only for many local authorities to spend large sums going in good faith to Brussels to plead their case cap in hand because, continually pressed by the Government through rate support grant cuts and so on, they are short of money. It is wrong, inefficient and undemocratic to hand money over to another body only to receive a relatively small proportion of it back.
  Mr. Michael Fallon: I am more than uncommonly grateful to the hon. Gentleman for giving way. Is it not time that he straightened out his argument? Is it not a fact that most Socialist member states and
  128
  Members of Parliament and the British Labour group argue for an increase in the structural funds which the hon. Gentleman is attacking? Why is he out of line?
  Mr. Cryer: The hon. Gentleman, as usual, is badly misinformed. The vast majority of the Socialist group in the Common Market happen to be pro-Market fanatics. [HON. MEMBERS: "Oh".] They are chosen on a list system based on proportional representation which a majority in this House would reject and which gives great power to the party ladership. In most Socialist parties in the EEC, if anybody steps out of line, he is immediately knocked off the list for that political dissent. I do not take too much notice of the hon. Gentleman's views.
  The fact is that those of us in the British Labour group are critical of the maldistribution of Common Market funds—70 per cent. or therabouts goes to the common agricultural policy. Ever since we joined in 1973 members have been claiming that reform is round the corner or will come next year, but it never comes. The proportion of expenditure that goes on the CAP has been increasing, with one or two ebbs and flows, virtually since we entered the Common Market. I shall come to a report from the Select Committee which very much substantiates my claim.
  Mr. Dennis Skinner: My hon. Friend said that in the Common Market countries other than Britain have a list system in which Members of Parliament are picked off according to how they fit in with their party. My hon. Friend raised a point of order about the Tory Chief Whip standing outside the Division Lobby ticking off the names of those Tory Members of Parliament who had voted with us against the Bill. One is bound to get the impression that Tory Members of Parliament are getting ready to operate their own list system.
  Mr. Cryer: It sounds very much like that, as my hon. Friend says. I am worried about what shreds of democracy are left in the Tory party, judging by the way in which two brutal-looking thugs stood outside the No Lobby looking menacingly towards those who had voted with the Labour party.
  Mr. Eric Forth (Mid-Worcestershire): On a point of order, Mr. Deputy Speaker. The hon. Gentleman has just been talking about thugs. There is an article in today's edition of The Independent about Sergeant Bob Cryer. Will you clarify, Mr. Deputy Speaker, whether the hon. Gentleman is the Sergeant Bob Cryer referred to in The Independent? He is talking about thugs——
  Mr. Deputy Speaker (Mr. Harold Walker): Order. What appears in a newspaper is not a matter for me.
  Mr. Cryer: I am most grateful. I am best able to decide which Bob Cryer is represented in The Independent or any other newspaper.
  I should like to finish my comments about what the hon. Member for Darlington (Mr. Fallon) said. There is——
  Mr. Deputy Speaker: Order. I remind the House that it is contrary to our practice to read newspapers during debate.
  Mr. Cryer: I am grateful to you, Mr. Deputy Speaker for scrupulously carrying out the Standing Orders of the

  129
  House and preventing Tory Members who who do not seem to know much about it from driving a coach and horses through them.
  Let me get back to the hon. Member for Darlington. There is a pro-Market uncritical majority of all the parties in the Assembly, so anybody in the House who claims that the Assembly, called by some a Parliament—but it is in fact a consultative Assembly, that and no more—will act as some sort of check, is living in cloud-cuckoo-land.
  Mr. Fallon: I am grateful, and I undertake to the hon. Gentleman, who has been most courteous, not to intervene again if he will answer this specific question. He referred to the proportion of agriculture expenditure increasing. I should have drawn his attention to the fact that throughout that time not only was there a Socialist majority in the European Assembly that he despises, but he was a member of it. I shall not labour that point, but I ask him this specific question. Does he now still perceive that Socialist majority, including the British Labour group, to be uncritical, and if so, will he vote for it in next year's elections?
  Mr. Cryer: The Socialist majority that the hon. Gentleman talks about is an illusion. There is not a Socialist majority in the Common Market Assembly. The Socialist group represents about 150 out of 450 and on anybody's calculation that is a minority. When one couples up all the European democrats, the Le Pen Fascist group and the rest of the Right wing, they have a majority. When one couples up those who are Euro-fanatics and totally uncritical, there is an even bigger majority.
  As I mentioned, the Assembly does not represent a critical body. There are strong strains and pressures for federalism, and for even more power to be taken away from bodies such as this and put across to the Assemblies in Brussels and Strasbourg. Jacques Delors does not represent an isolated strain, talking to a particular audience. His view is representative of the majority of the Commission and almost certainly the majority of the Assembly.
  The Single European Act started out as a campaign by Alteiro Spinelli, a member of the Communist list in Italy, and his campaign was supported by the European Democrats, the Christian Democrats and the Liberal Democrats, but not, at any stage, by the British Labour group. That campaign by Spinelli was to wrest power from the member states and transfer it to the EEC assembly.
  Sir Jim Spicer rose——
  Mr. Cryer: We are discussing the money resolution, and I shall resist the temptation to give way.
  Sir Jim Spicer rose——
  Mr. Deputy Speaker: Order. It is clear that the hon. Gentleman does not intend to give way.
  Mr. Cryer: I just wish that some of the Tory hooligans were better behaved. They set a poor example when they stand up against your express wishes, Mr. Deputy Speaker, as well as mine.
  Sir Jim Spicer: Will the hon. Gentleman give way?
  Mr. Cryer: No.
  130
  The fifth report of the Treasury and Civil Service Select Committee was referred to in the debate. It is a Committee with a Conservative majority, and on page 7 of its report, it states:
  "We are not convinced that an inter-institutional agreement is the equivalent of a firm and legally binding text. Given the Community's failure in the past to control its expenditure and notwithstanding the many significant improvements which were agreed at the Brussels summit, we believe there are still grounds for remaining sceptical about the prospects for proper budgetary control in the future. We believe the Government should press the Community to adopt the most rigorous forms of budget management."
  Although the Government may press the case, our experience from 1973 onwards is that there is little or no budgetary control. The Select Committe, which has a Conservative majority, sets that out lucidly. Therefore I believe that we must have strong reservations about a money resolution that hands over between another £200 million and £400 million to a body that experience and its proven record has shown to be incapable of budgetary control.
  We may suppose that some of that money will come back, but to hand money to another body, which has proved itself to be inefficient, in the hope that we will get a tiny share of it back, is an extremely inefficient way in which to deal with the matter. The money resolution, in common with the Bill, is much misplaced.
  10.48 pm
  Mr. Michael Fallon: The hon. Member for Bradford, South (Mr. Cryer) has an honourable record in opposing the expansion of European expenditure.
  When I came in to listen to the hon. Gentleman I thought that he might say something that I could support. I then discovered that he was objecting to an increase in European expenditure on the grounds that the European Parliament—or "the Assembly" as he has described and criticised it—would be assenting to that expenditure. Back in 1984, he offered himself to the European electorate as a member of that European Assembly and for five long years he sat as a member of it. Had the same argument come from the hon. Member for Bolsover (Mr. Skinner), we would have treated it with slightly more respect. Instead, it came from an hon. Member who took European money, air tickets, jobs, junkets and expenses. He now has the nerve to lecture us on increases in European expenditure.
  Mr. John Marshall rose——
  Mr. Fallon: I am so shocked that I can only give way t o my hon. Friend the Member for Hendon, South (Mr. Marshall).
  Mr. Marshall: Is my hon. Friend aware that the hon. Member for Bradford, South (Mr. Cryer) voted in favour of taking note of the sixth VAT directive, which he has been so busy criticising in recent weeks?
  Mr. Fallon: That directive is outside the scope of the resolution that is before us.
  We must not disregard the fact that the hon. Member for Bradford, South was a part of the European Assembly, and voted time and time again for increases in the European budget and increases in the structural funds—the philosophy and the theory of social space, which we now hear so much about on behalf of the poorer member

  131
  states. The hon. Gentleman voted for the extra moneys. Yet he has the nerve to lecture us about increases for the funds.
  We know that we have a far greater chance of controlling the funds and regulation expenditure through our Ministers at the Council of Ministers than the Ministers that the hon. Member for Bradford, South would have supported. There may be other financial resolutions on which the hon. Gentleman and I will agree, but he should be the last person to lecture the House on European expenditure. I have one piece of advice for the hon. Gentleman before he tells us what view we should take of the resolution and before we come to vote in the European elections next May. If I were the hon. Gentleman, I would keep very quiet.
  10.52pm
  The Paymaster General(Mr. Peter Brooke): I owe an apology to the hon. Member for Bradford, South (Mr. Cryer) for not giving way to him in the concluding minutes of the Second Reading debate. I am delighted to have the opportunity of rendering that apology. I think that I have the general purport of what he would have said if he had intervened at that stage. I apologise also to the hon. Member for Linlithgow (Mr. Dalyell) for not saying that I would answer the questions which he asked subsequently to the one to which I responded. I understand that he intended his final question to be broadly rhetorical.
  Mr. Dalyell: The final question on Mr. Powell is the most interesting.
  Mr. Brooke: There was one question not asked of me during the Second Reading debate which would have been relevant to the resolution and to which I should like to allude. No one asked me what would happen if we were asked for intergovernmental agreement payments before the Bill has been enacted. It is likely that IGA payments will be requested from I August. If the Bill has not been enacted by then, the Government envisage making payments from the contingency fund, given that the House has signalled its approval of the principle of making IGA payments by giving the Bill a Second Reading.
  This would be in accordance with the purpose of the contingency fund to meet urgent services in Anticipation of provision for those services by Parliament. At the same time it would take account of the key tests on the use of the fund, including, as explained by the then Financial Secretary to the Treasury in 1974, the right hon. Member for Dudley, East (Dr. Gilbert):
  "No Government of either party would be reckless enough to incur expenditure on any subject by using the fund if they thought there was any possibility of Parliament's later rejecting the substantive proposals when placed before the House."—[Official Report, 14 May 1974; Vol. 873, c. 1250.]
  The advances from the contingency fund would be repaid through the Consolidated Fund once the Bill had received Royal Assent.
  Mr. George Robertson: Why should the Paymaster General be so presumptuous after the Bill has received a Second Reading? The Bill has two separate and distinct components and I should like to know why he presumes that the House will approve it in Committee and on Third Reading. Why was this not part of the right hon. Gentleman's speech, or that of the Foreign Secretary, on
  132
  Second Reading? The House should have been told at that stage that this strange, perverse and, I would suggest, probably unprecedented procedure would be followed in the circumstances that have been outlined by the Paymaster General.
  Mr. Brooke: It is not unprecedented, because I alluded to the guidance given by the Financial Secretary to the Treasury in the Labour Administration in 1974 as to the use of the contingency fund.
  As to the likelihood of the Bill being defeated, I draw to the attention of the hon. Member for Hamilton (Mr. Robertson) the fact that the majority on Second Reading exceeded by a substantial majority the Government's natural majority in the House. Even the presence of the right hon. Member for Islwyn (Mr. Kinnock), the right hon. and learned Member for Monklands, East (Mr. Smith) and the right hon. Member for Manchester, Gorton (Mr. Kaufman) would not be enough to make up for that deficit.
  Mr. Nigel Spearing: The question was not asked, at least in one quarter, because the contingency would not appear to arise. The Paymaster General will know that the undertaking is not given to the Commission or to the Council, but is an undertaking of member states outside the treaty. He has just told us that there may be a request for the money to be paid, but who can legally make such a request? The undertaking is outside the terms of the treaty of Rome and formally nothing to do with the EEC.
  Mr. Brooke: The hon. Member for Newham, South (Mr. Spearing) knows, because of the procedures through which we have been at various stages, including evidence that I have given to the Treasury and Civil Service Select Committee, that the procedures relating to the budget for 1988 contained an assumption that in the fulness of time there would be an IGA. That IGA has now been agreed by the member states, but I agree that it is subject to the approval of both Houses and to a request for payment. That contingency may arise on 1 August.
  Question put:—
  The House divided: Ayes 296, Noes 50.

  Division No. 405]

  [10.56 pm

  AYES

  Alexander, Richard

  Bowden, Gerald (Dulwich)

  Alison, Rt Hon Michael

  Bowis, John

  Allason, Rupert

  Boyson, Rt Hon Dr Sir Rhodes

  Amess, David

  Braine, Rt Hon Sir Bernard

  Amos, Alan

  Brandon-Bravo, Martin

  Arbuthnot, James

  Brazier, Julian

  Arnold, Jacques (Gravesham)

  Bright, Graham

  Ashby, David

  Brittan, Rt Hon Leon

  Atkins, Robert

  Brooke, Rt Hon Peter

  Atkinson, David

  Brown, Michael (Brigg & Cl't's)

  Baker, Rt Hon K. (Mole Valley)

  Browne, John (Winchester)

  Baker, Nicholas (Dorset N)

  Bruce, Ian (Dorset South)

  Baldry, Tony

  Buck, Sir Antony

  Batiste, Spencer

  Burns, Simon

  Bendall, Vivian

  Burt, Alistair

  Bennett, Nicholas (Pembroke)

  Butcher, John

  Benyon, W.

  Butler, Chris

  Bevan, David Gilroy

  Butterfill, John

  Blackburn, Dr John G.

  Campbell, Menzies (Fife NE)

  Blaker, Rt Hon Sir Peter

  Carlile, Alex (Mont'g)

  Bonsor, Sir Nicholas

  Carlisle, Kenneth (Lincoln)

  Boswell, Tim

  Carrington, Matthew

  Bottomley, Peter

  Cash, William

  Bottomley, Mrs Virginia

  Channon, Rt Hon Paul

  Bowden, A (Brighton K'pto'n)

  Chapman, Sydney

  133

  Chope, Christopher

  Hunt, John (Ravensbourne)

  Churchill, Mr

  Hunter, Andrew

  Clark, Dr Michael (Rochford)

  Irvine, Michael

  Clark, Sir W. (Croydon S)

  Jack, Michael

  Coombs, Anthony (Wyre F'rest)

  Jackson, Robert

  Coombs, Simon (Swindon)

  Jessel, Toby

  Cope, Rt Hon John

  Johnson Smith, Sir Geoffrey

  Couchman, James

  Jones, Gwilym (Cardiff N)

  Cran, James

  Jones, Robert B (Herts W)

  Currie, Mrs Edwina

  Kellett-Bowman, Dame Elaine

  Curry, David

  Key, Robert

  Davies, Q. (Stamf'd & Spald'g)

  King, Roger (B'ham N'thfield)

  Davis, David (Boothferry)

  Kirkhope, Timothy

  Day, Stephen

  Knapman, Roger

  Devlin, Tim

  Knight, Greg (Derby North)

  Douglas-Hamilton, Lord James

  Knight, Dame Jill (Edgbaston)

  Dunn, Bob

  Knowles, Michael

  Durant, Tony

  Knox, David

  Dykes, Hugh

  Lamont, Rt Hon Norman

  Eggar, Tim

  Lang, Ian

  Emery, Sir Peter

  Latham, Michael

  Evans, David (Welwyn Hatf'd)

  Lawrence, Ivan

  Evennett, David

  Lawson, Rt Hon Nigel

  Ewing, Mrs Margaret (Moray)

  Leigh, Edward (Gainsbor'gh)

  Fallon, Michael

  Lennox-Boyd, Hon Mark

  Favell, Tony

  Lester, Jim (Broxtowe)

  Fearn, Ronald

  Lightbown, David

  Fenner, Dame Peggy

  Livsey, Richard

  Field, Barry (Isle of Wight)

  Lloyd, Peter (Fareham)

  Finsberg, Sir Geoffrey

  Lord, Michael

  Fookes, Miss Janet

  Luce, Rt Hon Richard

  Forman, Nigel

  Lyell, Sir Nicholas

  Forsyth, Michael (Stirling)

  McCrindle, Robert

  Forth, Eric

  Macfarlane, Sir Neil

  Fox, Sir Marcus

  MacGregor, Rt Hon John

  Franks, Cecil

  MacKay, Andrew (E Berkshire)

  Freeman, Roger

  Maclean, David

  French, Douglas

  McLoughlin, Patrick

  Gale, Roger

  McNair-Wilson, Sir Michael

  Gardiner, George

  McNair-Wilson, P. (New Forest)

  Gill, Christopher

  Madel, David

  Gilmour, Rt Hon Sir Ian

  Major, Rt Hon John

  Glyn, Dr Alan

  Malins, Humfrey

  Goodson-Wickes, Dr Charles

  Mans, Keith

  Gorst, John

  Maples, John

  Gow, Ian

  Marland, Paul

  Grant, Sir Anthony (CambsSW)

  Marshall, John (Hendon S)

  Greenway, Harry (Ealing N)

  Martin, David (Portsmouth S)

  Greenway, John (Ryedale)

  Mates, Michael

  Gregory, Conal

  Maude, Hon Francis

  Grist, Ian

  Maxwell-Hyslop, Robin

  Ground, Patrick

  Mayhew, Rt Hon Sir Patrick

  Grylls, Michael

  Mellor, David

  Hamilton, Hon Archie (Epsom)

  Meyer, Sir Anthony

  Hamilton, Neil (Tatton)

  Miller, Sir Hal

  Hanley, Jeremy

  Mills, Iain

  Hannam, John

  Miscampbell, Norman

  Hargreaves, A. (B'ham H'II Gr')

  Mitchell, Andrew (Gedling)

  Hargreaves, Ken (Hyndburn)

  Mitchell, David (Hants NW)

  Harris, David

  Montgomery, Sir Fergus

  Haselhurst, Alan

  Morrison, Sir Charles

  Hawkins, Christopher

  Morrison, Rt Hon P (Chester)

  Hayes, Jerry

  Moss, Malcolm

  Hayhoe, Rt Hon Sir Barney

  Moynihan, Hon Colin

  Hayward, Robert

  Mudd, David

  Heathcoat-Amory, David

  Neale, Gerrard

  Heddle, John

  Needham, Richard

  Higgins, Rt Hon Terence L

  Nelson, Anthony

  Hill, James

  Neubert, Michael

  Hind, Kenneth

  Newton, Rt Hon Tony

  Hogg, Hon Douglas (Gr'th'm)

  Nicholls, Patrick

  Holt, Richard

  Nicholson, David (Taunton)

  Hordern, Sir Peter

  Nicholson, Emma (Devon West)

  Howard, Michael

  Onslow, Rt Hon Cranley

  Howarth, Alan (Strat'd-on-A)

  Oppenheim, Phillip

  Howarth, G. (Cannock & B'wd)

  Page, Richard

  Howe, Rt Hon Sir Geoffrey

  Paice, James

  Howell, Rt Hon David (G'dford)

  Patnick, Irvine

  Hughes, Robert G. (Harrow W)

  Patten, Chris (Bath)

  Hunt, David (Wirral W)

  Patten, John (Oxford W)

  134

  Pattie, Rt Hon Sir Geoffrey

  Stewart, Allan (Eastwood)

  Pawsey, James

  Stewart, Andy (Sherwood)

  Peacock, Mrs Elizabeth

  Stradling Thomas, Sir John

  Porter, David (Waveney)

  Sumberg, David

  Powell, William (Corby)

  Summerson, Hugo

  Price, Sir David

  Tapsell, Sir Peter

  Raffan, Keith

  Taylor, Ian (Esher)

  Raison, Rt Hon Timothy

  Taylor, John M (Solihull)

  Rathbone, Tim

  Temple-Morris, Peter

  Renton, Tim

  Thompson, D. (Calder Valley)

  Rhodes James, Robert

  Thompson, Patrick (Norwich N)

  Riddick, Graham

  Thorne, Neil

  Ridley, Rt Hon Nicholas

  Thornton, Malcolm

  Ridsdale, Sir Julian

  Thurnham, Peter

  Rifkind, Rt Hon Malcolm

  Townsend, Cyril D. (B'heath)

  Roberts, Wyn (Conwy)

  Tredinnick, David

  Roe, Mrs Marion

  Trippier, David

  Rossi, Sir Hugh

  Trotter, Neville

  Rost, Peter

  Twinn, Dr Ian

  Rowe, Andrew

  Viggers, Peter

  Rumbold, Mrs Angela

  Waddington, Rt Hon David

  Ryder, Richard

  Wakeham, Rt Hon John

  Sackville, Hon Tom

  Waldegrave, Hon William

  Sainsbury, Hon Tim

  Walden, George

  Salmond, Alex

  Waller, Gary

  Sayeed, Jonathan

  Ward, John

  Shaw, David (Dover)

  Wardle, Charles (Bexhill)

  Shaw, Sir Giles (Pudsey)

  Wells, Bowen

  Shaw, Sir Michael (Scarb')

  Welsh, Andrew (Angus E)

  Shelton, William (Streatham)

  Wheeler, John

  Shephard, Mrs G. (Norfolk SW)

  Whitney, Ray

  Shepherd, Colin (Hereford)

  Widdecombe, Ann

  Shersby, Michael

  Wiggin, Jerry

  Sims, Roger

  Wigley, Dafydd

  Skeet, Sir Trevor

  Wilkinson, John

  Smith, Sir Dudley (Warwick)

  Wilshire, David

  Smith, Tim (Beaconsfield)

  Wolfson, Mark

  Speed, Keith

  Wood, Timothy

  Spicer, Sir Jim (Dorset W)

  Woodcock, Mike

  Spicer, Michael (S Worcs)

  Yeo, Tim

  Squire, Robin

  Young, Sir George (Acton)

  Stanbrook, Ivor

  Stanley, Rt Hon John

  Tellers for the Ayes:

  Stern, Michael

  Mr. Tristan Garel-Jones and Mr. Robert Boscawen.

  Stevens, Lewis

  NOES

  Allen, Graham

  Lamond, James

  Barnes, Harry (Derbyshire NE)

  Leighton, Ron

  Benn, Rt Hon Tony

  Loyden, Eddie

  Bermingham, Gerald

  McAvoy, Thomas

  Biffen, Rt Hon John

  McFall, John

  Body, Sir Richard

  McWilliam, John

  Brown, Ron (Edinburgh Leith)

  Madden, Max

  Buckley. George J.

  Mahon, Mrs Alice

  Campbell-Savours, D. N.

  Millan, Rt Hon Bruce

  Canavan, Dennis

  Moonie, Dr Lewis

  Clay, Bob

  Parry, Robert

  Cohen, Harry

  Patchett, Terry

  Corbyn, Jeremy

  Primarolo, Dawn

  Dalyell, Tam

  Rogers, Allan

  Eadie, Alexander

  Rowlands, Ted

  Evans, John (St Helens N)

  Shepherd, Richard (Aldridge)

  Ewing, Harry (Falkirk E)

  Skinner, Dennis

  Flannery, Martin

  Spearing, Nigel

  Galloway, George

  Taylor, Teddy (S'end E)

  Garrett, John (Norwich South)

  Williams, Alan W. (Carm'thon)

  Gordon, Mildred

  Wilson, Brian

  Grant, Bernie (Tottenham)

  Winnick, David

  Grocott, Bruce

  Wise, Mrs Audrey

  Heffer, Eric S.

  Hinchliffe, David

  Tellers for the Noes:

  Hughes, Roy (Newport E)

  Mr. Bob Cryer and Mr. Martin Redmond

  Lambie, David

  Question accordingly agreed to.
  Resolved,
  That, for the purposes of any Act resulting from the European Communities (Finance) Bill, is is expedient to authorise—
  (1) any increase attributable to that Act in the sums to be charged on and paid out of the Consolidated Fund or the National Loans Fund, or payable out of money provided by Parliament, under the European Communities Act 1972; and
  (2) the payment of any sums into the Consolidated Fund or the National Loans Fund.

  Rate Support Grant (Scotland)
  11.8 pm
  The Minister of State, Scottish Office (Mr. Ian Lang): I beg to move,
  That the Rate Support Grant (Scotland) Order 1988, dated 11 May 1988, a copy of which was laid before this House on 19 May, be approved.
  The order has three main purposes. As a result of local authorities' planned overspending this year in comparison with their guidelines, the first purpose is to reduce the amount of grant payable in respect of 1988–89 by £140 million and to determine revised grant payments accordingly.
  The second purpose is to adjust the rate support grant payable to Scottish local authorities in respect of the previous financial year, 1987–88. That involves the return of substantial grant penalties totalling £89 million in respect of that year in response to lower overspending by authorities at provisional outturn stage.
  Thirdly, the order implements minor adjustments in grant in respect of earlier years in the light of more up-to-date information. The effect is to decrease grant for 1986–87 by £0·1 million and to increase grant for 1985–86 by £3·2 million.
  I shall deal first with the reduction in grant for 1988–89. Let me begin by setting the issue in context. Last July my right hon. and learned Friend the Secretary of State announced, in respect of 1988–89 and for the second successive year, a rate support grant settlement based on local authorities' own budgets for the year then in operation—1987–88—uprated for inflation and certain other specific costs that were expected to arise. Provision for local authority relevant current expenditure in Scotland in 1988–89 was set at £3,640 million, or broadly 4 per cent. over authorities' total budgets for 1987–88. The grant percentage was maintained at 55·5 per cent., and aggregate Exchequer grant was fixed at £2,372 million. The provision and grant figures were respectively 9 per cent. and 8·2 per cent. above the corresponding figures for 1987–88— at a time when the projected general level of inflation was under 4 per cent. All that, and detailed proposals for grant distribution, were set out in the Rate Support Grant (Scotland) (No. 3) Order 1987, which the House approved on 18 January this year.
  In his announcement last July my right hon. and learned Friend described the settlement as "realistic and fair". That is a modest understatement, and it was clear at the time that the Convention of Scottish Local Authorities thought so too. In fact, the level of provision came very close to the figure of £3,677 million that COSLA was seeking for the year—within 1 per cent.
  We felt that with that settlement we had done our bit, and hoped that the local authorities would respond by careful budgeting, with low rate increases, for 1988–89. Many authorities did so: the number budgeting within guideline has increased from 28 last year to 34 this year. Further evidence of the reasonable response of many authorities is to be found in the low rate increases that large numbers of Scottish households have experienced this year. I think that it is very satisfactory that 50 per cent. of Scottish households have experienced rate increases no higher than the going rate of inflation.
  On the other hand, the extent of rate increases is not in itself a fully accurate indicator of underlying trends in
  138
  expenditure, as rates are only one way of financing expenditure. Another is, of course grant, but authorities also have at their disposal receipts, reserves and balances. Some authorities, even with low rate increases, have still approved budgets well over guidelines for the coming year, and authorities' planned expenditure as a whole in 1988–89 is 2·9 per cent. higher in volume terms than was their provisional outturn expenditure for 1987–88. In total, there is a planned expenditure over guideline of £136·5 million, or 3·8 per cent. It is particularly worth noting that Strathclyde and Lothian regions alone account for £116 million, or 85 per cent. of the overspend, while £130 million, or 95 per cent. of the overspend, is accounted for by only six authorities.
  That is the background against which we must consider the grant penalties. They are the consequence of high budgeted overspending. Local authorities were well warned before they drew up their budgets—not least in my speech in the House on 18 January this year—that the Government would respond to overspending with grant penalties.
  In considering the detail of the penalty proposals set out in the order, my right hon. and learned Friend and I have listened to and considered carefully the representations that COSLA has made to us, both in writing and through its officials, and a meeting which we had with the convention on 29 April. I acknowledge, of course, that COSLA opposes grant penalties in principle. But I would like to address myself to two more detailed comments which it made.
  First, COSLA disputed the effectiveness of penalties in persuading authorities to revise their expenditure during the year. That is not the conclusion that I draw from the provisional outturn figures for last year, which give rise to the grant now being returned in respect of that year. Many authorities' provisional outturn expenditure, by the end of the financial year, will be somewhat below their budget proposals. But I simply do not believe that, for example, Strathclyde region or Glasgow district would have reduced its spending so substantially last year were it not for the prospect of recovering £33 million and £12 million respectively, as they will do as a result of tonight's order.
  We are abandoning grant penalties after 1988–89, in recognition of the greater accountability to which local authorities will be subjected as a result of the community charge, but I believe that the efficacy of grant penalties in reducing expenditure during the year was amply demonstrated last year, and I am confident that the same will happen again.
  The second point that COSLA made was to point to the potentially damaging effect of grant penalties on community charge levels next year. The obvious first rejoinder to that is that there are no penalties for authorities that spend at or within guidelines. The fact is that authorities that consciously plan to overspend, knowing the consequences, cannot properly claim that. the consequences for their taxpayers are the Government's fault. The main purpose of grant penalties is to encourage authorities to reduce their expenditure in the course of the year, and to the extent that they do so the grant will be returned.
  As I see it, therefore, this last year of grant penalties should be an effective instrument for lowering local authority expenditure and hence the baseline against which the first community charges will be calculated. Ratepayers should see the penalties in that light; I hope

  139
  that the local authorities will do so too, and that all hon. Members representing overspending authorities will encourage them to maximise their eventual grant entitlement by reducing their expenditure as the year proceeds.
  Quite apart from these specific points which COSLA put to us on 29 April, there does appear to be a general view that local authority services are being cut to the bone. My hon. Friends who look around themselves in their constituencies will not recognise this view, and they would be right. Local authority budgets for 1988–89 have increased by 4 per cent. in volume terms over actual local authority spending in 1978–79, without there having been any significant increase in authorities' statutory burdens or responsibilities in the meantime. If, rather than adjusting for local authorities' own inflation rates, which include some excessive pay settlements, we compare local authority spending with the general rate of inflation, we come up with a real increase of 22 per cent. in council spending. That is to say that local authorities are costing the economy 22 per cent. more than 10 years ago. So it is no wonder that we have had to take action.
  I should now like to turn to details of the order. First, it reduces rate support grant for 1988–89 for authorities which have planned to overspend. The needs element of rate support grant has been reduced by £140·1 million. That reduction is concentrated entirely on the 31 overspenders.
  The grant reduction is related directly to the individual authority's degree of overspending by comparison with guideline, on the basis of a formula which is explained in the accompanying report. In arriving at the detail of our proposals, my right hon. and learned Friend and I have paid particular heed to the pattern of overspend revealed by authorities' budgets. The main features of the penalty tariff to which I would draw attention are, first, the low starting point, so that authorities planning to spend up to 2 per cent. over guideline attract a penalty rising only to 10 per cent. of their guideline excess; but there is a maximum penalty tariff of 110 per cent. for overspends of 5 per cent. over guideline and above.
  That compares with a penalty tariff last year standing at 70 per cent. and rising to 175 per cent, for spending of 3·5 per cent. in excess of guideline or above, and the reduction in grant at budget stage is broadly equivalent to the budgeted overspend. By comparison with last year, it is tailored specifically to the pattern of budgeted overspend this year. There will be limited burdens for authorities with low overspends, which may in any case be most disposed to reduce their spending to guideline as the year proceeds; but at the same time the penalty is high, with a correspondingly high incentive to economise, on those few authorities with major overspends.
  I offer the House only these two examples. Lothian region now plans to reduce its spending to 4·2 per cent. over guideline, which is the average excess over guideline for all regional councils, and as a result it will recover at the end of the year more than £33 million of the grant it is now forfeiting. If Strathclyde reduces its overspend to, say, 4 per cent. it will recover more than £47 million. These are powerful incentives to reduce spending in the course of the year, and when authorities do so, the benefit will be in reduced community charges next year.
  140
  I have mentioned Lothian region's decision to make a voluntary rate and budget reduction. As a result, we have less business to debate here this evening than would otherwise have been the case, and I shall say no more on the subject other than to welcome the sensible and realistic decision that Lothian regional council has now taken.
  In terms of previous years, the order contains grant adjustments to take account of provisional outturn and final outturn expenditure figures. In 1987–88, at budget stage, 28 authorities kept within guidelines and the total overspend was £123·2 million. Provisional outturns show that the number of authorities within guideline has increased to 30 and that the total overspend has come down to £74·6 million. The effect of this is to bring penalties for that year down from £202·3 million to £113·1 million, a saving of £89·2 million.
  Details of the 1987–88 penalties are given in annexes 3 and 4 to the report. For those authorities affected, the revised penalties are shown in column 7 in annex 4 with the adjustments that will be made to grant payments shown in column 9. I draw particular attention to the amounts of grant being returned to Strathclyde and Lothian regions and to Edinburgh and Glasgow districts.
  For 1986–87, final or near-final outturns show a small increase in spending. The effect of this is to increase penalties by £0·1 million. Details of the adjustments to penalties are shown in column 6 of table II of annex 5 to the report. For 1985–86, final outturns show a reduction in spending which has the effect of reducing penalties by £3·2 million. Details of the adjustments to penalties are shown in column 6 of table II of annex 6 to the report.
  There will be a continuing need to adjust grant in the light of up-to-date information in respect of 1988–89 and previous years, but this will be the last occasion on which grant penalties will be imposed. I hope that when grant, particularly in respect of 1988–89. is further adjusted, the news for local authorities will be good, reflecting a sensible response by local authorities to the order. I commend the order to the House.
  11.21 pm
  Mr. Donald Dewar: Some of us occasionally think that the economics of the European Community is obscure, obtuse and perverse. We now find ourselves looking at the rate support grant settlement of a Conservative Government and it is no improvement on what has gone before. I should make it clear that we oppose the order.
  I do not think that Conservative Governments never work; they sometimes achieve great things. I am indebted to my hon. Friend the Member for Motherwell, North (Dr. Reid) for the information that Mr. Alex Pagett, the important capture from the public sector, has just fled from Scottish Conservative party headquarters in Chester street. I am told that when challenged by the press about his reasons he said that he was taking advantage of the enterprise culture. I suppose that that proves that in this case it is not so much an alibi as an escape route. We ought to make it clear that taking Mr. Pagett was not a quid pro quo for Mr. Rio Stakis's knighthood.
  The order is offensive in principle and it is on principles that I want to start. The order and the clawback represent an arbitrary judgment based on questionable guidelines that have been manipulated by Ministers with political advantage in mind. The whole attitude of the Minister to

  141
  local government was well instanced in his speech. He talked about local authorities being "well warned" as if they were a collection of recalcitrant schoolchildren being reprimanded by a particularly inflexible dominie.
  The Minister talked about local authorities "costing the economy". I fear that he has the impression that any expenditure by local government is essentially wicked and can be allowed only in very special and grudging circumstances. I do not like the basis of the system. I remember on one occasion in the days when we had a Scottish Select Committee a senior official in the Scottish Office talking about objective factors subjectively applied. It might have been the other way round, but in any event it became very clear that the basis on which these guidelines have operated are anything but satisfactory and are based on expediency and not on principle.
  The global total for 1988–89 is based on the budget of the previous year plus 4 per cent. I think that there were one or two minor adjustments for the teachers' pay settlement and for the ever-burgeoning costs of administering the poll tax. It is interesting to note that the total is based on the budget for the previous year which does not suggest a vote of confidence in the basis on which the £202 million was clawed back in that financial year. It is not so much the total global figure with which we are concerned as the remarkable variations in the guidelines for individual local authorities.
  There are, for example, increases among the regions as high as 11 per cent. for Dumfries and Galloway and 10·7 per cent. for Grampian, down to 3 per cent. for Strathclyde and 3 per cent. for Lothian region. There are substantial variations among the districts. The figures vary between 3 per cent. and, in Sutherland, 44 per cent., which I concede is out of line in every sense.
  However, it is interesting to note that the authorities that have run into trouble are those whose increase in guidelines has been well below the going inflation rate and who are at the bottom of that list. Grampian, with a substantial increase in guidelines, is out of penalty altogether. Dumfries creeps in at 0·11 per cent.—that is a rather esoteric figure, if ever there was one—but Strathclyde and Lothian face the maximum penalty of 110 per cent.
  The whole matter turns on Strathclyde's position. It is being hammered for another £82 million and no one could seriously imagine that the 3 per cent. increase in guidelines this year, as against last year, could accommodate, for example, the problems that it has had and the factors to which I have already referred, such as poll tax administration and increases in teachers' salaries.
  It is simply a chaotic, artificial, vindictive and often illogical system. The Minister says that, last year, £202 million was clawed back, but some £89 million of that is now being returned. He says that as though it was a virtue, but it underlines the folly and complete irrelevance of what has been happening. The authorities have had to lie out of that money for up to a year. I am told by COSLA that the interest charges alone amounted to about £9 million. The fact that Strathclyde is getting back £33 million is not necessarily a success for common sense, although it may be a success for the Minister's spleen. That authority has had to struggle bravely to try and protect the ratepayers and has done so probably at the cost of dismantling some services and certainly of undermining financial stability. We should not applaud that or suggest that the Minister should encourage it.
  142
  Lothian region is in a particularly bizarre position. There has been an agreed reduction of £23 million, as the Minister said. That will come out of this year's expenditure, but the grant penalty is still being calculated on the basis that that £23 million will be spent. In addition, a penalty of 110 per cent. is being paid. Again, Lothian will have to wait for a whole year for that money to be returned, and interest charges and other expenses will accrue. How can that be in the ratepayers' interests? If the Minister is grateful for the fact that a common-sense solution, as he sees it, has been found and if, in some way, agreement has been reached with the Lothian region, surely the sensible course is to recognise what has happened and to take that £23 million out of its budget for grant calculation. I do not understand why that has not been done.
  I have no doubt that the Minister of State will argue that the penalties this year are less than they were last year. The sum of £202 million last year has been replaced with a sum of £ 140 million. The top rate penalty has come down from 175 per cent. to 110 per cent. I must make it clear that we believe that a clawback is wrong. There is no case for that during a financial year, and particularly in a year in which the average rate increase in Scotland is as low as 5 per cent.
  This is a very inappropriate order because, as the Minister pointed out, this is the last year of the old system and we face the Minister's brave new world of the poll tax. If we are to close the chapter, draw the line and start again, there is no case for carrying forward deficits into next year, the first year of the poll tax. In any event, it is a basically unsound system that has been foisted upon us without our consent and without any sort of wisdom or appreciation of the needs of Scotland or of the wishes of the Scottish people.
  However, be that as:it may, there is a practical argument that I should have thought would appeal to the Minister. It is not just the theory of the clean break. Inevitably, to some extent the penalties will be carried forward into the following year, and will fall specifically on the poll tax.
  No doubt the Minister will argue that if authorities cut expenditure, they will cut the deficit and relieve the additional burden on the poll tax. But many authorities have come down to the bare essentials. Some, such as Strathclyde last year, managed to meet their targets in reducing expenditure in the face of the Minister's threats and sanctions by one-off savings that will be difficult to repeat.
  I do not know anyone who denies that if the Minister goes ahead with the order and imposes the full penalty that is allowed, at least there will be an irreducible core of deficit that will have to be shifted into the following year, and into the calculations that make up the poll tax.
  It will be particularly serious because the burden will have to be borne not by the entire rating base, but by the poll tax payers alone. The commercial and industrial ratepayers are now linked to the RPI and cannot take a share of that increase. As a result, the burden will be carried by about 40 per cent. of the rating base and that will be entirely to the disadvantage of the poll tax payer.
  The Minister has said or implied that it is an advantage that the top rate of penalty has come down from 175 per cent. to 110 per cent. But allowing for the fact that the penalty will fall only on that 40 per cent. of the old rating base, to preserve parity, the penalty should be 70 per cent.

  143
  The impact of the order on the poll tax will vary from authority to authority. Those that are out of penalty will not be affected. However, COSLA tells me—and I have no reason to believe that it has not calculated carefully—that the impact on Strathclyde if the full penalty had to be met would be equivalent to £50 on the individual poll tax. Perhaps the Minister will say whether he accepts that figure. Even if Strathclyde manages to reduce the penalty that it has to pay, and even if it manages to cuts its expenditure, there will still be a significant push to poll tax levels for half Scotland's population. That is a practical illustration of a well-known and well-advertised consequence of the system that the Government have introduced.
  During our debate on the poll tax legislation, the very factors to which I am referring were explained to the Minister. It was pointed out to him by people from the press that there was a gearing effect and, inevitably, the poll tax would rise sharply to levels which the Scottish public would consider intolerable. The Minister's answer was that local authorities would not dare to do it. That says a great deal about his attitude. He is constantly expecting local authorities to respond to his wish to dismantle services and to cut provision, when, from his point of view, no doubt, perversely, but in my view very sensibly, people vote for councils that follow other policies and want the Government to follow other policies.
  It is unsatisfactory that in the last year of the present local government financial system, we will lumber local authorities and poll tax payers next year with a burden that is unfair and is a heritage from the past. The Minister knows that it is an unacceptable policy, not simply because it is the view of Opposition politicians, local government and any member of the public in Scotland who is aware and has thought through the system, but because it has been proclaimed as unacceptable by his colleagues south of the border. The Minister will be aware that when the Secretary of State for the Environment made his statement about local government finance in the House on 7 July, he made it clear that he would not follow that example. He said:
  "Under my proposals for closing down the system, grant payments to authorities will not be affected by their level of spending in 1989–90."[Official Report, 7 July; Vol. 136, c. 1200.]
  The Secretary of State for the Environment was saying very sensibly that the Government have enough problems—and, good Lord, he is right—in trying to get the crazy poll tax system off the ground without burdening it and handicapping it by enforcing a series of punitive penalties in the immeidiately preceding year which will force up the levels of poll tax. Why cannot the Scottish Office take a similarly sensible decision? We want the Minister to answer that question before we vote on the order.
  I suggest that the Minister should follow the English example on this occasion, take the same sensible decision and make it clear that he will abandon this series of punitive measures, this foraging expendition into local government finance. He should draw the line behind the present rate support grant system and start afresh next year. That would at least give the hard-pressed poll tax payer in Scotland some chance to come to terms with the unpleasant new system that has been foisted upon him.
  144
  This matter relates to a fundamental principle. I believe that the Government are still thirled to the idea of control, restriction and depression of local government expenditure for the sake of depression. They really look forward to inadequate services at an inflated price. We know that in 1981–82 the rate support grant settlement met 68·5 per cent. of agreed expenditure. That has now fallen to about 50 per cent. COSLA estimates that that has cost local government in Scotland about £3,000 million. Against the enormity of that disaster over recent years—a disaster for the ratepayers, despite the Government's rhetoric, and for the provision of services—the present £140 million may seem a paltry sum. This is a matter of principle and of practical importance. If the burden is passed on, it will be concentrated on those who will pay the poll tax for the first time and it may affect people who will be in the local government taxation net for the first time. That is wrong. We want none of that, and we will vote against the order.
  11.36 pm
  Mr. Allan Stewart: This important debate, regrettably, has been delayed. It should be recorded for the benefit of the people of Scotland that that delay was entirely due to the fact that a bunch of English Labour hooligans delayed the debate by forcing a completely unnecesary Division.
  The case that my hon. Friend the Minister put to the House——
  Mr. Harry Ewing: On a point of Order, Mr. Deputy Speaker. May not the comments of the hon. Member for Eastwood (Mr. Stewart) be regarded as a very serious reflection on the Chair, of which you were the occupant, when my hon. Friend the Member for Bradford, South (Mr. Cryer) was called to speak on the money resolution? Is it in order for the hon. Member for Eastwood to criticise your selection of my hon. Friend the Member for Bradford, South to speak on the money resolution? Is that not a very serious and scurrilous attack on the occupant of the Chair?
  Mr. Deputy Speaker(Mr. Harold Walker): The comments that I heard may be judged discourteous, but they were not out of order.
  Mr. Stewart: In no way was I criticising the Chair. It is a matter of regret that the hon. Member for Falkirk, East (Mr. Ewing) has delayed further the proceedings of this important debate.
  The case made by my hon. Friend the Minister was reasonable. It sounds generous almost to the point of excess. There is absolutely no doubt that the increased provision of 9 per cent. for 1988–89 over 1987–88 represents an increase of 4·7 per cent. on last year's budget. The penalty scale is significantly more generous than it was previously.
  The system under which the order operates has worked under successive Governments. Hearing the comments of the hon. Member for Glasgow, Garscadden (Mr. Dewar), one would have thought that Labour Governments had never passed rate support grants that were unpopular with Labour-controlled authorities. Indeed, the reverse is the case. I am delighted to see the hon. Member for Cunninghame, South (Mr. Lambie) in his place, because he has an unprecedented record of voting against rate support grant orders, irrespective of which party forms the Government.

  145
  The system has worked increasingly effectively and there is no doubt that it has been effective in Lothian and Strathclyde. It is necessary because of the lack of accountability to the electorate under the rating system. I am delighted that 1988–89 will be the last year of guidelines and that they will, in effect, be stopped by the changeover to the revenue support grant and the community charge.
  I followed my hon. Friend's reference to the real terms increase in council spending since 1978–79. I think that he said it was an increase of 22 per cent. Will my hon. Friend break down that figure because I understand that it varies considerably between different expenditure heads and that the figure for police expenditure has increased by only 10 per cent. compared with significantly higher figures for leisure and recreation, and social work?
  Mr. Brian Wilson: Does the hon. Gentleman agree that his comments and those of the Minister have ably demonstrated why Mr. Alex Pagett has preferred to move on to the exotic offices of the Stakis organisation rather than defend the system of gomeril nonsense that we are hearing about tonight?
  Mr. Stewart: That is the level of the intellectual attack on the order. That is all that Opposition Members can say. Mr. Alex Pagett can answer for himself—[HON. MEMBERS: "Can you?"] He has moved on and has said that his decision was made because he supports the enterprise culture, and so do I. It is absolutely right that people should move on when they wish to do so. The hon. Member for Cunninghame, North (Mr. Wilson) is trying to divert me from my reasoned appreciation——
  Mr. Bill Walker: Does my hon. Friend agree that none of us would be Members of this House if we had not at one point in our lives decided to change our employment? Therefore, it is humbug to criticise an individual for changing employment.
  Mr. Stewart: My hon. Friend is absolutely right, as always. He may agree that it is a pity that some Opposition Members chose to change their previous occupations.
  Will my hon. Friend the Minister of State confirm that Strathclyde is still pursuing a unique policy of keeping its police establishment below the authorised level? Such a policy is not pursued by any other police authority in Scotland, including Labour-controlled regional authorities. As I understand the position in Strathclyde—perhaps my hon. Friend can confirm or deny this—the excess in Strathclyde's 1988–89 budget is about 5·1 per cent. If the regional council reduced that to 3 per cent., I understand that that would yield a major saving to the regional council of between £65 million and £70 million, which would be of great benefit. Such a target is not unreasonable for Strathclyde.
  Furthermore, if the authority had pursued a policy of school reorganisation instead of bringing in political factors such as absurd opposition to single-sex schools which are popular with Catholics and ethnic minorities, even if unpopular with Opposition Members, it would have fared a great deal better.
  Finally, speaking as a Glasgow district ratepayer, I should like to ask my hon. Friend two questions about Glasgow district council. First, it is interesting that the director of finance of Glasgow district forecast a community charge level of £529 before the district elections and subsequently revised it downward after the
  146
  votes were counted. Secondly, can my hon. Friend comment on the widespread reports that Glasgow district has a substantial cash reserve, which has been put at between £30 million and £40 million? Clearly, it must have a contingency reserve, but, as my hon. Friend may know, that has been controversial and criticised not only by Government supporters but from within the Labour movement.
  Finally, next year we shall see the introduction of the community charge and an end to these orders. Will my hon. Friend confirm that over 90 per cent. of community charge canvasses have been returned and that the various assembled and spurious campaigns from the different Opposition parties have failed?
  11.45 pm
  Mr. Menzies Campbell: There appears to be a general welcome that this may be the last time we debate the system of clawbacks. The hon. Member for Eastwood (Mr. Stewart) has just stated the basis of his support and the House will undoubtedly draw its conclusions, and I have little difficulty in welcoming an end to these debates. The system of clawbacks has been deeply damaging to local government and offensive to local democracy. I say that to some extent invested with authority from the fact that the district council whose boundaries exactly coincide with those of my constituency did not until 1984, during the time when it was Conservative-controlled, contrive to produce a budget within guidelines. Only when the administration changed in 1984 and since then have budgets within guidelines been produced.
  What is deeply offensive about the present system is that it allows the Secretary of State to override the decisions of elected local councillors. The proper course is for those who make budgets and are responsible for expenditure to face the consequences of those decisions when they meet the electorate.
  The truth is that the political purpose of clawbacks has not been realised because the public in general have responded adversely to centralisation and appreciated. that a substantial part of the discretion of their local councillors is being taken away. The measure of the public's adverse reaction is found in the fact that not a single council which has been penalised under the clawback provisions has been reclaimed by the Conservative party. If anything, in authorities which have suffered most, the majorities against the Government party have increased substantially.
  The community charge is about to become part of local government finance in Scotland.
  Dr. John Reid: The poll tax.
  Mr. Campbell: I accept that it may now be called the poll tax. The hon. Member for Stirling (Mr. Forsyth), the Parliamentary Under-Secretary of State for Scotland, referred to it in those terms during Scottish questions, and on such matters he must for this limited purpose at least be regarded as something of an authority.
  I welcome the fact that the Convention of Scottish Local Authorities was consulted on this occasion and that the clawback has been less severe than in previous years. But that may not be unrelated to the fact that the poll tax is coming into operation. As the hon. Member for Glasgow, Garscadden (Mr. Dewar) pointed out, the

  147
  higher the penalty this year, so much higher may be the effect on the community charge next year. The burden will fall largely on those who pay the community charge or poll tax in the domestic sector, and I wait with interest, as I suspect does the House, to find out why there is to be this distinction in principle between Scotland and England. The distinction is hard to understand and I suspect that the Minister will find it even more difficult to justify when he winds up.
  The effect of clawback is to withdraw £140 million from the economy of Scotland. Its immediate effect must be a reduction in services and many of the services that will be adversely affected are those relied upon by the poor, the elderly and the disadvantaged. It is not the rich, the young or the gifted who are the beneficiaries of the services that will inevitably require to be cut. One listens to the Government explain their position, but it is notable that absent from the advice that they seem willing to give local authorities is advice on precisely what services should be cut. In a matter of responsibility, the Government seem willing to leave that problem to the duly elected local councillors.
  This is a Government who are supposed to be concerned about local government finance, responsibility and accountability. The truth is that they have presided over more centralisation and less accountability. The clawback has been an unhappy chapter in local government funding in Scotland. It has not achieved what the Government intended and it has weakened and had an adverse effect on local democracy. No tears will be shed when it comes to an end. Likewise, when the order is put to the vote, I doubt very much whether it will command support in the House other than that of the vast ranks of English Tory Members who have contrived to find compelling obligations outside the Chamber and who will troop into the Government Lobby and pass the order, just as one might expect. I wonder whether they would be as keen to pass it if the Secretary of State for the Environment had not made the announcement that he did last week.
  11.51 pm
  Mr. Bill Walker: The hon. and learned Member for Fife, North-East (Mr. Campbell) clearly showed why his party has been so long out of government and looks likely not to be in government in future years. His speech was typical of his party. It was full of aspects about what life should, could and may be, but not about good management and organisation, with accountability and responsibility.
  The hon. and learned Gentleman said that the clawback system was unpopular. I agree. It is unpopular with individuals in local government who knew full well that under the rating system there was not the accountability that the hon. and learned Gentleman talked about because under that system too few people paid and the majority did not pay, so those individuals were able to vote for expenditure, knowing full well that they would not have to pay for it. That is why there there was lack of accountability. So I am delighted that this is the last of the orders that we shall deal with.
  One of the great advantages of the community charge will be the responsibility and accountability that the hon. and learned Gentleman seems to imagine existed under the
  148
  rating system. He called it local democracy. There was nothing democratic about people passing massive expenditure that they knew their supporters would not have to pay for. That is what happened so often. It is gradually coming to an end, and not too soon.
  Mr. Ron Brown: Will the hon. Gentleman give way?
  Mr. Walker: I am delighted to give away to the hon. Gentleman who represents a party of one in the House.
  Mr. Brown: When we speak about the rate support grant, we must understand one thing. That contribution to local government does not come from the Tory party: it comes from the people, the working class, who pay into a kitty that should go into local government. That has been cut repeatedly by the Government. Millions of pounds have been diverted towards other areas, particularly armaments, Trident and so on. So it is dishonest of the hon. Gentleman to suggest that it is simply a matter of the rating system being discredited. Who discredited it? The system has been discredited by the hon. Gentleman's own party. If his Government owned up and made sure that the moneys were available to local government, the rating system would not be so bad.
  Mr. Bill Walker: We now know why the hon. Member for Edinburgh, Leith (Mr. Brown) is a party of one at the moment. He has clearly illustrated that he does not know how taxation works, or that the income tax reductions given by the Government have gone to ordinary people, the taxpayers. He may not believe that the people have welcomed that, but I know of no one who has given their tax refunds back to the Exchequer under any pretext.
  The Government have pursued a policy of attempting to control local authority expenditure. I stress "attempting" because it has not been possible to control it as one would wish. To suggest that, somehow, there has been a massive reduction in the services provided locally is nonsense. In my part of the world, services have improved in recent years and have not been decimated as the Opposition have sought to suggest. There have been substantial improvements in many of the sectors covered by local government and that has largely occurred because of the additional sums that have been made available to it. The money can only come from the taxpayer; there is no one else. Central Government have no money and local government has no money—it is provided either from central taxation or from local taxation. It is nonsense if the hon. Member for Edinburgh, Leith believes that there is a pot of gold that can be got at.
  I believe that my hon. Friend the Minister may have been over-generous in his approach to this matter, but whatever reason the Opposition believe lies behind my stance, I still believe that there are authorities that plan to spend much more than the guidelines. The guidelines were introduced by a Labour Government and it was a Labour Government who first ran into trouble with the local authorities about planned overspending.
  How lovely it is to have the selective memory of the Opposition, who forget the years between 1974 and 1979 and all the accompanying traumas. The only time there were massive reductions in local government expenditure was during that period. Since that time there have been substantial increases and it looks as if we are budgeting for a 9 per cent. increase. By any measure that is generous.
  11.57 pm
  Mr. Tony Worthington: Tonight we experienced the long-awaited moment when the Minister said something memorable.
  Mr. Norman Hogg: About Alex Pagett;.
  Mr. Worthington: It was nothing to do with Alex Pagett, it was when he said that, in the past three years, local government had been costing the economy more. The Government's attitude to local government has never been expressed more clearly.
  If one spends any money on local government the implication is that that is parasitical on the economy and dragging it down. Therefore, one must stop building roads. One must stop flushing the lavatory because that it is damaging the economy. One must stop running the tap because it is costing the economy. One must stop asking for a home help because that is costing the economy. One must not have a police or a fire service because that is costing the economy. If my son or daughter says that they want to continue to go to school they must be stopped because that is costing the economy. Nothing has exposed more clearly the Government's attitude to the local authorities, and it is the most insulting one that they could have. It is especially insulting to local government staff, many of whom are especially fine people doing a fine job. The same can be said of councillors. But the Government consider that local government is a cost to the economy. The Minister will suffer for his comment because it reveals clearly the Government's view of local authorities. There will be no end to the restrictions placed on local authorities because any local authority expenditure will be seen by central Government as a cost to the economy.
  We are told that this is the last time that we shall have the rate support grant farce. Is that right? Under the poll tax, there will be a similar debate next year when the Government have decided how they will distribute money among local authorities. There will have to be a formula, and the debate will be the same.
  I should like to know whether my conclusions on the Government's policies are correct. I estimate that in future about 80 per cent. of local authority expenditure will be controlled by central Government grant and that the business rate will be controlled also by central Government. I assume that about 20 per cent. of local authority expenditure will be controlled by local authorities. It is my experience in local government—I am sure that it was the experience also of my right hon. and hon. Friends—that the Government never provided adequately for inflation. The technique of control has been to say that inflation will he lower than it has turned out to be.
  If four fifths of local authority expenditure is controlled by central Government and one fifth by local government, and if the inflation level is 4 per cent. and the Government provide for 3 per cent., the poll tax will have to increase by 8 per cent. for inflation alone. Is that correct? If the level is 5 per cent. and the Government provide for 4 per cent., is it correct that the authorities will have to find 9 per cent. extra in poll tax? If the level is 6 per cent. and the Government provide for 4 per cent., will the poll tax have to increase by 14 per cent? If inflation is 6 per cent. and the Government provide for 3 per cent., will the poll tax have to increase by 18 per cent? The answer to my questions is
  150
  yes because it is easy to make the necessary calculations. That being so, how can we talk about local accountability? The behaviour of central Government will determine local government expenditure.
  In the settlement for this year, Lothian, Strathclyde and 11 district councils had a provision for inflation of 3 per cent. Inflation for local authorities is running at 6 per cent. If the pattern continues, the poll tax will have to increase by 18 per cent. The gearing effect is such that a local authority region such as Dumfries and Galloway, which this year was given provision for an 11 per cent. increase in its expenditure—that was arranged for it by a local and convenient Minister—would have to find some money for the poll tax in the circumstances that I have postulated.
  After repeated attempts to obtain an answer from the Government, I now want an answer on the uniform business rate. According to the Tory argument, high local government expenditure has driven jobs away from areas, and one reason why they control the business rate is to protect businesses. However, in Scotland, we have the worst of all possible worlds. They have said that they will take the existing business rate set by Strathclyde, Dumfries and Galloway or Lothian and index-link it. They said that they will not harmonise it within Scotland, but they will maintain it in perpetuity.
  What is the logic of that? The logic should be that one would seek to harmonise within Scotland and have a uniform business rate for Scotland, but we will not get that. Why? Dumfries and Galloway would lose—its rates would increase by 40 per cent.
  Mr. Nigel Griffiths: It is rigged.
  Mr. Worthington: As my hon. Friend says, it is rigged. However, the much bigger issue is when will the Government come clean about when they will introduce a uniform business rate for England, Wales and Scotland. It is not just the Opposition who are concerned about that, but the CBI, the Scottish Council (Development and Industry) and the chambers of commerce. They see Scotland losing substantially because, when a uniform business rate is introduced in England and Wales, there will be a transfer of resources from the south of England to the north. The substantial advantage that is already enjoyed by the north of England in comparison with rates in Scotland will become even greater.
  In Scotland, businesses pay between two and two and a half times as much in business rates as they would in the north of England. To compare the midlands with Scotland, the national exhibition centre, which is five times the size of the Scottish exhibition centre, pays the same rates. That disadvantage will be made even worse.
  When the Minister was questioned, he said that he could not anticipate what will happen, because the revaluation has not been carried out. Other sections of the Government have done that. A Treasury Paper called "Running Costs Guidance: Location of Work", issued in March 1988, said:
  "The effects of the uniform rate poundage in England are expected to include a reduction in average rates bills in much of the North and Midlands."
  That is official.
  The Scottish Council (Development and Industry), the Scottish CBI, the chambers of commerce and the Opposition cannot obtain an answer from the Government on why there will be a £300 million disadvantage to Scottish industry, starting in 1990. The

  151
  chief executive of the Scottish Tories, John MacKay—of beloved memory—admitted that there would be a period of at least 10 years from 1990 to the year 2000 when Scottish business would be disadvantaged to that extent, and the Government appear to be taking no note of that. Why will the Minister not tell us why a different rate of taxation is to be imposed on Scottish businesses as compared with businesses in the north of England?
  12.9 am
  Mr. Andrew Welsh: I note that the Conservative party has run out of speakers. I shall speak briefly to allow the maximum number of speakers from the Opposition, because it is important that the voice of Scotland in opposition to this disgraceful measure is heard as fully as possible.
  The point of the order is to withdraw about £140 million from the local government system in Scotland—money that could be used to provide services, create employment and allow local authorities to maintain and increase their standards of service. The people of Scotland will be the losers from the order, because it will affect the provision of services to individuals, families and the business community.
  The Government have a clear and consistent policy of withdrawing financial support from local authorities, which has the inevitable consequence of poorer services or higher rates bills, and, as the Government also operate a clawback penalty system, the inevitable consequences of the order will be poorer local government services for the people. It is yet another example of how central Government are destroying Scottish local government. By this order they are removing £140 million from local authorities' budgets, but at the same time they load new legislation and new financial burdens on the system. The idea of runaway local government spending is a myth, and apart from a few maverick exceptions, the reality is of a highly competent, professional and effective local government system in Scotland coping daily with myriad needs.
  The real culprit in rates increases—demonstrably so if one studies the excellent academic work by Dr. Arthur Midwinter and others in our universities—is the withdrawal by central Government of rate support grant funding, and with this order the Government are at it again. They have presided over a massive deliberate withdrawal of funds from Scottish local authorities. Between 1978–79 and 1988–89, the cumulative reduction in local authority grant, calculated at 1988–89 figures, was £1,930 million. Government policy has impoverished local government services at district, regional and island council levels. No national organisation can readily absorb such punishment, and the victim of the Government's policy of loading new responsibilities on to local authorities at the same time as withdrawing their funds is the provision of services to local people.
  The Government have acted unfairly towards Scottish local authorities, and their policy must affect every ratepayer. COSLA says:
  "The Secretary of State has already agreed that the penalty system will be withdrawn as from 1 April 1989 and the imposition of the £140 million penalty in the current year will create a situation whereby community charges will require to be considerably higher than would otherwise have been the
  152
  case. Unless service levels are reduced penalties will be carried over into 1989/90 and rest solely with community charge payers."
  We should contrast the Scottish Office treatment of poll tax payers with the position in England, where no penalties will be applied in the final year. No wonder that COSLA feels that a similar arrangement should apply to Scotland. We are entitled to ask the Government—and to receive an answer tonight—why Scotland should be treated less fairly than England over the poll tax.
  The order is typical of the cavalier and unfair treatment meted out to local authorities by successive Governments. It is unfair and it will create massive and unnecessary problems for the local authorities. It should be rejected.
  12.15 am
  Mrs. Maria Fyfe: Once again I intend to respond to the disgraceful attack on the integrity of the director of finance of Glasgow district council. This person has been accused of telling the council, and thereby the Glasgow public, what it suits the Labour administration to hear. I worked closely with Mr. English for several years. I know from direct experience that he would not shirk telling the council what it did not want to hear. He is not a person who seeks to curry favour. That attack says much more about the hon. Member for Eastwood (Mr. Stewart) than about Mr. English.
  The hon. Member for Eastwood said that he thought that the clawback of rate support grant was justified, on the peculiar ground that Glasgow district council carries a large contingency fund or surplus. That is pretty strange reasoning. The Government say that it relates purely to overspend. They would be delighted if councils amassed funds and did not spend them on services, but according to the hon. Member for Eastwood they are being punished for doing so. He knows that Glasgow district council held its rate steady for several years and that this year there was a slight decrease. It is not about vastly increased rates or about holding a surplus; it is supposed to be about excessive and unreasonable expenditure.
  As the average increase was only 3 per cent., do the Minister and the hon. Member for Eastwood think that 3 per cent. was excessive and unreasonable? [Interruption.] If the hon. Member for Eastwood wants to intervene, I might allow him to do so, but I do not intend to respond to stupid interruptions from a sedentary position. [Interruption.]
  Mr. Deputy Speaker (Mr. Harold Walker): Order. There are too many sedentary interruptions from both sides of the House. I should very much like to listen to the hon. Lady's speech.
  Mrs. Fyfe: But the sedentary interruptions on this side of the House are supportive.
  I shall put some questions to the Minister, not in the hope that he will answer them but to have them on record. I fully expect the Minister to do what he has done on previous occasions at the Dispatch Box and to avoid answering my questions. Does he accept that inflation, poll tax administration and teachers' salaries account for the majority of the budgeted excess that the order intends to penalise? If so, does he think that that is fair, or will he admit that it is a blatant attempt to force real cuts?
  Does the Minister think that a 3 per cent. increase on the previous year's budgets was excessive and unreasonable? If so, does he think that anybody else thinks that it

  153
  was excessive and unreasonable? If not, why is the majority of the penalty falling on those authorities whose budgets have increased by only 3 per cent.? What justification can there be for the top level of penalty exceeding more than a pound for pound loss of grant? Does he intend to impose £100 on two adults in a household in the first year of the poll tax, or does he hope that those councils will make drastic budget cuts and thereby provide a worse service than the people voted for in recent district elections, in the previous regional elections and in the general election?
  Does he believe that the domestic sector—we are talking local government jargon here, but everyone in the House ought to know that "domestic sector" means ordinary families and not business ratepayers—should bear the burden, when they represent only 40 per cent. of the total rating base?
  Finally, how can the Minister explain the imposition of this penalty on Scotland, when the Secretary of State for the Environment dare not impose any such penalty on England?
  12.19 am
  Mr. John McFall: The order concerns £140 million that is being withdrawn from 1 April 1989, but £136 million of that—over 97 per cent.—is a result of the Government's negligence in refusing to reflect the rate of inflation in rate support resettlement grants over the past six or seven years. Only £4 million is a consequence of local authorities' actions. That means that poll tax levels will have to be higher than they would otherwise have been, as the penalties will have to be carried forward.
  During the past six months we have heard that the Scottish legislation and that for England and Wales will come into line in defining such categories as the severely mentally handicapped. Why, then, can the Minister not pledge that these penalties will not be carried forward for 12 months, as the Secretary of State for the Environment did in his statement of 7 July in regard to England and Wales? Otherwise, next April, Scotland will have the poll tax along with rate capping, and it will be unique in that respect. If the Government want to be fair, why cannot they give us the same pledge that the Secretary of State for the Environment gave to England and Wales?
  The penalty figures suggest that an average couple in Strathclyde region will have to pay an extra £100. That will destroy at a stroke the so-called link between spending and accountability to which the Government have referred during the past six, 12 or 18 months. It will also destroy the link between spending and the poll tax charge.
  In future the Government will provide about 80 per cent. of local authorities' funds, with the authorities having to find the rest. If anything, that is a centralising measure. The Chartered Institute of Public Finance and Accountancy has carried out a survey over the past few months of nearly 50 local authorities in England and Wales. It found that, on the figures available, in about 26 authorities poll tax levels would go up while the authorities' spending fell. In 22, they found the opposite. There is no accountability, and carrying forward the penalties will only penalise Scottish poll taxpayers even more.
  It is said that the tariff will be reduced from 175 to 110 per cent. As my hon. Friend the Member for Glasgow, Maryhill (Mrs. Fyfe) has said, the burden will fall entirely
  154
  on the domestic sector. I well remember in the past few years asking Strathclyde regional council to petition the Government to save social projects in our area—projects such as latchkey schemes and schemes to help alcoholics. Not only did the Government not save the projects but they penalised Strathclyde regional council 110 per cent. over budget because the council had a conscience and decided to save them.
  If the Government have any conscience, they should let the poll tax payers in Scotland start with a clean sheet. As my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) said, over the past few years rate support grant has fallen from 68·5 per cent. in 1981 to 50 per cent. now. If the order is passed, there will be a total loss of £3 billion. Translated into its value in terms of rates, that means that poll tax payer in Scotland from next year would be entitled to a two-year rate-free period if the money were reinstated.
  The problems of local government are nothing to do with local authorities, which have done their best to balance the books and provide services of all kinds over the past seven years. Their problems stem from the actions of the Government. If the Government have any conscience they will cancel the penalties that are being carried over to next year and let the poll tax payers of Scotland start with a clean sheet.
  12.27 am
  Mr. Thomas Graham: We have heard the Minister castigate Strathclyde regional council. It was not so long ago that the previous Secretary of State for Scotland, the right hon. Member for Ayr (Mr. Younger), went around the world praising that council as an excellent, prudent and responsible authority. The council is in an area of huge deprivation, made worse since the Government came to power in 1979. Since then, the Government have cut almost £2 billion from Strathclyde alone.
  Since 1979, deprived areas have got worse; in 1979 there were 45—now 78 are so designated. I can see the Secretary of State having a wee laugh. I can assure him that people in Strathclyde are not laughing at the damage inflicted on them by the Government.
  The Minister mentioned local government guidelines. When Dick Stewart was leader of Strathclyde regional council he said that no one could tell it what the guidelines were. The figures were mythical, picked out of a hat. The officers and councillors of Strathclyde would learn more from the "Hitchhiker's Guide to the Galaxy" than from what the Scottish Office puts out.
  It is appalling that the Minister is attacking Strathclyde, given that it looks after nearly half the population of Scotland—2,500,000 people who are waiting with trepidation for the poll tax to be implemented. If the Minister goes ahead with the clawback there will he a lot of weeping and wailing in Strathclyde because of the damage that that would inflict on the area. For the first time ever, the council would have to consider cutting home helps, concessionary fares, social work and services for the elderly—and the police. That would be a tragedy. The Government should reverse the policy of clawback and give the people of Strathclyde some hope and some future to look forward to.
  Instead of castigating Strathclyde, the Government should start to give it a bit of support. They should give

  155
  some encouragement to local councillors to carry out their mandate. Those councillors were democratically elected and the number of Labour councillors has increased. They have not lost seats but have gained seats at every election. The people of Strathclyde have shown that they wish to have Labour-controlled councils and no Tories.
  12.30 am
  Mr. Brian Wilson: Everything that my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) has said is true. Perhaps the most eloquent comments were the horse laughs of ignorance from Conversative Members in response to the references to poverty in Strathclyde. At other times Conservative Members, and especially Scottish Office Ministers, seek to exploit the achievements of Glasgow and Strathclyde, but when it comes to the bit, the mass of people in those places need Government financial support to give them a decent standard of living and the decent housing and services that they desperately require.
  Ministers are only too happy to participate in the PR. With one hand they seek to take the credit for the achievements of Glasgow and Strathclyde and with the other they take away the resources that Glasgow, Strathclyde and other districts in Strathclyde so badly need.
  Scottish Office Ministers are making a deliberate and cynical attempt to raise the starting point of the poll tax in Scotland. That is what the measure is about. If the people of Scotland take note of nothing else that comes out of the debate, they must take note of the contrast between what the Secretary of State for Scotland and his sidekick the Minister of State are doing compared to what is happening in England. What they are doing is in direct contrast to the words of the Secretary of State for the Environment who specifically said that no grant penalty system would operate in England in the final year before the introduction of the community charge. He said:
  "Under my proposals for closing down the system, grant payments to authorities will not be affected by their level of spending in 1989–90."—[Official Report, 7 July 1988; Vol. 136, c. 1200.]
  Those words and their contrast to what Scottish Office Ministers are about tonight could not be more specific. Ministers are forcing up the level of poll tax in Scotland in some confused hope of gaining political advantage.
  We have had news tonight of the departure from office of Mr. Alex Pagett, hired less than a year ago as the propaganda minister for the Vichy regime in New St. Andrew's house. It was discreditable for Mr. Pagett to take the job in the first place, but credit is due to him for, within a few months, saying that he has no stomach for the task of acting as propagandist-in-chief for dishonest Ministers who consistently seek to impose on the people of Scotland policies for which they were not elected. Those policies have no popular mandate in Scotland and can be imposed only by what the Secretary of State for Scotland calls the Gatling gun. If the Government choose to rule by the Gatling gun they cannot expect any respect from the Opposition or from the electors in Scotland. They cannot even retain the loyalty of the hirelings that they have brought in to retrieve the discredited name of the Conservative party in Scotland.
  12.33 am
  Mr. Lang: It is conventional to say at this stage that the debate has been interesting and sometimes productive. The only substantive point of any novelty that has emerged in this debate is the Pagett point. I am happy to be able to assure the House of Mr. Pagett's departure does not incur penalty and will not affect the guidelines of the Scottish Conservative party. Our guideline remains the prudent handling of the economy, and that is evidenced by the order.
  The hon. Member for Glasgow, Garscadden (Mr. Dewar) raised a number of matters and claimed that Strathclyde and Lothian were being hammered. He carefully played down the point that Strathclyde was budgeting no less than £75 million over its guideline and that Lothian was about £40 million over budget.
  As my hon. Friend the Member for Eastwood (Mr. Stewart) pointed out, if the authority were to reduce its guidelines by just 1 per cent., it would reduce its penalty by £44 million. If it reduced it by 2 per cent., its saving would be over £66 million. There is a strong and clear incentive to the Strathclyde local authority to reduce its spending for the sake of its ratepayers and for the sake of its community charge payers next year. As Opposition Members have said, the penalties will be carried forward to the community charge, but, by the same token, a deduction in spending will also carry forward a benefit to the community charge payers next year.
  When the hon. Member for Garscadden suggests that the local authorities would have some difficulty in meeting those targets, I should again point out to him that the guidelines this year are 4·7 per cent. up on last year's budgets and no less than 8·3 per cent. up on guidelines.
  The hon. Gentleman made a bizarre point about the gearing of the community charge.
  Mr. Tom Clarke: Will the Minister give way?
  Mr. Lang: I am sorry, but I have no time to give way.
  The hon. Gentleman also referred to the effect that the penalty would have on community charge payers. Community charge payers will face a burden next year if spending is not reduced to guideline, but it works the other way round, and the benefit to community charge payers can be considerable.
  Suddenly my right hon. Friend the Secretary of State for the Environment has become the hero of the Labour Benches, as a result of his announcement that there will be no penalty in England in the year before the introduction of the community charge. The impact of that is, of course, that grant penalty will end in Scotland and in England in the same year. I should have thought that the Opposition Benches would have welcomed that. If we do something in Scotland before they do it in England, we are being guinea pigs. If we do it after them, we are being lemmings. If we do it at the same time, we are accused of being copycats.
  Mr. Dewar rose——
  Mr. Lang: I shall not give way, as I have only two minutes left.
  The hon. Gentleman raised the question of cuts in the rate support grant and the hon. Member for Banff and Buchan (Mr. Salmond)——
  Mr. Tom Clarke: On a point of order, Madam Deputy Speaker. On a major issue of this kind—it is almost a constitutional issue—influenced by the policy in Cabinet, which the Secretary of State for Scotland has accepted, would it not be in order, even at this last minute——
  Madam Deputy Speaker (Miss Betty Boothroyd): Order. That is not a point of order for the Chair. I call Mr. Lang.
  Mr. Lang: The hon. Member for Garscadden raised the question of cuts in the rate support grant, a familiar old story. He forgot to refer the House to the fact that the last Labour Government, in two successive years, cut the rate support grant by a total of no less than 6·5 per cent. No cut by any Conservative Government has ever come close to that. The hon. Gentleman also forgot that the average aggregate Exchequer grant has been increased considerably. Over the past five years, it has risen by 23 per cent. inflation has risen by 25 per cent., yet rates have risen by 52 per cent.
  The hon. Gentleman referred to grant penalties as artificial, vindictive and arbitrary, but let him reflect on the history of grant penalties and recall that it was a Labour Government who brought in grant penalties in the first place—admittedly, as a crude and high-handed mechanism for controlling local authorities. We have considerably improved and refined the system, first, by excluding authorities below guideline from penalty, which were penalised under the last Labour Government; secondly, by relating penalties directly to overspend, instead of the crude impost of the last Labour Government; and, thirdly, by providing for the penalties to be revised both at provisional and at outturn stages. We now have a tariff that impacts moderately on low-spending—
  It being one and a half hours after the commencement of proceedings on the motion, MADAM DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14.
  The House divided: Ayes 242, Noes 184.

  Division No. 406]

  [12.38 am

  AYES

  Aitken, Jonathan

  Bowden, Gerald (Dulwich)

  Alexander, Richard

  Bowis, John

  Alison, Rt Hon Michael

  Braine, Rt Hon Sir Bernard

  Allason, Rupert

  Brazier, Julian

  Amess, David

  Brittan, Rt Hon Leon

  Amos, Alan

  Brown, Michael (Brigg & Cl't's)

  Arbuthnot, James

  Bruce, Ian (Dorset South)

  Arnold, Jacques (Gravesham)

  Burns, Simon

  Ashby, David

  Burt, Alistair

  Atkins, Robert

  Butcher, John

  Atkinson, David

  Butler, Chris

  Baker, Rt Hon K. (Mole Valley)

  Butterfill, John

  Baker, Nicholas (Dorset N)

  Carlisle, John, (Luton N)

  Baldry, Tony

  Carlisle, Kenneth (Lincoln)

  Batiste, Spencer

  Carrington, Matthew

  Beaumont-Dark, Anthony

  Carttiss, Michael

  Bellingham, Henry

  Cash, William

  Bendall, Vivian

  Chope, Christopher

  Bennett, Nicholas (Pembroke)

  Clark, Sir W. (Croydon S)

  Benyon, W.

  Coombs, Simon (Swindon)

  Bevan, David Gilroy

  Currie, Mrs Edwina

  Biffen, Rt Hon John

  Davies, Q. (Stamf'd & Spald'g)

  Blackburn, Dr John G.

  Douglas-Hamilton, Lord James

  Blaker, Rt Hon Sir Peter

  Dunn, Bob

  Bonsor, Sir Nicholas

  Durant, Tony

  Boscawen, Hon Robert

  Emery, Sir Peter

  Boswell, Tim

  Fallon, Michael

  Bottomley, Peter

  Field, Barry (Isle of Wight)

  Bottomley, Mrs Virginia

  Forman, Nigel

  Bowden, A (Brighton K'pto'n)

  Gale, Roger

  158

  Garel-Jones, Tristan

  Miller, Sir Hal

  Gorman, Mrs Teresa

  Mills, Iain

  Gow, Ian

  Mitchell, Andrew (Gedling)

  Grant, Sir Anthony (CambsSW)

  Mitchell, David (Hants NW)

  Greenway, Harry (Ealing N)

  Moate, Roger

  Greenway, John (Ryedale)

  Montgomery, Sir Fergus

  Gregory, Conal

  Morrison, Sir Charles

  Griffiths, Peter (Portsmouth N)

  Morrison, Rt Hon P (Chester)

  Grist, Ian

  Moss, Malcolm

  Ground, Patrick

  Moynihan, Hon Colin

  Gummer, Rt Hon John Selwyn

  Neale, Gerrard

  Hamilton, Hon Archie (Epsom)

  Needham, Richard

  Hamilton, Neil (Tatton)

  Neubert, Michael

  Hanley, Jeremy

  Newton, Rt Hon Tony

  Hannam, John

  Nicholls, Patrick

  Hargreaves, A. (B'ham H'll Gr')

  Nicholson, David (Taunton)

  Hargreaves, Ken (Hyndburn)

  Nicholson, Emma (Devon West)

  Harris, David

  Onslow, Rt Hon Cranley

  Haselhurst, Alan

  Oppenheim, Phillip

  Hawkins, Christopher

  Page, Richard

  Hayes, Jerry

  Paice, James

  Hayhoe, Rt Hon Sir Barney

  Patnick, Irvine

  Hayward, Robert

  Patten, Chris (Bath)

  Heathcoat-Amory, David

  Pawsey, James

  Heseltine, Rt Hon Michael

  Peacock, Mrs Elizabeth

  Higgins, Rt Hon Terence L.

  Porter, David (Waveney)

  Hind, Kenneth

  Powell, William (Corby)

  Hogg, Hon Douglas (Gr'th'm)

  Price, Sir David

  Holt, Richard

  Raffan, Keith

  Howard, Michael

  Raison, Rt Hon Timothy

  Howarth, Alan (Strat'd-on-A)

  Redwood, John

  Howarth, G. (Cannock & B'wd)

  Renton, Tim

  Howell, Rt Hon David (G'dford)

  Rhodes James, Robert

  Hughes, Robert G. (Harrow W)

  Riddick, Graham

  Hunt, David (Wirral W)

  Rifkind, Rt Hon Malcolm

  Hunt, John (Ravensbourne)

  Roberts, Wyn (Conwy)

  Hunter, Andrew

  Rossi, Sir Hugh

  Irvine, Michael

  Rost, Peter

  Jack, Michael

  Rowe, Andrew

  Janman, Tim

  Rumbold, Mrs Angela

  Johnson Smith, Sir Geoffrey

  Ryder, Richard

  Jones, Gwilym (Cardiff N)

  Sackville, Hon Tom

  Jones, Robert B (Herts W)

  Sainsbury, Hon Tim

  Kellett-Bowman, Dame Elaine

  Sayeed, Jonathan

  Key, Robert

  Shaw, David (Dover)

  King, Roger (B'ham N'thfield)

  Shaw, Sir Giles (Pudsey)

  Kirkhope, Timothy

  Shaw, Sir Michael (Scarb)

  Knapman, Roger

  Shephard, Mrs G. (Norfolk SW)

  Knight, Greg (Derby North)

  Shepherd, Colin (Hereford)

  Knowles, Michael

  Shepherd, Richard (Aldridge)

  Knox, David

  Shersby, Michael

  Lamont, Rt Hon Norman

  Sims, Roger

  Lang, Ian

  Skeet, Sir Trevor

  Latham, Michael

  Smith, Sir Dudley (Warwick)

  Lawrence, Ivan

  Smith, Tim (Beaconsfield)

  Leigh, Edward (Gainsbor'gh)

  Soames, Hon Nicholas

  Lennox-Boyd, Hon Mark

  Speed, Keith

  Lester, Jim (Broxtowe)

  Spicer, Sir Jim (Dorset W)

  Lightbown, David

  Spicer, Michael (S Worcs)

  Lord, Michael

  Squire, Robin

  Luce, Rt Hon Richard

  Stanbrook, Ivor

  Lyell, Sir Nicholas

  Steen, Anthony

  McCrindle, Robert

  Stern, Michael

  Macfarlane, Sir Neil

  Stevens, Lewis

  MacGregor, Rt Hon John

  Stewart, Allan (Eastwood)

  MacKay, Andrew (E Berkshire)

  Stewart, Andy (Sherwood)

  McLoughlin, Patrick

  Stradling Thomas, Sir John

  McNair-Wilson, P. (New Forest)

  Sumberg, David

  Madel, David

  Summerson, Hugo

  Major, Rt Hon John

  Tapsell, Sir Peter

  Malins, Humfrey

  Taylor, Ian (Esher)

  Mans, Keith

  Taylor, John M (Solihull)

  Maples, John

  Temple-Morris, Peter

  Marland, Paul

  Thompson, Patrick (Norwich N)

  Marshall, John (Hendon S)

  Thorne, Neil

  Martin, David (Portsmouth S)

  Thornton, Malcolm

  Mates, Michael

  Thurnham, Peter

  Maude, Hon Francis

  Townend, John (Bridlington)

  Mellor, David

  Tredinnick, David

  Meyer, Sir Anthony

  Trippier, David

  159

  Trotter, Neville

  Whitney, Ray

  Twinn, Dr Ian

  Widdecombe, Ann

  Viggers, Peter

  Wiggin, Jerry

  Waddington, Rt Hon David

  Wilkinson, John

  Waldegrave, Hon William

  Wilshire, David

  Walden, George

  Wood, Timothy

  Walker, Bill (T'side North)

  Woodcock, Mike

  Waller, Gary

  Yeo, Tim

  Ward, John

  Young, Sir George (Acton)

  Wardle, Charles (Bexhill)

  Watts, John

  Tellers for the Ayes:

  Wells, Bowen

  Mr. Peter Lloyd and Mr. David Maclean.

  Wheeler, John

  NOES

  Abbott, Ms Diane

  Dalyell, Tam

  Adams, Allen (Paisley N)

  Davies, Ron (Caerphilly)

  Allen, Graham

  Davis, Terry (B'ham Hodge H'l)

  Anderson, Donald

  Dewar, Donald

  Archer, Rt Hon Peter

  Dixon, Don

  Armstrong, Hilary

  Dobson, Frank

  Ashley, Rt Hon Jack

  Doran, Frank

  Barnes, Harry (Derbyshire NE)

  Duffy, A. E. P.

  Barron, Kevin

  Dunnachie, Jimmy

  Battle, John

  Eadie, Alexander

  Beckett, Margaret

  Eastham, Ken

  Bell, Stuart

  Evans, John (St Helens N)

  Benn, Rt Hon Tony

  Ewing, Harry (Falkirk E)

  Bennett, A. F. (D'nt'n & R'dish)

  Ewing, Mrs Margaret (Moray)

  Bermingham, Gerald

  Fatchett, Derek

  Blunkett, David

  Faulds, Andrew

  Boateng, Paul

  Fields, Terry (L'pool B G'n)

  Boyes, Roland

  Flannery, Martin

  Bradley, Keith

  Flynn, Paul

  Bray, Dr Jeremy

  Foot, Rt Hon Michael

  Brown, Gordon (D'mline E)

  Foster, Derek

  Brown, Nicholas (Newcastle E)

  Fraser, John

  Brown, Ron (Edinburgh Leith)

  Fyfe, Maria

  Buckley, George J.

  Galbraith, Sam

  Campbell, Menzies (Fife NE)

  Galloway, George

  Campbell, Ron (Blyth Valley)

  Garrett, John (Norwich South)

  Campbell-Savours, D. N.

  Garrett, Ted (Wallsend)

  Canavan, Dennis

  George, Bruce

  Clark, Dr David (S Shields)

  Godman, Dr Norman A.

  Clarke, Tom (Monklands W)

  Golding, Mrs Llin

  Clay, Bob

  Gordon, Mildred

  Clelland, David

  Gould, Bryan

  Clwyd, Mrs Ann

  Graham, Thomas

  Cohen, Harry

  Grant, Bernie (Tottenham)

  Coleman, Donald

  Griffiths, Win (Bridgend)

  Cook, Frank (Stockton N)

  Grocott, Bruce

  Cook, Robin (Livingston)

  Hattersley, Rt Hon Roy

  Corbett, Robin

  Haynes, Frank

  Corbyn, Jeremy

  Heffer, Eric S.

  Cousins, Jim

  Hinchliffe, David

  Cryer, Bob

  Hogg, N. (C'nauld & Kilsyth)

  Cummings, John

  Holland, Stuart

  Cunliffe, Lawrence

  Home Robertson, John

  160

  Hood, Jimmy

  O'Neill, Martin

  Howarth, George (Knowsley N)

  Orme, Rt Hon Stanley

  Howell, Rt Hon D. (S'heath)

  Parry, Robert

  Hughes, John (Coventry NE)

  Patchett, Terry

  Hughes, Robert (Aberdeen N)

  Pike, Peter L.

  Hughes, Roy (Newport E)

  Powell, Ray (Ogmore)

  Hughes, Sean (Knowsley S)

  Primarolo, Dawn

  Illsley, Eric

  Quin, Ms Joyce

  John, Brynmor

  Radice, Giles

  Jones, Martyn (Clwyd S W)

  Redmond, Martin

  Kaufman, Rt Hon Gerald

  Rees, Rt Hon Merlyn

  Lambie, David

  Reid, Dr John

  Lamond, James

  Richardson, Jo

  Leadbitter, Ted

  Robertson, George

  Leighton, Ron

  Robinson, Geoffrey

  Lestor, Joan (Eccles)

  Rogers, Allan

  Lewis, Terry

  Rooker, Jeff

  Litherland, Robert

  Ross, Ernie (Dundee W)

  Livsey, Richard

  Rowlands, Ted

  Lloyd, Tony (Stretford)

  Salmond, Alex

  Lofthouse, Geoffrey

  Sedgemore, Brian

  Loyden, Eddie

  Sheerman, Barry

  McAllion, John

  Sheldon, Rt Hon Robert

  McAvoy, Thomas

  Shore, Rt Hon Peter

  McCartney, Ian

  Short, Clare

  Macdonald, Calum A.

  Skinner, Dennis

  McFall, John

  Smith, Andrew (Oxford E)

  McKay, Allen (Barnsley West)

  Smith, C. (Isl'ton & F'bury)

  McKelvey, William

  Snape, Peter

  McLeish, Henry

  Spearing, Nigel

  McNamara, Kevin

  Steel, Rt Hon David

  McTaggart, Bob

  Steinberg, Gerry

  McWilliam, John

  Thompson, Jack (Wansbeck)

  Madden, Max

  Turner, Dennis

  Mahon, Mrs Alice

  Vaz, Keith

  Marek, Dr John

  Wall, Pat

  Marshall, Jim (Leicester S)

  Wardell, Gareth (Gower)

  Martin, Michael J. (Springburn)

  Wareing, Robert N.

  Martlew, Eric

  Welsh, Andrew (Angus E)

  Maxton, John

  Welsh, Michael (Doncaster N)

  Meacher, Michael

  Williams, Rt Hon Alan

  Meale, Alan

  Williams, Alan W. (Carm'then)

  Michael, Alun

  Wilson, Brian

  Millan, Rt Hon Bruce

  Winnick, David

  Moonie, Dr Lewis

  Wise, Mrs Audrey

  Morgan, Rhodri

  Worthington, Tony

  Morley, Elliott

  Wray, Jimmy

  Morris, Rt Hon J. (Aberavon)

  Mowlam, Marjorie

  Tellers for the Noes:

  Mullin, Chris

  Mr. Adam Ingram and Mr. Nigel Griffiths.

  Murphy, Paul

  Question accordingly agreed to.
  Resolved,
  That the Rate Support Grant (Scotland) Order 1988, dated 11th May 1988, a copy of which was laid before this House on 19th May, be approved.

  Court of Session Bill [Lords]
  Considered in Committee.
  [MISS BETTY BOOTHROYD in the Chair.]
  Clauses 1 to 51 ordered to stand part of the Bill.

  Court of Session Bill [Lords]
    New clause 1

      RESTORATION OF POSSESSION AND SPECIFIC PERFORMANCE
      'The Court may, on application by summary petition—

      (a) order the restoration of possession of any real or personal property of the possession of which the petitioner may have been violently or fraudulently deprived; and

      (b) order the specific performance of any statutory duty, under such conditions and penalties (including fine and imprisonment, where consistent with the enactment concerned) in the event of the order not being implemented, as to the Court seem proper.'. —[Lord James Douglas-Hamilton.]

      Brought up, and read the First time.
      12.49 am
      The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): I beg to move, That the clause be now read a Second time.
      The Second Deputy Chairman of Ways and Means (Miss Betty Boothroyd): With this it will be convenient to discuss Government new clause 2 and Government amendments Nos. 1 to 3.
      Lord James Douglas-Hamilton: In speaking to new clause 1, I shall speak also to the second new clause and to three amendments. I intend to propose them en bloc because none involves amendments to the law.
      The main amendment is made by new clause 2, which concerns section 89 of the Court of Session Act 1868. The Scottish Law Commission's original view, as recorded in its report on this consolidation measure, was that this provision should be repealed in its entirety since it related to the Bill Chamber which was abolished in 1933. However, the commission has now reconsidered that view and wishes to restrict the appeal to those parts of section 89 which specifically relate to Bill Chamber proceedings.
      Accordingly, new clause 2 re-enacts those provisions of section 89 which cannot be regarded as wholly obsolete as relating to the Bill Chamber and which relate to the powers of the Court of Session. For example, an interdict normally prevents an action, but section 89 of the 1868 Act also allows the granting of specific relief. Therefore, it is desirable that that power should be retained so that there is no doubt about the extent of the court's powers.
      In order to achieve parity of treatment in the Bill of section 89 and section 91 of the 1868 Act, new clause 1 re-enacts also those provisions in section 91 which are not obsolete. Section 91 is similar in nature to section 89 of the 1868 Act and it should be helpful to practitioners if both provisions are dealt with in the Bill in the same manner—[Interruption.] Well, the point is that unless a provision is entirely obsolete it should not be rubbed out of existence without the House expressing a view on it. The point is that we are consolidating the law.
      Amendments Nos. 1 to 3 are purely technical amendments. They are aimed at making clear which of the repealed provisions are re-enacted in the Bill or are repealed without re-enactment.
      162
      The noble and learned Lord, Lord Oliver of Aylmer ton, the chairman of the Joint Committee on Consolidation Bills, has been consulted on the amendments. He has stated that he is of the view that they are appropriate to a consolidation Bill and further that the amendments do not change the legal effect of the Bill. That is what the hon. Member for Strathkelvin and Bearsden (Mr. Galbraith) was concerned about. Therefore, I commend the new clauses and amendments to the House.
      Mr. John Maxton: Not having understood a single word that the Minister said, I should point out that even in a Committee of the whole House, it is unusual for the Government's Deputy Chief Whip to make any intervention, whether from a sedentary position or not. I should assure the hon. Member for Penrith and The Border (Mr. Maclean) that I do not think that I was the only hon. Member who had difficulty in understanding what the Minister was saying. Indeed, I have a grave suspicion that the Minister himself did not understand what on earth he was saying. However, he read well from his notes and I accept that he is quite a good reader, but it is putting it a bit strongly to say that he actually understood it.
      This is a consolidation measure. It had its Second Reading debate and I gather was printed some weeks ago. What I want to know is what evidence has appeared in the courts in Scotland, in the Court of Session, in the weeks between the printing of the Bill and this Committee stage or even since Second Reading.
      The Minister said that it was originally believed that these clauses had fallen out of use and were no longer needed on the statute book. The only reason for reintroducing them is that in the past two weeks they have come back into use in the courts. Surely the Minister can give us examples of how this has come about. There must be a reason behind it. If not, why were they not included in the original Bill?
      The Minister's explanation is unsatisfactory. He might have given us a fuller explanation of exactly what the new clauses do and why they are now necessary when two weeks ago they were not. I hope that the Minister will spend a few minutes giving us that explanation. If that is the sort of nonsense that Alex Pagett was having to sell, I am not surprised that he chucked it.
      Mr. Menzies Campbell: Less than a week ago we heard the Minister tell the House that this was an uncontroversial consolidation measure which should not occupy the time of the House. We now find him compelled to move two new clauses and three consequential amendments. One is bound to ask what the Minister knew and when he came to know it. How is it that an uncontroversial measure suddenly requires new clauses and consequential amendments?
      The Minister's explanation of new clause 1 was less than convincing. I understand that it relates to section 91 of the Court of Session Act 1868. That section has been in use in the Court of Session since the passing into law of the Housing (Homeless Persons) Act 1977 when, in the absence of a system of judicial review in Scotland, recourse was frequently made to section 91 in an endeavour to persuade local authorities to discharge their statutory responsibilities. It is unconvincing that the draftsmen should have failed to take proper account of that when the section was in use and a matter of some judicial

      163
      controversy in the past 12 years. I hope that this is not a measure of the standard of draftsmanship that we may expect.
      The Minister knows that I have been pressing him for some time in questions and I asked again on Second Reading for a proper review of Court of Session procedure. Many people believe that that is a necessary accompaniment to the proper use of the Court of Session and its relevance to modern practice. I hope that if such a review is embarked on, the standard of draftsmanship which accompanies it will not be the same as that which apparently allowed these mistakes to occur in what we were told was an uncontroversial and consolidating measure.
      Both new clauses create remedies in the Court of Session. It is not clear in either case whether the new clauses provide that the remedies should be available on an interim basis. New clause I, which deals with the restoration of possession and specific performance, does not make any reference to whether such remedies may be available on an interim basis. Likewise, new clause 2 does not make any express reference to whether specific relief may be granted in interdict proceedings on an interim basis.
      I hope that the Minister will take a little time to answer those points, which, in my respectful judgment, have some substance and may have important legal consequences in the Court of Session and, indeed, the law of Scotland.
      It is perhaps unfortunate that these matters come before us at the end of a long day, because at another time those of us who know a little more about the procedure of the Court of Session might have been persuaded to press the Minister a little more vigorously. Perhaps the lengthy day has operated to the Minister's advantage. But I hope that he will accept that my observations are prompted by nothing other than a desire, which I have no doubt he shares, to ensure that the law of Scotland in this unitary Parliament receives the proper consideration that it deserves and that we pass into law, even by way of consolidation, only measures that are apt and appropriate and are not the subject of faulty draftsmanship.
      1 am
      Lord James Douglas-Hamilton: The Scottish Law Commission reconsidered its view because it noticed that a genuine error had been made by those responsible for drafting. I take full responsibility, although I did not draft every word personally. Acts going back to 1594 were being consolidated and obsolete provisions were being omitted, and one error was made in this case. As soon as it was picked up, we acted on it at once and came back to the House.
      Mr. Maxton: Where did the Law Commission meet to take that decision?
      Lord James Douglas-Hamilton: I am not sure whether there was a formal meeting. The Law Commission's view was firmly imparted and we are acting on it. I assure the hon. Gentleman that I am faithfully recording what that view was. It is clear that that was the Law Commission's view.
      Mr. Maxton: It may well be the Law Commission's view, but many Opposition Members do not know who
      164
      the members of the commission are, how many they are and how, if they did not have a formal meeting, they came to a decision that has been put so clearly to the Minister. How on earth did they come to the decision, or was it just the chairman or the clerk who decided that a mistake had been made?
      Lord James Douglas-Hamilton: The Scottish Law Commission does not put forward recommendations unless it has given them the most thorough and complete consideration. I have no regrets whatever about supporting the commission in this connection.
      The hon. and learned Member for Fife, North-East (Mr. Campbell) asked about whether the provisions would apply on an interim basis. The present provisions do not deal with interim orders. I should make that clear. I have no hesitation in coming back to the House to admit that there was an error.
      Mr. Brian Wilson: Has the Minister noticed that while learned people such as my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and the hon. and learned Member for Fife, North-East (Mr. Campbell) are here, only one party is not represented at this dissection of Scots law?
      Lord James Douglas-Hamilton: I note what the hon. Gentleman says about the absence of the Scottish National party.
      I end by saying that the lesser the man who is not wiser today than he was yesterday. I have great enthusiasm in proposing these corrections.
      Question put and agreed to.
      Clause read a Second time, and added to the Bill.

    New Clause 2

      SPECIFIC RELIEF MAY BE GRANTED IN INTERDICT PROCEEDINGS
      'Where a respondent in any application or proceedings in the Court, whether before or after the institution of such proceedings or application, has done any act which the Court might have prohibited by interdict, the Court may ordain the respondent to perform any act which may be necessary for reinstating the petitioner in his possessory right, or for granting specific relief against the illegal act complained of.'.—[Lord James Douglas-Hamilton.]
      Brought up, read the First and Second time, and added to the Bill.
      Schedule 1 agreed to.

    Schedule 2

      REPEALS
      Amendments made: No 1, in page 18, column 3, leave out lines 41 to 45 and insert—

      'Section 50 to 101.'.

      No. 2, in page 22, line 20, column 3, at end insert—

      'Section 89, In section 91 the words from the beginning to "seem proper".'.

      No. 3, in page 28, column 3, leave out line 29 and insert—

      'Sections 76 to 88. Section 90.'.—

      [Lord James Douglas-Hamilton.]

      Schedule 2, as amended, agreed to.
      Bill reported, with amendments; as amended, considered.
      Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 75 (Third Reading), and agreed to.
      Bill accordingly read the Third time and passed.

    BUSINESS OF THE HOUSE
    Ordered,
    That, at tomorrow's sitting, the Motion in the name of Mr. Neil Kinnock relating to Telegraphs may be proceeded with, though opposed, for one and a half hours after it has been entered upon, and if proceedings thereon have not been disposed of at the end of that period, Mr. Speaker shall then put the Question.—[Mr. David Hunt.]

    STATUTORY INSTRUMENTS, &c.
    Motion made, and Question put forthwith, pursuant to Standing Order No. 101(5) (Standing Committee on Statutory Instruments, &c.)
    STATUTORY INSTRUMENTS, &c.
      LAND DRAINAGE
      That the draft Land Drainage Improvement Works (Assessment of Environmental Effects) Regulations 1988, which were laid before this House on 16th June, be approved.
      FORESTRY
      That the draft Environmental Assessment (Afforestation) Regulations 1988, which were laid before this House on 27th June 1988, be approved.
      TOWN AND COUNTRY PLANNING (SCOTLAND)
      That the draft Environmental Assessment (Scotland) Regulations 1988, which were laid before this House on 14th June, be approved.

      FISH FARMING
      That the draft Environmental Assessment (Salmon Farming in Marine Waters) Regulations 1988, which were laid before this House on 16th June, be approved.—[Mr. Lightbown]
      Question agreed to.

    EUROPEAN COMMUNITY DOCUMENTS
    Motion made, and Question put forthwith pursuant to Standing Order No. 102(5) (Standing Committees on European Community documents.)
    EUROPEAN COMMUNITY DOCUMENTS

      ROADWORTHINESS TESTING
      That this House takes note of European Community Documents Nos. 6878/86 and the Supplementary Explanatory Memoranda submitted by the Department of Transport on 8th and 27the June 1988 and 7946/87 on roadworthiness tests for motor vehicles and their trailers; and agrees that Her Majesty's Government could accept an extension of roadworthiness testing providing that the items to be added to the Department of Transport test were beneficial and could be tested to Member State's own test methods.—[Mr. Lightbown.]
      Question agreed to.

  Science and Mathematics Teachers
  1.6 am
  Motion made, and Question proposed, That this House do now adjourn. [Mr. Lightbown.]
  Mr. Patrick Thompson: I am grateful for the opportunity to have an Adjournment debate on the current shortage of physics and mathematics teachers in schools. I am also grateful to the Under-Secretary of State for Education and Science for attending at this late hour to reply. The shortage has serious implications for the education of our children and also for Britain's industrial, commercial and technological prospects in the future.
  The shortage of physics and mathematics teachers has been a matter of concern for some time and the recent publication of a disturbing report commissioned by the Engineering Council, the Headmasters Conference and the Secondary Heads Association is relevant. Over the years, the Engineering Council has been considering ways in which to increase the number of engineering places in higher education, and that matter was raised during a recent debate on engineering in the House.
  The council found that not enough young people were coming forward from the schools and inevitably it began to consider the quality and quantity of mathematics and physics teachers. There is no doubt about the potential and ability of our young people, because just over a week ago Britain won the gold medal in the international school physics olympiad held in Bad Ischl in Austria. The talent is present and our young people have the ability to do well in the subjects.
  The report was prepared by Professor Alan Smithers and Dr. Pamela Robinson of Manchester university and it serves to heighten concern about the matter. Obviously it is essential to prevent the problem from growing worse.
  The origins of our present difficulties can be traced back, in part at least, to the changes in the education system since the 1960s. The disappearance of grammar and technical schools and their replacement with comprehensive schools, many now without sixth forms, reduced the availability of some of the more challenging and rewarding teaching posts in both subjects. The recent downgrading of the requirements at A-level and GCSE makes school a less satisfactory preparation for advanced university physics and mathematics.
  A significant proportion of those teaching mathematics and physics at secondary level lack adequate qualifications to do so. Therefore, there is a hidden shortage of teachers in those subjects. The 1984 secondary school staffing survey showed that 13 per cent. of mathematics teachers and 18 per cent. of physics teachers were without higher education qualifications in those subjects. If those who study maths and physics as subsidiary subjects in higher education are included in the definition of the fully qualified, the figures rise to 28 per cent. and 29 per cent. respectively. According to the 1986 document of the Department of Education and Science, "Action on Teacher Supply in Mathematics, Physics and Technology", only 45 per cent. of mathematics tuition and 57 per cent. of physics tuition was being provided by graduates in those subjects.
  The same problem arises in other subjects, including chemistry. I am interested and pleased to note that the

  167
  hon. Member for Swansea, East (Mr. Anderson), who I know is concerned with the Royal Society of Chemistry, is in his place.
  Mr. Donald Anderson: May I intervene?
  Madam Deputy Speaker (Miss Betty Boothroyd): With permission?
  Mr. Thompson: With permission, Madam Deputy Speaker.
  Mr. Anderson: The hon. Member for Norwich, North (Mr. Thompson) will be aware of the concern of the Royal Society of Chemistry that urgent action is required to increase the supply of chemists into teaching. The hon. Gentleman will know that there are special initiatives in play in physics, for example, which have resulted in an improvement in numbers. In 1985 there were 255 post-graduate certificate of education courses, which was improved to 527. Surely the hon. Gentleman will agree that no such action is proposed by the Department of Education and Science for chemistry. That must be wrong when we take account of the public interest. The number of candidates presenting themselves for a postgraduate certificate in chemistry is down by one third this year compared with the figure for last year. Is it not proper that there should be similar bonuses and initiatives for chemistry, where the problem is even more marked than in the other disciplines?
  Mr. Thomspon: I am grateful to the hon. Gentleman for that intervention. The survey on which I based my remarks was directed especially to physics and mathematics. On receiving correspondence from the Royal Society of Chemistry, I was as surprised and concerned as the hon. Gentleman. I hope that my hon. Friend the Under-Secretary of State for Education and Science will respond to this issue along with the other matters that I am raising.
  An especially alarming feature of the results of the survey on qualifications that was conducted by Manchester university is the disparities that it has revealed. Only a quarter of the staff in maintained schools with pupils up to the age of 16 years were trained graduates. There were twice as many in schools in the maintained sectors, with students up to 18. There were almost three times as many independent schools. This means that at the earlier stage of education the hidden shortage is worst.
  It is equally clear that some schools have responded to the lack of mathematics and physics teachers by adjusting their timetables. Typically, this has been done by reducing the number of subject periods per set and by limiting the number of sets. This had occurred in five of the 26 schools surveyed for mathematics and in four of the 26 for physics that were included in the Manchester university study. We therefore have a vicious cirle. A lack of qualified teachers leads to a reduction of subject time allowed. That leads to a lack of enthusiastic young people taking these subjects to a higher level. The vicious circle can continue unless action is taken.
  We can see the impact of inadequate training in these vital areas in the number of those abandoning study. Only a quarter of those who took O-level physics went on to
  168
  A-level work. Significantly, there was a disproportionately high female drop-out rate. Of those who passed A-level of all pupils, roughly one in seven went on to take a degree in either subject at a university. Just over 5 per cent. of graduates in maths and physics entered teacher training in 1986.
  This winnowing process is at least partly due to the fact that unqualified and under-qualified teachers play so large a part in the process of instruction. Nonetheless, it remains disturbing that accurate figures on the number of teachers in both disciplines in service remain hard to come by. The Interim Advisory Committee on Teachers' Pay and Conditions found this to be a general problem in its recent report. There is some evidence that the wastage rates for maths and physics teachers has been rising, and this rate of loss must be of concern.
  Even more serious is the apparent gap between the demand for teachers in maths and physics and the supply. Whatever assumptions are made, it is clear that there is a shortage now, possibly more than 2,000, and that there is the prospect of an even more serious shortfall developing by the mid-1990s.
  Other countries have experienced similar problems. The teaching of maths and physics cannot be considered in a vacuum. The attraction of other professions, in status and pay, must be taken into account. If severe difficulties are to be avoided, I believe that a wider approach may be required.
  The Manchester university report showed that in mathematics under 30 per cent. of graduates were women, yet women comprised more than 50 per cent of those entering teaching. In physics the imbalance is even more striking. Given the interest in teaching among women graduates, action should be taken to increase the number of girls taking mathematics and physics in schools. I urge the Government to consider introducing a national career break scheme to encourage more women to enter teaching. I am informed that Kent local education authority has recently introduced such a scheme.
  There appear to be discrepancies between the figures of the Department of Education and Science and those provided by other bodies which require urgent resolution. I hope that the Minister can help me on that. I urge him to consider the establishment of a comprehensive database for in-service teachers. That will show the extent of subject shortages, hidden and suppressed, throughout the country.
  As a corollary, an analysis should be made of staff movements within the education system and out of it. We need to know how many teachers are moving into other posts, into administrative jobs, and how many are leaving to have children, to retire or for other reasons. Only then will it be possible to consider the shape and scale of the training programmes for new recruits and for former teachers hoping to re-enter the profession. It is, regrettably, clear that many graduates would prefer the larger salaries and better working conditions to be found in commerce and industry. It may be necessary to offer financial incentives to attract such people into the classroom.
  I know that my hon. Friend understands those issues. I fully support the Government's intentions in establishing a national curriculum in which maths, science and technology will play a prominent role.
  The measures that have been taken to provide bursaries for prospective maths and physics teachers studying for a

  169
  postgraduate certificate of education have my full support. Could those bursaries be transferred to those who take up posts? I hope that the Minister will consider that suggestion in his reply. The provision of in-service training and the recruitment of new teachers through the Teaching As a Career unit are useful initiatives.
  I welcome the Education Reform Bill, and many of its measures are relevant to this debate. In a recent paper that I wrote with my hon. Friend the Member for Luton, South (Mr. Bright)—"A New Strategy for Education"—we would not only have secured the place of maths and physics in the curriculum, but would have created a professional teachers' council and a local pay bargaining mechanism at school level to help to restore the status of teachers. It is with individual teachers' sense of their professional standing, of their financial rewards and of their morale that an important part of the solution lies.
  The CBI's response to the circular of the Department of Education and Science on this subject stated that the teaching profession needs to be made attractive, by giving status and appropriate conditions of service, which should include annual assessment, career development and chances of advancement. It acknowledges that teaching is a vocation and that, unless rewards are adequate in the market place, employers will up the ante by offering higher salaries elsewhere.
  We should not rule out measures to obtain the short-term secondment of staff from industry or the recruitment of qualified teachers or technicians now working outside the profession on a long-term basis. I believe that technician support for science departments in schools is important and will help with the general problem. Time does not allow me to develop that theme, but I hope that my hon. Friend will bear it in mind.
  Mathematics and physics are two of the key disciplines on which the modern industrial world rests. Britain cannot afford to be out-distanced by its competitors in passing on that body of knowledge to the next generation. The fact that the importance of the issue has been recognised inside and outside the House is encouraging. The Government have responded positively to the concerns of the teaching profession, the universities and the Engineering Council. I hope that my hon. Friend will be able to carry that process further in his reply.
  1.19 am
  The Parliamentary Under-Secretary of State for Education and Science (Mr. Robert Dunn): I congratulate my hon. Friend the Member for Norwich, North (Mr. Thompson) on a most thoughtful and constructive speech. Those of us who have known him for some time recognise that he always makes a major contribution to our debates, and his speech tonight was in that vein. I was equally pleased to hear the short intervention of the hon. Member for Swansea, East (Mr. Anderson), who spoke about his connection with the Royal Society of Chemistry. We also recognise the presence of my hon. Friend the Member for Staffordshire, South-East (Mr. Lightbown), who always takes an interest in such matters and who had a long connection with the world of local government education.
  My hon. Friend the Member for Norwich, North has introduced an important matter, and I give an undertaking that I shall pass on to my right hon. Friend the Secretary of State the points that he and the hon. Member for Swansea, East made.
  170
  Britain has never been in greater need of people skilled in mathematics and the physical sciences so necessary to ensure that our industry can compete in the fast-changing world of the 1990s. We shall not have those people unless we have teachers to teach them, but it is precisely because those skills are in such high demand that those who have them are eagerly sought out by employers, against whom those who recruit people into teaching must compete.
  We have long recognised that special attention must be paid to ensuring that there are enough maths and physics teachers to teach in our schools. That is why we have had a teacher shortage action programme in place for about two years, much of it built up on the basis of recommendations reaching us in response to a consultation document that we published on the issue two years ago. The result has been dramatic: since 1985 we have reversed the trend of decline in intakes to initial teacher training in the shortage subjects.
  In 1986, as the report from which my hon. Friend quoted made clear, only 741 students started postgraduate certificate of education courses in maths and 341 in physics. In 1987, those two figures had risen by 29 per cent. and 41 per cent. respectively. It can be no coincidence that that took place over the first year of our action programme to combat teacher shortages, of which the main weapons are a bursary, tax-free, to trainee teachers in these subjects paid on top of their grant of £1,200 for 1986–87, which has risen to £1,300 in the next academic year, the use of national and local advertising, and the setting up of our Teaching As a Career unit—known as TASC—to promote teaching and improve its image.
  All this had an effect on numbers last year, and is continuing to have an effect, even though applications for teacher training courses in maths and physics are not as buoyant this year as they were at the same time last year. But it is too early to say what the final recruitment figures are like, and I am still confident that the reversal of trend secured during the past two years will continue.
  We are also spending six times more money than we are spending on direct recruitment on in-service training for the large number of teachers, also mentioned by my hon. Friend, who are teaching maths and physics without being properly qualified to do so. We call this the hidden shortage, and it is in many ways much more serious than the overt shortage of unfilled teaching posts in maths and physics, which are at their lowest level for many years. We intend to continue to offer substantial retraining and upgrading opportunities for under-qualified teachers through our training grants scheme to ensure that we have the right number of teachers that we need with the right qualifications to teach these vital subjects in the 1990s.
  We have funded distance learning television-based and text-based in-service training materials in maths and science for use in upgrading the skills of those teachers who cannot be spared from the classroom.
  Attracting new undergraduate recruits to teaching and upgrading existing teachers' skills is not, however, enough. The number of young people declines for demographic reasons in the 1990s just when the pupil population increases, so we need to make sure that we are tapping other sources of teachers to the full. We cannot expect teaching to take more than its fair share of scarce young qualified manpower.
  That is why part of our action programme focuses on attracting older, experienced people into teaching from other careers. Surprisingly large numbers of people in

  171
  industry and other walks of life often want to change to teaching. Their experience enriches the classroom. We are also encouraging local authorities to look at ways of maximising the use of another great undertapped pool of teaching talent—those who are qualified teachers but currently out of service. Many are, typically, married women who left the profession to have a family. Many are willing to return and local education authorities and schools may need to offer job-sharing opportunities and refresher courses to tempt them back.
  All in all, we would maintain that we are already doing pretty well everything enjoined upon us by the recommendations of the report quoted by my hon. Friend the Member for Norwich, North. It is too early to say whether the coverage of our action programme, or its intensity, is inadequate. We are in any case doing rather more than the report suggests. The Teaching As a Career unit, for instance, has started to make a real impact with its catchy national advertising, well-produced literature and videos and continuous appearance on the undergraduate milk round, at careers fairs and at seminars and conferences all over the country, as well as counselling some of the very significant number of older people in other careers to whom I have referred who actually want to come into teaching.
  Contrary to what the report alleges, over 80 per cent. of our first cohort of bursary holders were teaching in maintained schools last autumn, a higher proportion than most PGCE graduates. We are, as the House knows, making proposals to simplify routes to qualified teacher status, to make changing to teaching more attractive to suitable people with financial and other commitments that make it difficult for them to undertake full-time training with no commitment of a job at the end of it.
  We shall go on doing all these things and we shall step up our activities if the reversal of the trend shows any signs of falling back into decline. In spite of the turmoil of the last few years and in spite of constant denigration of their own profession as a career by teachers themselves, people want to come into teaching. We believe that they will find
  172
  teaching in the new world of the national curriculum and higher standards in our schools will be much more exciting, challenging and rewarding. We are convinced that this, together with the new pay structure, which also allows incentive allowances to be paid to teachers of shortage subjects, will encourage the teachers whom we need to stay in teaching. We are making more money available than ever to enable local education authorities to make improvements to the teaching environment.
  I turn to the figures quoted by my hon. Friend. We all know that we can do anything with statistics. It is of course theoretically possible that we could be short of up to 12,000 maths teachers by 1995, as the report quoted by my hon. Friend maintains, but it is also theoretically possible for us to have more maths teachers than we need by the same date. It all depends on the assumptions that we put into the supply and demand bits of the equation. We think that those who wrote the report have missed out some key assumptions and have given an unnecessarily pessimistic weight to others.
  We shall be in a better position to assess the demand for teachers in these subjects in the 1990s when we have digested the maths and science subject working group reports that my right hon. Friend the Secretary of State for Education and Science has just received. We shall have better estimates of the current supply of maths and physics teachers when we have the results later this year of the survey of secondary teachers that we have brought forward by a year. We shall then be in a position to assess what risk there is of a shortfall and its possible extent. We are well aware, as both hon. Members have said, that we must keep up the pressure. We believe that our programme of measures to combat teacher shortages has at least a good chance of reducing the shortfall to nothing. We certainly think that it should be given more of a chance to show whether it will.
  I am grateful to my hon. Friend the Member for Norwich, North and to the hon. Member for Swansea, East (Mr. Anderson) for their contributions to the debate. We are fully aware of the problems and I believe that I have suggested some solutions to them.
  Question put and agreed to.
  Adjourned accordingly at half-past One o'clock.