European Community

HC Deb 26 May 1988 vol 134 cc536-600

Mr. Speaker

I have to announce to the House that I have not selected the amendment on the Order Paper, but these matters may be canvassed in the debate.

4.27 pm

The Minister of State, Foreign and Commonwealth Office (Mrs. Lynda Chalker)

I beg to move, That this House takes note of the White Paper on developments in the European Community, July-December 1987 (Cm. 336). These debates are an important part of the role of the House in monitoring developments within the Community. The fact that they are seldom well attended is, in part, a reflection of the extent to which our membership of the Community is now taken for granted. But it is also a reflection of the pattern of debate in the past.

The White Paper that we are debating covers the period up to the European Council in Copenhagen last year. It describes the aims of the United Kingdom in the negotiations, which were still under way at the end of 1987. Our continuous central aim has been the lasting reform of the common agricultural policy. In the words of the White Paper our prime requirement was to achieve effective and proper control of agricultural spending, the key to which was a strict framework of budget discipline for all Community expenditure backed by mechanisms called 'stabilisers' to control the cost to the Community of support for each agricultural commodity". That is now being achieved.

The CAP has often been debated in the House. In the proposals on the future financing of the Community brought forward by the Commission at the beginning of 1987, reform of the CAP played a central role. The Commission recognised the case that we had made for strict budget discipline to control agricultural expenditure and for a firmer link between that budget discipline and the individual regulations controlling agricultural expenditure.

In the summer of last year, the Commission put forward proposals for agricultural stabilisers—that is, binding limits on the support mechanisms for individual agricultural commodities, firmly linked to an overall guideline for agricultural expenditure. It was the achievement of those stabilisers and that linkage at Brussels earlier this year which marked the successful culmination of our efforts.

As a result of this agreement, we now have a legally binding ceiling on agricultural expenditure which will reduce its real growth from 10 per cent. a year over the past three years to less than 2 per cent. by 1990.

We have a crucial agreement under which, if a threshold of production is passed, guaranteed price cuts will be triggered. For cereals, they will amount to over 12 per cent. over four years on a cumulative basis, and around 8 per cent. a year for the next three years for oilseeds.

The combined effect of those changes means that, if production continues to rise, there will be double digit price cuts in the arable sector over the next three years. The cereals package alone will save £120 million this year, and up to £900 million in 1991. The savings on the costs of the oilseeds regime will save up to £400 million in 1990.

The House will agree that they are significant changes—large in themselves, and enormous in the psychological and political change that they represent within the Community. The time for vigilance on CAP spending will never by over, but the era of open-ended support has been brought to an end.

It is on the basis of such policies that, last week, one newspaper was able to carry the headline "Butter mountain melts". The surplus of unsold butter, since the start of milk quotas 18 months ago, has been cut from 1.5 millon tonnes to half a million tonnes. That is still too much. It gives the lie, however, to those who claim that the butter mountain could only go one way—that is, upwards.

In addition, we have tightened up the control of agricultural expenditure in other ways. Before the Brussels agreement, agricultural expenditure was at the mercy of changes in the dollar-ecu exchange rate. If the ecu costs of agricultural expenditure went up, it was automatically reflected in the budget. If they went down the saving was not reflected in the budget. Now savings will feed through into the budget, and extra costs will be incurred only above a threshold and up to a fixed limit.

We have also secured other significant reforms in the management of the Community's budget and in the overall control of expenditure. In particular, hon. Members are rightly anxious that control of agricultural spending should not allow uncontrolled growth of non-agricultural spending. They will welcome the specific decision of the Brussels European Council in February to reaffirm the treaty provisions governing the control of non-obligatory spending for those programmes that are not clearly agreed priorities.

Mr. Geraint Howells (Ceredigion and Pembroke, North)

I am sure that the right hon. Lady will agree that it is difficult to assess whether British farmers have the same opportunity as their European counterparts to compete on equal terms. Will she urge her Government to hold an inquiry to determine whether British farmers are competing on equal terms with their European counterparts? It would restore confidence, which is at its lowest ebb since the war ended.

Mrs. Chalker

I understand what the hon. Gentleman said. In a recent debate, my right hon. Friend the Minister of Agriculture, Fisheries and Food sought to outline his views on that subject. I shall look again at what is available and come back to the hon. Gentleman.

The European Council also agreed to have, within the overall own resources decision annual sub-ceilings on Community revenue, to ensure that overall budget discipline is secured. In all of this the United Kingdom has preserved the benefits of the Fontainebleau abatement mechanism. There were some who said that we should sacrifice some of the abatement to secure agricultural reform. We believed that we could have both, and I am glad to say that the Government were proved right.

The abatement is not a favour to the United Kingdom which we should bargain away in negotiations. The abatement was the recognition by the Community that the United Kingdom was paying more than its fair share to the Community budget. Our argument has always been that we are willing to pay our share of the cost of Community policies, but it has to be a fair share. We shall ensure that it continues to be a fair share.

Mr. George Robertson (Hamilton)

I do not wish to raise the excitement level of the debate too quickly, but will the right hon. Lady tell the House who suggested that we should give up some of our abatement to deal with the agricultural crisis? I have no recollection of anybody saying that.

Mrs. Chalker

I shall check on the matter. At this moment, I cannot recall the person who said it, but I have heard it said during our many years of debating these subjects. I am sure that the hon. Gentleman will allow me to advise him later.

Sir Anthony Meyer (Clwyd, North-West)

If it is of any help to my right hon. Friend, I was the person who said it, and I have said it on repeated occasions. We are frustrating our long-term objectives by concentrating too much on our short-term objectives.

Mrs. Chalker

On a moment's further reflection and with some help from my hon. Friend the Member for Clwyd, North-West (Sir A. Meyer), the hon. Member for Hamilton (Mr. Robertson) will find that, on one occasion, the European Affairs Committee of the House of Lords referred to both matters being possible. However, we did not agree, and the outcome of the long negotiations has proved the Government to be absolutely right.

In 1984, the Leader of the Opposition told the press: The Prime Minister had better enjoy the sunshine at Fontainebleau because I do not think she is going to enjoy a hell of a lot else. She is not coming away with £475 million". The right hon. Gentleman was right—in a way. We have come away not with £475 million, but with £3,000 million. That is a much more satisfactory solution for this country.

We were confident that, once the case for the abatement had been accepted, it would become enshrined in the policies of the Community. That confidence has been borne out by events.

The key question for the next few years is what sort of Community we create and how we maximise our benefits from it. The Opposition are still coy about giving us their vision of the Community. I understand that. I sympathise with the problem that they face. When Opposition Members were advocating withdrawal from the Community, the British people said no. Now that the Labour leadership is in favour of the Community, the bulk of the Labour party may say no. One of these days, the Labour party may manage to synchronise its policies with the wishes of the British people, but it has not happened yet, and I suspect that it will not happen for a long time.

The Opposition have chosen a somewhat unlikely champion of their new policy that we now hear about. Faced with the impossibility of having a coherent policy here at Westminster, they have left it all to Labour MEPs at the European Parliament. They have just published a new Labour vision for Europe. It is based on the old ideas of the corporate state that have been comprehensively rejected, not just in this country, but in all other member states of the Community. The Labour party's view of Europe is of a Europe firmly governed from the centre. It is a Europe of directive, regulation and bureaucracy, workers' co-operatives and social engineering. It is as though the right hon. Member for Chesterfield (Mr. Benn) were to be made President of the Commission.

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

That is a good idea.

Mrs. Chalker

We can see where the hon. Gentleman's instincts lie. It is an interesting revelation. The Labour party's conception of the Community—be it in Strasbourg or in the House—is wrong.

The Government favour common action in the Community to solve our common problems. The Government favour concerted action to deal with unemployment. The most significant initiative to tackle unemployment, with an agreement on 40 specific proposals for action by the Community and member states, was taken under the British presidency in 1986.

We favour, too, concerted, sensible action to deal with the problems of the environment. It was under this Government that provision for concerted action on the environment was written into the treaty of Rome. That was one of the major elements of the Single European Act. The hon. Members whose party now puts itself forward as the champion of the environment, kept the House night after night opposing the Single European Act. Yet action on the environment was one of its benefits.

The Community has a role to play in setting standards for equality of opportunity. But none of that can be an end in itself. It may create a kind of equality, but it certainly does not create opportunity, and it is opportunity that we need to create.

Mr. Tam Dalyell (Linlithgow)

In the debate on 17 May when I made a fairly long speech about Ispra, the Under-Secretary of State for Consumer Affairs courteous-ly replied: The hon. Member for Linlithgow asked what we wished to see by way of new emphases within those facilities. In my opening remarks I said we felt it regrettable that, for example, the environmental programmes were running at about 14 per cent. Hence, much work remains to be done there."—[Official Report, 17 May 1988; Vol. 133, c. 916.] Can the Minister put flesh on that? Her colleague has said that there is a great deal of work to be done, especially in relation to the joint research centre. Can she be specific about what is to be done?

Mrs. Chalker

I shall not be specific now or I shall take up the time of the House unreasonably. I shall try to give the hon. Gentleman a quick reply if I have the leave of the House to answer at the end of the debate.

In the preface to the pamphlet produced by the British Labour group of the European Parliament, the Leader of the Opposition described the aims of my right hon. Friend the Prime Minister in Europe as the removal of many of the protections for consumers, citizens and workers which have been built up by national Parliaments over decades and which are seen as rigidities impeding market operations". Anyone would think that the single market was the sole creation of the United Kingdom, foist in some undemocratic way on our unwilling partners. What nonsense that is. No one would think that the Community's single market agenda for this year had been agreed by all 12 Heads of Government, and that that agenda comprises the liberalisation of capital movements, the opening up of financial services, the liberalisation of transport, the mutual recognition of qualifications and the opening up of public procurement. The White Paper that we are discussing records a notable success in our efforts to liberalise air transport within the Community last year and that should be recognised by the House.

We had an example only this week of what could be achieved once the Community's finances were put on a sound basis. We were able to agree in the Foreign Affairs Council on Tuesday to a new programme of Community expenditure on youth exchanges. I know that a number of hon. Members were concerned that the introduction of such a scheme should not damage our existing youth exchange programmes. Under the agreement that we have reached, our youth exchange centre will be the designated co-ordinating body for Community youth exchanges in this country. The total United Kingdom Government money devoted to youth exchanges in Europe will increase substantially.

Mr. Eric Forth (Mid-Worcestershire)

My right hon. Friend referred some moments ago to the Opposition's over-bureaucratic approach to the Community, but is she happy about the extent to which the Community seeks to regulate activities within its boundaries? I draw her attention to comparisons that are frequently made between the economic success of the United States over the past 10 to 15 years and that of Europe. I take as one indicator the creation of jobs, which is significantly different. The United States has created many more jobs than the Community. Does my right hon. Friend have any proposals to make to the Community to try to reduce regulations and bureaucracy, to set the economy free and to allow the economy naturally to generate more jobs in the way that the United States has?

Mrs. Chalker

My hon. Friend is well aware that it is almost impossible to make a direct comparison between the United States of America and the EC, for the simple reason that there are vastly different tax systems in the United States, even between states, and in the member countries of the EC.

However, I have some sympathy with my hon. Friend's remarks about regulations. I was a member of the Secretary of State for Employment's committee on breaking down barriers. We have fought consistently, and we shall go on doing so within the EC, to get rid of unnecessary regulations and barriers. But in saying that, let me reassure my hon. Friend the Member for Southend, East (Mr. Taylor) that if a regulation or a barrier is necessary for security or safety, we shall maintain that in the best interests of Britain and the Community. One must apply common sense to regulations and barriers. There are many more to be dismantled and they will be dismantled, but there may be some which, for our own safety and security, we shall have to retain.

Let me return to what I was saying about the way in which we are making progress—steadily, not dramatically, perhaps sometimes for the hon. Member for Hamilton (Mr. Robertson) rather boringly, but sound work is often not headline material of newspapers, as he well knows. There is sometimes a tendency to go for the headlines and not do the work. I should prefer to see the work done, whatever the headlines contain.

We have gained agreement from the Commission that the Community should add its weight to that of the United States and other countries in contributing to the International Fund for Ireland which has so effectively supported the economic reconstruction of Northern Ireland and the Republic. That has been the result of a joint initiative by the British and Irish Governments. It is another example of the practical way in which the Community makes its contribution to economic and political development.

I know that to many hon. Members our European agenda is familiar. It is also familiar to those who have witnessed Britain's economic success over the last few years. Our partners, in Europe and beyond, now look to Britain and see not the failed policies of the 1970s, but the success of policies of the 1980s. Fortunately, they do not suffer from political myopia. Conservative or Socialist, they judge Britain by the results that we are achieving and by our successful economic policies. They see the fastest drop in unemployment of any country in the Community. They see the fastest growth. They realise that what has worked at the national level can work at the Community level as well. That is the true measure of the success of our European policies over the last few years. Not only have we achieved essential reforms, but we have, by the success of our financial policies, established a new pattern of policy-making throughout the Community.

Mr. Eric S. Heller (Liverpool, Walton)

How can the right hon. Lady talk about Britain's great economic success when my constituency—in the area that we both represent—has an unemployment level of 27 per cent.? Although the Government argue that unemployment has gone down in the area, the drop is only minimal. No wonder the right hon. Lady only managed to secure her seat at the general election with a majority of 200.

Mrs. Chalker

The hon. Gentleman is wrong in blaming the Government for unemployment in his constituency and in mine. Secondly, he is wrong about my majority, although it was perhaps smaller than I would have wished.

Let me explain the sea change that must take place. Britain cannot continue with a policy of economic regeneration which was out of date before the previous Labour Government left office. It was a policy which, sad to say, laid the basis for the rot in so many companies that did not change their method of working and has produced the unemployment that far too many people suffered in the early 1980s. That level is coming down. Unemployment in my area is coming down.

Whatever may be happening in the hon. Gentleman's area, I shall be doing everything that I can through the Community to ensure that unemployment comes down throughout the country. One of the ways that will happen is by the wider opportunities available to British industry that will result from the single market. That is why we are directing a massive campaign of information and publicity to business and the public, to ensure that they are aware of the opportunities offered by the single market and are able to exploit them in the same way that every other country in the Community is doing.

We have reduced unemployment faster than any other European country because we have created more new jobs than any other European country. We have attracted to this country—and to my part of the world—new investment, which would not have come our way but for the economic policies pursued by the Government. We have done that by creating efficient manufacturing and service industries.

Jobs and prosperity will not be created by directives that dictate to companies the structure of their boards or the detailed organisation of the workplace. Jobs will come from expansion into Europe and, through collaborative ventures, expansion beyond Europe. We have achieved many other aims in the period covered by the White Paper and since then. However, it is more important to look forward, to establish what people want and to define what our combined efforts within the Community can help bring about for the betterment of our citizens.

We want easier and cheaper transport. We want better product standards for consumers. We want the freedom to buy and sell insurance, mortgages and banking services throughout the Community. That is exactly what the single market means. They all touch the lives of ordinary people. Anyone who thinks otherwise is out of touch with today's public, who are buying shares and their own houses. They are out of touch also with those who are unable to own their own homes but are benefiting from improved job opportunities and increased expenditure on health and education, which are the fruits of economic success.

We are now living on the money that British people are earning, and not on the money that the previous Labour Government had to borrow. That is why Britain is enjoying continuing success after seven successive years of growth and with a level of job creation that no other European country is enjoying, and which is envied by our partners.

Our objective has been to achieve all that within a sensible legislative framework. On occasions, the collective action that we take is bound to impose constraints. However, the Community must ensure that such constraints are more than outweighed by the opportunities. If we set the agenda for the Community on the basis outlined by the Labour party in the European Parliament, it would be an agenda of directives and regulations, imposing constraints but not creating opportunities. That is exactly the point made by my hon. Friend the Member for Mid-Worcestershire (Mr. Forth). The Government wish to see the minimum number of regulations and the maximum number of opportunities.

When I was much younger, but still very interested in politics, I took to my heart a remark made by President Kennedy in his inaugural address which I believe remains true today: Ask not what your country can do for you; ask what you can do for your country. Too often, the question is asked, particularly by the Labour party, "What has the Community done for us?", when the proper question to ask is, "What can we do for ourselves within the Community?" Our trade deficit is not a consequence of Community membership; it is a measure of our own failure to take advantage of the opportunities that membership of the Community offers. We will ensure that every company in Britain has the opportunity and the know-how to exploit the opportunities offered by the single market.

Mr. Teddy Taylor (Southend, East)

My right hon. Friend has stated that she wishes to get rid of silly regulations and actions. Last week, the Commission put forward a plan to treble the levy on—of all things—budgie seed. That will increase the retail price of budgie seed by 300 per cent., which will affect 4 million people—many of them pensioners. What could be sillier than that? Will my right hon. Friend put a stop to that silliness—which is but one of many examples—and help pensioners make a saving?

Mrs. Chalker

My hon. Friend the Member for Southend, East has not only waged a significant campaign to establish Miracle Bus in the Community but, from his reading of The Star, he will know of the problems which some correspondents like to make the meat of the European Community. I assure my hon. Friend that he need not worry about budgie seed—we shall make sure that it is available at a competitive price through competition within the European Community.

Mr. Dalyell

rose—

Mrs. Chalker

I have already given way once to every hon. Member who wished to intervene. I believe that I should now draw my remarks to a conclusion.

It is fair to say that when Britain joined the Community, the European playing field was uneven. The rules were written for a game that we were not accustomed to playing. We have changed that. We have reformed the inequities and have brought the rule book up to date. I have made clear the way in which we have set the agenda for the 1990s. The six-monthly White Paper before the House records progress made along that route. I commend it to the House. The next White Paper will record the signal achievements of the past six months. They represent a major landmark in the pursuit of this country's interests and those of the Community as a whole.

4.56 pm

Mr. George Robertson (Hamilton)

This debate marks the usual ludicrously belated tour around the European Community and review of matters which occurred nearly a year ago. To be considering a six-month period in the European Community almost 11 months to the day after the commencement of the relevant period makes a mockery of parliamentary scrutiny of this important subject and exposes the all-pervasive influence of the Community. I have protested from this Dispatch Box before about the delay in considering six-monthly reports. I do so again, but I am pessimistic enough to believe that in six or nine months' time, I shall be making precisely the same complaint. That situation is not good enough when so much of what occurs in the Community affects so many people—ranging from the levy on budgie seed to food prices. To be debating such an out-of-date period of events is ludicrous.

Mr. Teddy Taylor

Will the hon. Member for Hamilton (Mr. Robertson) give me an assurance that Labour MEPs will vote against the directive to treble the levy on budgie seed?

Mr. Robertson

If Labour MEPs thought that I was in any position to give assurances on their behalf, it would send a shudder of apprehension right up their collective spine. However, I am certain that my colleagues in the European Parliament will work to protect the consumer even more than any Government Member has done in the past or is likely to do in the future.

Since the period covered by the report came and went, and as the Minister has bravely reminded the House, there has been held the European summit, which the Prime Minister attended with so many inflexible demands, absolute preconditions and sticking points in mind relating to the key issues which were put before those attending that summit. She returned holding scraps of paper bearing the words, "legally binding guarantees" relating to financial discipline and curbing agricultural spending. The Minister's apologia for that agreement was as limp as anything in the propaganda she has presented today.

Last Thursday's debate on the Community's finances was to the contrary and told the sobering truth about the promise from Brussels. The chairman of the Conservative party, who moonlights as the Paymaster General and is now lying back on the green Government Front Bench, crept in last Thursday night to inform the House that nearly £1 billion extra would have to be coughed up to cover the immediate, euphemistically titled "problems" of the Community. I intend to return to that in a moment.

We said that the Prime Minister had been conned in Brussels. Now there is visible evidence, in the humbling of Her Majesty's Treasury before the Treasury Select Committee and, last Thursday, before the House. The package that the right hon. Lady was sold in February, which she brought back with such embarrassed bravado to the House that Monday afternoon, is now well and truly falling apart. Our much-vaunted rebate is once more in question, pursued by all those in the Community who ignore their own economic miracles so as to pay as little as possible to the Community budget.

The rigid limits on the common agricultural policy which were to rein it in and reduce its impact—we have heard all about them again from the Minister this afternoon—must be seen in the light of the 19.6 per cent. increase in the cost of the CAP in 1988 over that of 1987. That is the real measure of the restraint that the Minister is dangling before us, in the shape of jam tomorrow. Jam today, in the past 12 months, has meant an almost 20 per cent. increase in the cost of the CAP to the consumers of Europe.

The two outcomes of the Brussels summit were not a guaranteed rebate for Britain, or the legally binding controls on agricultural spending of which we were told and have been told again today. Instead, we have learnt a whole new vocabulary of European creative accounting. Added to the euphemism mountain are two new expressions. We now have "financial engineering", which has appeared suddenly on the scene—and the Great Mechanic of the Conservative party is here to articulate it for us. We also have an "inter-institutional agreement"—an IIA to go alongside the IGA or inter-governmental agreement, the reimbursable advances, the non-reimbursable advances and all the other euphemisms for debt, crisis and financial liability. It is almost like that section in Reader's Digest called "increase your word power". There is a competition in the European Community to invent new words and expressions simply to cover up the fact that more cash is required.

The period that we are discussing covers the period of sabotage of the framework research programme by the British Government, who delayed and delayed its commencement, setting back valuable work right across the Community. They then jumped in and rejoined on almost exactly the terms that they initially rejected. It also covers the period when the Government decided to pull out of the European Space Agency project, and then tried to get in again on the cheapest available terms.

Thus the tangible areas of non-Europeanism were displayed to our friends and allies at a time when the Prime Minister was trying, with a notable lack of success, to impose her conditions—conditions to which we subscribe and on which we supported her—on the uncontrolled budget of the European Community. This Prime Minister is one of the least communitarian of all Prime Ministers since the war. She despises her fellow Heads of Government, treating them like mere Conservative Cabinet Ministers. She suspects their intelligence and openly displays her contempt for their judgment. She pays, and as a consequence everyone in this country pays, a rich price for the domineering, abrasive way in which she goes about her European business.

I mentioned before the humiliating spectacle of the Paymaster General—the Conservative party chairman—coming back to the House last week to tell us that he was about to bail out the Common Market to the tune of almost £1 billion, which is almost equivalent to our total net contribution last year, and simultaneously introduce primary legislation to agree to a new own-resources formula for the European budget. All that is in advance of the so-called legally binding commitments on future spending. None of it is written down; none of it is agreed; nothing is actually on paper. Yet we in the British Parliament are being told to endorse the new arrangements.

Apart from being procedurally breathtaking, the gambit displays how bad the crisis really is. This time it is wholly appropriate to shoot the messenger, as the messenger is part of the process. The root of the Community's crisis remains in the CAP as it always has, and events in the past week show only too well that the Hanover summit in a few weeks' time may well be dominated like so many before it by a cash crisis caused by agricultural overspending.

Stabilisers—the great new wheeze invented for Brussels: the limits on production beyond which price cuts will be made—were set far too high, far higher than the Prime Minister knew was required, so no real progress can even be foreseen for at least a year. In her speech, the Minister—cleverly, I concede—disguised the fact that any savings as a result of stabilisers will certainly not come in the near future, if indeed in the distant future. Still the waste goes on, with the Community's wealth squandered on storing and destroying food that no one wants.

Opposition Members are often accused of being biased and prejudiced on the issue, and of giving the Government an unfair time. But a recent escapee from the British Civil Service has blown a valuable and well-informed whistle on the whole matter of the CAP. Sir Michael Franklin, who has just retired as permanent secretary to the Ministry of Agriculture, Fisheries and Food, has written an excellent and highly readable book published by the Royal Institute of International Affairs and entitled, appropriately, "Rich Man's Farming: The Crisis in Agriculture". He paints a dismal picture. It comes from the pen of someone who really knows what he is talking about, and what has gone on in the Community.

Sir Michael tells us that over the past decade agricultural expenditure rose by 7 per cent. per annum, when the wealth of the European Community, measured in gross domestic product at constant prices, grew by only 2 per cent. By 1985, real farm incomes were back at 1974 levels, and in the next three years they dropped in real terms by 3 per cent.—and this at a time when the standard of living in the rest of the Community was rising. Meanwhile the numbers employed in agriculture dropped by 24 per cent. between 1973 and 1983, and continue to drop.

It is a failure of a policy in every one of the respects for which it was designed, designed as it was to protect farm communities and incomes and to ensure balanced food supplies for the people of Europe. Still the 12 nations of the European Community conspire, either deliberately or through intimidation, to maintain a policy of waste, expense and high food prices which constantly bankrupts the Community of all promise.

Let me deal briefly with the important subject of the Government's accountability to this Parliament for European Community affairs. It is now some considerable time since the Single European Act—carried through the mechanism of the European Communities (Amendment) Act 1986—came into force, with all the new powers conceded to European Community institutions. I congratulate the Minister on managing, after about a year of the operation of the new amended treaty, to get a published document on to the streets of Britain so that we know what we are up against. That at least shows some efficiency, a year being a commendably short time for the Government to bring those important documents out into the open.

The Single European Act meant more majority voting, with automatic implementation of Community law in this country. It meant more powers for the European Parliament and for European measures. More competence is covered, including European political co-operation—that is, the co-ordination of foreign policy. All that stems from the European Single Act, yet the House has not changed its procedures one jot in recognition of the increasing pervasiveness of European legislation—whether we regard that pervasiveness as good or bad—and the institutions within it.

Looking at the recent European Parliament report, snappily entitled "Bodies Specialising in European Community Affairs Within National Parliaments", I do not wish to make a partisan point, but I was struck by how poorly our Parliament supervises the European dimension.

The House of Commons Select Committee on European Legislation has staff but few powers to do more than recommend matters for usually delayed debates in the House. My hon. Friend the Member for Newham, South (Mr. Spearing) chairs that Committee and is recognised for his great skill and industry. It is sad that he cannot be in his usual place today, but he also chairs the Select Committee on the Lyndhurst bypass and is paying a long-arranged visit to the New forest to see where the bypass is to be located. However, I know that he would concede that the staff and the powers of the Select Committee are wholly inadequate to deal with the post-European Single Act era.

The House of Lords Select Committee, which the right hon. Lady chose to mention in her speech, is an admirable institution which does an excellent job monitoring the details and the broad issues involved in the European Community, but it is surely perverse and indefensible that that scrutiny function should exist only in the non-elected Upper House.

The sheer magnitude of the issues which will hit this country, sometimes foreseen but often unpredicted, are not debated regularly and are never voted upon by Parliament, will soon become a scandal unless we create our own institutions to deal with them. It is one thing—and, of course, it is a controversial thing—to concede elements of sovereignty to European institutions, but it is quite another thing—and much more worrying—to concede the right to monitoring, supervising and even discussing what is being decided in our name outside this place.

Therefore, I ask the Minister to give the House an assurance that action will be taken to get an immediate review of the way in which the House of Commons considers European Community business, perhaps through the vehicle of the Procedure Committee, so that we can ensure the elementary consideration of the very important issues that can affect so many people in this country so often and in so many ways.

I now turn to the completion of the internal European market and its great target date of 1992. Lord Young, who never has to answer critics from both sides of this House, is already spending something like £5 million on yet another media extravaganza that warns, cajoles, hectors and boasts about 1992, its pitfalls and its opportunities. The House and the country would be wise to remain sober about what this business men's Euro-hype is all about.

First, there is already a single market in Europe, albeit incomplete, and Britain has not done very well as a consequence of it. Membership has already seen a flood of European goods drowning many United Kingdom industries. Secondly, the abolition of all remaining restrictions to trade—if such an event were possible—without major changes in attitude by British industry would lead to an even more calamitous devastation of British industry at the hands of our Community competitors.

The disciples of free European trade—the doomed Commissioner Lord Cockfield being in their front rank—see multiplying benefits from removing non-tariff barriers. The Cecchini report entitled "European Challenge", inititated by the European Commission and published this month, is lyrical in its exposition of the remarkable improvements to competition, efficiency and employment that will result from completing the internal market. It claims a 5 per cent. increase in Community, GNP, and a dazzling 1.8 million jobs to be created and to be set against Communitywide unemployment totalling 16 million.

It ill becomes the right hon. Lady, who has a good reputation for being frank and honest, to boast that we have the biggest reduction in unemployment in the Community when we had one of the largest rates of unemployment in the Community—and most of that was created by her Government during the nine years they have been in power.

The unemployment rate in this country in the last 12 months before the 1979 election went down every month. It shot up to ludicrous and shameful levels under this Administration. Therefore, for the right hon. Lady to take credit for managing to achieve marginal reductions is breathtaking in its cheek.

Mrs. Chalker

I remind the hon. Gentleman that it was once said—and he will remember by whom—that inflation is the mother and father of unemployment. That is what happened under the Labour Government. Inflation put in train unemployment. The high levels of inflation, the failure of the Labour Government to control inflation in the late 1970s and their propensity to go on borrowing caused the unemployment at the beginning of the 1980s.

Mr. Robertson

The right hon. Lady's memory is probably faulty after nine years of struggling to justify the policies of the Government.

In the 12 months before the 1979 election, inflation and unemployment were going down every month. Within months of the 1979 election—if we really need to relive that period—VAT was almost doubled by the then Chancellor of the Exchequer, now the right hon. Lady's boss in the Foreign Office, and unemployment climbed to a historically high level which beat that of our European competitors by a mile. That is what the right hon. Lady finds it so difficult to defend.

The new rose-coloured studies that are being produced mask a complex and wholly unrealistic set of assumptions which have been criticised in detail by reputable research institutes such as the Centre for Economic Relations and DRI Europe. DRI suggests that the increase in GNP will be closer to 0.5 per cent. than to 5 per cent. and that a mere 300,000 jobs will be created.

Those studies, whether they are optimistic or pessimistic, add little to the understanding of what is being contemplated for 1992. Their lack of realism and the sheer hypotheses of their assumptions mean that they should be dismissed as crystal gazing. In fact, I would suggest that the right hon. Lady would be wiser to consult Mrs. Nancy Reagan's astrologer.

Much of what is intended in completing the single internal market is good, sensible and, indeed, overdue. The harmonisation of technical and product standards will make it easier to sell and buy across the Community, as long as the British Government have the same single-minded determination as the French, the Italians and the Germans in making sure that we get a fair share of the technical standards adopted by the Community as part of that harmonisation process, and that we are not left hanging around with continental standards being adopted for everything.

The harmonisation of qualifications will at last make possible the real free movement of labour. The elimination or reduction of wasteful bureacratic border procedures will help industry and trade and those who are involved in it. But the tragedy, or the sinister element behind this great £5 million advertising hype is the vision of a Thatcher-Cockfield package that is being sold to our fellow Europeans in the same way as it is being peddled to the British public.

The Government see 1992 as a vision of Euro-Thatcherism with unrestrained competition, liberated and uncontrolled market forces, wholesale deregulation with no protection for the vulnerable industries, companies, regions and communities around us. This week we heard evidence of that attitude in the words of Mr. David Williamson. The report we are considering notes with some pride that Mr. David Williamson formerly a senior Cabinet Office official, was appointed Secretary-General of the Commission on 1 October. I am sure that what he said in London this week about the single market has been drawn to the Minister's attention. He said: In the UK there is rather a heavy concentration on the internal market as a cash register operation. That is out of the mouth of somebody who has been through the indoctrination process of the Foreign Office and the Cabinet Office. He can now tell the truth because he has been liberated from the coat tails of the lady in No. 10. He went on: The community must also decide accompanying economic, social and structural policy measures if it was to achieve the full benefits of a unified market. If the Minister can liberate herself from the lady in No. 10, perhaps she will tell us whether she agrees with the Cockfield view of the internal market or with the Williamson interpretation. I am sure that we would all like to know.

There is no question in the Government's mind of seeing intervention as a mechanism for easing transition or to facilitate change. After 1992 there is to be no drive to create alternative employment when jobs are lost, no harmonisation of workers' rights from country to country and no equalisation of anything other than the lowest possible level of health and safety standards, despite the fact that article 118A of the Single European Act, about which the Minister spoke lyrically, provides specific powers for that to be an accompanying measure for any movement towards a completed market. A free market does not make a fairer market and, as Mr. Williamson says, an unfair market will simply not produce the rewards that are envisaged by the programme.

I agree that the single European market will provide opportunities but it will also provide dangers for British industry. It will open the doors to our exporters but it will open doors wide to imports from the Community. It could lead to a considerable new trade for British firms hut, without adequate safeguards, it could see our small and medium-sized businesses die in the fight against European mega-firms. The events of this week in watching the Rowntree takeover only too amply illustrate the dangers that there may be. In its editorial today, the Financial Times says: There is a risk that in the rush to prepare for 1992, too many European industries will be concentrated in the hands of a few giant concerns which will be tempted to collude rather than compete. It goes on to say: Nevertheless, it would be quite wrong to get carried away with the idea that big is best or that what businessmen think is in their own interests is always good for the consumer. That is a danger in the single European market that exists for all of us.

Mr. David Curry (Skipton and Ripon)

Did the hon. Gentleman note that the same editorial in the Financial Times approved the Government's decision not to refer the Rowntree bid to the Monopolies and Mergers Commission?

Mr. Robertson

I am not in the least surprised at that attitude from the house magazine for the British capital market. However, it is appropriate that it should warn the Government and the country of the dangers that are in our way if 1992 is simply seen, as Lord Cockfield, the Prime Minister, Lord Young and others see it, as a paradise for big business and trouble for everybody else in the country.

Mr. Tony Banks (Newham, North-West)

Would my hon. Friend care to comment on the fact that the advertisements that have been chosen by the Department of Trade and Industry to advertise the benefits of the single market have selected two very big and ugly business men, which seems rather strange to us?

Mr. Robertson

I would not go on the aesthetic merits of Mr. Alan Sugar or any of the others. However, they are big business men and that should worry a lot of people in the country, who, at the moment, have not yet taken on the challenges and risks involved in European trade. Such people would be wise to look carefully at what has happened to Rowntree. The business was built on hard graft, good sense, initiative and enterprise and it is now to be swallowed up simply as a mechanism for giving Nestle or other competitors a bigger slice of the market in Europe. In spite of that, we do not hear a squeak on the advertisements about a stronger competition policy for the Community or any policy on mergers and acquisitions that might give encouragement to companies to believe that they would be protected.

We know that the Government are not concerned with that because they do not have the slightest clue about what the impact of 1992 will be on most British industry. We have repeatedly asked—it has been repeatedly denied—for a sector-by-sector, industry-by-industry study showing the potential impact of 1992. Only in that way can we fully appreciate the risks to British industry and the opportunities that might be opened up. A £5 million television advertising campaign on behalf of British big business is no substitute for that. The Prime Minister clearly sees it as being an unbalanced, uninformed, ill-prepared and doctrinaire plunge into the unknown. Those in this country whose livelihoods are tied in with that future would be well advised to worry about it.

I should like to conclude on a positive note. I would have liked to have started on a positive note but the manifest failures of the Government demand to be exposed for the wasted opportunities that they represent. The Community has promise. There are challenges that it can meet and dominate, given the political will of the leadership in the 12 countries concerned. European political co-operation has seen the development of co-ordinated policies to the outside world and their deployment to the benefit of everyone. The fact that it has pushed the Government into being more radical, sensible and practical than they want to be is all to the good.

Mr. Teddy Taylor

Give us an example.

Mr. Robertson

The impending protocol linking the European Community and COMECON, both East and West in Europe, overcoming years of mutual distrust, is a significant step forward for us all. The call on Tuesday by European Foreign Ministers, following the meeting with Foreign Minister Peres of Israel, for more progress on the middle east is an excellent example of the Community using its influence where it can in order to move events forward. In central America, South Africa and Turkey, European political co-operation has meant that a unified European voice has influenced world events that will affect all our nations in time.

That is a process we welcome and we hope that it will be deepened. The opportunities for European co-operation are considerable. In mobilising the momentum of ESPRIT, EUREKA and RACE to face the technological challenge of Japan, in seeing environmental protection as a Europewide problem to be met at a European level, in the idea of a community, not of a free-for-all market, working together on common problems in a small world, we have considerable hope to offer all the people of Europe.

If we see the Community simply as a market, an unregulated free-for-all, where the rich areas, rich firms and rich workers get richer and more powerful and the rest of us are left to rot, we shall have created nothing at all. We shall have simply destroyed all that is good and valuable in the great European Community.

5.29 pm

Mr. David Curry (Skipton and Ripon)

I sometimes feel that debates in the House on the European Community resemble the endless repeats of "Match of the Day" that one sees on television. They tend to be the great debates about who won in Brussels. We have watched every foul, every back pass and every dispute between the linesman and the referee. But everybody is getting thoroughly bored and can remember by heart almost every incident of that episode.

I should like to take advantage of a rare occasion to look at European development from over the hill, especially at some realistic implications of the move towards 1992. It will be refreshing for me to remark on the Community but to refer neither to the Budget nor CAP.

First, I shall comment a little on the campaign for 1992 and the need for a co-ordinated Government policy towards it. The great fanfare for 1992 must be accompanied by economic policy-making decisions that enable British industries to compete in overseas markets. There are now some worrying signs, which it would be unfair not to mention.

There is a parity relationship between the pound and the deutschmark, which gives some businesses cause for concern. Companies are reaching capacity shortages, and that unmet demand is fed by imports. British companies are tending to meet their home market demands before overseas demands, because the profit margins are bigger on domestic trade.

The interest rate cuts that we have introduced in order to stabilise the currency level will stimulate demand, which will in turn feed through into further imports. The United Kingdom is a very attractive import market because of the strength of the pound, and the efficiency and facility of our distribution system.

At the same time, some companies, including those in my northern constituency, are not in the position of those in the great booming southern constituencies that have labour bottlenecks. We must manage our economic affairs so that British industry is given more than an exhortation to meet the 1992 deadline. It would be a tragedy, after all the work to make British business competitive and get rid of the great slack attitude that has lost us many markets overseas, if we traded in another site but could not take advantage of the great movement towards a free market. In many respects, we invented that market in Europe. The great British demand has been, "Give us the real Common Market." We must make sure that we can compete in it.

As a specific example, I recall a speech by my right hon. Friend the Chancellor of the Exchequer at the conclusion of the Königswinter conference at Cambridge. He said that the way to go forward in Europe is not via the sort of tax harmonisation in the Cockfield package. I agree with him. The way forward is by deregulation. But if the Financial Services Act is our vision of deregulation, that will not help our businesses to compete in Europe. I fear that that sort of policy might make the City of London one of the great losers from 1992, rather than a great winner. That is particularly so when one considers that it costs five times as much to list in London as in Amsterdam.

We must be certain, not only that business must get out into the markets but that the Government have a duty to provide the broad economic policies that facilitate such an approach.

The hon. Member for Hamilton (Mr. Robertson) mentioned competition in the Community. Clearly there is an urgent need for national monopolies and mergers legislation to dovetail with the EEC legislation. As the Community becomes more integrated, it will become harder to sustain a distinction between takeovers affecting trade across borders and takeovers that do not do so. It is important that we pursue price-fixing agreements and make sure that consumers get the prime benefit of lowering costs, which is the root of supply-side economics. That is itself the basis of the movement towards 1992.

We must be intensely suspicious of the argument that "bigger" is necessarily justified because of a single market. The main benefits should come from the opportunities for mailer and medium-sized companies, especially in the service sector, to reach an optimum size in the market place. There is much less of a case to be made for cross-border mergers of already large concerns. This is a key point. The efficiency of the market must come from the increased size of the market, not necessarily from the increasing size of the players within it.

Perhaps it is ironic that the justification for the Nestle proposal to take over Rowntree plc was not the creation of a monopoly in the United Kingdom, but reduced competition within the Community as a whole, because of fewer players in the Community market place.

What matters is that it is much better for 20 companies to compete in a Continental-sized market place than for a handful to compete in each national market place. The biggest tariff barrier of all is the tendancy for companies to charge higer prices and earn higher profit margins at home and serve their external markets on a marginal cost basis. The threat of more competition at home is essential to persuade companies to lower their prices.

Another important point is that we must resist the silent call from business that, in parallel with the creation of the internal market in Europe, we must institute more thorough-going external protection. First, that would invite retaliation and secondly it would perpetuate the inefficiencies that a single market is designed to eliminate. The development of competition policy in Europe must be a necessary parallel to the creation of a single market place in Europe.

I must also refer to what may be the trend in monetary policy. I am looking over the mountain again, at the considerable implications for business. The development of monetary co-operation is linked inextricably with the achievement of the internal market. It would be silly not to look this straight in the face. This means that national abilities to exercise full autonomy in monetary policy will be diluted. The Community cannot sustain simultaneously free internal markets, free movement of capital, and manage exchange rates and full national autonomy in monetary policy. Those objectives simply do not marry up.

In practice, the defence of an agreed exchange rate may well require enhanced co-operation, which in turn will mean the subordination of certain national monetary aims.There is likely to be a parallel between the completion of the internal market and a consequent acceleration in the pace of achieving monetary union and accord. That will also stimulate the requirement that a currency is valid coin beyond national boundaries; if you like, we can call it a transnational currency.

Financial operators, after 1992, will be able to do business across borders, and exchange restrictions will be eliminated. If there is free choice in the currency to be used, it is inevitable that a few currencies will predominate. The economies of scale will apply to currency matters, just as they apply in other areas of economic activity. The predominating currencies will have a stable and real value. This represents a possible emergence of a parallel currency in which trade can be conducted, to avoid the scandalously high cost of foreign exchange transactions.

It is worth recalling the time and expense involved in transferring funds between EEC countries. To have to change currencies is just as much a barrier to trade, especially to small and medium-sized companies, as keeping lorries hanging about frontiers is a barrier to trade in physical goods. Only the banks benefit, when they enjoy the float derived from the currency exchange. The average commission of 9 per cent. is really a levy on small businesses. They do not have the option of establishing themselves overseas or investing there. They are now looking towards a classical export situation.

Perhaps the move will be from some sort of parallel currency to a common currency. That will happen if the parallel currency becomes so widespread that it replaces domestic currencies or where a strong convergence of national economies makes it possible to fix exchange rates irrevocably. At that point, a common currency might emerge.

It is worth noting that in a genuine single market there will be room for West Germany to take a more reflationary stance without risking the higher budgetary deficit or inflation rate that is an understandable preoccupation among German leaders now.

If the object of managing exchange rates, through the EMS or broader international agreement is to restore more stable exchange rates—in other words, to restore a system which is akin to Bretton Woods—there is an argument for having the additional advantages also of a common currency. If we have relatively fixed rates without a common currency, there are certain to be residual doubts about how determined the economic management is, and nothing is done to overcome the severe costs of exchanging money.

This is speculation, and I said at the beginning of my remarks that I was planning to speculate this afternoon on what might logically flow from the creation of the internal market. I do not think that these are visionary speculations; they are plausible, potential, practical consequences of letting the market decide. We have said as a Government that our motto in terms of the creation of a single market is to let the market decide what is necessary and whether there has to be an adjustment in rates. If the market is to decide, we must not start complaining if it decides on things that entail certain inconveniences for us.

This is the context in which we have to set the role of the pound. I believe that membership of the exchange rate mechanism is a necessary condition of this financial integration. Fluctuation of the pound against other ecu currencies would make the ecu less acceptable than if the rate against the pound were stable.

The 1992 movement is already exercising an external force. We see it in the pace of investment in the Community by companies that feel that they must get there before 1992, and a lot of that investment is coming to the United Kingdom. I believe that we may also see in the foreseeable future further enlargements of the European Community. The debate has resumed in Norway about the relationship with Europe, because Norway, as a NATO country, will feel extremely exposed if it is dependent upon the United States outside the context of the European Community.

We have seen in both Austria and Switzerland a debate resuming about the nature of the relationship with the European Community. As we know, Turkey has lodged an application. I do not say that these will necessarily result in membership, but the 1992 movement has quite clearly stimulated a change in the political situation throughout Europe, with those countries which could previously get by and manage with associated and special relationships now having to reflect upon their situation.

In the longer term also, there may be implications for defence and security policy, because all the major western democracies are strapped for cash in one way or another when it comes to defence spending. We cannot at the moment produce a NATO defence White Paper, as it were, that allocates the roles in more than general terms, and it may be that if the market takes us towards a greater degree of political association, that will begin to make possible a greater rationalisation of the defence burden. That would be a great economic benefit for all the countries in the European Community.

The hon. Member for Hamilton (Mr. Robertson) raised the question of the implications for the House of the movement towards 1992. I agree with him that it is impossible to say that 1992 will be a purely economic phenomenon, divorced from political implications of any kind. It is not possible to create a sort of apartheid between an economic movement arid the political consequences that may flow from it. That raises the question of the monitoring of legislation in the House. I know that it is fashionable to say that somehow the Danes have got it right because the Folketing manages to bind their Governments. I do not believe that. Theirs is such a tortuous system of proportional representation that it denies any government a firm majority in the Chamber, and it is that that makes Governments' lives so unpredictable. It does not have any success in binding the Government; all it does is make consistent Government policies very difficult to pursue.

I want to suggest something that I know will not find favour with everybody—and I suspect that what I have said already will not be greeted with hoots of joy by everybody. If the House is serious about monitoring legislation it should look to the European Parliament as some sort of partner in the process of maintaining democratic accountability and scrutiny, because otherwise it will not happen. It is important that in this Europe that is developing politically, the notion of democratic accountability should be maintained. That must be done by a process of partnership; it should not be resolved on a competitive basis between Parliaments.

To the Government I would say that at the moment we have everything going for us in Europe. We have a stable Government with four years ahead of them, a strong economic performance and a Prime Minister who has achieved world stature. We are winning the economic argument throughout the world, because umpteen Governments are now pursuing policies of the kind that have been pursued in the House. European Community policies are increasingly reflecting our own ideas, and the new defence situation, following the series of meetings between Reagan and Gorbachev and the new detente in international relations, is presenting a new challenge to the coherence of Europe and its ability to manage its own defence.

It is important that we grasp the opportunity for the United Kingdom to play a creative role in the Community, in alliance in particular, I suggest, with the French, who are also now heading for a period of stable government and clear leadership. It is very important that we do not pursue a policy of grudging minimalism towards Europe, with a motto that sometimes seems to be "a bridge too short". We have a particular chance; we have caught up a great deal on our deficit; all that remains is to decide whether we want to take it.

I hope profoundly that, under this Government, we shall take that opportunity and play a creative role in the development of Europe; otherwise we shall be overtaken by events. We have a history of joining things just when everybody is ready to move to the next phase. We must not be in that situation now. The choice is entirely ours to make.

5.46 pm

Mr. Geraint Howells (Ceredigion and Pembroke, North)

It is always an honour to speak in a debate on developments in the European Community. As a Liberal, I am a dedicated European, like all my party colleagues. As the years go by, I am getting more dedicated to the European movement and one of the reasons is, perhaps, that for over 40 years we have had peace within the European Community; we have been able to live with our neighbours peacefully and quietly and we are able to work together in harmony to improve the economic situation within the Community. Many hon. Members may not realise that there are 20 countries or more throughout the world at war at this very moment. How fortunate we are in Britain and in the Community that we are not at war.

This is not just one of the regular six-monthly European debates, for the period we are dealing with represents the first six months of the Single European Act. Things are changing in Europe and the goal of the common internal market in 1992 is approaching fast. I am sure that many farmers in the Community will find it difficult to keep going until we have that internal market. This is a historic moment, a time to consider in which direction Europe should be moving. One thing is clear: the Single European Act and the approach of the common internal market mean that far more decisions are unavoidably being made at the European level, and it is impossible for any of the national Parliaments properly to scrutinise them.

When the goal of the common internal market was first reviewed it was estimated that there would have to be new legislation in about 300 areas within the Community or regions to make it a reality. About one third of those regions have now been dealt with, but it is clear—and the House of Lords Select Committee supports this view—that the present system of parliamentary scrutiny is inadequate. There is what has been dubbed a "democratic deficit" within the Community. We should therefore recognise that only one body is properly equipped to exercise that vital role—the European Parliament.

We have already agreed to economic cohesion within the Community. We must complement that with a vital democratic element that allows the European Parliament to do its job properly, by giving it proper powers of democratic control and scrutiny. Such a move is about not accumulating power at European level but leaving as much power as possible with the nations and regions, replacing the arbitrary exercise of power at European level with a democratic process. It would be wonderful if that could he achieved by 1992.

Alas, that view is not shared by the Government. They regard the European Parliament as a toothless talking shop, not as a Parliament in the sense that we know. There is no better example of that attitude than the decision that has been taken yet again to hold the next European elections under the first-past-the-post system. Every other EC country will elect its members of the European Parliament by some form of proportional representation—only Britain will not. I say "Britain" advisedly, because Northern Ireland will have the advantage of a fair system. Is every other European country out of step, or is it us? That question must be answered, and I hope that when the Minister replies she will pay attention to what I have said.

How do the Government justify that outrageous distortion of the popular vote? The only argument used against proportional representation for Westminster is the need for so-called strong government—in other words, a one-party majority. For European elections, that argument does not hold water. The European Parliament exists to scrutinise, not to elect a Government.

Sir Anthony Meyer

I am listening attentively to the hon. Gentleman, and in the past I have shared many of his views about proportional representation. Will he reflect on the fact that proportional representation enabled Mr. Le Pen to become a major force in French politics? Now that he has become a major force, it will be hard to get rid of him. That is causing me to have second thoughts about the matter.

Mr. Howells

I agree with the hon. Gentleman, but I am sure that he will agree that a system of proportional representation would be beneficial to this country and the electorate.

There is no prospect of any party forming a majority in the European Parliament and no reason for the elections being held under an undemocratic system. How can the British Government's decision to oppose proportional representation for European elections be justified?

The problem is that the British perception of the European Community is dominated by the two major parties and the press. The way in which they portray the Community is overwhelmingly negative. The Government take a purely cash-register approach. The building of a supranational cohesion of countries must be undertaken with more enthusiasm if it is to be successful.

When the Government disagree with one of the British Commissioners, a view begins to circulate that he must be replaced when his first term of office comes to an end. Lord Cockfield has taken his responsibilities as Commissioner extremely seriously and has done an outstanding job. It would be a scandal if he were pushed aside before the completion of the policies that he has done so much to turn into reality.

The way in which the Government use EEC grants is typical of their attitude. When a grant is offered for a purpose, the Government deduct the amount involved from what they would have spent. That is precisely what is happening with the dualling of the A30 through Cornwall. We should demand that EEC spending intended to help the outlying regions is not siphoned off by central Government in that cavalier fashion.

Will the Minister say why the Government keep so quiet about the significant financial contribution that the EC makes to the cost of the youth training scheme and other training programmes? Perhaps the Minister will remind us of the size of that contribution.

The Labour party has taken a purely negative attitude to the EC for well over 20 years. It always failed to jump beyond the established state, in the same way as, until recently, it has feared devolution. It seems that attitudes are changing in the Labour movement. I hope that devolution will take place before the turn of the century and that the people of Wales and Scotland will have their own Parliaments. Who knows, perhaps the English will have regional Parliaments as well by then.

During the six-month period that we are debating there was intense discussion about the 1988 EC budget. Although no agreement was reached by the end of the year, we should be grateful that a settlement was found and that Britain agreed to it. Even in hard economic terms, the value of the common internal market has been estimated at £126 billion a year—about five times the Community's present budget.

If we are to have a common internal market, it is essential to have the back-up of strong social and regional policies to ensure that areas far from the centre of Europe can keep up. If we are to have such policies, they must be adequately financed. The accession to the Community of Spain and Portugal has made that more necessary.

There are many other issues that I should like to raise. As the Minister and the hon. Member for Hamilton (Mr. Robertson) raised the common agricultural policy and finance, let us remind ourselves that in the Community and in Britain we arc very fortunate that we have plenty of food. Other parts of the world would give their right hand for the food that we have in this country. I am sure that, given the will, there is a way to help them. It is the duty of the Community to do what it can to help.

Our agriculture is the most efficient in Europe. However, if one looks at its record in 1988 and its profit and loss accounts, one sees that confidence in the industry is at a low ebb. We were told by the Inland Revenue that about 50 per cent. of British farmers made a loss in 1986–87. What a wonderful achievement for the Government! Many farmers are talking about survival. It is our duty to try to help them. As I have said before, we are talking about 1992, but there are still four years to go. An internal inquiry would be beneficial to British farmers, enabling them to know whether they are competing on equal terms with others in the Community. If British farmers had that information, they would be willing to compete with their counterparts.

A great deal has been said about stabilisers. The present proposals will not be of benefit to many British farmers. If we have stabilisers they must be fair, and British farmers must be able to compete on equal terms with others in the Community.

We should remain loyal to our friends in the Community. I believe that the survival of this great country of ours lies within the bounds of the Community.

6 pm

Mr. David Howell (Guildford)

My hon. Friend the Member for Skipton and Ripon (Mr. Curry). in an excellent speech, made what he described as -speculative" comments about the current and future development of the European Community. I disagree on only one point. We are addressing the immediate issues of the European Community—issues that were unfolding and demanding our attention last year during the period covered by the White Paper. I should dearly like to think that my ministerial colleagues and their advisers are turning their minds to these issues and are moving away from some of the drearier and more difficult problems that have dogged every discussion in recent years about the Community.

My hon. Friend the Member for Skipton and Ripon was right to point out that we had reached a point of vast significance in European Community affairs—the first signs are in the White Paper—when a number of powerful influences and tides are flowing the British way. There are huge opportunities, and I hope that my right hon. Friend the Minister will describe how the Government will exploit some of them.

First, there is the obvious point that, at last, we seem to be making some small progress—not everyone would agree—in curbing the CAP monster and establishing the principle, if no more than that at this stage, that the purpose of rural economic policy should be to curb rather than encourage massive over-production of unwanted foodstuffs at vast costs. We have been engaged in that fight for years. My right hon. Friend the Prime Minister has been at the forefront and may yet end up, whether she wants it or not, with the label of the best European of them all, by establishing that we need a policy for rural economic development in Britain and Europe rather than a policy for increasing agricultural production. We are moving on that front.

Secondly, as the White Paper reveals in paragraph 2.15, things are moving on the monetary front, with the development of new thinking about more effective Communitywide monetary co-ordination. The British Government have been the slowest to move, and there may be high prices to pay for the delay. There is a new phase of views about the European monetary system and how it will play its part in the global financial structure that is emerging to replace the collapsed world order based on the dollar.

Thirdly, there is the goal of the single market. There has been hype by some politicians, but changes are occurring. There are directives already and it is not a matter of waiting until 1992. The business men or Governments who wait until then will find that it is too late. Why should we wait for 1992? There are already 100 directives either approved or in the pipeline that totally change the financial and corporate structure of European industry and commerce, and there are many more to come. The goal of the single market is vital and we shall hear much more about it.

Fourthly—this influences what happens in the Community—ideas and policies are on the march about the defence of Europe and the structure of the defence industries behind the defence of Europe. In the post-intermediate nuclear forces scene thare has been much questioning about how to develop a more coherent European defence pillar without undermining the North Atlantic Alliance. This changes the mood in Europe. We need not go back as far as the failed European Defence Council of the 1950s. New thoughts are developing. The French, who must decide whether to rejoin completely the NATO military structure, are taking a much more positive and constructive view of their dormant NATO membership. These enormous changes are reflected in a number of paragraphs in the White Paper.

I should like to pick out two of the four aspects that I have discussed—the single market and European monetary integration, as expressed by the European monetary system. Are they connected? My unequivocal answer is that they certainly are. It is an illusion to think that this island can gain the benefits of the growth of a single market without us understanding that we must be members of the European monetary system. The two are connected, and one cannot work without the other.

It is fantasy to think that there can be a single market for goods and services and for the transmission across borders of financial services and the products of knowledge-intensive industries—a single market that comes into being in the way urged by my right hon. Friend the Prime Minister and others as a new super-power—without economic and monetary co-ordination and a framework within which currencies can achieve reasonable stability.

No such system could emerge without European monetary integration of the kind expressed by the EMS in its present state. The White Paper—with its references in paragraphs 2.13 and 2.15 to the need for exchange rate stability in the world, including Europe, and the need to develop, refine and improve the European monetary system—takes us into the heart of the political and policy issues which we should address. It is good that we have an opportunity to consider these matters.

I should like to elaborate on why the crucial issue of monetary co-ordination is the key to unlocking all the potential advantages of the single market which may otherwise be denied to us. It is obvious that, if a highly volatile currency such as sterling is outside the less volatile zone of the existing currencies within the exchange rate mechanism, it is a highly awkward factor in a single market. It is ironic that we were told that the problem of the exchange rate mechanism of the EMS was that sterling's inclusion would mean frequent and embarrassing realignments and that we must not do that because it would show up the fact that sterling was moving away from the deutschmark, dollar or whatever. It was said that it would be embarrassing and that the Opposition would crucify the Government.

After the events of recent weeks I should much prefer the mild squalls of a currency realignment in Brussels, perhaps upward of the pound—which is, rightly, a strong currency—than the traumas of a political storm of the kind into which we have been dragged in recent weeks. The frequent realignments that we are bound to have in the EMS offer a much better and calmer prospect than the internal embarrassments and awkwardnesses of arguments about the sterling rate outside the EMS. So, even on these narrow practical and political grounds, we would do better to think of the pound as belonging to a co-ordinated European system rather than as a currency waiting unanchored and unmoored to be knocked about by the bow waves of everyone else's currency policies.

Secondly, we must consider the position of industry and its prospects in the single European market in the context of the European monetary system. I am not one to support the moaners in British industry who always want the currency to be lower than it is. We have a strong currency because we are a strong country, and it will remain strong. Like the Japanese, we must be determined to live with a strong currency and import low prices. That way, we shall remain highly effective with massive value added and develop and accelerate our colossal economic recovery. Nor is it realistic to demand zero volatility of currencies. Currencies move from day to day and week to week and business men must learn to hedge against such developments, even if that is an additional difficulty.

There is a strong industrial and commercial case, however, for a medium-term consistency in our objectives for the currency. In other words, there must be a framework in which the Government are known to be trying to operate. The European monetary system offers such a framework. While the White Paper was being prepared, we were operating within a framework, but on a shadow basis. Towards the end of last year and at the beginning of this, we appeared to be shadowing the deutschmark. That gave industry the broad understanding that, within a certain range and allowing for certain movements, the Government had a rough view of the exchange rate that they would like for sterling. They had a sort of policy for sterling.

We need to return to that. I do not know whether it will be at a higher rate, although I suspect it will. We must have a policy, and the framework of the EMS offers that policy in a way that will make it politically much easier to handle than being out on our own. That is essential if industry is to exploit the opportunities of the single market, as other countries in the Community clearly will.

We need also to consider the single market as it affects financial services industries and the liberalisation of capital movements both of which were dealt with in the White Paper. It is an illusion that we shall achieve the true liberalisation of capital movements in the European Community—between the great financial centres of Frankfurt, London, Paris, Milan—unless we have a reasonable framework governing the relative exchange rates. Unless the EMS is further developed and strengthened and unless sterling is included in it, capital movements will not be liberalised. Anyone who envisages colossal potential gains for our huge financial services industry, with its millions of jobs and its £7 billion-worth of export earnings—to which my right hon. Friend the Prime Minister referred this afternoon—without a strong European currency system of which sterling is a part, is living in cloud-cuckoo-land. We have to face that realisation soon, because the two matters cannot be separated.

Finally, let me deal with the larger question that my right hon. Friend the Chancellor and others have been addressing vigorously on the world scene. We are blind if we cannot see that the era of the dollar as the international reserve currency is coming to an end. Huge instabilities are building up as people try to find a new system to replace it. They ask, "Should we go back to Bretton Woods or should we go on to something new?" One thing is certain: if we stay where we are we shall suffer more of the financial earthquakes and tidal waves of which we had the first intimation last October. There will be many more unless we have a more stable international system.

The European element of that system is a key building block. Britain has already played a decisive role and my right hon. Friend the Chancellor is a financial statesman of world standing. Even his critics in the Opposition and elsewhere must concede that. He has played a decisive role, through the Group of Seven countries, in trying to carry forward discussions to find a replacement for the old crumbling dollar standard. However, that will not work until G7 becomes G3. By that I do not mean America, Japan and Germany but America, Japan and Europe—the essential element in the new stable world financial system that we must have.

It is Britain's proper responsibility to make what contribution it can to the building process, not only by taking an active part in the G7 discussions but by playing a positive role in strengthening the European currency bloc and providing one of the three foundations of the trilateral financial order to support replacement for the old dollar reserve currency system.

It is no use wringing one's hands and saying, "But that implies a loss of sovereign independence." Unless we establish a global system in place of the dollar system, with which we have lived for 40 years, and unless Europe plays a part in it, we shall be swamped. We shall suffer vast instability of the kind of which we have already had some suggestion in recent months. We shall be tossed aside. Sterling will be kicked around like a football by forces far outside our control. Sovereign indepencence and the power of self-determination in governing our currency will mean absolutely nothing. The more we talk about that concept and believe it the more the control of our currency—an intimate matter in our social welfare and progress will be taken completely out of our hands.

Those who talk about the need to control our destiny should look to where the powers lie to do that. They should understand that, if they stand back from allowing the development of a more co-ordinated EMS and the liberalisation of capital movements and the single market for industrial and other goods and services associated with it, they are the ones who are letting go on sovereign independence and surrendering self-determination.

My right hon. Friend the Minister of State has battled vigorously and with great determination in endlessly tedious meetings of the Council of Ministers at which, as some of us recall, one sits up all night fighting about commas and dots. My right hon. Friend's efforts have been second to none in the fight to get some sense into the new directives and the new shaping of the Europe that is emerging. The efforts of my right hon. Friend the Prime Minister have been second to none in trying to get out of the way the lunatic nonsense of the old common agricultural policy, with its emphasis on producing more and more food that no one wants at higher and higher cost, which leads in the end to the damaging and undermining of rural Europe and the rural economy rather than its reinforcement.

Let my right hon. Friend the Minister of State turn her able and agile mind, and encourage her colleagues to turn their minds, to the issues raised by my hon. Friend the Member for Skipton and Ripon, because they are the issues on which we need a policy and the issues that we must discuss in the House. If we do not have such a policy—if we stand back from it—others will race ahead. That would be a tragedy, because we are no longer a passenger in Europe. We are not in the second tier. We are not a junior member. We are one of the most powerful economies in Europe. We do not have to sit aside and watch France and Germany being the big boys and doing all the allying.

To stand aside now would not just be yet another missed opportunity, as my hon. Friend the Member for Skipton and Ripon said; it would be to opt out of our major responsibilities in re-establishing the new economic pattern upon which world progress and economic development will proceed. These are much bigger issues than the question of cereal prices or milk quotas, although those are vital. These are the issues which the House fails at its peril to address.

6.19 pm

Mr. Pat Wall (Bradford, North)

I do not wish to make a wide-ranging speech, as other hon. Members have, but I wish to refer specifically to item 11.8, "South Africa", contained on page 29 of the White Paper, which states: The Twelve remain committed in working for the initiation of a process of peaceful change in South Africa. They maintained their programmes of positive measures to assist the black South African community, and continue to implement the restrictive measures on which they agreed in October 1985 and September 1986. One of those positive measures to assist the black South African community was the EEC code of conduct, adopted in September 1977 by the then nine members of the Community. It was a code for EEC-based companies with interests in South Africa. It laid down guidelines in relation to wage rates, the employment of migrant labour, the racial structure of the work force, the advancement of black workers, the revision of fringe benefits and the designation of work places. The code is voluntary, but it has not produced any significant changes. Last week I spoke to South African trade unionists visiting this country and they said that they regarded the EEC code of conduct as a joke, and that that was a view shared generally by black workers in South Africa.

Under the code, companies were obliged to present an annual report on the progress made in implementing those points I have outlined, with emphasis on three issues: the right of workers to join, and be represented by, a trade union of their choice; a minimum wage at least 50 per cent. above the so-called minimum living level, which is a level simply for the survival of workers and their families and no support for the system of migrant labour.

In 1979 the newly elected Conservative Government ended the practice of publishing the names of companies failing to meet the EEC code, including Quinton Hazel, of which the Prime Minister's husband was then a director.

In 1985 the code was modified, with companies being asked to pay only 28 per cent:. above the subsistence wages, instead of 50 per cent., by replacing the minimum living level with the supplementary living level.

According to Labour Research, 234 United Kingdom companies have subsidiaries and associates in South Africa, which account for 40 per cent. of foreign investment. Further, eight British companies appear in the list of the top 100 companies in South Africa. Last year Britain was South Africa's third largest trading partner after Japan and West Germany, which is also a signatory to the EEC code of conduct. In 1987 exports from the United Kingdom rose by 11.8 per cent. to £949 million, although imports fell by 20 per cent. to £658 million.

Mr. John Marshall (Hendon, South)

Will the hon. Gentleman agree that that substantial increase in British exports to South Africa helps to create jobs for British industry?

Mr. Wall

There are plenty of markets in the world. We do not have to use a market where people are exploited to the extent that they are in South Africa.

Imports from the EEC countries fell by £810 million in 1987, but exports increased by £60 million. Those changes do not reflect a reduction in trade, but only the changes in currency that took place. There is no sign that the sanctions agreed by the EEC, or the code of conduct, are being applied properly for South Africa.

Labour Research examined the reports of 118 companies reporting under the EEC code. It found that 25 companies pay 1,916 black workers less than the EEC recommended minimum. Seven of those 25 companies pay at least 321 black workers less than the subsistence level, which is a starvation wage. Only 51 of the 118 companies have recognition agreements with trade unions in South Africa. Ten companies failed to give sufficient information to determine what they pay to their employees or how many employees they have. Those companies include names such as Blue Circle Industries, Commercial Union, GEC, IMI, Tarmac and Redland.

The standard of wages in most cases is pitiful. Loring Rattray, a subsidiary of Shell, pays its employees £25 per week, which it claims meets the EEC standards. Courtaulds does not accept that a relevant EEC rate exists. It pays £46 per week to households where both husband and wife work for that company.

In the past 18 months at least 16 British companies have been involved in labour disputes. Those include such famous names as ICI, Thorn EMI, Johnson Matthey, Plessey, Pilkington, Shell, Trafalgar House, BP and Unilever.

The most notorious case concerns BTR—the well known takeover and asset-stripping company. It shamed this nation with a dispute at Hangers, the firm that makes artificial limbs. In May 1985 it sacked 900 workers in a South African factory. That dispute continues today. Two strike leaders and a daughter of one of the strikers were abducted and murdered by vigilantes from the Inkatha movement. The management which fought the workers' union, the Metal and Allied Workers' Union, an affiliate of the Congress of South African Trade Unions—which now has a membership of a million workers—nevertheless recognised the gangster union, NUMSA, the National Union of Mineworkers of South Africa, which is directly linked to the murders that took place in that factory.

One press report estimates that 49 dismissed workers have died from starvation or starvation-related diseases since that lock-out began. The EEC code of conduct is largely ineffective, as are the limited sanctions applied by the EEC to South Africa. The British Government continue to do the absolute minimum to carry out the provisions of the EEC.

Despite promising that there would be no Government funding for trade missions to South Africa, such visits continue under the direction of the United Kingdom-South Africa Trade Association, as do visits by groups of Tory Members.

The Department of Trade and Industry continues to publish material to assist companies with trade and investment in South Africa. While 61 companies—to their credit—have withdrawn from South Africa since 1985, others continue to invest and enjoy the profits that accrue from low wages and the apartheid system.

Opposition Members believe that all trade links should be broken with the apartheid regime in South Africa, and that full sanctions should be applied. Even if the Government will not adopt that policy, they should insist that the EEC code of conduct is carried out with regard to the employment of migrant labour, the payment of decent wages, trade union recognition and a refusal to carry out the new anti-trade union laws that the South African Government are proposing. The Government should insist that the other 11 members of the EEC will meet those requirements.

The code of conduct and sanctions alone will not fundamentally change the situation in South Africa. They are the minimum that we can do to aid the struggle against that evil and disgusting regime. My faith is clearly in the working people of South Africa to change the system, and to do away with apartheid and with the big business interests that profit from that system and prop that system up.

6.28 pm

Mr. Teddy Taylor (Southend, East)

I do not question for one moment the sincerity of the views of the hon. Member for Bradford, North (Mr. Wall) on South Africa. He has campaigned about that issue for many years. Although I might disagree with his sentiments, I agree absolutely with his central point. He said that the EEC policy was one of make-believe; that it was not working and that all we are doing is trying to convince ourselves that something is happening, when it is not. I should like to make the simple point that almost every sentiment expressed so far in the debate has been on the basis of make-believe.

The Minister paid tribute to the fact that we might get a bus from Southend, starting from tomorrow. I am sorry that she did not have the time to explain what has happened in relation to that bus and that that bus might never arrive in Frankfurt because there is not yet an agreement on where the bus can stop. We have regulations on transport and buses which should have enabled that to be agreed three years ago. Since then, the Secretary of State for Foreign and Commonwealth Affairs has discussed the issue personally with Herr Genscher.

The Minister has taken up the matter on infraction proceedings in the Commission. I was one of six people from Southend who flew over with the British ambassador to meet a man who was described as the chief transport civil servant in Bonn, to discuss the question of the Southend bus. When we met him we found, sadly, that he is still designated as having responsibility for the Berlin airlift. When we pointed out that that had ceased some time ago, he explained that his designation had not changed. The rules and the regulations which were abundantly clear should have allowed a bus to travel from Ostend to Frankfurt, but we have had three years of non-stop harassment and bureaucracy in an endeavour to sort the matter out.

My fear is that all the high-flown sentiments about what Europe can do and what 1992 might mean get away from the central point that, for this country, the EEC is still a sick and costly joke, and that many of its so-called aims will not only not be realised, but cannot be realised.

Let us take first the issue which has been mentioned so often—the common agricultural policy. We are told once again, as we have been told three times before, that that issue is well on the way to being resolved and that we are going to have stability, control and legally binding restraints on spending. Apart from the fact that some of the expenditure may now be legally bound, that is exactly the story that we were told at the time of Fontainebleau. Last week, the delightful and courteous Paymaster General admitted that last year we had to operate a ten-month year so that the Common Market would be within the restrictions that had been agreed at Fontainebleau, and that is what happened.

The Paymaster General (Mr. Peter Brooke)

I am grateful to my hon. Friend for giving way. I think that he would be the first to acknowledge that the grounds for the ten-month year last year was the use by the Community of the doctrine of "exceptional circumstances", a doctrine which, I am sure that my hon. Friend will agree, had been nefarious in its implications and applications. By setting up the reserve fund under the new arrangements, the "exceptional circumstances" loophole cannot be used in future.

Mr. Taylor

I am delighted that my hon. Friend said that about the exceptional circumstances clause. My understanding was that the ten-month year went considerably beyond "exceptional circumstances", but he is right in saying that the exceptional circumstances clause allowed the EEC to spend whatever it liked so long as it said that there were exceptional circumstances. The exceptional circumstance clause is now re-written into the new agreement and although the answer is that it could work in both directions, I question whether it will work at all because there are plenty of other ways in which expenditure can be changed. I do not believe that it will be restricted.

We are told that there will be stabilisers which will curb spending. We heard that from the SLD representative, the hon. Member for Ceredigion and Pembroke, North (Mr. Howells), as well. The Minister must know what has happened to the so-called stabilisers. Let us take wheat as an example. What is this year's proposed expenditure for wheat? There is a massive increase because the stabiliser works only when the provision for last year has been exceeded. Even then, the reduction is only 5 per cent., which, in any event, is an artificial figure, bearing in mind the changes made by the member states themselves.

We should accept, and not kid ourselves, that there is no way in which the common agricultural policy will ever he reformed sensibly and rationally by the EEC because of its structure. That cannot happen unless agreed by member states, and some country will always be having an election. It does not help the Common Market, the British Parliament, or anyone, if we have the constant myth of holding debates every so often in which hon. Members make visionary comments about all the great things that might happen in 1992 or 2002, when we know that the EEC is not able to deal with its practical and real problems.

I was interested by the spokesman for the Social and Liberal Democratic party, the hon. Member for Ceredigion and Pembroke, North, who said, "Isn't it sad that we have all this extra food when lots of people in the world would like to have it?" He must know—I hope that he accepts this—that those people are poor because the Common Market is shamefully dumping its surplus food around the world at crazy low prices, thus depriving the poor countries of decent prices for their food. That is why such countries cannot pay their debts or buy machinery. The hon. Member must know that £220 million has been spent on that every week this year.

Mr. David Howell

indicated dissent.

Mr. Taylor

My right hon. Friend is shaking his head, but I can assure him that that figure was given in a parliamentary answer that I received three weeks ago from a Minister.

Mr. Howell

I did not shake my head at my hon. Friend's detail, because he is a master of detail and I always admire his dogged and rugged fight on the nonsenses of excess agricultural production. I shook my head simply because people in Ethiopia are dying and will die in much larger numbers not because of shortages of food—the food is there—but because it cannot be moved by roads because of the political warfare and civil war. It does not have anything to do with food production.

Mr. Taylor

I certainly accept that there is a war in Ethiopia and that that is an additional problem. However, I suggest that, if the war ended and Ethiopia had peace once again, it would suffer as so many other countries in the Third world are suffering because of the shameful and cruel policies of the EEC which are inflicting devastation and destruction on poor countries.

My hon. Friend must know that we are paying people three times the world price to produce wheat and he must know what we are doing in relation to the price of sugar. If we are crazy enough to want to pay those high prices and to force our communities to pay those high prices, that is a matter for ourselves. We know from the Treasury's own paper that we are forcing the average British family to spend £11 per week more for their food than they would if it were not for the CAP. If we want to do that, that is our own business, although it is bad for the economy, for our competitiveness and for our business. What we are not entitled to do is wreck world markets and cause so mach damage to the Third world by our dumping policies.

I had the pleasure of raising a question in the House about New Zealand's butter the other day. I got plenty of shouts, and people who disagreed with me said that it was terrible that New Zealand should have its throat cut on those exports. However, we should be aware that, when New Zealand tries to sell its butter anywhere else in the world, whether in Japan, in Korea or even in Russia, it finds Common Market salesmen selling butter for 6p per pound. That is what they are doing at special sales. It is recorded in a written answer that there was a special sale of 240,000 tonnes to Russia last month.

Mr. Curry

My hon. Friend is right to say that the Community sold butter at a low price to the Soviet Union. However, does he agree that in this circumstance New Zealand approved of that sale? It has a common interest with the Community in raising the world price of butter because otherwise it is trying to sell a commodity on which it is dependent for exports at low prices which do not represent a proper rate of return. Some of us heard the chairman of the New Zealand Dairy Board, Mr. Jim Graham, say quite specifically that he approved of the Community's disposal programme because it offered the hope of getting prices back in balance. My hon. Friend's general remarks are right, but New Zealand subscribed to those circumstances.

Mr. Taylor

I do not want to go into too much detail, but my hon. Friend may be misinterpreting what New Zealand Ministers have said. They said that, rather than a continuing year-by-year consistent dumping, they would prefer an accelerated dump which was part of last year's agreement to try to get rid of the existing mighty dump, on the understanding that it would not happen again. That is rather different from saying that the sale at 6p a pound was approved by the New Zealand Government. We are doing something cruel and nasty to New Zealand and other countries.

I am surprised that the Liberal party of all parties, which is meant to care about people and have some feeling for them, does not recognise that and do something about it. We know that organisations such as Oxfam constantly plead with Parliament to do something about this—but do we care? Rather than talk about visionary sentiments to do with how we are going to have the leading currency in the world and a new kind of trade structure, we should face up to doing something practical about a problem that is killing people and causing starvation and misery in the world, due to our wrongful policies. But sadly, nothing has been done.

The Paymaster General must know that things will not change because of these so-called reforms. There is not the slightest sign of that. Expenditure on dumping is up in 1988, as is expenditure on agriculture. The Minister must know these facts. Europe is proposing only a minor stabiliser for cereals and spending will increase even further. I appeal to hon. Members not to continue with visionary sentiments such as those that prevailed at the time of our original membership and of the Single European Act, but to try to do all in their power to persuade the Common Market to solve this real problem.

On the basis of what is contained in the White Paper, it is clear that there is only one way to go about this—to use the single power that we have, and every so often to say no to more spending. Sadly, it is recorded in the White Paper that we agreed to give a massive extra amount of money to the Common Market to spend, and we know exactly how it will be spent: on causing high food prices at home and devastation in the Third world.

Also, in the context of make-believe, I remind the Government of Britain's net contributions to the EEC. We were told at Fontainebleau that things would improve—that there would be refunds, which I am sure we have had. But can the Paymaster General explain what went wrong in the year that ended on 5 April 1988? The Government gave us four estimates. First, we were told that the net contribution was likely to be £500 million. Suddenly, it became £700 million; then it grew to £900 million; and then the Treasury White Paper said that it would be £1.5 billion. What is happening to the tight control of spending if our estimate of the net contributions for the year that has just ended was so wildly out? Recently, in a written answer, the Prime Minister said that last year's figure might have to be increased by £200 million because of changes that have taken place.

Why should we continue with this make-believe about trade? I happen to be a director of several companies, including an insurance company that trades throughout the world. One of the countries in which we operate is Germany, and we find that trade with that country is certainly not simple. The Minister must know what has happened. We always had a reasonable surplus in our trade with the EEC, but since membership that trade has gone crazily wrong. The latest figures for the year that has just ended were as follows: imports from the Common Market, £38.5 billion of manufactured goods; exports to the Common Market, £27.7 billion. That is a gap of more than £11 billion. Treasury Ministers are well aware that if anything will threaten the future prosperity of our country, the trade gap will.

It has been suggested by some that this is our fault—that somehow British managers, workers and trade unionists are at fault, because while the Germans have been rushing to send things here, we have not been rushing to send things to them. Why has our trade with the Common Market gone so abysmally wrong, yet our trade with the rest of the world has improved to such an extent that we can still keep our heads above water? Something is seriously wrong, and it is likely to grow worse.

I ask the Government to stop the make-believe about the harmonisation of taxation. I was delighted to hear the Paymaster General's assurance that the Government were going to use their veto to stop the imposition of VAT on food, fuel and children's clothing. But the Government must know that the Commission has proposed a massive programme of tax harmonisation, the basic feature of which is a huge reduction of the tax on alcohol and tobacco and a massive increase in tax on essentials—on a whole range of items from transport to newspaper.

If we are not going to harmonise liquor taxation it is almost impossible to see how we can have a completed market. If people are to be allowed to move freely from one place to another the position is not like American states, between which there are only minor differences—the tax on wine in Britain must be cut by 85 per cent. and that on liquor by £2.85. How can we have a free market without such harmonisation? At some stage the Government must face up to that problem. They cannot say they will look into the issue and set up committees. They must give us broad guidance about whether they accept the general principle of a huge cut in alcohol tax and a massive—

Mr. John Marshall

Is my right hon. Friend recommending the harmonisation of indirect taxation on wine, spirits and cigarettes?

Mr. Taylor

As my hon. Friend knows, I am not recommending that. It would be difficult to get such a measure through the House, although it is likely to happen if 1992 is to become a reality.

We are kidding ourselves and indulging in make-believe when we suggest that 1992 is directly related to trade. It is about the harmonisation of such things as tax. It is foolish to pretend that we are talking about trade issues. However, the Government will make their decisions on these issues and I doubt whether what I or anyone else says will make a great deal of difference. Nevertheless, I hope that they will reflect on the extent to which the European institutions have recently shown their intention and wish to extend their authority and reduce that of the national Governments substantially. There have been recent examples of that, and I hope that the Government will at least say that they are worried about the extent to which the non-elected, non-democratic institutions of Europe are seeking to extend their powers.

Two weeks ago, the EEC Commission decided to put a ban on apple imports into this country and others. It was a total ban on American, Canadian and Chilean apples—and those of certain other countries—and tight quotas that amounted to a ban were applied to New Zealand. The ban meant that we had to send back ships that were on their way here and many people lost a great deal of money. It also meant that housewives in Britain will have limited choice. We all know that the problem is the glut of 350,000 Golden Delicious apples, which are mainly produced in Italy and Greece and which are more than a year old. So we tell our consumers that they should eat these old apples instead of the ones that they might have preferred from America, Canada or Chile.

The interesting thing is that on all previous occasions when the Commission has tried to put a ban on a product such as this, it has consulted member states and our Government first. On this occasion there was no consultation, and it strikes me that that is a new pattern that we should watch out for.

Secondly. the Commission put forward proposals for 1992 on the basis of article 100A—majority voting—even though Mr. Speaker's counsel made it clear that that appeared to be an abuse of powers. It means that summer time for the United Kingdom will be decided by a majority in the Council of Ministers, and quite soon at that. According to our legal advisers, the Commission was wrong in this case to decide the matter by majority vote when it had no reason to do so.

Thirdly, we had the rather unusual and strange proposal to tax budgie seed. It was regarded as a small and peripheral matter in European terms, but it is rather important to the 4 million budgie owners in Britain. The proposal is not to impose a minor change but to increase the levy on such seed from £25 to £119, the sole reason being to harmonise the levies on budgie seed and on barley. I ask the Minister whether the matter was decided by a majority vote and whether the Government had any particular views.

The fourth point that should worry us is the extent to which the European Court is taking powers of taxation from the House. It was announced only this morning that the Government are bringing forward an amendment to the Finance Bill for the sole purpose of bringing in the changes that were proposed by the European Court of Justice. It told the Government that, against their wishes, they must charge VAT on spectacles and hearing aids. The European Court is shortly to make a judgment on whether we should also pay taxation.

Mr. John Marshall

My hon. Friend referred to a decision by the European Court. Does he agree that that decision interpreted the sixth VAT directive, which was passed by the House in 1977? How did he vote on that occasion?

Mr. Taylor

Precisely, no, but my hon. Friend is well aware that, whenever there is a vote on such issues, my vote is usually in the other direction. The Labour party was in power on that occasion, and I was not in the shadow Cabinet at the time. I shall look up the matter and tell my hon. Friend what the position is. When we were in opposition, Conservative Members took a firm, robust and patriotic stance on such matters.

The European Court is substantially extending its power and authority in relation to the sixth directive and other matters. As my hon. Friend will be concerned to know, in a few weeks it will decide whether the British Government should be instructed to levy VAT on gas, electricity for industry, water, sewerage, new services, and all new industrial and commercial buildings. It worries me that a non-elected group of foreign judges is able to determine what taxation should be levied on citizens of the United Kingdom.

I have put my points not so that visionary individuals will be able to say, "Here is someone who is always niggling and cannot see broad horizons," but simply to appeal to the Government not to be carried away by glossy stories and dreams. Let the Government accept the simple fact that reform of the CAP will not happen and that the only way we shall safeguard our farmers and European finances is to seek the repatriation of agriculture from the EEC, and that can be achieved only if we say no to more money.

Let the Government face our contributions and start trying to get their figures right, instead of always getting them wrong. Let them face the significance of an appalling trade gap with the Common Market. It substantially threatens the future of our country. There are good reasons for that, as the Minister well knows. We should appeal to the Common Market to start solving some of the real problems before it now, and not just to give a 30 per cent. pay rise and tell people to go on dreaming, as it is doing now.

6.53 pm

Mr. Tam Dalyell (Linlithgow)

It is like old times following the hon. Member for Southend, East (Mr. Taylor). I content myself with the friendly thought that, had the hon. Gentleman been Secretary of State for Scotland in a Conservative Government, the face of Scottish politics would be different.

Mr. Foulkes

Does my hon. Friend agree that, if the current trend of politics in Scotland continues, it is likely that, after the next election, the hon. Member for Southend, East (Mr. Taylor) could again be the shadow Secretary of State for Scotland?

Mr. Dalyell

I had better be careful. I agree with the hon. Member for Southend, East on one matter, and that is the importance of millet seed not only for budgerigars but for pigeon fanciers. I tremble before few organisations, but one is the formidable local pigeon fanciers organisation. A wise politician does not cross pigeon fanciers. I tried to interrupt the Minister of State, Foreign and Commonwealth Office on what will be done about the soaring price of millet seed. The matter may be a bit of a canard, but I should like a serious answer.

Paragraphs 1.4 and 15.2 of the EEC document refer to David Williamson, the first. British Secretary-General. I take this opportunity to wish him well. In the same breath, I say a big thank you to Emile Noel, a Frenchman of wit and wisdom, who showed kindness to the indirectly elected incoming British European parliamentary delegation. I shall always have good thoughts of that charming Frenchman. I do not know whether he thought that we should have joined the EEC, because we were not sufficiently Communautaire, but that did not prevent his giving of his time and experience to those new Members who asked about the Byzantine ways of the Community. Emile Noel was a great European civil servant.

On 17 May, I asked a specific question about Ispra. I am glad that the Paymaster General is present. I say quite openly that, in his incarnation as Under-Secretary of State for Education and Science, he was a good science Minister with a genuine interest in his portfolio. He knows about the problems of Ispra. I asked whether it is sensible to conduct negotiations with the JRC and whether it should become more involved in radioactive waste management.

Paragraph 1.10 refers to transport. I am a National Union of Railwaymen-sponsored Member. Earlier in the week, my colleagues and I spent some hours with Sir Robert Reid, the chairman of British Rail, discussing the Channel tunnel. I have one question relating to the vexed issue of customs. It involves the Treasury, the Home Office in relation to immigration aspects, and the Department of Transport. It is profoundly unsatisfactory that, at a cost of £15 million, £20 million or whatever, a great customs terminal is apparently to be built at Waterloo, while the French and our other European partners are prepared to conduct customs operations on board trains. What kind of sense does it make to have matters officially dealt with in the Pas de Calais, but the prospect of endless queues at Waterloo station, apart from the problem of having a 47 mph limit in Britain and 115-plus on the continent? We have real problems, and I hope that a combination of Ministers will sort them out.

Paragraph 6.5 refers to AIDS and cancer research. I repeat the view of Professor Ken Murray FRS, of the department of biochemistry at Edinburgh university, and many others that, possibly, the best way of giving money to cancer research on a European basis is to help distinguished individuals in university departments. The Paymaster General had some sympathy with that view when he was in the Department of Education and Science, but what is the Government's policy on that?

In paragraph 12.5 there is a reference to the Minister of State, Foreign and Commonwealth Office, visiting the European Parliament. It is a personal view—I cannot say that it is shared by my colleagues—but is it not a bit churlish to send to the European Parliament a Minister of State? Should not that be a job for the Foreign Secretary? I should have thought that there was an argument for the Foreign Secretary keeping that engagement. It may be that on this occasion there were difficulties, but I am really asking about the policy on sending senior Ministers.

I want to deal with the one major issue that I have to raise, and that is where European policy is now made. Is it in the Foreign Office—I see the hon. Member for Southend, East (Mr. Taylor) nodding—or is it in Downing street? One of the casualties of the Falklands war was the Foreign Office. It was right in terms of Britain's long-term interests, but it carried the can, and since 1982–83 it seems to many of us that the policy that matters in relation to Europe, as in relation to so much else, has been made in Downing street.

Some of us have become more and more curious about the role of Mr. Charles Powell in the process of formulating European policy, because not since Sir Horace Wilson has there been anything quite like it. Before the hon. Member for Pembroke (Mr. Bennett) gets excited about this, let me refer not to some Labour party magazine but to the Sunday Telegraph, which I think he will agree is not exactly the house magazine of the Labour party. Mr. Bruce Anderson, who would not consider himself to be some extreme Left-winger, said of Mr. Powell: one of the ablest prime ministerial private secretaries of the century—and one of the most important … When the history of the past few years comes to be written, he will be seen as one of the three or four most influential figures at the heart of this administration … Total rapport … rebuffing contrary advice from the Foreign Office … It seems that he and not Sir Geoffrey is the Foreign Secretary … those with whom he is dealing abroad are asking themselves whether he is really speaking for HMG, and telling their embassies to find out what Charles Powell thinks. If the Foreign Secretary and his Cabinet colleagues allow the Prime Minister to personalise Government to the extent that the right hon. Lady—

Mr. Deputy Speaker (Mr. Harold Walker)

Order. It is difficult to see what this has to do with the subject under debate.

Mr. Dalyell

It has a very great deal to do with it. It is at the heart of European formulation of policy.

I have to ask in what circumstances Mr. Powell has been unprecedently promoted in post. Never before has a private secretary been so—

Mr. Deputy Speaker

Order. I am not persuaded by what the hon. Gentleman has said that this has anything to do with the matter under discussion. We should return to the White Paper on the developments within the EEC. I cannot see how this is one of those developments covered by the White Paper.

Mr. Dalyell

Every hon. Member who has spoken has gone very wide indeed. I am saying that this matter is at the heart of the formulation of policy.

As I said yesterday, pre-1986, I did not name civil servants controversially. But Mr. Powell is not a shrinking violet.

Mr. Deputy Speaker

Order. I cannot accept responsibility for the scope of the debate before I came into the Chair. I did not listen to it. I am responsible for the debate that is taking place now on the White Paper on developments in the EC, of which the House is asked to take note. If the hon. Gentleman can assure me that the matter that he is raising is covered by the White Paper, I might be persuaded to allow him to continue his speech on those lines. Otherwise, he should change tack.

Mr. Dalyell

The press have stated that Mr. Powell, in certain circumstances, has asked for the ambassadorships in Paris or Washington. Appointments to key embassies are matters of important European policy to Britain.

Mr. Deputy Speaker

Order. I find it difficult to see how diplomatic appointments can in any way arise under the document that the House is debating. The hon. Gentleman must find some new line of debate or resume his seat.

Mr. Dalyell

Are we not talking about political co-operation in Europe? I should have thought that appointments to embassies such as Paris or Rome were a matter of considerable importance because those are places in which policies—

Mr. Deputy Speaker

Order. I do not minimise the importance of the matter; it is its relevance that I call in question. It does not seem to be relevant to the debate.

Mr. Dalyell

What could be more relevant than the appointment of senior diplomats to the British embassy in Paris? Is not that central to the whole question of our performance in Europe?

We have to go back to January 1986. Mr. Powell did his job immaculately. He did tell the Prime Minister everything.

Mr. Robertson

On a point of order, Mr. Deputy Speaker. May I come to your assistance and perhaps, inter alia, the assistance of my hon. Friend the Member for Linlithgow (Mr. Dalyell) by drawing to your attention pages 28 and 29 of the report entitled "European Political Co-operation"? European political co-operation is a Eurospeak term for the co-ordination of foreign policy. You will see that all the items in paragraphs 11 to 11.15 are concerned with foreign policy issues, and the British diplomatic service is an integral part of the process. My hon. Friend is mentioning a member of the diplomatic service, who fits neatly into that pattern of negotiation. The drift of Government policy, with which we agree, is towards the closer integration of foreign policy. I should have thought that my hon. Friend's references would fit into what is a wide remit of a report that covers practically everything that happened in the Community in six months.

Mr. Deputy Speaker

The hon. Gentleman's offer of help is rather like being struck on the head with a lifebelt. However, in the light of what he has said, I shall follow carefully what the hon. Member for Linlithgow (Mr. Dalyell) says.

Mr. Dalyell

I am grateful for lifebelts on the head or any other part of the anatomy at the moment. The Guardian of Friday 20 May said: Powell has another string to his bow: he knows where the bodies are buried in the Westland affair.

Mr. Deputy Speaker

Order. The hon. Gentleman is trying it on. I am sure that he knows that he is testing my patience. We are not going to go down that road when we are debating the White Paper on developments within the EC. I cannot allow the hon. Gentleman to continue with that line of debate.

Mr. Dalyell

It is testing the patience of many of us to think that knowledge of where the bodies were buried in the Westland affair can be a qualification for being ambassador in Paris.

Mr. Deputy Speaker

Order. The hon. Gentleman will have to do his exhumation on some other occasion.

Mr. Dalyell

This matter came up during business questions. In order to save time I referred to early-day motion 1142. I dropped the Leader of the House a note asking for exactly what he said, and, most courteously, produced a document headed, "Line to take". It said: I would have thought that the hon. Gentleman would by now have realised he ought not to believe everything he reads in the newspapers—even the Guardian. I am afraid his own lively imagination, alongside the speculation and gossip some newspapers contain, makes for a very unreliable recipe indeed. Facts may make for a more boring diet, but it is one I none the less recommend to the hon. Gentleman. It will be noticed that that was the line the Leader of the House was advised to take, but was not an honest rebuttal of the facts as set out in the early-day motion.

Mr. Deputy Speaker

Order. The hon. Gentleman is pursuing a line of debate which is not relevant to the document before the House. Unless the hon. Gentleman addresses himself more directly to the subject of the debate, I shall ask him to resume his seat.

Mr. Dalyell

This subject surely centres on a civil servant's capacity to obtain the ambassadorship of a country, such as Paris. I ask a very direct question of a Foreign Office Minister. Did Mr. Powell, or did he riot, turn down the offer of the ambassadorship in Stockholm? What other interpretation can be placed on the words Powell has another string to his bow: he knows where the bodies are buried in the Westland affair"? Clearly, the implication is that knowledge of wrongdoing by the Prime Minister places Mr. Powell in the position of being able to demand the ambassadorship of the Paris embassy or at a pinch, I am told, that of Rome, and to turn down the ambassadorship at Stockholm. Will the Government ask The Guardian to make any kind of withdrawal?

Mr. Deputy Speaker

Order. The hon. Gentleman has totally disregarded my advice. I must for the last time say to him that if he persists in pursuing that line, I shall have no option but to insist that he resumes his seat.

Mr. Dalyell

I do not wish in any way to be discourteous to the Chair. Nor do I want to take up the time of other hon. Members who wish to speak. I say only that this is a serious issue. The arguments were set out at column 851 of Hansard for 25 July 1986, at column 386 of Hansard for 29 October 1981, and in the Adjournement debate on 22 April this year. The press has clearly implied that the Prime Minister, in saving her own political skin over the Westland affair—

Mr. Deputy Speaker

Order. The hon. Gentleman clearly intends to have no regard to my ruling. I call Sir Anthony Meyer.

7.12 pm

Sir Anthony Meyer (Clwyd, North-West)

This debate will have been worth while if only for the contributions of my right hon. Friend the Member for Guildford (Mr. Howell) and of my hon. Friend the Member for Skipton and Ripon (Mr. Curry), who have made the best speeches so far on this subject. After what has just taken place, I am a little shamefaced to say that I will cover some of the ground covered by the hon. Member for Linlithgow (Mr. Dalyell)—although, I hasten to add, without making any incursion into the realm of personalities. However, I intend later to deal with the relative responsibilities of the Foreign Office and 10 Downing street in relation to our European policies.

At the outset of this debate, I entertained some hopes that the much proclaimed new realism of the Labour party on European matters would have enabled the hon. Member for Hamilton (Mr. Robertson) to come out in his true colours as the convinced European we all know him to be, instead of the "Mr. Facing Both Ways" which he was obliged so unconvincingly to impersonate today. By his intervention in Prime Minister's questions today, his right hon. Friend the Leader of the Opposition blew the gaff and made perfectly plain the fact that when it comes to the crunch, he and his party are still the protectionist Little Englanders that they have always been.

Ms Marjorie Mowlam (Redcar)

Do not be so silly.

Sir Anthony Meyer

That was clearly the implication of what was said by the Leader of the Opposition at Prime Minister's Question Time today, on the issue of the Rowntree takeover.

Hon. Members know perfectly well where I stand. I support the decisions taken by Governments of both parties to join the European Community and to make British membership the principal instrument of protecting British interests and of increasing British influence. Unlike some hon. Members on both sides of the house, I am also prepared to will the means to achieve that end. Unlike my hon. Friend the Member for Skipton and Ripon, perhaps, I hold the view that if we want to achieve a true single market by 1992, with the great benefits it can bring, we must move some way towards an approximation of indirect taxes throughout the Community. I would not go so far as proposing identical rates on every item, but the more glaring differences will have to be eased.

Ministers keep telling me that such is quite unnecessary and that an effective single market can be perfectly well achieved with widely differing levels of indirect tax. They point to the United States, which is undoubtedly a single market, where different states have different levels of sales tax—although there are nowhere near the same discrepancies in the United States that there are within the European Community; only the kind of difference which would be left after a sensible move towards approximation in Europe.

The Government's argument is more dishonest than that. It has been overlooked that in defending the poll tax, the Government argue that it would be totally impracticable to finance local government in this country by way of a local sales tax, as different levels would produce unacceptable distortions of shopping patterns. The Government have that all wrong. They cannot have it both ways, when the two concepts they try to defend are so blatantly mutually incompatible. As regards Europe, the idea that there can be a common market despite huge differences in the levels of sales tax is totally dominant in ministerial circles.

The debate on 11 May on the issue of tax harmonisation turned out to be a contest between the Economic Secretary to the Treasury and the hon. Member for Wrexham (Dr. Marek), whose speech had the great virtue of total inaudibility. It was a contest as to which of the two could sound more unenthusiastic about the European Community. I am glad to say that my right hon. Friend won that particular contest hands down when he said: We simply do not think it is necessary for the completion of the internal market that tax rates be approximated. Moreover, we have a major difficulty with the Commission's proposals for zero rates. As drafted, the proposal makes no provision for zero rates, although the Commission has hinted at temporary derogations for member states with particular difficulties. We have made specific pledges to the electorate to retain zero rating on food, fuel and power, and children's clothing. I can assure the House that we neither wish nor intend to resile from those pledges. So I would have been happy to accept the amendment in the name of my hon. Friend the Member for Thanet, South (Mr. Aitken)"— and for once it was not in the name of my hon. Friend the Member for Southend, East (Mr. Taylor)— and our hon. Friends."—[Official Report, 11 May 1988; Vol. 133, c. 411–12.] The latter presumably included my hon. Friend the Member for Southend, East.

In other words, election pledges are paramount, if I may coin a phrase, whatever damage may thereby be done to our other national objectives, and some Ministers seem positively eager to give encouraging signals to the cabal of malcontents who remain muttering in their caves about the unwisdom of ever having committed Britain to joining the European Community.

But there is a bigger issue than tax harmonisation: one on which my right hon. Friend the Member for Guildford spoke in his penetrating speech, and to which The Economist draws attention this week. That issue is whether Britain, one of the great financial centres of the world, will be able to hang on to and develop that status—which, as my right hon. Friend the Prime Minister reminded us at Prime Minister's Question Time today, is worth more than North sea oil in revenues.

As The Economist puts it, Britain as a member of the EC, would be able to ensure that much of the matching of savings and investment would take place through London". According to The Economist, That claim becomes less plausible the longer sterling stays outside the European Monetary System. To international moneymen, the British debate over the EMS grows quainter by the day … The one remaining obstacle to full EMS membership for sterling is Mrs. Thatcher's own hostility to the idea. I am a great admirer of both my right hon. and learned Friend the Foreign Secretary and my right hon. Friend the Minister of State, Foreign and Commonwealth Office, and I am delighted that they are now beginning to stand up for themselves. It has been sad over past years to see that once great, once proud Department, the Foreign Office, cowering in a corner like a whipped child after being put in the doghouse through its failure to oblige the House to face up to realities over the Falklands.

I sometimes like to describe my right hon. and learned Friend the Foreign Secretary as being engaged in a game of grandmother's steps with my right hon. Friend the Prime Minister. He can move, provided that he is not seen to be doing so; if she turns and sees him moving, he must go back to square one. I should like to see my right hon. and learned Friend take his courage in both hands and keep moving—as quietly, modestly and unprovocatively as possible, but none the less moving steadily—in the direction in which he knows that he must go, the direction of extending our influence and strengthening our interests throughout the world. I very much hope that he is able to do so.

7.22 pm

Mr. John Marshall (Hendon, South)

First, let me welcome the further impetus applied during the Danish presidency to the creation of the internal market. I must disagree, perhaps not for the first time this evening, with the comments of my hon. Friend the Member for Southend, East (Mr. Taylor), who said that 1992 was about harmonisation. As a long-standing and experienced battler in European Community matters, he should know full well that what 1992 is about is the removal of artificial trade barriers to produce a genuine Community. Harmonisation was introduced to deal with the noise of lawnmowers, for instance, not because some bureaucrat somewhere had the foolish notion that lawnmower noise was something about which he felt particularly strongly, but so that there could be genuine competition between lawnmower manufacturers in the United Kingdom and their competitors in the Federal Republic of Germany.

Sir Anthony Meyer

My own lawnmower, British-made, is so insufferably noisy that I am quite unable to use it before lunchtime. It seems to me a jolly good thing that there should be some rules about keeping lawnmowers a bit quieter.

Mr. Marshall

I am glad that the environment of my hon. Friend's constituency is being improved as a result of the draft directive. But I was really trying to say that, apart from improving the environment of his garden, the measure will make competition much more real between manufacturers within the Community, and the United Kingdom is bound to benefit from that increased competition.

Mr. Teddy Taylor

It is to build up protectionism.

Mr. Marshall

No. My hon. Friend has got it wrong again. It is not to build up protectionism at all; it is to get rid of protectionism. It is to allow competition to take place. It is time that my hon. Friend got his speeches out of the groove in which they have been since 1971, or perhaps 1975. I sometimes think that he is like my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath), who would like to believe that the world ended in 1975. I think that my hon. Friend the Member for Southend, East would like to think that the 1975 referendum had not taken place. He should recognise that Britain is in the European Community for good, and for the good of our country. The niggles that we hear from him whenever we debate the European Community do his constituency and his good sense no good at all.

I remember the days when my hon. Friend the Member for Southend, East was "Secretary of State for Scotland" in the Glasgow parliamentary debating association. He used to make first-rate speeches then: those were the days before he discovered the European Community. Since he has become obsessed with the Community and with niggling about it, I am afraid that the standard of his speeches has declined somewhat. I wish that he could concentrate on another theme. I think that that would be of benefit to the House, the European Community and perhaps my hon. Friend's career as well.

Mr. Teddy Taylor

I apologise for the character of my speeches. But does my hon. Friend—who, I know, studies these matters seriously—not accept that there is a great deal of protectionism in almost every measure coming out of the Commission in relation to 1992 and other matters? Will he consider in particular the proposals for foreign banks to come into the Community, which was simply a measure to protect the Common Market against outside intervention? Does he not accept that there is considerable evidence that the EEC is becoming a highly protectionist body?

Mr. Marshall

My hon. Friend has got it wrong yet again. What 1992 is about is opening up the European market in financial services so that British and Scottish financial institutions can compete within the Community in a way that they cannot do today. That is not protectionist.

As for institutions outside the European Community, we must remember that certain countries such as Japan have not been exactly welcoming when it comes to European financial institutions seeking to join their market. Without going too far at this stage in the argument about reciprocity—about which we have heard a great deal in recent days—I feel that there is much to be said for saying to the Japanese and others, "If you will not give us certain rights, we will not give them to you."

Mr. Roger Knapman (Stroud)

If the Common Market is so much in favour of reciprocity, why did the Director General of Fair Trading say yesterday with regard to Rowntree that the extent to which Swiss companies are or are not vulnerable to similar bids from overseas was irrelevant?

Mr. Marshall

As my hon. Friend knows, there is currently no EC directive on merger policy. When I spoke last week to the European Commissioner for merger policy, Commissioner Sutherland, he made it clear that the reason he would not be interfering in the Rowntree bid was that he had no power to do so. But I was intending to deal with reciprocity later in my speech.

Having suffered a certain amount of injury time, let me pay tribute to the work that Lord Cockfield has done in respect of 1992.

Mr. Donald Anderson (Swansea, East)

Let me say en passant that perhaps as a result of that work his fate is assured.

Mr. Marshall

I am sure that my noble Friend will take that delphic comment in the way that it was intended. Whatever his fate may be, I am sure that when the history of the Delors commission is written, he will be seen as one of the giants of that commission and universally commended for the treat energy he has put into creating the impetus to make the internal market for the European Community. The drive, enthusiasm and vision of Lord Cockfield have made 1992 possible for the European Community.

I believe that Britain should welcome the abolition of trading barriers which will be brought about by 1992. Already 49 per cent. of our exports go to our partners in the European Community. The financial services sector, which will benefit greatly from 1992, is an industry from which we as a country do very well. Of course, 1992 will benefit not only the south-east of England; it will benefit other parts of the United Kingdom. The liberalisation of the financial services market should benefit the canny investors of Charlotte square in Edinburgh just as much as it will benefit those in the City of London.

As my right hon. Friend the Member for Guildford (Mr. Howell) said, decisions about 1992 are already being made and it is wrong to assume that everything will happen on 31 December 1992. For a large number of markets, the decisions will have been made long before that. During the past six months, about 31 decisions were made by the Council. Of course there are bound to be some decisions which may be delayed somewhat beyond 31 December 1992. I consider that one of the Commission's mistakes during the past six months was to produce proposals for tax harmonisation. Those were stillborn and they must now be regarded as being as dead as the proverbial dodo. The Commission was putting economic theory before political practicality.

If we consider some of the proposals, the Commission said that petrol prices in Italy should fall by 29 per cent., and in Luxembourg they should go up by 32 per cent. The price of popular cigarettes should go up by 120 per cent. in Spain and fall by 44 per cent. in Denmark. It suggested that spirits should increase in price by 145 per cent. in Greece and drop by 50 per cent. in Denmark. In Ireland, the price of wine would decrease by 64 per cent., but the price of beer should decrease by 18 per cent. in France and 12 per cent. in Germany.

Do we really expect that the income tax payers of Ireland and Denmark would be amused at the prospect of higher income taxes and that they would then indulge in a toast to European unity as a result of those proposals? Do we really think that the drinkers in the German bier kellers will drink a toast to European unity if they are asked to pay 12 per cent. more for their litres of beer? Do we really think that smokers in Greece will relish the prospect of a near tripling in cigarette prices and then dream of Athens' contribution to European civilisation? Do we really think that the motorists of Germany would become more European if their petrol prices were to go up by 19 per cent. when the petrol price in Denmark went down by 19 per cent.? Of course, it is a political mirage. The sooner the European Commission clears up those proposals the better, as they will waste a lot of time and energy being debated and there is no likelihood of them coming to pass. The proposals do not just affect the United Kingdom. They have an adverse effect upon every country in the European Community.

Apart from the impact of taxes on cigarettes, wines and spirits and petrol, the proposals for VAT are socially regressive. In the United Kingdom, people with incomes of less than £60 a week spend 43 per cent. of that income on products that are currently zero-rated, while individuals with a weekly income of £325 to £450 spend only 22 per cent. of that income on zero-rated products. In the face of such widespread opposition, for the Commission to maintain those proposals is an exercise in pig-headed stupidity and wilful obstinacy. There is no prospect that they will be adopted, and energy is being dissipated in discussing them which could be used to much better effect elsewhere. The sooner the proposals are torn up the better. The tragedy of the European Community is that the Delors commission will not tear them up. It will take a new commission and new commissioners to remove those proposals.

The European Community has a population greater than that of the United States or Japan. It has a gross national product greater than that of the United States or Japan. We are a much more important trading block than either Japan or the United States. We are just as inventive as the Japanese or the Americans. Indeed, with all our assets, the Americans and the Japanese should be afraid of us, the European Community. Why are we so often afraid of the Japanese and the Americans? The reason is very simple. We have not taken full advantage of the potential of a home market of 320 million people. We have failed to create that full potential and 1992 provides us with the last chance to seize that opportunity before it is snatched away from us.

I congratulate the Government on the success of their campaign to educate the public and industry about the potential of 1992. Last year, during the period of the Danish presidency, covered by the report, there was a great deal of concern in the United Kingdom that France and Germany were well aware of what 1992 meant. Most people in the United Kingdom realise that 1992 will be a special year. It will be the year in which my right hon. Friend the Prime Minister will be re-elected for the third time. Of course, 1992 has a much greater significance than that historic event. It will create for industry in the United Kingdom an opportunity that it has never had before.

If industry is to prepare for 1992, it is essential that merger policies in the United Kingdom should take account of the potential of 1992. It is essential that when we consider mergers in the United Kingdom, we should recognise that from 1992 the market will be a European market and not a national market. Some 18 months ago, a merger between Tate and Lyle and British Sugar was vetoed, despite the fact that they would have been subject to competition from the European Community and prices would have been kept down because of that competition. More recently, a possible merger between Rowntree and Cadbury was frustrated because they would have had a large percentage of the United Kingdom confectionery market, although they would not have had an excessive percentage of the European market.

No doubt 1992 will result in a series of transnational mergers. If the United Kingdom is to be the only liberal capital market of the major markets in Europe, it is inevitable that British companies will be the main victims of that phenomenon. In our main competitors within the European Community, Germany, France and Italy, it is most unlikely that a hostile bid from a British company would succeed. Indeed, as Pearson discovered, it is almost impossible to carry out a friendly merger in France. If we are to remain the only open market, we shall be the country where the transnational mergers will take place and there must be a risk that we shall become a branch factory economy.

My hon. Friend the Member for Stroud (Mr. Knapman) referred to reciprocity, to Rowntree and Switzerland. I listened with interest to what was said yesterday about the subject but I feel that some of the comments distorted the philosophy of British industry and were perhaps kinder to the philosophy of Swiss industry than they should have been. We were told yesterday that in the United Kingdom some companies have strange voting structures. What we should have been told is that very few British companies have voting structures and that if any company were to go to the stock exchange today and say that it wanted a public float with a series of non-voting shares, the stock exchange would tell it, not very politely, to get knotted.

In Switzerland the ethos is quite different. A company's articles of association make it possible for it to frustrate hostile mergers. The only example we were given yesterday of a British company buying a Swiss company involved Cartier. I would not describe Cartier as a British company because 53 per cent. are bearer shares and no one knows who owns them. It was able to bid for the Swiss company only because the company went to it and said, "Please bid for us." I challenge my right hon. Friend the Minister to produce one example of a hostile bid in Switzerland by a British company that has succeeded.

If the argument about reciprocity does not apply to bids from Switzerland, I can only suggest that the paragraph about reciprocity in the White Paper on merger policy was put in to deal with bids from the Moscow Norodny hank.

There is a bid for Rowntree because it made a success of the preparations for 1992. It has been in Europe since—

Mr. Deputy Speaker

Order. It is difficult to see how this arises from the White Paper.

Mr. Marshall

One of the questions that relates to 1992 is that of merger policy. The White Paper refers to the progress being made in the developments towards 1992.

Mr. Deputy Speaker

With respect, the hon. Gentleman seems to be about to embark on a detailed discussion of Rowntree. That will not take place in 1992, but this year, 1988.

Mr. Marshall

I was going to deal with the matter only en passant. I was going to ask four questions of my right hon. Friend the Minister relating to merger policy. Perhaps we can deal with them in a debate after the Whitsun recess. Merger policy has to be looked at closely in respect of 1992 because there are deep implications for the future of British industry.

I have listened with interest to the various comments made about the European monetary system. I am always suspicious of economic panaceas because over the past 20 or 30 years I have found that most of the economic panaceas put forward have turned out to be unsuccessful. Rarely have the anticipated results flown from the proposals put forward. Since 1979 I have, as a Member of the European Parliament, listened to a number of my colleagues advocate British membership of the exchange rate mechanism and the European monetary system. Whatever the exchange rate has been, I have been told that the parity was right. Whether sterling has been high or low, I have been told that it is a good time to join. I get suspicious of people who tell me that whatever the rate, it is the right rate and that at long last we have reached a rate at which we can make the fateful leap.

The arguments for British membership of the exchange rate mechanism are, to say the least, thin. Those who argue that Britain should join the exchange rate mechanism of the EMS have to answer some questions. Why is it that Britain, which has not been a member of the exchange rate mechanism, has had a more successful economic record than many of the countries that are members of the exchange rate mechanism? Why is it that productivity has been growing more rapidly in the United Kingdom that in those countries that are subject to the exchange rate mechanism? Why has the growth in jobs been higher in the United Kingdom than in countries that are members of the EMS? Why has our ecomomy done so much better than those countries that are subject to the exchange rate mechanism? Could it be that membership of the exchange rate mechanism is not the panacea that some of my hon. Friends suggest?

I was interested in the speech of my right hon. Friend the Member for Guildford. He said that there might well be frequent realignments, if we were to join the exchange mechanism but that somehow there would not be a political storm about them. Some of us are sufficiently long in the tooth to remember what happened in 1967 when there was a realignment of the sterling-dollar rate. I do riot think that the noble Lord, Lord Wilson would say that there was no political storm or political fall-out from that. The lesson of history is that when there is a realignment as the result of a summit of Finance Ministers, there is frequently a political storm when the Minister comes back. How would a Minister, perhaps from the current Opposition, care to come back and say that there had been a devaluation of the pound relative to the deutsch mark of 15 per cent.? If people believe that that would not create a political storm, they are being unduly naive.

One of the consequences of realignment is that there would be significant benefits for the speculators because they can always read when a realignment is likely to take place and they would make millions of pounds of deutschmarks out of it.

The Copenhagen summit will be seen as a further milestone on the road to sanity within the European Community. We must realise that the Prime Minister is very much the saviour of Europe because the only reason why controls were put on milk output within the European Community was the determination of the Prime Minister to secure them. The only reason why there has been agreement on stabilisers is, again, the determination of the Prime Minister. The only reason why over the next few years there will be a reduction in the percentage of the European budget being spent on the common agricultural policy is the determination of the Prime Minister to secure that reduction.

The only reason why The Grocer magazine was able to report—[Interruption.] I am afraid that it was not published by my right hon. Friend the Member for Old Bexley and Sidcup. Perhaps it would have been interesting if it had been. The only reason why The Grocer magazine was able to say 10 days ago that there was no longer any skimmed milk powder in intervention in the United Kingdom is the determination of the Prime Minister to take Europe out of the thicket of subsidies and surpluses. It is a great privilege that she is our leader and that she has secured changes in Europe that are essential to bring sanity to the CAP.

The changes my right hon. Friend the Prime Minister has secured in the CAP will lead to a more cost-effective European budget. Money that has been spent on the CAP could not be spent on the regional and social funds or on research. Surely it must be better to spend money on cancer research than on funding the growth of tobacco. That is the sort of line along which the United Kingdom is moving. We are trying to reduce substantially the percentage of the European budget going to agriculture.

The debates on the European Community in this House are too often characterised by a sense of defeatism. The speeches of my right hon. Friends are cast too often in a groove of gloom and doom. Some hon. Members want to re-fight the battle of Culloden Moor—[HON. MEMBERS: "The Battle of Bannockburn."] There are even one or two hon. Members who would like to fight the battle of 1066 once again. Their negative attitude to the potential from the European Community does them and the House no good. We must recognise that the European Community provides many jobs for this country. It is the source of our influence in the world. Europe is the cradle of our defence. We should take advantage of the opportunities and recognise them and stop being sniggering and negative as some hon. Members are towards the European Community.

7.50 pm

Ms. Marjorie Mowlam (Redcar)

I shall speak briefly on the recent joint applications from Cleveland and Durham county councils to the European Commission for an integrated development operations programme. It is a small bid for just £210 million towards a programme of £430 million.

The eligibility of Durham and Cleveland counties for support from Europe is a recognition of the relatively low level of per capita income in the northern region. That is a direct result of the demise of the industrial base, due to the policies pursued by the Government.

The application by the two counties requests funding out of the European Commission structural fund. The money will be used to support programmes such as business advice services, land reclamation, and improved communications and transport, and to improve the physical environment, as well as develop tourism and provide training. The structural funds of the European Community, especially the regional and social funds, are important sources of support to the north. Their significance increases as the Government withdraw their regional support.

There are several concerns over the future of the structural funds and access to their benefits by less-favoured regions of the United Kingdom.

First, the Government's desire to minimise and change the basis of statistics will increasingly deny regions of the United Kingdom the right to participate in European programmes. A recent example is the Government's failure to provide regional data on research and development, which has led to most English regions being denied access to an EC initiative because only the United Kingdom aggregate figures were used.

Our second concern is the shift in emphasis towards co-ordinated and infrastructure programmes. We welcome these as a genuine attempt to examine and redress the underlying reasons for regional disparities, but they must be viewed against the Government's desire to weaken the role of local government, and to reduce the planning function and spending on local economic development by local authorities.

Those policies of the Government will limit the ability of certain regions of the United Kingdom to participate in the integrated development programme. I refer particularly today to the northern region.

In short, the EC is making progress in devising schemes for regional development, although there is some concern within the Opposition that there may be a bias towards the Mediterranean regions in their distribution.

The Opposition want to see our Government help and not hinder attempts at securing better funding for regional development initiatives. We want to see the Government supporting positive initiatives from Europe that will help to provide a long-term solution to the regional imbalances from which we are suffering.

7.55 pm

Mr. Tim Boswell (Daventry)

I sense that the mood of the House favours brief contributions, so as I am a new boy among the hardened experts on European affairs I hope that the hon. Member for Redcar (Ms. Mowlam) will forgive me if I do not comment on her speech other than to say that it was rather constructive.

Mr. Tim Devlin (Stockton, South)

Constructive!

Mr. Boswell

I am pleased to hear that one other hon. Member is listening to the debate. But I should like to deal with agriculture, if I may, and other related points including some that I have stored up for a long time.

Mr. Devlin

I sought to take issue on one point. The hon. Lady's speech was far from constructive when one considers the vast amount of regional aid.

Ms. Mowlam

On a point of order, Mr. Deputy Speaker. As an hon. Member who is new to the House, I am unaware of the full rules of the House. Could you therefore advise me on the fact that the hon. Member for Stockton, South (Mr. Devlin) never interrupts hon. Members when they are speaking, so that they can respond and defend themselves, but interrupts by the devious method that we have just seen. When that happens how can we have a proper debate? That is a back-door complaint.

Mr. Deputy Speaker

It is in order for an hon. Member who has the Floor to allow another hon. Member to intervene in his speech, so long as the intervention is relevant and brief. I understood that the hon. Member for Daventry (Mr. Boswell) had given way to the hon. Member for Stockton, South (Mr. Devlin).

Mr. Devlin

Thank you, Mr. Deputy Speaker. All that I sought to say was that the remark of my hon. Friend the Member for Daventry (Mr. Boswell) that the hon. Lady had made a constructive speech was wholly misconceived in the light of the Government's commitment to the northern region, and the notable successes that we are achieving there through means such as the urban development corporation recently installed on Teesside.

Mr. Boswell

As ever, I am honoured to accept a reproof by my hon. Friend. Perhaps I may help if I carry on to the next remark that I was going to make. I am in the business of sharing compliments with the Labour party wherever possible. I commend the party very much for its new attitude to Europe. It resembles nothing more closely than an exchange between the writer Thomas Carlyle and an anonymous lady. She said to him "Sir, I accept the universe." He replied: "Madam, you had better."

Moving on to the workings of the European Council, a myth and misconception is encouraged by the visionaries, and the anti-visionaries, of whom we have heard today. There is a feeling that however good, notable and lapidary is a settlement, it somehow sets a pattern indefinitely for the rest of the European Community. Europe does not work like that. The Council moves from one point of disagreement towards the next. The Minister of State might accept that the best one can expect and perhaps claim of Council meetings is that that remarkable and deliberative body will move at a deliberate pace. A camel train will pitch its caravan at an oasis for the night, and one can only hope to set its direction again in the morning.

Some constructive points have been made about agriculture, especially by my hon. Friend the Member for Hendon, South (Mr. Marshall) with regard to the settlement on stabilisers. We have the basic building blocks of agricultural control. The stabilisers are being put in place commodity by commodity. There is an overall financial ceiling, but there are some difficulties in starting it up because of the weight of the past. That was explored by my hon. Friend the Member for Skipton and Ripon (Mr. Curry). For example, the inherited stocks and the cost of disposing of them must be considered. We have the machinery whereby we can control what has previously been uncontrollable. Whether we do so depends on our being eternally vigilant.

Many of us remember mechanisms such as the guarantee threshold for cereals. They have come and gone. Now we have the opportunity to carry out the job. It is fair to record that, for milk products, for example, where annual expenditure was rising by about £1 billion a year, since 1984, with the imposition of quotas which were the precursors of stabilisers, expenditure in the Community has stabilised and tended to drop somewhat.

Of the current agricultural topics, clearly the topic of the green currencies looms large. I shall not make a long, partisan speech on behalf of British farmers. I recall that there is a disparity within the green currencies averaging perhaps 10 per cent. and in a band between 5 and 12 per cent. I feel that this must be addressed, sooner rather than later. There is a problem of cost for the Community, as we all know—a small one for the United Kingdom, but a much larger one if there is a French devaluation. But the issue will not go away; it must be addressed by 1992 and it is better to make an early start on it if we can. Others have been making the same point about the European monetary system.

On the general economic issue of 1992, I feel that the Minister of State, in opening the debate, spoke extremely clearly. I read with interest the comments of our noble Friend Lord Young in the other place yesterday on the implications for competition policy of that change. He indicated, in a somewhat oblique way, I thought, that the judgment on what is or is not a competitive position will have to move to the wider format of the enlarged market. I feel that we need to hammer out as a national Government with other member states and with the Commission a more definite blueprint for competition policy and the agreed transition thereto rather quickly.

I feel passionately that 1992 is much more than a simple matter of economics; it is an important political and psychological development. I wish to make two points on it. The first is from a position of no interest, unlike many other hon. Members who have spoken. It is important that we in this place stop treating our colleagues in the European Parliament purely as strangers and perhaps treat them a little more as brothers and sisters, if I may put it that way. Secondly, I stress the importance of education for 1992, and my right hon. Friend need make no apology for the campaign that is being launched now successfully by the Government.

I was delighted when my 17-year-old daughter, without the least prompting from me or anybody else, announced at her school that she wished to conduct a project on 1992. She derived a wealth of useful information from the packs available from the Department for Enterprise and is now writing her project. At the same time, to put a barb into this, I was a little concerned that the school seemed to be surprised that she thought that that was an interesting subject to explore. We need to take this right from youth upwards and make much more of it.

More important still, we need to recognise that we do not go into Europe simply as Britons to conduct tribal wars or cutting-out expeditions. We go there to establish a degree of mutual understanding and to find mutual interests. If we find that Ruhr steel workers are unemployed or that small farmers in the Auvergne arc facing problems, they are our problems just as much as problems of the other member states. I have derived great benefit and satisfaction from the European contacts I have made. We cannot see this as a zero sum exercise.

Again, it is not a purely European exercise. The United Kingdom is not just an offshore island and Europe cannot afford to be simply an offshore continent, devoid of wider responsibilities to both the developed and the developing worlds. The damage with the common agricultural policy as it is operating has been not so much its internal waste of resources, on which we could argue at length and which we could quantify, as its wider repercussions on the pattern of world trade. There I agree, although I do not always agree, with my hon. Friend the Member for Southend, East (Mr. Taylor).

The new concept developed in the Organisation for Economic Co-operation and Development of producer subsidy equivalent provides us with a very powerful analytical tool for working out the relative scale of agricultural protection in various states throughout the world. It may not be suitable, as Sir Michael Franklin, who was mentioned at the beginning of the debate, has suggested, to use it as the operational mechanism for enforcing cuts in tariffs and protection under the OECD and the GATT round, but it is a very useful starting point.

I believe that, as Europeans, we should take GATT very seriously now. Just as we are now beginning to find political detente with the east in relation to political and military matters, so with the west and the other developed and developing countries of the free world we should be looking for a measure of trade detente. I believe that that will be a very important theme beginning from this year and going through the negotiations and into 1992. We want open discussion of multilateral agricultural disarmament, fully and freely negotiated, balanced and to mutual benefit. We shall not be able to take it all the way, any more than, in my view, we can with nuclear weapons, but we must take it an important stage down the road.

8.5 pm

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

The oft-used phrase in replies from both sides of the House that we have had a very wide-ranging debate could not be more true than of tonight's debate. I shall not attempt to follow my hon. Friend the Member for Linlithgow (Mr. Dalyell) in his quest for millet seed or the hon. Member for Southend, East (Mr. Taylor) in his quest for budgie seed and apples—not that they are not important—but will concentrate on some of the even more important issues that have been raised.

I was disappointed by the Minister's introduction; it was not as constructive as I had hoped and expected. It was lacking in the vision that I had hoped for. Although the right hon. Lady is a Foreign Office Minister—indeed, deputy Foreign Secretary—she hardly touched on external relations, trade and aid or European political co-operation, which together take up nearly a quarter of the White Paper. I thought that they might form the centrepiece of the contribution by the deputy Foreign Secretary. I shall touch on a few of these topics later, which I hope will give the right hon. Lady a chance to make amends in her reply.

I shall deal first with one or two of the main issues raised in the debate, excluding the budget, which we dealt with at great length last week and which my hon. Friend the Member for Hamilton (Mr. Robertson) covered. He mentioned the speech of Mr. David Williamson, as did a number of other hon. Members. It was a very revealing and interesting speech. I have read that gentleman's curriculum vitae. He is a very impressive man, a Companion of the Bath and a former Under-Secretary in the Cabinet Office with special responsibility for the European Community. According to the Tuesday 24 May issue of that oft-quoted newspaper the Financial Times, Mr. Willliamson accused the United Kingdom of taking too narrow a view of EC plans to create a single market by 1992", and said: In the UK, there is rather a heavy concentration on the internal market as a cash register operation. Looking at Conservative Members talking about the prospects of the internal market—we even had the hon. Member for Southend, East telling us about his pecuniary interests—we often imagine that we see little pound signs lighting up in the pupils of their eyes, like little cash register symbols, at the prospect of the kind of money that they are going to make in the years after 1992.

The Department of Trade's version of a business man's Europe contrasts markedly with the version from across the Channel. To their credit, those across the Channel stress the advantages to consumers, workers and the environment. The advantages were best expressed in a speech by the president of the Commission, Jacques Delors, in Stockholm on 12 May. I am afraid that the text of his speech is in French, but I shall do my best to use parts of it.

Jacques Delors said that Europe is advancing towards six linked objectives. One is completion of the internal market, but the others, which are equally important, are often forgotten by Conservative Members, although not by the hon. Member for Stockton, South (Mr. Devlin). We did not have the opportunity to hear too much of his wisdom tonight.

The first of the other objectives is strengthening economic and social cohesion, including the social dimension of the Community. Hon. Members may recall that when we were discussing entry into the Common Market—I freely supported entry—one of the reasons why Labour Members, and some Conservative Members, supported it was because of that social cohesion and the social dimension.

Pensions in the Community range from a maximum of £125 per week to a minimum of £41.15p per week. Where in that range does the pensioner in the United Kingdom fall? Of course, we know that it is at the bottom of the pile.

Mr. Boswell

Will the hon. Gentleman accept that the important difference is that in the United Kingdom occupational pensions are paid in addition to the basic state retirement pension? Under the European caisse system there is often a single pension. The disparity in the income of pensioners—certainly for those retiring over the past few years—has become much less.

Mr. Foulkes

The hon. Gentleman is admitting that there is a disparity. He is contesting the figures produced by the Community, but, as he knows, many pensioners in the United Kingdom rely completely on the state pension.

Mr. John Marshall

Will the hon. Gentleman concede that in a number of Community countries, ladies are not eligible for pension at 60, and that the percentage of the national income given to pensioners is higher in the United Kingdom than in almost any other Community country?

Mr. Foulkes

That does not refute the point that I was making, which was that because the majority of pensioners must rely on state pensions they are substantially worse off. I should like to see the retirement age for men and women harmonised in the United Kingdom.

The second of the important objectives advanced by Jacques Delors is joint co-operation on research. The third is monetary co-operation. The right hon. Member for Guildford (Mr. Howell) mentioned the possibility of Britain joining the exchange rate mechanism. The hon. Member for Daventry (Mr. Boswell) put a different complexion on the matter. When the Prime Minister and the Chancellor of the Exchequer are asked about British membership of the exchange rate mechanism, the answer is always carefully rehearsed so that, for once, they give the same reply. They say that we shall join when the time is right.

As we are getting towards the recess, perhaps the Minister will be a little brave—she has been on other issues—and say what the criteria are for deciding when the time is right. I am asking her not to say when the time will be, but to give a hint of what the criteria are so that Labour Members can make judgments about when the time is likely to be right.

A further objective mentioned by Jacques Delors was that greater account should be taken of environmental matters. The Minister claimed some credit on environmental issues, which astonished me. Will she explain why on 22 separate occasions legal action has been taken against the United Kingdom for violating European environmental laws? Will she explain why Blackpool and Southport beaches are among the worst in Europe? Will she explain why there continue to be dangerous levels of lead in drinking water in Scotland, especially in Ayr, which is where I stay? It is reliably stated that intelligence levels decrease as the level of lead in water increases, so those who live in Ayr clearly have some personal concern.

Jacques Delors stressed the importance of accompanying policies for the internal market, and said that they are indispensable to the economic and social cohesion of the Community. He mentioned the development of backward regions. I pay tribute to the excellent, eloquent and intelligent speech made by my hon. Friend the Member for Redcar (Ms. Mowlam). She revealed that the United Kingdom has abandoned regional policy. As a result, we are losing aid from the European Community—money that it must give for vital projects in regions of the country is being lost. Those indispensable accompanying policies, as Jacques Delors described them, are being undermined by the United Kingdom.

Jacques Delors mentioned the struggle against long-term unemployment. Conservative Members claim some credit for the decline in unemployment. My hon. Friend the member for Hamilton exposed some aspects of those claims. Let us never forget the cosmetic action that the Government have taken to cover up the real level of unemployment.

A further indispensable policy mentioned by Jacques Delors is professional instruction for young people—real professional instruction, not the schemes dreamed up by the Government, which have caused so much resentment among our young people. France has 41,000 young people in training for electrical craft and technical skills. In comparison, we have only 15,000 young people in training.

Mrs. Chalker

That is all we need.

Mr. Foulkes

The Minister should ask employers in the south-east of England about the difficulties they have in obtaining skilled employees. Her colleagues at the Department of Trade and Industry and the Department of Employment will tell her about the difficulties involved. The Government are not making the sort of response that Jacques Delors is crying out for.

Another indispensable objective mentioned by Jacques Delors is the development of rural areas. As an hon. Member representing a large rural area, I confirm that deregulation, privatisation and the free-enterprise society have resulted in a reduction in services and jobs and in depopulation. Jacques Delors supported the Belgian idea of a pedestal of guaranteed social rights. How can the Government say that we are moving towards those guarantees of social rights when they have made cuts in housing benefit and social security over the past few months?

All Delors's objectives are entirely consistent with the Labour party's policy, which was agreed yesterday at the national executive committee meeting. That is the authorised version of the policy. The Minister mentioned the document produced by Labour MEPs entitled "Bringing Common Sense to the Common Market". That document made a useful contribution to the discussions. I shall not go into details, but if there are any questions, I can certainly answer them. Our policy is entirely consistent with the vision of the European Community put forward by Jacques Delors.

The hon. Member for Skipton and Ripon (Mr. Curry) always makes a good contribution to these debates, and I hope that that praise does him no harm because I mean him no harm—[Interruption.] It may be the kiss of death. The hon. Gentleman and my hon. Friend the Member for Hamilton mentioned the need for greater accountability of the European Community both here and in Brussels and Strasbourg. We believe that the European Commission should be made more accountable. The Single European Act enlarged it without setting out new safeguards of accountability. My hon. Friend Lord Bruce sometimes gives the Labour party little credit for the way that we opposed the Single European Act. Sometimes, some ironic remarks by Labour Members are taken out of context, so, as one who likes irony as a method of contributing to debates, I must be careful in future. We strongly opposed the Single European Act, and some of our predictions are coming true.

Mr. Teddy Taylor

To emphasise the hon. Gentleman's point, will he remind the House how many Labour Members were here to vote against the Third Reading of the European Communities (Amendment) Bill, which implemented parts of the Single European Act?

Mr. Foulkes

I remember speaking and voting a number of times against the Single European Act, but I remember also that the hon. Gentleman's actions were not as brave as his words when we came to the final consideration of that legislation.

My hon. Friend the Member for Hamilton called for consideration of ways in which the House can improve the scrutiny of the increasing volume of European legislation. What has happened to the convention of ministerial statements being made after meetings of the Council of Ministers? Only yesterday, according to the Financial Times, a couple of major issues were discussed. A summit talk on the middle east was urged by Ministers, including the Minister of State, and there were assurances about peripheral and sparsely populated areas. The Opposition would like statements to be made after such meetings so that we can challenge and question any statements to the press. As for the assurances about peripheral and sparsely populated areas, I hae ma doots, to use the veracular. We have not had the opportunity to express our doubts.

Political co-operation is the most important and underestimated part of the report and of the work of the European Community and the one with the greatest. potential. Has the Minister seen the conclusions of the Oxford conference on peace and development in Central America, which calls for concerted European action on human rights, help with the electoral process, support for the setting up of a Central American Parliament, help in alleviating Central America's problems—for example, debt—and aid and development assistance?

We welcome the programme of increased aid to central America which was agree after the Hamburg meeting. It is a pity that the Foreign Secretary did not attend the last couple of meetings. The European Community must become more involved in monitoring human rights in central America, encouraging implementation of the peace plan, assisting in setting up the central American Parliament—we can give some valuable practical advice—and pressing the Americans to stop their support for the Contra terrorists fighting against the elected Government of Nicaragua.

The European Community can use the combined power of 12 nations, with a knowledge and history of involvement in various regions, including Central America, as a power for good, separate from American policy, which is reeling under a series of humiliations. There are divisions among the Contra terrorists. The Americans have been humiliated by General Noriega, as we saw in today's newspapers. Other issues underline the importance of a vigorous separate European Community policy. I hope that the Minister, who winced a little at the thought, will see the great potential in the 12 countries of Europe working together as a new force for good in the world, separate from the foreign policy objectives of the United States and the Soviet Union.

The European Community needs to develop a co-ordinated policy on other foreign policy issues. On Chile, we need to develop a common approach to the plebiscite to ensure that there is free access to the media and to all parts of the electoral process for all opposition parties. We need to develop a common approach to freeing political prisoners and ending the torture and other violations of human rights which continue, as confirmed by the recent Amnesty International reports.

I support the comments of my hon. Friend the Member for Bradford, North (Mr. Wall) on South Africa. Unfortunately, the British Government have never been enthusiastic in their support for the European Community special programme to South Africa.

Mrs. Chalker

Nonsense.

Mr. Foulkes

I hope that the right hon. Lady will express her enthusiasm and that she will concede that the promotion of orderly internal politics legislation, currently being considered by the South African Parliament, will kill the European Community special programmes for the victims of apartheid. The Independent said that Britain should fight for the European Community fund. The Minister said, "Nonsense," when I said that the British Government do not support that approach. I hope that she will confirm that they will fight for the fund. I hope that the right hon. Lady agrees that, if the route offered by these positive measures is closed, the British Government must recognise that, to bring the South African Government to their senses, the only alternative is to impose sanctions.

Mr. Ian Taylor (Esher)

The hon. Gentleman has given a list of areas about which the Socialists are especially concerned. I was surprised that he did not mention areas about which European countries are concerned. They have ships in the middle east and four member states are especially involved in that area.

Mr. Foulkes

I was going to mention the middle east, but did not do so because of the lack of time. Through the Vienna treaty, the European Community has played a part in that area, but it could play a much greater part, for example, by encouraging the Israelis to accept the origin marking of goods produced in the Occupied Territories. There is scope to make positive progress. I accept that there are many areas—the middle east is a good example—where the European Community can make a positive contribution.

Mr. Teddy Taylor

Does the hon. Gentleman accept that it would be a bit daft if the Common Market went round telling Israel to get involved in origin marking given that the Common Market forced us to abolish origin marking altogether through the Consumer Credit Act. Would not that be rather silly?

Mr. Foulkes

Perhaps the hon. Gentleman would agree with me that there might be some consistency on that issue and that it might be a good idea from his point of view as well as from the point of view of those in the occupied territories.

I know that the Minister of State will want to answer all the points that have been raised in the debate, I certainly hope that she will answer some of mine. I am afraid that the Government's attitude to the European Community is somewhat niggardly and mercenary, and there has been criticism from the Conservative Benches in that regard. Abroad, as at home, we see the worship of greed. There is a lack of vision, understanding and appreciation of the potential of Europe and of Europe's global role. Instead, the Government see an opportunity for business men—an opportunity for the City slickers to make even more money. The Labour party is the party which is showing the visionary way forward, both within Europe and for Europe's place in the world.

8.30 pm

Mrs. Chalker

I cannot believe that the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) can have seen his hon. Friend the Member for Bolsover (Mr. Skinner) enter the Chamber. I suspect that if he had, he would not have gone on as he did.

The debate has been predictable in some ways, although there have been some interesting contributions. Some right hon. and hon. Members have looked forward. I may not agree with my right hon. Friend the Member for Guildford (Mr. Howell) in every respect, but he seizes the future possibilities most positively. To hear the hon. Member for Carrick, Cumnock and Doon Valley one would have thought that he had not listened to many of the contributions made tonight.

Mr. Foulkes

rose—

Mrs. Chalker

The hon. Gentleman has had a good whack. He originally said that he would speak for 10 or 15 minutes. He started at five past and stopped about half past, so he can wait patiently for a moment.

Mr. Foulkes

May I just make one correction?

Mr. Deputy Speaker (Sir Paul Dean)

Order. We cannot have the Minister and the Opposition Front Bench spokesman on their feet at the same time. Mrs. Chalker.

Mrs. Chalker

If it makes the hon. Gentleman any happier, I shall give way to him briefly now, and that is his lot.

Mr. Foulkes

I concede that the right hon. Member for Guildford (Mr. Howell) made an excellent and positive contribution. I was saying that the Government were not positive. The right hon. Member for Guildford is one of the many ex-Cabinet Ministers who litter the Conservative Benches.

Mrs. Chalker

I assure the hon. Gentleman that he will not find any of us lacking in enthusiasm for making Europe as a whole work, which means far more than the single market. I shall come to that issue later on.

My hon. Friends the Members for Skipton and Ripon (Mr. Curry) and for Hendon, South (Mr. Marshall) made positive contributions to the debate. I am sorry that could not be in the Chamber when my hon. Friend the Member for Southend, East (Mr. Taylor) spoke, but I have had a very reliable note from the Paymaster General. I would not have expected my hon. Friend to address the House in a debate such as this in anything other than his normal fashion. It is good to feel that that, at least, has not changed, even if this debate is about change and the positive developments in the European Community illustrated in the White Paper covering the second six months of last year.

A number of anxieties were expressed. The hon. Member for Ceredigion and Pembroke, North (Mr. Howells) asked to be forgiven because he had to leave us on constituency business. He was concerned about farming. We recently had a considerable debate—one of five debates on the European Community this month—in which my right hon. Friend the Minister of State, Ministry of Agriculture, Fisheries and Food made some interesting and relevant remarks. I shall urge, through the columns of Hansard, that the hon. Gentleman re-read our debate of 5 May because it is appropriate to the present discussions.

No one would disagree that farmers have been at a potential disadvantage and would continue to be if the system of subsidy continued. The system of subsidy lifts the inefficient farmer to the level of the efficient and in doing so removes much of our competitive advantage. Competition is distorted. I agree with those hon. Members, including my hon. Friend the Member for Daventry (Mr. Boswell), who said that competition is distorted by the system of monetary compensatory amounts. That is the very reason why we support the proposal to phase them out by 1992. I believe that a start should be made this year—particularly in the pigmeat sector, where removing the present disadvantage to the United Kingdom would save money in the Community budget. Even my hon. Friend the Member for Southend, East would welcome that.

Our objective in farming must be to return agriculture to the market place and at the same time, through the guarantee fund and the guidance fund, to help farmers to adapt to the changed circumstances and take advantage of the new opportunities. Far more could be said on that score, but I shall not stray on to the territory of my right hon. Friend the Minister of State.

Budgie seed was bound to he a central point at the beginning of our debate, and the hon. Member for Hamilton (Mr. Robertson) could not resist raising the subject. The Government agree with my hon. Friend the Member for Southend, East that the present proposal, which is one of the Commission's price-fixing proposals, is a rotten one; it is a shocking idea and we are opposing it on the following grounds. First, the Commission has offered us no technical justification for such a change. Secondly, the cost of the change would be borne by the caged bird owners. That would place an extra burden on many elderly, infirm and disabled people and we do not wish that to happen. We shall fight the measure. I gather that there are many budgies in Flanders and in other parts of the Community and I am sure that the Community will not be prepared to accept this thoughtless proposal, which perhaps results from a link with the price of barley.

Enough of the budgie seed—

Mr. Teddy Taylor

rose—

Mrs. Chalker

My hon. Friend is trying to ask me whether it is a matter for qualified majority vote. It is, but I am confident that the budgie owners of Europe will rise together and defeat this ridiculous proposal. Now that some of the other worries of my hon. Friend the Member for Southend, East seem to be diminishing, perhaps he will concentrate his efforts on the budgies.

Let me deal with a more long-term problem that the House has discussed—the whole question of the scrutiny of European business. Every time that we have a debate or discussion, concern is expressed about scrutiny, and I for one would never seek to run away from that fact. I fully endorse the requirement for scrutiny, but the precise procedural form that any consideration of changes in our current scrutiny proposals might take must be a matter for my right hon. Friend the Leader of the House.

I know that the matter has been already discussed, and I shall draw hon. Members' remarks to the notice of my right hon. Friend. The Government are already pledged to monitor the implications for scrutiny of the Single European Act, and we shall do that. I also agree with my hon. Friend the Member for Skipton and Ripon that British Members of the European Parliament have an important role to play. However, I think that my hon. Friend would agree that they cannot replace the efforts of this House, nor should they. Instead, they can complement them.

In that regard, let me pick up the point made by my hon. Friend the Member for Daventry at the end of the debate about the ridiculous attitude in the House to the presence of Members of the European Parliament in Westminster, and their involvement in the affairs of this country. Members of this House and Members of the European Parliament both have a role to play. Those roles can be complementary, and how much better it would be if our attitude were positive and that happened.

Mr. George Robertson

rose—

Mrs. Chalker

We must remember the time.

Mr. Robertson

The Minister does not have to worry about time. On this of all nights, we do not need to worry about time. One of the major problems about integrating Members of the European Parliament, who I agree could make a valuable contribution to the discussions and the monitoring of European Community business, is the pressure and space in this building. It is long overdue that we do something about the accommodation, so that hon. Members could at least have some of those facilities accorded to Members of the European Parliament in its two locations in Europe. We might then be able to offer them some hospitality and accommodation when they come here to help us.

Mrs. Chalker

I agree with the hon. Member. [Interruption.] I am delighted that the Lord President is endorsing my comments. However, it is not simply a need for space and equipment; there is a need for a change of attitude. That was the point referred to by my hon. Friend the Member for Daventry, although we have now taken the issue wider. We have a role to ensure that the scrutiny is as good as it can be. We are keeping it under review. We will look also at the methods used in other countries, because they may have ideas which could be applicable here. Just because they did not start necessarily in this country, that does not mean that the way other people do it would be bad for the scrutiny of Community legislation in this country.

During my absence from the Chamber, I know that my hon. Friend the Member for Southend, East discussed his anxiety about the Miracle Bus. That is an anxiety that I share. My hon. Friend has been working for years to try and ensure that there was a bus service which went from his constituency to Frankfurt. Along with the Miracle Bus company, he has always said that there need to be fewer regulations. As I said earlier, that is the view of the Government. I know that there have been difficulties and delays, not from the Federal Government of Germany, but from the Laender governments in the areas through which the bus is to go.

I have contacted the chairman of the Miracle Bus company frequently, as have my officials. I shall stand shoulder to shoulder with my hon. Friend the Member for Southend, East to ensure that the Miracle Bus does happen.

Mr. Robertson

On the bus with the budgie seed.

Mrs. Chalker

Yes, on the bus with the budgie seed.

We must not make fun of a serious and important debate. I believe that the freedom of transportation throughout the Community is something we have entered into far too slowly, not because of a lack of will on the part of this country, but because of a lack of ability for all nations to see the great prize that is there for the taking within Europe. Europe will become stronger if we can make our transport far better linked and far cheaper for the consumers of that transport, which is important.

The hon. Member for Bradford, North (Mr. Wall) made an interesting contribution. He took us into the area which the hon. Member for Carrick, Cumnock and Doon Valley referred to. I regard the development of European political co-operation as one of the most important developments in Europe. I did not say it at the beginning because I knew that—with the leave of the House—I would have to have something new and different to say at the end. As it happens, it has fitted in well with the comments of the hon. Member for Carrick, Cumnock and Doon Valley.

If the hon. Gentleman and his party are as enthusiastic as he claimed them to be, I wonder why on earth the Labour party opposed the Single European Act, which put European political co-operation on a treaty basis for the first time. At the end of our 1986 presidency, it enabled us to set up a permanent secretariat to ensure that it worked. That is why it is now working so much better. European political co-operation really started to work when the Government held the presidency of the European Council.

I now come to the questions that were asked during the debate. With regard to European political co-operation, the hon. Member for Bradford, North made a genuine and continuing comment about South Africa. The House is already aware that we have regular exchanges of views among the Twelve on the developments in South Africa. The objectives of the Twelve are the complete dismantling of apartheid and its replacement with a genuinely representative non-racial system of government. We make our views known to the South African Government. As the twelve nations in European political co-operation, we are committed to working actively to promote the process of peaceful change.

The hon. Member for Bradford, North also spoke of the EC code of conduct. The importance that we attach to the code is now being shared by our partners in the Community. We continue to encourage companies to comply with its provisions, and there has been more compliance in recent years than there was two or three years ago. I will not comment on individual company reports, as the hon. Gentleman did, but I will say that there has been positive and helpful development in European political co-operation.

The hon. Member for Carrick, Cumnock and Doon Valley covered many areas of the world. I think I would try the patience of the House if I went into all those areas of foreign policy. I am glad that the Opposition Whip, the hon. Member for Ashfield (Mr. Haynes) is completely at one with me, as so often happens. However, if there is a political issue on which the Twelve together have a genuine concern, we shall not hesitate to discuss it, whatever and wherever it may be. We will do all we can through political co-operation to bring greater peace to some of the troubled areas of the world.

I want to return to an issue that was raised by the hon. Member for Carrick, Cumnock and Doon Valley in his reply for the Opposition. The hon. Gentleman accused the Government of opposing improvement in environmental standards and poured cold water on some things that I had said briefly at the beginning of the debate. I will tell the hon. Gentleman one or two things that have happened in this area.

Mr. Foulkes

What about the beaches?

Mrs. Chalker

All right, I will start with the beaches. Last year we brought 264 new beaches under the EC directive. They are bathing beaches, and we have a £70 million a year programme to bring them all up to standard by 1995. The hon. Gentleman need only look at what happens in other parts of the Community. There have been problems with pollution not just in this country but in many others too. We are taking action on that problem.

We are also taking action to ensure full compliance with the directive on drinking water. I was sorry to hear that in the area in which the hon. Gentleman lives there is a problem with lead in pipes. However, he should know that it was this Government who put a major replacement programme for lead pipes into action. It was not the predecessor Labour Government. Therefore, the hon. Gentleman is wrong to say that we are opposed to improvement in environmental standards.

I could turn to a number of other areas, but I will not detain the House. The hon. Gentleman knows what they are.

Mr. Robertson

What about Mr. David Williamson?

Mrs. Chalker

I shall come to Mr. David Williamson in a moment. How could I deny the House an opportunity to discuss the new Secretary-General of the Commission?

I want to turn to the single market because many hon. Members have referred to its importance. However, one or two hon. Members, such as the hon. Member for Hamilton, have expressed their fears about the implications for the development of the single market. He also made some welcome remarks, which I especially noted because they show all the influence that he has had on his party in their new document, which he is now allowed to talk about in the House.

It is interesting to note just how much effort is being made—the hon. Gentleman criticised this—by the Department for enterprise—the Department of Trade and Industry—to make British business men truly aware of the opportunities. If we did not have a campaign and if every other Community country was campaigning for the benefits of the single market, the hon. Gentleman would be the first to complain, saying, "Why aren't we in there making business men aware? Why aren't we doing exactly what needs to be done to make British industry, especially small and medium-sized enterprises, aware of the opportunities?"

In our campaign about the single market, we have taken up and tried to progress the issues that can be progressed and have cut out some of the lengthy debate in which the people who opposed some of the ideas behind the single market were not opposing it because they opposed the idea, but were using it as a bargaining counter for other issues. That is why we have preserved the requirement in the Single European Act for unanimity where we need it, but have agreed to qualified majority voting where that would advance the interests of the United Kingdom. It is right that we should advance the single market wherever we can, and that is what we are doing.

We can see the impact that qualified majority voting can have. At the end of last year we were able to adopt a significant passage of reforms to liberalise civil aviation. After years of haggling over insurance matters, the advent of qualified majority voting brought us to the point where we are about to adopt measures to enable British insurance firms to compete throughout the Community. Of course, it is a two-way process and other people will compete with British firms, but the areas in which we make the most progress and where the most progress has so far been made are those where Britain is most competitive. We want to take those steps clearly and firmly, so that British business can benefit from advances in the European Community.

British business and industry in the late 1980s is very different from 10 years ago. I am sad that Opposition Members too often draw on their record of failure to make gloomy predictions about the impossibility of success. The Government and the British people have proved them wrong time and time again and we shall do so in the great internal market debate and in the development of the single market, which is giving the people of Europe real and new chances for the future.

I turn now to the Secretary-General of the Commission, David Williamson, who was an excellent civil servant in this country for many years. I suppose that I now have to say that anybody who works for the Commission can afford to take a relaxed view of financial considerations. I am sure that Opposition Members will not have forgotten that we are one of only three net contributors to the EC budget. We owe it to our taxpayers to redress the balance. If that is what the hon. Member for Carrick, Cumnock and Doon Valley means when he says that we have a "cash register" approach, so be it. I have more and wider comments to make about the approach of the single market. When we attended the Brussels European Council in February, it was this country that was prepared for a large increase in the structural funds and a balance in benefits for newer members of the Community. This country believes in the regional fund and the social fund.

The hon. Member for Redcar (Ms. Mowlam) mentioned her anxiety about her priority plans for the area that she represents. I cannot accept that when we have worked for improvements in the structural and social funds, we will not benefit, so I looked through the figures. This country can expect to be the largest beneficiary of the social fund this year. That may come as a surprise to some of my hon. Friends, but I can say firmly that our receipts from the social fund will be about £400 million and that our total receipts from all the funds will rise to about £1 billion per year by 1993, from about £750 million now. The special problems of the far-off regions have been recognised—

Mr. Foulkes

The far-off regions?

Mrs. Chalker

The Highlands and Islands, northern Scotland and so on. The special problems of those regions have been recognised in the debates and discussions that are taking place at present.

The areas that have been affected by the decline of the traditional industries will also be remembered through both the regional and the social funds. The resources of the social fund are being used to tackle unemployment, especially youth and long-term unemployment, wherever it occurs. Rural areas that are too prosperous to qualify for support under objective 1 of the regional fund will, because of their remoteness, be included in a different way. That is why we have been pressing for those regions to continue to qualify for support from all three structural funds under objective 5(b) for developing the remote rural areas.

I cannot go into the exact case raised by the hon. Member for Redcar tonight as I want to bring my remarks to a close shortly. I hope that the hon. Lady will forgive me. She knows that she is free to write to me at any time about the specific problem, which I well understand, coming also from an area that has great deprivation.

The Community has consistently taken the lead, as I said earlier, in promoting employment growth throughout the European Community. It was the December 1986 employment resolution, which was drawn up on the initiative of the United Kingdom, that set the action programme on employment growth in being. We have worked on that and given a practical lead ever since. That is why unemployment in the United Kingdom is below the EC average. We have created nearly 1.7 million jobs since 1983—more than the rest of the Community put together—and the hon. Member for Liverpool, Walton (Mr. Heifer) should note that. He should also note that we have just had the 21st successive month in which unemployment has fallen—a fall that includes the Merseyside area which both he and I represent.

The hon. Member for Ceredigion and Pembroke, North asked me earlier about the youth training scheme. We receive money from the European social fund for that and believe it to be a perfectly proper use for European social fund money.

Whether it be within the European Community or whether it be our wish to work with the nations of EFTA, and wider, the important thing is that the financial growth of the European Community should be sound so that we can help areas of the Third world and areas in our own Community that need our help.

My right hon. Friend the Member for Guildford made an interesting speech. I particularly liked the idea, because it is one which is certainly coming, that instead of talking about the Group of Seven, we should take about three main groups in the world—the United States as a trading bloc, Japan as a trading bloc:, and Europe as a trading bloc. That is not to exclude others, but to try to bring about the stability that is so much needed in the world's economy.

I advise my right hon. Friend that the White Paper under debate draws attention to the significant development in strengthening the operating mechanisms of the EMS. We favour measures to encourage greater use of the private ecu and further co-operation between central banks. I do not share his pessimism about the liberalisation of capital movements. Major progress on that has already been made and the Commission and the present German presidency of the council have made the liberalisation of capital movements a top priority; it will be seen to be so in the weeks leading up to the Hanover council.

In any community of sovereign member states committed to vital co-operation on policy issues, there will be continuing negotiation and argument. In the next few years we must argue about what is important to this country, and not about yesterday's issues. We must remain vigilant to ensure that reform of the CAP continues, not because it is some holy crusade but because, as technology continues to improve production techniques, so the need to return to a policy based on market forces will grow.

I welcome the Opposition's commitment to the application of market forces to the CAP. I am sorry that the conversion does not altogether apply to their approach to the single market, but they will have to learn that they cannot decry what happens with the CAP in Brussels and yet commend more Brussels direction for the conduct of the economy.

The Community is moving away from over-centralisation and regulation towards freeing up market forces across national frontiers, which is a hopeful development as we move towards 1992 and way beyond it. The climate of opinion is changing and more and more member states are giving their name and effort to developing the single market and beyond. The White Paper that we have debated tonight records a steady, undramatic process of negotiations. To some the debates may be boring, but in the past six months the negotiations referred to in the White Paper have come to a successful conclusion. There has been a new phase of opening up the development of the Community, which has everything to do with the issues that are essential to the well-being of ordinary people in this country, offering improvements for individuals through combined work within the Community. The Government will continue to argue for their interests, and it is on that basis I hope the House will accept the motion.

Question put and agreed to.

Resolved, That this House takes note of the White Paper on developments in the European Community, July-December 1987 (Cm. 336).

c600
1. LORD CHANCELLOR'S SALARY 22 words
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2. STATUTORY INSTRUMENTS, &c. 18 words
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1. HOUSING (SCOTLAND) 31 words
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3. EUROPEAN COMMUNITY DOCUMENTS 18 words
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1. HAZARDOUS SUBSTANCES 121 words