HC Deb 24 October 1988 vol 139 cc43-122

1. Following the conclusions of the European Council of 11 to 13 February 1988, the Representatives of the Governments of the Member States, meeting within the Council, hereby undertake to pay the Community to balance the 1988 budget an amount which will not exceed

7 113 737 522 ECU.

This amount is distributed among Member States as follows:

Amounts excluding the monetary reserve Amounts in respect of the monetary reserve Total
Belgium 215 705 631 34 310 784 250 016 415
Denmark 146 490 121 23 329 191 169 819 312
Germany 1 457 922 419 270 763 248 1 728 685 667
Greece 71 115 661 11 517 281 82 632 942
Spain 426 449 594 72 130 322 498 579 916
France 1 228 885 493 209 185 969 1 438 071 462
Ireland 35 684 063 61 60 406 41 844 469
Italy 1 118 527 881 183 312 263 1 371 840 144
Luxembourg 11 962 066 2 062 397 14 024 463
Netherlands 303 793 184 50 461 763 354 254 947
Portugal 53 704 695 8 651 353 62 356 048
United Kingdom 929 066 793 172 544 944 1 101 611 737
TOTAL 6 069 307 601 1 044 429 921 7 113 737 522

2. The amounts paid by each Member State constitute non-repayable advances on the payments due after the entry into force of the Decision on own resources.

3. These amounts shall be paid in monthly instalments. The conversion rate to be applied to these payments shall correspond to that laid down for the payment of own resources originating from VAT.

4. The Representatives of the Governments of the Member States note that the resources necessary to cover additional expenditure of monetary origin (=Monetary reserve) will be payable only after approval of the transfer of appropriations to the operational headings of the EAGGF Guarantee Section affected by the depreciation of the dollar, and will be limited to the amount of the appropriations transferred.

5. The Representatives of the Governments of the Member States note that the payment of amounts pursuant to this undertaking requires certain internal procedures to be completed 1.

1 Twelve delegations state that "internal procedures" involve parliamentary approval.'

Mr. Spearing

I am in an unaccustomed place in the Chamber because, as hon. Members know, Committee stage is, quite properly, more of an ordered conversation than a grand debate, and being in this place allows that facility.

My thanks go to you, Sir Paul, for selecting this amendment. Although it may have been thought that there would not be any selections in this debate, other than clause stand part, we owe that to one of our esteemed predecessors who, when the European Communities Act 1972 was being debated, allowed no fewer than 14 hours on points of order. As a result, we know something about amendments that are in order and about those that are not in order in respect of deliberately, tightly framed Bills, such as this. Alas—

Mr. Budgen


Mr. Spearing

In a minute.

Alas, because this is a relatively narrow amendment with narrow terms of reference, even if the Paymaster General catches your eye, Sir Paul, I do not think that he will be able to satisfy either my hon. Friends or those Conservative Members who have been asking for a statement.

Mr. Cryer


Mr. Spearing

In a minute.

As I understand it, there is a lacuna in procedure because if we were in Committee and a Minister had made a speech about the Bill then before the Committee which threw a question mark on the purposes and objectives of Her Majesty's Government or on the money that was to be voted for those objectives and purposes, the Government's representatives would have made a statement with alacrity on a point of order at the beginning of the proceedings to clarify matters. I very much regret that that cannot happen until we get to clause stand part, because I think you will agree, Sir Paul, that the subject of my technical but important amendment does not allow such a facility to occur.

Mr. Budgen

Does the hon. Gentleman know whether the Leader of the Opposition proposes to make a speech on clause stand part? It is obvious that the increase in the regional and social fund provides the Labour party with a wonderful opportunity to bring forward proposals for Socialist and interventionist measures that would completely subvert or bypass the will of the nation in electing a Conservative Government. As the right hon. Member for Islwyn (Mr. Kinnock) has now attacked the Conservative Government for being reluctant in Europe, I expect that he wishes to proclaim his new allegiance to a supernational authority which will prevent the will of the people as expressed in the last general election.

The First Deputy Chairman

Order. We must stick to amendment No. 13.

Mr. Spearing

I repeat what you have just said to the hon. Member for Wolverhampton, South-West (Mr. Budgen), Sir Paul—that that is not within the ambit of my amendment.

4.30 pm
Mr. Cryer

My hon. Friend is describing his difficulties in proceeding on this narrow but important amendment. Does he agree that much of the discussion at the beginning of the debate would have been helped if amendment No. 8 had been selected? We could then have had a discussion. As we have been gagged in seeking to make further points of order, will my hon. Friend consider suggesting to you, Sir Paul, that you have another look at the selection of amendments so that amendment No. 8, which is about sovereignty, is re-examined?

The First Deputy Chairman

Order. I am sure that the hon. Member for Newham, South (Mr. Spearing) will not be tempted along that road and that he will stick to his amendments.

Mr. Spearing

I heed what you say, Sir Paul, and say only that amendment No. 3 attempted to separate two aspects that we shall now debate.

This is a money Bill, for the payment of very substantial sums of money over the next five years, automatically and without further vote. That money will further the aims and purposes of the European Economic Community, including those outlined—and which are controversial—in the Single European Act, which is an amendment to the treaty of Rome. Therefore, the power that is involved is being taken in the Bill, but the amendment relates to the mechanisms and the details of the calculations of that payment. At the moment they have not been made explicit in the Bill.

The Bill attaches two treaties to those listed in the current version of the European Communities Act 1972, in section 2(1). That Act names various treaties that form part of what we now have as the constitution of the European Union. It does so just by naming the treaties which are before us, and which are named in new sub-paragraphs (e) and (f). The first is a decision, which is Cm. 419, a substantial document that outlines the ways in which our contributions to the EEC will be calculated between now and 1992. New sub-paragraph (f) relates to a much thinner, one-page document, Cm. 418, which describes a payment that should or can be made this year.

I think that it is in order to ask the Minister, in view of what he said on Second Reading, whether moneys have already been paid, as he said they may be under the contingencies fund, on the assumption that the Bill would be passed.

Mr. Marlow

The hon. Gentleman is being unduly modest about the scope of his amendments. He said that he would like the Minister to make a statement early on. In his amendments he seeks to introduce schedules 1 and 2 into the Bill. They are the meat; that is what is going on. Article 3 of schedule 1 refers to increasing the Community's own resources in 1988, 1989, 1990, 1991 and 1992, by given factors. Schedule 2 refers to the exact amount of money that member states will be liable to pay the Community.

I am sorry that the hon. Gentleman is so modest, but his amendments are the guts of the Bill. If my right hon. Friend the Minister wished to make a detailed speech on the Government's philosophy, it would be in order. I am sure that you would have ruled me out of order, Sir Paul, if that were not so.

Mr. Spearing

I am grateful to the hon. Gentleman for his compliments, but he has got it slightly wrong. My amendment No. 13 is but a coupling hook to make clear the contents of the two coaches that the Government are to attach to the railway train. I want a little glasnost. All that the Bill does is say that the decision and the undertaking shall be part of the 1972 Act. What the Bill does not say is what is in the contents of that decision and undertaking.

Any hon. Member could go to the Vote Office—hon. Members may have gone last week, for all I know—and ask for those documents. They may or may not have got them. When the Bill is enacted and people want to know under what obligations we stand and what are the calculations and details of the amounts that we have to pay to the European Economic Community, the Bill will not give them a clue. The purpose of my amendment is to insert at the end of the Bill two schedules that are the text of the decision and undertaking respectively. I challenge the Paymaster General to deny what I have said. The amendment will not change one iota the legal impact, significance or outcome of the Bill. All it will do is add to its clarity and to democracy. It will add to what we should have in the House—national glasnost. With the Bill as it stands, we would not have that.

Mr. Teddy Taylor

The hon. Gentleman has obviously done a great deal of work on his amendment. I have studied it and the text carefully. He stated that the text is basically that of the undertaking and decision. However, if the hon. Gentleman looks at his amendment and the Command Paper, he will see that they are not the same. For example, on page 4130 of the Amendment Paper, in lines 6 and 7 of article 11 there are words that do not appear in the Command Paper. There has been either a misprint or a misunderstanding. We cannot continue until that is sorted out. I appreciate that the hon. Gentleman is probably one of the most serious and conscientious hon. Members and studies European Community documents with great care. Few people have given as much time as he has to debates on the Community in the House. However, the amendment does not simply repeat the words in the Command Paper but two lines are added, which I cannot understand, and I believe that many other hon. Members would not. What is it all about?

Mr. Spearing

I regret that I cannot think quickly enough to reply to the hon. Gentleman's good point, but it does not detract from the thrust of the Bill. If it is a technical imprecision, I have no doubt that the Treasury Bench will tell us. I want the Government to accept the principle that the undertaking and the treaty should be written into the Bill.

Mr. Teddy Taylor

On a point of order, Sir Paul. I do not want to be difficult. The last thing that I want to do is undermine the excellent amendment moved by the hon. Member for Newham, South (Mr. Spearing), but it is not English and not adequate. The two lines to which I referred do not add anything. What is the basis for debating an amendment that contains a sentence that does not have a beginning? What do we do if we have an amendment that does not seem to make sense? I appeal to you, Sir Paul, to look at lines 6 and 7 of article 11 on page 4130. What does it mean? What is the position of the House of Commons when we are debating an amendment that is not English and seems to contain things that do not add up? What are we to do? We cannot debate an amendment that is not English.

Mr. Marlow


The First Deputy Chairman

Order. We would do well to let the hon. Gentleman continue to explain his amendment

Mr. Marlow

On a point of order, Sir Paul. Am I right in understanding that we are debating amendments Nos. 13, 14, and 15 together? If we are doing that, we are not just debating the hon. Gentleman's hook, because we have two fish on the end of the line as well—schedules 1 and 2 which are the guts of the Bill. If this is what we are debating, surely that would entitle my hon. Friend the Minister to make a wide-ranging speech on the Government's current position about the Bill.

The First Deputy Chairman

Perhaps I could help the Committee by reiterating what the hon. Member for Newham, South (Mr. Spearing) said in moving his amendments, which is that we are also debating amendments Nos. 14 and 15. As the hon. Gentleman made clear, the whole object of the debate, and the only matter that it is in order to speak to, is why these schedules should be in the Bill. That is what the hon. Gentleman is explaining to the Committee.

Mr. Spearing

I am grateful to you, Sir Paul, for your remarks. I should make it clear that if the Minister wishes to expand on the contents of the schedules or on any printing errors drawn to the attention of the Committee by the hon. Member for Southend, East (Mr. Taylor), we might deal with the matter in another place. If the Minister can say that he accepts in principle something along the lines of what I am suggesting in the amendment, we could debate the substance of schedules 1 and 2 in the clause stand part debate. If the Minister wishes to do that, I shall be quite happy to listen to what he has to say.

Mr. William Cash (Stafford)

Does the hon. Gentleman agree that, apart from the enormous amount of verbiage contained in the schedule, for practical purposes the esential question is about the legal effect of the provisions of clause 1? The consequence of doing it in the way provided for by the draftsman effectively means that it has legal effect. Whatever the merits of the issue, does the hon. Gentleman agree that it would be better to add it to the Bill so that it would have legal effect rather than to leave it at large, which would be dangerous? I am sure that the hon. Gentleman would not agree if it were done in that way.

Mr. Spearing

I do not think that it would be the same, because the Command Papers could be referred to in conjunction with the Bill and could be looked up by a citizen who would be able to see the text. The Bill is not as clear and full as it deserves to be. I hope that Conservative Members will at least agree with that in principle.

We are dealing with huge sums of money and it is right that our citizens should be able to read in an Act of Parliament how those sums are arrived at. I remind the Committee of the amounts. In 1987 we sent to the EC £1,278 million in customs payments. We contributed £3,053 million in VAT. That is not 1.4 per cent. of the VAT take: it is about 13 per cent. because the 1.4 per cent. is not VAT but a VAT base. Under this proposal, we will top that up with a new GNP contribution, allowance for which is contained in the schedules, and that contribution will be up to a given figure. The total will be more than 25 per cent. of what we contribute at the moment. The way in which this is done—I have outlined it in brief terms—should be contained in the Bill. If the schedules go in, the calculations for the vast figures that I have outlined will be there.

We do not only have the calculations that I have mentioned, because there is a new provision for an agricultural balancing fund, a provision for the rebates to the United Kingdom. There is also provision for an overall envelope about what can be spent in every year up to 1992. These are vast sums, and every year there will be a calculation. As the Bill stands, nobody could find out by looking at it how this is done. The schedules should be included in the Bill and be part of the Act.

4.45 pm

It is right that when legislating on such matters the Committee should include such details in a Bill. After all, that is what schedules are for. That is the principle of good draftsmanship. I am talking about the more technical details which, while not germane to the principle, must be included. Without them the principles cannot be understood. That is what legislation in a democracy is all about. Unless these schedules go in, people might say that the Government are deliberately obscuring the way in which this money is spent.

I remind the Committee again that if the Bill becomes an Act, there will be an automatic payment every year until 1992 and there will not necessarily be a debate in the House, other than a debate on the European Budget as a whole. Therefore, the money will go straight from the Consolidated Fund without debate because it will be authorised by the Act. For that reason this detail should be included in the schedules to the Bill.

Mr. Skinner

My hon. Friend says that there may be no further debates about the allocation of money from Britain to the Common Market. Is he saying that we shall not hear from the Prime Minister on those publicised occasions when she is supposed to be arguing for barrowloads of money for Britain from the Common Market? Despite all the publicity, the Prime Minister has been engaged in a bartering exercise which means that not only have we paid over £5 billion to the Common Market since she became Prime Minister, but that in future the Prime Minister will tell the nation another story. She is now presenting to Parliament a Bill that will not even give the House power to say that it is not prepared to hand over, in this instance, £765 million. Is that what my hon. Friend is saying?

The First Deputy Chairman

Order. I am sure that the hon. Gentleman will resist the temptation to broaden the debate.

Mr. Spearing

I shall attempt to resist that temptation, but I should like to correct my hon. Friend who asked some pertinent questions. As I understand it, it is not a matter of £765 million for the current EEC budget which, we believe, might not even need the money. The Bill authorises much larger sums of between £3,000 and £5,000 million a year for the next five years. The Minister will correct me if I have given the wrong range of figures. Those sums are to be transferred from the Consolidated Fund and will go directly to Brussels without coming through the House, without a motion—and, indeed, without a speech from the Prime Minister. That is what the Bill is about and that is why the Bill is such an important and fundamental financial measure.

Irrespective of the merits of the undertaking and the decision, which we will come to after the next debate, it is essential that the text of the decision and the undertaking be contained in the Bill. Unless that happens, the British people and onlookers from the Soviet Union might say that the Government are deliberately avoiding public accountability by not telling the people what they are doing but covering up by using jargon found in remote Command Papers that may not easily be available when people want to look them up. They should be included in the bound Acts of Parliament which I point out to school parties when I take them through the Lobbies and say, "There is the law of the country." The Bill should include these details; if it does not the Government are reneging on their democratic accountability and responsibility.

Mr. Teddy Taylor

I have three short questions to put to the Minister about this narrow amendment. First, can we put right what appears to be a misprint? We appreciate Oat there was a great rush, because the debate was announced on Thursday and is being held today. What is the procedure about misprints, and can they be dealt with under article 11? Secondly, will there be a difference in the legal position of these undertakings if they are included in the document, as proposed by the hon. Member for Newham, South (Mr. Spearing)?

Some of us have become rather mystified about the extent to which EEC documents, undertakings and decisions have no legal backing whatever. My hon. Friend the Minister will be aware, for example, that as a result of one of these documents, we are paying the Community £765 million to cover an overspend in 1987. He will also be aware that we had the most detailed assurances from my right hon. Friend the Prime Minister in 1985 that such overspending could not take place because of strict budgetary controls, which were binding on the Council. I hope that in dealing with this narrow amendment, my hon. Friend the Minister will say whether it makes a difference in law, and whether any obligations on, or assurances and undertakings by, the EEC count in law.

Thirdly, if the Bill becomes law, will it prevent the Common Market from using the accountancy fiddles that it has used—sadly, with the co-operation of Ministers—time after time at the expense of the taxpayers and people of Britain, to get away from its undertakings? The hon. Member for Bolsover (Mr. Skinner) and others talk in the House with great authority about the problems facing their constituents and the need for more money for this, that and the other purpose, but the EEC shows no concern about the way in which money is spent.

For example, if this Bill is agreed and becomes the law of the land, will the Community be able to get round the controls again by changing round the financial year to make it a 10-month instead of a 12-month year? My hon. Friend the Minister will be aware that the EEC did not break the budget in 1987, but simply changed the year to one of 10 months by having money paid in a month in advance and paying money out a month late. Would it be possible for this to happen once again, even if we make this Bill law? If it is, what we are doing would be complete nonsense.

Is there not a need to put something more directly related to the EEC obligations into the law? In particular, will my hon. Friend bear in mind the contributions for the current year and the series of statements that the Government have made month after month changing the figures? They started off at £500 million, were changed to £800 million and then to £1,200 million, and now become £1,649 million. If any Labour council in Britain carried on in that way, it would he vigorously attacked by the Government.

Mr. Skinner

That was the point that I wanted to make. Local councils such as Lambeth and Liverpool have been, and other councils will be, threatened with surcharges, as a result of overspending on vital services in the community. Have the hon. Gentleman and his hon. Friends ever considered the idea of having a Star Chamber to control Common Market money? As we all know, various Ministries are battling to get allocations of funds, and the Secretary of State for Energy is now, as chairman of the Star Chamber, in charge of allocating such money in the event of an impasse. It seems strange—I hope the hon. Gentleman will comment on this—that such are the restrictions imposed by the Star Chamber on spending money on vital necessities that family allowance is frozen, and many other services are cut, but in the Common Market there was £2 billion-worth of fraud last year, but nobody has been picked up for it.

The First Deputy Chairman

Order. These wider remarks are much more relevant to the clause stand part debate, which will be the next one. This debate is a comparatively narrow one, on whether the schedules should be in the Bill.

Mr. Taylor


Mr. Marlow

I am grateful to my hon. Friend. The third point, which I am just trying to get clear in my mind, as I am sure that my hon. Friend the Minister is trying to get it clear in his mind, is the point that my hon. Friend is making. Is he saying that if the schedules were included, any British citizen would then be able to take a case before a British court if the rules laid down by the schedule were not obeyed by the European Commissioner and the institutions of the European Community? Is that the question he is asking? If it is, it is an important question, and I am sure that we shall get a clear and precise answer from my hon. Friend.

Mr. Budgen

I wonder whether my hon. Friend—

The First Deputy Chairman

Order. We cannot have an intervention in an intervention.

Mr. Taylor

My hon. Friend the Member for Northampton, North (Mr. Marlow) has asked what I should like to ask the Minister. We have a sensible amendment, tabled by a sensible Member. Whether or not we accept the amendment, the whole thing is a sick fraud.

Mr. Budgen

Is my hon. Friend aware how deeply offensive his remarks are to loyal members of the Conservative party? All of us know that, after the Fontainebleau agreement, all the finances of the EEC were reformed for all time. There can be no overspending after that agreement. We were told that finances were reformed and that there would be no more overspending. It is monstrous that my hon. Friend suggests that there is overspending. It is monstrous that anyone should suggest that there is any more need for any more money. We were told on the highest authority that all is well and, while I recognise my hon. Friend's right to criticise, many people will he deeply affronted by his disloyalty in suggesting that all is not well.

The First Deputy Chairman

Order. Let us get back to the amendment.

Mr. Taylor

What my hon. Friend said is relevant to the amendment. However, does the Minister think that the Bill has any importance or any significance? For example, if we made this part of our law, would it have the slightest effect on the Common Market changing the responsibility for expenditure from the EEC to member states? My right hon. Friend the Minister will be aware of an example, and he may wish to comment on it. When the Common Market was bust last year, it decided that it should transfer responsibility for paying for butter dumping from the EEC to member states. That was an interesting proposal because it meant that the Common Market would spend less while member states would spend more, and it would find a way to get round the budget.

The Court of Auditors is meant to represent us, to stop overspending and to try to stop fraud, although it cannot. However, the court said that this practice was unlawful, and it placed before the Council of Ministers a report saying so. My hon. Friend the Minister may recall what happened to that. He may recall that, instead of action being taken and instead of the Council considering how this was unlawful, it decided not to discuss the matter, so that unlawful payment, if it was unlawful, is still being made by the United Kingdom taxpayer.

We know that the Common Market is changing its plan to increase its revenues greatly by using what it calls anti-dumping levies. My hon. Friend the Member for Amber Valley (Mr. Oppenheim) raised this issue only the other night. The Minister will be aware that, as part of a programme of trying to restrict trade, the Common Market is putting huge levies, of up to 30 per cent. or more, on any product coming from the far east, which is putting many firms in Britain at risk. This move greatly increases revenue, but will it have the slightest effect on improving the position of the British taxpayer?

While we appreciate that there are lots of words in the decisions and the undertakings, and while we appreciate that some words may be changed if the Bill is put into law, could the Minister give us any assurance that the British taxpayer and the British Parliament are affected? We have heard many stories of fraud. We have heard about the Mafia firm which, according to the Court of Auditors, is paid 17 million lira to deliver non-existent fruit juice to NATO headquarters in Palermo. What is happening about that? The answer is, nothing.

Are we not going through a bit of nonsense? Has my right hon. Friend the Minister the slightest assurance that this will make any difference to Common Market control? As my hon. Friend the Member for Northampton, North has inquired, could a British citizen do anything about it if there were an overspend? I know that the Minister is a serious-minded person, because he would not be appointed chairman of the Conservative party were he not. Will he tell us what protection, if any, is given to the British taxpayer and the British Parliament in consequence of this decision and undertaking, and whether it has been put into law, as has been suggested?

Will the Bill prevent changing round financial years? Will it stop advanced payments or late payments? Will it ensure that budgets have to be kept or that, for example, we stop some of the fiddles on spending that happen year after year? Why are the sums from the Common Market always so hopelessly wrong? Why has our contribution soared from a relatively small sum to this massive £1,649 million? We are entitled to at least that answer from my hon. Friend the Minister tonight. Will this make any difference, does it affect the law in any way, and does it affect British institutions?

5 pm

Mr. Leighton

The Paymaster General will be aware, from what he has heard so far, that he must make a significant statement when he responds to the debate. He must answer the points raised in the points of order and those made in the previous speech. We want to know what guarantees and assurances there are.

The Paymaster General must realise that we are approaching the matter in the light of the Fontainebleau agreement. We have a sense of déjà vu. We were given copper-bottomed guarantees and assurances at the time of the Fontainebleau agreement. He will know that it was agreed at the Fontainebleau summit to increase the VAT take by 40 per cent. That was done on the solemn guarantee that there would be financial discipline. Some of us said at the time that, if we had financial discipline, it would not be necessary to have an increase of 40 per cent., and that it would be far better to approach the problem the other way around and say that we would not keep paying the cheques. Nevertheless, it was done the other way and VAT was increased by 40 per cent. on the promise of financial discipline.

However, that was all nonsense. The measure failed, and we want to know why ministerial promises now will be any better than they were then. The Government have come back to us today with an intergovernmental agreement of about £750 million to pay for the previous mistakes. Under the Bill, they propose to increase the Community budget by 25 per cent. If any of the Paymaster General's colleagues among the spending Ministers who are now negotiating with the Treasury said to the Financial Secretary, "A little while ago I asked for and obtained an increase of 40 per cent. I now want another increase of 25 per cent.," we all know what sort of an answer they would receive from the Treasury.

That money would be for domestic spending on our constituents. That is where the Treasury keeps a tight grip on the purse strings. That is what might be called monetarism or the policy of the Conservative party regarding what the Government spend in this country. However, when it comes to expenditure on the Common Market—

The First Deputy Chairman

Order. I am finding it difficult to relate the hon. Gentleman's remarks to the amendment. His comments would fall more appropriately in the clause stand part debate. I am sure that he will relate his comments to the amendment.

Mr. Leighton

I am asking how the Bill and the amendment will give the House guarantees and assurances on which we can rely and which are better and more copper-bottomed than those given at the time of the Fontainebleau agreement. The Paymaster General must understand that we are suspicious and not convinced by the honeyed words of Ministers on the Treasury Bench, having heard those words before. Every time the Government come to us on Common Market matters, it is for more money. The Common Market is putting its hand in our pocket for more money all the time.

Sir Paul, you know that many other countries in the Common Market do not pay anything at all. They are net beneficiaries. They are richer than we are. Their GDP per capita is greater than ours, yet they take money out of the Common Market. This country puts money in and, every time we discuss the matter, it means more money for the Common Market. We are told that there will be assurances and guarantees, but I do not believe those that we are given. The next time the Common Market comes hack to us, it will he for even more money. That is the track record.

The Paymaster General has, therefore, a heavy responsibility and we shall commit his words to memory. The words that he utters now will be held against him if he gets it wrong in a year or two years' time. I say that in the most friendly spirit, as he will realise. He has a heavy responsibility to respond to the points that have been raised.

Mr. Cash

I hope that my right hon. Friend the Paymaster General will he good enough to deal with one point that I wish to put to him. I supported the Bill on Second Reading and agree with its main objects. The British people have the opportunity to consider, through a Committee of the whole House, the construction of the measure, which gives legal effect to a Community treaty.

My hon. Friend the Member for Northampton, North (Mr. Marlow) asked whether the provision would be justiciable before the courts. If the decision had not been given legal effect under the provisions of the Bill, surely there would be no basis upon which the matter could be referred to the courts. It is said, quite rightly, that the decision is directly applicable in the jargon of the European Community and, as I understand it, decisions directly applicable in Community law are also capable of being taken to the courts by individuals, where they can establish a satisfactory suit.

In that case—this seems to be the main object of the Bill—could member states ensure that the financial discipline intended by the provisions of the decision would be sustained, not only in the interinstitutional agreements between member states, but with the additional advantage that, in extremis, the matter could be referred to the Court of Justice? In that case, so far as is conceivably possible and given that there has not been a tremendous record of keeping within the limits previously indicated in other similar exercises, on this occasion the Government and the member states have got it right by requiring that the financial stringency contained in this decision will be adhered to and, in the final analysis, will be capable of being taken to the Court of Justice.

Mr. Stuart Holland (Vauxhall)

We certainly understand why the Government have some problems in this matter, many of which have been eloquently put by Conservative Members. There is a contrast between the provisions in the Single European Act and the speech made by the Prime Minister at Bruges. There is also a problem because, not unlike the holy Roman empire, the Single European Act is neither single, nor European, nor an Act. We do not have before us in this House at present a single statement in a recognisable form which the House can amend, approve or disapprove, and which is readily assimilable either by those outside the House or by many inside the House.

In terms of the Act, the Government are very much at sea and it will be interesting to see how the Paymaster General responds to the amendments tabled by my hon. Friend the Member for Newham, South (Mr. Spearing). We certainly support his amendments. They do not in themselves—as you have told the Committee, Sir Paul—raise the occasion for a discussion in Committee of the substantive issues referred to in the schedules concerned. However, their publication is important because it is dificult to follow the argument unless we can see it fully stated.

There is cross-reference in new sub-paragraphs (e) and (f), although we have the Council decision of 7 May, the intergovernmental agreement of April 1985 and the decisions of 24 June 1988. It may be clear to the body concerned what is involved and it may be to some of us, because we have to address these issues. With the co-operation of the Library, we have been able to gain the detailed text. Of course, we may follow these issues for other reasons. However, in our view there should be publication. My hon. Friend the Member for Newham, South has good reason for tabling the amendments and we support them. We shall be astonished if the Paymaster General does anything other than support them on behalf of the Government.

The Paymaster General (Mr. Peter Brooke)

We have had the pleasure of the summer recess since we deliberated on these matters on Second Reading. I would be the first to acknowledge, however, that events occurred duringn the recess, as they always do. Before we embarked upon an interesting debate on the amendments, several hon. Members raised expectations in their points of order that I was about to make a novel statement on behalf of the Government as to their intentions in the context of the Bill. I do not want to arouse great expectations in terms of what I might say subsequently. Modest though my contribution will subsequently be, I can heighten the suspense a little by deferring it until we come to consider whether the clause should stand part of the Bill.

The hon. Member for Newham, South (Mr. Spearing) explained the amendment with the cogency that we have come to expect from him. I accept the need to keep hon. Members fully informed about all Community legislation, and I hope that the Government have a good record in that regard. Despite the expectation of the hon. Member for Vauxhall (Mr. Holland), I believe that it would be unnecessary to add the new own resources decision and the 1988 intergovernmental agreement as schedules to the Bill.

Both those documents have already been made available to hon. Members and the public at large in the form of Command Papers, as the hon. Member for Newham, South was good enough to say. The new own resources decision was published as Cm. 419 and the 1988 IGA as Cm. 418. Both Commands were issued in July. Copies of the documents were made available in the Vote Office on Second Reading and hon. Members had the opportunity of reading them before voting upon them. The documents were referred to in the business statement of the previous Thursday as being relevant to Second Reading.

We did not attach the 1985 own resources decision or the 1985 IGA as schedules to the European Communities (Finance) Act 1985, for reasons similar to those which I have adduced. I recall that the hon. Member for Newham, South participated in the debates on that measure. The Bill follows the precedent that was set in 1985. I would not want to depart from those arrangements unless there was good reason for doing so. The European Communities Act 1972 did not set out as schedules all the relevant treaties.

My right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) was with us briefly at the Bar of the House earlier in the debate. He did not enter the Chamber to participate in it. He would have been able to confirm the position which I have described in earlier legislation.

Mr. Skinner

The Minister has referred to the right hon. Member for Old Bexley and Sidcup (Mr. Heath). Is that the same right hon. Member who went to the rostrum at the Tory party conference a few weeks ago to be rubbished by others who were supporting the Prime Minister? Is he the same hon. Member who still embraces the type of legislation to which the Minister has referred? I would like to know what sort of Alice-in-Wonderland world he lives in. A fortnight ago, Conservatives were rubbishing the right hon. Member for Old Bexley and Sidcup because he had the guts to tell the Prime Minister that she is one of the authors of the Single European Act, and the right hon. Lady is one of the authors of the Bill.

The Minister is now saying in nice tones that my hon. Friend the Member for Vauxhall (Mr. Holland) would welcome this position. Of course he would. The truth is that the Prime Minister has changed her view to a massive extent, at least on the surface. I want to know how much hypocrisy there is in the series of prime ministerial statements that have been made. The right hon. Lady is telling the world that she has had a change of heart on the Common Market, yet she sends Ministers to the Treasury Bench to say the opposite. She does not have the guts to say that herself. Is the Minister on the Prime Minister's side or that of the right hon. Member for Old Bexley and Sidcup? I want to know.

Mr. Budgen

Would my right hon. Friend allow me—

5.15 pm
The First Deputy Chairman

Order. We cannot have an intervention within an intervention.

Mr. Brooke

I shall give way shortly to my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen).

The hon. Member for Bolsover (Mr. Skinner) asked whether my right hon. Friend the Member for Old Bexley and Sidcup is the same individual as he who made a certain contribution to a debate at the Conservative party conference. If it is not the same gentleman, someone was exceptionally well disguised. It was an admirable contribution to the debate, but that is not the subject of the amendment.

Mr. Budgen

I am sure that my right hon. Friend, who is a generous-minded person, will apologise to my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) for the way in which he was rubbished at the Tory Party conference. He was supporting exactly this sort of legislation. He was demonstrating his loyalty to the European ideal. It is only we who, sadly, in a perverted way, wish to support the Bruges speech, who are out of step. I am sure that my right hon. Friend will wish to apologise to my right hon. Friend the Member for Old Bexley and Sidcup for the disgraceful way in which he was treated in the recent past.

Mr. Brooke

My hon. Friend has always had a good turn of phrase. As soon as I read the speech that my right hon. Friend the Prime Minister delivered in Bruges, I knew that it was a subject to which my hon. Friend would wish to return on many occasions. He has already done so to my consciousness on several occasions, and I have every confidence that he will do so again on many occasions in future. The speech warrants the amount of critical attention that he gives it.

It may be that the hon. Member for Newham, South tabled the amendment to ensure that the new own resources decision and the 1988 intergovernmental agreement were printed on the Order Paper for the convenience of hon. Members in Committee. In that respect, we are all in his debt. I shall deal in a moment with the misprints to which my hon. Friend the Member for Southend, East (Mr. Taylor) referred.

The hon. Member for Newham, South asked some specific questions about payments under the IGA. The Commission requested that the first IGA payment for eight twelfths of the total due, or around £500 million, be made on 1 August. Further requests have been made at the beginning of each month since then. The Commission has asked member states that are not in a position to pay their IGA contributions to make available overdraft facilities under article 12(2) of regulation 2891/77. The United Kingdom has not yet made any IGA payments and has therefore granted the Commission overdraft facilities.

The hon. Member for Newham, South asked me about transfers from the Consolidated Fund of £3 billion to £5 billion per annum during 1988–92. That is the gross contribution after abatement, and the figures are expected to lie within that range. The hon. Gentleman was talking about amounts transferred to Brussels, and that is the net contribution. These will be below the £3 billion to £5 billion range which he quoted. A projection will be included in the autumn statement.

Mr. Teddy Taylor

Will my right hon. Friend say more about the overdraft facilities? He has said that the Government have paid the money—we are debating whether they should pay it—in the form of an overdraft. Under what legislation are the Government entitled to give loans to organisations such as the EEC, and how far can this facility be made available? What provision is there for repayment?

Mr. Brooke

My hon. Friend the Member for Southend, East, who follows these matters very closely, knows that we treat on these matters frequently. I treat on them in answer to questions that he puts to me, so they are a familiar instrument within the Community's arrangements and of course they are legal. An overdraft cannot be granted unless it is within the budgetary amounts of the year in question, and of course, under those rules, we have responded.

Mr. Teddy Taylor

My right hon. Friend must accept that we are debating as a Parliament to safeguard the people's money. The Paymaster General just said that he has handed over £765 million to the Common Market as an overdraft because of some apparent relationship with the budget, which he must know is an overspend which we were told would not happen. Under what powers of what law did the Minister give an overdraft facility of £765 million to the Common Market? That is a simple question, and surely it is our job in the House of Commons to raise it.

Mr. Brooke

A moment ago I said, under article 12(2) of regulation 2891/77. I repeat that—article 12(2) of regulation 2891/77. That is an issue to which we have frequently referred, both in evidence before the Select Committee on the Treasury and Civil Service and in debates in this House.

Mr. Skinner

Will the Minister confirm that that is federal money?

Mr. Teddy Taylor


Mr. Brooke

I must clearly develop some instinct for which interventions not to give way to.

Mr. Cash


Mr. Budgen

My right hon. Friend was good enough to say that an overdraft to a certain level is lawful. If for the sake of argument the overdraft was 10 times as large, would that also be lawful? Are we to understand that the Community as authorised by this Parliament has the right to incur an unlimited overdraft?

Mr. Brooke

It may be helpful if I refer to a remark that I made in the debate of 19 May. I said: Member states are obliged to comply with overdraft requests by the Commission and article 12(2) of the regulation, provided that these are genuinely needed to cover a prospective cash deficit, and provided that they would not involve exceeding the own resources known to be available for the year. The Government stand ready, therefore, to meet such overdraft requests, before or after adoption of the budget, and before or after final agreement on the IGA, provided that these conditions are fulfilled. We would charge such overdrafts directly against the Consolidated Fund, like all other Community obligations, while keeping the House fully informed."—[Official Report, 19 May 1988; Vol. 133, c.1151.]

Mr. Cash

Does my right hon. Friend agree that if it is indeed a regulation, as appears to be the case, under sections 2 and 3 of the European Communities Act 1972, all Community obligations, including in particular regulations, are effective in law? Therefore, if this particular overdraft facility was made available under that regulation, it is already authorised under the Act to which I have referred as a Community obligation.

Mr. Brooke

I am grateful to my hon. Friend for reinforcing the point that I made earlier.

Mr. Leighton

I am sorry to interrupt the Paymaster General again, but I am certain that he realises that this is an important point and in the interests of clarity we should clear it up. Normally, when one gets an overdraft, it has a limit. I believe the right hon. Gentleman explained that there is a limit. However, will he put a cash figure for the current year on that? What is the overdraft's limit?

Mr. Brooke

If I may, I will deal with the questions as we proceed.

Mr. Teddy Taylor


Mr. Brooke

I want to make a little progress and then I will be content to give way. I hope that I can tell my confrère, the chairman of the Labour party, that—[Interruption.] The overdraft does not take the place of the IGA. The total amount of the overdraft is restricted to the total own resources under existing arrangements, as my hon. Friend the Member for Stafford (Mr. Cash) said. Accordingly, we have paid in line with the European Communities Act 1972.

Mr. Skinner

Now what about the ozone layer?

Mr. Brooke

Although there would be circumstances under which I would be grateful for the diversion of the ozone layer, I think that we can continue to make progress on this business.

Mr. Marlow

I have two brief points on which I would be grateful for my right hon. Friend's clarification. First, my hon. Friend said that this is being done in accordance with the regulation. Could my right hon. Friend tell the House when the House debated that regulation and gave its assent to it? Could he also tell the House which Act of Parliament enables the House to make payment? My right hon. Friend also said that an overdraft facility was allowable up to and including the own resources ceiling and also within the budget. Is it not the case that in this case the Community exceeds own resources and that is why the overdraft is being paid?

Mr. Brooke

Would my hon. Friend the Member for Northampton, North (Mr. Marlow) please repeat the first part of his question?

Mr. Marlow

When did the House debate the regulation under which this overdraft facility is being granted, and did it give its assent?

Mr. Brooke

I have held this office for nearly three years, but our history of dealing with these matters goes back before that. So close and so vigilant is the attention that my hon. Friends the Members for Northampton, North and for Southend, East pay to these matters that if we had not been behaving regularly, they would have pointed that out a long time ago.

Mr. Teddy Taylor

The Minister said first of all that he was unable to say under which British law we pay this, but he says that he is obliged by a Community article to make payments to the level of own resources. Surely he accepts that new sub-paragraph (f) does not relate to own resources, but to the fact that the Community has overspent resources in 1987–88. Under what year's own resources is he making the payment? If he is correct in so doing, observing that this does not lead to a payment within existing own resources, is it right in respect of an overspend of own resources?

Mr. Brooke

The payments that we have made, which we have regularly and faithfully reported to the House, have been conducted in line with our legal obligations. The Commission asked for overdrafts under article 12(2) of regulation 2891/77 in each month since June. The Commission's overdraft with the United Kingdom currently stands at £17.4 million, having peaked at around £166 million in mid-August. I hesitate to say that, against the kind of figures that were quoted a moment ago.

Mr. Cash

Does my right hon. Friend agree that, on 1 June 1988, the President of the European Parliament signed the budget for this year after there had been a serious dispute? Once he had done so, part of the mechanism required to ensure that it was fully lawful was complied with. In other words, 1 June is important and after that date payments made in accordance with the procedures that have been described are lawful.

5.30 pm
Mr. Brooke

I am most grateful to my hon. Friend for that confirmation.

Mr. Skinner


Mr. Brooke

I have been asked a series of questions by my right hon. and hon. Friends that I must answer first.

In particular, I was asked whether the overdraft payments that have been made are in effect IGA contributions. The Commission is well aware that payments under the IGA cannot be made until member states have completed their national procedures for approving them, and that that takes time. Meanwhile, as I have said, we have a legal obligation to meet article 12(2) overdraft requests, provided that they are properly drawn up. The sums requested by the Commission as own resources, excluding the IGA, under the new budget are less than the sum that would have been required under provisional twelfths. Looking at the budget as a whole, the Government took the view that it was right to meet the payment requests made by the Commission; not to have done so would have risked court action and the possibility of substantial interest payments.

I turn to the series of questions asked of me by my hon. Friend the Member for Southend, East. First, he asked whether misprints in the schedules could be put right. Clearly, were the schedules to pass into the legislation, as proposed in the amendment of the hon. Member for Newham, South (Mr. Spearing), they would need to pass correctly. My hon. Friend is correct in saying that there are misprints, and they would need to be corrected. However, as I said in my initial response, the Government's view is that the new schedules should not be added to the Bill, so the question of correcting the misprints does not arise.

My hon. Friend further asked what legal effect the inclusion of the schedules would have. If they were properly drafted—I am sure he would take that as common ground between us—their inclusion should have no special legal implications. He asked also what would be the effect of including the schedules on what he described as budgetary fiddles, such as the metric year. The Brussels package included changes to budget management that will help to limit artificial devices—such as, for example, limiting legative reserves and reinforcing annuality. However, that would not prevent recourse to another metric year.

While it is true that the Community was only able to respect the old financial guideline for agriculture in 1987 by changing from a system of advance payments to reimbursements, and that that effectively produced a one-off saving of two months' expenditure in 1987, the British Government supported that move not only because of the budgetary constraints at the time, to which my hon. Friend himself alluded, but also—I emphasise this point —because it makes better sense from the point of financial control for agricultural expenditure to be reimbursed like all other Community expenditure.

Mr. Terence Higgins (Worthing)

My right hon. Friend mentioned that incorporating the schedule in the Bill would not make any difference to legal enforceability. However, we have been assured throughout our debates, on many occasions, that budgetary discipline will now be legally enforceable. Will my right hon. Friend tell the House where in the Bill that legal enforceability is reflected?

Mr. Brooke

Given the fact that the Bill refers by their titles to the items that the hon. Member for Newham, South wishes to include in terms of schedules, the Government have continuously made it clear, throughout the earlier debate that led to the Brussels council's conclusions and in all our subsequent debates, that it was not possible at the Brussels Council itself to put into legal form the particular instruments needed to achieve the objective to which my right hon. Friend refers. However, as he knows, we made it clear that the principle was being established in terms of the Brussels Council.

As he also knows, the new own resources decision was not accepted within the Council for presentation to national Parliaments until 24 June. In the intervening period, between February and June, it was possible for draftsmen to work out the necessary instruments to achieve—for instance, in the context of automatic agricultural stabilisers—the purposes that I know my right hon. Friend the Member for Worthing (Mr. Higgins) shares.

Mr. Higgins

Perhaps I may press my right hon. Friend on what I am sure we both agree is a most important point. When we discussed this matter on Second Reading, the House was told that there were problems in making the non-obligatory expenditure provisions legally enforceable. That is a point to which we might return when we debate clause stand part. However, we were told that the provisions for limiting obligatory expenditure would be legally enforceable. I must again ask my right hon. Friend where it is that those provisions are to be found which would enable those who wish to ensure that expenditure is legally enforced to do so.

Mr. Brooke

My right hon. Friend is familiar with the process by which, as I said a moment ago, there are specific instruments intended to give such provisions legal form. I agree with my right hon. Friend that we are here talking about compulsory expenditure and not DNO, to which we can return, where those instruments have passed through the Council in the form of an extension of the basic principle.

Mr. Budgen

Before the Prime Minister went to the Fontainebleau summit, she said that she wished to achieve legally binding constraints on EEC expenditure. When she returned, she said, "Very sorry—we are not able to get legally binding constraints on EEC expenditure. That is not technically possible." She now says, "Never mind what happened at Fontainebleau—we have now agreed to have legally binding constraints." What changes have there been in the EEC constitution that now make it possible for legally binding constraints to be introduced?

Mr. Brooke

My hon. Friend knows very well that, in terms of the negotiations into which the British Government entered with their colleagues in the Community that led first to the Copenhagen European Council and then to Brussels, we were making it a sine qua non of our commitment to the agreement that was reached that it would be possible to achieve such legally binding instruments.

Mr. Budgen

Can my right hon. Friend tell the House why that could not have been done at Fontainebleau?

Mr. Brooke

I am not in any way seeking to escape a full and direct answer to that question by saying that I myself was not involved at that stage, but my hon. Friend knows that it was the very fact that we were unable to secure those legally binding instruments at Fontainebleau that made us determined, in the run-up to Copenhagen and Brussels, that we would not reach agreement with our Common Market partners unless such legally binding instruments were secured.

Several Hon. Members


The Second Deputy Chairman of Ways and Means (Miss Betty Boothroyd)

Order. To whom does the Paymaster General wish to give way?

Mr. Brooke

I believe that I should give way to my hon. Friend the Member for Skipton and Ripon (Mr. Curry), who has not previously intervened.

Mr. David Curry (Skipton and Ripon)

Is it not a fact that, following the Brussels summit, a series of statements of intent incorporated in that declaration were then translated into specific changes to the agricultural regulations, that they passed in the usual way and were approved by the Council of Ministers and the European Parliament, and that they now form Community law? Is it not true that, after Fontainebleau, the reforms were limited to a statement of good intentions not translated into regulations? Is it not the case that those reforms, which were known by the codeword "stabilisers", are now incorporated in the regulations and have been applied—notably in the case of oilseed rape, cereals and wine?

Mr. Brooke

I am grateful to my hon. Friend for putting much more eloquently than I did my answer to my hon. Friend the Member for Wolverhampton, South-West, who I see has changed his position in the Chamber.

Several Hon. Members


Mr. Brooke

I should be delighted to give way in a moment, but my right hon. Friend the Member for Worthing was seeking a more specific response from me.

Essentially, I think that he was asking about the legal text to enforce budget discipline. It is contained in various measures of Community law, in particular the budget discipline decision. That decision does not require approval by national Parliaments as does the own resources decision, but it is Community law, and the own resources sub-ceilings in the own resources decision reinforce budget discipline over total expenditure. I shall return to the inter-institutional agreement in a moment.

Mr. Richard Shepherd (Aldridge-Brownhills)

Will my right hon. Friend explain why, if the Government are yet again confident about budget discipline—forgetting Fontainebleau and so forth—we cannot incorporate it into British law and thus reaffirm our commitment in the Bill?

Mr. Brooke

I hope that I may give my hon. Friend a longish answer. As I am sure my right hon. and hon. Friends would agree, securing those legally binding instruments was a substantial achievement and to the future good of the Community, but to change the whole structure of Community legislation in relation to this Parliament as well might have been unduly ambitious.

Mr. Cash

Does not the Bill's long title refer to both the decision of 24 June 1988 and the undertaking—namely, the intergovernmental agreement—that the decision should be automatically binding under the European Communities Act 1972, because it is a decision of the Council of Ministers? The undertaking would not necessarily acquire the same legal status, so the Bill effectively combines the two, thus giving full legal effect to the combined provisions or both documents and putting beyond all doubt that the provisions in the Bill are fully effective legally.

Several Hon. Members


The Second Deputy Chairman

Order. The Minister must have the opportunity to reply to one intervention at a time.

Mr. Brooke

I think that we are drifting some distance from the amendment, but I am grateful to my hon. Friend the Member for Stafford for what he has said.

Mr. Hugh Dykes (Harrow, East)

Is not my right hon. Friend being too apologetic? Was he not right to say what he did just before that last intervention—that the agreement is very satisfactory and is properly legally enshrined in the Bill? Of course, the status and construction of Community law is the same as that of British law. There is no distinction, if we are fully fledged members of the Community. Why does my right hon. Friend not say that, without being so apologetic?

Mr. Brooke

I hasten to say that I was not trying to be apologetic. I have been trying to satisfy the understandable curiosity of a number of my hon. Friends, which I expect to continue for some time to come.

Mr. Marlow

Will my right hon. Friend give way?

Mr. Brooke

I think that if I do not answer the fourth question asked by our mutual hon. Friend the Member for Southend, East, we may all forget that he asked it.

My hon. Friend asked about the projections of our net payments to the Community institutions. My right hon. Friend the Prime Minister told the House on 15 February that the Brussels package would increase our net payments by a maximum of about £300 million a year compared with what might happen with the continuation of the 1.4 per cent. VAT ceiling, and by about £150 million to £200 million a year in comparison with the underlying level of spending in 1988.

That remains our estimate of what the package will cost. A revised forecast of our net payments to Community institutions, taking account of both the Brussels package and all other developments since the public expenditure White Paper was published, will be contained in this year's Autumn Statement, and the House will have to wait for that to find out what the projection will be.

5.45 pm

A forecast of our net contribution to the Community budget in 1988 will be published in the statement on the 1988 Community budget to be published shortly after the Autumn Statement. The delay in the publication of this White Paper arises partly because of the delay in adopting the 1988 budget itself—the budget as amended was adopted on 7 July—and partly because the Community has not yet published all the 1988 budget documents.

It is true—I am now responding to my hon. Friend's point—that over the past two or three years the Government have tended to under-forecast our net payments to Comunity institutions. That is partly because we did not wish to use any assumptions in the forecast, such as an increase in the 1.4 per cent. VAT ceiling, which could have prejudiced our negotiating position in Brussels on future financing. It is also because of the consistent under-estimation in recent years of United Kingdom VAT receipts, which are used for determining our VAT base for Community purposes. Another important factor is that we have not forecast with complete accuracy the speed of the decline in our share of Community receipts since about 1984.

The hon. Member for Newham, North-East (Mr. Leighton) warned me that the words that I used today might be taken down and used in evidence against me. As I said earlier, I have now survived this office for approaching three years, and a fair number of quotations from my earlier speeches could therefore be deployed; but I am grateful for his advice, and I shall watch what I say.

The hon. Member for Vauxhall pressed us to accept the amendment. I said that by putting down the amendment the hon. Member for Newham, South had provided the whole Committee with the convenience of having the ORD and the 1988 IGA printed on the amendment paper. I hope, however, that having secured that, and given that historically we have not included such schedules to the legislation, he will not wish to press the amendment to a vote.

Mr. Cryer

I am amazed at the Minister saying that the schedules should not be included because they have not been included before. Is he aware that there is a strong current of dissatisfaction in the country with our membership of the EEC? Part of that current is due to the massive number of regulations and Community instruments which pour out, and which make many of our citizens suspect that the sovereignty of this Parliament is being gradually eroded and shifted to the EEC.

I suspect that a few Euro-fanatic advisers in the Minister's Department have said, "It seems straightforward to accept the amendments." It would not do any harm, because, as the Minister said, the inclusion of the schedules has no special legal implication. What it does is give a pointer to the ordinary citizen who gets hold of a copy of the Bill when it becomes an Act.

Not a huge proportion of our citizens get hold of Acts of Parliament. I suppose that 99 per cent. of the population have never cast their eyes over an Act of Parliament. Therefore, the notion that we are conferring a huge benefit is not true either. Why should concerned citizens have to go to HMSO and pay an extortionate amount for a copy of the Act? The cost of legislation that binds citizens has shot up to an extortionate level under the Government.

Having obtained the Act of Parliament, the citizen has a chat to someone else who might know about such matters, and he is told that there are two EEC documents about agreements that have been reached and those should also be read. The citizen must then find a source for those EEC documents. I am among a tiny privileged minority in Sheffield who knows that there is a regional information centre at Sheffield polytechnic. I do not suppose that there are more than a couple of hundred people throughout the length and breadth of west and south Yorkshire who know that. However, the earnest citizen is now being told by the Minister that he cannot have these extra pages printed in the Bill because it has not been done before. Although the Minister has said that providing the citizen with extra information has no legal consequences, it cannot be done.

It is mean-spirited of the Government to refuse the amendments of my hon. Friend the Member for Newham, South (Mr. Spearing), who has tabled them in a helpful spirit. If the Minister had accepted the amendments and then sat down, he would have probably avoided one of the most gruelling half hours at the Dispatch Box. It would have been a double advantage to him. He could have sat down and still had a bit of a reputation left, but now it has gone. He was not able to answer the questions and was helped out by the hon. Member for Skipton and Ripon (Mr. Curry), who is a Euro-fanatic and knows his way around the financial institutions of the EEC. However, that is not saying much. Not many people know their way around the EEC because it is so labyrinthine.

As people do not understand the EEC, I believe that it is the duty of the House to explain legislation as clearly as possible. Of course, from the point of view of the Minister's Euro-fanatical advisers, there is a difficulty, because the vast proportion of the population suspect that there has been a large increase in the amount paid by the United Kingdom to the Common Market and, if the agreements are incorporated in the Act, that information might filter through to too many of the population. If there is an Act which is pretty meaningless by itself, and those obscure EEC agreements are kept in isolation, fewer people will know.

Therefore, the Prime Minister can go around the country trying to capture the spirit of widespread dissidence about the Common Market, but at the same time she can put legislation through that is collaborating with the Common Market to provide greater revenue for it, without any approval being required from the House after the Bill has been passed.

The Minister is being churlish in the extreme in not accepting these amendments. It is worth pointing out that the ordinary citizen, having obtained the Bill with the amendments incorporated, could say, "That is a lot of money into the Common Market, would that money not be better spent on research into the depletion of the ozone layer?", as was suggested in an intervention earlier. Many citizens would say that it was right to do that rather than to fritter the money away on this lavish organisation which has done little for this country. We still have a balance of trade deficit in manufactured goods of more than £10 billion. Since 1984, we have spent nearly £5 billion on the Common Market; indeed, the Minister has said that since 1984 there has been an accelerated decline in Community receipts, which has produced that massive deficit in our financial arrangements with the Common Market.

I suggest that the Minister would not lose anything by allowing these amendments. The citizen would gain some information. Frankly, to maintain the reputation of the House as a source of legislation, we should always have in mind the ordinary citizen and, if something is easier and clearer for him and saves him some money in obtaining that information, we should be prepared to legislate for it. It may be that the Euro-fanatics are apprehensive because the Common Market is in such a mess, the agricultural policy is in a mess—[Interruption.]

Mr. Skinner

Do you mean Dr. Death?

Mr. Cryer

I was just coming to him.

Mr. Skinner

I do not know whether my hon. Friend has noticed. but a lot of the Euro-fanatics have not been here. Dr. Death, who leads the provos, has not been here at all. The Liberals have been represented by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) who has never opened his gullet. Where are they? The Scot Nats, who are converted Euro-fanatics, have not been represented. It is strange that when we are discussing this wonderful institution that has cost Britain about £5,000 million net since the Prime Minister came into power, all the people who used to support it—Shirley Poppins, Roy of the Radicals and all the rest—are not here.

The Second Deputy Chairman

Order. The hon. Member for Bradford, South (Mr. Cryer) was speaking directly to the amendments before that intervention. I hope that he will continue to do so.

Mr. Cryer

If the people who support the Common Market feel that the inclusion of this information through the approval of amendment Nos. 14 and 15 would be a disadvantage to their cause, why are they not here to point that out? The Minister did not mention that in his speech. He did not say that this would be propaganda for those people who are critical of the Common Market. I believe that the citizen has a right to information, whether it gives him the right to criticise or to support the Common Market. It is for the citizen to make his judgment.

Curiously enough, that is the kind of argument that the Government normally embrace philosophically. They say that we should give the people information and let them make the choice. That is the way in which they talk about privatisation. There have to be two or three buses so that there are two or three choices. All the publicly owned monopolies must be hived off, so that there is a choice of 14 water companies in one street. On this occasion, the citizen will be denied the information in legislation passed by the House. That is quite wrong.

It is not a huge point, but we, as ordinary citizens, have been fortunate enough to be elected as Members, and we should safeguard legislation for the 54 million or 55 million other citizens. We should give them a decent opportunity to look at the legislation and make their own judgment about it, especially when it concerns this wretched organization—the Common Market.

Mr. Teddy Taylor

The hon. Member for Bolsover (Mr. Skinner) has just said that since 1979 there has been a net payment of £5 billion to the EEC. I have received a written answer from the Paymaster General, who said that up to 1987 it was £7.5 billion.

Mr. Cryer

The deficit is even worse than was anticipated—£7.5 billion. The point that my hon. Friend the Member for Bolsover (Mr. Skinner) was making was that, although this deficit is enormous, and is grist to the mill of the critics of the Common Market, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), the Euro-fanatic par excellence, and the right hon. Member for Plymouth, Devonport (Dr. Owen) are not here to defend it. That critical information is not in amendments Nos. 14 and 15 incorporating the schedules that my hon. Friend the Member for Newham, South has so prudently decided to table.

The deficit information is not included in the amendments, so it does not provide the anti-Marketeers —there are more of them than the Committee might think and I believe that that was why the Prime Minister was so adamant in her speech at Bruges—with a cause. There is no reason for the Minister to turn down this amendment except that, historically, such a course of action has never been taken.

6 pm

Historically, we did not have an electrified railway line between London and Leeds, but that did not mean that we should not have one. If British Rail had made such an application to the Minister, I am sure that he would have replied, "You want X million pounds to electrify the railway line, but historically there has never been such a line, so we should not have one." One could apply that daft argument to all sorts of things. As it happens, this House is the sort of place where it gains more credence We still have the leather, the oak and the procedures that have been with us for hundreds of years.

If it is said that, historically, we have always followed one course of action, people tend to suspend their analysis of it. People tend to believe that we should go on as we are, but if a new course of action is intended to improve things for the citizen we should undertake that action.

The Minister has not produced a scintilla of evidence or justification for his obdurate, unhelpful and antidemocratic decision. This is the right context for such an anti-democratic decision because the Common Market is an anti-democratic organisation. To bring us into line, we have to fudge, obscure and pour out documents that have the crucial information buried in paragraphs—by and large, that information is denied to the ordinary citizen.

My hon. Friend the Member for Newham, South is Chairman of the European Legislation Committee and he spends hours burrowing through documents. The hon. Member for Southend, East (Mr. Taylor), along with one or two other hon. Members, performs a similar job. They burrow through documents to get out the information, because one of the techniques of the Common Market is to bury things deep in obscure paragraphs. When people ask under what authority and under what chapter of English law a certain decision was reached, there is a lot of humming and hawing and, eventually, an obscure instrument is produced.

Regulation 2891/77 is the instrument which authorises much of the money for the European Community from the United Kingdom. I wonder how many citizens in our respective constituencies are busy chattering about it? I do not imagine that it is talked about in Bradford, South.

I believe that, underneath it all, the Minister is a Euro-fanatic. As I recall, he was a Heathite at one stage. I know that that represents the kiss of death in the Tory party these days and that a lot of people want to shake off that image. That streak of Euro-fanaticism, however, is still there and characterises the Minister's attitudes.

Mr. Budgen

The hon. Gentleman is making a splendid speech that will make him extremely popular on the Tory Benches today. We understand, however, that the Labour party has now become committed to the EEC and is particularly anxious to exploit the generosity of the Euro-Socialism that is to be made possible by the extra money that we are discussing. Many of the hon. Gentleman's constituents must be disgusted at the way in which the voters have denied Socialists the opportunity of carrying out their splendid and progressive policies—

The Second Deputy Chairman

Order. I do not believe that we need to go into all of that now. This is an extremely long intervention and the hon. Member for Wolverhampton, South-West (Mr. Budgen) should come to his point.

Mr. Budgen

Of course I will.

Given that the hon. Member for Bradford, South (Mr. Cryer) is so rude about the absence of Dr. Death and all the rest of them, is there anyone from the Labour party who will explain today how this money will be used to create the Socialists' new Jerusalem?

The Second Deputy Chairman

Order. The hon. Member for Bradford, South (Mr. Cryer) will not do that —he will refer to the amendments before us.

Mr. Cryer

Amendments Nos. 14 and 15 are linked to amendment No. 13 and as you will be aware, Miss Boothroyd, it is not possible to give the hon. Member for Wolverhampton, South-West (Mr. Budgen) the necessary explanation. In any case I would not be able to pursue his argument because the resolution at the Labour party conference was not passed by the necessary two thirds majority. Therefore, retaining the right of withdrawal is still there and is still Labour party policy.

We have no control over an Act which enables an increase in revenue for the Common Market. I believe that we shall win the battle of ideas and form the next Government. I do not believe that we can bypass the problems and I do not believe that we shall get things done by going through the European Community. I do not know of many people who have that illusion. The truth of the matter, however, is that, irrespective of the political views of many people in the Common Market, there is one overwhelming unifying principle which is held by those on the extreme Right, by the Christian Democrats and by the Socialist group—excluding the British Labour group who, I am happy to say, do not go along with it—and that is the creation of the united states of western Europe. Some of the money that we are discussing will go towards such a unification.

It is important that amendments 13, 14 and 15 are accepted so that the citizen is able to undertake some sort of examination of where the money goes. I note that the right hon. Member for Plymouth, Devonport—a Euro-fanatic—has just entered the Chamber. He is probably here to vote in favour of the Government denying the ordinary citizen the information to which he or she has every right.

It staggers me that the Government, who proclaim freedom of choice for the individual, are denying information and an element of choice to the ordinary citizen. The more people know the true face of Toryism, the more they will set their faces against it.

Mr. Richard Shepherd

The amendments moved so eloquently by the hon. Member for Newham, South (Mr. Spearing) go far beyond offering instructions or advice to the British people. I believe that they mandate the British Government, under British law, to abide by the financial constraints that the Government have entered into by agreement. From the line that my right hon. Friend has taken, it appears that the Government are nervous of such a situation because it inhibits or restrains their ability to negotiate large sums of money when this agreement falls apart, as many of us believe it inevitably will.

As my right hon. Friend has pointed out, he is an old hand in such debates. He is perfectly well aware that the assurances that the Government have given on a number of occasions have been treated with some scepticism, and no wonder. Every time the Prime Minister goes to Europe and announces that we shall constrain expenditure and bring in decent controls, she then comes back and we pay more. There is a certain other-wordly quality about such an attitude. On the one hand, the Government strike the ground and state that we shall pay less, yet, time after time, we accommodate large increases of expenditure outside the easy review of British law.

The amendments are important because they mandate the Government to abide by British law, which would reinforce all the disciplines that the Government are so confident will be effective. If the Government are so confident that the disciplines that have been entered into will be effective, surely it is an easy thing for the Government to say that they welcome the inclusion, in British statute law, of the new schedules.

The very reluctance of the Government to incorporate such schedules appears to reinforce the argument that the Government are nervous of their incorporation on the basis that revenue increases could be challenged in British law courts by British citizens on the basis of British law.

Sir Russell Johnston (Inverness, Nairn and Lochaber)

I feel obliged to say a brief word in defence of the world-weary and indubitably much maligned Minister. I say "brief', despite the fact that long-windedness is clearly the order of the day. The Minister rejected the amendments of the hon. Member for Newham, South (Mr. Spearing) with the simplest and most proper of reasons—to wit, that they would make no difference whatever to the legal consequence of the Bill. I must say to the hon. Member for Aldridge-Brownhills (Mr. Shepherd) that Bills are supposed to be, not encyclopaedias of knowledge, but statements of the law. I would have thought that the hon. Member for Wolverhampton, South-West (Mr. Budgen), who has a passing knowledge of the law, would find it desirable that legislation be brief, not long-winded. Therefore, I do not see any point in making the proposed addition.

Mr. Skinner

What about the hon. Gentleman's dead parrot?

Sir Russell Johnston

My dead parrot is dead, and I would be obliged if the hon. Gentleman would not exhume it.

Mr. Skinner

The hon. Gentleman backed it for 24 hours.

Sir Russell Johnston

I am sure, Miss Boothroyd, that you will protect me.

The Second Deputy Chairman

Certainly against the hon. Member for Bolsover (Mr. Skinner).

Sir Russell Johnston

We have now debated for more than two hours an amendment which would make no difference to the legal consequence of the Bill, and we should now desist. If there is a vote, I shall certainly vote against the amendment.

Sir Richard Body (Holland with Boston)

I shall make a short point, because this important debate has taken a substantial time.

I am troubled. I ask my right hon. Friend the Paymaster General to consider that this would not be tolerated in the Danish Parliament. In Denmark, Parliament is insistent that maximum information is given to the Danish people on matters such as this. Danish parliamentarians are much better informed about every regulation and decision passed by the Council of Ministers. We already know that this House was unaware of the regulation about the way in which the Council of Ministers could draw on extra funds from the British people and the rest of the Community, to which my right hon. Friend drew our attention. In Denmark there is a willingness, almost an eagerness, on the part of the Danish Government to keep Parliament well informed.

Sir Russell Johnston

Is the hon. Gentleman aware that the Danish Parliament is elected by proportional representation, so genuinely reflects the views of the Danish people?

Sir Richard Body

I am sorry that the hon. Gentleman, for whom I have the greatest regard, intervened in that way. I am trying to make a short point after a long debate and I hope that I may make it without taking up much time. This is an important Bill and there are other amendments which we wish to consider and debate properly. I hope that the hon. Gentleman will take part in that and that it is noted outside that he is the only Liberal —or Democrat, or whatever we call them now—to take any interest in this debate.

Why cannot we follow the example of the Danish Parliament and make this information available to the British people? This decision has considerable constitutional consequences, but the British people will be wholly unacquainted with it unless we take steps to acquaint them with it. Yet we are trying to suppress information. That is unsatisfactory, and anyone who wants the EC to succeed will agree that there is no point in suppressing information, unless it is for the reason that the hon. Member for Bradford, South (Mr. Cryer) gave us earlier. The more one reflects on it, the more plausible that explanation seems.

For those reasons, I ask my right hon. Friend to reconsider the matter and concede that what is good enough for the Danish people and the Danish Parliament should be good enough for the British people and the House of Commons.

6.15 pm
Mr. Marlow

I should like to reinforce the point made with great eloquence by my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd).

My right hon. Friend the Minister debated the subject of financial control. We know that the Government are deeply concerned about the financial control of Community resources and have not been happy about the way in which that control has been exercised. One of our main duties in Parliament is to ensure proper financial control of taxpayers' money. When the Bill was introduced, the Community had financial problems. It was short of cash. But now we know that its coffers are overflowing. It has not had the expenditure that it expected, so has money in reserve. It has spare cash. The urgency for the Bill is nothing like as great as previously. There is no urgency. We can delay.

My hon. Friend suggested—this should meet with the agreement of my right hon. Friend—that we should add these schedules to the Bill. If we add them, will it weaken the power of our constituents to take a case against the EC for financial imprudence? Should it start spending money which it should not spend? Now it has the problem under control, but should it start being extravagant again? If one of my constituents wanted to take a case against the Community institutions, would he be in a weaker position if we agreed to the schedules? If not, my right hon. Friend, like me, would wish to give my constituents all the power we could. Therefore, I plead with him to agree to the amendments, so eloquently moved by the hon. Member for Newham, South (Mr. Spearing).

Mr. Spearing

I rise to reply to this debate, which has taken longer than I expected. Its contents have vindicated the wisdom of Committee procedure because although we have debated whether these two schedules should be included in the Bill, we have, en passant, debated two other important points which otherwise might never have been pinpointed in the clause stand part debate.

The first relates to the undertaking in proposed new schedule 2. Is it necessary? That question has not been fully answered. We extracted from the Financial Secretary the obscure regulation of 1977 under which certain payments have been or are about to be made. The explanation was not entirely convincing, because at one stage—I shall have to read Hansard on this—the Minister said that the payments would not exceed resources known to be available.

It is true that resources will be available if the undertaking is ratified by other states, but we cannot assume that. on another occasion he said that the payments would not exceed those which could be made under existing arrangements. Existing arrangements could include the detailed article 12(2) of the 1977 regulation for forward payments. That is still unclear, although we have had something of a question and answer session on it. I must pay tribute to the patience of the Paymaster General, but he must give an answer on financial matters. These are matters not of judgment but of strict financial formulae.

The second point relates to new schedule 1, if it were accepted. What part of the decision set out in new schedule I would contain the discipline which we have been promised and assured of? The right hon. Member for Worthing (Mr. Higgins), who is the Chairman of the Select Committee on Treasury and Civil Service, asked what part of the new schedule would guarantee that discipline in Community law or United Kingdom law. But answer came there none, apart from a statement that it was contained in other documents about agricultural stabilisers that had subsequently been passed and given legal effect by the European Community.

The hon. Member for Skipton and Ripon (Mr. Curry) knowledgeably underlined that point. However, as I recollect the evidence given by the Minister of Agriculture, Fisheries and Food to the Select Committee that I have the honour to chair, there is no certainty in that. Agricultural stabilisers have more to do with hope than certainty.

I pay tribute to the Paymaster General for providing what answers he could, but I discern no mechanism of discipline in new schedule 2 or, for that matter, in the proposed decision before us. This could therefore be classified as a Fontainebleau mark II.

The Minister said, with his customary courtesy, that the amendment was unnecessary, but his remarks showed that to be untrue. He kindly said that the Committee was in our debt for putting the texts on the Order Paper. But if its members, who are a little acquainted with these matters—I put it no higher than that—find it convenient to have these details set out on the Order Paper, a document that we can obtain 10 yards away, so, too, would the people whom we represent.

At this point I want to answer the cogent point made by the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston). He was right to say that the amendment neither adds to nor detracts from the legal effect of the Bill, but I am sure that on other occasions, dealing with other matters, he would be the first to criticise a Minister who brought before a Committee a couple of clauses of gobbledegook. If the hon. Gentleman or one of his hon. Friends tabled an alternative form of clause, or an expansion of a clause, making clearer what was involved in it but entailing no legal change, he would be the first to criticise any Government that did not accept such an expansion or clarification. We are as much concerned here with the quality of legislative drafting as with the Bill's contents. All hon. Members can say amen to that, even if the Treasury cannot. To date it has not said amen to it, and I am sorry that it has not. It has been burrowing hard trying to find additional reasons such as those that the right hon. Gentleman gave us why the amendments should not be accepted.

The right hon. Gentleman said that such an inclusion had not been made in 1985 and asked why it should be made now. My hon. Friend the Member for Bradford, South (Mr. Cryer) disposed of that with his timely and apposite electrification example: we have not had electrified lines in Bradford and Leeds until now, so why should we have them in future? Yet the Government have paid for that electrification.

I have a better argument still. The Paymaster General said that this had not been done before; no more it had. But the so-called disciplinary mechanisms did not work either last time, and because of that it is all the more important that we should have them this time. I hope the Minister understands that. No doubt the scribes in the Treasury have been working hard on the Minister's reasons and I do not blame him for using them.

The Minister said, that in 1972, when we took on board all the then treaties of the European Community under the European Communities Act, we did not print them, either. I believe I have the advantage of the right hon. Gentleman in having attended those debates, and I can tell hon. Members why the treaties were not printed in the schedules to that Bill—95 treaties were hoisted aboard at that time. I remember going into the public library in Ealing, Acton, which I then represented, with the treaties on my shoulder piled up two feet high. As I remember, none of them was about the obligations of taxation. The money that we paid in then was given under an entirely different formula, not the own resources formula of today.

Now we have a treaty which is, in effect, a taxation instrument, and a member of the Treasury is telling us that, although this is a taxation document, we shall not print it in the Bill. How is that for open government? It is a trend towards authoritarianism. I suggest that the reasons the right hon. Gentleman gave for not including the amendment were not good ones, so his refusal does not carry the weight that his arguments usually do.

This has been a useful debate and in other circumstances we would have pressed it to a—

Mr. Skinner

We will.

Mr. Spearing

I shall explain why I was not going to. If, for the time being, we accept what the Minister has said, we shall always be able to say that the Treasury favours obfuscation and denial of information to the House and the people of this country. The Treasury is doing this in a matter of taxation under a formula that is to be adopted for the next five years. With that wrapped around the Treasury's neck from this evening onward, it might have second thoughts in another place, or later in the Bill's progress. I believe that would be for the best. The Government could never get out of this—but I leave the decision to the will of the Committee. The Government have every reason to accept the amendments, especially after the Prime Minister's speech at Bruges. The spirit in which they are moved is compatible with some of her remarks. I hope that, even at this late stage, the Paymaster General will change his mind.

Question put, That the amendment be made:—

The Committee divided: Ayes 106, Noes 284.

Division No. 450] [6.27pm
Aitken, Jonathan Bray, Dr Jeremy
Armstrong, Hilary Brown, Nicholas (Newcastle E)
Ashton, Joe Buckley, George J.
Banks, Tony (Newham NW) Budgen, Nicholas
Barnes, Harry (Derbyshire NE) Caborn, Richard
Battle, John Campbell-Savours, D. N.
Beckett, Margaret Clark, Dr David (S Shields)
Bell, Stuart Clay, Bob
Benn, Rt Hon Tony Clelland, David
Bennett, A. F. (D'nt'n & R'dish) Coleman, Donald
Bermingham, Gerald Cook, Frank (Stockton N)
Body, Sir Richard Corbett, Robin
Boyes, Roland Cousins, Jim
Crowther, Stan McKay, Allen (Barnsley West)
Cummings, John McKelvey, William
Davies, Ron (Caerphilly) McLeish, Henry
Dixon, Don Marlow, Tony
Dobson, Frank Meacher, Michael
Doran, Frank Meale, Alan
Dover, Den Michael, Alun
Dunwoody, Hon Mrs Gwyneth Michie, Bill (Sheffield Heeley)
Eadie, Alexander Morley, Elliott
Eastham, Ken Mowlam, Marjorie
Ewing, Harry (Falkirk E) Mullin, Chris
Fatchett, Derek O'Brien, William
Flynn, Paul Patchett, Terry
Foot, Rt Hon Michael Pike, Peter L.
Foster, Derek Powell, Ray (Ogmore)
Foulkes, George Prescott, John
Garrett, Ted (Wallsend) Primarolo, Dawn
George, Bruce Redmond, Martin
Golding, Mrs Llin Reid, Dr John
Gordon, Mildred Rogers, Allan
Gorman, Mrs Teresa Rooker, Jeff
Grant, Bernie (Tottenham) Ross, Ernie (Dundee W)
Grocott, Bruce Sedgemore, Brian
Hardy, Peter Shepherd, Richard (Aldridge)
Haynes, Frank Short, Clare
Heffer, Eric S. Smith, C. (Isl'ton & F'bury)
Henderson, Doug Soley, Clive
Hinchliffe, David Spearing, Nigel
Hogg, N. (C'nauld & Kilsyth) Steinberg, Gerry
Holland, Stuart Strang, Gavin
Home Robertson, John Taylor, Teddy (S'end E)
Hoyle, Doug Thompson, Jack (Wansbeck)
Hughes, John (Coventry NE) Townend, John (Bridlington)
Hughes, Roy (Newport E) Turner, Dennis
Illsley, Eric Vaz, Keith
Ingram, Adam Wall, Pat
Kaufman, Rt Hon Gerald Williams, Alan W. (Carm'then)
Lamond, James Wilson, Brian
Leighton, Ron
Lloyd, Tony (Stretford) Tellers for the Ayes:
McAllion, John Mr. Bob Cryer and
McAvoy, Thomas Mr. Dennis Skinner.
Alexander, Richard Brooke, Rt Hon Peter
Alison, Rt Hon Michael Brown, Michael (Brigg & CI't's)
Allason, Rupert Browne, John (Winchester)
Amess, David Bruce, Ian (Dorset South)
Amos, Alan Buck, Sir Antony
Arbuthnot, James Burns, Simon
Arnold, Jacques (Gravesham) Burt, Alistair
Ashby, David Butcher, John
Aspinwall, Jack Butler, Chris
Atkinson, David Butterfill, John
Baker, Rt Hon K. (Mole Valley) Campbell, Menzies (Fife NE)
Baker, Nicholas (Dorset N) Carlisle, Kenneth (Lincoln)
Baldry, Tony Carrington, Matthew
Banks, Robert (Harrogate) Carttiss, Michael
Barnes, Mrs Rosie (Greenwich) Cartwright, John
Batiste, Spencer Cash, William
Bellingham, Henry Channon, Rt Hon Paul
Bendall, Vivian Chapman, Sydney
Bennett, Nicholas (Pembroke) Chope, Christopher
Benyon, W. Clark, Dr Michael (Rochford)
Bevan, David Gilroy Clarke, Rt Hon K. (Rushcliffe)
Biffen, Rt Hon John Colvin, Michael
Blackburn, Dr John G. Conway, Derek
Bonsor, Sir Nicholas Coombs, Anthony (Wyre F'rest)
Boscawen, Hon Robert Coombs, Simon (Swindon)
Boswell, Tim Cope, Rt Hon John
Bottomley, Mrs Virginia Cormack, Patrick
Bowden, A (Brighton K'pto'n) Couchman, James
Bowden, Gerald (Dulwich) Cran, James
Bowis, John Currie, Mrs Edwina
Boyson, Rt Hon Dr Sir Rhodes Curry, David
Braine, Rt Hon Sir Bernard Davies, Q. (Stamf'd & Spald'g)
Brandon-Bravo, Martin Day, Stephen
Brazier, Julian Devlin, Tim
Bright, Graham Dickens, Geoffrey
Brittan, Rt Hon Leon Dorrell, Stephen
Douglas-Hamilton, Lord James Kirkhope, Timothy
Dunn, Bob Knapman, Roger
Durant, Tony Knight, Greg (Derby North)
Dykes, Hugh Knight, Dame Jill (Edgbaston)
Emery, Sir Peter Knowles, Michael
Evans, David (Welwyn Hatf'd) Knox, David
Evennett, David Lamont, Rt Hon Norman
Ewing, Mrs Margaret (Moray) Lang, Ian
Fallon, Michael Latham, Michael
Fenner, Dame Peggy Lee, John (Pendle)
Field, Barry (Isle of Wight) Leigh, Edward (Gainsbor'gh)
Finsberg, Sir Geoffrey Lennox-Boyd, Hon Mark
Fishburn, John Dudley Lightbown, David
Fookes, Miss Janet Lloyd, Sir Ian (Havant)
Forman, Nigel Lloyd, Peter (Fareham)
Forsyth, Michael (Stirling) Lord, Michael
Forth, Eric Luce, Rt Hon Richard
Fowler, Rt Hon Norman Lyell, Sir Nicholas
Fox, Sir Marcus Macfarlane, Sir Neil
Freeman, Roger MacGregor, Rt Hon John
French, Douglas MacKay, Andrew (E Berkshire)
Fry, Peter Maclean, David
Gale, Roger McLoughlin, Patrick
Gardiner, George McNair-Wilson, Sir Michael
Gilmour, Rt Hon Sir Ian McNair-Wilson, P. (New Forest)
Glyn, Dr Alan Major, Rt Hon John
Goodhart, Sir Philip Malins, Humfrey
Goodlad, Alastair Mans, Keith
Goodson-Wickes, Dr Charles Maples, John
Gorst, John Marland, Paul
Gow, Ian Marshall, Michael (Arundel)
Gower, Sir Raymond Martin, David (Portsmouth S)
Grant, Sir Anthony (CambsSW) Mates, Michael
Greenway, Harry (Ealing N) Maxwell-Hyslop, Robin
Greenway, John (Ryedale) Mayhew, Rt Hon Sir Patrick
Gregory, Conal Mellor, David
Griffiths, Peter (Portsmouth N) Miller, Sir Hal
Grist, Ian Mills, Iain
Ground, Patrick Mitchell, Andrew (Gedling)
Gummer, Rt Hon John Selwyn Mitchell, David (Hants NW)
Hamilton, Hon Archie (Epsom) Monro, Sir Hector
Hamilton, Neil (Tatton) Moore, Rt Hon John
Hanley, Jeremy Morris, M (N'hampton S)
Hannam, John Morrison, Rt Hon P (Chester)
Hargreaves, A. (B'ham H'll Gr') Moss, Malcolm
Hargreaves, Ken (Hyndburn) Mudd, David
Harris, David Neale, Gerrard
Haselhurst, Alan Nelson, Anthony
Hawkins, Christopher Nicholls, Patrick
Hayhoe, Rt Hon Sir Barney Nicholson, David (Taunton)
Hayward, Robert Nicholson, Emma (Devon West)
Heathcoat-Amory, David Onslow, Rt Hon Cranley
Heddle, John Oppenheim, Phillip
Heseltine, Rt Hon Michael Paice, James
Higgins, Rt Hon Terence L. Parkinson, Rt Hon Cecil
Hill, James Patnick, Irvine
Hogg, Hon Douglas (Gr'th'm) Patten, Chris (Bath)
Holt, Richard Pattie, Rt Hon Sir Geoffrey
Hordern, Sir Peter Pawsey, James
Howarth, Alan (Strat'd-on-A) Peacock, Mrs Elizabeth
Howarth, G. (Cannock & B'wd) Portillo, Michael
Howell, Ralph (North Norfolk) Powell, William (Corby)
Hughes, Robert G. (Harrow W) Price, Sir David
Hunt, David (Wirral W) Raffan, Keith
Hunt, John (Ravensbourne) Raison, Rt Hon Timothy
Hunter, Andrew Rathbone, Tim
Hurd, Rt Hon Douglas Redwood, John
Irvine, Michael Renton, Tim
Irving, Charles Rhodes James, Robert
Jackson, Robert Riddick, Graham
Janman, Tim Ridsdale, Sir Julian
Jessel, Toby Roberts, Wyn (Conwy)
Johnson Smith, Sir Geoffrey Roe, Mrs Marion
Johnston, Sir Russell Rossi, Sir Hugh
Jones, Gwilym (Cardiff N) Rost, Peter
Jones, Robert B (Herts W) Rowe, Andrew
Kellett-Bowman, Dame Elaine Rumbold, Mrs Angela
Kennedy, Charles Sackville, Hon Tom
Key, Robert Sainsbury, Hon Tim
King, Roger (B'ham N'thfield) Sayeed, Jonathan
Scott, Nicholas Townsend, Cyril D. (B'heath)
Shaw, David (Dover) Tracey, Richard
Shaw, Sir Giles (Pudsey) Tredinnick, David
Shaw, Sir Michael (Scarb') Twinn, Dr Ian
Shelton, William (Streatham) Vaughan, Sir Gerard
Shepherd, Colin (Hereford) Waddington, Rt Hon David
Shersby, Michael Wakeham, Rt Hon John
Skeet, Sir Trevor Walden, George
Smith, Sir Dudley (Warwick) Wallace, James
Smith, Tim (Beaconsfield) Waller, Gary
Soames, Hon Nicholas Walters, Sir Dennis
Spicer, Michael (S Worcs) Ward, John
Squire, Robin Wardle, Charles (Bexhill)
Stanbrook, Ivor Warren, Kenneth
Steel, Rt Hon David Wheeler, John
Steen, Anthony Whitney, Ray
Stern, Michael Widdecombe, Ann
Stevens, Lewis Wilkinson, John
Stewart, Andy (Sherwood) Wilshire, David
Stradling Thomas, Sir John Wolfson, Mark
Summerson, Hugo Wood, Timothy
Tapsell, Sir Peter Yeo, Tim
Taylor, John M (Solihull) Young, Sir George (Acton)
Taylor, Matthew (Truro)
Tebbit, Rt Hon Norman Tellers for the Noes:
Thompson, Patrick (Norwich N) Mr. Tristan Garel-Jones and
Thorne, Neil Mr. Michael Neubert.
Thurnham, Peter

Question accordingly negatived.


Motion made and Question proposed, That the clause stand part of the Bill.

The Second Deputy Chairman

With this question it will be convenient to discuss also new clause 3—Annual Report to Parliament'Each year Her Majesty's Government shall make an annual report to Parliament concerning the operation of the decision in section 1(e) above in respect of the preceding financial year, which shall include:

  1. (a) A general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein in respect of each principal category of expenditure;
  2. (b) An account of rebate mechanisms applicable to any member state;
  3. (c) The operation of each article of the decision;
  4. (d) Action taken by Her Majesty's Government in respect of financial discipline;
  5. (e) The operation of that part of the decision referred to as the "EAGGF monetary reserve";
  6. (f) The text of any regulation, directive or financial regulation relating to the operation of the decision to which Her Majesty's Government have given their assent.'.

Mr. Cryer

On a point of order, Miss Boothroyd. I was one of the Tellers and I thought that I caught sight of Tory Whips taking names outside the Aye Lobby. I did not see the documents that they held, but I presume that they were taking the names of Conservative Members who chose to exercise their rights, on behalf of the citizen, to ask for more information to be provided. Can you confirm, Miss Boothroyd, that under Standing Orders hon. Members cannot be intimidated by any clique of Tory Whips into voting one way or another? I should be grateful if you would confirm that.

The Second Deputy Chairman

Of course I can confirm that. I doubt whether there is an hon. Member who allows himself or herself to be intimidated. We shall now continue with clause 1 stand part.

Mr. Marlow

On a point of order, Miss Boothroyd. If I could put the record straight—

The Second Deputy Chairman

Order. I have put the record straight. I call Mr. Holland.

Mr. Holland

It shows how badly we need a debate on the substantive issues raised in the Bill that we have spent so long on the importance—

Mr. Spearing

On a point of order, Miss Boothroyd. Do I take it that the clause stand part has been moved formally and that we have had no speech from the Paymaster General in moving it?

The Second Deputy Chairman

The procedure is that clause 1 stand part is proposed from the Chair. If the Paymaster General were to rise, I would obviously, out of courtesy, call him first. It seems that the Opposition wish to make the opening remarks, and that is perfectly in order.

Mr. Holland

Whether or not we should add schedules to the Bill, we are debating substantive issues, to which we need to pay considerable attention. It would have helped us a great deal if the schedules had been published as part of the Bill and were to be part of the Act.

Essentially, clause 1 deals with the decision of the Council of the European Communities on own resources, made in Brussels on 7 May 1985 and with the undertaking made in Brussels on 23 and 24 April 1985 by representatives of the Governments of the member states to make payments to the Community. It also deals with the decision of the Council of the European Communities on own resources made in Luxembourg on 24 June 1988 and with the undertaking by representatives of the Governments of the member states, which was confirmed in Luxembourg on 24 June 1988. That means that there has been a shift in the basis of the financing of the Community and that was made explicit in the Luxembourg agreement of 24 June.

Article 2 of our proposed schedule 1 states:

Revenue from the following shall constitute own resources entered in the budget of the Communities:

  1. (a) levies, premiums, additional or compensatory amounts …
  2. (b) Common Customs, Tariff duties …
  3. (c) … the VAT assessment base …
  4. (d) the application of a rate … to the sum of all the Member States' GNP established in accordance with Community rules to be laid down in a Directive".
Apparently, a proposal for a directive is to be made.

6.45 pm

Article 3 spells out the significance of what we have to consider. Paragraph 1 states: The total amount of own resources assigned to the Communities may not exceed 1.20% of the total GNP … for payment appropriations. The total amount of own resources assigned to the Communities may not … exceed for the period 1988–92 a range of from 1.15 per cent. in 1988 to 1.20 per cent. in 1992. Therefore, we are debating not only the Community's current budget but its budget up until 1992. I think that you will agree, Miss Boothroyd, that it is therefore appropriate that the House should address the issue of what the Community will be doing with that budget in the period up to 1992 and the way in which the resources will be spent.

Mr. Spearing

As the House is in Committee, Miss Boothroyd, may I make the point for the record that my hon. Friend has rightly referred to a directive which he believes is to come, relating to the definitions of GNP on which the rate to which he has just referred will be applied? It is a significant calculation, because a small difference in the formula could make a difference, over a period, of £1,000 million or more. My recollection was that that directive has already been published. I think that it is 5647/88, which has been referred here for debate by the Select Committee on European Legislation. I hope that it will not be considered as being taken finally today, although it may be considered as having been debated, because I think that it was referred to in an earlier debate. It is not a question of that directive coming; it has come and is available in text form.

Mr. Holland

I am grateful to my hon. Friend. I have the text with me although I might not have had. I used the word "proposal" because under the heading "Subject Matter" in the explanatory memorandum, I read the words: This is a Commission proposal for a directive on the harmonisation of definitions of GNP. I was going to come to that a little later, but as my hon. Friend has given me this chance, I should like to say that it is indeed an important issue in as much as VAT contributions can be determined ex post facto in relation to the amount of VAT that has actually been paid in a particular country because one can take x per cent. of that.

The definition of GNP is much more complex. I appreciate that definitions of national product or national income are items which pass readily into the library of the great unread, except perhaps for those students of economics who, for a week or two, are supposed to address such issues and grasp their most basic definitions. There are differences in the way in which GNP is assessed and calculated in different Community countries. As I understand it, a committee is to be established. The document that we are considering confirms that there is a proposal under item 4 of the document to provide for an advisory committee, consisting of technical experts from the Commission and member states to assess the quality and comparability of the figures put forward by the different member states.

We also need to make sure that that committee, which presumably will be chaired by a member of the Commission and will, I believe, report to the President of the Commission, will be looking not simply at conventional definitions of GNP but at the means by which we can get greater transparency of the way in which the funds of the Community are being spent and on the way in which the system of aid, whether under structural funds or regional funds, is being operated. It might also look at the effectiveness with which resources within the Community are being used. There is relatively little transparency on those matters in the Community and it is extremely important that the House should be able to gain an effective evaluation of what is happening.

I believe that it is in order to refer also to new clause 3, in the name of my right hon. Friend the Leader of the Opposition and other of my right hon. and hon. Friends. It states: Each year Her Majesty's Government shall make an annual report to Parliament concerning the operation of the decision in section 1(e) above". That refers to the decisions of May 1985 and June 1988 on the manner in which the contributions from member states to the Community budget are assessed.

We regard it as important that there should be, as the new clause states, (a) A general presentation in text and tables … in respect of each principal category of expenditure; (b) An account of rebate mechanisms applicable to any member state". That is directly relevant to the United Kingdom case. The new clause continues: (c) The operation of each article of the decision". That involves the decision-making procedure within the Community as well as of the Community institutions, in other words the Council, the Parliament, the Commission and other bodies, and the relations between them.

Paragraph (d) states: Action taken by Her Majesty's Government in respect of financial discipline". That is a matter on which many contributions have been made by hon. Members on both sides of the House, in relation to stabilisers, destabilisers and guarantees that expenditure under the guidance and guarantee fund will be reduced.

The new clause continues: The operation of that part of the decision referred to as the "EAGGF monetary reserve"; (f) The text of any regulation, directive or financial regulation relating to the operation of the decision to which Her Majesty's Government have given their assent. I strongly recommend the new clause to the House. I trust that we shall gain a response from Conservative Members on the issue.

My hon. Friend the Member for Bolsover (Mr. Skinner), who is still present, and my hon. Friend the Member for Bradford, South (Mr. Cryer), who is not here now, but who has been here for the main part of the debate, have rightly drawn attention to the manner in which Community legislation on the expenditure of public moneys is opaque rather than transparent and does not enable people to see what is being done. Without impugning the integrity of every hon. Member of the House, and whether or not each of us is equally in command of every item and iota of legislation coming from the Community, I believe that it should be incumbent on the House to ensure that the issues concerned and the supporting documentation are presented regularly. In our view, an annual report to Parliament should be a major part of the parliamentary process. Whether it was debated on one day, two days or, several days or spread over a period, it should enable hon. Members to assess, and therefore to approve or disapprove, expenditure undertaken under the new provisions before us.

Several hon. Members are especially concerned about the implications of the provisions in clause 1, in relation to the rights and privileges of the House. The argument is made that we are moving towards a federal system in which the privileges and prerogatives of the House are being undermined. That issue should be addressed by the House. None the less, it is not as straightforward as it may appear. For example, most of the provisions, which include qualified majority voting under the Single European Act, refer to the elimination of certain non-tariff barriers on a series of traded products rather than to wider issues—for example, of social or regional expenditure in the Community.

Although the words in the Single European Act, the Acte unique or the unique Act, have been applied to the internal market that will be achieved, in a real sense—perhaps my hon. Friend the Member for Bolsover will agree—1992 is about a free trade area. It is less the start of a new Europe than an effort to restart the old Europe, because the internal free trade area should have been established by the late 1960s. The failure of the Community to move sufficiently fast to establish that free trade area and to grasp and eliminate non-tariff barriers is one of the reasons why we have had to restart the process of trying to achieve a genuinely free trade area within the Community itself.

The measure of a customs union, which is also part of the classic objective of states that are seeking to integrate, has long since been achieved. Through the customs union and quota system, the revenues that I have identified are due to the Commission from levies, especially agricultural levies. Many of us would wish that form of revenue for the Commission to be reduced and finally abolished inasmuch as it is quite iniquitous that the European Community should defend, for example, the production of beet sugar as opposed to the importation of sugar from developing countries. That is a source of Commission revenue that hon. Members on both sides of the House would wish to be reduced or abolished.

Mr. Cash

Does the hon. Gentleman agree that it was in the construction of the federal constitution of Germany that the best example of a movement from customs union to ultimate federation was achieved, but it does not necessarily follow by any means that it is a model that should be used for a progression towards a similar federal system in the European Community?

Mr. Holland

I agree very much with the hon. Gentleman. The point is well made and perhaps can be illustrated by the fact that Friedrich List, the ideologue of that customs union, argued the case for freedom to trade in a Germany when there were real barriers to trade. For example, at that time there were chains across the Rhine. It was a near-feudal mosaic rather than an integrated economic area. Anyone in his right mind would argue that chains across a main waterway constitute a barrier to shipping—

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

And to trade.

Mr. Holland

—and therefore to trade. My hon. Friend is assisting me.

It is not as clear that we need to proceed to harmonisation of other things inside the European Community to achieve equal conditions for trade. Nor is it as clear—in my view, it is wholly unclear—that we need to proceed to monetary union. One of the striking features of Germany in the 19th century—it had several, some of which were positive and some negative—was that the Zollverein— in other words, the German common market of those formerly independent states—was created without the integration of its currency. It was only after 1871 that the Bismarckian administration introduced a common currency for the countries concerned. Nobody would argue that the Zollverein had not been successful before. Some people might claim that the real industrialisation of the German economy happened in the 1880s and 1890s rather than before 1871. Arguably that followed from Bismarck making a deal with the Liberals and ditching his Junker friends. That allowed goods in from abroad and lowered costs at a time when conditions for capital accumulation were ripe.

7 pm

I do not want to detain the House further with this Zollverein analogy, but it illustrates the need for us to be specific about what the gains or non-gains of a specific kind of European Community are likely to be. I accept that we are talking about Community expenditure up to 1992, and in that context it is relevant to refer to the so-called Cecchini report, which evaluates the costs and advantages or disadvantages of Europe up to 1992. The report, which may not be everybody's bedside reading, has a rather qualified preface by Mr. Jacques Delors which almost suggests the Mr. Delors is not quite so enthusiastic as Lord Cockfield about the internal market being achieved by 1992. He regrets that the social and regional provisions have not been entered in the Single European Act with as much force as the provisions for the liberalisation of trade.

In the Cecchini report we find among other things that there are specific arguments about the savings there will be in the cost of administering the frontier collection of revenues inside the Community,. It is not at all clear to me, but I stand subject to information on the matter, that anybody has evaluated what the reduced cost of provision would be in terms of the Community budget. But as internal customs duties are reduced in the Community, the other provisions, which include VAT and GNP assessments, become yet more important.

The Committee should try to be clear about whether the provisions of the Single European Act and the 1992 proposal mean a move towards federalism. Clearly, it depends on what we mean in the provisions, but much of the decision-making will still be intergovernmental. At present, the qualified majority voting procedure will apply only to certain categories of traded goods and non-tariff barriers.

Mr. Spearing

We should not move too far from the financial provisions before the Committee, but on the definition of the internal market, does my hon. Friend agree that, potentially, the legislation goes much further than that? As he suggests, it is not just a question of removing barriers. As I read the Single European Act group of amendments to the treaty of Rome, centralised legislation on any matter, where there would be different legislation either side of a boundary or across a sea in the Common Market, which affects industry or commerce in almost any respect is permitted. Surely that is a much greater power than many people have yet realised.

Mr. Holland

I appreciate the points that my hon. Friend makes that any tax or legislative provision can be considered indirectly to have an effect on internal markets. It may well be that the European Court will interpret matters in this way, but it is not necessary for us to have this degree of harmonisation in the Community in order to achieve a large internal market. The whole rationale of Lord Cockfield and his directorate general in the Commission has been totally misconceived about this. The European Community is dominated by about 200 companies which now account for about two fifths of its GDP. Those multinational companies are buying permanent satellite time to monitor the trading of tens of thousands of products worldwide and are adjusting the pricing of those products to suit their own internal transfer pricing requirements. They have to live every minute and every hour of the day with foreign exchange fluctuations by leading and lagging of payments, through hedging and through speculation. Some of those companies have their own foreign exchange divisions.

Those companies can handle that on a permanent basis because they need to take decisions on instantaneous change. Therefore, the idea that a VAT rate of 15 per cent. in one country, 10 per cent. in another or zero in a third country cannot be handled by these companies seems quite meaningless. It seems that it is perfectly all right to harmonise the statutory provisions for rear view mirrors or prophylactics, but one will not give a better interpretation of the past and the other will not generate a future for a new Europe.

We need joint action from Europe in order to address the problems currently facing it. We need not only a budget to he spent by the Commission but a budget that is jointly spent by member Governments. Those joint action budgets may be for recovery programmes to take the strain in the world economy that could be caused by a reduction in the budget deficit in the United States. They could, for example, allow for joint action by Governments on environmental policy" despite the fact that there may well not be unanimity between member states about whether there should be a Community environmental policy. When nine, 10 or 11 member countries want to proceed on joint provisions for the implementation of such a policy, it should be open to any Government, sensible about a pragmatic approach to international economic co-operation, to proceed with joint programmes of this kind. Joint national budgets of that kind would of course be debated in the House because they would be presented by the Secretary of State for the Environment.

One thing that we do not have in terms of sufficient scrutiny goes beyond the terms of reference of the new clause but not beyond the implications of clause 1. It is the extent to which we can get a relationship between what the European Assembly is considering and what national parliaments are considering. At present, the two seem utterly divorced. Committees of the House monitor Community documents. As my hon. Friend the Member for Newham, South (Mr. Spearing) said, one could carry piles of documents several feet thick on almost any issue. Upended, the documents behind the Cecchini report would fill the space between these two Dispatch Boxes. I do not know who reads these reports other than their authors, the typesetters and the proof readers.

It is important that we know whether there will be a net gain or a net loss from the creation of a Community Europe and in what sense. The bottom line of the assumptions in the Cecchini report is that greater revenues will be generated for nation states by the stimulus effect of competition in the internal market. I am longer in the tooth than I should like to be, but I can say with at least the partial experience of advancing middle age that I was around when those arguments about the stimulus effect of joining the European Community were made in the 1960s and 1970s.

I can remember very well the answer given to one researcher into these matters, who went to a big multinational company. The researcher, Christopher Layton, now Lord Layton, asked Pilkington Bros what the consequences of joining the Common Market would be for it. The person he asked smiled and replied, "Look, we are in float glass, and in float glass we are the common market."

There are fantasy views of the stimulus effects of the creation of this internal free trade area. Companies have been multinational for 20 or 25 years, have directly invested in other countries and are operating in other countries. Europe is addressing the wrong issues by being so much concerned about harmonisation. Rather than seeking to integrate, Europe should seek to co-operate, and it should set an agenda for feasible co-operation on a range of policies, more on an intergovernmental basis, perhaps with a different kind of majority voting. It could be, for example, an enabling majority vote, whereby if a majority of countries in the Community want to pursue a policy, and two or three do not, those wishing to pursue the policy should get the support of the Community institutions and should be able to have debates in national parliaments.

Mr. Marlow

Does the hon. Gentleman agree that the words summing up his policy as he has just put it would be "willing and active co-operation between nation states"?

Mr. Holland

I find myself in the slightly uncomfortable position of being in agreement with the hon. Member. But, as he formulates it, that is my idea—intergovernmental co-operation. That does not have to be ad hoc and does not have to be uninstitutionalised, because we need institutions if we are to promote an argument concerning new forms of co-operation which at present are not on the Community agenda because they are neither in the Rome treaty, nor in the so-called Single European Act, nor in the provisions which the Paymaster General this year has chosen not to publish and put plainly before us.

Sir Russell Johnston

Does the hon. Gentleman agree that from 1957 right on through the 1960s, the initial foundation of the European Community created a dynamic economic effect? Our problem is that we came in too late.

Mr. Holland

I am glad that the hon. Gentleman asked me that question, although I do not agree with him. There was a dynamic effect for the Federal Republic of Germany, and good for it. The effect was hardly so dynamic for Italy and France, which by 1963 found themselves in major balance of payments crises because of the expectations engendered by higher trade and the increased imports to those countries from West Germany, and the lack of any successful return. The result was deflationary packages in both countries in 1963 and again in the late 1960s. Furthermore, neither of those countries can successfully compete with West Germany.

That brings me to another issue, which some hon. Members raised in the debate on the previous amendment. How can any region of the European economy successfully compete against the most successful region in that economy? When, if there were a single European currency, nation states became regions within the integrated area, how could individual parts of the Community compete effectively with West Germany? It may be said that these are specific questions that should be addressed elsewhere at some other time, but they are important in the discussions that we shall have before 1992, to which the budgetary provisions before us refer.

We have—I realise that this is not the turn-on of the year—an invitation to join the GDP reassessment committee of the Commission. Some excellent economists, even some former professional colleagues of mine, would no doubt like to join it, and I think that it is important and worth while. However, a longer list of applicants will be queuing to join the advisory committee to the President of the Commission of the European Community on monetary co-operation or monetary integration, because up until 1992, that will be the prime item on the agenda.

I am concerned about whether the House will be able to address these issues effectively over the period up until 1992. If we approve the Bill, we shall, under article 3 of the decision of the Council on 24 June this year, in Luxembourg, be approving the total amount of own resources assigned to the Community for the period from 1988 to 1992. The percentages of GNP are specific. In 1988, it will not be more than 1.15, in 1989 1.17, in 1990 1.18, in 1991 1.19 and in 1992 1.2. What will be left for the House to determine or decide if we decide on Third Reading that that is what the Community budget will be? If we are publicising in advance that the Community budget will be of that order, what accountability to the House of Commons will there be, and how will it scrutinise the use of those funds, without the proposals that we are making in our new clause?

7.15 pm
Mr. Spearing

My hon. Friend has posed a question—I do not know whether it is meant to be rhetorical or actual. My understanding is that the figure that he quotes, and hence the importance of the formula and of the committee to which he referred, is a maximum envelope, and that it will be used as a maximum precept when the so-called 1.4 per cent. of VAT will not supply the amount. This supplies the deficit. Surely, the control will be in an annual regulation passed by the Council of Ministers, which may determine a precept less than that amount. An amendment has been tabled to new clause 4 which I hope that he can support. I hope that the Treasury can do so also, because it is, I should have thought, in line with its philosophy. At that point, the House controls what Ministers do in Brussels, which determines whether that limit is kept to, or rather the degree to which it is determined inside the topmost limit, to which my hon. Friend has referred. I apologise for the apparent complexity of this, but it illustrates the extreme complexity of financial matters in relation to the EEC budget.

Mr. Holland

I am grateful to my hon. Friend for making those useful points. These are the maximum levels of expenditure beyond which one cannot go. But these are phrases that we have heard before. We have seen them overrun, as we did with the Fontainebleau agreement, which ended up being hardly worth the paper on which it was written. We need to know, if a Council regulation is to be made available to us, in what way it will be put before the House for the assessment and the approval of the House. Otherwise, we shall lose transparency and accountability.

I am not one of those who feel that this country has an unadulterated sovereignty which has been untarnished by any international agreement and would be sullied only by agreement with other member countries in the European Community. There is a strong case for effective joint action at the European level on a range of problems which at the moment the Community is hardly addressing. It has been stuck in the mud of the common agricultural policy and has not been able to address major environmental issues, and it should do so. We should seek a net transfer of funds between regions and sectors of the Community, because the competitive process itself equalises opportunities only in form, and not in reality, whether that is between rich and poor regions or between big and small companies.

I should be glad of a reply from the Postmaster General on this, so that the issue of monetary co-operation—I beg the right hon. Gentleman's pardon. I retract that. I am aware that he does far more than post to hon. Members briefs from the Treasury Bench. He is, of course, the Paymaster General. I should be grateful if the Paymaster General will tell us how the Government expect that the House will be able to address the issues raised by European monetary co-operation.

There may be less terror in this than at first appears. For instance, the proposals for monetary co-operation are not part of the Single European Act, but a committee established by the President of the Commission will report on those matters which directly concern the Treasury in a range of ways. There may be less terror in the sense that, just as the achievement of a common internal market will not be the springboard to a federal Europe, nor need monetary co-operation be some kind of sabre-toothed tiger which is about to shred the nation state. We do not need to react in emotive terms to the proposals that have been made.

The observations made on this by Jacques Delors, as President of the Commission, have been very useful. I wish to mention a couple of them because they refer to a European monetary fund which could involve expenditure either from the allocation before us and the Community fund, or other alternative forms of allocation. When it was put to Mr. Delors in an interview in Le Monde on 20 July this year—I summarise rather than give a detailed translation—"Well, Mr. Delors, as President of the Commission, you are presumably in favour of a European currency and a European central bank", he replied, "What do you mean by a European currency? Do you mean a European monetary fund, a European reserve currency, a parallel currency to the national currencies or, as some people think, but which is certainly not for now, the abolition of national currencies and the substitution of a Community currency? Do you mean, in effect, a pragmatic move such as a build-up of the ecu as a reserve currency and for use in other international relations?" Mr. Delors also asked what would be the relation between that and economic union and what would be the institutional implications of advancing towards closer European monetary co-operation up to 1992.

Opposition Members would like to know from the Paymaster General precisely how the Government will approach those matters and how the House will be able to address them. Will we find, as in so many other matters before the House, that an intergovernmental decision is taken at a European Council meeting which, months later, is brought to this Chamber for approval? We appreciate that Governments have to take decisions internationally, but that should be done on guidelines that have been debated in the House. The House does not wish to be taken by surprise by decisions which have been snatched at the 11 th hour and the 59th minute or by stopping the clock, whether in Luxembourg, Strasbourg or Brussels, on such important matters as monetary co-operation or monetary integration.

In that respect, we certainly trust that the Paymaster General will do better next time and that, instead of having apologies for unclear decisions which will not even be published and put before the House, we will have clarity, transparency and a chance for the House to express its view and voice.

Mr. Higgins

The atmosphere in these debates has varied considerably over the years. Some hon. Members are still fundamentally opposed to British membership of the EC and others are perhaps too uncritically in favour of it. Between those two extremes are those of us who take the view that our membership is, on balance, beneficial, but it is important that we should continue to scrutinise the way in which the Community develops.

One of the problems is that some power has undoubtedly been transferred from the House to the EC, in its various manifestations, so it is all the more important that we should continue to ensure that all the ways in which that power is in danger of being transferred perhaps too fast or to too great an extent are scrutinised as well as possible. That requires not only much hard work, but also some stamina, because otherwise there is some danger of a feeling of despair that we go on through a series of ritualistic debates without managing to convince the Government of the importance of their own scrutiny being as great as possible.

The Scrutiny Committee, chaired by the hon. Member for Newham, South (Mr. Spearing) and the Treasury and Civil Service Committee, of which I am Chairman, have spent a great deal of time, and continue to do so, on these matters, as do other Committees of the House, but there is now such a plethora of documentation from the EC that we must seriously consider whether the facilities that we have are adequate to deal with that. Much of it may be settled in the course of time and the flood of paperwork, directives and regulations will diminish, but, for the immediate future, we should be on our guard against the sheer weight of documentation and action, particularly leading up to 1992. Given the size of the Civil Service at the centre, it is seriously open to question whether there are the resources to ensure that many absurditites do not creep through simply because we do not have the time and resources to deal with them at the speed with which they are being put forward.

This evening, we come again to what is undoubtedly a tremendously important piece of legislation reminiscent of various occasions in the past when we have increased the Community's resources in exchange for various undertakings about effective budgetary discipline, more effective budgetary discipline and legally enforceable budgetary discipline. As we are in Committee, I wish to put some specific questions to my right hon. Friend the Paymaster General who, as always, is very assiduous and knowledgeable about these matters.

I wish to take up first a point which arose earlier with regard to the provision of overdraft agreements and overdraft facilities to the Community. A number of hon.

Members were worried because the Minister said that the overdraft arrangements would be effectively obligatory for the United Kingdom, provided they did not exceed the budget for that year, but he did not make it clear whether that was the situation. Many of us believe that the provisions in this piece of legislation, which extend the limits, would be necessary to justify the budgetary arrangements. If that is so, it is outside the legal framework to which he referred, so I hope that he will begin by clarifying that point.

It is in many ways unfortunate that new subparagraphs (e) and (f) do not appear as separate clauses because two very different principles are undoubtedly involved in them—the increase in own resources and the intergovernmental agreement. We debated the intergovernmental agreement at some length earlier, but I want to refer my right hon. Friend to one or two points.

I should stress that the agreement states that it will be an amount to balance the 1988 budget an amount which will not exceed a certain sum to which I shall refer in a moment. It has been suggested that the need for the agreement has passed because of changes in the financial situation but, none the less, the Government will now go along with it and the money will be spent on something else simply because the budget will be unbalanced again, although we have the sums available to balance it, if they are needed.

I am not sure whether I expressed that clearly. Let me try again. We originally had an amount which was to be provided by the member states to balance the 1988 budget. It is suggested that, since that negotiation, there have been further changes in the revenue and expenditure of the Community so that the full amount was not needed, but, none the less, it appears that we are still going to provide up to that full amount. Perhaps my right hon. Friend the Paymaster General will clarify the position.

7.30 pm

We are told that the amount in question will not exceed 7,113,737,522 ecu, and I should like to know how that remarkably unround sum was arrived at. I should have thought that a reasonably round sum would have been picked. What was the basis of the calculation? How was it changed by events that took place after 11 and 13 February? The situation cannot have remained the same, so it is rather extraordinary that the amount needed is still 7,113,737,522 ecu.

I was rather worried when my right hon. Friend the Paymaster General said earlier that that sum is the total due. As I understand it, it is not. That is the maximum sum that we may eventually be called upon to pay. Perhaps my right hon. Friend will explain what is now needed.

We know that basically the provisions in the Bill arise from profligate expenditure on agriculture. The United States has suffered a most appalling drought this summer and a great fall in the amount of grain harvested. Surely this is an ideal opportunity to dispose of the grain mountain and to recoup some of the huge sums that we have been spending on storage. This is a factor that should have affected the sum to which I have already referred Is that the position or it is not?

Much of the provision in the IGA is concerned with a special arrangement for agriculture. The EAGGF guarantee section is affected by the appreciation of the dollar, and I ask a question which I have asked before and to which I have never received an answer. Why should farming be the only industry that is protected against changes in the exchange rate? This protection is not offered to any other sector. Why should we be authorising the Government to go along with an EC proposal that does that? I do not understand why farming should be protected from exchange rate fluctuations when we do not find it necessary to provide that protection anywhere else.

Is the agreement legally binding? There have been many discussions on the issue and we all know that the Fontainebleau agreement, as the Select Committee on the Treasury and Civil Service observed at the time, will not work. I think that my right hon. Friend the Prime Minister has recognised now that the agreement was a mistake. That being so, is the present agreement legally enforceable? We are incorporating in the Bill the decisions of 7 and 20 May and 24 June, and the IGA, but are we incorporating anything that is legally binding?

In an earlier debate my right hon. Friend the Paymaster General said, in effect, "Don't worry. That is all incorporated in various EC regulations, directives and so on, which will be legally binding." But we know that a huge part of the EC budget is not covered. If the agreement is legally enforceable, by whom is it enforceable? We know from our debates on the Court of Auditors that many operations have been carried out within the EC which the court has said were illegal.

We have gone along with certain VAT adjustments, for example, because we have been bound by the relevant provisions. We have considered ourselves obliged to do so because the European Court has said that we must, but the Government have not pursued the legal sanctions that appear to be available from the reports of the Court of Auditors. If the arrangements are to some extent legally enforceable, by whom are they enforceable? Given the history of Court of Auditors? reports, can we rely on the Government to enforce them?

Mr. Spearing

As the right hon. Gentleman has said, the Select Committee on the Treasury and Civil Service drew attention to the flaw in the Fontainebleau agreement. The Scrutiny Committee, which I have the honour to chair, said that the provisions that we are considering are not treaty-binding. What is the stage that we have reached with the current proposals? It is true that the stabiliser mechanism is legally enforceable, perhaps by the Court of the European Communities, in accordance with the formula laid down therein.

Even if the provisions are enforced, will spending on agriculture be reduced to a level that is beneath the ceilings that are shown in the decision? That is the play on words, and the Government and the Community have not answered the question. Apart from legal enforceability, will expenditure be reduced? Will it be reduced to a sum smaller than that which appears in the documentation? The answer that I have so far is that we do not know.

Mr. Higgins

We are now told that expenditure on agriculture should be steady instead of being a falling proportion of gross national product. I take the hon. Gentleman's point.

It is understandable that Ministers are under great pressure when they engage in negotiations within the EEC. They are frequently heavily outnumbered and they often have to return to the charge time and time again. They eventually do a deal, and they convince themselves that it is the best one that is available, but that may not be so. It may be that they should have continued to say no for longer. In my view, that is the position with the Bill.

It is curious that the agreement has cleared the way for other discussions on 1992 and the other ways in which the Community is to develop. This has raised a number of difficult questions. We were told on Second Reading that the legally binding agreement would apply to obligatory expenditure. We were told also that it could not apply to non-obligatory expenditure, because that would infringe the rights of various Community institutions, including especially the European Parliament.

It is reasonable to ask whether the Bill implements the amendment of the treaties, and my understanding is that it does. It would seem that it is not honest to argue that we could not get a legally binding agreement on non-obligatory expenditure because that would require amendment of the treaties. We need to be clear why it is that we did not go for what we were originally told we would get, which was a legally binding agreement which covered all Community expenditure. We are told that that is no longer obtainable.

I hope that we shall hear satisfactory answers to these questions from my right hon. Friend the Paymaster General. We recognise the basic problems that he faces in all the negotiations and the assiduous way in which he has sought to get the best deal that he can. The scrutiny of these matters is ever more important and I hope that we can continue effectively to scrutinise in this place.

Ms. Mildred Gordon (Bow and Poplar)

The new fourth resource is to be based on shares in the gross national product, and the method of measuring GNP is likely to be on traditional lines that do not take into account the vast input of work outside the formal monetary economy that is to be found in every country. The traditional system of national income accounting measures GNP as the sum of income that is created by individuals in a particular country. It is largely a measure of activities that result in monetary transactions. That does not take account of unpaid work that is undertaken by women. Relevant examples are home-makers, mothers bearing and bringing up children, women caring for sick and/or aged people and farmers' wives in rural areas. The examples are manifold. All this work would be included in aggregated national accounts if it were performed by paid workers. Thus the income received by paid nannies, au pairs, child minders and agricultural workers would be included as part of the national income.

The United Nations has done a great deal of work to show how inappropriate are such distinctions in measuring GNP. In 1980 at a conference in Nairobi at the end of the United Nations decade for women, a United Nations document "Forward-Looking Strategies for the Advancement of Women to the Year 2000" was passed by representatives of the assembled Governments and was ratified later that year by the United Nations General Council in New York.

Paragraph 120 of the UN document reads: The remunerated and, in particular, the unremunerated contributions of women to all aspects and sectors of development should be recognised, and appropriate efforts should be made to measure and reflect these contributions in national accounts and economic statistics and in the gross national product. Concrete steps should be taken to quantify the unremunerated contribution of women to agriculture, food production, reproduction and household activities. In Germany there are many small agricultural holdings whose labour force is confined to unpaid family workers, most of whom are women. Considerable efforts are being made there to quantify their economic contributions. In rural Britain that unremunerated contribution includes tending the household plot, and caring for domestic animals. Unpaid women are small-scale growers, traders, vendors and sellers of handicrafts. They also keep the books. All that time-consuming, back-breaking work is left out of the GNP and thus cannot be convered by economic planning, programming and social welfare services. Women are the forgotten producers and providers of services.

When making comparisons for the purposes of GNP, the unpaid work of women in urban areas has an equally important bearing. Attempts are being made in Holland to assess the effects of including housework and other unwaged activities in the various economic aggregates. That is possible because a comprehensive family budget and time-use survey is carried out in Holland. The United Kingdom has a family expenditure survey, which considers income and expenditure, but does not consider time usage, and no attempt is made to quantify unpaid activities. Women's unpaid work is not counted, but it is certainly counted upon. The Government's initiatives to de-institutionalise health and welfare services and subsequent cuts in paid employment have increased the unwaged work load enormously.

Jacques Delors will chair a committee which will attempt to work out a uniform formula for calculating GNP. The committee should take steps to quantify and count the work of women in GNP, and that can be achieved on a European basis within the Community. It is also important that the United Kingdom Government initiate research into evaluating women's work. Only when the unpaid work of women is included will we see what is really happening in the economy in the United Kingdom and in Europe and make the proper assessment of GNP and the changes necessary to pursue justice for women.

Mr. Marlow

In deference to a long-dead relative of mine who was Archbishop of Canterbury once, and for no other reason, I would like to start with a text if that is all right. The schedule which the hon. Member for Newham, South (Mr. Spearing) wishes to add to the Bill entitled: Decision of the Council of the European Communities on the System of the Communities' Own Resources which was agreed at Luxembourg on 24 June this year states: Whereas the resources available within the limit of 1.4 per cent. are no longer sufficient to cover the estimates of Community expenditure; There are all sorts of whereases and whereats before the thing starts. The decision is based on the evidence that the 1.4 per cent. limit is no longer enough. That is not the case. That is history. That is water under the bridge. As I am sure all hon. Members will be pleased to hear, we have had a European success. Either through luck or judgment the Community is now awash with funds. It is solvent. It has got the money. It is not short of cash any more.

The Community is not now about the last penny or about cash. If I can share common ground with the hon. Member for Vauxhall (Mr. Holland)—I am sorry he is not in the Chamber at the moment—the Community is now about willing and active co-operation between independent sovereign states. It is not about cash any more. It is not about filthy lucre. The clause that we are debating at the moment is purely about money.

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The pre-Bruges pre-solvency clause seeks to increase the resources available to the Community by £1 for every £4 that is available at the moment. It is not necessary. They do not need it. It also seeks in its second part to provide a loan—an intergovernmental agreement I think is the code word for it—for a debt that does not exist. We are coughing up cash before it is necessary. We are making commitments before we need to.

In the previous debate we had a long discussion about financial discipline. I appreciate that we are all desperately concerned about financial discipline in the Community. We have not got it right yet. When the Bill was brought before the House the new mechanism for dealing with financial disciplines had not been decided. Apparently it has been decided now. Sadly, it is not in the Bill. It has been decided.

Mr. Brooke

I want simply to clarify what my hon. Friend has said because I do not want either of us to mislead the House. When the Council agreed the new own resources decision on 24 June, the various stabilizers—the legal instruments to which I referred in my exchange with my right hon. Friend the Member for Worthing (Mr. Higgins)—had all been concluded. When the Council met on 24 June, it was with the full package in being. The full package necessarily was not in being in Brussels in February.

Mr. Marlow

I am grateful to my right hon. Friend. That is very helpful. However, we have had packages before and they have not worked. We now have a new package and hopefully that new package is going to be effective and successful where others have not been so, but we do not know. We cannot take it on trust.

There was a time, when this Bill was first put forward, when it was essential to the Community or the Community felt that it was essential, that this agreement was reached and that the Bill was on the statute book. It is not essential now. As it is no longer essential, why do we not wait and see how the financial discipline works before we assent to the Bill and make it an Act of Parliament?

We all understand the Government's position. They go to negotiate, come to agreement and have to use their best endeavours to achieve what they first set out to achieve even though the circumstances might well have changed. It is therefore proper that the Government put this measure before the Committee. It is unimaginable that they would not because they are expected to by their Community partners. They cannot avoid it.

Opposition Members may say that the Government could have done better. I am a modest man and I do not believe that I could have done better. I do not believe that my right hon. Friend the Member for Worthing (Mr. Higgins), who is a great expert on this subject, could have done any better. I am sure that in various ways there are many modest people on the Opposition Benches and I am certain that they would not have done any better. The Luxembourg agreement in the Bill is probably the best that any Government could have got at the time. Having got that agreement, the Government must bring it forward. They are bound to bring it forward.

That is the Government, but we are not the Government—we are Parliament. We are all members of political parties and we all accept that unless we are members of political parties, we probably would not get elected to this place. However, we have been elected to this place and we are all individual members of Parliament. The sovereignty of Parliament is entrusted to us. Although the Government have got to come forward with this Bill, it does not mean to say that we have to accept it and agree to it. It may well be that we should do the other thing. It may well be that in the interests of parliamentary control and democracy we should oppose it, and it may also be in the interests of the United Kingdom that we should oppose this clause.

What are we being asked to do? We are being asked first to provide a chunk of cash, an RGA, which is no longer necessary. We are being asked, secondly, to surrender control for ever—in perpetuity—of an additional amount of money to the Community's resources: an amount of money which, mercifully and thankfully, the Community does not need. We are going to surrender that money to Community institutions—when, as my right hon. Friend has said, there is no proper democratic control over those Community institutions.

Some people will say, "Give it to the European Parliament," or "Give it to the Commission." There are problems in that because, as we all know, whatever their good intentions may be, the European Parliament's and the European Commission's overall objective, whatever else they are doing, is a federal united states of Europe. So every decision that they are going to make is not on the basis of whether that money is being spent wisely or correctly but whether that money is leading towards a European federation, so they cannot be trusted. So we are handing over vast sums of the taxpayers' money; I have heard £1.5 billion being mentioned. We are quite rightly concerned at the moment about the balance of trade deficit. That £1,500 million is a very significant figure of cash. That is not trade, that is cash. We are not getting goods for it, and it is going out of this country if we agree to this clause.

I would like my right hon. Friend the Minister, when he makes his reply, to answer a group of questions. What would happen if we did not agree to the clause? What would happen if the Bill fell? The money is not needed now. What would happen if the Bill were to be delayed? The Government can always bring it back at a later date. The Government are in a very powerful position. They have a massive majority. Those on the Government Benches who oppose the Bill realise that there are not enough of them to change the Government's mind. What would happen if we threw the clause out and threw the Bill out?

I understand that a few colleagues have personal ambitions. They have had a little piece of paper from the Whips' Office saying that they are expected to support the Government this evening. They are concerned that if they do not do that, their futures, their careers, might in some respects be jeopardised. I am pleased to see that we have a Whip on the Front Bench at the moment. A Whip knows, as we all know, that, as I said before, we are in a new situation. The Community does not need the cash. The Prime Minister has made a stirring speech about active and willing co-operation between independent sovereign states. It does not say anything about cash. Active and willing co-operation does not need cash. We do not need the Bill any more.

I am sure that my hon. Friend the Member for Penrith and the Border (Mr. Maclean) will tell the Committee whether any of my other hon. Friends' careers will be put in jeopardy this evening if they oppose this measure. I am sure that he will go to the Dispatch Box now and tell my hon. Friends. No, obviously. It is line with the Bruges speech. It is line with the Prime Minister's policy. Any of my hon. Friends who want to vote against this clause this evening are perfectly entitled to do so. Their careers will not be in hock at all. After Bruges, I would have thought that their careers might be even more secure than they have been.

I put to my right hon. Friend the Minister the subject of European financial control. Why do we not wait until we have just a little bit of evidence that this new formula for financial control is actually successful and operates properly? Why do we not wait? They do not need the money now. When we have that evidence—if we have that evidence—and if the Government then bring this Bill before the House, I promise my right hon. Friend—and I expect that my hon. Friends will promise him—that we shall do everything that we can to pass the Bill just as quickly as he wishes it to be done. Why do we not wait for that evidence? We do not need the Bill today, do we?

Another question that I wish to ask my right hon. Friend concerns Britain within Europe. Does it matter if we do not pass the Bill now? We are good Europeans. We believe, as the Prime Minister believes, and as the hon. Member for Vauxhall (Mr. Holland) believes, in willing and active co-operation between independent sovereign states. We do not need the Bill to produce that. What is the implication for Britain in Europe? I would have thought that it would be totally positive, totally in line with what the Prime Minister is trying to secure at the moment.

A final question for my right hon. Friend. If we do not pass the Bill today, what will be the effect on the United Kingdom taxpayer? We pay for the Community in two ways. We pay a net contribution, which is something for which we get nothing. It is our membership fee. If we did not pass the Bill, what would happen to our membership fee? Would it be higher or lower than it is under the existing pre-Bill situation? Also, we have a gross contribution. I like to look upon gross contribution as what we pay for that clutch of policies provided by the Community.

We are suggesting that we should increase our payment for that clutch of policies by one quarter. We are not going to increase Health Service expenditure, education expenditure, child benefit or defence expenditure by one quarter. But for the same clutch of policies within the Community, we are being asked to increase it by one quarter. If we do not agree to the Bill, what will be the effect on the gross contribution that our taxpayers would have to make for what they get from the Community? I feel that it would be significantly lower. I would like to hear the figures from my right hon. Friend.

This is a parliamentary matter. Governments come and Governments go. I believe that this Government will be around for a long time. But it is a parliamentary matter, and it is to do with the sovereignty of this House; to do with the control over taxpayers' money that this House still has at the moment. I hope and believe that many right hon. and hon. Members will oppose this new clause, so that we can retain a vestige of parliamentary dignity and control over affairs within the Community.

Sir Russell Johnston

I do not agree with the hon. Member for Northampton, North (Mr. Marlow) in his espousal of the mythical concept of sovereignty. Certainly his idea of what one should do with sovereignty and my idea of what one should do with it are very different and do not easily meld.

It is worth doing something that has not yet been done, which is to read into the record paragraph 7 of the explanatory and financial memoradum of the Bill, which in only five lines sums up what the Bill is about. It states: Clause 1 provides that both the new Own Resources Decision and the IGA shall be added to the list of Community treaties in section 1(2) of the European Communities Act 1972, allowing payments under both instruments to be charged directly on the Consolidated Fund under section 2(3) of that Act. That is very simple and straightforward, and very necessary. It should not have produced all the sound and fury that we have heard.

When we debated the Bill's Second Reading on 11 July, I said: I welcome the Bill. It represents an important step forward in the slow but steady integration of the European Community and the development of stable financial arrangements within it. It is very much in line with the views that I and other of my right hon. and hon. Friends have expressed from this Bench over many years. Later, I said: Looking back to the successful Brussels summit in February, the fact is that, when faced with the choice of either jeopardising the achievement of the common internal market or agreeing to a modest and sensible increase in the Community's own resources, the Prime Minister chose the latter."—[Official Report, 11 July 1988; Vol. 137, c. 62.] I see no reason to alter anything that I said then.

I refer now to three questions that are integral to the Bill. First, there is the Bill's context. In particular, there is the context of the Brussels Council, which for the first time —and this as has already been said by several right hon. and hon. Members, did not take place at Fontainebleau —set an absolute limit to agricultural expenditure for I988 of 27.5 billion ecu; in other words, £18,425 million. It provided that thereafter it should grow at no more than 74 per cent. of the rate of growth of Community GNP. That represented a considerable step forward in achieving a degree of budgetary discipline, particularly in this uncontrolled section, and the Government deserve some credit for what they did.

Secondly, the sums agreed in the IGA were fixed in proportion to GNP. That is an argument that I have made from this Bench for most of the past decade, and therefore it is something we much welcome. As everybody keeps going on about how much the British give, it is worth noting, because no one else has yet done so, what level of contributions are being required from each country according to that agreement. The largest contributor is the Federal Republic of Germany, with a contribution of £1,163 million. The second largest is France, with £967 million. The third largest is not the United Kingdom but Italy, with £923 million. The fourth largest is the United Kingdom with £741 million. Judging by how some hon. Members talk, it might be thought that we were carrying the whole weight on our shoulders, like Atlas or Colossus or whoever it was.

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Thirdly, the decision to double structural funds is enormously encouraging. What is most regrettable is the way in which the United Kindom, which should have been in the van in putting this argument, was for most of the time arguing against it. In my view it is an essential element of success within the Community. The trouble is that in the United Kingdom the whole argument about regional funds, and to some degree the social fund, has become mixed up with the Government's ideas of the minimalist state. If there is to be a regional fund, it must operate through some form of Government agency. Yet there are contradictions all the time. At the end of last week, the Government increased notably the funds available to the Scottish Development Agency, a Government agency engaged in regional development. There is not a great deal of consistency.

While we are on the subject of consistency it is perhaps appropriate to refer briefly to Bruges, and the seeming lack of consistency between the Prime Minister's position as set out there and the consequences of the Single European Act —to which she has already acceded and encouraged the House to accede—not to mention the very enlightened British paper presented at Fontainebleau. That paper has seldom seen the air, although I believe that it moulders in the Library. I recommend it to any hon. Member as a good sound indication of the kind of policy that the United Kingdom should follow.

Canute has always been given a bad press. It is forgotten that he did not try to stem the tide, but demonstrated to his sycophantic courtiers that he could not do so. The Prime Minister seems determined to prove Canute wrong, but it is she, I think, who is wrong. She is setting herself against the inevitable movement of history, and against the best interests of the people of the United Kingdom.

Mr. Marlow


Sir Russell Johnston

I am always only too delighted to give way to the hon. Gentleman, whose brief interventions I welcome greatly.

Mr. Marlow

I am grateful to the hon. Gentleman for his courtesy and dignity in giving way to me.

The hon. Gentleman is talking about the inevitable movement of history. Would he just look a little further into Europe—he is a keen European—at east Europe, and see what is happening in the Soviet Union, where all the central control is now being discovered to be a mistake and more power is being disseminated to the nations?

Sir Russell Johnston

Some of the remarks that I have to make are directed very much towards the hon. Gentleman's question. I agree with him, but what he has said does not contradict what I have to say.

The word "federal" has bounced lazily around the Chamber during our debate. For some—I suspect that they include the hon. Gentleman—it is an abhorrent concept, a nasty word, part of the bad vocabulary of politics that the hon. Gentleman does not like. I have never understood why that is, but then I must admit that the hon. Gentleman has said many things from time to time that I have found it difficult to understand. That may be a shortcoming on my part.

The hon. Member for Vauxhall (Mr. Holland) asked how the weaker parts of the Community could defend their economic interests. How, for that matter, can that be done within the existing nation state? There are only two answers to the question that we know of, and it is a very good question. The fear felt by everyone—not only those who are in favour of the European Community, but certainly those who are concerned about its centrifugal forces—is that everything will be drawn into some great centre from the Ruhr to Paris to London. What are the answers?

As I have said, there are two answers. First, there is a federal structure that acts against centralisation by creating a number of alternative power centres. Why does the Federal Republic of Germany not suffer as Britain and France do from that great overweening centre? An important reason is the way in which the länder structure spreads power and influence throughout the country.

Mr. Cash


Sir Russell Johnston

If the hon. Gentleman will permit me to make my second point, I shall then give way. Indeed, this may relate to what the hon. Gentleman is about to ask.

The second answer is an effective regional policy pursued from the centre—whether that centre be London, as in the case of the United Kingdom, or Brussels, as in the case of the European Community.

Mr. Cash

First, does the hon. Gentleman agree—as I am sure that he will—that the most important question that we must ask about a federal structure is, which powers are being spread and diversified? Secondly, there is no doubt that the Länder have become increasingly concerned about what has been going on in their own country. Furthermore, they have only recently had a first-rate constitutional crisis over the very question of the relations between the federal Government on the one hand, the länder on the other, and the European Community. The question has arisen: what is a member state in that context? That gave rise to some further serious questions that have just been before the federal court. I think that the hon. Gentleman may have got his facts wrong.

Sir Russell Johnston

I do not see how the hon. Gentleman can end up by saying that I have got my facts wrong.

Mr. Cash

He has got his law wrong, then.

Sir Russell Johnston

Or my law, for that matter. I entirely agree that in the examination of any federal structure the important question is which powers should be divided and which should be entrenched. But it is equally true that within federal systems there is a perpetual tension between the central authority and the state—whether we are talking about the Bundesrat to which the hon. Gentleman has referred, or Canada or the United States. There is always tension; there are always periodic crises. There is nothing wrong with crises in politics: they are part of the tension of argument and the pull towards the centre and away. But at least the federal system has a structure that acts as an effective barrier preventing the centre from pulling everything in. In our case that does not really exist.

Mr. Cash

It does exist, in the precise form of the debate that we are now conducting. The very fact that that centrifugal force is to be found in the various national parliaments maintaining the balance of power between themselves and the centre is at the heart of our debate.

Sir Russell Johnston

I do not think that that is very effective. I think that the reality outside the Chamber—which, as in almost all European debates, is sadly not overpopulated—is that things go on and it does not make all that much difference. I do not say that with any great pleasure, but I think it is a fact. I am jumping ahead of myself a bit, but let me say that I would much rather see the existence of effective, entrenched power centres in Scotland, Wales and the regions of England than trust this place to protect them against strong, centralising government.

Let me conclude by making two summing-up points. First, there is no doubt that the European Community has a wide agenda—social, environmental and economic—in which only supranational action, democratically supervised, can be effective and can allow transparent decision making. The hon. Member for Vauxhall referred to the Cecchini report, which again I recommend to hon. Members, although it is a bit dense—I use the word in its proper sense. The argumentation is heavy and closely interrelated.

As the hon. Member for Vauxhall said, the report forecasts a considerable dynamic increase in output following completion of the internal market. Whether or not one can be sure of that, of course, is another big question, but he is right to say it. When I interrupted him and said that there was something to be said for the original European Common Market from 1957 until the 1960s, he said that that was all very well. The Germans certainly benefited, but not so much the republic of France or the republic of Italy. They had to devalue and they did not do as well.

That is one of the things that in these days of artificial sensitivities we sometimes hesitate to say. Certain people are especially good at working. The Germans happen to be people who are especially good at working. They are assiduous, hard-working, competent and in many respects innovative. Perhaps, too, they are more disciplined and organised than some other countries have tended historically to be, if I may put that as gently as I can. However, the hon. Member for Vauxhall did not go on to say that neither France nor Italy made any attempt to leave the European Community because of that experience. On the contrary, they made the necessary adjustments that they felt were needed, and they derived benefit.

Before I leave that point, may I say in brackets—I do not think I have had the opportunity to say this to the House—that I believe that Lord Cockfield was badly treated in being sacked from his position for showing what was no more than diligence, activity and energy. That was unfortunate.

Mr. Foulkes

Does the hon. Gentleman equally agree that the work undertaken during the past four years by Stanley Clinton Davis as the other Commissioner was also not properly recognised in the summary way that he, too, was kicked out? Notwithstanding the fact that he has been replaced by one of my excellent colleagues, being kicked out in a such a way was certainly no recognition of the excellent work that he has done for the past four years.

Sir Russell Johnston

Certainly, Stanley Clinton Davis developed considerably towards the latter end of his period—[Laughter.]

Mr. Foulkes

Most ungenerous.

Sir Russell Johnston

On the contrary, I think that was very generous.

In addition, I believe that our former Member, Bruce Millan, will be a very good Commissioner and is a good choice.

To return to the question of supranational action, it is not just Jacques Delors and Helmut Kohl and the Italian Prime Minister who talk about the need for a social Europe: it is practically everybody bar our own Prime Minister. The idea that somehow we can achieve a politically acceptable internal market without considerable social and political protection is a mirage. I do not understand why the Prime Minister should continue to propagate it.

Mr. Spearing

The hon. Gentleman is speaking on an important point, but does he not agree that whatever agreement there may be for what he calls the social dimension, or whatever its merits, it was not part of the Cockfield package? For the hon. Gentleman and his party or anyone else now to suggest that without this dimension there is something wrong is surely inconsistent with an acceptance of the Cockfield package without it. Will the hon. Gentleman comment on that?

Sir Russell Johnston

I never accepted the Cockfield package without the social dimension. We have always said that, for the Cockfield package to be politically acceptable, it requires to have the social element of which I have just spoken. Unfortunately, we are not in a position to dictate these matters—any more than the hon. Member for Newham, South (Mr. Spearing) is. I have some confidence—the record thus far supports my confidence—that the other members of the European Community will drag our country slowly, reluctantly but inevitably in a social direction, for which I will be grateful.

I return to the question of federalism, because various Members asked what federalism was. I suppose that it is essentially a question of fitting function to geography and community. It is not something to fear, but to welcome and to utilise. Again, there is contradiction in the Prime Minister's position. If one talks to her about devolution of power to Scotland, Wales or the regions of England, she is against it. She does not want power to go down. If one talks to her about her power going up, she does not want it to go up either.

Mr. Foulkes

She wants it all for herself.

Sir Russell Johnston

That rests on the assumption that the status quo is perfect and is the most appropriate structure of government. I do not believe that at all. I believe that it will change because function, power and community are mismatched. The hon. Member for Northampton, North (Mr. Marlow) was quite right to say that what is essential is that, at the same time as we accept that there are certain economic, environmental and political activities that we can only undertake effectively in conjunction with others, we must realise that that is not an argument for centralisation at all, but an argument for effective entrenched devolution—which means federalism.

I believe that the Bill is a small step on the way. It shows the Government's confidence in the future of the European Community, and in that regard I welcome it.

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Mr. Curry

I believe that the theme that has underscored this debate has been that of sovereignty. Quite rightly, it has been more a theme of parliamentary sovereignty than national sovereignty. It is legitimate to draw a distinction between those two. I have always held the view that Governments in the Community have a sort of compact in which they pursue goals which they determine to be in the national interest in return for the pooling of some of their sovereign responsibilities.

In the Community we have a central authority or a Community authority which is facing a fragmented parliamentary authority. I have spent nearly 10 years in the European Parliament and I must say honestly to all my colleagues that I do not think that either Parliament is effectively scrutinising Community legislation. The European Parliament lives to some extent on the aspiration that it may be able to, and occasionally in the House there is some recollection of what it wishes it were able to do. I believe that between the two there is a deficit in sovereignty.

There is a deficit especially in that great mass of secondary and delegated legislation which takes place in Brussels. There is a misunderstanding of what Eurocrats are. The Eurocrats are likely to be national civil servants on a day trip from Gatwick, because they are the people who pack many of the committees that deal with the secondary legislation. I suspect that the problem can only be solved if we recognise that it must be solved on the basis of burden-sharing between that Parliament elected to serve the Community purpose in the sense of monitoring Community institutions and that Parliament that is there to monitor the effects of national government.

When the House gives the impression that the European Parliament is part of a problem and not part of a solution, it does itself a disservice. I believe that there is room for both institutions. They are both indispensible if what we are really concerned about is not exclusively the future of any particular institution but the future of the interest, and that interest is the notion of democratic accountability.

My hon. Friend the Member for Holland with Boston (Sir R. Body) talked of the success of the Danish Parliament. I agree with the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) that the nature of the democratic process in Denmark has an important influence, because it has a system of proportional representation which is so tortuous that it has the effect of denying almost any Government a stable majority for any issue—not just for a European issue. If we in the House were to vote for proportional representation of that sort of complexity, we could no doubt deny our own executives that sort of authority. In my conversations here I do not detect that readiness to embark upon that particular venture.

My hon. Friend the Member for Northampton, North (Mr. Marlow), who informed me that he would be leaving, asked what would happen if we did not vote for this measure. The answer is that we would see the independent sovereign states coming into action. What would happen if five independent sovereign states—for example, the French, the Germans, the Dutch, the Belgiums and somebody else—said that they would get together and create a central bank and a common currency, and do those things which they think are necessary? We forget that our membership can be a constraint upon as well as a spur to the action of others. If a central bank were formed by other countries, our politics would necessarily be governed by a need to respond to what those countries were doing.

The essential choice is not between membership and non-membership. It is not a choice between an autonomous line of action and one that is purely co-operative. It is a choice between participating in collective decision-making or necessarily finding that our major decisions are dictated by the fact that collective decisions have already been taken. For that reason it is important to recognise that the measure before us is not perfect. The guarantees cannot be absolute, but in terms of improvements and increments it is significantly better than what has gone before.

The history of our membership of the Community has been that we have galloped to catch up. Now we have reached the stage when we can look the other member states in the face and state that we have significantly recovered and improved upon the deficits that were once part of so much of our national life. Now we can participate fully and freely on the same terms as other member states.

Until I heard the previous few speeches, I felt that the debate had been somewhat unreal. Earlier the debate gave the impression that there is still unremitting hostility to our membership of the Community. I do not believe that is the case. I believe that there were significant changes in the summer; the most significant being the change of heart of the Labour party and of the national executive of the trade unions. I believe that those are positive developments. The debate is no longer about whether we should be members of the Community but about what should happen in Europe. When a certain amount of decision-making takes place under the umbrella of the Community it means that the national debate is transposed to the Community level.

It is right that we should argue about the role of the so-called social Europe. I must point out to the Treasury Bench and to the Opposition Front Bench that they have acted as by far the most successful publicity agents for which Jacques Delors could have hoped. Within the political spectrum described by Ministers and Opposition spokesmen, Mr. Delors has been painted in demonic terms. He is only chairman of a large county council and it is wrong to attribute to him all sorts of mystical powers.

It is right that we should discuss whether we want a social Europe and whether we want a Europe that is based on deregulation. It is right to discuss whether Europe should be run on Socialist or free enterprise principles. Europe has characteristics of both systems. The social and regional funds are interventionist and they will remain because of the political bargain at the heart of the Community between the northern states and the southern, less developed states, which perceive their means of advance through such funds and mechanisms. Those states stand to gain most from a deregulated system.

Mr. Cash

My hon. Friend is conducting himself in the sweetest and most reasonable manner. He is saying some very important and interesting things, not least of which is that Mr. Delors is only in charge of something akin to a county council. I take grave issue with my hon. Friend about that. He should reflect carefully on what he has said because the powers of the Commission are so far removed from the powers of a county council that it is not true.

Mr. Curry

The Commission is not an absolute Government. It is not a Government in exile. Of course it has certain charactieristics of government, but the essential power in the Community at present is the Council of Ministers and the Governments. When a decision is reached in Cabinet it is one step removed from Parliament; when a decision is taken in the Council of Ministers it is two steps removed from Parliament.

The Commission operates largely through management committees and a whole host of sub-structures which are part of the decision-making process. The Governments are significantly represented. It is true that Mr. Delors has delegated responsibility and that, in certain areas, the Commission acts as the executive, for example regarding competition policy. The Commission has intervened of late to use that power and it can also intervene on matters of state aids. I do not deny that my description of the Commission as a county council was exaggerated but it was only exaggerated to draw a contrast with what I believe to be an equal exaggeration regarding the excessive supranational functions of the Commission.

The move towards 1992 is not part of the Brussels bargain, but the single European market would not have been possible if the stage had not been set there. I believe that the Community is profoundly deregulatory in character. The right hon. Member for Chesterfield (Mr. Benn) has argued that he dislikes the Community because he believes that Socialism cannot be established within it. In a sense he is right, because the treaty of Rome is framed in liberal market economy manner and the move to 1992 is a thrust in that direction. There is no reason why a social democratic Europe—a Scandinavian Europe—is not feasible. That is what the nature of the debate should be.

Mr. Spearing

I wholeheartedly agree that the treaty of Rome, as drafted, is a laissez-faire document and for that reason is not neutral as between nation states.

Whatever the hon. Gentleman may say, does he not agree that the Commission is extremely important because under the treaty of Rome it originates the legislation that it puts before the Council of Ministers? The Council of Ministers cannot usually act other than on a proposal from the Commission. Therefore the power of the Commission and in particular the power of the President, currently Mr. Delors, is great. The Commission and the President are the guardians of the gate through which legislation can emerge. In Britain we would not agree for one moment that civil servants could suggest the legislation to place before Ministers—indeed, Members of Parliament can do that. I believe that the role of the Commission and its President is more crucial than the hon. Gentleman has tried to suggest.

Mr. Curry

The hon. Member for Newham, South (Mr. Spearing) is correct that the Commission sets the agenda in the sense that it has the power to initiate legislation, but the Commission cannot pass that legislation into law. There are many stories within the Community of legislation that was proposed decades ago which has not yet got through the decision-making process and has not reached the Council of Ministers for a final decision. Neither in this House nor in the European Parliament can Community legislation be originated.

Certainly the Commission has the potential to become a more powerful institution but at the moment the balance of power is effectively with the European Governments within the Community acting through the mechanism of the Council of Ministers. The hon. Member for Newham, South demonstrates how important it is that we should get some democratic accountability. That can he done only if it is seen as part of a burden-sharing operation between those people defending democratic interests. Such burden-sharing should not be seen as a competition between the various institutions.

The rendezvous in 1992 is deregulatory, as is the thrust of Brussels policy.

Dame Elaine Kellett Bowman (Lancaster)

Does my hon. Friend believe that Mr. Delors' remarks are deregulatory in character?

Mr. Curry

If Mr. Delors had not pushed hard for the package that emerged at Brussels, it would have been much more difficult to get that package through. Mr. Delors was a Socialist Minister in a French Government and he would like to see a greater parallel between the Community social policy and the liberation of the market place. I believe that we shall realise the gains of 1992, in so far as we shall manage to emphasise deregulation. We shall not find ourselves trapped in precisely the same web of entangled social regulation that we have tried to escape on a national level.

Too much has been made of the social programme. When one studies it, it is a lukewarm manifesto. The social programme is part of the debate that is now taking place in Europe regarding the policies for which the Community should aim.

Reference has been made to the Community budget and the savings to be realised. It is true that this year there are limited savings largely because of external events. The whole Community budget depends largely on external events—the level of the dollar, the state of the world harvest, world crises and the Chicago board of trade. It will depend increasingly on whether Mr. Gorbachev manages to reform Soviet agriculture successfully. We have a vast vested interest in his failure because if he succeeds, the last major world market will disappear.

8.30 pm

We must also remember that in agriculture the debate has been transposed a step beyond the European level. It is now in GATT. Agriculture will now be subject to constraints imposed by the need for orderly world trading, just as until now its reforms have been the result of budgetary exigencies in the EC.

The Community has a record of poor housekeeping, but the Commission, with all its sins, cannot be accused of responsibility for the American drought, the problems of the Soviet and Chinese harvests or the level of the dollar. Given the pattern of Community policies and the fact that a great deal depends on member states being willing to put regulations into place and to implement policies, there is a necessary imprecision in Community budget-making. We must try to limit it, but if we do not recognise that, we do an injustice to our case.

Any key based on GNP is bound to be better for the United Kingdom than a key based on VAT, especially when we have the 55 per cent. cut-off. The rebate which the United Kingdom has obtained and which we were told years ago we would never get because it was unpopular is enhanced under this document, unlike under the previous system, and it is taken outside the budget, which makes great good sense.

The present mechanisms have a much better chance of being effective than what has gone before. Until now, where they have been implemented, there has been a significant impact on prices. Those who doubt that need only accept my open invitation to come to my constituency, which consists of almost every possible form of agriculture, and listen to what the farmers are saying. Shortly the Council will have before it proposals to reform the sheepmeat and beef regimes and I trust that those who are anxious for continued agricultural reform will not baulk at these reforms on the grounds that they happen to be hitting their farmers rather than others' farmers. We must be consistent in what we do.

The measure is to be welcomed. The Government have brought us forward to a stage where we begin to see some consistency in the budget. The present savings are largely fortuitous. It would he wrong to take them from the capital account and put them into revenue or to assume that the savings would be permanent, just as it was wrong in the past always to apply for money the minute something appeared to be going wrong. The Commission is right to be cautious. Nevertheless, we are on target for a 4 billion ecu overestimation of expenditure next year.

This is a good and necessary measure. There is not an option to say no to it in practical terms because the choice is between taking part fully in Community decision-making, whether to promote or restrain spending, and allowing decisions to be taken only to find that the major parameters of political discussion are covered by decisions already taken by other people.

Mr. Spearing

It is a pleasure to follow the hon. Member for Skipton and Rippon (Mr. Curry). Although I disagree with him, perhaps fundamentally, on many of these issues, he at least has the ability and knowledge always to talk about them interestingly.

That illustrates one of the problems which confronts the House. We have an important international treaty and a Committee stage which involve the expenditure of about £5,000 million a year between now and 1992. Even with the help of eight permanent members of the House of Commons staff I find it increasingly difficult to have some sort of working knowledge, not just of the details but even of the major features of this sphere. I warn the House that we are fast reaching a stage where so few people will feel able to debate or understand this that scrutiny will be at risk—it already is—and power will go from us. However good our scrutiny, if details cannot be presented reasonably, we shall lose power. I challenge any hon. Member now to disagree with that. If hon. Members disagree, they should read the agenda or attend the Select Committee on European Legislation to see what it consists of.

Mr. Curry

indicated assent.

Mr. Spearing

I am glad to see the hon. Gentleman nodding assent.

My speech on clause 1 stand part is in two parts. The first relates to detailed matters of the articles of the principal document before us, which is the so-called decision, and the second will be a few remarks on the post-Bruges scene.

Several hon. Members have mentioned discipline. I understand—I hope that the Paymaster General will correct me if I am wrong—that we have a binding mechanism for stabilisers which are written into the regulations. We also have an obligation to double the social and regional funds and to create what I call an EAGGF—European agricultural guidance and guarantee fund. It is referred to in the preamble to this decision and it is authorised by virtue of the meeting of the Council of 11 and 12 February. It provides for the creation, in the Community budget, of monetary reserve, hereinafter referred to as the EAGGF monetary reserve, to offset the impact of significant and unforeseen fluctuations in the ECU/dollar parity. We know why that is important. There may be deficits and surpluses over a period of five years. I do not see how any guarantee so far will guarantee a deficit in that fund—therefore, a deficit in the whole of the Community financing outside the envelope limits contained in the decision. Can the Paymaster General throw light on that conundrum?

If we were going through the document, we would take clause stand part article by article, and it deserves that consideration. Article 3(2) authorises commitment appropriations to increase to 1.3 per cent. of total GNP, whereas the payments limit is 1–2 per cent. How is that ratio reached, and how can there be an excess of commitment when the payments are only up to 1.2 per cent.? I suppose that it is hoped to raise those later to pay for commitments made. That would be bad accounting practice and bad for the EEC. Will the Paymaster General comment on that?

My next point relates to amendment No. 4, which was not selected, and the wording of the Bill. Line 14 refers to the undertakings by member States, as confirmed at their meeting within the Council. The words "within the Council" should be deleted because, as it is an intergovernmental undertaking, it is by definition outside the status of the Council, and extra-treaty. The treaty lays down that income and expenditure shall balance year by year. I should not have thought that the Council of Ministers would be competent to produce a draft for such an undertaking. It would be competent for member states meeting in some other forum or for ambassadors to exchange letters and to come to such an undertaking. Perhaps the Paymaster General can explain the phrase "within the Council".

I now draw the House's attention to article 10 of the decision. This follows on from the points made by the hon. Member for Skipton and Ripon about the rebate, which was an important feature of the article, as it was of Fontainebleau. Our rebate amounts to about £1 billion, but in spite of it, our overall deficit is still about £1 billion —so the rebate's importance is great. I am sure that the Paymaster General will agree that it is.

Article 10 reads: The Commission shall submit, by the end of 1991, a report on the operation of the system, including a re-examination of the correction of budgetary imbalances granted to the United Kingdom, established by this Decision. When the Prime Minister brought back this draft from Brussels there was a great shout that the rebate was safe—but this is a leasehold of only about two to three years. So there can be no cheers about it from the hon. Member for Skipton and Ripon; the Fontainebleau mechanism is only a two-year lease. I do not say that the re-examination will not be successful; it was on the occasion concerned, but it is clearly a matter of some importance in the Community that we maintain the rebate.

As any Minister will confirm, if we are to retain any derogation for the United Kingdom in any matter of policy, we must pay a price by giving way somewhere else.

Mr. Curry

indicated assent.

Mr. Spearing

I am glad to see the hon. Member for Skipton and Ripon nodding his agreement. This is how the Community works. So even if we maintain the derogation in the next cycle—it will come up again within three or four years—something else will have to go, but by the very nature of package bargaining we shall not necessarily know what.

If we had been able to examine the decision itself my points about it might not have been so truncated. I turn now to the post-Bruges situation. Over the past few weeks those of us who are interested in the EEC have read pages of comment in the heavy, informed press. We have listened to talks and interviews on the radio, and read the texts of two or three of the Prime Minister's and M. Delors' speeches. One of the most frightening things about all this is that most of the media commentators have got it either incomplete or wrong, and most of the important features from Bruges have not been dealt with in the articles and comments of otherwise informed commentators.

I shall attempt to prove this charge shortly, but I want to do so without casting aspersions on the leader writers and experts who write articles in the newspapers—or even on some of our senior politicians who make speeches on the subject. They have all sorts of other things to look at and are mainly informed about EEC matters by specialists. That is an example of the problem with which I open my speech: fewer and fewer people have the time or resources to understand what is going on. I hope the Minister will relay my comments to his right hon. and learned Friend the Foreign Secretary, who is a sponsor of the Bill, and doubtless a representative of the Foreign and Commonwealth Office will be present on Third Reading—

Mr. George Robertson (Hamilton)

I wonder.

Mr. Spearing

This is a treaty which implements the amendments to the treaty of Rome, commonly known as the Single European Act, which was signed on behalf of this country by the right hon. Lady, the Minister of State, Foreign and Commonwealth Office. She was not a Privy Councillor when she signed it; I wonder whether that was constitutional. But I hope she will be here on Thursday—

Mr. Robertson

I join my hon. Friend in hoping that, but I am sure he will agree that it is significant that, although the Foreign Secretary opened the debate on Second Reading on 11 July, since then we have seen neither hide nor hair of the Foreign Office. The Opposition foreign affairs team has been here in numbers for long periods, and we would have expected at least a nominal Foreign Office presence. The Foreign Office contains a large number of Ministers, even if they keep changing fast. I am sure the Paymaster General can explain their unavoidable absence.

8.45 pm
Mr. Spearing

Perhaps we shall hear about that in the closing speech.

Now, I face the formidable task of backing up what may have appeared to some hon. Members a rash and exaggerated claim. Let us begin with social Europe. I am sorry that the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) has gone. He and I had an interesting exchange, during which he agreed that he would have preferred a social dimension in the Cockfield package, but did not oppose it because it did not contain one. I understand that no formal set of regulations or directives relating to the social dimension or social Europe has been placed before the Council of Ministers by the Commission. Obviously, Mr. Delors has his own ideas, and the Commission may have its.

The former expounded his ideas at length to the TUC. I shall not say whether they are desirable, or whether competence in this area is good or bad, but the idea was clearly a possibility. It was only a possibility, not a certainty like the Cockfield package of about 280 documents, of which we shall receive a progress report sometime between now and Christmas. The only documents about social Europe are some press releases produced by one Commissioner, and a publication officially entitled, "A Commission Working Paper SEC (88) 1148", dated 14 September 1988. It arrived in the Library the day before yesterday.

So the status of this concept, important though it may be, is nothing like as developed as that to which we are committed by 1992 through the Single European Act's amendments, and to suggest that it is immediately on offer is false. There may be a plan or idea of some importance; it may have been given informal approval at informal meetings of certain heads of Government and Ministers; but it is of a different order from the avalanche of legislation which is about to descend on us between now and the end of 1992.

This brings me to the second widespread misapprehension. It is even shared by BBC news bulletins, which usually know better. They speak of 1992 as though it were the equivalent of the big bang in the City, whereas, as the knowledgeable hon. Member for Skipton and Ripon agrees, the legislation is coming through now. By treaty and by regulation, it must be completed by 31 December 1992. Some important legislative measures dealing with public utility contracts and rights of establishment will be here long before that and may be set in concrete.

Whatever scrutiny the House can give to the legislation—the Select Committee has already considered some of it—even if we do not like it, it is still subject to majority voting in the Council of Ministers. Even if the Government and every Member of the House do not like it, it will still be possible for majority voting to make the law for this country. A parliamentary answer to me last week showed that more than 100 pieces of legislation have been given majority assent in the Council of Ministers.

Mr. Andrew Rowe (Mid-Kent)

Recently I attended a conference of the European Medium and Small Businesses Union, which covers 14 countries, and the confusion that the hon. Gentleman describes could not have been more clearly evident. Small and medium-sized businesses have been going along with enormous enthusiasm with proposals to regulate all sorts of matters which, had they not been in the context of forming this great European market, they would have resisted strongly because they would have seen in them exactly the tendencies against which they fight in their own countries. They did not perceive that many of the laws are being implemented as they are passed, not on one great date in 1992. I intervened there to point out to them that the dangers that they were running by not being clear about that point.

Mr. Spearing

I am grateful to the hon. Gentleman for backing what I said. Whatever may be our disagreements on other matters, all hon. Members can agree that public knowledge on this matter is woefully lacking, despite the publicity campaign mounted by the Secretary of State for Trade and Industry—of whom I shall say no more at the moment.

Mr. Leighton

If it is true that these matters are being decided by a majority vote and the British Parliament has no jurisdiction over them, is not the term "county council" more appropriate for the House? We, not the Commission, are being turned into a county council.

Mr. Spearing

My hon. Friend makes an excellent point. For the moment, I wish to obtain an agreement across the Committee about the present confusion and difficulty. But that will be the outcome of present events.

Mr. Cash

The analogy of county councils seems to have permeated the debate. Does the hon. Gentleman agree that the analogy drawn by the hon. Member for Newham, North-East (Mr. Leighton) is also inaccurate? A county council has powers that are conferred upon it by Parliament, and those parts of the European Communities Act 1972 that we are debating today, and all the other legislation that emanates from that Act, are granted by this Parliament. We must hang on to that central point at all times. It may be a slender thread, but it is critical and we must never forget it.

Mr. Spearing

I am grateful to the hon. Gentleman, but I should tell him that the thread is something of an umbilical cord of which the European Communities Act 1972 is one example and the Bill is another. But the nature of that "gossamer thread"—to reactivate a phrase used by a well-known right hon. Gentleman—is such that we do not always recognise its importance when it is going through. The European Communities (Amendment) Act 1986, which authorised the Single European Act, is another example. The hon. Gentleman reminds me that I should have dissented from my hon. Friend the Member for Newham, North-East (Mr. Leighton). The House gives a county council specific powers to operate in a specific area. As I understand it, the treaty of Rome does not give national Governments any specific power.

The hon. Member for Mid-Kent (Mr. Rowe) made a helpful intervention. Legislation is on flow now, and Command HC 43—one of 32 reports which the Select Committee on European Legislation will have made by the end of the Session—summarises all the legislation.

I draw the attention of the House to article 8A of the treaty of Rome, which the money that we are voting will implement. It states: The internal market shall comprise an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of this Treaty. The definition of "internal frontier" has been largely misunderstood by press commentators. We think of lorries, frontiers and border checks. As I understand it—I am sure that the Foreign and Commonwealth Office will correct me if I am wrong—the article concerns not a geographical frontier but an economic, commercial, industrial and competition frontier. If a set of laws that appertains in the United Kingdom is different from that appertaining in Portugal—although goods or services may be exported by sea or wire—and therefore the law relating to that internal market differs significantly from one part to another, an internal frontier exists.

As that frontier exists, it has to be eliminated by article 8A, a very important amendment that was brought about by the Single European Act. That presupposes that legislation that differs from one territory to another is to be harmonised, and that in turn presupposes a centralised legislative authority—the Commission and the Council working in tandem, as we discussed earlier.

Mr. Cryer

I have no doubt that my hon. Friend has seen the Press Association report that Lord Cockfield has asserted today that a united states of western Europe is inevitable, complete with a central bank and a common currency. Although he was displaced for embarrassing the Government over the harmonisation of VAT, it is worth recalling that he held those views when he was appointed by the present Government. He is still asserting that union is inevitable.

Mr. Spearing

I am grateful to my hon. Friend for giving us that information. Some of us have been sitting here since 3.30 pm and we have not had that particular information. I am not surprised by what Lord Cockfield has said. Anyone who heard him perform before the Select Committee on the Treasury and Civil Service—the right hon. Member for Worthing (Mr. Higgins), whom I am glad to see in his place, was in the Chair—will know what I mean. For reasons that I shall discuss in a minute, Lord Cockfield is almost certainly correct.

I have tried to explain what I understand article 8A to mean and the obligation on the central legislative authority to legislate not only on significant matters but on matters that are judged to affect significantly the internal market and which exist either side of a frontier.

Mr. Rowe


Mr. Spearing

I shall give way in a moment.

That point highlights the importance of the new article 100A. I have read only one document that mentioned article 100A in the plethora of documents that we have received in the past three weeks. It is important because it establishes qualified majority voting in any matter relating to article 8A—the creation of the single market by a single legislative authority. Where does that definition finish? What does majority voting cover? What is the scope of legislation covered by article 100A? I have to tell you, Sir Paul, that the Select Committee on European Legislation does not know the answer.

One could think of 10,000 factors that allegedly affect the internal market, such as any piece of legislation that is passed by a nation relating to commercial, industrial, economic or regulatory matters—regulatory matters include safety provisions and provisions for other purposes. Who will be the judge of whether it is a matter for the internal market? The court will decide and the Select Committee is now taking evidence on the use and scope of article 100A. We have not reached a conclusion or a report.

If any hon. Member thinks that he or she knows the margins and the legal limits of article 100A, let them stand up and speak. Let the Attorney-General or anybody else say that they know where it ends—I do not know. I challenge anybody to say that they do—

Several hon. Members


9 pm

Mr. Spearing

I shall now give way on that point to four hon. Gentlemen.

Mr. Cash

I would not presume to suggest the ambit or limits of article 100A. As the hon. Gentleman knows, I serve with him on the Select Committee on European Legislation. Does he not agree that, despite the fact that we had an opportunity to hear views on our suspicions about the misuse of article 100A, which goes to the heart of some of the questions that we have been discussing today—such as the manner in which the Commission or other organs of the Community may wish to extend and enlarge the competence of the Community—we had scant replies to satisfy us that there was not a misuse? In other words, we have real grounds for being concerned about the desire of people to use article 100A to get more majority voting or to get more things through in the way that the hon. Gentleman described.

Mr. Spearing

I am grateful to the hon. Gentleman for confirming my point. The question arises, where does one use article 100A instead of other articles? I shall wait for the report before I go into some of those points. That question has been reintroduced on a subject which, today of all days, is topical—the future of summer time. Originally it was to be promulgated under article 100A. There has been some back-pedalling since then, but at least one could argue that summer time is primarily a commercial and market matter and therefore comes with in the ambit of article 100A. Other people would say no. There is some debate and, I believe, some inconsistency within the Government, about which I shall say no more.

However, that issue illustrates the difficulty that we shall face about determining limits. I think that they are deliberately set very wide. If somebody challenged whether the Commission should use article 100 or article 100A—of course, the Council can question treaty bases unanimously of the Commission and change them if it wishes—he would find that a political issue on its own. We should look to the preamble of the Single European Act for some guidance. I suggest that we look there for guidance because that is where the European Court would look. Although the preamble is not part of the treaty, it counts as far as the European Court is concerned when relating to purpose.

The third paragraph of the preamble to the Single European Act states: Resolved to implement this European Union". The last paragraph reads: Determined to improve the economic and social situation by extending common policies and pursuing new objectives, and to ensure a smoother functioning of the Communities by enabling the Institutions to excercise their powers under conditions most in keeping with Community interests. Whereas at their Conference in Paris from 19 to 21 October 1972 the Heads of State or of Government approved the objective of progressive realization of Economic and Monetary Union". That is part of the preamble to the Single European Act, which at last some Conservative Members voted through in 1986 on a guillotine and which was given full support by the Prime Minister, who also made the Bruges speech. There is some inconsistency between her comments in Bruges and the preamble to the Single European Act.

However, it is not just the Single European Act that we must look at in this regard. The Stuttgart declaration, which is entitled "Solemn Declaration on European Union", states: The heads of State and Government of the Member States of the European Community signed the following Solemn Declaration on European Union at the conclusion of the meeting of the European Council in Stuttgart on 19 June 1983". Paragraph 8 of the preamble states: determined to achieve a comprehensive and coherent common political approach and reaffirming their will to transform the whole complex of relations between their States into a European Union. All those quotations back up the report that we have had —my hon. Friend the Member for Bradford, South (Mr. Cryer) spoke of it—of Lord Cockfield claiming that European union is an inevitability. I should not necessarily agree that that is so, but I agree that the documents suggest that it is. If we take the creeping legislative competence of the Council and the Commission under article 100A, it is clear that a great deal of that legislation will displace or be capable of displacing any legislation produced by any Parliament of any member state. Therefore, there will be no element of federalism.

Today and in previous debates hon. Members on both sides of the Chamber have used the word "federalism", but it does not exist. The treaty of Rome does not have any element of genuine federalism in it that I can see. It has a great big dose of movement towards a single European union, with a single legislative centre and institutions that mirror those found in every sovereign nation state—a legislature, an Executive, a Parliament and a court. It is all there. Therefore, the threat is not one of federalism or a united states of Europe, or vague comparisons with that nation, but the development of a unitary form of government and of legislation.

The Bill will provide the money and the steam for that development. I do not expect the Paymaster General to comment too much on the last part of my speech and what I have called the post-Bruges round-up. The right hon. Gentleman may wish to leave that until Thursday. However, if anyone who, by chance, has been listening to what I have said disagrees with the facts that I have conveyed to the House or with my pessimistic interpretation of their significance, I hope that he will let me know before Thursday because, if I am fortunate enough to be chosen to speak, I have several other points to add. I believe that the British public and the House, in the post-Bruges era, have got so many things wrong that we are in great danger of not understanding the essential issues that so far I have neither read in the press nor heard on the media.

Mr. Michael Irvine (Ipswich)

I hope that the Government recognise that the anxiety about the clause and the Bill is not confined to those who will vote against them. Four years ago the House was assured that the Fontainebleau agreement had at last provided an effective mechanism for restraining the juggernaut of agriculture spending, but we all know what happened. Agricultural spending resumed its profligate lurch onwards, the mechanism to restrain that spending simply buckled and the agreement came unstuck. Now, in this Bill, we face yet again a demand for more money accompanied by the self-same promises of future rectitude that were heard four years ago, laced with renewed assurances that all will now be well and that restraint will hereafter be the order of the day.

Two considerations in particular stick in my throat. The first is the rather disingenuous way in which exchange rate fluctuations are put forward as an excuse for the gross agriculture overspending that has taken place. Exchange rate fluctuations are inconvenient and often uncomfortable, but they are part of the commercial facts of life.

Several companies in my constituency have suffered considerably in recent years because of the weakness of the American dollar. I am sure that there are many such companies in the constituencies of other hon. Members. What has happened? Those companies have had to adapt and adjust. They are not able to go to the Government with a begging bowl. There is no soft option for them. Other industries have to take difficult decisions and have to adjust, reshape and adapt, but it appears that agriculture does not have to do that. It seems that at all costs spending on agriculture must be maintained and that agriculture must be protected from the reality that less privileged sectors of the economy are forced to face.

The second consideration that sticks in my throat is what I see as perhaps the fundamental flaw in EC decisions about the level of spending. Only three of the 12 member countries of the EC are regular net contributors. Because of occasional fluctuations there is sometimes a fourth net contributor. The two main net contributors are West Germany and ourselves. Most of the other member countries are net beneficiaries. Therefore they have an interest in weak budgetary control. Of course they are disinclined to submit to financial discipline and are happy to let the minority of net contributors take the strain. That is simply a recipe for weakness and financial indiscipline.

Four years after Fontainebleau should we say that enough is enough? Should we plunge the Community into a major crisis by refusing to pass the Bill? I confess that I have been sorely tempted to make cause on this issue with my hon. Friend the Member for Southend, East (Mr. Taylor) and his fellow rebels, On reflection, because of the crisis that would follow if the Bill were rejected and because in the EC there must be considerable give and take, it seems to me right that we should allow the powers that be one further chance. However, the Government should be aware that the patience of the House is wearing thin and that there is a limit. We will not for ever put up with lax control on spending and in particular burgeoning spending on agriculture. We shall not submit indefinitely to the financial indiscipline that has characterised EC expenditure in recent years. We must have stringent scrutiny and financial discipline. We look to the Government to persuade our European partners to accept such scrutiny and discipline.

Mr. Leighton

It is a pleasure to follow the speech of the hon. Member for Ipswich (Mr. Irvine). I agree with everything that he said, except his conclusion that we should give the Government one more chance.

We have been over this ground several times and each time it has cost us more money. The hon. Gentleman mentioned the Fontainebleau agreement. Many reassurances and guarantees were given at that time and we agreed to a 40 per cent. increase in the VAT take. The other side of the deal was that there would be financial discipline.

Some of us, including, I think, the Chairman of the Select Committee on the Treasury and Civil Service, said that if we refused to vote the extra money there would be financial discipline. If there were discipline there would be no need to vote extra money. The extra money was approved and we know what happened. The EC is coming once again and putting its hand in our pocket and asking us to approve more money. This time there is an intergovernmental agreement and £650 million is to be given just like that. There is to be another 25 per cent. increase in the Community budget.

The Ministers are in the middle of their spending round. I wonder what would happen if a Minister came along to the Treasury and said, "I increased my demand last time by 40 per cent., you were good enough to give it to me and now I am back again and I want a cash handout urgently and another 25 per cent. on my budget." We all know what the Treasury would say about that.

9.15 pm

Our net payment into the Community budget is about £1.5 billion. That is enough money to solve all the immediate problems of the National Health Service, and the problems of the universities, but we do not use it for that purpose. The Treasury is severe. It keeps a tight grip on the strings of the public purse at home. We have to have proper accounting and prudence, but not for the Common Market. The Common Market has an open cheque, and it does not matter what it spends. Parliament is being asked to agree to that, as the hon. Member for Ipswich said. The majority of the countries in the Common Market pay nothing net into the Community. Many countries that are richer than us, with a higher GDP per capita, take payments out of the budget while we, one of the poorer countries, are a paymaster.

Sometimes I hear people talking about the money that we get from the social fund as though that were a good thing, but it is only a fraction of our own money coming back. Money goes from the British taxpayer to Brussels, is translated into 10 languages, some of it stays there to pay for the bureaucracy and a fraction of it comes back. What can Brussels do with our money that we could not do better ourselves?

During the recess, the Prime Minister went to Bruges and made that famous speech. I do not know whether she will vote for the Bill. However, in her Bruges speech, she said that she is against the supranational Europe. I agree with much that she said, but the difficulty is that she voted for the Single European Act, which gave the Common market powers to do what she does not like. Some of us voted against it. Some Conservative Members voted against it, but she guillotined the Bill through. I do not know whether she has had a change of view. Perhaps she did not realise what she was doing when she forced the Single European Act through the House.

What will she do now? Are the words at Bruges empty? I suspect that they are. Our experience of the Prime Minister is that she is all bluff and bluster before she goes along to these summits and then, when it comes to the crunch, she gives way. That is what happened over the budget last time and that is what happened over the limit of £160 million on the cereals target.

Now we have the Single European Act, and several hon. Members have spoken about articles 100 and 100A. Under article 100A, which provides for majority voting, it does not matter what the Prime Minister or the House says; these changes will come into existence because we have temporarily given our powers away. Under article 100, the Prime Minister is in a difficult position. She cannot always be in a minority of one. Eventually, she has to give way. One of the reasons why she has to give way is that the rebates are guaranteed only for two years. Therefore, if she does not give way, she could lose the rebates. The Common Market has her in a sensitive spot. It has her by the rebates, so she has to be extremely careful.

When we had a referendum about staying in the Common Market, the Government issued a manifesto which said: The Minister representing Britain can veto any proposal for a new law or a new tax if he considers it to be against British interests. That was the basis on which we voted to stay in the Common Market. That basis has gone. The voters have been cheated by the Single European Act and do not have the slightest clue that that basis has gone.

I refer the House to the remarks of Wilfried Martens, who has been Prime Minister of Belgium for as long as the right hon. Member for Finchley (Mrs. Thatcher) has been Prime Minister here. I refer to a recent newspaper article in which he is quoted as saying: the EEC should move from economic to full political union, where 'common sovereignty' covered foreign policy, defence and security, as well as monetary, economic, environmental and social policy. If the EC is to have jurisdiction over all that, what is left? Jacques Delors has reiterated his view that 80 per cent. will be administered by the Common Market. The machinery of the Commission, the Council and the Parliament is already imposing measures on us that we do not want. We know that in relation to taxes. Taxes have been put on spectacles and hearing aids. I do not think that any hon. Members wanted tax levied on those items. Taxes have been levied on the construction of buildings for industrial and commercial use, water and sewerage services to industry, the supply of new services to commerce and industry, the supply of fuel and power to industry and even on protective boots and helmets supplied by employers. I do not think that any hon. Members wanted that. I do not think that the British Government wanted that, but it was foisted upon us.

We saw what happened about Austin Rover. The Government said that they had stitched up a wonderful deal between British Aerospace and Austin Rover. Then we did not hear anything about it for some months, because Commissioner Sutherland had to consider the deal, but who is Commissioner Sutherland? Who elected him? If we do not like what he is doing, how do we democratically get rid of him? He then said that he would not accept the deal, despite the fact the British Parliament and the Government had a majority in favour of it. He said that it could not be allowed because the Government were writing off too much of the debt. Then we had the spectacle of the Chancellor of the Duchy of Lancaster coming to the Dispatch Box and saying, "I can't give my announcement because British Aerospace has had second thoughts. It doesn't know whether it can accept the deal."

I also say to my own Front Bench that if, under the present Common Market administration, the Conservative Government cannot implement their industrial policy, what chance has the Labour party of implementing its industrial policy under the laissez-faire treaty of Rome?

Mr. Holland

That issue has run for a considerable time, but we must recognise that although the provisions before us concern, under the Single European Act, the proposal to harmonise bidding on public sector contracts, they do not make it impossible for a country to pursue a policy of industrial intervention which it wishes to pursue.

The French are currently on their 10th medium-term plan. They were able to nationalise broad sectors of industry within the European Community without being stopped by the treaty of Rome and, in the early 1980s, more than half of the investment undertaken in France came through the public sector. The French have also been able to adopt planning measures directly with big business, gaining the accountability in the opening of the books on big business through the programme contract system which, as with similar policies in Belgium and Italy, were the basis for our planning proposals.

Although I agree with much of what my hon. Friend says, in this respect, I must point out that the treaty of Rome does not stop a country doing what it wants to do. I should like to see us joining other Community Governments to gain greater accountability from big business in the Community and greater leverage for public intervention.

Mr. Leighton

I welcome my hon. Friend's confidence. He mentioned France, and I remember that when Mr. Mitterrand first came to power he launched a policy of great expansion. He immediately ran into balance of payments problems, which he was unable to rectify by the taking of national steps. As France was a member of the EMS, he was unable to devalue the franc. The only alternative was to put on the brakes.

I do not want to prolong the debate with my hon. Friend, but it is wise and prudent for us all to realise that there are limitations and constraints on our national freedom to run our countries in our own way while we labour on under the present regime. If Mr. Mitterrand had the difficulties which I have described and if the present Conservative Government are not able to implement their industrial policy under Common Market regulations and the present policy of the Commission, we must realise that a Labour Government will have difficulties and problems. We must understand also that after 1992 there will be a capitalist free-for-all. That is the policy that is being developed. There are many who support the idea of the Common Market because they see it preventing a Labour Government introducing Socialist measures in the United Kingdom. I am advancing this argument to sound a warning. There are difficulties that must be borne in mind by hon. Members on both sides of the House.

Mr. Holland

I do not seek to detain the Committee. My hon. Friend was not correct when he said that the French did not devalue. In fact, they devalued twice, in 1981 and 1983. It was not the EMS that prevented devaluation. The EMS, as it happened, enabled a more orderly management of it. As for this Government not being able to implement their industrial policy because of Community legislation, my hon. Friend will have to enlighten me. I was not aware that the Government had an industrial policy, or that they had been restrained by the Community in any specific respect.

We must make these things clear. The reason why the French Government expanded and the reason why they could not sustain that expansion was that the rest of the OECD had confidently said that it would expand and then did not do so. It is beggar-thy-neighbour deflation by Governments in Europe that has penalised countries that want to expand, and not the EMS mechanism as such.

I am not making an argument for the EMS per se. Monetary co-operation is not neutral; it can be either deflationary or expansionary. Any Government in their right mind who are members of the EMS should proceed on the conditions that Mr. Giscard D'Estaing set when he once supported President de Gaulle. In effect, he said "Yes, but …" That meant, "Yes, we shall support monetary co-operation if it is expansionary. If it is not, that system should not be supported."

Mr. Leighton

I do not think that you, Sir Paul, would wish me to continue the private debate that I am having with my hon. Friend. I look forward to continuing the debate with him on future occasions.

Mr. Bob Clay (Sunderland, North)

I have listened with considerable fascination to the topical little private debate to which my hon. Friend has referred. He will be aware that the Government have a policy of privatisation, and one of the undertakings that they have allegedly being trying to privatise is British Shipbuilders. The last remaining substantial merchant shipyards that remain are run by North-East Shipbuilders Ltd., which is in my constituency. On 30 September, the deadline closed for bids from those wishing to take over these public assets. Four bids were received and we are expecting an announcement in the House at any moment.

It is speculated in the press that the announcement will be made that none of the bids is acceptable to the Government and that the yards will have to close. I am hearing from civil servants and those who are close to them that none of the bids is acceptable—if one were accepted it would keep the last merchant shipyards open in the area which I represent—because the Government could not get a bid through the Commission. If the Government cannot even privatise with a bit of state intervention, what chance would a Labour Government have of intervening in the way that we would want? It seems that the chance would be pretty slim.

Mr. Leighton

There is no doubt that we are no longer masters of our own house in these matters. That is absolutely clear. If the Government's deal between British Aerospace and the Rover Group could not go through unmolested, it is wise to take on board the fact that a Labour Government would have similar problems and I put it no higher than that.

9.30 pm

The hon. Member for Stafford (Mr. Cash), in his discussion of whether we were a county council, said that we had given those powers in the European Communities Act 1972, but that we could take them back. That is true. I quote the manifesto issued by the Government at the time of the referendum: The British Parliament in Westminster retains the final right to repeal the Act which took us into the Market on I January 1973. Thus our continued membership will depend on the continuing assent of Parliament. There is no doubt that we could repeal section 2 of the 1972 Act. We could repeal the Act itself.

I believe that parliamentary sovereignty is valuable. I am not one of those people who believe that it is a reactionary idea. After all, when we gave sovereignty to the former colonies of the British empire everyone thought that that was an extremely progressive thing to do. Democratic self-government is extremely valuable. As the shoe pinches more and more and as the powers and prerogatives of the EEC take powers away from us, there will be more and more resentment in this Parliament. I will never reconcile myself to the loss of self-government by this Parliament and I look forward to the repeal of the 1972 Act.

Mr. Foulkes

As you may have appreciated, Miss Boothroyd, when you were in the Chair earlier, this has been a familiar debate with some familiar faces. However, there are two very important differences since we discussed the issue on Second Reading and before. We are now witnessing the unusual spectacle of the European Community budget moving into surplus. A number of my hon. Friends and others have said that the debate is taking place post-Bruges—a watershed which for one reason or another we shall all have reason never to forget.

It has been an interesting debate because within the general debate about the European Community's finances we have had discussions about federalism in which the hon. Member for Inverness, Nairn and Lochaber (Sir R. Johnston) played a large part. We have also had discussions about the political nature of Europe. When the hon. Member for Southend, East (Mr. Taylor) talks about the European Community as a Socialist conspiracy he encourages me to advocate it even more enthusiastically. However, that is a concept or perception that some of my hon. Friends do not share. We have also had a debate in the sub-theme of democratic accountability.

I want to refer to three issues and I shall be very brief in the few moments that are left. First of all, as we know, the change that will take place if the Bill is enacted will alter the nature of the funding of the European Community. One of the central bases of the funding will still be value added tax. Although that is based on a notional rate, Opposition Members and people outside the House are conscious that an intensifying pressure from the European Community will follow to harmonise VAT in the Community.

I hope that the Paymaster General will pay attention to me. We know that the Government have given a pledge in relation to VAT on children's clothes and food. However, it would be useful to have that pledge repeated tonight and a sign that the Government will in no way resile from their commitment to veto any proposal from the Community to harmonise VAT on children's clothes and food. We have not been given a pledge of the same intensity in relation to books, magazines and newspapers. Right hon. and hon. Members from all parts of the Committee have been under continuing pressure from various campaigns, whether they be opposing a tax on reading or on learning, and aimed at persuading the Government to give the same kind of assurance in respect of books, magazines and newspapers.

We took some hope from the definitive statement made by the Prime Minister. I do not mean her statement made in Bruges but the answer that she gave to the great interrogator of Prime Ministers, Jimmy Young, on the Jimmy Young radio programme, when she made it clear that harmonisation of value added tax was not in any way a requirement and that she would continue to oppose that. She said: Do you know they do not have all the same taxes in every state in America? They have different taxes according to their different requirements and their different history, so we do not go in to have a standardised Europe. The United States has a common currency but it still has throughout its states different levels of value added tax. We need a restatement of the commitment concerning value added tax on children's clothing and food, and in relation to the other areas.

My second point concerns the comments made by several right hon. and hon. Members about the budget going into surplus. Community spending has increased by 150 per cent. in the past seven years. As has been said during this debate, the 1988 budget represents a 20 per cent. increase over 1987. The proposal made tonight by a number of right hon. and hon. Members, and particularly eloquently by the hon. Member for Northampton, North (Mr. Marlow), represents a 25 per cent. increase. I believe that it was the hon. Member for Northampton, North who first asked whether we could not use that money to make sure that child benefit is indexed and not frozen, as seems to be the Government's current intention. Hon. Members in other parts of the Committee have raised the question whether that money could not be used for funding the Health Service. There are many other areas that one could suggest.

The fundamental question to which the Minister should address himself when replying is why we need such an increase. If effective control of the common agricultural policy has been achieved, why do we need another increase —albeit, in this case, through a change in the funding mechanism? Will there be a substantial increase in the structural funds? We are told that the structural funds are to double, but, as they currently represent only a small proportion of the Community budget, there does not need to be a huge 25 per cent. increase to double them.

If we take the Prime Minister at her word, in respect of the antagonism that she poured out at Bruges and on other occasions towards the social fund, which is an integral and important part of the structural funds, it is evident that she will not approve any substantial increases. That is despite the fact that it is concerned with vital areas such as youth retraining and assistance for the long-term unemployed. As the United Kingdom's regional policy has also been abandoned, it does not seem to us likely that the Prime Minister will support any substantial increase in that direction. Given the increases that have taken place and the increase that is proposed, we need to know exactly what the money will be used for. Where will it go, if agricultural spending is under control and there is not to be the spending on social Europe that the Prime Minister has apparently vetoed?

I know that the Minister wants adequate time to deal with all the points that have been raised. My third and final point relates to social Europe. I am not sure why my hon. Friend the Member for Hamilton (Mr. Robertson) has passed me a note, but I shall try to incorporate it in my remarks. 1 think that he is pointing out that some hon. Members who have managed to vote with their conscience and according to their own beliefs in past debates on this subject will not be able to do so tonight, because the Prime Minister has appointed them to posts of responsibility in government. But 1 shall not develop that theme.

The Prime Minister's attitude towards social Europe shows her real view about the Community, and the hopes that we have of seeing the Community develop. It is notable that Members of the European Parliament—some of whom are still here among us, no doubt for only a short time—have attacked the Prime Minister for her stance at Bruges. It is also interesting that the German Chancellor, a Conservative, has attacked her stance on social Europe. It is suggested in private briefings that even members of the Cabinet are critical of it.

Mr. Marlow

They keep it quiet.

Mr. Foulkes

Of course they keep it quiet, as the hon. Gentleman rightly says.

The purpose of social Europe is to protect workers' standards of living and rights hard won over the years, and to cushion them through what will otherwise be a harsh transition in the run-up to what is now commonly described as "1992". We can understand why the Prime Minister takes the approach that she does, given her attitude to the trade unions and the workers. But, as the hon. Member for Northampton, North has said, this is not just a matter for Government but one on which this Parliament shall ultimately decide, and Opposition Members hope that Parliament will take a much more enlightened view.

That may be a forlorn hope. We have heard brave speeches from the hon. Members for Northampton, North, for Southend, East and for Thanet, South (Mr. Aitken). We are constantly told that hon. Members will flock through the Lobby to vote against the Government, that Parliament is supreme and that at the end of the day Governments, propose but Parliament disposes. We are told that it does not matter whether the Bill has the approval of Government: it need not have the approval of Parliament. Increasing ranks on the Conservative Benches will support the Opposition in their criticism of the Bill.

In this clause stand part debate, which relates to the essential part of the Bill, we are providing that opportunity yet again. We challenge Conservative Members who constantly speak brave words in the House to match them with brave actions, and to join us in the Lobby to oppose the clause.

The Paymaster General

As so often on these occasions, we have had a vigorous debate. I shall try to respond to it briefly and to meet the deadline imposed on the House.

The hon. Member for Vauxhall (Mr. Holland) raised a number of points when he opened the debate on new clause 3. For instance, he mentioned the effect of 1992 on the Community budget. Those effects are likely to be fairly small. If member states import more from other member states and less from "third countries", fewer levies and duties will be collected, but if—as we suspect—the Community is more prosperous, Community GNP will be higher, giving more resources within the new 1.2 per cent. GNP ceiling.

The hon. Member for Vauxhall paraded his familiar King Charles's head of the multinational company. He made some remarks about my noble Friend, Lord Cockfield. I did not detect a marked difference of opinion between the spokesmen for the Front Benches on either side of the Committee about our attitudes to Lord Cockfield's proposals for harmonisation.

9.45 pm

The hon. Member for Vauxhall said that Fontainebleau was not worth the paper on which it was written. As it has produced £3 billion in abatements during the past three years and a further £1.6 billion this year, the hon. Gentleman uses very expensive writing paper.

The hon. Member for Vauxhall raised a number of questions about how the House would deal with the issue of European monetary union. Article 102A of the treaty of Rome, as amended by the Single European Act, makes clear that further developments in the sector of economic and monetary union necessitating institutional changes, such as the introduction of a European central bank, would require further amendment of the treaty of Rome. That in turn would require the calling of an intergovernmental conference, the unanimous agreement of all member states and approval by all national parliaments. Thus, no institutional changes will be possible without the approval of the House. Although in the past both Labour and Conservative Governments have agreed to political declarations about the desirability of the ultimate objective of European monetary union, neither the treaty of Rome nor the Single European Act nor any other Community treaty imposes an obligation upon the Community to introduce European monetary union.

My right hon. Friend the Member for Worthing (Mr. Higgins) asked me a series of questions. First, he asked me what is the limit on overdrafts under article 12(2). I must make it clear that the purpose of overdrafts under article 12(2) is to enable the Commission to meet cash flow problems and not to finance a surplus of expenditure over revenue. The scale of overdrafts is restricted to the amount of revenue remaining under the own resources decision. In 1988, therefore, overdrafts have not anticipated either the own resources decision or the IGA that are the subject of the Bill. The overdrafts have been limited to the amounts available under the pre-existing 1985 own resources decision. On that basis, the Government have made overdraft facilities available under article 2(3) of the European Communities Act 1972.

My right hon. Friend also asked whether, if there is an underspend in 1988 and the entire IGA is paid, this would allow further unplanned expenditure elsewhere. The short answer is no. The underspending in 1988 will result in a budget surplus that the Commission rightly proposes should be carried forward to 1989. The effect of that would be to reduce the level of member states' contributions in 1989 by comparison with what otherwise would have been the case.

My right hon. Friend raised the question of the amount of the IGA seeming oddly precise for a sum intended to be a maximum figure to balance the budget. The size of the IGA was determined in the light of the expenditure decisions taken line by line on the 1988 budget by the budgetary authority. It is, therefore, rightly a precise extra expenditure on agriculture may not be called up. In fact, we now know that it is unlikely to be so. The amounts payable under the IGA, apart from contributions to the monetary reserve, can be precisely stated in advance.

My right hon. Friend asked what action the Commission proposes to take account of the effect of the United States drought on Community expenditure. The Commission has announced that it intends to bring forward an amending letter to the 1989 budget which will, among other things, take account of the prospective surplus in 1988. Although the figures have not been finalised, the Commission's current estimate is for a surplus of 2,000 mecu, comprising an increase in receipts of 700 mecu and reduced expenditure of 1,300 mecu, of which approximately 1,000 mecu would be in agriculture.

For 1989 the Commission has proposed a reduction in the FEOGA guarantee of almost 1.46 ecu to allow for the effects of the United States drought on world agricultral prices.

My right hon. Friend asked why farming should be protected from the effects of exchange rate changes, which is a question that he has asked before. I am not sure that we can give a full explanation of why agriculture has a special place in the treaty of Rome, but it clearly does. For example, article 39 gives the objectives of the CAP. It includes the need to stabilise markets and to ensure reasonable prices.

The Government support the need to open up the agricultural sector so that it is more responsive to market forces. They also support the Commission's aims to phase out MCAs by 1992. As to who enforces regulations as 2891/77 the answer is the European Court of Justice, to which, of course, individual plaintiffs could take cases.

My right hon. Friend the Member for Worthing (Mr. Higgins) said that the Bill amends the treaty of Rome and asked why we do not amend it to restrict the rights of the Parliament. I am afraid that the Bill does not do that, and without amending the treaty of Rome we cannot infringe upon the treaty rights of the parliament over DNO. The way in which the own resources decision reinforces budget discipline is by limiting the amount of total resources available for all types of expenditure. I am perfectly happy to enter into a dialogue with my right hon. Friend on that issue.

The hon. Member for Bow and Poplar (Ms. Gordon) asked about the committee to be set up under the directive on GNP. The hon. Member for Vauxhall asked whether the committee would consider the way in which the budget is spent. The answer is no. Its role will be to help to ensure that data provided by member states on their respective GNPs are compiled in a comparable manner and provided in an orderly way to the Commission. That is an important role given the increased importance to be given to GNP when calculating contributions to the Community budget.

My hon. Friend the Member for Northampton, North (Mr. Marlow) asked what would happen if the Bill failed and what would be the effect on the United Kingdom's net and gross contributions. My hon. Friend the Member for Eastbourne (Mr. Gow) asked a similar question during the points of order raised earlier. If that happened I would certainly find myself leaving Her Majesty's Government and, without consulting the Patronage Secretary, I have a feeling that he might too.

Of course it is open to the House to reject the Bill if it sees fit, but the consequences would be extremely damaging for the United Kingdom and for Europe. The February European Council agreement was a package achieved after long and difficult negotiations. In that package we secured a legally binding budget discipline, important reforms of the CAP, in particular the introduction of stabilisers, and we preserved the Fontainebleau abatement. All that would be thrown back into the melting pot if we failed to implement the package.

The question that my hon. Friend the Member for Northampton, North put about our contribution is purely hypothetical. On 15 February the Prime Minister told the House that the Brussels package would increase the United Kingdom's net payment by a maximum of about £300 million a year compared with what might have happened with the continuation of the 1.4 per cent. ceiling. That remains our best estimate and a revised forecast will appear in this year's Autumn Statement.

The hon. Member for Newham, South (Mr. Spearing) raised a series of questions relating to why there was a ceiling on commitments of 1.3 per cent. of Community GNP. The 1.3 per cent. ceiling on commitments is in article 3 of the own resources decision, the purpose of which is to ensure an orderly relationship between commitments and payments. Such a relationship will help us to avoid the problems of the mid-1980s, when commitments grew much faster than payments—the so-called cost of the past. The commitment ceiling of 1.3 per cent. of GNP is above the payment ceiling of 1.2 per cent. In a situation where expenditure is growing, it is natural for commitments to exceed payments. Commitments cover payments for future years as well as payments for the year in which they are entered into the budget.

The hon. Member for Newham, South asked about decisions made within the Council. He is perfectly correct to draw a distinction between agreements of the Council and agreements between member states. The distinction is clear in the Bill as it is now worded. I assure the hon. Gentleman that we shall not allow that distinction to be blurred.

From time to time member states meet within the framework of the Council and reach conclusions that are not Council conclusions, but rather conclusions of the member states. That is the case with the 1988 intergovernmental agreement. It is accurate to refer to the IGA as an agreement between member states confirmed at their meeting within the Council.

The hon. Member for Newham, South congratulated my hon. Friend the Member for Skipton and Ripon (Mr. Curry) on what I thought was an extremely thoughtful speech. The hon. Member for Newham, South went on to ask questions relating to what he described as the "post-Bruges" situation. He asked a question about the "leasehold" on the rebate, but I remind him that that is an unfair comment. The new abatement system is not limited in any way. It will last as long as the new own resources decision. It can be changed only by the unanimous agreement of all member states and after approval by all national parliaments. Exactly the same was true during the post-Fontainebleau period, although there was a de novo examination by the Commission.

Various Opposition Members mentioned the absence of the Foreign Secretary, who was present on Second Reading, when the shadow Foreign Secretary was noticeably absent. It is a sign of the unfamiliarity of the Opposition Front Bench with what goes on in Europe that they are unaware that there is a Foreign Affairs Council today at which my right hon. and my right hon. and learned Friend are present.

The hon. Member for Newham, North-East (Mr. Leighton) asked about the qualified majority voting now applying to taxation, but that is not true. Under article 99, all tax proposals demand unanimity whether or not they are part of the internal market programme. I am grateful to my hon. Friend the Member for Ipswich (Mr. Irvine) for giving the Government the benefit of the doubt.

That brings me to new clause 3, which the hon. Member for Vauxhall moved. His concern for what he described as an exercise in transparency is the first evidence that I have seen of the Opposition Front Bench taking an interest in these matters. I would give them the benefit of the doubt that they have a continuing interest in it. I assure the hon. Gentleman that the matters that he wants to see in his report are amply covered in the information which the Government already make available to the House.

Mr. Holland

Sometimes one wonders how much attention the Paymaster General pays to our points. If he looks at the Hansards of our previous debates, he will find that I constantly push the theme of transparency. On the earlier matter that he raised, he should be re-advised by the Treasury Bench. If there are increased imports to the Community, revenues will rise, not fall.

Mr. Brooke

I spoke of fewer imports. The hon. Gentleman rehearsed several areas where he would like to see improvements and I am happy to write to him to show him where he can find them. These subjects are already adequately covered.

The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) asked where the increase in the budget was to go. For the first time, the Community has a five-year spending plan, the so-called financial perspective, which shows precisely where the additional resources might be spent. I commend to him the inter-institutional agreement, to which the perspectives are annexed. He asked, most extraordinarily and late at night on a wholly different debate, for a restatement of the Government's commitment on VAT. He knows perfectly well what our commitments are and he ran over the familiar subjects—for example, food, children's clothes and domestic fuel.

Mr. Foulkes


Mr. Brooke

I am dealing with the subject of this clause, Miss Boothby—[Laughter.] Miss Boothroyd. I am trying to finish by an agreed time.

Clause 1 contains prudent measures secured by hard negotiation. This is a pragmatic Government who respond to the circumstances of the various matters on which we must negotiate. I am proud to put this clause before the House and I share with my right hon. Friend the Prime Minister the collective responsibility of the whole Government. Her speech in Bruges admirably made clear where the Government stand.

Mr. Spearing

As you know, Miss Boothroyd, this is exempted business, so the haste with which the Paymaster General has uncharacteristically completed his speech must have something to do with an understanding between Front Bench spokesmen—but nothing to do with Back Benchers.

10 pm

Why will the right hon. Gentleman not accept new clause 3? Will he consider taking the Bill no further tonight, because if we continue until later we may encroach on the time for a prayer which, as he knows, is time-limited?

Mr. Brooke

As I said, we shall not accept new clause 3 because the things it asks for are adequately covered in other Government publications, notices and statements, which are issued throughout the year.

Mr. Marlow

My right hon. Friend said that if the clause were defeated tonight he would feel that he had to resign. We should all be sorry—

It being Ten o'clock, The Second Deputy Chairman left the Chair to report Progress and ask leave to sit again.

Committee report Progress.