Commons Sitting of 19 October 1990

Preamble
The House met at half-past Nine o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS

  Points of Order
  9.34 am
  Mr. Stanley Orme: On a point of order, Mr. Speaker. Yesterday when a question was raised about the Prime Minister calling my right hon. Friend the Leader of the Opposition a "crypto-communist", you said:
  "Allow me to reflect upon the matter to see what can be done."—[Official Report, 18 October 1990; Vol. 177, c. 1394.]
  Have you had a word from the Prime Minister about withdrawing that remark?
  Mr. Speaker: I have not had a word from the Prime Minister, but I have reflected upon the matter. I have discovered a specific ruling on this point. On 5 May 1948 the Speaker ruled that it was not out of order for one hon. Member to refer to another as a crypto-communist. However, he deprecated personalised attacks. As I said when the matter was raised yesterday, it appeared to me that the Leader of the Opposition was amused rather than offended by what the Prime Minister said and I took the precaution of seeing the action replay on television this morning. Perhaps we should leave the matter there.
  Mr. Dennis Skinner: Further to that point of order, Mr. Speaker.
  Mr. Speaker: No. I have not yet finished. I must add that I do deprecate personal aspersions between hon. Members. For the benefit of the House I shall quote page 380 of "Erskine May" which states:
  "Good temper and moderation are the characteristics of parliamentary language. Parliamentary language is never more desirable than when a Member is canvassing the opinions and conduct of his opponents in debate."
  Mr. Skinner: Further to that point of order, Mr. Speaker. It is well known that in the House hon. Members comment about others and that on occasion hon. Members are penalised for making those remarks. I referred yesterday to the time when I was thrown out of the House for calling Doctor Death a pompous sod. It seems that the rules are changed according to who makes the remark. For example, what would your reaction be—
  Mr. Speaker: Order.
  Mr. Skinner: —If I called—
  Mr. Speaker: Order.
  Mr. Skinner: —the Prime Minister a crypto-fascist? Is that in "Erskine May"?
  Mr. Speaker: Order. Will the hon. Gentleman sit down? I refer him to the precedents on this matter. If he looks up Hansard of 5 May 1948, he will see the exchanges that took place. Times have changed since 1948 and I repeat again—
  Mr. Skinner: It depends who says it.
  Mr. Speaker: Order.
  Mr. Skinner: You dare not throw them out.
  Mr. Speaker: Order. I again draw the attention of the whole House to the excerpt from "Erskine May" that I have just quoted. We should not cast personal aspersions on each other. I deprecate it. Hon. Members who saw the action replay on television this morning will have noted that there was a great deal of noise. The microphones amplify noise coming from the Back Benches on each side. It is not always possible in the Chair to hear remarks made in a soft voice.
  Mr. Orme: Thank you for your comments, Mr. Speaker. It might benefit the House if the Prime Minister reads what has been said today. I see that the deputy Prime Minister is present. The Prime Minister might reconsider her remark and let the House know accordingly.
  Mr. Speaker: I am sure that the matter will be drawn to the Prime Minister's attention.
  Mr. Robert G. Hughes: On a point of order, Mr. Speaker. You will recall that two days ago I raised a point of order because my name had been added in error to a number of early-day motions, including 1398 which is entitled "Massacre in Jerusalem". Some of my remarks at that time about the naivety or anti-semitic nature of the contents of the motion could have been taken as a personal remark about the hon. Member for Aberdeen, North (Mr. Hughes), who shares my name. I should like to make it clear to the House that that was not my intention, nor is it my view. Naturally I withdraw my remarks so far as the hon. Gentleman is concerned.
  Mr. Speaker: That is in the best traditions of the House, and I thank the hon. Member.

German Unification
[Relevant documents: Fourth Report from the Foreign Affairs Committee on German Unification: Some Immediate Issues (House of Commons Paper No. 335), the Observations by the Government on the Report (CM. 1246), and the Seventh Report from the Treasury and Civil Service Committee on International Monetary Arrangements: Eastern Europe (House of Commons Paper No. 431) and the Seventh Special Report from the Committee: the Government's Observations on the Seventh Report (House of Commons Paper No. 645) so far as they relate to German Economic and Monetary Union.]
9.39 am
The Minister of State, Foreign and Commonwealth Office (Mr. Tristan Garel-Jones): I beg to move,
That this House takes note of European Community Documents Nos. COM(90) 400 on transitional measures consequent upon German unification and 8782/90 on revision of the Community's financial perspective in the light of German unification; and endorses the Government's approach to these negotiations.
The House will be aware that I have spent most of my parliamentary life in the genteel and rather sheltered world of the usual channels. To that extent, in relation to the House, I claim to be an innocent abroad. The hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) kindly arranged a little outing on the nursery slopes for me by placing an Adjournment debate on the Order Paper just before the recess—a typically thoughtful gesture on his part—so I cannot even claim the House's indulgence as a novice performer at the Dispatch Box.
Today's main business is to debate the European Community's package of legislative proposals integrating the former German Democratic Republic into the European Community. That matter cannot be divorced from the wider background of the enormous changes that have swept across Europe in the past year. Nothing has symbolised those changes more than completion of the "Treaty on the Final Settlement with respect to Germany" and the achievement of German unification.
The unification of Germany is without doubt one of the single most important events to take place in our lifetime. It is a triumph for the German people and a vindication of the steadfastness of the allies throughout the cold war. And it is a tribute to President Gorbachev and his new Soviet Union.
German unification has heralded in an exciting prospect of a different and more hopeful world—a world not without danger and difficulty, but a world where it is possible for the community of nations—faced with the challenge of Saddam Hussein—to unite in a way that would have been unimaginable a year ago.
On a more prosaic level may I make a general House of Commons point? Those great events were triggered a year ago by the collapse of the Berlin wall; they gathered pace and moved on at a speed that is a salutary reminder to us politicians that, quite frequently, it is not we who shape events—but people themselves. The most that we can claim to do sometimes is to run along behind, trying to place these events in some kind of order. In essence, that is what we are doing in the House today.
The treaty, unification, and the EC reaction to it all took place while the House was in recess. I place on record my thanks for the co-operative response I received from the hon. Member for Hamilton (Mr. Robertson), who
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leads for the Opposition on EC matters, and from the hon. Member for Newham, South (Mr. Spearing) who chairs the Scrutiny Committee, when I expressed to them my anxiety that the House was not able to discuss these matters as and when they arose.
Equally my right hon. Friend the Member for Guildford (Mr. Howell)—whose Select Committee report is one of the documents relevant to today's debate—has taken great pains to keep in close touch with my right hon. Friend the Secretary of State throughout this fast moving drama. The Secretary of State has twice given evidence on German unification to the Select Committee on Foreign Affairs. The Government's reply to the Committee's report was published on 10 October.
I am grateful to all three Members for the interest they took in those matters during the recess, and I hope that the House itself will recognise that Her Majesty's Government have taken the earliest possible opportunity to enable the House to address itself to those matters.
In my speech, I shall remind the House briefly of the process of German unification, including two-plus-four talks and related matters. I shall then examine the EC implications of German unification, focusing in particular on the Commission's proposals for integrating the former GDR into the Community. In doing so, I shall draw attention to two detailed points that I expect to be of interest to the House: the interim arrangements now in force and the financial consequences of the overall package.
Let me turn first to the remarkable events of the past year in Germany. The process of unification began at the moment the Berlin wall was breached. From then on, the pressure for unification grew ever more intense as the bankruptcy of the GDR's economic and political system became clearer. Once the people of the GDR had voted on 18 March for unification, democracy and a market economy, work began in earnest. A decisive step was the introduction of German economic and monetary union—GEMU—on 1 July. I draw the attention of hon. Members to the report on this by the Select Committee on the Treasury and Civil Service and the Government's reply. GEMU initiated a period of economic and social adjustment which will no doubt take some time to be resolved. The economic and social upheaval in turn gave rise to political pressures which led to the decision to unify on 3 October. Therefore, I shall deal first with the non-EC aspects.
At Ottawa in February my right hon. Friend the Foreign Secretary and his colleagues agreed on the framework of the so-called two-plus-four talks, which brought together the two German states and the four wartime allies—Britain, France, the United States and the USSR—to discuss the external aspects of German unification. That proved to be a successful piece of machinery. Throughout the two-plus-four process the Government took the view that unification itself was something for the Germans themselves to decide. But we were concerned to ensure that the external aspects, which considerably affected our interests and which included a number of rights and responsibilities, were properly addressed and dealt with.
Two-plus-four Ministers met four times: in Bonn on 5 May, in East Berlin on 22 June, in Paris on 17 July and in Moscow on 12 September. The Polish Foreign Minister took part in the Paris meeting when Germany's border with Poland was discussed.

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The outcome of those meetings was the treaty to which I referred earlier. The treaty ends four-power rights and responsibilities relating to Germany as a whole and to Berlin, makes Germany's borders definitive, spells out that Soviet troops will leave Germany by the end of 1994, reaffirms Germany's right to belong to whatever alliances it chooses and deals with security arrangements for the territory of the former GDR. It is a good treaty, which meets our objectives while taking account of legitimate Soviet concerns.
The treaty comes into force when all signatories have ratified it. Germany and the United States have already done so. Our own ratification will be complete soon. It has been laid before the House in the normal way, for clearance under the Ponsonby rules. To cover the period between unification and entry into force of the treaty Foreign Ministers of the two-plus-four countries agreed in New York on 1 October that four-power rights and responsibilities would be suspended from the date of unification, 3 October, so that Germany would enjoy full sovereignty from the outset.
Two-plus-four was limited to those areas of business that the four powers and Germany needed to resolve together. We have also been active in negotiations with the Germans, the French and the Americans over issues that concern the western allies. The outcome of those is a series of agreements dealing with: the stationing of forces in Germany, the stationing of forces in Berlin, the 1952–54 relations and settlement conventions, and air services to Berlin. The purpose of those agreements is to put in place the practical arrangements needed to replace those that fell away with the ending of four-power rights and responsibilities. They will all be published as Command Papers.
Sir Geoffrey Finsberg: My hon. Friend the Minister mentioned a document on air services. Will he say now or during the winding-up speech whether the ridiculous height limitation on flights into Berlin have been abolished?
Mr. Garel-Jones: I shall ask my hon. Friend the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, who is to wind up the debate, to answer the question of my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg).
The background that I have outlined is, of course, directly relevant to the central purpose of our debate—the EC implications of German unification. The two-plus-four negotiations did not address the integration of the former GDR into the European Community. That is a matter for all EC member states. The United Kingdom has, from the outset, worked for the smooth and rapid integration of the GDR into the European Community. At the Dublin European Council in April, the Prime Minister was instrumental in securing conclusions that set the Community machine in motion. The European Council tasked the Commission to prepare proposals paving the way for EC-GDR integration. The Commission produced a detailed and thorough set of proposals in August. They landed on my desk, all 322 pages of them, at a time when many right hon. and hon. Members had other seasonal distractions. Those proposals are the focus of today's debate.
The leitmotif—hon. Members will forgive Watford a little Wagner today—of the Commission's approach was
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to ensure that, in principle, the territories of the former GDR became part of the European Community upon unification. That meant EC law had to be applied there as from 3 October.
Dr. Norman A. Godman: I hope that the hon. Gentleman or the Minister who is to reply to the debate will say something about the implications of unification for some of those whom I represent—the fishermen in Scotland. I have not met a single person in Scotland who has not wholeheartedly welcomed unification, but our fishing communities are deeply concerned about the implications of an enlarged German fishing fleet being allowed to fish in the so-called free waters west of Scotland and in the North sea.
Mr. Garel-Jones: The hon. Gentleman raised that question with my right hon. and learned Friend the Leader of the House when he made his business statement on Monday. I know that the hon. Gentleman will be relieved to hear that the reply that my hon. Friend the Minister will make at the end of the debate will satisfy both the hon. Gentleman and those whom he represents.
It was not possible for EC law to apply in its entirety in the former GDR immediately; environmental and other standards were well below the Community norm. A transitional period was clearly required before such standards could be applied. A limited number of derogations were necessary. The Commission's package therefore contains a series of substantive proposals for legislation. Each of them has been described for the House in an explanatory memorandum deposited with the Scrutiny Committee during the recess.
Mr. Dennis Skinner: How much will they cost?
Mr. Garel-Jones: I shall deal with that later in my remarks.
The main areas covered are trade, agriculture, environment and transport. When the Commission prepared its package, it was assumed that German unification would take place towards the end of the year. The telescoping of the timetable for German unification meant that European Community institutions could not complete their handling of the package before 3 October. It was therefore necessary to adopt interim procedural arrangements that would cater for the period between unification on 3 October and final adoption by the Council of the Commission's proposals. We expect that to happen in late November or early December.
We had a unique problem during that interregnum. No one wanted the ex-GDR integrated into the Community but unable to apply the acquis in full and with no constraint on the extent of its non-compliance. The Commission package therefore also contained two draft Council instruments that authorised the Commission to apply the proposed measures during the interim period as if they had already been adopted. That was of course without prejudice to the final Council decisions on the individual legislative proposals.
I submitted explanatory memorandums on those measures to the House on 10 September. I discussed them with the Chairman of the Scrutiny Committee on 7 September, and wrote to him on that date. It is fair to say that he, too, recognised the need for an interim arrangement, and the impossibility of holding up a

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decision until after the House reassembled some two weeks after unification. The Foreign Affairs Council discussed the draft instruments on 12 September, and finally adopted them on 17 September.
I regret that, because of the recess, it was not possible to meet normal scrutiny arrangements for those measures. Our purpose was to set a limit to the extent of derogations permissible during the interregnum. An absence of specific legislation would have risked a free-for-all which would have been in no one's interest. The procedure also allows the Commission to act, during the interim phase, as if its proposals were in force. Negotiations so far have shown that there are no major problems for Britain in the Commission's proposals. I hope that the House will agree that under the circumstances the Government were right to take a decision on those measures during the recess.
I now come to the main package of transitional measures. European Community—GDR integration poses a number of detailed technical issues across a range of EC policies, of interest to several Whitehall Departments. The Commission's proposals are the subject of intense negotiations in Brussels. A special working group has been dealing with the package in uninterrupted session. There will be a brief discussion of the package at the Foreign Affairs Council next Monday and probably also at the Council in November. Now is, therefore, an ideal opportunity for the House to express its views on the substance.
The task of integrating the GDR into the European Community throws up no institutional problems. The German Government have not sought amendments to the treaties establishing the Community—only to secondary legislation. Nor have the German Government sought amendments to the provisions for German weighting in qualified majority voting or an increase in the number of German members of the European Parliament to reflect German unification. I am sure that the whole House will welcome that.
Mr. Harry Barnes: Does not the German lack of interest in extending its representation in the European Parliament show the weakness of the European Parliament? It is like joining nothing, so there will not be any great pressure to take additional seats. Additional seats will be required only if the European Parliament begins to be of significance—the more significant it is, the more pressure there will be from the Germans to take additional seats.
Mr. Garel-Jones: I am interested in the hon. Gentleman's comments. I suppose that he is a crypto-member of the Labour party in these matters. His view on the Community and on the European Parliament is not, as I now understand it, the view taken by the Labour Front Bench. I do not think that it is even remotely plausible to accuse the Federal Republic of Germany of a lack of interest either in the European Parliament or in the Community.
Mr. Skinner: The truth is that the Minister is a crypto-Euro fanatic and always has been. When he entered this place, his main intention was to become further embroiled in the Common Market, but I do not think that he told the electors of Watford about his intention. Now he has an opportunity to prove it. He is saying something
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quite appalling to the House today. Germany has a £36 billion surplus on its trade with the rest of the world, and we are up to the neck in debt, yet the Minister is proposing that British taxpayers, who are already saddled with £16 per family to prop up the common agricultural policy, should hand out more of their money so that Germany can be even more powerful than it already is. I think that the Minister is a crypto-jackboot.
Mr. Garel-Jones: It is an important moment in the life of any Front-Bench spokesman when he receives his first intervention from the hon. Member for Bolsover (Mr. Skinner). It was a characteristically cosmopolitan intervention. If I am a crypto-Euro fanatic, he is a crypto-member of the Labour party in these matters.
Mr. Harry Barnes: On a point of order, Mr. Deputy Speaker. I do not intend to raise a point of order about being called a crypto-member of the Labour party—nor, I imagine, will my hon. Friend the Member for Bolsover (Mr. Skinner).
Mr. Garel-Jones: The House may find it helpful if I highlight the major substantive issues under negotiation in Brussels. One area of discussion in Brussels so far has been trade. It is extremely encouraging that the Commission estimates that about 80 per cent. of single market legislation can apply to the ex-GDR immediately, including that on public procurement, financial services, company law, indirect taxation and intellectual property.
The Community does, however, have to take some account of the very different trading environment within which the GDR has been operating until only very recently. It would, for example, cause considerable difficulties for the East Germans if goods produced in the former GDR were suddenly banned from sale in their own markets on the ground that they did not comply with EC standards. The Commission has, therefore, proposed that such goods may continue to be sold in the territory of the former GDR for a limited period. That does not, of course, affect other EC goods, which may circulate freely in the former GDR.
While many trade agreements between the former GDR and her traditional trading partners in eastern Europe, including the Soviet Union, expire at the end of this year, others will need to be renegotiated. The normal application of the EC rules would mean the immediate imposition of EC tariffs and standards on imports into the former GDR. Not only would that cause difficulties for GDR businesses, but it might also cause economic problems for the third countries involved that we and others are trying to assist. The Commission has, therefore, proposed that the derogations allowed for sub-standard GDR goods may also be extended to traditional eastern European imports, and that tariffs on east European imports may be suspended up to the maximum quantities and value of traditional patterns of trade.
We support those proposals. They should not cause any distortion to UK trade, because the transitional periods are so short—only limited derogations are allowed beyond 1992—and the goods benefiting from these derogations will only be traded within the territory of the former GDR.
We must of course ensure that the goods benefiting from those transitional arrangements do not circulate elsewhere in the Community, which would risk distorting trade. We have had particularly close contact with the German Government on that point, and, I am pleased to

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say, have reached a satisfactory agreement. We are confident that the risk of leakage is small—but were any problem to arise, arrangements have been put in place to ensure very rapid action to end it.
I have already mentioned briefly the length of the derogations. The Commission's aim, in line with the conclusions of Dublin Council in April—reported to the House by my right hon. Friend the Prime Minister immediately afterwards—is to keep the number of transitional derogations from EC law as few, and as short, as possible. Quite rightly so. In practice, most derogations are for two years—until the end of December 1992. In some areas, however—notably the environment—longer derogations are unavoidable. Rt. hon. and hon. Members will need no reminding of the appalling state of environmental decline in the GDR—as good a symbol as one could hope to find of the failure of the communist system.
With derogations proposed until the end of 1995 at the latest, GDR industry will need to make considerable and rapid efforts to meet EC requirements, and the Commission also wisely ensured that new infrastructural investment in the GDR will be excluded from these derogations. So from now on, for example, any new power stations there will have to be built to EC standards. Again, we are satisfied that there is little risk of distortions to competition, but any difficulties could be taken up with the Commission.
Mr. Tony Banks: Does the Minister have any calculations about the cost of cleaning up East Germany? I have heard a figure mentioned, for a 10-year period, of $140 billion to $150 billion.
Mr. Garel-Jones: The cost, which will be substantial, will fall on the Federal Republic. I do not know what the exact figure will be, but that is the price that the former citizens of the GDR must pay for 40 years of the kind of rule that some Opposition Members below the Gangway would support for our own country.
Competition policy and state aids are, of course, of particular interest and concern to us. One great advantage of bringing forward the date of unification is that the full force of the EC treaty in those areas will now apply to the former GDR. That is important at a crucial time in the economic development of the territory, with massive new investment flowing in. We have now moved to a position where the competition policy Commissioner, Sir Leon Brittan, has direct responsibility for applying the treaty of Rome in a country which a year ago was a communist state.
The Commission package includes proposals to allow derogations from secondary legislation on state aids, by allowing assistance to the shipbuilding and steel sectors. But we are satisfied that the current provisions of the sixth shipbuilding directive, which will apply to the ex-GDR and will he extended to the seventh Directive, protect the interest of other member states, and we have successfully pressed for assurances from the Commission that they will closely supervise the provision of aids to the steel sector, and take urgent action should any distortions of competition arise.
Agriculture is of course a key area, too, and one with immediate financial implications for the Community. My hon. Friend the Parliamentary Secretary to the Ministry of
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Agriculture, Fisheries and Food, will speak later in the debate, if he catches your eye, Mr. Deputy Speaker, and will cover those matters in some detail.
The United Kingdom has worked hard in the Brussels negotiations to resolve issues of potential concern. I am glad to be able to report that virtually all the areas of concern to us have been worked out to our satisfaction. Subject to approval by the House today, I hope that the Council will be able to reach a common position on the Commission's package before the end of the month. Final adoption should be by early December at the latest, following the Second Reading in the European Parliament.
That decision will, in effect, complete the handling of the external aspects of German unification. The rapid pace at which the package will have been handled in Brussels and Strasbourg is a tribute to the effectiveness of all the Community institutions.
I turn to the financial implications, in which the hon. Member for Bolsover expressed an interest. Volume III of the main commission package, which I am sure the hon. Member for Bolsover has read, covers that aspect, and the financial implications are updated by the Commission's proposal for revision of financial perspective, which also forms part of this debate. It is, of course, for the German Government to cope with the costs of unification. It has always been clear that they would bear the lion's share of the cost of adjustment.
There will, however, also be both expenditure and revenue on the EC budget as a result of integrating the GDR into the Community. As I have already made clear, EC law applies to the former GDR from unification. That includes the own resources decision. There will, therefore, be an immediate new source of income to the Community as a result of integration. However, the former GDR territories will also be eligible for Community expenditure—for example, from the structural funds and on agriculture.
Overall, the budgetary costs of EC-GDR integration should be well within the revenue ceiling set out in the 1988 own resources decision. Precise estimates are difficult, but the Commission estimates a net cost to the Community of about 500 mecu in 1991, peaking at a maximum of 1 becu—about £700 million—in 1992.
But our latest estimate is of a net cost to, the Community of some 650 mecu in 1991, peaking at a maximum of some 1·2 becu—around £835 million—in 1992.
Thanks to the Fontainebleau mechanism—I know that the hon. Member for Bolsover is closely attached to that because it has involved substantial savings for Britain over the years, thanks to the intervention of my right hon. Friend the Prime Minister, savings which the Labour Government were prepared to forgo—the net cost to the United Kingdom of EC-GDR integration will be small—on these figures, nil in 1990 and about £32 million in respect of 1991. I should stress that these figures can only be indicative at this stage.
Mr. Skinner: We have heard all this before about the Prime Minister going to the Common Market and coming back with barrowloads of money. The truth is that since the Government got in in 1979, it has cost the British taxpayer £14 billion to be a member of the Common Market, so where are the barrowloads of money? The Minister now says that the cost will be nil this year and

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about £32 million next year. The truth is that those figures are fiddled like all the other Government figures.. Here we are with the British taxpayer paying £16 a week for every family in Britain to prop up the common agricultural policy. We are now giving money to make the German regime more powerful. The Minister also said that the Government are going to prop up shipbuilding yards in east Germany and elsewhere—while they are shutting down shipbuilding yards in Sunderland and Birkenhead. What a scandal.
Mr. Garel-Jones: The truth is that the cost to the United Kingdom is considerably less than the British taxpayer has been spending for the past 20 years on propping up the industry that the hon. Gentleman is so interested in. If the Commission needed any advice on cooking the books, I think that it would know where to go.
This small cost to the United Kingdom will, we hope, be offset by greater opportunities for United Kingdom firms to do business in the German Democratic Republic. My right hon. Friend the Secretary of State for Trade and Industry is encouraging United Kingdom businesses to explore for themselves the important opportunities created by German unification. There are now 16 million new consumers in the single market. It is vital that we do not leave these new investment opportunities for others. The former German Democratic Republic territories must certainly come to terms with massive economic problems as a result of the transformation of their economies, but we believe that rapid growth is likely in due course.
At the outset of the debate I referred to the historic importance of these events that the House is now debating. As the Foreign Affairs Committee report points out,
"the re-emergence of a great unified German state is a development which alters the structure of world power".
A year ago East Germany was a communist country with all that that meant politically, economically and in terms of human rights. Today, with the documents before the House, we have in our hands the tools which bind that ex-communist territory into our democratic system, into our single market.
The new united democratic Germany makes the Community stronger and larger than it was before the recess. Yes, it is a challenge, too, because Germany will carry—and deserves to carry—a lot of weight within the Community institutions. But those challenges will be met on the level playing field increasingly provided by the single market. We in Britain must meet them because it is the challenge of the market place for which we have fought for so long within the Community.
But there is another challenge that all nations now face, and that is the wider challenge of the new world order, in which the new Germany will play an important role. As we have seen in the Gulf, it is an order which is not without danger and risk, but the very response the world has made to the situation there underlines the hopes that we all have for the future.
I have no doubt that the House will want to play its part in pressing forward with the process of EC-GDR integration which is a small part of the wider process of European integration after the collapse of communist ideology. I commend the proposals to the House.
10.14 am
Mr. George Robertson: I offer a warm welcome to the Dispatch Box to the hon. Member for Watford (Mr. Garel-Jones). He comes with a remarkable reputation, forged in the smoke-filled heat of the Whips' Office, and the delight of his right-wing friends at his movement to the Foreign Office—perhaps he will be replaced by some of them—tells its own tale of his background.
I offer the Minister a salutary warning—he should not get to like his job, because it is not an especially safe post. Since I was appointed to the Opposition Front Bench to speak on foreign affairs, nine years ago this month, I have watched no fewer than 23 Foreign Office Ministers come and go. The last tranche of three lasted one day less than a year. The hon. Gentleman's predecessor, the hon. Member for Warwickshire, North (Mr. Maude), the Minister for Europe, was one of those who managed one day less than a year. In the light of certain events last night in the south of England, it is likely that the hon. Member for Watford will be back in the Opposition Whips' Office before that record can be broken.
I welcome the debate because the subject is of enormous and momentous importance, but I must enter one caveat. I note the congratulations and thanks that the hon. Member for Watford gave for the co-operation he had received. The Scrutiny Committee, to whose work he paid testimony, does an enormously valuable job and has produced two reports on the documents that we are considering. I became aware of those reports as I sat listening to the Minister's speech. The reports are extremely important and apparently they were in the Vote Office at some point during the week—perhaps late on Wednesday—though they are not on the Table of the House for hon. Members this morning. I know that this is not directly the Minister's responsibility, but when the House is asked to consider documents running to more than 320 pages at very short notice and when the Scrutiny Committee goes to the time and trouble of going through them, making recommendations and drawing conclusions, the House should at least be made aware that its report is available in the Vote Office. The attention of Front-Bench spokesmen, as well as those responsible for the issue, should be drawn to that fact. It is a matter of some regret to me that that did not happen and I point it out for the future.
Mr. Nigel Spearing: I am grateful that my hon. Friend has drawn our attention to reports, which hon. Members on the Scrutiny Committee feel are important. For the record, the Committee considered these documents after receiving them in the post during the recess. I pay tribute to the Minister for his excellent communications to Committee members during the recess. The Committee met on Tuesday morning at 10.30 and we hoped that our report would be made available. I am grateful to my hon. Friend for advertising the importance of our reports. Ultimately they will be published as our 32nd report of the Session. When debates arise at short notice we put the typescript of our reports in the Vote Office and we hope that these reports are a succinct summary of the content and import of many important documents.
Mr. Robertson: I pay tribute to my hon. Friend and to the work that his Committee has done by glancing through

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these documents. In the limited time available I have found that the report offers a helpful and useful gloss on the matter that we are considering. The authorities of the House should consider how Scrutiny Committee reports can be made more generally available to hon. Members.
Although it is the European Community implications of German reunification that we are considering today, that act of uniting the two German states, brutally and artificially divided for the last 40 years, marks the final end of the second world war and puts a line under the cold war itself. Those of us, such as the Minister and myself, who have known only the days of a divided Europe, and a continent divided on that fault line which ran through Germany from the Baltic sea to the borders of Czechoslovakia, can especially savour the final act of a chilling and paralysing play which went on for so long.
I still retain memories of seeing the Berlin wall for the first time. Few people, in my experience, found it easy to take in. It seemed, at exactly the same time, to be both obscene and absurd, with concrete, guns, guards, dogs, traffic traps and searchlights all the way down the centre of a city in the modern world. It struck me then, and it still does, as incredible and sinister. I cannot imagine such an absurdity surviving the derisive vandalism of a couple of days of Glaswegian hostility. It survived, however, for far too long. Its asbestos-riddled chill will have entered the soul of a generation of Germans and others. It will not, and never should be, forgotten. The wall has now gone, but it is not yet a full year since that emotional 9 November when the pack of rotten cards that was the edifice of the German Democratic Republic finally crumbled.
Today is a day for marking in this Parliament our joy at the end of a divided Germany, a day when this Parliament of our United Kingdom can pay tribute to those brave people in the former German Democratic Republic who stood for freedom, decency and self-respect against a corrupt, corrosive communist dictatorship and whose real sacrifices laid the foundation for people to be free for the first time in almost 60 years.
We can, and we should, also pay tribute to the robustness of West Germany's democratic institutions. Some of them were certainly influenced and built by us after the second world war, but all of them were made to work by Germans who were determined not to repeat the horrors perpetrated by former generations. The success, both economic and political, of the Federal Republic of Germany is a testimony to the achievement of the post-war German generations in building a new nation which is peaceful, prosperous, generous and friendly, and that may be a moral for the new world order to which we all aspire.
We should also pay tribute in the debate to some others who transformed science fiction into political science during the last 12 momentous months—to the Hungarians, whose decision to open their borders to the refugees from Herr Honecker's "workers' paradise" kicked the final crutch from under the regime; to the Poles, whose devotion to Solidarity, even after martial law was imposed, kick-started the whole process that led to the end of the walls, the wires and the communist ruling classes; and to Mikhail Gorbachev, justifiably the recipient this week of the Nobel peace prize. who gave the signal that force would no longer be the means of tying the satellite states to mother Russia and who now sees mother Russia herself disintegrating into a dozen potential Lebanons.
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Although the debate gives us a chance to recognise and debate the new era that German unification, more than any other single event, symbolises, I recognise that it is also about the pain that the transition will involve. The 320 pages of the document before the House are a blow-by-blow description of the complexities and problems that this one act of political progress will mean for our 12-nation Community.
The Opposition endorse the general position that the Government have taken, reflecting, as it does, the collective position of the Council of Ministers, the Commission and the European Parliament. The pace of unification took everyone, including many Germans, by surprise. The measures that have been outlined are clearly necessary in the special circumstances, even though we all realise that more time, were it available, would make the transition easier and more digestible.
Before I deal with the Commission's document, I wish to refer to the important implications that the unification of Germany will have for our bilateral relations with Germany. Germany was and, in its larger form, will continue to be Britain's major European partner. The united Germany's eventual economic and political strength will make that relationship more and more important, so how we build our friendship and partnership with Germany will very largely determine what sort of role we ourselves play in the new Europe. That should be a self-evident and blindingly obvious truth. That it has to be said at all is a measure of just how hopelessly the Government of this country, and especially its Prime Minister, have managed their dealings with Germany in the past year.
The Prime Minister started with hostility to the very idea of unification; then she obstructed it; then she regretted it, even when it was inevitable; then she harked back to former German sins to disparage it. When, at last, she accepted the inevitable and was forced into grudging acceptance of it, her lack of warmth for it and her absence of pleasure at its symbolism blighted and injured the crucial relationship between our two countries. The disaster that was the Ridley fiasco simply put the icing on an already-poisoned cake. After his humiliating and disgraced resignation the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) still boasted in the Sunday Express in August:
"I believe that what I have said to you is not very far away at all from the position of the British Government."
That came from a man who was sitting in the British Cabinet in July. When, as he said, he was
"still at the top of the political tree"
he was asked by Dominic Lawson:
"But surely Herr Kohl is preferable to Herr Hitler? He's not going to bomb us after all."
The right hon. Gentleman could not, however, reply with the word no. Instead he said:
"I'm not sure I wouldn't rather have the shelters and the chance to fight back, than simply being taken over by economics."
As the right hon. Member for Shropshire, North (Mr. Biffen) said, revealingly, in The Guardian shortly afterwards, the former Secretary of State for Trade and Industry had
"momentarily possessed a gift in communication that eludes most front benchers."
Some gift; some Front Bench.
Mr. Hugh Dykes: After those remarks and the subsequent resignation of a certain person, did the

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hon. Gentleman regard it as a little bizarre that although a small number of people in this country said, slightly behind their hands, "Of course that person was correct; the Germans are bombastic and arrogant and wish to seize the whole of Europe and tell the rest of us what to do", the same people, several weeks later, in respect of the Gulf crisis said, "Why aren't the Germans with us in the Gulf with their forces? Why are they so pathetic and timid?" Was not it a strange double act by the same set of people?
Mr. Robertson: I could not have put it better myself. There are double standards. The hon. Gentleman points the finger unerringly in the direction that has probably kept him below the Gangway for much longer than he deserves.
At a time when bilateral relations really matter, if Britain's view and our special circumstances are to prevail at the European Community's intergovernmental conference in December, the Prime Minister's insensitivity and hooligan diplomacy have made us, first, a laughing stock and, secondly, a sadly ignored passenger in Europe. She may say, as she said in February:
"We dared to say the realities and talk the sense which other people are fearful to say, lest they be misinterpreted."
However, what grates with those who may even share her gut apprehensions is the crudely counter-productive effect of her ill-chosen words and her careless talk.
I ask the House to consider the Prime Minister's boastful approach last November at the Lord Mayor's banquet when she said:
"We re-established respect for Britain abroad and more and more we found the ideas that we had rediscovered were spreading to other countries as they began to free up their economies and return to the values which across the years had made Europe one of the greatest civilisations of the world."
Contrast that with the words of Chancellor Kohl in October, who said:
"At the beginning of the last decade of this century we see new opportunities for a world which solves its problems through reconciliation and understanding, and remains committed to the principles of international law. Our country stands shoulder to shoulder with all of those who are committed to peace, respect for human rights and fundamental freedoms as well as individual well being."
That contrast of tone and content shows the true measure of those who constantly hark back to the sins of the past and those, including the majority of people in this country, who look forward to the opportunities and promises of the future. Let the Prime Minister reflect on how worried this world would be, and with some justification, if Germany were adopting her brand of know-all nationalism.
I should like to touch on one particular aspect of the unification process concerning the lessons that some secessionist elements in Scotland take from the entry of east Germany into the community. The Scottish National party is trying to make out that the accession of the eastern Länder of Germany to the European Community proves its bogus prospectus on automatic membership of the Community for a separate Scotland. As usual, it deliberately misses the point. First, the constitution of the federal republic always allowed for the accession of East Germany, individually or collectively, to that state. Secondly, rapid unification was a economic imperative for the two Germanys, where, in effect, the German Democratic Republic was collapsing into the federal
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republic. Thirdly, and crucially, the European Commission has made it clear in the document before us that
"It views the integration of the GDR into a united Germany, and hence into the Community, as a special case. It will have to be done by stages. However, it does not necessarily require any amendments to the Treaties."
The secession of a part of the United Kingdom and its application to join the European Community would also be a special case, but, in contrast, would necessitate a major treaty change. That would require messy negotiations with vetoes possible, indeed almost inevitable, from other countries naturally worried by similar secessionist aspirations. Once again, the Scottish National party seeks to twist the events alive in Europe today to camouflage a policy which sounds attractive, but which if embarked on would threaten Scotland with chilly isolation from the European family.
This amazing report is right to warn us of the sizeable consequences for the European economy of German unification. Those consequences will reach well beyond the borders of the new Federal Republic, and will, as hon. Members will show later in the debate, penetrate into many aspects of British life—for example, into agriculture, shipbuilding, the environment and, as my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) will show if he catches your eye, Mr. Deputy Speaker, the fishing industry.
I had the pleasure of attending the debate in the European Parliament in Strasbourg last month when its committee on unification was considering this issue. It was a spirited and informed debate, watched with vigilance and interest from beside me by the Soviet ambassador to the European Community as well as by members of the now disbanded Volkskammer of the German Democratic Republic. I pay tribute to the European Parliament for its thorough work on the subject, especially to my friend and colleague Alan Donnelly, the Member of the European Parliament for Tyne and Wear, who was a most able rapporteur to the committee. He carried out an onerous and prestigious task to plaudits from all sides of that assembly and most countries involved.
A German newspaper reporting the debate concluded with this sentiment:
"There was only one thing lacking, the European Members of parliament in Strasbourg had only a vague idea of the real situation in the GDR."
That was not a fair or accurate reservation. The MEPs appreciate, as the German people are slowly realising, the enormity of the problems being exposed in the former German Democratic Republic. It is an environmental nightmare, an economic basket case, an investment Eiger wall and a social disaster zone—
Mr. Garel-Jones: Socialism.
Mr. Robertson: —caused by 40 years of communism; it has nothing whatsoever to do with socialism.
All those problems appear in the 320 pages of the report and much of it was predicted in the excellent report of the Select Committee on Foreign Affairs earlier this year and in the report on the monetary aspects from the Treasury and Civil Service Select Committee.
Mr. Andrew Rowe: I have been listening to the hon. Gentleman's extremely generous praise of Chancellor Kohl and his recent remark that the former Democratic Republic's problems had nothing whatever to

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do with socialism. Do not the recent results of the German elections reveal that the Germans are not as positive about that as he is?
Mr. Robertson: The real test of German opinion will be on 2 December. It remains to be seen how strong the Conservative elements will be in that country, but it does not come well from a member of a party that is 13 per cent. behind in the opinion polls in this country and which stunningly lost a safe Conservative seat last night to tell us about the success of the Labour party or of the German Social Democratic party.
The Conservative party is slipping into an era of desperation. When the Prime Minister clambers to the Dispatch Box to call the Leader of the Opposition "a crypto-communist" and a party political broadcast parades various eastern European luminaries across the screen to try to prop up the collapsing edifice of Thatcherism, people in this country will not be confused and will not be conned by the cheap propaganda or by the uncalculated desperation of the Prime Minister when she makes such accusations.
As the Minister amply displayed in his speech, we do not know the full facts. Years of statistical intervention and corruption in the GDR have left behind a wholly distorted picture. In their response to the Select Committee on Foreign Affairs, the Government say that unemployment in the former GDR in August was 1·75 million people, or 20 per cent. of the work force. On 4 October, the German federal labour office in Bonn put joblessness in the German Democratic Republic at 440,000, or 5 per cent. of the labour force. There is, therefore, a contradiction in the statistics that are being produced.
Even the costs of unification to the German taxpayer are obscured and perhaps will become public knowledge only after the all-German elections on 2 December. The Government's response to the Select Committee puts the cost at DM 100 billion per year, but on 4 October Chancellor Kohl put the overall cost at
"a four figure billion sum".
It would appear that these costs alone will eliminate the total external surplus of the Federal Republic of Germany—a matter which exercises my hon. Friend the Member for Bolsover (Mr. Skinner)—which is a major prop to the trade deficit in the United States of America. The knock-on effects of German unification will go well beyond the borders of that country.
There will be worrying costs to the European Community, as the lengthy financial memorandum outlines. Although the Minister expresses confidence, there is no real assurance that it is justified. The costs are calculated at DM 4 billion per year, with a net addition to the Community budget from Germany of DM 3 billion. We are told that the other DM 1 billion can be found without cost to the present budget, but there will inevitably be an increasing long-term budget for the European Community as a result of unification, which must be worrying to the German Government and other Governments.
Germany is again one state and the symbolic importance of that to the German people should not be underestimated. In the short term, that state—saddled by the legacy of the past 40 wasted years in the east—will have problems aplenty and it will need our support, help and guidance to get through that period. Thereafter, we had better be in no doubt that the new Germany will be a
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formidable power—economically, politically, but certainly not militarily—in our continent. However, inside the embrace of the European Community and sharing and participating in the pooled sovereignty that the Community represents, it will and must be a power for good. It will, though, pose one threat to this country and to our economy, enfeebled by these past 11 years, and that is a threat that we and we alone can meet and counter if we want to do so. It is up to us, the fortunate generation which is alive and in public life as the continent unites again, to see that our people get the means to join equally in that formidable competition.
10.41 am
Mr. David Howell: The recent report on German unification by the Foreign Affairs Select Committee, to which my hon. Friend the Minister and the hon. Member for Hamilton (Mr. Robertson) referred, began with these words:
"The re-emergence of a great unified German state is a development which alters the structure of world power. For Europe it is the most profound event since the division of the continent at the onset of the Cold War. Taken together, the decline of the Soviet 'empire' and dominance in Eastern Europe and the related coming together of the two German States are creating a new political map of Europe. The United Kingdom, as a prominent nation in Europe, as well as being one of the four occupying powers of post-war Germany, is fundamentally affected by these momentous and rapid changes."
Whether one looks on the reunification process with enthusiasm, as many do, or with mixed feelings, as many others do, the fact is that it became inevitable. The second the wall came down—perhaps some in the Federal Republic and elsewhere should have seen this more quickly than they did—it became inevitable that there would be a high-speed movement not merely towards monetary and economic unification but towards full political unification. With the perspective of last spring, we pointed out in our Select Committee report that, however fast the process already seemed then, it would be faster still and would become a top-speed operation. That has proved to be the case. The process has moved so quickly that, in a sense, it has gone ahead of the capacity of the European Community institutions and its members to make the necessary changes in time to admit the GDR to the Community. That is why we have this interregnum, about which my hon. Friend the Minister talked.
The reason for the speed lay in the fact that the disparities between the Federal Republic and East Germany were so vast that there was a possibility that, the moment the wall was down, millions of people would move across from East Germany to the west, unless there was a positive reassurance that East Germany would be quickly embraced in the West German economic system and in the values and support of the European Community. Even so, there was a colossal migratory movement and many thousands began to cross. That would have become an uncontrollable flood, utterly destabilising West Germany, unless there had been rapid acceleration of the timetable.
Unification has taken place. It is now our task in the House and in this country, as it is in other legislatures throughout the world, to meet the considerable challenges with immense vigour and to understand and respond to them. In our report, we put those challenges into a number of groups. We said that, first, there were the problems of

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welcoming a vastly enlarged Germany—much the largest member—into the European Community, and of recognising the inevitable changes that would be imposed on West Germany and East Germany and on the Community's procedures and structures by the arrival of that large new member state. Secondly, we discussed external aspects—the effect of a united Germany on broader questions of security in Europe and in the post-cold war security order.
On the first group of problems, we began in our Select Committee report to look at the issues which we are specifically considering today and which are raised by the proposals and documents before us—the cost to the European Community and individual members. There seems to be a little confusion as to whether a cost arises in 1990. It is clear from every document that a cost will arise in 1991 and 1992 for the whole Community and the United Kingdom. The documents state that the estimated cost to the United Kingdom could be about £50 million in 1991 and perhaps more in 1992.
The Scrutiny Committee, which does a superb job in keeping an eagle eye on these matters, reports in one of its papers the Commission's view that there will be no immediate cost impact in 1990, whereas the Foreign Office memorandum and explanatory note says that there will be an immediate cost. It is important for Ministers to clarify whether there is an immediate cost to the Community or United Kingdom budget. As hon. Members will recognise, there seems to be a flat contradiction between the Commission's view and statements by the Foreign and Commonwealth Office. Has the Commission just got it wrong? That seems probable.
The costs to the Federal Republic are enormous. I thank my hon. Friend the Minister and his colleagues for the unusually full reply by the Foreign and Commonwealth Office and the Government to the Select Committee's report. That useful reply went into interesting detail and recorded the staggering fact that the West Germans, who were expecting to pay about DM40 billion in 1990 out of their budget for the extra costs of unification, now face the prospect of paying DM100 billion—an overshoot of 150 per cent. in the current year. That is a staggering extra burden, even if it falls on one of the world's most powerful and richest economies, and it is bound to create enormous tensions not merely in that economy but in terms of funds being less available from Germany, one of the great capital engines of the 1980s.
Those funds will increasingly be diverted to East Germany and to internal matters, and the rest of the world will have to go without them. That will inevitably put new challenges in front of those who manage the deutschmark. It might not have worried us quite so much before we were in a fixed or semi-floating relationship to the deutschmark, but we are now within the ERM. It is important for us to be able to monitor closely the effect of the unification process on the deutschmark.
On the whole, I draw confidence from what the managers of the deutschmark in Frankfurt—the Bundesbank—are doing. They were overruled on many aspects of German monetary union and reunification. They argued, rightly, that the exchange rate was absurdly high and would inflict appalling and rapid damage on large swathes of East German industry. That has
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happened, but the bill has to be picked up in vastly increased welfare and unemployment benefits. That is where the extra DM60 billion has been generated.
Nevertheless, at the Bundesbank, people are clearly determined, despite the huge extra impost on the budget, to put one aim above all else—to maintain the integrity of the deutschmark. It is an interesting aside—and we shall come back to this in our debate next week—to ask why we are so confident that, despite all the extra strains, the deutschmark will maintain its soundness as a currency. The answer is that it has behind it a well-tested, immensely reliable and proven structure—the Bundesbank. It is an independent, central monetary authority, which puts the soundness of the German currency first. If it did not, it would create chaos for the rest of us.
If there is a lesson to be drawn for our own adventure into the exchange rate mechanism, it is that we shall not be able to operate effectively the disciplines in the ERM unless we, too, have a central monetary authority with the status and reputation in world currency markets that the Bundesbank has. That is a fundamental condition if we are to be part of the system as well. I have digressed slightly from our central concern about the effect on the deutschmark of the reunification process. As a result of the Bundesbank's commitment and the Germans' determination to put the soundness of their currency first, they will manage, although the strains will be great.
There are costs for eastern Europe, which we tend to overlook in the excitement of looking at the unification process. We must remember that Czechoslovakia, Poland, Hungary and Bulgaria are going through the same liberalising, free market cold shower. However, they have no rich uncle, no West Germany to pour in billions to cushion the enormous effect of moving into market economics. One of the repercussions of the rapid integration process—which, on the whole, I welcome—is that the new democracies, which are just struggling to get out from their old, planned framework and into a free market environment and which are just dipping the first toe into that ice-cold water, are being hit by the most appalling series of problems, one of which is the rapidity with which they have lost their East German markets.
In the Commission documents there is some provision to ensure that at least over the interregnum of a few weeks ahead, the absence of tariffs governing the exports from Czechoslovakia, Hungary and Poland into East Germany continues, but thereafter—and the Czechs take this view—those countries will have to say goodbye to many of their East German markets. That is happening at a moment when they are also saying goodbye to many of their markets in the Soviet Union, which is about to break up and disappear down a black hole. It comes at a time when their oil costs are soaring to the skies, although oil prices, I am glad to see, are at last beginning to return to sanity. It comes at a time when they are still not sure what access they will have to the rest of the European Community.
That change also comes at a time—and this is very much a matter for the United Kingdom—when there is a definite push to expand the use of the German language. The dominance of German business arrangements runs right through eastern Europe. We already have a true inner deutschmark zone, not only in the countries in the ERM, but in the countries that have said publicly that they will link their currencies absolutely at fixed rates to the deutschmark. Among those countries are Austria,

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Switzerland, Holland, Belgium, Luxembourg and, of course, the former German Democratic Republic. I know that the German authorities hope that, in due course, Czechoslovakia will join the deutschmark zone and that a convertible currency can somehow be achieved.
Our eyes would be tightly shut if we did not realise how the reunification process is changing all the balances and trade relationships in eastern Europe, and creating the most colossal challenges for the new democracies there. We must respond to that and, in my personal view, far more vigorously than we have so far, not least because the success or failure of the other bits of eastern Europe, apart from eastern Germany, will be our success or failure. We cannot merely watch and assume that everything will be taken care of by the invisible hand and by market forces now that communism has been destroyed. It will not necessarily happen that way unless there is vigorous and active western intervention and support on a scale higher than we have envisaged so far. If that does not happen, the opportunity for open and free economies to stretch from this side of Europe into Soviet Asia will be thrown over and history will judge us unkindly on that score.
When we studied these matters earlier in the year, we were worried that the Soviets might be a little difficult and that there would be arguments about the pace at which the Red Army of the west, encircling Berlin with its 350,000 soldiers and 200,000 dependants, would go and when it would go. To the great credit of all those involved in the two-plus-four process, of the Bonn Government and of those in Moscow, those problems have broadly been sorted out. They have been sorted out partly by the simple process of the Red Army of the west, like the East German army, beginning to disintegrate. Desertions have increased and it is becoming harder for the armies to be held together at all. The East German army has gone through an amazing process of self-shrinking as more and more of its members have simply failed to turn up for work. That is one way of carrying out the disarmament and weapons control process.
The Soviet army is also suffering huge desertions. That will become a major social problem, and will cost West Germany DM12 billion. It will have to spend money in keeping the troops round Berlin for a while, then shipping them home to Russia and then providing them with housing there. The housing will be built by German construction firms with German money. The problem of the armies has resolved itself by a melting process and the difficulties that might have arisen and the possibility of the Soviet army's presence being used as a bargaining counter by Mr. Gorbachev have gone away.
The reunification will change NATO. The two Germanies are fully in NATO, although on several conditions, such as a limit to the size of the Bundeswehr and how operations are carried out in what was formerly East German territory. There are also unspoken conditions in the minds of the Germans.
This is not the end of the process, but the beginning. We must ask ourselves to what extent Germany, like the other great defeated, but now super-economic power, Japan, will be a positive, active and willing member of the international security community. There is a danger, and there may have been a sign of this over the Gulf issue. The Germans failed to rally as quickly as some had hoped to an obvious threat to European and world interests. Some people felt that we might have been seeing a sign of another sort of Germany—not a militarist Germany, but
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an anti-militarist Germany, which would be inward looking and uninterested in playing its part in world affairs. I do not think that that is in the minds of the present leaders in Bonn, who have been sturdy and solid in their commitment, but it is silly to pretend that that is not a possibility and that we must not keep on our guard. There is a fear that the huge new Germany may become so preoccupied with itself that it may become increasingly reluctant to have nuclear weapons on its soil—a matter that has yet to be fully worked out—and that it may begin to drift not to the neutralism that we feared in the past—which meant anti-western neutralism—but to a passive non-commitment to world affairs that we could ill afford, bearing in mind the fact that it is such a huge country at the centre of European and world affairs. That is a word of warning only.
Mr. John Browne: Does not my right hon. Friend think that the German idea at which he hinted in his speech—that Germany sees its future in terms of economic rather than military growth—could he the seed of that theory?
Mr. Howell: My hon. Friend touches on a point that is understandable from the German point of view. The Germans have had two military adventures in this century and one in the 1870s, which appeared marvellous at the time but have all ended in the most miserable deprivation, and in total disaster and catastrophe for their society. Many of them are immunised and inoculated against engaging in any kind of military activity ever again. However, the process can go too far the other way, and become detachment and non-responsibility rather than proper commitment to the world security order.
Finally, I should like to refer to the other external change that the reunification process is bringing about—a change that affects the whole architecture of Europe, and especially the development of the European Community in the broader sense. There is a phrase that one hears in Paris a lot: it is said that the whole aim of Community policy must now be to "lock in" the new united Germany. That phrase is, I feel mistaken: it implies somehow that that huge power is a sort of dangerous bear that must be kept on a chain by the rest of the European Community, which will teach it a thing or two about balance and democracy. Such a line of thought is insulting to the Germans, who have shown—as was emphasised by the hon. Member for Hamilton—that they are some of the best practitioners of democracy in the post-war world. They do not need "locking in"; they need to find their place—a central and important place—in the new European structure. Whatever some people in western Europe may say about "locking in", and about the need to concentrate on developing and deepening the existing Community structure, the plain fact is that Europe's centre of gravity has moved eastwards as a result of the GDR's joining the Federal Republic and creating the new Germany.
By accepting East Germany into the Community, we have also brought into our perspective the affairs and problems of the other European states of eastern Europe in a most intimate way; unless we recognise that, we shall lead ourselves into many errors. That is why I disagree with those who argue that, for the time being, we should think of European Community development as excluding the eastern European countries—that they should come along later, but should not be a priority now. If we are

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truly set on the process of European construction and development, that process must embrace as soon as possible not just the GDR—as it has done with amazing speed in a matter of a few weeks—but the neighbouring powers east of East Germany. If we do not do that, we shall be sowing dragons' teeth: the instability and chaos, the social pressures and the defeat of all western aims and policies will be very great.
It must be understood that the success of the new democracies—like the success of East Germany—is our success, and their failure is our failure. That is the spirit in which we must act if we wish to see open societies develop from here deep into Russian Asia—which, after all, is what we fought the second world war to do and failed, and what we persisted through a 40-year cold war to do and succeeded. That is the way in which to consolidate our earlier success.
11.3 am
Mr. Nigel Spearing: I am pleased to follow the Chairman of the Foreign Affairs Committee, to whom we are indebted for a forward look on German unification—which, as he says, has now almost been overtaken by events. His was a useful contribution: he mentioned one aspect that might otherwise have been forgotten—the effect of the change in the status of the Länder of the GDR in relation to other emerging eastern European democracies.
The documents that we are considering contain the treaty arrangements and derogations that allow trade between those eastern European countries. I almost referred to them as "formerly members of COMECON"; I suppose that they are still formally members, although "formerly", with an "er", is pretty appropriate, too. The documents define in legislation the relationship between eastern Germany—indeed, the whole of the federal republic, and perhaps even the EEC—and the members of COMECON that are now changing their political arrangements.
Clearly, 1990 will go down in history—in the lifetime of all of us—as something of a political Clapham Junction, and this very month may mark both an end and a beginning. We are seeing the end of the post-war era in the peace treaty that will at last come as a result of German unification; the entry of Britain into the European exchange rate mechanism, which is the subject of controversy on both sides of the House and cannot be seen as a party matter; and the specific EEC legislation that we are considering this morning.
Before I deal with those topics, let me return to something that had been said about the European exchange rate mechanism—for all these mattters have been mentioned in Parliament this week. A reference was made to drivers' cabs. Surely, if we use the Clapham Junction theory of history, the comparison is not entirely accurate: on a railway the driver can go only where the lines are laid, and the route that he can choose—there is usually only one, not 12—will depend on the route set by the signalman, and on the speed of the signals. There is not the element of choice that some people might infer from such an analogy. But—if we are not talking about the driver—who, we must ask, will be the person or persons in
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the signal box? That is merely a passing comment—which I hope and trust is objectively correct—on the announcements made by the Government last week.
What we are debating today is the legislation consequent on political unification. Ours is a formidable agenda; an hon. Member whom I met earlier in the week asked, "Why a whole day on this?", but I fear that he may not have understood the total conspectus of history.
We are confronting a substantial legislative and documentary "meal". First, we have the four documents that we might regard as the hors d'oeuvres: the report of the Select Committee on Foreign Affairs, HC 335; the report of the Select Committee on Trade and Industry, HC 431; and the replies from the Government to those reports, in Cmnd 1246 and HC 645. We could engage in a whole day's debate on those documents alone. Next, we have the main meal—the vast COM(90)400, which, in the Minister's words, "banged on to his desk" during the recess: it is in three volumes, and contains 300-odd pages. That is the necessary legislation that the Select Committee on European Legislation has considered and attempted to summarise; our report is in the Vote Office, and will be printed as the 32nd report of our Committee this Session.
If we continue the meal analogy, we find ourselves faced with the bill—in the form of EEC document 8782/90, which is also being considered today. The total cost is probably prospective, and has been the subject of dispute between my hon. Friend the Member for Bolsover (Mr. Skinner) and the Minister. Ultimately—as with all financial matters—we shall have to wait and see.
The central document, COM(90)400, has three elements, which the Minister has in part described. On 17 September the Council of Ministers decided to adopt parts of the documents. The problem with this document is that, although it has one number—COM(90)400—there are about 34 elements within it, each of which, in more normal circumstances, might have been a single document. Two of the prime elements are procedural and constitutional. The document gave the Commission authority, as from 3 October, to produce documents which, until they were amended, became the law of the EEC and, therefore, the law of the United Kingdom. As the Minister has described, subsequent to that date they have been looked at one by one, and most of them have been either adjusted or agreed as acceptable to the United Kingdom.
Many of the documents would have been subject to majority voting or qualified majority voting anyway, even if they had not been accepted. However, it is reassuring to know that no substantial changes are envisaged at the moment, although, of course, we may discover that some things in the documents may have effects that we did not anticipate. I shall refer to that matter in a moment.
The 32 legislative documents—the Government have deposited in the Vote Office an explanatory memorandum on each—are in the process of being agreed. If agreed, they will last until the end of 1992 when the transitional period will come to an end. It will be assumed that, unless further transitional arrangements are made, the Länder of the former GDR will be fully integrated into the Community.
The third element in the document is volume 3, which outlines the financial considerations that are further followed up in document 8782/90. The Minister said that the net cost would be about 1,000 million ecu and that the net cost to this country will probably be about £30 million. Perhaps the Minister will confirm that the gross cost, as estimated in that document is about £3,000 million, and

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that the outcome will depend, of course, on what expenditure is made and what income is collected under the formula. Although the Government may be a little optimistic in their figures, the actual net cost to this country may not be as great as it looks at the moment.
The next aspect to which I draw attention is the unprecedented nature of the documents. I make no complaint about the necessity for them. Such legislation had to he in place by 3 October or there would have been a legislative vacuum. There can be no doubt about that. By agreement in Germany, unification was brought forward by about three months, and Her Majesty's Government had to act.
The legislation that had to fill the gap is not the sort to which we are used in this House, to which the nation as a whole has got used, and which we perhaps take for granted—certainly in the United Kingdom. When a Bill comes before us, certainly now in respect of private legislation and in procedural terms for public legislation, we hear of a petition for a Bill. The idea is that if we are to have a statute, or if the state is to invade common law or the freedom of the individual—that matter is very dear to the hearts of Conservative Members—there must be a petition stating why we need the legislation, why the monarch should do one thing and why Parliament should do the other. The purpose of the legislation is enshrined in the short and long titles. We then look at it and ask, "Are these powers necessary? Is this the right method? Is it the right policy?" After a long period of digestion, the legislation is agreed.
Legislation may give powers to the Executive of the day to exercise power in execution of the purposes of the necessary Act. As a result of that, regulations come before Parliament in statutory instruments. A Select Committee looks at them to ensure that they come within the scope of the powers given. In this House they are occasionally looked at on their merits when they are affirmative.
However, in this instance—again I make no complaint; the Government had no choice whatsoever—as the Minister properly said, the use of the prerogative, which has been habitually used by this Government and agreed by the House in respect of foreign affairs, was used in the Council of Ministers, again constitutionally properly, initially to validate legislation produced by the Commission, and subsequently, after a certain second look by the Council of Ministers, to become the new law of the Community. It fixes the relationship of businesses, firms and multitudinous matters in the United Kingdom with the new emerging Germany, and indeed with all our colleagues in the EEC.
That procedure has not been done by the due processes of the legislation to which we are habitually used. It has come about as a result of a prerogative act not only by the Government but by the Commission itself, for the Council of Ministers was incapable of producing that legislation. There was no petition and no consultation by the Council. It has to reject or accept the Commission's proposals. Therefore, to this extent it is fair to say that this set of regulations and directives, although inevitable, marks the most extensive example yet of a different sort of legislation being looked at by the House.
What, then, of the role of scrutiny? That will be discussed on Wednesday of next week, and I hope that many hon. Members will be present. Until now, scrutiny in this House has been of matters in which powers have been given by the House when the effects have been known and
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the merits have been debated. But scrutiny of EEC legislation is not quite of the same character. On this occasion we have a problem through speed, which is almost inevitable arising out of this political situation.
If a future problem were to arise—of course it is unlikely to be of the same nature—or if there were an economic problem of great significance to the work of the Community, perhaps arising out of the Gulf situation—let us hope that it would be solved—or some other world cataclysm, similar types of legislation, but perhaps not on such a grand scale, relating to energy or some other matter, could be put before us in a similar way.
I now refer to the problem that was highlighted by my hon. Friend the Member for Hamiliton (Mr. Robertson). We did our best with the documents and had our report out late on Tuesday evening or early on Wednesday for the debate today. If we are to have proper scrutiny and fulfil our part of what is sometimes called the democratic deficit there must be sufficient time. Almost as important, if not more important, is sufficient publicity of the proposals. My hon. Friend referred to our report, which we released as fast as we could, but there is sometimes a lack of distribution of reports of the Select Committee on European Legislation to the nation as a whole. If firms, organisations and interests are to be aware of what is proposed, they must have access to reports to the House which are publicly available from Her Majesty's Stationery Office. People often complain about the secrecy of official matters. A great deal of information about that kind of legislation is publicly available in reports of the Select Committee on European Legislation.
Unfortunately, events have not allowed time for the normal digestion of the meal that I have outlined on this occasion. That has been inevitable. However, having drawn the attention of the House to the ambit of the proposals and their context, I hope that I have been able to advertise the work of the Select Committee on European Legislation and the reports which its members and staff produce.
11.19 am
Sir Geoffrey Finsberg: I want to make two or three points about the broader aspects rather than concentrate on the detailed regulations. I am not sure what contacts the hon. Member for Hamilton (Mr. Robertson) has had. I can only say that over the past four years I have mixed with West German politicians of all parties, I have visited Poland and I have had discussions with Bulgarians and Yugoslavs who are part of the new democratic process. They paid tribute to the work of this country and this Government. If the hon. Member for Hamilton had spoken to people on the spot, he would realise that his comments about my right hon. Friend the Prime Minister bear no relation to reality. The hon. Gentleman may mix in strange circles comprising crypto-socialists. I can assure him that people from behind the iron curtain say that they defeated socialism in action and not just communism and that comes from the people who live in the area, some of whom have been in prison for 20 years. Listening to those people moved me greatly and I realised how lucky we are to live in a democratic institution such as this.
Mr. Robertson: I do not deny that the hon. Gentleman is entitled to his opinion. However, in most of those communist countries, if someone was a democratic

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socialist like many Opposition Members of this House, that person could have been imprisoned just like a Thatcherite right-winger. The rejection of communism does not mean a rejection of democratic socialism in any of those countries or in western Europe as a whole.
Sir Geoffrey Finsberg: I fear that that view is not shared by many people who live in those countries. However, I do not deny that socialists and trade unionists as well as Church people were imprisoned, but the basic fact is that socialism was put into action. I thought that the hon. Member for Hamilton spoilt a very good speech by his unnecessary attacks on my right hon. Friend the Prime Minister and he moved away from reality. That was a great pity.
Mr. Tony Banks: Oh!
Sir Geoffrey Finsberg: If the hon. Member for Newham, North-West (Mr. Banks) wants to intervene, he can, but he will isolate himself as he has done so often in the Council of Europe in the company of one other of his colleagues.
Sir Alan Glyn: Does my hon. Friend agree that the beginning of the process of democratisation occurred when my right hon. Friend the Prime Minister visited Poland and set alight the torch for freedom?
Sir Geoffrey Finsberg: Indeed, and I pay tribute to the Poles for the part that they played in that process. I am only sad that in the process of democratisation they are taking somewhat longer to have full and free elections than I had hoped. As a rapporteur for the Council of Europe, I visited Poland several times and I was saddened that the process has taken longer there than many of us had wanted.
Over the next 12 months several eastern and central European countries will become members of the Council of Europe. I take slight issue with my right hon. Friend the Member for Guildford (Mr. Howell) who is the Chairman of the Select Committee on Foreign Affairs. Before those countries can be admitted to the Community, we must be satisfied that they are democracies fully observing human rights. That is why the Council of Europe has been and is a far better bridge than the Community. Once they are inside the Council of Europe they can go forward a stage further. We must recognise that the Community is a Community of 12. The Council of Europe now has 23 members with six guest members and it will soon be a Council of 30. We cannot ignore what has happened in that institution over the past two years. I recognise how fortunate many of us have been to have taken part in the work of the Council of Europe and of the Western European Union, both of which are playing their part in pushing democracy forward.
Mr. David Howell: I do not dispute for a moment what my hon. Friend has said about the immensely important role of the Council of Europe and we should all recognise his substantial contribution to the Council's work and development. It is clearly more than a staging post. It is part of the process by which the construction and development of Europe will be carried forward. He was right to emphasise the human rights and democratisation
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aspects, which must progress still further in all those countries, and the Council of Europe plays a central role in that. I fully endorse what my hon. Friend said.
Mr. Dykes: I echo the tributes to my hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) for his work as head of the Council of Europe delegation from this country. I wholeheartedly agree with him that the Council of Europe is the ideal first bridge for those countries. Does he agree that that also helps the resolution of a possible dispute between the widening and deepening of the Community? It will take time for those countries to begin to become established parliamentary democracies and to show that they can continue to be such democracies without upsets, coups d'état or developing military regimes, which may occur because of their often very sad political histories in recent decades. Does my hon. Friend agree that there need be no built-in contradiction between the deepening of the Community, which so many members of the existing 12 now want to go ahead with political, economic and monetary union, starting from the December conferences, and the widening that will occur later? Inevitably, we must wait for those new fledgling democracies to prove their durability as democracies—and I do not say that in a spirit of condescension—and those countries will need long transitional periods because of the weakness of their economies.
Sir Geoffrey Finsberg: I should be wise not to enter the morass of widening and deepening and simply stick by what I have already said. Stage one must be full membership of the Council of Europe. Stages two and three may well follow, but I do not want to look that far ahead.
Today's debate is about Germany and I went there as chairman of the election observers of the Council of Europe. I want to relate some of my experiences because they throw into sharp relief what happened suddenly in the German Democratic Republic.
I went out to Germany on the Wednesday before election day. I drove in my taxi to the nearest crossing point to my hotel, but the taxi was sent back by the East German border guard. We were told that we could go only through checkpoint Charlie. We went through checkpoint Charlie and my money was entered on a form and my passport carefully scrutinsed by a very grim-faced guard and we eventually got through.
I left on the Monday, having issued a press statement saying that we were satisfied that the elections were fully fair and free. We went back through checkpoint Charlie and a smiling East German guard wanted to see neither passport nor money form. That was a very sudden change. I hope that it reflected the fact that the guard was merely anticipating the orders that he was to be given by the new Government. That memory remains with me.
I also remember going to a polling station in a small country village about 60 miles outside east Berlin. I saw an old lady enter the polling station. She took a piece of paper and marked her ballot form. She came out in tears. I have only schoolboy German, so with the help of an interpreter I asked why she had burst into tears. I was told that she had come to vote freely for the first time since the early 1930s and that her husband had died the previous day, so had not had the chance to vote. That has made me realise how fortunate we are to be able to go to polling stations with no worries when elections are called.

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On the night of the election results I was in the Volkskammer. At the end of the evening I was asked to go on German television with a representative of the West German Christian Democrats. The commentator asked both of us, "How long do you think it will be before there is full unification?" I deferred to my West German colleague, who replied, "About 18 months or two years at the very earliest." I said that I could not argue with that, but that it would take some time to complete all the formalities. Nobody anticipated the speed with which unification would take place. As my hon. Friend the Minister and my right hon. Friend the Chairman of the Foreign Affairs Select Committee said, exchange rates and the economic situation forced an amazing change in speed. As we look back with the most valuable asset of politicians, hindsight, we might have realised that a sudden rush was inevitable. In those circumstances, we have made remarkable progress and everybody is to be congratulated on the speed and apparent smoothness with which we have seen unification take place.
Paragraph 12 of the Government's observations on the fourth report deals with the Conference on Security and Co-operation in Europe and concludes:
"One of the CSCE's most important roles … will be to allow the East Europeans a forum in which to discuss their security concerns. The report touches on the question of security guarantees for them. The CSCE could not provide these: it is a political, not a military organisation, and lacks the common purpose necessary to become the latter."
If it is a political institution, its one lack is a democratic wing. I pay enormous tribute to all that CSCE has done since its inception and the Helsinki agreement. Without the agreement I am not sure whether the logjam would suddenly have disappeared. The fact that the Soviets agreed to allow other countries to discuss human rights issues in the Soviet Union, focused the spotlight on what was happening. Much has flowed from that.
CSCE is operating successfully, but there is no political check on its work. Ministers meet and take decisions. Civil servants meet and take decisions—sometimes in anticipation of what their Ministers may want and at other times assuming delegated powers. There is not an institution composed of democratically elected Members of Parliament from the 35 CSCE nations where Ministers can be asked what they are doing, why they are doing it and be questioned on a wide variety of issues. I believe and the Council of Europe believes that it is necessary for such a democratic wing to be formed quickly. In September the Council of Europe took the initiative and devoted a day and a half to CSCE matters under its auspices, but as a separate legal entity.
Mr. Tony Banks: What has been the British Government's response to the discussions that took place in Strasbourg on the creation of a parliamentary wing of the CSCE process? For the record, can the hon. Gentleman justify how he believes that for the CSCE process, which is based on a wider Europe, we should have a parliamentary wing that also includes elected representatives from the United States of America and Canada?
Sir Geoffrey Finsberg: The hon. Gentleman, who is a valuable and valued colleague on the United Kingdom delegation to the Council of Europe, occasionally expresses his own views. The difference between this Parliament and the Council of Europe is that his superb
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sedentary interventions are never translated there. It is a pity that they do not have some sort of simultaneous translation from the seat.
The British Government are sympathetic to the need for some sort of democratic body. Mr. Gorbachev, and everybody else, recognises that there is a vital link with north America. He has said that he recognises that the common European house needs a north American input. As major contributors to the work of CSCE, it is right that the Americans and Canadians should participate fully in a parliamentary wing.
During the day and a half on CSCE we tried to invite all 35 countries to the Council of Europe. I was fortunate enough to be made chairman of the working party organising it. In the end we had every country except the United States. The President of the Council of Europe was told that the United States could not come because in September it was in the middle of budget discussions and having a difficult time.
The Canadian representative was also in difficulty because although he was personally in favour of the concept, he had not had an opportunity to discuss it with his colleagues. He abstained from what was otherwise an almost unanimous vote, passing the resolution calling for the creation of a parliamentary wing of CSCE and a set of guidelines. I know from my conversations with him that he was returning to Canada with the intention of selling the idea to the Canadians.
Mr. Tony Banks: The hon. Gentleman recounts how the Canadian representative could not vote because his Parliament had not discussed the matter. Will he say when we shall have an opportunity to discuss the proposal for a parliamentary wing of CSCE, so that we can decide whether we want to progress towards it?
Sir Geoffrey Finsberg: I can give the hon. Gentleman a two-part answer. First, I have never been part of the usual channels who are responsible for organising such debates. Secondly, I am certain that with his immense influence in the Labour party the hon. Gentleman can persuade his Chief Whip to devote an Opposition day to the matter. That is entirely up to him.
Many other hon. Members wish to speak, so I shall conclude. I am convinced that if we are to see democracies fully established in eastern and central Europe and to avoid coups d'état and the like, such as my hon. Friend the Member for Harrow, East (Mr. Dykes) mentioned earlier—I see that he has temporarily left us—we must look at what is happening and see what support our political parties can provide. All parties can help their opposite numbers in those countries. We must try to show them not that it is fairly simple to have a party, which it is—at present there are some 78 parties in the Ukraine, one of the Soviet republics. Goodness knows how many parties there will be to fight the elections for the Polish lower House, but few of them will be recognisable parties in our scale of knowledge.
In Poland, Solidarity encompassed everyone. Perhaps the greatest contribution, other than that of Mr. Gorbachev, who made it clear that no force would be used, came from the Churches, both Protestant and Catholic, under whose embrella it was possible to discuss human rights, whether in East Germany, Poland or Hungary. Poland's ambrella organisation, Solidarity, represented all from left to right. As Solidarity begins to wonder how to

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fight coming elections—the presidential election and the elections for the Sejm in April or May—a factionalism will begin to arise in that country. It will surely be then, if we can identify a party close to our own, that we can give it whatever guidance it seeks about how to build up the grassroots organisation that is needed. It is true that in Poland there have been fully fair and free municipal elections, but there have not been the sort of grassroots organisations that we know. We must help Poland to build up such organisations, as we must in Hungary and other countries.
My hon. Friend the Minister of State was absolutely right when he said at the beginning of the debate that, following the unification of Germany, we have an opportunity to have a future that is secure for at least two generations to come. A new Germany, a democratic Germany, as part of a variety of communities—the Community, the Council of Europe, the Western European Union and the North Atlantic Treaty Organisation—provides opportunities for co-operation between the powers of the west and the east. It is not far-fetched to say that within a decade there may well be a security organisation encompassing both east and west. As we have seen in the Gulf, the real dangers against both east and west lie in unexpected quarters.
We must watch carefully to ensure that we do not have a euphoria of disarmament that goes so far that it leaves us at the mercy of blackmailers from insignificant, fourth-world countries that may possess chemical or nuclear weapons. If we in the east and west get rid of those, we could be blackmailed and should have little choice in what we had to do. Let us not be too euphoric, but at the same time take the opportunities that arise from the unification of Germany to establish a firm working relationship with the Soviet Union and the countries of eastern and central Europe. In that way, we can enter the 21st century with a large degree of confidence.
11.43 am
Dr. Norman A. Godman: My speech will be much more parochial than that of the hon. Member for Hampstead and Highgate (Sir G. Finsberg), though not chauvinistic. My concern focuses on the economic and social implications of German unification for various maritime communities in Scotland and elsewhere in the United Kingdom.
When I served as a young national service man in the then British zone of West Germany, facing members of the Volkspolizei, a few yards across the border, I never dreamed that I would live to see a united Germany. I thought that there would always be some sort of iron curtain during my lifetime. As a young national service man, I visited Berlin about a year before the horrible wall was built. As a young man, trade unionist and socialist, I could not envisage that those awful barriers would be dismantled.
I welcome the unification of Germany, as wholeheartedly and warmly as any hon. Member, but that process could—I stress "could"—present formidable economic and social problems for a number of coastal communities scattered around the Scottish coastline and its islands. I shall comment on three matters related to German unification that are arousing considerable concern in
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Scotland. The first is the distribution of structural funds. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Curry), who is present has some knowledge of that subject. Secondly, I am concerned about our shipbuilding industry, or should I say the vestigial remnants of our once-glorious shipbuilding industry. Thirdly, and this worry will not surprise the Parliamentary Secretary, I am concerned about the need to defend our fishing industries and fishing communities. I know that the Parliamentary Secretary will support me in that.
Structural funds have played an important part in revitalising some badly run-down districts of the Strathclyde region in Scotland. As every hon. Member knows, Strathclyde regional council is about the biggest local authority in the European Community. My colleagues on that council are extremely skilful in obtaining funds under the social fund network for some of our deeply deprived communities. That also holds true for other communities as far north as Shetland. In the Shetland islands, the structural funds played an important part in maintaining communities that might have simply died away without such assistance. Therefore, there is a good deal of support in Scotland for the European Community, especially in relation to the distribution of structural funds.
However, I am a little concerned about what is written in the explanatory memorandum. On pages 6 and 7, the report of the Select Committee on European Legislation says of the structural funds that the Department of Trade and Industry
"recalls that the Community is proposing that new commitment appropriations of 3 thousand million ECU be allocated to the EC Structural Funds for the period 1991–1993 for East Germany following unification."
No one would dispute that. There are communities in what I would now call eastern Germany that are badly in need of such aid.
The report of the Committee, which was chaired by my hon. Friend the Member for Newham, South (Mr. Spearing), and in which I had some hand, continues:
"This does not affect the United Kingdom's entitlements under the Structural Funds during this period. However, from 1994, survey information could be used to identify areas within East Germany which are to receive aid from the Structural Funds and this could have an effect on the future distribution of aid between Member States. The Department has also pointed out that it is too early to say at this stage what effect this might have for future United Kingdom receipts for the structural funds."
Many Scottish voluntary associations, local authorities and other interested bodies genuinely believe that if the financial assistance from the structural fund is to go to communities in eastern Germany, it must follow that there will be a reduction in the distribution of the fund to communities in Scotland. I do not think that that is a selfish or greedy concern. Certain areas of Scotland still suffer massive unemployment. My constituency is traditionally a shipbuilding, marine engineering and other maritime industrial community, and it still has one of the worst unemployment rates in the whole of the United Kingdom. It is in about seventh or eighth position in the dreadful league of unemployment. When I speak to Tory Members from the south-east, I sometimes think that I would give my right arm to have the unemployment rates in their constituencies. My remarks also hold good for constituencies in Glasgow, Ayr and further north.

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By all means, let every assistance be given to equally beleaguered communities in eastern Germany, but Scottish communities, which are bedevilled by such disgracefully high levels of unemployment, must continue to receive support from Brussels. I was especially anxious to make that point this morning, although I do not wish to take up the time of the House. I always make brief interventions.
The Clyde is now but a remnant of what was once a major industry and employer. I recently had the good fortune to visit the QE2 when she berthed in Greenock as part of the celebrations of the Cunard company. It was a remarkable moment when she slipped away from the terminal to head down the Firth of Clyde. She is a magnificent example of Clyde shipbuilding and marine engineering skills. I regret that today, we do not have a shipyard that could build a successor to the QE2.
Yarrows, a famous naval shipyard on the upper Clyde, may face serious problems because of what we call the peace dividend and because of the decision of the Ministry of Defence to cut the surface fleet to 40. Some 5,000 jobs depend directly or indirectly on Yarrows. There is a direct labour force of 3,392, and indirect employment and suppliers account for another 1,500 jobs. A firm such as Yarrows must be given assistance to meet the changing circumstances of the so-called peace dividend, which I welcome. Also on the upper Clyde is the famous Govan yard, which is now owned by the Norwegian firm Kvaerner. That provides several thousand jobs in my constituency, directly and indirectly. There is a small yard, Fergusons, in my constituency, which employs fewer than 100 highly-skilled people. As my hon. Friend the Member for Birkenhead (Mr. Field) mentioned a day or two ago, that constituency's shipyard is under threat of closure. We must give those yards the sort of support that the European Commission envisages being given to shipyards in eastern Germany.
The explanatory memorandum from the Department of Trade and Industry states:
"Under the terms of the EEC Commission's legislative proposals to deal with German unification, the provisions of the proposed Seventh Directive"—
currently, there is a sixth directive that expires on 31 December—
"will be directly applied to restructuring aid provided to East German shipyards. Under the terms of a special clause which will be added to the proposals for the Seventh Directive, East German shipyards will be permitted a higher level of operating aid than the level allowed for other Member States during the period of restructuring."
I am not at all happy with that proposal. Why should yards in eastern Germany be given more aid than yards on the Clyde and the Mersey?
I want to ask the Minister a question, although I appreciate that it does not fall within his responsibilities. I hope that he will convey it to his counterpart in the Department of Trade and Industry. Are east German yards to be given unfair advantages over other European yards under the Commission's regulation on procurement? I understand that procurement has to be fair and equal throughout the European Community. If so, is not it likely that yards given those unfair advantages could conceivably win orders from the United Kingdom that would otherwise have been placed with our shipyards? That is an important point.
I shall give the House an example. Soon, Caledonian MacBrayne, whose passenger ferry fleet serves all the
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islands of Scotland and provides an essential link with the mainland for those island communities, will be ordering a new vessel to replace the Suilven, which sails between Ullapool on the mainland and Stornoway in the Western Isles. Hon. Members will not be surprised to hear that I hope that the order for that vessel will be given to Fergusons in Port Glasgow—I did warn the House that I would be parochial—which would produce a first-class ship. I keep badgering the Secretary of State for Scotland to ensure that the order is given to the lower Clyde. However, it is conceivable that an east German yard, with its additional aid, could win the order because, under the regulation on procurement, it would have the right to bid for a vessel that will provide such an essential service between the mainland and the outer Hebrides. That is an important point for Scotland.
Mr. Peter L. Pike: Will not another factor be the lower wage levels in eastern Germany, at least until the period of transition has ended, which will put competitors there in a more favourable position?
Dr. Godman: I am grateful for my hon. Friend's powerful intervention. He is absolutely right. I am an ex-shipwright, though it is a long time since I worked in a shipyard, thank heaven, so I know that the cost of constructing a ship is determined to a considerable extent by labour costs. One of the reasons why the gap between the cost of building a ship in a European Community yard and in Japan or South Korea is beginning to diminish is the increase in wage levels in south-east Asia. That is particularly true of South Korea, where massive civil disturbances have in some cases focused on the large shipyards of Hyundai and Daewoo. The aim of the intervention fund is to provide Community yards with funds, so that they can come near to bridging the gap between the cost of a ship in Europe and in a south-east Asian yard.
Deep concern is felt by my constituents and all shipyard workers that they may suffer as a consequence of the advantages enjoyed by their counterparts in eastern Germany. I know of no shipyard worker in my constituency who wants to see any harm done to the interests of their counterparts in eastern Germany, but British shipyard workers should not be forced on to the dole queues because of the clause that is to be added to the seventh directive. If such a provision is to be made, a further clause should be included to provide additional assistance to shipyards in constituencies such as mine that suffer high unemployment.
There is also an important strategic reason to be taken into consideration. Apart from the Kvaerner yard at Govan, which is largely concerned with the construction of liquid petroleum gas carriers for that company's own fleet, and Harland and Wolff at Belfast, Britain does not possess the merchant ship building capability for large vessels such as very large or ultra-large crude carriers. That is to some extent shown by the problems in maritime transport that have arisen in transporting military equipment to Saudi Arabia.
By all means let us help the shipbuilding communities of eastern Germany, but at the same time we must arrest the dreadful decline in the United Kingdom's merchant shipbuilding capacity. To do that, and to generate valuable employment on the Clyde, Yarrows should be given assistance to diversify in the types of vessel that it can

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build. I should also like to see Scott Lithgow in my constituency allowed to acquire what I would term European Community shipbuilding intervention fund status. Scott Lithgow has the biggest merchant shipbuilding facility in the United Kingdom. Nothing else like it exists anywhere in the United Kingdom. Recently, a British tanker firm, keen to have its ships built in the United Kingdom, approached Scott Lithgow for a provisional price for constructing four VLCCs. Scott Lithgow had to say that it could not submit a realistic tender because it did not have access to the intervention fund, which currently provides 20 per cent. of the cost of constructing a vessel.
If Scotland's interests are ignored in respect of its shipbuilding and fishing industries, I must tell the House, and particularly my hon. Friend the Member for Hamilton (Mr. Robertson), who cannot be present for very good reasons, that more and more Scots may start listening to the seductive blandishments of the Scottish National party and to its arguments for an independent Scotland within the framework of the European Community.
Recent opinion polls strongly indicate that more and more Scots are viewing the nationalists' seductive but empty arguments with considerable favour. Those polls suggest that as many as 40 per cent. of Scots are not frightened of the prospect of independence within Europe. That should be borne in mind as we see Scotland's shipbuilding and fishing industries apparently being ignored by the House, and is why I asked the Leader of the House yesterday for a debate on our maritime industries.
I turn finally to the problems of the fishing industry, in which, I am pleased to say, the Parliamentary Secretary has a fair degree of knowledge and expertise. I may not always agree with what he tells our fishermen, but the Minister is, as they say in that industry, a knowledgeable lad.
The United Kingdom fishing industry is small in the numbers that it employs directly and indirectly, and in its share of the country's gross domestic product. Nevertheless, it is an extremely important industry to many small coastal communities throughout the United Kingdom's mainland and islands. That is true of Cornwall as much as of Northern Ireland, and the industry is a major source of employment in Scotland.
I have the pleasure of serving as one of the honorary presidents of the Clyde Fishermans Association, which is known to the Minister, as do several other right hon. and hon. Members, including the right hon. Member for Ayr (Mr. Younger), the hon. Member for Argyll and Bute (Mrs. Michie)—who ought to be contributing to this debate—and my hon. Friend the Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes). All would say that it is essential to defend the Scottish fishing industry with the utmost vigour. I also have a commitment to the English fishing industry. My brother is working as a mate on a big freezer trawler, fishing for cod off the west coast of Greenland, so I am not being too parochial. I am worried about the new Germany's fishing fleet, and its impact on the European Community's fleets. I am not being alarmist when I say that many people in the United Kingdom industry are worried about this new fleet.
The East German fishing fleet is ancient. Hon. Members would never catch me going on board some of
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their ships, even if they were just crossing the Clyde, the Mersey or the Humber. I certainly would not go up into the Arctic in one of those lumbering old ladies. The best thing that the Minister could do is urge his German counterparts to scrap the entire fleet, because ships that are ancient can be a danger to their crews in bad weather.
Returning to the fine report produced by the Select Committee, it states on page 11 that:
"The Commission reiterates that the capacity of the existing Community fleet is already disproportionately high compared to the limited resources available and so integration of the fishing fleet of the former GDR (whose overall capacity is 3·8 per cent of the Community fleet) poses political problems"—
not merely political problems but dangers for our fishermen—
"It is also suggested that in the case of Community resources not subject to TACs"—
total allowable catches—
"and quotas, access by the former GDR fleet to areas such as the North Sea, the west of Scotland, the Irish sea and the Bay of Biscay could result in disturbance to stocks"—
that is an understatement—
"There could also be problems of principle for Spain and Portugal whose fleets, unlike that of a unified Germany, do not enjoy the same rights of access. The Commission makes it clear that it will be watching carefully how the activities of the new fleet develop and, where appropriate, will take this into account in the revision of the Common Fisheries Policy (CFP) planned for 1991."
The Commissioners need to do much more than watch this carefully. This development has to be policed in the same way that our excellent fisheries protection service polices our waters—nothing less will do.
I want an assurance, or a reassurance, today from the Minister that there will be no access to the North sea or the west of Scotland. Some of us in the west of Scotland are saying that we should not allow fishing vessels from the north-east of Scotland to come round the corner and put down their multi-trawls. The Minister never listens to me when I talk about banning such gear. We are worried about trawlers from the north-east of Scotland—that will not win me many brownie points up there—let alone vessels lumbering through the Pentland Firth from eastern Germany. Such developments have to be policed very carefully.
Mr. Spearing: I was afraid to interrupt such a fascinating account, but if my hon. Friend is demonstrating—through his personal knowledge and constituency interests—the impact on fishing and shipbuilding of these arrangements, which may last for a couple of years or even longer, what impact might the arrangements have in other areas? The document contains at least 25 other areas of interest. Was not it perhaps a little optimistic for the Minister to say in his introduction to the debate that most of these arrangements are broadly satisfactory to the United Kingdom? Judging by what my hon. Friend is saying, is not it likely that there could be some nasty surprises in store?
Dr. Godman: I am grateful to my hon. Friend for reminding me of what the Minister said in the introduction to his otherwise fine speech. Where shipbuilding, the fishing industry and the structural fund are concerned these arrangements are certainly not satisfactory to many people. If the Minister is talking about the Government's point of view, that is one thing, but for many people in my constituency and in Scotland these are far from

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satisfactory matters and my constituents are deeply worried. I am grateful to my hon. Friend for his intervention.
Two or three years ago I sought an assurance from the Prime Minister that the review of the common fisheries policy would not lead to any diminution in the rights quite properly given to the United Kingdom's fishing fleet. At that time my eyes were fixed firmly on the huge Spanish fishing fleet which was slowly steaming over the horizon. I never thought that I would need to look towards the east.
I have great affection for the Spanish people, especially those in Andalusia, but I cannot abide Spanish fishing interests. They are the worst poachers in the European Community fishing industry, and one cannot trust them—they swap licences around. In Vigo they have a club; if a skipper is caught and fined, his fine is paid by an informal insurance system. I know that that is the case because one of my cousins was a skipper on one of those ships, so I have first-hand knowledge.
When I sought an assurance from the Prime Minister —which the right hon. Lady readily gave—she said that she would defend the interests of our fishermen with the utmost vigour. I was satisfied with her assurance, but when the Minister winds up the debate I shall be looking for a similar assurance from him about our fishermen's interests.
I said that. I was going to be parochial and I have focused on three issues: the distribution of certain structural funds, which is important to many Scottish communities, and two maritime industries, shipbuilding and fishing. While I warmly welcome the unification of Germany, the assistance given to the fishing and shipbuilding industries there should not exceed that given to people employed in those industries in Britain— assistance to which they are legitimately entitled.
I have one final question for the Minister—is the aid, or part of it, that is to be given to the eastern German shipbuilding communities to be used for assisting with training or retraining of redundant shipyard workers? There are many thousands of shipyard workers in eastern Germany. Will part of the financial package be given to workers who are keen to set up small community businesses and community-based co-operatives? That is the kind of assistance that they should be given. The assistance that they are given should not enable them, by means of unfair competition, to close down yards in Scotland and in the other countries of the United Kingdom.
12.19 pm
Mr. Andrew Rowe: It is a privilege to follow the hon. Member for Greenock and Port Glasgow (Dr. Godman). He has given the House details. That is appropriate in terms of the documents that we are discussing. He has filled me with knowledge. Until today I had no idea that our inability to build a successor to the QE2 was due to the large-scale migration of Scottish shipwrights to the Palace of Westminster. He has also told me about a new species of bird—a Spanish-speaking, fish-eating vulture. I shall not give so many details in my speech and I shall make no prediction about the length of my speech. It is clear from experience that speakers cannot accurately predict how long their speeches will last.
We are debating the most tangible result, so far, of the break-up of the Russian empire. Like most hon. Members,
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if not all, in the House, with one manifest exception, I am part of one of the luckiest generations ever to have been born. I was too young to take part in the second world war. I have lived all my life in a country where it has been possible to enjoy a level of prosperity that had never been reached before. I have more spare time, a higher disposable income and a better quality of life than that enjoyed by any previous generation.
It is important for my generation to remember that it forms part of the 15 per cent. of the world's population that uses up 85 per cent. of the world's energy resources and that we owe a great deal of that prosperity to two major factors. First, we owe it to the extraordinary generosity of the United States in 1945, which perceived that there was a clear altruistic interest and self-interest in making it possible for the war-ravaged economies of Europe to rebuild themselves on the back of American money.
Secondly, a substantial part of Europe was locked in by a tyranny unexampled in history. More people have been killed, tortured and imprisoned in the Soviet empire than in any other empire in history. To the people who have began to emerge from under that tyrannical ice we owe a great deal of support and practical assistance, of the same kind—albeit delivered by different mechanisms—as that which the Americans offered to us after the second world war.
I believe that certain hon. Members, most of whom are on the other side of the House, but not entirely, perhaps, believe, as does the hon. Member for Bolsover (Mr. Skinner), that any involvement with the European mainland is fraught with danger, enormously expensive and totally misguided. They have no clear perception of recent history. The truth is that, with only short bursts of isolationism, this country has been involved with mainland Europe throughout the whole of this century and for many centuries before.
Dr. Godman: The apparent detest for continental Europe, expressed so forcefully by my hon. Friend the Member for Bolsover (Mr. Skinner), is surely shared by many of the hon. Gentleman's colleagues.
Mr. Rowe: I said that I did not feel that that belief was held wholly and exclusively by Opposition Members. It is unfortunate that the hon. Member for Bolsover's assaults on my hon. Friend the Minister gain spurious clarity and effectiveness from the fact that, as so often, he did not stay to listen to the debate of which the Minister's speech was a part.
I believe firmly that we have been involved in Europe in the least constructive way possible. Time and again we have gone into Europe to fight great wars, or to clear up the mess of the great wars that we have had to fight and win. That is by far the least effective way to spend resources. It is destructive of life and peace. I am delighted that once again we have an opportunity to put an end to that for ever. To suggest that it is better to have large armed forces, paid for out of the national budget, sitting in Europe in order to keep the peace rather than getting ourselves properly involved in Europe, whereby we could ensure that war does not break out again, is a perversion of the truth.
I had the privilege to listen recently to a leading member of the Christian Democrats in West Germany speaking about recent developments. He used an example that I

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shall shamelessly steal from him. He said that there is no alternative to moving very fast indeed and that there are strong humanitarian reasons, apart from any other reasons, for moving quickly towards unification. He used as an example the Trabant car factory. Many of us saw Trabant cars for the first time as they came through the hole in the Berlin wall from east to west. The factory, he said, employs 65,000 people to make 12,000 cars that sell for DM15,000. The day that the wall came down, East Germans had access to Volkswagen Golfs. They sell for DM12,000 and are made by 7,000 workers. Not surprisingly, since the wall came down not a single Trabant car has been sold. The effect of that—it is almost funny at one level—is that 65,000 workers in East Germany have nothing useful to do and the plant in which they were employed is valueless. It cannot be changed, modified or used, so it will be destroyed.
Mr. Tony Banks: As an owner of a C5, perhaps I am not the best person to talk about Trabants. There is some worth in the concept of having a car that is exactly the same in all respects. I cannot think of anything more wasteful than the development money and the money that is poured into creating more models on the internal combustion engine principle with four wheels and four seats attached to them. The idea of producing one car that is standard throughout is quite good. I do not think that the East Germans were altogether wrong, and the hon. Gentleman should be fairer to the Trabant.
Mr. Rowe: I made no comment whatever on the quality or design of the Trabant. However, if 65,000 workers are required to build the same number of cars a year as are built elsewhere by 7,000 workers, there is little chance of that manufacturer surviving.
Some two thirds of the East German bureaucracy will no longer be necessary. If there had not been an urgent unification of the two Germanys, there would have been no social security system for those people. For humanitarian reasons, it was necessary to move rapidly.
The same is true of the Russian soldiers in East Germany. When the deutschmark was linked, Russian soldiers in East Germany were unable to buy anything. It is still commonplace to see them begging in the streets and selling their equipment, cap badges and everything else. The Germans have made a practical and generous settlement with the Russians: they will not only supply DM4 billion a year until the troops return home but, as we heard from my right hon. Friend the Member for Guildford (Mr. Howell), will build them the flats that they require to return home to, which must be unprecedented.
The costs of German unification have only just begun to emerge—DM100 billion to DM120 billion of Government expenditure alone. No one can foretell how much it will cost the private banking system and private companies to regenerate East German industry, but the cost will be enormous. As my hon. Friend the Minister said, that will give Britain an opportunity to take advantage of 16 million new consumers, many of whom have considerable resources because they were unable to spend their money on goods and have been saving it. I understand that one of the problems for the Bundesbank is how to allow that money to start circulating without causing considerable inflation. That must be an
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opportunity for British industry, and I very much hope that it will overcome its lack of German-speaking skill, get in there and create a market.
My right hon. Friend the Member for Guildford said that if there had not been rapid reunification, there would have been rapid movements of population. The break-up of the Russian empire presents western Europe with one of the biggest potential problems that it has had to face. Realistic estimates of the number of people who may leave the Soviet Union run as high as 23 million. Where will they go? With the exception of the Jews, they will travel west if they can. In many cases, they will travel to countries that are already struggling to emerge from under the Soviet yoke, which have no resources of their own and which are looking to join the European Community. For that reason, if not for humanitarian reasons, it must pay western Europe to work out a way of financing those people to stay in their own countries. It will not be easy, because, goodness knows, the Soviet Union is on the point of break-up. Regardless of whether the republics finally sign the treaty of union that is being painfully hammered out in Moscow, in real terms central control from Moscow will soon cease to be a reality in most of the Soviet republics.
We must take seriously the movement of population. The idea that if we shut our eyes to it, we can stand aloof from what is happening in eastern Europe is a chimera of the most dangerous kind. It has been calculated that the Russian Jews moving into Israel are likely to boost Israel's GNP by about 13 per cent. for the next four years. Where will those people live? I am sure that I am not the only Member who has the uneasy feeling that they will be put in the country that is claimed by the Palestinians. That will create a vast international problem of which we must take cognisance.
It must be right to encourage people to stay where they are. That will be done by a guarantee that their human rights will be observed. Many of these people would stay where they are, despite the financial attractions of moving, if they were sure that they would not be persecuted and their places of worship closed and if they were allowed freedom to exercise their human rights. That is why the Helsinki process has been so important. It is why the Council of Europe spends so much of its time trying to make sure that the countries that want to belong to the Council as new members have a secure human rights mechanism. That is why it is important that effective means are found of making sure that the Stasi, the Securitate, the secret police of all these countries—which had vast numbers and have almost disappeared from view—are not given the opportunity or the desire to organise themselves as a counterbalance to the legitimate democracies.
We must also take account of the large enclaves of people of different races, languages and religions who come from other countries. In Czechoslovakia, it is encouraging to find not only that the Slovaks and Czechs are determined to make their federation work but that the Hungarian minority has no intention of breaking away. The people are working extremely hard in the face of great difficulty to create federal and republic constitutions that will guarantee basic rights to the Hungarians. That is one reason why national frontiers in Europe generally must be of decreasing importance as the years go by.
All of us must have been reassured when it was agreed that the boundaries of the German Republic would be

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inviolate and would stay as they were. In the end, the guarantee that some troublemaker in the future will not use these minorities in the way that Hitler used minorities to stir up trouble, giving the pretext for armed intervention, will come when national frontiers cease to be of prime importance. It is clear that, so far, many workers in East Germany show no interest in construction work or manual work of any kind. They want to get on to the white collar ladder. If manual work is to be done, it will probably be done by people from Poland. It is essential that those people are welcomed into the Council of Europe as soon as possible and eventually into an enlarged European Community, although that will take some time.
Another pressure making the anxiety and understandable caution about losing a part of some national characteristic in the wider whole so irrelevant is the enormous compulsion of environmental protection. It is bizarre to imagine that we can protect the environment on the basis of historical national fronters. The announcement this week that the Elbe is to be the first of the great European rivers to be subjected to a multinational agreement to try to clean it up and to protect it is one of the developments that has given me more encouragement than anything else this week. The great European rivers are destroying not only themselves, but the North sea, and must be looked after by all the riparian owner countries through which the rivers flow working together.
One of the least encouraging features of my recent life was when I addressed in Strasbourg a group of young people, many of whom came from eastern European countries. No sooner were they given the chance to ask questions than they going for one another because of the pollution that each was causing to the others. The Czechs were going at the Poles and the Poles at the Hungarians. It was an appalling scene, with young people with the whole of their lives in front of them and who were just emerging from one of the worst tyrannies that the world has seen attacking each other instead of trying to work together.
In our generation, we have the finest opportunity ever to create a new European order in which national boundaries will gradually cease to be of anything like their importance hitherto. I want to be parochial for a moment, and to pay tribute to Kent county council and to some of the district councils in Kent that have taken the initiative and signed agreements with the Nord-Pas de Calais. They are engaged in training, educational and commercial exchanges, and they are hoping for industrial exchanges because they have realised that once the channel tunnel is built, the channel will be a meaningless division between the Nord-Pas de Calais and Kent. I admire and respect those councils for that. Their agreements, in their parochial way, are a model that I fervently hope that the House and Parliament will follow gladly. That will give our young people the best possible opportunity of enjoying the prosperity that our generation has had the luck to enjoy.
12.42 pm
Mr. Tony Banks: The hon. Member for Mid-Kent (Mr. Rowe) made some good points in his characteristically fair-minded way. I am glad that he has now joined the Council of Europe delegation, as he will he able to bring a further dimension to our deliberations in Strasbourg.
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The hon. Gentleman referred to the people of the east —especially those in the dissolving Soviet empire—staying where they are. He said that human rights are probably central to their decisions about location, but I believe that economic benefits and welfare are of equal importance. The British Government could do far more now to assist Mr. Gorbachev economically with the enormous problems facing the Soviet empire. One of our great fears is that the Soviet Union itself will fall asunder, giving rise to enormous instability throughout Europe when we are poised to gain great benefits from Mr. Gorbachev's achievements. There are great political dangers not only for him, but for all of us if we stand aside and say that these are merely the problems of the system and that we shall see how they resolve themselves. We cannot afford to do that and it would be an idle luxury on our part which could drag us down. I hope that Conservative Members will listen carefully to the hon. Member for Mid-Kent and that we shall see more initiatives from the Government in the weeks and months ahead.
The hon. Gentleman also referred to population movement. Many countries in the east will be looking to the united Germany for their own future economic welfare. It has been established that the united Germany has a negative population growth rate; it is also true that the average age there is just under 47. There is obviously a clear capacity for the country to absorb large numbers of eastern European workers, who will be able to share in what will clearly be one of the great economic success stories in the decade ahead. For my part, I have no doubt that a united Germany will succeed economically; but I shall develop that point later.
As the Minister of State, Foreign and Commonwealth Office made clear when he opened the debate, the unification of Germany has been a remarkable event in what can only be described as a politically most remarkable year. One almost runs out of adjectives to describe the current developments in Europe, and I am sure that we all wish to join the Minister in paying tribute to Mr. Gorbachev for what he has done. His historic role cannot be overestimated.
Marx would have said that it is impossible to judge the political and historical implications of an age when one happens to be living in it; my right hon. Friend the Member for Chesterfield (Mr. Benn) is fond of quoting Chairman Mao, who, when asked what he thought were the implications of the French revolution, replied that it was too early to say. However, even now we can see that Mr. Gorbachev's contribution to the historic process that we are witnessing in Europe is vast and cannot possibly he overestimated.
It is also remarkable that so few people, in this country and elsewhere, anticipated German unification. As politicians we have all been blessed with the benefit of hindsight, and we always employ it shamelessly. Only 12 months ago I was fortunate enough to be on a delegation to the United Nations, and I remember discussing the possibility of German unification with the Soviet ambassador. He said, "Oh no, that is not on; it would not be allowed." I remember asking him, "What if people vote with their feet? You cannot put the tanks in and roll it all back." The process started by Mr. Gorbachev had already gone too far, and there was nothing that the Soviets could do other than accept the developments in the GDR with the greatest grace that they could muster.

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As was pointed out by my hon. Friend the Member for Hamilton (Mr. Robertson), 12 months ago our own Prime Minister was turning her face against the inevitable—as she does so often with regard to developments in Europe. In a sense, I do not blame her: she did not see what was coming any more than did the politicians of either east or west. Now that it has come, however, we must ensure that we take the maximum advantage of it.
A united Germany will, of course, become a super-state; indeed, it is a super-state already, because of the enormous economic power of West Germany. The 77 million people in the united German economy make it one of the most successful in the world. Certainly it is the only economy in Europe that could have sustained the absorption of a run-down country like the GDR. Imagine the economic consequences for Britain if it tried to absorb such a country, economically and politically: we simply would not have the economic strength.
The figures for the cost of unification seem to be enormous. Of course, they cannot be regarded as wholly accurate; anyone who must provide a range of costs over 10 years running from $550 billion to $700 billion can clearly make only an intelligent guess. But, with the cost of the pollution clean-up in the eastern part of Germany estimated at $140 billion, it is clear that we are talking serious money here. Only one European economy could possibly even contemplate such costs without rushing into blind panic. Certainly, we could not have done it in this country.
When the Minister pointed out the cost to the EEC and to the United Kingdom—my hon. Friend the Member for Bolsover (Mr. Skinner) was concerned to quiz him—we realised that, because of the great contribution that will be made by the West German people to unification, the costs to the EEC and to the United Kingdom are minimal.
One understands that there is a great deal of anti-German sentiment in this country and in the House. I am disappointed that the right hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has not made a much-heralded appearance today. Many hon. Members would have liked to have heard him speak in the unaccustomed position of a Back-Bench Member. Perhaps his speech would have been more considered than his interview in The Spectator. The right hon. Gentleman enunciates something—there is anti-German feeling in this country; there is unease. We cannot really blame the people of this country. The second world war was not that long ago. It is still well within living memory. Many people come to my advice surgery and point out that they fought for this country during the war. They are now asking about what has happened to the successes that we are supposed to have achieved in the past 11 years of Thatcherism. They are asking, "Why haven't I got a decent pension on which to live?" They point to the success of Germany and say, "We are supposed to have defeated Germany in the last war, but it is undoubtedly true that the Germans have won the peace."
Hon. Members always pay attention to the enormous power of the West German mark. Who created the West German mark? It was France, the United States of America and the United Kingdom. We instituted the deutschmark in 1948. It is interesting to see what the exchange rate for the deutschmark was 1948. In 1948 we
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could have got DM 13·4 to the pound. Now in 1990, if we are lucky we can get about DM2·9 to the pound. Over those years our inflation has eroded our wealth, but West German inflation has more or less stayed at about 3 per cent. That is economic success. That is the sort of success that we should want for this country.
The Prime Minister talks about the lessons that Thatcherism has taught the Germans or the rest of eastern Europe. Pardon me for smiling, but that is an absolute farce. I have never known any senior politician to delude herself so often and so regularly as the Prime Minister does with regard to the developments of Europe and the power of the West German economy.
Again referring to anti-German sentiment, one must understand that there is no longer a military threat from the Germans. There is a vast economic threat if we go our separate ways, but there is no military threat. The only thing in my character that I find anti-German at the moment is that, as we all know, they manage to get the best places on the beach first. That also says something about their outlook on life generally. They are more efficient than we are, even when they are on holiday. That is another tribute to them.
Dr. Godman: They get up earlier.
Mr. Banks: They have always been getting up earlier. That is why they have achieved so much economic success. While we are still slumbering in our beds, they are getting the best places on the beach. They are creating the best products that are now flooding our markets. We are finding it very difficult, not to say impossible, to compete economically with them.
There is no doubt that Germany will make unification work. In 10 years—it may be a little longer, but it will be about 10 years—the eastern part of Germany will match the western part of Germany in terms of economic parity. Then we really will face the most formidable economic power on the planet.
I have already mentioned costs. It is interesting to see how the German Government intend to pay the costs. They are vast. I understand that they are prepared to allow the federal budget deficit to grow. Chancellor Kohl has even talked about the necessity, if need be, to raise taxes. One thing about Chancellor Kohl is that he is prepared to face political realities honestly and openly. We would all pay tribute to him for that, despite the fact that Opposition Members do not share his political outlook.
The other aspect of this debate which I want to refer to is the general criticism and condemnation of the old German Democratic Republic. The hon. Member for Mid-Kent referred to Trabants. I accept that Trabants make even Ladas look an attractive proposition. However, the concept was good, although, perhaps, the execution was not so successful. The concept of not having unnecessary competition in an area like motor vehicle manufacture might be something that we will all accept as normal in an advanced world, perhaps in 100 years' time. There will be other more necessary areas of expenditure where such resources will be needed. It does not matter if we are all driving around in cars that look the same if the car is efficient and gets us to our destination. Hon. Members have referred to choice, but when choice is provided only at enormous economic and social cost, that cannot be the kind of choice we want.
Mr. Rowe: The hon. Gentleman is making a theoretically very attractive point. However, modern motor vehicles are more efficient in their use of oil and petrol and also safer to drive than ever before and I believe that that is a direct consequence of manufacturers competing against each other.
Mr. Banks: That does not necessarily follow, but we certainly always want a product to be improved. As I have said, the concept of the Trabant had something to commend it, but we must link concept with execution. I did not mean to spend so much time talking about Trabants. There are many things that I do not want to do in this life and one of them is to become a Trabant salesperson. However, the Trabant was not a bad concept.
The GDR has taken a fair old kicking today. However, not everything in the GDR was worthless. The social guarantees available in the GDR constitution are worthy of comment, as are the welfare benefits and women's rights. I visited the GDR and witnessed the care and attention given to young people in nursery schools and I met a 108-year-old woman in an excellent old people's home. There was no homelessness in the GDR. Perhaps much of the housing was at a level that Members of Parliament would not be prepared to accept, but when I look round my constituency or around London as a whole, I see a lot of people who would be grateful to be driving a Trabant home to an East German flat.
Ms. Diane Abbott: I visited East Berlin in June. Although the people there were very relieved to be free of the tyranny of the secret police, the quality of the public housing there was far superior to what many of my unfortunate constituents have to endure in Hackney. The women I saw were very concerned about their rights to abortions under the new regime. Not everything about the old GDR was bad.
Mr. Banks: I am grateful that my hon. Friend the Member for Hackney, North and Stoke Newington (Ms. Abbott) has joined me in putting that on the record. There has been a tendency in this debate to ignore everything in East Germany, disregard it and say that everything there was rubbish. That is not true. It is important to state that the East Germans will gain a great deal in terms of future prosperity, choice and consumer goods. However, they will also lose something. I hope that disillusionment does not set in too soon.
Unification is good because the German economy is so strong and there is so much homogeneity. The polarisation that exists in this country does not exist there. I believe that they will be able to get a mix which combines the best of the consumerism of western Germany with some of the better aspects of the welfare provision of eastern Germany.
Mr. Spearing: Does my hon. Friend agree that it is vital to get the best of the experience of all nations? My hon. Friend will be aware that York House in Plaistow in Newham, a charity for elderly people which has run since 1925, must now close because the Government will not increase the residential homes allowance. Were old people ever turned out of charitable homes in East Germany?
Mr. Banks: My hon. Friend mentions yet more of the benefits of Thatcherism, rather than the sort of arrangements that the people of Germany, East or West, will be prepared to accept. We in this country have a lot to
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learn from the experiences of East and West Germany. In the end, unification represents a victory for consumerism. Markism has replaced Marxism. The great German mark has been the driving force behind unification.
As my hon. Friend the Member for Hamilton said, by the December elections the position will have shaken down in Germany and people will make a cooler judgment of future possibilities and a future direction. If that does not happen then, it will happen at the election after that. The ability to combine the economic efficiency of West Germany with the social justice of certain aspects of East Germany will represent a significant victory for the united German people. I hope that the SPD will win the December elections.
One cannot detract from Chancellor Kohl's achievements. He has achieved a major historic role in all of this and he will be commented on favourably when history comes to be written. As my hon. Friend the Member for Hamilton said, one does not share his political views and outlook, but one approves of his style. I read his comment that Germany does not seek the leading role in Europe, but will live up to her responsibilities. That non-arrogant, diplomatic style contrasts with the shrill narrow tones of the narrow-minded bigot who is temporarily Prime Minister of this country, and makes me realise the great gulf between Great Britain and united Germany. It may be all right for Helmut Kohl to adopt a position of humility and to speak of a united Germany not seeking the leading role, but it will be difficult for Germany to avoid playing the leading role in Europe. The integration of the GDR brings a complexity of special relationships between united Germany and eastern Europe. A unified Germany is undoubtedly pivotal to east-west relations.
The Soviets have now warmly welcomed unification. Vladimir Shenayev, the deputy director of the Soviet Institute of Europe said:
"We trust Germany. We have a united, democratic Germany that is actively disarming itself. Germany is the Soviet Union's largest trading partner–15 per cent. of foreign trade turnover will go through Germany—more than the United States, Britain and Italy combined."
That is the strength of and power behind the relationship between united Germany and the Soviet Union. We ignore it at our peril.
Mr. Shenayev talked about a unified Germany disarming itself. Because of the fears of many people, not only in this country but in France and elsewhere in Europe, there is an agreement to reduce the combined armed forces from 590,000 to 370,000 over the next four years. We have before us the prospect of 360,000 Soviet troops based in the eastern part of Germany leaving by 1994. That gives us a wonderful opportunity to ensure that we get all our British troops out of a united Germany. I understand that the Government aim to achieve that. I hope that when the Minister replies he will give us a clear assurance and perhaps a date for when British Army of the Rhine forces will be out of a united Germany.
I should like to see a unified Germany declared a nuclear-free zone and all nuclear weapons off German soil. That is another issue which will be raised in the December elections. According to opinion polls, a non-nuclear Germany would find favour with the great majority of German people.
There is now a united Germany standing at the crossroads of Europe with a Moscow-Berlin-Washington axis as the vital one linking east and west. It worries many

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people that that enormous economic power will act as a gravitational force of irresistible political strength—if there is economic power, there is political power—that that enormous eco-political structure will sit in Europe and its gravitational force will distort economies all around. That worries many people in this country and beyond. The only way that the United Kingdom can influence such an axis, and such economic and political power, is through European institutions—there is no other way.
I know that my hon. Friend the Member for Newham, South (Mr. Spearing) might disagree with some of the things I am about to say, but I believe them. In many ways my attitude on Europe has changed in the Gorbachev period. I am right to have changed my position because circumstances have changed so dramatically and for a politician to stand pat on a previous position without attempting to modify it in view of the momentous world changes would mean that he or she would probably be left behind in a major way.
Chancellor Kohl made an interesting statement on French television on Wednesday. Many people thought that the economic problems of unification would mean that enthusiasm for economic and monetary union western Germany would definitely wane. That has not happened. In his statement on television Chancellor Kohl made it quite clear that he agreed with the Dutch proposal that stage 2 could be achieved by January 1994. When the French and Germans agree on something such as that, it means that it will happen. It does not matter what the Prime Minister says, because she is increasingly irrelevant in all of it. I am sure that there will be some welcome among some Conservative Members for what Chancellor Kohl said; I am sure that the deputy Prime Minister and the Foreign Secretary will be quite happy about it and, in his quieter and more honest moments—those spent away from the Prime Minister—the Chancellor of the Exchequer will also welcome the news from Germany and Chancellor Kohl's statement.
We cannot stand aside, although some are determined to try to do so. A new club has been announced. I have a document stating:
"Tebbit joins new European club."
That is no recommendation for membership. The document continues:
"The right hon. Member for Chingford is joining with the right hon. Member for Cirencester and Tewkesbury to form a new club."
The club has no name yet but it has been formed to combat the insidious influences of Mr. Delors so perhaps it will be called, "Up yours, Delors" or something like that. It is to be a dining club and I should like to see some of its menus—obviously there will be no sauerkraut or French wines, it will be all bangers and chips. The club is pathetic and will not mean anything.
One of the club's new members, Mr. Alan Sked, said:
"This will be a massive campaign on the issue to drive a wedge between one European country and another."
That is a throwback. There is no way in which this country will stand in the way of economic and monetary union, which is an inevitability and became so as soon as Helmut Kohl and President Mitterrand agreed that it was so.
We cannot live in competition with the deutschmark. The pound sterling cannot survive in competition with the
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deutschmark, which is the powerhouse of Europe. The only way that we can influence events in a united Germany, whether economic or political events, will be through pan-European institutions. We can survive in an expanding Europe only in junior partnership with the united Germany.
Mr. Spearing: I am grateful to my hon. Friend, who is making a good, serious and important speech, expressing in the latter part of it the views of many of my hon. Friends. However, does not he agree that the basic and fundamental object is not in irrelevant dining clubs—I agree with him—but in not being left behind? The important question is whether we are going ahead in the right direction. There is all the difference between a true co-operative movement in Europe, which my hon. Friend wants—and I want co-operation—and political union which, in the words of the former Chancellor of the Exchequer, the right hon. Member for Blaby (Mr. Lawson), means one currency, one nation. Therein lies an enormous danger.
Mr. Banks: My hon. Friend thinks of it as a danger; I think of it as an exciting prospect. I grant that it is fraught with danger, but nothing momentous can be achieved without an element of danger. What is the hang-up about the nation state? The United Kingdom is made up of constituent countries, which themselves were formed from smaller principalities, kingdoms and states. Notwithstanding what is happening following the immediate break-up of the Soviet empire, the movement is definitely towards a larger Europe. I do not find anything frightening about the idea of a European Government, a European president, a European Prime Minister, a European Chancellor, a European bank and other European democratic institutions such as a European Parliament.
The days of this Parliament are numbered because we are surrendering national sovereignty. This place will become rather like a regional town hall. Those are the developments of the future and I am not frightened of them. I accept that there are dangers and that we should be wary, but it is the way of the future. Obviously, I am not someone given to good judgment, and I could be wrong, but having seen and thought about what is happening, I think that historically it is the way that this country will go. It will have to do so because of the momentous events that have occurred. Without Mr. Gorbachev, none of this would have happened, none of the discussions would have taken place and none of the possibilities would have been available.
My attitude has changed because of Mr. Gorbachev's concept of a common European house—a Europe that stretches from the Atlantic to the Urals. It is such an exciting concept that we must go for broke on it. The opportunity peacefully to redraw the map of Europe for the first time is a gift that former politicians would have given everything to achieve. Some, like Hitler, tried through war, but it did not work. We now have an opportunity to achieve it through peaceful means.
Although I understand the problems, the concept of a federal European state involving both east and west Europe captures the imagination and the mood of the country and beyond. I only wish that my hon. Friend the Member for Bolsover were here today. I know that I would disappoint him greatly. However, he is an avid

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reader of Hansard, so no doubt retribution will speedily follow on Monday when he reads my speech. Although I have great respect for my hon. Friend's views—and I do not say that in the hope that he does not totally brutalise me—he is wrong in his view about Europe and the developments currently taking place.
I am afraid that I have spoken for rather longer than I intended, having been diverted by my hon. Friend the Member for Newham, South, with whom I am sure I will have many opportunities to discuss the issue. For my money, I believe that German unification has given a major boost to the possibility of the greater Europe that I have described, and I wholeheartedly commend it.
1.14 pm
Sir Alan Glyn: It is not often that I agree with the hon. Member for Newham, North-West (Mr. Banks), but I agree with him about the role played by Mr. Gorbachev. However, I must also pay tribute—the hon. Gentleman will not agree with me—to my right hon. Friend the Prime Minister, who lit the torch of freedom when she visited Poland. I agree with the hon. Gentleman that not everything in the German Democratic Republic was bad, but I am sure that he will agree that it was an oppressive regime.
Those of us who knew Europe before the last war, and who then saw its artificial break-up as a result of the Yalta conference, would never have believed that its reunification could take place so quickly. Again, we must pay tribute for that to Mr. Gorbachev and my hon. Friend the Prime Minister.
Reunification has wide implications—some good, some bad. It will cost a great deal of money, and although there is a great pool of labour in East Germany, its industry has broken down, and it will take about 10 years for everything to be sorted out.
My right hon. Friend the Member for Guildford (Mr. Howell) pointed out that Germany is paying not only for its own reconstruction but for Soviet troops in East Germany to be withdrawn and rehoused in the Soviet Union, wherever the Soviets may choose. That has two advantages. It gets the troops out of Germany quickly, and at a very low price. Rather than pay for them to remain there, it is just as well to get them out of the way altogether. It is a miracle that Germany is able to do that without destroying its own economy. I was worried that, economically, reunification would destroy Germany, but instead it seems likely to become one of the most powerful economic units in Europe.
There is no point in paying tribute to the people who have made reunification possible. Instead, we must ask ourselves what role they are to play in the future. May we expect them to neglect a military role, and instead to spend money on rehabilitating a combined Germany—as was done after the last war? It seems possible that Germany can do the same again.
Shall we stop at Germany, or shall we also welcome into Europe countries such as Czechoslovakia and Hungary? That may be a good idea, with the proviso that those countries attain democracy first. Subject only to that, we should surely welcome them into a united Europe that might eventually include even Russia. There is no reason why that should not happen. There are immense opportunities for a united Europe.
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If all that occurs, what are we to do with the NATO troops who would be withdrawn from Europe? Given the experience of the Gulf crisis, the right thing might be to create an international force, so that the resources made available as a consequence of reunification throughout Europe could be used to deal with any situation that arose. It might not even be a NATO force, because NATO, too, might lose some of its significance. Nevertheless, it. would he capable of bringing peace to the middle east, the Gulf, South America or anywhere else in the world. However, we must realise that many nations are developing weapons that are not exactly nice—nuclear and chemical weapons. We must retain sufficient nuclear capacity to be able to say to them, "Look here, it's no good your trying this on, because we have a stronger force and you will be wiped out." That argument kept the peace for 40 years and it must be maintained.
No doubt, a strong Germany after reunification will be a strong competitor, but we have to live with the new Germany, accept it and work with it. We must try to get Germany interested, not merely in its own affairs but in world peace. East and West Germany suffered equally in two wars, so that would not be too much to ask now. Germany was built up by America, with the help of other nations. It has survived two wars and it is time that it helped an international force to maintain peace in the rest of the world.
I look towards a united Germany to fulfil that commitment to world peace not merely with weapons and armies but with money. I hope that it will assume such responsibilities when unification is complete, or should I say when reconstruction has finished. I agree that It may take 10 years, but during that time Germany should not neglect its contribution to world peace and it should be reminded of that.
1.22 pm
Mr. John Browne: First, I must declare that I have financial interests that could be affected by German reunification.
To a large extent, German reunification is the result of the drive, wish and initiative of the German people. It is a just and great event and the stage for it was set by Mr. Gorbachev. He did so in response to the great political fortitude shown by the United States, Great Britain and by our NATO allies. He had to meet the fortitude of the western nations with a response, so he issued the world with a new challenge. Unlike most challenges, Mr. Gorbachev's was not that of war but of peace. He proposed to change the nature of peace itself, from one based on deterrence to one based on detente. He swapped the threat of mutual destruction for the opportunity and hope of mutual trust.
Gorbachev's new challenge has successfully removed the Soviet bogeymen from the world strategic map. As a consequence, Mr. Gorbachev has achieved a number of great things.
First, he has heralded the end of the second world war—I find it hard to remember that the two losers of the hot part of that war were Japan and Germany.
Secondly, Mr. Gorbachev has catapulted Europe back into the centre of the world's strategic political stage. but what sort of Europe will it be, and how far will it extend? Will it end in Berlin or in Moscow?

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Thirdly, Mr. Gorbachev has exposed a great change in the super-power structures of the world. In 1945 Great Britain was replaced as a world super-power by Russia. Today, 45 years later, Russia itself has been replaced as a super-power. The big question is, by whom? Will it be replaced by a new Europe or a new Germany?
On 3 October we saw the birth of a new Germany. Some would say that we also saw the birth of a new German empire—this time, an empire that will be pushed forward not by force of arms, represented by the bayonet, but by economic measures, represented by the deutschmark.
Germany is a very great nation of about 100 million people. Even the Romans failed to conquer the Germanic tribes. Much of the praetorian guard of the Roman emperors consisted of Germans. For centuries the Teutonic knights protected Europe. We have seen Germany take on the might of the world in both industrial and military ways. The German economic miracle, following 1945, was a testimony to the strength and vitality of the German peoples. All this, in my view, portends even greater German growth in the years ahead, as a fully fledged member of the European Community, lying, as it does, adjacent to the vast new markets of central Europe and of the Soviet Union.
Germany has re-emerged as a major national force in Europe and in the world. The vital question for all of us in Europe is how the new Germany can best be assimilated into Europe, in the best interests of Europe in general. It is wrong to think—as, I believe, our French colleagues think—in terms of trying to lock Germany into the EEC. I believe that Germany will not for long be locked into anything. We are, therefore, at a fundamental crossroads in the design of our new Europe.
In essence, there are three major options. The first is the EEC—the European Economic Community of sovereign member states. The second is the EC, as it is now called, or the European Community of a federal European state. The third is a Europe dominated by one single member state.
With such choices, I think that it can truly be said that the times that we now live in are indeed times of legend. Now, we must decide whether Europe will move forward by means of revolution or by means of evolution. At the heart of the answer will lie our policies towards European monetary union.
These are times of great change, of enormous hope and of great uncertainty. One may almost characterise them as the fog of sudden peace. At such a time of uncertainty we are being asked to make a dramatic decision about something that is very dear to all our hearts: the future of our national sovereignty, the future of our way of life.
The hon. Member for Newham, North-West (Mr. Banks), who is not now in the Chamber, mentioned that we were going to surrender our sovereignty and that we must go for broke. I do not believe that the British people will readily accept that argument. National sovereignty is always a vital and very emotional issue. It is particularly important and emotional when it comes to jobs and the future employment of British people, and it is always important and emotional when it comes to the problem of mass immigration.
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I have the privilege of being the rapporteur of the civilian affairs committee of the North Atlantic Assembly. We have carried out some interesting studies in the human rights context both into the problem of the movement of peoples within central Europe as a result of the breakdown of the Soviet empire and into the enormous problems that face Europe with regard to mass immigration, particularly from the Soviet Union, where tens of millions of people may elect to live in the richer, western part of Europe. It is a major problem which must be faced by all EEC members.
I have no doubt that European monetary union is the back door to the creation of a federal European state. European monetary union, as a currency bloc, would effectively be dominated by the deutschmark.
The exchange rate mechanism of the European monetary system is a major step towards economic and monetary union and a single European currency. Proponents of the ERM and of European monetary union argue that it would give our economy more financial discipline. Some Labour Members might argue that there is too much financial discipline already.
The ERM and European monetary union are about sovereignty. I say yes to financial disciplines encouraged by economic competition among member states of the EEC, but very definitely no to financial disciplines imposed by a federal European state. The British people will not like it, and furthermore they will not accept it.
Economic domination of Europe by the deutschmark would have major implications for British industry, employment and our way of life.
For decades, following the second world war, our economy almost died. Indeed, today our economy is still in a state of convalescence. It is still prone to relapse into inflation or even stagflation. As it is a convalescent economy, it is the duty of the Government to ensure that our economic health is achieved fully before—I stress "before"—taking on the full unfettered gale of German economic competition. Let there be no doubt that the exchange rate mechanism, leading to European monetary union, will open the gates wide to the full gale force of German economic competition.
We still need time, which is of the greatest importance in continuing to ensure that we achieve economic health and that our economy is strong enough to be able to adapt to the competition that we shall face from Germany—adapt so that Britain will survive and be economically strong. If we enter the exchange rate mechanism and go for monetary union before we are ready, the implications will be serious and damaging for British companies, British industries, British employment and for the British people. We need time for evolution rather than revolution. It is wrong to say that we must go for broke. It is too big a gamble, with the jobs and future way of life of our people at stake.
The speed of our early entry into the European exchange rate mechanism worried me, and it continues to worry me seriously. What particularly worries me is that it appears that the Government were pushed into early membership of the ERM and, therefore, too early down the road to European monetary union and a single European currency dominated by the deutschmark.
As I said earlier, on 3 October we saw not just the birth of a new Germany but the birth of a new super-power. Before it is too late, we must ensure that the financial disciplines that are accepted by our Government as a result

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of competition in a European Economic Community of sovereign states, a true European common market, do not mean accepting the imposed financial disciplines of a single European currency dominated by the deutschmark.
The key question before us all is how best to assimilate the might of the new Germany in the best interests of Europe in general. I therefore welcome this debate, and I thank you, Madam Deputy Speaker, for calling me.
1.35 pm
Mr. James Paice: I do not think that anyone can over-emphasise the importance of this debate and our incredulity at having it; nor do I think that anyone could have envisaged, even a year ago, that we should already have moved to this momentous stage. Like many hon. Members, I have visited both East and West Germany several times. I was fortunate to visit East Germany, just prior to my election to the House, with a number of other individuals who are now my colleagues here. At that time, we would have no truck with the belief that German unification was on the political horizon. The same group went back only three weeks ago to see the incredible changes that have taken place in East Germany. What we saw will remain with us for the rest of our lives. We saw the end of the inhumanity that was the Berlin wall. We saw the change and felt the hope in the air in East Germany and the way that churches which had not been touched since the day they were destroyed by our bombers are being restored. All that is beginning to happen because of the end of the Berlin wall.
It is important to recall that the revolution in the whole of eastern Europe has been achieved largely, with the sad exception of Romania, without bloodshed. It is very different from the revolution that began it—the Bolshevik revolution, which cost 5·5 million Russian lives. I am sorry that the hon. Member for Hamilton (Mr. Robertson) has left the Chamber. In response to my hon. Friend the Member for Mid-Kent (Mr. Rowe), the hon. Gentleman asserted that socialism and communism were not the same. One cannot forget that at the time of the Bolshevik revolution, when Trotsky's armies were in retreat and falling back to Moscow in a last-ditch stand, the British Labour party pushed Lloyd George to abandon Churchill's support for White Russia. At the very time when that revolution could have been stopped, we failed. I am not saying that the Labour party is only to blame but, as much as anyone, it must share some responsibility for the tide of communism that then engulfed so much of the world. There is now an opportunity, as part of German unification and because of the trend of the past few years, to redraw the economic and political map of Europe and, indeed, of parts of Asia. We now have to address the future of Europe as it is affected by German unification.
I was interested to listen to the hon. Member for Newham, North-West (Mr. Banks), and I am sorry that he has left the Chamber. His speeches are often spoilt by too much humour, but this time he obviously made a speech from the heart. Although I did not agree with some aspects, the hon. Gentleman gave an interesting and sound perspective of one way in which the future of Europe could develop.
Several hon. Members referred to the effect on the United Kingdom economy. There are those who believe that the best way to prevent Germany becoming over-dominant is in some way to handicap it. That is no
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way forward. The way to ensure that Germany does not become over-dominant—let us not forget that it starts with a fairly large handicap because of the immense problems associated with the GDR—is for us to get our act together and for other countries to build their economies into a form by which they can compete effectively with Germany. That is the surest way of having a long-term assurance against over-dominance by any economy.
There is no doubt that the German people want to expunge their past. They would like to strike the history of this century out of the books, which is a highly respectable attitude for them to take. It is reflected in their anxiety to demonstrate their commitment to peace, to democracy and to the rest of the west, and in their determination and enthusiasm for the pursuit of European political union. From their perspective, that is a highly respectable and understandable position. However, despite my respect for them, I believe that we should not all rapidly embrace that perspective.
When I have discussed these matters with some of my German friends, I have found it difficult to accept their unwillingness to look favourably towards a fairly rapid assimilation of the German Democratic Republic's former trading partners in eastern Europe. We must work to assimilate them into the European Community as fast as we can. I know that there are worries about the state of their democracies, but I suggest that this is a chicken and egg problem. Which comes first? Is it a fully stable democracy, or should we assimilate those countries quickly and help them to develop and then stabilise that democracy?
We were quick to take on board Spain, Portugal and Greece as they came out of the grips of one form of dictatorship and I do not see why we cannot repeat that with the countries of eastern Europe. The development of their democracies would be one of the major benefits of their joining the Community and it would also provide them with a great opportunity to develop the capitalist market economy, which is now recognised as the only route to lead to prosperity and to proper care and attention for the environment.
When one sees, as I saw only three weeks ago, some of the incredible environmental problems, with lignite pollution and mile after mile of chemical and gas plants, some of which are unmodernised since the days when they produced Hitler's Zyklon B gas, one can understand the enormity of the challenge, which can be paid for only by the wealth created out of a market economy.
We must not forget that half the population of the GDR does not recall the war. People of my age or younger, born after the second world war, have no memories of anything other than a communist-dominated economy. They have had the wonderful opportunity to rejoin the Federal Republic and to become part of a Germany that is again united. That opportunity does not exist in the same way for the other peoples of eastern Europe, but that does not mean that we should not set out to create a similar opportunity as early as we can.
The papers that we are discussing today deal with the immediate problems, but we need also to deal with the problem of those adjoining nations. The association agreements produced by the Commission in September are a major stepping stone towards European Community membership by Poland, by Hungary, by Czechoslovakia and by the rest. The agreements refer to the approximation

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of the laws, to the removal of customs barriers and to the free movement of people. They are clearly designed to make the final stage so much easier, although they are not a reason for speeding up the cause of political unity in the European Community.
We must not forget that the Delors proposals were produced at a time when today's debate could not have been foreseen and that they are now outdated. They need to be binned and we must start to think again about how we should now draw the political map of Europe to encourage every nation to be part of a brotherhood that allows economies and national cultures to develop in a way that ensures developing peace and prosperity.
Before we discuss political union any further I want to draw a distinction between political union and what is sometimes lumped together with it—an improvement in the decision-making processes within our present Community. Such a reform is long overdue, but the two things are not the same and should not be confused. We must look to the new economies that are now emerging, and not build further obstacles through political union, which would make their ultimate accession much more difficult to achieve.
I look forward to the day when we can consider similar papers on the terms of membership of the European Community for Poland, Hungary, Czechoslovakia, Bulgaria and the rest of eastern Europe. We have assumed—some would say purloined—the title "European Community". Let us look forward to the day when— before the decade is very much older—it becomes truly a European Community.
1.46 pm
Mr. Harry Barnes: There is a peculiarity about this debate: technically, we are discussing documents consisting of masses of empirical detail as well as value judgments, but, more correctly, we are discussing a matter of practical political philosophy. The better speeches, including that of my hon. Friend the Member for Newham, North-West (Mr. Banks), have taken an ideological approach. However, they were ideological in a practical sense, because they referred to major developments and concerns. In the limited time available to me, 1 too wish to adopt that approach.
We should identify what is favourable about developments in both West and East Germany and the west and east as a whole, and thereby draw up plans to ensure that we achieve the right developments both in Germany and on a pan-European scale. What are our worries, and what should we seek to avoid? The various actions that have already been performed have sometimes proved unfortunate, but there are still plenty of opportunities for us to argue the case for acting differently.
What the west had to offer the east, and what West Germany had to offer East Germany, was undoubtedly parliamentary democracy. It was the operation of a voting system, however imperfect some aspects of that system might be. I firmly believe that, in this country, our democratic franchise is being undermined by the operation of the poll tax; I should not wish that tax to be foisted on East Germans as they moved into a new Germany.
I have not made my mind up about proportional representation, but I am aware that the German system is
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the best alternative on offer. It allows constituency representation; it produces a fair result; and it stops fringe and minority groups from being represented in ways that spoil the operation of the system. It has much to commend it in comparison with other systems, such as that of the single transferable vote in a multi-member constituency: that is not proportional representation, but is merely built on a metaphysical notion of PR. That is vastly superior to the East German "munipulation" of the bureaucratic structures that previously operated.
Democracy depends on more than voting arrangements. This country has recently moved towards a form of elective dictatorship. A full range of civil liberties is required to allow people to organise, demonstrate, express views and understand possible alternatives, and to allow proper checks and balances of the democratic system. The importance of western democracy is not that somebody is appointed to office and has a mandate to do things on behalf of the people; it is that it is always subject to the next election. That fact should influence the attitude and approach of Governments. They should play the game so that they may win on future occasions. At long last, given the unpopularity of this Government, we are beginning to see signs of some moves taking place. People are saying, "They are pinching things out of Labour's programme." That is a healthy arrangement; it should take place in a democracy. There should be to-ing and fro-ing in the market place of politics.
The east had things to offer the west. It had an ideology. Many aspects that were interesting and valuable—they were propounded, although considerably distorted—stressed collective provision and care and sometimes, even despite the bureaucratic arrangements in those societies, fed into policies on full employment and child care and a decent policy on abortion. However, unfavourable things in the west, such as its competitiveness and the capitalist free market, led to exploitation. When the walls were broken down, we saw people stream from the east to the west, but we did not see capital flooding into East Germany and eastern Europe in a way that almost knocked down all opposition.
Conservative Members speak about the value of market capitalism. They should realise that markets do not necessarily have to be capitalist. It is possible to have markets in which social forms of ownership operate and in which competition between co-operatives, for instance, takes place. There are different possibilities from those that are on the cards at the moment.
We have missed a fantastic opportunity to talk about a development in which the best from the west and from the east begins to be drawn together so that improved arrangements can be made in Germany and in Europe generally, and on a pan-European basis. Such insight influenced the speech by my hon. Friend the Member for Newham, North-West. I should have loved to have an opportunity to develop those themes.
This is an important debate and it will not go away. It is ideological in the best sense. I hope that other matters are put on the agenda, apart from a rampant movement of markets and capitalism with democracy somehow coming in and making social provision. That influences the current nature of the European Community. What is wrong with the European Community is that markets and capitalism are at the top of the agenda, with democracy, democratic institutions and social arrangements secondary to them. They need to lead the debate, not follow it.
1.53 pm
Mr. Peter L. Pike: It is right and appropriate that we should have this debate on German reunification in the first week after the summer recess. As so many hon. Members, including my hon. Friend the Member for Hamilton (Mr. Robertson), have said, German reunification symbolises the most important changes in the world. We must recognise that the changes which have taken place and those that will continue to take place have, to a large degree, been made possible by President Gorbachev taking power in the Soviet Union. We must recognise that he has influenced changes not only in Europe, but throughout the world. For example, he played a behind-the-scenes role leading up to the elections in Namibia last year.
There have been major changes to what most of us have accepted as the norm. For the first time since the war, the United Nations has an opportunity to play a major role and do something that it and the League of Nations between the war years could not do before. There is an opportunity to reduce defence expenditure in the east and the west and to use those resources more positively to the benefit of mankind. On so many occasions the Opposition regret the fact that we still have a Prime Minister and a Government who fail to recognise the opportunities.
In this final decade of the century, the world must deal with poverty and hunger and face our environmental problems. If we can spend as much time and resources on those problems as we have spent on other problems in the past 45 years, they can be solved by the turn of the century. That is the way we should proceed after grasping the new opportunities symbolised by this debate following German reunification.
My hon. Friend the Member for Newham North-West (Mr. Banks) correctly referred to the efficiency of the German nation. Despite the problems facing it after the absorption of East Germany, we all accept that Germany will make a success of unification. Reunification will be successful despite the problems which exist in the old GDR.
It is also important to remember that on the Friday of the week in which German reunification took place our Chancellor of the Exchequer announced that we would join the exchange rate mechanism. As has been said, ERM alone cannot solve all our problems.
The hon. Member for Winchester (Mr. Browne) and others referred to German industry. The success of German industry has depended on many different factors. The Germans have a far more regional approach than we have. German financial institutions look at industrial investment on a long-term as opposed to a short-term basis. While the people in manufacturing here to whom I have spoken welcome the stability provided by entry to the ERM, they are worried that we have probably entered at too high a price in relation to the deutschmark. They are afraid that that will make our industries uncompetitive and place them at a disadvantage.
Another major difference between our industry and that of our competitors and German industry is that when we talk of pay restraint, work and productivity we always talk about those working on the production line and we do not talk about management in the same terms. I worked in a multi-national company and in a factory before I became a Member of this House. A big difference between our partners in Europe and us is that if managers there expect
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workers to come in at 8 am or whenever, they do exactly the same themselves. We must set that kind of example. Britain's managers and workers must not oppose each other, but work together to ensure manufacturing output. If we work to that end, we could not only do well, but cure some of our economic problems. I have always been convinced that until the nation gets its manufacturing base right, we cannot cure our economic problems. We must recognise that, and we must have a Government who are prepared to do something about it.
My hon. Friend the Member for Newham, South (Mr. Spearing) referred to a Select Committee report. We are most appreciative of the efforts of the Select Committee on European Legislation, which my hon. Friend chairs. We must recognise that in a democracy we have people who are prepared to do the detailed work involved in such activity, which is so useful to us. The report makes it clear that major implications for agriculture will arise from German reunification. We must recognise that and deal with it.
The proposed milk quota for the former GDR is 6·8 million tonnes. The direct sales quota is 0·6 million tonnes compared with current annual production of 8·5 million tonnes. There are variants within the figures. The suggested quota for sugar is 870,000 tonnes compared with current production of 670,000 tonnes and a consumption of 800,000 tonnes. The ceiling on intervention purchases of beef would be increased by 15,000 tonnes to 235,000 tonnes. Reunited Germany has the third largest dairy industry in the world, after the Soviet Union and the United States. We must recognise the quota problems of our dairy industry and face them.
Reunification will bring changes which will affect our agriculture and the Government must recognise that. In particular, we must address the difficult areas of farming land where there is no alternative to sheep or dairy farming, especially hill farming. The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, who is to reply to this debate, represents an area which runs into the Pennines and includes difficult land, although it is perhaps slightly more favourable than that on my side of the Pennines.
If we want farmers who get a small income for their work and effort to remain in agriculture and do not want moorland and bracken to spread, the way in which we use the common agricultural policy and the direction of subsidies must change. Agricultural subsidies are under consideration.
We want a change in agricultural policy which removes much of the nonsense that we have debated so often. The CAP represents the biggest abuse of the Common Market and has engendered much public criticism of the EEC. It costs a family of four £16 per week. We want to change the way in which subsidies are used to advantage and encourage more environmental protection and better use. The agriculture of the former German Democratic Republic gives us cause to be extremely worried because of pesticides, and veterinary medicines and standards, all of which have serious implications.
Environmental pollution has been referred to in the debate. We have all seen the publicity about the environmental problems of the former eastern European countries. We must also recognise that environmental problems are not unique to industry, but exist in agriculture. We must ensure that they are tack led in a positive way.

1535
There is already pressure on fatstock market prices. Before reunification, the prices of many forms of meat were already lower, not only in real terms but in cash terms, than a few years ago, which puts considerable pressure on some farmers. It is clear that unauthorised imports from eastern Europe, coming through Germany, are a major cause of that problem now, and we should be concerned about that. An investigation is to take place into leakage from Poland and Czechoslovakia. The Ministry of Agriculture, Fisheries and Food has described the new German border as not tight. However, when the Minister of State, Foreign and Commonwealth Office opened the debate he said that he hoped that there would not be leakage. I am sure that Ministers will be just as concerned as we are that the agreements that have been reached are enforced and honoured, and nothing extra is allowed through the system that will have an adverse effect on our industry. A high percentage of food to the former GDR now comes from Hungary, Bulgaria and Romania, posing problems that we should consider extremely carefully.
We are in the process of ensuring that the complex harmonisation measures for 1992 which are being debated week after week, are enforced as speedily as possible in relation to the former GDR. The hon. Member for Cambridgeshire, South-East (Mr. Paice) said in his speech that it was likely that other former eastern European countries would want to join the European Community at an early date. That is extremely likely. If we look back to the days when borders were taken down between Hungary and Austria, we see that with that first move, the iron curtain no longer existed. The changes that have taken place since the iron curtain was breached were inevitable. That momentum will continue and the other countries will seek membership of the EEC. We must be prepared to face the implications of those changes.
My hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) in his speech was not attacking the former east German shipbuilding industry, which is now part of the reunited Germany, but stressing that he wanted the shipbuilding industry of his region to be given the same opportunity to succeed as that overseas. That is the great difference between the two parties at present. The Government's policy is to say that industry can take care of itself, whereas we recognise that Government must take a more positive role if industries such as shipbuilding are to survive. But that does not necessarily mean giving away massive amounts of money. All that we want is to ensure that our shipbuilding industries are given a fair crack of the whip. We want Scotland, Wales and the regions of England to be given a fair opportunity.
The Government do an injustice to the former eastern European countries in criticising their policies. They call them socialist and try to tie the Labour party into the same configuration in an attempt to influence votes at the next election. The Government fail to recognise that a majority Labour Government have been elected several times since the war but have not followed the path of removing democracy and the right of people to change their Government. Indeed, we have criticised the excesses in the way some other countries have been governed. As my hon. Friend the Member for Newham, North-West said, there
1536
were good aspects as well as bad in the way those countries were governed, and it would be wrong to totally ignore the good aspects.
Unification provides both challenges and opportunities. In a rapidly changing world, the Government cannot meet the challenges and therefore will continue to fail to meet the needs of the British people. That is why I am sure that when the Labour party has an opportunity to face the Conservative party at a general election we shall be returned to the Government Benches and the Conservatives will be on the Opposition Benches.
2.10 pm
The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. David Curry): Until the hon. Member for Burnley (Mr. Pike) made his speech, I thought that agriculture had been the orphan of this gathering, which is an unusual, but, perhaps, not entirely unwelcome phenomenon. He raised a number of agricultural points before diverting to the future prospects of a hypothetical Labour Government, and he joined the revisionist school on eastern Germany. I noted that there were a number of protagonists of the revisionist school. As East Germany is barely cold in the grave, that appears to be a form of political grave robbery. I am sometimes amazed that there was not a mass exodus of West Germans to East Germany to live under the undoubted attractions of that form of Government.
Satisfactory arrangements for agriculture have been made—
Mr. Spearing: Oh!
Mr. Curry: I shall deal with the exceptions in a moment.
The milk production quota for East Germany is considerably below the current level of consumption and there must be a significant reduction. One of the consequences has been a movement of cow cattle into the European market, and that is one of the contributory factors to the difficulties in the beef sector.
The proposed sugar quota of 870,000 tonnes is one that we, together with many other members of the Council regard as too high. Earlier this week, the Commissioner at the Luxembourg Council said that he was willing to reconsider that.
Dr. Godman: Will the Minister give an assurance that, in any negotiations on sugar, he will protect, at all costs, the interests of the African, Caribbean and Pacific cane sugar producing countries in their export of raw cane sugar to the European Community? Such a defence would be compatible with the motion proposed three years ago to defend the ACP countries and the United Kingdom refineries.
Mr. Curry: I assure the hon. Gentleman that we will defend the interest of the ACP countries. However, we regard it as part of that interest that prices remain at the same level as those paid in the European Community. The present claim that they should receive a compensatory payment because the EC has started to cut prices is not reasonable.
The maximum guaranteed quantities under the stabilising mechanisms remain the same. East German production does not count against them, but where prices are cut because of the triggering of the stabilisers, that will affect East Germany as well as the remainder of the

1537
European Community. There are some minor transitional arrangements for the market regimes, of which we approve.
There are a number of temporary derogations in structures. As in other sectors, we regard them as a sensible means of permitting the former East Germany to be accommodated within the current European system. There are also provisions for the Commission to take minor action where adjustments are necessary. There is always a need for a certain amount of tidying-up. There is also a safeguard clause, under which member states can seek the Commission's intervention if the market has been genuinely disrupted.
The latest estimate of the costs of market support shows that it will increase in 1991 by about 1·3 billion ecu, or £900 million, as a result of German reunification—but even with the inclusion of those costs, the guarantee section for 1991 will be below the guideline, so no adjustment will be needed. However, the budget is becoming fairly stretched and—GATT or no GATT— there will have to be significant changes in agricultural policies starting next year. That is something that member states currently resisting tooth and nail honouring their existing commitments under the GATT negotiation may like to bear in mind.
Given the constituency interests of the hon. Member for Greenock and Port Glasgow (Dr. Godman), I am sure that he would like me to give more weight to the fishery aspects. I have a close relationship with the German Fisheries Minister, Mr. von Geldern, who has assured me in several meetings that the East German fleet will fish against the West German quota and that no additional quota will operate in respect of East Germany.
The German fleet is now effectively a bigger fleet, but its entitlement remains the same as before, which means that there is no need to adjust total allowable catches or quotas. However, as the hon. Member for Greenock and Port Glasgow knows, there is a date on the horizon for a review of the common fisheries policy, when we expect that the Spanish and Portuguese will be the main proponents for change. The East German fleet is large, comprising 76,000 registered tonnes, and is one and a half times the size of the federal republic's fleet—but achieves only 60 per cent. of West Germany's catch.
However, reunification will have consequences for the United Kingdom. In the past, we have always added to our total allowable catch through swaps with West Germany, because we are not necessarily interested in catching the same species. That arrangement has proved advantageous to both countries. It may be that in future the swaps that we once obtained will be taken instead by the East Germans because of underfishing of the German quota. Also, some non-quota species may come under greater pressure, though, as they represent only 1 per cent. of our landings, that is a minor consideration.
There is a genuine question mark over the future of Klondiking. The fleet that used to Klondike might go for the West German quotas, and it is not certain whether the demand for pelagic fish will remain the same, given that prices are no longer at the 1948 levels at which fish was sold in the former East Germay—and the Soviet Union is finding it difficult to raise money to pay for the fish that it obtained from the Klondiking operation. Therefore, the United Kingdom processing industry might find itself with additional quantities of fish available. It is important that it should be able to process it, given the number of Scottish
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fishermen in particular—but not exclusively so—who depend on Klondiking arrangements. In addition, some third country arrangements will have to be renegotiated by the Community. We shall keep a careful eye on the cost and equity of any arrangements that are made in that respect.
The hon. Member for Greenock and Port Glasgow made a long speech, so I will either make a written response to his other points or will arrange to see him soon, as I recognise his strong constituency interest.
The hon. Member for Hamilton (Mr. Robertson) welcomed the developments in Germany, as did the other speakers, and I am sure that we all subscribe to the general tone of the debate. However, the hon. Gentleman said that the United Kingdom is a passenger in Europe. That is not the case. I invite him to review the series of votes in the European Council over the past year, to see how many times the United Kingdom has been on the receiving end of a minority vote. It is precious few. I might ask him to find out how many times the Federal Republic has been on the receiving end of a minority vote, especially on some of the important financial services regulations. He will find that that has happened on a significant number of ocasions.
The United Kingdom has played a predominant and important role in the European Community on the free movement of capital and the open marketplace. Of course, eastern Europeans look to the generality of successful policies in western Europe, but the United Kingdom experience is one to which they look particularly, as I have learnt when I visited those countries.
I am one of those who are impaled in Brussels now perhaps more than when I was a Member of the European Parliament, and I am sure that the hon. Member for Hamilton will be pleased to hear that. Those of us who do a lot of negotiating in the Council realise that enthusiasm is little substitute for realism. For example, Germany defends her corner very well. I have not the slightest doubt that Herr Keichle is defending his corner on the general agreement on tariffs and trade at this minute in Luxembourg with his customary vigour. He will be taking a stance with which, no doubt, we would be in agreement. It is simplistic, self-destructive and quite simply wrong to attribute to others a virtue which they may not necessarily deserve and to attribute to ourselves a vice which we have rarely demonstrated. The fact of the matter is that we are all in it together. There is a little horse trading but there is nothing wrong with that as it is part of the system and it works.
My right hon. Friend the Member for Guildford (Mr. Howell) told me that he would not be able to be present for the end of the debate. I am glad to pay tribute to the work of the Foreign Affairs Select Committee in this matter. He emphasised the question of eastern Europe and the importance of those countries as potential members of the Community. I hope that we will not be seduced into believing that the debate must necessarily be between people who want to go broader and people who want to go deeper. There are good arguments for the Community to continue with integration while ensuring that that does not preclude further enlargement, when conditions in those countries are right for them to join the European Community.
I beg the House not to forget that there are other parts of the world and other negotiations which matter just as much. For example, EFTA is now engaged in complex

1539
negotiations with the Community and it represents a large trading area. New institutional forms are being developed there. Nor should we forget that perhaps now that one of the predominant east-west issues has been settled, the north-south issue, and the role of the developing countries, is a matter to which we should also devote a considerable amount of our attention.
My right hon. Friend the Member for Guildford asked a specific question about the immediate cost to the United Kingdom. There has been no demand for an increase in the 1990 budget. We estimate the net cost to the United Kingdom in the 1991 budget at £32 million, and in 1992 at £59 million. It is worth remembering that Germany will remain overwhelmingly the largest contributor to the European Community budget. As the former East Germany grows in prosperity, the tax take contributed to the Community might be expected to increase.
Mr. Terence L. Higgins: I am not quite clear how those figures tie up with those given in the answer to the Treasury Select Committee's report yesterday. I certainly would not want the Minister to take those figures as an amount that we would not seek to negotiate downwards; otherwise we shall be paying a substantial sum towards German reunification.
Mr. Curry: My right hon. Friend will know that the United Kingdom Treasury—I hasten to add that I do not speak for the Treasury on this occasion—has rarely been averse to trying to negotiate figures downwards. I shall certainly check up on the matter that he has raised, and ensure that he receives a response.
Again I pay tribute to the work of the Scrutiny Committee under the chairmanship of the hon. Member for Newham, South (Mr. Spearing). As a Minister I am frequently on the receiving end of its work, and I do a lot of work upstairs in Committee. The new system, which will be introduced, with the approval of the House, in the new Session, will no doubt multiply my work. The Committee's work is clearly difficult, given the problems of monitoring European legislation. The hon. Gentleman asked a specific question on the gross cost of unification. The Commission's estimate, as it stands, is for commitments of 2·125 billion ecu in 1991, and 2·285 billion ecu in 1992. The United Kingdom's estimate is marginally below that level for commitments and is about 2·512 billion ecu for 1992. The increase in German contributions is estimated at 1·4 million ecu in 1991 and just under 1·3 million ecu in 1992.
My hon. Friend the Member for Hampstead and Highgate (Sir G. Finsberg) referred to the height at which aeroplanes can fly to Berlin. There has been an increase, but there is a limitation that is linked to the probable presence of Soviet troops in the former East Germany until 1994. The German authorities are now responsible for the height at which aeroplanes can fly.
I pay tribute to the Council of Europe's role as a staging post for eastern European countries in their eventual move towards integration with western Europe. It is an important role. We must not overlook the fact that the European Community has set certain criteria relating to democracy and the nature of society which must be fulfilled before states are eligible to join the Community.
1540
We must maintain those criteria. Therefore, the Council of Europe has an extremely important role to play in that respect.
I have replied to the question put to me by the hon. Member for Greenock and Port Glasgow about fisheries. He also asked me about shipbuilding. Current proposals suggest a higher level of aid, for two years only, to allow for the restructuring of yards. That aid can be given only on the basis of a clear structure plan. It is open to us to ask the Commission to investigate the matter if we think that contracts have not been subjected to the correct competitive procedures. My right hon. Friend the Secretary of State for Trade and Industry would take up with alacrity any evidence that suggested to the contrary.
The hon. Gentleman referred specifically to Caledonian MacBrayne. I understand that Ferguson is already building two ferries for Caledonian MacBrayne. That contract was awarded without Government assistance because the company did not need it. I am told, however, that aid would be available from the shipbuilding intervention fund for that purpose.
As the hon. Gentleman pointed out, a new commitment amounting to 3 billion ecu for the structural fund has been proposed by the Commission. The United Kingdom entitlement remains the same. From 1994 onwards the structural fund will be revised. I understand the hon. Gentleman's concern. I shall ensure that it is conveyed to my right hon. and learned Friend the Secretary of State for Employment, as the Minister who is most directly involved with the social fund.
My hon. Friend the Member for Mid-Kent (Mr. Rowe) drew attention to minorities in eastern Europe. It was a useful addition to the debate. We tend to forget that eastern Europe has had a particularly chequered history. The 20th century history of eastern European countries has hardly been one of unmitigated peace and light. There have been many problems and squabbles, not least territorial squabbles. Therefore, it is as well to remember that in all those countries there are victims of territorial squabbles.
The hon. Member for Newham, North-West (Mr. Banks) who inaugurated the revisionist view of East Germany—a view which its inhabitants do not appear to share—is nostalgic about the command system. His nostalgia is touching. As for his attraction to the Trabant, which I do not wish to figure too largely in these debates, that depends on whether one is in front of or behind that car, given the amount of pollution that it emits.
I subscribe to the praise of Mr. Gorbachev that has been voiced by many hon. Members. However, I ask the House to maintain a sense of perspective. We ought to give a little praise to those western countries, and the United States, that held firm over defence throughout the years, thus allowing conditions to be created that led to Mr. Gorbachev being faced with choices. The choice that he has adopted, to disengage the Soviet empire, would not have been open to him had it not been for the resolution of the west in defence matters since the end of the second world war. We should therefore be slightly more generous with the distribution of our praise. Nevertheless, the choice that he has made for the Soviet Union, which appears to be in major difficulties, is courageous.
My hon. Friend the Member for Windsor and Maidenhead (Sir A. Glyn) apoligised for the fact that he could not stay until the end of the debate. I accept his point about the importance of the next stage in Europe and his

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view that Germany will be both our competitor and our colleague. It is hoped that Germany will eventually feel that she is able to assume wider responsibilities in the world without compromising her firm resolve that she should put her history behind her and continue on a peaceful course. I foresee no reason why that should present a dilemma for the German Government.
My hon. Friend the Member for Winchester (Mr. Browne) praised the role of Mr. Gorbachev. He spoke of Germany's power being directed in a commercial way, which is exactly what will happen. However, there is no reason for West Germany to mop up the whole of eastern Europe. Its markets are available to all of us. I visited eastern Europe and very much hope that British companies will be active in seeking its investments.
The debate has been important. The hon. Member for Derbyshire, North-East (Mr. Barnes) invented the expression "munipulation", which I assume are the actions of left-wing Labour councils. It is important that we should welcome what has happened in Germany. It is a major achievement for the west, for democracy, and for peace. All of us will benefit, and I commend the motion to the House.
Question put:—
The House divided: Ayes 47, Noes 2.

Division No. 325]

[2.30 pm

AYES

Arbuthnot, James

Knapman, Roger

Arnold, Jacques (Gravesham)

Knight, Greg (Derby North)

Ashby, David

Lightbown, David

Baker, Nicholas (Dorset N)

Lilley, Peter

Boswell, Tim

Moate, Roger

Bowis, John

Neubert, Michael

Brazier, Julian

Paice, James

Browne, John (Winchester)

Renton, Rt Hon Tim

Carrington, Matthew

Rowe, Andrew

Chapman, Sydney

Shelton, Sir William

Cran, James

Smith, Tim (Beaconsfield)

Curry, David

Stern, Michael

Field, Barry (Isle of Wight)

Summerson, Hugo

Finsberg, Sir Geoffrey

Taylor, Ian (Esher)

Goodlad, Alastair

Taylor, John M (Solihull)

Goodson-Wickes, Dr Charles

Vaughan, Sir Gerard

Greenway, Harry (Ealing N)

Walden, George

Ground, Patrick

Ward, John

Hague, William

Widdecombe, Ann

Heseltine, Rt Hon Michael

Wood, Timothy

Howe, Rt Hon Sir Geoffrey

Young, Sir George (Acton)

Hughes, Robert G. (Harrow W)

Jack, Michael

Tellers for the Ayes:

Janman, Tim

Mr. Irvine Patnick and

Key, Robert

Mr. Neil Hamilton.

Kirkhope, Timothy

NOES

Cohen, Harry

Tellers for the Noes:

Godman, Dr Norman A.

Mr. Harry Barnes and

Mr. Dennis Skinner.

Question accordingly agreed to.
Resolved,
That this House takes note of European Community Documents Nos. COM (90) 400 on transitional measures consequent upon German unification and 8782/90 on revision of the Community's financial perspective in the light of German unification; and endorses the Government's approach to these negotiations.

SELECT COMMITTEES RELATED TO GOVERNMENT DEPARTMENTS
Ordered,
That—
(1) with effect from the beginning of the next Session of Parliament, Standing Order No. 130 (Select committees related to government departments) be amended by leaving out in the Table:

'10. Social Services

Department of Health and Social Security

11 3'

and inserting therein:

' . Health

Department of Health

11 3',

and

' . Social Security

Department of Social

11 3';

Security

and
(2) it be an Instruction to the Social Services Committee to lay upon the Table of the House before the end of the present Session of Parliament such Minutes of Evidence taken before it and Memoranda laid before it and not previously reported as may fall within the respective orders of reference of the proposed Committees.—[Sir George Young.]

BUSINESS OF THE HOUSE
Ordered,
That, at the sitting on Wednesday 24th October, if proceedings on the Motions in the name of Sir Geoffrey Howe relating to Procedure, Questions to Members Etc., European Standing Committees, Select Committee on European Legislation and European Community Legislation have not been previously disposed of, Mr. Speaker shall at Seven O'clock put the Question already proposed from the Chair, and, if that Question is for the amendment of the Motion then under consideration, then put forthwith the Questions on any other Amendments thereto which he may have selected and which may then be moved and then the Main Question or the Main Question, as amended, and shall then put forthwith with successively the Questions necessary to dispose of proceedings on any further such Motions as may then be made, including the Questions on any Amendments thereto which he may have selected and which may then be moved.—[Sir George Young.]

HOUSE OF COMMONS (SERVICES)
Ordered,
That Mr. David Lightbown be discharged from the Select Committee on House of Commons (Services) and Sir George Young be added to the Committee.—[Sir George Young.]

Beaver Estate, Hounslow
Motion made, and Question proposed, That this House do now adjourn.—[Sir George Young.]
2.41 pm
Mr. Patrick Ground: I am grateful for this opportunity to discuss the future of the Beaver estate in Hounslow. It gives me great pleasure in doing so to be able to welcome my hon. Friend the Member for Salisbury (Mr. Key) to the Front Bench and to give him my best wishes for his work there.
In 1967, the Greater London council bought the leasehold interest in the Beaver Farm estate, Hounslow and proceeded to build 631 dwellings on the site. In designing the estate, the architects sought to avoid the mistakes made in previous GLC estates. They set out to ensure that the estate would not be like any other GLC estate. It was to be low-rise, spacious and green, and laid out and managed as if it were a private estate. There were five acres of open space, and hundreds of mature trees and saplings. By 1972, most of the dwellings were occupied.
In 1973, the GLC assigned its lease to a housing association, the United Housing Association Trust, for £4·5 million and agreed to cover the deficit between the rental income, and the running costs and mortgage payments for 15 years. As a result of mergers, the housing association eventually became the United Kingdom Housing Trust.
The method of construction used for building the estate was known as Bison wallframe, which involved the use of pre-formed slabs. By March 1973, it was found that 393 out of the 631 dwellings were suffering from dampness. In many cases, the roofs, walls and windows were not properly keeping out the rain. The bathrooms and bedrooms were cold due to an inadequate heating system.
In 1983 and 1984, consultants recommended the renewal of the roofs and the bolting of the concrete panels. Subsequently, a pilot project was launched to renew the roofs of six blocks, with the aid of a GLC grant. In 1985, it was found that all types of dwelling on the estate contained asbestos, which was potentially dangerous—and, if disturbed, would certainly be so.
Although 17 years have passed since the first surveyors' reports were carried out in 1973, many of the dwellings still suffer from dampness. The condition is severe in a number of the properties whose roofs were renewed as part of the pilot project. Large amounts of asbestos remain unremoved.
The tenants believe that, if their properties are to be restored to a decent standard, it is not enough to provide new or additional roofs and bolt the concrete panels. They believe that the leaking windows should be replaced, the asbestos should be removed, new, adequate central heating should be provided and the interiors should be refurbished. The Beaver Estate Tenants Action Association, set up in November 1983, has a committee of 15, which has done an immense amount of work on the tenants' behalf. In a recent report, the committee said:
"In view of all the surveys that have been done on this estate over the last 19 years, the future would be no different from the past as far as the inside of our homes is concerned unless the United Kingdom Housing Trust or others can afford to remove the asbestos, replace the windows and refurbish to a decent standard the inside of our homes."
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A recent consultants' report indicates that the necessary internal work to the dwellings will cost at least £7 million over seven years.
Over the years, there has been no shortage of consultants' reports, but the amount of money required to bring the estate up to a satisfactory standard has never been available.
The method of construction was not the only problem that confronted the estate. The landlord's lease contained a clause under which the ground rent could be reviewed every 10 years. In 1967 the ground rent was set at £32,500. In 1977 it was increased to £96,000. In 1987, the freeholder's valuer contended that the rent payable according to the rent review formula would be £1·2 million, and it was evident from the advice received by the housing association that the rent fixed by the arbitrator would not fall far short of that figure.
The United Kingdom Housing Trust made it clear that it was unable to afford to pay more than a few instalments of the new ground rent. Moreover, it faced further increases at 10-yearly intervals. The housing association therefore faced the prospect of liquidation and forfeiture of its lease, while the tenants faced the prospect of losing their security of tenure and becoming assured tenants of another landlord.
Faced with that crisis, the Housing Corporation provided the United Kingdom Housing Trust with a £5 million grant. The United Kingdom Housing Trust agreed to borrow £12·4 million from a merchant bank, and a further £2 million from a public company, to enable it to buy the freehold and initiate a repairs programme. In order to be able to repay the banks, the housing association drew up a programme of intended sales of vacant dwellings on the estate, and embarked on a pilot sales project.
No properties on the estate have yet been sold, and the United Kingdom Housing Trust is unable to pay the interest or make the repayments that are due in respect of the loan from the merchant bank. Its position has been transformed from inability to pay the rent to inability to pay the mortgage.
I have been involved with the Beaver estate since 1983; during that period, the relationship between landlords and tenants has been generally unsatisfactory, and at times very bad. For much of the time there has been an atmosphere of distrust and a severe loss of confidence on the part of the tenants.
The tenants have also been concerned that, under the housing legislation passed since 1980, although the estate started as a council estate and has subsequently been owned by a housing association, they have not been entitled to buy their homes because the United Kingdom Housing Trust was a charitable housing association. Moreover, those tenants who moved away were not entitled to the cash discounts that were subsequently introduced for housing association tenants who did not have the right to buy because no housing association grant had been paid in respect of the construction of the estate.
Nevertheless, over the past year some progress has been made. Following an angry meeting of tenants, which I attended, and representations that I made to the landlords and the Housing Corporation, a Beaver estate working group was set up in which the landlords and the tenants consulted each other regarding building work and repairs to be carried out on the estate. That group has done useful

1545
work. The United Kingdom Housing Trust has agreed also to sell properties to tenants at a discount even though they have no statutory right to buy.
From that brief history of the experience of the Beaver estate so far, I believe that three important points emerge.
First, the combination of the structural problems caused by the Bison wallframe method of construction and the financial effects created by the rent review clause in the ground lease, which led to the "rescue" package, make the Beaver estate an exceptional problem for the voluntary housing association movement, which calls for an exceptional solution.
Secondly, the unusual experience of the tenants of that estate points to the need to review housing association tenants' rights in respect of security, the right to buy, and cash discounts.
Thirdly, the failure of the pilot project and the pending change of ownership of the estate make this the right moment for the new landlord, the Housing Corporation, and the Department of the Environment to review the future of the Beaver estate.
The tenants have been informed that the UKHT is to be merged with the North British Housing Association.
Neither I nor the tenants have heard anything but good of the North British Housing Association, and its appearance on the scene in place of the UKHT is certainly a source of encouragement. However, the tenants are concerned at the virtually total lack of consultation that has taken place regarding the proposed change of ownership. That again contrasts with the position of council estate tenants who are faced with the possibility of a change of ownership of the estate. A meeting has taken place between the tenants' representatives and the chief executive of North British Housing Association. It was evident that North British was far from fully informed about issues affecting the estate.
When they asked what funds North British would have to carry out the remedial work needed, the tenants were told that North British would seek funds from the Housing Corporation to carry out the necessary repairs and that the merger would give the Housing Corporation more options for allocating funding to the estate for improvements, but that priorities for expenditure would be determined by the local authority. That sounded to the tenants very like the discussions that have been taking place for the past 17 years.
The cost of the outstanding remedial work on the estate and of bringing the interiors up to a decent standard is very substantial. A recent consultants' report showed that the rebuilding of the whole estate in brick on existing foundations would cost about £20 million, and many of the tenants feel that a phased rebuilding programme in brick, starting with the most defective housing, is a solution that must receive serious consideration. If such a solution produces readily mortgageable and lettable dwellings, that may in the long run provide the soundest proposition for the estate.
With the proposed transfer of ownership, it is important that attention should be focused on the future of the estate. I urge that four steps should be taken.
First, where there is a proposal to change the ownership of an estate from one housing association to another landlord, the Secretary of State and the Housing Corporation should use all their influence to ensure that
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there is full consultation beforehand between the new landlord and the tenants' representatives, which should cover all issues of policy and practice relevant to the estate.
Secondly, in the case of the Beaver estate, that should include the question of transfers, sales at a discount and the future of the Beaver estate working group. It should include a full up-to-date analysis of the structural problems of the dwellings on the estate and discussions between the new landlords and the tenants to achieve an agreed plan of remedial action that will face up to all the defects in the properties and make a realistic estimate of the cost of refurbishing the dwellings to a decent standard. If a realistic assessment shows that a phased rebuilding in brick on the existing foundations appears to be the right solution for parts of the estate, that is an option that should be followed.
Thirdly, the tenants, the new landlords and the Housing Corporation need an assurance that the necessary funding will be available to carry out the remedial work and repay the loans that were incurred to the banks to buy the freehold in 1989. The failure to remedy the defects in the estate has now continued for 17 years and I believe that the time has now come when those defects must be tackled effectively and with the necessary resources.
Fourthly, I believe that the experience of the tenants of the Beaver estate shows that my right hon. Friend the Secretary of State for the Environment should review the rights of housing association tenants with regard to security, right to buy and cash discounts. There is a strong case for the view that security should depend on the relationship between landlord and tenant and not on a change in the personality of the landlord and for the view that, with regard to the right to buy, tenants of different sorts of housing associations should be treated in the same way.
I hope that my hon. Friend the Minister and his colleagues at the Department of the Environment will make it their business to ensure that these four steps are taken. The voluntary housing association movement plays an important role in Government housing policy. I believe that those steps are important not only for the future of the Beaver estate, but for the credibility of the voluntary housing association movement.
2.56 pm
The Parliamentary Under-Secretary of State for the Environment (Mr. Robert Key): First, I congratulate my hon. and learned Friend the Member for Feltham and Heston (Mr. Ground) on securing this Adjournment debate and thank him very much for his kind words. It is entirely appropriate and in keeping with my approach to politics that my maiden appearances are made in an empty Chamber. I recall that my maiden speech in 1983 was made at precisely 6 pm on a Thursday evening when the entire parliamentary Conservative party was at a meeting of the 1922 Committee. However, that means that we can concentrate on quality rather than quantity, and that is what I want to do.
I am grateful for this opportunity to lay out the background to this particular problem and to make some comments of a more general nature about the voluntary housing sector. My predecessors have taken a close interest in the welfare of the Beaver housing estate and I intend to maintain that interest. Of course, it does not fall to the Government to intervene directly in housing

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association management which is the statutory role of the Housing Corporation. However, this case throughout its turbulent history has illustrated the importance of, first, the supervisory and monitoring role of the Housing Corporation over registered housing associations and, secondly, the participation of the tenants themselves.
The good work of the tenants' association has rightly been commended. The residents have remained committed to a single principle, in their own words,
"to try and create a better place for all the residents to live, not just for today but for the future".
How right they are. The Government are committed to promoting meaningful tenant participation throughout the subsidised rented sector. The Beaver estate tenants are pursuing the ideal of participation which the Government recognise and for which, in the shape of my hon. and learned Friend the Member for Feltham and Heston, they have found a worthy champion.
The background to this case spans 23 complicated years. I thank my hon. and learned Friend for leading us so clearly through that history, which is no easy matter. The two fundamental difficulties that were to plague the management of the estate existed from the outset, when it was developed by the Greater London council. When the GLC purchased the leasehold interest in 1967 it accepted a ground rent review clause with a width of scope that was later to prove an intolerable burden for the estate. The GLC also chose to build the housing using the Bison wallframe construction method—an industrial building method of the time which used pre-formed slab construction. As the years have gone by, there have been severe problems—including, as my hon. and learned Friend said, rain penetration of the flat roofs, weakness in the concrete panels, the presence of asbestos, and condensation. Thus, when the United Housing Associations Trust—later the United Kingdom Housing Trust—took over the leasehold interest, those difficulties had already been created, even if the effects were not at that stage apparent.
The construction defects came to notice in the early 1980s, but it was in 1987 that the future of the Beaver estate tenants was thrown into serious jeopardy. The second 10-yearly ground rent review saw the freeholders seeking an annual payment of £1·2 million—30 times greater than the original 1967 rent charge. It was at that stage that the Housing Corporation demonstrated both a watchful eye and considerable flexibility. It felt able to provide £5 million to UKHT in grant to enable UKHT to relieve the burden of the rent review clause by acquiring the freehold. That was an exceptional decision, made in response to the exceptional circumstances of the case. The corporation's prime commitment for its development programme is to provide additional low-cost housing. Yet it took the broad view and accepted that UKHT would be meeting an urgent housing need. In this case, even if no new units would be forthcoming, it decided to proceed. Thus the money was supplied and UKHT carried out the transaction, aided by a loan facility of some £12·4 million supplied by a consortium of bankers.
It was unfortunate that no one at that stage could foresee the cash flow problems that were subsequently to hit UKHT. It is true that it was by no means the only organisation to be caught off guard by changing conditions in the housing market. Unfortunately, UKHT
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had considered that grant support of £5 million would suffice and at that time the Housing Corporation was in no position to provide further funding. I know that criticism has been levelled at UKHT and even at the corporation, but perhaps today we should concentrate on the tenacity and determination of the corporation and UKHT in trying to find the best solution available to tackle the enormous problems posed by the Beaver development.
One of the major statutory functions of the Housing Corporation is the monitoring and supervision of registered housing associations. The securing of high standards of performance by associations is one of its key strategies in the overall task of working with voluntary housing bodies to provide good homes for those in housing need.
On top of a sound monitoring and supervision framework, the corporation has developed systems for associations to improve their performance, most notably through the published performance expectations. They work in conjuction with the tenants' guarantee which lays down the minimum standards of housing management expected by the corporation. It is also a major benchmark for tenants to consider whether they are being given a fair deal. Two of the key principles of the guarantee are that associations should consult and involve tenants in major maintenance decisions and management changes, and that there should be a regular flow of information between landlord and tenant. I have noted my hon. and learned Friend's remarks about the tenants' views on consultation in this particular case.
The Housing Corporation used its statutory powers and its knowledge of the situation to confirm North British Housing Association as the right partner for UKHT in order to secure the future of the Beaver estate. UKHT considered various options before identifying North British Housing Association as a potential partner. The corporation was concerned to safeguard both the interests of the tenants and the earlier injection of public funds. Knowing the robust financial position of North British, the corporation was content with UKHT's decision. Thus, UKHT has now become a charitable subsidiary of North British. There has been no transfer of landlord. The tenants retain the same tenancy status as they did before.
That brings us to the crux of the matter for the tenants. What does the merger hold for them? My hon. and learned Friend has raised several of their anxieties and uncertainties and I now wish to address some of them.
First, is North British fully aware of what it has taken on, and when will the tenants see proposals designed to tackle the estate's problems? Here there is no doubt that the tenants have made their points very clearly, notably at an important joint meeting held on 18 September. Having said that, I am sure that North British, for its part, appreciates the special problems of Beaver estate but wants to avoid making any guarantees lightly. I am sure that the Beaver tenants have felt let down enough times during all the years to appreciate the association's reticence. However, one clear principle has been cited—a guarantee that UKHT tenants will enjoy at the minimum, the same quality of service as they received in the past. That is a baseline and a fair one on which to build.
The rescue package put together when the freehold was purchased included about £6 million for structural and external improvements to bring the properties up to a mortgageable standard. The first of two phases of that is due to be completed shortly. That programme was heavily

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reliant from the start on a programme of sales which, for the market reasons already mentioned, did not materialise. That sales programme is still required, now to be backed by a substantial sales and marketing campaign, and I hope that it will command the active support of the existing tenants. The important difference now is that North British can provide financial underpinning of UKHT should there be any shortfall in the sales programme.
It is estimated that a further £7 million is required for internal improvements of the dwellings. North British will be seeking major repairs funding from the Housing Corporation to help finance that, as my hon. and learned Friend said. Obviously, it is not certain that that funding will be provided and it is not for my Department to become involved in individual investment decisions when it is the corporation's responsibility to manage a very complex development programme. However, the corporation was fully supportive of the merger and it has been prepared to consider major repair proposals carefully and on their merits.
In short, I think that the tenants will need to be a little patient with North British in terms of detailed proposals. There is no point in the association rushing into schemes that prove not to be viable. North British merged with UKHT as a matter of some urgency. It must now be given a little breathing space to evaluate the options for dealing with the problems it has taken on. I know that it has assigned to its UKHT subsidiary the task of undertaking a thorough review of all options for the estate before any further major decisions are made. I know that the tenants tend to favour the phased redevelopment of the estate using traditional brick building methods. If that is a viable option, I am sure that it will be carefully considered.
One specific grievance that some of the tenants hold, and to which my hon. and learned Friend alluded, is that as UKHT is a charitable association, they have no statutory right to buy their homes. The Government have tried on a number of occasions to give secure tenants of charitable associations that right, only for the proposal to be rejected in another place. However, our commitment to helping people purchase their own homes remains and there are alternative schemes designed to help such tenants into low-cost home ownership. For example, the tenants' incentive scheme is designed to enable associations to offer grants to assist their tenants to move out and buy homes of their own. At the same time, that releases vacancies for reletting to homeless families and others in housing need. There are also shared ownership initiatives and self-build schemes available.
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Some tenants are also aggrieved that UKHT is offering to sell homes voluntarily, but at discount prices below those allowed under right-to-buy provisions. I am afraid that it is not for me to try to influence the levels of discount. Those were determined by the association in the light of legal and valuation advice and considered defensible under the constraints of charity law.
Let me turn finally to a quite proper tenant concern that I raised at the start of my reply—their right to be informed and consulted. I must say straight away that I was delighted when I heard that North British was to become involved with the Beaver estate tenants. Its track record for working alongside tenants is admirable and I am aware that communications with the Beaver estate tenants are already open and expanding. On 11 September the North British director of finance and UKHT's regional director met four members of the Tenants Action Association. A week later, as I have already said, the chief executives of both North British and UKHT met the Tenants Action Association and members of Hounslow council. The tenants were able to give a presentation of the history of the association and to fire a full range of questions at the chief executives. I gather that they received a full range of considerably detailed responses, and I am sure that that is only the beginning of the partnership.
With the strong reinforcement from North British now in place, I believe that the Beaver estate tenants can look to the future with some confidence. North British is one of the leading associations in the country, with 25,000 homes in management. It is renowned for the quality and responsiveness of its service to tenants. Both the association and the corporation are determined to work constructively with the tenants. I realise that the tenants themselves are still somewhat ill at ease. As I have said, that is not surprising considering the many years of frustration and grievances that they have suffered. After all, the estate was designed to be different, to be better, to be more open and to be more green. In the end that has, sadly, gone wrong.
After the turbulence that the tenants have experienced, I am not surprised that they are ill at ease. Let us hope that they will now put aside any scepticism and enter into a positive partnership with North British, working constructively to provide a new period of security for the Beaver estate.
Question put and agreed to.
Adjourned accordingly at ten minutes past Three o'clock.