HC Deb 13 December 1993 vol 234 cc685-701 3.30 pm
The Prime Minister (Mr. John Major)

With permission, Madam Speaker, I would like to make a statement on last weekend's European Council, which I attended with my right hon. Friend the Foreign Secretary and my right hon. and learned Friend the Chancellor of the Exchequer.

The task that we set ourselves at this Council was to set Europe on a course towards economic recovery and the creation of new jobs. In Britain, unemployment has been falling since January, but across the rest of the Community it has been rising. Indeed, since the Edinburgh Council met a year ago, 1.5 million extra people have become unemployed. At Brussels, and in the White Paper "Growth, Competitiveness, Employment", we considered how this could be reversed.

The conclusions of the Council on the White Paper show that member states are now determined to pursue realistic, practical and market-oriented policies to improve Europe's competitiveness. In Brussels, we agreed on the need for firm control of public spending and low inflation; open markets; deregulation; a more decentralised Europe; flexibility in labour markets and reductions in social costs and the decisive role of private investment in generating economic growth.

These conclusions are very welcome. They reflect policies that we have advocated at Council upon Council. However, a number of my fellow Heads of Government, and the European Commission itself, would have found many of those conclusions unthinkable only a few years ago. Outdated policies, involving extra burdens on business and extra borrowing to fund spending by the European Commission, were firmly rejected.

Drawing on elements of the White Paper, the European Council agreed a common framework within which member states will consider measures aimed at improving the supply side performance of our economies. The emphasis on improved training and education, measures to reduce the costs of taking on new employees, deregulation at Community and national level, all closely echoed the themes of my right hon. and learned Friend's Budget last month.

I am glad to report to the House that the conclusions include the British proposal that Community and national legislation should be subjected to a test—an audit—of its effects on jobs. The European Council rejected the intrusive, damaging and defeatist notion of compulsory work sharing.

The European Council reaffirmed the conclusions that it reached at Edinburgh on the speedy completion of trans-European networks—infrastructure projects designed to improve the workings of the single market—supported by finance from the European investment bank. I am glad to say that the Council recognised the decisive role to be played by private investors in financing trans-European networks. Additional loans would only even be considered if there was evidence that priority projects were blocked for lack of finance. European Finance Ministers have been asked to examine financing in more detail with the help of the European investment bank.

The Council did not endorse the last-minute proposals brought forward for extra financing through so-called "Union bonds" issued by the Community.

There was firm agreement on the need to ensure that measures taken at Community level should not undermine domestic efforts by national Governments to reduce their own borrowing.

A theme running through all our discussions was the need for a successful conclusion of the GATT round of trade talks. That would be by far the most important boost to international confidence and job creation. Independent estimates suggest that the economies of European countries would be the biggest single gainers from the Uruguay round. Negotiations between the Community and the United States were continuing while the Council met. Sir Leon Brittan, the Council negotiator, is reporting to the Foreign Affairs Council this afternoon.

We always knew that the end game of the negotiations would be difficult. They are still going on. It is a hugely ambitious round of negotiations, covering $4.5 trillion of international trade. Success is a remarkable prize.

The Council discussed the internal implications of the GATT negotiations. The Council noted the Commission's assessment that the reformed common agricultural policy is compatible with the new commitments which would result from an agreement in GATT. Some delegations asked what the position would be if that judgment were to prove wrong. In debate on that, the Council agreed—crucially—that, if any additional measures were to prove necessary, they would not breach the financial ceilings agreed by the Edinburgh European Council.

The European Council also endorsed an excellent work programme drawn up by Home Affairs and Justice Ministers. In particular, it agreed to an Anglo-German proposal that the EUROPOL drugs unit should be set up forthwith and that the EUROPOL convention should be completed by October next year. Community action in this matter has a valuable contribution to make in the international fight against organised crime, drug trafficking and illegal immigration.

That particular decision illustrates a new appreciation in the Community of a distinction that we have long sought to make clear: between actions sensibly conducted in co-operation with our European partners, and policies which are for national Governments to decide. The principle of subsidiarity is now producing concrete results.

In Brussels, we secured agreement to repeal, withdraw or amend 17 directives out of a list of 24 put to the Commission jointly by the British and French Governments. Other Governments will now, I believe, follow suit. In particular, the German Government are pressing their own proposals to extend subsidiarity further. The necessary procedures are in place to ensure that that process continues. We are determined to maintain high standards, but we are determined, too, to simplify European legislation to make it less intrusive and to leave more room for national choice.

The European Council also discussed foreign policy issues. Foreign Ministers discussed with Lord Owen the position in former Yugoslavia. Although there has been some improvement in the delivery of humanitarian aid, obstacles to a political settlement in Bosnia remain. In a further effort towards peace, Foreign Ministers invited the parties to the conflict to a meeting in Brussels on 22 December. As the winter sets in and the suffering of the population intensifies, we must continue to seek a political settlement, however difficult this will be.

We also discussed the French Prime Minister's initiative for a pact on stability which aims to promote stability and regional co-operation in central and eastern Europe. A launch conference will be held in Paris in the spring of next year.

I also had a useful meeting with President Yeltsin, who subsequently met the European Heads of State and Government.

At the summit, the Heads of Government agreed that the only road to economic recovery is the one upon which the Government are already embarked, with a year and a half of rising output already achieved. Low inflation, low interest rates, a reduction in industry's burdens and a lifting of the dead hand of regulation are the agreed signposts to investment and jobs. Open markets bring new opportunities to exporters; free markets encourage enterprise and prosperity. Europe still has a long way to go, but we on this side of the House will continue to point it in the right direction.

Mr. John Smith (Monklands, East)

I thank the right hon. Gentleman for his statement.

At the outset, let me endorse the importance which the right hon Gentleman attached to a successful outcome of the GATT talks. We look forward to a full statement later in the week on the full implications for Britain of a final agreement. A successful GATT round is vital for growth and employment in the industrialised countries, and especially for our service industries. It is no less important to less developed countries in creating the prospect of increased trade for them.

As for the impact of the GATT agreement on agriculture in Europe, if it is the case that no more money can be spent on the common agricultural policy than that already agreed, does that mean that if some agricultural producers are to be compensated, some other aspects of the Community's budget will have to be reduced?

On the question of relations with Ireland, the Prime Minister made no reference to his discussions with the Taoiseach at Brussels. Can he say whether he is likely to make a statement on the subject before the House rises for the Christmas recess?

We welcome the commitment of the European Community to the substantial reduction of unemployment by the end of the century. We also welcome the strong emphasis on education and training on a Community-wide basis and the commitment to what is described in the communiqué as economic and social progress, a high level of social protection and continuous improvement in the quality of life". Can the Prime Minister explain how reducing unemployment benefit from 12 months to six months, and persistently under-investing in training, squares with those objectives which are said to be agreed in the Community?

On the subject of indirect labour costs, can the right hon. Gentleman explain how he justifies transferring sick pay costs of £750 million from the Government to employers in the Bill that he is seeking to railroad through the House without proper debate on Thursday?

The Prime Minister quoted the agreement on the need for the speedy completion of trans-European transport networks. If there is no shortage of funds for those purposes, as the Chancellor of the Exchequer claims, why have so many delays occurred on major transport projects in Britain? Why is there still no opening date for the channel tunnel rail link? Does the Prime Minister not see the possibility of using extra borrowing capability at the European level to help to finance a project without which we will not have a successful rail connection with the rest of the single market?

On the question of foreign policy, can the Prime Minister say whether the discussions at the European Council will have a direct impact on the situation in Bosnia? Will more humanitarian aid be provided? Will the airlift to Sarajevo be stepped up? Will more troops be provided, as Mr. Stoltenberg has requested? Will brutality be more effectively confronted—for example, by the increased use of sanctions? If none of those things is to happen, what, if anything, of importance was decided at the European Council?

Finally, can the Prime Minister explain the Government's attitude to the extra borrowing capability in view of the severely conflicting noises which we heard before, during and after the Brussels summit? Before the right hon. Gentleman went to the Brussels summit, we heard how perverse the idea was that an extra 8 billion ecu of borrowing capability should be considered, but from the communiqué we now understand that the idea is under active consideration. If projects make sense, what is so wrong about borrowing for genuine investment in vital infrastructure projects which will improve our economy, create jobs, stimulate growth and competitiveness, and put our public finances in proper order in the medium term?

The Prime Minister

I will endeavour to respond to the points that the right hon. and learned Gentleman made that refer to our discussions over the weekend, and also to those comments that he made that had no relative involvement whatever in the discussions over the weekend.

Taking the last point first—on extra borrowing and what was said before we went there—before we went to the European Council, the point was made quite clearly that we saw no case for two particular aspects of the White Paper: first, the artificial targets on job creation, which are clearly ludicrous and unobtainable and were readily dropped by everybody when they looked at the White Paper; secondly, the question whether there should be special bonds issued by the Commission to underpin a large amount of extra borrowing. That, too, was rejected by everyone—conservative Governments and socialist Governments alike—and seems to be favoured only by the Labour Opposition in this country.

I agree with the right hon. and learned Gentleman about the importance of GATT agreement. As he rightly said, it is, of course, especially important for underdeveloped countries because the importance to them of opening up markets is likely to be even more valuable than the present sum total of world aid at present provided to them. They will be significant gainers if we are successful in delivering a GATT round during the course of this week.

On agriculture, it was decided that, in the event that the CAP turns out not to be compatible with the GATT—and it is the Commission's view that it is compatible—there would be no more money over and above that that was agreed in the financial perspectives at Edinburgh some time ago. There are other alternatives. It could mean a redistribution of resources within the budget, price cuts or other options. There is a range of options, none of which has yet been addressed. The point of principle that there is no extra money has been addressed and determined.

Ireland was not discussed at the Council, but it was discussed between the Taoiseach and me in the sidelines of the Council. We are both seeking a joint declaration, as the House is aware. It is important that it is a balanced declaration. I am more concerned with getting the declaration right than necessarily with getting it in a particularly short time.

As a result of the meeting that I had with the Taoiseach on Saturday, more work is currently in hand. I hope to speak to him by telephone later today, perhaps tomorrow morning. That is as yet undecided. At that stage, we will decide how and when we will be able to proceed. I am not yet in a position to say to the House whether that will lead to a statement before the House rises.

On unemployment, the whole purpose of the White Paper was to see what action could be taken in individual countries and across the Community collectively to improve the possibility of creating fresh jobs for the future. That was the whole thrust of it. The right hon. and learned Gentleman asked about unemployment benefit, which was not a matter raised. I might equally say to him that a minimum wage, so beloved of other countries, has led, in one country at least, to youth unemployment of 23 per cent., largely in a direct relationship to that policy.

On sick pay, the reductions to which the right hon. and learned Gentleman referred in terms of leaving an obligation on employers have been more than compensated for by parallel reductions in national insurance contributions to the extent that the overall reduction in national insurance contributions will cost the Revenue rather more than sick pay will cost employers.

The principal reason for the delay in the trans-European networks has been that no credible projects have yet been brought forward either by Governments or by the private sector across the European Community as a whole.

So far as the channel tunnel is concerned, the right hon. and learned Gentleman probably understands as well as I do that a principal problem there has been the question of planning delays and a necessity to ensure that people are properly consulted.

On foreign policy and Bosnia, I answered the right hon. and learned Gentleman's question in the statement that I made when I referred to the further meeting that will be held on 22 December. We are keen to see Tuzla airport opened. We are keen to ensure that the delivery of aid still continues. The view among many Foreign Ministers—though this was not discussed at a Heads of Government level—is that there is not a great deal of extra scope at present for more sanctions. What is desirable is to ensure that all the sanctions that exist are rigorously enforced.

Mr. David Howell (Guildford)

Will my right hon. Friend confirm, and explain to the Leader of the Opposition, that more borrowing by the Community now, which will fall on the credit of the member states just at a time when we are trying to reduce our borrowing and our interest rates, would be absurd and perverse? My right hon. Friend is wholly right to resist it.

As to subsidiarity, is not the list of 16 or 17 measures from which the Community will desist a good start but rather modest considering that the United Kingdom put forward 71 measures and other countries must have put forward many others? Therefore, will he give us some encouragement that the ideas of the House and other national Parliaments and Governments will be allowed to go forward vigorously, thereby leading to a far greater list of proposals and measures that should be unravelled at Community level and repatriated or returned to the nation states?

The Prime Minister

I can confirm my right hon. Friend's latter point. The report from the Commission was welcome. In practice it recommends the repeal of about 25 per cent. of existing European Community legislation. Some of that will be repealed completely and some will be replaced by fewer and simpler measures. That is still to be determined. The Council has asked the Commission to bring forward early proposals to put that report into effect. More subsidiarity lists will be coming forward. A substantial list from the Germans is under consideration. We shall have further proposals to make, as will France and other countries. It is agreed that that is the commencement of a process and that further subsidiarity lists will be presented to the Council for approval.

My hon. Friend is entirely right in his first point about borrowing. For sound economic reasons, right the way across Europe, Governments are seeking to reduce borrowing and fiscal deficits. It makes no sense for individual nation states across Europe to reduce their borrowing while increasing borrowing collectively through the European Community.

Sir David Steel (Tweeddale, Ettrick and Lauderdale)

In view of the heavy emphasis in his statement on free market rhetoric—an emphasis that was also present in the British press briefings—will the Prime Minister confirm that the Council of Ministers did not throw out the baby with the bath water and that there is a proper element of public investment on infrastructure programmes designed to help push unemployment down? He somehow forgot to mention that.

Secondly, as to the effect of GATT on the CAP, given that there has been so much publicity about the needs of farmers in France and eastern Germany, is the Prime Minister fully aware of the needs of farmers in Scotland, who are facing imposed set-aside at an unacceptable level? Will he make sure that that issue is sorted out at the same time?

The Prime Minister

On the right hon. Gentleman's first point, there was no agreement at the summit to increase public expenditure. There is some public expenditure, which was previously agreed and in the structural and cohesion programmes, but that is long-established public expenditure agreed some time ago as justifiable. What is being added to that is the extra resources that we think will come through the European Investment Bank and the private sector to top up the money needed for trans-European networks. Only if those resources are unavailable will there be any further examination of whether money might be needed to complete desirable projects. No one is in any doubt that the resources are likely to be forthcoming from the private sector.

On agriculture, I set out the position some time ago. I am aware of the problems of Scotland and those of other parts of the United Kingdom. However, 60 per cent. of all Community expenditure is on agriculture. That cannot be a sustainable position over the long term, and we must look to reduce it, both proportionately and absolutely, as speedily as possible.

Mr. Tristan Garel-Jones (Watford)

Does my right hon. Friend agree that the subsidiarity report presented by President Delors not only, as he has just pointed out, holds out the prospect of repeal of 25 per cent. of Community legislation but, much more importantly, makes it clear that article 3b, as he and Chancellor Kohl negotiated it, is a substantial improvement over the position that pertained under the Single European Act? Does he further agree that we can now look to that, as in many other areas, for a new agenda for Europe, one much more in tune with the one for which he and the Conservative party have been fighting for many years?

The Prime Minister

I am grateful to my right hon. Friend. He is entirely right about the question of article 3b, which some Opposition Members much mocked. They will now discover, when they examine the list that comes forward and future lists, that, whilst they may have mocked it in the past, they will pay homage at its shrine in the future.

Mr. Dennis Skinner (Bolsover)

As the Prime Minister thinks that GATT will result in jobs being provided across Europe and in Britain, will he say how many jobs will be provided in Britain, and by how much the unemployment total will be reduced in two years' time if the GATT negotiations are concluded satisfactorily?

The Prime Minister

After a reasonable number of years. I will write to the hon. Gentleman and tell him how many I think it is, but it will not be too many years. We estimate around 400,000 jobs. I cannot be precise as to how many of those will be created over the next two years. The hon. Gentleman set that time frame and I will endeavour to give him an answer, but GATT does not take effect for another year, so two years within GATT will be three years from now. I will write to the hon. Gentleman and give him a figure. The overall impact of the GATT deal, when fully implemented, over time will create around 400,000 jobs in this country.

Sir Peter Tapsell (East Lindsey)

Will the approval of the House be sought before Her Majesty's Government commit the country to any further weakening of the unanimity rule, or any change in the arrangements for qualified majority voting?

The Prime Minister

I am interested that my hon. Friend mentioned that point. In particular, I notice that the Liberal Democrats' policy, enunciated the other day, was not to change qualified majority voting but to end the veto that has thus far been a significant part of our policy in the European Community. The ending of the veto would apply to all issues, including own resources, foreign policy, asylum and immigration policy. That is the implication of the speech made by the leader of the Liberal Democrats just a few days ago.

As to qualified majority voting, I do not have any proposals to bring before the House. There may well be discussions ahead in the Community and, if there are, I will take those issues as and when they arise.

Mr. Giles Radice (Durham, North)

After systematically rubbishing the Delors White Paper all last week, how come the Government agreed to it over the weekend?

The Prime Minister

Because we took out the bits that we rubbished.

Sir Teddy Taylor (Southend, East)

I received the presidency conclusions at lunchtime today and they are not very clear. Will my right hon. Friend the Prime Minister give a clear undertaking that, as far as French agriculture is concerned, there is no question of using the reserve to exceed the guidelines, as it was used at Edinburgh, on the basis that it should not be considered as being within the guidelines? We lost 1 billion ecu at Edinburgh. Will the Prime Minister give an assurance that that will not happen again? Will he protest to the President for putting out a statement called "the Presidency conclusions", which was as clear and precise as could be, that additional funding will be provided and ECOFIN has been asked today to enable the Commission to mobilise up to an additional 8 billion ecu"?

Is not this something that must be cleared up quickly in case of misunderstanding?

The Prime Minister

I am pleased to clear it up. The hon. Member for Middlesbrough (Mr. Bell) on the Opposition Front Bench has been gabbling about this for the past few minutes. It will be mobilised by the private sector through the European investment bank, not through artificial loans in the Community budget. As to the reserve, my hon. Friend may or may not be pleased to know that for the immediate years ahead there is no reserve in the Community.

Mr. Peter Shore (Bethnal Green and Stepney)

Although I welcome the new stress on the dangerous levels of unemployment in Europe, and also welcome the recognition that a successful GATT round, increased infrastructure expenditure and wage moderation are all necessary to that end, is it not a matter of regret that the Heads of Government approved the guidelines under article 103 of the Maastricht treaty at the same time, which reaffirms both the timetable and the content of the second stage of economic and monetary union, with all that it means in cutting back on public expenditure and public borrowing? Does the Prime Minister think that it is possible to bring about an improvement in employment in Europe when, across Europe, all the member countries and states are dedicated to cutting public expenditure and public borrowing and conforming to a stable exchange rate in the exchange rate mechanism? How can that be possible?

The Prime Minister

It is not only possible; it is absolutely essential. If large fiscal deficits created jobs, there would be no unemployment right across Europe, because, in the past few years, European countries have dramatically increased their fiscal deficits at precisely the same moment as jobs have been lost. Unless we are able to reverse that trend, we will not put ourselves in a position where we are competitive enough to create permanent, long-lasting jobs. That is the policy to which each Government in the Community committed itself at the summit.

The right hon. Member for Bethnal Green and Stepney (Mr. Shore) asked about the guidelines under article 103 of the Maastricht treaty. The point about those guidelines is that they are non-binding recommendations; there is no obligation within them. They represent non-binding recommendations that would need to be met before any country was able, if we were to get that far, to enter into stage 3 of economic and monetary union, to which, as the right hon. Gentleman is aware, we are not committed.

The substance of the guidelines is thoroughly sensible economic policy to make sure that we get down excessive borrowing and keep interest rates low. That is something that I believe almost every hon. Member would applaud. They are not artificial, over-prescriptive and country-specific guidelines. The whole essence of them is that member states remain responsible for setting their own economic policy in line with their own national needs and conditions.

Rev. Ian Paisley (Antrim, North)

Having just come from two homes that were bereaved — they happen to be European constituents of mine—where the fathers were brutally and hellishly murdered last night, one on the doorstep of his own home, may I put to the Prime Minister what was put to me by one of the mourners at those homes today: is the Prime Minister convinced that the IRA is really intending to cease its violence? Is he in full agreement with Mr. Reynolds when he tells the people of Northern Ireland that that is so?

Does not the Prime Minister realise that the price that the IRA will be asking for a cessation of its violence is too high a price to pay for the people of Northern Ireland? Could he say whether Mr. Reynolds is speaking for him when he says that they both have now already got 70 per cent. of an agreement?

The Prime Minister

I am sure that the whole House would wish to send its deepest sympathies to the families of the two men who were so callously and brutally murdered overnight. They add to a catalogue of crime by paramilitaries over recent years which is a blot on the history of Ireland. I hope that such crime can soon be brought to an end and that we see it no more.

What I am seeking to do in the discussions that I am having with the Irish Prime Minister is, of course, to try to find a circumstance that will end such murders in the future. I have never pretended to the House that that will be easy. I believe that it is a policy worth pursuing in the hope that we will be able to bring an end to the violence that has for so long bedevilled the lives of people in Northern Ireland.

I know the concerns that the hon. Gentleman sets out on behalf of his constituents in Northern Ireland and the concerns felt by many people across Northern Ireland. In my discussions with the Irish Prime Minister, I am acutely aware of those concerns in every moment of our negotiations.

Rev. Martin Smyth (Belfast, South)

I welcome the Prime Minister's expression of concern. Of the trans-European routes, has imaginative planning been undertaken by our own nation to rejuvenate the west Britain ports and the links that would take goods across to Hull and thus open other avenues to Europe for our industry, which would build up our manufacturing sector? I am delighted that some progress has been made on GATT and I look forward to developments that will allow developing countries to improve.

Under the new concept of EUROPOL, will there be better co-operation between Community countries in the fight against not only organised crime but organised terrorism, or will we have to rely on those outside the Community to give us help, as happened recently with the arms shipment from Poland?

The Prime Minister

I certainly hope that we will get far better co-operation through EUROPOL on a range of issues, including terrorism. The particular target of EUROPOL is drugs, which are intimately related to terrorism, as a great deal of terrorism appears to be financed by drugs and money laundering. It is directly to attack those problems that EUROPOL is so attractive to Heads of Government in the European Community.

I can only endorse what the hon. Member for Belfast, South (Rev. Martin Smyth) said about the GATT round and its importance to the developing world. As I said earlier, it will provide a bigger boost to the incomes of the countries in the developing world than the sum total of aid provided by the western democracies and Japan combined, so it is clearly of immense importance to them.

All options are open on the question of the trans-European network and I shall draw the particular example to which the hon. Gentleman referred to the attention of my right hon. Friend the Secretary of State.

Mr. Paul Marland (Gloucestershire, West)

Is my right hon. Friend aware that there is widespread concern about cross-border terrorism and the threat of cross-border crime? Will he use his influence to ensure that the EUROPOL drugs unit is set up in the timetable that he has outlined and that there is no delay?

The Prime Minister

I can reassure my hon. Friend that it is intended that the EUROPOL drugs unit will start work in the new year. Together with the anti-money laundering and trade-related measures, it should contribute to a comprehensive anti-drug strategy. We see EUROPOL as being at the centre of the analysis of European cross-border crime patterns and for information exchanges between national police agencies. It will initially concentrate on drugs crime and its implications, as I said to the hon. Member for Belfast, South, with the intention that it will complement and support existing police activities. I believe that over time it will make a significant contribution to stemming the rising tide of cross-border crime throughout Europe.

Dr. Jeremy Bray (Motherwell, South)

Does the Prime Minister assume that the benefit of increased jobs from a successful outcome of GATT will accrue automatically? What steps are the Government taking to alert British industry to the special challenges that it will face?

The Prime Minister

The principal cause of job creation will be the general increased flow of trade and the increased demand that will result. That demand will be especially reflected in the manufacturing area, and the lower tariffs elsewhere will offer significant extra opportunities in the services sector. Probably some of that will occur almost automatically without rising levels of efficiency, but the hon. Gentleman is on to a good point by saying that business and commerce in the country will need to look for the opportunities that arise from GATT, to invest for them and seek to take them. The greater the extent to which they do that, the greater the extent that we shall see an increase in jobs.

Mr. Paul Channon (Southend, West)

Does my right hon. Friend agree that the most urgent task for the Community in the next few days is to achieve a successful conclusion to the GATT round? Time is running out. What are the main sticking points that concern the Community, or are they largely resolved? Does my right hon. Friend agree that it would be a disaster for the world if concern for the French film industry allowed the talks to break down? What is the position of Her Majesty's Government and that of the European Council as a whole?

The Prime Minister

Although the present position is changing almost by the minute at the moment, Director General Sutherland achieved an agreement on most of the GATT rounds texts early this morning—about 98 per cent. of the way to the finishing line. There have been substantial negotiations between Sir Leon Brittan and Mr. Kantor, the American negotiator, who were meeting for most of the night and a good deal of today before Sir Leon Brittan had to return to Brussels to report to the Foreign Affairs Council. Of course, my right hon. Friend the Foreign Secretary is also attending that meeting.

The principal areas outstanding at the moment are difficulties on audio-visual matters—not the only outstanding matters, but the principal matters outstanding. Although the primary concerns rest with France, it is not the only European nation that has concerns over a range of audio-visual matters. I very much hope that we will be able to make progress on that as it would be a tragedy if the talks were to break down over a subject which, although important, is such a relatively narrow part of the whole GATT round at this stage. The United States has recognised the special nature of the audio-visual sector. The discussion on that has narrowed down to a relatively small number of detailed points.

Mrs. Margaret Ewing (Moray)

Was any particular attention paid to the need for an effective Community-wide response to the political and economic refugees from central and eastern Europe who wish to take up permanent residence within the Community? It is important to have an effective economic and social strategy if we are to avoid racist attacks such as we have seen within sections of the Community.

The Prime Minister

We had some general discussion on collective asylum, which is operated co-operatively. The discussion was not specifically related to the countries that the hon. Lady mentioned, although we were all aware that there were areas of particular difficulties. The declaration on asylum commits members to common action on asylum. It is not a new proposition; it is an existing proposition. What it means in practice—so that no one misunderstands it—is that member states discuss together whether they can co-operate on asylum. They then decide intergovernmentally—not by Community decisions —whether they can take particular action. There was some discussion of that at the summit.

Sir Peter Hordern (Horsham)

Will my right hon. Friend explain how the commitment in the European communiqué to achieve economic growth by low inflation, low interest rates and tight control of public spending can be reconciled with the desire on the part of the European Commission to issue vast quantities of so-called Union bonds? How can it make sense, when every country in the Community is trying to reduce its deficit, to add to that deficit by issuing such bonds? Would it not be far better to achieve success in the GATT negotiations than to pursue grandiose schemes of that nature?

The Prime Minister

My right hon. Friend is entirely right. He states precisely the argument adopted by Britain and several other countries in our discussions at the summit over the weekend. It was for that and other reasons that a decision was taken not to proceed with the bonds to which my right hon. Friend refers.

Mr. John McAllion (Dundee, East)

The Prime Minister welcomed the moves made by the Council towards a more decentralised Europe. Does he accept that those moves are in line with the application of the principle of subsidiarity? If so, will he explain why the Government support the application of that principle by Europe in respect of the United Kingdom and, indeed, by the United Kingdom in respect of the Province of Northern Ireland, but not by the United Kingdom in respect of the nation of Scotland? Is it not the height of hypocrisy for a Government to mouth support for a principle at the Council of Ministers and then to apply that principle only when it is convenient for them to do so for party political purposes?

The Prime Minister

The hon. Gentleman clearly does not understand the definition of subsidiarity. The declaration on subsidiarity agreed by member states at the Birmingham European Council last year reiterated the point. It said: It is for each Member State to decide how its powers should be exercised domestically. Devolution is a separate issue. The principle of subsidiarity does not apply to the internal arrangements in member states. Indeed, such an idea would fly in the face of the principle itself, which expresses—[Interruption.] If the hon. Gentleman will listen, it is just possible that he will learn something—not probable, but just possible. Such an idea would fly in the face of the principle, which explicitly prohibits unnecessary interference by the Community in national affairs.

Sir Jim Spicer (Dorset, West)

Will my right hon. Friend confirm that the directives that are to be repealed include the bathing water directive and the drinking water directive? If that is the case, will he accept the thanks of all sensible people not only in the House but in the whole country? He and his Government have given the lead in bringing about the end of that nonsensical legislation, which is expensive and entirely unnecessary.

The Prime Minister

Yes, I can confirm what my hon. Friend says. The drinking water directive and the bathing water directive both need to be completely overhauled. They are over-prescriptive and outdated scientifically.

Ms Hilary Armstrong (Durham, North-West)


Ms Joyce Quin (Gateshead, East)


The Prime Minister

I am sorry that the hon. Ladies think that an outdated directive which is no longer accurate scientifically is appropriate to remain in law. It explains a great deal about the Opposition.

Mr. Nigel Spearing (Newham, South)

Does the Prime Minister think that when he agrees any matter of principle at the European Council it is essential that this House has an appropriate debate? Can he tell the House whether we had a debate on the home and justice matters that he agreed? Even if a convention is to be presented to the House at some due date, will that not mean that the royal prerogative used by the Government will replace the prerogative of an Act of Parliament?

The Prime Minister

I cannot conceive that any other nation state in the European Community spends remotely as much time, energy and effort on debating European matters, both before and after decisions, than this House. It is entirely proper that we should do so, but the concept that the Government should enable debate in the House on each and every issue, whether large or small, would effectively render any Government in power in no position to take decisions on behalf of the House or the country.

Mr. Raymond S. Robertson (Aberdeen, South)

Will my right hon. Friend tell the House whether we are on target to complete the negotiations with nations belonging to the European Free Trade Association on enlarging the Community according to the timetable set out at the special European Council in October?

The Prime Minister

Yes, we have reaffirmed that target for negotiating the entry of EFTA states. It is a very tough target and, although we have re-endorsed it, I cannot say that I would be surprised if we slipped a little. But at the moment the intention is to meet the target set out, so that providing that those countries get internal consent from their Parliaments and where appropriate from the referenda that they must have, they will be able to enter the Community and be full members by 1995.

Mr. Mike Gapes (Ilford, South)

The Prime Minister referred to the French Prime Minister's stability pact. Is there not a danger that the Paris 39 conference next year will complicate European Union relations with the countries of central and eastern Europe? Surely a plethora of organisations already exists, such as the North Atlantic Treaty Organisation, the conference on security and co-operation in Europe and the North Atlantic Co-operation Council structures. Is it not ridiculous to establish another organisation, which does not seem to have a clear role or purpose that is distinctive from that of the others? Does he agree that it would be far better to take judicious decisions, for example, about human rights before one recognised Croatia? Does he accept that it is deplorable that there was no reference in the communiqué on the former Yugoslavia to putting pressure on the Croatian Government through economic sanctions?

The Prime Minister

On the latter question, the Community's views on each of the warring parties in Bosnia have frequently been stated at face-to-face meetings and I have no doubt that that will happen again on 22 December. No one involved in the present conflict in Bosnia can escape some share of the blame for what has occurred there in recent years.

On the stability pact, I can entirely agree with the hon. Gentleman on some matters. The focus of the ideas in the pact will be on six central and east European states and on three Baltic states. I can agree with the hon. Gentleman on the need to involve the CSCE, and all the states participating in it will be invited to the conference to launch the stability pact. The hon. Gentleman is quite right that they all have a direct interest in that. Those countries not immediately involved in the pact will be observers, and representatives of other international organisations, such as NATO and the United Nations, will also be invited.

Dame Elaine Kellett-Bowman (Lancaster)

Will my right hon. Friend accept my warm congratulations on getting, as he put it, "the rubbish" out of the Delors document and on converting it into a highly acceptable blueprint for the future of Europe, along the lines for which he and his colleagues have been working so long—notably, the reduction of burdens on industry, which will enable unemployment in this country to continue to fall and that fall to spread to European countries where unemployment is, sadly, still rising?

The Prime Minister

I agree with my hon. Friend; she is entirely right. We agreed strongly with much in the prescription for the action plan, not least because much of it was based on the contribution made by Community member states. We made our contribution, a significant part of which appears to be reflected in the White Paper. As I said earlier, we objected to certain elements of the White Paper and they are no longer in it. The action plan, which is a framework of policies for member states to pursue, is intended to deliver growth and jobs. I emphasise that it is for member states to pursue because that is an important point for the House. Some specific accompanying measures at Community level—deregulation, subsidiarity, and largely privately financed networks—will march alongside national measures. We also propose to monitor what happens to see the impact on employment prospects over a period of years.

Mr. Jim Marshall (Leicester, South)

In his meeting with President Yeltsin, did the Prime Minister make it clear that Russia will not have a right of veto over the future security arrangements of the countries of central and eastern Europe?

The Prime Minister

I do not think that President Yeltsin has entertained the ambition that he should have such a veto. President Yeltsin and I discussed the internal affairs within Russia, the prospects for the election, and the co-operation agreement which President Yeltsin seeks to negotiate with the European Union. We did not discuss the countries to which the hon. Gentleman refers.

Mr. Geoffrey Dickens (Littleborough and Saddleworth)

Does the Prime Minister agree that this afternoon's statement has illustrated to all fair-minded Members of Parliament in this Chamber the value of the United Kingdom being at the centre of European matters? Should not the few doubting Thomases who were not in favour of the Maastricht treaty now feel ashamed of themselves because their number is diminishing outside the House?

The Prime Minister

My hon. Friend has a golden tongue.

Ms Glenda Jackson (Hampstead and Highgate)

The Prime Minister referred to the European Free Trade Area countries as being "winners" following a successful round of GATT negotiations. Does he agree that there will be sizeable losers, not least the signatories of the Lomé convention, particularly sub-Saharan Africa? As, by 2002, the winnings are estimated to be approaching £120 billion, will he guarantee that he will argue, within the European Union, that a sizeable percentage of those enormous profits will be set aside to help countries that are currently in no position to help themselves?

The Prime Minister

The hon. Lady is quite right to the extent that some of the provisions will hurt individual countries. Some of them will not be amenable to this country, the United States, Japan or Germany. All countries will find that some issues do not help them. However, because of the substantial anticipated growth in world trade—[Interruption.] It cannot be real until it has happened. Of course it is anticipated, but it is almost certain. The overall impact of the substantial anticipated growth in world trade is that nearly every country, including most sub-Saharan countries, will gain.

The Lomé convention provides special arrangements for a number of countries. Many of those are complex and, in the negotiations, there has been careful examination of relatively poor countries that do not have the political clout to protect themselves sufficiently to ensure that they are not unduly damaged. If it turned out that those countries were being damaged, particularly sub-Saharan Africa where we have a long-standing historical role, we would certainly seek to do what we could to protect them.

Mr. Bowen Wells (Hertford and Stortford)

As my right hon. Friend the Prime Minister has achieved, at this first European Council since the signature of the Maastricht treaty, the rejection of centralised borrowing by the Commission and strengthened subsidiarity considerably, does that signal that, at future Council meetings, we can look forward to more decentralisation and strengthening of nation states' co-operation within Europe?

The Prime Minister

I certainly expect more subsidiarity items to be agreed. Whether they will be agreed by next June or by next December, I cannot be certain, but more items under the subsidiarity principle will be remitted for national Governments to determine, which implies that there will be further repeals of Community legislation.

Mr. Harry Barnes (Derbyshire, North-East)

Last Thursday, the Leader of the House, when he stood in for the Prime Minister at Question Time, suggested that transparency and openness would be on the agenda at the Heads of Government meeting. In a democracy, is it not a fairly basic premise that people should know how their representatives vote? Was that matter discussed at that meeting? Will the Prime Minister ensure that information is supplied to the House on the way that our Ministers vote in Europe?

The Prime Minister

The United Kingdom was in the lead in discussing transparency and openness at the European Council. However, it is a principle that did not meet with universal favour among our colleagues. British Ministers are always available at the Dispatch Box to be questioned on how they voted on any issue.

Mr. James Clappison (Hertsmere)

Does my right hon. Friend agree that it is highly desirable that, in the deliberations on the financing of infrastructure and the trans-European networks, the maximum possible role is given to public and private sector co-operation? Does he further agree that that is a far more prudent course than the unhealthy and incredible obsession with borrowing exhibited in certain quarters, including by the Leader of the Opposition?

The Prime Minister

I agree with my hon. Friend. As I said earlier about the trans-European networks, some areas of public expenditure have long been agreed. The figures come from memory, but I believe that there is about 5 billion ecu in the structural and cohesion funds and about 7 billion ecu in the European investment fund. We are now looking for more from the latter fund. My hon. Friend is right to suggest that that is where the maximum amount of money should come from, but I also want the House to appreciate that there is some money in the structural and cohesion funds, which is effectively public money that will help to fund various items.

Mr. Barry Jones (Alyn and Deeside)

It is said that the airbus project is an obstacle to GATT. What assurances can the Prime Minister give to me and to the 2,000 of my constituents at Broughton who make the wings of the airbus that he and the Government will fight our corner? Is he aware that British Aerospace is largely reliant on a successful airbus project? Will he assure us that he is fighting his corner and that President Clinton's election promises made in Seattle last year to Boeing airbus workers will not tip the scales in this important matter?

The Prime Minister

I share the hon. Gentleman's view of the importance of this matter. Of course, we do not negotiate directly in the GATT round—the European Community is collectively represented by a negotiator, Sir Leon Brittan. Both the United States and the negotiator are aware of our special interests. We have made it clear to the Commission, and hence to Sir Leon as negotiator, that it is essential that aero engines and indirect support are covered, as in the current Chairman's text.

Mr. James Paice (Cambridgeshire, South-East)

I give a warm welcome to the first 17 directives that are to be reviewed or abandoned. Will my right hon. Friend ensure that that is just a foretaste of things to come? In particular, can he say whether the TUPE regulations are included, as the press led us to believe over the weekend? I very much hope that we are witnessing a change in attitude by the Commission and that, having introduced this list, it will take a positive rather than negative look at future lists put forward by this Government or, indeed, that put forward by the Germans, to which my right hon. Friend referred. Should not that attitude also apply in future to any proposed directives?

The Prime Minister

I confirm that the acquired rights directive is among those to be repealed or examined. That incorporates the TUPE regulations to which my hon. Friend referred.

Mr. David Winnick (Walsall, North)

Is the Prime Minister aware, in respect of his meeting with Mr. Reynolds, that the feeling remains that if the opportunity for peace is lost now it may be lost for a long time to come? Bearing in mind the vile murders over the weekend to which reference has already been made, as well as the ethnic cleansing of Catholic people last week, is it not all the more necessary to go the extra mile in seeking agreement with the Irish Republic? We all recognise of course that any such agreement, which is highly desirable, will not necessarily end terrorist killings on both sides.

The Prime Minister

It is important to try to take the opportunity to make the progress that it is possible to make at the moment. It is important that we reach a balanced agreement—one that can be seen to be fair by all the communities in Northern Ireland. That is not easy to obtain; achieving a balanced agreement with the maximum chance of stopping violence is what is taking so long. I do not know how much longer it will take. We will not unduly delay, but it is worth while taking extra trouble to see if we can find a solution. I cannot promise that we will be able to do so.

If we cannot because genuine points of difference cannot be reconciled, we shall have to come to the House and say that it was not possible to reach agreement. I hope that that will not be the case. We are working hard to see whether agreement can be reached. If it is, we shall announce it as speedily as possible.

Mr. Graham Riddick (Colne Valley)

It is not clear now, bearing in mind comments made earlier from Conservative Benches, that one of the most significant aspects of the European Council was the beginning of the reversal of the European Commission's endless regulations and unnecessary interferences in matters that could be handled better at national level? I congratulate my right hon. Friend on the important role that he played in that process. Is it not in stark contrast to that of Opposition parties, who want to pass more of Britain's sovereignty to Brussels?

The Prime Minister

I am grateful for my hon. Friend's remarks. Some matters are more appropriately handled at national rather than pan-national level. The essence of subsidiarity is that such matters should be done at a national level. There will always be areas where it is most appropriate for us to deal with matters collectively, and they will continue to be dealt with that way. However, I hope that we shall over time examine all existing legislation and determine which of it, in an excess of enthusiasm over the past 10 years or so, has gone to the European level but would have been better left at national level.

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