Commons Sitting of 7 December 1994

Preamble
The House met at half-past Two o'clock
PRAYERS
[MADAM SPEAKER in the Chair]
Oral Answers to Questions
  SCOTLAND

    BCCI
    Mr. Vaz: To ask the Secretary of State for Scotland if he will make a statement on when Scottish local authorities which lost money in the collapse of BCCI will receive compensation.
    The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): The Scottish local authorities that lost money in BCCI are in no different a position from the other creditors of the bank. I accordingly have nothing to add to the statements made by my hon. Friend the Minister of State, Treasury on 27 October in response to a question from the hon. Gentleman about this matter.
    Mr. Vaz: The Minister is aware that Scottish local authorities and other depositors in Scotland have been waiting since 5 July 1991 for compensation. As the Government are aware that a new compensation package has been agreed, will the Minister give an undertaking that he will write—either himself or through the Foreign Secretary–to the Sheikh of Abu Dhabi asking for $1.8 billion to be transferred immediately, and that, once it is received, it should be transferred to those Scottish local authorities and others who have suffered enormous hardship because of this unfortunate incident?
    Mr. Stewart: It is always a great pleasure to welcome an English Labour Back Bencher to Scottish questions.
    Mr. Norman Hogg: My hon. Friend is a Front Bencher on the Back Benches.
    Mr. Stewart: The House knows of the long-standing interest and involvement of the hon. Member for Leicester, East (Mr.Vaz) in the matter. However, the payment of BCCI creditors, which it is public knowledge is reported to be 30 to 40 per cent. of their loss, is entirely a matter for the liquidators, the majority shareholders and the creditors.
    Mr. John Marshall: Does my fellow St. Andrean agree that it would be quite wrong for taxpayers who lost money through BCCI to be asked to pay higher taxes to bail out short-sighted Scottish local authorities that had money on deposit with BCCI?
    Mr. Stewart: There is no question of taxpayers bailing out the local authorities involved. My hon. Friend is correct. My right hon. Friend the Secretary of State granted Western Isles islands council consent to borrow £24 million—the BCCI loss of £23 million plus anticipated interest of £1 million-and Ross and Cromarty district council consent to
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    borrow £1.8 million to help it cope with its losses. My hon. Friend may be referring to allegations that the Scottish Office did a secret deal to compensate Western Isles islands council. I am happy to reassure the House that such allegations are complete nonsense.
    Mr. McMaster: Does the Minister agree that BCCI is a financial success story compared with the record of the Secretary of State? First, the right hon. Gentleman gambles and loses £30 million on Health Care International, then he stands idly by watching the Scottish budget be slashed and axed and, finally, last night he led his own side into glorious defeat in the Lobby on VAT on fuel. Is it not time that he said sorry?
    Mr. Stewart: I congratulate the hon. Gentleman on his ingenuity in raising those questions, but he is entirely wrong on HCI, as he well knows. My right hon. Friend's public expenditure statement is extremely fair for Scotland, in relation, for example, to local government expenditure. The hon. Gentleman, who is experienced in local government, will know that, on any measure, local government in Scotland receives far more help from the taxpayer of the United Kingdom than local government in England or Wales. Opposition Members should bear that fact in mind.

    Violent Crime
    Mr. Eric Clarke: To ask the Secretary of State for Scotland what new initiatives he has considered to curb the increase in crimes of violence involving firearms.
    The Secretary of State for Scotland (Mr. Ian Lang): Very strict controls are already in place regarding the acquisition and possession of firearms, but provision to increase the maximum penalties for certain firearms offences is contained in the Criminal Justice and Public Order Act 1994. Those will be brought into force on a Great Britain basis early next year. With the assistance of the firearms consultative committee, the Government keep firearms control under continual review.
    Mr. Clarke: I am disappointed by not only that answer but the answer in the letter that I received from Lord Fraser of Carmyllie, the Minister in the other place. I asked for an amnesty because in Bonnyrigg, in my constituency, Mr. Dunn, an innocent bystander, was shot and killed during a bank robbery in which all three of the bank robbers had sidearms. The use of sidearms in such crimes is escalating throughout the United Kingdom, and I ask, first, for an amnesty and, secondly, that after that amnesty people in possession of illegal arms be severely dealt with, with further penalties for anyone who has criminal intent. The people of Bonnyrigg, Midlothian and the rest of Scotland are asking the Government for action.
    Mr. Lang: I understand about the tragic case in Bonnyrigg in the hon. Gentleman's constituency, and I offer both him and those involved my sympathy. Nevertheless, we should keep such matters in perspective. The question of an amnesty is one for the police; it is essentially an operational matter. There was an amnesty in 1988, and I do not think that it would be a good idea to have them too often. However, I am sure that the police will always bear the possibility in mind. I deplore any such use of guns as much as the hon. Gentleman does, and I also deplore the alleged increase in use, but it is important to realise that statistics show that only two in 1,000 cases of

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    all crimes and offences recorded in Scotland in recent years have involved the use of firearms. In many ways, using a number of Acts of Parliament, the Government have determinedly toughened sentences and other procedures in connection with firearms.
    Mr. Bill Walker: Does my right hon. Friend agree that the problem is not those who hold firearms properly, with licences, but those who hold firearms illegally and use them? So long as there is no deterrent such as capital punishment, it will be difficult to prevent such activity from growing, because of the international dimension.
    Mr. Lang: We should certainly always continue to seek ways of reducing that serious threat. The maximum penalty for possession of a firearm with intent to commit an indictable offence or to resist arrest is life imprisonment. We have increased the sentences for the unlawful possession of a firearm, including a sawn-off shotgun, and the sentences for the possession of a prohibited firearm. In those and in every other way open to us we shall continue to fight the growth in the use of firearms. I acknowledge that it is a serious potential threat.

    NHS Bed Provision
    Mr. Canavan: To ask the Secretary of State for Scotland what assessment he has made of the adequacy of the provision of NHS beds for frail elderly people.
    The Parliamentary Under-Secretary of State for Scotland (Lord James Douglas-Hamilton): National health service provision for the frail elderly will vary from health board to health board, depending on the local assessment of need in each area. The aim always is to match local national health service and social work services to need.
    Mr. Canavan: Will the Minister arrange to visit Lochgreen hospital, which is threatened with closure, and Bellsdyke hospital, where 155 beds for frail elderly people are similarly threatened, so that he can see for himself the high standard of patient care that is provided by the dedicated staff there? Will he intervene to stop the closures, especially in view of the increasing population of elderly people and the fact that the Government's so-called community care programme is so inadequate? If he does not, many frail elderly people will be deprived of the hospital beds that they require.
    Lord James Douglas-Hamilton: I shall certainly pass on to the Minister of State the hon. Gentleman's request for a visit. I have made inquiries about the two hospitals, and I understand that the board proposes to offer patients currently resident at Lochgreen hospital a choice in 1995. They will be able to transfer either to alternative NHS accommodation or to a suitable nursing home. The consultation will finish in January. We also look forward to seeing the board's strategy for mental health, which I understand will include proposals for Bellsdyke hospital involving the reprovision of care.
    The board will go out to public consultation, and the strategy will require ministerial approval. I undertake that approval will be given only if Ministers are satisfied that the changes will lead to a higher standard of care for patients in
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    more homely settings. I am sure that if the hon. Gentleman wishes to ask specific relevant questions, the Minister of State will be prepared to see him.
    Mr. Gallie: Is my hon. Friend aware of the proposal made by Ayrshire and Arran health board to close the accident and emergency unit at the new Ayr hospital? Given the considerable investment made by the national health service in that hospital, is my hon. Friend not glad to join me in commending the trust management, who will fight this move tooth and nail?
    Lord James Douglas-Hamilton: Trust status has brought many benefits to many hospitals. Closures of key services, such as those my hon. Friend mentioned, have to be put to the Minister for approval before they can be agreed. The matter will be looked at in great depth.
    Mr. McAvoy: Does the Minister recall that a long-planned and long-awaited national health service hospital for the elderly in my constituency was cancelled? It was removed from the plan and care of the frail elderly was turned over to Takare, a private health firm. Bearing in mind the fact that the reason for that decision was an alleged lack of cash for Greater Glasgow health board to build the hospital and bearing in mind the public money that the Secretary of State for Scotland put into HCI, does the Minister agree that the decision to transfer care of the frail elderly to a private company in my constituency was a disgrace?
    Lord James Douglas-Hamilton: There are two considerations. First, the decision to invest in HCI was an inward investment decision that had nothing to do with funds provided for the national health service. Secondly, Greater Glasgow health board and its partners are seeking to improve care and facilities for vulnerable elderly people and to provide better alternatives, not to withdraw care. It is very important that, before patients are discharged, the proper support arrangements are put correctly in place. Any breakdown in those arrangements is contrary to official policy and should be followed up speedily so that mistakes do not recur.
    Mr. Kirkwood: Will the Minister acknowledge that there is a great deal of concern about the definition of treatment and the definition of care for the frail elderly? Is he aware of the difference between people who are able to get treatment within the national health service and those who are decanted out of NHS beds because they are deemed only to require care, and who are then assessed in the context of social work, which requires their means to be tested? What steps is the Minister taking to clarify the definition of the two classifications? What steps is he taking to advertise the fact that if people are decanted out of free NHS beds, they may have to pay, using their meagre resources, to get the treatment that they require in the community?
    Lord James Douglas-Hamilton: Before patients are discharged, the care agencies must have been involved in a full assessment of all the needs of the patients concerned in terms of health, social welfare and housing. It must be ensured that all necessary support facilities are in place. Social work authorities have discretionary charging powers for day and domiciliary care. The principle that individuals

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    should not pay more than they can afford is applied to discretionary charges and charges for residential care. There is considerable discretion for local authorities.
    Mr. Ian Bruce: What is the increase in national health service resources in Scotland? How much extra has gone into care in the community through local government, and how do the figures compare with those for the rest of the United Kingdom?
    Lord James Douglas-Hamilton: Resources have increased considerably, by about 53 per cent. The total for health boards in 1994–95 was £3,234 million, which shows high spending. Spending per head on health is, of course, far higher north of the border than it is south of the border for a number of reasons. The health needs are more pressing in certain respects—the incidence of heart disease, for example, is far higher. We can readily justify the higher figure.
    Mr. George Robertson: Is the Minister aware that all over Scotland today, thousands of frail elderly people, in hospitals and out of them, will cheer the news that the second phase of the increase in VAT has now been scrapped because they were worried sick by the prospect? Is it not true that the Chancellor snubbed and ignored the views of the Secretary of State for Scotland and Scottish Office Ministers on this issue? Will the Minister take the opportunity to welcome the fact that Parliament did what Ministers could not? Does he agree that scrapping the second iniquitous increase in VAT on fuel is extremely good news for Scotland?
    Lord James Douglas-Hamilton: Votes in the House of Commons have to be respected and, as the hon. Gentleman knows, the Chancellor will make a full statement tomorrow, but I can say that compensation for the first stage of VAT on fuel and power will most certainly remain. That includes 50p cash compensation, which was given in April, and the uprating due next April. I can also confirm that the extra funds for the home energy efficiency scheme will certainly not be scrapped.

    Homelessness
    Mr. Welsh: To ask the Secretary of State for Scotland what further measures he is taking to tackle the issue of homelessness in Scotland; and if he will make a statement.
    Lord James Douglas-Hamilton: Local housing authorities are well resourced to tackle homelessness. It is one of the four key priorities that we have set them for the use of their housing capital allocations, which total £552 million in the current year. In addition, the supplementary capital allocations, which I announced on 13 October, included £2.6 million for about 15 new homelessness projects.
    Mr. Welsh: As more than a quarter of Scottish households are affected by dampness, condensation or mould and a record 43,000 households were registered as homeless last year, why are the Government cutting the housing finance budget by 20 per cent. in real terms over the next three years? The Conservative party says that it cares for the family. Is this not a betrayal of families in the most dire need?
    Lord James Douglas-Hamilton: No, more than £2.8 billion will be made available for housing over the next three years—at least £900 million a year. Scottish Homes
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    has a target to provide 2,500 housing units for the homeless in 1994–95 and some 8,000 new and improved houses, which will assist with the problem of dampness. The capital allocations of housing authorities total £552 million. Homelessness and dampness are two of the four key national priorities that local authorities are taking very seriously.
    Mr. Galloway: Last Friday evening, with about 200 others, I slept outside on the ground in St. Aloysius college in my constituency to raise funds for the Simon Community to help the homeless in Glasgow. I have been ill ever since. Has the Minister any idea how long a night sleeping outside on the ground really is, how cold it is, how damp it is and how miserable it is? What message does he have, from the vastness of his many-roomed mansions, for the thousands of Scottish families who do not have a home this Christmas?
    Lord James Douglas-Hamilton: It is top priority for all authorities in Scotland that nobody should be without a roof. Of course, there is a very great distinction between rooflessness and homelessness. The hon. Gentleman asked if I had slept out. I have done so with the Cameronians in the Army, and when it is pouring with rain it is a thoroughly disagreeable experience. Homeless persons officers—such as those at the Hamish Allen centre in the hon. Gentleman's district council—provide an extremely useful, valuable service in assisting applicants with problems in finding accommodation.
    Mr. McAllion: Will the Scottish housing Minister explain why, when he faces a worsening housing crisis, with record levels of homelessness, he has remained silent and inactive while the Scottish housing budget has been slashed and plundered to pay for future tax cuts to save the Tories' electoral skins? Is he not ashamed that the most common sight on the streets of Scotland this Christmas will not be red-suited Santas, but young people, desperate, with no roof over their Heads, selling the Big Issue? Does he not understand that a party that describes as fair a settlement that leaves tens of thousands of Scots homeless deserves to be rated a contemptible 12 per cent. in this morning's opinion poll in Scotland? The Conservative party is not fit to govern, and it is seen by Scots as not fit to govern.
    Lord James Douglas-Hamilton: Local authorities have strategic responsibility for dealing with homelessness. As well as their mainstream allocation, we have provided £29 million in special allocations for more than 200 special homelessness projects in Scotland, which have been of assistance. As for funding, I have mentioned that £2.8 billion will be available over the next three years. Of course, we expect local authorities to give top priority to dealing with that pressing issue in their plans and in their workings every day.

    Highlands and Islands
    Mr. Macdonald: To ask the Secretary of State for Scotland if he will make a statement on the economy of the highlands and islands.
    Mr. Lang: Good progress is being made in promoting economic regeneration and diversification of industry throughout the highlands and islands. The area is well

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    placed to take full advantage of the wider economic recovery that is now under way as a result of the Government's prudent economic policies.
    Mr. Macdonald: Will the Secretary of State confirm that objective 1 status was conferred upon the highlands and islands because of the region's problems of persistent high unemployment, the sparsity of population, the remoteness of communities and poor communications? Does he agree that those factors should be the criteria by which objective 1 funding is allocated within the highlands and islands? Is he surprised to learn that the programme partnership is yet to devise a formula to ensure that that happens? Will he therefore urge the partnership to produce such a formula as early as possible to ensure that aid is effectively targeted?
    Mr. Lang: I certainly hope that progression of the entitlement to objective 1 status is carried forward quickly. The highlands and islands obtained objective 1 status because, although the area did not meet all the criteria for objective 1 status as laid down, the Scottish Office persuaded the European Commission that the case deserved to be met under those criteria. As a result, £240 million will go to the highlands and islands over five years.
    I am sure that the hon. Gentleman will be as encouraged as I am by the fact that unemployment in the highlands and islands fell by between 5 and 6 per cent. last year and that it now stands at below the Scottish average, which, in turn, is below the United Kingdom average. That is a reflection of the strength of the regeneration of the economy of the highlands and islands, which was set in train by the Government.
    Mrs. Ray Michie: I understand that the Northern Ireland Office is about to approve the spending of £5.2 million on the necessary infrastructure to establish a ferry link between Ballycastle in Northern Ireland and Campbeltown in my constituency. Will the Secretary of State urgently consider seeking Treasury and Highlands and Islands Enterprise approval for the necessary spending for the Campbeltown end, which, at £2.2 million, will cost much less? Crucial decisions must be made very soon. The right hon. Gentleman will agree that the link would give a tremendous boost to Kintyre, Argyll and Scotland.
    Mr. Lang: I shall certainly look at any details that the hon. Lady cares to send me. I hope that she will be encouraged by the fact that, under the recent public expenditure announcement, the Government were able to find an extra £1.6 million to help the shipping and infrastructure of ferry services to the islands, the northern isles and the western isles. I hope, too, that she will welcome the announcement today that a new vehicle ferry service across the Sound of Harris has been approved and should go ahead for tenders to start construction next April.

    Economy
    Mr. Salmond: To ask the Secretary of State for Scotland when he next intends to meet representatives of
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    the Scottish Council (Development and Industry) to discuss the current state of the Scottish economy; and if he will make a statement.
    Mr. Lang: I look forward to meeting members of the Scottish Council (Development and Industry) before long, when I expect the current state of the Scottish economy to be among the topics of discussion.
    Mr. Salmond: Was this morning's interest rate rise an act of petulance by a discredited Chancellor, or does the Secretary of State claim that it was justified by economic conditions? Is the Secretary of State seriously telling the House that the Scottish economy is overheating? If it is not, is it not intensely damaging to have two consecutive interest rate rises without reference to Scottish economic conditions? Does the right hon. Gentleman have any role in interest rate determination, or did the Chancellor pay as much attention to his views on interest rates as he did to his views on the second tranche of VAT on fuel?
    Mr. Lang: My right hon. and learned Friend the Chancellor, who is responsible for deciding upon the level of interest rates in consultation with the Governor of the Bank of England, has my full support on that policy, as he has my support for his Budget.
    I am sure that my right hon. and learned Friend will reflect upon the success of the Scottish economy. For the first time since statistics have been kept, unemployment in Scotland is lower than in the rest of the United Kingdom. Scottish manufacturing output increased by 5 per cent. last year and is at an all-time high; exports increased by 19 per cent. last year and are at an all-time high; productivity increased by 5 per cent. last year and is at an all-time high; inward investment is at an all-time high and employment has increased in the last decade by about 150,000.
    The Scottish economy is in fundamentally better shape now than it has been in living memory. That is something that even the Scottish National party should welcome.
    Mr. Raymond S. Robertson: Does my right hon. Friend agree that it is quite shameful for the hon. Member for Banff and Buchan (Mr. Salmond) to speak in the way that he does, given that the economy of Grampian—an area which we are both privileged to represent—is leading the Scottish economy, the Scottish economy is leading the United Kingdom economy and the UK economy is leading European economies? As Scots, we should be proud of that record. We should not create fabrications to talk down Scotland and her achievements.
    Mr. Lang: My hon. Friend is absolutely right. I was delighted to hear the news from Amerada Hess today of an oil discovery named "Dauntless" in block 21.11, located 140 km east of Aberdeen.
    Dr. Reid: In the months since the last Scottish Question Time, has the Secretary of State had time to reflect upon my accusation that in the awarding of the Samsung project to Britain he was outflanked, undermined and outwitted by his colleague the President of the Board of Trade? Will he accept and admit that up to £10 million of Government money was made available through English Partnerships from the Department of the Environment under a scheme presided over by Mr. Peter

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    Walker, an ex-colleague of the President of the Board of Trade and present adviser on inward investment to the Board of Trade?
    How should we regard the Prime Minister's pledges that Lanarkshire will offset its disadvantages by special treatment when his colleague and possible leadership contender, the President of the Board of Trade, undermines those pledges with Government money in order to ensure that the biggest project to come to Britain in the last two decades did not go to Scotland but to the north of England?
    Mr. Lang: Scotland's offer to the Samsung electronic group was every bit as good as the offer from the north of England. The regional selective assistance component was identical.
    Whilst we cannot win every inward investment case that comes to the United Kingdom, the fact is that Scotland has won proportionately far more than its share. In the past five years we have won almost 350 different inward investment decisions, bringing in investment of between £2 billion and £3 billion and creating and safeguarding up to 47,000 jobs. That level of achievement reflects the confidence that the rest of the world has in the management of the United Kingdom's economy and Scotland's economy under a Conservative Government.
    Mr. Wallace: Does the Secretary of State accept that increasing interest rates at this stage of economic recovery, when unemployment in Scotland is still more than 220,000, is a real indictment of past failures of Government policy—not least their failure to invest in skills and in education and capital investment? What effect will the latest interest rates increase have upon the Scottish economy in the next six to 12 months?
    Mr. Lang: I believe that it will restore confidence which must have been shaken by the behaviour of the Opposition parties in the Division Lobby last night.
    Unemployment in Scotland decreased by 18,000 last year and long-term unemployment fell by 9 per cent. My public expenditure statement made good provision, through the budgets of Scottish Enterprise, Highlands and Islands Enterprise and in other ways, for continuing to build on our success in the training area. I believe that we have every reason to hope and expect that the Scottish economy will continue to outperform that of the United Kingdom.
    Mr. McFall: Does the Secretary of State think that the Scottish Council (Development and Industry) will agree that gains from the national lottery pale into insignificance compared with the multi-million pound gains made by Mr. John Mather and his three Clydeport directors? At a time when the Scottish economy desperately needs a kickstart—not least for the benefit of the 220,000 unemployed—how can it be fair that that chief executive stands to gain more than £5 million from his £75,000 investment in a public trust company? In light of cases such as that, does the Secretary of State agree that when the Government talk about economic development in Scotland, the public perception is that they are more concerned with the prospects of a few privileged individuals rather than the nation as a whole?
    Mr. Lang: The Government have been concerned in all their privatisation programmes to release the talent and quality of Scottish enterprise and of British enterprise,
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    which has been constrained and suppressed by nationalised state ownership, introduced by the Labour party. Not a single utility or industry has not suffered drastically as a result of nationalisation. The electricity industry, the gas industry, the airlines industry and any of the other industries that have been privatised have been able to raise money in the markets, invest in modern plant and develop new prosperity and jobs.

    Local Government Reform
    Mr. David Shaw: To ask the Secretary of State for Scotland if he will make a statement on local government reforms in Scotland.
    Mr. Stewart: As the House knows, the Local Government etc. (Scotland) Bill received Royal Assent on 3 November. I am delighted that the Convention of Scottish Local Authorities has rescinded its previous policy of non-co-operation on the Bill. I look forward to all those involved working closely to deliver new councils which will provide stronger, more effective and more accountable local government.
    Mr. Shaw: I thank my hon. Friend for that reply. Can he tell me whether many people in Scotland will be pleased by the proposed abolition of Monklands district council? Is he aware that in the Airdrie and Coatbridge Advertiser recently it was stated that a letter had been sent by Councillor Brookes and other Labour councillors seeking to cover up and call a halt to my investigations into wrongdoing in Monklands district council? Is he aware that that letter was conveyed to the Privileges Committee of the House of Commons by two Members of Parliament with Monklands constituencies? Should not they be stopped from trying to cover up the wrongdoing on that council?
    Mr. Stewart: I answer my hon. Friend's more general point by saying that in the course of receiving many representations from throughout Scotland about the reorganisation of local government, we were not exactly inundated with representations to the effect that Monklands district council should be one of the new unitary authorities. The single-tier system will enable a higher degree of accountability than the complexities of the two-tier system. That was acknowledged by the Wheatley Commission and, in principle, by all political parties.
    I do not always read the Airdrie and Coatbridge Advertiser because many newspapers attract my attention. As my hon. Friend knows, the hon. Member for Monklands, West (Mr. Clarke) has for a long time been a close personal and political associate of Councillor Jim Brookes. That is public knowledge.
    Mrs. Liddell: Does the Minister agree that, given the interest of his hon. Friend the Member for Dover (Mr. Shaw) in activities in my constituency and the constituency of my hon. Friend the Member for Monklands, West (Mr. Clarke), it is absolutely reprehensible that the hon. Member for Dover has failed to make available to Professor Robert Black, who is chairing the independent inquiry, the 20 pages of information that he claims to have about those activities?

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    Does the Minister agree that the bluff of the hon. Gentleman has been comprehensively called? He should put up or shut up.
    Mr. Stewart: I recall that during the Monklands, East by-election the hon. Lady did a massive U-turn and made public her own allegations about spending bias by Monklands district council. Perhaps she will put her evidence to Professor Black.
    Mrs. Fyfe: Given that Government support to councils will be cut by £133 million in real terms next year, is there not a risk that there will be fewer, not more, nursery schools in Monklands and elsewhere in Scotland while such provision is still not a statutory duty? What happened to the Prime Minister's promise of more nursery schools and what reassurance can the Minister give to parents of children with special needs? Having disrupted local government, will he give us his word that, whoever suffers disruption in the months to come, it will not be children with special needs?
    Mr. Stewart: As I said in answer to the hon. Lady's hon. Friend the Member for Paisley, South (Mr. McMaster), the settlement is extremely fair for local government, which in Scotland spends far more per head of population than is spent in England or Wales, for reasons that I continue to find incomprehensible. Details of provision are a matter for each local authority. I hope and believe that the hon. Lady's fears will be unfounded and I repeat my pleasure that local authorities in Scotland have shown excellent common sense in co-operating with reorganisation, against the wishes of the Labour Front-Bench team.

    Community Care
    Ms Rachel Squire: To ask the Secretary of State for Scotland if he will outline his proposals for the development of community care over the next 12 months.
    Lord James Douglas-Hamilton: Considerable progress has been made in establishing the framework for the successful development of community care policy. During the next 12 months implementation work will continue in order to secure the policy objectives set out in the White Paper, "Caring for People". In particular, community facilities will be developed for those leaving long-stay hospitals, support for carers will be encouraged and a flourishing mixed economy of care promoted.
    Ms Squire: Does the Minister agree that, in the next 12 months, it is his intention to use local government reorganisation to break up existing community care arrangements and replace direct council services with contracting out and privatisation? Does he further agree that last night's Government defeat on value added tax on fuel was the best news for community care, because lower fuel costs will enable people to stay in their own homes and be cared for in the community?
    Lord James Douglas-Hamilton: I do not agree with the second point. Even after the first stage of VAT on fuel and power, gas and electricity prices are lower in real terms than they were two years ago and, as compensation will remain in place, people will already be better off. On community care, we want maximum continuity during the transition in local government arrangements and substantial resourcing has been made available. Resources
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    available to housing authorities for community care will increase next year from £25 million to between £45 million and £50 million. Spending for Scottish Homes will rise from £78 million to £82.5 million in 1994–95 and for social care—providing for community care and other matters-it will increase from £345 million to £390 million. Total new resources for authorities will increase from £170 million to £241 million—a rise of 40 per cent.—so we take seriously the problems that could arise during transition by giving strong resourcing.
    Dr. Godman: In relation to so-called community care, does the Minister agree that the care of elderly and frail people is too often left to unscrupulous owners of private residential and nursing homes? In a small handful of cases those owners double up as the residents' general practitioner. Will he give an assurance that that disgraceful doubling up of roles in relation to the care of elderly people will be halted as soon as possible, in the interests of those people?
    Lord James Douglas-Hamilton: I shall look into the matter that the hon. Gentleman mentioned, but discretionary charging has been in place under successive Governments and that will continue. Obviously we must look into the matter with great care—sensitivity must be applied.
    Dr. Spink: Is my hon. Friend satisfied that Scottish local authorities have been able to manage their budgets properly over the 12-month period?
    Lord James Douglas-Hamilton: If I understand my hon. Friend correctly, I believe that local authorities will manage their budgets properly. We have a strong incentive to make certain that that happens, and the arrangements will be properly monitored. My right hon. Friend the Minister of State will issue guidelines where necessary if there are any doubts as to the best recommended practices.
    Mr. Michael J. Martin: On the question of proper care for the elderly, will the Minister ensure that more resources go to Alzheimers Scotland? The organisation does an excellent job in supporting those carers—many of whom are elderly themselves—who are looking after loved ones with a difficult illness, with the result that the carers sometimes get only three or four hours' sleep. The organisation should be given every assistance and support by the Government.
    Lord James Douglas-Hamilton: There is, of course, a mental illness grant of £14 million which has been made available, and I will look into that particular point. I am sure that my right hon. Friend the Minister is well aware of the organisation. In the brief period during which I was responsible for the community charge, I exempted those suffering from Alzheimer's disease from the charge, as did ministerial colleagues from south of the border.

    Local Government Reform
    Mr. Kynoch: To ask the Secretary of State for Scotland what representations he has received from Scottish local authorities with regard to area structure plans in the light of local government reform.
    Mr. Stewart: My right hon. Friend has received representations from three local authorities about structure plan areas. These representations have been taken into

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    account in preparing a consultation paper, setting out our proposals for structure plan areas, which should be published within the next few days.
    Mr. Kynoch: Is my hon. Friend aware of the planning chaos in my constituency which has been brought about by the failure of the Labour and subsequent Liberal-Scottish National party administrations of Grampian regional council to submit an area structure plan, thus blocking discussions on local district plans? Is he further aware that the consequent random planning applications from developers throughout the area are causing grave concern to my constituents? In light of the imminent advent of the single-tier authority, which is much welcomed in my area, will my hon. Friend reassure me that, before Grampian region's plan—whenever it is submitted—is finally adopted, it will be submitted for local consultation?
    Mr. Stewart: I fully appreciate my hon. Friend's concerns about Grampian's structure plan. As he rightly said, the situation has been chaotic, although I cannot comment on the merits of the proposed strategies. We are keen to see an up-to-date structure plan for Grampian region in place as soon as possible, and I believe that that is in everyone's interests. We are encouraging the region to bring forward its proposals without further delay. I can certainly give my hon. Friend the assurance that he seeks regarding consultation on the Grampian structure plan—when it is submitted—before my right hon. Friend reaches his conclusions on the matter.
    Mr. Darling: Following local government reorganisation, does the Minister propose to ensure that there is a co-ordinated local authority response to the Government's plans to build another road bridge across the Forth, with its motorway network to the west of Edinburgh and its highly damaging environmental impact on the city of Edinburgh? Does the fact that the head of the roads directorate at the Scottish Office has now left signify that, at long last, Ministers have woken up to the fact that they are being taken for a very expensive ride by their own civil servants?
    Mr. Stewart: The hon. Gentleman's latter comment is beneath contempt. In relation to his general point, my right hon. Friend will be making a statement on the matter in due course.

    Solvent Abuse
    Mr. Malcolm Bruce: To ask the Secretary of State for Scotland how many people in Scotland have died as a result of solvent abuse in each of the last five years for which figures are available.
    Lord James Douglas-Hamilton: The General Register Office for Scotland recorded 12 deaths from solvent abuse in 1989, 10 in 1990, 19 in 1991, seven in 1992 and seven in 1993.
    Mr. Bruce: Does the Minister acknowledge that solvent abuse is killing more young people than all other forms of drug abuse combined? More serious than that is evidence that the abuse of solvents is much more widespread than is generally known. The Minister will be aware that the Secretary of State received a letter from me following representations from my constituent Lorraine Morrice, whose son Colin tragically died after
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    inhaling lighter fuel. Can the Minister assure the House that he will be making representations to increase awareness among young people of the risks of solvent abuse? Will he ensure that lighter fuel manufacturers put a proper warning on cans, and that shopkeepers are properly prosecuted if they sell solvents when they know that they are to be used for abusive purposes?
    Lord James Douglas-Hamilton: First, let me assure the hon. Gentleman that we send our deepest sympathy to his constituent who sustained that tragic loss.
    The hon. Gentleman has a considerable constituency interest in the charity Re-Solv. Meetings have taken place with my right hon. Friend the Minister of State about the possibility of its receiving a grant; a statement will be made soon, and the matter is being viewed sympathetically.
    I sympathise with the hon. Gentleman's aim in regard to warning labels. There is, however, a danger that an interest in solvents could be aroused in young persons. We are considering the issue, and a report will be published by the prevention working group of the Advisory Council on the Misuse of Drugs, whose recommendations we shall examine immediately and carefully. We also have many educational programmes, including videos, to increase awareness of the problem. "Solvents: A Parent's Guide" was published earlier this year, along with "Drugs and Solvents: You and Your Child". We are doing all that we can to get the dangers across to those concerned through the medium of education.
    Mr. David Marshall: Can the Minister say how successful the Solvent Abuse (Scotland) Act 1983—taken through the House by the hon. Member for Glasgow, Shettleston—has been in dealing with the serious problem of solvent abuse among young people? How much priority does his office give that worrying problem?
    Lord James Douglas-Hamilton: I congratulate the hon. Member for Glasgow, Shettleston (Mr. Marshall) on taking the Bill through the House. I believe that it has had an effect: the figures are clearly much too high, but they have fallen in recent years. We must build on that with a strong programme of educational measures. The "Drugwise 2" educational package for 10 to 14-year-olds has been distributed free of charge to all primary and secondary schools in Scotland.
    Lady Olga Maitland: Does my hon. Friend agree that solvent abuse is not unique to Scotland? Nationally, two children a week die from it, and three quarters of a million are known to be experimenting with solvents. Does my hon. Friend agree that industry too has a role to play, and that it should be encouraged to carry out research into suitable solvent substitutes that are safe?
    Lord James Douglas-Hamilton: It is certainly very desirable for industries that make solvents that could be misused to conduct research, and to act as responsibly as possible. If the hon. Member for Gordon (Mr. Bruce)—or anyone else— has any information about shopkeepers who sell youngsters substances for which they can have no legitimate use, he should bring that information to the attention of the police so that the appropriate steps can be taken.

    Water Authorities
    Mr. Worthington: To ask the Secretary of State for Scotland how he will require the new water authorities to take into account the ability of consumers to pay.
    Mr. Stewart: Methods of charging for water and sewerage services will be a matter for the new authorities. Their charges schemes will need to be approved by the Customers Council or, failing that, by my right hon. Friend the Secretary of State.
    Mr. Worthington: That is simply not good enough. At present, ability to pay is taken into account by reference to reduced council taxes and the size of people's houses. In England and Wales, by Government diktat, it is not possible to take council tax information into account in setting charge levels. Unless the new water authorities are given access to such information, they will not be able to take ability to pay into account. That will mean that the water charges of the lowest-paid workers—the worst off in the country—will double. What will the Secretary of State do to prevent that from happening?
    Mr. Stewart: I can reassure the hon. Gentleman on that subject. Where the new councils are required to collect household charges in Scotland, as is proposed in the first year, the arrangements will mirror those for council tax, including the single-person discount. I believe that that makes practical and administrative sense and will ensure an easy and efficient form of collection, and I am glad to be able to reassure not only the hon. Gentleman but the whole House on that important point.
    Mr. Graham: Is the Secretary of State aware of a recent university research study that shows that Inverclyde has one of the worst poverty rates and is one of the worst deprivation areas? Will he ensure that none of the constituents of my hon. Friend the Member for Greenock and Port Glasgow (Dr. Godman) and myself is cut off from the life-giving supply of water or the ability to clean with water?
    Mr. Stewart: I can make it absolutely clear yet again to the House, as my hon. Friend the Member for Dumfries (Sir H. Monro), the Parliamentary Under-Secretary of State, has made clear, that water and sewerage authorities in Scotland have no power to disconnect water supplies because of non-payment. The new legislation, which has been passed by the House, affirms that position in relation to the new water and sewerage authorities.
    Mr. Gallie: Is my hon. Friend aware that, in the past 30 years, Strathclyde regional council has failed to supply my constituents in Ayr with adequate sewerage facilities? If, at this late stage, the council proposes new capital schemes, will my hon. Friend give an assurance that those schemes are called in by the Scottish Office pending the taking over of the water authorities by the new water and sewerage boards?
    Mr. Stewart: My hon. Friend anticipates the answer to his question No. 20, and he will receive that in writing later this afternoon. I say to him at this stage that, first, I entirely appreciate his anxiety on that issue, which I think is absolutely genuine. However, it is, in the first instance,
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    for Kyle and Carrick district council, as planning authority, to determine Strathclyde regional council's application.
    Mr. George Robertson: Is the Minister aware that his refusal to guarantee that Scottish water bills will not climb to the astronomic levels being experienced in England and Wales is a revealing giveaway of the real agenda involved in quangoising Scotland's water? Given that the Chancellor has not yet said how he will fill the humiliating hole in his finances caused by the Government's defeat last night on VAT on fuel, and given that the Prime Minister himself would not rule out, in a letter to me in June, the possibility of putting VAT on water bills, will the Minister, this afternoon, give an absolute guarantee that VAT will not be put on Scottish water bills—or will that be yet another of the new Tory taxes from which we are already suffering?
    Mr. Stewart: I have to say to the hon. Gentleman, as I have made clear on many occasions, that, as a result of the need for new investment in water and sewerage—which was widely recognised as necessary—in Scotland water bills will have to increase.
    In general terms, however, I must say to the hon. Gentleman, in relation to the Local Government etc. (Scotland) Act 1994, that he told the public that the Bill would be stopped because he was the master of the Maastricht rebels; he was wrong in that. He said that the Bill would not get through; he was wrong about that. He said that implementation of the Bill would be delayed; he was wrong about that.
    The hon. Gentleman is wrong again. In fact, the only difference between the hon. Gentleman and the grand old Duke of York is that the grand old Duke of York led his men up to the top of the hill before marching them down. The hon. Gentleman could not get his team half way up the hill before they slipped down.

    Driftnet Fishing
    Mr. Bellingham: To ask the Secretary of State for Scotland what recent representations he has received in respect of driftnet fishing for salmon off the east coast; and if he will make a statement.
    The Parliamentary Under-Secretary of State for Scotland (Sir Hector Monro): Representations from angling and conservation interests continue to be received against the salmon driftnet fishery off the north-east coast of England.
    Mr. Bellingham: When the Minister leaves the Chamber will he go to the Ministry of Agriculture, Fisheries and Food and tell his colleagues that they are procrastinating? Surely the time has come to ban, with compensation, the north-east driftnet fishery and all driftnetting in European waters. That is the only way to stop illegal Irish netting off the west coast of Scotland. Surely salmon that migrate into Scottish rivers should be allowed to go through to those rivers to benefit the local communities.
    Sir Hector Monro: I appreciate the strength of my hon. Friend's feeling—he ensures that he makes it known every Question Time. The Minister of Agriculture, Fisheries and Food is aware of the strong views held by Scottish Office Ministers because of the effect of salmon returning to Scottish rivers to spawn and the economic

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    impact on Scottish towns where angling is carried out. That is why we are so concerned that the right decision—with the scientific evidence to back it up—should be taken. The number of licences has been reduced to 114 through the net limitation order, and we are having
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    continuing discussions. The driftnet fishery in the Bay of Biscay and off the south-west approaches is being discussed by the European Union fishing committee and will be a matter for discussion at the next meeting later this month.

Bosnia
3.30 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Douglas Hurd): With permission, Madam Speaker, I should like to make a statement on Bosnia.
The situation on the ground deteriorated over the past month. Around the Bihac pocket, Bosnian Government forces launched an attack, but were then forced back by the Bosnian Serbs. The Bosnian Serbs, with support from Croatian Serb forces and rebel Bosnian Muslims, have taken the fighting into the United Nations safe area. That contravention of Security Council resolutions led the commanders of the United Nations force and NATO to call for and carry out air strikes to deter attacks against the safe area.
The fighting has also intensified in central Bosnia, with Bosnian Government forces making gains against the Bosnian Serbs. In the safe areas of Sarajevo, Gorazde and Srebrenica, the civilian populations and the United Nations contingents are short of supplies as convoys have been held up. More than 400 United Nations troops had their movements limited by the Bosnian Serbs. Some were effectively held hostage.
That was the situation which faced the Ministers of the Contact Group when we met on 2 December. The Contact Group countries—Britain, France, Germany, Russia, and the United States—united in calling for an immediate ceasefire in the Bihac pocket, including the withdrawal of Bosnian Serb and Croatian Serb forces from the safe area. We also called for talks to begin on a comprehensive agreement to cease hostilities throughout Bosnia.
The Contact Group supported the United Nations Protection Force's—UNPROFOR' s—mission, and demanded immediate freedom of movement for UNPROFOR and for humanitarian supplies throughout the country. Only once those steps have been taken and the Bosnian Serbs have accepted the Contact Group plan as the basis for a settlement can negotiations continue.
At the meeting last Friday night, the Contact Group reaffirmed the plan that we adopted last July. Under this plan, the integrity of Bosnia-Herzegovina would be preserved. The Bosnian Serbs would withdraw and hold 49 per cent. of the territory rather than more than 70 per cent., as they do today. The Bosnian Federation of Croats and Muslims would hold 51 per cent. whereas it holds less than 30 per cent. now.
We reiterated that the territorial proposal—the map of the 51 per cent. and 49 per cent—could be adjusted by mutual agreement between the parties. Constitutional arrangements agreeable to the parties would also need to be drawn up—they would preserve the integrity of Bosnia-Herzegovina and allow equitable and balanced arrangements for the Bosnian-Croat federation and the Bosnian-Serb entity.
We agreed that our officials would help the parties to reach a settlement on those issues. We did not discuss the lifting of the arms embargo or any change in the arrangements for the use of NATO air power in support of the UN.
Our purpose at that meeting was to re-launch the political process following agreement, which we hope will come soon, on a ceasefire. To carry this forward, I went to Belgrade with my French colleague, Mr. Juppé for
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talks with President Milosevic. Mr. Milosevic welcomed the clarifications we were able to provide. He said that they would help him to put again to the Bosnian Serb Assembly the case for accepting the peace plan which he has accepted for some months.
The next day, Monday, more than 20 members—or more than a quarter—of the Bosnian Serb Assembly saw Mr. Milosevic in Belgrade, and afterwards they put out a statement saying that, in the light of the clarifications made to the Contact Group plan, the Pale Assembly should consider accepting it and entering negotiations on the map and the constitution to reach a final settlement. It is an encouraging step forward, but it is not enough, because the Bosnian Serb leadership has yet to accept the plan.
At the CSCE summit which my right hon. Friend the Prime Minister and I attended in Budapest on 5 and 6 December, I met President Izetbegovic of the Bosnian Federation, President Tudjman of Croatia and the Secretaries-Generals of the UN and NATO.
The three Presidents all accept the Contact Group plan for Bosnia; they accept the continued presence of the UN force, and are all willing in principle to agree to a ceasefire throughout Bosnia—as are the Bosnian Serbs—although there remains a disagreement over its duration. We hope that the UN special representative, Mr. Akashi, will be able to make progress on a ceasefire this week.
Her Majesty's Government want the UN force to be able to continue its mission and the British contingent to continue to play a major part, but we must be clear about its role. It is not there to impose solutions on unwilling parties, it cannot fight on one side, and it does not defend one army's territories against the attacks of another. It is there to support the impressive aid effort—much of it British—to buttress ceasefires where they exist and, within its limitations, to underpin the safe areas and exclusion zones designated by the UN and NATO.
Withdrawal would be a difficult operation in itself, and the consequences for the civilians whom the forces are there to protect would be severe, but UNPROFOR can continue its mission only if it can do so without unacceptable risk, and if it can continue to fulfil its mandate. As with all military operations, planning is in hand to cover many possible events, including withdrawal, and the plans are constantly updated. The Government are not considering a unilateral withdrawal of the British contingent; we are working with our partners in NATO and the UN.
Our preferred way forward is clear, and I hope it commends itself to the House: first, a ceasefire in the Bihac safe area and throughout Bosnia; secondly, agreement on the free movement of UNPROFOR and for aid convoys; thirdly, resumption of urgent negotiations for a peace settlement on the basis of the Contact Group plan; fourthly, once agreement has been reached, withdrawal by the Bosnian Serbs from the land they hold to the new lines agreed.
Finally, I welcome some progress on agreement between the Croatian Government and the Croatian Serbs. Last week, they signed an economic agreement which provides for the resumption of oil, water and electricity links between the Serb-held areas of Croatia and the rest of the country, and reopening the highway between

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Zagreb and Belgrade. This was achieved after months of patient diplomacy between Lord Owen and Mr. Stoltenberg.
I hope that the agreement can be implemented soon. It improves the prospects for negotiations leading to a lasting political settlement in Croatia and for normalisation of ties between Croatia and Serbia.
Mr. Robin Cook: May I first express our appreciation for the fortitude and persistence which continues to be shown by all British troops in Bosnia? The whole House can take pride that, in the face of increasing tension, our troops have demonstrated the resolve to maintain aid to 2 million Bosnians who depend on the UN presence for food and fuel, and whose lives would be at risk if that presence was withdrawn in the worst of winter. May I also welcome the fact that both the European and the US members of the Contact Group now appear to be working to a common plan?
The Foreign Secretary, however, must be aware that the events of the past months have sharpened questions about the nature and the purpose of UN intervention in Bosnia. Will the Foreign Secretary recognise that the assault on Bihac has exposed the inability of the UN to defend safe havens which the UN itself has designated?
The Foreign Secretary's statement refers to action being taken to underpin the safe havens. I put it to the right hon. Gentleman that what is required is action to ensure that the remaining safe havens do not go the same way as Bihac. Does the Contact Group have any proposals to demilitarise the remaining safe havens so that they do not invite the same fate as Bihac? Does the United Nations have any plans to reinforce the troops around safe havens? Does the Foreign Secretary agree that critics in the US Congress and Senate would carry more authority if they were prepared to commit a single service man to defend those safe havens?
On the wider role of UNPROFOR, is the Foreign Secretary not concerned at the evident loss in authority of the UN's military presence? Does he understand the public frustration that soldiers of the world community can apparently be held to ransom by Bosnian Serbs with a total population of barely 1 million? Does it not encourage Bosnian Serbs to treat the UN presence with contempt rather than respect if they discover that hostage-taking is rewarded with concessions? Is that not the surest way to guarantee that hostage-taking will increase?
The Foreign Secretary will also be aware that public revulsion at the conflict in Bosnia is so strong because it is a war waged against the civilian population. Can we therefore be satisfied that only one person has yet been indicted before the UN war crimes tribunal, two years after it was set up in response to the horrors of ethnic cleansing and mass rape? Is there not a danger that the tedious progress of that tribunal is one more signal to the Bosnian Serbs that the world community will acquiesce in whatever outcome they can achieve by force of arms?
The Foreign Secretary will recall that, in the debate on the Queen's Speech, I expressed our view that any lasting, just peace must be based on the integrity of Bosnia's borders and the right of refugees to return to the areas from which they have been expelled. Therefore, will the Foreign Secretary clarify what is meant in his statement by
"equitable and balanced arrangements for the … Bosnian-Serb entity"?
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Is he aware that the press have reported that as some form of confederation with Serbia? Would he himself recognise that any offer of association between Bosnian Serbs and the state of Serbia that compromised the sovereignty of Bosnia will be seen as an admission by the west that it has given up on trying to restore Bosnia as an independent state?
What future does the Foreign Secretary now see for the Muslim population of Bosnia? What equitable and balanced arrangements are now available to them, and can they have a viable future if they are confined to a broken state covering only a third of the former Bosnia and almost entirety surrounded by greater Serbia, in reality if not in name?
I began by saying that the House can take pride in our troops in Bosnia who have shown firmness and dedication. However, no hon. Member can be proud of the response to the crisis in Bosnia of the world community which has shown indecision and division. Let us at least ensure that any settlement should not sanction the conquest of territory by force of arms, should not isolate the Muslim communities of Bosnia, and should not weaken the authority of the UN to intervene the next time one of its members is the victim of aggression.
Mr. Hurd: I thank the hon. Gentleman for what he said about our troops. I am also glad that he pointed out one truth which has not always been so. I have had a strong feeling in the past few weeks that we are working together more completely with the US Administration on Bosnia than we have been for a long time. For example, a statement such as President Clinton's in Budapest two days ago that no one will win a military victory there, so we must work for a negotiated settlement, has, when we have made it in the past, sometimes been attacked. It is a good thing that that comes from the President of the United States, and is backed up by what United States diplomacy is doing.
I entirely share the hon. Gentleman's concern and the public frustration about which he talked. I also share his concern about the UN's loss of authority. All members of the UN, but particularly those who are troop contributors, have all the time to review and assess whether the difficulties, which the hon. Gentleman is undoubtedly accurate in describing, outweigh the good that can be done. If they do, and if the risks become unacceptable, the troops should be withdrawn; but, as I said, we do not believe that we have reached that point.
My right hon. and learned Friend the Secretary of State for Defence has just returned, and he tells me that, in central Bosnia, where most of our troops are, and where there is not much news because there is not much disaster, the situation has improved considerably. Thanks to our troops and to the UN, 90 per cent. of the towns in that part of the country now have electricity, running water and basic medical facilities, and roads that used to be blocked are now open, with supplies flowing freely along them. That would not have happened without our forces, and it would probably be at risk if they were withdrawn. That is the balance that we have to strike.
The hon. Gentleman is right to draw attention to the war crimes tribunal. Such matters always move slowly; he will understand that from his knowledge of the profession. But, as he rightly says, there is already one case, and evidence is being collected for others.

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As for the constitutional arrangements, the hon. Gentleman will know that it has already been agreed in principle that the federation—that is, Muslims and Croats combined—could have a special relationship with Croatia. That was agreed in Washington in February. We are saying that it may be possible for the parties to agree that there should be a fair, balanced and equal relationship between the Bosnian Serbs and Serbia.
That has to be agreed; it cannot be imposed. We are not suggesting for the Bosnian Serbs anything that is not available for the Croats and Muslims, but it may not be possible to agree on that. We are talking not about a confederation but about constitutional arrangements within the integrity of Bosnia-Herzegovina.
There are certainly lessons to be drawn from all this, and when the war is over they will have to be drawn. I could easily detain the House for a long time talking about what they are, but our first priority must be to do what we can from the outside, which is limited. We must do what we can to create the ideas and pressures by which a negotiated settlement can be reached—meanwhile, so long as we can, saving lives and keeping some kind of life flowing and continuing in the parts of Bosnia that we can reach.
Mr. David Howell: Does my right hon. Friend accept that, as the Opposition spokesman, the hon. Member for Livingston (Mr. Cook), said, there is indeed deep and widespread admiration both for our troops and for General Rose, who is trying to perform his duties in an agonisingly difficult situation? However, if the UN cannot defend its own safe areas and if UN personnel are being taken hostage, it is true that the time may rapidly come when the position becomes impossible and we have to prepare for withdrawal. I am glad that the preparatory arrangements are always in hand.
Does my right hon. Friend also accept that, whatever is decided in Bosnia, it does not justify the tearing down and the destruction of NATO? Will he explain to his American opposite numbers and to some members of the American Congress that what their magnificent forebears and predecessors built up with us over 40 years for the security of the Atlantic and of Europe should not be idly torn down simply because there are disagreements over Bosnia?
Mr. Hurd: My right hon. Friend is entirely right. NATO is a collective security organisation, and its whole basis is that an attack on any one of us is an attack on all of us. That has to continue, because we continue to live in a dangerous world. Last week, in the NATO Council, we were devising ways in which that stability and assurance could be extended eastward to countries such as Poland and Hungary, while keeping or building up a partnership with Russia. That is the next NATO task.
What NATO is doing in Bosnia is trying to help the UN—enforcing a no-fly zone, which it has done, and seeking, as it has also done, to deal with the problems of heavy weapons—but always in consultation with the UN. That is a task that NATO has assumed in Bosnia, but it is not central to the continuation of the organisation.
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NATO is there as a collective security organisation, binding the two sides of the Atlantic together, and in our view it is essential that that should continue.
Mr. Menzies Campbell: Arising out of meetings that the Secretary of State has had in the past week, especially those with senior members of the Clinton Administration, can he confirm that, if the withdrawal of our troops becomes necessary, there will be available to them the full and unstinted resources of NATO, including those of the United States?
The Foreign Secretary was right to draw attention to the entirely sensible observations of his right hon. and learned Friend the Secretary of State for Defence about the fact that, away from Bihac, substantial good work can still be done. Can the Foreign Secretary confirm that, as long as that work can be done and as long as the mandates of the United Nations can be substantially, even if not completely, implemented, British troops will remain? Indeed, can he confirm that the British Government will neither withdraw unilaterally nor argue for such a withdrawal?
Mr. Hurd: American participation in the withdrawal of the UN force would be essential; that is accepted in principle by the United States Administration. As I have said, the actual planning is in hand; I do not think that I can go further than that. The hon. and learned Gentleman is correct: we are not talking about and we are not contemplating unilateral withdrawal, as I said in my statement.
Mr. Patrick Cormack: Will my right hon. Friend accept that, in the three years in which aggressive conquest has been building in greater Serbia, the international community in general, and the UN and NATO in particular, have had their credibility severely damaged? Now that everyone concerned, except the Bosnian Serbs, accepts the Contact Group's plan, should we not stop pretending to be impartial between the fire brigade and the fire? Would it not be appropriate for the Bosnian Serbs to be told that there will be massive retaliatory action from the air if they damage any further the concept of the safe area?
Mr. Hurd: NATO and the UN have worked out together ways in which NATO air power can be used to protect UN forces, to deal with heavy weapons in or around the safe areas and to enforce the no-fly zone. That has to be done with co-operation between NATO and the UN, because the UN is the responsible commander on the ground and only the UN can assess the impact on the ground of any particular action. That sometimes causes impatience among observers who especially favour stronger NATO action, but it is a reality which has to be accepted. That is compatible with the use of air power, as we have seen.
My hon. Friend, who has followed this matter with care and with fervent opinion through the years, somewhat exaggerates in his question the possible role of air power. Air power has its role, and I have just described what that role could be. The idea, however, that one can use air power to alter the policy of a Government or to bring recalcitrant people to the conference table is misguided, and has often proved to be misguided in the past.
Mr. John Home Robertson: The Secretary of State may be aware that, during the summer

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recess, I spent four weeks driving a lorry in a relief convoy in central Bosnia. Does he accept that it would be absolutely impossible to deliver essential supplies to 3 million people living in the area without the protection and support of UNPROFOR and without the peace that UNPROFOR has achieved between the Bosnian Government and the Bosnian Croats?
Does he acknowledge that it would be reckless if all those achievements were jeopardised by the premature withdrawal of UNPROFOR as a result of statements by American politicians who understand little about what is happening on the ground in Bosnia? Has the Secretary of State had any indication from the Americans that they are prepared to deploy troops on the ground, or do they seriously think that they can solve the problem with air power?
Mr. Hurd: No, I have had no indication that the Americans would be prepared to put troops on the ground. The hon. Member, who speaks from experience, is right about what is being achieved in central Bosnia. My right hon. and learned Friend the Secretary of State for Defence confirms that. At the moment, convoys do not need military escorts because the roads are clear, but if the UN forces withdrew, those convoys would be at risk. That is one of the factors, although not the only one, that we have to weigh up.
The situation in Sarajevo is another. Last year, 1,500 shells daily landed in Sarajevo; they are now very rare. Sarajevo is not back to normal life by any manner of means—it is a skeleton town—but at least people are not being shelled and bombarded every day as they were before. Again, that is something that we must weigh up.
Mr. Michael Alison: Will my right hon. Friend further confirm the Government's full support and approval, in spite of American criticisms, for the key role being played by General Sir Michael Rose in Bosnia? Does my right hon. Friend agree that General Rose's combination of patience, courage and deep humanitarian concern is in the very highest traditions of British military prowess being deployed in the cause of peace?
Mr. Hurd: I am grateful to my right hon. Friend. I entirely agree with what he says. I saw the transcript of one particularly unjustified attack on General Rose yesterday morning by the Bosnian ambassador to the UN. I do not think that anyone will think the worse of General Rose because of that sneering attack. The only person of whom we may think worse is the person who uttered it.
I hold no brief for the Bosnian Serbs—they have shown themselves barbarous, brutal and often murderous—but the indignation and frustration at what they do, which builds up in all of us, especially, obviously, in their victims on the ground, should not lead us into rhetoric and illusion, let alone into attacking in words those who are doing their best to save lives in Bosnia.
Mr. Calum Macdonald: The response of the Contact Group to every Serbian advance or attack is simply to revise the Contact Group plan to make it more acceptable to the Serbs. Will the Foreign Secretary explain how that can give the Serbs an incentive to negotiate meaningfully? Surely they will not negotiate
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until they suffer military reversals themselves. Should not the western community be thinking about how to inflict such reversals on them?
Mr. Hurd: I do not know what the hon. Gentleman means by introducing new concessions to the Bosnian Serbs. We have not done that—[Hon. MEMBERS: "Yes."] No, we have not. We are on the same map, and we are talking as we did in the summer. The phrase about balanced arrangements, about which the hon. Member for Livingston (Mr. Cook) questioned me, was there in the summer.
We are not claiming any privileged position for the Bosnian Serbs. We are talking about equitable and balanced arrangements inside Bosnia-Herzegovina, with its present frontiers. We are simply trying to find ways in which to put this, of persuading the Bosnian Serbs that they will not have a settled or accepted future simply by trying to hang on by force to the villages and towns which they now hold. President Milosevic is trying to do the same.
My own feeling is that this situation will turn in the right direction once President Milosevic brings, in one way or another, his fellow Serbs across the border of Bosnia-Herzegovina to accept, as he has accepted, that the only bright or durable future for them lies in accepting our plan.
Sir Peter Fry: Would my right hon. Friend say a little more about the approaches that he has had from President Milosevic? From the outside, it appears that greater Serbia is nearer to reality today than it has been, perhaps, for many years. Therefore, is my right hon. Friend satisfied in his own mind that President Milosevic is not co-operating merely to see the sanctions against Serbia further reduced and because he has abandoned the idea of a greater Serbia? What does my right hon. Friend think?
Mr. Hurd: President Milosevic has his own reasons. Undoubtedly, the imposition of sanctions is one of them, and he is seeking greater relief. The French Foreign Minister and I made it clear to him that we saw no prospect of further relief of sanctions against Serbia simply because Serbia accepts the Contact Group plan. He has had a bit of relief, as my hon. Friend knows. Belgrade airport is open and certain events which were prevented are now possible; but the main bulk of sanctions cannot be lifted—we have made this clear to him—until the Bosnian Serbs have accepted the plan and until this agreement, which I mentioned at the end of my statement and which is very important, between the Croatian Serbs and the Croatian Government, is implemented.
Mr. Dennis Skinner: When is the Foreign Secretary going to realise that Britain, with its so-called grandeur of an imperial past, cannot poke its nose into the civil wars going on around the world? There are more than 25 going on at the present time. Why should any Serb, or a Muslim fighting another Muslim, believe that they have to listen to the authority of a broken-backed Government who cannot even control their own rebels, who have lost their majority, and who cannot raise their

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taxes? One thing the Government want to be sure of is that, if they came forward with any legislation, the chances are that they would lose that as well.
Mr. Hurd: That is the kind of utterance to which I am accustomed from Mr. Karadzic rather than from hon. Members.
Mr. John Wilkinson: Did my right hon. Friend detect any significant change in attitude on the part of the Russians, particularly at the meeting in Budapest of the conference on security and co-operation in Europe? Was there not some difficulty in concluding an agreed communiqué with them? If that was the case, does that extend to their attitude to Serb ambitions in the former Yugoslavia, and could it be an impediment to peace in Bosnia?
Mr. Hurd: We spent several hours on Friday night with the Russians in the Contact Group. The Prime Minister saw President Yeltsin on the first morning of the conference in Budapest. I had an hour and a half with Mr. Kozyrev, some of it alone, yesterday. I am perfectly clear that the Russians are working, like the Americans, French, Germans and ourselves, for a negotiated settlement on the basis of a 51 per cent./49 per cent. split in the map and what we agreed in the rest of the document.
The Russians believe that President Milosevic is entitled now to further relief on sanctions than the international community has given him. That is the main difference between us. They know that that is not realistic at the moment. They are working, therefore, for the success of the international effort that I have described.
Mr. Robert N. Wareing: Why is it that, in 1991, the British Government, along with the German Government, were not prepared to respect the integrity of the former Yugoslavia, yet now we are told that we must defend the integrity of a state, Bosnia, which is not viable and which really requires partitioning so that the Croats and the Serbs can have a special relationship with Croatia proper and Serbia proper? Why was it right in one case to defy the integrity of an internationally recognised state, whereas now it is not?
Mr. Hurd: I will not go back to the history of 1991, which I have often debated with the hon. Gentleman. If we look at the ethnic map of Bosnia, we see that it is really not practicable—in my view, at any rate—to think of a partition plan. Leaving aside the morality of it, I do not think that it is simply practicable in effect, because of the way in which the communities are interspersed.
I do not accept the hon. Gentleman's thesis. I have much sympathy with what the Bosnian Government in Sarajevo say about the matter. For years and years, those people lived together in the former Yugoslavia, with all its faults, under the kings and under the communists. They joined the same professions, and they served in the same army. They were not hating and killing each other.
Now that has disintegrated, but it has to be reintegrated. That is why I believe that it is right to say that there should be a country called Bosnia-Herzegovina and that
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those are its frontiers, but, inside it, there have to be arrangements in which the three communities can live together.
Sir Jim Spicer: I thank my right hon. Friend for his remarks about the use of air power. Will he refer all those who call for massive air strikes back to other occasions when we have had that ability—for example, the Ardennes and Korea—when a beaten army on the ground was still able to inflict massive casualties on our armed forces? There is no solution that way. My right hon. Friend knows it, and we all know it.
My right hon. Friend said that there was no military solution. All rational people in this House, and indeed throughout the world, know that that is the case, but can my right hon. Friend say that the same will apply on the ground? We are not dealing with armies that are working on a control system. They are operating of their own volition. It is a case of order, attack, disorder, counter-attack and attack again. In those circumstances, what chance can there ever be of our achieving anything? For once, I agree with the hon. Member for Bolsover (Mr. Skinner)—that, at the end of the day, the matter must be sorted out by the people on the ground.
Mr. Hurd: In answer to my hon. Friend's first point, there is a long history of over-optimism about air power. To the examples that my hon. Friend gave I simply add Iraq. We bombed Saddam Hussein intensively for a long time using the latest technology, but it was not sufficient to force him to withdraw from Kuwait. There is a long history of wishful thinking about air power, and it is sad that it has surfaced again, even among people whose experience should have taught them otherwise.
I agree with my hon. Friend's final point—indeed, I have made it often enough, and been accused of being an appeaser and a defeatist for doing so. The fighting will cease when those who are doing the fighting decide to stop and when there are no longer military leaders whispering in the ears of Bosnian politicians: "Don't compromise, don't talk, just give me a few more months and I will really smash the enemy." That advice has been listened to too often, and it is always wrong.
My hon. Friend is correct when he describes the intermingling and sometimes chaotic nature of commands and forces, and therefore the difficulty of having a tidy ceasefire. That is what the United Nations and the forces concerned frequently discuss and occasionally achieve. To a substantial extent, it has been achieved in the area where most of the British troops are deployed—in central Bosnia.
Mr. John Hutton: Whilst accepting that all the units which have contributed to the UNPROFOR mission in the former Yugoslavia have performed their tasks extremely well, does the Foreign Secretary accept that this miserable and depressing episode reveals a deficiency in the way that the United Nations considers deploying force in support of Security Council resolutions? What thoughts and proposals does the Foreign Secretary have about finding a way to improve the delivery of force to support United Nations

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Security Council resolutions? What consideration has he given to the permanent convening of the Military Staff Committee of the United Nations?
Mr. Hurd: I think that the Military Staff Committee—which was set up in 1945 in quite different circumstances—is not the right body to deal with the matter.
The hon. Member is quite right, and I will send him details of the proposals that we have made precisely for the establishment of a proper general staff at the UN, so that all the efforts which the hon. Member for Bolsover (Mr. Skinner) scorns so mightily will have a chance of success.
Some efforts have failed, and some have succeeded, but problems will continue to arise, particularly in the form of savage civil wars in independent countries. The United Nations has to be better equipped with preventive diplomacy—that is the first thing—and, where that fails, with the quicker and more effective deployment of a force.
Mr. Iain Duncan Smith: Does my right hon. Friend agree that we face a problem in that we seem to be straddling two stools of humanitarian aid delivery and, to some degree, limited peacekeeping? As British forces are being taken hostage and our forces consistently come under fire, I press him to define slightly more clearly what he means by "unacceptable risk", given that the definition shifts continually and we must then change our sights each time.
Mr. Hurd: At the moment no British contingents are being held by the Bosnian Serbs or being prevented from moving, although other United Nations forces are currently in that situation. At the moment, the situation with our own forces has eased somewhat, although my hon. Friend knows that the problem might recur.
He knows the difficulty of defining "unacceptable risk". My right hon. and learned Friend the Secretary of State for Defence, his advisers and the whole Cabinet have to review it and weigh it constantly. We always tell the House the results of our striking the balance on each occasion.
Mr. David Winnick: Is it not obvious that the Serbian warlords—many of them outright war criminals—are daily humiliating the United Nations and its authority, knowing full well that member Governments do not have the political will to resist what is happening in safe areas? Having listened to some of the exchanges in the House today, if one were to change the word "Bosnia" to "Czechoslovakia", it is easy to imagine what it must have been like in the House of Commons in 1938. The air of Munich pervades this place, which is very unfortunate when it comes to resisting aggression in other countries.
Mr. Hurd: That is a frequent but ludicrous comparison. I do not know whether the hon. Gentleman comments out of ignorance, but he grotesquely over-simplifies the situation. He speaks of the "Serbian warlords". Is he talking about President Milosevic, who had a heavy responsibility for starting and abetting the war, but who is now seeking to prevent it? Or is he just talking about Mr. Karadzic, in which case I join with him?
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The comparison with Czechoslovakia and Munich is way out of line. We are seeking to get away from the type of illusion which the hon. Gentleman has, sincerely, promoted for a long time. Unless he shares the illusion about air power, he has never answered the question how the objective that he has stated is to be realised without the intervention of a huge semi-imperial army to impose a particular solution on the ground.
Mr. Quentin Davies: Does my right hon. Friend agree that two potential disasters must be avoided at all costs? One is a devastating humiliation of international law, and the other is a devastating humiliation of NATO. Does he agree that it does not make much sense to signal to the Serbs that the worse they behave, the more likely it is that United Nations forces, which act as some constraint on their behaviour, will be withdrawn? Is it not a fact that it is an act of war to capture or take hostage troops of another power? Is it not about time that we made it clear to the Serbs that we make that interpretation of their recent behaviour?
Mr. Hurd: The job of the UN force has been clearly defined. It is defined in the Security Council resolutions, and it has been frequently defined by General Rose. He holds to that definition. People in relatively secure positions are always urging on him this tactic or the other. When he started, he gained a reputation for being tough with the Serbs. He gained ground in that way. Now he is being accused, wholly unfairly, of being over-soft and not doing all he could with the resources at his disposal.
The UN commanders are using to the best effect the resources at their disposal. I wish that there were more resources on the ground. I wish that the appeal which was made in resolution 836 and others had been listened to by more countries. I am glad that we and the French are the two main countries to have contributed. I hope that we can continue to do so.
I do not believe in changing the mandate so as to render the task impossible. I believe in maintaining the mandate and enabling those on the ground to maintain their work as best they can, which will not be perfectly, so long as they believe that the good that they are doing and the lives that they are saving outweigh the loss of authority that they are suffering.
Mr. Max Madden: Does the Foreign Secretary understand that his latest statement reeks of further betrayal of the people of Bosnia-Herzegovina, and of further appeasement of the Serbs of Pale and Belgrade? Does he understand that the advent of a greater Serbian confederation would be the final reward for aggression, genocide and ethnic cleansing? Does he understand that, if UNPROFOR is withdrawn, the troops will have to walk out, leaving behind their weapons and equipment, and that their humiliation will be entirely the responsibility of politicians in the UN, NATO and the European Union, who have consistently refused the people of Bosnia-Herzegovina the means of their self-defence?
Mr. Hurd: As far as I can tell from the hon. Gentleman's question, he suggests lifting the arms embargo and keeping UNPROFOR in place. He criticises both parts of our policy. His suggestion is wholly unreal.

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The idea that the west should start supplying one side in the war with arms yet seek to maintain a peacekeeping force in the middle of the war is completely unreal.
Mr. Harold Elletson: Does my right hon. Friend agree that events in Bihac have shown two facts which are uncomfortable for many hon. Members? They are, first, that those who claimed that United Nations safe havens were being used as launch pads for Bosnian Muslim aggression and should be demilitarised as quickly as possible have been proved right; and secondly, that talk of lifting the arms embargo has merely encouraged the Bosnian Government to continue fighting, much to their disadvantage, and scuppered the chance for peace.
Mr. Hurd: On the first question, the Security Council's resolutions on safe areas, resolution 836 in particular, did two things—appealed for more troops and, in a crisis, declared areas safe. In an orderly and logical world, one would wait until one had the troops before one declared the area safe, but the world was not logical. Bosnia was in crisis and the Security Council thought that it was important to do something at that stage to help and so it did that.
Of course it would have been better, and the situation on the ground would be more secure, if there were a fully equipped and organised United Nations force in Bihac, instead of 1,400 Bangladeshis and ditto in the other areas. Our troops are in Gorazde and the Dutch are in Srebrenica, but the response to the UN Secretary-General's appeal has never been sufficient.
On my hon. Friend's second point, no Government are pressing for the lifting of the arms embargo. There have been times when that moment approached, and times when the Bosnians pressed hard for it, but when they realised that it would mean the withdrawal of UNPROFOR, they said, "No, we don't want an immediate lifting of the embargo. We would rather put it off until the spring and see what can be done meanwhile." Although there is still support in principle for the lifting of the embargo, no Government are pressing for that immediately, and for very good reason.
Ms Joyce Quin: May I press the Foreign Secretary on what he said about the future of the safe areas? What future does he think there is in Bihac? Will he respond to the questions that my hon. Friend the Member for Livingston (Mr. Cook) asked on what is being done to make the remaining safe areas safer for the future? Finally, can he give us assurances about the security and availability of supplies to our troops during the winter? We know from the long history of this situation that that is a difficult time for the troops and the civilian population. I am sure that we would all welcome reassurances on that score.
Mr. Hurd: As regards Bihac, there has been no significant change during the past few days, as fighting continues around the outskirts of the town, and Bosnian Government forces are still in the town. There has been some shelling around the outside of the town, and fighting continues in the rest of the Bihac pocket. The United Nations is seeking to get convoys through. I think that a convoy reached Bihac the day before yesterday, and a British convoy got through to Gorazde. That is part of the
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essential process of keeping supplies moving for the United Nations forces and the civilian population, which is especially important as winter approaches, as the hon. Lady said.
Several hon Members rose—
Madam Speaker: Order. We must now move on.

Points of Order
4.17 pm
Mr. Tam Dalyell: On a point of order, Madam Speaker. This House operates on the basis that debates are answered by a Minister with ministerial, or at least departmental, responsibility. I do not want to make a party point of this, because I know that the situation would be exactly the same under a Labour Government, but the Crown Office has not been able to answer debates in this House for many years.
That becomes a very serious matter when, in the biggest case of murder in the western world, the lead Department, along with the Foreign Office, is the Crown Office. On Tuesday 13 December 1994, on the motion for the Adjournment of the Scottish Grand Committee, under Standing Order No. 94H(6), you have given me leave to raise the subject of the Crown Office in relation to the Lockerbie investigation.
I do not wish to be disparaging about him in any way, but, under the present set-up, the hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) will be the Minister to respond. To be frank—I am not in any way using pejorative language about him personally—he is a messenger in that matter. The Scottish Office has little, if any, direct responsibility for matters of the Crown Office.
Mr. Robin Cook: None at all.
Mr. Dalyell: As my hon. Friend says: that is precisely the situation. The Crown Office goes to endless lengths to say how separate it is from the Scottish Office, and that is indeed the position.
My point of order is that there is a very grey area, which I will raise under the new dispensation. The usual channels believed that part of the reason for the reforms of the Scottish Office and the Scottish Grand Committee was precisely that the Crown Office could answer directly for itself, and make statements. It can make statements, but surely Departments which can make statements can also answer Adjournment debates.
Has there been any approach to allow the Crown Office to answer the debate? If there were such an approach from the Scottish Office and from the Government, would you cast a benevolent eye on it?
Madam Speaker: The hon. Gentleman raised this matter in the House with me only last week, and I can only refer him to what I said on that occasion. The Standing Orders, which were agreed by this House only recently, do not allow the Lord Advocate to respond to Adjournment debates. That is what the hon. Gentleman is seeking.
As I told the hon. Gentleman last week, he must find a way to amend Standing Orders if he wishes the Lord Advocate to respond to an Adjournment debate.
Mr. Ian Bruce: On a point of order, Madam Speaker. In columns 243 and 245 of yesterday's Hansard, it is reported that I voted both for and against the Opposition amendment, while the hon. Member for Gordon (Mr. Bruce) is recorded as being absent from both Lobbies. Could this be put right, or—in view of the fact that the authorities appear not to have been able to record
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the votes correctly—could we have a re-run? We would then at least be able put the interest rate increases back in the bag.
Madam Speaker: The error has been noted, and an amendment has been made.
Mr. William Cash: On a point of order, Madam Speaker. Under article 11 of the own resources decision, which we are about to debate with respect to—
Madam Speaker: Order. The hon. Gentleman will realise that that matter will be dealt with in Committee by the Chairman of Ways and Means. We shall now go into Committee, if the House will allow me to proceed. I must inform the House that I have not selected the instruction.

European Communities (Finance) Bill
Considered in Committee.
[MR. MICHAEL MORRIS in the Chair]

Clause 1

  EXTENDED MEANING OF "THE TREATIES" AND " THE COMMUNITY TREATIES"
  Motion made, and Question proposed, That the clause stand part of the Bill.
  4.23 pm
  Mr. Andrew Smith: On a point of order, Mr. Morris. First, may I welcome you to the Chair for our deliberations? It is quite like old times, and there are many familiar faces here from the debates on the Maastricht Bill. We now have an extra party, over and above what we had then, but that can only enliven our deliberations.
  Have you received any indication of the Government's intention to make a statement as to which of the new clauses that you have selected for debate represent essential matters of the Bill and which—in the Prime Minister's understanding—represent matters of confidence and which do not? If the House is to vote to bring down the Government, it perhaps ought to know when it is doing so.
  The Chairman of Ways and Means (Mr. Michael Morris): The Chair welcomes the initial comment from the hon. Gentleman, and also welcomes the prospect of getting on with the new clauses.
  The Paymaster General (Mr. David Heathcoat-Amory): Further to that point of order, Mr. Morris. It may assist the House if I point out that the Government attach the highest importance to the passage of the Bill, and have asked my right hon. and hon. Friends to attend accordingly. My right hon. Friend the Prime Minister said that the Bill must pass in all its essentials. That clearly refers to the clause 1 stand part debate which we will have shortly, and also to the Third Reading of the Bill.
  Mr. William Cash: On a point of order, Mr. Morris. Article 11 of the decision that we are to discuss within the context of the Bill says that the decision shall enter into force on the first day of the month following the receipt of the last of the notifications received from the member states in accordance with their respective constitutional requirements. It adds that the decision shall take effect on 1 January 1995.
  It is crystal clear that the Dutch Parliament has no chance whatever of managing to complete its procedures by 1 January 1995; indeed, that may well not happen until the end of February. I should therefore be glad if some consideration could be given to the effect on the requirement of an overriding European legal position by virtue of the decision that the measure must come into effect on 1 January 1995 to be effective.
  The Chairman: The hon. Gentleman will recognise that that is a matter of argument. My responsibilities are to the United Kingdom Parliament.
  Mr. Alex Salmond: On a point of order, Mr. Morris. It seems to have been made clear that
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  votes on clause 1 stand part and Third Reading will in effect be votes of confidence, presumably with the full authority of the Government Front Bench—whatever that may be now. Does that mean that other votes, if they take place, will not be votes of confidence? I am sure that that is of great interest to Conservative Members. Is it absolutely clear that two votes will be votes of confidence—according to the Government Front Bench—while the others will not be?
  The Chairman: As an experienced Member of Parliament, the hon. Gentleman will know that it is not for me to judge how many votes take place.
  Mr. David Winnick: On a point of order, Mr. Morris. My hon. Friend the Member for Oxford, East (Mr. Smith) made a passing reference to the debates that you chaired with such distinction during the Maastricht proceedings. My point concerns timing. Would it be correct to say that whether this debate continues after 10 pm is entirely up to the Government? It seems rather odd that it may do so, given that the Leader of the House is constantly telling us of the virtues of the Jopling report and saying that we should not -sit through the night because people outside misunderstand. It would be useful if the Government would tell us now whether the 10 o'clock motion will be moved.
  The Chairman: The hon. Gentleman has asked me a question to which the answer is yes: whether the motion is moved is entirely up to the Government.
  Question put and agreed to.
  Clause 1 ordered to stand part of the Bill.
  Clause 2 ordered to stand part of the Bill.
  Mr. Dennis Skinner: On a point of order, Mr. Morris. When you put the Questions on clauses 1 and 2, several voices—including mine—said "No". My hon. Friends the Members for Worsley (Mr. Lewis) and for Liverpool, Garston (Mr. Loyden) both shouted "No". You completely ignored those three voices. There should have been a Division. It looks to me as if you are siding with the two Front Benches.
  The Chairman: The hon. Gentleman's point of order was made distinctly; I could hear it clearly. I did not, however, hear a clear "No" from the hon. Gentleman, or from the hon. Members sitting next to him. Let me issue a plea to the hon. Gentleman that in future he speaks with his usual clarity—
  Mr. Skinner: I did.
  The Chairman: I regret to say that the hon. Gentleman did not.

New clause 1

  ENTRY INTO FORCE (OWN RESOURCES)
  'This Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister of the Crown as to the measures the Government intends to take in order to implement Article 8(2) of the Council Decision of 31st October 1994 on the system of the European Communities' own resources.'.—[Mr. Andrew Smith.]
  Brought up, and read the First time.
  Mr. Andrew Smith: I beg to move, That the clause be read a Second time.
  The Chairman: With this, it will be convenient to discuss also the following: New clause 4—Own resources calculation: annual reports—

  '.—(1) In implementing the provisions of Articles 2, 4 and 10 of the Council decision of 31st October 1994 ("the Decision") on the system of the European Communities' own resources, Her Majesty's Government shall lay a report before Parliament in each year to the end of 1999, on the operation of the system set out in Article 10 of the Decision in respect of the United Kingdom; and each such report shall include an analysis of—

  (a) the revenue which the United Kingdom would be required to provide as own resources entered in the budget of the Communities as compared to the revenue required be provided by other Member States, by reference to the percentages of annual GNP set out in Article 2 of the Decision;

  (b) the methods of calculating the GNP of the United Kingdom and each other Member State and their accuracy; and

  (c) the effects on the United Kingdom, were it to be implemented, of any re-examination made in any year by the Commission, under Article 10 of the Decision, of the correction of budgetary imbalances granted to the United Kingdom.

  (2) Each annual report made to Parliament under the provisions of subsection (1) of this section shall be subject to approval by a resolution of each House of Parliament.'.

  New clause 12—Annual report to Parliament—
  'Each year Her Majesty's Government shall make an annual report to Parliament concerning the operation of the Decision in section 1 (e) above in respect of the preceding financial year, which shall include:

  (a) a general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein in respect of each principal category of expenditure;

  (b) an account of rebate mechanisms applicable to any member state;

  (c) the operation of each article of the Decision;

  (d) action taken by Her Majesty's Government in respect of financial discipline;

  (e) the text of any regulation, directive or financial regulation relating to the operation of the Decision to which Her Majesty's Government has given its assent.'.

  Mr. Smith: I will begin with new clause 1. The article to which I referred—article 8(2)—states:
  "Without prejudice to the auditing of the accounts and to checks that they are lawful and regular as laid down in Article 188c of the Treaty establishing the European Community, such auditing and checks being mainly concerned with the reliability and effectiveness of national systems and procedures for determining the base for own resources accruing from VAT and GNP and without prejudice to the inspection arrangements made pursuant to Article 209(c) of that Treaty, the Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament, adopt the provisions necessary to apply this Decision and to make possible the inspection of the collection, the making available to the Commission and payment of the revenue referred to in Articles 2 and 5."
  That raises several important matters of concern to the House.
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  4.30 pm
  We have emphasised time and again our anxiety, which is widely shared both in the country and in the House, about the inadequacy of present arrangements in the European Union for the detection or elimination of fraud and waste, and about the shortcomings in the working of the common agricultural policy. We have said especially that the common agricultural policy is wasteful and economically and environmentally damaging. We have also said that the Government have not done nearly enough to combat waste and fraud in the European Union budget.
  As recently as last weekend, there were disturbing reports in the press of the way in which Ministers appear to have gone along with the cut of £3.9 million in the budget to counter fraud in the European Union. That was a matter of enormous concern to many hon. and right hon. Members because, if fraud is to be properly eliminated and the people responsible for it properly brought to account, the mechanisms have to be in place and they have to be properly enforced in each of the member states of the European Union. The fact that the Government accepted that cut calls into question the assurances given on Second Reading about the Government's commitment to eliminating fraud. I ask the Minister to reply specifically to that argument when he replies to the debate.
  We believe that the House of Commons has a right and a duty to the people of Britain to scrutinise and, as appropriate, to amend the very important measure before us. We believe that the Government have sought, by the confidence motion and the other pressures that they have brought to bear, effectively to curtail the right of the House to determine the way in which money is paid to Europe, the uses to which that money is put and the extent of waste and fraud in its application. The new clause therefore seeks to insist that the Government bring a motion before the House showing the way in which article 8(2) would be implemented.
  Article 8(2) mentions many important subjects. One of those touches on the United Kingdom abatement, because the article refers to articles 2 and 5 of the decision. I shall now mention an important issue. When we discussed the matter in European Standing Committee B, as long ago as 15 December 1993, I asked why papers were not available in the Vote Office setting out details of the United Kingdom abatement. In replying to my question, the former Paymaster General said something interesting. He said:
  "The working methods paper"—
  the paper governing the operation of the United Kingdom abatement—
  "is a Commission document that gives detailed examples of how the UK abatement is calculated. The current paper was produced in 1988 following the own resources decision … in that year. It is still extant. It was the subject of an explanatory memorandum on 1 July 1988."
  He continued:
  "The Commission is working on a new working methods paper. So far no copy is available so we could not lay it before the Committee. As soon as we receive a copy, we shall do so."— [Official Report, European Standing Committee B, 15 December 1993; c. 7.]
  I understand that there is now extant a paper SEC(92)/1412/final, dated Brussels 22 July 1992, about the United Kingdom abatement. Will the Paymaster

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  General say whether that paper updates the one to which the former Paymaster General referred in European Standing Committee B? Was it presented to the Committee for discussion in line with the undertaking that I was then given?
  An interesting aspect of the working paper which will be of concern to hon. Members is its reference to a number of changes, described as technical changes, in the operation of the UK abatement. Page 11 of the working paper states:
  "Taking into account the combined effect of these changes which should reduce the abatement by over—1 billion ecus in 1997 from the 'No change' scenario, the Commission's proposals should thus contribute towards a diminution of the UK abatement relative to the EC budget. The size of the abatement would fall from around 5 per cent. to under 4 per cent. of the budget by 1997."
  That raises an important question to which the House should have a full and comprehensive reply from the Minister. The working papers on the UK abatement are certainly complex and dense to wade through, as anyone who has sought to do so will confirm. If discussions and negotiations—even if they are described as technical— have been taking place about the UK abatement, that must greatly concern hon. Members in the light of the assurances that they have been given on the abatement and the importance of safeguarding the abatement. The Government should make the position clear.
  Our new clause has other implications. Before the Act can be ratified, the House of Commons must pass a Government resolution on a motion setting out what steps the Government intend to take to ensure that the United Kingdom has the mechanisms to calculate accurately its contributions. Article 8(2) states that each country should have the mechanisms to calculate accurately its own contributions according to the terms set out in articles 2 and 5 of the decision. Those articles refer to gross national product at market prices and VAT—the VAT harmonised base—so that each country calculates its own GDP and VAT base in the same way as other member countries.
  The question has been asked before as to how far variations in the adequacy of the arrangements in different member states affect the contributions that each member state is asked to pay. We can all think of examples of European Union member states where the arrangements for properly calculating the level of liability to VAT payments, the way in which they are collected and the measurement of gross national product are not so reliable as they are in this country. The system misses the operation of the informal economy, which is not properly recorded in the official statistics.
  Will the Paymaster General tell us what discussions he has had with his counterparts in the other European Union states to ensure that common and high standards are applied to the measurement and assessment of those matters, which have an important bearing on the contributions that this country has to make to the European Union budget?
  Mr. Eddie Loyden: Returning to his earlier remarks about what is happening in Europe and the concerns that have been expressed about certain practices in member states, does my hon. Friend believe that the weakness is within European legislation or within the member states?
  Mr. Smith: There are clearly weaknesses in the operation of the regulation and the law both at European
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  Union level and in member states. Clearly, procedures are more satisfactory in some member states than in others. Equally, there is a need for a binding convention in European law for fraudulent acts against the European Union budget to be contrary to the law in each member state.
  A dual approach is necessary to tackle such a serious problem. We need to ensure both that there are proper arrangements in place in each member state and that European law is able adequately to cover the situation. We have advocated that the convention currently being discussed by the European Union should be enacted into United Kingdom law properly to tighten up on procedures and to bring those engaged in fraud to account.
  We have also suggested that, where it can be shown that lax procedures operated by individual member states are responsible for shortcomings, fraud and waste, either because the basis for calculating payments has not been properly assessed, or because receipts of money from the Union have not been properly applied, it would be entirely appropriate to have a proper penalty regime which would require member states to pay money back, either by an addition to their required contributions or by a deduction from the revenues they receive.
  Mr. Christopher Gill: The hon. Gentleman will be aware that many Opposition Members and many of my hon. Friends have stood at the Dispatch Box and solemnly promised the House that they would get a grip on fraud, and are constantly talking about altering the mechanisms to do so. Has it occurred to the hon. Gentleman that much of the fraud cannot be eliminated without eliminating the system on which that fraud is founded?
  The Chairman: Order. Before the Committee goes any further, the next group of amendments—new clause 3 and the new clauses grouped with it—is specifically about fraud. It would be appropriate to develop the arguments on that point when we get there.
  Mr. Smith: I am, as ever, guided by your ruling, Mr. Morris, but the hon. Member's point is relevant to new clause 1. We are proposing the opportunity for the House, on a Government motion, to have further and proper discussion of the implementation of the decision in article 8(2).
  That would give us the opportunity further to develop the case for precisely the reforms to which the hon. Gentleman was referring and, as we have emphasised, the crucial importance of reform of the common agricultural policy. Notwithstanding the agreements which have been reached in Europe and such reforms as have received commitments from member states, expenditure under the CAP continues to bang up against the ceiling that was agreed at the Edinburgh summit and which forms the basis for the Bill that we are discussing. It can come within the ceiling only by using the devices agreed at Edinburgh, whereby differences in the charges to the CAP accounted for by currency fluctuations allow dipping into Community reserves to provide extra resources for the agricultural guarantee fund. Nobody can be satisfied with that; it perpetuates waste, with all the examples that we shall discuss in the next group of amendments which is

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  concerned specifically with fraud and waste and which worries so many Members of the House and members of the public.
  Mr. Hugh Dykes: Bearing in mind the fact that the Labour party has in recent years changed its view and become more enthusiastic about the European Union, does the hon. Gentleman share my concern that, given the primitive nationalism about Europe that one sees in Britain, particularly in the press, there is an attempt to negate the validity of the concept of the European Union and the Community having its own resources—money that belongs to the Community, having been passed over by member states under these complicated formulae? The suggestion is often made in some anti-European journals here that it is our money and we should have it back, notwithstanding that we are the only ones to benefit from the rebate. Will he assert categorically that Labour is very much in favour of the concept of own resources and that the Community budget remains a modest proportion of the total public spending, allowing for all the large amounts in the member states, and that that concept should be developed for the common good of everyone in the Union?
  4.45 pm
  Mr. Smith: We recognise the importance of the European Union having the resources that it requires to do its job, and there is important work to be done at European level. I shall not return to all the arguments on the Maastricht treaty, and I would be out of order if I attempted to do so, but we made it clear that in today's world, with the extent of interdependence of economies and peoples in Europe, it is clearly appropriate to have institutions, policies and resources operating at a European level for the common benefit of all European Union members.
  I wish to make two important points about that principle. First, it should be governed thoroughly by the principle of subsidiarity. Government works best when it is closest to the people and some enthusiasts for the European Union endeavour have in the past overstated the case for those measures which need to be taken centrally. Proper subsidiarity should operate in that the conduct and implementation of policy should be carried out at the level which is most effective and closest to the people.
  Secondly, nothing undermines people's confidence in common action throughout the European Union and its institutions more than the extent of the fraud, waste and the unnecessary bureaucracy to which the European Union Court of Auditors' report so frequently draws our attention. If those charged with those responsibilities in Brussels, in the European Union or in the European Parliament let too wide a gap open up between the project in which they see themselves engaged and the perception of the ordinary citizens in different member states and their experience of the European Union, as we saw in the reaction to the Maastricht treaty, not just in Britain and in Denmark but also in Germany, France and elsewhere, it sets up a reaction that is damaging to the concept of European co-operation.
  We need to emphasise what can be achieved by popular co-operation which engages people in trade, visits and cultural and sporting exchanges which bring practical benefit to people in their day-to-day lives. The £20 a week extra that the average family in the country is paying to
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  keep the common agricultural policy going and the extent of waste from food mountains, wine lakes and tobacco subsidies is unacceptable. Britain needs to assert that and to be much more forceful in pressing for change and reform. It needs to build alliances with others within the European Union who think similarly so that we can get the European Union on to a more sensible course which will benefit people in this country and in other member states.
  I repeat from the Dispatch Box Labour's commitment to European co-operation and our concern to see that the European Union works properly in the interests of the people of Britain and throughout Europe. The new clause, which addresses the important issues that I have raised, would give the House, on a motion tabled by the Government, the opportunity more fully to consider the issues. I commend it to the House.
  Several hon. Members rose—
  The Chairman: Order. I remind hon. Members again that this debate is essentially about own resources, so they should resist the temptation to talk about fraud until we reach the next group of new clauses.
  Mr. Cash: First, I want to follow up the arguments that have just been put to us by the hon. Member for Oxford, East (Mr. Smith) regarding the implications of article 8(2) of the Council decision on own resources. The hon. Gentleman said that that is based on the Edinburgh agreement, but that is not strictly true.
  The decision arises out of what has been described as an international commitment by the Prime Minister, but it was taken only on 31 October 1994 and in what could be described as extraordinary circumstances, not least of which is that it was taken only 10 days after the Chancellor of the Exchequer was summoned somewhat peremptorily by the commissars in Brussels in order to get him to give in to the Italian blackmail perpetrated as a result of the fraud that the Italians had committed for which they were to be fined.
  The consequences of giving in to that blackmail have tainted the Bill with the fraud to which we capitulated by remitting a degree of the penalty in order to get through the own resources decision. That is a great pity. We all want to ensure that we can prevent fraud. I hope that we will have some interesting and useful observations from the Prime Minister through the Minister when he replies and that we will have some reassurance that the British taxpayer will have better value for money as a result of proper investigations into the way in which own resources are dealt with, most particularly with regard to the United Kingdom.
  There is another disturbing feature of the manner in which the own resources decision went through. As far as anyone can tell, the decision was in breach of the undertaking given by the then Paymaster General to the Select Committee on European Legislation on 24 April this year. The Select Committee told the Government, in response to the explanatory memorandum, that we would expect the Government to come back to the Committee if the proposal was amended and resulted in a substantial change to the arrangements that were previously thought to exist.
  I was astonished to find that that scrutiny reserve, which goes to the heart of the Select Committee's scrutiny process, should have been broken on such an important

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  matter. The resolution of the House in October 1990 stipulates what is effectively a kind of veto by the Select Committee, and therefore the House, on the implementation of a decision. Therefore, the Minister who is our representative in the Council of Ministers should not, in almost any circumstances, make a decision when the Select Committee has put on a scrutiny reserve.
  On 31 October 1994 the own resources decision was passed, it would appear in breach of the resolution of the House in October 1990. That is a pretty serious state of affairs. I raised the matter on a point of order yesterday and I hope that the Minister will deal with it when he replies to the debate.
  In addition, the decision is in breach of our European manifesto. I fought hard, with great vigour and determination, during the European elections to support my local candidate and I remember well what the manifesto said. It used words to the effect that we would resist all pressure to raise the ceiling on public spending in the European Community.
  We had the presidency conclusions of the Edinburgh summit in December 1992. We then had the European elections in May/June 1994. We know from the sequence that I have described that the decision was not made binding in any respect until 31 October 1994. It would have been perfectly possible to have done a Fontainebleau by saying that circumstances had changed, so we should change with them, just as the Prime Minister said that circumstances had changed when we were ejected from the exchange rate mechanism. We should have said on 31 October, in all honesty and fairness to the other member states, particularly having regard to the behaviour of the Italians in all this, that we would not agree to the provisions.
  As I said on a point of order at the beginning of these proceedings, we know from the enormous row going on in Holland, rather unreported in the British press, that the Dutch are so concerned about the additional moneys that they might have to pay in order to implement the decision, that the measure may not go through until February. That throws considerable doubt over whether, in accordance with article 11 of the own resources decision, it would be able to come into effect at all. That is a remarkable state of affairs.
  The pressure that has been applied to get the measure through by 1 January 1995 is liable to be vitiated by the behaviour or attitude being adopted in Holland at the moment. That is Holland's affair, but no one should be under any misapprehension that we are being told to get the measure through by 1 January, when on any reasonable reading of the situation in the other member states that will not happen.
  Mr. Charles Kennedy: I am listening to the hon. Gentleman's reasoning with some interest. Is he saying that if the Government had a later implementation date the measure would be acceptable to him? He is using a sophist's argument if he objects to the measure in terms of the trigger date if there are difficulties in other member states. The measure is either acceptable to him or it is not and that should be the basis of his argument.
  Mr. Cash: I have made it clear that I intend to support the Bill although, as I have said, with grave reservations,
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  one of which is the matter to which the hon. Gentleman has just referred. It is important to make that position clear.
  Mr. Kennedy: Is the hon. Gentleman saying therefore that he has grave reservations vis-à-vis January, but not March?
  Mr. Cash: No, I am afraid that the hon. Gentleman does not understand what I am saying. I support the Bill but it is at least relevant to consider the extent to which the situation in other member states will delay the Bill beyond the legal requirements that are laid down in article 11 of the own resources decision.
  The Court of Auditors' report on fraud makes serious criticisms about the way in which the moneys that are received under the own resources decision are being handled.
  I understand perfectly, Mr. Morris, if you would rather we elaborated those questions on the next amendment, but for us to understand the implications of the own resources decision we had to have accurate figures. As you know, I was deeply concerned because there was a serious omission from the letter sent by -the Chancellor of the Exchequer to all hon. Members, which made the matter, unusually, a national issue. There was a £750 million gap, but I am glad to say that it has now been sorted out. Although the Chancellor of the Exchequer described my original figures as rubbish, he had to change his tune somewhat as the week went by, and fortunately the mistake has now been rectified by information later presented to the House.
  All those aspects throw substantial doubt on the way in which the Bill has been brought before the House. However, we have to make the best of the situation as we find it—and that brings me to a question that has caused me much concern, arising out of the manner in which the mechanisms to investigate own resources will operate.
  I have argued that the Public Accounts Committee ought to work in a spirit of mutual co-operation with the Court of Auditors, and be brought in to play a much larger role than it has so far been able to perform. I have been reading an excellent publication called "The Committee of Public Accounts of the House of Commons", which gives a full description of the functions of the PAC, and explains how it is set up under Standing Order No. 122.
  5 pm
  It is clear that it would be highly convenient for the British taxpayer to know with some certainty that the audit would be subject to the high degree of scrutiny and efficiency exercised by the Public Accounts Committee, the second most important Committee of the House. The Privileges Committee is the most important in terms of what is described as scrutiny seniority, and the Public Accounts Committee comes second. The Select Committee on European Legislation, on which I serve, is yet another Select Committee.
  The degree of independence of those Committees is reflected by their composition, their chairmanship and the fact that they—or at any rate, the Public Accounts Committee and the Scrutiny Committee—are chaired by members of the Opposition, to ensure that their scrutiny is totally independent. That is significant because the scrutiny process, the audit of the accounts on behalf of

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  the taxpayer, has to be done with the complete independence that will guarantee the public the right results from the mechanisms described.
  New clause 1 refers to article 8(2) of the own resources decision.
  Mr. Nigel Spearing: The hon. Gentleman has just elaborated on the importance of the PAC. Every Member of the House would endorse what he said about that. New clause 6, which the hon. Gentleman tabled but which has not been selected, is also relevant. Has he noticed that new clauses 14 and 15, which have not yet been selected either, but which deal with the same issue, now appear as starred amendments? Does he agree that it would be useful and appropriate to the matters that he is now raising if those new clauses could come into play in a later debate?
  Mr. Cash: I understand what the hon. Gentleman means, and I have much sympathy with what he says—but of course I defer entirely to your selection, Mr. Morris. However, it would be possible for a starred amendment to be selected tomorrow so that the matter could be considered then. But even now, as I shall explain, because article 8(2) raises the question of the mechanisms to be employed in investigating questions of audit and accounting, the provisions of Standing Order No. 122 could be extended to give the Public Accounts Committee that additional opportunity to consider such matters and to satisfy the British taxpayer.
  Article 8(2) says:
  "Without prejudice to the auditing of the accounts and to checks that they are lawful and regular as laid down in Article 188c of the Treaty establishing the European Community, such auditing and checks being mainly concerned with the reliability and effectiveness of national systems and procedures for determining the base for own resources accruing from VAT and GNP and without prejudice to the inspection arrangements made pursuant to Article 209(c) of that Treaty, the Council shall, acting unanimously",
  adopt those provisions, arid so on.
  In a nutshell, article 188(c) says that
  "The audit shall be based on records and, if necessary, performed on the spot in the other institutions of the Community and in the Member States. In the Member States the audit shall be carried out in liaison with the national audit bodies or, if these do not have the necessary powers"—
  that is an interesting point—
  "with the competent national departments. These bodies or departments shall inform the Court of Auditors whether they intend to take part in the audit."
  So even in article 188(c), which is referred to in the own resources decision, what I have been saying about the extension of the functions of the Public Accounts Committee is anticipated. All that we need to do is simply to turn the key and allow the PAC to take up those powers, which article 188(c) already anticipated might be necessary to make the system work effectively.
  The article continues:
  "The other institutions of the Community and the national audit bodies"—
  in this context I presume that that would include the PAC and the National Audit Office, on which the PAC relies extensively for its reports—
  "or, if these do not have the necessary powers"—
  that is the defect that we hope to rectify—
  "the competent national departments".
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  I hope that the Minister does not mind if from time to time I suggest that the words "the competent national departments"— might sometimes be changed to "the incompetent national departments"—for instance, in connection with the Treasury figures the other day. But I do not want to be too rude about that. The article says that the competent national departments
  "shall forward to the Court of Auditors, at its request, any document or information necessary to carry out its task."
  That means that we have a good working opportunity to get the procedure straight, and that would be of immense value and importance to British taxpayers, who would be assured that we were not only working within the context of the treaty itself, as amended up to and including Maastricht, but ensuring that taxpayers' money, as it relates to United Kingdom matters, was properly covered.
  There is another argument here. The Maastricht treaty contains an important declaration that national Parliaments should be more involved. What better opportunity is there to run all these things together than to provide a means of achieving those mutual objectives and to make the system work in the interests of the taxpayer? That would show the Government's good faith in tackling fraud and irregularities, and in ensuring proper accounting procedures.
  I never thought that I should say this, but I must say it because I like to use all the weapons that I can deploy. Even that dreadful concept of subsidiarity could be applied to this issue in the sense that there would be an opportunity to ensure that we got the proper examination of accounts in our domestic sphere in conjunction, as I said, with the operations of the Court of Auditors.
  Mr. Rupert Allason: Does my hon. Friend agree that one of the principles of subsidiarity, if we truly understand what that term means, is that individual Governments should make up their own minds and be masters of their own destinies on matters relating to the countries concerned? If we cannot rely on our European partners to tackle fraud in the rest of the Union, would it not be highly appropriate for our Government and this Parliament to exercise some control over British taxpayers' money that goes to the rest of Europe?
  Mr. Cash: Absolutely. As I shall say when I move to the analysis of gross national product, we must ensure that we do not have two separate sets of books of the kind that are, apparently, well known in Italian domestic tax collection. There are profound reasons why we want to be sure that the arrangements that we propose through our Public Accounts Committee become a model of the manner in which these matters should be dealt with in other countries. The knock-on effect in practical terms of what happens if we do things properly and other member states fiddle the books is that we end up paying much more. It is not merely a question of fraud; it is also a question of mismanagement, the result of which is that we end up paying a much bigger contribution than we should. A lot of profound and important questions are tied up in the intervention by my hon. Friend the Member for Torbay (Mr. Allason).
  As I have said, a whole range of matters are laid down under article 209, which deals with obtaining the opinion of the Court of Auditors; that is the dovetailing exercise I have in mind. Article 209(c) says that the Council shall

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  "lay down rules concerning the responsibility of financial controllers authorising officers and accounting officers, and concerning appropriate arrangements for inspection."
  There we have it in the European context, complemented by our arrangements with the Comptroller and Auditor General, the National Audit Office and the Public Accounts Committee. It is really quite a reasonable package which could result from the Government being constructive and forthcoming in making a change to Standing Order No. 122.
  I now refer briefly to Standing Order No. 122; members of the Committee may be interested to be reminded of it. It says:
  "There shall be a Select Committee to be called the Committee of Public Accounts for the examination of accounts showing the appropriation of the sums granted by Parliament to meet the public expenditure, and of such other accounts laid before Parliament as the committee may think fit".
  The words
  "and of such other accounts laid before Parliament as the committee may think fit"
  are important. The Standing Order then says that the Committee shall
  "consist of not more than 15 Members, of whom four shall be a quorum."
  Standing Order No. 122(3) says:
  "The committee shall have power to communicate to any committee appointed under Standing Order No. 130"—
  Standing Order No. 130 deals with the setting up of Select Committees—
  "such evidence as it may have received from the National Audit Office (having been agreed between that Office and the government department or departments concerned) but which has not been reported to the House."
  It so happens that the other accounts laid before Parliament include the reports of the Court of Auditors. We in the Select Committee on European Legislation consider those reports and they are then laid before the House.
  Recently—I say this with some concern and I have been critical of this—the reports have been shuffled together with a lot of other reports and have not been given the single-minded, independent debate that we used to have. Those debates were extremely valuable because people focused on the reports and they were not lost in a welter of other documents. If anything sensible came from the Government on the matter this evening, that point would be sorted out at the same time, thus giving the boxing blue clarity that I seek. Under Standing Order No. 122(3), the Public Accounts Committee would receive the evidence. Thus the whole package is neatly contained in my proposals.
  5.15 pm
  New clause 4 is grouped with new clause 1; I have examined new clause 1 to the extent that I wished. I raised the question of gross national product in the debate on convergence criteria some months ago. I happened to be rifling through my papers for the debate when I suddenly came across a table that took me a little by surprise. Our distinguished Chancellor of the Exchequer places much importance on the vital matter of convergence criteria and only yesterday, the President of the Board of Trade told us how wonderful it was that we were bringing down inflation, and so on. I had to point out to him that it was
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  only because we were now out of the exchange rate mechanism which he so strongly advocated. You will be glad to know, Mr. Morris, that I think that we can skip over that one for the moment.
  The fact is that this business of gross national product is really serious. In the debate on convergence criteria, which was prescribed under the European Communities (Amendment) Act 1993, the position became clear. In the tables that deal with how convergence criteria are calculated, east and west Germany are treated separately. I found that pretty astonishing. I thought that the wall had come down and that we were now dealing with one country.
  The report by the Court of Auditors, which has only just come out, gives special attention to the scope for manipulating the GNP of a country. The Court of Auditors is, rightly, deeply concerned about the way in which GNP is being calculated. I am prepared to say that there is a higher probability that we are accurate in the way in which GNP is calculated in this country. If GNP is calculated on a double-book basis by some other countries, in which case a shady GNP figure is produced, there will be a profound impact on the amount of own resources that are collected. That is a very serious matter. For many reasons, we want to be quite certain that the GNP is properly calculated in each of the member states.
  New clause 4 puts the matter in a nutshell. It says:
  "In implementing the provisions … of the Council decision of 31st October 1994 … the Government shall lay a report before Parliament in each year to the end of 1999, on the operation of the system set out in Article 10 of the Decision in respect of the United Kingdom; and each such report shall include an analysis of—
  (a) the revenue which the United Kingdom would be required to provide as own resources entered in the budget of the Communities as compared to the revenue required be provided by other Member States, by reference to the percentages of annual GNP set out in Article 2 of the Decision;"
  Secondly, the methods of calculating the GNP of the United Kingdom and each other member state and their accuracy should be put in a report. Finally, the new clause says that there should be an analysis of
  "the effects on the United Kingdom, were it to be implemented, of any re-examination made in any year by the Commission, under Article 10 of the Decision, of the correction of budgetary imbalances granted to the United Kingdom."
  That final matter is gobbledegook for the Fontainebleau rebate. It may come as some surprise to hon. Members that, under article 10 of the own resources decision, to which our Government have agreed, it says that the Commission shall, not might, by the end of 1999, submit a report on the operation of the system, including a re-examination of the correction of budgetary imbalances granted to the United Kingdom—that is the rebate—established by that decision. It shall also, by the end of 1999, submit a report on the findings of a study on the feasibility of creating a new own resource, as well as on arrangements for the possible introduction of a fixed uniform rate applicable to the VAT base.
  Bearing in mind the fact that under the Maastricht treaty as enacted, there will be economic and monetary union, if not for the United Kingdom, depending on our decision under section 2, certainly for the hard core of other countries, it is no exaggeration to say that by 1 January 1999 those countries will enter into economic and monetary union in the third stage. That is the failure of Maastricht.

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  However, if we combine the provisions in article 10 to which I have just referred with that 1999 situation, we arrive at a nuclear point. 'The new own resource system, which could well be produced under article 10, may well be the arrangements for a completely new financing of the European Community, in addition to anything that we now have before us—all of that by 1999. So, we need to know, through a Government report, what that means, because the own resources report does not say "in 1999": it says "by 1999".
  If, for example, by some terrible misfortune, the Government were to fall and if, for example, the Labour Government were to be in power, they would whistle through section 2 of the European Communities (Amendment) Act 1993 and, with the possibility to which I have just referred on the back of it, it is my belief that we could be in a very serious and difficult situation.
  Mr. Spearing: The hon. Gentleman has drawn to the attention of the House, and possibly the country, the importance of article 10 of the decision, which the Bill endorses. He is quoting properly from the Official Journal of the Community, No. L 293/9 of 12 November 1994. Is he aware that the words that he is pointing out are also on the amendment paper? If, in future, there were an amendment to include those words as part of a schedule to this new Act, it would be plain for all to see. If that amendment were ever selected, would the hon. Gentleman vote for it?
  Mr. Cash: I do not believe in hypotheses, certainly not when confidence motions are floating around. It is difficult enough to make up one's mind when one is faced with a real vote. I shall certainly not engage in a hypothesis of execution as well.
  The question of GNP is very important because in 1993, the European Community raised £52 billion from the 12 member states, of which the United Kingdom's share was £6·3 billion. Each member state's contribution arises from four sources: VAT, fourth resource payments, customs duties and agricultural and sugar levies. The relative importance of each of them is shown by the proportions which they represent. VAT represents 55 per cent. of the member states' contributions, fourth resource payments 22 per cent., customs duties 20 per cent. and agricultural and sugar levies 3 per cent. The first two items, VAT and fourth resource payments, account for 77 per cent. of the Community's own resources and they are assessed wholly or partially by reference to GNP.
  If we consider the way in which article 2 is drawn, which is the basis of revenue for the own resources, we see that a change is taking place. In 1995, the percentage of GNP required of the member states is 54 per cent., but it is 53 per cent. in 1996, 52 per cent. in 1997, 51 per cent. in 1998 and 50 per cent. in 1999. A country's VAT contribution to the Community budget is capped by reference to the country's GNP, while the fourth resource payments are assessed and paid on the basis of a country's GNP as a share of aggregate Community GNP. At the Community level, the total size of the Community's budget has to be held within a certain percentage of aggregate Community GNP, which is currently set at approximately 1.2 per cent.
  Therefore, the accurate measurement of each member state's GNP is of crucial importance on two counts—first, in determining the contribution for each member state and, secondly, in determining the overall size of the
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  Community budget. The amounts of money involved are absolutely massive and an error of 1 per cent. only in calculating, for example, the German GNP, would mean a difference in her fourth resource payment alone of something like £30 million. The question is how accurate, and how fair between member states, is the measurement of each country's GNP? It is not that accurate and fair, as the Court of Auditors' report makes clear.
  On the reliability of GNP measurements, the Court says:
  "The Commission's conclusions do not make it possible to form a clear opinion of the degree of reliability of the data currently supplied by the 'Member States."
  That is not a joking matter. It is about the extent to which, and the manner in which the amount of our own resources will be calculated with regard to other member states. If anybody thinks that is a matter of little importance, all I can say is that the taxpayers do not think so. The Opposition, if I may so—I am sure that they would not want to fall out with me this afternoon—may take account of the fact that all their palaver about fraud and so on is relevant only in so far as they properly appreciate the amount of money that British taxpayers are expected to cough up in this exercise. That amount is calculated by reference to the country's GNP.
  The Court of Auditors goes on to say:
  "It would therefore seem to be rather unrealistic to think that a pronouncement can be made with the necessary rigour, on the reliability and comparability of the GNP aggregates that the member states supply to the Commission."
  In other words, the Court of Auditors is saying that the member states are cooking the books. The result is that if we do not cook the books and we come up with a proper and accurate assessment of our GNP, we end up carrying the can.
  Earlier, in discussing the fact that estimates of GNP are out of date in general, with some countries' estimates being more out of date than others, the Court of Auditors goes on to say in paragraph 1.92:
  "For example, there is the question of the updating of national accounts, with regard to which there is considerable disparity between Member States and for which 'reserve' should have been issued concerning GNPs that were determined on the basis of data that were too old (Greece and Portugal)."
  There is also the example of the GNP of the former German Democratic Republic. Its previous planned economy is bound to pose problems for the assessment and integration into the GNP of the Federal Republic of Germany. As I have said, most people thought that we had a unified Germany. It seems that that is not the position when it comes to paying money into the Community. It is an amazing state of affairs. I hope that my hon. Friend the Minister will provide us with an explanation.
  The Court of Auditors states:
  Despite the fact that the four-year time limit has not yet expired (Germany was unified in 1990), it is still astonishing that the Commission has not issued a reserve with regard to this question. This is a very serious matter."
  "Reserve" is a technical word for rectification and notification; actions which the Commission is supposed to take. Presumably it takes an incident of staggering magnitude to induce the Court of Auditors to use an expression such as "it is still astonishing", but it did.
  What are we to make of all this?
  5.30 pm
  Mr. Nicholas Budgen: We have seen some recent comment about these matters. It seems that the Commission thought that the Court of Auditors was behaving in an unhelpful way in issuing its recent report. The Commission felt that the court should be rather more careful. It felt that it was undermining the idealism of the Community by revealing uncomfortable truths. Is my hon. Friend aware of those observations from the Commission?
  Mr. Cash: I certainly heard of them. As I am a member of the Select Committee on European Legislation, I have had the opportunity to visit the Court of Auditors and to have private sessions with it as well as the more formal ones. One of the most senior members of the court, Mr. Carey, was so dissatisfied with the way in which these matters were being conducted that he—I believe that the hon. Member for Newham, South (Mr. Spearing) had the original letter—tendered his resignation. He thought that the whole thing was going off the wall. Perhaps the hon. Gentleman will deal with that later. I hope that I have not misrepresented the position in any way. It was certainly deeply worrying.
  Figures have been provided and the Select Committee on European Legislation in the other place referred to about £4 billion-worth of fraud, or £6 billion. I am coming to believe that we have no idea of the extent of the fraud and that the figure could be as high as £15 billion, or £20 billion for all anyone knows. The Commission has every apparent intention of putting the matter under wraps.
  Mr. Budgen: I am grateful to my hon. Friend. I hope that he will forgive me for using that term to describe him. He may remember that the Chancellor of the Exchequer said that the figure of £6 billion-worth of fraud had been plucked out of the air. I know that my hon. Friend follows the Chancellor's observations with great care. What is the Government's figure for fraud in the Community?
  Mr. Cash: If the Chancellor of the Exchequer's figures, as expressed in his letter—
  The Chairman: Order. The hon. Member is getting into full flight. We are dealing with own resources and not exploring fraud in depth.
  Mr. Cash: Absolutely, but I was dead on the point until I was diverted by my hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen). I am delighted to refer to him as my hon. Friend.
  The Chairman: The hon. Member is correct; he was in order until he was nearly tempted by his hon. Friend.
  Mr. Cash: What are we to make of the GNP issue? The measurement of GNP and the way in which the Community raises money from member states are genuinely complex matters. I make no bones about that. If we read between the lines of the pronouncements set out in the recent report of the Court of Auditors, we find vast areas of what must be described as unfairness when it comes to assessing member states' contributions. If Portugal and Greece are still using 1970s data, as the court says, and if Germany is conveniently forgetting that unification took place, someone somewhere is being treated unfairly.
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  We can assume yet again that the country that the Court of Auditors does not mention in its catalogue of GNP sinners is the one whose Government want it to be at the heart of Europe. We are undoubtedly paying for that. The distortions in the figures show that as usual the United Kingdom is playing the game and that the other member states, according to the Court of Auditors, are not.
  I say with some sadness that some hon. Members go pottering about claiming that people such as myself are inventing nightmares, goblins or whatever; that we are slightly off the wall; that we do not have any concept of what the European Community is or should be, and that we are a collection of ridiculous, pompous old bores. It might occur to one or two of those hon. Members, who have been grossly negligent in the way in which they have allowed the European Community to burgeon as it has, to reflect that some of us are merely trying to do the job that we were elected to do. We are examining what is going on. The figures that I have produced and the arguments that I have advanced have all focused on the relationship between the United Kingdom Parliament, the Court of Auditors, the European Parliament, the Commission and a mutual arrangement. If we are to make any sense of these matters, we must take up the-arguments that I have been addressing. These issues must not be bunged under the carpet.
  I am informed by unimpeachable sources that during the debate on the EC budget on 28 October, when the House considered cutting out the European Parliament's proposals for an anti-fraud measure, it was said that the Government believed that the "Council's Second Reading budget" was "acceptable". That seems to suggest—I would like to hear the Minister's view—that the Government were going along with that budget rather than putting up a fight to increase the number of anti-fraud arrangements, which included the expenditure of 96,000 ecu for a unit to co-ordinate action against fraud. I would much prefer the matter to be dealt with through the Public Accounts Committee, but the arguments that I have been advancing are extremely relevant to the manner in which the own resources system functions.
  Mr. Bill Walker: Paragraph 5 of the explanatory and financial memorandum states:
  "The new Decision has to be approved by all member states in accordance with their national procedures before it can enter into force. It will take effect as from 1st January 1995."
  Everything that my hon. Friends and I have been trying to do has been designed to make sure that the House carries out its normal procedures and studies these matters, and that Committees are properly set up to do that as well.
  Mr. Cash: Absolutely. If we are to have a Community that works—I have been writing recently about this—and a Community that we want to be a member of, one that does not bully, threaten and cheat us, it is essential that we have complementary arrangements that are enforceable in the other member states. Why should we have debates of this sort, scrutiny arrangements, sittings of the Public Accounts Committee and all our other procedures if the other member states are cooking the books and not properly scrutinising the arrangements? Surely we are not that idiotic. We must insist on complementary arrangements and proper scrutiny as preconditions to any movements within the intergovernmental conference.

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  Given the connection between monetary union and own resources, we should also say no to a single currency now. That would clear up much of the trouble.
  I see you stirring in your seat, Mr. Morris, and I would not want to inconvenience you by causing you to stand to put me back on the straight and narrow. Accordingly, I shall make my final point. I have sought to explain my reasons for tabling my amendments and new clauses. I am deeply concerned that the Fontainebleau rebate appears to be up for grabs. I cannot understand how that could ever have been incorporated in an own resources decision which is at the heart of the Bill that we are implementing, in accordance, it is said, with our constitutional requirements. In our own Bill—in our own legislation—we are carrying out an obligation imposed upon us by the Government as a result of their not resisting the re-examination of the rebate, to open the question whether what was negotiated for at Fontainebleau should remain on the table. That is a very serious matter.
  I hope that we hear from the Minister, to minimise the potential man-traps that lie ahead this evening, a clear statement that we will have the opportunity, through the Public Accounts Committee, to look into all those questions. If we do, we will be able to get the finances of the European Community on to a better footing and, with a bit of luck and determination, also get the other member states to realise that we are not just an old, obsolete dinosaur of a Parliament, that we have some teeth and guts, and that we are going to do something about it.
  Mr. Spearing: The hon. Member for Stafford (Mr. Cash) outlined in extenso, but most usefully, several matters to which the Committee and, indeed, the nation should pay attention.
  We all know, I think, in outline form that own resources, which are the theme of the first important debate on this important Bill, relate to no fewer than three very complex and moving formulae: first, that which determines the maximum amount that the European Communities can spend in any one year; secondly, the formula that the nations of the Community contribute, which is an extremely complex affair dealing with levies, VAT and GNP; and, thirdly, the extremely significant rebate methods, to which the hon. Member for Stafford drew attention, whereby up to half of our contributions to the European Community are returned by way of rebates.
  Each of those is an extremely complex formula—much more complex even than most people realise. The Bill authorises financial provisions that will last until 1999, at which point—the hon. Member for Stafford spoke of an atomic explosion—they will come to a head. In 1999, the whole caboodle will have to be renegotiated, and, under article 10, which is important, so will the recalculation and reassessment of the United Kingdom's own rebate mechanism. The Bill refers to and authorises a decision to which we will be committed.
  The Government may accept the new clauses if they so wish as they are not essential to the purpose of the Bill. Indeed, Sir Michael, new clause 1, which was moved by my hon. Friend the Member for Oxford, East (Mr. Smith), new clause 4, which stands in the name of the hon. Member for Stafford, and new clause 12, which stands in the name of my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), are essentially "glasnostic". They deal with the mechanism of the
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  procedure, which is almost unbelievably complex, even for those of us who try to understand it and come back to it every five years or so.
  The means by which the formulae are drafted, let alone how they work, are almost impossible to discern. Where does one find a textbook or a running commentary on how they have been worked out in the past five years? We had such debates in 1988, Sir Michael, although I do not think that there are many survivors of them, and we know that, in 1999, our successors—some of us might be here then, but probably not many—will face an enormous problem.
  The new clauses, especially those on article 8(2), and the extensive requirements of new clause 4, will be an invaluable guide. In the intervening years, if the new clauses are accepted—and I see no reason for their not being accepted—the country will be able to trace a little more easily what is really happening. When the House debates the difficulties of 1999, which will be pretty bad—at least one very important nation in the European Community has said that the British rebate cannot remain as it is, and I heard that from an authenticated source—there will be the most colossal collision.
  5.45 pm
  I do not understand why the Government should not accept the new clauses. Are not reports to the House open government? Is that not what the Government are supposed to be about? Article 8(2), to which my hon. Friend the Member for Oxford, East referred, treads on the matter of fraud, which we must not debate yet, Sir Michael.
  The Chairman: Order. There has recently been too much confusion of identity. I am not Sir Michael.
  Mr. Spearing: I beg your pardon, Mr. Morris. I revert to the proper usage.
  Why should not new clause 4 be accepted? I do not say that the Minister should accept it straight away, but, if it is not accepted, where else will such matters be raised? We can look with some sympathy upon at least the intentions of the hon. Member for Stafford. Even if the Government do not want the new clause, the issues that the hon. Gentleman has raised and the questions that he has asked, particularly in respect of the formulae of new resources, are tremendously significant. Indeed—dare I suggest it?—the sums involved might be as great as or greater than the sum involved in last night's dramatic Division. It is very easy to lose squillions of pounds in such formulae yet worry about the mere £1,000 million which we discussed last night.
  I wish, in a relatively brief introduction, to refer to the terms of new clause 12, which you, Mr. Morris, have kindly included in this group. In view of its terms, my right hon. Friend the Member for Bethnal Green and Stepney, and my hon. Friends who might catch your eye to back him up, will request a separate Division if the Government do not accept it. I shall chance my arm and suggest that the Paymaster General accept it. It is a very straightforward request for an annual report to Parliament on the operation of the great big decision. The first thing that we want is
  "a general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein in respect of each principal category of expenditure".

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  I have no doubt that at some stage the Paymaster General will say, "Oh, the information is all in some report." It might be, but I suggest that what is sought by paragraphs (a) to (e) of new clause 12 will not be comprehensively available. It will not be gathered together in one slim White Paper which is presented to the House and which is available in public libraries for people in universities, colleges and schools to read and understand.
  I found it necessary to gather that information when I read some figures in respect of our contribution to the European Union. It is particularly important in relation to rebate mechanisms. We should remember that our rebate is paid for by another sub-formula of countries that have to adjust their own contributions by paying more for the British rebate and other offsets.
  I tried to get some figures from the Library to show how the European Community's receipts of expenditure had expanded at constant prices from 1973 to the present and how our own resources contribution and rebates worked out. The Library produced a graph, which I suggest is the only way for any citizen to understand what has happened. It looks rather like an atomic explosion because, even at constant prices, the amount of expenditure and income has expanded rapidly. This decision will authorise further expansion.
  Some cynics say that the only way in which the European Community secures agreement is by lubricating disagreements with more cash. That is one of the reasons why the Government and the Community require greater own resources contributions at a time when the Community is telling the Chancellor to watch his own expenditure, but that is an aside.
  The importance of our rebate formula cannot be overestimated because it zips up and down from year to year, as we were told during debate last week. Another graph that I commissioned from the Library shows the fluctuations only too well. The proportion of our receipts to our payments, without the rebate, is extraordinary. In some years, our receipts amount to only about one third of what we pay and the rebate makes up another third. However, if the rebate were taken away—as is envisaged in the decision that we will endorse in 1999—we would be in real shtook. Monitoring, which is the "in" word, as described in new clause 12 is very important indeed, as are the account of rebate mechanisms, which apply to any member state.
  New clause 12, proposed by my right hon. Friend the Member for Bethnal Green and Stepney, would require
  "the operation of each article of the Decision"—
  how it is worked out in practice. One article in the decision—which, incidentally, I believe should be a schedule to the Bill—relates to the British rebate. As I pointed out in an intervention, it is printed in the report to the Committee of the whole House. As you know, Mr. Morris, an amendment was proposed that sought to write the whole of the decision into the Bill as a schedule so that it would be there for all to see.
  Article 4 of the decision, which appears in the Official Journal and on the amendment paper, is quite extraordinary. It contains 30 lines of excruciating mathematical formulae, which I was tempted to read into the record. I do not think that I will do so, although it
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  may be educational for hon. Members. Almost every one of the 30 lines introduces another mathematical element into the decision— the magical formula
  "multiplying the result by 0.66"
  and so on. Paragraph 3 states:
  "The basic amount shall be adjusted in such a way as to correspond to the reference compensation amount",
  whatever that may be. Article 4 will affect the country most crucially but, unless a schedule is passed on Report or in another place, its yearly operation will hardly be debated at all because it is retrospective.
  Much was said in the debate last Monday and in previous debates about how much extra money will be paid to the European Union—I could not understand all that farrago. The press went batty, arguing about whether it was £750 million or less. I suggest that one cannot tell how much it will be because the article is retrospective. I see that the well-informed hon. Member for Harrow, East (Mr. Dykes) is nodding his head. The press farrago about how much the Government will pay is a matter of speculation; it is merely an estimate. Unless the Government are forced to report annually to Parliament, we will not have a retrospective report of how the amount was worked out. The paragraph about reporting is a very important part of new clause 12.
  If it does not appear in the schedule and we do not receive a report, as proposed under new clause 12, where will we get the information? The Official Journal, which was wielded by the Member for Stafford, contains the extraordinary statement:
  "Council decision of 31 October 1994; Acts whose publication is not obligatory".
  Fortunately, because the decision is an important one it is contained in the Official Journal. Regulations are regarded as being important and therefore have to be published, but decisions are usually much less important than this one, which amounts to a treaty, and may not be published. I suspect that this decision, according to strict European Community treaty law, did not need to be published, even in the Official Journal. I suspect that that is so, but perhaps the Paymaster General will seek advice and confirm whether I am correct.
  I hope that I have persuaded the Committee, particularly the Paymaster General, that new clause 12 is a democratic necessity. Without it, we will not be able to find out what has gone on and the Government will not be able to tell us comprehensively about the operation of this decision, and the 1998 decision which has to be considered with it. The decision of 1988 and the decision of 31 October 1994 have to be read together in order to find out what is going on. The 30 October 1994 decision comprised three different decisions, including one about budget discipline, which is related to this decision but is not the same. Perhaps the other place will include in legislation the reference number of another amendment which was put down but not selected and which is quite important.
  I challenge the Minister to explain why we should not have some British glasnost on this matter. What is the Treasury afraid of in opposing the proposed new clause? I cannot think of any possible democratic, financial or moral reason to refuse it.
  Mr. John Biffen: I am glad that the debate is proceeding without the drama of an impending general election or the mass withdrawal of the Whip. Of course, it has lost a little excitement in the process, but that is more than compensated for by the very pertinent comments made by the Labour Front Bench, my hon. Friend the Member for Stafford (Mr. Cash) and the hon. Member for Newham, South (Mr. Spearing).
  The three proposed new clauses—Nos. 1, 4 and 12—are an attempt by the House of Commons to at least have a presence in European Union decisions. Through the actions of this and past Governments, we are bereft of what are traditionally considered to be appropriate powers. However, that surrender has not taken place with total acceptance on the part of the House. Euro-scepticism is alive and vigorous, and—foolish or wise—believes that the future belongs to it. The more we travel with the evolution of the Union in post-Soviet collapse circumstances, the more we realise that the original blue paper judgments of the treaty of Rome are increasingly inappropriate.
  Therefore, the questions that we consider this afternoon are how the House can be better informed about resource allocation within the European Union and where the net balance of political judgment lies. Above all, that must be underwritten by the Treasury Bench and not secured by reading The Financial Times or The Independent. That is an important and legitimate aspiration. Knowledge will be the precursor of repossessing greater parliamentary authority in the decision-taking processes of the Union.
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  I hope that my hon. Friends on the Treasury Bench will feel generous towards the arguments that have been made, and will accept that we are trying to establish a partnership between the House of Commons and the Executive in the conduct of European policies. I say that because I believe that it is a matter of constitutional significance and one that will move in an evolutionary way, although not with high drama. As the hon. Member for Newham, South said, a few years from now people will look back and mark these debates. They will see what arguments were deployed and how they related to the way in which the Union has proceeded under the impact of our sister European nations.
  The way in which the Union will proceed is a matter of speculation on our part. I believe that the forces operating against centralisation within the Union are powerful and will mesh with the attitudes that have been expressed this evening.
  Mr. Geoffrey Hoon: I have followed the right hon. Gentleman's arguments with some care. Is he saying that, in reviewing the way in which the House of Commons votes money for the European institutions, it is right that we should consider how those institutions spend that money? Is not his argument that the House of Commons should have that opportunity when European institutions also have that opportunity? The European Commission, the European Parliament and the European Council examine both how the money is raised and how
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  it is spent. Does he not find it curious that the Bill deals only with how the money is raised and not with how it is spent?
  Mr. Biffen: That is an interesting point. I have no wish to widen my area of dialogue with the Front Bench. I think that I am doing reasonably well on the present basis, but I take account of what the hon. Gentleman says.
  There are great dangers in supposing that we can be some missionary force in the conduct of European fiscal affairs, and that the way in which we do things will eventually be accepted by our sister European countries. They all have their own traditions. One of the problems will be how those traditions relate to one another in a collective framework. Therefore, I am cautious about saying that we will stand out and have remarkable power in influencing future behaviour on such matters in Europe.
  I do not intend to make a long speech. My hon. Friend the Member for Stafford and the hon. Member for Newham, South properly concentrated on the role of the gross domestic product in the calculation of the allocation of resources. As the hon. Member for Newham, South said, GDP is presented in the European Council decision in the most fantastic, sophisticated manner, running to heaven knows how many places after the decimal point.
  In reality, the concept of GDP is hit or miss. It is not possessed of immense sophistication. I am led rather pedantically to quote the American economist Morgenstern, who said:
  "Qui incipit numerari incipit errari."
  That is perfectly true. One has only to look—[Interruption.] I assume that the Latin tongue is well known on the Opposition Benches, but I will supply a translation for the Treasury Bench if it is thought appropriate. Hansard is well able to cope with these matters. It is when I lapse into Welsh that difficulties arise.
  The concept of GDP is a matter for serious consideration. When substantial transfers of money from one country to another take place through a doubtful mechanism such as the present mechanism or whatever, do not suppose that there will not be eventually sharp political consequences. I see some Scots Members on the Opposition Benches. They will remember the days of rating revaluation. Something that ought to have been perfectly clear and manageable gave rise to a tremendous political furore.
  How do we measure the black economy? How do we measure something which, by its nature, cannot be measured? How do we think it operates in Italy, Greece or other countries possessed of the Latin culture, as opposed to countries such as Denmark or Germany, which are Nordic in their traditions?
  I do not see the point in any xenophobic way. It is a sheer practical consideration when we consider how we proceed with governmental co-operation, when the most intimate matters of resource allocation are decided by such dubious mechanisms. I will tell the House what will happen. There will be conflict and recrimination in all layers of government. The press will be expert in explaining how we are being ripped off by our partners. We see it already. We are forcing an arrangement which will compound all those difficulties.
  I believe that it is perfectly possible for beneficial circumstances to result from resource transfer. Of course I do. The Marshall plan was easily the most successful

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  internationally mounted system of resource reallocation. It was done without any of the absurd formulae which will be but an apple of discord for the future.
  The conclusion I draw is that what we are being asked to nod reverentially and acquiesce to is the blueprint for the next phases of European co-operation, which will produce exactly the opposite outcome to that intended. It is bad enough that the mechanism has to deal with the present budgetary ambitions of the European Union. If it is to be the fulcrum for the transfer of resources to bring about economic cohesion and the preconditions for a single currency, it will simply lead to disaster.
  Of course, I shall give the Treasury Bench all the support that it requires of me. But do not let it ask me to say that I have been intellectually convinced by Maastricht, by Edinburgh or by this Bill. For it simply will not stand the most severe testing—that of time.
  Mr. Denzil Davies: The right hon. Member for Shropshire, North (Mr. Biffen) had a short dialogue with those on his Front Bench. Perhaps I may have a short one with mine.
  I commend the speech of my hon. Friend the Member for Oxford, East (Mr. Smith). He will be surprised to hear that. Some of us were critical of his approach during the Maastricht debate, but his reply to the intervention of the hon. Member for Harrow, East (Mr. Dykes), who tried to trap him into a complete defence of own resources, gave some of us Euro-sceptics some encouragement.
  As my right hon. and hon. Friends see the doors of government opening and getting ever nearer, before long we on the Opposition Benches who have been the Euro-sceptics will gradually move to the main stream of the Labour party's attitude to Europe. All my hon. Friend needs to do is attend a session of what used to be called the Budget Council—I do not know whether there is still a Budget Council. The Budget Council is not about the budget, and its members cannot have any influence over spending decisions. In 1977–78, all the money went on the common agricultural policy, so there was not much point in going to Brussels for the Council. That is part of the problem—spending is set.
  I understand that surpluses can be carried forward. The Treasury used to shudder at the very thought of carrying forward surpluses, or money not spent, from one year to the next. That system does not provide any sensible control over public expenditure.
  I predict that, once my right hon. and hon. Friends get into government, the Labour party will move back to its original Euro-sceptic state. Whatever Government are in power, at some time they will have to stand up and defend British interests at the Councils of Ministers.
  Mr. Iain Duncan Smith: Does the right hon. Gentleman agree that the main point that so differentiates this budget from a domestic budget is the simple fact that, if we did nothing today, or on Third Reading, the Community would still get its money year on year? The increase is the only thing that it would not get. If a domestic budget is not voted through, there is no money for the following year, and therefore there can be no control.
  Mr. Davies: I understand that very well. The object of this debate is to make a charge on the Consolidated Fund.
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  It is that terrible thing, hypothecation. A chunk of money—about £2.5 billion net next year—is hypothecated. The Chancellor is scrabbling around to find £1 billion as a result of what happened last night. He can touch all other areas of public expenditure—I do not think that he can touch judges' salaries, as they also have their backsides on the Consolidated Fund—but he cannot touch the Euro-budget. That is the object of this sort of exercise.
  To return to the own resources debate, I must inform the Paymaster General that I was intrigued with article 8(2) of the European Council's decision, whereby the Commission is given certain powers to do certain things to apply the, decision. I do not understand what that means. I am sure that the Paymaster General is well briefed, and will tell us what it really means from a technical point of view.
  On the abatement provisions, I was a great admirer of Lady Thatcher and those people who negotiated the Fontainebleau agreement. It was not an easy thing to do, and our contributions decreased for a while. Now, that agreement is written into the document under discussion, as it presumably was in 1988. It is codified, and has been taken away from Fontainebleau and become part of article 4 of the Council's decision.
  When the document comes to the end of its life, the Fontainebleau agreement will do so also, and there will have to be more negotiations. On top of that, article 10 of the decision states that the Commission has to do something about it by 1999. It is therefore slightly disingenuous for the Government to say that they have preserved the Fontainebleau agreement, because it is up for grabs again.
  I do not know what will happen in 1999, or even before then. I do not know what will happen in 1996—the year of the intergovernmental conference. Perhaps new institutions and new common policies will be created, as well as new work found for the old institutions. Article 2(2) refers to common policies and new charges. Presumably, if a new policy is created, new money will have to be obtained.
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  I wonder whether what we are debating is really as sacrosanct as the Government seem to think. If substantial changes were to be made in 1996, it might give the Commission the opportunity to slip in a few figures, raise the ceiling a little and gain more powers for certain institutions.
  The history of this European centralised state has been the history of the battle to acquire power between the institutions. It is the Europe of the institutions and not of the people. The struggle is not between nation state and centralised European state, but within that centralised state for more power and more money. Power needs money, and more money produces more power. I would not be as sanguine as the Government that everything is all right until 1999. That is not how such things work. The Commission is adept at finding itself more money—not necessarily to spend for itself, but because of the power that goes with expenditure.
  The cost of the CAP is increasing. Perhaps it is a smaller percentage of the budget than it used to be, but the amount spent on it will still have increased by 1999. As I said on Second Reading, some people seem to think that the Poles will save us from the CAP and that they will smash it when they join, but they will need regional

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  and structural funds. Enlarging the Community with countries from the east, which are poorer than ours, will not mean a smaller budget or getting rid of the CAP.
  The balance of payments is not a fashionable subject these days. The Paymaster General is present: he probably writes the cheques once a week, or whatever it states in the agreement, which probably also states, "If you don't, the Commission will come down on you like a ton of bricks." So he has to write the cheques. I imagine that they are in ecus or deutschmarks. I do not suppose that they are made out in pounds. Presumably the money comes out of the exchange equalisation account. Perhaps things have changed, but that used to be the case.
  If our net contribution is to be £2.5 billion next year—I know that one cannot identify a particular year, because money goes in and comes back out—in my book that is £2.5 billion on the balance of payments deficit. In his Budget speech, the Chancellor said how wonderfully the balance of payments was doing. I am not so sure. I found in the Red Book that we would have a deficit of £6.5 billion on manufacturing industry and £7 billion on something called "other", which is in effect food and drink. That is a total of £13.5 billion, but it will be reduced by about £2 billion or £3 billion in invisibles and £5 billion in oil, as it has doubled in the past few years.
  Old oil is being called on once again to save the Conservative Government, although it is probably too late on this occasion. Earnings from invisibles and oil bring the total down, but the £2.5 billion has presumably been subtracted, and it amounts to half the surplus on oil exports. That sum of money is not merely public expenditure, as it goes across the exchanges. Perhaps it will do so less and less if we move to a single European currency. The great advantage of such a currency would be that no one would have to worry about such matters any more.
  The hon. Member for Harrow, East is nodding. He is very pleased. There would be no problems about a balance of payments deficit with Europe, or a large manufacturing deficit. Unemployment is the problem in my constituency, but I do not expect the hon. Gentleman to worry much about that. The problems will appear in different ways, but they will not appear in the balance of payments.
  Mr. Dykes: Unemployment is a separate problem, which needs to be dealt with by a separate mechanism. The programme on jobs, growth and employment was the beginning, and that is why more resources are needed to reduce unemployment. It still remains a modest amount of money in comparison with what other member states do.
  Mr. Davies: We have heard that speech so often. People say that more resources are required to counteract unemployment, and it is not very much really. As unemployment increases, more and more resources have to be found to combat it. Who has to pay? Constituents like mine, many of whom are unemployed anyway.
  If I may digress a little, I am surprised that the hon. Member for Harrow, East is considering unemployment in terms of little Europe. Perhaps we can debate the matter again. The world is passing us by, and moving away from
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  Europe. We have the general agreement on tariffs and trade and a global economy, yet the hon. Gentleman is still stuck in that old groove.
  The Chairman: Order. We are certainly not discussing the global economy in the debate on this new clause. The right hon. Gentleman must get back to own resources.
  Mr. Davies: I accept that we are talking about the European Union own resources decision, and nothing more global than that. The Library has assessed that we have spent £22 billion since 1974 across the exchanges on being a member of the club, or on having a seat at the top table. I am not quite sure what the justification is supposed to be. By 1999, it is projected that we will probably add to that another £13 billion. Let us round it up. It is just £35 billion—not very much to the hon. Member for Harrow, East, who thinks that that is a small amount in terms of total Government expenditure.
  That is the money that we have spent, but I do not know why we have spent it. Other countries have not spent similar amounts. As I said on Second Reading, my constituency is at the far end of Wales—Dylan Thomas described it as west Britain—far away from Brussels and further away from Berlin.
  I do not have the figures for Ireland here, but the Irish do marvellously. We talk about GNP—part of the GNP of the southern Irish economy comes from us. It comes from some of my constituents. The figures for income per head around Dublin are probably much higher than the income per head in Llanelli, Merthyr Tydfil or the Rhondda valley. Luxembourg does just as well as Ireland, and it has the second-highest per capita income in the European Union. That is the nonsense that we are discussing in the context of this new clause.
  The more information and control we have in the House the better. I would have thought that somebody would have to say that the ceiling should come down, and that, if we believe in subsidiarity, the ceiling should not go up. The battle between the centralised European state and the nation states will go on.
  I agree with the right hon. Member for Shropshire, North. I think that the tide is turning, and that it will not be long before even the Labour leadership recognises that change is necessary.
  Mr. Tim Renton: It strikes me as one of the ironies of my political life that, way back in 1979 when Lady Thatcher first formed her Government, I suddenly found myself made a Parliamentary Private Secretary to my right hon. Friend the Member for Shropshire, North (Mr. Biffen). He was already known as a fairly strong Euro-sceptic, while I was clearly on the Europhile wing of my party. That difference between us has not changed in the intervening years.
  My right hon. Friend tolerated me as a PPS with great good humour, until Lord Howe's Budget of 1981 when I resigned for not supporting the retrospective tax elements in it. My right hon. Friend tolerated my little rebellion. In those days, the resignation of a PPS earned about three lines on page 17 of a major newspaper, and my resignation did not make headline news. But he tolerated my departure with great good wit, just as, I am sure, the Front Bench will tolerate any rebellion by my right hon. Friend today.

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  I have always found that, despite our philosophical differences about the EC, my right hon. Friend and I have many other things in common. I agree very much with what he said about the need for greater transparency in the issues which we are discussing this afternoon. Clearly, that is not easy to achieve.
  My hon. Friend the Member for Stafford (Mr. Cash)— he is temporarily not in his seat—and the hon. Member for Newham, South (Mr. Spearing) bring to the issue enormous experience from sitting on relevant Committees, such as the Select Committee on European Legislation and the Committee on the Maastricht Bill. Most of the rest of us—myself included—do not have that experience. There are times when they are speaking—however wise the speech may be—when a certain miasma or a fog of lack of perception comes over one, simply because one does not know the details. That is one of the troubles with a debate such as this.
  The greater the transparency, the better. The House of Commons and all hon. Members need to be informed, no matter whether they have sat on the relevant Standing or Select Committees or not. I certainly accept that. Putting the issues of fraud or financial mismanagement aside to a later debate—that is what you want us to do, Mr. Morris—this first debate is therefore in search of transparency.
  The debate is about two prime questions: the first concerns the formula of own resources, and whether it can last until 1999, while the second is about the competence of the institutions that already exist to deal with the checking and control of the funds disbursed by the European Union.
  I shall deal with the resources question first. My hon. Friend the Member for Stafford—in a lengthy but well-informed speech—did somewhat exaggerate the problems of using GNP as a measurement of each country's proportionality or its suitability for contributing to own resources. That is borne out by the comments in the Court of Auditors report.
  The report carefully looks at whether the current, different definitions of GNP are adequate, but the court's summary on the issue states that employing a statistical concept such as GNP that does not correspond to a fiscal base that can be checked with reasonable certainty may provide a means of ensuring that the financial responsibilities of the European Union are fairly divided up between member states; the report states that the use of GNP may provide a fair division.
  To be fair, the report then goes on to say that the use of such a concept requires a considerable effort from the Commission and member states to ensure that national accounts are reliable and harmonised, and thus to ensure that the budget and the policies of the European Union are managed rationally. That is a far cry from the picture that my hon. Friend the Member for Stafford painted—that, as a result of conscious or unconscious distortions in GNP, the UK could find itself paying perhaps 1 billion ecu or 2 billion ecu more a year than was justified. My hon. Friend may have had his tongue in his cheek when he arrived at that over-dramatic conclusion.
  Of course GNP can be improved as a formula, and there is a necessity for the formula to be harmonised throughout member states. I do not believe that the formula has in
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  it—either at the moment or inherently—the degree of distortion which my hon. Friend painted. I do, however, agree much more readily with those who wonder whether the present own resources formula which is encapsulated in the Bill—clause 1 of which we passed with extreme rapidity—will last until 1999.
  The accession of the Visegrad countries—which hon. Members on both sides of the Chamber hope and believe will happen—is likely to increase the common agricultural policy budget by 50 per cent. and the regional budget by perhaps 100 per cent. By the time the British budget comes up for renegotiation in 1999—which is the present aim—the picture will be totally unrecognisable and different from the present situation. That should be put on the record, as we agree to the new higher limits based on an individual country's GNP.
  The second point is about the efficiency of the existing institutions to check on the disbursement of funds, and how carefully they are spent. It is remarkable that, during this interesting debate, no one has given credit to the European Parliament for having set up the Court of Auditors, which it decided to do in the early 1980s. I think we would all agree that that was very much a step in the right direction.
  As the hon. Member for Newham, South said, there is clearly friction between the Court of Auditors and members of the Commission. The Court of Auditors produced a fairly critical report, comprising 450 pages of detailed analysis of what, in many cases, constitutes financial mismanagement rather than fraud. Members of the Commission immediately stated, in print, that they considered some of the criticisms unfair and not properly based.
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  On one point, however, the Commission and the Court of Auditors established common ground. Shortly after presenting his annual report in Strasbourg on 15 November, Mr. Middelhoek, president of the Court of Auditors, said:
  "eighty per cent. of the European Budget is actually spent in the Member States so eighty per cent. of the problems come within the remit of the Member States".
  But what precisely does that word "remit" mean?
  The underlying thought, surely, is that if 80 per cent. of the money is passed on to the member states—remitted to them—by the Commission, it is up to those states to check that it is properly spent. Judging by some of the comments that I have heard, I think that there may be a gap in our present mechanism, which we and other member states must fill ourselves.
  I have never been a member of the Public Accounts Committee, but I fully appreciate its importance and its seniority in the pecking order of the House. Hon. Members have asked why the PAC is not empowered to look into the disbursement of European funds in this country, along the lines suggested by Mr. Middelhoek. What, in fact, is to stop it from doing so now? What is to stop the Comptroller and Auditor General from examining—at this very moment, if he so wishes—the way in which European funds are spent in this country, and establishing whether those funds are spent efficiently, fairly and honestly?
  Mr. Spearing: The quick and rather brutal answer to that question is that new clauses 14 and 15, and another

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  tabled by the hon. Member for Stafford (Mr. Cash), have not been selected. I understand that those new clauses would have done what the right hon. Gentleman asks.
  As for the 80 per cent. figure to which the right hon. Gentleman referred, it is difficult for a member state to say that the amount has been improperly distributed to some of its areas, regions and towns. The right hon. Gentleman might ask his city council, and I might ask mine, but it would be difficult to say that money sent by Brussels to perform—supposedly—many good works had been improperly sent by Brussels. It would be hard to question both the distribution of the money and the advisability of sending it.
  Mr. Renton: The hon. Gentleman has considerable experience in this context. Perhaps my hon. Friend the Minister will comment when he replies, but surely it would not be difficult for the Comptroller and Auditor General to examine the issue. Nowadays, for instance, bypasses are often built and little signs are put up, saying, "This bypass has been built in part with funds from the European Union." Surely it is easy to check whether the funds have been properly and fairly spent.
  This is, I think, very relevant to the common agricultural policy. As the CAP grows, which it is bound to do, with the accession of the Visegrad states, there is likely to be increasing demand for each member state to be responsible for CAP disbursements made within it—responsible in the sense of checking financial irregularity.
  Mr. Ted Rowlands: I should like the position to be as the right hon. Gentleman has described, but it is not, and I cannot see how it will be. The CAP does not involve British Government money; it is not part of any estimate in any individual Department. The accounting officer in the Ministry of Agriculture, Fisheries and Food is not responsible for CAP money, and is therefore not responsible for that expenditure to the National Audit Commission or the Public Accounts Committee. That is very sad: it represents one of the ways in which the House has lost control over the expenditure of large sums. I am afraid that the PAC is not the answer, however, although I should like it to be.
  Mr. Renton: Perhaps this is a genuine lacuna. Later this evening, we shall debate the PAC's role. New clauses which some of us tabled referred to it specifically, but they have not been selected.
  As a non-member of the PAC, I do not see any statutory bar that would prevent the Comptroller and Auditor General from examining the disbursement of the money. Furthermore, I believe that there will be increasing pressure from the Court of Auditors and the Commission on member states—not just because of the principle of subsidiarity but because of a genuine wish for the work to be done efficiently—to become more involved in checking that there has been no financial mismanagement.
  Mr. Duncan Smith: My right hon. Friend has said that a problem exists, and that it should therefore be scrutinised. He should approach the issue from another angle. The real problem lies in the fact that money passed to Brussels is then redistributed back to the nation states, where all accountability is lost. Surely the money should
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  not go to Brussels in the first place, but should be disbursed in the nation states originally. Brussels should then adjudicate.
  Mr. Renton: That issue lies at the heart of the way in which subsidiarity will develop in the years ahead. I strongly believe in the strength of the European Union and its ability to do some things better than individual nation states, but I think that because financial mismanagement—if not fraud—clearly accompanies international subsidy in particular, there will be a growing demand for better methods than subsidies to be found to redress regional or national imbalances. We do not yet know what that better way will be, but I think that allied with the pressure that I have mentioned will be pressure for fraud or mismanagement within member states to be the subject of redress within those states.
  The 450-page Court of Auditors report is an immensely impressive document; its authors have done a fantastic amount of work. The question now is this: how do we and other national Governments—and the Commission and the Council of Ministers—ensure that some of the report's many recommendations are implemented, and that problems are put right?
  I have been told, although I have not checked personally, that at present fraud against what are loosely defined as the European Union's financial interests is a criminal offence only in Germany, Italy and Portugal. If that is so, it means that there is a gap in the criminal justice provisions of individual countries, including our own. We should make certain that we have the legal and penalising weapons to ensure that, when we know that funds have been mismanaged, we have the capacity to right the position domestically when that is possible.
  I wholly agree with hon. Members who have said that the matter is deeply important to those of us who believe in the European Union. We know that, unless we get it right, the Union's image will be increasingly tarnished.
  Mr. Rowlands: I listened with considerable interest to the right hon. Member for Mid-Sussex (Mr. Renton), and all his speech demonstrated to me was the sad and tortuous way in which we are now realising exactly how much power has gone and is going from this place.
  I hope that the Minister will take the opportunity now, although the issue of control of public expenditure and its disbursement should arise when we discuss our next set of amendments, to clarify whether I was right in saying, when I intervened on the speech of the right hon. Member for Mid-Sussex, that there is no means by which the accounting officer in the Ministry of Agriculture, Fisheries and Food—the permanent secretary—can be hauled before the House of Commons or the Public Accounts Committee over expenditure on the common agricultural policy, because it is not part of any estimates in any Government Department. I shall illustrate that argument to him later, with the example of a Department for which he had some responsibility, in overseas aid.
  The right hon. Gentleman also, I think, left out a major aspect in his speech. He said that there were two issues—first, how money was raised and, secondly, the control of its disbursement and the competence and accountability of disbursement. There is one stage between those two— where the money is spent. The other aspect that requires transparency is the expenditure that will be given, as a result of the Bill, to the European Commission and Commissioners.

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  An important feature of new clause 12 is that we say that not only own resources but the expenditure that will flow from those own resources should be the subject of annual reports. If you have any doubts, Mr. Lofthouse, paragraph (a) of new clause 12 covers the point clearly.
  I therefore draw to the Committee's attention the aspects of expenditure that we shall approve. However, first I should like to say something to the Paymaster General. I listened to the Budget last week. I sat and listened to the Chancellor boasting about the degree of financial and Budget discipline that he had managed to instil and obtain. One of the key successes that he claimed in our last Budget was that he had stopped carrying over expenditure; the savings resulting from lower inflation had been clawed back, and that is why the public sector borrowing requirement was decreasing. That was one of the central things that he said. How could the same Minister and the same Cabinet likewise approve article 7 of the own resources decision, which reads:
  "Any surplus of the Communities' revenue over total actual expenditure during a financial year shall be carried over to the following financial year"?
  That means that there will be, presumably, built-in continuing expenditure, irrespective of whether one can find meaningful plans for spending the money and whether it will be efficiently spent—it does not matter. The money will be carried forward from year to year.
  How can the same Government who, in their national Budget, argued passionately that they had achieved that form of budget discipline approve an article of that type? We might want to carry money over to spend, but how can a Government who actually preached about prudence of that character, endorse and support article 7 of the own resources decision?
  Mr. Spearing: I suggest a possible answer to my hon. Friend. It is the old style of secret package bargaining. They have said, "And if you do not agree with that, we will not maintain your rebate."
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  Mr. Rowlands: My hon. Friend is absolutely right.
  There is another matter to which I draw the Committee's attention because it has not been discussed tonight, although my right hon. Friend the Member for Llanelli (Mr. Davies) mentioned some aspects. The other part of the bargain that was made was the determination of the expenditure that will arise from those own resources between now and 1999. It is not true that, one of these days, we shall decide where the money is to be spent. That matter was also determined at Edinburgh. It should be the subject of annual reports of the character that we suggest in new clause 12.
  I should like the Minister, when he replies, to tell us the status and nature of the "Financial perspectives 1993 to 1999—Appropriations for Commitments" which was attached to the own resources decision after the Edinburgh conclusions, which said not only, "This is how we shall raise the new money and the new own resources," but, "This is where it will be spent."
  Let me draw the Committee's attention to those commitments and decisions. For example, it was decided that there would be an increase of no less than 19 per cent. in real terms in administrative expenditure. The current
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  Government, who have said that administrative savings must be made so that all pay and salary increases in the public services may be met from increased productivity in each Department, support a policy that the administrative expenses of the Commission, and so on, should increase by 19 per cent. in real terms.
  Where is the consistency in the approach? Why is there that complete set of double standards—that we have to have the greatest possible control of the administrative costs of running the public services in this country but we shall endorse, as a result of the Bill, a 19 per cent. increase in the Commission's administrative expenses? I honestly do not understand how one squares those arguments.
  We were left with the major impression that somehow we had capped CAP—that we had capped the costs of CAP. But a commitment—as I understand it, a legally binding commitment—of the same kind and character as the Bill makes on the own resources decision was contained in the Edinburgh decision, which ensures that, far from the expenditure being capped, there will be another increase in CAP in real terms of about 9 per cent. between now and 1999.
  I considered the two aspects that should matter most to a constituency such as mine. Initially, I was pleased to note that the cohesion fund will increase by 73 per cent. between now and 1999—again, as I understand it, a legally binding commitment to spend the money which we are raising in the Bill, and which is being raised in the own resources decision, on the cohesion fund. I was pleased, that is, until I found out—this is why we need reports of the type suggested in new clause 12—the way in which it has been rigged. The criteria that will be used for cohesion funds ensure that only three or four countries will benefit. Communities such as those in parts of Mid-Glamorgan whose gross domestic product per capita is as low as that of many communities in Spain or Portugal will not be able—partly as a result of the present Government's policies—to qualify for any expenditure under the cohesion fund.
  I should have been delighted at the 39 per cent. increase in structural funds; here, at least, some money might be repatriated back into communities of the character of those in my constituency. However, one finds that the whole of Wales is ruled out of objective 1 status and therefore will not qualify for anything but a fraction of that 39 per cent. increase in structural funds. In fact, one encounters such problems repeatedly.
  The hon. Member for Harrow, East (Mr. Dykes) said that those moneys could be used to improve the lot of the constituents of Llanelli and of Merthyr Tydfil and Rhymney. I want to tell him the sad story of RECHAR— of trying to obtain funds for coalfield communities such as mine when the pits were closed. We bargained and haggled. Haggling between the Government and the Commission went on and on until such expenditures were way behind the closures. They were supposed to be lifelines; the lifelines came very late indeed as a result. So, even when we have tried to manipulate and utilise the expenditures that are envisaged in the decision, we have found them horrifically bureaucratic and difficult to apply.
  Finally, I draw the Committee's attention to the aspect that is the most extraordinary result and consequence of the Edinburgh own resources decision, and therefore makes necessary the reports which are provided for in our new clause 12. Did any Minister come before the Dispatch Box between the Edinburgh summit and May 1994 to tell

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  the House that, as a consequence of the determination of the expenditures that I have described, more than 50 per cent. of the overseas aid budget will be spent by agencies outside the United Kingdom? Was any hon. Member informed by any Minister at the Dispatch Box that the consequence of agreeing those guidelines, those appropriation commitments, legally bound the overseas aid budget to increase and increase in European terms although the United Kingdom's sum total has been capped?
  We shall be in an extraordinary situation. Next year, because of expenditure in the United Nations, but primarily because of the increases in the European overseas aid budget, which we shall be legally bound to pay, more than 50 per cent. of a major Department's public expenditure will be spent by agencies outside the control of the House and the Government. That is extraordinary.
  Ministers who grappled with the problems of financial accountability should be horrified. I believe that the right hon. Member for Mid-Sussex was once responsible for the aid programme. He should be horrified at such Government expenditure and the fact that most of the money is now spent on agencies outside the control of the House, without any accountability to the Public Accounts Committee in the way that he suggested.
  Mr. Renton: For the record, I should put the hon. Gentleman right. The Minister responsible for overseas aid to whom he referred was my good friend and namesake, now Sir Timothy Raison, not Timothy Renton.
  Mr. Rowlands: I apologise—I thought that, in his Foreign Office days, the right hon. Gentleman had some responsibility for such matters. However, I hope that he is similarly horrified by the results of such policies.
  According to the table on the appropriations for commitments, the European external aid budget will increase by 42 per cent. in real terms between now and 1999, while the British overseas aid budget will be capped, held at the same level or given a marginal increase. More than 50 per cent. of the aid budget will be spent on external matters outside our control.
  More interestingly, 45 per cent. of the European aid budget is outside the control of the European Parliament because it belongs to the European development fund, which is not part of the budget. We do not control, supervise or scrutinise money from the European development fund—the European Parliament does not have any right to do so either, because that fund is not part of the budget. That is extraordinary, and all the more reason why we need information and knowledge. The right hon. Member for Shropshire, North (Mr. Biffen) said that knowledge was power. Information would warn us and we would see the pattern of expenditure developing. We would not be in our present position, where we find that decisions made in 1992 have led to extraordinary figures on overseas aid expenditure, with the House lacking control over them.
  It is time for us to assert ourselves, not on a party basis but on a cross-party basis. This is a parliamentary matter and we need the information and reports on which to try to re-establish some degree of accountability and scrutiny—at least to know the consequences of the decisions being made. We did not know the consequences of many of the decisions made in Edinburgh in 1992. I thought that it was unfortunate and unfair when, on
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  Second Reading, the Chancellor chided his Conservative Back-Bench colleagues—I think that the hon. Member for Tayside, North (Mr. Walker) was one of them—for not raising various matters about the 1992 Edinburgh decision. In fairness, the information was not available to the House. It was only gradually, as a result of questioning in Committees and vigilance, that we became aware of what was happening, what would happen and the consequences of some of the decisions.
  Mr. Spearing: The Government seem to have forgotten that about a year ago in European Standing Committee B they dealt with the matter and there was a Division. One day later, on the Floor of the House, there was another Division on a measure being taken forthwith, and more than 40 Opposition Members voted against the sort of proposals contained in the legislation. Ministers have probably forgotten about that—they probably did not even know that it happened.
  Mr. Rowlands: Every time we discuss such matters I become more worried. I was a slow learner, but on Second Reading I found myself becoming more sceptical as I began to realise how accountability was moving from the House as a consequence of the decisions being taken.
  We are entitled to ask for the sort of information that we demand in new clause 12. Will the Paymaster General tell us the status of the appropriations for commitments that I have been describing and outlining to the Committee? Are they legally binding commitments to expenditure? The own resources decision is a legally binding commitment on which the Government are unable to renege. Are the expenditures that were forecast and the commitments attached to the own resources decision legally binding? When it investigated the overseas aid aspects of the Edinburgh decision, the Select Committee on Foreign Affairs was told that those commitments were legally binding and we could do nothing about them.
  Over and over again, the European Commission has failed to spend quite a lot of the money and has carried it forward or held it in account until it can find appropriate projects. Anyone who has begun to look, not at the corruption but at the waste and incredibly divided management of the European aid budget, will understand what I am saying. The Select Committee has been uncovering such problems in the past few weeks and hopes to report to the House soon. Without important changes to the management and accountability of the programme, the Committee would not agree to a 42 per cent. real terms increase in the European overseas aid budget. There will be an opportunity to raise those issues in our discussion on the next set of amendments.
  We are calling for greater transparency and information so that we do not get caught unawares. We want to foresee the consequences of the decisions made in 1992.
  Mr. Allason: I rise to support new clause 4 in the name of my hon. Friend the Member for Stafford (Mr. Cash) and a number of others, including myself.
  I have no enthusiasm for the Bill, but it does not have the constitutional implications of the Maastricht treaty. New clause 4 is important because it will enable the House and the public to understand the matters that will be decided at the intergovernmental conference in 1996. We are seeking a sort of annual report which will describe our contributions precisely and in simple terms so that

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  comparisons can be made with other countries. That is significant because it is in line with the traditions of the House in scrutinising all our expenditure.
  Our traditions are not automatically accepted or followed by our European partners. Baroness Thatcher used to boast of her twice-weekly visits to the House to answer Prime Minister's questions. She would then remind her European partners that her Spanish counterpart, the Spanish Prime Minister, had the sole constitutional responsibility of visiting the Cortes just once a year to answer questions.
  Scrutiny by the House is of enormous importance; it goes back to the principle of no taxation without representation. The issue before us today is taxation without information. We are seeking to ensure that the maximum information is placed before the House in a manner which enables us to scrutinise expenditure. If that is not allowed to happen, we shall certainly be moving towards taxation without representation. The issue of representation falls outside the scope of the subject of own resources, however, and I shall therefore not expand on it.
  It is important that the public should have confidence, not necessarily in the fact that the money is well spent, but in the acceptance of all the principles of subsidiarity. Elected Members of Parliament should have the right and the ability to scrutinise where and how tax is being spent and to ensure that there is maximum transparency and scrutiny of the fraud that we understand has taken place in the European Union in recent years and thus to seek to minimise the disappearance of significant amounts of taxation.
  The Minister was eloquent on the subject of fraud. I know that it is a subject close to his heart because I heard him on my car radio on Friday afternoon when he emphasised the information that had been laid before the House. In an interview with Nick Clarke on "The World At One" he got the better of his interviewer by demonstrating that some rather abstruse items of information had been laid before the House. He clearly believes that the availability of information is important; that is also at the heart of new clause 1.
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  It is our desire to ensure that the maximum information can be laid before the House. There is, of course, a danger in misinformation. Christopher Booker has written numerous columns about interference from Brussels and the ridiculous bureaucratic rules that are produced by directives. Apparently, they are the guiding light for environmental health officers up and down the country. If Christopher Booker is to continue his campaign, it is essential that the information he uses is accurate. We heard yesterday that he was uncharacteristically incorrect in saying that VAT on domestic fuel was a requirement of the European Union. Apparently that is not the case; Brussels makes no demands in that direction, so in those circumstances Christopher Booker would appear to be wrong.
  Mr. Spearing: Without looking at the records, perhaps the Paymaster General would agree that our zero rating arrangement will come to an end in 1998 or 1999, when we shall have to negotiate whether a zero rating continues.
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  In other words, there is a presumption under treaty regulations that we shall have to give it up or obtain an exemption in the future.
  Mr. Allason: The hon. Gentleman is quite correct when he says that 1999—the date mentioned in new clause 4—is the date when all bets are off and all the assurances received in Edinburgh will be up for grabs. That is a cause for great concern, particularly as by then we shall already have experienced the intergovernmental conference, which has often been described as Maastricht 2. Who knows what kind of European structures will be developed as a result of Maastricht 2. I have no objection to having a debate on the subject and discussing in the House and elsewhere what Maastricht 2 will entail, but if we are to have that important debate with all its constitutional implications, it is essential that the House should have access to the information. There is only one way to get that information, and that is to ensure that it is included in the legislation by putting new clause 4 into the Bill.
  The Minister clearly supports maximum transparency, and it is of enormous importance as we run up to this second critical time when the Maastricht structure will be reconsidered. The implications for Britain are enormous. There is no doubt that we went through an extremely dramatic trauma—I certainly did—over the Maastricht issue. If we are to repeat that exercise, it is essential that the public are reassured that they and their elected representatives have access to the maximum amount of information.
  The question is how can that be achieved. New clause 4 does not describe the mechanism for that scrutiny. We have heard today all the problems related to fraud, all the problems related to how we judge gross national product and our doubts about Mediterranean practices in accountancy. We know what the problems are; the question is what our solution is.
  All hon. Members on both sides of the House who have spoken today have praised the experience, skill and dedication of the Public Accounts Committee. It is held in very high regard and its status as the second most important Select Committee is recognised by the House. So the solution must be to allow the House to scrutinise the books by requiring the Public Accounts Committee to do so.
  Accordingly, I call upon the Minister to think carefully about including new clause 4 in the legislation. It is not a wrecking amendment; it would receive enormous support in the country because the bottom line is that those who elected us would have confidence that the House is exercising at least a degree of control over the expenditure—the vast grant that we are giving the European Union. Perhaps equally significantly, we must also ensure that the Public Accounts Committee takes those statistics and figures to pieces and makes annual reports to the House. That would be welcomed in all parts of the House and, more importantly, by the voters who—goodness knows—have little enough faith not just in the legislation but in the European Union.
  Mr. George Stevenson: In considering the accounting mechanisms for own resources, I agree with right hon. and hon. Members who have stated clearly that we cannot engage in that exercise without examining the demands on those own resources.

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  I also agree with my hon. Friend the Member for Oxford, East (Mr. Smith) that a continued majority demand on those own resources is the common agricultural policy. It is no coincidence that at the same time as the own resources decision was taken by the Council of Ministers on 31 October a decision was taken on budgetary discipline. The two are very much intertwined.
  We are talking not about fraud, but about expenditure that at the moment is envisaged. We are talking about expenditure and demands on own resources that at the moment are planned. Of course, the House can speculate all it likes about what is to happen over the next few weeks or months to the planned expenditure and, therefore, the demand on own resources, but at the moment when we are asked to take this decision I suggest that the votes of right hon. and hon. Members must be determined by the information that we have.
  New clause 1 is therefore vital. It says, in effect, that cross-party concerns are involved and that there are serious matters to consider when we examine own resources and the demands made on them, particularly by the common agricultural policy.
  Why can we not have a report? Perhaps a motion to the House over the next few weeks would help to clarify the position. We have to remove some of the uncertainties. That would give us an opportunity to put the Government to the test—to test their sincerity and their commitment to ensuring that the demands on own resources are kept within the constraints already described to us. We cannot calculate properly through the own resources mechanism what is required by the Community unless we consider its expenditure, not only in terms of the expansion of expenditure but in terms of its control. At present, we are not in that situation; I will give some examples to show why.
  As I understand it, the Government are saying, as of today, that expenditure is likely to be 2.6 billion ecu in excess of the agricultural guideline. The Government also say that we need not worry because they have measures in hand which are likely to remove that. I wish them luck. They may be successful. On the other hand, they may not. Demands on own resources will therefore be far greater than we are told at the moment.
  In the course of the next few weeks we shall, I hope, know whether the Government have been successful. They have told me that alternative measures—appropriate steps—may have to be taken to raise a further 919 million ecu. They say that olive oil payments of 1.2 billion ecu to southern member states will be deferred until next year and are not contained in the present budget.
  In those circumstances, how can we tell the Government that we trust them, that they should go away and do their best and that we will give them what can be described only as a blank cheque for own resources? That is not sensible. It should not be acceptable to the House, not in the interests of any right hon. or hon. Members, but in the interests of the House as a whole and the public whom we are here to represent.
  I do not know how hon. Members will be able to tell their constituents that they voted for an own resources resolution that puts demands on the British taxpayer, but that they do not know how 2.6 billion ecu—about £1.8 billion—which is in excess of the present agricultural guideline, will be found. The Government tell us not to
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  worry because they have the matter in hand and are not prepared to accept that. That is fine. I am prepared to take them at their word, although many of my right hon. and hon. Friends may castigate me for so doing.
  If we are prepared to put the Government on trust, what is so unreasonable about asking them to accept new clause 1, which asks them to trust us, too? If they are so determined to clarify the issue and to ensure that demand on own resources is kept within the budgetary guidelines and disciplines that they have accepted, why can they not trust us a bit? Why do the Government insist that it is they who need a blank cheque?
  Mr. Andrew Robathan: Would the new clause allow the House to scrutinise what is happening right now, when taxpayers' money to the tune of about £20 million is being spent on advertising to discourage smoking while £1 billion—I think that it is pounds and not ecu—of resources which come mainly from the British taxpayer is being spent in the European Union on producing tobacco which is completely unusable and has to be buried or burnt?
  Mr. Stevenson: Without going into the detail of particular expenditure headings under the common agricultural guarantee fund, I have tried to show the crucial relationship between own resources and expenditure. The two cannot be divorced. We cannot say that we will concoct an amount of revenue to be spent, but that we are not sure how it will be spent.
  In a letter sent to me today by the Paymaster General, the Government admit that they are not sure how a significant part of that demand—2.6 billion ecu, which is about £1.8 billion—will be met. That sum is made up of 919 million ecu which may have to be obtained by what the Government describe as appropriate measures but which they do not specify, 1.2 billion ecu in olive oil payments which have been deferred to future years and 500 million ecu of the monetary reserve. The Government say that the 500 million ecu monetary reserve cannot be included in the calculation because it is there to be used in any case. But it is outside the agricultural guideline and outside the discipline that the Government have accepted. It is therefore financial sleight of hand, to say the least, for the Government to seek the support of the House for own resources when they are using expenditure that is outside the budgetary guideline that they have accepted as the limit of expenditure.
  7.15 pm
  If one accepts that the two elements of the equation cannot be divorced, as I argue strongly that they cannot be, the answer to the hon. Gentleman's question must be yes. It is therefore crucial that new clause 1 be accepted. It is also crucial because time is not on our side. If the Bill goes through unamended, the system will come into force on 1 January 1995. Unless new clause 1 is accepted and the Government are required to report back to the House on the implementation of article 8(2) of the Council decision, the Government will have, if not a completely blank cheque, a cheque with a significant number of noughts missing from it.
  The British people expect nothing less than that we should tell the Government that we want to know exactly how they intend to control demands on own resources before we are prepared to support own resources as put to us at the moment. That is perfectly sensible and

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  reasonable. As I have said, we are asking the Government to trust us a bit. We cannot get away with calling on the Public Accounts Committee to scrutinise the issue at this time—it is not practical to argue for that—but new clause 1 is a reasonable attempt at asking the Government to come back to the House and show us what they have done; if they have tried their best and made some progress, hon. Members may then support them. But to go ahead in this sort of blind-alley fashion cannot be right.
  For those good reasons, I urge all right hon. and hon. Members to support new clause 1.
  Mr. Heathcoat-Amory: The group of new clauses that we have been considering for the past few hours falls into two parts. New clause 1, which was tabled by the hon. Member for Oxford, East (Mr. Smith), states that the Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister as to the measures that the Government intend to take in order to implement article 8(2) of the new own resources decision.
  The other two new clauses, which I shall deal with in due course, call on the Government to publish annual reports on various aspects of the own resources system and the Community budget. But first I shall dwell a little on what may be called the lead amendment, concerning article 8(2), which is about the detailed provisions necessary to put the own resources decision into practice—in other words, the implementing mechanism for giving effect to the own resources decision that is the subject of the Bill.
  First, I believe that new clause 1 is based on a misunderstanding, because it refers to the Government implementing article 8(2) of the new own resources decision, whereas in fact it is the Council of Ministers that agrees measures to implement that article. The Government have an effective power of veto over any measure that they find unsatisfactory, but they do not implement measures on their own, as the new clause implies. Of course the Government will be vigilant in using that veto if it proves necessary, and the House has a right to expect that.
  Secondly, there is nothing new in article 8(2). The text introduced in the new own resources decision is virtually identical to that in the existing ORD dating from 1988, but a few cross-references have been altered because of changes to the underlying treaty.
  However, the most important point, which has been overlooked by the Opposition, is that there are no plans to revise the existing implementing regulations. So article 8(2) will not be used as a consequence of the new own resources decision, or at any rate not in the foreseeable future.
  Mr. Hoon: The Paymaster General said that there was consistency between this decision and previous decisions on own resources. Will he explain why the original draft decision that gave rise to the decision we are debating contained specific reference to "fraud and irregularities" in connection with the Community budget, and the preliminary clause went on to detail the Commission's role in improving national VAT registration, calculation, recovery and control procedures? That was in the original
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  draft, but it is not in the version that we are debating. Why was there a change, and were the Government responsible, in Council, for making that change?
  Mr. Heathcoat-Amory: It is not clear whether the draft that the hon. Gentleman is talking about is a Labour party document or one of ours. He owes it to the Committee to be a little more specific in providing a reference if he wishes to ask a question. But when we deal with future new clauses or amendments, if they are debated, I shall endeavour to answer his question.
  What I am saying is important to the Opposition Front-Bench spokesmen, because their new clause is postulated on the idea that a number of revisions will be made in the implementing regulations. That is simply not in prospect. In 1988, there were quite profound and radical changes to the implementing directives and legislation. There were two large regulations and a directive, which profoundly changed the system whereby own resources were raised.
  The 1994 own resources decision makes no such radical change. It simply changes the figures within the programme. The programme itself is rolled forward into the new own resources decision. Indeed, that is specifically required and provided for separately by article 11(2)(a) of the new own resources decision, which explicitly provides the legal authority to continue using the earlier legislation.
  However, in due course new changes may be necessary to the implementing legislation, and any such decisions taken by the Council must be taken unanimously. That is a safeguard for the House and for this country. Any proposals from the Commission along those lines would be subject to the scrutiny requirements of the House. I believe that, on reflection, the hon. Member for Oxford, East will agree that it makes no sense to make the coming into force of what I hope will be an Act dependent on a resolution that contains nothing, because there is nothing at present to introduce under that heading.
  The hon. Member also talked about the United Kingdom abatement. He was joined in that concern by several other hon. Members, including my hon. Friend the Member for Stafford (Mr. Cash), and I believe that the right hon. Member for Llanelli (Mr. Davies) raised the issue as well. The Committee is right to be extremely vigilant about the British rebate.
  First, I shall answer a specific question asked by the hon. Member for Oxford, East: the new working methods paper on the United Kingdom abatement that the hon. Gentleman mentioned is set out in Council document 5455/94, and an explanatory memorandum was provided to the Scrutiny Committee on 22 February this year. I assure the hon. Gentleman that the formula by which the United Kingdom abatement is calculated has remained unchanged since 1988.
  Of course the Commission and many other member states would love to change and undermine the British abatement in one respect or another, and that brings me to a point raised by other hon. Members. There is nothing sinister in the requirement in the ORD that the Commission re-examine the British rebate by 1999, because it exactly replicates a similar requirement in the 1988 own resources decision. Indeed, the British rebate was examined in 1992.

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  However, the crucial fact for the Committee is that the abatement continues in force until it is changed, and it can be changed only by unanimity. As such a change would be contained in a new own resources decision in 1999 or later, and as the change can come into effect only through the constitutional requirements on member states, in this country that means that it can come into effect only through primary legislation. It therefore follows that not only the Government of the day but the House of Commons will have a veto over any alteration in the British rebate.
  I share the concerns expressed on both sides of the Committee about whether the Government of the day will maintain their position on the abatement. Opposition Members have reason to doubt their own Front-Bench spokesman, because the hon. Member for Dunfermline, East (Mr. Brown) said in 1992 that the British rebate would have to be up for renegotiation. So if the House is concerned to maintain the British rebate in its existing form—certainly I am—it must ensure that a Conservative Government are in charge in 1999.
  Mr. Andrew Smith: Having heard that allegation previously, my hon. Friend the Member for Dunfermline, East (Mr. Brown) has made it clear that he did not say that. Does the Minister accept that? Moreover, my hon. Friend has made it clear that it is and has been Labour party policy to maintain the United Kingdom rebate. I therefore hope that there will be no repetition of that charge by Conservative Members.
  Mr. Heathcoat-Amory: It is no comfort for me to know that that is claimed to be Labour party policy. Labour party policy changes week by week. What I do know is that the hon. Member for Dunfermline, East said on a radio programme listened to by millions of people that the British rebate was a matter for renegotiation. That shocked the House.
  Mr. Smith: Will the Paymaster General give way?
  Mr. Heathcoat-Amory: No. I will not give way to the hon. Gentleman, because I am answering the point he raised with me before.
  The hon. Member for Dunfermline, East, the shadow Chancellor of the Exchequer, said on the radio programme that the rebate was to be a matter for renegotiation. He may wish that he had not said that, and he may claim that it is no longer Labour party policy. I am illustrating to the Committee the fact that we get certainty and consistency on these matters only from Conservative Members.
  7.30 pm
  Ms Hilary Armstrong: The Minister really should accept Labour's assurances about what my hon. Friend the Member for Dunfermline, East (Mr. Brown) said. We can give him chapter and verse. On the radio this weekend, the Minister made claims about his tackling of the budget in the House last week which were not borne out in Hansard. We pressed him on what he had done about the European Parliament's amendment on fraud which was before the Council, and he refused to answer. However, on Friday or Saturday, he said on the radio that he had never been asked about that and that he
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  was not pressed about it. I know that he was in some distress in the debate last week, but I also know that he was pressed and that he never answered.
  Mr. Heathcoat-Amory: I am not sure what all that was about. I was referring to remarks made by the hon. Member for Dunfermline, East. If he has changed his mind, I welcome that. Consistency comes from Conservative Members.
  Mr. Smith: How many times do we have to say it? We have made it clear, and my hon. Friend the Member for Dunfermline, East has made it clear, that he did not say what the Minister alleges he said. We have made it clear that it has consistently been Labour party policy to uphold the abatement procedure and the United Kingdom rebate. We have given those pledges in good faith. I now call on the Minister to accept them, and to desist from repeating falsehoods.
  Mr. Heathcoat-Amory: The record will stand for itself. If the Labour party has changed its mind about the importance of the British rebate, I welcome that. I give an unqualified welcome to that. All my right hon. and hon. Friends welcome a sinner that répenteth.
  I now move on to a number of other issues raised in the debate. Serious points were raised about the GNP statistics, on which a great deal rests, especially the contributions from each member state. Again, this point was raised by my hon. Friend the Member for Stafford and, in truth, by the hon. Member for Oxford, East. I am glad to say that the Commission takes seriously the need to harmonise and to verify national GNP statistics. A GNP management committee set up in 1989 has led to improvements.
  It was correctly said that the statistics emanating from former East Germany were unreliable immediately following reunification. It is not the case that the contributions from Germany as a whole are assessed separately from former East Germany and former West Germany. They are based on the whole country. It is, of course, true that the change from a command economy threw up great difficulties in correctly and accurately estimating GNP statistics. As the world now knows, they were all made up before Germany was reunified.
  The other point raised in the debate has been the role of the Public Accounts Committee. The Committee is right to pay tribute to the work done by the PAC, and to raise the possibility of extending its remit to cover some of the matters that have been debated during the passage of the Bill.
  The National Audit Office may have a more direct and continuing interest in the actual auditing of the figures. It already has close links with the European Court of Auditors. When I met members of the court in London early this year, they went on to talk to and exchange ideas with the NAO. That does not undermine the case that has fairly been made out this evening for looking for ways in which to involve the PAC more intimately in this work.
  The PAC has a present remit which allows it to take a considerable interest in these matters. I may be able to be of assistance to the Committee, and especially to my hon. Friend the Member for Stafford who raised the matter specifically. It is a possibility that we could look again at the Standing Orders governing the PAC to see whether

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  changes might be appropriate to give it this wider remit. My right hon. Friend the Lord President is amenable to doing that.
  I have to put down the proviso that the PAC is a Committee of the House and not a Government committee. Decisions and discussions, therefore, of this nature will have to be conducted through the usual channels and, indeed, with the Chairman of the PAC. That very constructive suggestion has come out of the Committee, and it will meet some of the points raised in the debate.
  Mr. Rowlands: As I understand it, the PAC is triggered off by the responsibility of the accounting officer—the permanent secretary of each Government Department. How will it be possible for the permanent secretary of any Department to be responsible for money that has been handed over to Europe and spent by the European Commission?
  Mr. Heathcoat-Amory: I must not mislead the hon. Gentleman. I am not suggesting that the PAC can have a remit out of this country in pursuing expenditure in other member states. That would be stretching the terms of reference of the PAC to breaking point. That is not what I was suggesting.
  Mr. Cash: I am grateful for the indication that my hon. Friend has given. I have been given to understand that the points he has just made resulted from discussions today with the Prime Minister. Furthermore, I was given to understand that a specific undertaking would be given that the intention that the PAC should be involved in the process was something on which I could rely in good faith.
  If my hon. Friend put it in terms of an undertaking, I would then seek leave of the Committee to withdraw the motion. It would be a significant Euro-realist step for the PAC to be involved in dealing with fraud and own resources. That would indeed be a watershed in the whole European saga. I should be grateful for the words that I have asked for to be put in terms of an undertaking.
  Mr. Heathcoat-Amory: I have already explained that neither I nor my right hon. Friend the Prime Minister can direct the PAC, which is a Committee of the House. What I have already undertaken to do—I have the agreement of the Lord President—is to examine and to give a fair wind to changes in the terms of reference of the PAC, if the PAC considers that the terms of reference are a restraint on its action in this respect. My right hon. Friend the Prime Minister is certainly aware of this. He believes that tackling fraud and mismanagement, and getting better financial disciplines into the workings of the Community, are among the highest priorities that he takes into discussions in the European Union.
  I turn now to points raised by the hon. Member for Newham, South (Mr. Spearing), among others, on the connected but separate issue of reports to the House and the opportunities that the House has for scrutinising not only the Government but the workings of the European Union. The hon. Gentleman has a long and honourable role in defending the privileges of the House in this respect. I can give him some of the assurances he seeks.
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  First, however, I would like to point out to the Committee just how regular and numerous the reports already made by the Government to the House are.
  My hon. Friend the Member for Torbay (Mr. Allason) said that he was a strong advocate of information and transparency on such matters. I strongly agree. I believe that the House has a right in that respect. I must say, speaking as a former deputy Whip, that it is not always frightfully easy to get people to sit on the Committee to undertake the scrutiny. Indeed, some of the debates held on such matters are rather thinly attended. But that does not detract from the fact that the House has a right to the information. Indeed, many right hon. and hon. Members attending this debate have, over many years, taken a close personal interest in these matters.
  I emphasise that the quantity of information given to the House is seen by some as being too much, and of an indigestible nature, rather than too little. The figures for the net contributions to the EC budget are given out in the Red Book and at Budget time. In addition, the departmental report of the Chancellor's Departments is an expansion of the information in the Red Book and is presented around March each year.
  In addition to that, there is an annual statement on the Community budget, which takes the form of a White Paper. The statement for this year was published in March and it gave further information. There are also the Government's six-monthly White Papers on developments in the European Union, and an enormous number of explanatory memoranda on the Community budget. On European matters in 1994 alone, 673 explanatory memoranda have already been submitted to the House, 59 of which covered budgetary matters. They triggered no fewer than 31 scrutiny debates.
  In answer to the point raised by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) on the expenditure—
  Mr. Spearing rose—
  Mr. Heathcoat-Amory: May I answer the point raised by the hon. Gentleman's hon. Friend on the expenditure side of the budget? That was, of course, one of the matters that we considered last Monday, when the 1995 budget was under discussion in the House.
  I would assure the hon. Member for Merthyr Tydfil and Rhymney that the overall discipline on the European Union is a ceiling on contributions, which cannot be breached. If one allies that ceiling on contributions with the fact that the European Community cannot borrow, it is a very real discipline on its expenditure. It has a financial perspective, which is an agreement between the Council of Ministers and the European Parliament, which, although not legally binding, is a political agreement, which sets limits for each category of expenditure year by year. However, a number of legal agreements cover matters such as structural funds and the cohesion funds.
  I can reassure the hon. Member for Stoke-on-Trent, South (Mr. Stevenson) one more time that the agricultural guideline will not be breached because it requires unanimity, and we will not sanction a breach of the guideline this year or next year. It is up to the Commission

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  to organise its expenditure to fit that upper limit. We have long gone beyond the years during which revenue was set to cover all expenditure.
  Mr. Stevenson: I am grateful for the Paymaster General's undertaking, as was communicated to me by letter, that the agricultural guideline will not be breached. First, does that include not deferring expenditure from this year to future years simply to keep within the guideline? Secondly, does that mean that such elements as the monetary reserve, which is not within the guideline, will not be used?
  Mr. Heathcoat-Amory: As the hon. Gentleman fairly says, I have corresponded with him about this matter. I have explained the purpose of the monetary reserve and the fact that, if it was used for specified purposes, it would not be a breach of the agricultural guideline. I hope that he will accept that reassurance.
  7.45 pm
  Mr. Spearing: I think that the Paymaster General was responding to new clause 12 earlier. Despite what he says, does he not agree that the five sets of publications which he mentioned are disparate, come out at different times of the year and are not a comprehensive Command Paper? Indeed, the memoranda are many, duplicated and not easily available to the public. What objection does he have to new clause 12?
  Mr. Heathcoat-Amory: I want to make a suggestion to the hon. Gentleman. I think that I have shown the Committee that what almost amounts to a deluge of information descends on the Scrutiny Committee. I pay an incidental tribute to the members of that Committee, who presumably have to read the stuff and decide whether it is to be debated in Standing Committee—or, indeed, recommended for debate on the Floor of the House. It seems that most hon. Members find the sheer volume, complexity and detail of that information extremely difficult to cope with. I therefore suggest that the annual report on the Community budget should be expanded into a report rather along the lines of what I think the hon. Member for Newham, South is suggesting.
  It has to be owned that the report is not a best seller. It has been published annually for some 14 years, largely without alteration. I understand that it was published initially at the request of the Public Accounts Committee, so it is not a statutory requirement but a request that the Government have granted every year. To make it more accessible, it could be expanded and made more what one may call Member-friendly, and put into a form which could become the basis, if the House so wished, for a debate on its content.
  I think that that would meet the terms of hon. Members' requests, which are not so much for more information as for better information in a more accessible way. It does not require legislation, and it does not require a new clause. It requires an undertaking from me, which I am very happy to give. If that satisfies the Committee, invite it to reject the new clauses.
  Mr. Hoon: At the outset, it was suggested that this debate was reminiscent of some of the Maastricht debates, but the one significant difference is that, with the exception of the Paymaster General, almost every hon. Member is in agreement. The right hon. Members for Shropshire, North (Mr. Biffen) and for Mid-Sussex (Mr.
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  Renton), the hon. Member for Torbay (Mr. Allason) and, I think, every Opposition Member have agreed about own resources. They agreed that a vote and a debate on an increase in own resources for the European Union should be accompanied by a discussion of how that money is to be spent and whether it is to be spent consistently, properly and in accordance with the normal rules of expenditure that we expect in the United Kingdom and with those set down by the various European institutions. That issue united hon. Members: only the Paymaster General took exception to it.
  The Paymaster General took exception by using a very narrow construction of new clause 1. If he looks in more detail at new clause 1, as well as at article 8(2), he will see, especially in the final three lines of article 8(2), that the Council is enjoined
  "to make possible the inspection of the collection, the making available to the Commission and payment of the revenue referred to in Articles 2 and 5."
  As a member of the Council of Ministers, it is obviously incumbent on the Government to play their part in ensuring that the revenue is made available on the basis of a proper system of collection and that appropriate inspection is available to those who, are responsible for ensuring that member states make their appropriate contributions to the European Union's budget.
  In a sense, that approach links hon. Members on both sides of the Chamber. Everyone has said that there must be a proper system for expenditure. The first part of article 8(2) ensures that there are proper systems for expenditure and for collection. As we are debating an increase in own resources to be available to the European Union, we should consider the system that bears on the collection of revenue and on how that revenue is spent.
  As much as anything else, article 8(2) is concerned with maintaining a consistent system of raising revenue across the European Union, which is crucial under the new system of calculating own resources. A proper understanding of the ceiling on own resources will be achieved only on the basis of a GNP calculation. At the same time, if we are properly to concern ourselves with ceilings on own resources for the European Union, we must be confident that every member state has a proper system for calculating GNP.
  It is easy to refer to other countries' difficulties in calculating GNP, but from time to time GNP in Italy, for example, has fluctuated dramatically. Sometimes the fluctuation has been the result of concern about Italy's contribution to the European Union's budget. It is well known that at one stage an adjustment was made because the Italian Government were extraordinarily concerned that Italy was paying more into the European Union's budget than had been anticipated. Given the size of the GNP that had been recorded, Italy was receiving less by way of commitment from that budget. It was not entirely surprising that there was a significant adjustment downwards of Italy's GNP for the following year.
  It is important that in voting extra funds for the use of the European Union—this view has been expressed by everyone who has spoken in the debate apart from the Paymaster General—we have regard to how the funds are spent. I am not advocating a wide-ranging, Budget-style discussion during which we consider every heading in the European Union's budget, but in being asked to make further contributions to the European Union's budget, British taxpayers should not be concerned that the budget

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  contains significant elements of fraud and some elements of waste. They should be satisfied that there is an effective system of delivering an agriculture policy for the European Union.
  It is difficult to understand how anyone in the House of Commons could object to that approach. I assume that even the Paymaster General is sympathetic to my argument, yet the Bill contains no reference to the matters that I have raised so far. It would have been open to the Government, in implementing the decision by which, I accept, they are bound under European law and an international obligation, to ensure that many of the provisions that have been discussed by hon. Members were incorporated in the Bill.
  The Paymaster General has defended the Bill, and that is understandable, but the Government could have included provisions of the sort that have been suggested to ensure that the House has opportunities for proper debate, which the European Union's institutions have already.
  The Government say that we must debate the Bill, but not more than the Bill. They say that we must debate only how an increase in own resources should be implemented. At the same time, the European Parliament, the Commission and even the Council consider own resources as they consider budgetary discipline and fraud. Curiously, an earlier draft from the Commission contained a specific reference to fraud, which was deleted only after the adoption procedure in Council. I am talking not about a Labour party draft or the publication of a quango or pressure group but about the text of a document that was agreed by the Commission. As I have said, it contained a specific reference to fraud, which showed that the Commission was concerned about fraud in terms of spending alongside own resources.
  New clause 3 refers specifically to a Council regulation on the protection of the Community's financial interests. That regulation is not restricted to the raising of revenue or the spending of revenue, for both issues are raised in the same document. Fraud is defined in the regulation as being a "diminution" of the Community's own resources or other revenue. The document refers to fraud in the raising of revenue in terms of own resources, and it treats fraud in expenditure in the same way. That is what all hon. Members who have spoken in the debate have invited the Government to do, with the exception of the Paymaster General.
  Mr. Stevenson: Perhaps my hon. Friend will reflect on the question that I put to the Paymaster General, to which he did not respond. We are talking about how revenue is expended as well as how it is raised. I argue that transferring significant parts of agriculture expenditure from one year to the next constitutes a de facto breach of the current guidelines.
  Mr. Hoon: I shall not be tempted to go along that path too far, but where there are clear decisions of European Union institutions— such as the decision on budgetary discipline, which set out a framework for spending— and the guidelines are breached, surely that is a matter for consideration by the House of Commons, especially when we are considering the payment of extra funds to the European Union.
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  We do not need to investigate in detail as part of the budgetary debate precisely how each and every ecu in the EU's budget is spent. We should, however, have the opportunity of considering the broad framework within which the European Union spends its funds. It follows from that—I hope that this is consistent with what is happening in the EU—that we in the House should be considering the broad outline of the budget as we consider how the budget is raised, how own resources are secured and, in a general sense, how they are spent.
  The essential question for the Government to answer, having introduced the Bill, is why they have not made that consideration possible. Why cannot we have provisions in the Bill that allow the House, along with the European Commission, the European Parliament and the Council of Ministers, to consider the broad outline of how funds are spent when the British taxpayer is being asked to devote significant sums of extra money to the European Union?
  Mr. Bill Walker: I welcome the opportunity to speak, and the Committee will be pleased to know that I shall be brief because my hon. Friend the Paymaster General has taken up the concerns that I and others have felt.
  I am pleased to see my right hon. Friend the Prime Minister on the Front Bench. He will know that I and others have been concerned about how the House can scrutinise European funding so that it becomes transparent.
  There is no doubt that our constituents are concerned about how the moneys that they contribute in taxes are used within Europe. With that in mind, I intervened on my right hon. and learned Friend the Chancellor of the Exchequer on Second Reading to draw his attention to the explanatory and financial memorandum. I make no apologies for returning to the matter.
  Paragraph 5 of the explanatory and financial memorandum states:
  "The new Decision has to be approved by all member states in accordance with their national procedures before it can enter into force. It will take effect as from 1st January 1995."
  Hon. Members on both sides of the House have been trying to ensure that Parliament knows what is going on. That calls for transparency and scrutiny of expenditure by the House. That is what we have been after; we have not been attempting to torpedo the Bill. I felt very upset about being accused of attempting to do so, when, in private conversations, I had made it perfectly clear what my objectives were. I said that I would be brief, and I shall say merely that I welcome what my hon. Friend the Paymaster General said. I take his assurance for what it is worth, and believe it.
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  Mr. Peter Shore: I listened with care to the Paymaster General. He was more forthcoming on some matters that have been raised than on others. He took seriously the point that was touched on by my hon. Friend the Member for Ashfield (Mr. Hoon) and by the hon. Member for Stafford (Mr. Cash)—that is, the importance of obtaining a correct, unified and uniform definition of GNP. The plain truth is that the component of own resources, which is now being taken up by GNP contributions, is growing. It was about 20 per cent. of the total some years ago. It certainly is destined, under the new arrangements, to rise to about 45 per cent.

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  of the total. Therefore, it matters very much that there is a uniform, reliable definition of the GNP of the different countries.
  I listened with sympathy to what my hon. Friend said about the Italians not always being entirely measured in their GNP figures. It is well known that they have a substantial black economy, and of course it is very difficult anyway to integrate that into the true picture of the GNP. Nevertheless, I broadly welcome what was said about efforts to establish, in a uniform way, the GNP of the member states.
  On the role of the Public Accounts Committee, the Paymaster General rightly said that anything that he said tonight had to be in reference to the Committee itself. Indeed, it is for the Public Accounts Committee to decide whether it wishes to have its terms of reference extended in the way that has been suggested. I was glad to see, however, before my hon. Friend finished his remarks on that matter, the presence of the Chairman of the Public Accounts Committee. I am sure that he has taken on board, I hope, sympathetically, what was suggested.
  I hope that it will be possible for the PAC, which is a very senior Committee of the House and one whose judgment and expertise we have come to value, to play a part in assessing expenditures made in the United Kingdom from the Community budget and the contributions that we make to that budget.
  On the matter which was raised by my hon. Friend the Member for Newham, South (Mr. Spearing) and spoken to by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) dealing specifically with new clause 12, I was not so happy with what the Paymaster General said. He rightly reminded us that several disparate reports, which come out at different and unpredictable times of the year, deal with the financing of the Communities. As he rightly said, the net contribution that is made by the United Kingdom is set out in the Treasury Red Book. Hon. Members have seen the Red Book for this year. It is true that we receive a departmental report in March.
  Frankly, most of all, we are interested in our contribution to the European Community budget. Our contribution—that is to say, our gross contribution as well as our net contribution—how it is changing over time and how it compares with the gross and net contributions of other countries are of great importance. Although the Paymaster General expressed willingness to expand the Budget report in future to take account of some of our propositions, I do not think that that is quite good enough.
  We gave some thought to what we are urging, and we have a new clause with a number of component parts, all of which we wish very much to see enter the annual report for which new clause 12 calls. It is an annual report which is necessary for one overwhelming reason: there is no annual debate on the United Kingdom's contribution to the European Community's budget. It is only at approximately five-yearly intervals, when a new European Communities (Finance) Bill is required, that the figures are revealed. As we recall, as a preliminary to the debate on the European Communities (Finance) Bill 1994, the Chancellor published what the Treasury described as an
  "updated forecast of the UK's contribution to the EC Budget and a detailed paper describing the EC's Budgetary framework".
  There is much information in that publication which we do not normally see. Table 1, for example, gives the gross payments of the United Kingdom. I am not aware that
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  that information is published in any other document on a regular basis. We know from table 1 of that Treasury document that there has been an enormous increase in our contributions, from £5,800 million in 1989–90 to an estimated £8,308 million in 1994–95, rising in the Treasury forecast to £10.5 billion in 1997, which is virtually double in seven or eight years. That is significant.
  As was argued on Second Reading, it is not good enough simply to have the net figures—although we have those and they are important and relevant—because they reflect the priorities of the Community in spending money in its budget, not necessarily how we would wish that money to be spent. That is why, in new clause 12(a), we ask for
  "a general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein".
  That is a matter of considerable importance. We know that Germany is by far the largest net and gross contributor. We are certainly, massively, the second-largest gross contributor, and certainly the second-largest net contributor. Whether or not the new formula for own resources will lead to a change in our relative position, and whether or not we see Holland and perhaps France and Austria overtake Britain as net contributors, which is something that we would welcome, the only way of obtaining that information is through an annual report of the kind for which we have asked.
  I hope that that first requirement will be met, but it is not the only one. The Treasury report has helped to give us a real account of the rebate mechanism which has been used in adjusting Britain's net contribution. That is a very useful piece of information, as is the composition of own resources as between the three major components of agricultural levies, sugar levies, customs duties and VAT and now GDP, as the fourth component.
  We need that information. In paragraph (c) of our proposed new clause 12. we ask for the operation of each article of the decision of 31 October 1994. Perhaps the most important of the new articles—the one that we would certainly keep an eye on—is article 10, which the hon. Member for Stafford referred to in his speech. It contains proposals for a new additional own resource component. That is a very important matter and we want to contribute to the thinking behind it at an early stage. Any proposals for additional own resources should be reflected in the annual report for which we have asked.
  We have also asked, I think quite properly, for a report on any action taken by Her Majesty's Government in respect of financial discipline. Much has been said about financial discipline and more will be said about it in subsequent debates, but surely it is reasonable for the House of Commons to demand an annual report about financial discipline: what the British Government have proposed and how successful they have been in securing improvements in financial discipline.
  In paragraph (e) of our new clause 12, we ask for
  "the text of any regulation, directive or financial regulation relating to the operation of the Decision to which Her Majesty's Government has given its assent."
  I do not think there is a problem with that; we can expect to receive the information as soon as the European Community has made a decision under article 8(2).

  379
  I think that the precise categories of information for which we have asked are wholly reasonable. I think that they reflect the House's need to keep a close eye on the financing of the European Community, particularly as it affects the British contribution and British net receipts. I hope that we will be allowed to press the new clause to a Division tonight.
  Mr. Andrew Smith: I do not wish to detain the Committee for long, although I think that it has been a very useful debate. As my hon. Friend the Member for Ashfield (Mr. Hoon) said, there is a large measure of agreement on both sides. Hon. Members are not satisfied with the way in which the collection of European Union resources is supervised and they are not satisfied with the way in which expenditure is scrutinised. Many hon. Members referred to fraud and the need for better controls.
  When the Paymaster General replied to the debate I noticed that he did not answer the question which was put to him by my hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) about balances being carried forward from one year to the next. He asked whether that was consistent with the degree of financial control that the Government are seeking. Could the Paymaster General answer that question now?
  As Labour Members have said, we are not satisfied with the system of collection and calculation of European Community resources. Conservative Members also referred to the implications of inconsistencies in the way in which different member states calculate gross national product and VAT bases. They drew attention to the inequity in the amount of money paid by different member states. That, in itself, is a good reason to press our new clause to a Division.
  The Committee should also acknowledge that, in replying to new clause 12 proposed by my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) about an annual report to Parliament, the Paymaster General said that a good measure of the proposals could be incorporated in the annual report made to the House about the budget. But the Paymaster General will not incorporate some very important aspects of my right hon. Friend's new clause.
  The information which is detailed in new clause 12—rather than the great pile of documents that the Government bring to European debates— would be very useful and enlightening. The public would find it very interesting reading. Why does the Paymaster General think that certain parts of new clause 12 are unacceptable? We intend to support my right hon. and hon. Friends if they wish to press the matter to a Division.
  We also face the rather extraordinary prospect of the Paymaster General giving concessions to the hon. Member for Stafford (Mr. Cash)— concessions which were not given in the normal way in response to the debate, but which were negotiated at Downing street. That is a quite extraordinary turnaround for a Government who last week were going to beat the rebels and Euro-sceptics into the ground. All of a sudden, they are now negotiating with them at Downing street about terms. I suppose that the Government have learnt from last night that awarding
  380
  concessions five or 10 minutes before a 10 o'clock Division does not work. Perhaps they are trying a more structured approach.
  8.15 pm
  This style of governing—making all sorts of last-minute concessions—reveals the Government's total disarray and confusion. The Government's tactics are as confused as their Whips must be, if last night's vote is anything to go by. The Government are in as much mess as the European Union when it comes to controlling fraud.
  The Government have not responded adequately to the very powerful arguments for improved scrutiny and control of finances which were made on both sides of the Committee. In new clauses 1 and 12, my right hon. and hon. Friends advance the case for proper scrutiny by the House of what happens to money which is raised in this country and spent by the European Union. The public have a right to expect that control and scrutiny, and we intend to push the new clauses to a Division.
  Question put, That the clause be read a Second time:—
  The Committee divided: Ayes 259, Noes 318.

  Division No. 13]

  [20.17 pm

  AYES

  Abbott, Ms Diane

  Clarke, Eric (Midlothian)

  Adams, Mrs Irene

  Clarke, Tom (Monklands W)

  Ainger, Nick

  Clelland, David

  Ainsworth, Robert (Cov'try NE)

  Clwyd, Mrs Ann

  Allen, Graham

  Coffey, Ann

  Anderson, Donald (Swansea E)

  Cohen, Harry

  Anderson, Ms Janet (Ros'dale)

  Connarty, Michael

  Armstrong, Hilary

  Cook, Frank (Stockton N)

  Ashdown, Rt Hon Paddy

  Cook, Robin (Livingston)

  Ashton, Joe

  Corbett, Robin

  Banks, Tony (Newham NW)

  Corbyn, Jeremy

  Barnes, Harry

  Corston, Jean

  Barron, Kevin

  Cousins, Jim

  Battle, John

  Cox, Tom

  Bayley, Hugh

  Cunliffe, Lawrence

  Beckett, Rt Hon Margaret

  Cunningham, Jim (Covy SE)

  Beith, Rt Hon A J

  Dafis, Cynog

  Bell, Stuart

  Dalyell, Tam

  Benn, Rt Hon Tony

  Darling, Alistair

  Bennett, Andrew F

  Davidson, Ian

  Benton, Joe

  Davies, Ron (Caerphilly)

  Bermingham, Gerald

  Davies, Rt Hon Denzil (Llanelli)

  Berry, Roger

  Davis, Terry (B'ham, H'dge H'I)

  Betts,Clive

  Denham, John

  Blair, Rt Hon Tony

  Dewar, Donald

  Blunkett, David

  Dixon, Don

  Boateng, Paul

  Dobson, Frank

  Bradley, Keith

  Donohoe, Brian H

  Bray, Dr Jeremy

  Dowd, Jim

  Brown, Gordon (Dunfermline E)

  Dunnachie, Jimmy

  Brown, N (N'c'tle upon Tyne E)

  Dunwoody, Mrs Gwyneth

  Burden, Richard

  Eagle, Ms Angela

  Caborn, Richard

  Eastham, Ken

  Callaghan, Jim

  Enright, Derek

  Campbell, Menzies (Fife NE)

  Etherington, Bill

  Campbell, Mrs Anne (C'bridge)

  Evans, John (St Helens N)

  Campbell, Ronnie (Blyth V)

  Ewing, Mrs Margaret

  Campbell-Savours, D N

  Fatchett, Derek

  Caravan, Dennis

  Field, Frank (Birkenhead)

  Cann, Jamie

  Fisher, Mark

  Carlile, Alexander (Montgomry)

  Flynn, Paul

  Chidgey, David

  Foster, Don (Bath)

  Chisholm, Malcolm

  Foster, Rt Hon Derek

  Church, Judith

  Foulkes, George

  Clapham, Michael

  Fraser, John

  Clark, Dr David (South Shields)

  Fyfe, Maria

  381

  Galloway, George

  McKelvey, William

  Gapes, Mike

  McLeish, Henry

  Garrett, John

  McMaster, Gordon

  George, Bruce

  McWilliam, John

  Gerrard, Neil

  Meacher, Michael

  Gilbert, Rt Hon Dr John

  Meale, Alan

  Godsiff, Roger

  Michael, Alun

  Golding, Mrs Llin

  Michie, Bill (Sheffield Heeley)

  Gordon, Mildred

  Michie, Mrs Ray (Argyll & Bute)

  Graham, Thomas

  Milburn, Alan

  Grant, Bernie (Tottenham)

  Miller, Andrew

  Griffiths, Win (Bridgend)

  Mitchell, Austin (Gt Grimsby)

  Grocott, Bruce

  Moonie, Dr Lewis

  Gunnell, John

  Morgan, Rhodri

  Hain, Peter

  Morley, Elliot

  Hall, Mike

  Morris, Estelle (B'ham Yardley)

  Hanson, David

  Morris, Rt Hon Alfred (Wy'nshawe)

  Hardy, Peter

  Morris, Rt Hon John (Aberavon)

  Harman, Ms Harriet

  Mudie, George

  Harvey, Nick

  Mullin, Chris

  Henderson, Doug

  O'Brien, Bill (Normanton)

  Heppell, John

  O'Brien, Mike (N W'kshire)

  Hill, Keith (Streatham)

  O'Hara, Edward

  Hinchliffe, David

  O'Neill, Martin

  Hodge, Margaret

  Oakes, Rt Hon Gordon

  Hoey,Kate

  Olner, Bill

  Hogg, Norman (Cumbernauld)

  Paisley, The Reverend Ian

  Home Robertson, John

  Parry, Robert

  Hood, Jimmy

  Pendry, Tom

  Hoon, Geoffrey

  Pickthall, Colin

  Howarth, George (Knowsley N)

  Pike, Peter L

  Howells, Dr. Kim (Pontypridd)

  Powell, Ray (Ogmore)

  Hoyle, Doug

  Prentice, Bridget (Lew'm E)

  Hughes, Kevin (Doncaster N)

  Prentice, Gordon (Pendle)

  Hughes, Robert (Aberdeen N)

  Primarolo, Dawn

  Hughes, Roy (Newport E)

  Purchase, Ken

  Hutton,John

  Quin, Ms Joyce

  Illsley, Eric

  Radice, Giles

  Jackson, Glenda (H'stead)

  Randal, Stuart

  Jackson, Helen (Shef'ld, H)

  Raynsford, Nick

  Jamieson, David

  Reid, Dr John

  Jones, Barry (Alyn and D'side)

  Rendel, David

  Jones, leuan Wyn (Ynys Mon)

  Robertson, George (Hamilton)

  Jones, Jon Owen (Cardiff C)

  Roche, Mrs Barbara

  Jones, Lynne (B'ham S O)

  Rogers, Allan

  Jones, Martyn (Clwyd, SW)

  Rooney, Terry

  Jones, Nigel (Cheltenham)

  Ross, Ernie (Dundee W)

  Keen, Alan

  Rowlands, Ted

  Kennedy, Charles (Ross,C&S)

  Ruddock, Joan

  Kennedy, Jane (Lpool Brdgn)

  Salmond, Alex

  Khabra, Piara S

  Sedgemore, Brian

  Kilfoyle, Peter

  Sheerman, Barry

  Kirkwood, Archy

  Sheldon, Rt Hon Robert

  Lestor, Joan (Eccles)

  Shore, Rt Hon Peter

  Lewis, Terry

  Short, Clare

  Liddell, Mrs Helen

  Simpson, Alan

  Litherland, Robert

  Skinner, Dennis

  Livingstone, Ken

  Smith, Andrew (Oxford E)

  Llwyd, Elfyn

  Smith, Chris (Isl'ton S & F'sbury)

  Loyden, Eddie

  Smith, Llew (Blaenau Gwent)

  Macdonald, Calum

  Soley, Clive

  Mackinlay, Andrew

  Spearing, Nigel

  MacShane, Denis

  Spellar, John

  Madden, Max

  Squire, Rachel (Dunfermline W)

  Maddock, Diana

  Steinberg, Gerry

  Mahon, Alice

  Stevenson, George

  Mandelson, Peter

  Stott, Roger

  Marek, Dr John

  Strang, Dr. Gavin

  Marshall, David (Shettleston)

  Straw, Jack

  Marshall, Jim (Leicester, S)

  Sutcliffe, Gerry

  Martin, Michael J (Springburn)

  Taylor, Mrs Ann (Dewsbury)

  Martlew, Eric

  Thompson, Jack (Wansbeck)

  Maxton, John

  Tipping, Paddy

  McAllion, John

  Tyler, Paul

  McAvoy, Thomas

  Walker, Rt Hon Sir Harold

  McCartney, Ian

  Wallace, James

  382

  Walley, Joan

  Winnick, David

  Wardell, Gareth (Gower)

  Wise, Audrey

  Wareing, Robert N

  Worthington, Tony

  Wray, Jimmy

  Welsh, Andrew

  Wright, Dr Tony

  Wicks, Malcolm

  Young, David (Bolton South East)

  Wigley, Dafydd

  Williams, Alan W (Carmarthen)

  Tellers for the Ayes:

  Williams, Rt Hon Alan (Sw'n W)

  Mr. Stephen Byers and

  Wilson, Brian

  Mr. John Cummings.

  NOES

  Ainsworth, Peter (East Surrey)

  Cormack, Patrick

  Aitken, Rt Hon Jonathan

  Couchman, James

  Alexander, Richard

  Cran, James

  Alison, Rt Hon Michael (Selby)

  Currie, Mrs Edwina (S D'by'ire)

  Allason, Rupert (Torbay)

  Curry, David (Skipton & Ripon)

  Amess, David

  Davies, Quentin (Stamford)

  Ancram, Michael

  Davis, David (Boothferry)

  Arbuthnot, James

  Day, Stephen

  Arnold, Sir Thomas (Hazel Grv)

  Deva, Nirj Joseph

  Ashby, David

  Devlin, Tim

  Aspinwall, Jack

  Dicks, Terry

  Atkins, Robert

  Dorrell, Rt Hon Stephen

  Atkinson, David (Bour'mouth E)

  Douglas-Hamilton, Lord James

  Atkinson, Peter (Hexham)

  Dover, Den

  Baker, Nicholas (Dorset North)

  Duncan Smith, Iain

  Baker, Rt Hon K (Mole Valley)

  Duncan, Alan

  Baldry, Tony

  Dunn, Bob

  Banks, Matthew (Southport)

  Durant, Sir Anthony

  Banks, Robert (Harrogate)

  Dykes, Hugh

  Bates, Michael

  Eggar, Tim

  Batiste, Spencer

  Elletson, Harold

  Beggs, Roy

  Emery, Rt Hon Sir Peter

  Bellingham, Henry

  Evans, David (Welwyn Hatfield)

  Bendall, Vivian

  Evans, Jonathan (Brecon)

  Beresford, Sir Paul

  Evans, Nigel (Ribble Valley)

  Biffen, Rt Hon John

  Evans, Roger (Monmouth)

  Bonsor, Sir Nicholas

  Evennett, David

  Booth, Hartley

  Faber, David

  Boswell, Tim

  Fabricant, Michael

  Bottomley, Peter (Eltham)

  Fenner, Dame Peggy

  Bottomley, Rt Hon Virginia

  Field, Barry (Isle of Wight)

  Bowis, John

  Fishburn, Dudley

  Boyson, Rt Hon Sir Rhodes

  Forsyth, Michael (Stirling)

  Brandreth, Gyles

  Forsythe, Clifford (Antrim S)

  Brazier, Julian

  Forth, Eric

  Bright, Sir Graham

  Fowler, Rt Hon Sir Norman

  Brooke, Rt Hon Peter

  Fox, Sir Marcus (Shipley)

  Brown, M (Brigg & Cl'thorpes)

  French, Douglas

  Browning, Mrs. Angela

  Fry, Sir Peter

  Bruce, Ian (Dorset)

  Gale, Roger

  Budgen, Nicholas

  Gallie, Phil

  Burns, Simon

  Gardiner, Sir George

  Burt, Alistair

  Garel-Jones, Rt Hon Tristan

  Butcher, John

  Garnier, Edward

  Butler, peter

  Gillan, Cheryl

  Butterfill, John

  Goodlad, Rt Hon Alastair

  Carlisle, John (Luton North)

  Goodson-Wickes, Dr Charles

  Carlisle, Sir Kenneth (Lincoln)

  Gorst, Sir John

  Carrington, Matthew

  Grant, Sir A (Cambs SW)

  Cash, William

  Greenway, Harry (Ealing N)

  Channon, Rt Hon Paul

  Greenway, John (Ryedale)

  Chapman, Sydney

  Griffiths, Peter (Portsmouth, N)

  Churchill, Mr

  Grylls, Sir Michael

  Clappison, James

  Gummer, Rt Hon John Selwyn

  Clark, Dr Michael (Rochford)

  Hague, William

  Clarke, Rt Hon Kenneth (Ru'clif)

  Hamilton, Neil (Tatton)

  Clifton-Brown, Geoffrey

  Hamilton, Rt Hon Sir Archibald

  Coe, Sebastian

  Hampson, Dr Keith

  Colvin, Michael

  Hanley, Rt Hon Jeremy

  Congdon, David

  Hannam, Sir John

  Conway, Derek

  Hargreaves, Andrew

  Coombs, Anthony (Wyre For'st)

  Harris, David

  Coombs, Simon (Swindon)

  Haselhurst, Alan

  Cope, Rt Hon Sir John

  Hawkins, Nick

  383

  Hawksley, Warren

  Moate, Sir Roger

  Hayes, Jerry

  Molyneaux, Rt Hon James

  Heald, Oliver

  Monro, Sir Hector

  Heath, Rt Hon Sir Edward

  Montgomery, Sir Fergus

  Heathcoat-Amory, David

  Moss, Malcolm

  Hendry, Charles

  Needham, Rt Hon Richard

  Heseltine, Rt Hon Michael

  Nelson, Anthony

  Hicks, Robert

  Neubert, Sir Michael

  Higgins, Rt Hon Sir Terence

  Newton, Rt Hon Tony

  Hill, James (Southampton Test)

  Nicholls, Patrick

  Hogg, Rt Hon Douglas (G'tham)

  Nicholson, David (Taunton)

  Horam, John

  Nicholson, Emma (Devon West)

  Hordern, Rt Hon Sir Peter

  Norris, Steve

  Howard, Rt Hon Michael

  Onslow, Rt Hon Sir Cranley

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

  Oppenheim, Phillip

  Howell, Rt Hon David (G'dford)

  Ottaway, Richard

  Howell, Sir Ralph (N Norfolk)

  Paice, James

  Hughes, Robert (Aberdeen N)

  Patnick, Sir Irvine

  Hunt, Rt Hon David (Wirral W)

  Patten, Rt Hon John

  Hunt, Sir John (Ravensbourne)

  Pattie, Rt Hon Sir Geoffrey

  Hunter, Andrew

  Pawsey, James

  Jack, Michael

  Peacock, Mrs Elizabeth

  Jackson, Robert (Wantage)

  Pickles, Eric

  Jenkin, Bernard

  Porter, Barry (Wirral S)

  Johnson Smith, Sir Geoffrey

  Porter, David (Waveney)

  Jones, Gwilym (Cardiff N)

  Portillo, Rt Hon Michael

  Jones, Robert B (W Hertfdshr)

  Powell, William (Corby)

  Jopling, Rt Hon Michael

  Rathbone, Tim

  Kellett-Bowman, Dame Elaine

  Redwood, Rt Hon John

  Key, Robert

  Renton, Rt Hon Tim

  Kilfedder, Sir James

  Richards, Rod

  King, Rt Hon Tom

  Riddick, Graham

  Kirkhope, Timothy

  Rifkind, Rt Hon Malcolm

  Knapman, Roger

  Robathan, Andrew

  Knight, Dame Jill (Bir'm E'st'n)

  Roberts, Rt Hon Sir Wyn

  Knight, Greg (Derby N)

  Robertson, Raymond (Ab'd'n S)

  Knight, Mrs Angela (Erewash)

  Robinson, Mark (Somerton)

  Knox, Sir David

  Roe, Mrs Marion (Broxbourne)

  Kynoch, George (Kincardine)

  Ross, William (E Londonderry)

  Lait, Mrs Jacqui

  Rowe, Andrew (Mid Kent)

  Lamont, Rt Hon Norman

  Rumbold, Rt Hon Dame Angela

  Lang, Rt Hon Ian

  Ryder, Rt Hon Richard

  Lawrence, Sir Ivan

  Sackville, Tom

  Legg, Barry

  Sainsbury, Rt Hon Tim

  Lennox-Boyd, Sir Mark

  Scott, Rt Hon Nicholas

  Lester, Jim (Broxtowe)

  Shaw, David (Dover)

  Lidington, David

  Shaw, Sir Giles (Pudsey)

  Lightbown, David

  Shephard, Rt Hon Gillian

  Lilley, Rt Hon Peter

  Shepherd, Colin (Hereford)

  Lloyd, Rt Hon Peter (Fareham)

  Shersby, Michael

  Lord, Michael

  Sims, Roger

  Luff, Peter

  Skeet Sir Trevor

  Lyell, Rt Hon Sir Nicholas

  Smith, Sir Dudley (Warwick)

  MacGregor, Rt Hon John

  Smith, Tim (Beaconsfield)

  MacKay, Andrew

  Smyth, Rev Martin (Belfast S)

  Maclean, David

  Soames, Nicholas

  Madel, Sir David

  Speed, Sir Keith

  Maginnis, Ken

  Spencer, Sir Derek

  Maitland, Lady Olga

  Spicer, Michael (S Worcs)

  Major, Rt Hon John

  Spicer, Sir James (W Dorset)

  Malone, Gerald

  Spink, Dr Robert

  Mans, Keith

  Spring, Richard

  Marland, Paul

  Sproat, Iain

  Marshall, John (Hendon S)

  Squire, Robin (Hornchurch)

  Marshall, Sir Michael (Arundel)

  Stanley, Rt Hon Sir John

  Martin, David (Portsmouth S)

  Steen, Anthony

  Mates, Michael

  Stephen, Michael

  Mawhinney, Rt Hon Dr Brian

  Stern, Michael

  Mayhew, Rt Hon Sir Patrick

  Stewart, Allan

  McLoughlin, Patrick

  Streeter, Gary

  McNair-Wilson, Sir Patrick

  Sumberg, David

  Mellor, Rt Hon David

  Sweeney, Walter

  Merchant, Piers

  Sykes, John

  Mills, Iain

  Tapsell, Sir Peter

  Mitchell, Andrew (Gedling)

  Taylor, Ian (Esher)

  Mitchell, Sir David (Hants NW)

  Taylor, John M (Solihull)

  384

  Taylor, Rt Hon John D (Strgfd)

  Ward, John

  Temple-Morris, Peter

  Wardle, Charles (Bexhill)

  Thomason, Roy

  Waterson, Nigel

  Thompson, Patrick (Norwich N)

  Watts, John

  Thompson, Sir Donald (C'er V)

  Wheeler, Rt Hon Sir John

  Thomton, Sir Malcolm

  Whitney, Ray

  Thurnham, Peter

  Whittingdale, John

  Townend, John (Bridlington)

  Widdecombe, Ann

  Townsend, Cyril D (Bexl'yh'th)

  Wiggin, Sir Jerry

  Tracey, Richard

  Willetts, David

  Tredinnick, David

  Wilshire, David

  Trend, Michael

  Winterton, Mrs Ann (Congleton)

  Trotter, Neville

  Winterton, Nicholas (Macc'f'ld)

  Twinn, Dr Ian

  Wolfson, Mark

  Vaughan, Sir Gerard

  Wood, Timothy

  Viggers, Peter

  Yeo, Tim

  Waldegrave, Rt Hon William

  Young, Rt Hon Sir George

  Walden, George

  Walker, A Cecil (Belfast N)

  Tellers for the Noes:

  Walker, Bill(N Tayside)

  Mr. Bowen Wells and

  Waller, Gary

  Dr. Liam Fox.

  Question accordingly negatived.
  8.30 pm
  The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): Before we move on, I advise the right hon. Member for Bethnal Green and Stepney (Mr. Shore) that, when the time comes, I am prepared to allow a separate Division on new clause 12, if he so wishes.
  Mr. Spearing: On a point of order, Mr. Lofthouse. You and the Chairman will have heard the many references to the Public Accounts Committee. Indeed, in his reply the Minister referred to the Government's willingness, if the House permits, to take some action in that regard. May I draw your attention to starred amendments Nos. 14 and 15, which may be relevant to any future selection when the stars are removed?
  The First Deputy Chairman: For the moment, the Chairman has decided that those amendments are not selected.

New clause 3

  ENTRY INTO FORCE (PROTECTION OF FINANCIAL INTERESTS)
  'This Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister of the Crown as to whether the United Kingdom Government should adopt a Council Regulation on the Protection of the Community's Financial Interests.'.—[Ms Quin.]
  Brought up, and read the First time.
  Ms Joyce Quin: I beg to move, That the clause be read a Second time.
  The First Deputy Chairman: With this, it will be convenient to discuss also the following: New clause 10—Annual report on fraud and waste—
  'Each year Her Majesty's Government shall make a report to Parliament on the proposals it has made and the progress achieved in combating fraud and waste in Community expenditure as documented in the relevant annual reports of the Court of Auditors.'.
  New clause 13—Fraud in the European communities: annual reports—

  385
  'Her Majesty's Government shall make an annual report to Parliament on their efforts to eliminate fraud in the spending of the European Communities' General Budget.'.
  Ms Quin: New clause 3 is important because it allows the important subject of fraud to be discussed in this debate.
  The new clause states:
  "This Act shall come into force only when the House of Commons has come to a resolution on a motion tabled by a Minister of the Crown as to whether the United Kingdom Government should adopt a Council Regulation on the Protection of the Community's Financial Interests."
  We know that such a regulation is being mooted, and I think that on this occasion the Government will claim to have been active in proposing it. I understand that the regulation was partly a British initiative and dates back to the early part of the year, when the British Government said that they wanted the rest of the European Union to consider the protection of the Community's financial interests, how money is spent and how best to crack down on fraud. I also understand that there have been discussions in the Council of Ministers as a result.
  As is often and frustratingly the case, it is difficult for hon. Members to get any information about what is happening in this important area. I understand that protection of the financial interests of the European Union was on the agendas of the Justice and Home Affairs Council on 1 December and the Economic and Finance Council on 5 December.
  Perhaps the Paymaster General can give us an update on the Council's consideration of that important matter when he replies to the debate. Any information that he can give us could greatly influence the attitude of hon. Members on both sides of the Committee towards that important issue and whether we feel that there is any real chance that fraud and financial mismanagement will be taken seriously.
  The results of the discussions at the two Council meetings were unclear. What seems clear, however, is that the Council of Ministers has simply come out in favour of a resolution on the protection of the financial interests of the European Union. As we know, a resolution is a very weak instrument in the Union. Apparently, the Government are in favour of a regulation on the legal protection of the Community's financial interests, as I am certain that we would be. Perhaps the Paymaster General can give us an update on the progress that has been made towards such a regulation. I understand that the matter might be discussed at one of the meetings taking place as part of the Essen summit. We would be extremely interested to know what progress is being made on that important matter.
  From recent debates and the long-standing interest of many hon. Members on both sides of the House, it is clear that hon. Members take the question of fraud in the European Union very seriously. None the less, I repeat that it is often difficult to get adequate information about what has been taking place.
  In an intervention on the Paymaster General, my hon. Friend the Member for Durham, North-West (Ms Armstrong) rightly mentioned the rather murky negotiations about fraud which took place as part of the Budget Council on 16 November, when Britain apparently agreed to a cut in the European Union's anti-fraud budget at the same time as the Government were trying to persuade suspicious Conservative Members that they were
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  trying to deal with the problem of European fraud. The fact that that was revealed in the press was especially frustrating to Opposition Members, including myself. I had tabled a written question to the Treasury, asking the Government to make a statement on the outcome of the Council held on 16 November. In the written answer that I received from the Paymaster General, which went into a certain amount of detail, there was no mention of the discussion of fraud. There is therefore a lack of transparency in the information that the Government are prepared to give the House on that important issue. I want the Paymaster General to deal with that matter.
  Press releases are issued at the end of each European Council meeting. The release issued after the Council on 16 November has just been made available to us. Again, there is absolutely no reference to the discussions on anti-fraud measures that we now hear took place, or to the fact that the Council failed to increase the funds available to combat fraud and, indeed, cut anti-fraud measures in the Union. We want an explanation of why Members of Parliament and the general public are refused information about the Council of Ministers. Many hon. Members on both sides of the House have rightly complained about undue secrecy in relation to Council of Ministers proceedings and this would seem to be a flagrant example of such secrecy when it is clear that members of the public as well as Members of Parliament want information on the fight against fraud and the measures that need to be taken.
  From the documents before us today, it is clear that the European Court of Auditors feels frustrated at the difficulty that it faces in getting information from the Council of Ministers. That comes over in the opinion of the Court of Auditors on the proposals for a Council decision concerning budgetary discipline.
  Mr. D. N. Campbell-Savours: I am sure that my hon. Friend knows John Tomlinson, who is a Member of the European Parliament. He issued a press release on 18 November 1993—12 months ago—which stated that, at a meeting which took place two weeks prior to that press release, the Council of Ministers failed to increase the budget to deal with fraud. One wonders whether that occurs every year, and whether the Council is now calling the same tune.
  Ms Quin: My hon. Friend is right to detect an alarming trend, and the information that he gives to the Committee is correct. It is certainly true that, a year ago, the Council of Ministers was also prepared to cut anti-fraud measures in the European Union at a time when clear incidence of fraud was increasing at an alarming rate. The Court of Auditors report, which is produced annually, has made severe criticisms of fraud in the European Union for a number of years.
  Rev. Ian Paisley: Is the hon. Lady aware that in a recent debate in Strasbourg, criticism was voiced about the reticence of the Commission in dealing in an upright and forthright way with the quaestors?
  Ms Quin: The hon. Gentleman pre-empts a comment that I was about to make. I had started to refer to the difficulty that the Court of Auditors has in receiving information from the Commission and from other pants of the European Union about the extent of fraud, and in having the figures in good time to make timely comments about the problems which are arising.

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  The court's comments on the Council's decision concerning budgetary discipline say, in relation to article 2, that the proposal provides for the monitoring of expenditure to be tightened up and for statements of expenditure by chapter presented by member states to be sent to the European Parliament and the Council for information. The Court of Auditors understandably says that the paragraph in the proposed Council decision relating to the matter should be amended to include the Court of Auditors, so that it could receive data promptly.
  When the Council decision was made on 31 October 1994, the request from the court for a change in the Council's decision was ignored. The court, even now, is in the frustrating position of not being able to get information in time to make criticisms at an earlier stage than it has been able to at present. In many ways, the court feels greatly frustrated by the fact that it has had to complain so long after the event. That makes its task in trying to get corrective measures adopted much more difficult.
  8.45 pm
  The Commission is castigated generally for its weakness in its approach to fraud, although it does have undoubted difficulties because so much fraud occurs within each member state. Lax controls within certain member states often give rise to many problems.
  In that respect, I can understand the comments made in relation to the earlier group of amendments on the role of the Public Accounts Committee. The way in which the Government reacted was disappointing, although I take the point made by the right hon. Member for Mid-Sussex (Mr. Renton) that the Public Accounts Committee could take certain initiatives without waiting to be cajoled by the Government. It is an area to which I am sure that the Public Accounts Committee will be paying close attention in the future.
  My hon. Friend the Member for Workington (Mr. Campbell-Savours) has referred to the Government's record on fraud. The Government like to give the impression that they are the leading fraud-busters. In fact, as my hon. Friend pointed out, their record is not quite so glossy. It is certainly true that the Government have voted against anti-fraud measures in the Council of Ministers, and a great deal more could have been done by the Government to campaign for reform of the common agricultural policy, which causes so many of the problems of fraud in the European Union.
  Although this may seem to be a minor point, the Government have failed in another respect—by conniving with other Governments to perpetuate the European Parliament's position of meeting in two different places. Many of us feel that a certain amount of useful money could be saved if the European Parliament was not forced into that expensive travelling circus. It is a great pity that the Edinburgh summit in 1992 confirmed the dual nature of the seat of the European Parliament. Of course, some elements of the Parliament still have their base in Luxembourg. The situation is absurd, and members of the public feel that it is quite crazy. Perhaps if there were more publicity about it, there would be more pressure to put an end to that waste of money in the European Union.
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  The question of the common agricultural policy is crucial to any discussion on fraud in the European Union. The Court of Auditors report gave many examples which were fully quoted in the debate that we had a couple of weeks ago. None the less, they are staggering. For example, there was the money paid out for the destruction of trees which are in fact still standing. There was the tremendous scandal of the wine lake, and the amount of money claimed in export refunds for wine supposedly exported from Italy to the countries of central and eastern Europe, when eight times more money was claimed than could be backed up by the figures for exports to those countries. It seems a strange and unjust system whereby the Italians and other wine-producing countries in the European Union can export with subsidies to countries in central and eastern Europe which are trying to build their own economies and in many cases have potentially excellent wine industries of their own but find themselves being undercut by that type of activity in the European Union.
  A similar situation exists with regard to the olive oil industry, where substantial fraud has been reported in the Court of Auditors report. Sub-standard olive oil was none the less claimed for as though it were of a high standard and high quality. It is a very sad situation when people notice how expensive olive oil is to buy at a time when there is a huge level of production in the European Union and a huge amount of money is being spent on subsidising that production.
  Mr. Oliver Heald: If what the hon. Lady is saying is right, why have Labour MEPs voted to double the increase to the future European budget that is proposed in the Bill? They did not make any of the provisos for which she is asking in new clause 3.
  Ms Quin: The provisos in new clause 3 have been pressed consistently by Labour MEPs since 1979. I can inform the hon. Gentleman of that fact, partly because I was a Member of the European Parliament from 1979 to 1989 and I took part in the debates, and partly because of the efforts of the Labour members of the budgetary control committee in the European Parliament: John Tomlinson has already been mentioned, and Terry Wynn is also active on that committee. I can assure the hon. Gentleman that what we are proposing here is fundamentally in line with what we have said on many other occasions, both here and in the European Parliament.
  Mr. Stevenson: Is it not strange that Conservative Members should make the comments that they have, given that a Conservative Government have presided over and agreed to a £5 billion increase in common agricultural policy expenditure since 1992–93?
  Ms Quin: It is indeed. The Conservatives—particularly in the European election campaign—claimed to have tackled, for example, the scandal of costly food mountains; yet, at the time when they made that claim there were about 200,000 tonnes of butter, 112,000 tonnes of cheese and 430,000 tonnes of beef in store. As my hon. Friend points out—he is in a good position to do so in view of his experience on the agriculture committee of the European Parliament—agricultural expenditure has

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  increased greatly. In certain sectors, production has continued to rise, despite the measures that have been taken.
  Rev. Ian Paisley: The hon. Lady will know that I, too, am a Member of the Strasbourg Parliament and I can confirm that Labour Members of the United Kingdom Parliament have continually opposed those developments on the Floor of the House.
  Ms Quin: I welcome the hon. Gentleman's comments. I believe that he has been a Member of the European Parliament since 1979; he will therefore have participated in many debates of this kind and will know what was said on those numerous occasions.
  I could give many more examples. For instance, there has also been a great deal of fraud in relation to tobacco. A large amount of money has apparently been spent on subsidising unusable tobacco; given the health problems that tobacco causes, subsidising usable tobacco may be slightly worse than subsidising unusable tobacco, but in any event it is scandalous that tobacco should be subsidised to that extent in the European Union.
  It seems crazy that tobacco farmers—if that is the right word—can obtain export credits for tobacco that is sold nowhere because it is unusable, and can then simply dump the tobacco. It would be cheaper to provide them directly with a livelihood without their having to produce the substance at all—not that I am suggesting that that should be done in the European Union, but it seems crazy that adopting such an approach would save money for the EU budget. It is regrettable, to say the least, that the Court of Auditors' report on tobacco fraud and misuse was ignored by EU Agriculture Ministers.
  The common agricultural policy itself is, unfortunately, a fraud-friendly system. There has been a huge increase in CAP fraud. Even the legal operation of the policy is tantamount to fraud: an absurd circular system of subsidy can arise, so that a farmer may be paid a subsidy for not putting one field into production while being paid another subsidy for increasing the yield from another field. We also know of the policy's negative effect on the trading for third world agricultural products.
  It is clear from the report that there are huge inefficiencies and irregularities in the use of European Union funds, that the .administration of the European guarantee fund in agriculture is ineffective, that fraud is encouraged by weak internal systems and complex legislation, that there are no proper clear and fixed objectives for expenditure, that there are breaches of rules in contracts with third parties, that there is confusion between administrative and operational spending, and that the Commission's delegation of financial management to national Administrations and third parties has led to a serious loss of control. That reinforces the point made earlier about the Commission's culpability.
  It is vital for member states to improve their accounting, internal control and auditing of European Community operations. The whole saga adds up to gross weaknesses in what should be sound financial management, and very poor value for money. That explains why so many hon. Members on both sides of the House have expressed concern about the issue recently, and why the new clauses have been tabled.
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  New clauses 10 and 13 call for annual reports on fraud to be presented to the House of Commons, which I think would be very sensible. I can foresee some of what the Paymaster General will say: he will say, for instance, that there are already many opportunities to raise such matters. There is, of course, a six-monthly report on events in the European Union, as well as the various procedures and documents that are considered in Committee—often, I may say, with inadequate media attention. Much of the work done in European Standing Committees is worthy of much more attention that it receives.
  Given the interest that the House has expressed in the issue, it strikes me as sensible to hold an annual, focused debate on it alone. I believe that we should continue to hold such annual debates until the fraud problem ceases to exist in the European Union; we all look forward to that time, but it seems unlikely to arrive in the near future.
  Earlier, my right hon. Friend the Member for Llanelli (Mr. Davies) forecast a certain meeting of minds between Euro-sceptics and those who are more positive about the European Union. I am not sure whether his forecast will be proved right, although I respect his experience: he has been in government, and has seen some of the matters that we are discussing from the viewpoint of the Council of Ministers. I know, however, that there is a great deal of cross-party agreement on this issue; I therefore hope that new clause 3 will receive the maximum support not only from Opposition Members, but from Conservative Members.
  Mr. Dykes: I shall speak briefly. I welcome the interest and support expressed by hon. Members on both sides of the Chamber on endeavours to deal with the thorny problem of fraud in the European Community. I have no quarrel with anyone who suggests that that is necessary, although I remain sceptical about whether these or, indeed, any amendments to existing legislation are needed, or will deal with fraud in the best possible way.
  I do not condone fraud either in member states—including this country—or in any of the Community transfer payments. Far from it. I am a member of the Select Committee on European Legislation—the Scrutiny Committee—and fraud is naturally one of our main concerns. It is a regular subject of discussion and deep examination, to the extent that we have the necessary information to hand. My quarrel, as emerged from the debate on Second Reading, is with putting it together with this legislation. That is why I would object to the proposed amendments, or any that were along similar lines.
  The Bill should not have been opposed by any hon. Member because it was a routine Bill, dealing with a very modest increase in own resources as agreed at the relevant summit meeting in Edinburgh. I shall not repeat the Second Reading debating arguments for that, but it remains a literal truth about the text, and the two clauses are entirely routine and should not even be gone over in that way. However, we know why that happened—for a totally different reason, and that is why fraud has been built into the argument as a wonderful way for anti-European Members of Parliament here, and the press especially, to have a tremendous field day. Interestingly, the press are not here tonight—that is a different point—but they certainly were here on Second Reading because they anticipated trouble and enjoyed the anticipation thereof.

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  To hound the European Community and say that it is riddled with fraud is a good, populist thing to say, but it is totally untrue. No one would condone any fraud at the margin anywhere, including in member states, and substantial fraud takes place in the United Kingdom that has nothing to do with the European Community. That needs to be tackled energetically by the various relevant authorities as well, and I hope that that will happen.
  For the hon. Member for Gateshead, East (Ms Quin) to be so optimistic as to say that fraud could be eliminated, either between member states of the European Union and the Commission handling all those payments in a complicated budget, or in the individual member states, is perhaps a little bit naive. I am afraid that there are some wicked people in the world. Unfortunately, our skill at financial techniques in this country, allied with agricultural payments, agricultural activity and other aspects, means that this country is full of people who practise those things, and that happens in the other member states.
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  Mr. Austin Mitchell: Will the hon. Gentleman give way?
  Mr. Dykes: At the moment, I do not intend to give way at all, because I want to be brief, to give other hon. Members a chance. I shall not give way at all unless I am deeply moved by an especially unusual and esoteric intervention. However, as, by definition, I shall not know that until I have given way and heard it, it is unlikely that I shall do that tonight. I want, therefore, to be brief, if the hon. Gentleman, with his extravagant obsessions about disliking the European Union, will forgive me on this occasion.
  That problem also applies in the other member states. I gleaned from my visits that each one is equally concerned with national domestic fraud that has nothing to do with the European Union and with the fraud that occurs in the European Community.
  However, let us keep the matter in perspective. Let us get rid of the hysteria. Let us get away from the £6 billion figure that was bandied about in the press, with no evidence to that effect; that equalled, by the way, the amount of money that the previous Chancellor of the Exchequer wasted in trying to defend an exchange rate mechanism rate that was untenably high, because we should not have entered at such a high rate against the deutschmark.
  Perhaps £6 billion is a leitmotif figure for all those seeming political and financial scandals, and will be repeated in other areas as well. However, in our own report—
  Mr. Campbell-Savours rose—
  Mr. Dykes: I have already said that I shall not give way.
  In our Select Committee reports, and in the explanatory memorandum provided by the Treasury and signed, I think, by my hon. Friend the Paymaster General, it emerges repeatedly that fraud is a legitimate and serious preoccupation of all of us—but at the margin the size is grossly exaggerated by the anti-European propaganda—
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  that the Commission has responded to the Court of Auditors' regular admonitions and references to those matters; and that the main problem is mishandling and mismanagement of financial payments, as was also discussed in the debate on the previous group of new clauses, rather than huge amounts of fraud in vast areas of the Community budget zones. That remains the literal truth. Therefore, it is a matter for the House of Commons to be extremely worried about, but let us keep it in perspective.
  I quote from the latest report that the Select Committee had on the latest Court of Auditors' report. We referred in paragraph 56 of our report to the Commission's response:
  "The Commission accepted a number of the Court's findings and"
  has
  "taken steps to implement them. The Commission's response to the main features of the report are detailed below".
  Then, in a specific example:
  "The Commission comments that for Own Resources it is aware of the importance and value of post-import clearance checks and agrees with the Court that the effectiveness of the checks depends on the adoption of methods based on risk analysis. It is in contact with Member States to promote their use. The Commission does not accept that the overall GNP figures are not reliable but agrees that further efforts need to be made to ensure harmonisation of the national accounts."
  In the "blue-top weekly Europe bulletins" that we receive from the various local Commission offices in the capital cities, the matter was also put in perspective with the leading paragraph in the edition of 24 November:
  "Commission rejects fraud allegations. Commission Secretary-General David Williamson has rejected media allegations that fraud was widespread in European budgetary spending. Commenting on the recent Court of Auditors report, he said that the document was not about fraud but about financial management"
  or mismanagement.
  "It mentioned fraud only once in its 484 pages"—
  Mr. Duncan Smith: Will my hon. Friend give way? It is esoteric.
  Mr. Dykes: I am not giving way.
  "It mentioned fraud only once in its 484 pages, referring to just one transaction in Denmark. It was completely wrong to bandy about figures suggesting that fraud amounted to £6 billion or more, Williamson said. The Court of Auditors makes the point that more than 80 per cent. of EU funds",
  as brought out in previous debates, on the Opposition Benches as well,
  "are managed on behalf of the Union by the Member States".
  I do not think that anyone in the Committee would regard Secretary-General David Williamson as anything other than a man of great integrity. He is an honest public servant with much international experience—a serious senior figure in the European Commission. He is from this country and I believe that he was a permanent secretary at the Ministry of Agriculture, Fisheries and Food many years ago before he went to Europe. He is a credit to this country and to the European Community and not the sort of person to tell lies. He should not apologise—he is not the sort of person who says that he agrees with The Sun and the Daily Star, and the gutter filth and poisoned propaganda against the European Community that one regularly reads in those journals and, sadly, elsewhere.
  Let us keep the subject in perspective. When Ministers deal with such issues, they should not succumb to the temptation to stir up hysteria about fraud by saying that it is connected with the legislation. To be fair to them,

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  Ministers have not done that, but the Opposition should not do so. The Opposition made a basic mistake—it is perfectly reasonable for, and open to, the Opposition to raise the subject of fraud in Europe or national fraud at any time without connecting it to the Bill. They have done a disservice to the cause of Europe in the House, where there is a natural, built-in majority for further developments after Maastricht among all parties. If there were free votes instead of the three-line Whip clamps put on by our nervous Whips—I understand why they do that nowadays—there would be large majorities in favour of all significant new developments in the Community. That is the important point on which to focus.
  Keeping matters in perspective means being rational and pragmatic, not hysterical. I have a good example that is directly linked with domestic fraud. I believe that social security fraud—allowing for all systems, including income support and unemployment fraud—amounts to about £4 billion per annum. Would it be wise and right for payments to genuine and deserving applicants of whatever sort within the social security protection system to be denied financial assistance pending the resolution of the problem of fraud?
  In the private sector, the Serious Fraud Office is, rightly or wrongly, under a great cloud of suspicion; it is suspected that it has adopted the wrong sort of investigative methods. Many people would be concerned if the SFO were too weak and had inadequate resources to do its job properly. Fraud also occurs when various spivs and crooks misuse public sector funds. There is fraud by way of tax evasion, not just avoidance—one can talk to any senior Inland Revenue officer about that. The sums involved amount to billions of pounds. Does that mean that ordinary, honest taxpayers should be penalised and brought into that category? No. Ministers should put the correct record on Europe in a balanced way. Newspaper propaganda and poison against Europe are moving from the merely alarming to the positively dangerous.
  I do not think that I shall be out of order if I refer to some articles that refer, at least tangentially, to fraud. Two recent examples fill me with gloom and foreboding if they reflect future standards in the British press. The examples are not taken from The Sun, the Daily Star or the Daily Sport, but from serious journals. One example comes from The Spectator of 3 December—
  Mr. Denis MacShane: A Tory comic.
  Mr. Dykes: I agree with that, and I thank the hon. Gentleman, who described it as a Tory comic. It is perhaps a right-wing comic. I am not sure that many of those Tories are genuine Tories in the old sense that I still respect.
  I love the story of the British mother whose children were taken to Germany by a recalcitrant and difficult father. The theme of the article is that the case is the direct responsibility of the European Union. The writer wonders how the wicked Germans and Europeans dare to lake the
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  wonderful children away from their mum in Britain. It is nothing to do with the European Union—that is poisoned propaganda—
  The Second Deputy Chairman of Ways and Means (Dame Janet Fookes): Order. This does not have much to do with the new clause either.
  Mr. Dykes: I agree, Dame Janet. Although I shall not detain the Committee at great length by reading from the article, in other passages it refers, tangentially, to fraud. Were other hon. Members alarmed by the futuristic article in the Daily Mail last Saturday? It certainly referred to fraud. [Interruption.] I am grateful for the advice from the Opposition, but such matters are important because the press are doing it more and more. What the press do—in concert with some of our hon. Friends, because they all work closely together—is to repeat poisoned propaganda against the European Union. It is a self-feeding process which would be easily reversed and dealt with if the Government had the necessary boldness and courage to deny such allegations, put the matter into perspective and restore the traditional enthusiasm for European Union developments on which the Government were partly elected, although the main policy areas must have been domestic, economic and social policy.
  As you are looking at me rather severely, Dame Janet—and understandably so—I shall conclude. If the Government give a balanced lead, acknowledge that these issues are important, reject the amendments, which are unnecessary and would not be an useful change to existing legislation, and express their determination to deal with matters where justified but keep them in a balanced perspective, they will get more support from all parts of the Chamber.
  Mr. Campbell-Savours: I want briefly to intervene to tell the hon. Member for Harrow, East (Mr. Dykes) that I simply cannot understand his attitude. Like me, he has spent most of his life advocating support for the Community. He must see the dangers of a referendum and he must accept that if there is a referendum by the end of the decade, the likelihood is that it will be fought on the issue of fraud and not on the ballot paper, if that is what it will be called. If it is fought on fraud, we shall lose and there will be a major crisis in terms of our membership of the European Community. The strongest advocates of the European Union have a special responsibility placed on their shoulders to deal with the issue before it destroys a principle that we have advocated for most of our lives.
  I was not here when my right hon. Friend the Member for Llanelli (Mr. Davies) made his speech, but I understand that he saw some consensus developing between those of us who are concerned as supporters of Europe with those who have historically taken a position in opposition. I recognise that a consensus will develop because it is in all our interests to resolve the issues.
  The Lords European Communities Select Committee has now produced three reports of which I am aware: the 1989 report, "Fraud against the Community", the 1992 report, "The Fight Against Fraud" and the 1994 report, "Fraud and Mismanagement of Community Finance". The reports point to the problem within the Community. They are all set against a background of repeated attempts over the years by Labour and, if I am honest, I must admit, by Conservative Members of the European Parliament to deal with such issues. They recognised, particularly

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  Conservative supporters of the Community, that the problem had to be dealt with before greater damage was done. Yet nothing has happened apart from measures being introduced as a result of the passing of the Maastricht treaty.
  The problem is whether the will is there: some of us believe that it is not. Even if measures are introduced under the provisions of the Maastricht treaty, some countries within the European Community may set out to undermine whatever arrangements are made because their reasons for membership are selfish. As we heard in the previous debate, they are prepared to adapt their national statistics to ensure that they are beneficiaries.
  I want to draw the Committee's attention to three particular pieces of information. The hon. Member for Harrow, East referred to a newspaper article. I shall refer to a Commissioner, Mr. Peter Schmidhuber, whom my hon. Friends will know. The EC Commissioner responsible for fraud prevention told MEPs in 1992 that the Commission was seeking to improve co-ordination between its own departments and member states. He told a public hearing of the European Parliament's budgetary control committee that
  "Brussels is examining whether to pay rewards for information on fraud, or offer performance-related bonuses to investigators."
  I have asked the Minister to take note of my request as I shall be seeking a response from him. Those two propositions were considered by the Commission. What was the result of that consideration, and will the fraud measures that we understand are to be introduced include those two provisions, which will go some way towards dealing with the problem?
  In 1992, Mr. Peter Schmidhuber went on to say:
  "Demands for a further 35 fraud-busters have had to be shelved because of a general financial squeeze"—
  I find that remarkable in the context of the EC budget—
  "and the effective devaluation of the Ecu, in which the EC budget is calculated, against the Belgian franc, in which most staff salaries are paid."
  9.15 pm
  Are we to believe that the Community, which seems to spend its money lavishly in many areas, could not find the resources to pay 35 fraud-busters? That is a Commissioner responsible for fraud prevention speaking to the European Parliament budgetary control committee.
  Mr. John Tomlinson, Member of the European Parliament, in a press release in 1993, said:
  "'European Community Ministers are attacking funds for fighting fraud in the Community budget—at the insistence of the British Government', said John Tomlinson Labour MEP today in the European Parliament in Strasbourg. 'This will be resisted most strongly and a row is certainly brewing between anti-fraud campaigners in the Parliament and the Council of Ministers. The first move was when the Ministers slashed 25 million ECU (about £20 million) from the anti-fraud funds in next year's European Community budget.'"
  Again, nothing happened.
  On 10 March 1994, in a letter to the editor of The Independent, Terry Wynn said:
  "Can I make one or two comments following Douglas Hurd's remarks about fraud in the European Community. In July last year at the Council of Ministers first reading of the 1994 EC Budget, the Council made sweeping cuts throughout the budget. However, when it came to agriculture, which accounts for half of the £56 billion
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  budget of the EC, the only cut they made was to take 20 million off the anti fraud line at the insistence of the British Government. At their second reading, the European Parliament had allocated funds to create 50 extra posts in the Anti Fraud Unit, they voted against this also. Mr. Hurd should remember that under the British Presidency, the Edinburgh Council insisted that the European Parliament continue to meet in Strasbourg, which means Parliament pays about £100 million per year for this decision, rather than being centralised in Brussels. He really should remember that when it comes to fraud, Member States have the prime responsibility for preventing, detecting and prosecuting fraud against the Community Budget and for recovering sums unduly paid out."
  We all know what has happened about that promise. Many of us see it as a vague promise arising from the passage of the Maastricht treaty.
  The truth is that unless we deal with the problem we will lose the Community because it will be destroyed and discredited. I tell the hon. Member for Harrow, East that it is all right trying to ignore it—[Interruption.] The hon. Gentleman's speech suggested to me that while he may be concerned about the problem, he believed that it was exaggerated. I believe that we are looking at only the tip of the iceberg.
  I have spent much of my life in Italy. I lived there as a child, I have friends and contacts there now and I go there regularly. Fraud is rife not only in Italy but in Greece, Spain and in parts of the CAP budget in France—
  Mr. Dykes: And in the United Kingdom.
  Mr. Campbell-Savours: Yes, and in the United Kingdom.
  Mr. Dykes: Everywhere.
  Mr. Campbell-Savours: If it is, it should be dealt with. If we do not deal with it, we will lose the Union. That is why we have a special responsibility.
  This issue will surface at the top of the British parliamentary agenda, not because we are anti-Community but because many of us are concerned that the Community might be wrecked unless the problem is dealt with.
  Mr. MacShane: Is my hon. Friend aware that the Court of Auditors report, which many hon. Members have mentioned, shows that there were more fraud cases in the United Kingdom than in France or Italy? The sums were larger in France, because the French defraud in a more concentrated way there, but let us pay tribute to the British firms, farms and organisations that go out and show how to milk money from Brussels.
  Sometimes I wonder whether we should put ourselves in the position of a German or a French parliamentarian ranting on about fraud in England. How quickly our xenophobic press would pick that up. Parliaments in the rest of Europe, however vigorous and vicious they may be, debate the issue in a rather more measured way.
  Mr. Campbell-Savours: I can tell my hon. Friend why there is a higher incidence of fraud, if that is the right way to put it, in the United Kingdom. It is because we detect it. In some other Community countries, people simply do not want to detect fraud.
  Mr. Dykes: Very naive.
  Mr. Campbell-Savours: The hon. Gentleman may think that I am naive, but last year members of the European Standing Committee were heavily briefed on

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  the subject, and I spent several days reading the material. One report in particular, which I have been trying to find, dealt with the different reporting mechanisms in the various European states, and showed how in some states there is resistance within the Administration to identifying fraud. The hon. Member for Harrow, East may shake his head at that; clearly he thinks that the source of the material was poor. But if I remember rightly, the document came from the Court of Auditors. If I find it after I finish my speech, I shall intervene and tell him what it was called.
  Mr. Dykes: Will the hon. Gentleman give way?
  Mr. Campbell-Savours: No; the hon. Gentleman did not give way to me.
  Mr. Dykes: But the hon. Gentleman keeps referring to me. Will he give way?
  Mr. Campbell-Savours: All right.
  Mr. Dykes: I know that I did not give way to the hon. Gentleman, but that was because I was trying to be brief, and I had said that I did not intend to give way to anybody. However, the hon. Gentleman is repeatedly referring to me, so I am grateful to him for letting me intervene briefly.
  As a member of the Select Committee on European Legislation I know that we scrutinise the annual report of the Court of Auditors. The hon. Member for Newham, South (Mr. Spearing), who does more homework than most hon. Members on such matters, knows that too. Every one of those annual reports says that there is fraud in every member state, including the United Kingdom. In many areas the incidence of fraud is greater here than in other countries. Detection systems and cultures vary, but I have visited all the other member states and, with one or two exceptions—deliberately, I shall not name them now—every country thinks that it has the best detection systems, and that others are cheating more than it is.
  Mr. Campbell-Savours: That is the hon. Gentleman's view, but it is not mine. If I find the document, I shall give him the reference.
  I have here a document, the Thomson report, which is about EC agricultural policy for the 21st century. Ministers have repeatedly told us in Parliament that we could not see that report, because it dealt with reform of the common agricultural policy. We have been told again and again from the Dispatch Box that it is a Commission document and is not available to us. My hon. Friend the Member for Stoke-on-Trent, South (Mr. Stevenson) tried to get access to the document before he left the European Parliament, and I understand that several other hon. Members have tried to get hold of it. Finally, I got my local Member of the European Parliament for Cumbria and Lancashire, Tony Cunningham, to extract it from the Commission by one means or another.
  The document is extremely significant, and I advise all hon. Members to read it because it deals with reform of the CAP and makes many interesting proposals that should be debated in the House. If we really intend to deal with fraud in the Community we must tackle the structures and frameworks within which that fraud takes place. We must reform the CAP; it desperately needs reform.
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  I have been in the House for 15 years now, and the problem is that year after year Members get up and talk about reforming the CAP, but nothing ever happens. Ministers speak from the Dispatch Box in annual agriculture debates. We used to have an annual statement on the settlement, at which hon. Members always asked Ministers for assurances that work was going on to reform the CAP. Very little has happened. All that has happened is that larger amounts have been being spent despite the fact that we have been given undertakings that, over the longer term, there will be reductions in the CAP budget.
  We must address the issue and there should be open debate. Documents should not be the unique preserve of Commission officials. The material should be made available to Members of Parliament so that we can deal with the issues. That is the only way in which we shall see proper reform in the Community.
  Mr. Duncan Smith: I find myself in pretty near full agreement with the hon. Member for Workington (Mr. Campbell-Savours). He had a more honest and clear view of the problem than did my hon. Friend the Member for Harrow, East (Mr. Dykes), who spent most of his speech trying to hide away some of the problems. He seems to think that we should ignore them because we have to get them in perspective. The reality is that, unless these things are dealt with, there will not be a European Union, because it will have collapsed under the weight of its own inefficiency and fraud. If we wish to continue to see a marketplace here, we would not necessarily wish that to happen.
  My hon. Friend the Member for Harrow, East went on to say something along the lines that one of the Commissioners had said that fraud was out of all proportion, and that it was really a question of mismanagement. I tell my hon. Friend and other hon. Members that I used to be a business man. When running a company, I would have looked at mismanagement of finance in the same way that I would have looked at fraud. Deliberate mismanagement is the same as fraud.
  The point about the report by the Court of Auditors is simply that the court is not able to find out how much of the mismanagement is really fraud. In truth, the structures are such that mismanagement is endemic. The mismanagement is part of the system, and leads to further fraudulent mismanagement of money.
  The argument for an annual debate on the finances of the European Community is now strong. Each year, we rightly discuss the Budget and the Finance Bill, when the Government seek money for the next year. Yet the reality is that each year, we sit here quietly while European money flows through the Consolidated Fund straight into the European Community. Until the Heads of Government get together to decide whether there should be any more money, Parliaments are denied access to the debate. It is ironic that we should debate the matter here, when the reality is that we do so on the basis of the increase and not the total budget.
  The timely arrival of the report by the Court of Auditors has made the debate even more interesting. I looked at the executive summary of the report; the main book is very detailed. It is interesting that, at the beginning of the report, the authors talk about comparing the findings with the annual report for 1983. Even glancing through, one is struck by how little has changed. We have talked about the powers that Maastricht gave the Court of Auditors in

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  the whole investigative process. From looking through the reports in 1983, one finds that the present report mentions essentially the same things. The court did not have all the extra powers in 1983.
  There is no demonstration that the powers under Maastricht have suddenly opened this can of worms. The can of worms was on display; it is just that nobody had the political will to discuss it. There was not the drive. It is only now that we see the inexorable rise of money that the drive has come to find out where the money is going. The report says:
  "it is clear that many of the problems then identified in accounting and financial management of the most important areas of Community expenditure have not yet been overcome."
  The report talks about the Commission having "made efforts" and about the
  "proper level of financial management and control necessary in the complex environment of Community finances."
  Nothing has changed. The court was saying the same things back in 1983.
  The report talks about mismanagement and about inducements; it touches here on the agricultural side. I know that the hon. Member for Gateshead, East (Ms Quin) went into detail on that point. I shall not go down that road, but will simply reiterate the point. The report says:
  "Agricultural management measures are still failing to achieve balanced markets."
  The report talks about how aids for distillation, appropriate for temporary production surplus, have been made into permanent encouragement to the reduction of unsaleable wine. It goes on to say:
  "the permanent abandonment of vineyards are offset by others which encourage investment in the sector."
  It is the particular part which talks about temporary production surpluses made into permanent encouragement which suggests a quiet slide across in practice. That is endemic. It was allowed to happen.
  Another part of the report is even more fascinating. I ask the Committee to think about the matter as though I were talking about a local council, and that it were an investigation of how councillors were carrying through their practice. The paragraph says:
  "The audit continues to discover breaches of the rules governing the placing of contracts with third parties … The financial controller's department has sometimes accepted that expenditure be charged to the wrong account or that a single operation be covered by several small private treaty contracts instead of one large contract which would have been put out to tender."
  I looked at that, and I could not believe it. I immediately thought that, if it had been a reference to a council in this country and we had been talking about councillors, the Audit Commission would have recommended surcharging them and their disbarment.
  That is not only mismanagement. It is now entitled mismanagement, but it is fraud, because it is a misuse of moneys which the Community has no right to abuse and misuse. It is not a case of hiding the problem or pretending that it is out of all proportion: it is a reality. It was just the same in 1983. The travesty is that it is still happening.
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  9.30 pm
  The report even goes on to say:
  "The Commission's central accounting system is supported by inadequate documentation which fails to provide a clear 'audit trail'".
  That is accountants' doublespeak. On numerous occasions, I have seen business accounts vetted by accountants who talk in the first instance about difficulty in finding documentation; a lost trail. That is them giving hint to the fact that it has more than probably been deliberate, that in fact documents have gone missing which nicely hide the reality of the figures.
  The report goes on:
  "the Commission needs to devote a significantly larger proportion of its staff resources to securing the necessary improvements in the performance of its own services".
  I shall come to that matter later, because I want to ask the big question at the end: to whom will those people be accountable, and about what?
  There are two other sections with which I want to deal briefly. One section, on the financial audit, makes very interesting reading. I recommend that right hon. and hon. Members read it. It says:
  "Cases of avoidance of the rules and tenders, the granting of approval ex post facto by the Financial Controller or officials who are not authorised to do so, the absence or inadequacy of supporting documents, items which are not booked in accordance with the provisions of the regulations and various book-keeping procedures are all weaknesses in the internal control system."
  They are not weaknesses: they are disasters. Over that period of 11 years, there was no drive to tighten up those aspects.
  It is not that we now have people looking into matters and saying that it is a problem. Nobody, at any stage, who controls the money—those same upright individuals about whom my hon. Friend the Member for Harrow, East talked—once asked themselves why they were living with those weaknesses, why they were not doing something about it, why they needed a policeman to come along to tell them it was wrong. If they did not intend it to happen, why did they not stop it earlier? It is the same for our own Government practices, and we should hunt those flaws down on the same basis. However, those disasters come through as
  "weaknesses in the internal control system."
  The section of the report entitled "European Parliament Building Expenditure" is enlightening. I know that the hon. Member for Gateshead, East said that it was ridiculous that there were two buildings, and possibly a third, and I fully agree. I do not think that anybody in this Committee would for one moment believe that there should be more than one building.
  However, in the midst of that discussion, we suddenly find a little gem. The report says:
  "It was found that there had been no prior invitation to tender for the execution of the project"—
  the building of the Parliament. That is quite incredible. In other words, somehow that invitation was known about, quietly slid along and, somehow, the right people tendered a bid. It goes on:
  "The Parliament is obliged to review these aspects for the purposes of obtaining long-term financing for the project at the lowest cost."
  The funny thing is that, when one reads the report, one begins to get the feeling that one is almost re-reading through some eastern potentate's book of accounts,

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  because one begins to see the number of palaces growing, people with largesse and large salaries. It is as if we are talking about something that is both anti-democratic—
  Mr. MacShane: Will the hon. Gentleman give way?
  Mr. Duncan Smith: With all due respect, I shall not give way. I am aware that others wish to speak. I wish to draw my remarks to a conclusion.
  Some information has been given to me by the hon. Member for Antrim, North (Rev. Ian Paisley), who is now in his place, about Pieter Dankert, who I believe was the president of the European Parliament. The information stems from the debate that took place on the Court of Auditors. I gather that Mr. Dankert said—I am paraphrasing—that it was strange that the Commission seemed not to have co-operated fully and speedily when the Court of Auditors was producing its report. He seemed to say that somehow the process was slowed down.
  We must remember what was going on when the report was being written. A number of nations were applying to join the European Community and were holding their referendums. There were Austria—Switzerland rejected membership—Finland and Sweden. The process that I was describing was not completed until shortly after Sweden held its referendum.
  I am not trying to suggest that an attempt was made to stop the Swedes knowing about the "company" that they were about to join, but the situation was rather like taking part in a company as a director, for example. Would such a person sign himself in only after he had read the accounts? Applicant countries did not have that opportunity, and they will now be saying, "What have we said we shall join?"
  Rev. Ian Paisley: I can confirm what the hon. Gentleman has said, and what Mr. Pieter Dankert said. As the hon. Gentleman has said, Mr. Dankert was a president of the Strasbourg Parliament, and so could not be called a Euro-sceptic. He said that it was interesting to note that, if someone wanted to join a company, he would always examine the books, but in the instance to which the hon. Gentleman was referring the books could not be opened until the referendum took place.
  I was a member of the Bureau of the Strasbourg Parliament. During a meeting of the Bureau, the French argued that, unless the issue of the new Parliament building was dealt with quickly and quietly, they would stop the European elections altogether. It was said that the members of the Bureau should not let the matter out of the meeting.
  Mr. Duncan Smith: I am grateful to the hon. Gentleman for his intervention. He told me earlier that he wanted to make the specific point.
  Time and again, hon. Members on both sides of the House reach the point when they say, "There are problems. There is endemic, deep-seated fraud." As the hon. Member for Workington said, we cannot rely on the figures of some countries when they investigate fraud.
  Like the hon. Gentleman, I have lived and spent a long time in Italy and various other countries, and have done business with them. I know the culture, which does not lend itself to the genuine examination that I have witnessed in the United Kingdom and in some other
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  countries. There is endemic fraud in certain countries, and it is their structures that have given rise to it. It is those structures that we must tackle.
  It is no good saying that we should level police on police so that they can investigate each other. That will mean allocating even more money for the next structure that investigates the structure below it, and so on. That is exactly the problem with the Community now. The different structures are not co-operating but hiding themselves from each other as part of a game.
  The common agricultural policy, for example, is no longer viable in its present form. Indeed, it has not been viable for a long time. So what must we do with it? The main problem is that moneys go into the Commission and then out to member states. There is no control at Commission level. The members of the Commission are the policemen, and at the same time they control the moneys that go out to member states. It is clear that they are not under any pressure to resolve the problem.
  The issue could be settled by repatriating much of the control of the Commission back to member states and leaving the Commission, as it should have been in the first place, adjudicating between nation states. That would give the real cause and the real drive behind checking on fraud. Essentially, in that and all other matters throughout the cohesion fund and every other mechanism in the Commission, at present we give it that money in the first place and then watch it recycled back, through various means, to us and to others.
  In reality, restructuring or changing is the answer, not a continual demand for more police, because they will not find out any more. They will just do in 10 years what they have done over the past 11 years, and that is to say, "Oh, surprise, surprise, there is fraud in the European Community, but we cannot obtain a full answer because we do not have full co-operation." Let national Parliaments ask their Governments why we are paying more tax.
  Forums across Europe will be the right ones to investigate using their own versions of the Public Accounts Committee, not trying to give central control and central investigation. I therefore urge my hon. Friend the Minister to drive this matter forward into 1996 and reform root and branch the structures that exist in in Community; otherwise, as has been said, we shall inevitably watch the disintegration of what exists there at the moment.
  Mr. Shore: I agree with much of what the hon. Member for Chingford (Mr. Duncan Smith) said. It contrasts very starkly with the remarks by the hon. Member for Harrow, East (Mr. Dykes). The hon. Member did not do his cause any good by seeking to minimise the extent and gravity of fraud in the European Community. He would have done very well indeed to have listened to the good advice of my hon. Friend the Member for Workington (Mr. Campbell-Savours).
  One of the most telling phrases during the debate came from my hon. Friend the Member for Gateshead, East (Ms Quin). She said correctly and pointedly that the CAP is a fraud-friendly system. It is. No one who has turned his or her mind seriously to the character of the CAP would deny that.

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  I do not know whether I may formally move new clause 10 in my name, but we are calling for—
  The Second Deputy Chairman: Order. The right hon. Gentleman cannot do so at this stage. Debate is possible, because new clause 10 has been grouped with new clause 3. If new clause 10 were moved, it would have to be moved in the order in which it appears on the amendment paper.
  Mr. Shore: I may, however, refer to its terms. We say that
  "Each year Her Majesty's Government shall make a report to Parliament on the proposals it has made and the progress achieved in combating fraud and waste in Community expenditure as documented in the relevant annual reports of the Court of Auditors."
  No one who has followed the annual documentation by the Court of Auditors on fraud, waste and inadequate financial control in the Community over the past decade can fail to see the need for such a new clause. The hon. Member for Chingford made a telling point when he said that the recent report of the Court of Auditors itself made the point that nothing has really changed in the past 10 years. That is a tremendous indictment not of the Court of Auditors but of the Commission and the national Government authorities which should be concerned with combating fraud.
  To the dismay of the Government, no doubt, the Court of Auditors published its annual report for the year 1993 as recently as 24 November. What the Court of Auditors and the House of Lords Select Committee had to say in the two major documents to which I shall refer is very telling.
  It is absurd for the hon. Member for Harrow, East, who is unfortunately not in his place, to refer to "poisoned propaganda". The Court of Auditors is a professional and competent body which can hardly be challenged by the people whom it has been appointed to investigate and whom it has found it necessary to censure. The Commission's defence is very unconvincing indeed.
  9.45 pm
  The Court of Auditors said a great deal about CAP and the overseas aid programme. At the beginning of its very gentle general summing up it says:
  "Overall, it would be fair to say that the development of Community activities has not been accompanied, either in the Commission or in the Member States, by a commensurate development of the necessary financial management and control systems".
  It goes on to say:
  "insufficient resources, both in quantity and in quality, have been allocated to ensuring the best use of public money and accountability for it."
  They are very measured words, but the charges are documented over and again in the 480 pages which form the report.
  I find the last of the House of Lords European Communities Committee reports very convincing— the idea that it is "poisoned propaganda" is simply ludicrous. The report was published on 19 July this year, so it is very recent indeed. I draw the Chamber's attention to the report's summary, which says:
  "The Committee's main conclusions are as follows: the Commission's new anti-fraud strategy is inadequate. It is an action plan with no plans for action."
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  Its next finding states:
  "there is not enough emphasis on fraud prevention as distinct from fraud detection …The former should be an objective of policy and much more attention should be paid to fraud-proofing regulations and schemes".
  The Committee's next conclusion says:
  "the Commission must accept its responsibility for ensuring proper administration of Community funds and must specify precisely the procedures and controls to be followed by Member States acting as its agents".
  Mr. Rowlands: Did the Government accept this?
  Mr. Shore: I will come to that point in a minute. I wish to finish with their Lordships' conclusions because they are highly relevant. They continue:
  "the Court of Auditors must be strengthened".
  They said that in July this year, knowing full well what had gone into the Maastricht treaty and what additional powers it had given to the Court of Auditors. They go on to say:
  "the whole of the European Parliament should play a more active role in the fight against fraud and Member States should pay more attention to reports from the Budgetary Control Committee".
  Another important conclusion states:
  "public opinion needs to be informed and motivated".
  The public must not be misinformed nor should the truth be hidden from them, as the hon. Member for Harrow, East, who is not in his place, would have us accept. The final conclusion states:
  "the present step-by-step approach is not producing sufficient results. A Task Force of outside experts should be appointed to undertake a fundamental review of the way the Institutions are discharging their financial responsibilities and in particular the matters referred to in paragraph 53. Failing that, the European Council must insist on the Commission undertaking such a review itself with the help of outside professionals."
  That is a series of quite powerful recommendations. Those conclusions were reached after careful study by a body whose members could hardly be accused of being Euro-sceptics. On the contrary, they are very responsible people who, for the most part, are friends of the European Union.
  My hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) has prompted me to ask how the Government will respond to the House of Lords Select Committee report. I think that the whole House would like to have that response.
  I conclude my dealings with the report by quoting paragraph 56, which says:
  "We emphasise, as we have done in previous reports, that there has hitherto been a lack of political will in the Community to take remedial action, with the result that the integrity of the Community's financial statements is in doubt."
  I know that hon. Members on both sides of the Committee will concur fully with those words. It continues:
  "It is Europe's honest taxpayers and traders who bear the huge sums"—
  the Committee's words—
  "lost to fraud against the Community. These losses are a public scandal. Unless the measures described above are set in hand boldly and resolutely, adverse reports will continue to be issued by the Court of Auditors year after year, and such reports will inevitably fail to give the assurances required by the Maastricht Treaty. The Community in the meanwhile will continue to suffer grievous losses through fraud and irregularity. We do not think that any responsible Government would wish to allow that state of affairs to continue."

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  Those are pretty weighty words. They fully express the proper anxiety that has been articulated in today's debate by hon. Members on both sides of the Committee about the extent of fraud and the difficulty that has been found so far in combating it.
  The Government's response to that report is something that we would be interested to hear. The Government have not helped themselves or their reputation by turning down those sums of money which have been offered in two member states to help deal with fraud. My hon. Friend the shadow Chancellor cited some items during his speech on Second Reading. Only yesterday or the day before the political editor of The Guardian, Michael White, had this to say of recent meetings of Budget Ministers on 16 November. The article reads:
  "Mr. Heathcoat-Amory agreed to a £3.9 million cut in the anti-fraud budget for 1995, currently set at £100 million and far less than demanded by the European Parliament."
  If the Minister agreed to cut £3.9 million from the anti-fraud budget, that undermines his credibility as a Minister who should take such matters very seriously.
  The now absent hon. Member for Harrow, East quoted defensively the extraordinary reaction of the European Commission to the Court of Auditors' censure of it. He quoted Mr. David Williamson, the Secretary-General of the European Commission, who made an unwise and foolish statement. He went out of his way to diminish the impact of the report. That is not what he should have done as a person very much involved in the reputation of the European Community.
  Reference has been made in the debate to the regulation and convention for the protection of the Community's financial interests. That occurs in the new clause moved by my hon. Friend the Member for Gateshead, East. It is obviously germane to the problem of fraud and financial irregularities. A regulation and convention for the protection of the Community's financial interests is now being negotiated within the Community. There is great difficulty in achieving an agreement on the content of that regulation and, indeed, that convention.
  The regulation is that part of the procedure of the Community that comes under the old provisions of the Rome treaty and, if agreed unanimously, it would be imposed on us. The convention for the protection of the Community's financial interests has been negotiated on our behalf, under the third pillar arrangement of the Maastricht treaty, by the Home Secretary with the Ministers of Justice and Home Affairs of other Community countries.
  The great difficulty is the lack of any agreement on what fraud is. If one cannot reach an agreement on a definition of fraud, frankly, one will not get far with legislation of that type, whether it be a regulation or a convention.
  As the Committee will recognise, in new clause 10 we ask the Government to make an annual report to Parliament on their proposals and the progress achieved in combating fraud. That would precisely focus the attention of the Government on what we want to hear from them—not merely the extent of fraud, but what they are doing to combat it. Our proposal makes the Minister's reply a very important contribution to this debate, especially in relation to the recommendations made by the House of Lords Select Committee.
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  I have another proposal, which must have occurred to many hon. Members. Fraud should be given the high profile and urgent attention that it needs. Goodness knows, we have enough Commissioners—we do not know quite what to do with them all. One would have thought that the Commission should accept that a senior Commissioner should be given, as his main or only task, the responsibility of combating fraud and imposing adequate financial controls. It would be beneficial for the Commission and for all of us.
  Mr. Tim Devlin: A Commissioner is already responsible for tackling fraud—Mr. Schmidhuber, whose name was mentioned earlier.
  It was interesting to see how several hon. Members dealt with an intervention by my hon. Friend the Member for Harrow, East (Mr. Dykes). They said that he was trying to ignore the problems of fraud in the European Union. In fact, my hon. Friend was absolutely right. The report of the Court of Auditors is a report not on fraud but on financial management in the Union as a whole. In the information note attached to the report, which picks out the highlights, fraud is cited only once.
  The interesting aspect of coverage of that subject in the United Kingdom is that we constantly hear references to a figure of 6 becu, which is said to be the extent of fraud in the Community. That figure has no basis in fact. Its origin can be found in a report carried out by a German academic some years ago, in an extrapolation of an estimate of 10 per cent. of the Community budget which is possibly lost to fraud. He based those calculations on a specific slaughter premium scheme and extrapolated the amount to all parts of the budget. As such, the example and the amount are totally without justification.
  The Court of Auditors' report strongly criticises member states, including the United Kingdom, on financial management. The president of the court pointed out that, as Governments of member states effectively manage about 80 per cent. of the Union's budget, to some degree they are responsible for its proper management. We all know that there are differences in standards of financial probity in member states, but we must bear it in mind that, as the Secretary of State for Social Security has told the House more than once, we have sufficient fraud in our social security system without its negating the whole system. When discussing such matters, we have to take care that we do not debase the institutions themselves when labelling everything in the European Union as fraudulent and dishonest. Hon. Members should not forget that one third of the budget of the European Union is spent in disadvantaged regions of the Union, and that much is spent in the north-east of England, where I come from, and in Scotland. Since 1989, £30 billion has been spent in that way.
  My hon. Friend the Member for Chingford (Mr. Duncan Smith) has said that it is interesting that, as greater financial contributions are made to the European Union budget, there will undoubtedly be greater scrutiny of the expenditure of the Union. That is only right. After all, each directorate in the Commission has its own computer system which has been contributed by different member states. I do not know which member state introduced the computer system—
  It being Ten o'clock, THE SECOND DEPUTY CHAIRMAN left the Chair to report progress and ask leave to sit again.
  Committee report progress.
  Motion made, and Question put forthwith, pursuant to Standing Order No. 14 (Exempted business),
  That, at this day's sitting, the European Communities (Finance) Bill may be proceeded with, though opposed, until any hour.—[Mr. Kirkhope.]
  Question agreed to.
  Again considered in Committee.
  Mr. Devlin: I shall return to the point which I briefly wanted to make. I have spoken for only three minutes so far. [Interruption.] I shall see my hon. Friend the Member for Salisbury (Mr. Key) later. [Interruption.]
  The Second Deputy Chairman: Order. Before the hon. Gentleman continues his speech, may I say that I deprecate what appears to be the post-prandial gossip which is taking place in the Chamber? If hon. Members wish so to engage, I suggest that they leave the Chamber.
  Mr. Devlin: It is nice to know that some hon. Members are making such a contribution to diminishing the European wine lake.
  The point which I wanted to make briefly is that the systems within the Community can be scrutinised heavily. The situation regarding computers is that each directorate has selected a computer system from a different Community country. For instance, the education directorate's computer system has been installed by Greeks, and its software was written by a Greek. It is not one of the most worthy computer systems, and is prone to certain inefficiencies.
  Across the Community institutions as a whole, there are a large number of well-paid officials who, frankly, are not finding enough to do with their time. Consequently, we could be looking for further productivity improvements from them.
  We also have an historic opportunity with the joining of three new countries—Finland, Sweden and Austria—to the Community. A shift will take place in the Community which will give this country a fundamental opportunity. Up until now, the French-speaking countries have had a hold over the institutions in the European Union. We are seeing a shift, and a number of senior policy positions will be taken over by Germans, Austrians and other nationalities.
  With the influx of Austrians, Finns and Swedes, English will be used much more as the working language in the Community. We are also seeing a massive improvement in information technology, most of which is written in English. That will have a serious effect on the management of the European Union, because it will mean that the standard of financial management which we have grown used to in this country will be much more amenable to the operating systems within the Union. With that in mind, we can see that there will be a much greater improvement in the future.
  Let me finish by identifying an area in which an early improvement in financial systems would be very welcome. I refer to the allocation of European social fund objective 2, 3 and 4 status, and the management of the funds. In my constituency and throughout my region in the north of England, a number of local authorities, voluntary organisations and other institutions have applied
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  for ESF objective 2 funding, but they will not find out until half way through the financial year—or even later—whether they will receive that money.
  Organisations in my constituency that applied for funds for their projects in January still have not heard whether they will receive those funds. They are, however, required to spend their money evenly over the year; so they are speculating, taking money that they have earned from other sources—or borrowing money—and then spending it in the hope that later in the year they will receive the funds that they confidently expect. It is not a happy system, because it may mean that a number of worthy organisations are left out in the financial cold.
  I look forward to further reforms in the future, but I agree with my hon. Friend the Member for Harrow, East that the whole question has been blown very much out of proportion. We must try to preserve the integrity of the European initiative without necessarily dressing it up in an erroneous cloak of fraud.
  Mr. Austin Mitchell: I should have thought that the best way of preserving the integrity of the European initiative was by demonstrating the extent of fraud. That would show whether we can have faith in Europe's control systems and institutions. Rather than saying, as the hon. Member for Stockton, South (Mr. Devlin) seemed to say at one stage, that it is okay as long as some of the money comes to the north-east, we should want all the fraud to be detected so that we know what we are dealing with.
  At present, unfortunately, fraud and the European Community are synonymous in the minds of a vast number of people. Indeed, the European Union could almost be called the European Union of fraudsters and related trades. Examples of fraud have been brought home to people by television reports and reports from the Court of Auditors. There is, for instance, the massive olive fraud in Italy: for years, people went around counting the olive trees on the estate and plotting them on maps; then they moved on to superior technology—aerial spotting of olive trees. Subsequently, that technology was itself improved: the spotting was done by means of ortho-chromatic, pan-chromatic, infra-red and ultra-violet film. By that method, all the olive trees could be minutely counted.
  The comic aspect only gives ammunition to people like me who are strongly critical of the Community. It generates an atmosphere of alienation—a general belief that the Community is all about fraud. Other examples are the piggy-go-round, and the export rebates on goods that never leave the country or else return to it by some roundabout route. I am not talking only about the common agricultural policy, although it is a fraudsters charter that accounts for half the budget. The CAP, along with the enormous fluctuations in commodity prices, gives great scope for fraud, as does tobacco.
  Our new clause 10 mentions waste as well as fraud. We need to deal with waste. We have spent £1 billion on growing tobacco in Greece, and more billions on expanding the wine lake. We have provided subsidies to cut wine production, and production has increased. All those examples are endemic in the CAP, but trading schemes are also a problem. An element of corruption is present in the Commission itself, and we must ask whether the European Parliament is an adequate means of dealing with fraud. Building contracts for the European Court are an example, as are the travel expenses

  409
  claimed—fraudulently, in some cases—by Members of the European Parliament. Some claim the full fare and then pay a cut-price fare. Wasteful overseas trips are made. How can anyone have faith in an institution that is so redolent of fraud, when so many examples of it are hitting the newspapers?
  The sad fact is that policing of that fraud depends on national Governments, who often have a vested interest in sustaining the fraud, or not revealing it because it will draw attention to what is happening, and national Governments who, in some cases, are corrupt.
  The example of what is happening in Italy was mentioned by my hon. Friend the Member for Workington (Mr. Campbell-Savours). One cannot claim that fraud is not endemic in a system in which politicians are interrogated about fraud and politicians are carried off to prison as a result of fraud.
  Perhaps, in passing, I should commend the example of Italy to the Government, because the effect of carrying politicians off to gaol has been a collapse of confidence in the lira; the lira has fallen and Italian exports and Italian manufacturing are booming. It is a precedent that the Government might well choose to follow, given the incompetent way in which they handled our own exit from the exchange rate mechanism.
  One cannot assume that, in a system where that is happening in national politics, fraud and corruption are restricted to national politicians; they must be endemic in the society. If they are endemic in the society, we cannot know the scale of what is happening to the European Community's spending in that country.
  Italian fraud, Spanish practices and the Irish beef scandal are all examples of a corrupt system that is essentially a fiddlers charter. Other problems are the huge scale of spending, which gives enormous scope for speculation, the conflict between European authorities and national authorities, and the pork barrel mentality whereby, as long as funds are channelled into the "Club Med" states and the poorer states, corruption is accepted. A conspiracy of silence develops in relation to it.
  We do not know the scale of fraud. The Chancellor of the Exchequer says, with his usual insouciance, that it is on a small scale—peanuts—but he thinks that of so many things. Our budget contributions are on a small scale—peanuts. Only tomorrow, when he comes to the House with a package on a much bigger scale, shall we discover his definition of something that is not peanuts. It is all peanuts to the Chancellor—but what are the estimates?
  The Court of Auditors produced an estimate of fraud and waste last year of between £600 million and £4 billion. I am happy to accept any estimate, provided that it is high enough. The fact is that we do not know. My estimates, from a prejudiced point of view, are as good as the estimates of people whose attitude to the Community is favourable.
  That is the aim of the new clauses. It is simply to shed light on the issue from all points of view, as my hon. Friend the Member for Workington said. From the point of view of people who are enthusiastic about and loyal to the Community, it is important that the true scale of fraud, a cancer eating away at the heart of the Community, which is alienating public opinion on a considerable scale, should be known, just as it is important from my point of view that it should be known.
  410
  The true scale of fraud might be high, in which case it will probably fuel my frenzy; it might well be low, in which case it will fuel the enthusiasm of those people who are committed to the Community. We need to know, if we are to deal with the problem adequately and in the effective way in which we tackle fraud in this country; the public want to know, and it is essential for the enlightenment of the public that they be told the scale of the problem. There is a connection between the widespread alienation from Europe which exists, and which is shown by public opinion polls in this country, and the pervasive feeling that what is going on there is a fraudsters charter.
  It is hypocrisy for Governments to come back, as the Government have done, year after year, and tell us, "We are strengthening the procedures for fraud, we are voting more money to deal with fraud," and then be found to be voting in the Council for cuts in the provision for tackling fraud. It happened last year, as was revealed by John Tomlinson—our Government supported a £20 million cut in the provision for tackling fraud. When the European Parliament suggested in this year's draft budget that 50 additional staff should be provided for the anti-fraud squad in Europe, the squad was cut with the concurrence of our Government. Such double-talk leads to a collapse in belief in terms of what people say about Europe—one thing is said here and another elsewhere.
  What we need and what the new clauses will provide is more light on the subject. Much of the secrecy is due to the Council of Ministers, which is one of the obstacles to dealing with fraud. It will not provide the information to the Court of Auditors or to us. Our new clause 10 simply provides for a report to Parliament on what is being done to combat both fraud, which is endemic, arid waste, which is an even more serious problem. New clause 13, tabled by the official Opposition, does not mention waste and does not cover all Community expenditure as our new clause does; it merely deals with the general budget.
  10.15 pm
  I would expect a Government who are trying to persuade Parliament to agree to raise the ceiling on European expenditure to support the new clauses, and to defend and promote them. If we are giving a concession to the Community by raising the ceiling, it is surely essential to use that as a negotiating counter and say that we have to take action to deal with fraud. The Government have lavished money on the big six accountancy houses, including Coopers and Lybrand and Price Waterhouse. I do not know why the Government do not propose that one of the big six firms of auditors should audit the expenditure and financial procedures of the Commission and the Council.
  I had a moment of hope when it was proposed that Sir James Goldsmith should draft into the Commission a team of 200 auditors to find out what is going on. What a good thing that would be. Why do the Government not propose that? Why do they not send Coopers and Lybrand to Brussels to deal with the problems and tell us what is going on? We are asking for more light and more information. If our new clauses are agreed to—they are an essential concomitant of the increase in expenditure and fraud—we shall have achieved that.
  Mr. Heathcoat-Amory: I can at least agree with the hon. Member for Great Grimsby (Mr. Mitchell) that we

  411
  are debating a serious issue. Over the past 10 years and more, the United Kingdom has often ploughed a lonely furrow in encouraging and arguing for prompter and more resolute action against fraud and mismanagement in all its forms. We believe not only in direct action to fight fraud, but in tightening up financial discipline at all levels in the European Community and introducing better systems of budgetary management to stop fraud arising in the first place. That is why we are extremely glad that a number of other European Union institutions now take the issue with the same degree of seriousness.
  The European Parliament sometimes has a reputation for running a sort of global foreign policy rather than looking after the interests of taxpayers. It is extremely welcome that members of that Parliament are grasping the issue and using their own powers to bring the European budget under better control. Member states are also becoming interested, which may have something to do with the fact that more of them are becoming net contributors. Before the end of the century, in terms of net contributions per head, we shall be overtaken by France, the Netherlands, Sweden and Austria, with Germany remaining by far and away the largest net contributor. Italy too is becoming a contributor to the budget so the attitude of those countries towards the need for better financial control has been transformed in recent years.
  New clause 3 does not make a great deal of sense because it assumes that it is the United Kingdom that adopts Council regulations. It is not; the Council of Ministers adopts them. We have a veto over their adoption because they must be agreed by unanimous vote, but that distinction is a important one. The regulation specified in new clause 3 has already been submitted to the Scrutiny Committee. That happened on 5 October and it has been recommended for debate, so we do not need a new clause to ensure that that draft regulation is properly scrutinised.
  The Opposition sometimes speak as though the draft regulation against fraud were the only one that exists. It is important because it will bring into effect a European Union-wide system of administrative penalties which we very much welcome. A great deal has been happening quite separately from that initiative. For instance, my right hon. and learned Friend the Home Secretary put forward a British proposal under the third pillar of the Maastricht treaty which requires inter-governmental action. It suggested a series of measures to ensure that fraud against the interests of the Community is subjected to appropriate sanctions under national laws. Indeed, it was largely at his prompting that the Justice and Home Affairs Council has now agreed a resolution that will go forward to Essen to be considered by the European Council next weekend.
  The hon. Member for Gateshead, East (Ms Quin), who introduced the debate for the Labour party, sought to suggest that the United Kingdom had voted against anti-fraud measures. I want to put that myth to rest. In the draft budget for next year, the Commission asked for anti-fraud resources of some £102 million. That was virtually granted in full by the Council. It is true that it represents a small cut on 1994 but that is because the 1994 budget for anti-fraud measures includes a number of start-up costs and one-off studies and the purchase of capital equipment which obviously do not have to be
  412
  repeated every year, but the operational effectiveness and the number of people deployed on the ground against fraud will remain, and in some cases be enhanced.
  Of course the European Parliament, as so often is the case, sought an increase in expenditure for this category as for many others. It wanted some £2 million more spent on agriculture to make sure that the inspection of animals in transit was enhanced. That did not find favour with the Council of Ministers. Another suggested item of expenditure would insert into the operational section of the budget a number of administrative expenditure budgets. Those two items were taken out by the Council of Ministers. If it is of any assistance to the hon. Lady, I can give her the categorical assurance that the United Kingdom did not vote for any cut whatsoever.
  There is a wider point, however, that action against fraud is not simply a question of spending more public money. We want more preventive measures and better regulations in Community legislation. We want to improve the discipline of the budget to stop fraud arising in the first place. It is too often the instinct of the European Parliament and Opposition parties to meet expenditure with more expenditure and to judge any organisation simply by the amount of money being spent on it.
  Mr. Campbell-Savours: What about social security?
  Mr. Heathcoat-Amory: The anti-fraud measures in the European Commission and elsewhere are properly funded and have the required degree of political momentum behind them.
  Mr. Campbell-Savours rose—
  Mr. Heathcoat-Amory: I am responding to the hon. Gentleman, who spoke earlier in the debate.
  The hon. Gentleman referred to the Thomson report on agriculture. I think that he has a copy, but he can also obtain one from the Library where I believe that it was recently deposited by my right hon. Friend the Minister of Agriculture, Fisheries and Food. It is entitled, "European Agriculture in the 21st Century". I believe that it is a rattling good read and I commend it to the House. There is no question of the United Kingdom Government wishing to suppress well thought out and constructive contributions to the debate about CAP reform which itself has an important part to play in reducing the incentives for fraud.
  My hon. Friend the Member for Chingford (Mr. Duncan Smith) wanted an annual debate on this and in my final remarks I shall mention an idea along those lines. First, I want to assure him that the United Kingdom Government were instrumental in obtaining for the European Court of Auditors full status as an institution of the European Union during the Maastricht negotiation and ensuring that reports from the European Court of Auditors are not simply filed in the bottom drawer in the Commission but are responded to and acted upon.
  Mr. Shore: I hope that the Minister will address himself to the House of Lords Select Committee's July report which particularly mentions, as their Lordships saw it, the lack of powers of the Court of Auditors after the Maastricht treaty.
  Mr. Heathcoat-Amory: I was coming to that very point. The right hon. Gentleman rightly drew attention to

  413
  the good work that has been done in another place on the question of fraud and how to fight it. The Government will be responding in due course to their Lordships' latest report, but I can assure the right hon. Gentleman that already many of the constructive proposals that they put forward, including strengthening the European Court of Auditors, are being put in place. I met the European Court of Auditors in London earlier in the summer and I gave it an assurance that it would receive the full support of the British Government and, I presumed, of the House in the good work that it does.
  I end by responding to the point about reports to the House. It is an essential task of the Government to keep the House fully informed about what we are doing on the question of fraud and mismanagement. At an earlier stage in the debate I mentioned the annual report submitted to the House on the Community budget. Starting from next year, I propose to expand the statement to include what is being done on budgetary discipline and mismanagement and to counter fraud. A point picked up by other hon. Members but suggested by me was that in some ways the House suffers from a surfeit of different reports, not all of them being properly scrutinised. Therefore, there is merit not in triggering yet another report as a consequence of today's debate, but in incorporating it into a single annual report which will draw together all that the Government are doing on this important issue.
  Ms Quin: Despite what the Minister has just said, the Opposition consider that the new clause is still important and that it would be right for the Council to adopt this regulation on the protection of the Community's financial interests so that all of us could feel that something was being done to tackle the problem effectively. For that reason, we shall press the new clause to a Division.
  Question put, That the clause be read a Second time:—
  The Committee divided: Ayes 255, Noes 319.

  Division No. 14]

  [22.28 pm

  AYES

  Abbott, Ms Diane

  Byers, Stephen

  Adams, Mrs Irene

  Callaghan, Jim

  Ainger, Nick

  Campbell, Menzies (Fife NE)

  Ainsworth, Robert (Cov'try NE)

  Campbell, Mrs Anne (C'bridge)

  Allen, Graham

  Campbell, Ronnie (Blyth V)

  Anderson, Donald (Swansea E)

  Campbell-Savours, D N

  Anderson, Ms Janet (Ros'dale)

  Canavan, Dennis

  Armstrong, Hilary

  Cann, Jamie

  Ashton, Joe

  Carlile, Alexander (Montgomry)

  Barnes, Harry

  Chisholm, Malcolm

  Barron, Kevin

  Church, Judith

  Battle, John

  Clapham, Michael

  Bayley, Hugh

  Clark, Dr David (South Shields)

  Beckett, Rt Hon Margaret

  Clarke, Eric (Midlothian)

  Beith, Rt Hon A J

  Clarke, Tom (Monklands W)

  Bell, Stuart

  Clelland, David

  Benn, Rt Hon Tony

  Clwyd, Mrs Ann

  Bennett, Andrew F

  Coffey, Ann

  Benton, Joe

  Cohen, Harry

  Bermingham, Gerald

  Connarty, Michael

  Berry, Roger

  Cook, Frank (Stockton N)

  Betts, Clive

  Cook, Robin (Livingston)

  Blunkett, David

  Corbett, Robin

  Boateng, Paul

  Corbyn, Jeremy

  Bradley, Keith

  Corston, Jean

  Bray, Dr Jeremy

  Cousins, Jim

  Brown, Gordon (Dunfermline E)

  Cox, Tom

  Brown, N (N'c'tle upon Tyne E)

  Cunliffe, Lawrence

  Burden, Richard

  Cunningham, Jim (Covy SE)

  414

  Dafis, Cynog

  Jones, Martyn (Clwyd, SW)

  Dalyell, Tam

  Jones, Nigel (Cheltenham)

  Darling, Alistair

  Keen, Alan

  Davidson, Ian

  Kennedy, Charles (Ross, C&S)

  Davies, Bryan (Oldham C'tral)

  Kennedy, Jane (Lpool Brdgn)

  Davies, Ron (Caerphilly)

  Khabra, Piara S

  Davies, Rt Hon Denzil (Llanelli)

  Kilfoyle, Peter

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

  Kirkwood, Archy

  Denham, John

  Lestor, Joan (Eccles)

  Dewar, Donald

  Lewis, Terry

  Dixon, Don

  Liddell, Mrs Helen

  Dobson, Frank

  Litherland, Robert

  Donohoe, Brian H

  Llwyd, Elfyn

  Dowd, Jim

  Loyden, Eddie

  Dunnachie, Jimmy

  Macdonald, Calum

  Dunwoody, Mrs Gwyneth

  Mackinlay, Andrew

  Eagle, Ms Angela

  MacShane, Denis

  Eastham, Ken

  Madden, Max

  Enright, Derek

  Maddock, Diana

  Etherington, Bill

  Mahon, Alice

  Ewing, Mrs Margaret

  Mandelson, Peter

  Fatchett, Derek

  Marek, Dr John

  Field, Frank (Birkenhead)

  Marshall, David (Shettleston)

  Fisher, Mark

  Marshall, Jim (Leicester, S)

  Flynn, Paul

  Martin, Michael J (Springburn)

  Foster, Rt Hon Derek

  Martlew, Eric

  Foulkes, George

  Maxton, John

  Fraser, John

  McAllion, John

  Fyfe, Maria

  McAvoy, Thomas

  Galloway, George

  McCartney, Ian

  Gapes, Mike

  McKelvey, William

  Garrett, John

  McLeish, Henry

  George, Bruce

  McMaster, Gordon

  Gerrard, Neil

  McNamara, Kevin

  Gilbert, Rt Hon Dr John

  McWilliam, John

  Godsiff, Roger

  Meacher, Michael

  Getting, Mrs Llin

  Meale, Alan

  Gordon, Mildred

  Michael, Alun

  Graham, Thomas

  Michie, Bill (Sheffield Heeley)

  Grant, Bernie (Tottenham)

  Milburn, Alan

  Griffiths, Nigel (Edinburgh S)

  Miller, Andrew

  Griffiths, Win (Bridgend)

  Mitchell, Austin (Gt Grimsby)

  Grocott, Bruce

  Moonie, Dr Lewis

  Gunnell, John

  Morgan, Rhodri

  Hain, Peter

  Morley, Elliot

  Hall, Mike

  Morris, Estelle (B'ham Yardley)

  Hanson, David

  Morris, Rt Hon Alfred (Wy'nshawe)

  Hardy, Peter

  Morris, Rt Hon John (Aberavon)

  Hattersley, Rt Hon Roy

  Mudie, George

  Henderson, Doug

  Mullin, Chris

  Heppell, John

  O'Brien, Bill (Normanton)

  Hill, Keith (Streatham)

  O'Brien, Mike (N W'kshire)

  Hinchliffe, David

  O'Hara, Edward

  Hodge, Margaret

  Oakes, Rt Hon Gordon

  Hoey, Kate

  Olner, Bill

  Hogg, Norman (Cumbernauld)

  Paisley, The Reverend Ian

  Home Robertson, John

  Parry, Robert

  Hood, Jimmy

  Pendry, Tom

  Hoon, Geoffrey

  Pickthall, Colin

  Howarth, George (Knowsley N)

  Pike, Peter L

  Howells, Dr. Kim (Pontypridd)

  Pope, Greg

  Hoyle, Doug

  Powell, Ray (Ogmore)

  Hughes, Kevin (Doncaster N)

  Prentice, Bridget (Lew'm E)

  Hughes, Robert (Aberdeen N)

  Prentice, Gordon (Pendle)

  Hughes, Roy (Newport E)

  Primarolo, Dawn

  Hughes, Simon (Southwark)

  Purchase, Ken

  Hutton, John

  Quin, Ms Joyce

  Illsley, Eric

  Radice, Giles

  Ingram, Adam

  Randal, Stuart

  Jackson, Glenda (H'stead)

  Raynsford, Nick

  Jackson, Helen (Shef'ld, H)

  Reid, Dr John

  Jamieson, David

  Robertson, George (Hamilton)

  Jones, Barry (Alyn and D'side)

  Robinson, Geoffrey (Co'try NW)

  Jones, Ieuan Wyn (Ynys Mon)

  Roche, Mrs Barbara

  Jones, Jon Owen (Cardiff Central)

  Rogers, Allan

  Jones, Lynne (B'ham S O)

  Rooney, Terry

  415

  Ross, Ernie (Dundee W)

  Taylor, Mrs Ann (Dewsbury)

  Rowlands, Ted

  Thompson, Jack (Wansbeck)

  Ruddock, Joan

  Timms, Stephen

  Salmond, Alex

  Tipping. Paddy

  Sedgemore, Brian

  Vaz, Keith

  Sheerman, Barry

  Walker, Rt Hon Sir Harold

  Sheldon, Rt Hon Robert

  Walley, Joan

  Shore, Rt Hon Peter

  Wardell, Gareth (Gower)

  Short, Clare

  Wareing, Robert N

  Simpson, Alan

  Welsh, Andrew

  Skinner, Dennis

  Wicks, Malcolm

  Smith, Andrew (Oxford E)

  Wigley, Dafydd

  Smith, Chris (Isl'ton S & F'sbury)

  Williams, Alan W (Carmarthen)

  Smith, Llew (Blaenau Gwent)

  Williams, Rt Hon Alan (Sw'n W)

  Soley, Clive

  Wilson, Brian

  Spearing, Nigel

  Winnick, David

  Wise, Audrey

  Spellar, John

  Worthington, Tony

  Squire, Rachel (Dunfermline W)

  Wray, Jimmy

  Steinberg, Gerry

  Wright, Dr Tony

  Stevenson, George

  Young, David (Bolton SE)

  Stott, Roger

  Strang, Dr. Gavin

  Tellers for the Ayes:

  Straw, Jack

  Ms Tessa Jowell and

  Sutcliffe, Gerry

  Mr. John Cummings.

  NOES

  Ainsworth, Peter (East Surrey)

  Carrington, Matthew

  Aitken, Rt Hon Jonathan

  Cash, William

  Alexander, Richard

  Channon, Rt Hon Paul

  Alison, Rt Hon Michael (Selby)

  Chapman, Sydney

  Allason, Rupert (Torbay)

  Churchill, Mr

  Amess, David

  Clappison, James

  Ancram, Michael

  Clark, Dr Michael (Rochford)

  Arbuthnot, James

  Clarke, Rt Hon Kenneth (Ru'clif)

  Arnold, Jacques (Gravesham)

  Clifton-Brown, Geoffrey

  Arnold, Sir Thomas (Hazel Grv)

  Coe, Sebastian

  Ashby, David

  Colvin, Michael

  Aspinwall, Jack

  Congdon, David

  Atkins, Robert

  Conway, Derek

  Atkinson, David (Bour'mouth E)

  Coombs, Anthony (Wyre For'st)

  Atkinson, Peter (Hexham)

  Coombs, Simon (Swindon)

  Baker, Nicholas (Dorset North)

  Cope, Rt Hon Sir John

  Baker, Rt Hon K (Mole Valley)

  Cormack, Patrick

  Baldry, Tony

  Couchman, James

  Banks, Matthew (Southport)

  Cran, James

  Banks, Robert (Harrogate)

  Currie, Mrs Edwina (S D'by'ire)

  Bates, Michael

  Curry, David (Skipton & Ripon)

  Batiste, Spencer

  Davies, Quentin (Stamford)

  Beggs, Roy

  Davis, David (Boothferry)

  Bellingham, Henry

  Day, Stephen

  Bendall, Vivian

  Deva, Nirj Joseph

  Beresford, Sir Paul

  Devlin, Tim

  Biffen, Rt Hon John

  Dicks, Terry

  Bonsor, Sir Nicholas

  Dorrell, Rt Hon Stephen

  Booth, Hartley

  Douglas-Hamilton, Lord James

  Boswell, Tim

  Dover, Den

  Bottomley, Peter (Eltham)

  Duncan Smith, Iain

  Bottomley, Rt Hon Virginia

  Duncan, Alan

  Bowis, John

  Dunn, Bob

  Boyson, Rt Hon Sir Rhodes

  Durant, Sir Anthony

  Brandreth, Gyles

  Dykes, Hugh

  Brazier, Julin

  Eggar, Tim

  Bright, Sir Graham

  Elletson, Harold

  Brooke, Rt Hon Peter

  Emery, Rt Hen Sir Peter

  Brown, M (Brigg & Cl'thorpes)

  Evans, David (Welwyn Hatfield)

  Browning, Mrs. Angela

  Evans, Jonathan (Brecon)

  Bruce, Ian (Dorset)

  Evans, Nigel (Ribble Valley)

  Budgen, Nicholas

  Evans, Roger (Monmouth)

  Burns, Simon

  Evennett, David

  Burt, Alistair

  Faber, David

  Butcher, John

  Fabricant, Michael

  Butler, Peter

  Fenner, Dame Peggy

  Butterfill, John

  Field, Barry (Isle of Wight)

  Carlisle, John (Luton North)

  Fishburn, Dudley

  Carlisle, Sir Kenneth (Lincoln)

  Forsyth, Michael (Stirling)

  416

  Forsythe, Clifford (Antrim S)

  Lennox-Boyd, Sir Mark

  Forth, Eric

  Lester, Jim (Broxtowe)

  Fowler, Rt Hon Sir Norman

  Lidington, David

  Fox, Sir Marcus (Shipley)

  Lightbown, David

  Freeman, Rt Hon Roger

  Lilley, Rt Hon Peter

  French, Douglas

  Lloyd, Rt Hon Peter (Fareham)

  Fry, Sir Peter

  Lord, Michael

  Gale, Roger

  Luff, Peter

  Gallie, Phil

  Lyell, Rt Hon Sir Nicholas

  Gardiner, Sir George

  MacGregor, Rt Hon John

  Garel-Jones, Rt Hon Tristan

  MacKay, Andrew

  Garnier, Edward

  Maclean, David

  Gillan, Cheryl

  Madel, Sir David

  Goodlad, Rt Hon Alastair

  Maginnis, Ken

  Goodson-Wickes, Dr Charles

  Maitland, Lady Olga

  Gorst, Sir John

  Major, Rt Hon John

  Grant Sir A (Cambs SW)

  Malone, Gerald

  Greenway, Harry (Ealing N)

  Mans, Keith

  Greenway, John (Ryedale)

  Marland, Paul

  Griffiths, Peter (Portsmouth, N)

  Marshall, John (Hendon S)

  Gummer, Rt Hon John Selwyn

  Marshall, Sir Michael (Arundel)

  Hague, William

  Martin, David (Portsmouth S)

  Hamilton, Neil (Tatton)

  Mates, Michael

  Hamilton, Rt Hon Sir Archibald

  Mawhinney, Rt Hon Dr Brian

  Hampson, Dr Keith

  Mayhew, Rt Hon Sir Patrick

  Hanley, Rt Hon Jeremy

  McLoughlin, Patrick

  Hannam, Sir John

  McNair-Wilson, Sir Patrick

  Hargreaves, Andrew

  Mellor, Rt Hon David

  Harris, David

  Merchant, Piers

  Haselhurst, Alan

  Mills, Iain

  Hawkins, Nick

  Mitchell, Andrew (Gedling)

  Hawksley, Warren

  Mitchell, Sir David (Hants NW)

  Hayes, Jerry

  Moate, Sir Roger

  Heald, Oliver

  Molyneaux, Rt Hon James

  Heath, Rt Hon Sir Edward

  Monro, Sir Hector

  Heathcoat-Amory, David

  Montgomery, Sir Fergus

  Hendry, Charles

  Moss, Malcolm

  Heseltine, Rt Hon Michael

  Needham, Rt Hon Richard

  Hicks, Robert

  Nelson, Anthony

  Higgins, Rt Hon Sir Terence

  Neubert, Sir Michael

  Hill, James (Southampton Test)

  Newton, Rt Hon Tony

  Hogg, Rt Hon Douglas (G'tham)

  Nicholls, Patrick

  Horam, John

  Nicholson, David (Taunton)

  Hordern, Rt Hon Sir Peter

  Nicholson, Emma (Devon West)

  Howard, Rt Hon Michael

  Norris, Steve

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

  Onslow, Rt Hon Sir Cranley

  Howell, Rt Hon David (G'dford)

  Oppenheim, Phillip

  Howell, Sir Ralph (N Norfolk)

  Ottaway, Richard

  Hughes, Robert G (Harrow W)

  Paice, James

  Hunt, Rt Hon David (Wirral W)

  Patnick, Sir Irvine

  Hunt, Sir John (Ravensbourne)

  Patten, Rt Hon John

  Hunter, Andrew

  Pattie, Rt Hon Sir Geoffrey

  Hurd, Rt Hon Douglas

  Pawsey, James

  Jack, Michael

  Peacock, Mrs Elizabeth

  Jackson, Robert (Wantage)

  Pickles, Eric

  Jenkin, Bernard

  Porter, Barry (Wirral S)

  Jessel, Toby

  Porter, David (Waveney)

  Johnson Smith, Sir Geoffrey

  Portillo, Rt Hon Michael

  Jones, Robert B (W Hertfdshr)

  Powell, William (Corby)

  Jopling, Rt Hon Michael

  Rathbone, Tim

  Kellett-Bowman, Dame Elaine

  Redwood, Rt Hon John

  Key, Robert

  Renton, Rt Hon Tim

  Kilfedder, Sir James

  Richards, Rod

  Kirkhope, Timothy

  Riddick, Graham

  Knapman, Roger

  Rifkind, Rt Hon Malcolm

  Knight, Dame Jill (Bir'm E'st'n)

  Robathan, Andrew

  Knight, Greg (Derby N)

  Roberts, Rt Hon Sir Wyn

  Knight Mrs Angela (Erewash)

  Robertson, Raymond (Ab'd'n S)

  Knox, Sir David

  Robinson, Mark (Somerton)

  Kynoch, George (Kincardine)

  Roe, Mrs Marion (Broxbourne)

  Lait, Mrs Jacqui

  Ross, William (E Londonderry)

  Lamont Rt Hon Norman

  Rowe, Andrew (Mid Kent)

  Lang, Rt Hon Ian

  Rumbold, Rt Hon Dame Angela

  Lawrence, Sir Ivan

  Ryder, Rt Hon Richard

  Legg, Barry

  Sackville, Tom

  Leigh, Edward

  Sainsbury, Rt Hon Tim

  417

  Scott, Rt Hon Nicholas

  Thornton, Sir Malcolm

  Shaw, David (Dover)

  Thurnham, Peter

  Shaw, Sir Giles (Pudsey)

  Townend, John (Bridlington)

  Shephard, Rt Hon Gillian

  Townsend, Cyril D (Bexl'yh'th)

  Shepherd, Colin (Hereford)

  Tredinnick, David

  Shersby, Michael

  Trend, Michael

  Sims, Roger

  Trimble, David

  Skeet, Sir Trevor

  Trotter, Neville

  Smith, Sir Dudley (Warwick)

  Twinn, Dr Ian

  Smith, Tim (Beaconsfield)

  Vaughan, Sir Gerard

  Smyth, Rev Martin (Belfast S)

  Viggers, Peter

  Soames, Nicholas

  Waldegrave, Rt Hon William

  Walden, George

  Speed, Sir Keith

  Walker, A Cecil (Belfast N)

  Spencer, Sir Derek

  Walker, Bill (N Tayside)

  Spicer, Michael (S Worcs)

  Walker, Gary

  Spicer, Sir James (W Dorset)

  Ward, John

  Spink, Dr Robert

  Wardle, Charles (Bexhill)

  Spring, Richard

  Waterson, Nigel

  Sproat, Iain

  Watts, John

  Squire, Robin (Hornchurch)

  Wheeler, Rt Hon Sir John

  Stanley, Rt Hon Sir John

  Whitney, Ray

  Steen, Anthony

  Whittingdale, John

  Stephen, Michael

  Widdecombe, Ann

  Stern, Micheal

  Wiggin, Sir Jerry

  Stewart, Alan

  Willetts, David

  Streeter, Gary

  Wilshire, David

  Sumberg, David

  Winterton, Mrs Ann (Congleton)

  Sweeney, Walter

  Winterton, Nicholas (Macc'fld)

  Sykes, John

  Wolfson, Mark

  Tapsell, Sir Peter

  Wood, Timothy

  Taylor, Ian (Esher)

  Yeo, Tim

  Taylor, John M (Solihull)

  Young, Rt Hon Sir George

  Temple-Morris, Peter

  Thomason, Roy

  Tellers for the Noes:

  Thompson, Patrick (Norwich N)

  Mr. Bowen Wells and

  Thompson, Sir Donald (C'er V)

  Dr. Liam Fox.

  Question accordingly negatived.
  Mr. Shore: On a point of order, Mr. Lofthouse. I raised the matter with Dame Janet Fookes when she was in the Chair. It was my clear understanding that there would be a Division on new clause 10.
  The First Deputy Chairman of Ways and Means (Mr. Geoffrey Lofthouse): I know of no undertaking being given.
  Mr. Spearing: Further to that point of order, Mr. Lofthouse. We accept your ruling, of course, but would it be possible for you to read the relevant passage in Hansard tomorrow?
  The First Deputy Chairman: I shall certainly read Hansard tomorrow.

New clause 11

  HOUSE OF COMMONS APPROVAL OF SUBORDINATE ACTION
  'No Minister of the Crown shall give assent to any Regulation, Directive, or other instrument relating to the operation of the decision of 31st October 1994 in the Council of the European Communities in section 1(e) above, unless the text of that instrument has been approved by a Resolution of the House of Commons.'.—[Mr. Spearing.]
  Brought up, and read the First time.
  10.45 pm
  Mr. Spearing: I beg to move, That the clause be read a Second time.
  418
  The clause deals with the powers of the House of Commons in the voting of money. I shall not speak for long— [Interruption.] That is partly because the Conservative Members who are jeering and laughing should quickly understand that they have been sent to this place to do a job of work. If they do not examine taxation and how it is used, their party will not be pursuing its constitutional and parliamentary purpose. The clause would ensure that that purpose would be pursued.
  The clause turns on how the House of Commons decides where taxpayers' money goes. We all know from previous debates that about £10 billion of taxpayers' money may be allocated to the European Communities in the next year or so. Some Conservative Members may feel that that is a good deal. I shall not deal with the merits of membership, because I wish to confine myself to whether the House controls taxpayers' money. [Interruption.]
  The First Deputy Chairman: Order. It is difficult to hear what the hon. Member is saying. The Committee must settle down.
  Mr. Spearing: As I was saying, Mr. Lofthouse—
  Mr. Campbell-Savours: On a point of order, Mr. Lofthouse. Shortly before the most recent Division, the Paymaster General gave an assurance that a certain document had been placed in the Library. I understand that those in the Library, having been requested by a number of Members to produce the document, undertook an extensive search but found no reference to it, except for one last March, when two Members of the other place asked for a copy to be placed in the Library. Perhaps the Minister would care to qualify what he said earlier. We cannot find the document that he assured Parliament was available to Members.
  The First Deputy Chairman: That is not a matter for the Chair. The hon. Member for Newham, South (Mr. Spearing) has the floor.
  Mr. Spearing: An essential question is how the House of Commons votes money. The Chamber is crowded at Budget time, especially when it comes to debates about whether value added tax is to be reduced, for example. When it comes to voting up to £10 billion a year to the European Communities, we demonstrate a failure to take control. Conservative Members who are talking while in their places and perhaps not understanding the purpose of the clause may demonstrate a greater understanding when we come to 1999, when perhaps a third of the rebate that we were debating earlier will disappear. The hapless Government of the time will be faced with an extremely difficult situation.
  The Bill authorises the maximum amount that the Community can impose on its members. It does not provide, however, how much each annual budget will be. That is a matter for annual procedure, in which the Paymaster General is a key figure. The Chancellor of the Exchequer watches to see how much each year the Communities are to spend. The details come before the House of Commons, where they are scrutinised in what is usually a take-note debate. That debate usually takes place late at night, and is usually attended by relatively few hon. Members.

  419
  The moneys for the 1995 budget were debated on Monday evening, and I do not think that more than 20 hon. Members were present. That shows the extent to which hon. Members on both sides of the Chamber are unaware of the power that is potentially in their hands, or rather in the hands of the Government, that is not being used.
  In the past couple of hours, we have had a long debate about fraud. If one is not satisfied with the bookkeeping of a company or organisation to which one subscribes, the ultimate weapon to ensure that fraud is diminished or tackled properly—clearly, in this case, it is not—is to say, "No. Next year we will not vote you any more money. We will not cut you off, but we will not vote any increase at all." Conservative Members support a Bill which says, "We will give you virtually carte blanche to increase our contributions up to £10 billion gross a year, without any practical possibility of saying that, in any one year, we are not going to provide any more."
  New clause 11 would ensure that, before a Minister of the Crown agreed to the annual budget in Brussels, the Government presented an instrument to the House and obtained approval of that budget, not just in a take-note discussion in respect of a document when it is of perhaps even greater import than some previous Budget motions.
  We want some control. The only way of doing that is by agreeing the new clause, which says that no Minister shall give assent to expenditure for a certain Community year unless the proposal receives, by resolution, the assent of the House. At present there is a take-note debate and a bit of discussion, and the Minister goes off and does more or less what he likes. That is proven by the revelation of a previous Paymaster General, when we discussed this very matter in 1988. He said:
  "I fully accept the need for the Government to take careful note of the views of the House whenever possible before agreeing directives or regulations linked to the new own resources decision, but—I do not intend the next remark ironically, although it may be so taken—I nevertheless urge hon. Members to reject the new clause"—
  which is virtually the same as new clause 11—
  "as it would impose an excessive and unnecessary constraint on the Government's freedom of action."—[Official Report, 24 October 1988; Vol. 139, c. 129.]
  That is freedom of action to send to the European Communities, after negotiation, what they consider suitable.
  In doing that, the Government are throwing away most of the power to ensure proper prevention of waste, proper prevention of fraud, and even their bargaining power in the Council of Ministers. If the Government went to the Council and said, "Our House of Commons will allow only a certain amount," they would have real muscle behind them. Instead, the budget of the Community expands year on year because there is a mutual back-scratching exercise for everybody to obtain a bit more, so that they can agree and then go home and tell their Parliaments and nations how well they have done, and how much they have, at the expense of an ever-expanding budget and an inability to tackle fraud.
  420
  It is even worse than that. Many hon. Members have talked about waste. I shall conclude this relatively brief speech by giving an almost breathtaking example. The hon. Member for Harrow, East (Mr. Dykes), who knows much about the Community, decried people for talking about waste, and said that there are scare stories in the newspapers and so on. I shall give an example of how a resolution such as we suggest would actually bite.
  I refer to expenditure, which will almost surely occur, of £6 million by the European Community. The money will be spent to tell us something which most of us know already: lifelong learning is important. All hon. Members will agree that we continue to learn, and in these modern times we have the opportunity to learn to a relatively late age. We learn new facts and new ideas and gain new insights every day. There is no dissent about that.
  The European document of 29 September 1994 under the name of Mr. Klaus Kinkel, President of the Council of the European Union, advocates a year of European lifelong learning. The "year" will spread over one year of preparation and a second year of expenditure. It will cost £6 million, but it will not suggest any procedures for lifelong learning. It will simply produce a number of conferences, logos and surveys in order to impress upon the citizens of the member states of the European Union the importance of lifelong learning.
  According to the explanatory memorandum which accompanies the document, it is based on articles 126 and 127 of the Union's treaty of Maastricht. In other words, the treaty has given it a form of legislative and statutory basis.
  Mr. MacShane: I am grateful to my hon. Friend for giving way. Will he provide details of the document to each Member of the House? We would like to see a little of that £6 million spent in Rotherham. A lifelong learning scheme would do all of us a power of good.
  Mr. Spearing: I think that my hon. Friend misunderstands what I have said. Unfortunately, I gather from the raw document that not a pound of the £6 million will be spent on the sorts of excellent adult education schemes that they have in Rotherham. The document explains what will happen under the proposal. It says:
  "Contents: Actions wholly financed out of the Community budget.
  Organisation of European conferences on the abovementioned themes to launch and close the European Year.
  Organisation of meetings in the Member States in order to stress the contribution made by the European Union to the abovementioned themes.
  Community-wide information and promotional campaigns involving: the designing of a logo and a slogan for the European Year of Lifelong Learning".
  If the project were confined to grants for adult education or lifelong learning it might be a different story, but I am afraid that my hon. Friend has been taken in by the document's title; it is an advertising campaign.
  Mr. Lofthouse, if you and I heard about the proposal and started up a consultancy or put in a bid to run the campaign in Britain— I presume that about £1 million will be spent on this rather curious exercise— we might be in the money; particularly if we had warning of what was going to happen.

  421
  The project is not an example of fraud, but it will generate enough money for someone to do quite well. We do not want to see the Commission financing that sort of project, even if, like my hon. Friend the Member for Rotherham (Mr. MacShane), we are very much in favour of the Union.
  My hon. Friend the Member for Workington (Mr. Campbell-Savours) talked about certain schemes which did not do the Union any good. I suggest that the project is a bad use of public money. That sort of thing can be stopped only if the Chamber uses its power to vote money—just as it does on voting Supply to the Crown, or on voting, as we did last night, on measures which will make money for the Government. Unless and until we get a grip on the European Community's finances, there will be trouble ahead for the Chamber, the Government and, above all, the people of this country.
  11 pm
  Mr. Heathcoat-Amory: I open by answering a point raised by the hon. Member for Workington (Mr. Campbell-Savours), although he does not seem to be in his place. He is probably back in the Library trying to find his book. I did not give an undertaking that the book on European agriculture was available. I said that I understood that it was in the Library. I had been told such by the Ministry of Agriculture, Fisheries and Food. If it is not in the Library, I apologise, and I shall make sure that it is placed there at the earliest possible moment. I repeat that it is not the intention of the British Government to suppress the book. It appears to be a useful contribution to the issue of reform of the common agricultural policy, which has been led by the Government and by Britain.
  Although I sympathise with some of the points made by the hon. Member for Newham, South (Mr. Spearing), I cannot accept his new clause 11. It is potentially extremely wide. The House will accept that already a huge quantity of documents is submitted to the House and is available for parliamentary scrutiny. Earlier in the evening, I quoted the figure of 673 explanatory memorandums submitted to the House in 1994 alone, of which 59 applied to budgetary issues. So Ministers who go to Council meetings and negotiate on behalf of the British Government already provide the House with a great deal of information. The Scrutiny Committee sifts through those explanatory memoranda and recommends some for debate.
  Mrs. Gwyneth Dunwoody: This is an important point. This morning in one of the European Committees the House was asked to examine four major directives on the training of marine employees, safety at sea and pollution. We made it clear that it was not in the interests of the House of Commons that such major pieces of legislation, which will have the effect of law in this country if they are passed, should be allowed to go through in one block sitting without proper examination or any opportunity for the House of Commons to vote against any amended resolution brought to the Floor of the House.
  It is all very well the Minister saying that more than 600 memoranda have been looked at. If that is the sort of scrutiny they receive from the House of Commons,
  422
  neither the Government nor the House should be satisfied that we are monitoring what is happening in the Community.
  Mr. Heathcoat-Amory: It is up to the House to order its scrutiny proceedings in order to give proper attention to the memoranda put before it. I emphasise that the Select Committee, not the Government, decides which shall be recommended for debate. I assure the hon. Lady that, when a draft directive or regulation is submitted to the Government, it is in turn provided to the Scrutiny Committee by way of an explanatory memorandum before final decision, and often before any decisions are taken in discussions in Council meetings in Brussels or elsewhere.
  So the Government are most anxious to supply the House with all necessary information, although it has been observed in the debate that the very quantity of explanatory memoranda means that they do not individually receive the attention that they deserve. I have already made the suggestion that we should consolidate some of the information into an annual report, which could perhaps receive more concerted attention from the House as a whole.
  The effect of new clause 11 would be to mandate Ministers at each stage of every negotiation in Council meetings. That is simply not realistic. A negotiator must be able to speak for those he represents. Obviously, during negotiations positions have to shift; opening bids retreat or advance; and objectives are secured by giving concessions elsewhere. If, at every point in the negotiations, reference had to be made back to the House and another resolution passed before they could proceed, they clearly could not proceed in any realistic sense of the term.
  Any hon. Member who has negotiated in any forum will appreciate that it is unwise for a Government to reveal their negotiating position in full before exchanges take place. I think that the House accepts that it is consistent with our scrutiny proceedings that Ministers should go to Council meetings with the knowledge of where the House stands on important issues, but free to negotiate the best deal possible.
  One should not forget that the negotiations are international discussions, and it behoves Ministers and officials negotiating for this country to get the best possible deal. They are conscious of the need to keep the House of Commons informed, but that position would be undermined by new clause 11, and I recommend that the House reject it.
  Mr. Spearing: With the leave of the House, Mr. Lofthouse. I shall be brief, but I think that the Minister is not absolutely clear about the meaning of new clause 11 in respect of the decision.
  I believe that it might be desirable—the Minister thinks it undesirable—for Ministers to be bound by decisions of this House in scrutiny debates, because all the things he mentioned will be a consequence. The resolution required by new clause 11 relates to the Council decision of 31 October, which concerns finance and the voting of money. I suggest that that changes the position.

  423
  Inadvertently or otherwise, the Paymaster General has been most frank in revealing the nature of the constraints that would be applied by the House and that he and any Minister would be placed under. He used the words "advance", "retreat", "negotiating positions", "concessions" and "concessions elsewhere". I hope that he means elsewhere in a regulation, but I am afraid that he means elsewhere in other matters of policy.
  Since the negotiations take place in secret, who is to know what minority interest in this country—employment in one hon. Member's constituency, or capital appreciation somewhere else—has been sacrificed. Hon. Members and the people of this country would be unaware of that.
  The Minister could come back and say, "I've done the best for the United Kingdom." The reason why any Government—including one whom I supported strongly, who said virtually the same—would say that is because the nature of the constitution of the European Union makes it thus. It mixes up the important matter of legislation, which we do openly and in public in this House, with negotiation, which is a matter of policy formulation between sovereign states. In their reply to the new clause, the Government admitted that mix, which is poisonous to the spirit of democracy, if not to its actuality.
  The hour is late, Mr. Lofthouse, and the Government in their wonderful democratic way, having allocated two days to debate the matter, appear to want to press on. I do not want to give them too much, but by refusing the new clause, with its deep, underlying constitutional principles, they have revealed the fix they are in, the fix that any Government would be in, and the nature of the treaties to which successive Governments have adhered and advocated to the House. Given the opportunity, I would negative the new clause, then we can perhaps move on to the next business.
  Question put, That the clause be read a Second time:—
  The Committee divided: Ayes 50, Noes 312.

  Division No. 15]

  [23.10 pm

  AYES

  Adams, Mrs Irene

  Gordon, Mildred

  Banks, Tony (Newham NW)

  Graham, Thomas

  Barnes, Harry

  Hall, Mike

  Benn, Rt Hon Tony

  Hanson, David

  Betts, Clive

  Hoey, Kate

  Burden, Richard

  Illsley, Eric

  Campbell-Savours, D N

  Lewis, Terry

  Canavan, Dennis

  Livingstone, Ken

  Cohen, Harry

  Loyden, Eddie

  Connarty, Michael

  Mackinlay, Andrew

  Corbyn Jeremy

  Mahon, Alice

  Cunliffe, Lawrence

  McAvoy, Thomas

  Cunningham, Jim (Covy SE)

  Michie, Bill (Sheffield Heeley)

  Dalyell, Tam

  Mullin, Chris

  Davidson, Ian

  Olner, Bill

  Davis, Terry (B'ham, H'dge H'I)

  Paisley, The Reverend Ian

  Dixon, Don

  Pickthall, Colin

  Donohoe, Brian H

  Pope, Greg

  Evans, John (St Helens N)

  Prentice, Bridget (Lev'm E)

  Gerard, Neil

  Rooney, Terry

  424

  Rowlands, Ted

  Spellar, John

  Salmond, Alex

  Williams, Alan W (Carmarthen)

  Shore, Rt Hon Peter

  Wise, Audrey

  Simpson, Alan

  Skinner, Dennis

  Tellers for the Ayes:

  Smith, Llew (Blaenau Gwent)

  Mrs. Gwyneth Dunwoody

  Spearing, Nigel

  and Mr. Austin Mitchell.

  NOES

  Ainsworth, Peter (East Surrey)

  Currie, Mrs Edwina (S D'by'ire)

  Aitken, Rt Hon Jonathan

  Curry, David (Skipton & Ripon)

  Alexander, Richard

  Davies, Quentin (Stamford)

  Alison, Rt Hon Michael (Selby)

  Davis, David (Boothferry)

  Amess, David

  Day, Stephen

  Ancram, Michael

  Deva, Nirj Joseph

  Arbuthnot, James

  Devlin, Tim

  Arnold, Jacques (Gravesham)

  Dorrell, Rt Hon Stephen

  Arnold, Sir Thomas (Hazel Grv)

  Douglas-Hamilton, Lord James

  Ashby, David

  Dover, Den

  Aspinwall, Jack

  Duncan Smith, Iain

  Atkins, Robert

  Duncan, Alan

  Atkinson, Peter (Hexham)

  Dunn, Bob

  Baker, Nicholas (Dorset North)

  Durant, Sir Anthony

  Baker, Rt Hon K (Mole Valley)

  Dykes, Hugh

  Baldry, Tony

  Eggar, Tim

  Banks, Matthew (Southport)

  Elletson, Harold

  Banks, Robert (Harrogate)

  Emery, Rt Hon Sir Peter

  Bates, Michael

  Evans, David (Welwyn Hatfield)

  Batiste, Spencer

  Evans, Nigel (Ribble Valley)

  Beggs, Roy

  Evans, Roger (Monmouth)

  Bellingham, Henry

  Evennett, David

  Bendall, Vivian

  Faber, David

  Beresford, Sir Paul

  Fabricant, Michael

  Biffen, Rt Hon John

  Fenner, Dame Peggy

  Bonsor, Sir Nicholas

  Field, Barry (Isle of Wight)

  Booth< Hartley

  Fishburn, Dudley

  Boswell, Tim

  Forsyth, Michael (Stirling)

  Bottomley, Peter (Eltham)

  Forsythe, Clifford (Antrim S)

  Bottomley, Rt Hon Virginia

  Forth, Eric

  Bowis, John

  Fowler, Rt Hon Sir Norman

  Boyson, Rt Hon Sir Rhodes

  Fox, Dr Liam (Woodspring)

  Brandreth, Gyles

  Fox, Sir Marcus (Shipley)

  Brazier, Julian

  Freeman, Rt Hon Roger

  Bright, Sir Graham

  French, Douglas

  Brooke, Rt Hon Peter

  Fry, Sir Peter

  Brown, M (Brigg & Cl'thorpes)

  Gale, Roger

  Browning, Mrs. Angela

  Gallie, Phil

  Bruce, Ian (Dorset)

  Garel-Jones, Rt Hon Tristan

  Bruce, Malcolm (Gordon)

  Garnier, Edward

  Budgen, Nicholas

  Gillan, Cheryl

  Burns, Simon

  Goodlad, Rt Hon Alastair

  Burt, Alistair

  Goodson-Wickes, Dr Charles

  Butcher, John

  Gorst, Sir John

  Butler, Peter

  Greenway, Harry (Ealing N)

  Butterfill, John

  Greenway, John (Ryedale)

  Campbell, Menzies (Fife NE)

  Griffiths, Peter (Portsmouth, N)

  Carlile, Alexander (Montgomry)

  Grylls, Sir Michael

  Carlisle, Sir Kenneth (Lincoln)

  Gummer, Rt Hon John Selwyn

  Carrington, Matthew

  Hague, William

  Cash, William

  Hamilton, Neil (Tatton)

  Channon, Rt Hon Paul

  Hamilton, Rt Hon Sir Archibald

  Chapman, Sydney

  Hampson, Dr Keith

  Churchill, Mr

  Hanley, Rt Hon Jeremy

  Clappison, James

  Hannam, Sir John

  Clarke, Rt Hon Kenneth (Ru'clif)

  Hargreaves, Andrew

  Clifton-Brown, Geoffrey

  Harris, David

  Coe, Sebastian

  Haselhurst Alan

  Colvin, Michael

  Hawkins, Nick

  Congdon, David

  Hawksley, Warren

  Conway, Derek

  Hayes, Jerry

  Coombs, Anthony (Wyre For'st)

  Heald, Oliver

  Coombs, Simon (Swindon)

  Heathcoat-Amory, David

  Cope, Rt Hon Sir John

  Hendry, Charles

  Cormack, Patrick

  Hicks, Robert

  Couchman, James

  Higgins, Rt Hon Sir Terence

  Cran, James

  Hill, James (Southampton Test)

  425

  Hogg, Rt Hon Douglas (G'tham)

  Newton, Rt Hon Tony

  Horam, John

  Nicholls, Patrick

  Hordern, Rt Hon Sir Peter

  Nicholson, David (Taunton)

  Howard, Rt Hon Michael

  Nicholson, Emma (Devon West)

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

  Norris, Steve

  Howell, Rt Hon David (G'dford)

  Onslow, Rt Hon Sir Cranley

  Howell, Sir Ralph (N Norfolk)

  Oppenheim, Philip

  Hughes, Robert G (Harrow W)

  Ottaway, Richard

  Hughes, Simon (Southwark)

  Paice, James

  Hunt, Rt Hon David (Wirral W)

  Patrick, Sir Irvine

  Hunt, Sir John (Ravensbourne)

  Patten, Rt Hon John

  Hunter, Andrew

  Pattie, Rt Hon Sir Geoffrey

  Hurd, Rt Hon Douglas

  Pawsey, James

  Jack, Michael

  Peacock, Mrs Elizabeth

  Jackson, Robert (Wantage)

  Pickles, Eric

  Jenkin, Bernard

  Porter, David (Waveney)

  Jessel, Toby

  Portillo, Rt Hon Michael

  Johnson Smith, Sir Geoffrey

  Rathbone, Tim

  Jones, Gwilym (Cardiff N)

  Redwood, Rt Hon John

  Jones, Robert B (W Hertfdshr)

  Renton, Rt Hon Tim

  Jopling, Rt Hon Michael

  Richards, Rod

  Kennedy, Charles (Ross,C&S)

  Riddick, Graham

  Key, Robert

  Rifkind, Rt Hon Malcolm

  Kilfedder, Sir James

  Robathan, Andrew

  King, Rt Hon Tom

  Roberts, Rt Hon Sir Wyn

  Kirkwood, Archy

  Robertson, Raymond (Ab'd'n S)

  Knapman, Roger

  Robinson, Mark (Somerton)

  Knight, Dame Jill (Bir'm E'st'n)

  Roe, Mrs Marion (Broxbourne)

  Knight, Greg (Derby N)

  Ross, William (E Londonderry)

  Knight Mrs Angela (Erewash)

  Rowe, Andrew (Mid Kent)

  Knox, Sir David

  Rumbold, Rt Hon Dame Angela

  Kynoch, George (Kincardine)

  Ryder, Rt Hon Richard

  Lait, Mrs Jacqui

  Sackville, Tom

  Lamont, Rt Hon Norman

  Sainsbury, Rt Hon Tim

  Lang, Rt Hon Ian

  Scott, Rt Hon Nicholas

  Lawrence, Sir Ivan

  Shaw, David (Dover)

  Legg, Barry

  Shaw, Sir Giles (Pudsey)

  Leigh, Edward

  Shephard, Rt Hon Gillian

  Lennox-Boyd, Sir Mark

  Shepherd, Colin (Hereford)

  Lester, Jim (Broxtowe)

  Shersby, Michael

  Lidington, David

  Sims, Roger

  Lightbown, David

  Skeet, Sir Trevor

  Lilley, Rt Hon Peter

  Smith, Sir Dudley (Warwick)

  Lloyd, Rt Hon Peter (Fareham)

  Smith, Tim (Beaconsfield)

  Lord, Michael

  Smyth, Rev Martin (Belfast S)

  Luff, Peter

  Soames, Nicholas

  Lyell, Rt Hon Sir Nicholas

  Speed, Sir Keith

  MacGregor, Rt Hon John

  Spencer, Sir Derek

  MacKay, Andrew

  Spicer, Michael (S Worcs)

  Maclean, David

  Spicer, Sir James (W Dorset)

  Madel, Sir David

  Spink, Dr Robert

  Maginnis, Ken

  Spring, Richard

  Maitland, Lady Olga

  Sproat, Iain

  Malone, Gerald

  Squire, Robin (Hornchurch)

  Mans, Keith

  Stanley, Rt Hon Sir John

  Marland, Paul

  Steen, Anthony

  Marshall, John (Hendon S)

  Stephen, Michael

  Marshal, Sir Michael (Arundel)

  Stern, Michael

  Martin, David (Portsmouth S)

  Stewart, Allen

  Mates, Michael

  Streeter, Gary

  Mawhinney, Rt Hon Dr Brian

  Sumberg, David

  Mayhew, Rt Hon Sir Patrick

  Sweeney, Walter

  McLoughlin, Patrick

  Sykes, John

  McNair-Wilson, Sir Patrick

  Tapsell, Sir Peter

  Mellor, Rt Hon David

  Taylor, Ian (Esher)

  Merchant, Piers

  Taylor, John M (Solihull)

  Mills, Iain

  Taylor, Rt Hon John D (Strgfd)

  Mitchell, Andrew (Gedling)

  Temple-Morris, Peter

  Mitchell, Sir David (Hants NW)

  Thomason, Roy

  Moate, Sir Roger

  Thompson, Patrick (Norwich N)

  Molyneaux, Rt Hon James

  Thompson, Sir Donald (C'er V)

  Monro, Sir Hector

  Thomton, Sir Malcolm

  Montgomery, Sir Fergus

  Thurnham, Peter

  Needham, Rt Hon Richard

  Townend, John (Bridlington)

  Nelson, Anthony

  Townsend, Cyril D (Bexl'yh'th)

  Neubert, Sir Michael

  Tredinnick, David

  426

  Trend, Michael

  Whitney, Ray

  Trotter, Nevillé

  Whittingdale, John

  Twinn, Dr Ian

  Widdecombe, Ann

  Vaughan, Sir Gerard

  Wiggin, Sir Jerry

  Waldegrave, Rt Hon William

  Willetts, David

  Walden, George

  Wilshire, David

  Walker, A Cecil (Belfast N)

  Winterton, Mrs Ann (Congleton)

  Waller, Gary

  Winterton, Nicholas (Macc'fld)

  Wolfson, Mark

  Ward, John

  Yeo, Tim

  Wardle, Charles (Bexhill)

  Young, Rt Hon Sir George

  Waterson, Nigel

  Watts, John

  Tellers for the Noes:

  Wells, Bowen

  Mr. Timothy Wood and

  Wheeler, Rt Hon Sir John

  Mr. Timothy Kirkhope.

  Question accordingly negatived.

New clause 12

  ANNUAL REPORT TO PARLIAMENT
  'Each year Her Majesty's Government shall make an annual report to Parliament concerning the operation of the Decision in section 1 (e) above in respect of the preceding financial year, which shall include:

  (a) a general presentation in text and tables of the financing and expenditure of the European Economic Communities in sterling equivalent and any common unit, which shall include comparable tables of income derived from each member state and expenditure therein in respect of each principal category of expenditure;

  (b) an account of rebate mechanisms applicable to any member state;

  (c) the operation of each article of the Decision;

  (d) action taken by Her Majesty's Government in respect of financial discipline;

  (e) the text of any regulation, directive or financial regulation relating to the operation of the Decision to which Her Majesty's Government has given its assent.'.—[Mr. Shore.]

  Brought up, and read the First time.
  Motion made, and Question put, That the clause be read a Second time:—
  The Committee divided: Ayes 73, Noes 308.

  Division No. 16]

  [23.21 pm

  AYES

  Adams, Mrs Irene

  George, Bruce

  Anderson, Ms Janet (Ros'dale)

  Gordon, Mildred

  Armstrong, Hilary

  Graham, Thomas

  Banks, Tony (Newham NW)

  Gunnell, John

  Barnes, Harry

  Hall, Mike

  Benn, Rt Hon Tony

  Hanson, David

  Betts, Clive

  Heppell, John

  Caborn, Richard

  Hill, Keith (Streatham)

  Campbell-Savours, D N

  Hoey, Kate

  Canavan, Dennis

  Home Robertson, John

  Clwyd, Mrs Ann

  Howarth, George (Knowsley N)

  Cohen, Harry

  Illsley, Eric

  Connarty, Michael

  Jones, Jon Owen (Cardiff C)

  Corbyn, Jeremy

  Jones, Martyn (Clwyd SW)

  Cunliffe, Lawrence

  Kilfoyle, Peter

  Cunningham, Jim (Covy SE)

  Lewis, Terry

  Dalyell,Tam

  Livingstone, Ken

  Darling, Alistair

  Loyden, Eddie

  Davidson, Ian

  Mackinlay, Andrew

  Davies, Ron (Caerphilly)

  Mahon, Alice

  Davis, Terry (B'ham, H'dge H'I)

  Martin, Michael J (Springburn)

  Dixon, Don

  McMaster, Gordon

  Donohoe, Brian H

  Michael, Alun

  Dowd, Jim

  Michie, Bill (Sheffield Heeley)

  Evans, John (St Helens N)

  Moonie, Dr Lewis

  427

  Mullin, Chris

  Salmond, Alex

  O'Hara, Edward

  Shore, Rt Hon Peter

  Paisley, The Reverend Ian

  Skinner, Dennis

  Pickthall, Colin

  Smith, Andrew (Oxford E)

  Pike Peter L

  Smith, Llew (Blaenau Gwent)

  Pope, Greg

  Spearing, Nigel

  Powell, Ray (Ogmore)

  Spellar, John

  Prentice, Bridget (Lew'm E)

  Sutcliffe, Gerry

  Williams, Alan W (Carmarthen)

  Quin, Ms Joyce

  Wise Audrey

  Robertson, George (Hamilton)

  Roche, Mrs Barbara

  Tellers for the Ayes:

  Rooney, Terry

  Mrs. Gwyneth Dunwoody

  Rowlands, Ted

  and Mr. Austin Mitchell.

  NOES

  Ainsworth, Peter (East Surrey)

  Coombs, Simon (Swindon)

  Aitken, Rt Hon Jonathan

  Cope, Rt Hon Sir John

  Alexander, Richard

  Cormack, Patrick

  Alison, Rt Hon Michael (Selby)

  Couchman, James

  Ancram, Michael

  Cran, James

  Arbuthnot, James

  Currie, Mrs Edwina (S D'by'ire)

  Arnold, Jacques (Gravesham)

  Curry, David (Skipton & Ripon)

  Arnold, Sir Thomas (Hazel Grv)

  Davies, Quentin (Stamford)

  Ashby, David

  Davis, David (Boothferry)

  Aspinwall, Jack

  Day, Stephen

  Atkins, Robert

  Deva, Nirj Joseph

  Atkinson, Peter (Hexham)

  Devlin, Tim

  Baker, Nicholas (Dorset North)

  Dorrell, Rt Hon Stephen

  Baker, Rt Hon K (Mole Valley)

  Douglas-Hamilton, Lord James

  Baldry, Tony

  Dover, Den

  Banks, Matthew (Southport)

  Duncan Smith, Iain

  Banks, Robert (Harrogate)

  Duncan, Alan

  Bates, Michael

  Dunn, Bob

  Batiste, Spencer

  Durant, Sir Anthony

  Beggs,Roy

  Dykes, Hugh

  Bellingham, Henry

  Eggar, Tim

  Bendall, Vivian

  Elletson, Harold

  Beresford, Sir Paul

  Emery, Rt Hon Sir Peter

  Biffen, Rt Hon John

  Evans, David (Welwyn Hatfield)

  Bonsor, Sir Nicholas

  Evans, Nigel (Ribble Valley)

  Booth, Hartley

  Evans, Roger (Monmouth)

  Boswell, Tim

  Evennett, David

  Bottomley, Peter (Eltham)

  Faber, David

  Bottomley, Rt Hon Virginia

  Fabricant, Michael

  Bowis, John

  Fenner, Dame Peggy

  Boyson, Rt Hon Sir Rhodes

  Field, Barry (Isle of Wight)

  Brandreth, Gyles

  Fishburn, Dudley

  Brazier, Julian

  Forsyth, Michael (Stirling)

  Bright, Sir Graham

  Forsythe, Clifford (Antrim S)

  Brooke, Rt Hon Peter

  Forth, Eric

  Brown, M (Brigg & Cl'thorpes)

  Fowler, Rt Hon Sir Norman

  Browning, Mrs. Angela

  Fox, Dr Liam (Woodspring)

  Bruce,Ian (Dorset)

  Fox, Sir Marcus (Shipley)

  Bruce, Malcolm (Gordon)

  Freeman, Rt Hon Roger

  Burns, Simon

  French, Douglas

  Burt, Alistair

  Fry, Sir Peter

  Butcher, John

  Gale, Roger

  Butler, Peter

  Gallie, Phil

  Butterfill, John

  Garel-Jones, Rt Hon Tristan

  Campbell, Menzies (Fife NE)

  Garnier, Edward

  Carlile, Alexander (Montgomry)

  Gillan, Cheryl

  Carlisle, Sir Kenneth (Lincoln)

  Goodlad, Rt Hon Alastair

  Carrington, Matthew

  Goodson-Wickes, Dr Charles

  Cash, William

  Gorst, Sir John

  Channon, Rt Hon Paul

  Grant Sir A (Cambs SW)

  Chapman, Sydney

  Greenway, Harry (Ealing N)

  Churchill, Mr

  Greenway, John (Ryedale)

  Clappison, James

  Griffiths, Peter (Portsmouth, N)

  Clarke, Rt Hon Kenneth (Ru'clif)

  Grylls, Sir Michael

  Clifton-Brown, Geoffrey

  Gummer, Rt Hon John Selwyn

  Coe, Sebastian

  Hague, William

  Colvin, Michael

  Hamilton, Neil (Tatton)

  Congdon, David

  Hamilton, Rt Hon Sir Archibald

  Conway, Derek

  Hampson, Dr Keith

  Coombs, Anthony (Wyre For'st)

  Hanley, Rt Hon Jeremy

  428

  Hannam, Sir John

  Merchant, Piers

  Hargreaves, Andrew

  Mills, Iain

  Harris, David

  Mitchell, Andrew (Gedling)

  Haselhurst, Alan

  Mitchell, Sir David (Hants NW)

  Hawkins, Nick

  Moate, Sir Roger

  Hayes, Jerry

  Molyneaux, Rt Hon James

  Heald, Oliver

  Monro, Sir Hector

  Heathcoat-Amory, David

  Montgomery, Sir Fergus

  Hendry, Charles

  Needham, Rt Hon Richard

  Hicks, Robert

  Nelson, Anthony

  Higgins, Rt Hon Sir Terence

  Neubert, Sir Michael

  Hill, James (Southampton Test)

  Newton, Rt Hon Tony

  Hogg, Rt Hon Douglas (G'tham)

  Nicholls, Patrick

  Horam, John

  Nicholson, David (Taunton)

  Hordern,Rt Hon Sir Peter

  Nicholson, Emma (Devon West)

  Howard, Rt Hon Michael

  Norris, Steve

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

  Onslow, Rt Hon Sir Cranley

  Howell, Rt Hon David (G'dford)

  Oppenheim, Phillip

  Howell, Sir Ralph (N Norfolk)

  Ottaway, Richard

  Hughes, Robert (Aberdeen N)

  Paice, James

  Hughes, Simon (Southwark)

  Patnick, Sir Irvine

  Hunt, Rt Hon David (Wirral W)

  Patten, Rt Hon John

  Hunter, Andrew

  Pattie, Rt Hon Sir Geoffrey

  Hurd, Rt Hon Douglas

  Pawsey, James

  Jack, Michael

  Peacock, Mrs Elizabeth

  Jackson, Robert (Wantage)

  Pickles, Eric

  Jenkin, Bernard

  Porter, David (Waveney)

  Jessel, Toby

  Portillo, Rt Hon Michael

  Johnson Smith, Sir Geoffrey

  Rathbone, Tim

  Jones, Gwilym (Cardiff N)

  Redwood, Rt Hon John

  Jones, Robert B (W Hertfdshr)

  Renton, Rt Hon Tim

  Jopling, Rt Hon Michael

  Richards, Rod

  Kennedy, Charles (Ross,C&S)

  Riddick, Graham

  Key, Robert

  Rifkind, Rt Hon Malcolm

  Kilfedder, Sir James

  Robathan, Andrew

  King, Rt Hon Tom

  Roberts, Rt Hon Sir Wyn

  Kirkwood, Archy

  Robertson, Raymond (Ab'd'n S)

  Knapman, Roger

  Robinson, Mark (Somerton)

  Knight, Dame Jill (Bir'm E'st'n)

  Roe, Mrs Marion (Broxbourne)

  Knight, Greg (Derby N)

  Ross, William (E Londonderry)

  Knight, Mrs Angela (Erewash)

  Rowe, Andrew (Mid Kent)

  Knox, Sir David

  Rumbold, Rt Hon Dame Angela

  Kynoch, George (Kincardine)

  Ryder, Rt Hon Richard

  Lait, Mrs Jacqui

  Sackville, Tom

  Lamont, Rt Hon Norman

  Sainsbury, Rt Hon Tim

  Lang, Rt Hon Ian

  Scott, Rt Hon Nicholas

  Lawrence, Sir Ivan

  Shaw, David (Dover)

  Legg, Barry

  Shaw, Sir Giles (Pudsey)

  Leigh, Edward

  Shephard, Rt Hon Gillian

  Lennox-Boyd, Sir Mark

  Shepherd, Colin (Hereford)

  Lester, Jim (Broxtowe)

  Shersby, Michael

  Lidington, David

  Sims, Roger

  Lightbown, David

  Skeet, Sir Trevor

  Lilley, Rt Hon Peter

  Smith, Sir Dudley (Warwick)

  Lloyd, Rt Hon Peter (Fareham)

  Smith, Tim (Beaconsfield)

  Lord, Michael

  Smyth, Rev Martin (Belfast S)

  Luff, Peter

  Soames, Nicholas

  Lyell, Rt Hon Sir Nicholas

  Speed, Sir Keith

  MacGregor, Rt Hon John

  Spencer, Sir Derek

  MacKay, Andrew

  Spicer, Michael (S Worcs)

  Maclean, David

  Spicer, Sir James (W Dorset)

  Madel, Sir David

  Spring, Richard

  Maginnis, Ken

  Sproat, Iain

  Maitland, Lady Olga

  Squire, Robin (Hornchurch)

  Malone, Gerald

  Stanley, Rt Hon Sir John

  Mans, Keith

  Steen, Anthony

  Marland, Paul

  Stephen, Michael

  Marshall, John (Hendon S)

  Stern, Michael

  Marshall, Sir Michael (Arundel)

  Stewart, Alan

  Martin, David (Portsmouth S)

  Streeter, Gary

  Mates, Michael

  Sumberg, David

  Mawhinney, Rt Hon Dr Brian

  Sweeney, Walter

  Mayhew, Rt Hon Sir Patrick

  Sykes, John

  McLoughlin, Patrick

  Tapsell, Sir Peter

  McNair-Wilson, Sir Patrick

  Taylor, Ian (Esher)

  Mellor, Rt Hon David

  Taylor, John M (Solihull)

  429

  Taylor, Rt Hon John D (Strgfd)

  Wardle, Charles (Bexhill)

  Temple-Morris, Peter

  Waterson, Nigel

  Thomason, Roy

  Watts, John

  Thompson, Patrick (Norwich N)

  Wells, Bowen

  Thompson, Sir Donald (C'er V)

  Wheeler, Rt Hon Sir John

  Thornton, Sir Malcolm

  Whitney, Ray

  Thurnham, Peter

  Whittingdale, John

  Townend, John (Bridlington)

  Widdecombe, Ann

  Townsend, Cyril D (Bexl'yh'th)

  Wiggin, Sir Jerry

  Tredinnick, David

  Willetts, David

  Trend, Michael

  Wilshire, David

  Trotter, Neville

  Winterton, Mrs Ann (Congleton)

  Twinn, Dr Ian

  Winterton, Nicholas (Macc'fld)

  Vaughan, Sir Gerard

  Wolfson, Mark

  Waldegrave, Rt Hon William

  Yeo, Tim

  Young, Rt Hon Sir George

  Walden, George

  Walker, A Cecil (Belfast N)

  Tellers for the Noes:

  Waller, Gary

  Mr. Timothy Wood and

  Ward, John

  Mr. Timothy Kirkhope.

  Question accordingly negatived.
  Bill reported without amendment.
  Motion made, and Question proposed, That the Bill be now read the Third time.—[Mr. Heathcoat-Amory.]
  11.33 pm
  Mr. Shore: It would be absurd if we were to allow the Third Reading of this contentious and, in many ways, memorable Bill to be taken on the nod, and we have no intention of allowing that to happen.
  The Bill will enter the annals of parliamentary history for several reasons. First, it has been a memorable Bill for the passions that it has excited, not least among Conservative Members. It has also been a very puzzling Bill because of the curious tactics employed by the Prime Minister and the Cabinet in order to secure its passage. When people return to the Bill, as they will again and again, they will want to know why on earth the Government thought that it was necessary to get the measure through. They will ask, too, why amendments of a most reasonable kind were not accepted in Committee—why on earth the Prime Minister thought it was so worth while to get the Bill that he threatened electoral suicide and a general election, and why, in pursuit of the same cause, he was prepared to turn his elected majority Government into a minority Government. Those are truly amazing events, although we shall, over time, come to understand them a little better.
  The Bill is about increasing the Community's own resources from 1.20 per cent. to 1.27 per cent. over a five-year period. That is an increase of about 5 per cent. in its total budgetary or tax yield. Five per cent. of about £60 billion, which is spent now, is a yield of about £3 billion over that period.
  People will ask, why on earth was it necessary to have the Bill at all? What were the increased expenditures that it was designed to cover? We find, of course, that the principal item was the so-called cohesion fund in the Maastricht treaty, under which, in contradiction of an accepted regional policy, special funds were made available to Greece, Portugal, Spain and Ireland—not to particular regions in those countries but to the countries themselves.
  We know why that pledge was made and those funds have been raised. It was not because of the particular needs of those countries—they would be covered properly by regional policy—but as a kind of general bribe to bring them along into the Euro-federal camp to get through the other far more dangerous and contentious parts of the Maastricht treaty. I have nothing but good will in my feelings towards the four countries concerned, but I do not think that it is right that they should be the recipients of a cohesion fund.
  The House of Commons has a long tradition of careful scrutiny of finance, taxation and expenditure and has always insisted that grievances be remedied before it voted Supply. The Court of Auditors report, although we may argue about the precise amount, reveals waste, lack of financial control and fraud amounting to 10 per cent. of the Community budget or a sum equal to £6 billion. People will ask how the House could consider increasing the Community's finances by £3 billion when up to £6 billion could be saved if we had proper scrutiny and checks on the waste, the fraud and the other failings of
  432
  the budgetary system. It is difficult to understand why no such amendments were approved, despite the fact that they were proposed.
  What argument carried the Bill through the House of Commons? I think that, above all, it was a false but important constitutional argument: that the Prime Minister felt that this had the status of a full treaty and that the agreement that he had entered into in Edinburgh in December 1992 was not the Prime Minister giving his consent, subject to the approval of Parliament, but his giving consent, as Ministers have in the past when signing a foreign treaty, by the use of prerogative power, which is seldom challenged in the House after it has been used. But this is not a treaty. How can we go on accepting that agreements arranged between Community countries should have the status of a full-blown treaty? That is absurd, and it is simply a means of ensuring that we lose democratic control.
  Agreements are being made all the time in the European Community—agreements or "decisions". Are we to be told the same every time an agreement is made? The document is not called a treaty; it is called a decision—the decision of 31 October 1994. Are we to be told in future that all the decisions taken in the European Community have the status of treaties, and that those who have signed them feel so strongly and passionately about them that they are prepared to resign en bloc and force a general election if they do not get them through?
  It is constitutionally improper that such threats should be made, and if those threats are effective, Parliament is reduced in power and influence in a totally unacceptable way. We shall constantly be threatened with the use of a treaty power, when we should be treating such agreements as if they were normal pieces of legislation.
  It is interesting that in the so-called decision of 31 October, after the usual prelude, with the long list of "whereas this" and "whereas that" that precedes Community doctrines, the articles of the decision are introduced by the following passage:
  "Whereas the European Council provided that this Decision should take effect on 1 January 1995,
  HAS LAID DOWN THESE PROVISIONS, WHICH IT RECOMMENDS TO THE MEMBER STATES FOR ADOPTION".
  The Council "recommends". That is not the language of a treaty; it is the language of an ordinary decision, almost equivalent to a piece of domestic legislation.
  The Bill is memorable for the reasons that I have given. It represents a major constitutional innovation, and in order to get it through the Government have behaved as no Government, in my recollection, have ever behaved. It has been introduced at a time when its purpose is clearly under dispute, and it coincides with a massive indictment of fraud and waste in the Community.
  I hope that the House will never again allow a decision made within the Community to be given the status of a treaty, thus denying the House the right to object, to amend and to turn it out if need be. I hope that we shall all come to that resolution. Although I do not believe that I shall defeat the Bill on its Third Reading I shall certainly vote against it, and I shall do so with enthusiasm.
  11.42 pm
  Ms Armstrong: I echo what my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) said about the amazing procedure that we have seen and been through during the passage of the Bill.

  433
  We have always made it clear that we support the principles agreed at Edinburgh, but that we believe that the Government can do far more to examine and scrutinise properly fraud, waste and the common agricultural policy. At the moment, scrutiny is insufficient and ineffective, and much more could be done. Speeches made during the passage of the Bill have made it clear that hon. Members on both sides of the House believe that much more can and should be done.
  It was always clear to us that the Government would get the Second Reading of the Bill, because despite their Euro-sceptics there was sufficient support for it in the House. Yet it seems as though the Prime Minister decided that this was the time when he had to show his authority. This was the time to show that he would tolerate no more, and that he would not have people constantly disrupting his Government. So, in spite of what common sense should have told him, he decided to make the Bill an occasion for a great show of strength. The result was—[HON. MEMBERS: "Why not?"] Hon. Members ask why not. A politician has to decide when it is time to take such action and when it is not necessary. What happened last week was that the Prime Minister showed incalculably bad judgment, which has split his party and left him with a minority Government. It led to his Government being defeated last night and today, it has led to ignominious, backstairs dealing—[HON. MEMBERS: "Say it again."]— backstairs dealing to get a shabby agreement from those who, last week, were prepared to vote and to stick with their consciences and who, today, were doing deals with the Prime Minister to sell out what they had supposedly gone to the stake for last week.
  Many people outside the House will wonder what all the fuss was about last week. We know now that the party in government is in a shambles. The Government do not know how they want to govern, they do not know what their priorities are and they do not have the confidence of their own party, let alone the confidence of the country.
  The debate today began interestingly, with the hon. Member for Stafford (Mr. Cash) making a long speech to draw out from the Paymaster General and to get on the record exactly what the shady deal had been. As I said, he and his colleagues disappeared; we have seen no more of them. Their determination to scrutinise disappeared and we can only guess at what was said within No. 10 Downing street about it. That is no way to run a Government. What a shambles and what a disgrace to British democracy!
  The people of this country want to see a Government who scrutinise effectively the raising of money from them and the way in which that money is spent. They have the right to expect that and we in the House have the right to expect that. That is what the new clauses were all about. The Government have wavered today, not sure quite what they were going to do until they were sure that the Euro-sceptics had been bought off. Once the Euro-sceptics were bought off, the Government wanted to run and to get home quickly. I know that they have had too much of this place this week, but the country has had too much of them.
  The Government will get their Bill tonight because, as I have said, we agree with the principle, but they have lost their credibility and their competence to govern. Many hon. Members now believe that the Government are unfit to govern.
  11.48 pm
  Mr. Rowlands: As a preamble to the Bill, every hon. Member was sent a letter by the Chancellor of the Exchequer in which he explained what a minor and minimum sum was involved in the Bill. As the explanatory and financial memorandum states, the figure will be a mere £75 million net additional cost in 1995–96, rising to £250 million. Frankly, the reason why I did not believe that letter and why I believe that we are being conned is based on my own experience in this House. I came here in 1966, years before we were a member of the European Community. I voted in the referendum in 1975 to stay in the European Community and it is interesting to note that in that year, the gross contribution made by the United Kingdom to the EC budget was £341 million. The public sector receipts from the European Community were £398 million. The only year in which we were net beneficiaries of the whole system was 1975, when I voted to stay in the European Community and when we were net beneficiaries by some £57 million as a result of transitional arrangements and so on.
  It is worth reminding the House of what I have seen those figures become. We have been asked to agree that the Bill represents a mere £75 million now and a mere £250 million by net increase next year. In 1975, the year I voted in a referendum to stay in the Community, the gross contribution was a mere £341 million. The gross contribution in 1994 is £7,203 million. As a result of the changes in this Bill, the gross United Kingdom contribution will reach £10 billion by 1996–97.
  If I look back again at the time when I voted in 1975, the net contribution was minus £57 million. In 1994, it will be £1.3 billion and by 1996, net contribution to the European budget will become £3.53 billion. So, we have every reason, if one takes into account about a 20-year period since the key decision was made in 1975, to wonder about, question and worry about whether we should pass a Bill on the basis of a Chancellor's letter that tells us that we will be paying a mere £75 million extra this year and a mere £250 million next year.
  I have lost any belief that Governments have meaningful control over the UK contribution. I am an old-fashioned parliamentarian. I came here because I thought that this was where influence and power lay. As a parliamentary historian, before and during my time here, I believe passionately that this House matters and that the procedures, means and the basis on which we have built parliamentary traditions in this House are based on scrutiny and control of public expenditure. The term that my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) used about redress before Supply was old-fashioned, but good nevertheless. It was the basis on which this House was created, formed and became a continuous institution. Before then, it was an occasional occurrence when the House met. Years would go by when Parliament did not even meet. Problems of annual estimates and the creation of the first Public Accounts Committee occurred 300 years ago this year, in the 1690s, as I said on Second Reading. From there, annual Sessions were perpetuated.
  Others may not care a damn about whether that tradition matters. I believe that it does. I believe that it is very important. It gave people the confidence to give Government money because they knew that there was

  435
  some method and degree of parliamentary accountability. What do I see now? I witness a gross, growing erosion of that basic fundamental power of control over expenditure.
  One of the worrying beliefs which I have heard expressed tonight is the illusion, which has been gradually created between the Minister and his Back Benchers, that, somehow, our Public Accounts Committee will be able to get a handle on the issue. I raised the matter with the Minister and he said that it was a House of Commons matter and not one for him, but when replying to earlier debates he offered the idea that the Public Accounts Committee would be able to get involved in the detailed control and scrutiny of European expenditure. I ask him again: how?
  Public Accounts Committee procedure is based on the simple principle that the permanent secretary, as the accounting officer of the Department, is ultimately responsible to the PAC, the National Audit Office and the Comptroller and Auditor General. As I understand it, no individual permanent secretary will be responsible to the House for a penny of the expenditure that is involved in the Bill. It would seem that the same comment could be made in respect of the PAC. If I am wrong, I hope that the Minister will tell me, but I do not think that I am. No estimates flow from own resources. The financial prospectus, as it was called, that was attached to the Edinburgh accord, or conclusions, was a five-year forward budget for individual items, not one of which will be subject to parliamentary accountability. No permanent secretary, as the accounting officer of a Department, will be responsible and answerable to the PAC.
  Money is being handed over to another body to spend. The permanent secretaries of the Ministry of Agriculture, Fisheries and Food and the Department of Trade and Industry will not be responsible for structural funds or the CAP. There is no connection between the money being handed over and the system of parliamentary accountability that we have devised. The Paymaster General was offering an illusion when he suggested to Conservative Back-Bench Members that the PAC would be able to become involved. The Minister should not try to kid us or persuade us that a new form of accountability will emerge as a consequence of the "promises" from the Government Front Bench to Conservative Back-Bench Members. Perhaps the Minister will care to tell me by what procedures it will emerge.
  The system of permanent secretaries becoming accounting officers was one of the consequences of Treasury changes that were introduced in the 1920s, and related to the estimates of Departments.
  I questioned the Paymaster General about the financial prospectus. We have been much concerned about own resources but alongside them is a five-year projected budget. The prospectus for 1993–99 lists various areas of expenditure, including the increased expenditure that will take place. The Minister told us that it was a political agreement, not one that was legally binding.
  Will the Minister tell us in future that the prospectus was not legally binding, but that it was politically internationally binding on the Government that the figures be observed? Will we be told that there can be no fundamental alterations in the budgets that were laid down at Edinburgh? That will mean that the 41 per cent.
  436
  increase in the structural operations, for example, is laid down and will have to be spent. There will not be a major alteration unless all parties agree.
  Will the Minister tell us, just as we were told on Second Reading, that the own resources part of the Bill was a matter of confidence and had to be driven through unamended? Will he say that because the Government have given their word, we are bound to the own resources decisions and to all of the budget arrangements for the next five years and the expenditure there outlined? Are those arrangements immutable in the sense that they have been signed and agreed politically? Are they binding on us unless all parties agree to alter them?
  Irrespective of its not being legally binding, does the political agreement which was created at Edinburgh have the same moral force of an international arrangement of the kind that the Paymaster General has tried to sell us and to which we are committed in terms of own resources? If it is, for the next four or five years, the way in which the money will be raised and where it will be spent will be outside our control. We cannot alter the various budgets. The Government are binding us not only to resources but to a four or five-year expenditure programme.
  I should like to believe that my constituency will be a beneficiary, but I am growing increasingly disillusioned. Anyone who was involved in RECHAR or structural funds, and anyone who has tried to beg money from the European Commission in the past couple of years goes away feeling very sorry. Anyway, it is only begging for money that we have sent. It is only trying to obtain a small proportion of the gross contribution that we have made. We are major net contributors. Even the curious recycling process is elaborate and bureaucratic. We are now told that the financial perspective is a political agreement, and that that, too, is as unalterable as the own resources decision.
  I have been slow in waking up to the matter. I said on Second Reading, and I repeat on Third Reading, that I was a slow learner on the European Community. I did not appreciate what was involved. Other hon. Members who are much more perceptive than I am spotted the arguments earlier. I am a good pupil, and I have learnt my lesson. I will not support a Bill which has been driven through in such a way, with its consequences for expenditure and parliamentary and public accountability. I will not be conned by the letter which the Chancellor sent to me before the Bill began its progress or by the promises of a Minister who obviously does not know much about parliamentary procedure and who is offering a fig leaf by way of control of public accountability through the Public Accounts Committee. For those reasons, I shall certainly oppose the Third Reading.
  12.1 am
  Mr. Charles Kennedy: I wish to contribute briefly to the Third Reading debate. It is a fair indication of the confusion at the heart of the Government on this and many other matters that a Bill which began its life with its Second Reading becoming a motion of confidence, which threatened to bring down the Government and send off the Prime Minister to see Her Majesty the Queen to seek an immediate dissolution and a pre-Christmas general election, all within the space of 10 days, has its Third Reading moved formally by the Minister. That is a breathtaking constitutional development in little more than one working week at Westminster.

  437
  As has been said, in the past 10 days, the Government have technically turned themselves into a minority Government. We saw the Minister, when he replied to his hon. Friend the Member for Stafford (Mr. Cash)—I do not know whether he is one of his hon. Friends at the moment—offer a palliative via the Public Accounts Committee. That was a clear sign that the Government are desperate to get the rebels back on board.
  If there is one group of people who have shown consistency in this matter, it is the Conservative Euro-sceptics. I have said it before, and I repeat, that they stick to their guns and they argue their case. They did so again in the Lobby last night, and we must respect them. I completely and utterly disagree with them. They are wrong on the European issue and they are doing great damage to the country's interests because of the influence that they are exerting within their own party at the moment; but I must respect the fact that they stick to their guns and argue their case.
  I just wish that we had a Prime Minister who knew what his case on Europe was. I wish that he would argue with conviction and consistency, but alas the Prime Minister does not. We have now reached the Third Reading of a Bill of which, had there been a free vote on Second Reading, 500 hon. Members would have voted in favour.
  The Prime Minister managed to turn the vote into an issue of confidence. He has not just sundered what should have been all-party support for the principles of the Bill on Second Reading, but in the process he has allowed the Back-Bench sceptics to have still more influence over the Government on matters European. We have seen hopeless parliamentary tactics and very poor political leadership from the Prime Minister in the past 10 days.
  The Government are in the utterly farcical situation—not seen since the days of Denis Healey— of having to deliver a mini-Budget tomorrow afternoon as a result of a defeat which can be traced directly to the Bill's Second Reading and to the way that the issue was mishandled by the Conservative party. That is a matter of internal grief for the Conservatives, but the problem is that this country will pay a heavy price in terms of its interests.
  If the Conservatives hang on to power for another year or 18 months, the sceptics will have more influence over the Government's stance vis-à-vis the 1996 intergovernmental conference. I predict that two things will happen. First, the Government will have to came out in favour of a referendum on the European issue. I believe in that myself. I voted for it during the debate on Maastricht; I thought that we should have had a referendum about that issue. There should be referendums to decide any constitutional implications arising out of the IGC, such as the single currency issue and the like.
  Secondly, as we saw in the Prime Minister's speech to the Conservative women's conference at the end of last week, the Government will adopt a more chauvinistic and nationalistic approach.
  Mr. Deputy Speaker (Mr. Geoffrey Lofthouse): Order. Could we hear a little about something that is in the Bill?
  Mr. Kennedy: I contend that these are the implications which flow from the approach which the Government and the Cabinet have taken to the Bill. Therefore, my comments are absolutely generic to the case.
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  As a result of the way in which the Prime Minister and the Chancellor have handled the Bill, the stance that the Government will adopt at the next IGC will be damaging to our national interests. At the end of the day, the Prime Minister will be more concerned about appeasing a vocal and determined minority within his own ranks than he will be about addressing the broader issues of greater integration, greater democracy and greater decentralisation for European institutions as a whole. Regrettably, that is the price that we will pay.
  Pressing the nuclear trigger in the form of the confidence vote, technically losing an overall majority in the House and finally losing the vote on the Budget measure last night and having to come up with an emergency package tomorrow will be seen as the beginning of the end for the Prime Minister, and I hope the beginning of the end for the Government.
  It is a great shame that a Bill which should have commanded all-party support cannot do so because the Government have quite erroneously turned it into an issue of confidence. It is impossible for the Labour party and the Liberal Democrats, who support the principles of the Bill, to vote for it because of the Government's stupid handling of the issue.
  12.7 am
  Mrs. Dunwoody: I shall not follow the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) in his remarks. Whatever my views about the Conservative party, if there comes a time when the House of Commons does not listen to the differing opinions of Back Benchers there will be absolutely no point in having democratic elections.
  The House has control over taxation. It has the power to increase taxes, to decide priority spending areas and to monitor whether taxes are paid. That constitutes the basis of House of Commons procedure. The majority of hon. Members come to this place because we have priorities about those things that we believe are of concern in our electorates. I believe that constant erosion of the House of Commons' power to examine in considerable detail where taxation money should be spent would frighten those whom we seek to represent. That is increasingly the situation in which the House of Commons finds itself.
  I have the honour to sit on a European Committee that is charged with the responsibility of looking not only at the constant flow of directives and regulations but at the precise monetary implications of the legislation which is brought before us. We are failing to examine in sufficient detail what is happening within the Community. We are certainly failing to examine the flow of moneys, over which we have little control, from the United Kingdom into the Community.
  It is all very well to use slightly sophisticated and superficial phrases such as, "If you belong to a club, you have to pay the subscription." It is tremendously important to understand that the Bill means a great deal more than a subscription. It is the movement of a very large amount of money raised from the British people by taxation, but not controlled by them or by the democratic Government who are elected by them. Indeed, the money is not even supervised by the Members of Parliament for whom they have the opportunity to vote.
  Throughout the coming years, it will become clear that the priorities for the use of the money will not be those set by the House. Monitoring of the proper use of that

  439
  money will not be undertaken by the House. The Government seek to mislead if they imply that we will have extra powers which will enable us to examine in detail what is happening.
  I deplore the way in which the Bill has been handled. I certainly deplore the fact that a major piece of legislation should be handled at this hour with such superficiality. That approach is defended by the Government, giving the impression that a few Members of Parliament seek to detain the House without having a legitimate political reason. I believe that simply being a democrat and being proud to be a Member of Parliament is enough reason for me to detain the House. I am deeply worried by what we are doing tonight. I am frightened that in the near future the House of Commons will have real reason to rue the decisions that we are about to take.
  12.11 am
  Mr. Austin Mitchell: I agree with the hon. Member for Ross, Cromarty and Skye (Mr. Kennedy) that the Bill has moved from crisis to cursory contempt. The cursory contempt has been shown in the way in which it has been pushed through tonight. The Bill started out with the most incompetent piece of parliamentary management that has been seen this century. It has overwhelming support in the House, although not from me. About 500 Members might well support the Bill.
  The episode ended last week with the farce of having to push the Bill through on a vote of confidence. That guaranteed that the Liberals were desperate to grovel and to support any initiative from Europe. The Labour party, which is now communautaire and friendly to all things European, was forced to vote against the measure because it has been handled in such an incompetent way. The Bill could have been passed easily. The matter has been turned into a tremendous difficulty, which ends only tonight. That is insane incompetence. It has ended in a squalid scuttle, as the midnight hour passes and most people are sensibly at home in bed.
  "Oh what a tangled web we weave,
  When first we practise to deceive!"
  That has been the progress of the Bill. The Government have got their legislation. The Prime Minister gave his word at Edinburgh and that word is upheld by the House by the procedure that I have described, but at what cost? No trust. Trust has been broken. It can never be glad, confident Major again, if it ever was. The Prime Minister has cashed in all his credit chips to get this measure through in such a fashion.
  The Prime Minister cannot get any support from that section of his party that he has treated so contemptuously and stupidly. He will get the Bill on the back of a widespread realisation that it has been pushed through by what amounts to a confidence trick on Parliament and on the British people, by using the treaty power to push through a measure that will tax the people, against their consent and without that of Parliament.
  If the money is justified, why not ask the people for it honestly? If belonging to the club brings them benefits, they will be prepared to pay the contribution. Why should the case not be put before the people and before us, and our honest consent asked for? Why should it be treated in such a deceitful and half-baked fashion, with the legacy of and hostility that that builds up? I am happy
  440
  that it builds up that feeling in the Conservative party, but it has also built up unease outside because the people see what has been done and how. They might not have a clear understanding of the deceit that has been used, but they are uneasy and unhappy about what has happened. The Government are trying to build a commitment to Europe on that unease.
  The Bill has been dealt with contemptuously and without any safeguards, checks, audit, justification or controls. The Government have rejected all the controls in the amendments that were tabled. There are no safeguards. The Bill is just the latest part of that long, humiliating and embittering experience that is our relationship with Europe and our membership of the European Union.
  It is no wonder that every poll shows a widespread hostility, distaste and dislike for Europe. The people sense that the relationship has brought them no benefit—in fact, they know it from their experiences with jobs, food prices, regulations, interference and the unjustified actions imposed on them. They know that they are asked to pay an accumulating total—£22 billion net since the relationship began—to belong to a club that is doing damage to the economy, jobs and food prices. They are asked to pay a contribution that cannot be justified, and the bill will increase—to £10 billion in 1996.
  Because that cost cannot be justified and the Government cannot explain why the people should pay that money to have damage done, we are forced into what amounts to an agenda of lies in the democratic dialogue of this country. It has become a dialogue of lies and of half-truths. We have to pretend that loss is benefit, that drain is success and that humiliation is triumph. All that has to be reinterpreted for the British people because they know instinctively what is wrong and they cannot be told the truth.
  The Bill prolongs that process. It is no longer Lady Curzon's motto on matters sexual, "Lie back and think of England," but "Lie back and think of Europe." That is the only justification that the Government can give for the Bill and for the half-truths, distortions, dodges and the Chancellor's letter. That becomes a culture—a habit of lies and dodges like the ones used to push through as a treaty a measure that should have been scrutinised, audited, costed and controlled.
  I am concluding, Mr. Deputy Speaker. It is said that power corrupts and absolute power corrupts absolutely. Long tenure of power makes one contemptuous, and an even longer tenure of power makes the Government absolutely contemptuous of the Parliament, the people and, worst of all, their own party—an instrument that has been so badly messed about in pushing through the Bill.
  The Bill, and that relationship, has been an embittering experience. Fortunately, that experience carries its own nemesis because it is building its own antibodies, alienation, dislike and mistrust for the institution in whose name all that is done and for the Government who are doing it.
  12.19 am
  Mr. Spearing: My right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) properly asked why we have had such extraordinary political and constitutional contortions about this Bill. The answer, I think, is that the Conservative party has got itself into

  441
  what might be termed a form of political crack. It has a certain amount of muscle when operating along the traditional lines, but those traditional lines no longer work. That is why the Conservative party is proposing the Bill in the form of an extended crisis on two or three fronts.
  The main reason for that is that the power which the Government once had in this House as sole decision makers as to what money should be spent and what money should be taxed has gone elsewhere. No longer is the Conservative party—nor, indeed, any party holding a majority—in the position in which it might have been even in 1975 when we had the referendum.
  I put it to the Government Front Bench that there have been two ministerial statements of untruth in the media in relation to the Bill, one of which was made in this House. The Chancellor tried to make out in the House that there was an international or treaty obligation that the Bill should be passed. As recently as this week, the Secretary of State for Defence—I gave the right hon. and learned Gentleman warning that I intended to raise the matter in the House—said the same thing.
  We had better get it straight. The claims of those Cabinet Ministers are wrong. Either they do not know the treaty, or they have been misinformed. Article 201 of the treaty—we should get this firmly on the record in the closing minutes of debate on this important Bill—says in relation to own resources:
  "To this end, the Commission shall submit proposals to the Council. After consulting the European Parliament on these proposals the Council may, acting unanimously, lay down the appropriate provisions, which it shall recommend to the Member States for adoption in accordance with their respective constitutional requirements."
  The treaty was signed on the basis of an option to this House. It may be that the Government have given some undertaking, but that was not the constitutional last decision, which is for this House alone. Yet the Chancellor, the Secretary of State for Defence and possibly other members of the Cabinet pretend otherwise.
  I suggest that the wording of article 201 gives a clue as to what we now have. We have a cascade of coercion in which the Prime Minister himself is entangled, as is the Chancellor and any hon. Member who goes along with the principle of the treaties that we have signed. Why is that? It is because that article says that the Commission shall propose what taxes will be. The last word is not with the Commission, but it is the originator of any proposal for own resources taxation.
  The article then says that the Council will take that proposal up. The Council may do that but, in secret bargaining inside the Council, there is coercion on the back markers, who must take something which they do not want because they have to pay for something else. In relation to that, individual Governments—whether they wish to or not—must go to their respective Parliaments or assemblies and say, "We have got the best deal we could. Here are the tax proposals. Please will you pass them?"
  We then go down to our constituents and tell them that they will have to pay the taxes, extra heating charges or VAT to supply the money which was first proposed by
  442
  the Commission. In other words, we are back to the constitutional position that we were in before 1688, when proposals for expenditure came from the Crown and not from the revolutionary representatives of the House acting on behalf of a neutralised Crown. Our new Crown is primarily an amalgam of the Commission and the Council. That is the constitutional position and I challenge any Conservative Member to controvert it in absolute principle. It lies behind the reason why the Government—and, I believe, members of any future Conservative Government—will find themselves in considerable difficulty.
  That was illustrated by my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Rowlands), who demonstrated in his speech that we are now being asked to pay the price of the sort of Maastricht treaty that the Prime Minister—after a great deal of negotiation—thought that he could recommend. That treaty arose from the much fiercer, more tightly bound treaty proposed by the Dutch presidency, which was changed. The Prime Minister managed to persuade his party to accept it only because the Foreign Secretary said, "It is not a great unity; we have the pillars—we have the trunk. The court cannot get at the whole thing, nor can the Community institutions." He tried to make out, in fact, that the Union was bigger than the Community.
  There is a technical and legal difference, but is there such a difference in practice, in the Council of Ministers? I doubt it very much. The Prime Minister had to pay for that opt-out—that modification. He also had to pay for a temporary, theoretical opt-out from the requirements of economic and monetary union. The third thing that he secured, and perhaps the most controversial of all, was a so-called opt-out from the social chapter—or so we are told, although that is not what the treaty says.
  Indeed, there is no social chapter in the Union treaty that was agreed at Maastricht. It is in the Single European Act, and we have to pay for it with the money on which we are now voting. That is why I speak of a unity: the measure that we shall pass tonight constitutes a decision to pay for the whole Community and all its works—not just to pay for a few things in future, but to make payments to which we are already committed.
  The Community's stability is fuelled only by libations of additional cash. Agreements can be reached only if everyone wins more money—more grants. Problems with the common agricultural policy, for instance, are solved by surpluses. That is the only way in which negotiation can be reasonably successful for everyone. Everyone gets a prize, says the president of the Commission. The Community staggers on, and is stable—up to a point—only because of that inherent instability, fuelled by the cash that the Bill will provide in the future.
  If that were not so, common sense would dictate that the Community should remain at its institutional level and that we should find out how things are going before we go on to the next stage, instead of which we go on and on and on—[HON. MEMBERS: "And on, and on, and on."]

  443
  Indeed. We go on and on to lose the powers that Conservative Members, and the rest of us, were elected to exercise.
  Legislation is now encompassed in an invisible cage of existing regulation. Taxation relates increasingly to the EC; the allocation of expenditure relates more and more to the EC; administration becomes more like that of county councils year by year; and adjudication, the other function of sovereign Governments, is increasingly a matter for the European Court.
  The passing of this Act, and especially the passing of the European Communities (Finance) Act 1988—which initiated own resources—mean that we are returning to the constitutional position that obtained before 1688. We are losing not only our own financial resources—the source of our power, as my hon. Friend the Member for Crewe and Nantwich (Mrs. Dunwoody) admirably noted—but the sources of our own democracy, because we now have to bow to what is fundamentally an authoritarian system, over which we have lost, and will lose, more and more control.
  12.29 am
  Mr. Salmond: I was moved to speak, not so much by the prospect of keeping so many Conservative Members of Parliament from their beds, attractive though that prospect is, but rather by the comments of the hon. Member for Great Grimsby (Mr. Mitchell), who a few moments ago estimated that about 500 Members of the House of Commons basically supported the legislation. I should think that that is an underestimate. I believe that at least 550 Members basically support the legislation. I cannot believe that there are any more than 100 fundamental Euro-sceptics in the Conservative and Labour parties who would really want to vote against the legislation.
  It is worth reflecting on the extraordinary progress of the legislation in the past few weeks. I know that many Conservative Members were not in the Chamber at the start of proceedings this evening, but I was, and I heard the Minister define what we were doing and say that there would be two votes of confidence this evening. The first was to be on the Question that clause 1 stand part of the Bill, which we then did not actually vote on, if I remember correctly, and the second was to be on Third Reading.
  I thought that I was entitled in those circumstances to turn up for the Third Reading debate and to participate in that vote of confidence, as defined by Ministers. I am not sure why the other votes that we had this evening were not to be defined as votes of confidence. I have reached the conclusion that the Conservative party Whips Office is now so incompetent that it could not do the basic arithmetic and realise that it was not in any conceivable danger of losing any of the earlier votes this evening. None the less, as defined by the Government Front Bench, the vote on Third Reading of the legislation is a vote of confidence, which is why I find myself in the extraordinary position of being more in support of the legislation than, I believe, the vast majority of hon. Members on the Conservative Benches, but none the less having to vote against it if, indeed, a vote is forced in a few minutes' time.
  444
  How can we arrive at a position in which a Government defeat on part of their Budget legislation—which happened yesterday evening—is not defined as a vote of confidence and not even placed on the Order Paper as a formal vote of confidence while the vote on the legislation before us now, supported by about 550 Members of the House of Commons, is defined as a vote of confidence?
  I leave the following thought with Conservative Members: if the Government are now in the extraordinary position of having such enormous difficulty in forcing through the House of Commons a piece of legislation which carries the support of 550 Members, how on earth will they progress the business of the rest of the Session, which might be more contentious? I hope that the more thoughtful Conservative Members—which may be only a few of the people on the Conservative Benches—will reflect on that when they go to their beds tonight, because I do not think that they will have a happy new year to look forward to.
  12.32 am
  Mr. Heathcoat-Amory: There has always been a majority in the House in favour of the Bill, and only the opportunistic manoeuvres of the Opposition parties tried to block the Bill on Second Reading.
  The Bill gives effect to the financial arrangements agreed at the Edinburgh Council two years ago. That agreement was not legally binding, and no Member on the Conservative side of the House has suggested otherwise, so I can assure both the right hon. Member for Bethnal Green and Stepney (Mr. Shore) and the hon. Member for Great Grimsby (Mr. Mitchell) that they are correct: we have always agreed that that Edinburgh agreement needed to be given legal effect by the Bill. That is the precise purpose and intent of the Bill before the House.
  The abatement is safe under the Bill. Our contribution will increase between now and the end of the century in line with the projections in the own resources decision, adding seven hundredths of 1 per cent. of Community gross national product to the budget. We shall pay a lower share of the total cost than many other member states.
  Today's debate has shown the seriousness with which the House takes the issue of financial mismanagement and the related issue of fraud. The fight against fraud will not be won by grand gestures, by setting up new institutions or even by the involvement of the Public Accounts Committee in this country, although I welcome that possible development. It will be won by relentless and grinding vigilance, by attention to detail and by giving it the highest possible political impetus and attention, as has been promised by my right hon. Friend the Prime Minister. I am pleased that that attitude has received the full support of the House today and I hope that the House will also give the Bill a Third Reading.
  Question put, That the Bill be now read the Third time:—
  The House divided: Ayes 295, Noes 23.

  Division No. 17]

  [12.35 am

  AYES

  Ainsworth, Peter (East Surrey)

  Allason, Rupert (Torbay)

  Aitken, Rt Hon Jonathan

  Amess, David

  Alexander, Richard

  Ancram, Michael

  Alison, Rt Hon Michael (Selby)

  Arbuthnot, James

  445

  Arnold, Jacques (Gravesham)

  Fabricant, Michael

  Arnold, Sir Thomas (Hazel Grv)

  Fenner, Dame Peggy

  Ashby, David

  Field, Barry (Isle of Wight)

  Atkins, Robert

  Fishburn, Dudley

  Atkinson, David (Bour'mouth E)

  Forsyth, Michael (String)

  Atkinson, Peter (Hexham)

  Forsythe, Clifford (Antrim S)

  Baker, Nicholas (Dorset North)

  Forth, Eric

  Baker, Rt Hon K (Mole Valley)

  Fowler, Rt Hon Sir Norman

  Baldry, Tony

  Fox, Dr Liam (Woodspring)

  Banks, Matthew (Southport)

  Fox, Sir Marcus (Shipley)

  Banks, Robert (Harrogate)

  Freeman, Rt Hon Roger

  Bates, Michael

  French, Douglas

  Batiste, Spencer

  Gale, Roger

  Beggs, Roy

  Gallie, Phil

  Bellingham, Henry

  Garel-Jones, Rt Hon Tristan

  Bendall, Vivian

  Garnier, Edward

  Beresford, Sir Paul

  Gillan, Cheryl

  Biffen, Rt Hon John

  Goodlad, Rt Hon Alastair

  Bonsor, Sir Nicholas

  Goodson-Wickes, Dr Charles

  Booth, Hartley

  Gorst Sir John

  Boswell, Tim

  Grant, Sir A (Cambs SW)

  Bottomley, Peter (Eltham)

  Greenway, Harry (Ealing N)

  Bottomley, Rt Hon Virginia

  Greenway, John (Ryedale)

  Bowis, John

  Griffiths, Peter (Portsmouth, N)

  Brandreth, Gyles

  Grylls, Sir Michael

  Brazier, Julian

  Gummer, Rt Hon John Selwyn

  Bright, Sir Graham

  Hague, Wiliam

  Brooke, Rt Hon Peter

  Hamilton, Neil (Tatton)

  Brown, M (Brigg & Cl'thorpes)

  Hamilton, Rt Hon Sir Archibald

  Browning, Mrs. Angela

  Hampson, Dr Keith

  Bruce, Ian (Dorset)

  Hanley, Rt Hon Jeremy

  Burt, Alistair

  Hannam, Sir John

  Butcher, John

  Hargreaves, Andrew

  Butler, Peter

  Harris, David

  Butterfill, John

  Haselhurst, Alan

  Carlisle, Sir Kenneth (Lincoln)

  Hawkins, Nick

  Carrington, Matthew

  Hayes, Jerry

  Cash, Wiliam

  Heald, Oliver

  Channon, Rt Hon Paul

  Heathcoat-Amory, David

  Chapman, Sydney

  Hendry, Charles

  Churchill, Mr

  Hicks, Robert

  Clappison, James

  Higgins, Rt Hon Sir Terence

  Clarke, Rt Hon Kenneth (Ru'clif)

  Hill, James (Southampton Test)

  Clifton-Brown, Geoffrey

  Hogg, Rt Hon Douglas (G'tham)

  Coe, Sebastian

  Horam, John

  Colvin, Michael

  Hordern, Rt Hon Sir Peter

  Congdon, David

  Howard, Rt Hon Michael

  Conway, Derek

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

  Coombs, Simon (Swindon)

  Howell, Rt Hon David (G'dford)

  Cope, Rt Hon Sir John

  Howell, Sir Ralph (N Norfolk)

  Cormack, Patrick

  Hughes, Robert G (Harrow W)

  Couchman, James

  Hunt, Rt Hon David (Wirral W)

  Cran, James

  Hunter, Andrew

  Currie, Mrs Edwina (S D'by'ire)

  Jack, Michael

  Curry, David (Skipton & Ripon)

  Jackson, Robert (Wantage)

  Davies, Quentin (Stamford)

  Jenkin, Bernard

  Davis, David (Boothferry)

  Jessel,Toby

  Day, Stephen

  Johnson Smith, Sir Geoffrey

  Deva, Nirj Joseph

  Jones, Gwilym (Cardiff N)

  Devlin, Tim

  Jones, Robert B (W Hertfdshr)

  Dorrell, Rt Hon Stephen

  Jopling, Rt Hon Michael

  Douglas-Hamilton, Lord James

  Key, Robert

  Dover, Den

  Kilfedder, Sir James

  Duncan Smith, Iain

  King, Rt Hon Tom

  Duncan, Alan

  Kirkhope, Timothy

  Dunn, Bob

  Knapman, Roger

  Durant, Sir Anthony

  Knight Dame Jill (Bir'm E'st'n)

  Dykes, Hugh

  Knight, Greg (Derby N)

  Eggar,Tim

  Knight, Mrs Angela (Erewash)

  Elletson, Harold

  Knox, Sir David

  Emery, Rt Hon Sir Peter

  Kynoch, George (Kincardine)

  Evans, David (Welwyn Hatfield)

  Lait, Mrs Jacqui

  Evans, Nigel (Ribble Valley)

  Lamont, Rt Hon Norman

  Evans, Roger (Monmouth)

  Lang, Rt Hon Ian

  Evennett, David

  Lawrence, Sir Ivan

  Faber, David

  Legg, Barry

  446

  Leigh, Edward

  Sainsbury, Rt Hon Tim

  Lennox-Boyd, Sir Mark

  Scott, Rt Hon Nicholas

  Lester, Jim (Broxtowe)

  Shaw, Sir Giles (Pudsey)

  Lidington, David

  Shephard, Rt Hon Gillian

  Lightbown, David

  Shepherd, Colin (Hereford)

  Lilley, Rt Hon Peter

  Shersby, Michael

  Lloyd, Rt Hon Peter (Fareham)

  Sims, Roger

  Lord, Michael

  Skeet Sir Trevor

  Luff, Peter

  Smith, Sir Dudley (Warwick)

  Lyell, Rt Hon Sir Nicholas

  Smith, Tim (Beaconsfield)

  MacGregor, Rt Hon John

  Smyth, Rev Martin (Belfast S)

  MacKay, Andrew

  Soames, Nicholas

  Maclean, David

  Speed, Sir Keith

  Madel, Sir David

  Spencer, Sir Derek

  Maitland, Lady Olga

  Spicer, Michael (S Worcs)

  Malone, Gerald

  Spicer, Sir James (W Dorset)

  Mans, Keith

  Spink, Dr Robert

  Marland, Paul

  Spring, Richard

  Marshall, John (Hendon S)

  Sproat, Iain

  Martin, David (Portsmouth S)

  Squire, Robin (Hornchurch)

  Mates, Michael

  Stanley, Rt Hon Sir John

  Mawhinney, Rt Hon Dr Brian

  Steen, Anthony

  Mayhew, Rt Hon Sir Patrick

  Stephen, Michael

  McLoughlin, Patrick

  Stern, Michael

  McNair-Wilson, Sir Patrick

  Stewart, Allan

  Mellor, Rt Hon David

  Streeter, Gary

  Merchant Piers

  Sumberg, David

  Mitchell, Andrew (Gedling)

  Sweeney, Walter

  Mitchell, Sir David (Hants NW)

  Sykes, John

  Moate, Sir Roger

  Tapsell, Sir Peter

  Molyneaux, Rt Hon James

  Taylor, Ian (Esher)

  Monro, Sir Hector

  Taylor, John M (Solihull)

  Montgomery, Sir Fergus

  Temple-Morris, Peter

  Needham, Rt Hon Richard

  Thomason, Roy

  Nelson, Anthony

  Thompson, Patrick (Norwich N)

  Neubert, Sir Michael

  Thompson, Sir Donald (C'er V)

  Newton, Rt Hon Tony

  Thornton, Sir Malcolm

  Thurnham, Peter

  Nicholls, Patrick

  Townend, John (Bridlington)

  Nicholson, David (Taunton)

  Townsend, Cyril D (Bexl'yh'th)

  Nicholson, Emma (Devon West)

  Tracey, Richard

  Norris, Steve

  Tredinnick, David

  Onslow, Rt Hon Sir Cranley

  Trend, Michael

  Oppenheim, Phillip

  Trotter, Neville

  Ottaway, Richard

  Twinn, Dr Ian

  Paice, James

  Vaughan, Sir Gerard

  Patnick, Sir Irvine

  Viggers, Peter

  Patten, Rt Hon John

  Waldegrave, Rt Hon William

  Pattie, Rt Hon Sir Geoffrey

  Walden, George

  Pawsey, James

  Waller, Gary

  Peacock, Mrs Elizabeth

  Ward, John

  Pickles, Eric

  Wardle, Charles (Bexhill)

  Porter, David (Waveney)

  Waterson, Nigel

  Portillo, Rt Hon Michael

  Watts, John

  Rathbone, Tim

  Wells, Bowen

  Redwood, Rt Hon John

  Wheeler, Rt Hon Sir John

  Renton, Rt Hon Tim

  Whitney, Ray

  Richards, Rod

  Whittingdale, John

  Riddick, Graham

  Widdecombe, Ann

  Rifkind, Rt Hon Malcolm

  Wiggin, Sir Jerry

  Robathan, Andrew

  Winterton, Mrs Ann (Congleton)

  Roberts, Rt Hon Sir Wyn

  Winterton, Nicholas (Macc'fld)

  Robertson, Raymond (Ab'd'n S)

  Wolfson, Mark

  Robinson, Mark (Somerton)

  Wood, Timothy

  Roe, Mrs Marion (Broxbourne)

  Yeo,Tim

  Ross, William (E Londonderry)

  Young, Rt Hon Sir George

  Rowe, Andrew (Mid Kent)

  Rumbold, Rt Hon Dame Angela

  Tellers for the Ayes:

  Ryder, Rt Hon Richard

  Mr. David Willetts and

  Sackville, Tom

  Mr. Michael Bates.

  NOES

  Banks, Tony (Newham NW)

  Cunliffe, Lawrence

  Barnes, Harry

  Davidson, Ian

  Canavan, Dennis

  Davis, Terry (B'ham, H'dge H'I)

  Corbyn, Jeremy

  Dunwoody, Mrs Gwyneth

  447

  Evans, John (St Helens N)

  Salmond, Alex

  Hoey, Kate

  Shore, Rt Hon Peter

  Lewis, Terry

  Skinner, Dennis

  Mackinlay, Andrew

  Smith, Llew (Blaenau Gwent)

  Marshal, Jim (Leicester, S)

  Spearing, Nigel

  Wise, Audrey

  McAvoy, Thomas

  Michie, Bill (Sheffield Heeley)

  Tellers for the Noes:

  Paisley, The Reverend Ian

  Mr. Austin Mitchell and

  Pike, Peter L

  Mr. Ted Rowlands.

  Question accordingly agreed to.
  Bill read the Third time, and passed.

Opencasting (Leeds Green Belt)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]
12.46 am
Mr. Spencer Batiste: I am most grateful, Mr. Deputy Speaker, for this opportunity to raise a subject of vital importance to my constituents, albeit at a late hour and in a very interesting week in politics. It is a subject, as I say, that is of great interest and importance to my constituents, as I believe it is also to yours, Mr. Deputy Speaker, and to those of my hon. Friend the Member for Leicestershire, North-West (Mr. Ashby), who is in his seat tonight.
My purpose in seeking the debate is to focus attention on the effect of the revision of mineral planning guidance note 3 this summer on opencast applications in the green belt and to seek clarification of what those changes mean. I am concerned particularly with its impact on the east Leeds green belt, but what I have to say will have wider implications for similar areas.
I am aware that my hon. Friend the Minister cannot comment on the facts of individual cases, but I shall have to refer to some to identify the issues of principle that they raise. However, I say at the outset how pleased I am that my right hon. Friend the Secretary of State has agreed to visit my constituency to see the area for himself that has been affected by a recent spate of opencast applications and to discuss what needs to be done as far as the planning framework is concerned.
It has been clear for some time that MPG3, the planning guidelines governing opencast applications, were out of date and needed fairly radical review. I and many others submitted evidence to the Secretary of State in the consultation process on that review. Many of the ideas that I and others submitted were incorporated into the revision that was announced in July, and I welcome that.
However, the first appeal decision to be made by an inspector under that revision, by H.J. Banks Ltd., related to land at Garforth in my constituency, and my concern is that, if that decision is a valid precedent, the new thinking in the MPG3 revision is not working out in practice as was intended and as I believed at the time when it was raised in the House.
The old position was that, in the national interest, there was a presumption in favour of opencasting. That is clearly no longer true, as there is a massive surplus both of coal being produced and of coal reserves. That presumption was removed, first by a ministerial statement and then, by way of confirmation, by the MPG3 revision.
Rightly, there is now no overriding requirement in the national interest that coal should be extracted simply because it is there. The correct test now is principally one of environmental acceptability. But that must carry a special significance for the green belt, where there are especially strong environmental factors.
Although it is true that coal can be worked only where it lies, it is equally true that houses can be built only where there is appropriate land available. Now that there is no national priority for extracting coal, there is no more logical reason for treating that activity more favourably than any other kind of development in the green belt. In other words, it should be allowed only in exceptional circumstances.

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Let me make it clear that I do not oppose opencasting in the right circumstances; nor, for that matter, does Leeds council. Several years ago, the council granted consent for a very large site at St. Aidans, a site in the green belt in my constituency that borders your constituency too, Mr. Deputy Speaker. The development required the diversion of the River Aire and its associated canal, and I sponsored a private Bill through Parliament to enable that to take place.
That happened under the old MPG3, but I believe that it would have been equally justified under the revised MPG3. The site was derelict, and a potential health hazard. It was dangerous, and only by opencasting could the problems be properly addressed. There will be a massive improvement in the environment when the extraction has been completed.
It is vital to be able to determine clearly what is environmentally acceptable and what is not. If environmental acceptability is now the key test, what exactly does it mean? To whom should a development be acceptable? How does the new test, expressed in the context of MPG3, impact on other planning guidelines, such as those on green belt? Does the existing case law affecting planning need to be redefined?
It is at that point that the experience of my constituency shows up the weakness in the current position. One would have expected that the revision of MPG3 would have reduced the number of opencast applications, especially in green belts. One would have expected that appeals to Department of the Environment inspectors would face more stringent tests. But the opposite seems to have happened. Apart from the St. Aidans site that I mentioned, four separate applications have been made in the green belt in or around the south of my constituency.
The Banks application at Barwick road, Garforth, which was made during the run-up to the revision but decided afterwards, was rejected by the council but allowed by an inspector on appeal. Following that, Leeds council granted an application for a site in Methley lane, allegedly on the basis that, after the Banks decision, it had no choice. At least two more applications are threatened or pending in the Garforth area, at Barrowby lane and at Hawk's Nest wood.
At this stage, it is necessary to examine the issues on which the Banks inquiry turned. The original rejection by the council took place under the old MPG3, and was on very limited grounds. The public inquiry took place in the summer and was completed just before the announcement of the MPG3 revision. The inspector's decision was announced in August, after the revision was published.
The council claimed that it was inhibited from expanding on the limited grounds that it had used to reject the original application and from bringing in wider issues of policy. I gave evidence at the inquiry, in which I reminded the inspector that he could reopen the public inquiry after the publication of MPG3 if he wanted to hear evidence on the changed criteria.
At the inquiry, the application was opposed by myself, as the Member of Parliament, by the council, by all the local councillors, by the local Member of the European Parliament, by local industry, by the Department of Transport, by a local action group and by a number of individuals. Why was there such unanimity?
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In the Garforth area, there has been no mining for many years. Its green belt is one of the most sensitive in the Leeds area, because it prevents the Leeds conurbation from expanding and swallowing up the surrounding towns and villages. It attracts long-term, high-quality investment from international companies, which is prejudiced by opencasting.
One such company, which I worked hard to help bring to the Garforth area, opened two years ago and now employs almost 200 people in the textile industry, which, we hear from so many sources, is under threat in the United Kingdom. The company is now planning further expansion. It has submitted evidence that it would have to invest heavily in air filters if opencasting was allowed, to protect the quality of the white polyester yarn it produces at the factory. Why should such a company have to compensate for environmental degradation? Is it sustainable development when long-term, world-class investment in jobs is threatened by an ephemeral opencast application?
Against that background, great play was made by the opencast developer of the sterilisation of coal reserves that would follow due to the imminent building of the A1-M1 link road over the site. However, the Department of Transport opposed the application, because it feared that opencasting would delay work on the road, which is massively important to my area, from both an environmental and an economic point of view. It will open up access for industrial operations and it will remove heavy traffic from congested villages. What on earth do the concepts of environmental acceptability and sustainable development mean when consent for opencasting is given by the inspector against that background?
The inspector gave that consent without warning in August, when many people, including myself, were away on holiday. A petition was raised, which was signed by most of the local inhabitants, which I passed on to the Secretary of State for the Environment. I was told by his office that he had no power to intervene, and that the decision was the inspector's alone. Many local people find it difficult to believe that, and I should be grateful if the Minister could confirm that that was the situation. How unsatisfactory that is. This is an issue that cannot be decided on that narrow basis alone.
Indeed, the problem was that the only group that could, in practice, have objected was the council. It could have applied to the court for judicial review, but it chose not to do so. It was not helped in that decision by the fact that there was a limited time for appeal, which was fully taken up with the holiday period. That in itself was bad enough. We have now moved on from that situation to one in which the council is inclined to grant further opencast applications without serious opposition, as it has at Methley lane, arguing that it is bound by the Banks decision.
That is simply not acceptable, especially when the council owns, directly or indirectly, a great deal of the land in the area and stands to make a great deal of money if opencasting expands, or if the fear of opencasting forces an area of the green belt out of the green belt and into other kinds of development. All this is a very long way from the principle of environmental acceptability, and it is politically unacceptable as well.

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I am aware that the council can prepare a minerals plan, defining where opencasting would be acceptable and where it would not be. That is sensible, and the council should get on with it, alongside the current unitary development plan for Leeds. However, even if we can get over the council's conflict of interests, that will not help us in the short term, with the current and pending applications for opencasting and others that will be stimulated by the success of previous applications. Nor does it set the right background for the preparation of the minerals plan.
Against that background, I should like to hear what my hon. Friend the Minister has to say. I look forward to the visit by the Secretary of State to the area, and to being able to show him at first hand exactly what is at stake. Most of all, I look forward to action to resolve the uncertainties. There is uncertainty about what environmental acceptability means in the context of a sensitive green belt. If that requires further clarification or amendment, so be it. The current situation in my constituency is simply unacceptable.
12.59 am
The Parliamentary Under-Secretary of State for the Environment (Sir Paul Beresford): First of all I should like to thank my hon. Friend the Member for Elmet (Mr. Batiste), in spite of the hour, for raising this quite important matter. He has been extremely diligent in pursuing the interests of his constituents over this matter.
I understand the concerns of my hon. Friend and his constituents about opencast coal mining. It is those concerns and similar concerns that influenced the thinking behind the guidance we published in the new MPG3 in July. That guidance emphasises that development should be allowed only where the development can be carried out in an environmentally acceptable way or where there are overriding—I must emphasise—benefits. But it is not, and should not, be the intention to stop all opencast mining.
The aim of the new guidance is to ensure that the extraction of coal can take place in accordance with the full and proper protection of the environment and the principles of sustainable development. The new guidance was not produced rashly. It was drawn up after extensive consultation with the industry, planners, environmental groups and local communities. As has been mentioned, that consultation included meetings with my hon. Friend, a delegation from Leeds city council, and the Yorkshire Opencast Objectors Group.
As my hon. Friend graciously recognises, the new guidelines respond to many of the concerns that were expressed. The strong presumption in favour of opencast mining has been removed. The guidelines emphasise a development plan-led approach and tests of environmental acceptability for individual projects. There is a tougher approach to the assessment of impacts with an annex addressing each one in turn, including such matters as dust, noise and visual impact. We are committed to monitoring the implementation of the guidance through the research programme.
The development plan-led approach ensures that decisions on land availability and use are debated fully and openly at local level. That must offer the greatest
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certainty for industry about where coal extraction and spoil disposal is likely to be allowed. Similarly, however, communities where coal reserves exist will have a clearer idea about where such activities are likely to take place and over what period. This new approach, which responded to many of the concerns raised, has been generally well received, but I need to expand a little on it.
Planning policy needs to be formulated within the framework of the Government's energy programme. That programme, or policy, is to ensure diverse and sustainable supplies of energy in the form which people and businesses want and at competitive prices consistent with wider economic policies and the full and proper protection of the environment. The Government believe that that can best be achieved through the operation of a competitive and open market. In that context, it is not for the planning system to seek to set national limits on or targets for any particular source or level of energy supply, nor to predetermine the appropriate levels of coal to be produced by underground or even opencast mining.
The Government believe that coal can be mined economically and in an environmentally acceptable way, and that it is an important indigenous energy resource. The aim of the guidance is to ensure that development that can be carried out in an environmentally acceptable way is not inhibited. While it is for the industry to make decisions on the level of output that it wishes to aim for in the light of market conditions at the time, the acceptability of individual projects will be determined by the land use planning system.
My hon. Friend expressly refers to the test of environmental acceptability and how that is to be discharged. As he will realise, there is no simple answer to that question, but what is clear is that, first, the development plan has to provide a policy lead. The preparation of the development plan provides an opportunity to test the acceptability of national guidance to local circumstances. Secondly, in considering individual proposals, planning authorities need to weigh up on one hand the benefits of the development and, on the other hand, the environmental impact.
As I have already said, the new guidance gives comprehensive advice on the specific impacts that may arise and how to deal with them. Those include such matters as visual impact, noise, as I have already mentioned, blasting, dust, water pollution, transportation, land use and built heritage and nature conservation. The MPG3 also makes it clear that the guidance it contains is relevant to the consideration of planning applications whether or not the development plan is up to date.
My hon. Friend referred to the decision to grant planning permission for opencast coal mining at Garforth. As he said, that decision was issued on appeal by an inspector in August, following a local inquiry in June. Although the inquiry was held before the new MPG3 was published, the inspector took account of the revised guidance in reaching his decision. The inspector, as has been mentioned, has delegated powers to issue decisions on behalf of the Secretary of State. That was the situation in this case.
My hon. Friend will understand that it would be improper for me to discuss the merits of a decision. The pros and cons were argued at the local inquiry and the reasons for the decision are set out in the inspector's letter. I can say, however, that the decision appears to fall well within the revised guidelines. The project is of short

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duration— 13 months— and avoids the sterilisation of coal by allowing its extraction in advance of the construction of the three-lane M1-A1 link road.
The planning inspector has imposed tough conditions on the permission. These conditions relate, for the most part, to the timing, preparation, operation and restoration of the site, together with measures for the protection of local amenity, including controls on noise and dust.
My hon. Friend mentioned other cases in the area—one which has already been approved and two which are pending. He expressed concern that the appeal decision at Garforth had created a precedent and fettered the planning authority's discretion. That is not the case. I cannot comment on applications currently before the planning authority, but I should point out that, in his decision letter on the Garforth case, the inspector stated:
"Nor do I consider that an approval in this case has any bearing on other proposals for opencasting in the wider area that might come forward in the future".
That is clear. The fact is that each case must be determined on its merits in accordance with the relevant provisions of the development plan and all other material considerations.
I turn to mineral working in the green belt, which was raised by my hon. Friend. Green belts have been a cornerstone of the town and country planning system. They will remain so, serving us in as good if not better stead as we enter the 21st century. Now, more than ever, we need to remember that we hold the environment in trust for future generations, and to take decisions wisely.
Green belts have served us well in preventing urban sprawl and ribbon development. They are probably the most popular part of our planning system. They have been emulated widely abroad, from the Netherlands to South Korea. Let no one doubt that the Government remain as firmly committed as ever to green belts. Since 1979, their extent has more than doubled. They now cover 12 per cent. of England, or about 3.8 million acres.
Inside green belts, development is normally restricted to agriculture, forestry, open-air leisure and sport, and other uses appropriate to a rural area. There is a general presumption against inappropriate development within them. Very special circumstances are required to justify permitting any development which is not normally
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appropriate in a green belt, or removing any land from the green belt. We expect shortly to publish a revision of planning policy guidance note 2 on green belts. This will confirm the overriding importance that we attach to their protection, and further strengthen green belt policy.
But there is no bar to making planning applications for development in the green belt. Nor do we intend to introduce a presumption against mineral working in green belts. The simple fact is that minerals can be worked only where they are found, and are a temporary use of the land. Their extraction therefore need not be incompatible with green belt objectives.
However, applications for mineral working in the green belt should be examined very carefully, and development should be allowed only where the highest standards of operation and restoration can be achieved. MPG3 does not encourage applications for green-field sites, but provides that priority should be given to proposals that involve the clearance of dereliction. Operators will need to demonstrate that real benefits will accrue from their proposals if they wish to work sensitive green-field sites.
I congratulate my hon. Friend on the way in which he has presented his case and represented his constituents. In addition to the debate, he has met my right hon. Friend the Secretary of State. As my hon. Friend has said, he is to visit his constituency. I know that my right hon. Friend is particularly well aware of my hon. Friend's concerns; hence his acceptance of the invitation.
I emphasise that the purpose of the new planning guidelines, as set out in MPG3, is to ensure that mining and spoil disposal are carried forward in an environmentally acceptable way through the planning system.
The guidelines aim to provide a balanced approach. On the one hand, they provide a positive steer in terms of national policy for the extraction of the resource. On the other hand, they give planning authorities the responsibility of indicating how, where and at what pace the resource should be developed through the development plan system. Within that framework, each proposal must be considered on its merits according to the circumstances of the particular case.
Question put and agreed to.
Adjourned accordingly at nine minutes past One o'clock.