CONSEQUENCES OF BREAKDOWN OF BRUSSELS NEGOTIATIONS

HL Deb 06 March 1963 vol 247 cc429-518

3.55 p.m.

Debate resumed.

THE SECRETARY OF STATE FOR FOREIGN AFFAIRS (THE EARL OF HOME)

My Lords, I must apologise in advance to the House. Many months ago I promised that this evening I would entertain to dinner and go to the opera with the Prime Minister of Sweden and the Foreign Minister, and I am sure the House would wish me to keep that engagement. If noble Lords will forgive me if I do not hear the latter half of the debate, I shall be very grateful.

It is all too seldom that we have the privilege in this House of hearing the noble Lord, Lord Williams of Barnburgh, but he has retained enough of the techniques of another place to deliver, under the cover of a most innocent Motion, an all-out attack on the agricultural policy of the Conservative Government. I must say I thought that his history was a little biased. He said, if I remember aright, that the agricultural policies of successive Conservative Governments in the 'twenties and the 'thirties had been an unrelieved disaster. That may be his opinion, but I am bound to point out that, if he will recollect, it was not the opinion of the electors at the time. Only for one short period in 1929 were the noble Lord and his friends elected. They made the most disastrous economic bungle and were shot out at the earliest possible opportunity, with their agricultural policy. The next time they came back was in 1945 and they did, I must admit, splendid work by introducing the 1947 Act. But they undid almost everything good they had done by being the first British Government to have the honour of devaluing the pound. Really, when the noble Lord accuses us of having a disastrous agricultural policy he must refresh his memory of what happened and whom the people elected during those years.

LORD MORRISON OF LAMBETH

My Lords, does the noble Earl remember that the previous Conservative Government decided to go back to the gold standard and that that led to very grave economic consequences for the country?

The Earl of HOME

My Lords, we can job backwards, but we had better get our history right. If I can look forward a little and give the noble Lord some advice I would say that if lie really wants to protect agriculture from damage let him go and muzzle his friend Mr. Callaghan. I was looking at his proposals the other day and the only way I can see in which a farmer who has a farm valued at £20,000 or over can pay the tax will be to sell one field one year and two fields the next year until the whole farm disappears.

Lord WILLIAMS OF BARNBURGH

My Lords, the noble Earl will not be in ignorance of the point that if the Conservative so-called agricultural policy had been maintained from 1945 onwards there would be no farm worth over £20,000.

THE EARL OF HOME

All I am saying is that if the noble Lord wants an agricultural debate with me he can have it and he will get as good as he gives. But this Motion suggests that the debate really is about the Common Market, of which agriculture is an important feature but not the only feature. It is one to which I will come back; I will deal with it further in a moment when I come to deal with some of the agricultural problems involved. But as I listened to the noble Lord's speech I thought, although he dealt almost entirely with agriculture, that it could be said that he was against the Common Market, like his noble Leader, who has never disguised from the start that he was firmly against it. All I can say is that that is a perfectly tenable point of view. But I should like to point out to him that the last months have revealed that a great many people were in favour of British application and British membership.

EARL ALEXANDER OF HILLSBOROUGH

Where?

THE EARL OF HOME

The noble Earl says, "Where?". The five countries out of the Six; all the EFTA countries, which really means the whole of free Europe; all the United States and, as I understood it to-day, the noble Lord, Lord Grantchester. That really is not bad.

LORD REA

My Lords, surely Lord Grantchester comes ahead of all these other people in regard to the time for which he has supported it?

THE EARL OF HOME

My Lords, he comes high in quality, but not in numbers. I think it is worth asking why all these people have been so keen on British entry. The broad answer is, I think, that this Common Market, particularly if Britain had been added to it, is an imaginative adventure in European co-operation, political co-operation and economic expansion—and it is political co-operation and economic expansion which are the keys that will open the door to peace and prosperity in the future. We want to get away from the mentality which is introspective and restrictive, and all the time pursue policies which are policies of expansion. It was therefore thought—and I think rightly—by a great many people in this country, and the people that I have named overseas, that it would be a good thing if Great Britain's voice were heard in the formulation of all the big political decisions taken in and on behalf of the Continent of Europe. It was also thought to be a good thing that British influence should be added to the scales on the side of a liberal Europe recognising its duty to the world outside; and our Commonwealth relations and our close relationship with the United States were in fact a guarantee that if we got into the Common Market we would use the Common Market, not in a restrictive way but to build a bridge between the United States, Europe and North America, the United States and Canada, and between Europe and the Commonwealth.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, may I ask a question here? I would not do so, but for the fact that the Foreign Secretary has a duty to perform later on and will not be here when, if necessary, I shall have to deal with some of these points. If all this was the real reason behind the Government policy, can the noble Earl tell me why all the contrary was prophesied about such a proposal by Mr. Maudling in February, 1959, and by Mr. Macmillan in the same year? No such proposal was laid before the electorate for a mandate. Where does all this come from? At whose instigation? Why have not the people therefore been properly informed all the way through?

THE EARL OF HOME

My Lords, I think that in 1959 there was no question of political co-operation—it was one of the weaknesses of that scheme. We were really dealing, if I remember aright, with what would have amounted to an industrial Customs Union at that time. But I do not think that anybody can complain that, in the last two and a half years, the public have not been informed of the Government's intentions.

EARL ALEXANDER OF HILLSBOROUGH

Never.

THE EARL OF HOME

So clear have our intentions been that we have practically caused a political crisis in this country and almost a revolution in Europe. But what I was going on to say was that I think these broad reasons for British entry have been accepted by the countries overseas; and, indeed, if the noble Earl has, as I have no doubt he has, read the papers to-day and has seen the extract from the Commission's Report on where the negotiations had reached in Brussels, he will no doubt have read this comment: The negotiations with the United Kingdom … compelled the Community to come to grips with [problems] sooner than it otherwise would have done. This process brought with it greater awareness of the responsibilities an enlarged Community would bear to the world. Because of the United Kingdom's almost worldwide responsibilities, the questions raised by the United Kingdom delegation also made it vital for the Community to define without delay the main policy lines of such a large and powerful Common Market with regard to matters which, once Britain was a member, would have had a direct and crucial impact on the overall balance of the free world. So our participation in the negotiations for the Common Market I think have been carried on in a way which proves that, had we got in, this Common Market would have been the most powerful political body of co-operation in Europe, with an influence far outside. I hope it will still be so, but it would certainly have been so if we had been a member.

I think there are certain consequences of our failure to get in—namely, that if there is to be political cohesion it must either be based on an economic base or a basis of security. I think the noble Lord, Lord Grantchester, was saying something of the same kind. He was wanting common citizenship. You cannot have that unless you have common constitutional arrangements. I do not think you can have a political agreement unless you have an economic base or a security base on which to rest such agreements. The fear is, now that the economic structure of Europe does not include Britain, that it may have serious repercussions on the security system, which does.

We shall return, I have no doubt, in the Defence debate, to questions of the organisation and purpose of NATO. I will not say more about that now. But the noble Lord did not deal with this point. I think it is right to remind the House that there will be repercussions at Britain's failure to get into Europe, particularly if the French pursue the policies which General de Gaulle seems to have in mind. I am not going to represent the failure of the talks as a tragedy. We have plenty of resilience in this country, and we have many resources upon which we can draw and can exploit. But there is a definite loss which we must face. If the influence of the French, for instance, inside the Community is against the lowering of tariffs, we shall not be in the councils to counter that move. When the time comes for the Community to react to the tariff reductions of what is known as the "Kennedy round", we shall not be in the inner councils; and although we can help our friends of a like mind, no doubt, so that we should hope that the recommendation would be a liberal one, it is not the same thing as being inside, because inside you can exercise quite a different sort of authority.

If I may say so without arrogance, I think that while it is a loss to Britain that we are not in Europe, it is an even greater loss to the Continent of Europe itself, because they have lost the opportunity of unity of Europe reinforced by the strength of Britain, who would have been a full and active partner. Before I deal with the questions, "Where do we go next?" and, "What do we do next?", I should like to take up one theme which I detected in the speech of the noble Lord, and which, of course, the House has detected in the Questions asked by the noble Earl, Lord Alexander of Hillsborough. He, in particular, has always talked in terms of agreements which were reached in Brussels between our negotiators and the Six, and of commitments entered into by Her Majesty's Government at the various prolonged stages of negotiation, and in Question and Answer I have done my best to make the position clear. I think I must do so again.

Every arrangement which was entered into by our negotiators in Brussels was provisional and dependent on the whole of the negotiations being acceptable. When the negotiations had been completed they would have been judged by Parliament and a decision taken as to whether, on balance, they could have been adopted; and the Socialist Party would then have been perfectly entitled—or anyone, or either House, would have been entitled—to reject the whole arrangement as a bad bargain. But neither I nor the noble Earl know what the final balance sheet would have been. So that I think that at the present time a post-mortem on this or that provisional arrangement, taken out of the whole context, is really a waste of time.

The noble Lord, Lord Williams of Barnburgh, may claim that we were a long way from a settlement, and certainly there were quite a number of things left unsettled. The noble Lord will find them in the account given by the Commission to-day: for instance, matters of interest to the Commonwealth; the interpretation of what was meant by "reasonable price levels"—a very important point; the question of New Zealand—an agreement had been reached in principle, but no agreement worked out on how one would deal with the New Zealand butter problem; again, on agriculture no agreement worked out as to how we could deal with the provisional period during which we should have changed from one system to another. There were a number of problems still outstanding. Noble Lords can say that we were far from agreement, and I can say we were much nearer; but it would be a profitless exchange. I think it is better to concentrate on what we might do in (the future.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, before we leave this part of the discussion, may I say that I appreciate the fact that the Foreign Secretary is trying to make things plain to me; but on the one hand it is stated that we were almost in, and on the other, that we were not in. We do not know how much we had conceded—nobody knows. We have had certain information in the White Papers issued, but none on that point. I say that the country, which was never asked for a mandate on the question, has a right to know what were the facts at the time the break came.

THE EARL OF HOME

I can only give a short answer to that point. The answer is that they would have conceded nothing, and they know nothing about conceding anything—unless we had been able to complete the negotiations to a point which we considered would be satisfactory to Parliament. The noble Lord may shake his head but that is the fact—that we have conceded nothing.

It will not surprise the House to know that the points of difficulty, which are illustrated in the Report of the Commission to-day, are just those points in which both Houses of Parliament were most interested, and the points about which the Government pledged themselves to find satisfactory solutions: namely, the Commonwealth (in particular New Zealand), and the transitional provisions for agriculture. These were the "sticky" points, and we had not reached agreement on them. Until we had, we should not have been able to judge whether we could accept an agreement or not.

LORD WILLIAMS OF BARNBURGH

The noble Earl, will not, I imagine, by implication or otherwise, charge me with having referred adversely to our negotiators—neither our own nor Continental Ministers negotiating for their countries. I made that clear in my opening remarks. What I complained of throughout, however, was not that we were nearly in or nearly out, but that the Prime Minister and the Deputy Prime Minister at Llandudno made the statement that the Community agricultural policy—which they did not understand, and still do not understand—was better than our support policy. That was my serious complaint.

THE EARL OF HOME

My Lords, I was in a way, perhaps a little unfairly, anticipating, what the noble Earl might say this evening when I was absent from the House; but he has said it before so I felt bound to try to give him an answer once more as to how we were not committed to anything unless we were satisfied that the whole package could be accepted by Parliament.

One thing I think I must add to the Report that came out from the Commission to-day is that, while it pretty well conveys the facts of the case about the negotiations and the point they had reached, what it cannot convey is the atmosphere of the talks on which hopes rested. With the will, we feel that agreements could have been reached, and reached quickly, and that was the opinion of the great majority of negotiators around the table.

There have been rumours that there might be presented to us a proposal for what, for convenience, I would call an industrial Customs Union, and it has been asked whether we could consider such an approach. I think I would say, in reply to that, that we cannot go in for another period of prolonged negotiation. If any proposals are put to us they must be in specific terms, put to us by the whole Community and agreed by the whole Community, and we should need to be convinced of the good faith of all parties participating in such an offer. I would add that we have had no evidence at all that such a proposal would be encouraged by the French. Indeed, it would be easier to think in terms of an economic agreement if success or failure of the negotiations had really depended on this or that economic adjustment. For a long time we felt that was so, because the French indicated to us that if the checks and balances in the economic side of the negotiations could be got right, British entry would be assured.

But, as the noble Lord, Lord Grantchester, said in his speech, it became clearer at the later stages of the negotiations that underlying the technical points still at issue was a fundamental conflict of principle on what the structure of Europe should be. The statements and action of the French Government really reveal a concept of Europe inward-looking, tightly-knit; a Continental grouping from which British and United States influences would be removed; a Europe pursuing the rôle, as I said the other day in our debate on NATO, of a third force, balancing between the United States and Russia in the hope that Europe alone—this is what I understand—could achieve something which the whole strength and the whole negotiating diplomatic power of the West has not so far been able to achieve: a rapprochement with Russia, and the reunification of Germany.

We think that those calculations are wrong and that those hopes are vain. There would be room for Britain in such a grouping; but only, it became clear, if we were willing to shed our ties with the Commonwealth and our close relationship with the United States. I hope, my Lords, that I have stated that view fairly. We are totally opposed to such a conception of Europe, and we have always made that clear. It has become quite clear that the other five members of the Six are totally opposed to such a conception of Europe, too. In fact, everybody is really opposed to that conception, except the French. If the French persist in this view it is well that it has been brought into the open, because this is an issue—if it is to be brought to a head—which must be resolved inside the Community and inside NATO. We must therefore be vigilant to keep our contacts alive, both in our bilateral arrangements with the different European countries, in EFTA, in the W.E.U. and, above all, in the NATO Alliance. We must work as best we may through our friends and by ourselves for a Europe which, in the fields both of trade and security, is liberal, progressive and co-operative with North America and with the world outside.

My Lords, so far I have dealt with some of the debits of our failure to get into the Common Market. I should like to say now a word about what one might call the credits. The first is that there is no immediate obligation to alter our Commonwealth preference arrangements. It is very timely that there is a meeting of the Commonwealth Economic Advisory Council to be held in April—the noble Earl will remember that we set this up in Montreal—and that will be in a position to consult about the operations in GATT before the "Kennedy round" of tariff reductions. We all want that "round" to succeed, and it will be very valuable to have talks with the Commonwealth countries before that matter is taken in GATT.

There are some who argue—I do not know, but I suppose my noble friend Lord Balfour of Inchyre was doing so, from the questions which he asked yesterday—that all the United Kingdom has to do to bring about an expansion of Commonwealth preference is to put forward such a proposal in GATT. I want only to give a note of caution here. The erosion of preferences has not been the United Kingdom's choice; the erosion of preferences has come because practically every Commonwealth country wants to build up and establish its own industries. The second point is this: that there is no evidence so far that the Commonwealth countries wish to disturb the international trading framework which GATT provides for them. Of course, if the "Kennedy round" runs into the sands, or is actively frustrated, then it is perfectly true that many countries will have to do a lot more thinking about the future patterns of world trade.

The second thing on the credit side—and this will be endorsed by the noble Lord, Lord Williams of Barnburgh—is that we retain our freedom of policy with regard to our own agriculture, and we are not faced now with fitting British farming into the European system of support prices in a matter of a very few years. I only wish I could say that this relieved us of all difficulties so far as our home agriculture is concerned. Like him I am an absolutely unrepentant believer that much of the health and wealth of any country depends on keeping a sturdy rural population. That is certainly true; but we do, of course, have a dilemma in a small island, highly industrialised, with an enormous population for our acreage. How much food can we grow, and is it desirable to grow, for our own economic and social needs, and how much can we take in from overseas?—because unless we take in a great deal countries cannot pay for our exports.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, I quite agree with the points laid down, but the noble Earl left out the word "security". Agriculture has been our security in war.

THE EARL OF HOME

Of course I would not hesitate for a moment to add national security to this; and of course we must supply a high percentage of our own needs so far as food is concerned. But none of us can escape from the dilemma that, if we are to enable countries overseas to pay for our exports, we must take in a pretty high import of food. We cannot escape from that. When the noble Lord, Lord Williams of Barnburgh, says to me, or implies, that we were willing, by entering into the negotiations with the Common Market, to betray British agriculture, I would just remind him of this: that the objectives, as they were stated at any rate, of the European Community were, as I understand them, the same as ours—to increase productivity, to ensure fair standards of living for the farming community, and to create enlarged and stable markets. One can go further, because during the course of the negotiations the countries of the Six accepted our proposal that there should be an Annual Review; and if experience showed that the objectives which I have mentioned were not being achieved in any country, remedial measures were to be taken at the request of any member Government.

LORD WILLIAMS OF BARNBURGH

Yes, my Lords, but of course the noble Earl will tell your Lordships that nobody in Europe need take any notice of those Annual Reviews.

THE EARL OF HOME

I do not know what the point of having them would be, if there were no notice taken of them.

LORD WILLIAMS OF BARNBURGH

Neither do I.

THE EARL OF HOME

You may well say that nobody would take any notice of the Annual Reviews here, but we do. We sit down together and we work out what the income of the farming community ought to be over the next year. That could have been done.

LORD WILLIAMS OF BARNBURGH

Yes, but the noble Earl will not forget that that is a statutory obligation. The Annual Review foreshadowed in Europe would, as a result, have been sent to the Commission which could have forgotten it.

SEVERAL NOBLE LORDS

No.

LORD WILLIAMS OF BARNBURGH

If any noble Lord can tell me exactly what it meant, or that I am wrong, I shall be very happy to listen to him.

THE EARL OF HOME

I think the noble Lord is assuming that if the Commission accepted the obligation they would proceed to ignore it, and it would simply be something on paper which would never be worked.

LORD WILLIAMS OF BARNBURGH

That is it.

THE EARL OF HOME

He is entitled to that assumption, but it is a curious way to go about international negotiations. You have a right to expect, if you negotiate something and the other partners in the negotiation accept it, that it will be carried out in good faith. I agree that could only have been seen, and that the proof of the pudding would have been in the eating. But at any rate the rules, and what they agreed to, were as I stated.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, to get the record straight, may I say that if my recollection is correct the Community were prepared to deal with Price Reviews. But no single member of the Community was going to be required, unless they wished to do so, to submit facts for the Annual Review. That was the position as published in the Press.

THE EARL OF HOME

Not compelled to submit, no doubt. But it would have been a great advantage to every country to do so, because the whole purpose of the Review was to work out an agricultural policy which was fair. But, my Lords, I repeat that this phase of the negotiations is over. What we are doing now, in a way, is to have a postmortem, and I do not think there is very much point in it. But when we are accused of betraying British agriculture in the negotiations as carried on so far, I think I am entitled to repudiate that suggestion with facts. We will, of course, try to look after British agriculture as best we can as a Government.

EARL ALEXANDER OF HILLSBOROUGH

As best you can.

THE EARL OF HOME

Nobody can do better. We can do our best—let me put it that way—to look after British agriculture, and I do not think we have been unsuccessful in the past. The noble Earl really must recognise that there is a problem here ahead of us—ahead of us, I hope; not of him. When British food production is expanding, when Commonwealth food production is expanding, and when a considerable percentage of the British farmers' income is in subsidies, the equation is not very easy to face. We must be realistic and realise that. Whichever Government are in power, there is a Problem as far as agriculture is concerned.

The third item on the credit side is that we now retain the whole of the advantages of EFTA, which would have been embodied in the larger European Economic Community. But, my Lords, I have deliberately left until last the only action that will bring us real compensation, reward and expansion, and that is, by all means, to increase our national efficiency. That is really the answer to the problem. There is the opportunity. If we can hold our costs competitive, then we have a chance to neutralise the attack. If we can hold our costs competitive, there is a chance we can attract people from overseas to put down factories in this country. They will, of course, calculate between the Continent and Britain. There is, on the one side, a large market of 150 million people or more: on the other side, here, if we can hold our prices competitive, they will have considerable advantages. I think that, in the mind of a man putting his factory here, all will depend on this question of whether we can hold our prices, because if we can hold our prices reasonably steady and competitive then there is a chance for anybody manufacturing in this country to jump the external tariff of the Community. But if costs are not held, then our percentage both of European trade and of world trade is bound to fall.

My Lords, in the coming months the steps which the Government mean to take to expand our economy will be unfolded, but I must say that there is a limit to what any Government can or could do, and we shall remain a great trading nation earning wealth on an expanding scale only if the whole nation is put on its mettle. That is the Government's task—and, indeed, something in which we should all cooperate; and it is on that note that I would end my reply to the speech of the noble Lord.

4.32 p.m.

LORD ROBERTSON OF OAKRIDGE

My Lords, I feel in considerable trouble of mind about my speech to you this after- noon, particularly speaking, as I do, after the noble Earl the Foreign Secretary himself, because I am all too conscious that what I have to say this afternoon is really very small beer. I have not any profound review to offer you of the situation created by the suspension of the Brussels negotiations. Indeed, I am not capable of making one. I only wish to make a certain number of remarks, rather discursive, and to offer a few suggestions, with very great diffidence. I do not expect all these suggestions to be liked by everybody, but I hope it will be thought that they are put forward in an attempt, at least, to help.

The first remark I should like to make is to join with the noble Lord, Lord Grantchester, in complimenting the Government on their handling of these negotiations. I think the noble Lord did compliment the Government, though I must read more carefully in Hansard to-morrow what he said. But, at all events, I for my part should like to do that, and particularly to pay a tribute to our negotiators at the conference table.

LORD GRANTCHESTER

If I may say so, I complimented the negotiators on both sides.

LORD ROBERTSON OF OAKRIDGE

I should particularly like to compliment our own negotiators, without saying anything about the other side, as it seems to me that it was a tribute to their skill that, when President de Gaulle decided to bring the discussions to an end, he found no way of doing it other than by sending his representative into the conference room with instructions, metaphorically speaking, to "kick the table over".

The discussions have been suspended, and this is described as the failure of Great Britain to get into the Common Market. It may be that that is justifiable as a statement, but I venture to say that it is not less true that it is the failure of the countries of the European Economic Community to get Great Brtain into the Common Market; and I believe that those countries so regard it. The noble Earl the Foreign Secretary said so himself in his own language. It is not only five out of the six countries who would like to see us in: we all know that there is a large, influential and well-informed section of opinion in France who have always wanted to see us in; and still do. Perhaps I might remind your Lordships of the basic reason for that. In doing so, I am stating the obvious; but, after all, we have it on the authority of the noble and learned Viscount the Leader of the House that sometimes the obvious is the only thing worth saying.

The basic reason is this—and perhaps I can remind your Lordships of it because, whereas the noble Earl the Foreign Secretary has to be careful what he says, I do not, or at least not to the same degree. They desired us to be in the Community from the start because none of them wished to have a Community that is dominated by any one country, whether it is France, whether it is Germany or whether it is anybody else; and they believe that Great Britain, if she enters the Community, will provide a means of equilibrium. That is something they still feel, I am sure, and that is why I feel absolutely certain that these negotiations will be resumed in some form. When, we cannot say, but I hope that the delay will not be too long.

I should now like to make a remark or two about the recently signed Treaty between France and Germany, and about its bearing on this matter. After the First World War, France endeavoured to insure herself against any repetition of German aggression by erecting a system of collective security under the League of Nations and by insisting that Germany should remain disarmed. That strategy, as we know, failed. After the Second World War, France made a renewed attempt. She demanded that Germany should be split up into a large number of semiautonomous States, held together only by the flimsiest confederacy at the centre. She openly expressed her disinterest in the reunification of Germany, and her dislike of the idea that Berlin should ever be the capital again, and she proposed methods of demilitarisation which would have had a permanent effect on the German economy. This strategy, also, was not successful, and very largely because France could not persuade Great Britain and the United States of America to go along with her. Now she is adopting a new strategy. Now she is endeavouring to bind Germany to her with the silken threads of a treaty of friendship. I believe, my Lords, that you will think of this as I do: that it is a much wiser-seeming strategy, that it is a strategy which has a much greater chance of enduring, and that it is something which we can welcome and support.

I should like next to refer to something which was written in the French Press at the height of the crisis at Brussels by a very distinguished Frenchman who is an acknowledged expert on Franco-German relations. He referred to the new Treaty as "a tender sapling just planted in the ground". He said that it had no roots, no hold on the soil, and was a very tender plant. He went on to say that Germany would certainly not allow herself to be estranged either from the United States of America or from Great Britain. Nothing could be more certain to kill this tender plant and render it a dead letter than any attempt by France so to isolate Germany.

I mention this to your Lordships because I was struck, as I am sure your Lordships would have been, by the way in which this prognosis was borne out, letter by letter, only last week by the debate which took place in the Bundestag, when the Treaty came up for First Reading or ratification. One might say that it was almost word for word; and that is why I am sure the discussions will be resumed. Indeed, that is why we must be sure that nothing foolish will be done; because this Treaty is something we welcome. I am sure we desire the enmity between these two countries to be ended and ourselves to be on good terms with both of them. I welcome what the Prime Minister said in another place when he spoke of the need for friendly relations with Germany. As to France—we are smarting to-day; but we know quite well that we need friendly relations with France, just as she needs them with us. Anything else is both silly and dangerous. Some remarks which were made in this House only yesterday show how many agree with this point of view.

The discussions, I am sure, will be resumed in some form. I wonder if one may hope that, meanwhile, other nations will not be given cause to think that the attitude of Great Britain is uncertain in the matter of our being willing to accept, and desirous of accepting, economic and political union with the Community; or that it might change with time, or, if I may say so with respect, with a change in the political scene. It has been a very difficult problem, and this country did not make up its mind, through its Government, for a very long time—not until a great deal of heart-searching had taken place. Indeed, right at the end there was a division of opinion, and there still is.

But, as I say, the Government made up their mind, and when they did so they had behind them a volume of support that was certainly not limited to a majority of their own Party. I do not think I shall be contradicted if I say that the division was not on Party lines. Over and beyond that was the statement by the Prime Minister in another place, that most economists and a large majority of businessmen agreed with that decision. And his statement has not, I believe, been contradicted. I would suggest that it has been a characteristic of our method of conducting ourselves in international affairs over the years that, once we have made up our minds, we show a great consistency; our representatives all speak with the same voice, and foreign nations are not given the opportunity to point to contradictions between what they say or to play off one section of political opinion against another. There perhaps I have made my first point.

During these difficult negotiations (and reference has been made to this point this afternoon) a number of provisional agreements were reached and a number of provisional concessions were made. President de Gaulle now says that they can be forgotten. Here, this afternoon, is a request that they should be published. I do not quite understand what is asked for. A good deal has been made public, and the Report issued in Brussels makes further things public. But I cannot help thinking that this would be likely to lead to reproaches to the Government for any concessions which they have made and to a hardening of the positions, an insistence on fresh commitments and a general tendency towards more stiffness next time the discussions are opened.

With great respect, I cannot help thinking that that is not the wise thing this time. I feel personally that, as regards those provisional agreements, it would be better to leave things just where they are, and to spend one's time and effort in negotiation and probing to make matters easier when discussions are resumed. I venture to refer for a moment, with much immodesty, to something I said when I spoke on this subject last August. I said that perhaps we should find that our biggest difficulty about entering the Common Market lay in our own national characteristics and in our insularity. That is exactly the reproach which President de Gaulle threw at us when the negotiations were broken off. It hurt. Maybe it was meant to hurt. And it hurt because it has been true.

I suggest that in this interval it would be very helpful to ourselves and to our friends if we could give some practical, concrete evidence, however small, that this reproach is no longer true. Could we, for example, bring forward some of those measures which we know we shall one day have to take to bring our methods and practices into harmony with those on the Continent? There is the question of our currency, which has been discussed in this House and is under consideration; there is the question of weights and measures, and so forth. These are practical matters; they are rather difficult, but I think most of us know that we shall have to act on them one day. If only one of them could be brought forward, it would, I think, give encouragement to our friends and practical evidence of our desire to associate ourselves with them.

Finally, my Lords, I would make a suggestion which could be made only by someone from the Cross Benches—and I make it with some trepidation because of the rather menacing words which the Foreign Secretary let fall in the course of his speech. We all know that we have to increase our exports—the National Economic Development Council tell us so; the pundits say so; and we know it ourselves. Speaking in another place, Mr. Harold Wilson the other day used some very simple words—simple, but striking in their simplicity. He said that the breakdown of the Brussels talks brings the certainty now that discrimination will be taken against our exports into Europe. I think nobody will deny that. It seems difficult to deny.

How are we to increase our exports to Europe? The Government will produce plans: they will help. But suppose they do not succeed; suppose they do not go far enough. It is not easy. There could be extended credit, export incentives—all these things are not easy to devise if they are, in fact, to do the trick. Are we likely to get our costs down? One sees no evidence of that. Profits cannot be cut much more. There is one way which is certain as a means of ensuring that our goods will sell more cheaply and more freely on the Continent, and there are some wise men who are arguing that we shall have to come round to it. I should not myself like to venture any opinion on it, but we know that there are wise men who are having a look at it.

The suggestion that I am making is that, if we are to consider the devaluation of our currency, and if some change in the level of exchange has to be made, there is a good deal to be said for taking the two steps together. It is what we did in Germany, in rather different circumstances; but it certainly was successful. It is a hard thing to do, but I suppose that the road ahead is hard, as the Foreign Secretary has told us. One sees little evidence in the newspapers that that fact is hoisted in generally, especially when one reads of what is going on in the world of industrial relations. I should like to see the leaders in Government, and out of Government, constantly reminding the people that the road ahead will be hard and that if we do not work hard ourselves, we shall not get to where we want to go.

4.51 p.m.

LORD MORRISON OF LAMBETH

My Lords, the noble Lord who has just spoken speaks with considerable knowledge of Germany, especially of post-war Germany. I had the pleasure of meeting him there when he was Military Governor. I agree that friendship between France and Germany is a circumstance to be heartily welcomed. It is a good thing, especially in the light of history and of the series of wars in which these two countries engaged, just as it is a good thing that we should be good friends with France, in view of the series of wars in which we were engaged with France earlier on in our history.

I am bound to add—and I do not think the noble Lord, Lord Robertson of Oakridge, will violently disagree with me—that I cannot see the vital necessity of the treaty recently arrived at between France and Germany. It seems to me unnecessary. The relations between the two countries are good. Both are in NATO and in the European Economic Community, and for them to single themselves out as two countries among the Six seems to me to be open to the interpretation that they are rather separating themselves from the others. From that point of view, I wish it had not happened, and I should not be sorry if the Bundestag, the Lower House of the German Parliament, was not in a hurry to ratify this treaty. I cannot see that it is useful and I think that it is open to misinterpretation, though on the principle of good relations between France and Germany, it is to be welcomed.

This debate was opened by my noble friend Lord Williams of Barnburgh in an able speech, with some of which I did not wholly agree. It is well known that there are differences of opinion in the Labour Party about E.E.C. and there are differences of opinion in the Conservative Party about it as well. Indeed, it is not sharply a Party political issue, although it is difficult for these things not to be argued on a Party basis in the long run. I think the Foreign Secretary was unduly aggressive with regard to my noble friend Lord Williams of Barnburgh. I do not mind the Foreign Secretary's being aggressive on those occasions when it is open to him, as Secretary of State for Foreign Affairs, to be aggressive, because it is so often impossible for a Foreign Secretary to be as aggressive in speech as he would like to be. I rather welcomed the Foreign Secretary's action in landing out and knocking my noble friend about, though I do not think he was justified to the extent he went in knocking my noble friend about.

Say what you like, my noble friend was a great Minister of Agriculture. I have heard farmers say he was the greatest Minister of Agriculture we have ever had, and I think they are right. It is the case that prior to my noble friend, there were numerous Conservative Ministers of Agriculture, a number of whom were farmers. They were picked up, put in office, and put out—in fact, the political stage was pretty crowded with ex-Conservative Ministers of Agriculture—because they had not brought pleasure or confidence to the farming community, despite the fact that the farmers are predominantly Conservative—or they were. My noble friend Lord Williams of Barnburgh was a very good Minister of Agriculture. His Act of 1947 is a great Act. I know of his work very well, because he used to consult with me and I gave him a good deal of encouragement and support, so far as I could, in the Labour Government, in the implementation of his agricultural policy, and it would not do the Foreign Secretary any harm if he admitted that my noble friend was a very good Minister of Agriculture.

THE EARL OF HOME

My Lords, if I did not do it, may I do it now? Of course, he was a very good Minister of Agriculture. I said that the 1947 Act was a very good Act. What I did not like was the way he took the Motion and the use he made of it. That is what I was complaining of.

LORD MORRISON OF LAMBETH

My Lords, that is very generous on the part of the Foreign Secretary. I thank him very much, and I appreciate what he said about the Act of 1947. Not all farmers are Tories. There are a certain number of farmers on this side of the House and I am glad they are here. I used to go round with my noble friend and I have met many farmers. I met some farmers in Yorkshire who said that Tom Williams was the greatest Minister of Agriculture we had ever had. I said, "All right, boys, you will vote Labour at the next Election." "Oh, no", they said, "that is another matter." I replied, "What is the good of your praising Tom Williams as the greatest Minister of Agriculture we have had and then voting Tory, so that he cannot be Minister any more?" But they did not see the point. We have done very well with the agricultural workers, and a little with the farmers, but they are pretty slow-moving when it comes to switching politically. But I hope the time may come when we shall have far more farmers supporting the Labour Party.

If my noble friend takes a strong view about agriculture in relation to the Common Market, as does my noble Leader, who is also very much interested in the well-being of agriculture, I can understand it. I certainly would not hold it against them, nor can I argue with them about it, because I am nowhere near so expert on agricultural questions as they are. I was, and I remain, in principle a supporter of the Common Market. I believe in it for a number of reasons—first, because I am a Socialist. I believe that international co-operation is a good thing and that, if protective tariffs between countries can be abolished, even on a regional basis, that is a thing to be welcomed and encouraged. I do not take the view that it would be wrong to enter the Common Market because you do not like foreigners. I do not see how one can be a Socialist and at the same time not like foreigners in principle, though some people take that point of view. But the world is full of anomalies of one sort or another.

My second point is that protective tariffs, especially over a contiguous region, such as Western Europe, are a fetter upon trade, a fetter upon economic progress and economic well-being. I think that if those tariffs can be done away with, and there can be free trade between those countries, it is a good thing; just as it is a good thing in the United States of America, in view of the circumstances, that there are no tariffs between the fifty States there. I am sure that country would not be nearly as prosperous as it is if there were tariffs between them.

Thirdly, I think that economic wellbeing, a healthy economic basis, economic prosperity and progress is a good thing for Western Europe in the light of the foreign policy and military problems that it faces. I am a strong supporter of NATO, as is the Leader of the Opposition in your Lordships House—in fact, he had a hand in bringing it about. NATO is a good thing, and Europe would have been worse off if it had not existed. But if NATO is also based upon, in part at any rate, communities which are themselves economically prosperous, then the military strength of NATO will be stronger as a consequence. The late Mr. Stalin took the view, and enforced it with great ruthlessness and even brutality, that if Russia was to be a great Power she must be economically strong, especially in relation to her heavy industries. That is why he pursued such a policy. It is equally true that if Western Europe is to have adequate military strength, then Western Europe should have a sound economic basis. The reason why the Communists are opposed to the European Economic Community is that they wish Western Europe to be economically weak, just as They wish Western Europe to be militarily weak, as well.

So I am sorry that the negotiations were not successful. I do not wish to pronounce finally as to whether they could have been sufficiently successful to be satisfactory to the British Parliament and people, or to the British Commonwealth, or British agriculture; I think it would be premature to make a final judgment upon that point. You cannot judge of these things until the negotiations are completed; until the balance sheet is available and the arguments for and against are set out in black and white with great care and circumspection and a respect for fact. Therefore, I reserve judgment. I only say that, in principle, I was in favour of the Common Market, and, in principle, I am still in favour of it; but I reserve final judgment until such time may eventuate when negotiations are completed.

It looks is if the next General Election will return a Labour Government to office and to power, and it may well be that it will fall to a Labour Government to resume and complete these negotiations, if the Labour Party is minded so to do. The negotiations have broken down, and General de Gaulle must take the major personal responsibility for their breakdown. I think it was unkind of him; I think Britain deserved more appreciation from General de Gaulle and from France than we got in the course of these negotiations. But there it is, and it is no good our being permanently bitter about it or degenerating into an anti-French frame of mind; we are neighbours and we have to live together. The Five were loyal to the ideal that the British should join, and they remain so loyal; and I hope that in due course the Government of France will change its mind and will be with us in a desire for us to enter Europe, if that still remains the opinion of the country.

I think that perhaps our own Government made a mistake at the beginning, when they sought the authority of Parliament to enter into negotiations, in laying down minimum conditions of such a character and degree that they ought to have known they might not be fully able to be achieved: there must not be any disturbance of British agriculture; there must be full rights and protection for the Commonwealth; and the same for EFTA. You cannot start negotiations, any more than a sensible trade union leader can start negotiations, an the basis of laying down minimum conditions beforehand, for the essence of negotiation is that there must be give and take and some degree of elasticity. In fairness, I must say that I think the Labour Party also laid down two stiff minimum conditions for our entry, which, having been adhered to, almost led to the point where it was impossible for us to go into Europe unless those conditions were fully met; and it was not likely that they would be. So I think that both the great political Parties added to our difficulties by the undertakings into which they entered.

The Government really ought to have known better, because in fact (and this is a justifiable complaint of my noble Leader and the noble Lord, Lord Williams of Barnburgh) they have not lived up to the undertakings into which they entered when they first started negotiations. They have not properly observed the promises they made to British agriculture, to the Commonwealth or to EFTA: indeed, I do not think they could live up to them. But the answer to that is that they should not have made these firm and rather extravagant undertakings which they did at the beginning.

Whether we go into the Common Market or not, we face serious economic problems. I said in an earlier debate, and it was said with greater emphasis by the noble Viscount, Lord Chandos, that it would be a great mistake for us to think that going into the Common Market was an automatic solution of all Britain's economic problems; that if we went in we should face economic headaches and problems almost as great as would exist if we stayed out—though in my view, on the balance of advantage, it was right for us to be in. We should have faced increased competition, for Western European trade would have had a common tariff round the lot of them, and the result would be that we should have had to meet Continental competition on equal terms without any tariff protection, and, consequently, we should have had to buck ourselves up and improve our efficiency, our economic energy and enterprise; and that would have been nothing simple. On the other hand, being outside, we have the disadvantage that we have to get over that tariff wall in order to get into Europe on something like economic equality, and we are not on economic equality until we have passed the tariff wall.

Some British manufacturers have already decided to build factories in the Western Europe mainland, because of the fact that we are out of the Common Market, and they had decided even before they knew whether we were to be in or not. I saw one British manufacturer on television who looked quite cheerful about shifting part of his factory over to Europe. It made me a little sick, because I do not think he should have been so glad about it. It may have been inevitable that he should, but I do not see anything to be pleased about in shifting British factories and British employment on to the mainland of Europe because of the tariff. That is the other side of the picture which we now have to face: that we may be up against difficulties in that respect.

But for the time being we are now out. Just as we should have had to make ourselves economically and industrially as efficient as possible if we were in, it is no less necessary—indeed, if anything, is is more necessary—that we should make ourselves industrially efficient, progressive and lively now that we are out of the European Common Market, because it means that we have to try to be in a position of active and effective competition within Europe, notwithstanding the tariff around the Six which will be to some extent an impediment to British trade. Therefore, just as it would have been necessary to be lively if we were in, it is no less necessary, and perhaps a bit more necessary, that we should be lively now that we are out.

I should like to say to British industry on both sides (I wish we could avoid this phrase about "both sides" of industry, but we cannot) that the employers, management and the trade unions have to think about the well-being of our country. All of them must put their best foot forward to ensure the economic and industrial efficiency and progress of our country. This is no time for restrictive practices on either side of industry, whether it be management or trade unions. We want to get rid of it: we want public spirit. If we had not had public spirit in the war, when the nation was fighting for its life, we should have gone down in that war. We owe a lot to the fact that during the war the British people, of all classes, pulled their weight and gave of their best to ensure victory. That was a triumph of morale. Why cannot we have triumphs of morale in times of peace, as well as in times of war? Must we have the enemy's razor at our throats before we do our best? Or cannot we do our best, on the merits of the case, for the sake of our country, because it is necessary in all the circumstances?

My Lords, we need to win this battle of morale, and I want to put this point to Her Majesty's Government. As a whole they have been running—not entirely, but as a whole—a policy of laissez faire: of letting things drift, of standing aside from industrial progress, improvement and liveliness. I say that it is the duty of the Government to inspire, and to lead the nation in industrial vigour, progress and liveliness. The Government are not doing it. They are not doing enough public education on the economic problems with which we are faced. They are letting things drift too much.

Take this problem of unemployment in the North, and over-employment, if anything, in the South and in the Midlands. The sin of the Government here is the sin of laissez faire. They do not believe, and will not believe, that they can encourage industry to go to the North instead of swamping the South and Midlands to the extent that it is doing. It is really a wicked thing that the Government should be indifferent to that, because those Northern people are a fine people—they have great character. Our country owes a lot to them. So have my people in the South great character. But the people in the South have enough tolerance and sense to learn that it is not a good thing that we in the South-East and the Midlands should be over-industrialised, and that the North should be facing a slump and a tendency for growing unemployment.

I would not say that the Government are indifferent to this problem. I would not say they do not care tuppence about what happens to the North. But their philosophy is wrong. They instinctively believe that there is nothing effective they can do about it. Now they have appointed the noble Viscount, Lord Hailsham, as Minister for unemployment in the North. I think he was a foolish chap to undertake the job, but it is his funeral and not mine. I remember our late friend Jimmie Thomas, when, in the Labour Government of 1929–31, he was Minister for unemployment. It nearly killed him, politically and otherwise. It is not a fair burden to put upon one man, because inevitably a series of State Departments are involved in this matter. However, I wish the noble Viscount luck. Whether he will get it or not, I do not know.

The next thing is that we must do our best with the Commonwealth. If there can be consultation whereby the tariff barriers between ourselves and the other countries of the Commonwealth can be reduced (to expect them to be abolished is too much), I am in favour of it; and I hope that the Government will do their best to be persuasive and reasonable about it. I believe that the noble Lord, Lord Beaverbrook, in advocating Commonwealth Free Trade—formerly Empire Free Trade—was asking for the impossible; because I think that the other Commonwealth countries, with their young industries which they are determined to protect, are not likely to accept it. I think it was an unreal ideal which he had. But he was sincere about it and meant it, and I must say that he has stuck to his guns, even at the expense of conducting a persistent and vigorous campaign against the idea of the European Economic Community. But if we can do anything with the Commonwealth whereby trade can more easily flow freely between us and the Commonwealth countries, that is all to the better. The same applies as between us and the EFTA countries. If we can develop the ideas which were behind the establishment of EFTA, that will be a good thing, so long as it does not become an impediment to our joining later on the European Economic Community. So we must look after our own industry. We must look after our own exports, because unless we export we cannot effectively import—at least without becoming involved in recurrent balance-of-payments crises.

The Government must give information. They must look after the morale of the nation in industrial affairs and give to the people a pride in our country and its industrial achievements and progress. The Government must inspire a national drive for economic progress and efficiency. It must declare polite war against economic and industrial inefficiency, because upon the economic and industrial efficiency of our country depends not only our future for the purpose of getting a living, but also our future as a great Power in the world.

5.18 p.m.

LORD ECCLES

My Lords, it is a great pleasure to follow the noble Lord, Lord Morrison of Lambeth, because, like him, I am a supporter of the Common Market. I think that he will find the reasons for my support similar to those which he gave. I was much interested in his desire to recapture, if possible, some of the public spirit that we knew so well in the war. It is tempting to find some point of resemblance between the end of the Brussels negotiations and the crisis in the summer of 1940. When Western Europe was overrun and gave in, a great many people here felt their spirits rise at the prospect of being left alone to fight it out. Sacrifices were made, and great deeds done, beyond the expectation of ourselves or our enemies. Of course it is also true that the loss of so many Allies greatly increased the final cost of the war. Now, twenty years later, we are engaged in another great struggle, in a cold war to contain the ambitions of the Communists. We have suffered another sharp reverse in Europe; and again there is a sense of relief, irrational as I think it is. But it is there, and it offers an opportunity to call, and call successfully, as the noble Lord, Lord Morrison of Lambeth, also wished to do, for an extra effort. I think it is equally true that what happened in Brussels is going to damage our prospects in the cold war.

What has happened has been partly our own fault: we waited too long to take the Treaty of Rome seriously. But whether we had begun earlier or not to negotiate, it must now seem always to have been a matter of doubt whether the French Government would accept us in their Europe. A small acquaintance with history shows that all Governments are selfish, and French Governments more selfish than most; and I cannot help having a certain amount of sympathy with the Administration in Paris for wanting to get a bit of their own back for the various occasions in the past on which we have successfully opposed their desire to dominate Europe. But what is really depressing is that paying off old scores should have been done at such a tremendous cost to the co-ordination and strength of the Western World, which so badly needs to make a more intelligent use of its scattered resources.

My Lords, it stands out a mile how the economic power of the Free World is fragmented and diminished by nationalist policies, out-of-date rivalries, tariffs, quotas, subsidies, flag discrimination, and so on; and how the flow of new capital ought to be very much stronger than it is. Looking forward over the next 25 years, one wonders whether the hotch-potch of free nations, some old, some new, all more or less jealous, are going to prove a match for the thousand and more million Communists who live on one great land mass from the Iron Curtain to the China Sea and the Behring Strait. In numbers these Communists must increase very fast, because they have a very large number of young people in their population; and we have already seen that by keeping down consumption, and by investing largely in education and in capital programmes, they can achieve rates of growth in planned directions never before equalled. What all that costs them in personal freedom they do not reckon as important.

This economic challenge to the West builds up every year, but I suppose that the French Government are not unduly worried. They must be convinced that the Russians do not want to start a shooting war; and in that they may well be right. But they are wrong to conclude that therefore it does not matter how much the Western Allies dissipate their economic power; and all for the sake of some national or Continental sense of superiority. I do not think the conclusion that the French seem to have come to takes real account of the size of the threat that faces us. Certainly, if I were a Moscow Communist, I should not see the point of a shooting war: I should think it was a waste of effort. Why should they go to all that ruin and expense when they can win completely by the penetration of their goods, their propaganda and trained personnel? And when they see the Western leaders falling out among themselves, how much that must add to their confidence that final victory will be theirs without launching a single rocket!

This competition with the Communist system grows all the time. In such organisations as UNESCO I used to observe the representatives of Asia, Africa and Latin America watching and questioning, now the Communists, now the Western delegates, to discover which system of society promised them most help in raising their standards of life. They were not interested in our political philosophy, or in our culture, or in our religions. What they wanted to know about was our capacity to produce food and manufactures and universal education. At every meeting one felt that our half-capitalist half-Socialist methods of creating wealth were on trial and that with their success or failure would go our political and spiritual values.

That is why I regret so much the breakdown in the Brussels negotiations. I thought that by going into Europe we could work with the Six, and others, to find a large part of the answer to the regimented power of the Communists. But now the negotiations are dead; and the noble Lord, Lord Williams of Barn-burgh, at any rate, did not conceal the fact that he was very pleased to be here at this memorial service. When we have paid our respects to the corpse, what do we do next? I will, with your Lordships' indulgence, turn for a few moments to that question.

Failure means freedom—freedom to do things which we could not have done had we gone into the Community; and there are many temptations to abuse that freedom, to sit back and do nothing, to try to revive hoary old dreams and make fresh enemies. Her Majesty's Government are receiving advice of all sorts and kinds on what British policy should now be. I would submit to your Lordships, in the first place that there are no dramatic alternatives to the things that it would have been right to do here at home whether we got into the Common Market or not. That is not to agree with those who favour waiting, in a gentlemanly way, to see what may turn up in Europe. I suppose these people hope that some change in leadership will make it possible to resume negotiations and bring them to a successful conclusion. I doubt that. But, at any rate, if we now took that drab and complacent view we should almost certainly leave undone a great many things that badly need doing. Had we gone into Europe our industry and agriculture would have been re-shaped by the forces of a much larger home market, and that would have brought great benefits to us and to the Community as well.

I had not intended to talk about agriculture, but the noble Lord, Lord Williams of Barnburgh, devoted his whole speech to it. He might perhaps think, as was pointed out by the Foreign Secretary, that going into Europe would have been an opportunity to look again at the situation created by duty-free, quota-free, imports of food from so many suppliers with surpluses to sell, and to think once more whether possibly there was not a method by which, without increasing the unknown commitments to the Treasury, we could assure our farmers—of course, it would have meant managed marketing—of a very much more secure and long-term future from which to expand the output of British farming through efficiency. The policy we have now, which the noble Lord did not invent—it was invented entirely by our old friend the first Lord Hudson—

LORD WILLIAMS OF BARNBURGH

Who told you that?

LORD ECCLES

I was there at the time. The policy was the outcome of the agricultural policy in the war. But it is not a policy which it is possible to go on with for ever without putting a ceiling on the total production of British farmers, and that is a very depressing thing to do.

LORD WILLIAMS OF BARNBURGH

My Lords, the noble Lord has just made about the most contradictory contribution that I can possibly conceive. He suggests that our agricultural policy if we were in the Community would be this, that and the other, thinking in terms absolutely of no duties on food anywhere at any time, when the whole basis of the agricultural policy in the Community so far as it has been built up—and I am not complaining—is based on perhaps higher tariffs than we have ever dreamed of for food.

LORD ECCLES

I probably did not make myself clear, but I never suggested that if we went into the Community there would be no duties of any kind on food. I have a slight knowledge of the agricultural negotiations.

At any rate, I really came to your Lordships' House to talk about industry. The benefits that we have lost by not having this very large home market we must now by other means contrive to secure, because it is even more important, as the noble Lord, Lord Morrison of Lambeth, said, that we should remove all obstacles to growth; and we have to consider seriously whether there are not other patterns of trade that might suit us and our friends in EFTA and the Commonwealth and the United States. In my view what happened in Brussels is bound to force great changes in international commercial policy, compelling many nations outside Europe to plan and act on a scale much larger than they have hitherto contemplated. And perhaps, as we heard from the Foreign Secretary, these events will force a change in the Community's policy as well.

When all these reappraisals have been made it will be seen that Mr. Heath was negotiating as much in the interests of the Commonwealth and the United States as directly for the United Kingdom, and that the veto of the French President was as much a defeat for all of them as it has been for us. It is not to be expected, just because the French have chosen to block one line of advance, that so many and so powerful nations will be content to abandon their interest and their duty to rationalise and expand the trade of the rest of the free world. It seems to me that a new initiative in policy for trade and aid is now the absolute logic of events, and that that initiative will have to be on a considerably wider scale than a round of haggling in GATT. I regret to say that I do not have much confidence that negotiations in GATT will go anything like to the root of what we now want to do. More fundamental thinking is required and a great deal of consultation with our friends. If I may say so with respect, it is a matter of great satisfaction that the Prime Minister and the Foreign Minister of Sweden should be in London now, because their advice will be very valuable.

Inside Great Britain, the problem is how to use to the full the traditional rise in spirits that always follows a reverse on the continent of Europe. We have to put our own house in better order by removing the obstacles to growth. And here we are fortunate because we have just had the report of the N.E.D.C., which is bound to be of great help to the Government. We also have to show ourselves to be patient, understanding and unselfish in our dealings abroad. I have to say, in answer to a suggestion thrown out by the noble Lord, Lord Robertson of Oakridge, that we cannot either take a short cut to efficiency or win respect abroad by devaluing the pound. Devaluation is a cruel act of the last resort which is justifiable only when currency reserves are almost exhausted, export prices are out of line and when the crisis is so severe that it cannot be solved in any more civilised manner.

Let us look at the present situation. Our currency reserves are, without doubt, uncomfortably small, but measures to buttress them by international action have recently been improved and could be improved still more if Mr. Maudling can get his ideas accepted. Our export prices are not out of line, and no crisis exists to justify the damage which devaluation would do to fixed incomes and to overseas holders of sterling, among whom some of the more vulnerable are our good friends in the Commonwealth. The advocates of devalution, or of a floating rate, which of course means a sinking rate, are really telling us that we have neither the courage nor the maturity to combine big plans for growth with a sensible incomes policy, that we have not the will to get rid of restrictive practices, nor the wits or the training to produce and sell enough exports abroad without the temporary intoxication of a depreciated pound. To take that view is to take a very low view of British character in adversity, and it is one I am sure your Lordships will not share.

There is another piece of advice that is being given us in strange quarters, and that is to clap on import controls as a protection against the inflationary effects of rapid expansion. We have had experience of import controls in peace time. The Labour Party kept them on far too long after the war, with most damaging effect on the vigour and growth of the economy. In any case, there is a fallacy behind this policy. If a man is prevented from importing something for which he has the money to pay, he does not put the money in a drawer; he goes into the home market, he buys the next best thing, he forces up home prices or takes away goods that might have been exported, and very soon a policy of import controls is self-defeating. In any case, nobody has ever been able to produce a list of the imports and the quantities which would have to be prohibited and would add up to a substantial sum of money and yet not frustrate growth or invite damaging retaliation from abroad. Over and over again in another place when Mr. Harold Wilson was speaking as Shadow Chancellor of the Exchequer we challenged him to produce such a list. He never could. Nor could anybody else. Again, if imports are cut, how could foreign travel escape? What a good example that would be at a time when we all want the peoples of the world to get to know each other better! Devaluation and import controls must be seen for what they really are, unworthy substitutes for taking a number of tough but honest and bracing measures of the nature of which we are all perfectly well aware.

Is it really too much to hope that an attack upon restrictive practices would now succeed? I should like to see published the details of restrictive practices, about which so many of us know bits and pieces, and then those who cling to them challenged to defend them in public. I fancy the trade unions would be surprised at how few young workers would support the old principle of protecting the job where it costs a great deal in industrial efficiency. I think those young people also have no tender feelings for the out-of-date managements who skimp their technical education and give the good jobs to those with influence rather than to those with qualifications. The time is ripe to attack all these restrictions, and that attack would be all the more likely to succeed if, at the same time, bold plans were announced for promoting growth through much higher investment in the basic services. When I suggest that the time is ripe, what I mean is that the mood to act with vigour is a dividend that we might get from the upset in Brussels.

At the risk of repeating what I ventured to say to your Lordships in the debate on unemployment, I would say that I am quite convinced that the Government would do well to tell the people in the plainest terms just what additional investments in houses, schools, universities, roads, factories, power stations and so on, could be put in hand without danger to the pound, but provided that some restraint in incomes and current consumption were accepted. I hope that Ministers will not try to run, at one and the same time, a short-term policy of indiscriminate releases of purchasing power, and a long-term policy of more selective investment, if they do that, they will blur their purpose and will invite not enthusiasm but inflation.

There are many choices to be made. To give one example, is it better to make cosmetics and "pop" records cheaper and leave undoubtedly many millions in the pockets of the teenagers; or is it better to use that money to give the same young people a better education? Those are the sort of choices which the Government must make. On their decisions will depend whether the morale to which the noble Lord, Lord Morrison of Lambeth, referred, is as good as we all want it to be. I was most encouraged when my noble friend the Leader of the House told us the other day that he would press for more investment in the basic services in the North-East. That is the right policy for the whole country. But it will have to be paid for. It means more savings, and therefore some restraint and sense of responsibility by all of us. It was most difficult to carry that sort of argument to the people a year ago, as Mr. Selwyn Lloyd found out to his cost. But things have changed. The negotiations in Brussels are dead, and we have an opportunity now. One might perhaps repeat the words of one noble Lord in Shakespeare's Richard II: … even through the hollow eyes of death I spy life peering".

5.45 p.m.

LORD SHEPHERD

My Lords, the noble Lord, Lord Eccles, has again made a well-reasoned speech, although on this occasion, at least from the point of view of this side of the House, it was slightly more controversial than his previous one. I has been said that when the Common Market talks broke down we should face the situation as we did in 1940, in the spirit of Dunkirk. Perhaps that would be exaggerating the position of this country. But undoubtedly in industry and in all phases of our financial life, a spirit of Dunkirk, a determinatoin to go back and fight, would be extremely welcome. In fact, a New Zealand friend who has recently visited various industries in this country told me that he was pleased to see, not only among the directors of companies but even among the workers, a real determination to make a go, to make it possible for this country to expand. I believe that there is this spirit within the country. Perhaps it cannot be expressed by the ordinary working man, but I believe it to be there.

Patriotism is a thing that this country has always been known for. We appear to act at our best in difficult circumstances, and I would have hoped that in the present circumstance we would have had more leadership from Her Majesty's Government. It may well be that the Government had put their utmost confidence in our entry into the Common Market, and that they had not considered the alternatives; that may be the case. But if you are responsible in Government, or if you are responsible as a director of a company entering into negotiations, one major factor must be that, if you should fail in your deal or negotiations, at least you have an alternative plan available.

Two or three times this afternoon it has been said that we should continue to try again to open negotiations to enter the Common Market. I would suggest to the House that for at least a number of years that would not be wise. I wonder whether the Government have appreciated what may have been the cost to industry, to finance, not only in this country but also in the Commonwealth, because of the long-drawn-out negotiations in Brussels. I would draw the attention of the Government to their own balance-of-payments figures issued in October, 1962. They said that our own trade with the Commonwealth continued to decline. In fact, it had declined in the last eighteen months to the tune of £66 million. Our exports and re-exports in January to June, 1961, were £741 million; in January to June. 1962, they were £675 million.

As one who is in the trade of exports to the Commonwealth, I speak with some experience when I say that while those negotiations were going on, and in view of the exhortations that were being made by Her Majesty's Government, many of our industries and many of our businesses turned their minds to exploring the possibilities of the Common Market, and did not in fact carry out the prosecution of their trade as they did previously in the Commonwealth. If it is said that our trade with the Commonwealth declined due to a retraction of Commonwealth trade, the figures are indeed interesting. During the period 1959 to 1961 the Commonwealth developed their purchases to the tune of £490 million; they increased their trade with Western Europe by £156 million, with North America by £216 million, and with the non-sterling area by £121 million. Our share of that was a mere £48 million. I see the invoices of merchandise going from Europe to Australia and New Zealand as I do those in relation to business from this country. The significant thing is that the Germans, the French and other European countries ship much the same articles as we do.

It is, I fear, a fact that we ourselves, particularly in the last eighteen months, in looking to Europe, have rather turned our backs on the Commonwealth and South America. We cannot get into Europe, and therefore we have to go back and recapture the share of the trade which we had in the Commonwealth, in EFTA and also in South America—though I realise that that is a very difficult area with which to trade. I think the House and the country should face up to the fact that Government policy aimed at stimulating our stagnant production is taking a very grave risk. As the noble Lord, Lord Eccles, has warned us, we should not proceed too fast. During 1962 this country incurred a deficit of £318 million in regard to visible trade, £302 million of which was incurred in the last six months of 1962. I wonder what the figures for the first six months of 1963 will show? It may be that the "invisibles"—on which we have for so long depended to balance our payments position—may help us out, but we have very little margin to play with.

I would not go so far as to suggest that we should consider import controls, which would be difficult to operate. But we must face the fact that if we are going to release purchasing power in this country, and if we are to face the very heavy military expenditure which this Government have now undertaken in regard to Polaris and other military equipment in the United States, we must either develop our exports well above that recommended by "Neddy", a mere 5 per cent., or somehow budget on the basis of what we can import. I believe that if we could spread out our military commitments, if we could develop our own trade so as to make it really competitive, and if we could also develop our exports we should not need to consider import control. This whole matter will depend on our ability to develop exports. I agree entirely with the noble Lord, Lord Eccles, that we should turn our backs on the question of devaluation. In the past it has afforded only a short-term advantage during critical periods. We should also have to take account of such a course upon Commonwealth countries in the sterling area, particularly those countries producing primary products whose prices are very low indeed. Devaluation at the present moment would have a savage effect on many of our Commonwealth friends.

The Government could do a number of things to help exports. First, we have to get ourselves into the spirit of exports. This involves a very difficult decision to be made by a board of directors, particularly in those efficient firms supported by the big chain stores which could well do more in the export market. At home they have a distributive and retail organisation in which there are fixed prices, which provide comfortable margins to retailers and manufacturers. I would agree with Lord Eccles that we must deal with this matter of fixed prices. If we are to have competition, let there be full competition. As "Neddy" so clearly says in its Report, if home prices can be brought down to the export price, then the manufacturers will look to the export markets for increased turnover. At the present time the home market has been so comfortable that the efficient firms have had little need to look to the export markets to keep their machines going.

However, I do not think that this in itself will be sufficient. Something will have to be done about incentives. I remember discussing this point with the noble Viscount, Lord Mills, on a previous occasion, when I was opposed to it. But I believe that circumstances have changed considerably since then. I would suggest to the Government that as soon as possible—perhaps in the Budget—they should put company taxes and individual taxes on a different basis. This would allow considerable flexibility in giving inducement and incentive to company executives who have to go out into the byways of the world markets to secure business—and they do need an incentive. In this way tax concessions could be given to executives in the higher income bracket, without necessarily having to make the same concessions to companies. Having adopted that system, the Government could then go a stage further and levy a different rate of tax according to the proportion in which a company indulged in export markets. Whilst the home and export prices may well be in line the overheads are not the same, because to operate in an export market involves infinitely more expense than operating at home, having regard to overseas travel, overseas agencies, and many other things.

Would the Government, in order to help the smaller companies who perhaps are setting out for the first time in the export market, consider treating overseas travel of executives or directors, which has been approved by a board, in some way similar to capital equipment, whereby the depreciation, or the write-down of that depreciation, is spread over a number of years? The expenditure would not then, as at present, have to be included for tax purposes in the accounts for the year in which the travel was undertaken. If a man goes to Australia, and has five or six weeks' extensive traveling—and, with it, entertainment—it may involve the company concerned in the expenditure of £2,000 to £3,000. This is a very considerable sum to a company wishing to set out into the export market. I think that, if these small gestures to exporters could be adopted, and with leadership, more companies would be persuaded to go into the export business.

Here I would say to the Government that I wish they would stop saying that our future in exports depends upon sophisticated goods, such as electronic equipment and computers. The export trade of this country will depend to some extent on those, but I believe that it will depend in the main on the general merchandise that we produce. I can give two examples. Recently when I returned from Australia I had some samples of plastics that were being shipped from Japan to Australia. Those I showed to a leading firm in this country. I gave them the price, and I was very surprised to find that they were able to get very close to the price—sufficiently close, indeed, for my Australian friends to place their first order, which was in the region of £40,000. Here was an example of the will of a British manufacturer to get into the Australian market.

I could quote another example of a textile firm—one of those which have suffered, perhaps, more than any other of our industries in the export trade. This firm was determined to remain in Malaya, and it created the qualities of cloth which the market required. It was able, by a sacrifice, to meet the price. It maintained its turnover at £100,000 and has done so since 1950, at least. My Lords, those are two examples of companies which were not prepared to be talked out of the export market. They went in and were able to achieve what they wanted. Therefore I hope that the Government will stress the fact that if you are efficient, no matter what you produce, and if it is an article that is bought in any of the Commonwealth or overseas markets, you can trade.

There is much that could be said. I should have loved to cross swords with my noble friend Lord Morrison of Lambeth on the question of the Socialist approach to the Common Market. As one who looks on the Common Market not necessarily from British eyes, but from the viewpoint of the Commonwealth, I cannot help saying that it appears to me to be rather a rich cartel of nations, which will, perhaps one day, be outward-looking. But since they have treated our application as they have done, there does not seem much hope that in the end they will prove outward-looking, so far as the countries of Africa, Asia, Australia or New Zealand are concerned. I believe that, if there were to be a trading group, it should not be with the narrow European concept. I would have accepted, I would have supported, the Atlantic Alliance, into which would have been brought the United States and Canada, because I believe that it would then have proved outward-looking due to its diversification.

My Lords, I personally am not sorry that we are not going into the Common Market. I believe that we have a great chance here. We have had some of the wool pulled away from our eyes. I hope that we shall foster the spirit of Dunkirk. We are not alone. We were not alone at Dunkirk. There is a lot of good will towards us in the Commonwealth, and there is a lot of good will in many other countries. Many would wish to trade with us if we were prepared to trade with them. I believe that if the Government will create the conditions, and if management and workers are determined to make this country great, nothing in Europe will prevent us. I believe that the future is ours.

6.6 p.m.

LORD GLADWYN

My Lords, in view of the very large number of speakers to-night I have said that I will speak for only a very few minutes, so my contribution to what I am afraid has been aptly referred to as a memorial service will take the form of a series of unsupported assertions which may nevertheless commend themselves to your Lordships—or some of you. The first point I would make is that I think it must be obvious to all reasonable people that the Government were quite right to apply for membership of the E.E.C. in August, 1951, and thereafter to try to negotiate their way in. Nobody, I think, has disputed that to-day in this House; I hardly think it can be disputed. Just think what would have happened if they had not done this! Just think of the flood of legitimate criticism to which they would have been subjected by practically everybody in all Parties!

Nor can anybody say, I think, that the eighteen-months-long negotiations were not extremely valuable, at least in that they disentangled the real issues and prepared the ground on which any future agreement must inevitably rest. I think that can hardly be disputed. No fair-minded person, either, can further assert that it was the Government's fault that the negotiations broke down. They broke down because General de Gaulle thought that they were going to succeed; he did not want the United Kingdom to come in now, for purely political reasons. All this, I think is common ground.

Now it is perhaps arguable that if the political nettle had been seized earlier in the negotiations, success might have resulted. A noble Lord made that suggestion earlier in the debate, but I am afraid I have forgotten who it was. But for this argument to be sustained, it would be necessary to know exactly what happened in the many secret talks between the Prime Minister and General de Gaulle. Since we do not, and we cannot, know the full details of these conversations, we cannot, I think, legitimately criticise the Government under this heading, either. All we do know is that, rightly or wrongly, General de Gaulle apparently believes that the Bahamas Agreement is not consonant with the entry of this country into the European Economic Community.

Now it may be that that was just an excuse on the General's part, and that he was determined to prevent our entry into the Community whatever we did. Frankly, I doubt this. I think that even now, if he thought we really favoured a political and defence machine in Europe which could function, he might even reverse, gradually perhaps, his veto. But if the Brussels negotiations were ever reopened—and I imagine all noble Lords will agree that in practice they cannot be reopened until our next General Election in this country is over—I think it would not only be General de Gaulle who would continue to prove a very tough economic bargainer: it would be the representative of any French Government which might conceivably have taken the place of the Government of General de Gaulle.

Meanwhile, I think General de Gaulle will try to get on with the organisation of Europe on his own plan—that is to say, on the sole effective basis of the Franco-German Treaty; and though we cannot object, as I think the noble Lord, Lord Robertson of Oakridge, said, nor do we object, to the conclusion of this Treaty as such (we are all for friendship between these two great nations, who have quarrelled so often), I think we must nevertheless admit that if Europe is really going to be organised on this basis it is going to be on the basis of a strong appeal to nationalist and indeed, I am afraid, to anti-British feelings. That is the danger. Therefore, it will, I think, be a horribly dangerous experiment. It may even result—and we must admit this—in the break-up of the Community, and even, perhaps, in the breakup of the Western Alliance.

Nevertheless, it would obviously be wrong for us now to work consciously to disrupt the progress and the development of the Community itself, for, after all, if the E.E.C. broke up, there might well be other dangers for the Alliance. What we should do in the first place is to go on trying to revive our economy by all the ingenious means suggested by the noble Lord, Lord Shepherd, the noble Lord, Lord Eccles, and others, including, if you like (and I think that probably it is very necessary, so far as it can be appealed to), an appeal to something like the Dunkirk spirit—"We are up against the world, and we must show them where they get off"—which would be very healthy; including, also, doing everything we possibly can to stimulate our exports. But, in addition—and here I am not sure I am on the side of the noble Lord, Lord Shepherd—what I think we should do—collectively, I mean—is to go on saying that the people of this country still feel that the best hope for the future is the entry of Great Britain into the European Economic Community on the broad terms which, as will be seen from the document which the Foreign Secretary quoted just now, seemed attainable in Brussels a month or two ago—namely, terms enabling Commonwealth trade and trade with the rest of the world to be satisfactorily developed at the same time as our entry is organised into the Community itself.

Furthermore—and this, I think, should be the other side of our long-term policy—we should make clear our desire to come into a European political and defence Community that makes sense; that is to say, one comprising a small and a workable council, acting by some form of majority vote and, in the absence of disarmament, with a European deterrent, however large or small it may be, at its disposal, the whole firmly within the framework of the Western Alliance. Here, I agree with the noble Lord, Lord Grantchester, that we should, if possible, between now and then, accept no long-term defence commitments which would make it impossible one day to attain this European end.

Such objectives as I have been describing are the objectives for which, in any case, the small organisations over which I have the honour to preside will continue to press. I believe that, as the dangers of the United Kingdom's exclusion from Europe become more and more apparent bath here and on the Continent, and as the extreme difficulties of organising any so-called multilateral NATO deterrent which is anything more than a snare and a delusion become increasingly evident, so the desirability of relaunching the great European conception on new lines and under better auspices will once again present itself, and we shall eventually achieve that unified, democratic, confident and outward-looking Europe which is still the best hope of this country and, indeed, the hope of all mankind.

6.15 p.m.

LORD BALFOUR OF INCHRYE

My Lords, I cannot agree with the description of the noble Lord, Lord Eccles, supported by the noble Lord, Lord Gladwyn, that this debate is necessarily akin to a memorial service. A memorial service is always a sad occasion. To some, at any rate, this is a more joyous occasion, in that we see propects of entering into a new and fuller life.

LORD GLADWYN

If I may interrupt the noble Lord, I said it certainly was a memorial service; but it is clearly a joyous occasion for the noble Lord.

LORD BALFOUR OF INCHRYE

No: a joyous occasion in that I think we shall have greater opportunities.

My Lords, I think the theme of this debate, illuminated as it has been by the speech of my noble friend the Foreign Secretary, has been, "Brussels is dead—long live opportunity and triumph!" Because from all sides of the House your Lordships have been saying that this is an opportunity for rethinking and for a re-dedication. By all means let us agree to go forward with, as the Foreign Secretary said, no post-mortem, whatever our part may have been, because we must truly combine for the future. But I think we should be clear on one thing. Let those who are most disappointed, the most ardent supporters of Britain's entry into the Common Market, even if they do, quite naturally, feel disappointed, and even resentful, have no thoughts or reservations that at some future time we can pick up the negotiations where they were left off and start with them again. Because if that thought is allowed to enter the minds of any of us we shall continue to find—as has been the fact for the last eighteen months—that our political and economic thinking is dominated by Europe. While, of course, one has no thoughts of severance from Europe, I am convinced that looking back over one's shoulder, with regrets at opportunities that might have been taken, will only revive stagnation and uncertainty. That is why I take such issue with the noble Lord, Lord Gladwyn, who I think desires to continue to encourage hopes that we shall be able to pick up the negotiations where they were left off (I presume he means where they were left off) and succeed where we have just failed.

LORD GLADWYN

If the noble Lord will allow me to intervene for a moment, I should certainly say that if negotiations are resumed (and I hope indeed that one day they will be resumed, though it may not be for a year or two), it can be only on the broad basis of the agreement which was nearly reached at Brussels and if that broad basis is not acceptable to us, then surely we shall not be able to resume negotiations at all.

LORD BALFOUR OF INCHRYE

thank the noble Lord. That is where I take issue with him. I feel it would be a great mistake if we were to let our minds be constantly diverted from our present and future tasks by looking over our shoulders all the time, hoping that we can job backwards to a position which we have just lost.

The Foreign Secretary's plea for looking forward was supported by the point he made, that no-one will ever really know whether the negotiations would or would not have succeeded. I took the point; but I would say, with respect—and I am glad that, for my next remarks, the Foreign Secretary is not here—that the point would be more acceptable if some of his colleagues in the Government would cease talking in their speeches as if everything had been decided except for the wickedness of General de Gaulle, because that is not in accord with what the Foreign Secretary has been telling us today. The Foreign Secretary said: "No more long negotiations"—and I am sure that we agree with him. But let us take one more resolve: that we shall never again see British Ministers put in the undignified position in which the Lord Privy Seal (who conducted these negotiations with great courage and thoroughness) was put. He, and through him the British nation, was put in a most undignified position—waiting on the doorstep to be allowed admission into the rooms. It is, as noble Lords have said, time for new measures, and the cut is clear.

But apparently the Government, from the answers given to two questions I put yesterday, still hold firmly to their trade policies of non-discriminatory trade on an international multilateral basis. This policy has not stopped a series of balance-of-payments crises under several Chancellors of the Exchequer during the past few years. Nor has that policy succeeded in any way in insulating us from the immediate and rapid effects of a fall in world trade. So to-day we see figures of unemployment which have distressed noble Lords on every side of the House. I was encouraged, however, to see the first glimmerings of a breakthrough from that passionate adherence to international multilaterialism in the speech of the Foreign Secretary, when he said that if the "Kennedy round" does not fulfil its aims and objects then much re-thinking on trade policies will have to be done by all countries. My comment is: must we wait for this?

The theme of many of your Lordships speeches to-day, on both sides of the House, has been Commonwealth, EFTA, and then, perhaps, an approach to the Six on a far wider and bolder basis than before. I listened with great interest to the speech of the noble Lord, Lord Eccles. He said that big plans were needed for growth. He had little faith in future developments from the forthcoming GATT meeting. He spoke of the need for patience, for selling ourselves abroad: but after that, I thought if I may say so the speech rather fell away, because the noble Lord then recounted a most formidable list of nothing new at all. These were desirable generalities to which we all subscribed. He reminded me of a horse which comes to a big jump; looks at it, does not like it, turns away and goes back along the well-tried and well trodden paths.

My Lords, my final point is that everyone agrees with the Foreign Secretary's main point—to be enthusiastic and to be efficient, in or out of the Common Market. It is the prime need, and it is the Government's task to lead. My only reservation is this. Can those who have sacrificed so much, who have staked so much, who have believed so firmly in the policy of Britain's entry into the Common Market, be the men to inspire and guide in Government policies in other directions? Will not their bitter disappointments involve them emotionally, so that one would be inclined to ask whether their great abilities would not be better directed in other channels of Government activity, rather than that they should be expected to do an about-turn and forget that which meant so much to them? That is the question that I put, with all humility; and naturally I do not expect any answer from the noble Earl who is going to reply, because that is a matter on which one Minister could not comment. It is, if I may say so, essentially a matter that a private Member is entitled to put forward. This is a time of great opportunity. There are many speakers, so I will curtail any remarks I might have made about the fiscal opportunities that the Commonwealth gives this country; but they are there for us all to see if we read the past trade figures in Europe and in the Commonwealth. I believe that the hope lies in Britain, the Commonwealth and EFTA making a combination which will be an unbeatable one as regards successful trading in the world.

6.28 p.m.

LORD WALSTON

My Lords, the noble Lord who has just sat down posed a very pertinent question to the Government which I very much hope that, even if the noble Earl, Lord Dundee, is not in a position to answer, others will do so. I hope the noble Lord did not direct it simply to those individual Ministers closely connected with the negotiations for the Common Market, but that it was directed towards the whole of the Government whose entire policy was identified with the Common Market. It is a question I should like to see put to them from the country as a whole.

The noble Lord, Lord Balfour of Inchrye, and other noble Lords made considerable mention of the Commonwealth and its position now that we are no longer in a position to enter the Common Market. That is not surprising because a great deal of the discussions which went on in the preceding months was concerned with the Commonwealth. Those of us who, like myself, hoped to see us enter the Common Market were extremely concerned (and took pains to say so) that the interests of the Commonwealth must be safeguarded. Those opposed to our entry made one of their main planks for opposition the fact that the Commonwealth would be abandoned. Both sides are now presented with a situation where we are not likely to enter the Common Market for some time to come; but both sides—those who wished us to enter, provided we could safeguard the Commonwealth interests, and those against our entry because we could not safeguard the Commonwealth—are confronted with this fact.

Now we have both committed ourselves to safeguard the Commonwealth and to strengthen and increase the ties with the Commonwealth, what do we propose to do about it? That is a very specific question which inevitably arises out of this particular situation. The noble Lord, Lord Shepherd, gave in his extremely interesting speech some useful and valuable figures concerning the decline of Commonwealth trade that clearly have significance in this particular context.

Earlier, my noble friend Lord Williams of Barnburgh explained in his inimitable way what I hope and imagine most of us already appreciate, the need for the farmers of this country to have certain things, in particular to have security, remunerative prices and guaranteed markets—in other words, the guaranteed prices of the 1947 Agriculture Act. Whether, in fact, the ideas of that Act first arose in the brain of the late Lord Hudson or in the brain of my noble friend, or in a combination of their brains and other people's, I do not think many people will deny that it was under my noble friend's Ministership that such principles were put into force for the first time in the peace-time history of this country. That is what British farmers require, and it is not surprising that farmers overseas require the same things, even farmers in all parts of the Commonwealth. If we are going to fulfil our pledges to the Commonwealth, we must take into account this overriding need of the majority of people living in the Commonwealth. The Foreign Secretary said: Much of The health and wealth of this country depends upon keeping a sturdy rural population". That, of course, is true. Do not let us forget that 75 per cent., even 80 per cent., of the population of the countries of the Commonwealth are rural, and if we are to keep them sturdy, they must have a fair amount of wealth. Therefore, as the largest buyer of Commonwealth produce and as the country with the greatest responsibility towards the Commonwealth, clearly we have a large part to play.

It is no good simply relying on the existing systems of Commonwealth preference and the rest, which have not stood the strain too well. They have not led to prosperity throughout the Commonwealth and to a strengthening of the ties of Commonwealth. In fact, they have led to the reverse. We must look elsewhere, as the noble Lord, Lord Eccles, suggested in talking of our own domestic agricultural policy, to a new form of commercial association with the Commonwealth, if we are to fulfil what in fact are pledges, albeit unwritten, to the members of the Commonwealth. I suggest that the way in which this can be done is by some form, depending on the commodity, of long-term purchasing agreements. We may call them commodity agreements, though there is considerable difference of opinion about what "a commodity agreement" means. I do not mean an association of producers of a certain commodity, such as the association of coffee producers which is taking place whereby they can agree among themselves that they will not sell below a certain price. Possibly that has some value, if nothing better can be thought out, but for us, as the main purchasers, it is not the type of agreement into which we should enter. Our agreement should be much more specific, along the lines of the existing Commonwealth Sugar Agreement.

This is not in any way an airy-fairy theoretical idea. It has been proved to work and, with your Lordships' permission, I will give some figures which show just what happens under such a system. Before I do so, I would give some figures of a commodity, which affects certain areas of the Commonwealth closely, which is not subject to any such agreement and concerning which the free play of economic forces has full power. That commodity is cocoa, an extremely important one in many parts of the Commonwealth and, in particular, in West Africa. Over the past ten years, the price of cocoa has fluctuated to an extraordinary extent. It reached its highest in 1954, with a price of 562s. 6d. per ton—£28, let us call it. Three years later, it was at its lowest, with a price of 178s. 9d.—in other words, £9 compared with £28, a fluctuation in three years of over 300 per cent. During that time the crop also fluctuated. There was not a particularly large crop when price was low and vice versa.

If we take Ghana as an example we find that in 1954 its gross income from cocoa amounted to £5.7 million and in 1957 it had dropped to £2.6 million. I ask your Lordships to consider the effect upon a developing country, which one year finds itself with an income of over £5 million and three years later finds itself with an income of not very much more than one-third of that. How can it plan, develop its own resources, build its own railways, roads, schools and hospitals? And how can the actual producers of cocoa, even though they are buffered to some extent by equalisation payments inside their own economy, plan in any efficient way, improve their efficiency, adopt new methods and pay higher wages? It is manifestly impossible.

Now let us turn to another commodity, sugar, regarding which the Commonwealth Sugar Agreement is in operation, and, to make the comparison somewhat similar, let us restrict our view to the area of the West Indies. There, in the last five years, from 1958 to 1963, the prices varied, it is true, but only within the range of £37 to £41 per ton, a variation of approximately 10 per cent.; whereas, during the same period, the world prices on the free market varied from between £16 to £50 a ton, a variation of approximately 300 per cent. Again, just as we looked at Ghana, let us look at Barbados, where sugar is virtually the sole export—at any rate, by far the most important. The total production of sugar sold for export is, in round figures, 150,000 tons a year and the range of the total national income from sugar is between £5½ and £6¼ million, a perfectly fair and reasonable range, enabling the country to plan in the way we should like to see members of the Commonwealth and other underdeveloped countries planning their general evolution. Had Barbados not been the beneficiary of the Commonwealth Sugar Agreement but subjected to the wild fluctuations of world prices, its national income would have varied from something under £2½ million to something over £7½ million. Its total income over the period would not necessarily have been significantly different, but its year to year variation would have been of the order of 300 per cent.

I suggest to your Lordships that, if we are in any way sincere and serious in our desire to do something to help the Commonwealth, as we appeared to be when making arguments for bargaining purposes about the Common Market, we have here a clear blueprint of how this can be done. I do not say that we can follow explicitly every single section of the Commonwealth Sugar Agreement. Clearly it depends on the elasticity of demand, the variation in the time it takes for Drops to mature and the harvest yield, but we have that blueprint which we can follow, and which we must follow if we really do mean to do something for the Commonwealth, let alone for the underdeveloped countries in other parts of the world, and not only the underdeveloped countries, but also countries like New Zealand, which, after all, is not in so very different a case in its dependence upon this country to take its main exports.

If we wish to see that happening, we can no longer simply say: "All right. We will give the Commonwealth a little Commonwealth preference here and there, we will dole them out a little assistance in one form or another, but otherwise we shall go on as we were." We know now, as the noble Lord, Lord Eccles, said, in connection with agriculture, the new look towards this problem of how to deal with the primary producer in the Commonwealth; and I sincerely hope the valuable and good lessons we have learned from the Commonwealth Sugar Agreement will be followed, not only for economic reasons but for the important social and welfare reasons as well.

6.41 p.m.

THE EARL OF PERTH

My Lords, I know that there are many speakers after me, and I will be brief. I agree with many noble Lords that this debate should not be thought of as a memorial service. At the same time, I profoundly disagree with the noble Lord, Lord Balfour of Inchrye, in looking at it as a cause for rejoicing. To me, the end of the Brussels talks is a serious economic and political setback for this country, for Europe, for the Commonwealth and, indeed, for the Western world. We and most of the other countries of Europe were seeking the means of getting together, particularly on a political and economic basis, which would have buried the rivalries and misunderstandings of many centuries. Something like that must involve long negotiations, and eighteen months was no long time for such negotiations. But this high purpose, the unity of Europe, has been shattered, and we are back in the tragic days of power politics in Europe. If proof of that were needed, I think it would be shown by the action of General de Gaulle immediately after the breakdown of the talks, when he, without consulting any of his colleagues in the Six, asked Denmark whether she would join with him. That, surely, is old-fashioned power politics and not in the spirit of to-day. I think it reveals a serious situation.

I would, first of all, touch on what I consider should be done on the economic front. I do this because if you have not a strong home economy, then your chance of having any real influence in the political world is very small. I agree with the noble Lord, Lord Morrison of Lambeth, and others, that the first and most important thing for us is to be efficient at home. One of our great boasts has always been that we are a great industrial nation; and this is true; but I suspect that of the great industrial nations our tariffs on manufactured goods coming into this country are far higher than anyone else's, and that is a situation of which we cannot be proud. Therefore, the first thing we have to do to get efficiency is to slash our tariffs. I suggest that we might do this in the "Kennedy round", or perhaps we can do it in bilateral arrangements with Commonwealth or other countries. But that we do it is, I am sure, essential.

In doing this, there is something else that we must do at the same time—namely, give every encouragement to our exporters. Various noble Lords have given some indication of how this might be done. I would only say that if, in giving encouragement to our exporters, somebody in GATT challenges our action, we should say to them: "What is the purpose of GATT? GATT is to increase trade. We are doing just that. We have slashed our tariffs and for the time being we have to take these measures to live and to increase our exports." I should hope that it would not come to this, because our purpose in doing so would be obvious. In this I feel very much with the noble Lord, Lord Eccles, and the noble Lord, Lord Walston, that particular arrangements might be possible, either with the Commonwealth or on particular commodities to help us forward.

One point was made by the noble Lord, Lord Eccles, that I wish to echo, and that was when he spoke of the question of devaluation. To me, devaluation is no cure of our economic ills; it is indeed the exact opposite. Devaluation is a palliative, occasionally necessary when the patient is very ill; but it is no fundamental or basic help towards efficiency. If you have the temporary advantage of devaluation, then industry and the workers for the time being, as it were, are sheltered from the need to be efficient. One achieves nothing by it except suffering, and I would say it is almost a dishonest purpose in relation to the Commonwealth. So I hope we shall not think of devaluation as a possible answer to our troubles.

Let me now turn for a moment to the political side. What are we to do in Europe? Here I am not going to mention the Commonwealth or the United States, because in anything that we do I know we shall always have their goodwill and their interests in mind. What I suggest is that we must work out with our friends in Europe, whether it be the Five out of the Six or the majority of the EFTA countries, something positive which keeps us together. The original concept of the European Economic Community was to have an economic base, and from that base to build up to a political unity. That is denied us. Now we must try to go from the top down, as I see it; that is, to work at the political concept and hope that over a period of time this will flow downwards also into the economic side. So far as I know, there is nothing in the Treaty of Rome which prevents such political working together.

The question is: what form should this take? The noble Lord, Lord Gladwyn, in a letter to The Times, and various other people have made suggestions as to what might be done. The Foreign Secretary mentioned such bodies as W.E.U., NATO and EFTA and general bilateral arrangements. I have no particular brief for one or the other. I have some doubt about W.E.U., because that is old bones, and I think it is difficult to revive old bones. Anyhow, it is a restricted body, only of seven of us, whereas I think we want, if possible, to include one or two other of the European countries. To get it extended for that purpose, with France in her present frame of mind, would be difficult.

LORD GLADWYN

My Lords, if I may intervene for one moment, I do not think the suggestion was made by anybody that W.E.U. should build up into a kind of new political unity, but rather that through W.E.U., which includes ourselves and the Six, it might be possible at some stage to discuss these new possibilities.

THE EARL OF PERTH

In so far as anything is discussed on this subject, I am all for it; but I personally should like to see us try to build something new and novel which would enable the other nations of our mind as to the importance of the unity of Europe all to come together.

Now what can one suggest? There are various possibilities. One that occurs to me is that the various Foreign Secretaries of the nations who are so inclined could undertake—and I emphasise the word "undertake"—to meet together, say once or twice in a year, to discuss the problem of European unity. Because Foreign Secretaries are very busy people, I would suggest that they might have these meetings at, say, a week-end. I know from my own experience that there is a European institute of private bankers which meets twice a year at week-ends to discuss problems of common interest, and they are careful to choose the place of their meeting at a pleasant place, let us say Italy in the spring, or some such place, so that as well as business there is some degree of pleasure in it. Perhaps if the Foreign Secretaries were to meet as a club, as it were, to this end, it might have some value.

It would not be necessary to have any elaborate machinery attached to this club. There would need to be a small secretariat whose purpose would be to see that none of the nations undertook steps which would make European unity at a later date either difficult or impossible. That would not rule out arrangements we might make whether with the Commonwealth, with EFTA or with the United States in the meantime, but would avoid doing something which would stop progress the day when one could resume the talks. It would be, as it were, a Foreign Secretaries' club, with the purpose of the ultimate unity of Europe. That is just one thought. There are others which easily could be considered. The point I want to emphasise, and what I believe is essential, is that at this moment we should capitalise and have a concrete and positive form in which we could turn the goodwill of all our European friends, who are distressed at what has happened and who are anxious to see us alongside them in the future, to good purpose.

6.53 p.m.

THE EARL OF IDDESLEIGH

My Lords, last year France achieved an end to the war in Algeria, and many of your Lordships—I expect all your Lordships—shared the intense relief that I felt when that bitter, bloody business was brought to a conclusion. No one of lesser stature or lesser authority than General de Gaulle could have achieved that end. We must remember, however, that the ending of the Algerian war was an intense pain for France. We must not think of it in terms of our very dignified surrender to our former Colonies of devolution of responsibility. Algeria was an integral part of France and of French history, and there were 1½ million persons of European origin living there.

Ten days ago, I listened to a broadcast—not the one in everybody's mind—on the Third programme entitled "France Looks at Algeria". I do not know whether the noble Earl, Lord Dundee, heard it. I hope somebody in the Foreign Office paid attention to that broadcast. Nearly all the distinguished Frenchmen who participated in that programme spoke of the loss of Algeria as "la blessure"—the wounding. They spoke of France being in mourning for Algeria. Those wounds are healing; but a wounded man is a sensitive man, a man who has a claim to have his feelings respected, and who will resent disrespect for his feelings. At this moment it is quite unusally important that we should mind our manners and our dignity, and perhaps have in mind some of our old friendship when we are dealing with the French. I do not think that is a wholly irrelevant commencement to a speech on the present situation.

To come to the Press Conference at which General de Gaulle expressed his veto of our entry into the Common Market, there was no one more sad at that Conference than I was, unless it be my noble friend Lord Gladwyn. But I regretted the phrase the noble Lord, Lord Eccles, used, which suggested that General de Gaulle was paying off old scores. I do not think that is fair. I do not think it is constructive to regard his action in any such terms as those. The General mentioned at least two arguments to which we ought to pay attention. He reminded his hearers that England was an island—and so we are. In my lifetime England has become a much less insular place than it used to be. Still, we have to-day a great many insular traits. The General quoted Sir Winston Churchill—not a bad authority to quote. He quoted Sir Winston to the effect that Britain would always in the last resort prefer maritime interests to Continental interests. Perhaps the General was a little influenced by the fact that at that moment we were not quite fulfilling our NATO commitments, while a great part of our Army had just been placed on 72 hours' notice for the jungles of Malaya. I do not know that we can dispute the truth of the statement which General de Gaulle quoted.

We have to remember that it is substantially true to say of the United Nations, that only two, Britain and Portugal, have not yet succeeded in liquidating their overseas military commitments, while the great and largely battle-hardened army of France is at home and available for European purposes, and the well-armed, very well-equipped army of Germany is her ally. The General probably looked further. He knew that the state of opinion in this country was deeply and about evenly divided. I have had a document from a body called National Opinion Polls. Your Lordships have no doubt also received it. It shows that for two months—December and January, I think they were—opinion on the Common Market in England was exactly even. The "Don't knows" were decreasing, but they were joining in equal proportion with the friends and the opponents of the Common Market.

Some of us want England to be more European, and some of us do not. I do not think anybody wants Britain to be half-heartedly European, and that was the risk that we were taking and would have taken if, in our state of opinion then, we had entered the Common Market as a full member. We shall be discussing the Bahamas Agreement next week, but, of course, that had its effect upon the General's mind.

As for the NATO deterrent, to which allusion has been made, I think it would be very unwise and quite fruitless to hold any further discussions about the NATO deterrent in the absence of France. Unless France is coming into the NATO deterrent there will not be a NATO deterrent; and I do not think we shall get France in by making plans to which she has not yet assented or which she has not been invited to help form. However, General de Gaulle did, in the course of that Press conference, assure Great Britain in quite friendly terms that our trade interests could be cared for by a formula of association. We have surely to pay a good deal of attention to that formula. I am very glad to say that the Lord Privy Seal, with his usual good sense, indicated that he was willing to discuss a formula of commercial association, and he made a fairly reasonable condition that it should be offered to us without too much delay and unanimously by the Six. I will return to that subject in a moment.

After the speech at the Press conference there occurred another episode in which the great granddaughter of King Edward the Peacemaker was denied the opportunity to play the ancestral rôle. I was not very content with that decision. A little later we had a statement by the French Minister of Information which mentioned the possibility of British association with the Community, in altogether less inviting terms. I do not know how we can reconcile the words of the French Head of State with the words of his Minister of Information. For my part I would rather trust the "boss". We are at least willing under some conditions to discuss the possibility of an industrial free trade area and some form of association with the Six, and I trust that our decision to sit quietly until we are approached does not wholly exclude the possibility of some discreet diplomatic initiative. I hope that it does not exclude what my noble and gallant friend Lord Robertson of Oakridge described as "quiet negotiation and proving". Even if you fold your arms you can still twiddle your fingers a little, and I suggest that is a consideration which may have its importance at the present moment.

Then we had the Geneva Conference of the EFTA Powers. On August 1 last year the noble Earl, Lord Home, reminded us that most of the EFTA countries had made their applications for association with the Common Market; so, incidentally, had the Irish Republic. I have not heard that those negotiations have been, or are likely to be, withdrawn. It was, of course, a profound disappointment to our EFTA partners that our application was refused. We have to be loyal to them—the Government have often said so—and we must remember that what would really suit them would be our association with the Community, an economic association, which would enable them to trade in whichever market suited them best. I am glad that the Conference was successful in so far that a resolution of general tariff abolition was arrived at. That is very much on the good side, but it must be remembered that some awkward questions were raised there. It must be remembered that Austria, for special reasons, no doubt, kept a rather pregnant silence; and our Danish friends raised the question of butter. What a difficult Chateau Gaillard is the butter question! In the long run, is there not a likelihood that these Continental countries will feel the magnetic pull of the Great free trade market of the Community? It is the ambition of every trader to-day to load his own goods on to his own lorry and send it along a motorway to the headquarters of his purchaser, and that applies very strongly indeed to Denmark, Switzerland and Austria. It is very difficult for me, who has been in Basle and seen their great port, to envisage Switzerland permanently cut off from the Rhineland by a tariff barrier. I would suggest as a theme for meditation that in this age of ours, with the coming of the lorry and the motorway, a Continental age in commerce, and perhaps in other things, has arrived, and that the oceanic age of the past few centuries is departing.

My Lords, since then we have had another very regrettable incident to mar our relations with France. I do not want to say much about that because the French, so far as we can judge from their immediate reactions, have treated the matter with a quite admirable sangfroid. Perhaps I will imitate other speakers and leave unsaid many things I would say, but I do regret very deeply anything that mars those relations, particularly at this critical moment. I do not myself believe that we can turn our backs on Europe in any permanent sense; and even at a memorial service it is customary to mention the possibility of resurrection. What alternatives have we? I am not going to be either optimistic or pessimistic about the possibilities of increased Commonwealth trade. Some months hence we shall be holding an Imperial Economic Conference and we shall know more about it. I am never very optimistic about tariff reductions under the "Kennedy round". It is fortunate that President Kennedy has secured a certain freedom of action from his Congress, but it is always difficult to persuade countries to reduce their tariffs, which they consider necessary for the protection of their industries.

But I am going to be, I expect, a very lone voice in pleading that we should not forget that France was our Ally in one war and that Free France was our Ally in another, and that we once had a cordial understanding with her—it was sometimes cordial; sometimes it was understanding. We should at least not quite abandon that hope; and even if sentiment does not enter into the matter at all, let us remember, leaving aside the rather foolish talk there has been about French domination of Europe and power politics, that France is the strongest of European countries, that she has an alliance with Germany, and that we shall do very imprudently if we allow too severe a breach to occur in our relations.

7.12 p.m.

VISCOUNT STONEHAVEN

My Lords, I have always found it very difficult to understand what all these enormous numbers of initials mean and I was therefore delighted to hear the translation of W.E.U. as "old bones". I find I have been a member of "old bones" for quite a period, and if, as a member of "old bones", I might venture a few remarks I will not keep your Lordships very long; it is getting rather late. I entirely agree with the noble Earl, Lord Iddesleigh: I think to allow ourselves to be jockeyed into positions where we display the grossest bad manners to, whatever else he is, certainly the greatest Frenchman there has been for a very long time, is deplorable. I cannot say that too strongly. Many of us do not agree with him, but that does not make any difference.

This debate has been described as many things, a memorial service and so on, but I do not so regard it at all. I am sorry that the noble Lord, Lord Balfour of Inchrye, has forgotten the debt that my countrymen owe to the spider and the significance of the spider. I would say we have been indulging in a boxing match and we have been knocked out. That has happened to many of us who have boxed, but it does not stop our boxing again. I would go on from that and say that if Her Majesty's Government had decided that to go into Europe, provided we could get proper terms, was the best policy, the fact that we did not get those terms does not alter the policy one jot or tittle; it still remains the best policy provided we can get the terms. It is perfectly true that we shall not be able in a year or two's time to go on with the negotiations where we left off. But if one adopts that school of thought we must do all we can to move in the same direction as the Six are moving themselves. We must endeavour to keep in step. We must endeavour to do nothing which will conflict with the possibility of later being able to get in at short notice. That, of course, presupposes that you agree with the policy, and I stand here as an unrepentant European in its widest sense. I was convinced before, after very careful thought, that the policy was right; I remain convinced. The mere fact that we have been knocked out has nothing to do with it at all.

Perhaps I may say a few words on the agricultural side. We started off with a good "wallop" of agriculture; it is a subject in which I am keenly interested, and I should like to enlarge slightly on that aspect. Mr. Pisani, who was (I think he still is) Minister of Agriculture in France says in general round terms—I will not bore your Lordships with all the figures—that there is no such thing as a true world market price. He gives overall figures that show that, in his opinion, from wherever he got his statistics, of the total temperate food produced in the world only 10 per cent. comes on to the surplus market or the world market. Again in general terms, he says that the price at which that surplus is sold is 70 per cent. of the production cost. That is putting everything together, and it is too late to do anything other than that now. But if that is true, the French attitude is that we are parasitically living off the backs of the suppliers of those commodities, who are selling their surpluses at the best price they can get. We are keeping the prices down, which is keeping our cost of living lower than that of France, who does not import much food. Thus we are getting an unfair advantage by having a cheaper cost of living in the industrial field. That may or may not be true, but he stated that in public as the French idea of what is going on.

If there is anything in that idea, I would suggest it is high time we stood on our own feet. I would not challenge anybody who said that our system of support for agriculture was the best for us at the moment. I think it is. But I would say it is entirely unsuitable for the whole of Europe; and if we go into Europe, while we must protect our farmers we must regard ourselves as European farmers, and we shall have to move towards a system which will not be totally unsuitable for Europe. At the same time we must maintain price levels which will not be to the detriment of our own farmers.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, on that point—it is a very interesting point—how does it really work out? The noble Viscount refers to agriculture in the rest of Europe and how it compares with ours. But there is no nation in the world which imports the quantity we import. We go on importing food not only from the Commonwealth but from many other places, and there is no real reason, therefore, to compare us to the other countries of the Six in Europe in that respect. That is why farmers resent so much what has been said by the Minister of Agriculture: that whether we are in or out, whichever way it is, we shall not be able to go on as we have been doing.

VISCOUNT STONEHAVEN

My Lords, a great deal of what the noble Earl says, of course, is true, but West Germany is approaching us now as a very large importer. She is not of the same size, but she is approaching us. I do not know the figures. But the noble Earl takes the opposite view: that we should have nothing to do with Europe whatsoever. I based my remarks on the premise that we ought to go into Europe. We have not agreed on any particular policy, but we have agreed on a common policy unspecified. On a European basis we represent a very small number of producers—we have been described by the French as being insignificant, which I think is a little unjust; nevertheless among the European producers we represent a very small number. Therefore, if we are to go into Europe at all we must, I suggest, come towards Europe on this matter.

I have found that various members of the Scottish Farmers' Union in North East Scotland who are interested in this subject have all been prepared, when told the true facts of the whole business as one can see it, and not simply that it was going to be to their advantage, to accept it: but not on the principle that it is going to be to the benefit of farming—it is not; of that I am sure. I am also sure that for a short period—at least, I hope it will be short—it will be to their definite detriment. I have always said so; I am saying so now. But it is still my opinion, in regard to the overall picture, that it is the right policy.

I agree very much with the noble Lord, Lord Walston, about commodity prices. That, of course, ties up with these figures of M. Pesani, if he is correct; and the commodity prices, however organised, would have to be based on a reasonable period of time to give adequate security, and would also have to bear a relation to the cost of production and not merely to the best price the buyer could get. I think that will be done by the Six, whether or not we do it. I suggest that we certainly should be in on that. As we are the largest importers anyway, I think that, clearly, we should take the initiative in arranging these prices and conditions.

There was one other point about which I wanted to ask the noble Lord, Lord Williams of Barnburgh, but he is not here at the moment. As I recollect, in 1939 farmers had the option to be assessed for taxation purposes, from which their return of income and so on is derived, under Schedule B. If I am correct, a large number of farmers were still being assessed under Schedule B in 1939. Although I am not quite sure about this, I think the position changed in 1940. If that is so, I should like to know how that tallies with the statistics which the noble Lord gave of the average overall income of a farmer of £112. If I am correct in regard to these Schedule B assessment returns, then of course it would not be reliable to compare them with an after-the-war figure. I am not sure whether I am right, and I should like to know.

On the general terms of this matter, I should say that, if we do decide to go into Europe, it is no good our going in with the attitude of mind: what are we going to get out of it? If we do it at all, we must do it with the attitude of mind: to what level can we raise our collective standard of living? It is quite wrong to think that we shall get the benefit of this and the benefit of that at the expense of somebody else. If we are going to be European at all, we must do it properly and go there definitely with the idea that we are going to make this thing work, and not to hinder it in any way at all. In regard to the relevance of which organisation should keep alongside which, I confess that I just do not know—there are so many. But I should not put much favour in W.E.U. On the other hand, if it is a question of old bones, if you boil old bones you get glue; and if you grind them up you get fertiliser. So that by the combination of fertilising and sticking things together, we get roughly speaking what we want. Therefore, perhaps, W.E.U. is not such a bad bet, after all.

7.25 p.m.

LORD MERRIVALE

My Lords, I do not propose to follow the noble Viscount, Lord Stonehaven, in his earlier remarks, or the theme of the speech of the noble Earl, Lord Iddesleigh, in spite of the fact that I have some French blood in my veins. I feel that no useful purpose can be gained by constantly harping on the failure of the negotiations to enter the European Economic Community, except in regard to such consideration as may be useful for planning for the future. In fact, useful results were achieved in Brussels during the discussions there. For instance, agreement was reached on arrangements for India, Pakistan and Ceylon. These are of obvious economic and political importance. I think, therefore, that it is encouraging that Dr. Hallstein should be now pressing for the early conclusion of a generous commercial agreement between the Community and those three countries.

I would also most certainly welcome the Commission's view expressed as follows: We shall not turn our backs on England. The door must not only be kept open, but solutions must be worked out to bridge the period before Britain becomes a member. An examination must be made of the questions which have arisen in connection with the negotiations for membership and which affect other countries. Therefore, I can but sincerely hope that the strengthened British delegation, to which the Lord Privy Seal referred in another place a few weeks ago, will be actively engaged in co-operation with the Commission towards that end. I welcome also the decision of Her Majesty's Government not to turn their back on Europe and to develop political contacts with France, the other five members of E.E.C. and, naturally, with the EFTA partners. As it was agreed between Mr. Fanfani and the Prime Minister in Rome that the Western European Union would appear to be the ideal platform for such discussions on a political basis, I sincerely hope that the five partners of France will persuade her not in any way to boycott attendance at such meetings of the Western European Union. I would agree to some extent with the noble Earl, Lord Iddesleigh, that measures are certainly needed to lessen the tension which exists between France and this country at the present moment.

This, I fear, brings me to the recent remarkable blunder of the British Broadcasting Corporation—namely, that they should have allowed their delight at making a scoop to weigh so strongly in the balance that, as a responsible body, they should not have appreciated or cared for the political or diplomatic repercussions of their action. This seems to be—because the B.B.C. are a responsible body—exceedingly regrettable and reprehensible, and I do not know whether my noble friend intends to say anything on this matter.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, may I suggest that we ought not to import into this debate that particular incident involving M. Bidault.

LORD MERRIVALE

I am sorry if I have offended the noble Earl by referring to that matter. I did not mention M. Bidault, but was regretting the fact that a responsible body, a public corporation, in this country had taken an action which could only offend France.

EARL ALEXANDER OF HILLSBOROUGH

It has nothing to do with the Common Market.

LORD MERRIVALE

That may be, my Lords.

From an economic angle, I would agree with the Director General of the Federation of British Industries, Sir Norman Kipping, when he said, over the Brussels radio a few weeks ago, that we had much to contribute and much to gain by joining the European Economic Community. He also went on to say that, in spite of the tariff barrier, our exports to those countries in 1962 had risen by 17 per cent. over 1961. That is a very good omen for the future. I was therefore delighted to hear the Foreign Secretary stress the need for efficiency, thereby assisting productivity and the lowering of costs in this country—in other words, as he put it, holding competitive prices. That, I presume one may take it, is the Government's theme for the years that lie ahead.

I should like to welcome the attitude taken by the Association of British Chambers of Commerce, which is to maintain trading contacts with the Common Market and also to develop contacts and liaison with the chambers of commerce of Europe as a whole—that is, in the Community and in EFTA. I think it is common ground we should take every advantage of the forthcoming GATT negotiations and the "Kennedy round". I would ask my noble friend who is to reply whether he would not agree that any cuts in America similar to those made by ourselves or our European partners would still to some extent be to our disadvantage, because in regard to a number of commodities their external tariffs are higher than ours. Therefore, would it not be possible not only to seek reciprocity but also a certain adjustment of tariffs? I think that a change of attitude on the part of America is needed, and it is needed along the lines hinted at by Mr. Selwyn Lloyd in his recent article in the Saturday Evening Post. This article was referred to in the Daily Telegraph on Tuesday, January 26, and its heading was most appropriate: "Allies of U.S. feel pushed about".

Having regard to the fact that this is National Productivity Year, I would refer to one industry which is well conscious of the need for efficiency. I refer to the transport industry, with which I have a number of connections, though not of a financial nature. No doubt your Lordships are aware of one organisation's efforts in this field to sponsor research and encourage action in order to raise efficiency and to lower costs. On this question of costs I think it right to mention that the cost of delays in relation to transport in the West Midlands area alone has been put at £10 million per year. Recognising how the various causes of delays affect industry generally, and that they are a regrettable part of industry's costs, we should welcome the initiative of Road Haulage and Road Services in endeavouring to combat this evil. I hope that the British Railways Board are also taking this question very much to heart. Within the context of the part transport has to play in industry generally, it is interesting to bear in mind that, on average, there are seven different handling operations involving transport from the raw product to the finished product when it reaches the hands of the consumer.

In conclusion, my Lords, may I say how delighted I was to hear the Foreign Secretary stress Her Majesty's Government's desire for political co-operation with Europe and economic expansion? With a view to assisting industry to jump the Community external tariff barriers, I hope that Her Majesty's Government recognise the part which the transport industry can play, if assisted, in the reduction of costs—in other words, towards holding competitive prices. Furthermore, I hope that more city councils will emulate the efforts of the Corporation of Plymouth (your Lordships' attention was drawn to this matter by my noble friend Lord Colyton on February 14, 1961) to attract industries from overseas to set up factories in this country, as suggested by the Foreign Secretary.

7.40 p.m.

THE EARL OF LYTTON

My Lords, it will be a satisfaction to those of you who have stood it out that the tip of the long tail is in sight, and I am the last speaker in the tail. Before I make a brief speech, I must take the opportunity of saying, as a farmer, how much I believe the farming and land-owning community of this country appreciate the services of the noble Lord, Lord Williams of Barnburgh. I have not had the opportunity of saying so before, but we were, and are, grateful to him for what he did. The feeling of all farmers has for a long time been that when the emergency is over any Government will let the farmers down. I think that the work done by the noble Lord, Lord Williams of Barnburgh, and his colleagues, was an achievement of convincing the townsman—95 per cent. of our population—of the importance of the prosperity of the countryman. That new bridge between town and country, which had not existed since before the abolition of the Corn Laws, was brought into being in 1947. It is quite plain that the other Party have kept it in being, have adopted a child which was not their own, and have continued to nourish it. For that, too, we are grateful.

I think that this fact also has a bearing on one of the aspects of the Common Market—namely, the entry of British agriculture into it. I have not been able to discover from anyone—not even from my lengthy correspondence with representatives of the National Farmers' Union—what it is they so greatly fear. Because the measures of guarantee to British farmers, made in 1947, were no greater than those which had been made, generation after generation, by French Governments to their farmers, although they did it in all sorts of ways. I have not been able to understand why there should be this fear on the part of British farmers to enter a Community where the farming community of France at all events, is so tremendously strong politically and has preserved its position and its prosperity for so many generations. That is an introduction, as it were, to what I should now like to do very briefly—that is, to take a kind of inter-planetary view of movements of European history.

Eighteen years ago in Lepanto, in Greece, some Greeks, wishing to show gratitude to Britain for having liberated them, made me an honorary member of the ancient and historic city. It was in that way, I suppose, that the smatterings of school history which I picked up during the First World War, and in other ways, brought me to a study of what Lepanto means in history. It was the final arresting battle at sea against the military aggressions of Islam, which had haunted Europe with fear for 900 years. That seems to me a singularly decisive moment, because it gave tremendous freedom to a movement which had already started a century before under Columbus and da Gama—the founding of overseas empires by European Christian States.

During the 400 years that followed Lepanto (which brings us up to the present time), eight European Christian nations founded empires overseas. The experiences of them all have been the same in one respect: that the point came when the children came of age and decided to be independent. That movement with us has taken place at a great pace during my active adult life—that is, from the independence of Ireland in 1922 up to 1962. During those 40 years the independence of our own dependencies, and of many others, has almost reached its completion, and we have reached the end, whether we like it or whether we do not, of half a thousand years of history.

As the Foreign Secretary rightly observed in his speech, it is not we who are responsible for the erosion of preferences; it is our children. That is a fact of which, it seems to me, we have to take account now; and we must regard ourselves at an historic turning point. In the decade in which we live the period of overseas colonial empires has come to an end. That is a fact, and the characteristic of our children is that, like others, they choose what is beneficial to themselves, irrespective of whether it is beneficial to their parents. That happens whether they are the children of the Ottoman Empire—the former "Sick Man of Europe"—or of the Portuguese, the Spaniards, the French, the Belgians, the Dutch or ourselves. It is the same story—the children are growing up.

It seems to me that what has happened during this period is that the European nations have established abroad wonderful developments in colonial unities, but they have failed to establish a unity between the metropolitan country and their dependencies, and have, between themselves, fallen into the most ghastly strife. As we look at the end of this period, it seems to me that a hundred and one things point to our return to an effort to unify Europe. Quite apart from many other attractions of such a course, there are two things which, from our point of view, seem to me desirable in connection with it. First, our children are so big and so numerous that I do not think we can provide them with the trade and aid which they require unless we enter a larger community. We are like the "old woman who lived in a shoe, and had so many children she did not know what to do". It is time we got into a larger shoe. That is what seems to me desirable.

Secondly, there has been a return, not of the fear of Islam which has remained static since the time of Lepanto (when I say "static" I mean in the sense of military aggressions), but of a new and formidable fear. It is one which I personally cannot forget and cannot fail to appreciate, because I happened to be in those countries of Europe which are now behind the Iron Curtain—Greece, which nearly was; Albania; Yugoslavia; Austria, which was for a time; Czechoslovakia and Poland. One saw the process by which a military and atheist Communism established itself in countries which have a long historic Christian tradition. That menace is in front of us in two senses. If we are weak militarily it will take advantage of it; and, unless we are strong in all matters of welfare, it will overcome us in different ways.

My Lords, quite apart from the mechanical difficulties, there are obviously deep feelings and misgivings about joining Europe at all. During the last debate in this House in which I took part I was most impressed by the speech of the noble Earl, Lord Alexander of Hillsborough, who, unless I was misled by political arts, appeared to me to speak from the bottom of his heart. His misgivings regarding the surrender of British sovereignty, perhaps even the question of the position of the Sovereign, was one of the things on which he harped. I know he addressed many questions to the noble and learned Lord on the Woolsack—at least, I am not sure whether that can be done; but in devious ways he obtained answers. I am doubtful whether they satisfied him. It was quite obvious to me that, although he was, and may be to-day, in the minority in this House who were against the Common Market, he spoke with feeling and echoed the misgivings of a great many people in this country.

From that time, I personally have felt that we are not ready, and that one thing General de Gaulle said was quite true: we are not ready because we are not united. Nevertheless, before I sit down I should like particularly to endorse what I thought were the extremely wise words of Lord Robertson of Oakridge, who said that if we are going in, do not let us do anything to make it more difficult, but let us, if possible, take positive steps. Perhaps one of the positive steps that might be taken would be to divide France by showing the French farmers what they have lost by our not going into the Common Market. Because they have a tremendous influence, even with General de Gaulle.

7.52 p.m.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, we have come towards the end of a debate and, as so often happens on the occasions of these important debates, I have to get up in a thin House. We have not yet got the full loyalties of noble Lords to bring about their attendance during these debates right the way through, but I hope that from time to time, as we go on, we shall get better attendances. I am grateful to the noble Earl, Lord Lytton, who has just sat down, for what he said about my position in relation to the Common Market. I think he analysed me quite correctly on this subject. I am very much against going in on the conditions laid down in the Treaty of Rome.

On that point, I should like to go back for a moment or two to 1959—not so very long ago. On February 12, 1959, Mr. Maudling, then the Paymaster General, was speaking on this subject in the other place, and listed some of the reasons why it was unthinkable that the Government in this country were likely to want to enter the Common Market; and one of the reasons was Clause 138 (I am speaking from memory) of the Treaty of Rome. It is that and certain other similar clauses which so restrict what can be done in the exercise of the sovereignty of the British Parliament on matters which affect the daily lives of our individual citizens that it makes me fearful of the sovereignty position. Once you weaken the sovereignty position in this country in relation to a large, Catholic Europe, you may be tending to undermine the basis of the Act of Succession of 1689. I do not want to go into that in detail, but if anybody would like to come to my outside meetings on the matter I should be glad to welcome him and to have discussions on the subject.

The debate was opened by my noble friend Lord Williams of Barnburgh in his own inimitable way with regard to agriculture and its relation to the Common Market, and the dangers that we were likely to be in as a result. I am quite shocked at times to find noble Lords and members of the Conservative Party in another place also rallying to the help of their Government in spite of the fact that it is obvious that the Government have been full of "double talk". At one moment there is the undoubted pledge to the farmers. Certainly up to after the Election of 1959 there had never been the slightest suggestion that the British system of support of agriculture was going in any way to be jettisoned or amended or cut up. There is no mandate now from the country for the kind of thing which is likely to occur if the Government follow the statements made more recently by Mr. Soames, that it did not matter whether you went into the Common Market or did not, you could not go on having the same system as you have got now. That is what he said in effect to the farmers. How members of the Conservative Party can go on for week after week and month after month accepting such "double talk", which has still to be answered before the electors, I do not know.

I felt that the noble Viscount, Lord Stonehaven, whom I always listen to with very great interest, was making some very stretched arguments in explaining the possible favour he would give to entry into the Common Market in spite of its lowering and reducing the standards of life of our own farmers. It seemed to me that he was bending over backwards to bring forward support for the Party in office at the present time.

VISCOUNT STONEHAVEN

My Lords, may I interrupt the noble Earl for one moment? I think I made it clear that at any rate I went quite a long way towards sharing the noble Earl's view on "double talk". I think my own Party and the Government have been less than honest. I have said so in public and I am saying it now. But I still do not retract what I said, that I think there will probably be a temporary lowering of the standard of the farmers; and I hope that it is for only a short time.

EARL ALEXANDER OF HILLSBOROUGH

I am very much obliged As always, the noble Viscount is fair in debate, and he will not mind my having introduced that particular part of his speech to assist myself in the matter.

The other thing I want to point out is that the Government have never had a mandate from the people for entry into the Common Market—none at all. They have never put it to the electors. When it comes to the question of sovereignty, on that point, over and over again there have been statements—in 1956 by Mr. Macmillan, as well as a repetition by Mr. Maudling in 1959, and a most firm declaration by Mr. Thorneycroft, in 1958 or 1959—all against the possibility of our doing such injury to the Commonwealth and other institutions as would be likely if we went into the Common Market. I think it is an amazing thing that we should have come to the situation we were in last January, when Mr. Heath was going over for what proved to be his last main discussions and negotiations with the leaders of the Six.

I myself do not want to be associated with attacks upon General de Gaulle in regard to the part he played in bringing those negotiations to an end in January last. I think that he does not seem to have played up very well from the point of view of our application. He kept us on tenterhooks, apparently. But, on the other hand, we got no information from the Government. You want the British public to forget that Mr. Macmillan went to General de Gaulle himself on two occasions: and, on the last occasion, before he went on to see Mr. Kennedy in the United States, what did they say to each other? If you cannot give us the full text of the conversation, tell us at least what it was about, and where it was likely to lead. As soon as we begin to ask for particulars we are told there cannot be a post-mortem. Why not? If the situation in our country today is that of economic sickness, we want to get it cured. Why not have a post-mortem on these negotiations to find out what was wrong: either what was wrong with us and the view we take; or what was wrong in the Government presentation, whether in form or manner? We do not get the information. We ask for a White Paper. Scorn! Again and again, we do not get the information.

When it comes to dealing with the problem, it is necessary to remember also the different attitudes that are being displayed by, for example, the Foreign Secretary here this afternoon; by Mr. Macmillan in his latest speech (the last one I read on February 11 in the other place); and by other members of the Government compared with their talk at Llandudno. At the Llandudno Conference Mr. Butler, Mr. Heath and Mr. Macmillan made it quite plain that they thought it would be almost the ruin of our economy if we did not go into the Common Market. Mr. Macmillan went so far as to say that we shall still be here; we shall have to go on, but we shall be weak. We are not in a position, says Mr. Butler, in another form of words, for our economy to stand up to it. We shall have to alter the basis of our economy if we do not go in.

What do they say now? Well, of course it is no longer the disaster that they foretold at Llandudno—where there was all the pressure organisation, the special representatives on the sea-front, the handing out by agents on behalf of the Common Market of the buttonholes with "Yes" on them, to work up the feeling for a day or two to make sure they would be able to get this through at the Llandudno Conservative Conference. Talk about double talk! Really, we ought not to be dealing with great matters of State on the basis on which the present Government have been dealing with them for the past four years. What a contrast to the Election of 1959! This country which, they say, is so weak that we can exist economically and progressively only if we go into the Common Market, was told in 1959 "You never had it so good".

What sort of case have the Government to put to the country themselves? Now it is to be a sacrifice for agriculture. According to Mr. Soames (I do not want to introduce again the noble Viscount, Lord Stonehaven, who has always regarded it as more likely that the farmers would be worse off), if we do not get in then we are going to be worse off. Yet what a case Lord Williams of Barnburgh made to-day for what the farming community is doing for this country under the general scheme of support adopted! It was an amazing catalogue of success. And in relation to its effect as a whole on our budgetary and economic position it was far and away more valuable in respect to the balance of payments than the actual cost of the public support.

In regard to the actual cost to the Budget, let me point out to the noble Earl who is to reply that if the Government had not gone in for removal of controls in connection with the subsidy scheme they would not have had to pay out agricultural subsidies at the rate they have done. One has only to watch the markets to-day to see the effect of a sudden movement downwards in the price of cattle. For the last two or three days this week it has been possible to buy fairly good quality beef on the hoof for 112s. to 125s. a cwt. Do you see these results passed on to the consumer? No! The present Government do not believe in controls: they put the larger cost back on to the general taxpayer, and the consumer does not get the benefit.

On the general position which would be likely to obtain under the Common Market, let me mention another point. I would refer, with respect to the noble Earl, Lord Lytton, to the sovereignty position. Let me give a case. The Common Market countries have certain likeable and good objectives in relation to the general community. They want to see prosperity in this and that, and they want to set up social services and the like. So do we. But once you are in that Community the settled standard of life in the future for our people will largely be determined by the European Parliament. They can come to decisions affecting either the majority or the minority, and the British Parliament could not take any action at all, with regard to defending the standard of life, on this or that particular matter in this country. That is an amazing situation. That has never been fully explained or understood by the general population in this country to-day.

My Lords, having got a few of those things off my chest, let me also say here in what way I think the Government are very slow and stumbling. I dared to say, when the first announcement was made of the effect of de Gaulle's position, that no further negotiations could take place; that that was a challenge to our greatness. What sort of steps have the Government so far taken to show that we are great in that respect and are really going to fight for the maintenance of our standards and the like? I cannot see any great indication that they are taking effective steps. I know they said they are going to have a meeting of the Commonwealth Premiers. That is so, but it keeps on being put back and back. But, if our condition was so economically sick as they say, an amazing urgency should be exercised instead of this shuffling along.

It is said that we have been steadily losing trade with our Commonwealth. It has fallen more, in my view, in the last two years, while all this Common Market situation has been talked about. In the early days of the suggestion of Common Market entry by us we did not even take the trouble to get into touch properly with all the Dominions and Colonies concerned. We sent out Mr. Sandys to make contact at short and late notice. I cannot see any more urgency being exercised at the moment by the Government. That is not our attitude on this matter.

I read very carefully the speech of the Prime Minister on February 11 in another place. I could not see any urgency in it. I saw a number of interruptions by my Leader, Mr. Harold Wilson. Let the noble Earl take count of the columns for the last fifteen minutes of that speech by Mr. Harold Wilson, because he thought it was his duty to put before Parliament what could be done now in these circumstances really to strengthen and to boost our economy. For example, there was a letter the other day in The Times in which the businessmen of this country were explaining how difficult it was to understand why at the present moment we are not taking any real steps to develop our trade with Eastern Europe behind the Iron Curtain. Why not? I know understandings may have been arrived at, which we have never heard about, between the leaders of this Government and the Americans about the supply of strategic goods, as they are called, to these countries; but can the Government tell me whether there is any difficulty about Western Germany supplying Eastern Germany? I was moved by the words of the noble Earl the other day when he spoke about the terrible position created by the wall in Berlin. He said that this was one of the reasons why we do not do this, that or the other. But Western Germany does not stop exporting to Eastern Germany.

We find that Russia is having five freighters built in Japan and twenty special type cargo ships, while we haggle for months about whether we can take orders from Russia for ships, because they want to pay for some of them with oil. Seemingly there is a poor understanding of what we ought to be doing for the economic sickness of our country and to help reduce the growing unemployment we have seen in the last few months, which we all hope will be reduced as soon as possible.

If we take the Commonwealth, what cure can we apply to the situation of New Zealand? Already during this long-drawn-out period of uncertainty of nearly two years they have had to look for other markets. On this side of the House, those of us who have had experience of this matter know that a proper method of bulk purchase and long-term contracts would suit New Zealand, who depend so much—up to 90 per cent. in some commodities—on this country for their markets, and who fit in best with British agricultural production.

I am amazed at the ineptitude and lack of courage of this Government. If my noble friend Lord Attlee does not mind, I should like to tell a story about the time when he and I were down at Criccieth for a few days' holiday. We had been at a League of Nations meeting with David Lloyd George. That weekend the Foreign Secretary of the Chamberlain Government had been speaking in Lanark, just a day or two before Czechoslovakia was railroaded and overrun. David Lloyd George stood on top of a mountain with Clem—my noble friend Lord Attlee; I beg his pardon—and myself. He asked us what we thought. We both gave our answers. Then he threw his cape back over his shoulder and said, "Clem, Albert, believe me, this spineless crew will never raise a finger to save Czechoslovakia, and the British Empire will never recover from it."

We are very nearly as spineless to-day in dealing with these problems. After eleven years of Conservative Government the Leader of the House comes along and says that we are now at the beginning of a new epoch in which we shall begin to lay the foundations for Britain 30 years hence. What have they been doing for eleven years? It is an amazing situation. Yet there remains the basic, inherent greatness in this nation of ours, if we can find the Government who will call upon it and use it. We were able to do that in times of greater stress, and surely we ought to be able to do it now.

I hope that in a few weeks' time we may get a better story from the Government about how they are going to treat British agriculture. When the debates come up, we shall be able to say: "By their fruits shall ye know them". We shall be able to judge then what is going to be the extent of the Government's efforts to obtain markets, either in the Commonwealth or in the rest of the world. We shall be able to know whether there is going to be a different spirit in trying to help the underdeveloped countries within our Commonwealth and perhaps one or two who have recently left us.

For ten solid years from this Table different colleagues of mine have pressed for proper aid to the countries who had been receiving grants under the Commonwealth Development Corporation, and only a few weeks ago did that Government finally come to the conclusion that they would have to do that, after all—this shuffling along Government, this weak Government, this "Stop and Go" Government. It is about time they pulled themselves together or left it to somebody else who can do a lot better.

8.17 p.m.

THE EARL OF DUNDEE

My Lords, I share the regret of the noble Earl the Leader of the Opposition that fewer noble Lords have stayed in order to listen to his magnificent tirade against the Government and the Party to which I belong. I should seriously like to say how much I admire the way in which the noble Earl sits through these often long debates, sometimes interrupting about some quite different point, and then winds up in such tremendous form as he has shown now. I did not know until he spoke this evening that he holds outside meetings somewhere else, too. It is a "new one on me". If, as he implied, his speeches are filled with even more magnificent invective than that with which he has entertained us, I should like to have the privilege of hearing them.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, may I invite the noble Earl to come to the next Protestant meeting we hold?

THE EARL OF DUNDEE

My Lords, I am most honoured and gratified by that invitation. As for me, I have had the perhaps not very enviable task, for more than four years now, of speaking to your Lordships on this subject. I began doing it in 1958 and I have done it more times than I care to remember. It is interesting to me to see how the burden of criticism has completely shifted during these four years. When I first spoke to your Lordships on the EFTA agreement, in a very fine debate we had in 1959, the noble Earl the Leader of the Opposition absented himself from speaking then and subsequently on the Bill which I brought in in 1960.

The whole burden of the criticism against the Government then was that we were dragging our feet about going into the Common Market. I explained that the EFTA plan was intended to be a step towards that objective and that the main motive in forming this association of seven members—the Outer Seven, as they were called—was to make it easier for an ultimate association in which the whole of Europe would be united. I remember time after time in discussing this subject noble Lords opposite—and the late Lord Pethick-Lawrence, in particular—used to press me to say more about the steps which we were taking to realise this objective, which all the criticis at that time were agreed upon. We were taken to task very strongly for going too slowly and not pushing on fast enough in order to achieve an economically united Europe.

It was not until after 1961, when we actually made our application, that criticism on the other side began to express itself. We all recognise that the noble Earl, Lord Alexander of Hills-borough, has always been strongly consistent on this subject. But since 1961 criticism has grown, and I think it is true to say, as the noble Earl, Lord Iddes-leigh, implied, that in the country opposition to the Common Market has increased during these very long and protracted negotiations. I think one of the reasons why it has increased somewhat is that it was obvious that the French were doing their best not to let us in on terms which we could honestly and reasonably accept. I think it was the long frustration and the protraction of these negotiations which caused feeling against the Common Market in this country to grow. In spite of that, we had a very patient negotiator in my right honourable friend the Privy Seal, Mr. Heath, whose magnificent performance is universally appreciated and whose patience and perseverance made it impossible for the negotiations to be broken off by us.

So, finally, the French President had to use this sledge hammer. Finding that if the negotiations had gone on, although there were still many points to be decided, they would have resulted in success, he decided that the time had come to end our application. I think the report which was issued yesterday in Brussels (I do not know whether when it is translated it will satisfy the demands which have been made for a more comprehensive report; probably not) shows generally that, in spite of the many outstanding questions which were in process of being dealt with, the negotiations, if they had not been broken off when they were, would probably before long have reached a successful conclusion.

The criticism during the last eighteen months, and now the retrospective criticism, which we have had to meet has nearly all been from exactly the opposite direction: not that we were dragging our feet and were too slow and reluctant in promoting European economic union, but that we were going too far and too fast, and we were letting down and abandoning the interests which we ought to have secured in these negotiations. The noble Lord, Lord Morrison of Lambeth, made, I thought, in general, an excellent speech with which I found myself in strong agreement; he said a great many things which I should have liked to say, much better than I could say them. But even he went on to say that we had, as he put it, let down agriculture, the Commonwealth and EFTA. That, of course, is an allegation which we must rebut. We cannot accept that; we do not think it is true.

My noble friend the Foreign Secretary has dealt already with the question of agriculture; and it has been a great pleasure to your Lordships to hear two noble Lords opposite who have had so much to do with agriculture, the Leader of the Opposition, who is himself a keen farmer, as many of us are, and the noble Lord, Lord Williams of Barnburgh. I should like to associate myself with the tribute which the noble Earl, Lord Lytton, paid to the noble Lord. A great deal of the speech of the noble Lord, Lord Morrison of Lambeth, was taken up in discussing whether the noble Lord, Lord Williams of Barnburgh, was a good Minister of Agriculture or not. I would say that if a vote were taken among all living ex-Ministers of Agriculture as to who was the best, they would all unhesitatingly vote for the noble Lord. I think all Parties and both farmers and landowners would agree that he did good work when he was in office.

What was the objective of the 1947 Act which he passed? I think it could be defined as a stable and prosperous agriculture, with a fair standard of living for the farmer. That is a principle which in all Parties we have always accepted and tried to put into practice. There was a change in 1954, or round about then, when we departed from the method of either direct or indirect Government purchase in order to secure the guaranteed price and substituted deficiency payments, which you may say is a more efficient or a less efficient method.

The noble Earl the Leader of the Opposition said a good deal in his speech about double-talk. I thought there was a certain ambiguity in his speech when he said that our agricultural policy had been an amazing record of success, and then in the next sentence said that we were robbing both the taxpayer and the consumer by not controlling all the agricultural markets. It may or may not be a good thing to control markets in certain circumstances; it may or may not be a better thing to have deficiency payments. Anyhow, our objective is the same—namely, a stable and prosperous agriculture. And our objective in the Common Market negotiations has been the same.

We know that the method we should have had to follow if we had joined the Common Market, would by 1970 have been quite different from our present method, and it is arguable whether that is better for the economy of the country and of Europe or not. I think it would have depended a good deal on how high these tariffs were, and whether they might not have resulted in overproduction of some economic agricultural product, with the result of unduly high food prices. But the objective which we were following and trying to secure was the same objective of a stable and prosperous agriculture, with a reasonable standard of living for the farmer; and that is why we got agreement at Brussels on the principle that there would be a review of agriculture, and if this showed that the farmers were not getting a fair standard of living, action would be taken to put it right.

LORD WILLIAMS OF BARNBURGH

My Lords, there is a point here which was raised in the presence of the Foreign Secretary. I do not know whether the noble Earl can clear it up. I rather suggested that while an annual review was agreed upon for each country within the Six which had ultimately to be dispatched to the Commission, there was no "shall" that the Commission should do anything about this annual review. If the noble Earl can tell us that there was something obligatory to make the Commission act once they received the price review, I will stand corrected.

THE EARL OF DUNDEE

I am not sure that there was anything obligatory, in the sense of inserting in the Treaty of Rome a clause saying they would pay such a price, or anything like that. But, after all, what is the purpose of making any agreement of this kind? Why have a review, and why state that you will take action to put things right if the standard of living is not up to the mark?

LORD WILLIAMS OF BARNBURGH

That is our question.

THE EARL OF DUNDEE

What is the point of having that if you do not do anything about it? Surely the real danger of this new method of agricultural support which we should have adhered to in the Common Market might have been that protection would have been put too high, in order to protect the relatively inefficient farmers in France and Germany. That would have been a bad thing for our economy, but it would not have lowered the standard of living of our farmers or the receipt which they got.

I have had to deal with the Commonwealth on many occasions. I do not think it is an acceptable criticism that we have in any way let the Commonwealth down. In respect to some parts of the Commonwealth we had made very favourable arrangements indeed. One example was the agreement to abolish any tax on tea, which would have been of great benefit to India and Ceylon. We had made other special arrangements for these two countries, and we had secured the offer of some form of association for all the Afro-Asian and Caribbean parts of the Commonwealth who had recently become independent and who desired it, and for all our dependencies.

With regard to the White Commonwealth on the question of temperate foodstuffs, what we had done so far was to get agreement on the principle that there would be world commodity agreements. That is something which is desirable on many other grounds, too. One purpose of that was to try to get reasonable prices for producers of temperate foodstuffs among all countries, including the White Commonwealth. But the Six in Brussels agreed to say that they would have regard to the interests of Canada and Australia; and for New Zealand they agreed in principle that particular arrangements would have to be made about New Zealand butter. That was another of the points which had not yet been finally settled when the negotiations were broken off.

In regard to EFTA, I am not quite clear what the noble Lord was thinking of when he suggested that we had let EFTA down: because all the EFTA countries were engaged in their own negotiations. However, we were keeping in close touch with them. It was agreed that our application should be disposed of first, because it was much the most difficult. After we had made our agreement we were not going to join until they made their arrangements, too. Norway and Denmark would probably have become full members, and some of the others associates.

LORD SHEPHERD

My Lords, I am sure the noble Earl will remember the disturbing thoughts of the Common- wealth Prime Ministers when they were over here last year. Would he not also accept that there was considerable disquiet, right through the Commonwealth among business people and those people who have special regard to this country? Would the noble Earl not agree that, to set their minds at rest, the Government should again consider publishing the terms of these provisional agreements that had been made? It has been possible for the Commission to publish their side. I should have thought the Government ought to produce similar facts, not only to the country but to the Commonwealth.

THE EARL OF DUNDEE

They were published in the White Paper which was made available during 1962. I do not want to quote at length from them, but they describe the principles which had been agreed upon. I think it would be true to say that although, naturally, some members of the Commonwealth, particularly the White Commonwealth, were at first apprehensive, they were beginning to realise the great advantages which they might ultimately have derived from our membership of the Common Market, had our application been successful.

What were our real objectives, our real motives for wanting to join? My noble friend Lord Stonehaven, who has apologised for having to leave to catch a train, said, rightly, I thought, that it is no good our going into the Common Market for selfish reasons. I think he is right. The reasons why we went in, and the reasons why we ought, in my submission, to have wanted to go in, were, to put it in a sentence, to strengthen the Free World, to strengthen our defence against aggression. That was one objective. Another was to strengthen the economic growth of the whole Free World and, finally, to strengthen the ability of all the advanced nations to help and aid those vast millions of people whom we were discussing the day before yesterday in your Lordships' House, in South America, Africa and Asia, who can never learn to appreciate and enjoy freedom unless we enable them to have a minimum economic security. That was the reason why we wanted to join and, as I have put to your Lordships before, that was the reason why the Communist propaganda machine had applied itself with such tremendous strength of purpose to attack and discredit the idea of the Common Market all over the world. Now that we have received this setback, it is the Communists who are the gainers and who are rejoicing at this temporary failure.

EARL ALEXANDER OF HILLSBOROUGH

My Lords, may I say that I admire the language of the defendants' advocate on this occasion, but it does not agree at all with what Mr. Macmillan and Mr. Butler said at the Llandudno Conference? It was said that we were going to be completely weak ourselves; we should not have enough. Mr. Butler said we should not have a wide enough economic base for us to be able to maintain our heavy economic industries. We were going to be hopeless without going in. That was the case put at Llandudno. The noble Earl has made a nice defence of the position and of our reasons for wanting to go into the Common Market, but they do not tie up.

THE EARL OF DUNDEE

I am sorry, but I cannot for a moment agree with what the noble Earl has said. I am not going over the Llandudno Conference now, because I have a short speech of my own to make, which I hope to bring to its conclusion in a few minutes as it is getting so very late. I repeat that the chief gainers in the world from this temporary setback at Brussels are the countries behind the Iron Curtain, the Communist countries of the world.

What are we going to do in these circumstances? I should dike to say that I greatly appreciated the speech of the noble Lord, Lord Robertson of Oakridge, who wisely pointed out that we must not have any bitterness. That is very true. That does not mean that we must talk or act as if we thought it was a trivial affair. It is, however, I hope, not a mortal, but a grave blow which the French Government has struck against the Free World and its future, as we believe. But we must not have any bitterness. The first thing we must do is to keep in touch not only with the Five but also, if we can, with France. We hope, as my noble friend Lord Merrivale said, that in the W.E.U. the Five will persuade France to attend.

The object of that contact, which we must do all we can to preserve, at the meetings which the Lord Privy Seal is now having with those of the Five who are willing to go on discussing matters with him, is not that we are anxiously hoping for some new proposal. In order to keep in with the rest of the Free World we must keep the Common Market countries informed in a friendly manner of everything we are doing outside, and whether that is going to lead up to some renewal of the project or not does not matter. We must try to keep the Free World united in the face of its adversaries.

Next, of course, we must try to accelerate the economic integration of EFTA, the Free Trade Association. We have already had one meeting about this at Geneva last month, where the permanent representatives were instructed to prepare proposals for a revised time-table providing for the more rapid dismantlement of tariffs between member countries with their final elimination during 1966. The Ministers also instructed their permanent representatives to seek a number of other ways in which EFTA co-operation might be further developed, and these matters are going to be considered further at the next meeting of the Ministerial Council in Lisbon on May 9.

Then, of course, we come to the Commonwealth. I will not go over everything which I think has been gone over before. We are having a meeting, not with Commonwealth Prime Ministers but with Commonwealth trade representatives, which will be held before the GATT meeting in May. My noble friend Lord Balfour of Inchrye, who has always been a strong and consistent advocate, as many of us have always tried to be, of more trade with the Commonwealth, said, taking up a remark that the Foreign Secretary had made, that if we are going to have to do some rethinking about our commercial policy—I think he said this in relation to GATT—why not start doing it now? I am all in favour of starting rethinking as soon as we can, but we cannot do it by ourselves. We have to do it in relation to somebody else. We know that since the war the Commonwealth has not been receptive to extension of the preferences which were made at Ottawa in 1932. On the contrary, they have been steadily eroding them. That is a matter for them. As my noble friend knows, we tried in 1957 with a proposal for free trade with Canada, but that was not acceptable for reasons which we well understand, and I do not think we ought to delude ourselves by imagining that there is any practical possibility of anything approaching a free trade area even with the White Commonwealth. But that does not mean we should not do everything we can to promote trade by bilateral arrangements; and that we will certainly endeavour to do.

Then there is what is called the "Kennedy round", which is going to be discussed at GATT in May. Again, I think I have had to talk about that on two occasions lately, one of them the day before yesterday in the debate in connection with the world campaign against hunger; so I need not say much more about it now. But we have made it clear that we welcome the opportunities created by the forthcoming negotiations for the further expansion of world trade. There are two things about the Trade Expansion Act; one is the possibility of a 50 per cent. reduction on a large number of tariffs affecting many countries in the world; the other was the proposal for a 100 per cent. reduction on tariffs on commodities 80 per cent. of which are produced by America, Britain and Common Market countries. That, as your Lordships know, is now in danger of being frustrated. In spite of that, we hope that an agreement will be reached on these projects, and if it is not, then it will be for the Americans to decide whether they will alter the Trade Expansion Act so that the "Kennedy round" can be made effective by those countries willing to give effect to it, despite the fact that the Six may be prevented by any French veto from playing their part until (I think it is) January 1, 1966. But that is an objective which we must go for all out now: to get tariffs reduced in all parts of the world with which we trade and to reduce our own, both in order to increase the volume of trade and to stimulate our own efficiency.

May I say how much I agreed with everything, except what I have already mentioned, that the noble Lord, Lord Morrison of Lambeth, said, particularly about the need for increasing our own economic strength now? He said a good deal about the redistribution of industry with which I agree. I have often had to defend our actions in this matter to your Lordships. I had to bring in the Local Employment Act, and I am very glad to defend that again because I think we have done a great deal. But I should be the first to agree that we have not done nearly enough. We must aim at establishing many new growth points in Scotland and the North-East of England, and at diminishing the growing congestion of industry in those parts of England with which the noble Lord, Lord Morrison of Lambeth, is more at home; which he himself said he would like to do.

LORD MORRISON OF LAMBETH

My Lords, I am obliged to the noble Earl, and I do not want to detain him, because I know that he has to get away. I am obliged for what he has said, but does he not think it a pity, in view of these urgent economic and industrial matters that concern our own country, both as a country and in view of our position in the world, that the Government should undertake a major controversial legislative measure in this Parliament this Session, the London Government Bill, which has no relevance to the situation whatever and which really is an insult to the intelligence of the British public?

THE EARL OF DUNDEE

My Lords, not only may it have no relevance to the situation, as the noble Lord said, but I am afraid it is a subject on which I am relatively ignorant. I have to talk to your Lordships about quite a number of different departmental subjects, but, the London Government Bill is one which, so far, by one expedient or another, I have always managed to wriggle out of and leave to somebody else. One reason is that, much as I love debating with the noble Lord, Lord Morrison of Lambeth, I do not relish sitting in this House for three weeks arguing with him about local government. I even prefer the Foreign Office to that.

I was going to conclude by saying that I agree more particularly with my noble friend Lord Eccles in his remarks on economic growth. He compared our comparatively slow progress with that of the Communist countries. What was the reason? The reason he gave, I think, correctly: that the Communist countries are able to control the relationship between investment and consumption; they have their people at a level of consumption which we should think very harsh, and the result is they have been able to put a great deal into investment; and their economic growth has been enormous compared with ours. Of course, if we could have the powers of a Communist dictator I daresay our growth would be much faster, too. If we could control everybody's income then the difficulty of our post-war economy which has hampered the steadiness of our growth would disappear.

But we cannot do that because we are a free country; and that is why our incomes policy, in my view, is so very important, not only to our economy but to the whole subject which we are discussing now. It is a matter of regret to us that the measures which we are trying to take through the National Incomes Commission to influence incomes policy are not more widely supported than they are by all classes of the community, because we believe that this is the main thing which is needed to promote our industrial growth and our industrial strength; and we believe that, as a result of the breakdown of the Brussels negotiations, the industrial strength of Britain alone is more than ever important to the future of the Free World.

8.49 p.m.

LORD WILLIAMS OF BARNBURGH

My Lords, I should like to express my profound thanks to all those who have taken part in this debate. I think your Lordships will all agree that this has been a day well spent. We have not secured all the information we should have liked, but perhaps it would not have done us much good if we had. I would also express my thanks to all those noble Lords who made such kindly and generous references to myself. The only practical way I can express my thanks is to ask leave to withdraw the Motion, as I do.

Motion for Papers, by leave, withdrawn.