THE EUROPEAN ECONOMIC COMMUNITY

HL Deb 09 May 1967 vol 282 cc1329-87

3.27 p.m.

Debate resumed (according to Order) on the Motion moved yesterday by The Lord Chancellor—namely, That this House approves the White Paper entitled Membership of the European Communities (Cmnd. 3269).

LORD MCCORQUODALE OF NEWTON

My Lords, I wonder whether I might ask for one moment of your sympathy, for one of the main difficulties in opening the second day of a great debate of this sort is the welter of conflicting words with which one has been oppressed yesterday and to-day. There were the admirable speeches yesterday in your Lordships' House, to some of which I was privileged to listen (and the rest I have read), and there was the debate in another place which occupies an enormous Hansard, including an hour and a half's speech of great importance by the Prime Minister. There was a very high-class speech, if I may say so, from Sir Alec Douglas-Home (as we in this House should expect) and some barbed wit from Mr. Michael Foot. I did not get any further, because there was not time. Then there was the "Panorama" exercise for the general public which one was supposed to pick up; and all the newspapers this morning had it all over again. Believe me, my Lords, I am a little confused. In this condition I feel that it is better, to use sporting parlance, to "go back to square one".

My Lords, it is a strange coincidence that in the great debate on Britain and the Common Market held in this House on August 1 and 2, 1962, I was privileged to be the last Back-Bench speaker on the second day, and was followed by the noble Lord, Lord Silkin. Incidentally, on that occasion the noble Lord was remarkably kind to me and about my remarks. I only hope that to-day, in following me again, he will not be too harsh. I am sure that the whole House is delighted, as I am, that we are also to have a speech from the noble Earl, Lord Cromer. It seemed to me that possibly the one gap in the debate yesterday was the lack of a real authoritative speech from the great commercial and banking centre of the City of London —something which the noble Earl is uniquely able to give us.

May I, at the outset of my remarks, quote two or three isolated statements from the previous debate to which I have referred, because I think they are not only pungent and relevant, but well worth reading to your Lordships. The late Lord Morrison of Lambeth made a great speech on that occasion which I well remember. In balancing up the pros and cons of going into the Common Market he finished up by saying: But that does not prevent my feeling that, if it be practicable, in principle it is right that the British should go into the Common Market."—[OFFICIAL REPORT, Vol. 243, col. 312; 1/8/62.] Lord Morrison of Lambeth was one of those great men who was able to put into simple words what a great number of people in the country were thinking at any one time. Indeed, he could exercise that gift possibly as well as anyone I have ever known. I believe that the feeling then expressed is now shared by the great majority of people in this country. I know from my association with organised industry that these views are overwhelmingly held by industrialists, both great and small.

I wonder whether I might quote, also from the previous debate, a remarkable prophecy made by the noble Lord, Lord Robertson of Oakridge. He said, at the end of his remarks: ….there remains one plain cold fact, and that is that if we do not join the Common Market, the Economic Community, the Community will go ahead without us; it will succeed without us; and it will grow in exclusiveness, to our detriment, because our voice will not be heard in its councils."—[OFFICIAL REPORT, 1/8/1962, col. 367.] Surely five years later the truth of that prophecy is apparent to us all. Then, in possibly a lighter vein, may I quote one sentence of a former Prime Minister, Lord Attlee, who was strongly opposed to our application to join the Common Market and made a strong attack on the proposition at that time? He claimed that if we went in we should be putting the Germans before the Australians, and so on, and the noble Earl, Lord Home (as he then was) interjected with these words: Our motive in entering the Common Market is so as to be able to serve our old friends better by getting additional friends for Britain."—[col. 428.] I think that that is worth remembering, too.

It is instructive to note that both Mr. Macmillan, the Prime Minister at our last attempt to get into the Common Market, and Mr. Wilson, the Prime Minister now, have become progressively enthusiastic about joining as they have gone more deeply into the whole question. This has been most marked. Why, it is only two years since Mr. Wilson was very cold about the whole idea. Two years ago, almost to the very day, he said: There can be no question at present of a new British effort to enter the E.E.C. For my part, I am glad that he has now not only changed his own view but also changed the views of the great majority of his Party. That is a very good thing. I believed five years ago, and I believe even more strongly to-day, that entry by Britain into E.E.C. on anything like suitable terms will be a good thing, not only for Britain and for Europe but also, in the long run, for the people of the whole world.

Nevertheless, if French opposition once again makes it impossible for us to join on fair conditions—and I agree with what the noble Lord, Lord Sherfield, said yesterday, that we do not want the negotiations to be bogged down for months and years; we must have some time limit to these discussions—I am convinced that we should not despair. I agree with much of what the noble Lord, Lord Caccia, said on this subject yesterday.

I should like to speak from an industrial point of view for a few moments. What have we to offer Europe from an economic standpoint? We have one of the great markets of the world to share with them. We have an industrial potential second to none for the size of our country. And we have a know-how which has been developed over many years. There is a regrettable tendency in many quarters to criticise British industry, both management and men. Of course, neither arc perfect—no human beings are—and in industry we have great difficulties, many of our own making; but I believe that the worst mistake we possibly can make is to continue to decry ourselves and run ourselves down. I hope that if we get into the Common Market, this odd talent of ours will be abolished. For I claim confidently that British industry is remarkably healthy, considering all the buffets and difficulties that it has had to contend with in recent years. It is not only healthy, but also well able to stand up for itself most adequately in the competition in Europe, if we join the Common Market. After all, we are still the greatest exporting nation in the world for our size, and how many of the most notable technological advances in recent years have not come from Britain? We have not always developed them ourselves, to our cost, but the inventive genius is still there in British industry and still lively.

But what we shall need—and this I would impress upon your Lordships—is increasingly year by year a greater scale of individual operations in industry. The size of enterprises in the United States of America is so vast, the market is so great, that one firm can readily and rapidly evolve in its own special market to a scale which enables it to cater for a whole nation in Europe. And to get to this same level, Britain must be able to achieve a scale of operations which I believe can only be found (if I may put it this way) in balanced partnerships on an international basis. This will be most conveniently achieved by joining the E.E.C.

I wonder whether I may go into this matter a little more deeply. For these remarks I am much indebted to some admirable articles in the Economist recently, drawing attention to a remarkable and authoritative inquiry which has been held into the American and the British chemical industries at the present time. Nowadays it requires 2½ British chemical workers to produce as much as one American chemical worker. This disparity is due, not to bad management or to "feather-bedding" of unions—although, of course, this does not help—but chiefly to the advantage American industry enjoys through the economy resulting from its scale of operations.

The Americans, this report found out, gain greatly, not only from their much larger plants and their mass production of goods but also from such things as bulk buying, bulk handling, bulk transport and also—a point which I thought was interesting—from not having to export small packets of chemicals to so many small markets all over the world, as British exporters have to do, especially to the Commonwealth, if they wish to keep up the scale of their exports. The British exporter finds these small exports expensive, but he has to pursue them and then, when the market to which he is exporting becomes enlarged in value, the country to which he is exporting sets up its own plant, sets up tariffs against imports from outside, and an impasse is reached. Surely the Economic Community of the Six, a free market in Europe, is the obvious solution to this impasse. It is close to Britain and, very important, it uses in general the same type of goods as we do here at home.

In a speech the other day, Mr.Brown, the Foreign Secretary, gave some figures of gross national productivity which I think are worth mentioning in your Lordships' House. He said that in Britain to-day our gross national product, on a 1964 basis, is something like 35 billion pounds. But if we joined the European Economic Community and EFTA together the gross national product at the present time would be over 135 billion pounds. In the United States it is 210 billion pounds, and in the U.S.S.R. 72 billion pounds—more than twice what it is in this country. Here, then, is the price.

But there is another point. If size gives such advantages, as we saw in this inquiry into the chemical industries, then, if we do not go into the Common Market, and Germany, France and Italy, our competitors, have the advantage of size within their Community, they will be even more serious competitors to us in our own markets outside. But if we get into the Common Market, then I believe we shall benefit especially, because those industries in which we appear to have an advantage—the science-space industries, the modern industries, which if they are to grow need a mass market—will be the first to prosper. But this will be so only if we have this mass market.

There are many lessons which we can teach Europe, and there are many which they can teach us, to our mutual advantage. It is encouraging, I think, to note that, so far as industry is concerned, Europe as a whole is most anxious that we should come and work with them. Even in France the Patronat are most cordial and friendly to us in this project —and the Patronat are the equivalent of the C.B.I. in this country. I would at this point say how much I agree with one of the remarks made by the noble Lord, Lord Clitheroe in the debate yesterday—although I do not agree with all that he said—when he expressed the hope that we should adopt some of the taxation principles of the countries of the Common Market. They seem to base their taxation on principles to encourage enterprise and industry, and not to stifle it.

I claim, therefore, that it is the carefully considered view of industry in this country that we shall be able to compete reasonably successfully in this huge market of 300 million people if we succeed in getting into it, and that thereby we shall be able to increase greatly the prosperity of this overcrowded little Island of ours. Surely this is of great importance, so far as the Commonwealth is concerned. For if we prosper in this country, we can help the demands of the Commonwealth. As we have seen, over the last few difficult years we have had to cut off even sending capital to the Commonwealth because of the difficulties at home. One thing that the Commonwealth, and indeed the underdeveloped countries throughout the world, want above all others at the present time is capital; and we can provide this capital only if we are prosperous.

As a nation which has a larger inherited series of skills in manufacture, commerce and finance than any other in the world, it will surely be our own fault entirely if we do not compete successfully should we enter the Common Market. But I would emphasise that there will have to be adjustments, and painful adjustments; and we heard about a good many of them in the debate yesterday. Many people tend to be frightened of adjustments, but in industry, surely, we are having to make adjustments every day to meet the changing needs and requirements of our markets. It is those firms, those industries and those countries which refuse to make the necessary adjustments that go to the wall.

In conclusion, I would just say this. In the admirable debate yesterday, so much was so well said about the political opportunities, the cultural opportunities, the religious and moral opportunities and the opportunities, above all, for strengthening peaceful ties that I thought this afternoon I should confine my remarks mainly to the industrial scene in which I have been engaged all my life. But let me assure your Lordships that this in no way implies that I do not think these possibilities are not of immense and permanent importance, and in many ways probably even more important than the industrial scene which I have endeavoured to describe. I agree with every word spoken by my noble Leader, Lord Carrington, the most reverend Primate the Archbishop of Canterbury, in his remarkable speech, and the noble Lords, Lord Caccia and Lord Sherfield, speaking from their expert knowledge.

Are we going into the Common Market? I trust that we shall go into the negotiations with our heads high and our reasonable demands firmly adhered to. We wish the Government well in their endeavours, and we only hope that their timing in this matter is right. But I see in some papers—indeed, in the majority of papers—that the possibility of our getting into the Common Market at this time is rated at only about 50–50. I hope this is not true; and I cannot believe that it is true. But even if, in spite of all the efforts—and this time the efforts of a combined nation, of all Parties together, which we never had before—we fail, then let us still hold our heads high, our principles intact and our confidence in ourselves unimpaired. We have many friends in the world outside Europe, and many other opportunities will offer themselves to this country in due course.

3.48 p.m.

LORD BLYTON

My Lords, I hope that the noble Lord, Lord McCorquodale of Newton, will excuse me if I do not follow him in the industrial, field. In the last paragraph of the White Paper the Prime Minister said: For all of us this is a historic decision which could well determine the future of Britain and indeed of the world for decades to come. Although I take a contrary view to that contained in the document, a view long held by those in the Cabinet who are now embarking on this perilous journey, I agree that it is a historic decision, and one that will probably smash the Commonwealth to smithereens. The procedure that has been adopted by our Government is the same as that adopted by Mr. Macmillan when he was Prime Minister in 1962. First we had the probe, followed by an application to join the E.E.C. Then, when negotiations were taking place, we were told that nothing could be said because we could not show our cards. Then, if we had not been evicted by General de Gaulle, we should have faced a fait accompli. This is again the same procedure, and in the months ahead we shall probably be told that the negotiations are confidential until we settle the terms.

I do not apologise, on a day of loud hosannas from all sides for disturbing the jubilations by putting a contrary point of view. I rise to-day to restate the Labour Party policy of 1962 and support our Party's Conference decision on the five conditions laid down by our late respected Leader, Mr. Hugh Gaitskell, which up to date has not been changed. Those conditions were designed to safeguard the Commonwealth, its trade, British agricultural policy, the right to determine our own foreign policy without interference, the right to plan our own economy and safeguard our reserve currency and for the fulfilment of a pledge to EFTA. I know I shall be told that those conditions have been eroded since 1962, but in what respect they have been eroded has never yet elicited clarification. Even the Foreign Secretary, only seven months ago at our Conference at Brighton, said that those five conditions were still valid.

We were told last year that there would be the "great debate"; and what has been the debate till this week? It has been the Press and radio exclaiming in a loud voice: "We must go in. It is sure to come. If we do not get into the Common Market we shall be excluded from a substantial share of world trade. How can we isolate ourselves from Europe? Are we not Europe?". Those have been the headlines continually over the last twelve months. Then we had the fanatical "Europeans" of Britain shouting: "Sign the Treaty of Rome and negotiate after. Get in at all costs, regardless of the price to be paid and the damage done to our Commonwealth." I am pleased, as I said last week, that at least the Government have not gone that far.

Let me make it quite clear that, with all the attempts by propaganda in the last twelve months, I do not by any means think that the people of Britain have been brainwashed by it. I am confident that if this question can be tested with the people on the basis of the cost-of-living increase and the destruction of our Commonwealth, all those who advocate the Common Market policy must certainly get a rude awakening. I have not much in common with the Daily Express or the Morning Star, but they are the only two papers that have put the opposition point of view against the rest of the Press.

The Government have decided to apply, and in the negotiations there must be no sacrifice of our principles and no violation of our freedom. I seek co-operation with all countries, but not on terms dictated by the Economic Community of Europe. Neither does our survival depend on our being reluctantly admitted into the Market. The Treaty of Rome, the Treaty of Paris and Euratom are, political institutions seeking to reach a political goal by an economic method. Their goal is a European Parliament, and we shall have to accept it if we enter. When the last Government in 1962 tried to get in, and accepted humiliating terms in their endeavour to get in, they were always told of the perils if we did not get in and the real reward there would be if we did. But this time we are at the stage where now we are told, "In the first few years it will be painful, but in the long term great rewards will be yours."

What are we asked to do in our application to join, accepting the Treaty of Rome and the Treaty of Paris? We are asked to give up the right to determine our own destiny, for once we sign it is for an unlimited period and there is no escape clause. No country can legally withdraw, and that applies to us once we enter. We should have to accept in many spheres a European Court of Justice which will have power to overrule the decisions of the British High Court. And our elected Parliament would have to accept decisions made, though they might be derogatory to our economy. The House of Commons would be subservient to a High Authority abroad, and the elected representatives of the people would be powerless in many respects.

It has always been the cardinal principle in England for the people to exercise the right to influence Governments. We do this through the Press, lobbying, demonstrations and pressure on Members of Parliament. These things, as we all know, do exert influence, and rightly so. These rights would be stripped from us if we joined the Common Market under the Treaty of Rome. We should retain control over certain domestic matters such as education, housing and health. The Board of Trade, the Commonwealth Office, the Foreign Office, Customs and Excise, the Colonial Office, the Chancellor of the Exchequer and the Ministry of Agriculture would all, in varying degree, lose their independence of action. They would be no longer free to make decisions on their own judgment of facts and the people's wishes. They could take only those decisions which a majority of the Common Market agreed to permit. We should have to bow to majority decisions of a Council of Ministers, in which we should have 3 or 4 out of 20. Worse; these Ministers would be forced to take decisions against their judgment and against the people's wishes whenever a majority of the Common Market insisted.

It would be no good trying to sack a Government, as their successor would have to take up that position. It would be useless to demonstrate by lobbying; the matter would be out of Parliament's hands. Power of decisions would be shifted out of this country to a group of bureaucrats in Brussels and Luxembourg, whom we could not sack, except on the basis of a two-thirds majority in their Assembly, however much their policies might injure us. Since the High Authority is not responsible to us, we should not he able to lobby or demonstrate; and Brussels is a long way from London.

In the time that I have served in Parliament I have always seen a healthy anxiety lest excessive power be vested in our own Civil Service, who, after all, are accountable to Ministers, who in turn are responsible to the people. Under the Treaty of Rome, our civil servants will have no importance at all compared with the High Authority in Brussels, who will then have become our effective masters. The rights of our elected Parliament, for which struggles have taken place over the years, will have been usurped, at a time when many people are thinking of trying to make Government not less, but more, responsive to the public will. We shall have to surrender to the Executive Commission, composed of non-elected civil servants, the right to negotiate trade agreements with nations outside the Common Market. In other words, we shall not be able to make freely a trade agreement with Australia, Canada, New Zealand or South Africa, although these nations are among our best customers.

To take from the State its power to organise its economy is to give up a vital and essential part of Government. I want to see planning based not solely on economics, but with the aim of creating a kind of society which will be conducive to the happiness of our people. It must take into account such matters as the location of industry, the creation of the right balance between town and country, and the preservation of the beauty of Britain.

By joining the Common Market our country will be planned by others. It is true that we shall partake in these decisions, but in effect we shall cease to be able to build the Britain we want, and we shall have to accept the kind of Britain which foreign experts think will best fit in with their Continental plans. It will most certainly mean a substantial increase in food prices, estimated by some at 25s. a week for a family of four, and by others at 50s. a week, as the Meat Traders' Association said. Nevertheless, the Common Market requires big taxes to be imposed on agricultural imports from overseas. Half of our food to-day comes in duty free from the Commonwealth. In addition, control over our domestic food prices would pass from Parliament to officials on the Continent. I have seen Press reports of prominent men in this set-up stating that food prices must be stabilised at a higher level than that obtaining in the world market. It also involves the ending of our agricultural support system, which provides our farmers with a secure income and consumers with reasonably priced food, and substitutes for this a system specially designed for the needs of the less efficient peasant farmers on the Continent. It is known as an import levy system.

Our experience from the last negotiations was that the Government of the day accepted the principle of taxing cheap Commonwealth food in order to let dear European food come into this country tax free. At the last General Election the Conservatives made it a plank of their programme that they approved of an im- Ports levy tax which was to condition our economy for going into the Common Market. I have no complaint about that—they were defeated. But the Labour Party did not take the same line. Even the Prime Minister himself said at Bristol in the General Election, in the context of the Common Market That Britain should retain the right to buy its food and raw materials in the cheapest markets, the Commonwealth, and not have this trade wrecked by levies the Tories are so keen to impose. This has been abandoned, and it seems that we have now accepted a dear food policy.

Whatever transitional arrangement we could get, at the end of the time we should be buying our food in the dearest markets of Europe and imposing a levy on the Commonwealth and the rest of the world. In accepting the Treaty of Rome it is implicit that we accept the European levy system. But what about labour and industrial issues, the movement of labour and the question of work permits for Commonwealth subjects? There will be free and unrestricted entry for workpeople from the Six countries. Will our Commonwealth people be allowed free entry into Europe? Trade unions have not much status in Europe; at High Authority level it is purely consultative. So far as I can see, all these issues are regarded as irrelevancies, but I am sure that they will loom as large issues before our entrance into the Common Market is effected

From the point of view of coal and steel, under the Treaty of Paris there is nothing to be gained for the worker. Coal on the Continent is stacked high on the ground, and so is steel. They have more than they can sell, and their capacity for producing steel has been reduced. These two industries of the European Coal and Steel Community are in serious trouble, and I doubt very much whether, on entry, our new nationalised Steel Board will not be forced to fragment the industry under the rules of competition under the Treaty of Paris. We know of High Court decisions against Belgium, which meant that they were prevented from price fixing in respect of coal. It is probable, if we get into the Common Market, that the Steel Board will be prevented from fixing steel prices as being against the rules of competition under that Treaty.

Article 92 of the Treaty of Rome subjects workers and employers to the rules governing competition, one of which forbids any Member State to aid industry in any manner likely to destroy compettion within the Market. That means that our Government could be denied the right to give specific help to enable industries in this country to modernise and to become more efficient. If this rule were applied we should not be able to help the coal, steel or shipbuilding industries

The entry of Britain into the Common Market means the abandonment of the Commonwealth. When we tried to enter the Common Market last time, M. Couve de Murville, who was then the Foreign Minister of France, said: If Britain enters the Common Market with the Commonwealth, the Common Market is finished. If Britain enters the Common Market without the Commonwealth, the Commonwealth is finished How true this is, as we shall soon learn in the months that lie ahead. We know that when the late Government accepted the conditions for entering the Market, and accepted a discrimination within the Commonwealth, African dependencies were to be treated as second-class citizens and were to get in return a favourable entry to the British market. Canada, Australia and New Zealand did not even get this, and I, for one, do not expect that we shall get any better terms.

Many of the Common Market supporters have written off the Commonwealth. As one dependency after another attains independence, the stronger becomes the advocacy that Britain should now join Europe regardless of the Commonwealth. I do not subscribe to this philosophy. The Common Market is avowedly political in its aims. The Six form a political bloc aiming at a united Europe, and if we are accepted Britain, for the first time in her life, would be bound politically to the Continent of Europe. While I support the organisation of defence in NATO, which we can leave by giving notice, I do not support a Britain which would become merely a part of the Continent of Europe, bound up with the aims of the Continental powers which do not concern us. There is still the whole of the outside world with which we can trade. What is needed is world unity, not continental grouping. Europe, after years of domination, has now to live in a world where other continents, inhabited by black, whites and yellow races, no longer acknowledge white supremacy.

It is often suggested that a vast market is available if we join. By joining we must bring to an end Imperial Preference and discriminate against Commonwealth countries with a market of 700 million people. Our trade with the Imperial Preference area is 39 per cent.; with EFTA it is 14 per cent.; with the E.E.C. it is 19 per cent., and with the rest of the world it is 28 per cent. So if we join by ourselves we shall have to put tariffs against 81 per cent. of our trade with all countries outside the E.E.C. In turn we can expect that the other countries will reciprocate and put tariffs on our exports. In this context we could lose more world trade than we can gain by entering the Common Market. Our trade with the European Community has increased although we did not sign the Treaty of Rome and we still retain our sovereignty.

Again, if the cost of living goes up then wages will have to increase, and if we are also to put a levy on imports of our raw materials it will mean that our costs will go up, and that will reduce our competitiveness. And what happens to the prices and incomes policy? You cannot restrain wages when by your own political action you increase the cost of food that people have to buy. To those who say, in their advocacy of the Common Market, that the Market is necessary to us, I reply: so is our market necessary to them. In any case, big as the Common Market is, it is only part of a worldwide scene in which a nation like ours can look for its trade. One of our principles in the Labour Party has been that we will safeguard Commonwealth trade. That means that we cannot accept to tax imported food from the Commonwealth, as we will have to do under the Treaty of Rome. If our conditions are not acceptable—and they will not be unless the Treaty is altered to suit—then we ought to concentrate on a policy with EFTA and the Commonwealth. This would be a return to our future destiny of friendship and co-operation with the multiracial Commonwealth and the Scandinavian countries. After all, the Commonwealth and the EFTA countries as a whole offer most of the economic resources of the world, and their potential resources are much greater than those of any part of Western Europe.

We should invite all other countries, like Poland, Yugoslavia and the Soviet bloc, to join EFTA, and then we should all work out plans for a rapidly expanding trade between us. In this plan there would be no loss of sovereignty and no loss of our control over our own affairs. This is my alternative to the supra-nationalism that we see abroad, and if we must have groupings that is the grouping I should like to see. It is only the fainthearted, and those who want to tie us up, hip and thigh, to the Common Market, who will not see a programme of this character.

My Lords, it is my firm belief that if Britain does not get into the Common Market—and we are a long way from it yet—we shall not only survive but prosper; and we shall not only retain but increase our influence in the world. If we face humiliation a second time it will be most deplorable. The great task before us is to give a new lead in international policy aimed at the expansion of international trade, the maintenance of full employment and securing a greater share of world prosperity for the developing nations, without being hamstrung by High Authorities of Europe who are responsible to no Parliaments and who can override the wishes of an elected Parliament.

If the five conditions of the Labour Party Conference were accepted by the E.E.C., it would mean a conscious decision to liberalise their commercial policy and to become outward-looking rather than an inward-looking Community. It would mean they would have to recognise, in deeds as well as words, that Britain has obligations, not just to 200 million people within the Common Market but to 700 million people within the Commonwealth.

How is it that the Government now think that our safeguards are more easily attainable? There has been no alteration in the Treaty of Rome: it is the same as when it was made in 1957. And the Treaty of Paris is also the same. They are the same as when Mr. Heath got his terms. The Treaty of Rome is still the same as when members of my own Government were very critical of these Treaties in 1962. I see no evidence at all to justify the arguments we now have, that the Treaty of Rome is not so rigorous as they thought then, and many of us have grave misgivings about this. I seek to trade with all countries but not on terms dictated by the Treaty of Rome. Make agreement, yes, complementary to each other's economies, but not to hand over the liberties we have gained in Britain over all these years. There are many other problems that arise, though I will not touch on them to-day. I am thinking of the agricultural levy, the position of sterling, the balance of payments, and so on, which await the negotiations.

It is now becoming fashionable for those who disagree with my point of view to call us "Little Englanders" or "Ancient Britons", as "Manny" Shinwell was called. It is easy to sneer when argument fails. I must say that I am pleased to be a "Little Englander". I am fighting not to destroy the Commonwealth, which twice in my lifetime has come to our aid, with material wealth and manpower, in two world wars. Many of their sons, who fought to save us from those whom we now want to embrace, lie in battlefields abroad. Whilst I have forgiven much that was done by those who fought against us, I could not throw overboard our people of the Commonwealth for new-found friends in Europe, especially under the Treaty of Rome and all the political implications that are involved.

The peoples of Canada, Australia and New Zealand are, by birth and descent, as much British as we are, and we cannot sever or repudiate the union of history and of common interest. We cannot desert those other member nations of the Commonwealth of different blood who by conquest in the past are still with us as a result of our years in their countries. If we have to face a choice between Europe and our British partners in the Commonwealth, and it has to be made in the future, then, my Lords, I know my choice.

This decision should be taken only after the people have been told plainly what it involves and have been given the right to decide such momentous issues. Moreover, as we have long been accustomed to ruling ourselves, before any part of our liberty to do so has been delegated to others the people ought to be consulted. Even to-day, it is reported that Professor Hallstein has said that we must accept political union. Without the people understanding what is involved, it is not right that the Government and Parliament should commit us forever to the European Community, which would deprive every future Parliament of much of its sovereignty in a number of major issues affecting the life of every person, living and unborn. To take this, as the Prime Minister said, "most historic decision in our lives" without giving the people that elected the Government, and for whom they hold their powers in trust an opportunity of deciding, or even expressing an opinion on Britain's future as a democracy, would, in my opinion, be travelling a dangerous road.

To-night, if a vote is taken I shall abstain and reserve my position until we see what conditions for entry are accepted by the Government. To-day, in my opinion, the so-called benefits from entry consist of speculation, conjecture and imagination. The Commonwealth countries are now becoming alarmed. They fear for the second time that they are to be sacrificed if we can get into Europe. The countries in the Commonwealth who grow sugar and which are one-crop-only countries are greatly alarmed also, as they know that the Six are concentrating on a huge sugar beet industry. They are dependent on our market because we geared their economy to ours. If we go in, ruin awaits those people.

I await with anxiety the long negotiations ahead. It is a gigantic gamble. The problems are immense. My last word is, let the people know and let them decide the issues. This is what Labour demanded from the Tories in 1962. I conclude by saying that it is a sad day for the Commonwealth, apart from all the other issues involved. In my 47 years in the Socialist Party I never dreamed that our Party would be the one to strike such a mortal blow at our friends with whom we have been associated for over a hundred years. At this stage I say to the Government and to the people of Britain, in the words of the great Bard, William Shakespeare: Those friends thou halt, and their adoption tried, Grapple them to thy soul with hoops of steel

4.24 p.m

THE EARL OF CROMER

My Lords, I rise to-day to support the Motion before the House. As has been said by a number of noble Lords, and by nobody more clearly than the noble Lord the Leader of the Opposition, in what I thought was a remarkable and outstanding speech in yesterday's debate, this is a historic decision, of fundamental importance not only to the country but to the world at large. It is a declaration of our intent to move forward in step with like-minded neighbours towards building a world fitted to meet the problems, economic, financial and industrial, of the 20th century.

As the noble Lord, Lord McCorquodale of Newton, in another outstanding speech mentioned, the scale of industrial production is probably the keynote to the second half of this century in the industrial world; and the scale on which investment in industry of the future will be called for can only be justified on a market size that supports the demand. The capital intensiveness of modern industry is going to become greater and greater, and with the capital intensiveness the greater will be the investment required.

But this declaration of ours is at the same time an acknowledgment, I think, that we are now ready to leave behind us, albeit with honour and respect where it is due, those elements of outworn dogma, some of which have bedeviled our progress in the modern environment. If, with respect, I suggest that the noble and learned Lord on the Woolsack did perhaps less than full justice to the changes implied in our life by accession to the Treaty of Rome, I think it can be claimed that other noble Lords have fully filled in any gaps there may have been. But I think it is right and proper that we should recognise that change is implicit. Some of these changes will be fundamental, and they will affect our daily lives in a variety of ways.

The basic subject of tariffs was touched on yesterday by the noble Lord, Lord Kahn, who deplored the fact that we should be lowering tariffs more than other countries would be doing. I personally welcome this move, as a move away from discrimination and preference, albeit only within the circle of the Community. But I believe it is a move in the right direction.

While this is indeed an Economic Community, the implementation of economic and financial policies stems from political decision. I think that the political decision lying behind the Motion before the House to-day is the right one for this country. So far as the political judgment in the timing of making the application is concerned, I am in no position to judge. I have no doubt that it has been carefully weighed by the Government against the serious and far-reaching results that are possible if the negotiations are not brought to a successful conclusion. I do not mean by this that there are not other alternatives for us if the negotiations are unsuccessful. Of course there are. I do not think they will be any easier. I do not think life will in any way be simpler; and the fact of the negotiations failing, were that to happen, would, I think, have a disruptive effect on world trade and world relations generally.

Most of the topics connected with our accession to the Common Market have already been touched on, with the rather notable exception of those particularly within the financial field, and it is with those that briefly I should like to deal to-day. I welcome this Motion, as I believe that if the negotiations are successful this country will once again find itself in the mainstream of world financial affairs instead of the financial backwater that we have busied ourselves in trying to contain, largely as the result of our Exchange Control measures, brought upon us by the circumstances of our affairs. I wonder whether noble Lords fully realise the extent to which we have withdrawn from the financial mainstream of the world as a result of these restrictions. Many of these restrictions now are even more rigorous than they were during the war. The noble Lord, Lord Clitheroe, yesterday mentioned that one of the companies with which he was associated had either branches or affiliations with the Common Market countries. Of course, he is lucky, because anybody else who wanted to emulate him to-day would not be allowed to do so; nor, for that matter—for those who think that this is entirely confined to the Community—would he, as things stand, receive any encouragement to make an investment in Australia, New Zealand, Canada, South Africa or Eire.

I feel that this degree of retrenchment is perhaps not as fully recognised as it might be. Curiously, it is more clearly discernible when viewed from a distant vantage point, with the benefit of perspective that only distance can give. We are finding ourselves opting out of more and more international business. It is true that the ingenuity displayed by the British financial community in seeking legitimate ways of participating in world financial affairs disguises to some extent the full effect of the restrictions which exist; but the cumulative effects of these restrictions are progressive. They work through over a period of time. The immediate results and effects are not particularly noticeable, but the erosion which is taking place is continuous.

I know there are those who are concerned at the possible results of the removal of restrictions inherent in accession to the Treaty of Rome. Personally, I feel that the fears on this score are rather exaggerated. I do not believe that there would be a rush of portfolio investment from this country into the Community countries if restrictions were removed—one has only to look at the yield on equity investments in Continental countries to find some support for this argument. But more fundamentally, whether we join the Community or not, I think that most economists, no matter what particular camp they belong to, agree—it is rare that they agree on anything, but I think they agree on this—that this country needs to see an inflow of foreign capital of investments from abroad coming to this country in the years ahead. This will come about only if the opportunities and conditions for the employment of funds in this country and the treatment of investments in this country are at least as good as they are in the other industrialised countries of the world.

If this is to be the case—and we must make it the case—the incentive to the British investor to seek the first opportunity to invest abroad in preference to investing at home is not very great. Given that the conditions at home are satisfactory, the degree of diversification that the average British investor is likely to seek is not, in my opinion, likely to be any serious threat. The institutional investor is a different matter; for quite different reasons he, too, has quite severe limitations on the extent to which he is likely to seek overseas investment—at least as the law stands at present—not as a result of exchange control, but as a result of his contractual liabilities to his investors.

I make these remarks in the hope that it may not be considered necessary to seek too long a transitional period in adherence to the Treaty of Rome in this regard. I feel that the next few years will see major changes in the structure of industry within the Community and the continuation of rationalisation within British industry. It would, in my belief, be unfortunate if these two movements take place separately—in two separate streams, if you like—rather than comprehensively to meet the needs of the European market as a whole as one envisages it existing towards the end of the century. And it is towards the end of the century that we should now be planning. In this connection, we have to look at the future. It is important, in my belief, that we participate as fully as we can in the process of rationalisation in the Community as it is a sphere of activity in which we are particularly skilled, and if vie fail to participate from the start it will become progressively more difficult to do so later; that is to say, if we accede to the Treaty of Rome.

One further point I should like to mention relates to the suggestions which have appeared in the Press that means should be found to differentiate between investment in the Community and investment on a world-wide basis. It would, in my belief, be a mistake to attempt to introduce by regulation discrimination between one area and another. The removal of discrimination on payments as between one country and another was one of the great tasks in the financial and monetary field in the decade following the war, culminating in regard to what are known as current payments with the adoption by the United Kingdom and the leading countries of Europe of external convertibility, from which great benefits have accrued to the trade. I feel that it would be a retrogressive step to attempt to introduce discrimination, and I would suggest that it would be displaying some naïvety in the knowledge of the viscosity of money.

One last point relates to sterling as a key currency, and the Sterling Area. Here again, I know that there are misgivings, misgivings amongst Continental observers rather than in this country. I regard these misgivings as being exaggerated. I think it is well to bear in mind that the Sterling Area is a by-product of British history in the field of finance, and is not an end in itself. The rather formal concept of the Sterling Area is of relatively recent origin. The use of sterling, both as a reserve currency and a trading currency has been, and doubtless will continue to be, a subject of a constant evolution. The foreign holder of sterling has long been entirely free to convert his sterling into some other currency, but despite the vicissitudes through which sterling has passed the tendency to do this has been markedly unimportant. The vicissitudes themselves have stemmed from the manner in which we have managed our economy here at home. The international use of sterling as a trading or a reserve currency has not of itself been a source of weakness, but has been the medium through which the lack of confidence from time to time has manifested itself. On the basis that we manage our economy here at home within our means, which is incumbent upon us whether we join the Common Market or not, then I do not see the international role of sterling as any impediment to the obligations which we may assume under the Treaty of Rome. If anything, I see it in the contrary sense as being advantageous to ourselves and to the other members of the Community.

The noble Lord, Lord Gladwyn, introduced in his speech yesterday the thought of some sort of European currency, and indeed perhaps our grandchildren may see something of the sort. I myself do not believe that this is something which is of any great concern to us at present. I think it is a very distant dream. On the other hand, the degree of co-operation which exists to-day between the central banks, which has been of such immense assistance to us in this country, will, if anything, be enhanced, and I think that this development is likely to continue regardless of this particular discussion. I support this Motion, and I wish our negotiators all success in the task that lies ahead of them.

4.40 p.m.

LORD SILKIN

My Lords, I had not intended to speak in this debate but I was asked yesterday to do so, and I felt very much like the noble Lord, Lord McCorquodale of Newton, in wondering what there was left to say after so many admirable speeches, and particularly after the opening speeches by my noble and learned friend the Lord Chancellor and by the noble Lord, Lord Carrington. I thought that at any rate the case for the Motion had been adequately covered in those two speeches, and I was quite ready to vote at the end of what they said. But I thought I should get some inspiration, as the noble Lord, Lord Lord McCorquodale of Newton, did, from the debate which we had on August 1 and 2, 1962, which was indeed a remarkable debate.

It was opened by my late noble friend, Lord Alexander of Hillsborough, and there took part in it my noble friend Lord Attlee and my late noble friend Lord Lucan. All three of them were bitterly opposed to our entering the Common Market and, like the noble Lord, Lord Blyton, they stated what they thought was the Labour Party's position as that time. Among other people who were opposed to our entering the Common Market was the noble Lord, Lord Balfour of Inchrye, and I am very glad that he had courage to come and say that he had changed his view. May I say to the noble Lord, Lord McCorquodale of Newton, as I said on the previous occasion, that I agreed with everything he said? My own views have been very much confirmed by what has happened in the intervening years since 1962. I was gratified to find that a great many of the things which I said then have been repeated on this occasion. For instance, the noble Lord, Lord Caccia, talked about the spirit in which we should enter the Common Market. We should not enter as suppliants. We should not apply from weakness, nor from strength. All these things were said in 1962, and there were many others which have been said again now.

There is one important new factor which we did not adequately discuss at that time, and that is the common agricultural policy which has now largely been agreed upon but which at that time was merely foreshadowed. We had no exact idea as to what kind of agreement would be made by the Six, or whether any agreement would be possible. We now have it, with all its disadvantages in the short term, and those who are opposed to our entering the Common Market, and who always have been, have made use of this new factor in advocating their objection.

I am in favour of this Motion and of applying to enter the Common Market, as I think everyone else is, on two grounds. The first is our long-term self-interest: the larger markets that will be available to us; the greater opportunities for making use of our skill, our technological ability and experience, our nuclear progress and matters of that kind. I need not elaborate on this, because the case has already been made so admirably. If anything, the case is even stronger to-day than it was then. The second reason I favour entry into the Common Market is the political one, and in that I want to include, as the noble Lord, Lord McCorquodale of Newton, did, the cultural case, the opportunities for widening the scope of culture; the spiritual case, which was made by the most reverend Primate yesterday, and, generally, the widening and broadening of the whole sphere of human activity.

Some people, including myself, regard the political case as even more important than the economic case, although we all recognise that this will have to evolve and will not come about in the very near future. It would be highly dangerous to prepare to-day any framework for such an ultimate evolution. But we must face the fact that, if we do enter the Common Market, eventually political unity is inevitable.

We shall be working very closely economically with a number of nations, but we shall also be working with them in the modification of certain laws. I agree with the noble Lord, Lord Blyton, that our entry into the Common Market must affect some of the Statutes and laws of this country; that we shall be handing over to the Commission of the Six the power to make laws which will affect this country. But, of course, we shall have a voice in any changes which are made and one must assume—and I do assume—that our fellow members of the Community will be acting reasonably, and that our influence will be felt in any changes which are made. Moreover, we shall retain our own domestic and national interests, and our national characteristics. The Treaty of Rome does not permit of any interference with the day-to-day lives of its member nations.

In 1962 a great case was made by my noble friend Lord Attlee about the danger of entering the European Community, from the point of view of its political consequences. He feared, as was the case at that time, that it might even accentuate the difficulties between the East and the West; that we should have been joining a clique which he thought at that time existed largely for the purpose of combating Communism and preventing its growth and influence. That view is not held to-day to anything like the same extent. I believe that most of the members of the Community would welcome a closer relationship with the countries of the East, and it would be very interesting, once we are in—as I hope we shall be—to see what line was taken if there were an application to join by, say, Yugoslavia, Poland or some other member of the Warsaw Pact. I think that we should be prepared to accept such an application on its merits, and that the Community would gain.

Eventually, if our objective is really achieved, it will be a Community of the whole of Europe. This may take many years, but that is the ultimate objective; a Community of the whole of Europe, with a population running into perhaps 500, 600 or 700 million people. The time may well come when even such a Community will not be too large, because we still have to face the possibility of a community of the whole of the American continent (and steps have already been taken in that direction by the United States) and the possibility of another Asian community, with China perhaps as its focal point. So I look forward, from a political point of view, to a Community of the whole of Europe although, as I have said, one cannot necessarily plan for this at the present time.

The real case against our applying, if there is one, was made by the noble Lord, Lord Kahn, the noble Lord, Lord Woolley, and the noble Lord, Lord Blyton, and it is that for the short-term it will undoubtedly mean some increase in the cost of living: how much is a matter for discussion and speculation. The Government have given certain figures. In their view, it might be between 2½ and 3½per cent.; but if they can negotiate to spread the effect it will be over a period of a number of years and will not be felt very substantially by those who are going to be affected. To the extent that it would be a hardship on certain classes of persons, such as people on fixed incomes, people on low incomes, old-age pensioners and so on, the Prime Minister, in his, I think, wonderful television appearance last night, answered by saying that the Government would contemplate increases in pensions for people who are the victims of any increase in the cost of living; and, of course, we should do everything we possibly could to mitigate and alleviate the results of any hardship that might be incurred.

I do not propose to give the Government any detailed advice on how to carry on the negotiations. The House, in passing this Motion, must be held to express confidence in the ability of our negotiators to do just this. Where some hardship is inevitable they will, as I have said, do their utmost to mitigate it, either by internal action or as the result of negotiations with the members of the Six. We shall also try to ease the transitional stage—and I agree with the noble Earl, Lord Cromer, that the transitional stage should not be too long. I think it would be a great mistake to hang it out for, as some think, four or five years. I do not propose to put a time limit on it, but I think it should be very much shorter than that.

The Prime Minister has already said that in negotiating he would try to discuss principles and not details, leaving these for determination until we are inside the Community. I think that is right. Once we are inside the Community and have settled the main principles then I think that our influence should be sufficient to ensure that we get a reasonable settlement of the details. To get bogged down by detail would be making the same mistake as I regret to say we made on the earlier occasion. In saying this I am not criticising Mr. Heath at all. He did his best, and I think he did an excellent job; but the one mistake I think he made was to get too much bogged down by detail, with the result that he gave the impression that, as a people, we were not really serious, or were not wholly serious, about joining the Market.

Of course, there was something to be said for that view. In the debates in this House and in the other place in 1962 there was a great deal of opposition to our joining the Market—opposition which does not exist to anything like the same extent to-day—so it was natural that getting bogged down in detail should have given the impression that we as a nation were not yet ready to join the Market. We must not give that impression to-day.

There are a few principles we must discuss and settle. We all know what they are. They have been referred to over and over again in the course of the debates here and in the other place. Once we have settled those, there should be no delay in applying formally to join the Market. I was very glad to hear the Prime Minister say, in this same Panorama programme last night, that he hoped we should be in a very favourable position for coming to a firm decision by the end of this year.

My Lords, there has been some question as to timing. Is this the right time for making the application? I am sure it is. My own view is that if we do not make our application now it will be too late. This is our last chance. We cannot go on discussing the pros and cons of joining the Common Market and remain shivering on the brink. This is the time when we must make our decision; and I agree with all those who have said that it is a most fateful decision that we are making. I myself am as convinced as ever that by accepting the Motion before the House to-day and by making application we shall be taking a step which will be for the benefit of our people, of the Commonwealth, of the whole of Europe and of the world.

4.58 p.m.

LORD BUTLER of SAFFRON WALDEN

My Lords, I hope noble Lords will excuse and tolerate me for a few minutes in a short intervention. I do not wish to make a speech because I think it is far too late; and I must apologise for not having been present during the debate yesterday, which was impossible owing to a previous engagement elsewhere. However, I have been able to read the whole debate in both Houses.

I speak as the Chairman of the Home Committee of the Government to which the negotiators reported during the course of our previous negotiations to join the Common Market. I speak also as one who sat side by side with Mr. Macmillan, when he was Prime Minister, at the very difficult Commonwealth Conference which took place before the negotiations finally broke down—a Conference of such extreme difficulty that I can remember walking round Marlborough House garden with our then Prime Minister and our wondering whether we should ever be able to bring that Conference along with us and make application. It was largely due to the drive and determination of Mr. Macmillan that we were able to go ahead and make application on the last occasion. I simply wish to say that the position with regard to the Commonwealth has, in my view, almost completely changed since that date, and from the point of view of the Commonwealth is very much better now than it was then.

I also speak as one who was President of the O.E.E.C. in Paris for four years running. In those days—it was only the 1950s—it was regarded as normal in Europe for Britain to take the lead and, indeed, to take the chair. The whole of the affairs of Europe, economic or otherwise, were then discussed; and I look forward with confidence to the day when Europe will again find it useful to have Britain taking the lead and taking part in her most intimate affairs. I often wonder why we did not take part earlier in the discussions about the Common Market. I believe it was due to our Ministers and our Government Departments—including the Treasury, the Foreign Office and the Board of Trade—not taking the Messina conversations seriously, and in their being unduly frightened about the word "federation".

I should like to say to the noble Lord, Lord Blyton, in answer to his very moving and eloquent speech to-day, that I think it is a very grave exaggeration to say that the signing of the Treaty of Rome is going to interfere with our own Parliament and with our own daily life. I believe that signing the Treaty of Rome is the sine qua non of successful negotiations with the Six at the present time. I am glad that the Government have taken that hurdle, because without it I do not think we could hope for the negotiations to be successful at all. I now wish the negotiations well for political and economic reasons.

As Sir Winston Churchill pointed out —and I gave recently the Churchill Memorial Lecture in Zurich describing his spirit and his ideas—it is vital that we should have a presence in Europe, politically. This has also been brought out by the noble Lord, Lord Gladwyn, not so much in his speech yesterday, but in his previous writings. It is really essential for Britain to be in Europe to keep the balance between France and Germany. There was little mention in the debate yesterday on the possibility of Germany developing in a certain way which we all fear. Whether she does or not, I believe that we are the only nation who, politically, in Europe can be right in the middle and be the right strength for peace by simply being part of Europe. That is the political argument.

The economic argument has been described by the noble Lord, Lord McCorquodale of Newton. The only difference I have with him is that his figures of the gross national product of the various countries differed markedly from those given by the noble and learned Lord the Lord Chancellor yesterday. I do not wish to go into details, except to say that when we see the size of our own gross national product as an Island, and what it would be if we had the Community and EFTA with us, if we all got together, I do not think it needs any further words of mine in this very short intervention to point out that for our industry it is absolutely vital to have wider markets, wider potentialities, and to take part in a wider and greater gross national product than we could alone.

My Lords, before I joined Mr. Macmillan in agreeing that I was in favour of entry into the Common Market, I had reserved my position about agriculture. I should like to warn the House that I do not think the position about agriculture is very easy to-day. The nub of the whole thing is the financial arrangement surrounding the agricultural policy. The Prime Minister said yesterday in the House of Commons that the levy bill might be as much for us as for all the other countries put together. The noble and learned Lord reminded us of the excellent paper which has been published by the Government on the agricultural situation, and that the strain on our balance of payments may be between £175 million and £250 million a year. We must find a solution to this problem.

I have kept in touch with the leaders of the Six ever since I was Foreign Secretary, and ever since I was taking part in the previous negotiations. I keep in touch with representatives of the French Government and with others concerned. I can assure noble Lords that this is the point upon which the Six feel that the difficulties will really arise. Some reference has been made to-day by the noble Lord, Lord Silkin, and by other speakers to the fact that the transitional period should be short. I do not mind a bit if the transitional period is short on the rest of the canvas; but on the agricultural canvas we may find that we shall have a long transitional period before we finally settle this matter. I go so far as to say that if we settled this matter and then had a long transitional period for agriculture to work itself out, it might well be the most sensible solution of all—at any rate, a great deal more sensible than breaking down the financial arrangements of the agricultural policy.

My Lords, I promise not to detain you. I want to add only three further points. The first concerns what I have mentioned about the Commonwealth. What we said to that Commonwealth Conference was that a Britain strong economically would help the Commonwealth more than any other arrangement we could possibly make. It is because I believe that going into Europe will make Britain strong that I believe that, eventually, it will be better for the Commonwealth than any other plan. The second is in regard to the Treaty of Rome. I agree with the noble and learned Lord the Lord Chancellor who said in his speech yesterday that the remarks made by the noble and learned Viscount, Lord Dilhorne, on August 2, 1962, were correct. I venture to suggest" — he said — that the vast majority of men and women in this country will never directly feel the impact of the Community-made law at all"—[OFFICIAL REPORT, col. 420.] I think the noble Lord, Lord Blyton, was exaggerating greatly when he said that we shall all suffer in the way he suggested.

Lastly, my Lords, a word on the balance of payments. I was glad that the noble Earl, Lord Cromer, referred to this matter, because my friends in Europe tell me that our position with sterling is the second big difficulty—the first being the Financial Resolution relating to the agricultural policy. For once, I do not agree with Lord Gladwyn that we shall easily reach a European currency, although I hope, as Lord Cromer said, that that will come in due course. At the moment, we have to go in with our sterling proudly flying, as it should, as our own proud achievement. I hope that we shall never give it up as our currency and as a world currency.

I believe that the difficulties have been grossly exaggerated; though I recognise that there is a lot to be done by the Chancellor of the Exchequer, and by other Ministers concerned, in supporting sterling internationally. I believe it will be strengthened by going into Europe. But means of supporting it, even within Europe, may be found. I believe that we are going to have difficult negotiations, particularly on the points of the agricultural Financial Resolution; and therefore I do not mind if we see a longer transitional period for agriculture to work itself out.

I agree with my old friend Lord Clitheroe that if we do not go in wider groupings are still possible, and that we should never lose our nerve. But I disagree with him in that I believe we should make this further attempt, make it firmly and on a wide front. The most reverend Primate spoke from the particular spiritual angle. I want to say a last word from the cultural angle. I have recently assumed the presidency of the British Committee of the European Cultural Foundation, because I believe that now I am not active politically I should do something in the sphere of culture to further what we all have at heart; that is, the unity of Europe. It is in that spirit that I shall support this Motion.

5.9 p.m.

THE MARQUESS OF SALISBURY

My Lords, I had not intended to intervene in this debate. For I am certainly not an economist, and I realise that I am speaking to a gathering of experts. If I do speak, for a very few minutes indeed, it is because of some things that were said—or perhaps it would be more accurate to say were not said—in this House yesterday. One noble Lord (I think it was the noble Lord, Lord Carrington) said in his speech that he thought our discussion was to some extent bound to be a sham fight; for everyone on both sides had made up his mind long ago what he thought on this particular subject. I am afraid that I am not one of those. Like, I think, the noble Lord, Lord Champion, who spoke yesterday, I am one who still finds it terribly difficult, even now, to decide my final attitude on this difficult and tortuous subject.

My main object in coming to this House yesterday, was to listen to what was said on both sides and to make up my mind on which side the true balance of the argument came down. Even after listening to the speeches of some of those in your Lordships' House whose judgment I most respect, in favour of the course which the Government now advocate, I still find, I must confess, that I am very much in two minds—even in spite of the advice of my own Leader—as to whether the present decision of the Government is right.

A striking feature of the debate yesterday—at least so I thought—was that, although all the theoretical arguments used in favour of our entry into the Common Market were impeccable, they were never supported by figures. On the other hand, all the speeches made by those expressing doubts did include figures—and all those figures seemed to me to point rather in the other direction. Take the speech of the noble Lord, Lord Kahn, to which we all listened with such deep interest. He is, I know, an acknowledged expert on these subjects, and one of very great distinction. What was the general effect of his speech? I think it was this: that the entry of this country into the Common Market would mean a substantial rise in the cost of living in this country, and, above all, in the cost of living of the very poorest classes; and he gave figures in support of that view.

If I am not misquoting the noble Lord, he said that the rise in the general cost of living might amount to about 3½ per cent., and that for the poorest classes, if I may say so, where bread consumes a much larger proportion of their weekly wage than is the case in other sections of the population, it would be very much more. The rise in the cost of bread was likely to be about 14 per cent., and though this was likely to be offset over the whole country by a fall in the cost of vegetables and fruit, the poorest classes, as he pointed out, do not in fact eat much vegetables and fruit and so it would not help them very much; and the noble Lord gave other examples of the same kind.

What is more, my Lords, similar views were expressed by my noble friend Lord Clitheroe, also a man of long experience in politics, and later in financial circles; and he, too, quoted figures in support of his argument. Nor have these figures, so far as I have heard, been controverted in any way by protagonists of the other side. The Prime Minister, indeed, has given an assurance (I think he gave it in another place, and I gather that he repeated it last night) that if the poorest people—for example, the pensioners—were heavily hit, their difficulties would be alleviated—he gave that assurance—by higher pensions and lighter taxes.

But, my Lords, if there are to be lighter taxes and higher pensions for these people, and possibly for others as well, it is surely fair to ask where the money for that is to come from. That point was very much skated over in your Lordships' debate yesterday. It was hardly mentioned at all. The money will clearly not come from the taxes on tobacco and alcohol which to-day, as was said by the noble Lord, Lord Kahn, bring in, I think, £1,700 million annually to the Exchequer; for, as the noble Lord pointed out (col. 1237), there are already proposals being considered by the Commission for: the harmonisation of tax rates on alcohol and tobacco I do not know exactly what that means; but in the context in which the noble Lord used the words, it seemed to indicate that, at any rate in his view, if we joined the Common Market there would be a lower yield to the Exchequer from these two items.

Where then, my Lords, is this money to come from? We have not been told, and I feel that the country, and your Lordships, too, ought to be given more information on this particular aspect. I hope that the Leader of the House will give it in his reply. It would be a very great help to a great many of us, I am sure, to know what his answer is, and it is surely relevant; for, up to now, all we have been given are comfortable assurances that all will be well in the long run. My Lords—and I would say this in particular, if I may, to the noble Lord, Lord Silkin—my grandfather, who was Prime Minister at the end of the last century and who as a result of the hard experiences of his political life had become more and more sceptical about comfortable assurances, used to have a phrase which he sometimes used. It was, "My old enemy, the long run." Much that we have heard to-day seems to me to be a classic example of "My old enemy, the long run."

I may of course be asked, and quite properly, "You may not be altogether happy about this plan, but what is your alternative?" My Lords, judging by the debate to-day there seems to be a number of alternatives. We have heard them produced in more than one speech. The noble Lord, Lord Caccia, mentioned no fewer than three—certainly two, and I think three; and no doubt there are others. I must confess that for political and other reasons the one I should have greatly preferred would have been what the noble Lord, Lord Caccia, yesterday called …a trading association of EFTA with the Atlantic Powers, or such an association with selected Powers to include Australia and New Zealand as well as Canada; this with or without the United States and Japan, at least in the first stage".—[OFFICIAL REPORT, col. 1230.] I think that an admirable idea, if I may say so with all deference. It seems to me to have no important disadvantages over the Government's present plan and to have one vastly greater advantage, in that it provides, politically, a far more adequate balance between the Communist bloc and the Free World than an arrangement limited strictly to Europe can ever have. I do not know whether President Johnson would prove as obstructive as General de Gaulle has been; but he could not possibly be worse.

However, having said all this, and having expressed my doubts, I do not, I can assure your Lordships, propose to vote against the present proposal, if it is pressed to a vote. We must recognise that it is supported by the leaders of all the great political Parties and by the majority of their supporters, at any rate in Parliament. I emphasise the words "in Parliament", because it seems to me to be yet another example of a steadily growing practice, even in Parliamentary democracy as it is now developing, that there is no necessity for Parliament to consult the people, even on matters that most intimately concern them. In this case, I recognise that a decision has been taken: the die has been cast. Mr. Wilson has made up his mind: Mr. Heath has made up his mind: Mr. Thorpe has made up his mind. In such circumstances, and matters having gone so far, may I very diffidently wish the attempt well. But my Lords, I cannot conceal from myself that it will not break my heart if this attempt fails and we can turn to Lord Caccia's alternative; and I suspect that in saying this I speak for quite a considerable proportion of the British people.

5.19 p.m.

LORD BYERS

My Lords, we have had a long debate and a good debate, and I am glad to say that we on these Benches do not have the difficulty the noble Marquess, Lord Salisbury, has in making up his mind; although I must say from these Benches how much we appreciate the good wishes with which he ended his speech. We have believed for a very long time in the British people playing their full part as good Europeans in the politics and economics of the world. It is for this reason that for many years we have been unwavering in our support of efforts to bring the European nations together in a much larger political and economic community. This has not by any means been a Liberal monopoly, but leading Liberals, like the late Lord Layton, my noble friend Baroness Asquith of Yarnbury, and my noble friend Lord Gladwyn, who spoke yesterday, have all played a vigorous part in trying to educate the public of this country to appreciate the excitement and the challenge presented by these wider horizons.

Liberalism is essentially international; it is essentially a belief in the free movement of peoples, goods and services across frontiers. To many of us this greater community, enlarged by British membership to about 300 million people, offered the economic scope and the breaking down of barriers which we believed would bring out the best in our industry, and indeed, even in our agriculture. It had the added advantage to the free traders that it made the protection of the common external tariff seem respectable. I was interested in what the noble Lord, Lord Butler of Saffron Walden, said in his short intervention about the way in which there was so little enthusiasm in this country and also in Europe for a wider community and a wider arrangement.

As I have said, we claim no monopoly, but we can claim not to have wavered in our support for British entry. In the other Parties there have been changes of view and of heart. Some of them we have welcomed. We do not object to people changing their minds. Mr. Shinwell in 1951 was a strong advocate of European unity. Mr. Peart, however, has never wavered, so far as I know, in his opposition to the idea. Some of the Conservatives were, on the whole, pretty lukewarm and aloof for quite a long time after 1957, until they presented Mr. Heath with the almost impossible task of trying to negotiate our entry with inadequate preparation of the public mind. I think that it was this lack of previous enthusiasm by the Conservatives, coupled with an uneducated public, a hostile Opposition and a frightened Commonwealth, which made Mr. Heath's task so unenviable and thankless in those days.

To-day, as many speakers have said, the climate is much better. The Commonwealth has had time to diversify and adjust a good deal of its trade. Public opinion, despite the crusade of the Express newspapers, is far more understanding an amenable, and the Opposition is more friendly to the idea. But we still have to overcome the suspicions of our future co-partners, as a result of the hostility and lack of support by the two other Parties over the early years of the building up of the Common Market.

In 1959 Mr. Maudling was assuring the country that: "We never dreamed of entering the Common Market". The I am sure is the way to success in our Conservative Party Weekly Newsletter of August 6, 1960, which criticised the Liberals for voting in favour of the Common Market, and listed the four major disadvantages of joining, ended by saying: Why not ask your local Liberal M.P. or candidate whether he is willing to accept all these consequences of the policy his Party advocates. I well remember this anti-Liberal and anti-Common Market campaign, because a few weeks afterwards I fought the Bolton by-election, and fought it largely on this issue. So unenthusiastic were the Conservatives that it was said of my Conservative opponent that he thought the Common Market was behind the Town Hall—and there were many people who agreed with him. This was the atmosphere in the early 'sixties which made it difficult to get in.

I mention these things because they undoubtedly lowered Mr. Heath's chances of success when he was given the job of entering, and also because to-day I am worried on another score. I am worried whether the well-publicised divisions in the present Cabinet will impede our negotiations in Brussels. I very much hope that they will not. It is inexplicable to me how one can hope to demonstrate one's sincerity and enthusiasm for entry into the E.E.C. when it is reported that at least six members of the Cabinet are against entry in any event. I hope that this is not true. But it is odd that one of these members is in charge of trade, and another is in charge of agriculture. These are the two major issues on which we have great difficulty. If there is no division of opinion in the Cabinet, the sooner this is said the better. I believe that we must not lower our chances of success in our discussions by having people in the Cabinet who are known to be completely against entry at all costs. I do not think that our future partners will be impressed if we try to get into the Community on the basis of a majority verdict.

I was particularly reassured by the emphasis which the noble and learned Lord the Lord Chancellor put on our intention to discuss matters on the, basis of what will be best for the new expanded community, rather than of seeking advantages for Britain alone all along the line. This I am sure is the way to success in our negotiations. We must think and behave like good Europeans from the start. We must not go in and try to seize every advantage we can for this country. We have to see that what comes out of the discussions is good for the Community as a whole. The prize is a large one. The advantages of this vast market which is offered to us can be many. But I believe that, in the long run, notwithstanding what the noble Marquess, Lord Salisbury, said, that this will be a good thing.

I want to deal briefly with two or three general points. The first is the attitude of the Commonwealth. I would reinforce what the noble Lord, Lord Butler of Saffron Walden, said. Two months ago I was in Australia. I found, from talking to businessmen and politicians, that the general concensus of opinion was exactly what was said at the Commonwealth Conference. They said to me that the most important thing for Australia is for Britain to be economically strong. If membership of the Common Market will bring about that strength, then they were in favour of it. I found this practically everywhere I went.

I know that the noble Lord, Lord Blyton, feels sincerely about the Commonwealth, but the idea that our entry into the Common Market will smash the Commonwealth to smithereens is absolute nonsense. We should also remember that from the trade and politics points of view Australia is rightly looking more and more towards Japan and the Far Eastern complex. You cannot avoid getting this impression as you travel through South-East Asia, Japan and down into Australia. In Hong Kong and Malaysia I found no fear of the effect which Britain's joining the Common Market would have. In the last four years there have been major readjustments of trading patterns in this area. New Zealand presents a real problem and one on which we have to keep our eyes very firmly. But in 1958 special treatment was afforded by E.E.C. to Algeria and Surinam: therefore there is a precedent for exceptions being made.

I do not think that the Commonwealth is going to suffer. I believe that the improved strength of Britain and of Europe will help the member countries more than Britain could do alone. Regarding the problem of agricultural policy I believe, with the noble Lord, Lord Butler of Saffron Walden, that the answer is largely to be found in the length of the transitional period. Although I would go for a short period on other issues, I think that a long transitional period for agriculture might be the right answer. But as the noble and learned Lord the Lord Chancellor said yesterday, we must realise that we have to accept Common Market policy as it stands to-day. The only question is the length of the period of readjustment. Some of the agricultural agreements in E.E.C. have been reached only with great difficulty and after long negotiations. The agricultural marathon of January, 1962, involved 45 separate meetings, 137 hours of discussion, with 214 hours in sub-committee, and the result was over half a million pages of documents and three heart attacks. Surely we are not going to ask people to renegotiate in a hurry in that sort of detail.

Of course, the E.E.C. system will mean a rise in the cost of living. There have been many different estimates of what this rise will be, but I am sure that the increase from this cause is not likely to be nearly as much as we get through the normal annual increase of inflation. I think that we should remember two things. First, we can, and should, deal with this problem for those on low incomes through social security. It is not just a question of pensions; it also concerns those on low incomes. We are moving into a new social security atmosphere in which we have to take care of people who, from whatever cause—low wages or large families—are not able to keep up. I have no worry on this score. The other thing we must remember is that we are going into the E.E.C. to obtain the economic benefits which offer us a real chance of an improved standard of living all round: greater production runs, economies of scale—which the noble Lord, Lord McCorquodale of Newton, mentioned—the better use of manpower, lower overheads per unit, and all the other benefits which we hope will provide bigger incomes for both farmers and consumers.

The only other economic matter of importance and difficulty might be with our regional policy and economic subsidies, such as investment grants. I want to say only one thing to the Government on this. I hope that where an investment grant has been promised and is to be taken over a period of years, there will be no question of taking it back or cutting it off suddently at a particular point. This could create a great deal of uncertainty, particularly in the development areas, where the investment grants are serving a useful purpose. In the main, I believe that this vast new trading area must be good for Britain and good for Europe. We welcome the initiative taken by the Government. I only hope that there may be a vote to-night, because I should like to see an overwhelming vote on the part of your Lordships in favour of our entry into the Common Market, which I believe would help our negotiating power.

5.31 p.m.

LORD ERROLL OF HALE

My Lords, I am sure we all agree that we have had a most interesting debate, extending well into the second day, and that a number of extremely important and valuable speeches have been made. I should like, however, to begin by thanking the noble and learned Lord the Lord Chancellor for his introduction to our debate yesterday afternoon, and for the extremely cogent and lucid description he gave of the legal consequences of our entry into the Common Market. It could have hardly been bettered, and will certainly serve to allay the fears of those who, although generally in favour of our entry, may have had reservations on that count. In other respects I thought his speech was cast in a somewhat sombre vein. Maybe, having scored such a notable success in the papers with his speech over the weekend, he thought it was the turn of the Prime Minister to have the headlines on the following day. I should have liked to see a little more of the exuberance and enthusiasm of his speech over the week-end in his speech of yesterday.

Noble Lords have made a great number of points in the course of their speeches, and it would be a superhuman task for the noble Earl, Lord Longford, to try to reply to them all in the course of his winding up. I am sure I can say on behalf of those who have already spoken that we certainly should not expect him to reply immediately to all of them. We in this House may perhaps feel that the debate in another place is getting more public attention. On the other hand, we can rest assured that the Government will look carefully at what has been said here and seek to benefit from the course of our discussions. It would take too long for me to praise the many good speeches made from the Benches behind me, and I am grateful to my noble friend Lord McCorquodale of Newton for thanking yesterday's speakers and so lightening my task. But it was a particular pleasure to hear the noble Earl, Lord Cromer, and also my old friend Lord Butler of Saffron Walden, contributing with their usual clarity and from their wide experience.

Despite all that has been said, there are, I think, still several matters which might usefully be referred to at this point. I should have liked to hear more, for example, about the problem of population movement. This is a sensitive area. We do not want to think just of our own difficulties in this matter. For example, will Pakistanis in Bradford be able to go to the silk mills at Lyons, with equal freedom for Italians to come and work in Britain, and so on? These are matters of great importance to the trade union movement. While I have not heard every speaker in this debate, I have heard most of them, and I do not think any noble Lord referred to the views of the trade union movement. They must, surely, have views on this subject and I am surprised that they have not been ventilated in your Lordships' House, particularly when so many have spoken about the need for large-scale industry, manufacturing complexes, taking Europe as their market. Surely in the British trade union movement there must be some thought about a European trade union movement: perhaps a single chemical workers' union for the whole of the large Community—and if things are to go wrong, a chemical workers' strike throwing every chemical plant in Europe out of action for the time being. But to look on the brighter side of this matter, let us hope that the trade union movement in Britain is as solidly behind a move to the Community as the Government are at the present time.

I was going to say something about capital movements, but the noble Earl, Lord Cromer, has said it so well, and it was mentioned by the noble Lord, Lord Butler of Saffron Walden, who reminded us of what. I had temporarily forgotten: namely, that there was a time when Britain was the automatically accepted leader of economic affairs in Europe and we were expected to take the chair at the O.E.E.C. We have come a long way indeed from that day, when it is now practically impossible for a British firm to obtain the necessary foreign exchange from the Bank of England to add to an existing factory plant which they have on the Continent of Europe. This is an important matter which the Government must do their best to clarify as soon as possible.

In view of what has been said on the problems of the Commonwealth countries, I would make one comment on a subject that has not been referred to, and that is the difficult problem of Commonwealth textiles coming from Asian Commonwealth countries into this country. When we were involved in the negotiations we were able to bring about some sort of arrangement whereby Europe would take a little more, and thus ease the burden on our own domestic textile industry, which would at the same time derive benefit from access to the markets of Europe. This is a field which can cause difficulties later on, and I hope the Government already have the matter well in hand.

I am concerned, too, about our EFTA partners. This Association has successfully withstood a number of extremely difficult situations, and not least the one when Her Majesty's Government felt it necessary to impose a 15 per cent. import surcharge with the minimum notice. Despite that severe blow to our partnership, it remained firm and resolute; and even now they have accepted the compromise from the original London Declaration because they are confident of our good faith. I am sure they are right to be confident of our good faith, but I earnestly hope there will be no question of letting down our EFTA partners at any stage in the negotiations.

On technical matters, I think the question of a European patent and of European designs, the merging of our patent system with that of Europe, will represent a substantial change for established technological producers in this country; but this is something that we shall have to face. The noble Lord, Lord Byers, referred briefly to the development areas policy, and I was glad to see from the Prime Minister's Statement that he has found the present development areas policy no obstacle to our joining the Community.

I should like to stress at this stage that if we try to prevent development in the London and South-East—assuming, that is, that we join—we shall be denying ourselves a considerable economic and geographic advantage. With its proximity to the Six, London and the South-East must assume greater importance in our economic development. While not in any way wishing to derogate from the importance of revivifying our development areas, I think we shall have to accept a further surge forward of economic activity in London and the South-East of England.

On a lighter note, when one understands that the Community represents a Customs Union, noble Lords who have not yet seen the illustrated article in the Weekend Telegraph might be well advised to do so. It is illustrated, and it shows the smuggling which now takes place on the frontier between Holland and Belgium. This is a prosperous and lucrative business, and by the time a man is 30 he is usually able to retire on the profits. What are they smuggling through this non-barrier frontier?—butter. Apparently, with all the arrangements that have been made, with all the piles of committee documents to which the noble Lord, Lord Byers, referred, the differential in the price of butter in Holland and Belgium is such that there is a profitable and lucrative, and sometimes rather bloodthirsty, smuggling trade going on. This leads me to ask what the Government are going to do about the harmonisation of excise duties. Are we going to continue with purchase tax when we join the Community, or are we going over to the added-value tax; and, if so, are we contemplating a move to the French or the German model?

Several of your Lordships have referred to the costs of entry. The noble Lord, Lord Butler of Saffron Walden, particularly referred to the cost of the levy on agriculture, but there are other costs as well. The speech of my noble friend Lord Clitheroe yesterday was particularly cogent on this matter, as indeed was The Times in an extremely good and balanced article on Monday, May 1, from which I might give a short quotation, if noble Lords would bear with me. It says: All things considered, £600 million a year after the transitional period would appear to be the minimum realistic estimate of the total balance-of-payments (current and long-term capital) cost of joining the E.E.C. If the range of probability is preferred, the bracket might extend from £500 million to £800 million. My noble friend Lord Clitheroe expressed the hope that Her Majesty's Government would be able to comment on the figures he gave, and perhaps I may reiterate that point and hope that Her Majesty's Government, in replying, will be able to deal with the question of these extra costs.

Another reason why I was particularly glad that Lord Butler of Saffron Walden was able to be here to-day and to speak was that he referred to the fact that he was Chairman of the Ministerial Group which was looking after the progress of the negotiations at the home end. I had the privilege of serving in that Committee under his inspiring leadership, and I am glad to have this opportunity of saying so to your Lordships. Having been a member of that Committee, naturally during the last few weeks I have permitted myself a backward glance over my shoulder to remind myself of some of the difficulties we had and some of the problems we solved, which will thus make the present negotiations that much more easy, and also to consider to what extent the negotiations should follow the same path as last time and to what extent the present Government may be able to learn from our experience.

The first question is whether there is going to be a new Ted Heath. Are the Government going to find such a single man? I must say—and I do not wish to strike a violently partisan note in this amicable Assembly—that it would be extremely difficult for them to find someone as good as Ted Heath for this job. And, if they fail to get somebody equally good, then whoever is chosen will suffer by comparison, because in Brussels it will be said, "This chap isn't as good as Ted Heath was." Therefore, they may well be driven to, and it might be wise to adopt, a different policy from the start; namely, that of a Ministerial Group in Brussels, or visiting Brussels, each Minister being responsible for his own sector. It is a problem for the Government, but I suggest that they should go into the question very carefully.

As the negotiations proceed there may come various occasions when one is apt to say, "We have come to the crunch"; but then that difficulty is overcome and the next arises. In these negotiations there may well come a stage when it would be in the Government's own best interests to refer the issue back to Parliament, not for a broad, progress-report type of debate, but to discuss a particular issue and obtain a Parliamentary mandate. The Prime Minister in his speech held out a good deal of hope in this respect, and I will quote briefly from the end of what he said: We shall take the opportunity to enable Parliament to form a full, fair and informed judgment of the great issues involved. There is no point, really, in working away to have an informed judgment unless we can have an opportunity of exercising it.

This is not a theoretical matter. It is difficult to give an exact case, because the negotiations have not begun, but the problem could arise in an acute form if the Six, for example, said they would be prepared to consider immediate British, and perhaps Danish, applications but no others for the time being. This could happen, and it would mean that we should be in breach of our undertakings to our EFTA partners. This is not a matter which the Government on their own should decide, because it involves the honour of Britain as to whether we withdraw from the negotiations because of our EFTA partners, or say, "It is too bad. We have enjoyed the ride with EFTA, but we shall now let them go". A decision of that sort should be taken by Parliament and not just by the Government. But I hope it will not have to come to that.

In moving on, I wonder why so much should have been made of the fact that the negotiations are going to be prolonged. Inevitably, some of the Prime Minister's favourite clichés came into his statements and speeches: they are going to be "tough negotiations", naturally; they are going to be "realistic". The thing that bothered me was that they are going to be long negotiations. We felt at the end of our negotiations, when they broke down, that we had at least got the difficulties ironed out, and that, if there were to be a second application, long negotiations would not be necessary. In my view, it would seem that all that has to be done, if I may put it colloquially, is for the present Administration to pull out the old papers where matters were agreed, and alter a few figures and a few dates, because all the essential features were agreed. The details have changed, but not the main fabric of the agreements which we negotiated.

Do we really have to go back to square one and start all over again with the duty on imported tea from India and Ceylon? Well, we do not have to do that one, because, thanks to our negotiations, although they broke down, the Six agreed to abolish the duty on Commonwealth tea; so that is one thing less to be done. But has the whole of the Commonwealth section of the negotiations to be gone over again in detail? Because that can take a very long time. Several noble Lords I think were quite right when they stressed that there should be a timetable or time limit on the negotiations.

But overhanging everything else is one crucial issue which I believe ought to be faced squarely and openly; and I say this in a constructive spirit. At the end of 1962 the negotiations were on the point of success, but, as everybody knows, in January the President of France made a statement which showed that the negotiations were going to be broken off; and (without going into a lot of detail, if I may put it in "telegraphese") he said that Britain was not ready to join the club; Britain was not sufficiently European to be a member of the Community. This had never been part of the discussions. It had never been taken into account at all. In other words, the negotiations were broken off for something which had nothing whatever to do with the negotiations for entering the Community. Whether the General was right or not is another matter. That is history, although I have put it to your Lordships very briefly so as not to take too long.

I think that the first thing to make sure of, before making a second application, should be to get it clear from the Government of France that we have in fact grown up, so to speak, in their opinion, and that entry to the Common Market will not be denied to us any longer on those grounds. It seems to me that the whole negotiations will inevitably have an element of unreality about them so long as this issue remains unresolved. I should not ask the President of France to say he would not exercise a veto in any circumstances when the negotiations had come to an otherwise successful conclusion, because conceivably new factors could arise; but in regard to the facts of January, 1963, could he not give us an open, clear undertaking that what he had claimed then was an obstacle was an obstacle no longer?

It seems to me, from all that has been said, and from the Prime Minister's excellent replies on the Panorama broadcast last night, that he has not, and the British Government have not, been successful in this matter. It is therefore taking a chance. But maybe, by the way the negotiations are carried out, it will be shown that we have, in fact, in the opinion of the General, grown up enough to be good Europeans. But I think it is going to hamper the negotiators in the coming months, and I am only sorry that it has not been possible for it to be cleared up in advance. Indeed, it is not too late, if the Government were so minded, to hold up the letter of application for a few days. They could say to the General, "We have had our debate. You now see how enthusiastic Parliament is. Will you give us our clearance before we post the letter to Brussels?" I make that as a constructive suggestion.

Inevitably one thinks of the decision as being the General's, but it is important to realise that many people in France are suspicious of our entry. I have been surprised at the number of prominent French businessmen whom I had the privilege of meeting who have expressed doubts about our going in. Indeed, one of the matters which give rise to most suspicion is the very reason why we tell each other we should go in; namely, that it will have great advantages for us. So they say, in their logical way, "That means it will be a disadvantage to France."

I should like to see the Government, in the weeks and months to come, stressing to us and to Europe the great advantages to the Six of our going into Europe. I presume there are such advantages. We have hardly heard of them. I have done my best to trawl around to find some of the advantages, one of which would be access to the London capital market, if only that could be done; but there are many others. It would strengthen the hand of our negotiators immensely, because I know Mr. Heath always found that the difficulty was that there was no real bargaining; and the negotiators this time will be faced with the same problem. One goes as an applicant, and then the matter gets whittled down and one has to decide whether to accept a little less than one asked for. It is impossible to put anything else as an alternative on the bargaining table, and it would be a great help if the Six could be made to feel that there were great advantages for them in our going in and that it would be a great misfortune for them if our application did not succeed and was not handled expeditiously.

So although I wish the Government well, I think there is an intrinsic weakness in our posture as we begin the negotiations, and it would be foolish if we did not recognise that our negotiators will be working under substantial difficulties. First, we have not spelt out the advantages to the Six; secondly, the negotiations will have an air of unreality as long as the General refuses to revoke publicly his former objections, and, thirdly, we are applying for the second time. How much better it would have been if we could have been invited unanimously to make an application! However, realising that there are some weaknesses in our application, I am sure your Lordships have been a great help to the Government to-day in supporting almost unanimously the Government's proposals, which I myself most heartily endorse. Her Majesty's Government have demonstrated their intention to succeed. We wish them well and we hope that the Membership of the Community will crown their efforts.

5.53 p.m.

THE LORD PRIVY SEAL: (THE EARL OF LONGFORD)

My Lords, I know that the Government, and I am sure the House, will be grateful to the noble Lord, Lord Balfour of Inchrye, for postponing his Motion after it had been brought forward from tomorrow. I can assure him that we all admired his speech—I might almost call it his conversion—yesterday, and I hope that that knowledge will be some consolation for what must have been a rather inconvenient afternoon.

We have listened to close on thirty speeches, all of them interesting and some of them deeply impressive, even moving, from the classic exposition in which the noble and learned Lord the Lord Chancellor opened the debate, to the graceful encouragement of the noble Lord, Lord Erroll of Hale, who has himself had so much experience of international negotiation. He was kind enough to absolve me from the duty of replying to all, or most, of the points that have been raised, but I can assure him that the Government will study all that has been said, and in particular what has been said by him, although I cannot think that after tonight the idea of sending a messenger to General de Gaulle to try to clear up his attitude, would commend itself to many of us. I am sure the noble Lord realises that the Government have conducted a most systematic probe and while perhaps it would have been agreeable to have discovered more than we have discovered, I do not think that a last-minute and rather desperate plea to get the General to "come clean" would be particularly helpful.

The noble Lord, Lord Erroll of Hale, put one other question with which I will deal now, then I will deal with his general argument, perhaps, as I go along. He asked whether there was a single man in the Government who was the equal of Ted Heath for the purposes of negotiation. I do not know about a single man—we have so few batchelors in our Government—but we have quite a few excellent married men who I think could do the job exceedingly well.

In the spirit of the noble Lord's remarks I will ask some noble Lords to forgive me if I do not comment on their speeches. For example, I will take the notable contribution of the noble Earl, Lord Cromer, which I am sure will be widely studied. But there will be other noble Lords whom I cannot even mention; I can only ask them to believe that I value their remarks almost as highly as those of the noble Earl, Lord Cromer. The Government have every reason to be grateful to the House, to those who have spoken and those who have attended the debate, and those who, in one way or another, I suppose, will show their approval in perhaps half an hour from now. We are particularly grateful to the noble Lord, Lord Carrington, the Leader of the official Opposition; to the noble Lord, Lord Byers, the Leader of the Liberal Party, who spoke so generously in support of the Government, and also, if I may say so, to the most reverend Primate the Archbishop of Canterbury who gave us spiritual guidance. We certainly hope that when this Motion is put by the noble and learned Lord the Lord Chancellor the House will overwhelmingly support it.

The noble Lord, Lord Gladwyn, has done more perhaps than any one man in this country to bring about this day, and I think he is entitled to sing a Magnificat to-night, though not, I hope, a Nunc Dimittis, because we cannot do without him quite yet. But certainly it must be a happy day for him and for many others who followed him in his course. The fact that the House now seems ready, so far as one can judge, to support this Motion does not mean that anybody has won a victory over anyone else. The noble Baroness, Lady Gaitskell, divided us into three categories: the fanatical pro-Marketeers, the fanatical antiMarketeers and the cool, dispassionate group (to which I think she herself certainly belongs), which judged the matter at every stage on the facts and according to the balance of the argument.

I suppose that the great majority of the House can now be said to belong to that third group, but within that third group I should say the overwhelming majority now appear, so far as I can judge taking the sense of the debate, to favour an application for entry. There were one or two noble Lords of great eminence who expressed some doubts: for example the noble Lord, Lord Champion, and the noble Marquess, Lord Salisbury. I understand that if I give the noble Marquess satisfactory answers before the end he may come round. I hope that will be possible. I must not say that there will then be more joy over one sinner who repents, because it is not yet a sin to be doubtful about the Common Market; but I think I can say that there will be more joy about a "doubting Thomas" who becomes a believer than about all the other Apostles put together. At any rate, we shall see at the end of the debate.

My Lords, we are going forward, I hope enthusiastically, with this application. But, of course, we are applying to enter upon a negotiation: we are not applying to sign on a dotted line. We are not asking a favour of anybody. To use an image of Lord Champion's, we are not "crawling on our bellies", or, to adapt an even more elegant phrase of Mr. Gladstone's, we are expecting, hopeful, though on this occasion far from suppliant. Speaking of negotiations and the negotiating posture, which the noble Lord, Lord Erroll of Hale, dealt with, we (and I am speaking now of my own Party and of the Government, and also, I think, of the political leaders generally) have never failed to insist that essential British and Commonwealth interests must be secured. We believe that the essential British and Commonwealth interests will be secured; but secured they must be if these negotiations are to succeed.

The noble Lord, Lord Rowley, speaking with all the authority of one who has done so much for Commonwealth relations, and who is also a convinced European, asked me to satisfy him rather fully on a number of points affecting the Commonwealth. In view of the debate yesterday, perhaps both he and the House will forgive me if I do not deal with his points at length. May I remind the House, or inform the House if they have not had the time to read the discussion elsewhere, of the words with which the Secretary of State for Commonwealth Relations wound up his speech last night. He said: Of course, we may fail in our negotiations… They may refuse to give us safeguards for ourselves. They may refuse to give us the safeguards for the Commonwealth that we seek. If that turns out to be the case, our rejection, or maybe withdrawal, will be honourable, and will. I believe, be understood and accepted by the Commonwealth and the people in this country alike."—[OFFICIAL REPORT, Commons, col. 1184.] In view of those words, I hope there will not be even the faintest suggestion anywhere that we are "selling the Commonwealth down the river"; and while it is possible for "the ranks of Tusculum" to have been moved by the speech of the noble Lord, Lord Blyton, I would say that he was totally wrong about the intentions of the Government with regard to the Commonwealth. Indeed, safeguards of Commonwealth interests will be one of the main features of the whole negotiation.

It was very encouraging to hear from the noble Lord, Lord Butler of Saffron Walden, who intervened in the debate to the pleasure of us all, that he feels (though he did not spell out this point) that the situation with regard to the Commonwealth is going to be a great deal easier this time than last. I felt that was one of the important things said in the debate. I certainly agree with another thing said by him and by the noble Lord, Lord Rowley, and others; that one of the best services, certainly an outstanding service, that we can render to the Commonwealth is to make sure that Britain herself is strong and prosperous. Certainly, a weak and economically wretched Britain can be of no use to the Commonwealth at all. That is obvious, and I think the other side of that is equally true.

As regards our negotiating posture, I was not quite clear where the noble Lord, Lord Erroll of Hale, discovered his grounds for criticism. But I must read more carefully what he said about where he felt that we had erred—I could not quite follow him there. As regards our posture and tactics, I think that all who want these negotiations to succeed—and that is nearly everybody here—can draw much pleasure and encouragement from the words of some distinguished Ambassadors who have taken part in this debate, including the noble Lord, Lord Caccia, who was in charge of the Foreign Office at the time of the last negotiations, and also the noble Lords, Lord Sherfield and Lord Hankey. They, as I understood it, applaud us for not exaggerating the difficulties and not ignoring them but for taking up a balanced approach. I feel that we are entitled to rest a great deal of weight on their opinions.

I must not spend too long on any of the main issues raised; I shall have to proceed through them fairly rapidly. As regards agriculture, I was bound to note the rather doubtful assessment by the noble Lord, Lord Butler of Saffron Walden. He certainly feels that that road is going to be hard. Turning for a moment to the noble Lord, Lord Erroll of Hale, may I assure him that we do not want these negotiations to last any longer than they must. We are not seeking lengthy negotiations for the sake of them, but we face the fact that they are going to be hard; and of course they may be long.

Lord Woolley's tribute to a great Labour Minister of Agriculture was appreciated far and wide among his own colleagues and throughout the House. I hope that he, with his infinitely greater knowledge of agriculture than mine, will accept the general proposition that a Community where the proportion of the labour force employed in agriculture is four times what it is in the United Kingdom is not likely in the long run to set out to damage agriculture. In other words, agriculture globally is likely to receive very careful treatment, to say the least, and favourable treatment it may be, within the Community.

But, of course, we are insisting on a transition, and doubts have been expressed as to what will occur during the transition and what will occur afterwards. I think the language used about agriculture in the Statement is quite firm. The House will be aware of the statement in the White Paper, that: …the financial arrangements which have been devised to meet the requirements of the Community's agricultural policy as it exists to-day would, if applied to Britain as they now stand, involve an inequitable sharing of the financial cost and impose on our balance of payments an additional burden which we should not in fairness be asked to carry. I hope that that language is quite clear enough for any noble Lords who wonder whether we are going to stand up to our partners in these discussions. I would only add that all these arrangements arc due for review in the course of 1969. So, while one cannot guarantee success—and clearly we are calling for quite substantial adjustments—I can only assure the House that there is no sign of weakness in any language or posture that we are employing.

The noble Lord, Lord Blyton, referred to the five conditions propounded by the late Hugh Gaitskell. I have said a word about our determination to safeguard Commonwealth interests and agricultural interests. The other three conditions would not appear to afford the same difficulty.

The noble Lord, Lord Erroll of Hale, asked me about EFTA, and hoped that there was no question of forsaking or betraying EFTA. I can give him that assurance absolutely; there can be no question of forsaking or betraying EFTA. Without embarking on new assurances, because the whole matter has been recently cleared up with EFTA, I should have thought that our relationship with our EFTA friends was healthy at the present time: they understand the position very well.

The noble Lord, Lord Blyton, no doubt was concerned, is concerned, about the interference with our freedom of action. I will not pursue that aspect in detail now, but if we look at the way the European countries have handled their own foreign policies during the time of the Community, or their own internal economic policies, I would feel—and this is certainly the view of the Government—that it is a good deal clearer to-day than it was five years ago that the Community as it functions is not precisely the same entity as the Community as written and described on paper. So as regards those two points, freedom of action in foreign policy and domestic economic policy, our anxieties are not of the same order, or, rather, do not weigh so heavily with us.

But of course since 1962, to be quite candid, and speaking as a champion of this policy, one has to admit that the balance-of-payments question has come to loom larger. It was not in itself one of the five conditions, but clearly it is now a very important issue. And, this being so, any Ministers who in recent discussions would say that they have been supporters of this kind of policy for years are bound to consider very carefully indeed what effects, so far as one can possibly tell, there would be on our balance of payments and on our cost of living. Here, perhaps, I can discuss the issues most conveniently by referring to some of the remarks made by the noble Lord, Lord Kahn, who is one of the leading economists in the country.

The noble Lord confesses himself quite at a loss to understand how what he calls the "malaise", and the difficulties and tribulations of the transition period, can be reconciled with the promotion of economic growth. According to my dictionary, a "malaise" is defined as "bodily discomfort, especially without the evidence of a specific disease." I am not going to accept from the noble Lord that my colleagues have admitted that there will be a malaise. I do not quite know how this phrase has crept in.

Certainly there will be adjustments to be made. The noble Lord, Lord McCorquodale of Newton, told us earlier with great authority that he has been engaged in adjustments all through his business life; and we gathered from him, I am sure correctly, that they never did anybody any harm. So I feel that the talk of the difficulties and tribulations of a transition period have been considerably overstressed by the noble Lord, Lord Kahn. Certainly, British business does not seem to share his pessimism.

The noble Marquess, Lord Salisbury, attached great weight to the words of the noble Lord, Lord Kahn. If I may say so in a friendly spirit, he has not always attached so much weight to the sayings of theoreticians as compared to practical men. I am told occasionally that what is much more useful than academic experience is a little management of affairs. So here the great business leaders are against him, or at any rate against Lord Kahn.

THE MARQUESS OF SALISBURY

My Lords, I would only say that I regard Lord Kahn as both.

THE EARL OF LONGFORD

Well, far be it from me to disparage Lord Kahn's reputation as a tycoon, but I think he is better known as a political economist. At any rate, we have tycoons here who can speak for tycoons, and there is no doubt that British business does not in any way share this rather painful pessimism of the noble Lord, Lord Kahn, which for the moment seems to have infected the noble Marquess, Lord Salisbury.

May I turn to the noble Lord, Lord Clitheroe, who certainly made a powerful speech. He has explained to me that owing to an engagement, I believe in church, he cannot be with us this afternoon. I am sure he is much better occupied there than listening to me. But I listened to his speech carefully, and I read it carefully. He quoted an article from The Times, with a great deal of approval, on the damage to our balance of payments if we join the Common Market. The article in The Times must of course be read like other documents. But as the Prime Minister yesterday explained, some of the figures which are being bandied about are based on the assumption that nothing whatever comes of our negotiations. They are based on the assumption that we go into the Community exactly as it is, which is all right, I suppose, for an academic discussion, but clearly has little or no relationship to the practical situation. We must all assume that if these negotiations are to succeed, as we believe they will, something practical will come from them. So those who make the other assumption are falsified from the beginning.

The truth is—I say this with great respect to the noble Marquess if it is of any interest to him—that I personally would distrust anybody who came out too confidently with some estimate of what the balance of payments in the middle 'seventies will be if we go into the Common Market, compared with what it will be if we do not go in. The noble Marquess seemed to feel that the kind of speculative dogmatism that would lead one to lay down figures of that sort constituted evidence of a practical mind. But I would distrust a man who believed that things of that sort could amount to very much, and if I had any money I would take it out of his business.

If I may still be allowed to use The Times, I should much rather quote the conclusion of their leading article in the same issue from which Lord Clitheroe quoted, which I think we may treat as their summing up.The Times says that one fact is clear, that British business stands, almost unanimously, strongly in favour of the United Kingdom joining the Common Market. So if we can talk about the practical men and the men who know their job, and we put our cards on their experience and prudence, I would myself consider that this view of British businessmen is one of overwhelming significance in this debate. The noble Lord, Lord McCorquodale of Newton, spelt out some of the reasons why they believe that this is so. I will not go into them now, but I think we can accept that this is the conclusion of those who have, in a personal sense, to make the decisions on which the fortunes, net only of themselves, but of their depositors or shareholders, or whatever they may be, will rest.

The noble Lord, Lord Kahn, rather leaned in his argument on the rise in food prices that would follow membership of the Community. I have already discussed with him privately one of his phrases, which I will not argue about now. His main point in this connection was perhaps the argument that the prospective rise of 2½ to 3½ per cent. would represent a considerably higher rise for the poorer citizens of the country. This aspect has also worried the noble Lords, Lord Wells-Pestell and Lord Segal, among my own colleagues, and also the noble Marquess, Lord Salisbury. As the Prime Minister said yesterday, we are only too well aware that, whether the increase is 2½ or 3½ per cent., or a little less or a little more, this is a serious matter for the poorer section of the population, those on the lowest incomes.

I am sure that all noble Lords will have been consoled by something which the Prime Minister said yesterday in another place, and also, I gather, on television. In another place the Prime Minister, speaking of these people with the low incomes, said (col. 1065): The answer to their problem must lie in social policies, particularly pensions, to ensure that they are not asked to bear a disproportionate part of the cost of British entry into the Community. Rather, indeed, will it be our aim to shield them from any short-term adverse effects. I hope noble Lords will feel that even since yesterday considerable reassurance has been given on that most important point.

The noble Marquess, Lord Salisbury, however, went on to ask where this money was coming from. Again, I do not think that, looking so far ahead, one can speak dogmatically there. May I call the attention of the noble Marquess to something else that the Prime Minister said just before the passage which I quoted a moment ago. He referred in the same column to the figures of increase in the cost of living, and he said that they should not be laughed off at all, but they should be capable of some offset through the reduction of prices of non-food items, for example, imported consumer goods, to say nothing of the possibility of some reduction in taxation as a result of savings in agricultural subsidies. So that there will clearly be, on the face of it, and looking some years ahead—I think the Prime Minister is wise not to pledge himself about the use of some moneys that will fall into the pool in this way—a considerable sum available to the Exchequer when we switch over from our present method of subsidising agriculture to the method of the Community. So the short answer is that on the face of it, although some years ahead, there will be a considerable sum of money available here from the reduction in the subsidies. I hope, therefore, that I have done something, if the noble Marquess was exactly balanced before, to bring him over.

The noble Lord, Lord Kahn, went on to assert that the Government have left entirely out of their appreciation the consequences of substituting over a period of years a new system of indirect taxation for our present one. On this matter I can at least speak with first-hand knowledge. The noble Lord is certainly quite mistaken in thinking that this has simply been overlooked by the Government. I hardly think that, on reflection, he meant to say that. He can hardly suppose that the Government failed to notice Article 99 of the Treaty of Rome which deals with the harmonisation of indirect taxation. I have only time to say a word of reassurance. This whole business of harmonising indirect taxation has proved long and arduous. It was only a few weeks ago that the Community managed to agree on the first step, which will not come into force until 1970. It is unlikely that any harmonised rates will have been settled before our own application is decided, and once we are members we shall be able to play a prominent part in producing a system acceptable to all. I am afraid that I must leave some of the noble Lord's other points for correspondence with him, or possibly for discussion on the next occasion.

My Lords, we are approaching a conclusion. The decision has been based both on political and on economic considerations. Though I would feel myself that it is impossible to separate these two considerations in a great matter of this kind as readily as some find convenient, basically this is a political decision. The economic arguments to me, and I think to most of my colleagues, seem to favour entry, but it is the political arguments which seem to us to be the strongest. On that matter we had with us a number of noble Lords, certainly my noble friend Lord Silkin who spoke very strongly about the political arguments. We see great opportunities here for us, as the noble Lord, Lord Carrington, pointed out, for Europe, and for the world.

A point which was made with much force by the noble Lord, Lord Butler of Saffron Walden, was the balancing role which we can play in Europe. Certainly we do not see this policy as being aimed against anybody. We are convinced that it is in everybody's interest. We feel sure that a Europe united economically and developing its full economic and technological strength will have a better role to play in the future political development of the world than ever it has done in the past. We think of our role within the Atlantic Alliance, in promoting a detente between East and West, and our role, which was stressed by the noble Lord, Lord Ritchie-Calder, of giving far more assistance to the underdeveloped countries of the world. There are those of us, certainly I am one, who see our way beyond this stage to an even greater vision, a vision of an even wider unity within the world. I myself think that this is the one clear step which we can take at this time in the direction of ultimate world government.

Therefore, I leave these thoughts with the House. I have done no more, as Edmund Burke said, than state a case and, as he said all those years ago, many things occur. We cannot be sure, as we come together today, whether our application will succeed, whether the negotiations will succeed, and we cannot tell what will happen thereafter. Certainly we in the Government believe that success is not only possible, but probable; but it is only probable so long as we do not at any time suppose that the Common Market is going to offer us an easy way out, a sort of magic carpet which will heal our woes without any great exertion by ourselves. We shall only succeed now and later if we view this step as a tremendous and glorious challenge to greater efficiency, greater exertions, and much more dedication than in the past. Whatever the outcome, let this at least be said of our generation, when the history of this period comes to be written: that we responded fully to a unique opportunity, that we took up a position inspired in the first place, not ignobly by enlightened self-interest, but on a deeper level by concern for all humanity. Let it be said that at this moment of destiny we stood where it was an honour to stand.

On Question, Motion agreed to.