BRITAIN AND THE EUROPEAN COMMUNITIES

HL Deb 17 March 1970 vol 308 cc1021-125

3.58 p.m.

Debate resumed.

LORD GLADWYN

My Lords, I am not at all sure that this is the right moment for a major debate on the desirability, or otherwise, of our joining the European Economic Community. Officially, of course, as has already been said, we are merely taking note of the White Paper. I shall have certain things to say about that Paper later. But if the recent excellent debate in another place is to be taken as a guide, it will, I suppose, be impossible to restrict our remarks this afternoon to this one rather technical subject.

However, though there will inevitably be a major debate to-day and to-morrow, we must surely all recognise that nothing we say this afternoon is likely to have any great effect on the course of events, because there is now, happily, every reason to suppose that negotiations for our entry into the European Economic Community will start not later than the beginning of July, and that towards the beginning or middle of August they will be suspended for some weeks during the summer holidays, during which period, presumably, there will be further consultations on both sides in the light of which might reasonably be described as a preliminary skirmish. That will bring us up to the autumn, when there may, or there may not, be a General Election—though let us hope there will be, my Lords, since the prospect of intensive negotiations during the winter, that is, during a period in which the Election would draw nearer and nearer, is, to say the least, hardly alluring. Indeed, quite aside from Party politics, I suppose that most of us would think that such a development would be contrary to the national interest. Whatever side one is on, it is surely not a good thing that this issue should, as they say, become a "political football", as it obviously will be if it goes right on until the moment of an Election in a year's time from now.

On the White Paper itself, therefore, what can 1 say? First, that it is really not very evident why it was produced at all. I understand from the Press that there are various theories about this, and none of them makes much sense. The first theory is that the Prime Minister, teased by the anti-Common Marketeers, said in a rash moment that he would produce facts and figures about the probable result of our entry and that he just could not go back on his word. On the whole I think this is the most likely theory. So, as the Economist said in an article, two gangs of civil servants got to work: those, one may suppose, from the Ministry of Agriculture, Fisheries and Food being probably "con" and perhaps those from the Board of Trade— I do not know—but certainly those from the Foreign Office being "pro".

They then put up this extraordinary document which, as we all know, comes to the solemn conclusion that on the important but improbable assumption that the present common agricultural policy of the Six will be maintained in all its absurdity when we enter the Market, and that we shall have to hand over the entire proceeds of the levies to the Central Agricultural Fund, this providing about half its income, and regardless of any other consideration— on this assumption, I say, they have come to the conclusion that the cost of food and the cost of living might be increased —I agree it is "might be"—by 18 to 26 per cent. and 4 to 5 per cent. respectively; the change in our food import bill could range from a reduction of £85 million a year to an increase of £255 million a year; and the overall balance of payments cost could vary, as the noble Earl, Lord Jellicoe, said, between £100 million and £1,100 million a year.

It is quite true, my Lords, that the White Paper, having stated these figures, immediately remarks that they are "positively misleading". If that is so, why publish them at all? Anyhow, it is the only set of figures in the whole White Paper that has achieved world-wide publicity. So, apart from salving the Prime Minister's conscience, what, in the name of Heaven, was the point of coming out with all this? I heard what the noble Lord the Leader of the House said, but he did not convince me. Personally I strongly suspect that the only real "Pro" in the whole operation was "Con", and I imagine—although this is pure speculation—that if his influence had prevailed we might have had something much more like the intelligent and well constructed paper of the C.B.I., which at least had a shot at working out the possible economic results of our entry on several assumptions and not only on the most deeply pessimistic of all.

Noble Lords will recall—or at least those who have read it will know—that according to the C.B.I. (and here I am quoting) a reasonable probability would be a total cost to the balance of payments… rising annually during the transitional period to about £400 million in 1977–78, and thereafter declining, in line with the expected fall in total F.E.O.G.A. expenditures, to a level of £200 million to £300 million per annum in the 1980s", and that the expected rise in the cost of living would not be more than 4½ per cent. and could even be as low as 2 per cent. I should like to ask the noble Lord the Leader of the House, or the noble Lord who is going to wind up the debate, whether the Government dispute this apparently reasonable conjecture. It would be interesting to know.

This brings me to the second hypothesis; namely, that the White Paper was firmly based on the most pessimistic assumptions in order in the first place to increase Mr. Thomson's bargaining power in Brussels, and in the second place to demonstrate to rebellious Labour Party comrades that the Government knew very well that there were conditions for entry that they would never accept— "We will never crawl into Europe on our hands and knees," and so on. So even if they did have to accept what might be thought to be tough terms, the Government could at least show that they had avoided the worst. The trouble about this theory is that in the first place the Six know just as well as we do what the economic position of this country is and what the results of entry on the various assumptions are likely to be, and, in the second place, obviously no White Paper, however constructed, will mitigate the opposition of comrades on the Left, which is based not on economic but simply on ideological considerations, any more than it will influence those on the Right whose objections are founded on pure, old-fashioned nationalism.

So, my Lords, we come to the third hypothesis, which is that the Prime Minister is preparing, as the Leader of the Conservative Opposiiton hinted in another place, to "rat" on the whole idea. Personally, I do not see how Mr. Wilson, even if he would, could possibly stage such a dramatic coup before the General Election which, as I have already said, we must all hope will be in the autumn, if not sooner, Even if we hold the dreary view, my Lords, that he is going to hang on to office for another year or so from now it is hardly possible to imagine that the negotiations will be so far advanced by them as to give Her Majesty's Government an excuse for staging a walk-out, even if they wanted to. Incidentally, what would happen to the Labour Government of the time if such a thing took place? We all know that many members of the Labour Government are convinced and ardent "Europeans" who might well think that a satisfactory solution might be reached if the negotiations were continued. No, my Lords, I am sure that the scenario of the "cunning plot" does not seem on the face of it to make any sense either.

LORD SHACKLETON

My Lords, may I interrupt the noble Lord to say that his scenario—his own—is totally without foundation?

LORD GLADWYN

My Lords, I thought it was, but it has been widely put about—indeed in the other place a great point was made of it. I am flying to the assistance of the Government, in the sense at any rate, that I quite discount that possibility.

LORD SHACKLETON

My Lords, we can do without it.

LORD GLADWYN

My Lords, it is indeed possible to maintain that the Prime Minister has no very fixed convictions about the possibility, or even the desirability, of constructing a wider Europe that is anything more than a mere congeries of nation States. Indeed, there is a wide choice of quotations from his many speeches over the last ten years or so which would confirm such a view. But this does not mean that he has not now effectively burnt his boats as regards Europe or, in his own language, has "surrendered one of his options". For I rather think that he has, my Lords.

Leaving the White Paper aside, I should like to make a few observations on the position in which we now find ourselves. When the negotiations start, as I have already said I assume they will— although this is not absolutely certain— there is little doubt that the French will take a pretty tough line, even if they do not demand (as has been said) their full "pound of flesh". They will probably not make extreme demands because, as a nation, they are now reconciled to the British entry into the European Economic Community. But the Gaullist or, one might even call it, the xenophobic element in the Government, and especially in the Assembly, is still strong— strong enough anyway to insist on pretty severe terms, though I think that even the orthodox Gaullists are becoming rather alarmed at the possibility of a breakdown in negotiations which might involve the possibility of German domination.

Besides, apart from the great, over-shadowing agricultural issue, and the almost equally important and difficult one of the lengths of the various transitional periods, there are certain points of real difficulty which can be solved only with mutual good will and, probably, as a result of long discussions. It is not essential, for instance, nor is it strictly necessary under the Treaty, for us to reach some kind of agreement with the Six on monetary policy. But it would ease the situation greatly if we did; and, indeed, the Six are now expressly negotiating within their own Community with that very end in view. It is even arguable that the decision to do this was the most significant decision taken at the Conference at The Hague at the end of December, which, after all, set the Six off on the supra-national path that we ourselves shall have to follow if we ever do go into the Community.

Then there is the whole question of the composition of the Commission at Brussels, in the light of the amalgamation of the existing three Communities—that is to say, the European Economic Community, the Coal and Steel Authority and Euratom—and the likelihood of an exten sion of the membership of the whole amalgamated body from six to ten. This will bring us straight up against the great issue of the kind of enlarged Community that we are aiming at; in other words, the degree of supranationality that it will contain. What, for instance, will be the exact agreed role of the new Commission? Will it have the same function as regards the preparation and the administration of the Community budget as was proposed in the Hallstein project of 1965, torn up by General de Gaulle? And what exactly will its relations and those of Ministers be with the Parliament of Europe? I do not think that we can avoid discussion of these great problems with our prospective partners during the negotiations by saying that we will simply agree with anything that they themselves may have agreed to. If we are to join the Community our whole future may well be affected by the decisions arrived at in this field alone.

I need not perhaps dwell also, at the risk of boring your Lordships, on the great complexity and importance of the arrangements, no doubt provisional arrangements, not only for New Zealand and the so-called Common-wealth "sugar islands" but also for many countries of the so-called Third World, involving such matters as the treatment of raw materials, the import of industrial goods from what are known as low-wage countries, and the effect of all this on the Aid policies of the Six and ourselves which, it is devoutly to be hoped, we may now in some sense amalgamate. The same applies to the interests often conflicting, of the various members of EFTA whom, we have often said, we will by no means leave in the lurch. And may I say, in passing, that I trust that they will not leave us in the lurch either?

Finally, there is the whole political aspect, touched on by the noble Earl, Lord Jellicoe, which, as I believe, can hardly be left on one side while we wrestle, no doubt for two or three years, with the great problem of grafting on to the fairly comfortable Economic Community of the Six a large, rather intractable body of 56 million, with its own political characteristics, its vast trade, and its strong continuing links with the Commonwealth and the United States and with the outside world generally. This can be done, and I believe will be done, though sometimes when one regards our present rake's progress towards inflation by way of wage increases and sky-rocketing prices one begins to have some doubts; but it is no good saying, with the Government and Macbeth (I think I have the quotation right): "If it were done when 'tis done, then 'twere well it were done quickly."

Let us therefore consider what I suggest may be the rather easier problem of achieving a measure of unity within the foreign policy and defence field—rather easier, I think, in spite of all appearances. Here the situation is at present complicated, it is true, by the continuing absence of France from the Ministerial Council of Western European Union, though there is happily considerable reason to suppose that she will return fairly shortly. There never was anything in the Gaullist suspicion that Her Majesty's Government would use W.E.U. for getting into the E.E.C., as it were, by the back door, any more than there were grounds, as some suggest or suggested, for suspecting that the reason why de Gaulle left the Ministerial Council in February, 1968, was in order to prepare for his Middle Eastern renversemem des alliances, which he might perhaps have found embarrassing to explain to his colleagues in the Council. But in any case the General is no longer in power, and there is now no real reason why the quarrel should not be patched up, even though it should not be patched up by our acceptance of the Gaullist theory that each member should have a veto even on the preparation of the agenda; that would be too much. So we must soon expect W.E.U. to be functioning normally.

But the real point is that if the Western democracies, faced for the first time, as I believe, with a massive deployment close to the Elbe of the Soviet armed divisions which in two days occupied Czechoslovakia, and with the evidently early prospect of a reduction of United States Forces in Western Germany, are to pull themselves together and strengthen and streamline their own conventional defence, it must be by some means more efficient than W.E.U. itself. That organisation, though useful both as a forum for Ministers and more especially perhaps for parliamentarians, has never up to now succeeded in formulating any common defence or foreign policy at all. It has not even succeeded in standardising the smallest item of military equipment. Still less has it made any advance towards a common arms procurement policy. And it is high time it did. It is not as if the intention would be to form a sort of Third Force in the world of super-Powers. That is impossible in present circumstances, and most people would think it pretty undesirable as well. The political entity which will gradually emerge in Western Europe, as I see it, will, we should all hope, form part of NATO, and it would in any case be within the Atlantic Alliance that its policies would be harmonised with those of America.

But there really is an urgent necessity to arrive at some common Western European policy on the production and deployment of weapons, on various technological schemes of great importance, and indeed—let us not funk this issue— on the future role of the nuclear deter-rents, if such they may be termed, of Britain and France. There is also a crying need for a common Western European attitude towards, for instance, relations with the Soviet Union, the crisis in the Middle East, and indeed towards South-East Asia generally.

It is not at all clear how all this can be accomplished within W.E.U. as at present constituted. The staff, though excellent, is quite insufficient. There is nothing equivalent, on the political and defence side, to the European Commission in Brussels. The Parliament, or Assembly, has no function beyond simple discussion; and, above all, the unanimity rule prevails in all respects in the Council of Ministers. To construct anything of value at least a start must be made to remedy all these deficiencies At the very least there should be an Independent Advisory Commission, or a body of "Wise Men", or a specially reinforced Secretariat—whatever you like to call it —who would not draw their instructions from any one Government, but would rather submit reports on all matters, and notably on great issues of foreign policy on which the Foreign Ministers could not, or would not, agree: in other words, a body which could at least begin to look at problems from the point of view of the group as a whole rather than from that of any one individual member of the group.

What can be expected is not, of course, immediate agreement. No-body suggests that immediate agreement can be expected on reforms of this kind, however necessary we, or some of us, may believe them to be. To start with, as I see it, there should simply be a conference of the Six and the four candidates in order to discover how progress can best be made, whether inside W.E.U. or inside an enlarged W.E.U., or even outside W.E.U. altogether. This conference should try to agree on great questions of principle, leaving the details to be worked out by a high-level expert commission which would have to report to the next meeting of the conference, say within six months' time. By such means progress may be possible; it just will not be possible on any other basis.

I should be most grateful if the representative of the Government who is to wind up—I think the noble Lord, Lord Chalfont—could say whether the Government feel that a conference of the kind that I have described is at all likely; and in any case, likely or not, whether they themselves would favour it. It is quite useless to suggest that all such negotiations should be conducted within the framework of the present Brussels Commission, obviously overworked as it would be, and in any case quite incompetent to advise on matters of defence and foreign policy. As I see it, political and indeed monetary negotiations should run parallel with the economic negotiations during the next two or three or four years.

Generally speaking, it would seem to be along the lines suggested that we might more easily make progress towards greater European unity during the next year or two, and I would urge the Government not to ignore the arguments in favour of doing so, but rather, at a convenient moment, to take the initiative themselves of at least floating the idea of a conference. Surely it is time that they took some initiative in this all-important sphere, and did not give the impression all the time that they will eventually go along with anything that may be decided by our prospective partners across the Channel. To say that one is in favour of proceeding pragmatically is merely a cowardly way of avoiding the issue. Now, if ever, is the time to think big, and, if we can, to rise to the measure of our great opportunities.

4.24 p.m.

LORD GARNER

My Lords, as this promises to be a lengthy debate I propose to be as brief as possible and to confine my remarks to a single topic; namely, the repercussions of the White Paper on the Commonwealth countries. I hope to do so in a fairly broad way and not in any detail. I certainly do not wish to be destructive, or to say anything that is likely to prejudice the success of any negotiations, because I am in favour of the negotiations. I am in favour of the application. Everything depends on the terms eventually settled, and they must meet our essential requirements; but the only test can come in actual negotiations.

The first thing that strikes me about the Commonwealth in the current situation is the infinitely smaller amount of attention paid to the Commonwealth countries to-day than was the case in the great debates of 1961 and 1962, and to some extent in 1967. I think in some ways this is to be regretted, although I personally think that in some ways we exaggerated the position ten years or so ago. I think we made mistakes. For instance, first of all we tended to equate our relationship with the Commonwealth countries to our relationship with Europe. This was really false in that we were not comparing like with like. The Commonwealth never was a political federation, and it is never likely to become one. It has never been a military alliance or an economic unit, although we have had useful defence co-operation and helpful reciprocal trading arrangements; and the sterling area system certainly gave a degree of financial homogeneity.

One recalls, for instance, statements of the Government of the day, the Macmillan Government, that if there were any conflict between Europe and the Commonwealth, the Commonwealth would come first. One also recalls criticisms that by making an application to join the Community Britain was turning her back on the Commonwealth. I do not think either of these concepts is really valid. We may have let the Commonwealth down in other respects and for other reasons, and if Britain joins the Community there will of course be some practical effects on Commonwealth countries, notably in the trade field; and in the long term, if and when the Community develops greater political unity, there may be more far-reaching effects on the concept of the Commonwealth. But membership of the Community can be made perfectly compatible with continued membership of the Commonwealth. After all, Canterbury lamb is washed down very well with claret and I think this applies metaphorically as well. Secondly, I think that in a way we were possibly unduly apologetic about the Commonwealth some years ago, and made too much of the difficulties that obligations to the Commonwealth created in our negotiations without making enough of the positive side.

On the contrary, I think we should strike a robust note. The Commonwealth is an asset. It is something of great value that we bring to any association with Europe that we can arrange. If the Community hope to make a contribution to the world as a whole, then Britain has more to offer than any other Power on the Continent in this respect; although obviously France has much, and all have something to offer. Possibly our so-called special relationship with the United States was a handicap in certain persons' eyes on the Continent in years gone by, but I have never heard that our relationship with the Commonwealth came into this category at all. The most eloquent recent testimonial for what I am trying to say was said to Members of this House and of another place only a week or so ago by the German Chancellor who, when addressing us, said: The Community would be directly enriched by British traditions, the historical experience of the Commonwealth, Britain's continuing worldwide connections and appreciations of foreign culture. That I think is precisely the point.

But, of course, there is also the reverse of the medal. If we bring our worldwide association as an asset, if we are able to join the Community, then we must ensure that it is in fact a continuing asset. The terms of our entry must be tolerable from the point of view of the individual Commonwealth countries. In 1962 great weight was attached to the requirements of the Commonwealth. I think we have all noticed that the emphasis has shifted over the years, and the White Paper, for instance, pays minimal attention to the position of the Commonwealth, although I accept that this was not the purpose of the White Paper itself. For example, there was the use of the phrase, "Commonwealth preferences have been eroded." I must confess that I always wonder why it is necessary to use this pejorative phrase to describe what is happening.

Certainly preferences have been diminished to some extent. But if they have been diminished, whose fault primarily is it? Surely this is primarily Britain's fault, for she has been announcing loud and clear—and I am not objecting to that —for the last ten years that she was contemplating ending the traditional preferences shared with Commonwealth countries, and was even prepared to subject her partners to the so-called reverse preferences; that is, putting a tariff on their goods which would enter free from foreign competitors. In these circumstances, it was only prudent for our partners to diversify as far as they could and to make what arrangements they could with others; as, of course, Australia has done very successfully over the years with Japan, and as a number of developing countries have been doing with the Community itself. Surely it is not for us to complain of developments on these lines.

Certainly, too, the proportion of trade to Commonwealth countries has declined relative to our total trade throughout the world as a whole. But to record the declining percentages as if they should lead to the assumption that our trade was insignificant is clearly a nonsense. Incidentally, I often think that the trade figures are somewhat distorted by the position of South Africa (to whom, of course, our exports are extremely important) because she went from one side of the ledger sheet to the other when she left the Commonwealth some 15 or so years ago. The actual figures are that in 1969 we sold to Commonwealth countries £1,590 million worth of exports, and earned from them in invisible earnings £1,021 million worth. Those are pretty hefty totals, and amount to nearly one-fifth of our total trade so far as exports are concerned, and nearly one-third on invisibles so far as they are concerned. Surely, if those total figures were to disappear, our balance of payments would look very sorry indeed.

As the noble Lord, Lord Gladwyn, mentioned earlier, there are two major points to which the Government have always attached importance relating to the Commonwealth. The first concerns the position of New Zealand. For a century New Zealand developed as a producer for Britain; for a century they sent high quality food to this country at very reasonable prices. If that market were to be shut out, there would be no easy alternative for them. They are too small for industrialisation; they are too distant for union with Australia, and there is no ready alternative market immediately open to take all their produce. These people are our people, with whom we built up these relations over generations, and we just could not afford, morally or otherwise, to see them ruined. Secondly, there is the special case of the Common-wealth Sugar Agreement. For a century we developed a number of small islands for the production of sugar. This has been of very great benefit to us over the years, and, again, if this market were to be closed, there would be no easy alternative in sight. Many of these islands in the West Indies and elsewhere—or at least some of them—are depressed enough already.

There are various other matters concerning the developing and still dependent territories on which provisional agreement was reached during the negotiations from 1961 to 1963, and the position reached was spelt out in Mr. Brown's statement to the Council of Western European Union in 1967. I hope, therefore, that the Government will be robust in maintaining the position on all these points, and will recognise that a short interim period for adjustment is just not enough to meet some of the real needs, particularly of New Zealand and some other countries. However, I see not reason to despair of finding solutions. New Zealand's case is a very special one, and it was recognised as such by all the Six at an earlier stage. I do not think any of them was able to propound a solution, but the difficulty is readily understood. In 1962 the Community were by no means unreasonable in trying to accommodate some of our problems, and they made many helpful arrangements, particularly for developing countries, on the lines that I was suggesting earlier. It is not in our interests, and not in theirs, that violent disturbances should be caused to third parties if our application to join the Community is successful.

At the end of the day, Her Majesty's Government must judge what in fact are satisfactory terms, and this will involve a good deal of guesswork—perhaps with a little more authority than we can have now from the forecasts in the White Paper. But there will be a degree of guess-work involved about the future, and it may be that Commonwealth countries will not always accept our view of what the future is likely to bring under the arrangements proposed. We must face the fact that this may be a difficulty, and the only way to meet it is to have throughout, during the period of negotiations, the closest consultation and to try to develop complete understanding by all concerned. At the end of the day, if we finally join the Community, it will be an act of faith for everyone.

One of the first needs of the Common-wealth is that Britain herself should be strong. I believe that informed opinion in Commonwealth countries wants our application to succeed. Certainly this was true of most of my friends in Canada, and I believe it to be so in a number of other countries as well, even though they would not claim to look into the future. Subject to the terms being acceptable to us, and to our being satisfied that they meet essential Commonwealth needs, I believe that Britain's entry into Europe can be achieved in a way that will ensure Britain's continuance of her role in the Commonwealth; and if it can be achieved in this way, it will benefit not only Britain and the Community, but also the Commonwealth. Though I do not want to develop what has already been said by noble Lords who have spoken earlier in the debate, I believe that our entry into the Community can develop into a helpful influence on the baffling preoccupations of the world as a whole.

4.38 p.m.

LORD SILKIN

My Lords, if I were chairman of a company considering participating in a purely commercial or industrial undertaking and I had before me a document prepared by my economic advisers similar to the White Paper, with its many doubts, assumptions, reservations and unknown factors, I suppose common prudence would justify my hesitations; and probably if I had to decide on the basis of this White Paper alone I would decide against joining the under-taking—particularly if I were asked to pay a stiff price for joining. To-day we are being asked to consider the White Paper, and in my submission it is quite impossible to consider it without the things that accompany it, particularly the political implications of joining. Supposing I had, however, the detailed results of ten years' successful working of this undertaking and I was able to form a reasonable judgment about its future and as to what my own contribution would be to its increased success, I should, as would any businessman, feel it worth a much closer look. I presume that that is what we are being asked to do to-day: to review the White Paper and see what we think about it.

There are a great many doubts and vague statements in the White Paper which have been referred to by the noble Earl, Lord Jellicoe, and the noble Lord, Lord Gladwyn. Lord Gladwyn went so far as to suggest that it might have been wiser not to publish the White Paper at all. I do not know whether he read the Prime Minister's statement on the second day of the debate when he had been urged by some Members of the other place. The fact is that everybody agreed that a White Paper should be published, and it was pressed upon the Government. But when they came to submit the White Paper, which was to be a purely factual statement, they found the difficulties which are inherent in the situation.

They could have enlarged on the White Paper, they could have explained and elaborated; but it would have been quite wrong, particularly in view of the negotiations which are about to take place. I think the facts must speak for themselves. If the Government had withdrawn the White Paper because it did not contain useful or relevant or important information, they would have been subject to a very considerable amount of criticism and a great deal of misunderstanding not only from people in this country, but from people abroad. The Government would have been asked: "What are you hiding? What are you trying to keep away?" In the light of the prospective negotiations, it would have been a terrible mistake not to put the White Paper on the table for better or for worse.

As I said, in my view we cannot consider the White Paper alone, and perhaps the terms of the Motion before the House are somewhat too rigidly worded, because they should have given us the opportunity to hold a much wider debate. Therefore, as was done in another place, I propose to take a rather wider view and to have a closer look at the whole of the implications of joining the Community.

Nobody here has so far spoken against joining the Community, although I thought that the noble Lord, Lord Gladwyn, even though I know he is a very great supporter, spoke more against it than anybody else. He tended to derogate from the idea. He said it was going to take years, it was going to be very difficult, and so on. In my view nothing could be further from the truth. I do not know whether anyone intends to speak against our joining the Community, but those who have done so in another place and outside have confined themselves to the White Paper itself and have tended to ignore all other information or aspects.

That is understandable. We shall have to pay a substantial entrance fee. Whether it be of the order of £1,100 million or something less, there is no doubt that our entry will involve an increase in the cost of living over and above what might be anticipated in the coming years by ordinary inflation, rising wages and so on. There is no doubt that although we have every opportunity, if we take it, of increasing cur trade with the Community countries, we shall lose some of our present home market as a result of competition from the other members of the Community, once our tariff against them has been removed.

Though on balance the larger market will probably work in our favour, one cannot speak with any certainty, and it is fairly sure that we shall lose a certain amount of trade as a result of stronger competition from the other members of the Common Market. The other certainty is that our relations with the Commonwealth will inevitably grow less close and, in particular, the existing preferences which we offer to New Zealand and other Commonwealth countries will gradually have to disappear or lessen. I was very glad indeed and encouraged by the intervention of the noble Lord, Lord Garner, on this point.

It may well be that this matter is still open to negotiation with the members of the Community and that we could still retain our close connection with the Commonwealth, as has been the case with France, and even be in a position to grant preferences if we wished to do so. However, the fact remains that our ties and—we have to face it—our trade ties with the Commonwealth are becoming less than they have been. In the last resort, if we had to choose between entering and continuing our preferences to New Zealand and other countries, we should be placed in great difficulty; and I think the majority of people faced with that limited choice would agree that we should enter the Common Market. But I hope that we can negotiate something which will maintain our relationship with New Zealand.

If the whole story were contained within the White Paper, one might still be rather lukewarm about entering the Community, but of course it is not the whole story. Those who, like me, are strong advocates of the European Community are far more attracted by what is called the political aspect of our entry, and I was very heartened to read the Report of the debate in another place, to hear the speech of the noble Earl, Lord Jellicoe, and also to read the statement of the Bow Group the other day on our joining the Community. I hope that my noble friends on this side will not mind my saying that I agreed with practically every word that Mr. Heath said in the debate, naturally with the exception of the last few words which I think were really the result of misunderstanding on both sides. I thought his case for joining the Community was an extraordinarily attractive one, and one which could not have been bettered. May I say to the noble Earl, Lord Jellicoe, who is now resting after his efforts, that I was also very much attracted by his speech. I am glad that this is not a Party matter. Whichever side eventually has to negotiate, I hope that we shall arrive at very much the same kind of conclusion. With few exceptions, we in this House and in the other place are all merely concerned to join the Common Market and to accept the political implications of so doing.

The creation of a Third Force in Europe, equal in economic strength to that of the United States and the Soviet Union and with the possibility of enlargement, of which we were a member is a factor of tremendous importance in the history of the world. It is early days to enumerate all the possible outcomes of the advantages of political co-operation. It could lead—and I personally hope that it will—to the closest political union, as in the case of the United States of America and of the U.S.S.R.: to a federation of a sort, with a single democratically elected Parliament; or, as is more likely to be the case, at any rate for a long time to come, to a looser form of integration. Whichever way it goes, it will be an enormous factor for peace. We have not, of course, been at war with France since the Napoleonic days, but war between any of the participants in the Community would, if we joined it, become quite un-thinkable; and the existence of the E.E.C., with us inside it, would be a standing deterrent against attack from outside, and indeed would encourage closer co-operation with the other, existing World Powers.

There are many things we can look forward to for which the Treaty of Rome provides: for example, a single European currency by 1978; pooled reserves of foreign currency—which have been referred to already; and the many other provisions for closer association which are set out in the Treaty. I suppose it is too much to hope for a common language, but at least it is reasonable to expect that, with greater freedom of movement from one country to another within the Community, children will be taught as a matter of course at least one language— and one hopes two—other than their own. I hope that that will be generally accepted as a mater of routine.

My Lords, since 1961 we have been standing on the brink of the E.E.C. True, we have had two major difficulties to overcome. The first is the resistance of France, to put it no higher; and the second is the fact that our economic position has been until recently unattractive to the Community, and we might well have been considered a liability rather an asset. To-day the position is different, and is likely to remain so. We have a big contribution to make, as well as a great deal to gain, in the economic field. Our invisible exports are a very important factor, and in all the components which make up these exports—banking, shipping, insurance, transport and so on —we have a greater knowhow than any other country in the world. These invisible exports have in fact been increasing rather than decreasing.

Both these factors—the objection of France and the state of our economic position—are no longer valid to-day. We do not know whether France is going to be positively helpful, but she is certainly no longer antagonistic; and economically we should be one of the strongest members of the Community. Not only economically, but also from the political angle we have, as I have said, a tremendous contribution to make. Our experience as a World Power (which we no longer are), and our former Empire and, later, our Commonwealth have given us vast experience of relationships with other peoples of all races and all types. These experiences, together with the old form of democratic government which we possess, are all tremendous assets which we have to give to a political community, from which we should also have a great deal to gain.

There is one other aspect that I would mention, and that is defence. I should like to see, eventually, a common European Defence Force, under European command and with European headquarters, making its contribution as a European unit to Nato, so long as this is necessary. It is certain that we cannot much longer rely on the United States of America for the defence of Europe and of ourselves, and our entry into the Community would probably hasten the United States' intention of relieving themselves of a great deal of the burden of the defence of Europe—and I think it is high time, too. It has always struck me as rather humiliating that we and the other great Powers of Europe should be so dependent on the United States for our defence. It is quite time that we stood on our own feet; and I believe that our joining the Community will be a great help towards that. Anyway, it looks as if before long it will be largely inevitable. Coupled with a unified defence, of course, would go a common foreign policy, and I think that has got to come before very long. It seems inconceivable to me that a Community of some 300 million people should have six or seven diverse foreign policies. We must get together and work together as one unit, in defence as well as in foreign policy.

As I and other speakers before me have said, the Motion before the House is that we "take note of" the White Paper. We already have our application before the European Community, and we hope that it will be considered in the next few months, possibly in the summer. We are invited to consider this White Paper purely as an economic document, but as I and many previous speakers, both here and in another place, have said, it is quite impossible to look at this White Paper by itself. It has to be looked at as part of the future of Europe and of the future of this country, as well as from the point of view of all the various aspects which have been mentioned in the debate.

Although I recognise the difficulty of equating the economic with the less tangible factors that have been put forward —the political side—I suppose it has to be done. What sacrifice is it worth while our making in order to join the Community and to get the benefits, as I think, of our political union? Figures have been bandied about, but 1 do not think it would be helpful if anyone expressed a view on this aspect. We have to negotiate, and we have to make the best bargain we can. But I hope that we shall be pretty generous and shall not under-estimate the value of the political association. Nor should we be too pessimistic in estimating the economic value of our joining the Community. The figures in the White Paper take little account of what might be the benefits of our joining. Taking an optimistic view, these could be so considerable as to wipe out completely any deficiency that we may be called upon to bear; although I recognise that that is an optimistic view.

Of course I see the difficulty of equating a financial result with something so intangible as the political benefits of joining, but 1 hope that the time will not be too far distant when we shall have negotiated a satisfactory agreement on the economic field which will not be too burdensome to this country and which will provide a reasonable time to adjust ourselves to any additional burdens which it may be necessary for us to bear. I am sure that good sense will prevail in the course of the negotiations. Everybody realises that it is not a good thing to drive too hard a bargain, and those with whom we shall be negotiating will, I am sure, see the value of our entering the Community, as part of it, fully satisfied that we have had a fair deal in the transactions and that we are not being called upon to bear anything which is unreasonable.

I am not one of those whose judgment dictates that the burdens will not be great; but I believe that the economic benefits flowing from membership of the Common Market will go a very long way, if not the whole way, towards covering the financial costs. Taking the long view, that of future generations, I have no doubt that anything but a crippling cost would be worth bearing for the sake of the other advantages of membership. I wish our negotiators every success in the forthcoming task and I am sure that the whole House will await the outcome with the greatest of confidence.

5.3 p.m.

LORD HARLECH

My Lords, as the first speaker from these Benches to follow the noble Lord, Lord Silkin, 1 think I should start by expressing our gratitude for the bouquets that he conferred upon my noble friend Lord Jellicoe, upon the Bow Group and upon the leader of the Conservative Party. He said that he was very thankful that the debate on our entry into the Common Market was now not a Party issue. I agree with those sentiments. I think it was unfortunate that on our previous application, in 1961–63, it was a Party issue.

There seems to be a general feeling among noble Lords that the White Paper is not a wholly satisfactory document; although I think that we accept the reasons why it was published. I think it would be fair to summarise the conclusions of the White Paper as follows. In economic terms it could either be very expensive or rather cheap for Britain to enter the Common Market; on balance it would be a "good thing" for Britain to enter the Common Market unless the negotiations went very badly and it turned out to be to expensive. These are not very compelling conclu- sions. Therefore, in being asked to "take note of" the White Paper, I do not think that we are being invited to take any very radical or earth-shaking decisions. Indeed, it would be ludicrous—and here I agree with the noble Lord, Lord Silkin —to come to any judgment regarding this country's policy towards Europe on so narrow an assessment as is provided by the White Paper. It would be like judging the benefits of a contemplated marriage on the contents of a balance sheet drawn up by accountants showing the additional cost of adding one person to the household compared with the increased income the intended partner might bring in.

Of course, it is important that we should give due consideration to the economic aspects of the question, but we can only arrive at a balanced view about the right course for Britain to take if we look simultaneously at the political and defence aspects of the matter. In any case, I do not intend to deploy the economic arguments for our entry into the Community at any length because I believe that they are already well known to your Lordships. These advantages all stem from the creation of a vastly increased home market which it is expected will generate an increased dynamism in our economy and bring about those economies of scale which are of such profound importance in the modern, science-based industries of our country.

It is still not sufficiently appreciated that the United States' home market has at this moment a 50 per cent, larger purchasing power than the whole of Western Europe put together, including Great Britain. The inevitable result of the continued fragmentation of Europe will be that all Europe's advanced technological industries will be faced with a most unpleasant dilemma. Either they struggle on, on their own, dropping further and further behind America technically until they finally probably have to drop out of the race altogether; or they keep going by entering into agreements with American companies which give them access to American research and know-how and they end up by coming under the effective control of American industry. That is the crux of the matter, and it has been most vividly and ably described in Mr. Servan Schrieber's book, The American Challenge.

We have no earthly chance of meeting that challenge without industrial integration on a European scale. The figures relating to money spent on research and development on the two sides of the Atlantic make the threat crystal clear. Due largely to the scale on which American industry operates, United States expenditure on research and development amounts to 20,000 million dollars a year. For the whole of Western Europe, including Britain, the figure is 6,300 million dollars—less than one-third of the American figure. This means quite simply that in the modern growth industries, such as the aerospace industry, the electronics industry, the computer industry and the nuclear power industry, the technological gap between a fragmented Europe and America will continue to widen.

And there is a subsidiary effect to all this that is of growing significance. I am referring to the brain-drain. One of my duties requires me to interview some of our most outstanding students who wish to carry on their studies in the United States. If those students are in the scientific field I sometimes ask them where they will do their research after completing their education. Quite frequently, their reply is that work in the particular field that they are interested in is carried on only in the United States. These are not young men and women who wish to go to America in order to earn higher salaries than they can earn here or because they wish to have a higher standard of living; they are people simply faced with the stark fact that if they are to make full use of their knowledge and of their intellectual potential they may have to go to work in the United States. In this way Britain and other European countries are not just losing the services of some of their most brilliant brains; they are actually helping to widen the disparity between American and European technology.

This situation is in no way contradicted by the statement made yesterday by the Minister of Technology, Mr. Wedgwood Benn, because he went on to indicate that the reason there is a counter flow is that there has been a falling off in orders in the American aerospace industry; and, as we know, there is the element of recession in the United States, and the Government has been cutting back expenditure. The fact is perfectly clear, though, that at the end of this process there will be far more British and other European scientists working in the United States than there will be United States scientists working in European industry.

My Lords, there may be some in this country who are not particularly concerned at the prospect of great sections of our industry being absorbed into the American industrial complex, or they may think that it is inevitable. But I would say this—and I say it as a life-long friend and admirer of the United States. I am utterly convinced that the industrial domination of Europe by America will most emphatically not be in America's own interest. It could set up social and political tensions in Europe which could explode in a most dangerous manner. Far better for the United States to have as a partner and friend a prosperous, vigorous, self-reliant Europe, than a Europe which was a resentful and even a rebellious helot. If Britain and the other applicants became full members of the Community there would be good prospects for a far more favourable development in our affairs.

Only last week in The Times Business News there was a report of a revised assessment made by International Computers of what might be expected from a unified European computer industry. Under existing conditions, Europe could be expected to export computers worth £280 million in 1975, but would have to import from America £400 million worth. There would, therefore, be a deficit of £120 million on a European output valued at £1,450 million. With an integrated European industry they expect that there would, in contrast, be a favourable balance of trade of some £200 million in 1975 and a considerable expansion in total output. After 1975, the consequential benefits would increase rapidly so that European trade and output might benefit by over £2,000 million during the decade 1970–80.

LORD SILKIN

My Lords, may I ask the noble Lord a question? Would these improvements result solely from Great Britain's joining the Community?

LORD HARLECH

No, my Lords, they would be the result of an integrated all-European computer industry, and the figures were given in The Times Business News supplement last week. But I think that this is just one example of what might be expected to happen in our more technologically advanced industries.

My Lords, I intend to be very brief about what one might call the "bread and butter" benefits to be expected from British entry into the Community, because they have already received a good deal of attention. It is not possible, though, to ignore the plain fact that, whereas ten years ago the standard of living in Britain was surpassed by only one of the six Members of the Common Market, to-day it is surpassed by all except one. I have little doubt that if we continue in splendid isolation, as some urge us to do, we shall in another ten years sink firmly into bottom place. There will be no sudden catastrophe, no actual decline in living standards, but just a consistent failure to keep up with the pace of advance elsewhere. Indeed, it is the almost imperceptible consequences of our relative failure that is such a danger. The public in general is simply not aware that during the 1960s alone four out of five members of the Community overtook the British standard of living.

Then there are the statistics with regard to the rate of economic growth. It is a statistical fact that if Britain had achieved a rate of growth no better than the least successful of the Six over the last ten years, we should now have additional resources available to us which could be measured in thousands of millions of pounds. The figures in this respect with regard to Belgium, to which my noble friend referred, are I think particularly relevant to us here in Britain. It is truly astonishing to witness the tortuous and incredible manipulation of these statistics which the anti-Common Marketeers have to resort to in order to try to bolster up their case. The economic evidence is overwhelmingly against them, and their arguments are even less impressive when they are advanced by persons notorious for inaccurate economic forecasting in the past.

My Lords, I intend now to turn for a few moments to some of the political considerations which seem to me to be of overriding importance. We must all be aware of a deep malaise in our society and, I am sorry to say, a growing disenchantment with politics and politicians. I believe that much of this malaise is due to the failure of political institutions to develop at a pace that is in keeping with the revolutionary changes that have taken place in man's environment. During the last century, and partly in response to the first Industrial Revolution, we saw the development of the highly organised nation State. But such a political unit alone, and on the scale existing in Western Europe, has become totally inadequate to meet the conditions which flow from the even more rapid technological and scientific revolution through which we are now living.

What is the result? On the one hand we see a failure to exercise effective democratic political control over the economic forces that are moulding the world we live in. On the other hand we see a growing disposition, particularly among the young, to disparage politics and to feel remote, even alienated, from a system which in certain respects seems rooted in unreality. My heart sinks when I hear people use phrases about "retaining an independent foreign policy" or" an independent economic policy." No doubt these phrases make an emotional impact, which is what they are intended to do. They are words with which to mystify the millions, but in this day and age they are pure fantasy so far as a country of this size is concerned.

Attempting to look ahead to the end of this century what should we find to be the position of this country if we sought to continue an independent policy? Broadly speaking, in the year 2000 the United States will have a population of about 300 million and a gross national product of at least 2,000 billion dollars a year. Western Europe, without Britain, will have a population of nearly 300 million and a gross national product of at least 1,000 billion dollars a year. The figures for the Soviet Union would be roughly similar to those of Western Europe. In contrast to these three, Britain alone will have a population of less than 70 million and a gross national product of about 200 billion dollars a year. In such circumstances, our power to influence events, whether in the economic field or in the fields of foreign policy and defence, would be minimal. Decisions taken by the three vast aggregates of power that I have mentioned would directly affect the lives of every man, woman and child in this country, but we should have had no direct say in the formulation of those decisions.

Again and again in our history we have been profoundly affected by events which have taken place on the Continent of Europe; and twice in this century alone the consequences have been well-nigh disastrous for us all. It therefore seems to me that no responsible British Government, elected to preserve the interests and the security of the citizens of these Islands, could accept such an isolated role for this country.

By joining a partnership in Europe, we shall not in any essential sense be abandoning sovereignty. Quite the reverse: we shall be ensuring that our people, through a sharing of sovereignty, will have their interests, their security and their prosperity taken fully into consideration. It is sometimes suggested that there are alternative groupings which could give us equal or greater advantages, but successive Governments have discovered, in some cases to their great regret, that none of them are practical propositions. No significant body of opinion now believes that the Commonwealth represents such an alternative. The so-called "special relationship" with America is equally unrealistic, together with its economic variant, the North Atlantic Free Trade Area. The truth is that successive American Administrations have always hoped that Britain would be able to play a full part in a united Europe, though for obvious and very wise reasons they do not go about publicly saying it. They have regarded British entry, as I do, as the first indispensible step to the building of a true and satisfactory partnership across the Atlantic.

When we examine our defence requirements, the necessity for greater integration in Europe is equally compelling. President Nixon has given fair warning that although he is prepared to resist for a year or two more the rising tide of opinion in Congress which is calling for an early and major withdrawal of American forces from Europe, we must now plan on the assumption that the security of Western Europe will soon be overwhelmingly the responsibility of Europeans, at least in the conventional field. In such circumstances, the burden will become intolerable unless the countries of Western Europe move towards a far more intimate harmonisation of defence policies than exists at present. Standardisation of weapons systems, common arms procurement policies, an armaments industry working on a Continental scale, will all be essential if we are to make the most economic use of our resources and avoid a rapid escalation of national defence budgets. And as we have seen— and the noble Lord, Lord Gladwyn, referred to this—in the case of W.E.U. ordinary inter-Governmental debate and liaison is woefully inadequate.

So far as nuclear weapons are concerned, we are completely in the dark as to what our long-term policy is to be. The only really effective element in our strategic nuclear forces is provided by the Polaris submarines, acquired under the Nassau Agreement so much criticised by certain people at the time. In fact, it was one of the most fantastic bargains in the defence field ever achieved by a British Government, and it is quite certain that no such bargain will be available from the Americans again. In addition, we know that the French nuclear programme is in difficulties. What is going to happen when our already diminutive capability in Europe becomes steadily more obsolescent? I do not myself think it is politically realistic to suppose that a Western Europe, left increasingly to defend itself with its own resources and lying under the shadow of a nuclear-powered Soviet Union, will be content with no nuclear capability whatsoever. On the other hand, it is perfectly obvious that if it is to be effective, the resources available to Britain or France individually will be totally inadequate for the task. Nothing less than a concerted effort by the whole Community, including Britain, will suffice. This poses political and economic problems of great complexity, but they must soon be faced if proper provision is to be made for the future security of Western Europe.

I think I have now given sufficient indication of the reasons why I feel so passionately about Britain's entry into Europe and why I hope so fervently for the success of the negotiations due to start this summer. Inevitably these negotiations will be difficult and protracted. It is therefore all the more important that they should be approached in the right spirit. We must not give the impression—and I fear that we may have given the impression —that we are backing gingerly into Europe because we fear that our standard of living may suffer if we stay out. The impression we ought to give is that we see a great prize to be won, not just for Britain but for Europe and for our Western civilisation.

We have an opportunity to help build an economic and political structure which will once and for all ensure that we have turned our backs upon the rivalries and bloodstained struggles of quite recent history and which will allow the genius and enterprise of Europe to flourish in unity. All six existing members of the Community now wish to see Britain join with them in the building of this structure, which alone can meet the needs of our peoples in the modern world. If, therefore, we keep this noble prospect before us, then despite all the difficulties there must be high hopes of our negotiations succeeding. Britain will then be in a position once more to play a role worthy of her historic past.

5.27 p.m.

LORD WOOLLEY

My Lords, following the remarkable speech we have just listened to from the noble Lord, Lord Harlech, I feel almost ignoble if I am unable to engender quite the same passion and emotion that he feels on this subject. If I bring the debate down to rather more bread and butter considerations it is because, after all, there is something to be said for bread and butter, and in the end we can get along a bit longer on bread and butter than on passion. However, I should like to congratulate the noble Lord, if I may presume to do so, on a remarkable and enjoyable speech.

This White Paper, of which I thought we were now supposed to be taking note, is an economic assessment. I am not altogether surprised that the great advocates of joining the Community take the earliest opportunity of leaving the field of economic assessment and embarking on the more specious field of the political nuance. I do not know: it may be that these political feelings and thoughts are right. I happen myself to be unconvinced on the political field, but that is not to say that the arguments are not right.

I wish to talk about the agricultural aspect of the economic assessment which we are considering. Chapter II of the White Paper brings out starkly the serious economic facts that we are facing, the burden in terms of the increased cost of our food and the effect on our balance of payments. It seems to me that Chapter II is the most objective, frank and honest exposition of the problem that has been made by the present Government or by the previous Government, and I congratulate them on it. The author does his best to patch it up and present it in the best possible light. Chapter III is infused with the dynamic potentials which I think we ought to generate, whether we are in or out of the Common Market.

I am not surprised that there has been a growing warmth among the countries of the E.E.C. towards the prospect of Britain's becoming a member. When we look at some of the figures of the mounting surpluses and the cost of running their common agricultural policy we can readily understand that, from their point of view, it would be a great boon if this country entered into the Community and if, without the present colossal sums of intervention payments, export subsidies and support buying, they could make us pay this much larger price for the mounting surplus that their own policy has generated. This is a perfectly reasonable and natural attitude for them to take: it may be a bread and butter attitude, but it is a very practical one.

I am not suggesting that it is the only consideration, or that they are motivated only by some material gain; but it seems to me to come out of the figures. When one sees in Table 2, on page 9, that the total for three commodities alone— cereals, milk and dairy products and sugar —in the guarantee section of their agricultural fund in the year 1968–69 was £667 million, one can quite understand their feeling that the entry of Britain could be the saving of their Common Agricultural Policy even if perhaps only for a short time; it could have great significance, and they might greatly welcome it.

I think it is only fair to say that seven or eight years ago there were those who warned that this was a state of affairs which they thought was likely to arise from the sort of agricultural policy that they were pursuing, and who were then firmly opposed to Britain's abandoning her food and agricultural policy, a policy which had built up in this country an efficient agricultural industry and which is to-day estimated to be contributing at least £300 million a year more to the balance of payments than it was ten years ago. These are economic facts; they are not very inspiring, but as regards an economic assessment they are pertinent. I submit that, on the facts before us, it would be at any rate a gamble for us to abandon and dismantle this system in order to comply with the insistence of the members of the E.E.C. as regards the terms of a Common Agricultural Policy. I submit that there is not in Europe a coherent agricultural policy; nor do I see any clear sign of one emerging, despite the best intentions and earnest endeavours of a great many competent people on the Brussels Commission. I happen to have had first-hand experience of the difficulties of trying to ascertain within the confines of the United Kingdom the right balance between various commodities—milk and beef, cereals and all the other ranges of commodities—to try to secure a balanced agricultural production policy; that is to say, balanced in terms of a fair price to the farmer: a price which not only would give him a fair return but would be likely to produce the quantities of the various commodities that the market could absorb at fair prices, and which the housewife would be able to buy and for which she would be a willing buyer.

Little has been said here about the possible effect upon consumer demand. If I may relate a personal incident, I happened to see my butcher on Friday morning coming along with a piece of meat for the weekend. We had had some meat that was not very good, and I said to him, "I had better have a look at that." He showed it to me and said that it was very good. He said that it was off a Charolais heifer, but despite that I thought it was a nice piece of meat. He said, "This is a piece of sirloin." I asked him, "How much is it?" He said: "8s. a pound". I said to him: "You wait and see how much you sell." He said: "I know all about it. I am going out of business."

That is rather a flippant story, my Lords, but do not let us assume that these things have no significance. Do not let us get ourselves so airborne and so completely carried away that we forget that the great mass of the people of this country are concerned with the practical everyday things of life. They are concerned whether they are able to have a choice in food, and whether they are able to afford to buy butter instead of being compelled to buy a substitute. The National Opinion Poll shows that in the minds of the ordinary people of this country these things are important. I do not mean that we have to think only in these terms; but there have to be convincing arguments—and more convincing than I have yet heard—for our entry into the Common Market.

I know that the noble Lord, Lord Harlech, has referred to the people who oppose our entry and to the devious things they get up to. I feel that some of those on the other side think just the same about the advocates of our entry. There has been a fair amount of (shall I say?) inflation and gas injection. You can read the C.B.I. Report or Chapter III of this economic assessment: there you will see gas and inflation. I do not know whom the noble Lord had in mind when he spoke about people miscalculating, but certainly they would find it a little difficult to miscalculate more seriously than the people who miscalculated what the agricultural fund cost would be in 1968–69. I think they said that it would be £520 million. In fact it has turned out to be nearly 50 per cent. more—between £800 million and £900 million. So I do not think we should throw stones at people who make miscalculations, or indeed accuse people of straining the arguments.

But let me return to my agricultural thesis. The other factor is that in trying to formulate a policy, certainly in this country, we have had to have regard to reasonable access for the agricultural products of other countries with whom we are inextricably involved in international trading, and to guard against the Treasury liability's rocketing sky-high —although we do not need to worry particularly about that, because the Treasury take pretty good care of it without our concerning ourselves unduly. But these are all factors which have a part in shaping our agricultural pattern at Annual Farm Price Reviews. If I were to claim that the techniques are perfect, I should be, and rightly, open to the challenge as to why farmers are at this time demonstrating and expressing their dissatisfaction. I do not claim that our system works perfectly; and I do not think there is any other system that will ever work perfectly. But what I do claim is that it is basically within the joint capacity, if I may so term it, of Government and the farmers' representatives (with the emphasis clearly on the Government's influence and dominating part) to adjust and modify the changing circumstances as we go along through the years. Since 1947, changes have been made. There was a change in 1954 when we moved from individual fixed price guarantees and State buying to standard prices, virtually free markets and deficiency payments. I think, without checking, that it was done in 1953, when the guarantee for milk—a very big commodity—was related to a standard quantity, and the whole price-fixing pattern was changed. Another change was made in the early 1960s, when a considerable measure of import regulation was introduced for butter and bacon and there were minimum import prices and standard quantities for cereals. Those standard quantities were related to the guarantee that would be paid to the home producers.

I apologise for inflicting those remarks upon you, my Lords, but I did so to show that, difficult though it may be, we are able within the orbit of the United Kingdom to shape these things to the practical requirements of our country and to have regard to all the factors that bear upon the economy, the trading and the whole life of this country. I do not believe—and if it comes to pass I hope I shall be proved wrong—that there is the least likelihood of the E.E.C. being able to operate in anything like this way and to have this degree of influence on the pattern of European agriculture; and if we are part of that Community we shall certainly not be able to exercise any worthwhile influence in bringing that about. I am convinced about that. I am appalled by the task that would confront any body of men, however competent, in trying to create a coherent and balanced agricultural policy for a conglomeration of countries, for a stretch of territory from Scotland to Sicily and from the West of Ireland to the borders of Eastern Europe. That is the area which is referred to in Chapter III, this great "home market". If one tried to arrange something for the home within that lot we should find just how domestic it was. It is outside all practical possibility.

LORD HARLECH

My Lords, I am sorry to interrupt the noble Lord, because it is high time we had a speech by somebody who is opposed to the Common Market. However, I would refer him to the United States and the Soviet Union: they have territories much wider than that and, somehow or other, manage to establish an agricultural policy in both countries. You may not like it, but they have those policies.

LORD WOOLLEY

My Lords, in reply to the noble Lord, may I say that it seems to me, from what I read in the newspapers, that the agricultural policy of the Soviet Union is likely to be the downfall of Mr. Brezhnev and Mr. Kosygin, because they are in dire trouble. So I do not think that is much of a testimony. As regards the United States, I know that the noble Lord has far more knowledge than I, and I am sure he knows the bitter feuds that go on. There is nothing like a coherent policy. It is divided up. It is not, as we have, a national farm in concept and operation, but in the United States it is divided into pure commodity interests, and great trouble has been caused them with their soil erosion and soil bank. They have had the problem within the United States of trying to deal with the unbridled production policies of purely sectional interests. That is my experience of agriculture in that country. So, I am sorry, but I just cannot see this coming about, and it is no use pretending that I can.

One understands that within the concept of a completely integrated economic community there has to be a common agricultural policy, to some degree. One accepts that. I very much doubt whether the other members were wise to allow themselves to be propelled so far as they were by France in 1963. It was France who insisted on this; it was the quid pro quo that she, not unnaturally, insisted upon against the industrial advantage that she felt Germany was going to get in the Economic Community. So France aimed to be the butcher's shop, the bakery and the market garden for the whole of Europe, and the rest of them have been pretty well paying her for it ever since. No doubt they would like us us to come in and help to pay the bill.

I am afraid I have spoken for rather a long time, but in conclusion I submit that this White Paper brings out in clear terms serious economic problems which are connected with our possible membership of the European Economic Community. I have not enlarged upon the political side—that is another aspect of the matter. It would be more honest and practical if we dropped the pretence that, except for a few who are very powerful, vocal and influential, the economic prospects will be advantageous, and that there is, in any event, a case on political grounds. I personally do not think there is, but I am not going to argue on that ground. However, I can see that there is an argument. On the economic ground, I congratulate the Government on bringing out this much clearer exposition than we have had hitherto, but it still has not convinced me that my former views were wrong.

5.47 p.m.

LORD DONALDSON OF KINGS-BRIDGE

My Lords, I should have liked to follow the arguments of the noble Lord, Lord Harlech, whose speech I found most impressive and entirely convincing, but I find myself compelled to follow some of the arguments of the noble Lord, Lord Woolley, even though I do not agree with his conclusions. That is the unfortunate position one sometimes finds oneself in.

Let me begin by making my own position clear. I am in favour of joining the Common Market on economic and political grounds. My economic reasons were well stated in the other place the other day by my right honourable friend the Prime Minister, and by my right honourable friend the Chancellor of the Exchequer. The political grounds were much enhanced by the right honourable gentleman, the Leader of the Opposition. These give authority to my views, and I will not bother your Lordships with them; I do not want to tangle in these great questions. I want to draw your Lordships' attention, following the arguments of the noble Lord, Lord Woolley, to one particular and limited problem. I have noticed, from the earliest negotiations, a tendency to skate rather lightly over the actual difficulties involved in adapting our system of agricultural support to the E.E.C. system. There is no doubt that the White Paper treats this pretty scantily. I think it is important that we should not burk this problem. We should face it honestly, both in this House and in the country. I have made it clear that it is a problem that we can and must overcome. I think it will benefit from my making some remarks about it, even though it is following the general line which the noble Lord, Lord Woolley, has laid down.

The cardinal point is that we shall be under pressure, perhaps even obligation, to change from an extremely successful system of controlling output to a system of almost unrelieved failure. Since the war, the Ministry of Agriculture, whether led by Tory or Labour Ministers, and impelled more by horse-sense than a deep understanding of the long-term influences at work—one might say more by good luck than by good management— has succeeded in feeding the nation cheaply, mitigating the worst hardships to farmers during a period of fundamental and rapid change and, most important of all, in avoiding the accumulation of surpluses. Our industry has been subjected to a slow but steady squeeze which has reduced the number of workers from 669,000 ten years ago to 366,000 now; and the number of holdings, which is a rough guide to the number of farmers, over the same period from 356,000 to about 300,000. It has increased the capital investment by £1,000 million and has kept the price of staple commodities such as milk, eggs and sugar at or near 1958 prices—eggs actually lower, milk about 20 per cent. higher. That has been achieved without a major increase of bankruptcies and without any slackening in the upward pressure of land prices or shortening in the queue of young men offering high rents for tenancies. It has been a most impressive achievement of fairly painless rationalisation.

As Professor Britten said a year or two ago: It is my belief that although the cost/price squeeze has been irksome to farmers, it has stimulated them to reach for a high level of efficiency and has brought a healthy resilience to the whole agricultural community. Above all, we have avoided the accumulation of surpluses. We got dangerously near it with eggs, but the Government intervened; the Wright Commission was set up, and the matter is now in hand.

If we look in contrast, and with the greatest good will, at the performance of the E.E.C., we find that they began by fixing prices so high that surpluses were inevitable. The price for wheat in 1968 was £44 a ton in Duisberg; that against a world price of £29, but a price to us here of £27. Inevitably, too much wheat was produced and the bill for getting rid of it this year is estimated in the latest Common Market pamphlet at 700 million units of account—700 million dollars. Now they are cutting the price, too late and, in my opinion, too little, and raising the price of barley and maize.

To take sugar, the E.E.C. expect to produce this year over a million tons of sugar in excess of consumption, and to spend 100 million dollars in getting rid of it through exports. Contrast that with our position, which is almost beautiful in its neat effectiveness. I must declare my interest here because I am a director of the British Sugar Corporation. But the Corporation is only one factor in an elaborately contrived mixture of freedom and control which divides the home market between cane and beet growers, paying a fair price to each, and delivers sugar to the housewife at 11d. a pound, which is the cheapest in Europe, all without a penny in subsidy.

Lastly, the most flagrant example— milk and milk products, to which various speakers have referred. The main differences between our economy and theirs are well known. We produce much less per head of population, less than half, but we consume over 60 per cent. of it as fresh milk, as opposed to 20 per cent. in the E.E.C. It follows that we turn much less into butter—9 per cent., as opposed to 40 per cent. We can afford to do this as we can import butter from New Zealand and Scandinavia more cheaply than we can produce it. But the end result—and this is the point— is that we have stable and efficient dairy farmers, growing yearly more efficient, even though they do grumble a good deal, and producing all the liquid milk we need in winter and summer. In the E.E.C. the butter surplus has risen from 57,000 tons in 1963 to 150,000 tons in 1968, and now to 350,000 tons at the beginning of this year. And note that it costs more to store for three years than it does to produce. Note, too, that there is a surplus of skim milk of about the same size —350,000 tons. We have avoided these surpluses. I think we must be very careful indeed to refuse to become a dumping ground for other people.

There are reasons for all this, of course, and some progress has been made towards rationalisation, particularly, I should have thought, in France. The absurd price of wheat is a consequence of the fact that 90 per cent. of the one and a half million German farmers grow some wheat, although their average holding is no more than 17 acres, whereas ours is 86. So it has always been the practice to help the small farmer by raising the price of wheat, and of course it is painful to bring it down again. In this country the small farmer has been forced by economic realities to cut out grain-growing because he cannot compete with the larger man and is dependent on livestock of various kinds. Thus, obviously, since grain is his raw material which he feeds to his beasts, he is hurt and not helped by the rise in the price of feed grains. The point here is that we are a couple of decades ahead of the Germans in this respect. It is no more efficient for the small farmer in Germany or Italy to grow grains than it is for the small farmer to do so here. The difference is that we have learnt not to, and he has not. Yet if we adopt the E.E.C. price of wheat, which is designed to help the German and the Italian farmer to continue in his inefficient ways, we shall make it more difficult for our own far more rational small farmer to continue on his far more efficient course. He is being squeezed out fast enough in all conscience, without borrowing outdated methods from abroad to hurry the process.

I could make a very long speech on these lines, but I think I have said enough to make my point. We are years ahead of the E.E.C. countries, taken as a whole—not of course individually; we would not include Holland, but taken as a whole—as regards the structure of our agriculture. The E.E.C. are increasingly realising that they can never manage their affairs till they have re-formed their structure. In 1967 Dr. Mansholt said: We cannot go on in this way. We must call a halt and consider what is to be done to regulate the milk market so that we do not end up with these enormous surpluses, since these cannot be sold off to the world market. We must, of course, try to increase butter consumption within the Community, but I must admit that the Community does not yet know how this whole question is to be solved. In December of the following year, 1968, he produced the Mansholt Plan, described in the Economist to-day as "the only hope, but friendless". This Plan is to reduce the number of farmers from 10 million in 1971 to 5 million in 1980, and to reduce the proportion of the population on the land from 16 per cent. to 6 per cent. in the same period. That is easier said than done, and while it is being discussed the butter surplus has doubled. I do not suppose any policy, for agriculture or anything else, has ever been more obviously at risk or, as some might say, in ruins.

The E.E.C. have shown themselves tough, persistent and versatile, and I am quite sure they will get this right in the end; but meanwhile they are in a state of unprecedented muddle, with no certainty how soon they can find and operate a solution. So we, who have managed our affairs with singular success, must be wary before we agree to modify the machinery, complex though it is, which maintains our successful equilibrium, to conform to the much simpler, much more logical, but completely ineffective, system employed in the E.E.C. To take an example, the Milk Marketing Board would not fit into the logics of the E.E.C. theory or practice. Yet it is certainly a major factor in the stability of our dairy industry, and it would be very dangerous to change it.

Still more, my Lords, we must stand by our friends. The stability of our markets for milk products and for lamb is closely bound up with the supplies we take from New Zealand: 170,000 tons of butter and 300,000 tons of lamb-nearly half New Zealand's total exports by value. Our stable sugar situation is dependent on the Commonwealth Sugar Agreement. We cannot go back on those agreements on any basis, but least of all to join anything as unpre- dictable as the current E.E.C. gropings towards an agricultural policy. The point I am trying to make is not that we should not go into the E.E.C., but that we should realise that we are the strong ones in this particular subject. It may not be true in industry, but where agriculture is concerned we are the top ones; we are the efficient ones. We must, and can, negotiate from strength. We may, by providing the one stable factor in the chaotic agriculture of the E.E.C., be able to help them solve their problems, which we have surmounted and which seem to be swamping them. Agriculture accounts for no more than a small proportion of this country's gross national product, and its special problems of entry must be solved for the greater good of the nation as a whole —I accept that. I have not minimised the difficulties, and I have tried to highlight a few of them to make clear that they arise, not from our backwardness, but rather from the fact that we are so far ahead of our neighbours that what suits them cannot be expected to suit us. So I hope, my Lords, that our negotiators will be very careful.

6.0 p.m.

LORD GRANTCHESTER

My Lords, like other speakers this afternoon, I do not feel that we can discuss the White Paper before us in isolation. From the first tentative moves after the war it has been a difference of background thinking that has bedevilled this issue. During the war the frontiers of Continental Europe were overrun and kept open. This enabled the resources of a wide area to be used to the best advantage. The lesson of this was not lost, particularly on the Germans. The price of peace and prosperity in the future was a Franco-German reconciliation. The background of the thinking on the Continent ran counter to our traditional policy of a "balance of power".

That our traditional policy dies slowly has, I think, been evident from the way in which, since their application to join the Community, Her Majesty's Government have tried to play one member against another, with the result that the Community now insist on waiting for full agreement among themselves before there are any negotiations with us. In the result, there may be precious little room left for negotiation. In January last, Le Figaro published a table showing the weight of Governmental debt per inhabitant in 25 countries. In this country this debt is three times what it is in France, and four times what it is in Germany. So, my Lords, we start negotiations with a considerable handicap on our backs.

The White Paper we are considering to-day is called An Economic Assessment. It does not turn out to be much of an assessment. Those who are engaged in trade and commerce usually find a way of overcoming great difficulties, many of them put in their way by the shortsightedness, the inexperience and sometimes by the plain stupidity of Governments. There is really only one economic argument which is relevant in this matter. It has been shown beyond all doubt that when artificial barriers to trade are removed the volume of trade increases; so there is no question that everyone could but benefit, not only from dismantling Europe's tariff barriers but by the removal of other obstacles and devices which sometimes hamper trade more than tariffs.

But, my Lords, as the White Paper shows at great length, this is not the only economic issue. There is a price to be paid in contributions to the Agricultural Fund. Perhaps I may recall an incident which happened soon after the signature of the Treaty of Rome, before any application to join had been made by us. On this occasion, at one of the periodic joint meetings of the European Parliament and the Council of Europe, M. Pleven presided over a group of all the Liberal representatives from the Council of Europe and the European Parliament. I was the only British Member present at that meeting. Without any warning the Chairman asked me whether I could say what I thought would be the conditions on which the British would be willing to join the Community. I replied that our country being a small one, we looked upon part of the agricultural production of the Commonwealth countries, and particularly of Canada and New Zealand, as part of our home production, and that, in my opinion, Britain would ask for a licence to continue to import from these countries up to the level we had reached at the date of our application.

At that time this was unanimously accepted and considered to be a very reasonable stipulation. Of course there would be safeguards written in against our re-exporting any of that production, or against raising the level of home production so as to export it without paying the levy. But with these safeguards there was no objection to the suggestion I made, and in any political discussions since I have always adhered to this point. I suggest it is relevant to-day to bear this in mind. This is not a matter to be argued with the Commission. Before any negotiations are started with the Commission I suggest that "heads of agreement" (and they could be put on to a single sheet of paper) should be drawn up and agreed between this country and the Council of Ministers. This is a political venture and it requires a political decision at the beginning, between this country and the Council of Ministers, leaving the details to be worked out subsequently in negotiation with the Commission in Brussels.

My Lords, in order to facilitate a political decision it seems to me that not only do certain matters need the attention of Her Majesty's Government, but Her Majesty's Government should state their views upon these matters now. I should like to mention some of them. First, if we join, do Her Majesty's Government envisage that European views should normally be expressed through an enlarged Council of Ministers? There is much talk about a common foreign policy, but what means do we envisage to express that common foreign policy? Secondly, some EFTA countries may be accommodated within the Community in negotiations into which they may be drawn, but others will not be accommodated within the Community: I am thinking particularly of the so-called neutral countries, Sweden, Switzerland and Austria. Is it the opinion of Her Majesty's Government that those countries should retain at least the advantages in tariff reductions which they have secured through their membership of EFTA? I feel that on a matter of principle like this Her Majesty's Government should make a disclosure of their views.

Third, the system of weighted voting in the Community has been very carefully worked out to avoid undue pressure being brought against any member. I have seen no satisfactory method that could be applied to, say, ten countries instead of six. It would be helpful to know if Her Majesty's Government have studied this question and whether they can suggest any solution for this problem. The Community must avoid being torn into opposing parties where some countries will be forced to accept a decision contrary to their interests.

Fourth, have Her Majesty's Government taken a look at the wideness of British citizenship? Would this need adaptation, in view of the provisions of the Treaty of Rome regarding free movement? If so, this is a question that we might well deal with before we come to negotiations, because it concerns us and nobody else.

Fifth, What are the views of Her Majesty's Government upon the definition of powers, if any, which they are ready to surrender to a European Parliament? In the talks that were held with the Italian Ministers here there was a reference to a European Parliament. Some views were expressed which some of us found a little surprising. If the Government have any views as to what powers they should surrender to a European Parliament, it would help us very much to know where we are or where we may be.

Sixth, how far are Her Majesty's Government ready to go in harmonising our welfare services and our taxation levels with the countries of the Community? That is a subject which we could work on before the negotiations start, so as to know how much adjustment, if any, is necessary.

Seventh, do Her Majesty's Government consider the European Convention on Human Rights a satisfactory alternative for habeas corpus in the event of the arrest of a British citizen in a country of the Community? I think that recently attempts have been made to define the period which could elapse after an arrest before a charge is made. The conclusion reached, I understand, was that a delay of more than two years would be an unreasonable time to keep a man waiting. I do not think this is a very satisfactory position for a British citizen moving about freely, as the Treaty of Rome suggests, in Germany, for instance, or some other countries of the Community. I suggest, with respect, that this is a matter to which the noble and learned Lord the Lord Chancellor might give some attention.

Lastly, where do Her Majesty's Government stand on the question of curbing inflation—the fear of world inflation referred to recently by M. Giscard d'Estaing, the French Minister of Finance? Are Her Majesty's Government in favour of the creation of a stable European currency, possibly tied to gold, which might be useful as a reserve currency, as an alternative to the dollar, which is no longer convertible within the terms of the Bretton Woods Agreement.

If Her Majesty's Government are not prepared to answer these questions to-day, perhaps we might have at an early date another useful White Paper on them and other questions which have been raised in this debate.

6.17 p.m.

LORD WALSTON

My Lords, your Lordships have already listened to two interesting and authoritative speeches on agriculture, and I propose to subject you to a third discourse on the same subject. I do not do so because I am in any way obsessed with the importance of agriculture in this whole matter of our entry into the Common Market: to me it is inconceivable that a historic decision of this sort could possibly depend upon the interests of 3½ per cent. of the population in this country. And, in parenthesis, I would add that in my view the majority of that 3½ per cent. engaged in agriculture would in fact benefit considerably from our entry into the Common Market.

Nor can it depend upon such matters, important though they may be, as the price of butter. The noble Lord, Lord Harlech, in his admirable speech has given the real reasons why, sooner or later—and I very much hope sooner—we must become members of the European Community. But it is quite clear that agriculture is of very great importance, and very great interest, to all of us in this country who study this problem, and to those in the Community also. It is of interest not because agriculture is a way of life to 3½ per cent. of the population here, or to something between 12 and 15 per cent. of the population of the Community, but because it is a source of food for everybody throughout the whole of the world: so that people are naturally concerned with what is going to happen to their supplies of food and the price they have to pay for it.

We have heard from my noble agricultural friends—and I am sorry that the noble Lord, Lord Woolley, is not now here, because some of the things I shall say may be somewhat critical of him. We have heard from both noble Lords how very different the Common Market agricultural policy is from the British policy. We have also heard how admirable and how successful our own policy has been, and still is. I think that my right honourable friend the Minister of Agriculture might well have been pleased to hear these comments, particularly from the noble Lord, Lord Woolley, during the negotiations he has recently been carrying out. But it is good to hear that this policy has so much support in such an influential place.

My Lords, are there really such basic differences between the Common Market agricultural policy and our own? First of all, I suggest to your Lordships that our objectives are the same. What we want to do in this country, as indeed every sophisticated industrial country must want to do, is to ensure a reasonable supply of food and an adequate supply of food for the people of the country, whether it comes from home sources or from imports. It wants to ensure a favourable balance of payments; to ensure that those who are engaged in agriculture have a reasonably high standard of living, a standard comparable to that of people engaged in industry and, what is more, one sufficiently good to enable them to progress in their efficiency and to invest more money in such a way that it will accrue not only to their own advantage but to the advantage of the country as a whole; and to ensure, finally, that our industrialisation and our supply of labour in industry will not be interfered with and that our overseas trade will flourish. These, I suggest to your Lordships, are the objectives of our agricultural policy.

The agricultural policy of the Community, as stated by the Community, is that the factors which are taken into account by the Commission in Brussels for fixing their price levels in their Community are: first of all, the total agricultural income; the welfare of the farmers and the farmworkers themselves; the relative profitabilities of different crops in view of the needs of the Com- munity; the supply of food, the food that the Community wants from its own sources; the provision of consumer supplies at reasonable prices; the Community's role in world trade, with particular reference to international commitments, and the cost of financing the Common Agricultural Policy. Those are the Community's objectives. We know very well that in certain of them—not in all, but in some—the Community has failed. I do not think that we in this country can say that we have succeeded 100 per cent. in our own agricultural policy, though I fully agree with my noble friend Lord Donaldson that we have succeeded far better than the Community has up to the present time.

To turn to methods, there are certain significant similarities in the methods that have been adopted both in the Community and at home in Britain. In both areas prices have been fixed by Government action or intervention. There is no question of leaving to the free play of the markets the prices the farmer gets. In one form or another, there are guaranteed prices which bear only a tenuous resemblance to world prices. That is the first and most basic similarity between the two. The second one is that, in spite of what many people, including the noble Lord, Lord Woolley, say, there is in both areas an annual re-assessment of prices, in the light both of profitability and of the production of crops—call it an Annual Review or not, as you like. But if he were here, the noble Lord would say to me, "Yes; but in the United Kingdom system the farmers' representatives come into consultation with the Government". Of course they do, my Lords. But what good does it do them? They consult, but they cannot dictate. The Government listen to what the farmers' representatives have to say, and the Government make up their mind; otherwise, we should always have an agreed Review. I suspect that when we hear the result to-morrow of this year's Price Review we shall hear that it is not an agreed Review.

In the Community the Commission recommend to the Council of Ministers what the prices should be. They recommend these annually. In making these recommendations they naturally pay attention to the general position and to the wishes of the farmers' representatives, though there is no formal consultation— a weakness, I believe, but still not a basic difference from what goes on in this country. Clearly, when they come to approve, or to modify, the recommendations of the Commission, the Council of Ministers, being elected politicians, bear very much in mind—far more than our politicians do—the feelings of the farmers, solely because the farmers in the Community have a larger number of votes than they have in this country. So in those two basic aspects I suggest that there is a strong similarity between our two systems, upon which we can build when we come to negotiate the actual terms of our entry in so far as agriculture is concerned.

Now let me move quickly on to the second point. What are the general terms that we should hope for in our negotiations with the Community? First of all, I suggest that we should accept, once and for all, the outline of the Common Agricultural Policy, in so far as it lays down that the home producer has first call on the home market. That is an essential article of faith in the Common Agricultural Policy. I believe that we should accept that. But—and here is a most important "but", and it was rightly mentioned by my noble friend Lord Donaldson—we must at the same time insist that the policy which the Community takes with us in it is one that will prevent the appearance of increasing surpluses, which, as we have heard, and as we know so well, only pile up and have to be dumped at prices that cost the Community as a whole an in-ordinate amount of money. They are well aware of this; they know it perfectly well. Again, as we have heard, Dr. Mansholt and his colleagues are working hard, and with the good will of the Governments of the Six, in order to overcome this. I believe that here we can be of help to them. We must be adamant that the steps taken should be adequate steps. I am not despondent about it because, after all, they have already taken steps to reduce their surplus of sugar; they have restricted the actual area on which sugar is grown, and they have reduced the price paid to the producer.

The second line on which we must be very firm is that our total contribution to the common agricultural fund should have an upper limit. Here I do not think that we shall meet very great difficulties. This is a principle that has already been adopted in the Community, the six members of which each have an upper limit above which they do not contribute. I believe that we should press for a modification of their form of annual price changes so that it comes somewhat more in line with our present Price Review.

There should be consultation between the joint farmers' representatives—and farmworkers' representatives, too, I believe—of the whole Community with the Commission in Brussels, and, if possible, they should agree between themselves what should be the prices to be recommended to the Council of Ministers. If they disagree, it will be up to the Council of Ministers, as it is at present up to the Government in this country, to decide between them.

I am in no way despondent, as the noble Lord, Lord Woolley, was, about the technical difficulties of organising agriculture on such a vast scale. Of course it presents problems, but in some ways those problems are less severe when one is dealing with nearly 300 million people, and a range of climate and population such as will occur in the enlarged Community, than the problems which occur in a much smaller and more self-contained community.

Let me turn to two points also mentioned by my noble friend Lord Donaldson, sugar and butter. Undoubtedly, those commodities give rise to two of the most difficult problems which are uppermost in the minds of people who give thought to these matters. I entirely agree with him that the Commonwealth Sugar Agreement must be retained. I think we must do so even if for no other reason than our obligations towards those Commonwealth countries from which we take our sugar. But what are the actual figures involved in this? We produce at home approximately one-third, 30 per cent., of our total sugar consumption. We buy under the Commonwealth Sugar Agreement, approximately 55 per cent. which leaves 15 per cent., in round figures, which has to be imported outside our obligations to our home farmers and Commonwealth producers. That 15 per cent. could well, I believe, be bought, and we should under-take to buy it, from the reducing surplus of the enlarged Community. All the projections that I have seen suggest that even at present production rates that surplus will not be a very large one, and if the measures which Brussels has mounted succeed it will be still smaller. If we were to take 15 per cent. from them, it would go a long way to absorb their entire surplus, and we could still stick to our agreements with the Commonwealth producers.

When we turn to the subject of butter the position is different, but far from hopeless. At present we are importing something like 450,000 tons of butter, and of that something like 150,000 tons come from those countries who would be members of the enlarged Community. In other words, we should still have to import a further 300,000 tons. If we were to take an extra 100,000 tons from the Community itself, that would absorb not their present 400,000 tons surplus, but what is likely to be the surplus that they will be producing at the time of our entry, assuming that they do not reduce their total dairy production at all. Therefore we could satisfy them by taking that 100,000 tons, and it would still leave us something like 200,000 tons to import from outside the Community—in other words, from our traditional suppliers. At present we are bringing in about 175,000 tons from New Zealand; so, if we wished, we could continue to take 100 per cent. Of the New Zealand supplies, and have 25,000 tons left over for other people. Possibly we should reduce the supply from New Zealand by a certain amount and take some from Australia and other traditional suppliers, leaving some to come from Finland, Poland, or the other countries that send it to us at the present time. I do not want to weary your Lordships with these detailed figures; I give them only to show that even this problem of butter, which has been so played up, when one looks at the figures with some care, does not present anything like an insuperable problem.

What about the cost? My noble friend Lord Shackleton dealt in considerable detail and with great clarity with the cost to the consumer, and he quoted Table 7 in the White Paper which we are discussing. He was right to point out that one of the important points in this Paper is the fact that it shows so clearly the great difference in retail prices, even in the Community, between comparable commodities; which emphasises the point that the actual cost of the raw material is by no means the determining factor in the cost that the housewife has to pay. For instance, if one looks at sugar one sees that there is a variation from 1s. 1d. in France to 1s. 6d. in Italy; a variation of nearly 40 per cent. in the price, although there cannot be much variation in the quality of sugar. If one looks at bread, one finds there is a variation between Belgium and the Netherlands at 11d., and France at 1s. 4d.—something like a 45 per cent. variation in price. That is in spite of a common agricultural price for the raw material, for the wheat. So it simply does not follow as an argument that because our raw materials will, in certain respects, undoubtedly cost more, there will inevitably be apro rata rise in the cost when it appears in the shops.

May I give your Lordships just one figure which bears out that point in this country? Between the years 1958 and 1967 the price of home-grown wheat on the market, as paid by the miller, rose by 4 per cent.; the price of imported Manitoba No. 2, which is the main ingredient of our bread, rose by 14 per cent. One might therefore have thought that the price of bread would rise by something in between those two figures— something like 10 or 11 per cent.—but in fact the price of bread rose by 54 per cent. Therefore one can almost say that in certain cases the cost of the raw material is insignificant when it comes to the cost of the final product. For those reasons, I am not unduly impressed by the calculations of a rise in the cost of food to the consumer. It will go up, there is no doubt about that; but I am satisfied that the figures my noble friend Lord Shackleton gave on the rises in wages and salaries will undoubtedly take care of any rise in the price of food that may take place, and so the standard of living will in no way fall.

So much for the cost to the consumer; now for the cost to the Exchequer itself. There will be a saving there, because we shall be saved the larger part of the £ 250 million—or maybe by to-morrow it will be still more—that is spent every year in agricultural subsidies. So there will be the possibility of reducing taxes as far as the taxpayer is concerned. I cannot weary your Lordships with the calculations which have led me to this figure, but I am of the opinion that the maximum cost in foreign exchange on the agricultural front of joining the Common Market would be in the neighbourhood of £ 250 million a year—I repeat, the maximum cost. That is taking the present situation as static; but of course it is not static because it depends on the movement of world prices and the ratio of prices in the Community to prices in this country, and I strongly suspect that when to-morrow comes we shall see that the ratio has closed considerably, which would reduce the cost very considerably. There is also the important effect which higher prices to the home producer in this country would have on production. Your Lordships will remember the "Little Neddy" Report which—I think I am correct but I am speaking from memory—spoke of an increase of £ 180 million worth at the end of 1972 or 1973. The Government reduced that target to something like £ 160 million. But if we were to achieve that during, I would suggest, the four-year transitional period, the cost in foreign exchange woud be reduced by the amount by which our home production would go up. If it went up by the full £ 160 million, it might well be that the cost in foreign exchange to this country would be under £ 200 million a year.

I repeat that the agricultural picture, although an important one, is in no way the determining factor in coming to a decision about the Common Market. All I would say is that the rise in food prices, the cost in foreign exchange because of our change of agricultural policy, the effect on our farmers of adopting to some extent (in the way I have outlined) the Common agricultural policy, need cause little, if any, hardship, and need be no deterrent whatever. My Lords, I hope that Her Majesty's Government will press on with all deliberate speed.

6.40 p.m.

LORD CACCIA

My Lords, after two days debate in another place, a London newspaper opined that everything that could or should be said about the White Paper had already been said. So why say it again? On listening to previous speakers and reading recurrent opinion polls, my answer would be that there is surely something to be said for this debate—indeed, for a continuing debate— on a question as fundamental to the national interest as this is.

For myself, my only claim to take any of your Lordships' time is that I was Permanent Under-Secretary in the Foreign Office during the first negotiations with the E.E.C. But I shall not of course weary your Lordships by trying to recount, like some Ancient Mariner, all the lessons that might be learned from that rather doleful experience. Rather, and to be brief, I will restrict myself narrowly to the terms of the Motion, to take note of the White Paper, and speak designedly without passion and in a minor key.

First, it is only fair to recall that Her Majesty's Government now, as Her Majesty's Government in 1961 to 1963, are under the handicap that they must at one and the same time try to inform and convince the public at home and negotiate abroad. While nowadays in the Western World we may all favour open agreements and set our faces against secret treaties, most would accept that this open diplomacy does not normally mean that open agreements should be openly arrived at. In such circumstances, there would indeed be precious few arrivals to report. But in the case of these negotiations, we are close to that. My sympathy now, as earlier, goes to the Government. What is wise to tell your countrymen openly may give hostages to fortune in negotiating. In case of doubt, I personally am in favour of inclining towards informing and convincing the public and taking a chance on it. I therefore support the publication of a White Paper.

Next, we are told that whatever the economic advantages long-term may be of joining the E.E.C., these should not be considered in isolation, and that the political factors may indeed be of greater significance. But surely the White Paper, though explicitly an economic assessment, in fact sets out the political elements sucoinctly but fairly, even generously, in paragraph 3. And here I must say a word of warning. Some now tend to talk as if the political benefits were there for the taking. If we look at things as they are, rather than what they might ultimately be, we should be forced, I think, to accept that it will be exceeding difficult to hammer out agreed European policies in foreign affairs and in defence.

The French, as we have seen recently, are often the odd men out and are not in the smallest embarrassed at being, like Jeeves on a certain occasion, a solemn procession of one. Does anybody seriously argue that in the foreseeable future the French attitutes towards NATO, towards the Middle East, towards Africa or over their very real agricultural problems are likely to change radically, and that they will abandon their views and interests in order to be convenient to an enlarged Europe and enable it to speak with unified, and thus hopefully with enlarged, authority? If so, they have little knowledge of France and far too little respect for her. "Oh, you Foreign Office people are so anti-French" (before the war it was so pro-French) I have heard some say when faced with this dilemma. Not at all, just respectful and mindful of M. Massigli's aphorism during the war: that although France could rarely achieve anything single-handed on the world stage it was often found that she had a veto. So let us be honest about the political factors. Let us not pitch the public expectancy too high for the near or even mid-term. Let us be content to say that it should be less difficult to hammer out European policies if we are in than out of the E.E.C. Then, I submit, we shall be on safer ground.

Thirdly, I was glad to see that the Government took the view that it would be as much a tragedy for Europe as for us if these negotiations failed. Exactly so. The corollary is that, although we and Europe should be better off politically and economically and in defence if we and our associates are in rather than out, the alternative is not national disaster. On the economic side, perhaps we can look again at economic arrangements short of membership, as the French have suggested. Perhaps there may be possibilities in wider arrangements through the GATT which would avoid the drawbacks of economic clubs about which the Financial Times wrote yesterday. Per- haps if once again entry is made impossible for us, we may explore the line suggested by Governor Rockefeller in a notable speech on November 5 last, when he wholeheartedly supported our renewed attempt to enter the European Common Market, but went on: If such a role for Great Britain does not emerge in Europe, it is essential to the future of the free world that the bonds between the English-speaking peoples stay strong. If Britain does nor join Europe, surely our nations must be joined firmly and lastingly, for we are more than neighbours in the world community. We are brothers in the world family. On the political side, perhaps we can make some further use of the Council of the Western European Union to try to achieve common political policies and defence policies in Europe. These are just a few illustrations to show that, without much invention and much initiative, there are already a good many possibilities outside the mechanism of the E.E.C. which could be made "live" if the need arose. There is an Australian saying known to many of your Lordships when a vital choice has to be made, "Sydney or the Bush". All or nothing. Here I at any rate agree with what I understand the view of the Government and the Opposition to be, although rather differently expressed. This is that the choice before us is not "Europe or the Bush".

It has also been argued that the mere publication of the White Paper was a tactical mistake, for it might have been read by the Six as implying that our determination to seek admission had weakened. I have seen no evidence of this. The German Chancellor on his recent visit gave no public hint of any such thing. Surely we can take it that the nerves of the Governments of the Six are not so on edge nor their judgments so insipid. Nor have I seen any attempt on their part to argue that the economic analysis was itself biased one way or the other. It was certainly vague, but at this stage I should have thought that quite inevitable.

Some have argued, "If you cannot be precise, why do it at all?" That brings me back to my first point: the need to inform the public at home as well as to negotiate abroad. Let me therefore in conclusion return to the point that I made to begin with: that the Government at this time have an over-riding obligation to inform their public, and that in doing so they should be entitled to take some risks in saying enough to give the public a basis for forming a judgment.

I would therefore on balance support this White Paper, and would not myself think that our negotiating position with the Six has been damaged in any serious way. Both political Parties—indeed, all three Parties in this House—have expressed their determination (and I welcome this) to seek entry if proper terms can be negotiated, and this White Paper helps us all to make up our own minds what might be meant by "proper terms", or perhaps, more easily, what might not constitute such terms. Of course, the White Paper of itself settles nothing; no one ever claimed that it would. But it sets out the parameters of this problem. On balance, and with respect, I should have thought that that was worth while and that, in the terms of the Motion, the British public, as well as this House, might with some profit take note of it. No more. No less. No bouquets. No brickbats. Just that.

6.50 p.m.

LORD MOYLE

My Lords, we have had a very interesting introduction to this all-important debate in the very well reasoned and dispassionate speeches both of my own Leader, my noble friend Lord Shackleton, and, of course, the noble Earl, Lord Jellicoe; and we have had some interesting speeches from other noble Lords. The one which appealed to me was the excellent speech of the noble Lord, Lord Woolley. It was, I thought, based on fact, whereas most of the speeches in the other place, and indeed in this noble House, were based on faith. Even the speech in another place of my right honourable friend the Foreign Secretary was based, of course, as he admitted, on assumptions. Being a trade union product, I was brought up on the simple premise that one does not accept judgments unless they are based upon ascertained evidence.

My difficulty is that we are called upon to pronounce judgment upon one of the most fateful issues that has ever faced British democracy, and we are called upon to pronounce this judgment on the basis of assumptions. If one reads the White Paper—my noble friend the Leader of the House himself said that it was not possible to produce accurate data— one finds that much of it is tentative, and therefore I would put this question to this noble House: why make a decision now, in the absence of evidence? Why not wait until we have had an opportunity to sound the Common Market and to sound those in control of the Common Market to find out exactly what are the terms on which we shall be called upon to enter? I find myself in this position: that I am against the Common Market, but not wholly against it: I am relatively against it. I must be satisfied that the terms for Britain's entry are such as accord with the interests of the British people as a whole, and not just with those of newspaper proprietors or of leaders of heavy industry. It must be. so far as I am concerned, a judgment which accords with the interests of the British people as a whole.

My Lords, it is not easy to decide when one listens to a speech such as that made by the noble Lord, Lord Woolley, who speaks with authority on agriculture, as one of its leaders. We all know, as he said, that British agriculture is an efficient industry; one of the most highly mechanised agricultural industries, if not the most highly mechanised, in the world; and when he tells your Lordships that through our agricultural system we have been able, domestically, to make a contribution to our balance of payments of £ 300 million more than was made by British agriculture ten years ago, it makes one think. One cannot throw that in the maelstrom of European politics without having some compelling evidence on which to go into the Common Market, when we know that, if we accept the judgments of the Continental leaders of the Common Market only this weekend, what is not negotiable in the conditions of entry is the agricultural policy of the Common Market. My Lords, if that is so, I should have to think twice before I could support by my vote the entry of British agriculture into the Common Market, when I have a feeling that we shall be taxed in order to provide a featherbed for French agriculture. I merely put the question. I cannot answer it; I do not know the facts.

But there is another point which exercises my mind. I was in the other place for not quite twenty years, and I went through the 'fifties, when Mr. Harold Macmillan was the Prime Minister and appointed two excellent members of his Government to carry out negotiations with a view to our entry into the Common Market. They were the right honourable Member for North Barnet and the present Leader of the Opposition. Those negotiations went on for months. Little, if anything, was got out of it. But contemporary with that period of uncertainty and frustration we were having speeches galore from all quarters saying, "If we do not go into the Common Market, Britain will sink into unsplendid isolation, being pushed about by every Tom, Dick and Harry. It will cease to have any influence in the world, and will eke out its future as an offshore island". If ever a body of people spread gloom and despondency throughout the British nation, it was the then Prime Minister and his supporters.

What were the adverse effects of that? It depressed British agriculturists and industrialists. They began to wonder just exactly what the future held for them; and, of course, it hastened the disintegration of the British Common-wealth of Nations. The British Common-wealth countries lost heart because we had lost heart. Indeed, we were reduced to the abject position of running after General de Gaulle like a fox terrier yapping at the heels of its master—and this was Britain! We became, in that period of time, camp followers and not pioneers.

I am not competent to argue the conditions of entry, but I know that for the last few years people have come from France and from the Low Countries to Dover, to Margate, to Cliftonville, to Brighton and to Eastbourne to make purchases of food and clothing and boots and shoes, because the say that they are able to come here and enjoy the cheap markets of this country and still be in pocket after having defrayed the costs of their excursions from the Low Countries and from France. Those are inescapable facts that we have to consider.

My Lords, there is another argument, the argument of defence. What are we asked to do by some of the Common Marketeers? We are told that Britain is without defence, or at least that we do not have a defence that can stand up to the super power of America and Russia, and that we should constitute a Third Force by going into the Common Market. Let us look at that. Is there anything in the Continental position that encourages us to risk our future defence in the hands of different European countries? What about the political instability of the last 30 years in Europe? What about the development of the Communist movement in Europe—to give Italy and France as just two examples? Are we expected to commit the future defence of this country to the European Community? What is wrong with America? America stood by us in the First World War—and I am old enough to remember it. America stood by us in the Second World War. And they are standing by us now. If we have to choose an umbrella, let us at any rate choose our known friends and not put our trust in those who have yet to prove their loyalty to Britain. Therefore, so far as I am concerned, having been for a whole lifetime a supporter of the Anglo-American Alliance, I see in that link with an English-speaking community far greater security than in any alternative that is based on the instability that has for far too long prevailed in European countries.

One final word. The Brussels Commission, a bureaucratic body, as I under-stand it, is answerable only to the Council of Ministers. Faced with this bureaucratic system, are we not entitled to be assured that if we go into the Common Market the British Parliamentary system of democracy will not suffer? It has stood the test of time and, with one Cromwellian exception, has given us for over 600 years a political stability that is the envy of the world. Are we to treat that so lightly as to put it at risk by surrendering part of our sovereignty in order to strengthen, as it were, this bureaucratic organisation of "Wise Men", as they are described. Without hesitation I say that I am not prepared in any way to compromise the British Parliamentary system. For me, self-determination must be unquestioned and in no way restrictive if we are to be brought within the European Community.

My Lords, I come back to the point that I made at the outset. I am unconvinced by the evidence that we need to go into the Common Market in order to ensure a prosperous economic future for the British people.

On the assumptions upon which most of the Common Marketeers base their argument, I am entitled to say that I should find it more in accord with our history if we, the British people, set out as pioneers to try to evolve a North American Atlantic Free Trade Area, open-ended so that all who wish may come in. That, to me, is a much healthier, nobler and more world-wide concept of future relations for Britain and its Commonwealth than anything that the European Community can offer us.

7.6 p.m.

THE EARL OF LYTTON

My Lords, the fact that one of the speakers has dropped out has made me the 13th on the list. Looking around for a favourable omen to compensate me, I noted —but also note that it has just gone—in the buttonhole of the noble Lord, Lord O'Neill of the Maine, the emblem of St. Patrick. I do not know quite whether that is a double bad omen or not.

I am glad to follow the noble Lord, Lord Moyle—not that I agree with most of what he has said. My position is different; but I have every sympathy with him when he finds the White Paper which we are asked to "take note of" unconvincing. I find, for example, that Table 8 which, if it were correctly and not confusingly set out would be a compound of 18 variables, produces a theory of relativity that takes one off the ground altogether and conveys no conviction to anybody. If I had need of that conviction from the White Paper I should not have got it and I would refrain from showing it to others. People come to me and say, "What do you think of it?" I have to try, as many of your Lordships do, to persuade them of what we believe to be the right reasons for signing the Treaty of Rome. I follow the noble Lord the Leader of the House in accepting that, with all-Party agreement, we have applied; and I am not going to discuss whether we should or should not have done so. We go on from that point; it is a standpoint from which we must advance.

The noble Earl, Lord Jellicoe, referred to the cost of food as mentioned in the White Paper and said it appeared to the British housewife very much as the last straw on the camel's back. It appears to me, from the reactions of camels to various loads, that it is very much as if I approached a camel that had been loaded up with 400 lb., and started getting on it. I think it is unfortunate that it should be presented in this way. It is such an enormous increase in the price of food, and that, in a sense, is the "sacred cow" of the British urban dweller—cheap food from the cheapest market in the world. I think it hits them very hard and that it will take a good deal of reassurance before they see their advantages.

I am convinced as passionately, perhaps, as the noble Lord, Lord Harlech, in another way, that unless this entry into the Common Market, into the Community, is shown clearly as being to the economic advantage of our people, it will not stand the strain. They will not accept it heartily; they will never be enthusiastic about it. As they are not enthusiastic about Westminster politics, they certainly will not be more enthusiastic about those in Brussels. Unless the economic advantage is clearly theirs; unless it is a matter of consumer interest, it seems to me that we should be building on an incorrect foundation.

We may have protests against what is called the "Nine-line Whip" with representatives of some of the farmers, if they are against it (I am a farmer, and I am not), coming up with the housewives in a kind of democracy of incantation, "Europe, out!", unless our people are carried with us. I hope they will be, and I hope that some sort of Paper will be issued which starts with the admirable economic picture painted by the noble Lord, Lord Harlech. He mentioned bread and butter, but it was on such a high level that it did not come down to those who actually spread it. If we can supplement what he said, so that people really understand that entry into Europe is advantageous economically, that is what is wanted; and I hope that it will be done persuasively. Perhaps the noble Lord, Lord Harlech, can be enlisted to help to write the next Paper which goes out on that aspect of the subject.

My Lords, I turn to the balance of payments. I have rehashed what I proposed to say, because I do not wish to repeat too much of what other noble Lords have said; but I want to try to explain what is still a bother to me. I have read the speech made in another place by the Chancellor of the Exchequer on this subject of the balance of payments, and though it is a mine of useful information I could not find that which I thought related most to the circumstances before us. I noticed that the noble Earl, Lord Jellicoe, spoke of his worry about a balance of payments fragile through lack of growth. I do not know whether the noble Earl made a mistake, but my worry is the opposite. I am afraid of the impact of a weak balance of payments on our growth rate, which I believe is the essential factor. I cannot get an assurance on this matter, and there are certain aspects which worry me. I agree with, welcome and congratulate the success in producing a strong balance of payments. But this balance of payments is against an enormously long history of recurring weakness; almost back to 1925—the economic consequences of Mr. Churchill and all that. And just a temporary success is not in itself entirely convincing to me, especially as all our controls are still on, except the one control that really matters; namely, the control over the massive increase of wages all over the country. That is the danger that bothers me.

I think I heard the Prime Minister say —I trust I may be corrected if I am wrong—that we have reached a situation where one man's wage rise in another man's price rise. It is that fact which bothers me, because continuous, galloping inflation is a recipe for soaking the poor and sinking the balance of payments. It is that which continues to bother me. I do not wish to attribute blame; it is a most difficult problem which has defeated both major Parties for a great many years. I am, therefore, not reproaching anyone. I am merely saying that we do not have control of what is the essential factor of control. It is that which, I suspect, influenced the French more than anything to exercise their veto; that an elephant, lame in that way, with a weak balance of payments, would be a handicap in Europe. It is true that they also are a bit lame, but that does not make it any more easy for them to accept anybody else—one is enough. Therefore, I am still uncertain whether, first, we shall not be vetoed again from the same source for the same reason; and, secondly, whether if we go in, we shall not have continuous trouble and have to be propping up ourselves with the help of others. That is a posi- tion in which we ought not to be. For so long, up to the First World War, we were supreme in handling balance of payments problems and we should be able to do it again. I hope we can have some assurance that my fears are not well-grounded; but there they are, and I am among those who have to try to convince others.

Lastly, my Lords, there is the political factor. The Treaty of Rome, a copy of which I have before me, indicates that it is an economic community. Article 1 simply states that by this Treaty the parties establish, set up, a European Economic Community. Article 2 gives five sound economic reasons, aims, targets, tasks—or whatever it is. Incidentally, I am using the English translation which, I understand, is not an authentic version. Only the last indicates anything that might be construed as political; and it is, I should have said, political in the sense of what is necessary to carry out the economic tasks. That is what the Community is.

THE MINISTER OF STATE, FOREIGN AND COLONIAL OFFICE (LORD CHALFONT)

My Lords, may I interrupt the noble Earl for a moment to ask whether he has studied with equal care the preamble to the Treaty of Rome? If he does that, I think he will find the answer to his question about the political nature, the political aims, of this Community.

THE EARL OF LYTTON

My Lords, I am very deaf and I did not quite catch what the noble Lord said, except that I shall find the answer somewhere. I should be very glad to find the answer.

I would only add to what I was saying that the statement made by the German Chancellor, Herr Willi Brandt, on "Panorama", as repeated in the Daily Telegraph, that all they are after is a qualified political co-operation, without supranational elements in the area of foreign, political, and security operations, seems to me the correct attitude of the Community in political matters. If it is not, the Germans can prevent its being anything else, because the opinions and views of one are sufficient to determine the limits beyond which the others will not go. And it seems to me that that is the kind of entente cordiale which ought to delight us all, but which may take us fifty to a hundred years to develop—this feeling of common good will throughout Europe. But it falls very much short of many of the speeches of politicians who advocate, both in another place and in this House, the supremacy of the political over the economic. That does not seem to me to be envisaged in the Statutes of the Treaty that we are contemplating joining and certainly not in the thinking of Herr Brandt, who I imagine would see in it a recipe for consolidating the Berlin Wall, for dividing brother from brother for ever, and for accepting the Iron Curtain as a permanent division between the countries of Europe.

Indeed, my Lords, I am a little on the opposite side of most people in their treatment of these countries. I notice that they are called "satellites", whereas I always refer to them as captive nations, which I would gladly see liberated. And I would work for that purpose by putting up an example that would cause the bastions of the monolith ultimately to collapse. I was rather horrified, in reading parts of the Report of the defence debate in another place, to learn that in certain circumstances we would lob a tactical "Hiroshima" into the satellite countries, by way of deterring the Soviet Union from further advances if the Red Army did advance into Europe. I have a totally different conception of what the attitude should be towards the captive countries in Eastern Europe. It is a part of the old question of Europe which I should like to see freed; and Russia as well. It will come, if we are patient. That is the third matter which I find difficult to follow. Although I agree that in Parliament it is generally accepted that the political dominates the economic, I regard that as what I call the Westminster gloss on the Treaty of Rome, which I do not think the Germans will accept and which, for all sorts of reasons, I hope they will not accept.

I should like to assure those who have been doing the work on this White Paper that I think the Paper is a remarkable achievement: it reveals an immense amount of work on the variety of circumstances that could arise, and I think that they deserve great credit. Though I cannot myself use the White Paper very much in persuading my fellow country-men I hope that Her Majesty's Government will address themselves to the housewife, on the ground that there are great economic advantages to her in our joining the Community.

7.23 p.m.

LORDTHORNEYCROFT

My Lords, we have had a fascinating debate, including many notable contributions, not least the elegant and interesting speech which the noble Earl, Lord Lytton, has addressed to the House. I enjoyed particularly the speech of my noble friend Lord Harlech, but perhaps most of all I enjoyed the speeches of the noble Lords, Lord Woolley and Lord Moyle, because it is the essence of a debate that there should be two sides to the question and it is difficult to intervene in a sensible way unless one has someone with whom to discuss. I hope to have an opportunity in a moment of dealing with one or two of the things they said.

We are also assisted by having a White Paper. I think that someone said of the White Paper that its authors were charged with a combination of the impossible and the irrelevant. This is not the first time that public servants have been asked to deal with the combination of the impossible and the irrelevant. They are quite used to it. On balance, I think that in this case they made a good show of it. They demonstrated that, by and large, with all the information available it was extraordinarily difficult even for a body like Her Majesty's Government to say precisely where the material advantage is going to lie.

I think that that is a good thing to say. It is right that the public should know this. It would have led to a lot of suspicion and ill will if even those facts, however easy or hard it may be to deduce a line of policy from them, were somehow concealed. Nevertheless, the debate is not about how to ascertain the unascertainable, or even about cod fillets or the price of custard powder in Rome, though all those matters are bread and butter matters and are all relevant. But they are not what the standard of man's life is really about; it is much more complicated than that. The relationship between what a man pays for his food and for his house, for what he regards as necessities and as amenities, how much the Government pay and how much he pays for some things and even, if I may mention it near the Budget period, how much of what he earns he is allowed to keep to pay for these things—all these are directly relevant to the standard of living. However difficult some of these tables may be, just to take them in isolation and say that this is the standard of living or the effect that entry is going to have on the standard of living is, as all of us realise, a considerable exaggeration.

I find that the arguments are tantalisingly balanced. It is always dangerous to put the case against yourself, became that is the bit your opponents always quote, but I should mention, in case nobody can follow my argument, that I have always been and still am in favour of going into the Common Market. But the arguments against it are more powerfully held outside this House than have been expressed in our debate. It may be that our collective wisdom is great indeed, but there are thousands outside this House who hold a different view, who think that it would be much better to stand on the sidelines, to let the Community grow up, trade with it, but not get mixed up with all the irrelevant eccentricities (as the noble Lord, Lord Woolley, thinks) of their agricultural policies, dictated in part, because they are human as we are, by political timidity, the farming vote and all that. So there are many who feel that there would be solid advantages in trading with the countries of the Community, with all the advantages of cheap imports and so on.

There are people on the other side— and I thought that my noble friend Lord Harlech put the arguments with great dignity and brilliance—who see an immense opportunity opening out ahead of us, an opportunity which exists nowhere else. I will come to what the noble Lord, Lord Moyle, said about America. But there is this important view of an opportunity which exists in no other part of the world, of suddenly finding a market of adequate size for modern-scale business, a place where capital can be raised, a solid area which is defensible and which has everything on a vast scale that goes with the conception of a modern community in a modern world. My noble friend urged upon us with great eloquence that we should seize this opportunity.

I have listened to this debate for 15 years, because it has been going on for a long time. I can remember the first days when the idea of whether we should have anything to do with Europe was being debated in the Government. I suppose one ought to be careful about what one says about any member of a Government of which you have been a member; though everybody writes about them, and books come out from time to time, so perhaps I may make a few tentative observations. These Ministries have independent souls of their own, with their own policies and ideas deep in them. The Board of Trade is basically free trade; it wants to trade with the world. It has been the leader in the desire to get into contact with Europe. The Treasury are a little behind, more concerned, and properly so, with the balance of payments, and most anxious about the kind of figures that Sir Con O'Neill has produced in this White Paper. The Commonwealth Office (as it then was) and the Ministry of Agriculture were both in the early days faced by far the greatest range of difficulties. Both were steered by great men—and we have had the opportunity of listening to one of them, the noble Lord, Lord Garner, in this debate. They were led by men like Mr. Duncan Sandys and, in the case of the Ministry of Agriculture, by our present Ambassador to Paris to think along the lines that, with all the difficulties fully recognised, there were still opportunities for solving them.

Then there is the Foreign Office. I do not want your Lordships to think for a moment that I have any more doubt for my friends in the Foreign Office; I have too many friends in the Foreign Office for that. I recognise, and have recognised over 15 years, their difficulties and responsibilities. So if I content myself in your Lordships' House by saying to the noble Lord, Lord Caccia, that it may be that in the coming months they may have to move a little nearer to Sydney or a little nearer to the bush, he will understand what I have in mind. Perhaps I may say just one more thing to the noble Lord. As one who knows Sydney, and loves that beautiful city, I think there is not very much between Sydney and the bush. It is important to remember that.

So we are going to move towards a negotiation. It will be a tough negotiation. I am not very worried about the negotiation, because I have taken part in many negotiations. I do not pretend to be a brilliant negotiator myself, but I have learned a lot about negotiating. One thing that I have learned above everything else is that it is no good negotiating unless both sides reach a satisfactory conclusion. Good negotiators make sure that both sides have a reasonable satisfaction of their real responsibilities and wishes if they are attempting something of this character. What would be the point otherwise? To put it at its lowest level, if you are merging two firms you do not want to ruin one firm before you put it in the other. You must have the best measure of success. I think it will be a long and difficult negotiation, but it will be successful. And it will not be just about money and figures. It will be about faith and friendship; whether we are really prepared (this is a difficult thing about which to make up our minds, and the noble Lord, Lord Moyle, touched on some of the deep feelings there are about this) to go along with them, at any rate to the horizons we see, and try to look over them to see whether we can go even a little further. It is a big decision for the British people to take. But that is what the negotiation is really about.

With regard to choice, I know that we talk in these debates as though we had a great choice to make. We are, in a broad sense, politicians. Many of us have played parts of one kind or another in running bits of the great Establishment that goes to make up this country, or have sought to influence events by the speeches that we make: and we like to think that we determine a little what happens. I am just a little doubtful whether politicians determine quite as much as they say they do; whether they alter history quite as much as they think, and whether many of the great events of history have been altered quite as much as we sometimes think from reading the history books. If the Southern States of America had won the Civil War there would still have been a United States of America. If Garabaldi had never lived Italy would not be a long peninsula of rather contesting provinces. Things do not work that way. Events take place, new developments occur, science develops, agriculture grows—all different things happen. With the very events occurring around us, we find that we have to create new structures.

There has been mention of the Maud Report. I am not going to attempt to debate the Maud Report (I cannot claim to understand it), but we have woken up to the fact that the range of a horse and cart is no longer the right measure of a local government boundary in this country, and that something must be done about it. I do not know whether it is the right thing or not, but it is quite a big thing that we suddenly find we have to do. But this is a recognition of the fact, and not something that is just drawn out of the air. So it is with Europe.

The Europe that we are dealing with is not the Europe that was crudely drawing lines with rulers all over the world, with rather scant regard to the tribes or races which lived on either side of the boundaries, in the 19th century. It is not even the Europe that has torn itself to pieces twice in our lifetime. It is a Europe in which France no longer has an empire; in which German and Dutch colonies have broadly disappeared; and in which the influence of Britain in the outer world, whatever view one takes of the policies we pursue East of Suez, is obviously far less now than it was at the time when most of us were born. It is an altogether different Europe, living in a different world. It is a world in which Russia and America are immensely stronger; China is growing stronger all the time, and the other parts of the world—Asia, Africa, Arabia—are much more dangerous, divided, terrified and nearer to handling modern weapons than ever they were before. So, my Lords, what we are talking about is really a new Europe and a new world. When we talk about the choice that we make, we are not making a choice for something that we were brought up with; we are adapting a society to enormous events which have taken place in our own lifetime.

What is it that we want to do?—because, broadly, Governments will do what we want: and by "we" I mean, of course, not your Lordships' House, but the mass of the people in Europe. What are they doing at what I may call the working levels, the places where people do not talk so much, but really do a job? Find a banker to-day in this country who really thinks that he can conduct his business, or any large part of it, without constant contact with the capitals of Europe. They spend their lives in contact with them; and of course they go to other parts of the world as well. They spend a very great deal of their time, sometimes in face-to-face consultations, and at other times in committees, but month by month, year by year, their job is a pooling, integrating, shaping arrangement on the finances and currencies of Europe.

Then I would say (and I should not have dared say this if the noble Lord, Lord Woolley, had still been in the Chamber: I am always nervous of the noble Lord, for he knows a lot about the farmers): find a farmer to-day who is not thinking a great deal about what advantages he is going to take out of our entry into the Common Market. Find anybody in the research world, and you will see that he moves all the time between Hamburg, Cambridge, Milan, Eindhoven, Berlin, and all the research centres of the world. This is already forming European research: it is already being pooled.

Another example is industrialists. I work in industry to-day, and I happen to work in industries which every day are becoming more involved in association between Europe and this country. Find almost any industrialist to-day and you will discover that he is considering with whom he can link and unite, whose interests he has in common: not simply how we can get a bigger share of the European market—which has been mentioned, and is very important—but how, by building up his strength as a European firm, he can take a bigger share of the world market that lies outside. The noble Lord, Lord Harlech, dealt very well with this aspect. It is a choice whether we are to be on the same level, to deal in the same way; and we have to have a partner. We are doing this, and it is happening all the time. Some people may say, "If it is happening all the time, why bother about the Common Market?" But it is happening in face of almost incredible difficulties. There are the complexities, of the different taxation systems, the different legal systems, customs barriers; and the problems experienced by even great firms in getting together are formidable. They all want to move in the same direction, and if we want it done on the larger scale, then I am quite satisfied that in this field—as in others—we shall all have to have systems, structures and arrangements whereby there is a commonalty of arrangements that is at least sufficient for us to move along these lines.

I do not wish to detain your Lordships, but take, for example, defence—because this matter has been mentioned; indeed, it was mentioned by the noble Earl, Lord Lytton, in his speech. If we forget for one moment this rather terrifying thought of nuclear trip wires somewhere along the German frontier—and I hope we shall forget it; if we talk about the conventional defence of Europe, the fact is that it is utterly impossible without France being solid, absolute and in the centre of it. France, for this purpose, is Europe. We may have difficulties with the French; they may be awkward. But they are there, right in the centre, and it is not possible to defend Europe unless the French defence is built right into the middle, and unless there are bases behind the Pyrenees; because conventional defence means that anybody attacking has to fight inch by inch, and yard by yard, from the German frontier to the Pyrenees and Portugal. That is what defence is about. This is a matter that is a long way removed from a nuclear trip wire and is a far more meaningful arrangement.

Whether you consider this subject in connection with research or industry, or from a military point of view; whether you ask industrialists, soldiers or research workers, you will find that they are all engaged at the present time in Europe, making their arrangements and planning. In other words, my Lords, what I am saying is that this is happening before our eyes. And when something is happening before your eyes, you do not have a choice except to try to act sensibly to work out the best arrangements possible. We have good friends there. We have wise and skilful men, and our civil servants, from my knowledge, will be widely welcomed there. There is the greatest1 respect on the Continent of Europe for the English Civil Service's ability, integrity and sensible methods of negotiation. Of course, everything is not right there; but then everything is not right over here. Between us we have to do what has often been done before—not anything very dramatic, not the creation of a new kingdom, but the rather humdrum job of getting down and trying to get out something which fits the world in which we are living to-day.

7.46 p.m.

LORD ROYLE

My Lords, as I have sat in my place throughout the whole of this debate listening to almost every speech, I have wondered more and more at my own temerity in having put my name down on the list, because the speakers who have preceded me have a much wider knowledge and great ability. I have not been helped at all by the speech to which we have just listened. That thoughtful and impressive speech which the noble Lord, Lord Thorneycroft, has just delivered to your Lordships' House was very involved, and with the background of his experience in the Cabinet at the Board of Trade and the Treasury it is a speech which I could not possibly hope to follow. Therefore, whatever I have to say will be on a much simpler note, and much less involved.

The noble Lord, Lord Thorneycroft, referred to the speech of my noble friend Lord Moyle. Throughout our debate to-day my noble friend has been the only one who has really come out against joining the Community. He made a very powerful speech. It was very impressive, and would need a great deal of thought to answer it. His courage to-day has been magnificent. I have always respected him, but I respect him even more for having taken the line he has. He said one or two things with which I do not agree, but I admire his courage.

There is one point that I have time to deal with, and that is with regard to defence. I was almost amazed when my noble friend talked about the Americans being, as it were, our saviours in two world wars. I wonder whether he has forgotten that they did not arrive until 1917. I was in France at the time engaged in helping to train the half-trained American Divisions which came out. Has he forgotten that it was only because of Pearl Harbour that the Americans came in later in the Second World War? While all this was going on, at least the French were there, particularly in the first war, and surely our relationships with the French must mean that for the future we should try to co-operate with them in any European Community.

Now I should like to come back to what I intended to say. My interest in this matter was first aroused when I was one of the British representatives in Strasbourg at the Council of Europe and the Western European Union. From the beginning I wanted us to be in on the Treaty of Rome. It has been one of my big disappointments over the years that we did not go in at that time, when I believe there were fewer difficulties around than there are now. Had we gone in at that time we should by now have been part and parcel of the great European Community.

in those days I had one great reservation, and that reservation was dealt with at length this afternoon by the noble Lord, Lord Garner, who made a very impressive speech, if I may say so, on the Commonwealth attitude towards the Common Market. In those days at Strasbourg, I remember—it was a nerve on my part; I was a very modest member of the British delegation—I suggested that we might look even further into what was then being discussed, and that the Commonwealth might be seriously considered as an associate member of the Council of Europe. If we had tackled it in that way, I still believe we should have established the greatest economic unit in the world, which would have made the United States in the West and the Soviet Union in the East secondary to our strength in Europe. It is because I see that we can move towards that, even without the Commonwealth, that I believe there is such a purpose in our going into the Community.

But I come back to a point touched upon mainly in the opening speech of the noble Earl, Lord Jellicoe. We have not realised to the full why it is that the British people are expressing themselves in the Gallup polls, as they are, against our going into the Common Market. That, in the main, is the simple issue I want to deal with in what I have to say. I believe that the fears which are now being expressed have largely come about through the terms of the White Paper. It may be that Her Majesty's Government set out to put the worst face on joining the Community, so that, if the terms proved too onerous, we could stay out without any loss of face. But the White Paper certainly gives the impression—and this is what has hit the British public—that the British housewife will wake up one morning to a 5s. in the £1 increase; and when this is read there is doubt and confusion. In fact, we are all confused. None of us is quite clear about the position, and the White Paper has not helped. It has been a gift to the anti-Marketeers because basic issues have not been made clear. The Press opposed to our entry into the Community spread banner headlines about 50s. a week on a £10 house-keeping bill; they spread on their headlines: "£1,100 million to pay".

Ignoring, for the moment, all political aspects, let us look at the £ s. d. I firmly believe it is wrong to think that entry will lead immediately to rocketing prices. The White Paper suggests 26 per cent. But, even if that were true and proves to be true, it would be very gradual and might not be reached for eight years. Surely, on the present tendencies and trends pay packets would be certain to rise at least as fast as prices. Let us look, for example, at this dear butter scare: "10s. in Europe; 3s. 4d. in Britain"—how the Press have used it! But we are a butter buying nation. We have never regarded butter as one of our luxuries, as other European nations have done. All of us have seen French people in their restaurants, and even in the streets, gnawing away at their uncovered baguettes which would stick in our gullets. Butter remains low priced here, I suggest, because we have an assured market, and that assured market makes it safe to produce, and to import, in bulk. I have not looked it up, but I am prepared to wager that spaghetti is cheaper in Italy than it is in London.

We hear a lot about meat—I am always talking about meat. On meat, there is no comparison between European beef, particularly, and British beef; it is a different commodity. We work to a policy of rearing beef cattle for our tables. The French, particularly, eat them only after they have finished milking them. It is hardly the same subject. Therefore, when we get together, if we do, these are issues that can be resolved by an interweaving of agricultural policies.

Let us look for a moment at the overall cost reckoned in the White Paper and seized upon by the anti-Marketeers. It could be £100 million, which I suggest is a drop in the bucket for a nation earning £39,000 million a year which could be £50,000 million a year, with a 3 per cent, growth, by the time we start paying to go into the Community. The overall cost figure at the top is £1,100 million. Surely that could only be if the Six imposed the worst possible obligations on us—and they would be conditions we should never consider. For that reason, I believe, they will not try them on. After all, there are clear indications now that the Six are anxious to admit us. Even if we accept the £1,100 million figure, it takes no account whatever of the benefits we could conceivably derive. And no one can fault this figure: that British factories would be able to sell to 300 million people without customs tariffs. Mass production would reduce costs on small items made in our factories so that items, say, at present 20s. for 100 could be 20s. for 1,000. Let us remember that the Community would gain 50 million customers, while we should gain 300 million.

I have seen it suggested that a 1 per cent, increase in the gross national product would cover the cost of joining; and this may well be right. If that is so, the other 2 per cent, can go into the bank. I know it is anybody's guess, but it needs to be taken notice of as one of the arguments and reasons for joining the Community. If the argument is on the economic front, the opponents of joining the Treaty of Rome Powers have very little faith in the businessmen, the manufacturers and the workers in Britain at least to equal their Continental counterparts. I wonder whether opponents of entry will admit that lack of faith.

My Lords, it is interesting at the moment (and this is my last point) to watch what I regard as the vacillations of the United States in their attitude towards Britain's joining the Common Market. It would appear from my reading that they are anxious that we should do so from a political angle, to relieve them of many of their European responsibilities, but they do not appear to be quite so keen on the economic front. I think they fear a strong Europe in an economic sense as a rival to their own great potential in trade and industry; and I believe that this might be a pointer to the need for a strong economic unity for Europe, to the benefit of all the peoples of Western Europe. It is on those grounds, my Lords, that I join with so many other noble Lords to-day in saying to the Government "Go on; negotiate"—and ultimately, I hope, participate.

8.1 p.m.

LORD PLOWDEN

My Lords, in July, 1961, the noble Lord, Lord Crowther, and I wrote a letter to The Times in which we advocated an early start to negotiations to join the Common Market. Our reason was the need for a massive and continuing increase in exports from this country, and we saw no opportunity of getting this on a continuing basis unless we were part of some larger economic grouping. The Common Market was the only one that we could see. To-day I remain of the same view. Perhaps I should confess that in the terms used by the noble Lord, Lord Moyle, I am a "heavy industrialist". During the past years of discussion about the Common Market, as the noble Lord, Lord Caccia, said, every argument for and against has been used over and over again and it is not possible to say anything new, but I feel that both those of us who are in favour of joining and those of us who are against should be willing at this stage to stand up and be counted.

There is bound to be a price for entering, and in large part that price will be an increase in the cost of living, but, as the noble Lord, Lord Shackleton, pointed out, that does not necessarily mean that there will be a fall in the standard of living. Indeed, all of us who favour joining expect that there will be a substantial rise in the standard of living. But anything connected with the price of food quite naturally generates much emotion, and I thought that the Chancellor of the Exchequer, in the debate in another place recently, put this matter in the right perspective. He pointed out that this increase would not come in one sudden blow, but it would rise to its maximum—whatever that might be— over the transitional period, however long that was, and then it would continue at that rate thereafter. I personally think it probably would tend to fall as Continental agriculture became restructured and more efficient. But of course during the transitional period our economy would be growing and therefore should be that much richer and that much better able to afford the extra cost. Thereafter the rise in our economic growth would continue, hopefully, at a rather faster pace than it has done over the last ten years.

Again, as various noble Lords have remarked, there is a cost that will fall on the balance of payments, but, as the Chancellor of the Exchequer pointed out, the balance of payments is in far better shape to-day than it has been for many years, and he would be ready to devote some part of that surplus to paying the price of joining the Common Market. I agree with him. Some people fear competition from Continental industrialists if we were inside Europe and there were no tariff barriers between us; but we have to compete with those industries anyway in the third market and also within the Common Market but with the disadvantage of a tariff against us.

If we were members of the Market we should have the advantage of an assured market free from tariffs. In a Paper prepared for M. Monnet's action Committee last summer, Professor Winacker, the Chairman of the German chemical concern Farbwerke Hoechst and myself concluded that, valuable as a market free from tariffs was, it was no more than the first vital step, and to secure the real advantages of an enlarged market the legal and fiscal obstacles to the free circulation of goods and services must be eliminated. By that I mean differing company and patent law, specifications for capital groups and so on.

The creation of a larger market which for us, as the noble Lord, Lord Shackleton, pointed out, could be seen as some 300 per cent, greater than our present home market, would inevitably lead to the reduction of cost through long production runs and would permit a much higher degree of specialisation by allowing firms to concentrate on a narrower, and possibly a more highly sophisticated, range of products. There would be increased opportunities for the creation of trans-European companies, and the size of the market would also create the opportunity and the right environment suitable for small, highly specialised firms. That happens, just as this kind of firm has grown up in the United States of America, particularly in the vast technological industries. The larger market should provide the prospect of increased sales for products which have a high cost of initial development, and consequently European and British companies would be able to embark upon more expensive and more technically advanced development projects with a realistic hope of an adequate commercial return.

Now if European industry is to gain all the advantages of a large market it must be able to compete across national frontiers for public as well as private contracts, and that is an area in which a great deal still has to be done to remove non-tariff barriers such as I have described. In the field of advanced technology Governments or State bodies sometimes are the only buyers, of course in the defence field but also in such things as commercial aircraft, telecommunications, data processing and so on; and often the actual existence of these industries is dependent upon support from Governments. In the United States of America those industries have grown and flourished as a result of the massive defence programme of the United States Government. That has been highly coordinated in Washington, and a high degree of standardisation has resulted. In Europe, these industries are fragmented between countries, and unless an attempt is made to reach common specifications and common methods of tendering, these industries which in the United States are among the fastest growing will not exist in Europe except as offshoots from United States industry.

Here I find myself very much in agreement with what was put forward by the noble Lord, Lord Harlech. It is not just in the defence field that this applies. It covers things like telephone exchanges, power stations, and so on. All of them need common standards and common methods of tendering if they are to produce efficiently on a Continental scale. Of course joining the Market would give a great opportunity to the City of London and, I believe, a great increase in our invisible exports. All this is admirably set out, as noble Lords have said, in the document Britain in Europe, prepared by the C.B.I.

Most of the discussion about the entry to the Common Market takes place in economic terms, largely I think because we have learned painfully since the war that our influence abroad and the ability to do what we want at home have been controlled and limited by our economic weakness. But in the ultimate I believe that it is in the political field that we have most to gain and most to give. We have missed many opportunities. The Leader of the Opposition in another place recently said that in 1945 we could have had the leadership of Europe on a plate. Perhaps we could. But we did not want it; and that is quite understandable. We had just won a war; we were still the centre of a great Empire, and above all we were anxious to do nothing that would jeopardise keeping the Americans in Europe.

As an official, I had some considerable experience of this. In 1949, the then Chancellor of the Exchequer, Sir Stafford Cripps, sent the noble Lord, Lord Roberthall, and me to Paris to discuss with M. Monnet the possibility of closer economic arrangements with France. We did not come up with any very exciting ideas, but such proposals as we did bring back were soon turned down by then Ministers; and quite understandably. It was on this occasion that I heard for the first time M. Monnet use his famous phrase; that, with the exception of Great Britain and the neutrals, every country in Europe had been defeated in war, and every country in Europe had been occupied by an enemy army, so that all the peoples of Europe were ready for changes in their institutions because they had lost faith in their existing ones. To some extent I think this was a foretaste of the point of view that has been put forward this evening by the noble Lord, Lord Thorneycroft; that change has already begun and is taking place. In Europe, it had already begun in those days.

I cannot claim the prescience of the noble Earl, Lord Jellicoe, in seeing this twenty years ago. I am afraid that I became a convert to change only in the late 1950s, but I was in good company. When the Schuman Plan was put forward it met with a very lukewarm reception from the then Labour Government; and when the Conservatives came back to power in 1951, despite all the speeches and promises they had made in Opposition, they did nothing—indeed, one senior Minister asked me whether I thought that he ought to resign. Next came Euratom. This was turned down, I think rightly, on the ground that we had embarked on the development of thermonuclear weapons and were dependent crucially on American know-how, which came to us under an amendment to the McMahon Act, and I doubt whether this would have been possible if we had been a member of Euratom.

My Lords, I, as you will have seen from what I have said, am strongly in favour of starting negotiations, and during those negotiations we shall discover not only the economic price of entry but what kind of Community it is we are seeking to enter, whether it is outward-looking and liberal, or the reverse. If, as I hope and understand, it is outward-looking and liberal, I believe that by joining we shall have won a great political prize, the prize of being an influential part (because we are bound to be a very influential part) of a larger economic and political grouping which is able to play a really constructive part in the dangerous world that will confront us for the rest of this century. Of course there are bound to be risks, but all decision involves risk. Doing nothing, hoping that nothing will happen or change, entails risk—the risk of becoming an inward-looking country with a slowly growing standard of living and quite unable to influence the forces, economic and political, that shape the world in which we live. But let us decide the issue on rational grounds, with all the facts ascertained in negotiation, not on the understandable but emotional ground that butter to-day in Paris costs two and a half times what it does in London.

8.16 p.m.

LORD WELLS-PESTELL

My Lords, there are very few Members of your Lordships' House, and for that matter very few people outside your Lordships' House, who can speak with greater authority on the economic aspects of going into the Common Market than the noble Lord, Lord Woolley. I want to say at the very beginning that I subscribe to everything that he said and would dot his i's and cross his t's to the utmost.

In the five years that I have been in your Lordships' House we have had two debates upon the Common Market, and on each occasion I have expressed my view that I was much opposed to going in. I accept what the noble Lord, Lord Plowden, says, that the time has come when we ought to stand up and be counted; and I have read nothing in recent months and heard nothing to-day which changes my opinion one bit. I do not think that it is self-evidently wise that we should go into the Common Market, nor have I heard any argument that would convince me of the wisdom of doing so.

We are here to-day, my Lords, to discuss the White Paper which is described as "an economic assessment", and I feel that it is in more senses than one a quite shocking document. What value can there be in a document which states that we shall have an overall balance of payments cost ranging from about £100 million to a possible £1,100 million if we enter the Common Market? The margin is so wide that if we are not able to be more precise it would, in my submission, not be wise to pursue the matter of entry. In many respects the White Paper is unhelpful when it comes to understanding and appreciating what is really involved.

I do not want to put forward the same arguments as the noble Lord, Lord Woolley, but I think we ought to bear in mind, if the White Paper is to make any contribution at all, that in referring to agriculture it states that our import bill could either go up by £225 million a year or fall by £85 million, and that our direct contribution to the Community's agricultural fund could be as much as £670 million or as little as £150 million. I should have thought that a more precise or closer estimate could have been made after all this time. We have been considering this matter, if not negotiating, for a good many years, and we are not, so it would seem, in a position to assess the financial liability more clearly. If we are not able to assess it more clearly I really think we ought to stop what seems to me to be a mystery tour which is not going to lead us anywhere. I should like to ask the Government whether they have any knowledge of the memorandum dealing with the amount of Britain's financial contribution to the Community Funds which was prepared recently by the Brussels Commission and sent to all six Common Market countries and referred to in the Press this last week-end.

At least the White Paper has one merit, for it gives us for the very first time an official indication of the huge cost of entering. We are running currently, I believe, a balance-of-payments surplus of upwards of £850 million. According to the Chancellor of the Exchequer, we can advantageously invest part of it in the cost of admission to the Community. I find myself asking, advantageously to whom? Not, I think, to the ordinary man and his family in this country; most probably it will be to the advantage of the Six, and perhaps the French farming community in particular.

The White Paper estimates that there will be an increase in retail food prices which will substantially raise the cost of living. I believe it will raise it to a figure far higher than that suggested in the White Paper itself. If we have any sense of responsibility to the society in which we live, I think we have to face the fact that this would mean a serious tightening of the belt, and, I believe, a lower standard of living for a large section of the British people; and I do not think that many could survive on a much lower standard of living.

My noble Leader disturbed me when he dealt with the possible rise in the cost of living. I feel that it was dismissed too summarily. And the noble Lord, Lord Harlech, said that we must not give the impression that we are going in reluctantly because of our standard of living. I do not know whether he meant that it would get worse or that it would get better; but I think we have to face the fact that, for many families in this country, it is going to impose a serious strain on their resources. We have paid a substantial price for our balance-of-payments surplus. I would remind the Government that it has been achieved at some sacrifice in terms of unemployment, high cost of living and high interest rates. I do not want to see that achievement dissipated by entry into the Common Market.

I accept that by going into the Common Market some people in this country will be a great deal better off; but they arc people who are already well placed financially. I believe that it would require a substantial increase in real income before the mass of the people of this country would benefit. I say, quite sincerely, that I cannot see that substantial rise resulting from our entry into the Common Market. Nor is there anything in the White Paper which leads me to believe that real income will improve dramatically in a reasonable time, if it improves at all. I accept the argument that what really matters is not so much a rise in the cost of living, but whether there is going to be a substantial increase in real income. There is no evidence, certainly not in the White Paper, nor in anything I have seen or heard, which leads me to believe that there will be a substantial rise in real income.

The Party represented by this Government is committed, and has been committed for generations, to provide the best possible standard of living for those less fortunately placed in our society. What I want to say now is probably very strong. I believe that to go into the Common Market would be a betrayal of that trust. There is no evidence that it will be disastrous for us if we stay out. I do not believe there is any evidence that there is a certain advantage if we go in. We have managed successfully over recent years to maintain a reasonable standard of living for our people, and I believe that given greater co-operation between management and workers, each showing more responsibility in the future than they have done of late, we shall have little difficulty in achieving the kind of society and a more equitable distribution of wealth which I think many in your Lordships' House would welcome.

If I could believe that it would not impose a serious financial burden on a very large section of the community that can ill afford to face and meet that burden, I would feel inclined to consider that perhaps it might well be to the advantage of this country to go in. I hope that the Government will pursue to the utmost the inquiries that they are proposing to make in the near future. But from what I have heard or read recently, I cannot see that there is a convincing argument for us to go into the Common Market, and I hope that ultimately the Government will come to the same conclusion.

8.27 p.m.

LORD ROBERTHALL

My Lords, as I am in the same frame of mind as the noble Lords, Lord Caccia and Lord Plowden, in so distinguished a debate as we have had, I cannot hope to say anything new. My excuse for speaking is that I was involved in many of the early arguments on this subject, between 1948 and 1961, when I was Economic Adviser to the Government; and although I do not for a moment suggest that wisdom lies in those with experience (because as we know they disagree strongly on almost every subject) I still feel that one has some obligation to state one's position.

For many years I have been in favour of Britain's joining the European Community. As noble Lords know, the original driving force for the Community's establishment was not economic, except in the widest sense. This is recognised in paragraph 3 of the White Paper. The background is that Europe had suffered tremendously from two world wars and it was felt that the best safeguard against repetition was to form a single political entity. The Economic Community was partly a step in this direction, and party a device for getting the constituent parts so scrambled together that they would not in future be capable of disentangling themselves sufficiently to go to war with each other.

Fundamentally, this is the background to my own thinking. It seems to me that nationalism is the curse of our time, and that anything which makes for larger units is likely to make for the welfare of mankind, and that anything making for smaller ones is likely to have the opposite tendency. This is a very unrealistic view to take at the present time, when we have these violent forces driving us towards setting up more and more smaller and smaller units. But the Common Market, with its ultimate objective of political unity, at least represents a step in the right direction; and it has already been an influence for sanity in the world, both by leading other areas to imitate it and by leading people to seek to establish links with the Community.

I mention these things because it seems to me that one of the great problems is to get the economic issues which we are debating to-day into perspective. A number of noble Lords, including the noble Lord, Lord Silkin (whose speech impressed me very much), have sought to do this. The White Paper is an assessment of the direct costs of British entry, but unless they were larger even than the highest costs shown in the White Paper it would be unbalanced to settle the matter on the figures. What we can afford depends to a large extent on how much we want the wider objectives; and the same considerations apply, in the other direction, to the potential gains. The White Paper does not attempt to quantify these, but it does give reasons for thinking that if we join the Community our growth rate would be faster than it would otherwise be. As the Paper says, an increase of 1 per cent. in the growth of our gross national product would be equivalent, in the mid-1970s, to something approaching £500 million a year at present prices. An annual growth increase of this order would quickly outweigh the costs imposed by our entry. I am one of those who believe that, on balance, and over quite a short time, the advantages would be greater than the disadvantages; that is to say, that over a period of time there would be no net cost of entry. But it would be equally wrong to set these advantages, however real and substantial one expected them to be, against the political consequences of entry, if we object to these consequences.

The most emotional aspects of the White Paper, so far as the ordinary man is concerned, are those dealing with food prices, and especially the prices of beef and butter, which were mentioned first by the noble Lord, Lord Woolley, and later by several other noble Lords, including the noble Lord, Lord Royle. I said earlier that the great task was to try to see the economic issues in perspective, and I think that this consideration underlines that. A great problem faces those who feel that we should join the Common Market; that is, how to explain why these emotional aspects, such as the price of beef and the price of butter, ought not to be the deciding factors. Fears about the cost of living, which rises inexorably every year whether we are in the Common Market or not, and the effects of these rises (which are far out-weighed almost every year by the growth in productivity, which leads to a constant growth of the standard of living), ought not to be the determining factor. Although it is an enormous advantage that the main political Parties want to keep this issue away from the elections, because of the danger that, in an atmosphere of elections, the electorate would be swayed by relatively trivial matters, nevertheless how to get this into perspective remains a great problem.

My Lords, I will not weary you by going once more over the ground which is covered—I think inconclusively—by the White Paper. In my view, the best speech on the subject was the one made by the Chancellor of the Exchequer during the debate in another place about a fortnight ago. In recent years the Chancellor of the Exchequer has done more than any other man to improve our balance of payments, and if he is not dismayed by the probable cost of entry to this balance I do not see why anyone else should be. It is easy to alarm people by pointing out that something will make a change in their lives, without calling their attention to the much larger changes which they are experiencing all the time. The White Paper puts the worst that can happen to prices at an increase of 4 to 5 per cent, in the retail index over a period of some years. A footnote calls attention to the fact that this index rose by 34 per cent, between 1962 and 1969; yet during this period our standard of living rose almost every year.

The real burden of our entry will be the cost to the balance of payments. This is different from an ordinary rise in prices, which is counterbalanced by rises in incomes. In the case of the balance of payments we have to pay more for our food imports, and we must also pay our share of the Common Agricultural Policy. The top figure given in the White Paper, of £1,100 million, is, I think, a quite impossible one, as indeed is explained in the same place, where, by applying three formulae they give the top figure for the payment to the Community's agricultural policy as £650 million. But, on the same page, they make pessimistic estimates, the most pessimistic of which gives the figure of £350 million.

Several noble Lords who have spoken in the debate have quoted the C.B.I. figure, which is about £400 million. That is close to the figure given by the noble Lord, Lord Walston, who suggested £250 million as the cost of the agricultural aspects, though he did not mention the White Paper figure for the industrial aspect. However, suppose we take the middle figure, of £600 million, or, more probably, £400 million, we might usefully remind ourselves that the Chancellor of the Exchequer, in the Budget of 1968, added over £900 million to taxation and that, partly because of that Budget, the balance of payments improved between the third quarter of 1968 and the third quarter of 1969 at an annual rate of nearly £600 million.

The point is, of course, that people talk about these large figures without quite realising that in these national in-come matters one is always dealing with large figures. I have quoted two of them, the taxation of 1968 and the turn-round of the balance of payments; and the noble Lord, Lord Thorneycroft, mentioned a smiliar turn-round between 1957 and 1958. I doubt very much whether, in a few years' time, anybody but an expert statistician would be able to tell us what changes in his own position took place in these two years when these very large changes occurred internally. That is the kind of point that must be borne in mind when one is trying to get this matter into perspective. This is an emotional issue and we cannot hope to reach any agreement on what is likely to happen. But it is very unlikely that the direct cost of entry would be anything like the top figure shown in the White Paper. If our growth rate improved by even a small amount the improvement in our income would soon outweigh the costs imposed by our entry. But even if we were to take a gloomy view of the possibilities, it would not be right to decide the question on the basis of an economic assessment alone. If we want to go into Europe we can afford the cost, even if it is high.

I should like to conclude by mentioning one more point with regard to the negotiations. It is one that was raised by the noble Lord, Lord Thorneycroft, and with which I agreed. In the debate in another place, a number of speakers attempted to extract from the Government a precise figure of what they would be willing to pay to go in and what figure they would not go beyond. This is a complete misunderstanding of what we are engaged in. We are not buying a mink coat; we are not even buying another firm. We are trying to negotiate with people with whom, if the negotiations are successful, we shall hope to build up something very much better for us all. Undoubtedly in those negotiations the most important thing will be the extent to which we can see one another's point of view and one another's difficulties.

My own view, which has been expressed by several other speakers, is that the most difficult points for us concern New Zealand and the Commonwealth Sugar Agreement, because I think it would be dishonourable of us not to implement our undertakings, and if that point of view were not accepted that would be much more important to us than £100 million one way or the other. But if, as I am quite sure will happen, the negotiations show that they are between reasonable men who reasonably share the same objectives (although I believe that the consequence of that is that the price would not be too expensive, because a reasonable price is certainly something much less than the highest one) the great thing will be not the final price ticket but whether our real difficulties are understood, and whether we are agreed on directions of movement which we think will benefit us all.

8.44 p.m.

LORD GRANVILLE OF EYE

My Lords, the noble Lord, Lord Roberthall, is a considerable authority on these great economic questions and his speech has dealt with the broad issue, as have most of the speeches in this debate on the White Paper. In a sense this debate is somewhat academic, because the application is in, it is on the table, and there is not very much that we can do about it until the discussions begin in July, and then eventually Parliament will take the decision. But having listened to this debate, and having read the Report of the speeches in the two days' debate in another place, although in a sense it is somewhat academic I am rather surprised that no new arguments have emerged either from another place or from this debate in your Lordships' House. It seems to me that it is still an act of faith. It seems to me also that we are back to square one if, when the negotiations take place, it is found that the price is going to be too high. The long wait after these considerable discussions take place, and before the final decision is taken, is going to be something like waiting for Godot.

Another point that rather surprised me, listening to some of the contributions to-day, is that there were no ghosts present, although there were some noble Lords who had, I imagine, followed with some interest those who believed that there was a future Commonwealth economic policy —a policy which I imagine no one has crusaded for in this country in any political Party since the late Lord Beaver- brook. Of course history, if we look forward, may say that he was right and we were wrong. It may also say that the Rhodes scholars and Imperial Conference planners, and the mineral explorers of the deserts of Australia and of the riches of Alaska and the Canadian North were also right. History may also say that those who think that satellites and space flights are a Commonwealth season ticket to-day, and that the Commonwealth was an economic act of faith anyhow, were right, too. In fact, I think that the economic historians will look back in this regard to the point of no return, which I suppose was 1945 or, as has been said, the Imperial monetary policy of the 'thirties which, after the collapse of the World Economic Conference, worked successfully.

So after the White Paper, after several debates, we are back to the fact that it is still an act of faith. But it seems to me that it has to be an act of faith in one vital assumption if we are going to get what we hope out of this; that is, that British industry, its workpeople, its executives and its directors can give this country an industrial renaissance in almost every section of the community. Otherwise, we may find that the act of faith is going to be an act of faith in our old-time complacency as a nation of shop-keepers, taking in each other's washing and, "I'm all right, Jack"—what one economist referred to as the soft under-belly of industry in this country.

If we go in, it will mean competing with Italians, Germans and French here in this country and in their own countries as well. We have to ask ourselves whether a very large section of industry in this country which has never bothered about exports, which has not had to compete too much, which has found that it is difficult to export and that it is quicker to make profits on the home market, can meet on a successful basis competition from the tried, hard-time exporters and competitors in those countries to which I have referred. And can we do it quickly? Can we get the efficiency? Can we get this industrial renaissance, in that large section of industry where it will matter, done quickly? If not, if our exports are still going to be too much bother or too difficult, what are we left with, or what do we do in the interim?

My Lords, when all of the talk has subsided and when everyone has expressed his view that this is an act of faith; when everybody has or has not convinced himself that the right thing for this country to do is to go into the Common Market, the acid test—not the speeches or the signing of treaties or the act of faith, but the acid test—is whether we can give the people of this country the standard of living to which they are looking forward in the future. I think that while we are waiting for this long drawn out discussion to take place and for the decisions to be made and submitted to Parliament after the Election, we have no time to lose in making a very large sector of British industry more efficient and more able to compete, as they will have to compete in this Market as never before with consumer goods— because in my view the very existence of the employment of a large number of work-people and technicians in this country is going to depend upon just that. An economist has listed all the things that we have to do to get industry efficient and able to compete—and there is no time to lose. But the rewards and the priorities, if we get this renaissance, will go only to the efficient and not to those who believe that all we need is an act of faith.

8.52 p.m.

THE EARL OF LAUDERDALE

My Lords, one might have thought that, with the Soviet submarine fleet scouring the ocean bed; with a NATO ready to wound with tactical nuclear weapons but afraid to strike with ordinary troops in the absence of the French; with the "demo." in control of the seats of learning and, at many places of work, the shop stewards likewise, such a crisis in the West would concentrate the mind wonderfully. Yet this White Paper, of which we are invited to take note, oscillates between the pros and cons like a metronome. It resembles little so much as an investors blurb at the time of the South Sea Bubble: "This is an undertaking of great advantage but none to know what it is." Its compilers would seem to have been neutroids, bewitched by the beauty of the Common Market, encapsuled in splendour and renown and yet somehow unable to perform—eunuchs in the harem of politics—

LORD SHACKLETON

My Lords, may I interrupt the noble Earl? As Minister in day-to-day charge of the Civil Service Department, I hope he is not calling civil servants neutroids and eunuchs. That is what I thought he was doing.

THE EARL OF LAUDERDALE

My Lords, I readily accept the gracious rebuke, if I may put it in that way, of the noble Lord the Leader of the House, who is always so kind in guiding us; and if my words give offence they are certainly not intended to do so. But at least this is a neutral operation by men of great skill and ability whose profession, if I may put it in that way, is to be neutral in political matters.

My Lords, this White Paper, in an age when cost-benefit is attached to almost every proposition, tells us nothing of the economic risks of moving towards federation with Germany, itself split like the twin charges in an atom bomb; it tells us nothing of the economic risks of doing a deep and intimate trade deal with one half of Europe to the exclusion of the other; it tells us nothing of the economic risks or implications of a common currency nor yet of the bearing of this upon the sterling area, that very empire of our invisibles; it tells us nothing of the influence of all this upon our own inclination toward affluence with inflation in the blood shown in each annual Budget and its recurring and mounting borrowing requirement; it tells us nothing of the economic implications of the common energy policy which is being developed, still less of the common transportation and port policy which is not. The White Paper gives us no sign of the sticking point, and it tells us nothing about the alternative.

My Lords, following Lord Thorneycroft's indications about industry, about banking, about commerce, about men of research one way or another seeking and making their own integration, I am mainly concerned that we build a policy of integration in practice. I want one that will be suited to the facts of life whether or not we go into the Community as it is or whether we stay out and explore some of Lord Caccia's indications about the way we might possibly go. I am concerned more with a pragmatic level of integration and with advancing our own interests; and I see our chance in the whole current of management concentration which is such a feature of the present economic scene, whether in this country or in Western Europe. My Lords, the pressures of optimising investment in the advanced capitalism that surrounds us surely fore-shadows a valuable way for Britain whether we go in or stay out; and it is well, perhaps, to remember that the only people who like the British are the English.

A critical fact—and paragraph 66 of the White Paper refers to it—is the rapid growth in cross trade between industrial countries, where indeed each place and each industry within it seeks rather to do some processing for others than a complete process from raw material to finished goods. We may bewail—and some do—that the British Steel Corporation last year felt itself forced to import 800,000 tons of partly finished German steel. But we should surely hail, as does B.S.C., that the year before it took 100,000 tons; that it has ideas of building a steel plant one day in Europe; and that the concept of taking half-finished goods from other industrial countries and completing the process is now the concept which largely operates in heavy industry all over the Western industrial world. Indeed, the picture is brought out by the chemical industry's "Little Neddy", which only the other day—and I take leave to quote—wrote these words: The industry operates increasingly on an international basis and individual firms, with plants in more than one country, must optimise their operations internationally to remain competitive ". Little wonder that there has been talk of I.C.I. scheming for a chemicals pipe-line across the North Sea.

It is the international division of labour between the industrial countries which is now perhaps the overwhelming fact of our relations with Europe and it generates at this stage some unlikely passages. Aberdeen exports paper to Scandinavia and takes certain kinds of processed granite in return. We find Solvay in Belgium sells I.C.I. Ordinary and takes a stake, it would seem, in doing a deal with Laporte. New York-bound containers from Milan and Genoa come into Britain at Felixstowe and go out by the Mersey. This is the picture that is going on all the time and develop- ing. Perhaps its simplest picture is shown by the figures for trade between countries of the O.E.C.D. area. Last year the trade between them rose 15 per cent. by value and 16 per cent. by volume. The very equation of those figures itself is witness to the division of labour in the exchange of semi-finished goods. All this—and let tariffs be damned!

Whatever the negotiations over the Common Market produce, here is the situation to which we have to address ourselves. It is less the comparatively greater and growing volume of Common Market trade as such; rather it is the rising tempo of cross trade in semi-finished goods within the fraternity of the O.E.C.D. Electronics and chemicals are the growth field at the present time. I take chemicals and oil as an example. Non-cellulosic fibres from hydro-carbons have grown more than fifty times in twenty years in the O.E.C.D. area. Europe's petro-chemical industry has been growing at the rate of 15 per cent. per annum over the last decade. Even in sluggish Britain, our chemical industry has grown at twice the industrial growth rate. World output in plastics, to take another example, may well reach 90 million tons in ten years; and the plastics manufacturers and visionaries believe it may even outpace steel. The outlets are endless, whether it be building houses without need of painting or building motor cars.

Feed stock for all this is either natural gas or crude oil and certain crude chemicals. It is in this context (pipelines apart) that our maritime policy is vital and ship design in particular offers a particularly critical economy of scale. World output of oil has multiplied four times in twenty years but the Common Market import of crude oil has multi-plied 14 times during the same period. It is now of the order of 370 million tons a year, but as there is refinery capacity for another 130 million tons satiation on present form will not be reached just yet. But it will be reached. And of those oil imports to Europe one-third come from North Africa and accessible corners of the Mediterranean while more than one-half come from Africa and the Middle East; it sails up the English Channel and into the North Sea. It is here where, as time advances and tonnages used for economies of scale out- class the shallows of the North Sea; it is here in this sea that now divides us from Europe; it is here that there will be an increasing demand for refinery-linked trans-shipment points which can only build up a European desire to use the natural deep water sites and MIDAS that are available in the British Isles. West Europe has 170,000 acres of these MIDAS and plans another 60,000 by dredging and civil engineering. It calls upon us to provide something like 50,000 as well.

In or out of the Common Market, whether we follow the noble Lord, Lord Harlech, and go in; or whether we follow the noble Lord, Lord Woolley, and stay out, or whether we follow the noble Lord, Lord Caccia, in any case the European Market as it stands with its intense industrial development and exchange of semi-finished goods invites us to prepare for receiving the great ships which, as time goes on, can only come to British shores and British deep water bringing the raw materials for Europe. Here is where we can go, and I take leave to quote a specialist paper prepared not long ago by Mr. R. E. Takel, the Planning Officer of the British Transport Docks Board in South Wales. He wrote: The pure cost of increasing capacity and draught in continental ports with the accompanying traffic discipline, and insurance, required in the English Channel—these things give the opportunity to this isle to intercept the deep water trade in raw materials and to create the land bridge to Europe. Such a bridge should involve industrial processing en route, combining of Britain the advantages for Midas with those of an entrepot trade. It is possible to imagine the development of the major inlets on the West of Britain linked with those on the East in a complex of transport and manufacture "— all this to combine a saving in sea distance with the industrial talent, the tradition and the topography of a land where the critical ten-fathom contour shows a deep penetration of our coasts, when no place is more than 50 miles from the sea; where our skills and our enterprise harnessed together, and at last released, can help all Europe, whatever be the sticking point in the negotiations. The noble Lord, Lord Caccia, showed that there were alternatives as did the noble Lord, Lord Thorneycroft, and although he begged not to be quoted I apologise to him in advance.

But there is need for a dynamic of intent in these matters, hitherto alas! invisible. Where the six Common Market countries' transportation policy lags, and a co-ordinated Common Market port policy is absent, here we have our opportunity. But their competitive operations point a moral to the dynamic purpose that we require. Rotterdam enjoys a 67 per cent. grant on new capital works; Antwerp a 100 per cent. grant on basic capital works plus 60 per cent. grant on superstructure; Le Havre 60 per cent. and 80 per cent. respectively. And Britain?—our port modernisation grant is a miserable 20 per cent. In such a climate it is hardly surprising that our Government gave short shrift to an imaginative scheme by one of the most skilled harbour design specialists in Britain, Sir Bruce White, Wolfe Barry and Partners, to make a major physical contribution to relations with Europe and our trade with Europe irrespective of our signing the Treaty of Rome.

My Lords, is the North Sea too shallow? Are the Straits of Dover too congested for the big ships to pass by in safety both ways? Then do something about it. Spend £20 million; sink four roundheads of sheet steel piling in the Goodwin Sands; make a breakwater by dumping rubble to gain strength by natural accretion between them, and within two years, these experts have fore-cast, you will have a deep water road-stead off St. David's Bay at the very heart of the industrial triangle of the West between Hamburg, Paris and Birmingham. This could be a free port and a major transshipment point for the wealth of Europe.

My Lords, you burn incense to the gods of cost/benefit. Listen to what happened at Rotterdam. Within some six months of their making it known that they would invest another £15 million in harbour developments, something like £120 million worth of private industrial investment was called forth, at that point. My Lords, you sacrifice on the altar of economy? Then turn to paragraph 60 of the White Paper and look at the £6,000 million rise in the gross national product foreseen for this in the next five years.

We British, in a field of opportunity like this, bemused by negotiation, puzzled by White Papers, embarrassed by 15 years of debate—confused by it, at any rate, as the noble Lord, Lord Thorneycroft, reminded us—are misers in the face of great opportunity. The Touche Ross Report for the National Ports Council shows that if British ports enjoyed the subsidies of Rotterdam, Antwerp, Dunkirk and Hamburg we could slash port charges and, at certain points, drop them altogether. In so doing we should help Europe's bulk imports into the bargain. If we had Rotterdam's subsidy applied here we could cut charges by one third; if we had Antwerp's by between a quarter and a half; if we had Dunkirk's by one half and if we had Hamburg's by at least one half.

The White Paper's greatest weakness, despite the independence, the integrity and the academic distinction of those who compiled it, is its failure to show an alternative. The crisis of the West demands a style of British purpose less functioning with the solemn air of a major Power, albeit denied its satisfaction; less like auntie, treating adult entrepreneurs, whether in the public or the private sector, like children needing protection, and with more sense of risk, more vision, more zest for adventure. After Palmerston we accept no lasting enemies nor any eternal allies; but our maritime interests are, pray God! for ever, if we do but provision and protect them for the benefit of all.

9.12 p.m.

LORD MACPHERSON OF DRUMOCHTER

My Lords, a great deal has been written and stated here this afternoon, and elsewhere, about the E.E.C. and the Common Market, but the majority of the British public still does not appear to understand the main issues. Nor has it been convinced by the various statements that the basic issues are going to be dealt with satisfactorily. I therefore intend, briefly, to outline some of those issues as I see them, and to voice the fears of the public and, I may say, the fears of some of the Commonwealth countries. The noble Lord, Lord Walston, tackled this problem on similar lines to my views, but I hope that I may be able to offer a slightly different slant.

First of all, I believe that for Great Britain to flourish it is essential that we extend our home market. We cannot afford to remain outside the main European markets and continue to hold our position as one of the world's largest trading nations. During the past ten years the Community has been our largest single export market, representing some 19 per cent. of our total exports. But our share of this market, as a non-member, has fallen from 106 per cent. to 7.1 per cent. To illustrate this point further, only last week Sir Roger Jackling, our Ambassador in Bonn, stated that our share of the rising import market in West Germany during the past year had fallen from 4.8 per cent. to 4 per cent. I should mention that a half of one per cent. represents £50 million. Therefore, if we could push up our share of this market to, say, 6 per cent., it would give an improvement of £200 million in our balance of payments.

Apart from the necessity of adding some 300 million people to our home market so that we could compete with countries like the United States of America and the Soviet Union, who both have vast supplies of raw materials and home markets with populations of 200 million and 178 million, respectively, we must face the fact that during the past decade the whole concept of Common-wealth trade has changed, a point made by the noble Lord, Lord Shackleton, in his opening speech. I regret that both trade and preferences will, on a long-term basis, continue to decline. During the past 10 years, United Kingdom exports have doubled from £3,250 million to £6,183 million, but our exports to the Commonwealth have been running at almost the same level, which, expressed as a percentage of our total trade, represents a fall from 38 per cent. to 23 per cent. I appreciate that those two factors are not the only two major reasons for our joining the E.E.C., but to me they are the most important.

I now turn to the problem of our entry into the E.E.C., and my fears. The biggest problem is the Community's agricultural policy, which is based on a method different from our own, and the increase in the cost of living which follows, if we adopt their agricultural policies. As your Lordships are aware, with the United Kingdom system the cost of support prices and subsidies is largely borne by the taxpayer. With the E.E.C. system, the main cost is borne by the consumer. If we change to the Community's policy how would it affect us? It would mean that we should have to contribute to the Community's agricultural support fund. That would be achieved by levies on our imports of foodstuffs, and I estimate that that would cost, according to my reading of the White Paper, around £250 million per-annum. I am not taking into account any receipts we may receive from the Community's agricultural funds, which should be around £50 million to £100 million per annum. On the other hand, United Kingdom Government expenditure on agriculture during the year 1968–69 amounted to £315 million, of which £125 million was used in direct support of our farmers. To take this a stage further, the estimated increase in the cost of living index would be around 4 to 5 per cent. Behind those figures is a possible increase in food prices of some 18 to 26 per cent. Those increases would of course be spread over the transitional period.

All these figures do not necessarily mean a great deal to some people. Therefore, I refer your Lordships to the comparison tables on page 16 of the White Paper. The figures show, for instance, that the United Kingdom price for beef, for sirloin steak, is around 8s. 7d. per pound. This could eventually rise to 12s.; our pork from 6s. 3d. to 8s. 6d.; our chicken from 3s. 9d. to 4s. 4d. In milk there would be no change; on bread an increase of a copper or so. The big differences would be on dairy produce, where our price of approximately 3s. 4d. a lb. for butter would in time rise to around 8s., and for cheese from 3s. 7d. to 7s;. 9d. I say again that direct taxes should be reduced correspondingly, and those price increases would come into effect only gradually and spread over the transitional period of, say, at least four to five years. We all know that our food prices have risen during the past year, and maybe by the time the initial period is over these differences may have gradually been reduced—although I appreciate the possibility that some of the European prices may also increase during this period.

So far as the United Kingdom farmer is concerned, there are two points that I should like to make. First, I believe that our farming community, which is one of the most highly mechanised and efficient in the world, can compete with any country provided they are given the same terms and conditions. The prices at present received by farmers in the E.E.C. for most farm products are far higher than those received by our fanners. I should have thought that the British farming community would rather receive payment for their products based on world market prices, with protection from outside, than exist on negotiated Government support. I cannot agree with the noble Lord, Lord Woolley. His policy, that we are all right now so let us not upset the present position, to me seems a very short-sighted policy.

The second point I wish to make bearing in mind that our imports of foodstuffs amount to around £1,000 million a year, is that with the correct encouragement and incentive our farming community can achieve the "Little Neddy" target of increased production, thus making an import saving of around £220 million per annum. This would be a tremendous saving in the future on the levies that we should have to pay for imported food.

My last point concerns the fears that the British public and our Commonwealth partners have about the effect of our entry on such countries as Australia, New Zealand and the Commonwealth Caribbean. I can see that negotiations could successfully cover these problems on a short-term basis, but I am more concerned about the long-term position, particularly for New Zealand lamb and dairy produce, Caribbean sugar, bananas and citrus. Most people in the United Kingdom would be much more enthusiastic about our joining the E.E.C. if they were certain that these countries which are dependent on our market for their agricultural products would be safeguarded on a long-term basis. I have just returned from leading a trade mission to the West Indies, where I had discussions with six Prime Ministers from the main countries that I visited. I also had talks with the commerical people. The universal question I heard was: what will happen to the marketing of their products when the United Kingdom finally joins the Common Market?

I know that Mr. George Brown, at that time our Foreign Secretary, when attending the meeting of Ministers of the Community at The Hague in 1967, clearly made the point that Britain must have safeguards for her dependent countries, and that consideration must be given to the long-term problems. The Ministers of the Six recognised and accepted this necessity. But, for my part, like a great many other people, I am still not clear how this is going to work out satisfactorily and still fit into the agricultural policy of the E.E.C. and the Treaty of Rome. It would be most helpful if the Minister winding up this debate could allay these fears which are so important to all of us.

9.27 p.m.

THE EARL OF BUCKINGHAMSHIRE

My Lords, I have listened with great interest to the many speeches that have been made in this long debate concerning Britain and the European Communities. Great Britain is facing her third take-over bid to joining the Common Market. The first two, which were made by Germany, were forunately unsuccessful. This one is being made by a group of "Europeans" who no doubt believe that it will be in their interests but really do not know on whose behalf they are endeavouring to promote world dominion and centralised rule over all nations.

We are all well aware of France's fantastically high food prices, and her inefficient agriculture; and the desire of the other Common Market countries to get us into the Six is what France hopes to use as the only bargaining weapon left to her. If the dear food policies of the Six continue in anything like their present form, the damage, from an economic point of view, to this country from joining would be far too great; and, if I may say so, almost everyone in this country now understands the situation. If the food policies of the Common Market countries are drastically changed in our favour, then the Government must bear in mind that the time to join is after they have been changed, and not before.

The fact remains that, whatever policies are pursued, the foodstuffs of the world —grain, meat and dairy produce—can be produced, for physical and climatic reasons, far more cheaply in North America, Australia and New Zealand, than ever they could be in Europe; and arising from this the British standard of living must, to my mind, permanently suffer, because we shall be buying less from the efficient producers and more from the Continent.

We must not be deceived when the Common Market is advocated as a mutually beneficial trading arrangement, thus camouflaging its real intention, which is to destroy the sovereignty and independence of the nations. We all know how deception accompanied the formation of the League of Nations. The support of the public was obtained by introducing it as an organisation under which the nations would come to each other's aid in the event of aggression. The real intention was later revealed when the name was changed to "Central Authority", and the title, "United Nations" was adopted.

Are the Government really prepared to deprive this country of self-government and themselves of the power to make decisions on political, economic, financial and other matters affecting Britain; on such matters as defence, food prices and immigration? The White Paper did not impress me or make me change my attitude for the reasons I have tried to give. In my view—and I agree with the right honourable Douglas Jay, who said and I quote—

LORD SHACKLETON

My Lords, the noble Lord may not quote from the speech made by a non-Minister in the other place, if it was a speech made last week. He may give the gist of it, but not quote it.

THE EARL OF BUCKINGHAMSHIRE

He said that there is all the more reason for caution because another and far better solution is perfectly possible—a looser association between EFTA and the E.E.C. which could achieve industrial free trade all round and not inflict disastrous food policies on Britain. This would be overwhelmingly to the advantage to Britain, to our living standards, our trade and our balance of payments. My Lords, this is what most of the EFTA countries desire—countries such as Austria, Finland, Portugal, Sweden and Switzerland, who are opposed politically to joining the E.E.C. Therefore I hope that when negotiations begin in the summer, our negotiators will accept the policy which British interests, above all, demand and that these possibilities will be explored again.

I will not take up any more of your Lordships' time, but I should like in conclusion to say this. What I, and many more in this country, want to see is a free and independent Britain, under a free system of exchange, with currencies valued for what they will buy, having no difficulty in paying with its own production for all it needs from abroad, and at the same time achieving a much higher standard of living than at present. My Lords, the lion has in the past had its tail pulled far too much and far too often, and it is high time that it bared its teeth and remained out of the Common Market.

9.32 p.m.

LORD NATHAN

My Lords, it seems to me that the differences between those who are in favour and those who are against our entering the Common Market essentially depend, first, upon an assessment of the present economic and political power of this country; and, secondly, on an assessment as to whether that power will increase or decline either within or outside the Common Market. This is the essence of the difference between the points made so forcefully, for instance (if I may mention names), by the noble Lord, Lord Moyle, and, equally force-fully, by the noble Lord, Lord Thorney-croft. It is a question of the assessment of power.

This is the difference which arises between the majority of those who have spoken in your Lordships' House this evening and those many outside who have expressed a view in polls against our joining the Common Market. I do not share so cynical a view that a large number of thoughtful people in this country would decide such an important issue, one way or another, simply upon the cost of cakes and ale. It is relevant that in 1963 a majority of people were said to be in favour of our joining, and, while the facts and figures were perhaps not the same as they are to-day, the people were not so insular as to think that such a matter was out of the question. Of course there were differences of view.

I think that the present difficulties for those outside this House to whom I am referring arise not only from the questions of the cost of living—those questions are indeed important; and their importance has been underlined here to-day—but also from a certain offence which was taken, rightly or wrongly, from the treatment accorded to our application by the President of France; from the subsequent differences within the Council of Ministers and the Commission; from the events of May in Paris; the difficulties in Italy and the difficulties in Belgium between those who speak Flemish and those who speak French. And there is a feeling that here we are, a homogeneous country with a stable Government: why should we get involved in all this? I think that this aspect is just as important to the people as a whole as the question of the steep rise in prices forecast in the White Paper.

The question is the assessment of power, and what worries me about the White Paper is that there seems to be an underlying assumption that if we remain outside the Common Market then conditions will remain as they are. For instance, there are three well known obvious developments currently in hand which call for comment. One is our position in relation to GATT and our dependence on a substantial measure of free trade and free movement for goods. Since the Kennedy Round was completed increasing support has been obtained for protection, not by tariffs— which are not thought to be particularly respectable—but I suppose by four main means: first, by establishing national standards of industrial products; secondly, by Government purchases; thirdly, by the vexed question of exchange rates, and fourthly, by taxation. The Secretary-General of GATT, Olivier Long, only the other day referred to his anxiety in this connection. It is clear that the United Kingdom alone at this time would have no real power to affect the arrangements under GATT— and not only the arrangements in connection with tariffs but also the underlying philosophy of GATT, which was the development of free interchange of goods. The two bodies which have that power preponderantly at the present time are the United States of America and the Common Market. I believe strongly that the United Kingdom would have a far greater influence within the Common Market to sustain not only GATT but the philosophy behind it, which it is so much in our interests to do.

A very attractive idea was earlier mentioned in this debate, I think by the noble Lord, Lord Moyle, that there should be some kind of North Atlantic free trade area. That idea is, and must be, based upon the co-operation—indeed the leadership—of the United States. From my visits to the United States I would say that there is no indication whatever that they would be prepared to entertain any such ideas.

I referred first to the matter of GATT, which it seems to me is assumed in the White Paper will continue as now operating. I think that is a bold assumption; there is a movement towards protection. Secondly, there is the question of transnational companies, which I include in all their infinite variety—I mean companies having a national base in one country or another and operating substantially in large numbers of countries. I also include under this heading for this purpose those companies having more than one base of operations and operating internationally, and I include also those companies which have combined together for a substantial part of their trading operations. I do not think one needs for this purpose to differentiate between them.

These types of transnational companies have been growing and will continue to grow. They arise and exist because of the present economic conditions, which include the technological factors which so substantially give rise to their coming into being. They can be a spring-board for economic progress; they can also overwhelm the power of individual States. They are not in themselves either good or evil, but they are certainly here to stay, and there are two things about them. One is that they can only operate conveniently within a large economic community which is far more than one which is a free trade area. The reason for that is that a free trade area is only an area by definition because of the absence of tariffs. But, as I have earlier indicated, that is only one of the barriers to trade. It is essential for a substantial company of that kind to be able to operate in a large economic unit. That, after all, is why the United States has such a preponderance of them. But we in this country play no mean part in having companies of this sort of size. I suggest that the United Kingdom is too small to contain such companies in order that their development in this country shall be substantial. Secondly, this country is too small to control such companies, and this, I believe, is a serious reason why we should associate ourselves integrally as an economic unit with another; namely, the Common Market.

LORD WYNNE-JONES

My Lords, would the noble Lord forgive my asking him why he considers that Japan has been so successful in economic development when its size is no greater than that of this country?

LORD NATHAN

My Lords, I think there are perhaps two reasons. One is that its population is very substantial; the other is that the measure of control, particularly of foreign exchange, in Japan is greater than in this country. Successful she has certainly been. The question with which Japan is confronted is the question of the power of the individual industries in relation to the power of the State, and this is the problem with which I think we and most other countries are going to be confronted. In this connection I think of large companies. It is quite interesting that the Industrial Re-organisation Corporation is apparently exploring the prospect of creating links between industry in this country and industry on the Continent; and if my thesis is right in relation to the size of companies and the powers of States, this itself would create, if it were carried through, a problem for Government—not one particular type of Government, but any Government here.

In relation to this question of international companies there is at the moment a strong tendency for what might be called an international Civil Service to be growing up: an international industrial Civil Service, of people trained in a particular way, who have dissociated themselves, in the best way and from the best motives, from particular national associations, to serve the international companies. I think it is these companies, which at the moment are so preponderantly American, that are giving rise, and have given rise, to a certain phobia of these very large companies, as has been evidenced particularly in Europe and also, to some extent, in this country.

Passing from that particular problem, one comes to the third matter that I think is perhaps not sufficiently emphasised in the White Paper, although it is referred to; and that is the inherent question of monopoly in a comparatively small country which is well-trodden ground. It is a problem which gives rise to social, political and economic consequences. Underlying the many factors indicated in this debate as tending to show the desirability of our joining the Common Market, to increase standards of living in this country, is all the time this matter of power. Taking a ten-year view of our economic and political power, I believe (and this is really the subject of the debate) that if we are outside the Common Market it will decline both in absolute and in relative terms—that is to say, relative to the Common Market and the United States, the two most powerful economic units in the West.

By a happy chance our balance of payments is strong at a time when we wish to commence negotiations, and also by a happy chance there is a good deal of movement of ideas within the Common Market. It is quite conceivable that the Common Market institutions would by now have crystallised. Had that been so, it would have been much more difficult to negotiate. It seems to me that there is considerable flexibility for all sorts of discussions and changes to take place within the Common Market relating to agricultural policy, to finance, to taxation and so forth. This, therefore, seems to me to be the time, a good time, perhaps the last time, to negotiate hard for entry. I believe there is no time to lose.

VISCOUNT WATKINSON

My Lords, I beg to move that this debate be now adjourned until tomorrow.

Moved accordingly, and, on Question, Motion agreed to.