EUROPEAN ECONOMIC COMMUNITY: BRITISH ENTRY NEGOTIATIONS

HL Deb 19 January 1971 vol 314 cc313-479

3.0 p.m.

EARL JELLICOE rose to move, That this House takes note of the present negotiations for British membership of the E.E.C. The noble Earl said: My Lords, I put down the Motion in my name which we are debating to-day for two main reasons. In the first place, there is the intrinsic and vast importance of the issue of British membership of the European Economic Community. Secondly, this seems a good moment for at least an interim appraisal of the position. Despite their complexity, the number of issues which we and the Community have to settle are in fact quite few. Several have already been provisionally agreed—I say "provisionally agreed" because no agreement can naturally be final until the negotiations as a whole have been concluded. We are now starting to concentrate on the three residual and crucial issues on which, in the last resort, the success or failure of the negotiations is likely to hinge. This seems, therefore, a good moment to take preliminary stock.

Before I go further, may I say how glad I am to see that a large number of noble Lords are taking part in this debate—although, what is rather unusual in your Lordships' House these days, there happen to be no "maidens" among them. May I apologise to the speakers, and to your Lordships in general, for the fact that a long-standing engagement which affects my own Department means that I shall necessarily have to be absent from your Lordships' House for a period later in the debate.

That said, I should like to remind your Lordships of the background to these negotiations. As your Lordships know, our first attempt to join the Community failed through no fault of the British Government of the day. The second attempt, by the Labour Government in May, 1967, had the advantage of being made with the full backing and support of the Party to which I belong, which was then in Opposition. Although I suspect that there are those in your Lordships' House on this issue who may not agree with me, I am sure that on great issues of this sort the influence that we as a nation, and the Government of the day, can bring to bear in negotiations is greatly reinforced if it is known that by and large the policies which are being pursued have the backing of the other main Parties. Be that as it may, the attempt by the previous Government to negotiate membership was not immediately successful. However, by the time the present Government came into office in June last year the omens were already more favourable. The present Government were able to carry matters forward on the basis of the negotiating objectives already defined and worked out by the previous Government. Again I should like to underline, I hope without unnecessarily doing so, the importance of national continuity in these matters.

Those of your Lordships who follow these matters will remember the eloquent statement made at The Hague on July 4, 1967, by the then Foreign Secretary, the noble Lord, Lord George-Brown, who, I am glad to see, will be speaking shortly in this debate. As Foreign Secretary, he explained in terms which the present Government fully support both the thinking behind our application and the matters which would have to be settled in the negotiations. It was clear to him then, as it is clear to us now, that the Community system which we hope to adopt, if the negotiations succeed, is complex. But let me make this perfectly clear at the outset: like the last Government, this Government, even before the negotiations began, made it clear that we accept not only the objectives of the Community system but the system as a whole. This was emphasised by the present Chancellor in his opening statement at Luxembourg on June 30 last year. It is our belief that by accepting that system wholeheartedly—and I mean wholeheartedly—and by making it clear in the negotiations that we do so, we should best be able to share in the future benefits which the Community system has demonstrably brought to the present members.

I hope not unduly to weary your Lordships with a catalogue raisonée of all of the issues in these complex negotiations. However, it might be useful if I were to list them briefly and to consider some of the implications in each case. First, there is the issue raised by the dependent territories of the Commonwealth. Together with the six Associated States of the West Indies they number 27 countries in all, of an infinite variety ranging from Bermuda in the North Atlantic to St. Helena in the South Atlantic; from the Bahamas in the Caribbean to the British Antarctic Territory; from the British Indian Ocean Territory and the Seychelles to Pitcairn in the Pacific, and so on.

I am glad to say that for all the dependent Commonwealth countries except Gibraltar and Hong Kong the Community have agreed in principle association under Part IV of the Treaty of Rome; and this is in line with the treatment accorded to the dependencies of the present member countries. So far as Gibraltar is concerned, the Community have agreed that the Rock is a European territory for whose external relations we are responsible, and that it therefore comes under Article 227(4) of the Treaty of Rome. Agreement has also been reached on ways of dealing with Gibraltar's free port arrangements.

We are still discussing Hong Kong with the Community, who have, I am glad to say, offered to include the territory within their UNCTAD generalised preferences scheme with certain modifications. In addition, the Community have also confirmed that nine independent African Commonwealth countries — Kenya, Uganda, Tanzania, Zambia, Malawi, Nigeria, Ghana, The Gambia and Sierra Leone—will have the right to choose one of the three ways of linking themselves with the Community including, of course, accession to the Yaounde Convention for association, as set out in the Community's 1963 Declaration of Intent. For the other independent Commonwealth countries—those in the Indian Ocean, the Pacific and the Caribbean; that is, Mauritius, Fiji, Tonga and Western Samoa, Jamaica. Trinidad and Tobago, Barbados and Guyana—the Community has reserved its position until the important question of Commonwealth sugar is settled. In addition, we have made proposals for independent Commonwealth countries in Asia—that is, India, Pakistan, Ceylon, Malaysia and Singapore—which we believe should prove satisfactory, and which we have no reason to believe will not prove acceptable to the Six. The position of these countries has, in any event, been improved by the UNCTAD scheme for generalised preferences.

I now turn to what are clearly the two most important issues of Commonwealth concern and which, together with the question of Community finance, form the central hinge of issues on which the success or otherwise of the negotiations will probably turn. Those issues are, of course, the question of sugar from the developing Commonwealth countries and that of New Zealand—especially New Zealand dairy products. For both of these we have made proposals for arrangements on a continuing basis, subject to review, so that the position can be assessed by the Community—and we hope this will include us—as it develops. The Community has yet to reply to those proposals. In both cases our proposals reflect our obligations past and present to those countries, which we recognise. They reflect our close consultations with the Governments concerned and our view that these are special problems of crucial importance to the countries concerned, whose solution must be sought outside the framework of the transitional period for our adaptation to the rules of the Community. As I say, the Community have yet to reply to our proposals; but there are good grounds for thinking that they accept the special nature of these problems. In fact, it would make no sense for the enlarged Community to emerge from the negotiations with policies towards the outside world which are demonstrably ungenerous.

So far as the issues which directly affect this country are concerned, I should perhaps remind your Lordships that early in the present negotiations the Chancellor of the Duchy succeeded in reaching provisional agreement on a number of agricultural commodities and on an annual review. The Community have also welcomed our proposals for a five-year transitional period in both the industrial and agricultural fields. We believe that for our agriculture five years of transition, with provision for flexibility, should be sufficient. In addition, they have agreed to examine in a positive spirit our proposals for a similar five-year period for adapting to Community rules on capital movement and fiscal harmonisation. For Euratom and the European Coal and Steel Community we have proposed a one-year transitional period. Finally, we made proposals, as your Lordships know, on December 16 for our participation in the Community's financial arrangements. Therefore our proposals on all the major subjects are now before the Conference. A meeting at Deputies' level took place last week, and there is to be another next week. The next meeting of the Conference at Ministerial level is to be on February 2.

Your Lordships may reasonably ask when the negotiations will be concluded. When shall we know really where we stand? In a negotiation of this sort, one cannot of course lay down precise deadlines. Nevertheless, let us consider how matters have gone so far. After the formal start before the summer holiday last year, much fact-finding work was done beginning immediately after the holiday period. This detailed work is continuing and there is still a mass to be done at the technical level. But the political issues remaining to be settled are relatively few in number. We hope—and I believe that the Community as a whole also hones—that these will be settled before the summer holiday this year. This would permit the signature of an agreement at the end of this year, with ratification by all concerned within a year thereafter; that is, by January 1, 1973.

We naturally hope that it will be possible to adhere to a timetable of this sort, and it should be possible to do so provided that the political will, which undoubtedly exists on the part of all the Governments concerned, can cut a way through the technicalities in the weeks and months ahead. I can in any event assure your Lordships that Parliament will continue to be fully consulted at all stages between now and the moment when the agreement reached at Brussels—assuming that we succeed in reaching an agreement—is put before Parliament for its approval. The present Prime Minister during the 1961–63 negotiations set an example of frequent and full statements to Parliament. The present Government will continue to follow that example.

If your Lordships will hear with me a moment longer on these technicalities and on the present position, I should now like to go into slightly greater detail on the issue of Community finance. This the Governments of the Community regard as the heart of the Community system, and the proposals we have made clearly indicate our willingness to accept that system. Our proposals are of course designed to adapt us to the system on a fair and realistic basis. Through them we hope to achieve a mutual balance of advantage with our partners throughout the transitional period, so that what are described as the impact effects in some fields are balanced by the so-called dynamic effects in others. If the impact were—to use the Community's jargon—greater than the dynamic in the early stages, we should all be in for trouble, the existing members of the Community as well as ourselves.

The arrangements which we propose follow closely what present members arranged for themselves. We have proposed that we should move towards a share of the total expenses of the Community—known as the key—of between 13 per cent. and 15 per cent. by the end of our fifth year as members, and that for three years thereafter so-called correctives should be applied to limit the variation from that percentage. At the end of the day—and I am now speaking of the early 1980s; almost as far ahead of us as the foundation of the Community is behind us—we should then be ready to play a full and fully equal part in the whole Community system.

We have made it absolutely clear that we are not seeking to change that system and we fully recognise the importance which the Community attaches to it. The assurance for which we have asked to take account of unforeseen developments—and this is important—is in the spirit of what the Community itself has told us; namely, that the survival of the Community would depend on finding equitable solutions should unacceptable situations arise in the course of time.

I know that noble Lords are concerned about different aspects of the negotiations. Many are concerned, and rightly so, about the legitimate interests of the other members of the Commonwealth. I have, I hope, already demonstrated that we share their concern and that the Community itself recognises that that concern is valid. Other noble Lords may rightly be concerned about our EFTA partners, and I can assure them that consultation has been close and frequent, not only with the Commonwealth but also with the EFTA countries. There has also been considerable discussion in this country—and it is right that there has been—about the economic advantages or disadvantages of membership for Britain. Many of the facts and many of the projections are disputed, but one fact is clear. However reluctant some academic economists are to admit the existence of cause and effect, the fact is that the Six Community countries have all enjoyed a far better rate of growth since the formation of the Community than Britain has enjoyed in EFTA.

There are certain conclusions which can be legitimately drawn from this, even without straying on to disputed and disputable economic ground. The first conclusion is that the Community system as a whole works, complex though it may be. It is nonsense to suggest, as some opponents have suggested, that the Common Agricultural Policy must inevitably bring ruin. Cheap food is important, but it is not everything. Despite cheap food, we in this country have had an exceptionally low growth rate for the last two decades, and even without cheap food the Community has had an impressively high one. In addition, comparisons with countries at different stages of development and with widely different national characteristics are much less relevant than a straight comparison between the United Kingdom and her similar neighbours on the Continent.

It is certainly my experience that Continental observers of the British scene tend to smile at the prognostications of doom with which some people in this country now make play. Those observers do not deny that the omens are uncertain for British membership—anything about the future, especially as far ahead as we are talking about, is hound to be uncertain—but they recall that these are exactly the fears that were expressed in each country of the Six at the time when the Community itself was formed. For the Six, these fears have been unfounded. Despite what Mr. Jay or Mr. Shore or the Daily Express or some economists of the National Institute may say, the Six themselves have no doubt whatever that the growth and the increasing prosperity which they have enjoyed is bound up with their membership of the Community. It is for the critics to explain why what has been sauce for the European goose should not be sauce for the British gander. May I, in this connection, point out one very remarkable fact? There is not, so far as I know, a single political or sectional group of any consequence within the Six which aims to do away with the Community. Funnily enough, this goes even for the Communist Parties in France and Italy.

When speaking about the dynamic progress of the economies of the Six and necessarily emphasising the relative sluggishness of the British economy in recent years it is easy to fall into the trap—and indeed some of our friends in Europe do so—of painting Miss Britain as a decidely plain girl who almost deserves to be a lonely and wilting wallflower in the European dance. But in fact Miss Britain has a number of not so hidden attractions which together constitute a very substantial dowry. In financial expertise, in advanced technologies, in research and development expertise, in companies of world scale, we have an enormous contribution to make to Europe, and I hope that Europe will continue to remember that.

It is true that many of these activities could be, and some are, carried out already on a European basis with British involvement even while we are outside the Community. But this does not weaken, at least in my mind, the case for membership. Remember, my Lords, we are seeking to join not a static Community but a developing Community; and the way it develops is surely likely to make it easier for members, more difficult for outsiders, to collaborate in the sort of ways I have indicated. And the fact that Her Majesty's Government and British industry have in their own interests already concluded important agreements with Community countries is in itself a reason for sharing fully in their decisions and the advantages to be won within the Community framework. Harmonisation of taxation, the removal of non-tariff barriers—all this will provide Community countries with an increasingly advantageous environment for scientific and technological integration.

There is a reverse threat here of which we should take due note. The C.B.I., in the admirably thorough report which they published a year ago, drew attention to the increasing sensitivity of the British economy to economic conditions in Europe. They also drew attention, to quote their words: to the danger that if economic policies in Europe are co-ordinated without reference to the situation in the United Kingdom, the constraints which will be placed on British economic policy would be increased. My Lords, this applies in the case of our trade relations with Western Europe. The danger of not joining the Community, if we get acceptable terms, is not only that we shall then be faced with tariff walls which we shall not easily surmount. A parallel, indeed an almost greater, danger is that the non-tariff barriers will increasingly deny us the opportunities for trade expansion, and hence for economic growth, which we require.

But this argument extends a long way beyond purely trade matters. Your Lordships are aware of the substantial progress which the countries of the Six have made since that historic meeting at The Hague in December, 1969, towards the greater harmonisation of their fiscal and economic policies. The steps proposed in the so-called Werner Report are indeed ambitious. Some sceptics will predict that they will not be realised. I think we should be wise to be on our guard against undue scepticism here. There would seem, at least in my experience, to be a certain inbuilt momentum in the affairs of the Community, which means that sooner or later, and sometimes after a lot of hesitation and delay, the movement towards greater integration goes steadily forward; and this applies in the even more difficult field of harmonising political policies—the field covered by the so-called recent Davignon Report. Its proposals were of course relatively modest, and it certainly does not foreshadow federal institutions in Europe to-morrow, or even necessarily in the foreseeable future.

However, the identification of Europe's common economic interests and the construction of institutions to promote those interests is bound to lead naturally to the identification of political and defence interests; and as this process goes forward so institutions will emerge, will be agreed freely by all concerned, to promote those political and defence interests. The question I ask myself, and the question I put to your Lordships, is whether it is in our interests to divorce ourselves from this sometimes imperceptible but almost inevitable progress towards greater integration, economic, financial, political and possibly military, in Western Europe. To me, at any rate, the answer is pretty simple. Provided, and provided only, the terms we can win at Brussels are acceptable, it would be right for us to link ourselves with this Europe in a future full of possibilities. As full members, we should have a major influence at every stage in both the direction and the control of the Community's progress: as nonmembers, we should have precious little.

My Lords, that, in capsule form, indicates the stage which we have now reached in negotiating the economic and financial terms for entry into the European Economic Community; and those, equally in capsule terms, are, in sum, some of the reasons why I believe that, provided equitable terms can in the end be agreed—and by "equitable" I mean fair for us and fair for both the present and the enlarged Community—the balance of advantage points decisively in favour of entry. Meanwhile, I suggest that it would be a pity—and here I would agree with Mr. Enoch Powell—if we were to allow ourselves to be mesmerised by the bread and butter issues, important though they undoubtedly are, by the economic and financial pros and cons on which the pundits pass such marvelously contradictory judgments. Man, my Lords, does not live by bread or butter or steel or computers alone. We should remember—and here I am sure I can carry the noble Lord, Lord George-Brown, with me—that at the end of the road, when we as individuals or as members of a Party or as a nation have to take the final decision on this great issue, a primary constituent of that decision is bound to be political.

It would be wise for us all in these coming months, as we move towards that crucial decision, to ponder, I believe, the shape of the world in which we and our children will live in the last decade or two of this century. It would also be wise, I submit, to take that decision in the light of what we know about the instincts and aspirations of the British people. It may be reasonable for the Swedes or the Swiss to wish to opt out of the rougher international waters. But, my Lords, we as a nation have been deeply engaged and involved in the affairs of the world ever since the Tudor merchants first ventured out into the open sea. We could, of course, now decide to contract out, to go against this age-old instinct for involvement in the outside world. If we were so to decide, I would venture to suggest—this is a subjective judgment, of course—that Britain would not settle down into a comfortable and cosy existence. On the contrary, I believe that as we became increasingly introspective our society would become increasingly frustrated and discontented.

But if we opt for continuing involvement in the world, then we must decide on: involvement with what? None of us in this era of change can safely prophesy the shape of the world a decade or so from now. But the probabilities, at least as I see it, are that the world of the 1980s and the 1990s is likely to be a world of large Power clusters, of four or possibly five great Power clusters. There will be the United States, a super-Power. There will be the Soviet Union, another super-Power. Japan, on almost any prediction, is bound to be another super-Power; and so, in all probability, will be China. The fifth super-Power is likely to be centred around the Western slant of our Eurasian Continent. In that world of super-Powers, Britain by itself could count for no more than a feather in the scales. If, therefore, we opt for involvement; if we really wish as a people to play a significant part in the world of the 21st century; if we aspire to a position in which all the great world decisions are not taken over our head, then I would hold that the logic of history, and indeed of geography, points to involvement in a larger Europe. In such a Europe we could exert our moderating and humanising influence within a cluster of real power, which in its turn should be in a position to exercise a moderating and humanising influence on the world as a whole—that rather rough and dangerous world which lies just over the horizon of 1971.

My Lords, I know that there is plenty of division of opinion on these great political issues. I know that there are those who claim that to opt for Europe is to opt against the broader horizon of a North Atlantic Community. There are those who claim that to enlarge the European Community is to harden and perpetuate the division between East and West in Europe. There are those who fear that if we succeed in joining the European Community we shall be joining an inward-looking Community—one which is turning its back on the looming problems of the developing world. And there are those who fear that in joining we should lose our distinctive national identity and tang.

My Lords, if I believed that those fears were valid I would not be, as I am, among those who have supported and who support our application for membership, and who hope, in the interests of this country, of Europe and of the wider world, that that application will prove successful. On the contrary, I believe those fears to be misconceived. It is my belief that, rather than constituting a bar to a wider Atlantic association, the emergence of a wider and more structured European Community should serve to strengthen rather than weaken the links between North America and Western Europe. It is crystal clear that the United States Administration, despite its natural fears of a more powerful Europe as a potent trade rival, is keen to see a Western Europe economically more closely integrated, politically more united and with a greater ability to defend itself.

It is also my belief that, far from perpetuating or deepening the division between East and West in Europe, the evolution of a wider and stronger unity in Western Europe will serve to stabilise and to fertilise the relationship between that Europe and the countries of Eastern Europe. Certainly we should never forget that Eastern Europe is the joint heir with us of the wider European tradition. But, my Lords, the Federal German Chancellor has made it clear time and time again that for him—and I am sure the same must hold for us—the essential precondition of the opening to the East—the Ostpolitik—is greater cohesion in Western Europe.

Again, it is my profound belief that there is no evidence whatsoever to lead us to suppose that the Six are any whit less conscious of their responsibilities towards the developing world than we are. I would go further. I would claim that if we can together build a Community of the Ten—a Community which includes the United Kingdom—that should serve to ensure that Europe is able to play its full and due part in tackling what is by common consent perhaps the greater problem of the last third of this century—the growing poverty gap between the rich and the poor countries of the world.

Finally, my Lords, I have sufficient belief in the virility and distinctiveness of the British genius not to believe that in joining Europe we shall lose our identity as a nation. Given the evidence of our eyes as we travel—the evidence of 4 or 5 million pairs of British eyes a year—it is absurd to suppose that we could. Despite the steady integration of Western Europe, the French, my Lords, still feel, and will for long feel, French. The Germans feel and will continue to feel German. The Italians feel and will continue to feel Italian. The attachment of the Dutch to their monarchy and the Belgians to theirs is no whit diminished as a result of Dutch and Belgian membership of the Community.

No, my Lords, these could not be the reasons which would lead me to oppose in principle—as I know many people sincerely do oppose—our entry into Europe should the terms, when finally negotiated out, prove to be acceptable. The real reason why I would be against it would be if I were a Little Englander content to see a little England playing a smaller and smaller part in the affairs of this planet. My Lords, I am not so content. That is the main reason why I trust that these negotiations on which we are now well and truly embarked will shortly be brought to a successful conclusion. I beg to move.

Moved, That this House takes note of the present negotiations for British membership of the E.E.C.—(Earl Jellicoe.)

3.35 p.m.

LORD CHALFONT

My Lords, may I begin by thanking the noble Earl for his clear exposition of the present position regarding negotiations to enter the European Economic Community, and may I say that we on this side entirely understand why he was not able to go into too much detail of our negotiating position. The essence of a negotiating position is that it should remain as confidential as possible until the other side have had a chance to respond to' it. I should like, from this side, to go into that negotiating position in a little more detail and I hope that the noble Earl will understand the reasons why I should wish to do so. There was no reason for him to apologise for the technicalities which are inseparable from a speech of that kind; this is a very technical and complex subject and I was most grateful for the patient and clear way in which he outlined the present position.

I was also glad that he made mention of the 1967 application and the opening statement which was made at The Hague. I was particularly appreciative of his reference to the noble Lord, Lord George-Brown, whom I had the pleasure of accompanying to The Hague on that occasion; and your Lordships may wish to know that when the full story of that meeting comes to be told it will be seen that it was not only the eloquence of the noble Lord, Lord George-Brown, which informed most of that opening statement but that had it not been for his very considerable tactical skill the opening statement might never have been made at all. I was grateful for the reference which the noble Earl made to the contribution of the noble Lord on that occasion.

My Lords the Motion before us is: That this House takes note of the present negotiations for British membership of the E.E.C. I should therefore like to follow the noble Earl in the way in which he approached the matter: to look first of all at the negotiations and then towards the end to broaden the subject into a more general appreciation of why it is, as we see it on this side, that the United Kingdom has made this application and is trying to bring the negotiations to a successful conclusion. I do not wish to rake up old issues and quarrels, but I think it was rather unfortunate that the noble Earl's right honourable friend in another place spoke of "when" we join the Community. We on this side know that it is "if" we join the Community—because there is one very clear condition: that is, that fair terms for entry should be negotiated. I do not want to make a great issue of this but simply to say that, until the negotiations are complete, we hope we can retain this reservation in our minds: it is "if" we join the Community and not "when" we join.

EARL JELLICOE

My Lords I apologise—especially at the outset of the noble Lord's speech and especially since he was being so kind—for interjecting. The noble Lord is of course aware that on more than one occasion throughout my speech I referred to the conditions that the terms must be acceptable and must be seen to be fair.

LORD CHALFONT

My Lords, I entirely accept that. It is merely to impress upon the noble Earl and upon noble Lords opposite that we are determined on this side that it shall be seen at all times that this reservation is a real one; that the terms must be fair. I am grateful to the noble Earl for making this so clear in what he said.

May we look at what the noble Earl has said about how we are doing so far in the negotiations? He mentioned that we had accepted a transitional period of five years to adapt both our agriculture and our industry to the Community regulations after our entry. This, I understand, is also to cover the Community regulations on capital movement and fiscal harmonisation. Although again I do not want to place too much emphasis on this, I think there is perhaps a slightly ominous sign here, because on October 14 the proposal put forward by Her Majesty's Government was that there should be three years for the common external tariffs and for industrial movements inside the Community—that is, for the whole industrial transitional period—but that there should be six years for a Common Agricultural Policy. My own view, which is entirely subjective and personal, is that six years is perhaps scarcely long enough for an agricultural transitional period. However, we have now reduced the agricultural transitional period from six years, our original opening bid, to five years. The counter-concession that we have there, which is to raise the industrial period from three years to five years, is not really of very great advantage to us. So it seems to me that we have already made quite a substantial concession; largely in the face of pressure, on the principle of "parallelism" as it is called; that is to say, the principle held most vigorously by the French that the transitional periods for industry and agriculture should be the same. I understand that concessions have to be made in negotiations—that is what negotiations are about—but I hope that we shall recall, and see that our negotiating partners in the Common Market recall, that here we have made a concession and now perhaps we might look forward to a concession or two in return.

At the same time as we accepted the five-year period, we did, as the noble Earl said, accept the position of the Commonwealth countries, particularly the African Commonwealth countries, the nine that he mentioned—I will not go through the list again. We negotiated an Agreement that if they wished, they could become associates, possibly under the Yaoundé Convention, on the same terms as the former dependencies of France, Italy and Belgium. If we still have a Commonwealth after what is going on at the moment in Singapore, this seems to me to be a very welcome arrangement. It would indeed have been invidious if former British territories had been treated less favourably than those of other members. So from this side of the House we welcome the success of the Government in ensuring that those nine African Commonwealth countries have this right to become associate members under the terms of the Yaoundé Convention, or something similar to that.

It now remains to negotiate equitable terms for the rest of the Commonwealth countries. There are the three Commonwealth countries which form a customs union with South Africa—Swaziland, Botswana and Lesotho—and it would be valuable if the noble Marquess, Lord Lothian, when he replies to the debate, could tell us what progress is being made on the question of those three territories. The noble Earl, Lord Jellicoe, also mentioned that we still have to finalise the arrangement for other Commonwealth countries in the Caribbean and in the Indian and Pacific Oceans. Some of these countries have their position reserved by the Community because of certain commodities, such as sugar, bananas and citrus fruit. But there are others not so reserved. For example, there is the important matter of Hong Kong, and again it would be interesting for us to know what kind of progress is being made in negotiating terms for those countries which are not reserved because of the particular commodities that they produce.

This my Lords, leaves us, as the noble Earl clearly said, with three major problems still to be negotiated: Commonwealth sugar, New Zealand dairy products and, perhaps most important of all, our financial contribution to the Community budget. I should like to underline the vital importance of these three matters, and I agree with the noble Earl when he says, if I understood him correctly, that success in negotiating these three major issues will largely determine whether the terms for entering the Common Market are acceptable or not. These are the crucial make-or-break negotiations, and it might be of value if we looked at them for a moment in some little detail.

Let us look, first, at the issues that are not yet joined—by that I mean that although we have made our proposals and views clear, we have not yet heard what is the position of the Common Market on them—that is to say, Commonwealth sugar and New Zealand dairy products. Let us look at sugar first. This affects principally three Commonwealth areas: Mauritius, Fiji and the Caribbean. If nothing at all is done in the negotiations, or by the Community, to help, there will be in those areas serious, grievous damage to their economy, and mass unemployment. These developing countries, many of them monocultural with no other means of supporting themselves, are our responsibility. They are the responsibility of this country and of no one else, and in these negotiations they must not be left out. I am certain that Her Majesty's Government agree about this; but I think it must be quite clear, and it would be wrong if from this side of the House we did not make it clear, that terms that do not protect these countries against grievous economic harm and mass unemployment, and all that goes with it, will not be acceptable to the majority of people in this country.

As the noble Earl has said, proposals have, been made about this subject. We do not yet know what they are; there is no reason why we should, until the negotiations have progressed a little further and the Government know what is the reaction of the Common Market countries. But we can, I think, say something about the kind of things we should be looking for. Perhaps I might simply mention in this connection that three former French territories, Guadaloupe, Martinique and Réunion, get their sugar into the Common Market on preferential terms as outside Departments of France. This is a very neat device; it would be similar to our saying that Fiji was a county of England. I see no reason why the sugar-producing former dependencies of this country should be treated any less favourably in this matter of getting their sugar into the Common Market than are the former dependencies of the Government of France.

Of course, there are difficulties; we know that. The Common Market already produces too much sugar itself. The farmers in the Community are limited in their production by a quota system, but there is still too much sugar already in the Common Market. So it is obvious that if Caribbean, Fijian and Mauritian sugar comes into the Common Market as well, there will be a massive over-production of sugar and therefore damage—or at any rate potential damage—to the existing European sugar producers. Although clearly we must have understanding and sympathy for this problem in the Common Market, that is their problem; and the Commonwealth sugar producers are ours. The more we can persuade the Common Market countries to concede in terms of sugar imports into the Community, clearly the shorter period of adjustment to the Common Market regulations we shall need in that respect. But it is not good enough to say, as I have heard said by some people in Brussels, that these Commonwealth countries must fend for themselves. We must fend for them; and in my view this is one of the first matters that is crucial to the success of these negotiations.

New Zealand dairy products also were mentioned by the noble Earl. The Community say that they recognise this problem. Well, my Lords, I hope that they do. Again, I have heard some politicians in the Community making the point, and making it very forcibly, that New Zealand should now think of selling her dairy products to Japan, diversifying her markets if she cannot diversify her economy.

LORD GLADWYN

Why not?

LORD CHALFONT

I will tell the noble Lord why not; because the manufacture of Japanese dairy products is already going up, and Japan has agricultural problems of her own. Even if New Zealand could find a market there for her dairy products now, it is unlikely that they would find a market there permanently. Here, again, in these negotiations we must take account of the requirements and the interests of the New Zealand dairy producers. After all, butter is the main problem here; and what has before stood in the way of a solution to this problem is what has been known as the "butter mountain" in Europe. That butter mountain—vast stocks of butter produced by what has been in the past a notably inefficient agricultural system—is beginning to diminish, and I believe that we should now be in a position to seek, at any rate as an opening negotiating position, derogations for New Zealand from the Common external tariff; enduring derogations of some kind to protect New Zealand agriculture from intolerable damage. So much for the Commonwealth problems.

I come now to the third and last of the important negotiating areas, perhaps the most important of all, the question of our financial contribution. As the noble Earl has said, the financial arrangements in the Common Market are highly complicated. They involve such problems as value-added tax and the difference between mandatory expenditure and administrative budgeting. They also have to take into account matters like the cost of the Common Agricultural Policy and the Mansholt proposals to reduce it, and all kinds of complicated budgetary and financial matters of that kind. Even if I were qualified to do so, this would scarcely be the time to go into them in detail. But it is important to note that, as the noble Earl has confirmed to-day in the House, and as was made public before, Her Majesty's Government have already accepted in principle the existing financial arrangements for the Community. So what is left to be negotiated now is how they would be applied in an enlarged Community and how they would affect us from our point of view.

The main problem, of course, as always, is the financing of the Common Agricultural Policy. There is one aspect of this which the noble Earl, presumably for lack of time, did not mention—that is, that at their Session in December, 1969, the Council of Ministers of the Six agreed on a completely new system of financing to become effective in 1978. The general effect of this, without going into financial details, is that after 1978 the Community's financing system will become completely automatic. So what we are now negotiating really is our share of the financial budget of the enlarged Community up to 1978. As the noble Earl said, on December 16 the Government detailed certain British proposals. They covered a transitional period of eight years, in the first five years of which we would build up by annual steps from 13 to 15 per cent. of the total budget of the enlarged Community. In the next three years of the transitional period, we would accept changes on the same lines as the Six had agreed for themselves from 1975 to 1977. The third and, in my personal view, the most important proposal made by Her Majesty's Government was that there should be a review clause to cover these arrangements.

If we look at this proposal of from 13 to 15 per cent. after five years and the changes pari passu with the Six in the last three years, it seems to me that it is a reasonable and fair proposal. If we compare it with the proportions of the French and Germans in 1970, when the Germans will pay 31.7 per cent. of the farm budget and the French 28 per cent., it seems to me that the proposals of the negotiating team in Brussels are eminently reasonable. I, for one, could not quarrel with them, and I do not think that many on this side of the House would do so. But, of course, negotiating positions and agreements are always different things. We ought to compare the two proposals made by the Commission, as opposed to the proposal made by us, that we should either pay 21 to 25 per cent. on joining or that we should start at 10 to 15 per cent. and end in 1977 with 20 to 25 per cent., and after that the prescription should be automatic. In my view, those proposals just will not do. There is obviously going to be some very tough negotiating ahead.

It is not for me to go into that matter in any further detail, except to say—and I put this to the noble Earl and to noble Lords opposite—that, whatever arguments go on about the figures and the percentages (and I have no doubt that they will go on long into the night), I hope that Her Majesty's Government will stand firm for our proposal for a review clause. That seems to me to be the crucial element in the British proposal.

So, my Lords, to sum up the progress that has been made, it seems to me that there is little doubt about the parallel five-year transitional period. I hope that it will be long enough for the Common Agricultural Policy but I have some nagging doubts about it. I think that the Government's progress in arranging for an association of Commonwealth countries and dependencies is going along in a very satisfactory way. But in the matter of Caribbean sugar, and other Commonwealth sugar as well, of New Zealand dairy products and of the financing of the Community, I think that there is some very tough bargaining ahead. In my view, success in these particular areas is essential if the terms which the Government obtain are to be seen in the country as acceptable.

Having said all that, which may seem to the noble Earl rather carping, after what he has said about the progress we have made, let me say, speaking for myself, and I think also for most of the noble Lords on this side, that I hope profoundly that the Government will be successful in their negotiations. It is now a cliché of debate to say that the economic arguments are finely balanced and the political arguments are decisive. It may be a cliché; nevertheless I profoundly believe it. I believe that there are great long-term economic advantages in joining the Common Market, advantages brought by economics of scale and by the ability to form and control the activities of large multi-national companies. I believe that even on the economic side, in spite of the possible short-term difficulties which we shall have to face in the transitional periods—though let us remember that the transitional periods will cushion their effects—the long-term advantages are overriding.

Nevertheless, I still believe that it is the political case that makes our entry into Europe important—indeed, vital, and perhaps I may end by a brief résumé of the political case as I see it, brief because our political arguments are comprehensive and exhaustive. My view of the political case is very similar in essence to that put forward by the noble Earl. A middle-ranging Power like ourselves can no longer make its voice heard in the kind of world in which we live to-day. Those who are obsessed with the idea of national sovereignty and are terrified lest any part of that sovereignty should be eroded in a larger Community should remember that national sovereignty is largely an illusion unless it confers upon the nation some kind of influence in the world. Otherwise, I am at a loss to understand what value our national sovereignty has.

Some may ask: why do we need this influence? What does it matter if Great Britain is no longer a great Imperial Power but now a great Power of the middle rank? I think that there are two reasons why we do not need this influence. We do not need it, as the noble Earl has said, to create an exclusive club of large industrial nations in Western Europe, all concerned with their own prosperity, their own balance of payments, their own gross national product and their own economic growth. We do not want it for that. Nor do we need it for any attempt to create a new super-Power, with all the paraphernalia of nuclear deterrents and ruiniously expensive military establishments. What we do need this influence for is to have some voice in the really great international problems which are going to face the world, including the world of Western Europe and Great Britain, in the rest of this century. The noble Earl has mentioned the familiar problem of the Third World. He spoke of the poverty gap between the developed world and the developing. It is a poverty gap which, put into more graphic terms, means that two-thirds of the people of the world have not enough to eat. This is something, I am convinced, that everyone in this country would wish to do something about.

We need this influence for the great issues of arms control and disarmament, on which our voice as a nation State can no longer carry the weight of the great super-Power. We need it (and again the noble Earl mentioned this) for the improvement of East/West relations. We need it to ensure that Eastern and Western Europe eventually come together and that the great artificial barrier which at the moment runs through the centre of Europe is broken down and dismantled for ever. Willy Brandt, the Chancellor of West Germany, has already begun to break down these barriers with his Eastern policy. The Soviet Union, as we discovered in our negotiations to join the Common Market, abortive as they turned out to be, are by no means hostile to this idea of an integrated Western Europe. They realise, as we do, that it is only by consolidating, integrating and unifying the foreign policies of Western Europe that we shall eventually be in a position to break down these barriers and to bring East and West together. We need this influence to solve the great problem of the poisoning of the environment. We need it to help in making an effective world organisation of the United Nations. These are the things that we need influence for.

The great decisions, as the noble Earl has said, are now made by the super-Powers, or what he called the Power clusters. They are made for the moment in Washington and in Moscow. As he rightly said, at the end of this century they will probably be made in Peking and Tokyo as well. There are many people in this country, including myself, and particularly many among the young, who care deeply about the problems of the Third World, nuclear weapons and East/West relations. These young people want some of these decisions to be made here in Europe, and not always to be made elsewhere. As the noble Earl has said, this is not a time for anybody to be thinking in terms of a "Little England". It would be entirely against all tradition, and hostile to the genius and temperament of the people of this country, if we were to suggest that we can turn our back on these great international problems, and simply tend our own gardens and look after our own prosperity and our own standard of living. Quite apart from the fact that I do not think we could look after it, if left on our own, even if we could it is not enough for the young people of this country, who want to see Britain helping to solve the problems about which they feel so passionately.

The best way to do this that I can see—indeed, I can see no other way—is through an economically integrated and politically united Europe. That is why, provided that the terms are right, and provided they impose no intolerable burden on the people of this country, or indeed on those abroad who rightly rely on us to look after their interests, I think the Government are right to take advantage of what I believe to be the most important and exciting political opportunity that Britain is likely to see in this century. It is now for the Government and their negotiators to secure those acceptable terms. It is a great opportunity, my Lords, and this time I hope that it can be seized.

4.5 p.m.

LORD GLADWYN

My Lords, this is obviously going to be an important debate, if only because it should make clear what this House collectively thinks about the present state of the negotiations for our entry into the European Economic Community. Let us hope that in addition it will strengthen the hands of the Government at what is obviously a difficult, if not a critical, moment in these negotiations.

At the outset, I should like to say that I am sure that, in this House at any rate, we shall not indulge in what the French call a procès de motifs—that is to say, questioning other people's motives. It is absurd, for instance, to describe all those who believe in the necessity of creating a political entity of a new kind in Western Europe as "starry-eyed idealists". I regard myself as a practical ex-diplomatist, with some experience of political negotiations, who is nevertheless convinced that we can work towards a united Western Europe by gradually adopting new techniques that have already proved their worth on the Continent of Europe. Quite a number of hard-headed industrialists and politicians on both sides of the Channel share this view. It may be contested, but it is very much the reverse of a pipe-dream.

Nor is it as if such techniques to which I have alluded would in any way diminish what is always called our national personality and integrity. Look at the Dutch! Does that proud and ancient nation think that its Queen and its Constitution are in any way compromised by membership of the Community? Of course not. Just go to Holland and ask any Dutchman, and you will find that almost all of them are very happy to belong to the Community if only because, as they believe, it has raised their standard of living and, as it were, put Holland on the map. What worries me, my Lords, is what is likely to happen to our own nation if we stay out of the Community. It is our own starry-eyed nationalists who fill me with alarm!

However that may be, I hope that in this House at any rate—and I am sure that this will be the case—in discussing this matter we shall avoid any Party politics. As is known, in the Parliamentary Parties—though not, I think, in our small Liberal Party—opinion is divided on the main issue; that is to say, on whether we should, in principle, come into the Community at all. In both the major Parties there are those who feel that we should in no circumstances join the Six, and those who feel that we should join them on almost any terms. But the majority in both Parties are obviously waiting to see what comes out of the negotiations before making up their minds. And of course they are the sensible ones.

First of all, I think we might sincerely congratulate the Government on having seemingly found an excellent negotiator. Mr. Geoffrey Rippon clearly has all the qualities required: intelligence, conviction, toughness, both mental and physical, and above all, if I may say so, unflappability. If he cannot arrive at a sensible formula, then I am confident that nobody can. Whether he will is, frankly, anybody's guess. Our country is, after all, in a different position from that of our neighbours on the Continent. It is not our fault that we should, as a result of history, have rather exceptional overseas connections and that our agricultural revolution took place over 100 years ago. If we are to join the Six, therefore, there simply must be some concessions on the part of the Six which, without in any way (and I emphasise those words) damaging or undermining that Community, will take account of this outstanding and undeniable fact.

Nor, as has so frequently been said, would it be in the Six's own interest if we joined them on terms which could produce major balance-of-payments difficulties. The whole thing, in other words, simply must be looked at not from the point of view of any individual nation, but from that of an enlarged or prospectively enlarged Community.

Of course there are the clever ones who say: "Never mind. Just sign on the dotted line, and once you are in you can refuse to pay up on the simple grounds that you have no money. "But though there might be nations who could play this game, it would not I think be ours, and our prospective colleagues must realise that if we do come in we shall be serious partners, willing and anxious to play it straight in the general interests of the group. But first of all they must make it possible for us to do this.

What has always struck me as odd, however, is the extent to which among the Six—and notably in France—people tend to represent us as what is always called as demandereurs; that is to say, broadly speaking, as supplicants begging to be allowed to share in the wealth and glory of the Common Market. They are right when they say that if we do come into their Community we must accept the principles of their Common Agricultural Policy, worked out with such difficulty, and be genuinely prepared to make considerable sacrifices in order to help solve the agricultural problems of the Continental countries, which are very real, and this even though we may legitimately hope, with them, eventually to mitigate some of the more evident absurdities of the C.A.P. as time goes on.

What the Six tend to ignore is the extent to which we should finance their farmers, even if we paid into the central fund considerably less than, theoretically, we should be obliged to pay under the present regulations. I am not sure that this fact is always realised, but everything over about 5½ per cent. of our subscription, which is the amount we should calculate to recover, would, from their point of view, be pure gain, and if we did not come in they would therefore be so much the poorer by some hundreds of millions of pounds.

Moreover, they must surely have formed some idea of how far their farmers are likely to profit by exporting to us some, at least, of their famous agricultural surpluses. And unless we joined them, there would be no question of any such outlet. All this in addition to the great technological advantages of expanding the Market, so justifiably vaunted by Mr. Harold Wilson some three years ago. Really, if as is said, the Six want us to join for valid political reasons, they must now get down, in their own interests, to doing the necessary deal. As I believe has been said by both speakers this afternoon, a sensible review clause—or its equivalent—would help a lot, and might, to a large extent, provide the answer.

This brings me on to the political issue. It is really twofold, and the two are often confused—anyhow, in the public mind. The first question is to what extent, if we join, we shall be committed to the acceptance of what is always called a "Federal" system; the second is to what extent we could, on joining, or even before joining, agree on suitable machinery for harmonising our foreign policies and standardising our armaments; and also, if possible, having a common arms procurement programme.

On the first point—how far we should be committed to Federalism—the answer is clear. The Six, at their conference at The Hague just over a year ago, agreed to advance towards an economic union of a new type. But so far it seems that they have been unable to agree on any very positive steps in this direction, more particularly—as I think was said by the noble Lord, Lord Chalfont—in the monetary sphere. They have agreed that by January 1, 1975, they will pay into the central fund the proceeds of the agricultural levies all the customs duties, together with 1 per cent. of the new tax on added values. So it is clear that unless the system is to collapse—and there will be small point in our joining if we thought that—there will, before 1975, have to be adequate machinery for democratically controlling the expenditure by the Commission in Brussels of very large sums of money. If we come in before the decision to establish this machinery is made, we shall have a say in establishing it, and indeed it could not be established unless we—that is to say, Parliament here—agreed on how best to do so. And the same applies to any further step that may be proposed in the direction of what some might call a Federation, but which I would call a Community—and there is here a real difference and not a mere distinction which I have not the time to enlarge on now.

I believe, in any case, that if we join we shall be among the foremost—among the first—in urging the completion of a union on democratic lines, because it will be so much in the interest of everybody to complete it. But the point I am making—or perhaps labouring—is that such completion could only be accomplished with the consent of the British Parliament. In other words, there is simply no question of our being, as a nation, forced into some Federation against our will. For it will in any case not be a Federation of the old-fashioned type, nor shall we participate unless we are convinced that to do so would be in our own national interest.

Mr. Enoch Powell, as we know, spends much of his time nowadays proving, apparently to his own satisfaction, that British entry into the European Economic Community—for which we may note in passing that he voted in principle in 1967—would supress the "individuality" and "personality" of the British nation … in a community of which the United Kingdom would be permanently a minority. Those are his words as expressed in The Times yesterday. If Mr. Powell really thinks that we are going to become non-British and, as it were, foreign by combining with neighbouring democracies on the Continent for certain evidently common purposes, he is not a patriot but a timorous defeatist. Does he really think that this great nation, largely responsible for the defeat of Hitler, is going to shed its national characteristics because it joins in a venture designed primarily to prevent the resurgence of old European feuds and make the voice of Europe once again heard in the world? Of course we must respect the Six's interests—and they ours: that is what the present negotiation is about. But to try to terrify our people by suggesting that, if we joined, we should always be in a minority, bossed about by aliens, when in point of fact we should probably normally be in a majority is, I am afraid, only typical of a politician with an axe to grind.

The other aspect of the phrase, "political union"; namely, closer integration of foreign and defence policies, is so obviously necessary (whether we join the European Economic Community or not) that it is difficult to see why even our nationalists should disapprove of it. Faced with a very dangerous situation if the Americans should withdraw their troops from Europe, or even substantially reduce them, the Western European democracies—if indeed they are to remain democracies—will have to streamline their conventional defences and no doubt consider what, if any, their collective nuclear effort should be as well. Besides, if they are to have any influence on world events—for instance, in the Middle East—they will have increasingly to speak with one voice within the general framework of the Atlantic Alliance.

There is only one way of starting this process up if we really want to do so. It is to replace the existing rather useless machinery for periodical meetings of the Ministers of Foreign Affairs of the Six—already referred to, I think, by the noble Earl, Lord Jellicoe—followed by a day's discussion with the Ministers of the Four, by a workmanlike system, preferably based on the Western European Union, or on an enlarged W.E.U. equipped with an independent secretariat, similar in some ways, to the United Nations secretariat, and an independent political commission. This would in no way be a supranational system—and I beg people to believe that—but its mere existence would ensure that at least there was some body, some organ, in which the great problems of foreign affairs and defence were examined from the point of view of the group, and not from that of various entirely independent nation Stases. Later—this would be a more significant step, of course—there could be weighted majority voting in the Committee of Ministers in certain defined spheres, such as the standardisation of armaments. Why not? Such a joint obligation would be entirely fair to all, and would in any case be the only way—I am sure it would be the only way—ever to standardise anything.

This is not just idle theorising. Proposals of the kind I have indicated are, I assure your Lordships, a vital necessity. The whole future of Europe is now in the balance. All the great strength of the Soviet Union—and I say this in spite of the view of the noble Lord, Lord Chalfont—is, for obvious reasons, now deployed against the extension of the E.E.C. and the emergence of anything like a Political Community in Europe. If we go into a European security conference, as is now always proposed, as completely separate nations, nation-states, the Russians will undoubtedly exploit our divisions. What we must have, therefore, is not a series of Ostpolitiks, but one considered Ostpolitik. This, I am sure, is what Herr Willy Brandt, for whom I have great admiration, wants, because, in default of Western unity, his whole present policy is likely to fall to the ground. But how can we arrive at any common policy with these 18th century nationalist machines now at our present disposal? What we want is, surely, what Mr. Rippon has already called a Westpolitik. My Lords, divided we fall.

Speaking recently in the French National Assembly (this may be of certain interest to your Lordships) on the desirability of the French Government's taking some initiative in the direction of greater political unity, M. Bernard Destremau, a Giscardien, a former Gaullist, now a member of the Liberal Group in the Western European Union Assembly, over which I have the honour to preside, expressed himself more or less as follows. It was not necessary, he said, to set up new organs for we already had ones that were perfectly adequate. The only one, however, which at the moment gave expression to a desire to establish a common defence and a political union was the Western European Union.

Certainly other schemes had been put forward, he said, by a body of high officials in Brussels. But if these were to advance at the pace of the economic organs, progress towards any political union would be very much too slow, if only for the reason that some of the countries applying for membership of the E.E.C., he thought, apparently had doubts about joining any Political and Defence Community. For this reason a Political Community of 10 might be (and I think he was right in saying this) much too cumbersome. He therefore asked M. Schumann, the French Minister for Foreign Affairs, whether he did not think that the Treaty of Paris of 1954, in which the United Kingdom, for the first time in its history (his words), had agreed a priori to commit herself to the Continent, provided a solid basis for strengthening the general cohesion of Europe. And I should add that M. Destremau is one of the 250-odd French Parliamentarians—that is to say, Senators and Deputies—who have now come out in favour of the acceptance by the French Government of something like an Independent Political Commission, for so long advocated by my old organisation, Britain and Europe.

To this, M. Schumann replied that, while he was all in favour of Britain's joining the Common Market, "as it was", he did not believe that "two rival communities" should be set up in Europe. Criticising this attitude during the W.E.U. debate, I said that we could only conclude that, in the opinion of the French Government, if the Western European Union was useful it was only because it was in no way a "rival" of the E.E.C. If, however, it did anything, then it would presumably be such a rival. Consequently, the evident intention of the French Government at the moment was that, if possible, Western European Union should do nothing at all—and this at a time when there had never been greater need for it.

If we examine Mr. Schumann's attitude a little further we see that in his speech to the French National Assembly of November 5 last he made great play with the statement of Mr. Harold Wilson—repeated, he said, many times—that British candidature for membership of the E.E.C. and the prospects of forming any European super-State were mutually exclusive. This was to prove, of course, that nothing further than the report of the Davignon Committee could possibly be accepted by any British Government. But the point is that we could, and, as I have always said, certainly should, go further than this pretty useless system of consultation without the slightest prospect of setting up any super-State. I repeat that. Our present silence on this subject is thus being used by those, more especially in France, I am afraid, who are simply disinclined at the present time to make any real progress towards the harmonisation of the foreign policies of Western Europe or the standardisation of its defences.

Nobody could describe M. Destremau as a starry-eyed idealist. Like myself, he is an ex-diplomatist; he is also an undoubted French patriot and a hardworking and practical Deputy. The same might well be said of the 250 French Parliamentarians who signed the resolution to which I have referred. The ideas contained in it do not, admittedly, for the moment, seem to appeal to the French Government—or (shall we say?) to those members of the French Government who share the views of M. Michel Debrè. But what I cannot see is why our own Government should not make these proposals, or something like them, their own. If they did, it would certainly not, I assure them, affect unfavourably their chances of getting the Six to agree to a suitable formula for our entry into the E.E.C. On the contrary, it would create a widespread impression that we are not after all seeking admission to the Community with the secret intention of sabotaging the Common Market from within—the famous Trojan Horse. So I would venture to ask the Government to let us know whether, in principle, they favour some strengthening of the W.E.U. on the lines suggested; and if not, what their reasons are for rejecting that suggestion.

My Lords, I should like to make one final observation. One or two worried Members of Parliament, on both sides of the House, have recently said to me: "You know, I personally am quite convinced, after long and anxious thought, that it would be in the interests of this country, to say nothing of the interests of world peace, for us to join the E.E.C. if a reasonable formula could be worked out regarding our contribution to the Central Agricultural Fund, the position of New Zealand, the Commonwealth sugar producers, and 'low wage' textile exporting countries, as with good will it probably can be. But I simply could not do so if I believed that a large majority of my constituents were opposed to it." To such Members I have replied that this is an entirely comprehensible standpoint, but that I should hope that, if they really felt deeply that the Government's policy was right, they would support it and risk subsequent defeat at the polls; and quite likely, if they stuck to their guns and explained their reasons frankly and fully to their electors, they would be re-elected all the same.

For, my Lords—and this is really my final thought—in foreign affairs the voice of the people is by no means always right. Most people would now admit that our failure to react against the Nazi occupation of the Rhineland in 1936 was a far more important cause of the Second World War than even Munich, in 1938. Yet there is little doubt, I should say, that if a Gallup Poll had been taken in 1936 about 90 per cent. of the people would have opposed any vigorous reaction, just as a similiar proportion, I should have said, would have voted for the Munich settlement as well.

There is also the simple thought that when France and the other members of the Community signed the Treaty of Rome there was no question of a referendum. If there had been, it is most likely that at least one important country would have come out, by a large majority, against the whole idea of a Common Market, which of course would then have been stillborn. But now, if we had a referendum in any country of the Six on the question whether the people wished to withdraw from their obligations under the Treaty, there would be an enormous majority against any such suggestion—even among the Communists. This fact alone should induce us to reject such superficially attractive schemes as that now put forward by Mr. Anthony Wedgwood Benn.

Whatever your Lordships may think of these arguments, I would ask you to reflect on the dreadful dangers of any refusal to join the Common Market in 1971, even though a reasonable formula had been worked out by Her Majesty's Government, on the ground that public opinion was opposed to it. For this might have, and probably would have, the gravest effects on the world balance of power and thus on the prospects of a peaceful future for ourselves and our children.

But, my Lords, it is not in the role of Cassandra that I wish to conclude my remarks this afternoon. On the contrary, I think that, with luck, we are on the edge of a great breakthrough in Western Europe. Given inspired leadership—and it will certainly have to be inspired leadership—we may well look back on the coming months as those in which Britain took the decision to embark on a wider and a truer democracy, perfectly consonant with increased regionalism and political devolution at home and abroad. In that very act she will shake off the introspective and cynical mood that has plagued her since the war and once again, "mewing her mighty youth", as Milton said, come forward as a model for other peoples and a willing partner in what is likely to be the most promising and constructive enterprise of our modern times.

My Lords, we should set our sights high, and, as was suggested by the noble Earl, Lord Jellicoe, in his remarkable speech, "greet the unknown with a cheer".

4.34 p.m.

LORD SHERFIELD

My Lords, I venture to intervene briefly in this debate as it is nearly four years since I last spoke in the House on this subject, at the outset of the second series of Common Market negotiations. I refer to my previous speech only in order to say that, slightly to my surprise, my few remarks to-day will be consistent with it. I then welcomed the start of the 1967 negotiations though I thought they had perhaps rather little hope of success. Equally I welcome the opening of series number three, which obviously has a much better chance of ending in an agreement.

It is often said that the alternative to joining the Common Market is not to join it; but four years ago there were other alternative policies, some of which had not then been fully studied or explored. At that time there were still those who felt that the Commonwealth could provide the large and expanding market which we need, but it is surely clear that while Commonwealth trade remains of great importance to us it is not of itself enough, and that Commonwealth preferences are a steadily diminishing asset.

Among alternatives, the concept of a North Atlantic free trade area was canvassed and enjoyed a good deal of support in principle. Since that time a lot of good work has been done by the Atlantic Trade Study and other individuals and groups on the implications of a North Atlantic free trade area, and indeed of other proposals based on free trade area principles, but it is fair to say that nothing very concrete in the way of a policy has emerged from those studies, if only because of the difficulty of defining a particular free trade area, whether in terms of geography or of the range of goods and commodities to be included. Should Japan be excluded or included? Should the area be restricted to industrial goods or should it also include agricultural commodities? I do not say that these questions are unanswerable, but after much research the answers are still far from clear.

Whatever the merits of these proposals, (and a multilateral free trade area, if one were practicable, would probably suit this country best) they have not, in spite of some distinguished academic advocacy, aroused any strong public support or political interest: not in the United States of America, from which, if there was to be any prospect of progress, the initiative would have to come; not in Canada; certainly not in Europe; not in this country and, indeed, not in this House. It may be that in due course greater support will develop for free trade area ideas. A multilateral free trade area could, in principle, include the European Common Market, whether or not the United Kingdom had joined it. But it seems to me that this possibility lies rather far in the future and that we cannot stay out of the European Community, waiting for that day to come.

Then, again, four years ago it was widely held that British industry did not need the stimulus or the opportunity of a wider market in order to improve its efficiency and enable the country to achieve an acceptable rate of economic growth. I still think that, in theory, that contention was correct, but it has not proved to be the case in practice, for in recent years we have continued to lag even further behind our principal industrial competitors, with the result that we have suffered much more than they have from the general inflation.

So I conclude that in this series of negotiations we are confronted with a straight choice: to join, or not to join—to go in or—to go it alone. As between these alternatives the advantages of joining seem to me to have increased and not diminished with the passage of time. One must, of course, repeat the qualification, "if fair, acceptable terms can be negotiated"; but what is negotiable and what is acceptable can be judged only at the time when the final deal is settled and recommended by the Government to Parliament.

It is perhaps natural that the nearer the prospect of membership, the stronger the opposition to joining becomes. As the noble Lord, Lord Gladwyn, said, some of the opposition is founded on principle, and those who hold this view will not easily be persuaded; but much of the opposition is rooted in prejudice or in deep misunderstanding, and is perhaps to be taken the more seriously on that account. It is, I know, difficult for a Government to deal adequately with popular prejudice in the middle of delicate negotiations, which make it impracticable to conduct a vigorous and specific propaganda campaign, but it does mean that misconceptions get a rather free run. A sympathetic European observer of our affairs was amused recently by the following answer given in a radio quiz programme on the Common Market: I suppose we ought to join, but it will turn us all into foreigners, won't it? It is one of the most deep-rooted misconceptions that membership will in some way cause us to lose our national identity, will impair our sovereignty, will weaken our institutions, or injure our heritage in some way or another. As the noble Earl, Lord Jellicoe, said, this is demonstrably untrue in the case of every Common Market country, notably and most emphatically in the case of France.

Nor, on a related point, is membership likely, in my view, to injure our relations with the United States. It is true that in the United States the first strong and insistent general support for our membership has largely evaporated and that the American attitude has become more ambivalent with the passage of time. It is also true that our membership will add to the strains in relations between North America and Europe which already arise on a number of economic issues. But I do not accept that this is a serious obstacle to our membership, or that our membership will impair the links which bind the United States and Britain and which are deeply anchored in our common history.

In conclusion, I should like to make a short point on each of two very large issues. On the question of the Common Agricultural Policy, it has been urged that in view of its long term effect on world trade in agricultural commodities it should be renegotiated before any agreement is reached on the enlargement of the Community. I believe this to be an unrealistic view. The Common Agricultural Policy is generally recognised to have been largely misconceived, and it will fail in time through its own inherent weaknesses. It is surely better reviewed by a Community enlarged by, among others, the United Kingdom and Denmark than in the course of the present negotiations, even if this were practicable.

Then there is the question of monetary policy. This need not be imported into the current negotiations. It is a long-term question on which at present there is considerable disagreement. It may be that Her Majesty's Government will be asked to subscribe to whatever the Six decide to do about the Werner Report, but that is unlikely at this stage to amount to very much. If a Common Market Government, the French Government, in particular, seek to introduce this problem as a substantive matter in the discussions, I think it will be indicative of the extent to which they want to have us in, or rather keep us out.

Though they cannot, of course, say what they are, I imagine that by now the Government have a pretty good idea of the limits within which an agreement can be reached on the matters so far introduced into the negotiations and that the margin between what is acceptable or not is becoming narrowed. There is a sense in which the Government are in the hands of those on the other side of the negotiating table. No one expects charity in international discussions, but in the end the issue will turn on whether they want us as a partner or not. It is my hope that the protestations of good will that have been made by our prospective partners, and the strength of the collective political will to which the noble Earl, Lord Jellicoe, referred, will turn out to be well-founded.

4.45 p.m.

LORD SHINWELL

My Lords, it is a high distinction to follow the noble Lord. Lord Sherfield. Many years ago, when I was associated with an Administration, his name, his influence and his multifarious activities in the diplomatic sphere were familiar to me. He was in those days a great public servant. But he will forgive me if, after listening to his speech and the succession of others preceding his advocating British entry into the Common market, I find myself in fundamental disagreement. I was under the impression that the noble Lord, Lord Sherfield, a few years ago was somewhat sceptical about the desirability of British entry into the Common Market. I do not doubt his sincerity in the least. He is entitled to engage in a transformation of the kind suggested by the speech he has just delivered.

It is not unusual—there have been many contradictions, apologies, transformations, political somersaults and wriggles in the last seven years since the subject of British entry into the E.E.C. assumed prominence. To take an example—I might almost say a classic example—there is the speech of the noble Lord, Lord Gladwyn, who is, I suppose, the high priest of the Common marketeers. He referred to something that happened several years ago and ventured the opinion that if the general public in the United Kingdom had been asked their views about association with a wider Europe they would have accepted it gladly.

LORD GLADWYN

My Lords, I am sorry to interrupt the noble Lord, but I said nothing of the kind.

LORD SHINWELL

That certainly was not the attitude, the position, of the noble Lord?

LORD GLADWYN

Quite right.

LORD SHINWELL

In preparation for this debate I ventured to indulge in some research. Research is desirable, because it enables one to get at the facts, not starry-eyed idealism, not astrology, not forecasts about the future as far away as the 1980's and even further afield; just the facts, precise, definite, clear-cut statements indicating one's views. I therefore venture to explain the transformation that has come about in the case of the noble Lord, Lord Gladwyn. A few years ago, not so very long ago, he was interviewed by a prominent industrial publication on the subject of his views on the Common Market. This is what he said: The political revolution which would begin by going into Europe is, to my mind, far more important, for example, than the economic revolution. Quite simply, if we accept the Treaty of Rome we shall gradually surrender the right to make economic decisions decisively affecting our own economy to an organisation or organisations which we shall be able to influence strongly but not dominate. Membership of the Common Market for Britain would mean that, in ten years' time"— just about this time — or so, we might well be a member of a confederation, perhaps with a common currency and no doubt with a fairly free flow of labour and capital in which major economic and social decisions affecting our lives would be taken elsewhere than at Westminster".

LORD GLADWYN

My Lords, may I say, in interrupting the noble Lord once again, that I think that was a very good statement of mine, and I entirely abide by it.

LORD SHINWELL

My Lords, all I have to say is that this is a remarkable transformation.

LORD GLADWYN

It is not a transformation at all.

LORD SHINWELL

My Lords, of course everyone has the right to change his mind. But, then, who are we to believe, and when are we to believe them? If the noble Lord, Lord Gladwyn, was right several years ago, obviously he is wrong now. Perhaps he was wrong then and is right now. But certainly he is not the type of person to whom the general public of the United Kingdom should pay very much heed. I would venture to say that in the course—

LORD BOOTHBY

My Lords, if the noble Lord, Lord Shinwell, would forgive me for saying so, I think that the noble Lord, Lord Gladwyn, is saying exactly the same thing to-day as he said ten years ago.

LORD SHINWELL

My Lords, I am bound to say that it seems rather different to me. However, I have ventured to put it before your Lordships' House and noble Lords can draw their own conclusions. But the remarkable feature of the debate, so far as it has gone, is to indicate a complete disregard of public opinion. The noble Lord, Lord Gladwyn, spoke of the voice of the people not always being right. That may be so. But the voice of Members of Parliament, or even of noble Lords, will not always be right or wise. What are we to do in such circumstances? Are we to disregard completely, wholeheartedly, almost enthusiastically, the views of the electors in the United Kingdom? Are they to have no voice in the decision, in the final conclusion reached about whether or not we should enter the Common Market?

If the general public are to have a voice, by what means are we to ascertain their views? Several statements have been made on this aspect of the problem. Take the example of the Prime Minister: he has made it abundantly clear from time to time that no Government would dare venture into the Common Market without regard to the interests of the nation and of our people. How do we interpret that statement? Does it mean that we have to rely on a decision taken, in the first instance, by two Front Benches in collaboration, and then by a Parliament which is itself divided, ignoring completely the opinion of the general public? That is the first point I wish to make. At the end of this debate the Minister speaking on behalf of the Government may perhaps venture to express an opinion on whether or not the general public are to be at any time I consulted.

Despite the fact that the original idea of entering the Common Market was based on economic, and to some extent on social, considerations, there can be no question but that there has been a departure from the original idea. For example, in the course of the speeches that we have just heard, reference has been made to federalisation. On the other hand, it has been denied by no less a person than Mr. Harold Wilson that it was the intention of the previous Administration to accept anything in the nature of a federal structure. Mr. George Thomson, who was in charge of negotiations on behalf of the previous Administration, on one occasion said that the object of Her Majesty's Government was political unification. A few months later, he stated quite explicitly that it was not the intention of the Government to embark on anything pertaining to a federal structure.

These contradictory statements create confusion in the mind of the general public. We want much more than the superficial statements that have been made, if I may say so with great respect, by both Front Benches this afternoon. We want precision, something definite, and a little less astrology. Even my noble friend Lord Chalfont ventured some time ago, in a letter that he sent to somebody who wrote to him, to say: People who pretend to be able to forecast the cost of British entry into the Common Market at the end of a period which, allowing for negotiations for entry plus a transitional period, would take us into the mid 'seventies, cannot be taken seriously. Of course these forecasts cannot be taken seriously. Who can tell what is going to happen in the 'eighties, or even in the latter part of the 'seventies? In fact, the case for entering the Common Market has been based almost exclusively on assumptions and on acts of faith.

On the other hand, those of us who have opposed entry into the Common Market are regarded as being emotional. Indeed, it is sometimes said of us that we are hysterical. It was just now said by the noble Lord, Lord Sherfield, that we are prejudiced, that we do not like foreigners. That is a lot of rubbish; it is a lot of nonsense. We have no hatred of the foreigner—of the French, the Germans, the Dutch, the Belgians, or the Luxembourgers: of course not. I can put it in another fashion. A trading country such as we are must trade with every country in the world—in Europe and elsewhere. That has been our tradition for centuries. It is for this country, the United Kingdom, to enter into collaboration with other countries on matters associated with technology and a variety of other matters of mutual interest. To that I take no exception whatever. But when we are asked to accept the provisions of the Treaty of Rome, the final conclusion of which is political integration—a federal structure, whereby this Parliament of ours is completely dominated by, and must accept, decisions taken either in Brussels, in Bonn, in Paris or elsewhere in Europe—I venture to say to noble Lords that it is not a proposition which is agreeable to the vast majority of people in this country.

I do not want to occupy too much of your Lordships' time, but in the course of his speech to the Commonwealth Conference the Prime Minister made a statement which I venture to think will prove interesting and from which I propose to read an extract. Speaking of the Commonwealth as it now is, he said: To me, it is a body of friends brought together by history, free to come and go as they wish, to contribute as much or as little as they can, but always concerned, as old friends are, with one another's welfare. I accept this mostly mixed, almost casual association of friends, concerned with mutual trade, interested in world affairs, co-operating sometimes at the United Nations, and sometimes in disagreement. That I accept. That is our conception of the Commonwealth—a fair and square definition. But let us consider what we are asked to accept as an alternative to relying on our Commonwealth associations—the Treaty of Rome which, once we accept it, becomes irrevocable, rigid, firm, definite, precise and capable of domination; officered by a non-democratic Commission and a Council of Ministers not elected. If that is the situation, I prefer the Commonwealth as it is.

It has been suggested by preceding speakers in the debate that we have no future. Indeed, my noble friend Lord Chalfont, though he argued about conditions which might not be acceptable, proceeded to argue that we really had no future. The noble Lord, Lord Gladwyn, would argue that we have no diplomatic future, and that we really do not count. In other words, the cry is "Stinking fish!"; and that this country is finished. I venture to say that if that is the conviction of some noble Lords, I cannot see why they trouble about conditions at all. If I really believed that it was essential that we should enter the Common Market because we have no future; that Commonwealth preferences are diminishing; that our associations with our friends in Africa and in the old Commonwealth are no longer of value and have no validity; that we have no influence in the world (this despite the fact that we are one of the four Powers, are influential in the Security Council, and are still something of a military Power, and our forces are asked to go to various parts of the world in order to quell disorder and the like, and we are in association with the North Atlantic Treaty Organisation and have relations with the United States of America) I should not worry about some problem associated with Commonwealth sugar; nor worry very much about the price of food, nor concern myself unduly about the future of New Zealand. I would put British interests first, economic and political, whatever the consequences, rather than look forward to a dismal, grim, gloomy future for this country and our people.

LORD CHALFONT

My Lords, will the noble Lord forgive me? I forebore to interrupt before because the House enjoys his flights of eloquence so much. However, I should like to go on record as saying that I, for one, do not believe that this country has no future. I should not like the House to think that the noble Lord is quoting me accurately. I believe this country has a great future, as it has had a great past, but I simply believe that its future lies in a united Europe.

LORD SHINWELL

My Lords, that seems to me to be a contradiction in terms: to say that this country has a great future but only as an ally of Europe. I am surprised at my noble friend. I have always thought of him as an intelligent person; I shall have to change my mind. That is no sort of argument even to put before noble Lords.

I want to come to a point which I think is of some substance. The noble Earl, Lord Jellicoe, said something that really astonished me, and I jotted it down. He said, "Nobody in the E.E.C. wants to abandon the Common Market". That is what he said. That was used as an argument in support of his advocacy of British entry. Of course nobody in the E.E.C. wants to abandon the Common Market, for the simple reason that once you enter you cannot leave. I do not know whether the noble Earl thought about that. The provisions of the Treaty of Rome provide that once a country becomes a member of the Community it is irrevocable. So what was the point of the noble Earl arguing in support of his advocacy of British entry that nobody in the E.E.C. wants to abandon it? Of course they do not. They cannot. They are in, and they cannot get out. I do not want this country to be placed in a straitjacket, in fetters, socially, industrially and, in particular, politically.

Finally, I want to say that I know that I am almost like a voice crying in the wilderness in your Lordships' House. Well, that is all right, but I am not a voice crying in the wilderness outside. Please take note of that—not that I take credit for it; far from it! I simply recognise the fact. All I ask is that before we come to a final and what is bound to be an irrevocable decision, the people of this country should be consulted, in whatever fashion the Government desire. The noble Lord, Lord Gladwyn, stated a conversation he had with an M.P. He was right in not disclosing the name; it would almost have been: a libel. He said that an M.P. agreed with the Government about entry into the Common Market, but his constituents did not agree with him, so the Member was told, "Never mind about your constituents; just take the chance of being defeated at the next election." I have never known an M.P. like that in all my life. What nonsense they are talking!

I declare my interest. I have been described in all sorts of ways. As an "ancient Briton" A Briton, yes; but not so ancient, if I may quote the Scriptures: With the ancient is wisdom; And in length of days understanding". I rely on that. "Super patriot". Do not worry about that. I remember reading Dr. Johnson a long time ago. Do not worry about patriotism; I simply believe in Britain. I think we have a future. Some time ago the noble Lord, Lord Plowden, ventured to say that he and the noble Lord, Lord Crowther, on one occasion wrote to The Times predicting that our export trade would so diminish that it would be disastrous. It is at column 1095 of Vol. 308 of the OFFICIAL REPORT; and if any noble Lord cares to look it up, he will find that I have stated it accurately. In the last few years we have discovered that our exports have reached unprecedented heights. How can we rely on these industrial tycoons and economists?

There is going to be a lot of controversy about this subject. Read The Times this morning, and read yesterday's issue; the controversy between two eminent economists arising out the Werner Report on a common currency. One says that a common currency is disastrous for us, for employment; no relief for the depressed areas, and some completely neglected. The other says, "I do not agree entirely with the views of my colleague of another university. But I myself have some doubts. Let us not proceed too rapidly in the direction of the common currency." This controversy is rife throughout the whole country. It will increase until such time as Her Majesty's Government are forced to the conclusion that the electors should be consulted.

As for my noble friends, I ask them to take note of what the Leader of the Labour Party has said in repeating the words of the late Hugh Gaitskell at a memorable Labour Party Conference. He said, "Whether we go in or not, this country has got a future. There will be no disaster if we remain out." That is what Harold Wilson repeated. That is the answer to those who say we must go in, that it is inevitable that we should go in. No; the alternative is not a North Atlantic Organisation associated with EFTA. The alternative is Britain strong, reliant, standing on its own feet; ready to play its part in the world, in trade, even in defence, and in diplomatic affairs; making, if not a substantial defence contribution, a moral contribution, along with Commonwealth countries, and even without the Commonwealth countries if they decide to abandon the Commonwealth.

That is my conception of a future Britain, and because I believe that sincerely and wholeheartedly I will not accept entry into the Common Market. I shall sit down after saying this. I have no quarrel with Germany or France, in spite of the defection of France in two wars. I do not quarrel with the Hollanders, the Belgians or the Luxembourgers. I have no quarrel with the Common Market. I just want this country to have nothing to do with it.

5.11 p.m.

BARONESS ELLIOT OF HARWOOD

My Lords, your Lordships have listened to a remarkable speech from the noble Lord, Lord Shinwell, who always makes remarkable speeches. You will shortly be listening to a remarkable speech from the noble Lord, Lord George-Brown, who also makes remarkable speeches. I do not know how I have become sandwiched in the middle. I discovered my position in the order of speaking only when I came into the House this afternoon. Nevertheless, as I propose to make a short contribution on lines slightly different from what I heard from the noble Lord, Lord Shinwell, and from what I think the noble Lord, Lord George-Brown, is going to say, I shall try to be the meat in this sandwich between the two of them, because I want to talk about the Common Market and agriculture.

I do not agree with the noble Lord, Lord Shinwell, that because Britain in Europe will be a very strong power and influence, we are not also going to be a very strong power and influence in relation to the other Commonwealth countries. We have heard from the noble Earl, Lord Jellicoe, that the Commonwealth countries are in favour of association with the Common Market, so I do not believe that that argument has any force at all. Furthermore, the noble Lord said that those of us who believe in the Common Market are suggesting that the United Kingdom cannot play its part in the world, and that this is a feeble effort to rehabilitate this country. I do not agree with that, because I believe strongly in the future of this country. We have a tremendous future; but this country must be pointed in the right direction, which is towards Europe.

Speaking as a farmer, I should like to say something about agriculture and the markets which we need. There is no doubt at all that agriculture has been the most difficult problem for the Six. I agree with the noble Lord, Lord Sheffield, that the policy will have to change, but it will be much better if we are there to influence the change. I do not see why we should not be, and I do not see why our agriculture should not be as good as, and indeed better than, the agriculture of Europe. In France and Germany, agriculture still employs a larger proportion of the working population than is the case in the United Kingdom. The farmers and farm workers in Europe are just as hard to please and as tough as we are in Britain.

We in Britain have the most efficient agricultural industry in Europe. We have a highly mechanised and highly efficient form of agriculture. What we need is a larger market for our produce. We are faced, as everybody else is faced, with rising costs, and in order to meet them we must have larger markets in which to sell. I am not quite sure why it is—I do not know whether it is because of increased imports or whether people are eating differently—but at the present moment it is more difficult for us to sell our produce in this country, and Europe could provide us with a larger market. Any of your Lordships who are producers of mutton or beef will know that when we are able to export to France, let us say, word gets around and there is a great rush of animals to be sold on the market. But, suddenly—and I never have any warning of this—the European market closes down, prices drop and the produce has to find other outlets. If we were actively engaged in agriculture in the Common Market, we should not be subject to such violent changes and, what is more, we should to some extent be able to influence what other countries in the Common Market do.

At present, food prices in this country are lower than those in Europe. In many cases we are selling a long way below the cost of production, and the difference is made up by guaranteed prices. In some instances, we are selling at prices which are the same as they were ten years ago, although our costs have multiplied about ten times. That is a formidable fact. But if we could take advantage of a greater outlet for our produce, it would solve a great many of our problems. I should like the Government to consider very carefully assuring the British agricultural industry that their interests will be considered, as well as the interests of the great Industrialists in this country. I am in favour of going into the Common Market, but we must not have a policy which is going to ignore our agricultural industry and which thinks only in terms of the big industries throughout the country. I hope that the Minister will give us some assurance on that point when he replies.

In a recent pamphlet on the concept of the Common Market, I read the following: In 1958 we in Britain were better off per head of the population than any country in the Common Market. Now we are worse off than any except Italy. That is a quotation from one of the publications of the European Movement. That is obviously one reason why the Common Market countries are very anxious to continue their association, and it is surely up to us to see that there are the same possibilities for us. We cannot get a great market in the Commonwealth countries, since they are not as rich as the European countries. In the United States we are competing against very formidable tariffs and enormous production lines, so it is very difficult to sell more there. We should go into Europe and seek our fortune there, in order to increase our selling power. I should like to end with a quotation from a White Paper published in 1967. It stated: We believe that Europe can emerge as a community expressing its own point of view, exercising influence in world affairs, not only in the commercial and economic fields but also in the political and defence fields. We shall play our full part in the process. It is the realisation of this European potential which has above all aroused our desire to join the Community. As a member we shall accept whatever responsibilities the evolving Community may decide to assume, and we shall join as eagerly as other members in creating new opportunities for the expression of European unity. Those words came from Lord George-Brown in 1967, and I agree with them.

I think it is a remarkable fact that we now have a new Government equally as anxious to join the Common Market as were the last Government. In reply to the view expressed by the noble Lord, Lord Shinwell, that the public is not interested, I can only say that during the last General Election I made a considerable number of speeches in certain parts of the country and I did not find that people were opposed to our negotiating to enter the Common Market. My Lords, I believe that this is a great opportunity. There our fortunes lie. With courage, enterprise and know-how, I see no reason at all why we should not play our part and be a great power for good in the Common Market.

5.21 p.m.

LORD GEORGE-BROWN

My Lords, the noble Baroness who has just spoken, with whom I agreed absolutely wholeheartedly in everything she said (perhaps rather more when she was agreeing with me than at the other times), seemed a little uncertain at the beginning of her speech whether she relished the position of being, as she put it, the meat in the middle of the sandwich. May I tell her that there is nobody I would rather have cushioning me than the noble Baroness. May I say, before I get into the argument, how grateful I was, and how nice it was, to hear not only what the noble Baroness kindly had to say about what I said in 1967 but also the references which the noble Earl, Lord Jellicoe, and my noble friend Lord Chalfont were kind enough to make about my efforts then. It is always encouraging, especially when the Fates have dealt rather roughly with one in the meantime, to have by hindsight the thought that one might have been right if only people had listened.

One of the problems in any discussion about this subject in any forum in this country is that one is speaking to two audiences at the same time. This, of course, is where the opponents of entry have it so easy. They have to speak to only one audience, and that is the most impressionable, the most prejudiced, of all—those who are against making any change in their present situation at home. The rest of us, in trying to counter their arguments, and in trying to put our own (as we like to think of them) positive arguments, have not only to weigh the effect we might have on our people here; we have, of course, to balance how we put it to our people here with the effect it might have on highly critical and highly suspicious audiences overseas. It is unhappily true that the most telling arguments for our people can be the most off-putting arguments for the audience overseas, some of whom, I repeat, want to be suspicious of our motives. This makes the task of those who, in advance of going in, want to put the case for going in that much more difficult.

If I may say so to the noble Lord, Lord Shinwell, and to others who think the way he does about consulting the British public, one of the problems about doing so, if it is consultation in advance of a decision, is again how you would frame the questions and how you would frame the supporting arguments in such a way that not only would you adequately inform them of what are called the facts where those facts are ascertainable and not hypothetical (and, if I may interpolate, the word "fact" is the most misleading thing of all, because the fact for the most part is what one wants to believe the fact to be) but how you would present all the arguments about the various different sets of circumstances that might arise. You might end up by persuading your own people but find that nobody else is thereafter going to go on with the bargain; or you may end up by having persuaded the others of your sincerity and determination but having put it so ineffectually to your own people that you get the wrong decision here at home.

Of course, none of us wants the responsibility of making a decision like this, whether it be while we sat in the other place or while we sit here, without carrying our people with us. But the more I think about it, with respect, the more I come to the conclusion that at the end of the day the decision will have to be made where it always has been made in this country since we founded our Parliamentary democracy: it will have to be made in Parliament. Everybody (those who are elected and all the rest of us who, in a way, respond to that, too) will have to stand up and, as they say, "carry the can" for the decision which is then made, and the people will make their judgment about that decision. Of course, it is not in fact true, with respect—and some people who do their homework and their research before the debate might carry their research a little bit further in this respect—that once in you cannot get out. God Bless my soul! General de Gaulle made it absolutely painfully and abundantly clear to the other side on one rather painful occasion (there was more than one, but there is one I am thinking of particularly now) that he could and would unless they quickly came to heel, and come to heel they did rather than have him get out. So that is not true; and while I would not advocate that we should go in thinking of coming out—this is one of the difficulties I was talking about just now in putting the argument clearly—it really is, if I may say so, misrepresenting it to say that this is so final that thereafter we shall be wholly committed to what other people want us to do.

It seems to me (and, as I listened to the debate, I thought to everybody else; I am saying nothing new here) that there are two major considerations that the British people and our colleagues on the Continent have to take into account in making this, what is essentially a two-way argument. The first consideration is the economic consequences not only to us, if we are talking to the home audience, but to Europe—we are talking to a European audience, too—of our joining the Common Market with our fellow-applicants; and equally (and this is what the opponents seem to me always to leave out of account, though certainly the noble Lord, Lord Shinwell, approached it) the economic consequences of our not joining. As I shall hope to show in a moment, I think that the argument that 50 million people in these Islands can in fact economically go it alone seems to me to be such a crashing fallacy that I find it hard to believe how anybody can put it forward in this modern day and age knowing what industry requires, what commerce requires, what technological development requires.

So there are vast economic considerations in our not joining; and, with respect, I do not propose to examine greatly the question of our going it alone, although I will return to it in a moment. But if we did not join we should have to consider what other formation, what other grouping, we might john, and what the economic consequences to us would be of one or the other or all or each of them. The economic consequences, my Lords, as I am sure everybody here knows—I repeat, there is not much new that one can say—are both short-term and long-term, and they may not be the same. Indeed, they are not the same in the short-term as they will be in the long-term. In fact, the economic costs would tend, I suspect, to come heavier in the short-term: the economic advantages would tend to come greater in the long-term. This again, is one of the problems of putting the case: you can show fairly easily the immediate cost that arises—and there is no use denying it, it is a very considerable one—but then you have to assess the long-term advantages which flow from us sharing in the generally greater rate of economic growth from the effect on British industry released from a 22½ per cent. tariff against it. So there is a whole set of considerations which have to be taken into account. I repeat, some are short-term and some are long-term, but these are the first things one tries to measure.

As I shall try to support in a moment with argument, I still think that the economic consequences, while undoubtedly balanced, and while having to be supported by a certain act of faith, a certain belief that our country would respond to the challenge of joining, are on the side of our joining and are against our not joining.

Then there is the second argument to which noble Lords have referred in the debate to-day, and that is the political future that we envisage for this country: how we see this country exercising its political influence, and in what direction; for what purposes and with whom; the political future we envisage for Europe—for the whole of Western Europe for the moment and, optimistically, for the whole of Europe in the end—but certainly for Western Europe. We cannot avoid that.

Britain has never pursued a foreign policy wholly dictated by itself and the surrounding seas. Our foreign policy, however far back one tries to read to equip oneself for this, has always been conditioned—and if not conditioned, certainly coloured, though I would think "conditioned" is probably the right word—by the political developments we envisaged for the area of the world in which we are bound to live. And that means, of course, the Continent of which we are and have always been a member. We have had to consider the political developments in that Continent, how we wanted to see power controlled in that Continent, how we wanted to see relations between nations in that Continent with each other and what effect we wanted that Continent to be exercising elsewhere. So we have to consider the political consequences for ourselves of any of the possible courses of action; the political consequences for the Continent, and the effect it would have on ourselves if it went the wrong way. We have to consider the future relationships we want to have not only with Continental Powers—and I have too many recollections of that dinner in the Harcourt Room, with Mr. Khrushchev, reminding me that he bad done it once at Rapallo and that, if pushed hard, he reckoned he could do it alone again, to rule out entirely from my mind that the relationships between the Continental European Powers matter to us.

Then there is the relationship between European Powers and others, between the generality of smaller Powers in the world and the major Powers in the world. How are we going to see the world developments where there are major Powers? The noble Earl, Lord Jellicoe, has talked about the two that we have—and the third and the fourth we are likely to see jolly soon. How are we to see the future? Are we content that they should dominate, divide up and settle? And do we really believe that a Britain which is able to invent defence weapons and able to research, able possibly to develop but not able to produce, not able to find the money for supporting, for providing the vehicles or the carriers—how do we see such a development if we were trying to influence that alone?

These, I think, are the political consequences we must consider. They all seem to me to defeat any idea of "going it alone", just as I think the economic arguments defeat any idea of "going it alone". So one is forced, I repeat, to look at the other possibilities open to us. When this debate is held, whether in this House or in another place, or in the country outside, it seems to oscillate between economic and political arguments. Sometimes people are putting all their weight on economic arguments and sometimes on political arguments; and seldom do we try to balance the two. If I may be forgiven by those who are opponents of entry into the E.E.C., I would say, with deepest respect to them and with much affection for some of them, that their case is essentially and basically one of prejudice and suspicion.

It is all very well to say, "I don't hate any foreigners: I just want to have nothing to do with them." That is getting fairly near, if not to prejudice then certainly to suspicion; and it reminds me of that very great lady, Dame Florence Hancock, of the Transport and Workers' Union, who not long ago was one of the great figures of the trade union movement in this country and who after the war was attending her first international conference in Paris. She got into some difficulties there because she would not go through the entrance labelled "Etrangers." It was explained to her that she must do that because she was a foreigner, and Florence—who came from the South-West country—said most indignantly, "I am not a foreigner." Everybody else was a foreigner—even in Paris. So there is here a prejudice and a suspicion on which the case is based. We are all foreigners one to another, yet we all have much the same interests, and we have to see how we can make them work.

The same prejudice comes out in a speech which was made at the week-end by a gentleman who certainly ought to know better, and who I suspect does in fact know better, but whose present political outlook makes him pretend he does not. Having demolished all our coloured fellow citizens of the Commonwealth and elsewhere in the world, and having condemned them to all kinds of things outside our shores, he is now attacking the Continental peasantry. That very phrase which is adopted gives the game away. "You are second-class coloured citizens of the world. You are not really in our class, don't you know." Or, "You are a Continental peasant." And still these people go on saying they have no prejudices, no suspicions: that they are not against foreigners, but that they simply do not want to have much to do with them. Now I can understand the right honourable gentleman who made that speech at the weekend doing it (having spent a long time at that end of the corridor, I can understand the motives which led him to make it), but I am bound to say that I cannot understand an international Socialist lining up here with those who preach that kind of argument. I cannot think what happens to any international Socialist who is prepared to join in in that sort of way.

May I now say a word about the economic aspects, as I see them? It is very apparent, and I will not labour the point, that nobody is saying that the terms do not matter. We all accept that they do matter. At the end of the day maybe some of us would accept more stringent terms than others, but that will depend on certain other considerations, and nobody in this argument is saying that the terms do not matter. We all accept that they do; and the Governments of the Six and the Commission negotiators must be well aware of the very strong truth that lay behind Sir Con O'Neill's reminder to them the other day that such things as the length of the period of transition which we ask for, the level of the payments we must make during it and the provisions which will be made to handle the situation when we come through the first part of the transition phase and then move up to the higher level—these are critical decisions, critical to a favourable outcome.

They want us in: they want us in at least—as Mr. Wilson once put it—as much as we want to go in. We are essential to the development of the Community and essential to the building of an integrated Europe. They cannot do it alone. They must recognise that Sir Con O'Neill was speaking for all of us and not just putting forward a negotiating card; and had I still been the Minister his instructions would have been the same—that the terms they are willing to offer on these issues are absolutely critical if we are to carry public opinion, however you consult and however that opinion makes itself known. That support must be sufficient to enable us to take the decision to go in and it will decide our ability to be politically effective when we get in and, of course, the extent of the economic strength we can then bring to the Community. If they pitch the terms too high they may well make it impossible for us to go in; or, if they do not quite do that, they may well so weaken us that when we go in we shall not really bring economic strength to them.

I think that they must get the hang of this. I am sure they do; these are bargaining situations and we have all done negotiations in the past—nobody admits too much round the negotiating table, as I have said before. But I think there is every reason for us to say—and to say quite strongly, but without overstating it—that they really must understand this. At the same time as saying that (and I hope that this is now acceptable to everybody), I urge that we do not over-engage in facile and easily discountable exaggerations or unbalanced equations. A great many figures are being thrown into this which are rather easily discountable; they are too hypothetical for words; they leave out too many considerations that are self-evident; and they do not do any good to us or help our case. The people in Brussels are very able fellows; the Ministers in the Six, and their advisers, are very able people. They can do their sums; they can see whether the equation is unbalanced; they can see where we are "pushing in the kitchen table as well" in order to make up the sum. They assume that we can do our sums. Therefore, if we go on exaggerating, as many are doing today, there will be consequences in prices and balance of payments and in levies and so on. They do not think we are exaggerating because we cannot add up; they think we are exaggerating because we want to spoil the case. All this does our credibility and our sincerity a very great deal of harm and it introduces another element of prejudice and suspicion into the negotiations.

I can give a good example—at least it seems to me to be a good one. There is the argument about price increases that are bound to flow from our joining the Community, especially increases in the price of food. Here it is very difficult to get exact comparisons. I hear what people say in their speeches, I read what they write in their pamphlets and in the newspapers; and sometimes I get the impression that they think that every British worker is eating fillet steak and that every Continental worker is eating scrag end of lamb. It is either that, or I must be living in a particularly rough part of London. For what we pay for fillet steak on the occasions that we eat it is much more than the price that is quoted in these comparisons. It is difficult to be sure that you are comparing like with like in order to get at the price level of what people buy to eat.

I suspect that if you could compare like with like, you would find that the comparisons are by no means as bad from our point of view as it is sometimes alleged. Frenchmen eat good meat every now and again, too! Other people eat good meat. When I go around the Continent, I do not find all my fellow workers there starving all the time or eating the cheapest possible food; I find them enjoying jolly good food for their meals—and, of course, reducing the amount as the money runs out at the end of the week, before pay day comes. That happens in this country, too. The comparisons that are being made seem to me to be extraordinarily inexact—as possibly they may have to be. They also ignore the price increases that are happening here and are inevitable here.

The noble Baroness spoke as a farmer and referred to the system of farm prices support. Since I served with the great Tom Williams (as I like to think of him) in the days just after the war; and since during and before the war I was in the agricultural industry, I feel very much wedded to the 1947 Agriculture Act and to the system of price support for which Bob Hudson was responsible during the war and which was enshrined in that peace-time Act afterwards. But it is becoming increasingly clear to most of us that the clays of that particular system are numbered. Making up out of direct taxation what we were theoretically not charging the housewives, in order to pass it on to the farmers, was becoming the most expensive, the most unpoliceable and uncontrollable operation that one could devise.

I do not want to give any comfort to the present Minister of Agriculture, who is not high on my list of favourites; but the switch from that sort of farm support system to a levy system was becoming almost impossible to resist. One might be temperamentally against it and one might, out of sentiment and emotion, want it not to happen; but I become more and more aware that it must happen. So, once you go to a levy system, in or out of E.E.C., the direct price goes up. And the consequence is that, unless the Chancellor of the Exchequer is allowed to fiddle the books, indirect price—that is, the taxation subsidy—goes down. When we compare prices, we forget that the Continentals pay more directly across the counter, as we shall do under the levy system, whether we are in or out of the Common Market. They are paying less by way of taxes than we pay in order to hand our £300 million, think the figure is, to the farmers by way of compensating payment. So the comparisons have to take into account something which is inevitably going to happen here.

But these comparisons also ignore something which has always puzzled me, something which intelligent people do not seem to want to know. As anybody who has been in the Ministry of Agriculture or in any other economic Ministry will know, let alone anyone who has been responsible for once trying to operate a price control system, it is not true that the distributors and the retailers charge the cost to them of getting goods plus just the proper mark-up to cover their expenses. That is not what they do. They charge "what the market will bear"—and I put that phrase in quotes. They charge the housewife as much as they can get the housewife to pay. And that turns on the availability not just of beef or pork but of other supplies. It may be that there is room for squeezing margins; it may be that the mark-up cannot be quite so high if one is already charging what the market will bear. Then the supermarkets—I hesitate to mention the Co-op—the great distributors have to consider whether they can charge more in such a situation, or whether their mark-up will have to be rather lower. There are a whole lot of considerations which you cannot quantify but which exist and will exist. They make these comparisons inexact and very much weaken the case that the opponents put forward.

My noble friend Lord Shinwell was very scornful of what the noble Earl, Lord Jellicoe, had to say about nobody in the Common Market wanting to come out. That is where the argument about whether they were able to do so or not arose. I do not know much about the Governments in E.E.C. I know a bit about the trade unionists in the Common Market, and if what my colleagues and friends say is true, the trade unions in the Common Market have at least as good a research system as we have. They have very good liaison with the British T.U.C. through the I.C.F.T.U. and the Americans, and they would see how unfairly this is treating them. If nobody else wanted to come out, they would be arguing for coming out if it were working this way round. Trade union leaders there are as hard-headed as ours. I see my noble friend Lord Cooper of Stockton Heath in his place. He will go along with me on that point. The trade union membership in the Six is at least as militant as ours, even in our present mood; and the Communist influence in the individual trade unions and trade union centres of the Six is greater than it is here.

If the position were as people are saying it is, it is impossible to believe that those unions would not be under great pressure from their members, or great pressure from the political Parties, or making a great impact themselves to come out, even if they could not make their Governments come out. The Communist trade unions of Italy are not all that keen on keeping a Left Centre Government together. The Communist trade unions of France are not all that keen on social democracy. But they are not wanting to come out. There is not one trade union leader, one trade union centre, in the Six which is asking to leave. At every liaison meeting that we have had with them (the noble Lord, Lord Cooper, may demolish this point or support me) they have urged us to go in. So it cannot be as bad for the workers as some of my friends would have us believe.

I think, therefore, that the changes we have to face, economically, commercially, price-wise, are a fact. There will be switches from this to that form and problems of adjustment. More will be paid direct and less via taxation, as I said just now. But unacceptable? An impossible imposition? I think not.

In any case, and still on the economics of the thing, there is another side to the economic coin which nobody mentions—at any rate, no one among the opponents of the case for going in. That is the question of job opportunities. People are free to invest where they will. They will invest where it suits them best to do so. There is no way by which you can stop people from doing that. You can stop them from investing somewhere else, but you cannot make them invest here. If we have to stay out, or if we choose to do so, where do my friends think that the future investment of the large international, almost uncontrolled corporation will go? Will there be investment in Skelmersdale? In the North? In the North-West, or Wales? And what about trying to sell over a 22½ per cent. tariff barrier? Or will there be investment in Rheims or Lyons; or in Italy or Holland, within the tariff barrier? What do people think the effect on job opportunities for ordinary men and women here is going to be if we allow that to happen? We have to face particularly almost the certainty that job opportunity would desert us for the mainland of our Continent if we do not face up to this matter.

There is the important point about the size of the domestic market. The noble Baroness referred to it in relation to food, but it is true of everything. Here, there would be a market of 50 million, if we go it alone. Given modern technological scales, what could we expect to develop and sell in competition with the United States of America, with the Soviet Union or even with the rest of Europe? There will be a market of 50 million if we stay alone, and of 100 million if we stay with EFTA—and I do do not think that EFTA will stay with itself. The countries of EFTA know that they have anyway to move for some association with, or membership of, the Common Market because they want a larger market.

There is also the question of growth. I agree with what was said by Mr. Roy Jenkins in America in December. He said that we must not expect to be "floated out" just because we shall have joined a vast growing economic community. But, given effort by us, surely there must be more growth for us as a domestic member of a dynamic growing market than there would be as an individual, rather tiny non-dynamic group on our own. People do not like the phrase "the only way", but that may indeed be the only way in which we shall get an increase that we want in the growth rate without other disadvantages.

Terms do not count now; but I will say that I regard quite substantial terms as bearable, as payable, in return for the very clear gains, the avoidance of otherwise insupportable problems, and, as I would think, almost certain decline. I ask only for a transition period which is long enough, and for levels of payment during that time to be supportable enough; and, as the noble Earl, Lord Jellicoe, put it, for about the same as they gave each other when they were having to face very similar problems.

Lastly, my Lords, on the economic issue, and before I say a word or two about the political issue, I wish to say something which it is difficult to say, for reasons that I gave at the beginning. But I should like to whisper something in the ears of my friends here which I should not like too many members of the Six to hear me say—not all of them, because some of them have it rather joyfully in their minds. Membership of the E.E.C., like membership of any body, carries something which we trade unionists know as a card vote. Card votes, my Lords, carry influence and power. When at the Labour Party Conference and holding up a card representing 100 votes of the local constituency party, an awfully difficult situation arises for you when you know that Mr. Jack Jones is behind you holding up a card representing 1 million votes. Under those circumstances you get a rather clear sense of where the influence and power lies. Card votes do carry influence, and they attract allies. Other chaps are inclined to line up with you, if you have a card vote in, your pocket; they are not so keen to do so if you are without one. Every trade unionist, in this Assembly as everywhere else, knows the difference between addressing a rally of protest outside the hall in which the Trades Union Congress is meeting, and being inside the hall with your card vote and the ability to influence what is going on.

Please remember, my Lords, that when we get in we are there like the others: with a card vote like the others. Our allies will vary; our interests on some things will align with the Germans and on other things with the French. This is not "ganging up" against any one member, but it will enable us to influence what goes on and to stop the members from being dominated by anyone. So, I conclude that economically all is not gloom and doom. To the adventurous, despite, or perhaps because of, all its challenge, it appeals.

Now, my Lords, a brief reference to the political arguments. Even if the economic arguments are balanced, I think that the political arguments are overwhelming. We have been rebuked for referring to "ancient Britons". I will not look in any particular direction when I say that; rather carefully I will keep my eyes where they are, but there are some of them about. Also about, as we know, are new exponents of a narrow and discredited nationalism. I repeat what I said just now: in my view British influence, our power to affect events, has always been dependent upon our membership and—dare I mention it?—our capacity to lead one wide grouping or another.

I applaud Lord Shinwell's defence of the British power and capacity; I share his feeling to the full. But it is the capacity to lead which is the real strength that this country has brought to the world; and through that leadership, wisely to influence events for most of the time. As I have said, I cannot see anything but disaster if we try to go it alone. We should influence nobody, not even ourselves; instead of influencing events we should become the victim of events.

A North Atlantic Free Trade Association, by ourselves, alone, is not "on". That would not attract the Americans one little bit. Even if it did, we should become the 51st State. We should be a junior lackey. They would not want that. We should be a supplicant all the time. We should not even have State rights to reinforce us, and no chance ever of having a senior, aged Senator, so old that he became the chairman of a senior committee in the United States Senate.

LORD BOOTHBY

My Lords, if the noble Lord will forgive me, he may well become a Senator himself.

LORD GEORGE-BROWN

My Lords, I am all in favour of that; but I do not think I would ever be so aged as to become a Senator in the American Senate. We should then be very much a junior lackey.

But, given the Commonwealth as it now exists, as it will exist and as it must exist, I think we are not available. The Commonwealth is an association of old friends who come together every now and then so that Britain can be lectured. I had the joy of being lectured over two years (my noble friend Lord Chalfont shared this with me) by Zambia, Tanzania and others of our friends about our sins and wickednesses. It is a nice association of old friends; but as a trading, an economic unit, no. New Zealand, Australia, Canada and the African States look elsewhere for most of the things they want. The African and Asian States want to be associated with Europe anyhow, but with an integrated Europe.

Given a North Atlantic Alliance, Western Europe could become a reality economically, politically and defence-wise, because then we should have a real alliance of equal groupings of people, with equal geographical advantages and with equal contributions to make. Then we might influence events like the Czechoslovakian situation, which we were powerless to influence. As one Europe, we might influence things like NATO, the anti-ballistic missile decision, SALT and Ostpolitik—which ought to be "West-politik." Then Western Europe itself would be able to deal with the question of the détente towards Europe instead of its being done by one member having a special interest, though I am not against them doing it and I applaud Willy Brandt. In the Middle East, in which Europe has a great interest, we would be influencing events and not living in the hope that somebody else will do it for us.

There is much else I should like to say, my Lords, but I am well aware that I have trespassed a little long on your Lordships' time. These and other considerations seem to me to make up the case for saying, "Yes: on anything but clearly impossible terms we ought to seek to go in." The economic arguments balance: certainly the long-term ones are in our favour, and maybe the short-term ones, too. The political arguments are overwhelmingly on the side of Britain, of the kind of Europe of which I want to be a member and of the kind of grouping in the world that will make it easier to handle this difficult political problem. I wish the Government the best of luck in their negotiations.

6.4 p.m.

LORD CACCIA

My Lords, I should like to start by welcoming the move by the Government to have this debate this afternoon, thereby giving an opportunity to inform Parliament, and through Parliament the public, of as much as is profitable of the negotiations in progress. I am among those who believe that there is a gap between the Front Benches and the public, and this may at any moment become rather more than embarrassing. So far, I go along with what the noble Lord, Lord Shinwell, has said.

Here, as an old hack of the 1961–63 negotiations, may I express some of the sympathy for the negotiators as the noble Lord, Lord George-Brown, has already done? They are facing both ways—the public in the open in this country and the Six at the negotiating table in Brussels and elsewhere. Harold Nicolson's suggested optimum was for open agreements secretly arrived at. For Governments, as for diplomats, this is an ideal rarely if ever attainable. But it is a guideline which retains some validity. This is why I would begin my short intervention, within the "Egremont rule", with the promise not to press Her Majesty's Government to say more than they consider profitable at this stage.

In the spirit of this self-denying ordinaance, I shall make only one or two general points. They will have no impact on those whose minds are already closed. But they are addressed to the doubters to show that their anxieties are at the least premature. With this in view, I am naturally glad that the noble Earl, Lord Jellicoe, was ready to go so far as he did in telling us so much as he has done about the negotiations, especially on such needle subjects as Commonwealth sugar, New Zealand and finance. For, in my judgment, it is no good at this stage, with British public opinion at best lukewarm and generally unconvinced, to talk only in terms of great designs and principles.

On this I have some sympathy with those who dislike being asked to make up their minds simply on generalisations about the size of the Common Market and the advantages that might accrue, if Europe were to speak with one voice in the councils of the world. This is perfectly true. But we also know that the Six have found it extremely difficult so far to reach such unanimity, and though hopefully our membership would add to their chances of a united European voice, it will be a slow process. So here, if I may mention the name of Lord Beaver-brook in a debate on this subject, I would only do it in recalling one of the many telephone conversations between him and members of his staff. He asked on the telephone, "What are you doing?" to which the deferential reply was, "I am working for the greatest newspaper in the world." Lord Beaverbrook's retort was, "Don't give me that stuff. Show me the figures." So although the broad future possibilities should never be underestimated or overlooked, it is proper and not just factious to be reminded that many great visions have come to grief on a wrangle over a small point.

Here again may I express my support of the line taken by Her Majesty's Government. For, in an effort to keep details and figures in the right proportion, the word used by the noble Earl was that the terms should be "equitable". I recall that the Prime Minister, before the Election, said that the terms should be "tolerable"; and in the same vein the noble Lord, Lord Chalfont, has said this afternoon "not intolerable".

Fortunately, the term "tolerable" is elastic. Among the definitions suggested in the Oxford Dictionary is "fairly good" and "not bad". Just so. What would be bad or inequitable? I would suggest that doubters should look for two broad criteria. First, we should undertake no obligation which we do not have a reasonable chance of discharging. For instance, on payments towards the total of the Common Market budget we have proposed 13 to 15 per cent. I presume that our proposal was a genuine one and not made in the spirit of a Chinese auction. If so, and an attempt is made to force on us an appreciably higher percentage without proper review arrangements, that might be intolerable. On this, I for one would not be impressed by the arguments sometimes advanced, but not by the Government, that it does not matter because, once inside the Community, it will be possible for us to get out of our obligations on the ground that it is not in the interests of the Community to beggar any member. But what a start to our membership, if in the early years after joining we had to plead the Gaming Act! Any commercial or private undertaking entered into on this basis would be rightly regarded as fraudulent.

Another criterion I would suggest to doubters is that we should see that our basic obligations to our existing and traditional trading partners are met in respectable measure. I am thinking of New Zealand and the Sugar Agreement, to which the noble Earl referred. My reason here is that nations who act otherwise for temporary interest cast much in their own eyes and gain no respect from other newer partners. These will realise all too well that what was done in one case may be likely to be done in another. If the E.E.C. is as responsible as we have every right to think it is, then it should be as aware of that as we are: and in this we have the advantage, of course, that some of their members, such as France, have had many of the same problems and have gone a long way to meet them in an honourable manner. After all, it is not only we who should be concerned with a big design, but our future partners as well; and they should be as keen as anyone for us to avoid any imputation of this kind of meanness towards weaker and dependent economies.

From what the noble Earl the Leader of the House and others have said, I take it that such criteria are not only accepted by Her Majesty's Government, but that the Six have already had it made clear to them that these are the sort of measures with which we shall meet. Is not this the nub of the matter so far as the doubters are concerned? Should they not be content, if such criteria are met, without having to go into the elaborate matter of all the figures and the calculations? If so, we can get away from the anxiety that a broad policy, a vision of what might be, could be frustrated by the price of a pat of butter. Of course, whatever criteria we use in judging whether the terms are tolerable or not will affect the price of that pat. But the criteria that I have suggested are based on honest dealing and national character, and these are not, I understand, up for auction. Nor, anyhow, is this the time when we are being asked to make a final judgment on the terms. That is a matter which will have to be judged when we know what the terms are, after the negotiation is completed.

Here I should like to say what a relief, after our previous experience, it is to be given evidence that this is at last a real negotiation, and that in the ultimate resort we shall not be fobbed off with the comment that we are not sufficiently European. The Government have shown beyond doubt that their application is genuine, and we are neither being asked nor need to consider "cutting any capers" to prove it. Quite simply, we are applying because we think this is in our national interest, and the Six are responding because they believe it is in their interest. This includes the French Government, to whom I shall always be the first to pay tribute in the single-mindedness with which, right or wrong, they unashamedly pursue their national interest. Sometimes I wish that some of our own Governments, and commentators in particular, were equally forthright. Once again, it is for me refreshing that the present Government think that this is a proper attitude to foreign affairs for a British Government to take.

Before I sit down, I have a further point to make, also in support of the line taken, I believe, by the Government and the Opposition alike. It is that this is not an issue with which to break with our past custom and put it to a referendum. Perhaps your Lordships will bear with me if I give a modern instance—the West Indies Federation—to illustrate why not. When this proposal was referred back, Mr. Dulles said to me: "Well, there is an end of it." He concluded this not out of any deep study of that particular proposal, but from his reading, which was profound, of American history at the time of the Founding Fathers. He said that this had convinced him that there would not have been a United States of America at that time if the representatives of the 13 colonies had not been plenipotentiaries. Whatever the truth of that may be, I am as surely convinced that this whole enterprise might founder if the final judgment on so complex a matter should be referred to the electors individually. Parliamentary democracy does not mean that.

In sum, I think Her Majesty's Government were right to make this attempt to negotiate our entry on tolerable terms. We have had ten years of this uncertainty, and it is time to know one way or another what we shall do. We shall later be told whether the Government can recommend the terms. In the meantime, having listened to this debate, I would only add one thing to what the noble Lord, Lord Shinwell, has said. It is that we should be extremely careful in this House, which I do not think from what I have heard this afternoon reflects the opinion of the public at large, about saying that either we go in or we are beggared. I do not believe that to be the true case. If those circumstances were most unhappily to arise, this would be a diminishment for the Common Market just as much as it would be for us.

After all, we should remind ourselves, with some justifiable pride, of certain facts, and I do not say this in any derogatory sense of the Six. We have not a divided country, like Germany; we are not entering on an agricultural revolution, such as France is; we have not a Communist Party of the size of that of Italy; and if there are problems with Plaid Cymru and the Scottish Nationalists, this is as nothing to the problem that the Belgians face between Fleming and Walloon. We have much to envy, and the Common Market should understand—and I trust and hope that they do—that they stand to benefit by our joining just as much as we do. It is not just little England on one side and great stellar constellations of the five types of constellations to which the noble Earl referred. The consequence of this negotiation will either be that we join and there is the possibility of such a constellation in Europe, or there will be " little Europe" as well.

So, in supporting the Government, I hope that before the end of the debate—perhaps in the summing up by the noble Marquess; and perhaps the noble Lord, Lord Shackleton, also will say something because Lord Chalfont's words have been misunderstood—we shall hear that neither of the Front Benches considers that if the terms are intolerable, the future for Britain is disaster.

6.18 p.m.

LORD ST. OSWALD

My Lords, this is going to be a long debate, appropriately so and commendably so. I find myself sandwiched between two former and for midable Ambassadors, but I suppose that on the whole this is a more comfortable experience than that of my noble friend Lady Elliot. For the sake of individual brevity, what I shall subscribe to-day will be little more than a series of somewhat staccato points. They will reaffirm my own convictions on this issue, without any polish and without elaborating at any length.

Those of us who have been convinced and positive Europeans from the beginning are stronger than ever in our conviction and our certainty of the rightness of our endeavour. There is enough to disturb us in the public evaluation of that objective. It would be slightly ingenuous to declare otherwise, in view, for instance, of the recent opinion poll. There are signs, which were given emphasis by the noble Lord, Lord Shinwell, in his speech, of public reluctance to take this historic step; and there are even more signs of public apathy. In part, this is natural; in part it is, or appears to be, contrived: I hope contrived with the best of personal intention, but, as I believe, to the danger of our nation and our world. Much of the issue is complicated at best, and much of it is at this time wrapped in illusion—several layers of illusion—sometimes deliberate, manufactured illusion, formed of pretty flimsy material.

It amazes me, for example, that anyone in political life seeks to pretend that the Europeans among our countrymen are on the defensive. We cannot either be on the defensive or feel on the defensive, because it is we who are seeking to break new ground and open up new fields of hope and opportunity for our country and the neighbouring lands and nations with whom we have lived on better or worse terms for so many centuries. It is those who wish to enclose us and to limit and frustrate the opportunities to which we aspire who are on the defensive. It is they who are manning the barricades of the status quo, a visibly deteriorating status quo. It also amazes me that men of powerful principle and sincerity can stand up and say, as was said last week-end, that the great questions have not even been properly asked, let alone debated, let alone answered; that anyone of such stature can suggest oracularly but categorically that there is a conspiracy to be silent about them in the hope that no one would notice that they exist. It is a matter of astonishment to me.

The great question is whether Europe is to survive, or revive, as a force in world affairs, or whether it is to wither. What disturbs me is the present ineffectiveness of Europe. What fortifies me is the potential effectiveness of Europe. That effectiveness depends on the degree of unity among the nations of Europe—or on the degree of disunity. The effectiveness and influence of each of our nations individually is tied even more evidently and realistically to the effective unity of the whole. We are one of those nations. To pretend otherwise is a delusion and a dangerous delusion.

The achievement of this unity is a high endeavour and a creative endeavour, one of the most remarkable ever attempted in history by men of affairs, who have had to be men of vision at the same time. In saying this, I am using the term employed by the man whom many regard as the most dedicated European of all, M. Jean Monnet. He said plainly enough: Europe has never existed. It is not the addition of national sovereignties in a conclave which creates an entity. One must genuinely create Europe. That is a recognised challenge which distinguished leaders and modest supporters have accepted. Once it has been accepted, there can be no question of being on the defensive.

The admission of existing disunity can be neither a pride nor a satisfaction to anyone, except our enemies, the enemies of our country and of our civilisation. It is a fact of Western life that the disputes and contradictions and palpable differences between the peoples of this Continent are more easily pointed out than the similarities. They have led to wars and animosities and treacheries beyond numbering. The weakness, a hitherto besetting weakness, which affects the whole, affects each element of that whole. Who would be ready to gainsay that assertion?

Because the differences are more easily pointed out, they are not thereby more important or more inevitable. The bloodletting and wastage of this state of affairs was a heavy burden to bear even when Europe occupied a privileged and advantageous place in the world as a whole. Now that such privilege and advantage has been largely abdicated or dissipated, that continued state of affairs cannot be afforded. The long-borne burden may break our backs. Unity may signify survival, disunity may spell decrepitude. The fact that a great part of the world chooses to see us—or feels forced to see us—as a decrepit civilisation requires us to examine that imputation. It is a sad and sobering fact, known to those who travel, that we are seen by the super-Powers, and even by the Third World, as an area of the world's surface peopled by tired and quarrelsome and obsolescent nations. We are seen in this light with varying degrees of sadness or satisfaction, according to the observer. If I were to make an historical comparison, I should say that we were looked upon as something akin to the Balkans before the First World War, regarded with the same kind of impatience and irritation. We know that is a false picture, but in a sense it is a picture painted by ourselves, and it is we, the people of Europe, who must prove it false.

It is not simply for selfish interests that we should do so. As much as ever, though by different methods, Europe has as beneficial a part as ever to play in the world at large. There are only two aspects of this that I wish to mention briefly to-day.

A minute or two ago I referred to the Third World. That is an entity, however hard it may be to define in physical terms. It is certainly more than a mere political phrase. For the past 15 years at least, the Communist Powers have been engaged in obtaining ultimate idea-logical and economic control over Africa and Asia. Their methods have included armed invasion, the incitement and equipping of armed insurrection within countries, and penetration, at an early stage by seemingly more powerful means, generally aimed at eventual violent revolution. In every case their efforts are characterised by materialism and by the imposition of ruthless discipline. The advance of this creeping control has been restrained and counter-balanced, not so much by the efforts of Western Governments as by disputes and contradictions between the two Communist Powers, Soviet Russia and China. We have seen them at work in Tibet, in South-East Asia, in Iran, in the Middle East, in Turkey and in many parts of Africa, notably the Congo, Tanzania, Zambia and Algeria. There is hardly an area where they are not at their dangerous work. Informed observers believe that Peking may be engaged in establishing a zone of control right across the entire centre of Africa, and then moving to further conquests.

It would be perilous to comfort ourselves with the belief that the efforts of the two Communist Powers will devour each other. They are both directed against the West; and what impression does the West give to the peoples of the Third World, or to any of those groups of nations which my noble friend, the Leader of the House, has called the "clusters of power"? One of the most distinguished and best-disposed among spokesmen, Mr. Lee Kuan Yew, the Prime Minister of Singapore, declared sadly in July of 1969 that he felt that the West was now disillusioned with what he called, "The poor, strife-ridden, chaotic Third World". That kind of belief gives direct encouragment to both the Soviet Union and China. It describes a situation which they are bound to exploit.

What sort of example, what sort of peaceful, encouraging contrast and example can Europe give until we have been able to mend our own quarrels and distrusts and work closely, permanently together? I am thinking, and of course they are thinking, of the ways in which we can peacefully assist them. But there is evidence that we are not even able to combine realistically in our own physical defence. The inadequacy of that defence was described starkly enough by the recent Labour Government's Secretary of State for Defence, whose words I had occasion to quote directly in this House. Let us hope that there will be an improvement now with my noble friend Lord Carrington in charge.

But again it will be false to suppose that Britain or any one Western nation can or should undertake the whole conversion from inadequate to adequate, to compensate for at least a measure of American withdrawal which we have to expect. The danger is there, the cost of weakness is open for all to see, the consequences of weakness are plain to read. To state the situation in its most unimaginative and emollient form, to understate, almost preposterously, the Warsaw Pact countries possess far more forces on the ground and in reserve than could be needed for, or warranted by, the defence of Eastern Europe. Yet they know, as they must, that there is no danger of attack by Western initiative. This fact must be known and contributed to Soviet military planning. So what are they planning for, with an expenditure startling even when measured against the resources of Soviet Russia? Why the maintenance of these forces of land and air, on a massive scale, up against the frontiers of the Free World in Europe? Why the apparently unemployable naval forces in the Mediterranean, let alone in the Indian Ocean?

Europe cannot, at least as yet, feasibly match such manpower or such weight of weaponry, and to my mind it will be a sad day if we ever have to spend so much of our treasure on weapons of destruction and engage such a high proportion of the minds and bodies of our citizens in the profitless task of preparing for war. But we can, or we should be able to, match the imposed unity of the Communist world with the voluntary unity of the Free World. I believe this cannot be credibly done without Europe. I believe it cannot be credibly achieved in Europe without Britain. Our political history is so tied up with the theory and the process and the formula of a balance of power within Europe, balancing the forces and antagonisms of the free peoples of Europe, that we have a special responsibility in professing, and proving, our trust in a new harmony and a new co-operation aimed against none, but symbolising the harmony which should exist in the world at large.

In the course of these words I have, by design, not touched upon the negotiations in progress which are in the hands of the Government—to put it as grudgingly as possible, as able and determined as any other conceivable Government to obtain a fair agreement for both Britain and her prospective partners. If there were any doubters at the beginning of this debate, their doubts cannot reasonably have survived the opening speech of my noble friend. He spoke, among many other things, of the attributes which Britain can bring to the E.E.C. by way of contributing, and of the character and virility of this people, which membership of the Community does not seek to dilute or transform.

It seems to me that antagonism to entry is based on two totally contradictory illusions: either that we are not good enough to compete, or that we are so superior to other European nations that we do not need to consort closely with them. As between these two contradictory beliefs, the exponents of the latter are the more apparent and explicit, but the exponents of the former, who express themselves by implication and innuendo, seem to be more numerous. Both are mistaken. If this whole concept is to founder in a Slough of self-created Despond; if apathy is to win the day; if suspicion is to win the day; if faintheartedness is to win the day, it will be a tragedy for the world we know and the future for which we work. I do not believe that this will be the outcome. I pray that it will be a positive outcome.

In closing, my Lords, I turn back to the lessons of history—in this instance, recent history, events within the memories of most of us here; and painful memories, in all conscience. Lately the papers of the Government of Mr. Neville Chamberlain became available, through a Private Member's Bill of 1967, and a condensation of the record of that political epoch has been made by Mr. Ian Colvin and published in the last few days. It shows how during the late 'thirties the efforts of peace-loving, if depressingly innocent, men were bent to appeasing one or more predatory European Powers at the cost, at the sacrifice, of smaller nations. It seemed to be the be-all and end-all of achievement of foreign policy at that time. There were some of us, even at that time, who thought it immoral. In any case, it was a failure. It was a hand-to-mouth form of security even for those who seemed to gain some respite over a short period. It depended upon the ephemeral interest of the most selfish and unscrupulous Governments involved. It led, as it was bound to lead, to catastrophe.

In a United Europe such questions and problems will not arise. There will be no need to appease. There will be a general endeavour to harmonise and share the benefits of peace and co-operation. In cur day, fortunately—indeed, "providentially" would not be too strong a term—there are Europeans who think in these more positive terms. They are Europeans in a new, practical, resolute sense; but their eyes are raised beyond Europe to new and still nobler horizons encompassing the whole family of nations. Consistent with their convictions, those within the existing Community have been at all times champions of Britain's entry. They should have been, they would have been, truly fortified by the speech of the noble Lord, Lord George-Brown, today. They join with kindred spirits and kindred minds in this country. We who follow them know why we do so. When we strive to unite Europe into a force and an influence equivalent to the super-Powers, we know that it can be done, but something more must be plainly and widely understood. The object of this new Europe is not to throw its weight about in a world already rocked by massive rivalries, but to help to compose and to balance the world by example, by tangible aid where needed. Nor do we seek this status as a Continent of nations simply for our own enrichment; we do it in order to contribute to the enrichment of civilisation in this century and in the centuries to come.

6.36 p.m.

LORD GORE-BOOTH

My Lords, I should like first to join the noble Lord who has just spoken in his tribute to the speech with which the noble Earl, Lord Jellicoe, opened this discussion. The noble Earl described it as a "capsule". I think I would call it a luxury capsule with all "mod. cons.". It combined, to my mind, pragmatism and idealism; it combined bargaining power with vision, and as such was a notable contribution to this argument in its general context.

It also seemed to me very appropriate that the second speech should have been made by the noble Lord, Lord Chalfont, who in that difficult year, 1967, acquired such expertise so quickly on this subject, an expertise which he reproduced with great effect. I am also glad that both noble Lords should have paid a tribute to the work of the noble Lord, Lord George-Brown, in that year. I wish he were here at this moment to hear my compliments. In that period I do not think there was any occasion when any exposition by the noble Lord on this subject was ever less than first-class. I heard him speak to small committees and large gatherings, and on every occasion what he said was first-class, as indeed it was this evening.

We have arrived at the stage in the argument where, some noble Lords have said, there are not many new things to say, and I do not profess to have any. But I have lived with this subject actively for twenty years and it is interesting to look back over that period and see how one's ideas have developed. I am only glad that I have been a person of no importance so that the noble Lord, Lord Shinwell, has not felt tempted to research into my past utterances. Many of us will have—not exactly changed our minds but, first, suspended judgment, and now come to the view which the majority of this Chamber seems to be developing.

But surely this debate is none the less useful for the purposes of identification, of showing what one thinks at this stage, and also for the purpose of sending a few messages to friends, and a few refutations to those who disagree. On that point, I should like to say that one of the most valuable of many valuable remarks made by the noble Lord, Lord George-Brown, was the point that it is immensely difficult to make public statements on private negotiations while those negotiations are in progress. It is almost impossible to do so without either failing to make one's own case quite right or making the wrong impression on the other people.

I should like briefly to pronounce a few messages on my own modest intermediate-range launcher to our friends in Europe; a comment to our friends in this country, and also to add a few considerations about the things we cannot do. First, to our friends on the Continent. If I understood the noble Earl aright, in referring to New Zealand he said that our proposal was that New Zealand should be treated on a continuing basis subject to review. If I may say so, this seems to me to be important and absolutely fair. All through this argument one has had a fear that we might be tempted to give away the case of what a New Zealand statesman eloquently called "Britain's other farm" for the apparently tempting offer of a short transitional period. I hope this means that we are asking our friends to drop the idea of a transitional period but to accept the idea of a review after a certain time.

I should like to add one argument to those that have been adduced already. There is the economic argument, but there is the social and political argument behind it. In the world to-day there are too many unstable communities. New Zealand may be a static community in some ways, but it is a stable community, and a meritoriously stable community in the economic and social sense. If there were to be the prospect of simply a transitional period, Europe would be creating an instability where there is stability at the moment, and I believe this would be a damaging thing at this time when the world needs a few examples of genuine democratic stability.

If one is again asked why, I think one can only add to that—a departure from strict classical logic—simply that Europe should remember what twice in half a century New Zealand did for it.

My second message to our friends on the Continent is, "Do not worry too much about reports of daily speeches and weekly opinion polls in this country". The media will carry all the destructive speeches with great glee and will speculate gloomily about the figures of the polls. What will matter will be the leadership that is given by those who favour this initiative, and the decision that will be made in Parliament by the elected representatives of the people. That is what matters; and people on the Continent should suspend judgment until they see what is going to happen at that moment. As noble Lords who have already spoken have said, all of this is subject to the great "if": "If the conditions are right", and anything that I say from now on is subject to "if" and not to "when".

Now may I say a word to our own negotiators and to the supporters of the initiative of entering the Common Market? Let us not overplay the argument. When we become members of the Community—if we become members of the Community—we are not suddenly going to find that the French, Germans and the Italians are immensely easy to do business with, when they were previously immensely difficult. We shall have the same sort of temperamental personal, and even commercial, difficulties; but we are going to have them, if we succeed in this endeavour, in a more sensible and relaxed framework, in which we can really work together without the suspicion that somebody may be manoeuvring for some strictly and exclusively national advantage—something which has dogged our efforts in the eyes of some people in the past. That is the great gain.

At this point may I underline another of the arguments which was always a favourite one of the noble Lord, Lord George-Brown, though he did not stress it to-day? Do not let us say that we are seeking to "enter" Europe. We are seeking to establish our future proper status in the Continent where we are already. If we look at it that way then we can overcome one of the main objections raised by the noble Lord, Lord Shinwell. With great respect, the noble Lord's remarks were based on two propositions that were wrong. One was that Europe does not change, whereas it is changing very fast. And the other was that anything beyond the Straits of Dover is "they". Whereas, of course, when we argue that, if we enter the Common Market, then so-and-so will happen, the Community is "we" and not "they". That again is a wholly different kind of atmosphere, of political institutions and also of mental attitude.

If I may for a moment bring that all together into one other message for our European friends, it is this. At the critical moment—and there will come a critical moment with our own public opinion which we must certainly not disregard—we want to feel that there is no question of our being "tolerated" as a member of the Community. There will come a moment when we shall want to be welcomed, and it will be important at that moment that the noises that come to us, not only from Brussels but from the capitals of the Six, should be not only tolerant but welcoming. I should like to feel that the political equivalents of Mr. Vic Walters or Mr. Stan Cowan, at five to eight in the morning, will be saying to us at that moment that there is a steady stream of warm air coming to us from the South-East.

May I now turn to those points which might seem to be alternatives but are not? They have been dealt with in some degree and with great skill by the noble Lord, Lord Sherfield. The noble Lord analysed the progress of the idea of a North Atlantic free trade area. I would sum that up simply by saying that we should be overwhelmed and that the Americans, who were never very enthusiastic, prefer an independent-minded ally to a disgruntled satellite. I think that is the whole summing up of that proposition, which was well worth considering but now, I believe, has no life.

I have also heard quite recently a Member of another place insisting very strongly that an alternative is what he termed the Commonwealth economic system. The noble Lord, Lord George-Brown, referred to that. Of course there was a Commonwealth economic system, but to-day Australia exports to Japan five times as much as she did 12 years ago, and about the same to us. So there has been a tremendous policy of insurance.

Secondly, East Africa has been referred to. There are now commodities in which, in East Africa, the Common Market has a preference against us of some 9 per cent. So the economic system of the Commonwealth in fact no longer exists. Our ties with the Commonwealth are deeper and more intangible than this. So it is no use arguing that there is any economic substitute in the Commonwealth for membership of the Community.

There is one other thesis which should be mentioned, because it is usually half-defined. It is the point of view which manifests itself in saying that we ought really to sit back and wait and see whether an East/West détente occurs, and then perhaps we might join a Europe of East and West, a universal Europe. Either that is very naive and gets the timing all wrong, or what it is really saying is that we are so antagonistic to the United States that we should like to join in an anti-American Europe, which would then of course be dominated militarily by the Soviet Union. There are a few eccentrics and a few dedicated people who would prefer this. There are a few others who are so anti-American that they would prefer not to look at the positive result of this kind of policy. I do not mention this view because I think it is likely to have any great effect, but it is what lies behind some rather "fuzzy" requests for delay that are sometimes put before the public.

So what does that leave us with? It leaves us really with the only other alternative—ourselves and EFTA. I think it is only appropriate on this occasion to give a bouquet to EFTA. EFTA has been curiously disregarded and underestimated by the media of publicity and by many others. It has in fact been a most valuable and most congenial association. But it has been rightly said in this debate that some other members of EFTA who can do it are now looking forward towards the extended Common Market, even as they did at the time when EFTA was initiated.

So it really comes down to ourselves alone, and I do not think it is any national self-depreciation when I say that, if the noble Earl thought that our fireside by ourselves would be cosy, I have rather the picture of the fire going out and the remaining smoke polluting the atmosphere. I think if we do not get offered fair terms, then, being a proud and capable enough people, we would say with dignity and obstinacy, "O.K.: we refuse unfair terms". I say that, because it is important that people should know it. To that extent I go along with the patriotic motif.

But I am sure this is not what we should do by choice. We should warn ourselves that while we are the country of Captain Cook and many people who have explored the world, the physical world and the world of the mind, we are also the country, presumably, of Mrs. Partington, and we want to avoid the attitude of the lady who tried to push back history with a broom. I am sure that in the development that is going on (and I go back to the point that I have been dealing with this directly for twenty years) we are not dealing only with something political. This is something better described as something historic. It is a movement of history. It is a response to ease of movement around the world. It is a response to both the sobering up of Europe and a realisation by Europe of its capacity.

What it is not going to be—and here is one other thing, which has not been mentioned to-day (and which I would like to shoot down)—is a rich man's club. This is a diversionary tactic on the part of people who are against the idea. If Europe has got a little rich that is a tribute to its incredible vitality, its power of resilience. What will be important in this position is that our accession to this organisation means that the weight of our public opinion behind aid, behind technical assistance, behind help in the North-West problem—all that weight will go into the combined European effort.

So, my Lords, may I, as a final plea to those who are still against this initiative, say this? I hope that people with weighty personalities and big voices do not go around the country using those big voices to put forward little ideas. This is not a time for little ideas. It is a time in which Europe, where we live and where we enjoy ourselves, where we move around naturally, should be the place where we live freely and compete freely with each other in what is, above the competition, a great co-operative enterprise. And this is perhaps the last time that we shall have a chance to do this. And so, subject to the great "if", I hope very strongly that the Government will succeed, and I would close by wishing them Godspeed in their efforts.

6.54 p.m.

LORD DIAMOND

My Lords, it is indeed a great privilege to follow such a knowledgeable and distinguished noble Lord as the noble Lord, Lord Gore-Booth, who speaks with possibly a greater length of experience of this matter than anyone in your Lordships' House. I would echo what he said in complimenting both my noble friends, Lord George-Brown and Lord Chalfont, and, if I may say so in particular—and I hope I shall not embarrass him by saying so—the noble Earl who opened the debate, with every word of whose speech I entirely agree. That will save a lot of time in explaining where I stand on these matters.

I also take the view that the political arguments are of far greater weight than the economic; but they are so easily demonstrated to be such and so obviously in favour of our going into Europe that, if I may, I shall give myself the slightly more difficult task of attempting to demonstrate to your Lordships that the economic arguments also point in that direction. I am bound to do this because there has been only one speech, and in fact in that speech only one argument on the political side, against going in. That was by my noble friend Lord Shinwell, who took the view, in a very forceful speech, that he would not wish to be dominated by a number of Frenchmen, Germans and so on. I listened very carefully to every word my noble friend said, but I was not persuaded that he was right. Indeed, if he had taken the opposite view and said that there were a lot of Frenchmen, Germans, Italians and so on who were most anxious about being dominated by my noble friend Lord Shinwell, I should have thought there was a great deal more substance to his argument. I am sure he has no lack of confidence in his ability to make his contribution at the conference table, whatever conference table it is, and I certainly have no lack of confidence in the ability of my noble friend to do so.

But what he did say—and your Lordships will excuse me for concentrating on this point, which I thought was extremely valid—was that although, as we have seen, all the other speeches were wholly and enthusiastically in favour of joining, it certainly would not be right to say that the majority opinion so far expressed in your Lordships' House accurately reflects the opinion outside. Therefore one has to get hold of some of the economic arguments and endeavour, however inadequately, however much one could wish that one did not have to attempt the task, in order to do one's duty in explaining to the world outside why one takes the view one does and has done for a great number of years. Therefore I wish to attempt the more difficult task of looking at the economic arguments and expressing them in terms which your Lordships will regard as wholly oversimplified but which, nevertheless, will have to be of a clarity and simplicity to be capable of being dealt with by the man in the street, whose views must be heard and without whose support our membership of the Community will not be as fruitful as it would otherwise be. That is why I hope your Lordships will forgive me if I turn immediately to the question of the costs. I will then turn to the question of the benefits in economic terms.

So far as the costs are concerned, your Lordships will forgive me for reminding you—because I am sure you are already aware of it—that what the costs are not are the figures of £100 million to £1,100 million set out in the White Paper. Those figures have often been quoted as the possible bracket of costs. The White Paper, which I do not see for the first time, made it absolutely clear. I read paragraph 101: The total effect"— that is to say, of the costs— cannot be assessed by adding together the extremes of the respective ranges there given. The result … is positively misleading in that it is inconceivable that all the elements in the calculation will work in the same direction, whether favourable or unfavourable. What the White Paper might have gone on to say is that many of the various assumptions which had to be made in order to build up the detailed costs would be wholly inconsistent with other assumptions, and therefore you could not have a single situation in which the bracket could be as wide as that. So what the costs are not is the bracket of £100 million to £1,100 million.

What the costs are going to be is a matter for negotiation, admittedly, and I think we can see it closing towards a figure of something in the neighbourhood of £400 million to £500 million at the end of the period of entry, at the end of the adjustment period. Your Lordships may say that this is a pure guess. I do not think it is. I think that a careful reading of the White Paper and of the statements that have been made in another place would lead one to make a guess that those round the table have in mind a figure of that order. I am going to assume, therefore, that it is something of that kind—although, as your Lordships will see if you are good enough to bear with me, whether that figure is accurate or grossly inaccurate will at the end of the day make very little difference to the argument.

The argument in favour of going in, on the benefit of going in, has always been the prospect of additional growth. That has been the argument over years and years, as the noble Lord, Lord Boothby, well recollects. Those of us who supported entry have always said that this was the challenge which would enable our growth to increase, and that if we did not join we should see the others, the members of the Six, overtaking us in living standards. Alas! with one exception, that of Italy, that has already happened: their living standards to-day are all in excess of ours, and they were not ten years ago.

I do not say that that is by itself a conclusive argument. Clearly it is not. Clearly, there are other nations whose growth has been large. Clearly, there are nations within EFTA whose growth has been large, although for a very special reason. What I say is that had our estimate made ten years ago, that the growth of the E.E.C. countries would exceed ours, not been validated, had it not proved correct, then we should have heard a great deal from those who are opposed to the Common Market saying how wrong we were. So I say that it is a relevant argument, though not a conclusive one. What I am more attracted by is the position of Belgium as one of the Six. The position of Belgium was that their rate of growth was comparable with ours, thoroughly sluggish, and that their industrial position was comparable with ours in set-up, though not in size. What happened to them was that their rate of growth after joining the Common Market—as I think, very much influenced by their joining the Common Market—went up from something like 2.8 per cent. to something like 4.4 per cent. per annum. There is no other obvious outside influence which can explain the sudden and remarkable change in Belgium's growth rate.

I think it reasonable to conclude from both of the things I have said, therefore, that it is open—not a certainty—to this country to achieve an additional growth of something of the order of 1½ per cent. through the advantages, which I shall very shortly outline, of joining the E.E.C. If your Lordships will bear with me, I shall attempt to measure that, once I have indicated what I think the arguments are. First of all, there can be no doubt that our scope for growth is great. Not only has our growth been disappointing, but the trend rate over the last ten years has, if anything, been downwards and not upwards. It is not a satisfactory explanation to say that it has been held back entirely because of balance-of-payments difficulties. If your Lordships will be good enough to examine some of the periods when we had—even since 1964—full employment and great pressure, you will find that even then we were not able to achieve a satisfactory rate of growth. I myself feel that we have to look much more deeply than into the purely surface reasons of that kind.

There is great scope. The E.E.C. countries grew, and Belgium, in particular, made a spectacular growth after joining the Common Market. Therefore, is there reason to hope that we ourselves should experience something of a similar kind? My Lords, I think there is, for a number of reasons. First, a country's economic growth does not depend upon a whole line of industries marching forward in equal step. It depends upon a number of individual industries which are peculiarly suited to growth because they are modern, have high technological capacity, and are suitable and appropriate to the modern world. They are generally very complex, and very large scale. It is the growth in these industries—as you see if you examine the figures—which helps forward the total figure of growth. It is these particular industries which Great Britain has, and in which we are well able to stand up to European and other competition, that will gain enormously from the much larger home market that will be available, not only in terms of scale of production or in scope of sales, but also in terms of the capacity to attack third market countries through a much wider home market base. I have no doubt, therefore, that these industries will benefit enormously as a result of the much wider home market, and the freedom from having to jump the tariff wall, which joining the Community will bestow.

A minor but not unimportant point is that membership of the Community will permit a form of what I might call "unified command" in these industries which is lacking at the moment, and which I think your Lordships will discover most industrialists find of considerable difficulty. You can get a much more efficient and effective industry or business moving if you can have a unified line of command, something which is denied at the moment. That is, of course, purely in terms of exporting our visible exports. If we think in terms of invisible exports, and the invisible services that we render, of course we are well poised to take considerable advantage of the additional market which will be open to us. Indeed, I should be astonished if our services did not increase very substantially. There is no body of opinion which doubts that our expertise, our skills, our approach, our character, our history and tradition in these matters all give us an enormous potential to improve and to take advantage of the addition to the market.

The biggest single argument that I would put before your Lordships is the question of competition: competition that will be felt. I myself, having searched my mind, cannot find any other method by which we can be jerked or shocked out of what is, by and large, our complacency. This complacency stems from the knowledge that one can always get a reasonable day's living; that if one is unemployed the hardships are not physically great; that there is always business to be done—that kind of acceptance of orders instead of searching for them. I find a general attitude of complacency which I believe we can be jerked out of only by visible, close, competition. All of us know that in the world of sport we react to the stimulation of a pacemaker. The pacemaker must be next door; he must be visible. It is no use having a pacemaker in Glasgow and running a race in London; for then you are not aware of the fact that you are losing. We have not been aware in this country of the fact that we have been losing this race, year after year, with all the other countries of the Six, and with many others—Australia, Canada, and Denmark—also passing us by in our standard of living. We have not been aware of this because the competition has not been sufficiently closely seen and experienced by all who are concerned at all levels in production of goods and services.

It is the knowledge of working in competition with, perhaps side by side with, workers, managers and administrators of the different countries of the Six, which will provide the challenge and enable the growth to take place. I agree with those who say that there is no obvious alternative to joining the Community, not only because of the reasons they have given of the lack of suitability of AFTA or EFTA, but also because there is no other likely event which, to my mind, will produce the challenge that is needed to make all of us go for additional growth.

So I believe it reasonable to assume that we will have not an additional growth of 1½ per cent., but a very modest 1 per cent., attributable to joining the Community; doing less well than the Community countries themselves have done, and doing less well than Belgium found herself able to do as a result of joining the Community. I can then do my sums, because if you take a figure of 1 per cent. you find after five years that the additional gross national product is of the order of £2,000 million a year, and after ten years is of the order of £5,000 million a year.

If I am right in saying that the cost of entering might ultimately amount to something of the order of £400 million to £500 million, and that the benefit in ten years might be of the order of £5,000 million, we are arriving at an equation which can easily be grasped; namely, that the benefit in ten years' time is approximately ten times as great as the likely cost of entry. It is our duty to try to explain that, if we believe it, and, on the basis of such experience as I have in these matters, I believe that that is a possible outcome which we can achieve.

Therefore, I say to the Government that of course we must be firm in our negotiation, and we must rely on the security which we feel as future partners to put our case firmly and well, which one can do only when one has a secure position vis-à-vis the person with whom one is bargaining. But at the end of the day I do not think the conclusion will depend precisely on what has been the outcome of the negotiations. I do not think that that will be the determining factor. Those negotiations need to demonstrate the truth of what was said to Mr. Rippon, which he reported in another place on December 10. I quote from Hansard, col. 691: … should unacceptable situations arise within the present Community or an enlarged Community, the very survival of the Community would demand that the institutions find equitable solutions. That is the key and, provided that the negotiations are conducted in a sense which demonstrates that philosophy being taken into account, they will show themselves to be acceptable.

Therefore, the decision will not exactly depend on the proportion of benefit to cost—is it likely to be ten times, nine times or eight times? It will depend on the confidence which we have in ourselves to play our part in Europe, to lead where we are entitled to lead, to follow where we should follow, to exert the greater influence which can be exerted only when it is shared. It will depend on our confidence to do those things born of our political maturity, our political wisdom, in spite of our falling—and recognisably falling—military and economic power. I have every confidence that we can make our contribution to the European Community. I may be said to be a good European for making that statement. I prefer to say that I am no mean patriot.

7.15 p.m.

LORD BOOTHBY

My Lords, I am very glad indeed that the noble Lord, Lord Diamond, with characteristic experience and ability, has put forward the economic advantages of our joining the European Economic Community so clearly and so well, because I am going to dwell very briefly on the other side, on the political side, which he said at the beginning of his speech was basically the more important of the two. I am not going back on the past. Your Lordships have heard me enough on this subject and know my views very well.

I first proposed a United States of Western Europe before the war ended, in a newspaper despatch from the San Francisco Conference over a quarter of a century ago, when I saw quite clearly what the Russians were up to. They achieved all their aims. They got half of Europe. We achieved none of ours. All we got was the end of the "special relationship" with the United States, and the liquidation of the British Empire. The time for us to get into Europe (and I have said this before) was when we could have had the undisputed leadership of Western Europe on our own terms, on any terms: in the late 'forties and early 'fifties. This was ruthlessly rejected by successive Labour and Conservative Governments, so it is no Party issue.

But from that came the rise of the Six. The Common Market, in which we never believed, arose as a result of the despair of the Six over British policy; and I myself saw it happening as a member of the Council of Europe at Strasbourg, which I was for seven years, from 1949 to 1956. We did not even send a delegate to their conferences at Messina and Brussels. To our amazement, and not altogether to our pleasure, the Common Market succeeded, as the noble Lord, Lord Diamond, has pointed out. Economic growth in the Common Market has since far exceeded our own. Between 1958 and 1968 the gross national product of the Six expanded at a rate of 5.1 per cent. per annum, while in Britain it expanded at a rate of 3.2 per cent. per annum; and from our point of view the figures to-day are no better.

Where do we stand now, my Lords? I do not want to be too pessimistic, but I should be inclined to say in stagnant and almost impotent isolation. We are no longer masters of our own destiny in foreign or economic affairs. Strategic arms limitation upon which the future of the world depends is being discussed over our heads. We are under the absolute economic domination of the United States of America at this moment. The markets in London are completely under the influence of those in Wall Street. And, if it came to a crunch between the super-Powers, we should be totally dependent upon the United States for our defence.

I have said before to your Lordships, somewhat to my surprise without any great dissent, that the multiracial Commonwealth is to-day something of a myth. So it is, from the point of view of an effective coherent united policy in the fields of defence, foreign or economic affairs. We are watching that to-day in Singapore. Some progress is being made in Europe upon the lines indicated by the noble Lord, Lord Diamond. So far as technology, banking, industrial rationalisation and research are concerned, there is a considerable coming together between the various industries of Western Europe, as the noble Lord, Lord Thornycroft, reminded us in a remarkable speech which he made recently in your Lordships' House.

What are the Government doing? The Germans are on the move in Central and Eastern Europe—very much so—with the Ostpolitik. We should be with them; but we are not. The French are moving pretty fast all over Africa. Their infiltration is of far greater import than that of the Communists. We should be with them. We are not. If we were all together in a Western European Political Union, there would have been no crisis over the sale of arms to South Africa, because whatever we jointly decided would have been accepted.

We are now talking largely in terms of bread and butter. It is inevitable on account of the negotiations that are proceeding—the cost of entry into the Common Market, the cost of food and so on. Certainly no one expects us to subsidise an archaic European agriculture (I deliberately refrain from using the word "peasantry", in view of what the noble Lord, Lord George-Brown, said about Mr. Enoch Powell's speech) for an indefinite period—although I am bound to point out that Mr. Powell himself said that the peasantry of Europe was diminishing all the time. But nobody expects us to subsidise for an indefinite period a bad system of agriculture in Europe on the Continent; nor, for that matter, does anyone expect us to subsidise our own farmers indefinitely to the extent which we are now doing: because we cannot afford it. These are proper matters for negotiations now proceeding, and for further negotiations after we get into the Common Market.

But, my Lords, the issue goes deeper than that. It concerns the whole future of this country. As Mr. Enoch Powell said, with merciless logic, the day before yesterday, it is on the principle and not on the fripperies that we should be heard and on which Parliament will have to decide. Do we want to go on as we are; or do we want to become part of a Western European Confederation in which we should certainly play a leading part, but not necessarily the leading part? A Confederation which might one day face the modern super-Powers on both sides of it on level terms, and even rival Rome? That is the prospect that glitters in the distance before us.

Oddly enough, my Lords, it was de Gaulle who, in one of his flashes of insight and inspiration, defined the issue most clearly ten years ago. He said: The nations which are becoming associated in Europe must not cease to be themselves, and the path to be followed must be that of organised co-operation between States while waiting to achieve, perhaps, an imposing confederation. My Lords, "confederation" is defined in the dictionary as: A permanent union of sovereign States for common external action. I find nothing to quarrel with in that definition. De Gaulle took the view that we were not yet ready to go along with it, and he therefore kept us out. I do not know whether he was right or wrong, but I rather suspect that at the time he was right. Shall we go along with it now? This is the basic issue that has to be decided, and it is primarily a political issue.

My Lords, not ten but over twenty years ago the noble and gallant Field Marshal, Lord Montgomery of Alamein, when he was at NATO, said prophetically: The strategic centre of the battle for world peace is Western Europe. We must be able to hold the position there. The task before the nations of the West is primarily political". This was over twenty years ago. Economic fusion and military strength will not be obtained until the political association between the group of nations concerned has first been defined". My Lords, it has never been defined; and it is not defined to-day.

That brings me to my last point. If and when we join the Common Market our task will have only just begun. We shall have to bring our own unique political genius and experience to bear upon the scene, because a Customs Union, buttressed by an unviable agricultural policy, is simply not good enough. We must go back to the ideas and ideals of Strasbourg in the 1950s, when we passed a resolution in the Assembly demanding the creation of a European Political Authority with limited functions but defined powers. Full economic and monetary union, and effective co-operation in the fields of foreign policy and defence, cannot be achieved without a political foundation and structure. New forms of organic political union which amount not so much to the surrender as the joint exercise by common consent of certain defined sovereign powers in defined fields are an essential corollary to any kind of constructive or worthwhile European union; and to that extent we must be prepared to surrender some national sovereignty in defined fields to certain defined authorities.

Let me give one or two examples before I sit down. Monetary union, if it ever comes about, must mean a Federal Reserve Board for Western Europe. A common monetary policy, which must precede it, means regular meetings between the Finance Ministers concerned and the governors of the banks. A common foreign policy means frequent regular meetings between the Foreign Ministers, and a common defence policy exactly the same. At the summit of power there must be meetings, and fairly frequent meetings, between the Prime Ministers concerned.

All this is bound to mean a co-ordinating Council of Ministerial status, and a number of supranational organisations under the ultimate control of a Western European Council or Parliament; and I should hope that this would be chosen, as now in the Council of Europe, from members of existing national Parliaments, because I do not believe that direct elections, in the teeth of national Parliaments, to a European Parliament would ever work. They must be representatives of the national Parliaments in the Council of Europe, reporting regularly the workings of the Council of Europe to their own Houses of Parliament. That is the sensible course of action, in my view, for the future. It will take time, but, my Lords—

LORD GLADWYN

My Lords, if I may interrupt the noble Lord, may I ask him this question? Does he think that these chosen, appointed Members of Parliament from the various Parliaments will be able to spend more than a fortnight or even, at the outside, a month looking after the affairs of Europe; and therefore would not the question of nominating them by some other means, or even elecing them, have to arise?

LORD BOOTHBY

No, my Lords, I think there is plenty of time for Members of Parliament, who have an immensely long summer vacation and vacations at Christmas and Easter, to do a bit more work than they do. I think they would have plenty of time to attend to the work, especially during the long summer months, in some agreeable city. If the noble Lord persists with this matter I would suggest Venice as an appropriate place for the Council of Europe to meet, and I am sure the noble Lord would not be too reluctant to give up (not at his own expense—but with all expenses paid and everything done) four weeks of his time during September to be in Venice. I can assure him that there are few more delectable experiences.

My Lords, as I said, it will take time, but as Churchill said at the beginning of it all: We are not making a machine; we are growing a living plant". And that is something we should never forget. Mr. Powell, in his much-criticised speech the day before yesterday, said, I think with truth, that this was the most basic of all questions that could be addressed to the people of any nation. Could they, and would they, he argued, so merge themselves with others that they would no longer be a "we" and a "they" but only a "we"? This, he said, was what the debate was all about, and in this each much speak for himself. My Lords, I have risen to speak in this debate to give my answer to that, because I reached my own decision 25 years ago, and have not changed it. It is an unequivocal "we", not "they".

Why? First, because I believe that insistence on narrow national sovereignty is the primary cause of the evils of our modern world, and that this has been proved by the events of the past three centuries, including the present one. I believe there is no longer any room for small sovereign nation States, in the world that confronts us to-day and is going to confront us for the next two or three hundred years, acting in isolation. I believe that virulent nationalism on the part of these nations—and you have only to look at the Middle East to see it in one of its most disastrous aspects—is one of the greatest evils of our time. Secondly, I believe that we shall have a tremendous opportunity for bringing our influence and vast political experience to bear from inside Western Europe rather than from outside it. Thirdly, the only conceivable alternative I can see for us (here I am afraid that I must disagree with my noble friend Lord Caccia) is to become an impotent offshore island being gradually bought up by the United States, and living on memories of an Empire which has ceased to exist. That is the real and dire alternative I can see before us: I can see no other.

This is not to say that we should not be firm in our attitude towards these negotiations; that we should not turn down anything we regard as quite intolerable. But I do not think that intolerable demands will be made upon us. However, I do say that the alternative to joining Western Europe seems to be dire. My Lords, in the 18th century Napoleon, in the 19th century Bismarck, and in the 20th century Hitler, sought to impose unity on Europe by blood and iron; and they were by no means the first. All failed. Let us at least try to show the way to a more lasting unity by democracy and consent.

7.33 p.m.

LORD BETHELL

My Lords, I do not understand the issue of the Common Market. At the beginning of this debate my noble friend the Leader of the House spoke of "marvellously contradictory" economic forecasts which have been appearing in the Press, in pamphlets, and in journals in recent years, which have confused him and which have confused most people, economists included; which certainly have confused me, and which leave 99 per cent. of the population in the situation of not knowing really what we are letting ourselves in for if we embark on this tremendous and world shattering enterprise.

In recent months I have seen costs of entry into the Common Market balanced against expenses and benefits, and I have seen comparisons between costs and benefits which attempt to come to some conclusion about whether we would be right to go in. I have even seen the costs deducted from, or even added to, the benefits and some sort of a difference achieved which would lead to a conclusion which we should take into account when deciding whether the Common Market is a good thing or not.

The problem about this is that the costs are a more accurately measurable factor; that there is already a budget for these costs: they exist already, they are now here; and one can work them out and try to see what we are sacrificing by taking these costs upon our shoulders.

The benefits are more long-term. We are told that we must look forward to an expanding market, that this will bring us untold benefits. But how much is this worth? One cannot evaluate those benefits in terms of millions of pounds per annum. We are told that if we wish to develop new techniques, if we wish not to become an underdeveloped country and if we wish to keep ourselves supplied with new products and to share in the development of the technical world on the highest level, we must be a large unit. But how much is this worth to us? This is very hard to work out. I do not believe there has been made any sort of accurate attempt—certainly none which could be presented to the people or to Parliament—at anything on which we should base our opinions.

I should like to bring to your Lordships' attention something which has most influenced me in recent months. It is a different matter from that which was touched upon by the noble Lord, Lord George-Brown, in his long but fascinating speech. He mentioned the cost of keeping out. He spoke of what is happening as the years pass and we do not join. By doing nothing what are we losing? As a corollary to this, trade-wise, where are we going?

The noble Lord, Lord Shinwell, spoke of research. I have done just a little research, and I have seen from my works of reference that British imports from the Commonwealth in 1961 were 30.8 per cent. of our total trade. In 1968 they had fallen to 22.7 per cent. I have seen that British exports to the Commonwealth in 1961 were 33.3 per cent., and that in 1968 they had sunk to 21.8 per cent. At the same time, in 1968 British exports to Western Europe were 44.5 per cent. This means that not only has our trade with the Commonwealth declined remarkably in the seven or eight years in question, but also that our trade with the Commonwealth has been converted from a favourable one to an adverse one. It also seems to me to show that our exports to the European countries are becoming more important to us just as our exports to the Commonwealth are becoming less and less important.

I ask myself: "Which way are things going? What is the future? Is there any reason to believe that this tendency will not continue?" None of the experts I ask can tell me of any reason why this trend should not continue. At the same time our traditional customers and our traditional partners in trade are seeking alternative markets. I am told that now Australia sells more to Japan than to any other country, and buys more from the United States. This was not the case 10 years ago, but it is now; and I see no prospect of this tendency being reversed. Other Commonwealth countries—Nigeria, Tanzania, Uganda, Kenya, Malta—are, separately from us, seeking some sort of an accommodation with the E.E.C. This is being done totally irrespective of our own application to join the Community.

I wonder, therefore, my Lords, whether there can be any doubt at all as to where our future lies. Does it lie in this declining market, which was our "bread and butter" before the Second World War and in the early years after, or does it lie in this expanding market which, irrespective of any tariff barriers, seems to have imposed itself on us in the last ten years really quite remarkably? Can we really kick against the pricks to this extent? Can we fight against this tendency? I very much doubt whether we can. This seems to me very much where our future lies.

One point which my noble friend Lord Shinwell raised which is very important is the question of public opinion. Of course he is quite right when he points out to the House that at the moment it would appear that public opinion is against our joining Europe. Gallup Polls can be so deceptive, as we saw in June; but there have been a number of these polls, and it would seem fairly conclusive that if there were to be a referendum—which of course the opponents of the Common Market not unnaturally demand—the vote would go against our joining.

But I am wondering how long this state of affairs will continue. Will people continue to believe that our future lies in our standing alone, on our own feet? Will this idea continue and prolong itself in the minds of the public? I must say that I doubt it. It has been said on the side of the non-Marketeers that our trade with Europe has already increased 2½ times in the past ten years. But at the same time the volume of trade inside the European community has increased five times—twice as much. These are elementary figures which make an impression on me, as a non-economist who does not really understand the situation and who is trying to find a path that we should follow. I wonder how long it will be before these figures start to impress the bulk of our population and before public opinion begins to swing in favour of our joining.

Again, we have the basic problem, which no one can deny, that people are concerned with such matters as wages and the standard of living. I read that in 1958, measured in market prices, the average income in this country was the highest in Europe. In 1968, ten years later, it was lower than that of any of the member countries of the Six with the exception of Italy. There is no doubt that in a year or two it will be the lowest of all and that in the foreseeable future it will continue to fall in relation to the advanced European countries. I see no prospect of this trend reversing if we continue as we are going now. Similarly, the gross national product per head between the years 1958 and 1968 rose in the United Kingdom by 49 per cent. and in the European Community by 112 per cent.

Are these facts totally coincidental? Is this not very strong circumstantial evidence of the fact that it is membership of this large, 200 million population Community which has contributed to the vast economic growth of the member countries and to their tremendous rise in wages in the past ten years? My noble friend the Leader of the House spoke interestingly of a rough timetable which he hoped would lead to our gradual approach to membership of the E.E.C. He mentioned a time about the end of this year when we should reach broad agreement with the other members of the Six about our terms of joining, after which it would be simply a matter of transition. I should like to suggest to my noble friend who will be replying for the Government that before the end of this year, before the point is reached when—as I hope—we shall reach agreement with the Six, Government should attempt to put these points to the people; that they should try to get these ideas across and to explain to the British people what we stand to lose by marking time, by doing nothing, and what we stand to gain by joining this huge unit which seems to be doing so well and which is having such success economically. I have given a few figures and I am sure that they can be hammered home to convince the people that there is a very strong case for going in.

My final point is, indirectly, a personal one. I have a number of friends who are members of the Foreign Service and who are directly involved in the negotiations of our entry into Europe. In the months since they have embarked on this enterprise I have noticed in these men, young men whom I respect, a growing enthusiasm, keenness and ebullience for the work on which they are engaged, which is quite untypical of the normal diplomat. This enthusiasm that they are bringing into this enterprise of getting us into Europe really makes them stand out from their colleagues in the Foreign Service. I have been very impressed by what they say, by what they tell me, by the facts which they understand (for it is their job to understand them and they spend eight hours a day working on it) and which they try to get across to me in a brief period. The results of their work and their research I am prepared to accept as those of real experts who understand the situation and who are thoroughly in favour of the course on which the Government have embarked.

I would end with a prediction which is not astrological, as mentioned by the noble Lord, Lord Shinwell, but a prediction which may come to pass: that we shall enter Europe. I think that this has been clear for some years to most Members of this House. We shall enter Europe, and the people of this country, by and large, will take to the idea, slowly but surely. The more that one knows about it the more one takes to the idea. This is a tendency I have noticed. The people by and large will come to realise that no one and no country—not even this country—is "an island entire of itself".

7.56 p.m.

LORD REAY

My Lords, the decision as to whether or not we join the E.E.C. is a major decision about our future political direction. I accept the view which was expressed by Mr. Enoch Powell—although, I think, it was also possibly implied in the speeches of some noble Lords this afternoon—that in the light of the importance of this question, the differences that now remain over the terms to be negotiated between ourselves and the community are only trivial. For the first time in three applications this country has been negotiating with a Community which unanimously wishes us to be part of itself. I believe that each side simply wishes to be reasonable over the matter of terms. In such a situation nothing can prevent us from becoming a member except an eleventh-hour refusal by ourselves to do so.

It is perhaps useful to take a look at what is happening to bring us closer to Europe and which will continue to happen, whether or not the Government are able to lead us into Europe at the present time. There is the matter of trade to which the noble Lord, Lord Bethell, referred in some detail. Between 1958 and 1968, our exports to the Commonwealth rose by only 14 per cent. In the same period they rose to EFTA by 144 per cent. and to the E.E.C., despite tariffs, by 167 per cent. There are, besides, other fields in which our policies will increasingly need to be integrated with those of other European countries. We shall become more exclusively concerned with European defence as our defence commitments throughout the world are withdrawn. We shall need co-operation over legislation for the control and taxation of international companies. There will be need, in the first instance, for a European solution to the problem of the pollution of our air and our water. But there is a more important respect in which, whether we like it or not, we are going to merge with Europe. Each one of the European countries has the same basic modern problems—the strains and aggressions produced by present-day urbanisation; the speed of change; the problem of acquiring the political co-operation of the labour force. In all of these the causes and solutions must be the same, and the obvious way to solve them must be to solve them jointly. Indeed, it may be essential to solve them jointly.

For one thing, my Lords, it is arguable—it is even probable—that inflation requires a European solution. It is no accident that inflation should have begun in the autumn of 1969 in every European country at the same time as it began here; for the populations of these countries react to the same influences in the same way at the same time. Each is stimulated by the demands of the other; each adopts the solutions or the compromises of the other; each even borrows the arguments of the other. I absolutely agree with a political observation made by Professor John Williamson, Professor of Economics at Warwick University, in an article in to-day's Times which the noble Lord, Lord Shinwell, was kind enough to draw to the attention of the House. Professor Williamson doubted that the maintenance of national currencies would be of any use as a means of protecting depressed regional areas, because unions would demand parity across frontiers, even where a common currency had not been created. In other words, there will be a tendency for the labour force to unite across national frontiers; and this is a problem which Governments will have to unite to handle. So a unification, whether we want it or not, is taking place on a popular level before our eyes. To join Europe, therefore, is to recognise, and not to set a course against, the popular interests of to-morrow.

My Lords, it may then be objected, "Why, in this case, is there not a steady national demand for our entry into Europe?" I believe the answer is that our sense of our national identity is still too closely linked with ideas of isolation and of an imperial role. Any sort of independent global role in the world, however much it is expressed in terms of the needs of others, or even in terms of the protection of our own commercial interest, is still an imperial role. To have an imperial role is to have an isolated role; and if one demands an isolated role it means that one is still unwilling to co-operate as an equal with countries that are our equals.

It is no coincidence, I think, that the opponents of our entry into Europe have never explored the possibility—or at least they have never discussed in public the possibility—of our remaining outside the Community, without at the same time inflating the possibility for us to increase our ties with either the United States or the Commonwealth. The noble Lord, Lord Shinwell, may have appeared to do this; his speech was certainly a very impressive declaration of faith in Britain. But it contained absolutely no policies whatsoever for the future.

One might have expected from some of the opponents of entry into the Common Market that they would have drawn for us a picture of ourselves outside any permanent grouping or alliance, without any wish for an empire, either by association with the United States or, nostalgically, within the Commonwealth—a view of our future that contained some of the comforts of isolationism without the imperial illusions. But the two are, in fact, inextricably linked. To admit that we did not want an empire would remove the only objection to co-operating with our equals in Europe. It is, then, I submit, because we want an empire which we know we cannot have—for we have spent 25 years attempting to stimulate it into life and it has simply crumbled away between our fingers—that our prevailing mood has become so frustrated. The frustration, a frustration to which a number of noble Lords have referred, the continuing doubts about the value either of our political role or of our economic role in the world—all these would disappear, or at least acquire a far less self-critical character, if we were to accept the reality of our role in Europe.

To some extent, the fear of a loss of national identity in these circumstances is quite natural. My noble friend Lord Gladwyn pointed out that if a referendum had been taken of the present Common Market countries before they entered the Common Market, very likely one or two of them would not have joined. For us it is more difficult. We are the last of the great European Powers to maintain some of the habits and the form of empire.

There are a number of signs that what the Government are afraid of is not the terms that they may, or may not, be able to get out of the Community, but the difficult task they will have of containing the resurgence of an emotional refusal to risk our national identity. It is this emotional response which the Express group of newspapers so skilfully stimulates with their series of heroic war-time exploits; their dramatic announcement of a new gunboat action in the Indian Ocean, et cetera.

What in the first place the Government need to do, if they are anxious about their ability to carry the argument for our entry into Europe, is to spend the intervening time between now and when the Treaty is ratified, in playing down, rather than playing up, the possibilities for us in a special relationship with America, or in maintaining the Commonwealth. The more the Government demonstrate their anxiety to maintain the unity of the Commonwealth, the more they provide a base for those who are against our entry for an emotional appeal to those who are inclined to fear it. The Government should have one principal direction in mind—Europe—to which the others are related, not three directions which are followed independently.

In the second place, in my view the Government should immediately start to stimulate public discussion, for it is easier to maintain over a period of time a rational argument than an emotional resistance. I am sure we all persuade each other by the arguments we are using this afternoon, but I am not at all sure that, at the present rate, the Government are going to win the argument in the country; and unless they win it, or unless they at least balance the argument in the country, they will very possibly not have their majority in Parliament.

I certainly do not imagine, my Lords, that a decision to remain outside the Community, in whatever political direction the Community goes, would be a permanent decision. If there is one thing that is clear about the youth of to-day it is that they are in no way so likely to be affected by the same fear of a loss of national identity as we ourselves may be. The young to-day are determined to be international rather than national. And since the Common Market offers us the first opportunity for a permanent cooperation with other nations without the pretence that we are superior to them, I believe that that must be the opportunity for the expression of their internationalism that youth would support to-day; and if we do not take that opportunity, I believe that is the choice they will make for themselves to-morrow.

If we enter, we shall indeed be paying a high price for the sake of the Community's agriculture policy, but I believe that the need for a high-price food policy is only temporary. The reason why it is needed is one of social structure and not of economic theory. The class of peasant farmers on the Continent is undoubtedly fast disappearing. In 1958, of the total working population of all the countries in the E.E.C., some 25 per cent. were employed in agriculture. By 1968 this had gone down to less than 16 per cent. By the time such peasant economies as Spain, Portugal and Greece wish to join the Community, France and Germany will have the same interest as ourselves in limiting the extent to which such economies should be subsidised at the expense of member-countries with a smaller agricultural population.

But against this price, which we should perhaps save if we joined later rather than now, there is a far graver risk involved should we remain out of the Community for a further period. For we shall risk entering at a later stage on the level not of one of Europe's first-rank Powers but at a level of one of its second-rank Powers, and entering a Europe whose further developments, both for this reason and because the Community will on its own have integrated far further without our participation, we shall be able to determine to a far less extent than we shall be able to determine them if we join now. Nor do I expect any political rewards for the Government if they decide not to go in, even if they do it for the sake of their majority in Parliament.

Before I conclude, I should like to make two observations on the negotiations now taking place. It was reported that we caused, at the least, confusion when we made it plain to the Germans and to the French separately that we agreed with both of their alternative and conflicting policies on the future of economic and monetary union. Now I think it is a mistake to pretend to agree with the French when you do not agree with the French. I am glad to have the support of my noble friend Lord Gladwyn. The French have always been very clear sighted about British interests and intentions and will never be blackmailed by earnest and, to them, hypocritical attempts to win their affection, when those attempts are designed to disguise or at least to compensate for real differences of policy. Although we are always hurt and uncomprehending when the charge is made, yet if we do this, the cry of "Perfide Albion" will once more be circulated on its rounds of Europe.

In the second place, I believe that there is a danger that we might put too much emphasis on the review clause, and if the Government were to listen to the recommendation of the noble Lord, Lord Chalfont, there certainly would be danger of that. I understand that the Government should wish to be able to reassure the British people, in whom there lurks a fear that the E.E.C. represents an open-ended and irrevocable trap, by being able to point to our opportunities for reviewing the terms on which we made our decision. If I were the Government, I think I should rely more on the argument that if the terms did prove to be intolerable, well, that is that—they would have to be changed or we should have to leave. Alternatively, if there has to be a review clause, I think it should be confined to narrow and carefully specified limits. To insist on a general review clause in advance, just as if a person demanded subsequent opportunities to review his decision in advance of contracting marriage, is to announce our distrust of our partners' co-operative intentions. We should not be surprised if the countries of the Community will tend to be unaccommodating on this question. After all, we have for years conducted in front of them our perpetual debate as to whether we should look for a future with them or with the Commonwealth or with the United States. For them, as for us, this is a test of our willingness to behave as a partner among equals.

To join the Community contains, of course, a risk. It will be at moments a frightening experience, but it will be, I believe, an exciting and vital experience. If we join, I believe that a lot of the frustration and the sense of being lost that is a consequence of our persistent attempts to attach a meaning to forms of the past that can no longer bear a meaning, will disappear. I believe that our own view of ourselves, and our self-confidence, will immediately alter. We can expect as much, if a major problem of twenty-five years' standing is finally dealt with. Such a prospect demands a risk; it cannot be reached without a risk; and I believe that this risk is the right risk.

8.6 p.m.

LORD CAMPBELL OF ESKAN

My Lords, I hardly dare confess that, after the last five hours of flood-tide towards the European Common Market, stemmed only by the noble Lord, Lord Shinwell, I am still far from convinced that any British Government can negotiate terms for Britain's joining the Community under which the British people will be socially, economically and politically better off, which one must assume to be among the important considerations which the Government have in mind in their quest for the European Eldorado. But I shall spare your Lordships by not talking about that. Because I want to keep my speech within ten minutes, I shall stick to one single aspect of Commonwealth relations, let alone British interests, which will be jeopardised if we join the Common Market on the wrong terms. I refer to Commonwealth cane sugar, which I was most reassured to hear the noble Earl the Leader of the House recognise in opening this debate as "a very special problem of crucial importance".

In this, I must declare an interest. My family have had sugar interests in Guyana and the West Indies since the eighteenth century, and since 1951 I have been Chairman of the Commonwealth Sugar Exporters Group, which works with the British Government in operating the Commonwealth Sugar Agreement. This Agreement, which a Labour Government negotiated and a Conservative Government signed, has stood the test of nearly twenty years as the instrument, the charter, which assures Commonwealth suppliers an outlet for about half their production at (to quote the rubric) "reasonably remunerative prices for efficient producers", and which has assured British housewives of supplies of sugar at a price which the British Sugar Board have described in their latest report as lower than that prevailing in any other major developed country in the world. The present Government, as the noble Earl made plain, have clearly stated their conviction that Commonwealth sugar is an interest which must be protected in the E.E.C. negotiations. Happily, this is not a Party issue, because the previous Government had given virtually identical assurances. Towards fulfilling these assurances, the present Government have tabled proposals in Brussels, which have been duly leaked. The noble Lord, Lord Chalfont, said that these proposals were not known. I assume that, like everything else, they were leaked fairly accurately.

These proposals are, with one exception, admirable. They include special quotas, settled prices and periodic review. These, to all intents and purposes, are the essential features of the Commonwealth Sugar Agreement, except that Australia is to be phased out. For many years, Australia has been a reliable supplier to the British market and a good customer for British exports. Its exclusion from the special arrangement in an enlarged Community, thus pushing its exports on to the precarious world sugar market, would upset the balance of the International Sugar Agreement, which, incidentally, the E.E.C. have consistently refused to join. This would damage not only Australia but all developing countries which export sugar. There is no time to elaborate on this matter, but it could prove a serious problem for the future. Except for the case of Australia, the British proposals are, I think, the most we could possibly have expected, but they are the very least that would meet the needs of the developing countries. The Six have not yet replied to the British proposals. Although the noble Lord, Lord Chalfont, spoke with real understanding about the problem, I hope, your Lordships will allow me a few minutes longer to explain briefly, but in some detail, why I hope the British Government will stick to their guns on the original proposals.

Obviously an easy way out would be to settle nothing definitely now, but to offer honeyed words, left to be quantified and settled after Britain's entry to the Community. To such an act of faith there are great objections. The fact is that beet farmers have votes in the European market and cane producers do not have votes. Moreover, the sugar rules of the Six guarantee both price and market for 105 per cent, of Community consumption of sugar. So that if, as an outcome of this year's negotiations, it were known that nothing definite was to be settled for Commonwealth sugar until 1974, this would be the green light for beet production to expand to fill the market of the enlarged Community, and cane sugar would inevitably be squeezed out. By the same token it would be the red light for all investment in cane sugar, because sugar is a long-term crop involving exceptionally heavy capital investment. The Commonwealth countries do not dream of asking beet producers to cut back production, and it is most unlikely that they would ask for anything so unreasonable. They recognise that there may well be further expansion of beet production both in Europe and in the highly efficient British beet sugar industry.

The Commonwealth producers do not seek a bigger outlet in the enlarged Community than they have had in Britain for the last 20 years. They only ask that the enlarged Community should undertake now to continue to buy the quantities of Commonwealth sugar which already have guaranteed access under the Commonwealth Sugar Agreement. This certainly implies the acceptance of some bounds to the expansion of European sugar production. But I see no reason why a firm settlement for Commonwealth sugar should not be reached now, including a quantified minimum guarantee of access, without prejudice to the review of the Community's own sugar régime as planned for 1974.

Unless the guarantee of entry for Commonwealth sugar is quantified and written into the E.E.C. negotiations, the future of Commonwealth cane sugar will be in grave jeopardy. I do not think it is clearly understood that that means that the future of the British sugar refining industry—with a great record for efficiency and total employment of the order of 10,000 people—will also be imperilled, because the cane producers' outlet is the refiners' throughput.

The Commonwealth exporters are concerned with three factors. The first is duration. This is vital because the economies of many developing countries in the Commonwealth depend on sugar for employment and foreign exchange. The noble Earl the Leader of the House said that man cannot live by bread and butter or steel alone. For one awful moment I thought he was going to add sugar, because in fact a great many people in the Commonwealth have to live by sugar alone. The second essential factor is price because it must cover the cost of production.

The third is quantity. In the E.E.C. negotiations this is the crucial factor. Unless, as I have said, a minimum guaranteed quantity is settled now, nothing could inhibit the expansion of European beet, and the whole of the cane sugar of the enlarged Community would be closed.

It seems to me that if the British negotiators were driven on this issue to give way to the pressure of Common Market doctrine (I nearly said theology), and to disregard the practical consequences, then many people and interests in this country and in the Commonwealth would be called upon to pay a quite excessive price for smoothing the road for British entry into the Community. Commonwealth producers, many of them already desperately poor; British housewives, already overcharged; our balance of payments, already overstrained; our refining, shipping and exporting industries, already struggling against subsidised competition (even in that fragmented archipelago the West Indies buy more per head each year than the E.E.C.), would all suffer if the British Government took the line of least resistance. Let me hastetn to add that I have no reason to believe that they will. Nor is there any reason why they should, because there is a way out of the conflict between British and Commonwealth interests and the rather strange rules of the E.E.C. game. Although the Six have a surplus of sugar, an enlarged Community would have a deficit. Either the enlarged Community can use the present rules to fill the deficit with beet sugar, or it can set aside quotas for British Commonwealth suppliers. That is what the sugar negotiations are about, or should be about.

Finally, my Lords, I must say that sugar seems to me to be a test case in the attitude of the Six and of Britain to the Third World; their opportunity of showing that they are not, as the noble Lord, Lord Gore-Booth, disclaimed, a rich man's club. The problem of sugar is soluble (that is not an intentional pun) if the British Government are firm and the Six will see reason. I am not sure that that is asking to much of them.

8.15 p.m.

LORD SELSDON

My Lords, having listened with considerable interest to the eloquent speeches made by noble Lords so supremely qualified to speak on this subject, I must admit to feeling rather like a member of a junior cricket eleven who has accidentally found himself in the first eleven nets. The reason I put my name down on the list to-day is that for the past ten years I have been working almost entirely in the international field and have been engaged in the development of trade and business interests of British and foreign companies in the markets of Western Europe. I am very proud of our industry, and proud of our products, but somewhat concerned that we do not appear to have the confidence that we need to tackle the markets of Western Europe. I have been fortunate enough to spend some time living and working in all the countries of the Common Market, and have been kept continuously aware of the problems and opportunities facing British companies. It is about some of these problems and opportunities that I want to talk to-day.

As our noble Leader has said, we have some excellent industries in this country and, in terms of our size, more than our fair share of leading international giants on a global basis. But the spread of our international business is far wider than that of our Continental competitors. We tend to be strongest in those markets with which we have had a traditional association, notably the Commonwealth. With a few exceptions, we are relatively weak in the countries of the Common Market. The ten-year cloud of uncertainty over our entry has held back many of our leading industries and prevented them from making the substantial investments needed to ensure that they could compete on equal terms in the local markets with their Common Market competitors.

Instead, many of them have looked further afield to countries where there is no local production and no local competition. In many cases, notably in parts of Latin America, their performances have been excellent. But the development of interests in these distant markets, although praiseworthy, ties up money and senior management time, which I personally believe should be more directed towards Europe at this time. I believe that we must do more to encourage our industries to concentrate their major efforts upon Europe, and we need a stronger and broader base in this part of the world, together with the economies of scale it will offer. We must provide industry with the right incentive to develop in the European market.

Since I was a salesman in Germany in 1962 I have watched with interest the growing power of the new European combines: not the traditional international companies that we know so well, like Henkel, Bosch, Akzo, Pechiney or Montedison; and one or two others in Italy, and even in Spain. We have not had the same concentrated power base that we need from which to attack their home markets, because with the strength they have built up over the past ten years they have been able to enter this market despite the restriction that our non-membership of the Common Market offers them. We have not had this power. I believe that we must build up local operations, and we need to establish more key British industries now in Continental Europe. Export-led operations can have only a limited success, except in certain fields. Distribution problems are the main difficulty. Distribution costs are much higher in Continental Europe, and national distribution of products is far more difficult to achieve.

It is rather sad that the efficiency of our own distributive trade should have enabled so many of our foreign competitors to gain major shares in these markets so quickly. This advance has been accelerated by the failure of many British manufacturers to deliver on time. Poor delivery and difficult distribution make it a very uphill job for a British international marketing man trying to sell our products on the Continent. We see opportunity after opportunity snatched from us by foreign competitors with better delivery times, but often with poorer quality products.

I am delighted to see that recently a number of British firms have been making substantial acquisitions in the Common Market, even during our current economic climate. They are the wise ones, because I believe that the whole Market will so dramatically change, with our entry, that new opportunities will arise. Denmark and Norway will probably join us. If they do, and if Sweden holds back, then Nordek will probably break up, and we may see a decline in the dominance of Swedish industry in Scandinavia. That is an area in which we should strengthen our links. Existing Common Market countries, too, will see greater opportunities and spread their nets, and by so doing may weaken their hold on current markets. From a competitive point of view we are fortunate, too, that the U.S. recession has, to some extent, slowed the advance of many American companies in Europe, although they may well be in the front of the Eurodollar loan queue. I feel that they are a less dominant threat than they were a few years ago.

All in all, my Lords, I feel that the opportunities now are quite good. We must, however, concentrate on those areas where we have an advantage over our competitors, and where we can press that advantage home now. My noble Leader mentioned that in the service area we have much to offer. We have much to offer in all areas, but it is in one area particularly, the technological area, that the opportunities are most promising. It is extremely depressing that at present we seem unable in many cases to manufacture the end products fast enough, and with sufficient dependability, in order that we may capitalise throughout Europe on our know-how.

If we cannot manufacture at sufficient speed and with sufficient reliability at home many of our large, international companies may be persuaded to take the manufacture of United Kingdom products overseas, and in that event we shall lose valuable employment and business. It is also rather ironic that the same problem—basically industrial relations—is keeping, so I understand, many European companies back from setting up manufacture or assembly plants over here, and giving employment in areas of the country where it is badly needed. Yet, despite all this, we still have an image for quality products. A recent consumer survey carried out throughout Europe has shown that we excel in the production of suits, woollen goods, marmalade, whisky and biscuits. That is at one end of the scale. Yet they still feel, too, that we are good at the other end, the planes, ships and cars end.

My Lords, I should like to dwell briefly on the subject of our cars. I have always had a British car, and I have only owned four in 14 years, three of which were made by the company with which my noble friend Lord Stokes is associated. Jaguar have one of the best reputations throughout Europe. They are almost the prize car at one end of the scale; and the Mini is at the other. I hope it will not be long before we can satisfy the demand which is there, and get more products on to the markets over there. We have to face the fact that in other consumer durable areas we do not have the spread throughout Europe that major European companies have now achieved, those that are attacking our markets over here. Often unknown to us they have gained over half of the British market, particularly in the white goods area of Italian products which are sold under British brand names over here.

I move now to the area which the noble Lord, Lord Diamond, mentioned, and which was also referred to by my noble Leader, the financial area. We are the financial centre of Europe. There is no doubt about that. As the financial centre, we can even now offer greater advantages than any others. We have a wider experience, a higher standard, a reputation for confidence; and, perhaps equally important, we are quick and efficient. But speed and efficiency in the international area depend to a large extent upon simplicity, with the minimum amount of paperwork, and the minimum complications. What can pass for standard practice in the United Kingdom domestic sector can cause unnecessary complications, delays and irritation where international work is concerned. These delays can sometimes discourage organisations from conducting their financial business in London. A current example is the question of stamp duty on documents relating to certain types of foreign currency transactions. I understand that if all documents with obligations payable in foreign currency could be exempt from stamp duty a major irritation and unnecessary complication would be removed without any substantial loss to the Treasury. I hope that Her Majesty's Government will consider this step.

This leads me to the need to make this country more attractive by building a stable situation, particularly in the taxation area. Our international companies, planning their development, need to have reassurance of consistency and not continual change. I should very much like to see the Government declare their long-term tax policies, for this could be of great help to companies in their long-term corporate planning, particularly in Continental Europe. We have to face the fact that international companies have the facilities to move costs from one country to another, thereby adjusting profits to levels which suit them best and, regrettable though it may be, legislation cannot adequately prevent this.

My Lords, we want to have some substantial changes in the tax structure that will make this country a more attractive one to which to repatriate profits. Although this attractiveness is to a large extent affected by the level of corporation tax, I cannot help feeling that stability and, perhaps, a greater feeling of security are pretty important. Many people who bring back their profits, or have the opportunity to do so, are worried about the difficulties of taking money out again without substantial complications and expense.

I cannot think that any other country in Europe can match us in the service industries. One of the most important in the future is insurance. We have greater expertise and efficiency than anyone in the Common Market. It is encouraging that already many insurance companies are setting up offices and subsidiary companies in Continental Europe. However, the advantages which our skills will offer will be somewhat limited if legislation cannot be harmonised between countries. It is obviously going to be important that, in any discussions of this sort now going on among the Six, our insurance industry should continue to have its views expressed. This is essential if we are not to be faced with a fait accompli and legislation which, if based on current European practices, would be far more restrictive than our own.

If we are to obtain maximum benefit in this area we must be allowed to operate throughout Europe with the same freedom that we have been able to enjoy in this country. This is an important area, because the market potential is enormous. For example, it has been estimated that the additional income which could probably come to Lloyd's is of the order of £400 million a year—all this over and above what they currently obtain from the Six. My Lords, in Lloyd's and our insurance companies we have a great asset. I hope that they will have the opportunity within the Common Market to obtain the benefits and rewards it can offer. This is one area in which we can do extraordinarily well. We have to look at the desirability of London as the centre for the headquarters of international companies. There are benefits and disadvantages in this. We do not want to turn it into a haven for too many international people, but, at the same time, by attracting these large companies to build their headquarters here we can do quite well.

A very important aspect in the management and direction of international operations is the matter of incentives and remuneration for senior executives and middle management. It is rather galling for an Englishman working hard on the Continent, or in this country for a British company, to find that his competitors have better net remuneration than he does, and greater incentives; also to find on occasions that his competitors are trying to attract the best industrialists away to their own companies. In our people we have another of our greatest assets. If we cannot keep them with the right incentives to work for our British companies, then we may lose out fairly substantially. I know of a number of cases where Continental companies, having engaged British managers, have made a fairly dramatic growth in a short period of time.

I should like to dwell on one further point for a moment, and that is the fear of people in this country—which I believe is fanned by the anti-marketeers—that we are going to give up and surrender our nationality. But, as our noble Leader said, the French are as French as they have even been. I have found in my dealings in Common Market countries that the differences have been increased by the Common Market—not reduced. There are similarities in the purchase of consumer durables and there are certain other similarities. But it is an incredible nuisance if you are trying to sell in the Six countries to 300 million people, that they do not all eat the same food, buy the same products, have the same opinions and behave in the same predictable way; for if they did life would be a lot easier. But they do not; and I do not think they ever will. My Lords, I have no doubt at all that we have no freedom to lose here, only an opportunity.

Finally, I would point out that, as is probably apparent, I am wholeheartedly in favour of our application to join the Common Market. But I am British first, my Lords, and European second. I do not believe in a European Utopia; it certainly has not been possible in my dealings with companies and countries in the last few years. Rather I am convinced that if we can harness our technological skills, our somewhat latent manufacturing capacity, our management ability and the will and enthusiasm of the people, then we shall emerge as leaders of Europe and enjoy the benefits to which that role will entitle us.

8.30 p.m.

LORD MILVERTON

My Lords, I have listened to every speech in this debate, and at the beginning I was a little alarmed at the extreme altitude of the political, diplomatic and intellectual manner in which it was being conducted, and I thought that perhaps a descent into business would be no bad thing. I speak, of course, as an administrator, and not qualified for those other species of altitude. I had the temerity to put my name down to speak in this debate because I feel that in a consideration of the vastly great questions involved by the proposal to join the Common Market, there is perhaps a danger that some of the relatively minor issues may not receive the close attention they deserve—and indeed demand, because the good name of this country is involved.

If we become a partner in the Common Market we shall presumably do so because, or mainly because, we think it would be an advantageous partnership for us; in short, we think that the future welfare of our people would be furthered by this momentous decision. Much depends on the price we may have to pay, and this price must surely not involve indifference to the welfare of friends bound to us by economic ties dating back to former colonial days. I suggest that it can never be a wise or creditable, or indeed ultimately profitable, move to accept neglect of our friends as part of the price of entry to the new club.

I want, therefore, to say a few words about Jamaica and the Windward Islands, and the banana business—it is a typical example; there are many others but there is time to give only one—in the hope that Government will be able to assure us that our reasonable obligations to combine practical sympathy and help to a vital Jamaican and Windwards industry will not be overlooked or obscured by the wider issues involved in this gamble with futurity. If Britain joined the E.E.C. without concluding special arrangements for Preference Area producers of bananas, not only would they lose the small preference now held in the United Kingdom and have to pay the Common External Tariff, but, even more seriously, they would suffer from the physical restriction of access which would result from Britain's adoption of the Community regulations about fruit. Restrictive grade specifications, application of price structures calculated to give a preference to Community producers, the operation of countervailing duties, and other measures—particularly the Safeguard Clause—aimed to protect the expanding production, and the extended storage techniques, of Community fruit growers, and those in the Associated Territories, would impose unsupportable burdens on Preference Area producers who look to Britain for more than half their total export earnings.

In the case of Caribbean Commonwealth countries producing bananas, even the achievement of Associate status would not give adequate protection unless in addition they were given preferential access quotas such as have been established for the traditional suppliers of other Community countries. The Jamaican banana industry and the Wind-wards banana industry are two of the large communities of overseas producers who face disaster if their material interests in the United Kingdom market are not safeguarded. These interests are capable of being safeguarded without hurt to E.E.C., but Britain will have to fight to obtain the substantial safeguards required.

If we look at the figures we see that the United Kingdom annual import of bananas amounts to about 350,000 tons, of which 97 per cent. come from Jamaica and the Windward Islands, earning those countries over £20 million and providing much needed employment for a large proportion of their population. West Indian bananas enter the United Kingdom free of duty and there is a general tariff of £7 10s. a ton on supplies from outside the Commonwealth, in additional to a quantitative restriction on bananas from the dollar area—this being about 4,000 tons per annum—which, I may say, is reviewed from time to time, and increased to meet market requirements when banana supplies from the Windwards and Jamaica, as sometimes happens, are not sufficient for this country.

The E.E.C.'s Common External Tariff on bananas is 20 per cent. ad valorem and the Departments d'Outre-Mer and Associated Overseas Territories of the Community could considerably expand their present production if the United Kingdom market became available as part of the E.E.C. and no special arrangements were made for West Indian producers. The balance would pass to the huge "low-cost" producers of Central and South America, whose soil and climatic conditions are particularly suitable for banana growing. These producers, one should remember, too, have very depressed social conditions and a much lower standard of living for most of their population as compared with the Windwards and Jamaica.

It is reasonable to assume that if Britain joined the Community, Jamaica and the Windward Islands would be able to achieve what is called "A.O.T." status, but this alone would not adequately safeguard the banana industry because, first, the existing A.O.T.s which are banana producers would be competing on equal terms in the United Kingdom and they could accept lower prices than the West Indies could afford; and furthermore, Central and Southern American producers could surmount the 20 per cent. tariff and still out-price West Indian supplies for the balance of the available demand. The existing A.O.T.s could accept lower prices than the Windwards and the Jamaicans could afford, because, under their preferential position in the French market, they already receive a high average price for the greater part of their present banana production. So the E.E.C. as at present organised has a number of special arrangements for banana imports from its members' traditional suppliers, and these could provide precedents for special safeguards that could be applied to West Indian producers. Germany imports 80 per cent. of her requirements duty free under the terms of a special protocol. France applies a strict licensing and quota system which ensures that 97 per cent. of her supplies come from the franc zone, free of duty, while other A.O.T.'s suppliers pay 5 per cent. ad valorem. Italy adopts a similar system, favouring fruit from Somalia, and the Benelux countries give preferential treatment to fruit from Burundi, Congo, Ruanda and Surinam.

Therefore it should be possible to negotiate for Britain a system similar to that applied by France, allotting a major duty free supply quota to Jamaica and the Windward Islands, with a modified tariff for supplies from non-Commonwealth A.O.T.s and the full C.E.T. to bananas arriving from third countries. It would be quite possible, by means of admittedly complex and time-consuming methods, to make special arrangements to safeguard the interests of the producers concerned by a variety of methods, such as association agreements, tariff quotas and protocols covering regulated access quotas. Such safeguards were written into the Treaty of Rome to preserve the existing channels of trade of the original members of the Community. They could be introduced without detriment to the legitimate interests of the present members of the Community and, given a spirit of community among those who negotiate, they should be as reasonably conceded as they are resolutely demanded.

It is confidently believed that a case has been made out that primary producers in the Commonwealth need safeguards if Britain becomes a member of the E.E.C. If the E.E.C. negotiators refused them, they would surely be proclaiming that in denying to the candidate the concessions they share themselves they are seeking not only to protect their own legitimate interests but to make an unwarranted trading gain at the expense of the British food consumer and Britain's traditional suppliers. There is another side to this problem which has been insufficiently examined. Unless the necessary safeguards were obtained and the preference system preserved, there is a real danger that British exports would become uncompetitive in the overseas markets in which they now enjoy a valuable tariff advantage.

If we look at the French market in bananas we find it is rigidly controlled. Imports of bananas into France are controlled by licensing and quotas. In this way the French market is almost entirely reserved for supplies from their overseas departments—Guadeloupe and Martinique in the West Indies and from African countries belonging to the franc zone—for example, Cameroon, Ivory Coast and Madagascar. As far as other countries are concerned, relatively small quantities are permitted to enter France from Spain—that is, the Canary Islands—as well as from associated countries of the E.E.C. not belonging to the franc zone. A longstanding trade agreement, subject to annual renewal, between France and Spain provides for annual import quotas in France for certain fruit and vegetables which are of importance to Spain, but imports of which are restricted in France. Bananas belong to those items. My Lords, the object of the Jamaica Banana Board and the Windwards Board ought to meet with sympathy. It is to establish a state of affairs in which the British housewife is assured of an adequate supply of bananas of satisfactory quality at an equitable price, while at the same time assuring to the banana grower of Jamaica and the Windward Islands a reasonable return on his investment.

Incidentally, coming down to recent history, owing to technical marketing difficulties and to some lack of ability to reach mutual agreement between the main companies who deal with banana importation and sale, suitable methods of protection for unquestionable British interests are still sub judice in this country. I mention this in passing to make my concluding appeal to the Government, which is firmly to retain in their Common Market negotiations the independent right to act in whatever way they may decide that the interests of the banana industry as related to Jamaica and the Windward Islands and to the United Kingdom would best be forwarded.

As many of your Lordships are probably aware, the economic details of the banana business are somewhat intricate and impossible to deal with in a short speech. I only wanted to outline, as I have done, the position and to mention in passing that my interest was deeply aroused many years ago when I had the honour to be Governor of Jamaica and lent my strong support to the newly-formed Jamaica Producers' Association, which was formed to give them a fair influence in the banana business, which had been under the control of the great multi-million American company, the United Fruit Company. Their main object in forming this Association was to secure better terms for the humble grower of the fruit. I ought perhaps to mention that I am at the moment a member of the Jamaica Producers London Advisory Board, and that is how I come to know these details so well.

My Lords, if we look at the situation in which I am asking the British Government to retain the power to help, we find that in Jamaica the Banana Board has some 80,000 growers on its books. The successful operation of the local box-making industry is heavily dependent on the manufacture of boxes for bananas. Labourers in Jamaican ports—Montego Bay, Port Antonio and Bowden—to a large extent depend on the shipment of bananas for a living. Jamaica's only shipping line, the Jamaica Banana Producers Steamship Company, which employs 84 Jamaican seamen and contributes nearly £1 million a year to the credit side of Jamaica's balance of payments, could not continue to exist without the revenue it earns from carrying bananas to this country. Hundreds of truck owners and truck drivers and sidemen depend on transporting bananas for a living; several thousands of labourers are employed on banana farms and in banana boxing stations.

Again, bananas are a very important factor in the Government's land settlement programme. There is no other quick growing crop to which a new settler can look forward with certainty for an income, week by week throughout the year. That is the case. It may seem that it is inappropriate to quote all these details, but I maintain that if you do not have them brought to your attention you do not realise the disastrous effect which might affect several scores of thousands of people, of a humble station in life, who rely on an industry which might easily be wrecked for them by, shall we say, the inattention of the British Government. The fate of thousands of men and their families depends on the British Government continuing to insist on their right and their duty to adhere to this policy of helping them to help themselves. I have no reason to believe that any British Government would allow any other consideration to obscure this duty, but I submit that it would be right to dispel any public ignorance or doubt by taking it into their confidence at an early date.

My Lords, I have endeavoured to keep this speech within the limits of the Government statement that entry to the Common Market can only be supported if the terms are fair. I have dealt with only one of the many facets of this qualification. I am aware that the Jamaica and Windward Islands banana industry has, and has for many years, had the sympathy and practical support of the British Government. My object to-day has been to underline the importance of retaining their ability to give that help in any necessary degree.

I have referred to our entry into the Common Market as a gamble with futurity. This analysis may or may not be wrong; only time can tell. But to-day I have also been dealing with known facts about which one can speak with certainty. It is not a Party matter, and I am optimistic enough to think that support for these views may reasonably be expected from all sides of this House, whether it be Conservative, Labour, Liberal or even that home of idealised uncertainty, the Cross-Benches. Jamaica and the Windward Islands ask for no greater protection of their interests than the Community has already conceded to France and her analogous interests. Such a request surely cannot be denied. In a nutshell, if we contemplate entry into the Common Market we must surely go there as equals and not as humble suppliants. We should insist on entering with a clear conscience in relation to the many thousands of workers who have always looked to us for the time-honoured preference treatment that helps them to help themselves in the struggle for a tolerable life, which is surely a better policy than any indiscriminate grant of subsidies. I am confident that the British Government will bear this in mind, and if necessary refuse to jettison their honourable obligations in pursuit of an elusive millennium of a United Europe. It is reasons such as these that make a critical, practical examination of the terms of entry so necessary.

8.55 p.m.

THE EARL OF BUCKINGHAMSHIRE

My Lords, most of the speeches to-day have been directed in support of the E.E.C., but I will endeavour to give the House my views as to why we should not join the European Community, and strongly support my noble friend Lord Shinwell in his remarkable and most eloquent speech. The reasons why Britain must not join are economic and social, as well as political.

First, and I think foremost, my Lords, Britain, with her teeming millions and declining acreage, cannot afford to tie herself to the Common Market agricultural system. The market is dominated by France. France stands for artificially high food prices based on an out-of-date and inefficient agricultural system, and what is more, she believes in the deliberate destruction of food to aid the artificially high price. How is a policy like this consistent with our policy of giving lavish aid to help the starving millions abroad? To accept the Common Market agricultural policy is not only folly, it could well be national suicide. The British agricultural system has achieved a high standard, and it is not right to throw it over to enter a Community which has by no means established a settled system of agriculture.

The second economic reason against entry is what one would term mobility of labour; in other words, with people in the Common Market countries having a right to come and work in Britain. In practice, the free movement of labour in the Common Market is supposed to be controlled, to prevent disrupting a country's economic and social situation. Those concerned have to take trade union rates and must have a job to go to.

Her Majesty's Government have failed to realise that we have already an immigrant problem which the other six countries in the Common Market, except possibly France, have not. We are allowing 50,000 immigrants a year into this country. This is far too many, and our overpopulation problems, of housing, hospitals, traffic, noise, pollution and the despoilation of our countryside, are having a serious detrimental effect on our people.

My Lords, I would point out to Her Majesty's Government that if Italian and other labour is going to flock into Britain, as it undoubtedly will, to obtain such benefits of the Welfare State as family allowances, hospital accommodation and operations, as well as public assistance, this will impose upon our country an economic and social strain from which we shall never recover. In these respects the problems are already desperate now.

As we have accepted them, our present immigrants have to be treated on a basis of equality; but it is sheer madness to accept any snore of them, as we shall have to do under the Treaty of Rome. The people of this country were never asked whether they agreed to immigration. They have got to be asked to give their decision on the Common Market.

My Lords, turning to the political aspect of our entry, I believe that an independent foreign policy for this country and for the Commonwealth is vital to the peace of the world, and our foreign policy must sometimes differ from that of Europe. We have wider interests; the Common Market is a purely selfish one. Britain will have to give up control over much of her affairs if she goes into the Common Market. Supporters maintain that this would be a good thing; they point to the success of the United States of America, and ask why we cannot follow America's example and have a United States of Europe. There is no comparison between America and Europe. The States of America have a common language, law, and political systems. We have none of these things in common with the States of Europe. Our whole history has accentuated the differences between us and the Commonwealth on the one hand and Europe on the other. This applies especially to religious differences, for some countries are predominantly Roman Catholic.

Finally, if we sign the Treaty of Rome we shall be committing ourselves to something we cannot change. Article 240 states: This Treaty shall be concluded for an unlimited period. To me, this means that once you are in you cannot get out. The majority of the British people distrust the political implications of this Common Market. They know in their hearts that it may well lead to disaster. I believe it will. There will be such great resentment over further immigrants entering this country, overcrowded as it is, that we shall never be able to be an influential member of that Community. Here I refer to the influence of this country in advocating more aid for the developing countries in relation to which we practise what we preach.

Let this great country of ours keep out of the E.E.C. and have an Atlantic and Pacific alliance of the English-speaking countries, Britain, America, Canada, Australia and New Zealand. Aid to foreign countries and the Common Market is a contradiction in terms. Therefore, should we have this alliance I firmly believe that one day the Six and the EFTA countries will come to us on our terms instead of our taking theirs—a very different matter indeed.

When the noble Marquess replies for the Government I hope that he will consider what I have been endeavouring to put into words. This little Island still shows a bright light to all the world. Let it remain so.

LORD CHALFONT

My Lords, before the noble Earl sits down, may I say one thing for the Record. My noble friend Lord George-Brown has already made this point, but it seems to need reiterating. The fact that Article 240 of the Treaty of Rome says that the Treaty is concluded for an unlimited period does not mean that members of the Treaty cannot get out of the Community if they want to. It simply means there is no term to the Treaty. I think we ought to be clear about this.

9.3 p.m.

LORD MERRIVALE

My Lords, I would only refer to the noble Earl's speech regarding one point he made, and that is when he said that France had a deliberate policy of destruction of food. I must say to the noble Earl that he could not have heard some of the programmes on the French radio when they were highlighting the co-operation which exists between producers, local authorities and transport organisations, co-operating to distribute excess food through willing organisations to the needy and the sick. That rather shows that in France there is no deliberate policy of destroying food; it goes to the needy and the sick whenever it can be so arranged.

I should like to consider this Motion in the context of Anglo-French relations, for I believe them to be very relevant to the success of the present negotiations. In fact, if I may go back to 1860, I believe that the words of the preamble to the Anglo-French Treaty of Commerce of that year are still relevant to-day, namely: Her Majesty the Queen and His Majesty the Emperor being equally animated with the desire to draw closer the ties of friendship which unite their two peoples have resolved to conclude a Treaty. What I should like to see now are the two Governments, the French and the British, equally animated in a similar desire to bring closer the peoples of our two countries.

Last summer, 110 years later, Gordon Brook-Shepherd, in an article from Paris under the heading "Third time lucky into Europe", said: As a negotiation it is going to succeed. It will succeed because for the first time since we started eyeing the Common Market nearly ten years ago we have both a Government in London genuinely determined to get us in and a Government in Paris genuinely willing to let us in. It might not be amiss to remember that from this month France is in the chair of the Community's negotiating team. Therefore, they will provide the common negotiator. I believe, as Ian Waller said on December 6, 1970, in the Sunday Telegraph: A genuine community of interest between France and Britain exists in two main fields: in distrust of any artificial fostering of supranational institutions (for it is not mere pandering to chauvinism to argue that deep historical and political traditions cannot be eliminated overnight) … and in the reality that French and British interests and associations go far beyond Europe (even if at times they are in conflict). I apologise for quoting articles, but I believe in the power of the Press, and they do represent a certain body of opinion.

LORD CHALFONT

My Lords, may I ask the noble Lord whether he ever reads any paper other than the Telegraph?

LORD MERRIVALE

My Lords, I do, but I think the Telegraph is a very good paper. However, I take the noble Lord's point.

I should like to put forward certain views, in the light of what I said, and ask Her Majesty's Government certain questions. I apologise to the noble Lord, Lord Chalfont, but an article in last Sunday's Telegraph says: France has launched an all-out drive to penetrate the English-speaking countries of Black Africa with French aid in the military, financial, technical and cultural spheres. The programme has been personally authorised by President Pompidou himself. I must say, on this question, that I should like to query the validity of this article, and possibly when the noble Marquess conies to reply he can say that the article is not entirely valid. It goes on: Britain does not yet seem to have declared her hand in all this. What I should like to stress, as the author of the article has stressed too, is that the idea of a broad English/French partnership in Africa would be, I should have thought, difficult to reject at a time when Her Majesty's Government are striving for precisely the same partnership in Europe. I am hoping that the noble Marquess will be able to say whether or not we are having consultations at the moment with the French regarding joint policies in Africa; in other words, considering some form of partnership. I think it is relevant at a time when, as was mentioned earlier by the noble Earl, the Leader of the House, certain alternatives will be open to nine African Commonwealth countries. It may well be that one could define common policies by our two Governments in these English and French speaking African countries.

My noble friend the Leader of the House and the noble Lord, Lord Chalfont, rightly stressed the importance of dealing with the poverty gap which exists between the developed and the developing countries. In view of the importance of the poverty gap, I think that joint consideration by our two Governments of this aspect could be very fruitful in the future. It is right to say that association agreements with African States have in the past been mainly with ex-dependencies of France, while those in the future will be mainly with ex-dependencies of Britain, so I should have thought that a joint policy would be most desirable.

I should like to turn to the question of our industrial relations with Europe. The Chancellor of the Duchy of Lancaster, Mr. Geoffrey Rippon, referred on December 16 last to the dynamic economic advantages of membership, and said that industry's response to the opportunities and challenges would be vigorous and determined. Those are indeed encouraging words. At this point I should like to quote what my noble friend Lord Drumalbyn said to your Lordships' House on November 30 last. He said: Her Majesty's Government strongly support the idea of co-operation between British and French firms."—[OFFICIAL REPORT, 30/11/70, c. 324.] I added that I hoped our merchant bankers would play an increasingly important part in bringing about bilateral and trilateral industrial integration.

I should have thought that that was something which Her Majesty's Government would actively seek to encourage, especially if one heeds the recent remarks of Mr. Louis Camu, President of the Bank of Brussels, who complained that companies in the Common Market lacked the urge to merge. I understand he thinks they are downright reluctant (I believe those were the words he used) to link up with other companies to form the big international groupings which many Europeans see as the only answer to the challenge of the giant American corporations. We should remind ourselves, too, that in America there is virtually no obstacle of any kind, given the will and the resources, to go for any part, or all, of that vast Western European market of rising 300 million people. Therefore I hope my noble friend Lord Lothian will be able to say whether there have been any discussions with the French appertaining to the industrial policy of the Six.

I believe I am right in saying that a number of months ago M. Maurice Schumann, the French Foreign Minister, proposed in Brussels that obstacles to mergers of Community industries should be removed and that a European-type corporation should be created to promote multinational corporations. He also asked for the creation of a Community advisory bureau to counsel small and medium-sized firms on possible mergers, which I should have thought was something Her Majesty's Government might look into. Something on similar lines in this country which could link up with a Community advisory bureau might be very beneficial to small and medium-sized firms in this country, with a view to future mergers with European firms. I should like to take this opportunity of asking my noble friend whether Her Majesty's Government support the suggestions of M. Maurice Schumann. I know that there has also been a German plan, and I am wondering whether Her Majesty's Government opt more for the French plan or for the German plan.

In the October, 1970, issue of the monthly journal of the European Movement in Britain, Mr. Geoffrey Rippon said—and I quote his words: As members, if the negotiations succeed, we shall have a tremendous contribution to make to the next stage, including the move to a common industrial policy". These are perhaps not remarks which are relevant to the negotiations at the present moment, but in the very near future they certainly will be. In conclusion, my Lords, whilst we have heard much this afternoon on the economic and political advantages of our becoming an integral part of Europe, I believe that there is much to be gained by recognising the areas of common interest that we have with France, whether industrially in Europe or concerning relations with our ex-dependencies in Africa, so that they may be exploited to the benefit of our people and of those in Africa.

9.14 p.m.

THE EARL OF LYTTON

My Lords, the noble Lord, Lord Merrivale, has dealt, characteristically, with our relationships with the French in the matter of the Common Market. In my short speech I want to deal a little with the impact on our own people. I do not think we have nursed them along as well as we might have done, and I think we may have a little trouble when the time comes. I am conscious, of course, that in the end it is the will of the people that prevails, and I am sure that die noble Lord, Lord Gladwyn, did not mean to suggest anything else when he seemed to say the exact contrary, that we should ignore their views.

LORD GLADWYN

My Lords, if the noble Earl will forgive my interrupting, I said that the will of the people was not always right.

THE EARL OF LYTTON

The will of the people, of course, is not always right; and, as somebody else has said, the will of the House of Lords is not always right. In human affairs, nobody's will is always right. But in this country the will of the people will in the end prevail, and we must take that into account.

To those who say what are the facts, or alternatively that the facts are what you like to make them, I always reply that there are outstanding facts about the Common Market which everyone should know and recognise. The Treaty of Rome set up an Economic Community; a Customs Union of Six independent States: it did not establish a Political Union. The Vatican had nothing to do with it, and those Scotsmen who think it is a Popish plot are mistaken. After 14 years, the Community is still an Economic Union. All Six members have prospered exceedingly, and all of them attribute their advance in economic matters to their membership of this Union. Ali Six are still independent States. The economic club has not been transformed into a political club. There have of course been advances in political co-operation, and these will continue; but we have heard from the noble Earl, Lord Jellicoe, to-day that federal institutions are not yet in sight, and I do not think we need alarm our people by any thought that we are entering a Political Union: it is, I repeat, an Economic Union.

The prospect of reciprocal economic advantage seems to me the very basis of our approach to persuade our own people that it is to their advantage, just as people on the Continent will be persuading them. Although membership of the Community is intended to be permanent, any development which causes any member to feel that continued membership is against the vital interests of the State to which he belongs will cause the Community to crumble. We shall, in signing this Treaty, surrender a portion of sovereignty, just as we surrender a portion of sovereignty every time we sign any treaty anywhere. But we do not surrender the right to secede, and I am very glad to note that the Prime Minister, when he was Leader of the Opposition, said that very thing in the last debate. The noble Lord, Lord Chalfont, has said it, and I believe the noble Lord, Lord George-Brown, has also said the same thing. I think it must be clear to all that it is a delusion that we go into a sack from which we can never escape. The whole point is, if our anticipations are right, that it is not a sack.

The noble Lord, Lord Chalfont, seems to declare (I have heard him twice, in two successive debates, on this point) that the economic arguments are finely balanced, which means that they do not tip you one way or the other. To anybody who approached me with this view I would reply by saying, "If you share those views, you need not be tempted by the vision of a position at the top table of super-Powers, because the whole foundation of our entry is based not on a fine balance but on a reasonable conviction of progressive growth".

LORD CHALFONT

My Lords, I apologise for interrupting the noble Earl, but I think it is important not to be misunderstood, especially in your Lordships' House. The point I made was that some people say that the economic arguments are finely balanced. My own view is that the long-term economic advantages to us would be considerable. I should like to make that quite clear.

THE EARL OF LYTTON

My Lords, I am very grateful to the noble Lord for his intervention and explanation, because I think it rounds off the second first-class speech I have heard him make in this House on this very subject.

There are those who may pick up the noble Earl, Lord Jellicoe, who, in a similar manner but in slightly different phrases, seemed to pour contempt on the economic argument with the phrase that, "Man does not live by bread alone". I think my answers to others who come to me with such an argument is that better business, faster growth and greater welfare are the predictable advantages which all of us must foresee with confidence if and when we go in.

The Community we are joining is founded on a multiplication of loaves, not on a fast in the desert; and unless this proves to be the outcome of our journey we shall not be able to face, with any certainty those visionary influences of which we have heard to-day. We shall not have the better life at home. We shall not have the resources with which to help the Third World. The whole approach to our people in this country, I feel, must be to say, as Lord George-Brown did in his speech, that he was confident that the economic basis in the long term was pregnant with the greatness of a great future.

Perhaps I should conclude by stating my conviction that some of the visionary greatnesses foreseen by the prophets on either side on the Front Benches will make no appeal whatsoever to the common man in this country. Many do not have any great regard for "the man in Whitehall" now, and none of them will be impressed with the information that he is moving to Brussells to take a seat at a top table, or any other table. Therefore I think that those who believe there is no economic advantage must be honest and say so, and they must vote against when the time comes. But for myself I am impressed by all that I have heard, and I depend much on the immense and detailed resources of people on either side of this House to present a most complex case, totally unsuited to a Referendum, on which Parliament will presently base its decision; and I wish the best of success to those who are negotiating now.

9.24 p.m.

THE EARL OF LAUDERDALE

My Lords, in following the noble Earl, Lord Lytton, I should like to say straight away that I too am much concerned about the impact on public opinion; and this is a matter to which I shall return.

Plunging into the waters of argument and, with others, trying to peer round the corners of time, I should like to start by thanking the noble Earl, Lord Jellicoe, for the very full information he has given; and, so far as the Commonwealth is concerned, to some of us at least this is reassuring, so far as it goes. But the very frequency with which Ministers, and indeed enthusiasts on both sides of the House, slip into the future tense when we should still be in the conditional tense puts me on my guard alongside the noble Lords, Lord Caccia and Lord Gore-Booth, who, with all their experience, did with diplomatic skill sound a note of caution. Lord Gore-Booth was very right when he deprecated all this talk about going into Europe when it should really be recognised as a negotiation about our future proper status in a Europe to which we already belong. It reminded me of that point in the last debate on the Common Market when the noble Lord, Lord Caccia, stressed that the failure of these negotiations would not—I repeat "would not"—be a disaster; and he showed then and implied to-day that he still had some reservations.

Two things have run through this, alas! largely rhetorical debate studded with such phrases as "the inbuilt momentum of Common Market affairs". The first theme has been worry about public opinion. This has been expressed by a whole range of speakers. The second common theme has been all these assumptions about Common Market growth. It is in that connection that I propose to be interrogatory. I am not content to accept this projected dynamic growth on the simple basis of faith and blind guesswork. I am reminded of Pope's lines about Poetic Justice with her lifted scale, Wherein nice balanced truth with gold she weighs, And solid pudding against empty phrase. With great respect to my noble friend Lord Jellicoe, who I appreciate cannot be here now, it just is not good enough, if he and the Government wish to win public opinion, to dismiss as—and I quote the phrase as I took it down as he spoke— some individual academic economists of the National Institute without any further ado. The National Institute of Economic and Social Research is sponsored by the Ford Foundation and the Social Research Council. The views expressed in its monthly publication are the responsibility of the Director and the staff. In the November, 1970, issue they said first of all, after deep study, that there was no sure sign that Common Market countries have become either more competitive or more specialised or faster growing; and, secondly, they said that the Common Market share of world export trade had actually shrunk. I am not an economist. I do not claim to judge their arguments. But they must be answered and not least their conclusions, which I quote: The only visible consequence of the progressive implementation of the Common Market has been the intensification of commodity trade within the Six. It is hard to think that if the dynamic properties of a widening market were really as great as is sometimes suggested the statistical evidence of their influence would be so completely and consistently lacking. A further passage sums up their views as follows: With much the lowest ratio of agricultural employment to total employment in the whole of O.E.C.D., the United Kingdom seems ill placed to take advantage of any 'dynamic' forces that may be at work in the Community. To accept a heavy burden of 'impact effects' as the price of entry, in the belief that the 'dynamic effects' are likely to be even bigger, would under these circumstances represent a triumph of hope over experience. I am not endorsing that argument but I consider that, coming from this quarter, it merits a proper answer, and I was hoping that the noble Lord, Lord Diamond, would have gone a little further in his speech into these matters because he obviously had this article in mind. Both he and others will doubtless be competent to answer this article better than the Economist has so far done.

LORD GLADWYN

My Lords, may I draw the noble Lord's attention to an article in the Economist which dealt with this argument? If he studies that he will be well informed.

THE EARL OF LAUDERDALE

My Lords, I am much obliged to the noble Lord for his reference to the Economist, to which I have already referred. There are those who consider—I am not a judge—that the Economist answer to this review was superficial. I am not a judge, but I believe that this calls for a real answer, if I may say so, from real quarters.

A quite different argument about growth has been put forward; it is that Common Market growth is demonstrable from the recent pattern of international investment in Britain. The Board of Trade Journal figures show that, leaving out oil, the book value of overseas investment in Britain from 1962 to 1968 has EFTA about constant around 11 per cent.—£300 million or so out of a total of £2,700 million of foreign investment—and the E.E.C. constant at about 9 per cent. or 10 per cent. My Lords, that is excluding oil, and I submit that the oil situation is one which is very relevant to this discussion. Two factors suggest that this inward investment, largely due to European development, is likely to grow sensationally in Britain, with or without the Treaty of Rome.

Common Market figures forecast a Common Market energy deficit by 1990 of the order of 1,500 million tons of coal equivalent a year, and corresponding figures suggest that for the whole of Western Europe, including Britain, the figure would be around 3,000 million tons of coal equivalent a year. This argues for additional crude oil refining capacity of something like 1,000 million tons a year. The very likelihood that Western Europe, with or without our adherence to the Treaty of Rome, is going to have this immense demand for fuel, and most likely fuel oil, matches in with the second factor, which is, of course, recent events in the Straits of Dover and the English Channel. These events, the accidents and the consequential rise in insurance rates (as noble Lords will be aware, insurance is about half the running costs of a Jumbo tanker), will increasingly force big tankers to Europe northabout, rather than through the Channel, and therefore past the deep water front of the Atlantic coast of Britain rather than through the Straits of Dover from the South.

This suggests that in the coming years much of this new refining capacity will come to Britain and be a major factor ill our industrial picture; and, indeed, in the industrial picture of the whole of Western Europe, irrespective of the Treaty of Rome, and due entirely to factors of geography. At the present time, the refining capacity of Britain has risen from about 60 million to 90 million tons a year over ten years or so, from about £580 million to more that £1,000 million, as against total (non-oil) foreign investment in Britain of little more than £2,700 million; so the oil factor in overseas investment here is a highly significant feature.

Furthermore, my Lords, so far as one can judge, it looks as if in the last ten years or so the European share in refining capacity investment in Britain has already risen from about 10 per cent. to something like 26 per cent. All the signs, therefore, are that, irrespective of our adherence to the Treaty of Rome, there will be, and must be, a great new investment in Britain in refinery capacity to supply the oil and petro-chemical industries in the whole of Western Europe; and that this will have nothing to do with our signature on the Treaty.

My Lords, taking note of the state of the negotiations, I should like to put some strictly interrogative points both about fuel and about transport. The cost of fuel in Britain is at an index of about 130, which means something like 30 per cent. above Benelux, 23 per cent. above Germany and 14 per cent. above France. The Common Market are planning to harmonise their fuel oil taxation—and here is my first question to the Government. If Ministers would prefer me to put these down as separate Questions on another day I shall be happy to do so, but these are my questions. First, what plans have the Government for modifying the fuel oil tax in Britain in order to approach a measure of harmonisation with the E.E.C., not least when that tax accounts for something like 40 per cent. of the excess of C.E.G.B. prices over those of the Tennessee Valley Authority in America, which is the only comparable authority for which figures are available.

Secondly, is transport an item of negotiation? I understand that the Common Market policy aim is for free competition, but the proposals are under four heads: first, rate control by means of a forked tariff on road, rail and waterway, though this would tend to inhibit rather than multiply competition. Secondly, capacity control appears to be an element in their policy. This is shown in a system of road haulage licensing for firms allowed to traffic throughout the Common Market. My question under this head is: Will Britain have parity at least with Germany and France, each of which, enjoys 286 permits out of a total of 1,200 for unrestricted road haulage transport within the Community? My third question on transport relates to the driving hours limitation, which, under the Geneva rules, would require us to reduce our driving hours on road haulage from ten hours to nine and then to eight by 1973 without affecting working time. So I ask: Do the British Government agree with this driving hours limitation? Will not the impact of this be to raise internal traffic costs in Britain very sharply?

Fourthly, there are common tariffs on sea freights, both as regards coastal and short sea shipping. This could mean that we have tariffs imposed on us while non-Community shipping can charge as it likes. What do the Government propose to do? Finally, under the Transport heading there is a question of port subsidisation. Rotterdam enjoys a 67 per cent. capital grant on new works, Antwerp 100 per cent. and Le Havre a 60 per cent. grant, against our own miserable 20 per cent. for port modernisation. Is port subsidisation a negotiating point? What is the Government's policy, since these capital subsidies naturally affect port dues correspondingly?

On the political front, it has been widely assumed that the Federation of Western Europe will be a stabilising factor. In searching for historical analogies, my mind has reluctantly gone back to the Austro-Hungarian Empire, which was put together without very much consideration for the wishes of the inhabitants and which fell apart, if you like, upon self-determination. The public in Britain, as has been admitted on all sides in the debate to-day, are now strongly against adherence to the Treaty of Rome, whether for good reasons or bad. The management of the debates (I say this with reluctance, but I think that it has to be said some time) at Tory Party Conferences during the last ten years, which has resulted in the Treaty of Rome policy being incorporated in our election manifestos, has in the eyes of some been circuitous at times.

The public are confused and distrustful. Some would say of the Common Market, I should like to know What this whole show Is about, Before it's out. The public are going to need balanced information, as the noble Earl, Lord Lytton, said just now, and, requoting with respect the noble Lord, Lord Shin-well, who I think has had less than justice in this debate, let us have less astrology and more facts, less talk about dynamic growth and more evidence that it is really there. Otherwise cynicism will triumph and folks will go around saying that, The universe may Be as great as they say, But it would not be missed If it did not exist.

9.40 p.m.

LORD MILFORD

My Lords, I am not a little Englander, a Chauvinist, Nationalist or anything else. I think it rather mean when certain speakers, especially the noble Earl, Lord Jellicoe, call people who are against the Common Market "Little Englanders". It has always been a dream of mine that the nations should come together and cooperate, and so make the world safer from wars. But I am worried that this Common Market is being pushed ahead now, when we have hopes of closer East-West relations and discussions and exploration are going on to try to get a European security pact, because it seems to me, in spite of Lord Jellicoe and Lord George-Brown, that the Common Market at the moment will keep Europe definitely divided into two blocs.

One must remember that the Common Market was originally thought about and set up in the days of the cold war. If there were even a tentative move towards a complete European community, the integration of East and West, the coming together of the socialist and capitalist systems in the interests of the people of those countries, it would be a tremendously progressive step forward for peace and understanding. But I do not believe that the Common Market is good for this. It seems to me, from the speeches that we have had this afternoon, that concentration has all been on the advantages to big business; that the Common Market is in fact the unity and coming together of vast monopolies and trusts, who really are the most reactionary people in Western Europe. I speak as one of millions of people who are Socialists, and see Socialism, especially as it was produced in the English tradition of the Labour Movement, as a more just and democratic society than we have at present. How are we going to get Socialism if we are in the Common Market? Is it not going to be far more difficult for Britain to go forwards toward Socialism?

The noble Earl, Lord Jellicoe, said that the Italian Communist Party and the French Communist Party are not against the Common Market. Originally, before the Common Market became a fact, they were against it, when they saw that it was splitting Europe into two camps. But now that Italy and France are in the Common Market they have had to accept it. Their job now, as they see it, is to make the Common Market more democratic, to help the Trade Union Movement to be more democratic and to look after its workers across these national boundaries.

Under our present Government in this country there is a chipping away of civil liberties—take the German student case the other day. Under the new Bill that we are going to have to fight there is a chipping away of trade union democracy. Is it all part of the idea, if we go into the Common Market, of impressing our associates that we are less democratic and more like they are?—because Britain at the moment is the most democratic country in Western Europe. We want to keep it so. We do not want to have to give away any of our civil liberties, trade union democracies, or any other kind of democracy, just to go into the Common Market. Under this huge combine of trusts and monopolies, democracy of the trade unions, democracy of the workers by hand and brain, will become less and less. They will have far less say in the economic planning and running of their industries.

People have talked about British sovereignty. I still cannot get a picture of why it is not true that if we are in the Common Market the British Parliament will have a dwindling say in our foreign policies, and that it will more and more become a rubber stamp to superbure[...]cratic international institutions over which we have no control. I have not heard this point answered properly to-day.

We have been exhorted in a very schoolmasterly way not to worry about the price of butter and food, but instead to raise our eyes to this lofty vision of the United Europe. It is very easy for those who do not live by wages to preach so piously; but try telling it to the factory workers; try arguing like this to the ordinary people that the noble Lord, Lord Shinwell, speaks about—and nobody else in this House has spoken in the same way as the noble Lord, Lord Shinwell, with regard to the people of Britain. You have to put your propaganda across far better than that if you are going to convince the workers that they have to pay higher prices for their food, all for a lofty ideal. To them these lofty idealists very often appear as people who really see a new way of increasing the profits of the monopolies, getting higher dividends for their shareholders, and keeping wages down. You have to get this across much better if you are going to convince workers. Yes, it is very funny—

LORD GEORGE-BROWN

My Lords, I am sorry: I apologise. The noble Lord properly objected to me, as it were, chuckling, and said it was very funny. But I am bound to tell him that it sounds very funny to me to hear my noble landowning friend going on and on about the workers, when the Communist Parties of Italy, France and the rest of Europe, know very well that their working-class members are doing a jolly sight better out of their land-owning exploiters since the Common Market came into being than they were doing before. It sounded a little odd to me.

LORD MILFORD

My Lords, I have just come back from Italy, where I talked to many Italian workers who have been in other parts of Europe. Their complaint is that they may get higher wages compared to what they received in Southern Italy, or even in Spain, but they were treated like second-class citizens. They did not have the same rights; they were not treated in the same way as the other people in the country in which they worked. They were full of complaints of that sort, even if they were getting higher wages.

It is difficult enough in this country to get the facts about a big combine, for the Government to find out all the secrets behind a big monopoly. But how are we going even to start to scrutinise the huge cartels, and how they work, in the European market? Are we going to have any control over them at all? Are we going to have any political control whatever?

I want to ask a question of the Government. Is the value tax on all produced goods still the chief taxation in the Common Market? If so, does this not mean more indirect taxation, which comes harder on the poor people? That may have been altered, but I do not know whether this value tax is something we have to face if we go into the Common Market. On the question of unemployment, in the past adverse balances of payments dictated that we could have no industrial and technical expansion in this country; we could not expand because it would mean more imports and our balance of payments would be worse and worse. Our balance of payments has now come on the right side, but is it true that if we go into the Common Market it will go completely against us again and become much worse? And, because of this, shall we have to restrict economic growth for years and years yet, and carry a large number of unemployed? I put that as a question.

Another question I want to put, especially to this side of the House, is this. Supposing we got, by Election, a real Socialist Government in this country, and the country wanted to go forward with Socialism and wanted to nationalise many industries. Should we be able to do it if we were in the Common Market? Should we be allowed to nationalise them?

LORD GEORGE-BROWN

Yes, my Lords.

LORD MILFORD

I thank the noble Lord. These are questions.

As I said at the beginning of my speech, I am not a "Little Englander". If I felt we were really going forward into a Community of the whole of Europe, a Community of progressive Governments, to create a much more just society for everybody, I should absolutely welcome it; but I do not feel that that is the kind of Community we are entering. I think that the E.E.C. is going to be ruled more and more by huge combines and supranational firms, and I do not see how we are going to control them in the interests of the British people.

9.53 p.m.

THE EARL OF DUDLEY

My Lords, I must apologise to the noble Lord, Lord Milford, and assure him I was not trying to "jump the gun". I am delighted to follow him in point of time, even if I cannot, perhaps, follow him in other respects—I am not sure that I follow the noble Lord at all, quite frankly. However, the hour is very late and I think that polemics and politics would be quite inappropriate, so, if I may, I will take a few points from the oration I would have inflicted on your Lordships had the hour been earlier and had all of us been stronger. Due to certain minor weaknesses of the flesh, I found it necessary to depart from this Chamber once or twice during the course of this debate, so if any points have been made by other speakers which happen to coincide with the points I am about to make, I should be delighted if noble Lords would intervene and tell me so.

One slight point that not only puzzles but even astonishes me is this. I am a comparative newcomer to this House. I remember that shortly before the Christmas Recess we had a very lively, remarkable debate on museum charges, in which I was fortunate enough to take part, and I think that in the course of that debate we got through a longer list of speakers in a very much shorter time than we have taken this evening. Here we have this great subject of the Common Market and, if I may say so, your Lordships look—and indeed I feel—as if, instead of going into Western Europe, you are heading for the tumbrils. Indeed, my Lords, looking at this Chamber one would think that the tumbrils had been busy for the last two or three hours!

Perhaps before I make my points one or two brief credentials are appropriate. I am, by education and by instinct, a European, in the sense that back in 1932 I was studying German in Munich. I have spent a good deal of my working life selling machinery into Europe and buying machinery from Europe. I speak reasonably fluent French, German and Spanish, so I hope, my Lords, with these qualifications you will allow me a few more moments of your time.

I had hoped that the statement the Chancellor of the Duchy of Lancaster made in another place on December 16 would have helped me through this jungle of statistics. We all know the old saying that for an Englishman the jungle begins at Calais; I must say that from my point of view it now begins at the entrance to the Common Market in one respect, and that is that the papers on the subject are a jungle of statistics, estimates and figures which make even the Mato Grosso look by comparison like an apple orchard. Comnd. 4289, the last Government's White Paper entitled Britain and the European Communities—A n Economic Assessment, was a statistical undergrowth as dense as I had ever seen, and when I hacked my way through it I wondered whether I was ever going to get out at the other end. Mr. Rippon's statement did not help me as much as I had hoped in various respects, and I have to ask the noble Marquess whether he will be kind enough to explain one or two points which I find confusing.

First, could the noble Marquess explain what Mr. Rippon meant by the expression "Community budget"? As I understand it, in the Community the expression "Community budget" means the charge for the administrative services, including the European Parliament, public orations, press hand-outs, staff, and sc on, with the total cost of these amounting to about 3½ per cent. of the total expenditure of the Community. I cannot believe that this was the figure to which Mr. Rippon was referring. Did he mean the total of agricultural and non-agricultural expenditure by an enlarged Community in 1977, or did he mean the total budgetary contributions by ten member countries in that year? The point is of some relevance, because Mr. Rippon estimates that the so-called Community budget in 1977 will be 4,500 million dollars which, at the current rate of exchange, is £1,875 million. If we go back on hands and knees into the shrubbery of Cmnd. 4289, we find that there is no figure higher than £1,750 million for agricultural expenditure. This figure was the Commission's own estimate, and the Government's estimate was £1,600 million. I say this because if in fact since the publication of the White Paper the estimate for agricultural expenditure has risen by any substantial amount, I think Parliament should know and should have it clearly spelt out.

The same comment applies to the adverse effects on the balance of payments, which Mr. Rippon gave as £200 million to £300 million. Again, there is no figure in the previous Government's White Paper which bears any relation to this. We have already had some of the figures quoted earlier in the debate, but we can take it that the range of adverse effects was from £40 million reduction in our surplus in the best case and about £530 million in the worst case. This, of course, is of very great importance, because if Mr. Rippon's figures are correct, as I have no doubt they are, there are certain calculations by which it is possible to deduce from those figures that in the event of our going in there would be no overall adverse effect on the balance of payments at all, instead of some of the frightening figures that have been bandied about over the past nine months. The point I am trying to make, and I repeat it, is that the figures which were given are considerably lower than the figures shown in Cmnd. 4289.

At this point perhaps I might be permitted to make a few general observations. Europa has traditionally been portrayed as seated on the back of the bull which abducted her, and if the analogy is still appropriate (and I think that even the noble Lord, Lord Shinwell will agree that Britain is geographically part of Europe) then Britain is astride the horns, not just the horns of the bull but the horns of a dilemma; and the dilemma, as I see it, is not exactly whether or not Britain accedes to membership of the Community: it is created, on the one hand, by fears that membership of a higher priced economic group may affect our quality of life, and, on the other hand, by hopes that the dynamic effects of growth will outweigh those disadvantages.

I do not propose to follow the noble Lord, Lord Diamond, and other speakers on the question of what our growth rate will be, and so on. I think it is undeniable that there will be growth. But my noble friend should remember that there are people of intelligence and wisdom who take the view that growth is not necessarily the key to the improvement of our quality of life. In fact they feel that membership of a Community dedicated to growth may well be not just a statistical jungle but a spiritual wilderness. Bearing that in mind, and bearing in mind the support and respect which they enjoy throughout the country, and given that in my opinion the terms of reference of Cmnd. 4289 were far too narrow, I would urgently entreat the present Government to think seriously in terms of producing another White Paper with wider terms of reference to which they can put their signatures and which will lay emphasis both on the effects of membership on our quality of life, and also on a second question, which was not seriously dealt with by the last White Paper, namely, the effects on the industrial infrastructure of this country.

You may say to me, I think very rightly, "How do you quantify quality of life?" One point stands out in my mind, and that is that when we do go in—indeed I support this proposal and I think there are many reasons why we should go in—prices will rise, whatever noble Lords have said previously this evening. Prices will rise and the cost of living will go up, and therefore it is incumbent upon the present Government to spell out at some stage or other—in my opinion, better sooner than later—what measures they propose to take to alleviate the hardship that this is bound to produce for the poorer sections of the community, and particularly the people who, for instance, are not paying income tax, and the old age pensioners. We on this side of the House have inherited a problem, but we did give certain undertakings. We may have found the problem more intractable than we anticipated, but we must not appear to be hard-faced on prices and to compound the difficulty by endorsing the changeover to decimal currency, which may lead to price increases. Then to go into the Common Market without formulating measures to alleviate hardship will be not only political folly but socially unjust.

I have only a few more points that I should like to make. One relates to the industrial infrastructure which I should like to see brought into this review or White Paper. Certain problems are bound to arise, which I do not see being considered by the present Government—I do not think they were considered by the last Government. For instance, our trade to Europe is expected to increase by about 50 to 60 per cent. In monetary terms this will be something of the order of £750 million per annum. Our motorways have been directed towards the West, the North, and the North-East; can we cope with the increased flow of traffic to Europe? Are we planning to build an extra motorway where it may be needed? If we are going to cope with this vast increase of trade to Europe of the order which I have mentioned, bearing in mind that it represents a productive capacity of something like 400,000 workers, what are going to be the effects on our traditional trade? And what are the effects on our great shipping and shipbuilding industries, which are so closely linked with our traditional trade? Are these problems being considered? I hope that my noble friend will take this point seriously and consider whether there is not still time to put pen to paper and devote some time to thinking out these problems in depth.

The point about monetary union has been mentioned earlier in the debate and I should like to make one comment about it. The experience of the Community is that the economies of scale and the formation of large multi-national industries are delayed and impeded in the absence of monetary union and in the absence of a centralised economic policy. Here again, I ask the Government to take a hard look at this problem, because I do not see that we can possibly achieve the objects which we should like to achieve in that respect without being prepared to consent to both monetary union and centralised economic control. The one, of course, will mean some reduction in our role as the banker for reserve currency. It is very much a matter of dispute as to whether this would be a blow to our banking system, or whether it would be a blessing in disguise. The other would inevitably lead to some pooling or loss of sovereignty. But I feel that if we are not prepared to face up to these sacrifices and to the steps which will need to be taken to produce the kind of unity for which the noble Lord, Lord George-Brown, is looking, there will be no benefit to be gained from going in.

The second point which I should like to make is on defence. I think it was Baldwin who said in 1934 that Britain's frontier lay on the Rhine. Where should it lie to-day? It cannot lie on the Vistula or the Oder, and it is undeniable that it must lie along the eastern frontier of Western Europe. For that frontier to give us the security we want, we must look to a strong unified Western defence force, and what could be stronger than one which derives from the peoples of Western Europe who have a political identity, a common purpose, a common outlook and a common goal?

I know that a right honourable gentleman in Ireland said that he could not see the British people accepting such a situation. I feel that the poor Irish must have been as surprised as I was by the irrelevance of his remarks to their immediate problems. But if he thinks that the British people are as arrogant, as insular and as self-centred as he portrayed them, then he is making a great mistake and is in for a real surprise. One has only to see the verve with which the British people react to Europe when they are there on business or on holiday, to realise that those remarks are inappropriate now and have been inappropriate throughout our history.

I have taken up far too much of your Lordships' time and I apologise. I should like to say that I feel that my noble friends carry a great weight of responsebility in their decision on this matter. It is important that any decision or any negotiated agreement which they ask Parliament to endorse should be seen not to be taken lightly, but only after wise and mature reflection of all the various factors involved.

LORD STRANGE

My Lords, before the noble Earl sits down, may I ask whether he has taken into account in his figures the enormous cost of bureaucracy which will increase with our entry?

THE EARL OF DUDLEY

My Lords, does the noble Lord mean the bureaucracy in the Common Market?

LORD STRANGE

My Lords, I mean the increased bureaucracy. The Common Market is all bureaucracy, and there will be increased bureaucracy if we go in.

THE EARL OF DUDLEY

My Lords, I cannot see that our entry could possibly make any difference to the bureaucracy. The bureaucracy of the Common Market exists on the one hand, and our own bureaucracy exists on the other. I cannot understand why our joining the Common Market should increase the number of bureaucrats.

LORD STRANGE

My Lords, it will.

10.14 p.m.

THE EARL OF GOWRIE

My Lords, the only really chilling phrase I heard in your Lordships' House today was that of the noble Lord who said, "Finally. No, not finally but fourthly", and then went on to make three more points. I hope I can say, "Finally but twenty-fifthly" in my very brief remarks at this extremely late hour.

I want to make a few remarks as coolly as I can about the demand for a national referendum on the Common Market issue. I hope that all of your Lordships will agree with me and with my noble and right honourable friends that a referendum is not only inconsistent with the constitutional practice of our country but is a positive threat to our democratic procedures. It is all the more a threat because it comes in so democratic a guise. When an Englishman, a Britisher, votes for the M.P. of his choice, on the one hand he is protecting himself from the over-simplified choice of a leader which you get in a presidential system, and, on the other hand, he is protecting himself from the imprecision and volatility of mass opinion. If you are fortunate enough to live in a democracy, you need to protect yourself from the "demos". We vote for men to make choices on our behalf—men we can easily approach, person to person, about the validity of such choices. We have protection, in short; and that is a safeguard to cherish.

I very much regret that so able and energetic a politician as Mr. Wedgwood Benn has proposed a referendum. I should admire him for thinking better of it. It has been suggested, in my view quite rightly, that the constitutional implications of holding a referendum and thus setting a precedent for overruling the decisions of an elected Parliament would be greater than the constitutional implications of joining the European Economic Community. I know that Mr. Benn has said that Parliament should have the last word and that his proposed Bill provides for that. Then why is he so anxious to confuse and indeed undermine the ordinary voter and the ordinary voter's confidence in our constitutional procedures? There are, to my mind, ways in which objections can easily be raised to those conclusions on policy to which three successive Governments, Conservative and Labour, have come. For example, it is open to anyone who can raise the by no means insuperable sum of £150 to stand as an anti-Common Market candidate in a General or By-Election. Deliberation on the pros and cons of entry has been going on quite publicly for ten years. It has been going on in the Press, highbrow and lowbrow, if I may make such a distinction; it has been going on on radio and it has been going on on television, until the greatest danger, perhaps, to public opinion about the Common Market is saturation and boredom.

My Lords, my right honourable friend the Prime Minister is the least ambivalent of men, and his experience of European politics, as I think even his political opponents would agree, is both wide and deep. He could hardly have a clearer mandate for application and he has said publicly, again and again, that the Government would not recommend acceptance of our application unless the terms were to the satisfaction of the Government. Nor would Parliament, as against the Government, approve a settlement which in the opinion of its Members, whatever their Party, was unequal and unfair. To suggest otherwise is, in my view, further to undermine public trust in public institutions, and this is not the time to do that.

Imagine, my Lords, what might have been the constitutional implications of a referendum after the constitutional crisis of 1937, or a referendum on either the fact or the timing of our entry into either of the European wars. May I also remind noble Lords that it was Mr. Wilson who, in answer to a Question in another place in November, 1969, declared that a referendum would be contrary to the traditions of this country. It ill becomes me to congratulate Mr. Wilson on his constitutional views, or further to lecture your Lordships on constitutional practice, but I very much regret that the referendum issue has been dragged into the arena of serious debate in another place on a serious issue, and may I urge any of your Lordships who may have been flirting with that idea to ponder its implications?

My Lords, there is in America at present, as your Lordships may have read, a new and fashionable academic subject called futureology. It consists of assembling all sorts of information about various societies and then making predictions about what seems likely to be going to happen to them. All men who are engaged in political life must face facts and then make decisions—which are, after all, choices; which are, after all, guesses. But it is not good to let ourselves become fettered by contingencies. Looking before you leap need not involve being lowered over the cliff to take samples of the rocks below. There may well be disasters in store for the European nations, or for the whole or part of mankind. We belong to a doubtfully perfectible species, and while we can partly affect our own and our planet's future, the future is not, in the end, in our hands. What we can do, and what all nations must try to do, is to face our present, our reality. And this, as I understand it, is what political maturity means.

Our reality is that we are, as the noble Lord, Lord Gore-Booth, has said, a European country. Britain cannot, like an ageing millionairess who has made her by now diminishing pile out of shipping and heavy industry, simply hoist anchor and head for some Western Isle where bronchitis is banned and there are no death duties. We are a creative people, and we need scope for our creativity. It is very difficult to separate creative or cultural activity from economic activity, or economic from political life. These are abstractions, filing cabinet words for the one great subject, which is how men live and behave.

Europe is not where we are coming to: it is where we always were. Europe is less a place than an idea—the idea that Western man has of himself; and I would say to the noble Lord, Lord Boothby, should be happen to read these words, that the European idea must necessarily include both Washington and Moscow. The story of this idea is one of terror and of splendour, a treasure trove of achievement guarded by those absurd but formidable dragons—poverty, bloodshed and anxiety. If we do not take on the less romantic but nevertheless exacting task of maintaining and extending Europe's new democratic daily affairs, we diminish the light which we here can uniquely throw. We opt, in short, for obscurity. In 1914 a compatriot of mine of genius, Joyce, wrote that if there was to be a new Ireland it must first become European. He said that as long ago as 1914. My Lords, I suggest that this is not the first time we could take a lesson from an Irishman.

10.22 p.m.

LORD SHACKLETON

My Lords this has been both a lengthy and a notable debate—notable because practically every noble Lord having said that he was not going to make a lengthy speech has then proceeded to do so. The exception was that of the noble Earl, Lord Lytton, whose speech was so short that it was the only one I missed as I went from one end of the Chamber to the other. But, my Lords, there have been some very notable speeches. I think the whole House was deeply impressed by my friend Lord George-Brown, who made a most careful and brilliant study; and we have had a great deal of vitality from a great many noble Lords, and a great deal of wisdom—with some of which, I may say, I do not find myself in agreement. We see, on the whole, at the end of the debate a picture of the House predominantly in favour of entry into Europe on the right terms, but some of the opponents, like my noble friend Lord Shinwell and the noble Lord, Lord Milford, poised at opposite ends of the Chamber with, in many respects, different political views but united in regard to certain points relating to this debate.

I would like to deal with some of the points that have been made. Let me point out that I have not promised to be brief in my speech, but for the benefit of my noble friend Lord Beswick (whose stony glare I could feel behind me) I say at once that I shall be as short as I can. While I have myself for many years been in favour of entering Europe (and I think it is necessary again to get this on the Record, if only for the benefit of my noble friend Lord Shinwell), I also accept, and I am quite sure that the Government accept, that it would be disastrous not merely for us but also for the European Economic Community if we entered on terms which in the short run could be so damaging to this country that they were unacceptable to the British people as a whole and, as a result, weakening to the European Community. This would be the effect if the newest and most important recruit were to suffer a decline. Although it could be a relative decline only, and it could still be argued that at the end of the day we should be better off, I believe that a relative decline would be so disruptive to the whole concept as to be politically impossible. Jam in the future is no substitute for bread in the present.

I think that my noble friend Lord Shinwell misunderstood some of the remarks made by my noble friend Lord Chalfont in his extremely thoughtful and well-studied speech—incidentally, I thought both opening speeches were first-class—because Lord Shinwell seemed to suggest that my noble friend Lord Chalfont was advocating entering the Common Market at any price (though what I have already said indicates that this is not so) and was implying that there was no alternative. Anyone who studies Lord Chalfont's speech will agree that this in no way reflects his view. He was careful to say on at least three occasions that we must ensure that the price is right. This implies that the price might in some circumstances be too high and, therefore, that there might have to be an alternative. Let me therefore turn to the alternative, since the noble Lord, Lord Caccia, also took the view that Lord Shinwell had attributed to my noble friend Lord Chalfont the suggestion that there was no alternative.

My Lords, the one thing that none of us argues—though some wish to put such words into our mouths—is whether Britain will survive if we do not enter the Common Market. Of course we shall. I do not doubt that standards of living will gradually improve. The basic argument of those who are in favour of entering the Common Market on the right terms is that if we do not do so there will be less economic progress in this country—and this is a matter of judgment—and that, if we stay outside, so far from retaining freedom we shall have less freedom to influence our future development. This is the case that we have put forward, based on our judgment of the matter. We have to form a judgment as to whether this country will be more prosperous; whether our political security will be greater along with the rest of Europe, and whether we shall be able, along with our European colleagues,—and I want to stress this again to possible critics—to make a greater contribution to raising living standards in the rest of the world. And the fact is, of course, that we are being rapidly passed by the European Community in the contributions they are making to the under-developed world.

There are those, like Lord Shinwell and Lord Milford (who said, however, that he was open to be convinced) who will argue—though Lord Milford's arguments were much more in political terms, some of which I will deal with later—either that we shall be worse off or, that even if we are eventually better off, the price is too heavy. In other words, they argue that at best it is a gamble to enter Europe. But I must say squarely to them that it is equally a gamble not to enter Europe. The idea that those who wish to go into the European Community are the only gamblers is quite misleading: those who wish to stay out are also gambling with our own progress and future. Both sides have to make up their minds as to which is the right gamble. This evening we have had many powerful economic arguments, particularly from my noble friends Lord George-Brown and Lord Diamond, and from others in all parts of the House, as well as, if I may say so, a traditionally eloquent speech from the noble Lord, Lord St. Oswald.

There is, my Lords, a great deal of evidence that for an industrial country, with major industries involving vast capital investment, a larger home market is of vital importance to the growth and expansion of its industries and the creation of wealth. I do not disagree with what the noble Earl, Lord Dudley, said, that growth is not everything, but it is absolutely vital to raising living standards; and I must say to the noble Lord, Lord Milford, that I think he was a little unfair to my noble friend Lord George-Brown in implying that he was not speaking about the workers.

THE EARL OF DUDLEY

My Lords, may I interrupt the noble Lord, as reference has been made to my speech? If I gave the impression that I agreed with that point of view, the noble Lord misunderstood me. I was merely putting forward a point of view which I felt had not received sufficient attention in official publications.

LORD SHACKLETON

My Lords, in fact, of course, a great many of the publications that are produced, and certainly some of the Common Market ones, point very much to this argument of growth. But I am sorry if I misunderstood the noble Earl. It is important, however, because this was so much the kernel of Lord George-Brown's argument. It is in this respect that we can hope to see better living standards for our people in this country, and, again, I reiterate, better and larger contributions to raising living standards abroad. With the emergence (it has been going on; and we have seen it in the United States and in the Soviet Union, with its COMECON trading area), the desirability of free access, without tariff barriers, within the European home market, is more likely to contribute to progress—again, I put it no higher than that—than the reverse.

Against this there is the argument, and a valid one, that the cost of living will be higher—I will come in a moment to the balance-of-payments argument which has not been raised very much. This is an important question; but the equation is a simple one, and those who oppose this must equally face this equation. If, as a result of our entry, our annual growth increases by as little as an extra ½per cent. a year (we know our performance with regard to growth for all sorts of reasons has not been as good as we should like) over what would happen if we did not go in, this will more than overtake any increases in prices. In fact, any increase in prices may well be no higher than we suffered in the last year or two under our own self-generated inflation.

We have seen a very big increase in prices since 1963–27 per cent.—but the real value of incomes has increased much more. If my figures are correct, and I am sure the order is right, they have increased by 50 per cent. And what noble Lord would go back to 1963 prices and forgo the increase in 1963 incomes?—because the real wealth would be less. This argument applies just as much in the future, at the end of the transitional period. If prices have gone up, we may not like it, but if incomes have gone up more than they otherwise would have done we may be better off.

It is to me a very curious argument when people suggest that because large numbers of Continental visitors, particularly French, flock across the Channel to buy our cheap food and the cheap goods available in this country, this is a sign that we are more prosperous. It is simply a sign that wages are lower in this country. People who before the war used to travel the world will know perfectly well that there were certain things that you bought if you went to a colony. You bought as many clothes as you could, because they were cheaper as the wage rates were lower. No one would suggest that because there are many goods that could be bought cheaper in Hong Kong than in this country the standard of living in Hong Kong is for all the people much higher.

My Lords, the fact is that the world does not stand still, even though many people fail to notice the change; and many people fail to register the changes, in regard to the position of the Common Market, that have taken place in the last few years. We have great strength in our country. It is still the most stable and, I believe, the best place in the world in which to live; and I echo the remarks of the noble Lord, Lord Milford, in this respect. But we cannot conceal the fact that European countries have been progressing, so that today the living standards of all, except possibly Italy, are now higher than ours. Furthermore, our workers work longer hours than those in most of the E.E.C. countries. This is not a factor to be ignored in relation to industrial peace. There has been much complaint about recent uncovenanted holidays taken by workers after Christmas and at the New Year, but the average annual holidays in Britain to-day are 10 to 15 days, with six public holidays, while in France and Germany the annual holidays are from 15 to 24 days, plus 9 to 13 public holidays. In other words, there is 50 per cent. more time off in these countries. And this is partly the achievement of the trade unions. The belief that there are not effective trade unions in the Common Market is one we ought to face fairly, and I look forward to improved co-operation between the British and European trade unions.

It is possible, of course, to argue that the great progress in the European countries, both in relative and in absolute terms, has nothing to do with the Common Market, but that seems to me to be a pretty unlikely proposition. There is, however, one short-term problem which I am sure is very much in the mind of Mr. Rippon—that is, the effect on our balance of payments. Our balance of payments is now exceedingly strong, much stronger than it was on the last two occasions on which we sought entry, as my right honourable friend Mr. Jenkins forecast. I will not quote what Mr. Heath said about the balance of payments at the time of the General Election, because we are all agreed that the balance of payments is strong. But, strong though it is, and rapid as I trust will be the continued repayment of our debt, we could not lightly accept an undue burden in the short run on our balance of payments, especially if it fell in too short a period. I am not pressing the Government on details, but this clearly is one of the areas in which Mr. Rippon has to work hardest. But if the negotiations now take this point fully into account, in the long run our entry into Europe will help to move us into a position of greater monetary strength, and I hope will gradually, but not immediately, because there is no magic wand, free us from the repeated threats to our progress resulting from the vulnerability of sterling and its rôle as one of the two reserve currencies.

There has been little mention of the Werner proposals, and this is probably wise. They seem to me to be overly ambitious in the short run, though they are exceedingly interesting. I, for one, sympathise with the view which Mr. Roy Jenkins has held for many years, long before the question of entering the Common Market was raised, and which others have advocated, that we should seek gradually to change the role of sterling as a reserve currency. Let there be no misunderstanding: I am not suggesting that we do this now. This is not a declaration of Labour Party immediate policy. I mention this subject tentatively, because it is my view that this would not weaken the capacity of the City of London, which has always been used as one of the arguments in favour of sterling as a reserve currency. London, as several noble Lords have already mentioned, is already the centre of the Eurodollar market and is likely to emerge as the financial capital of Europe. Let me say, so that there may be no misunderstanding, that there is no suggestion in this that we should or could contemplate repudiating our sterling liabilities; but their existence in their present form, in spite of improvements in regard to funding, must be a continual source of discomfort to any Chancellor of the Exchequer.

I hope that noble Lords who are doubtful about the wisdom of entering the Common Market will recognise the extraordinary expansion of Japan and the impact that this is going to have on world trade. It is in relation to Japan that the great new mineral wealth of Australia is finding its outlet. This is an additional reason why we must fear the increase of protectionism in the world, and why it is desirable that, if the price is right, we should get within an area where we can operate in a large market within our own tariff walls.

There are only one or two more points that I want to make. I should like to say to the noble Lord, Lord Milford, that it is precisely because I believe that there is a need for a wider concern with the activities of international companies, whether the companies are public spirited or otherwise, that I am in favour of strengthening some of the political institutions of the E.E.C. The argument about the international company, so far from weakening the case for going into the Common Market, actually strengthens it. It would certainly be my hope in regard to bureaucracy (I am sometimes a little surprised when a Communist talks about bureaucracy), and I am sure it is desirable, that the democratic institutions within the Common Market should be developed. We shall be able to contribute to this because of our own experience in this field, and I am sure Europe welcomes us for this reason. I might say to the noble Lord, Lord Milford, who asked, "How do you get socialism in Europe?", that he might also ask, "How do you get socialism in Britain?". I know that this is a matter of concern. I am just wondering whether in certain respects we should not be better off in Europe than under the present Tory Government. But I should not wish at this stage to surrender sovereignty to this extent. There are developing provisions with regard to regional planning and other matters, to all of which we shall need to contribute. It is inconceivable that in a matter of this importance there will not be difficulties and arguments against any particular course.

Let me just touch on the political aspect. It is of course an illusion that Britain, in the midst of her Commonwealth and Empire, can be insulated from events on the Continent of Europe. That is a point that I should like to make in particular to my noble friend Lord Buckinghamshire who spoke in the debate. We cannot be insulated from events on the Continent of Europe. That is a lesson that both Britain and the United States have had to learn. Speaker after speaker—the noble Lord, Lord Gladwyn, and others—has repeated the fact that we have always been involved in Europe, and it is better for us now to seek to influence events there—because Europe will influence us—by entering, if this be possible, into a Community which will then become a Community of Ten nations and not of Six nations, with a number of very like-minded nations entering with us. Incidentally, I even see some hope with regard to the problem of Ireland if we enter the Common Market.

There seems to be an impression on the part of my noble friend Lord Shinwell that once we go into Europe we shall have surrendered for ever our freedom of choice and our freedom to influence. I do not believe this is so. Noble Lords have already demonstrated that this is not so. We want to go into Europe for the benefit of ourselves, Europe and the world as a whole. I believe this to be a noble idea. The history of the world is littered with failures; nations sometimes imagining short-term advantages and failing to take steps which would have led to greater security and greatness. Anybody who has been classically educated will know that the tragedy of Greece is contained in the story of missed opportunity. We have a great deal to contribute to the world and to Europe. It is not a source of pride that our contributions to the under developed areas are now falling behind those of Europe. We may not be able to fulfil our historic overseas roles as well outside Europe as inside.

Other noble Lords have pointed to the fact that the success of détente with the East and Willy Brandt's Ostpolitik—despite what the noble Lord, Lord Milford, said—in my opinion, and certainly in Willy Brandt's view, will be increased rather than diminished. The move to a new European democratic set-up should become greater, and the last thing I should wish to rule out is the possibility ultimately of a degree, not only of détente but of integration with the rest of Europe. We have to put our own house in order; we have to raise our own living standards; we have to compete and show that we can organise in a socially just society.

My Lords, I return to the point where I began. The terms must be acceptable to the British people. It is no use entering a negotiation if one is not going to negotiate. We are telling the Government (and I suspect that the Government may welcome this) that there are certain points beyond which they cannot go. Above all—and I am sure that the noble Lord, Lord Gladwyn, will agree—I hope that our friends in Europe will believe us when we say this. It would be absurd at this moment to set out the particular combination of terms that are acceptable, when there are so many variables. But there is no doubt that they will have to be brought back and debated fully in Parliament. I will not get into an argument on the interesting point about a referendum. I only know that when we debated this in 1961 there was no suggestion that we should have taken a referendum.

Noble Lords opposite may remember a rather strange debate in which my noble friend the late Lord Alexander of Hillsborough took part. He loathed the idea of the Common Market and regarded it as a sort of Roman Catholic plot. He persuaded those in opposition to him—all 17 of us—to support an amendment on the subject. Practically everyone on the Labour side—my noble friend Lord Stonham and others—made powerful speeches in support of the Common Market, and loyally supported this rather strange amendment, which in effect merely asked that the terms should be right.

There is another point I should like to make—and I wish that my noble friend Lord Shinwell was here. The late Lord Morrison of Lambeth, who was a great friend of the noble Lord, Lord Shinwell, was once an anti-European. I remember sitting with him in Paris, talking to Guy Mollet. The French were saying, "Can't you make a gesture?" But we were all rather British and superior in those days, and I admit that we missed great opportunities. Lord Morrison changed his mind (I have also been doing my research) and he said: Our island has had a great place in the world. It still has a great place. We have often done much in the way of helping the world towards sanity and in world leadership. I believe that the British have a part to play in the European Community. Therefore"— and this might be what we are saying to-day— subject to the results of these negotiations, I think it is right to take the proposed steps.

10.50 p.m.

THE PARLIAMENTARY UNDER-SECRETARY OF STATE, FOREIGN AND COMMONWEALTH OFFICE (THE MARQUESS OF LOTHIAN)

My Lords, may I first of all thank all noble Lords who have taken part in this debate to-day? It is absolutely obvious, and goes without saying, that this has been a most useful debate, and that the standard of speeches (if one may say so without appearing to be at all patronising) has been one of the highest we have had in this House for some time. We have heard in all 25 speeches, and I feel that noble Lords will forgive me if I do not reply to every one of them individually. Even at the rate of one a minute it would take me getting on for half-an-hour to do so. But I will in the course of my speech pick up as many points as I can and try to answer some of those put to me; and as for those that I do not answer to-night, I will of course read the speeches and endeavour to send replies to noble Lords.

My noble friend Lord Jellicoe, in his opening speech, reviewed the progress of negotiations. He pointed out that these followed the application made by the previous Government with the firm support of the Opposition. He also explained the reasons why membership of the European Communities would benefit this country, and the rest of Europe, if terms fair to all could be obtained. This point has commanded almost universal acceptance in the House. We in Britain have long recognised that the Communities provide the essential framework within which progress towards greater unity can occur. But until the Communities are enlarged, they cannot speak for Europe. Until they are enlarged to embrace the economic interests of members and of the applicants, important developments in the harmonisation of foreign and defence policies are most unlikely. And unless we can learn to act together in foreign policy—unless we can work much closer together in defence—the relative influence of Europe will, I believe, continue to decline. Therefore, the membership of Britain and other applicants is of extreme importance to Europe as a whole.

For Britain also the opportunities offered by membership are of the greatest significance. No one who considers this country's situation in the world to-day can deny that it is essentially the same as that of the other major nations of Western Europe, with whose peoples we share a common origin and a common culture. Our critics try to inflate what differences remain. But even such a striking difference as that which, for instance, still exists between the structure of British agriculture and Community agriculture is diminishing at a perceptible rate. Far more important than this difference is the fact that our interests in foreign, defence and industrial policies and trade are either identical or converging rapidly. There is a tendency to forget the extent to which we are already bound to our Continental neighbours in Western European Union and, of course, in the North Atlantic Alliance.

It is not always easy for a people to understand immediately that their interests can best be served by a change; and noble Lords in many parts of the House have drawn attention to the fact that a great deal more publicity is needed in this country to convince people of the wisdom of joining the Community. But, despite what some would have us believe, despite perhaps certain superficial appearances, I do not believe that inward-looking insularity is a characteristic of our people. Those who act and speak as if it is overlook the British people's capacity for taking change in their stride, so long as they have understood the need for it. One might almost say that this is in fact equalled only by their capacity for pretending immediately afterwards that nothing has happened. Provided that fair terms are available, the British people will, I feel certain, accept and exploit the opportunities offered by the European Community, just as they have always exploited their opportunities in the past.

I know that there are some who are anxious about the effect on the Commonwealth of our becoming members of the E.E.C., but I think we must remember how greatly the pattern of trade of developed and developing Commonwealth countries has changed in recent years. This point was alluded to by my noble friend Lord Bethell, who has had to leave the debate early. Also, the dependence of New Zealand on the British market is still, of course, very considerable, and that is why we are negotiating for a special arrangement for her dairy products. If the negotiatons are concluded successfully, I am sure we shall find, as France has found in respect of the Francophone world, that our membership of the Communities can do a great deal for Commonwealth development.

My Lords, I should like now to turn briefly—

LORD SHACKLETON

My Lords, may I ask whether the noble Marquess is leaving the subject of the Commonwealth at the moment? There was a very important point made by my noble friend, and also by the noble Lord, Lord Milverton.

THE MARQUESS OF LOTHIAN

Yes, my Lords, I was coming to those points in relation to the particular noble Lords who spoke. I should like to pay my tribute to the noble Lord, Lord Chalfont, for a most interesting and constructive speech. He asked me one or two questions. The first was in connection with the former High Commission territories. The position there is that we are discussing this matter further with the Community, and I am sure he will understand that I cannot say anything more about that at this time. The noble Lord also questioned the provisional agreement on a five-year transitional period for both agriculture and industry, instead of the six and three, and I am sure he will realise that, this being a negotiation, there must be give-and-take, and that is why we want it to be as flexible as possible.

Perhaps I may now turn to the noble Lord, Lord Campbell, and his most interesting remarks concerning the question of Commonwealth cane sugar. I would assure him that, as I think both the previous Government and the present Government have made plain (and he himself alluded to this) both the Community and ourselves regard this problem as one of the most serious to be tackled in the negotiations. I am glad to tell him that all the indications are that the Six are fully aware of the responsibilities which an enlarged Community would bear to the countries with which he is concerned. We have been doing everything possible in consultation, and, as I expect he knows, my right honourable friend the Chancellor of the Duchy of Lancaster is shortly to visit the Caribbean and will be talking to Ministers in that part of the world on this precise point.

I see that the noble Lord, Lord George-Brown, has unfortunately had to leave—no: he is back; but at any rate he has technically left the Chamber. I want to echo what other noble Lords have said in complimenting him on what I thought was a most remarkable and wide-ranging and helpful speech. I hope that it will be widely read, not only in this country but in the Six as well. I am very grateful indeed to him for stressing that terms do matter, because I think this is important. As I say, I am grateful to him for his speech to-day. The noble Lord also mentioned agriculture and the levy system for agricultural support, and I was glad to think that we had his encouragement in our policy in regard to the levies.

While I am on the subject of agriculture perhaps I may mention the speech of the noble Baroness, Lady Elliot of Harwood, who asked for an assurance that the interests of British agriculture, as well as those of industry, will be fully taken into account. As a farmer, like herself, I can give her that assurance absolutely unequivocally. We realise, of course, that for certain sectors of agriculture, some parts of horticulture, for example, there will be difficulties of adaptation, and these must be dealt with through adequate arrangements during the transitional period. But I entirely share her confidence that in general British agriculture is extremely efficient and will seize the opportunities offered by entrance into the European Community.

The noble Lord, Lord Milverton, kindly warned me that he would be raising the question of bananas, and I say this because I was unfortunately not able to hear his speech, and he is not able to hear mine either; but, for the Record, I wanted him to know that we appreciate the importance of bananas in this matter. I have every confidence that we shall be able to satisfy him when the time comes.

The noble Earl, Lord Dudley, in what I thought was a most interesting speech, asked me one or two questions. The first was what my right honourable friend meant by the expression "Community budget" in his statement of December 16. The answer is that he was referring to the total expenditure of the enlarged Community in 1977. Again, the noble Earl asked me whether there was any relationship between the Chancellor of the Duchy's figures for possible adverse effects on the balance of payments and the figures given in the previous Government's White Paper. In that White Paper the estimate was based on the various short-term adverse effects; that is, costlier food imports, the effect of tariff changes and the changes in costs. My right honourable friend's estimate was derived from a re-examination of the ranges for these items indicated in the White Paper, and in effect it embraces about the midpoint of those ranges. The noble Earl also asked whether it would be possible to produce another White Paper wan more reference to such things as the price effect on pensioners and old people, industrial infrastructure, defence, and this kind of thing. I should like to think about this. He obviously will not expect me to answer him to-day, but I will certainly take the point.

I was grateful to the noble Lord, Lord Gladwyn, for what he said about the financial benefit which the British contribution to the Community finance on the scale indicated in our proposals of December 16 would confer on each member of the existing Community. That is very true. And I am also grateful for his kind words of encouragement for my right honourable friend the Chancellor of the Duchy of Lancaster, who, I think noble Lords will agree, is doing a sterling task with the greatest possible skill.

The noble Lord, Lord Caccia, in, if I may say so, a speech of great wisdom and experience in foreign affairs, put the issues at stake very realistically. I quite agree with him and the noble Lord, Lord Shackleton, who made the same point, that we must not work ourselves up into the state of thinking that if we do not get in, the outlook will be absolutely disastrous for this country. "Disaster" is a big word, and Britain would, I am certain, survive as she always has done. But, in my view, as, I think, in the view also of the noble Lord, Lord Shackleton, every advantage is to be obtained by attempting, if we can get the right terms, to go into the Economic Community.

LORD BOOTHBY

My Lords, would the noble Marquess forgive me if I say that if we did not get in it would not be disastrous; it would be dire.

THE MARQUESS OF LOTHIAN

My Lords, perhaps "dire" is a slightly less disastrous word than "disaster", and in that sense I would accept it.

There have been many interesting speeches. The noble Lord, Lord Shinwell, was good enough to tell me that he could not be here for the end of the debate. I think his speech has been answered by the noble Lord, Lord George-Brown, and many others. I thought that the noble Lord made a very typical and interesting speech. If I may say so, I agreed with him on one point. That was the point, as I have mentioned before, of getting the general British public to understand a great deal more about what is involved in the Common Market.

I was also interested in the most stimulating speech of the noble Lord, Lord Reay, most of which I was fortunately able to hear, because I missed part of his speech on the last occasion. The noble Lord, Lord Merrivale, asked me a number of questions. If he will forgive me for saying so, I do not think any of them related to the present negotiations. I will endeavour to send him a reply to the matters he raised concerning the French.

The noble Earl, Lord Lauderdale, in, if I may say so, a most stimulating and interesting speech, asked for the Government's view of the recent N.I.E.S.R. Review about the effects of the E.E.C. on present member countries. In our view this article falls below the usually high standards set by the Institute. For example, it ignores the evidence of the performance of manufacturing industries in the Six, which points to substantial improvements in the rate of productivity growth in recent years, which have no parallel in non-E.E.C. countries. Again, in its analysis of Germany's performance, it gives no weight to the existence of the two revaluations of the Deutschmark in the 1960s as a sign of the strength of the German balance of payments and of German competitiveness. The noble Earl asked me a series of rather complicated technical questions, and I would be much obliged if he would put those down separately on the Order Paper as I want to be able to give him an accurate answer, which I cannot to-night.

I do not want to keep the House much longer, but I should like to return to what other noble Lords have been saying, that we have in fact been involved in Europe for centuries, indeed one might say since the time of Julius Caesar: through geography, as a European offshore island, and through history with a tangle of long and complicated alliances, treaties and pacts. We must not forget also the sacrifice of a great many British Servicemen's lives. We have also been involved through religion, immigration and inter-marriage, and perhaps, more recently, through new economic and financial ties.

Our whole tradition is European. As I think the noble Lord, Lord St. Oswald, said, our traditional European policy was to preserve the balance of power, and indeed it was. Surely, we cannot now retire to the sidelines as mere spectators of one of the most important world developments of our time. I know that there are those who disagree and who, quite apart from necessary and understandable worries concerning practical and important questions such as increased food prices and many other problems which have arisen to-day, have a feeling that Britain would, in some way, be losing her independence, her individuality and sovereignty, if we join the E.E.C.

One hears the sort of talk that we do not want to be dictated to by a European Parliament, and told what to do by a lot of foreigners who do not understand. I think it may be easier—and I should like to feel I had the backing of the noble Baroness in this—for a Scotsman to appreciate this feeling, for we in Scotland, some 260 years ago, took a somewhat similar step in joining England at the Act of Union—in my view to our great mutual benefit. Ever since that time we have been very much concerned about preserving our national identity. Even without the benefit—if one calls it that—of a national Parliament, I think we can claim to have succeeded in preserving our identity.

There is a parallel in Europe. Like many other noble Lords, I see no sign of the French or the Germans or the Italians losing their identities or giving up control of their own affairs, and I cannot foresee it happening. Of course there must be some diminution of national sovereignty, but, as I think the noble Earl, Lord Lytton, said, any treaty or commercial pact that binds a party to certain courses of action involves loss of sovereignty; for instance, being a member of the United Nations or of the North Atlantic Treaty Organisation. So that fears on those grounds, however sincerely held, are often exaggerated.

LORD BOOTHBY

My Lords, I hesitate to interrupt again, but I would remind the noble Marquess that prior to joining England, Scotland joined France.

THE MARQUESS OF LOTHIAN

My Lords, I am much obliged to the noble Lord for that observation.

LORD SHACKLETON

It was not a very helpful one.

THE MARQUESS OF LOTHIAN

I do not think it has affected the Scottish national identity at all.

LORD BOOTHBY

That was the point, my Lords.

THE MARQUESS OF LOTHIAN

Europe is made up of many ingredients—industriousness, steadiness, artistry, subtlety, even passion. All countries have something to give and much to learn from others. I am wondering what our country can give. Possibly we can contribute justice, fair play, ingenuity and, indeed, technical skills, as well as many other ingredients to which I have referred. And I hope that the Community would welcome this contribution, not because it is lacking in it in any way, but because it would be our own particular British national contribution. It is Her Majesty's Government's hope that we shall be able to participate.

I think that the degree of unanimity in the debate about our aims has been most heartening. I do not often quote from the Leader of the Opposition, but I should like in conclusion to echo the words which Mr. Wilson used in the debate on the White Paper last February, when he said: We shall enter"— the negotiations— in full determination to achieve success, for we believe it to be in the interests not only of Britain, but of Europe and of Europe's place in world affairs. My Lords, that remains to-day our view and our resolve.

On Question, Motion agreed to.